| Although the name CCI uses the term "Commodity" the oscillator is commonly used for analyzing equities. A CCI is based on a comparison of price and moving average. The CCI is expressed as percentage that oscillates between -100 and 100. However, these levels can be exceeded. More... | | Event Date: | Jul 15, 2010 | | Opportunity Type: | Short-Term Bullish | | Close Price: | $0.53 | | | Price Period: | Daily | | Volume: | 496,700 | |
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26 comments:
Pepito and Mrstormpay, welcome to the blog!
Wingfong, I have some thoughts on your question about market cap once Century ramps up and expands production (either organically or M&A, or both).
I think Century`s market cap should be in the same range as the companies I listed in my June comparative post titled ``The Gap``. I think Century has (or will have once we further ramp up) as much or more than a number of the companies on the list.
I think Century`s market cap should be in the $600 million to $3.0 billion range, depending on our production run rate (both interal growth and M&A) as we move down the path.
For example, assuming the gold price continues to stay strong and our cash cost per ounce comes in solidly once we achieve commercial production, I see a 115,000 production run rate (90K Lamaque and 25K San Juan) being worth somewhere between $600 million and $1 billion.
I see a 140,000 production run rate (110K Lamaque and 30K SJ) being worth between $1 billion and $1.3 billion.
Assuming a new and expanded mine plan eventually get`s rolled out (3,000 tpd), I see a 180,000 production run rate (150K Lamaque and 30K SJ) being worth between $1.3 billion and $2.0 billion (including a large mid-tier premium being granted).
Assuming M&A activity eventually occurs, I see a 300,000 production run rate being worth between $2.0 billion and $3.0.
Now, to ensure Century realizes these values management need to execute far better than they have done in previous years (we are off to a very good start in 2010, especially on the operations start up front).
Here are some other benefits to assist in achieving these market caps:
1) Premium for being in some of the best locations in the world for gold mining - Quebec, Canada, Peru
2) Successful IR program that delivers institutional investors
3) Move more ounces into P&P Reserves
4) A share price premium will be given once we reach 100,000 ounces of production for company overall, another one once Lamaque (by itself) reaches 100,000 and then a larger premium will be given once we achieve mid-tier production status
5) A premium will be given for greater production diversity - we need to show more production from our second producing location in order to take more advantage of this premium. We need to eventually show 60,000 - 80,000 annual production ounces from our second location. We have 2 possible mid-term options:
A) Do an M&A transaction for a small mine or advanced deposit near San Juan (which can eventually produce 30,000 to 50,000 ounces) to add to San Juan`s 30,000 base amount. This should allow the San Juan mine get a previum as a 60,000 - 80,000 ounce producing mine, event if the production is being generated by 2 separate mines and processing plans within the area (especially if the 2 location are within about 25 - 30 km of one another).
B) Do an M&A transaction for a gold mine from anywhere in Peru, even if it is far away from San Juan. The total production coming out of Peru would still give us a premium - a regional production premium, which might be almost as good as a mine premium.
Mrstompay
I always thought this blog would be well served by some technicals. Now we have them. Great technicals, Mrstompay, keep it up, cheers!
Thank you for the welcome!
In your analysis Production, do you see the catalyst for revaluation being hitting commercial production next year? If so, is that when we might expect the ounces to begin being revalued?
On the technical side, do others see the cup and handle formation, or is that my imagination?
Cheers.
Hi Prod05
Had done a fair amount of comparisions over the last few months including with some of the mines you had high lighted in your ("The Gap") posting.
Got some similar figures. However, it was precisely these figures that had bothered me a lot cos with my limited experience and access to info, I just could not believe it. Questions like are they really possible? are the info reliable? how could CMM be so massively undervalued compared to peers? too good to be true? any hidden issues not know? etc etc. By a large extend, being from Singapore a few thousand km away, there are things I can't possibly do to get to the bottom of things.
Tks to all blog contributors and particularly your inputs for you had helped me to cross the threshold.
