##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date
of event requiring this shell company report............
 Commission File Number 1-8488
 Campbell Resources Inc.
  
 
  Title of each class
    
    Name of each exchange on which registeredcommon shares
    
    TSX and OTC-BB
  
  
   o þ
 o þ
 þ o
  o o þ
 þ o
 o þ
 EXPLANATORY NOTE




---



##### 



CAMPBELL RESOURCES INC.
TABLE OF CONTENTS
 FORWARD-LOOKING STATEMENTS
    
    
    1CURRENCY AND METRIC EQUIVALENTS
    
    
    1RESERVE AND RESOURCE ESTIMATES
    
    
    2GLOSSARY OF SIGNIFICANT TERMS
    
    
    2Item 1. Identity of Directors, Senior Management and Advisors  Not Applicable
    
    
    3Item 2. Offer Statistics and Expected Timetable  Not Applicable
    
    
    3Item 3. Key Information
    
    
    3Selected Financial Data
    
    
    3Summary of Differences Between US and Canadian GAAP
    
    
    5Risk Factors
    
    
    6Mining Risks
    
    
    6Environmental Matters
    
    
    10Item 4. Information on the Company
    
    
    11History and Development of the Company
    
    
    11Financings
    
    
    16Business Overview
    
    
    19Campbell Properties
    
    
    22Organizational Structure
    
    
    23Inter-Corporate Relationships
    
    
    23Employees
    
    
    23Property, Plants and Equipment
    
    
    24Business of Meston
    
    
    24The Joe Mann Mine
    
    
    24History
    
    
    24Location, Access and Ownership
    
    
    25Geology
    
    
    25Mineral Reserves and Resources
    
    
    26Mining
    
    
    27Milling
    
    
    28Employees
    
    
    28Royalties
    
    
    28Environmental Matters
    
    
    29Mineral Exploration Properties
    
    
    29Chibougamau Exploration Properties
    
    
    29Business of MSV
    
    
    31The Copper Rand Mine
    
    
    31Location and Title
    
    
    31History
    
    
    31Copper Rand 5000 Project Background
    
    
    31Financing of the Copper Rand Project and Details of the Management of the Copper Rand Project
    
    
    32Other Aspects of the Copper Rand Project
    
    
    33Geology
    
    
    33Mineral Resources
    
    
    34Mining
    
    
    34The Copper Rand Mill
    
    
    35Milling
    
    
    35
 - i -




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##### 



Environmental Fund
    
    
    35Tailings and Waste Disposal
    
    
    35Employees
    
    
    35Royalties
    
    
    36The Corner Bay Property
    
    
    36Location and Title
    
    
    36History
    
    
    36Geology
    
    
    37Mineral Resources
    
    
    37Royalties
    
    
    38The Eastmain Mine
    
    
    38The Cedar Bay Property
    
    
    38Business of GéoNova
    
    
    39The Discovery Project
    
    
    39The Chevrier Project
    
    
    39Location, Access and Ownership
    
    
    40Geology
    
    
    40Historical
Mineral Resources(1)
    
    
    40Berthiaume Syndicate
    
    
    40Property, Location and Access
    
    
    41Geology
    
    
    41The Pitt Gold Property
    
    
    41Location, Access and Ownership
    
    
    42Geology
    
    
    42Item 5. Operating and Financial Review and Prospects
    
    
    43Managements Discussion and Analysis
    
    
    43Selected Annual Information
    
    
    47Summary of Quarterly Results
    
    
    50Item 6. Directors, Senior Management and Employees
    
    
    61Directors
    
    
    61Senior Management
    
    
    62Executive Compensation
    
    
    63Option/SAR Grants in Last Financial Year
    
    
    64Aggregated Option/SAR Exercises During The Most Recently Completed Financial Year and
Financial Year End Option/SAR Values
    
    
    64Indebtedness of Directors and Executive Officers
    
    
    65Employee Incentive Plan
    
    
    65Share Option Plan
    
    
    65Share Purchase Plan
    
    
    67Share Bonus Plan
    
    
    67Share Loan Plan
    
    
    67Remuneration of Directors
    
    
    70Directors and Officers Liability insurance
    
    
    70Employment Agreements
    
    
    70Audit Committee
    
    
    71Audit Committee Oversight
    
    
    72Pre-Approval Policies and Procedures
    
    
    72Compensation Committee
    
    
    72Composition of the Compensation Committee
    
    
    72Executive Compensation Philosophy and Policy
    
    
    73
 - ii -




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##### 



Report on Executive Compensation
    
    
    73Indebtedness of Directors and Executive Officers
    
    
    75Statement of Corporate Governance Practices
    
    
    75Employees
    
    
    81Item 7. Major Shareholders and Related Party Transactions
    
    
    81Item 8. Financial Information
    
    
    81Financial Statements
    
    
    81Legal Proceedings
    
    
    81Dividend Record and Policy
    
    
    83Significant Changes
    
    
    83Item 9. The Offer and Listing
    
    
    83Toronto Stock Exchange
    
    
    83OTC-BB
    
    
    84Item 10. Additional Information
    
    
    85Share Capital
    
    
    85Memorandum and Articles of Incorporation
    
    
    85Election and Qualifications of Directors
    
    
    85Meetings
    
    
    86Limitations on Ownership of Securities
    
    
    86Change in Control of Company
    
    
    86Material Contracts
    
    
    86Exchange Controls
    
    
    87Taxation
    
    
    88Certain Canadian Federal Income Tax Consequences
    
    
    88Dividends on Common Shares
    
    
    88Disposition of Common Shares
    
    
    88Certain United States Federal Income Tax Considerations
    
    
    89U.S. Holders
    
    
    90Distributions of Common Shares
    
    
    90Foreign Tax Credit
    
    
    91Disposition of Common Shares
    
    
    91Other Considerations
    
    
    91Passive Foreign Investment Corporation
    
    
    91Backup Withholding
    
    
    92Documents on Display
    
    
    92Subsidiary Information
    
    
    92Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    92Gold Risk Disclosures
    
    
    92Foreign Currency Risk Disclosures
    
    
    93Other Financial Instrument Risk Disclosures
    
    
    93Competition
    
    
    93Item 12. Description of Securities other than Equity Securities  Not Applicable
    
    
    93PART II
    
    
    93Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    93Credit facility with Investissement Québec
    
    
    93Convertible debentures
    
    
    93CCAA Procedures
    
    
    94Item 14. Material Modifications to the Right of Security Holders and Use of Proceeds  None
    
    
    94Item 15. Controls and Procedures
    
    
    94Item 16 A. Audit Committee Financial Expert
    
    
    94
 - iii -




---



##### 



Item 16 B. Code Of Ethics
    
    
    95Item 16 C. Principal Accountant Fees And Services
    
    
    95(a) Audit Fees
    
    
    95(b) Audit-Related Fees
    
    
    95(c) Tax Fees
    
    
    96(d) All Other Fees
    
    
    96(e) Audit Committees Pre-Approval Policies
    
    
    96Interest of Auditors
    
    
    96Item 16 D. Exemptions From The Listing Standards For Audit Committees  None
    
    
    96Item 16 E. Purchases Of Equity Securities By The Issuer And Affiliated Purchasers  None
    
    
    96PART III
    
    
    96Item 17. Financial Statements
    
    
    96Item 18. Not applicable
    
    
    96Item 19. Exhibits
    
    
    149
 - iv -




---



##### 



FORWARD-LOOKING STATEMENTS
 Securities Act of 1933 Securities Exchange Act of 1934 Private Securities Litigation Reform Act of 1995
 CURRENCY AND METRIC EQUIVALENTS
  Rate at
    
    AverageDecember 31
    
    Rate (1)
    
    High
    
    Low2002
    
    
    1.5800
    
    
    
    1.5702
    
    
    
    1.6049
    
    
    
    1.51902003
    
    
    1.2923
    
    
    
    1.3916
    
    
    
    1.5286
    
    
    
    1.29232004
    
    
    1.2034
    
    
    
    1.3016
    
    
    
    1.3970
    
    
    
    1.17752005
    
    
    1.1656
    (2)
    
    
    1.2083
    
    
    
    1.2703
    
    
    
    1.15072006
    
    
    1.1654
    (3)
    
    
    1.1304
    
    
    
    1.1722
    
    
    
    1.0983
 
 Notes:(1)
    
    The average rate means the average of the exchange rates on the
last day of each month during the year.(2)
    
    Rate at December 30.(3)
    
    Rate at December 29.




---



##### 



High
    
    LowMarch 2007
    
    
    1.1806
    
    
    
    1.1546February 2007
    
    
    1.1855
    
    
    
    1.1591January 2007
    
    
    1.1827
    
    
    
    1.1636December 2006
    
    
    1.1654
    
    
    
    1.1403November 2006
    
    
    1.1473
    
    
    
    1.1290October 2006
    
    
    1.1404
    
    
    
    1.1152September 2006
    
    
    1.1287
    
    
    
    1.1045
   RESERVE AND RESOURCE ESTIMATES
 .
 GLOSSARY OF SIGNIFICANT TERMS
 Proven mineral reserve
 - 2 -




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##### 



Probable mineral reserve
 Measured mineral resource
 Indicated mineral resource
 Inferred mineral resource
 Mineral resource
 Qualified person Standards of
Disclosure for Mineral Projects
 Item 1. Identity of Directors, Senior Management and Advisors  Not Applicable
 Item 2. Offer Statistics and Expected Timetable  Not Applicable
 Item 3. Key Information
 Selected Financial Data
  - 3 -




---



##### 



FIVE YEAR COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA
 (expressed in thousands of Canadian dollars unless otherwise indicated)(In accordance with Canadian GAAP)(1)Years ended December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Restated)Operating resultsNet metal sales
    
    
    10,919
    
    
    
    18,274
    
    
    
    20,461
    
    
    
    20,812
    
    
    
    14,310Loss from operations
    
    
    41,681
    
    
    
    28,259
    
    
    
    9,515
    
    
    
    6,368
    
    
    
    7,023Net loss
    
    
    41,195
    
    
    
    24,430
    
    
    
    8,192
    
    
    
    3,940
    
    
    
    5,361Cash flow (used for) provided by
operations
    
    
    (5,779
    )
    
    
    (748
    )
    
    
    1,193
    
    
    
    (4,380
    )
    
    
    (4,994
    )Capital expenditures
    
    
    (4,674
    )
    
    
    (2,696
    )
    
    
    (28,053
    )
    
    
    (4,193
    )
    
    
    (4,256
    )Financial positionCash and short-term deposits
    
    
    1,964
    
    
    
    1,772
    
    
    
    1,191
    
    
    
    4,752
    
    
    
    3,432Total assets
    
    
    115,142
    
    
    
    134,643
    
    
    
    177,756
    
    
    
    159,773
    
    
    
    133,866Long-term debt (2)
    
    
    65,357
    
    
    
    67,782
    
    
    
    66,502
    
    
    
    60,079
    
    
    
    59,166Capital stock
    
    
    85,572
    
    
    
    69,958
    
    
    
    69,610
    
    
    
    55,429
    
    
    
    30,013Shareholders equity
    
    
    12,006
    
    
    
    30,503
    
    
    
    54,585
    
    
    
    45,803
    
    
    
    24,284Per share data (in dollars per share)Loss from operation per share
    
    
    0.28
    
    
    
    0.26
    
    
    
    0.10
    
    
    
    0.12
    
    
    
    0.17Net loss per share
    
    
    0.27
    
    
    
    0.23
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.13
 
 Note:(1)
    
    please refer to Note 23 of the consolidated financial statements in Item 17 for differences
between Canadian generally accepted accounting principles (GAAP) and United States GAAP(2)
    
    Long term debt includes current portion of long term debt. Foreign exchange rateCanadian to US dollar:
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Year end/average
    
    
    1.1654/1.1304
    
    
    
    1.1656/1.2083
    
    
    
    1.2034/1.3016
    
    
    
    1.2923/1.3916
    
    
    
    1.5800/1.5702High/low
    
    
    1.1722/1.0983
    
    
    
    1.2703/1.1507
    
    
    
    1.3970/1.1775
    
    
    
    1.5286/1.2923
    
    
    
    1.6049/1.5190
 - 4 -




---



##### 



Month Ended
    
    High
    
    LowMarch 30, 2007
    
    
    1.1548
    
    
    
    1.1500February 28, 2007
    
    
    1.1739
    
    
    
    1.1661January 31, 2007
    
    
    1.1845
    
    
    
    1.1750December 30, 2006
    
    
    1.1670
    
    
    
    1.1599November 30, 2006
    
    
    1.1440
    
    
    
    1.1393October 31, 2006
    
    
    1.1289
    
    
    
    1.1201September 30, 2006
    
    
    1.1190
    
    
    
    1.1141
 Monthly Average
    
    High
    
    LowMarch 2007
    
    
    1.1806
    
    
    
    1.1546February 2007
    
    
    1.1855
    
    
    
    1.1591January 2007
    
    
    1.1827
    
    
    
    1.1636December 2006
    
    
    1.1654
    
    
    
    1.1403November 2006
    
    
    1.1473
    
    
    
    1.1290October 2006
    
    
    1.1404
    
    
    
    1.1152September 2006
    
    
    1.1287
    
    
    
    1.1045
  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 (expressed in thousands of Canadian dollars except per share amounts)Year ended December 31, 2006
    
    1st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th QuarterMetal sales
    
    
    2,644
    
    
    
    3,840
    
    
    
    2,267
    
    
    
    3,174Loss from operations
    
    
    (2,501
    )
    
    
    (1,888
    )
    
    
    (4,262
    )
    
    
    (33,030
    )Net earnings (loss)
    
    
    (2,298
    )
    
    
    (1,755
    )
    
    
    (4,902
    )
    
    
    (32,240
    )Net earnings (loss) per share
    
    
    (0.02
    )
    
    
    (0.02
    )
    
    
    (0.04
    )
    
    
    (0.19
    )
 Year ended December 31, 2005
    
    1st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th QuarterMetal sales
    
    
    5,512
    
    
    
    5,245
    
    
    
    4,924
    
    
    
    4,234Loss from operations
    
    
    (3,052
    )
    
    
    (1,362
    )
    
    
    (1,007
    )
    
    
    (22,838
    )Net earnings (loss)
    
    
    (2,677
    )
    
    
    166
    
    
    
    (645
    )
    
    
    (21,274
    )Net earnings (loss) per share
    
    
    (0.02
    )
    
    
    0.00
    
    
    
    (0.01
    )
    
    
    (0.20
    )
 Summary of Differences Between US and Canadian GAAP
  - 5 -




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##### 



Risk Factors
 Mining Risks
        - 6 -




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##### 



- 7 -




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##### 



- 8 -




---



##### 



- 9 -




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##### 



Environmental Matters
    ministère des Ressources naturelles et
de la Faune
  - 10 -




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##### 



ministère du Développement durable, de
lEnvironnement et des Parcs
 Item 4. Information on the Company
 History and Development of the Company
 Canada Business Corporations Act
  Joe Mann Mine
   - 11 -




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##### 



Copper Rand Mine
    Companies Creditors
Arrangement Act
  - 12 -




---



##### 



Discovery Project
  - 13 -




---



##### 



Mexican Assets
   2 3
 Bachelor Lake Property
   - 14 -




---



##### 



2006 Agreements
    - 15 -




---



##### 



Financings
  1 2 1 2 1 2 1 2
   - 16 -




---



##### 



- 17 -




---



##### 



- 18 -




---



##### 



Business Overview
    Joe Mann Mine
  - 19 -




---



##### 



Sales
    
    2006
    
    
    2005
    
    
    2004Quantities
    
    
    $000
    
    
    Quantities
    
    
    $000
    
    
    Quantities
    
    
    $000Gold (ounces)
    
    
    13,816
    
    
    
    9,795
    
    
    
    30,460
    
    
    
    17,818
    
    
    
    38,447
    
    
    
    20,287Copper (lbs)
    
    
    440,000
    
    
    
    1,973
    
    
    
    903,000
    
    
    
    2,039
    
    
    
    795,000
    
    
    
    1,422Silver (ounces)
    
    
    9,282
    
    
    
    120
    
    
    
    22,286
    
    
    
    194
    
    
    
    22,456
    
    
    
    199Gain (loss) on foreign exchange
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    (136
    )
    
    
    
    
    
    
    (75
    )Total gross metal sales
    
    
    
    
    
    
    11,925
    
    
    
    
    
    
    
    19,915
    
    
    
    
    
    
    
    21,833
  Copper Rand Mine
    Sales
    
    2006
    
    
    2005Quantities
    
    
    $000
    
    
    Quantities
    
    
    $000Gold (ounces)
    
    
    3,631
    
    
    
    2,769
    
    
    
    7,098
    
    
    
    4,036Copper (lbs)
    
    
    3,271,000
    
    
    
    12,969
    
    
    
    6,777,000
    
    
    
    15,489Silver (ounces)
    
    
    8,813
    
    
    
    134
    
    
    
    21,820
    
    
    
    183Gain (loss) on foreign exchange
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    (144
    )Total gross metal sales
    
    
    
    
    
    
    15,910
    
    
    
    
    
    
    
    19,564
 Corner Bay Property
  - 20 -




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##### 









[Intentionnally left blank]


- 21 -



---



##### 



Campbell Properties
  
 1 Pitt Gold
    
    5 Chevrier
    
    9 Copper Rand Mine2 Berthiaume Syndicate
    
    6 Gwillim
    
    10 Corner Bay3 Discovery (sold in 2006)
    
    7 Joe Mann Mine
    
    11 Eastmain (sold in 2007)4 Bachelor Lake (sold in 2004)
    
    8 Cedar Bay
    
    12 Lac Harbour
   - 22 -
        Organizational Structure
 Inter-Corporate Relationships
  
 
 Note:(1)
    
    See discussion of agreement with Strateco discussed in Item 4.(2)
    
    See discussion of agreement with Eastmain Resources Inc. discussed in Item 4.(3)
    
    See discussion of agreement with Metanor discussed in Item 4 Employees
  - 23 -




---



##### 



Le Syndicat des Travailleurs-euses de la Mine Meston
 Property, Plants and Equipment
 Business of Meston
 The Joe Mann Mine
 History
     - 24 -




---



##### 



Location, Access and Ownership
  Geology
     - 25 -




---



##### 



Mineral Reserves and Resources
   Mineral ReservesDecember 31, 2006
    
    December 31, 2005
    
    December 31, 2004Grade
    
    
    
    
    
    Grade
    
    
    
    GradeTons
    
    (onz/ton)
    
    Tons
    
    (oz./ton)
    
    Tons
    
    (oz./ton)Proven
    
    
    32,000
    
    
    
    0.201
    
    
    
    45,300
    
    
    
    0.236
    
    
    
    107,000
    
    
    
    0.306Probable
    
    
    6,000
    
    
    
    0.211
    
    
    
    64,000
    
    
    
    0.245
    
    
    
    105,000
    
    
    
    0.305Total
    
    
    38,000
    
    
    
    0.203
    
    
    
    109,300
    
    
    
    0.241
    
    
    
    212,000
    
    
    
    0.306
 Mineral ReservesDecember 31, 2006
    
    December 31, 2005
    
    December 31, 2004Grade
    
    
    
    
    
    Grade
    
    
    
    GradeTons
    
    (onz/ton)
    
    Tons
    
    (oz./ton)
    
    Tons
    
    (oz./ton)Measured
    
    
    9,000
    
    
    
    0.240
    
    
    
    162,000
    
    
    
    0.229
    
    
    
    214,000
    
    
    
    0.246Indicated
    
    
    142,000
    
    
    
    0.239
    
    
    
    264,000
    
    
    
    0.288
    
    
    
    257,000
    
    
    
    0.289Inferred
    
    
    165,000
    
    
    
    0.233
    
    
    
    180,000
    
    
    
    0.191
    
    
    
    180,000
    
    
    
    0.191
 
 Notes:(1)
    
    These estimates were verified internally by Ghislain Deschênes and Jean Tanguay (2004-2005) both Qualified Persons who are practicing as
geologists since 1982 and 1996 respectively.(2)
    
    Details and parameters of mineral resource calculations at December 31, 2004, 2005 and 2006. Calculation method
    
    Data bloc modellingCut off grade 2006 (2004) (2005)
    
    0.200 oz Au/T (0.250, 0.225)High-grade cut Au
    
    2.0 ozDilution 2006 (2004-2005)
    
    6 ft. min. horz. WidthMill recovery (Au) 2006 (2004) (2005)
    
    84.6% (85%, 83%)Price assumption (Au) 2006, (2004) (2005)
    
    US$575/oz (US $425/oz, US $450/oz)Exchange rate Can$/US$ 2006 (2005) (2004)
    
    0.893, (0.80),(0,833)
  - 26 -




---



##### 



Tons (short)
    
    Au (opt)ReservesProven
    
    
    32,000
    
    
    
    0.201Probable
    
    
    6,000
    
    
    
    0.211Total reserves
    
    
    38,000
    
    
    
    0.203ResourcesMeasured
    
    
    9,000
    
    
    
    0.240Indicated
    
    
    142,000
    
    
    
    0.239Total resources
    
    
    151,000
    
    
    
    0.239Inferred
    
    
    165,000
    
    
    
    0.233
 
 Notes: Information on calculations of mineral reserves and resources at Joe Mann:-
    
    All data verified by G. Deschênes, Chief Geologist for Campbell;-
    
    Economic parameters: Au = US$575/oz, Cu = US$3.00/lb US$/Can$ = 1.12;-
    
    All high gold grades brought back to 2.0 opt Au;-
    
    Method used, polygon on orthogonal projection. Cut off = 0.200 opt Au (reserves);
0.20 opt Au (resources); Recovery=
    
    Au : 84.6%  Mining
   - 27 -




---



##### 



Joe Mann Mine Production Summary Year ended December 31
    
    2006
    
    2005
    
    2004Tons Milled
    
    
    80,639
    
    
    
    139,064
    
    
    
    185,490Gold Grade (oz./ton)
    
    
    0.207
    
    
    
    0.254
    
    
    
    0.230Copper Grade (%)
    
    
    0.29
    
    
    
    0.34
    
    
    
    0.23Gold Produced (ounces)
    
    
    14,146
    
    
    
    29,434
    
    
    
    39,175Copper Produced (000s lbs.)
    
