Saturday, January 24, 2009

$ Value - Lamaque vs Lobo-Marte (Kinross)

Kinross recently purchased the Lobo-Marte deposit from Teck Cominco and Anglo-American. The deposit comes with 5.4M indicated ounces and .5M inferred ounces. There are no ounces in the reserves category. Grades are 1.72 g/t (indicated) and 1.56 g/t (inferred). It’s a past producer (located in Chile), but hasn’t produced anything since 1992 (shut down due to low gold prices, below $350 US). It sounds like it will be a heap leach (open pit) operation. It looks like it’s going to be at least a couple of years before they can bring this into production, as not only do they have to develop the project but they have to perform significant exploration work to upgrade the ounces. Certainly, Lamaque’s production start up timeframe is much shorter.

Based on the limited info available, there doesn’t appear to be anything that distinguishes Lobo-Marte from a typical gold deposit or mining operation.

Kinross paid $250M US ($313M Cdn) for this gold deposit.


Lobo-Marte analysis:

Proven & Probable Reserves: 0 ounces $100 = $0

Measured: 0 ounces * $50 per oz = $0

Indicated: 5.4M ounces * $45.37 per oz = $245M

Inferred: .5M * $10 per oz = $5M

Total (in the ground) value of Lobo-Marte = $250M US ($313M Cdn)

Note: I assumed a $10 value per inferred oz then I backed into the value per indicated oz, of $45.37


Lamaque analysis:

Proven & Probable Reserves: 1.221M ounces $100 = $122.1M

Measured: .124M ounces * $50 per oz = $6.2M

Indicated: .5M ounces * $45.37 per oz = $22.685M

Inferred: 2.824M * $10 per oz = $28.24M

Total (in the ground) value of Lamaque = $179M US ($224M Cdn)

Note: Ounces profiled for Lamaque represents the same breakdown as used in the recent technical DD report prepared by Gorman (for Fortis).


Summary / Conclusion:

Lamaque appears to compare favourably to Lobo-Marte. If Lobo-Marte is valued at $250 US then (the Lobo-Marte) logic would suggest that Lamaque has a true value of $179M US ($224M Cdn). Of course, it is supply and demand (as well as perception) that will ultimately determine the sale price of the asset (if it gets sold instead of getting bank financing). As such, let’s see what is left if we were to apply various discount rates:

25% discount: $179M * .75 = $135M US ($168M Cdn)
50% discount: $179M * .50 = $90M US ($112M Cdn)
75% discount: $179M * .25 = $45M US ($56M Cdn)

The numbers are certainly suggesting that Peggy should not settle for anything too low.

Friday, January 23, 2009

FWIW, we touched $1,100 in Cdn gold price

Who knows how long it will stay here, but nevertheless it's positive for us. We are unable to take full advantage of this price due to Lamaque being out of commission, but it is still a major advantage for us:

1) It allows San Juan to be more profitable (100% unhedged), which is currently our only source of cash generated through operations. At these gold price levels, San Juan appears to provide sufficient cash to allow the overall business to move forward without an equity offering or bridge loan, or so it seems anyway. It even sounds like they are continuing to work on the resource upgrade program at Lamaque (based on comments by PK during the conference call). I wouldn't be surprised if the 1.1M reserve oz total at Lamaque is unofficially even higher now, as they have continued to work on this program all along (the last official update was a year ago, with Lamaque reserves being 1.1M ounces and Lamaque resource total being 4.6M ounces). I imagine that they will not be able to release updated numbers until they get financing and is able to bring back the 43-101 guy to officially update the numbers. Regardless, basic logic would suggest that continuous work on the project for a full year would likely increase the numbers.

I think a major advantage that Century has over most other junior companies (aside from having Lamaque, a signficant project that can be brought into production near-term, once financing is gained) is the fact that Century actually has a profitable GOLD producing operation (San Juan) in place that provides sustainable cash (very few juniors have this). In addition, Century's secured debt is held by IQ (essentially a government organization with the #1 priority of providing jobs for Quebec citizens during these difficult times). None of these 3 very important benefits are reflected in Century's share price as yet.

2) As important as note 1, the solid gold price allows for more favourable marketing of Lamaque, be it for bank financing or outright sale or J/V.

US gold price currently $874.

