Century Aluminum Company (CENX) Q3 2008 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you very much for standing by. Welcome to the Third Quarter 2008 Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions]. As a reminder, the conference is being recorded. I would now like to turn the conference call over to our host, Ms. Shelly Lair. Please go ahead.

Thank you, Rhonda. Good afternoon everyone, and welcome to the conference call. For those of you joining us by telephone, this presentation is being webcast on the Century Aluminum website, www.centuryaluminum.com. Please note that website participants have the ability to advance their own slides. The following presentation, accompanying press release and comments, includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Century's actual results or actions may differ materially from those projected in these forward-looking statements. These forward-looking statements are based on our current expectations and we assume no obligation to update these statements. Investors are cautioned not to place undue reliance on these forward-looking statements. For risks related to these forward-looking statements, please review Annex A in our periodic SEC filings, including the Risk Factors and Management's Discussion and Analysis sections of our annual report and quarterly reports. In addition, throughout this conference call, we will use non-GAAP financial measures. Please refer the Appendix, which contains the reconciliations to the most directly comparable GAAP measures. This presentation, including the Appendix, is available on our website. I'd now like to introduce Logan Kruger, Century's President and Chief Executive Officer.

Thank you, Shelly. Welcome, to the third quarter conference call. Other participants include Wayne Hale and Mike Bless, and we have with us, Bob Nielsen and Steve Schneider. I wonder if you'd turn to slide number four. I'll take a little bit more time than I usual do to the overview today. We're obviously managing through some extraordinary and difficult times. As you'd expect, our first priority is to protect our existing business. As I will explain, we continue to believe the long-term fundamentals for the aluminum business are sound. So our focus is on preserving the value of our assets, so that we will emerge from the downturn with a strong platform on which to grow. We are confident that we can achieve this objective. Clearly the crisis in the global financial markets and the impending slowdown in the global economy have impacted all metal prices. In commodities, these trends have been exacerbated by investors using these assets as the source of liquidity. Many investors, of course, have had no choice but to do so and the strengthening of the U.S. dollar has added to the pressure. I will provide more detail on the market fundamentals in a few moments. At a high level, we're seeing slowing of the worldwide demand in building inventories in the near term. However, the supply response from the industry, especially in China, has already begun. Not only cuts in the existing capacities but delayed all projects. And also remember through longer term, we believe the fundamentals will support a strong market. Maybe even increasingly slow at the constraints in supply are now going to be even more severe than has been forecast before. The LME cash flow have reached $2792 for the quarter, down from $2940 the previous quarter. Remember that most of our revenues are tracked on the prior month LME, Michael Bless will provide detail. We produced above capacity in the U.S. and in Iceland. We've also the leadership teams at the plants, focused hard on cash flow as you would expect. We have an experienced group and they have been through this before. We've been absolute hold on discretionary spending in the U.S. and at Grundartangi in Iceland. Mike will provide detail in order of cash balances and the state for the banking system in Iceland. We're obviously closely monitoring events, but the situation has improved over the last ten days. We are spending a significant amount of time and an effort evaluating the best place plot for the Helguvik project in Iceland. First and most importantly, we continue to believe we have an excellent project in the long term. The plot will be world class in operating metrics and the environmental safety performance. This coupled with the capital cost that we believe is comparative with any plot being brought or consulted outside of China, will provide and produce an attractive return for our shareholders. However, we are carefully assessing our course of action for the next year or so. Before I comment on our plans for the project, let me an update of the situation in Iceland. I've spent last week there meeting with our project team as well as our partners of the top companies, the municipalities in which the project is being built and many officials of the government. I met with the Minister of Industry, the Minister of Trades, Finance Minister. I also met with the Chairman and CEOs of all three power companies; that's in addition to all the other members of the municipalities, that I met with. They obviously, as you would expect, have tremendous amount of support and are committed to help make this project a reality to the extent they exist a prudent course of action. The Governor was saying that the Helguvik project will be a significantly important part of the economic activity in Iceland during the coming years. We continue to believe that Iceland will be a great long-term player to do business in our industry and many others. The Icelanders will get through this very difficult period and emerge with the assets and qualities that have made the country an attractive place to do business. We want to be part in these efforts, if we can prudently do so. But as you would expect, we will unemotionally assess our situation. The prudent financability of the project is obviously a key consideration. While we are engaged in assessing a variety of alternatives, it's still too early to tell and we don't want to make any hasty decision. While speaking of the assets [ph] we have some flexibility. As of a months ago we stopped making any new commitments at this project. While we evaluate our course of action during the coming weeks, we have taken actions to reduce all the spending of the project through a measured pace. Obviously there has been a catch-up effect as the full cost spending in October for example, is largely based on the actual dexterity as thought, in September, for a normal terms about which pay off to clients. That's our expectation is that the spending in the Helguvik in the fourth quarter will be modestly higher than Grundartangi's free cash flow at current mature process. Wayne and Mike will provide more detail. So in summary, we continue to believe we have a world-class project. Just in addition we have faith and confidence in the future of Iceland for cycling our ability to do business there. Based upon the minimal level of spending, we will have until further notice, we have some time to assess the overall situation of the global economy, in commodities, in credit markets and specifically in Iceland. When I say some time, I do not mean months and months. We will carefully and thoughtfully with the input from all relevant parties complete this work expeditiously. If you'd mind turning to slide five. As you'll see from the slide, nearby pressures process has decreased significantly at the last few months. Just to give you an idea to illustrate the points, we had prices in excess of $3200 in July, down to $2600 by the end of August and less than $2100 per ton today. We are hearing, seeing nearby downside pressure as a results of concerns about the demand from China and globally. In addition, uncertainty in Iran, the timing of the Russian countries keeping them nearby prices well below marginal cash costs. For example, at $2200 per ton LME, approximately 35% of global smelters are producing at a cost above the LME price, cash negative in other terms. Sales in China received the Shanghai price which is typically less than the LME project price. At $2000 per ton, nearly all Chinese smelters are losing money, pushing their global number of those not producing positive cash flow to 40%. Near-term power contract expirations in Western Europe will further increase this percentage if the aluminum processes do not recover. Smelters are beginning to reduce capacity and the projects in the path now are expected to be delayed or cancelled. But the balance will mark the time to achieve and China will play an important role and we have direct evidence that they ready standing do that. So we turn to slide at number six; over the longer term, forecasts continued to indicate strong market fundamentals. Prices at the far end of the curve are supported by rising operating costs and for power supply issues globally. But most notably in China where high power cost put them us through smelters in the fourth quarter. In addition, Greenfield and Brownfield expansion costs have increased significantly and outside of China project lead times of several years. Longer-term demand drop is expected continue largely from China and the BRIC countries. Couple of statistics; growth in China continues to be strong, although we had note that growth has slowed recently. Industrial production 15% year-to-date and 11.4% for September. GDP 9.9% year-to-date, 9% for the third quarter of this year. The 2008 real global GDP growth is forecast to be some 3%. Can we move onto the next slide; looking through the near bar, we obviously had to look at what the potential for the future brings up and what the market may look like in terms of requirements of new smelter capacity. We continue to believe that the global constraints of supply will be support of our stronger prices over the medium and the longer term. This chart shown an incremental of 42 new and 350,000 tonnes smelter is required to meet demand expectations at a 7% CAGR demand growth through 2012. This is somewhat less than the 8% number of recent averages of analyst reports. Obviously, this is a five-year average and expectation for 2000 demand of below this level. Producing this additional capacity will be a challenge, especially at a time when projects are taking longer, costing more and particularly long-term affordable blocks of power are difficult to secure. Current prices aren't likely to attract new capital for expansion projects other than those that are of the top-tier world class projects. Expansions that are already under construction, especially in China, may be delayed or cancelled altogether. We have direct knowledge of that in the provinces that we have been working in China. At current process, we'd expect to see significant amounts of existing high-cost capacity to come off. This capacity reduction has ready begun with closures both in the U.S. and China. The unanswerable question is how long before, we see projects delays and capacity cuts, cuts into the magnitude so it's significant and sufficient to stabilize the market. Clearly challenged, demand itself will have to have a significant impact on the market balance going forward. We move onto slide eight; we're seeing a significant increase in the inventories recently. This is indicative of a weaker demand that also reflects the current liquidity crunch, as market participants are allowed with inventory to free-up cash. Days inventory are now some 33 days of global demand. As you can see in the chart, the previous factor was some 50 days of capacity of inventory, so that we are still well below these levels, although the numbers have increased significantly in the short term. The U.S. market remains subdued and the Midwest price [ph] continues to be in the 4 to 4.5% range. This track is consistent with historical averages. Although we believe the medium and longer-term aluminum market fundamentals remain strong. I will now hand over to Wayne to discuss the operations.