    
    440
    
    
    
    897
    
    
    
    801Cash Operating Costs (1) (US$  per oz. of gold)
    
    
    818
    
    
    
    427
    
    
    
    411
 
 Note:(1)
    
    Operating costs include all on-site mining, processing and
administrative costs, net of copper and silver by-product credits. Milling
  Employees
 La Fédération des Infirmiers et Infirmières du Québec
  Royalties
  - 28 -




---



##### 



Environmental Matters
  Mineral Exploration Properties
 Chibougamau Exploration Properties
  - 29 -




---



##### 



- 30 -




---



##### 



Business of MSV
  The Copper Rand Mine
 Location and Title
  History
   Copper Rand 5000 Project Background
  - 31 -




---



##### 



Financing of the Copper Rand Project and Details of the Management of the Copper Rand
Project
      - 32 -




---



##### 



Other Aspects of the Copper Rand Project
  Geology
  - 33 -




---



##### 



Mineral Resources
  Tons (short)
    
    Cu (%)
    
    Au (opt)ReservesProven
    
    
    384,000
    
    
    
    2,23
    
    
    
    0.060Probable
    
    
    951,000
    
    
    
    1,54
    
    
    
    0.091Total reserves
    
    
    1,335,000
    
    
    
    1,74
    
    
    
    0.082ResourcesMeasured
    
    
    47,000
    
    
    
    2,02
    
    
    
    0.057Indicated
    
    
    706,000
    
    
    
    1,54
    
    
    
    0.101Total reserves
    
    
    753,000
    
    
    
    1,57
    
    
    
    0.098Inferred
    
    
    467,000
    
    
    
    2,06
    
    
    
    0.079
 
 Notes: Information on calculations of mineral reserves and resources at Copper Rand:-
    
    All data verified byG. Deschênes, Chief Geologist for Campbell;Economic parameters: Au = US$575/oz, Cu = US$3.00/lb US$/Can$=1.12;All high gold grades brought back to 0.40 opt Au; All high copper grades brought back to 6.0%;Method used, polygon on orthogonal projection. Cut off = $58 NSR;Mill recovery = Au : 84,25% Cu = 98,4%. Mining
   - 34 -




---



##### 



The Copper Rand Mill
  Milling
  Environmental Fund
  Tailings and Waste Disposal
  Employees
  - 35 -




---



##### 



Royalties
   The Corner Bay Property
 Location and Title
  History
     - 36 -




---



##### 



Geology
   Mineral Resources
  - 37 -




---



##### 



GradeTons
    
    (Cu%)Measured
    
    
    181,000
    
    
    
    5,07Indicated
    
    
    265,000
    
    
    
    5,93Inferred
    
    
    1,441,000
    
    
    
    6,76
 
 Notes:(1)
    
    Ref: GÉOSTAT Technical Report on Corner Bay, July 2006. (Available on
SEDAR: www.sedar.com) Calculation method
    
    PolygonCut off grade
    
    3.00 % CuHigh-grade cut (Cu)
    
    12.00 % Cu.Dilution
    
    Long hole: 15% Shrinkage: 20%Mill recovery(Cu)
    
    95%Price assumption (Cu)
    
    1.25US$/poundExchange rate Can $/US$
    
    0.833
 Royalties
  The Eastmain Mine
  The Cedar Bay Property
    - 38 -




---



##### 



Business of GéoNova
   The Discovery Project
   The Chevrier Project
  - 39 -




---



##### 



Location, Access and Ownership
  Geology
   Historical Mineral Resources (1)
  
 Note:(1)
    
    Historical resources are not in compliance with the National Instrument 43-101 Standards of
Disclosure for Mineral Projects. Berthiaume Syndicate
  - 40 -




---



##### 



Property, Location and Access
  Geology
   The Pitt Gold Property
  - 41 -




---



##### 



Location, Access and Ownership
  Geology
  - 42 -




---



##### 



Item 5. Operating and Financial Review and Prospects
 Managements Discussion and Analysis
     Ø
    
    Creditor Protection and RestructuringØ
    
    Summary: A summarized presentation of initiatives, consolidated results and the financial situation as well as the main
factors impacting those results and the outlook for 2007.Ø
    
    Selected Annual InformationØ
    
    Consolidated financial results: A discussion of the results of the last three years.Ø
    
    Summary of quarterly results: A review of the factors that have led to variations during the quarters and that are
required in order to understand the evolution of overall trends in operations.Ø
    
    Liquidity and capital resources: A discussion of the liquidity and capital resources, including contractual obligations.Ø
    
    Capital stock.
 - 43 -




---



##### 



Ø
    
    Critical accounting principles: An analysis of the various accounting principles that significantly impact the value of
net assets, liabilities, income and/or expenses in the Companys consolidated financial statements, and how their
application requires management to present estimates and significant assumptions.Ø
    
    Changes to accounting principles: A presentation of the most recent changes to accounting principles and practices
impacting current results.Ø
    
    Tabular Disclosure of Contractual Obligations.Ø
    
    Risk factors.Ø
    
    Subsequent eventsØ
    
    Outlook.Ø
    
    Access to information.Ø
    
    Disclosure controls and procedures.
 Creditor Protection and Restructuring
     -
    
    2 million common shares of the Company upon commencement of the provision of
services;-
    
    1 million common shares of the Company upon completion of the equity financings;
and,
 - 44 -




---



##### 



-
    
    $25,000 plus 200,000 common shares of the Company per month, in advance (up to a
maximum of 4 million common shares).
   Summary
        - 45 -




---



##### 



- 46 -




---



##### 



Selected Annual Information
 (Express in thousands of Canadian dollarsexcept per share amounts and unlessSummary Operating Results Data
    
    otherwise indicated)Years ended December 31
    
    2006
    
    
    2005
    
    
    2004Gross metal sales
    
    $
    11,925
    
    
    $
    19,915
    
    
    $
    21,833Mining expenses
    
    $
    13,897
    
    
    $
    16,346
    
    
    $
    20,853Property write down
    
    $
    25,001
    
    
    $
    18,512
    
    
    $
    1,750Net loss
    
    $
    41,195
    
    
    $
    24,430
    
    
    $
    8,192Net loss per share
    
    $
    0.27
    
    
    $
    0.23
    
    
    $
    0.08Summary Balance Sheet DataTotal Assets
    
    $
    115,142
    
    
    $
    134,643
    
    
    $
    177,756Long-term financial liabilities(1)
    
    $
    65,357
    
    
    $
    67,782
    
    
    $
    66,502Other DataShort tons produced (from Joe Mann Mine only)
    
    
    80,639
    
    
    
    139,064
    
    
    
    185,490Sales revenue per ton ($/ton)
    
    $
    147.88
    
    
    $
    143.21
    
    
    $
    117.70Mining expenses per ton ($/ton)
    
    $
    172.34
    
    
    $
    117.54
    
    
    $
    112.42Ounces of gold sold
    
    
    13,816
    
    
    
    30,460
    
    
    
    38,447Average selling price ($/oz Au)
    
    $
    682
    
    
    $
    539
    
    
    $
    531Production costs ($/oz Au)
    
    $
    927
    
    
    $
    517
    
    
    $
    535Grade (oz/t Au)
    
    
    0.207
    
    
    
    0.254
    
    
    
    0.230Recovery
    
    
    84.87
    %
    
    
    83.36
    %
    
    
    91.72
    %
 
 (1)
    
    Long-term debt including current portion of long-term debt Results of Operations
  2006
    
    
    2005
    
    
    2004Sales

    
    Quantities
    
    
    000 $
    
    
    Quantities
    
    
    000 $
    
    
    Quantities
    
    
    000 $Gold (ounces)
    
    
    13,816
    
    
    
    9,795
    
    
    
    30,460
    
    
    
    17,818
    
    
    
    38,447
    
    
    
    20,287Copper (lbs)
    
    
    440,000
    
    
    
    1,973
    
    
    
    903,000
    
    
    
    2,039
    
    
    
    795,000
    
    
    
    1,422Silver (ounces)
    
    
    9,282
    
    
    
    120
    
    
    
    22,286
    
    
    
    194
    
    
    
    22,456
    
    
    
    199Gain (Loss) on foreign exchange
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    (136
    )
    
    
    
    
    
    
    (75
    )Total
    
    
    
    
    
    
    11,925
    
    
    
    
    
    
    
    19,915
    
    
    
    
    
    
    
    21,833
 Year ended December 31, 2006, compared with the year ended December 31, 2005
  - 47 -




---



##### 



- 48 -




---



##### 



Year Ended December 31, 2005, Compared With the Year Ended December 31, 2004
            - 49 -




---



##### 



Summary of Quarterly Results
  2006
    
    Q-1
    
    
    Q-2
    
    
    Q-3
    
    
    Q-4Gross metal sales (in thousands of dollars)
    
    $
    2,644
    
    
    $
    3,840
    
    
    $
    2,267
    
    
    $
    3,174Loss from operations (in thousands of dollars)
    
    $
    (2,501
    )
    
    $
    (1,888
    )
    
    $
    (4,262
    )
    
    $
    (33,030
    )Net loss (in thousands of dollars)
    
    $
    (2,298
    )
    
    $
    (1,755
    )
    
    $
    (4,902
    )
    
    $
    (32,240
    )Basic and fully diluted loss from operations per share
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.20
    )Basic and
diluted net loss per share
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.19
    )2005Gross metal sales (in thousands of dollars)
    
    $
    5,512
    
    
    $
    5,245
    
    
    $
    4,924
    
    
    $
    4,234Loss from operations (in thousands of dollars)
    
    $
    (3,052
    )
    
    $
    (1,362
    )
    
    $
    (1,007
    )
    
    $
    (22,838
    )Net
(loss) earnings (in thousands of dollars)
    
    $
    (2,677
    )
    
    $
    166
    
    
    $
    (645
    )
    
    $
    (21,274
    )Basic and fully diluted loss from operations per share
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.21
    )Basic and diluted net loss per share
    
    $
    (0.02
    )
    
    $
    0.00
    
    
    $
    (0.01
    )
    
    $
    (0.20
    )
 - 50 -




---



##### 



Summary of Production Data for Joe Mann Mine
  2006
    
    Q-1
    
    
    Q-2
    
    
    Q-3
    
    
    Q-4Tons produced
    
    
    22,556
    
    
    
    23,006
    
    
    
    16,808
    
    
    
    18,269GradesAu (oz./t)
    
    
    0.186
    
    
    
    0.215
    
    
    
    0.194
    
    
    
    0.237Cu (%)
    
    
    0.32
    
    
    
    0.33
    
    
    
    0.25
    
    
    
    0.23Ag (oz./t)
    
    
    0.177
    
    
    
    0.185
    
    
    
    0.139
    
    
    
    0.167RecoveryAu (%)
    
    
    82.72
    
    
    
    86.08
    
    
    
    84.13
    
    
    
    86.12Cu (%)
    
    
    96.79
    
    
    
    96.24
    
    
    
    95.56
    
    
    
    93.3Ag (%)
    
    
    70.23
    
    
    
    68.25
    
    
    
    65.27
    
    
    
    68.40Metal producedAu (oz.)
    
    
    3,464
    
    
    
    4,265
    
    
    
    2,695
    
    
    
    3,722Cu (lbs)
    
    
    137,963
    
    
    
    144,866
    
    
    
    79,369
    
    
    
    77,580Ag (oz.)
    
    
    2,802
    
    
    
    2,899
    
    
    
    1,528
    
    
    
    2,0932005Tons produced
    
    
    41,891
    
    
    
    39,810
    
    
    
    31,685
    
    
    
    25,678GradesAu (oz./t)
    
    
    0.217
    
    
    
    0.251
    
    
    
    0.304
    
    
    
    0.256Cu (%)
    
    
    0.29
    
    
    
    0.33
    
    
    
    0.38
    
    
    
    0.39Ag (oz./t)
    
    
    0.198
    
    
    
    0.217
    
    
    
    0.273
    
    
    
    0.259RecoveryAu (%)
    
    
    81.47
    
    
    
    83.18
    
    
    
    84.22
    
    
    
    84.99Cu (%)
    
    
    93.01
    
    
    
    93.86
    
    
    
    95.83
    
    
    
    96.03Ag (%)
    
    
    64.50
    
    
    
    66.55
    
    
    
    67.67
    
    
    
    72.79Metal producedAu (oz.)
    
    
    7,410
    
    
    
    8,319
    
    
    
    8,125
    
    
    
    5,577Cu (lbs)
    
    
    224,838
    
    
    
    249,360
    
    
    
    231,004
    
    
    
    192,258Ag (oz.)
    
    
    5,353
    
    
    
    5,748
    
    
    
    5,861
    
    
    
    4,833
 Development Activities
 Copper Rand Mine
   - 51 -




---



##### 



Corner Bay Deposit
  Mineral Resources
  TonnageClassification
    
    (tonnes*)
    
    
    Cu %Measured
    
    
    181,000
    
    
    
    5.07Indicated
    
    
    265,000
    
    
    
    5.93Total
    
    
    446,000
    
    
    
    5.58Inferred
    
    
    1,441,000
    
    
    
    6.76
  
 
 Liquidity and Capital Resources
  2006
    
    2005
    
    2004(in thousands of dollars)Long-term debt
    
    
    65,357
    
    
    
    67,782
    
    
    
    66,502Shareholders equity
    
    
    12,006
    
    
    
    30,503
    
    
    
    54,585Cash and cash equivalents
    
    
    1,964
    
    
    
    1,772
    
    
    
    1,191
 - 52 -




---



##### 



-
    
    An increase of $22.7 million mainly represented by a $15.6 million increase in
capital stock and a $6.5 million increase for warrants, stock options and conversion
rights following the three equity financings (Note 14). Contributed surplus increased by
$0.6 million following the cancellation of options and the expiration of conversion
rights.-
    
    A decrease of $41.2 million due to the net loss for the year resulting from the
write-down of the Copper Rand Mine by $23.7 million and of the Joe Mann Mine by $1.3
million. The reduction is also explained by the $3.0 million operating loss at the Joe
Mann Mine, amortization of $2.7 million, general administration expenses of $3.4
million, CCAA and reorganization costs of $6.5 million and other costs of $0.6 million.
       - 53 -




---



##### 



Capital stock
 Managements
Discussion and Analysis
 Expiry
    
    
    Exercisedate
    
    
    price
    
    
    Total
    
    
    TotalCommon shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351,423,977Share purchase option
    
    October 14, 2008
    
    
    0.80
    
    
    
    20,000May 31, 2009
    
    
    0.64
    
    
    
    395,000August 6, 2007
    
    
    0.67
    
    
    
    380,000August 16, 2011
    
    
    0.15
    
    
    
    4,450,000
    
    
    
    5,245,000Warrants
    
    October 9, 2007
    
    
    0.65
    
    
    
    200,000February 1, 2008
    
    
    0.195
    
    
    
    200,000May 27, 2008
    
    
    0.15
    
    
    
    112,563,600December 23, 2008
    
    
    0.105
    
    
    
    150,000January 18, 2009
    
    
    0.10
    
    
    
    67,807,429
    
    
    
    180,921,029
  Critical Accounting Principles
  Impairment of long-term assets
  Depreciation and amortization
  - 54 -




---



##### 



Financial instruments
  Fair value
  Interest rate risk
  Credit risk
   Asset retirement obligations
  - 55 -




---



##### 



Recent accounting changes for Canadian GAAP
 2006
 Non-monetary transactions
  
    
    the transaction lacks commercial substance;
    
    the transaction is an exchange of a product or property held for sale in the ordinary
course of business for a product or property to be sold in the same line of business to
facilitate sales to customers other than the parties to the exchange;
    
    neither the fair value of the asset received nor the fair value of the asset given up is
reliably measurable; or
    
    the transaction is a non-monetary non-reciprocal transfer to owners that represents a
spin-off or other form of restructuring or liquidation.All non-monetary transactions that occurred during the year were measured at their fair value
 Future accounting changes
 Comprehensive income
 Comprehensive Income
  
    
    changes in the currency translation adjustment relating to self-sustaining foreign operations
    
    unrealized gains or losses on available for-sale investments
 Surplus Equity
  
    
    comprehensive income and its components
 - 56 -




---



##### 




    
    accumulated comprehensive income and its components.
 Financial Instruments  Recognition and Measurement
 Financial Instruments  Recognition
and Measurement
  
    
    all financial assets be measured at fair value, with some exceptions like loans and
investments that are classified as held-to-maturity;
    
    all financial liabilities be measured at fair value if they are derivatives or
classified as held for trading purposes. Other financial liabilities are measured at their
carrying value; and
    
    all derivative financial instruments be measured at fair value, even when they are part
of a hedging relationship.
  Hedges
 Hedges
  
    
    changes in the cash flows attributable to a hedged item and a hedging item, or
    
    changes resulting from a risk exposure relating to a hedged item and a hedging item.
   Stripping costs
  - 57 -




---



##### 



U.S. GAAP
  Tabular Disclosure of Contractual Obligations
  Payments due by periodContractual  Obligations
    
    
    
    
    
    Less than 1
    
    
    1-3
    
    
    4-5
    
    
    More than 5(in million dollars)
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsLong-Term Debt Obligations (1)
    
    
    65.4
    
    
    
    65.3
    
    
    
    0.1
    
    
    
    
    
    
    
    Pension Plan Actuarial Deficit (3)
    
    
    6.6
    
    
    
    0.7
    
    
    
    1.4
    
    
    
    1.3
    
    
    
    3.2Asset Retirement Obligations(2)
    
    
    5.0
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.4
    
    
    
    4.0Total
    
    
    27.0
    
    
    
    16.1
    
    
    
    2.0
    
    
    
    1.7
    
    
    
    7.2
 
  (1)
    
    Including an amount of $50 million which is assumed by the restricted deposit and the Exchange
Agreement assigned.(2)
    
    Asset retirement obligations exclude obligations assumed by the Copper Rand/Portage Fiduciary Fund
in the amount of $2.8 million.(3)
    
    Based on December 31, 2005 actuarial valuation. Risk factors
    - 58 -




---



##### 



Subsequent Events
    - 59 -




---



##### 



Outlook
     Access to information
 www.sedar.com www.campbellresources.com
 - 60 -




---



##### 



Financial reporting controls and procedures
    Item 6. Directors, Senior Management and Employees
 Directors
  Number of
    
    PercentName & Municipality
    
    Principal Occupation
    
    Director
    
    
    
    
    
    Common
    
    ofOf Residence
    
    and Business Experience
    
    Since
    
    Age
    
    Shares
    
    ClassLouis Archambault(1)(2)(3)
Montréal, Québec
    
    President, Groupe Conseil Entraco
Inc., Montréal, Québec,
environmental consulting firm.
    
