CMM announces good news, therefore share price gets hammered.
Century Mining Reports First Quarter Operating Profit of $1.9 Million at Sigma Mine
Friday May 19, 9:56 am ET
BLAINE, WASHINGTON--(CCNMatthews - May 19, 2006) - Century Mining Corporation (TSX VENTURE:CMM - News) is pleased to announce its unaudited financial and operating results for the first quarter ended March 31, 2006 and report on a number of positive events in the year to date.
First Quarter Highlights
- Operating profit of $1.9 million from revenue of $11.2 million at Sigma mining operations, before royalty expenses, depreciation, amortization and accretion.
- Produced 18,943 ounces of gold at Sigma Mine at a cash cost of US$386 an ounce.
- Recorded a net loss for the quarter of $1.3 million or $0.01 per share with loss primarily from expensing of all financing costs related to the recently redeemed convertible debentures.
- Cash flows provided by financing activities of $2.9 million.
- Cash flows used in investing activities of $1.7 million.
- Completed a $25.0 million equity financing in April that provided the Company with positive working capital, reversing the working capital deficit of $6.8 million at the end of the first quarter.
- Redeemed outstanding balance of 10% Convertible Debentures in March.
- Commenced an underground exploration and development program at Lamaque Mine in March.
- Purchased the operating royalty on production from the Sigma Mine for 3.0 million shares and $2.0 million in cash in April.
- Opened a Peruvian office in February and purchased a 60% interest in the San Juan Gold Mine.
Summary of first quarter operating results and recent positive initiatives
The Sigma Mine reported an operating profit of $1.9 million in the first quarter of 2006 following positive cash flow in the third and fourth quarters of last year after commencing commercial production on May 25, 2005. The following table presents production data for the first three quarters of commercial production from the Sigma Mine.
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Period Realized Gold Ounces Cash Cost Cash Cost
Price (US$/oz) Gold Produced (C$/oz) (US$/oz)
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Q1-06 510 18,943 446 386
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Q4-05 446 20,104 451 385
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Q3-05 438 16,005 554 462
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Note: Realized price is based on ounces of gold sold.
The table below summarizes operating results and financial position in the last three quarters:
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Canadian dollars Q1-2006 Q4-2005 Q3-2005
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Results
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Revenues 11,151,726 9,922,947 9,993,056
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Operating profit from
mining operations 1,927,421 295,373 1,118,890
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Net loss 1,309,335 4,438,074 2,630,370
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Net loss per share 0.01 0.09 0.06
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Financial position
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Cash and cash equivalents 2,883,663 808,896 1,325,850
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Total assets 59,051,533 57,106,214 49,210,308
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Long-term debt 12,345,222 22,628,347 23,649,684
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Shareholders' equity 24,380,975 11,393,896 13,213,427
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Shares issued and outstanding 88,110,789 56,385,179 54,684,037
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Revenues are benefiting from the current rising gold price. The Company has reduced cash costs each quarter on a Canadian dollar basis at the Sigma Mine, but because of the weakening U.S dollar these reductions are not reflected in the industry standard U.S. dollar cash cost. The addition of four new haul trucks in June and July will increase the availability and productivity of the mining fleet considerably, facilitating the removal of waste in the open pit to expose new ore faces for mining. Further reductions in cash costs on a Canadian dollar basis are expected.
The net loss of $1.3 million, or $0.01 per share, in the first quarter was exacerbated by approximately $1.6 million of items that were expensed, which were directly related to the senior debt that the Company incurred to acquire the Sigma-Lamaque assets and provide working capital during the bulk sample program, start-up and achievement of commercial production. Pursuant to redemption of convertible debentures in the first quarter, there will be no future related expenses.
After adding back the non-cash items that were expensed to the net change in non-cash working capital balances, the Company reported cash flows from operating activities of $0.9 million in the first quarter of 2006.
