Sunday, August 2, 2009
Anybody notice the last sentence
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."
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13 comments:
yes thats right lamaque have a great potential cuz i work in and some stoppes have 125 g/t who i work so lamaque is a good investment and garanty for a good futur for all investors
As we all know, it has been a complete nightmare over the past 12 months on trying to get financing to restart Lamaque. Financing difficulties aside, the efforts have resulted in some good side benefits, especially with regards to DD work.
A lot of institutions have passed through over the last 12 months and they have all had positive DD findings.
Gorman (Puma Resources Limited) prepared the main technicall DD report. It was used and embraced positively by both Fortis and the recent Far East investors. Those deals did not end up closer for other reasons.
Most recently, both the banking institution and Union Securities have performed their own respective DD, with results being positive. From the recent NR:
"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."
With the recent site visit, I heard that the Union guy felt that surface conditions are good. I believe he also mentioned that their is some contingency built into the mine plan, which should provide some flexibility. The Gorman note (below) is also consistent of this, as he had a lot of influence on the final version of the mine plan.
I wanted to post a few quotes from the Gorman technical DD report (still on front page of Century's website), but before I do that I'll share a quick thought on personnel. It is my belief that the VP of Operations, Adrian McNutt, was overmatched at Lamaque (both with the open pit earlier years and the u/g operation in recent years). However, my understanding is that he hasn't been involved with Lamaque over the past 12 months. I think he is focused on San Juan. I think it was critical to move him away from Lamaque, after all these years of substandard performance (and I'm being nice with my description here). As a result, I don't believe he was involved in building the final version of the Lamaque u/g mine plan. Century brought in Tim Gouch (from Australia), as a consultant, to drive the mine plan in the second half of last year. Century should try to bring him in again once funding is available. Also, I wonder if they have the new VP Operations for Lamaque selected as yet, for once funding is available. They should have gotten some good candidates, with the mining downturn and all.
I will continue this on the next post.
Gorman visited the underground as part of the technical evaluation, and came back with some key confirmations (section 1.4 of the report):
"The visit underground confirmed that flat vein stopes were typically 5’ to 8’ in height (1.5 to 2.4m) and provided evidence that the ore and host rocks are strong and competent, ventilation is adequate, workings are dry and the geometry of the veins is typically, but not always, predictable."
Gorman worked with Century to ensure the Project Execution Plan maintained a certain level of conservativeness (section 1.8):
"At PRL’s request Century prepared and delivered a Project Execution Plan (PEP) in September 2008. Although the PEP was not fully comprehensive, PRL considered that the overall plan is practical, realistic and executable. In the September 2008 report PRL considered the ramp up of mine production in 2009 to be aggressive given that it may be impacted by the timing of the issue
of permits, mine equipment deliveries, personnel build up and contractors’ availabilities. The
November 2008 plan provided by Century forecasts reduced production over a longer ramp up
period. PRL accepts the revised Century plan as summarised in section 1.4."
Aside from the mine Plan, Gorman feels that there are a lot of other positive factors that will enable a successful restart of Lamaque (section 1.8):
"The recruitment/rehiring plan is considered to be acceptable given that relations with the Union
and former workers are good and are constructive despite there being some back pay owed to laidoff
employees. Other factors which are expected to contribute to a successful restart include the
close proximity of the mine next to Val D’Or; history of allegiance and loyalty to the operation;
the good working conditions; planned competitive pay structure; and the positive relations with
community."
Hi Roxy: Yes, that stood out like a sore thumb. I am not sure if it is window dressing, but obviously PK thinks in the near term CMM, will be re-valued to an acceptable price for her to consider selling some of her investment. September cannot come soon enough.
Hi Roxy; CMM's share re-valuation seems to be a "certainty"(?!) not only because of PK's latest vote of confidence, but because of the influence of the "Lamaque Factor" (which will impact on the shares sooner-or-later). Right now the market still seems to be sceptical due to PK's track record of delivering on promises.
