Kinross Gold Corporation (KGC) Q1 2016 Earnings Report, Transcript and Summary

Welcome to the Kinross Gold Corporation First Quarter 2016 Financial Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Tom Elliott, Vice President Investor Relations. Please go ahead, Mr. Elliott.

Thank you, and good morning. With us today, we have Paul Rollinson, Chief Executive Officer; Tony Giardini, Chief Financial Officer; and Warwick Morley-Jepson, Chief Operating Officer. Before we begin, I'd like to bring to your attention the fact that we will be making forward-looking statements during this presentation. For a complete discussion of the risks, uncertainties, and assumptions, which may lead to actual financial results and performance being different from estimates contained in our forward-looking information, please refer to Page 2 of this presentation, our news release dated May 10, 2016, the MD&A for the period ended March 31, 2015 and our most recently filed AIF, all of which are available on our website. I'll now turn the call over to Paul.

Thanks, Tom and good morning everyone and thanks for joining us today. As you can see from our Q1 results, we’re off to a strong start in 2016. Production is up year-over-year as a result of our continued focus on operational excellence and the recent Bald and Round Mountain acquisition. Our all-in sustaining cost continue to trend downward and we generated solid free cash flow of approximately $75 million at an average core price significantly lower than today’s par price. As a result we’re once again on track to meet our 2016 guidance for production, all-in sustaining cost and production cost of sales. At the same time our balance sheet remains strong as we look to capitalize on some very exciting organic growth opportunities. I’ll get to those opportunities in a moment, but first I would like to touch on a few operational highlights in the quarter. Paracatu, Maricunga and Kupol, Dvoinoye all reached new record lows in their production cost of sales per ounce, with levels not seen since Q3, 2011 in the case of both Brazil and Russia. While all three sites benefited from weaker foreign exchange rates against the U.S. dollar, we also saw strong operational performance with Kupol, Dvoinoye producing more than 192,000 in the quarter, which is a 4% increase year-over-year. Fort Knox also posted a strong Q1, due to milder winter conditions, which allowed for increased mining and better heat performance. Round Mountain, which is now 100% owned by Kinross benefited from higher grades, strong heat performance and better miller coverage. And I’m pleased to say that the Kettle River-Buckhorn mine, which was originally said to close in October, will likely continue mining until the end of the year as the team has found some incremental profitable ounces. I would now like to turn to Tasiast, while we have made the decision to proceed with Phase 1 of the expansion, we are continuing to focus on interim operational improvements with a way to improving existing mill throughput. As we mentioned last quarter, engineering upgrades to the tertiary crushing circuit, the conveyor system and the milling and screening processes, increased average mill throughput from approximately 6,800 to 7,500 tons per day. And I’m pleased to say that trend continued in Q1 with throughput averaging above 8,000 tons per day. The enhanced mill performance in turn helped us at lower grades this quarter and the planned lower production from the dump leach. With these recent operational improvements, we’re strongly positioned to take the site to the next level as we began preliminary construction of Phase 1, which is expected to increase throughput to 12,000 tons per day. Since announcing our decision to proceed with Phase 1 on March 30, I’m pleased to report that engineering and procurement is progressing well and is now approximately 55% complete. Major construction activity is scheduled to begin in August, with completion of commissioning and ramp up to full production by the end of Q1 2018. As I have mentioned, Phase 1requires a relatively modest capital investment for what is expected to be a substantial improvement to Tasiast’s production profile and cost structure. It’s expected to nearly double annual production to approximately 400,000 ounces, while significantly reducing production cost of sales to an estimated $535 per ounce and occurrence part rates the projects there are [ph] even more attractive at about 25%. Phase 2, which is expected to expand mill throughput to 30,000 tons per day would transform what is expected to be an excellent operation post Phase 1 into a world class mine. According to the prefeasibility study completed in March, annual production is expected to nearly double again to an estimated 780,000 ounce and a production cost of sales that would decline to approximately $460 per ounce. The operations team is currently focused on executing Phase 1 and work will begin later this year on the Phase 2 feasibility study. We look forward to sharing those results with you when they are available. I’d like now to turn to another exiting organic growth initiative, which is Bald Mountain. We’ve just completed our first quarter as operators of the mine and I can tell you, we’re even more excited by Bald Mountain’s upside potential now than when we agreed to acquire the asset. Now that we’ve had some time on the ground, there will be some adjustments in the short term regarding working capital and Q1, which Tony and Warwick will elaborate on. But as I say, these are expected to be short term considerations. Our confidence in converting a substantial amount of Bald’s 4 million ounces of mineral resources to mineral reserves has increased as we continue infill growing. This conversion is expected to support increased annual production and enhance the longevity of the operation. We currently have two drill rigs on site and have drilled 9,000 meters mostly in the Saga, Top and Redbird pits in the North area. With permitting for exploration of mining expected by mid-year, we plan to increase the number of rigs and expand drilling to the Vantage, Luxe, Saddle and Gator pits in the south area. There is no shortage of targets and as we become increasingly familiar with the land package, we see the potential to expand production from the current pit in the north to include additional pit locations on the property. Obviously, these organic opportunities would book more than Tasiast’s required capital investment and also requires to set strategic priorities within our portfolio. The mine plan at Maricunga has brought us to a natural decision point with laybacks required if we had to advance into new sections of the ore body. Given our focus on disciplined capital allocation and our desire to preserve balance sheet strength, choices need to be made regarding our investment priorities, which is why we’re contemplating a temporary suspension of mining activities at our Maricunga operation as of October this year. The exact timing of the suspension could be impacted by the ongoing regulatory action by Chile’s environmental authorities, which Warwick will address later in his remarks. While the time may not be right for additional capital expenditure, Maricunga remains an attractive property, with over 1 million ounces of 2P and an estimated measured and indicated resource of approximately 4.3 million ounces. We have demonstrated that we have been willing to make tough decisions when necessary. By focusing on the fundamentals of operational excellence and financial discipline, we have consistently and steadily delivered quarter-after-quarter and year-after-year and Q1 is no exception. We are on track to meet our guidance with strong production and declining all-in sustaining cost. We generated solid free cash flow in the quarter and our balance sheet remains strong. With that I’ll now turn the call over to Tony.

