Monday, November 30, 2009
Q3 Financials Filed
The Q3 financials have been filed on Sedar. I've posted links to the Financials and the Management Analysis & Discussion on the Information Links on the right. San Juan produced 4,561 ounces at a cash cost of $460/ounce.
Some really positive developments today! The only condition for closing the $21 million PP that I thought might be a bit dicey after the recent bad press in Quebec was the renegotiation of the IQ debt. The deal reached under that political cloud was amazing. (One Quebec MP called Century a company they despised). I would have been happy with shares priced at 25 cents (the same deal as the other creditors received). For the past year where we have been most vulnerable was someone else buying the IQ debt and foreclosing on us. As Production said, IQ has treated Century extremely well.
I'll post today's trades in detail after this and will try to keep the "Today's Trades" link current from now on as it now appears we are back in business.
Some really positive developments today! The only condition for closing the $21 million PP that I thought might be a bit dicey after the recent bad press in Quebec was the renegotiation of the IQ debt. The deal reached under that political cloud was amazing. (One Quebec MP called Century a company they despised). I would have been happy with shares priced at 25 cents (the same deal as the other creditors received). For the past year where we have been most vulnerable was someone else buying the IQ debt and foreclosing on us. As Production said, IQ has treated Century extremely well.
I'll post today's trades in detail after this and will try to keep the "Today's Trades" link current from now on as it now appears we are back in business.
3rd Quarter results
>
In the third quarter ended September 30, 2009 the Company reported an operating profit from mining operations, before depreciation, amortization and accretion, of $2,334,568 (2008 - $1,735,994) from gold revenues of $4,532,083 (2008 - $4,300,640). Expenses incurred in the mining operations were $2,197,515 (2008 - $2,564,646). For the quarter ended September 30, 2009 the Company reported net income of $2,689,470 or $0.01 per share, compared to net income of $607,382, or $0.004 per share in the prior period.
As at September 30, 2009 the Company had a working capital deficiency of $5,830,238 compared to a working capital deficiency of $14,985,245 at December 31, 2008, a decrease of 38%. The Company is working diligently to continue to reduce this deficit.
During the third quarter of 2009, the Company announced the signing of a term sheet for a US$33million prepaid gold forward sale to a major international bank with a significant gold trading business. This term sheet was conditional on a $20 million dollar equity offering. Consequently the Company signed a non binding term sheet with Gravity/Kirkland for a $21million dollar private placement. It is expected that these financings will close in mid December. In total the new financing will be providing the Company with $56 million dollars of new money to start up the Lamaque project. In addition to these financings, the Company has an arrangement with Investissement Québec to buy out their note for $8.75 million dollars and 5 million shares of Century.
In the third quarter the Company completed a flow-through private placement for $1.1 million. Two additional flow-through private placements in the amounts of $1.3 million and $2.7 million were completed in October and November.
The 2010 forecasted production from the Lamaque and San Juan is estimated to be 70,000 ounces. The cash cost at San Juan is expected to be similar to that in 2009. Lamaque's production costs will be capitalized until such time that the project reaches commercial production levels as defined under Canadian GAAP.
Margaret Kent, President and CEO of Century commented, "As we have discussed in our MD&A, the worst times are behind us. Our financing plans that we will be closing in mid-December will be accretive to our shareholders and insure over time that all our creditors will be paid in full. Our Peru operation continues to be cash flow positive and we look forward to reinvesting the cash generated from the operation to expand production".
Ms. Kent further commented, "The Company has worked diligently to reduce its working capital deficit. The year end financial statements, which will reflect the closing of the proposed financings will show a significant reduction in the Company's liabilities".
About Century Mining Corporation
Century Mining Corporation is a junior gold producer. The Company owns and is working towards the start up of the Lamaque mine in Québec that historically has produced over 9.2 million ounces of gold. In Peru, Century wholly-owned subsidiaries own an 82.6% interest in the San Juan Mine where the Company accounts for 100% of gold production. Total gold production for 2007 and 2008 was 63,124 and 14,252 ounces of gold, respectively.
