Friday, February 27, 2009

Trading Summary for Feb. 27

Strong buying near the close with Canaccord leading the way taking out the 9-cent ask. See "Today's Trades" link on the right for details.

Thursday, February 26, 2009

Wednesday, February 25, 2009

Today's Trade Summary

(Click to enlarge)
No sign of GMP today, so they may be done. Canaccord has sold over 2 million shares the past 3 days.

Tuesday, February 24, 2009


- Company also increases inferred gold resources by 285,000 ounces - Blaine, WA: Century Mining Corporation (CMM: TSX-V) today announced that significant progress has been made over the last several months through additional historical data input and computer modeling of the mineral resources at the Company’s Lamaque underground gold complex.

The updated data input and model includes new resources defined from 1,000 - 2,000 feet below surface. The intersections were calculated using information from an additional 1,100 diamond drill holes, 26,500 assays and 9,800 moil samples that have been entered since the issuance of the Company’s NI 43-101 technical report in April 2008. As a result, a detailed block model identified 428,357 ounces of new measured and indicated gold resources in an area previously estimated to contain only 70,916 ounces of gold. Furthermore, 285,452 additional ounces of gold in the inferred category have been identified.

Since completion of the Company’s NI 43-101 technical report in April 2008, Century’s team of engineers and geologists have continued to digitize, scan and compile additional historic underground data from previous owners Teck Cominco and Placer Dome to develop a single Vulcan database and model for use in its short and long term mine planning strategies. The updated model announced today adds to the previous model that had been completed from surface to 6,000 feet.
Century also noted several diamond drill hole additions to the model that yielded assay results within unmined dyke and shear structures, including a diamond drill hole containing 91 continuous feet grading 9.0 grams per tonne. Other notable diamond drill holes from unmined areas used in the updated model are shown in the following table:

These newly defined dyke and shear structures indicate the presence of large virgin ore zones, which may be bulk mined within 2,000 feet of surface. Along with these results, the Company still has a significant amount of data to enter for modeling along strike from surface to the 2,000 foot level. Data input and calculation for this zone is ongoing, and the Company will make further announcements when subsequent calculations are complete.

The mine site is located in the prolific Abitibi camp, where over 120 million ounces of gold have been produced historically. The Lamaque Underground mine complex has produced over 9.2 million ounces of gold historically.

The resource evaluations in this press release were prepared by Mr. Ross Burns, P Geo., LG, Vice President of Exploration. This press release was prepared under the guidance of Mr. Burns, who is designated as a Qualified Person under National Instrument 43-101, with the ability and authority to verify the authenticity and validity of the data.

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 9.2 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

For further investor information, please contact:
Brent Jones, Manager of Investor Relations
Phone: (877) 284-6535 or (360) 332-4653
Fax: (360) 332-4652 3

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

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.

Monday, February 23, 2009

Today's Trades

With over 2 million shares trading today, I've revived the "Today's Trades" link.

When I saw an odd lot sale of 700 shares by GMP, I thought that might have been it for them, but no such luck as they sold more after that. They had some help from Cannaccord today who dumped half a million shares into the 6.5 cent bid just when there was strong buying at 7 cents.

Two new buyers showed up today - Research Capital and Standard.

The #1 strategist in Asia calls for a $3,500 US gold price

His name is Chris Wood. He has been voted the #1 strategist in Asia 6 times since 2002. His biggest claim to fame is being the investment strategist credited with being the first to predict the US sub-prime meltdown. He is well respected. Also, he works for the #1 Brokerage firm in Asia - CLSA. The firm's research team has also been voted the number #1 Research team in Asia. As you can see, big time reputations on the line here.

He assigned the $3,500 US price in a presentation today. I don't know if he has a new timeframe though. It seems like he increased his target by $500, as I saw something from February 11, 2009 where his target was $3,000 by 2010. That timeframe seemed really aggressive to me, but I guess you never know. Again, I don't know if he changed his timeframe with the new target of $3,500 US.

Chris Wood recommended that institutions should have a 30% gold explosure. This is an unheard of gold exposure percentage for institutions.

Oddly enough, there was a second call out today for $3,500 US gold. Henry Smyth, Director of Granville Cooper Gold Funds, says gold will hit $3,500 US an ounce over the next two years.

Friday, February 20, 2009

GMP Trades for past 30 days

Hey Carib, a request about GMP

If you get the chance, could you let us know if the GMP total shares sold is still at 3.9M or if it has increased over the past couple of days.


Gold futures briefly touched $1,000 US

It has fallen back now. Let's see how many tries it takes to stick above $1,000 US.

Hopefully all of this will help us to pull together and close off the gold-based financing.

