Friday, May 30, 2008

CMM Terminates Rosario de Belen And Algamarca Purchases

I will post the NR in the comment area.

http://www.newswire.ca/en/releases/archive/May2008/30/c6749.html

23 comments:

production05 said...

Century Mining Terminates Rosario de Belen And Algamarca Purchases

- Company cites focus on Lamaque and San Juan Gold Mines -

BLAINE, WA, May 30 /CNW/ - Century Mining Corporation (CMM: TSX-V) today announced that by mutual agreement between the vendors and purchasers the parties have agreed to terminate Century's purchase of the Rosario de Belen property in Peru. Pursuant to the terms of the purchase agreement previously announced on May 7, 2007, the shares, concessions and all other assets of Rosario de Belen will revert back to the previous owners in substantially the same operating and financial condition in which they were acquired.

Century has recorded a write-off of its investment in Rosario de Belen in the Company's 2007 year-end financial statements, and anticipates recognizing no further liabilities related to this transaction.

Explaining the decision to terminate the purchase, Century cited its comprehensive focus of all management and financial resources on the Lamaque Underground Mine in Quebec and the San Juan Gold Mine in Peru.

Century also announced today that it has terminated its purchase and
interest in all of the shares of Compania Minera Algamarca S.A. and four other companies, which own the 26 concessions, surface rights, mortgages and all litigation rights of the precious metal property known as "Shahuindo" in Cajamarca in northern Peru. This purchase was originally announced on May 16, 2007. Century will direct the responsible notary to release all of the shares of Algamarca it had purchased back to the vendors upon completion of necessary documentation. As with the Rosario de Belen transaction, Century has written off the deposits paid toward the purchase of Algamarca and the expenses related to the takeover bid for Sulliden Exploration Inc. in the Company's
2007 year-end financial statements, and currently recognizes no further liabilities related to these transactions. The Company also terminated the option for the purchase of the Atimmsa property, for which no payments had
been made.

Today's announcement effectively ends the Company's business association with all the various sellers in both the Rosario de Belen and Algamarca transactions. Final documentation of the termination is currently being drafted and will be completed in the next few weeks.

Margaret Kent, President & CEO commented, "Both of these purchases were carried out in good faith by Century, and were consistent with the Company's fundamental growth strategy in Peru. Regarding Rosario de Belen, the current production, physical condition of the operation and resources did not justify the purchase price at a time when Century's management and financial resources must be focused on the Lamaque Mine. The prolonged dispute with regard to the title of the Shahuindo property is disappointing. Century purchased the shares of Algamarca as a means of ending several years of litigation and building a producing mine at Shahuindo. Over the past year Century has tried repeatedly to resolve the dispute, ending in a withdrawal of Century's takeover bid for Sulliden. As a result, Century will commit no further time, money or other management resources on this venture. Management sincerely regrets that an agreement between the parties could not be reached because from our experience in Peru it was the only way to bring an immediate end to the title dispute. Century remains focused on expanding gold production at both the Lamaque and San Juan properties."

About Century Mining Corporation

Century Mining Corporation is an emerging mid-tier gold producer that is aggressively acquiring producing mines and exploration properties in Peru. The Company owns and produces gold at the Lamaque mine in Québec that historically has produced over 9.4 million ounces of gold. In Peru, Century wholly-owned subsidiaries own an 82.6% interest in the San Juan Mine where the Company accounts for 100% of gold production. Century's growth strategy is to acquire gold producing assets in South America that will substantially reduce the
Company's consolidated total cash cost of production and where there is exceptional exploration potential to expand production at these mines.

"Margaret M. Kent"

Chairman, President & CEO

roxy14 said...

Now all they have to do is terminate PK. Her mistakes have
cost us all dearly.

production05 said...

The positive impacts of this move are too many to mention (I would be here all night listing them). Nevertheless, I will mention only one - the most critical one at this moment in time. I had recently commented that company executives like their acquisitions to be nice and clean. Well, they are not the only ones - lenders are probably even more pointed about this being essential. As a result, I am of strong belief that this move has propelled us a HUGH step closer to finalizing both a bridge loan and the LT Debt (albeit, the LT Debt still needs another 4 months before closure could occur).

Downtown Dantan said...

I agree, there is no way any one would lend CMM any more money if there was overhanging million dollar installment payments of disputed property... it's like lending a gambler money to gamble. This is a slight positive.

This is not entirely unexpected because Sue's price has already factored this in.

Like I said, whenever news releases come out at night after market closes, it's usually bad.

The bright side out of this is the market has already factored all this in.

Carib said...

Production, based on today's realities, I agree that this is a positive move, but the sad reality is that we wouldn't need bridge financing if PK hadn't embarked on this misadventure. The cash payments alone that will be written off are $10 million and who knows how much was spent on the Sulliden takeover attempt.

However, I agree this action was probably a condition of securing both short term and long term financing and that is all that counts now. We were never going to be able to make the $13.5 million payment for Rosario, but it's sad that we couldn't pay $1 million per quarter to hold onto Shahuindo.

