John:
So you've "dragged 6 kicking and screaming and *unwilling* folks I know into this puppy (CMM). Why? It was the right thing
to do."
LOL ... Ummmmmm ... errrrrr ... I've dragged a considerable number more than that in,..... and I know that Tanoose has as well ?
Anyhow, to address you question.
On page 19 of the YE 2005 financials, the company states,...
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e) Obligation to be settled via the issue of shares Pursuant to the agreement for acquisition of assets from Sigma-Lamaque, the Company agreed to pay a total of $6,000,000 to certain unsecured creditors of the Sigma-Lamaque Limited Partnership. The Company paid $125,000 in cash to these creditors on closing of the acquisition. The remaining balance of $5,875,000 can be paid via the issuance of common shares or cash at the option of the Company. The Company has agreed to issue up to 13,694,638 common shares in tranches as follows: 15% on the closing date of the agreement, 10% 4 months thereafter, 15% 8, 12, 16, 20 and 24 months thereafter to settle this debt. In September 2004, the Company issued 2,054,196 common shares in the amount of $881,250 in accordance with the agreement. In 2005, the Company issued 5,477,856 common shares for the value of $2,348,630 resulting in a remaining obligation of $2,645,120 at December 31, 2005. At December 31, 2005, the Company had reserved an additional 6,162,586 (2004- 11,640,442) shares to be used for the settlement of this liability.
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My comments ...
On January 15, 2006, the company made their scheduled payment again. I believe each share issued in these previous payments to the former unsecured credit holders of McWatters had a deemd value of $0.43/share. There are now two payments left to fulfill the committment to these unsecured credit holders. One on May 15 2006 and the last one on Sept 15 2006.
The payments are for $881,250 in cash or shares at the discretion of the company. They've allocated the issuance of "up to" 6,162,586 as of year end 2005. So for the January 15 2006 payment, there were about 2 million more shares issued, as the share price was still quite low. As for the remaining two payments, if we use a current share price of $1.50 then the following amount of shares could be issued for the upcoming May 15 2006 payment.
$881,250 / $1.50 = 587,500 shares
This looks like very marginal dilution at this point in time for the last two payments. From the explanation I received from IR while at the PDAC convention in Toronto back in early March, the fact that Century Mining offered the "unsecured credit holders" something for their losses incurred from the McWatters bankruptcy, this was one of the deal makers that helped Century win the bidding for the Sigma Lamaque Complex. CMM also agreed to pony up the back holiday pay owed to the former employees as well. All of these details are available on the SEDAR site for Century Mining's filings dated on April 29,2005.
Recall, the price paid for Sigma Lamaque was $25.9 million. Looks to me like the company will see at least $25 - $30 million in cash flow from there this year alone, should gold prices hold steady above US$600/oz .
Also, when looking at the value assessed for "Mining properties, other properties plant and equipment" of $49,567,078, do you think you could build a 5000 tpd mill for $50 million today, not to mention the costs to drill, do pre-feasibility and feasibility work on the open pit reserves and resources, and how much more would it cost to cut all the drifts and the shafts for the Lamaque underground. There's over 4.5 million known ounces of gold in reserves and resources at Sigma Lamaque. Not bad for a $25.9 million purchase price eh ? |