Thanks, very much Logan. Let's turn to slide nine. I want to start out and say that all the smelters operated well during the quarter and we're at or above-rated capacity at all locations. As Logan, discussed earlier with the recent market developments, all plant overhead, G&A and capital costs are being reviewed and reduced, stop or deferred. Leadership at all plants have stepped up to this task and this quality leadership is what differentiates Century from the rest. Progress continues with the Big Rivers' unwind; as you recall this is the secured long-term cost based power for the Hawesville plant until 2023. Recently several significant contractual elements have been concluded between Big Rivers' smelters and unwind. As a result, the unwind has again been submitted to the KPSC; this is Kentucky Public Service Commission, for review and public testimony and approval. We remain optimistic that the unwind will be concluded around year end. In the sustainability area, the Silver Arch's health, environment and safety, we see our continued trends year-on-year for improvement in reducing the total injuries and also their severity across all our facilities. For example, Hawesville is well above 2 million man hours now working without a loss-time accident. And Grundartangi continues to improve, and in this case, specifically the number of incidents has been halved as compared to a year ago. Move on to slide ten, which is bauxite, alumina and sales. At St. Ann Bauxite, the mine and shipped tonnes were impacted by poor weather and labor negotiation-related slowdowns. In this case, the negotiations with UAW continue and now have entered a binding arbitration stage. Looking at Gramercy Alumina; operations there were also affected by weather and specifically the hurricanes and some unexpected operational events. Production was impacted, however operations have now returned to capacity performance. Turning to sales and marketing; most product markets in which we participate had been impacted and are flat to decreasing. The demand for a higher purity remains strong as well as the demand for the metal to produce rod and cable. We're rigorously and continuously monitoring all our customers and have experienced to-date zero payment issues. Midwest premium had remained flat and quarter-to-quarter and our finished good inventories are low at all locations. Turning to the next slide, I'll say a few words about Helguvik. As indicated by Logan, this project is under scrutiny and review and all areas bundling cost, scope, schedule are being reviewed and looked at. For example, in procurement, we're taking advantage of the decrease in commodity prices and reviewing all packages with the vendors. The project is on schedule and budget and its trajectory will continue to be reviewed in the light of the present circumstances. Just a point to note, however the greenhouse gas allocations for Helguvik for 2008 through 2012 have been received. Therefore, all approvals and licenses are now in place. In summary, our operations are performing well. We're making good progress on the Helguvik project. As one would expect, in these turbulent times, we're reviewing all areas of the business to increase output, improve quality and reduce expenditures. Now I'll turn it over to Mike who will discuss the financial results.

