Someone PMed me about the difference between pourring gold and commercial production. This is a good question and I thought it best to answer it here for all to see.

We are aiming to start production in this summer but commercial production not scheduled till January 2011. What is the difference here?

Here is a post by Production05 that explains this very well. If anyone does not understand, please feel free to PM me.

This is a repost from Production05 -Thanks again!

We will be bringing the Lamaque gold mine back into production, and we expect to be pouring gold this summer and achieve commercial production during the first quarter of 2011."

The commercial production target varies from mine to mine, or so it seems. However, 30 consecutive days of operating at 60% (or greater) of designed capacity level appears to be commonly used. Though, I have seen requirements of 90 consecutive days at 60% (we can't rule out 90 days being the requirement for Lamaque). Also, it has to be consecutive days. If one day happens to fall before the 60% designed level then the counter starts all over again. As a result, to begin pouring gold in mid 2010 and then to achieve commercial production in Q1 2011 is reasonable.

This does not automatically mean that we can't achieve cash flow positive levels prior to achieving commercial.

I believe that achieving cash flow positive results and achieving commercial production requirements are 2 separate events (even though the revenues and costs will both be capitalized into the Balance Sheet prior to commercial production so will likely never get to view Cash Flow separately prior to commercial production).

For example:

let's use a designed capacity of 100,000 ounces for Lamaque

100,000 * 60% = 60,000 annual ounces (at commercial production level)

Century is planning to begin pouring gold in the summer (let's assume 6 months for 2010). Century is planning to produce 45,000 from Lamaque in 2010 (those 6 months combined).

As you can see, 45,000 ounces for 6 months is not bad. Extrapolated annually, that's probably in the 70,000 to 90,000 range (depending on available ore feed on the various areas being mined from month to month).

45,000 ounces (for 6 mths) = 7,500 ounces per month

I would like to think that Lamaque can be cash flow positive at 7,500 production ounces per month, especially with a $1,120 US gold price.

posted by production05 at 7:30 AM on Jan 4, 2010