MONTREAL, March 15 /PRNewswire-FirstCall/ -- Campbell Resources Inc. (TSX: CCH, OTC Bulletin Board: CBLRF) today announced financial and operating results for the fiscal year and fourth quarter ended December 31, 2006. During the year, the Company took significant steps toward exiting CCAA, a goal that was partially achieved subsequent to year end. Other achievements during the year that positioned the Company to take advantage of strong copper and gold markets included:
- Received approval of creditors for the Plans of Arrangement.
- Campbell and GeoNova exited CCAA protection subsequent to year end.
- Working capital increased by $26.2 million on a proforma basis.
- Completed three equity financings totaling $18.1 million.
- Repaid $4.0 million of secured debt.
- Sold the Discovery property to Strateco Resources Inc.
- Retained Geostat Systems International Inc. ("Geostat") to complete a
43-101 compliant technical report (Ref. SEDAR) on the high-grade Corner
Bay deposit which estimates measured and indicated resources at
542,000 tons grading 5.03% Cu.
- Positive Geostat technical report recommends proceeding with the
extraction of a 42,000 tonne bulk sample grading 3.7% copper at Corner
Bay.
- Collared the portal and began installation of infrastructure for
development of Corner Bay.
- Entered into an Operating Consulting Agreement with Nuinsco Resources
Limited for consulting services at the Campbell's Chibougamau
operations.
- Sold the Eastmain property for $2.5 million in cash, two million common
shares, one million common share purchase warrants and a 2% net smelter
royalty.
- Identified the Merrill Island property for potential early copper
production.
- Applied for permits to begin operations at the Merrill Island open pit.
FINANCIAL RESULTS
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The Company recorded a net loss of $32.2 million or $0.19 per share in the fourth quarter of 2006, compared with a net loss of $21.3 million or $0.20 per share in 2005. The net loss includes a write down of the carrying value of the Copper Rand property by an amount of $23.7 million to an estimated fair value of $30.0 million and a write down of the Joe Mann property by an amount of $1.3 million to nil. For the year, the net loss was $41.2 million, or $0.27 per share, compared with $24.4 million, or $0.23 per share, in 2005. These results do not include operations at the Copper Rand Mine, which continue to be capitalized as preproduction development.
In 2005, the Company wrote down the carrying values of the Discovery property by $1.8 million following the acceptance, in 2006, of the offer to purchase the property from Strateco Resources Inc. and the Copper Rand Mine by $16.7 million based on a projection of the operation's future cash flow.
Gross metal sales for the fourth quarter of 2006, comprised exclusively of gold production from the Joe Mann mine, were $3.2 million compared with $4.2 million for the comparable period in 2005. The average market gold price for the fourth quarter was $717 (US$622), compared with $581 (US$498) for the fourth quarter of 2005.
Gross metal sales for 2006 were $11.9 million (13,800 ounces of gold) compared with $19.9 million (30,500 ounces of gold) for the previous year. The average market gold price was $682 (US$601) for 2006 and $539 (US$449) for 2005.
Mining expenses for the fourth quarter 2006 were $4.1 million, compared with $4.0 million for the comparable period in 2005. The operating cost per ounce in the fourth quarter of 2006 was US$922 compared with US$578 in the previous year. Mining expenses for 2006 were $13.9 million compared to $16.4 million for the previous year and the operating cost per ounce was US$798 compared with US$442 in 2005.
JOE MANN MINE
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Joe Mann, originally scheduled to close in November 2005, continues to operate without known reserves. Production in the fourth quarter was 3,722 ounces of gold and 77,580 pounds of copper compared with 5,577 ounces and 192,258 pounds in the same period in 2005. Average gold content per ton produced was 0.237 ounces of gold, compared with 0.256 ounces of gold, realized for the same period in 2005. During the quarter, 18,269 tons of ore were milled compared with 25,678 tons in 2005. The development of new blocks of ore has been initiated on lower levels to support 2007 production estimated at 20,000 ounces of gold.
