Financing pay able in gold
Century to sell $66 million gold-based financing to fund Lamaque mine and improve company's financial position
09:35 EST Monday, February 02, 2009
BLAINE, WA, Feb. 2 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced today that it has chosen to sell a structured gold-based financing, whereby the Company will raise up to US$66 million from institutional investors and repay the loan over a period of 5 years with physical gold from production at the Lamaque underground mine in Quebec. The completion of this financing will also improve the Company's financial position by eliminating a significant portion of short-term liabilities.
The Company has chosen Toronto-based Octagon Capital Corporation as lead agent to arrange this brokered financing. Century and Octagon will work closely together to place this structured financing with qualified institutions. This financing is expected to close by the end of February 2009.
The Company will sell 15,000 units, each unit consisting of 600 common shares of the company, 1,000 purchase warrants and 5 troy ounces of gold, each such ounce deliverable by the Company on November 30 in each of 2011, 2012, 2013, 2014 and 2015. Each unit will be priced at $4,400. The combination of shares and warrants issued through this financing will result in less than an additional 15% dilution to current shareholders.
After evaluating several strategic options and consulting with various investment banking groups over the past two weeks, the Company has chosen this solution, which it believes is in the best interests of Century's shareholders and other stakeholders.
This financing alternative will allow Century to secure financing by committing just a small percentage of the gold that will be mined at Lamaque between 2009 and 2019. The gold-based financing will also eliminate the significant dilution of the Company's shares and overhang normally associated with convertible debt and other conventional financing methods. The method chosen by Century also allows the Company to avoid excessive interest rates associated with high-yield debt facilities.
The funds raised through this financing will be used for the Lamaque project development (74%), working capital and pay down of short- and long-term liabilities (19%), and various fees and costs associated with the closing of this transaction (7%).
Margaret Kent, President and CEO of Century commented, "The Board of Directors and management consulted financial advisors and reviewed numerous alternatives for the Lamaque project, including mergers, joint ventures, high-yield debt and other facilities with senior lending institutions. Based on these consultations, management determined that in a robust gold market and with a positive outlook for gold, it is in the best interests of Century's shareholders to minimize dilution with a gold-based financing alternative. Octagon Capital Corporation reviewed available information from the Fortis financing due diligence process and has agreed to be lead agent for the offering."
About Century Mining Corporation
Century Mining Corporation is a junior gold producer. The Company owns and is working towards the restart of the Lamaque mine in Québec that historically has produced over 9.4 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 2006 and 2007 was 70,401 ounces and 63,124 ounces of gold, respectively.
"Margaret M. Kent"
Chairman, President & CEO
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Caution Concerning Forward-Looking Information
This press release contains forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws. We use words such as "may", "will", "should", "anticipate", "plan", "expect", "believe", "estimate" and similar terminology to identify forward-looking statements and forward-looking information. Such statements and information are based on assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments as well as other factors which it believes to be reasonable and relevant. Forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward-looking statements and information and accordingly, readers should not place undue reliance on such statements and information. Risks and uncertainties that may cause actual results to vary include but are not limited to the speculative nature of mineral exploration and development, including the uncertainty of reserve and resource estimates; operational and technical difficulties; the availability to the Company of suitable financing alternatives; fluctuations in gold and other commodity prices; changes to and compliance with applicable laws and regulations, including environmental laws and obtaining requisite permits; political, economic and other risks arising from our South American activities; fluctuations in foreign exchange rates; as well as other risks and uncertainties which are more fully described in our annual and quarterly Management's Discussion and Analysis included in this Annual Report, in our Annual Information Form and in other filings made by us with the Securities and Exchange Commission and with Canadian securities regulatory authorities and available at www.sedar.com.
While the Company believes that the expectations expressed by such forward-looking statements and forward-looking information and the assumptions, estimates, opinions and analysis underlying such expectations are reasonable, there can be no assurance that they will prove to be correct. In evaluating forward-looking statements and information, readers should carefully consider the various factors which could cause actual results or events to differ materially from those expressed or implied in the forward-looking statements and forward-looking information.
For further information: Brent Jones, Manager of Investor Relations, E-mail: bjones@centurymining.com, Phone: (877) 284-6535 or (360) 332-4653, Fax: (360) 332-4652, Website: www.centurymining.com
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