Eldorado Gold Corporation (EGO) Q3 2019 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Corporation Third Quarter 2019 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Peter Lekich, Manager, Investor Relations. Please go ahead, Mr. Lekich.

Thank you, operator and thank you ladies and gentlemen for taking the time to dial into our conference call today. With me in Vancouver this morning are George Burns, President and CEO; Phil Yee, Executive Vice President and CFO; Paul Skayman, Executive Vice President and COO; and Jason Cho, Executive Vice President and Chief Strategy Officer. Our release yesterday details our 2019 third quarter financial and operational results. This should be read in conjunction with our third quarter financial statements and management’s discussion and analysis, both of which are available on our website. They’ve also been filed on SEDAR and EDGAR. All dollar figures discussed today are in U.S. dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. Before we begin, I would like to remind you that any projections included in our discussion today are likely to involve risks which are detailed in our 2018 AIF, and in the cautionary note on Slide 1. I will now turn the call over to George.

Thanks, Peter and good morning everyone. Here is the format for today’s call. I will give an overview of the quarter’s highlights along with some comments, then I will pass it over to Phil to go through the financials and Paul will follow by reviewing operations. Then we will open it up for questions. Over to Q3 highlights on the next slide, it was a solid quarter overall both operationally and financially. Consolidated gold production and costs came in on plan and we reiterated our 2019 guidance of 390,000 ounces to 420,000 ounces of gold at cash costs of $550 per ounce to $600 per ounce. Revenues were up in Q3 driven by another great quarter at Lamaque, increased production at both Kisladag and Efemcukuru and a higher gold price. Our operating cash flow was almost 3x higher than Q3 last year and I am pleased to report a second consecutive quarter of free cash flow, resulting from higher sales volumes. This quarter, Kisladag saw the benefit of ore stacked earlier this year with production beginning to increase after ongoing longer lead cycles. Also, positive recent test results confirmed recoveries from leaching deeper material over 250-day cycles, supporting an extension of mine life beyond our current three-year guidance. As such, we took the decision to begin waste stripping to support such an extension. The team began this work in October. Test work is still ongoing to determine the ultimate heap leach recovery and the extent of the mine life extension. We expect to announce this in Q1, 2020. It was a busy cycle at Lamaque, who had a second successful operating quarter. Resource expansion drilling in the lower triangle deposit continues to reinforce our belief that the deposit could be larger than what we currently have in our resource model. We hosted an analyst tour of Lamaque in September and announced we are undertaking a PEA to increase average annual gold production from approximately 130,000 ounces to 170,000 ounces. We expect to release this during Q4. In Greece advances on the permitting front was a highlight this quarter. We received the long outstanding installation permits for both Skouries and Olympias in September. Subsequent to the quarter, we received further permits and approvals for Skouries. These include the building permit for the Skouries mill and consent from the Central Archaeological Council to relocate antiquities from the open pit area. We still require ministerial approval to finalize this. There is a bit more detail on engagement with the Greek government during the quarter and next steps. We have had several positive meetings with all levels of the government, including two meetings with Prime Minister, Mitsotakis. We are very encouraged by the outcomes of our discussions to-date, that is receipt of the outstanding permits and we will continue to work together to drive the projects forward. The focus of discussion remains on dry stack tailings permit and establishing necessary investor protections. A modification to the technical study to move to dry stack tailings is under way. This would be followed by the submission of an electromechanical permit application for the tailings filtration plant. We expect this process to be completed later next year. In parallel to this, we have restarted desktop work on our Perama Hill project, which has been on hold since 2014. A review is underway to update permitting and relevant legislative changes. We will then establish a revised path forward, including engagement with the local community. Lastly, we are continuing to explore funding options for our Greek projects. Before I hand it over to Phil, a quick word on resources and reserves, we expect to publish our updated statement before the year-end, so look for that in the coming months. In the case of Kisladag, we will use subtraction only and then update the reserves and resources for this asset once the metallurgical test work has been completed. That’s it for me. Over to you, Phil.

Thanks, George. Good morning, everyone. I will start on Slide 5, where we have an overview of our financial results for Q3, 2019. During the quarter, Eldorado generated $172.3 million in total metal revenue, which included $150.2 million in gold sales. Revenues were higher than the comparative period in 2018, due to a higher gold sales volume and a higher average realized gold price in Q3, 2019. The rise in gold price and the increase in production translated into net earnings to shareholders of $4.2 million or $0.03 per share for Q3, 2019. Adjusted earnings for the quarter amounted to $7.5 million or $0.05 per share. This is after adjusting for among other items, the $3.4 million of deferred tax expense related to foreign currency exchange rate fluctuations. The strong sales in Q3, 2019 resulted in an EBITDA of $73.2 million and adjusted EBITDA of $75.9 million. Adjusted EBITDA excludes the impact of non-cash share-based compensation expense. Some of the non-operational items affecting net earnings include, finance costs totaling $13.2 million in the quarter, compared with $0.8 million in Q3, 2018. The significant increase in Q3, 2019 was primarily a result of changes in the treatment of interest costs between the two periods. Interest costs related to Lamaque are no longer capitalized after Q1 of 2019, following commencement of commercial operations. Interest charges related to Skouries are no longer capitalized in 2019 after Skouries was transferred to care and maintenance at the end of 2018. As I mentioned last quarter, going forward, we expect our interest costs to be in the ballpark of approximately $12 million per quarter. This includes interest on debt, fees related to the credit facility and amortization of transaction costs. The interest component may vary slightly from quarter-to-quarter, as a portion of the debt is now at variable rates. Mine standby costs of $2.5 million were incurred during the quarter, reflecting a decrease from $4.5 million in Q3 of 2018. This was a result of Kisladag transitioning back into operation in April of 2019. Income tax expense totaled $15.9 million for Q3, 2019 and included current income taxes of $10.1 million, primarily relating to operations in Turkey and deferred taxes of $5.8 million primarily due to timing differences and foreign currency exchange fluctuations. In Q3, 2019, the income tax expense was impacted by the deferred tax liability, whereas both Q1 and Q2 were impacted by deferred tax recovery. As George mentioned, we had a second consecutive quarter of positive free cash flow generation. We finished the quarter with approximately $322 million of available liquidity. Of this, $134.9 million was in cash, cash equivalents and term deposits, and approximately $187 million was available under our $250 million revolving credit facility, which remains undrawn. $63 million of this facility is allocated to secure certain reclamation obligations. I will now turn it over to Paul for a recap of operations.

Thanks, Phil. Good morning, everyone. On Slide 6, there is a quick summary of our quarterly and year-to-date operating results. As George mentioned, we produced 101,596 ounces of gold in the quarter, at cash operating cost of $560 per ounce sold. This was a decrease from $754 per ounce sold in Q3 2018, and is primarily due to the resumption of mining operations at Kisladag, partially offset by higher cash operating costs at Olympias and Efemcukuru. All-in sustaining cost per ounce sold averaged $1,031 in Q3 2019 compared to $1,112 in Q3 2018. The decrease was a result of lower cash operating costs, partially offset by higher sustaining capital expenditures in the quarter compared to the prior year. Production year-to-date has been 276,376 ounces at a cash cost of $602 per ounce and all-in sustaining cost of $998 per ounce. This is in line with our expectations. I would reiterate the management expects to be in line with the 2019 consolidated guidance and we have pointed to expected stronger production in the back half of the year a number of times. Looking at Slide 7 now, we announced earlier this year that we are working on a PEA at Lamaque to increase production to approximately 170,000 ounces per year. This study will look at three discrete projects. One, a decline from the Sigma Mill to the Triangle deposit; two, upgrades to the Sigma Mill; and three, the paste plant to provide a long-term tailing solution. Before we commit meaningful capital to any of these discrete projects, we will complete a PFS that will outline the optimal plan for Lamaque, including timelines. If the study supports further development, construction on the ramp could begin in late 2020. At Kisladag, we announced that the positive test results we have received confirm an extension of mine life beyond the current 3-year guidance. The size of the pit will be determined early next year when we update our mine plan with the ultimate heap leach recovery. As George mentioned earlier, we’ve begun waste stripping at Kisladag, and expect to spend approximately $4 million this year. We’re confident though that any stripping completed in the short-term will be with any of the current pit scenarios that we’re currently contemplating. Over to Olympias on Slide 8, at Olympias, production and associated costs for the quarter were once again below expectations. Our focus remains on improving underground operations. The amount of underground development and the amount of all brought to surface are the key metrics. The underground contractor has made good progress on development. As more development meters are completed, we will be able to access more stopes and increase production. Approximately half of the development done in Q3 occurred in September, demonstrating our increasing rate of development. Our October development was 60% higher than the Q3 monthly average. It’s a similar story on backfilling, where our rates are now on target, and paste plant utilization and availability are increasing. Ore hauled to surface was over 31,000 tonnes for October, which is 40% higher than the Q3 monthly average of 22,000 tonnes. We expect to see similar levels in November before this drops offs for the Christmas period. While we still have a ways to go at Olympias, we are making progress. And with that, I’ll turn it over to George for closing remarks.