    
    2001
    
    
    
    56
    
    
    6,000(6)
    
       *Michel Blouin(2)
Montréal, Québec
    
    Secretary of Campbell; Partner,
Lavery, de Billy, L.L.P., Montréal,
Québec, law firm; Director of
Stingray Resources Inc. and Merrex
Gold Inc., exploration companies.
    
    
    2000
    
    
    
    65
    
    
    75,556(7)
    
      *Graham G. Clow(3)(4)
Toronto, Ontario
    
    Managing Director, Scott Wilson
Mining Group, Toronto, Ontario,
mining consultants; Director of
Baffinland Iron Mines Corporation.
    
    
    1996
    
    
    
    56
    
    
    130,250(8)
    
    *André Y. Fortier(5)
Montréal, Québec
    
    President and Chief Executive
Officer of Campbell; prior to June
2001, Chairman and Chief Executive
Officer of MSV Resources Inc. and
President and Chief Executive
Officer of GéoNova Explorations
Inc.; Director of Excellon
Resources Inc. and Norcast Income Fund.
    
    
    2000
    
    
    
    66
    
    
    1,813,024(9)
    
       *
 - 61 -




---



##### 



Number of

    
    PercentName & Municipality
    
    Principal Occupation
    
    Director
    
    
    
    
    
    Common

    
    ofOf Residence
    
    and Business Experience
    
    Since
    
    Age
    
    Shares

    
    ClassRené R. Galipeau(4)
Toronto, Ontario
    
    Vice-Chairman and CEO of Nuinsco and
Victory Nickel Inc., Mining
Executive, formerly Executive
Vice-President and Chief Financial
Officer of Breakwater Resources
Ltd., a base metals company, to
early 2004, and Senior
Vice-President and Chief Financial
Officer of HMZ Metals Inc. from
September 2004 to February 2006.
    
    
    2006
    
    
    
    61
    
    
    1,365,030
    (10)
    
    *W. Warren Holmes
Timmins, Ontario
    
    Chairman of Nuinsco and Victory
Nickel Inc., formerly CEO of
Nuinsco, Mining Executive. Prior to
July 2002, Senior Vice-President,
Canadian Mining Operations,
Falconbridge Ltd., a base metals
producer.
    
    
    2006
    
    
    
    64
    
    
    1,500,000
    (11)
    
    *James C.
McCartney Q.C.(1)(2)(5)
Toronto, Ontario
    
    Chairman of Campbell; Counsel,
McCarthy Tétrault LLP, Toronto,
Ontario, law firm; 40 years as a
practising lawyer in corporate
finance and mergers and
acquisitions; Director and
Secretary-Treasurer, Labrador Iron
Ore Royalty Income Fund; Director,
Iron Ore Company of Canada; prior
to January 2003, Partner and Past
Chairman, McCarthy Tétrault LLP.
    
    
    1993
    
    
    
    69
    
    
    22,500

(12)
    

    *G. E. Kurt Pralle(4)
Ramsey, New Jersey
    
    Mining and Metallurgical Consultant.
    
    
    1993
    
    
    
    72
    
    
        10,000
    (13)
    
    *James
D.
Raymond(1)(5)
Montréal, Québec
    
    Private Investor.
    
    
    1979
    
    
    
    82
    
    
    1,000
    (14) (15)
    
    *
 
 Notes:(1)
    
    Member of Compensation Committee.(2)
    
    Member of Corporate Governance Committee.(3)
    
    Member of Environmental Committee.(4)
    
    Member of Audit Committee.(5)
    
    Member of Executive Committee.(6)
    
    Excludes 295,000 Shares subject to option.(7)
    
    Excludes 295,000 Shares subject to option.(8)
    
    Excludes 295,000 Shares subject to option(9)
    
    Excludes 870,000 Shares subject to option(10)
    
    Excludes 250,000 Shares subject to option(11)
    
    Excludes 250,000 Shares subject to option(12)
    
    Excludes 490,000 Shares subject to option.(13)
    
    Exclude 295,000 Shares subject to option.(14)
    
    Exclude 295,000 Shares subject to option(15)
    
    Indirectly held*
    
    Less than 1% of the outstanding Shares.  Senior Management
  - 62 -




---



##### 



Yearappointed
    
    
    Other Positions andName
    
    Office
    
    
    to Office
    
    
    Business Experience
 
    
    AgeAndré Y. Fortier
    
    President and Chief Executive Officer
    
    
    2000
    
    
    Business Executive(1)
    
    
    66Réal Savoie
    
    Vice-President, Finance
    
    
    2006
    
    
    
    C.G.A.
    
    
    
    53Alain Blais
    
    Vice President and General Manager
    
    
    2001
    
    
    Geologist(2)
    
    
    51Michel Blouin
    
    Secretary
    
    
    2003
    
    
    Lawyer(3)
    
    
    65
 
 Notes:(1)
    
    See description of Principal Occupation and Business Experience under Item 6  Directors.(2)
    
    Prior to the merger in June 2001, Mr. Blais was Vice President, Geology & Development with MSV and has worked as a geologist in Chibougamau since
1979.(3)
    
    Mr. Blouin is a partner at the law firm Lavery, de Billy, L.L.P.    Executive Compensation
  Summary Compensation Table
 Annual Compensation
    

    Long-Term CompensationAwards
    
    PayoutsSecurities
    
    RestrictedName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Annual

    
    Under
    
    Shares or
    
    LTIP
    
    All OtherPrincipal
    
    
    
    Salary
    
    Bonus
    
    Compensation

  
    Options
    
    Restricted Share
    
    Payouts
    
    CompensationPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)

    
    (#)
    
    Units($)
    
    ($)
    
    ($)André Y. Fortier
    
    
    2006
    
    
    
    235,000
    
    
    
    
    
    
    
    18,000
    
    
    
    
    
    
    
    
    
    
    
    14,866President & Chief
    
    
    2005
    
    
    
    229,845
    
    
    
    
    
    
    
    16,500
    
    
    
    600,000
    
    
    
    
    
    
    
    16,165Executive Officer
    
    
    2004
    
    
    
    225,000
    
    
    
    19,200
    
    
    
    15,500
    
    
    
    100,000
    
    
    
    
    
    
    
    19,587Claude Bégin(1)
    
    
    2006
    
    
    
    95,008
    
    
    
    3,303
    
    
    
    18,000
    
    
    
    
    
    
    
    
    
    
    
    6,326Former Executive Vice President
    
    
    2005
    
    
    
    138,000
    
    
    
    5,035
    
    
    
    16,500
    
    
    
    
    
    
    
    
    
    
    
    11,802& Chief Operating Officer
    
    
    2004
    
    
    
    138,000
    
    
    
    15,039
    
    
    
    15,500
    
    
    
    50,000
    
    
    
    
    
    
    
    6,788Alain Blais
    
    
    2006
    
    
    
    114,893
    
    
    
    7,179
    
    
    
    18,000
    
    
    
    200,000
    
    
    
    
    
    
    
    9,895Vice
President and
    
    
    2005
    
    
    
    107,200
    
    
    
    7,021
    
    
    
    16,500
    
    
    
    #151;
    
    
    
    
    
    
    
    10,009General Manager
    
    
    2004
    
    
    
    107,200
    
    
    
    17,240
    
    
    
    15,500
    
    
    
    50,000
    
    
    
    
    
    
    
    15,589
 - 63 -




---



##### 



Long-Term CompensationAwards
    
    PayoutsAnnual Compensation
    
    Securities
    
    RestrictedName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Annual
    
    Under
    
    Shares or
    
    LTIP
    
    All OtherPrincipal
    
    
    
    Salary
    
    Bonus
    
    Compensation
    
    Options
    
    Restricted Share
    
    Payouts
    
    CompensationPosition
    
    Year


    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    Units($)
    
    ($)
    
    ($)Lucie Brun(2)
    
    
    2006
    
    
    
    61,347
    
    
    
    5,923
    
    
    
    18,000
    
    
    
    
    
    
    
    
    
    
    
    9,048Former Executive
    
    
    2005
    
    
    
    110,000
    
    
    
    6,207
    
    
    
    16,500
    
    
    
    
    
    
    
    
    
    
    
    12,255Vice President & Chief Administrative Officer
    
    
    2004
    
    
    
    110,000
    
    
    
    16,685
    
    
    
    15,500
    
    
    
    50,000
    
    
    
    
    
    
    
    18,312Réal Savoie(3)
    
    
    2006
    
    
    
    96,231
    
    
    
    
    
    
    
    16,818
    
    
    
    200,000
    
    
    
    
    
    
    
    1,869Vice President,
    
    
    2005
    
    
    
    77,404
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,391Finance
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
  (1)
    
    Resigned as of June 30, 2006.(2)
    
    Resigned as of September 30, 2006.(3)
    
    Appointed as of August 9, 2006 Option/SAR Grants in Last Financial Year
  Aggregated Option/SAR Exercises During The Most Recently Completed Financial Year and Financial
Year End Option/SAR Values
  Aggregate
    
    
    
    Value of Unexercised in-Securities
    
    Value
    
    Unexercised Options at
    
    the-Money Options/SARs atAcquired on
    
    Realized
    
    Financial Year-End (#)
    
    Financial Year-End ($)Name
    
    Exercise (#)
    
    ($)
    
    Exercisable/Unexercisable
    
    Exercisable/UnexercisableAndré Y. FortierPresident & Chief Executive Officer
    
    Nil
    
    Nil
    
    870,000/Nil
    
    Nil/NilAlain BlaisVice President and General
    
    Nil
    
    Nil
    
    290,000/Nil
    
    Nil/NilManagerRéal Savoie (1)Vice President, Finance
    
    Nil
    
    Nil
    
    200,000/Nil
    
    Nil/Nil
 
  (1)
    
    Appointed as of August 9, 2006. - 64 -




---



##### 



Indebtedness of Directors and Executive Officers
  Employee Incentive Plan
     (a)
    
    materially increase the benefits under the Employee Incentive Plan;(b)
    
    materially increase the number of common shares which would be issued under the
Employee Incentive Plan;(c)
    
    materially modify the requirements as to eligibility for participation in the
Employee Incentive Plan; or(d)
    
    otherwise require approval by shareholders (or disinterested shareholders as
the case may be) in accordance with the requirements of any regulatory body having
jurisdiction over the common shares;
   Share Option Plan
  - 65 -




---



##### 



(a)
    
    if such employment ceases by reason of permanent disability of the optionee, or
the retirement of the optionee on or after attaining the age of sixty years or the
death of the optionee, any option granted to the optionee may be exercised in full by
the optionee or by his legal representatives as if such employment had not ceased
provided that all options held by the optionee or his legal representatives must be
exercised on or before one (1) year after employment so ceased and thereafter any
portion which remains unexercised shall terminate and be of no force or effect; and(b)
    
    the Board or the Compensation Committee may in its discretion, in special
circumstances, give its express consent to the exercise, after the effective date of
the optionee ceasing to be employed by the Company, of any options which are
exercisable at the time the optionees employment ceases.
    - 66 -




---



##### 



Share Purchase Plan
   Share Bonus Plan
  Share Loan Plan
  - 67 -




---



##### 



(a)
    
    if the loan and any interest thereon have not been repaid in full to the
Company within eighteen (18) months of the date the participant ceases to be an
employee:
 (i)
    
    the trustee shall sell on behalf of such share loan participant
all or such part of the common shares then held by it on his behalf as shall be
necessary to repay the loan and any interest thereon in full and the trustee
shall pay to the Company the proceeds of such sale;(ii)
    
    the trustee shall transfer and deliver to the share loan
participant the balance of the common shares, if any, that are not so sold; and(iii)
    
    the Board or the Compensation Committee shall fix such terms
and conditions with regard to repayment of all or part of the balance of the
loan or forgiveness of all or part of the balance of the loan as the Board or
the Compensation Committee may in its discretion determine.
 (b)
    
    if the loan and any interest thereon have been repaid in full to the Company
within eighteen (18) months of the date the Participant ceases to be an employee, the
Trustee shall forthwith upon repayment transfer and deliver to the Share Loan
Participant the Shares, if any, then held by it on behalf of such Share Loan
Participant.
  (a)
    
    if the loan and any such interest thereon have not been repaid in full to the
Company within one year from the date of death of such Share Loan participant;
 (i)
    
    the trustee shall sell on behalf of such deceased Share Loan
participant all or such part of the common shares then held by it on his behalf
as shall be necessary to repay to the Company the loan and such interest in
full and the trustee shall pay to the Company the proceeds of such sale;(ii)
    
    the trustee shall transfer and deliver the balance of the
common shares, if any, to the legal personal representatives of the deceased
Share Loan participant; and(iii)
    
    the Board or the Compensation Committee shall fix such terms
and conditions with regard to repayment of all or part of the balance of the
loan or forgiveness of all or part of the balance of the loan as the Board or
the Compensation Committee may in its discretion determine.
 (b)
    
    if the loan and any interest thereon have been repaid in full to the Company
within one year of the date of the death of the share loan participant, the trustee
shall then transfer and deliver the common shares held by it to the legal personal
representatives of the deceased participant.
 - 68 -




---



##### 



Directors Stock Option Plan
      (a)
    
    the original grant of probate or letters of administration or a court certified
copy thereof; or(b)
    
    the original of a court certified or authenticated copy of the grant of
representation, will, order, or other instrument or such other evidence as the
Administrator may require of his or their authority to act for the estate.
    - 69 -




---



##### 



Remuneration of Directors
    Directors and Officers Liability insurance
  Employment Agreements
   - 70 -




---



##### 



Audit Committee
  Composition of Audit Committee
 Name
    
    Independent
    
    Financially LiterateGraham G. Clow
    
    Yes
    
    YesRené R. Galipeau(1)
    
    Yes
    
    YesG.E. Kurt Pralle
    
    Yes
    
    Yes
 
 Note:
    
    René R. Galipeau was appointed as an Audit Committee
member effective as of July 1 , 2006 replacing James C.
McCartney who resigned as an Audit Committee member
effective as of July 1, 2006.(1)
    
    The Audit Committee is comprised of three directors, each of whom is independent in
conformity with applicable Canadian, TSX and U.S. requirements. All the members of the Committee
are financially literate and have the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity that can reasonably expected to be raised by the
Corporations financial statements.  - 71 -




---



##### 



Audit Committee Oversight
  Pre-Approval Policies and Procedures
  Compensation Committee
 Composition of the Compensation Committee
  - 72 -




---



##### 



Executive Compensation Philosophy and Policy
   Base Salary
 Annual Incentive Compensation
 Stock Option Programs
 Report on Executive Compensation
  Securities Authorized for Issuance Under Equity Compensation Plans
  - 73 -




---



##### 



Equity Compensation Plan Information
 Number of common shares
    
    Weighted-average
    
    Number of common shares remainingto be issued upon exercise
    
    exercise price of
    
    available for future issuance underof outstanding options,
    
    outstanding options,
    
    equity compensation plans [excludingwarrants and rights
    
    warrants and rights
    
    securities reflected in column (a)]Plan Category
    
    (a)
    
    (b)
    
    (c)Equity compensation plans
approved by
securityholders
    
    5,245,000
    
    $0.23
    
    1,197,790(1)Equity compensation plans
not approved by
securityholders
    
    Nil
    
    Nil
    
    NilTOTAL:
    
    5,245,000
    
    $0.23
    
    1,197,790
 
 Note:(1)
    
    771,790 common shares remain available for future issuance under the Employee Incentive
Plan and 426,000 common shares remain available for future issuance under the Directors
Plan. Shareholder Return Performance Graph
  Comparison of Five Year Cumulative Total Return
 
 - 74 -




---



##### 



Dec. 31, 2002(1)
    
    Dec. 31, 2003
    
    Dec. 31, 2004
    
    Dec. 31, 2005
    
    Dec. 31, 2006Campbell
    
    $
    100.00
    
    
    $
    184.31
    
    
    $
    92.16
    
    
    $
    26.47
    
    
    $
    20.59S&P/TSX Composite Index
    
    $
    100.00
    
    
    $
    224.29
    
    
    $
    139.79
    
    
    $
    170.42
    
    
    $
    195.15
 
 Note:(1)
    
    $100 invested on 12/31/02 in stock or index  including reinvestment of dividends. Indebtedness of Directors and Executive Officers
  Statement of Corporate Governance Practices
   Form 58-101-F1 - Corporate Governance
    

The Companys PracticesDisclosure1.
    
    Board of Directorsa)
    
    Disclose the identity of
directors who are independent.
    
    The Board of Directors
is composed of nine
persons. Of those nine
persons, Louis
Archambault, Graham G.
Clow, René R.
Galipeau, W. Warren
Holmes, James C.
McCartney, G.E. Kurt
Pralle and James D.
Raymond are
independent. These
directors are
independent as none of
them has a direct or
indirect material
relationship with the
Company.b)
    
    Disclose the identity of
directors who are not independent,
and describe the basis for that
determination.
    
    The other two
Directors are André Y.
Fortier and Michel
Blouin, neither of
whom is independent as
they hold the
positions of President
and Chief Executive
Officer and Corporate
Secretary,
respectively.c)
    
    Disclose whether or not a
majority of directors are
independent. If a majority of
directors are not independent,
describe what the board of
directors (the board) does to
facilitate its exercise of
independent judgement in carrying
out its responsibilities.
    
    A majority of the
Companys Directors
are independent.d)
    
    If a director is presently a
director of any other issuer that
is a reporting issuer (or the
equivalent) in a jurisdiction or a
foreign jurisdiction, identify both
the director and the other issuer.
    