Repurchase of LT debt from IQ
Blaine, WA, Nov. 30 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced that it has reached agreement in principle with Investissement Quebec for the repurchase of the long-term note held by Investissement Quebec. In exchange for payment of $8,750,000 in cash and the issuance of 5,000,000 common shares in the Company, Investissement Quebec has agreed to discharge the Company from all obligations under the note and to release all of its security interests in the property of the Company. Funding for the transaction will come from the debt and equity financings recently announced by the Company which are scheduled to close in early December. Also from the closing of the debt and equity financings the Company's working capital gold facility with Gerald Metals will be paid out. After the closing, the Company's only long-term debt will be the $33 million prepaid gold forward facility.
"Over the last several weeks and months, we have methodically taken the right steps towards the reopening of the Lamaque underground project. The repurchase of the note from Investissement Quebec is another major step forward in our financing and development plans" said Margaret Kent, President and CEO, Century Mining Inc.
The Company also announced the following management appointments:
Hugh W. Blakely, C.A., B.C. - is appointed to the position of Chief Financial Officer, effective November 18, 2009. Blakely was most recently Interim Chief Financial Officer of Canadian Royalties Inc. Previously, he held the position of Senior Vice-President and Chief Financial Officer of Heico's Canadian steel operations, operating under the name of Ivaco (formerly Ivaco Inc, a public company). During his tenure at Ivaco Inc, Mr. Blakely held a number of senior financial positions and worked in tandem with the Chief Restructuring Officer and Ivaco's financial advisors in managing the restructuring and sale of the businesses to Heico. He earned his Bachelor of Commerce from Concordia University and began his career with Coopers & Lybrand in Montreal and obtained his C.A. designation in 1974. Mr. Blakely is a solid professional with deep financial skills bringing over 30 years experience to Century.
Richard B. Meschke, J.D., M.B.A., B.A. - is promoted from Chief Financial Officer to Vice President, Legal and Corporate Development, where he will be leading the Company's major contract negotiations and growth and acquisition programs. Mr. Meschke has extensive experience completing acquisitions, optimizing operations and negotiating contracts in the mining industry. During 20 years with AMAX Inc., a major metals and energy company, and its successor, Cyprus Amax Minerals Company, Mr. Meschke held executive positions with finance, business development and operating responsibilities. His accomplishments include completion of more than $.5 billion in acquisitions and divestitures, and negotiation of long-term contracts representing in excess of $300 million in annual revenues. He also worked in the engineering and construction industry where he negotiated contracts up to $100 million in value. Mr. Meschke earned a B.A. from Wabash College, an M.B.A. from the University of Michigan and a law degree from Indiana University.
Peter A. Ball - will be joining the Company as Director, Investor Relations in early December 2009. Mr. Ball is a graduate of the Mine Engineering Program, Haileybury School of Mines and the Canadian Securities Program. Mr. Ball comes to Century with over 20 years experience in the resource industry, most recently at Hawthorne Gold Corp. and previously with El Dorado Gold Corp. He is well versed in corporate communications, public relations, engineering, business development initiatives, investor relations, marketing, finance and securities.
Margaret Kent, President and CEO of Century commented, "The Company has a very bright future, and over the coming months we plan to rebuild our corporate management and add staff to execute the Lamaque project. We are pleased to welcome Hugh and Peter to our team."
Anonymous and Canaccord at it again
This guys are truly amazing. How long has their show been running now? Two years non-stop? They should taken their show to Broadway. They seem to have access to an endless supply of shares. What is it, net sales of 20,000,000 - 25,000,000 over the past 2 years? I think pretty much all of those shares were sold below the current $.28 share price, and a significant portion was below $.10. They seem to love hitting the bids and getting the worst possible price.
I have no idea where they got that many shares from. Most of the shares have been accounted for from PP's previous to this year, for example:
*Scion - they sold primarily during tax loss periods, and I do not recall Canaccord picking up a significant number of those shares
*Wega - their selling is vividly embedded in my mind (ugly period). Canaccord and Anonymous were anything but buyers. In fact, they piled on with the selling, in a massive way - almost as if someone was trying to break the company.
*The New York PP - almost all of those shares were sold by the NY investors directly to Peggy and Ross via a private transaction
*Late 2007 and early 2008 financings - we saw most of those shares sold by GMP, and we didn't see Canaccord making purchases
The only financings unaccounted for since 2005 are the $.13 - $.14 financings earlier in this year. It's not clear if Canaccord got their hands on any of those shares.
