<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2000
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
120 ADELAIDE ST. WEST, SUITE 1910
TORONTO, ONTARIO M5H 1T1 CANADA
TELEPHONE - (416) 366-5201
(Address, including zip code, and telephone number including area code of
registrants principal executive offices)
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 September 30,2000, 15,762,270 Common Shares, without
par value
<PAGE> 2
CAMPBELL RESOURCES INC.
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as at September 30, 2000 (Unaudited) and December 31, 1999 ......... 3
Consolidated Statements of Operations (Unaudited) for the Three Months and the Nine Months
Ended September 30, 2000........................................................................ 4
Consolidated Statements of Deficit (Unaudited) for the Nine Months Ended September 30, 2000..... 4
Consolidated Statements of Cash Flows (Unaudited) for the Three Months and the Nine Months
Ended September 30, 2000........................................................................ 5
Notes to the Consolidated Financial Statements (Unaudited) ..................................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................................................... 11
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings............................................................................... 14
ITEM 2. Changes in Securities........................................................................... 14
ITEM 3. Defaults Upon Senior Securities................................................................. 14
ITEM 4. Submission of Matters to a Vote
of Security Holders............................................................................. 14
ITEM 5. Other Information............................................................................... 14
ITEM 6. Exhibits and Reports on Form 8-K................................................................ 14
SIGNATURES...................................................................................... 15
</TABLE>
2
<PAGE> 3
CAMPBELL RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of Canadian dollars)
<TABLE>
<CAPTION>
Unaudited
September 30 December 31
2000 1999
--------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term deposits $ 9,979 $ 18,219
Money market instruments 7,958
Receivables 3,013 1,999
Inventories (note 3) 4,749 4,891
Prepaids 417 460
--------- ---------
Total current assets 18,158 33,527
--------- ---------
OTHER ASSETS 132 194
FUTURE INCOME TAX ASSET 1,600
MINING INTERESTS 186,596 178,538
less accumulated depreciation and amortization (129,139) (125,125)
--------- ---------
57,457 53,413
--------- ---------
Total assets $ 77,347 $ 87,134
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,638 $ 1,104
Accrued liabilities 1,261 1,003
Future income tax liability 888
--------- ---------
Total current liabilities 4,787 2,107
--------- ---------
ACCRUED RECLAMATION 2,306 2,169
CONVERTIBLE DEBENTURES (note 4) 3,882 3,718
FUTURE INCOME AND MINING TAX LIABILITY 1,492 1,716
OTHER LIABILITIES 949 1,751
SHAREHOLDERS' EQUITY
Capital stock (note 5) 125,347 125,339
Foreign currency translation adjustment 1,320 593
Deficit (62,736) (50,259)
--------- ---------
Total shareholders' equity 63,931 75,673
--------- ---------
Total liabilities and shareholders' equity $ 77,347 $ 87,134
========= =========
</TABLE>
Commitments and contingencies (note 7)
3
<PAGE> 4
CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Expressed in thousands of Canadian dollars except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
September 30 September 30
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
METAL SALES $ 5,947 $ 5,699 $ 10,750 $ 18,724
-------- -------- -------- --------
EXPENSES
Mining 9,651 6,078 17,772 21,541
General administration 745 762 2,104 2,225
Depreciation and amortization 2,245 1,191 3,451 3,953
Exploration 633 759 1,712 1,668
Care and maintenance 71 540 288 1,327
-------- -------- -------- --------
13,345 9,330 25,327 30,714
-------- -------- -------- --------
Loss from operations (7,398) (3,631) (14,577) (11,990)
-------- -------- -------- --------
Other income (expense)
Other income 698 (2,000) 1,498 (644)
Convertible debenture interest expense (80) (85) (236) (271)
-------- -------- -------- --------
618 (2,085) 1,262 (915)
-------- -------- -------- --------
Loss before taxes (6,780) (5,716) (13,315) (12,905)
Income and mining tax recovery 136 39 154 257
-------- -------- -------- --------
NET LOSS ($ 6,644) ($ 5,677) ($13,161) ($12,648)
======== ======== ======== ========
LOSS PER SHARE (note 5) ($ 0.42) ($ 0.36) ($ 0.84) ($ 0.81)
======== ======== ======== ========
</TABLE>
