Century Mining Reports Mine Operating Profit in Second Quarter and Takes Steps to Reduce Cash Costs
Thursday August 17, 3:48 pm ET
ca.us.biz.yahoo.com
BLAINE, WASHINGTON--(CCNMatthews - Aug. 17, 2006) - Century Mining Corporation (TSX VENTURE:CMM - News) is pleased to announce its financial and operating results for the second quarter ended June 30, 2006.
The Company will host a conference call on Friday, August 18, 2006 at 9:00 a.m. Pacific time to discuss results and future developments in Quebec and Peru, which will be followed by a question and answer period (see phone-in details below).
Second Quarter Highlights
- Operating profit of $2.9 million from mine revenue of $11.9 million at Sigma mining operations before depreciation and amortization.
- Produced 18,012 ounces of gold at Sigma Mine.
- Recorded a net loss for the quarter of $1.2 million or $0.01 per share. The loss was the result of a one-time hedging loss of $1.6 million.
- Cash flows provided by financing activities of $23.8 million.
- Cash flows used in investing activities of $8.5 million.
- Completed a $25.1 million equity financing in April that provided the Company with working capital of $9.4 million at June 30, 2006 after uses of funds for acquisitions, purchases of mining equipment and buyback of the royalty on gold production at the Sigma Mine.
- Advanced the underground exploration and development program at the Lamaque Mine.
- Purchased the operating royalty on production from the Sigma Mine for 3.0 million shares and $2.0 million in cash.
- Completed the purchase of a 60% controlling interest in the San Juan Gold Mine in Peru.
- Purchased Banco Weise debt of US$14.35 million securing San Juan concessions for US$2.5 million.
Summary of second quarter operating results and recent positive initiatives
The Sigma Mine reported an operating profit of $2.9 million in the second quarter of 2006 following positive mine operating cash flows in each quarter since the mine commenced commercial production on May 25, 2005. The following table presents production data for the four quarters of commercial production at the Sigma Mine.
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Realized Gold Ounces Cash Cost Cash Cost
Period Price (US$/oz) Gold Produced (C$/oz) (US$/oz)
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Q2-06 588 18,012 465 414
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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 four quarters:
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Canadian dollars Q2-2006 Q1-2006 Q4-2005 Q3-2005
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Results
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Mine revenues 11,878,882 11,151,726 9,922,947 9,993,056
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Operating profit
from mining
operations 2,911,936 2,038,921 295,373 1,118,890
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Net loss 1,198,135 1,197,835 4,438,074 2,630,370
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Net loss per share 0.01 0.01 0.09 0.06
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Financial position
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Cash and cash
equivalents 8,481,360 2,883,663 808,896 1,325,850
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Total assets 88,166,375 59,163,033 57,106,214 49,210,308
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Long-term debt 11,921,972 12,345,222 22,628,347 23,649,684
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Shareholders' equity 55,747,845 24,492,475 11,393,896 13,213,427
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Shares issued and
outstanding 115,575,759 88,110,789 56,385,179 54,684,037
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Revenues continue to benefit from current high gold prices. Cash costs increased in the second quarter as a result of low mining equipment availability. The addition of four new haul trucks in the third quarter 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. The fourth truck is expected to be in operation by the end of August. Reductions in cash costs on a Canadian dollar basis are expected. Furthermore, the mill head grade in the second quarter was 1.66 g/t gold compared to the average proven and probable reserve grade of 1.77 g/t because low grade stockpiled ore was hauled to the mill to keep the mill operating close to capacity. The addition of the new haul trucks should ensure that total tonnage mined increases from less than 20,000 tpd in the first half to 35,000 tpd, allowing the Company to maintain more ore faces open for mining and to control dilution. Furthermore, the recent purchase of a reverse circulation drill will reduce dilution because of better definition of ore blocks.
