(excluding costs related to development, exploration, etc., also excluding an adjustment to cover the operating costs associated with producing the 667 monthly Deutsche Bank ounces but maybe that gets partly offset by the $9M cash still in escrow (and should come available in the next 2 or 3 months if all continues to go well) coupled with the US$88 price participation cash we receive for each Deutsche Bank ounce)
The majority of the Lamaque operating costs should be in Canadian dollars (especially labour).
The Peruvian operation provides sufficient gross revenues to cover both the Peruvian costs (San Juan Operation and Peruvian office in Lima) and the Corporate Head Office US dollar expenses.
We haven`t had a Canadian operation for a while. The last time we were producing heavy in Canada (during the peak open pit days) we only had a gold price of around C$500 - C$600 to work with.
We now have the opportunity to start up Lamaque knowning we have C$1,328 gross revenue per ounce produced to work with, with the majority of our cost to produce the ounces paid out in Canadian dollars.
9 comments:
Ave Volume of CMM is over 500,000 shares per day. This is quite good for a Junior. Volume has been slowing a bit of late but the end of the doldrums is around the corner.
The current movement of CMM from 39 to 44 cents from a technical perspective is quite bullish.
A full retracement to the 210 day moving average was completed at 41 cents. The SP went under water to 39 cents for a day but since then has remained above the 210 day ma. Further movement higher would be a strong bullish signal that the next major wave up is imminent.
Volume - The volume has been lower yet the SP has gone from 39 cents to 44 cents ? This is due to a "lack of selling" Buying is low but the price goes up !? .. because no one wants to sell this stock at these prices.
There have been over 90 million shares traded since the SP hit 40 cents in March. This represents almost the entire actively traded float. This means that there are not many people who got in below a price of 40 cents who are actively trading. Therefor, if there were a large volume of sellers here they would be selling at a loss .. and no one wants to do that unless they are scared.
My belief is that those that we selling for fear or profit have already done so .. the chart, chart action and volume seem to confirm that .... CMM has found a bottom and is ready to begin the next wave up.
Production increases and a rising gold price also seem to support the case that CMM has found a bottom.
Happy parading miners in Puru !? .. The Parade for this stock is just beginning IMO
Mike
Century is focused a 100% on delivering and that`s where our focus should be right now.
However, people like Rich (Corp Develpmt), Finskiy, Scola, (Peggy`s consulting time with Century), etc., have nothing (or little) to do with operations. They should have the time to explore Corporate Development opportunities (even if it`s just kicking the tires).
Northern Star Mining (NSM) is now in Bankruptcy. They have good assets in the Val d`Or. I think Richmont Mines, Osisko and Agnico-Eagle are prime candidates to gobble up NSM`s assets. However, I believe that Century might be able to put together the most attractive offer to the key secure debt holder, if Century chooses to explore the opportunity.
Although NSM is now trading for less than a penny ($.005), I don`t think Century should take on the NSM shares. The merger days with NSM are now gone (points earlier in the year were much more ideal for a merger, as I had been suggesting), IMO. Sadly for NSM shareholders, I think those opportunities are gone. A large NSM shareholder has launched a lawsuit against NSM and its directors (NSM was one of the worst managed companies in the space, IMO). There will be other lawsuits to follow. Century should stay completely away from taking over the company (and the shares) for this reason.
Under my approach, Century`s abilities to make an offer to the NSM assets is entirely dependent on Deutsche Bank`s willingness to participate (partner up with us).
First step: Get DB to extend our current gold sales agreement with Century to include another 30,000 ounces (paybable starting 2012, once the NSM assets are in production). Have the agreement be 30,000 ounces @ US$750 per oz * 1.06 = C$23,850,000 cash.
Second step: Make an offer to secured debt holder for the rights to NSM`s assets (which is for all of NSM assets). Offer them C$.40 to the Cdn dollar along with 20 million Century shares. The secured note is C$45.2M (converted to Cdn). The cash offer for the debt works out to C$18.1M and the shares will be worth C$50M once Century hits C$2.50 within the next couple years (especially with the additional NSM assets within the portfolio). As such, the future value of the offer to the secured holder is C$68.1M on current debt value of C$45.2M.
