Monday, January 4, 2010

Century Mining Fully Funded and Reopens Lamaque Gold Project

Century Mining Fully Funded and Reopens Lamaque Gold Project
BLAINE, WASHINGTON--(Marketwire - Jan. 4, 2010) - Century Mining Corporation ("Century" or the "Company") (TSX VENTURE:CMM) is pleased to report that the previously announced debt and equity financings totaling CDN$60.75 million have all been completed. These funds will provide the necessary capital for the continued exploration, development and reopening of the Company's Lamaque project in Val d'Or, Quebec, enable repayment of the Company's previous debt, and provide the Company with substantial working capital. Included in the funding is a US$33 million prepaid gold forward facility with Deutsche Bank AG. Simultaneously, Century has completed a CDN$17 million private placement. Kirkland Intertrade Corp. ("Kirkland") subscribed for CDN$15.75 million of the private placement along with two other subscribers. The previously completed flow-through placements which have totaled CDN$9.1 million round out the Company's financing program. The initial ownership positions in the Company of Kirkland and its associate, Gravity Ltd., ("Gravity") came as a result of these earlier placements. All of the financings are summarized below.Margaret Kent, President & CEO, stated, "The closing and funding of these financings and the reopening of the Lamaque project mark a significant turning point for the Company. We will be bringing the Lamaque gold mine back into production, and we expect to be pouring gold this summer and achieve commercial production during the first quarter of 2011.Century expects that the reopening of the Lamaque mine complex will have a significant impact on the economy of Val d'Or, Quebec. Up to 250 employees will be employed at the mining operation at full capacity, bringing millions of dollars to the community, the region and the province of Quebec, and once again Century will pour gold from Val d'Or. In addition, the Company has posted the full amount of the financial guarantee required by the Quebec Ministry of Natural Resources to provide for final site reclamation after completion of mining."Maxim Finskiy of Kirkland commented, "As a mining executive I am focused on the ability of a company's management to ramp up production while controlling costs. After our due diligence process we concluded that Century has the management skills to execute, and this is why we have made the investment in the company. Further, in our quest to build a new mid-tier gold company, we were looking for management that has the skills to significantly grow the company through acquisitions. It is our view that the Century management team has the requisite collective experience in acquiring, building and running major operations to facilitate achievement of this goal."Fran Scola of Gravity added, "Working closely with Peggy Kent and her team over the last six months we have become impressed with the energy, commitment and vision of management. These are qualities that translate into significant shareholder value."SUMMARY OF FINANCIAL TRANSACTIONSPrepaid Gold Forward FacilityDeutsche Bank has funded a US$33 million prepaid gold forward facility whereby Deutsche Bank has paid Century today US$33 million under certain restrictions on the availability of funds in exchange for Century delivering 61,183 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$900 per ounce, up to a maximum of US$988 per ounce. There were no up-front fees, nor is any future interest payable under this senior secured facility. The schedule of gold payments is as follows: year 1 - 5,669 ounces; year 2 - 8,004 ounces; year 3 - 13,310 ounces; year 4 - 17,100 ounces; and year 5 - 17,100 ounces. The 61,183 ounces of gold that have been committed under this facility represent less than 3% of the existing reserve and measured and indicated resource base at Lamaque. The Company has also been provided a margin-free gold trading line for up to 180,000 ounces of gold and a currency trading line. The Company has an obligation under certain circumstances to put in place price protection hedging to preserve cash flows if the gold price starts to decline. At closing, a performance reserve account has been set up whereby US$15 million of the facility was placed in this account and will be released to the Company upon certain hurdles and specified production levels being met. The projected hurdle achievement dates and related releases of funds are consistent with the Lamaque cash requirements for project development.Private Placement of New Equity and New InvestorsSimultaneously with the closing of the prepaid gold forward facility, Century has issued an aggregate of 85 million units at CDN.20 per unit for gross proceeds of CDN$17,000,000. Each unit consists of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to purchase one common share at a price of CDN.30 for a period of 18 months. If, however, the volume weighted average closing price of the Company's common shares on the TSX Venture Exchange is equal to or greater than CDN.60 for a period of 30 consecutive trading days following the first anniversary of the closing of the private placement, Century will have the right, upon 60 days notice to the holders of the warrants, to accelerate