John: Regarding Q2 projections.
I posted my thoughts on what we might be looking at for Q2 results over on Stockhouse ,... I'm not really expecting anything out of the ordinary, yet again. If fact it may be a little on the disappointing side as far as ounces produced,... not much, but not as good as I was originally anticipating. I would love to see a surprise to the upside but I doubt we get it in Q2.
stockhouse.ca
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Production05:
Thanx for your numbers. I've been doing some number crunching as well, actually I was trying to come up with a response to "unpredictable's" post from earlier this past week.
stockhouse.ca
Kept coming up with more info and had to keep tweaking the numbers.
I've been trying to come up with as accurate a picture from the known publically available information we have at hand.
Quite interesting how we both are going to use 21,500 ounces for a worst case scenario. I've come up with US$375 for cash costs to offset the nickel increase in the Canadian Dollar as well. Anyhow ... here's what I came up with,...
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unpredictable:
Regarding your assumptions for Q2, recall that TheRock17 and I also feel that 22,500 oz should be doable. But let’s lowball production ounces down to a somewhat more miserable 21,500. Still an improvement over Q1 but it would still be somewhat of a disappointment. My initial understanding of April being a record month of production may have been wrong. There were records in April for daily production ounces and tonnage throughput, however, I’ve been told that the overall monthly production ounces wasn’t a record, as they ran into truck availability issues once more, so it should be safe to assume that April had less than the 8400 ounces recorded in January ‘06, which is the company’s best month thus far.
As for revenues,.... did you take into consideration the remaining 8050 ounces committed at US$498 that were noted at the end of Q1? And were your revenues in Canuck bucks ?
Let's extrapolate on the numbers a little more.
Based on the data for Q2 gold prices I've compiled from this website and using a daily time scale, (you can left click over the chart and this graph will give you a pop-up on the historical daily prices.)
netdania.com|comstock_lite
I come up with an average price of gold for Q2 as follows :
Q2 2006 Weekly Gold Price average (rough estimates)
Week I $590
Week II $595
Week III $625
Week IV $645
Week V $675
Week VI $710
Week VII $650
Week VIII $650
Week IX $640
Week X $625
Week XI $570
Week XII $570
Week XIII $575 (projected)
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13 Weeks $8120 / 13 = US$625
Now as for Century Mining ....
As noted in the Q1 financial statement there were 8050 ounces committed at US$498. Let’s assume these ounces were delivered into the contract(s) in Q2
8050 oz x US$498 = US$4,088,900
That leaves us with 13,450 ounces based on the lower 21,500 oz projection. We were informed at the AGM on May 19, that the company had 14,000 ounces committed at an average of US$550 per ounce. Those committments were subsequently eliminated within the next two weeks as stated in the conference call on May 31. I was informed by Tom in a subsequent conversation that some of those committments were delivered into the contracts and the rest were bought back. No breakdown was given and I doubt he would have been given specific information anyway. Let's say the company was fully exposed to spot gold for the last 6 weeks of Q2, with average weekly production of about 1654 oz. (21,500 oz / 13 weeks)
1654 oz x 6 = 9924 oz x US$605/oz average for last 6 weeks of Q2 = US$6,004,020
This would leave us with about 21,500 - (8,050 + 9924) = 3,526 ounces left with an unknown price received, so let’s assume the average US$550 committment price stated at the AGM on May 19? This figure could be higher, could be lower depending on the strike prices on the remaining contracts if the gold was in fact delivered into them.
3526 X US$550 = US$1,939,300
Totalling it up ....
US$4,088,900
US$6,004,020
US$1,939,300
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US$12,032,220 x $1.11 exchange rate (approx. average for Q2)
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CD$13,235,442 Revenue from operations
That works out to an average realized price of gold for Q2 of US$559 per ounce. Pretty close to your estimate of $560.
The company raised $25 million and had warrants exercised in Q2 for about $1.4 million plus there was a cash and cash equivalents balance of $2.8 million at Q1 end. Add in the cash flow for Q2 and after taking out cash expenditures for one time commitments incurred in Q2 like the SGF royalty buy back and the acquisition costs of the San Juan Gold Mine, the company should have about $20 million cash balance at the end of Q2. Let’s use a 5% interest rate which would give the company about $166,666 in interest revenue for the two months after the financing closed at the end of April.
