Sunday, May 3, 2009

Thoughts on key liabilities

1) At end of Q3, $951K owing to Gerald Metals to close off hedge position and a balance of $1,869K in Working capital gold facility. The company had 3,000 ounces sitting in inventory at Lamaque. The company stated that they would pay down the $951K and the $1,869K via proceeds of the processed ounces in Lamaque's inventory. This was likely done in Q4. It is also likely that either that credit line (Working capital gold facility) or another credit line was utilized again, due to the extremely tight cash situation. It's unclear if they were successful in producing additional ounces at Lamaque (over the past 9 months) via spent carbons (they were planning to).

2) $15.4M Cdn owing to IQ (our secured lender) at end of Q3'08 - I continue to maintain that a key reason that Century is in such a favourable position now is due to the positive support provided by IQ during the difficult times. In addition, the January planning document stated that IQ was willing to settle the debt for only $9.0M Cdn had the Fortis deal gone through, thus giving Century a discount of $6.4M plus interest incurred since Q3. Nothing is ever guaranteed, but it would be reasonable to think that IQ would transfer some of that discount to this new $65M US deal, right? The settlement might not quite be $9M, as our potential new deal is for $65M US (higher) vs the Fortis deal of $55M US, but my guess is that the IQ discount will likely be in the same ballpark. My logic for this belief is that the extra cash will leave Century on more solid ground, and I think IQ is interested in establishing a successful Lamaque operation - I'm of the belief that IQ and the province of Quebec has job creation as a top priority for Quebec in these terrible economic times (mining is a major employment engine in Quebec).

3) Net Accounts Payable of $11.5M Cdn ($15M A/P and $3.5 Accounts Receivable) at end of Q3'08. In the January planning document, it showed that Quebec (excluding San Juan) had $10M Cdn in payables to be settled. Century has subsequentely announced that creditors agreed to settle $2.0M Cdn of the liabilities for shares of Century (@ $.25 per share). This is a very positive sign, as it demonstrates that our creditors believe in the direction of Century. It think it is also an indication that our creditors welcome the additional business they will receive from Century starting up Lamaque again, especially during these tough economic times - it is in their best interest to continue to support us. I think Century's success benefits everyone (miners looking for employment, creditors/suppliers, government, community, $65M lenders, shareholders.....).

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