Thursday, February 19, 2009

the next wave of banking crisis

Next Wave of Banking Crisis to come from Eastern Europe

F. William Engdahl
Feb 19, 2009

European banks face an entirely new wave of losses in coming months not yet calculated in any government bank rescue aid to date. Unlike the losses of US banks which derive initially from their exposures to low-quality sub-prime real estate and other securitized lending, the problems of western European banks, most especially in Austria, Sweden and perhaps Switzerland arise from the massive volumes of loans they made during the 2002-2007 period of extreme low international interest rates to clients in eastern European countries.

The problems in Eastern Europe which are just now emerging with full force are, if you will, an indirect consequence of the libertine monetary policies of the Greenspan Fed from 2002 until 2006, the period where Wall Street's asset backed securitization Ponzi Scheme took off.

The riskiness of these eastern European loans is now coming to light as the global economic recession in both east and west Europe is forcing western banks to pull back, refusing to renew loans or 'rollover' the credits, leaving thousands of borrowers with unpayable loan debts. The dimension of the eastern European emerging loan crisis pales anything yet realized. It will force a radical new look at the entire question of bank nationalizations in coming weeks regardless what nice hopes politicians in any party entertain.

Moody's Rating Service has just announced it 'might' downgrade a number of western European banks with large exposures to eastern Europe. On the report, the Euro fell to 2 and a half month lows against the dollar.

The Moody's report mentioned especially banks in eastern Europe owned by western European banks including specifically Raiffeisen Zenetralbank Oesterreich and Sweden's Swedbank. The public Moody's warning will now force western banks with subsidiaries in eastern Europe to dramatically tighten lending conditions in the east at just the time the opposite is needed to keep economic growth from collapsing and thereby setting off chain-reaction loan defaults. The western banks are caught in a devil's circle.

According to my well-informed City of London sources, the new concerns over bank exposures to eastern Europe will define the next wave of the global financial crisis, one they believe could be even more devastating than the US sub-prime securitization collapse which triggered the entire crisis of confidence.
As a result of the Moody's warning, west European banks will now likely be selective in supporting their subsidiaries. Moody's report noted that 'banks in countries that are associated with higher systemic risks might face reduced support.' Western European governments may also establish rules to ensure banks receiving state support are forbidden to aid foreign subsidiaries. This is already the case with Greek banks and the Greek Government. The result is to make a bad situation far worse.

The size of risks are staggering

The amount of loans potentially at risk involve mostly Italian, Austrian, Swiss, Swedish and it is believed German banks. Once the countries of the former Soviet Union and Warsaw Pact declared independence in the early 1990's west European banks rushed in to buy on the cheap the major banks in most of the newly independent east countries. As US interest rate cuts after the stock crisis in 2002 pushed interest rates around the world to new lows, easy credit led to higher risk lending across borders in foreign currencies. In countries such as Hungary, Swiss and Austrian banks promoted home mortgage loans denominated in Swiss Francs where interest rates were significantly lower. The only risk at the time was if the Hungarian currency were to devalue, forcing homeowners in Hungary to repay sometimes double the monthly amount in Swiss Francs. That is what has happened over the past 18 months as western banks and funds have dramatically reduced their speculative investments in eastern countries to repatriate capital back home where the mother banks had serious problems caused by the US banking catastrophe. In the case of the Polish Zloty, the currency has dropped in recent months by 50%. The volume of mortgages existing in foreign currencies in Poland is not known but London estimates are that it could be huge.

In the case of Austrian banks, the country faces a rerun of the 1931 Vienna Creditanstalt crisis which in chain-reaction spread to the German banks and brought Continental Europe into the economic crisis of 1931-33. At the recent EU Finance Ministers' meeting in Brussels, Austrian Finance Minister Josef Pröll reportedly pleaded with his colleagues to come up with a €150 billion rescue package for the banks in eastern Europe. Austrian banks alone have lent €230 billion there, equivalent to 70% of Austria's GDP. Austria's largest bank, Bank Austria, which in turn is owned by Italy's Unicredito along with the German HypoVereinsbank, faces what the Vienna press calls a 'monetary Stalingrad' over its loan exposure in the east. In a bitter historic irony, Bank Austria bought the Vienna Creditanstalt in recent years in its wave of mergers.

According to estimates published in the Vienna financial press, were only 10% of the Austrian loans in the east to default in coming months, it 'would lead to the collapse of the Austrian financial system.' The EU's European Bank for Reconstruction and Development (EBRD) in London estimates that bad debts in the east will exceed 10% and 'may reach 20%.'

German Finance Minister Peer Steinbrück reportedly flatly rejected any EU rescue funds for the east, claiming it was not Germany's problem. He may soon regret that as the crisis spreads to German banks and results in far greater costs to German taxpayers. One of the most striking aspects of the present crisis which first erupted in summer of 2007 is the increasingly evident incompetence of leading finance ministers and central bankers from Washington to Brussels to Paris and Frankfurt and Berlin to deal resolutely with the crisis.

