Century Mining Reports Net Income of C$1.1 Million and $3.7 Million of Operating Cash Flow at Sigma Mine in Third Quarter
Monday November 20, 9:30 am ET
ca.us.biz.yahoo.com
BLAINE, WASHINGTON--(CCNMatthews - Nov. 20, 2006) - Century Mining Corporation (TSX VENTURE:CMM - News) is pleased to announce its financial and operating results for the third quarter ended September 30, 2006. The Company reported net income of $1.1 million, or $0.01 per share, the first net income earned in the Company's three-year history. The Sigma open pit mine generated operating cash flow of $3.7 million.
The Company will host a conference call on Tuesday, November 21, 2006 at 11:00 a.m. Pacific time (2:00 p.m. Eastern 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).
Third Quarter Highlights
- Net income of $1.1 million or $0.01 per share.
- Operating profit of $3.7 million from mine revenue of $11.0 million at Sigma mining operations before depreciation and amortization.
- Produced 16,952 ounces of gold at Sigma Mine.
- Cash flows provided by operating activities of $2.9 million.
- Cash flows used in financing activities of $2.2 million.
- Cash flows used in investing activities of $5.8 million.
- Working capital of $2.6 million at September 30, 2006.
- Advanced the underground exploration and development program at the Lamaque Mine towards production in the first quarter of 2007.
- Subsequent to the third quarter, entered into an agreement to acquire a 37.5% interest in Compania Minera Poderosa S.A. that operates the Poderosa Mine in Peru.
Summary of third quarter operating results and recent positive initiatives
Net income of $1.1 million, or $0.01 per share in the third quarter was the first net income earned by the Company in its three-year history. The Sigma Mine reported an operating profit of $3.7 million in the third quarter of 2006, which is the fifth consecutive quarter of positive mine operating cash flow since the mine commenced commercial production on May 25, 2005. The following table presents production data for the five quarters of commercial production at the Sigma Mine.
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Realized Gold Ounces Cash Cost Cash Cost
Period Price (US$/oz) Gold Produced (C$/oz) (US$/oz)
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Q3-06 581 16,952 473 422
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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 Q3-2006 Q2-2006 Q1-2006 Q4-2005
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Results
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Mine revenues 11,045,950 11,878,882 11,151,726 9,922,947
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Operating profit
from mining
operations 3,671,599 2,911,936 2,038,921 295,373
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Net income (loss) 1,107,485 (1,198,135) (1,197,835) (4,438,074)
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Net income (loss)
per share 0.01 (0.01) (0.01) (0.09)
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Financial position
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Cash and cash
equivalents 3,436,073 8,481,360 2,883,663 808,896
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Total assets 94,407,128 88,166,375 59,163,033 57,106,214
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Long-term debt 11,921,972 11,921,972 12,345,222 22,628,347
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Shareholders'
equity 56,937,514 55,747,845 24,492,475 11,393,896
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Shares issued and
outstanding 115,762,884 115,574,009 88,110,789 56,385,179
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Cash costs per ounce of gold increased in the third quarter due to lower-than-budgeted gold production. This shortfall was mainly due to a lack of exposed ore blocks resulting from the inability to move sufficient waste because of low mining equipment availability. The delivery of four new haul trucks late in the third quarter will increase the availability and productivity of the mining fleet considerably in the long term, facilitating the removal of waste to expose new ore blocks for mining. Furthermore, the mill head grade in the third quarter was 1.54 g/t gold compared to the average 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 has already improved the total tonnage of ore and waste mined from less than 20,000 tpd in the first half of the year to more than 35,000 tpd on a sustainable basis, thereby allowing the Company to maintain more ore faces open for mining and better control dilution. In addition, the recent purchase of a reverse circulation drill will reduce dilution because of improved definition of ore blocks.
Net income of $1.1 million, or $0.01 per share, in the third quarter was a result of a reduction in total expenses of $1.4 million from the second quarter. In the second quarter, total expenses were exacerbated by other expense items that included a $1.6 million loss on derivative contracts. After net changes to non-cash working capital balances amounting to approximately $0.5 million the Company reported cash flows from operating activities of $2.9 million in the third 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 earlier 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. In the third quarter the Company leased four new haul trucks and an RC drill for approximately $1.2 million. These initiatives had a positive impact on the balance sheets and income statements in the second and third quarters of this year.
The Company has no further financial obligations to the unsecured creditors. These obligations had amounted to payment of either approximately $881,250 or the issuance of 2,054,196 shares of the Company, at the Company's option, every four months since the closing of the Sigma-Lamaque acquisition in September 2004.
Production and cost estimates revised based on year to date results
Based on production at the Sigma Mine in the first nine months of this year and the delays to starting production at the Lamaque underground mine, the Company has updated 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 73,000 85,000 85,000
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Lamaque underground mine - 20,000 40,000
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San Juan underground mine 4,000 20,000 80,000
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Poderosa 3,000 38,000 38,000
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Total 80,000 163,000 243,000
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The projected cash cost for 2006 is US$400 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.
