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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-8488
CAMPBELL RESOURCES INC.
(Exact Name of registrant as specified in its charter)
Under the Canada Business Corporations Act
(Jurisdiction of Incorporation)
I.R.S. Employer Identification No - Not Applicable
1155 UNIVERSITY, SUITE 1405
MONTREAL, QUEBEC H3B 3A7 CANADA
TELEPHONE - (514) 875-9033
(Address, including zip code, and telephone number including area code of
registrants principal executive offices)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date.
Shares Outstanding as of November 1, 2001, 31,398,922 Common Shares,
without par value
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CAMPBELL RESOURCES INC.
Table of Contents
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as at September 30, 2001 (Unaudited) and December
31, 2000 ............................................................................ 3
Consolidated Statements of Operations (Unaudited) for the Three Months and the
Nine Months Ended September 30, 2001................................................. 4
Consolidated Statements of Deficit (Unaudited) for the Nine Months Ended
September 30, 2001................................................................... 4
Consolidated Statements of Cash Flows (Unaudited) for the Three Months and the
Nine Months Ended September 30, 2001................................................. 5
Notes to the Consolidated Financial Statements (Unaudited) .......................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................................... 13
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings.................................................................... 15
ITEM 2. Changes in Securities................................................................ 15
ITEM 3. Defaults Upon Senior Securities...................................................... 15
ITEM 4. Submission of Matters to a Vote
of Security Holders.................................................................. 15
ITEM 5. Other Information.................................................................... 15
ITEM 6. Exhibits and Reports on Form 8-K..................................................... 16
SIGNATURES........................................................................... 17
2
CAMPBELL RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of Canadian dollars)
UNAUDITED
SEPTEMBER 30 December 31
2001 2000
---- ----
ASSETS $ $
CURRENT ASSETS
Cash and short-term deposits 1,466 4,548
Receivables 2,785 1,684
Restricted cash 834 840
Inventories 4,957 4,420
Prepaids 274 539
------- -------
Total current assets 10,316 12,031
------- -------
OTHER ASSETS 2,105 628
INVESTMENTS (NOTE 2) 6,576 --
FUTURE INCOME TAX ASSET 1,742 1,742
MINING INTERESTS 195,699 186,937
less accumulated depreciation and amortization (172,422) (171,738)
------- -------
23,277 15,199
------- -------
Total assets 44,016 29,600
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 2,696 2,195
Accrued liabilities 1,518 1,590
Future income tax liability 886 886
------- -------
Total current liabilities 5,100 4,671
------- -------
ACCRUED RECLAMATION 8,073 6,513
DEFFERRED INCOME 600 --
CONVERTIBLE DEBENTURES (NOTE 3) 7,246 3,864
FUTURE INCOME AND MINING TAX LIABILITY 856 856
OTHER LIABILITIES 78 228
SHAREHOLDERS' EQUITY
Capital stock (note 4) 24,175 125,355
Foreign currency translation adjustment 1,345 1,258
Deficit (3,457) (113,145)
------- -------
Total shareholders' equity 22,063 13,468
------- -------
Total liabilities and shareholders' equity 44,016 29,600
======= =======
3
CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Expressed in thousands of Canadian dollars except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
METAL SALES -- 5,947 -- 10,750
------- ------- ------- -------
EXPENSES
Mining -- 9,651 -- 17,772
General administration 408 745 1,309 2,104
Indemnity in lieu of notice -- -- 300 --
Depreciation and amortization 15 2,245 27 3,451
Exploration -- 633 -- 1,712
Care and maintenance 452 71 2,259 288
------- ------- -------- -------
875 13,345 3,895 25,327
------- ------- -------- -------
Loss from operations (875) (7,398) (3,895) (14,577)
------- ------- -------- -------
Other income (expense)
Other income 41 698 208 1,498
Metal sales adjustment previous year -- -- (76) --
Convertible debenture interest expense (161) (80) (307) (236)
------- ------- -------- -------
(120) 618 (175) 1,262
------- ------- -------- -------
Loss before taxes (995) (6,780) (4,070) (13,315)
Income and mining tax recovery -- 136 113 154
------- ------- -------- -------
NET LOSS (995) (6,644) (3,957) (13,161)
======= ======= ======== =======
LOSS PER SHARE (0.03) (0.42) (0.19) (0.84)
