National Post Q&A Article with Peggy Kent
Juniors in for rocky ride: miner
Margaret "Peggy" Kent, who some might remember by her former name of Peggy Witte, was the most powerful woman in the mining industry when she ran Royal Oak Mines Inc. The company was liquidated when the gold price sank in the late 1990s. Ms. Kent is clawing her way back with a new company, Century Mining Corp., which has bought the Sigma gold mine in Quebec and is developing some projects in South America. Ms. Kent spoke with the Financial Post's mining reporter, Drew Hasselback.
Drew Hasselback, Financial Post
Published: Tuesday, November 07, 2006
Q The junior market has been strong, but you say juniors are in for a crash within 18 to 24 months.
A I believe so. On a go-forward basis, a lot of these companies, who have found it very easy to go back to the well to continue raising money to drill, are going to have problems.
Q So the good times aren't going to last forever?
A The institutions are not seeing gold at US$1,000 or US$750 an ounce. Their perspective on gold is that it's going to start to move sideways. The emphasis is going to be off the junior explorers. The institutions are going to be looking more toward buying production.
Q What does that mean for Century Mining? I mean, some could say Century is a junior. How do you separate the wheat from the chaff?
A We are a junior company in that our market is less than $500-million. On the other hand, we're producers. We have a technical team. One of the biggest assets we have that the market doesn't recognize is a fabulous operating team at Sigma in Quebec. That's a huge asset these days, especially when you have all these junior exploration companies running around that have all found things, but have no idea how to develop them.
They're never going to be able to put together a team in this marketplace to get these projects developed. So they don't have any choice, other than to sell their project to a major, or perhaps do a merger with someone who has a decent operating team and who wants to grow.
So, the juniors who are running around with exploration projects should be looking at the undervalued kind of producers in an effort to roll up into one sizable company that would get that middle-tier market recognition.
Q And you tell me that you think private equity buyers have been looking at the possibility of buying mining companies.
A I think it's an interesting concept, certainly for the base metals producers. The problem is that we haven't been able to establish just how far forward we can go to lock in some of these metal prices.
Q Copper producers seem to be an option, because there's a market for long-term copper sales contracts.
A I think you could probably write a five-year copper contract right now. My problem with the private equity situation is the swings in the market. Even if you put a five-year contract in place, is that going to satisfy the private equity buyer? They're looking for deals where the cash flow is guaranteed forever and ever. Number one, in these metal markets you don't get that, because it's a roller-coaster. And number two, they're dependent upon the resources that you have in the ground, and those resources being economic.
Q Tell us about what Century is doing in Peru. Is that where the future of your company is? And why Peru?
A I wouldn't say the future of the company is just in Peru. I would say the future of the company is in South America. We certainly are not going to want to put all of our eggs into one geographic basket here. That's the reason I'm going to Argentina in a month to spend some time there.
The issue is that in the 1990s, when we operated Royal Oak, we were all-Canadian. We were all high-cost, old mines, and we were chasing underground remnants. We just don't want that for this company. The company is positioned here to be looking for those five-million-ounce deposits. And you're not going to find them in Canada or in the United States.
Q You mentioned Argentina. Is there another Latin American jurisdiction that you like?
A We're all watching Ecuador for the next month to see what happens there. I also think there are a few Central American countries. But right now we don't want to spread ourselves too thin. We want to develop relationships in those other countries. And we would have to have more than 500,000 ounces of production coming out of Peru before we would feel comfortable with any other investment in Peru.
CENTURY MINING CORP.
Ticker: cmm/TSX
Close: 74 cents, down 4 cents
Volume: 205,830
Avg. 6-month vol.: 285,143
© National Post 2006
Source:
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