Zemex Corporation
1996
Annual Report
Financial Highlights



                                        1996           1995            1994
SUMMARY OF OPERATIONS
Net Sales	                 $86,420,000    $85,056,000       55,306,000
Net Income                         2,612,000      8,418,000        6,250,000
Capital Expenditures              16,426,000     15,451,000        3,077,000
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FINANCIAL POSITION
Working Capital                  $18,688,000    $19,709,000      $26,046,000
Shareholders' Equity              70,997,000     70,900,000       54,052,000
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PER COMMON SHARE
Net Income                            $ 0.33        $ 1.03            $ 1.12
Shareholders' Equity                    8.59          8.49              7.54
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Average Common Shares and 
  Common Share Equivalents 
        Outstanding                8,000,522     8,208,874         5,588,682

Common Shares Issued and 
  Outstanding at Year End          8,269,099     8,355,722         7,168,153
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TABLE OF CONTENTS

	To Our Shareholders                         2
	Industrial Minerals                         4
	Metal Powders                               6
	Alumitech                                   8
        Management's Discussion and Analysis       10
        Independent Auditors' Report               17
        Management's Report                        18
	Audit Committee Report 	                   18
	Financial Statements 	                   19
        Notes to Financial Statements              23
        Selected Financial Data                    41


<PAGE 2>


TO OUR SHAREHOLDERS

The year 1996 was one of disappointment tempered by accomplishment.
The cost of  resolving several operating issues coupled with  poor earnings
performance in some areas took a significant toll on the bottom line.
However, great strides were made towards building a solid future as many of
our capital and research programs were successfully completed. The
Corporation made real progress in improving the efficiency of resource
production and more is to come. Certainly the efforts and accomplishments
of 1996 should make a positive contribution to the future earnings of the
Corporation.


Industrial Minerals

During the first quarter of 1996, the Corporation's feldspar, talc and mica
divisions were combined into one organization, Zemex Industrial Minerals.
Peter Goodwin, Vice President of Zemex and previously President of the talc
and mica operations, was appointed President of the new organization and is
currently implementing a plan to capitalize on the marketing, management
and operating synergies of this group. The year also saw the construction
of a low iron sand plant; the low iron sand material, which is used in
high-technology glass applications is being sold pursuant to a long term
contract.  The project was completed on time and on budget. In addition,
by year end, work was near completion on the installation of a new fine
grind milling facility at Benwood, West Virginia. Increased revenue
attributable to these two projects should enhance the profitability of
the industrial minerals segment in 1997 and beyond.


Unfortunately, the minerals group suffered some major setbacks in 1996
and, consequently, earnings were negatively affected. A $1.8 million
charge was taken during the first quarter in connection with the
reorganization and the write-down of inventory that had been exported in
an attempt to penetrate the Brazilian feldspar market. Furthermore, during
the fourth quarter, the Corporation recognized the write-down of parts and
supplies that had been rendered obsolete as the result of the Spruce Pine
expansion. A reserve of $750,000 was also taken at year end due to the
default by the purchaser of a property previously sold by the Corporation
in August 1995.


Alumitech

Nowhere was the dichotomy of the year more evident than at Alumitech. On
one hand, Alumitech made great progress in refining its process and
developing new alternative commercial applications for its non-metallic
product ("NMP"). On the other hand, decreasing aluminum prices over the year
overshadowed Alumitech's record throughput levels and prevented it from
being profitable.


Consistent with its long term objective of commercializing its proprietary
technology, Alumitech signed a letter of intent with IMCO Recycling Inc.,
the world's largest aluminum recycler, to jointly construct the first of
the dross reprocessing "super plants". Under the terms of the agreement,
IMCO will supply the required feedstock and Alumitech, for its part, will
contribute its closed loop technology. Although the joint venture agreement
has not yet been signed, both parties are working to this end.


<PAGE 3>

Alumitech has also initiated a $3.5 million capital project at its
Cleveland location to construct a full-scale facility to commercialize
NMP and derivative products.

Earlier in the year, Alumitech was awarded the maximum grant allowable
under the federal government's NICE3 program, underscoring its contribution
and future importance to the environment. Specifically, Alumitech's patented
closed loop technology allows it to convert NMP, the waste by-product that
results from reprocessing dross and saltcake materials, into usable
commercial products. The NICE3 program, sponsored jointly by the Department
of Energy and the Environmental Protection Agency, is a national competition
awarding grants to assist companies in the commercialization of processes
which improve competitiveness, foster energy efficiency, and reduce waste
and waste treatment. Alumitech was one of only 17 companies to receive this
award.

Metal Powders

The metal powder group had a less than satisfactory year. Sponge iron
product sales exceeded expectations, but atomized sales failed to
materialize to the levels forecasted. However, a number of new products were
developed during the year, and some were brought to commercialization. One
such product was a manganese sulfide material. Toward the end of the year,
the Corporation also introduced test materials from its development of high
molybdenum containing powders.

We believe that 1997 should be a solid year for the metal powders group
with the continuation of strong sponge iron sales, the introduction of new
products, and a greater focus on the strategic direction of our atomized
and non-ferrous materials into niche markets.

Share Repurchase

The Corporation has been repurchasing its common stock from time to time
on the open market since the end of 1994. Since the share repurchase program
was first initiated, it has repurchased 773,000 shares in total for the
treasury. The board of directors has recently given its approval for the
purchase of up to another 5% of the Corporation's issued and outstanding
shares.

Outlook

The year 1996 was meant to be a transition year with all businesses
performing better than the 1995 results. This did not happen; however, we
anticipate that 1997 will attain and hopefully surpass many of those
benchmarks set for 1996. We have introduced new products, improved
efficiencies and, generally, are well poised to increase overall sales and
improve margins.

We are most grateful for the contribution of our board of directors,
the continued support of our shareholders and, most particularly, for
the outstanding endeavors of our employees in a very difficult year. We
believe that 1997, the Corporation's ninetieth year in business, should
start to see the benefit of our efforts of the past two years.


Richard L. Lister                               Peter Lawson-Johnston
President and Chief Executive Officer           Chairman


<PAGE 4>

Industrial Minerals

In 1996, the Corporation's feldspar, talc and mica operations were
combined into one group, Zemex Industrial Minerals ("ZIM"), to take
advantage of the synergistic strengths and resources that exist among the
various businesses.

As a result of the reorganization, ZIM is benefiting from the depth and
experience of its restructured sales and marketing team, particularly in
the talc area. The market focus of the new organization is divided into
three areas: ceramics; plastics, coatings and specialty products; and
international sales, with each area assigned a dedicated sales team.
The realignment of the sales and marketing force by market should reduce
expenses, improve efficiency and, most importantly, increase the amount of
time spent with customers. As a result, customer service will be enhanced
and sales should increase.

The consolidation also brings with it significant operational efficiencies.
The implementation of centralized management allows for cross-fertilization
of ideas, knowledge and experience across the organization. In addition,
ZIM is now able to justify the creation and retention of specialized groups,
such as its new engineering team. This team is dedicated to maximizing the
efficiency of each of the operating units with a specific focus on unit cost
reduction and capital expansion programs. The consolidation also serves to
heighten financial controls.

Ceramics
Despite the work involved with the reorganization in 1996, ZIM remained
sharply focused on its strategy of being a major supplier to niche industries.
The group posted a record year for shipments of its sodium feldspar due to
increased presence and a strong market for ceramic floor tiles and plumbing
fixtures. The group also experienced significant volume growth in potassium
feldspar, attributable to a shift in marketing strategy. ZIM concentrates
on being the major supplier to niche markets and has achieved that goal in
the sanitaryware and ceramic tile industries. The company currently enjoys
a strong position in the domestic sodium feldspar market and, with the
recent capacity expansion at its plant in Spruce Pine, North Carolina,
anticipates that as demand continues to grow, its market share will as well.

In keeping with its by-product utilization strategy, the industrial minerals
group recently completed the construction of a new low iron sand plant at
its Spruce Pine location. Using a sophisticated and highly controlled
process, a low margin by-product is converted into a high value-added
material for use in specialized glass applications. The product is sold
pursuant to a long term contract and is expected to make a healthy
contribution to future earnings.

Plastics, Coatings and Specialty Products
In 1996, the focus at the mica operation was twofold: enhance the efficiency
and cost effectiveness of the processing plant and develop new products and
markets. As a result of its product development effort, ZIM will introduce
an improved treated mica in the spring of 1997. This new surface modified
product offers plastic compounders a potential substitute for more expensive
fiberglass reinforcements.


<PAGE5>

The talc business continues to develop market share with its regular grades;
however, this process is slow as it entails winning market share from other
producers. As part of the company's strategy to seek out niche business
opportunities for value-added products, a fine grind milling system was
installed at the Benwood, West Virginia facility to produce ultra fine
products. These products have met with ready customer acceptance and
commercial shipments are in the initial phase. Expanding the market share
for ZIM'S talc business will continue to have a very high priority in 1997.

The development of our new feldspar product line, Felex, for the coatings
industry was also completed in 1996. The line is getting positive response
from the industry and samples are being evaluated by target accounts.
While the product line must still be evaluated by customers, the company
is optimistic about its potential given the quality of, and established
demand for, the Felex product.

International
ZIM's initial foray into the Brazilian market in late 1995 was an
unsuccessful and expensive learning experience. However, in 1996, the
international sales and marketing efforts were successful in increasing the
sales of the company's clay and talc into Mexico. As well, by entering into
an agreement with a toll grinder, ZIM was able to profitably export feldspar
to Italy.

The Future
The reorganization of the industrial minerals group has given birth to a
stronger and more cohesive business unit, combining the best aspects of
management, products, plants and processes from three established
operations. It is with this dynamic framework that Zemex Industrial Minerals
will focus on moving forward and growing the business.


<PAGE 6>


Metal Powders

Pyron Corporation, originally incorporated in 1940, was acquired by Zemex in
1977. During the past five years, Pyron has augmented its sponge iron
production with the addition of an atomizing facility in Niagara Falls,
New York and the acquisition of two non-ferrous businesses, one in Maryville,
Tennessee and another in Greenback, Tennessee. As a result, Pyron has
evolved from a single market supplier into a broad spectrum ferrous and
non-ferrous metal powder producer serving a diversity of markets.

During the 1990s, advanced technology has accelerated market growth for
atomized powders as they displaced other traditional methods of production
such as machining, casting and forging. These rapid technological
developments dictate that continuous improvements be made to both the
critical characteristics of materials used in powder metallurgy ("P/M")
and Pyron's strategy with respect to the marketplace.

Hydrogen Reduced Sponge Iron
Ten years ago, trends in the P/M market indicated that hydrogen reduced
sponge iron would be replaced by atomized materials. Ten years later, due
in part to a healthy friction market and the growth of alternative
applications, the demand for sponge iron continues to grow. In order to
ensure that Pyron maintains its competitive position in the marketplace,
cost improvements have recently been implemented at the sponge iron plant
in Niagara Falls, New York. Plans are also underway to optimize sponge
production capacity and to expand the company's focus to the global friction
market.