Yes, the figures are not from some scamer's note book, CMM is real, PK and team is real, the NI43-101 R/R is real and the mill facilities are real.
Now I am in, confidently taking a seat in the boat reassured that I have good company. Let us do well.
Ya, I read the same C&H formation from the weekly too. Further, believe an impending golden cross is about to be formed (50ma crossing over the 200ma from below). Seems to indicate good tidings in the near future. Cheers
Thank you for the warm welcome folks:):):) the charts are looking better than ever!!!!
Like so many juniors, CMM was deeply impacted by a combination of the 2008 financial debacle and a series of mine-and grade related issues of the time. I sense that much of the development work at Sigma/Lamaque would have been accomplished during that period had we not all been taken to the cleaners by the Wall St. meltdown. Owning a good stock at a time like that is as useless as owning a bad one - they all get sold to cover large -house losses.
The boon to us latecomers (I began looking at CMM late last year) is that the present cycle allows us to participate, where in 2008, CMM just looked like another junior in difficulties.
We also have one of the toughest, smartest and most storied CEO's in the mining business. PK can tell you what the deal is because there is almost no part of the mining experience that she doesn't have firsthand knowledge of. I like our management and BOD precisely because they have taken it on the chin. If you examine the history closely, however, you find that the difficulties experienced in the past are largely (in PK's case, almost exclusively) related to external events over which no CEO has control - metal prices, market conditions, investor sentiment, labor attitudes, etc. Our management's style is somewhat brusque at times, but they have consistently made the right decisions (IMO) in the face of what were, in '08, insurmountable challenges. For this reason, we have a strong and very strongly growing company today.
The market is a spooky place, which acts like schools of fish-apt to be frightened off or driven to a thing for no apparent reason - in the short term. Overall, however, a strong story will inevitably produce strong results. CMM has the metal in, and coming out of the ground, and the right people managing and financing the process.
Hi Pepito,
I think commericial production will be a key catalyst, but I think there will be numerous other catalysts/opportunities both before that point and after that point.
I think the key is for management to keep delivering the goods - let their actions shine through, mean what they say, etc. With the gold price likely to stay strong for a while, I think a lot of it has to do with the market establishing confidence that management can continue to deliver the goods. I think Century has the asset package to create significant value for shareholders. Management needs to show the market that they can turn potential into value for shareholders.
Century should look at Red Back Mining as a role model company. These guys have delivered the goods big time for their shareholders, continually since 2006. Their market cap is $6.3 billion, with $760 million cash and no debt. They only have 2 operating mines, similar to Century. However, they operate in Ghana (good mining country) and Mauritania (a somewhat unstable country). In 2006 (prior to purchasing their 2nd mine), they only had about 100,000 ounces of production. In 2009, their production grew to about 340,000 ounces (combined, from both mines). They are expecting 500,000 ounces in 2010 and over 800,000 ounces in 2013. On the exploration front, they just continually build up their P&P Reserves total - now at 7.25 million ounces. All I can remember of Red Back Mining (and their management team), at least since 2006 anyway, is them continually delivering the goods (without fail). The market has rewarded their shareholders plentiful. I remember their share price being about $2.00 in 2005/2006 timeframe. I remember it increasing to around $5.00 when they did a financing in 2006 (to purchase the new mine). Red Back`s share price is now $25.
There has been a number of other model companies like this also, including Eldorado Gold and Randgold.
I don`t think there is a ceiling to Century`s market cap, but I do think it`s completely up to management win over the market by delivering results (without excuses) and even continually far exceed results like Red Back Mining, Eldorado Gold, Randgold and other high performing mid-tier gold mining companies.
Hi again Pepito,
From one of my earlier comments:
``For example, assuming the gold price continues to stay strong and our cash cost per ounce comes in solidly once we achieve commercial production, ....``
The reason I mentioned commercial production in that example is to note that we will not be seeing official cash cost per oz from Lamaque until the first reporting quarter after commercial production is achieved.