    André Y. Fortier is
also director of
Excellon Resources,
Inc. and Norcast
Income Fund.
Michel Blouin is also
director of Stingray
Resources Inc. and
Merrex Gold Inc. 
Graham G. Clow is also
director of
Baffinland Iron
Mines Corporation 
René R. Galipeau is
also director of
Nuinsco and Victory
Nickel Inc. 
W. Warren Holmes is
also Chairman of
Nuinsco and Victory
Nickel Inc.
 - 75 -




---



##### 



Form 58-101-F1 - Corporate Governance
    

The Companys PracticesDisclosuree)
    
    Disclose whether or not the
independent directors hold
regularly scheduled meetings at
which non-independent directors and
members of management are not in
attendance. If the independent
directors hold such meetings,
disclose the number of meetings
held since the beginning of the
issuers most recently completed
financial year. If the independent
directors do not hold such
meetings, describe what the board
does to facilitate open and candid
discussion among its independent
directors.
    
    When required, the
independent Directors
hold scheduled
meetings at which
non-independent
Directors and members
of management are not
in attendance. Such
meetings are held at
least once a year. In
2006, two (2) such
meetings were held.f)
    
    Disclosure whether or not the
chair of the board is an
independent director. If the board
has a chair or lead director who is
an independent director, disclose
the identity of the independent
chair or lead director, and
describe his or her role and
responsibilities. If the board has
neither a chair that is independent
nor a lead director that is
independent, describe what the
board does to provide leadership
for its independent directors.
    
    James C. McCartney
serves as
non-executive Chairman
of the Board. He has
served in that
position since April
26, 1995.g)
    
    Disclose the attendance record
of each director for all board
meetings held since the beginning
of the issuers most recently
completed financial year.
    
    All Directors attended
all Board meetings,
except James C.
McCartney, W. Warren
Holmes, Michel Blouin
and Louis Archambault
who were each absent
from one (1) meeting.
and Graham G. Clow who
was absent from two
(2) meetings.2.
    
    Board Mandatea)
    
    Disclose the text of the boards
written mandate. If the board does
not have a written mandate,
describe how the board delineates
its role and responsibilities.
    
    The Boards mandate is
set forth in the
Governance Policy of
the Company, a copy of
which is attached
hereto as Exhibit
15.4.
 - 76 -




---



##### 



Form 58-101-F1 - Corporate Governance
    

The Companys PracticesDisclosure3.
    
    Position Descriptionsa)
    
    Disclose whether or not the
board has developed written
position descriptions for the chair
and the chair of each board
committee. If the board has not
developed written position
descriptions for the chair and/or
the chair of each board committee,
briefly describe how the board
delineates the role and
responsibilities of each such
position.
    
    The Board has
developed written
position descriptions
for the Chair of the
Board and the Chair of
each Board committees.
These descriptions are
set forth in the
Governance Policy of
the Company, a copy of
which is attached
hereto as Exhibit
15.4.b)
    
    Disclose whether or not the
board and CEO have developed a
written position description for
the CEO. If the board and CEO have
not developed such a position
description, briefly describe how
the board delineates the role and
responsibilities of the CEO.
    
    The Board and the
Chief Executive
Officer have developed
a written position
description for the
Chief Executive
Officer. This
description is set
forth in the
Governance Policy of
the Company, a copy of
which is attached
hereto as Exhibit
15.4.4.
    
    Orientation and Continuing Educationa)
    
    Briefly describe what measures
the board takes to orient new
directors regarding
    
    Orientation and
education of directors
is an ongoing matter. As such, ongoing
informal discussions
between management and
members of the Board
is encouraged and formal presentations
by management
throughout the year in
addition to regularly
scheduled site visits
to the Companys
operations are
mandated.(f) the role of the
board, its committees and its
directors, and 

ii) the nature and operation of the
issuers business.b)
    
    Briefly describe what measures,
if any, the board takes to provide
continuing education for its
directors. If the board does not
provide continuing education,
describe how the board ensures that
its directors maintain the skill
and knowledge necessary to meet
their obligations as directors.
    
    Orientation and
education of directors
is an ongoing matter.
As such, ongoing
informal discussions
between management and
members of the Board
is encouraged and
formal presentations
by management
throughout the year in
addition to regularly
scheduled site visits
to the Companys
operations are
mandated.5.
    
    Ethical Business Conducta)
    
    Disclose whether or not the
board has adopted a written code
for the directors, officers and
employees. If the board has adopted
a written code:
    
    The Board has adopted
a written Code of
Conduct for directors,
officers and
employees.i) disclose how a person or Company
may obtain a copy of the code;
    
    A copy of the Code of
Conduct is attached
hereto as Exhibit
11.1.ii) describe how the board monitors
compliance with its code, or if the
board does not monitor compliance,
explain whether and how the board
satisfies itself regarding
compliance with its code; and
    
    Employees, officers
and directors must
confirm having read
and understood the
Code of Conduct and
the Company has
implemented a
complaint procedure
which allows employees
to report any conduct
that is not compliant
with the Code of
Conduct on an
anonymous and/or
confidential basis.
Mid-level and upper
levels of management
are required to report
to senior management
any instances of
fraud, illegal acts
and compliance issues.
When situations of
non-compliance have
become known to
management,
appropriate
disciplinary action
has been taken.
 - 77 -




---



##### 



Form 58-101-F1 - Corporate Governance
    

The Companys PracticesDisclosureiii) provide a cross-reference to
any material change report filed
since the beginning of the issuers
most recently completed financial
year that pertains to any conduct
of a director or executive officer
that constitutes a departure from
the code.
    
    The Company has not
filed any material
change report during
the financial year
ended December 31,
2006 that pertains to
any conduct of a
Director or executive
officer that
constitutes a
departure from the
Code of Conduct. No
waivers from the Code
of Conduct have been
sought or granted.b)
    
    Describe any steps the board
takes to ensure directors exercise
independent judgement in
considering transactions and
agreements in respect of which a
director or executive officer has a
material interest.
    
    In the event any
transactions or
agreements occur in
respect of which a
Director or executive
officer has a material
interest, the matter
must be initially
reviewed by the Audit
Committee and is then
submitted to the Board
of Directors. The
Board may implement
any measures that it
finds necessary in
order to ensure the
exercise of
independent judgment.
In the event a
Director has a
material interest in
any transaction or
agreement, such
Director will abstain
from voting in that
regard.c)
    
    Describe any other steps the
board takes to encourage and
promote a culture of ethical
business conduct.
    
    Through the
above-noted methods,
the Board encourages
and promotes a culture
of ethical business
conduct. This is
reinforced by the
behaviour of the
Board, as provided in
its mandate, which is
in strict compliance
with the terms and the
spirit of these
measures.6.
    
    Nomination of Directorsa)
    
    Describe the process by which
the board identifies new candidates
for board nomination.
    
    The Corporate
Governance Committee
oversees the process
by which the Board
identifies new
candidates for Board
nomination.b)
    
    Disclose whether or not the
board has a nominating committee
composed entirely of independent
directors. If the board does not
have a nominating committee
composed entirely of independent
directors, describe what steps the
board takes to encourage an
objective nomination process.
    
    With the exception of
Michel Blouin, a
lawyer specializing in
mining law and
securities law, this
Governance Committee
is composed entirely
of independent
Directors.c)
    
    If the board has a nominating
committee, describe the
responsibilities, powers and
operation of the nominating
committee.
    
    The Corporate
Governance Committee
oversees the process
by which the Board
identifies new
candidates for Board
nomination.
 - 78 -




---



##### 



Form 58-101-F1 - Corporate Governance
    

The Companys PracticesDisclosure7.
    
    Compensationa)
    
    Describe the process by which
the board determines the
compensation for the issuers
directors and officers.
    
    Each year, the
Compensation Committee
reviews data of
director compensation
for companies of a
comparable size. Using
such information, the
Compensation Committee
formulates a
recommendation to the
Board of Directors and
the final decision is
made by the Board of
Directors.As concerns the
officers, the
Compensation Committee
is responsible for
establishing the
annual compensation of
all senior executives
following discussions
with the President and
Chief Executive
Officer and after
reviewing their
recommendations. The
level of compensation
for senior executives
is to be consistent
with the compensation
provided for senior
executives of
companies in local
markets of comparable
size and type facing
similar operating and
financial issues.As concerns the
President and Chief
Executive Officer, the
Committee reviews and
recommends to the
Board the compensation
and performance
criteria with respect
to the President and
Chief Executive
Officer basing its
recommendations on
available data for
comparable companies.The Compensation
Committee met only
once in 2006.b)
    
    Disclose whether or not the
board has a compensation committee
composed entirely of independent
directors. If the board does not
have a compensation committee
composed entirely of independent
directors, describe what steps the
board takes to ensure an objective
process for determining such
compensation.
    
    The Compensation
Committee oversees
compensation matters
and is composed
entirely of
independent Directors.c)
    
    If the board has a compensation
committee, describe the
responsibilities, powers and
operation of the compensation
committee.
    
    Compensation matters
are overseen by the
Compensation
Committee.d)
    
    If a compensation consultant or
advisor has, at any time since the
beginning of the issuers most
recently completed financial year,
been retained to assist in
determining compensation for any of
the issuers directors and
officers, disclose the identity of
the consultant or advisor and
briefly summarize the mandate for
which they have been retained. If
the consultant or advisor has been
retained to perform any other work
for the issuer, state that fact and
briefly describe the nature of the
work.
    
    During the 2006
financial year, the
Company did not retain
the services of a
compensation
consultant.
 - 79 -




---



##### 



Form 58-101-F1 - Corporate Governance
    

The Companys PracticesDisclosure8.
    
    Other Board CommitteesIf the board has standing
committees other than the audit,
compensation and nominating
committees, identify the committees
and describe their function.
    
    The Board has no
standing committees
other than the Audit
Committee, the
Compensation
Committee, the
Environment Committee,
the Corporate
Governance Committee
and the Executive
Committee.9.
    
    AssessmentsDisclose whether or not the board,
its committees and individual
are regularly assessed
with respect to their effectiveness
and contribution. If assessments
are regularly conducted, describe
the process used for the
assessments. If assessments are not
regularly conducted, describe how
the board satisfies itself that the
board, its committees, and its
individual directors are performing
effectively.
    
    The Board has adopted
processes for
evaluating the
effectiveness of the
Board of Directors and
its various
committees. Once a
year the Chair of the
Corporate Governance
Committee will have
each Director and
committee member
complete the
appropriate
effectiveness
assessment
questionnaire. The
input is summarized on
a confidential basis
and reviewed by the
Corporate Governance
Committee. The Chair
of that committee
reports the findings
to the full Board and aside at
that meeting for a
full and comprehensive
discussion of Board
and committee
effectiveness and any
agreed upon
improvements are
implemented as
applicable.
 - 80 -




---



##### 



Employees
   Item 7. Major Shareholders and Related Party Transactions
     Item 8. Financial Information
 Financial Statements
  Legal Proceedings
  - 81 -




---



##### 



- 82 -




---



##### 



Dividend
Record and Policy
  Significant Changes
  Item 9. The Offer and Listing
  Toronto Stock Exchange
 Period
    
    High
    
    Low
    
    VolumeMonth EndedMarch 2007
    
    
    0.17
    
    
    
    0.12
    
    
    
    67,112,300February 2007
    
    
    0.19
    
    
    
    0.12
    
    
    
    124,674,500January 2007
    
    
    0.14
    
    
    
    0.10
    
    
    
    55,166,000December 2006
    
    
    0.14
    
    
    
    0.10
    
    
    
    54,615,500November 2006
    
    
    0.16
    
    
    
    0.08
    
    
    
    101,497,100October 2006
    
    
    0.10
    
    
    
    0.07
    
    
    
    57,553,500September 2006
    
    
    0.18
    
    
    
    0.09
    
    
    
    7,410,800
 Period
    
    High
    
    Low
    
    VolumeQuarter EndedDecember 31, 2006
    
    
    0.16
    
    
    
    0.07
    
    
    
    213,666,100September 30, 2006
    
    
    0.18
    
    
    
    0.09
    
    
    
    9,251,200June 30, 2006
    
    
    0.22
    
    
    
    0.15
    
    
    
    18,852,600March 31, 2006
    
    
    0.27
    
    
    
    0.11
    
    
    
    35,819,700December 31, 2005
    
    
    0.19
    
    
    
    0.09
    
    
    
    19,218,300September 30, 2005
    
    
    0.30
    
    
    
    0.05
    
    
    
    51,386,000June 30, 2005
    
    
    0.38
    
    
    
    0.07
    
    
    
    14,334,400March 31, 2005
    
    
    0.52
    
    
    
    0.36
    
    
    
    11,237,700
 - 83 -




---



##### 



Period
    
    High
    
    Low
    
    VolumeFiscal Year EndedDecember 2006
    
    
    
    
    
    
    0.27
    
    
    
    0.07
    
    
    
    277,589,600December 2005
    
    
    
    
    
    
    0.98
    
    
    
    0.05
    
    
    
    96,176,400December 2004
    
    
    
    
    
    
    1.11
    
    
    
    0.37
    
    
    
    25,997,200December 2003
    
    
    
    
    
    
    0.91
    
    
    
    0.33
    
    
    
    23,030,700December 2002
    
    
    
    
    
    
    0.52
    
    
    
    0.31
    
    
    
    12,260,900
 
 Note:(1)
    
    All prices and volumes have been adjusted to
reflect the one for ten consolidation in May
2000. Prices are in Canadian dollars. OTC-BB
 Period
    
    High
    
    Low
    
    VolumeMonth EndedMarch 2007
    
    
    0.15
    
    
    
    0.10
    
    
    
    6,795,000February 2007
    
    
    0.17
    
    
    
    0.11
    
    
    
    16,171,400January 2007
    
    
    0.12
    
    
    
    0.08
    
    
    
    5,691,300December 2006
    
    
    0.12
    
    
    
    0.07
    
    
    
    5,342,000November 2006
    
    
    0.14
    
    
    
    0.07
    
    
    
    10,767,100October 2006
    
    
    0.09
    
    
    
    0.06
    
    
    
    9,314,100September 2006
    
    
    0.16
    
    
    
    0.08
    
    
    
    2,170,300
 Period
    
    High
    
    Low
    
    VolumeQuarter EndedDecember 31, 2006
    
    
    0.14
    
    
    
    0.06
    
    
    
    25,423,200September 30, 2006
    
    
    0.19
    
    
    
    0.08
    
    
    
    3,347,500June 30, 2006
    
    
    0.21
    
    
    
    0.13
    
    
    
    11,259,700March 31, 2006
    
    
    0.24
    
    
    
    0.01
    
    
    
    10,178,300December 31, 2005
    
    
    0.17
    
    
    
    0.07
    
    
    
    5,350,700September 30, 2005
    
    
    0.25
    
    
    
    0.02
    
    
    
    7,831,500June 30, 2005
    
    
    0.32
    
    
    
    0.05
    
    
    
    4,723,600March 31, 2005
    
    
    0.48
    
    
    
    0.29
    
    
    
    3,588,900
 Period
    
    High
    
    Low
    
    VolumeFiscal Year EndedDecember 2006
    
    
    0.21
    
    
    
    0.01
    
    
    
    50,208,700December 2005
    
    
    0.48
    
    
    
    0.02
    
    
    
    21,494,700December 2004
    
    
    0.78
    
    
    
    0.29
    
    
    
    10,352,942December 2003
    
    
    0.84
    
    
    
    0.20
    
    
    
    11,209,588December 2002
    
    
    0.45
    
    
    
    0.29
    
    
    
    9,339,003
 
 Notes:(1)
    
    Traded on the New York Stock Exchange until
November 23, 2001 and commenced trading on the
OTC-BB on November 29, 2001.(2)
    
    All prices and volumes have been adjusted to
reflect the one for ten consolidation in May
2000. Prices are in U.S. dollars. - 84 -




---



##### 



Item 10. Additional Information
 Share Capital
  Memorandum and Articles of Incorporation
     Election and Qualifications of Directors
   - 85 -




---



##### 



Meetings
   Limitations on Ownership of Securities
  Change in Control of Company
  Material Contracts
       - 86 -




---



##### 



Exchange Controls
 Investment Canada Act
     (a)
    
    by the acquisition of voting shares or the voting interests by any person in
the ordinary course of that persons business as a trader or dealer in securities;(b)
    
    in connection with the realization of security granted for a loan or other
financial assistance and not for any purpose related to the Investment Act;(c)
    
    for facilitating its financing and not for any purpose related to the
Investment Act on the condition that the acquirer divest control within two years after
control was acquired; and
 - 87 -




---



##### 



(d)
    
    by reason of an amalgamation, merger, consolidation or corporate reorganization
following which the ultimate or indirect control in fact of the Company through the
ownership of voting interests remains unchanged.
   Taxation
 Certain Canadian Federal Income Tax Consequences
   Dividends on Common Shares
  Disposition of Common Shares
  - 88 -




---



##### 



(a)
    
    the value of the shares is derived principally from real property in Canada,
including the right to explore for or exploit natural resources and rights to amounts
computed by reference to production,(b)
    
    the shareholder was resident in Canada for 120 months during any period of 20
consecutive years preceding the disposition, was resident in Canada at any time during
the 10 years immediately preceding the disposition and the shares were owned by him
when he ceased to be resident in Canada, or(c)
    
    the shares formed part of the business property of a permanent establishment
or pertained to a fixed base used for the purpose of performing independent personal
services that the shareholder has or had in Canada within the 12 months preceding the
disposition.
  Certain United States Federal Income Tax Considerations
  - 89 -




---



##### 



U.S. Holders
  Distributions of Common Shares
   - 90 -




---



##### 



Foreign Tax Credit
  Disposition of Common Shares
  Other Considerations
  Passive Foreign Investment Corporation
   - 91 -




---



##### 



Backup Withholding
  Documents on Display
  Subsidiary Information
  Item 11. Quantitative and Qualitative Disclosures about Market Risk
  Gold Risk Disclosures
  - 92 -




---



##### 



Foreign Currency Risk Disclosures
  Other Financial Instrument Risk Disclosures
  Competition
   Item 12. Description of Securities other than Equity Securities  Not Applicable
 PART II
 Item 13. Defaults, Dividend Arrearages and Delinquencies
 Credit facility with Investissement Québec
  Convertible debentures
  - 93 -




---



##### 



CCAA Procedures
   Item 14. Material Modifications to the Right of Security Holders and Use of Proceeds  None
 Item 15. Controls and Procedures
    Item 16 A. Audit Committee Financial Expert
  - 94 -




---



##### 



Item 16 B. Code Of Ethics
  Item 16 C. Principal Accountant Fees And Services
 (a)
    
    Audit Fees
  (b)
    
    Audit-Related Fees
  - 95 -




---



##### 



(c)
    
    Tax Fees
  (d)
    
    All Other Fees
  (e)
    
    Audit Committees Pre-Approval Policies
   (f)
    
    Auditors Use of Non-Permanent Employees
  Interest of Auditors
  Item 16 D. Exemptions From The Listing Standards For Audit Committees  None
 Item 16 E. Purchases Of Equity Securities By The Issuer And Affiliated Purchasers  None
 PART III
 Item 17. Financial Statements
   Item 18. Not applicable
 - 96 -




---



##### 



Consolidated financial statements of
 CAMPBELL RESOURCES INC.
 December 31, 2006, 2005 and 2004
 - 97 -




---



##### 



CAMPBELL RESOURCES INC.  Table of contents
 Auditors report
    
    
    99-100Consolidated statements of operations
    
    
    101Consolidated statements of contributed surplus and deficit
    
    
    102Consolidated balance sheets
    
    
    103Consolidated statements of cash flows
    
    
    104-105Notes to the consolidated financial statements
    
    
    106-147
 - 98 -




---



##### 



(DELOITTE LOGO)
    
