Freeport-McMoRan Inc. (FCX) Q3 2011 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Copper & Gold Third Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ms. Kathleen Quirk, Executive Vice President and Chief Financial Officer. Please go ahead, ma'am.

Thank you. Good morning, everyone, and welcome to the Freeport-McMoRan Copper & Gold Third Quarter 2011 Earnings Conference Call. Our results were released earlier this morning and a copy of the press release is available on our website at fcx.com. Our conference call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call. As usual, we have several slides to supplement our comments this morning and you can access the slides by using the webcast link on fcx.com. In addition to analysts and investors, the financial press has been invited to listen to today's call, and a replay of the webcast will be available on our website later today. Before we begin today's comments, we'd like to remind everyone that today's press release and certain of our comments on this call will include forward-looking statements. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings. On the call with me today is Richard Adkerson, President and Chief Executive Officer; Jim Bob Moffett, Chairman of the Board. We also have Mark Johnson with us today and also Rick Coleman, who manages our expansion and construction activities. I'll start by briefly summarizing the financial results, and then turn the call over to Richard who will review our recent performance and outlook. As usual, after our remarks, we'll open the call for questions. Today, FCX reported third quarter 2011 net income attributable to common stock of $1.1 billion or $1.10 per share, compared with $1.2 billion or $1.24 per share, for the third quarter of 2010. Our third quarter results included additional tax provision of approximately…

Thanks, Kathleen, and good morning, everyone. Slide 3 has the details on the financial results that Kathleen talked about, and I want to just speak to a couple of things that she mentioned. In terms of assessing our production numbers and our financial results for the third quarter, there are a couple of factors that I'd like to point out. First, we -- our long-term mine plan, as our guidance in the second quarter reflected, provided that we would have been in a lower grade material in the Grasberg mine than we were a year ago, without the strike. So our guidance going into the third quarter before the strike situation projected lower numbers, and -- because of this grade issue. Now, as always, our team on the ground works to find ways of getting access to higher grade materials and adjusting the mine plan to optimize those plans. And that was part of the process that is reflected in this -- in the results that we achieved. The strike had a significant impact on us. As Kathleen said, both the work stoppage in early July and then the ongoing strike that started in mid-September reduced our third quarter copper production by 70 million pounds from what it otherwise would've been, and 100,000 ounces. So that is an adverse impact to us. It results in lower taxes and royalties to the government of Indonesia then there otherwise would've been because of that. And of course the workers who are on strike are not being paid. So all of us, all the stakeholders have a strong incentive to try to resolve this strike and we're committed to trying to do that on a fair basis. But we did revise our operating plans. We -- our management team on the ground at…

[Operator Instructions] The first question comes from the line of Michael Gambardella with JP Morgan. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: I have a question on potential for share buyback, and given the balance sheet with the $5 billion in cash, and you have net cash on the balance sheet, and given the growth prospects that you have certainly well-funded with the internal cash flows and your comment on the value of the stock down here and then I would agree with the stock's cheap down here, what's your view on using some of that cash for share buyback?

We are -- well Mike, our focus is on investments. I mean, we really want to look at taking advantage, as aggressive as we can, on these opportunities to grow our business because of our positive view about the future for the business. We do have an authorized share buyback program. Our -- as you know, better than anyone, we have a long history of returning cash to shareholders in the form of dividends and historically, with share buybacks, it's something that our board considers on an ongoing basis. And we understand your comment and it will be a matter for the board's consideration. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: One other question, it's about Grasberg. I think I heard you say that the mine is currently operating at around 2/3 of its capacity, is that correct?

That's right. In terms of the open pit mine rate. The underground is really more like 80% of its capacity. And that, when I talk about mine rates, that includes the significant waste material that we move as well as ore production. So we are dealing with both of those and adjusting our mine plans for -- in relation to our current available workforce. And all that adds up to the bill, where we produce a concentrate, and it's like at 75% to 80% of capacity. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: Okay, and what percent of the workforce are you doing that with right now?

