Monday, November 3, 2008

While we wait

As bad as the global credit market is right now, there still doesn't appear to be any visible signs that BNP Paribas/Fortis has abandoned us at this time. In addition, (although us little guys could never know 100% as to what is happening) chances might be decent that Century is still progressing through the process. It is likely that the technical report was submitted a while ago.

From the Sept. 2'08 NR:

"The Fortis facility due diligence is scheduled to be completed by the second week of September, at which time the bank will need three to four weeks to finalize submissions for credit approval. Upon credit approval the Company will need approximately six weeks to complete legal documentation."

My guess is that there would need to be a period for fine tuning the technical report, and perhaps to address recommendations that either the independent technical person and/or Fortis may come back with. This is actually a good thing, as it helps to make a stronger case prior to presenting it to the credit committee. I had previously heard that Century had been working on an underground mine plan for a while now, and they had been making really good progress with it. My guess is that the Fortis rep would want to see this in the package prior to meeting with the credit committee.

Also, there might have been a hint in the Sept 2'08 NR that Century was expecting a bit of additional technical info MIGHT be required:

"no assurance can be made at this time that other conditions precedent will not be requirements of drawdown. These conditions precedent could include the need to raise additional equity, permitting or additional technical information."

Perhaps the "additional technical information" is to dot the i(s) and cross the t(s), again, to make a better presentation to the credit committee.

With regards to the "raise additional equity" note, it sounds like this may not be the case of raising substantial equity. I vaguely remember there being a note in the last MD&A that stated something to the effect that they may be asked to raise capital to reduce a substantial portion of the outstanding accounts payable balance, prior to the Fortis drawdown. However, I believe that note might have been superseded by the following note included in the Sept 17'08 NR:

'The combination of these two financings will provide the immediate and near-term financing necessary to take Century to a position to draw the senior secured financing Century is arranging for its Lamaque Project from Fortis Bank.'

As a side note, Tamerlane (our sister company, with the same management team) issued a project update today. It included this note: "Tamerlane’s management is considering other avenues for project financing, including private equity firms."

We should probably keep an eye on how that develops. Maybe PK could try to secure a million or two for Century also, as part of a package deal. They obviously used the package deal approach previously with MRI, even though the deal didn't end up closing for either Century or Tamerlane. Looking back now, (IMO) it is clear that MRI kept delaying everything due to the rapidly falling zinc price, and were also waiting for Tamerlane's updated project economics profile to come out. The zinc production cost wasn't very favourable (relative to zinc spot price at the time) so MRI bolted. Century was a toss in for MRI, (so although Century is a gold miner, with gold holding up far better compared to zinc) they no longer had any use for us (especially with them being primarily a base metals trader). All in my view of course. By the way, Tamerlane managed to get their production cost down within the study, thus their project if more favourable now.

No comments: