TO ALL, THE LETTER FROM CARL CAMPBELL:
Here is the letter from Carl Campbell. Campbell didn't resign as a director, incidentally, to "strengthen the Board with additional mining talent," as Naxos' 6/11 News Release misrepresented. He resigned in protest to (1) Kemp's outright hostility to and refusal to consider ANY new technology, J-L or otherwise (he blows hot and cold on any day depending on the amount of shareholder pressure at the moment), and (2) the unsoundness of Naxos' mounting an all-out, expensive drilling program before developing an economic assay methodology (current results are not economic at today's gold prices) and a network of assay labs that can replicate it.
On the first point, while claiming above-the-table to stockholders to be pursuing a two-track effort, Kemp/Norton pursued hostile efforts toward J-L and other new technology below the table which ran the gamut from: threatening lawsuits against J-L, to trying to discredit Johnson at every opportunity, to threatening to abrogate contractual agreements with J-L, to refusing to permit any ore to be released for ANY new technology evaluation, to delaying or threatening not to pay bills for a top recognized source to evaluate the J-L technology after first hiring this source--all apparently in an effort to try to drive away J-L and thus secure the power base of the existing interim management, at the expense of stockholders. CPM is impressed that this top recognized source is reviewing the J-L technology, apparently knowing this source, Kemp indicates; so J-L is not some sort of jinx on financing. The letter:
July 4, 1998
To the Shareholders of Naxos Resources: a Current Commentary
by Carl Campbell
PERSONAL NOTE I have been close to Naxos for over eight years, including six years as director. I resigned in May of this year in order to put distance between myself and certain policies which were taking shape over which I had no control. I still have a very active interest in Naxos, but now from the vantage point of a shareholder rather than director. I want to share some thoughts with you about what is going on today and how I think we can maximize our opportunities directly ahead.
JOHNSON TECHNOLOGY Yes, there is a Johnson technology, created by Dr. Al Johnson, controlled by Johnson, Lett and Company. It was introduced to Naxos about a year ago, after which Naxos purchased an option to acquire all rights to the technology following a period of investigation. As you know, the investigation turned out to be disappointing, leading to all kinds of doubts about the authenticity of Al Johnson and ultimately causing the resignation of Jimmy John as president and CEO.
What you need to know is that the "Johnson technology" is not dead, nor is it carved in stone. There is a good deal of science to it, and like any new science it has gone through a painful learning curve. It keeps changing as experimental knowledge adds up. In retrospect, Naxos was introduced prematurely, at a time when Al Johnson was desperate for development money, and targets were set too high too soon. Also, because of the novelty and complexity of the processes, third party verification of the sort needed by all mineral exploration companies was severely handicapped.
It is now safe to say that Al Johnon is indeed authentic. His technology has been closely studied by a world-class matallurgist who has impeccable credentials. This man's reaction, in terms of whether this is a technology worth pursuing, is definitely yes. Let me emphasize that this is not a guarantee of overnight success, or any kind of ultimate success. I am only saying that here is a top-level scientist with first-hand knowledge who indicates this to be a promising technology. Which to me means anyone who has tried to summarily discredit Al Johnson was wrong. Likewise, anyone who did not have the patience to let this thing unfold at its own speed--which includes practically everybody involved--has been misguided.
WHAT NEXT? As things stand, there is still a relationship between Naxos and Johnson, Lett, and I would give much of the credit to Jimmy John for keeping it alive at a personal level. Naxos today is otherwise under the control of persons who are unsympathetic toward anything that smacks of being novel or "black box." Fortunately, up until the present time, neither party has had a compelling reason to break off the agreement completely, just leaving things in limbo, but a time for decision is fast approaching.
I have personally been supportive of efforts to get conventional answers at Franklin Lake, which at one time were given a tremendous boost by the efforts of Ray Steele. I also know how frustrating these efforts can be, not so much for lack of results as for lack of replication in someone else's lab. In today's mining industry that sends up all kinds of red flags. The trouble with Franklin Lake is that the material itself is not the least bit conventional. It is loaded with elements that interfere with conventional processes. If a lead-fire assay is successful it is only because of special pretreatment of the sample or other modifications that tend to be subtle and easily reversible, causing great difficulty for assayers.
In short, Naxos has every reason to maintain a keen interest in programs that are MORE unconventional as well as those that are less, because those are the only two choices. Where does Al Johnson fit in? In my mind an authentic Al Johnson is a perfect match for Naxos, not only because of his new technology but because of his all-around imagination, creativity, and experience treating complex ores in the Southwest. If you can imagine what it means to add in the synergy of a consulting partnership with a world-class recognized name in metallurgical research the choice is clear. You go for it. You can put this team at the center of your company, not unlike the way it was in the old Bill Groves days, but much more organized. The existing program of "conventional" assaying can continue without interruption, once the replicating labs have been brought up to speed.
THE PROBLEM There is still a problem of how to go about finalizing a deal with Johnson, Lett and merging operations in the most timely and productive manner. I am not concerned about the negotiations themselves, as long as the relationship is friendly and upbeat. I can even see ways of accelerating the integration without risk to the highest interest of either party. The problem is how to purge Naxos of anti-Johnson sentiment and replace it with enthusiastic support. This was not possible at all prior to the recent developments. Now it is not only possible but entirely rational. The trouble is, human nature being what it is, there is a strong possibility that all sorts of baggage from the past will not simply blow away. Feelings and attitudes can run very, very deep, and this can apply to both sides, not just Naxos. An unnecessary breakdown is a real threat.
Of immediate interest, as a personal opinion, I do not feel that either Sid Kemp or Jimmy John has exactly the right qualifications to represent the shareholders of Naxos in negotiations with Johnson, Lett, for totally opposite reasons. Fred Arkoosh has been suggested as a possible candidate for the job. Any other recommendations should be made known.
ONE LAST TOPIC The AGM. It is scheduled for July 24th in Vancouver. If you can possibly attend, do so. If not, give your proxy to anyone in attendance. That is, anyone you know and trust. I urge you NOT to do the automatic thing and sign it over to management. The current management is led by an interim president who is now seeking permanent entrenchment. I am sorry to say, the presence of Mr. Kemp in management jeopardizes the prospect of creating a healthy relationship with the Johnson Lett organization. If you have already sent in a proxy and wish to change it, information on how to do so properly will be circulated in the near future. Let's put democracy to work and pull this extremely interesting project out of the mire. Thank you for your interest.
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Incidentally, the source evaluating J-L's technology was with Mintek, South Africa's top metallurgical research organization, for 19 years. During this time he headed up its Analytical Division for a number of years, then spent time on the metallurgical side on special projects, and then started up the Economics and Costing division, which subsequently became a separate South African government organization. Mintek is somewhat like our Bureau of Mines. Mintek has been responsible for developing all of the processes used in all of the mines of South Africa. South Africa is the world's largest gold mining country accounting for 21% of world gold production. So, the referee chosen to evaluate J-L's technology is the very top. His report should be available before the AGM. Which is the reason to keep your proxies free until we see the report.
If your stock is registered in your name and you wish to change your proxy having already sent it in, you can revoke your original and ask them to send or FAX you new instructions and a new proxy, then resubmit the new proxy. Do so either by writing Montreal Trust Company, Attn: Stock and Bond Transfer Dept., 510 Burrard St., 4th Floor, Vancouver, B.C. V6C 3B9, where you sent in your first proxy, or by calling 604-661-9400 and asking for Jeff Alexander, who is Montreal Trust's person on the Naxos account. If your stock is in street name, you must get your broker to do this for you. |
