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.
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