The net loss of $1.2 million, or $0.01 per share, in the second quarter was a result of a $1.6 million loss on derivative contracts. In 2005, the Company entered into derivative contracts to generate cash flow needed for start-up of the Sigma Mine. These derivative contracts were converted to spot deferred contracts for price protection when they expired. As a result of the price of gold exceeding US$725 an ounce during the second quarter, the counterparty demanded closure of the contracts resulting in a cash payout of $1.6 million. After net changes to non-cash working capital balances the Company reported cash flows used in operating activities of $9.7 million in the second 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 redeemed all the outstanding convertible debentures in the first quarter; completed a $25.1 million equity financing; and purchased the royalty on production at the Sigma-Lamaque Complex. These initiatives had a positive impact on the balance sheet and income statement in the second quarter of this year.
Production estimates revised based on half year results
Based on production at the Sigma Mine in the first half of this year and the delays in the delivery of the haul trucks, the Company has made downward revisions to its production estimates. The revised estimates are shown in the following table:
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Production (ounces) 2006 2007 2008
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Sigma open pit mine 75,000 85,000 85,000
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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 85,000 125,000 205,000
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The projected cash cost for 2006 is US$385 per ounce of gold. The Company cautions readers that production and cost estimates are forward-looking statements and there can be no assurance that these estimates will be achieved.
Conference call
Management will host a conference call on Friday, August 18 at 9:00 a.m. Pacific time (Noon Eastern time) to discuss second quarter results and future developments at its operations in Quebec and Peru. Mining analysts, investors and the media are invited to phone 1-888-603-9218, or 1-630-395-0173 if outside Canada and the U.S.A., followed by the pass code 12567 approximately 5 minutes before the start of the presentation. The presentation will be followed by a question and answer period.
A replay of the conference call can be heard until Friday, August 27 by dialing 1-866-415-3314, or from outside North America 1-203-369-0693.
Margaret Kent, President & CEO commenting on Century's second quarter results and future production estimates said: "We are disappointed with the second quarter results for the Sigma Mine. Although the Sigma Mine generated almost $3 million of operating cash flow in the second quarter the cash costs were higher than in the first quarter. This is a result of the low availability of our large equipment fleet and the delay in delivering the four new trucks to site. The problems with the existing equipment fleet and the lack of an RC drill this year resulted in the Company having to draw from a low-grade stockpile during the second quarter to operate the mill at full capacity.
During the second quarter we took steps to rectify this situation. We raised new equity so that we could make the necessary changes. We purchased a new highly mobile RC drill and four new haul trucks. We are already seeing a significant improvement in tonnage hauled from the pit. The third truck was delivered yesterday. During the last 30 days the tonnage moved has increased by 30%. The last seven days averaged 30,000 tpd while the last three days have averaged 35,000 tpd.
Interestingly, in an analysis of total costs for the half year, including D & A and G & A costs, we note that our total costs of US$490 an ounce are below the average of a number of companies in our peer group at approximately US$550 an ounce. Many of our peers have higher total costs, indicating that our management team is maximizing the value of our Sigma-Lamaque asset. Our philosophy is not to overpay for assets. Although the Sigma Mine is a relatively high cash cost producer, the purchase price of approximately C$27.0 million for the assets was not high. Overpaying for assets just to produce at a low cost is not accretive to shareholders in the long term.
The initiatives we took in the first quarter to reduce debt by expensing all costs related to the convertible debentures have had a positive impact on the balance sheet and income statement in the second quarter of this year. Our exploration and development program at the Lamaque underground mine is on track to return the mine to production in the third quarter of this year.
In Peru, we are developing plans to return the San Juan Mine to its rated production capacity and will be preparing a technical report to qualify the resources to NI 43-101 standards of disclosure. We have also applied for permits to commence exploration drilling programs on the Veta Clara and Santa Clarita properties at San Juan, and on the Colina Dorada property in the north of Peru.
We are taking steps to build Century into a significant mid-tier 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 by acquisitions on more favourable terms than were possible in the last 18 months. We are building a solid base of institutional shareholders who recognize management's track record to add shareholder value by acquiring assets at a significant discount to typical industry valuation multiples. We believe that Century is well positioned to grow in value as we pursue new opportunities with our team of highly experienced mining and financial professionals."
About Century Mining Corporation
The Company forecasts total gold production of 85,000 ounces of gold at a cash cost of approximately US$385 an ounce from its Sigma, Lamaque and San Juan mines in 2006. The Company owns the dormant Carolin gold mine in southwestern British Columbia; nine precious metals exploration properties located on the historic Juneau Gold Belt in Alaska; and production and 23,000 ha of exploration properties in Peru.
Margaret M. Kent, Chairman, President & CEO
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 June 30, December 31,
As at 2006 2005
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Unaudited Audited
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Assets
Current
Cash and cash equivalents $ 8,481,360 $ 808,896
Accounts receivable 3,879,185 1,787,048
Inventories (Note 6) 3,917,784 2,414,436
Prepaid expenses & deposits 246,012 266,061
Note receivable (Note 4. b)) 2,850,000 -
---------------------------
19,374,342 5,276,441Mining properties, other
properties plant and equipment
(Note 7) 67,610,958 49,567,078
Deferred finance fees (Note 5) - 1,081,620
Future tax asset 688,075 688,075
Deposits for reclamation costs 493,000 493,000
---------------------------
$ 88,166,375 $ 57,106,214
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---------------------------------------------------------------------Liabilities and Shareholders' EquityCurrent
Accounts payable and accrued liabilities $ 4,922,935 $ 7,386,932
Working capital gold facility (Note 10) 1,007,898 1,287,219
Current portion of long-term
liabilities (Note 9 and 11) 4,007,671 3,819,851
Unrealized losses on derivative contracts - 1,293,463
---------------------------
9,938,504 13,787,465
---------------------------Long-term notes (Note 11) 11,921,972 12,768,472
Asset retirement obligation 2,262,090 2,262,090
Capital lease obligation (Note 9) 2,933,192 3,806,169
Non-controlling interest (Note 4) 2,888,977 -
Long term liabilities 711,295 -
---------------------------
30,656,030 32,624,196To be settled via issue of shares
Royalties payable (Note 8) - 583,127
Unsecured creditors (Note 13. e)) 1,762,500 2,645,120
Convertible debentures - 9,859,875
---------------------------
32,418,530 45,712,318
---------------------------Shareholders equity
Common shares (Note 13 b) 65,878,650 22,950,378
Fair value of warrants 9,289,585 3,534,867
Equity portion of convertible debenture - 2,021,000
Fair value of options (Note 13 c) 1,287,476 1,199,546
Deficit (20,707,866) (18,311,895)
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55,747,845 11,393,896
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$ 88,166,375 $ 57,106,214
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---------------------------------------------------------------------Approved on behalf of the Board:Margaret M. Kent, DirectorDonald S. Macdonald, DirectorCentury Mining Corporation
Consolidated Statements of Operations and Deficit Three Three Six Six
months months months months
For the June 30, June 30, June 30, June 30,
period ended 2006 2005 2006 2005
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Revenues
Sale of
precious
metals $ 11,878,882 $ 4,651,526 $ 23,030,608 $ 4,651,526
Geological
fees and
other 218,921 129,735 316,286 222,516
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12,097,803 4,781,261 23,346,894 4,874,042
------------------------------------------------------Expenses
Mining
operation 8,966,946 4,518,711 18,079,751 4,518,711
Depreciation
amortization
and accretion
(Note 7) 905,240 87,424 1,707,673 119,322
Amortization
on deferred
finance fees
(Note 5) - 98,563 1,081,620 197,126
Accretion on
convertible
debentures - 260,000 144,800 520,000
Corporate
administration 1,356,678 799,445 2,048,818 1,348,672
Interest on
long-term
notes 290,133 735 556,383 225,253
Interest on
convertible
debentures - - 113,302 -
Stock based
compensation 93,255 196,900 171,665 290,300
------------------------------------------------------
11,612,252 5,961,778 23,904,012 7,219,384
------------------------------------------------------Profit (Loss)
from operations
before other
items 485,552 (1,180,517) (557,117) (2,345,342)
---------------------------------------------------------------Other items
