Wednesday, May 14, 2008

Century vs Sulliden

As I write this CMM's share price is 17 cents and SUE's share price is 76 cents. 6 months ago Century was offering 0.72 shares of CMM for every SUE share.

Sulliden now has a market cap of over $60 million. They have a disputed interest in a low-grade deposit of 2 million resource ounces in Peru with no infrastructure. Clear and free title via the courts is anything but assured and that process is expected to take several years. That is all they have.

Century now has a market cap of $28 million - less than one-half of Sulliden's. They also have a disputed interest in the same property in Peru. If the odds of getting that property were 50-50, then they should have a similar market cap as SUE.

But Century also has 5 million oz of 43-101 compliant resources and 3 operating gold mines - the largest in mining-friendly Quebec and the other two are in Peru that are producing gold at 21,000 opy at a cash cost of $350/oz. - $400/oz. The total value of the mining infrastructure in Canada and Peru is in excess of $100 million. They also have substantial exploration potential at these and other properties.

What does these comparative valuations say about the lack of confidence in current management?

23 comments:

nino said...

I think that if the BOD do act soon than the shareholders should consider legal action.

Anonymous said...

My guess would be that if it were put to a vote PK would we voted out. But unless Wega and/or Scion initiate an action to replace the CEO, I don't see it happening anytime soon. Anyone have any thoughts on whether something like this is in the works ?

The Ref said...

Carib,
Based on the our current share price, one can see that our trading public are thinking the same way.

Based on the history of our company and the powers that drive it, I don't see anything changing either. Until the "My way or the highway" mentality goes away, we are up a creek with out a paddle.

When I watched the way our team worked at the AGM two years ago, it was quite obvious that there was only one desision maker on that board, and nothing has changed in two years. So if the board won't do anything and there is no conserted effort to mass a large block of votes for a vote of no confidance, the question is raised "What can we do then"???

I made the big mistake a few years ago by not selling any CMM when it was a buck 70. I just waited for it to come down to sub .20 cents so that I could buy more.. Was that another mistake??

If there is a light at the end of tunnel as someone has suggested, I would feel better, but as of now it does not seem that way...

Great job by the way on the blog..

Mike

nino said...

Natik seems to think that she is on the way out.

Previous post should of read "if the BOD do NOT act soon"

Natik how reliable is that info?

production05 said...

Hey guys, good (healthy) discussion here. This is one of the reasons why Carib created the blog. Feel free to contribute more often - it makes for a better blog.

I am of the belief that something is right now in the works to fill the CEO position with a new person. IT HAS TO BE. The BOD and PK have to already know that they are toast if a CEO change is not made. Why not do it on friendly terms in advance?

If this change is not done in the next couple/few weeks then my guess is that it is pretty much guaranteed that action will be taken to replace the entire existing Century board of directors, and have the new board immediately replace the CEO. It's a no brainer, especially with a $.17 share price versus the assets we have. There are a lot of large retail shareholders that would be more than willing to call up Wega, Scion and other large shareholders to co-ordinate all of this. Mind you, it will not take much convincing - the large shareholders might already have their own plans that are ready for execution.

As I mentioned, there is going to be a new CEO, and potentially a new BOD in place, but it's just a matter who initiates it. It is much better for everyone if it's friendly and if PK and the current BOD initiates it.

As I also mentioned, I don't think any drastic steps will be necessary, as I strongly believe something is in the works right now (to put a new CEO in place).

production05 said...

I also believe that this could be why Wega stopped selling. They might have been given details of plans to bring in a new CEO (on the day they stopped selling, around April 16/17). I have a feeling this was what Wega might have been trying to do all along - to force top level management change, due to the terrible share price performance. As such, if there turns out to be no change then my bet is that Wega will go nuts again. PK and the BOD knows that Wega has the shares to drive the share price down to $.01, in order to ensure the change in made. They know they can't get out of this.

Of course, there is no certainty that any of this is true, but this is what I believe to be the case.

Anonymous said...

Next week should prove interesting as the MCTO will have been lifted by Friday(hopefully). Hope Wega doesn't plan another sell-off and I hope an NR with positive news will be able to lift the stocks. Lots of hope.

With the mining situation in some Latin American countries being as tenuous as they are, Canada, and especially mining-friendly Quebec is such a comforting place to be in with the value we have at Lamaque alone. That will not go away.

Better must come. We've held on this far and must be among THE most patient shareholders on the planet. Tough to watch others making money while your account shows thousands in the red with little near-term hope of changing.

Having said that, the winds of change are upon us. Hang in there guys.

