Century Mining cuts reserve estimates at Lamaque gold project to less than half

Century Mining Corp. (TSXV:CMM) slashed reserve estimates at its Lamaque gold project in Quebec by more than half on Thursday as it worked to close its merger with a smaller company.

However Century Mining chief executive Daniel Major called it an interim report needed to help close the company's deal with White Tiger Gold Ltd. (TSX:WTG).

"This is very much an interim process for us," Major told a conference call with financial analysts and investors.

The new estimate was requested by the Toronto Stock Exchange before it signed off on Century Mining's proposed merger with White Tiger.

Major said the company was working on another reserve update that would take another five to six months to complete. Century filed the estimate Thursday to keep the White Tiger deal on track, he said.

Reserve and resource estimates are used by mining companies and investors to gauge whether minerals are present in sufficient quantity and quality to be extracted profitably.

Mining companies frequently update their estimates with new information based on additional drilling analysis and other data.

"While there is a reduction in the reserves and resources, the company believes that there is no impact on the company's operations in the short to medium term plan," Major said.

"In addition, in our opinion, a reasonable amount of the resource reduction can be recovered and or reclassified through further work."

In a separate statement from the British Virgin Islands on Thursday, White Tiger said it "continues to unanimously support the proposed arrangement to combine the companies."

Century Mining cut its proven and probable reserves for the northwestern Quebec project to roughly 451,000 ounces of gold, down from a June 24, 2009 estimate of 1.1 million ounces.

Total measured and indicated resources totalled 587,000 ounces, down from 2.4 million, while total inferred resources amounted to nearly 1.9 million ounces, down from 3.1 million.

Under Canadian standards for mining and energy estimates, the "proven" reserves meet tougher criteria than "probable" reserves. Similarly "measured," "indicated" and "inferred" resources meet less rigorous criteria.

Century attributed the drop in its estimates to more rigorous and technically advanced processes that were applied to the modelling of the project.

Despite the drop at Lamaque, Century increased its reserve estimates for its San Juan project in Peru to 223,941 ounces of gold in the proven and probable category, up from 186,316 ounces.

Under the merger deal, White Tiger shareholders would own about 39 per cent of the combined company and Century shareholders would own 61 per cent. White Tiger directors would make up the new board, although Major would remain president and CEO.

White Tiger is three-quarters owned by Russian mining magnate Max Finskiy, who is slated to become executive chairman of the combined business. It has five Russian subsidiaries that hold licences in the Savkino and Nasedkino mineral and gold deposits.

Shares of both Century Mining and White Tiger were halted prior to Thursday's news. After trading resumed, Century Mining shares were down 1.5 cents at 28.5 cents on the TSX Venture Exchange, while White Tiger shares were up seven cents at $1.85 on the Toronto Stock Exchange.

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