I have no idea where they got that many shares from. Most of the shares have been accounted for from PP's previous to this year, for example:
*Scion - they sold primarily during tax loss periods, and I do not recall Canaccord picking up a significant number of those shares
*Wega - their selling is vividly embedded in my mind (ugly period). Canaccord and Anonymous were anything but buyers. In fact, they piled on with the selling, in a massive way - almost as if someone was trying to break the company.
*The New York PP - almost all of those shares were sold by the NY investors directly to Peggy and Ross via a private transaction
*Late 2007 and early 2008 financings - we saw most of those shares sold by GMP, and we didn't see Canaccord making purchases
The only financings unaccounted for since 2005 are the $.13 - $.14 financings earlier in this year. It's not clear if Canaccord got their hands on any of those shares.
Friday, November 27, 2009
Upgraded from 3 star to a 4 star by TD
I received this in my inbox from a TD Alert:
| The 5-Star Rating of Century Mining Corp. (CMM-X) has changed | |||
| 5-Star rating (new): | **** | 5-Star rating (previous): | *** |
Lamaque will shine
Hi Glorieux,
I think people forget that Lamaque has produced 9,287,450 ounces of gold since 1935 (almost entirely from the underground). A property cannot be that successful, for that period of time (including during periods of low gold prices), and not be world class and distinguished.
Quite often, the best places to find gold discoveries are places where gold has been mined successfully before. Right now, some of the greatest success stories in the world are located on properties with former production (along prominent gold belts in Canada - similar to Lamaque).
I posted this a few months ago, but I thought it's a good point to make again. It profiles the humble beginnings of 3 hugely successful Canadian mines/properties. I especially like the story of Goldcorp's Red Lake Mine. Also, that story reminds me of Lamaque's situation the most. The Red Lake Mine was left for dead at one point, but Goldcorp saw the potential and challenged that thinking. What is it now, the world's most highly regarded mine?
The other 2 mines profiled are Detour Gold's Detour Lake Mine and Osisko's Malartic Mine. Detour Gold (originally Pelangio) started with nothing and now its market cap is $1.2 billion. Same with Osisko, from nothing to $2.2 billion in market cap.
It is my belief that Lamaque will go down a similar path to these 3 mine/companies.
1) Goldcorp’s Red Lake Mine
“1994: Red Lake Mine was a marginal operation that been in continuous operation since 1948. It had been starved of capital and its performance had always been overshadowed by Campbell. Conventional wisdom said the Red Lake was finished, but Goldcorp challenged this belief at the beginning of 1995 when a $7 million exploration program was initiated that lead to the discovery of a high grade zone of gold mineralization.”
“1995: Significant discovery announced at Red Lake – nine holes averaging 311.31 grams of gold per tonne across 2.3 metres. The mineralization was discovered at a depth and location previously thought to have no potential.” The rest is history, right?
I believe Goldcorp used a similar modeling technique and approach (to assist with their exploration efforts) that Century is using with Lamaque right now.
2) Detour Lake
“The Detour Lake joint venture consists of the wholly owned exploration lands and the mine option lands covering the former Detour Lake mine which produced 1,764,985 ounces of gold during its 17-yearhistory.
How successful has Detour Gold’s exploration program been? Detour Gold currently has 13,200,000 of 43-101 ounces.
3) Osisko Exploration
“November 8, 2004: “The Canadian Malartic property includes the former Canadian Malartic Mine which produced over 1 million ounces of gold at an average grade of 3.37 g/t Au between the years 1935 - 1965. Historical production in the Malartic camp from 1935 to 1979 (Canadian Malartic and the adjacent Barnat-Sladen and East Malartic Mines) totaled over 5 million ounces (figures obtained from public data base of the Ministere des Ressources Naturelles du Quebec).”
“November 23, 2004: “…..announce results of the preliminary review of acquired technical documentation on its recently optioned Canadian Malartic property, Quebec. The review indicates that the Canadian Malartic property has a reported historical resource of over 500,000 ounces gold contained within several near-surface deposits.”
How successful has Osisko’s exploration program been? Osisko currently has 10,010,000 of 43-101 ounces.
I think people forget that Lamaque has produced 9,287,450 ounces of gold since 1935 (almost entirely from the underground). A property cannot be that successful, for that period of time (including during periods of low gold prices), and not be world class and distinguished.
Quite often, the best places to find gold discoveries are places where gold has been mined successfully before. Right now, some of the greatest success stories in the world are located on properties with former production (along prominent gold belts in Canada - similar to Lamaque).
