Century Mining arranges $66-million (U.S.) financing

2009-02-02 09:52 ET - News Release

Ms. Margaret Kent reports

CENTURY TO SELL $66 MILLION GOLD-BASED FINANCING TO FUND LAMAQUE MINE AND IMPROVE COMPANY'S FINANCIAL POSITION

Century Mining Corp. has arranged a structured gold-based financing, whereby the company will raise up to $66-million (U.S.) from institutional investors and repay the loan over a period of five years with physical gold from production at the Lamaque underground mine in Quebec. The completion of this financing will also improve the company's financial position by eliminating a significant portion of short-term liabilities.

The company has chosen Toronto-based Octagon Capital Corp. as lead agent to arrange this brokered financing. Century and Octagon will work closely together to place this structured financing with qualified institutions. This financing is expected to close by the end of February, 2009.

The company will sell 15,000 units, each unit consisting of 600 common shares of the company, 1,000 purchase warrants and five troy ounces of gold, each such ounce deliverable by the company on Nov. 30 in each of 2011, 2012, 2013, 2014 and 2015. Each unit will be priced at $4,400 (U.S.). The combination of shares and warrants issued through this financing will result in less than an additional 15-per-cent dilution to current shareholders.

After evaluating several strategic options and consulting with various investment banking groups over the past two weeks, the company has chosen this solution, which it believes is in the best interests of Century's shareholders and other stakeholders.

This financing alternative will allow Century to secure financing by committing just a small percentage of the gold that will be mined at Lamaque between 2009 and 2019. The gold-based financing will also eliminate the significant dilution of the company's shares and overhang normally associated with convertible debt and other conventional financing methods. The method chosen by Century also allows the company to avoid excessive interest rates associated with high-yield debt facilities.

The funds raised through this financing will be used for the Lamaque project development (74 per cent), working capital and paydown of short- and long-term liabilities (19 per cent), and various fees and costs associated with the closing of this transaction (7 per cent).

Margaret Kent, president and chief executive officer of Century, commented: "The board of directors and management consulted financial advisers and reviewed numerous alternatives for the Lamaque project, including mergers, joint ventures, high-yield debt and other facilities with senior lending institutions. Based on these consultations, management determined that in a robust gold market and with a positive outlook for gold, it is in the best interests of Century's shareholders to minimize dilution with a gold-based financing alternative. Octagon Capital Corp. reviewed available information from the Fortis financing due diligence process and has agreed to be lead agent for the offering."

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