Interpretations and comments

1) Lamaque mining appears to be 1.5 to 2 months behind schedule, largely due to delays with arrival of the essential (critical) new low-profile equipment. Peggy says that the new jumbos and scoops (loaders) are working ``fabulously``. She says it will revolutionize the industry, with regards to mining narrow veins.


2) They are currently mining entirely from the Lamaque flats. BD bulk sample mining is not expected to start up until July. Gold currently being mined in the flats can be categorized as follows:

i) Stope ore that was already included as reserves – represents 50% of what is being mined, which they believe is coming in with a grade around 4.5 g/t

ii) They are mining and crushing some of the waste muck. They are already mining in the area and have to move the wastes anyway and the gold price is $1,200 per ounce. This may not work at $800 gold, but it might help to pay some bills at $1,200 gold. The gold in waste material, that is being processed, has a minimum grade of .5 g/t, but likely averages somewhere in the 1.0 to 2.0 g/t range. They say that the waste muck being mined represents about 1/3 or the tonnage going through the milling process. Let`s say that this represents 33%.

iii) They are also finding that the ore areas (being mined) continue within the veins - even after already mining what was identified in reserves. This would therefore represent stope area gold (similar to point i above), but not previously counted in reserves. There seems to be continuation in the veins of all the stopes they have thus far opened up. It`s also not clear if the grade is also within the 4.5 g/t area. I guess by default it sounds like this represent 17% (100% - 50% - 33%) of what is currently being mined.

In the Jan`09 bankable report, it was identified that we would likely find low grade non-reserve ounces (in the path) that could be economically mined. As such, I am not surprised of the findings after actually mining the flats. The Lamaque flats are comprised of mainly narrow vein high grade ore, but has low grade loose change as well (as we can see). If the gold price is high enough and the mining teams are efficient, theoretically they should be able to pick up some of these low grade ounces economically as they are already mining in the area (no extra development work and they should be right in the path).


3) 1,800 ounces of gold produced at Lamaque so far. This is from 19,161 tonnes process thus far, which includes the 1/3 from low grade muck being run through the crusher.

Prior to the mill circuit being shut down, the circuit normally carried about 2,000 to 2,500 ounces as inventory. In addition to the 1,800 ounces already produced, the Lamaque circuit currently carries an additional 1,000 ounces. They expect the circuit inventory total to go back up to 2,000 ounces before settling in at that level on a continuous basis. I don`t know exactly how it works, but there is usually build up in the circuit that accounts for the inventory. They had cleaned out the circuit when it was last shut down. This new inventory build is happening naturally as they have cranked things up again. Now, most likely not all of the 1,800 ounces produced and the 1,000 ounces currently in mill circuit inventory is from current mining. I say this because the company was carrying X number of Lamaque inventory all along (since the last shut down), although I don`t know where they were storing those ounces given the mill clean that occurred. Maybe they moved the ounces back for mill circuit storage after the mill had been cleaned up. Either way, we should keep in mind that it is likely that not all of the 2,800 ounces were from new mining efforts.


4) They are currently doing 400 tpd at Lamaque. That is probably the key (starting point) number to work with when trying to assess the ramp up situation.

``Additional stopes to opened in June 2010 with increased production anticipated``

There were 4 stopes in production at the end of May. There are 3 additional stopes in development at the end of May. It`s not clear if at least 1 of the 3 development stopes is in the BD (or if all 3 are incremental to BD). Either way, it sounds like there is soon to be more than 4 production stopes at the Lamaque flats in the near future. This should increase tonnage beyond the 400 tpd level.

``Production expected to increase due to low-profile underground equipment became operational later than expected at the end of May 2010``

It`s not clear how much of the low-profile equipment gains have already been built into the 400 tpd EOM number. If the low-profile equipment is making a ``fabulous`` impact (as Peggy claims) it would be extremely disappointing and operationally devastating if this new equipment (alone) doesn`t push the 400 tpd number to a much higher level.