Wednesday, January 21, 2009

Some possible (positive) scenarios for Lamaque

Scenario 1) New bank financing deal for Lamaque - a major key to this possibility is the very positive independent technical DD report issued by Gorman (apparently a highly regarded independent DD person by the banking industry). Apparently, Gorman is willing to drop everything he is currently working on in order to answer questions or perform additional support work on Lamaque, if a new bank gets involved and further requires his services.

In addition, Fortis is willing to help us out as much as they can. They have given us a contact list of other possible bank possibilities. They are willing to provide reasons (to possible future Lamaque bank candidates) as to why this deal was declined (Lamaque was not the reason – decline was entirely related to Fortis’ current condition).

Another recent positive relates to the change in credit market conditions. Banks are still not lending to consumers. However, relative to a few months ago, business to business lending appears to have picked up. We can see this in the 3 month libor rate. It was 2.8% just prior to the Lehman Brothers collapse, then spiked to 4.8% with the Lehman explosion, then gradually worked its way back down due to the massive injection of funds into banks by governments and as levels of reduced volatility / panic was established. As you know, a higher libor rate means less lending, while a lower rate means increased lending. The 3 month libor rate is currently around 1.2%, which is actually now lower than the pre-Lehman blow up. It’s also possible to sense the slight positive increase in business lending via comments by money managers, tv personalities and government type people. Of course, the economy is not going to get any better until lending to consumers pick up, but this slight increase in lending to businesses is at least a tiny first step.

The gold section is currently looked upon by lenders as being favourable, at least relative to many other sections. Over the past month or so, there appears to be a noticeable pick in lending (and equity financing) to gold companies, even junior companies. The key is to have a solid, advanced stage, asset.

Hopefully all of these positive developments will provide an opportunity for Century to secure another banking deal. If successful, hopefully the technical DD work already done by Gorman will make for a much shorter timeframe.

Scenario 2) Sale of Lamaque (all cash deal) – hopefully we can get somewhere between $45M US ($50M Cdn) and $110M US ($138M Cdn).

Scenario 3) Sale of Lamaque (combo cash and shares deal) – we probably owe around $15M Cdn to IQ and around $11M Cdn net in A/P ($14M A/P less $3M A/R). Let’s add in another $2M or so for other obligations. As such, I would like to see around $28M Cdn in cash to eliminate all obligations to creditors. Then I would like to see at least another $5M Cdn in cash to upgrade San Juan. In total, I would like us to get at least $33M Cdn in cash, if we were to do a combo cash and shares deal. Then the rest of the payment could be in the form of shares. However, I would want the shares to be paid out directly to Century’s shares, and not to the company itself. Shareholders can then benefit directly, and can choose to do whatever they please with the shares (and within their own timeframes). Under this scenario, hopefully the buyer will be an undervalued mid-tier company or strong junior company with access to capital or connections to raise the capital to bring the project back into production (without significantly diluting shareholder value). Also, hopefully the buying company will be in a position where this deal is viewed as being substantially accretive by the market, thus bringing significant (and immediate) share price appreciation to the shares being paid to Century shareholders.

To summarize, under this scenario we would get the cash to eliminate all creditor obligations, get some cash to upgrade our San Juan operation, get (hopefully) highly accretive shares from the buying company, and get to keep our current Century shares (which would be then trading without the burden of creditor obligations) with the primary asset being an upgraded San Juan (with increased cash generating abilities).

Scenario 4) Buy in by a joint venture partner with cash or with abilities to raise cash?

Monday, January 19, 2009

Fortis Declines Project Financing For Lamaque

BLAINE, WA, Jan. 19 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced today that it has been informed by Fortis Bank that its Credit Committee has decided not to support the financing of Century's Lamaque underground gold mine expansion project. Fortis cited depressed financial markets, uncertainty in the overall economic environment and strategic changes within Fortis as reasons for today's decision.

A thorough due diligence report submitted to Fortis by independent consultants concluded that the Lamaque project is economically viable, and Fortis has agreed to support the marketing of the financing package to other banks jointly with Century.

Century has elected to hire an investment bank and immediately put the project up for sale. Regarding the sale of Lamaque, the Company received two separate purchase offers for the project in 2008, but elected not to sell the project at that time and pursue a fully-underwritten project financing proposed by Fortis bank. The due diligence process for the Fortis project financing took place between July and December 2008. A summary of the results of the due diligence, including projected cash flows from the Lamaque project, may be viewed on Century's website at www.centurymining.com.

