Century Mining Lands $20M In Deal With Private Investors

Cash-strapped Century Mining (CMM-V, CMNZF-O) has pulled a rabbit out of its hat with a tentative investment deal by firms owned by Russian tycoon Maxim Finskiy and American investor Fran Scola to inject $20 million into the company.

The U. S.-based gold producer, whose stock was languishing at 1¢ a share last November, says the $20-million investment, combined with a US$25-million prepaid gold forward facility it set up in July, will give the company enough money to restart operations at its Lamaque underground gold mine in Val d’Or, Que.

The two investors, through Kirkland Intertrade Corp. and Gravity Ltd., will pay 20¢ for each of 100 million units of Century. Each unit is made up of one share and half a warrant. (Each whole warrant gives the holder the opportunity to buy one share of Century for 30¢ over 18 months.)

In a separate transaction, the investors have acquired an additional 7.14 million shares of Century.

If the financing goes ahead — the investors will together own about half of Century, or between 45.8% and 52.3% of the company’s shares — depending on how many warrants are exercised.

The investors can nominate three board members. Century’s current chief executive, Margaret Kent, will remain as head of the company.

The investors have also agreed to advance a $4-million bridge loan to fund immediate working capital requirements for Lamaque.

The proceeds from the private placement will be used to pay for the initial development and operation of the Lamaque mine and will give Century much-needed working capital.

Finskiy indirectly owns Kirkland Intertrade and is currently the chief executive of LLC Intergeo Managing Co., the mining and exploration arm of the Onexim group, one of Russia’s largest private investment funds with about $25 billion in assets. Finskiy served as deputy general director and deputy chairman of the management board at Norilsk Nickel (NILSY-O, MNOD-L) until last year.

Gravity is Scola’s personal investment vehicle. Scola is also chief executive of Ecometals ₍EC-V, ECMLF-O), an exploration company with a primary focus on South America with iron ore and manganese prospects in Brazil and gold projects in Ecuador. Scola is also a partner at LFM Partners, a partnership with investments in the natural resources sector and sits on a number of boards. Previously, he was a partner at Weintraub Investments, a San Francisco-based hedge fund.

In a related but separate transaction, Century will acquire Kirkland’s stake in Etruscan Resources (EET-T, ETRUF-O), giving Century about 16.6% of Etruscan and 22.2% if it exercises all of its warrants.

Etruscan is a gold-focused junior with more than 10,000 sq. km of land in West Africa. Etruscan is in the startup phase of the Youga gold mine in Burkina Faso, which is expected to produce 88,000 oz. gold per year at full capacity. The Agbaou gold project in Côte d’Ivoire and the Finkolo gold project in Mali are development-stage projects.

Advanced and early stage exploration projects are ongoing in Burkina Faso, Mali, Côte d’Ivoire, Ghana and Namibia. Etruscan also has a 47.4% interest in Etruscan Diamonds, which has a land position in the Ventersdorp diamond district of South Africa, where it is developing the Blue Gum diamond project.

“This funding allows us to immediately restart our flagship asset and aggressively pursue other production opportunities,” Kent said in a statement.

In a joint comment, Finskiy and Scola said their objective was to build a sizable mining company with initial operations and investments in Africa and the Americas.

“We have selected the Century management team and the Lamaque project as the core upon which we will base our portfolio,” they said. “Our plans are to support Century, both financially and technically, in order to enhance the value of our share position.”

Century says it will set up a team to work on future acquisitions.

In addition to the Lamaque mine, which historically has produced more than 9.2 million oz. of gold, Century owns the San Juan mine in Peru, which produced 14,250 oz. of gold last year.

At presstime, Century traded at 23¢ per share. The company has a 52-week trading range of 1-28¢ and 198 million shares outstanding.