``Work continues on Bedard Dyke portal access; expect to ramp to zone by July 2010 and additional tonnage to be added to production profile``

The 20,000 bulk sample tonnes from BD starting in July (hopefully not too much longer than a month from now) should help to push the 400 tpd higher. The ore grade from BD should be good also. As they are mining the 20,000 sample tonnes, I would like to see them apply for a permit extension to mine another 20,000 sample (once they`ve mined the first 20,000). I don`t know if they are allowed to do this though. They did manage to increase the original 15,000 tonne request up to 20,000.

I would like for them to make this request because it will likely be a while before we get our long-hole stoping permit to fully mine the BD and the North Wall. Per the Jan. 14 DB agreement on SEDAR, the long-hole stoping permit is not expected until 180 days after the Lamaque exploration permit is granted. The Lamaque exploration permit was granted around the end of April. If we stick to what is in the DB agreement then we will not get the long-hole stoping permit until beginning of November (5 months from now). We need to ensure we can find a way to mine the BD continually from July to October. Maybe they are planning to stretch the 20,000 bulk sample throughout that 4 month period. That would equate to 167 tpd from BD for the 4 month period. It would be 333 tpd from BD if they mine the 20,000 tonnes over 2 months, which probably makes more sense. Peggy said that BD would represent 40% of production (let`s hope she means near-term) and then 50%-60% at full BD mining.

Although, Peggy said something on the conference call that was odd. She said that they recently purchased a long-hole drill and it will be arriving in a week or 2. Now, I am not exactly clear why they would need a long-hole drill right now when the long-hole stoping permit is not expected for another 5 months. Hopefully they are anticipating that the permit will arrive much earlier.


5) ``Exploration Drilling started end of May 2010; 3 holes completed to date for 500+ meters``

Our in-house assay lab is now up and running. One would think that means quick turnaround time. They will probably still need to send out some assays to independent labs, but that should only be about 10%. With the in-house lab, let`s hope that Century will be in a position to release results from the first 3 holes in about 2 weeks or so.
It sounds like the first few drill holes are focused on drilling the Lamaque flats ahead of mining. If so, this should provide more near-term mining certainty and provide better mine plan expectations. It should also help to add ounces to reserves.


6) Updated SJ 43-101 report expected at some point in the next little while. The last one was a couple of years ago so they will have to remove ounces mined. However, they should be able to increase the net numbers. To be honest, I really didn`t understand what the independent person was thinking when he prepared the last report. He was super conservative I think, to the point where it didn`t make any basic sense to me. His team used an average reserve grade of 8.87 g/t for SJ, even though they know that SJ operates at an average grade of around 6.5 g/t (before the report and after the report). It`s obvious that SJ operator mixes the high grade ore with the low grade ore to get to the very economical 6.5 g/t average. The 43-101 preparer likely left out a lot of the lower (very economical) grade ore from the last 43-101 report.

Those ounces are even more economical today. The gold price was US$800 back then. The gold price is now 50% higher today, at US$1,200.

As you can see, there should be at least a couple of opportunities to improve the 43-101 resource profile relative to what was published in the past.


7) Century received the US$5M Performance Hurdle A amount at the end of April (a month ago), but I am still concerned about the cash situation. The 1.5 to 2 month operations delay will likely subsequently delay access to the next US$8.5M from escrow. They need to do a run rate of 70,000 ounces of production for 4 consecutive months in order to access the US$8.5M. Even though they can use the SJ ounces in the calc, I don`t see 400 tpd at Lamaque as cutting it. Even if they reach 4.7 g/t planned grade, they still need Lamaque to contribute close to 1,000 tpd for 4 consecutive months. At best, we are looking at mid Q4 before we can access the US$8.5M. There are tonnes of costs we need to address way before then, including daily operating costs, significant accounts payables, BD development, exploration, Corporate G&A, development of the North Wall starting in Q4, etc.

If it was strictly the management team of the past, without Finskiy and Scola and company, I would be concerned about this being a serious issue. However, that`s not the case this time around. I am concerned, but I don`t see it as a problem. There WILL eventually be a solution. As a first stage remedy, I would like to see Finskiy and Scola convert $5M of their $15M worth of warrants.


8) The DB prepaid gold sales payment increases to 667 ounces per month starting in June (from 200 per month from Jan to May). I am not concerned because we can supply the ounces from SJ if the 1.5 to 2 Lamaque delay has impacted our abilities at Lamaque.