Wednesday, July 2, 2008

CMM Announces Temporary Curtailment of Lamaque Underground Production

- Company to continue development work, further resource upgrades and focus on achieving senior debt financing draw down -

BLAINE, WA, July 2 /CNW/ - Century Mining Corporation (CMM: TSX-V) today announced that it will temporarily curtail production at the Company's Lamaque Underground Mine, located in Val d'Or Quebec. The Company also announced that mining operations at the San Juan Gold Mine in Peru will continue as normal.

Investor Conference Call
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Management will host a conference call after the 2008 first quarter financial results are released to discuss the details of the financial results and the future strategies at its operations in Québec and Peru. The date and other details of the conference call will be included in the first quarter financial results announcement.

Overview
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Explaining today's decision, the Company cited economic and timing issues that favor a temporary curtailment of underground production. The Company stressed, however, that the operation will continue to remain open. Century expects to complete necessary preparations and close the financing in order to commence ramp up of the underground mining operations in November 2008.

Purpose of Curtailment
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The Company's Board of Directors, after carefully evaluating current operations and near-term financial commitments and capital requirements, determined that there are significant benefits to curtailing production for a period of up to 6 months. During this period, the Company will utilize funds procured through the recently announced financings to fully focus the key staff on mine development, mine planning, permitting activities and financing due diligence activities. Century recommenced development at the Lamaque underground mine in May of 2007 and in parallel has undertaken a substantial data compilation program that has resulted in a NI 43-101 compliant technical report including 1.13 million ounces of gold reserves, 624,000 ounces of measured and indicated resources and 2.83 million ounces in the inferred resource category. During the interim curtailment, Century will maintain its key staff at the Lamaque Complex.

Financing
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On June 5, 2008 the Company announced that it had secured a commitment for $6 million from MRI Trading AG. Century is also currently engaged in a due diligence process with Fortis Bank for a senior financing package of up to $70 million. Both of these financings are expected to proceed as planned during the interim period. Funds procured through the MRI facility will be used for the aforementioned due diligence activities, which will lead to the Company's ability to draw down on the Fortis facility.

Margaret Kent, President & CEO, commented: "The decision to implement a curtailment of production during this interim period for Lamaque was carefully considered by management and the Board of Directors based on all available financial and operational information. Underground mining at Lamaque carried out since May of last year has provided a thorough understanding of the mine and the associated operating costs. This information was needed to confirm previously reported feasibility numbers and provide the backup necessary for the current banking due diligence processes. The underground operation was operating at about 20% of optimum capacity, and the lack of necessary bridge financing to increase production has resulted in continued operating losses.

By temporarily curtailing production the Company will be able to allocate all funding and dedicate all management resources to mine development so that full-scale production may begin immediately upon draw down of the previously announced Fortis Bank debt financing. Management believes that this plan will ensure the long-term success of the Lamaque Underground Mine and minimize further dilution to the Company's shareholders. During the interim period Century will work closely with the Company's financial backers and all other stakeholders to ensure a smooth transition from development to the restart of full-scale mining operations. The project has a 10 year life based on mineable reserves and it is expected that the overall mine life will approach 20 plus years, based on the known resource profile. A six month curtailment of production is a positive step toward achieving our long-term goals."

15 comments:

Unknown said...

Well the BOD kept PK around for one reason... she could raise money...

Now that she has proven she can't do that anymore, it's time to oust her keister and put somebody credible in place as CEO.

JFF7

production05 said...

TSX-V accepts filing documentation for the $1M MRI Convertible Debenture

CENTURY MINING CORPORATION ("CMM")
BULLETIN TYPE: Private Placement-Brokered, Convertible Debenture/s
BULLETIN DATE: July 2, 2008
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing documentation with respect to a Brokered Private Placement announced June 3, 2008:

Convertible Debenture: $1,000,000

Conversion Price: Convertible into 5,555,555 units within 12 months of the date of issuance at a conversion price of $0.18 per unit. Each unit consists of 1 common share and 1/2 common share purchase warrant.