As a reminder, it will likely take 90 consecutive days of hitting current mine plan production or steady state production at a rate of 60% (or better) - some mines require 30 days and some require 60 days, but I`m pretty sure Lamaque requires 90 days (hence the 2011 target). Our current mine plan max out at 2,000 tpd. As such, we will likely need to hit 1,200 tpd or above (2,000 * 60%) for 90 consecutive days.
I`m really hoping that our tonnage can really take off by the end of Q3, with feeds from all 3 ore sources (Lamaque no. 2, Bedard Dyke and at least limited feed from the North Wall area). Though, I`m not sure how they will handle the tonnage feed situation for the Bedard Dyke in between the time when the BD bulk sample program is done and the time they start with BD long-hole stope mining (I don`t even know how much time will elapse in between). I`m hoping that the North Wall ore will pick up the slack during that period.
Anyway, all this to say that there is not enough info to know if they can carry 1,200 tpd throughout Q4 (90 days). If they can find a way to do that then declaration of commercial production at the beginning of January might be possible (our best case scenario). This would allow for Lamaque to be included in the Q1 Income Statement (due date April 30, 2011). However, we are most likely looking at commercial production being established at some point later in Q1 2011, with Lamaque not loaded into the Income Statement until Q2 2011 (due date end of August 2011).
Regardless, we don`t need to see the official cash cost per oz to determine if Lamaque is operating efficiently. Tpd, grade, recovery rate, should all tell us a lot. In addition, employment levels (both employees and contractors) should tell us a lot also - in a mining environment, employees account for a big chunk of the operating costs (although there are plenty of other heavy costs). The employee levels should also tell us how well the low-profile equipment is working, as well as how well efficient we are with long-hole stoping. We can get a good sense that efficiency is going well if they deliver on tpd, grade, recovery, production ounces, employee levels, etc. (of course, without having to high grade the mine or something of that nature). We can also profile all this items against the gold price to get a ballpark sense if margins are strong enough to assist with future development.
If we can take these analytical approaches then I would hope the professional investment analysts can perform similar performance analysis also, without having to wait for official commercial production financials. In my opinion, analysts that are on the ball should not have to wait for more than 6 months before they initiate coverage on Century Mining.
Sorry, it is the Y/E financials that are due end of April. Q1 is due end of May.
Thanks Production, that's very informative. I know Randgold, invested in them many years ago, sold too early!
Yes, the team seems good, it's easy to forget how difficult it is to build a successful mine, by far the majority of them fail.
I'm quite happy to wait and let management do their job, the timeline is there, so I'm not worried about that at this stage. I am looking forward to seeing the drilling results around the mine though, as we still don't know the full size of this deposit, that's the known unknown as Rumsfeld would put it.
HI Prod05
From my prior due delligence, together with all your inputs over the months, I had come to the firm conclusion that there is impressive
quantity of gold in the Lamaque and San Juan properties making CMM a worthwhile investment.
Now it is extremely heartening to note that you had affirmed that CMM has the asset package to create significant value for shareholders and that you do not think there is a limit to CMM's mkt cap!
What bothers me a bit is that I do sense a constant anxiety and doubt from blog members on management's ability to deliver.
I am influenced and I do feel anxious too.
Few questions, please assist
1) since Red Back Mining, Eldorado Gold and Randgold are successfully mined, pl elaborate are CMM's properties significantly different from these properties in terms of mining difficulty? meaning can CMM's prop be similarly mined as these prop or they are more challenging to mine as compared with those prop?
2) I like to assume that the present management team has the exp
and skills to deliver. However, just in case it is not the case, what can Finskiy & Scola do to amend situation? will they do it? presume retail investors really can't do much
3) It is undisputed that CMM has the asset package. I like to assume that all the gold in the ground represents solid value. As such, should the share price stay in the doldrum or worst cos of non delivery by management, do you recommend retail investors to sit tight until management is changed for the better?