$13,235,442 + $166,666 = $13,402,108 in revenues for Q2 based on 21,500 oz of production and estimating realized price per ounce based on some assumptions regarding the gold delivered into call options.
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As for net profits,…..
Here's where we may diverge somewhat. Keep in mind, I’m no accountant either. I know there are a couple accountants on the forum, so maybe they’d like to pitch in their two cents worth ???
If cash costs dropped to US$350/oz on your estimated 23,000 oz, we'd be looking at only US$8,050,000 mine operating cash costs. $8,050,000 x $1.11 exchange = CD$8,935,500. However, this calculation does not take into consideration that the Canadian Dollar appreciated in value against the US Greenback by about $0.05 in Q2 compared to Q1. (average $1.11 in Q2 ’06 .... $1.16 in Q1’06) I can’t see how they could actually reduce cash costs this much considering the labour costs would be comparably the same quarter over quarter, and fuel costs would be up a little due to increased truck availability.
So lets use a cash cost of US$375 per ounce. Using this price should offset the higher Canadian dollar,.... Again, a small improvement but this would somewhat disappointing as well.
21,500 oz x US$375 = US$8,062,500 x $1.11 = CD$8,949,375 operating costs
CD$$13,402,108 - CD$8,949,375 = CD$4,452,733 cash flow.
With 115 million shares O/S .... almost 4 cents per share cash flow still looks pretty healthy for Q2.
As for “Other expenses”. My numbers come in higher than yours
$692,140 Corporate Administration (from Q1)
$266,250 Interest on Long Term Debt ... IQ debt (from Q1)
$763,133 Depreciation, amortization and accretion (from Q1)
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$1,721,523
CD$4,452,773 - CD$1,721,523 = CD$2,731,250
So far, looks pretty good.
Now, let’s throw the kitchen sink at the bottom line ?
No idea how the company's accountant(s) intend on dealing with the $2,000,000 cash payment for the elimination of the royalty payments to SGF incurred in Q2. Would it be safe to assume that this will be expensed in the Q2 numbers, similar to how they dealt with the elimination of the debenture costs as you noted in your post for Q1 ? If so, then,....
CD$2,731,250 - $2,000,000 = CD$731,250
The first instalment of the long term debt repayment occurs on June 30, 2006. The first payment is for $846,500, with subsequent quarterly payments of $423,250.
CD$731,250 - $846,500 = -$115,250
Oops, we’ve slipped just below break-even now. However this would be due to a one time event of expensing of the SGF royalty buyout in Q2. How do the 3 million shares issued as the other portion of the SGF royalty buyout come into the accounting equation ?
Some other questions remaining,…..
What will the revenues be, if any, from San Juan Gold Mine for Q2 ?
Any capital costs incurred for Peru acquisition and/or development in Q2 ?
How will the bottom line be affected by the “non-operating losses” from elimination of the call options and (if any) remaining forward sold contracts in Q2 ?
There is that pending ruling on the May 15 2006 unsecured credit holders for a cash payment of $881,250, instead of issuing shares again.
Capital expenditures for Lamaque underground for Phase 1 development is stated as $600,000.
Once again, I will re-iterate my previous statement, I was giving the company one year to get the Sigma open pit operations hashed out. Q2 results will be one full year of production.
If Q2 projection of 21,500 is correct, then the company managed to produce 21,500 + 18,943 + 45,158 in the first two full qtrs of 2005 (and June 2005’s) production for 85,621 ounces in the first year of commercial operations.
The new trucks will definitely help out in the second half of 2006 as we will need to see 25,000 ounces in both Q3 and Q4 to hit the 90,000 projection for 2006.
Still seeing progress in Val D’or operations and Lamaque development seems to be proceeding quite smoothly as reported in a couple of news releases.
Peru is going to be the main driver for share price appreciation going forward I think. Unless the company finds a new zone or two in the Lamaque underground like Gold Corp did in Red Lake a number of years back, there’s not going to be very much “spice” coming from Val D’or ... Just the meat and potatoes grind of daily production.
Being fully exposed to spot gold prices now may also help... as long as the gold price remains on its upward path ? |
