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Century Global pleased with China progress

Friday, October 21, 2016 12:16
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(Before It's News)

Century Global Commodities Corp. (CVE:CNT) said it is very pleased with the growth in revenue, product range and customer base in the company’s food business in Hong Kong, China where Century relocated its headquarters.

The move to Hong Kong was in line with the overwhelming focus of its target market (and that of the global mining industry) since its inception, the company said in a trading update. “Management therefore deemed it appropriate to provide shareholders and the market an update on the company’s progress at this juncture,” it added.

Quality food services

Management is very pleased with the growth in revenue, product range and customer base in the company’s food business in Hong Kong, China. The company has firmly established local distribution there, covering the major supermarket chains, hotels and restaurants, as well as an international airline. The company also extended its distribution network to Macao, China.

Since logging its first sales in January, the company has been steadily increasing the volume of its food business, expanding its product range and broadening the sourcing of products to Europe, as well as Australia.

Century has also established an office in Wuhan, China. It’s lean professional team there is sourcing quality imported food products and positioning the company to exploit the market in central China, where long-term growth is expected to outperform coastal and other mature markets in the country.

Non-ferrous diversifications

Management continues to believe that market conditions for other metals may recover earlier than iron ore. Therefore, the company believes that there will be more value-creation opportunities in diversifying into certain precious and base-metal opportunities. The global market will benefit hugely over the next market cycle — and very possibly beyond — from China’s transition to a massive consumption-driven economy.

The country’s middle-class population is already equal to that of the United States and will become much larger over time. This growing middle class in China is poised to fuel the continuous consumption and demand for commodities. The company has considered and conducted an in-depth evaluation of a number of projects, but has not yet identified sufficiently compelling investment cases. Management will continue to search for compelling investment and project opportunities.

As an adjunct to its evaluation of mineral exploration and mining projects, the company continues to enhance the functionality of the Century mining database, which was well received at the China mining conference in September.

Management changes

The company has been streamlining its personnel structure to rapidly reduce the size of its geological team and general and administrative staff in line with the company’s strategy. Conversely, the company has added core professionals to its staff in its revenue-generating food business, to remain lean but to retain the capacity to meet current needs and be ready to pursue appropriate initiatives.

While the company’s financial team has had an excellent chief financial officer, Rebecca Ng, who was a key leader and guided the company through significant accomplishments and transformation in a difficult market environment over the past few years, Ms. Ng has decided to leave Century and the mining and mineral exploration industry in early November, after the filing of the company’s financial results for the quarter ended Sept. 30, 2016. Management and the board are disappointed to be losing Ms. Ng, who will be leaving for another industry, and would like to take this opportunity to thank her for her outstanding contributions to the company and wish her great success in her future endeavours.

Alex Tsang has been recruited to succeed Ms. Ng as the new CFO of Century, subject to board approval of such appointment being granted in due course. Mr. Tsang, a member of the CPA, Australia, has more than 20 years of experience in finance, compliance and risk management, operational excellence, and reporting and management advisory matters. He has worked in a wide and diversified range of industries, including but not limited to health care, consumer electronics, plastic moulding, steel, shipbuilding and engineering, and food manufacturing. Prior to joining Century, he worked with several multinational organizations in Singapore, Hong Kong and the People’s Republic of China. During his career stints in these countries, with his expertise in handling both financial and compliance issues, he has participated in various local and overseas projects, such as constructing risk management frameworks, business restructuring, remediating fund investors, internal audits and ensuring the effectiveness of control environments for the various business units within each organization. His last position was with Philips (China) Investment Company Ltd., where he was the finance director of the health system sector of the greater China region.

Business update

The context of this update is the mining industry’s struggle to emerge from the down cycle, which has been particularly difficult for the iron sector. This year to date has seen conditions more favourable for recovery, alongside a prolonged industrywide structural rebalancing in the aftermath of the last commodities supercycle. Given the current dynamics of the global steel industry, management remains convinced of the definitive need for Century to complete a major transformation and has initiated several measures to create shareholder value in the medium and long term.

Iron ore

The company’s assessment is that the global iron ore sector will experience more systemic structural adjustments over the next few years as a result of major new megaprojects in Australia and Brazil coming on stream just as the Chinese steel industry is reducing its overcapacity. Spot markets for iron ore remain volatile. The price of iron ore surged to nearly $70 (U.S.) per tonne in April, 2016, from a low of less than $40 (U.S.) per tonne at the end of 2015, and the price is now fluctuating around mid-$50 (U.S.) per tonne, eliminating about half of its price gain in 2016.

Century’s management believes that it is very important that the company stay the course and remain in a safe observer position. Management also feels that it is important for the company to keep the maintenance cost of its projects as low as possible so the company can wait out the market and preserve sufficient resources to advance them when favourable market conditions return.

Normal course issuer bid amendments

Century is also pleased to announce that the Toronto Stock Exchange has accepted Century’s application to amend the normal course issuer bid that is currently in place for the company.

The company’s current normal course issuer bid program began operating on Nov. 4, 2015, and expires on Nov. 3. Under the original programme, a maximum of 350,000 ordinary shares could be purchased during the one-year period of its operation. Pursuant to the amendments approved by the TSX, purchases of up to two million ordinary shares of the company may be now completed during the one-year period of the program’s operation. To date under this program, Century has purchased a total of 1,000 ordinary shares at an average price of 25 cents per share.

The two million ordinary shares of the company that may be purchased for cancellation under the amended NCIB correspond to approximately 2.02 per cent of Century’s issued and outstanding ordinary shares (out of the total of 98,793,571 ordinary shares currently outstanding). The company expects to cancel all shares purchased under the amended NCIB. Maison Placements Canada Inc. will continue to act on the company’s behalf to complete purchases of ordinary shares pursuant to the amended NCIB.

The amended NCIB will take effect on Oct. 26, 2016, and end no later than Nov. 3, 2016.

Story by ProactiveInvestors

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