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 JUNE 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-8488
CAMPBELL RESOURCES INC.
(Exact Name of registrant as specified in its charter)
Under the Canada Business Corporations Act
(Jurisdiction of Incorporation)
I.R.S. Employer Identification No. - Not Applicable
1155 UNIVERSITY, SUITE 1405
MONTREAL, QUEBEC H3B 3A7 CANADA
TELEPHONE - (514) 875-9033
(Address, including zip code, and telephone number including area code of
registrant's 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 August 10, 2001, 31,398,922 Common Shares,
without par value
================================================================================
2
CAMPBELL RESOURCES INC.
Table of Contents
Page
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as at June 30, 2001 (unaudited) and
December 31, 2000 .................................................. 3
Consolidated Statements of Operations (unaudited) for the Three
Months and the Six Months Ended June 30, 2001 and 2000 ............. 4
Consolidated Statements of Deficit (unaudited) for the Three
Months and the Six Months Ended June 30, 2001 and 2000 ............. 4
Consolidated Statements of Cash Flows (unaudited) for the Three
Months and the Six Months Ended June 30, 2001 and 2000 ............. 5
Notes to the Consolidated Financial Statements (unaudited) ......... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .......................................... 12
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 .................................................. 15
ITEM 6. Exhibits and Reports on Form 8-K ................................... 15
SIGNATURES ......................................................... 16
2
3
CAMPBELL RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of Canadian dollars)
UNAUDITED
JUNE 30 December 31
2001 2000
--------- -----------
ASSETS $ $
CURRENT ASSETS
Cash and short-term deposits 2,540 4,548
Receivables 2,428 1,684
Restricted cash 836 840
Inventories 4,932 4,420
Prepaids 530 539
-------- --------
Total current assets 11,266 12,031
-------- --------
OTHER ASSETS 1,681 628
INVESTMENTS (NOTE 2) 6,576 --
FUTURE INCOME TAX ASSET 1,742 1,742
MINING INTERESTS 194,948 186,937
less accumulated depreciation and amortization (171,600) (171,738)
-------- --------
23,348 15,199
-------- --------
Total assets 44,613 29,600
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 2,074 2,195
Accrued liabilities 2,500 1,590
Future income tax liability 886 886
-------- --------
Total current liabilities 5,460 4,671
-------- --------
ACCRUED RECLAMATION 8,022 6,513
DEFERRED INCOME 522 --
CONVERTIBLE DEBENTURES (NOTE 3) 7,017 3,864
FUTURE INCOME AND MINING TAX LIABILITY 856 856
OTHER LIABILITIES 121 228
SHAREHOLDERS' EQUITY
Capital stock (note 4) 23,744 125,355
Foreign currency translation adjustment 1,333 1,258
Deficit (2,462) (113,145)
-------- --------
Total shareholders' equity 22,615 13,468
-------- --------
Total liabilities and shareholders' equity 44,613 29,600
======== ========
3
4
CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Expressed in thousands of Canadian dollars except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------ ----------------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
METAL SALES -- 3,547 -- 4,803
-------- ------- -------- -------
EXPENSES
Mining -- 6,649 -- 8,121
General administration 413 650 901 1,359
Indemnity in lieu of notice 300 -- 300 --
Depreciation and amortization 6 917 12 1,206
Exploration -- 385 -- 1,079
Care and maintenance 476 80 1,807 217
-------- ------- -------- -------
1,195 8,681 3,020 11,982
-------- ------- -------- -------
Loss from operations (1,195) (5,134) (3,020) (7,179)
-------- ------- -------- -------
Other income (expense)
Other income 151 442 167 800
Metal sales adjustment previous year 42 -- (76) (156)
Convertible debenture interest expense (73) (79) (146) --
-------- ------- -------- -------
120 363 (55) 644
-------- ------- -------- -------
Loss before taxes (1,075) (4,771) (3,075) (6,535)
Income and mining tax recovery 144 50 113 18
-------- ------- -------- -------
NET LOSS (931) (4,721) (2,962) (6,517)
======== ======= ======== =======
LOSS PER SHARE (0.06) (0.30) (0.19) (0.41)
======== ======= ======== =======
CONSOLIDATED STATEMENTS OF DEFICIT (UNAUDITED)
(Expressed in thousands of Canadian dollars)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
