Document rpZ63K8B3Vb5GwOae9LdQ66Za

BEST COPY ,n : ' Intercontinental Research & Analysis Co. 19 Rector Street, New York, N.Y. 10006 in Asbestos July I97S GROWTH. SUSTAINED AND NON-CYCLICAL The industrial popularity of asbestos which in recent sears raised its value twice as fast as its production is now. despite llie recession, entering ap even greater stage. Asbestos is in creasingly essential to many aspects of building in basic ways to such an extent that its usage expands even when h.uiding slows down. Growth will now accelerate. Combined with cement and in certain other products connected with many kinds of construction, asbestos demand was very strong around the world prior to the sudden upsurge in energy costs. These have made it still more attractive because competitive materials such as plastics and glass fibres have a high quotient oil-gas casts in -their expenses. Also the biter lusc become scarce at times and may be so again as politically induced energy- short ages intermittently hit North America. The non-cement -markets, `for asbestos such as insulation, tiles, gaskets, etc. are also likely to Moom. Insulation to conserve energy losses is being emphasized more, and more. The spectacubr failure of pljslic insulation in the recent telephone fire in New York ti another case in point, as is the concern of architects to design out any possibility of creating "towering .infernos" when they build new sky-scrapers. ftradoxiolly, the environmentalist' movement which some times criticized the health risk in asbestos, has at the same time increased the demand`for cement asbestos pipe in tlur . U.S. It is upTulIy 507' since 1971 due to the need lor better drainage of sewage and other liquids as well as the need lor ' increased'watcr supply. . . The accompanying chart of the predominant world source. Canada, shows- a pin since 1961 of 56'- in production paralleled by one of 115" in value. The value curve is likely to go up even faster now since growing demand will impinge for a while on a shrinking supply. Investors nnglil note-that unlike many other mineral products, asbestos prices are not cyclical. They show stability or enhancements without intervening collapses, reflecting the constantly widening circle of uses and features ADVc\rr ASItl.SItlSCORP. CA.VSIAK JOIINS-MANVtLI k UNIItD ASBLSTOS geographical markets. For the past 25 years, price increases have been posted from time to time. Recently, from Jan. 1st. 1975. to Jan. 1st. 1975. the successive increases amounted to 75". 1950 1960 1970 1975 Grade 4 Grade 5 Grade 6 Grade 7 137 300 243 442 87 130 156 290 65 87 110 211 33 43 53 98 MTC 000350 7 i-. - \- E- fr'v -V' *: V ,-. ' v;,,--`V ' '*T '- 'a >*S> --.f-' .>; ;* s* *v% * y^J^Sr . >:" '' r.w.yS'*' X r~ I 1 o--o e 3 o 5"- z o' s*2.r3! " ~2 S o ^.s: - M m a ~ 2-ll| 2. r* 00 P> I =r - 5, "c _S i ?=* o ~ = g = ~3I 3 9* ^ =*. ^ m (OP3 .:3.. .;.::?-i^^A,v^')->'-.' \3 ` * ' VI V w fc- *VT?fe -'iV:;:: '. '*. * r.^:iV'r*V ;'*>. \':^/- >.;=> . ^^ ' .< 1 * -"T - * * * .1 >. *- ' ' v-*r '-tv* . ** Wk- . . i` ::Ur. ^'r-*v- t. *>>. i.'. ; -* ' * ^^ ^^ . -** ` V:* >><*.--'.*.. ..- . S.*>-. `. freest. - /U *V* * . .< "\ "ZK-'-il*. tv" .. w: - -J.; ::-LLh'v:.^ - v^_;..v-:. ^ -'.i where would we be ,, without r;;: '%- ,4 : - > ?S In danger! Without asbestos, ships, for instance, could not be as thoroughly protected against fire as they are today. Incombustible asbestos is the life-saving material which shields ships' superstructures and passenger accommodation against fire at sea. In blazing buildings, asbestos keeps open the escape routes along which the occupants may reach safety. In hundreds of high-energy Industrial processes, asbestos-and only asbestosprovides the unique combination of properties which contains fire and harnesses heat safely. Many essential lire regulations today could never be met without the aid of asbestos. But the people who work with this material must themselves observe certain safety regulations, as with many other materials. Fortunately the asbestos industry, with its long experience of effective control measures, can give ' practical and authoritative advice. For further information on this, and on the technical advantages of this indispensable material, write to: Asbestos Information Committee. 