Mar 08, 2011 08:30 ET
Century Provides Operational and Financial Update for Lamaque Mine
BLAINE, WASHINGTON--(Marketwire - March 8, 2011) - Century Mining Corporation ("Century" or the "Company") (TSX VENTURE:CMM) is currently commissioning the Lamaque gold mine in Val d'Or, Québec, Canada. On February 9, 2011, the mill facility experienced a failure of its cone crusher that placed the total crusher circuit inoperable until February 17, 2011, at which time the Company was able to implement a temporary solution and resume operation. Final repairs and replacement of the cone crusher were completed on March 6, 2011.
The loss of the crusher circuit for nine days and the need to operate with a temporary solution since that time have had a more severe impact on the Lamaque mill throughput than originally anticipated. In January mill throughput improved to average 944 tpd for the month, below the Company's expectations. Due to the crusher failure, mill throughput was reduced to 788 tpd for the month of February.
Mining operations continued during the period in which the crusher circuit was inoperable. The production rate has improved but remains below plan, and management continues to work on programs to improve this situation. In January the mine production averaged 971 tpd and this increased to an average of 1168 tpd in February.
Prior to the crusher circuit failure, the Company was working on a number of programs intended to continue the ramp up of the ore production including the refurbishment of the third ball mill, underground dewatering, reconfiguration of the crusher conveyor system, and development of the North Wall ore area.
The losses in mill throughput resulting from the crusher failure has had an adverse impact upon the Company's cash flow and its available funds. This severe constraint on funds availability has forced management to halt the operations of the contractor responsible for the development of access to the North Wall mining area, which is now expected to delay mining in this area until May at the earliest, subject to funding availability.
All other capital projects have also been placed on hold while the Company considers its options as it seeks to meet its obligations associated with debt repayment and ongoing working capital payments as the Company continues to operate on a cash negative basis as it works to ramp up production. The delays in the capital projects will slow the ramp up process and further extend the period during which the Company expects to operate on a cash negative basis.
The current gold production guidance for 2011 at the Lamaque operation is 70,000 to 75,000 ounces. The operating team is now completing a full review of potential operational impacts based on the recent cone crusher failure and the subsequent development and production delays resulting from the financial impact of the downtime. The Company will provide an update on production guidance for 2011 when this review is complete.
While this incident has had a negative impact on the Company's ramp-up process at Lamaque, the operating staff at the mine must be congratulated for their ingenuity and speed in responding to implement contingency measures and minimize the production downtime, avoiding further delays and production losses.
About Century Mining Corporation
Century Mining Corporation is a Canadian gold producer and holds strategic land positions in Canada, the United States and Peru. The Company's strategy is to grow to its gold production through existing mine expansions and acquisitions of other strategic and synergistic gold opportunities.
On behalf of Century Mining Corporation,
Daniel J. Major, President & CEO
26 comments:
Production 05 we would love to hear your comments on this overall happening.This appears to be a great way to wear down the retail group in hopes of offering a discounted price to SAVE CMM from it perceived situation.
The mill experienced a failure on February 9th,2011. The avg TPD for January was 971.
On the conference call they said it would be 2 months of 1500 tpd followed by 2 months of 2100 tpd if I'm correct. The failure had nothing to do with January, and yet we're behind again.
It might have been February as the first month to produce 1500 tpd actually Major was referring to, but regardless I don't see how they could have achieved that. They were off by too much.
An unforeseeable operation problem occurs again..seems like never ending ways to just knock down the share price over and over.
Now we have financing and operational problems as we cannot keep the North Wall area online due to cash shortages. Gives reason for another private placement, more dilution of us retails and a greater position to takeover for Finskiy and friends.
Please point any missed points out, but I think our share price of .57 is generous given the fact we're illiquid and have had a huge road block presented to us yet again
The long delay between the problem with the crusher and the announcement today makes one suspicious of management's motive (especially in view of the date of the "special meeting" of shareholders). Does anyone have any contact with the miners at Lamaque to get their side of the story? The whole series of events here (e.g. strange coincidences) do not pass the "smell test" for corporate integrity & honesty.
While this news release was unexpected and disappointing, it wasn't nearly as bad as it was made out to be. It was designed to cause as much of a negative impact as possible and it certainly succeeded. Panic selling at the open dropped the price to 47 cents before the bargain hunters and traders entered the fray.
While the January mine production of 971 tpd was disappointing, the February number of 1168 wasn't bad at all. If we averaged 1168 for the whole month of February after only 971 in January, then we probably exited February well above 1200 tpd. The forecast for March and April was 1500 tpd with ore coming primarily from the Flats and Bedard dyke. Perhaps averaging 1500 tpd for March and April won't happen, but reaching 1500 tpd in that period should be reasonable.
We had some temporary pain because we processed 380 tpd less in February than the mine produced. Now that the mill is back in full operation we can process 380 tpd (from stockpiled ore) than we mine in March and April. There is no reason why the mill should not now be operating at 1500 tpd and at 1500 tpd and $1430 gold, we have to be profitable.
I just don't believe the doom and gloom about the negative cash flow position in the NR. That is designed to steal our shares in a takeover offer. Peggy once said that breakeven for Lamaque was 700 tpd and that was when gold was at $930/oz.
For me the negatively slanted NR just increases my resolve not to hand over my shares to the Russian thieves for less than a fair and reasonable CASH price .
Hi JOAR,
I really don`t have too many comments on the situation.
I agree with all the blog comments thus far. I think all of the points are valid.
The NR was far from being balanced. As a shareholder, yes, I absolutely want to hear about the doom and gloom realities of the situation. However, at the same time, I want to hear about the options (be them preliminary at this time) the company is considering to remedy the situation.
In my opinion, either Mr Major is inexperienced at writing these types of NR`s or it was written with a specific agenda in mind.
It is clear what the company needs. It needs a recapitalization of funds to address the short-term cash shortfalls.
Even aside from the recent cone crusher problems (by the way, a brand spanking new cone crusher that is less than a year old), the start up performance of Lamaque (ever since last April) has been absolutely brutal, IMO. This management does not give me a lot of confidence (certainly, I am not confident in their abilities to operate with a tight budget).
As a result, I would like to see a major recapitalization done - once and for all.
I would like to see a $20 - 30 million recapitalization (33.3M - 50M @ $.60 per sh, with half warrants).
I would like to see them involve Shandong Gold (the major Chinese company with a stake in Integra Gold - with potentially deep pockets). I have no clue if Shandong is willing to make that type of investment in Century, but they would probably have more motivation than anyone. I saw that due to their equity interest in the property next door (a processing facilty next door is the most optimal solution for processing their own ore). Century`s processing infrastructure might allow Shandong to take more investment risks with Century than other companies / investors might be willing to do.
Unfortunately, I doubt Shandong Gold will be allowed to participate in the financing. I cannot see Finskiy allowing a potential competitor to get involved.
As a side note, I still have a good size share position in Century (which will allow me to still participate from the upsides). However, I did reduce my original Century position back in the December - January timeframe. As you may recall, I mentioned on the blog a while back that I continually reassess my investments (not just CMM, but all investments). I reduced my Century position in order to top up some of my other investments, and to also take initial positions in some other companies I like (with good entry points at the time). However, I also reduced my Century position because of the method I use to manage my investments. I set certain performance expectations for specific investments in advance. It provides me with a guage based on my own standards. I also have expectations for management.
I still like Century`s assets, hence I still have a good size position in the company. I guess we will see how the situation develops over the next month or two.
In the past week we were hot on the "game changing" meetings that were supposed to be held on the 8/3/11. Can anyone relate anything? things seems to have gone silent all of a sudden
Many posters on this Blog, as well as on others, expressed the opinion about Mr Major that he seems to be a competent manager (CEO). That's how he came accross during the CC, and also to those who spoke with him personally at PDAC. Now we know better. When he had to face the first real crisis at CMM back on February 9th, what did he do? Well, he crafted a lousy pessimistic NR, and he set on it for nearly a month (until such time when it would do most good for his corporate masters, if a takeover attempt is really in the works)! A good manager would have had a contingency plan (including for extra ore to by-pass the crusher, as well as for finances), and released the news rightaway. A competent CEO would have made reference to our positive cashflow situation at SanJuan, and how that might help us through the hump. Unfortunately it looks like that the good FUNDAMENTALS of CMM alone aren't going to be enough to help us faithful retail shareholders.
Hi Bigjohn,
You wrote:
``A good manager would have had a contingency plan......... A competent CEO would have made reference to our positive cashflow situation at SanJuan, and how that might help us through the hump.``
Those are my thoughts exactly.
Also, the sky is falling and we don`t know if there is any hope at this time (essentially the picture the NR was describing, in my view) type of situation does not suddenly develop overnight.
I have managed business operations before, and I have also built and managed big budgets before. I would have been fired instantly if I suddenly showed up one day to my boss`s office and said I needed to shut down all projects today because we are out of cash. It would have meant that I either wasn`t managing my cash situation over the past months or I didn`t proactively take the steps in advance to secure additional cash, or both.
Similarly, I see this as being some sort of agenda or someone miss the ball completely (in my view). They knew about the cone breakdown on February 9th. They knew about the tonnage shortfall trend and grade challenge even before February. Essentially, they were likely low on cash to begin with.
I`m sorry, based on my experiences, one does not show up on March 8th, essentially saying that the situation is severe and they still have to review options (unless for the reasons I highlighted, in my view).
A recapitalization plan should have been executed weeks ago, even if it ended up just being contingency funds (and not eventually required). With low grade, low tonnage, mandatory requirement to deliver pre-paid ounces to Deutsche Bank each month and likely a low cash situation to begin with, (as far as I`m concerned) there is only one immediate action at the first sign of breakdown on February 9th - RECAPITALIZATION!!!! Seriously, I would have been fired instantly if I operated like this.
Agree the NR was rather badly done. However, on balance, I am more inclined to thk that Mr Major is a thinking competent CEO. I believe, among other problems, he is awared of the cash situation but for some inexplicable reasons he had chosen the chance to ride out the problems with tonnage, grade n milling throughput improvements; but by an ill-faithed n ill-timed crusher breakdown, the game plan failed. Now the situation has to be revealed and remedy sought. IMO, we will properly have a better judgement of his competency, strength of character n integrety by ways of how he overcome these problems over the next few weeks. My hope is that the damage to the sp has ceased.
Production, I have nothing but the utmost respect for your views and in the years that we’ve both been posting on this blog, I can’t ever remember having a difference of opinion with anything you have posted. You’ve probably made more quality posts than everyone else combined.
However what makes a blog sometimes is an exchange of differing viewpoints, respectfully submitted, and I must respectfully take an opposing view to your latest posts. You may be right about the need for recapitalization, but I’m not convinced.
On the February 3 CC Daniel Major told us that he expected production rates of 1200 tpd in Jan and Feb, increasing to 1500 tpd for March and April and further increasing to 2,000 tpd for May – Dec.
The actual reported mill throughput for January was 944 tpd and 788 tpd for February. So instead of processing 70,800 tonnes for these two months, we would have processed 51,328 tonnes – a difference of 19,472 tonnes.
Assuming a grade of 3.5 g/tonne, the value of this lost production at $1400 gold is less than $3 million. Total revenue for this period would have been approximately $7.8 million less the $1.8 million to service the DB loan. So instead of generating $9 million in net revenues, we generated $6 million. Is this enough to put us in the crisis mode intimated in the NR? I think not. I believe at $3 million/month we are probably operating cash flow positive, in fact I heard some time ago that our nominal burn rate is about $2 million/month. How much of the $14.2 million in cash raised in the Sept – Dec period have we burned through and how much cash did we have before we raised more via the PP’s? There should be a good chunk of that left and at $1400+ gold San Juan should be producing free cash flow of about $1.5 million/month. I believe DB also released additional funds.