Losses on
derivative
contracts (1,590,712) (11,437) (1,724,475) 191,754
Foreign
exchange gain
(loss) (92,974) 4,111 (114,378) (4,346)
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(1,683,686) (7,326) (1,838,853) 187,408
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Net loss for
the period (1,198,135) (1,187,843) (2,395,971) (2,157,934)Deficit,
beginning
of the period (19,509,731) (10,055,608) (18,311,895) (9,085,517)
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Deficit, end
of the period $(20,707,866) $(11,243,451) $(20,707,866) $(11,243,451)
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---------------------------------------------------------------------Net loss per
share
- basic and
diluted $ (0.01) $ (0.03) $ (0.02) $ (0.06)
(Note 13(f))
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---------------------------------------------------------------------Century Mining Corporation
Consolidated Statements of Cash Flows Three Three Six Six
months months months months
For the June 30, June 30, June 30, June 30,
periods ended 2006 2005 2006 2005
---------------------------------------------------------------------Cash flows from
operating
activities
Net loss for
the period $ (1,198,136) $ (1,187,843) $ (2,395,971) $ (2,157,934)
Charges to
operations
not requiring
a cash payment:
Interest on
convertible
debentures - - 94,304 223,562
Interest
capitalized - 223,803 - 440,877
Accretion on
debentures - 260,000 144,800 520,000
Amortization,
depreciation
and accretion 905,240 87,424 1,707,673 119,322
Amortization on
deferred
finance fees - 98,563 1,081,620 197,126
Stock based
compensation 93,255 196,900 171,665 290,300
Interest on
long term debt - - 266,250 -
Issue of shares
for remuneration 279,300 - 279,300 -
----------------------------------------------------
79,659 (321,153) 1,349,640 (366,747)
Net change to
non-cash working
capital balances
Receivable (1,964,083) (858,136) (2,092,138) (1,618,664)
Prepaid expenses 449,029 (566,330) 20,049 (523,249)
Inventory (2,022,014) (4,189) (1,503,348) (1,360,166)
Accounts payable
and accrued
liabilities (1,801,465) 3,384,258 (2,197,747) 5,705,634
Working capital
gold facility (475,690) - (279,321) -
Unrealized
derivative
loss (1,293,463) - (1,293,463) -
Note
receivable (2,850,000) - (2,850,000) -
----------------------------------------------------
(9,745,540) 1,634,450 (8,846,327) 1,836,808
----------------------------------------------------
Cash flows from
financing
activities
Advances on
convertible
debenture - 500,000 - 2,500,000
Issue of equity
instruments, net
of share issue
costs 25,065,301 35,000 28,302,976 2,884,122
Decrease in
long term
lease
obligation (384,307) - (685,157) -
Decrease in
long term debt (846,500) - (846,500) -
----------------------------------------------------
23,834,494 535,000 26,771,319 5,384,122
----------------------------------------------------
Cash flows from
investing
activities
Acquisition of
San Juan Mine (2,281,047) - (2,281,047) -
Acquisition of
mineral
properties (296,306) - (396,443) -
Capitalized
stripping
costs (1,044,599) - (1,309,681) -
Purchases and
payment for
properties and
equipment (4,868,727) (1,814,531) (6,265,357) (8,061,091) ----------------------------------------------------
(8,491,257) (1,814,531) (10,252,528) (8,061,091)
----------------------------------------------------
Increase
(decrease) in
cash and cash
equivalent 5,597,697 354,919 7,672,464 (840,161)
Cash and cash
equivalent,
beginning of
the period 2,883,663 373,696 808,896 1,568,776
---------------------------------------------------------------
Cash and cash
equivalent,
end of the
period $ 8,481,360 $ 728,615 $ 8,481,360 $ 728,615
Supplemental disclosure of non cash financing and investing activities (note 17)
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
(360) 332-4653 or Toll Free: 1-877-284-6535
tthomsen@centurymining.com
Graham Eacott
Century Mining Corporation
Vice President, Investor Relations
(360) 332-4653 or Toll Free: 1-877-284-6535
(360) 332-4652 (FAX)
geacott@centurymining.com
www.centurymining.com
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Source: Century Mining Corporation |