    Deloitte & Touche LLP1 Place Ville MarieSuite 3000Montreal QC H3B 4T9CanadaTel: 514-393-5239Fax: 514-390-4113www.deloitte.ca
 Report of Independent Registered Chartered Accountants
       
 - 99 -




---



##### 



Comments by Independent Registered Chartered Accountants on Canada-United States of America Reporting Difference
  
 - 100 -




---



##### 



CAMPBELL RESOURCES INC.  Consolidated statements of operations  years ended December 31  (expressed in thousands of Canadian dollars except per share amounts)
 2006
    
    2005
    
    2004$

    
    
    
    $
    
    
    
    $Gross metal sales
    
    
    11,925
    
    
    
    19,915
    
    
    
    21,833Treatment charges
    
    
    1,006
    
    
    
    1,641
    
    
    
    1,372Net metal sales
    
    
    10,919
    
    
    
    18,274
    
    
    
    20,461ExpensesMining
    
    
    13,897
    
    
    
    16,346
    
    
    
    20,853Amortization of property, plant and equipment
    
    
    2,743
    
    
    
    4,675
    
    
    
    4,802Write-down of properties (Note 9)
    
    
    25,001
    
    
    
    18,512
    
    
    
    1,750General administration
    
    
    2,945
    
    
    
    2,716
    
    
    
    2,255Stock-based compensation (Note 14)
    
    
    496
    
    
    
    
    
    
    
    269CCAA and reorganisation costs
    
    
    6,511
    
    
    
    972
    
    
    
    Exploration
    
    
    (159
    )
    
    
    854
    
    
    
    705Care and maintenance
    
    
    146
    
    
    
    345
    
    
    
    36551,580
    
    
    
    44,420
    
    
    
    30,999Loss before the following items
    
    
    40,661
    
    
    
    26,146
    
    
    
    10,538Interest on short-term loan (Note 11)
    
    
    501
    
    
    
    392
    
    
    
    10Interest expense on long-term debt (Note 15)
    
    
    692
    
    
    
    770
    
    
    
    405Interest income
    
    
    (173
    )
    
    
    (900
    )
    
    
    (1,702
    )Amortization of deferred charges related
to the sale of royalty (Note 6)
    
    
    
    
    
    
    1,851
    
    
    
    264Loss from operations
    
    
    41,681
    
    
    
    28,259
    
    
    
    9,515Other (income) expense
    
    
    31
    
    
    
    (334
    )
    
    
    (47
    )Foreign
exchange loss (gain) Other income (Note 16)
    
    
    (552
    )
    
    
    (3,577
    )
    
    
    (797
    )(521
    )
    
    
    (3,911
    )
    
    
    (844
    )Loss before taxes and non-controlling interest
    
    
    41,160
    
    
    
    24,348
    
    
    
    8,671Income and mining tax expense (recovery) (Note 17)
    
    
    35
    
    
    
    82
    
    
    
    (455
    )41,195
    
    
    
    24,430
    
    
    
    8,216Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    (24
    )Net loss
    
    
    41,195
    
    
    
    24,430
    
    
    
    8,192Weighted average number of common shares (000)
    
    
    150,562
    
    
    
    107,925
    
    
    
    96,482Basic and fully diluted loss per share
    
    
    0.27
    
    
    
    0.23
    
    
    
    0.08
  - 101 -




---



##### 



CAMPBELL RESOURCES INC.  Consolidated statements of contributed surplus and deficit  years ended December 31  (expressed in thousands of Canadian dollars)
 2006
    
    2005
    
    2004$
    
    
    
    $
    
    
    
    $Contributed surplusBalance, beginning of year
    
    
    1,404
    
    
    
    1,101
    
    
    
    1,081Options expired and cancelled during the year (Note 14d)
    
    
    132
    
    
    
    303
    
    
    
    20Conversion rights expired during the year (Note 14d)
    
    
    460
    
    
    
    
    
    
    
    Balance, end of year
    
    
    1,996
    
    
    
    1,404
    
    
    
    1,101DeficitBalance, beginning of year
    
    
    43,630
    
    
    
    19,200
    
    
    
    11,008Net loss
    
    
    41,195
    
    
    
    24,430
    
    
    
    8,192Balance, end of year
    
    
    84,825
    
    
    
    43,630
    
    
    
    19,200
  - 102 -




---



##### 



CAMPBELL RESOURCES INC.  Consolidated balance sheets  as at December 31  (expressed in thousands of Canadian dollars)
 2006
    
    2005$
    
    
    
    $AssetsCurrent assetsCash and cash equivalents
    
    
    1,964
    
    
    
    1,772Short-term investments
    
    
    792
    
    
    
    125Restricted deposits and exchange agreements (Note 8)
    
    
    50,000
    
    
    
    Receivables
    
    
    1,591
    
    
    
    1,654Settlements receivable
    
    
    5,413
    
    
    
    8,374Production inventories
    
    
    401
    
    
    
    67Supply inventories
    
    
    3,844
    
    
    
    3,330Prepaids
    
    
    1,194
    
    
    
    87765,199
    
    
    
    16,199Amount receivable from Copper Rand/Portage Restoration Fiduciary Trust (Note 7)
    
    
    2,826
    
    
    
    3,012Restricted cash (Notes 5 and 12c)
    
    
    3,942
    
    
    
    350Restricted deposits and exchange agreements (Note 8)
    
    
    
    
    
    
    49,723Future income tax assets (Note 17)
    
    
    1,484
    
    
    
    1,324Property, plant and equipment (Note 9)
    
    
    37,135
    
    
    
    59,955Accrued benefit asset (Note 21)
    
    
    4,427
    
    
    
    3,897Deferred charges and other assets (Note 10)
    
    
    129
    
    
    
    183115,142
    
    
    
    134,643LiabilitiesCurrent liabilitiesShort-term loan (Note 11)
    
    
    3,891
    
    
    
    6,606Accounts payable
    
    
    13,973
    
    
    
    13,563Accrued liabilities
    
    
    5,475
    
    
    
    3,695Current portion of long-term debt (Note 13)
    
    
    65,287
    
    
    
    18,03788,626
    
    
    
    41,901Asset retirement obligations (Note 12)
    
    
    7,804
    
    
    
    7,738Long-term debt (Note 13)
    
    
    70
    
    
    
    49,745Future income tax liabilities (Note 17)
    
    
    6,636
    
    
    
    4,756103,136
    
    
    
    104,140Commitments and contingencies (Note 19)Shareholders equityCapital stock (Note 14)
    
    
    85,572
    
    
    
    69,958Warrants, stock options and conversion rights (Note 14)
    
    
    9,263
    
    
    
    2,771Contributed surplus
    
    
    1,996
    
    
    
    1,404Deficit
    
    
    (84,825
    )
    
    
    (43,630
    )12,006
    
    
    
    30,503115,142
    
    
    
    134,643
  Approved on behalf of the Board
 (s) André Y. Fortier  (s) G. E. Kurt Pralle
 - 103 -




---



##### 



CAMPBELL RESOURCES INC.  Consolidated statements of cash flows  years ended December 31  (expressed in thousands of Canadian dollars)
 2006
    
    2005
    
    2004$
    
    
    
    $
    
    
    
    $Operating activitiesNet loss
    
    
    (41,195
    )
    
    
    (24,430
    )
    
    
    (8,192
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Amortization
    
    
    2,743
    
    
    
    4,675
    
    
    
    4,802Write-down of the properties (Note 9)
    
    
    25,001
    
    
    
    18,512
    
    
    
    1,750Deferred royalty amortization
    
    
    
    
    
    
    (2,860
    )
    
    
    (2,597
    )Future income tax related to flow-through
share renunciation (Note 17)
    
    
    
    
    
    
    
    
    
    
    (550
    )Gain on sale of property, plant and equipment
    
    
    (1
    )
    
    
    (4
    )
    
    
    (39
    )Gain on repurchase of royalty (Notes 6 and 16)
    
    
    
    
    
    
    (1,571
    )
    
    
    Gain on sale of short-term investments (Note 16)
    
    
    (262
    )
    
    
    
    
    
    
    (374
    )Asset retirement accretion expense, net of the share
assumed by the Restoration Fiduciary Trust
    
    
    252
    
    
    
    258
    
    
    
    273Amortization of deferred charges and other assets
    
    
    442
    
    
    
    2,248
    
    
    
    356Amortization of conversion right on long-term debt
    
    
    191
    
    
    
    202
    
    
    
    Unrealized foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    42Accretion of short-term loan and long-term debt
    
    
    
    
    
    
    
    
    
    
    101Stock-based compensation (Note 14)
    
    
    496
    
    
    
    
    
    
    
    269Deferred interest accrued on long-term debt
    
    
    53
    
    
    
    51
    
    
    
    52Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    (24
    )Excess of amount paid over pension plan costs
    
    
    (42
    )
    
    
    (354
    )
    
    
    (25
    )Share purchase plan
    
    
    
    
    
    
    12
    
    
    
    56Share bonus plan
    
    
    
    
    
    
    
    
    
    
    48Shares and warrants issued for payment of services
    
    
    4,476
    
    
    
    
    
    
    
    Other
    
    
    (196
    )
    
    
    (23
    )
    
    
    12Changes in non-cash working capital (Note 18a)
    
    
    2,263
    
    
    
    2,536
    
    
    
    5,233Cash (used for) provided by operating activities
    
    
    (5,779
    )
    
    
    (748
    )
    
    
    1,193Financing activities(Decrease) increase in short-term loan
    
    
    (2,715
    )
    
    
    3,920
    
    
    
    2,686(Decrease) increase in long-term debt
    
    
    (3 944
    )
    
    
    (8
    )
    
    
    8,834Issuance of capital stock (Note 14)
    
    
    16,435
    
    
    
    25
    
    
    
    8,748Future mining taxes
    
    
    1,748
    
    
    
    51
    
    
    
    1,466Share issue costs (Note 14)
    
    
    (1,478
    )
    
    
    (3
    )
    
    
    (689
    )Conversion rights on long-term debt
    
    
    
    
    
    
    
    
    
    
    460Warrants issued as part of placements (Note 14)
    
    
    2,262
    
    
    
    
    
    
    
    1,996Cash provided by financing activities
    
    
    12,308
    
    
    
    3,985
    
    
    
    23,501
 - 104 -




---



##### 



CAMPBELL RESOURCES INC.  Consolidated statements of cash flows (continued)  years ended December 31  (expressed in thousands of Canadian dollars)
 2006
    
    2005
    
    2004$
    
    
    
    $
    
    
    
    $Investing activitiesRestricted cash
    
    
    (2,784
    )
    
    
    
    
    
    
    (116
    )Notes receivable (Note 6)
    
    
    
    
    
    
    
    
    
    
    590Acquisition of short-term investments
    
    
    (12
    )
    
    
    
    
    
    
    Investment in shares (Note 16)
    
    
    515
    
    
    
    
    
    
    
    Increase in property, plant and equipment
    
    
    (4,674
    )
    
    
    (2,696
    )
    
    
    (28,053
    )Proceeds on sale of short-term investments
    
    
    363
    
    
    
    
    
    
    
    796Proceeds on sale of property, plant and equipment
    
    
    515
    
    
    
    40
    
    
    
    50Amount paid in excess of the pension plan costs
capitalized to property, plant and equipment
    
    
    (260
    )
    
    
    
    
    
    
    (951
    )Increase in deferred charges and other assets
    
    
    
    
    
    
    
    
    
    
    (571
    )Cash used in investing activities
    
    
    (6,337
    )
    
    
    (2,656
    )
    
    
    (28,255
    )Increase (decrease) in cash and cash equivalents
    
    
    192
    
    
    
    581
    
    
    
    (3,561
    )Cash and cash equivalents, beginning of year
    
    
    1,772
    
    
    
    1,191
    
    
    
    4,752Cash and cash equivalents, end of year
    
    
    1,964
    
    
    
    1,772
    
    
    
    1,191
   - 105 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 1. Description of business
 Canada Business Corporations Act
 2. Going concern
       - 106 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 2. Going concern (continued)
    -
    
    2 million common shares of the Company upon commencement of the provision of services;-
    
    1 million common shares of the Company upon completion of the equity financing; and-
    
    $25,000 plus 200,000 common shares of the Company per month, in advance (up to a
maximum of 4 million common shares).
    - 107 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 2. Going concern (continued)
    3. Summary of significant accounting policies
 Preparation of consolidated financial statements
  Use of estimates
  - 108 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 3. Summary of significant accounting policies (continued)
 Principles of consolidation
  Cash and cash equivalents
  Production inventories
  Supply inventories
  Investments
  Property, plant and equipment
    - 109 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 3. Summary of significant accounting policies (continued)
 Property, plant and equipment (continued)
  Deferred charges and other assets
  Stock-based compensation plans
  Deferred royalty
  Asset retirement obligations
  - 110 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 3. Summary of significant accounting policies (continued)
 Impairment of long-lived assets
 Impairment of Long-Lived Assets
 Share issue costs
  Income taxes
   Revenue recognition
  Earnings per share
  Flow-through shares
 Flow-through shares
 - 111 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 3. Summary of significant accounting policies (continued)
 Employee future benefits
  Translation of foreign currency
  Recent accounting changes
 2006
 Non-monetary transactions
  
    
    the transaction lacks commercial substance;
    
    the transaction is an exchange of a product or property held for sale in the
ordinary course of business for a product or property to be sold in the same line of
business to facilitate sales to customers other than the parties to the exchange;
    
    neither the fair value of the asset received nor the fair value of the asset
given up is reliably measurable; or
    
    the transaction is a non-monetary non-reciprocal transfer to owners that
represents a spin-off or other form of restructuring or liquidation.
  - 112 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 3. Summary of significant accounting policies (continued)
 Future accounting changes
 Comprehensive income
 Comprehensive Income
  
    
    changes in the currency translation adjustment relating to self-sustaining foreign operations
    
    unrealized gains or losses on available for-sale investments
 Surplus Equity Comprehensive Income
  
    
    comprehensive income and its components
    
    accumulated comprehensive income and its components.
 Stripping costs
 Stripping Costs Incurred in the Production Phase of a
Mining Operation
 - 113 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 3. Summary of significant accounting policies (continued)
 Future accounting changes (continued)
 Financial Instruments  Recognition and Measurement
 Financial Instruments  Recognition and
Measurement
  
    
    all financial assets be measured at fair value, with some exceptions like loans and
investments that are classified as held-to-maturity;
    
    all financial liabilities be measured at fair value if they are derivatives or
classified as held for trading purposes. Other financial liabilities are measured at
their carrying value; and
    
    all derivative financial instruments be measured at fair value, even when they are
part of a hedging relationship.
  Hedges
 Hedges
  
    
    changes in the cash flows attributable to a hedged item and a hedging item, or
    
    changes resulting from a risk exposure relating to a hedged item and a hedging item.
   - 114 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 4. Business acquisitions
  2006
    
    2005
    
    2004$
    
    $
    
    $Assets acquiredProperty, plant and equipment
    
    
    
    
    
    
    
    
    
    
    (2,501
    )
    
    
    
    
    
    
    
    (2,501
    )Liabilities assumedNon controlling interest
    
    
    
    
    
    
    
    
    
    
    5,721Fair value of net assets acquired
    
    
    
    
    
    
    
    
    
    
    3,220ConsiderationIssuance of common shares (a)
    
    
    
    
    
    
    
    
    
    
    3,219Acquisition costs
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3,220
 (a)
    
    The value of $3,219,000 for the 5,853,660 shares issued as consideration for the
November 2004 acquisition of the 24% tranche in CCR was determined using the average
closing share price on the TSX over a reasonable period before and after the date the
terms were agreed to by the parties.
 5. Restricted cash
 2006
    
    2005$
    
    $Deposit to the Ministère des Ressources Naturelles
as guarantee for restoration work (Note 12c)
    
    
    1,158
    
    
    
    350In trust deposit for the settlement of creditors in
accordance with the plans of arrangement
    
    
    2,784
    
    
    
    3,942
    
    
    
    350
 - 115 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 6. Notes receivable and deferred royalty
     7. Amount receivable from Copper Rand/Portage Restoration Fiduciary Trust
    - 116 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 8. Restricted deposits and Exchange Agreements
    9. Property, plant and equipment
 2006Accumulated
    
    Net bookCost
    
    amortization
    
    value$
    
    $
    
    $Property, plant and equipmentRoad
    
    
    730
    
    
    
    730
    
    
    
    Plant
    
    
    7,892
    
    
    
    6,593
    
    
    
    1,299Mining, exploration and milling equipment
    
    
    38,043
    
    
    
    28,978
    
    
    
    9,065Office furniture and computer equipment
    
    
    1,386
    
    
    
    1,312
    
    
    
    7448,051
    
    
    
    37,613
    
    
    
    10,438Mining propertiesJoe Mann property
    
    
    116,727
    
    
    
    116,727
    
    
    
    Copper Rand property
    
    
    21,671
    
    
    
    
    
    
    
    21,671Exploration properties(1)
    
    
    5,026
    
    
    
    
    
    
    
    5,026143,424
    
    
    
    116,727
    
    
    
    26,697191,475
    
    
    
    154,340
    
    
    
    37,135
 (1)
    
    In 2006, the Discovery property was sold for proceeds of $500,000 in cash and
$1,000,000 in shares of the purchaser. No gain or loss was realized on the sale, since
the property had been written down in 2005 to its net realizable value.
 - 117 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 9. Property, plant and equipment (continued)
 2005Accumulated
    
    Net bookCost
    
    amortization
    
    value$
    
    $
    
    $Property, plant and equipmentRoad
    
    
    730
    
    
    
    730
    
    
    
    Plant
    
    
    7,466
    
    
    
    5,909
    
    
    
    1,557Mining, exploration and milling equipment
    
    
    36,764
    
    
    
    17,626
    
    
    
    19,138Office furniture and computer equipment
    
    
    1,388
    
    
    
    1,155
    
    
    
    23346,348
    
    
    
    25,420
    
    
    
    20,928Mining propertiesJoe Mann property
    
    
    116,727
    
    
    
    115,633
    
    
    
    1,094Copper Rand property
    
    
    31,793
    
    
    
    
    
    
    
    31,793Exploration properties
    
    
    6,140
    
    
    
    
    
    
    
    6,140154,660
    
    
    
    115,633
    
    
    
    39,027201,008
    
    
    
    141,053
    
    
    
    59,955
     - 118 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 10. Deferred charges and other assets
 2006Accumulated
    
    Net bookCost
    
    amortization
    
    value$
    
    $
    
    $Fees related to the Operating Consulting Agreement
    
    
    388
    
    
    
    259
    
    
    
    129Fees related to the long-term debt
    
    
    455
    
    
    
    455
    
    
    
    843
    
    
    
    714
    
    
    
    129
 2005Accumulated
    
    Net bookCost
    
    amortization
    
    value$
    
    $
    
    $Fees related to the sale of the royalty
    
    
    2,486
    
    
    
    2,486
    
    
    
    Fees related to the long-term debt
    
    
    455
    
    
    
    272
    
    
    
    183Fees related to the short-term loan
    
    
    200
    
    
    
    200
    
    
    
    3,141
    
    
    
    2,958
    
    
    
    183
 11. Short-term loan
  12. Asset retirement obligations
     - 119 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 12. Asset retirement obligations (continued)
 AdjustedBalance at
    
