Hope this wasn't posted earlier - http://www.theaureport.com/pub/na/6989

TGR: You just started covering Century Mining Corporation (TSX.V:CMM). In northwestern Québec, it has the former Sigma-Lamaque mine, which has underground ore that Century is starting to mill. Production is ramping up for 2011. Why did Union decide to focus on Century?

BM: Century is a name that we've been looking at for about a year. I went up to the Lamaque site last July to get the lay of the land and meet some of the technical personnel. I was impressed with what I saw at the mill and some of the other ancillary facilities, underground, as well as the fact that it's in Val-d'Or, Quebec, a mature mining center, where you have lots of labor, the supplies you need, the infrastructure and a cooperative government.

I also felt very comfortable with the technical team's plan to bring this mine back into operation. I thought the focus on underground production was key. We know the history of the open pit and some of the trouble the previous operators had with them.

The engineers described how they wanted to proceed. All they needed was money, which they finally got at the end of December. In January they started to roll and I kept an eye on it. Were they hitting the milestones that they set for themselves? Yes, they were doing exactly what they said they would do. I have confidence in the team's ability at Lamaque to bring the operation online.

TGR: What about its production profile?

BM: Century has the ability to ramp up from its target of 40,000 ounces this year to 90,000 next year and eventually 100,000 ounces by 2013. I like that. I'm quite confident that Century will be able to execute the plan to ramp up to 100,000 ounces in the next three years.

There is additional exploration potential at Lamaque based on their historic database, as well as other exploration targets within the complex.

TGR: What about some of their other properties? They've got a significant project in Peru.

BM: Yes, San Juan in Peru. It's a small, narrow-vein, high-grade system. It had been capital- starved when they purchased it, and then they got things rolling. They're producing about 19,000 ounces a year from San Juan now. There are plans to expand to about 30,000 ounces by 2012, through mill expansion as well as by modernizing and mechanizing the underground mining methods using refurbished equipment from Lamaque.

They also want to use different mining methods to increase throughput and ultimately produce more gold and silver out of San Juan. That's the plan, over the next two or three years. In terms of reserves, they've got six years on the books; that's what I've modeled right now. But the mine has run for 30 years and there's still significant exploration potential on the zone where they're mining, as well as the different vein structures within their property. There is also a porphyry target. I think six years is conservative in terms of mine life. Over the next couple of years we'll see what the exploration efforts bring.

TGR: What about cash flow?

BM: Cash flow is going to be basically flat this year as they ramp up Lamaque. Then into next year, we're looking at $0.10 per share in cash flow. In absolute dollars, that's about $36 million. This declines to $0.09 per share as a result of the reductions in my gold price assumptions for 2012.

TGR: Will that be enough to service debt and make reinvestments?

BM: Yes. This year is the critical year. I've assumed that they'll need another $5 million in financing to basically complete development through 2010. Then they'll start to become cash-flow positive next year, probably in Q2, then they're home free. They'll be able to repay the capital leases from cash flow. Right now they're delivering gold into that prepaid gold forward. I don't foresee any issues with Century not being able to deliver the gold to meet their obligations.

TGR: They're hedged?

BM: The $33 million prepaid forward agreement they entered into with Deutsche Bank is a five-year facility, so they're partially hedged until 2014; it covers 61,183 ounces or 17% of the forecast production during that period. After that, they experience the full gold price.

TGR: What's your 12-month target on Century?

BM: It's $0.90.