I don’t think there was a news release in February because the temporary loss of the crusher was not enough of a material event in a start-up operation prior to declaration of commercial production. The only real cost was the $200,000 cost of repair, because the lost throughput is only deferred to the following month(s) until the mill is operating at full capacity. I believe the motive for the NR was to lower the share price to increase the success of a planned takeover offer and it was perfectly timed.
Our share price was hammered today by the infamous “Anonymous” who had sales of 643,000 shares against buys of 20,000, including a sale at market of 275,000 shares – 30 minutes before the close. Conversely WTG was up 13% on volume of 23,500 shares – a big volume day for them. Finiskiy can make WTG’s share price whatever he wants it to be.
Someone reported on SH earlier today that they had talked to Hugh (Blakely the CFO) and was told that Century had no thought of going to the market with paper, i.e. no plans to raise additional funds at this time.
Keith Hulley told us on his final conference call on November 16 that Century had no need to raise additional funds. This assurance came after we had only produced 480 tpd in October so obviously they felt they had sufficient funds at that time until the company became cash flow positive. Increasing production from 480 tpd in October to 1188 in February is probably in line with what they expected at the time. Surely they had contingency funds of more than $3 million.
So are we in a good cash position now? Who knows, but we should be putting 1500 tpd through the mill now and at that rate that will generate revenues (net of DB loan) of $6 million/month. Combined with San Juan’s contribution of $1.5 million/month, we should have about $5 million/month for capital expenditures.
Wingfong, you said:
In the past week we were hot on the "game changing" meetings that were supposed to be held on the 8/3/11. Can anyone relate anything? things seems to have gone silent all of a sudden
The (Special) meeting was scheduled for April 12; March 8 was the date of record for shareholder ownership for voting rights. March 8 also coincided with the latest date that the company had to tell us what the meeting was about, if it was to consider a takeover offer. The fact that March 8 has passed doesn't mean that there won't be a takeover offer, but if so, I believe that the date of the Special Meeting will have to be postponed.
The delay may be for any number of reasons such as legal issues (such as the Century BOD doesn't have the required 25% of Canadians), or the share price on March 8 was too high and had to be knocked down to fit the offer.
I think a lot of the buying up to March 7 was on speculation of an offer being made at a premium to the share price and when it didn't happen some selling started. The NR on the morning of the 8th was the coup de gras.
Carib. tks for the info
Carib/ Production05, Gentlemen: CMM as an operation is NOT in trouble as the NR indicates. The agenda by Finsky and friends is well planned and executed for maximum effect to get the price of CMM discounted for obvious reasons. Mr. Major is now a pawn in this whole senerio and is doing as directed.
I agree that the numbers speak for them selves and at todays gold prices you can't help but make money and have cashflow. I too like Production05 am a senior operations manager and incidents like this are not Company back breakers. They are in fact normal operational issues which good managers handle on a daily basis.
So where this leaves us is in a waiting situation since we know Finsky and friends arn't just going to let CMM die for real, just put it into a position where they are happy with a the takout price.
Once the take out price is announced you decide then what to do.
Another important fact about Mr Major's recent background is that prior to his appointment as CEO of CMM, he was a member of the Lamaque mill's operating committee for a year. One wonders why?! Related to this is the global search for a competent CEO which went on for six months!! What a charade! It looks as if the Finskiy/Scola group is following a well planned script.
Open Letter to Mr Daniel Major
As you no doubt are aware the NR issued on Tuesday morning has had a significant impact on our company’s SP, 30% down. Everything is much easier with hindsight, so perhaps now, on reflection, you might have worded the announcement differently. As a fellow shareholder with the best interests of our company in mind I would encourage you to issue your next news release as soon as you can. It would be useful if it could address as many as possible of the main issues which have been iterated on the two blog sites. Actions and complete pertinent information should bring some reassurance to investors and calm to the SP. This is in the interests of the majority of us shareholders. Over to you Mr Major. Yours Sincerely.