Thanks for setting up this blog. A breath of fresh air where we can exhale and blow off steam without being subjected to irresponsible raves, rants and personal abuse.

Anonymous said...

Nino, how can she ignore the 'cries of her outraged shareholders?' By any objective standard of measure that is applied to assess CEO performance, she has disappointed. I thought she'd step down gracefully before the AGM, neat and tidy like, and the Board would quickly appoint a CEO who is well known and respected. It looks like we're going to have to take matters into our hands and force a change.

Can we begin a list of CEO candidates - preferably in North America - with turnaround experience in junior gold producers. There must be a few looking for the challenges. The M& A must have shaken a few loose.


Natik

Downtown Dantan said...

someone knows something. Look at Sulliden's share price.... $0.80 with only 1 property Shahuindo that is disputed. ours is $0.17 with assets with NPV>$200M. SUE's O/S shares are going to balloon with the rights offering.

Now does that make sense given what we know? probably not. However, what we do not know is what's going on behind the scenes. Someone knows something otherwise SUE share price will be at $0.30.

The other shoe to drop could be a settlement between CMM and SUE where we get pennies to give up Shahuindo, or the court rules against us or something unfavourable to us. What else could explain the delta in market cap? (almost 2X)

Anonymous said...

Sulliden makes a hostile takeover bid for Century and fires Peggy when it succeeds?

production05 said...

Hi Natik,

Here is a key dilemma shareholders, PK, BOD, Wega and Century might face in attempting to make an immediate CEO change, even if it's a friendly change. It often takes a while to find the right candidate for the job, especially at the CEO level. If PK was to step down immediately (which is what the market seems to want, IMO) there doesn't appear to be anyone in-house right now that can fill in temporarily (IMO) until the BOD conducts a proper search for the ideal CEO for Century (I'm not considering RB due to his close ties to PK - market would probably not like that). At the same time, the company is going through major transition right now - there needs to be a CEO at the helm. As such, if they need a lot more time to conduct the search then we may not have a choice but to keep PK in the CEO role for a while longer, even if PK is willing to step down in a friendly way, and even if the market appears to be screaming for her to step down. It may leave us too volnerable to not have a CEO at the helm for a period of time.

The other challenge we have is Wega. Is Wega willing to give the BOD more time to continue to conduct the search.

However, after taking the time to explain that major dilemma, I can also say that my position has not changed at all. As mentioned before, IMO, CENTURY NEEDS TO TELL THE MARKET THAT THEY ARE IN THE PROCESS OF SEARCHING FOR SOMEONE NEW TO OCCUPY THE CEO POSITION. It's clear to me that the market needs to see this in print, coming from the company, regardless of what stage they are at in the hiring process (if they are indeed searching). There are absolutely no excuses for not communicating with the shareholder base and the market on such a key issue, especially with the stock chart looking the way it has for the past 2 years, and even more so with an $.18 share price.

Natik, you are correct, if the share price remain at these levels over the next little while, and if the company still refuses to tell the market what they intend to do about the CEO position, then retail shareholders will have to take it upon themselves to contact Wega, Scion and other large shareholders, and together replace the BOD (which will be viewed as inadequate at that stage, IMO).

Here is the bottom line: IT IS COMPLETELY UNACCEPTABLE FOR THIS COMPANY TO HAVE A SHARE PRICE AT THESE LEVELS.

Century's BOD need to clearly understand this.

Production05

Carib said...

Production05, I couldn't agree more with your comments. Just the announcement that PK would be stepping down as CEO as soon as a replacement could be hired would do wonders for the share price.

I'd advertise that an Executive Recruitment Agency has been hired to find the best available candidate for CEO and that the new CEO would be offered 1 million options as part of his compensation package. That should attract some very competent and well-known executives with the challenge of turning around the fortunes of the company and in the process earn himself millions of dollars on his options.

A high-profile hire would give us another boost in share price, but the big news would be that PK is out.

nino said...

Natik, here is one for your list (I doubt he would take it), Todd Bruce.

Prod.5 "then retail shareholders will have to take it upon themselves to contact Wega, Scion"

Consider it done.

Anonymous said...

Excellent comments, analyses.
The momment of truth (AGM?!) is creeping closer & closer.
By the way, who is planning to attend? (I plan to be there).
Bigjohn 37

Anonymous said...

Bargain Hunter,

Perhaps yes, i have had the same feeling since Sullidens SP began to rise, it may have some correlation with CMM and it is probably no good for us. Hopefully as you say it is "only", that we must give the Shauindo property up. I am concerned the 2 managments has cooked up something behind our backs though, i don't know at all how these things works but maybe Suliden has offered PK and her board members something extra, and that we will loose everything. This money claim from SUE also, they seem to have more on their hands then us, it's very strange that an option of a great property feels more like a burden then a positive feeling i must say.

production05 said...