Third step: Offer C$.20 to the unsecured lenders along with some shares. There are about C$24M in unsecured (or secondary secured) liabilities (there is a C$2M or so future tax liability which I didn`t bother to factor in - I`m sure some sort of carried forward deal could be worked out). Once Century has control of the secured debt then the holders of these C$24M liabilities should easily fall in line (as they try to get something other than zero. To eliminate the C$24M, I have penciled in C$4.8M cash and issuance of 2.8M Century shares.
To be continued...
Bottom line impact: A total of C$22.9M cash paid and a total of 22.8M Century shares issued. The NSM assets can deliver the extra 30,000 ounces to Deutsche Bank once in production. We get properties in the Val d`Or area that has the potential for 2+ million ounces (with aggressive exploration), 900 tpd mill (potential to upgrade to 1,800 tpd), 50,000 ounces of added production potentially in 2012 and further potential to ramp up to 100,000 ounces with mill upgrade eventually and average or slightly below average cash cost per ounce.
Of course, heavy DD will be required on the properties to ensure everything checks out.
Again, I think Richmont or Osisko or Agnico-Eagle are the more likely candidates to get the NSM properties. As mentioned, for Century to even make an offer for the assets Deutsche Bank will need to be excited about participating.
Anyway, there are no signs that Century will be a player here. To be honest, I hope that NSM can recover and allow its shareholders to salvage the situation. I just don`t see how it can happen given the situation (especially with lawsuits flying everywhere and all of their debts becoming immediately due).
Nevertheless, this is the package I would attempt to structure if I was in charge of Century. Given our heavily discounted share price, I don`t think any of the competing companies can offer a better package (especially with our significant leverage to the expected US$1,300 - US$2,000 gold price down the road).
From the article below:
``According to the median estimate of 29 analysts and traders as surveyed by Bloomberg, gold may beat $1500 per ounce in 2011. `Dan Brebner, an analyst at Deutsche Bank in London who is the most accurate forecaster so far this year, says the metal may reach $1,550.`”
The article:
Merit Market Update – Bloomberg: Gold Rallying to $1500 – August 31st, 2010
Posted: August 31st, 2010
Gold posted strong gains this morning, topping $1247 per ounce on a weakening dollar. As analysts around the globe are scrambling to raise their gold forecasts in time to keep up with the charging bull market, interest in gold futures at much higher prices has increased drastically. According to an article released on Bloomberg.com this morning, “The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent more than the record $1,266.50…”
In other words, more options traders are betting on $1500 per ounce gold in December than on any other contract above or below that level. With such consensus as to the direction of the market, investors are charging into bullion to relieve some of the uncertainty currently being experienced in other markets.
Eugen Weinberg, a Commerzbank AG analyst who most accurately predicted the gold price in the first quarter spoke to Bloomberg about his new prediction that gold will break $1400 in the next 12 months. “Either a swift economic recovery or further dismal economic performance should bring new buyers into the market. A stronger economy would create more jewelry demand. If the economy stays weak or gets worse, then investors will be looking for a safe haven.”
According to the median estimate of 29 analysts and traders as surveyed by Bloomberg, gold may beat $1500 per ounce in 2011. “Dan Brebner, an analyst at Deutsche Bank in London who is the most accurate forecaster so far this year, says the metal may reach $1,550.”
With the median forecast more than 6% higher than it was just two months ago, it is clear that analysts are becoming more bullish on gold by the day. After the $1500 December contract, the call option for $2000 gold in November 2011 is the second more widely held.
Back on March 11, 2009, Daniel Brebner was with UBS (as we know, he is now with Deutsche Bank, and has been the most accurate forecaster in 2010 thus far). Back on March 11, 2009, he stated that gold could surge to $2,500 within 5 years. It is clear that he is still quite bullish on gold, especially given his statement today that gold could reach $1,550 in 2011. If this is a general feeling of Deutsche Bank overall then hopefully they will partner with us on future acquisition opportunities once we are ready (not specifically NSM but just in general).
Here is the March 11`09 article:
UBS Bullish on Gold Price Nearing $2,500
By Javier Blas
Financial Times
Wednesday, March 11, 2009
Gold could surge to $2,500 a troy ounce in the next five years because the prospects of either deflation or inflation were "becoming more extreme", UBS said on Tuesday. The Swiss bank told investors to overweight gold in their portfolios.
The Swiss bank's warning is the most radical among mainstream institutions and comes as some hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks.
"The current environment is one which can best be characterised as having a 'low margin of error' for central bankers, with the prospects for deflation or inflation becoming more extreme," said Daniel Brebner, analyst at UBS in London.
