Friday, October 29, 2010

Welcome Nicholas,

I find it great to have someone with some investment knowledge to the scene here. I was looking at your corporate profile:

Nicholas Winton

Owner, Hedgehog Trader

Toronto, Canada Area

Nicholas Winton

  • Investment Writer at Delphi Associates
  • University of Toronto
  • University of Toronto - University College

Nicholas Winton’s Summary

Nicholas Winton’s Specialties:

Forecasting the rise/fall of commodities, indices and uniquely - individual stocks, over the short-term, long-term and even on a week-to-week and day-to-day basis using traditional methods, technical analysis, contrarian strategy, and most importantly, Hedgehog Trader's own proprietary Alpha Signals. Finding undervalued resource companies about to explode in value!

Nicholas Winton’s Experience

  • Owner

    Hedgehog Trader

    (Financial Services industry)

    October 2006Present (4 years 1 month)

    CEO and editor-in-chief of That's where I offer a number of cutting-edge investment advisories profiling elite metal stocks, uranium, oil & gas, alternative energy and microcap stocks on US and Canadian Exchanges. Generated +2,000% gains in resource stocks for our subscribers over the past 2 years! Continue to publish public forecasts for gold, silver, broad market indices and particular companies, on our blog and on Twitter which prove accurate!

  • Virtual Fund Manager

    (Privately Held; Financial Services industry)

    February 2003Present (7 years 9 months)

    Manage several virtual investment funds, including my flagship Hedgehog Fund which began with a NAV of 10 and rose to a high of 36 in just two years by focusing on resource stocks.

  • Investment Writer

    Delphi Associates

    (Financial Services industry)

    August 2005January 2008 (2 years 6 months)

    Investment writer for one of North America's largest New Age magazines, The Delphi Associates Newsletter. Starting in 2005, wrote about the future (now present) financial crisis and recommended preparing for it with physical gold and silver - as well as a basket of 8 US-listed gold and silver stocks that soared an average of 100% in two years!

Nicholas Winton’s Education

  • University of Toronto

    cTESL , 19971999

  • University of Toronto - University College

    B.A. , English , 19921997

    Activities and Societies:
    Writer (University College: Gargoyle), Writer (The Newspaper), Writer (The Independent), VP Classics Students Union
It't great to have you on the blog. I just hope your not the kind of guy that would pump a stock in a blog that gets much attention and the proceed to selling shares. Not that you would I have just seen this type of thing happen in the past.
Once again welcome to the blog we have a nice little community of investors here and I am sure that your input and opinions will be well appreciated.


Monday, October 25, 2010

Some notes

I did manage to connect with Peter.

Of note, one should be aware that Lamaque is a work in progress. One should keep this in mind when reading this post and when trying to evaluate the current state of Lamaque.

At the end of the day, I am the ultimate one accountable for my investments. I am the one that will have to live with the consequences of my decisions, regardless of the info provided by the company. As a result, I find that it is extremely important for me to be completely objective with my evaluation approach (of all my investments) regardless of any type of positive forward looking info from the company.

I don`t think I have reached a comfortable state as yet about the near-term Lamaque start up, but at the same time I haven`t noticed any major red flags either. This is positive, especially given the start up delays. Again, my view is only from a 10,000 foot level. I may not see the entire picture.

It sounds like infrastructure development work is on track with the Bedard Dyke. It doesn`t sound like there are major issues with Lamaque no. 2 area, at least based on the descriptions I received (see below).

I personally don`t have a good sense of the data at a granular level (at least the averages) for current and near-term periods. As such, it is difficult to compare actual data performance to my own near-term expectations for evaluation purposes. However, the company`s Q1 (unofficial) guidance appears to be somewhat reasonable relative to my expectations.


1) It seems like the capital lease financing agreement (from the June 28th NR) has been closed off.