Well, our workforce includes, our management team which is all there, our staff workers, our junior and senior national staff. And they -- they've been extraordinarily supportive of our operations. So we have people doing jobs that they normally don't do. And we have had some union workers that have decided to come to work, maybe in the range of 10% to 15%. It varies day by day. So you add it all up. It's about 60% of our regular workforce. And the regular workforce includes not only the mine workers but infrastructure. We have fewer people up there. So there's a reduced infrastructure requirement for them. And the union workers, I said 10% to 15%, it's more like 15% to 20%, Mark is telling me.

Your next question comes from the line of Jorge Beristain with Deutsche Bank.

And congratulations, I think on good results in the face of adversity. My question is really about the fourth quarter guidance, which you put for copper at 915 pounds. I'm just trying to understand how much of the strike impact is embedded in that assumption, if any. The union has basically extended the strike through November 15, and you guys produce about 3 million pounds per day there. So that would be 135 million pounds of lost production, but you're saying you're operating at about 75% to 80% of throughput. So I'm just trying to understand, are you baking through a November 15 lost production because of the strike at this point, or how many pounds would you say have been shaved off that guidance number?

Well for the year, including the third quarter impacts, we're estimating of 100 million pounds of copper and 100,000 ounces of gold. Most of the gold impact was actually in the third quarter. The copper impact in the third quarter is 70 million pounds. So that leaves about 30 million pound impact for the fourth quarter. We were -- our fourth quarter was projected in any case, to be our lowest grade quarter of the year. And actually, with the strike action in the third quarter, some of the higher grade material that we expected to mine in third quarter has been pushed into the fourth quarter. But these assumptions assume that we're operating under strike conditions at this moderated rate that Richard's been talking about. So we've baked that into the forecast.

So Jorge, it just assumes that we're doing what we're doing now and in recent days.

That's through till November 15, or through the entirety of the fourth quarter?

All the way through to the end of the year. So I mean that's just an assumption. It's a projection. Our hope is that we get the strike resolved and gets everybody back to work. But in terms of giving you and others in the investment community guidance, we thought the best way to do that now is just to say if we continue to operate right now, as we are right now, through the end of the quarter to give you those results.

So to paraphrase then, if you're talking about a 90-day quarter, to lose 30 million pounds of production at Grasberg is like 0.3 million pounds a day. That's pretty good for an operation that does 3 million pounds a day.

Yes. And as I tried to emphasize at the start of my comments, there's a combination of factors going on here. One is our revised mine plans on how to deal with this, and then taking into account the lost capacity that we have because of the strike situation. So using overall averages doesn't take into account exactly how we're responding to the situation. And because of this, ore bodies being of the quality it is, it gives us more flexibility than you might have with other operations.

The other aspect of that, Richard, is, this is Mark Johnson, is that in the higher grade areas of the Grasberg, we're operating at 100% of pre-strike capacity. Where we're giving up some of the production due to the strike impacts is in the lower grade areas, and we're deferring some of the stripping. As Richard said, in the underground, we're pretty much where we were prior to the strike. So the incremental tons that we're giving up right now are not at an average grade. They're more on the lower grade side of things.

Right, that sounds very positive. And sorry, if I could just ask a second question, Richard you're -- you've been talking up this idea of these growth plans at Cerro and Morenci and Tenke for a while. Is there a firm date by which you would expect the board would approve these projects? Is there like an end-December deadline or early Q1 where we would know if these projects are authorized?

Yes. We will have that presented. It's just a question of completing the necessary work to get the data together. We've been keeping our board informed. They've been very supportive of what we're doing. So it's a natural process here and nothing -- the board's very supportive of our overall strategy. So we are -- we anticipate getting that done in due course. And I just want to make a comment, as I was listening to questions of Jorge and so forth, our resource that we have available to us at Grasberg is going to be there. It's a question of when we're able to mine it. And our first priority, as we operate day-to-day, is to do what we can to protect the safety of our people, the people in the local community and so forth. So this is going to be a dynamic situation, and we'll -- we're going to get back to normal. We will do it, and we'll keep you informed as we move along.

Your next question comes from the line of Sal Tharani with Goldman Sachs.

I wanted to just understand the CapEx for Cerro Verde. You have increased that number from the previous presentation by about $500 million. Is there something additional you're doing on over there?