10 Wardour Street, London W.l. Telephone: 01*734 7617 CO N O N> 0) MTC 000351 .CANADIAN DOMINATION f'jnada lias led in pioductton fur a lung lime with 66'. nf tlic Fiec Woild onlpul and 435 nl the whole \iinld in I'*7T. (lit latest year f-ir wmld-widc ftpuros. Despite its large output. Canaila lias been able to glow with world demand vvlneli it senes, consuming only abunl 55 itscll. I960 1970 1973 1974 Canada 1,118.000 1.662.000 1.974.000 pl.8IO.OtX) World 1,940.000 3.846,000 4.597.000 p4.487.000 Notes: Figures in short Ions, p-preliminary U.S. production was only 14'! of its needs last year, and due tu decline lurtlier. The U.S. output was I 12.533 tons in 1974. down from 150.116 in |073. The U S. is the world's leading consumer, taking 185 of the total, and is also C anada s main market, importing 735.150 tons in 1974. over 405 of the Canadian mine output. World needs are met in pail by the export of about 448.U00 tons of the Soviet production of 1,411.000. hut tins is mainly to satellites and not all of the qualities we require. The Soviet has some tonnage beyond the above figure, but it is "waste" good mostly for road building. Italy's output of 164,000 tons about matches its osvn needs. South Africa's output is mostly "blue" and amosite asbestos, not as suitable for U.S. purposes as the Canadian higher grade Chrysolite. South Africa exported 294.829 tons in a recent year, only 17.798 to the U.S. with the U.K. and Japan the big customers. China has an output of 230.000 Ions, but there is no indication of exports. The balance of world output is spread among small producers often unable to meet their own nation al demands. Free World production is now entering a period of critical shortage. It will lose about 250.000 tuns in the next three years during which lime demand is expected to grow 550.000 tons. The slurp drop in Output is due to the phasing out of mjrgmal operations, final depletion of reserves and other causes. United Asbestos' new Midlothian mine nf 110.000 tons annual output is the only major new production definitely scheduled. The environmentalist movement may be a deterrant to the rapid development of new reserves, even though at the same time, it is increasing the need tor asbestos cement, as we pointed out before. ASBESTOS. SILK OF MINERALS Essential for safety, very useful in construction, vital to transportation on land, sea and air. asbestos expands its markets. The general public and investors too are not aw are of the technical excellence of the silk nf minerals. Mines sell fabricators who mix it in various end products. Tltc industry docs little advertising. Asbestos was known and used in ancient Egypt, but it was not until Victorian limes tlul I I.W. Johns (Johiis-Manvillc) attempted to dev elop a wide commercial nurket for it. Research by tlic industry and the more sophisticated needs of our highly technical age luve broadened markets greatly in recent times. One of its latest uses is in the space capsules of lunar rockets where Us rcsistcncc to fire. heat, friction and corrosion arc essential. So far 3000 uses have been found for a fibre which has many qualities, yet is comparatively inexpensive. The description of the Canadian Department of Energy. Mines and Resources catalogues officially the characteristics of asbestos with teclinical accuracy. "Asbestos is of use in industry because of its shape as a slender fibre, other physical characteristics and r* m chemical stability. Asbestos "sjs durability and resists fungigrowth wealher. corrosion, heal, acidsauj vermin.il insulates ag.misl heal, ul'r.ilimi. electricity and viand. Us fibrous form helps to hind fillers. timber. uv-l ait and cement, the latter being a most imp.nun! material m that moie than '0 percent of the worlJ'v asbestos produetion is used in asbestos cement products. Asbestos fibre is used for filtration of acids, alkalies and a great variety of liquids: it can be sprayed, moulded with plasties or glass, and dispersed in fluids, greases, adhesives and sealing compounds.'' Asbestos is not only very strong, but it is by far the lightest of fibres and of course fireproof. The ler.srleslrcngthof chryso lite asbestos is 80-100.000 Ibs./sq. in. compared to 48,000 for wrought iron. 155,000 for carbon steel. 80.000 for cotton and 100-200.000 lor gljss fibres. Asbestos is extremely light with 130-220.000 sq. cm.