Atomized Products
During the past three years, industry capacity of atomized products has
significantly outstripped market demand with industry shipments in 1996
indicating only a marginal improvement. Moreover, a major portion of Pyron's
atomized business, and that of the industry, is tied to automotive and
related industries. The cost pressures that the automotive manufacturers are
undergoing would appear to indicate that there is little likelihood of price
relief in the immediate future. In response to these market conditions, Pyron
changed its strategic direction in 1996 to one of creating new specialty
products and services and identifying alternative sectors where these
value-added products can be sold. Research and marketing efforts to support
this strategy are underway and it is anticipated that Pyron will introduce
a number of new products over the next eighteen months.

Non-Ferrous Powders
In 1992, Pyron acquired a copper powder producer in Maryville, Tennessee.
In 1994, it acquired the assets of another non-ferrous producer in nearby
Greenback, Tennessee. In 1996, in order to optimize production efficiencies
and lower operating costs, the two Tennessee plants were consolidated. In
addition, a new water atomized copper powder process was successfully
commissioned at the Greenback location during the third quarter. The
start-up of this high capacity system enables Pyron to be more aggressive
in pursuing the growing market for water atomized copper.



<PAGE 7>

Manganese Sulfide
In late 1995, as part of its niche market focus, Pyron announced its
intention to become the only U.S. producer of manganese sulfide. Manganese
sulfide is an additive used by the P/M industry to enhance tool life and
aid in machinability. For Pyron, this product is a natural complement to its
core ferrous and non-ferrous businesses. For Pyron's customers, it means a
reliable low cost domestic source of this essential material. Machinability
and fatigue tests have shown Manganese Sulfide Plus (MnS+ TM) to be superior
to any P/M machinability enhancer on the market. Construction of a facility
to produce this newly developed product was completed in late 1996 at the
Greenback location and the new material is now commercially available.
Response from customers has been very positive.

Custom Blends
In response to changing dynamics in the P/M marketplace, Pyron constructed
a specialized blending facility in St. Marys, Pennsylvania in 1995. Through
this location Pyron is able to provide warehousing, custom pre-packaged
powders, and just-in-time service to its customers. As anticipated, many
customers are discovering that it is more cost efficient to purchase
pre-blends, such as those offered by the St. Marys plant, than to blend
in-house. Strategically, the St. Marys blending facility will play a
significant role going forward as the P/M market continues to evolve and
customers consolidate vendors, pool purchases and demand more from suppliers.
The blending plant plays a dual role as a service center and as an additional
channel of distribution for Pyron's products.

The Future
Pyron's long term focus includes capitalizing on its hydrogen reduced
sponge iron and developing new value-added products using its ferrous and
non-ferrous atomizing processes. Pyron's business is predicated on the
development of products and market segments where it can utilize its unique
production methods to enhance customer efficiency.


<PAGE 8>

Alumitech
Alumitech's strategy has been to create an environmentally friendly,
economically competitive process that will convert aluminum waste
by-products normally diverted to landfill into commercially saleable
products. The process includes the recovery of aluminum metal and
salt fluxes, which are sold back to the secondary aluminum industry, and
the reclamation of non-metallic products ("NMP"), predominantly metallic
oxides.

Conventional dross processors simply recover aluminum metal and send any
remaining materials to landfill. However, with its patented technology and
technical expertise, Alumitech is able to divert NMP from landfill and
convert it into raw materials for commercial products. Alumitech is the
industry leader in the development of alternative uses for NMP; it has
developed the ability to use NMP in the production of refractory ceramic
fiber, as well as products for the chemical and metallurgical industries.

The Process
The secondary aluminum industry is the major source of feedstock for
Alumitech's process. The melting process used by the secondary aluminum
industry causes the exposed surface of the molten aluminum to oxidize and
form a protective barrier. Salts are added to increase metal recovery and
facilitate the separation of the metal from the oxides. The molten salts
form a barrier layer, containing 8-15% aluminum, which is skimmed off and
cooled. The resultant product is known as black dross. Black dross is the
primary feedstock for Alumitech's process.

Conventional dross processors break down the dross into two parts: aluminum,
which is sold back to secondary smelters, and saltcake, which is typically
landfilled. This is where Alumitech differentiates itself. Alumitech
separates saltcake and black dross into their basic components: aluminum
metal, alumina and metal fines, salts, and NMP. In addition, using its
proprietary process, Alumitech can also further refine the NMP for use in
the production of commercially acceptable industrial products.

NMP Applications
Alumitech has developed several applications for NMP. The first, a high
temperature refractory ceramic fiber, is used as insulation in industrial
applications where temperatures range up to 2000 degreesF. During 1996,
using NMP as a raw material, ceramic fiber was successfully produced in a
large-scale pilot trial, and the quality of the test material positively
verified by independent third parties. The test was of importance because
it demonstrated that, by applying Alumitech's patented process, NMP could be
used in the production of commercial products.

Encouraged by these results, Alumitech continues to seek other possible
applications for NMP. A number of products have been developed and yielded
positive assessments when tested by potential customers. Likely markets
for the new products are the steel and cement industries, refractories and
the brown alumina markets.



<PAGE 9>

As part of Alumitech's focus on developing derivative products from NMP,
engineering is currently being completed to retrofit the Cleveland facility
for the commercialization of NMP. The expanded facility, which will include
full-scale pyrometallurgical and hydrometallurgical operations, will be
dedicated to the production of products derived from NMP. It is anticipated
that this capital project will cost approximately $3.5 million and be
completed by the end of 1997.

National Award
Recently, Alumitech was the recipient of a $400,000 federal grant,
awarded jointly by the Department of Energy and the Environmental Protection
Agency. The award is in recognition of Alumitech's technical achievements
and is to contribute to the commercialization of NMP-derived products
produced using its proprietary process. Alumitech was one of only seventeen
companies nationwide to be recognized under this program.

The Future
The next major step in Alumitech's growth is the construction of a
large-scale facility. To this end, in November 1996, Alumitech signed a
letter of intent with respect to forming a joint venture with IMCO Recycling
Inc. The proposed joint venture is for the construction of a large-scale
facility, which would see Alumitech contributing its proprietary technology,
IMCO supplying the required feedstock, and both parties contributing equally
to the capital requirements. It is anticipated that a joint venture agreement
will be signed over the course of the next several months.

Environmental protection and liability are very contentious issues these days.
Accordingly, as litigation and legislative activity increase, so has the
potential liability associated with landfilling. It is with this in mind
that Alumitech continues to lay the groundwork for its new "super plant" and
to develop alternative applications for NMP.



<PAGE 10>

Management's Discussion And Analysis 


The following is a discussion and analysis of the financial condition
and results of operations of the Corporation for the years ended
December 31, 1996, 1995 and 1994, and certain factors that may affect the
Corporation's prospective financial condition and results of operations.
The following should be read in conjunction with the Consolidated Financial
Statements and related notes thereto.

OVERVIEW

The Corporation is a diversified producer of specialty materials and
products for use in a variety of industrial applications. The Corporation
operates in two principal business segments: (i) industrial minerals, which
includes The Feldspar Corporation, Suzorite Mica Products Inc. and Suzorite
Mineral Products, Inc.; and (ii) metal products, which includes Pyron
Corporation, Pyron Metal Powders, Inc. and Alumitech, Inc.

During 1994, the Corporation acquired the assets of Greenback Industries,
Inc.; the talc operations of Whittaker, Clark & Daniels, renamed Suzorite
Mineral Products, Inc.; and a 42% interest in Alumitech, Inc. In 1995, the
Corporation completed its acquisition of 100% of Alumitech, Inc. and
acquired a mineral processing facility in Benwood, West Virginia.

The Corporation's strategy going forward is to enhance its position as a
leading supplier of specialty materials through investments in its core
businesses, the introduction of new products, strategic acquisitions, and
investments in new technologies.

RESULTS OF OPERATIONS

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Net Sales
------------------------------------------------------------------------
                                1996         1995      Change  Change
------------------------------------------------------------------------
Industrial Minerals      $40,469,000  $37,089,000  $3,380,000    9.1% 
Metal Products            45,951,000   47,967,000  (2,016,000)  (4.2%)
                       --------------------------------------
                         $86,420,000  $85,056,000  $1,364,000    1.6%
------------------------------------------------------------------------        
The Corporation's net sales for 1996 were $86.4 million, an increase of
$1.4 million, or 1.6%, from 1995. The major components of the increase were:
the full year consolidation of Alumitech, Inc. and increased industrial
minerals sales of $3.4 million, offset by decreased metal powder sales of
$2.7 million.

The industrial minerals segment recorded a 9.1% increase in sales from
$37.1 million in 1995 to $40.5 million in 1996. The increase was due to a
$1.7 million increase from the feldspar group, a $1.2 million increase in
the talc group's sales and a $0.5 million increase in sales of phlogopite
mica.


<PAGE 11>


The increase in talc sales is largely due to the inclusion of a full year's
sales from the Benwood facility, which was acquired in May 1995. Talc sales
are expected to increase in 1997 as new products are introduced and approved
by customers. Feldspar sales continue to grow steadily due to increased
demand from ceramic manufacturers and increased availability of the new low
iron sand product.

Net sales of the metal products group decreased 4.2%, or $2.0 million, from
$48.0 million in 1995 to $46.0 million in 1996. Of this decrease, $2.1
million is primarily due to lower copper prices and slightly lower volume of
copper sales affecting sales at Pyron Metal Powders, Inc. as well as a $1.3
million decline in atomized steel sales. These decreases were offset in part
by increased sales of $0.7 million from Alumitech, Inc. Sponge iron sales
increased by 2.3% while atomized steel sales decreased 21.2%. In 1997,
modest sales growth in both metal powders and aluminum dross processing is
anticipated.

Cost of Goods Sold

Cost of goods sold were $66.4 million in 1996 compared to $64.4 million in
1995. The corresponding gross margin was 23.1% for 1996 and 24.3% for 1995.
The decline in gross margin was primarily due to lower aluminum prices. The
decline in aluminum prices realized in 1996 compared to 1995 resulted in
margin erosion of 1.8%, offsetting a slight improvement achieved by the other
groups. In addition, cost of goods sold was negatively affected by the
write-down of parts and supplies that had been rendered obsolete as the
result of the expansion of the sodium feldspar plant at Spruce Pine, North
Carolina.

Selling, General and Administrative Expenses

Selling, general and administrative expense ("SG&A") increased 21.0% from
$8.7 million in 1995 to $10.5 million in 1996. As a percent of sales, SG&A
was 12.1% in 1996 as compared to 10.2% in 1995. The increase was the result
of the full year consolidation of Alumitech, Inc. in 1996 and the addition
of sales and marketing staff for the industrial minerals segment. It is
anticipated that there will be minimal increases in SG&A as future sales
increase.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization increased by $1.0 million, or
27.2%, from $3.7 million in 1995 to $4.7 million in 1996. This increase
results from the 19.4% net increase in property, plant and equipment during
1996 as a result of capital expenditures. Prospectively, depreciation will
continue to increase as current capital programs are placed into service.