======= ======= ======== =======
CONSOLIDATED STATEMENTS OF DEFICIT (UNAUDITED)
(Expressed in thousands of Canadian dollars)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
Balance at beginning of period (2,462) (56,092) (113,145) (50,259)
Reduction of stated capital -- -- 113,645 --
Change in accounting policy -- -- -- 684
Net loss (995) (6,644) (3,957) (13,161)
-------- ------- -------- -------
Balance at end of period (3,457) (62,736) (3,457) (62,736)
========= ======== ======== ========
4
CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of Canadian dollars)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
CASH PROVIDED BY (USED IN): $ $ $ $
OPERATING ACTIVITIES
Net loss (995) (6,644) (3,957) (13,161)
Items not involving cash
Depreciation and amortization 15 2,245 27 3,451
Loss on sale of assets 29 -- 29 --
Recoveries of future income and mining taxes -- (170) -- (253)
Other 232 (288) 319 (485)
------- ------- -------- -------
(719) (4,857) (3,582) (10,448)
Net change in non-cash operating working capital (485) 390 516 963
------- ------- -------- -------
(1,204) (4,467) (3,066) (9,485)
FINANCING ACTIVITIES
Issues of capital stock -- 28 -- 69
Other 64 (61) 64 (61)
64 (33) 64 8
------- ------- -------- -------
INVESTING ACTIVITIES
Expenditures on mining interests (7) (259) (7) (6,935)
Business acquisitions, net of cash and short-term deposits 1 -- (91) --
Proceeds of sale of assets 34 -- 34 --
Deferred income 78 -- 78 --
Money market instruments (43) -- (150) 8,000
------- ------- -------- -------
63 (259) (136) 1,065
------- ------- -------- -------
Effect of exchange rate change on cash
and short-term deposits 3 85 56 172
------- ------- -------- -------
Decrease in cash and short-term deposits (1,074) (4,674) (3,082) (8,240)
Cash and short-term deposits at beginning of period 2,540 14,653 4,548 18,219
Cash and short-term deposits at end of period 1,466 9,979 1,466 9,979
======= ======= ======= =======
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
Receivables (351) (797) 770 (1,014)
Inventories and prepaids 230 845 615 185
Accounts payable 622 (233) 16 1,534
Accrued liabilities (986) 575 (885) 258
------- ------- -------- -------
(485) 390 516 963
======== ======= ======== =======
5
CAMPBELL RESOURCES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2001
(Tabular amounts are expressed in thousands of Canadian dollars)
1--GENERAL
The Corporation is incorporated under the Canada Business Corporations Act and
is engaged in the exploration, development, mining and processing of precious
metals in Canada, Mexico and Panama.
These unaudited consolidated financial statements reflect all adjustments that
are, in the opinion of management, necessary for a fair statement of results for
the interim periods presented. The unaudited financial statements presented
herein have been prepared in accordance with the instructions to Form 10-Q and
do not include all the information and note disclosures required by generally
accepted accounting principles for complete financial statements. For further
information, refer to the financial statements and related footnotes included in
the Corporation's Annual Report on Form 10-K for the year ended December 31,
2000.
The financial statements are prepared in accordance with accounting principles
generally accepted in Canada and, except as described in note 8, conform in all
material respects with accounting principles generally accepted in the United
States.
The results of operations for the first nine months of the year are not
necessarily indicative of the results to be expected for the full year.
2--INVESTMENTS
2001 2000
---- ----
$ $
Investments in shares at cost
Corporation Copper Rand Inc (65,000 common shares; 26% of
outstanding shares) 6,500 --
International Coromandel Resources Ltd. (50,000 common shares,
Market value of $3) 11 --
Arca Explorations Inc. (171,664 common shares,
Market value of $9) 48 --
Matamec Explorations Inc. (70,026 common shares
Market value of $11) 17 --
----- -----
6,576 --
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6
3--CONVERTIBLE DEBENTURES
a) In July 1994, the Corporation issued US$11,005,000 of 7.5% Convertible
Subordinated Debentures. The debentures are unsecured, bear interest at
7.5% payable in arrears on June 1 and December 1 each year and mature on
July 21, 2004. The debentures are convertible at the option of the holder
into common shares of the Corporation at any time prior to maturity at a
conversion price of US$5.00 per common share. The debentures are redeemable
for cash at any time after the fifth anniversary of the date of issue or,
at the Corporation's option, may be redeemed in common shares on the basis
of one common share for each US$5.00 of debenture principal being redeemed.
