Monday, November 15, 2010

Nov`s Corp Presentation

http://www.centurymining.com/i/pdf/CMMNovember2010.pdf

19 comments:

Erik W said...

Production05,

I think everyone is waiting for your thoughts, as we all respect and value your opinion. So what did you think of Q3?

Thanks,

Erik W

production05 said...

Hi Erik W,

I`m not sure I will comment too much. Everything is pretty much as expected. No real surprises, after the info we learned over the few weeks.

As mentioned in the past, the production numbers don`t really mean too much until December, as we need BD and NW to come online smoothly and jump start us into 2011. I would like to see the gov`t give them the long-hole stope permit within the next couple of weeks. It may not do much for the share price, but it will be huge - the most important development item right now, as far as I`m concerned. I think there is a 1 month automatic wait period, once all the final documents (including the positive technical evaluations by independent parties) have been submitted to the gov`t.

The story is still the same. The opportunities are still the same. The key drivers 12 months ago - the key drivers 6 months ago - are all still the same today.

A (one time) $1.0M Peggy resignation payout provision was part of the Q3 $3.9M bottom line loss. Also, the loss included usual non-cash items, depreciation and stock compensation (options), of $1.4M. The G&A was $2.3M (after backing out Peggy`s $1.0M provision). That`s too much Corp G&A for San Juan to carry alone, especially while San Juan is also going through temporary upgrades (resulting in temporary inefficiences). We will likely see similar Income Statement buttom line numbers until Lamaque reaches commercial production (and is reported in the quarterly Income Stmt). The company is saying that they are expecting declaration of com. prod. to occur in H1 2011.

to be continued....

David2010 said...

Hopefully tomorrow on the call they will touch on 2 things:

1. CEO search update.

2. Update on the long-hole stoping permit. Like you said, this is vital for continuing ramp-up.

See you all on the call tmrw!

real_economics said...

I agree with Prod05 that the news today was mostly expected with not much of a surprise.

If you look at it with the glass half full you can consider we made it over the biggest hump, have made it past the equipment delays, are well funded and can now continue progress towards increasing TPD and achieving the 100k oz+ yr production that will give us the revaluation of many multiples.

I also understand the cynical view that we have needed to dilute our total shares 10-12% to offset delays in the ramp up and lower production targets which does not look good.

However, my personal view is the upside upon achieving commercial production and beyond at Lamaque is so great that it easily offsets the additional shares from the recent PPs and stumbles we've had along the way.

I believe the most difficult quarter is behind us, and the quarterly reports will get stronger and stronger from here on out.

What we have set off to do - quintrupling production - is certainly no easy task. It has't been a smooth ride by an means, but we are moving towards this.

The street will probably revalue us upon achievements as opposed to anticipation of achievements, but that is ok for the longer term investors, as the end result is the same when we get there.

RE

production05 said...

...... continued


Some notes:


1) They are doing a good job of managing and further cleaning up the balance sheet.

``Deferred Revenue`` are all related to the Deutsche Bank (prepaid gold sales) debt. If we continue to deliver the DB ounces, and ramp up Lamaque, then does amounts will continue to decrease with each passing month.

They have done a fine job with paying down the Accounts Payable (and Accrued Liabilities). It is down to $8.9M. It was $11.8M last quarter and $14.4M at the beginning of 2010. That doesn`t even include the long-term portion of the AP that they paid down - they paid around $5.0M towards this initiative (in the LT Debt section). I believe Century is planning to carry about $8.0M balance in AP in any given month. The $8.9M balance is very reasonable for this size company.


2) The main debt remaining is $4.6M (Current portion of LT Debt - due at points within the next 12 months) and $4.2M (due at points beyond 12 and over a period of the 4 following years). These are good numbers considering they added $7.5M in capital leased equipment (low-profile, etc.) in 2010. They will likely add more equipment in Q4 and Q1.

There are also typical balances for Asset retirement obligations and Future income tax liability, as part of LT Liabilities.


3) Wingfong, the new geologist is thinking along the same lines as us, with regards to future exploration potential. It`s not clear when he will get to these areas, mid-term or long-term, but at least he is eyeballing the same areas as us, for interesting brownfield opportunities.

Maybe a bit of the $2.5M exploration (CEE) cash will be left over (after drilling within high priority Lamaque areas - Lamaque flats, BD, NW, etc.), to do a bit of investigative exploration. There are some good potential bulk mining areas they can explore within the mine (where they might not need the shafts). There are also some interesting areas beyond the immediate complex we have previously discussed on the blog.

