Cass1ar ASBESTOS CORPORATION LIMITED Pace TEN

Assuming the hanging wall has a strike approximately the same as the footwall, then the trend of
the contact down the north face of the cirque, indicates the hanging wall is dipping around 65° N.E.
With this assumption, there are still some 321 ft. between the present face of the tunnel and the
hanging wall of the serpentine. Surface exposures support this assumption, and it is possible the major
portion of this distance will expose fibre bearing serpentine of similar grade to that already exposed
in the crosscut.

To date the muck samples have graded themselves into three zones or groups; this division is
evident by visual examination along the walls of the crosscut. The first zone extends from 188 ft. to
317 ft. (129 ft.). This zone may be considered relatively high grade with an indicated average of 7.5%—
3F fibre plus some crude. The next 48 ft. (317 ft. - 365 ft.) is relatively low grade, both as to length and
quantity of fibre. The samples from this section averaged 3.7% —3Z. This so called low grade zone is
followed by a second zone of relatively higher grade material—365 ft. to face 439 ft. (74 ft.), which
averages 10.2°-—3K plus some crude. The overall average from 188 ft. to the face—251 ft.— is 7.6%
—3K plus some crude. This indicates a value of at least $30.00 per ton of rock, assuming $400.00 as the
price of 3K fibre, with no credits for either the crude ore that can be hand picked, or the 4 and 5 grades,
which were not determined.

From the exposures in the tunnel, the true width of the serpentine zone at the tunnel location is
indicated as 500 ft. The indicated true width across a section by drill hole +1—350 ft. south of the
tunnel—is around 430 ft. Contact zones of dark serpentine, low in asbestos fibre, are indicated, and may
be of varying widths up to at least 50 ft. in the main ore bearing portion of the deposit.

TONNAGE ESTIMATES:

The tonnage estimate is made by assuming three blocks of ground only:

(1) Block A—The main block is a volume of material 700 ft. north-south, by 300 ft. east-west
and 300 ft. in depth. The surface area 700 x 300 ft. lies along the surface of the hill on its
western slope; the block dips into the hill at 56° N.E. The net tonnage allowed in this Block
is 4,667,000 tons.

(2) Block B—Lying immediately north of the above block and adjoining it, there is a volume of
rock made up of a rectangle 220 ft. x 300 ft. plus a triangle 110 ft. x 220 ft., which can be
considered a minimum of 100 ft. thick, containing an estimated 625,000 tons.

(3) Block C—Along the hanging wall of Block A there is indicated on the surface, an additional
100 ft. of fibre bearing serpentine. To account for this material a volume of rock is assumed
having a width of 100 ft. on the surface, wedging to nothing at the bottom of the main
block, and extending for 500 ft. along the hanging wall. Tonnage in Block C is estimated
at 600,000 tons.
The above three blocks, A, B, and C, are considered to be reasonably well assured. They cannot
be considered proven ore in the strict sense, but by surface outcrops, two drill holes, and the 300 adit, I
believe the above tonnage, 1.e. (4,667,000 - 625,000 - 600,000) or 5,892,000 tons can be accepted with
reasonable assurance. The crosscut is presently indicating a value of approx. $30.00 per ton (7.5% of 3K
at $400.00 per ton).

In addition to the above proven tonnage, there is a further length of 2,000 ft. of serpentine lying
to the north of the developed block, which is covered with asbestos talus and throughout which asbestos
bearing outcrops have been mapped. There is no reason to believe that this area will not respond to
development in similar manner. It can be readily seen that the presently developed length of 700 ft. may
well form only a portion of the entire orebody. Depth development below the adit level will likewise
rapidly increase the total reserve figure.

SUMMARY:

In summary, I would estimate there are 5,892,000 tons of reasonably assured fibre bearing
serpentine grading $30.00 per ton in spinning grade fibre in addition to which there will be a recovery of
hand picked crude fibres and an amount of Group 4 and 5 fibre which has not yet been determined.

Respectfully submitted,

“WM. V. SMITHERINGALE”, B.Sc., Ph.D., P.Eng.