Tuesday, July 6, 2010

This week's trading and other comments

All in all today's update was extremely positive, but discouraging when there is no positive reaction in the market.  I think that there is no institutional buying yet and there are still the shares for debt being bled into the market which is consumed by the retail shareholders that still have the funds to add to their positions.  The Anonymous selling could be MRI of Switzerland who were issed 3.5 million shares at a deemed price of 28 cents to cover a $1 million loan and there were several million other shares issued to local creditors at a deemed price of 25 cents per share.  Anonymous is often the largest seller and are again this week.  Surprisingly Canaccord was the biggest buyer today; they bought 171,000 and sold 0. 

Hopefully we'll see some institutional buying after the analysts' tour. With almost 2,000 oz produced in June, Lamaque's production has now exceeded San Juan's.  Some day some institution is going to recognize how mispriced the shares are and buy millions of shares.

Here are the 2-day trading totals:

5 comments:

production05 said...

Additional notes

7) ``The Company expects to be developed down into the Bedard Dyke in July, at which point the 20,000 tonne bulk sample will be extracted and tested.``

It would be nice if they can do the 20,000 tonnes over 3 months (if not more aggressive). That would give us 222 tpd over that 3 month period.

770 tpd - end of June

220 tpd - bulk sample Bedard Dyke

110 tpd - from the 2 new Lamaque no. 2 stopes plus further optimization of low-profile equipment plus the new jumbo expected to arrive in Q3

We may have a shot at 1,100 tpd @ 4.76 g/t with 96% recovery at some point in the not too distant future. All of the drivers are now (or soon to be) in place.

Let`s make these assumptions for once we reach that stage:

*4.76 g/t grade

*1,100 tpd

*96% recovery

*667 Lamaque monthly ounces paid to DB (prepaid gold sales agreement)

*US$1,200 gold price

*currency conversion rate of 1.06


At this stage, we are looking at 4,848 in gross Lamaque gold production ounces per month.

4,848 - 667 = 4,181 Lamaque ounces left over for Century

4,181 * US$1,200 * 1.06 = C$5,300,000 in potential Lamaque gross revenue per month

This is in addition to the 1,700 ounces of monthly gold production out of San Juan.


8) ``The Bedard Dyke is the second zone which the Company anticipates to develop in 2010, and production is expected to significantly increase upon commencement of mining.``

Assuming we get our long-hole stoping permit within the next 3 months, Q4 mining could bump our tpd up to the next level.

Low-profile mining of Lamaque no. 2 mine (with improved optimization), long-hole stope (high tonnage, bulk) mining of the Bedard Dyke and if we are fortunate perhaps a bit of mining in the North Wall zone (at the very least bulk samples).

We may have a shot at 1,400 tpd @ 4.76 g/t with 96% recovery at some point in Q4 (even if it turns out to be later Q4).


Let`s make these assumptions for once we reach that stage:

*4.76 g/t grade

*1,400 tpd

*96% recovery

*667 Lamaque monthly ounces paid to DB (prepaid gold sales agreement)

*US$1,200 gold price

*currency conversion rate of 1.06


At this stage, we are looking at 6,170 in gross Lamaque gold production ounces per month.

6,170 - 667 = 5,503 Lamaque ounces left over for Century

5,503 * US$1,200 * 1.06 = C$7,000,000 in potential Lamaque gross revenue per month (C$21,000,000 of gross revenue on a go forward quarterly basis, from Lamaque alone)

This is in addition to the 1,700 ounces of monthly gold production out of San Juan.


9) ``Concurrently, the exploration team will also be initiating the underground drill program to fully explore this newly discovered mineralized zone.``

I look forward to see what they find once some or all of these targets have been tested:

1) Bedard Dyke at depth

2) Southwest extension of numerous mineralized flats, going beyond the Bedard Dyke

3) Potential of the Bedard Dyke mineralized zone connecting to the North Dippers

4) Potential of a (historically mined at depth) high grade mineralized Shear structure extending upwards just north of the Bedard Dyke

production05 said...
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production05 said...
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production05 said...

Sorry about the deletions - you didn`t miss anything. My comment got posted 3 times.

production05 said...

I have one more note.

10) From Century`s Jan. 4`10 NR:

``Century expects that the reopening of the Lamaque mine complex will have a significant impact on the economy of Val d'Or, Quebec. Up to 250 employees will be employed at the mining operation at full capacity, bringing millions of dollars to the community, the region and the province of Quebec, and once again Century will pour gold from Val d'Or.``

That 250 employee number represents full staff (including all Lamaque management and support staff, i.e. Lamaque geologists). Also, that 250 number is a max number - the success of the low-profile equipment could reduce it. In addition, that 250 number is for when we are at 100% of the current mining plan. The current mining plan is capped at 2,000 tpd (the next mining plan will be 3,000 tpd, but that has not been rolled out as yet).

Well, as you can see, 1,400 tpd per day in Q4 is still well below the current mine plan ceiling of 2,000. This likely means that we are far from carrying 250 employees at Lamaque anytime soon.

However, let`s be conservative and work with the entire 250 employee number.

Also, let`s say that the full loaded average cost to Century for each of those employees is $70,000 per year. That would include compensation, any type of cash bonuses, the part of the benefits paid by Century, administrative / maintenance costs incurred by Century, etc.

That $70,000 is $5,800 per employee per month. Let`s round that up to $6,000.

250 employees * $6,600 = $1,500,000 per month

We are potentially looking at $1,500,000 per month in employee compensation related expenses when we reach 2,000 tpd at Lamaque.

Employee costs is not our only type of operating costs, but they certainly represent a large percentage of the production costs. There are many other costs (fuel, electrical power, monthly payments on leased vehicles, supplies, parts/replacement parts, external maintenance labour, etc.).

I think any way you slice it, C$7,000,0000 per month in gross revenue at 1,400 tpd (nevermind what gross revenue we will get at 2,000 tpd with still only 250 Lamaque employees or less) should go a long long long way.