Let's cross our fingers!
its official now century announce the reopen of lamaque in septembre,
they says that at the news today its so great news for use and we going to have our last paid and the bonus paid
rick,,, lets hope you are right. that you get your job back and your back pay. I am all for that. Good luck and good luck to investors. I have been speculating so long on this stock, I must label myself as an investor. Yuk! LOL.
production 05 you are really in the error with the condition of the lamaque mine. if the situations are so good and favorable. how to explain that the mine had at least ten superintendent with the factory and as much of managing director in 4 years. you say that the mine is competitive on the level of the pay whereas the wages of the employers are at least ten pourcent in bottom of the mine nearest. positive relation with the communauter, they is completely false.
it is a truth large challenges which awaits you to do something of good and to bring back confidence towards people of the community. people will never oublirons the evil which theirs was caused. I wish you good luck in the negotiations of the new collective agreement because I do not think that they will be to tend towards the company.
a last point, if adrian reveint you can be sour that the mine will crumble once again. it is one of the factor to the fact that we never had stability in the staff of the mine.
yeah rhump they really said they going to restart the lamaque in september and they talk about 2 investment ,1 is 20$ millions canadian and 25$ million US.
but mr marcoux the president of the union worker his not really optimist , he said a lots of miniers found a nother job and he not sure they going to come back to work at lamaque .
and the century going to have hire new miner but the mine going to show some good money to hired new good experimented miners . in the past a lot of miners leave the mine cuz the mine try to sheat the bonus
I listened to the conference call for the first time this morning. Here are a few quick notes/comments:
*C$3.6M of the C$20M equity financing is targeted to be via flow-through shares. If it works out then the flow-through shares will likely be a few cents higher. They didn't mention this on the conference call but I'm hoping that the flow-through shares will not have warrants. That is how it has been done with Century financings in the past, but it doesn't mean it will be the same this time. I'm sure it will depend on extent of the incentives required to solicit appropriate funding and close off the financing. With regards to the remaining C$16.4M equity financing, they are thinking that the warrants might be either quarter warrants or half warrants (nothing is set in stone at this time though).
*Finance prices are expected to be set in the next week or 2. They hope to have the equity cash in our account by end of August, at which time Century expects to update the market, via NR. Although, the closing will not happen until after labour day September, in combination with the Gold Sale financing with the banking institution. In order words, the equity financing could move fast (if they get the targeted equity investors to sign up).
*Conventional mining in the first 4 months of production and mechanical mining afterwards. In the original production profile I had previously notice that (in the originally published forecast) production picked up in the 5th month of production. I had assumed that it might have something to do with access to ore in particular locations in particular months. With this new info, I'm now thinking that it might be a combination of both (access and switching over to more mechanical mining)
*Latest production target for Lamaque:
-49,300 ounces in 2010 (calendar)
-53,100 in 2011
-74,300 in 2012
-100,000 in 2013
Relative to the last version, 2010 is about 11K higher, 2011 is about 5K lower and 2012 is about 20K lower. The drop in 2012 is what really stands out. Perhaps it's a reflection of the lower up front funding, in combination of less cash flow to inject back into operations due to delivering the 10,000 annual ounces (although, this will be partly offset by not having make interest payments on debt, net of IQ payments of course).
San Juan is expected to produce 16 - 18K ounces, incremental to Lamaque ounces listed above. I must admit though, I am still totally unclear as to when they are targeting to increase San Juan's production to 30K. I think they are planning to provide a production update for San Juan. Maybe they will provide better clarity at that time.
*They plan on staffing up Lamaque to 223 people.
*Century hosted a open house for 35-40 geologist type representatives from local mining companies. Apparently, according to Peggy, they all walked away being impressed with Lamaque, and the progress made by Century's staff. They had luke warm thoughts coming in but lift being won over. The presentation should be available to investors, via Century's website, over the next 7 days or so.