Thank you, Paul. We generated a solid free cash flow of $75 million in the quarter as a result of our strong production and a continuing decline in our all-in sustaining to $963 per ounce. Our Q1 all-in sustaining cost includes withholding and consumption taxes that are not expected to reoccur during the reminder of the year. Had we adjusted out this amount, Q1 all-in sustaining cost could have been lower by approximately $30 per ounce. A number of factors contributed to the generation of free cash flow including an increase in production resulting from our recent Bald and Round Mountain acquisition, a continued focus on cost reduction through CI initiatives and streamline procurement and favorable oil prices and foreign currency exchange rates. Foreign exchange and lower oil prices resulted in a benefit of approximately $23 per ounce to a cost of sales this is our budget, with currency benefits from the Russia ruble, the Chilean peso and the Brazilian real. Despite a decline in the average realized gold price year-over-year and a lag between gold production and sales for the quarter, our revenue remained essentially flat or adjusted net earnings declined slightly on a per share basis to $0.0 for the quarter. The balance sheet remains strong with $750 million in cash and cash equivalents and $2.3 billion in total liquidity. During the quarter, the company completed an equity offering issuing 96 million common shares for gross proceeds of $288 million. Of that, $175 million was used to repay what we drilldown from our revolving credit facility following the $610 million all cash acquisition of Bald and Round Mountain was closed January 11. Going forward, we have two significant capital requirements this year, $250 million senior notes due in September, which is our only debt maturity between now and 2019 and $160 million in additional capital expenditure for Phase 1 of the Tasiast expansion, which increased our CapEx guidance for the year to $755 million. We expect to pay for the senior notes and the Phase 1 CapEx from existing liquidity. Based on a $1,200 gold price, we expect to meet these capital requirements and finish 2016 with cash and cash equivalents of approximately $700 million on the balance sheet, which is slightly below where we are today. Before turning the call over to Warwick, there are two items that I want to highlight. First, there has been a lot of interest around hedging strategies given the gold price and fluctuations we have seen. Over the past three years, we have in fact moved to reduce our hedges in order to benefit from the weaker currency and oil prices. Many of our hedges rolled off in 2015 and we’re now fully benefiting from a weaker Russian currency, about 26% of our exposure to the Brazilian real, that’s currently hedged at favorable rates relative to spot prices. With the go ahead decision on Tasiast Phase 1 however, we decided in early April to hedge 50% of our fuel, oil requirements for the project at $46 a barrel from now until April 2019. We thought that this was prudent given the volatility in the energy market and in order to protect our returns for the project. We will continue to look for opportunities to hedge the projects oil requirement at attractive prices. The second item I want to mention also came after the end of quarter and relates to the working capital adjustment primarily associated with the Bald Mountain acquisition. As you may have seen, there was a notable gap between our expectation for gold production and gold sales at Bald Mountain for the quarter. This was due to lower than anticipated inventory levels. Kinross received a working capital adjustment from Barrick of $22 million in cash in early May, of which a large portion is related to inventory effort. This payment will be reflected in our second quarter results. With that, I’ll now turn the call over Warwick for highlights of our operating results.