2) Apparently, it shouldn`t be too much longer for the long-hole permit. Also, it sounds like they still have some extraction room under the original Exploration permit, if necessary (part of the 20,000 tonne bulk sample). They haven`t started long-hole mining yet, naturally. The BD ore currently being processed I think is from the areas being developed (development material from the top and bottom cuts). As such, it will fluctuate from day to day.

3) They are looking to average 1,200 – 1,500 tpd in Q1`11. It would be aligned with my expectations, if they can hit it. It would include all 3 zones (Lamaque 2, Bedard Dyke, North Wall), but at different tpd levels. Naturally, North Wall is planned to come online later than the other 2 zones, thus will have a disproportionate contribution to Q1 average tpd (1,200 – 1,500) relative to the other 2 zones.

4) As I figured, the 820 tpd (July) and the 1,000 tpd (early August) were rich partly due to heavy mineralized material from development areas (especially Bedard Dyke). The tpd decreased back down to more sustainable levels once they got past those mineralized development areas. Based on the best answers I got from the company (strictly based on this, and I have nothing else to confirm it), there doesn`t seem to be major problems with the Lamaque no. 2 stope ore area. Lately they haven`t had to use the Lamaque 2 reserves due to the Lamaque 2 non-reserves continuing to be rich. Back in June, I remember an NR stating that the non-reserves stope ore was contributing 30 – 35% of Lamaque 2 ore to the mill. Apparently, the non-reserve stope ore is now contributing at a rate of 100% (calculation excluding mineralized development material from both Lamaque 2 and Bedard Dyke of course). If I understand this performance correctly, it means that the Lamaque 2 stopes are still strong, and they are able to save the Lamaque 2 stope reserve ore. The low-profile equipment appears to be a key in allowing them to extent the stopes. I believe I heard that there is only 1 jackleg and slusher combo remaining in production. I believe I also heard that are ordering another low-profile combo to replace the final jackleg/slusher combo.

Once ramped up and working well, they are expecting each zone (Lamaque 2, BD, NW) to be contributing at a rate of 400 – 700 tpd. The 700 tpd level from each zone is consistent with my long-term expectations. I don`t have a good sense of what the company is expecting with regards to grade in both the near-term and mid-term periods. The company may be waiting for further development progress before they feel more comfortable discussing forward looking near-term or even mid-term grade numbers. This somewhat hinders my personal evaluation.

5) They are looking to access the North Wall underground via the Lamaque no. 2 area. It sounds like they have made good progress on that front. They are looking to begin mining NW at some point in Q1. It sounds like their NW access focus is via the Lamaque 2. It sounds like finishing the NW portal then building the NW decline is secondary priority (after they begin mining NW via Lamaque 2 access).

6) Still a chance of accessing the Performance Hurdle B (Deutsche Bank, escrow) funds in Q1.

7) Peter`s understanding is the same as mine with regards to the Deutsche Bank agreement (the agreement is posted on SEDAR, Jan. 14`11). There doesn`t appear to be any near-term or mid-term show stopper dates (BEST I CAN TELL, but I`m not a lawyer), just as long as we continue to deliver the 667 monthly ounces to Deutsche Bank and we are able to continue funding the operations. The ounces to Deutsche Bank does not increase beyond the 667 monthly commitment until June 2012.

8) I don`t know how much of this next info is strictly company speak. I asked about the relationship with Deutsche Bank. For what it`s worth, Peter says that the relationship is excellent.

I will make another post about conference call questions. Peter is willing to answer about 4 questions during the conference call, prior to the question period. We should post questions on here and then someone can take the most popular questions and send it to him via email by November 8th. Again, I will make another post for this.

Friday, October 22, 2010

Gold miners' profits expected to sparkle

Canadian gold miners are expected to report a sharp jump in quarterly profits in coming weeks, though cost increases and foreign exchange rates are likely to limit the benefits of record bullion prices.

Gold prices averaged $1,227 an ounce in the third quarter, a 28 per cent increase over the same period of 2009, with spot prices climbing to daily highs and hitting a record of $1,315.80.