Well Sal, you're going to hear this over and over in this industry. I mean, as companies work on projects, despite the fact we've got these economic uncertainties, the factors that go in to spending money on capital project in this industry continues to rise. And so, some of that is escalation as we get ready to actually order equipment and contract for services. Costs are higher than they were estimated in our previous studies. There are other factors that go in. We've -- we changed the scope of this water project that we're doing for Arequipa. That's going to be the source of our water. We found that we're going to have to build some additional power line facilities and transmission facilities that are different than we originally anticipated. But I will just make an observation, because we are engaged in so many of these projects, and we watch what's going on with others in the industry, is that capital cost escalation is a significant factor. It's going to have an impact on supply development and the timing of projects.

Understood. And also, you are forecasting, gold forecast if I look at your total forecast and subtract the first 3 quarter, it appears to be higher than what you mentioned later in the press release, that you're going to do 218,000 ounces in Grasberg because it comes out to about 355. I was wondering that gap, if that's significantly higher than what you do outside of Grasberg for gold.

Yes, I'll tell you what Sal, it is good. All of our -- essentially all of our gold's Grasberg. So it's not anything. . .

We've got some coming from South America.

We got some coming from South America...

But if I take your total gold forecast for the year, subtract the first 3 quarters, it comes to 355,000 ounce. While you say in the press release later on at Grasberg, you expect the fourth quarter to be 218,000 ounce. I was just wondering how to reconcile that.

Yes, we're expecting from Indonesia total for the year and you look on Page 24, 1.45 million ounces. And roughly 100,000 ounces from South America. So I think the math works. We'll go off-line with you if you still have questions.

Yes, let's take a look at that, and we'll go forward with the next question, operator.

The next question comes from the line of Oscar Cabrera with Bank of America.

Just getting back to Grasberg. The additional color on mining 100% of the open pit, that was very helpful. But just would like to understand what type of stockpile you're working with in terms of, I don't know if you can disclose how many days and what type of grades you have in the stockpile?

This is not really stock. I mean, we develop short-term stockpiles depending on our mine plans and so forth. But we don't have significant stockpile situation there. We basically move material very quickly from the mine crushing system through our ore drops into the mill. So stockpiles, there's not a long-term stockpile for us there in terms of our current operations.

In terms of the, you indicated in your presentation that 2012 production for copper is also lower than what you are anticipating. I mean, the number is not that significantly lower. But is this all coming from Grasberg and mining lower grade zones?

No, this whole thing, about half of it's from Grasberg. But the total adjustments, I don't think is 2% or less, and it's just normal mine planning adjustments. We're now going in to developing our annual plans which we complete in the fourth quarter. But that's just normal adjustments for mine plans, nothing significant.

Okay, great. That's very helpful. Then on the next question is over the last couple of weeks, CODELCO has been able to obtain financing from one of the Japanese, large Japanese smelting companies. And I guess when you talk about your project in El Abra and the sulfide, that looks to be something that is very attractive. In your discussions with the company, is there any sense that you can push this forward? Because, I mean, you've been referring to it for about a year now. But that is, are we closer to seeing anything coming forward?

Well, we're working actively on it. And I mean, and we're also working jointly with CODELCO. But this is a project in the prefeasibility stage, and so that's going to take a significant amount of time to advance it. That's just the nature of these projects, because it involves being where it's located in Northern Chile. There's challenging water issues and power issues and we're working cooperatively with CODELCO on those issues, and... But just going back to my comments about why we're optimistic about the future of copper. One of the things is, supply constraints. And as attractive as this project is, and as aggressive as we are in wanting to pursue it, it's going to take several years to do the prefeasibility study and deal with the water and power issues, which we believe we can. It will cost money. But that's indicative of the constraints on supplies and why even though we can produce copper at such a low unit cost, you can't just turn on projects and get production very quickly.

Your next question comes from the line of Brian MacArthur with UBS Securities.

I just want to go back one more time on the Grasberg situation. First of all, we've talked a lot about production and we've talked about sales going forward. Is there any inventory effect at the port? I know you're running at 75% at site, give or take. But do we borrow any inventory going forward or is that all smoothing out over the next few quarters?

It's -- our inventory at port builds up and then drops as ships come in. And this is just a normal situation. We did have some inventory that we drew down. But we try to ship it as quickly as we can, and it's just a question of shipping schedules and so forth. So at any point in time, the inventory's going to be driven by kind of the steady production that comes out of the mill, gets down there, ships come in, it's loaded. Inventory drops. And -- but there's nothing unusual about it now, other than the fact that we're operating at a reduced level.

