The chronology is seen through the eyes of a cynic. In all cases where I am drawing a conclusion, the conclusion is “opinion only”. I would have a difficult time finding solid proof to back up exact the conclusions that I hint at in this document.
I am profoundly bullish on the opportunity in owning CCH. I think the opportunity for investors in CCH/CBLRF shares is bigger than Montréal’s Mount Royal. I (and many others) just have some questions as to whether Management is proceeding with our goals (Near-term operational success and share price appreciation) in mind.
What I see is some clever attempts (my opinion only) to “take the wind out of the sails”, at the same time that some Institutions (and maybe Insiders) are aggressively accumulating this stock. For example, we have been informed that Sprott Asset Management recently purchased of 23 million CBLRF shares, in addition to the 16 million CCH shares that they own.
Campbell does appear ready to “go live” now, but the proof is in the pudding – they need to execute. The have easily raised over $20 million from Institutions in the last year. There’s a reason why those Institutions have been "jumping through hoops" to get some cabin space on this vessel.
They (the company and the Institutions they deal with) might be thinking that if they you “take some wind out of the sails”, maybe a few small Investors will go play somewhere else (and free up some shares).
On February 22, 2006, Campbell released press that a rock fall had occurred at the Copper Rand mine, and that operations were suspended until further notice.
Right away, there were several signs that could lead to someone guessing or assuming that the impact was being over-played, or maybe the rock fall didn’t occur in the exact manner reported. Here was a post from StockHouse that summed up the suspicions of more than few people:
Post: Sweet Murray Pezim - What a great ploy!
Note: This post was censored, and removed from StockHouse, soemtoime in August 2007. But we know how to get things back, and we have now saved a "screen shot" of the post as well.
I thought this post by “Whale_Oil_Beef_Hooked” was the funniest thing I have ever read on the StockHouse CCH message board. Will someone please Mr. Whale Oil that I have used his material. He was last seen on the StockHouse TVI message board. He sums it up perfectly, in my opinion.
A few days later, Mr. Fortier made this comments to the press, in a CP (Canadian Press) release:
Press Release covering the rock fall
Note: This post was censored, and has now been recovered
That was a very suspicious comment. In my opinion, either Mr. Fortier is just incredibly stupid, or (more likely) it was a calculated comment to help spread some fear and shake loose some shares from the hands of small shareholders.
I just can not imagine a CEO making the comment “It makes you wonder about the stability of the mine to produce."
That same press article (link above) also had some words from John Ing, president and CEO of Maison Placements Canada. Mr. Ing was quoted with the following:
CCH had been one of the most actively traded companies on the TSX in the last few weeks, but John Ing, an analyst with Maison Placement Canada Inc. in Toronto, said "that's simply due to the large number of shares outstanding - more than 236 million.".
"It's a major setback," Ing said of the rock fall.
"Their major contributor is shut down for a while. It's not good."
WHAT??? Mr. Ing wrote that the reason CCH has been one of the most actively traded companies is because it has too many shares? But he doesn’t mention that the share price moved up 100% in the recent time frame? I suppose that 100% up-move was also because of "too many shares".
Then he talks about the rock fall being a “major setback”. But he doesn’t mention that Copper Rand was just starting back up, and had not produced much copper or gold in the preceding months, so there was no expectation for immediate earnings. And Mr. Ing didn’t mention that the rock fall would be quickly cleaned up, or that rock falls are regular occurrences in mining.
But the biggest failure of both Mr. Fortier and Mr. Ing was that they didn’t emphasize to Investors that the rock fall occurred in an older are of the mine, NOT in the an area where Campbell has been installing the news Alimak ground support equipment. Campbell has recently spent millions on new ground support efforts, and has reported big improvements in ground stability in those areas (from recent company reports).
To deliberately not discuss this more comforting outlook, to NOT say something like “this incident would have been very unlikely in the areas with our new ground support work” – that is the ultimate failure here.
Of course I don’t see it as an accident. I believe (my opinion only) that Mr. Fortier was trying to get out a specific message, requested straight from the Institutions. And we see reports that severel Institutions were buying CCH in this time period.
John Ing is the President and CEO of Maison Placements Canada. Maison Placements is an Institutional and private client Investment firm. Mr. Ing has followed CCH for many years. If you Google his name, you can probably see an article form about 4 years ago where he mentions Campbell as one of his top picks.