Operating Income Before Reorganization Charges

Operating income before reorganization charges was $4.8 million in 1996
compared to $8.3 million in 1995. A $1.8 million reorganization charge was
recognized in the first quarter of 1996 in connection with the
reorganization of the Corporation's industrial minerals division, a
write-down to market of its Brazilian inventory, and the recognition of a
provision for storage costs and selling expenses in connection thereto.


<PAGE 12>

Operating Income

Operating income after reorganization charges decreased to $3.1 million for
fiscal 1996 from $8.3 million in fiscal 1995, representing a 63.2% decline.
This decline was due to reasons discussed previously.

Interest Expense, Net

Net interest expense for the year ended December 31, 1996 was $0.9 million,
an increase of $0.4 million over 1995. This is attributable to an increase
in total indebtedness from $13.1 million in 1995 to $26.6 million in 1996.

Other, Net

In 1996, the Corporation recognized other net expense of $0.5 million. The
largest component of this expense was a $0.7 million provision relating to a
property sale that the purchaser had defaulted on. The offset was a number
of small income items which reduced the total expense.

Recovery of Income Taxes

In 1996, the Corporation realized an income tax recovery of $0.9 million as
compared to a recovery of $0.5 million in 1995. The recoveries reflect the
recognition of the benefit of net operating losses available to the
Corporation. In 1997 and beyond, the Corporation will incur an effective tax
rate of approximately 35% to calculate its income taxes, reflecting the
ongoing permanent difference arising from a percentage depletion allowance.

Net Income and Earnings Per Share

As a result of the factors discussed above, net income for the year ended
December 31, 1996 was $2.6 million, a decrease of $5.8 million from 1995. As
the impact of the recognition of the benefits of the loss carryforwards is
significant, the Corporation's earnings per share have been restated below
on a fully-taxed basis using an effective rate of 35%.

--------------------------------------------------------------------------
                                                      1996            1995
Pre-Tax Income                                  $1,663,000      $7,899,000
Primary EPS(as reported)                             $0.33           $1.03
EPS(fully taxed at 35%)                              $0.14           $0.63
--------------------------------------------------------------------------


<PAGE 13>


Results of Operations
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Net Sales
--------------------------------------------------------------------------
                                     1995        1994      Change   Change
Industrial Minerals	      $37,089,000 $30,378,000 $ 6,711,000    22.1%	
Metal Products		       47,967,000  24,928,000  23,039,000    92.4%
                              -----------------------------------
                              $85,056,000 $55,306,000 $29,750,000    53.8%
--------------------------------------------------------------------------

The Corporation's net sales for 1995 were $85.1 million, an increase of
$29.7 million, or 53.8%, from 1994. The major components of the increase
were:  the consolidation of Alumitech, Inc., $13.6 million; increased
industrial mineral sales, $6.7 million; and increased metal powder sales,
$9.4 million.

The industrial minerals segment recorded a 22.1% increase in sales from
$30.4 million in 1994 to $37.1 million in 1995. The change was due to an
incremental $6.0 million in sales from the talc operations which were
acquired December 1, 1994 and a $2.0 million increase from the feldspar
group, offset in part by lower sales of phlogopite mica.

Net sales for the metal products group increased $23.0 million, or 92.4%,
from $24.9 million in 1994 to $48.0 million in 1995. Of this increase,
$13.6 million was due to the consolidation of Alumitech, Inc., which was
previously accounted for as an equity investment. Sales from the metal
powder group increased 38.0% in 1995, primarily due to increased non-ferrous
sales following the September 1994 acquisition of Greenback Industries, Inc.
Sponge iron sales increased by 4.7% while atomized steel sales increased
20.0%, notwithstanding the significant negative impact of the explosion of
the atomization furnace at the plant in Niagara Falls, New York in March
1995.

Cost of Goods Sold

Cost of goods sold were $64.4 million in 1995 compared to $40.6 million in
1994. The corresponding gross margins were 24.3% for 1995 and 26.7% for
1994. The decline in gross margin was due to several factors: a decline in
high-end mica product sales; an increase in sales of several lower margin
industrial mineral products; and lower margins due to competitive pressures in
certain metal powder product lines.

Selling, General and Administrative Expenses

SG&A increased 31.4% from $6.6 million in 1994 to $8.7 million in 1995. The
increase was the result of acquisitions in late 1994 and early 1995. As a
percent of sales, SG&A was 10.2% in 1995 as compared to 11.9% in 1994,
reflecting the benefit derived from higher volumes.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization increased by $1.4 million, or
59.4%, from $2.3 million in 1994 to $3.7 million in 1995. This increase was
driven by the 73.2% increase in property, plant and equipment during 1995 as
a result of acquisitions and capital expenditures.


<PAGE 14>


Operating Income

Operating income rose to $8.3 million for fiscal 1995 from $5.8 million in
fiscal 1994. While this represents a 42.8% increase, the operating margin
declined from 10.6% in 1994 to 9.8%  in 1995. This decline was due to reasons
discussed previously.

Interest Expense, Net

Net interest expense for the year ended December 31, 1995 was $0.5 million,
an increase of $0.1 million over 1994. This is attributable to an increase
in total indebtedness from $6.7 million at December 31, 1994 to $13.1
million at December 31, 1995, offset in part by a decline in interest
rates.

Recovery of Income Taxes

In 1995, the Corporation realized an income tax recovery of $0.5 million as
compared to a recovery of $0.7 million in 1994. The 1995 recovery reflects
the recognition of the benefit of the balance of the net operating tax loss
carryforwards available to the Corporation.

Net Income and Earnings Per Share

As a result of the factors discussed above, net income for the year ended
December 31, 1995 was $8.4 million, an increase of $2.2 million from 1994.
As the impact of the recognition of the benefits of the loss carryforwards
is significant, the Corporation's earnings per share have been restated
below on a fully-taxed basis using an effective rate of 35%.

-------------------------------------------------------------------------
                                                    1995            1994
Pre-Tax Income                                $7,899,000      $5,579,000
Primary EPS(as reported)                           $1.03           $1.12
EPS(fully taxed at 35%)                            $0.63           $0.65
-------------------------------------------------------------------------

Liquidity and Capital Resources

The Corporation has historically funded its extraction and processing
activities through cash flow from operations, bank debt and sales of capital
stock and warrants. During the most recent three-year period ended December
31, 1996, the Corporation partially funded all capital expenditures,
acquisitions and debt reduction from a combination of additional debt and
cash flow from operations. In addition, in September 1994 the Corporation
completed a public offering, raising net proceeds of approximately $18.5
million. During 1995, outstanding warrants were exercised which resulted in
net proceeds of $4.8 million. These funds were utilized in part to repay
long term debt, fund acquisitions and purchase treasury stock.


<PAGE 15>


Cash Flow from Operations

The Corporation had $18.7 million of working capital at December 31, 1996,
compared to working capital of $19.7 million at December 31, 1995. Net cash
provided by operating activities for the year ended December 31, 1996 was
$6.0 million, down $1.2 million, or 16.4%, relative to 1995. Earnings before
interest, taxes, and depreciation, depletion and amortization for the year
ended December 31, 1996 were $7.3 million, a decrease of 39.7% over the
$12.1 million generated in 1995.

Financing Agreements

In March 1995, the Corporation entered into a $30.2 million credit facility
with a syndicate of two banks. The credit facility is further subdivided
into four facilities: (i) a $10.0 million revolving credit and term loan
facility; (ii) a $10.0 million multiple advance term loan facility; (iii)
a $5.2 million standby letter of credit; and (iv) a $5.0 million operating
line. These facilities are secured by specific assets and a floating charge
over a significant portion of the Corporation's assets. The facilities bear
interest at rates varying from bank prime to bank prime plus 0.25% and from
LIBOR plus 1.25% to LIBOR plus 2.25%, depending upon the financial position
of the Corporation. As at December 31, 1996, there was $5.0 million
outstanding under the operating line, $9.2 million outstanding under the
multiple advance term loan facility, $5.0 million outstanding under the
revolving credit and term loan facility and the standby letter of credit was
issued to secure the Corporation's Industrial Revenue Bond. The operating
line matures June 30, 1997 and is reviewed annually for renewal. The multiple
advance term loan facility requires quarterly payments of $0.3 million which
commenced April 1, 1996 with the balance outstanding, if any, due
January 1, 2000.

Capital Expenditures

The Corporation's primary capital activities in the past involved the
acquisition and development of industrial mineral properties and facilities
and necessary capital investments to maintain operating viability and meet
environmental, health and safety standards at its existing operations. During
1996, capital expenditures were $16.4 million compared to $15.5 million and
$3.1 million for the years ended December 31, 1995 and 1994, respectively.
The capital expenditures were funded by cash on hand, cash flow from
operations and an increase in total bank indebtedness of $13.5 million.

The Corporation is currently implementing and/or planning several major
capital programs. These include the retrofitting of the aluminum dross plant
in Cleveland and the construction of a new aluminum dross processing
facility in connection with a proposed joint venture. In aggregate, 1997
capital expenditures are anticipated to be approximately $16 million. The
Corporation plans on funding these from a combination of cash flow from
operations and credit facilities.

Although the Corporation's capital budgets provide for certain reclamation
and environmental compliance activities, management does not believe that
the cost of the Corporation's environmental compliance will have a material
adverse effect on the Corporation's results of operations or financial
condition in 1997. The Corporation has no definitive acquisition agreements
with respect to additional property or other acquisitions. The Corporation
will, however, continue to monitor potential strategic acquisitions that
would enhance its current activities.


<PAGE 16>


Seasonality and Inflation

Although the Corporation's results from extraction and processing operations
are cyclical due to fluctuations in demand for industrial minerals and metal
products, sales of the Corporation's products are generally not seasonal.
Inflation in recent years has not adversely affected the Corporation's
results of operations or costs, and is not expected to adversely affect the
Corporation in the future unless it grows substantially and the markets for
industrial minerals suffer from a negative impact on the economy in general.


Capital Stock

The capital stock of Zemex Corporation is traded on the New York Stock
Exchange. The price range in which the stock has traded is shown for the
past two years in the following tables.


Capital Stock Prices
--------------------------------------------------------------------------
1996                                 Q1         Q2      Q3      Q4    Year
--------------------------------------------------------------------------
High                                 10      9 5/8   8 1/8   8 7/8      10
Low                               8 7/8      7 1/2   6 7/8       7   6 7/8
Close                             9 1/8      7 5/8   7 3/4       7       7
--------------------------------------------------------------------------
1995                                 Q1         Q2      Q3      Q4    Year
High                             10 7/8     10 7/8  10 7/8      10  10 7/8
Low                               8 3/8          9   9 1/8   8 1/4   8 1/4
Close                            10 5/8      9 3/8   9 5/8      10      10
--------------------------------------------------------------------------

In the fourth quarter of each of 1996, 1995 and 1994, the Corporation
declared a two percent stock dividend.

As of December 31, 1996, there were approximately 1,618 holders of record
of the Corporation's capital stock. This number includes shares held in
nominee name and, thus, does not reflect the number of holders of a
beneficial interest in the stock.


