<PAGE> 1
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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 JUNE 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)
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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 June 30,2000, 15,728,638 Common Shares, without par
value
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CAMPBELL RESOURCES INC.
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as at June 30, 2000 (unaudited) and December 31, 1999 .................................... 3
Consolidated Statements of Operations (unaudited) for the Three Months and the Six Months Ended June 30, 2000 and
1999 .................................................................................................................. 4
Consolidated Statements of Deficit (unaudited) for the Six Months Ended June 30, 2000 and 1999......................... 4
Consolidated Statements of Cash Flows (unaudited) for the Three Months and the Six Months Ended June 30, 2000 and
1999................................................................................................................... 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>
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CAMPBELL RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of Canadian dollars)
<TABLE>
<CAPTION>
Unaudited
June 30 December 31
2000 1999
----------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term deposits $ 14,653 $ 18,219
Money market instruments 7,958
Receivables 2,216 1,999
Inventories (note 3) 5,212 4,891
Prepaids 799 460
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Total current assets 22,880 33,527
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OTHER ASSETS 179 194
FUTURE INCOME TAX ASSET 1,657
MINING INTERESTS 185,977 178,538
less accumulated depreciation and amortization (126,784) (125,125)
----------------------------------
59,193 53,413
----------------------------------
Total assets $ 83,909 $ 87,134
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,871 $ 1,104
Accrued liabilities 686 1,003
Future income tax liability 916
----------------------------------
Total current liabilities 4,473 2,107
----------------------------------
ACCRUED RECLAMATION 2,241 2,169
CONVERTIBLE DEBENTURES (note 4) 3,811 3,718
FUTURE INCOME AND MINING TAX LIABILITY 1,690 1,716
OTHER LIABILITIES 1,409 1,751
SHAREHOLDERS' EQUITY
Capital stock (note 5) 125,380 125,339
Foreign currency translation adjustment 997 593
Deficit (56,092) (50,259)
----------------------------------
Total shareholders' equity 70,285 75,673
----------------------------------
Total liabilities and shareholders' equity $ 83,909 $ 87,134
==================================
</TABLE>
Commitments and contingencies (note 7)
3
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CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Expressed in thousands of
Canadian dollars except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
METAL SALES $3,547 $6,424 $4,803 $13,025
-------------------------------------------------------------------
EXPENSES
Mining 6,649 7,655 8,121 15,463
General administration 650 694 1,359 1,463
Depreciation and amortization 917 1,373 1,206 2,762
Exploration 385 573 1,079 909
Care and maintenance 80 549 217 787
-------------------------------------------------------------------
8,681 10,844 11,982 21,384
-------------------------------------------------------------------
Loss from operations (5,134) (4,420) (7,179) (8,359)
-------------------------------------------------------------------
Other income (expense)
Other income 442 584 800 1,356
Convertible debenture interest expense (79) (79) (156) (186)
-------------------------------------------------------------------
363 505 644 1,170
-------------------------------------------------------------------
Loss before taxes (4,771) (3,915) (6,535) (7,189)
Income and mining tax recovery (expense) 50 (8) 18 218
-------------------------------------------------------------------
NET LOSS ($4,721) ($3,923) ($6,517) ($6,971)
===================================================================
LOSS PER SHARE (NOTE 5) ($0.30) ($0.25) ($0.41) ($0.44)
===================================================================
</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 (6,517) (6,971)
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Balance at end of period ($56,092) ($44,528)
==================================
</TABLE>
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CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of Canadian dollars)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
CASH PROVIDED BY (USED IN):
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ($4,721) ($3,923) ($6,517) ($6,971)
Items not involving cash
Depreciation and amortization 917 1,373 1,206 2,762
Future mining taxes recovery (83) (168) (83) (522)
Other (90) (87) (197) (522)
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(3,977) (2,805) (5,591) (5,253)
Net change in non-cash operating working capital 73 (1,177) 573 1,015
-----------------------------------------------------------------
(3,904) (3,982) (5,018) (4,238)
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FINANCING ACTIVITIES
Issues of capital stock 22 34 41 34
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INVESTING ACTIVITIES
Expenditures on mining interests (1,673) (2,715) (6,676) (3,660)
Money market instruments 8,000
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(1,673) (2,715) 1,324 (3,660)
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Effect of exchange rate change on cash
and short-term deposits 32 (288) 87 (205)
-----------------------------------------------------------------
Decrease in cash and short-term deposits (5,523) (6,951) (3,566) (8,069)
Cash and short-term deposits at beginning of period 20,176 40,375 18,219 41,493
-----------------------------------------------------------------
Cash and short-term deposits at end of period $14,653 $33,424 $14,653 $33,424
=================================================================
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
Receivables $535 ($200) ($217) $590
Inventories and prepaids (290) 182 (660) 580
Accounts payable 491 (146) 1,767 257
Accrued liabilities (663) (1,013) (317) (412)
-----------------------------------------------------------------
$73 ($1,177) $573 $1,015
=================================================================
</TABLE>
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CAMPBELL RESOURCES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 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.