Thanks, Paul. Overall, it was a solid quarter, particularly at Kisladag, Efemcukuru and Lamaque. We remain committed to paying down our debt, while remaining disciplined in our capital allocation, as we look to generate value from our growth projects. This includes a potential expansion at Lamaque, mine life extension at Kisladag, and transformational investments in Greece. As we said before, we are committed to building safe, modern and world class operations in Greece. This includes, implementing best available technologies such as dry stack tailings at Skouries and Perama Hill. Thank you everyone. I will now turn it over to the operator for questions.

Certainly, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Cosmos Chiu of CIBC. Please go ahead.

Thank you, George, Phil, Paul and Jason. Maybe my first question is on Kisladag, I know you are still doing some ongoing test work on it, but at this point in time, I’m wondering if you can share with us any kind of the potential recovery with a longer leach cycle. From that perspective, can we actually get back to some of the recoveries levels that you realize previous to the issues you had in 2017?

Hi, Cosmos, it’s Paul. We are obviously still working on recovery numbers. I think it’s fair to say we’re not going to see the numbers that we were seeing prior to the issues, but obviously a fair bit better than what we have been guiding to with the 22 million tons. As you can appreciate, we have got a lot of columns underway and we are trying to get as many days into those as we can and continuing to see recovery as you would expect. So we will have to wait until the first quarter to get final numbers there.

And then on longer leach cycle here, you started stocking once again in Kisladag in Q2, could we see some of the improving recoveries come through in Q4 or you think in 2019? I asked that question as well, just given that if I work through the numbers, you need a fairly robust Q4 to get to 2019 guidance. I’m just wondering if you factored in any kind of improvement in recovery or is it great?

A little bit of both Cosmos, as you can appreciate, as we get more material under leach and under irrigation with the longer leach cycle, we do expect more gold recovery. So the stuff that we put on very early in the year is now pretty well late. The stuff that’s going on now is still sort of coming up. So, that’s why we’ve been pointing to a slower production in the first half and a stronger second half. So, I think we are still as we keep saying, we are maintaining guidance and obviously key to that is a good quarter out of Kisladag.

Well, sure. Maybe switching gears a little bit here, at Olympias, it certainly wasn’t the best quarter you have had. I appreciate all the different ways to try to improve the operation here, but is there a point in time or some kind of scenario whereby you might come to realization that Olympias just might not make money is unprofitable at current spot prices. And as you said, I think you have a lot of growth opportunities coming from Lamaque, coming from Kisladag. In terms of allocation of capital, is there a point in time where you might start allocating some of the capital that you have earmarked for Olympias to somewhere else or is it more complicated than that given the overall picture in Greece?

So I’ll take the first crack at that Cosmos. To begin with we are still very confident in Olympias being a high value project for us. The ore body is performing well and it’s a long-life asset. The mill has performed well this year. We’re consistently seeing recoveries in concentrate quality as expected. Our challenge this year is really around the underground, and as Paul stated, underground development, available faces underground and backfill, which also has implications in available faces. So, as you know, as we ramp up tonnage on Olympias, it dramatically impacts operating results and that’s been our challenge to-date. So, it’s a mining issue, it’s not a processing issue, it’s not an ore body issue. And we see the underlying factors that are going to solve that improving. In terms of capital allocation, we’re pretty disciplined in how we look at capital. And for Olympias, I would tell you we are focused on getting that mine up to nameplate throughput through the plant and producing good operating results. And when we achieve that, and I believe that will happen next year. Then it will line up against the other capital allocation growth opportunities within the company. At Olympias, we have the ability for a very nominal capital to be able to increase throughput. And again due to the variable fixed cost, it can have a 50% increase in throughput and nearly double free cash flow generation from this asset. So, we believe this is going to be a long-term great asset for us. For now it’s head down, execution, get the underground productivities and efficiencies up. And I’d say keep watching this quarter-over-quarter we are expecting to see significant improvements.