<PAGE 17>


Independent Auditors' Report

To the Shareholders and 
Board of Directors of Zemex Corporation

We have audited the accompanying consolidated balance sheets of Zemex
Corporation and its Subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Zemex Corporation and its
Subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles in the United States.

Deloitte & Touche
Chartered Accountants

Toronto, Ontario
January 31, 1997


<PAGE 18>


Management's Report

The management of Zemex Corporation and its subsidiaries has the
responsibility for preparing the consolidated financial statements presented
in this Annual Report and for their accuracy and integrity. The statements
have been prepared in conformity with generally accepted accounting
principles in the United States, and include informed judgments and
estimates as required. Other financial information in this Annual Report is
consistent with the financial statements.

Zemex Corporation's system of internal controls is designed to provide
reasonable assurance, at a justifiable cost, as to the reliability of
financial records and reporting and the protection of assets. This system
includes organizational arrangements with clearly defined lines of
responsibility.

Deloitte & Touche, independent auditors, have audited the consolidated
financial statements of Zemex Corporation and their opinion is included on
the preceding page.

Zemex Corporation has formal standards of corporate conduct and policies
regarding high standards of ethics and financial integrity. These policies
have been disseminated to appropriate employees and internal control
procedures provide reasonable assurance that violations of these policies,
if any, are detected.


Allen J. Palmiere                       Richard L. Lister
Vice President and 			President and Chief Executive Officer
Chief Financial Officer 


Audit Committee Report

The Audit Committee of the Board of Directors is composed of three
independent directors, Patrick H. O'Neill, Chairman, John M. Donovan, and
Thomas B. Evans, Jr. The Committee held three meetings during 1996.

The Audit Committee oversees the financial reporting process of the
Corporation on behalf of the Board of Directors. In fulfilling its
responsibility, the Committee recommended to the Board of Directors,
subject to shareholder approval, the selection of the Corporation's
independent auditors. The Audit Committee met with management and
representatives of the auditors, Deloitte & Touche, to review accounting,
auditing and financial reporting matters. The Committee met with Deloitte
& Touche representatives without management present.

Patrick H. O'Neill
Chairman, Audit Committee


<PAGE 19>



Consolidated Balance Sheets

--------------------------------------------------------------------------
December 31                                           1996           1995
--------------------------------------------------------------------------
ASSETS
Current Assets
  Cash and cash equivalents                 $    2,279,000    $  1,653,000
  Accounts receivable (less allowance 
     for doubtful accounts of $452,000 
     at December 31, 1996 and $386,000 
     at December 31, 1995)(Note 15)             15,003,000      13,165,000
  Inventories (Note 3)                          18,171,000      20,176,000
  Prepaid expenses 	                         1,388,000         841,000
  Deferred income taxes(Note 6)                  1,013,000               -
--------------------------------------------------------------------------
                                                37,854,000      35,835,000
Property, Plant and Equipment(Notes 4 and 8)	62,084,000      50,271,000
Other Assets (Note 5)                            9,438,000      10,575,000
--------------------------------------------------------------------------
                                            $  109,376,000    $ 96,681,000
--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Bank indebtedness(Note 8)                 $    6,590,000    $  3,220,000
  Accounts payable                               7,091,000       8,037,000
  Accrued liabilities                            2,983,000       2,222,000
  Accrued income taxes                             301,000         269,000
  Current portion of long term debt (Note 8)	 2,201,000       2,378,000
--------------------------------------------------------------------------
                                                19,166,000      16,126,000
Long Term Debt (Note 8)                         17,797,000       7,485,000
Other Non-Current Liabilities                      599,000         605,000
Deferred Income Taxes (Note 6)			   817,000       1,565,000
--------------------------------------------------------------------------
                                                38,379,000      25,781,000
--------------------------------------------------------------------------
Shareholders' Equity
  Common stock (Note 9)                          8,950,000       8,695,000
  Paid-in capital                               51,304,000      49,692,000
  Retained earnings                             20,040,000      18,683,000
  Note receivable from shareholder (Note 9)	(1,749,000)     (1,749,000)
  Cumulative translation adjustment             (1,175,000)     (1,218,000)
  Treasury stock at cost (Note 9)               (6,373,000)     (3,203,000)
--------------------------------------------------------------------------
                                                70,997,000      70,900,000
--------------------------------------------------------------------------
                                             $ 109,376,000    $ 96,681,000
--------------------------------------------------------------------------
See Notes to the Consolidated Financial Statements


<PAGE 20>


Consolidated Statements of Shareholders' Equity (dollars in thousands)
                                               
                                                     Note         
                                               Receivable  Cumulative
             Common Paid In  Treasury Retained        from Translation
              Stock Capital     Stock Earnings Shareholder  Adjustment   Total
Balance at
 Dec 31/93   $4,535 $17,910    $    -   $6,738    $(1,749)     $ (904) $26,530
Stock issued
 for cash (a) 2,348  18,174         -        -          -            -  20,522
Stock
 dividend (a)   146   1,171         -   (1,320)         -            -     (3)
Stock options
 and warrants
 exercised (a)   56     357         -        -          -            -     413
Stock issued in
 connection with
 acquisition (b)136   1,091         -        -          -            -   1,227
Stock
 purchased for
 treasury (a)     -       -      (465)       -          -            -   (465)
Net income               
for the year      -       -         -    6,250          -            -   6,250
Translation
 adjustment       -       -         -        -          -        (422)   (422)
--------------------------------------------------------------------------
Balance at
 Dec 31/94    7,221  38,703      (465)  11,668     (1,749)     (1,326)  54,052
Stock
 issued under
 employee
 stock purchase
 plan (a)        49     422         -        -          -           -      471
Stock
 dividend (a)   167   1,233         -   (1,403)         -           -      (3)
Stock options
 and  warrants
 exercised (a)  626   4,423         -        -          -           -    5,049
Stock issued
 in connection
 with Alumitech
 purchase (b)   632   5,133       834        -          -           -    6,599
Warrants
 repurchased (a)  -    (222)        -        -          -           -    (222)
Stock
 purchased for
 treasury (a)     -       -   (3,572)        -          -           -  (3,572)
Net income for
 the year         -       -         -    8,418          -           -    8,418
Translation
adjustment        -       -         -        -          -         108      108
--------------------------------------------------------------------------
Balance at
 Dec 31/95    8,695  49,692   (3,203)   18,683    (1,749)    (1,218)    70,900
Stock issued
 under
 employee
 stock
 purchase
 plan (a)        73     535        -         -         -          -        608
Stock
 dividend (a)   161   1,089        -    (1,255)        -          -        (5)
Stock options
 exercised (a)   21      84        -         -         -          -        105
Stock purchased
 for treasury (a) -       -   (3,170)        -         -          -    (3,170)
Stock options
 repurchased      -     (96)       -         -         -          -       (96)
Net income
for the year      -       -        -     2,612         -          -      2,612
Translation
adjustment        -       -        -         -         -         43         43
----------------------------------------------------------------------------
Balance at
Dec 31/96    $8,950 $51,304  $(6,373)  $20,040   $(1,749)   $(1,175)   $70,997
----------------------------------------------------------------------------
See Notes to the Consolidated Financial Statements
	(a) See Note 9
	(b) See Note 2



<PAGE 21>



Consolidated Statements of Income
--------------------------------------------------------------------------
Years ended December 31                    1996         1995         1994
--------------------------------------------------------------------------
Net Sales                           $86,420,000  $85,056,000  $55,306,000
--------------------------------------------------------------------------
Costs and Expenses
   Cost of goods sold                66,416,000   64,356,000   40,552,000
   Selling, general and 
      administrative		     10,492,000    8,669,000    6,598,000
   Depreciation, depletion 
      and amortization		      4,694,000    3,689,000    2,315,000
--------------------------------------------------------------------------
                                     81,602,000   76,714,000   49,465,000
--------------------------------------------------------------------------
Operating Income Before 
   Reorganization Charges             4,818,000    8,342,000    5,841,000
Reorganization Charges (Note 10)      1,752,000            -            -
Operating Income                      3,066,000    8,342,000    5,841,000
Other Income (Expenses)
   Interest expense, net(Note 8)       (948,000)    (523,000)    (425,000)
   Other, net(Notes 2 and 10)          (455,000)      80,000      163,000
--------------------------------------------------------------------------
                                     (1,403,000)    (443,000)    (262,000)
--------------------------------------------------------------------------
Income Before Recovery of 
   Income Taxes                       1,663,000    7,899,000    5,579,000
Recovery of Income Taxes(Note 6)        949,000      519,000      671,000
--------------------------------------------------------------------------
Net Income                          $ 2,612,000  $ 8,418,000  $ 6,250,000
--------------------------------------------------------------------------
Net Income per Share                      $0.33        $1.03        $1.12
--------------------------------------------------------------------------
Average Common Shares and 
   Common Share Equivalents
    Outstanding                      8,000,522     8,208,874    5,588,682
--------------------------------------------------------------------------
See Notes to the Consolidated Financial Statements



<PAGE 22>


Consolidated Statements of Cash Flows
--------------------------------------------------------------------------
Years ended December 31               1996            1995            1994
--------------------------------------------------------------------------
Cash Flows from Operating Activities
  Net income                    $2,612,000      $8,418,000      $6,250,000
  Adjustments to reconcile
  income from operations
  to net cash flows from
  operating activities
    Depreciation, depletion 
    and amortization             4,694,000       3,754,000       2,315,000
    Loss on assets held for resale       -          61,000               -
    Decrease in deferred 
       income taxes             (1,761,000)       (122,000)     (1,366,000)
    Share of net income of investee      -         (87,000)       (267,000)
    Loss on sale of property, 
       plant and equipment         255,000          22,000          15,000
    Decrease (increase) in 
       other assets                771,000        (227,000)        (63,000)
   (Decrease) increase in 
       non-current liabilities      (6,000)         56,000          67,000
   Changes in non-cash working 
       capital items(a)           (533,000)     (4,660,000)     (4,311,000)
--------------------------------------------------------------------------
Net cash provided by 
   operating activities          6,032,000       7,215,000       2,640,000
--------------------------------------------------------------------------
Cash Flows from Investing Activities
  Additions to property, 
    plant and equipment        (16,426,000)    (15,451,000)     (3,077,000)
  Assets acquired in connection 
    with acquisitions(b)                 -      (3,658,000)     (4,888,000)
  Proceeds from sale of assets      86,000               -          78,000
  Investment(b)                          -               -      (2,019,000)
  Promissory notes                       -               -        (371,000)
--------------------------------------------------------------------------
Net cash used in investing 
   activities                   (16,340,000)   (19,109,000)    (10,277,000)
--------------------------------------------------------------------------
Cash Flows from Financing Activities
   Deferred financing costs               -       (467,000)              -
   Proceeds from long term debt  12,882,000      6,219,000         266,000
   Proceeds(payments) net, 
      on bank indebtedness        3,370,000      3,040,000        (415,000)
   Repayment of long term debt   (2,747,000)    (5,343,000)     (8,094,000)
   Cash paid in lieu of 
      fractional shares              (5,000)        (3,000)         (3,000)
   Issuance of common stock(c)      713,000      5,520,000      20,935,000
   Purchase of common stock and 
      warrants for treasury(c)   (3,266,000)    (3,794,000)       (465,000)
--------------------------------------------------------------------------
Net cash provided by 
   financing activities          10,947,000      5,172,000       12,224,000
--------------------------------------------------------------------------
Effect of Exchange Rate 
   Changes on Cash                  (13,000)        32,000          (40,000)
--------------------------------------------------------------------------
Net Increase(Decrease)in Cash       626,000     (6,690,000)       4,547,000
Cash and Cash Equivalents at 
   Beginning of Year              1,653,000      8,343,000        3,796,000
--------------------------------------------------------------------------
Cash and Cash Equivalents at 
   End of Year                  $ 2,279,000    $ 1,653,000    $   8,343,000
--------------------------------------------------------------------------
Supplemental Disclosure
of Cash Flow Information
  Income taxes paid             $   393,000    $   303,000    $     233,000
  Interest paid                     937,000        656,000          573,000
--------------------------------------------------------------------------
Supplemental Disclosure of
Non-Cash Activities
  Notes issued in connection 
      with purchase of assets(b)   $      -    $         -    $   1,102,000
  Stock issued in connection 
      with acquisition(b)                 -      6,599,000        1,227,000
  Assumption of liabilities
  in connection
        with asset purchases              -              -          793,000
  Notes received in connection with
        sale of assets held for resale(d) -        423,000                -
--------------------------------------------------------------------------
See Notes to the Consolidated Financial Statements
	(a) See Note 14
	(b) See Note 2
	(c) See Note 9
	(d) See Note 10