Balance at beginning of period (115,176) (51,371) (113,145) (50,259)
Reduction of stated capital 113,645 -- 113,645 --
Change in accounting policy -- -- -- 684
Net loss (931) (4,721) (2,962) (6,517)
-------- ------- -------- -------
Balance at end of period (2,462) (56,092) (2,462) (56,092)
======== ======= ======== =======
4
5
CAMPBELL RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of Canadian dollars)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
CASH PROVIDED BY (USED IN):
------ ------ ------ ------
OPERATING ACTIVITIES
Net loss (931) (4,721) (2,962) (6,517)
Items not involving cash
Depreciation and amortization 6 917 12 1,206
Recoveries of future income and
mining taxes -- (83) -- (83)
Other (169) (90) 87 (197)
------ ------ ------ ------
(1,094) (3,977) (2,863) (5,591)
Net change in non-cash operating
working capital 799 73 1,001 573
------ ------ ------ ------
(295) (3,904) (1,862) (5,018)
------ ------ ------ ------
FINANCING ACTIVITIES
Issues of capital stock -- 22 -- 41
------ ------ ------ ------
INVESTING ACTIVITIES
Expenditures on mining interests -- (1,673) -- (6,676)
Business acquisitions, net of cash and
short-term deposits (92) -- (92) --
Money market instruments (107) -- (107) 8,000
------ ------ ------ ------
(199) (1,673) (199) 1,324
------ ------ ------ ------
Effect of exchange rate change on
cash and short-term deposits (57) 32 53 87
------ ------ ------ ------
Decrease in cash and short-term deposits (551) (5,523) (2,008) (3,566)
Cash and short-term deposits at
beginning of period 3,091 20,176 4,548 18,219
------ ------ ------ ------
Cash and short-term deposits at
end of period 2,540 14,653 2,540 14,653
====== ====== ====== ======
CHANGES IN NON-CASH OPERATING
WORKING CAPITAL
Receivables 707 535 1,121 (217)
Inventories and prepaids 199 (290) 385 (660)
Accounts payable (426) 491 (606) 1,767
Accrued liabilities 319 (663) 101 (317)
------ ------ ------ ------
799 73 1,001 573
====== ====== ====== ======
5
6
CAMPBELL RESOURCES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2001
(Tabular amounts are expressed in thousands of Canadian dollars)
1 -- GENERAL
The Corporation is incorporated under the Canada Business Corporations Act and
is engaged in the exploration, development, mining and processing of precious
metals in Canada, Mexico and Panama.
These unaudited consolidated financial statements reflect all adjustments that
are, in the opinion of management, necessary for a fair statement of results for
the interim periods presented. The unaudited financial statements presented
herein have been prepared in accordance with the instructions to Form 10-Q and
do not include all the information and note disclosures required by generally
accepted accounting principles for complete financial statements. For further
information, refer to the financial statements and related footnotes included in
the Corporation's Annual Report on Form 10-K for the year ended December 31,
2000.
The financial statements are prepared in accordance with accounting principles
generally accepted in Canada and, except as described in note 8, conform in all
material respects with accounting principles generally accepted in the United
States.
The results of operations for the first six months of the year are not
necessarily indicative of the results to be expected for the full year.
2 -- INVESTMENTS
2001 2000
----- -----
$ $
Investments in shares at cost
Corporation Copper Rand Inc (65,000 common shares; 26% of
outstanding shares) 6,500 --
International Coromandel Resources Ltd. (50,000 common
shares, Market value of $7) 11 --
Arca Explorations Inc. (171,664 common shares ,
Market value of $89) 48 --
Matamec Explorations Inc. (70,026 common shares
Market value of $9) 17 --
----- -----
6,576 --
===== =====
6
7
3 -- CONVERTIBLE DEBENTURES
a) In July 1994, the Corporation issued US$11,005,000 of 7.5% Convertible
Subordinated Debentures. The debentures are unsecured, bear interest at
7.5% payable in arrears on June 1 and December 1 each year and mature on
July 21, 2004. The debentures are convertible at the option of the holder
into common shares of the Corporation at any time prior to maturity at a
conversion price of US$5.00 per common share. The debentures are redeemable
for cash at any time after the fifth anniversary of the date of issue or,
at the Corporation's option, may be redeemed in common shares on the basis
of one common share for each US$5.00 of debenture principal being redeemed.