The world's top two gold miners, Barrick Gold and Goldcorp. are expected to post 50 per cent increases in earnings over the previous year, according to Thomson Reuters. No. 3 Kinross, which closed a $7.1-billion deal to buy Red Back Mining in September, is expected to post a nearly 100 per cent increase in adjusted earnings.

Goldcorp and Agnico-Eagle will kick off the flurry of earnings Wednesday, followed by Barrick and Eldorado Gold, and then Newmont Mining, Yamana Gold, Iamgold and Kinross.

Read more:

Monday, October 18, 2010

Quick courtesy post

Since I am a frequent poster on the blog, and given I haven`t posted in a bit, I thought I would make a quick courtesy post. I am attempting to gather more info to get my head around Century`s current operating situation. I evaluate my investments on a continuous basis. I increase or decrease my share position based on outcome of these evaulations relative to my expectations. I am not one to post for the sake of posting. I only post when I feel I have something meaningful to contribute to blog conversations. I also like to reach a certain comfort level with topics before I post. I`m not sure when I will gather enough info to post more intelligently about the subject matter on the attached link. It could be tomorrow or it could be a few weeks or even months from now. I posted this comment on Stockhouse last Thursday to someone else`s post (only because my comment was requested on the post):

Wednesday, October 13, 2010

Our time is just around the corner folks!

As someone who has watched the Gold market for over 10 years, i'm convinced the time for CMM is finally here. I don't mean just today or this week - I mean the next year or two were going much higher. Throughout the macro-bull Gold Market, there are a lot of up legs and corrections. With each big move up in the gold price that spans several months, I've observed the following (I'm sure others have as well and I welcome anyone's input)

1) First the highly liquid large cap gold stocks move first with bullion as they are the most obvious play for big money
[check - Newmont, El Dorado, all the GDX components up big]

2) Then the mid tiers and silver plays move up and outpace other PM plays
[check - IamGold, Yamana have all moved up along with Silver plays like CDE, HL, SLW especially]

3) Then the junior plays with dependable track records move up big
[check - Arian Silver got a huge revaluation up, Aurizon way up, Claude up, countless other examples]

4) The last move is the highest in percentage terms. I believe we are now here. That is when the large caps and mid caps slow down their gains while beaten up plays like CMM that are GROSSLY undervalued and that have some perceived risk and past issues finally burst up as they revalue closer to fair valuation. (which is MUCH MUCH higher)

I've seen and been in many of these that were 5-baggers and 10-baggers. This is where we are now - right on the cusp. It is very frustrating because this move is usually LAST in a gold bull move, but it is by far the biggest. Doubles in a matter of days and weeks happen constantly in this phase.

A lot of great things on the horizon. BD drilling, increased tonnage, new 43-101, new CEO. Our patience will be rewarded.


Tuesday, October 12, 2010

Goldman Sachs Analysts Forecast $1,650 Gold In 12 Months

12 October 2010, 9:56 a.m.
By Kitco News

(Kitco News) - Goldman Sachs has raised its 12-month forecast for gold to $1,650 an ounce, citing expectations for further quantitative easing in the U.S. and prospects for long-term interest rates to continue falling.

“With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb,” said the Goldman report, authored by David Greely and Damien Courvalin. “Despite the rebound in net speculative length, it remains well below levels consistent with the current low U.S. real interest rate environment.”

Goldman said the decline in U.S. real interest rates is likely to persist, and rates could push even lower in the near term should the Federal Reserve undertake quantitative easing measures. Thus, Goldman said it is raising its gold price forecasts to $1,400, $1,525 and $1,650 on a three-, six- and 12-month horizon. Goldman said its updated forecasts point to an average of $1,575 an ounce in 2011, which is $175 higher than it previously expected.

“The return to quantitative easing will likely be a strong catalyst to drive gold prices higher, and we expect the gold price rally to continue until U.S. monetary policy begins to tighten,” Goldman said.