From the new Corp Presentation:

``* Sigma-Lamaque: The mine has potential for expansion of reserves in all directions but is bounded by the Kalahari property to the south. The depth potential of the mine is very good and has bulk mining possibilities.

``* Mine Contiguous Claims: A list of a few intersections on these claims is given below:

 Central Diorite: 50.7 g/t Au over 0.6 m
 South Diorite: 108.3 g/t Au over 1.7 m
 Lac Langlade: 21.3 g/t Au over 1.2 m
 Auric West 55.8 g/t Au over 0.6 m
 Aumaque Mine: 10.3 g/t Au over 1.7 m

``*Sigma II: This deposit is located 20 km. east of Sigma and is contained within the Vicour differentiated mafic sill. The deposit has produced 2.05 million
tonnes at a grade of 2.4 g/t Au. The deposit has the potential for further mineralization.``

Wingfong said...

Hi Prod05

Very pleased to read your dissectations again. Hope one day I could read CMM like U do. It is heartening to note that the Co geologist is viewing San Juan's potentials with the same interest. Frankly, Erika's 500million ton co-building copper prophyry possibility is ever in my mind.
I too share the view that management is delivering and the board's preference to do meaningful and solid stuffs like parring down the various debts etc on the quiet will only be good for the Co.
In my mind, getting from 300tpd to 800tpd and from 1000tpd to 1500tpd to 2000tpd is not quite the same. In the former, it could involve very substantial heavy liftings n pains. In the latter, having stabilised at 1000tpd means all the madness would have been removed and methods prevailed. In short, it should be more predictable to move from 1000tpd to 1500tpd to 2000tpd than from 300tpd to 800tpd.
Believe the most difficult and unpredictable mine development works have come to pass and barring unforseen n unnatural circumstances, 2011 will certainly turn out to be THE DEFINING YEAR for CMM. It is my brief experience in the years I had lived that when things start to get better, it will get better and better until the next tipping point.
Cheers

CenturyisScary said...

With Q4 already half over, and the company just reaching 1000 tpd (3.25g/t), the revised production of 18-20,000 oz by year end doesn't seem likely.

It's hard to believe, but this company STILL doesn't get it.

I've never seen such incompetence in a company and nobody seems to be able to do anything about it.

yikes1 said...

You may be right Scary, but It's November 15th, so all they really should be forecasting is the last month and a half...it shouldn't be rocket science to come up with the feasible number, but they've been off on every forecast this year, so you may be right.

CenturyFan said...

While I expected the shareprice to take a hit this morning, I did not think it would be 15%+.

This hurts.

CenturyisScary said...

Yikes, with the stock currently down 16% to $0.37,the market appears to be pricing in the reduced year end target of 18-20,000 oz which I believe is not achievable given the company's abilities.

Further, I think the 2011 goal of 80-90,000 oz at Lamaque is not realistic, and telling shareholders this at this point is insulting to their intelligence.

Afterall, is the company going to get it right all of a sudden? No, and all future 'revisions' will highlight the company incompetence, and get priced into the stock as it is today.

But I expect the company will tell shareholders otherwise on the conference call today.

Anonymous said...

37cents.... do I sell now and hope to re-enter 20-25c? Or hold and pray it recovers to 40c?

My *only* consolation is that everyone involved in the most recent PP at .39 is at least 10% underwater too!

Good....now they know what it feels like and maybe they will demand more accountability and some answers.

Now I know why PK jumped ship. She saw the writing on the wall. Unbelievable that TAM & CMM will soon be the same price!

WC

yikes1 said...

CenturyisScary,
I'm not saying that you aren't right, and that they will be able to produce 18,000 oz in 2010. I just know that it's a lot easier to forecast 1.5 months than 12 months, 6months, 4months, etc. If it was not achievable, why not drop it to 13,000 oz. At this point, is the sp really going to take a bigger hit because of a more accurate 2010 forecast? They already know 50% of Q4 output, and I certainly hope they wouldn't over promise again, but like you said, it's not like they haven't in the past. As for the 2011 forecast- I'll believe the 2011 forecast when I see the financials in April of 2012.

Anonymous said...

A down day. Tsv down 4% at one point (cmm not in that index)

AU down to 1330 (and lower)
Near 90 % red on my stocklist
.. many 8% or more down.

So what do we settle out at? Can we lay much of blame on equipment delays and other unforeseeable events?

Anonymous said...

