Of course, again, the production levels that mean the most to us are the ones that (over the next year or so):
1) enables us to access the funds sitting in the performance hurdle account
2) allows us to achieve commericial production status
3) puts us in a position to discontinue the start up guarantee agreement with DB
Everything appears to be moving along well so far.
Nevertheless, I think it`s a good exercise to profile how quickly we are moving on the gold production front, company overall (a nice upward ramp is starting to take shape):
Q1`10 - 4,921 ounces
Q2`10 - 8,800 ounces (est., 3.8K Lamaque, 5.0K SJ)
Q3`10 - 18,500 ounces (est., 13.5K Lamaque, 5.0K SJ), based on reasonable tpd levels (900 Jul, 1,100 Aug, 1,100 Sep) with targeted grade and recovery
Q4`10 - 21,500 ounces (est., 16.5K Lamaque, 5.0K SJ), based on reasonable tpd levels (1,200 Oct, 1,200, Nov, 1,400 Dec) with targeted grade and recovery
These numbers work out to 53,700 (33.8K Lamaque, 19.9K SJ) company overall ounces in 2010.
Century`s target range for production ounces in 2010 is 55,000 - 60,000 for company overall.
Century will have to go a bit higher with Q4 Lamaque or/and SJ, to hit the low end of the range (55,000 ounces) from the numbers I have profiled. Also, any shortfalls from the Q3 numbers I have used will have to made up in Q4. In my view, Century will need to have a massive Q4 at Lamaque to hit the high end of the range (60,000 ounces). We don`t have enough info (at this time) to know what their capabilities will look like for Q4. I suppose anything is possible, especially if they are able to drive production from all fronts effective early Q4. I guess we`ll have to wait and see how everything shapes up.
Also, another reminder, the Lamaque production ounces will have no impact on the bottom line of Century`s Income Statement until commericial production gets achieved in 2011 (and reported in quarterlies) - until then, the net of dollars from Lamaque gold sales (these ounces profiled above) and costs associated with work done at Lamaque will be netted together and further netted against the asset book value of Lamaque that resides in the Balance Sheet (as a capitalized items).
14 comments:
Hi Prod05
Assuming the anticipated figures of 53000oz is achieved, even though it is a tart below target of 55000oz, I will still consider it respectable considering the amount of works (some first time ever for sure) associated with any start-up, be it a mine or any other commercial project. Anyway, will it lead to a cash flow positive situation for the co?
Further, if I am not mistaken, CMM had acquired +-20% of Etruscan Resources Inc at the time of the private placement done with Kiekland & Gravity (Finskiy and Scola). Can you elaborate how important is this investment to CMM and what is the potential this Etruscan offers?
Etruscan is in the process of being acquired by Endeavour Financial Corp, which seems to have ambitions of backing its financial interests with producing gold mines. EDV had a substantial interest already in Etruscan, and has opted to acquire the entire business. I personally view this as a stroke of brilliance on both companies' parts-one that will strengthen both. Assuming that we still own our 20%, this will add some immediate value to CMM, as well as possibly opening a substantial market-maker for us.
EET has a producing mine in Burkina Faso (Youga), and a very interesting (and likely very under-measured) resource in Mali, on The Kofi Shear Zone, which hosts some pretty stupendous deposits. EET has a lot of irons in the West African fire, having operated there for about 15 years, with about 3Moz total M,I&I. Who knows? CMM, EET and EDV tied up together might go a long way towards building the powerhouse envisioned by PK, MF and FS (not to mention the rest of us).
EDV also owns something more than 40% of Crew Gold (CRU). CRU & EET together, once producing at +/- full capacity, should have annual production of 300-360 thousand oz. Both will be relatively low-cost producers in what pass for politically stable jurisdictions in Africa.
Hi guys,
Sorry I couldn`t get to your EET question earlier, as my answer will be a bit of a downer. Chillby had some good ideas there about what CMM and EET would have looked like together. EET has some decent to good assets.
Unfortunately, the EET share ownership consideration was from back in September last year. Finskiy owned about 20% of EET at the time he partnered up with CMM. The plan was to sell his EET shares to CMM in exchange for CMM shares. CMM`s plan was to work with EET to improve their operating situation then perhaps merge with them to create a larger company.
