Thursday, July 30, 2009

Prepaid Gold Facility and Equity Deal

July 30, 2009


- Century chooses gold-based alternative to previously announced financing for Lamaque -

Blaine, WA: Century Mining Corporation (CMM: TSX-V) announced today that the Company is in receipt of a financing term sheet for a US$25 million prepaid gold forward facility from a major international bank with a large gold trading business. The prepaid gold facility is a forward contract to deliver 49,868 ounces of gold over a five-year term. The debt facility has other price participation terms whereby the Company will receive an additional cash payment for gold pricing above US$800 per ounce, up to a maximum of US$950 per ounce. There are no upfront fees, warrants or interest payable to the bank during the term of the facility. The facility is subject to normal course due diligence and standard conditions to closing. Simultaneously, Century has appointed Union Securities as the lead agent to undertake a C$20 million equity issue. The combination of the two financings will provide the necessary cash for the Lamaque Mine to restart in September 2009. It is expected that both facilities will close by early September.

In connection with the gold facility the Company is paying a third party finder’s fee of US$200,000 and 2,000,000 shares of the Company. In connection with the equity issue, the Company has arranged to pay Union Securities Ltd. a 6% cash fee and 6% in broker warrants.

The Company further announced that after extended negotiations and consultations with its legal counsel and investment bankers, Century’s Board of Directors decided not to proceed with the proposed $65 million project financing that was originally announced on March 24, 2009. The Board’s decision was based on the conclusion that completing this transaction would have subjected the Company and its shareholders to an unacceptable level of risk with regard to the Lamaque project.

The Lamaque project is an exceptional gold asset with 1.1 million ounces of gold reserves (7,736,181 tonnes at 4.56 g/t), 1.3 million additional ounces of measured and indicated resources (8,310,074 tonnes at 4.81 g/t), and an additional 3.1 million ounces of inferred resources (19,633,148 tonnes at 4.96 g/t). The deposit hosts potential for several million more ounces. The project is ready to restart upon closing of the financing and will reach full production of approximately 105,000 ounces of gold production per year, at a cash cost of approximately US$423 per ounce of gold produced.

The Company also has existing gold production of approximately 18,000 ounces per year at Century’s San Juan Gold Mine (Peru), and expects to increase production at this mine over the next three years to about 30,000 ounces of gold per year.

The Company has chosen a gold based facility after reviewing several alternatives primarily to eliminate financing risk. Century can service the commitments under this facility from either its Peruvian or Canadian operations. Furthermore, the commitment of only 49,868 ounces of gold production from the more than 2.4 million ounces of reserves and measured and indicated resources and 3.1 million ounces of inferred resources will allow Century’s shareholders significant upside in a bull market for gold.

The banking institution is very experienced in lending to and trading with international gold mining companies and has conducted project due diligence over the preceding month. After review of the Company’s assets the bank has proceeded to issue the term sheet to the Company. Union Securities Ltd. has also completed technical due diligence on the project with an outside consultant and is prepared to broker the equity transaction.

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 presented herein.

Margaret Kent, President and CEO of Century commented, “In the end, the attractive debt facility the Company was previously offered was a facility that put the Company’s key asset at risk. After several months of working on this loan it became evident that we could not modify the lender’s loan structure to fit our needs. We will proceed to close and draw down the prepaid forward facility with this very reputable lender and complete the equity raise.

Our potential long-term relationship with a bank well established in the gold business will allow the Company to capitalize upon various opportunities that will present themselves in the gold market. This has been a long process, but during this time the Company has continued to work on the Lamaque project and enhance the value of the project. Unfortunately, this has not been reflected in the Company’s share price. This mine is shaping up to contain an exceptionally large resource. This financing package will afford our shareholders a tremendous amount of upside and we will start up the mine in September with gold production by January. This is why I recently converted my debenture and exercised my warrants.”

Investor conference call

Management will host a conference call on Tuesday, August 4 at 9:00 a.m. Pacific time (12:00 p.m. Eastern time) to discuss the details of this press release. Mining analysts, investors and the media are invited to phone 1-888-730-9135, or 1-517-308-9062 if outside Canada and the U.S.A., followed by the pass code 5655722 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, August 14 by dialing 1-800-704-0516, or from outside North America 1-203-369-3323.



Friday, July 24, 2009

Carib,,,,,,,,, could you post

today's trades. Friday July 24th. Thanks in advance! rhump.

Wednesday, July 22, 2009

Lamaque will shine one day

Hi Rhump,

Thanks. I will take a look at the updated 43-101 report on SEDAR.