CONSOLIDATED STATEMENTS OF DEFICIT (UNAUDITED)
(Expressed in thousands of Canadian dollars)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Balance at beginning of period ($50,259) ($37,557)
Change in accounting policy (note 2) 684
Net loss (13,161) (12,648)
-------- --------
Balance at end of period ($62,736) ($50,205)
======== ========
</TABLE>
4
<PAGE> 5
CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of Canadian dollars)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
September 30 September 30
------------ ------------
CASH PROVIDED BY (USED IN):
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ($ 6,644) ($ 5,677) ($13,161) ($12,648)
Items not involving cash
Depreciation and amortization 2,245 1,191 3,451 3,953
Future mining taxes recovery (170) (216) (253) (738)
Other (288) 2,425 (485) 1,903
-------- -------- -------- --------
(4,857) (2,277) (10,448) (7,530)
Net change in non-cash operating working capital 390 (968) 963 47
-------- -------- -------- --------
(4,467) (3,245) (9,485) (7,483)
-------- -------- -------- --------
FINANCING ACTIVITIES
Issues of capital stock 28 25 69 59
Other (61) (61)
-------- -------- -------- --------
(33) 25 8 59
-------- -------- -------- --------
INVESTING ACTIVITIES
Expenditures on mining interests (259) (474) (6,935) (4,134)
Money market instruments (7,858) 8,000 (7,858)
-------- -------- -------- --------
(259) (8,332) 1,065 (11,992)
-------- -------- -------- --------
Effect of exchange rate change on cash
and short-term deposits 85 (31) 172 (236)
-------- -------- -------- --------
Decrease in cash and short-term deposits (4,674) (11,583) (8,240) (19,652)
Cash and short-term deposits at beginning of period 14,653 33,424 18,219 41,493
-------- -------- -------- --------
Cash and short-term deposits at end of period $ 9,979 $ 21,841 $ 9,979 $ 21,841
======== ======== ======== ========
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
Receivables ($ 797) $ 93 ($ 1,014) $ 683
Inventories and prepaids 845 1 185 581
Accounts payable (233) (941) 1,534 (684)
Accrued liabilities 575 (121) 258 (533)
-------- -------- -------- --------
$ 390 ($ 968) $ 963 $ 47
======== ======== ======== ========
</TABLE>
5
<PAGE> 6
CAMPBELL RESOURCES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2000
(Tabular amounts are expressed in thousands of Canadian dollars)
1 -- GENERAL
The Company 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 Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Campbell will perform a review of the carrying value of its mining properties
during the fourth quarter. This review will take account of the gold price
environment, the operating status of the Joe Mann Mine, the results of the
update of the ore reserves and long-term plan at the Joe Mann Mine, the success
of the Company's exploration efforts at the Santa Gertrudis Mine, and the future
prospects for the Cerro Quema project in Panama. Any material downward
revisions to gold price assumptions, gold production, increases in costs, lack
of success in exploration or future prospects will likely results in a
writedown of a significant portion of the carrying value of Mining Interests.
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 -- CHANGE IN ACCOUNTING POLICY
The Company has changed its policy for accounting for income taxes by adopting,
effective January 1, 2000, the Canadian Institute of Chartered Accountants
Handbook Section 3465 "Income Taxes". The Company has adopted Section 3465
retroactively without restatement of prior period financial statements resulting
in the deficit at January 1, 2000 being reduced by $684,000.
3 -- INVENTORIES
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Materials and supplies $4,310 $4,369
Work-in-process 439 522
------- ------
$4,749 $4,891
====== ======
</TABLE>
6
<PAGE> 7
4 -- CONVERTIBLE DEBENTURES
In July 1994, the Company 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
Company at any time prior to maturity at a conversion of US$5.00 per common
share (adjusted for the share consolidation - see note 5). The debentures are
redeemable for cash at any time after the fifth anniversary of the date of issue
or, at the Company'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 Company 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 Company may, at
its option, repay the debenture at maturity by issuing common shares of the
Company at the conversion price of US$5.00 per common share.
During the nine months ended September 30, 2000, debenture holders converted
US$nil (1999 - US$1,117,000) of debenture principal into nil (1999 - 223,400)
common shares of the Company resulting in a balance outstanding at September 30,
2000 of US$2,576,000 (December 31, 1999 - US$2,576,000).
