The Financial Reckoning Resource Report January 30, 2006
Gold in The Spotlight
Century Mining Corporation
In the Canadian mining industry, the best man for the job may actually be a woman
Peggy Kent of Century Mining is an internationally respected metallurgist and a shrewd deal maker. She’s also a mother of two.
There is a business philosophy that implies that, to be truly successful, you must take risks, and this is very true in the mining industry. Many companies’ fortunes have been made and lost by the risks they did and did not take. Margaret “Peggy” Kent, president and CEO of Century Mining Corporation, has been successful by taking over other mining companies’ risks and operations after they hit hard times.
To be a successful entrepreneur one must have a vision to see and create opportunities, as well as the skills to negotiate and structure deals to take these opportunities to fruition. It is this vision that puts you ahead of your competitors. These innate qualities constitute the recipe for success for entrepreneurs such as Peter Munk, Donald Trump, Bill Gates and others. Peggy Kent’s deals in the mining industry show that she possesses these same innate qualities.
Peggy Kent, a metallurgist by profession, has grown three publically listed mining companies based on the axiom, “Where others have failed there is an opportunity for a well-managed technical team to succeed.” Peggy developed the foundation for this axiom when in 1981 she founded Witteck Development Inc., a contract R&D firm on the outskirts of Toronto, to help mining companies develop their properties. At Witteck she amassed knowledge of how to make mining projects work, both technically and economically.
Ms. Kent’s first public company was Neptune Resources Corp., the vehicle she used to develop the large Colomac deposit in the Northwest Territories. Peggy saw a tremendous opportunity to acquire an undervalued asset, and was proved correct when Neptune was subsequently acquired by Northgate Minerals Corporation. Seeing another opportunity – which would ultimately become the vehicle that led to her being awarded a number of business and professional accolades in recognition of her achievements in the Canadian mining industry – she bought Royal Oak Resources, a junior oil and gas company. This led to Peggy’s second public company, Royal Oak Mines, which acquired the Pamour and Giant gold mines, located in Timmins and Yellowknife, respectively, out of a receivership.
Royal Oak Mines, under Peggy Kent’s leadership, became one of Canada’s fastest growing gold companies, steadily rising to annual production of nearly 500,000 ounces of gold after making a number of acquisitions. Annual revenues peaked at over $200 million. An unsuccessful bid to acquire Lac Minerals, a company four times the size of Royal Oak, did not dampen her spirits to build the company.
Ms. Kent, as CEO of Royal Oak, developed a reputation as a tenacious negotiator and visionary who saw opportunity where others did not. These traits were no more evident than the example of the Windy Craggy copper project owned by Geddes Resources. Ms. Kent acquired Geddes Resources knowing the site would most likely be declared a World Heritage Site, which would prevent the project from being developed. This was exactly what happened, but Peggy was already one step ahead and was able to negotiate a deal featuring $150 million of compensation from the provincial government, and the acquisition of two junior mining companies which owned the Kemess gold-copper deposit in northcentral British Colombia. Royal Oak was given the go-ahead to develop Kemess into production in the mid-1990’s. This was one of the largest mining projects to be developed in North America in a decade. Kemess is still in production today. The market for gold was at an all-time low during this period and resulted in Royal Oak forced into receivership.
After taking a sabbatical for a few years to raise her young children and contemplate her future, Peggy Kent had a yearning to get back into the mining industry. Recharged and wiser after the hard knocks she had taken, Peggy took over the management of Saxony Explorations Ltd. in September of 2003. A name change to Century Mining Corporation and a small private placement put enough money in the treasury to look for an acquisition. A year later Century completed its due diligence and acquired the Sigma-Lamaque Complex in Quebec from the receiver of the Sigma-Lamaque Limited Partnership. The Sigma Mine is now Century’s principal asset, the others being the dormant Carolin Mine in British Colombia and nine exploration properties in Alaska.
The complex acquisition involved a number of stakeholders, but was typical of Peggy Kent’s vision and deal-making skills. The operation had gone through two bankruptcies and investments totalling over $150 million since 1997. Century’s cash outlay was only $6 million of the total purchase price of $28 million paid for the assets, which included underground and surface reserves of more than 800,000 ounces of gold contained in a total resource of 4 million ounces, a new 5,000 tonne per day mill and infrastructure. Few assets have changed hands in the mining industry at such a low price per ounce of gold in resources, even without a plant and equipment and infrastructure in place.
Century is slowly shaking off the legacy of Sigma’s recent history, which has led to some investors to be skeptical of the merits of this acquisition. However, Century is benefiting from the capital invested by the previous owner in the new mill and development of the resources.
Peggy Kent had the confidence in the technical skills of her management team that they could overcome the technical challenges at the mine and make it profitable. The Sigma Mine reached commercial production last May and is now generating positive cash flow. Since the early 1980’s this acquisition has proven to be a winner and the foundation for building a larger gold company, especially with today’s record gold prices. The mine sits on the Abitibi Gold Belt, which has historically produced more than 150 million ounces of gold and still has exceptional exploration potential.
Now that the Sigma Mine is profitable, Peggy Kent has redirected her energy in searching for acquisitions to build Century using the same formula that she has used successfully in the past: Don’t overpay for assets and utilize the strong technical capabilities of your management team to turn around marginal mines. While gold prices are booming, the latter is easier to achieve than in her early years running Royal Oak.
Peggy Kent has shown that she knows the hard-rock mining business, and with the knowledge she has gained from the past lessons, she and her management team are well positioned to make Century Mining a success story. Management is actively carrying out due diligence on a number of acquisitions opportunities, both in Canada, and overseas. Consolidating assets on the Abitibi Gold Belt would enable Century to take advantage of a number of synergies to build a major gold company in Quebec.
Bill Sheridan, a longtime associate who has carried out legal work for her various companies for nearly 20 years, ascribes Peggy’s success to her vision and to her ability to create opportunities, negotiate and structure deals, and her determination to succeed against difficult odds. These are the classic traits of an entrepreneur.
To learn more about Century Gold, visit them online at www.centurymining.com or call 1-877-284-6536 (toll free).
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