-'grant of weight, far above nylon's 3100. acetate, rayon's 3800. silk's 7600. wool's 9(00 and viscose ray on's 9800. It is niucn finer than i!.c human hair which runs 630 to the linear inch compared to 850.000-1.400.000 for chrysolile asbestos fibre. It can withstand -1800 degree heal I Fahrenheit) with a loss of only.13.7 5 of its bulk. WORLD MARKETS' SCOPE The diversification of the uses uf asbestos is further ad vanced in the U.S. than abroad. It is likely that as other nations raise their standards of living they too will expand the use of asbestos into many more products. Tlic tables below were compiled by Jolins-M.uivillc from 1973 data. U25. CONSUMPTION (Table I) Asbestos Cement Pipe Asbestos Latex Sheet (sheet flooring under layment) Asbestos Cement Sheets, shingles, etc. 141.000 tons 134,000 50.000 Floor Tile 125.000 Asbestos Paper 84.000 Friction Materials 51.000 Roof Coalines 34.000 Asbestos Textiles Plastics Joint Cements 12.000 18.000 13.000 Miscellaneous (packings & gaskets. 170.000 asplialt paving, caulking compound. sealants, sound deadeners. oil well drilling muds, fillers, ceiling tile, accnuslica! plaster, automotive umlcrcoatings, etc.) -- TOTAL 832.000 175. 16? 6? 15? 10? 6? 4? 1.45 2.1? 1.6? 20.4? FREE WORLD CONSUMPTION . (Table 111 Ashest os Cement Products (pipe. sheets shingles, etc.) Friction Materials A (iaskets ' Asbestos hiper (asbestos felt. asbestos latex & other commercial paper) Floor Tile Paints. Roof Coatings. Caulks. Sealants Plastics Miscellaneous 2. .400.000 110.000 2703)00 250.000 85.000 30.000 267.000 TOTAL 3,412,000 tons 70? 3.2? 8.9? 7.3? 2.55 1? 7.8? i I MTC 000352 I cr-o a Z| 2. - 2. -- r- O --1< 7<+ - mol| S* 2 S lif'J a*!i| = =r <3mo I > *1 n * Hie U.S. takes fully.j quarter of llio lot:it. It will be not above. Obviously tlic future potential for sales abroad is v. as per capita consumption begins to duplicate that in the U Mere statistical projections may not reveal tlic extent of the potential. For example, the newly rich Mid-last is drawing up plans to build entire new cities and industrialize up to compe titive levels within just a few years. Asbestos cement products are likely to be very suitable. The Arabs have the ingredients for cement, but must first build plants. Actually many devel oping countries have local cement industries, and need to import only a small bulk of asbestos (12/i-25%) to make a strong fireproof, rat proof construction. Europe has been much more concrete oriented that the US., possible because it plans more massive construction, and also it lacks wood. Incidentally. Florida and Ari/ona in the U S. seem inclined the same way. The preceding table showed a foreign proportion of 70% in asbestos cement products. High lights of European advances in tlic use of asbestos in 1971-73 were: Netherlands 64%. Spain 56%, Portugal 47%. West Germany 27%, Denmark 26%, France 23%. and the United Kingdom 16%, all above the U.S. figure for these years of 15%. Other parts of the world also exceeded our percentage. Brazil had an 82% gain. South Korea 66%. Mexico 34%, India 31%. Japan 17% and Turkey 17%. CURRENTSHORTAGE EXTREME While supply has been barely able to pace demand in recent yean, several unusual factors have occurred since last December to wipe out the narrow margin and turn into an actual shortage. So severe is the shortage that it may take two yean to overcome it and replenish inventories loo. Meanwhile, posted prices may be exceeded in some short areas by special premiums. For example, in Australia, prices have gone up 18% over the landed import quotations. Canadian production in 1975 las been cut down so far by almost one-quarter and may be reduced further. On December 8th, the King Beaver mill of Asbestos Corporation was com pletely destroyed by fire, reducing the capacity of the company about 145,000 tons/ycar. Mining was partially resumed toward the end of January with the ore shipped to another mill at Black Lake, but on March 18th, all asbestos mines in the prov ince of Quebec were struck with the exception of JphnsManville. Meanwhile, on January'21 si a slide occurred at the Jeffrey Mine of- Jolms-Manvillc which will cost about 80.000 tons of fibres before full output can be resumed in October. Altogether, there 4s a deficit of about 400,000 tons to date. F.uclt iiK.nth the strike persists will add approximately 75,000 tons to this delicti. Inventories are now exhausted While Jolms-Manvillc settled without a strike on April 2nd for ahuiit a 2')% wage increase over two years, plus a cost of living adjustment vs lien necessary, the two different unions forming a common front at the other Quebec mines are demanding 47',T plus a cost of lising adjustment. Health con siderations ate run i basic : oi ! r i\ F- the s;nkev.i|l continue lor a tunc, jges usually run around 2i` ul sales lor the industry. Wc do not lave