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 six 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 $4,415 $4,369
Work-in-process 797 522
------ ------
$5,212 $4,891
====== ======
</TABLE>
6
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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$5.00 per common share.
During the six months ended June 30, 2000, debenture holders converted US$nil
(1999 - US$1,067,000) of debenture principal into nil (1999 - 213,400) common
shares of the Company resulting in a balance outstanding at June 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 six 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 213 1,570
Employee Incentive Plan and
Directors' Stock Option Plan 14 41 8 34
------ -------- ------ --------
Balance at June 30 15,729 $125,380 15,690 $125,236
====== ======== ====== ========
</TABLE>
Loss per share has been calculated using the weighted average number of shares
outstanding during the six months which was 15,717,000 (1999 - 15,684,000) and
during the three months which was 15,720,000 (1998 - 15,686,000).
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6-- STATEMENTS OF CASH FLOWS
Additional disclosures with respect to the Statements of Cash Flows are as
follows:
<TABLE>
<CAPTION>
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Cash taxes paid $ 6 $ 168 $ 44 $ 281
Cash interest paid $ 145 $ 147 $ 145 $ 148
</TABLE>
7 -- COMMITMENTS AND CONTINGENCIES
a) At June 30, 2000 the Company has sold forward 18,250 ounces of gold for
delivery in 2000 under forward contracts at an average of US$290 per
ounce, and has 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 was advised that
this assessment was improper as it completely ignored the earlier
ruling. Accordingly the Company filed a new appeal before the
Federal Tax Court to nullify the assessment. The appeal is still
awaiting consideration by the Tax Court. 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. 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
8
<PAGE> 9
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 June 30 Six months ended June 30
-------------------------- ------------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net loss for period as reported $(4,721) $(3,923) $(6,517) $(6,971)
Depreciation and amortization (a) (837) 526 (1,045) 1,039
Deferred income taxes (b) (62) (180)
Foreign exchange contracts (d) 390 828
Net loss for the year in accordance ------- ------- ------- -------
with United States accounting principles $(5,558) $(3,069) $(7,562) $(5,284)
------- ------- ------- -------
Other comprehensive income (loss):
Foreign currency translation adjustments 296 (314) 404 (481)
------- ------- ------- -------
Comprehensive loss for the year in accordance
with United States accounting principles $(5,262) $(3,383) $(7,158) $(5,765)
------- ------- ------- -------
Loss per share for the year in accordance
with United States accounting principles
Basic and fully diluted $ (0.35) $ (0.20) $ (0.48) $ (0.34)
------- ------- ------- -------
</TABLE>
Differences between Canadian and United States accounting principles as they
affect the Company's financial statements are as follows:
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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 June 30, 2000 and
December 31, 1999 would be to decrease mining interests by $23,522,000
(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 $1,032,000 (1999 - $896,000), increase
preferred shares by $12,000,000 (1999 - $12,000,000) and reduce
shareholders equity by $22,490,000 (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.
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CAMPBELL RESOURCES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
JUNE 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.
OVERVIEW
The Company recorded a loss of $6.5 million or $0.41 per share in the six months
and a loss of $4.7 million or $0.30 per share in the three months ended June 30,
2000. This compares to a loss of $7 million or $0.44 per share and a loss of
$3.9 million or $0.25 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 $5.6 million in the six months ended June 30, 2000 compared to
negative cash flow of $5.3 million in the comparable period of 1999.
The results for the first six 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 costs were expensed thereafter.
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. Mine management and independent consultants are reviewing these issues
to determine how best to achieve the forecast production rates.
During the first six months of 2000, Campbell produced a total of 13,300 ounces
of gold of which 8,100 ounces was produced from the Joe Mann Mine and 5,200
ounces from the Santa Gertrudis Mine in Sonora, Mexico. In the comparable period
of 1999, Campbell produced 31,900 ounces of gold of which 31,100 ounces were
from the Joe Mann Mine and 800 ounces from the Santa Gertrudis Mine. The average
gold price recognized in the six months ended June 30, 2000 was US$282 per ounce
compared to US$277 per ounce in the comparable period of 1999.
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<PAGE> 12
JOE MANN MINE
Following completion of the development necessary to begin mining using
cut-and-fill mining methods, milling commenced in early April 2000, initially of
development ore. The poor ground conditions that were the reason for changing
mining methods have stabilized considerably under the new approach. In addition,
the operation of the hydraulic backfill plant is exceeding expectations.