This would seem to confirm that the Rosario purchase was part of the Shahuindo acquisition and wasn't really worth $20.5 million on its own. Otherwise if it were worth $20.5 million at a gold price of $688, it should have been worth more than that at today's gold price of $886. Instead we drop $7 million on that acquisition alone.

roxy14 said it best.

Anonymous said...

Production,

The lenders enquired about Peru.

Today's announcement is six months overdue. She finally listened to some intelligent shareholders although she won't admit it.

Roxy, I have granted you one wish. I will get to work on it.

roxy14 said...

Natik

God speed......

Downtown Dantan said...

SUE shareholders including December are probably celebrating right now. However, the battle for Shahuindo is not over. CMM is out but Algamarca is still in the game, and I don't think that they are going to give up.

With this out of the way, hopefully next week we see short term financing announced along with the financial results. We should also see a nice pop upwards on Monday as bargain hunters like me swoop in to pick up a potential winner. Investors hate uncertainty - with 2 big money drains out of the way, we can focus on our core assets - $250M and $40M NPV assets.... wait, that's $300M.... and what's our current market cap?

Monday will be a good day. Good luck all.

Anonymous said...

Let the celebrants celebrate. We will be celebrating too. SUE is still doing what it does best: stay embroiled in interminable lawsuits. Let Algamarca deal with them.

Looks like a new day since we can't do worse than we've done in the past six months or so. Once PK's gone and our SP's up, we will see some competing for a TO. In time, this will be a no-brainer with the assets we have.


Cheers!

nino said...

I hope the other part of this will be that the Sulledin lawsuit is dropped. I was expecting some kind of good news (PK gone) but I guess I forgot its Century Mining I’m invested in (if you can call it that).

Will we ever have a good day?

Anonymous said...

Perfect!! Extremely good news i think, this was exactly what we needed

Anonymous said...

Carib,

"but it's sad that we couldn't pay $1 million per quarter to hold onto Shahuindo."

I agree but if CMM should hold it they must have a nice plan to do something good about it, maybe they have been forced into a corner and can't see any possibility to come out from there. Also, this might be about the lawsuit also, it might be better to not irritate Sulliden any more, maybe they will even drop the lawsuit now..

production05 said...

I think the core benefits of securing some additional short-term funds are obvious (i.e. provide working capital until Lamaque becomes cash flow positive, provide development cash to ramp up tpd production at Lamaque.....). However, I think a short-term bridge loan can have some amazing side benefits also. One of those side benefits relate to resource upgrades at Lamaque. There are 2.8M ounces sitting in the the Inferred category and an additional 624K ounces in M&I, which are all incremental to the 1.1M already classified as 43-101 reserves. We know that the company is focused on moving some of those Inferred ounces into M&I in 2008. Let's say they were successful with 500K ounces. That would mean over 1.1M in M&I resource to end 2008. The company can then spend 2009 converting those ounces into reserves.

Here is what is so interesting about this particular situation. The company has already established 1.1M in reserves, with an 8 yr mine life, and expected cumulative pre-tax operating profit of $456M. A little bit of cash from the potential bridge loan (to support the resource upgrade program in the short-term), and successful upgrade of the M&I ounces to reserves in 2009, could realistically double expectations for Lamaque within the next 1.5 yrs. It could double reserves to 2.2M ounces, mine life to 16 yrs, and cumulative pre-tax operating profit to over $900M.

This appears to be an extremely low hanging fruit that has the potential of materially improving the 43-101 economics of Lamaque (even though Lamaque is already looking very good).

I do hope they come up with short-term funding over the next couple of weeks, as I can see it being a great enabler.

Anonymous said...

I hope so to, just some interest rate as the only negative part of it, but we don't need any dilution in that way+that we feel much more secure. Also i hope they will not dilute much to get SJ going, it's better to wait a while and later ramp it up with money from the Lamaque production, and in the meanwhile do some more exploration at the site.

They also have the trucks left and why don't they sell them when Rosario and is out of the book? It might be the case that they need them for mining the west plug( i sure don't know..)? Now when Rosario and Shauindo is out of the way i think and hope that the managment manage to hold the O/S below 200 milion. We have about 169right now, and it's only a million or a few million below .50, and some milions at .75. So it seems like we might say we have 175M fully diluted or so in a practical sense(more in reality) and also some money to bring into the bank account this way. If we need to do more PP's it should prefferaly be about something that can contribute in value to the companies assets.

Also i don't know if i suspect that Rosario was a bad property after all, because the sellers obviously wanted it back(if they didn't screwed up the deal by themselves that is). But right now it was a bad property, it's much better with only Lamaque and SJ. My dream for the company is(besides Lamaque expansion), is that this copper/ gold anomaly at SJ turns out big and my second dream is that they will be able to secure several years of extra production into reserves at the main SJ site.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

The S-P gang dragged out the deferred payments negotiations for 4 months. They wanted the whole shebang from CMM, rightfully calculating that PK is a bulldog. No one likes to admit their mistakes, least of all PK. The CMM board under pressure from shareholders must of told PK that enough is enough, focus on our core asset.