So we've probably got -- you would've always had 100%. Your production's come down, you probably drew a bit in this quarter but going forward, it will just be flat going forward. There'll be no mismatch per se, other than your normal ship loading?

Okay, but you know as we always have, the amount of sales at the end of any quarter is based on ship loading. And Brian, I know you recall in the past that sometimes it's a shallow sea and rough weather can delay a ship. We record sales when it's loaded on the ship. So the timing, if you want to call it a mismatch or whatever, is strictly a function of getting the concentrate on the ships and getting it out of there. And that skips ship schedules and loading conditions.

And we're just forecasting normal inventory levels in our outlook.

Okay, great, that helps. And then just on, because that was one of my questions. The deferred profits in this quarter, I know it was something like 200 and something last quarter, and 101 at the end of this quarter. Do you know what the deferred profit -- was it, I don't -- I've lost track of how this works, whether it's a gain or loss in the quarter, and what it would be?

It was income during the quarter, because inventories were lower. If you look in the footnotes on the income statement, Brian, there's a summary of what the impact was. It was a positive impact of $84 million to net income. But as you know, that number moves depending on the changes in these intercompany inventory levels.

Great, yes, that's what I was looking for. I just missed that because at the year end. And the final question, I think someone mentioned, and I just want to be clear about this, as we work to the fourth quarter, which makes sense obviously with all the uncertainty, we focus on where we make money. But was there a comment made that we sort of slowed down our stripping a bit. I think someone said that to one of the answers to an earlier questions and therefore, is that significant and is there a catch up as we go into the future quarters?

It's just a question of how we plan our mining activities given the reduced workforce. And so obviously, to the extent that we adjust stripping or ore mining in these conditions, it affects what we're doing going forward. So again, the mine plan is a mine plan. We're not doing anything that would be inconsistent with our long-term mine plan in terms of protecting pit stability and in terms of maximizing the MPV out of the ore. So it's just a question of how we do that with the reduced workforce that we have.

Right, which makes sense. And then I guess -- so then my final question just on this because I think I totally understand the maximization. You also had gold production down a little bit year-over-year versus your previous guidance. Is that just more the normal reset that we all the time rounding errors as opposed to anything to do with the strike?

That's correct. Beyond 2011. Beyond 2011. Let me just make a comment. We have a very long list of questions and so I'm going to ask everyone just to limit your question to a single question. If you want to get back in the queue, just to give everybody a chance that wants to have a question a chance to ask it.

Your next question comes from the line of Paretosh Misra with Morgan Stanley.

What are your thoughts on your capital structure? Would you like to keep some debt, or just an optimum debt to capital ratio that you'd like to maintain, or just wondering what are your thoughts on that.

No, we don't have any targeted capital structure. We look at the debt situation over the last 4 years. Our credit rating has improved significantly. And so this gives us time, opportunities to repay debt on an opportunistic basis and reduce our interest costs. We point out that a good portion of our interest cost does not get the benefit of tax deductibility. And so we just approach everything on a cash flow basis of optimizing our cash flows as opposed to targeting any level of debt. We would be more comfortable with a greater level of debt on our balance sheet, and we certainly have the financial capability of doing that. And -- but we'll just look at it in terms of maximizing cash flows.

Your next question comes from the line of Brian Yu with Citi.

Richard, I was wondering if you've got a breakout for that $1 billion in CapEx for the projects under evaluation next year? Just between the 3 major ones.

It includes the 3 projects that we're -- that are in advanced stages, Cerro Verde, Morenci and Tenke. We are going to be in the permitting process for most of next year in Cerro Verde. And so the cost includes advancing the engineering and also potentially advancing our earthworks there. We've also got capital associated with the second phase of Tenke and this Morenci mill expansion. But it's probably evenly distributed between those 3 projects.

Your next question comes from the line of Tony Rizzuto with Dahlman Rose. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: Richard, I take from your earlier comments that the operating plan modifications that you guys have been employing at Grasberg shouldn't affect the life of the open pit?