Thank you, Wayne and if we could turn to slide 12 please. As usual, if you could have the financial information that comes attached to the press release handy. It will make my comments easier to follow along with these I'll obviously be referring to those. So on slide 12, talk a little bit about the components of the change in net sales. Again, as usual my comments will compare the second quarter to the third quarter. So, sequentially... sequential growth and sequential changes will be what I will address. First on net sales line; as Logan referred to the cash LME averaged Q3 over Q2 was down about 5.5%, 5.4% to be specific. On a month lag basis, it was down only 0.8% and as Logan referred, most of our revenues and costs are priced on that month's lag basis. So, that's the relevance statistic to look at in terms of changes in the market but down under just under 1%. On that basis, our realized average price on a global per-ton basis was down about 1.4%. Moving on to the volumes; our shipments volumes, both in the U.S. and Iceland were up 3% as reported and about 2% on a per-day basis, there was one more shipping day in Q3 over Q2. As Wayne and Logan noted, we're pleased with the performance of all the plans. I'd note in particular Grundartangi shipped at an average annual rate of 271,000 tonnes for the quarter. So, putting together the pricing and shipment growth, net sales for the quarter were up just about 1%. Moving down the income statement again if you have the financial statements in front of you; gross profit was down $34 million quarter-to-quarter as we predicted last quarter. We did face cost increases in a variety of areas and let me detail those for you. First and foremost raw materials, down $6 million quarter-to-quarter that's exactly as we predicted, that's largely carbon-based products. U.S. power prices, again up $6 million quarter-to-quarter, again on our forecast. Half of that amount or $3 million was due our increase in the fuel surcharge at Mt. Holly. We had a $10 million increase quarter-to-quarter in the delivered cost of Gramercy Alumina into Hawesville obviously. Of that $10 million let me just break it out for you, about a third of it, about 30% of it was due to increase in natural gas costs. The remainder of it was largely due to a decrease in volumes coming out of Gramercy and that's an increase in costs. The volume decrease is attributable to two factors. One is, the weather the storms in quarter. As you know the Mississippi river for example is closed for a couple of days in the quarter; that impacted volumes. And then some operational issues that we had during the quarter that are now behind as plant is now producing at capacity, as Wayne said. I would note that the controllable expenses at the plants, including power utilization and maintenance and other labor and other controllable expenses at all our plants were flat quarter-to-quarter. That's terrific performance in this kind of environment especially and we're proud of the team as Logan and Wayne said. Lastly, in gross profit, FIFO expense of $9 million for the quarter, again not surprising. That's obviously given the way the accounting works based on all cuts on the balance sheet, running through the income statement. Moving down, P&L; SG&A expense $11 million for the quarter, that's obviously down from previous quarters. Net loss on forward contracts, $79 million for the quarter. That's made up of two components this quarter. Let me just detail them. First obviously, we had to mark-to-market the liability from the end of last quarter, June 30th obviously, to the date of settlement and that was July the 7th as you recall. That was a $241 million charge. Offsetting that was the gain on the settlement itself for the 162 million. So the net results two items is of $79 million you see on the face of the income statement. Moving on, effective tax rate for the quarter was 18% on and as-reported basis. As you know the way we do that, calculate that number as we pull out the mark-to-market charge and it's effective tax rate of 36.2%. That's the effective U.S. tax rate 36.2%. So on that basis, 18% effective tax rate. If you adjust for the $3.3 million tax benefit that we described in the earnings release, the release of reserves, that moves the effective tax rate up to 21% which is consistent with the mix of taxable income in the U.S. versus Iceland as we have in our 2008 forecast. And asking now if you can turn to slide 18 just for a moment, when I talk a little bit shares outstanding and the accounting for EPS. Let me just take a step backwards as you do that. The reason we want to do this for you and the reason you're going to see this presentation going forward, as the way the EPS accounting works for the preferred shares that we issued for the hedge unwind, in the middle of the summer it's regrettably not quite as simple as we were hoping. So, as you recall we ended last quarter with about 41 million basic shares outstanding and we issued a little over 8 million over the summer in the public common stock offering that of course includes the exercise of the Greenshoe. And so that's where you see the average shares outstanding for the quarter, $47.7 million basic and $50 million diluted shares outstanding. Those are the common shares outstanding. As you know also we issued 16 million preferred shares in the middle or after first week in July for the hedge unwind. Just a detailed note; 400,000 of those shares, have converted from preferred stock to common stock. Based on the anti-dilution provisions in the preferred stock, basically what the contract says is that any time the company takes an action that drives the ownership of the preferred stock holder obviously Glencore down below the ownership that they had before the hedge unwind that was about 28.5% of the common stock. Any time that happens, then contractually a number of preferred shares convert into common to get them back to that 28.5% ownership. And obviously the exercise of the over allotment option with the Greenshoe in the public common stock offering trigged that event. So 400,000 shares are no longer preferred. They convert into common and their ownership is at the 28.5% level. So when you add all that up, the 50 million as you can see there, up on the right hand of slide 18, average diluted common shares for the quarter. 14.5 million would be average preferred shares for the quarter. If you accounted those preferred shares as common shares, they're basically common share equivalents as we talked about over the summer and all their terms and rights what not, 64.5 million is the total share count again treated and referred as common. Now, moving onto the EPS accounting. The way the GAAP... the accounting works for it, if you looked at the front of the income statement in the press release, is that we calculate part of the accounting and show on the income statement only the EPS allocable to common shares. And the way you do that obviously, is you take that 50 million common shares and portion of the total net income, total net income is 37 million. The portion of the total net income that's allocable to that... those common share is 28.4 million. That basically is based on the proportion of common versus preferred shares outstanding, is the way you calculate that 28.4 million versus 8.6 for the preferred. We believe that way investors will want to look at this obviously, is total net income as you see there, the 37 million. That's the same amount that you'll see on the income statement. Divided by the total shares, as if the preferred were common, or as if preferred had converted into common of 64.5. And that this is the way we're preparing this adjusted EPS that you see here. So, if you do that math, you make the adjustments that we normally make to pull out the mark-to-market loss 50.4 after-tax and to pull out the $3.3 million tax gain non-recurring. You get adjusted EPS as you can see in the bottom right-hand corner of the chart of $1.31. Okay and after that, if we could move back please to slide 13 which is cash flow. Free cash flow for the quarter was strong at $77 million. We are pleased with the result. And as you know, the hedge unwind transaction contemplated the hedge volumes only through June, so we have to make that last payment for July. That payment was $21 million or $13 million after taxes, as you can see on the chart on side 13. So free cash flow, would have been $90 million without those hedge payments. If you had a chance to look at the cash flow statement, so far you saw this quarter not surprisingly another use of funds for working capital. That trend will start to reverse itself, obviously assuming metal prices stay around their current levels as we go forward. Couple of more items on the cash flow statement, if you have it, in front of you, CapEx for the quarter this is excluding Helguvik, I will get to that in a moment. CapEx for the quarter was $12 million. As Wayne detailed that includes projects which we have now suspended. I'd remind you that the average sustaining or maintenance capital rate for the company on an annualized basis across the company, this includes the U.S. facilities and Grundartangi, is about $20 million. On the Helguvik as you can see on the cash flow statement, year-to-date CapEx for Helguvik $53 million and that works out to $21 million for Q3. If you take a step back, Logan and Wayne made comments obviously about the actions that we're taking in Iceland. So I won't belabor those but just to put some numbers to them. If you took a step back and looked at the Q4 forecast for Helguvik spending, what it would have been before we took these actions to seize new commitments and to reduce the current spending. The forecast was for a cash spending in Q4 of $45 million. And that number obviously is reduced. As Logan and Wayne both referred to, it's not an immediate cessation in that spending, because as Logan detailed for example, in that $45 million the number say that was in that number for November spending, is largely based on October activity. And our vendors bills us, we pay him 30 days, same thing October spending based on September activity. So that $45 million will go down. We're just not sure exactly how much at this point, but it will be lower. One way to look at that, as Logan referred to is versus the free cash flow coming out of Grundartangi. Let me just put a level on that; at current metal prices the after tax free cash flow coming from Grundartangi is about $10 million, per month. We turn to slide 14 please. Just a couple of comments about the cash situation Iceland and some other issues. If you had a chance to look at the balance sheet total cash at September 30th, pardon me was $169 million. That will split about 50-50 between the U.S and Nordural. In the U.S., the only of note since then was the final payment that we made on October 1, per terms on the short-term note the deferred settlement amount from the hedge unwind. That was the last payment under that note, $25 million that we've done there. Nordural cash today is a bit higher than it was at September 30th. Just quickly in cash held in the U.S., we hold at Banc of America and that Black Rock. Nordural cash there, just to take a step back as we talked about in the earnings... pardon me the press release we put out a couple of weeks ago. Cash held by Nordural always has been and of course still is held in U.S. dollars. Given the nature of our business there, we never held a lot of kroner. The way we worked the business obviously is that when we get to make a payroll or other Kroner-based payment, we'd exchanged dollars to kroner same day and make those payments. And obviously that's the way we're continuing to do it. In terms of the total of Nordural cash, about 60% of it is held at BNP Paribas and Banc of America in Europe and the U.S. respectively. We were able to get those funds out of Iceland before the situation started to deteriorate... pardon me, seriously last month. The remainder of Nordural's funds are held in Iceland at Landsbanki and Kaupthing. Let me talk about those. We continue to believe those funds in Iceland are secured, as you know the government affectively owns both of those banking institutions and has guaranteed those deposits. Those funds have been and continue to be available for use to make local... to pay local expenses, which are mainly power, or power those in Iceland on payroll. And our foreign exchange obligations and I'll get to that in just a moment. And the government has been exchanging krona and in effect in the market for conversions at this point in time. And I'll update from this side the current rate as of today is 114 krona per dollar. At present we have all of our customers paying us into those accounts at Paribas and Banc of America in Europe and in New York respectively, so no new funds into Iceland at this point. And we're also largely making payments non-Iceland payments i.e. to vendors in Europe and other places from those accounts. Our preference obviously would be to return to normal banking operations in Iceland as quickly as possible i.e. to receive payments and make payments in Iceland. And we'll continue to assess the situation closely obviously it's changing day-to-day. Let me talk about the foreign exchange obligation; the counter party there as you know is essentially the government, it's the same banking institutions that hold our cash deposits. As we've talked about earlier in the year and earlier this year we did indeed buy forward krona. The contracts go out through September of 2009. The average forward price is 85 at which we bought forward. Late breaking agreement here is literally as of earlier today, we have preliminary confirmation from both banks that they have agreed to settle those liabilities at the current exchange rate of a 114. And that's a combined payment to both banks, an aggregate payment of about $28 million. It obviously removes the risk of further devaluation once your settlement with the IMF is reached in Iceland or other solution, to stabilize the economic and banking situation there. We'll obviously simply offset that payment, specific cash balances that we hold in Iceland. And of course, this payment that we're making it today and decreasing risk we believe by doing it, will be offset by the lower dollar value of the Icelandic krona payments that will make obviously over the coming year, just to fund our business. Couple of other comments, as you would expect we have been reviewing very carefully our supplier and customer base, what Wayne and Logan made reference to this. No issues in the supplier base. On the credit side, we've been looking at customers for over a year as the business begin to soften in the U.S. We have two things going for us here; one is a small group of customers, as you know three customers in Iceland and two in the U.S. an aggregate make up about 80% of our sales. And we have about two and half of dozen of total customers. So it's not a long list to review. We have ... in addition we have a very experienced credit manager who works underneath Shelly. He had a long carrier at U.S. Steel before he joined us earlier this decade. He's been to this kind of thing before. We're lucky to have him. He started ratcheting down credit terms on many of our customers, smaller customers earlier this year. So we have no customers as well as Wayne detailed. But we talked to them literally on a daily basis. Lastly just a couple of comments on liquidity. I talked already about the cash balances in both the U.S. and at Nordural, as you know we don't have any maturities until 2014 which is when the senior notes mature, if converts don't mature for another 10 years in 2024 although I would note that the converts contain a power-put in August of 2011 it becomes exercisable. The conversion price is about $30.50 so that's something we obviously have to consider as we think about the next couple of years. And lastly our revolver is un-drawn that's a $100 million revolver, it's all available based on the borrowing base, other than about $10 million that is used to back stop normal there is a credit, that is with a group of very strong banks and it matures in September of 2010. And with that, I will turn it back to Logan.

