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Gold/Mining/Energy : Century Mining Corporation -- Ignore unavailable to you. Want to Upgrade?

To: John McCarthy who wrote (163)	7/24/2006 2:31:00 PM
From: HotnSpicy	Read Replies (1) \| Respond to of 545

John, you have gone schizo on us. You were very bullish a month or two ago. Now, almost in despair.... Lets take a rational look at the issues: 1) Trucks are late. Yes. But is a month "very late"? Hmmm. Perhaps you haven't been paying too much attention to the state of affairs of the mining equip business recently? Problems are so bad that some equip is shipped without tires. So a month delay is hardly a big issue, nor surprising, nor a fault of management. 2) Hedges are gone and will likely be a drain on Q2. But finally, we can predict earnings a touch better going forward. I suspect a lot of people were shocked to learn that CMM rec'd about $100 less per ounce in Q1 than the quarterly average. I know I was miffed. Had the hedges not been there, they would have posted a profit. 3) Q3 will likely be above 22,500 oz if they simply have modest mill thru put and equip availibility. August should see an entire month of two new trucks hauling out waste (not tailings). And Sept will see all four trucks running. So production will rise. Remember, they had miserable equip avail in Q1 and were only a few thousand ounces short of their budget. Even a modest improvement will see them meeting budgeted production. And with 4 new trucks, availability should damn near double. The full benefit comes in Q4. At 5500 tpd, they will see about 27,000 oz (assuming 1.8 gpt headgrade and 95% recovery). That more than makes up for the modest shortfall in Q1 and Q2. CMM has said the new trucks will allow more waste stripping to allow more access to paydirt. If I recall, CMM has a ~4.5:1 strip ratio. (4.5 tonnes of waste for every one tonne of ore). So the ability to strip is key to getting ore to the mill. 4) Exploration expenses are not going to be anywhere near your assumptions. Certainly not "several millions" for both Q3 and Q4. I doubt they spend a million in either. Perhaps you are confusing capex for underground expansion at Lamaque and upgrading at San Juan? That will be more of hit imo than exploration expense. 5) Q3 P&L will finally show a profit imo. You are making some wild conclusions based on an apparent misunderstanding of the entire business. Confusing tailings with waste from the pit is close to confusing letter A in the alphabet with Z. 6) Weather has no effect in Peru. They are in the desert, and virtually no rain falls there. In Val d'Or, they mine year round. Perhaps some modest slow down in the very coldest months, but not significant. If you recall, CMM had their best month in January. Feb wasn't so good, but that was a function of equip downtime rather than an inability to mine the pit. Some of the heaviest snow will cause pit road conditions to be too slippery, but that's not too common. 7) POG is highly volitile and we have to get used to it. US $ is going down as soon as they stop raising rates, which is sooner than later. And that's good for gold. In any event $600+ POG is a boon to miners like CMM. 8) Q4 is probably too early to tell if Lamaque is viable. I expect similar issues that plagued Sigma to also affect Lamaque. (people, equip, rising consumable costs) Personally, I look for a modest loss in Q2 again (due to one time items like closing the hedge book, costs with the PP etc). The mine will post another operating profit now that the hedges are gone. Going forward, unless POG falls off a cliff, or head grades collapse at Sigma, CMM will finally show a profit. And as more ounces from Lamaque, Sigma and San Juan come on, it should be a steadily improving bottom line for years to come. Current prices reflect a warped view of CMM's prospects.