The London office of US investment bank, Morgan Stanley, has issued a report estimating the total of western European bank lending to the east. According to the report Eastern Europe has borrowed a total of more than $1.7 TRILLION abroad from mainly west European banks. Much of that has been short-term borrowing of less than a year. In 2009 eastern countries must repay or roll-over (renew) some $400 billion, fully 33% of the region's total GDP. As the global recession deepens the chances of that are fading by the day. Now western banks are refusing to roll-over such loans, under political pressure and financial pressure back home. The credit window in the east, only two years ago the source of booming profits for the west European banks, has now slammed shut.

Even Russia which a year ago had more than $600 billion foreign exchange reserves, is in a difficult situation. Russian large companies must repay or roll-over $500 billion this year. Russia has bled 36pc of its foreign reserves since August defending the rouble.

In Poland, 60% of all mortgages are in Swiss francs. The Polish zloty has just fallen in half against the Swiss franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this same story. As an act of collective folly - by lenders and borrowers - it matches America's sub-prime debacle. This crisis for European banks comes atop their losses in US real estate securities. It is the next wave of the crisis that is about to hit. Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. Europeans account for an astonishing 74% of the entire $4.9 trillion portfolio of loans to emerging markets. They are five times more exposed to this latest crisis than American or Japanese banks, and they are 50pc more leveraged, according to the IMF.

Whether it takes months, or just weeks, Europe's financial system now faces a major test and the situation is complicated by the fact that when the rules of the European Central Bank were finalized in the late 1990's, governments could not agree to surrender total national central banking powers to the new ECB. As a result, in this first test of the ECB in a systemic crisis, the bank is unable to act in the same manner as say the Federal Reserve and fulfil the role of lender of last resort or flood the markets with emergency stimulus.

By some estimates the European Central Bank already needs to cut rates to zero and then purchase bonds and Pfandbriefe on a huge scale. It is constrained by geopolitics - a German-Dutch veto - and the Maastricht Treaty. The EBRD estimates that eastern Europe needs at least €400bn in help to cover loans and prop up the credit system.

Europe's governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans. The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan - and Turkey next - and is fast exhausting its own €155bn reserve, forcing it to sell its gold reserves to raise cash. [emphasis added by editor]

The recent IMF $16bn rescue of Ukraine has unravelled. The country - facing a 12pc contraction in GDP after the collapse of steel prices - is going towards default, leaving Unicredit, Raffeisen and ING facing disaster. Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.

Perhaps most alarming is that the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU.

Clear at present is that for small-minded political reasons, Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU 'union bonds' should the debt markets boycott Italy's exploding public debt, hitting 112% of GDP next year, just revised up from 101%.

Someone else has decided to try something similar to Peggy's gold bullion repayment idea

PMI Gold Corporation - US$20 million private placement announced

VANCOUVER, Feb. 19 /CNW/ - PMI Gold Corporation (TSX.V:PMV), the Company is pleased to announce that it has entered into an Engagement Agreement with Jesup & Lamont Securities Corporation of New York (the "Agent") to raise US$20 million in Senior Convertible Promissory Notes (the "Notes"). The Notes will be offered on a private placement basis to accredited investors and qualified institutional buyers. Closing is expected on or before March 17, 2009. The engagement is on a non exclusive, best efforts basis.

The principal and accrued interest will be due on the third anniversary of the closing (the "Closing Date") of the offering. Annual interest of 12%, will be payable quarterly with payments starting the first anniversary after the closing date.

A unique feature of the placement is that the principal and interest are convertible into gold bullion at 110% of the one week average closing price of an ounce of gold on the New York Mercantile Exchange at the time of closing. The investors may elect to convert the then due interest of the Note into gold bullion at anytime, but if before the third anniversary of the Closing Date, as to only up to an aggregate of 1/2 of the amount of gold actually produced at the Kubi Gold mine to the date of conversion and any remaining balance then due at the 3 year anniversary date. The investors will also receive a total of 10 million warrants exercisable at US$0.50 for two years to purchase a Common Share of the Company.

The Company will pay the Agent a fee equal to 8% of the gross aggregate proceeds of the Notes, payable on the Closing Date. In addition, the Company will issue to the Agent on the Closing Date Agent's Warrants entitling the Agent to purchase 3.2 million warrants exercisable at US$0.50 for two years to purchase a Common Share of the Company. In the event that the closing is expedited and occurs on or before March 3, 2009, the Agents fee will increase to 10% and the number of Agent's Warrants will increase to 4 million.

Proceeds of the financing are to be utilized to pay out in full the financing facility entered into with Trafalgar Capital Specialized Investment Fund, FIS ("Trafalgar") in July 2008 for $3.5 million including accrued interest, to fund the pre-production development costs to bring our Kubi Gold project into production, and for general working capital purposes.

The closing of this Transaction is subject to the approval of Trafalgar Capital Specialized Investment Fund FIS, the TSX Venture Exchange, and the customary closing conditions precedent.

Further information will be released when and as available.