Thanks Mike. To wrap up my remark before we take questions, the coming months will provide more clarity as it relates both to the near term demand and the industries actions on supply, especially of course the most of disadvantage part of the cost curve. We described to the view that over longer-term, the bar dropping developing regions of the world would resume to healthier level. And the supply suggestion which look challenging before the financial market process began in earnings will only be exacerbated. Our plants are performing very well and I am very pleased with that. And we have an experienced and talented group of people who know how to run these operations during flaunt. As I'd described in detail, in addition to the company's cash management activities, we are focusing our efforts and energy on a full amount of feasibility of the project at Helguvik over the near term. We are keeping best as updated as we reach any conclusions. I'd like now open it to invite any questions. All right, Sandra, we can go to questions. Question And Answer

[Operator Instructions]. And our first question comes from Kuni Chen of Banc of America. Please go ahead.

Hi, good afternoon everybody.

Hi, Kuni.

Hey, Kuni.

I guess, first question on Iceland's... you mentioned earlier in your comments that you met with the ministers over there and you met with the heads of some of the municipalities. I guess are there any kind of red flags that stand out in your minds that could impair your ability to operate, going forward longer term. Just given any kind of power availability issues or raw material access or anything like that, just looking for color on kind of what concerns you at this point, operationally?

Thanks, very much, Kuni, that's a very good question. Obviously, Grundartangi we don't see any red flags. We peaked in out the power companies and they're producing units continue to do well and we get supply of power in fact people are putting power to take us beyond 260,000 tons as you see. I think Mike mentioned capacity at Grundartangi is right over or about 271,000 plus. Obviously, most of our activities are in dollars. We've, also, been very careful about our stocking, with concerned of the impacts of that. We've had a favorable response and made some adjustments to on a short-term basis to some salaries. I think all in all, the country is undergoing a phenomenal impact but it's dealing with it in a very pragmatic sensible way. The ministers, and I met with three of them were obviously support of any of our activities they see as one of the fundamentals for the country's economy going forward and the communities are very well supportive for us well and it's a difficult time. Currency risk obviously, Mike has explained and we've obviously got down of our hedge position, exposed enough to a potentially deteriorating currency will see. I think the IMF, obviously solutions we don't know the details of that and we'll await that. Mike has got some comments as well.

Just to address the two specific items in their good ones, Kuni, obviously that you raised. On the power side for Grundartangi, obviously those assets have long been in the ground. The operating expenses for the power company is to run that apparatus is very low. And they need our dollars now. So those will continue to run. There is no operational issues there, no problem at all. As it relates to raw materials, all the raw materials come from outside Iceland anyway. And so there is really no... has been no and we don't foresee any interruptions or issues there.

We get delivery right to dock at this, but proper fact as you know.