It never materalized thought. At the same time as the Century announcement with Finskiy, EET`s management was finalizing a deal with EDV. Once the EET and EDV deal was announced, it didn`t make any sense for CMM to be involved with EET anymore (as CMM could no longer do a takeover for majority ownership). Finskiy ended up selling his EET shares to EDV.
The bottom line is that we do not own any EET shares and we`re not involved in any way with EET.
Though, I really like Burkina Faso (BF) as a mining country. It`s the best place in Africa to be right now, in my opinion. There seems to be gold everywhere and the government has rolled out the red carpet to attract foreign companies (the government gets to keep 10% of the mine, which is standard in Africa, but, in BF, companies get tax discounts - I think a 20% tax rate instead of 30% or 40%). Actually, I`ve known about the rise of Burkina Faso for about 6 or 7 years now, due to another investment.
BF use to be the poorest country in Africa (not sure if it still is). No gold mines in the country as recent as 3 - 4 years ago. BF has 6 mines in production now. The government wants to turn BF into the 4th largest gold producer in Africa.
If CMM was ever going to consider Africa, Burkina Faso would be the place. There are huge opportunities there right now.
Just read something about Severstal buying a big chunk of EET yesterday, mainly out of concern over the EDV deal...might be a price war in the offing.
I'm with you on BF and Guinea, though my money is on Idsizek. One talented fellow...
In my opinion there are three reasons why the market cap of CMM is hovering around 160 million.
1) 3800 oz for Q2 means Lamaque is not profitable. The profits from San Juan will go a long way towards break even for the company as a whole ... but basically cmm is not yet making money.
2) Stability of the price of Gold above 1000.
3) Lack of confidence in Management
Gold was barely above 700 in the latter part of 2008. Many think Gold can return to these levels.
I believe that gold will remain above 1000 for quite some time .. but ??
There is no question that if 18,000 oz of Gold is produced in Q3 at the current gold price CMM will be "very" profitable. The move from in the red to in the black will be a "tipping point" of sorts.
The second tipping point is "at what point investors will throw in the towel and believe in >1000 Gold" This could be triggered IMO by a run of Gold above 1300 or continued stabilization of the price at current levels > 1150 would be Glorious .. at this piont investors will start to value the smaller mining startups to higher levels.
Action in the Juniors is already starting to happen. YNG, PEM, SCM are just a few recent examples...
21,500 oz for Q4 .. if gold still above 1100 ..
The fickle street will be treating this management as if they just won the Superbowl .. Last years bad season all but a distant memory
The raging masses will be piling into the juniors en masse
Getting anywhere close to 50,000 oz for the year .. and having monthly production anwhere near 8000 oz/month (again at current Gold prices) CMM will be handsomely rewarded by the street.
Mike
I am not close enough and invested long enough to feel the market's lack-of-faith/confidence feeling towards management. However,in my file I had recorded the following paragraphs I consider important. I thought they encapsulate a certain vision for CMM, and goals, if achieved, will certainly bring respectable rewards to investors.
P1) With the private placement and the Etruscan transaction (just learnt this is now a non issue), Frinskiy, Scola, Gravity and Kickland have demonstrated a
commitment to make Century their PREFERRED vehicle for gold investments, support the successful EXPANSION of the co's business and grow Century into a significant gold producer.
P2) Century's management will IMMEDIATELY establish an acquisition team to work on future ACQUISITIONS of additional gold advanced development properties and production. The investors are prepared to continue to invest in Century as appropriate acquisitions are identified.
P3) Maxim Finskiy n Fran Scola, in a joint comment, said, quote "Our objective is to build a sizable gold mining co with initial operations and investments in Africa and the Americas. Over the last few months, we had evaluated numerous opportunities and we are pleased that we have selected Century management team and the Lamaque project as the CORE upon which we will base our portfolio. Our plans are to support Century, both financially and technically in order to ENHANCE the value of our share position.
P4) Margaret Kent, President & CEO of Century commented "...... Century's vision is to create a FORMIDABLE mid-tier gold producer and we believe that today's financing announcement, along with the strategic acquisition of Etruscan shares (a non issue now), will help the co achieve its goals.This funding allows us to immediately restart our flagship asset and AGGRESSIVELY pursue other production opportunities.
Through all the available info, blog members's discussions and revealations, it is clear that the co's assets are well demonstrated and as one can see, the aims and designs are unambigiously declared too. Since the declarations are backed by the declarers's own gold, I am inclined to believe CMM's great deposits are in the hands of no-nonsence management/controlling interests with an expansive mandate (seems impatient too).