Unfortunately production levels are falling behind schedule as a result of a
number of factors. The conversion of certain work areas that had started to be
mined under the previous method took much longer than anticipated and at a
higher cost. In addition, the required productivity levels have not yet been
achieved in all work areas or on a consistent basis. These factors have resulted
in lower tons being mined and milled. To date the grade of the ore milled has
been considerably lower than the ore definition drilling would indicate. Mine
management and external consultants are reviewing these start-up problems to
determine how best to achieve the expected production levels.
The third quarter will be critical for the Joe Mann Mine as the impact of the
remedial measures and operating changes being implemented on production levels
are closely evaluated. Should the gold price remain in the US$270 range and the
measures undertaken not prove successful, mining operations may have to be
temporarily suspended pending higher gold prices.
In the three months ended June 30, 2000, the Joe Mann Mine milled 49,400 tons of
ore at a grade of 0.179 ounces per ton compared to 76,235 tons of ore at a grade
of 0.223 ounces per ton in the three months to June 30, 1999. The mill recovery
rate was 93.5% in 2000 compared to 94.2% in the second quarter of 1999. The
impact of the slow start-up has been to increase the cash cost per ounce of gold
to US$503 per ounce from US$314 per ounce in 1999.
SANTA GERTRUDIS MINE
During the six months the Santa Gertrudis Mine mined 198,200 tonnes of ore at a
grade of 1.49 g/t and a strip ratio of 8.9 to one. The mine was effectively on a
care and maintenance basis in the comparable period of 1999. Gold production was
2,100 ounces in the quarter and 5,200 ounces in the six months ended June 30,
2000. Gold production is approximately 35% lower than initially forecast due to
lower gold recovery rates from the heaps on the leach pads. As a result of the
lower production levels the cash cost per ounce for the year to date was US$445
per ounce. Mining has now moved to another pit and gold production levels have
been increasing. Gold production for the year is now forecast to be 23,000
ounces at a projected cash operating cost of US$255 per ounce.
Exploration expense of $1.2 million in the six months all relates to
expenditures on the Santa Gertrudis property and the Roca Roja claims that were
acquired in 1999. Exploration expense in the same period of 1999 was $0.9
million.
LIQUIDITY AND CAPITAL RESOURCES
The start-up delays in achieving targeted production levels at the Joe Mann Mine
and the lower than expected gold production from the Santa Gertrudis Mine have
both contributed to the decrease in cash and short-term deposits to $14.7
million at June 30, 2000 compared to $26.2 million (including money market
instruments) at December 31, 1999. Working capital also decreased to $18.4
million from $31.4 million at December 31, 1999.
Capital expenditures in the three and six month periods ended June 30, 2000
amounted to $1.7 million (1999 -
12
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$2.7 million) and $6.7 million (1999 - $3.7 million), respectively and relate to
the development at the Joe Mann Mine for all periods presented.
As discussed above, Campbell is reviewing with external consultants the problems
and possible remedies to the slower than expected start-up performance at the
Joe Mann Mine. Increased production from the Santa Gertrudis Mine in the second
half of 2000 should also help. In addition, the Company has hedged 18,250 ounces
of gold for the balance of 2000 at a gold price of US$290 per ounce. This will
remove price uncertainty on a portion of the future gold production in the
current poor gold price environment.
13
<PAGE> 14
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Following shareholder approval at the Annual and Special Meeting of
Shareholders, held on May 19, 2000, Campbell Resources Inc. filed
Articles of Amendment effecting a one-for-ten share consolidation.
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Annual and Special Meeting of Shareholders held on May 19, 2000,
the shareholders voted on election of a slate of nine directors
comprised of Messrs. Beatty, Clow, Douglas, Kachmar, McCartney, Murphy,
O=Kelly, Pralle, and Raymond. 116,464,532 votes were cast in favour of
election of the slate with 2,582,212 withheld.
At this meeting, the shareholders also voted on the re-appointment of
KPMG LLP as auditors for the coming year and authorizing the directors
to fix remuneration. 117,176,984 votes were cast in favour of this item
and 2,475,514 votes were withheld.
Shareholders also approved by special resolution that the Articles of
the Corporation be amended to consolidate all of the issued and
outstanding Common Shares of the Corporation on the basis of one(1) new
post-consolidation Common Share for every ten (10) pre-consolidation
Common Shares. 113,973,684 votes were cast in favour, 5,918,788 votes
were cast against and 719,106 votes were withheld.
ITEM 5. Other Information
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 27.1 Financial Data Schedule.
(b Form 8-K was filed on May 24, 2000.
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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
August 11, 2000
15
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CAMPBELL RESOURCES INC.
FORM 10-Q - JUNE 30, 2000
EXHIBIT INDEX
27.1 Financial Data Schedule