4) How would u rate the current management on a scale of 1 to 10 with 10 being having the highest confidence in performance
delivery
Hi Wingfong,
Red Back Mining, Eldorado Gold and Randgold all have good large scale properties, with low to good cash cost per oz. I haven`t looked at their properties in details in recent years. As such, I`m not sure I`m in a position to compare mining methods, deposit types, geology, etc., relative to Century`s properties. However, I can say that, in my view, there are a lot of positives with Lamaque (long and successful u/g production history, efficient long-hole stope mining method, new low-profile equipment for room and pillar mining (potentially big improvement from historical room and pillar mining), new mining zones established with significant upside potential elsewhere and high potential of extended land package, etc.).
Opinions about management are personal opinions. I`m sure they will differ from person to person. I think management has the basic fundamental skills and drive to succeed:
*I like the well throught out Lamaque restart mine plan.
*I generally like how the restart is progressing thus far.
*I like how the geologists have been on the ball with Bedard Dyke structure. It tells me that they have a solid understanding of historical gold bearing structures on the Lamaque property (which potentially bodes well for future exploration programs).
*I like the decision to switch to low-profile equipment. It could potentially revolutionize room and pillar mining of narrow veins. Management recognized this potential before any other company in North America.
*I like how they managed the company throughout the global financially crisis. They managed the limited cash well - they made every dollar last as long as possible. They took steps to protect the company. They worked closedly with the primary secured lender (IQ) to ensure everyone was on the right page. At the same time, they aggressively pursued financing in the worst lending environment in 80 years. While all this was happening, they were focused enough to ensure they found a way to keep the (very important) Vulcan resource modeling work going. In addition, (from reading the documents) their was ongoing (critical) clear up work, site preparation work and studies (i.e. prelim crown pillar studies) going throughout the crisis, which has already heavily contributed to us getting the first permit and will contribute to us getting the second permit. Clearly, they had the foresight to understand the importance of all this once the global crisis settled down. Lesser management (perhaps even less experienced management) may have collapsed or lost focused from the plan under such tremendous pressures (like few people have seen in 80 years).
As you can see, I like a lot of what they have done recently. However, Management do have flaws and frustrating bad habits. I have gone into them extensively in recent past so I will not do so at this time.
To be continued....
Any way you slice it, Century is substantially discounted in the marketplace. It is my view that the discount is largely a management discount. It`s all about confidence in management and delivering to expectations, especially production expectations. The fact of the matter is that Century has a poor track record of hitting production targets in its past.
What we can look forward to is the results from the evolution of Century`s management structure. We now have checks and balances in place, with Finskiy and Scola (it`s no longer a one person show). In addition, there is a 4 person operating committee in place for Lamaque.
This is the best shape the company has ever been in, IMO.
I am not one that believes our significant share price discount is fixed. I believe that management has to win back over the market. I believe the best way to doing so is by continuing with the solid Lamaque start up, and ultimately deliver the goods. The market will not ignore Century in this US$1,200 gold price world, if Century delivers the numbers.
With regards to investment recommendations, as a general rule I do not provide investment advice. I think everyone`s investment situation and timeframes are different. I`m sure you will be able to assess everything and reach conclusions that best fits your situation. You seem to do a good job in gathering as much DD info as possible. You also do a very good job at questioning things that do not add up.
With regards to rating management, I don`t have a particular rating. As highlighted above, there are both positives and negatives. I still believe that Century`s share price will eventually be substantially higher than it is today, hence I am still a Century shareholder.
Hi Prod05
Indeed it is true opinion on management is rather subjective. However, what u had high lighted, I must say, is most revealing and u had put across some observations(thk some of them are not generally known) which, to me, are crucial inputs for use in evaluating management quality, capability and the relevence of the checks and balances put in place.Your information is much valued and I am impressed by your unending passion and your earnest treatment of every member's questions, however mundane, as something worthy of your attention.
Out of curiosity, what is this Vulcan Resource Modeling? and why u thk it is very important?