The Fortis long term debt was also a factor. Ricardo Campoy is a financing expert which probably explains why they dumped Rosario and Shahuindo. Allan Ambrose is a smart guy too. They know that the Fortis financing is our last great hope to save the company.

After the year-ends and first quarters financials are released, the only news that will move the share price will be announcements about financing - bridge, non-convertible debt, % hedging - and resignations (granting Roxy's wish). The SP won't come near 50 cents before the AGM without some major news.

I'm beginning to see some light at the end of the tunnel. Hope it's not a freight train.

Who is attending the AGM on June 27 in Vancouver, British Columbia?

nino said...

Natik,
"rightfully calculating that PK is a bulldog"

bulldog? The bulldog belongs in the dog pound,it as turned on its owner.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

You are absolutely right, hockeylad33 (i.e. it was a foolhardy executive decision to go after Belen & Algamarca in a foreign jurisdiction). Especially, since according to independent mining analysts, Quebec is the most industry friendly jurisdiction in the world! Why not search for good prospects in our own backyard? Now CMM (our company!) has to swallow a $15M price tag, when we desperately need operating cash. Not exactly PK's finest hour on the loooong road to learning her lessons.

Well, that's all water under the bridge now (hopefully!?).
Let's see how the market will react to these changes tomorrow. If no movement, then the market smells receivership.

By the way, who is attending the AGM?
GLTA. bigjohn37

Anonymous said...
This comment has been removed by a blog administrator.
production05 said...

Personally, (next to securing short-term financing) the Shahuindo/Algamarca/Sulliden/Rosario situation was my biggest concern. I was uncomfortable with the lack of direction, and the news blackout for such a prolonged period of time (although we knew they were in negotiations to defer the payments into 2009). I was also concerned that it might be a challenge to negotiate our way out of the Rosario deal (if we had to) without having to put the property up for sale (to settle the remaining payments), which would have further prolonged everything. So, personally (for me), I was thrilled to see this news, and the clean and decisive break away from this entire (nightmare) situation. I was especially very happy to see this: "mutual agreement between the vendors and purchasers". It signified to me that lawsuits are unlikely to come out of this development (which was another concern of mine).

Going forward, they need to release the Y/E and Q1 financials within the next few days (this will also allow for the MCTO to be eliminated). This will finally bring closure to the whole BCSC mess, but also satisfy the TSE Venture with regards to filing requirements. It almost seems as if these Rosario and Algamarca termination decisions were finalized within the last few days (due to lack of progress with negotiations to defer payments), therefore they probably kept the financials open in order to incorporate these developments (instead of having to go back and re-issue statements). This is most likely the reason for further delays in issuance of the statements. If so, then hopefully the adjustments will be administrative and straight forward, with no delays in sign-off for Y/E statements - obviously, the auditors have been very involved throughout the process (which bodes well for a quick sign-off).

The other 2 major concerns that need to be addressed soon are short-term financing and CEO direction/replacement. In addition, (although it's not a pressing concern at this moment in time) I would like for them to provide an update on tpd and staffing progress at Lamaque - hopefully they are progressing relatively close to targets.

To summarize, my 4 (big) immediate concerns have been as follows:

1) BCSC/CTO
2) Shahuindo/Algamarca/Sulliden/Rosario
3) Short-term financing
4) CEO direction

With the release of the financial statements (let's hope soon), 50% of my immediate concerns will be fully eliminated. I also have a good feeling that the other 50% is being addressed. Let's hope that the days of an $.18 share price will soon be behind us.

Anonymous said...

Sir (I assume) Carambe, I have too much invested in CMM to be a basher (I assume you are referring to my post above under my blogger name: bigjohn37). I never posted under any other alias; and I assure you that I am not December, etc. Besides, bashing is against my personal ethics, and I am a registered member of this blog (just ask Carib). If my post offended you, I apologize!

When I said that if there is no positive market reaction to getting two of the Peruvian (mis)adventures behind us, then I am affraid that the market might be smelling something bad (like receivership?). You should know that the market does not like uncertainty, and there has been plenty of that around CMM during the past year (otherwise the share price would be $2.00+, with the assets the company has). So tell me, what is your explanation of the $0.18 share price? I sure would like to know.
Finally, most lenders are averse to lending to corporate borrowers who can not be trusted. Unfortunately, PK falls into this category (and she just happens to be the Chairman & CEO of CMM). If you were a lender, would you lend her money?
In any event, good luck to you Mr Carambe! I hope you forgive my "bashing".
BJ37 (not an alias!)

Carib said...

bigjohn37, you needn't worry about my deleting your posts, as there is no doubt about your sincerity or motives.

OTOH, my patience with Carambe, aka December3, is wearing very thin. I will not allow him to be a disruptive force on this blog.