A bet on gold is considered by some as essentially a bet against all paper currencies.
"Given the broad uncertainties in the current macro climate we believe investors should look to gold, given its historic tendency to act as a hedge," the bank said.
The bullish forecast failed to lift gold prices, depressed on Tuesday by lacklustre jewellery demand, traditionally the backbone of gold consumption, some profit-taking and an early rebound in financial stocks.
Spot gold in London was $896.5 a troy ounce in late afternoon trading, down from the previous days' closing quote in New York of $920.95 an ounce. Gold prices hit a high of $1,030.8 last March and last month traded briefly above $1,000.
UBS, one of the biggest bullion dealers in London and Zurich, said the downside risks to gold prices were limited to about $500 an ounce, or less than 50 per cent below the current price, while the potential upside was $2,500.
Hedge funds that bet last year against investment banks are now betting against their ability to weather the crisis without triggering a jump of inflation or letting the economy fall into deflation. Gold bulls include David Einhorn, founder of the hedge fund Greenlight Capital, who last year came under the spotlight for short selling shares in Lehman Brothers. Others looking at gold include Eton Park and TPG-Axon, investors said.
Hi Prod05
As a matter of interest, if you may, would like to know more of this NSM; like properties, land parcels, location, ounces in the ground, development status and the 2 million oz potential etc.
Also, if possible, like to know too, what went wrong and how badly was it managed. I am thinking there is something to be learnt from this case study since you are on it.
Hi Wingfong,
Given the legal case that has been launched and the bankruptcy status of the company, it`s probably best for me to refrain from commenting on the management situation other than to state my high level opinion (which I already gave).
I`ll try my best to give a brief overall of NSM`s assets.
Their core property is called Malartic-Midway (``Midway``). It`s located immediately to the right of Osisko. It`s about 14 km from Lamaque, to the left (along the hwy). Their management believes that this property has 2 - 4 million ounce potential. It currently has 525,000 (4.7 g/t) official 43-101 ounces. They have identified another 300,000 non-43101 ounces. They perform a lot of drilling over the past year or two (with good results) but the 43-101 report hasn`t been updated as yet to increase the total ounces.
Midway produced 2 million ounces in the past, down to about 1,000 m. Apparently the ore structures are still open in all directions. Two types of gold mineralization:
• Larger volume, lower grade gold mineralized porphyry (2.4 g/t Au)
• Higher grade gold mineralized gabbro (6.6 g/t Au)
Access portal already in place. Decline and many mining tunnels already in place. It is a very advanced stage property. Though, my impression is that they need to build a more comprehensive mining plan, and perhaps perform more defined exploration.
Their Callahan Project is close by to Midway, about 2 or 3 km on the other side of the hwy (next to Wesdome`s Kiena Mine). No 43-101 resource as yet. They believe that the targets are “Goldex” style structure with multiple broad intersections and multiple zones.
Their Mckenzie Break Project is located about 30 - 35 from their mill (to the North). It`s a 60/40 joint-venture with Britannica Resource Corporation (V.BRR). It`s an advance stage project also, but much smaller than their core asset. No 43-101 resource as yet, but it does have resource ready for mining. They need to prepare a 43-101 report and continue with exploration efforts. Mining portal in place. Some mining infrastructure in place. It`s an advance stage property that can produce relatively small scale ore feed once a production decision has been made.
Their Beacon Mill is located about 14 km from Lamaque (along the hwy) and about 28 km from their Midway property. It can currently handle 900 tpd, but can be upgarted to 1,800. Of note, it is only about 6 - 8 km away from our Sigma II property. Our Sigma II property produced 155,000 ounces in the past for Placer Dome @ 2.7 g/t as an open pit mine. The ore body is still open at depth, if we decide to launch an exploration program down the road.
They have some perspective grassroots properties along the hwy also.
I think the 2 - 4 million ounce potential they are talking about it only for their core asset. I think they believe that the mine can go very deep, based on positive deep drill hole and also the deep success of mines in the area such as Lamaque and LaRonde. I think the ounces from Mckenzie and Callahan are added ounces.
Prod05
Tks for the info. First impression is there seems to be some considerable ounces in the ground n the properties are in good mining districts. Surpice to note that they have gone so far as to have put up a 900 tpd.(upgradeable to 1800tpd)mill and yet things can go so wrong that total failure is the miserable result.Should be making good money more or less by now. What a waste!
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