If I may pick up the thread here a little-
Much of the current exploration in Canada revolves around applying new exploration technologies to old mine sites. It often happened, back in the days before radio-isotope analysis, VTEM surveys, soil geochemical analysis, ground-penetrating radar, etc., that miners missed or bypassed ore bodies that had no signature on the mine surfaces that they could see. With the advent of non-ferrous metal detectors, oh, some 30 years ago, chaps began making some very rich finds in old mine workings, and so a revolution was born in the industry.
Vulcan modelling is (subject to my large lack of detail on this subject) a means of compiling historical data from old drill cores and mining data and building, through autocad, a 3-dimensional model that shows you how the underground rock and sediment is likely to appear. The data is typically used to compile a "block model," which can then be analyzed to determine where to drill, run your winzes and stopes, etc. Vulcan modelling composes a single analysis of disparate historical and recent data to give a picture of where the ore bodies are likely to be.
When you watch CMM's presentations, that show those pretty golden sheets stretching away into the earth, you are looking at an edited interpretation of that resource compiled using Vulcan.
Hi Chillby
Tks for the introductory explanation of the VRM technique. Pleased to learn that latest technologies are being used. It can only be a plus for CMM. Tks again
If I am not mistaken, believe Finskiy and Scola holds +-40% with management holding +-7%. Is management's 7% a bit on the low side to indicate high/firm commitment? Perhaps the latest situation has been significantly changed?
I have been reading with interest the number of responses to this blog site.Especially interesting is the question by Wingfong on the management of the Lamaque operation and the laments of the undervaluation of CM.Certainly looking at the Lamaque property and the pro/con, it is hard to imagine or clearly define the under achivement. I suggest that there may be an undercurrent of mistrust of the Management at CM.
Like George and Viola McMillian and the (in)famous,Windfall of the 1960s'left people,small business bankrupt as the Company catapulted to stardom and then as quickly declined.Such has been the case/legacy of PK and her band of Merrymen.From the days of Royal Oak to Giant Yellowknife to Kemess and Lamaque underground and open pit debacle,PK and her Merrymen have left hardache in their wake.....continued
Continued..
I am proud to say that I ahve been in the mining industry for many years and have known many mining people and mine suppliers both large and small that have suffered the effects of MKs'promises.Ask an unpaid miner,small businesses and leasors paid by/through default agreement with PK and of course the investor losing or left penniless by broken promises of untold wealth.Come to B.C.Kemess,Ontarios' Porcupine Mining Camp,Yukon,Yellowknife and ask about Peggy Kent(Witty).Be prepared for a laugh,sneer or a tear at the mention of the name.
Miners have long memories,the investment group may forgive/forget quickly but PK and her Merrymen(man) McNutt are alive and well in our(miners)mind.
Canadian Miners,a small group in the world of Resourse Development,continue to be sought for thier expertise in u/g mining,hard work and their resourfulness in dealing with Mother Nature.We know and understand that "She" can be a fickled lady but the Canadian Miner has learned through broken bones and broken hearts that treating Her with respect due can be rewarding for all.
continued.....
contined...
I do not believe this is true of CM at the senior management of Lamaque and hence the Corporate team.Led by McNutt(remember Sigma and the OP messes)a Mine Super for the states , a Vulcan guru from corporate, an inexperienced engineering and geology group again places the Lamaque in peril of shortterm gain with a lack of cohesion for developing longterm goals.It appears that bullying wants/demands rather than discussing/informing our Proud French Canadian Miners of the Corporate wishes/goals leaves a void of mistrust.
Are we seeing a pillage of the Lamaque Mine for shortterm gain.Is there a similarity here to other PK endeavors.Does the Investment community feel worried with the Management?
To use a most appropriate phrase," LEST WE FORGET".
Well, Just Wondering,
Knowing the story from afar, I can't help but wonder what fool would attempt to leave a fellow like Max Finsky swinging in the wind...? If the management were not going about this the right way, I think we would have seen some shakeup at the recent annual meeting. There isn't any mistaking that much progress has come since January. Long memories are good things - and what is in the past is in the past. Naturally, we'd all like to see new and different chapters in the labor relations department - but don't you think that the quick resolution of the strike in Peru this year points to that?