The bank’s economics team expects the Fed to return to quantitative easing with purchases of U.S. Treasury securities of $1 trillion, which in turn should keep U.S. bond yields depressed. Furthermore, the bank said it expects the announcement at the Federal Open Market Committee’s Nov. 2-3 meeting.

Goldman said the rally since August came as the yield on 10-year U.S. Treasury Inflation-Protected Securities plummeted, with the yield now closer to the 0.50% than the 1.0% imbedded in prior forecasts. It also cites stronger demand for the metal for gold exchange-traded funds and from central banks.

However, while Goldman said gold could rally for an “extended period,” it also sees a “considerable downside risk” in the longer term, should the Fed eventually tighten monetary policy earlier than expected.

For now, Goldman said, its U.S. economists suggest that it could take until 2015 or longer before a rate hike becomes “appropriate,” although they emphasize this is not a “formal forecast.”

“While they do not expect tightening to happen before 2012 at the earliest, we view an earlier-than-expected tightening of U.S. monetary policy as the primary downside risk to our gold price forecasts,” Goldman said.

By Allen Sykora of Kitco News;

Friday, October 8, 2010

Conservative approach to accessing the C$9M escrow cash at end of Jan`11

Also, Finskiy will need to convert his remaining C$8M worth of warrants by end of Jun`11 (8.5 months from now). The C$9M escrow cash + the C$8M Finskiy cash will give us C$17 million in extra cash. We will be able to go heavy with San Juan upgrades to enable 30,000 oz per yr production. They might even be able to bring in the power line (which is 15 km away). They estimate it would cost $6 - 10M to make it happen. Century was talking to the Peru government about splitting the cost at one time, but I don`t know what the latest is on that front. With serious economies of scale from a 30,000 oz operation (though, that might be partly/slightly offset if they have to go heavily into narrower veins to mine some of the extra ounces) , coupled with electical power (rather than diesel), I wouldn`t be surprised if they can get the San Juan cash cost per oz back to the US$400 - 500 range. After all, San Juan use to be consistently in the US$300 - 350 range (even without electrical power).

Of note, the key San Juan veins (San Juan and Mercedes) are mesothermal veins (potentially even all of the veins are mesothermal in nature). It means the ore grade gets higher as these veins are mined at deeper levels. San Juan`s mining approach is mainly adit based (access through the sides of the mountains, as oppose to open pit or full underground mining), with limited internal shafts. San Juan hasn`t really operated as an underground operation in the past. In some parts they have gone to a decent level below surface level (which would be considered underground mining), but not extensively in all parts. There still remains plenty of opportunities to increase focus on both underground mining and underground exploration - the main veins are kilometres long, thus it makes for interesting underground potential. All main veins are still open at both along strike and at depth. San Juan recently successfully lowered one of the internal shafts. They recently also increased the tailings pond.

Also, of note, my understanding is that some of the old Lamaque equipment is now at San Juan in Peru (this equipment represents an upgrade to what the Peru miners were using).

Anyway, as mentioned previously, the C$9M escrow access is based on hitting 70,000 run rate production ounces for 4 consecutive months. However, this time, we are able to use ounces from both Lamaque and San Juan. Though, we are still able to use the average of the sum of the consecutive 4 month approach (as oppose to having to hit the average for each and every day of the 4 consecutive months).

As usual, it is impossible to know what the numbers will look like. As such, let`s use a somewhat safe / conservative approach with the data. This gives us a decent or at least semi-decent shot at reaching the escrow goal at the end of Jan`11 (assuming no further significant delays):

1) San Juan:

Let`s say that San Juan keeps trucking at 1,700 ounces of production per month

1,700 * 4 consecutive months = 6,800 * 3 = 20,400 ounces San Juan annualized run rate for 12 months

2) Lamaque:

October (900 tpd, 3.7 g/t, 96% recovery):

Let`s now apply the formula.

900 tpd * 30 days avg * 3.7 g/t grade * .96 recovery / 31.1 grams in each troy ounce

= 3,083 ounces

Use the same formula for the other 3 consecutive months.