<<
The Lamaque Project
-------------------
The underground mine has an 80 year history, with total past production of approximately 9.4 million ounces of gold at a head grade of 5.8 grams per tonne. Current NI 43-101 compliant reserves total 1.13 million ounces of gold. Total measured and indicated resources are 624,201 ounces of gold, with a further 2.8 million ounces of gold in the inferred resources category.

The proposed restart of mining operations at Lamaque would concentrate on ramping up production over the short- to mid- term to a nominal 2,000 tonnes of ore per day at an average grade of 4.74 grams of gold per tonne.

The project is currently permitted for underground ore production up to 1,200 tonnes per day. Permits to complete the dewatering of the mine, access the Bedard Dyke and raise the tailings storage dam are being prepared or are currently under government review.

According to the due diligence report, the economics of Lamaque afford it a favourable ranking in the middle section of the cost curve of world gold producers, while the project is also competitive on a total cost basis. Furthermore, all major infrastructure is in place. The due diligence report includes detailed mining plans for 11 years of mining. The following table shows insitu ore scheduled for production over the 11 year period.

Table 1
Scheduled Insitu Ore Production

Area Tonnes of Ore Grams per Tonne Ounces of Gold
Lamaque No. 2 446,420 5.72 78,049
Lamaque Main Plug 615,025 5.37 100,924
Sigma (below pit) 3,877,760 5.33 631,644
North Wall 1,661,895 4.99 253,535
Sigma West (Bedard Dyke) 150,404 4.80 22,050
West Plug 449,680 4.27 58,646
Total 7,201,184 4.94 1,144,848

The due diligence report also contains monthly mine plans for the first 36 months of production and annual production plans for the first 11 years. The mine plans are based on a comprehensive review of Lamaque ore reserves, detailed cash flow models and capital requirements.

To view the graphs entitled "Lamaque Gold Production for First 12 Months after Startup" and "Scheduled Production after Startup", please visit the following URL: http://files.newswire.ca/669/Century.doc

Lamaque NI 43-101 Compliant Mineral inventory
---------------------------------------------

Category Tonnes Grade (g/t Au) Gold (oz)
-------- ------ -------------- ---------
Proven 2,416,993 5.26 409,045
Probable 4,517,162 4.67 677,706
West Plug (probable) 802,026 1.87 48,220
Total reserves 7,736,181 4.56 1,134,971
Measured 760,964 5.08 124,334
Indicated 2,926,614 5.31 499,867
Total M&I resources 3,687,308 5.27 624,201
Total inferred resources 17,839,915 4.83 2,832,389

As part of the due diligence process for the Lamaque project financing, Century worked with independent consultants and Fortis to create a comprehensive financial model and long-term plan for the Lamaque mine. This model is inclusive of all production and development requirements, construction and working capital, detailed labor and operating cost calculations, exchange rate calculations, debt service requirements, cover ratio requirements, sensitivity analysis, taxes, environmental bonds and other relevant factors.

Lamaque Financial Model Highlights for First 11 Years of Mining
---------------------------------------------------------------

(US$ 1,000 except where noted)

Gold production (oz).................... 1,028,900
Hedged gold avg. (US$/oz)..................... 905
Spot gold sales avg. (US$/oz)................. 664
Revenue................................... 730,265
Cash costs................................ 427,138
Operating cash flow....................... 297,590
Operating costs (US$/oz)...................... 421
Cash flow after taxes..................... 168,267

Total capital expenditures................ 138,326
Total loan amount.......................... 55,000
(balance funded from operating cash flow)
Net cash flow after capital............... 113,267
NPV @ 10%............................... 88,248

Margaret Kent, President and CEO of Century commented, "We are very disappointed in today's decision by Fortis, as we have been working on this project financing for ten months. Century was given assurance that the process for credit committee approval was proceeding as recently as last week. The Lamaque project is technically and economically viable, as demonstrated by projected cash flows in the due diligence report on Century's website. The management and Board of Directors of Century will continue to do everything possible to protect and enhance shareholder value during this difficult time."

Investor conference call
------------------------
Management will host a conference call on Tuesday, January 20 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time) to discuss the details of this press release. Mining analysts, investors and the media are invited to phone 1-800-988-9669, or 1-312-470-7065 if outside Canada and the U.S.A., followed by the pass code 7109991 approximately 5 minutes before the start of management's presentation. The presentation will be followed by a question and answer period. A replay of the conference call can be heard through Friday, January 30 by dialing 1-800-925-5417, or from outside North America
1-203-369-3849.