The right of the Corporation to redeem the debentures for cash or common
shares is conditional on the average price of the common shares exceeding
US$5.00 during a period of 20 consecutive days prior to notice of
redemption. The Corporation may, at its option, repay the debenture at
maturity by issuing common shares of the Corporation at the conversion
price of US$5.00 per common share.
During the six months ended June 30, 2001, debenture holders converted
US$25,000 (2000 - US$nil) of debenture principal into 5,000 (2000 - nil)
common shares of the Corporation resulting in a balance outstanding at June
30, 2001 of US$2,551,000 (December 31, 2000 - US$2,576,000).
b) In 2001, the Corporation issued $3,150,000 convertible debentures. The
debentures are unsecured, bear interest at an annual rate of 8% and include
additional interest based on the price of metals and level of production at
the Copper Rand mine. The interest is payable quarterly. The debentures are
refundable as to 20% of capital on July 1, 2004, as to 40% on July 1, 2005
and as to 40% on July 1, 2006 and are convertible in shares at a price of
$1.025 per share or up to a maximum of $1.64 based on an increase of the
gold price above US$350.
4 -- CAPITAL STOCK
Changes in the issued and outstanding common shares for the six months are as
follows (in thousands):
2001 2000
-------------------- -------------------
Amount Shares Amount Shares
------- -------- -------- -------
# $ # $
Common shares:
Balance at beginning of period 15,784 125,355 15,715 125,339
Reduction of capital (113,645) --
Issued
Conversion of convertible debentures 5 37 -- --
Acquisition of MSV Resources inc. 10,892 8,823 -- --
Acquisition of GeoNova Explorations inc. 3,919 3,174 -- --
Employee Incentive Plan and Directors' Stock Option Plan -- -- 14 41
------ -------- ------ -------
Balance at June 30 30,600 23,744 15,729 125,380
====== ======== ====== =======
7
8
\
Loss per share has been calculated using the weighted average number of shares
outstanding during the six months which was 15,870,000 (2000 - 15,717,000) and
during the three months which was 15,870,000 (2000 - 15,720,000).
5 -- BUSINESS ACQUISITION
On June 30, the Corporation merged with MSV Resources Inc. ("MSV") and GeoNova
Explorations Inc. ("GNE"). The purchase method of accounting is used for this
merger. This merger is summarized below:
MSV GNE Total
----- ----- ------
$ $ $
Assets acquired
Cash and short-term deposit 650 9 659
Receivables 1,827 39 1,866
Inventories 623 -- 623
Prepaid 257 7 264
Mining assets 4,322 3,837 8,159
Investments 6,544 21 6,565
Other assets 1,081 -- 1,081
Liabilities assumed
Accounts payable 493 63 556
Accrued liabilities 260 477 736
Convertible debentures 3,155 -- 3,155
Accrued reclamation 1,500 -- 1,500
Deferred income 522 -- 522
----- ----- ------
Net assets acquired at fair value 9,374 3,373 12,747
===== ===== ======
Consideration
Shares issued (14,811 shares) 8,823 3,174 11,997
Acquisition costs 551 199 750
----- ----- ------
9,374 3,373 12,747
===== ===== ======
6 -- STATEMENTS OF CASH FLOWS
Additional disclosures with respect to the Statements of Cash Flows are as
follows:
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
Cash taxes paid -- 6 12 44
Cash interest paid 147 145 147 145
8
9
7 -- COMMITMENTS AND CONTINGENCIES
a) At June 30, 2001 the Corporation has outstanding calls for 16,600 ounces of
gold in 2001 at US$350 per ounce subject to floating gold lease rates.
b) At June 30, 2001, the Corporation amended the Net Smelter Return Royalty
Agreement on the production of the Joe Mann Mine. In consideration of the
issuance of 800,000 common shares of Campbell, the royalty will be reduced
to a graduated net smelter return royalty increasing from 1.5% at gold
price of US$325 per ounce to 2.0% at a gold price of US$375 per ounce.
