has been recalculated and the resulting difference has been charged to retained earnings as of that
date. The financial statements for the year ended December 31, 1986 have been adjusted to
reflect this change in accounting principle with the result that the net losses for the year ended
December 31, 1986, have been increased from $283,000 previously reported to $547,000. As a
result of the change in accounting principle, the net profit for the year ended December 31, 1987,
has been increased from $3,008,000, based on the previous accounting principle, to $3,719,000.

PENSION COSTS

Effective January 1, 1987, the company adopted prospectively the recommendations of the
Canadian Institute of Chartered Accountants on accounting for pension costs. In prior years, the
Company’s pension expense equalled the net contributions made to fund the plan during the
year. As a result of the change, net profit for the year has been reduced by $102,000 in 1987
(see Note 11).

. PROPERTY, PLANT AND EQUIPMENT

1987 1986
Accumulated
Cost depreciation Net Net
(in thousands) :
Operating
Mining property $111,892 $ 81,493 $ 30,399 $ 32,398
Non-operating 15,218 — 15,218 12,623

$127,110 $ 81,493 $ 45,617 $ 45,021

As a result of the decision to proceed with development of the McDame asbestos orebody at
Cassiar, the Company has revised the useful life of certain fixed assets. The change in estimated
useful life has resulted in a decrease in the amount of depreciation for the year of $3,366,000 and
an increase in net income for the year of $1,919,000.

NON-OPERATING

The costs incurred on the McDame property amounting to $15,007,000 (1986 - $12,402,000)
will, with development expenditures to be incurred, be written-off in accordance with the policy
described in Note 1 when the mine commences production in 1991. During 1987 government
grants were received (or accrued) amounting to $235,000 which have been credited to McDame
expenditures.

During 1987, a total of $2,761,000 (1986 - $4,283,000) in proceeds from the issue of flow-
through shares were applied to fund exploration on the McDame deposit. These amounts are
not deductible to the Company for income tax purposes.

Non-operating also includes costs of $179,000 incurred at the subsidiary company’s San Antonio
gold property in Manitoba. These funds were incurred in anticipation of bringing the property
back into production as soon as suitable financing can be arranged.

. LONG-TERM INVESTMENTS

BRINCO 1981 ENERGY PROGRAM

The Company holds 1,389 units (1986 - 2,186 units)) of the Brinco 1981 Energy Program. The
investment has been written down to $110,000, being the amount expected to be recovered from
future operations of the properties.

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