1) Bedard Dyke Drilling
We’ve probably been drilling for 4 weeks now. I wonder if the assay results will be back within the next 2 to 3 weeks. I guess it all depends on how busy the external labs are at this time.
2) Vulcan Resource Update
We are probably overdue for the next update. We have received 3 updates so far this year (February, April and June) and they have been very fruitful in either significantly increasing our 43-101 resource count or identifying new high grade zones, or both. It would be good if they could release another update in November so that all parties involved in the financing deal can get a refresher of Lamaque’s resource potential in this US$1,040 (potentially US$1,500 to US$2,000) gold price environment. This isn’t the late 90s with US$250 – US$300 gold. We have the right product for this market – gold.
3) Our Val d’Or properties outside of the Lamaque Complex
At some point after the major PP gets closed off I would like to see Century toss a bit of spare change towards initiating work on one or two of our high potential target areas on these properties (if it doesn’t get in the way of the start up of course). There have already been some really good drill results in some areas in the past. Perhaps Century can create a Vulcan model with these historical drilled data also, thus enabling them to better select drill targets (along with the assistance of mapping, surveys, rock samples, pit holes, etc.). I would like to see Century drill maybe about 10 holes to test the continuation potential of the historical holes.
I personally believe there is enormous potential here.
I think demonstrating the potential of our adjacent properties will get some of the skeptics (the ones that don’t like old mines) excited about our fresh new un-mined Val d’Or properties.
From the Salaried Staffed Personnel job posting: “There also exists significant exploration potential on and near the property which is expected to add substantial ounces and years to the current production schedule and mine life.”
4) IQ Debt
I wonder if they will renegotiate the IQ Debt down from C$16.1M to say C$11M then pay it completely off later in the ramp up phase once the Lamaque development targets are achieved and the C$10.8M (US$10M) is released by the bank (from the Performance Reserves Account). It would allow Century to be pretty much debt free other than the US$33M prepaid gold sale to the bank, which will be paid back by delivering the 61,000 gold ounces over the next 5 years. It would also mean no interest payments to make which will be positive on our cash flow.
From the Circular: “The closing of the Private Placement is subject to, among other things, the following conditions:”
“(e) an agreement shall have been entered into with respect to either a buy-out or renegotiation of the long
term note held by Investissement Québec, on terms satisfactory to the Investor acting reasonably;”
5) The Exchange has conditionally approved the major PP
From the Circular: “The Exchange has provided its conditional acceptance to the Private Placement subject to the Company obtaining disinterested shareholders’ approval on the creation of new Control Persons and other customary conditions of the Exchange, including the Company issuing a press release with respect to increasing the size of the Private Placement from $20,000,000 to $21,000,000.”
6) Investor’s intention for Century: ‘sizeable gold producer’
From the Circular: “Kirkland and Gravity have indicated their intention to grow the Company into a sizeable gold producer and Shareholders should benefit from this growth and support.”
Saturday, October 31, 2009
Friday, October 30, 2009
A few initial key notes from the Circular
If my initial glance is correct, there is a chance that the financing could end up being $58,000,000 (not accounting for exchange rates) + $15,750,000 when the $.30 warrants are exercised.
The prepaid gold sales is now 61,000 ounces over 5 years. It provides US$33,000,000. However, US$10,000,000 will be deposited into a performance reserve account. My guess is that the US$10,000,000 will only be released once Lamaque achieves specific targets during the development period.
It looks like they will be closing $2,000,000 of the FT financing today (by end of October).
They are looking to close off another $2,000,000 FT financing in November, but prior to the major financing close off date.
It doesn't appear as if Finskiy and Scola are participating in the bridge financing.
Finskiy and Scola will be contributing $16,000,000 with a stand by guarantee for another $5,000,000 if additional purchasers are not identified for the $5,000,000. Essentially, if additional buyers (friendly to both Century and the Investor) are not identified then Finskiy and Scola will subscribe to the entire $21,000,000 (105,000,000 shares), otherwise they will stick to the C$16,000,000 (minimum requirement to access the US$33,000,000 bank financing).
It says that Finskiy and Scola could have a 42.9% ownership once the warrants are exercise. I have accounted for all those shares, as identified above. It means that they are not part of the bridge PP. Although, it looks like the 7,142,857 private sale has gone through. I guess it looks like they are currently official shareholders of Century shares, but not as substantial of a commitment as we would like to see at this stage. It would have been much more meaningful if Finskiy and Scola had participated in the bridge equity PP. It would have sent a much stronger message.
There might have been some last minute changes to the bridge PP, hence it is now scattered all over the map.
One other note, it sounds like they only need C$16,000,000 in equity financing instead of the original bank mandate of C$20,000,000.
The prepaid gold sales is now 61,000 ounces over 5 years. It provides US$33,000,000. However, US$10,000,000 will be deposited into a performance reserve account. My guess is that the US$10,000,000 will only be released once Lamaque achieves specific targets during the development period.
It looks like they will be closing $2,000,000 of the FT financing today (by end of October).
They are looking to close off another $2,000,000 FT financing in November, but prior to the major financing close off date.
It doesn't appear as if Finskiy and Scola are participating in the bridge financing.
Finskiy and Scola will be contributing $16,000,000 with a stand by guarantee for another $5,000,000 if additional purchasers are not identified for the $5,000,000. Essentially, if additional buyers (friendly to both Century and the Investor) are not identified then Finskiy and Scola will subscribe to the entire $21,000,000 (105,000,000 shares), otherwise they will stick to the C$16,000,000 (minimum requirement to access the US$33,000,000 bank financing).
It says that Finskiy and Scola could have a 42.9% ownership once the warrants are exercise. I have accounted for all those shares, as identified above. It means that they are not part of the bridge PP. Although, it looks like the 7,142,857 private sale has gone through. I guess it looks like they are currently official shareholders of Century shares, but not as substantial of a commitment as we would like to see at this stage. It would have been much more meaningful if Finskiy and Scola had participated in the bridge equity PP. It would have sent a much stronger message.
There might have been some last minute changes to the bridge PP, hence it is now scattered all over the map.
One other note, it sounds like they only need C$16,000,000 in equity financing instead of the original bank mandate of C$20,000,000.
Circular for meeting is on schedule
Given the mandatory deadline, I was expecting it to be completed at this time and it is. It is already posting on SEDAR. It has to be mailed prior to 21 days before the meeting. The meeting is now 25 days away. The Circular was likely mailed out yesterday or will be mailed out today or will be mailed out Monday, all depending on how long it takes to make thousands of copies and putting the packages together. Also, in my most cases it will go to a clearinghouse before being mailed directly to shareholders.
Thursday, October 29, 2009
My guess is that Century is waiting for TSX-V
I have been looking everyday and the TSX-V hasn't approved for filing at yet (at least they haven't made it public through their daily bulletins).
Perhaps it's taking longer due to added layers of complexity. For example, the bridge PP was announced for FT shares only (no warrants). However, if Finskiy and Scola subsequently joined the PP then their allotment would likely be common shares and warrants, as (being non-Canadians) they likely have little use (if any) for the benefits of FT shares. As such, the TSV-V may require more time to review the documents if the bridge financing now includes FT shares, regular common shares and warrants, and if additional parties are now taking down the PP.
I don't know if this is what Century is waiting for before issuing the NR. It would make sense though, given the large size of the PP. This would also be consistent with the last PP closed off by Century, which was delayed also. However, if you look back it would appear as if Century was waiting for the TSX-V filing also, prior to issuing the close off NR.
Sept 22'09 - TSX-V includes approved for filing note in its daily bulletin with regards to Century's C$1.1M financing.
Sept 22'09 - Century issues NR that C$1.1M financing has been closed off.
You see, the same day, and it was after the targeted date.
It's not always in-sync though. Sometimes Century issues their NR ahead of TSX-V's bulletin note. That could simply be a timing delay between when Century gets verbal notification of approval versus when the info gets published into the TSX-V bulletin. I guess the bottom line is that theoretically a PP cannot truly be closed off without the approval of the TSX-V.
Given the high dollar value of this current bridge financing, it is more than likely that Century is waiting for TSX-V to approve the filing (although there could be other factors behind the delay also).
Perhaps it's taking longer due to added layers of complexity. For example, the bridge PP was announced for FT shares only (no warrants). However, if Finskiy and Scola subsequently joined the PP then their allotment would likely be common shares and warrants, as (being non-Canadians) they likely have little use (if any) for the benefits of FT shares. As such, the TSV-V may require more time to review the documents if the bridge financing now includes FT shares, regular common shares and warrants, and if additional parties are now taking down the PP.
I don't know if this is what Century is waiting for before issuing the NR. It would make sense though, given the large size of the PP. This would also be consistent with the last PP closed off by Century, which was delayed also. However, if you look back it would appear as if Century was waiting for the TSX-V filing also, prior to issuing the close off NR.
Sept 22'09 - TSX-V includes approved for filing note in its daily bulletin with regards to Century's C$1.1M financing.
Sept 22'09 - Century issues NR that C$1.1M financing has been closed off.
You see, the same day, and it was after the targeted date.
It's not always in-sync though. Sometimes Century issues their NR ahead of TSX-V's bulletin note. That could simply be a timing delay between when Century gets verbal notification of approval versus when the info gets published into the TSX-V bulletin. I guess the bottom line is that theoretically a PP cannot truly be closed off without the approval of the TSX-V.
Given the high dollar value of this current bridge financing, it is more than likely that Century is waiting for TSX-V to approve the filing (although there could be other factors behind the delay also).
While we wait for the news
Alexandria Minerals came out with a 43-101 resource count at their Sleepy property this morning, of 150,000 Inferred ounces @ 3.0 g/t.
Their Sleepy property is 4 KMs away from our Sigma II Mine, in Louvicourt, Quebec. Sigma II is 20 - 25 KMs away from Lamaque, well within trucking distance. Placer Dome (trucked/mined) processed about 155,000 ounces (2.67 g/t) at Lamaque/Sigma in the 80s.
The Sigma II deposit is still open at depth. The property is relatively large. There is good mid-term potential for either u/g mining or o/p mining or both from Sigma II. The gold price is now US$1,040 and is expected to go much higher. With this type of gold price it might be quicker and cheaper to continue mining the deposit via o/p (especially since the deposit will likely be 2.67 g/t and likely getting higher as they go deeper).
It looks to be a large property so there is potential to locate new mineralized pits also.
Mining Sigma II via o/p will have none of the challenges we experienced while mining the Sigma o/p in recent years. Sigma II was never previously mined below the pit deposit.
Once the financing closes, Century needs to spend a couple of dollars to perform a preliminary assessment on Sigma II to determine if there is value in aggressively attacking the property. I think the gold price has presented a unique opportunity here.
In this gold environment, Sigma II has the potential to provide solid mill feed to Lamaque over the next few years while we wait on the lower parts of Lamaque to be dewatered.
I will attach a link of a map in the comment area.
Their Sleepy property is 4 KMs away from our Sigma II Mine, in Louvicourt, Quebec. Sigma II is 20 - 25 KMs away from Lamaque, well within trucking distance. Placer Dome (trucked/mined) processed about 155,000 ounces (2.67 g/t) at Lamaque/Sigma in the 80s.
The Sigma II deposit is still open at depth. The property is relatively large. There is good mid-term potential for either u/g mining or o/p mining or both from Sigma II. The gold price is now US$1,040 and is expected to go much higher. With this type of gold price it might be quicker and cheaper to continue mining the deposit via o/p (especially since the deposit will likely be 2.67 g/t and likely getting higher as they go deeper).
It looks to be a large property so there is potential to locate new mineralized pits also.
Mining Sigma II via o/p will have none of the challenges we experienced while mining the Sigma o/p in recent years. Sigma II was never previously mined below the pit deposit.