The right of the Corporation to redeem the debentures for cash or common
shares is conditional on the average price of the common shares exceeding
US$5.00 during a period of 20 consecutive days prior to notice of
redemption. The Corporation may, at its option, repay the debenture at
maturity by issuing common shares of the Corporation at the conversion
price of US$5.00 per common share.
During the nine months ended September 30, 2001, debenture holders
converted US$25,000 (2000 - US$nil) of debenture principal into 5,000 (2000
- nil) common shares of the Corporation resulting in a balance outstanding
at September 30, 2001 of US$2,551,000 (December 31, 2000 - US$2,576,000).
b) In 2001, the Corporation issued $3,150,000 convertible debentures. The
debentures are unsecured, bear interest at an annual rate of 8% and include
additional interest based on the price of metals and level of production at
the Copper Rand mine. The interest is payable quarterly. The debentures are
refundable as to 20% of capital on July 1, 2004, as to 40% on July 1, 2005
and as to 40% on July 1, 2006 and are convertible in shares at a price of
$1.025 per share or up to a maximum of $1.64 based on an increase of the
gold price above US$350.
4--CAPITAL STOCK
Changes in the issued and outstanding common shares for the nine months are as
follows (in thousands):
2001 2000
---------- ---------
Shares Amount Shares Amount
------ ------ ------ ------
Common shares: # $ # $
Balance at beginning of period 15,784 125,355 15,715 125,339
Reduction of capital (113,645) --
Issued
Conversion of convertible debentures 5 37 -- --
Shares issued in relation to the
amendment of the Net Smelter
Return Royalty Agreement (note 7b) 800 432
Share consolidation costs (61)
Acquisition of MSV Resources inc 10,891 8,822 -- --
Acquisition of GeoNova Explorations inc 3,919 3,174 -- --
Employee Incentive Plan and Directors'Stock Option Plan -- -- 47 69
-------- ------- ------ -------
Balance at September 30 31,399 24,175 15,762 125,347
======== ======= ====== =======
7
Loss per share has been calculated using the weighted average number of shares
outstanding during the nine months which was 21,018,000 (2000- 15,722,000) and
during the three months which was 30,783,000 (2000 - 15,762,000).
5 -- BUSINESS ACQUISITION
On June 30, the Corporation merged with MSV Resources Inc. (`MSV') and GeoNova
Explorations Inc. (`GNE'). The purchase method of accounting is used for this
merger. This merger is summarized below:
MSV GNE Total
Assets acquired $ $ $
----- ----- -----
Cash and short-term deposit 650 9 659
Receivables 1,831 39 1,870
Inventories 623 -- 623
Prepaid 257 7 264
Mining assets 4,322 3,837 8,159
Investments 6,544 21 6,565
Other assets 1,080 -- 1,080
Liabilities assumed
Accounts payable 493 63 556
Accrued liabilities 264 477 741
Convertible debentures 3,155 -- 3,155
Accrued reclamation 1,500 -- 1,500
Deferred income 522 -- 522
----- ------ ------
Net assets acquired at fair value 9,373 3,373 12,746
===== ====== ======
Consideration
Shares issued (14,810 shares) 8,822 3,174 11,996
Acquisition costs 551 199 750
----- ------ ------
9,373 3,373 12,746
===== ====== ======
8
6--STATEMENTS OF CASH FLOWS
Additional disclosures with respect to the Statements of Cash Flows are as
follows:
Three months ended Nine months ended
------------------ -----------------
September 30 September 30
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
Cash taxes paid (6) 13 6 57
Cash interest paid 147 145 147 145
7--COMMITMENTS AND CONTINGENCIES
a) At September 30, 2001 the Corporation has outstanding calls for 8,300
ounces of gold in 2001 at US$350 per ounce subject to floating gold lease
rates.
b) At June 30, 2001, the Corporation amended the Net Smelter Return Royalty
Agreement on the production of the Joe Mann Mine. In consideration of the
issuance of 800,000 common shares of Campbell, the royalty will be reduced
to a graduated net smelter return royalty increasing from 1.5% at gold
price of US$325 per ounce to 2.0% at a gold price of US$375 per ounce.