Sure. And maybe in a bit more detail I think Olympias late last year, there were some issues in terms of the mixed of ore coming from east and west. Given some of the issues you’ve had with the pace backfill, so is that still an issue in terms of how you are blending the ore from East and West?

I think I would say Cosmos, that’s improved over the last well, I mean obviously as you can appreciate with not enough development having enough headings makes that a bigger issue, but we are getting on top of that now and naturally simplifying that blending on site to give the mine a bit more sort of free run in terms of production, so pretty happy with where that’s sitting now.

Sure. And then maybe one last question from me if I can. On taxes here, Phil, certainly taxes in Q3 as a percentage was higher than what I had expected and I think what The Street had expected as well. I appreciate some of the comments around it. I think deferred tax expense previously, it was a deferred tax of recovery, but what should we do, can you give us some guidance in terms of what we should model for Q4 and maybe for the full year and next year. And any guidance would be helpful?

Hi, Cosmos. I mean, I think the tax expenses from income tax perspective, Turkey is our most profitable operation at this point and the average tax rate is about 22% on a corporate tax perspective. The income tax expense is impacted as well by fluctuations in foreign exchange. That’s a bit hard to predict the times. But I think most of it – and there is also in Lamaque there is Quebec mining duty, that’s about $1 million per quarter. So I think those are probably more stable – the Turkish tax rate, the Quebec mining duties are pretty stable going forward. It’s the fluctuations in foreign exchange that have an impact that is a little bit harder to predict.

Okay, great. Thanks again, George, Phil, Paul and Jason. Those are the other questions I have. Have a good weekend.

Thanks, Cosmos.

The next question comes from Steven Butler of GMP Securities. Please go ahead.

Thanks, operator and thanks, Cosmos. Guys, a question for you on Skouries, when would you expect to submit your Skouries application permit for the dry stack, George?

We’re busy with that now. We believe that will happen early in the New Year.

Okay. And is there a reason why that maybe couldn’t have occurred by now or did you need other certainty and other permits service just because – we are at the site almost two years ago, George you needed the dry stack with a way to go, but was there just a process that had to follow on that and as to why it’s taken longer to filed and then expected?

Yes, I mean, as you know Steve, we had done a updated technical study in the first quarter of 2018 signaling our desire to move toward dry stack tailings. And unfortunately, we didn’t get any constructive response from the government until just recently.

Great.

And then obviously with this government, we sit down and put the regulatory process understand from their perspective what do we need to include in the modification file. And so, that’s what’s been happening – is working through the regulatory requirements. We have those – engineering permitting teams are working to make the necessary adjustments to meet the government’s needs. And as I said, we expect to file that early in the New Year.

Okay. And then last question is on Lamaque, the opposite of Olympias, I suppose the employed unit cost of the operation were better than expected for us and we delivered really good cash cost there. So, what’s been the pleasant surprise? Has it been underground productivity in mining? Where are you seeing some of the perks of the ramp up in terms of unit costs there?

Well, I think it’s across the board. I mean, one of the first things I’d point to is, recovery, as you know we’ve – in our PFS, we had 95% target and we are beating that by a few points, so the mills doing a great job. Underground, we’re moving the tons lower grades and the stopes are reconciling well dilutions as expected and we have got a fantastic workforce there that are knocking out of park day-in, day-out. So I think, across the board we’re just hitting on all cylinders there. And I think the most exciting thing that you have at Lamaque is that the exploration potential is enormous. We’re doing the infill drilling on the bottom of C4, C5 and we actually have one drill underground now drilling C7, and all that ties into the PEA and the expansion opportunities so –. We’re really pleased with Lamaque and I’d say it’s unfolding as we expected when we acquired the asset. We’re very pleased with [indiscernible] team and how they are performing.

I guess the other one, the mill one I mean it was a refurbishment. There was probably a little bit of risk there, but it’s started up and run according to plan and has delivered good performance in terms of recovery and availability. So, it makes life a lot easier.

Okay. Thanks, guys.

Thank you.