Once the financing closes, Century needs to spend a couple of dollars to perform a preliminary assessment on Sigma II to determine if there is value in aggressively attacking the property. I think the gold price has presented a unique opportunity here.
In this gold environment, Sigma II has the potential to provide solid mill feed to Lamaque over the next few years while we wait on the lower parts of Lamaque to be dewatered.
I will attach a link of a map in the comment area.
Wednesday, October 28, 2009
Amazing, I saw a US$1,500 per oz hedge deal
A US$1,500 hedge means that there is at least one hedge company willing to bet millions of dollars that the gold price is going well above US1,500 dollars for an extended period of time. This US$1,500 hedge means that someone fully expects to see a sustainable US$2,000 price - they are not betting all this money to just break even.
I know absolutely nothing about this Australian company called Catalpa Resources, but they were able to hedge 352,316 ounces of production for a price around US$1,500. That represents a gross revenue of US$500,000,000 when the ounces get delivered.
I don't think Century's share price will be $.155 per share when Century is producing 145,000 ounces (Lamaque and San Juan combined) @ US$1,500 gross revenue per oz.
Here is part of the article about Catalpa:
Neil Dowling
October 27, 2009 01:00pm
PERTH gold miner Catalpa Resources today announced it planned to pour its first gold in June next year.
In its activity statement for the September quarter, Catalpa says the timetable was based on rapid infrastructure progress at its Edna May gold project near Southern Cross.
It is buoyed by the successful raising of more than $106 million in debt and equity to advance the $92 million Edna May open-pit gold operation to production.
As part of the finance facility, Catalpa says it has sold forward 352,316 ounces of gold at an ``exceptional'' price of A$1557 an ounce.
I know absolutely nothing about this Australian company called Catalpa Resources, but they were able to hedge 352,316 ounces of production for a price around US$1,500. That represents a gross revenue of US$500,000,000 when the ounces get delivered.
I don't think Century's share price will be $.155 per share when Century is producing 145,000 ounces (Lamaque and San Juan combined) @ US$1,500 gross revenue per oz.
Here is part of the article about Catalpa:
Neil Dowling
October 27, 2009 01:00pm
PERTH gold miner Catalpa Resources today announced it planned to pour its first gold in June next year.
In its activity statement for the September quarter, Catalpa says the timetable was based on rapid infrastructure progress at its Edna May gold project near Southern Cross.
It is buoyed by the successful raising of more than $106 million in debt and equity to advance the $92 million Edna May open-pit gold operation to production.
As part of the finance facility, Catalpa says it has sold forward 352,316 ounces of gold at an ``exceptional'' price of A$1557 an ounce.
Tuesday, October 27, 2009
Closing the 5 Million offering
Just a quick note. I have an account at Canaccord, and I regularly participate in offerings at other firms. I usually ask my broker, if they can get me some, and 90% of the time, the answer is yes. So, upon hearing about the Flow Through shares, I figured it was a good deal, and I'd take some down. My brokers desk called Union, to ask for CMM shares, and they were refused. This was just days after the offering was announced, so in my mind, the deal is fully sucscribed.
Pete
Pete
Saturday, October 24, 2009
I wonder who the new Chairman will be
1) Idea for the new Chairman and the new IR person:
“Upon closing, the Investor will be entitled to nominate three members to Century's Board, and an independent non-executive chairman will be named.”
Hopefully they appoint someone that is well respected in the investment community (and maybe with some connections), especially with institutions.
I would like to see the new Chairman (once appointed) and the new IR person (once hired) to set up meetings with various institutional investors / fund managers to present Finksiy’s and Scola’s vision for the new Century Mining. I would like one of the meetings to be with Sprott Asset Management (if Sprott is receptive to a meeting). It would be nice to get John Embry (of Sprott) on side again. I think he knows that Lamaque can be a good investment in a gold bull market, once cashed up and with leaders he is comfortable with (assuming he warms up to the new Chairman, as well as to Finskiy and Scola).
2) John Embry’s successful experience with Lamaque during last bull market:
As mentioned in a pervious post, John Embry made a lot of money with Lamaque during the last gold bull market frenzy (late 70s – early 80s). Sigma Mines (which mined the Sigma u/g back then – Sigma u/g is now part of the Lamaque Complex), went from $.30 per share to $3.00, then from $3.00 to $36.00, and then eventually peaked at $57.00 per share. I heard John Embry state that he was invested in Sigma Mines from $3.00 all the way up to $20.00.
We’re not going to see $57.00 per share this time around for Sigma Mines / Century Mining, but I’m sure even John Embry realizes that there is potential here for a significantly appreciated share price relative to today’s price, especially once the company is cashed up and with new figureheads (with deep pockets) in place.
By the way, I will post a link in the comment area of a report I read back in 2005, prepared by Doug Casey. On page 7 and 8 of that report it shows the share prices of key junior companies during the time periods of Dec. 1978 to late 1980, during the last gold bull market. For Sigma Mines, it only captures the $36.00 to $57.00 per share period. For Carolin Mines (as I previously posted about also), it showed the climb from $3.10 to $57.00. A few of the other companies/mines on the list will be recognizable, but many will not be also.
3) Growth Strategy idea for Finskiy and Scola:
Also, I wonder what strategy Finskiy and Scola will employ to grow the business, once we reach that stage. Finskiy is the CEO for Intergeo Managing Company, the mining and exploration arm of Onexim Group, which is Russia's largest investment fund with $25 billion in assets. As we know, Prokhorov (currently Russia’s wealthiest person) is the driving force behind Onexim. I believe Prokhorov and Finskiy are close business associates.
Once Century’s share price is high enough, and the time is right, I would like to see a growth strategy that includes a partnership with Intergeo/Onexim, where both companies can benefit. The strategy can focus around Century merging with distressed companies with good assets (in need of financing). As part of the merger, Century can set up non-recourse financing with Intergeo/Onexim to either roll over current debt obligations from the new company or provide project financing for mine development projects (from the new company). It is something that will be attractive to shareholders of any company in distress. Also, these are situations where we can utilize Peggy’s best skills (in complex deal making roles, especially ones involving managing or rolling over debt). Intergeo/Onexim will benefit also because (as a financing partner) we can provide them with a very good interest rate on their non-recourse financing. This should be attractive since global interest rates are expected to stay relatively low for a number of years into the future (the global rates might increase but we are not going to see sky high rates until the unemployment rates have decreased by quite a bit, which typically doesn’t happen overnight).
