Century Mining Corporation Concerned Shareholders

May 09, 2011 10:27 ET

Century Mining Concerned Shareholders Call for Updated 43-101 Compliant Reserves and Resources Estimate for the Sigma-Lamaque Gold Project

TORONTO, ONTARIO--(Marketwire - May 9, 2011) - In the press releases of April 18, 2011, April 28, 2011 and May 2, 2011 the concerned shareholders (the "Concerned Shareholders") of Century Mining Corp. ("Century") advised that we were unable to support the proposed business combination (the "Business Combination") between Century and White Tiger Gold Ltd. ("White Tiger") for the reasons set out in such press releases. The Concerned Shareholders wish to raise an additional issue which is fundamental to the economic evaluation by Century shareholders of the proposed Business Combination; namely; the lack of a current National Instrument 43-101 ("NI 43-101") compliant resource/reserve estimate for the Sigma-Lamaque gold project (the "S-L Project"), operated by Century in Quebec. Since the announcement of the proposed merger between Century and White Tiger, any reference to reserve or resource gold ounces at the S-L Project have relied on the resource and reserve gold estimates published in "Technical Review Lamaque Mine: Reopening of the Underground Mining Operation" last amended June 24, 2009 (the "Technical Report"). The text of that report was publicly filed on July 21, 2009, and is also available under Century's profile at www.SEDAR.com.

We believe that all Century shareholders hold the expectation of dramatically increased gold reserves and resources, based on the disclosure provided in Century press releases, SEDAR filings, recorded conference calls, and other public disclosure by Century since the date of the Technical Report which disclosed that significant additional exploration has occurred at the S-L Project. As a result, we believe that the Technical Report is no longer current, and that in order for shareholders to make an informed decision with respect to the Business Combination, Century must produce an updated independent NI 43-101 compliant reserve/resource estimate so that shareholders are provided with current information in respect of the S-L Project prior to voting on the merger proposal.

Given that the proposed Business Combination is a related party transaction (see the joint press release of Century/White Tiger dated March 14, 2011), the Concerned Shareholders believe that the updated NI 43-101 compliant resource/reserve estimate which we believe should be disclosed with respect to the proposed Business Combination should be authored by an "independent" qualified person (within the meaning of that term in NI 43-101) – in fact, the listing requirements for the Toronto Stock Exchange ("TSX") on which White Tiger is listed (and will presumably continue to be listed after it acquires Century as proposed) set out that that an "up-to-date, comprehensive technical report prepared by (an) independent qualified person" must be filed in connection with obtaining a listing on that exchange. The Technical Report was co-authored by an officer and substantial shareholder of Century who was not considered "independent" of Century at the time, and therefore we believe that the current Technical Report does not meet the listing requirements for mining companies seeking a listing as required by the TSX. The Concerned Shareholders also believe that the Technical Report is out of date as it utilized a cut-off grade of 2.1-2.5 grams per tonne, which was associated with a realized market price of $800/ounce gold. A lower cut-off grade would substantially increase the resources, without even accounting for the increase in value of the gold produced. Given today's market price for gold of approximately US$1,400/ounce, it would seem to be apparent that the underlying economic assumptions supporting the resource/reserve disclosure in the Technical Report are no longer valid. Further, an ongoing program of computer analysis of historical records relating to the S-L project was only partially completed as of the date of the Technical Report and the final results of that project have never been publicly released. Finally, substantial infill and exploration drilling has been conducted at the S-L Project, the results of which have, at best, only been partially released, but which to date have not been incorporated into resource estimates in a current NI 43-101 compliant technical report. Infill drilling, in particular, often results in the upgrade of inferred resources to indicated and measured categories, which would permit economic assessments to be made on those resources.

