Coeur Mining, Inc. (CDE) Q1 2020 Earnings Report, Transcript and Summary

Good morning. And welcome to the Coeur Mining First Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Paul DePartout, Director of Investor Relations. Please go ahead.

Thank you, and good morning. Welcome to Coeur Mining’s first quarter earnings conference call. Our results were released after yesterday’s market close and a copy of the press release and slides are available on our Web site. I would like to remind everyone that our press release, slides and some of our comments today include forward-looking statements from which actual results may differ. Please review the cautionary statements included in our press release and presentation, as well as the Risk Factors described in our first quarter 10-Q and 2019 10-K. Now, I’ll turn it over to Mitch.

Thanks, Paul. Joining me on the line are Tom Whelan and Terry Smith, along with several other members of the management team. Before discussing the quarter, I'd like to provide a brief COVID-19 update. Since early March, our two objectives for navigating through the impacts of this global pandemic have been to protect the health and well-being of our fellow employees, their families, our contractors, and our communities where we operate and to ensure the continuity of our business operations as best we can. To date, we have had no positive COVID 19 cases anywhere in the company. Early last month we put a series of controls and procedures in place, focused on controlling and limiting access to our operations, thoroughly screening employees and visitors and reducing exposure and transmission risk through a range of social distancing protocols and sanitizing and cleaning procedures. Office employees are all working from home and nonessential travel has been eliminated. We are continually reassessing these procedures as the situation evolves, and as we gain additional information. The level of engagement, support and outreach by our employees to the communities in Western South Dakota, Northern Nevada, Southeast Alaska, Chihuahua Mexico and British Columbia, has been truly inspiring. Slides 15 through 17 highlights several of the efforts being made by our employees. In terms of business continuity our three U. S. assets remain in operation with minimal adjustments or disruptions. Our Palmarejo mine suspended operating and exploration activities in accordance with the decree issued by Mexico in late March. Our Silvertip operation in British Columbia safety suspended mining and processing activities just ahead of the COVID-19 outbreak, and all ongoing site activities along with our drilling program are continuing there. We remain in close contact with our suppliers and with our smelter and refinery customers, and we have not experienced any significant disruptions to-date. Like many companies, we've taken steps to increase our frequency and methods of communication, bolster our liquidity levels and be as prepared as possible for a wide range of potential scenarios going forward. Overall, I think our strategy is serving us well during these unprecedented times. Our focus on operating a balanced portfolio of assets located in North America with a particular focus on the U. S. is helping us reduce our overall risk profile. Our shift over the past several years towards more gold and less silver has removed a significant amount of volatility and has us well positioned for the current environment. Our collection of organic growth projects offers investors compelling near, medium and long-term growth and our commitment to a higher sustained level of exploration, particularly near our existing assets, provides our stock holders with exposure to the upside potential associated with new discoveries and to opportunities for high return mine life extensions from successful reserve and resource growth. And finally, our U. S. listing and location as well as our liquidity and access to capital are key differentiators, especially during times like this. Now turning to our results. Overall, the quarter was in line with our expectations, mostly due to strong performances from Palmarejo and our Kensington gold mine in Alaska. Those two operations offset a lighter quarter from both Wharf and Rochester as anticipated, both of which are expected to deliver stronger results during the remainder of the year. I mentioned our collection of growth projects, the two most impactful near term opportunities are the expansion of Rochester and a potential restart of Silvertip. At Rochester, we achieved a major milestone on schedule for the POA 11 expansion project when we received the record of decision from the Bureau of Land Management last month. We plan to accelerate work later this year and complete this important project by late 2022. We are also on track the issue an updated technical report in the fourth quarter, incorporating an updated capital estimate, optimized mine plan and economic analysis. And at Silvertip, a pre-feasibility study for a potential mill expansion is now underway and we expect to have some results in mid year. The drilling program at Silvertip kicked off last month and we remain optimistic about what this program will deliver. And finally, speaking of exploration other key elements of our 2020 exploration program the largest in our company’s 92 year history are off to good starts. The bulk of our near mine exploration investment during the first quarter went to Palmarejo and Kensington, while our single largest allocation of resource expansion drilling went to the Sterling and Crown deposits in Southern Nevada. We plan to provide a mid year exploration update later this year, given the size and importance of these programs for the company. And with that, I’ll go ahead and turn it over to Terry.

