CMM closes Lamaque Mine. Can Bankruptcy be far off?
Century Mining to stop production at Lamaque
2008-07-02 16:38 ET - News Release
Ms. Margaret Kent reports
CENTURY MINING ANNOUNCES TEMPORARY CURTAILMENT OF LAMAQUE UNDERGROUND PRODUCTION; COMPANY TO CONTINUE DEVELOPMENT WORK, FURTHER RESOURCE UPGRADES AND FOCUS ON ACHIEVING SENIOR DEBT FINANCING DRAW DOWN
Century Mining Corp. will temporarily curtail production at the company's Lamaque underground mine, located in Val d'Or, Que. The company also announced that mining operations at the San Juan gold mine in Peru will continue as normal.
Investor conference call
Management will host a conference call after the 2008 first-quarter financial results are released, to discuss the details of the financial results and the future strategies at its operations in Quebec and Peru. The date and other details of the conference call will be included in the first-quarter financial results announcement.
Overview
Explaining today's decision, the company cited economic and timing issues that favour a temporary curtailment of underground production. The company stressed, however, that the operation will continue to remain open. Century expects to complete necessary preparations and close the financing, in order to commence ramp-up of the underground mining operations in November, 2008.
Purpose of curtailment
The company's board of directors, after carefully evaluating current operations, and near-term financial commitments and capital requirements, determined that there are significant benefits to curtailing production for a period of up to six months. During this period, the company will use funds procured through the recently announced financings to fully focus the key staff on mine development, mine planning, permitting activities and financing due diligence activities. Century recommenced development at the Lamaque underground mine in May of 2007 and, in parallel, has undertaken a substantial data compilation program that has resulted in an NI 43-101-compliant technical report, including 1.13 million ounces of gold reserves, 624,000 ounces of measured and indicated resources, and 2.83 million ounces in the inferred resource category. During the interim curtailment, Century will maintain its key staff at the Lamaque complex.
Financing
On June 5, 2008, the company announced in Stockwatch that it had secured a commitment for $6-million from MRI Trading AG. Century is also currently engaged in a due diligence process with Fortis Bank for a senior financing package of up to $70-million. Both of these financings are expected to proceed as planned during the interim period. Funds procured through the MRI facility will be used for the aforementioned due diligence activities, which will lead to the company's ability to draw down on the Fortis facility.
Margaret Kent, president and chief executive officer, commented: "The decision to implement a curtailment of production during this interim period for Lamaque was carefully considered by management and the board of directors, based on all available financial and operational information. Underground mining at Lamaque carried out since May of last year has provided a thorough understanding of the mine and the associated operating costs. This information was needed to confirm previously reported feasibility numbers and provide the backup necessary for the current banking due diligence processes. The underground operation was operating at about 20 per cent of optimum capacity, and the lack of necessary bridge financing to increase production has resulted in continued operating losses. By temporarily curtailing production, the company will be able to allocate all funding and dedicate all management resources to mine development, so that full-scale production may begin immediately upon drawdown of the previously announced Fortis Bank debt financing. Management believes that this plan will ensure the long-term success of the Lamaque underground mine, and minimize further dilution to the company's shareholders. During the interim period, Century will work closely with the company's financial backers and all other stakeholders, to ensure a smooth transition from development to the restart of full-scale mining operations. The project has a 10-year life, based on minable reserves, and it is expected that the overall mine life will approach 20-plus years, based on the known resource profile. A six-month curtailment of production is a positive step toward achieving our long-term goals."
We seek Safe Harbor.
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