I am mindful too, that substantial works were already done with much more progressing in Lamaque in increasing momentum. It is very likely that these are some markers the co will be judged against in the near future.
Additionally, at age 45 and having built up the $25billion Polyus Gold, I do not wish to underestimate what Finskiy can bring to the management table of CMM. To me, he is more like a gold major than just a loaded invertor.
commitment to make Century their preferred vehicle for gold investment, support the successful expansion of the company's business and grow Century into a significant gold producer.
Hi Mike
It is said that gold is in the secular bull market with another 6 yrs of life and in the gold price predicting/guessing game, do consider the followings:-
1) Rob MCewen of GoldCorp fame--US$2000 by end 2010
2) Victor Goncalves, one of CMM's strong supporters--US$1700 end 2010 early 2011
3) Mac Faber of Gloom & Doom--price will never again falls below US$1000 For US$1500 and above, many more but tedious to list them all
4) Gold Speculator reported on the 7/23/10 that JP Morgon et al reduce their gold short position substantially! Quoting from the same report " And that is what this position limits issue with the
CFTC is all about...establishing credible position limits, eliminating phony hedge exemptions...and enforcing them. That will end the price manipulation in both silver and gold forever. By the way, I want to thank all my readers who were kind enough to send a letter in to the CFTC as they were absolutely swamped by e-mails over the last couple of days. I think they get the message!"
5) The Indian government bought their 200ton of gold from the IMF at US$1045. This is the price many an analyst consider as the newly established concrete base for the price of gold
6) The Chinese government had only over the last 2 yrs started to encourage its populace to own gold and silver bullions as a form of saving/investment (campaigns went right down to peasant/village
levels). Believe prices for gold were above US$1000 when the game got started. The Chinese government, most unlikely(will never if I may) want to see the price of gold slides as it may become a political bomb should the citizens, rightly or wrongly, link their losses to the advice/encouragement of the Chinese government.
So I am in the gold-price-never-belowUS$1000-camp and gold priced at US$800? .. well, anything is possible but I don't think it is probable.
Wingfong-
I read with interest yesterday that JP Morgan is advising miners to sell their gold forward to protect themselves from a drop in gold prices after 2011-2012. I find this highly suspicious - especially coming from them. One only need review the, ah..."merger" between Anglo Gold and Ashanti Goldfields (where Ashanti got the golden screw). Both companies were clients of JPM. Essentially, by listening to JPM, Ashanti shareholders lost an enormous amount of money on the deal.
If JPM says sell forward, I'd wager better than even odds that they fully expect gold to rise dramatically, and see it as nothing less than an opportunity to buy a lot of gold on the cheap, as well as possibly gaining ownership of a few miners themselves. And if they can help that process along, well, it isn't as if their brokers don't brag about how much they manipulate the market at LME...
Hi Wingfong,
I agree 100% with what Chillby had to say about JP Morgan.
In addition, JP Morgan does behind the scenes work for slimeball mining companies like Severstal. In my opinion, Severstal (especially its majority owner, Alexei Mordashov) is by far the slimiest mining person/company out. In my view, he is only about greed, games and guerrilla tactics, which he uses to wipe out retail shareholders and walk away with their valuable assets for virtually nothing. It`s an approach he uses time and time again. Canadian regulatory bodies have shown absolutely no interest in protecting the little guys, in my view - they are not even willing to admit there are loopholes in their regulatory system (nevermind fixing the problems).
As such, parasites, like the example I gave, are allowed to survive and actually thrive in the Canadian system right now, as awful as that is.
Chillby
This gold-forward-selling, gold bullion leasing n what have u had been going on over the years. What is interesting is what is the forward price this present JP Morgon offer is pegged?
It is said that in the past, all such activities were aimed at surpressing the price of gold to secure/sustain the position of non-gold-backed pure printed paper notes as money.
I have a feeling, come this round, what the American banks are trying to conjure up to lay their hands on the supply of gold is not for the same purpose in suppressing the price of the metal. On the contrary, they may be planning to hoard the yellow metal in anticipation of the day they may need to deliver on their shorts and also in anticipation of higher, much higher prices
Frankly, if they game to supress the price of gold, it seems to me it is pure stupidity because the Governments and people of China, India, Russia, Brazil, Middle East and Asians will buy laughingly with both hands and will cry for more too!