<PAGE 23>


Notes to the Consolidated Financial Statements
December 31, 1996 and 1995


1.	Summary of Significant Accounting Policies

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Corporation's significant accounting policies are as follows:

a.	Principles of Consolidation

The consolidated financial statements include the accounts of Zemex
Corporation and its wholly-owned subsidiaries (the "Corporation"). All
material intercompany transactions have been eliminated. As discussed in
Note 2, Alumitech, Inc. ("Alumitech") was acquired in two separate
transactions and, accordingly, was accounted for on an equity basis until it
became a wholly-owned subsidiary in February 1995.

b.	Inventories

Inventories are stated at the lower of cost or market and are computed using
the average cost method. It is not practical to segregate finished products
from ore and concentrates. Supplies are stated at cost using the first-in,
first-out or average cost method.

c.	Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Repairs and maintenance
are charged to expense as incurred. Expenditures for major renewals and
improvements are capitalized. When assets are sold or otherwise retired,
the cost and accumulated depreciation or depletion are removed from the
accounts and any gain or loss is included in results of operations.
Provisions for depreciation are based upon estimated useful lives, using
principally the straight-line method. Depletion of mining properties and
depreciation of other mining assets are computed using the unit-of-production
method, except in the case of the Corporation's mica operation where the
estimated reserves exceed the expected production during the term of the
mining lease. The mica mining lease rights and deferred costs, including all
preproduction and set-up costs, are amortized using the straight-line method
over the term of the mining lease.

d.	Postretirement Benefits

Pension Plans

The funding policy of the Corporation, generally, is to contribute annually
at a rate that is intended to provide for the cost of benefits earned during
the year and which will amortize prior service costs over periods of 10 to
30 years, subject to Internal Revenue Service limits for deductible
contributions.


<PAGE 24>


Healthcare and Other Postretirement Benefits Other Than Pensions

The Corporation accounts for healthcare and other postretirement benefits
other than pensions in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 106 - "Employers' Accounting for Postretirement
Benefits Other Than Pensions". This Statement requires the accrual of all
postretirement benefits other than pensions during the years in which
employees render the necessary services to be entitled to receive such
benefits. The 1996, 1995 and 1994 amounts include the current year expense
and the transition liability which is being amortized over twenty years as
allowed by SFAS No. 106 (Note 7).

e.	Foreign Currency Translation

The functional currency for the Corporation's foreign operations is the
local currency. Foreign currency assets and liabilities are translated using
the exchange rates in effect at the balance sheet date. The effect of
exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars is accumulated as part of the cumulative
translation adjustment component of shareholders' equity. Results of operations
and cash flows are translated using the average exchange rates during the
year. Gains and losses from foreign currency transactions are included in
net income for the year.

f.	Research and Development Expense

Research and development expense was $622,000 in 1996, $320,000 in 1995 and
$315,000 in 1994.

g.	Provision for Future Reclamation Costs

Costs for future reclamation have been provided for based upon estimated
future reclamation costs allocated over the expected productive lives of the
quarries.

h.	Income Taxes

The Corporation accounts for income taxes in accordance with SFAS No. 109
"Accounting for Income Taxes". This Statement requires the liability method
of accounting for income taxes.

i.	Earnings Per Share

Earnings per share is based upon the weighted average number of common
shares and common share equivalents outstanding. Common share equivalents
include stock options issued under the employee stock option plans and stock
issued under the Key Executive Common Stock Purchase Plan (Note 9). For the
purpose of calculating earnings per share, stock dividends are considered to
be issued at the beginning of the period.


<PAGE 25>


j.	Deferred Financing Costs

Costs associated with the issuance of long term debt are deferred, and are
being amortized over the term of the debt on a straight-line basis. The
unamortized balance is included in other assets.

k.	Other Assets

Other assets include assets held for sale which are stated at the lower of
cost or estimated net realizable value. In determining the estimated net
realizable value, the Corporation deducts from the estimated selling price the
projected costs to bring the assets into a saleable condition, to dispose of
the assets and to hold the property to an expected date of sale. Other
assets also includes patents which are stated at cost and are being
amortized over their remaining life of 14 years on a straight-line basis.
Intangible assets are evaluated periodically and, if conditions warrant,
an impairment valuation is provided.

l.	Cash Equivalents 

For purposes of the consolidated statements of cash flows, highly liquid
investments with original maturities of three months or less, when
purchased, are considered as cash equivalents.

m.	Stock-Based Compensation Costs

Stock-based compensation costs for pro forma presentation purposes (Note 9)
are based on the fair value of each option at the grant date. The option
value is calculated using the Black-Scholes option-pricing model.

2.	ACQUISITIONS 

Acquisition of Alumitech, Inc. 

In June 1994, the Corporation acquired its initial 39.53% investment in 
Alumitech by investing $2,000,000 to acquire treasury stock. In 1995, the
Corporation increased its interest to 100% by issuing 722,352 shares of
common stock with an ascribed value of $6,599,000. The shares were issued as
to 266,106 to Dundee Bancorp International Inc. ("Dundee"), the
Corporation's largest shareholder, and as to 266,106 to Clarion Capital
Corporation, a company controlled by a director of the Corporation.
Alumitech, an aluminum dross processor, has developed proprietary technology
that enables it to have the ability to convert 100% of its dross feed into
marketable products.

The acquisition of Alumitech has been accounted for using the purchase
method of accounting and, accordingly, the purchase price has been allocated
to the assets purchased and liabilities assumed based upon the fair values
at the date of acquisition. The net purchase price was allocated as
follows:


<PAGE 26>

--------------------------------------------------------------------------
        Working capital                                   $       73,000
        Property, plant and equipment                          5,527,000
        Patents                                                7,363,000
        Other assets                                             225,000
        Other liabilities                                     (2,192,000)
        Deferred income taxes                                 (2,025,000)
--------------------------------------------------------------------------
                                                            $  8,971,000
--------------------------------------------------------------------------
	Consideration
	Carrying value of investment at date of 
                acquisition of remaining interest         $    2,372,000
        Capital stock                                          6,599,000
--------------------------------------------------------------------------
                                                          $    8,971,000
--------------------------------------------------------------------------

The operating results of Alumitech have been included in the consolidated
statements of income from the date of acquisition. On the basis of a pro
forma consolidation of the results of operations as if the acquisition had
taken place at the beginning of fiscal 1994, rather than at February 15,
1995, consolidated net sales would have been $64,500,000 for fiscal 1994,
and $86,900,000 for fiscal 1995. Consolidated pro forma income and earnings
per share would not have been materially different from the reported amounts
for fiscal 1994 and 1995. Such pro forma amounts are not necessarily
indicative of what the actual consolidated results of operations might have
been if the acquisition had been effective at the beginning of fiscal 1994.
Acquisition of the assets of Benwood Limestone Company, Inc.

On May 15, 1995, the Corporation acquired the assets of Benwood Limestone
Company, Inc. ("Benwood"), through its wholly-owned subsidiary, Suzorite
Mineral Products, Inc. ("SMP"), for $3,658,000. The acquisition of Benwood
augmented the Corporation's talc and mineral processing capability. Benwood
will continue to process consumer products for its former owner under a
long term contract.

Acquisition of the talc operations of Whittaker, Clark & Daniels, Inc.

In December 1994, the Corporation, through SMP, acquired from Whittaker,
Clark & Daniels, Inc. ("WCD") certain assets including its talc operations.
Consideration for the purchase included $4,388,000 in cash, 136,360 common
shares of the Corporation with an ascribed value of $1,227,000, and the
assumption of certain current liabilities directly relating to the
operations acquired aggregating $267,000. Concurrent with the purchase,
the Corporation entered into an agreement with WCD whereby WCD agreed to act
as the exclusive marketing, distribution and sales agent for the
Corporation's premium talc products.


<PAGE 27>


Acquisition of the assets of Greenback Industries, Inc.

In September 1994, the Corporation, through its wholly-owned subsidiary,
Pyron Metal Powders, Inc., acquired the assets and assumed certain
liabilities of Greenback Industries, Inc. ("Greenback"). Consideration for
the purchase was $500,000 in cash, the issuance of two promissory notes
having principal amounts of $650,000 and $451,563, respectively, and the
assumption of certain current liabilities aggregating $526,000. The
Greenback facilities provide the Corporation with increased capacity to
produce powdered copper as well as powdered tin, and powdered copper and tin
alloys.

3.	INVENTORIES

--------------------------------------------------------------------------
                                                  1996               1995
Ore, concentrates and finished products
  Industrial minerals                      $  8,565,000      $ 10,852,000
  Metal products                              5,035,000         4,042,000
--------------------------------------------------------------------------
                                             13,600,000        14,894,000
--------------------------------------------------------------------------
Materials and supplies
  Industrial minerals                         3,683,000         3,867,000
  Metal products                                888,000         1,415,000
--------------------------------------------------------------------------
                                              4,571,000         5,282,000
--------------------------------------------------------------------------
                                           $ 18,171,000      $ 20,176,000
--------------------------------------------------------------------------


4.	PROPERTY, PLANT AND EQUIPMENT

--------------------------------------------------------------------------
                                                   1996              1995
--------------------------------------------------------------------------
Land                                       $  5,246,000      $  4,952,000
Mining properties and deferred costs          6,605,000         5,535,000
Buildings                                    16,728,000        15,304,000
Machinery and equipment                      50,937,000        45,797,000
Construction in progress                     15,065,000         7,609,000
--------------------------------------------------------------------------
Total property, plant and equipment, at cost 94,581,000        79,197,000
Less: Accumulated depreciation, depletion
        and amortization                     32,497,000        28,926,000
--------------------------------------------------------------------------
Net property, plant and equipment          $ 62,084,000      $ 50,271,000
--------------------------------------------------------------------------

As of December 31, 1996, the Corporation estimates that approximately
$4,592,000 will be expended to complete its construction in progress.


