Saturday, August 8, 2009

Another company with prepaid gold sales

I recently did some research on other companies with a prepaid gold sale financing. I only found one other recently announced deal. The company is called Luna Gold. They are small in every aspect relative to Century. However, they went down a similar financing path. They did a huge (extremely dilutive) equity financing early this year and then they completed a prepaid gold sales financing just 2-3 months ago.

They have 346.4M shares outstanding, but yet they trade at $.39 per share.

Below is some key info on both companies. The wildcard in the comparison is Century’s debt covenant situation (including the Completion Guarantee). I have profiled the Completion Guarantee for Luna Gold. We don’t know what is in the debt covenants for Century and whether everything is reasonable. As such, I will leave that out of the equation for Century, given that we have nothing to work with at this time.

Assuming debt covenants are reasonable for Century, with Luna Gold currently trading at $.39 per share (after going down a similar path) I hope $.39 would be a good starting point for Century as well (if/once our deal closes). It would be better than the current $.145 share price (again, if the deal is not too risky of course). Given the comparative numbers between the 2 companies, logic would suggest that Century should trade higher than Luna Gold upon closing, but (after being beaten down for so long) I’m sure we will all settle for $.39 as a starting point (if we can get it).


Luna Gold

*outstanding shares – 346,393,000
*current share price - $.39
*current market cap - C$131.1M
*Country – Brazil
*P&P Reserves – 729,000 ounces
*Total Resource – 1,300,000 ounces
*prepaid gold sales committed to financing – unclear, but it appears to be ongoing (it could eventually be over 200,000 ounces, if I understand their situation correctly)
*prepaid gold sales as a % of P&P Reserves – 17%
*prepaid gold sales as a % Total Resource – 17%
*completion guarantee (part of debt covenants) – “Luna has provided a completion guarantee that within 30 months from the date that Sandstorm makes the Upfront Payment, the Project will produce a minimum of 12,500 ounces of payable gold in any three consecutive month period.”
*production start up – Q2’10
*2010 targeted production – unclear
*2011 targeted production – 60,000 ounces
*2012 targeted production - 60,000 ounces
*2013 targeted production - 60,000 ounces


Century Mining

*outstanding shares (after deal closes) – 329,300,000 (assuming $.18 Flow-Through shares, $.15 regular shares, 2M shares issued for commissions)
*current share price - $.145
*current market cap - C$28.7M
*Country – Canada (Quebec), Peru
*P&P Reserves – 1,300,000 ounces (Lamaque & SJ)
*Total Resource – 6,000,000 ounces (Lamaque & SJ)
*prepaid gold sales committed to financing – 50,000 ounces in total
*prepaid gold sales as a % of P&P Reserves (Lamaque & SJ) – 3.8%
*prepaid gold sales as a % Total Resource (Lamaque & SJ) – .8%
*primary completion guarantee (part of debt covenants) – unclear at this time
*production start up – SJ currently in production, Lamaque targeted for production Jan’10
*2010 targeted production – 67,000 ounces (Lamaque & SJ)
*2011 targeted production – 71,000 ounces (Lamaque & SJ)
*2012 targeted production - 104,000 ounces (Lamaque & SJ)
*2013 targeted production - 130,000 ounces (Lamaque & SJ)

2 comments:

bigjohn37 said...

Production, you are to be thanked & congratulated for your ongoing diligent work, on behalf of all of us shareholders of CMM. I just hope that PK & Company read your postings.
Thank you much, BJ

Peter said...

It's funny you should mention Luna. I owned the company that did the deal with them - Sandstorm, and I was amazed at how much they got from Luna. I believe the CMM deal was much better.