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."

7 comments:

juha said...

600k+ C dollars in a heartbeat

rhump said...

Peruvian sols are worth 38 cents Canadian. Therefore, the 268k shares is worth approx. $ 100k CDN + the $300k US. So in total CMM receives about $450k CDN. One tenth of what they were looking for. hhhmmmm,,,, I guess PK has bigger and better things on her mind. At least I hope so. This financing deal is getting long in the tooth. May be this was one of the stipulations from the Asian investors. Clear up any and all litigations. Well CMM is moving in the right direction anyway. GLTA.

production05 said...

Hi Rhump,

I value today's Poderosa settlement deal at C$715,321.

*1 Poderosa share trades for 3.70 Peruvian Sols

*1 sol = .3284 US$

*1 US$ converts to 1.1594 C$

*1 Poderosa share trading for US$1.22 (3.70 * .3284)

*1 Poderosa share trading for C$1.41 (US$1.22 * 1.1594)

Value of shares = C$367,501 (260,868 * C$1.41)

Value of cash = C$347,820 (US$300,000 * 1.1594)

Total value of deal = c$715,321 (C$367,501 + C$347,820)

rhump said...

Hi Prod5; yeah you are right just re-did my calculations.
$0.38CDN x 268k shares x 3.7 sols = $367k CDN. Plus the $300k US ($ 348k CDN)= approx. $715k CDN. Oops, forgot to multiple $102k CDN with the Poderosa Minera SP of 3.7 sols. Anyway, my point was that PK originally was working on a $40M US settlement from this litigation but settled for pennies on the dollar. I believe this litigation had to be settled before the financing deal could/would go through. It is not like PK "the pitbull" to put this litigation to bed so easy. There had to be incentive to do so. Here is hoping for a financing announcement close at hand. Followed by some serious institutional buying (?????)Time will tell.

production05 said...

I have absolutely no idea as to what the status is with the financing. I've always assumed that they were waiting mainly for the money to arrive in the bank account. I get the impression that they have been waiting for a month now, but maybe much shorter (after adjusting for the conditional requirements that needed to be satisfied after signing by both parties).

Now, it's possible that those conditional requirements were not achieved until just recently, or maybe they are still outstanding. If such is the case then it's understandable as to why the funds hasn't arrived as yet.

The bottom line is that we don't know either way - at least I have no idea at all. My personal opinion is that Century should move on to Plan B or Plan C, that is if Century feels that they have fulfilled all of the conditions of the deal and the money still has not arrived within the expected time period (and if they feel that the chances are slim of the money arriving). We can't just expect the back up options to be there forever. Yeah, Plan A is the best option, but we can't wait forever (if the Plan A investors are not delivering) and risk losing all 3 options.

In my view:

Plan A - straight debt with the Chinese/Bangkok investors (via Union Securities)

Plan B - debt deal (with some equity) with US investors. Plan B can also deliver the US$65M, but comes with some share dilution also.

Plan C - merger with another severely under valued company. Plan C can also deliver the US$65M, but comes with share dilution - the extent of the dilution depends on negotiations. The upside is that it will leave the company debt free (there is something to be said for that in this environment)

If Century moves on from Plan A then I think they will focus on Plan B, the debt + equity option. The good part about this is that Century has been negotiating (at least) high level with these investors for several months now. As such, it may not take long to get to an advanced negotiation stage (assuming their terms are reasonable). Also, Lamaque has already been set up as a subsidiary and approved by shareholders. Escrow account has been set up (perhaps modifications needed to reflect new lender). Debt settlement negotiations likely already done with IQ. A lot of other preparation work has been done also. With a lot of the work already done, and transferable, it will likely not take as long to close off the Plan B option as it is taking with the Plan A option.

Obviously, Plan A is our best option. Let's hope that everything can still get closed off with the Chinese/Bangkok investors. However, I hope that management doesn't wait forever.

production05 said...

Hi Rhump,

FWIW, I've heard whispers that all parties (Century, Asians, Union Securities) are still working hard to eventually get the deal done.

rhump said...

P5,, thanks for the update. Looks like with today's NR of Kent exercising her 5 cent share options and 10 cent warrants, she is preparing for the announcement of the financing deal and the restart of Lamaque. Lets hope it is sooner rather than later. BW, Rhump.