November (1,100 tpd, 4.0 g/t, 96% recovery):
= 4,074 ounces

December (1,200 tpd, 4.2 g/t, 96% recovery):
= 4,667 ounces

January, 2011 (1,300 tpd, 4.2 g/t, 96% recovery):
= 5,056 ounces

Total Lamaque ounces produced for the 4 consecutive month period, using this conservative approach:

3,083 + 4,074 + 4,667 + 5,056
= 16,880 for 4 months

Annualized run rate production based on the 4 consecutive months at Lamaque:

16,880 * 3
= 50,640 annualized Lamaque run rate ounces (12 months)

3) San Juan and Lamaque combined - annualized run rate production based on 4 consecutive months starting this month (October 2010):

20,400 San Juan + 50,640 Lamaque = 71,040 total ounces

Tuesday, October 5, 2010

Comment on Gold Price

As I write this Gold is at $1,343/oz -up $98.60 in the last 30 days according to Kitco.  At $1,343 gold, it is virtually certain that all of Century's ounces in the ground covered by 43-101 reports are economical to mine and that number is certainly going to grow as the Bedard Dyke ounces are added.

So we have about 6 million ounces and in the past 30 days the value of those ounces increased by almost $600 million!!  and yet here we sit with a market cap of $165 million.

The value of our company has increased by $600 million in one month because an increase in the price of gold virtually all flows to the bottom line when it is mined.  Our 6 million ounces have a cash flow potential of $4.2 billion if we assume cash costs of a much higher than forecast $643/oz.  

6,000,000 x (1,343 - 643) = $4,200,000,000 

That doesn't seem to matter to those selling their piece of the company at 45 cents, because to them, the company is apparently not worth $165 million.

Even if we never get past 1200 tpd, using production05's numbers, that is 4,890 oz/month or 58,680 oz/yr.  Add 24,000 oz from San Juan and we are at 82,680 oz in 2011.

At today's gold price and an average cash cost of $643, 2011 cash flow will be $58 million.  So even at a lowball production level of 1,200 tpd for all of 2011, we are trading at 3 times 2011 cash flow.  If we meet our forecasts, we are closer to 2 times cash flow.  (100,000 oz @ $543cash costs)

Some day when the market realizes that we can maintain production of at least 1200 tpd and can therefore generate the cash flow above, there is going to be a serious re-valuation.  Those that are jumping ship to catch a faster moving train will be scrambling back to get onboard.  If we can show that we can meet our 2011 year-end production forecast of 2,000 tpd, then the share price will be many multiples of where it is today.

I've always said that the only two things that matter to me are the price of gold and Century meeting its forecast targets for gold production.  The price of gold is moving higher and I believe will continue to do so.  I can't imagine Century not being able to maintain production of at least 1,200 tpd when Bedard Dyke and the North Wall are in production, but I expect that it should be closer to 2,000 tpd by late 2011.

The share price will eventually be reflective of our assets and cash flow generation.  We just need patience.

Monday, October 4, 2010

New Poll?

We have not had a Poll for a while. How about one for a new name for CMM? A new name has been suggested in recent postings, indicating that it should have the word GOLD in it. Perhaps give three or four choices (e.g. "Century Gold Inc."; Century Gold Mining Inc."; "Century Gold Corp"; ???
CMM's management might get the message.

More fyi info for much further down the road

The Hunter Dickinson (HDI) group is an extremely successful management team.

The more companies that have success in our part of Alaska could only help to make this part of Alaska more attractive for mining. There is no urgency for us to spend any money up there anytime soon, but it`s good to notice all the positive exploration and mining developments in the area.

