Firstly, welcome to the Century blog.
With regards to your question, on a longer term basis, I don`t think 10 million ounces in resource from strictly our Val d`Or area properties is inconceivable. The 2 million represent strictly bulk mineable potential from the 2 key plugs (Lamaque Main Plug and the West Plug). This does not factor in vein/other stockwork potential (flats, north dippers, high grade shears and porphyry dykes) from numerous still to be tested target areas within the Lamaque Complex, both at depth and along strike, as well as newly discovered (via the Vulcan modeling program) zones within the complex.
There is also the enormous long-term potential of our Val d`Or area properties outside of the Lamaque Complex. If our Union Gold area properties (just outside of the Lamaque Complex) turns out to house a mini Lamaque Complex within its borders (as discussed in my post about potential exploration targets) then only the sky will be the limit at that point.
25 comments:
P05,
I'd just like to take a moment to tell you a huge thank-you for the work you put into this blog and our company. Without losing sight of why we all do this, it is just the same a great pleasure to be able to discuss our issues without the usual claptrap that investment blogs seem to perpetuate. There is no doubt in my mind that you and Carib are a boon to this investment community. Hope I get to buy you lunch one of hese days.
Thanks for the kind words Chillby and Wingfong.
Chillby, I`m glad you feel that way about the blog.
Wingfong, I`m glad you found the blog info to be helpful in speeding up your DD process.
Those were 2 of the primary goals in launching the blog.
We started the blog in order to provide a community type place where investors and potential investors could feel comfortable in respectfully discussing items (including DD info, progress, challenges and frustrations) related to Century Mining without being intimidated or bullied or having to deal with personal attacks from others.
It`s good to see all the new blog contributors lately.
The next 6 to 12 months should be very interesting, as Century ramps up production, nevermind possible further increases in the gold price.
Prod05
Your informative answer has again revealed another part of CMM that is beyond what I had expected.Tks for the effort and time taken. I totally share Chillby's feeling. Believe such a blog is rare in your home markets. As for my local Eastern markets, there is none I know of. Thk stock investing is well served by blogs of such nature and contents. I am already benefiting.
As per article by one Marc Davis, published in Mineweb dd 07 Dec 2009, quote " The problem is that fewer and fewer world-class gold deposits (at least 5million oz in size) are being found. The current success rate is about one per year, regardless of how many companies are hunting for them and the approximately us$4billion per year that is being spent in the quest."
By his logic, CMM is world-class? and in Quebec, the world's best mining jurisdiction and with gold price now at us$1200 potentially going on to us$1500, us$2000? can't hide my excitement!
Prod05
Singapore has a land mass of 699 sq km and San Juan's property is 220 sq km. Now I can visualise how big the property really is.
Recently, you had revealed that Erika copper-gold-silver porphyry system should have at least 500million tonnes. Can we say that a deposit of this size (proven to be correct of course) could be considered to be in the company- building catagory?
Hi Wingfong,
That`s correct, 500 million tonnes would be sufficient to make Erika a company maker type of deposit for a junior company (assuming the grade is sufficient).
However, as you hinted, the Erika theory still has to be proven. It is likely Century`s geologists that view this type of potential for Erika. Nevertheless, we have to use extreme caution as very little work has been done on the property in the past (no significant work as yet). We know there is likely a porphyry there, but it`s a matter of if it is econonically viable. It`s impossible to know until we initiate geo work, drilling, etc.
What we have going for us though is location and geology. Erika is lined up perfectly in the Southern Peru Copper belt. It also has the same or similar geology as the very successful Zafranal cu-porphyry property (about 50 km away).
Here is the size of the other world class Cu-porphyry systems in the Southern Peru belt.
*Zafranal (50 kilometres from Erika) - will be large when 43-101 comes out
*Cerro Verde - 1,000,000,000 tonnes
*Cerro Negro - 64,000,000 tonnes
*Cuajone - 1,212,000,000 tonnes
*Quellaveco - 974,000,000 tonnes
*Toquepala - 770,000,000 tonnes
Prod05
Did not expect u to came back so speedily. Many tks. ok, a further question.