Thank you, Tony. As Paul mentioned, Q1was a strong a strong quarter operationally, this performance was underpinned as always via constant focus on our safety standards and the safety of all our employees and contractors. Starting with the Americas, we had a strong sharing from Fort Knox, Round Mountain, Maricunga and Kettle River-Buckhorn. The Paracatu, the Santo Antonio tailings reprocessing initiative is firmly on track, producing approximately 13,000 ounces in the quarter. As you may recall, the team developed a new approach to the recovering the tailings with significantly reduced water consumption given the low levels of rainfall in the region. Instead of harder mining and pumping the tailings to Plant 1, we’re physically mining the tailings and holding them to Plant 2, where incidentally recovery is all better. Significant rainfall still remains a concern for Paracatu. The rainy season just ended as of April and the region has received somewhat less rain than historically being the average. We have instituted a number of conservation measures as we noted in Q4 and are currently focused on assessing additional water sources which we expect to update you on in July. Given current water levels out of it, I want to underscore that we still expect to meet regional production guidance for the year. Turning now to Maricunga, I would like to provide an update regarding the ongoing regulatory process with Chile’s environmental authority the SMA. On May 2, the regulatory imposed a 15 day order to tailing the amount of water Maricunga pumps from its wells. In response on May 3, Maricunga suspended mining and crushing activities for the duration of the 15 day order. This temporary suspension is not expected to impact regional production or cost guidance. As we notified the markets on March 18, the SMA is seeking the permanent closure of Maricunga’s water pumping wells. We believe the procurement order and the original March 18 resolution are taken and legally float and are appealing both. Those not only contravene our permitting requirements, but are based on contested scientific study and pose serious environmental health and safety consequences. It is early days in the appeal process, so we are not in a position to speculate on the outcome at this time. Moving to Bold Mountain, now that the integration process is largely complete, and we have a clear picture on the ground. We are making some short term adjustments to our production forecast for 2016. In Q1, we had a lower than anticipated production due to a number of factors. The inventory shortfall, which Tony mentioned earlier, the deviation from the mine plan in the weeks before the acquisition closed resulting in a lag in mine plan sequencing and more waste stripping than anticipated and severe winter weather in Northern Nevada which made safe access to the pit more challenging. The team has risen to the challenge and has been moving waste material at an impressive rate, and we therefore expect to see improved performance in the second half of the year. In this regard, I’d emphasize that we have always seen 2016 as an integration year for Bald Mountain and we expect 2017 to be much better, the substantial increased production and lower cost. As the current stripping campaign will be behind us and we will be in to the heart of the current overheat [ph]. Turning now to West Africa, Tasiast had a strong quarter. Continuous improvement initiatives which are focused on blasting techniques to improve fragmentation of the ore, as well as adjustments to the crushing and grinding circuits have all contributed to a significant improvement in throughput. While the heap is performing well, overall production is down due to lower mill grades. We expect mill grades to recover to approximately 2.5 grams per ton by the end of the year. Moving to Chirano, we are seeing a decrease in mine production and grade as we transition from Akwaaba mine to Paboase. The Paboase mine is a lower grade deposit than Akwaaba was in its best years. And as we transition into the ore body, we have encountered some challenges opening up new mining areas. We have made adjustments to our mining techniques, and while we expect this transition period to continue in Q2, we anticipate improved performance in Q3. Moving to the Russian region, Kupol and Dvoinoye continued to outperform. Tons of ore mined increased 6% year-on-year, and mill grades reached nearly 14 grams per ton, the highest level since Q2 of 2011. At the same time, production cost of sales reached favorable levels, not seen since Q3 2011, due to combination of increased production, high grades and the benefits from the weaker Russian ruble. Given the world class quality of our Russian operations, we are pleased with the progress we made on two projects, to potentially extend the mine life of both Kupol and Dvoinoye. At the Moroshka project, which is located approximately 4 kilometers from Kupol, the construction of an ore haulage road to the site is currently underway. Moroshka added 180,000 gold ounces to Kupol’s mineral resource in 2015 and mining is expected to begin at the Moroshka deposits in 2018, with ore process at Kupol mill. At the September Northeast target near Dvoinoye, a 15 kilometer haulage road has been completed and a camp facility has been established, a high grade near surface M&I mineral resource estimate of some 68,000 ounces at an average grade of 32,000 grams per ton has been defined at the target, and is expected to enter production in late 2017. Exploration continues at both Kupol and Dvoinoye, and we are focused on opportunities to continue to extend the life of these two assets. In summary, our balanced portfolio continues to deliver good operational performance across all our regions, and we remain on target to meet our guidance for the production and cost for the year. I’ll now hand back to Paul