But according to the StockWatch Institutional Holding screen, it also appears that Maison Placements sold their CCH position about 18 months ago (did they sell right at the bottom?). I wonder if Mr. Ing has been “trying to get back in”.
It was also odd how the Journalist from the Canadian Press just happened to interview John Ing, and include his comments in the same press article where Mr. Fortier was quoted with his (my opinion only) stupid comment. I wonder if this was all coordinated. I have no proof of anything, but I am suspicious.
I ask Fortier on the phone, and he just “blew off” the whole thing. He just couldn’t explain how Mr. Ing’s comments ended up in the same (independent) article that had his s primary quotes (it was purely coincidental). Mr. Fortier said that he never reviewed the article before it went to press. And he didn’t see anything wrong with his own comments anyway.
So let me get this straight: We see Institutional Investors piling in Campbell shares, while at the same time the CEO and a well known Institutions Investor gets quoted in the press writing (in my opinion) a bunch of bullshit. That’s just too convenient.
Yeah, like I’m showing my house to a prospective buyer, and the bracket behind a row of heavy shelves separates from the wall, and falls down. So I say “Gee, I’ve been wondering about the structural integrity of the house frame.”
On March 15th, Annual Earnings for 2006 were released. This was followed by the release of their “Management Discussion and Analysis” (MD&A) on April 2nd. In the MD&A, Campbell reported (for the first time) that would be building a new ramp in the Copper Rand mine. Production would be limited until May or June.
Let’s be serious – a new ramp is not necessarily a bad thing. The report identified several good things coming from the new ramp. It will lead to an increase in efficiency and lower costs. It would only take a couple of months – production will resume in June (now I think they said that production will resume in May).
But just for an exercise, let’s be cynical, and see what we come up with…
The work on the ramp started immediately after the cleanup work on the rock fall. So the effect was limited production form Copper Rand for 3-4 months. What a perfect time to release two quarterly earnings reports that won’t be so great! (The “perfect time” is when the Institutions are struggling to get into this stock without being noticed).
The first quarter will still show Copper Rand production for the 7 weeks before the rock fall, but it was “just gearing up”. The 2nd quarter report will show hardly any Copper rand production. But then we have a “Negative” that no one is talking about.
Here is the Negative: For 2005 and 2006, the Copper Rand (CR) mine was being treated as a development property, where CR earnings would not get reported as regular earnings. On at least 5 separate occasions I asked Mr. Fortier why they were doing it that way. His answer was always the same:
(Paraphrase) “We don’t want to include those earnings because then we would also have to take the Amortization charge, and we need to see production above a certain level, or the Amortization charge will cancel out all of the earnings, and (effectively) make the quarter look much worse.”
I was pleasantly surprised to see the company announce that Copper Rand result would be fully included in earnings starting in January 2007. But when did they announce this sudden change? I think they announced this in the MD&A in April, and it was retroactive to January 2007.
Just 2 months earlier, Mr. Fortier said he was absolutely not including CR earnings until certain production levels were reached. It sure was odd to see them suddenly change their mind (remember that this happened after the rock fall).
Was this a “gift from the Heavens”, or should we take a cynical view?
Management knows that, with CR earnings included, they will have to take the amortization charge. There may be other front-loaded costs they will be taking. At the same time, they know that CR had limited production in the 1st quarter, and will probably have even lower production this 2nd quarter.
So the net effect is two quarters that may not be that good. The world finally sees CR earnings included, and what do we get? We might get a loss.
I am suspicious that Management made this move (gave us the gift) because they knew they could work it in a way where the 1st and 2nd quarters are impacted negatively. Look at the timing – the decision was announced only after the rock fall, and after the plans for the ramp were put in place.
“Shake Shake Shake. Shake le tree now"
Now all they need is a TV interview with John Ing, talking about the “unpredictability of earnings.”
What nobody is going to tell you is that once CR production gets above a certain threshold (to cover fixed costs , and the various charges), Copper Rand will be an absolute "cash cow". CR will produce gold and copper. Read some of my analysis – the CR gold production alone could be worth $20 - $35 million in earnings per year.
What a great time to build a new ramp! I don’t remember seeing any mention, anywhere, that the company was planning to build that ramp. It seems like it came “out of the blue”.
Could two more quarters with “nothing special to report” (maybe even a bottom line loss) actually get some retail investors to sell and move on?
The latest word from management is that the 3rd and 4th quarters will be much better.