Hello Bigjohn37,

I thought I would drop you a quick note to ensure you have the updated date and location of the AGM. There are 2 notices posted on SEDAR - original (March 31st) and most recent (May 1st). It looks like the AGM is now planned for June 27'08, and to held in Vancouver (instead of Toronto).

Take care,
Production05

Anonymous said...

Thanks for your note about the AGM, Production.
With the state of my current portfolio valuation (mainly because of CMM) I won't be able to fly to Vancouver from Toronto.
I do hope some of you will be there to represent us 'little guys'.
But I definitely will exercize my voting rights via proxy, to try to bring about the change we all (most of us, anyway) want.
All the best,
Bigjohn 37

Anonymous said...

Nino,
I like your pro-active attitude (i.e. contacting Scion & Wega; and your first comment about considering legal action by shareholders). I am not a lawyer, but I wonder what could form the basis of a prospective lawsuit by shareholders? The BOD neglecting their fiduciary duty? Did management brake any laws, or were they just "negligent"?
Personally, I never liked a situation in corporate governance when both the CEO & the BOD Chair positions were held by the same individual.
Nino, let us know what feedback you'll get from the two institutions (if any).
Thanks & good luck!
Bigjohn37

Anonymous said...

The Board of Directors has definitely turned a blind eye to the huge hole (grave?) that PK has dug for us. The financial statements were promised today. Another broken promise.

Everyone - send your email complaints to:

mkent@centurymining.com

She won't reply but she does read them.

William (Bill) Sheridan, Corp Secretary is:

wsheridan@langmichener.ca

Request that he circulate your correspondence to each Director.

Anonymous said...

$70M loan.... if Lamaque can support itself after the first $10M, then where is the other $60 slated to go?

$14M to Rosario
$31M to Shahuindo
$22M to Attimsa
$3M to SJ....

numbers add up.

With the delay in 2007 financials, we are likely going to see more pressure on the SP. people are afraid of the aftermath.... possible Scion and Wega may continue their barrage of selling if the news is bad once the MCTO is lifted.... however, any surprises on the upside, lets this pressure cooker take off.... I am hoping for the latter.

relic said...

I have seen a few references now to selling pressure by Wega once the MCTO is lifted but it is my understanding that WEGA is free to trade shares now and has been allowed to since April 7th

http://www.bcsc.bc.ca/comdoc.nsf/comdoc.nsf/webpolicies/7BC7D98FCAFEA2BB88257424007F25CC?OpenDocument

2008 BCSECCOM 188

Amended Cease Trade Order


WEGA Mining ASA

(the Insider)

And

Century Mining Corporation


Sections 164 and 171 of the Securities Act, R.S.B.C. 1996, c. 418



¶ 1 On March 20, 2008, the Executive Director ordered under section 164(1) of the Act, that all trading by certain Insiders in the securities of Century Mining Corporation cease until Century files the required records and the Executive Director revokes the cease trade order.

¶ 2 This order amends that cease trade order.

¶ 3 The Executive Director considers that to vary the cease trade order to remove WEGA Mining ASA from the cease trade order would not be prejudicial to the public interest.

¶ 4 Under section 171 of the Act, the Executive Director orders that the cease trade order be varied to remove WEGA Mining ASA from the cease trade order.

¶ 5 Century is still in default for not filing the required records.

¶ 6 The cease trade order dated March 20, 2008 as it applies to the Insiders other than WEGA Mining ASA remains in place.

¶ 7 April 7, 2008



Michael L. Moretto, CA, CPA (Illinois)

Manager
Corporate Finance

nino said...

Bigjohn 37, when I posted:

Prod.5 "then retail shareholders will have to take it upon themselves to contact Wega, Scion"

Consider it done.


I have contacted Scion many many moons ago and last time I contacted Wega was last week. The common response is that they can not comment. But I still email them to let them know how other shareholders feel.

Is it me or does it feel like some errors are done on purpose?

If the BOD feel that PK should stay maybe they can step up to the plate, lots available for them.

Email Sheridan? Consider it done.

Anonymous said...

Anonymous

$70M loan= maybe some other may explain this better, but i have understood it like we have a maximum credit allowance for $70M.
$14M to Rosario=Yes
$31M to Shahuindo= just an option
$22M to Attimsa= just an option
$3M to SJ....= But here we must spend to expand production, right? or sell

Also "Anonymous" there is still long term debt of about $15M i think applied to Lamaque, and lease of infrastructure perhaps and maybe something more?