The next question comes from Kerry Smith of Haywood Securities. Please go ahead.

Thanks, operator. Good morning.

Good morning.

George or maybe Paul, for the waste stripping at Kisladag, you were suggesting that the stripping that you’ve got planned as well within the pit limits had even the smallest sort of ultimate pit that you could envision there. Would you share with us what the mine life would be for even that smallest pit?

I would prefer not to carry – as you can appreciate we are still doing sort of recovery numbers. I think you should take confidence though that the fact that we are committing capital to stripping within any of the scenarios indicates it’s going to be a reasonable amount more than the 3 years we are talking to at the moment. You are just going to have to wait a little bit longer before we can share that with you.

Okay, that’s fine. And on Perama, you started to do some work there, is your understanding, George that you would need to re-file the EIS that you filed back in ‘20, I think it was maybe even 2012 and would the engineering studies that you are updating now would those be required as part of that re-filing?

So Kerry, the EIA has been kind of on hold and dormant since 2014 and so there has been some minor legislative changes in the EU and Greece that we’re making some adjustments to the EIA. And the other thing, given the amount of time that’s passed, we want to reengage with not only the local community that we have been closed to during this period, but also regionally in the area and update everybody in terms of the project, the benefits, all the environmental and social controls and benefits that go with it. So, I guess what I would say is we don’t expect any significant changes to the EIA, but we are going to refresh it and we will be reengaging with communities prior considering moving forward with that project. Obviously, in our industry, we need strong local support. Believe we will have it, but we will reengage just given the time it’s passed.

Okay. George, is there any sort of opposition to that project currently that you are aware?

The way I would describe it Kerry, everywhere around the world there are people that are concerned about mining projects. And so we have those in Greece and around the Perama project. And so we will be engaging with those parties to try to inform them better and get the true facts. This is a pretty simple project. Here we are going to deploy dry stack tailings. It’s an oxide ore body, simple mill projects, it’s high return, it’s in an area of Greece that needs development and economic input. So, we think we have the right ingredients here. And so I would say it’s the normal environment that any mining project deals with. And we have what I would consider pretty strong support from the local communities and believe with the government, we will be able to find a path forward to begin construction.

Okay. And when would you sort of expect that you would be filing or re-filing this amended EIA then? Is that something that would happen in maybe back half of 2020 then?

Yes. I would describe 2020 is we will be unfolding the permit process and the consultation process with communities and it’s really hard for me to predict a schedule around that other than I expect to see significant progress down that path during next year.

Okay, that’s helpful. Thank you everybody.

Thank you, Kerry.

The next question comes from Mike Parkin of National Bank. Please go ahead.

Thanks guys for taking my questions. Most of them have been answered. Just I had one follow-up on Kisladag. Give us a sense on the stripping of the waste, will that be broken into growth and sustaining or just growth – just sustaining how do you guys – how should we kind of think about that being modeled just wondering kind of on the potential impact of all-in sustaining cost profile for the asset?

Hi, Mike. It’s Phil here. So I think, at this point, as we begin the process of pre-stripping and extending the life of mine, it would fit in the category of non-sustaining. And I think as we get further in and start realizing production, that’s when the mix would change, but I think at this point, at the start, it’s non-sustaining.

Okay. That’s it. Good, thanks very much guys. Have a good weekend.

Thanks Mike.

The next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.

Great. Good morning, everybody. Maybe, Paul just starting off back to Olympias, it sounds as though you are getting that development rate up. And you have guided that November was going to be good and then down again for December. Are you indicating to us that Q4, we are expecting a similar quarter operationally to Q3 for Olympias?

No, I think we are looking to be a fair bit better in Q4. I mean, obviously we’re not where we want to be yet, Tanya, but we are seeing – I think as we pointed out, October was a fair bit better than any of the sort of Q3 months. And we are looking to put some of those together now. So I think we are expecting a better Q4 and then obviously looking to a much stronger 2020.

When do you think Paul that the development rate is going to be at the level that we need still poised to feed the mill? Is that toward the end of 2020 or mid next year just to get a sense of when do we think we will be at steady state?

I think it will be early 2020. I think a solid sort of last quarter 2019 will be pretty well placed and getting a lot closer to sort of nameplate for 2020.

