Northgate influence shown in Campbell’s 1987 results

When Northgate Exploration acquired a 13% equity stake in Campbell Resources and an option on 19.6%, it came as no surprise to Northgate watchers.

Campbell’s Chibougamau gold/ copper interests made it an obvious target for a company which had just sold its two Chibougamau mines — the Copper Rand and Portage Island — to Western Mining Corp. of Australia.

More unexpected, perhaps, is the speed at which Northgate has asserted its influence on its new affiliate. While announcing a 1987 net loss of $11.2 millon (30 cents per share), Campbell has written off its Kentucky and West Virginia coal interests which usually produce around 500,000 tons of coal annually.

A depressed market combined with the non-renewal of 1988 contracts were given as the reasons why Campbell opted to discontinue its coal operations.

Campbell has also announced a more conservative mineral exploration accounting policy and changed its financial year-end from June 30 to Dec 31. As a result, Campbell now charges exploration expenses to income during the period incurred.

The change in policy has resulted in a charge to earnings of $1.92 million in 1987 and $1.02 million for expenses incurred in the six months ended Dec 31, 1986, Campbell says.

Results for previous years have been restated to reflect discontinued coal operations and the change in accounting policy.

Due to a resumption of operations at the Joe Mann mine in Chibougamau, Campbell’s gold output was up 22,000 oz from 30,000 oz in 1986 to 52,000 oz in 1987.

Income from continuing operations in 1987 was $1.61 million or 4 cents per share but due to a $1.65- million loss from its coal division and an extraordinary $11.2-million loss due to the coal writedown, Campbell reported an $11.23-million loss for the year ended Dec 31.

Cash flow from operations was $4.54 million for the 12-month period ended Dec 31. However after receiving a $11.4-million cash injection in February when Northgate exercised 5.1 million warrants, Campbell regards its cash position as healthy.