Cassiar Asbestos Corporation Limited

and its subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1968

Depreciation and amortization

The basis of amortization and depreciation is as follows:

Depreciation —
Buildings — 5% per annum on cost
Equipment — 10% per annum on cost

Automotive equipment cost is charged to operations at a uniform rate over the
estimated useful life applied on a unit basis.

During the year the depreciation charge to operations amounted to $3,136,853
(1967 — $1,492,336).

Amortization of waste removal expenditures —

Waste removal costs are charged to operations on a per ton of ore mined basis, the
rate being determined by dividing the cost of waste removal by the estimated tons of
ore to be released. During the year waste removal costs charged to cost of production
amounted to $1,774,290 (1967 — $1,729,516).

Amortization of preproduction expenditures —
Preproduction expenditures are amortized on a per ton basis, the rate being determined
by the estimated ore reserves.

During the year preproduction costs charged to cost of production amounted to
$264,158 (1967 — Nil).

Exploration expenditures

The companies’ policy is to write off all general exploration expenditures incurred during the
year and to capitalize the direct costs of acquisition and expenditure thereon in mining
properties which were in good standing at the year end. Upon disposal or abandonment of such
interest the net gain or loss is reflected in the statement of income.

Bank credit

The company has established a line of credit pursuant to section 88 of the Bank Act secured
by a general assignment of accounts receivable and inventories of asbestos fibre, ore and supplies
in the aggregate amount of $6,500,000.

At December 31, 1968 the amounts outstanding were —

Direct advances due on demand.......... $1,244,217
Bankers acceptances:

IDs, Jamuamy 2, IDO 2. ccccccvcnces 3,500,000

DUS epyauainy 2O, ING) 2c ccccsccccss 1,000,000

IDWS Mian FS, WO ..accnccsccvccces 500,000 5,000,000
Bank indebtedness per balance sheet ....... $6,244,217

In addition to the foregoing there is outstanding a term loan (unsecured) due July 1, 1969 in the
amount of $3,800,000 reduced from $4,000,000 during the year and now shown under current
liabilities in the balance sheet.

Income taxes deferred

The deferred income taxes of $900,000 is the amount by which income taxes otherwise payable
in respect of the year have been reduced by claiming for tax purposes capital cost allowances,
waste removal costs, and exploration and development expenditures, in excess of the amounts

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