Thanks Mitch and good morning everyone. Slide 6 highlights our production performance at each operations during the quarter, and provides an outlook for the remainder of the year. Starting with Palmarejo. Throughput increased by over 25% year-over-year and improved recovery rates from several optimization initiatives help drive higher gold production quarter-over-quarter. As anticipated silver production decreased due to lower grades in our mine plan during the first quarter. Higher gold recoveries and throughput along with the slightly higher gold price combined to generate over 20 million of free cash flow at Palmarejo. Its also worth pointing out that we'll be well positioned to safely and efficiently ramp back up once the suspension in Mexico is lifted. Switching over to Rochester. We mentioned on the last call that crusher production was sitting at strides early in the year. I am happy to report that crusher performance during the quarter was 11% higher than our target and 33% higher than the fourth quarter. We have now rebuilt momentum on our leach pad that we lost late last year, but have not yet seen the benefit of improved ore replacement rates and restock metal inventories as we were operating on deeper sections of the pad in the first quarter. We expect production to improve during the second quarter and climb steadily through the remainder of the year. Before moving on to Kensington, I’ll add some color to Mitch’s earlier comments on our expansion plans at Rochester. We plan to spend roughly $30 million to $35 million on the expansion this year, which includes the mix of procurement and early stage workloads. We have several purchase agreements already in place along these items, including crushing and process equipment. At SNC-Lavalin, our third-party EPCM contractor, has progressed detailed designs to around 50% completion to-date. We are also conducting a targeted drilling program, which we are optimistic will help us upgrade our mine plan as we work towards an updated technical report at the end of the year. Now switching over to Kensington. Production was on budget for the quarter as we saw positive grade reconciliation on the Kensington main deposits. Financial performance remain strong as unit costs decreased by 5% to under $930 per ounce, helping to generate just over $14 million in free cash flow during the quarter. We were able to produce just over 2,500 ounces from Jualin at an average grade of 0.33 ounce per ton or 11.3 grams per ton, and now expect Jualin to account for 15% to 20% of Kensington’s production for the full year. We expect a slightly weaker second quarter due to fewer anticipated Jualin tons but expect Kensington will deliver another strong year for the company. At Wharf, adverse weather impacted first quarter pressure performance leading to weaker than expected production levels. We have mobilized the third party crusher contractor to accelerate our placement rates, and help us catch up on and deliver on our full year plan. As a reminder, we are planning to increase our strip throughout the year but we expect it to revert to historical level in 2021. Before passing the call over to Tom, I'd like to thank our workforce for stepping up during this difficult period. We had a solid quarter of safety performance despite this additional time of stress and distraction. We continue to be mindful and focus on the task at hand. We appreciate everything you are doing and your continued dedication to the company. Next Tom will cover the financial highlights for the quarter.