Buyers are buying on the expectation of full operations will commence soon. Buyers are buying a company that will soon be a mid-cap gold and copper producer, and they are buying at “restructuring prices”. Nobody should be concerned about 1st or 2nd quarter earnings – we need to focus on the potential when Copper Rand and Corner Bay are at full production. But the timing of everything seems interesting.
Campbell has operated under CCAA restructuring protection since June 30, 2005. The original June 2005 press release is worth looking at. You can see what happened to the CCH share price on a two year chart.
The crash in the share price “sort of sucked” for a lot of people. But that crash in the share price (down to today’s range) was the buying opportunity of a lifetime for the value investors. I first started build my position in August 2005.
In April 2006, Campbell announced financing plans with a goal of emerging from CCAA. In late 2006, the plan was fully implemented. There are many press releases covering this.
But in the fall of 2006, Campbell also wrote (in a press release) that emergence from CCAA would be in the next few months.
Now look where we are: The parent company (Campbell Resources) HAS successfully emerged from CCAA. Refer to their February 28th press release for details. With the parent company out of CCAA, I don’t see real risk in owning CCH shares.
But two of Campbell subsidiaries remain under CCAA restructuring protection. These subsidiaries are supposed to completely emerge in this current 2nd quarter.
You can ask Mr. Fortier what is the total amount of cash they would need to completely settle those remaining debts. I think the number will be in the single-digit millions. That debt is not too big, considering the cash flow that Campbell will receive when Copper Rand resumes production. (But if they go around building ramps, they won’t have that cash flow.)
In other words, I think Campbell has the ability to completely settle those debts right now.
So what's going on? I can’t prove this, but my opinion is that the ongoing CCAA issue is being used to “take a little wind out of the sails”. It’s another manifestation of “Downplay”. You small investors wouldn’t want to invest too much of your hard-earned money in a company that still has parts of the company under CCAA, would you?
The Institutions have invested over $20 million in CCH the last 8 months. But what do they know? They take huge unknown risks all the time, right?
It just wouldn’t be possible that these buyers of the placements were getting any kind of private reassurances that the CCAA issue was totally “done an over with”, would it? But the “CCAA problem” sure is something for Analyst, retail stockbroker, or “Basher” to hang his hat on, depending on their motives. If a Take-over buyer emerges, the CCAA issue is something that the Attempting Buyers can point to, and say “Campbell has some skeletons in the closet”, that’s why our offer is so low – the CCAA issue is a problem”. If that take-over offer comes from a group connected to Insiders, there will be hell to pay.
On March 26th, Campbell announced a private placement to raise funds for the development of Corner Bay. We believe this placement was severely under priced, to the detriment of shareholders, and the company.
In the recent period before the private placement was announced, the CCH share price moved as high as 18 cents. But that move up was a move up on volume – the move had volume of over 12 million shares, for several days. That volume underlines the strength of the move, and suggests that “the market was comfortable” in the 15 – 18 cent range. Volume always tells the story.
It is true that the price after Feb 10th (or so) drifted back down, but that move was on much lower volume. This underlines the point that the true buying interest was higher than where the price was in April.
The share were flow-through shares. Flow through shares almost always trade at a premium in the marketplace. Taking into account the flow-through benefit, it’s like Campbell Management did the placement at around 10 cents a share. No one can justify that give-away price.
A few small shareholders inquired with their Broker, and expressed interest in buying some of these privet placement shares. They were told that the placement had been fully subscribed almost immediately. One person heard (I think form Dundee) that the placement sold out in 2 hours. None of the small shareholders invested in Campbell reported any success in buying these private placement shares.
When I (Benson) asked Mr. Fortier why the private placement was done at such a low price, he replied “that’s where the offers came in”. Myself (and perhaps a few others shareholders think that Mr. Forties answer was a bunch of bullshit. The charts shows recent, very good, high volume, buying interest in the range above 15 cents. And the information circulating on the street is that the private placement filled up immediately.
In some email explanations that people received from Mr. Fortier, it sounded like he was saying he had commitment for all 56 million shares on the day the price was announced.
That doesn’t sound like “best effort” at all. That sounds like “people tearing down the wall to get a piece of the under priced placement”. In my opinion, a “best effort” is when the price is announced, and it takes some work to sell the deal, and get it to be fully subscribed.
Several of us strongly believe that Campbell Management either deliberately under priced the private placement, or had very poor market judgment. That is opinion only, but there is good agreement on that among small shareholders.
