Campbell Resources Reports a Loss Resulting from Lower Gold Prices, Decreased Production and Non-Cash Charges; Company Maintains Cash Position of $41.7 million, Seeking Acquisition.TORONTO--(BUSINESS WIRE)--Feb. 25, 1998--Campbell Resources (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CCH CCH Colegio de Ciencias y Humanidades (Spanish) CCH Certified Clinical Hypnotherapist CCH Cook County Hospital CCH Certified in Classical Homeopathy CCH Country Club Hills (Fairfax City, VA, USA) )(ME:CCH)(NYSE NYSE See: New York Stock Exchange :CCH) Financial Results The impact of lower gold prices, decreased gold production from the Santa Gertrudis Santa Gertrudis Heaviest breed of beef cattle, developed in the 20th century by the King Ranch in Texas by crossing Brahman bulls with shorthorn cows. It is usually solid red with occasional small white markings on the forehead or the flanks. Mine and a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. in the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of natural resource properties resulted in Campbell recording a loss of $40.4 million, or $0.27 per share for the year ended December 31, 1997, compared to net income of $9 million ($0.06 per share in 1996). Excluding write-downs and the closure costs of $31.7 million, there was a loss from operations of $12.2 million in 1997 compared to income from operations of $6.7 million in 1996. Following the drop in gold prices in 1997, the Company prepared a new life-of-mine plan for the Joe Mann Mine, calculating mineable reserves based on a gold price of US$300 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. in 1998, US$325 per ounce in 1999 and US$375 thereafter. As a result of this new plan, the Company has recorded a write-down of $28 million before taxes, or $25.7 million net of the drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: of related deferred mining taxes. Total gold production in 1997 was 113,000 ounces compared to the 125,000 ounces produced in 1996. The decrease in 1997 production was attributable to lower grade material mined at the Santa Gertrudis Mine and the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of mining operations at Santa Gertrudis in early December. Cash operating costs operating costs npl → gastos mpl operacionales in 1997 were US$288 per ounce of gold produced compared with US$252 per ounce a year earlier. Campbell's realized gold revenue of US$336 per ounce in 1997 compared to realized gold revenue of US$396 in 1996. Campbell currently has 45,000 ounces of gold hedged in 1998 at an average price of US$327 per ounce. As of December 31, 1997, Campbell had working capital of $49.0 million including cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. deposits of $41.7 million. This compares with working capital of $65.5 million and cash and short-term deposits of $55.3 million in 1996. As a result of increased mining costs and decreased revenues from gold sales, cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses before the change in non-cash operating working capital decreased to $0.6 million in 1997 compared to $21.4 million in 1996. The Joe Mann Mine in Quebec experienced an excellent year in 1997 with gold production of 73,500 ounces, an increase of 4.5 percent over 1996. Cash operating costs were further reduced by US$8 to US$264 per ounce. The higher gold production was due to an increase in the mill head grade and an increase in mill recoveries. In 1997, mined ore graded Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly 0.30 ounces per ton, 3.4 percent higher than the 0.29 ounce per ton material mined a year earlier, in part the result of better than expected grades in some stopes Stopes , Marie Carmichael 1880-1958. British social reformer who opened England's first birth control clinic (1924) in London and later promoted family planning in east Asia. . Mill recoveries increased to 93.9 percent in 1997 from 93.2 percent in 1996. The program to deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. the No. 2 mine shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. by almost 1,100 feet was completed in December on schedule and under budget. The shaft now extends to a depth of more than 3,700 ft. below surface. Lateral lateral /lat·er·al/ (-il) 1. denoting a position farther from the median plane or midline of the body or a structure. 2. pertaining to a side. lat·er·al adj. 1. development to connect the ore and waste pass systems will be completed by the first half of 1998. Subsequent lateral development will be initiated on the six new production levels. Gold production at the Santa Gertrudis Mine of 39,200 ounces was less than projected for 1997. Costs increased to US$333 per ounce. A decision was made to suspend mining operations at Santa Gertrudis in December 1997 after attempts to find a sufficient supply of easily mineable high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. ore were unsuccessful. Despite the suspension of mining activity, Santa Gertrudis will continue to produce gold in 1998 as ore presently on the pads continues to be leached. In 1998 Campbell expects Santa Gertrudis will produce approximately 12,000 to 15,000 ounces at a significantly lower cash operating cost than in 1997. Exploration Total exploration expenditures for 1997 were $4.7 million compared to $7.2 million in 1996. Of this amount, $3.7 million was spent at Santa Gertrudis compared to $4.9 million in 1996. Exploration initiated at the beginning of 1997 at Santa Gertrudis was primarily designed to delineate easily accessible deposits that would provide near-term production. While efforts to find mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. within the mine area were successful, we were unable to locate near-surface, economic deposits around the mine in the time frame available to ensure no disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in