============================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter ended SEPTEMBER 30, 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 registrants principal executive offices) ---------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of issuer's classes of common stock, as of the latest practicable date. Shares Outstanding as of November 1, 2001, 31,398,922 Common Shares, without par value ============================================================================ CAMPBELL RESOURCES INC. Table of Contents Page ---- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets as at September 30, 2001 (Unaudited) and December 31, 2000 ............................................................................ 3 Consolidated Statements of Operations (Unaudited) for the Three Months and the Nine Months Ended September 30, 2001................................................. 4 Consolidated Statements of Deficit (Unaudited) for the Nine Months Ended September 30, 2001................................................................... 4 Consolidated Statements of Cash Flows (Unaudited) for the Three Months and the Nine Months Ended September 30, 2001................................................. 5 Notes to the Consolidated Financial Statements (Unaudited) .......................... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................................... 13 PART II. OTHER INFORMATION: ITEM 1. Legal Proceedings.................................................................... 15 ITEM 2. Changes in Securities................................................................ 15 ITEM 3. Defaults Upon Senior Securities...................................................... 15 ITEM 4. Submission of Matters to a Vote of Security Holders.................................................................. 15 ITEM 5. Other Information.................................................................... 15 ITEM 6. Exhibits and Reports on Form 8-K..................................................... 16 SIGNATURES........................................................................... 17 2 CAMPBELL RESOURCES INC. CONSOLIDATED BALANCE SHEETS (Expressed in thousands of Canadian dollars) UNAUDITED SEPTEMBER 30 December 31 2001 2000 ---- ---- ASSETS $ $ CURRENT ASSETS Cash and short-term deposits 1,466 4,548 Receivables 2,785 1,684 Restricted cash 834 840 Inventories 4,957 4,420 Prepaids 274 539 ------- ------- Total current assets 10,316 12,031 ------- ------- OTHER ASSETS 2,105 628 INVESTMENTS (NOTE 2) 6,576 -- FUTURE INCOME TAX ASSET 1,742 1,742 MINING INTERESTS 195,699 186,937 less accumulated depreciation and amortization (172,422) (171,738) ------- ------- 23,277 15,199 ------- ------- Total assets 44,016 29,600 ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable 2,696 2,195 Accrued liabilities 1,518 1,590 Future income tax liability 886 886 ------- ------- Total current liabilities 5,100 4,671 ------- ------- ACCRUED RECLAMATION 8,073 6,513 DEFFERRED INCOME 600 -- CONVERTIBLE DEBENTURES (NOTE 3) 7,246 3,864 FUTURE INCOME AND MINING TAX LIABILITY 856 856 OTHER LIABILITIES 78 228 SHAREHOLDERS' EQUITY Capital stock (note 4) 24,175 125,355 Foreign currency translation adjustment 1,345 1,258 Deficit (3,457) (113,145) ------- ------- Total shareholders' equity 22,063 13,468 ------- ------- Total liabilities and shareholders' equity 44,016 29,600 ======= ======= 3 CAMPBELL RESOURCES INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Expressed in thousands of Canadian dollars except per share amounts) THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- SEPTEMBER 30 SEPTEMBER 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- $ $ $ $ METAL SALES -- 5,947 -- 10,750 ------- ------- ------- ------- EXPENSES Mining -- 9,651 -- 17,772 General administration 408 745 1,309 2,104 Indemnity in lieu of notice -- -- 300 -- Depreciation and amortization 15 2,245 27 3,451 Exploration -- 633 -- 1,712 Care and maintenance 452 71 2,259 288 ------- ------- -------- ------- 875 13,345 3,895 25,327 ------- ------- -------- ------- Loss from operations (875) (7,398) (3,895) (14,577) ------- ------- -------- ------- Other income (expense) Other income 41 698 208 1,498 Metal sales adjustment previous year -- -- (76) -- Convertible debenture interest expense (161) (80) (307) (236) ------- ------- -------- ------- (120) 618 (175) 1,262 ------- ------- -------- ------- Loss before taxes (995) (6,780) (4,070) (13,315) Income and mining tax recovery -- 136 113 154 ------- ------- -------- ------- NET LOSS (995) (6,644) (3,957) (13,161) ======= ======= ======== ======= LOSS PER SHARE (0.03) (0.42) (0.19) (0.84) ======= ======= ======== ======= CONSOLIDATED STATEMENTS OF DEFICIT (UNAUDITED) (Expressed in thousands of Canadian dollars) THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- SEPTEMBER 30 SEPTEMBER 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- $ $ $ $ Balance at beginning of period (2,462) (56,092) (113,145) (50,259) Reduction of stated capital -- -- 113,645 -- Change in accounting policy -- -- -- 684 Net loss (995) (6,644) (3,957) (13,161) -------- ------- -------- ------- Balance at end of period (3,457) (62,736) (3,457) (62,736) ========= ======== ======== ======== 4 CAMPBELL RESOURCES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Expressed in thousands of Canadian dollars) THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- SEPTEMBER 30 SEPTEMBER 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- CASH PROVIDED BY (USED IN): $ $ $ $ OPERATING ACTIVITIES Net loss (995) (6,644) (3,957) (13,161) Items not involving cash Depreciation and amortization 15 2,245 27 3,451 Loss on sale of assets 29 -- 29 -- Recoveries of future income and mining taxes -- (170) -- (253) Other 232 (288) 319 (485) ------- ------- -------- ------- (719) (4,857) (3,582) (10,448) Net change