1. Summary of Significant
Accounting Policies

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.

The oil and gas exploration and production is conducted
under joint venture agreements and the Company’s
proportionate interest in the assets and liabilities and
revenues and expenses of joint ventures is included in
the accounts.

The active subsidiaries, which are wholly-owned, are as
follows:

Brinco Mining Limited
Brinco Oil & Gas Limited

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 on mineral
resource properties, net of recoveries from joint venture
partners, are capitalized providing the properties are
considered to be of value to the Company. When a
property achieves commercial production volumes, costs
are charged to earnings using the unit-of-production
method based on proven reserves. In the event of
abandonment or disposal of such properties, the
resulting loss is charged to earnings.

Oil and Gas Properties

Expenditures on oil and gas properties are accounted for
using the full cost method whereby all costs relating to the
exploration for and development of oil and gas reserves
are capitalized. The costs of such properties are charged
to earnings using the unit-of-production method based on
proven reserves.

Plant and Equipment

Depreciation of oil and gas plant and equipment is
charged to earnings using the unit-of-production method
based on proven reserves. Mine plant and equipment is
charged to earnings over its physical or economic life
using the unit-of-production and straight-line methods of
depreciation.

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. Supplies are valued at the lower of cost,
principally average cost, and replacement cost.

TRANSLATION OF FOREIGN CURRENCIES

Current monetary assets and liabilities arising in foreign
currencies are translated into Canadian dollars at the rate
of exchange in effect at the end of the year and revenue
and expense items are translated at the average rate of
exchange for the year. Gains and losses on currency
translations are included in the determination of earnings.