    Accretion
    
    or
    
    Balance atbeginning
    
    expense
    
    (incurred)
    
    end$
    
    $
    
    $
    
    $2006Campbell Mill
    
    
    2,778
    
    
    
    165
    
    
    
    (1
    )
    
    
    2,942Joe Mann Mine
    
    
    829
    
    
    
    50
    
    
    
    (29
    )
    
    
    850Eastmain Mine
    
    
    1,027
    
    
    
    61
    
    
    
    
    
    
    
    1,088Cedar bay Mine
    
    
    29
    
    
    
    2
    
    
    
    
    
    
    
    31Corner Bay project
    
    
    20
    
    
    
    1
    
    
    
    
    
    
    
    21Henderson I and II
    
    
    43
    
    
    
    3
    
    
    
    
    
    
    
    46Copper Rand Mine
    
    
    2,882
    
    
    
    173
    
    
    
    (373
    )
    
    
    2,682Portage, Jaculet andCopper Cliff Mines
    
    
    130
    
    
    
    8
    
    
    
    6
    
    
    
    1447,738
    
    
    
    463
    
    
    
    (397
    )
    
    
    7,8042005Campbell Mill
    
    
    2,622
    
    
    
    157
    
    
    
    (1
    )
    
    
    2,778Joe Mann Mine
    
    
    786
    
    
    
    47
    
    
    
    (4
    )
    
    
    829Eastmain Mine
    
    
    968
    
    
    
    58
    
    
    
    1
    
    
    
    1,027Cedar bay Mine
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    29Corner Bay project
    
    
    19
    
    
    
    1
    
    
    
    
    
    
    
    20Henderson I and II
    
    
    44
    
    
    
    2
    
    
    
    (3
    )
    
    
    43Copper Rand Mine
    
    
    2,722
    
    
    
    162
    
    
    
    (2
    )
    
    
    2,882Portage, Jaculet andCopper Cliff Mines
    
    
    131
    
    
    
    5
    
    
    
    (6
    )
    
    
    1307,321
    
    
    
    432
    
    
    
    (15
    )
    
    
    7,7382004Campbell Mill
    
    
    2,502
    
    
    
    150
    
    
    
    (30
    )
    
    
    2,622Joe Mann Mine
    
    
    645
    
    
    
    39
    
    
    
    102
    
    
    
    786Eastmain Mine
    
    
    952
    
    
    
    57
    
    
    
    (41
    )
    
    
    968Cedar bay Mine
    
    
    28
    
    
    
    1
    
    
    
    
    
    
    
    29Corner Bay project
    
    
    18
    
    
    
    1
    
    
    
    
    
    
    
    19Henderson I and II
    
    
    50
    
    
    
    2
    
    
    
    (8
    )
    
    
    44Copper Rand Mine
    
    
    2,771
    
    
    
    165
    
    
    
    (214
    )
    
    
    2,722Portage, Jaculet andCopper Cliff Mines
    
    
    146
    
    
    
    8
    
    
    
    (23
    )
    
    
    1317,112
    
    
    
    423
    
    
    
    (214
    )
    
    
    7,321
 - 120 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 12. Asset retirement obligations (continued)
   Total estimated
    
    
    Discountcash flow
    
    
    periods$
    
    
    yearsCampbell Mill
    
    
    4,172
    
    
    
    17Joe Mann Mine
    
    
    836
    
    
    
    5Eastmain Mine
    
    
    1,166
    
    
    
    6Cedar Bay Mine
    
    
    28
    
    
    
    2Corner Bay project
    
    
    21
    
    
    
    3Henderson I and II
    
    
    43
    
    
    
    2Copper Rand Mine
    
    
    3,135
    
    
    
    11Portage, Jaculet andCopper cliff Mines
    
    
    132
    
    
    
    29,533
   - 121 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 13. Long-term debt
 2006
    
    
    2005$
    
    
    $Guaranteed Subordinated Debentures, bearing interest
at varying rates (effective average rate of 6.11% in 2006
and 5.16% in 2005), repayable at maturity in January 2007 (a)
    
    
    38,000
    
    
    
    38,000Guaranteed Non-Cumulative Redeemable Retractable
Preferred Shares of a subsidiary (50 shares), with a
nominal value of $12,000,000 (a)
    
    
    12,000
    
    
    
    11,72350,000
    
    
    
    49,723Exchangeable Capital Units facility agreement bearing
interest at an average of LIBOR plus 3.5% per annum,
interest payable quarterly, secured by collateral security
and which matured on November 2nd, 2006 (b)
    
    
    
    
    
    
    3,809Credit facility including $1,394,925 in accrued interest,
($396,772 in 2005) secured by a first-ranking encumbrance
on the assets of the Copper Rand Mine, bearing interest at the
average prime rate of six Canadian banks plus 1.5%,
repayable from June 30, 2005 in quarterly instalments,
maturing March 2009 (c)
    
    
    14,325
    
    
    
    13,326Convertible Debentures with interest accrued thereon of
$291,000 ($238,000 in 2005) (d)
    
    
    941
    
    
    
    888Other
    
    
    91
    
    
    
    3665,357
    
    
    
    67,782Current portion
    
    
    65,287
    
    
    
    18,03770
    
    
    
    49,745
  - 122 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 13. Long-term debt (continued)
 a)
    
    In 1991, a subsidiary of the Company entered into a financing arrangement
(Arrangement) whereby it issued to a group of Canadian financial institutions
$38,000,000 of Guaranteed Subordinate Debentures and Notes (Debentures) and
$12,000,000 of Guaranteed Non-Cumulative Redeemable Retractable Preferred Shares
(Preferred Shares). The Debentures are guaranteed by a series of restricted deposit
and Exchange Agreements (Note 8), subordinate to all existing non-tradable debt and
future senior debt, and cannot be prepaid. The Preferred Shares are redeemable at any
time at an amount of $240,000 per Preferred Share, rank equally and pari passu with the
common shares for dividends when declared, and are retractable in January 2007.
 In order to secure the performance and repayment of the Debentures and Preferred Shares,
the Companys subsidiary entered into a series of Interest Rate and Currency Exchange
Agreements, referred to as Exchange Agreements, with a major international bank. The
Exchange Agreements provide for the conversion of one floating rate interest basis to
another and for differences in the timing of payments so as to match the interest payment
requirements under the Debentures, repayment of the Debentures upon maturity and
retraction of the Preferred Shares. The Companys subsidiary invested $29,850,000 in
restricted deposits and $16,150,000 as an initial payment under the Exchange Agreements
with the counterparty, all of which have been assigned to secure all payments due under
the Exchange Agreements (Note 8). The deposits and Exchange Agreements were irrevocably
assigned directly to and accepted by the investors.The Preferred Shares have increased to their nominal value of $12,000,000 over the term
of the financing period.Under the term of the Exchange Agreements, the deposit will be drawn down to nil by
January 2007. The Exchange Agreements provide for termination payments to be made to the
subsidiary of the Company totalling $50,000,000 in January 2007.In January 2007, the Debentures were reimbursed and the Preferred Shares redeemed.
 b)
    
    In 2004, a subsidiary of the Company entered into an Exchangeable Capital Units
(ECU) financing agreement of $4,000,000 with RMB Resources Ltd. (RMB), guaranteed by
a first-ranking hypothec on the Corner Bay, Eastmain and Joe Mann properties, and a
floating charge on all other Company assets. The net proceeds were used to complete the
development at the Copper Rand Mine and to increase working capital.
 RMB had the possibility to convert into the Companys common shares, a right that was not
exercised by RMB and expired with the full reimbursement by the Company of the ECU on
September 29, 2006. The value originally assigned to the conversion rights granted was
estimated at $460,000 (Note 14d).
 - 123 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 13. Long-term debt (continued)
 c)
    
    The interest of $998,153 in 2006 was capitalized to property, plant and equipment
since the Copper Rand Mine was in development ($759,394 in 2005).d)
    
    The convertible debentures are unsecured, bear interest at 8% annually, plus an
additional interest charge calculated as follows: 1% for every $1 million of unpaid
capital multiplied by the net smelter return (NSR), which is reduced by $40 multiplied
by the tonnage of ore produced by the Copper Rand Mine. This charge will be determined
at the end of each year, beginning with the first repayment of capital. The first
interest payment is due July 1, 2005, and quarterly thereafter. The debentures are
repayable as to 20% of capital on July 1, 2005, as to 40% on July 1, 2006 and up to 40%
on July 1, 2007, or are convertible into common shares at a price of $1.025 per share or
up to a maximum of $1.64 based on an increase of the gold price above US$350.
 14. Capital stock
 a)
    
    Authorized sharesPreference shares  unlimited, issuable in series, without par valueCommon shares  unlimited
 b)
    
    Issued and outstanding shares
 2006
    
    
    2005
    
    
    2004Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount(in thousands)
    
    $
    
    
    (in thousands)
    
    $
    
    
    (in thousands)
    
    $Common sharesBalance, beginning
of year
    
    
    108,213
    
    
    
    69,958
    
    
    
    107,238
    
    
    
    69,610
    
    
    
    86,762
    
    
    
    55,429IssuedPrivate placements (1)
    
    
    156,250
    
    
    
    9,565
    
    
    
    
    
    
    
    
    
    
    
    11,041
    
    
    
    6,175Rights offering (2)
    
    
    69,966
    
    
    
    4,417
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    For services (Note 2)
    
    
    3,600
    
    
    
    627
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion of
convertible
debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    510
    
    
    
    3,349Flow through shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,690
    
    
    
    1,224Business acquisitions
(Note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,854
    
    
    
    3,219Payment of debt
    
    
    
    
    
    
    
    
    
    
    871
    
    
    
    311
    
    
    
    
    
    
    
    Exercise of warrants
    
    
    7,500
    
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share purchase plan
    
    
    
    
    
    
    
    
    
    
    104
    
    
    
    37
    
    
    
    306
    
    
    
    166Share Bonus Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    48Issued
    
    
    345,529
    
    
    
    85,467
    
    
    
    108,213
    
    
    
    69,958
    
    
    
    107,238
    
    
    
    69,610To be issuedFor services (Note 2)
    
    
    1,000
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, end of year
    
    
    346,529
    
    
    
    85,572
    
    
    
    108,213
    
    
    
    69,958
    
    
    
    107,238
    
    
    
    69,610
 - 124 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14. Capital stock (continued)
  (1)
    
    On September 27, 2006, the Brokered Placement was completed, generating
gross proceeds in cash of $10,000,000. This amount was allocated as follows:
$8,750,000 to capital stock and $1,250,000 to warrants, stock options and conversion
rights. Share issue costs of $1,355,839 were applied in reduction of capital stock.
  (2)
    
    On November 24, 2006, the rights offering was completed, generating gross
proceeds in cash of $5,597,301. This amount was allocated as follows: $4,897,638 to
capital stock and $699,663 to warrants, stock options and conversion rights. Share
issue costs of $480,628 were applied in reduction of capital stock.
       - 125 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14. Capital stock (continued)
   2006
    
    
    2005
    
    
    2004Weightedaverage
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedexercise
    
    
    exercise
    
    
    average
    
    
    exercise
    
    
    averageOptions
    
    
    price
    
    
    Options
    
    
    price
    
    
    Options
    
    
    price(in thousands)
    
    $
    
    (in thousands)
    
    $
    
    (in thousands)
    
    $Outstanding,
beginning of year
    
    
    2,135
    
    
    
    0.61
    
    
    
    2,270
    
    
    
    0.62
    
    
    
    1,700
    
    
    
    0.66Granted
    
    
    4,950
    
    
    
    0.15
    
    
    
    
    
    
    
    
    
    
    
    645
    
    
    
    0.64Expired and cancelled (1)
    
    
    (1,840
    )
    
    
    0.46
    
    
    
    (135
    )
    
    
    0.74
    
    
    
    (75
    )
    
    
    1.64Exercised
    
    


    
    
    


    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding,
end of year
    
    
    5,245
    
    
    
    0.23
    
    
    
    2,135
    
    
    
    0.61
    
    
    
    2,270
    
    
    
    0.62
 (1)
    
    655,000 options initially accounted for as stock-based compensation
expense, for an amount of approximately $132,000, were cancelled in 2006 and applied
to contributed surplus (120,000 options for $45,000 in 2005 and 45,000 options for
$20,000 in 2004).  Options outstanding and exercisableWeightedaverage
    
    
    WeightedRange
of
    
    
    
    
    
    remaining
    
    
    averageexercise
    
    Number
    
    
    contractual
    
    
    exerciseprice
    
    outstanding
    
    
    life
    
    
    price$
    
    (in thousands)
    
    (years)
    
    
    $0.15
    
    
    4,450
    
    
    
    4.6
    
    
    
    0.150.64 - 0.80
    
    
    795
    
    
    
    1.5
    
    
    
    0.665,245
    
    
    
    4.2
    
    
    
    0.23
  - 126 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14. Capital stock (continued)
   2006
    
    
    2005
    
    
    2004Fair value of each option
    
    $
    0.10
    
    
    
    
    
    
    $
    0.42Stock-based compensation expense
    
    $
    496
    
    
    
    
    
    
    $
    269Number of options
    
    
    4,950
    
    
    
    
    
    
    
    645AssumptionsRisk-free interest rate
    
    
    3.86
    %
    
    
    
    
    
    
    3.68
    %Expected return on share
    
    nil
    
    
    
    
    
    
    nilExpected volatility
    
    
    107
    %
    
    
    
    
    
    
    78
    %Expected duration
    
    3
    years
    
    
    
    
    
        5
    years
   2006
    
    
    2005
    
    
    2004$
    
    
    $
    
    
    $Balance, beginning of year
    
    
    2,771
    
    
    
    3,074
    
    
    
    301Warrants issued as part of the private placements (1)
    
    
    1,562
    
    
    
    
    
    
    
    1,996Warrants issued as part of the rights offering (2)
    
    
    700
    
    
    
    
    
    
    
    Warrants issued as remuneration of the broker (3)
    
    
    375
    
    
    
    
    
    
    
    Warrants issued on exercise of the broker warrants (3)
    
    
    75
    
    
    
    
    
    
    
    Warrants issued under the management
and operating agreement (5)
    
    
    4,218
    
    
    
    
    
    
    
    ECU-conversion rights expired
    
    
    (460
    )
    
    
    
    
    
    
    460Warrants issued in connection with the
short-term loan (4)
    
    
    33
    
    
    
    
    
    
    
    68Stock-based compensation expense
    
    
    496
    
    
    
    
    
    
    
    269Warrants exercised (3)
    
    
    (375
    )
    
    
    
    
    
    
    Warrants and options expired and cancelled
    
    
    (132
    )
    
    
    (303
    )
    
    
    (20
    )Balance, end of year
    
    
    9,263
    
    
    
    2,771
    
    
    
    3,074
 - 127 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14. Capital stock (continued)
  2006
  (1)
    
    As part of the Brokered Placement and Nuinsco Placement, 78,125,000 share
purchase warrants were issued. Each warrant entitles the holder to purchase one
common share at $0.15 per share until May 26, 2008. The warrants are subject to an
accelerated expiry if, on or after May 26, 2007, the volume weighted average price of
the shares of the Company is at least $0.30 for any period of 20 consecutive trading
days. The fair value of the warrants as at the date of issuance was estimated at
$1,562,000 and allocated to Warrants, Stock options and Conversion rights.(2)
    
    As part of the Rights Offering, 34,983,312 share purchase warrants were
issued. Each warrant entitles the holder to purchase one common share at $0.15 per
share until May 26, 2008. The warrants are subject to an accelerated expiry if, on or
after May 26, 2007, the volume weighted average price of the shares of the Company is
at least $0.30 for any period of 20 consecutive trading days. The fair value of the
warrants as at the date of issuance was estimated at $700,000 and allocated to
Warrants, Stock options and Conversion rights.(3)
    
    In relation to the Brokered Placement, the broker was issued 7,500,000
special broker warrants. Each special broker warrant entitles its holder to purchase,
until May 26, 2007, one unit at a price of $0.08 per unit. Each unit consists of one
common share and one-half of one common share purchase warrant. The fair value of the
special broker warrants as at the date of issuance was estimated at $375,000 and
accounted for as issuance costs. The special broker warrants were exercised in
December 2006 and consequently, 3,750,000 share purchase warrants were issued. Each
warrant having the same conditions as the warrants issued in regard to the Brokered
Placement, Rights Offering and Nuinsco Placement. The fair value of the warrants as
at the date of issuance was estimated at $75,000. Upon exercise of the special broker
warrants, the $375,000 value attributed to the special warrants was reversed from
warrants, stock options and conversion rights and was recorded in capital stock.(4)
    
    As part of the renewal of the short-term loan, the Company granted warrants
to purchase 200,000 common shares at a price of $0.195 until January 31, 2008. The
fair value was estimated at the date of grant at $25,000 and accounted for as
administrative costs.
 Also in 2006, in order to obtain a bridge loan, the Company granted warrants to
purchase 150,000 common shares at a price of $0.105 per share until December 22, 2008.
The fair value at the date of the grant was estimated at $8,000 and accounted for as
administrative costs.
 - 128 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14. Capital stock (continued)
  (5)
    
    Pursuant to the Operating Consulting Agreement (Note 2), Nuinsco was
entitled to receive share purchase warrants equal to 20% of the outstanding shares of
the Company, after completion of the Brokered Placement, Rights Offering and Nuinsco
Placement. The Company accounted for these warrants in 2006, since all the conditions
had been met as at December 30, 2006, even if the issuance of the warrants was
delayed to January 18, 2007 due to the necessity to obtain additional regulatory
approval required by the increase in the total number of warrants to be issued,
compared to the pre-approved number. The fair value of the 67,807,429 warrants,
exercisable at a price of $0.10 per share until January 18, 2009, was estimated at
$4,218,000 and accounted for as reorganisation costs.
  2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseWarrants
    
    
    price
    
    
    Warrants
    
    
    price
    
    
    Warrants
    
    
    price(in thousands)
    
    
    $
    
    
    (in thousands)
    
    
    $
    
    
    (in thousands)
    
    
    $Outstanding, beginning of year
    
    
    5,737
    
    
    
    1.18
    
    
    
    6,343
    
    
    
    1.13
    
    
    
    631
    
    
    
    0.67Granted
    
    
    192,516
    
    
    
    0.13
    
    
    
    
    
    
    
    
    
    
    
    5,712
    
    
    
    1.18Exercised
    
    
    (7,500
    )
    
    
    0.08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired and cancelled
    
    
    (25
    )
    
    
    1.03
    
    
    
    (606
    )
    
    
    0.66
    
    
    
    
    
    
    
    -Outstanding, end of year
    
    
    190,728
    
    
    
    0.16
    
    
    
    5,737
    
    
    
    1.18
    
    
    
    6,343
    
    
    
    1.13
  WeightedRange of
    
    Number of
    
    
    average remaining
    
    
    Weighted averageexercise price
    
    outstanding
    
    
    contractual life
    
    
    exercise price$
    
    (in thousands)
    
    (years)
    
    
    $0.10 - 0.20
    
    
    185,016
    
    
    
    1.6
    
    
    
    0.130.65 - 1.20
    
    
    5,712
    
    
    
    0.2
    
    
    
    1.18190,728
    
    
    
    1.6
    
    
    
    0.16
 - 129 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14. Capital stock (continued)
  The Company recorded the fair value of the warrants issued as of the measurement date
using the Black-Scholes pricing model with various assumptions regarding risk free
interest rate, expected dividend yield, expected volatility and expected duration as
follows:
 Short-Private
    
    
    Broker
    
    
    termPlacements (1)
    
    
    warrant
    
    
    loanFair value of warrants
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    0.13Fair value
    
    $
    2,262
    
    
    $
    375
    
    
    $
    25Number of warrants
    
    
    113,108
    
    
    
    7,500
    
    
    
    200Assumptions:Risk free interest rate
    
    
    3.75
    %
    
    
    3.75
    %
    
    
    3.86
    %Expected return on share
    
    nil
    
    
    nil
    
    
    nilExpected volatility
    
    
    91
    %
    
    
    60
    %
    
    
    126
    %Expected duration
    
1.2
    years
    
    0.67

    years
    
    2
    years
 Exerciseof broker
    
    
    Bridge
    
    
    Nuinscowarrants
    
    
    loan
    
    
    WarrantsFair value of warrants
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    0.06Fair value
    
    $
    75
    
    
    $
    8
    
    
    $
    4,218Number of warrants
    
    
    3,750
    
    
    
    150
    
    
    
    67,808Assumptions:Risk free interest rate
    
    
    3.75
    %
    
    
    3.75
    %
    
    
    3.75
    %Expected return on share
    
    nil
    
    
    nil
    
    
    nilExpected volatility
    
    
    91
    %
    
    
    113
    %
    
    
    121
    %Expected duration
    

    1.2
    years
    
    1.5
    years
    
    2
    years
 
 (1)
    
    Rights Offering, Brokered Placement and Nuinsco Placement. - 130 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 14.
    