<PAGE 28>



5.	OTHER ASSETS
	
--------------------------------------------------------------------------
                                                  1996               1995
--------------------------------------------------------------------------
Prepaid pension cost(Note 7)            $    1,488,000       $  1,632,000
Assets held for resale(Note 10)                300,000            250,000
Deferred financing costs                       659,000            802,000
Other deferred charges                         318,000            443,000
Promissory notes receivable,
   non-current portion                               -            369,000
Patents, net                                 6,673,000          7,079,000
--------------------------------------------------------------------------
                                          $  9,438,000       $ 10,575,000
--------------------------------------------------------------------------


6.	INCOME TAXES

The provision for income taxes consists of the following components:

--------------------------------------------------------------------------
                                        1996             1995         1994
--------------------------------------------------------------------------
Income from operations before
  provision for income taxes
    Domestic                     $ 1,492,000      $ 7,708,000  $ 3,631,000
    Foreign                          171,000          191,000    1,948,000
--------------------------------------------------------------------------
Total pre-tax income             $ 1,663,000      $ 7,899,000  $ 5,579,000
--------------------------------------------------------------------------
Current tax provision
    Federal                      $   478,000      $ 1,849,000    $ 880,000
    State and local                  123,000          293,000      258,000
    Foreign                           76,000           37,000      425,000
--------------------------------------------------------------------------
Total                                677,000        2,179,000    1,563,000
--------------------------------------------------------------------------
Deferred tax provision
    Federal                       (1,369,000)         283,000            -
    State and local                 (257,000)          55,000            -
    Foreign                                -           40,000      256,000
--------------------------------------------------------------------------
Total                             (1,626,000)         378,000      256,000
--------------------------------------------------------------------------
Benefit of operating loss and tax 
    credit carryforwards                   -       (3,076,000)  (2,490,000)
--------------------------------------------------------------------------
Recovery of income taxes         $  (949,000)    $   (519,000) $  (671,000)
--------------------------------------------------------------------------


<PAGE 29>



The following tabulation reconciles the U.S. federal statutory income tax
rate to the federal, state and foreign overall effective income tax rate.

--------------------------------------------------------------------------
                                        1996          1995           1994
--------------------------------------------------------------------------
                                       PERCENT       PERCENT        PERCENT 
Statutory federal rate                  34.0          34.0           34.0
Benefit of operating loss carryforwards
  (net of foreign income taxes)        (43.8)        (38.1)         (46.0)
Percentage depletion                   (47.9)         (4.9)             -
Other                                    0.6           2.4              -
--------------------------------------------------------------------------
Effective income tax rate              (57.1)         (6.6)         (12.0)
--------------------------------------------------------------------------

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. At
December 31, 1996, the Corporation had unused tax benefits of $6,172,000
related to U.S. federal and state net operating loss and tax credit
carryforwards. Significant components of the Corporation's deferred tax
assets and liabilities as of December 31 are as follows (dollars in
thousands):

--------------------------------------------------------------------------
                                 1996                         1995
                        U.S.  Foreign     Total      U.S.   Foreign  Total
--------------------------------------------------------------------------
Deferred tax assets
 Net operating loss 
   and tax credit 
     carryforwards   $ 6,172   $    -   $ 6,172   $4,102    $   -  $ 4,102 
 Accrued expenses and 
  reserves               763        -       763      444        -      444
 Bad debt allowances     139        -       139      112        -      112
 Inventories             526        -       526      505        -      505
 Other                    63        -        63      137        -      137
--------------------------------------------------------------------------
Gross deferred tax 
  assets               7,663        -     7,663    5,300        -    5,300
--------------------------------------------------------------------------
Deferred tax liabilities
  Property, plant 
    and equipment      2,656    2,075     4,731    2,159    2,075    4,234
  Patent               1,791        -     1,791    1,929        -    1,929
  Pension
    contributions        521        -       521      600        -      600
  Other                  424        -       424      102        -      102
--------------------------------------------------------------------------
Total                  5,392    2,075     7,467    4,790    2,075    6,865
--------------------------------------------------------------------------
Net deferred tax 
  (assets)
     liabilities     $(2,271)  $2,075   $  (196)  $ (510) $ 2,075  $ 1,565
--------------------------------------------------------------------------


<PAGE 30>



The net change in the valuation allowance for deferred tax assets was a
decrease of $1,645,000 in the year ended December 31, 1995 related primarily
to benefits arising from recognition of net operating loss carryforwards. In
1995, the benefit of the balance of the net operating losses was recognized
and, accordingly, the valuation allowance was reduced to nil.

At December 31, 1996, the Corporation had approximately $15,000,000 of
federal operating loss carryforwards available to reduce future taxable
income which will expire between 2002 and 2011. Additionally, the
Corporation has unused general business tax credits, which expire between
1997 and 2011, and alternative minimum tax credits.

7.	PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Pension Plans

The Corporation has several pension plans covering substantially all domestic
employees. The plans covering salaried employees provide pension benefits
that are based on the compensation of the employee. In all plans, the plan
assets exceed the benefit obligations and hence the plans are overfunded.

Net periodic pension cost (income) included the following components: 

--------------------------------------------------------------------------
                                      1996              1995         1994
--------------------------------------------------------------------------
Current service costs          $   528,000      $    369,000   $  422,000
Interest cost on projected 
  benefit obligations            1,028,000           940,000      882,000
Actual return on assets           (389,000)       (2,587,000)     368,000
Net amortization and deferral   (1,023,000)        1,164,000   (1,704,000)
--------------------------------------------------------------------------
Net pension expense (income)   $   144,000      $   (114,000) $   (32,000)
--------------------------------------------------------------------------

Net amortization and deferral consists of amortization of net assets at
transition and deferral of subsequent net gains and losses. The assumptions
used to determine projected benefit obligations were (i) a discount rate of
7 percent in 1996 and 1995 and 7.5 percent in 1994; (ii) an expected long
term rate of return on assets of 8.75% in 1996, 1995 and 1994; and (iii) an
increase in the level of compensation of 6% for 1996, 1995 and 1994.



<PAGE 31>



The status of the plans and the amounts recognized in the consolidated balance
sheets of the Corporation for its pension plans as of December 31, 1996 and
1995 are tabulated below:

--------------------------------------------------------------------------
                                                   1996              1995
--------------------------------------------------------------------------
Actuarial present value of benefit obligations
  Vested benefit obligation          $       11,687,000      $  11,059,000
--------------------------------------------------------------------------
  Accumulated benefit obligation     $       11,896,000      $  11,261,000
--------------------------------------------------------------------------
  Projected benefit obligation       $      (15,925,000)      $(15,042,000)
  Plan assets at fair value                  16,432,000         16,646,000
--------------------------------------------------------------------------
  Plan assets in excess of 
    projected benefit obligation                507,000          1,604,000
  Unrecognized net loss                       1,071,000            226,000
  Prior service cost not yet recognized                             
    in net periodic pension cost                239,000            282,000
  Unrecognized net asset at year end           (329,000)          (480,000)
--------------------------------------------------------------------------
  Prepaid pension cost included in
  consolidated balance sheets         $       1,488,000      $   1,632,000
--------------------------------------------------------------------------

Other Postretirement Benefits

The Corporation provides healthcare and life insurance benefits for certain
retired employees which, are accrued as earned (Note 1). The cost of such
benefits was $105,000 in 1996, $95,000 in 1995, and $73,000 in 1994. The
unrecognized obligation for postretirement benefits is not material.

8.	LONG TERM DEBT

--------------------------------------------------------------------------
                                                  1996               1995
--------------------------------------------------------------------------
Term loan facility (a)                     $ 14,167,000      $   2,700,000
Other term loans (b)                            813,000          1,038,000
Industrial Development Revenue Bonds (c)      4,080,000          4,612,000
Promissory notes (d)                            113,000            811,000
Capital leases (e)                              488,000            330,000
Other                                           337,000            372,000
--------------------------------------------------------------------------
Total debt                                   19,998,000          9,863,000
Less: Current portion                         2,201,000          2,378,000
--------------------------------------------------------------------------
Long term debt                             $ 17,797,000      $   7,485,000
--------------------------------------------------------------------------


<PAGE 32>



(a)	During 1995, the Corporation entered into a $30,224,000 credit
facility with a syndicate of two banks. The credit facility is further
subdivided into four facilities: (i) a $10,000,000 revolving credit and term
loan facility; (ii) a $10,000,000 multiple advance term loan facility; (iii)
a $5,224,000 standby letter of credit; and (iv) a $5,000,000 operating line.
These facilities are secured by specific assets and a floating charge over a
significant portion of the Corporation's assets. The facilities bear interest
at rates varying from bank prime to bank prime plus 0.25% and from LIBOR
plus 1.25% to LIBOR plus 2.25%, depending upon the financial position of the
Corporation. As at December 31, 1996 and December 31, 1995, there was
$5,000,000 and $2,000,000, respectively, outstanding under the operating
line and $9,167,000 and $2,700,000, respectively, outstanding under the
multiple advance term loan facility. Advances under the revolving credit and
term loan facility as at December 31, 1996 were $5,000,000, and the standby
letter of credit was issued to secure Pyron's Industrial Development Revenue
Bonds (see (c) below). The operating line matures June 30, 1997 and is
reviewed annually for renewal. The multiple advance term loan facility
requires quarterly payments of $278,000 which commenced April 1, 1996 with
the balance outstanding, if any, due January 1, 2000.

(b)	The other term loans bear interest at the prime rate of the lending
institution plus 1.25 percent to 1.50 percent, depending on certain tests.
They are secured by substantially all of the fixed assets of Alumitech and
its wholly-owned subsidiaries and are repayable in monthly principal instalments
of approximately $19,000 until they are repaid with a terminal payment in
1999.

(c)	Pyron Corporation ("Pyron") entered into a lease agreement on
November 29, 1989 with the Niagara County Industrial Development Agency
(the "Agency") to partially finance the construction of a manufacturing
facility, acquire and install equipment and machinery, and renovate the
existing Pyron facility for the purpose of manufacturing atomized steel
powders. The agreement authorized the Agency to issue and sell Industrial
Development Revenue Bonds in the aggregate principal amount of $7,650,000
to provide the funds for the project.

While the bonds are not the obligation of Pyron, the agreement requires
Pyron to make quarterly rental payments equal to the debt service under the
sinking fund requirements and interest on the outstanding principal to the
Agency. The amount outstanding at December 31, 1996 and 1995 was $4,080,000
and $4,612,000, respectively. Pyron's annual obligation under the agreement
is $510,000 until paid.