I think it is news that the March 2011 CMM Corporate Presentation is now posted on the Century website. I'm pretty sure it was not there this morning, though I could be mistaken.
The presentation has some humorous highlights. Namely, when they call out the operational milestone of "Crusher Upgrades" and place a giant green checkmark next to "Start mining the North Wall."
Hi Carib
Thoroughly went tro my notes again n on balance I found your views posted on March 9 7.29pm had given me a lot of food for thought. If your deductions were correct which I thk likely, then their sp suppression game may not intimitate investors who have adequate knowledge on CMM
Yest's price movement appeared to be violent quite unlike the gapped down prices in response to the NR 2 days ago. Price opened at 0.50, quickly being sold down to 0.45 but ended at 0.56 with trading vol of 2.4million. Could it be some short coverings or certain cmm-knowledgeable investors saw tro the suppression game n grapped all they could? anyone?
Hi Wingfong,
With regards to the asian quate, I head that the fault (that moved to initiate the quate) had a fault line of 400 miles. The quate was 8.9 magnitude. Hopefully the quake didn`t have a ripple affect over to your country of Singapore.
With regards to the tsunami, it looks like Singapore should be far enough away from the epicenter of the quate (and hidden behind other land masses) to realize a severe impact from the tsunami, hopefully.
Nevertheless, all the best for you country, and stay safe.
Hi Prod05
Thank U for your kind concern. We are ok. Japan is seriously affected. Vietnam to a much lesser extend. Taiwan is bracing for possible aftershock effect. All other surrounding countries are ok so far.
If a lowball offer comes from WTG, it means that they pulled many of the exact same Russian moves pulled previously by Severstal on High River Gold shareholders.
The track record to Russian bullying and suppression moves against shareholders of smaller companies is growing at a rapid pace, in my view.
The 2007 unsolicited Russian (Severstal) takeover of Celtic Resources was very controversial.
``Moscow-based analysts say Russian companies are deliberately after smaller western businesses because they are keen to make inroads into developed markets but unwilling to face the backlash from trying to acquire larger companies.``
The 2010 Crew Gold takeover by Russians (Severstal) was filled with all types of controversies also.
If WTG makes an offer to CMM, after what just took place, the regulators need to launch a serious investigation, in my opinion.
A lot of honest and hard working shareholders lost a lot of money over the past few days by selling their shares, due to what transpired. Again, if WTG makes an offer, someone needs to be held accountable in a serious way (all punishment options should be on the table, including US style punishment for serious white collar crimes), in my opinion.
Someone on the Agoracom board posted these comments:
``Peter Ball is no longer with CMM.
His tenure with CMM endfed the last day of the PDAC.
He is now with ArgentEx
.....carry``
``I am looking at his brand new business card which say's Peter A Ball , Vice president Corporate Development, Argent Ex
Suite 835, 1100 Melville St. Vancouver BC 604-568-2496
and then there is his new email address that I won't publish on the net.
He does not work for CMM as of the last day of the PDAC.
all I know.......carry``
I think poster ``Positive Carry`` (the person that posted these comments on Agoracom) is a friend of or at least has good blog interactions with Glorieux (a valid poster on our blog).
Hi Wingfong,
It's good to know that you & your country are OK. Hopefully, the other affected countries are also.
Production, you hit the nail on the head (again): our regulators should launch an immediate investigation of the predatory takeover practices of certain russian-controlled resource companies. Isn't it strange that WTG comes to the TSX for listing & capital, and it does not even have one Canadian director on its BoD. These corporate predators must take us for suckers!
By the way, does anyone know a good investigative reporter at any of our major newspapers? This whole sordid saga would make a good story (& that would bring some regulatory action for sure).
BJ37 thanks for your concern
Hi guys, I am on holidays and trying to stay happily married by not going on the computer...that sure has been hard lately!
Positive Carry is a friend of mine and a great stand up guy. Peter will be working for argentex as he posted however Peter will retain a consulting role with cmm till the end of July.
Sorry to keep this short, but I know I will need all my brownie points for Monday morning.
Cheers and good luck to all of us.
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