Optimusprime, The Ref and Carib, I also agree that a lot of baggage has been eliminated since earlier in the year. Of course, we all know that we need cash in order to get back on stable ground. Hopefully that will arrive soon, in the form of debt financing (with incentive shares thrown in) - this seems to be the typical finaning package other small companies are getting in this environment. (if a deal goes through) the cash will hopefully be sufficient to eliminate a large chunk of the accounts payable liability, which addresses not only one of the company's primary concerns, but eliminates (what would likely become) a requirement to closing off the Fortis deal.
Anyway, here is a recap of some of the major issues that have been eliminated since earlier in the year:
1) BCSC
2) Rosario - we got out without paying the $13M balloon payment, and the remaining smaller payments, and the $1.2M accounts payment amount - would have been a Fortis barrier
3) Shashuindo/Algamarca - we got out without making the outstanding quarterly payments to Algarmarca, and shut the door on what was a very damaging situation for Century shareholders - would have been a Fortis barrier
4) Sulliden's $200M lawsuit - it was thrown out without any cash payments by Century - would have been a Fortis barrier
5) Wega gone (hopefully)
6) Eliminated hedge position - 3,200 ounces exist at Lamaque, which will be used to cover the $2.1M owing to Gerald Metals (expected to be closed off in Q4 - Century may be waiting for the gold price to increase again, before settling with Gerald Metals)
7) 100 ton o/p trucks and lease obligations - the trucks seem to be still booked as both an asset and a liability on the balance sheet (which is normal). The trucks are probably currently being sold off with the rest of the open pit equipment. The cash from the sale of the 100 ton trucks (I imagine) would be sufficient to cover a large portion of the remaining liability. As such, (if they get a resonable price) the sale should enable them to remove both the asset and the capital lease obligation from the balance sheet (an offset, naturally).
8) Ongoing support from IQ - we tend to take this for granted, but I find it to be essential. They allowed us to move the $1M interest payment (that was due this year) into the future. Also, by allowing Century to spread payments of the principal amount over a 15 year period (of equal payments) has turned out to be huge for Century, especially during these difficult times. It has allowed the company to focus entirely on addressing the accounts payable situation, without having to worry about the senior LT Debt. This will prove to be privotal in our recovery, IMO.
3 comments:
Here are a couple of side notes:
1) The option of spinning out San Juan and giving the NEWCO shares to existing shareholders (eventually):
From Q2's MD&A: "It is the objective of management to seek value for its shareholders by exploring all strategic initiatives. These initiatives include finding financing sources, selling assets, selling the Company or dividing the Company."
It seems like this option might be up for consideration, either for now or later down the road once the company has stabilized.
As you may know, a spin out to shareholders would have to be in the form of a dividend. The original agreement with IQ did not allow for dividends to be paid out to shareholders, unless the IQ debt has been paid back in full. Given that Century has at least considered "dividing the Company", there may be a loophole or Century might have removed this clause when they renegotiated the deal with IQ late last year. This would have to be the case if Century wants to perform the spin out prior to the Fortis deal closing in November. However, if Century wants to do the San Juan spin out afterwards then they shouldn't have any barriers (no loopholes needed), regardless of the dividend payout status of the IQ debt agreement. That's because the IQ debt will most likely not exist after the Fortis debt gets closed off. The IQ debt should be paid down with cash from the Fortis deal. This would likely need to be the case due to the Lamaque mineral claims being pledged as security for the IQ debt. Century will most likely need to set up a subsidiary for Lamaque (which would include mineral claims, plant, equipment, etc.) and pledge the entire subsidiary as security for the $70M senior debt from Fortis.
Personally, I think Century should spin out San Juan and give to shareholders. Century's share price has never included any value for San Juan, be it now at $.03 or back when the share price was $.90. A (profitable) producing operation like San Juan should be worth at least $.20 per share to current shareholders (once spun out).
2) Poderosa situation
Below is an article which identifies a POTENTIAL majority ownership change with the Peruvian company called Atacocha. Hopefully it will help to force a more reasonable legal settlement in our Poderosa legal case. As you may recall, Atacocha is the company that purchased 50.1% of Poderosa, and is listed as one of the parties in the legal case initiated by Century. The article below identified that up to 50% (50.1% maybe) of Atacocha's shares might be in the process of being purchased by an external party. If it comes to fruition I'm hoping that the new majority owner will want to eliminate all legal cases Atacocha is currently involved in, and start with a new slate. Atacocha's 50.1% of Poderosa shares are still frozen due to the legal case filed by Century. Certainly, it's only logical that this would be one of the first issues any new owner (in any company for that matter) would want to eliminate.
Let's hope that we (Century) finally get positive closure on the Poderosa situation (with maximum possible settlement payout). However, we shouldn't get our hopes up. It is not 100% guaranteed that Atacocha will receive new majority owners. Also, although it is likely, there is no guarantees that the new owners will move any faster or will be more reasonable with the settlement amount. In addition, it will most likely be several months until Poderosa reaches a settlement stage, even with a new majority owner.
Peru Atacocha says shareholders in sales talks
LIMA, Aug 28 (Reuters) - The shareholders of Peruvian miner Atacocha (ATA.LM: Quote, Profile, Research, Stock Buzz)(ATB.LM: Quote, Profile, Research, Stock Buzz) are holding talks with investors to sell more than 50 percent of class A shares, the company said. Representatives at Atacocha, one of the country’s leading zinc and lead producers, said the company did not know the identity of the possible buyers, a letter posted on Peru’ssecurities regulator showed on Thursday. “The operation could involve the transfer of more than 50 percent of Class A shares in the company,” the letter said, stressing that a smaller stake might end up being sold in any deal. Earlier this week, Atacocha shares surged 15 percent on speculation among traders that Brazilian conglomerate Votorantim wanted to buy a stake in the company. Votorantim, which is working to consolidate its holdings in the sector, bought some 8 percent of Peruvian miner Milpo(MIL.LM: Quote, Profile, Research, Stock Buzz)(MILi.LM: Quote, Profile, Research, Stock Buzz) earlier this year, triggering a rise in thestock price. Neither Votorantim nor Atacocha could immediately be reached to comment on the letter posted by Atacocha.
The Brazilian company is the world’s third-largest producerof zinc and has mining operations across Latin America. (Reporting by Teresa Cespedes; Writing by Dana Ford; Editingby Andre Grenon)
production05, I do find it conforting that whom ever is dumping the shares, there is somebody(s) that are quite willing to scoop them all up. Now our sellers today seem to be afraid of that .05 cent price, thus the flury of shares that come out for sale everytime the .045's dissappear..
Mike
Ref, suspect a bridge financing deal is in the works. The CMM nitwits are operating in a void again. Retail shareholders will be the last to hear anything.
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