Resource boosted at Santa Gertrudis property

Campbell Resources (CCH-T) has made significant advances at its Santa Gertrudis gold property in Mexico’s Sonora state, both through exploration drilling and the acquisition of adjacent gold prospects.

During the most recent phase of exploration, over 60 drill holes totalling about 6,000 metres were drilled. The program tested targets on strike with Campbell’s Santa Gertrudis mine, 7 km to the northwest, which the company closed in December. Specifically, the work targeted the La Gloria Norte fault, La Gloria shear zone, the Greta splay and the Esperanza Lupita fault.

Results from the program, combined with last year’s drilling, have enabled the company to delineate an additional resource of 1.8 million tonnes averaging 2.39 grams gold per tonne, for about 140,000 contained ounces gold, within five deposits: Ontario, Tracy, La Gloria Jasperoid, La Gloria Deep and El Tigre. Most of these deposits remain open, and at least five other nearby targets have yet to be tested.

Meanwhile, Campbell is buying from former Mexican gold-producer Minera Roca Roja some 900 ha of mining claims situated north of, and adjacent to, the Santa Gertrudis mine. Most of the new claims are underlain by the same geology and structures that host both the Santa Gertrudis mine and the newly delineated resources to the southeast.

Upon the expected closing of the transaction in August, Campbell plans to begin an exploration program on the new claims. Until then, work will continue on the Santa Gertrudis property in an effort to upgrade resources to the proven category.

The company plans to resume mining operations at Santa Gertrudis once it has established proven reserves of 200,000 oz. gold, enough for at least three years’ mining.

On the financial front, for the three months ended March 31, Campbell reported a loss of $1.7 million (or 1 cents per share) compared with a loss of $2.8 million (2 cents per share) for the corresponding period in 1997.

Cash flow from operations increased to $1.3 million during the quarter, compared with $200,000 in the first quarter of 1997. Working capital at March 31, 1998, was $47.3 million, including $38.7 million in cash.

Lower gold prices dropped quarterly revenues from metal sales to $10.3 million (or US$297 per oz. gold) from $12.3 million (US$362 per oz.) a year earlier. The company has hedged 37,500 oz. of gold production for the remainder of 1998 at US$326 per oz.

During the first quarter, gold production from the leach pads at Santa Gertrudis was only moderately impacted by the suspension of mining operations, with total gold production decreasing by 5% to 24,200 oz.

compared with the first quarter of 1997. Cash operating costs for the quarter fell to US$261 per oz. gold, compared with US$321 per oz. a year earlier.

Gold production at Santa Gertrudis is expected to cease during the second half of 1998.

Campbell’s Joe Mann mine in northern Quebec produced 18,200 oz. gold at a cash operating cost of US$290 per oz. in the first quarter of 1998, compared with 17,100 oz. at US$295 per oz. in 1997’s first quarter. The production gain was primarily due to an increase in the tonnage milled, to 76,300 tons from 65,800 tons a year earlier. This increase was partially offset by lower mill head grades, which fell to 0.26 oz. gold from 0.28 oz.

Campbell expects the current shaft-deepening program at Joe Mann to be completed by the end of the second quarter of 1998, on time and roughly $1 million under budget. The firm is reviewing its options regarding lateral development below the mine’s 2350 level.