5 -- CAPITAL STOCK
In each period presented the common shares issued have been adjusted to reflect
the one-for-ten share consolidation approved by the shareholders at the Annual
General Meeting on May 19, 2000. Changes in the issued and outstanding common
shares for the nine months are as follows (in thousands):
<TABLE>
<CAPTION>
2000 1999
---- ----
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Common shares:
Balance at beginning of period
15,715 $125,339 15,469 $123,632
Issued:
Conversion of convertible debentures 223 1,643
Share consolidation costs (61)
Employee Incentive Plan and
Directors' Stock Option Plan 47 69 14 59
-------- -------- ------ --------
Balance at September 30 15,762 $125,347 15,706 $125,334
======== ======== ====== ========
</TABLE>
Loss per share has been calculated using the weighted average number of shares
outstanding during the nine months which was 15,722,000 (1999 - 15,691,000) and
during the three months which was 15,762,000 (1999 - 15,701,000).
7
<PAGE> 8
6-- STATEMENTS OF CASH FLOWS
Additional disclosures with respect to the Statements of Cash Flows are as
follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
September 30 September 30
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash taxes paid $ 13 $194 $ 57 $475
Cash interest paid $ - $ 7 $145 $255
</TABLE>
7 -- COMMITMENTS AND CONTINGENCIES
a) As at September 30, 2000 the Company had sold forward 10,000 ounces of
gold for delivery in 2000 under forward contracts at an average of
US$291 per ounce, and had outstanding calls for 33,200 ounces of gold
in 2001 and 20,000 ounces of gold in 2002 at US$350 per ounce subject
to floating gold lease rates.
b) The Company's Joe Mann mine is subject to a graduated net smelter
return royalty increasing from 1.8% up to a gold price of Canadian $512
per ounce to 3.6% at a gold price of Canadian $625 per ounce.
c) During 1996, the Company'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
Company 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 Company 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 Company has been advised that
this assessment is improper as it completely ignores the earlier
ruling. Accordingly the Company has filed a new appeal before the
Federal Tax Court to nullify the assessment. No provision has been made
in the financial statements for the amounts assessed on the basis of
the earlier ruling and the legal advice received.
d) During 1991, a subsidiary of the Company 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 Company's subsidiary entered into an Interest Rate
and Currency Exchange Swap Agreement ("Swap Agreement") with a major
international bank.
8
<PAGE> 9
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 Company'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 Company 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 Company'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 Company 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 Company
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 Company
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.
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:
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ ------------------
September 30 September 30
------------ -------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss for period as reported $(6,644) $(5,677) $(13,161) $(12,648)
Depreciation and amortization (a) (2,026) 443 (3,071) 1,482
Deferred income taxes (b) (253) (68) (253) (248)
Foreign exchange contracts (d) (95) 733
------- ------- -------- --------
Net loss for the year in accordance
with United States accounting principles $(8,923) $(5,397) $(16,485) $(10,681)
------- ------- -------- --------
Other comprehensive income (loss):
Foreign currency translation adjustments 323 (14) 727 (495)
------- ------- -------- --------
Comprehensive loss for the year in accordance
with United States accounting principles $(8,600) $(5,411) $(15,758) $(11,176)
------- ------- -------- --------
Loss per share for the year in accordance
with United States accounting principles
Basic and fully diluted $ ( 0.57) $ ( 0.34) $ (1.05) $ (0.68)
------- ------- -------- --------
</TABLE>
9
<PAGE> 10
Differences between Canadian and United States accounting principles as they
affect the Company'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) Deferred Income Taxes - Effective January 1, 2000 the Company adopted
the liability method of accounting for income taxes in accordance with
Canadian accounting principles (see note 2) which is now substantially
consistent with accounting for income taxes in accordance with United
States accounting principles. For Canadian accounting principles the
Company did not restate prior period financial statements.
c) 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.
d) 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.