“Fran Scola is a partner at LFM Partners, a partnership with extensive investments in the natural resources sector.” I don’t know much about LFM Partners, but hopefully Century can create a financing partnership with them also.
“Upon closing, the Investor will be entitled to nominate three members to Century's Board, and an independent non-executive chairman will be named.”
Hopefully they appoint someone that is well respected in the investment community (and maybe with some connections), especially with institutions.
I would like to see the new Chairman (once appointed) and the new IR person (once hired) to set up meetings with various institutional investors / fund managers to present Finksiy’s and Scola’s vision for the new Century Mining. I would like one of the meetings to be with Sprott Asset Management (if Sprott is receptive to a meeting). It would be nice to get John Embry (of Sprott) on side again. I think he knows that Lamaque can be a good investment in a gold bull market, once cashed up and with leaders he is comfortable with (assuming he warms up to the new Chairman, as well as to Finskiy and Scola).
2) John Embry’s successful experience with Lamaque during last bull market:
As mentioned in a pervious post, John Embry made a lot of money with Lamaque during the last gold bull market frenzy (late 70s – early 80s). Sigma Mines (which mined the Sigma u/g back then – Sigma u/g is now part of the Lamaque Complex), went from $.30 per share to $3.00, then from $3.00 to $36.00, and then eventually peaked at $57.00 per share. I heard John Embry state that he was invested in Sigma Mines from $3.00 all the way up to $20.00.
We’re not going to see $57.00 per share this time around for Sigma Mines / Century Mining, but I’m sure even John Embry realizes that there is potential here for a significantly appreciated share price relative to today’s price, especially once the company is cashed up and with new figureheads (with deep pockets) in place.
By the way, I will post a link in the comment area of a report I read back in 2005, prepared by Doug Casey. On page 7 and 8 of that report it shows the share prices of key junior companies during the time periods of Dec. 1978 to late 1980, during the last gold bull market. For Sigma Mines, it only captures the $36.00 to $57.00 per share period. For Carolin Mines (as I previously posted about also), it showed the climb from $3.10 to $57.00. A few of the other companies/mines on the list will be recognizable, but many will not be also.
3) Growth Strategy idea for Finskiy and Scola:
Also, I wonder what strategy Finskiy and Scola will employ to grow the business, once we reach that stage. Finskiy is the CEO for Intergeo Managing Company, the mining and exploration arm of Onexim Group, which is Russia's largest investment fund with $25 billion in assets. As we know, Prokhorov (currently Russia’s wealthiest person) is the driving force behind Onexim. I believe Prokhorov and Finskiy are close business associates.
Once Century’s share price is high enough, and the time is right, I would like to see a growth strategy that includes a partnership with Intergeo/Onexim, where both companies can benefit. The strategy can focus around Century merging with distressed companies with good assets (in need of financing). As part of the merger, Century can set up non-recourse financing with Intergeo/Onexim to either roll over current debt obligations from the new company or provide project financing for mine development projects (from the new company). It is something that will be attractive to shareholders of any company in distress. Also, these are situations where we can utilize Peggy’s best skills (in complex deal making roles, especially ones involving managing or rolling over debt). Intergeo/Onexim will benefit also because (as a financing partner) we can provide them with a very good interest rate on their non-recourse financing. This should be attractive since global interest rates are expected to stay relatively low for a number of years into the future (the global rates might increase but we are not going to see sky high rates until the unemployment rates have decreased by quite a bit, which typically doesn’t happen overnight).
“Fran Scola is a partner at LFM Partners, a partnership with extensive investments in the natural resources sector.” I don’t know much about LFM Partners, but hopefully Century can create a financing partnership with them also.
Tuesday, October 20, 2009
Special Meeting of Shareholders - Nov. 23'09
Same place in Vancouver (on SEDAR). IMO, the key to everything is the C$5.25M bridge equity financing closing in 4 days from now (or around the targeted Oct. 23rd date).
Monday, October 19, 2009
Analysis of balance sheet obligations
1) Current obligations that might be settled with cash from the bridge equity financing are:
* Tamerlane loan ($549,199)
* MRI, convertible debenture ($1,000,000) – I think this is an unsecured debt. It was the remaining $5M potential loan that was to be secured with Lamaque’s milling circuit and other assets, but MRI walked away last year before it was closed off. I haven’t seen anything that would suggest that the $1M debenture is anything other than unsecured. Currently, a case is in the courts with regards to the $1,000,000 payment. Century has filed a counterclaim for damages resulting from MRI’s default on the larger facility. I’m not positive that it is vital to make this payment in time close off our prepaid gold facility with the bank, due to it not likely being a secured obligation. It doesn’t pose a risk to the bank either as the worst case scenario is we end up paying back the $1M to MRI. However, the most likely scenario is an out of court settlement between MRI and Century at some point down the road for something less than $1M.
* Equipment loan/lease, current – ($357,213)
* Gerald Metals, hedge buyout ($400,784)
Sub-total = $2,307,196 (these 4 obligations add to this total), clearly the $5,250,000 bridge equity financing will be more than sufficient to retire all of these current obligations, if required.
2) Working capital gold facility – current ($2,225,177, non-issue, in my view), this is a revolving credit line. There should be no urgency to retire this amount. They should be able to continue making minimum payments on this balance without any issues. It is secured by 2,000 ounces of unfinished gold sitting in inventory at Lamaque. The current value of those ounces is C$2,200,000 which is sufficient security for that obligation. Century will have the option of paying down the full balance in order to stop paying interest. If they retire the entire balance then Century will still have the $2.2M revolving credit line available for future charges, plus the $2.2M value of the unfinished ounces in the Lamaque inventory. I see the Working capital gold facility as a net zero obligation for Century.