a breakdown lur each company. Obviously, an expensive settlement util lave to be passed on -- Johns-Maiivdlc raised its prices a month after the settlement 6%-7% INDUSTRY ADVANTAGES Unlike many other minerals, asbestos is not mined by a large number of companies in many parts of the globe. There arc ulily ten asbestos mining companies in Canada, and the relatively small foreign production is also limited to a few. Competition is keen, but not chaotic. These mines are usually large open pit and often operations amenable to very low cost per ton. Separation of the fibre from the ore is essentially a dry grinding process not requiring complex chemicals or smelting. Hence it avoids the risks and costs which the environ mental criticisms of oilier mineral processing force them to overcome as atmospheric or water pollution. The major Canadian operations in some cases have about the same mining costs per ton of ore, but final profits per ton of fibre vary substantially for reasons we shall develop. Reserves are ample except in one instance. While Jolins-Manville is the largest mine (in the world as well as in Canada) the asbestos division apparently accounted for only 32% of pretax income of all divisions in 1974. We expect the proportion to rise. The economically strong position of asbestos mining has provided an excellent base for the sales growth our table shows. It augurs well for the further expansion the industry must now undertake to the extent its ore reserves will permit. ADVOCATE MINES The company on tlie northeast coast of Newfoundland commenced operations in June. 1963, under an agreement with Canadian Johns-Manville and Amet Corporation. The groups - had brought Advocate into production for an investment of $17.900,000. In addition to J.:M.'s 30.6% holding in the share capital of 6,000.000 shares, other corporations hold 47.1%, including Belgian cement interests. J.-M. and Amet receive 4% of gross revenues plus certain costs as a fee for management. Ore Mined Tons Grade Cost Fibre Value Writeoff Net Earnings Waste Ratio E p/share Quote P/E Sales 1974/70 Reserve Life Advocate 2,413,000 3.73% S5.89/T 79,983 S228/T ' S24.40/T S25.70/T 3.13:1 23* 1.70 7.4 167% 30yrs. Asbestos Corp. 13.641.000 3.23% ' S6.06/T 430.137 S252/T S33.70/T ' S29.90/T 2.69:1 S4.I7 16 3.8 203% 19 yrs. Caxviar 3,237,000 5.75% SI3.40/T 183,982 S289/T S50.00 LSI 1.50 4.77:1 (394) 5 - 130% 9 yrs. Johns-Man. E.11,000.000 E.6.23% E.S5.66/T E .680.000 ES13I/T E.SI 8.50 E.S20.90 no. $2.72 20 7.4 113% 45 yrs. United* 4,470.000 3.59% S3.29/T 74.846 S213/T S34.40 S73.70 3.21:1 78* 4 5/8 5.8 170% 22 yrs. E.5.567,000 ' E.4.65% E.S4.07/T E.174,846 E.S204/T E.S3IO0 E.S 105.00 E.2.65:1 E.S2.50 E.4 5/8 E.1J nj. EJ5 yrs. Notes: First column, present operation, second combined with new. Write-ofT includes depreciation, depletion and amortization. Deferred tax charges also included. N.A. Combined properties not ir. operation in 1974/70 E our estimate, no official figure MTC 000353 i '" , \_ ' Vi V ` The group has alio agreed lo buy 25,000 tons of fibre annually It the market with J.-M. taking 40% of this amount, or 10,000 tons. Under the influence of a computer mining program initialed In 1971, results improved. The management reports more reliable mining sequence of operations and an elimination in fluctuations in the tonnages moved. The ratio of waste to ore has been brought down from 3.85:1 in 1970 to 3.13.1 last year. Shipments by water arc usually possible nine months of the year, but the company has storage capacity equal to six months' output. Measured ore reserves have been largely maintained from asbestos showings near the present mine. Advocate's deposit is rich in group 4 grade which accounts for its higher value per ton of fibre than J.-M.'s Jeffrey Mine. It is interesting to note that the mining leases also have showings of coppcr-gohltihrer, lead-zinc and molybdenum.' Advocate paid its first common dividend, of 5 cents per share, in 1971. It is now 1'fi cents. It is worth noting cash flow per common share in 1974 was 55 cents, or 2.4 times reported net eatnings of 23 cents per share. Warnings were unchanged in the fust quarter. ` V. ASBESTOS CORPORATION .'V.. The longevity and profitability of asbestos mining are , '' dearly shown in the history of Asbestos Corporation. The ,. company was incorporated in 1925 to consolidate several . y V mines already established. There has not been an unprofitable v year lince 1934, with net earnings in 1974 over SO times more .. ,, than then. By 1974 output had readied 430,100 tons including " 79,580 from a recent extension. Our tabje shows that Asbestos Corporation is the second largest in Canada. It has about one-third of its present output In the rich group 4 grade, thus giving its fibre a high value per --1 . ion. Capitalization is a modest 2.837,000 common shares, of , , which 54% is owned by General Dynamics. The company . .' Incurred a long term debt of $47,813,000 to Dec. 31.1973. in connection with the investment of about S98,000,000 in the new Asbestos Hill complex. The gross value on.tlie.books of . .'