Campbell trades below book value
Below is some research I did that examines book value. Campbell is now trading below (my calculated) book value, even with the upcoming dilution.
For all people taking a first look at Campbell, the thing you must realize is that Campbell has been operating under CCAA (Canadian Restructuring) protection. But Campbell expects to emerge from CCAA very soon. This is stated in their recent "Management Discussion and Analysis". That's why you are are able to buy at such a low price. Sprott Securities is investing $10 million.
Campbell Resources
CCH.TO
CBLRF.OB
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According to the 2005 Annual report, the book value of Campbell’s properties is listed as:
Joe Mann property......... $ 2,457,000
Copper Rand property..... 46,042,000
Exploration properties...... 6,795,000
Total = $55 million CAD
But these book values are old numbers, and clearly underestimate Campbell’s properties.
The Corner Bay mine is included in that $6.7 million number. But Corner Bay will be a full producing mine in one year, producing around 15 million pounds copper per year
(I am fairly sure that one of the recent press releases from Nuinsco (NWI.TO) lists an annual production target of 15 million lbs copper from Corner Bay. I was previously using about 9 million lbs annually in my models). I think the book value of just Corner Bay will rise to over $50 million, when production is near.
These book value numbers do not include any of the new Resources at Joe Mann. Campbell now expects production from Joe Mann through the end of 2007. But they have depreciated Joe Mann down to just $2.4 million in book value.
These book value numbers also do not include Cedar Bay. Cedar Bay will be developed in late 2007. It will probably produce upwards of 5 million lbs copper and 30,000 ounces of gold annually. Those numbers are huge guesses, and may be higher. We don’t hear much about Cedar Bay, except that Mr. Fortier recently told me that the gold grades were among the highest they have at any of their properties.
(There’s a beautiful diagram of Cedar Bay’s resource on the Campbell website, and the diagram shows how Campbell can get at the ore through the Copper rand main shaft)
And these book value numbers don’t include Merrill Island, or the 3 royalty streams.
$6.8 million for “exploration properties” is a way low number. I think this category, which includes Corner Bay, will have a book value of $50 - $100 million in the 2007 annual report.
So total book value of Campbell’s properties will rise to $100 - $150 million, IMO.
How many Producing copper/gold miners, that are cash flow positive, can you buy for book value? |
