Comparing CMM with DEZ
(from a Stockhouse post)
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March 19, 2006
Desert Sun Mining and Century Mining Comparison Valuation
Desert Sun Mining
Website :
desertsunmining.com
Corporate Presentation
desertsunmining.com
Share Structure as of March 1 2006 Closing Date of Record for Yamana & Desert Sun Combination
desertsunmining.com
105,164,482 shares issued and outstanding
134,447,864 shares fully diluted shares total dilution
No Debt
No Hedging (DSM has CDN/USD exchange rate protection in place for 2006)
Commercial Production began July 1, 2005
Estimated 50,000 oz production for 2005
Annual Production forecast of 100,000 ounces for 2006
Jacobina Mine ……… Data as of Nov 10 2005
4200 tpd facility
Q3 Highlights
- Ore mined of 340,913 tonnes
- Ore milled of 300,505 tonnes
- Gold production of 18,683 ounces at an average cash cost of US$292 per ounce
- Gold sales of 16,400 ounces at a realized price of US$442 per ounce
- Revenues from gold sales of CAD$ 9.0 million
- Mine operating earnings of CAD$1.2 million
- Cash flow from operating activities of CAD$566,000
In the three months ended September 30 2005, the mill at Jacobina processed 300,505 tonnes with an average grade of 2.03g Au/t, producing 18,683 ounces of gold. The average recovery rate at the mill was 95.4%.
Total production for 2005 is forecast at 55,000 ounces, including production of 11,935 ounces in the preproduction phase.
Q4 Highlights
desertsunmining.com
-Ore mined of 380,304 tonnes
-Ore milled of 327,329 tonnes
-Gold production of 22,550 oz at an average cash cost of US$265 per ounce
-Revenues from gold sales CDN$11,266,000
-Mine operating earnings of CDN$3.33 million
-Cash flow from operating earnings of CDN$5,191,000
- In the three months ending Dec 31, 2005, the mill at Jacobina processed 327,3289 tonnes with an average grade of 2.23 g Au/t, producing 22,550 ounces of gold. The average recovery rate at the mill was 96%
As of December 31, 2005, the company had CDN$40,717,000 in cash
Takeover offer of US$450 million x US/CDN exchange rate of $1.16 = approx CDN$532 million
On February 21, 2006, Desert Sun and Yamana Gold Inc. (“Yamana”) (TSX: YRI; AMEX: AUY; LSE (AIM): YAU) announced the acquisition of the Company by Yamana by way of plan of arrangement. Desert Sun shareholders will receive 0.6 of a Yamana common share for each Desert Sun common share held. Based on the 5-Day weighted average of Yamana’s share price, the transaction price is C$5.47 per Desert Sun common share, representing a premium of 21.1% over the 5-Day weighted average price of the Company’s common shares. Desert Sun’s Jacobina gold mine in Bahia, Brazil is near Yamana’s Fazenda Brasileiro mine and its C1 Santa Luz development-stage project. The total net cost of the transaction is US$450 million, or US$85 per resource ounce based on Desert Sun’s latest reserve and resource estimates.
Century Mining
centurymining.com
Corporate presentation
N/A
Q3 Financials
sedar.com
Q3 Management Discussion and Analysis
sedar.com
Share Structure as of March 15 2006
81,084,910 shares issued and outstanding
17,002,869 share purchase warrants
0 convertible debentures *** (eliminated as of Mar13, 2006)
5,000,000*** for cash component of Long Term Debt Elimination
4,325,000 stock options
107,412,779*** fully diluted shares (pending final IQ debt elimination deal)
Debt
$0*** ( When deal closes with Investissement Quebec date ?? )
Hedging, unknown at this time, most likely very marginal if any. Company has stated in recent past, no more than approx 10% of annual production.
Commercial Production began May 25, 2005
Production for 2005
36,029 oz commercial production
Gold sales for 2005
55,152 oz including gold extracted from bulk sample
Annual Production forecast of 90,000 oz for 2006 with US$325/oz cash cost
Sigma Mill
5000 tpd mill with expansion to 6000 tpd probable with rod mill
Q4 Highlights
centurymining.com
Ore milled 373,710 tonnes
- Gold Production of 20,024 ounces at an average cash cost of US$385 per ounce ($1.16 exchange rate = CDN$446)
- Gold sales of approx 21,400** ounces (from past conversation with IR rep, not official)
- Revenues from gold sales approx CDN$11,500,000 (Realized price of CDN$540/oz from conversation with IR rep)
- Estimated cash flow $2,054,400
** apparently there was another 1400 oz in the mill from Q3 that was removed in addition to Q4 production
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Reserves and Resources
sedar.com
The Sigma-Lamaque Complex contains 4,469,080 ounces of gold in resources, of which
857,380 ounces have been upgraded to reserves.
Reserves
Sigma Open Pit
Proven and Probable.…. 12,940,300 tonnes at 1.97 gpt containing 819,000 ounces of gold
Proven and Probable.…. 2,178,486 tonnes at 0.548gpt containing 38,380 ounces of gold
Resources
Sigma Open Pit
Measured and indicated …....4,495,600 tonnes grading 2.20 gpt containing 317,000 oz of gold
Inferred Resources ………. 14,296,900 tonnes grading 1.91 gpt containing 875,700 oz of gold.
Other Resources
Sigma Lamaque Underground
Measured and indicated ….. 3,923,000 tonnes grading 4.99 gpt containing 630,000 oz of gold
Inferred Resources ……….10,101,000 tonnes grading 5.26 gpt containing 1,708,000 oz of gold.
Lamaque Surface (West Plug)
Measured and indicated …..695,000 tonnes grading 2.29 gpt containing 51,000 oz of gold
Inferred Resources ………. 490,000 tonnes grading 1.88 gpt containing 30,000 oz of gold.
Potential 227,160 oz resource (drill indicated) at Carolin .
Company believes that there is perhaps another 1 million ounces there. ( Not NI 43 101 compliant )
Potential 3,000,000 ounces of resources in Treadwell area ( Not NI 43 101 compliant )
Current Market Capitalization
86,084,910 * x CAD$1.00 = CAD$86,084,910
*Share total includes estimated 5 million shares for IQ debt elimination closing in March ?? 2006
Again, the biggest differences between DSM and CMM were the known cash costs.
This may change quite soon, considering Century Mining’s January production stats. DSM also has about twice the reported reserve ounces, but I believe that CMM will also be upgrading a substantial percentage of their underground resources into the mineable reserves category this year as well.
January production reports from Century Mining news release
centurymining.com
8400 oz of production with an average headgrade of 2.28 gpt
Total cash costs for January of about US$300/oz cash cost. Cash costs for Q1 2006 will probably be higher than this, as I doubt they'll be able to maintain an average grade of 2.28 gpt for the entire quarter. Let’s see if the company can bring cash costs down, later on into 2006, to Desert Sun’s $265/oz cash costs, once CMM starts processing higher grade underground ore.
DSM also had about $40 million in cash, mostly from a recent financing. Should CMM’s share price continue to appreciate to the point where we feel it would more realistically reflect it’s asset base, mg’t could also have the opportunity to obtain a similar sized financing for development/refurbishing of Carolin, or perhaps another acquisition or two.
"We're nose down...ass up at Sigma"
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