Aside from the PK factor thing, it amazes me how the market, and institutional investors for that matter, treat the Lamaque underground property like crap. I think people forget that Lamaque has produced 9,287,450 ounces of gold since 1935 (almost entirely from the underground). A property cannot have that level of success, for that period of time (including during periods of low gold prices), and not be world class and distinguished.

Quite often, the best places to find gold discoveries are where gold has been mined successfully before. Right now, some of the greatest success stories in the world at located on properties with former production.

1) Goldcorp’s Red Lake Mine

“1994: Red Lake Mine was a marginal operation that been in continuous operation since 1948. It had been starved of capital and its performance had always been overshadowed by Campbell. Conventional wisdom said the Red Lake was finished, but Goldcorp challenged this belief at the beginning of 1995 when a $7 million exploration program was initiated that lead to the discovery of a high grade zone of gold mineralization.”

“1995: Significant discovery announced at Red Lake – nine holes averaging 311.31 grams of gold per tonne across 2.3 metres. The mineralization was discovered at a depth and location previously thought to have no potential.”
The rest is history, right?

I believe Goldcorp used a similar modeling technique (to assist with their exploration efforts) that Century is using with Lamaque right now. Actually, I believe even the same modeling guy that worked with Goldcorp is currently working with Century or initiated Century’s very successful modeling program.

2) Detour Lake

“The Detour Lake joint venture consists of the wholly owned exploration lands and the mine option lands covering the former Detour Lake mine which produced 1,764,985 ounces of gold during its 17-yearhistory.

How successful has Detour Gold’s exploration program been? Detour Gold currently has 13,200,000 of 43-101 ounces.

3) Osisko Exploration

“November 8, 2004: “The Canadian Malartic property includes the former Canadian Malartic Mine which produced over 1 million ounces of gold at an average grade of 3.37 g/t Au between the years 1935 - 1965. Historical production in the Malartic camp from 1935 to 1979 (Canadian Malartic and the adjacent Barnat-Sladen and East Malartic Mines) totaled over 5 million ounces (figures obtained from public data base of the Ministere des Ressources Naturelles du Quebec).”

“November 23, 2004: “…..announce results of the preliminary review of acquired technical documentation on its recently optioned Canadian Malartic property, Quebec. The review indicates that the Canadian Malartic property has a reported historical resource of over 500,000 ounces gold contained within several near-surface deposits.”

How successful has Osisko’s exploration program been? Osisko currently has 10,010,000 of 43-101 ounces.

There are plenty of other examples.

Lamaque currently has about 5,500,000 of official 43-101 gold ounces identified within the Lamaque complex. The company believes that this will eventually be increased to at least 9,000,000 ounces, and that only represents ounces within the complex. Century has a large land position (mineralized, with some drill tested results) beyond the complex which will eventually add significantly more ounces to the resource count.

I am of the belief that Lamaque will eventually be hugely successful. It’s ours and we deserve to reap the benefits. Hopefully we will begin the journey down the road very soon, one way or another.

UpdatedTech Report added to SEDAR

Century has submitted a 226 page Updated Tech Report including the new Inferred oz at Lamaque.

Monday, July 13, 2009

With financing, (true) Gross Value of CMM = C$441,076,879

(my calculations)

US$100 = 1 P&P Reserve 43-101 oz in ground
US$50 = 1 M&I 43-101 oz in ground
US$10 = 1 Inferred 43-101 oz in ground
US$5 = 1 Resource oz in ground (tabulated prior to launch of 43-101 standards)

Exchange rate = 1.1538

1) Lamaque (43-101):

P&P Reserves, 1,134,971 ounces = C$130,952,954
Other M&I, 1,283,891 ounces = C$74,067,672
Inferred, 3,130,779 ounces = C$36,122,928

Total 43-101 Lamaque = C$241,143,554

2) Century has demonstrated good success with its 12 month development / exploration program at Lamaque (highlighted in the March’09 Presentation – still on website). Examples of this include the recent issuance of additional M&I and Inferred ounces and taking the Vulcan program down to the 2000 – 3000 ft level.

Century has listed an objective of adding 200,000 ounces in reserves. Given its success in announcing timely increases to the Lamaque resource base, I belief the chances are good that this will be announced at some point in the next couple of months. As such, I’ve decided to build it into my gross value analysis for Century.

Additional P&P Reserves at Lamaque (and assuming the M&I it originated from will be replenished), 200,000 ounces = C$23,076,000

3) San Juan (43-101):

P&P Reserves, 186,316 ounces = C$21,497,140
Other M&I, 16,475 ounces = C$950,443
Inferred, 175,125 ounces = C$2,020,592

Total 43-101 San Juan = C$24,468,175

4) Northbelt (non-43101)

Ounces calculated prior to 43-101 standards being launched. PK has said that the count is currently 250,000 ounces for Northbelt. I have been able to find 175,000 ounces (averaging grade of 10.3 g/t and 4.0 g/t) via online documents. The other 75,000 ounces is likely located in internal documents that are not published online.