Right, right. I understand. Okay and then as a follow up, can you just talk a bit about the U.S. plant system with metal prices at or below $2100. How are the U.S smelters holding up in a kind of what's your ability to arguably sustain some operating losses there over the next or at least over the near term?

I think it's again another good question. Let me give you sort of an outlook view and I will ask Wayne to comment. Obviously over a month ago, we took immediate action because of the deteriorating market obviously stopped hold discretionary capital and spending of any sort. The challenging plants are probably the ones which is all in the higher end of the cost curve. And Wayne and the team are working very diligently to, at these prices have risen and be at least for the cash mutual position. You may not climb there yet as you would expect, but we do have some favorable reactions. You will also see some pricing come off on the alumina, as a percentage of alumina. And going into next year, our alumina supply contracts are slightly move favorable than they were this year, as well as what we think will be favorable impact from freight. So the challenge is Mt. Holly and Hawesville obviously add to that number in terms of cost and produce operating cash flow and we're pleased about them. Challenge is really where do we get to writings within the short-term. Any comments?

I think you hit the major points, so Logan, I just emphasize your view. We have been in contact with all of suppliers and so far as price reductions, they presumably come to us when they want price increases, when their experience had changed. So, we've had some favorable conversations with those groups of people to-date. And as I said earlier, although the leadership is certainly focusing reducing all costs in all that is across the facilities and the goal has been set and we're certainly stepping up to the mark.

Okay. Then one last question I'll turned it over. Assuming how good it stays on hold, let's say for all of 2009, can you give us a CapEx range for next year?

I think obviously you're making a proposal over the full next year. I think just to repeat what you said and I'll make sure that --. We've slowed and reduced expenditure at Helguvik project dramatically and we are under a review process which we know will take some weeks, but not months to complete. Year-to-date $53 million has been spent and I think there's another $45 million which Mike has mentioned, including about $15 million in October. We think we can do better than at $45 million because that's expenditure to come again before costing. I think that really gives you in a nutshell what we see as the expenditure. The next step beyond that to me I think just asking another part to your question really is, what do you do if you put the project on hold for a period of time and that's obviously one of the options. You would then have to look at your supply in the longer lead items and you have to go into negotiations with a number of people. I think maybe that's the best point to leave it and we know, we have a good idea of what additional exposure we have on those project including that before you have negotiations to extend terms delay, there is the whole lot of parameters that you have to go through. Probably we take you to some expended to-date to that point of about $100 million or less. Mike.

Yes. I mean Kuni to answer your question that obviously, let me talk about the projects and the status of the analysis. I mean if we didn't stop spending on the project, the answer is back to that $20 million of maintenance CapEx. There is one or two small projects in the U.S that for safety reasons will be completed, but we're talking about maybe $1 million over that, Wayne is nodding yes. So you go back to that maintenance level, absolutely.

Okay.

With so much detail Kuni I think it covers the area. We will see you in follow-up questions.

Alright. Great, thanks. I'll turn it over.

Thank you.

Next question comes from David Lipschitz of Merrill Lynch. Please go ahead.

Thank you. Hi, everyone.

Hi, David.

In terms of... you did a great job as of last quarter going quarter-over-quarter in terms your costs. Can you talk about in terms of the change on the downside for the fourth quarter from the third quarter in terms of you know, you've got $6 million up or something like that. Is there any type of breakdown you can give us, I think either fourth quarter or next year prices would average where we're right now?

No, David we don't have it right now. We usually... where we looking at in and as Wayne said, we're going supplier by supplier. We usually don't like to sort of guess forward, but last quarter we knew these cost increases were coming and we felt that since we knew it you should know it. And that's why we detailed all of them. Right now, we don't know. I mean we're going through it. Obviously some of these have a quarter or two lag before you catch up and you start to see things reversely other way, obviously Anheuser & Co and Fitch are referenced to oil. There are some lag effects but we'll start to see some of that as Logan said you have alumina in two respects one just simply as the LME comes down and the lag effect goes away. And two, based on the range for the contracts next year and that's a little bit unknowable at this point in time. It will come down how much we don't know. So when we have, it'll certainly have an estimate that is good enough to give you in the next call in late January. Right now, we don't have it for ourselves.

Wayne, if Ravenswood were to be cash neutral, would you just shut it down?

I think that's a question, that's David in the future we will see that. I think we got to answer that. Our work is to keep our operations in a cash neutral or positive situation. So it is a question we haven't come to and the team at Ravenswood are doing a good job. So we have to address that in the coming months David.

Okay, thanks.

Sure

Your next question comes from Tim Hayes at Davenport & Company. Please go ahead. Timothy Hayes - Davenport & Company Llc: Hi good afternoon.

Hi Tim. Timothy Hayes - Davenport & Company Llc: This is a question on the annual cost and the shipping; given that oil has been all over the place and shipping rates have come down, what roughly are you paying for spot anodes and how much of it costs you are delivering?

We don't purchase spot anodes. All our anodes are on a long-term contract basis. Remember now, when we talk about anodes it's only for Iceland and in the U.S. we make our own anodes, we have our own anode manufacturing facilities. We buy the cook and pitch and bake it and combine it and make a block. So in Iceland we buy from European and from China. Those are long-term contracts with reference to obviously petroleum products and so again they had some reference. As I said they'll come down, but over time same with freight. We're starting to see some alleviation right now. I think freight rates are going to go down, but nothing priced in certainly for the quarter we just ended. Timothy Hayes - Davenport & Company Llc: Yes, on the long-term contracts and is there a date in the near term, when that starts to get renewed or exact how long term are we talking?

I mean those get re-upped every quarter. As far as the pricing in those contracts, you come to conclusion of those European ones. Now you remember we have ownership of BHH in China that's an ownership issue. So, right now we see the pricing mitigating a bit do the input costs and as Mike indicated freight. Timothy Hayes - Davenport & Company Llc: Okay, thanks. And again I appreciate all the details on the sequential costs that you do.

Thank you, Tim.

Thanks, Tim.

Our next question comes from David Gagliano of Credit Suisse. Please go ahead.

Hi I just wanted to focus on cost a little bit more. First of all the $10 million cost increase in Q3; now is it fair... I am coming from Gramercy; is it fair given that 30% of that was gas, 70% was volumes that are now backup and running. Is it fair to assume that we should not expect to see a similar issue in Q4?

Yes it is fair assume that, correct.

Okay.And then the second question is on the krona. I just want to make sure I have this right. What was the sort of the sort of the average krona that flowed through your operating average you know expense rate and flow through your operating results in Q3 in terms of the krona?

Well I don't have what the average rate was David. I've not calculated. It's easy to do. I don't know.

More than I guess question were hedges in place?

Yes, there were hedges in place absolutely, absolutely.