3) Equipment loan/lease – Long-Term Debt ($326,619, non-issue, in my view), there is no urgency to eliminate this item for payment purposes, but I suppose it could be retired due to being a secured item, depending on how clean the bank wants the balance sheet to look.
4) Net payables and accrued liabilities ($10,506,626) - stated as payables and accrued liabilities less receivables) – most of this will be paid down after the major equity and prepaid gold financings have been closed off. I think the rumoured $350,000 in arrears (Lamaque) employee compensation is included in this category. If the employee amount is truly around $350,000 (per the rumour) then there should be sufficient room in the bridge financing to allow for settlement at that point. I can’t comment any further though as I don’t know enough on the legalities to say which unsecured creditors are entitled to be paid first, and the understanding Century’s management has with everyone. It makes perfect sense to me that it would be the employees, but I don’t want to give anyone false hope as I don’t have enough knowledge to know for sure how it all works on the legal side.
5) IQ Debt ($16,156,952) – this debt will continue into the foreseeable future, even after the major financings have been closed off. IQ and the bank will likely share pledged securities. Currently, all mineral assets in Quebec are pledged as security for the IQ debt. That has always been my understanding and I believe it is still the case. The milling circuit was previously pledged for the Endeavour debt. However, the Endeavour debentures were converted over to shares and sold on the open market in 2006. As a result, the Lamaque milling circuit should currently be free from any security pledges. Also, there are currently no security liens again our San Juan properties and facilities. In addition, with PK’s convertible debenture now eliminated, there should be no liens against our NWT, Northbelt property (perhaps the Tamerlane loan is the only grey area, slightly). Our Northbelt property has about 200,000 (non-43101) ounces, with loads of potential.
6) Future income tax liability – LT Liability ($935,053, non-issue, in my view), per Peggy in the last conference call, Century is working with the IQ/Quebec government to stagger and defer these payments well into the future (to provide added flexibility for the Lamaque restart). The restart of Lamaque provides jobs for Quebec.
7) Asset retirement obligations – LT Liability ($3,899,085, non-issue, in my view), will be funded via significant cash flow when required down the road. Also, there are deposits for reclamation costs totaling $693,000 in the balance sheet. I suppose that could offset some of the obligations in the future.
* Tamerlane loan ($549,199)
* MRI, convertible debenture ($1,000,000) – I think this is an unsecured debt. It was the remaining $5M potential loan that was to be secured with Lamaque’s milling circuit and other assets, but MRI walked away last year before it was closed off. I haven’t seen anything that would suggest that the $1M debenture is anything other than unsecured. Currently, a case is in the courts with regards to the $1,000,000 payment. Century has filed a counterclaim for damages resulting from MRI’s default on the larger facility. I’m not positive that it is vital to make this payment in time close off our prepaid gold facility with the bank, due to it not likely being a secured obligation. It doesn’t pose a risk to the bank either as the worst case scenario is we end up paying back the $1M to MRI. However, the most likely scenario is an out of court settlement between MRI and Century at some point down the road for something less than $1M.
* Equipment loan/lease, current – ($357,213)
* Gerald Metals, hedge buyout ($400,784)
Sub-total = $2,307,196 (these 4 obligations add to this total), clearly the $5,250,000 bridge equity financing will be more than sufficient to retire all of these current obligations, if required.
2) Working capital gold facility – current ($2,225,177, non-issue, in my view), this is a revolving credit line. There should be no urgency to retire this amount. They should be able to continue making minimum payments on this balance without any issues. It is secured by 2,000 ounces of unfinished gold sitting in inventory at Lamaque. The current value of those ounces is C$2,200,000 which is sufficient security for that obligation. Century will have the option of paying down the full balance in order to stop paying interest. If they retire the entire balance then Century will still have the $2.2M revolving credit line available for future charges, plus the $2.2M value of the unfinished ounces in the Lamaque inventory. I see the Working capital gold facility as a net zero obligation for Century.
3) Equipment loan/lease – Long-Term Debt ($326,619, non-issue, in my view), there is no urgency to eliminate this item for payment purposes, but I suppose it could be retired due to being a secured item, depending on how clean the bank wants the balance sheet to look.
4) Net payables and accrued liabilities ($10,506,626) - stated as payables and accrued liabilities less receivables) – most of this will be paid down after the major equity and prepaid gold financings have been closed off. I think the rumoured $350,000 in arrears (Lamaque) employee compensation is included in this category. If the employee amount is truly around $350,000 (per the rumour) then there should be sufficient room in the bridge financing to allow for settlement at that point. I can’t comment any further though as I don’t know enough on the legalities to say which unsecured creditors are entitled to be paid first, and the understanding Century’s management has with everyone. It makes perfect sense to me that it would be the employees, but I don’t want to give anyone false hope as I don’t have enough knowledge to know for sure how it all works on the legal side.
5) IQ Debt ($16,156,952) – this debt will continue into the foreseeable future, even after the major financings have been closed off. IQ and the bank will likely share pledged securities. Currently, all mineral assets in Quebec are pledged as security for the IQ debt. That has always been my understanding and I believe it is still the case. The milling circuit was previously pledged for the Endeavour debt. However, the Endeavour debentures were converted over to shares and sold on the open market in 2006. As a result, the Lamaque milling circuit should currently be free from any security pledges. Also, there are currently no security liens again our San Juan properties and facilities. In addition, with PK’s convertible debenture now eliminated, there should be no liens against our NWT, Northbelt property (perhaps the Tamerlane loan is the only grey area, slightly). Our Northbelt property has about 200,000 (non-43101) ounces, with loads of potential.
6) Future income tax liability – LT Liability ($935,053, non-issue, in my view), per Peggy in the last conference call, Century is working with the IQ/Quebec government to stagger and defer these payments well into the future (to provide added flexibility for the Lamaque restart). The restart of Lamaque provides jobs for Quebec.