I posted this a few months ago, but I thought it's a good point to make again. It profiles the humble beginnings of 3 hugely successful Canadian mines/properties. I especially like the story of Goldcorp's Red Lake Mine. Also, that story reminds me of Lamaque's situation the most. The Red Lake Mine was left for dead at one point, but Goldcorp saw the potential and challenged that thinking. What is it now, the world's most highly regarded mine?
The other 2 mines profiled are Detour Gold's Detour Lake Mine and Osisko's Malartic Mine. Detour Gold (originally Pelangio) started with nothing and now its market cap is $1.2 billion. Same with Osisko, from nothing to $2.2 billion in market cap.
It is my belief that Lamaque will go down a similar path to these 3 mine/companies.
1) Goldcorp’s Red Lake Mine
“1994: Red Lake Mine was a marginal operation that been in continuous operation since 1948. It had been starved of capital and its performance had always been overshadowed by Campbell. Conventional wisdom said the Red Lake was finished, but Goldcorp challenged this belief at the beginning of 1995 when a $7 million exploration program was initiated that lead to the discovery of a high grade zone of gold mineralization.”
“1995: Significant discovery announced at Red Lake – nine holes averaging 311.31 grams of gold per tonne across 2.3 metres. The mineralization was discovered at a depth and location previously thought to have no potential.” The rest is history, right?
I believe Goldcorp used a similar modeling technique and approach (to assist with their exploration efforts) that Century is using with Lamaque right now.
2) Detour Lake
“The Detour Lake joint venture consists of the wholly owned exploration lands and the mine option lands covering the former Detour Lake mine which produced 1,764,985 ounces of gold during its 17-yearhistory.
How successful has Detour Gold’s exploration program been? Detour Gold currently has 13,200,000 of 43-101 ounces.
3) Osisko Exploration
“November 8, 2004: “The Canadian Malartic property includes the former Canadian Malartic Mine which produced over 1 million ounces of gold at an average grade of 3.37 g/t Au between the years 1935 - 1965. Historical production in the Malartic camp from 1935 to 1979 (Canadian Malartic and the adjacent Barnat-Sladen and East Malartic Mines) totaled over 5 million ounces (figures obtained from public data base of the Ministere des Ressources Naturelles du Quebec).”
“November 23, 2004: “…..announce results of the preliminary review of acquired technical documentation on its recently optioned Canadian Malartic property, Quebec. The review indicates that the Canadian Malartic property has a reported historical resource of over 500,000 ounces gold contained within several near-surface deposits.”
How successful has Osisko’s exploration program been? Osisko currently has 10,010,000 of 43-101 ounces.
RECAP: High grade/Bulk Mining zones newly discovered this year via Vulcan
Companies like San Gold receives ridiculous market cap values for showing high grade exploration zones. Meanwhile, the market gives literally ZERO value (not even a fraction of a penny) for our high grade zones.
We know about the Bedard Dyke (numerous high grade zones going potentially down to 1000 ft, from the surface) and the North Wall Dyke. Both will be mined via long hole stoping methods (which favours block mining) during the early years of mining after start up.
Below are the high grade / bulk mining zones discovered this year alone (via Vulcan) - it doesn't include the potential 2M bulk mining ounces in the plugs. There may be an opportunity to drill some zones identified in the April 6'09 NR during this current $4M underground drilling program at Lamaque. We may have to wait until we dewater below 1,200 ft to drill most of the other zones identified on this post.
1) April 6’09 NR – discovery of 3 completely separate new zones with bulk mining potential, located at points between the surface and 2,000 feet down. ‘Of more significance, is that some of these holes are step outs of over 300 feet from the main mine areas. There is a high probability that the ore extends from the main mine workings to these newly modeled intersections.’