This decision to price the placement at .125 hurt the company, because it deprived the company of the additional funds, had they sought a higher price. It also hurt small shareholders because it led to a weakening of the price chart in the recent time period. (But the drops in the share price are almost always low volume.)
Conclusion: The pricing of the private placement was one of the worse decisions (destructive to share value) that Campbell has made recently. When we asked Mr. Fortier about it, his answers sounded like “spin” (in my opinion).
This was one of the final moves that turned me into an “Activist Shareholder”.
There was also a “strange occurrence” that happened at the end of December and early January 2007. There was hugely positive fundamental development that Investor Relations (appeared to be) in no rush to report in après release.
Nuinsco Resources had closed on their private placement purchase of 36 million CCH shares. The press release was issued January 23rd. But we have clues that the deal actually closed at the end of December. I wrote about this situation in this StockHouse post:
Incident where Mr. Fortier really didn't want to report good news (my opinion only)
Here’s a positive development that should have been reported immediately. We can’t prove it, but it appears that the company sat on this news for about 3 weeks. Campbell may not have even reported it on January 23rd, except for the fact that people were already asking questions on the StockHouse message board, and I was asking questions on the phone.
Why would a company receive a massive private placement investment, and be in “no particular rush” to report the news?
Joe Mann is Campbell’s primary gold mine. Compared to newer projects, (like Copper Rand and Corner Bay), Joe Mann will have only a small addition to cash flow and earnings over the next year or two. Even in a very bullish scenario, Joe Mann would probably contribute just $10 - 15 million to annual earnings. That’s “small fry” compared to what Copper Rand will earn at full production.
Notwithstanding the above, I have still seen a great deal of inconsistency in the message from Campbell as to how long Joe Mann will operate for.
I have become suspicious (but have no proof) that the whole issue of Joe Mann’s production life is being dangled in front of people, depending on whether Campbell wants to put out a bullish picture or a more low-key picture to a specific audience or caller.
For example:
- One of the Campbell VP’s (I think Alain Blais) gave an interview to a Quebec newspaper in January , where he spoke very optimistically about the future of Joe Mann (production for a few years more).
- I remember a press release in 2006 that included the words (paraphrase) “we remain committed to the operation of this mine.
- On the other hand, I am 95% sure that a recent press release from the company said that Joe Mann would be close in September 2007.
- The new Campbell resources website (made available at the beginning of May 2007) list Reserves and Resources for Joe Mann, with no mention that the mine is closing soon.
- When talking with Mr. Fortier, he will mention that Joe Mann reserves are almost depleted, but usually seems shy about talking about Joe Mann Resources. The official Resources at Joe Mann could support major operations (a lot more gold they are producing now) for over 2 years. That’s without addition drilling.
- Mr. Fortier has, at times, “retreated” into a discussion of how difficult the Joe Mann mine has been. But it has official Resources.
I have some suspicions about this. I think it’s another example of “Downplay”.
I once read that Heckle Mines (NYSE:HL), which has mined for 100 years, never had official resources representing more than 3 years for forward looking production. But the vein at their primary silver mines just went “on and on”, for 100 years.
Is Mr. Fortier downplaying Joe Mann’s real possibilities? Is the news of possible closure being dangled in front of us, to communicate a slightly less bullish picture.
And does it even matter. Remember that if Joe Mann does close, Campbell will lose a small amount in earnings from Joe Mann, but the miners can be offered work at some of Campbell other projects. Hasn’t management complained about being short of workers? Maybe closing Joe Mann would free up enough personal to start wok on Cedar Bay (different from Corner Bay).
Nuinsco Resources (NWI.TO) now owns around 10% of the outstanding CCH shares. The exact percentage is hard to determine, because more shares were issued in April and Nuinsco may have bough some of those shares too (new ownership numbers have not been reported yet).
Nuinsco Resources (NWI.TO) is also providing “operational consulting” at two of Campbell’s mines. They are being paid in CCH shares each month (“better than cash” they must assume).
The highest ranking Operational guy (Geologist type) on the ground at Campbell’s mines also came from Nuinsco.
Don’t you guys find it strange how Nuinsco is so reluctant to make any press comments about Campbell operations?
For example, after the rock fall, it took a while for Mr. Fortier to make any press comments. When Mr. Fortier did comment to the press, he stuck his foot in his mouth (onion only). But why was Nuinsco so quiet during that episode? They are being paid to perform operation consulting – shouldn’t they have more to day?