On behalf of the Board,
"Douglas R. MacQuarrie"
President & CEO

Wednesday, February 18, 2009

A few thoughts

Three days after the CMM news release that announced that the Fortis financing had fallen through, GMP began dumping shares and since then has sold almost 3.9 million shares, effectively capping the share price at 7 cents. Since I don't recall GMP ever buying those shares on the open market, they were likely acquired in one of the private placements early last year. They can't have that many more shares left. They sold 370k shares today.

In the past 3 days, the POG has increased by almost $50/oz and $1,000/oz gold seems to be imminent as more and more investors flee the equity markets and start buying gold, gold ETFs and gold mining shares. It hasn't had any effect on CMM yet because GMP has hit any significant bid of 6.5 cents, but it has substantially increased the value of Lamaque's 1.2 million ounces of reserves and millions more in resources. The increase in the value of the reserves alone is 4 times our current market cap.

This increase in the POG should greatly enhance the prospect of closing the proposed financing. If not, the value of the Lamaque assets are worth a lot more in an asset sale than they were just a week ago.

For an example of how a company's fortunes can change once the fear of not getting financing is removed, just look at Central Sun Mining, CSM. In mid-October it announced the suspension of its Orosi project because it couldn't get financing. Their shares hit a low of 8 cents in mid-December at the peak of tax-loss selling. A few days later CSM announced a agreement with Lihr Gold where Lihr would acquire all of CSM's shares for about 29 cents/share, and since then B2Gold has made a superior offer to acquire CSM. CSM currently trades at $1.06.

Edit: I forgot one.

At $980 gold, $35 oil and an 80-cent Canadian dollar, we'd still be mining the Sigma open pit and if gold continues on its upward projection in the next couple of years, who knows if that operation might not be revived.

Monday, February 16, 2009

Gold price - $1,200 Cdn

At least we can say we finally touched it (regardless of where it goes in the short term). With the overwhelming fear currently out there (globally), and the foregone conclusion of severe inflation in a couple/few years (as the economy gets reflated), I'm sure many institutional investors are visualizing that $1,200 gold price to be US dollars within the next couple of years. Those are the type of institutional investors that would be interested in Century's offer. It's a compelling offer - with both short-term (shares) and long-term (physical gold) benefits - for those who truly believe that this is the direction the world is heading in.

Gold is in a good place right now, and going forward. If fear continues to overwhelm then gold will act as protection (who knows, there could be a phase 2 of massive deleveraging, somewhat similar to October, but gold will be alright again once it stabilizes, if a phase 2 selling happens to occur). If the economy picks up (and the Dow Jones begin to recover) it means prices will reflate. The governments of the world will not be able to remove all of this massive amounts of money from the global system for many many many years into the future (if ever at all) - they will also need to move at a slow place for fear of sinking the economy again. This naturally will lead to inflation, and possibly hyperinflation (if reflation happens quickly enough).

US = $959.90 ($960, rounded up)

Sunday, February 15, 2009

Thoughts about the spent carbon gold recovery initiative - Lamaque

Here is just a quick side note (for anyone interested in this type of info, and level of detail).

Lamaque ounces in inventory was 3,200 at the end of Q2, but decreased only to 3,000 at the end of Q3. The plan was to pay off the Gerald Metals liability from the Lamaque ounces. The Gerald Metals amount decreased from $2.28M (July) to $.951M (end of Q3), thus representing a $1.329M payment in Q3. Using $1,000 Cdn gold price, that payment is equivalent to 1,329 ounces of gold. With the Lamaque gold total only decreasing by 200, it likely means they were able to replenish around 1,100 ounces in Q3, at Lamaque (assuming they did follow through and paid Gerald Metals from Lamaque ounces). Actually, it makes total sense that they could recover about 1,100 ounces (such a high number) in Q3, as mining did not shut down until early July - it would be the normal process to recover (the mined) gold ounces several days after mining the tonnage.

From the Q3 MD&A report:

“The Company continues to carry approximately 3,000 ounces of gold in inventory in the milling circuit at the Lamaque mine which will be used to repay the in-process working capital credit line and the liability for close-out of the forward position. As at September 30 the Company’s liability for the in-process line was $1.9 million and the liability for the close-out of the forwards was $0.9 million.”

As previous mentioned, I believe Century paid off the remaining $.9M (Gerald Metals) forward amount in Q4 (to close the books completely on that particular liability). Also, likely, the $1.9M in-process working capital credit has been repaid already (if not, it can be paid at anytime with the Lamaque ounces in inventory).

Assuming both payments were made in Q4, it then likely means 2,800 of the Lamaque ounces were used in closing off both payments (assuming $1,000 Cdn per oz). That would then still leave 200 ounces in inventory. Now, given the cash challenges last year, likely those 200 ounces have already been spent. However, if they are still in inventory (with the gold price being $1,160 Cdn) then they would represent $232,000 to us at this moment.

As mentioned previously also, bringing down the in-process working capital credit balance to zero likely creates an available source for emergency cash drawdown, if necessary – thus likely reducing the need for an immediate (non-shareholder friendly) bridge loan.