CMM's strategy is to grow to an intermediate gold producer (by this, I presume achieving annual production of 300,000 oz?) tro existing mine expansion and acquisition of other strategic and synergistic gold opportunities.
Knowing what I know now about CMM's 43-101 qualified reserves/resources in the Val O'dor and San Juan properties plus the potential reserves/resources yet/hope to be discovered in these 2 very large property groups, it seems to me that the aim to achieve mid-tier gold producer status tro existing mine expansion may even be achieved without considering the NWT and Alaska properties.Wish to have your view.
Hi Wingfong,
A few companies consider mid-tier gold production to begin at 150,000 ounces. That is not my view however. I consider mid-tier to start at 180,000 ounces of annual gold production.
Century`s current mine plan (at 2,000 tpd) calls for Lamaque to ramp up to 100,000 - 110,000 ounces per year. We also have San Juan ramping up to 30,000 ounces. Based on current mine plan, we could ramp up to 130,000 - 140,000 company overall.
Century`s Lamaque mill is currently capable of processing at a rate 3,000 tpd. A 3,000 tpd rate, 4.76 g/t and 96% mill recovery rate, equates to 159,000 ounces of annual production (let`s round it down to 150,000). At some point further down the road Century may be in a position to roll out a new mine plan, which could include 150,000 ounces of production for Lamaque (although, it is not clear when).
The answer to your question is, yes, a 3,000 tpd mine plan for Lamaque, coupled with San Juan`s ramped up production, should be sufficient to achieve mid-tier production status (180,000 ounces) through strictly organic means.
As a further note, I would say that going to 300,000 ounces of annual gold production (one of a number of eventual goals for Century) would require acquisitions or merger activity (at least if it is to be achieved in the near-term or mid-term timeframes).
I read that McWatters had installed a 5000TPD mill...was that changed out or downsized during the startup?
Hi Prod05
Looks like phase one's targets are LM-105000oz(ave),SJ-30000oz(total 135000oz), phase two's targets are LM-150000oz, SJ-30000oz(total 180000oz) henceforth achieving mid-tier producer status and to achieve 300000oz in the near term, your view is we need M&A options. It bags a question:-
Assuming Lamaque is potentially hosting +-10millionoz reserves/resources and conservatively assuming that finally +-5million(hope is consecvative enough) is mineable, than at a rate of 150000oz, it will need app 33 yrs to dig the
stuff out. Is it reasonable?(believe PK mentioned a mine life of 12 yrs)or am I missing something? Your view on all the intricacies on this growth/ramping up strategies if you may.
Hi Prod05
On the basis of 135000oz (first phase output LM-105000oz+ SJ-30000) the potential cash generated could possibly be in the region of US$90million per annum ((US$1200-US$550)x135000). Can one say that the often-mentioned M&A aims are legitimately based as a result? If it is correct, it seems that, barring a major problem, it is possible and highly probable that CMM could have explosive growth in the near term. Am I too optimistic?
Hi Chillby,
The 5,000 tpd mill operation was designed for open pit mining (processing lower grade ore). With the switch back over to underground mining, we replaced the crushing system in order to more efficiently crush the underground higher grade material.
Our mill operation can now efficiently process 3,000 - 3,400 tpd of high grade underground material. However, that is not a fixed limit. I remember reading in the Jan`09 bankable independent DD report (unfortunately, no longer available with the launch of Century`s new website) that Century has the flexibility to make further enhancements if they need to increase the high grade tpd limit in the future. For example, I got the impression that upgrading the system to, say, 4,000 tpd would not be a show stopper or even the most complex job in the world (if we ever got to that stage).
As a side note, 4,000 tpd, 4.76 g/t and 96% recovery, equates to 211,000 ounces of gold production annually. Of course, we are a long long long ways away from reaching that playground - we are currently taking baby steps in trying to push ourselves from 770 tpd to 900 tpd.
