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Gold/Mining/Energy : Century Mining Corporation
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To: Golden Nugget who wrote (335)1/17/2007 7:49:19 AM
From: John McCarthy  Read Replies (3) of 545
 
Hi GN

Yesterday was a rough day.

Before I begin what you should know is that I am a
*dummy*. So what follows is from a *dummy*.

(a) We should not have a problem doing the 100,000 oz
forecast in their 2007 projection notwithstanding
that I don't know where the 100,000 is coming from.

(b) What greatly concerns me right now is the $8.0 million
dollars that was cited in yesterdays new release as
stripping costs.

Here is how its worded -

>>>>>>
with a further $8.0 million estimated for deferred stripping and mine development
>>>>>>

Here is what it means - presented as an ILLUSTRATION so
that you can SEE IT. (I am also an accounting *dummy*
that has booked a couple of debits/credits in my life)

(1) We incur $8.0 million dollars in WAGE COSTS.

(2) The $8.0 million dollars in WAGE COSTS means that
we cut payroll checks for $8.0 million thereby REDUCING
our CASH by $8.0 million.

Point:That is $8.0 million in cash that we don't have
to invest in San Juan because the cash HAS TO BE invested
in these stripping costs.

(3) Here is the coup DE IT SUCKS .... thru accounting
mumbo-jumbo we DO NOT book the entire $8.0 million in
Wage Costs to the 2007 P&L.

Rather - CMM mgt. and our accounting firm come up with
some LOGIC - based on some historical CRITERIA - by
which - FOR ILLUSTRATION PURPOSES - we only book $2.0
million of the $8.0 million to our 2007 P&L and book
the balance $8.0 - $2.0 million = $6.0 million to
FUTURE YEARS e.g 2008,2009 etc.

I don't like this - esp. in the case of CMM - because that
$6.0 deferral to future periods was based on some ESTIMATE
that I *automatically* do not trust.

What I would prefer is that we book the entire $8.0 in
stripping costs to the year 2007 as expense. AND YES -
this would reduce our profitability by $8.0 million
bucks - but if dem da facts - then dem da facts - STOP
with the cutesey cutesey accounting entries.

Are we profitable - YES?

Again - I am a *dummy* so its best to keep asking questions
and get other viewpoints.

regards,
John
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