Beginning in June of 2007, Century initiated a comprehensive review of the extensive historical data available to them, from decades of exploration and production at the S-L Project. Beginning on January 10, 2008, and updated three times through June 24, 2009, NI 43-101 compliant resource estimates were prepared based on this historic information together with more current data obtained by Century. As at June 24, 2009, the date of the Technical Report, this assessment project was incomplete. From p.172 of the Technical Report, "…it is expected that the (comprehensive) review will require at least another 12 months of intensive work." Subsequent to that date, extensive drilling has been conducted on the Bedard Dyke. In May 2010, Century began a circa 50,000 metre infill and exploration drill program at the S-L Project, and in early June of 2010, announced the appointment of Andrew Daniels as Vice President, Geology, whose duties were said to include resource development, according to a recorded conference call dated June 2, 2010. During that call, Mr. Daniels suggested that he would have the mine plan updated within 90 days. To date, none of this information with respect to updated gold resources and reserves has been made public by Century.

For these reasons, the Concerned Shareholders are calling on Century, and seeking the support of the regulators in this regard, to ensure that Century completely and fully discloses all available data and interpretation with respect to gold deposits in respect of the S-L Project in the form of an independent, updated NI 43-101 compliant resource estimate. Based on the public disclosures by the company dating back to 2009 (detailed below), the Concerned Shareholders anticipate that the gold reserves/resources estimates at the S-L Project will significantly increase upon completion of this exercise. On that basis, the Concerned Shareholders further request that new fairness assessments of the proposed Business Combination be provided, based on such updated resource estimates. A copy of this document has been forwarded to the Senior Manager, Compliance and Disclosure, Mining, at the TSX.

All of the following references are taken from Century's public filings, or Century's recorded conference calls to which the public was invited to participate. The full text of each can be found under Century's profile on www.SEDAR.com or, in the case of conference calls, on Century's website:

June 23, 2009 News Release (NR)

"The updated data input and model includes new previously unknown resources, below the previously mined out Sigma Open Pit, defined from 2,000 - 2,600 feet below surface. The intersections were calculated using information from an additional 4,114 diamond drill holes, 46,725 assays and 8,984 moil samples that have been entered since the announcement of additional resources in the Company's February 25th, 2009 press release. As a result, a detailed block model identified 231,333 ounces of new measured and indicated gold resources in an area previously estimated to contain only 52,890 ounces of gold. Furthermore, 12,938 additional ounces of gold in the inferred category have been identified. Current modeling efforts below the Sigma Open Pit to a depth of 2,600 feet have confirmed an average addition of M&I resources of 39,500 ounces per 100 vertical feet….

….Along with these results, the Company still has a significant amount of data to enter for modeling along strike from surface to the 2,600 foot level. Data input and calculation for this zone is ongoing, and the Company will make further announcements when subsequent calculations are complete."

June 24, 2009 TECHNICAL REVIEW, LAMAQUE MINE: Re-Opening of the Underground Mining Operation, Val d'Or, Quebec

Executive Summary page (iii): 2.1 – 2.5 Au g/t cutoff used for resource estimation. See also Table i-2, page (iv).

Executive Summary page (v): "The computerization and reworking of the mine geology and mineral resource that is currently in preparation must be completed."

p.172: "Mine Re-evaluation Project

A comprehensive review of the entire property is now in preparation. The review was initiated in June, 2007 and it is expected that the review will require at least another 12 months of intensive work. The Lamaque property has been divided into 16 blocks for detailed evaluation (Figure 17.5)."

p.173: A comprehensive resource (ore reserve) analysis that will include the preparation of long sections and inclined sections for each Sigma and Lamaque vein, dyke and longhole area. This will consist of approximately 150 E-size drawings strictly for resource analysis. Examples of this approach to evaluation are included in Appendix F – Longitudinal Sections."

p.189: Recommendations, Engineering and Geology

5. Prepare a complete re-working of ore reserves as the new digital model for the mine is updated (now in preparation)."

January 17, 2010 NR

"The Bedard Dyke continues to show significant exploration promise and the results are very exciting. Century looks forward to continue building the reserves and resources at the Lamaque gold project, where currently existing reserves and measured and indicated resources exceed 2.4 million ounces of gold. The Lamaque mine also contains approximately 3.1 million ounces of inferred resources that the Company will look to upgrade in 2010 and beyond….