For 2006, production totalled 14,146 ounces of gold and 439,778 pounds of copper, compared with 29,431 ounces of gold and 897,460 pounds of copper for the same period in 2005. For the year, gold grade averaged 0.207 ounces per ton compared with 0.254 ounces per ton in 2005.
COPPER RAND MINE
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As the Copper Rand Mine is still under development and has not yet reached commercial production, its results are not included in the Company's consolidated financial results.
Production for the fourth quarter was 15,393 tons grading 2.90% copper and 0.064 ounces of gold per ton for a total metal production of 874,761 pounds of copper and 846 ounces of gold. For 2006, total production reached 76,250 tonnes for a production of 3,275,246 pounds of copper and 3,716 ounces of gold.
The completion of the paste backfill plant was accelerated and is scheduled to be put in operation by the end of March 2007. To improve productivity, a mobile equipment maintenance program was put in place to increase the equipment availability and to reduce operating costs; the size of development headings were reduced as part of ground control program; the Alimak mining method was introduced and is on-going to reduce development in waste rock and provide a more effective mining method. A mining firm, specialized in Alimak mining, has been retained by Campbell to do this work.
For the fourth quarter of 2006, the Company invested $3.9 million in development of Copper Rand net of $2.9 million of revenue generated from the mine. For the year 2006, $5.8 million was invested in this property net of the net metal sales revenue of $12.1 million.
COPPER RAND MILL
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Operations at the mill continued on a 4 days per week schedule and treated ore from both the Copper Rand and Joe Mann mines. The Copper Rand Mill has capacity to process additional ore from other deposits in the area.
OUTLOOK
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Management has completed the assessment of the ground conditions at the Copper Rand Mine and has initiated the development of a 1400-foot long ramp between levels 4690 and 4510 to replace the existing ramp between the two levels. The cost of the new ramp will be offset by a substantial reduction in the amount of rehabilitation work required and will provide a more secure working environment. This decision will limit production from the Copper Rand Mine until June. Effective January 1, 2007, the Copper Rand Mine will be treated as having reached commercial production. As a result, operating and financial results will be included with Joe Mann operating and financial results in future financial statements.
As part of the ongoing strategy to maximize mill throughput, the Company intends to initiate production from the Merrill Island open pit as soon as the required environmental permit is obtained. The required permit is expected by the end of March. Production from that operation will compensate in part for the temporary loss of the Copper Rand production and represent a significant contribution to the volume of ore milled as monthly tonnage should average 20,000 tonnes. The Merrill Island open pit contains historical measured resources of 1.1 million tons grading 0.92% copper and inferred resources 0.905 million tons grading 0.53% copper. Other deposits in the area are being assessed to provide additional ore for the Copper Rand Mill.
Output at the Joe Mann Mine reflects the decreasing number of work places; however the Company is implementing a first stage exploration program of 4,000 metres both at depth and within the mine to evaluate the potential to continue production. Exploration will begin at the end of the second quarter.
The Company expects to soon complete the financing to develop the high-grade Corner Bay copper project. The Company has collared the ramp and the required surface infrastructure has been established on site. Bids for the development of the ramp have been received and work is expected to begin in the second quarter leading to production within twelve months.
The Company recently announced the closing of the sale of its Eastmain Mine property to Eastmain Resources Inc. The $2,500,000 received has been deposited with the Monitor for eventual distribution to creditors. The shares and warrants included as part of the sale proceeds remain with the Company.
Campbell and GeoNova have met all of the obligations pursuant to the Plans of Arrangement with the creditors and have received a certificate to that effect from the Monitor. Both MSV Resources and Meston Resources will require more time to complete the agreed Plans of Arrangement with expected completion during the second quarter.
With two producing mines, a mill capable of handling significantly more ore, an exceptional deposit at Corner Bay, a dominant position in the Chibougamau mining camp and its exit from CCAA protection, the Company will capitalize on the robust metal markets. In 2007, Campbell's priorities will be to evaluate opportunities and implement procedures to increase production from the Joe Mann and Copper Rand mines, to maximize mill throughput through regional exploration programs such as the Merrill Island Pit and, perhaps most significantly, to complete development and begin to process the high-grade copper mineralization from Corner Bay. Management is excited about the Company's potential and looks forward to a successful and productive year ahead.
