Ian/Tom/Larry/Sonny/Dorothy
Below is a summary of selected posts by posters on StockHouse
that reflect their take on the recent CMM Conference Call.
The order that I present them in is of my own choosing
and based on what I think is important.
In general - the categories that the postins fall under
are as follows:
(a) Current CMM production forecast
(b) How much gold can we produce in the 2nd quarter from
Lamaque now that we have the permit.
(c) New CMM initiatives with respect to the Sigma/Lamaque
complex.
(d) Other stuff.
Overall with respect to the CC - the BIG NEGATIVE that
came out of it was that they HAVE NOT moved that pile
of SCRAP. The reason for this is broken shovels and
other stuff.
I got the impression from the posters that the chief
concern about this is not so much that the SCRAPE hasn't
been removed - but that because it is so massive
it limits how much real mining can be done in the Sigma
open pit.
Here is a summary of posts for the last two days:
You will have to read this several times to absorb
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donnymac
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2007 Budget
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The following paragraph is from page 15 of the MDA. The MDA was compiled with
information available up until March 16, including the "subsequent events" and the
"outlook" sections.
........In 2007, the Company plans to produce a total of 100,000 ounces of gold,
including 74,000 ounces from the Sigma open pit, 12,000 ounces from the Lamaque
underground mine, and 14,000 ounces from the San Juan underground mine in Peru, at an
estimated cash cost of approximately US$370 per ounce.........
Seems to me that it is a forgone conclusion that the approx. 18,500 oz from Sigma and
the approx. 3,500 oz from San Juan are in the bag.
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joker
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Lamaque - 2nd Quarter
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December, not quite as negative as you posted:
6. While the NR said that "up to 400 tpd" of Lamaque ore would be going into the Sigma Mill, Kent said that they are starting with only 50 tpd of ore and would be
ramping up to only 75 tpd by the end of August! Ouch!
As per the CC, they are starting to process Lamaque ore today at a rate of 50 tpd.
That number will increase to 275 tpd by June and 400 tpd by August. That is still sufficient to
add 5,000 oz to Q2 with 15 g/t ore
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dec03
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Lamaque - 2nd Quarter
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Joker, did they say 275 tpd by the end of June? I thought I heard 75 tpd? Apparently
I didn't hear that correctly or messed up taking notes.
Thanks for straightening me out! [I'll listen again.] Hope I didn't screw up a bunch more facts. My bad.
You are right 275 tpd would be better....looks 400 tpd of 15 g/t would produce 5500+ ounces per month.
12-3
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joker
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Lamaque - 2nd Quarter
================
did they say 275 tpd by the end of June? I thought I heard 75 tpd? Apparently I didn't hear that correctly or messed up taking notes.
No they didn't say 275 tpd by the end of June; MK said 275 tpd by June and 400 tpd by August. I'd interpret that to be producing 275 tpd in June and 400 tpd from the start
of August to the end of the year.
John tpd = tonnes or ore per day and
g/t = grams/tonne of gold in the ore.
If we assume 50 tpd for April, 150 tpd for May and 275 tpd for June, the total Lamaque ore processed in Q2 would be 13,400 tonnes grading about 15 grams/tonne. This is equal to 6,000 oz.
The Sigma production is as per forecast, but MK said that they are currently processing 4,300 - 4,500 tpd. At a grade of 1.6 g/t, 4,400 tpd would yield 19,000 oz.
At a grade of 1.5 g/t, the production would drop to 17,800. Forecast is 18,500 oz. per quarter.
Therefore depending on the actual average Sigma grade (which has been lowered because of the reduction in the cutoff grade)SL should produce somewhere between 22,000 to 25,000 oz and another 3,000 oz from SJ in Q2.
Considering the ongoing problems in Q1, I'm not expecting Q1 production to be much better than Q4 of 06 - maybe 17,000 oz.
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joker
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Lamaque - 2nd Quarter
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Barood, neither I nor Century is suggesting that 15 g/t is sustainable but based on the initial blocks that have been sampled, the first 7,500 oz will come from ore grading 15 g/t.
After that I'd agree that 5 g/t tonne is the number to use.
400 tpd at 5 g/t will still produce 5,400 oz/qtr or 21,600 oz annually. There should be no problem beating the 12,000 oz forecast for Lamaque this year.
As per MK's comments on the CC, CMM will be taking a hard look at the possibility of increasing the amount of higher grade underground ore to the mill from other sources including Sigma underground as well as other higher grade sources such as the West Plug. Agnico-Eagle is planning to process 3 g/t gold at a depth of 5,000.