The Company is now in a much stronger financial position than at the end of 2005 after completing a number of initiatives this year. The Company has redeemed all the outstanding convertible debentures; completed a $25.0 million equity financing; and purchased the royalty on production at the Sigma-Lamaque Complex. These initiatives will have a positive impact on the balance sheet and income statement in the second quarter of this year.
Future Production Estimates
The table below presents a breakdown of the Company's production estimates for 2006, 2007 and 2008 from the following sources:
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Production (ounces) 2006 2007 2008
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Sigma open pit mine 90,000 90,000 90,000
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Lamaque underground mine 5,000 20,000 40,000
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San Juan underground mine 5,000 20,000 80,000
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Total 100,000 130,000 210,000
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The Company cautions readers that production estimates are forward-looking statements and there can be no assurance that these estimates will be achieved.
Margaret Kent, President & CEO commenting on Century's first quarter results and future production estimates said: "We are very pleased with the continuing operating performance of our Sigma Mine, which has generated positive cash flow in three consecutive quarters. We expect further reductions in cash costs when our new truck fleet is commissioned. Our cash costs are decreasing on a Canadian dollar basis each quarter as the dollar is strengthening against the U.S dollar. The initiatives we took in the first quarter to reduce debt by expensing all costs related to the convertible debentures will have a positive impact on the balance sheet and income statement in the second quarter of this year.
We are taking steps to build Century into a major gold producer with a solid asset base in Quebec and outstanding production and exploration opportunities in Peru. Our stronger balance sheet will enable us to finance future growth on more favourable terms than were possible in the last 18 months. We are pleased that we are now building a solid base of institutional shareholders who understand management's niche in the industry and ability to add shareholder value by acquiring assets at a significant discount to typical industry valuation multiples. In Peru, we believe that we have purchased ounces in the ground, which we will be qualifying with an NI 43-101 technical report later this year, for less than US$7.50 an ounce. We believe that Century is well positioned to grow in value as we create and pursue new opportunities with our team of highly experienced mining and financial professionals".
Margaret M. Kent, Chairman, President & C.E.O.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and as amended in Section 27E of the 1934 Act.
Century Mining Corporation
Consolidated Balance Sheets March December
As at 31,2006 31,2005
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Unaudited Audited
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Current
Cash and cash equivalents $ 2,883,663 $ 808,896
Accounts receivable 1,915,103 1,787,048
Inventories (Note 5) 1,895,770 2,414,436
Prepaid expenses & deposits 695,041 266,061
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7,389,577 5,276,441Mining properties, other properties
plant and equipment (Note 6) 50,592,381 49,567,078
Deferred finance fees (Note 4) - 1,081,620
Future tax asset 688,075 688,075
Deposits for reclamation costs 493,000 493,000
--------------------------- $ 59,163,033 $ 57,106,214
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-----------------------------------------------------------------------Liabilities and Shareholders' EquityCurrent
Accounts payable and accrued liabilities $ 6,990,650 $ 7,386,932
Working capital gold facility (Note 9) 1,483,588 1,287,219
Current portion of long-term
liabilities (Note 8 and 10) 4,315,893 3,819,851
Unrealized losses on derivative
contracts 1,427,226 1,293,463
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14,217,357 13,787,465
---------------------------Long-term notes (Note 10) 12,345,222 12,768,472
Asset retirement obligation 2,262,090 2,262,090
Capital lease obligation (Note 8) 3,432,527 3,806,169
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32,257,196 32,624,196To be settled via issue of shares
Royalties payable (Note 7) 649,427 583,127
Unsecured creditors (Note 12 (e)) 1,763,935 2,645,120
Convertible debentures - 9,859,875