Non-43101, 250,000 ounces = C$1,442,250

5) Aumaque (non-43101)

Ounces calculated prior to 43-101 standards being launched.

Non-43101, 100,000 ounces (average grade between 6.0 g/t and 8.5 g/t) = C$576,900

6) Poderosa shares = C$370,000

7) Taking a conservative approach, no value was assigned (in this analysis) to any of these other solid properties:

*Other parts of the Lamaque Complex
*Excellent exploration properties surrounding Lamaque (outside of the Lamaque Complex)
*A number of mineralized properties surrounding San Juan
*Juneau (Alaskan) properties
*Erika copper property
*Carolin Mine
*Goodchild properties

8) In today’s world, it would cost far beyond C$125,000,000 to put mining (underground – most expensive type) and processing (milling – most expensive type) infrastructures in place at Lamaque, comparable to what is currently in place right now.

9) In today’s world, it would cost at least C$25,000,000 to put mining and processing infrastructures in place at San Juan, comparable to what is currently in place right now.

10) Total Gross Value of CMM = C$441,076,879

Saturday, July 11, 2009

Another Value Comparison

Occasionally I've posted on this blog an example of how much Century is undervalued compared to its peers. There was a news release that I read on Kitco this week that caught my attention. It was the announcement that Brazil's Vale (the world's second largest miner) had agreed to an option to purchase 60% of Intrepid Mines Indonesia's gold-copper project.

This is a low grade deposit with gold grades of 0.5 grams/tonne and has 2.57 million of inferred ounces. Vale is paying for the cost of the feasibility study to determine if the project is well, feasible.

If so, Vale will be paying US$ 40 million for 60% of 2.57 million inferred ounces for a property in Indonesia that has no infrastructure. At a grade of 0.5 g/t, you have to process over 60 tonnes of material to recover 1 ounce of gold. It will be years before any gold is mined from that deposit.

Century has 2.4 million ounces of Measured and Indicated Resources, including 1.1 million ounces of Proven and Probable Reserves plus 3.1 million inferred resources for a total of 5.5 million ounces gold at Lamaque.

Century's market cap is less than Can$ 30 million. The mine infrastructure at Lamaque alone is worth multiples of that number.

So if you had US$40 million to spend on an acquisition, which is the better value?

60% of 2.57 million of inferred ounces of low-grade gold in Indonesia, with its relatively high political risk, OR

100% of an operating mine in Quebec, Canada that has 5.5 million ounces of mostly 43-101 certified gold with a fully operational plant that can start producing gold within a few months.

And BTW, you also get a profitable and operating gold mine in Peru plus a bunch of exploration properties in Peru, Canada and Alaska for free.

Tough choice, no?

Yet we have owners of the company (existing shareholders) selling their company for the equivalent of Can$30 million. That's like owning a mansion in an affluent neighbourhood and selling it for $100,000 where on the other side of town in less desirable neighbourhoods, lessor houses are selling for $200,000.

It's one of the problems of owning shares in a low-cap company without significant institutional ownership. Many retailers have no clue what their shares are really worth. They buy stocks that are going up -often on little more than hype - and then sell when others are selling because someone must know something they don't.

With or without financing, the company's value is waaay more than its current market cap and companies like Vale won't let someone else pick it up for less than Can$30 million even if they have to assume existing debt. Vale was the company that bought Canada's Inco in 2006.

With financing, which I expect will be completed sometime this month, this company will not be a penny stock in a year or two.

Risk-reward situations like this one are hard to find.

I think PK contributed $400K cash to Century this week

"Pursuant to the terms of the note, Ms. Kent converted the note into units at $0.05. Each unit consisted of a common share and a common share purchase warrant exercisable at $0.10. The conversion of the principal amount, warrants and interest resulted in the issuance of 8,255,714 shares to Ms. Kent."

The principal debt was C$200K. It was eliminated with the $.05 conversion to common shares:

C$200,000 / $.05 = 4,000,000 common shares

I can see this registered on SEDI. However, on SEDI, I can also see the common shares converted from warrants.

4,000,000 common shares * $.10 = C$400,000

The only way PK could have exercised the warrants is by paying $.10 for each common share. As a result, the C$400,000 has to be new money.

So, it sounds like PK's actions had a positive impact to the balance of about C$600,000 (C$200,000 elimination of debt and C$400,000 new cash), plus interest elimination.

It looks like we picked up C$750,000 in new cash this week (C$400K from PK and C$350,000 from the Poderosa deal).