Well, this question of the life of open pit is a dynamic question in and of itself, even without the considerations of the strike. So at the present time, we don't see any significant change as a result of recent events. But that's something that we are continuing to evaluate, and it could change based on that further evaluation.

Your next question comes from the line of Kuni Chen with CRT Capital Group.

Just one more quick one on Grasberg, can you maybe lay out some of the near-term milestones when you meet again with the union and the mediators, and maybe just give us some perspective on how far apart the 2 sides may be at this point?

Kuni, it wouldn't be appropriate for us to talk about that, because as we've said and it's well known, been reported in Indonesia, that one of the next steps is filing in the labor court for a consideration following the union's not accepting the mediators' response. So how that goes is subject to that court case, and it just wouldn't be appropriate for us to make any comments on specifics.

So no comment at all on timing for labor court or...

No, that's uncertain. We have filed our initial filing with the court, which is simply following the procedures set out under Indonesian law. And so that's just where we are.

Your next question comes from the line of Richard Garchitorena with Crédit Suisse. Richard Garchitorena - Crédit Suisse AG, Research Division: One question for me. It looks like the guidance for 2012 volumes came down by about 100 million pounds and 100,000 ounces. I just wanted to make sure, that's largely related to the higher ore grade that you're mining this quarter, and then basically it's going to decline as you move into the fourth quarter and into next year?

Well, Richard, it's just more of the overall process, of the continuing changes in mine plans. And it's not all Grasberg, as I said, it's about half Grasberg but it's nothing unusual. It's just ordinary business course mine plan changes.

The next question comes from the line of Brett Levy with Jefferies & Company.

In terms of the ramp-up of the Climax moly mine, I mean it does look kind of if you look at demand and supply growth here, that, that might be the incremental capacity that really pushes prices down. As you guys kind of look at your supply and demand dynamics for moly in the next couple of years, is there something that just sort of causes you to say, "we're just going to wait on this one"?

Well, we've crossed the bridge, in terms of completing spending the capital and hiring the people. So we're committed to -- I know we're very near to completed -- we've actually turned the power on to the mills, the mechanical completion there is going to be finished by the end of this year, roughly. We started mining activities this past summer. We're hiring the workforce. So in terms of completing the project, we've crossed the Rubicon. Now the issue is, how are we going to operate it. And because of both Climax and Henderson, we have the ability to flex production to be responsive to market conditions. And that's what we'll do.

Your next question comes from the line of Elliot Glazer with du Pasquier.

The situation in Indonesia is obviously muddled. Recently a story came out on Reuters quoting a new energy and mining minister Jero Wacik inaugurated today to replace Saleh said one of his first priorities was to renegotiate "2 unfair" production sharing contracts. Can you give us your view on what that means?

Well, the government has been restructured, the line up of ministers has changed. You -- like -- sort of like here in the United States, you can see press reports on all sorts of things and it's been a feature of our being in Indonesia now for 40 years. We have ongoing discussions with senior government officials. We've always had positive relationships. We've always had great support for our contracts, our government -- and our company has honored our contracts since the early 1970s, and we're confident that we'll be able to work together on a positive basis going forward. So I would just -- that's the only comment I would make about that. We don't anticipate there'll be any change with our relationships with the government with the new cabinet situation.

The article goes on to say the local power to negotiate contracts has been handed over to a locally elected governor and the local government now has more power in these negotiations. Any thoughts on that?

Our contract is with the government of Indonesia. The contract has the status of law in Indonesia. We work cooperatively with the provincial governor and his office, with the regency, the community where we work with. So all those things are things we work with. Our contract is with the central government.

Your next question comes from the line of Wayne Atwell with Rodman & Renshaw.

Have a quick question for you, it's really an overview question. You have done a great job of managing your M&A program. You have a number of wonderful projects in your queue. But with a very strong balance sheet and good cash flow and dynamic environment in the commodities sector, what thought are you giving to diversifying, maybe going into met coal and iron ore. There's some other commodities, you're in 2 or 3 of the best. But have you given thought to being diversified and having a broader profile?