production. Three major structures with significant gold-bearing potential were identified southeast of the mine following completion of a comprehensive compilation Compiling a program. See compiler. program. These major structures were the focus of exploration during the second half of 1997 and will continue to be the focus of exploration in 1998. The La Gloria shear shear: see strength of materials. Shear A straining action wherein applied forces produce a sliding or skewing type of deformation. zone is a structure that is associated with three exploration targets known as the El Tigre El Tigre is a city in the eastern Venezuelan state of Anzoátegui. This city is the shire town of the Simón Rodríguez Municipality and, according to the 2001 Venezuelan census, the municipality has a population of 147,800. , Nadia and Tracy zones. These three zones extend over a 1.1-kilometre-section of the La Gloria shear zone, leaving approximately 4.4 kilometres of the structure as yet unexplored. The Tracy zone was discovered during a regional geochemical soil sampling program. Subsequent trenching and drilling has confirmed the presence of mineralization at depth. The Tracy zone has a known strike length of 125 metres and ranges in width up to 38 metres and remains open along strike and at depth. Further south along the La Gloria shear zone are the Nadia and El Tigre zones. Many of the drill holes testing the El Tigre zone intersected economic grades of oxidized oxidized having been modified by the process of oxidation. oxidized cellulose see absorbable cellulose. mineralization. The Nadia zone, located between the Tracy and El Tigre zones has undergone initial exploration including sampling, mapping and trenching with encouraging results. A second structure known as the Ontario shear zone occurs as a splay branching off of the La Gloria shear zone. Trenching, channel sampling and drilling have delineated de·lin·e·ate tr.v. de·lin·e·at·ed, de·lin·e·at·ing, de·lin·e·ates 1. To draw or trace the outline of; sketch out. 2. To represent pictorially; depict. 3. a 450-metre-long target area associated with the Ontario shear that hosts the Greta Northeast, Greta Hill, Greta Ontario and Greta Sur zones. To date more than half of the holes returned multi-gram intersections over widths of up to 4.5 metres. The 500-metre-long interval between the junction of the Ontario and La Gloria shear zones and the most southwestern drilling on the Greta Shear also appears promising with two surface samples assaying 23.09 and 13.91 grams gold per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. . A program of soil sampling, trenching and preliminary drilling is continuing to evaluate the Esperanza, Lupita and Lupita South zones which are associated with the 5.0-kilometre-long Esperanza-Lupita fault zone, situated southeast of the Ontario shear zone. Sampling has returned high gold values of up to 267 grams per tonne over 0.5 metres. In addition to near-surface oxide oxide, chemical compound containing oxygen and one other chemical element. Oxides are widely and abundantly distributed in nature. Water is the oxide of hydrogen. Silicon dioxide is the major component of sand and quartz. reserves, Campbell is investigating the potential for deeper gold-bearing sulphide sulphide: see sulfide. mineralization. Results of Campbell's exploration efforts and an independent consultant's report supporting the similarities between Santa Gertrudis and the Carlin car·line or car·lin n. Scots A woman, especially an old one. [Middle English kerling, from Old Norse, from karl, man.] Trend have prompted management to seek a joint venture partner to evaluate the potential for deep sulphide mineralization. The Company received significant interest in the deep sulphide potential of the property from major gold mining companies who visited the property with a view to participating in a joint venture exploration program. The level of interest was high, however, the current gold price environment and reduced exploration budgets resulted in no firm offers to participate at this time. Campbell still believes in the deep sulphide potential of the property but in the short-term will continue to focus on exploration of near-surface oxide mineralization until gold prices, and exploration budgets, recover. In Panama, development of the Cerro Quema project has been put on hold and the project has been placed on a care and maintenance basis pending an improvement in the gold price. Outlook In 1997 the gold mining industry suffered a setback setback In architecture, a steplike recession in the profile of a high-rise building. Usually dictated by building codes to allow sunlight to reach streets and lower floors, the building must take another step back from the street for every specified added height interval. resulting from a significant drop in the price of gold. This set back has made Campbell's management re-assess every aspect of its business. The long-term growth prospects for the Company are considered to be good. We remain committed to enhancing shareholder value by striving to increase gold production and reserves either through exploration on our mine properties or through the acquisition of compatible assets. We will also improve shareholder value by continuing to improve efficiencies at our existing operations. We are confident that a program of focused exploration, prudent capital and exploration expenditures and the ultimate acquisition of a high-quality asset will see Campbell through this period of depressed gold prices. Campbell Resources is a growth-oriented gold mining company with operations in Quebec, Canada and Sonora, Mexico, and a development-stage gold project in Panama. The Company is currently exploring on its mine properties in Quebec and Mexico and seeking acquisition opportunities elsewhere in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. .