I think I now have a firmer guess as to why PK converted her debentures and exercised the warrants at this time (when she didn't have to for a long time into the future). I think it might be to assist with eliminating the $1M cash that is due to MRI. The C$750,000 goes a long ways towards this objective, without having to rely too much on existing cash balance and cash flow from San Juan.

As a side note, it means we increased our assets this week by C$1,120,000 (the C$750,000 cash + C$370,000 value of the Poderosa shares).

Potentially, some of that asset value was parlayed into eliminating $1,200,000 debt ($200K PK + $1M MRI)from our balance sheet (plus the elimination of interests).

The sell off in our share price this week is very unfortunate, especially given all the positive business developments.

PK's 8.3M converted shares now posted on SEDI

Peggy and Ross (combined) now own 11.5% (22,801,606) of Century's outstanding shares:

*13,951,700 - shared ownership between PK and RB
*8,262,714 - PK's newly converted shares
*335,346 - additional direct ownership by PK
*251,846 - additional direct ownership by RB

In addition to this 11.5% ownership, they also hold warrants that can be converted to 6,000,000 common shares @ $.75 per share. They also hold more than 2 million options, at various prices.

One would say that PK has plenty of incentives to close off some financing for shareholders, right?

Both Carib and I have provided a number of logical reasons why PK's action to convert her debt holdings to shares were intended to be positive for Century. I don't know how many people realize this but PK paid $.10 to convert each of the 4 million warrants to common shares. This is only 3.5 cents lower than the lowest traded Century shares ($.135) yesterday. Century's volume has been low for a few weeks now, as buyers wait for the financing to close (naturally, PK would have been fully aware of this when she made her debt conversion decision). I took a quick glance at the bids yesterday. It was so bad yesterday that (at the point of my quick glance) only 35,000 volume was on the bid side, for the top 5 bid prices combined. As you can see, it is virtually impossible to sell 8,262,714 shares on the open market right now. If it could be done then it would certainly be well below the $.10 price that PK paid to exercise her 4 million warrants.

This is perhaps the most obvious reason of all that points to PK's debt conversion action as being (intended to be) positive for Century, as I believe it completely rules out any ideas people may have about PK converting her debt now in order sell her shares on the open market (at a huge profit) - you know, 8,262,714 shares cannot fit into a hole that is configured for 35,000 shares.

Tuesday, July 7, 2009

CMM Insider Exercises Conversion Rights and Warrants


Blaine, WA: Century Mining Corporation (CMM: TSX-V) announced today that the Company’s Chairperson and CEO Margaret Kent has exercised all conversion rights and warrants associated with the C$200,000 convertible note announced on September 17, 2008. Ms. Kent has also elected to convert all interest accrued on the note into shares of the Company.

Pursuant to the terms of the note, Ms. Kent converted the note into units at $0.05. Each unit consisted of a common share and a common share purchase warrant exercisable at $0.10. The conversion of the principal amount, warrants and interest resulted in the issuance of 8,255,714 shares to Ms. Kent.

Ms. Kent now owns directly and indirectly 15,573,921 shares of the Company, or 7.9% of the total 197,978,400 outstanding shares of Century.

Monday, July 6, 2009

CMM Settles Law Suit Surrounding "Poderosa"

Century Mining Settles Law Suit Surrounding "Poderosa"

- Century receives cash payment and shares of Poderosa as settlement -

BLAINE, WA, July 6 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced today that it has settled a lawsuit in Peru that the Company had brought against Corporacion Minera San Manuel S.A., Compania Minera Atacocha S.A.A. and Monica Patricia Arias Vargas de Ucelli, Veronica Rocio Arias Vargas de Gamero, White Peak Resources Inc. and Koriarias Inc. regarding the binding agreement signed for the sale of shares to Century of Compania Minera Poderosa S.A.

As part of the settlement announced today, Century will receive 260,868 common shares of Poderosa, which have been held in trust since a Letter of Intent was signed by both parties in 2006. In addition to the shares of Poderosa, Century will receive a cash payment in the amount of US$300,000. Today's announcement brings to an end all litigation concerning the "Poderosa" deal.

The law suit Century filed in Peru was the result of what Century understood was a violation of a binding agreement between Century and the selling group of Poderosa. In 2006, Century and the selling group entered into an agreement whereby Century would purchase approximately 38% of the shares of Poderosa from the selling group. This agreement expired on November 17, 2006 and on November 22, Century was advised that the selling group sold their shares to a third party.

Margaret Kent, President and CEO of Century commented, "Our main focus now is closing a project financing for the Lamaque Mine and bringing it into production. Although litigation is sometimes necessary for the purpose of protecting the interests of shareholders, the process can require significant allocation of management's time and other resources. We are pleased have this matter resolved."