Campbell sees first profit in almost six years

“While this is a small profit, it is a step in the right direction, ” said President John Kearney. Last year the company had a net loss of more than $67.6 million or $1.25 per share.

Last year, Campbell increased its gold production to 61,000 oz from 52,000 oz the year before, but production costs increased to $362(US) per oz in 1988 from $348. Copper production fell to 4.9 million lb from 5.3 million lb.

If Campbell continues to recover from the cost of a write-down in the carrying value of its mothballed Henderson II operation, much of the credit will go to an $18.2 million expansion program at the Joe Mann gold/copper mine in Chibougamau, Que., according to Kearney.

In a bid to increase the mine’s production to 100,000 oz gold from 36,000 oz last year, Campbell is attempting to raise $30 million through a rights offering involving affiliate Northgate Exploration (TSE) and the Montreal-based Claridge Group.

After examining several alternatives, Campbell has decided that the best way to cut costs at Joe Mann from $242 per oz in 1987 and increase throughput is to sink a new 2,050-ft shaft.

“Scheduled to be finished by mid-1990, the new 4-compartment shaft will enable the mine to produce 1,600 tons per day as early as October 1990 and a maximum 1,800 tons per day by April, 1991,” said newly appointed executive vice-president and chief operating officer Ken Hill.

As a result of ongoing surface and underground exploration, Joe Mann reserves stand at 3.7 million tons grading 0.24 oz gold per ton. Most of those reserves are located in an area 3,000 ft east of the shaft in a mineralized structure that stretches for more than six miles.

“By the end of this year, development work on the 1050 and 1650 levels will convert about 800,000 tons from the possible category and increased proven and probable reserves to almost two million tons,” said Hill.

Many of the 130 workers needed for the Joe Mann expansion program will come from the S-3 gold mine in Chibougamau which will remain open until the end of 1989 unless gold prices drop to $350.

Having produced 11,500 oz gold and 840,000 lb copper in 1988, the S-3’s performance is being closely monitored. “It was originally anticipated that the S-3 mine might be closed at about this time (May 11),” said Kearney.

“However, operating costs have been reduced, grades have improved somewhat and additional reserves have been outlined which have prolonged the life of this operation,” he said.

Under a rights offering consisting of a $20-million equity portion and $10 million in bank debt, shareholders can subscribe for one new share at 85 cents each for every four shares currently held.

After taking down 6.5 million shares at $1 each in a private placement, Northgate has increased its stake in Campbell to 21.7% fully diluted. If the offering is fully subscribed, Northgate’s interest would rise to 22-25%.

The Bronfman-controlled Claridge Group which, holds 8.11% of Campbell’s 61.4 million outstanding shares, has also agreed to exercise its rights under the offering to a maximum 3.9 million shares. As a result, its stake in Campbell could increase to 11.5%.

Another Bronfman-owned company, Great Lakes Capital Markets Inc., is acting as standby underwriter and can subscribe for up to 4.7 million shares. Scheduled to expire May 18, the rights offering is expected to increase the number of outstanding Campbell shares to 77 million.

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