No value given for almost 6M 43-101 ounces in the ground and no value for having one of the largest milling operations (and one of the very few milling operations) in the entire gold mining region (and the only mill in the region with significant spare capacity (both from 2,000 to 3,000 tpd, and the abilities to scale back up to 5,000 tpd with further midifications) - in a region where there seems to be limitless small exploration companies, with gold deposits, that will be looking to hook up with a local mill operation to process their ore in the near-future and for many years into the future (either via JV or M&A, custom milling or otherwise)).
Century needs to do a far better job in selling itself. It actually has something of significant value to sell, unlike the majority of the companies in the space, in my opinion.
Century`s financial stats for the first 9 months of 2009 (YE numbers should be out around April 15th):
1) 2009 (first 9 months) Earnings from Mine Operations = $6,269,460
2) 2009 (first 9 months) Cash Flow from Operations = $7,716,484
3) 2009 (first 9 months) Net Profit for Century overall = $5,439,938
Century realized record gold production at San Juan in Q4. Also, the gold price was a historical record high in Q4. Century`s full year numbers will be higher than those 9 month numbers.
Let`s say that Cash Flow from Operations come in at around $9.0M for full year 2009.
We know that San Juan`s production target is around 20,000 ounces in 2010, which is about 3,000 ounces greater than 2009. Let`s say that it (plus the US$1,100+ gold price for the entire year) pushes the 2010 cash flow up to $11M (just San Juan, without Lamaque).
$11,000,000 / 340,000,000 outstanding Century shares = $.032 CF per share
$.032 * 15 CF to share price ratio in a US$1,150 gold price bull market = $.485 share price
Today`s Century share price closed at $.47
As such, WE (SHAREHOLDERS) HAVE RECEIVED ZERO VALUE FOR OUR LAMAQUE ASSET THUS FAR.
By the way, San Juan has been hugely successful relative to other small gold focused producers. San Juan has carried costs for the entire Century business. Very few small producers in the space even show a profit.
Below is a comparative analysis (of companies with small producing gold mines) I had orginally posted back in February. Look especially at the cash cost per oz of these small operations.
The results below reflect Q3`09 results .
San Juan Gold Mine (Century Mining):
*Operating country - Peru
*Operating earnings - $2,334,568
*Net income (Net loss), company overall - $2,689,470
*Gold production or sale (ounces) - 4,561
*Total cash cost per oz - US$486
1) Dynacor Gold Mines:
*Operating country - Peru
*Operating earnings (Loss) - $(329,215)
*Net income (Net loss), company overall - $(1,529,000)
*Gold production or sale (ounces) - 3,321
*Total cash cost per oz - US$877
2) Sierra Minerals:
*Operating country - Mexico
*Operating earnings - $806,445
*Net income (Net loss), company overall - $30,751
*Gold production or sale (ounces) - 5,162
*Total cash cost per oz - US$753
3) Olympus Pacific:
*Operating country - Vietnam
*Operating earnings (Loss) - $330,247
*Net income (Net loss), company overall - $(2,175,166)
*Gold production or sale (ounces) - 4,053
*Total cash cost per oz - n/a
4) Alexis Minerals:
*Operating country - Canada (Quebec)
*Operating earnings - $352,619
*Net income (Net loss), company overall - $(1,714,536)
*Gold production or sale (ounces) - 7,883
*Total cash cost per oz - US$888
5) Avnel Gold:
*Operating country - Mali
*Operating earnings - $415,000
*Net income (Net loss), company overall - $(1,420,000)
*Gold production or sale (ounces) - 4,314
*Total cash cost per oz - US$802
6) Caledonia Mining:
*Operating country - Zimbabwe
*Operating earnings - $1,802,000
*Net income (Net loss), company overall - $846,000
*Gold production or sale (ounces) - 4,117
*Total cash cost per oz - n/a
7) Starcore International:
*Operating country - Mexico
*Operating earnings - $1,687,000
*Net income (Net loss), company overall - $562,000
*Gold production or sale (ounces) - 5,400 (gold equivalent)
*Total cash cost per oz - US$449
4 comments:
Production05,
What do you think would be a realistic SP when considering Lamaque?
petercz to Production 05 – Your question as to what share price should be at is difficult to get a handle on. However, this commentary does provide a bare minimum P/E @ .47 / .032 = 15. This is low in comparison to peers. I would like to see 40. So let’s do some soul searching to brainstorm why we are so low. Here are my thoughts:
• We are still smarting from nearly having to close the doors forever.
• We are trading on a ‘small exchange’.
• Our track record on delivering the promises has not been that good.
• The PR has been mediocre.
• The website looked like an advertisement for a USA Western Ghost Town.
There is hope. If we use this same abysmal P/E ratio of 15 and extrapolate it to the 2010 estimates, we then have:
• 65,000 ozT / 2010 total production
• Assume: $570 / ozT cash cost
• Assume: $1,100 / ozT
• Assume: 340 M shares
This translates into $1.52 / share. Given the fundamental asset > 1 M ozT proven and an excellent chance at tripling the original investment, even the prudent person sees this as an outstanding investment.
