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San Juan (conservative version)
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1042 Posts
April 6, 2008 - 6:48 pm

I asked Brent for an appreciation of current tpd at SJ. He actioned all of my other requests, but completely avoided this one. It’s either due to A) things have suddenly gone terribly bad at SJ, or B) they want any potential near-term ramp up at SJ to be a surprise.

Actual tpd SJ (based on 90 days in quarter) = 155 (Q1), 211 (Q2), 234 (Q3)

Per the Jan. 14’08 cc, actual tpd (which fully supports the 1,300 Dec’07 ounces) was around 277 in Dec’07.

During the early Dec’07 (Q3) cc, they said that tpd was 250 at SJ. They said that they were working on mining new areas that would increase production by 20 – 100 tpd. As such, it seems like the best case scenario at the time was 350 tpd (250 + 100). I think they said that they were going to increase mining from the Mercedes and San Juan veins, but also start mining additional veins.

I can see how it might be possible to mine up to 350 tpd (or even higher) really soon at SJ, without injecting any new capital.

The big unknown is mill capacity. We know that they are currently licensed to operate the mill up to 750 tpd (but can apply to increase that capacity level especially once they are ready to ramp up to 1,500 tpd – to the 70 - 80K oz production range). We also know that it takes $1.5 – 2.0M to ramp milling capacity up to 700 tpd (per Brent, this will not happen until funding is available later in 2008 – perhaps the debt financing funds?).

Based on putting various pieces of info together, it would appear to me as if Century believes that they currently have milling capacity for 350 tpd, without spending additional capital on the 2nd mill circuit. Clearly, Century is NOT counting on the $1.5 – 2.0M in mill upgrade (to 700 tpd) to deliver at least 20,000 - 21,500 oz production run rate (as that is what a 350 tpd mill can provide without additional capital upgrades) – the 700 tpd operation would deliver 35,000 – 40,000 (potentially higher depending on grade).

From the AIF (May’07): “One circuit is currently running well for 300 tonnes per day, and includes the CIP circuit. The second circuit, with a potential capacity of 250 tonnes per day, requires rebuilding with a capital cost of approximately US$1.5M.

Clearly, the $1.5 – 2.0M is to refurbish the final 250 tpd of the milling operation. Also, as you can see 300 + 250 = 550 tpd, and not 700 tpd. As such, it would almost seem as if Century currently has processing capabilities of 450 tpd. I just don’t know this stuff well enough to know what is giving them the extra 150 tpd milling capabilities (300 vs 450) – perhaps either or both the CIP circuit (the CIP circuit recovers the gold remaining in the tailings from the primary mill circuit) and the Merrill Crowe zinc precipitation are helping in some unknown way. Chances are probably greater than they have added extra ball mills to first circuit.

I guess the bottom line is that if they plan on ramping up to 350 tpd in the near future (per the math from the conference calls) then they must foresee having both mining and processing capabilities in place to ramp up to that level.

As mentioned above, I truly do not know what the status is of San Juan. I have absolutely no clue if things have gone terribly bad with regards to tpd or if things are still progressing well. Nevertheless, taking all of the info listed above into consideration, I’ve built a hopeful tpd profile for SJ. Using 84.8% recovery, 5.8g/t grade, this profile would give us 18,900 ounces at SJ for 2008. Given the YTD ounces produced at Q3’07, they probably finished 2007 at around the 12,000 oz level.

A hopeful view for 2008 at SJ:

Jan – 270 tpd
Feb – 275
Mar – 280
Apr - 290
May – 300
Jun - 325
Jul – 350
Aug - 350
Sep - 350
Oct - 350
Nov - 350
Dec - 350


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