Century Mining Corporation ("Century", "Century Mining", or the "Company"), announced today that it has purchased 100% of the shares of Compania Minera Algamarca S.A., Compania de Explorations Algamarca S.A., Andean Mining Gold, Import & Export A.C.D., S.A., and Inversiones Mineras Sudamericanas S.A.. These companies own the 26 concessions, the surface rights, the mortgages and all litigation rights in respect of the precious metal property known as "Shahuindo" in the district of Cachachi, province of Cajabamba, department of Cajamarca in northern Peru.
The purchase price for 100% ownership of these companies is $US31 million, which is being financed by the sellers over a 2-year period. An initial installment by Century of US$1 million will be paid immediately and Century will continue payments of US$1 million each quarter for the remaining 7 quarters during the 2-year post closing period pursuant to the terms of the purchase agreement. At any time up to the end of the two-year post closing period, Century will effect a payment of US$20 million, with the balance payable 18 months later. Any quarterly installments made after February 6, 2008, will not be applied against the balance payable. The financing is non- recourse to Century Mining, or any of its subsidiaries and in certain circumstances the payments can be accelerated.
Concurrent with this transaction, Century acquired an option to purchase the mining concessions and surface rights surrounding Shahuindo, called the "Atimmsa Project" for US$21 million. This property, totaling 10,000 hectares of mining concessions and 142 hectares of surface rights may contain further extensions of the Shahuindo deposit.
The purchase price for the Atimmsa Project is to be paid in two installments and within the same timelines prescribed in the Shahuindo transaction: (i) US$12.5 million upon exercise of the option (also to be financed by the sellers) and which may, at Century’s discretion, be paid at any time within two years following the closing of the Shahuindo transaction; and (ii) US$8.5 million due in 12 months after the exercise of the option. Additional consideration in the form of a 2% NSR on both the Shahuindo and the Atimmsa Projects is also payable.
After a thorough legal review completed by the company and its advisors, and a review of the history of the dispute that has surrounded the title to the Shahuindo mining project, Century believes that the companies it is buying are the rightful owners of the properties and associated surface rights. Century has also taken the additional steps necessary to acquire the surrounding mining concessions and surface rights in order to be well-positioned to further develop the project. As part of the transaction, the selling group will continue to manage the ongoing litigation in the Peruvian court system.
Century plans to move the Shahuindo project forward, including undertaking background sampling for application of the environmental permit. Algamarca currently has on site a camp and the personnel necessary to undertake this work.
Margaret Kent, President & CEO of Century, commented, "We believe that there are over 2 million ounces of gold and gold equivalents at Shahuindo, which makes this an exceptional project for Century. We are going to build a mine at Shahuindo. My exploration team and I have visited the project and we view the Atimmsa property as a very exciting addition to the core Shahuindo property. Century has significant experience operating in Peru, with two producing operations and over 500 employees. We are also confident in our legal position in the litigation surrounding the Shahuindo Project. Rosario de Belen is similar to Shahuindo as it is located in the same district and is an open pit heap leach operation. This will facilitate extensive operational synergies, and we plan to build a similar but larger operation at Shahuindo. Shahuindo could be operational as early as the 4th quarter of 2009, with gold equivalent production of 125,000-150,000 ounces per year. This acquisition is consistent with Century’s strategy of increasing production while lowering cash costs through the consolidation of gold assets in the Americas. We are very excited that Century is continuing to grow with a world class asset."
Management will host a conference call today (May 16, 2007) at 1:00 p.m. Pacific time (4:00 p.m. Eastern time) to discuss recent acquisitions in Peru. Mining analysts, investors and the media are invited to phone 1-888-566-5775, or 1-517-308-9367 if outside Canada and the U.S.A., followed by the pass code 9930656 approximately 5 minutes before the start of management’s presentation. The presentation will be followed by a question and answer period.
A replay of the conference call can be heard through Wednesday, May 23 by dialing 1-800-814-6746, or from outside North America 1-203-369-3827.
About Century Mining Corporation
Century Mining Corporation is an emerging mid-tier gold producer that is aggressively acquiring producing mines and exploration properties in Peru. The Company owns and produces gold at the Sigma and Lamaque mines in Quebec that historically have produced over 9.4 million ounces of gold. In Peru, Century owns an 82.6% interest in the San Juan Mine where the Company accounts for 100% of gold production. The Company has also recently acquired Rosario de Belen where it accounts for 100% of both gold and silver production. Century’s growth strategy is to acquire gold producing assets in South America that will substantially reduce the Company’s consolidated total cash cost of production and where there is exceptional exploration potential to expand production at these mines.
Margaret M. Kent, Chairman, President & CEO
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