Now, here is where it gets a bit interesting.

From the Q3 MD&A report:

“The Company continues to recover gold from the spent carbon at Lamaque in order to reduce this liability.”

It’s not clear how much spent carbon is left or how rich it is. As such, it is impossible to tell what kind of recovery potential this has, and for how long. They shouldn’t need to do regular mining (for this initiative) so the cost to recover these gold ounces should be cheaper. The high gold price is helpful also.

That note was from the Q3 report so (with it now being Feb’09) it’s not clear if they are still going at this process (and if it’s still fruitful).

It would be nice though if they were able to recover, say, 500 ounces of gold per quarter (for the next couple of quarters) via the spent carbon gold recovery process.

You know, with current gold prices, if they were able to produce the ounces for, say, $500 Cdn (without having to mine) then it could provide $650 Cdn per ounce to be applied against Lamaque liabilities. It’s not much, but $325,000 per quarter out of Lamaque, plus the cash out of San Juan, helps to provide a bit more cash flexibility for the company, until funding is secured.

Wednesday, February 11, 2009

the $940 US gold price

Our share price is ugly (as usual), but we can still take advantage of this excellent gold price environment to assist us in 2 other vital areas.

1) Increase in cash via San Juan

While we go through the process to secure capital to get Lamaque operational again, San Juan continues to be our bread and butter. Although we are not seeing the $940 US gold price reflected in our share price, it should be helping us tremendously via sales of our production ounces at San Juan.

We might be getting some really good cash out of San Juan in Q1’09 due to developments in these key areas:

a) High gold prices, as mentioned (we don’t have any hedges).

b) During Q2 and Q3 (and maybe Q4), San Juan’s cash flow went primarily towards addressing emergency situations in Quebec (and company overall). A lot of those situations have been eliminated since those periods in time (i.e. curtailment at Lamaque, which was bleeding heavy cash, until financing is secured). Also, Century has done a good job in cleaning up the balance sheet:

* removed $3.4M from the significant accounts payables total

* eliminated the majority ($4.2M) of Capital Lease Obligations – represents 80% of the total

* made the $2.2M payment to Gerald Metals (for the hedge buyout) – paid with a portion of the 3,200 Lamaque ounces in inventory (some paid down in Q3 and some in Q4)

* paid down the $1.8M Working Capital Gold Facility – also paid with the remaining Lamaque ounces (likely paid in Q4, otherwise the ounces still set aside for future payment – this credit facility, along with another credit facility, is likely available for Century to access emergency cash, if necessary, thus a bridge loan at not necessary at this time)

During those periods, there weren’t a lot of dollars left over to run the San Juan operation. As a result, there were some non-productive days in Q2 and Q3 (and maybe Q4). I don’t know what the actual numbers were, but I’ve estimated roughly the equivalent of 15 non-productive days for Q2 and the equivalent of 16 non-productive days for Q3 (based on available tonnage numbers, etc.). With the company having curtailed Lamaque (until financing gets closed off), and having eliminated all of those balance sheet liabilities (listed above) my guess is that there probably wouldn’t be any (at least not many) non-productive days effective Q1’09 (especially with the strong gold price performance).

A more stable San Juan operation means more production ounces. San Juan produced 3,590 ounces in Q3. With not have to shut down operations due to cash issues in Q1’09, San Juan could produce close to 4,000 ounces based on normal run rates. Also, not having to carry fixed/overhead costs for the 16 unproductive days will likely mean a natural decrease in cash cost per ounce.

c) The Peruvian currency has decreased about 10% relative to the US dollar, from Q3 to Q1’09. Theoretically, this should mean an automatic 10% improvement on cash cost per ounce, prior to factoring in other improvements.

With the gold prices we have seen thus far in Q1’09 (if all is going even semi well at San Juan), the operation should be generating sufficient cash to cover off Corporate costs, while paying for basic (near-term) mine development (capital) requirements at San Juan, while still having some semi-good size cash left over to address other things.

2) Gold-based financing

A $940 US gold price doesn’t hurt in attempting to sell the offer.

I think Peggy has some wiggle room with the price, if take up falls short with the first attempt.

All we need are 11 institutions to purchase $6M US worth of the financing offer (based on the current price). There are a lot of people in the institutional investment world that are very concerned about inflation (expected to become prominent in about 2 - 3 years). This is also the effective time period of Century's offer (gold delivery period). A lot of people are looking to protect themselves from what they are seeing (more and more every day) as unavoidable devaluation of global currencies, by flooding the global system with new money (they are now realizing that it might be the only way of fighting off a 1930s style depression). Institutions are now realizing that governments will create as much money as possible to avoid this situation, regardless of the long-term impact (i.e. monetary inflation or hyperinflation). Actually, institutions welcome the high liquidity, as the lesser of 2 evils – everyone is afraid of a depression. As such, (while accepting there is a price to pay long term – likely monetary inflation) institutions are looking for a hedge. I think many institutional managers believe that the governments of the world will not be able to pull the liquidity out of the system quick enough once the global economy stabilizes – it’s an impossible task, especially with the kind of unprecedented injection of fiat currencies being pumped into the global system. Through the gold-based financing, Century is not only offering that hedge (actual gold ounces, and in the period it will likely be required) but is also providing a bunch of free shares for institutions to realize immediate (significant) returns while they wait for the inflation scenario to materialize. If they wanted to they could even sell their free shares for $.50 - $1.00 (at some point after the normal 4 month freeze – the share price will take off with financing) in order to reduce their purchase price.