After a cumulative royalty payment of Cdn$500,000, a royalty of 1% will be
paid only if the gold price is at US$350 or greater.
c) During 1996, the Corporation's Mexican subsidiary received import duty
assessments following an audit claiming the subsidiary's interest in
certain pieces of machinery and equipment with an approximate value of
US$2,200,000 and levying taxes, penalties, interest and inflationary
adjustments for a further Mexican pesos 9,200,000. On May 26, 1997, the
Corporation received notice that it was successful in its appeal against
the assessments and that the Mexican pesos 9,200,000 was not payable. The
charge against the assets will be released when the final tax assessment
covering this matter is issued in favour of the Corporation by the tax
authorities. On May 6, 1998, the tax authorities issued a tax assessment
identical to that issued in 1996 except that the amounts claimed have
increased to Mexican pesos 18,000,000 as a result of inflation and
additional interest. The Corporation has been advised that this assessment
is improper as it completely ignores the earlier ruling. Accordingly the
Corporation has filed a new appeal before the Federal Tax Court to nullify
the assessment. 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 Corporation entered into a corporate
restructuring and financing arrangement ("Arrangement") in which it issued
to a group of Canadian financial institutions $38,000,000 of Guaranteed
Subordinate Debentures and Notes ("Debentures") and $12,000,000 of
Guaranteed Non-Cumulative Redeemable Retractable Preferred Shares
("Preferred Shares"). The Debentures are unsecured, subordinate to all
existing non-trade debt and future senior debt, bear interest at varying
rates, are repayable upon maturity in 2007, and cannot be prepaid. The
Preferred Shares are redeemable at any time at an amount of $240,000 per
Preferred Share, rank equally and pari passu with the common shares for
dividends when declared, and are retractable in 2007. In order to secure
the performance of the Debentures and Preferred Shares the Corporation's
subsidiary entered into an Interest Rate and Currency Exchange Swap
Agreement ("Swap Agreement") with a major international bank. The Swap
Agreement provides for the conversion of one floating rate interest basis
to another and for differences in the timing of payments so as to match the
interest payment requirements under the Debentures, repay the Debentures
upon maturity and retract the Preferred Shares. All payments are
denominated in Canadian dollars. The Corporation's subsidiary placed
Canadian dollar deposits with the counter party to the Swap agreement which
deposits have been charged to secure the performance under the Swap
agreement. These deposits earn interest at Canadian Bankers Acceptance
rates. The Swap Agreement was irrevocably assigned directly to the
investors. Accordingly the bank is the primary obligor under the
Arrangement.
e) The Corporation is from time to time involved in various claims, legal
proceedings and reassessments for income, mining and other taxes, arising
in the ordinary course of business. The Corporation's current and proposed
mining and exploration activities are subject to various laws and
regulations governing the protection of the environment. These laws and
regulations are continually changing and are generally
9
10
becoming more restrictive. The Corporation conducts its operations so as to
protect its employees, the general public and the environment and, to the
best of its knowledge, believes its operations are in compliance with all
applicable laws and regulations, in all material respects. The Corporation
has made, and expects to make in the future, submissions and expenditures
to comply with such laws and regulations. Where estimated reclamation and
closure costs are reasonably determinable, the Corporation has recorded a
provision for environmental liabilities based on management's estimate of
these costs. Such estimates are subject to adjustment based on changes in
laws and regulations and as new information becomes available.
8 -- DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The reconciliation of net loss determined in accordance with generally accepted
accounting principles in Canada to net loss determined under accounting
principles which are generally accepted in the United States is as follows:
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2001 2000 2001 2000
---- ---- ---- ----
$ $ $ $
Net loss for the period as reported (631) (4,721) (2,662) (6,517)
Depreciation and amortization (a) -- 837 -- (1,045)
Foreign exchange contract (b) -- -- -- 390
----- ------ ------ ------
Net loss for the period in accordance
with United States accounting principles (631) (5,558) (2,662) (7,562)
----- ------ ------ ------
Other comprehensive income (loss):
Foreign currency translation adjustments -- 296 -- 404
----- ------ ------ ------
Comprehensive loss for the period in accordance
with United States accounting principles (631) (5,262) (2,662) 7,158
----- ------ ------ ------
Loss per share for the period in accordance
with United States accounting principles
Basic and fully diluted (0.06) (0.35) (0.19) (0.48)
----- ------ ------ ------
Differences between Canadian and United States accounting principles as they
affect the Corporation's financial statements are as follows:
a) Depreciation and Amortization -- Under Canadian accounting principles,
depreciation and amortization may be calculated on the unit-of-production
method based upon the estimated mine life, whereas under United States
accounting principles the calculations are made based upon proven and
probable mineable reserves.
