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.

Substantially all of the oil and gas exploration and production and a significant amount of the mining exploration and development is conducted under joint venture agreements. The Company’s proportionate interest in the assets and liabilities and revenues and expenses of such ventures is included in the accounts.

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

Brinco Mining Limited Brinco Oil & Gas Limited

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

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 Brinco Limited and Subsidiarie NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1983

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

Expenditures for plant and equipment are capitalized in the property accounts. 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 the straight-line methods of depreciation.

TRANSLATION OF FOREIGN CURRENCIES

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.