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 20-F for the year ended December 31, 2006. 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.
CAMPBELL RESOURCES INC.
Consolidated balance sheets
as at December 31
(expressed in thousands of Canadian dollars)
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2006 2005
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$ $
Assets
Current assets
Cash and cash equivalents 1,964 1,772
Short-term investments 792 125
Restricted cash and exchange agreements 50,000 -
Receivables 1,591 1,654
Settlements receivable 5,413 8,374
Production inventories 401 67
Supply inventories 3,844 3,330
Prepaids 1,194 877
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65,199 16,549
Amount receivable from Copper Rand
/Portage Restoration Fiduciary Trust 2,826 3,012
Restricted cash 3,942 350
Restricted deposits and exchange agreements - 49,723
Future income tax assets 1,484 1,324
Property, plant and equipment 37,135 59,955
Accrued benefit asset 4,427 3,897
Deferred charges and other assets 129 183
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115,142 134,643
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Liabilities
Current liabilities
Short-term loan 3,891 6,606
Accounts payable 13,973 13,563
Accrued liabilities 5,475 3,695
Current portion of long-term debt 65,287 18,037
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88,626 41,901
Asset retirement obligations 7,804 7,738
Long-term debt 70 49,745
Future income tax liabilities 6,636 4,756
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103,136 104,140
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Shareholders' equity
Capital stock 85,572 69,958
Warrants, stock options and conversion rights 9,263 2,771
Contributed surplus 1,996 1,404
Deficit (84,825) (43,630)
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12,006 30,503
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115,142 134,643
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CAMPBELL RESOURCES INC.
Consolidated statements of operations
years ended December 31
(expressed in thousands of Canadian dollars except per share amounts)
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2006 2005 2004
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$ $ $
Gross metal sales 11,925 19,915 21,833
Treatment charges 1,006 1,641 1,372
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Net metal sales 10,919 18,274 20,461
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Expenses
Mining 13,897 16,346 20,853
Amortization of property,
plant and equipment 2,743 4,675 4,802
Write-down of properties 25,001 18,512 1,750
General administration 2,945 4,080 2,255
Stock-based compensation 496 - 269
CCAA and reorganisation costs 6,511 972 -
Exploration (159) 854 705
Care and maintenance 146 345 365
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51,580 44,812 31,009
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Loss before the following items 40,661 26,538 10,548
Interest on short-term loan 501 392 10
Interest expense on long-term debt 692 770 405
Interest income (173) (900) (1,702)
Amortization of deferred charges related
to the sale of royalty - 1,851 264
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Loss from operations 41,681 28,259 9,515
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Other (income) expense
Foreign exchange gain (loss) 31 (334) (47)
Other income expense (552) (3,577) (797)
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(521) (3,911) (844)
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Loss before taxes and
non-controlling interest 41,160 24,348 8,671
Income and mining tax expense
(recovery) 35 82 (455)
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41,195 24,430 8,216
Non-controlling interest - - (24)
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Net loss 41,195 24,430 8,192
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Weighted average number of
common shares ('000) 150,562 107,925 96,482
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Basic and fully diluted
loss per share 0.27 0.23 0.08
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CAMPBELL RESOURCES INC.
Consolidated statements of contributed surplus and deficit
years ended December 31
(expressed in thousands of Canadian dollars)
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2006 2005 2004
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$ $ $
Contributed surplus
Balance, beginning of year 1,404 1,101 1,081
Options expired and cancelled
during the year 132 303 20
Conversion rights expired
during the year 460 - -
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Balance, end of year 1,996 1,404 1,101
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Deficit
Balance, beginning of year 43,630 19,200 11,008
Net loss 41,195 24,430 8,192
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Balance, end of year 84,825 43,630 19,200
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