Af, Westshore Terminals Income Fund Management's Discussion & Analysis of Financial Condition and Results of Operations Investment in Fording Trust Liffect on Customer Contracts The Fund financed its investment in the Fording Trust through two credit facilities that were negotiated together by the Fund with a Canadian chartered bank and Great Pacific Capital Corp., a member of The Jim Pattison Group. Westar Group Ltd., another member of The Jim Pattison Group, is the manager of Westshore and the administrator of the Fund. Great Pacific Capital Corp. and an affiliate hold 14,807,300 units approximately 21% of all the outstanding units of the Fund. of the Fund representing The Fording Trust used the funds invested by Westshore, together with funds from other sources, to pay Fording’s securityholders the cash amounts to which they wete entitled under the Plan of Arrangement. Upon formation, the Coal Partnership became the world’s second-largest exporter of metallurgical coal. Westshore has contracts covering the five mines located in British Columbia owned by the Coal Partnership. In connection with the creation of the Coal Partnership, Westshore’s existing contract relating to the Elkview mine (which runs to 2010) was assigned to the Coal Partnership, and Westshore entered into a long term port services contract covering the three mines previously owned by Fording, which will run to February 29, 2012. These contracts provide that, subject to minor exceptions relating to customer preferences, all of the coal shipped from those mines through West Coast ports must be shipped through Westshore. In addition to the Fording Trust’s regular quarterly distributions, all holders of units of the Fording Trust (including the Fund) will be entitled to receive a special distribution of $1.48 per Fording Trust unit, payable as to one half with each of the first two regular quarterly distributions in 2003 made by the Fording Trust. In addition the Fund received a payment from Fording on closing of the Plan of Arrangement on account of expenses and costs incurred in relation to the transaction. The amount received by the Fund was approximately $8.0 million net of identifiable external costs such as financing and professional fees. On February 28, 2003, Fording Inc. completed a Plan of Arrangement which created the Fording Trust. As part of the broader transactions relating to the Plan of Arrangement: The Canadian chartered bank provided a $120 million three-year senior non-revolving term loan facility on a syndicated basis. Great Pacific Capital Corp. provided a $30 million four-year subordinated non-revolving loan. Each loan is at a floating rate of interest with no scheduled repayments prior to maturity. Mandatory prepayments are required from the proceeds of disposition of assets (including the units of the Fording Trust owned by the Fund) and proceeds of any unit or debt offering by the Fund. Prior to August 31, 2004, any proceeds of a unit or debt offering are to be applied first to prepayment of the $30 million subordinated facility. ® the Fund subscribed for $150 million worth of trust units of the Fording Trust, representing approximately 9.1% of the units of the Fording Trust; e Fording Trust acquired all the issued and outstanding shares of Fording Inc.; ® Fording sold its thermal coal operations to Luscar Ltd. (“Luscar”) and Fording purchased the metallurgical coal operations of Luscar; ° Fording and Teck Cominco Limited entered into a partnership (the “Coal Partnership”), Fording holding a 65% interest in the Coal Partnership and Teck Cominco holding a 35% interest in the Coal Partnership; and ° the Coal Partnership acquired the metallurgical coal operations of Fording, Luscar and Teck Cominco.