Campbell Resources Inc.
(Incorporated under the laws of Canada)
CONSOLIDATED BALANCE SHEETS
as at December 31,
(Expressed in thousands of Canadian dollars)
1997 1996
------- -------
ASSETS
CURRENT ASSETS
Cash and short-term deposits $41,735 $55,302
Receivables 4,805 8,270
Inventories 7,250 9,134
Prepaids 995 749
-------- ---------
Total current assets 54,785 73,455
------- -------
OTHER ASSETS 986 1,271
------- -------
NATURAL RESOURCE PROPERTIES 170,256 149,879
Less accumulated depreciation
and amortization (102,145) (59,307)
------- -------
68,111 90,572
------- -------
Total assets $123,882 $165,298
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $3,989 $5,504
Accrued liabilities 1,757 2,337
Income taxes payable 31 94
------- -------
Total current liabilities 5,777 7,935
------- -------
OTHER LIABILITIES 1,442 881
CONVERTIBLE DEBENTURES 7,341 7,657
DEFERRED MINING TAXES 4,198 6,767
SHAREHOLDERS' EQUITY
Capital stock 121,425 118,605
Foreign currency translation
adjustment 408 (248)
Retained earnings (deficit) (16,709) 23,701
------- -------
Total shareholders' equity 105,124 142,058
-------- -------
Total liabilities and
-------- --------
shareholders' equity $123,882 $165,298
-------- ---------
-------- ---------
CONSOLIDATED STATEMENTS OF INCOME
(Expressed in thousands of Canadian dollars)
Three months Year
ended December 31 ended December 31
1997 1996 1997 1996
------- ------ ----- ------
METAL SALES $13,798 $13,859 $52,635 $67,180
------- ------ ----- ------
EXPENSES
Mining 12,374 10,812 46,681 44,667
General administration 982 971 3,203 3,064
Depreciation and
amortization 2,809 1,144 9,587 9,604
Exploration 1,101 1,192 5,315 3,179
-------- ------- ------- --------
17,266 14,119 64,786 60,514
-------- ------- ------- --------
Income (loss) from operations
before writedown and
closure costs of natural
resource properties (3,468) (260) (12,151) 6,666
Writedown and closure
costs of natural
resource properties 31,684 31,684
-------- ------- ------- --------
Income (loss)
from operations (35,152) (260) (43,835) 6,666
-------- ------- ------- --------
Other income (expense)
Other income 847 1,144 2,096 3,595
Convertible debenture
interest expense (158) (153) (639) (661)
-------- ------- ------- --------
689 991 1,457 2,934
-------- ------- ------- --------
Income (loss) before taxes (34,463) 731 (42,378) 9,600
Income and
mining taxes (recovery) (1,974) (123) (1,968) 588
-------- ------- ------- --------
NET INCOME (LOSS) ($32,489) $854 ($40,410) $9,012
------- ------- -------- --------
------- ------- -------- --------
EARNINGS (LOSS) PER SHARE ($0.21) $0.01 ($0.27) $0.06
CONTACT: Campbell Resources Inc. Steven Dawson, 416/ 366-5201 416/ 367-3294 (FAX) |
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