in non-cash operating working capital (485) 390 516 963 ------- ------- -------- ------- (1,204) (4,467) (3,066) (9,485) FINANCING ACTIVITIES Issues of capital stock -- 28 -- 69 Other 64 (61) 64 (61) 64 (33) 64 8 ------- ------- -------- ------- INVESTING ACTIVITIES Expenditures on mining interests (7) (259) (7) (6,935) Business acquisitions, net of cash and short-term deposits 1 -- (91) -- Proceeds of sale of assets 34 -- 34 -- Deferred income 78 -- 78 -- Money market instruments (43) -- (150) 8,000 ------- ------- -------- ------- 63 (259) (136) 1,065 ------- ------- -------- ------- Effect of exchange rate change on cash and short-term deposits 3 85 56 172 ------- ------- -------- ------- Decrease in cash and short-term deposits (1,074) (4,674) (3,082) (8,240) Cash and short-term deposits at beginning of period 2,540 14,653 4,548 18,219 Cash and short-term deposits at end of period 1,466 9,979 1,466 9,979 ======= ======= ======= ======= CHANGES IN NON-CASH OPERATING WORKING CAPITAL Receivables (351) (797) 770 (1,014) Inventories and prepaids 230 845 615 185 Accounts payable 622 (233) 16 1,534 Accrued liabilities (986) 575 (885) 258 ------- ------- -------- ------- (485) 390 516 963 ======== ======= ======== ======= 5 CAMPBELL RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 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 nine 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 $3) 11 -- Arca Explorations Inc. (171,664 common shares, Market value of $9) 48 -- Matamec Explorations Inc. (70,026 common shares Market value of $11) 17 -- ----- ----- 6,576 -- ===== ===== 6 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 nine months ended September 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 September 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 nine months are as follows (in thousands): 2001 2000 ---------- --------- Shares Amount Shares Amount ------ ------ ------ ------ 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 -- -- Shares issued in relation to the amendment of the Net Smelter Return Royalty Agreement (note 7b) 800 432 Share consolidation costs (61) Acquisition of MSV Resources inc 10,891 8,822 -- -- Acquisition of GeoNova Explorations inc 3,919 3,174 -- -- Employee Incentive Plan and Directors'Stock Option Plan -- -- 47 69 -------- ------- ------ ------- Balance at September 30 31,399 24,175 15,762 125,347 ======== ======= ====== ======= 7 Loss per share has been calculated using the weighted average number of shares outstanding during the nine months which was 21,018,000 (2000- 15,722,000) and during the three months which was 30,783,000 (2000 - 15,762,000). 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 1,831 39 1,870 Inventories 623 -- 623 Prepaid 257 7 264 Mining assets 4,322 3,837 8,159 Investments 6,544 21 6,565 Other assets 1,080 -- 1,080 Liabilities assumed Accounts payable 493 63 556 Accrued liabilities 264 477 741 Convertible debentures 3,155 -- 3,155 Accrued reclamation 1,500 -- 1,500 Deferred income 522 -- 522 ----- ------ ------ Net assets acquired at fair value 9,373 3,373 12,746 ===== ====== ====== Consideration Shares issued (14,810 shares) 8,822 3,174 11,996 Acquisition costs 551 199 750 ----- ------ ------ 9,373 3,373 12,746 ===== ====== ====== 8 6--STATEMENTS OF CASH FLOWS Additional disclosures with respect to the Statements of Cash Flows are as follows: Three months ended Nine months ended ------------------ ----------------- September 30 September 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- $ $ $ $ Cash taxes paid (6) 13 6 57 Cash interest paid 147 145 147 145 7--COMMITMENTS AND CONTINGENCIES a) At September 30, 2001 the Corporation has outstanding calls for 8,300 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. On October 11, 2001, the Corporation received notice that it was successful in its appeal against the assessments. This decision is subject to further appeal by the tax authorities on or before October 26, 2001. No provision has been made in the financial statements for the amounts assessed on the basis of the outcome of this appeal, the earlier ruling and the legal advice received. 9 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 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. 10 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 Nine months ended ------------------ ----------------- September 30 September 30 ------------ ------------ 2001 2000 2001 2000 ---- ---- ---- ---- $ $ $ $ Net loss for the period as reported (995) (6,644) (3,957) (13,161) Depreciation and amortization (a) -- (2,026) -- (3,071) Exploration expenses (d) (5) -- (5) -- Foreign exchange contracts (c) (253) -- (253) ------ ------ ------ ------- Net loss for the period in accordance with United States accounting principles (1,000) (8,923) (3,962) (16,485) ------ ------ ------ ------- Other comprehensive income (loss): Foreign currency translation adjustments -- 323 -- 727 ------ ------ ------ ------- Comprehensive loss for the period in accordance with United States accounting principles (1,000) (8,600) (3,962) (15,758) ------ ------ ------ ------- Loss per share for the period in accordance with United States accounting principles Basic and fully diluted (0.03) (0.57) (0.19) (1.05) ------ ------ ------ ------- 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 Retractable Preferred Shares of $12 million which would be included outside of shareholders' equity. 11 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 $3,825,000. 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 September 30, 2001and December 31, 2000 would be to decrease mining interests by $5,782,000 (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 $5,782,000 (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 three quarters of 2001. 