Tuesday, March 30, 2010

IMO, Century should look at the feasibility of doing an IPO on either the HK or the Shanghai stock exchange

2 reasons:

1) The World Gold Council performed a study that came to the conclusion that China`s gold consumption could double within the next 10 years.

“`Assuming these figures are correct, WGC estimates suggest that China could exhaust its known gold mining reserves in six years from now,` the report said.``

`This could occur more rapidly if demand for gold in China experienced a sudden surge from current levels.`

2) There seems to already be some interest in Finskiy associated projects with some Chinese investors. Finskiy has his own private gold company in Russia called Daltsvetmet. It is targeted to produce about 42,000 ounces in 2010. It includes 7 holding companies with licenses purchased via Russian auctions (it is customary in russia for the government to auction off licenses and deposits to the highest bidder). In a Russia article published late last year, Finskiy stated that he has a production target of 225,000 - 255,000 ounces for Daltsvetmet in 2013. He expects 97,000 of that target production total to come from ramping up Daltsvetmet`s current flagship operation and the balance to come from his other Russian licenses.

Finskiy said he is considering doing an IPO of Daltsvetmet in either Shanghai or Hong Kong (in the second half of 2010) in order to fund the production ramp up of Daltsvetmet. In the article, Finskiy said that Proposals from Chinese investors to purchase shares are received continuously.


Getting back to Century, I think Century can benefit nicely from these 2 developments. This is a good time for Century to branch out to high appetite markets, as the company is soon to be revalued from Lamaque successfully coming back online.

I don`t think Century should issue new shares though. I think Century should purchase a few million shares on the open market in Toronto (at these severely discounted prices). Century should then retire those Toronto shares and then launch the HK or Shanghai IPO with the same number of shares that were retired from Toronto. The Chinese cash raised via the IPO will not only recover Century`s cash outlay to retire the Toronto shares, but should also make a pretty good IPO profit (as Century should be well into production at Lamaque).

I have no idea if Century is thinking along these lines. Personally, I think it`s an opportunity they should capitalize on, especially since there seems to already be Chinese institutional demand in the Chinese public markets for Finskiy associated gold companies.

Century should also look at doing an IPO on AIM (in London) as a stepping stone to eventually moving to the London Stock Exchange. Also, Century should also look at doing an IPO on the LIMA exchange in Peru. Both the AIM and LIMA IPO efforts can wait until much further down the road. I think the IPO priority should be China.

1 comment:

Anonymous said...

This is creative thinking. However, the Chinese model is wrong. The Chinese government is purchasing nearly all of the domestic production. Nobody believes the production numbers anyway. Gold production is a subset of the currency war / exchange rate. If anything gold will go underground as an unofficial currency when and if there is an inflation threat. This action would be totally independent of CM share price.

Second, the country is very under explored but given the geology there is tremendous potential. Also given that gold is a commodity and it is easy to transported. I do not necessarily see a link between production and consumption.

What CM needs to do is get on a larger exchange like AMEX or NY. The Denver Gold Show in EU territory is an excellent marketing strategy. I like the idea of repurchasing shares to bump share price. This would also give us a ticket to the big league exchanges.