Victor`s excellent (detailed) write up

This is the part of Victor`s write up about Century:


Century Mining Corp.

The last company reviewed on my trip to Val d’Or was Century Mining Corp (V.CMM). This was probablythe most interesting (and fun) of the three tours, as I had the opportunity to suit up and get underground to watch this operation first hand and in action.

Century Mining has, so far, delivered on major milestones that they have promised. Let’s take a step back in time, just for a second. On January 1, 2010, it was a snowy day, and, with the wind chill, it registered -34 in Val d’Or. The Lamaque mine, which shut down its open pit operations in July 2008, was frozen solid, not a single car sat in the parking lot, no lights on, and the only thing visible was a lock on the gate. What happened since then is actually quite remarkable in the mining industry, with the mine opening ahead of schedule -yes let me say that again -it poured gold as promised in the second quarter of 2010, and actually in the first month of the second quarter, April 30, 2010. The company received the financing required to put the mine into production on December 31, 2009, and on January 1, 2010 started mobilizing to site. Fifty-nine days later, on March 1, they were underground mining, and 59 days after that, they poured their first gold bar.

In the past six months, they have had operational hiccups, where electricity to the site was delayed by 3-4 weeks, their new low profile equipment arrived a couple of weeks late, and they completed extra work on the stabilization of the Bedard Dyke portal access, but, as I have seen in many startups, these hiccups come with the nature of the mining game.

There are some interesting operational highlights that the company has worked through that are actually quite positive and unique, and they will likely be beneficial going forward as the operation comes on full stream. First of all, the company was completing their pre-development work on the mine, which normally means moving a bunch of waste that is not mineralized to get to the mineralized zone. In the case of Century Mining, they did that, but discovered that portions of this development work ended up being mineralized. It’s not in the resource base grading around 4.5 g/t Au, but its turning out grading around 1.5 g/t Au. They have categorized this material as "mineralized development", and with a highly efficient mill that can put through 0.5 g/t material profitably, this waste, or mineralized development, becomes extra gold at the end of the circuit. At the early stages of opening a mine, having the option of putting additional tonnage through, even though at a lower grade, effectively turns a liability, or waste, into income out of the mill for them. Another interesting point is that a couple of the recently mined stopes have continued to yield significant tonnage above and beyond what the resource calculations identified. For example, in one stope they mined an additional 9,950 tonnes that the area should of hosted because mineralized vein just kept going. I see this likely occurring in many more mining areas throughout the mine, as, historically, these veins have been traced for hundreds of meters and in some places up to two kilometers.

When I first visited the Lamaque operation in early 2010, I was cautiously optimistic, but very curious as to how the head grade from underground would turn out. Historically, the mined grade of the Sigma and Lamaque mines was around the 5.4 g/t range. The mine plan for Lamaque in 2010 is estimating an approximate head grade of 4.75 g/t from underground. This is 12% lower than the 9.4 million ounces that was produced over the last 80 years. Based on what I have seen, this leaves upside in potentiallyhigher grades than estimated in the mine plan. Historical production also used pretty crude mining methods, including a majority of mining done with jacklegs and slushers. Remember, a slusher drags the rock from the face of the stope to where it can be loaded by mechanized equipment, such as a scooptram. The productivity is also very low, and noting the operation of a slusher, sometimes a large amount of the gold bearing material is left in the stope, as the cleaning out of the area is not as efficient as using a scooptram.

The gold at Lamaque is hosted in a variety of mineralized and faulted zones known as flat veins, north and south dippers, shear veins, mineralized dykes and plugs. As indicated earlier, some of these flat veins can continue for hundreds of meters, and range in thickness from a few inches to two feet, but were are very high grade. The north and south dippers, which are actually from an anticline structure from dips south into the Lamqaue mine and dips north into the Sigma workings, can range up to a couple meters wide, and again at grades much higher than the anticipated head grade of 4.75 g/t. The shear zones are like the flats, but are near vertical in their dip or 75-85 degrees, and can range up to two meters in width. The dykes can range up to 15 meters in width, and again like the shear zones, dip near vertical or 80-85 degrees. Finally, the mighty ‘plugs’, can be 170 meters in diameter or bigger, and are seen throughout the structurally-controlled, geological environment within Century’s property. For example, as I noted in an earlier write-up, the main plug at Sigma produced 80% of the ounces at the mine, and one miner made his underground trek into the same stoping complex for 27 years.

