from $1 earlier in the year.

1) from $1.00 to $.88 – Wega’s equity financing at $.89.  Wega protected the share price for a while (in the $.88 - $.90 range) by also buying shares on the open market (to gain a 19.9% ownership in Century).  At the time, this was very beneficial due to Century’s official announcement of a “strategic shift to a significantly larger percentage of Sigma/Lamaque production from underground operations, which will result in a gradual phasing out of mining from the Sigma open pit in late 2009”.

2) from $.88 to $.51 – there were 2 major impacts during this period, as follows:

*About 2 million cheap warrants from 2005 start up financings – these warrants were exercised and dumped immediately onto the open market.  With the company being in a transition period (from decreased pit mining at Sigma to ramped up underground mining at Lamaque), coupled with gold sales being in the off-peak time of year (over and above it being summertime – off-peak season for overall investment markets), this share dump was magnified significantly.

*Subprime mortgage financial crisis / asset-backed commercial paper issue – this problem materially impacted the share price of almost every company (in almost every industry) on a global scale.  I believe many large size companies might have bounced back decently since the initial impact.  However, I get the impression that not many juniors have demonstrated much of a recovery. 

Century’s share price did bounce back to around $.68 with the announcement of “Sulliden loses registration of Shahuindo concessions to Algamarca”.

3) from $.68 to $.53 – cheap equity financing announced ($.55).

4) from $.53 to $.31 – the double whammy announcement that broke the camel’s back – accelerated closure of Sigma coupled with an additional cheap (equity) financing.  It appears as if a large number of Century investors threw in the towel at this point, with some leaving permanently and some deciding to go for the tax loss (with intentions to buy back in later at a cheaper price).  Of course, it represented added fuel to the regular tax loss selling fire.  Again, the primary impacts during this period were:

A) Accelerated closure of Sigma, which was originally planned for 2009 – the company mentioned that they do not expect positive cash flow from Lamaque until mid 2008.  Even though San Juan is cash flow positive, it probably wasn’t enough to slow down the share price bleeding (perhaps due to it being at early stage ramp up and the 43-101 resource report still pending).

B) Going from 2 million (warrant related) cheap shares being dumped onto the open market, directly into a cheap $.55 equity financing, then right into a 2nd (even cheaper) financing, was difficult for many Century Mining shareholders to swallow.  We later found out via the Q3 financials and conference call that it was necessary, due to the company’s cash position.  I recommend strongly that management review this situation closely and learn from the mistakes.  Based on the Q2 quarterly results, there should have been sufficient information about the accelerated decline of Sigma back in June.  I am of the belief that at that point in time (after realizing a major drop off in tonnage) management should have become immediately more conservative with cash management (to the highest extreme).

Knowing what we know now, if management had made this switch in managing cash then Huancacancha (on August 7th) would have never happened (at least not in 2007).  Huancacancha did not have an economically viable ore body, like Shahuindo for example.  Without pre-establishment of any silver content, it was essentially a pure exploration property – one which we were not financially capable of taking on at that time.  I believe the total costs were only around $340,000 ($215K initial installment and $125K exploration), however, that represents 850,000 shares at the recently announced financing price of $.40 (regular common share).

Given the company’s long-term strategy, I’m not against the purchase of an advanced stage deposit, or an already in production asset, especially if the price is heavily in our favour and if (non-recourse) debt financing can be independently arranged (during this low share price period), especially if it’s tremendously accretive to shareholders and it doesn’t get in the way of advancing the assets we already have.  I just don’t think Huancacancha fell into that category.  Huancacancha was an interesting exploration concept, but strictly for another time period.

Anyway, I still believe that Century’s management is capable of delivering the goods, but with a $.27 share price I don’t think it’s a secret to Century’s shareholders that management has made their share of mistakes (even with the events/legitimate excuses highlighted in this post).  I also think that management has made a lot of positive developments (albeit, most are at early stages) but unfortunately they have been overshadowed by the continuous negative situations.  I think everything will become more balanced (and positive for shareholders) once we start moving forward again.

C)  tax loss selling

5) from $.31 to $.27 – Scion sold about 2 million shares as part of year end re-balancing of their funds (and potentially to also take advantage of the tax loss situation).  They still see the great potential for Century Mining, as they “continue to own 12,310,500 common shares of Century Mining and 7,500,000 common share purchase warrants, representing 12.36% of the outstanding common shares of Century Mining, assuming the exercise of the warrants owned by the Scion Funds.”  Of course, coupled with the Scion sales we also experienced tax loss selling from our retail shareholder base during this share price drop.

Our share price is currently $.27 and it appears to be now impacted by strictly retail tax loss selling.  There are only 3 tax loss selling days remaining in Canada.

Of course, throughout all of the periods identified above, we were naturally also impacted by the ongoing litigation and a very public battle over Shahuindo.  Hopefully sufficient number of voters will see the value of the takeover offer, and get the deal closed off.  Why remain in the courts?  Century’s management team is far from perfect, like many management teams in the junior sector, but I believe they have assembled a good portfolio of assets in a short period of time (without giving away the farm).  I think adding Shahuindo to the mix will unlock tremendous value for all shareholders involved.  I believe it is a once in a lifetime opportunity that has been created primarily due to heavy litigation and market perception issues.  In this $800 gold price environment, I think the consolidation of Century and Sulliden will create a very formidable company, and a company that will be transformed into a value creation vehicle (never before experienced by its shareholders – on a sustained basis).  Every day that goes by without closure is another day that is wasted in an already short lifespan.

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