    Capital stock (continued)
 d)
    
    Warrants, stock options and conversion rights (continued)2004In 2004, 5,511,500 share purchase warrants were issued with regard to the private
placement. Each warrant entitles the holder to purchase one common share at $1.20 per
share until March 11, 2007. The fair value of the warrants as at the date of issuance was
estimated at $1,996,000 and applied in reduction of the proceeds received for the issued
shares of the private placement, as part of capital stock.As part of the ECU financing entered into during 2004, the Company issued conversion
rights as detailed in Note 12b). The fair value of these conversion rights as at the date
of the agreement was estimated at $460,000.Also in 2004, as part of the short-term loan, the Company granted warrants to purchase
200,000 common shares at a price of $0.65 per share until October 8, 2007. The fair value
was estimated at the date of the grant at $68,800.The Company recorded the fair value of the warrants issued or conversion rights granted as
of the date of issuance using the Black-Scholes pricing model with various assumptions
regarding risk free interest rate, expected dividend yield, expected volatility and
expected duration as follows:
 Exchangeable
    
    Short-Private
    
    Capital
    
    termplacements
    
    Units
    
    loanFair value of warrants or conversion rights
    
    $
    0.36
    
    
    

    
    (1)
    
    $
    0.34Fair value
    
    $
    1,996
    
    
    $
    460
    
    
    $
    69Number of warrants, options or rights
    
    
    5,512
    
    
    
    7,834
    
    
    
    200Assumptions:Risk free interest rate
    
    
    4.06
    %
    
    
    3.2
    %
    
    
    3.2
    %Expected return on share
    
    nil
    
    
    nil
    
    
    nilExpected volatility
    
    
    80
    %
    
    
    64.69
    %
    
    
    79
    %Expected duration
    
    3
    years
    
    2
  year
    

    3
  years
 
 (1)
    
    The fair value of the conversion rights was established based on
managements appreciation of the probability of the repayment of the debt for its
entire amount by the Company or its conversion into common shares by the holder.
 - 131 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 15.
    
    Interest expense on long-term debt
 2006
    
    2005
    
    2004$
    
    $
    
    $Exchangeable Capital Units facility
    
    
    637
    
    
    
    713
    
    
    
    146Credit facility
    
    
    
    
    
    
    
    
    
    
    39Guaranteed Subordinated Debentures
    
    
    2,323
    
    
    
    1,958
    
    
    
    1,855Convertible Debentures
    
    
    53
    
    
    
    55
    
    
    
    219Other
    
    
    2
    
    
    
    2
    
    
    
    13,015
    
    
    
    2,728
    
    
    
    2,260Interest revenue on restricted deposits (Note 7)
    
    
    (2,323
    )
    
    
    (1,958
    )
    
    
    (1,855
    )692
    
    
    
    770
    
    
    
    405
 16.
    
    Other income
 2006
    
    2005
    
    2004$
    
    $
    
    $Gain on sale of short-term investments
    
    
    262
    
    
    
    
    
    
    
    374Gain on repurchase of royalty (Note 6)
    
    
    
    
    
    
    1,571
    
    
    
    Gain on sale of property, plant and equipment
    
    
    1
    
    
    
    2,002
    
    
    
    39Gain on an investment in shares (a)
    
    
    515
    
    
    
    
    
    
    
    Other
    
    
    (226
    )
    
    
    4
    
    
    
    384552
    
    
    
    3,577
    
    
    
    797
 (a)
    
    On October 23, 2006, the Company acquired all of the outstanding shares of
Pinnacle International (Taylor) Plaza Inc. (PINNACLE) which then became a wholly-owned
subsidiary of the Company. On November 9, 2006, PINNACLE, a corporation involved in
residential development, was dissolved and wound-up in Meston Resources Inc. As at
December 22, 2006, the development project was completed and sold. The acquisition was
not accounted for as a business combination as it did not meet the definition of a
business in accordance with the criteria in EIC-124.
 - 132 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 17.
    
    Income and mining taxes
 a)
    
    Effective tax rateThe income tax recovery varies from the amounts that would be computed by applying the
combined Canadian federal and provincial statutory tax rates to earnings before taxes as
follows:
 2006
    
    2005
    
    2004$
    
    $
    
    $Expected income tax recovery using
statutory income tax rates
    
    
    (13,244
    )
    
    
    (7,552
    )
    
    
    (2,682
    )Resource allowance
    
    
    181
    
    
    
    220
    
    
    
    208Valuation allowance
    
    
    13,098
    
    
    
    7,414
    
    
    
    2,019Income and mining tax expense (recovery)
    
    
    35
    
    
    
    82
    
    
    
    (455
    )
 The 2004 income tax recovery of $455,000 is attributable mainly to the reversal of the
future income tax liability of $550,000 recorded as part of the flow-through shares
issuance as required by EIC 146.b)
    
    Future income taxesAt December 31, future income taxes are as follows:
 2006
    
    2005$
    
    $Current future income tax assets:Inventories of ore and supplies
    
    
    99
    
    
    
    149Other
    
    
    54
    
    
    
    13153
    
    
    
    162Long-term future income tax assets:Property, plant and equipment
    
    
    28,383
    
    
    
    40,018Operating loss carry forwards
    
    
    24,685
    
    
    
    6,303Capital loss carry forwards
    
    
    11,006
    
    
    
    10,514Other
    
    
    5,631
    
    
    
    5,04469,705
    
    
    
    61,87969,858
    
    
    
    62,041Valuation allowance
    
    
    (68,374
    )
    
    
    (60,717
    )Future income tax assets
    
    
    1,484
    
    
    
    1,324Long-term future income tax liabilities:Mining taxes
    
    
    5,152
    
    
    
    3,432Other
    
    
    1,484
    
    
    
    1,324Future income tax liabilities
    
    
    6,636
    
    
    
    4,756Net future income tax liabilities
    
    
    5,152
    
    
    
    3,432
 - 133 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 17.
    
    Income and mining taxes (continued)
 c)
    
    Loss carry forwardsAt December 31, 2006, the Company and its subsidiaries had operating losses for income tax
purposes in Canada approximating $71,400,000, which are available to reduce taxable income
in future years and which expire over the period to the year 2026. In addition, the
Company and its subsidiaries had capital losses for income tax purposes in Canada of
approximately $66,000,000, which can be applied against future taxable capital gains.
 18.
    
    Changes in non-cash working capital and supplementary information
 a)
    
    Changes in non-cash working capital
 2006
    
    2005
    
    2004$
    
    $
    
    $Receivables and settlements receivable
    
    
    1,809
    
    
    
    (2,923
    )
    
    
    (1,697
    )Production and supply inventories
    
    
    (752
    )
    
    
    1,178
    
    
    
    124Prepaids
    
    
    (317
    )
    
    
    (699
    )
    
    
    418Accounts payable and accrued liabilities
    
    
    1,523
    
    
    
    4,980
    
    
    
    6,3882,263
    
    
    
    2,536
    
    
    
    5,233
 - 134 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 18.
    
    Changes in non-cash working capital and supplementary information (continued)
 b)
    
    Supplementary information
 2006
    
    2005
    
    2004$
    
    $
    
    $Income taxes paid
    
    
    136
    
    
    
    98
    
    
    
    24Interest paid
    
    
    2,809
    
    
    
    2,013
    
    
    
    2,027Shares issued for business acquisitions
and credit facility reimbursement (Note 4)
    
    
    
    
    
    
    
    
    
    
    3,219Shares issued for services under the Management
and Operating Agreement (Note 14)
    
    
    732
    
    
    
    
    
    
    
    Conversion of debentures into common shares
    
    
    
    
    
    
    
    
    
    
    3,349Warrants issued for the short-term loan
(capitalized as deferred charges in 2004)
    
    
    25
    
    
    
    
    
    
    
    68Warrants issued for the bridge loan
    
    
    8
    
    
    
    
    
    
    
    Warrants issued under the Management and
Operating Agreement
    
    
    4,218
    
    
    
    
    
    
    
    Deferred charges reclassed to property, plant
and equipment
    
    
    
    
    
    
    
    
    
    
    45Other liabilities applied against property, plant
and equipment
    
    
    
    
    
    
    
    
    
    
    14Other liabilities applied against accounts payable
    
    
    
    
    
    
    
    
    
    
    300Shares issued for debt settlement (Note 13)
    
    
    
    
    
    
    314
    
    
    
    Proceeds on sale of mining interest received
in shares
    
    
    1,000
    
    
    
    
    
    
    
    Interest capitalized to mining properties
    
    
    998
    
    
    
    759
    
    
    
    468Redemption of royalty
    
    
    
    
    
    
    5,900
    
    
    
    Mining rights receivable
    
    
    
    
    
    
    1,214
    
    
    
    Mining rights held as security
deposit for site restoration
    
    
    808
    
    
    
    
    
    
    
    Mining rights held as reimbursement
of property, plant and equipment
acquisition grant
    
    
    378
    
    
    
    
    
    
    
    
 - 135 -




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##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 19.
    
    Commitments and contingencies
 a)
    
    The Company is committed to pay royalties calculated on the net smelter return at
various rates or based on the tonnage of ore processed at the mills. These agreements
are also subject to repurchase rights at various prices.b)
    
    Under the financing arrangement (Arrangement) referred to in Note 13 a),
mineral development expenditures which were renounced in favor of the investors as part
of the Arrangement were based, in part, on independent valuations of certain related
mineral properties. The Canada Revenue Agency (CRA) has challenged certain of those
valuations, and disallowed certain of the renounced flow-through deductions for certain
of the investors. The Company may be contingently liable for certain losses or damages
to investors, if any, that may result if CRA is ultimately successful in its challenges.
No provision for losses that could result from the above mentioned challenges had been
recorded at year end.c)
    
    The Oujibougoumou Cree initiated legal proceedings against the Company, claiming
that the poor condition of lakes in the region of Chibougamau, Québec was due to mining
activities in the area. The Public Health Department, the Québec Environment Ministry
and the Québec Fish and Wildlife Association began to study the issue. As a temporary
measure, the Company and the plaintiffs jointly agreed to request that proceedings be
suspended for two years. It is not possible to determine either the outcome of the
proceedings or the financial consequences for the Company.
 20.
    
    Related party transactionsDuring the year ended December 31, 2006, the Company paid or accrued $1,039,000
($510,000 and $150,000 in 2005 and 2004, respectively) in legal fees to a law firm of which a
director is a partner.21.
    
    Employee future benefitsThe Company and its subsidiaries maintain two defined benefit pension plans for most of
their employees. The pension benefit for the first plan is based on a fixed amount per year
of service. The pension benefit for the second plan is based on years of service and a
percentage of the final average salary. The Company measures its accrued benefit obligation
and the fair value of plan assets for accounting purposes as at December 31 of each year. The
most recent actuarial valuation of the pension plans for funding purposes was as of December
31, 2005, and the next required valuation will be as of December 31, 2008.Total cash paymentsTotal cash payments for employee future benefits for 2006, consisting of cash contributed by
the Company to its funded pension plans were $358,000 ($332,000 in 2005 and $1,041,000 in
2004).
 - 136 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 21.
    
    Employee future benefits (continued)
 2006
    
    2005$
    
    $Accrued benefit obligationBalance, beginning of year
    
    
    15,377
    
    
    
    13,672Current service cost
    
    
    169
    
    
    
    138Benefits paid
    
    
    (986
    )
    
    
    (1,144
    )Interest cost
    
    
    786
    
    
    
    790Actuarial loss
    
    
    478
    
    
    
    1,921Balance, end of year
    
    
    15,824
    
    
    
    15,377Plan assets fair valueBalance, beginning of year
    
    
    12,203
    
    
    
    11,455Employer contribution
    
    
    920
    
    
    
    1,004Employees contributions
    
    
    4
    
    
    
    7Benefits paid
    
    
    (986
    )
    
    
    (1,144
    )Actual return on plan assets
    
    
    1,073
    
    
    
    881Balance, end of year
    
    
    13,214
    
    
    
    12,203
  Percentage of plan assets2006
    
    2005%
    
    %Employer contribution receivable
    
    
    10
    
    
    
    6Canadian equity securities
    
    
    30
    
    
    
    31American equity securities
    
    
    12
    
    
    
    12International equity securities
    
    
    13
    
    
    
    10Bonds
    
    
    28
    
    
    
    33Campbell common shares
    
    
    1
    
    
    
    1Other (including cash and cash equivalents)
    
    
    6
    
    
    
    7100
    
    
    
    100
  2006
    
    2005$
    
    $Fair value of plan assets
    
    
    13,214
    
    
    
    12,203Accrued benefit obligation
    
    
    (15,824
    )
    
    
    (15,377
    )Funded status of pension plans  (deficit)
    
    
    (2,610
    )
    
    
    (3,174
    )Unamortized net actuarial loss
    
    
    7,037
    
    
    
    7,071Accrued benefit asset
    
    
    4,427
    
    
    
    3,897
 - 137 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 21.
    
    Employee future benefits (continued)Pension plans with accrued benefit obligations in excess of plan assets included in the
above accrued benefit obligation and fair value of plan assets in respect of plans that are
not fully funded:
 2006
    
    2005$
    
    $Accrued benefit obligation
    
    
    12,424
    
    
    
    15,377Fair value of plan assets
    
    
    9,700
    
    
    
    12,203Funding deficit
    
    
    (2,724
    )
    
    
    (3,174
    )Elements of defined benefit pension plans costs recognized in the year
 2006
    
    2005$
    
    $Current service cost, net of employee contributions
    
    
    165
    
    
    
    131Interest cost
    
    
    786
    
    
    
    790Actual return on plan assets
    
    
    (1,073
    )
    
    
    (881
    )Actuarial losses
    
    
    478
    
    
    
    1,921Elements of employee pension plans costs before
adjustments to recognize the long-term nature of
employee pension plans costs
    
    
    356
    
    
    
    1,961Adjustments to recognize the long-term nature of
employee pension plans costsdifference between expected return and actual return
on plans assets for the year
    
    
    221
    
    
    
    69difference between actuarial loss recognized for the
year and actual actuarial loss on accrued benefit
obligation for the year
    
    
    (187
    )
    
    
    (1,708
    )Defined benefit pension costs
    
    
    390
    
    
    
    322Amount capitalized to property, plant and equipment
    
    
    (388
    )
    
    
    (344
    )Net Pension credit
    
    
    2
    
    
    
    (22
    )
 - 138 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 21.
    
    Employee future benefits (continued)The significant assumptions used are as follows:
 2006
    
    2005%
    
    %Accrued benefit obligation as of December 31:Discount rate
    
    
    5.12
    
    
    
    5.25Rate of compensation increase
    
    
    2.50
    
    
    
    2.50Benefit costs for years ended December 31:Discount rate
    
    
    5.25
    
    
    
    6.00Expected long-term rate of return on plans assets
    
    
    7.00
    
    
    
    7.00Rate of compensation increase
    
    
    2.50
    
    
    
    2.50Average remaining service period of active employees
    
    19
    years
    
    19
    years
 22.
    
    Financial instrumentsFair valueThe carrying amount of cash, restricted cash, short term loan, short-term investments,
receivables, settlement receivables, accounts payable and accrued liabilities in the
consolidated balance sheets approximates fair value based on their short-term maturities
and/or quotes received. Also, the fair value of long-term debt is approximately equal to its
carrying value due to interest rates which are based on current market rate to the exception
of the convertible debentures. Given the terms of these convertible debentures, their fair
value cannot practically be calculated. No prepayments have been made on the convertible
debentures to date.Interest rate riskThe Company is subject to interest rate risk due to changes to the prime rate since the
majority of its borrowings bear variable interest rates. Otherwise, the Company manages the
interest risk through an Exchange Agreement (Notes 8 and 13).Credit riskThe Company is exposed to credit-related losses in the event of non-performance by
counterparties to financial instruments, but does not expect any counterparties to fail to
meet their obligations. The Company deals with only highly-rated counterparties, normally
major financial institutions and specialized private investors. The credit risk represents
the maximum amount that would be at risk if the counterparties failed completely to perform
under the contracts.The copper concentrate is sold exclusively to Falconbridge Limited, including the Copper Rand
mine pre-production revenue, under a copper concentrate purchase agreement. The net metal
sales to Falconbridge Limited represent approximately $16,864,000 for the year ended December
31, 2006 ($21,854,000 in 2005 and $10,911,000 in 2004) and an amount of $5,413,000 is
receivable at year end ($8,374,000 in 2005).
 - 139 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 22.
    