Okay, great. That’s very helpful on that one. And maybe just continuing on the technical side, just wanted to come back to Kisladag, just I remember from our – when we were at Lamaque at the mine tour, we talked a little bit about just capital allocation and we talked about Kisladag in terms of being a priority for that and depending on what the recoveries come out, you were looking at potentially HPGR. Has anything changed right now in terms of your view of whether you need an HPGR?

We are continuing to do work on the HPGR and it’s something where we will be discussing as we sort of putting budgets et cetera, together for early next year. At the moment the recoveries etcetera are predicated on a standard crack as we have been doing previously. So undecided at this point, we are seeing some improvement with HPGR, it really needs a trade-off analysis as to whether that justifies the extra required capital etcetera.

I would like to supplement that. I think Tanya in terms of outlook as Paul stating there is some benefits from HPGR will continue to study it perhaps becomes a project that we would invest in, but it’s not something that’s being contemplated in the current work, we are going to set up reserves in Q1. So don’t expect to see HPGR in the reserve announcement that will happen in early Q1, but perhaps it is an opportunity to compete for capital among the rest of our growth projects later in the year, later next year.

Okay. And then we also talked, I think George when we were at the mine site about the waste stripping that is required at Kisladag. And I remember a number of between $50 million and $100 million or $150 million thereabout for like the waste stripping and pre-strip, is that still something that is valid?

Well, for the mill scenario, we had about $100 million dedicated to capital for that project. So I mean that just gives you an idea, we had roughly a nine-year mine life under the mill scenario roughly $100 million in pre-stripping to support that sort of a mine life. So I think you can just scale from that, dependent on how good the recoveries end up and how big that pit is, it will be scalable around that $100 million capital depending on the mine life.

Okay. But I mean the pre-strip is something that is quite substantial in terms of capital outlay that would have to be done?

Yes. I mean, again, it depends on the mine life. If you go from a 3 to 5 to 7 to a 10-year mine life the deeper material requires a higher strip ratio than the shallow. So it’s hard to give you a number, because right now we definitively don’t know the ultimate recovery or the size of that pit. But I’d say at this point, it’s going to be less than $100 million and the bigger mine life extension, the closer to $100 million, the lesser of the mine life extension, it’s closer to the zero number. So I really can’t help you beyond that until we get the numbers finished.

Okay. And just looking at the Lamaque if you were to make that decision to go ahead, and pending on the what you decide to do, most of the spend would start end of 2021 into 2022?

Yes. So the pre-feasibility study in Lamaque, we expect to have done in the second half of next year. If that supportive, we’re looking to potentially begin the ramp development in late 2020. So that would be the only thing possible next year in terms of expenditures beyond obviously the engineering work on the PFS. And then, it’s a 3-stage project. So you put the decline in first that would continue into 2021. When the declines completed, it would be the conveyor and crusher infrastructure and in parallel, work on the mill to support the higher throughput. And the paste plant is the third stage of the expansion and that’s a couple of years down the road at least. But we want to make sure in the PFS, we have a full life of mine scenario for tailings, and that’s why it’s in there.

Okay. So it would be spread over like maybe about 4 years or so?

Yes, maybe even a bit longer for the paste.

Okay, that’s helpful. And then just maybe, George, just lastly on your conversation with the Greek government, you have talked about some of the technical stuff that’s been going on. With the two meetings you have had meetings you have had with the Prime Minister and your other meetings that you have had. Where are we on the foreign direct investor protection? We’ve talked about the permits that you are looking to grab, but what about some of the other things that you’re looking at to get security to start investing in country?

So I don’t want to get into any of the details obviously, but I just tell you at a high level Prime Minister Mitsotakis and the Greek government are keenly interested in getting foreign direct investment into the country. They are publicly supportive of Skouries that we’re focused heavily on and we have the right environment to land on a mutually beneficial agreement that it can allow this investment to restart. Obviously, we’ve got some time to get that completed as we work through the dry stack tailings permitting. But I’d tell you it’s very favorable I think we are both aligned that this is a good project and it’s an environmentally extremely well done. The life of mine for this project, the pit finishes in a decade. We have run the underground for 2.5 decades in the dry stack tailings from the underground portion backfill the pit. We have shrunk the footprint of the property. So environmentally, I think upgraded the project tremendously. They see the value and all of that and we are aligned to getting this done, but I really can’t get into any details around the negotiations other than to tell you I am very optimistic, we will get this completed.

