Century Mining Corporation

Century Mining Corporation

March 30, 2006 09:30 ET

Century Mining Announces Acquisition of San Juan Gold Mines and Minera Chorunga in Peru

BLAINE, WASHINGTON--(CCNMatthews - March 30, 2006) - Century Mining Corporation (TSX VENTURE:CMM) today announced that it has reached an agreement with the owners and secured creditor to purchase 60 percent controlling interest in San Juan Gold Mines S.A.A., and 60 percent interest in Minera Chorunga S.A.A. The remaining 40 percent interest is owned by the existing labour force, many of whom have worked at the San Juan Mine over the past years.

The operation is located near the southern Peruvian coast, approximately 80 kilometers inland from the mouth of the Ocona River and the city of Camana. The mine is currently producing 12,000 ounces of gold per year operating at a rate of approximately 150 tonnes per day. The conventional zinc precipitation/CIP circuit mill is on-site and is rated and permitted for 700 tonnes per day. In the 1980s the operation produced as much as 36,000 ounces of gold per year. Approximately 50 percent of the gold is easily recovered by gravity methods.

The Chorunga Mining District is characterized by extensive mesothermal veins and shears within intrusive andesite and granodiorite rocks. The district represents a structural analog to the Pataz District of Peru, the Abitibi Belt of Quebec, and similar orogenic lode gold districts.

The mineralization at San Juan Gold Mines consists of quartz-pyrite-gold veins which are persistent structures traceable in outcrop. More than 35 mineralized structures have been identified on the property. The veins exhibit classic "pinch and swell" structures (sigmoid loops), with an average width of 1 meter. These structures persist for three kilometers or more along strike, and more than 800 meters vertically.

In 2002, San Juan Gold Mines S.A.A. commissioned DMT-Montan Consulting GmbH of Essen, Germany to prepare a medium term business plan for the modernization and expansion of its mining operations. The report, titled "Three Years Business Plan for Empresa Minera San Juan Gold Mines S.A.A., Arequipa, Peru", was prepared by Dr.-Ing. Jurgen Kowalewski and dated November 8, 2002.

The report quoted underground ore reserves of 6,525,478 tonnes at an average grade of 8.34 g/t gold containing 1,531,119 ounces of gold. This historical estimate is "based upon the official ore reserves balance prepared by San Juan by December 31, 2001. This ore reserves inventory shows, according to typical Peruvian standards for underground vein operations, geological and mineable ore reserves, diluted to a minimum stope width." Since the date of the report there has been no significant depletion in reserves. This historical estimate is not compliant with NI 43-101 standards of disclosure.

As consideration for the purchase, Century will pay a total of US$4.5 million in cash, US$600,000 worth of common shares of Century, and 1.0 million common shares of Century. As part of the transaction, Century will purchase US$9.9 million of outstanding bank debt that currently secures the majority of the mining concessions. This bank debt is being purchased for US$2.5 million and is part of the total US$4.5 million consideration. The balance of the cash purchase price and Century shares will be used to pay the shareholder and pay down unsecured creditors, leaving San Juan and Minera Chorunga essentially free of liabilities other than the secured debt that Century is purchasing as part of this transaction.

On completion of the acquisition, Century Mining Peru S.A.C. will assume control of the property and will immediately initiate plans for expansion of the operation. The Company currently anticipates that an expansion to 80,000 ounces per year of gold production is possible with a US$10.0 million capital investment. Dr. Kowalewski's report stated that an immediate expansion to 31,000 ounces per year at a cash cost of US$265 per ounce is possible with a US$2.0 million cash investment.

The Company plans to evaluate the existing 1.5 million ounces of historical reserve and bring it to NI 43-101 standards of disclosure as soon as possible. This process is anticipated to require approximately six months, during which time existing production from the property will be maintained.

Exploration Potential

In addition to the 1.5 million ounce historical reserve in the vein systems, the 16,300 hectare property hosts several types of additional exploration targets. These include several excellent epithermal prospects within Miocene-age volcanics, equivalent in age and chemistry to the host units for many large open pit gold mines in Peru.

The "Santa Clarita" prospect is located in a zone of hydrothermal alteration near the Choclon fault, six kilometers from the San Juan Gold Mine. The zone extends for seven kilometers. It consists of layers of iron oxides more than 10 meters thick in clastic sediments with veins of quartz with visible gold.

The "Golden Champune" prospect is located on a hill of the same name, 3.5 km northeast of San Juan Gold Mine. It displays stockwork mineralization with vein quartz. Pyrite and chalcopyrite are the primary sulfides, plus hydrothermal muscovite in some locations. Host rocks are a tonalitic intrusive with andesite dikes. Gold grades from this prospect run from 1.5 to 3.0 g/t gold, and a historical estimate by San Juan Gold Mines S.A.A. put the potential tonnage of the deposit at 185 million tonnes indicating the potential for a major heap leachable deposit. This historical estimate is not compliant with NI 43-101 standards of disclosure.

The "Lily" prospect is situated 15 kilometers southwest of San Juan Gold Mine and consists of gold-silver quartz veins in clastic sandstones and quartzites. Gold is found in oxidized fractures and partings in sandstones of medium grain size.

The "Erika" prospect is located 10 km southeast of the San Juan Gold Mines Mine. It displays traces of copper with gold and silver values along stockwork fractures in a granodioritic intrusive. The intrusive is in contact with clastic sediments which carry traces of pyrite and chalcopyrite.

To date the San Juan property of 16,300 hectares has had no geophysical surveys, no systematic geochemical sampling, and no drilling on any of the additional veins or epithermal targets. It is the Company's plan to immediately commence a systematic exploration program on the property shortly after closing. Specific plans and budget will be announced.

Financing for the acquisition is covered by existing cash in the Company's treasury and banking lines of credit that are currently being arranged. Closing of the transaction is expected to take place in the next 30 days. The closing is subject to regulatory approvals for the issuance of the shares and finalizing of documentation.

"This asset acquisition is possible because of our management team's substantial insolvency and restructuring experience, including settlement with creditors. Consequently we are able to buy the existing historical reserve ounces at US$7.00 per ounce, complete with a 700 tonne per day permitted mill," said Margaret M. Kent, Chairman, President & CEO. "Based on the due diligence that we have completed and a review of the previous consultants work, we believe the property has the potential to host several million ounces of gold.

"Properly capitalized, the property will produce a significant amount of gold from the existing underground vein operation. However, the very real and exciting potential of the property lies in the unexplored large epithermal targets. We believe with the injection of exploration funds in the area San Juan can become a major gold producer," concluded Kent.

A presentation of the San Juan property and the surrounding epithermal target areas can be found on the Company's web site, www.centurymining.com.

About Century Mining Corporation

The Company forecasts gold production of 90,000 ounces at a cash cost of US$325 an ounce from its Sigma Mine in Quebec in 2006. The Company owns the dormant Carolin gold mine in southwestern British Columbia; nine precious metals exploration properties located on the historic Juneau Gold Belt in Alaska; and exploration properties in Peru.

Margaret M. Kent, Chairman, President & CEO

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and as amended in Section 27E of the 1934 Act.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this press release.

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