After a cumulative royalty payment of Cdn$500,000, a royalty of 1% will be
paid only if the gold price is at US$350 or greater.
c) During 1996, the Corporation's Mexican subsidiary received import duty
assessments following an audit claiming the subsidiary's interest in
certain pieces of machinery and equipment with an approximate value of
US$2,200,000 and levying taxes, penalties, interest and inflationary
adjustments for a further Mexican pesos 9,200,000. On May 26, 1997, the
Corporation received notice that it was successful in its appeal against
the assessments and that the Mexican pesos 9,200,000 was not payable. The
charge against the assets will be released when the final tax assessment
covering this matter is issued in favour of the Corporation by the tax
authorities. On May 6, 1998, the tax authorities issued a tax assessment
identical to that issued in 1996 except that the amounts claimed have
increased to Mexican pesos 18,000,000 as a result of inflation and
additional interest. The Corporation has been advised that this assessment
is improper as it completely ignores the earlier ruling. Accordingly the
Corporation has filed a new appeal before the Federal Tax Court to nullify
the assessment. On October 11, 2001, the Corporation received notice that
it was successful in its appeal against the assessments. This decision is
subject to further appeal by the tax authorities on or before October 26,
2001. No provision has been made in the financial statements for the
amounts assessed on the basis of the outcome of this appeal, the earlier
ruling and the legal advice received.
9
d) During 1991, a subsidiary of the Corporation entered into a corporate
restructuring and financing arrangement ("Arrangement") in which it issued
to a group of Canadian financial institutions $38,000,000 of Guaranteed
Subordinate Debentures and Notes ("Debentures") and $12,000,000 of
Guaranteed Non-Cumulative Redeemable Retractable Preferred Shares
("Preferred Shares"). The Debentures are unsecured, subordinate to all
existing non-trade debt and future senior debt, bear interest at varying
rates, are repayable upon maturity in 2007, and cannot be prepaid. The
Preferred Shares are redeemable at any time at an amount of $240,000 per
Preferred Share, rank equally and pari passu with the common shares for
dividends when declared, and are retractable in 2007. In order to secure
the performance of the Debentures and Preferred Shares the Corporation's
subsidiary entered into an Interest Rate and Currency Exchange Swap
Agreement ("Swap Agreement") with a major international bank. The Swap
Agreement provides for the conversion of one floating rate interest basis
to another and for differences in the timing of payments so as to match the
interest payment requirements under the Debentures, repay the Debentures
upon maturity and retract the Preferred Shares. All payments are
denominated in Canadian dollars. The Corporation's subsidiary placed
Canadian dollar deposits with the counter party to the Swap agreement which
deposits have been charged to secure the performance under the Swap
agreement. These deposits earn interest at Canadian Bankers Acceptance
rates. The Swap Agreement was irrevocably assigned directly to the
investors. Accordingly the bank is the primary obligor under the
Arrangement.
e) The Corporation is from time to time involved in various claims, legal
proceedings and reassessments for income, mining and other taxes, arising
in the ordinary course of business. The Corporation's current and proposed
mining and exploration activities are subject to various laws and
regulations governing the protection of the environment. These laws and
regulations are continually changing and are generally becoming more
restrictive. The Corporation conducts its operations so as to protect its
employees, the general public and the environment and, to the best of its
knowledge, believes its operations are in compliance with all applicable
laws and regulations, in all material respects. The Corporation has made,
and expects to make in the future, submissions and expenditures to comply
with such laws and regulations. Where estimated reclamation and closure
costs are reasonably determinable, the Corporation has recorded a provision
for environmental liabilities based on management's estimate of these
costs. Such estimates are subject to adjustment based on changes in laws
and regulations and as new information becomes available.
10
8--DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The reconciliation of net loss determined in accordance with generally accepted
accounting principles in Canada to net loss determined under accounting
principles which are generally accepted in the United States is as follows:
Three months ended Nine months ended
------------------ -----------------
September 30 September 30
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
Net loss for the period as reported (995) (6,644) (3,957) (13,161)
Depreciation and amortization (a) -- (2,026) -- (3,071)
Exploration expenses (d) (5) -- (5) --
Foreign exchange contracts (c) (253) -- (253)
------ ------ ------ -------
Net loss for the period in accordance
with United States accounting principles (1,000) (8,923) (3,962) (16,485)
------ ------ ------ -------
Other comprehensive income (loss):
Foreign currency translation adjustments -- 323 -- 727
------ ------ ------ -------
Comprehensive loss for the period in accordance
with United States accounting principles (1,000) (8,600) (3,962) (15,758)
------ ------ ------ -------
Loss per share for the period in accordance
with United States accounting principles
Basic and fully diluted (0.03) (0.57) (0.19) (1.05)
------ ------ ------ -------
Differences between Canadian and United States accounting principles as they
affect the Corporation's financial statements are as follows:
a) Depreciation and Amortization - Under Canadian accounting principles,
depreciation and amortization may be calculated on the unit-of-production
method based upon the estimated mine life, whereas under United States
accounting principles the calculations are made based upon proven and
probable mineable reserves.
