I think I first noticed this a couple of weeks ago. It`s a summary of San Juan done by www.mining-technology.com. There is nothing new in the summary, but nonetheless I wanted to highlight this (as I continue to view as being important potential at San Juan):
``Mining at San Juan has been restricted to the veins that outcrop in granodiorite cliffs up to 800m in height. Modern exploration and drilling had not been carried out over the area until November 2006. From the surface, the veins have been mined to a depth slightly below the river bed. Mining at depth or at the full strike extent has never been carried out, leaving a substantial potential for further mineralisation along the strike and dip.``
``Mining has been carried out only up to 1,000m horizontally and to a depth of 1,000m. Several ore blocks remain to be extracted in this zone.``
They are only discussing the the San Juan veins. That potential is over and above gold discoveries that may occur on other promising locations within our Peru land package, such as Veta Clara, Santa Clarita, Chumpune, Lily La Hucua, ``Northern Vien`` and other promising potential gold bearing areas. Then we also have Erika, our highly anticipated Cu-Au porphyry potential land position.
As a side note reminder, the San Juan veins are mesothermal veins. Typically with these types of veins, there is strong vein stength with depth and the grades increase with depth also.
http://www.mining-technology.com/projects/sanjuangoldmine/
Saturday, August 7, 2010
Friday, August 6, 2010
An Opposing View
One of the drawbacks to a blog as compared to a stock forum like Stockhouse is that it is easy to miss a comment to a post if you don't check all recent posts for new comments. For that reason and the fact it is much easier to compose a new post, I usually prefer to make a new post rather than comment on an existing post.
Production05 I seldom, if ever, disagree with anything you post, but this time I'd like to make an opposing case for relocation of the Head Offices of Century Mining from the US to Canada. You do make a lot of valid points, but I think now is the time to become a truly Canadian company.
The company is, in fact, a Canadian company as it was incorporated in British Columbia in 1994 and is subject to Canadian laws and trades on a Canadian exchange and will pay Canadian taxes when profitable. The head office is in Blaine, Washington only because that is where Peggy Kent lives and she owns the building where Century rents space from her. There is no reason to continue to do so, but I agree the transition has to be a gradual process. I'd like to see it happen this year. We only need to relocate key management and technical people, but many of the accounting and data entry positions are easily fill-able at the new location.
I agree with you that Century should be located in Toronto rather than Vancouver. Apart from the reasons you cited, it is much closer to our operations in Val d'Or and Peru which would reduce travel costs and time and we'd be in the same time zone as our mining operations.
We are supposed to get our new CEO sometime in the fall. I'd like the company to tell prospective candidates that they will be located in Toronto, Canada - not Blaine, Washington.
Now might also be a good time to change the name of the company to something with the word "Gold" in the name. A lot of investors lost money on the decline in share price from its $1.89 peak to the low single digits. A new management and a new name might help to erase the PK experience and help bring them back once the company demonstrates its return to profitability.
On another note, I'd like to thank all contributors for their posts and comments and welcome Mike who posts on Stockhouse as Giftedone. He is one of the very few sensible posters on that Forum. Mike, if you'd like to become a blog member and have the ability to create new posts, send me an email to centurycarib@gmail.com. Of course that invitation is open to all of you "commenters".
Production05 I seldom, if ever, disagree with anything you post, but this time I'd like to make an opposing case for relocation of the Head Offices of Century Mining from the US to Canada. You do make a lot of valid points, but I think now is the time to become a truly Canadian company.
The company is, in fact, a Canadian company as it was incorporated in British Columbia in 1994 and is subject to Canadian laws and trades on a Canadian exchange and will pay Canadian taxes when profitable. The head office is in Blaine, Washington only because that is where Peggy Kent lives and she owns the building where Century rents space from her. There is no reason to continue to do so, but I agree the transition has to be a gradual process. I'd like to see it happen this year. We only need to relocate key management and technical people, but many of the accounting and data entry positions are easily fill-able at the new location.