The bonds bear interest at a variable rate not to exceed 15 percent per
annum. The rate at December 31, 1996 was 4.15% and at December 31, 1995 was
5.25 percent. Pyron has the option to convert the bonds to a fixed interest
rate at any time during the term. Under the lease agreement, Pyron may
purchase the facility at any time during the term, which expires November
1, 2004, by paying the outstanding principal amount of the bonds plus $1.



<PAGE 33>



The bonds are collateralized by a mortgage on the land, the new facility and
the existing facility, which have an aggregate net book value of
approximately $9,480,000 at December 31, 1996.


A bank has provided Pyron with a letter of credit which is available to
support Pyron's obligations under the lease agreement. If the bondholders
tender their bonds for repayment, the letter of credit will be utilized to
pay the bondholders. The letter of credit is collateralized under the credit
facility in (a) above. The letter of credit expires on October 1, 1999.

(d)	In 1994, Pyron Metal Powders, Inc. issued two promissory notes to
former owners in connection with the acquisition of its two operations. One
promissory note with an aggregate principal amount outstanding as of
December 31, 1995 of $325,000, bearing interest at 7 percent in both 1996
and 1995, was paid in full September 15, 1996. A second note with an
aggregate principal amount of $113,000 outstanding as at December 31, 1996
and $263,000 at December 31, 1995 is non-interest bearing with monthly
principal payments of $12,550 commencing October 15, 1994 until the final
payment of $12,313 due September 15, 1997.

(e)	The Corporation has long term capital lease agreements at various
rates and for various terms with maturities ranging from 1997 to 2001 for
equipment used in its operations. The carrying value of the leased equipment
as of December 31, 1996 was $573,000.

Principal repayments on long term debt are as follows:

--------------------------------------------------------------------------
	1997					$	2,201,000
	1998						2,068,000
	1999						2,661,000
        2000                                           10,883,000
	2001						  545,000
	Thereafter					1,640,000
--------------------------------------------------------------------------
                                                $      19,998,000
--------------------------------------------------------------------------

Interest

Interest earned and expensed in each of the past three years is summarized
below:

--------------------------------------------------------------------------
                                         1996           1995         1994
--------------------------------------------------------------------------
Interest income                   $    93,000    $    268,000   $  246,000
Interest expense                   (1,041,000)       (791,000)    (671,000)
--------------------------------------------------------------------------
Net interest expense              $  (948,000)   $   (523,000)  $ (425,000)
--------------------------------------------------------------------------


<PAGE 34>



9.	COMMON STOCK, STOCK OPTIONS AND WARRANTS

Shares Outstanding 

During 1995, the Corporation increased its authorized common stock from
10,000,000 to 25,000,000, par value one dollar per share, of which
20,000,000 shares will be denominated common stock and 5,000,000 shares will
be denominated preferred stock. There were 8,269,099 shares of common stock
issued and outstanding as of December 31, 1996 and 8,355,722 shares as of
December 31, 1995.

In May 1994, the Corporation issued 347,826 shares of common stock in a
private placement transaction for aggregate proceeds of $2,000,000.
In September 1994, the Corporation issued 2,000,000 shares of its common
stock pursuant to a public offering of shares for net proceeds, after
underwriting fees and expenses of issue, of $18,522,000.

In 1995, the Corporation completed its purchase of 100 percent of Alumitech
by issuing 722,352 shares of common stock with an ascribed value of
$6,599,000.

During 1996, 80,000 shares of common stock were purchased pursuant to the
Corporation's employee stock purchase plan for an aggregate cost of
$672,000.

During 1995, 49,000 shares of common stock were purchased pursuant to the
Corporation's employee stock purchase plan for an aggregate cost of
$471,000. The plan was approved by the shareholders and provides that
250,000 shares may be purchased under the plan. The shares have been
registered for listing on the New York Stock Exchange.

As part of a stock repurchase program initiated in 1994, the Corporation
has purchased 773,000 of shares of common stock on the open market:
344,000 common shares in 1996 for an aggregate cost of $3,170,000, 376,000
common shares in 1995 for an aggregate cost of $3,572,000 and 53,000 common
shares in 1994 for an aggregate cost of $465,000.

Dividends

On October 18, 1996, the Corporation declared a 2 percent stock dividend to
shareholders of record on November 4, 1996, which was paid November 18, 1996.
Retained earnings were charged $1,255,192 as a result of the issuance of
161,398 shares of the Corporation's common stock, and cash payments of
$4,357 in lieu of fractional shares.

On November 10, 1995, the Corporation declared a 2 percent stock dividend to
shareholders of record on November 24, 1995, which was paid December 8, 1995.
Retained earnings were charged $1,403,248 as the result of the issuance of
167,149 shares of the Corporation's common stock, and cash payments of
$3,375 in lieu of fractional shares.



<PAGE 35>



On November 14, 1994, the Corporation declared a 2 percent stock dividend to
shareholders of record on November 28, 1994, which was paid December 19, 1994.
Retained earnings were charged $1,320,307 as the result of the issuance of
145,708 shares of the Corporation's common stock, and cash payments of
$3,218 in lieu of fractional shares.

Stock Options 

The Corporation provides stock option incentive plans and has, with
shareholder approval, issued options to certain directors outside of the
plans. The plans are intended to provide long term incentives and rewards to
executive officers, directors and other key employees contingent upon an
increase in the market value of the Corporation's common stock. Options for
10 percent of the Corporation's outstanding common shares are issuable under
the plans.

The following is a summary of option transactions under the Corporation's
stock option plans:

--------------------------------------------------------------------------
For the years ended December 31             1996         1995       1994
--------------------------------------------------------------------------
Options outstanding at beginning of year 852,550      556,550    572,500
Options granted during the year           61,000      341,000     25,000
Options exercised during the year        (45,000)     (38,250)   (23,200)
Options cancelled during the year        (23,000)      (6,750)   (17,750)
--------------------------------------------------------------------------
Options outstanding at end of year       845,550      852,550    556,550
Options exercisable at end of year       631,550      511,550    333,550
Price range of options granted 
  during the year                    $7 3/4-$9 3/4 $9 1/8-$10 1/8$11 1/2
--------------------------------------------------------------------------

The options expire from 1997 to 2002. During 1996 options for 45,000 shares
of common stock were exercised for proceeds of $235,500. At December 31, 1996
there were 631,550 options exercisable.

The Corporation does not recognize compensation expense for its stock-based
compensation plans. Had compensation cost for the stock option plans been
determined based upon fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS No. 123,
"Accounting for Stock-Based Compensation", the Corporation's net income and
earnings per share would have been reduced by approximately $341,000 or
$0.04 per share in 1996 and $2,177,000 or $0.27 per share in 1995. The fair
value of the options granted during 1996 and 1995 is estimated to be
$341,000 and $2,177,000, respectively. The fair value of each option grant
is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions used for grants in
1996 and 1995: dividend yield of 0%; expected volatility of 84% and 88%,
respectively; risk-free interest rate of 5.5%; and an expected life of 5
years.


<PAGE 36>


Warrants

During 1993, in connection with the acquisition of Suzorite Mica Products
Inc., the Corporation issued a transferable warrant to Dundee to purchase at
any time prior to July 15, 1995 up to 100,000 shares (104,040 shares after
adjustments for stock dividends) of common stock at $7.00 per share. The
warrant was exercised by Dundee on July 14, 1995 for proceeds of $700,000.
As a result of a stock rights offering in 1990, 725,769 warrants were issued.
Each warrant entitled the holder to purchase, prior to July 15, 1995, 1.08
shares of common stock at an exercise price of $8.56 per share, which was
repriced from $9.25 per share as a result of dilution due to the issuance of
stock dividends. Of the 725,769 warrants originally issued, the Corporation
repurchased 218,046 warrants at an aggregate cost of $222,000. During 1995,
448,000 warrants were exercised for 484,027 shares of common stock for net
proceeds of $4,143,000. During 1994, 31,514 warrants were exercised resulting
in the issuance of 32,771 shares of common stock at an exercise price of
$8.88 per share for aggregate proceeds of $291,000. There were no remaining
warrants outstanding as at December 31, 1995.

Note Receivable from Shareholder

The note receivable from shareholder of $1,749,000 represents amounts due
from the Corporation's President and Chief Executive Officer pursuant to the
Key Executive Common Stock Purchase Plan. The loan, which was used to acquire
357,000 shares of common stock of the Corporation, is non-interest bearing,
secured by a pledge of the shares acquired and due on the earlier of August
12, 1998 or 30 days after the termination of employment. Since the loan arose
from the sale of stock, it is classified as a reduction of shareholders'
equity.

10.	REORGANIZATION CHARGES AND UNUSUAL ITEMS

Reorganization Charges

During the first quarter of 1996, the Corporation recognized reorganization
costs of $1,752,000 in connection with the reorganization of its minerals
division, a write-down to market of inventory held in Brazil and the
recognition of a provision for anticipated costs associated with storing and
selling the material. The Brazilian enterprise was unsuccessful primarily
due to rapidly deteriorating market prices which made market penetration
extremely difficult.

Unusual Items

In December 1991, the Corporation closed its industrial minerals plant
located in Connecticut. The assets of this operation were reclassified to
assets held for resale and written down in 1991 by $430,000 to their estimated
net realizable value. These assets were written down by a further $300,000 in
1993. In 1995, a portion of the property was sold for approximately net book
value. In 1996, the purchaser defaulted on the payment obligations.
Accordingly, the Corporation instituted legal action to repossess the property.
A provision of $723,000 has been recorded to provide for reclamation costs,
legal costs and to write-down the property to current market value.


<PAGE 37>


11.	OPERATING LEASES AND OTHER COMMITMENTS

Operating Leases

The Corporation has a number of operating lease agreements primarily
involving equipment, office space, warehouse facilities and rail sidings. The
operating lease for equipment provides that the Corporation may, after the
initial lease term, renew the lease for successive yearly periods or may
purchase the equipment at the fair market value. An operating lease for office
facilities contains escalation clauses for increases in operating costs and
property taxes. The majority of the leases are cancellable and are renewable
on a yearly basis.

Future minimum rental payments required by operating leases that have initial
or remaining non-cancellable lease terms in excess of one year as of
December 31, 1996 are as follows:

--------------------------------------------------------------------------
                                                                   Minimum 
        Years                                               Lease Payments
--------------------------------------------------------------------------
        1997                                               $       520,000
        1998                                                       393,000
        1999                                                       271,000
        2000                                                       195,000
        2001                                                       332,000
        Thereafter                                                 538,000
--------------------------------------------------------------------------
        Total minimum lease payments                        $    2,249,000
--------------------------------------------------------------------------

Rent expense was $668,000, $442,000, and $281,000 in 1996, 1995 and 1994,
respectively.

Other Commitments

The Corporation has a mining contract with an independent contractor expiring
on September 30, 1998 to extract minerals from its open pit mine in Suzor
Township, Quebec. This contract specifies the mining and delivery of
approximately 50,000 tons of ore per year to the mine site rail siding at a
fixed rate.