….Once the drilling has been completed and all assays returned, the Bedard Dyke will be remodeled utilizing Vulcan software to determine additional measured and indicated resources and proven and probable reserves that are hosted within the dyke."

March 1, 2010 NR

"An eight-hole exploration and definition drill program commenced on the Bedard Dyke during the week of January 25th, 2010, and was completed on February 17, 2010, with visible gold identified in each of the eight holes. Assays are pending and will be released when completed. Information from the drill program is currently being used to complete the block model for the dyke and to finalize the mine planning on the area for the upcoming development program in the Bedard Dyke zone."

March 15, 2010 NR

"The Bedard Dyke drilling was successful in delineating the zone for mining planning, geotechnical engineering and future mine development in 2010. The results continue to show the high grade mineralization and upside potential of the Lamaque mine complex, as the Company continues to build the reserves and resources at the Lamaque gold project."

April 6, 2010 NR

"Information and data received from the February 2010 exploration and definition drill program on the Bedard Dyke has assisted in the completion of the mine plan and block model for the upcoming underground development program in the Bedard Dyke zone….

….The Company is finalizing the upcoming 150,000 foot (45,700+ meter) exploration and definition drill program at Lamaque, which is expected to commence in May 2010 and continue over a three-year period. Historically the Sigma mine was developed to the 6,100 foot level and the Lamaque mine to the 3,500 foot level. The Company believes that the gold mineralization continues to depth beneath both areas, and historically the grade has increased as the mine was developed deeper."

June 2, 2010 Conference Call

Please see the Century Mining Corp. website under the "Investors" tab and select "Audio/Video" for a list of conference calls including the June 2, 2010 call (as of May 9, 2011).

July 6, 2010 NR

  • "Underground mine stope head grade ranged from 4.2 to 6.7 g/t Au.
  • Mill head grade averaged slightly lower than expected due to excess mineralized development (MD) material fed into the mill circuit. Initial mining in the Lamaque #2 flats identified the development waste graded in excess of 1.0 g/t Au and thus was used as additional mill feed during startup, which subsequently decreased the mill head grade. With the current excess capacity in the mill, the use of "MD" as mill feed will continue to be processed, to maximize throughput.
  • Of significance, during startup, approximately 30-35% of the milled tonnage was mined from outside the Company's underground resource base due to the continuation of vein systems or discovery of new mineralized areas as mining was in progress. The Company believes that additional "new" tonnage will continue to be mined within stope complexes that has never been placed, recorded or defined in the current resource base.
  • Excluding mineralized development, mill head grade averaged 4.31 g/t Au for May and 4.76 g/t Au for June, which aligns with the expected milling head grade target.

….Century's exploration team continues with its 150,000 foot (45,000+ metre) exploration and definition drill program that commenced in May 2010 at Lamaque and is expected to continue over a three-year period."

September 27 2010 NR

"This first drill station was designed to test the extent of both the Bedard Dyke contacts and the internal structure of the mineralization in areas where no previous drilling has been done. These results, along with the continued drilling campaigns in the Bedard Dyke, will be used to complete a new 3D wireframe model to assist in mine planning and resource estimation.

The Company is planning to complete a mineral resource estimate in 2011 compiled from current and future drilling at the Bedard Dyke zone. No resource estimate is currently published at the Bedard Dyke zone and all potential resources derived from the zone will be in addition to the current mineral resources already published for the Lamaque complex."

Concerned Century Shareholders

The Concerned Shareholders believe that the technical information with respect to the S-L Project that is currently available on the public record is materially out of date and significantly under-estimates the resources/reserves at the S-L Project based on the information that Century has publicly disclosed since the date of the Technical Report, as set out above. Consequently, in the event that Century chooses not to update the public record with current information in respect of the S-L Project, the Concerned Shareholders are without accurate factual information and thus, not in a position to render an informed decision to vote in favour of the proposed Business Combination.

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