Whether or not we stay in a trading range for the next 5 or 6 months depends on whether how many more investors come to realize how undervalued this company is compared to its peers. With the Lamaque permit in hand, I don't think the 100k
forecast for this year is in any doubt. That alone should be worth a market cap of at least $300 million.
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barood
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Lamaque - 2nd Quarter
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Joker,You can't use 15 g/t for Lamque as a sustainable grade. Historically, this mine's
grade average is 5 g/t. I would not buy these speculations, I would rather trust the historical grades.
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dec03
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Sigma UnderGround
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Did you hear that guy on the CC ask about Environmental Permits for the West Plug and Sigma U/G Mine?
I was shocked that no one seemed to know if the existing permits covered the West Plug or not! Gee, didn't we learn anything from the Lamaque Environmental Permit debacle? We put out a NR touting, "Look at what we have at the West Plug" but they have no idea if they can go get the ore tomorrow or not or need to work through a permit for the property?
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production05
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Sigma UnderGround
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Agnico-Eagle has 1,640,000 ounces of reserves at their Globex mine, BUT only at a grade of 2.39 g/t. Their grade appears to be very low grade for an undergrouind mine.
However, they plan to have tremendous success at this mine. They are expecting 170,000 ounces of annual production (10 yr mine life) at a cash cost of only $225 US.
I can now understand why Peggy is so excited about the potential of CMM going underground at Sigma. I even think that Century's gold sitting underground at Sigma
is much higher than the 2.39 g/t at Globex. In addition, we now have a $680 US gold price.
Maybe CMM can use the same techniques that Agnico-Eagle is using to get such a low cash cost. CMM doesn't even have to bring in that $225 US cash cost. They could even
do $400 US in cash cost at Sigma underground and still be hugely profitable.
This sounds like an exciting initiative with huge upside potential given current gold prices.
I am really looking forward to seeing them move on all of these new initiatives.
These are exciting times for Century Mining.
Production05
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production05
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Sigma Initiatives
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From the Y/E NR:
'For the Sigma-Lamaque Complex, in particular, management is currently finalizing plans that will further enhance profitability. Specific initiatives for Sigma-Lamaque
will be announced in a forthcoming press release.'
Based on the Thursday NR and info provided in the conference call, here are 3 of these initiatives:
1) Mining at Lamaque - they increased 2007 ore tonnage from 250 – 300 tpd to 400 tpd.
It perhaps represents anywhere between 25% and 50% increase in 2007 Lamaque (run rate) production.
2) West Plug – they will attempt to initiate mining at the West Plug, an open pit operation. It has 81,000 ounces that are 43-101, with the indicated portion grading at 2.29 g/t. However, what was surprising today is no mention by Peggy about solid 2005 drill results. All along they have said they will be doing a calculation on the ounces and incorporate them into the 43-101 report, as part of the reserves calculation they are generating for Lamaque. As a result, I am expecting the West Plug deposit to be a lot more than 81,000 ounces. Again, here are some highlights of the 2005 drill program:
* 7 meters @ 13.25 g/t
* 3.14 meters @ 15.86 g/t
* 7 meters @ 7.8 g/t
Now, it could be that these new ounces are located at a different part of the West Plug property than where the pit design is planned for the 81,000 ounces. If such is
the case then perhaps they can start up a second small pit for the new ounces.
Anyway, I will try to drop a message with IR and see if we can get an answer.
3) Mining underground at Sigma. Historically, both open pit and underground mining was done on the Sigma property. Underground mining was discontinued due to low gold
prices. My guess is that the price was probably around $300 – 350 back then. As we all know, the gold price is now $680 and it expected to remain at this level or greater for many more years. Anyway, they say Agnico-Eagle is having success with a
similar type of circumstances so it probably bodes well for Sigma underground.
They might have some other initiatives, but I think these 3 will be the primary ones.
It doesn’t sound like they are considering the custom milling option, at least they didn’t hint about that during the conference call.
Too bad the 50,000 ounces at our Aumaque mine is not 43-101 compliant as yet. It would great to mine those ounces as they are very high grade gold at over 8 g/t.
Aumaque is located close to the S-L complex. The mine is already developed, but probably needs some more dewatering. If the gold is mainly located in the developed parts then they should look to mine it. They probably need to do some drilling to make it 43-101, but that would increase the ounces also.
They could probably go underground at our Sigma 2 mine. It’s in trucking distance.
However, that represents more long term planning as it would require some drilling and development.
They have great long term potential with their Boulamaque properties, but again, a lot more long term.
Production05
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production05
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1st and 2nd Quarter EAT
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It looks like we can. It looks like we might have a good chance of coming in with net profits of around $1.4M in Q1 and around $1.8M in Q2, assuming all of the conservative assumptions listed below.
From a cash perspective we would get the $1.4M net profit + around $1.2M from non-cash deductions, thus it would make our cash/near cash contribution about $2.6M in Q1. That could pay for most of the deferred stripping.
For Q2, it would be $3.0M ($1.8M + $1.2M).
Per the conference call today, Century Mining is currently paying for development and exploration costs through a combination of cash flow and line of credit. It wasn’t
mentioned during the conference call, but I believe the credit facility is $10M US.
All of this should be more than sufficient to pay for everything until Lamaque begins to generate positive cash contributions. As a reminder, positive cash contributions
can be achieved (and funds available for company use) well before commercial production is established. Also, as mentioned in a post yesterday, once SJ starts to
make an operating profit it will begin paying for its own exploration costs, until it eventually sustains itself 100%.
* Let’s be conservative about everything.
* Let’s go with the low end 16,500 ounces from Sigma as being our only commercial production ounces. No commercial contributions from Lamaque and SJ for Q1 and Q2. All
costs for those projects are capitalized to the respective project. Sigma remains clean, without Lamaque and SJ influences. Also, let’s assume no positive or negative
influences from deferred stripping on the Income Statement.
* Let’s use the Q3’06 cash cost of $422 US for both Q1 and Q2.
* Let’s assume that CMM’s gold price came in at the spot price of $649 US in Q1.
* Let’s assume that Q2’s gold price will continue at $680 US for the balance of the quarter, and CMM achieves that price.
* Let’s assume no major surprises (positive or negative), including no hedging surprise.
* Let’s assume same G&A and other non-mining costs as Q4’06.
* Increased exchange rates in Q1 and especially Q2.
Production05
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barood
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hedging
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Management now has a different perspetive on the future price of Gold and they have no plans for hedging. They believe in stronger POG as we move forward.
Processing lower grade Ore at sigma is becoming economical. Which means longer mine life and expanded reserve. This will keep the mill fully utilized while processing
high grade Ore from Lamaque.
SJ is a multimillion ounce resource.
But needs a lot of work going forward to prove it up.
Time is of the essence here.
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dec03
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Overview
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Actually this was one of the best CCs that CMM has ever done! No need to ask a long litany of questions as Ms Kent already had them covered in the opening remarks. Lots
of good straight forward information given about every aspect of the company and its operations.
Lets go through the questions I had and see what the answers were:
Whatsup with the TSX and a listing? Same old, same old? Clarify the need for 43-101 Reports: is that for ALL of CMM properties or just the major ones?
CMM decided not to focus any effort in getting listed on any other exchange except for the TSX. They are focusing on the getting the 43-101 Report complete for The San
Juan main property and then will reapply for listing. Ir sounds like with the SJ 43-101 report and Carolin JV'ed that CMM thinks it can get a listing.
Poderosa lawsuit is attempting to get cash or regain control over the shares? What are the odds of success? What is this debacle going to cost us?
CMM has filed required briefs to start the "mediation process" and these documents were accepted by the court. CMM has filed an $85MM lawsuit and expects to commence discussions soon. A caller questioned the extension of the contract until November
17th, apparently both parties agreed to extend the day of the closure for the sale until the 17th, and were working closely with the seller's attorneys (20 something
emails back & forth on T&C), but on Friday they agreed to work over the weekend to finalize and on Monday CMM's money was wired to Peru and as that was happening the
sellers were selling their shares on the Lima Exchange.
How come CMM changed the target of 80,000 opy of production from the SJ Mine starting in 2007 to delayed till 2008? Can't find used equipment? Can't pay for the equipment?
Got no one who could build it?
Not answered directly, however, CMM did state that they have been having equipment problems with generators and compressors- having a hard time getting air and water
underground to aid in mining. Right now they are at 800 to 900 oz per month rate and hope to ramp up to 1,500 to 1,600 oz per month. So yes they are looking for used
equipment to replace what the have and that is holding things up.
What is CMM doing in order to gain access to the deeper parts of the Lamaque Mine that are under water - those parts below the 1500 ft level?
CMM is running a pump now to dewater the mine and it is progressing at a rate of 15 feet per day, I thought I heard at a rate of 800 pgm. CMM is looking at the chemistry
of the water and the possibility of using it as makeup water for the milling process.
Whatsup with the spin-off plans, why is it taking so long and who was hired as the Subsidiary President CMM was shopping for?
Caroline was on CMM's books for 490,000 so the deal which gives CMM payments in the millions and a back-in rights, or a 3% NSR is a pretty good deal (Kent's words).
Module will use flow through funding to raise cash to drill and explore the property.
CMM looked at doing a spin off as a dividend to shareholders but were prohibited from
doing such by the loan covenants on the $12MM Sigma Debt. If CMM had done a spin-off as a dividend then the whole "dividend" would have gone to the bank for loan
repayment.
Did we get anymore exploration permits for the various SJ properties?
Apparently not. Sounds like they have applications in for the rest of the sites on the San Juan property. Ms Kent sounded pretty excited about the possibilities of the
Erika property with a 1.5km diameter dike. Grade is the range of 0.6% copper were termed as "fabulous." Oh yeah, and the permits are expected in the "next 30 days!"
{Yeah, right!]
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Kazan
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While I thought the news releases the last two days were great, I think the conference call sucked. Sigma is still struggling and the waste stripping program is
way behind. And San Juan drilling is moving more slowly than hoped. Lamaque does sound like it's going to cure a lot of ills though.
I also expect a PP in the near future. Peg needs the scratch.
Bottom line - While the fortunes of CMM have turned, it's going to be a long slog to $2 (or fair value of above $3) in my opinion. The conference call was akin to ending
a very nice week on a very dour note.
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dec03
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Negatives from Conference Call
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OK, here are all of the negatives from the CC. One big ball you can attack as false or irrelevant if you wish.
1. The Sigma pit is too small and it is hard to move around in there with all of the equipment. operations are so tight at times as to hamper CMM's ability to get ore and
waste out of the pit.
2. To make matters worse, CMM is going to dump more rock and ore into the pit from the Lamaque U/G Mine.
3. CMM is having equipment problems again (deja vu?). One shovel caught on fire and there were cracks in the booms (structural failures in the metal of the arm of the
shovels). Yousa.
4. As a result of equipment problems, no waste was hauled out of the pit during 4th Quarter and little was taken out during 1st Quarter! Stripping still needs to get
done, 'we are working on it." (deja vu #2?) I thought I heard that they needed to get 1.5 to 2.0 MM tonnes out of the pit yet! Yousa! Removal rate of waste is about 15 Kt
per day! Yousa! 100 more days?
5. CMM has had some stripping circuit problems in the Mill of late where 2,000 ounces has gotten trapped in the process. They are working on fixing it.
6. While the NR said that "up to 400 tpd" of Lamaque ore would be going into the Sigma Mill, Kent said that they are starting with only 50 tpd of ore and would be
ramping up to only 75 tpd by the end of August! Ouch!
7. Peru is developing slowly because it is having equipment problems: generators, compressors, etc. SJ is only running 800 to 900 ounces per month. They are trying to
buy new or used equipment but having a hard time. Currently CMM can't get enough air or water u/g to effectively mine.
8. The exploration program HAD two rigs running on the project. CMM could not generate enough work so they had to send one rig away. Now they need about 5 rigs
once they get permits for Erika and other areas. They need to do a bunch of drilling underground in order to be able to define the SJ Mine area resources, however, they
can't get power or water into the mine so they aren't doing any of that drilling.
9. SJ is not going to prove up 1.0 Million ounces through surface drilling. If CMM wanted to they could issue a 43-101 Resource Report on SJ within a week, but as of
now it would be only 200,000 ounces! Yousa!
10. CMM is off "regrouping" (again?) on both the S/L and SJ projects. Apparently next week CMM will get together to regroup on the SJ exploration and make sure they are on
target. In addition, CMM is re-evaluating everything at S/L to determine what to do next? Mine at the West Plug? Sigma U/G Mine? Lamaque Mine? Bedard Dike? Always a
bunch of hope for what is next...
11. The net effect of the ore reclassification which changed the stripping ratio and sent striping costs to 'deferred stripping' on the balance sheet was $2 Million!
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barood
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Future Price Movement
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I am looking for CMM to stay in a trading
range between now and septemeber
as it failed to take out fibo 68% @1.38. |