b) Contingent Liability -- Under United States accounting principles the
contingent liability disclosed in note 7(d) would be reflected in the
balance sheet. Accordingly, for United States accounting principles total
assets and liabilities would increase by $50 million. The increase in
assets represents investments (non-current) comprising Canadian dollar
payments under the Swap agreement and Canadian dollar deposits with the
counter party to the Swap agreement. The liabilities (non-current)
represent the Guaranteed Subordinate Debentures and Notes of $38 million
and the Guaranteed Non-Cumulative Redeemable
10
11
Retractable Preferred Shares of $12 million which would be included outside
of shareholders' equity.
c) Foreign Exchange Contracts -- In accordance with Canadian accounting
principles, certain long-term foreign exchange contracts are considered to
be hedges of sales revenue denominated in foreign currencies. Gains and
losses related to changes in market values of such contracts are deferred
and recognized when the contract is settled as part of sales revenue. Under
United States accounting principles, changes in the market value of the
contracts would be included in current earnings.
d) Exploration Expenses and Related Mining Properties -- Under FASB Statement
No 121, exploration expenses and related mining properties acquired prior
to the determination of the existence of a commercially mineable deposit
are recorded as expenses as they are incurred. Under Canadian GAAP, these
costs may be deferred until such time as the exploration and development
work is either effectively abandoned and related costs are written off or,
an operating mine is established following which accumulated costs are
amortized to earnings. Accordingly, the net loss is adjusted to reflect
GeoNova deferred exploration costs which would have been expensed for U.S.
GAAP purposes. The mining interest and the Shareholder's equity would be
reduced by $3,837,000.
e) Balance Sheets -- The cumulative effect of the application of United States
accounting principles, noted in (a) to (d) above, on the consolidated
balance sheets of the Corporation as at June 30, 2001 and December 31, 2000
would be to decrease mining interests by $5,794,000 (2000 - $1,957,000),
increase long-term investments by $50,000,000 (2000 - $50,000,000),
increase long-term liabilities by $38,000,000 (2000 - $38,000,000),
increase preferred shares by $12,000,000 (2000 - $12,000,000) and reduce
shareholders equity by $3,847,000 (2000 - $1,957,000).
f) During 1999, the Securities Exchange Commission ("SEC") issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 reflects the SEC staff's interpretation of basic
principles of revenue recognition in existing United States generally
accepted accounting principles. There was no impact of adopting SAB 101
during the first half of 2001.
11
12
CAMPBELL RESOURCES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
JUNE 30, 2001
(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
Corporation's current Annual Report on Form 10-K for the year ended December 31,
2000. Such factors include, but are not limited to: differences between
estimated and actual 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 Corporation. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Corporation undertakes no obligation to
release publicly any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect unanticipated events
or developments.
OVERVIEW
Campbell recorded a loss of $3.0 million or $0.19 per share in the six months
and a loss of $0.9 million or $0.06 per share in the three months ended June 30,
2001. This compares to a loss of $6.5 million or $0.41 per share and a loss of
$4.7 million or $0.30 per share in the comparable periods of 2000. There was
negative cash flow from operations before the change in non-cash operating
working capital of $2.9 million in the six months ended June 30, 2001 compared
to negative cash flow of $5.6 million in the comparable period of 2000.
The results for the first six months of 2001 reflect the care and maintenance
situation at the Joe Mann Mine compared to ongoing development and start-up of
operations for the same period of 2000. During the previous year, 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.
The first two quarters include the care and maintenance costs at all mining
properties, the costs of an in-house study on resumption of operations at the
Joe Mann Mine and $300,000 to be paid as an indemnity in lieu of notice to the
salaried employees working at the time operations were suspended in November,
2000.
BALANCE SHEET
The balance sheet reflects the merger with MSV Resources Inc. and GeoNova
Explorations Inc. effective June 30, 2001. The net assets acquired represent
$12.7 million as presented in note 5 of the financial statements. A total of
14.8 million common shares were issued to shareholders of MSV and GeoNova on the
basis of 1 share of Campbell in exchange for every 4.1 shares of MSV and every
10 shares of GeoNova.