I agree with you that Century should be located in Toronto rather than Vancouver. Apart from the reasons you cited, it is much closer to our operations in Val d'Or and Peru which would reduce travel costs and time and we'd be in the same time zone as our mining operations.
We are supposed to get our new CEO sometime in the fall. I'd like the company to tell prospective candidates that they will be located in Toronto, Canada - not Blaine, Washington.
Now might also be a good time to change the name of the company to something with the word "Gold" in the name. A lot of investors lost money on the decline in share price from its $1.89 peak to the low single digits. A new management and a new name might help to erase the PK experience and help bring them back once the company demonstrates its return to profitability.
On another note, I'd like to thank all contributors for their posts and comments and welcome Mike who posts on Stockhouse as Giftedone. He is one of the very few sensible posters on that Forum. Mike, if you'd like to become a blog member and have the ability to create new posts, send me an email to centurycarib@gmail.com. Of course that invitation is open to all of you "commenters".
Century in an advantageous position, being fully funded - juniors struggling with financing and especially project financing
If Century can deliver Lamaque, get the share price significantly up and build up cash position through strong operating cash flow then it could eventually be in a position to take advantage of market conditions in the junior space.
Christopher Ecclestone did not mention Century (or any other specific company) in the article. However, Mr. Ecclestone was one of the 3 public figures that recommended Century Mining as a BUY earlier in the year (Victor Goncalves and Mark Lackey were the other two) - long-term BUY recommendation by Mr. Ecclestone in March.
Here is the article:
Trouble in paradise nowadays for mine project financing--Ecclestone
Hallgarten's Christopher Ecclestone suggests gold ETFs have become a lobster trap for the mining industry and mining investors, particularly in reducing the availability of funds for project financing.
Author: Dorothy Kosich
Posted: Tuesday , 03 Aug 2010
RENO, NV -
Hallgarten mining analyst Christopher Ecclestone suggested Monday that there is "trouble in paradise" because gold ETFs diverted funds that might have otherwise gone to a broader universe of mining stocks.
"It has created an unworthy aristocracy of stocks, particularly in the gold space," he insisted.
Ecclestone also believes, "IPOs in the mining space are largely a thing of the past" because "there are too many shells and moribund miners around for anyone to bother going through the rigmarole and expense of a de novo listing at this time.
"In fact there are so many of these vehicles available that it might be five years before IPOs become a feature again," he advised.
Junior financing is tough
"Many categories of miner are well-nigh unfinanceable to the institutional or retail public these days," Ecclestone suggested. "This includes most base metals stocks (that are not copper focused) and most specialty metals stories."
"A surprising number of junior golds and silvers are also like lepers," he asserted. "Their problem comes from marginal projects that will need amounts of money to move forward that are just not imaginable in light of the insiders' lack of access to fund."
"The most they can raise is lots of under $2mn and in many cases under $500K and then the market just knows that they will be back in short-order seeking more," he added. "The drip-feed financing method is now poison in a static market."
Large-scale financings are iffy
In his analysis, Ecclestone suggests that "quite a number of mid-sized miners did raises that were disproportionate to their needs and then have husbanded cash" because they feared that things would not get better.
To compound the situation, "we do not see a flow of new money to the mining space," he noted.
Gold, silver loans are not providing the expected boost
"One would expect that companies in the financial stretch to production would be a pretty sure bet for a VPP [volumetric production payments] arrangement or some such structure, but we hear increasingly that companies who have tried their path are abandoning it out of impatience with the protracted nature of the negotiations with the commercial banks that tend to back these deals," Ecclestone said.
"This is throwing these companies back into the financing quicksand where they have to suffer the indignities of dilution as they enter the final straight to production," he observed. "One of the disappointments here is that no one has come up with a vehicle or instrument to make these gold loans tradable. Instead, they can go onto the books of the banks and disappears forever."
"Thus the banks are limited to the extent that they can add long-term exposures to their balance sheets," Ecclestone added.