I read with interest just wondering's robust view on CMM's management particularly on PK and MN.
As a latecomer getting invested in CMM, I happen to have no baggage of past performances of present CMM's key management personnels (frankly I do not know any of those historicals mentioned by just wondering at all)
I like CMM, bought in, saw its share price nearly doubled, followed it back to more or less square one. Of the 3 aspects of projects, share structure and management, my humble evaluation (hope is not naive eveluation) of the 3rd aspect depends heavily, in fact solely on info available in the public domains of the recent and present types.
Risking being mundane and redundence, the followings are what I have considered and together with some recent info abstracted from blog postings, formed the basis of my evaluation of CMM's management quality.
1) Lamaque was left dormand for 18 months since July 2008 and the ability to secure the +$60million funding in the worst of times (took them 11 months in year 2009) impressed me.
2) Able to use the smallish San Juan mine to sustain the co and keep the Lamaque flagship intack is not an easy feat
3) Frank Scola of the Finskiy & Scola team (taking up abt 40%) mentioned in the firat teleconference that in their due deliggence process, they had reviewed abt 100 proposals and settled on CMM in the end. He specifically high lighted that PK has the actual experience in running a mine (possibly what he meant was the San Juan mine?). He further said that he would like to see the co hitting 300000 oz as soon as possible. Believe F&S have reasons to retain the present management team .. cont
4) The San Juan labour dispute was resolved speedily showing sign of competancy and management skill
5) It seems that throughout the shut down times, the Vulcan Resource Modelling works apparently went on behind the scence purportedly enabling CMM to secure the first permit and is likely to be on track in getting the second permit. I remember PK mentioned in the first teleconference that the former owners left behind 10000 drill samples and 22000 surface maps and they had continued aggressive data compilation with the aim of adding resources and reserves. In PK's words, the compiled data would take 1 to 2 years to evaluate and it was not possible if it were 3 yrs ago due to the lack of IT softwares. Bravo to management.
6) The start-up and gold pour were 45 days ahead of schedule
7) Now there is checks and balances in F&S in addition to a 4-person operating committee in place for Lamaque. This is business-like evolution of CMM's management structure
8) Committed to a multi-yr drill program to look tro those land parcels in Lamaque. In PK's words at the first teleconference, she said " for the first time we are able to look at the surrounding areas of Lamaque.." ..cont
9) Decision to bring in the low profile equipment that has the potential to up productivity. A first in a North American mine
10) PK stated that by early 2011, co will add 120000-150000 oz tro
synegistic acquisation so achieving 300000 oz fairly quickly. This shows the influence of F&S and management is moving in that direction
Summing up all these, I must say what I see is a management that had delivered the most crucial job in getting Lamaque re-started (otherwise there may not be CMM now and this blog too). I see management's toughness and direction, resourcefullness and important works being done. As it is now, I see a management furiously pulling in all the parts into their right places of a mosaic.
I would rather have a co with a long term major share holding that can amend errors decisively and influence direction of the co rather than splintered holdings needing compromises to work things out and potential harmful infightings. So if one believes F&S are in for the money which I thk should be, then retail investors should be more or less well assured they can ride along with them.
I am biased as I only see/use the recent and present works/events occurred. Never the less it is not to say that history is not important. It has its place in the scope of things.
However, to me, what are potentially achievable in the near future depends more on works done recently and what are continuously being done currently.. cont
Additionally, I understand from the various past postings that PK is a negotiator and acquisitor of par excellence. Perhaps our 300000 oz target and CMM shareholders will be well served by her prowess. I like to assume she will move to be the chairperson and bags us the best 150000 oz mine as a starter by early 2011 tro M&A and leave the daily running of the mines to an equally strong and purposeful CEO (who can say that is not what she wants?)
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