Zone 1) – drill hole#1243 – 4.6 meters true thickness @ 30.2 g/t gold
- drill hole #369 – 10.6 meters true thickness @ 22.0 g/t gold
- drill hole #10875 – 1.7 meters true thickness @ 37.3 g/t gold
Zone 2) – drill hole #1676 - 3.0 meters true thickness @ 29.1 g/t gold
Zone 3) – drill hole#9251 – 4.2 meters true thickness @ 23.5 g/t gold
– drill hole#9477 – 7.2 meters true thickness @ 8.5 g/t gold
2) June 23’09 NR – located between 2,000 and 2,600 feet below the surface (231,333 ounces of M&I and 12,938 Inferred ounces added)
*drill hole #5729 – 15.6 meters true length @ 27.3 g/t gold – “a diamond drill hole within a dyke structure containing 51 true vertical feet grading 27.3 grams per tonne including 3.5 feet of 363.4 grams per tonne”
*drill hole #6414 – 9.0 meters true length @ 7.8 g/t gold
*drill hole #9391 – 7.5 meters true length @ 20.2 g/t gold
*drill hole #12257 – 6.3 meters true length @ 9.5 g/t gold
*drill hole #15021 – 14.1 meters true length @ 7.0 g/t gold
*drill hole #15581 – 18.2 meters true length @ 6.9 g/t gold
*drill hole #16539 – 10.6 meters true length @ 9.2 g/t gold
*drill hole #16542 – 21.6 meters true length @ 4.2 g/t gold
3) February 24’09 NR - “These newly defined dyke and shear structures indicate the presence of large virgin ore zones, which may be bulk mined within 2,000 feet of surface.” – located at 1000 to 2000 ft below the surface
The NR included 428,357 new M&I ounces and 285,452 new Inferred ounces. It is not likely that all of the new resources on this particular NR have bulk mining potential, but some of the ounces should have strong potential. Here are some drill results from this NR that certainly looks to have bulk mining potential:
*drill hole #16178 – 21.9 meters true length @ 8.3 g/t gold
*drill hole #16179 – 14.1 meters true length @ 10.5 g/t gold
*drill hole #14580 – 27.6 meters true length @ 9.0 g/t gold
*drill hole #16028 – 12.3 meters true length @ 3.8 g/t gold
*drill hole #14027 – 9.1 meters true length @ 5.5 g/t gold
We know about the Bedard Dyke (numerous high grade zones going potentially down to 1000 ft, from the surface) and the North Wall Dyke. Both will be mined via long hole stoping methods (which favours block mining) during the early years of mining after start up.
Below are the high grade / bulk mining zones discovered this year alone (via Vulcan) - it doesn't include the potential 2M bulk mining ounces in the plugs. There may be an opportunity to drill some zones identified in the April 6'09 NR during this current $4M underground drilling program at Lamaque. We may have to wait until we dewater below 1,200 ft to drill most of the other zones identified on this post.
1) April 6’09 NR – discovery of 3 completely separate new zones with bulk mining potential, located at points between the surface and 2,000 feet down. ‘Of more significance, is that some of these holes are step outs of over 300 feet from the main mine areas. There is a high probability that the ore extends from the main mine workings to these newly modeled intersections.’
Zone 1) – drill hole#1243 – 4.6 meters true thickness @ 30.2 g/t gold
- drill hole #369 – 10.6 meters true thickness @ 22.0 g/t gold
- drill hole #10875 – 1.7 meters true thickness @ 37.3 g/t gold
Zone 2) – drill hole #1676 - 3.0 meters true thickness @ 29.1 g/t gold
Zone 3) – drill hole#9251 – 4.2 meters true thickness @ 23.5 g/t gold
– drill hole#9477 – 7.2 meters true thickness @ 8.5 g/t gold
2) June 23’09 NR – located between 2,000 and 2,600 feet below the surface (231,333 ounces of M&I and 12,938 Inferred ounces added)
*drill hole #5729 – 15.6 meters true length @ 27.3 g/t gold – “a diamond drill hole within a dyke structure containing 51 true vertical feet grading 27.3 grams per tonne including 3.5 feet of 363.4 grams per tonne”
*drill hole #6414 – 9.0 meters true length @ 7.8 g/t gold
*drill hole #9391 – 7.5 meters true length @ 20.2 g/t gold
*drill hole #12257 – 6.3 meters true length @ 9.5 g/t gold
*drill hole #15021 – 14.1 meters true length @ 7.0 g/t gold
*drill hole #15581 – 18.2 meters true length @ 6.9 g/t gold
*drill hole #16539 – 10.6 meters true length @ 9.2 g/t gold
*drill hole #16542 – 21.6 meters true length @ 4.2 g/t gold
3) February 24’09 NR - “These newly defined dyke and shear structures indicate the presence of large virgin ore zones, which may be bulk mined within 2,000 feet of surface.” – located at 1000 to 2000 ft below the surface
The NR included 428,357 new M&I ounces and 285,452 new Inferred ounces. It is not likely that all of the new resources on this particular NR have bulk mining potential, but some of the ounces should have strong potential. Here are some drill results from this NR that certainly looks to have bulk mining potential:
*drill hole #16178 – 21.9 meters true length @ 8.3 g/t gold
*drill hole #16179 – 14.1 meters true length @ 10.5 g/t gold
*drill hole #14580 – 27.6 meters true length @ 9.0 g/t gold
*drill hole #16028 – 12.3 meters true length @ 3.8 g/t gold
*drill hole #14027 – 9.1 meters true length @ 5.5 g/t gold
Thursday, November 26, 2009
$4M PP
Century Mining Corporation (CMM: TSX-V) today announced that, subject to regulatory approval, it will complete a non-brokered private 
The Company will issue 20,000,000 units at an issue price of $0.20 per unit. The proceeds from this offering will be used for the underground drilling of the Lamaque project in Val-d'Or, Quebec. This financing comprises a portion of the $21,000,000 private placement described in the Company's November 2, 2009 press release.