M&A-Cashboxes are now few and far between
In his analysis, Ecclestone advised, "The snapping up of cashboxes as a backdoor financing method has pretty much run its course. The big...are as elusive and clueless as ever, while the small...imagine that every dollar in their trove is worth $1.20."
"Curiously the cashboxes should be the initiators of the transaction because they have the whiphand and instead they are like deer in the headlights," he added.
Bought Deals
Ecclestone observed that many of the big mining transactions (those in the over $100mn raised category) in the Canadian market are done as bought deals. "However, even these are relatively scarce."
Between March 30th and July 29th, the website www.canadianfinancing.com/mining showed 204 mining companies on the TSX and TSX-V that are raising money. Of these, two were cancelled, 11 amended, 76 closed and 106 proposed. "This gives a rather damning majority of transactions still in the pending category," he noted.
ETFS-a lobster trap for industry and investors?
"We are now eight years into the commodity (and most particularly metals) reflation and there has not even been something vaguely like the popular upwelling of retail interest in the mining space that there was in emerging markets in the 1990s," Ecclestone observed.
"Well, might we ask ‘Has the Gold ETF phenomenon actually undermined the financing of mining companies in both the mid- and junior-tier of the markets?' and then ‘Has the Gold ETF phenomenon removed oxygen from the base and specialty metals miners and prospectors?'"
Ecclestone believes the move into the precious metals ETFs "has been a relatively one-way street." He envisions a worse scenario for gold bugs, which "would be having the gold ETF shrink by a mere 20% which would tip $10bn of gold into the marketplace which is extraordinarily thin."
He also asserted that "the whole ETF phenomenon has made money for the ETF promoters in terms of fees but that the investment banking community have made almost nothing of it while only the Magic Circle of companies in the GDX [Market Vectors Gold Miners ETF] and the GDXJ [Market Vectors Junior Gold Miners ETF] have been able to push out some stock into the ferocious buying pressure from the ETFs, but everyone else in the mining community have largely been beggars at this feast."
Conclusion
"Things are tough now and mining companies that have lost their credibility might think it's the market that is tough when in fact the blame can be slated home to their own errors and misdeeds," Ecclestone advised.
"As in any Darwinian process, it's survival of the fittest and a lack of introspection on why the investing public no longer like a management might be a significant step to making it more marketable and thus more worthy of being financed," he concluded.
http://www.miningweb.co.za/mineweb/view/mineweb/en/page31?oid=109088&sn=Detail&pid=31
Christopher Ecclestone did not mention Century (or any other specific company) in the article. However, Mr. Ecclestone was one of the 3 public figures that recommended Century Mining as a BUY earlier in the year (Victor Goncalves and Mark Lackey were the other two) - long-term BUY recommendation by Mr. Ecclestone in March.
Here is the article:
Trouble in paradise nowadays for mine project financing--Ecclestone
Hallgarten's Christopher Ecclestone suggests gold ETFs have become a lobster trap for the mining industry and mining investors, particularly in reducing the availability of funds for project financing.
Author: Dorothy Kosich
Posted: Tuesday , 03 Aug 2010
RENO, NV -
Hallgarten mining analyst Christopher Ecclestone suggested Monday that there is "trouble in paradise" because gold ETFs diverted funds that might have otherwise gone to a broader universe of mining stocks.
"It has created an unworthy aristocracy of stocks, particularly in the gold space," he insisted.
Ecclestone also believes, "IPOs in the mining space are largely a thing of the past" because "there are too many shells and moribund miners around for anyone to bother going through the rigmarole and expense of a de novo listing at this time.
"In fact there are so many of these vehicles available that it might be five years before IPOs become a feature again," he advised.
Junior financing is tough
"Many categories of miner are well-nigh unfinanceable to the institutional or retail public these days," Ecclestone suggested. "This includes most base metals stocks (that are not copper focused) and most specialty metals stories."
"A surprising number of junior golds and silvers are also like lepers," he asserted. "Their problem comes from marginal projects that will need amounts of money to move forward that are just not imaginable in light of the insiders' lack of access to fund."