* other properties was about*S68,000,000 it the end of 1974, so _ i it may be seen how big a financial step has been taken. Debt is t mw down to $40,102,000 and an S8,67.1,000 bank lqan has -Y V been repaid-. v The main complex is at Thetford, Quebec, supplemented by ,. - ' mines and mills at Black Lake anil Coleraine. Tiicse accounted ai s ' tot 350,557 tons in 1974, from ore averaging 2.8%. The main ' j ' mill at the King' Beaver mine was burned to the ground Deccm' Vi \ her 8th. Rated at -18,000 tons/day it represented 42% of the -"? V capacity there and 27% of the overall capability. By January ' 15th, the underground mine was reopened to send richer ores to mills at Black Lake, three miles away. Of the 147,000 tons f', of annual fibre production lost by the fire, some undisclosed V fy -. portion nay be recovered. . The major expansion of about 30% was first initialed in - '7' -V 1967 in the Arctic at Ungava. and called Asbestos HiU. ATter many delays, the new complex started to work smoothly in the V V"' autumn of 1974. Output at Asbestos Hill was about 79.500 ... V?'"-. Iona of fibre in 1974 against a normal capacity of 100.000. j-V. In 1975 the shipments are officially expected to exceed . ^ 100,000 tons. Farther down the road, the shift of mining to underground may enable operations to exceed the limit of , . seven months now imposed by the rigorous climate. Last year. , * *. .' 228 days were worked compared to 289 at the main complex .- j-jV : at Thetford-Black Lake. The ore is panially concentrated in . ; Ungava, then sliipped to Nordenham, West Germany, for finishing in the company's SD.OOO.OOO mill there. The ore runs a high 6.6" which more than offscWi the high Arctic costs. With Asbestos Hill now really on stream, the financial out look for Asbestos Corporation is very- bright as soon as the problems of the Kmc-Beivcr lire are resolved. To replace the mill completely would cost approximately S65.000.000 in the company's opinion. Insurance may cover only around S20.000.000 although no final settlement of the claims has been made. The management inclines at the moment only to building a concentrator at King-Beaver, which would mean a recovery of perhaps 75-100,000 tons of the fibre capacity lost, giving Asbestos Corporation a total capability of about 400.000 tons per year. At the prices now to prevail for asbestos, the company could earn substantially more in the first strikefree year than ever before, and resume dividends. The latter were suspended in 1972 to accumulate cash for the expansion in Ungava. The first quarter yielded $1.00 per share despite the fire, but with only minor effects of the March 18th strike. Ore reserves overall equal 19 years life plus another six years possible from other ore. CASS1AR ASBESTOS CORPORATION Cassiar shares have been strong despite coming difficulties with (he company's ore reserve, because Cassiar is not shut down and will benefit from the higher prices of asbestos now coming into effect. For the first quarter, it earned IS cents per share against a loss last year. Cassiar produced 91.315 tons of fibre last year from its high grade mine of the same name, tunning 8.11%. Its Ginton mine did 92.667 tons from a lower grade of 4.37%. Results last year were penalized by a net charge of $2,600,000 in anticipation of the dosing of the Clinton mine due to exliauslion of the ore. Were it not for this charge and the cost of an affiliate's exploration, Cassiar would apparently have earned about 60 cents pershare.lt is worth noting also that write-offs, aside from the special charge, were $1.04 per share. Our table shows such depreciation amounted to $50 per ton of fibre, the highest write-off of any company listed there. The Clinton ore reserve was reduced last year by removing 7.500.000 tons from the possible classification following the failure of testing to confirm. Clinton is now left with 7,285,000 