When You Fail To Deliver on A Gold Lease, Case Study #1Parallels in this sad story are many. Notice the operational losses.
https://www.mining.com/white-tiger-announces-default-by-century-mining-corporation-under-forward-gold-purchase-agreement/?gce_var=lower-comments&utm_expid=17625373-0.wR1isPasQ6GSvnWKGYTdqA.1&utm_referrer=https%3A%2F%2Fwww.google.ca%2F
TORONTO, ONTARIO–(Marketwire – May 25, 2012) - White Tiger Gold Ltd. ("White Tiger") (TSX:WTG) announces that its wholly-owned subsidiary, Century Mining Corporation ("Century"), has received a notice from Deutsche Bank AG, London Branch ("Deutsche Bank"), advising that Deutsche Bank has elected to terminate its Forward Gold Purchase Agreement (the "Forward Agreement") with Century as a result of the occurrence and continuation of an event of default (the "Default"). Century had previously advised Deutsche Bank that Century would not have sufficient gold production or cash to satisfy its May 2012 obligations. In connection with the Default, Deutsche Bank intends to enforce its security on the property of Century, including Century's Lamaque project in Val d'Or, Québec and its San Juan Project in Arequipa Department, Peru. The Default and the enforcement proceedings are not expected to affect White Tiger's Russian assets.
Century has determined to accept and not take steps to remedy the Default. Century has taken this decision following a review of the viability of the Lamaque project in light of ongoing operating losses and continued lower than anticipated gold production, combined with Century's continuing obligations to deliver gold and/or make cash payments under the Forward Agreement. As a result of the above decision, White Tiger will no longer be funding Century's operations or any payments due by Century under the Forward Agreement.
Operations at Century's Lamaque gold mine in Val d'Or, Québec were restarted in January 2010, with the expectation that ore production would be ramped up to 2,000 tonnes per day by mid-2011. However, the mine has suffered a series of technical issues that significantly extended the ramp-up period and the mine continues to operate at a non-commercial rate of gold production. Accordingly, Century has not been producing sufficient quantities of gold to satisfy the gold delivery obligations under the Forward Agreement. Where there is a shortfall in any month in the number of gold ounces deliverable by Century to Deutsche Bank under this agreement, Century is required to pay to Deutsche Bank an amount in US dollars equal to the shortfall. A failure to make any required payment to Deutsche Bank would result in a default under the Forward Agreement.
As described in White Tiger's annual information form, audited annual financial statements and related MD&A for the year ended December 31, 2011, Century's ability to continue operations at its Lamaque mine was dependent upon its obtaining additional financing to fund its exploration and development activities and to bring its Lamaque mine to its intended capacity. To this end, White Tiger solicited lenders and investors in its efforts to obtain debt and/or equity financing and, as disclosed in White Tiger's May 11, 2012 press release, White Tiger has also explored the possible sale of Century's San Juan project as a means of improving Century's financial situation. Despite White Tiger's attempts, these efforts have proved unsuccessful and Century was unable to negotiate the refinancing of the Forward Agreement with Deutsche Bank.
At the time of its business combination with Century, White Tiger outlined its expansion and growth strategy to become a mid-tier gold producer within five years by creating a balanced portfolio of exploration/brownfield and producing gold assets through acquisitions and mergers. Century was intended to be part of this plan, as Century possessed a large resource base with the potential for increased gold production.
Since the completion of business combination in October 2011, White Tiger has invested more than $30 million and very significant management time in efforts to achieve commercial gold production at the Lamaque project.
Century's initial plans were to produce 2,000 tonnes of ore per day from three portals at the Lamaque mine: 800 tonnes per day from each of the North Wall and the Flats and 400 tonnes per day from Sigma West. Since the completion of the business combination, Century has spent considerable time and money developing the North Wall and, during the first quarter of 2012, it commenced ore stoping from this area.