"The most they can raise is lots of under $2mn and in many cases under $500K and then the market just knows that they will be back in short-order seeking more," he added. "The drip-feed financing method is now poison in a static market."
Large-scale financings are iffy
In his analysis, Ecclestone suggests that "quite a number of mid-sized miners did raises that were disproportionate to their needs and then have husbanded cash" because they feared that things would not get better.
To compound the situation, "we do not see a flow of new money to the mining space," he noted.
Gold, silver loans are not providing the expected boost
"One would expect that companies in the financial stretch to production would be a pretty sure bet for a VPP [volumetric production payments] arrangement or some such structure, but we hear increasingly that companies who have tried their path are abandoning it out of impatience with the protracted nature of the negotiations with the commercial banks that tend to back these deals," Ecclestone said.
"This is throwing these companies back into the financing quicksand where they have to suffer the indignities of dilution as they enter the final straight to production," he observed. "One of the disappointments here is that no one has come up with a vehicle or instrument to make these gold loans tradable. Instead, they can go onto the books of the banks and disappears forever."
"Thus the banks are limited to the extent that they can add long-term exposures to their balance sheets," Ecclestone added.
M&A-Cashboxes are now few and far between
In his analysis, Ecclestone advised, "The snapping up of cashboxes as a backdoor financing method has pretty much run its course. The big...are as elusive and clueless as ever, while the small...imagine that every dollar in their trove is worth $1.20."
"Curiously the cashboxes should be the initiators of the transaction because they have the whiphand and instead they are like deer in the headlights," he added.
Bought Deals
Ecclestone observed that many of the big mining transactions (those in the over $100mn raised category) in the Canadian market are done as bought deals. "However, even these are relatively scarce."
Between March 30th and July 29th, the website www.canadianfinancing.com/mining showed 204 mining companies on the TSX and TSX-V that are raising money. Of these, two were cancelled, 11 amended, 76 closed and 106 proposed. "This gives a rather damning majority of transactions still in the pending category," he noted.
ETFS-a lobster trap for industry and investors?
"We are now eight years into the commodity (and most particularly metals) reflation and there has not even been something vaguely like the popular upwelling of retail interest in the mining space that there was in emerging markets in the 1990s," Ecclestone observed.
"Well, might we ask ‘Has the Gold ETF phenomenon actually undermined the financing of mining companies in both the mid- and junior-tier of the markets?' and then ‘Has the Gold ETF phenomenon removed oxygen from the base and specialty metals miners and prospectors?'"
Ecclestone believes the move into the precious metals ETFs "has been a relatively one-way street." He envisions a worse scenario for gold bugs, which "would be having the gold ETF shrink by a mere 20% which would tip $10bn of gold into the marketplace which is extraordinarily thin."
He also asserted that "the whole ETF phenomenon has made money for the ETF promoters in terms of fees but that the investment banking community have made almost nothing of it while only the Magic Circle of companies in the GDX [Market Vectors Gold Miners ETF] and the GDXJ [Market Vectors Junior Gold Miners ETF] have been able to push out some stock into the ferocious buying pressure from the ETFs, but everyone else in the mining community have largely been beggars at this feast."
Conclusion
"Things are tough now and mining companies that have lost their credibility might think it's the market that is tough when in fact the blame can be slated home to their own errors and misdeeds," Ecclestone advised.
"As in any Darwinian process, it's survival of the fittest and a lack of introspection on why the investing public no longer like a management might be a significant step to making it more marketable and thus more worthy of being financed," he concluded.
http://www.miningweb.co.za/mineweb/view/mineweb/en/page31?oid=109088&sn=Detail&pid=31
Question to ponder
Now that PK is gone, what (who) is holding back the share price of CMM?
Any thoughts?
Any thoughts?