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 Company as at September 30, 2000 and
December 31, 1999 would be to decrease mining interests by $25,548,000
(1999 - $22,477,000), increase long-term investments by $50,000,000
(1999 - $50,000,000), increase long-term liabilities by $38,000,000
(1999 - $38,000,000), increase future tax assets, non-current by $nil
(1999 - $1,999,000), increase future taxes, current liabilities by $nil
(1999 - $1,179,000), decrease future income and mining taxes,
non-current liabilities by $779,000 (1999 - $896,000), increase
preferred shares by $12,000,000 (1999 - $12,000,000) and reduce
shareholders equity by $24,769,000 (1999 - $20,761,000).
f) Other Recent Accounting Pronouncements - In June 1998, the FASB issued
SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes methods of accounting for
derivative financial instruments and hedging activities related to
those instruments as well as other hedging activities. The Company will
be required to implement SFAS No. 133 for its fiscal year ending
December 31, 2001. The Company has not yet determined the impact, if
any, of the adoption of SFAS No. 133 on its reported financial
position, results of operations or cash flows.
10
<PAGE> 11
CAMPBELL RESOURCES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SEPTEMBER 30, 2000
(all dollars are Canadian unless noted otherwise)
FORWARD-LOOKING STATEMENTS
This report contains certain "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
Company's current Annual Report on Form 10-K for the year ended December 31,
1999. Such factors include, but are not limited to: differences between
estimated and actual ore reserves; 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 ore reserves of the Company. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date hereof. The Company 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.
JOE MANN MINE OPERATIONS TEMPORARILY SUSPENDED
As a result of the cash losses incurred during the start-up of operations at the
Joe Mann Mine, the continuing cash losses, and the likely requirement for
funding future mine development, mine operations will be temporarily suspended
effective November 10 awaiting higher gold prices and further development plans.
Significant progress had been made improving the performance of the Joe Mann
Mine. An action plan developed in August with the assistance of Dynatec
Corporation focused on increasing overall productivity rates for the mine and
was being implemented with positive results. The average tons of ore mined
increased to 850 tons per day in October compared to 570 tons in September and
500 tons in August. This success primarily results from the start of mining of
the 29-0-9 stope, a wide multi-lens stope being mined by a mechanized variation
of the long-hole method with backfill, that produced approximately 45% of the
ore during October.
During the month of October 24,550 tons of ore were milled at a grade of 0.224
ounces of gold per ton to recover 5,038 ounces of gold and 88,000 pounds of
copper. The cash cost was US$330 per ounce produced. Although this cash cost per
ounce is a significant improvement over previous months, the increase in
production in October has not achieved the predicted break-even in cash flow.
Based on current productivity levels and expected ore grades, the Joe Mann Mine
is forecast to produce 17,000 ounces of gold during the fourth quarter at a cash
cost of approximately US$300 per ounce. Development costs are forecast at
approximately $300,000 for the same period. With gold prices close to their 20
year low and only 10,000 ounces of gold hedged for the balance of the year at an
average price of US$291 per ounce, the forecast indicates a continuing drain on
the Company's cash resources. As a result mine operations will be temporarily
suspended effective November 10 awaiting higher gold prices. In the interim,
management is considering various strategies to enable the mine to be properly
funded and receive the support it needs for its future development.
11
<PAGE> 12
During the fourth quarter, the ore reserves will be re-estimated and the
long-term plan updated. Any material downward revisions to gold price
assumptions, gold production or increases in costs will likely result in a
writedown of a significant portion of the carrying value of the Joe Mann Mine.
THIRD QUARTER RESULTS
The Company recorded a loss of $13.2 million or $0.84 per share in the nine
months and a loss of $6.6 million or $0.42 per share in the three months ended
September 30, 2000. This compares to a loss of $12.6 million or $0.81 per share
and a loss of $5.7 million or $0.36 per share in the comparable periods of 1999.
The loss per share amounts for 1999 have been restated to take account of the
consolidation of the Company's shares on a one-for-ten basis in May, 2000. There
was negative cash flow from operations before the change in non-cash operating
working capital of $10.4 million in the nine months and $4.9 million in the
three months ended September 30, 2000 compared to negative cash flow of $7.5
million and $2.3 million in the comparable periods of 1999.
Campbell produced a total of 27,400 ounces of gold in the nine months and 14,100
ounces in the three months ended September 30, 2000 compared to 45,200 ounces
and 13,400 ounces in 1999. Gold production was lower than earlier forecast
primarily as a result of a number of start-up issues that have put production at
the Joe Mann Mine behind schedule. The average gold price recognized in the nine
months ended September 30, 2000 was US$278 per ounce compared to US$275 per
ounce in the comparable period of 1999.