HDI manages a company called Heatherdale Resources. Heatherdale released some impressive VMS drill results this morning. I don`t follow them so I don`t know what their provious results look like, but they seem to talking mine potential for this property (it must be a somewhat established ore body). It`s great to see HDI working in our part of Alaska (given their track record and all). Heatherdale`s (51 - 70% owned) property is in the same part of Alaska as our properties, but much further down the panhandle. As you know, our properties are closer to the currently in production Kensington (Ceour) and Greens Creek (Hecla) mines - Greens Creek is a polymetallic mine, but is also considered as one of the top 5 silver mines in the world. Here is a map of Heatherdale`s Niblack property along the panhandle, relative to Juneau and the 2 prominent mines:

Heatherdale`s VMS results looks impressive. Mineralization in this part of Alaska appears to be rich.

Sunday, October 3, 2010

Century`s near to mid term share price revaluation could look like this

It is my view that the main issue holding back Century`s share price is a confidence issue. Due to the company`s track record, coupled with recent negative history of open pit mining on the property (even though Century will be mining strictly underground, and there is an extremely successful 70 year underground mining history on the property - it appears as if the structure of the mineralization on the property requires a high level of selectiveness, which underground mining can far better accommodate relative to open pit mining), it is my view that the market (institutions, analysts, new retail investors, additional newsletter writers, etc.) is demanding to see extensive proof that Century has turned the corner operationally.

As such, I believe that a successful launch of the Bedard Dyke into the production stream, followed by North Wall not too far behind, could initiate the first stage of the share price revaluation process.

It is impossible to know which pace the revaluation will follow. It could follow a slow gradual pace, demanding more proof from the company after each baby step, or the pace may be violent and explosive like recent share price revaluations experienced by these companies:

1) Yukon-Nevada Gold

2) Intrepid Mines

3) Sulliden Gold

4) La Mancha Resources

5) High River Gold

6) Olympus Pacific Minerals

7) Orvana Minerals

8) Victoria Gold

9) American Bonanza Gold

10) Timmins Gold

Friday, October 1, 2010

Thoughts - earliest possible commercial production possibility

With regards to achievement of commercial production, the only info the company has provided to the market is that they are expecting to reach that status in H1 2011. Of course, H1 is a very general timeframe - could be January (though unlikely) or it could be June (unlikely also).

I have a thought with regards to the best case scenario to reach commercial production at Lamaque. It means they need to get going with bringing BD online soon though (end of October). Under this best case scenario, they would need to get BD contributing at a level of least 200 tpd effective right at November 1st (assuming Lamaque 2 is still good for 1,000 tpd).

It is not clear what they will be using as required targets to achieve commercial production at Lamaque. I am expecting they will need to process ore tpd at a rate of 60% of (current) life of mine tpd production (2,000), for 90 consecutive days. That would equate to 1,200 tpd (60% * 2,000 ore tpd) for the 90 consecutive day period. I don`t know if they are allowed any grace days in the 90 consecutive day period. I have always assumed that if one day is missed then the counter resets to the beginning. At least it is based on processed tonnes (not mined tonnes). As such, it is important to have some stockpile ore handy. If there are a few bad mining days with less than 1,200 tpd then the company can reach for the stockpile ore to ensure the 1,200 tpd processed ore total is achieved for that day. This would ensure that the 90 day count doesn`t reset all over again.

Anyway, the above is a typical commercial production target/requirement for start up gold mining operations (though number of consecutive days can vary - some are 30 and some are 60 (Lamaque will likely be 90 days though)). Also, it is not clear if there are additional requirements over and above this requirement, such as grade. Though, all examples I have come across in the past were strictly based on throughput (be it per hr or per day).

We actually do have an advantage relative to a brand new start up operation. We have a milling operation in place that has an excellent track record. Mechanical glitches with start up milling operations are sometimes (maybe somewhat often) the root cause of commercial production delays.

If they can get Bedard Dyke to ramp up to 200 tpd starting November 1st then maybe we have a shot at declaring commercial production at the end of January. If we can do that then maybe the Q1 2011 Income Statement can include Lamaque for 2 months. If the 90 days start mid November instead then everything gets shifted accordingly, and so forth with any lengthier delays.