Thursday, August 5, 2010
New President and CEO in the fall?
http://nnsl.com/northern-news-services/stories/papers/aug4_10res.html
SOMBA K'E/YELLOWKNIFE - A former mining executive well known to Yellowknifers resigned her position as president and CEO of a U.S. mining company on July 28 for "personal reasons," according to a company press release.
"Peggy (Kent) is looking to move on to spend more time with her family and to continue on other business opportunities," said Peter A. Ball, director of investor relations for Century Mining Corporation in Blaine, Wash., in a telephone interview on July 30.
Peggy Kent, also known as Margaret Kent and formerly known as Peggy Witte, will stay on as a consultant for the next 12 months with Century, a company of which she is credited as "the founder and leader" since the company's beginning in 2003, according to the press release.
Ball said he expects a new president and CEO will be named sometime in the fall. In the meantime, Keith Hulley will replace Kent as president and CEO on an interim basis. Century Mining also promoted Adrian McNutt to chief operating officer.
Ball said investors had "mixed feelings" about Kent's resignation.
"Some investors were sad to see an icon in the mining industry leave the company at the point she did," he said.
Kent was formerly president and CEO of Royal Oak Mines in NWT during the 1990s. She was in charge of the Giant mine during a two-year bitter labour strike in 1992.
The labour dispute made national headlines when a bomb exploded along an underground track and claimed the lives of nine miners. Roger Warren was found guilty by a jury for the explosion. The mine's final downfall came when it went into receivership in 1999. It was later discovered that about 237,000 tonnes of arsenic trioxide was stored underneath the mine.
In a previous interview with Northern News Services, Kent said that arsenic storage underground and labour problems were inherited by Royal Oak from previous owners of the mine since 1948.
"I walked into that situation that already had trouble with a capital T," she said. "When you walk into a situation like that, no matter if you were God ... it takes a long time to turn around an operation."
"The only thing that I can say is that I continue to be very, very sorry for what has happened," she said. "If there was anything I ever could have done differently, I probably should have advised my board that we shouldn't have bought the mine."
Kent was unavailable for an interview July 30 because she is "travelling and on holidays," said Ball.
Kent is still employed by Century Mining's sister company Tamerlane Ventures Inc. as chairman where she continues to take an active role in Tamerlane's lead and zinc operations in the Pine Point project in Hay River.
Both Century Mining and Tamerlane Ventures are based in Blaine, and share the same building.
Century Mining's share price closed on July 30 on the Toronto Stock Exchange at $0.52. Tamerlane Ventures closed at $0.15.
SOMBA K'E/YELLOWKNIFE - A former mining executive well known to Yellowknifers resigned her position as president and CEO of a U.S. mining company on July 28 for "personal reasons," according to a company press release.
"Peggy (Kent) is looking to move on to spend more time with her family and to continue on other business opportunities," said Peter A. Ball, director of investor relations for Century Mining Corporation in Blaine, Wash., in a telephone interview on July 30.
Peggy Kent, also known as Margaret Kent and formerly known as Peggy Witte, will stay on as a consultant for the next 12 months with Century, a company of which she is credited as "the founder and leader" since the company's beginning in 2003, according to the press release.
Ball said he expects a new president and CEO will be named sometime in the fall. In the meantime, Keith Hulley will replace Kent as president and CEO on an interim basis. Century Mining also promoted Adrian McNutt to chief operating officer.
Ball said investors had "mixed feelings" about Kent's resignation.
"Some investors were sad to see an icon in the mining industry leave the company at the point she did," he said.
Kent was formerly president and CEO of Royal Oak Mines in NWT during the 1990s. She was in charge of the Giant mine during a two-year bitter labour strike in 1992.
The labour dispute made national headlines when a bomb exploded along an underground track and claimed the lives of nine miners. Roger Warren was found guilty by a jury for the explosion. The mine's final downfall came when it went into receivership in 1999. It was later discovered that about 237,000 tonnes of arsenic trioxide was stored underneath the mine.
In a previous interview with Northern News Services, Kent said that arsenic storage underground and labour problems were inherited by Royal Oak from previous owners of the mine since 1948.