*If after 12 to 18 months of production Century's share price is still in the $.20 area then Century will use its cash flow to buy back shares.
*Century is working with IQ/Gov't of Quebec to work out an even more favourable payment plan, and perhaps a discount. They have been amazing partners throughout this process. Their focus is on enabling those 223 jobs at Lamaque.
From the last NR:
"The prepaid gold facility is a forward contract to deliver 49,868 ounces of gold over a five-year term."
It doesn't say when the first 10,000 ounces are due.
"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."
It sounds like both the bank and Century are attempting to establish this relationship as a long-term partnership, as oppose to just a one off business deal. As such, one would think that sufficient ramp up period would be provided prior to the first 10,000 ounces being due for delivery. Assuming the financing gets close off, and is closed off on schedule in September (with production starting in January), there is still a ramp up period before commercial production is established and the operation becomes cash flow positive. It all depends on the aggressivenesss of the ramp up schedule but my guess is that it will be at least 4-6 months into production start up before it becomes cash flow positive.
As a result, (assuming the deal closes in Sept'09) a reasonable delivery of the first 10,000 ounces would be Sept'11. I think that is fair for all parties involved. If Century had to deliver the first 10,000 ounces in the first half of 2010 (before Lamaque reaches commercial production) then they can always deliver the ounces out of San Juan. It doesn't make sense though, that a contract would be put together in such an unusual structure.
If the first ounces are due in Sept'11 (which I believe is more fair and reasonable contract structure) then it provides Century 2 years to really crank things up, with very little pressure and distractions to deal with (a new era for Century, and its shareholders). A good size of the overdue payables will likely be paid off shortly after the financing gets closed. Also, Century is in discussions with IQ for a more extended payment schedule. The $750K - $1M annual IQ interest payment should be straight forward to service. In addition, IQ may provide a retirement discount upon closing of the financing deal.
There is no $65M debt to service or strict debt convenants from those potential Asian investors to worry about (if there happens to be delays). With the payables being more reasonable and IQ debt payment schedule extended, as well as the first 10,000 ounce delivery not being until 2011 (if Peggy is successful in negotiating this), a lot of the major near-term risks gets eliminated or minimized.
I think it provides a good environment for small cap investors, and share price appreciation for long suffering Century shareholders, if management is able to address all of those barriers.
This is why I say that delivery date for the first 10,000 ounces is important. It potentially clears the table for everything I just discussed. In addition, if ramp up goes well, it could provide a good 6 - 12 months for Century to bank some serious cash from operations, once Lamaque becomes cash flow positive.
Let's hope that the relationship with this new bank is not just words, but is a true long-term partnership that works for everything.
Let's hope that the relationship with Union Securities turns out to be fruitful also. They seem to want to establish a long-term partnership also.
anonimous you talk about the past situation of the open pit in sigma who they changea lot of super intendent in a short time. but you make a point about Adrian and about the salary you are right to if we compare whit other mines arround we are less paid and other mines gave some allocation for miners who came from a way from valdor century dont give a penny , other mine give arround 70$ a day for thos guys, am sure if century do the same thing they going to have a lot of miners to work at lamaque. take me for exemple i have to do 2 hours of traveleing to go work at lamaque so i need to rent a batchlor cost me arround 350$ month and i have to do a grocery to arround 150$ month and i need to gas to so arround 150$ month to, so it cost me to go work 600$ a month i have to take off my paid every time and the rest of the paid is for the bills and the loan so a lot of good miner dont wont to go work there cuz its cost mutch to work
Rick,,, all good points. Unfortunately shareholders have nothing to do with the day to day operation OR the will be day to day. These are good points you will have to bring up with management. management needs to bring in good miners who are trained and readily available so some sort of compensation package for out of town expenses is valid. I hope you can negotiate this with management when you and your co-workers return to work. The main thing is to get this mine operating again and VIABLE and then you are in a better bargaining position. Just my thoughts! Best of Luck!
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