Brinco Limited and Subsidiaries

Notes to the

Consolidated Financial Statements

December 31, 1981

1. Summary of Significant
Accounting Policies

The financial statements have been
prepared on the historic cost basis in
accordance with accounting principles
generally accepted in Canada and
conform in all material respects with
International Accounting Standards
adopted by the International Accounting
Standards Committee. The accounting
policies of significance to the Company
are as follows:

Principles of Consolidation

The consolidated financial statements
include the accounts of the Company and
its subsidiary companies. The operations
of the subsidiaries are included in the
accounts from the date of acquisition.

Substantially all of the oil and gas
exploration and production and a
significant amount of the mining explo-
ration and development is conducted
under joint venture agreements. The
Company's proportionate interest in the
assets and liabilities and revenues and
expenses of such ventures is included in
the accounts,

The active subsidiaries and the
Company's ownership therein, are as
follows:

Ownership

Brinco Mining Limited 100%

Brinco Oil & Gas Limited 100%

Brinco Petroleum Inc.

(incorporated in 1981) 100%

Sharondale Corporation 100%

Abitibi Asbestos Mining Company Limited 60%

In 1981, Brinco Mining Limited was
amalgamated with its wholly owned
subsidiary Cassiar Resources Limited.
Inventories and Mine Supplies

Asbestos fibre and ore stockpiled are
valued at the lower of cost, determined on
a first-in, first-out basis and net realizable
value. Mine supplies are valued at the
lower of cost, principally average c7st,and
replacement cost.

Mineral Exploration

Exploration expenditures and costs
related to the investigation of possible
investments in mineral resource properties
are charged to earnings as incurred, net of
recoveries from joint venture partners.

Property, Plant and Equipment
Mineral Resource Properties _
Development and preproduction

‘expenditures, including certain interest —

costs, on mineral resource properti

of recoveries from joint venture pa

are capitalized providing the properties
considered to be of value to the Comp:
When the property achieves commer
production volumes, costs are charged
earnings using the unit-of-producti
method based on estimated reserv
the event of abandonment or disposal
such properties, the resulting gain or
is charged to earnings. , :

Oil and Gas Properties

Expenditures on oil and gas propertie
are accounted for using the full cost
method whereby all costs relating to
exploration for and development of
gas reserves are capitalized. The costs «
such properties are charged to earnin
using the unit-of-production method
on estimated proved reserves.

Plant and Equipment =
Expenditures for plant and equipm rt
are capitalized in the property accounts. —
Depreciation of oil and gas plant and —
equipment is charged to earnings usin¢
the unit-of-production method based
estimated reserves. Mine plant and

of Heese
Long-term Investments

cost and the related income is recorded —
when received. In the event of a aa =
permanent decline in value, the tae
investment is written down to estimated — oe
realizable value and the loss is charged to
earnings.
Translation of Foreign Currencies mere
The accounts of the Company's foreign Sx
subsidiaries and assets and liabilities arising —
in foreign currencies are translated into
Canadian dollars on the following basis; =
current assets and current liabilities at bs
rate of exchange in effect at the end of —
the period; revenue and expense items at —
the average rate of exchange for the
period; non-current assets, related ay
depletion and depreciation and non-current
liabilities at exchange rates applicable at
the time of relevant transactions. Gains —
and losses on currency translations are
included in the determination of earnings.