"I walked into that situation that already had trouble with a capital T," she said. "When you walk into a situation like that, no matter if you were God ... it takes a long time to turn around an operation."
"The only thing that I can say is that I continue to be very, very sorry for what has happened," she said. "If there was anything I ever could have done differently, I probably should have advised my board that we shouldn't have bought the mine."
Kent was unavailable for an interview July 30 because she is "travelling and on holidays," said Ball.
Kent is still employed by Century Mining's sister company Tamerlane Ventures Inc. as chairman where she continues to take an active role in Tamerlane's lead and zinc operations in the Pine Point project in Hay River.
Both Century Mining and Tamerlane Ventures are based in Blaine, and share the same building.
Century Mining's share price closed on July 30 on the Toronto Stock Exchange at $0.52. Tamerlane Ventures closed at $0.15.
Wednesday, August 4, 2010
More Warrants Exercised by Finisky
Finisky exercised another 3,333,333 warrants on July 31, bringing his total to 10 million exercised which has added $3 million to the coffers.
In my opinion he is exercising options to provide needed expansion capital - not to increase his holdings for any kind of takeover scenario by the Russians. There are no Russians on the Board or in any management position. Finisky had the right to name two people to the BoD and he didn't name any Russians, but two highly respected executives whose integrity is beyond reproach IMO.
Besides Finisky is still a minority shareholder and would remain so even if he exercised all of his options. He can influence the Board, but not control it.
I expect the vacant board position to be filled by the new CEO and it would be a good time to also appoint an independent Chairman of the board like we were promised last December. I find it somewhat strange that the Board would take the position that PK was the best person to be Chairman in addition to President and CEO and then have her abruptly resign. Perhaps Hulley will become the new Chairman after the new CEO is appointed.
I'm also wondering if McNutt threatened to leave as well, but was pacified by the VP of Operations and COO appointment. He has been very loyal to Peggy and she to him as evidenced by the $800k payment she was able to get him to stay after the Finskiy investment.
The selling today appeared to be all retail from TD Securities - Canada's largest discount brokerage. Pictet, with 56,000 shares purchased, was the largest buyer which was likely to be institutional. I don't think we'll see much institutional buying until we can show that Lamaque is cash flow positive.
To me the only things that really matter are production rates increasing to 1,200 tpd this year and 2,000 tpd next year as well as a strong gold price. I don't expect we will make the 2010 production target of 40k ounces from Lamaque, as we would have to average 1,350 tpd for the July - December period at current grades. But we should get to 1200 tpd by year end which will put us in position to produce over 100k ounces in 2011 from both mines.
In my opinion he is exercising options to provide needed expansion capital - not to increase his holdings for any kind of takeover scenario by the Russians. There are no Russians on the Board or in any management position. Finisky had the right to name two people to the BoD and he didn't name any Russians, but two highly respected executives whose integrity is beyond reproach IMO.
Besides Finisky is still a minority shareholder and would remain so even if he exercised all of his options. He can influence the Board, but not control it.
I expect the vacant board position to be filled by the new CEO and it would be a good time to also appoint an independent Chairman of the board like we were promised last December. I find it somewhat strange that the Board would take the position that PK was the best person to be Chairman in addition to President and CEO and then have her abruptly resign. Perhaps Hulley will become the new Chairman after the new CEO is appointed.
I'm also wondering if McNutt threatened to leave as well, but was pacified by the VP of Operations and COO appointment. He has been very loyal to Peggy and she to him as evidenced by the $800k payment she was able to get him to stay after the Finskiy investment.
The selling today appeared to be all retail from TD Securities - Canada's largest discount brokerage. Pictet, with 56,000 shares purchased, was the largest buyer which was likely to be institutional. I don't think we'll see much institutional buying until we can show that Lamaque is cash flow positive.