The Company places an emphasis on controlling costs and generating cash flow from gold production that will cover all expenses to provide net income, rather than maximizing production and compromising profitability.
Conference call
Management will host a conference call on Tuesday, November 21 at 11:00 a.m. Pacific time (2:00 p.m. Eastern time) to discuss third quarter results and future developments at its operations in Quebec and Peru. Mining analysts, investors and the media are invited to phone 1-888-820-8951, or 1-210-234-0026 if outside Canada and the U.S.A., followed by the pass code 12567 approximately 5 minutes before the start of management's presentation. The presentation will be followed by a question and answer period.
A replay of the conference call can be heard until Tuesday, November 28 by dialing 1-888-562-6891, or from outside North America 1-203-369-3496.
Margaret Kent, President & CEO commenting on Century's third quarter results said: "We are very pleased that the Company reported net income in the third quarter for the first time in its three-year history. Furthermore, the Sigma Mine has now reported five consecutive quarters of positive cash flow since commencing commercial production on May 25, 2005. These are significant achievements given that the Sigma Mine is not yet operating at its full potential. Although the Sigma Mine generated almost $3.7 million of operating cash flow in the third quarter, the cash costs were higher than in the first and second quarters. This was a result of the low availability of our old mining equipment fleet and the delay in delivering the four new haul trucks to site. The problems with the old equipment fleet and the lack of an RC drill for much of this year resulted in the Company having to draw from a low-grade stockpile during the second and third quarters to operate the mill near full capacity. We are pleased with the performance of the new trucks and expect an improvement in operating results in the future.
In Peru, we are developing plans to return the San Juan Mine to its nominal rated production capacity of 80,000 ounces of gold a year. We will be preparing a technical report to qualify the resources to NI 43-101 standards of disclosure based on the results of the exploration program that we have just started. We are also applying for permits to commence exploration drilling programs on the Alpacay, Veta Clara and Santa Clarita properties at San Juan.
We are taking steps to build Century into a profitable 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
Century Mining is an emerging mid-tier gold producer that is aggressively acquiring producing mines and exploration properties in Peru. The Company owns and produces gold at the Sigma and Lamaque mines in Quebec that historically have produced over 9.4 million ounces of gold. In Peru this year Century acquired control of the San Juan Mine where the Company accounts for 100% of gold production, and recently signed an agreement to acquire, initially, a 37.5% interest in the Poderosa Mine. This transaction is expected to close within the next two weeks. Century's growth strategy is to acquire gold producing assets in South America that will substantially reduce the Company's consolidated total cash cost of production and where there is exceptional exploration potential to expand production at these mines.
Margaret M. Kent, Chairman, President & CEO
Caution Concerning Forward-Looking Information
This press release contains forward-looking information within the meaning of applicable securities laws. We use words such as "may", "will", "should", "anticipate", "plan", "expect", "believe", "estimate" and similar terminology to identify forward-looking information. It is 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 information involves 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 accordingly, readers should not place undue reliance on those statements. 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 resource 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 and in other filings made by us with Canadian securities regulatory authorities and available at www.sedar.com.
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Century Mining Corporation
Consolidated Balance Sheets
September December
As at 30,2006 31,2005
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Unaudited Audited
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Assets
Current
Cash and cash equivalents $ 3,436,073 $ 808,896
Accounts receivable 3,984,886 1,787,048
Inventories (Note 6) 2,956,774 2,414,436
Prepaid expenses & deposits 2,412,858 266,061
Note receivable (Note 4 b) 2,850,000 -
---------------------------
15,640,592 5,276,441
Mining properties, other
properties plant
and equipment (Note 7) 77,585,461 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
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$94,407,128 $ 57,106,214
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Liabilities and Shareholders'
Equity
Current
Accounts payable and accrued
liabilities $ 7,176,434 $ 7,386,932
Working capital gold facility
(Note 10) 793,414 1,287,219
Current portion of long-term
liabilities
(Note 9 and 11) 5,038,987 3,819,851
Unrealized losses on derivative
contracts - 1,293,463
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13,008,835 13,787,465
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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) 5,795,194 3,806,169
Non controlling interest (Note 4) 2,888,977 -
Long term liabilities (Note 12) 711,295 -
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36,588,363 32,624,196
To be settled via issue of shares
Royalties payable (Note 8) - 583,127
Unsecured creditors (Note 14 e) 881,250 2,645,120
Convertible debentures - 9,859,875
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37,469,613 45,712,318
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Shareholders equity
Common shares (Note 14 b) 65,870,543 22,950,378
Fair value of warrants 9,279,010 3,534,867
Equity portion of convertible
debenture - 2,021,000
Fair value of options (Note 14 c) 1,388,343 1,199,546
Deficit (19,600,381) (18,311,895)
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56,937,514 11,393,896
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$ 94,407,128 $ 57,106,214
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Approved on behalf of the Board:
Margaret M. Kent Director
Dale G. Parker Director
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Century Mining Corporation
Consolidated Statements of Operations and Deficit
For the period ended Three Three Nine Nine
months months months months
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
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Revenues
Sale of precious
metals $ 11,045,950 $ 9,993,056 $ 34,076,559 $ 14,644,582
Geological fees
and other 281,788 116,495 598,074 339,011
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11,327,738 10,109,551 34,674,632 14,983,593
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Expenses
Mining operation 7,374,35 9,097,696 25,454,102 13,616,407
Depreciation
amortization and
accretion (Note 7) 1,177,671 105,580 2,885,344 224,902
Amortization on
Deferred finance
fees (Note 5) - 98,563 1,081,620 295,689
Accretion on
convertible
debentures - 260,000 144,800 780,000
Corporate
administration 1,259,024 825,334 3,307,842 2,174,006
Interest on
long-term notes 283,117 688,200 839,499 688,200
Interest on
convertible
debentures - 978,702 113,302 1,203,955
Stock based
compensation 116,327 41,303 287,992 331,603
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10,210,490 12,095,378 34,114,502 19,314,762
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Income (Loss) from
Operations before
other items 1,117,248 (1,985,827) 560,131 (4,331,169)
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Other items
Losses on derivative
contracts - (510,173) (1,724,475) (318,419)
Foreign exchange
loss (9,763) (134,370) (124,141) (138,716)
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(9,763) (644,543) (1,848,616) (457,135)
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Net income (loss) for
the period 1,107,485 (2,630,370) (1,288,486) (4,788,304)
Deficit, beginning of
the period (20,707,866) (11,243,452) (18,311,895) (9,085,518)
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Deficit, end of the
period (19,600,381) (13,873,822) (19,600,381)(13,873,822)
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Net income (loss) per
Share basic and
diluted (Note 14 f) $ 0.01 $ (0.06)$ (0.02)$ (0.13)
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Century Mining Corporation
Consolidated Statements of Cash Flows
For the periods ended Three Three Nine Nine
months months months months
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
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Cash flows from
operating activities
Net income (loss)
for the period 1,107,485 (2,630,370) (1,288,486) (4,788,304)
Charges to operations
not requiring a cash
payment:
Interest on
convertible debentures - 554,258 94,304 777,820
Interest on long-term
debt - 230,941 266,250 671,818
Accretion on
debentures - 260,000 144,800 780,000
Amortization,
depreciation and
accretion 1,177,671 105,580 2,885,344 224,902
Amortization on
deferred
finance fees - 98,563 1,081,620 295,689
Stock based
compensation 116,327 41,303 287,992 331,603
Fee paid via issue
of shares - 764,300 - 764,300
Royalty payable
in terms of shares - 223,529 - 223,529
Issue of shares for
remuneration - - 279,300 -
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2,401,483 (351,896) 3,751,124 (718,643)
Net change to non-cash
working capital
balances:
Receivable (105,700) 288,656 (2,197,838) (1,330,008)
Prepaid expenses (2,166,846) 657,494 (2,146,797) 134,245
Inventory 961,010 (125,903) (542,338) (1,486,069)
Accounts payable and
accrued liabilities 1,987,249 829,846 (210,498) 6,535,480
Working capital gold
facility (214,484) - (493,805) -
Unrealized
derivative loss - - (1,293,463) -
Note receivable - - (2,850,000) -
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2,862,712 1,298,197 (5,983,615) 3,315,005
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Cash flows from
financing activities
Advances on
convertible
debenture - 2,500,000
Issue of equity
instruments, net of
share issue cost 601,834 1,743,250 24,115,069 4,592,372
Decrease in long-
term lease
obligation (1,957,452) - (2,642,609) -
Decrease in long
-term debt - - (846,500) -
Decrease in
non-cash obligation (881,250) - (881,250) -
Exercise of
warrants and
options 83,523 1,115,775 4,873,264 1,150,775
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(2,153,345) 2,859,025 24,617,974 8,243,147
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Cash flows from
investing activities
Acquisition
of San Juan
Mine - - (2,281,047) -
Acquisition of
mineral properties (450,243) - (846,686) -
Capitalized
stripping costs (2,936,659) - (4,246,340) -
Purchases and
payment for
properties and
equipment (2,367,751) (3,559,987) (8,633,108) (11,621,07)
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(5,754,654) (3,559,987) (16,007,181) (11,621,078)
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Increase (decrease)
in cash and cash
equivalents (5,045,287) 597,235 2,627,177 (242,926)
Cash and cash
equivalents,
beginning of
the period 8,481,360 728,615 808,896 1,568,776
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Cash and cash
equivalents,
end of the period 3,436,073 1,325,850 3,436,073 1,325,850
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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:
Brent Jones
Century Mining Corporation
Manager of Investor Relations
(877) 284-6535 or (360) 332-4653
Email: bjones@centurymining.com
Graham Eacott
Century Mining Corporation
Vice President, Investor Relations
(877) 284-6535 or (360) 332-4653
(360) 332-4652 (FAX)
Email: geacott@centurymining.com
Website: www.centurymining.com
Source: Century Mining Corporation |