Maturity date: 12 months from the date of issuance

Warrants: Each whole warrant is exercisable into one common share at a price of $0.30 per share for a 12 month period.

Interest rate: N/A

Number of Placees: 1 placee

Finder's Fee: David R. Lean will receive a 6% finder's fee of 333,333 units

Pursuant to Corporate Finance Policy 4.1, Section 1.11(d), the Company must issue a news release announcing the closing of the private placement and setting out the expiry dates of the hold period(s). The Company must also issue a news release if the private placement does not close promptly.

TSX-X

Downtown Dantan said...

Now this explains why the stock is trading at 9 cents. Now all dates are pushed out 6 months..... the bad news never ends.

The only good news is, there might be a buying opportunity as short term flippers dump like mad tomorrow.

roxy14 said...

Guess PK's saving all her ounces
till gold reaches $2,000.LOL.
Boy they sure are consistant at
one thing........lying. Wonder
why they even bothered putting
out the June presentation.
Guess its time to file this one away for a year or take the tax loss. Wonder if the company will
still be around by then.

roxy14 said...

Oh yea, I forgot. Wonder what will
happen to all those new underground
miners they were supposedly training for all these months.
Guess they'll go the way of the
new trucks.

Natik said...

hey Roxy, The corporate culture promotes lying and bullchit, fear, silence and intimidation. PK is the leader so what else would you expect?

Change the leader, change the corporate culture. Change is needed, change is overdue.

She received a vote of confidence at the AGM. WEGA and Scion are the largest shareholders. They didn't use to their clout to oust her. Why not?

PK should be confined to her office indefinitely... without a telephone, computer, or a blackberry. She is a menace to the marketplace. BJ can keep her company in there until there is something to promote. lol

Downtown Dantan said...

I just found out that MRI had a hand in temporarily shutting down Lamaque. They don't want to see their $5M frittered away in a money losing operation. Better shut it down temporarily, and setup the mine to run properly versus half-S right now. Let's see whether MRI lives up to their side of the commitment and close the financing deal. 2-3 weeks was the time I was given.

Now the big hurdle and long term viability of this company lies in the Fortis deal. Either Fortis goes through or we are selling Lamaque in 4-6 months. or we sell San Juan for $20M to fund Lamaque which might not be enough to get it past breakeven. or sell both to a midtier producer.

The Ref said...

Question for the blog. Is todays news already factored into the price. As we all have wondered, why the price did not reflect the assets at one time or another. The large share holder bailing (no doubt having an inclinging (spelling????)on what was coming, but consistant buying at around 9 cents.

Mike

bigjohn37 said...

Attempting to read between the lines of the latest (today's) 'double speak' from CMM, it seems that there isn't enough money in the kitty, so let's try temporary curtailment (to conserve cash). And due diligence seems to be taking loonger & loooonger. What should we think that means? [Perhaps Fortis is getting cold feet?]. Oh, but there will be a Conference call...to answer all...(to be announced later).The PK drama/saga continues.

Carib said...

We have 5 million ounces of gold in the ground, worth $4.7 BILLION at today's gold price. That alone is worth more than $1/share.

We have almost all of the infrastructure in place to get it out except for an additional $10 million (including the MRI funding) and we have to shut it down because NOBODY will lend PK another $5 million!

How pathetic is that!

Obviously her track record speaks for itself. The saying is "once bitten, twice shy", except we've been bitten so often, there's not much flesh left.

I repeat, why is this woman the CEO, President and Chairman of our company. Who are the imbeciles that voted 60 million shares "FOR" her?

Natik said...

Fortis and MRI both influenced this decision. MRI's debt is closer than 2-3 weeks but it will be used to finance CMM's work to prepare Lamaque for the Fortis DD.
The Fortis DD delay resulted because they had to hire an independent technical person to review Lamaque. The report wouldn't be complete until September. Then Fortis must complete an independent legal review. Mine engineers remaining at Lamaque will use the downtime on underground development - identify ore bodies and prepare a mine plan.