Yes. I guess more than anything, I just wanted to understand whether you have actually gotten to discussing the foreign direct investor protections or has it been mainly focused on getting the permits?

I just tell you we are advancing on both fronts.

Okay, alright, great. Thank you very much.

Thank you.

[Operator Instructions] The next question comes from Mike Jalonen of Bank of America. Please go ahead.

Hi, George. Just following up what Tanya was on Skouries, I guess you kind of answered a part of my question. But I was just wondering assuming it sounds like permits and approvals are raining down in Greece these days after a long period of drought, sorry, for the metaphor. But just wondering what it sounds like you could get the Skouries approvals permit very quickly once implemented dry stack tailings, get that – put output in. Well, how long would it take to build Skouries? I think there is still $500 million left to build it. Just wondering, I guess I’m looking at the next step. Thanks.

Yes. So we have got about 2 years worth of construction once we restart in the pre-feasibility study that was out in early 2018 had us about $670 million – $680 million as I recall in remaining capital. So we are going to put the mill building up and pour the concrete. We are committed to that is about $5 million over the next couple of months. So you are just shy of $700 million in two years of construction, Mike.

Okay. I look forward to the mine opening in about 2.5 years.

We do too.

Thanks.

Thank you.

The next question comes from Matt Fields of Bank of America. Please go ahead.

Hi, guys. Matt Castellini here on for Matt Fields. So we saw you filed that shelf registration recently or just look for any color on what that was for? And maybe secondly, any thought to taking advantage of your recent bounce in stock price to issue some opportunistic equity like some of your peers have done, maybe you could get ahead of some of the mandatory term loan amortization you have coming up? Thanks.

It’s Jason here. Just as a quick summary, the use of proceeds as was described in the prospectus is in part to fund some of the internal projects that the company has currently have. The other thing that was mentioned was possible use of proceeds with respect to potential debt pay down as well. So with regard to the last question you are asking there on potential issuance with the current share price. I suppose that was the part of the purpose in filing the shelf and potentially proceeding with the ATM.

Okay, great. Thank you.

The next question comes from Frank Duplak with Prudential Financial. Please go ahead.

Yes, hey guys. Just a question I don’t know that I have seen it updated, maybe I missed it. Have you guys talked about full year kind of CapEx for 2019 I thought I had an earlier number that you guys have come up pretty close to through three quarters, just curious as you think about kind of 4Q CapEx, where that might come out?

Yes, I mean we are sticking with our guidance for the year, which is $80 million to $105 million in sustaining CapEx.

And then, is the growth CapEx number different than the 45 guidance?

No, it still stands.

Yes, Frank, it’s Phil here. Most of that growth CapEx was tied to Lamaque, completion of Lamaque and getting into commercial production. And that was completed at the end of Q1.

And I guess as I look at the cash flow statement, I see some like $149 million year-to-date and the math would take you to somewhere maybe the $160 million area [indiscernible] million in the fourth quarter?

I think at this point, Frank I think as we said, we believe it will be within guidance and I don’t – like I think the sustaining CapEx will continue in Q4, but it will be very limited growth CapEx other than the pre-stripping that was announced. That was the additional amount that was around $3.8 million that was approved for pre-stripping starting at Kisladag. And maybe part of this is when we talk numbers, we are netting out the pre-commercial production from Lamaque, so gross versus net.

How much has that been year-to-date, pre-commercial dollars?

Pre-commercial proceeds that were netted against capital was about just over $12 million year-to-date.

Okay, got it. And then just on I think in the prior call I touched on it, I mean you have $33 million of loan or more by the end of this year. Kind of is this the plan this sort of comes out of the cash balance, how do you guys kind of think about dealing with that first tranche kind of amortization come up in the term loan?

Yes, Frank, it’s Jason. The first payment on the term loan starts in June of next year. So the expectation is between cash on balance sheet at that time combined with internally generated cash. That would be the primary source of funding for that.

Okay, great. Thank you. Have a good weekend.

Thanks, Frank.

This concludes the question-and-answer session. I would now like to turn the conference back over to Mr. George Burns for any closing remarks.

Thanks everybody for joining us today. Look forward to giving you another good update here in a couple of months. Thanks everyone.

This concludes today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.