their expiry date.An amount of CDN$15.75 million of the private placement was taken down by Kirkland with the balance taken down by two other subscribers. As a result of the closing of the Private Placement, Kirkland and its associates and affiliates, together with Gravity Ltd., a company controlled by Fran Scola ("Gravity"), hold 121,122,759 Common Shares (170,497,759 Common Shares assuming exercise of its warrants) representing approximately 35.9% of the issued and outstanding Common Shares (44.1% assuming exercise of its warrants). All of the securities issued in connection with the private placement are subject to a four month hold period.A shareholders agreement has been entered into with Kirkland and Gravity covering board representation, operating committee representation, first rights of refusal on future equity issuances and other associated matters. Under the agreement Kirkland and Gravity have the right to nominate two of the five directors of the Company and as soon as possible the Company's Board will endeavor to retain an independent chairman.TOTAL PROCEEDS AND USE OF PROCEEDSOver the last 120 days Century has raised CDN$60.75 million including the US$33 million Deutsche Bank facility and the five equity placements totaling CDN$26.1 million. The proceeds from the combined financings will be used to provide the funding required to start up the Company's Lamaque project and complete the necessary underground development to bring the mine into full production, pay outstanding obligations and for general working capital purposes. Proceeds will also be used for exploration and further resource delineation, as it is expected that the Lamaque deposit and the Company's surrounding property may host significant additional resources.OTHER ASSOCIATED TRANSACTIONSInvestissement Quebec Note PayoutA portion of the proceeds of the Deutsche Bank facility has been used by the Company to pay out its existing senior secured facility with Investissement Quebec. The Company has paid CDN$8,750,000 and has issued 5 million common shares to Investissement Quebec. These transfers were in complete satisfaction of all obligations the Company had under this facility, which had been recorded at CDN$16.4 million on the Company's balance sheet at September 30, 2009.Royalty BuyoutAn existing royalty over a portion of the Lamaque underground reserves was bought out as part of the transactions announced today. The Company paid CDN$750,000 and issued 1.5 million common shares. As a result of this transaction there are no further royalties covering any part of the Company's properties in Quebec.Various Creditor SettlementsAs a result of the financings a number of creditor settlements with respect to existing obligations were made, including some which spread the payments to certain creditors over the next two years. These deferred payments will allow the Company to preserve cash for the reopening of the Lamaque project. The existing working capital gold facility and gold contract debt owed to Gerald Metals have also been paid in full. All liens other than those associated with the new Deutsche Bank facility have been removed from the Sigma-Lamaque property.TIMING AND PRODUCTIONThe Company plans to reopen the Lamaque site in January. Power will be restored to the facility as soon as possible, and the underground workings will be immediately reopened. The Company expects to rehire 40 employees by the end of January, and to commence underground development in February. An upgrade of the crushing facilities will commence immediately, and the new crushing circuit is to be operational by the end of April. It is expected that gold production will commence shortly thereafter. The Company is expected to produce 45,000 ounces from Lamaque in 2010 and 20,000 ounces from the Peru operation in 2010 for a combined production of 65,000 ounces. Until the Lamaque operation reaches commercial production, which is expected to occur in 2011, all costs associated with the development and operation will be capitalized after crediting the value of the gold production. Cash costs in Peru are expected to be US$550 for 2010.ABOUT KIRKLAND AND GRAVITYKirkland is beneficially owned by Maxim Finskiy. Mr. Finskiy is Chief Executive Officer of MMC Intergeo Managing Company, the mining and exploration arm of the private Russian conglomerate Onexim Group, which is Russia's largest investment fund with US$25 billion in assets. Gravity is the personal investment vehicle of Fran Scola. Mr. Scola is a partner at LFM Partners, a partnership with extensive investments in the natural resources sector.Upcoming Conference Call to Discuss Financing DetailsCentury will host a telephone conference call for investors and analysts on January 12th, 2010 at 10:30 AM, Pacific Time (1:30 PM, Eastern Time) to discuss the recently completed financing and its impact on the future of the Company. The Company will also discuss the pre-production development plan for the Lamaque Gold Mine and the corporate growth strategy for 2010.The conference call may be accessed by dialing toll-free 1-800-988-9507 in Canada and the United States, or 1-210-234-0085 from international locations (normal toll rates do apply) and state the verbal passcode "CenturyMining".

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