12
13
The 26% participation in Corporation Copper Rand Inc., owner of the Copper Rand
Mine, is accounted for at cost. At this point in time, there would be no
difference in accounting for this participation on the equity method basis. As
the operator of the Copper Rand Mine, all the current assets and liabilities
related to this operation are taken into account on the balance sheet.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2001 the Corporation's cash and short term deposits decreased to
$2.5 million compared to $4.5 million at December 31, 2000. Working capital also
decreased to $5.8 million compared to $7.4 million at December 31, 2000. The
decrease is attributable to the general administration expenses, the care and
maintenance expenses of the sites and the interest on the convertible debenture.
The Corporation's principal sources of liquidity are the future cash flows from
the Joe Mann Mine, the Copper Rand Mine, the Corporation participation in the
excess funding of the Copper Rand / Portage Environmental Fund. The Corporation
is subject to the normal risks and uncertainties associated with mining,
including fluctuations in gold prices, the relative U.S./ Mexican/ Canadian
exchange rates, the ability of the Company to meet its production estimates and
any unforeseen environmental problems.
13
14
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
(c) The Registrant issued an aggregate of 15,610,294 shares of its Common
Stock in exchange for shares of MSV Resources Inc. ("MSV") and GeoNova
Explorations Inc. ("GeoNova ") and to Repadre Capital Corporation
pursuant to the merger of MSV and GeoNova into the Registrant
("Merger"), and further reserved up to 26,828,772 shares of its Common
Stock for issuance upon exercise of outstanding warrants, options and
other contractual rights resulting from the Merger. The Merger was
effective June 30, 2001. The terms of the Merger are set forth in
Current Report of Form 8-K filed July 16, 2001, which is hereby
incorporated by reference. The terms of the shares reserved for
issuance pursuant to the Registrant's Employee Incentive Plan as
amended and Directors' Stock Option Plan are set forth in the
Registrant's Registration Statements on Form S-8 (File Nos. 333-93063,
and 33-91824 respectively), which are incorporated by reference to
this filing.
The shares issued pursuant to the Merger were exempt from registration
under Section 3(a)(10) of the Securities Act as the Merger was approved
by the Superior Court of Quebec, District of Montreal, on June 14,
2001, after the court held a hearing on the fairness of the terms and
conditions of the issuance of the shares and all shareholders of MSV
and GeoNova had notice of such hearing and an opportunity to be heard.
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 June 13,
2001, the shareholders voted on the following items:
4) The election of a slate of nine directors.
12,420,679 votes were cast in favour (99%)
113,485 withheld.
5) The reduction of the Stated Capital
3,815,784 votes were cast in favour (93%)
207,213 against
8,582,968 abstentions including broker non-votes
14
15
6) Merger by way of Plan of Arrangement
3,883,772 votes were cast in favour (95%)
198,986 against
8,523,209 abstentions including broker non-votes
4) The appointment of Samson Belair/Deloitte & Touche as auditors
12,519,411 votes were cast in favour (99%)
61,722 votes were withheld.
ITEM 5. Other Information
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are furnished in accordance with the provision s
of Item 601 of Regulation S-K:
Exhibit No.
Regulation S-K
Item 601 Designation Exhibit Description
-------------------- -------------------
(2) Merger agreement dated May 7, 2001 with Plan of
Agreement under Canada Business Corporations Act and
Arrangement By Law (Incorporated by reference to the
Registrant's current Report on Form 8-K dated July
16, 2001, Exhibit (2))
(b) Reports on Form 8-K. During the period covered by this Report on Form
10-Q, the Registrant filed the following Current Reports on Form 8-K:
(i) A Report, dated June 21, 2001 and amended July 6, 2001, which
reported change of the Registrant's Certifying Accountants and
shareholders' approval of Merger with MSV and GeoNova.
(ii) A Report, dated July 16, 2001, which reported details of Merger
of MSV and GeoNova into the Registrant.
15
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
CAMPBELL RESOURCES INC.
"LUCIE BRUN"
-----------------------
Lucie Brun
Executive Vice President and
Chief Administrative Officer
(Principal Financial and Accounting Officer and
authorized signatory)
Montreal, Quebec
August 14, 2001
16