7) Asset retirement obligations – LT Liability ($3,899,085, non-issue, in my view), will be funded via significant cash flow when required down the road. Also, there are deposits for reclamation costs totaling $693,000 in the balance sheet. I suppose that could offset some of the obligations in the future.
Friday, October 16, 2009
Idea to increase Reserve Ounces
With the higher gold price, many gold companies have been recalculating their reserves to reflect a higher gold price. A substantial number of those companies are now using US$1,000, including:
1) Etruscan Resources - Agbaou Project
2) B2Gold - Gramalote Project
3) Alexis Minerals - Lac Herbin Mine, located in the Val d'Or area, not far from our Lamaque Complex. Actually, they have used a US$1,050 gold price for Lac Herbin.
Etruscan recently updated their feasibility study for Agbaou. They increased the u/g price from US$850 to US$1,000, representing an 18% increase. They increase the pit price from US$750 to US$1,000, representing a 33% increase. It turned out that the combined (u/g and pit) increase in reserve ounces was 29%.
Century Mining's reserves are currently based on an US$800 gold price. Company wide (Lamaque and San Jan), the most recent 43-101 reports show Century with 1,321,287 reserve ounces.
US$800 vs US$900 = increase of 13%
US$800 vs US$1,000 = increase of 25%
The increase in gold price may not necessarily translate to the same increase in reserve ounces. It's very complex and there are many factors I'm sure. However, if it happens to turn out to be similar (like it did in the Etruscan case) then our updated reserve ounces might look something like this:
Using US$800 = 1,321,287 (currently)
Using US$900 = 1,486,448 (increase of 165,161 reserve ounces)
Using US$1,000 = 1,651,609 (increase of 330,322 reserve ounces)
As we know, everything for Century is severely discounted. However, in a non-discounted world the increase of 165,161 reserve ounces (@ US$100 per oz) would be worth C$17,100,000 and the 330,322 would be worth C$34,200,000.
Century should spend a tiny bit of that Lamaque restart cash to update the reserves to a higher gold price. It will help to make the project more appealing for financing purposes. It might also help to increase production, even in the first year. If Century is still going with the prepaid gold sales via the bank then I don't think they can use US$1,000 for the reserves. Banks are always more conservative and would likely not want to see that. However, Century should still be able to use a gold price anywhere between US$800 and US$1,000.
As a side note, (we now know for sure that) they are drilling the Bedard Dyke. If they drill it aggressively enough then we could be adding some Bedard Dyke ounces directly into reserves as well. There are 3 large high grade zones are various levels of the Bedard Dyke, although it's unclear if those zones will be drilled during the first phase of drilling.
1) Etruscan Resources - Agbaou Project
2) B2Gold - Gramalote Project
3) Alexis Minerals - Lac Herbin Mine, located in the Val d'Or area, not far from our Lamaque Complex. Actually, they have used a US$1,050 gold price for Lac Herbin.
Etruscan recently updated their feasibility study for Agbaou. They increased the u/g price from US$850 to US$1,000, representing an 18% increase. They increase the pit price from US$750 to US$1,000, representing a 33% increase. It turned out that the combined (u/g and pit) increase in reserve ounces was 29%.
Century Mining's reserves are currently based on an US$800 gold price. Company wide (Lamaque and San Jan), the most recent 43-101 reports show Century with 1,321,287 reserve ounces.
US$800 vs US$900 = increase of 13%
US$800 vs US$1,000 = increase of 25%
The increase in gold price may not necessarily translate to the same increase in reserve ounces. It's very complex and there are many factors I'm sure. However, if it happens to turn out to be similar (like it did in the Etruscan case) then our updated reserve ounces might look something like this:
Using US$800 = 1,321,287 (currently)
Using US$900 = 1,486,448 (increase of 165,161 reserve ounces)
Using US$1,000 = 1,651,609 (increase of 330,322 reserve ounces)
As we know, everything for Century is severely discounted. However, in a non-discounted world the increase of 165,161 reserve ounces (@ US$100 per oz) would be worth C$17,100,000 and the 330,322 would be worth C$34,200,000.
Century should spend a tiny bit of that Lamaque restart cash to update the reserves to a higher gold price. It will help to make the project more appealing for financing purposes. It might also help to increase production, even in the first year. If Century is still going with the prepaid gold sales via the bank then I don't think they can use US$1,000 for the reserves. Banks are always more conservative and would likely not want to see that. However, Century should still be able to use a gold price anywhere between US$800 and US$1,000.
As a side note, (we now know for sure that) they are drilling the Bedard Dyke. If they drill it aggressively enough then we could be adding some Bedard Dyke ounces directly into reserves as well. There are 3 large high grade zones are various levels of the Bedard Dyke, although it's unclear if those zones will be drilled during the first phase of drilling.
Thursday, October 15, 2009
Ideas for a back up plan (Plan B and Plan C)
Plan B:
Firstly, I still like the idea of hooking up Finskiy and Scola. With all honesty (100% honest), like every other shareholder, I have absolutely no idea as to the status of the deal. Hopefully it's still going well - I have no reasons to believe that it's not. However, Finskiy and Scola are going to do what they feel is best for them, which is completely understandable. Hopefully they still feel the same way as they did when the original deal was announced. Regardless of how well things are going with that deal, we should ALWAYS be working on a back up (contingency) plan, simultaneously. Any well run department within any company, and any well run company, always have solid contingency plans in place.
Here is my back up plan recommendation:
To close off the US$25,000,000 prepaid gold sales financing (with the international bank) the requirement was for Century to raise C$20M via the equity markets.
Century closed off C$1,100,000 in equity financing already - money that is going towards the restart of Lamaque, with Bedard Dyke drilling, etc.
Century is expected to close off the C$5,250,000 bridge (equity) financing on October 23rd. This is money targeted for the restart of Lamaque also. Based on the NR (including the relatively quick targeted close off date), it sounds like a deal is already in place (investor, price, technical DD....), with the parties mainly having to go through the paper work and wait for the TSX-V approval.