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34,670,558 45,712,318
---------------------------Equity
Equity instruments (Note 12 (b)) 42,724,249 26,485,245
Equity portion of convertible debenture - 2,021,000
Contributed surplus (Note 12 (c)) 1,277,956 1,199,546
Deficit (19,509,730) (18,311,895)
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24,492,475 11,393,896
--------------------------- $ 59,163,033 $ 57,106,214
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-----------------------------------------------------------------------Approved on behalf of the Board:signed "Margaret M. Kent" Director
Margaret M. Kentsigned "Donald S. Macdonald" Director
Donald S. MacdonaldCentury Mining Corporation
Consolidated Statements of Operations and DeficitFor the three months ended March 31 2006 2005
-----------------------------------------------------------------------Revenues
Mining operations $ 11,151,726 $ -
Geological fees and other 97,365 92,781
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11,249,091 92,781
---------------------------Expenses
Mining operation 9,112,805 -
Operating royalties (Note 7) 66,300 -
Depreciation amortization and
accretion (Note 6) 736,133 31,898
Amortization on deferred
finance fees (Note 4) 1,081,620 98,563
Accretion on convertible debentures 144,800 260,000
Corporate administration 692,140 543,052
Interest on long-term notes 266,250 224,518
Interest on convertible debentures 113,302 -
Exploration expenses - 6,175
Stock based compensation 78,410 93,400
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12,291,760 1,257,606
---------------------------Loss from operations before other items (1,042,668) (1,164,825)
---------------------------Other items
Unrealized losses on derivative contracts (133,763) 203,191
Foreign exchange gain (loss) (21,404) (8,457)
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(155,167) 194,737
---------------------------Net loss for the period (1,197,835) (970,091)Deficit, beginning of the period (18,311,895) (9,085,517)
---------------------------Deficit, end of the period $(19,509,730) $(10,055,608)
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-----------------------------------------------------------------------Net loss per share - basic and
diluted (Note 12 (f)) $ (0.01) $ (0.03)
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-----------------------------------------------------------------------Century Mining Corporation
Consolidated Statements of Cash FlowsFor the periods ended March 31 2006 2005
-----------------------------------------------------------------------Cash flows from operating activities
Net loss for the period $ (1,197,835) $ (970,091)
Charges to operations not requiring
a cash payment:
Interest on convertible debentures 94,304 223,562
Accretion on debentures 144,800 260,000
Operating royalties 66,300 -
Amortization, depreciation
and accretion 736,133 31,898
Amortization on deferred finance fees 1,081,620 98,563
Stock based compensation 78,410 93,400
Unrealized losses on
derivative contracts 133,763 -
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1,137,495 (262,668)Net change to non-cash working capital
balances
Receivable (128,055) (760,528)
Prepaid expenses (428,980) 43,081
Inventory 518,666 (1,355,977)
Accounts payable and accrued liabilities (396,282) 2,538,450
Working capital gold facility 196,369 -
---------------------------
899,213 202,358
---------------------------Cash flows from financing activities
Advances on convertible debenture - 2,000,000
Issue of equity instruments, net of
share issue costs 3,237,675 2,849,122
Decrease in long term lease obligation (300,850) -
---------------------------
2,936,825 4,849,122
---------------------------Cash flows from investing activities
Acquisition of mineral properties (99,558) -
Capitalized stripping costs (265,082) -
Purchases and payment for
properties and equipment (1,396,630) (6,246,560)
---------------------------
(1,761,270) (6,246,560)
---------------------------Increase (decrease) in cash and
cash equivalent 2,074,767 (1,195,080)Cash and cash equivalent, beginning
of the period 808,896 1,568,776
---------------------------Cash and cash equivalent, end
of the period $ 2,883,663 $ 373,696
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this press release.
Contact:
Tom Thomsen
Century Mining Corporation
Investor Relations Consultant
(877) 284-6535 or (360) 332-4653
tthomsen@centurymining.com
Graham Eacott
Century Mining Corporation
Vice President, Investor Relations
(877) 284-6535 or (360) 332-4653
(360) 332-4652 (FAX)
geacott@centurymining.com
www.centurymining.com
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Source: Century Mining Corporation |