I think it's a good strategy for this environment, and I think it's an offer that provides an excellent chance for all parties to win big. The timing is absolutely perfect for this. It would be ideal (a better sell) if the gold price could hold above $900 US throughout February, but it's not necessary. I think institutions are now better understanding what is happening in the bigger picture. This is why the Toronto institutional investment community has been doing bought financing deals (with gold mining companies) left, right and centre over the past month

This is also why buyers are willing to lock into a gold price of $900 US on gold ounces to be delivered 6+ years down the road (as was demonstrated by Peggy’s preliminary hedged deals associated with the Fortis package).

Who knows what the outcome will be, but it is certainly worth a try. The share price sucks. Clearly, very few people believe in this initiative. I don’t think it’s a case of people having inside info as to how the financing is progressing (and then selling), as there were essentially no buyers from the moment the announcement was made – which meant negativity from the beginning. I think it’s a case of the majority of people not believing that anything will come out of this initiative. There are whispers that things are coming along well with the financing, but yet people are selling for 6 cents. I guess you can’t really blame anyone. All the other financings have come apart at the eleventh hour, even after things went well throughout the process. I guess some of this has to do with bad timing and bad luck – all of the situations were unique. Nonetheless, a lot of people have gotten their hopes up in the past, only to get crushed. So, I suppose, the majority of people are saying (talk is cheap) show me the money Peggy!

Friday, February 6, 2009

A few quick comments

1) I like the steady $900 - $915 US gold price range. It's good that we are building a base, and not moving up too quickly. Sudden (significant) moves are not usually sustainable (unless they are moves of recovery). The gold price is strong despite jewellery demand falling off substantially in India (due to the Indian economy being hit especially hard). It is heavy investment demand that is the current strength in the gold price - money managers that have traditionally stayed away from gold are now moving some money into gold. Also, rich people are now looking to protect some of their wealth through gold. In addition, at times (not all the time though) gold has been decoupling from a lot of key influences, i.e. US dollar, oil, interest rate changes, various economic data.... There was one very positive (and new) decoupling event that took place this week. The Bank of England decreased their interest rate this week and that shot the gold price upwards. That would normally kill the gold price as it would weaken the pound, thus given strength to the US dollar index, and ultimately to the benefit of the US dollar (and the fall of gold). The fact that gold jump up is an indication that gold (for the moment anyway) is acting like a true global option in a time of major global problems. Gold didn't act this way a few months ago (with all that panic back then) because money managers were just trying to get out of the market as fast as they could (everything was sold, including gold). Now that the forced liquidation has stabilized, gold can be used as a true protector of wealth.

2) Clive of B2Gold (the former Bema guy) says that B2Gold is looking to do more mergers with companies with producing/near-producing gold assets (even after the recent merger with Central Sun Mining. He says he is looking to build B2Gold into a mid-tier gold producer soon. There are many other companies (with the abilibities to raise cash) that are looking for producing assets in this type of gold price evirnoment (and with where people think the gold price is going over the next several years). Their is certainly a merger market out there for Lamaque/Century, but there appears to be more attractive opportunities (for shareholders) to explore first, before going in that direction. With a $.065 share price now (and virtually no demand since the gold-based financing annoucement) it's obvious that not enough people think that anything positive will come about with this particular financing initiative. Given no buying demand at all since the annoucement, people have said no without even giving it a chance. As such, market sentiments is likely based on historical difficulties with closing off financings. It is likely not based on what info Octagon and Peggy possess, and what game plan they are using in attempting to achieve success. I would like to think that Octagon and Peggy chose this finaning option because they were comfortable of success. At $.065, it seems like Century is trading like this is our only option, even though the gold price is currently $914 US and many companies out there are looking to merge with or acquire a company with production or near-producing gold assets. In addition, the finance market has really opened for to gold companies with producing/near-producing/very advanced staged assets. I guess nothing should really surprise us anymore. Afterall, it was just recently that people were selling (giving away) millions and millions of Century shares for 1 cent.

3) As mentioned, the market to finance gold companies has really started to open up. Even some exploration companies (albeit high profile and high potential ones) are getting bought deals. Exeter just announced a $25.2M Cdn (+ over-allotments)bought deal today.