Once the bridge (equity) financing closes, the way I am interpreting the mandate, it means we would have raised C$6,350,000 of the required C$20,000,000 equity financing, or 32%. It would mean we are only required to raise another C$13,650,000 via equity.
With the gold price now US$1,060 (and the outlook expected to be positive for a number of years into the future, as many are not expecting inflation to really flare up for another couple of years), I think the equity markets for junior companies (with advanced staged projects/near-term production) are more relaxed now, even compared to say a month ago. I think passing the US$1,000 barrier (and sustaining) has been a major catalyst. There seems to be a lot more deals being done with juniors now.
At $.20 per share, the remaining C$13,650,000 represents only 68,250,000 additional outstanding shares and only 34,125,000 warrants. Even while trying to close the deal with Finskiy and Scola, I would like Century's management to attempt to find back up investors (just in case the deal falls apart at the 11th hour). We can no longer leave it totally up to chance. The rug has been pulled out from us at the 11th hour way too many times already. It's not about a lack of trust. It's entirely about contingency planning. If we can already raise C$6,350,000 (once the bridge financing closes Oct. 23rd) then maybe we have a decent chance to find additional contingency investors.
If my back up plan comes to fruition then we will only need to have 301,500,000 shares outstanding to enable us to restart Lamaque (and expand San Juan) and only 350,000,000 Fully Diluted shares (including our current options and warrants).
Plan C is in the comment section.
Firstly, I still like the idea of hooking up Finskiy and Scola. With all honesty (100% honest), like every other shareholder, I have absolutely no idea as to the status of the deal. Hopefully it's still going well - I have no reasons to believe that it's not. However, Finskiy and Scola are going to do what they feel is best for them, which is completely understandable. Hopefully they still feel the same way as they did when the original deal was announced. Regardless of how well things are going with that deal, we should ALWAYS be working on a back up (contingency) plan, simultaneously. Any well run department within any company, and any well run company, always have solid contingency plans in place.
Here is my back up plan recommendation:
To close off the US$25,000,000 prepaid gold sales financing (with the international bank) the requirement was for Century to raise C$20M via the equity markets.
Century closed off C$1,100,000 in equity financing already - money that is going towards the restart of Lamaque, with Bedard Dyke drilling, etc.
Century is expected to close off the C$5,250,000 bridge (equity) financing on October 23rd. This is money targeted for the restart of Lamaque also. Based on the NR (including the relatively quick targeted close off date), it sounds like a deal is already in place (investor, price, technical DD....), with the parties mainly having to go through the paper work and wait for the TSX-V approval.
Once the bridge (equity) financing closes, the way I am interpreting the mandate, it means we would have raised C$6,350,000 of the required C$20,000,000 equity financing, or 32%. It would mean we are only required to raise another C$13,650,000 via equity.
With the gold price now US$1,060 (and the outlook expected to be positive for a number of years into the future, as many are not expecting inflation to really flare up for another couple of years), I think the equity markets for junior companies (with advanced staged projects/near-term production) are more relaxed now, even compared to say a month ago. I think passing the US$1,000 barrier (and sustaining) has been a major catalyst. There seems to be a lot more deals being done with juniors now.
At $.20 per share, the remaining C$13,650,000 represents only 68,250,000 additional outstanding shares and only 34,125,000 warrants. Even while trying to close the deal with Finskiy and Scola, I would like Century's management to attempt to find back up investors (just in case the deal falls apart at the 11th hour). We can no longer leave it totally up to chance. The rug has been pulled out from us at the 11th hour way too many times already. It's not about a lack of trust. It's entirely about contingency planning. If we can already raise C$6,350,000 (once the bridge financing closes Oct. 23rd) then maybe we have a decent chance to find additional contingency investors.
If my back up plan comes to fruition then we will only need to have 301,500,000 shares outstanding to enable us to restart Lamaque (and expand San Juan) and only 350,000,000 Fully Diluted shares (including our current options and warrants).
Plan C is in the comment section.
Wednesday, October 14, 2009
Our Poderosa and Module shares
CMM owns 260,868 Poderosa shares. The market value has moved a bit in the last few days. Still small potatoes, but it gives us access to C$430,000 in short-term investments (it moved from around C$350,000 I think).
Module Resources recently made an option payment to Century in the form of 1M of their common shares. I think there might be more option payments required in the future also. Century will retain 10% ownership of the Carolin Mine, plus back in rights for 50% in total. Module's share price is $.10, and their shares are thinly traded. Century would probably have to trade for about 2 months in order to cash in those 1M shares, and not drop the $.10 share price average too much. Our million shares carry a market value of C$100,000.
Module announced yesterday that they have hooked up with another company to do some studies on the feasibility of processing some old tailings. I think a lot of tests have to passed first before they actually get to sample the tailings. I think it's all months away though. They are trying to generate a bit of cash flow from the old tailings - they're using a company that has had good success with this in the past. It would be tiny potatoes, but if it works then theoretically Century might be entitled to at least 10% or more depending on the stage of the option buy in (although, 100% of the cash flow would naturally go directly back into developing the project).
Module Resources recently made an option payment to Century in the form of 1M of their common shares. I think there might be more option payments required in the future also. Century will retain 10% ownership of the Carolin Mine, plus back in rights for 50% in total. Module's share price is $.10, and their shares are thinly traded. Century would probably have to trade for about 2 months in order to cash in those 1M shares, and not drop the $.10 share price average too much. Our million shares carry a market value of C$100,000.
Module announced yesterday that they have hooked up with another company to do some studies on the feasibility of processing some old tailings. I think a lot of tests have to passed first before they actually get to sample the tailings. I think it's all months away though. They are trying to generate a bit of cash flow from the old tailings - they're using a company that has had good success with this in the past. It would be tiny potatoes, but if it works then theoretically Century might be entitled to at least 10% or more depending on the stage of the option buy in (although, 100% of the cash flow would naturally go directly back into developing the project).