tons of reserves., for an indicated life of some three and onelialf years. At the Cassiar mine the probable ore represents a 20 year life. Exploration in New Zealand lias not been encour aging. At Kutcho Creek, 60 miles southeast of Cassiar, the company has a substantial find, but it is not dear whether the grade is high enough to justify a large investment. The mines are operated under the high cost conditions of Northern British Columbia and the Yukon where they are located. Transportation expenses are heavy, but it may be possible in 1977 to ship through Anchorage, Alaska, thereby saving SI0-S12 per Ion. In tliat year an agreement to use Canadian government facilities expires. It is worth noting that in its 21 years of operating, Cassiar has not had one case of asbestosis. JOHN-MANV1LLE CORPORATION Johns-Manville las many divisions in addition to its asbestos mining. However, the Jeffrey mine in Quebec is the largest in the world and an important source of earnings. In 1974 the pretax profits from outside sales of asbestos were 23% of the total for the company. The total pretax gain from asbestos is not reported, but applying (lie same margins to all output including the 30% used internally by the other divisions of J.-M.. we unofficially estimate asbestos at about 32% of all pretax profits. Furthermore, the margin in asbestos was much er .o a r z 2. 2. o u -- r* ^ "2j*7e* S Om =f O ^ O " 2 ^ _ ID -* a. 5 a. o f* - a 3 Z 3* 5T 3a to N O ro o> i MTC 000354 I- the best of any division in 1974, At 31", it compared wifii 3.21:1. Actually the waste ratio in the early years at Midlothian 19% for all mining including asbestos, 11% for roofing. !( nay be only 16:1 and the fibre mix could be upped in value by for pip* and pipe products, 67i for industrial and other pro 1 the inclusion of more group four fibres which sell at very high ucts, 5% for thermal insulation and 47' lor general budding prices. For example, group fours averaged S442/(on in 1975 products. against S290 for live- and S211 for sixes. J.-M. completed a $75,000,000 program of improvement at The opportunities for long term growth have been much the Jeffrey in 1974, assuring an output of about 650,000 tons enhanced for United by bringing the Midlothian ore body into annually from reserves estimated at more than 40 years. The production. The i.<ilit vcntuic .1 l;..,cK Ijke witn A^iivo figures in our table are our own deductions for grade and costs. operated since 1958. now has estimated ore reserves of No official details are given. Two other small asbestos mines 100.320.000 tons grading 3.1%, or 50,160.000 to United's have been closed, one at Coatinga, California in 1974, with a interest. The Midlothian output will be based initially on about capability of 20,000 tons of fibre annually, and one in Ontario 32.000,000 tons of ore engineered for the null, but the total of in 197S, capable of 30,000 tons. We have not included J.-M.'s proven and probable exceeds 150,000.000 tons. United is not ownership of 30.6% of Advocate in our figures in the table. likely to hesitate to expand soon. Its Midlothian fibre has J.-M. had done a good job in thermal insulation prior to been well received in tests around the world. Some 70% of the energy crisis. Now, of course, the outlook for this business output is suitable for asbestos cement products. Orders to date is brilliant as saving heat energy is a necessity. J.-M. figures are about 217,000 tons or twice initial capacity. Tentative adequate insulation can save us 2,000,000 b/d of oil ultimately. offers to finance a doubling of the mill have already been Thermal insulation sales have grown from S159.993.000 in received but the management will probably want to run the 1970 to $294,445,000 in 1974. As fiberglass becomes more new operation for a lime before a final decision to go ahead. expensive and occasionally scarce, it may be asbestos will take Doubling the mill would not require as mucii investment as the over some more insulating work. Fiberglass used in all the initial installation, as many of the features of the complex company's divisions amounted to $240,418,000 in 1974, up would not have to be duplicated. The tax advantages of expan from $91,824,000 in 1970. Profits pretax in fiberglass were sion soon may weigh in the decision as credits for the construct oiT in 1974 to SI9,386,000 from S34.020.000 the preceding ion could be taken just as taxes bite. year. Asbestos sales in total we estimate last year at about A-rising curve in United's earning power per share is clearly, $90,000,000, earning S28.000.000. in prospect over the years. Soon Black Lake alone wilt mean The outlook for J.