We always have our eyes open for opportunities that may come to us. The -- our board has not made a decision to diversify just for the sake of diversification. We believe we're confident in saying that success in the mining business depends on the quality of the assets, and not the mix of the assets. So given the quality of the assets we have and the development opportunities that we have, it would take a significant opportunity to be attractive to us to compete with our own development projects. But I believe the story of 2008 was that the macroeconomic forces affect base metals and other commodities across the board, and diversification is not going to protect you from macroeconomic events. So we have the opportunity through our contacts with the industry, and with the investment banks, opportunities are presented to us all the time. And if we had the opportunity for a high quality asset that we believe would be -- add incremental value to our shareholders, we're prepared to take it. But our strategy is focused on our internal investments and our internal growth prospects.

Your next question comes from the line of Isabel Darrigrandi with Celfin Capital.

My question is regarding Cerro Verde. I would like to know if you're at all concerned that the current labor conflict could escalate at Cerro Verde, given the current social and political context in Peru and the sometimes violent and illegal disruptions that other mining operators have had to deal with in recent years? And just if you could comment how you guys are handling the situation, and if you believe you can resolve it in the near term?

Yes we do, Isabel, believe we can resolve it in the near term. And we've had a peaceful situation with this strike and with previous issues related to labor at Cerro Verde. We have a very positive relationship with the community of Arequipa, because of the efforts we've made to improve the standards of living there. And so our situation there is different from some of the other mining projects in Peru. We take it very seriously. We listen carefully to the union and to the workforce, and we're working to get a resolution and we believe we're making current progress in getting it resolved. So we don't expect the kinds of violence that you suggested and we're taking this very seriously, and believe we can reach a mutually acceptable resolution in the near future.

Your next question comes from the line of Sanil Daptardar with Sentinel Investment.

If the striking workers accept your offer, how much increase in cost, operating cost do you see for 2012?

I think that's speculation about that and about where we are with the process. The cost increase would -- there would be a cost increase because we're offering a substantial increase to the workforce. Labor is about 25% to 30% of our cost there. And so you can get some sense about what would be a reasonable increase on that. But as I said in response to an earlier question, I'm reluctant and I'm not going to get into too much details here because of the sensitivity of the negotiations, and the fact that we've got this legal process going on, Sanil. So as things get clarified, we'll give more detailed guidance. At the end of the day, Grasberg is going to continue to be a very low cost producer because of the high grades of copper and gold. And the truth is, commodity price movements are going to be much more important.

Your next question comes from the line of Jorge Beristain with Deutsche Bank.

I just wanted to get clarification on the news about the Grasberg pipeline which was damaged over the weekend. Ultimately, was that caused by a rock slide, or was it actual sabotage and has it been fully repaired?

Yes, it was sabotaged. This happens from time to time. It's not necessarily related to the strike. Rock slides really are an issue with our pipeline. It's -- there's just places, as it goes from the mill down to the port where it's above ground and there's access to it. And at times, illegal miners have disrupted it. We -- it's not a significant issue to get it repaired and get it operating again.

Your final question will come from the line of Sal Tharani with Goldman Sachs.

Can you give us an idea, your DOZ mine, which is at 80,000 tons per day right now of ore mining, and you are planning to go to 240,000 once you seize the open pit and start doing the underground. What is the timeframe you're looking at from going from 80,000 to 240,000?

Well, that would be triggered when we stop mining the open pit, and start mining operations of the Grasberg block cave. So if you think about 80,000 tons per day from the DOZ complex, we would look at ramping up to 160,000 tons per day in the Grasberg block cave. We've done access work for that. We've begun initial mine development, but there would be a ramp up period from the time that we stop mining in the pit, since these -- this is a block cave that's directly underneath the pit, same ore body, and we can't start the caving operations so long as we're mining in the pit. So there would be a period of time for the ramp-up, and we are looking at steps as how to mitigate that. This is an issue that we've been had in our 10-K's and have talked about for years in terms of mitigating that ramp up period. But there will be a ramp up period from when the open pit stops and we start ramping up the Grasberg block cave. It's the same ore body. We're just mining it with a different mining method. This is the case where we will do stockpiles to help us do that. We're looking at ways of adjusting the operations in the DOZ and the MOZ to help mitigate this effect. But it's part of our future. All right, well, we appreciate everyone's participation and interest in our call and we look forward to giving you further updates as the fourth quarter progresses. Thanks, everybody.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation and you may now disconnect.