Campbell divides time between Mexico and Quebec

For years, Campbell Resources (TSE) has been hobbled with a mixed bag of gold-copper, asbestos and coal investments. Profitability and a clean balance sheet were elusive.

However, the past few years have marked a gradual improvement. Having jettisoned its interests in asbestos and Kentucky coal, Campbell can now call itself a pure gold producer (with byproduct copper from its Chibougamau, Que., mine). Its balance sheet is clean — no long-term debt and cash of $19 million, with help from a $14-million treasury issue last year. Furthermore, under President John Kachmar, who took over after Northgate Explorations disposed of its 35% shareholding last August, the company has redefined its strategy. It’s a straightforward, 2-pronged approach: Prove up bigger tonnages at the Joe Mann mine near Chibougamau and acquire projects in Latin America.

But Kachmar told The Northern Miner that he is stepping out of North America cautiously, focusing on heap-leach gold projects with potential for 30,000 oz. per annum or more. Campbell already has some experience south of the Rio Grande River as a result of its 30% interest in the Colorada mine (operated by Eldorado). This approximately 25,000-oz.-per-year Mexican producer gives Campbell an additional 7,000 oz. per annum.

This year, the company is committing $1 million to explore in Mexico. Joe Spiteri, a former Placer Dome development-production geologist, who had a brief stint with Lac Minerals before signing on as Campbell’s vice-president of technical services, said potential acquisitions must be “heap-leachable and open-pit-style, with a minimum 30,000 oz. (per year output).” Low operating costs are also key, as they will serve to counterbalance the higher costs at Joe Mann (US$276). He mentioned US$250 per oz. as an overall target level.

“We’ve hired someone to oversee our exploration in Mexico and review the geology of potential acquisitions,” Spiteri said. He believes there is potential for “big-tonnage, Carlin-type” projects as well.

At Joe Mann, two separate exploration programs are under way. The first, a $2-million effort, will attempt to prove up tonnages below existing workings. In earlier work, three intersections near the 2350 level hit 0.906 oz. per ton across 7.6 ft. (core length), 0.349 oz. across 18.7 ft. and 0.360 over 17 ft.

“This program will turn out some very high-grade intersections, but we are also looking for a large-tonnage reserve,” said Spiteri. “We’re hoping to uncover about a million tons. I believe in the potential of this mine down-rake.”

A second target lies west of the existing mine, where a near-surface zone has been identified. Campbell is putting $500,000 into this effort. “If anything is going to change the face of this mine, the results from here will,” predicted Kachmar.

“It’s a great geologic bet,” added Spiteri. “What we have here is a near-surface zone that’s open down-rake with the potential to rake toward the existing shaft.”

Geologically, the Joe Mann orebodies are typical Archean vein systems. The veins are persistent, both laterally and downdip, with a strike length of 6,000 ft. and a depth of at least 2,500 ft. The current reserve is 1.1 million proven and probable tons grading 0.30% copper and 0.268 oz. gold per ton. Another 1.8 million tons of similar grade are classified as possible. Kachmar wants to refurbish the idle mill at Joe Mann, but his hands are tied unless the reserve increases to a point that would justify spending $11 million on mill rehabilitation. Currently, production is shipped to a mill in Chibougamau, about 40 miles from the mine, adding $30 to per-ounce operating costs.

Last year, the mill handled 258,000 tons of ore and yielded 55,000 oz. Gold production at Joe Mann this year should reach to 65,000 oz., according to company estimates. As well, Campbell will receive another 7,000 oz. from La Colorada in Mexico.

Campbell recently settled a difficult labor negotiation at Joe Mann. The contract calls for a 5% wage reduction for the April-to-December, 1994, period and further reductions of 8% in each of 1995 and 1996. However, wage cuts may be eliminated if the price of gold rises to certain levels. Last year, Campbell lost $3.5 million. It is projecting a $3.1-million profit this year. There are about 117 million shares outstanding.