Addressing production 05’s question as well as the dynamics that Century is demonstrating now, I project the P/E one year from now to be at 30 and the share price to be at $3.04. Here is why:
• The website is excellent and projects the dynamics that have been lacking in the past. Even the best sites don’t give share-holders a frequent status report. This is unprecedented as far as I know for the industry. Where we use to see a lifeless head-frame, we now are looking at ore moving on a belt and under lights. To me at least this says, “These people are serious about moving tonnage.” The countdown is very original and we all know that most likely first pour will be sooner rather than later. It says to the observer, “These people are committed to the project and willing to draw the proverbial line-in-the-sand.”
• The money in-place or lack of a cash flow problem is very good.
• We are not going out and buying other mining operations or diluting the share price through the creation of additional shares.
To hit one out of the park (baseball analogy) by pushing the P/E up to 45 or share price = $4.56 in my humble opinion requires the following:
• Century to make even a token attempt to buy back shares.
• Continue the new website approach to dealing with the investment community.
• Follow through with the plans for a new CEO from Canada.
• Have contingency plans to reassign miners to new tasks in the event that there is a problem under-ground. No one should be laid-off because ‘management’ did not have a plan ready-to-implement. We have the money now we have to have the plan in place ready to execute. Read the book, Gen. U. Grant Memoires.
• Get a listing on a major exchange like AMEX or NY. In the event that this cannot happen at least start a rumor.
Let it not be said that petercz@earthlink.net shoots too low. Long live the wolf.
Here is my opinion of what Century`s MINIMUM share price should be at the points of ramp up:
1) Now = $1.00 per share minimum = $340M market cap
2) Over the next 2 or 3 months as we demonstrate we can consistently deliver 1,200 tpd to the mill = $1.35 per share minimum = $459M market cap
3) Later in 2010 after hit 4 consecutive months of producing run rate production of 70,000 ounces, thus eliminating the key Deutsche Bank start up guarantees = $1.70 per share minimum = $578M market cap
4) At some point in 2011 when Century hits 2,000 tpd and 105,000 run rate production ounces at Lamaque = $2.00 per shapre minimum = $680M market cap
5) Century will be launching an u/g exploration program at Lamaque in May. I would like to see them move some of the 600,000 M&I Cross-over ounces into P&P and also some of the 1.1M Inferred Cross-over ounces into M&I. Also, the North Wall has about 250,000 P&P ounces currently. I would like to see Century move some of the remaining 400K+ North Wall Inferred ounces into P&P. After accomplishing this I would like to see Century ramp up Lamaque`s annual production to 150,000 within the next couple of years instead of waiting for the refurbished shafts. Perhaps Century can add a second haulage drift and an extra decline if it helps. Century`s mill can handle 150,000 ounces right now (so not an issue on that front). I`m sure extra tailings space can be worked out.
Exploration success with the drill program at San Juan later this year could increase long-term production target to 35,000 ounces (the scaled up 700 tpd mill can handle 35,000 ounces at current avg grade).
If ramped up production of 185,000 ounces was achieved = $3.00 per share minimum = $1,020M
All 5 of these ramp up levels exclude any significantly accretive (and synergestic) mergers that will likely occur later this year (in the Val dÒr area).
This will continue with the next comment. I will post a comparative analysis.
Century Mining:
* Outstanding shares = 340,000,000
* Current market cap = $160,000,000
* 2011 production = 115,000 ounces
* 2013 production = 185,000 ounces (assuming the ramp up plan I just described)
* Cash cost per ounce = $450 - 500
If Century continues successfully down the path I described, I do not see the following companies having assets that are substantially more superior:
1) Alamos Gold:
* Outstanding shares = 114,286,608
* Current market cap = $1,626,298,432
* 2011 production = 167,500(+) ounces
* 2013 production = 300,000 ounces
* Cash cost per ounce = $338 (for core asset only)
2) Lake Shore Gold:
* Outstanding shares = 347,474,000
* Current market cap = $1,063,270,440
* 2011 production = 120,000(+) ounces
* 2013 production = 200,000 ounces
* Cash cost per ounce = $320 (old estimate only)
3) San Gold Corp:
* Outstanding shares = 268,265,000
* Current market cap = $930,879,550
* 2011 production = unclear
* 2013 production = unclear (at one point I remember seeing an old figure of 200,000 ounces)
* Cash cost per ounce = unclear (again, at one point I remember seeing an old figure of $350)
4) Aurizon:
* Outstanding shares = 159,095,000
* Current market cap = $808,202,600
* 2011 production = 170,000 ounces
* 2013 production = 275,000 ounces
* Cash cost per ounce = $435
5) Semafo:
* Outstanding shares = 250,981,000
* Current market cap = $1,400,473,980
* 2011 production = 245,000(avg) ounces
* 2013 production = 245,000 ounces (avg)
* Cash cost per ounce = $500 (avg)
6) Romarco Minerals:
* Outstanding shares = 446,148,000 (includes 70M shares from a recent bought financing deal that is expected to close on April 13th)
* Current market cap = $869,988,600
* 2011 production = no production ounces until 2012
* 2013 production = 150,000 ounces
* Cash cost per ounce = $266 (old number)
7) Jinshan Gold:
* Outstanding shares = 168,199,000
* Current market cap = $940,232,410
* 2011 production = 120,000 ounces
* 2013 production = 140,000 ounces
* Cash cost per ounce = $401
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