The Company will pay Oberon Capital Corporation for introducing subscribers to the Company a finder's fee of cash equal to 4% of the aggregate gross proceeds, and broker warrants equal to 4% of the aggregate number of flow-through shares. Each broker warrant shall be exercisable for 18 months from the date of issue and shall entitle the holder to purchase a common share of the Company for a price of $0.20. The flow-through share issuance is subject to approval by the TSX Venture Exchange. All of the securities issued under this private placement will be subject to a four-month hold period.
Margaret Kent, President and CEO of Century commented, "This financing is part of the $21 million private placement, the balance of which we expect to close in early December."
'scheduled to produce more than 70,000 ounces of gold next year'
From yesterday's Bloomberg article: "Lamaque in Canada and San Juan in Peru are scheduled to produce more than 70,000 ounces of gold next year."
Let's assume San Juan can manage to eventually squeeze out 5,000 ounces per quarter (1,667 per mth) for the first 6 months of 2010, from having a 3rd shift in the schedule. Also, let's assume that SJ's production will increase to 6,250 ounces per quarter (2,083 per mth) for the last 6 months of 2010, from spending US$1.5M on the mill expansion. This would equate to 22,500 SJ ounces in 2010.
70,000 - 22,500 = 49,500 Lamaque ounces
'next year' The meaning of those 2 words is key to the rest of the analysis. Did something get lost in translation or does 'next year' literally mean 2010 calendar year, as oppose to something getting lost in translation and the intent is really first 12 months after gold pour (with Lamaque's 12 months bleeding into the first 3 months of 2011).
For the purpose of our analysis, let's assume that 'next year' literally means next calendar year (2010). That would therefore mean that Century intents to produce around 47,500 ounces over 9 months in 2010 (as first gold pour doesn't happen until Apr'10).
This is a meaningful development - the increased ounces, coupled with the US$1,190 gold price, improves our chances to become cash flow positive earlier. The Fortis (Jan'09) plan had a start date of April also. That plan had identified 38,363 ounces over the remaining 9 months of the start up year. Also, in the last conference all, it was identified that the plan was to produce 49,300 ounces for the first 12 months after first gold pour. This meant about 35,000 ounces for a 9 month period, which is consistent to the Fortis plan.
Quite frankly, given the most recent developments, I have been expecting more production than 35,000 ounces over the 9 month period. The recent developments being:
1) Century is now planning on spending $4M on exploration instead of $1M. Most of this money will be focused on upgrading existing 43-101 ounces to higher categories, with an extra focus on increasing near-surface reserves.
2) The gold price is now US$1,190 per oz. Lowering the cutoff grade from 2.5 g/t to 2.1 g/t (US$900 gold price - still very conservative) should increase reserves to be mined (even in the first 9 months).
Given these 2 significant factors, I do not see 47,500 ounces of production over the 9 months of gold pour in 2010 as being unrealistic. At least it shouldn't be if they execute. Actually, I will be disappointed if they are still targeting 35,000 ounces.
All 3 portals are in place (Sigma West Zone/Bedard Dyke, Cross-Over Zone, North Wall Dyke), although Century will likely need to perform some internal development to reach the various ore bodies, as well as development/preparation work before launching into the long hole stoping method of ore extraction.