Hi Wingfong,
I think most (long-term) Century investors likely feel comfortable that Lamaque still has decades of gold production capabilities still remaining. Unfortunately, bankable reports and mine plans only (mostly/typically) considers P&P Reserves (all other ounces and potential ounces are almost completely irrelevant).
We do have 1.1 million ounces in the P&P Reserves category at Lamaque. Our current 3 year plan includes some of that total. About 250K P&P ounces are in the North Wall zone, which is included in the 3 year mining plan.
Some of Lamaque no. 2 ounces are included in the 1.1M but a lot of the ounces in that area have not been incorporated in the 43-101 report as yet (though we are successfully mining them) - more will likely be included with the next report due to valuable mining info we are getting and the infill/look ahead drilling currently being done.
The Bedard Dyke ounces are not in the 1.1M P&P total yet - likely soon to be added also (given the recent drill program and near-term additional drilling).
Nevertheless, between Lamaque no. 2, Bedard Dyke and North Wall, there are sufficient ounces to build a 3 year mine plan and ramp up to 110,000 ounces per year. I believe that plan calls for the Cross Over ounces to be incorporated at some point in year 3 - no P&P Cross Over ounces currently in P&P so some infill drilling will be required in that area over the next 3 years. The Lamaque no. 2 decline will be used to access this area also.
All of those ounces in the mine plan are within 1,000 ft of the surface.
To be conintued...
Of the 1.1M P&P Reserves ounces, about 690,000 are categorized as being below the pit (not part of the Lamaque no. 2, Bedard Dyke, North Wall zones). If some of these ounces are within 1,000 ft of the surface then they are likely not easily accessible from the 3 declines (but not sure). Most likely a number of these ounces are below 1,000 ft. Some of the these ounces may be located between 1,000 and 2,000 ft (and away from water), and perhaps may be accessible via the declines if Century lowers the declines to, say, 2,000 ft. I have absolutely no firm ideas of any of these possibilities though.
The tentative plan is to refurbish the Sigma no. 2 shaft by around year 3 or year 4 then use the shaft to access the lower ounces. The Sigma no. 2 shaft will need a lot of work as the previous owner left it in not the greatest shape. I think it goes down to about 3,000 ft (or so) then the no. 3 winze kicks in and goes from 3,000 down to 6,000 ft. My understanding is that the no. 3 winze should be in very good shape and should require minimum work.
By the way, here is an explanation of a winze (for those who are not familiar with the term), from wiki:
``A winze is an opening in an underground mine that is sunk downward (as opposed to a raise, which is mined upward) from inside to connect lower levels. The top of a winze is located underground, in contrast to a shaft where the top of the excavation is located on surface.``
Anyway, hope this all helps a bit. These are essentially the reasons they can`t just build a 150,000 ounce mining plan right at the start. There needs to be phases as they ease back into the underground. The current drill program will go for the next 3 years. As they drill, the new data will help to configure the future mining plans.
The wildcard in all of this is the 1.7M ounces sitting the Cross Over section. Those ounces could provide a lot of options as they begin moving them into P&P Reserves. I believe those are flats, with room and pillar mining. The success of the low profile equipment with room and pillar mining has further provided mining options for this area.
Oh, I forget to mention, another wildcard is the 400,000 Inferred ounces ounces sitting in the North Wall. Those ounces might be even more important than the 1.7M Cross Over ounces from a mid-term perspective, due to us already being established in the North Wall (or soon to be) and also because of the long-hole mining capabilities of the North Wall zone. The 400,000 North Wall Inferred ounces are in addition to the 250,000 North Wall P&P Reserves. Both the North Wall ounces and the Cross Over ounces are within 1,000 ft of the surface.
Hi Prod05
Chewed over all your figures n disectations, can appretiate there are tons of work ahead and yes, as you had said, there need to be phases and to achieve 300000oz near term really must need M&A options. Points taken, tks.Further,
is it possible and probable that this 300000oz target may be achieved via and including M&A options in the next 18 months?
Hi Prod05
Receive an email stating that Faircourt Gold Income Corp (www.faircourtassetmgt.com) is offering to issue redeemable class A shares of the company in exchange for shares of CMM. Offer close 16/07/2010 12pm. What is it all about? curious.
