1) The new Lamaque targets are much more achievable for 2010 (after adjusting the figures to reflect the start up issues)
Again, we don`t know the exact current grade, but let`s use 3.8 g/t as the foundation grade and then build it up a tiny bit each month as the operation progresses in 2010 due to training and experience, further optimization, new equipment arrival (at some point) and ore feeds from additional areas (especially Bedard Dyke bulk samples and start up of long-hole mining) - the grade build up I am using is likely extremely conservative:
Jun - 4.37 g/t (actual)
Jul - 3.80 g/t (using the mid point of the initial start up grade range)
Aug - 3.80 g/t (using this as the go forward foundation grade)
Sep - 3.90 g/t
Oct - 4.10 g/t (long-hole mining of the Bedard Dyke expected to start)
Nov - 4.30 g/t
Dec - 4.50 g/t
Tonnes per day:
Mar - 115 tpd (actual)
Apr/May - 265 tpd (actual)
Jun - 450 tpd (actual)
Jul - 820 tpd (actual)
Aug - 1,000 tpd (almost at this level in the first half of August)
Sep - 1,100 tpd
Oct - 1,200 tpd (long-hole mining of the Bedard Dyke expected to start)
Nov - 1,300 tpd
Dec - 1,400 tpd
Produced ounces at Lamaque in 2010 (with 96% recovery going forward):
Mar - 0 ounces
Apr/May - 1,961 ounces (actual)
Jun - 1,870 ounces (actual)
Jul - 2,885 ounces (blind estimate using 3.8 g/t grade)
Aug - 3,500 ounces
Sep - 3,970 ounces
Oct - 4,550 ounces (long-hole mining of the Bedard Dyke expected to start)
Nov - 5,175 ounces
Dec - 5,800 ounces
Total, Lamaque 2010 (using the above assumptions) = 29,711 Ounces
Revised target range, Lamaque 2010 = 25,000 to 30,000 ounces
If all key drivers/enablers progress well for the balance of 2010 at Lamaque, especially long-hole mining at the Bedard Dyke effective October, we will be well positioned to achieve the revised 2010 target and to get a solid kick start into 2011 (and a hugely successful 2011 for Century Mining and its shareholders).
2) Our Mighty Mouse operation (San Juan) is still doing some heavy lifting for us - even despite the temporary inefficienies resulting from the shutdowns to accommodate upgrades and expansions. San Juan continues to handle our Corporate G&A costs while Lamaque is ramping up. It handled our $1,632,000 of Corporate G&A costs in Q2`10. Not many emerging gold producing companies can claim to have a little mine like San Juan to help out in this manner.
3) Start of a new era: Century trying to build a new reputation with the TSX, BCSC, Quebec Securities Regulators, the market, institutional investors, retail shareholders and everyone else I`ve missed. This is the first step in showing all of those groups why Century deserves (will eventually deserve) to be a TSX ``Main Board`` company (once we are ready to apply). The TSX `Main Board`` deadline for companies to file financials was mid August. The TSX Venture deadline is not until end of August.
This is only a baby step, but it`s a good first step on the way back respectibility.
9 comments:
The ahead-of-time release of the Q2 report is commendable. The quick no-fuss adjustment of the targeted output range to 25,000-30,000 oz showed quick-decision and a resolve to break from the pass. As per Prod05's estimates, looks like the full year production of 50,000 oz is achieveable.
Assuming the new CEO and GM are in place and full recruitment, training and equipment are accomplished and received within the next 4 months, anticipate it will be a roaring start for CMM come 2011.
It is said that gold is a major precious metal that is prone to slip into a Summer season of price weakness. And it seems a study using 8 full years's of daily CDNX price history that happens to cover the present secular commodities bull(and by extension including the secular gold bull market) confirms this tendency.
The verdit is these CDNX seasonals suggest we are now fast approaching the takeoff line whereforth this June, July, August Summer doldrum headwind is about to turn into very strong supportive tailwind.
Glenced from one of the charts, mid-August tends to mark the bottom of the CDNX's weakest season for gold stocks. So, it is hoped that history repeats and price will rally back into the Autumn, Winter and Spring months.
Layering on the numerous reasons pertaining to the several major aspects of sovereign debt, economic woes, quantitative easing, inflation/hyperinflation vs recession/depression and currency debasement etc etc of the top tier countries, I anticipate gold will soon perform the rallying act from its present prices and CMM will take out its recent $0.85 high before 2010.
Hope that this time is for real!
Production,
I think your numbers are very realistic.. and even a bit conservative which is good. I think the ore grade may increase as they move into the reserve.
5800 oz/mo out of lamaque + 1600/mo out of San Juan = 7400 oz = 89,000/year
Using 700 cash cost and 1100 gold price that is still 400/oz profit/oz.
400 x 89,000 = 35.6 Million Profit.
No way .. a Gold company in a politically stable jurisdiction that is continuing to ramp up production .. making 35.6 M is going to trade at a P/E of less than 10 ..
10 x 35 = 350 M Market cap
350 M/150 M x 43 cents = $1.00
Question: If cmm is at 1400 tonne/day in December .. production then should ramp up to 2000 tonne/day should it not ?
2) Cash costs at lamaque should be lower than 700 ?
3) Ore grade should increase ?
Mike
Why would a post be removed from this blog????
What could someone possilby say???
I have a burning question ... ?!
It says in the Q2 financials that they expect to be in full production in 2011 .. and cash flow positive "one year after that".
Full production is 2000 tonnes/day
Assuming 4.5 oz/tonne thats 9000 oz/month.
Producing 9000 oz gold /month .. how can Lamaque not be cash flow positive ?
Appreciate any comments,
Mike
Mike, it's unexplained comments like that in the financials that are not very helpful to the share price. Who can be blamed for not wanting to wait around until 2012 until the company is profitable, right?
What I really think they mean is that all positive cash flow is to be re-invested into new capex to expand production. I've fixed the link to the Lamaque Mine Due Diligence Report prepared by Fortis in 2008 as the basis for securing funding from Lamaque. It was produced for Fortis by an independent third party.
If you look at page 22, you can see a Cash Flow Summary. A lot has changed since then, including the timing is over a year later than planned at that time, but the price of gold is about 50% higher than estimated too. Even at those gold prices, Operating Cash Flow in 2011 (now 2012) was estimated at $36.6 million, but the Cash Flow after Capex was a mere $6.5 million. Capex costs in 2011 were estimated at over $27 million.
I think it is safe to say that we will have earnings in 2011 similar to your estimates or better, but those earnings will be re-invested into expanding operations. Notice also that our after tax cash flow is not much less than operating cash flow. That's because of inherited tax losses from prior operations from the previous owners. No Federal or Provincial taxes are payable for the first 6 years of operations.
I agree with Carib. I had previously read the comment elsewhere a few weeks back (I think). Whenever it was, it got me puzzled, just like it did with Mike. However, I eventually coming to the same conclusions as Carib. They must be talking about cash going right back into development and exploration. It also potentially becomes more of an immediate impact in Cash Flow calculations once commericial production gets achieved.
What they should really be mentioning is Operating Profits. That profit stat is perhaps the earliest indiciation of how the mine is performing at commercial production declaration stage (in first Quarterly Rpt). To achive commercial production means that tpd is consecutively above 1,200 for 3 straight months (but likely it will be consistently between 1,200 to 2,000). If they are doing that type of tpd in this type of gold price environment then we know that Lamaque is in great shape and driving out huge cash.
I have always said that Century does a poor job educating the market. This is just yet another example of that.
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