About Century Mining Corporation

Century Mining Corporation is a junior gold producer. The Company owns and is working towards the restart of the Lamaque mine in Qu├ębec 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. Total gold production for 2006 and 2007 was 70,401 ounces and 63,124 ounces of gold, respectively.

"Margaret M. Kent"

Chairman, President & CEO

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this press release.
>>

Caution Concerning Forward-Looking Information

This press release contains forward looking statements within the meaning
of the United States Private Securities Litigation Reform Act of 1995 and
forward-looking information within the meaning of applicable Canadian
securities laws. We use words such as "may", "will", "should", "anticipate",
"plan", "expect", "believe", "estimate" and similar terminology to identify
forward-looking statements and forward-looking information. Such statements
and information are based on assumptions, estimates, opinions and analysis
made by management in light of its experience, current conditions and its
expectations of future developments as well as other factors which it believes
to be reasonable and relevant. Forward-looking statements and information
involve known and unknown risks, uncertainties and other factors that may
cause our actual results to differ materially from those expressed or implied
in the forward-looking statements and information and accordingly, readers
should not place undue reliance on such statements and information. Risks and
uncertainties that may cause actual results to vary include but are not
limited to the speculative nature of mineral exploration and development,
including the uncertainty of reserve and resource estimates; operational and
technical difficulties; the availability to the Company of suitable financing
alternatives; fluctuations in gold and other commodity prices; changes to and
compliance with applicable laws and regulations, including environmental laws
and obtaining requisite permits; political, economic and other risks arising
from our South American activities; fluctuations in foreign exchange rates; as
well as other risks and uncertainties which are more fully described in our
annual and quarterly Management's Discussion and Analysis included in this
Annual Report, in our Annual Information Form and in other filings made by us
with the Securities and Exchange Commission and with Canadian securities
regulatory authorities and available at www.sedar.com.

While the Company believes that the expectations expressed by such
forward-looking statements and forward-looking information and the
assumptions, estimates, opinions and analysis underlying such expectations are
reasonable, there can be no assurance that they will prove to be correct. In
evaluating forward-looking statements and information, readers should
carefully consider the various factors which could cause actual results or
events to differ materially from those expressed or implied in the
forward-looking statements and forward-looking information.




For further information: Brent Jones, Manager of Investor Relations,
E-mail: bjones@centurymining.com, Phone: (877) 284-6535 or (360) 332-4653,
Fax: (360) 332-4652, Website: www.centurymining.com

Halted

Let's hope we get some positive news on financing tomorrow, once the US market is open again. Or, perhaps they will issue something today and just keep it halted until the morning.

Monday, January 5, 2009

CMM's NR about the recent insider share purchase

Century Mining Reports Significant Private Purchase Of Century Shares By Insiders

BLAINE, WA, Jan. 5 /CNW/ - Century Mining Corporation (CMM: TSX-V) announces that Margaret M. Kent and Ross F. Burns, directors and officers of the Company, have directly and indirectly acquired 11,500,000 shares and 6,000,000 warrants of the Company from an institutional shareholder of Century in a private transaction. The warrants have an exercise price of $0.75 per share and expire on October 24, 2009.

Pursuant to the above-mentioned transaction, Margaret Kent and Ross Burns jointly exercise control or direction over, and directly and indirectly own 14,545,914 shares of Century. This represents 8.6% of the Company's 169,072,599 common shares currently issued and outstanding.

In September 2008, the Company issued a convertible debenture to Margaret Kent in exchange for a C$200,000 loan to the Company. The maximum number of shares that have been reserved for issuance on full conversion of the debenture, which matures in March of 2010, is 8,900,822 common shares.

Assuming the exercise of all warrants and stock options, and full conversion of all convertible debentures, there would be 204,211,205 shares on a fully diluted basis. Margaret Kent and Ross Burns would directly and indirectly hold 30,861,736 shares representing 15.1% of the fully diluted shares.

Friday, January 2, 2009

Large private acquisition of CMM shares and Warrants by PK & RB

(posted on SEDI)

1) 11,500,000 shares @ 1.5 cents

2) 6,000,000 warrants

The key here is the exercise price for the warrants is $.75 (Oct. 24, 2010)