Thanks Terry. As presented on Slide 10, we have a very sound balance sheet with no near term maturities and over $250 million of liquidity. With improved margins, our LTM EBITDA increased 44% to $195 million versus $135 million just 12 months ago. Higher EBITDA along with our 2019 debt reduction initiatives led to total and net debt leverage ratios at the quarter end of 1.8 times and 1.5 times respectively. We've been completing various scenario planning analyses to consider the potential impacts of COVID-19 on our business, specifically focusing on liquidity. From volatile gold and silver prices to estimating the impact of the temporary suspension at Palmarejo and other potential downside scenarios, we have modeled numerous cases to determine a range of financial impacts. We believe it is prudent to have a wide variety of options available to maximize our financial flexibility during these unprecedented times of volatility and uncertainty. Based on our analysis, we've taken the following key actions to be well positioned under various potential downside scenarios. First, we've added foreign currency hedges to lock in operating cash flow gains relative to our budget. Secondly, we drew down an additional $100 million after quarter end on our revolving credit facility. Third, we developed an internal list of opportunities where CapEx and exploration could be deferred. And fourth, we've also put $100 million at the market equity program in place, which is available as a source of liquidity if needed. To date, we have not begun the deferral of any capital projects or exploration investments, and will not expect to reduce these key internal growth initiatives unless certain downside scenarios became likely. Looking at our financial results on Slide 5. we expected the first quarter to be our weakest quarter of 2020 and are pleased to be ahead of our internal budget on operating and free cash flow. Digging into the numbers, our first quarter results include $47 million of adjusted EBITDA, which is 79% improvement over Q1 2019. We had strong kickoff to our 2020 exploration programs and we had modest negative operating cash flow of $8 million, which was impacted by the timing of the annual Mexican EBITDA tax, the payment of our annual bonuses across the company and the buildup of inventory on the leach pads at Wharf and Rochester. The temporary cessation of active mining and processing activities at Silvertip also had a notable impact on our Q1 2020 results. Silvertip used $32 million of free cash flow during the quarter, a figure we will expect will be much smaller going forward as the site focuses on exploration, pre-feasibility work and ongoing maintenance activities. We forecast that ongoing carrying costs will be $4.5 million per quarter, down from the $6 million figure that we guided towards at the beginning of the year. Exploration and pre-feasibility costs remain inline with our previous estimates. One additional note on Silvertip. Given the precipitous drop in zinc and lead prices during Q1 2020 and the significant increase in the 2020 benchmark treatment charges for zinc and lead concentrates, which were finalized during March, 2020, we remain confident that the temporary cessation was a sound decision. Before handing the call back to Mitch, I wanted to draw everyone's attention to Slide 11 where we summarized our hedging program. We continued to take advantage of the stronger gold price by implementing additional price protection. You'll see that we've extended our zero-cost collar gold hedges to cover a portion of our production in 2020 with $1,600 floor. As I mentioned earlier, we also laid in some foreign currency hedges over the next few years. Our hedging strategy is designed to support cash flow generation and help fund key internal growth projects, most notably the POA 11 extension at Rochester, which we anticipate funding with a combination of internally generated cash flow and borrowings from our revolving credit facility. I'll now pass the call back to Mitch.

Thanks Tom. Just to quickly wrap up, Slide 12 hit several of our key priorities for the remainder of the year. Of course, our top priority remains the health of our employees, their families and members of our communities as we continue to manage our way through the COVID-19 crisis. We remain optimistic about our exploration programs and the results we expect to see over the course of the year. We're also looking forward to seeing Rochester's production levels rise based on the higher crushing and placement rates the team has been delivering. All of us are excited about the operations future growth potential as POA 11 is set up to gain momentum during the second half. I'm also enthusiastic about the work that is now underway on the pre-feasibility study at Silvertip, and we look forward to sharing results with you later in the year. And finally, we will continue to further improve upon our strong safety and environmental performance as we strive to deliver consistent operating and financial results. With that, let's go ahead and open it up for any questions.

We will now begin the question and answer session [Operator Instructions]. Our first question will come from Michael Dudas with Vertical Research Partners. Please go ahead.

Good morning, Mitch, gentlemen. And glad to hear things are going safely and healthy for everyone. So, first question regarding Palmarejo, maybe you can share some additional thoughts on expectations on some of the government in the news we're hearing about to extension of the COVID situation, what maybe other angles have been worked on down there to kind of alleviate that and how and -- for first? And then secondly, how quickly do you think you can ramp up once you get the green light? And third, what are some of the carrying costs that we should anticipate in the Q2 given the succession of the mining down there?

I'll start and then Tom I'll ask you to step in as well. In terms of the overall status in Mexico just to rewind the clock. At March 31st, the Mexican government issued the emergency decree regarding restrictions on non essential businesses. And then we received some further clarification on April 6th, that made it clear that precious metals mining was not an essential business according to the decree. So then on the 7th of April, we announced that we were going to begin the process of temporarily suspending operating activities at Palmarejo. That decree earlier this week was officially extended out to May 30th. However, there are areas with little COVID-19 impact that will be allowed to reopen on May 18th and currently Palmarejo sits in one of those zones of little to no COVID-19 impact. So we'll kind of circle the 18th of May. But meanwhile on kind of a separate path, we submitted an application for exemption to the decree under guidelines published under secretary of mines, and that's kind of a case by case process, where they'll take the applications, discuss it with public health officials to determine whether or not mines can restart sooner than those May date. So we'll keep pushing on that angle, as well as kind of gearing ourselves up for a restart, kind of worst case hopefully in the middle of May, kind of like the ramp down that takes two or three weeks, there'll be a similar kind of two or three week ramp up process to get ourselves back up and going whenever we do get the green light, whether it's the 18th of May or sooner. And so that's how we're kind of thinking about it. In terms of impact on costs, obviously that depends heavily on when we are able to restart so that we can measure how many days we were not producing. But Tom, do you want to go into another level of detail there as far as potential impact?

