Brien Lundin - April GoldNewsLetter new buy on CMM:
"New Recommendations:
Century Mining
(CMM.V; CMNZF.PK)
(360-332-4653)
centurymining.com
Century Mining is the first of two compelling revitalization plays to
make this month’s list of new recs.
The company is directed by the talented Margaret “Peggy” Kent (nee
Witte). Seasoned gold stock investors remember Ms. Kent well, as the former head of the high-flying Royal Oak Mines in the early 1990s. Her
audacious bid for much-larger Lac Minerals in 1994 earned her widespread,
and often grudging, respect in the mining industry. Alas, Barrick outbid her for Lac, and plummeting gold prices forced an over-leveraged Royal Oak into bankruptcy. Still, there are few in the business who doubt Ms. Kent’s tremendous abilities and persistence.
Which brings us to one of her new ventures, Century Mining. Since acquiring the past-producing Sigma-Lamaque Mining Complex in September 2004 for C$25.9 million, Ms. Kent and her team have re-tooled
the mine plan for Sigma’s abandoned open-pit operations and geared up to
bring the underground resources at the adjacent Lamaque mine back to life.
Even given the challenges faced by the previous operator, it’s not hard
to see why Century took an interest in the project. Over its life, the Sigma-
Lamaque Complex, located near Val d’Or Quebec, has produced 9.2 million
ounces of gold, and it lies along the Abitibi Gold Belt, a district that boasts over 150 million ounces of historical gold production.
Drawing on her considerable ability to raise capital and to attract talent,
Ms. Kent decided she could figure out a way to both make Sigma-Lamaque
profitable and to extend its mine life. So far, so good. Since commercial
production re-commenced on the Sigma pit in May 2005, the company’s
re-vamped mining plan has steadily cut away at the high cash costs that, combined with lower gold prices, stymied the previous owners.
Production is on pace to generate 90,000 ounces of gold in 2006 at a
cash cost of US$325. And while the Sigma Pit continues to generate revenues and profits in the short-term, Century’s exploration plan to overhaul the Lamaque Mine will secure its long-term future. The initial plan for Lamaque, now underway, calls for an overhaul of the #2 Shaft and decline area with the goal of staging operations from the 1,200-foot level. Once Phase 1 is completed, Phase 2, slated for the back half of 2006, could quickly bring mineable ore from those depths online. If so, Lamaque could contribute as much as 10,000 ounces of gold to this year’s
production schedule. Management pegs the underground resource at the Sigma- Lamaque Complex at 2.3 million ounces in all categories, with grades running as high as 7.0 g/t gold in Lamaque, according to historical records.
With financing for the underground development drawn largely from the cash flow from the Sigma Pit, Century has all the tools in place to
make this project one of the best turnaround stories in this cycle.
The stock has more than tripled since the beginning of the year, as the improving production and profit numbers have drawn investors like moths to a flame. Even so, this company’s current market cap in no way reflects its potential. In the current environment for gold, it’s not hard for me to envision a current producer like Century multiplying several times over in price from current levels.
Century Mining Corp.
Recent Share Price: .................C$1.47
Shares Outstanding: .........88.0 million
Market Cap: ..............C$129.4 million
Shares Outstanding
Fully Diluted: .................103.0 million
Market Cap
Fully Diluted: ............C$151.4 million |