To me the only things that really matter are production rates increasing to 1,200 tpd this year and 2,000 tpd next year as well as a strong gold price. I don't expect we will make the 2010 production target of 40k ounces from Lamaque, as we would have to average 1,350 tpd for the July - December period at current grades. But we should get to 1200 tpd by year end which will put us in position to produce over 100k ounces in 2011 from both mines.
Article from IBTimes with Brian Mok from Union Securities
Whole Article found here: http://uk.ibtimes.com/articles/20100804/gold-silver-copper-gold-price-functional-currencies-major-explorers-producers-junior.htm
TGR: You just started covering Century Mining Corporation (TSX.V:CMM). In northwestern Québec, it has the former Sigma-Lamaque mine, which has underground ore that Century is starting to mill. Production is ramping up for 2011. Why did Union decide to focus on Century?
BM: Century is a name that we've been looking at for about a year. I went up to the Lamaque site last July to get the lay of the land and meet some of the technical personnel. I was impressed with what I saw at the mill and some of the other ancillary facilities, underground, as well as the fact that it's in Val-d'Or, Quebec, a mature mining center, where you have lots of labor, the supplies you need, the infrastructure and a cooperative government.
I also felt very comfortable with the technical team's plan to bring this mine back into operation. I thought the focus on underground production was key. We know the history of the open pit and some of the trouble the previous operators had with them.
The engineers described how they wanted to proceed. All they needed was money, which they finally got at the end of December. In January they started to roll and I kept an eye on it. Were they hitting the milestones that they set for themselves? Yes, they were doing exactly what they said they would do. I have confidence in the team's ability at Lamaque to bring the operation online.
TGR: What about its production profile?
BM: Century has the ability to ramp up from its target of 40,000 ounces this year to 90,000 next year and eventually 100,000 ounces by 2013. I like that. I'm quite confident that Century will be able to execute the plan to ramp up to 100,000 ounces in the next three years.
There is additional exploration potential at Lamaque based on their historic database, as well as other exploration targets within the complex.
TGR: What about some of their other properties? They've got a significant project in Peru.
BM: Yes, San Juan in Peru. It's a small, narrow-vein, high-grade system. It had been capital- starved when they purchased it, and then they got things rolling. They're producing about 19,000 ounces a year from San Juan now. There are plans to expand to about 30,000 ounces by 2012, through mill expansion as well as by modernizing and mechanizing the underground mining methods using refurbished equipment from Lamaque.
They also want to use different mining methods to increase throughput and ultimately produce more gold and silver out of San Juan. That's the plan, over the next two or three years. In terms of reserves, they've got six years on the books; that's what I've modeled right now. But the mine has run for 30 years and there's still significant exploration potential on the zone where they're mining, as well as the different vein structures within their property. There is also a porphyry target. I think six years is conservative in terms of mine life. Over the next couple of years we'll see what the exploration efforts bring.
TGR: What about cash flow?
BM: Cash flow is going to be basically flat this year as they ramp up Lamaque. Then into next year, we're looking at $0.10 per share in cash flow. In absolute dollars, that's about $36 million. This declines to $0.09 per share as a result of the reductions in my gold price assumptions for 2012.
TGR: Will that be enough to service debt and make reinvestments?
BM: Yes. This year is the critical year. I've assumed that they'll need another $5 million in financing to basically complete development through 2010. Then they'll start to become cash-flow positive next year, probably in Q2, then they're home free. They'll be able to repay the capital leases from cash flow. Right now they're delivering gold into that prepaid gold forward. I don't foresee any issues with Century not being able to deliver the gold to meet their obligations.
TGR: They're hedged?
BM: The $33 million prepaid forward agreement they entered into with Deutsche Bank is a five-year facility, so they're partially hedged until 2014; it covers 61,183 ounces or 17% of the forecast production during that period. After that, they experience the full gold price.
TGR: What's your 12-month target on Century?
BM: It's $0.90.
TGR: You just started covering Century Mining Corporation (TSX.V:CMM). In northwestern Québec, it has the former Sigma-Lamaque mine, which has underground ore that Century is starting to mill. Production is ramping up for 2011. Why did Union decide to focus on Century?
