White Tiger curls up with cash-strapped Century Mining (March 28, 2011)

Amid serious financial troubles, Century Mining (CMM-V) has agreed to an all-share takeover bid by White Tiger Gold (WTG-T), a newly listed gold miner 74% controlled by Russian mining promoter Maxim Finskiy.

Century has struggled to turn a profit this year at its Lamaque gold mine near Val d’Or, Que., which ended up bankrupting former operator McWatters Mining in 2004. In early March, Century had to put its mine expansion program for Lamaque on hold after nearly running out of money. It appears 45-year-old Finskiy, who also controls 111.9 million Century shares for roughly 27% of the company, might have come up with a solution that will salvage his investment in Century just in time.

Century shareholders stand to receive 0.4 of a White Tiger share under the deal but will control 61% of the combined company after the takeover. The two companies forecast combined gold production of up to 121,000 oz. in 2011, a lofty
target despite controlling three producing mines between them. 

White Tiger owns one gold mine, Savkino, in Siberia, about 15 km from the Chinese border. It expects to produce 21,000 gold oz. there in 2011, and bring another Siberian gold project, Nasedkino, to production in 2014.

If Century plans on meeting the remaining 100,000 gold oz. targeted for 2011, it will have to dramatically increase production at its two mines. The San Juan mine in Peru produced 19,224 oz. in 2010 but Century hopes to produce 20,000 to 25,000 oz. there this
year. At Lamaque, the company produced just 14,419 gold oz. in eight months of operations in
2010, far below earlier forecasts of up to 45,000 oz., and will have to ramp up production to 75,000 or 80,000 oz. to meet the new targets.

A failed cone crusher at Lamaque temporarily halted operations in February and led to a capital shortage. A deal with White Tiger would give Century better access to financing, which would then allow it to resume mine expansion. Meanwhile, White Tiger has loaned it US$1.8 million and agreed to provide a further US$2.2 million under a bridge loan.

If Century’s shareholders agree to the deal, Finskiy will continue acting as executive chairman, Century’s current president and CEO Daniel Major will assume the same roles, and White Tiger’s CEO Geoffrey Cowley will become chief operating officer.

The Russian stock promoter listed White Tiger on the Toronto Stock Exchange on Dec. 29, 2010, after selling it four Russian gold projects and one producing mine in return for 85 million shares. Since listing at $1, the stock climbed as high as $8.45 before retreating to a more stable $4.50 before the takeover announcement, and as low as $3.25 afterward. At March 18, 2010, Finskiy’s 85 million shares were worth about $315 million on paper.

Finskiy is also the president of the mining division of Russia’s largest investment fund, Onexim Group, which has US$25 billion in assets. Other roles include serving as a director of Polyus Gold (PLZL-L), Russia’s largest gold miner with 2010 gold production of 1.38 million oz. Forty-four-year-old Mikhail Prokhorov, rumoured to be Russia’s second richest businessman with a net worth of around US$22 billion, is the president of Onexim and the general director of Polyus, as well as the owner of the New Jersey Nets basketball team.