Excellent question Carib - WHO the F voted 60 million shares to re-elect PK? One large institution and a whole bunch of retail, that's who!

Another question? Is PK taking a pay cut and refusing her bonus?

production05 said...

To add further onto Natik's comments.

One thing we should probably remember is that these aren't normal times for securing funds. It might seem to be a lengthy DD process (it certainly does to me, especially for only a $70M amount), but it probably reflects the times we are in (credit crunch).

Orezone is going after $250M for their Burkina Faso gold project. They originally made their announcement on January 7'08 and it is now July and there are no signs of closure in the immediate future. Of course, Orezone is asking for a lot more money than Century. I guess my point is that even companies with great projects (and many institutional shareholders, and affiliated with major gold producing companies) are going through a lengthy drawn out process during this credit crunch period - the DD process might have been much more simplified if we were doing this exercise slightly more than a year ago.

As a side topic, I think Century needs to release some go forward numbers for San Juan (in the near future). The profits from San Juan will play a key roll for the balance of 2008 (coupled with the $6M from MRI of course). Flowing out of the AGM is that the San Juan cash cost per ounce is currently at sub $350.

Carib said...

It seems to me that the company had two choices. Shut Lamaque down for 6 months and get the $5 million bridge financing or shut Lamaque down permamently if they couldn't get financing elsewhere.

Since they apparently couldn't obtain any other financing to supplement the MCI financing, there really was no choice because the bridge provided by MCI was too short to span the time frame to get the Fortis financing.

The golden rule is "He who has the gold makes the rules" and all of CMM's gold (cash) was squandered last year.

production05 said...

At first, I didn't think the "temporary production curtailment" choice was the best option, due to the market negativity it may further stimulate, but mainly due to the high risks of losing critical workers (in a very competitive mining area). However, at the end of the day it is probably the only choice, given the necessary funding is not available in a timely manner.

Here is why it's probably the best move. Lamaque is a mine that is all about economies of scale. In other words, the higher its tpd then the more efficient its operation (especially cash cost per oz). Unfortunately, not having access to the required funding meant they couldn't ramp up tpd. As a result, the Lamaque cash cost per ounce is probably still in the $1,000 - 1,500. It means that they are probably losing $300 - 800 on each ounce produced (based on the hedged gold price of $720). That doesn't make a lot of sense if they can't immediately get the required capital for current injection.

Immediately curtailing production will enable them to elminate a large portion of the $300 - 800 loss per ounce. In turn, it should result on less cash drain from San Juan's profits and on the $6M MRI funding.

Anonymous said...

This management team should have cans tied to their azzes, be tarred and feathered, and run out of Dodge.
They're an embarassment to all their loyal employees and shareholders. Some poor miners and their families just had their summers ruined by an egomaniac. Pathetic! The suits keep their jobs.

How does TAM score $40 million from MRI but CMM can only pull down $6 mill and not the $10 million they require? Why would CMM apply for $6 million if they need $10 million or more? What happened to the $7 million equipment lease line that CMM told shareholders they had secured? Was the offer cancelled? If so, why? If they lost it why weren't we informed? Something is wrong with this picture! They had no intention to use the MRI debt for bridge financing IMHO and they knew long before the AGM but withheld that information.

From the June 5 press release -

The convertible debenture is scheduled to close immediately and the drawdown of the bridge facility is expected in the near term. As reported in Stockwatch news dated May 12, 2008, Century is currently negotiating a significant project loan facility with Fortis for up to $70-million. The financings announced today were arranged to provide Century with sufficient capital to continue production expansion at the Lamaque mine until the proceeds from the project loan facility are available.

Margaret Kent, president and chief executive officer, commented: "Today's announcement is another important step in Century's plan to expand production at the Lamaque underground mine. The financing announced today will provide Century with the additional capital to operate the Lamaque mine until the operation is cash flow neutral and the Fortis facility can be drawn down."

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All the difficulties point to the continued failings and shortcomings of management.