Century Mining Signs Agreement to Acquire a 38% Interest in Peruvian Mining Company Compania Minera Poderosa S.A.
Monday October 16, 9:59 am ET
BLAINE, WASHINGTON--(CCNMatthews - Oct. 16, 2006) - Century Mining Corporation (TSX VENTURE:CMM - News) is pleased to announce that it has entered into an agreement with a group of private shareholders to acquire a 38% interest in the publicly-listed Peruvian mining company, Compania Minera Poderosa S.A. (CMPSA).
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The acquisition is subject to completion of due diligence by the Company, which will be completed within two weeks, finalization of all documentation, and regulatory approvals. The transaction is expected to close within 30 days.
The purchase price of the common shares of CMPSA is US$1.15 per share. In exchange for purchasing its 38% interest in CMPSA, Century will issue to the group of private shareholders US$45.7 million of Convertible Debentures with a 12-month maturity and 5% interest rate payable quarterly. Up to 40% of the value of the convertible debentures may be converted into common shares of Century Mining Corporation at C$0.90 per share at the option of the debenture holders for a period of nine months. On closing, Century will pay cash for the face value of the related shareholder debt amounting to US$5.6 million. Because of the percentage of the CMPSA shares that Century is acquiring, the Company is required to comply with the Offer of Public Acquisitions (OPA) requirements and make an offer for the balance of the shares of CMPSA.
The Company will equity account its interest in CMPSA. The Company will recognize approximately 38,000 ounces of Poderosa's annual gold production at a mine site cash cost of approximately US$205 per ounce.
CMPSA owns and operates the Poderosa gold mine located in the Pataz province of northern Peru, 475 kilometres by air north of Lima. The mining property consists of 70,000 hectares located mostly in the Pataz batholith, a highly prospective geological region that hosts a number of producing long-life mines. Over 400,000 ounces of gold are produced annually from the Pataz batholith.
Since 1982, the Poderosa mine has produced approximately 1.4 million ounces of gold from 3.3 million tonnes of ore at an historical average grade of approximately 14.0 g/t. In 2005, Poderosa produced a total of 97,907 ounces of gold from 181,735 tonnes of ore at a head grade of 17.91 g/t and recovery of 94.0% at a mine site cash cost of US$217 per ounce. Gold production for 2006 is estimated at approximately 100,000 ounces. The company has approximately 750 employees. (Reference: CMPSA 2005 Annual Report).
CMPSA extracts high-grade ore from a series of underground mines that use both mechanized and conventional mining methods, including longwall and cut and fill. Each mine exploits several different high-grade, narrow quartz-sulphide veins that typically are 1.0 to 1.5 metres thick, dip at 20 to 45 degrees and measure several hundred metres along strike and down-dip. Total ore processing capacity in two mills is 800 tonnes per day and includes cyanide leaching and Merrill Crowe processing.
Margaret Kent, President and CEO commented, "Our acquisition of a 38% interest in CMPSA, an established and well regarded mining company in Peru, allows us to consolidate and grow our position in Peru following our acquisition of 60% controlling interest in San Juan Gold Mines S.A.A. in May of this year. The high-grade, low cost Poderosa mine provides immediate growth for our Company and will significantly reduce the Company's total cash cost of gold production. The Poderosa Mine is located in an area with excellent potential for future development. We look forward to working with Poderosa's management team as they delineate additional mineral reserves and resources and continue exploration on this excellent land position."
About Century Mining Corporation
Pursuant to its acquisition of a 38% interest in CMPSA the Company has revised its consolidated production and mine site cash cost estimates from the Sigma, Lamaque, San Juan and Poderosa mines to the following:
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Year Production Cash cost
Oz/year gold US$/oz gold
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2006 88,100 385
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2007 163,000 331
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2008 243,000 319
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The Company also owns the dormant Carolin gold mine in southwestern British Columbia and nine precious metals exploration properties located on the historic Juneau Gold Belt in Alaska.
Margaret M. Kent, Chairman, President & C.E.O. |
