Century Mining Posts Profit of C$1.9 Million
By Douglas J. Hadfield
23 May 2006 at 11:48 AM EDT
resourceinvestor.com
VANCOUVER (ResourceInvestor.com) -- Century Mining [TSXv:CMM] posted first quarter operating profits of C$1.9 million on revenue of C$11.2 million in its second year of operation.
CEO Margaret Kent said: “We are very pleased with the continuing operating performance of our Sigma Mine, which has generated positive cash flow in three consecutive quarters. We expect further reductions in cash costs when our new truck fleet is commissioned. Our cash costs are decreasing on a Canadian dollar basis each quarter as the dollar is strengthening against the U.S dollar. The initiatives we took in the first quarter to reduce debt by expensing all costs related to the convertible debentures will have a positive impact on the balance sheet and income statement in the second quarter of this year.
“We are taking steps to build Century into a major gold producer with a solid asset base in Québec and outstanding production and exploration opportunities in Peru. Our stronger balance sheet will enable us to finance future growth on more favourable terms than were possible in the last 18 months. 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 assets at a significant discount to typical industry valuation multiples. In Peru, we believe that we have purchased ounces in the ground, which we will be qualifying with an NI 43-101 technical report later this year, for less than US$7.50 an ounce. We believe that Century is well positioned to grow in value as we create and pursue new opportunities with our team of highly experienced mining and financial professionals.”
Revenues are benefiting from the current rising gold price. The company has reduced cash costs each quarter on a Canadian dollar basis at the Sigma Mine, but because of the weakening U.S. dollar these reductions are not reflected in the industry standard U.S. dollar cash cost. 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. Further reductions in cash costs on a Canadian dollar basis are expected.
A net loss of C$1.3 million, or C$0.01 per share, in the first quarter was exacerbated by approximately C$1.6 million of 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. Pursuant to redemption of convertible debentures in the first quarter, there will be no future related expenses.
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 C$0.9 million in the first 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 this year. The company has redeemed all the outstanding convertible debentures; completed a C$25 million equity financing; 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.
The company forecasts total production in 2006 of 100,000 ounces of gold. In 2007, Century says it will produce 130,000 ounces, and by 2008, 210,000 ounces. But Kent cautioned that these are forward-looking statements. |
