Press Release Source: Century Mining Corporation
Century Mining Reports Operating Profit at Sigma Mine in the First Two Quarters After Start-Up
Monday May 1, 8:25 pm ET
BLAINE, WASHINGTON--(CCNMatthews - May 1, 2006) - Century Mining Corporation (TSX VENTURE:CMM - News) is pleased to announce its financial and operating results for the year ended December 31, 2005 and report on a number of positive initiatives in the first four months of this year.
Highlights
In 2005
- Commenced start-up and commercial production at Sigma Mine
- Operating profit of $1.8 million from Sigma mining operations, before royalty expenses and depreciation, amortization and accretion
- Produced 45,158 ounces of gold at Sigma Mine in the first two quarters of production at a start-up cash cost of US$410 per ounce
- Cash flows generated from operating activities of $4.9 million after net changes to non-cash working capital balances (2004 - cash flows used of $1.1 million)
- Established NI 43-101 compliant Proven and Probable Reserves of 857,380 ounces of gold at Sigma-Lamaque Complex with an additional 998,000 ounces of gold in Measured and Indicated Resources
- Recorded a net loss for the year of $9.2 million or $0.22 per share (2004 - $2.0 million or $0.15 per share) with $4.9 million of net loss attributed to financing activities for the purchase of Sigma-Lamaque
- Cash flows from financing activities of $8.5 million (2004 - $11.9 million)
- Cash flows used in investing activities of $14.2 million (2004 - $9.4 million)
In 2006
- Completed a $25.0 million equity financing in April
- Redeemed outstanding balance of 10% Convertible Debentures in March
- Commenced underground exploration and development program at Lamaque Mine in March
- Purchased the operating royalty on production from the Sigma Mine for 3.0 million shares and $2.0 million in cash in April
- Opened a Peruvian office in February and signed an agreement to purchase a 60% interest in the San Juan Gold Mine in April
- Recruited well qualified and experienced professional staff at the corporate office and Sigma Mine
Summary of 2005 operating results and recent positive initiatives
The Sigma Mine reported an operating profit of $1.8 million in 2005 after commencing commercial production on May 25. The mine generated positive cash flow in the third and fourth quarters last year and continues to be profitable as improvements to productivity are being implemented. Revenues are benefiting from the current rising gold price. The addition of four new haul trucks in June and July 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.
In 2005, the Sigma Mine produced 45,158 ounces of gold from 940,000 tonnes of ore at an average grade of 1.7 g/t gold and 95% recovery since commercial production began.
We have commenced an aggressive exploration and development program at the Lamaque underground mine to supplement feed to the Sigma mill by the end of this year. The addition of ore from Lamaque, which has a significantly higher average grade than Sigma open pit ore, is expected to have a positive impact on operations by increasing production and reducing cash costs. Cash costs continue to decrease at the Sigma Mine each quarter as technical and operating problems are resolved.
The net loss for the year of $9.2 million, or $0.22 per share, was exacerbated by approximately $5.0 million of non-cash items that were expensed, which were directly related to the senior debt that the Company incurred to acquire the Sigma-Lamaque assets and provide working capital during the bulk sample program, start-up and achievement of commercial production, as well as by an additional $1.3 million of unrealized losses on derivative contracts.
After adding back the non-cash items that were expensed to the net change in non-cash working capital balances, the Company reported cash flows from operating activities of $4.9 million in 2005.
The Company is now in a much stronger financial position than at the end of 2005 after implementing a number of initiatives. In the first four months of this year the Company has redeemed all the outstanding convertible debentures; completed a $25.0 million equity offering; and purchased the royalty on production at the Sigma-Lamaque Complex. These initiatives will have a positive impact on the balance sheet and income statement in the second quarter of this year.
Confirmation of NI 43-101 compliant Proven and Probable Reserves of 857,380 ounces of gold at the Sigma-Lamaque open pit should ensure nearly 10 years of mine life at current production levels. There are 998,000 ounces of gold in Measured and Indicated Resources that will extend mine life when upgraded to reserves, and an additional non-economic Inferred Resource (refer to Technical Report filed on November 30, 2005 on www.sedar.com). The Company is currently pursuing the opening of the Lamaque underground mine.
Margaret Kent, President & CEO commenting on Century's 2005 results and future prospects, said: "We are very pleased with the overall performance of our Sigma Mine given that we encountered a number of challenges last year as we brought the mine into commercial production. There are very few operations that generate positive cash flow in the first two quarters after commencing commercial production. Our industry peers also experienced many of these same challenges. They were a consequence of the impact of higher metals and commodity prices on the mining industry, which led to higher prices for steel and fuel oil and shortages of consumables and spare parts, as well as difficulties recruiting experienced personnel as the industry continues to operate at full capacity. These challenges could not be foreseen in mid-2004 when we carried out our due diligence to purchase the Sigma-Lamaque assets.
We overcame most of the technical challenges at the mine in the first six months of operation and now have a good understanding of the Sigma ore body and how it should be mined.
We can look forward to building Century into a major gold producer with a solid asset base in Quebec and outstanding production and exploration opportunities in Peru. Our strengthened balance sheet enables us to finance future growth on more favourable terms than were possible in the last 18 months. A significant portion of our net loss last year came from the high financing costs that we incurred for the purchase of the Sigma-Lamaque assets. We are pleased that we are now building a solid base of institutional shareholders who understand management's niche in the industry and ability to add shareholder value by acquiring good assets at a significant discount to industry standard multiples. With our highly experienced team of mining and financial professionals we believe that Century is well positioned to grow in value as we create and pursue new opportunities."
Century will be hosting a conference call early next week to review 2005 results and update investors and analysts on recent developments in Canada and Peru. Call-in details will be provided at the end of this week.
Margaret M. Kent, Chairman, President & C.E.O.
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.
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
1-877-284-6535 or (360) 332-4653
tthomsen@centurymining.com
Graham Eacott
Century Mining Corporation
Vice President, Investor Relations
1-877-284-6535 or (360) 332-4653
(360) 332-4652 (FAX)
geacott@centurymining.com
www.centurymining.com
Source: Century Mining Corporation
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note:the emphasis was added by me and is not
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