Mining in an environment like Lamaque/Sigma is all about controlling dilution and minimizing the waste material to the mill. The operational and technical team currently is seeing the expected grade at the face of the stope ranging from 4.5 g/t up to 7.0 g/t (some places a lot higher), and now is focused on getting as much of this material into the mill as possible, without leaving it in the stope or bringing too much mineralized development out with it.

To do that, they search out new technology, rethink the historical operations, and focus on controlling grade. A month ago, Century Mining brought in low profile scooptrams and jumbo drills from South Africa. This type of equipment has never seen operation in a North American mine at any other company. These vehicles are only five feet high. Even I tower over them. The small size of these machines allows them to operate in smaller spaces, thus moving less dirt/waste, which means higher grade out of the mine. When underground, I watched this new equipment in action. Talk about productivity.

The company is getting their team trained on how to use these new pieces of equipment to increase productivity and also how to minimize dilution. Their team is now focused on adjusting blasting patterns and loading of the holes, to ensure minimal over breakage on the blasted round. Positive results have started to be seen over the last month, and higher grades are being seen out of the mine and into the mill. This type of operation requires time, as more stopes are opened, and production from the room and pillar flats increases. I understand they have a couple more low profile pieces of equipment on order. This seems like a logical purchase decision from what I have seen. This addition of modern technology, combined with rethinking the operation, should increase efficiencies by a very nice factor.

Of the three zones to be mined and operated in 2010, the room and pillar flats are just the beginning and the lowest productive of the three. Next in line is the Bedard Dyke, which was opened up the same day I arrived at the mine site, and finally is the North Wall zone to which they are currently drifting over to. The Bedard Dyke will be a very welcomed addition to the mill, as it will be a long-hole, open stope stoping complex, and is expected to grade higher than the flats. The face of the Bedard Dyke portal, prior to its first blast, graded 37 g/t Au, and recent drilling showed intersections close to 100 g/t Au. The dailytonnage expected from the Bedard Dyke will be significantly higher than the flats, as it is the meat and gravy of the future of the operation. The Goldex Mine (Agnico-Eagle), down the road a few kilometers, is mining below 5,500 feet with a head grade of only 2.8 g/t Au, but is moving a lot of ore via their long-hole stopes, and at a low mining cost. I can see the Bedard Dyke lowering their operating costs at Lamaque going forward.

An interesting point is that the development work required to access the Bedard Dyke will be right through this high grade vein before they access the underground to extract their 20,000 tonne bulk sample. Obviously, this material will be crushed and sent to the mill, as it has plenty of visible gold, as well as, massive chalcopyrite widely disseminated all through the veins. Once the sample is removed and tested, the mine will look to receive the next permit to mine the zone.

In terms of the current mill operation, it is operational and processing about 700 tonnes per day (tpd), with tonnage from underground reaching peaks of 700 to 750 tpd. The mill can be cranked up to adjust for higher tonnage on any given day, as they have put through 1,100 tpd on certain days during the ramp up of the facility. As in any normal startup and commissioning of an operation, this number is progressively increasing and will do so until they hit their daily tonnage requirements. A good thing is their 2010 requirement is only needed to average 1200 tpd, and in 2011 just over 2000 tpd. With a facility that can process 3000-3400 tpd, they have lots of extra capacity to ensure they don’t operate too close and max out.

I believe Century Mining is on its way to putting an excellent mine into operation, and, over time, is well positioned to add significant shareholder value. I focused only on the Lamaque operation for this update, but they have operated their San Juan gold mine in Peru from which they have consistently delivered above expectation results.


In Conclusion

I talked about 3 companies in the area. There are many more. Some are in great shape, such as Agnico- Eagle, Osisko Mining and Cartier Resources, and others, such as Northern Star Mining, are not. One thing is for sure, the companies that I did visit are at different stages of development, but all are well positioned to further develop their assets and eventually add value for their shareholders. Val d’Or has a rich mining history, and it is a mature mining camp in a safe and stable jurisdiction, known as the best place to be for mining. Based on what I have seen on this trip throughout the area, even though there has been over 170 million ounces of gold found in this camp, there are many more ounces to be found, and companies such as NioGold and Alexandria should continue to find more of them. Century Mining is an emerging, mid-tier producer with strong financial backing. They have 6 million ounces of gold, but they are probablysitting on many more than that, so that mine will be around for many years to come.

Going forward, I expect the price of gold to continue its rise to over US$1500 per ounce by the end of the year. This will spur more deals in this camp and more ounces will become economic.


Here is the link to the full write up:

http://www.vantagewire.com/articles/showarticle/910/Victor-Goncalves-on-Three-Val-dOr-Mining-Companies