Nuinsco owns a huge chunk of CCH shares, and has a 50% stake in the Corner Bay project, and will participate 50/50 on future projects.
To all you guys going to the Gold Show in NY: I assume Nuinsco will also be at the Gold Show. Go ahead and ask them various questions on Campbell. Judge for yourself – will the Nuinsco officers be completely forthcoming? Or will they be evasive in their answers, like they don’t want the story to get out.
I won’t be at the show, but if someone could report back on the CCH message board in InvestorVillage, that would be great.
Then we have John Embry and Sprott Asset management (SAM). SAM is now (probably) the largest single holder of Campbell shares. SAM is the single most respected “blue-chip” investment firm that operates in the sector and John Embry is on various TV investment shows on a regular basis.
StockWatch has reported that SAM owns about 16 million shares, and bought that position in 2006. But on the home page of this website, I point out that another Poster observed a new report that SAM has also recently purchased 23 million shares of CBLRF. (In an oversight, I never independently versified this latest report – can anyone help out and verify it, and post a follow-up on Investor Village.)
So with the 23 million share purchase of CBLRF, SAM would now own about 40 million shares (between CCH and CBLRF).
John Embry has been on RobTV (I think that’s the channel) at least 2 times in the last 6 months. We have been “:calling in” and trying to get Mr. Embry to comment on Campbell resources. He simply refuses to say anything about Campbell. The call screener explains that Mr. Embry is not available to discuss Campbell.
That sure is strange. What do you guys think is going on here?
Sometime in March 2007, it was reported on the StockHouse message board that a gentleman named “Peter Hodson”, an Investment Strategist at Sprott Asset Management, made some public comments of Campbell. This news came from one of the Basher slime-balls on the StockHouse message board (MolySpecKing). Thank you Molly, but I was curious if this information was deliberately funneled through you. I commented on this news here:
Negative Comments by Peter Hodson on the stockchase website
For at least 18 months, on the old Campbell Resources website, Campbell listed the names of the Analyst who coves CCH . It was some guy from GMP Securities.
And for 18 months, that Analyst never issued a single public report on CCH. At least I never saw one.
Now, on the new Campbell website, I don’t even see his name. Do you think that maybe the long-time Analyst could make some comments, ever? He might be greeted with skepticism, but shouldn’t he at least be talking?
Nor do I see the link to the PowerPoint Investor slideshow that I have referred to in some of my StockHouse posts. You know – the slide show that showed Copper Rand being very profitable even with copper at around $1 per pound, and a much lower gold price (around $400 an ounce). That presentation was on Campbell's website for 3 years, and now they took it down.
( I have a downloaded copy of the PowerPoint slideshow, which I can provide to people in the Campbell Stakeholders Group – for personal review only).
The "Grabbing of the Rights"
One of the earliest signs that Management was (my opinion only) more interested in helping certain Institutions than small shareholders was an incident that I will call “the grabbing of the rights”.
In April 2006, the Campbell financings were announced. The financing was to have 3 parts: Private placement offered by Sprott Securities Private placement to be purchased by Nuinsco Rights plan offered to the holders of the original shares
The Rights plan would offer 3 rights for each 5 share of CCH that they held. In my opinion, it was very clear that thus was targeted for the current shareholders (before any other parts of the deal closed). You can read the press releases.
This rights plan started trading the morning of October 5th, 2006. Before a single trade was made, trading in the rights (CCH.RT) was halted, and press release was issued. The press release said something to the affect (paraphrase) that “TSX rules has not been followed because not all shareholders had been given the right to participate in the right plan”. The holders of the new 125 million private placement shares (offered by Sprott Securities) were also now regular shareholders, and according to TSX rules, needed to be offered rights to.
So we all had to wait about 2 more weeks, and then the new deal was announced. Each shareholder would get 3 Rights for each 10 shares – a 50% dilution (we previously got 3 rights for each 5 shares).
Here’s the problem: Those 125 million shares in the Sprott Securities private placement were not shares. They were “units”. A unit was comprised of one full share and half a warrant. That the same “unit” that was being offered in the rights plan.
In other words, “they” already got their shares and half warrants, now they were going to take half ours too. Management let this happen.
I call this “double dipping”. In my opinion , Campbell Management allowed their arm to be twisted by one or more of the buyers of the Sprott Securities private replacement.
This also led to “that group of Institutions” who purchased the Sprott Securities private placement in May 2006, to accumulate over 200 million shares + warrants.
More information in this StockHouse post from February 2007: