Century Mulls Its Options At Lamaque

Junior gold producer Century Mining (CMM-V, CMNZF-O) has nailed down a conditional underwriting commitment for US$65 million to restart Lamaque, a gold mine in Quebec that historically has produced more than 9.2 million oz. gold.

The financing from a consortium of international investors is subject to the transfer of all assets and liabilities associated with the mine into a new, wholly owned subsidiary of the company. The subsidiary’s shares would then be pledged as part of the security package for the loan.

In addition to the $65-million debt financing, Century is in the midst of negotiations for additional financing with two separate parties. One of the two deals would involve a merger with another resource company in a bid to pool resources to develop Lamaque and pay down debt. The other involves an agreement with a group of financiers for debt and equity financing for Lamaque.

The three alternatives are not exclusive of each other, Century says. It points out that any combination of the US$65-million debt financing and one of the two deals could be completed.

Century also unveiled a shares-for- debt arrangement in which the company would undertake a private placement of up to $2 million in lieu of payment to certain creditors. Under such a deal, Century would issue up to 8 million shares at a price of 25¢ per share.

The offering is being made to various creditors in order to cut corporate debt and strengthen Century’s balance sheet, the company says.

“Many of the creditors that are participating in this offering will play a key role in the restart of the mine and have supported the company for the past year,” Margaret Kent, Century’s president and chief executive, said in a statement. “We are happy that, as key stakeholders, they will recognize the potential upside when financing for the project is completed.”

Apart from the Lamaque mine, Century’s San Juan mine in Peru produced 63,120 oz. gold in 2007.

Century shares recently traded at 17¢ apiece in a 52-week trading range of 1-28¢. The junior has 169.1 million shares outstanding.