Morning y'all,
Two guesses regarding the faircourt offer: 1: CMM is so massively undervalued compared to peer group that the value offer on an even trade has big potential for capital gain.
2: Anytime I can swap something that cost me nothing for something that is liquid and has a large potential for appreciation, I'm all over it. Too bad I'm out of preferred shares! How about lumber for shares? Any takers?
Hi Wingfong,
Yes, I think there is a very good chance of M&A activity occuring within the next 18 months. Though, it remains to be seen if there will be sufficient M&A activity to push the production ounce total from 130,000 (internal - 100K Lamaque and 30K San Juan) up to 300,000 within that 18 month period. I think it will depend heavily on these 3 factors:
1) successful and smooth ramp up of Lamaque - this will provide the (vital) core asset base that will entice management and shareholders of other companies to partner up with Century
2) Century`s share price needs to be significantly stronger than it is today
3) availability of (accretive) opportunities in the right locations and at the right prices
It may be that we're just as well to build a stronger base for the time being anyway. If you look at what Thompson Creek bought for next to nothing today (Terrane Metals/Mt. Milligan), I'd say its a buyers market out there. It will undoubtedly make TC and GG better off, but it was a junk deal for Terrane shareholders, and that's one heck of a deposit.
Chillby,
Terrane is pretty different though, the buyout price is about $650 million, but they also needed somebody who had nearly $1 billion to build the mine, that was always the snag with that deposit. They will make a fortune on it, but it was getting the initial cash.
CMM on the other hand probably has more gold, but should be able to pay for developing the mine further from cash flow, so hopefully our dilution is nearly over.
That's one thing that has pleased me recently, now we just get standard loans for stuff, we aren't like San Gold, issuing another 32 million shares the other day.
Oh hello everybody, I am no longer anon! Thanks again for the informative site, much better than Stockhouse.
I'm looking forward to seeing the rest of the analysts reports, it's always good to see some other opinions.
Have most of you been invested in CMM a long time?
HI Pepito
For me, I became an investor only in early March this year (getting involved from a few thousand km away!). Had done some comparative studies of many mines prior to that. Came in upon hearing that CMM succeeded in getting its +$60million financing. For junior producer, only Metonar came close but opted for CMM cos of its scope, land bank(mining properties that is), size of its in situ NI43-101 R/R (Metonar has only 1million oz posted in its site), entry prices, trend and prices of gold, milling facilities(3000tpd existing, potentially 5000tpd with upgrading), jurisdiction
( Quebec is the best),the strength of the Canadian dollar (US$ seems shaky), and one analyst's opinion.
Dear Sirs, the financials were not good and I had no way to gauge management quality but then it is my belief that for a team/person that has/can come back from the brink of collapse ( caused by the financial upheaval), they must be made of metals and not solubles and more so, have the collective luck. Believe Napolean said he much preferred his generals to be lucky than capable (of course better to have both). That was the start.Frankly,it was with Prod05's inputs and inputs of other blog members that I backed up the truck.CMM is one of my core holdings now. Success to all.
Hi Prod05
Ya, M&A may be achieved but to spit out 300,000oz is a seperate matter or/are different phases of the same matter. Get it!.
Anyway, besides the cash flow generated, what does it implies or what attention will CMM(or any junior producer in general) attracts should it achieve consistent annual production of:-
1)150000oz (not so easy judging from what CMM is going tro now)
2)200000oz (difficult, some said this is a critical threshold in gold producing)
3)300000oz (???)
Just like to have a general feel of how the gold minining game is played
Hi Wingfong, you made a good choice choosing Century over Metanor. Otto Rock did some DD on Metanor on his blog http://incakolanews.blogspot.com/
If you use the search function he does a write up on Metanor, essentially the stock price hasn't changed for 8 years, as management continually dilutes. It's a good website to check out as he often covers fraud in the junior mining sector, so he gives the heads up on who to avoid.
Hi Pepito
Tks for the information
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