b) Contingent Liability - Under United States accounting principles the
contingent liability disclosed in note 7(d) would be reflected in the
balance sheet. Accordingly, for United States accounting principles total
assets and liabilities would increase by $50 million. The increase in
assets represents investments (non-current) comprising Canadian dollar
payments under the Swap agreement and Canadian dollar deposits with the
counter party to the Swap agreement. The liabilities (non-current)
represent the Guaranteed Subordinate Debentures and Notes of $38 million
and the Guaranteed Non-Cumulative Redeemable Retractable Preferred Shares
of $12 million which would be included outside of shareholders' equity.
11
c) Foreign Exchange Contracts - In accordance with Canadian accounting
principles, certain long-term foreign exchange contracts are considered to
be hedges of sales revenue denominated in foreign currencies. Gains and
losses related to changes in market values of such contracts are deferred
and recognized when the contract is settled as part of sales revenue. Under
United States accounting principles, changes in the market value of the
contracts would be included in current earnings.
d) Exploration Expenses and Related Mining Properties - Under FASB Statement
No 121, exploration expenses and related mining properties acquired prior
to the determination of the existence of a commercially mineable deposit
are recorded as expenses as they are incurred. Under Canadian GAAP, these
costs may be deferred until such time as the exploration and development
work is either effectively abandoned and related costs are written off or,
an operating mine is established following which accumulated costs are
amortized to earnings. Accordingly, the net loss is adjusted to reflect
GeoNova deferred exploration costs which would have been expensed for U.S.
GAAP purposes. The mining interest and the Shareholder's equity would be
reduced by $3,825,000.
e) Balance Sheets - The cumulative effect of the application of United States
accounting principles, noted in (a) to (d) above, on the consolidated
balance sheets of the Corporation as at September 30, 2001and December 31,
2000 would be to decrease mining interests by $5,782,000 (2000 -
$1,957,000), increase long-term investments by $50,000,000 (2000 -
$50,000,000), increase long-term liabilities by $38,000,000 (2000 -
$38,000,000), increase preferred shares by $12,000,000 (2000 - $12,000,000)
and reduce shareholders equity by $5,782,000 (2000 - $1,957,000).
f) During 1999, the Securities Exchange Commission ("SEC") issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 reflects the SEC staff's interpretation of basic
principles of revenue recognition in existing United States generally
accepted accounting principles. There was no impact of adopting SAB 101
during the first three quarters of 2001.
12
CAMPBELL RESOURCES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Expressed in Canadian dollars unless otherwise noted)
FORWARD-LOOKING STATEMENTS
Certain information contained in this release contains "Forward-Looking
Statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and is subject to certain risks and uncertainties, including those "Risk
Factors" set forth in the Campbell's current Annual Report on Form 10-K for the
year ended December 31, 2000. Such factors include, but are not limited to:
differences between estimated and actual mineral reserves and resources; changes
to exploration, development and mining plans due to prudent reaction of
management to ongoing exploration results, engineering and financial concerns;
and fluctuations in the gold price which affect the profitability and mineral
reserves and resources of Campbell. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Campbell undertakes no obligation to release publicly any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect unanticipated events or developments.
OVERVIEW
Campbell recorded a loss of $1.0 million or $0.03 per share in this third
quarter ended September 30, 2001 and a loss of $4.0 million or $0.19 per share
for the first nine months of the year. Losses in the comparable periods of 2000
were $6.6 million or $0.03 per share and $13.2 million or $0.84 per share. There
was a negative cash flow from operations before the change in non-cash operating
working capital of $3.6 million for the nine months ended September 30, 2001
compared to negative cash flow of $10.5 million in the comparable period of
2000.
In 2001, the Company entered into agreements to sell its Panamanian and Mexican
subsidiaries. Also, Campbell has reviewed and revised its mining and geological
reserves, studied previous operating methods and established a new more
profitable mining plan for the Joe Mann Mine based on certain assumptions
included in a feasibility study. The Company also completed the merger with
GeoNova Explorations and MSV Resources Inc. This merger, with two companies
already well established in the Chibougamau region, provides for considerable
savings in human and material resources as well as lower administrative costs.
Financing of future projects should also be made easier. Furthermore, in this
last quarter, the Company reached agreements on a number of concessions with the
various unions representing mine and treatment plant employees.