12 CAMPBELL RESOURCES INC. MANAGEMENT'S DISCUSSION AND ANALYSIS (Expressed in Canadian dollars unless otherwise noted) FORWARD-LOOKING STATEMENTS 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 10-K for the year ended December 31, 2000. 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. OVERVIEW Campbell recorded a loss of $1.0 million or $0.03 per share in this third quarter ended September 30, 2001 and a loss of $4.0 million or $0.19 per share for the first nine months of the year. Losses in the comparable periods of 2000 were $6.6 million or $0.03 per share and $13.2 million or $0.84 per share. There was a negative cash flow from operations before the change in non-cash operating working capital of $3.6 million for the nine months ended September 30, 2001 compared to negative cash flow of $10.5 million in the comparable period of 2000. In 2001, the Company entered into agreements to sell its Panamanian and Mexican subsidiaries. Also, Campbell has reviewed and revised its mining and geological reserves, studied previous operating methods and established a new more profitable mining plan for the Joe Mann Mine based on certain assumptions included in a feasibility study. The Company also completed the merger with GeoNova Explorations and MSV Resources Inc. This merger, with two companies already well established in the Chibougamau region, provides for considerable savings in human and material resources as well as lower administrative costs. Financing of future projects should also be made easier. Furthermore, in this last quarter, the Company reached agreements on a number of concessions with the various unions representing mine and treatment plant employees. The results for the first nine months reflect the care and maintenance situation at the Joe Mann Mine as well as the payment of an indemnity in lieu of notice to the salaried employees working at the time operations were suspended in November 2000. In the previous year, the costs for development and resumption of operations are included in the results. In 2000, pre-production costs at the Joe Mann Mine (net of any revenue from ore production) were capitalized as at April 30, 2000 after which the costs were expensed. Administration costs for this third quarter include the three companies. Other revenues totalling $208,000 for the nine months ended this September include interest revenues of $123,000, $102,000 for the sale of gold recovered at the Campbell mill, and a loss of $121,000 from the conversion of foreign currency. 13 BALANCE SHEET The balance sheet reflects the merger with MSV Resources Inc. and GeoNova Explorations Inc. effective June 30, 2001. The net assets as at September 30, 2001 were $44.0 million. A total of 14.8 million common shares were issued to shareholders of MSV and GeoNova. As at September 30, 2001, net assets for Campbell were $22 million or $0.70 per share. 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. Production at the Copper Rand Mine should begin in the first quarter of 2003. The company recently announced the beginning of exploration and development work at the Joe Mann Mine. Operations should resume in the 1st quarter of 2002. Ten million dollars will be spent for exploration ($5 million) and development ($5 million). Funds will be raised through a one-million dollar private placement, a two-million dollar grant, a four-million dollar credit facility and part of the proceeds from the sale of units in a royalty on production from the Joe Mann Mine and Corner Bay project. LIQUIDITY AND CAPITAL RESOURCES As at September 30, 2001, the Corporation's cash and short term deposits were $1.5 million compared to $4.5 million on December 31, 2000. The decrease is attributable to the general administration expenses, the care and maintenance expenses of the sites, the interest on convertible debentures and the costs of the merger. The Corporations' principal sources of liquidity are the future cash flows from the Joe Mann Mine, the Copper Rand Mine and the Corporation's 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. 14 ITEM 1. Legal Proceedings ----------------- Not applicable ITEM 2. Changes in Securities --------------------- Not Applicable ITEM 3. Defaults Upon Senior Securities ------------------------------- None ITEM 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None ITEM 5. Other Information ----------------- On November 14, 2001, The New York Stock Exchange announced that it has determined that the common stock of the Company will be suspended on or before Monday, November 26, 2001. Following suspension, application will be made to the Securities and Exchange Commission to delist the issue, as the Company will not challenge this determination. The Company will continue to trade on The Toronto Stock Exchange and has informed the NYSE that it is actively seeking a trading market in the United States and will provide additional information to investors in due course. The decision was reached in view of the fact that the Company has fallen below the continued listing standards regarding total market capitalization of not less than $50 million and stockholders' equity of not less than $50 million, total market capitalization of not less than $15 million over a 30 trading-day period and minimum share price of not less than $1 over a 30 trading-day period. The NYSE had previously accepted a Plan provided by the Company that would have brought it into conformity with continued listing standards. The Company, while making progress on its Plan has, however, been unable to meet certain material quantitative aspects of that Plan. 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (b) Reports on Form 8-K. During the period covered by this Report on Form 10-Q, the Registrant filed the following Current Report 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. 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 thereunto 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 November 14, 2001