As we talked and have been thinking about tons of scenarios around this and the number that I would use for kind of a 30 day shutdown, which kind of feels like our best estimate at this stage, be the $10 million in terms of less free cash flow for the year for Palmarejo. We really want to grind into how we came up with that just an estimate of the 12th of the revenue loss. We think we can reduce our operating costs by 50% or obviously stop the drilling and there'll be less CapEx, that's kind of to give you some numbers about how to get to that 10 million. But the other thing I would just remind everybody is that, I mean the peso is really devalued here. And as mentioned, we put on some hedges. The peso, about 50% to 60% of our costs are denominated in Mexican peso. So with those hedges, we've kind of locked in roughly the same amount of lost free cash flow from operations. So just to give you a sense, we'll come back with obviously a clearer picture as Q2 but hopefully, that gives you some numbers to play around with.

Tom, that's perfect. Thank you. And Mitch, thank you for the thoughts on that and hopefully the 18th is sooner rather than later. Second question is, turning to Kensington. So, just to clarify. So sounds like second half, you're getting a lot more ore processed through Jualin. So is that mix going to be a 15%, 20%, is that over the 12 month period or -- so therefore the -- maybe a much higher mix in the second half of the year. Is that how we should think about that?

First quarter, Terry, remind me what it was, single-digits, right…

Yes.

In terms of contribution. And a lot of that, Mike, had to do back to COVID-19 in terms of workforce availability, a decent amount of our workforce at Kensington flies up from the lower 48 to work there, their scheduled rotations and that has impacted in the first quarter and in particular March availability of workers in Jualin. And so that is a reason why we were a little lower in the first quarter than we expect to be in subsequent quarters. I kind of look at it as a positive that with only 9% or whatever of the tons coming from Jualin, it had a great quarter on its own. So hopefully with a little bit higher contribution through the rest of the year, we'll see the results reflect that.

And just finally and maybe back to, Terry, on the scenario analysis or maybe the hedging part. So I assume since you've been putting through this hedge program on gold over the last few quarters, you're going to continue to think through that as the markets move forward and with higher collar balances, I would assume. And from a scenario concept looking at the potential spend on the deferrals and such, it seems like you feel like you have enough liquidity and to kind of crush through this and not have to defer some of the important work that you're doing. But what -- will it be just price change or concerns about that or Palmarejo would be out for several months. Would that be some of the negative scenarios that would impact that?

Yeah. I will start and then Tom, you can chime in with our thoughts on the market and the hedging program that we've been carrying out. Having a $1,600 floor under a good chunk of our gold production goes a long way toward helping to ensure that we've got sufficient cash flow from Rochester and elsewhere to fund that expansion project. That’s a project that doesn't have a lot of room to be deferred or moved, because as we stack on the stage four leach pad, there's a point at which that pad is full and we need to have this new pad down and ready to start stacking on and that is sort of late 2022. So, we're working on that basis and on that schedule and between our revolver and cash flow, especially feeling better about that downside of $1,600 gives us a lot of comfort that that's sufficient. Now if Mexico continues on longer than what we all hope and expect that makes the numbers obviously a little bit tighter, but we still feel comfortable that we'll have sufficient liquidity. And then just Mike on separate but related point. I mentioned Silvertip and the pre-feasibility study and potential scenario of a restart. You know, that's a project that we have a lot of flexibility on in terms of if and when we would ever pursue that. And so obviously we were thinking through and mindful of not only relative returns on these projects, but how do they sequence and swap in to our financial capacity to deliver on that. But Rochester's clearly the one that has the highest priority. Tom, anything on the hedging that you want to add?

Yes, I'd just reiterate, Mitch, that $1,600 floor is definitely a target. And the beauty of doing it in layering is we're not trying to time the market and obviously, the more patient you are the higher the ceiling that we're able to achieve. And just as a reminder, in March we did see gold drop below 1,500 and silver went below 12. So, we definitely want to protect the downside to ensure that we've got sufficient funding for POA 11 , as Mitch mentioned. I mean, that timing is we really don't have that much flexibility to move around that capital spend.

Our next question will come from Joseph Reagor with Roth Capital Partners. Please go ahead.