The results for the first nine months reflect the care and maintenance situation
at the Joe Mann Mine as well as the payment of an indemnity in lieu of notice to
the salaried employees working at the time operations were suspended in November
2000. In the previous year, the costs for development and resumption of
operations are included in the results. In 2000, pre-production costs at the Joe
Mann Mine (net of any revenue from ore production) were capitalized as at April
30, 2000 after which the costs were expensed. Administration costs for this
third quarter include the three companies. Other revenues totalling $208,000 for
the nine months ended this September include interest revenues of $123,000,
$102,000 for the sale of gold recovered at the Campbell mill, and a loss of
$121,000 from the conversion of foreign currency.
13
BALANCE SHEET
The balance sheet reflects the merger with MSV Resources Inc. and GeoNova
Explorations Inc. effective June 30, 2001. The net assets as at September 30,
2001 were $44.0 million. A total of 14.8 million common shares were issued to
shareholders of MSV and GeoNova. As at September 30, 2001, net assets for
Campbell were $22 million or $0.70 per share.
The 26% participation in Corporation Copper Rand Inc., owner of the Copper Rand
Mine, is accounted for at cost. At this point in time, there would be no
difference in accounting for this participation on the equity method basis. As
the operator of the Copper Rand Mine, all the current assets and liabilities
related to this operation are taken into account on the balance sheet.
Production at the Copper Rand Mine should begin in the first quarter of 2003.
The company recently announced the beginning of exploration and development work
at the Joe Mann Mine. Operations should resume in the 1st quarter of 2002. Ten
million dollars will be spent for exploration ($5 million) and development ($5
million). Funds will be raised through a one-million dollar private placement, a
two-million dollar grant, a four-million dollar credit facility and part of the
proceeds from the sale of units in a royalty on production from the Joe Mann
Mine and Corner Bay project.
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2001, the Corporation's cash and short term deposits were
$1.5 million compared to $4.5 million on December 31, 2000. The decrease is
attributable to the general administration expenses, the care and maintenance
expenses of the sites, the interest on convertible debentures and the costs of
the merger.
The Corporations' principal sources of liquidity are the future cash flows from
the Joe Mann Mine, the Copper Rand Mine and the Corporation's participation in
the excess funding of the Copper Rand/Portage Environmental Fund. The
Corporation is subject to the normal risks and uncertainties associated with
mining, including fluctuations in gold prices, the relative
U.S./Mexican/Canadian exchange rates, the ability of the Company to meet its
production estimates and any unforeseen environmental problems.
14
ITEM 1. Legal Proceedings
-----------------
Not applicable
ITEM 2. Changes in Securities
---------------------
Not Applicable
ITEM 3. Defaults Upon Senior Securities
-------------------------------
None
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
ITEM 5. Other Information
-----------------
On November 14, 2001, The New York Stock Exchange announced
that it has determined that the common stock of the Company
will be suspended on or before Monday, November 26, 2001.
Following suspension, application will be made to the
Securities and Exchange Commission to delist the issue, as the
Company will not challenge this determination. The Company
will continue to trade on The Toronto Stock Exchange and has
informed the NYSE that it is actively seeking a trading market
in the United States and will provide additional information
to investors in due course.
The decision was reached in view of the fact that the Company
has fallen below the continued listing standards regarding
total market capitalization of not less than $50 million and
stockholders' equity of not less than $50 million, total
market capitalization of not less than $15 million over a 30
trading-day period and minimum share price of not less than $1
over a 30 trading-day period.
The NYSE had previously accepted a Plan provided by the
Company that would have brought it into conformity with
continued listing standards. The Company, while making
progress on its Plan has, however, been unable to meet certain
material quantitative aspects of that Plan.
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(b) Reports on Form 8-K. During the period covered by this Report on
Form 10-Q, the Registrant filed the following Current Report on
Form 8-K:
(i) A Report, dated June 21, 2001 and amended July 6, 2001,
which reported change of the Registrant's Certifying
Accountants and shareholders' approval of Merger with
MSV and GeoNova.
(ii) A Report, dated July 16, 2001, which reported details
of Merger of MSV and GeoNova into the Registrant.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMPBELL RESOURCES INC.
"LUCIE BRUN"
-------------
Lucie Brun
Executive Vice President, and Chief
Administrative Officer (Principal Financial
and Accounting Officer and authorized
signatory)
Montreal, Quebec
November 14, 2001