Quinsam Coal Project

Under arrangements with Weldwood of
Canada Limited, Brinco has since mid-1981
managed programs and studies covering the
Quinsam coal reserves which are located
approximately 27 kilometres southwest of
Campbell River on Vancouver Island in British
Columbia. Activities on the project during 1983
were directed toward the obtaining of permits
for the development of the project, market
investigations, and further refinement of pre-
feasibility studies to determine the optimum
operating mode of the project.

In February 1983, the Government of British
Columbia granted Stage II approval to the
Quinsam project, and at the same time directed
that a public i inquiry be held to allow a full
public discussion of the major environmental
issues. The public inquiry commenced on
October 12, 1983, and during the six weeks of
sittings which followed, briets from a wide
variety of interested groups were presented and
discussed. The i inquiry chairman’s report is
expected to be delivered to the Government
during the early months of 1984.

Presently, markets for thermal coal in Pacific
Rim countries are weak. Current surpluses in
the market place have created extreme
competition amongst coal supplie rs and in the
past three years, thermal coal prices have
decreased in the order of 30 percent. From a
technical point of view, the project is
sufficiently advanced to permit early

dev clopment as and when acceptable coal
contracts become available.

Sharondale Corporation

The chief asset of Sharondale Corporation, a
wholly-owned subsidiary of Brinco, is the Loftis
coal mine in eastern Kentucky. The Loftis mine,
acquired by Sharondale late in 1980, is a
producer of high quality, low sulphur coal,
destined primarily for the utility and industrial
markets in the northeastern United States.

Coal markets in the eastern United States
continued to deteriorate during 1983, with a
substantial reduction in demand in both the
domestic and export markets. Prices for steam
coal fell steadily and by mid-year thirty percent
of capacity in the region in which Loftis
operates was idle. Coal producers such as
Sharondale which rely on spot markets, and
producers selling under coal contracts which
came due for renewal during the year, were
those most adversely affected. In these
conditions, it was not possible to continue
mining operations at the Loftis mine, despite all
efforts to reduce costs. Accordingly, operations
were discontinued during the fourth quarter
and the mine is presently held on a care-and-
maintenance basis.

Coal sales from the Loftis mine during 1983, up
to the time of closure, were 243,369 tons,
compared with full-year sales of 327,271 tons
during 1982. While ‘the mine was operating,
daily productivity was at planned levels and
operating costs declined as a result of significant
reductions in direct mining costs.

Quinsam & Sharondale

Corporation