So I guess, first thing thinking about the scenario with Rochester with building out the additional leach pads. Would you need to have all like the capital to do that in hand when you embarked on that, or is that something where you can kind of have a certain portion day one that would make you feel comfortable?

I think it's the latter, Joe, in terms of, we have the revolver balance day one. But with the cash flow from Rochester and then from the other operations, that of course will come over time during 2021 and 2022 to act as another key source of the funding. So that would come sort of as we as we go. Tom, anything to add to that?

No, you nailed it again. Joe, we think we've got between the internally generated free cash flow from our mines, as well as the revolver capacity. Based on the scenarios that we've run, we're feeling pretty good about our ability to fund POA 11.

Also at Rochester, a big portion of kind of the decline in production there has been related to tonnage. And then that stepped back up in Q1, but that probably won't flow through till Q2 just as you rebuild inventory. But is there any difference in the ore makeup from say mid last year to now? Like are you guys experienced any changes even though maybe the model says it should be fine. Is there anything geologically different about the ore that you're mining today?

Terry, do you want to cover that?

Joe, thanks for the question. No, there's nothing significantly different over that time period that you're thinking about. One of the things that we benefit from at Rochester is just uniformity. I think there's some differences in terms of hardness. You know we see drilling differences and crushing impacts from hardness, but nothing you know geologically or mineralogically that is different.

So given that and given you know, my layman's terms understanding of the high pressure grinding you're doing, there's really nothing but time standing between you guys and getting to where you want to be.

I think that's fair. You know, every time we put HPGR crushed or on or near liner, we see the kind of recovery results that all the tests work had indicated. So that's certainly comforting and validating. It's really about the timings, like you said, Joe, of getting not only ounces down through deeper sections of that stage four pad but building up that tonnage. So stacking rates and placement rates that the guys out there have done a good job of reestablishing. In large part, blasting in the pit has gone a long way toward helping improve the crusher performance. But we like what we see at HPGR and you're right, it's more of a time, function of time than anything.

One last one just at Silvertip. Are there any remaining payments or did you guys make the final contingent payments in Q1?

Yes, we made that no more now to go.

[Operator Instructions] Our next question will come from Brian MacArthur with Raymond James. Please go ahead.

I have three quick questions. Just back to Tom's point about layering. You said you had 99,000 ounces in 2021 and then the press release just sort of give us 56.5 thousand with the first half and the second half. Can I assume those other ounces were sort of layered in, in the first half and the second half equally?

Tom, do you want to cover that?

Yes, is the answer. It's probably a little bit more weighting to the first half of the year, but the goal would be to have them spread out evenly when we complete the program.

It’s just like there’s 56, you kindly gave us 56.5 thousand ounces of the prices in the press release, and I saw you've got up to 99, as you said in your presentation. Second thing, just the 100 million draw on the revolver, I mean I get it if you draw 200 you're going to pay more under fees or whatever. Is there any, I assume that 100 million was sort of in the context of guaranteeing cash to finance Rochester. Obviously, you'd want to have a buffer just in case things didn't go wrong. Is that kind of just the way you came up with a hundred, you did all your testing, you made analysis and hundred sort of seemed like the right number. And I mean you could have taken, I presume 150 or 200 and maxed it out and then you'd had more cash on the balance sheet. Is that kind of the thinking about where the 100 million came from?

You're definitely on the right track there. Tom, you want to provide…

We went through a bunch of different scenarios and the last, so a couple of comments. One is this is a different crisis than ‘08. It's not a banking crisis. It's a economic crisis. So, we chatted with all the banks and just made sure that there were no restrictions to be able to draw on the revolver, and so this had nothing to do with that. But it was just -- we thought a precautionary measure just to make sure that we had some cash on hand if some of these downside scenarios were to come together. I mean the hope is that we'll never need to draw on it. And again, I’d just reiterate right as of this moment, we have no intention to stop any CapEx or exploration again at $1,700 goal. We're feeling actually pretty good. But last thing you want to do is rest on your laurels and get caught short in a time like this. We've never seen times like this and so we just thought it was a prudent thing to do.

Yes, it makes total sense in a lot of other companies have done that too. I figured that's where that number came from as opposed to -- I mean I could argue just to be really sure you take the whole 200 million, I guess is the debate…

We also thought, again, we've talked about all of the responses that our response to COVID-19 and we just didn't think drawing all of it was commensurate with all of the risk mitigation that has happened. And we thought it would probably send the wrong signal there with as you point out we could have done the whole thing, but it just didn't feel right to us.