    Financial instruments (continued)Foreign exchange rate and metal price risksThe Company is exposed to risks from changes in foreign currency rates and metal prices. The
Company does not usually use derivative instruments to manage those risks. However, in
November 2006, in order to obtain a bridge loan, the Company entered into forward contracts
on the price of copper. These contracts have not been designated by the Company as hedges and
were therefore marked to market as at December 31, 2006.23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP)The material differences between Canadian GAAP and United States GAAP affecting the
Companys consolidated financial statements are detailed as follows:
 2006
    
    2005
    
    2004$
    
    $
    
    $(restated)
    
    (restated)Reconciliation of net lossNet loss  Canadian GAAP
    
    
    41,195
    
    
    
    24,430
    
    
    
    8,192Adjustments:Amortization adjustment (a)
    
    
    (188
    )
    
    
    (233
    )
    
    
    (667
    )Reversal of impairment of property, plant
and equipment (b)
    
    
    780
    
    
    
    970
    
    
    
    (1,750
    )Warrants of the entity subject to significant
influence (i)
    
    
    
    
    
    
    485
    
    
    
    Exploration expenses (c)
    
    
    (658
    )
    
    
    (109
    )
    
    
    525Derivative instruments (d)
    
    
    256
    
    
    
    16
    
    
    
    (44
    )Flow through shares  Income tax expense (e)
    
    
    
    
    
    
    
    
    
    
    (40
    )Net loss  United States GAAP
    
    
    41,385
    
    
    
    25,559
    
    
    
    6,216Minimum liability of defined benefit plans (f)
    
    
    816
    
    
    
    1,360
    
    
    
    479Comprehensive loss  United States GAAP (g)
    
    
    42,201
    
    
    
    26,919
    
    
    
    6,695Basic and fully diluted loss  United States GAAP
    
    
    0.28
    
    
    
    0.25
    
    
    
    0.07
 - 140 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 2006
    
    2005
    
    2004$
    
    $
    
    $(restated)
    
    (restated)Reconciliation of shareholders equity
Shareholders equity  Canadian GAAP
    
    
    12,006
    
    
    
    30,503
    
    
    
    54,585Adjustments:Amortization adjustment (a)
    
    
    
    
    
    
    (188
    )
    
    
    (421
    )Reversal of impairment of property, plant
and equipment (b)
    
    
    
    
    
    
    780
    
    
    
    1,750Exploration expenses (c)
    
    
    (2,853
    )
    
    
    (3,511
    )
    
    
    (3,620
    )Derivative instruments (d)
    
    
    (228
    )
    
    
    (28
    )
    
    
    44Minimum liability of defined benefit plans (f)
    
    
    (7,037
    )
    
    
    (6,221
    )
    
    
    (4,861
    )Capital stock (h)
    
    
    (1,481
    )
    
    
    (1,481
    )
    
    
    (1,481
    )Warrants of the entity subject to
significant influence (i)
    
    
    
    
    
    
    
    
    
    
    485Shareholders equity  United States GAAP
    
    
    407
    
    
    
    19,854
    
    
    
    46,481
 a)
    
    Amortization adjustment
 i)
    
    Under Canadian GAAP and prior to the adoption of the CICA Handbook Section
3063, Impairment of long-lived assets, at the time of an impairment, future cash
flows from impaired property, plant and equipment were not discounted. In subsequent
periods, the methodology for calculating asset impairment under Canadian GAAP was
harmonized with United States GAAP, requiring the use of discounted cash flows.
However, under Canadian GAAP, the change was not made retroactively and, as a result,
the difference remained.Under United States GAAP, in periods subsequent to the impairment, the lower property,
plant and equipment carrying value resulted in a lower amortization expense.Under United States GAAP, during the years ended December 31, 2006, 2005 and 2004,
amortization would have been reduced by $188,000, $233,000 (restated from $421,000)
and $667,000, respectively.ii)
    
    The amortization calculation under United States GAAP was not adequately
computed in accordance with the Company policy in 2005; therefore the 2005
amortization has been restated, as mentioned above.
 
 - 141 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 b)
    
    Reversal of impairment of property, plant and equipmentIn 2004, property, plant and equipment were written down by $1,750,000, under Canadian
GAAP, following an asset impairment analysis. This write-down was not required under
United States GAAP since the carrying value under United States GAAP was already below the
impaired value under Canadian GAAP. The 2004 figures have therefore been restated by
$1,750,000 to reflect the reversal of the impairment recorded under Canadian GAAP and the
related amortization for 2005 was restated to reflect a higher amortization of $970,000
under United States GAAP. Under United States GAAP, amortization would be $780,000 higher
in 2006.c)
    
    Exploration expenses
 i)
    
    Under Canadian GAAP, exploration expenses may be deferred until such time
as the exploration and development work is either effectively abandoned and related
costs are written off or an operating mine is established following which accumulated
costs are amortized to earnings. Under United States GAAP and under Securities and
Exchange Commission guidelines, all exploration expenses incurred prior to the
determination of the existence of a commercially minable deposit and the completion
of a feasibility study should be recorded as expenses as they are incurred. During
2006, $359,000 ($1,155,000 in 2005 and $1,145,000 in 2004) of exploration expenses
were capitalized under Canadian GAAP and should be expensed under United States GAAP.The adjustment of $658,000 ($109,000 in 2005 and $525,000 in 2004) comprises the
difference described in the previous paragraph less the amortization charge of
$1,017,000 ($1,264,000 (restated from $330,000) in 2005 and $620,000 in 2004) which
results from the previous years exploration expenses, which were capitalized in
accordance with Canadian GAAP.ii)
    
    The amortization calculation under United States GAAP was not adequately
computed in accordance with the Company policy in 2005, therefore, the 2005
amortization has been restated, as mentioned above.
 
 - 142 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 d)
    
    Derivative instrumentsUnder the terms of its copper concentrate selling contract, the selling prices for copper,
gold and silver are established respectively based on the average price of the fourth,
third and second month following delivery. Under Canadian GAAP, the Company recognizes
revenue upon shipment using provisional sales prices and adjusts the revenue on a monthly
basis to reflect current prices. Under United States GAAP, the Companys provisionally
priced sales contain an embedded derivative that is required to be separated from the host
contract for accounting purposes. The host contract is the receivable from the sale of
concentrates measured at the forward price at the time of sale. The embedded derivative,
which does not qualify for hedge accounting, is marked to market through earnings each
period prior to final settlement. The net impact (net of the reversal of the prior year
adjustment) is, therefore, an increase of $209,000 to the net loss under United States
GAAP for 2006 and a decrease of $16,000 to the net loss under United States GAAP for 2005
and $44,000 for 2004.The debentures detailed in Note 13 included embedded derivatives, such as additional
interest charges calculated on the net smelter return and the tonnage of ore produced by
the Copper Rand Mine and a conversion option into common shares at variable prices based
on an increase in the gold price above US$350 per ounce. Under Canadian GAAP, no value was
assigned to these embedded derivatives. Under United States GAAP (SFAS 133), the related
derivatives are evaluated at their fair value as at each balance sheet date and the
resulting difference between the fair value should be recorded in current earnings. These
embedded derivatives had no value as at December 31, 2006, 2005 and 2004.In 2004, the Company renewed one of its collective agreements under which the employees
are entitled to receive a bonus based on the increase in the price of gold during the term
of the agreement. This feature meets the definition of an embedded derivative under United
States GAAP. Under Canadian GAAP, no value was assigned to these embedded derivatives. The
net impact (net of reversal of the prior year adjustment) is, therefore, an increase of
$47,000 to the net loss under United States GAAP in 2006 and $32,000 in 2005.In 2005, the Company renewed another of its collective agreements under which the employee
agreed to salary reductions based on the price of gold during the term of the agreement.
No adjustment was included in the earnings of 2006 and 2005.
 - 143 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 e)
    
    Flow-through shares  Income tax expensePrior to March 2004, under Canadian GAAP, flow-through share proceeds were recorded to
capital stock at the time of issuance of the shares and a future income tax liability was
recorded upon renouncement by the Company of the tax benefits in favour of the investors.In March 2004, the Company adopted EIC 146, Flow-through shares. Under this standard, the
foregone tax benefits of $550,000, at the date the Company renounces them, are applied in
reduction of capital stock and an equivalent income tax liability is recorded.
Subsequently, the income tax liability is reversed against income tax expense if the
Company has unrecorded future tax assets.Under United States GAAP, flow-through shares are recorded at their fair value at time of
issuance and the difference of nil in 2006 (nil in 2005 and $590,000 in 2004) between the
proceeds received and the fair value of the shares issued is recorded as a liability. Upon
renouncement by the Company of the tax benefits in favour of the investors, the liability
is applied in reduction of the income tax expense. The difference of $40,000 in 2004,
representing the difference between the amount recorded under Canadian and United States
GAAP has been adjusted to the 2004 earnings.f)
    
    Minimum liability of defined benefit plansThe provisions of Statement of Financial Accounting Standards No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans, requires an
employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan as an asset or liability in its statement of financial position and to
recognize changes in that funded status in the year in which the changes occur through
comprehensive income. The standard does not change the calculation of periodic pension
expense under United States GAAP but will affect other comprehensive income in future
years. Before the adoption of this standard, the Company had additional minimum pension
liability of $6,413,000, $6,221,000 and $4,861,000, as at December, 31, 2006, 2005 and
2004, and an equivalent reduction of accumulated other comprehensive income. The adoption
of this standard resulted in an additional charge of $623,000 directly to closing
accumulated other comprehensive income and had no impact on the Companys net loss or
deficit.
 - 144 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 g)
    
    Comprehensive incomeUnited States accounting standards for reporting comprehensive income are set forth in
SFAS No. 130, Comprehensive income.Comprehensive income represents the change in equity
during a reporting period from transactions and other events and circumstances from
non-owner sources. Components of comprehensive income include items such as unrealized
gain or loss, pension liability adjustments and certain foreign currency translation gains
and losses. Under Canadian GAAP, the concept of comprehensive income is not applicable
until January 1, 2007.h)
    
    Capital stockBefore July 1, 2001, under Canadian GAAP, the value assigned to the common shares issued
in consideration for a business acquisition, such as the MSV acquisition in June 2001, was
based upon the average trading price of the shares over a reasonable period before and
after the closing date of the acquisition of June 30, 2001. Under United States GAAP, the
value assigned to the common shares is based upon the average trading price of the shares
over a reasonable period before and after April 25, 2001, which is the date the terms of
the business combinations were agreed to and announced. The adjustment of $1,481,000
represents the difference in the value of the common shares issued under Canadian and
United States GAAP. The adjustment to the purchase price described above resulted in a
decrease of the carrying value of property, plant and equipment under United States GAAP.i)
    
    Warrants of the entity subject to significant influenceUnder Canadian GAAP, no value was recognized for the warrants issued by CCR, an entity
that was subject to significant influence in 2001 and became a subsidiary in 2003; for
that, the Company granted, in 2001, an automatic conversion feature into common shares of
the Company. Under United States GAAP, the fair value of the conversion feature is
recognized in shareholders equity and recorded as an additional cost to the investment in
CCR. The adjustment of $485,000 represents the fair value of the conversion feature.In 2003, since the Company acquired an additional interest of 50% in CCR, which became a
subsidiary, the additional cost of the investment in CCR (as mentioned in the preceding
paragraph) was reclassified to property, plant and equipment.Since the carrying value of the property, plant and equipment was higher under United
States GAAP than under the Canadian GAAP, the write-down recorded in 2005 for the Copper
Rand property should have been higher under United States GAAP. Accordingly, the 2005
figures have been restated to reflect an additional write-down of $485,000 under United
States GAAP.
 - 145 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 j)
    
    Elimination of deficitIn 2001, under Canadian GAAP, the Company proceeded to reduce its deficit against its
stated capital of outstanding common shares. However, under United States GAAP, such
reduction is not permitted, which creates a permanent difference of $113,645,000 in the
deficit and the stated capital of outstanding common shares between the Canadian GAAP and
United States GAAP figures. This difference has no impact on the total amount of the
shareholders equity.k)
    
    Income taxesUnder United States GAAP, future income taxes are measured using enacted tax rates. Under
Canadian GAAP, enacted or substantively enacted tax rates are used. This difference had no
impact on the December 31, 2006, 2005 and 2004 earnings.l)
    
    Recent and future accounting changesIn May 2005, the FASB issued SFAS No. 154, entitled Accounting Changes and Error
Corrections. SFAS No. 154 eliminates the requirement to include the cumulative effect of a
change in accounting principle in the income statement in the period of change. The
changes should be retrospectively applied as of the beginning of the first period
presented as if that principle had always been used. This statement is effective for
changes and corrections of errors made in fiscal year beginning after December 15, 2005.
Adoption of this statement will have an impact when a change of accounting policy occurs
in the future.In July 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes,which
clarifies the accounting for uncertainty in income taxes recognized in an enterprises
financial statements in accordance with SFAS No. 109, Accounting for Income Taxes.FIN 48
prescribes a recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax
return. FIN 48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. The Company will
begin application of FIN 48 on January 1, 2007 and does not expect the adoption of this
pronouncement to have a material impact on its financial position or results of
operations.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which is
effective for the Company beginning January 1, 2008 and provides a definition of fair
value, establishes a framework for measuring fair value and expands disclosures about fair
value measurements for future transactions. The Company does not expect the adoption of
this pronouncement to have a material impact on its financial position or results of
operations.
 - 146 -




---



##### 



CAMPBELL RESOURCES INC.
Notes to consolidated financial statements
years ended December 31, 2006, 2005 and 2004
(tabular amounts are expressed in thousands of Canadian dollars, except share data)
 23.
    
    Differences between Canadian and United States generally accepted accounting principles
(GAAP) (continued)
 l)
    
    Recent and future accounting changes (continued)In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, which permits an entity to measure certain financial assets and
financial liabilities at fair value. The objective of SFAS No. 159 is to improve financial
reporting by allowing entities to mitigate volatility in reported earnings caused by the
measurement of related assets and liabilities using different attributes, without having
to apply complex hedge accounting provisions. Under SFAS No. 159, entities that elect the
fair value option (by instrument) will report unrealized gains and losses in earnings at
each subsequent reporting date. The fair value option election is irrecoverable, unless a
new election date occurs. SFAS No. 159 establishes presentation and disclosure
requirements to help financial statement users understand the effect of the entitys
election on its earnings, but does not eliminate disclosure requirements of other
accounting standards. Assets and liabilities that are measured at fair value must be
displayed on the face of the balance sheet. SFAS No. 159 is effective for years beginning
after November 15, 2007. The Company does not expect the adoption of this pronouncement to
have a material impact on its financial position or results of operations.
 24.
    
    Subsequent eventsOn February 22, 2007, the Company announced a temporary suspension of the mining
activities at its Copper Rand mine as a result of a rock fall and observations of ground
movements in the area. Cleaning and rehabilitation work is underway (see Note 2).On February 27, 2007, the Company sold its Eastmain Mine Property to Eastmain Mines Inc., a
wholly-owned subsidiary of Eastmain Resources Inc., for a cash consideration of $2,500,000,
1,000,000 common shares and 500,000 share purchase warrants exercisable at $1.00 per share
for a period of twelve months. Also, on May 18, 2007, Eastmain Resources Inc. shall issue an
additional 1,000,000 common shares and 500,000 share purchase warrants exercisable at $1.50
per share for a period of twelve months. The Company is also entitled to a Net Smelter Return
Royalty of 2% on any production over and above 250,000 ounces of gold. Eastmain Resources
Inc. will have the option to re-purchase one-half of the royalty for $1 million. The selling
price is above the carrying value, therefore a gain will be recorded in the first quarter of
2007.On March 30, 2007, the Company completed a $7 million private placement equity financing,
consisting of 56 million flow-through common shares at a price of $0.125 per share. Closing
is expected to occur on or around April 17, 2007. The completion of this financing will
trigger the availability of a further $4 million in convertible debt financing.25.
    
    Comparative figuresCertain comparative figures have been reclassified to conform to the current yearss
presentation.
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SIGNATURES
  CAMPBELL RESOURCES INC.Dated: March 30, 2007
    
    By: (s) André Y. Fortier

André Y. Fortier,President and Chief Executive Officer
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Item 19. Exhibits
 EXHIBIT INDEX
 Exhibit Number
    
    Exhibit Description1.1
    
    Restated Articles of Incorporation dated August 9, 1999 (E) (Exhibit 4(a)).1.2
    
    Articles of Amendment dated May 19, 2000 consolidating the common shares on
the basis of one post consolidation common share for every ten
pre-consolidation common share. (F) (Exhibit 3.1)1.3
    
    Articles of Arrangement effective June 30, 2001 relating to the merger with
GéoNova Explorations Inc. (I) (Exhibit 3.3)1.4
    
    By-Law No. 1 as amended and as in effect on the date hereof (A) (Exhibit 3.12)1.5
    
    Amendment of By-Law No. 1 (A) (Exhibit 3.11)1.6
    
    Restated Certificate of Incorporation dated January 7, 2005 (L) (Exhibit 1.6)2.1
    
    Trust Indenture made as of July 21, 1994 between the Company and Montreal
Trust Company of Canada regarding the 71/2% Convertible Subordinated Debentures
(B) (Exhibit 4.1)4.1
    
    The Companys Employee Incentive Plan as amended (E) (Exhibit 99)4.2
    
    Employment Agreement dated August 6, 2002 between the Company and André Y.
Fortier (J) (Exhibit 10.2)4.3
    
    Employment Agreement dated August 6, 2002 between the Company and Claude
Bégin (J) (Exhibit 10.3)4.4
    
    Employment Agreement dated August 6, 2002 between the Company and Alain Blais
(J) (Exhibit 10.4)4.5
    
    Employment Agreement dated August 6, 2002 between the Company and Lucie Brun
(J) (Exhibit 10.5)4.6
    
    Directors Stock Option Plan (I) (Exhibit 10.8)4.7
    
    Royalty Agreement with Repadre Capital Corporation made as of April 23, 1993.
I (Exhibit 10.14) and amendment dated June 30, 2001 (I) (Exhibit 10.4)4.8
    
    Merger Agreement dated May 7, 2001 between the Company, MSV Resources Inc.
and GéoNova Explorations Inc. pursuant to which MSV and GéoNova became
wholly-owned subsidiaries of the with Plan of Arrangement under the Canada
Business Corporations Actand Arrangement By-Law attached. (H) (Exhibit 2)4.10
    
    Sale and Purchase Agreement dated November 10, 2004 between GéoNova and
Metanor (L) (Exhibit 4.10)4.11
    
    Nuinsco Letter Agreement dated April 18, 2006 between Campbell and Nuinsco
(EXHIBIT 4.11)4.12
    
    Operating and Consulting Agreement dated May 1, 2006 between Campbell and
Nuinsco (EXHIBIT 4.12)4.13
    
    Purchase and Sale Agreement dated February 26, 2007 between MSV, Campbell,
Eastmain and Eastmain Mines Inc. (EXHIBIT 4.13)
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Exhibit Number
    
    Exhibit Description6.1
    
    Statement detailing computation of per share earnings8.1
    
    Significant subsidiaries11.1
    
    Standards of Ethical Conduct (K)12.1
    
    Certification of André Y. Fortier pursuant to Section 302 of the
Sarbanes-Oxley Act of 200212.2
    
    Certification of Réal Savoie pursuant to Section 302 of the Sarbanes-Oxley
Act of 200213.1
    
    Certification of André Y. Fortier pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2
    
    Certification of Réal Savoie pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1
    
    Consent of Deloitte & Touche LLP15.2
    
    Consent of Systemes Geostat International Inc.15.3
    
    Audit Committee Charter (L)15.4
    
    Governance Policy (M) (EXHIBIT 15.4)
 
 (A)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
10-K for the year ended December 31, 1987 and incorporated herein by reference.(B)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by reference.(C)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
10-K for the year ended December 31, 1993 and incorporated herein by reference.(D)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
10-K for the year ended December 31, 1999 dated March 27, 2000 and incorporated herein by
reference.(E)
    
    refers to documents previously filed as an exhibit to Campbells registration statement
on Form S-8 (Registration No. 333-93063) and incorporated herein by reference.(F)
    
    refers to documents previously filed as an exhibit to Campbells Current Report on Form
8-K dated May 19, 2000 and incorporated herein by reference.(G)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
10-K for the year ended December 31, 2000 dated April 12, 2001 and incorporated herein by
reference.(H)
    
    refers to documents previously filed as an exhibit to Campbells Current Report on Form
8-K dated July 13, 2001 and incorporated herein by reference.(I)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
20-F for the year ended December 31, 2001 dated May 14, 2002 and incorporated herein by
reference.
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(J)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
20-F for the year ended December 31, 2002 dated May 15, 2003 and incorporated herein by
reference.(K)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
20-F for the year ended December 31, 2003 dated May 19, 2004 and incorporated herein by
reference.(L)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
20-F for the year ended December 31, 2004 dated March 30, 2005 and incorporated herein by
reference.(M)
    
    refers to documents previously filed as an exhibit to Campbells Annual Report on Form
20-F for the year ended December 31, 2005 dated March 31, 2006 and incorporated herein by
reference.Exhibits in parentheses are references to the Exhibit No. of the filing indicated.
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