Campbell struggling after weak third quarter

Campbell Resources (CCH-T) is looking to turn around operations at the Joe Mann mine, south of Chibougamau, Que., after production problems left the company with a loss of $2.9 million in the three months ended Sept. 30.

Delayed development at Joe Mann, combined with the loss of a load-haul-dump machine and equipment breakdowns, meant the mine produced only 7,715 oz. gold and 64 tonnes copper during the quarter. Joe Mann’s total cash cost to produce an ounce of gold was US$392.

Low production kept revenues down to $3.6 million in the quarter, and the $2.9-million loss translates to 7 per share. In the third quarter of 2001, when production at Joe Mann was suspended, Campbell posted a loss of $1 million, or 3 per share, on zero revenue.

For the first nine months of the year, Campbell lost $4.1 million on revenues of $7.3 million, against a loss of $4 million in the corresponding period of 2001.

Campbell is hoping operational improvements at Joe Mann have brought the operation back into profitability. The ore hoisted at the mine reached a low of 8,700 tonnes in August, but rebounded to 16,000 tonnes in September and 16,400 tonnes in October. Mill head grades, which had fallen to 6.1 grams gold per tonne and 0.19% copper in August, rose to 7.8 grams gold and 0.2% copper in September, and 10.4 grams gold and 0.29% copper in October. Production rose from 1,500 oz. gold in August to 3,616 oz. in September and 5,127 oz. in October.

Dilution has been a chronic problem at Joe Mann, and previously forced a change in mining method from shrinkage stoping to cut-and-fill mining. Campbell will be testing a thermal-fragmentation technique on some ore blocks at Joe Mann to see if narrower structures, currently uneconomic at the mine, can be mined that way. Reserve drilling has been confirming previously defined ore zones and has also identified some additional mineralization at the mine.

The company is forecasting production of 35,000 oz. gold in 2002.

Campbell had $16.2 million in cash and other current assets at the end of the quarter, with $6.7 million in working capital. A $2.7-million loan from Quebec government agency Investissement Qubec is to be repaid in six instalments starting this month.