I am awared the Chinese, Indians, Middle Easterners and Asians have gold in their blood and in their collective memory--gold is real wealth even their enamies will accept! (never mind the morden jargon that gold is not somebody's liabilities, counter party risks etc etc. To these people, gold is just pure wealth and the more the better!)
Richard Russel, the 80+ doyan of the financial/gold analysts/letter writers circle in the USA had this to say on Sep/8/10
Quote " I have been wondering why the Chinese government has been almost pleading with the Chinese people to buy and hold gold and silver. And it suddenly occur to me that the Chinese government sincerely believes that gold and silver are heading substantially higher. The Chinese leaders want the Chinese people to benefrit from any higher price of the precious metals. The idea is that if the people are happy and richer by holding gold and silver, the leaders (and the political party) will be that much safer. The one thing the leaders of the Communist party want is a peaceful, contented and richer population.
So far, the leaders of China have been very smart, and it occurs to me to tell my subscribers .."Do like wise" (gold price sept/09 is +-US$930 per oz)
HI Prod05
The slimball types u brought up are what I fear most as a retail investor. I have known of fellow investors who had suffered much in similar situations run by slimeballs.
To say it again, this blog and all past and present postings had in one way or another answered many a question I need an answer to.
Again, many tks to every blog contributor.
I hate to say this, most especially as a dyed-in-the-wool capitalist, but the thing that the investment marketplace and the vast majority of governments in the world are missing is one simple fact: a prosperous, well-educated population is more stable, more productive, and more capable of responding to everything from day-to-day life to huge natural calamities than any oppressed, poverty-stricken population can possible be. Governments that foster the prosperity of their taxpayers (likewise corporations and their shareholders) keep power. When's the last time we saw a political revolution in Switzerland?
The Chinese government sees quite clearly that raising the standard of living and providing additional wealth for an increasingly urbanized population is their surest path to keeping a lid on anarchy. Encouraging people to buy hard assets takes some of the onus for achieving that prosperity off of Beijing.
I really don't know what is going to become of my own country - we are being impoverished, thrown out of work and losing such wealth as we have to the bottomless pit of short-term profiteers - JPM, GS and a whole host of foolish barons who somehow think that history will fail to repeat itself when they've destroyed the machine that made their wealth in the first place. K Street owns our government. People cannot admit their mistakes, let alone forge a sensible path. The US is stuck with a dysfunctional government. The welfare of the nation is held hostage to political infighting and oblivion to the gaping disaster that waits for us to ignore the facts just a little bit longer. Those proud, steep mountains will be laid low into the plains. Just hope there are some future generations left to mine the sediments afterwards.
Few better mechanisms exist for individuals to contribute to their own posterity than the equity markets. What a pity that the JPM's of today's world have lost the vision of the Henry Fords of a few generations ago. It isn't Blankfein's vision of the world that will make it a better place, or provide for the longevity of his company. Er,...Gravity rules 'em all! (no pun intended...)
I read one article that listed 20 analysts who have projections of Gold $5000 in one to two years.
I too am in the camp that the massive debts "soveriegn debt crisis" will be drawn out for years and in the end a new reserve currency will emerge with (at least initially) a partial backing of gold to instill confidence.
That said .. the due dilligence for the initial financing package for CMM estimated used Gold at 800
Lamaque will still be profitable at $800 Gold.
Right now .. the US and Europe is
trying to solve the debt problem by creating more debt ??
They had to bail out Greece because Greece did not have enough money to make an upcoming interest payment on thier debt. These countries do not have to pay down their debts .. but one thing they "must" do is make the interest payments to investors.
If Greece were to miss the interest payment .. they would be in default. This would cause a panic affecting the and investers would demand higher interest rate of all soverign nations.
Rising interest rates cause the interest payments spiral out of control causing more defaults and so on ..... "the death spiral"
Solving current debt problems by creating more debt is not new .. This was also tried by the Spanish Deutch and British when they were world economic empires. (You can go back to Rome actually and see the same)
The end now .. will be the same as the end back then .. The end of the current economic empire and transition to something new.
This debt crisis is bigger than any of the previous (except perhaps Roman empire) .. It will take some time to unwind ..
My belief is that we are in the beginning phases of the end of a massive global economic and social transition .. we have started into the "death spiral" IMO .. this will take many years to unwind .. and Gold will continue to do well
Mike
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