-M. when building picks up, both domes SI per share after the settlement of the strike and compensatory tically and industrially, is excellent. Meanwhile, the asbestos price increases. Midlothian stage one should mean about SI .50 mine and insulation should be very helpful (as mentioned more pretax, with* no taxes likely in the first years. Then before,J.-M. is not struck). A slide in the open pit January 21st Midlothian, too, might add another SI .SO per share at least, will cost about 80,000 tons of fibre this year and SS,000.000 if asbestos prices display their usual tendency to rise fairly in earnings, but the mine will be back to capacity by October. regularly. Incidentally, Midlothian in Ontario is not struck. By then we expect asbestos prices to be up again. Earnings in This new production will certainly be eagerly awaited by the the first quarter were 26 cents' per share on an overall drop in . trade. All in all shareholders are looking at S2SO pretax in two all divisions of 2S%. yean and over S4 in less than five years. The stock is scarcely The platinum discovery in Montana has been rather over one times such probable future earning power. We expect the looked by the market. The company reported early in I97S market to awaken to these values very soon. Management has it could be of "possible economic interest." Further work is been careful not to dilute the shareholders' interest, financing being done on holdings on a mineralized zone 24 miles by four a $30,000,000 expansion without dilution. - miles, which obviously could be a bonanza even if only partly mineralized. Some observers compare it to the famous Merensky LIFE PRESERVERS VS. LAWSUITS Reef in'South Africa, source of most of the free World's The criticism of asbestos as a health risk never did apply to platinum. the general public, according to the U.S. National Academy of Sconces. The danger to workers in asbestos plants has some UNITED ASBESTOS. INCORPORATED foundation if exposure extends over decades-with .inadequate United Asbestos' imminent substantial growth is sho*n by . protection. However, the industry has been aware of the risk the use of two columns of statistics in our table, one for the - for years and has increased the safety measures to at least an present joint venture at Black Lake, and the second for the adequate lcveL The criticism often seemed to single out asbestos enlarged company as it will operate by September, deriving as the most dangerous industrial material, yet actually fatalities . income not only from the joint venture but also from its occur in coal mines, natural gas is a deadly poison and so is 100% owned large mine at Midlothian. The annualized figures chlorine. Polyvinyl chloride, the base of many plastics, has. are for the fiscal years ended March 31st, the first column being been connected apparently with cancer of the liver, yet there for the 12 months March, I97S, and the second'column our is no thought.of banning it. Incidentally, a study started in unofficial estimate of a full 12 months of the enlarged company, 1966 by a group of Canadian doctors and scientist of 11,572 Le., the fiscal year March. 1977. From September on, this' persons born between 1891 and 1920 who were or are employ year, however, we expect annualized earning power to approx ed in the intensive asbestos industry in Quebec, found a lower imate the figures in our second column, and the quotation in mortality rate than for the general gopulgtion of Quebec. Abo the shares to react favorable to the great jump in earnings. Cassiar Asbestos in the last 20 years of operation has not had The addition of-at least another 100,000 tons of fibre from one reported case of aqy of the three diseases claimed to be Midlothian to the 74,840 last yeas from Black Lake should raise connected with asbestos. Actually, asbestos has saved thousands earnings by approximately 220% on a gain in tonnage of some of lives from death by fire as a superb insulation in homes, 130%. The relative increase in earnings is due to the much factories, theatres and shops, not to mention those saved by its higher grade of the ore and lower waste ratio at Midlothian. life preservers. The recoverable grade is 9.65% compared to 3.59% at Black Lake and the waste ratio over the mine's life 116:1 against June 30,1975* Robert A. Gilbert I MTC 000355 r