Here is a short description of long hole stoping (from the World Gold Council):
"Where large blocks of ore can be identified and the surrounding rock is reasonably strong, then a long hole mining method is generally the lowest cost mining method. The result is not unlike an underground quarry. Access to the top and bottom of the ore block is established with drifts or tunnels. A vertical hole (slot raise) is created within the ore from the top of the block to the bottom. Long holes are drilled to blast vertical slabs off the ore block. Normally a loader will pick up the broken ore from the lower tunnel and take it away to an ore pass. For safety reasons, the loader is operated remotely by a radio control when it is inside the large open stope. Once the ore block has been blasted and extracted, the stope will normally be filled with waste rock to stabilise the void and make possible the extraction of adjoining ore blocks. This mining method is very popular, and is almost the underground analogy to the advances achieved in mechanising a large open pit. Where large blocks of ore can be identified in relatively strong rock this method is productive and has low costs."
Let's assume San Juan can manage to eventually squeeze out 5,000 ounces per quarter (1,667 per mth) for the first 6 months of 2010, from having a 3rd shift in the schedule. Also, let's assume that SJ's production will increase to 6,250 ounces per quarter (2,083 per mth) for the last 6 months of 2010, from spending US$1.5M on the mill expansion. This would equate to 22,500 SJ ounces in 2010.
70,000 - 22,500 = 49,500 Lamaque ounces
'next year' The meaning of those 2 words is key to the rest of the analysis. Did something get lost in translation or does 'next year' literally mean 2010 calendar year, as oppose to something getting lost in translation and the intent is really first 12 months after gold pour (with Lamaque's 12 months bleeding into the first 3 months of 2011).
For the purpose of our analysis, let's assume that 'next year' literally means next calendar year (2010). That would therefore mean that Century intents to produce around 47,500 ounces over 9 months in 2010 (as first gold pour doesn't happen until Apr'10).
This is a meaningful development - the increased ounces, coupled with the US$1,190 gold price, improves our chances to become cash flow positive earlier. The Fortis (Jan'09) plan had a start date of April also. That plan had identified 38,363 ounces over the remaining 9 months of the start up year. Also, in the last conference all, it was identified that the plan was to produce 49,300 ounces for the first 12 months after first gold pour. This meant about 35,000 ounces for a 9 month period, which is consistent to the Fortis plan.
Quite frankly, given the most recent developments, I have been expecting more production than 35,000 ounces over the 9 month period. The recent developments being:
1) Century is now planning on spending $4M on exploration instead of $1M. Most of this money will be focused on upgrading existing 43-101 ounces to higher categories, with an extra focus on increasing near-surface reserves.
2) The gold price is now US$1,190 per oz. Lowering the cutoff grade from 2.5 g/t to 2.1 g/t (US$900 gold price - still very conservative) should increase reserves to be mined (even in the first 9 months).
Given these 2 significant factors, I do not see 47,500 ounces of production over the 9 months of gold pour in 2010 as being unrealistic. At least it shouldn't be if they execute. Actually, I will be disappointed if they are still targeting 35,000 ounces.
All 3 portals are in place (Sigma West Zone/Bedard Dyke, Cross-Over Zone, North Wall Dyke), although Century will likely need to perform some internal development to reach the various ore bodies, as well as development/preparation work before launching into the long hole stoping method of ore extraction.
Here is a short description of long hole stoping (from the World Gold Council):
"Where large blocks of ore can be identified and the surrounding rock is reasonably strong, then a long hole mining method is generally the lowest cost mining method. The result is not unlike an underground quarry. Access to the top and bottom of the ore block is established with drifts or tunnels. A vertical hole (slot raise) is created within the ore from the top of the block to the bottom. Long holes are drilled to blast vertical slabs off the ore block. Normally a loader will pick up the broken ore from the lower tunnel and take it away to an ore pass. For safety reasons, the loader is operated remotely by a radio control when it is inside the large open stope. Once the ore block has been blasted and extracted, the stope will normally be filled with waste rock to stabilise the void and make possible the extraction of adjoining ore blocks. This mining method is very popular, and is almost the underground analogy to the advances achieved in mechanising a large open pit. Where large blocks of ore can be identified in relatively strong rock this method is productive and has low costs."
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