So you are closing out those hedges is that right?

We're closing out those hedges. So just to repeat, the hedges that remain and then absolutely we had three months for us to settle in the quarter for the terms, they settle once a month as you know. And so, everything that we have left is we believe has been close at. This literally is breaking news as of today we've been working on it for the past couple of days led by our team in Iceland of course have done a terrific job. We've got not written yet but confirmation with draft writing, I guess I should say to be confirmed later today or tomorrow that, that those contracts are settled and closed. And so we will have no remaining forward krona purchases. And the way we look at it there's two fold just to repeat; the reason that we were anxious to settle them with two fold one is because as I am sure everybody has read once the situation really deteriorated in Iceland basically the market for foreign exchange between the current and any other currency broke down and the private coats that were being made were all over the net, but some of them were quite, quite high. We saw... you see them too anecdotal evidence in the 200 and 300s even per dollar. And so, in that respect the government is coming and they did try to peg rate and for a day but they back-off on that, but they as really the only market maker today have been exchange in Krona and have been consistent and good about it at the rate of spend between 110 and 114 over the last couple of weeks. Once the settlement is made again whether it's with the IMF and we don't know we obviously have some insight given Logan's meetings there in such but we're reading the same stuff deteriorating but once there is a settlement reached through the IMF and/or other parties. The supposition is if you follow... if you have followed other IMF settlements that one of the conditions is that the currency is allowed to freely float again. And we did not want to take the risk that, that happens and this could get really away from us, so we settled it.

And its not a proposition about taking it or changing to the Euro so I think its very difficult to predict what will happen in that spaces in the next couple of months there.

Okay. Just... I just want to make to sure I am thinking about it correctly. Is it right and the way I am thinking about as 85 goes to 114 i.e. 25% reduction in your?

That's why I said David that, we make this one time payment, obviously we offset it against our deposits that are in Iceland. And then we move on and every month as we make Krona based payments, whether its payroll or other local expenses. We're now exchanging that 114 or frankly if things go the way that I think most people expecting it to go the currency probably should devalue and that's not a prediction it's just an observation based on sort of... where the world was before things broke down and the way past IMF settlements have worked. And so we'll enjoy that upside as well. So, we basically do have a look at it is for those volumes we bought at 85, we gave up the upside between 85 and where we settled at 114 but if it does devalue which of course for Iceland we hope it does not, because it's in our interest there to have a strong economy, but we would enjoy the upside above 114.

Okay. And then just last question. How much of your operating cost you're going to target actually, Krona basis at a 100%?

Krona based?

I am assuming that...

No. no that's....

That'sabout 12% to 15% I think it's a good number.

Little higher than that maybe 20 off giving the cushions yet far beyond maybe 15% to 20%. You've seen a lot I mean just to take a step back to where those numbers are coming from, usually in a typical smelter as we say, payroll is and on play base costs or on the orders take 15% and Iceland of course, because you don't have alumina in the cost of sales. You got a kind a growth setup at least by a third, so, it's maybe in the 20% to even 25% David range.

Okay. And then how much of the capital cost that held with is Krona based and what was the exchange rate that was assumed when your development capital cost as much?

Good question. Yes good, David, I think for analysis lets take a step back and I think for the project Phase I particularly, 70 to 75 sorry.... for $1.2 million up to the end of 2010. About 40% was Krona based. And we used that in exchange rates of around about 70.

75.

So, if you'll understand what our review is going to be, its obviously looking forward, can we take advantage on the Helguvik project now and is up the prudent things for us to do and on what basis as considering the whole lot of other option. Not only the local cost but also the material cost. So, I'll give one that you've seen in the last one. Its obviously, steel has come over from over $1000 a ton to $600. We fortunate for in one point of time that we haven't commercial expenditures to a particular set of process on materials and obviously we'll have the opportunity to go back and re-look at some of our contracts.

Just one another comment if I may. Another and the major factors of many factors that we have to look at during this assessment over the very near term and I think David, I have a sense of where you're heading and you're right on. The only counter way, not the only, but eight counter availing force of course, I think your point is right we saw there a big chunk upon a big chunk of the project spending where we'd proceed, we'll enjoy benefit there. The counter availing force of course is inflation, which... with anybody familiar with a situation like this and I've seen them in my past in South and Latin America. Those economies as we all know, for burden buys some pretty ugly inflation after a corrective or a doing a corrective period like this. So that's, it's a not straight savings. You've got to recalculate sort of what all the local and current based rates you are going to be, based on where you think prices are going.

Okay, fair enough. I appreciate the additional info. Thanks.

Sure, David.

Thank you, David.

The next question comes from Tom Adonty of Aker [ph]. Please go ahead.

Hey guys, how are you doing?

Hi.

You mentioned Ravenswood on Mt. Holly and Hawesville, how much lower do aluminum prices need to go for those facilities to sort of hit cash breakeven?

Alright, I think it's on that question we don't give guidance on individual cost segment. I mean I think our rate is rated at the top end its well known and that's the one obviously is first exposed so we don't give that. We know, we are better than mid-tier and things can be improved. So I think that's the best we can help you, I don't if Mike is going to comment.

No,there are obviously, the cash flow positive today we can confirm that in the and as Logan said we really for a whole host of reasons, haven't got down to the plant level in terms of taking about OpEx, cash OpEx but there are cash breakeven today and as Logan said Ravenswood would... is closed and we think that we have we and the team have some reasonably achievable buckets of ways that we can get it even at today's metal price within striking distance at least and we're going after that hard.

Got. Those were my question.

Okay. Thank you.

Now we've a question from Plain Adwell from Quintus Capital Management [ph]. Please go ahead.

Thank you and sorry for blabbering this point but when you're close in at Krona and exchange forward contracts, you took a $28 million chart, is that correct?

We haven't taken it yet, again this is late breaking, if we have indeed done it as we believe and the only reason I'm hedging there are no funds and credits. I haven't seen yet, there is a piece of paper yet but our attorneys in Iceland who were present at these meetings with the banks tell us that it's done. So assuming that's true we will take the charge and obviously that would be reflected in our fourth quarter financial statements, I know we'll winning that.

And did you say there was an offsetting $28 million or something?

Well of course you get that back as you I mean you'll see it relative to P&L as you go forward because now you're un-hedged and as you are taking dollars to exchange I mean the Krona that to make you payroll and make your Iceland based expenses. You're exchanging it with 114 or whatever the currency goes. So we'll to the extent that the currency stays at 114 or even the values we'll get that back or quite frankly or more if the currency de-values as we, as the business climbs forward over the next nine months.

Right. So essentially you are saying your local cost with wages and power and such will be less of course because as you...