Thursday, February 5, 2009

Recent financing deals

Below are 10 other very recent financing deals in the gold minding space. They are all bought deals, and I think they were all Toronto deals also. As you may know, a bought deal is when the underwriter(s) buy the shares directly from the company. They then try to sell the shares to the public at a certain price (after the fact). If the underwriter(s) is unable to sell all of the bought shares then the underwriter(s) is forced to keep the remaining balance (none can be returned back to the company).

A bought deal is very straight forward, and perhaps it is the quickest deal to close, as the shares are essentially bought at the date of the announcement (with the exception of over allotments). The most time consuming part (prior to closing) is probably the documentation aspect. With the 10 companies below, the closing timeframe ranged from 10 days to 28 days (with many being around 21 days).

Now, Century’s deal is not a bought deal, obviously. It is also a gold-based financing deal, which is completely different from all of the deals indentified on this post. The entire process for Century’s deal is substantially more complex to put together. As such, it is logical to think that the targeted timeframe required to put together this gold-based financing deal would be dramatically greater. However, (although it’s a longer timeframe) it doesn’t appear to be that much longer. Century’s deal was announced on February 2’09 and Century has given a targeted close date of end of February, thus representing a close off timeframe of 27 days.

It’s either Octagon and Peggy are feeling confident that they can get sufficient institutional investors to subscribe to this gold-based financing offer or they have miscalculated with regards to the timeframe required. Certainly, the 27 day turnaround time might suggest that Octagon and Peggy believe they have gone into this with a solid game plan for success – let’s hope so.

I think there might be a certain appeal/attractiveness to our offer (perhaps that fills a void). What we have going for us is the innovativeness of this gold-based financing deal. As you can see, all of these other 10 companies sold the exact same deal. No one offered the option of buying gold ounces and getting free shares (along with the cheap warrants). Our deal may be appealing for institutional investors who are looking for something different, especially the attractiveness of owning their gold ounces (with the extremely bullish gold price outlook).

In my opinion, the gold-based financing offers the best of all worlds:

1) it’s like owning your own little mining company (which produces 1 oz gold per year);

2) while being invested in a gold ETF (getting the pure gold price benefits like ETFers);

3) while owning shares in a publicly traded company (realizing significant share price appreciation)

I guess only time will tell how well the deal comes together

1) Agnico-Eagle Mines - $290M US bought deal, announced Nov 20’08 – was closed 14 days later

2) Red Back Mining, deal #1 - $60M Cdn bought deal, announced Nov 21’08 – was closed 21 days later

3) Minefinders - $40M Cdn bought deal, announced Dec 2’08 – was closed 10 days later

4) Centamin Egypt - $60M Cdn bought deal, announced Jan 20’09 – expected to close 28 days later

5) Kinross Gold - $360M US bought deal, announced Jan 21’09 – expected to close 15 days later

6) Red Back Mining, deal #2 - $150M Cdn bought deal, announced Jan 23’09 – expected to close 21 days later

7) Anatolia Minerals - $52M Cdn bought deal, announced Jan 23’09 – expected to close 21 days later

8) Alamos Gold - $75M Cdn bought deal, announced Jan 26’09 - expected to close 22 days later

9) Silver Wheaton - $250M Cdn bought deal, announced Jan 26’09 – expected to close 19 days later

10) Osisko Mining - $350M Cdn bought deal, announced Feb 3’09 – expected to close 22 days later

Wednesday, February 4, 2009

While we wait for end of Feb

A major side benefit of the Lamaque financing:

There are some working capital dollars built into the financing total. Hopefully part of that working capital amount will go towards quarterly General and Corporate costs, at least until Lamaque becomes cash flow positive later in year 1.

Currently, San Juan is carrying the entire company, and doing so with only a run rate production of around 16,000 ounces (annualized). With the closing of the Lamaque financing, 100% of San Juan's profits will be freed up to be invested right back into San Juan on a daily basis. Injection of capital not only means a more stable San Juan operation (lower cash cost per oz, etc.), but it also means a substantial increase in San Juan's total production ounces.

With the gold prices at the levels they are right now (and expected to go higher), (and the type of cash I can see being self funded by SJ's operation) I can see San Juan's production ounces moving from 16,000 now to 35,000 within a year or two.

As such, by the time Lamaque ramps up to its targeted production level of around 110,000 ounces, I can see our company wide production ounces being eventually around 145,000 (110K Lamaque + 35K San Juan).

If everything comes together as expected we could see ourselves with 145,000 ounces annually, a gold price of $1,100 US, a cash cost per oz of $380 - 420 US (blended nationally - Lamaque and SJ) and virtually no traditional debt (or very little).

Closing off this gold-based financing is naturally the key to accomplishing all this. If the financing gets closed off, everyone will eventually make a lot of money on this investment, especially the institutional investors that decided to subscribe to this gold-based financing offer.