The results for the first nine months of 2000 reflect the ongoing development
and start-up of operations at the Company's Joe Mann Mine in Chibougamau, Quebec
and are not readily comparable to the same period of 1999. All pre-production
costs less any revenues relating to the Joe Mann Mine were capitalized to the
end of April, 2000 and expensed thereafter.
JOE MANN MINE PRODUCTION
Production at the Joe Mann Mine during the reporting periods was as follows:
<TABLE>
<CAPTION>
NINE (1) NINE
MONTHS MONTHS
THREE MONTHS ENDED ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
------------ --------- ---------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Tons milled 50,500 77,500 99,800 223,000
Gold grade (ounces per ton) 0.212 0.184 0.201 0.214
Mill recovery 92.7% 94.6% 93.1% 94.2%
Ounces of gold produced 9,800 13,400 17,900 44,500
Pounds of copper produced 189,100 274,700 399,400 919,500
Cash cost per ounce of gold produced (US$) $ 457 $ 284 $ 475 $ 301
</TABLE>
(1) The Joe Mann Mine restarted production on April 3, 2000
12
<PAGE> 13
SANTA GERTRUDIS MINE
During the nine months ended September 30, 2000, 326,300 tonnes of ore were
mined at the Santa Gertrudis Mine at a grade of 1.69 g/t and a strip ratio of
7.6 to one. Gold production was 4,400 ounces in the quarter and 9,600 ounces in
the nine months ended September 30, 2000. The mine was effectively on a care and
maintenance basis in the comparable period of 1999. As previously reported,
mining operations were suspended on October 15, 2000 as a result of the
continuing weak gold price and the lower than expected gold production.
Leaching of the stock-piled ore will continue as long as the economics permit.
As a result of the lower production levels the cash cost per ounce for the year
to date was US$393 per ounce.
Exploration will continue for the balance of 2000 on the Santa Gertrudis
property to test three key targets. Approximately $500,000 is budgeted for the
fourth quarter for trenching and 1,800 metres of drilling on these targets.
Efforts are also continuing to gain access to the promising San Enrique
geochemical anomaly discovered in 1998. In addition, Campbell is continuing
discussions with certain major gold compaies to determine their level of
interest in pursuing a deep drilling program to search for sulphide
mineralization on the property. Exploration expense of $1.7 million in each of
the nine months ended September 30, 2000 and 1999 all relates to expenditures on
the Santa Gertrudis property and the Roca Roja claims that were acquired in
1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term deposits decreased to $10 million at September 30, 2000
compared to $26.2 million (including money market instruments) at December 31,
1999. Working capital also decreased to $13.4 million from $31.4 million at
December 31, 1999. The continuing low gold price, difficulties in achieving
targeted production levels at the Joe Mann Mine and the lower than expected gold
production from the Santa Gertrudis Mine have all contributed to the decrease in
the financial position of the Company.
Capital expenditures in the three and nine month periods ended September 30,
2000 amounted to $0.3 million (1999 - $0.5 million) and $6.9 million (1999 -
$4.1 million), respectively and relate to the development at the Joe Mann Mine
for all periods presented.
OUTLOOK
Following the temporary suspension of mining operations at the Joe Mann Mine,
management will be considering various strategies to enable the mine to be
properly funded and receive the support it needs for its future development.
Campbell will perform a review of the carrying value of its mining properties
during the fourth quarter. This review will take account of the gold price
environment, the operating status of the Joe Mann Mine, the results of the
update of the ore reserves and long-term plan at the Joe Mann Mine, the success
of the Company's exploration efforts at the Santa Gertrudis Mine, and the future
prospects for the Cerro Quema project in Panama. Management is also currently
performing another detailed review of corporate administration expense in an
effort to further reduce these amounts.
13
<PAGE> 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
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 27.1. Financial Data Schedule
(b No reports on Form 8-K were filed during the three months
ended September 30, 2000.
14
<PAGE> 15
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.
"PAUL J. IRELAND"
-----------------
Paul J. Ireland
Vice President, Finance and Chief
Financial Officer
(Principal Financial and Accounting
Officer and authorized signatory)
Toronto, Ontario
November 13, 2000
15
<PAGE> 16
CAMPBELL RESOURCES INC.
FORM 10-Q - SEPTEMBER 30, 2000
EXHIBIT INDEX
27.1 Financial Data Schedule