Not, not power, we pay power in U.S dollar as you know as paying to the LME so that's in dollars.

Right.

But it's payroll on others which is as Shelly pointed out as in the 20%-25% maybe of the total OpEx at Grundartangi category.

Okay. Now we also done with mark-to-market since that's been closed out, we won't see that anymore?

That's correct.

Great. And I think you covered this, but there has been no discontinuation of services in Iceland, everything is operating as expected and deliveries are arriving as expected and things are fairly smooth in that respect?

I've been and we say which is roughly that came back and when are continuing quite normally and obviously we've checked and but our Grundartangi facility we have deliveries go direct to the harbor, and those are continuing our supplies for the alumina, particularly BHP and Glencore and those like Renault suppliers and they take the metal away. And the other coming quite close and so can deal with it. So, I think payroll continues and seems to have made some leads we have that's what I can say that no more abnormal. Although it's a pretty abnormal arrangements, banks operates although there is some difficulties in dealing with some of the currencies, but we've had positive results, as Mike had described including the unwind of this currency hedge.

We've had, I just might add, great cooperation from the Icelanders and the banking community, the Central Bank and helping us. And when I say we, I am sure I speak with our peers to U.S. and other non-Icelandic companies at the business there as well. And trying to make our business operations as normal as possible. They are bending over backwards and doing everything within their power to help keep our business operating normally because it's number one, it's the right thing to do. And two, it's in their best interest to do so. We're major employee on the Island. We provide good, high-paying jobs and all that. And in over the next couple of years that's going to be an important engine in that economy. So, we've had just phenomenal cooperation and complete access at any time. Obviously, we're watching it very closely. I think Mike's been quite clear we've managed this conditions in the banking system and our funds in often time we will continue to monitor as we go forward.

Great. Thank you very much.

Thanks.

We have a question from Mark Liinamaa of Morgan Stanley. Please go ahead.

Good evening. I am pretty sure that's me.

Yes, I think that's you, Mark.

I can not talk to the second word. Thanks for the confidence.

Could you comment as far as the cost curve goes in the United States. Would you be able to give any color on how much North American capacity operates above Ravenswood?

I think it is a good question. I would suggest you go and look at something like CRU or Brook Hunt.

But it's not a high cost facility in North America?

No it's not. That's why I suggest it really would be inappropriate for me to run out a list of names even if I did know the most top on of my head. I am sure Michael, certainly Wayne would have some ideas. They are all some properties issues you would know in Northwest at top. So, you can work it out probably is there all a number. And I don't want people to over analyze why I used Ravenswood, but just for us as a company, we have to set benchmarks. It's really important for us to aim it and drive it what is the one and where the dealers upfront. And it would be remorse for us deal for not deal with us in our discussions with you today in these particular circumstances.

Certainly understandable, don't want to get everybody upset there, and I am sure they're going to make good progress in getting costs under control. It would be interest though hearing some commentary; how big a decision is it to shut something down, not that specifically Ravenswood pretty in the industry. If you shut it down today, how longs does it take, how much does it cost and how easy is it to take back up again, when market conditions return? Because I think there is some, maybe some benefit to managing high facilities to maximize profit rather than minimize cost that these points cycle? Any commentary there would be appreciated.

Presuming talking Mark combined operating smelter facilities or refineries let's just make it generic on that basis. Generally quite difficult to shutdown and then you got to look at the ongoing maintenance costs for whatever period and so you've got a one-time hiccups of value you do liberate the working capital as you know from what you got in the plot. But I think the real trick and this is the one that everyone is going to sit and think much about is where you are going to get the power from? How long can you preserve that power option and what's that pricing going to be if and when you want stop up so. Although it's a hypothetical question, its got some interesting connotations of why you have to think about it. So the upfront in types are fairly easy to measure. The ongoing impacts are all pretty reasonable. I think the real test which is the one that goes to the supply side constraint is that, do you able to preserve a power contractual arrangement that you can turn on at terms that you understand later on.

Okay, do you think there is any risk at all if this economic situation hangs around for a bit that we create an overhang that takes multiyear to hang on or to get over?

You know I could just turn it to Wayne to comment but let me just give you some thoughts. There was the Northwest USA overhang, which in reality it don't turn out to be there for a number of circumstances. I think you always used one the questions which I alluded to in our discussion rather market is how quickly do you work through this. But, I think more importantly is the supply side, particularly not only the existing operations, but future expansions growth and I am particularly look at perhaps China as an example and don't go ahead. Any growth beyond that quickly evaporates the inventory numbers and the ability to immediately bring response to that is very dirty growth. Wayne do you want to add any comment?

Yes, I think you made a good reference in former times in Pacific Northwest and in those specific circumstances, there was a bit overhang. And because people who own this facilities don't immediately shut them down because of the costs and circumstances that prevail as a result of the shutdown. So basically owners and operators look at the marketplace and try to predict how long is this going to go on, before they take the adoption to shutdown. So it's a wait-and-see scenario basically and because it's a serious decision to take.

And I think we've no intention at this point in time to do any of those spectrum. Obviously we would be remiss not to be able to talk about this. And just but in China shutting down is quicker obviously for a lot of reasons. The functional cost there amongst other things is up. But then the question would be will there be power available to continue to go up and so some of the people, would obviously then fight power increases, and we're certainly Mark aware of at least a couple of places that have close down power production. We in fact have a list of up to 800,000 tonnes of capacity that's coming. Also we talked about it coming or some of that has already happen, and we do have one of the expansion projects that we now caught well that hasn't flowed and there is no intention to product for at least three to five months. So I think that that response just is happening. So I will see I have given you some food for thought on looking on those.

Yes, very good. Thanks and good luck to you.

Thanks, Mark.

Next question comes from Tony Rizzuto of Dahlman Rose. Please go ahead. Anthony Rizzuto - Dahlman Rose & Co.: Thank you very much. Gentlemen thank you very much for the level of detail. I've got a couple of questions here and the first one, you know as you evaluate Helguvik, could you share with us what the price tag for aluminum is that as you look at that?

Tony it's a good question, but we don't shoot at that. I think if you had a look at how we looked at this project and so we had a very good positive return for our shareholders in the date that we made the decision on this project. The returns are good at process that perhaps a little bit low than that you're seeing today. So that gives you an idea of how somewhat conservative a process some of the plastic that we used. It's difficult for us to predict or to show projects for these reasons because things going up and down everyday. Anthony Rizzuto - Dahlman Rose & Co.: Understood, and I wondered regarding Ravenswood and correct me if I'm wrong, but my understanding of Ravenswood you have a pretty good situation that you guys supply that the hot metal to the rolling mill.