Century Mining Announces C$5.25 Million Flow-Through Financing
BLAINE, WA, Oct. 14 /CNW/ - Century Mining Corporation (CMM: TSX-V) today announced that, subject to regulatory approval, it will complete a non-brokered private placement of C$5.25 million comprised of flow-through shares.
The Company will issue 26,250,000 common shares on a flow-through basis at an issue price of $0.20 per share.
The Company will pay Union Securities Ltd. for introducing subscribers to the Company a finder's fee of cash equal to 7% of the aggregate gross proceeds, and broker warrants equal to 7% of the aggregate number of flow-through shares. Each broker warrant shall be exercisable for 18 months from the date of issue and shall entitle the holder to purchase a common share of the Company for a price of $0.20. The flow-through share issuance is subject to approval by the TSX Venture Exchange. Closing of the private placement is expected to occur on or before October 23, 2009. All of the securities issued under these private placements will be subject to a four-month hold period.
The proceeds from this offering will be used for the underground diamond drill program at Lamaque, the ongoing Vulcan computer modeling project, and resource and mine planning. Drilling is currently underway at the Bedard dyke.
As a result of this private placement and the deletion of the Etruscan share acquisition from the financing term sheet described in the Century Mining press release issued September 15, 2009, the Company will be proceeding directly to the closing of the private placement to Kirkland Intertrade Corp. and Gravity Ltd. and the prepaid gold forward facility without completing the $4 million interim bridge loan referred to in the term sheet. For more information, refer to the Century Mining press releases issued July 30, 2009 and September 15, 2009.
Commenting on the private placement announced today, Margaret Kent, President & CEO of Century, said, "We are pleased to be able to simplify the large transaction and complete the flow-through private placement described above. This allows us to continue our exploration and mine development efforts in preparation for the start up of the Lamaque mining project, which will commence as soon as the larger financing is completed."
The Company will issue 26,250,000 common shares on a flow-through basis at an issue price of $0.20 per share.
The Company will pay Union Securities Ltd. for introducing subscribers to the Company a finder's fee of cash equal to 7% of the aggregate gross proceeds, and broker warrants equal to 7% of the aggregate number of flow-through shares. Each broker warrant shall be exercisable for 18 months from the date of issue and shall entitle the holder to purchase a common share of the Company for a price of $0.20. The flow-through share issuance is subject to approval by the TSX Venture Exchange. Closing of the private placement is expected to occur on or before October 23, 2009. All of the securities issued under these private placements will be subject to a four-month hold period.
The proceeds from this offering will be used for the underground diamond drill program at Lamaque, the ongoing Vulcan computer modeling project, and resource and mine planning. Drilling is currently underway at the Bedard dyke.
As a result of this private placement and the deletion of the Etruscan share acquisition from the financing term sheet described in the Century Mining press release issued September 15, 2009, the Company will be proceeding directly to the closing of the private placement to Kirkland Intertrade Corp. and Gravity Ltd. and the prepaid gold forward facility without completing the $4 million interim bridge loan referred to in the term sheet. For more information, refer to the Century Mining press releases issued July 30, 2009 and September 15, 2009.
Commenting on the private placement announced today, Margaret Kent, President & CEO of Century, said, "We are pleased to be able to simplify the large transaction and complete the flow-through private placement described above. This allows us to continue our exploration and mine development efforts in preparation for the start up of the Lamaque mining project, which will commence as soon as the larger financing is completed."
Sunday, October 11, 2009
Bedard Dyke
It would be nice if someone was close enough to the Lamaque property to take a glance to see if there are any drill rig movements on the property. CMM recently completed the small $1.1M FT financing. The Bedard Dyke drilling has always been scheduled for the very beginning of the Lamaque Restart Project Plan - minus mth 2 and minus mth 1 time periods prior to start up mth. In other words, before the large project financing deal actually closes.
As such, we are in the exact (planned) timeframe for Bedard Dyke drilling. Furthermore, there is a rumour that the drilling has actually started. If it has then it would be exactly in line with the plan. Century did say in the Sept. 15'09 NR that they planned to immediately begin work on the restart of Lamaque. Maybe this is one indication that they were serious about that statement.
It's going to be nearly impossible for any of us to confirm it in person though, even if someone can view that area of the Lamaque property from the street. The reason I say this is I imagine that the drill rig will be drilling heavily from within the pit itself. Currently, the Bedard ore that can give us the quickest access is in the pit walls (Century has actually successfully mined some of that Bedard pit wall ore before). The drill rig might be on the surface sometimes too, but they will likely position the drill rig deep within the pit as I think that best allows them to drill all angles of the Bedard Dyke, including the deepest areas.
As a result, the drill rig will likely be hidden from road view, being located deep in the pits and all. Nevertheless, it still might be worth a drive by if anyone lives relatively close to the Val d'Or area. The rumour is likely true, as it fits perfectly into the Restart Project Plan. However, as with any rumour, it could be just nonsense. On site confirmation would improve the chances of it being true.
As such, we are in the exact (planned) timeframe for Bedard Dyke drilling. Furthermore, there is a rumour that the drilling has actually started. If it has then it would be exactly in line with the plan. Century did say in the Sept. 15'09 NR that they planned to immediately begin work on the restart of Lamaque. Maybe this is one indication that they were serious about that statement.
It's going to be nearly impossible for any of us to confirm it in person though, even if someone can view that area of the Lamaque property from the street. The reason I say this is I imagine that the drill rig will be drilling heavily from within the pit itself. Currently, the Bedard ore that can give us the quickest access is in the pit walls (Century has actually successfully mined some of that Bedard pit wall ore before). The drill rig might be on the surface sometimes too, but they will likely position the drill rig deep within the pit as I think that best allows them to drill all angles of the Bedard Dyke, including the deepest areas.
As a result, the drill rig will likely be hidden from road view, being located deep in the pits and all. Nevertheless, it still might be worth a drive by if anyone lives relatively close to the Val d'Or area. The rumour is likely true, as it fits perfectly into the Restart Project Plan. However, as with any rumour, it could be just nonsense. On site confirmation would improve the chances of it being true.
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