And I guess just my third question just with Silvertip and as you mentioned with you know, TCRCs up, prices down, you put in the final payment at 25 million. I guess the stress testing for write down, what's the general thought process on that? I assume you're going to wait until you get the new study because then you sort of have a adjusted long-term plan and maybe you don't need do what? I'm not saying you do, you're doing. I was just kind of curious whether that had to be stress tested this quarter.

Again, the assumptions that we used in the impairment analysis contemplated a restart in 2022. And so again looking out to where long-term prices would be, I think it was disclosed in the 10-K, what we used in terms of zinc and lead prices, sort of back to more long-term. And so again, whatever happens to the zinc and lead price here over the next 18 months is not going to impact the amount of the impairment.

Our next question will come from Adam Graf with the B. Riley FBR. Please go ahead.

Just a couple of questions. One at Rochester, the study that you guys are targeting for the end of the year. Could you just remind us if that's going to include Lincoln or Wilco, or is that the next study for Rochester?

The plan would be updated capital and then a mine plan that would be optimized and expanded to hopefully include some of those East Rochester ounces that sit underneath the old stage one and stage two pads and then some additional material from Lincoln Hill, but nothing from Wilco or Gold Ridge further to the West of Lincoln Hill.

And then could you guys just give us maybe some color on any progress in the first quarter, exploration at Preciosa and at Sterling and Crown.

Hans, do you want to cover that?

Adam, La Preciosa continues with the engineers looking at our updated geologic and resource model, and we'll get actually a meeting at the end of next week. We'll review it. So sometime in May we'll have a much better idea what we're going to do there. The Crown and Sterling projects started out with three rigs turning two up at the Crown area, one down Sterling. The Crown area had a large truck grade, it’s one of the grades testing in new geophysical target. Because of the success of that target now, we've moved our smaller RC rig up there and have continued drilling on this target. It's called seahorse, not sure if we've shown that in any of our maps, but it's up about a mile and a half north of the SNA resource in an area that was where no prior drilling was, it’s a geophysical target. So we've been quite busy with one rig up there. We sent the truck rig home and we're continuing to drill around the Sterling area that Sterling will move a core rig in starting on Sunday and the core rig will start doing the infill large diameter core that we're going to use for metallurgical work, engineering work and look at a pick design at Sterling itself. Both Crown and Sterling has had some nice upside hits in the drill results, which we're going to talk about in our midyear updates in places we didn't expect. So these will be results that I can disclose when we put that news release out and hopefully by that news release, we'll have somewhere around between five and 10 holes to the report in those new zones. So it's going really well at Crown and Sterling.

And Hans, just in terms of the, you know the biggest components of the program this year, Palmarejo and Kensington. Obviously, Palmarejo right now is , drills aren't turning but we have 10 rigs there ready to get back into action. And so we're looking forward to that program and the results from there. Kensington also will have some good results to talk about in a mid year update. And then Rochester and Wharf are both more kind of middle of the second half of the year weighted. So we've had a lot of good things going on in a lot of places.

Yes, Silvertip just got started near the mid to end of March, and is up to three rigs. Now we'll have five rigs by the middle of second quarter, visually the things are looking really good there too.

Can you remind us of Palmarejo? Is the focus more resource conversion or resource expansion?

We started out the year with a bit more resource conversion just because of our annual resources and reserves calculations. Typically we have a data cut off end of June. So if you look at our money spent in fleet drilled or meters drilled, they're bit more in the infill reserve resource conversion category right now. However, it's super important that we find some new veins, new clavos to expand into in a couple of years. And so you'll see for the remainder of the year that the focus will be dominantly expansion. And we're finding some interesting looking stuff that we're going to end up like Mitch said, we’ve got 10 rigs geared up to start up and aggressively drill some new areas north of Independencia and East of Independencia, where we've got some good intercepts that we'll talk about in the mid year report.

This concludes our question and answer session. I would like to turn the conference back over to Mitchell Krebs for any closing remarks.

Okay, thanks. Well, we appreciate everyone's time this morning. And we look forward to speaking with you again in the summer when things are hopefully returning to normal to discuss our second quarter results. In the meantime, I hope you all stay healthy and safe. And thanks again for your time. Bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.