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.
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The Lamaque Project
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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
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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
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(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
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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 Québec 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.
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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
4 comments:
Let's hope there is still a buyer or two that is still interested in purchasing Lamaque.
Hopefully the DD process that CMM went through over the past year will enable to project to be more attractive to potential buyers.
The gold price is expected to be strong over the next couple/few years. Lamaque already has a mill and significant infrastructure in place, and can be brought back into production near-term. Hopefully all of that will make it fairly attractive for a mid-tier type company with cash or access to cash.
Yea and hopefully better than
Nirek's offer. Wonder whats in
store for San Jaun?
It looks like they will try to sell Lamaque, which hopefully will enable us to remove all liabilities from our books and provide some additional cash. Then, continue onward with production from San Juan, and try to improve results from that operation.
I think it helps that the gold price has consistently remained in the $1,000 - $1,040 Cdn. Hopefully the new guy at SJ is able to get the operation to run more smoothly.
Century should try to reduce as much overhead as possible, in order to reduce Overhead/Corporate expenses.
From the NR:
"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."
Hopefully this will help a little in shopping the project around.
I took a quick glance at both Century's DD report and the Independent Technical Due Diligence Report prepared by the independent party for Fortis - posted on Century's website. For the most part, both reports were positive.
It's unfortunate that Fortis decided to go in a different direction, especially since they appeared to be onboard over the past 10 months, except for this week (or so it seems). Perhaps there are too many unsolved issues within Fortis, to enable them to make this commitment at this time. Their issues were suppose to have been resolved a while ago, but have lingered on, perhaps to our detriment. Their shareholders are in the process of fighting the sale of the company to BNP. BNP has subsequently been hammered. Belgium's governement is in shambles, with the latest issues being the direct result of October's proposed sale of Fortis. The Belgium President had to resign due to accusations (within the last few weeks).
It's unclear if Fortis would have approved the financing had their situation been better, but perhaps our chances would have been better had their situations been resolved within the planned timeframes. I have absolutely no idea though.
I guess at least we came out of this with the independent DD documentation. Hopefully it will help with the marketing of Lamaque, for selling purposes.
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