BM: Century is a name that we've been looking at for about a year. I went up to the Lamaque site last July to get the lay of the land and meet some of the technical personnel. I was impressed with what I saw at the mill and some of the other ancillary facilities, underground, as well as the fact that it's in Val-d'Or, Quebec, a mature mining center, where you have lots of labor, the supplies you need, the infrastructure and a cooperative government.
I also felt very comfortable with the technical team's plan to bring this mine back into operation. I thought the focus on underground production was key. We know the history of the open pit and some of the trouble the previous operators had with them.
The engineers described how they wanted to proceed. All they needed was money, which they finally got at the end of December. In January they started to roll and I kept an eye on it. Were they hitting the milestones that they set for themselves? Yes, they were doing exactly what they said they would do. I have confidence in the team's ability at Lamaque to bring the operation online.
TGR: What about its production profile?
BM: Century has the ability to ramp up from its target of 40,000 ounces this year to 90,000 next year and eventually 100,000 ounces by 2013. I like that. I'm quite confident that Century will be able to execute the plan to ramp up to 100,000 ounces in the next three years.
There is additional exploration potential at Lamaque based on their historic database, as well as other exploration targets within the complex.
TGR: What about some of their other properties? They've got a significant project in Peru.
BM: Yes, San Juan in Peru. It's a small, narrow-vein, high-grade system. It had been capital- starved when they purchased it, and then they got things rolling. They're producing about 19,000 ounces a year from San Juan now. There are plans to expand to about 30,000 ounces by 2012, through mill expansion as well as by modernizing and mechanizing the underground mining methods using refurbished equipment from Lamaque.
They also want to use different mining methods to increase throughput and ultimately produce more gold and silver out of San Juan. That's the plan, over the next two or three years. In terms of reserves, they've got six years on the books; that's what I've modeled right now. But the mine has run for 30 years and there's still significant exploration potential on the zone where they're mining, as well as the different vein structures within their property. There is also a porphyry target. I think six years is conservative in terms of mine life. Over the next couple of years we'll see what the exploration efforts bring.
TGR: What about cash flow?
BM: Cash flow is going to be basically flat this year as they ramp up Lamaque. Then into next year, we're looking at $0.10 per share in cash flow. In absolute dollars, that's about $36 million. This declines to $0.09 per share as a result of the reductions in my gold price assumptions for 2012.
TGR: Will that be enough to service debt and make reinvestments?
BM: Yes. This year is the critical year. I've assumed that they'll need another $5 million in financing to basically complete development through 2010. Then they'll start to become cash-flow positive next year, probably in Q2, then they're home free. They'll be able to repay the capital leases from cash flow. Right now they're delivering gold into that prepaid gold forward. I don't foresee any issues with Century not being able to deliver the gold to meet their obligations.
TGR: They're hedged?
BM: The $33 million prepaid forward agreement they entered into with Deutsche Bank is a five-year facility, so they're partially hedged until 2014; it covers 61,183 ounces or 17% of the forecast production during that period. After that, they experience the full gold price.
TGR: What's your 12-month target on Century?
BM: It's $0.90.
Tuesday, August 3, 2010
New Corporate presentation
http://www.centurymining.com/i/pdf/July-2010-CorpPres.pdf
Absent are the July numbers but Peggy's name has been removed. Does anyone know for sure that we are not getting July # till the end of August?
Monday, August 2, 2010
Interesting interview
I thought this might be interesting- especially the remark about the first qualification of a miner, for investment purposes: :Grade is everything..."
Pierre Lassonde:
article with a link to interview on Mineweb.
http://www.mineweb.net/mineweb/view/mineweb/en/page96985?oid=108750&sn=2010+Detail&pid=102055
Pierre Lassonde:
article with a link to interview on Mineweb.
http://www.mineweb.net/mineweb/view/mineweb/en/page96985?oid=108750&sn=2010+Detail&pid=102055
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