<PAGE 38>




12.	QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of certain unaudited quarterly financial data
from continuing operations:

--------------------------------------------------------------------------
                                             1996                    1995
--------------------------------------------------------------------------
Net Sales
  First quarter                $       22,405,000      $       21,105,000
  Second quarter                       21,356,000              21,439,000
  Third quarter                        21,601,000              21,748,000
  Fourth quarter                       21,058,000              20,764,000
--------------------------------------------------------------------------
                               $       86,420,000      $       85,056,000
--------------------------------------------------------------------------
Operating Income 
  First quarter                $          170,000      $        2,123,000
  Second quarter                        1,512,000               2,465,000
  Third quarter                         1,444,000               1,822,000
  Fourth quarter                          (60,000)              1,932,000
--------------------------------------------------------------------------
                               $        3,066,000      $        8,342,000
--------------------------------------------------------------------------
Net Income
  First quarter                $            6,000      $        1,459,000
  Second quarter                          819,000               2,183,000
  Third quarter                           779,000               1,562,000
  Fourth quarter                        1,008,000               3,214,000
--------------------------------------------------------------------------
                               $        2,612,000      $        8,418,000
--------------------------------------------------------------------------
Net Income Per Share 
  First quarter                             $ .00                   $ .19
  Second quarter                              .10                     .28
  Third quarter                               .10                     .18
  Fourth quarter                              .13                     .37
--------------------------------------------------------------------------

13.	FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Corporation to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers comprising the Corporation's customer
base and their dispersion across a number of different industries,
principally construction, glass, electrical and automotive.

Financial instruments comprise cash and cash equivalents, accounts receivable,
short term bank borrowings, accounts payable, accrued liabilities, and long
term debt. The fair value of these financial instruments approximates their
carrying value.



<PAGE 39>



14.	CHANGES IN NON-CASH WORKING CAPITAL ITEMS

The changes in non-cash working capital items are as follows:

--------------------------------------------------------------------------
                                           1996          1995         1994
--------------------------------------------------------------------------
Increase in accounts receivable    $ (1,838,000)  $  (783,000) $ (2,384,000)
Decrease (increase) in inventories    2,005,000    (2,742,000)   (4,471,000)
Increase in prepaid expenses           (547,000)      (16,000)      (31,000)
(Decrease) increase in accounts 
  payable and accrued liabilities      (185,000)   (1,495,000)    2,248,000
Increase in accrued income taxes         32,000       376,000       327,000
--------------------------------------------------------------------------
                                   $   (533,000)  $(4,660,000) $ (4,311,000)
--------------------------------------------------------------------------

15.	RELATED PARTY TRANSACTIONS

As at December 31, 1996 and 1995, accounts receivable included amounts due
from directors of $350,000. These amounts are non-interest bearing, with no
fixed terms of repayment, and have not otherwise been disclosed in the
consolidated financial statements.

16.	SEGMENT INFORMATION

The Corporation has two principal lines of business and is organized into
two operating units based on its product lines: (i) industrial minerals, and
(ii) metal products. Industrial mineral products include feldspar, kaolin,
mica, talc, baryte, feldspathic sand and industrial sand. These products are
marketed principally to the automotive, housing, and ceramics industries in
North America. They are produced from mines and processing plants located
near Edgar, Florida; Monticello, Georgia; Murphy, North Carolina; Spruce Pine,
North Carolina; Natural Bridge, New York; Van Horn, Texas; Benwood, West
Virginia; Boucherville, Quebec; and Suzor Township, Quebec. Metal products
are processed in Niagara Falls, New York; St. Marys, Pennsylvania; and
Greenback, Tennessee. The Corporation's ferrous and non-ferrous metal powders
are marketed primarily in North America to manufacturers of powder metallurgy
parts used in the automotive and transportation industries. Aluminum dross
is recycled at a plant in Cleveland, Ohio and ceramic products are produced
at a plant in Streetsboro, Ohio. Corporate assets principally include cash,
term deposits, and furniture and fixtures.



<PAGE 40>


Information pertaining to sales and earnings from continuing operations and
assets by business segment appears below:

--------------------------------------------------------------------------
                                  1996             1995              1994
--------------------------------------------------------------------------
Net sales (a)
  Industrial minerals    $  40,469,000      $ 37,089,000     $ 30,378,000
  Metal products            45,951,000        47,967,000       24,928,000
--------------------------------------------------------------------------
Total                    $  86,420,000      $ 85,056,000     $ 55,306,000
--------------------------------------------------------------------------
Operating income (a)
  Industrial minerals    $   3,118,000      $  4,622,000     $  3,865,000
  Metal products             1,868,000         3,677,000        2,202,000
  Reorganization charges(b) (1,752,000)                -                -
  General unallocated
     corporate                (168,000)           43,000         (226,000)
--------------------------------------------------------------------------
Total                        3,066,000         8,342,000        5,841,000
  Interest expense net        (948,000)         (523,000)        (425,000)
  Other (expense) income,
     net(b)                   (455,000)           80,000          163,000
--------------------------------------------------------------------------
Income before recovery
of income taxes          $   1,663,000       $ 7,899,000     $  5,579,000
--------------------------------------------------------------------------
Capital expenditures (a)(c)
  Industrial minerals    $  11,855,000      $  9,653,000     $  2,050,000
  Metal products             4,528,000         5,784,000          878,000
  Corporate                     43,000            14,000          149,000
--------------------------------------------------------------------------
Total                    $  16,426,000      $ 15,451,000     $  3,077,000
--------------------------------------------------------------------------
Depreciation, depletion
and amortization (a)
  Industrial minerals    $   2,352,000      $  1,932,000     $  1,456,000
  Metal products             1,948,000         1,451,000          828,000
  Corporate                    394,000           306,000           31,000
--------------------------------------------------------------------------
Total                    $   4,694,000      $  3,689,000     $  2,315,000
--------------------------------------------------------------------------
Identifiable assets
at year end (a)
  Industrial minerals    $  60,915,000      $ 52,348,000     $ 36,853,000
  Metal products            37,145,000        34,133,000       22,665,000
  Corporate (d)             11,316,000        10,200,000       11,346,000
--------------------------------------------------------------------------
Total                    $ 109,376,000      $ 96,681,000     $ 70,864,000
--------------------------------------------------------------------------

(a)	The Corporation's businesses are located in the United States and
        Canada, which the Corporation considers one geographic segment.

(b)	See Note 10.

(c)	Capital expenditures for 1995 and 1994 exclude property, plant and
        equipment of $9,027,000 and $3,264,000, respectively, acquired in
        connection with the Corporation's 1995 and 1994 acquisitions (Note 2).

(d)	Includes cash and cash equivalents for all years presented.



<PAGE 41>



Selected Financial Data

--------------------------------------------------------------------------
                        1996        1995        1994       1993          1992
--------------------------------------------------------------------------
SUMMARY OF OPERATIONS

Net Sales        $86,420,000 $85,056,000 $55,306,000 $47,958,000  $42,020,000
Restructuring 
  Charges                  -           -           -   1,250,000            -
Reorganization 
  Charges          1,752,000           -           -           -            -
Operating 
  Income           3,066,000   8,342,000   5,841,000   1,237,000    1,737,000
Other Income 
  (Expenses)      (1,403,000)   (443,000)   (262,000)  2,421,000     (475,000)
Net Income
from Continuing
  Operations       2,612,000   8,418,000   6,250,000   3,188,000      838,000
Net Income         2,612,000   8,418,000   6,250,000   1,852,000      949,000
-----------------------------------------------------------------------------
FINANCIAL POSITION
Working Capital $ 18,688,000 $19,709,000 $26,046,000 $ 9,288,000  $ 9,431,000
Total Assets     109,376,000  96,681,000  70,864,000  48,414,000   50,773,000
Long Term Debt
  (non-current 
   portion)       17,797,000   7,485,000   5,461,000   8,735,000    9,593,000
-----------------------------------------------------------------------------
COMMON STOCK
Average Common
Shares Outstanding 8,000,522   8,208,874   5,588,682   4,605,440    4,440,551
Actual Common
Shares Issued
and Outstanding
at Year End        8,269,099   8,355,722   7,168,153   4,535,283    4,491,834
-----------------------------------------------------------------------------
PER COMMON SHARE
Net Income      $       0.33 $      1.03 $      1.12 $      0.40  $      0.21
Net Income,
excluding the
benefit of tax loss
carryforwards           0.14        0.63        0.65        0.20         0.21
-----------------------------------------------------------------------------
COMMON STOCK PRICES
 High           $         10 $    10 7/8 $    12 1/4  $        8  $     6 3/8
 Low                   6 7/8       8 1/4       6 1/8       4 1/2        2 7/8
 Year End                  7          10       8 5/8       6 3/4        5 3/8
-----------------------------------------------------------------------------


<PAGE 43>


Corporate Directory

BOARD OF DIRECTORS

Paul A. Carroll
Chairman and 
Chief Executive Officer, 
World Wide Minerals Ltd. (1)

Morton A. Cohen
Chairman, President and 
Chief Executive Officer, 
Clarion Capital Corporation

John M. Donovan
Corporate Consultant (1) (2)

Thomas B. Evans, Jr.
Vice Chairman, 
The Jefferson Group Inc. (2)

Ned Goodman
Chairman, President and Chief Executive Officer, Dundee Bancorp Inc.

Peter Lawson-Johnston
Chairman and Trustee, 
Solomon R. Guggenheim Foundation; Chairman,
The Harry Frank Guggenheim Foundation (1) (3)

Richard L. Lister
President and Chief Executive Officer of the Corporation (3)

Patrick H. O'Neill
Corporate Consultant (2)

William J. vanden Heuvel
Counsel, Strook, Strook & 
Lavan (3)

(1)	Member of the Executive Compensation/Pension Committee

(2)	Member of the Audit Committee

(3)	Member of the Executive Committee


OFFICERS

Peter Lawson-Johnston
Chairman of the Board

Richard L. Lister
President and Chief Executive Officer

Allen J. Palmiere
Vice President, Chief Financial Officer and Assistant Secretary

Peter J. Goodwin
Vice President; 
President, Industrial Minerals

Terrance J. Hogan
President, Alumitech, Inc.

G. Russell Lewis
President, Metal Powers

Patricia K. Moran
Assistant Secretary-Treasurer


EXECUTIVE OFFICE

Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750, P.O. Box 703
Toronto, Ontario
Canada M5J 2S1

Telephone: (416) 365-8080
Fax: (416) 365-8094

Independent Public Accountants

Deloitte & Touche
Toronto, Ontario, Canada

Transfer Agent 
and Registrar 
Capital Stock

First Union National Bank 
of North Carolina
Shareholder Services Group
230 South Tryon Street
Charlotte, N.C. 28288

Telephone: (800) 829-8432
Fax: (704) 374-6114

Form 10-K

Copies of Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 1996 will be available after April 1, 1997 by
writing to Shareholder Relations at the Executive Office