No, that's correct. So although there is a challenge there this also some positives as you pointed out. So the hot metal it goes to a good rolling facility which is supplying the aircraft industry, which is you know, reasonably I wouldn't say buoyant, it's certainly got some growth. And it's a pretty specialized presence as well we've done. You can't build that sort of color to the running mill other than mark anyway. Anthony Rizzuto - Dahlman Rose & Co.: Now we've been hearing from some of our trade sources that Alcan is in the process of reviewing the mix there and might be looking to exit some of the different product categories. And I am wondering, if they were to get out of some of the more standard products or common outlet products, would you guys have an alternate outlet, if you will for that material? With the melting --

Yes, I think certainly my colleagues can comment on this.

Logan thanks. We don't sell all our metal across the fence anyway well that's the first thing easy to remember and we do sell metal into the market and to various sources already. And we have the capacity to adjust that we have one occasions when they've had some operational difficulties. So I don't know why and I think we don't recollect on what they're doing in the terms of on operations and I think that's briefly to a product versus direct play.

I think to your point on, because of the association of the two facilities, there is a very symbolic relationship there and so we have certainly sold the more metal when required and they have taken less metal and we've been able to cast it and dispose it and sell it appropriately when they couldn't take the metal. So we may decide what they're going to be able to produce and take. We'll have another sarcasm in place which will allow us to easily cast out, replacement on the market and so we'll be able to move that metal as and if and when required. Anthony Rizzuto - Dahlman Rose & Co.: Alright and it wouldn't have... Wayne it wouldn't have a meaningful change or impact on your overall cost structure or the overall price against that product to customer?

You've got a freight element, Tony. That's, that's the difference, you're loosing something in cost but its not a sum of huge costs. And the you've got freight in total that. Anthony Rizzuto - Dahlman Rose & Co.: Alright, thank you very much gentlemen.

Thanks, Tony.

Thank you.

And our next question comes from the line Tony Robson with BMO Capital Markets. Please go ahead.

Gentleman, good afternoon and thank you for taking my call.

Thanks Tony.

To Wayne, actually stole most of my questions, but one remaining, one or two remaining questions, did I hear correctly that whole CapEx of 2008 was $53 million to-date and other 45 to go?

Yes. Let me try and get to get this from close to keep direct and my colleagues don't direct me too much. $53 million spent for so far. Mike has mentioned already that for the balance of the year $45 of commitments of both including 15 in October. We believe we can improve on that 45 because we're able to apply pressure on reducing that. We obviously will look at all options would in Helguvik. How do we proceed forward? But while we're considering that in the short-term, we don't want to incur any more value in Helguvik and spend more capital. But do note that anything that we've done at Helguvik is not a loss of value. In other words you could probably design that is used about, it's not a design or a process that will change all the match work, you don't have that risk. Going right forward and I don't know if it's off, but maybe obviously the things are written off, what would you look at if you had to apply a full stop to this, but the answer is we haven't come to that decision. And we really wish to look at those project and it's a very good project, its world class. And we want to take the time to look at it.

Okay. Assuming you go ahead with Helguvik. I have assumed in my model and I really want to guess the other one is to two, that you would access the debt markets and what are the form covered bonds of bank facilities. Are you're talking to your bankers in the debt markets at the moment what's.... how receptive are they in the terms of a credit freeze and the aluminum price at $0.94?

It is Mike, Tony. The answer question to your question and I'll elaborate it, absolutely we're talking to a number of people right now as you would expect. About a variety of potential structures you use the correct word freeze right now if you had to close the fund alone, you wouldn't be very happy because there is no credit available. Other than for those borrowers as you kind of better than we let our truly I don't like to use the word desperate, but that truly need whether it's to fund or refinancing or what not. But the markets are as we all know, not even effectively they're close period. We are looking at a variety of potential structures. You named it two of them, and quite appropriately there are others out there that could be available to us. There is some, I would call it not even an expectation at this point. Again, you guys talk to more people in this world than we do. But at least the hope is not verging on an expectation that perhaps towards the end of this year or more likely in first quarter of '09, there will be some credit being extended. But at this point time we've got a lot of work to do and this is part of what will go into the ultimate decision we make about how to proceed with the project and at what pace and to your point on running metal prices... this was to and I think was Tony your question as well, there are really two issues or two parts as it relates to the price expectations. One is long term, do you have still have a good IRR based on that long term price expectations as Logan correctly pointed out. We did use a price right here on, where we are today and for the feasibility study and go to our Board of Directors and decide to proceed. Second is, in the very short term, you've got to make some pretty hard assumptions about what metal could be over the next two years as you're developing the project if we were to proceed and make sure that you've got your downside covered, because you certainly don't want to start or.... I should say certainly don't want to go in earnest with outside risk that you might have to stop down the road.

Maybe just to come little from the bolder, I think the Canadian banks have plenty of cash.

Sorry I didn't even get it.

As Logan already said, its covered... Board of the Canadian bank.

Hey, you've got to an invite, I'll be there tomorrow.

Do we bring pockets.

Alright, that's all my questions thank you.

Thank you, Tony.

Thanks.

Thank you. And our next question comes from the line of Dan Whalen with Dahlman Rose. Please go ahead.

Yes, hi. This question is really related to the question Mark was asking earlier, and you've addressed a lot of it when you are talking about the U.S. industry structure but, you also mentioned earlier about showing first hand of curtailments over in China, as well as that region being able to shut down and restart a bit quicker. But given that is a much higher cost region and much dire situation. Do you think they kind of try and weather the storm for a few months or it will take a few quarter before we really begin to see significant curtailments over in that part?

I think the answer to that Dan is good as mine. But we are aware of curtailments already. We are aware of a slow down. We are also aware of expansions that have not started in other words they're nearing completion and they're not started and don't I think they will start. I think it depends on the individual circumstances in the case of refineries, those are important both facts are already announced, closures and shutdown and things, similarly the smelters will depend on location freight cost, power cost, and what is the alumina cost and that goes back to obviously freight and some will obviously do it quicker than others and the others will do what you think is press hang on for a little bit longer.

I mean, from what you've heard has it been rough order magnitude as it have been 400,000 or 500,000 tons that have been delayed or any ...

Yes, I think the numbers are lot higher. Organic numbers 800 million and it's far surprising when you get a lot and you can actually go and check some of these things. You can actually go buy name of smelter and gone since someone to go and come from one way or the other. And this is volatile to give the sense of the acreage and offset it looks very detailed ones, leading up to 1 million ton.

Thank you very much.

Thank you. Dan.

There are no further questions. Please continue.

Well thank you. Every one this Logan and we appreciate your time that you spend today. We're obviously well focused on the challenges ahead of us and we look to speak to you again in the near future. Thank you.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect. .