The charts never lie with CMM. SP has been drifting downward for 3 months when it should have had positive upward bias (if they meeting/reaching targets).

What is really pathetic is how it seemed as if CMM actually turned a corner in Jan-April 2010. The monthly presentation kept the company on track.

Big warning flag when they turfed the presentations this summer. I think they knew they had the shit numbers back then. By refusing to publish monthly forecast, they left investors in the dark.

I'm out until they bring back the monthy presentation = ACCOUNTABILITY and/or they have a quarter where they DO what they say they are going to do.

Bob1013

Anonymous said...

No run up with gold, but CMM sure knows how to follow it dowwwwwwwwwwwwwnnn.

Mike said...

I am hoping Keith has had second thoughts about giving out limited production information in Q3 .. and we will see more info in relation to production increases, or lack therof, going foward.

On another note .. there were about 5 x more questions on this call than the last call. Im am hoping this shows increased interest .. Perhaps Victor G was busy .. would have liked to hear from him on this call.

Mike

BuillonBull said...

Q: Will Century try and brief the market better?
A: Yes they will try to be more transparent with the market to inform it of its milestones.

Q: What will the distribution of ore to the mill be in 2011?
A: 55% from Lamaque, 25% from Bedard and 20% from the North Wall.

Q: Why should we trust you to meet next years guidance after 2 revisions?
A: We now have good management in place, good equipment in place, a good plan in place, and a lot more comfort in terms of predicting over the next year then we had in 2010 (THANK GOD). McNutt spoke about reducing water levels in the mine to access previously unreachable ore and using equipment better and more efficiently. He also spoke about infrastructure improvements out of Peru.

Q: This wasn't so much a question as it was a ranting thrashing or McNutt and his preformance as COO.

Q: Specifics of the Deutsche Bank deal?
A: The DB ounces represent only 2% of our reserves and 12% of our current production.

Q: How many faces do we need to make Lamaque work? Are Jacklegs in use? Are the low profile drills working?
A: 3 low profile drills are currently doing 10-12 rounds per day with 15 faces across different stopes. They hope to be able to mine 2 high grade extensive flats with 2 jumbo's in one area. BD continues high grades and good results. They hope to have 2 long-hole stopes by Q1 2011 in production at 250-300 tpd.

Q: Why did G&A expenses spike so much? Is this a one time deal or can this be expected going forward?
A: This included depreciation from Peru mine for the first time, as well as increased legal costs and the $1 million one time fee from Peggy's departure. We should normally average $1.5 million per quarter going forward.

Q: How is the CEO search coming?
A: Have a well known head hunter helping out and are in the final stages of a world wide selection. Hulley remarked that "All the good ones were working" so we have to try and lure away a high profile, high quality CEO. They expect this process to be complete and a new CEO installed by Q1 2011. Hulley also let slip later in the call that the new CEO would be a "he".

Q: When can we expect Q4 earnings?
A: Not before April.30, 2011 as they are only allowed to be released 120 days past the end of the year.

Q: How will we meet 18k guidance from Lamaque after only having produced 8400 for first 9 months of 2010?
A: Have a good team in place, have the equipment in place (more then we budgeted for), we are accessing 2 large flat areas that will sustain good grades and high tonnages as we go forward.

Q: How important is 100% efficiency with low profile equipment to our targets at Lamaque?
A: In Q3 there was more dilution then desired, but right now we are doing 5 rounds per day and have hit as high as 6 rounds per day. As such, we are running at about 85% efficiency with the low profile equipment. In a positive note, McNutt noted we only budgeted for 2 pieces of equipment but are running 3, so in my opinion we might be able to have higher then anticipated production in Q4.

Q: Whats PK's relationship with CMM at this time?
A: Nothing. She retired and has no further relationship with CMM.

Q: Relocation to Vancouver or Toronto?
A: This is not a priority for mgmt as they are solely focused on ramping up production at Lamaque. This will be the new CEO's problem.

Q: When will the PP's stop? When will the latest ones be closed?
A: We are working hard to close the recent PP by the end of Nov/early Dec. (both the flow through and regular PP). Also, Hulley explicity stated they do not expect to have to come back to the market again. THANK GOD.

yikes1 said...

Thanks BB, as I was in transit, and was unable to listen. Much appreciate both posts on SH and here.

real_economics said...

The key here is we had some delays but have turned the corner.

Was happy to hear issues regarding equipment and employment have been resolved and the CEO search has been well advanced.

Was also glad to hear no more PPs in the near future.

RE