Friday, July 4, 2008

Accountability

Understanable, the production charts were removed the website presentation.

Here is a presentation note on San Juan:

"The San Juan Gold Mine in Peru is currently in production and expected to be producing at an annualized rate of 25,000 oz. Au/year by the end of 2008."

Flowing out of the AGM, tpd for both April and May, was poor, and was lower than Q1 results, due to focusing on the stopes during those months. However, the forecast for Jun to Dec sounded promising. They used 350 tpd, but how can one believe them right? They have lost all credibility. Nevertheless, let's go with it in order to keep moving here. Using 350 tpd, 5.5 g/t and 85% recovery rate, the results show as 4,735 quarterly ounces and 18,940 annualized ounces. If they manage to achieve that level in a future quarter (Q3, Q4 or otherwise), using $720 (hedged) gold price, $350 cash cost per oz and 4,735 quarterly produced ounces, San Juan would give them $1,750,000 in operating profits to work with each quarter.

Now, the presentation note states that they are expecting to have an annualized run rate of 25,000 by the end of 2008. As mentioned, they have no credibility that would support this, but like also said, let's keep moving. It would take a tpd of 462 (with 5.5 g/t and 85% recovery rate) to produce 25,000 annualized ounces (6,250 quarterly). However, if it occurs it will generate $3,690,000 in quarterly operating profits (using a spot gold prrice of $940 and cash cost per oz of $350).

Here is there presentation note on Lamaque:

"The Company’s Lamaque Mine in Quebec is scheduled to recommence mining operations in November 2008, upon completion of development work and bank financing due diligence activities."

They are looking at re-start in Nov'08, about 5 months from now. I imagine it's going to take a couple of months to crank things up again. In anticipation of the Fortis draw down being approved in November, they need to begin making phone calls in October to organize their workers.

THEY CAN'T FLIPPING MESS THIS UP!!! Even if the HR person, Margaret Kent and each BOD member has to call every single employee every single month for the next 5 months just to tell them that Century Mining is thinking about them, then that's what they have to do. As far as I can see, the leaders of this company do not show even basic respect and dignity to their shareholders, I can only imagine how they treat their employees. THAT MUST CHANGE IF THEY INTEND TO BE SUCCESSFUL IN BRINGING BACK OUR EMPLOYEES.

Also, planning will be essential for the re-start of Lamaque, otherwise the start up will fail again, like every single other start up operation in the entire history of Century Mining. Move McNutt aside, or whomever have been responsible for the other failures. They need to do their homework, put together a solid plan, and then execute.

THE CULTURE NEEDS TO BE CHANGED!!! Failure can no longer be the norm. Accountability has to be firmly embedded within the culture, and it starts at the top. It starts with the BOD. In the past, (IMO) the BOD members have been as much to blame as the CEO, due to not holding the CEO accountable and also failure to take decisive actions. The culture must change immediately if this company is to succeed.

Unfortunately, (IMO) Century's shareholder base is fractured, fragmented and fragile (suicidal in one case, IMO). The company does not have any strong institutional sharesholders that have demonstrated abilities to bring the shareholder base together, in order to guide the company in a direction that is beneficial to all shareholders. Rather, Century's largest shareholder has demonstrated only self serving interests, which have all been severely detrimental to the rest of the shareholder base. If Century had more ideal (significant) institutional investors then Century Mining would not be a $.06 stock today (in a $940 gold price environment) - Century's Board of Directors would be held fully (and decisively) accountable.

Whether it's at the very top or the very bottom, everything starts and ends with accountability.

3 comments:

bigjohn37 said...

Production05, your analysis of CMM's current situation is right on. Not only is accountability lacking with this management, but also credibility. Once you lose credibility, it's pretty tough to stay in business. Unfortunately, this is where we are at with PK at the helm. No-one believes her any more. Period. That is why I'm very pessimistic about the outcome of the current negotioations for financing.

It is not an accident that the the share price is 5.5 cents (soon, it won't even qualify as a 'penny stock'). As the old addage goes: "you can't fool all of the people all of the time"! And she still does not get it: that she is the problem.

Anonymous said...

Wega had an opportunity to make a statement at the AGM with their votes or by attending. They did neither.

CMM has 168 million o/s shares, 85 million were voted, PK received 60 million in support. The Blog voted 10 million to withhold support, Wega had 20-22 million, That adds up to 32 million. Only 25 million were voted to withhold. What can you do?

Has Scion washed their hands of Kent and Century?

btw, is 35% of the shares a ringing endorsement?

What would be the value of SJ - a producing mine capable of 40000 opy with a minimum investment - if it was carved out of CMM? It alone has to be worth more than 6 cents!

Carib said...

optimusprime, 40,000 oz/yr at a cash cost of $350/oz generates $23 million/year in cash flow at current gold prices. We were promised 80,000 opy by PK in 2008 back in 2006.

Any other company would receive a cash flow multiple of at least 5 for $23 million in cash flow per year which equates to a market cap of $115 million. Our current market cap is about $10 million.

SJ alone producing 40,000 opy should be worth a share price of 66 cents!