Outlook

The sharp decline in Canadian shipments of
asbestos fibre which began in 1979 was arrested
in 1983, and 1984 purchase commitments for
Cassiar fibre are well ahead of those received by
this time last year. A price recovery in the
asbestos market in the immediate future is
unlikely however, given the serious over-
capacity in the industry. It is anticipated that
the dollar value of asbestos fibre sales in 1984
will be similar to that experienced in 1983, but
overall corporate results in 1984 should be
better than those achieved in 1983, reflecting
reduced minesite costs, a further reduction in
overhead, a continuing strong performance by
Brinco Oil & Gas Limited and elimination of
losses at Loftis and San Antonio. Also, the
combination of the Company’s corporate offices
with those of Brinco Mining Limited in
Vancouver, is expected to have a significant
beneficial impact on consolidated general and
administrative costs.

The debt level in Brinco Mining Limited was
reduced by $7.2 million during 1983 and by a
further $15 million during the first quarter “of
1984. Further modest reductions are likely
during the remaining three quarters of 1984.
Principal repayments on the term loan are
behind schedule however, and the terms and
conditions of this loan remain under negotiation
with Brinco Mining Limited’s bankers.

Ore sources additional to the present Cassiar
open pit, which have good potential to prolong
the mine life, will continue to be evaluated and
a modest exploration program, oriented toward
precious metals, will be conducted in British
Columbia and Newfoundland. The adv “isability
of increasing the development activities of
Brinco Oil & Gas Limited will be examined in
the light of that company’s improved

erformance and the more stable conditions
which apply in the oil and gas industry in
Canada.

Although an improvement is expected in 1984,
the financial results anticipated are unlikely to
permit a resumption of dividends on the
Preferred Shares in 1984 and given the
Company’s deficit position, redemption of any
of the Preferred Shares Series A during 1984
cannot be expected. In the longer term, the
Company’s ability to retract the Preferied
Shares Series A will depend, principally, ona
significant improvement in the asbestos market.

Volume in this market is presently showing
signs of improvement and prices will follow
when over-capacity, which is considerable, is
removed. Notwithstanding the depressed
conditions in the market at this time, the
Cassiar mine is generating a healthy cash flow
before debt service and a small improvement in
prices would significantly improve earnings.

Acknowledgements

Costs have been reduced at all locations and
we, together with all members of the Board of
Directors, extend our thanks to all employees
and particularly to those at the Cassiar minesite
where, in addition to improving productivity
and reducing costs, a record safety performance
for British Columbia mines has been achieved.

AW Let nee/

Harry W. Macdonell
Chairman

WAL S

Hugh R. Snyder
President and
Chief Executive Officer

April 6, 1984