This is a quote from the Metronews article yikes1 posted on Stockhouse: "Century expects to pour gold this summer, with 45,000 ounces produced this year and 105,000 ounces of commercial production reached in the first quarter of 2011. Expansions could boost production to 150,000 ounces per year."
I have no idea what this part means: "105,000 ounces of commercial production reached in the first quarter of 2011"
The article writer must have made a typo. Perhaps the "2011" was intended to read 2012.
Now, this is from Century's news release today: "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."
2010 = 5,669 gold payment / 45,000 Lamaque production = 12.6%
Let's see where it takes us if we apply that 12.6% to future years.
2011 = 8,004 / .126 = 63,535 (Lamaque production)
2012 = 13,310 / .126 = 105,654
2013 = 17,100 / .126 = 135,738
2014 = 17,100 / .126 = 135,738
I have absolutely no idea if the 12.6% repayment rate was applied to future years or if different rates were used. However, when applying the 12.6% to years 2013 and 2014, the 135,000 Lamaque production figure appears to be consistent with the 150,000 long-term expansion gold quoted in the article.
Personally, I think the aggressiveness of the production ramp up will depend on how successful we are at moving some of the 2.6M near surface resource into P&P Reserves. The sky is really the limit. We already have the processing facilities in place to produce 150,000 ounces out of Lamaque.
6 comments:
here is the link, if anyone is interested in the article:
http://www.metronews.ca/toronto/business/article/412797--century-mining-says-lamaque-mining-complex-in-quebec-to-reopen-this-month
I have no idea what this part means: "105,000 ounces of commercial production reached in the first quarter of 2011
Could the writer been discussing rate of production ie in 2011, the rate of production will be 105k ounces per year or 8750 ounces per month? I believe this is possible and consistent with there production targets as per MD&A-I think they had 110k-but close enough. If they ramp up this fast, this stock should do very well. I am looking at Osisko and liking the parraleles between the 2 companies.
Does anyone have a calculation of what our share float will be after all the dilution and warrants are exerciced?
Osisko currently shows 336k shares issued, I think we are close to that. The rest of the numbers in terms of reserves and production level are not out of the question in the next 2 years...or am I dreaming here?
Production, I think the "105,000 ounces of commercial production reached in the first quarter of 2011" means rate of production. In other words by March 2011, PK is saying Lamaque will be producing at a rate of 105,000/12 = 8,750 oz/month. It's a metric that PK was fond of using in the past where she would quote the production rate at the end of a given year and some mistakenly thought she meant that amount for the whole year. Century could never make either the rate or the amount and I hope this is not more over-promising.
We will continue to suffer from a management discount until the company can walk the talk or until there is new management. If we can reach a rate of 105,000 oz/year by Q1 2011, then we should easily produce 120,000 ounces in 2011 with San Juan adding 25,000 oz. Take away the 8,000 oz allotted to DB to repay debt and we're still looking at 112,000 oz times a margin of $550/oz (at $1,100 gold) = 61 million in cash flow. If the market believed Century could actually achieve this, we'd be trading for more than $1 today.
Thanks Glorieux and Carib. Your explanations make a lot of sense.
I think these 2 significant exploration expectations are driving the numbers:
1) The Bedard Dyke and its multiple large high grade zones (with the dyke looking like it goes down to 1000 ft from the surface).
2) Aggressive drilling plans to bring a number of those 2.6M near surface ounces into reserves. Some development work will be required to mine these ounces, even after moving into P&P Reserves, however some of those ounces should be low hanging fruits. We are set up well. No dewatering required to mine these ounces as they are located within 1000 ft of the surface. Also, access portals are already in place for all 3 ore mining locations (Sigma West/Bedard Dyke, North Wall Dyke, Cross-Over Zone). That is a huge advantage!
I get the impression that some of the ounces in the Cross-Over Zone will be challenging to access, but nothing that's a show stopper. Plus, there are 1.7M ounces in that zone. Even if some of those ounces are difficult to access, the majority of the 1.7M should be straight forward to mine.
I am looking forward to the $4M aggressive exploration program.
All all the financings and transactions now closed, the issued and outstanding share count is around 337.5M and the fully diluted share total should be in the ballpark of 400M. The FD count includes 49.375M warrants belonging to Finskiy. I believe that these warrants act as a contingency fund for Century. It it my belief that Finskiy will exercise these warrants to provide $14.8M for Century in an emergency situation.
For example:
Of the $33M US financing from the bank, $15M will be held in escrow until certain performance numbers are hit. As such, only $18M will be released immediately. Let's talk worst case scenario. Let's say that production ramp gets delayed due to something beyond Century's control. Also, let's say that the bank begins to play games with us, and does not provide any forbearance. Let's say they then demand payment of the $18M debt (the $15M is still in escrow so we are not responsible to repay that amount).
Under this scenario, Finskiy can cash in his $14.8M worth of warrants and the other $3.2M can come from cash (this type of scenario would be early enough for us to still have plenty of cash on hand), thus giving us the $18M to protect us from this situation.
We also have the option of Finskiy just writing a cheque. He has the deep pockets and connections to even deeper pockets. There is no way he is going to let a bank threaten his investment.
Anyway, this is why I don't mind the existence of all those extra warrants within Finskiy's hands. It provides an emergency strategy in a worst case scenario.
Century has no other debt remaining on the balance sheet. We have deep pocket significant owners that can handle any pressure from the bank (and warrants set up for contingency purposes). Most of the risks have been eliminated or minimized (other than Act of God and political/government type risks). That's why $.425 a head scratcher for me. The share price should easily be doubled that, with the Lamaque restart cash now in place, with San Juan finally being freed up, with a clean balance sheet, with big time (deep pocket) shareholders now driving the company, with a contingency plan if the bank begins to act up.....
We have a commitment of 5,669 ounces in gold payment to the bank in 2010.
We already have 2,017 ounces at Lamaque that can go towards that payment. It's in unfinished gold in Lamaque's inventory. It just got freed up by us eliminating the debt to Gerald Metals.
As a result, we only need to give up 3,652 ounces from the 45,000 to be produced at Lamaque in the second half of 2010.
It also means we don't have to give up any of the 20,000 ounces from San Juan.
Post a Comment