The suspension of mining at two gold operations — one in Quebec, the other in Mexico — has pushed
Coming on the heels of a $64-million loss for all of 2000, the Montreal-based junior lost another $2 million (or 13 per share) on zero sales revenue during the first quarter, compared with a loss of $1.8 million (13 per share) from sales revenue of $1.3 million during the corresponding period last year.
Burning through more than $17 million in cash over 12 months, the company ended the March quarter with just $3 million in the till.
During the first three months of 2001, Campbell carried out work at its three main assets. This included:
– completing studies that may lead to the resumption of operations at the Joe Mann underground gold mine, south of Chibougamau, Que., where production was suspended in November 2000;
– identifying a potential investor for the Santa Gertrudis gold mine in Mexico, where production was halted in October 2000; and
– completing the sale of its stake in the Cerro Quema low-grade gold project in Panama.
However, Campbell says its primary focus has been advancing the proposed merger with fellow hard-luck juniors
The boards of all three companies have approved the deal; the next step will be obtaining the blessing of shareholders at three separate meetings to be held in quick succession in Montreal on June 13.
Under the proposal, MSV will amalgamate with a wholly owned subsidiary of Campbell, with MSV shareholders receiving one Campbell share for every 4.1 MSV shares held. GeoNova shareholders will receive Campbell shares on a 1-for-10 basis.
The terms of the merger were developed by special committees set up within each company. They were vetted by the independent firm Griffiths McBurney & Partners.
Looking forward, Campbell says the cost of maintaining the two mothballed mines will be reduced to $500,000 in the second quarter from $1.3 million in the first.
Restart plan
Also, the company has presented employees and suppliers of Joe Mann with a plan to resume mining there by the end of the third quarter.
The plan calls for the renegotiation of an existing production royalty held by
Meanwhile, GeoNova has almost completed its purchase of
As payment, GeoNova will issue Ced-Or 5 million shares and a further 5 million shares in one year at 15 per share. GeoNova will also pay out a maximum of $1.8 million to Ced-Or in the form of a net smelter return royalty on production from Bachelor Lake or any other GeoNova ore treated at the Bachelor Lake mill. The dormant Bachelor Lake mine contains 523,075 tons of measured and indicated resources grading 0.233 oz. gold per ton. A 500-ton per day mill and a tailings facility are on the property.
GeoNova already owns a 100% interest in the Discovery project, 124 km southwest of Bachelor Lake. Drilling has identified resources of 2.3 million tons of 0.149 oz. gold, including 1.4 million tons of 0.20 oz. gold. In the bigger picture, the company is considering trucking Discovery ore to the Bachelor Lake facilities for processing.
New business
For its part, Ced-Or has effectively moved out of the mining business and is about to begin construction of a cedar strand-board plant in Quebec’s Temiscamingue area.
GeoNova says its will not carry through with a proposed acquisition of Quebec mining properties held by SKG Interactive, formally Sikaman Gold Resources.
And MSV, in what will likely be its last annual financial statement, reported net earnings in 2000 of $3.3 million (7 per share) on metals sales of $196,215, compared with 1999’s loss of $10 million (27) on metal sales of $148,101.
In the fall of 2000, MSV presented a proposal to its creditors in conformity with the Bankruptcy and Insolvency Act. Creditors subsequently approved the settlement proposal of $10.6 million in debt for $5 million.
Consequently, $5.6 million in debt was presented in MSV’s statement of operations as a debt forgiveness.
The company says that, with restructuring completed, it has been able to complete the financing of its 16%-owned Copper Rand 5000 project in Chibougamau.
On March 8, MSV sold mining assets relating to the Copper Rand 5000 project for $13.2 million in return for: a 16% participation in the voting shares of Corporation Copper Rand; the reimbursement of loans consented to by the project’s institutional partners; the payment of the amounts due following the settlement of the proposal to creditors; and the reimbursement of short-term debt.
The estimated $2.7-million gain from the asset sale will be reflected in MSV’s upcoming first-quarter results.
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