Gorman's independent technical DD report is available for any institutional investor (or anyone else for that matter) to review (either the summary report or the detailed comprehensive report). Gorman has been doing this for over 30 years (I think) and he is highly respected by the financing / banking community. I have done some research on him to better understand which companies and which deposits he has worked with over the years. It appears to be a very impressive list.

My understanding is that Fortis did not want to work with just any technical DD guy (they wanted someone reputable and someone they considered one of the best in the business). Century had to wait around until this guy became available (back when they started this initiative).

Tuesday, February 3, 2009

Potential per unit returns for institutional investors

(as I understand it)

Cost per unit - $4,400 US (or $880 US per oz), $5,301 Cdn (assuming .83 conversion)

Institutional investors that purchase this deal MUST believe in a higher gold price.

Century’s share price will increase dramatically with a successful ramp up of production at Lamaque (100K oz per yr or better).

Each unit comes with 600 outstanding shares, for free.

Each unit comes with 1,000 warrants, at most likely an almost free exercise price.

Scenario 1 - $1,100 US gold price and $3 Century share price (during payback period)

Value of gold ounces per unit during payback period: 5 ounces * $1,100 US /.83 = $6,627 Cdn per unit

Value of shares per unit: 600 * $3 = $1,800 Cdn

Value of exercised warrants per unit: 1,000 * $2.85 ($3 - $.15 assumed warrant exercise price) = $2,850 Cdn

Total value of unit during payback period for institutional investor = $11,277 Cdn

Net profit per unit for institutional investor: $11,277 Cdn - $5,301 Cdn = $5,975 Cdn or 113% investment return

Scenario 2 - $1,100 US gold price and $2 Century share price (during payback period)

Value of gold ounces per unit during payback period: 5 ounces * $1,100 US /.83 = $6,627 Cdn per unit

Value of shares per unit: 600 * $2 = $1,200 Cdn

Value of exercised warrants per unit: 1,000 * $1.85 ($2 - $.15 assumed warrant exercise price) = $1,850 Cdn

Total value of unit during payback period for institutional investor = $9,677 Cdn

Net profit per unit for institutional investor: $9,677 Cdn - $5,301 Cdn = $4,375 Cdn or 83% investment return

Scenario 3 - $1,100 US gold price and $1 Century share price (during payback period)

Value of gold ounces per unit during payback period: 5 ounces * $1,100 US /.83 = $6,627 Cdn per unit

Value of shares per unit: 600 * $1 = $600 Cdn

Value of exercised warrants per unit: 1,000 * $.85 ($1 - $.15 assumed warrant exercise price) = $850 Cdn

Total value of unit during payback period for institutional investor = $8,077 Cdn

Net profit per unit for institutional investor: $8,077 Cdn - $5,301 Cdn = $2,775 Cdn or 52% investment return

Monday, February 2, 2009

Century to sell $66 million gold-based financing to fund Lamaque mine and improve company's financial position

BLAINE, WA, Feb. 2 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced today that it has chosen to sell a structured gold-based financing, whereby the Company will raise up to US$66 million from institutional investors and repay the loan over a period of 5 years with physical gold from production at the Lamaque underground mine in Quebec. The completion of this financing will also improve the Company's financial position by eliminating a significant portion of short-term liabilities.

The Company has chosen Toronto-based Octagon Capital Corporation as lead agent to arrange this brokered financing. Century and Octagon will work closely together to place this structured financing with qualified institutions. This financing is expected to close by the end of February 2009.

The Company will sell 15,000 units, each unit consisting of 600 common shares of the company, 1,000 purchase warrants and 5 troy ounces of gold, each such ounce deliverable by the Company on November 30 in each of 2011, 2012, 2013, 2014 and 2015. Each unit will be priced at $4,400. The combination of shares and warrants issued through this financing will result in less than an additional 15% dilution to current shareholders.

After evaluating several strategic options and consulting with various investment banking groups over the past two weeks, the Company has chosen this solution, which it believes is in the best interests of Century's shareholders and other stakeholders.

This financing alternative will allow Century to secure financing by committing just a small percentage of the gold that will be mined at Lamaque between 2009 and 2019. The gold-based financing will also eliminate the significant dilution of the Company's shares and overhang normally associated with convertible debt and other conventional financing methods. The method chosen by Century also allows the Company to avoid excessive interest rates associated with high-yield debt facilities.

The funds raised through this financing will be used for the Lamaque project development (74%), working capital and pay down of short- and long-term liabilities (19%), and various fees and costs associated with the closing of this transaction (7%).

Margaret Kent, President and CEO of Century commented, "The Board of Directors and management consulted financial advisors and reviewed numerous alternatives for the Lamaque project, including mergers, joint ventures, high-yield debt and other facilities with senior lending institutions. Based on these consultations, management determined that in a robust gold market and with a positive outlook for gold, it is in the best interests of Century's shareholders to minimize dilution with a gold-based financing alternative. Octagon Capital Corporation reviewed available information from the Fortis financing due diligence process and has agreed to be lead agent for the offering."