Thanks, Warwick. Our track record has been consistent in focusing on the things that matter, operational excellence, balance sheet strength and disciplined growth. Over the past few years the gold prices trended steadily down and the gold industry as a result has experienced significant change. Throughout this period, we have maintained our focus, we have continued to hear our operational targets quarter after quarter and year after year, and we have refused to jeopardize our balance sheet strengths. That focus, I am pleased to say has positioned us very well. We are on track to achieve record production this year. We are generating solid free cash flow from our operations. Our balance sheet remains strong and we have organic growth projects in every one of our three operating regions, Tasiast in West Africa, Bald Mountain in the U.S. and Moroshka and September Northeast in Russia. Kinross has a clear path forward and solid momentum at a time when the gold price seems to have turned to corner and I am very excited about our future. With that operator, I’d now like to open up the call for some questions. Thank you.

We will now begin the question and answer session. [Operator Instructions] Our first question is from the line of Chris Terry with Deutsche Bank. Please go ahead with your question.

Yeah good morning guys. Yeah a couple of questions from me, just studying on Maricunga, and I appreciate it is still uncertain at this stage, how it might play out there but can you just give us some indication around what the CapEx savings might be just so that we fairly think about the MPV implications of reducing production there.

Sure. Again we haven’t made a decision, we are contemplating. And again and just for context Chris it’s - this - as I said in my words earlier, there is a significant amount of gold at Maricunga, and we have got a great team there that’s done a good job of bringing the cost down from where there were historically. But it is still one of our higher cost assets, and the challenge that we are thinking about is, is the capital return on doing that layback to access to continue access that ore resource for us, we said for many years it’s not about production for the sake of production. We have had those mantra of quality over quantity, we do have to make a good return. Well maybe Warwick you can elaborate more specifically on the capital.

Well thank you, Paul. The approach that we have taken for every one of our increases or continuation of production has been on the basis of phases and we are trying to come in to the end of the phase, where we have spent the capital and from most of that program during 2015. Early in 2016, if we have to continue it would be in the order of $26 million for those laybacks. As Paul has suggested, it’s not necessarily about the capital, but rather associated margin.

Okay thanks. Thanks for the call. So the $26 million would then allow you to access to the resource, is that the way or is that just what it would have been in 2016 aligned for capital.

That would have been for the next phase, which would have given us access to a further CapEx and access to all of the specifics, not the full reserve that we currently have on our resource.

Okay thanks for that. And just on the balance sheet, thinking about your comments on Tasiast phase one and also the nature in September this year, we talked about where the cash balance was at 2016. What is the minimum - now that you have Round and Bald Mountain, what is the minimum cash requirement and is it just from a working capital standpoint, just so we can think about where you have to dip into your revolving capital.

Yeah Chris, it’s Tony. We basically like to look at about –– $250 million of liquidity, and I use the term liquidity and that could obviously consider that credit facility, but as I indicated in my comments, when we look at our year-end cash position after we paying the notes of $250 million and paying for the current year’s portion of Tasiast capital of $160 million, we could foresee being around $170 million, if the gold price holds at 1200, and in fact our - just with the current gold price levels, $100 change in the gold price on an annualized basis is worth about $220 million of cash on an after-tax basis. So I am going to look at that $250 million, and we look at $700 possibly if gold stays around 1200, we are in a very strong position just from a straight cash flow perspective. But as I pointed out, our liquidity total is more like $2.3 billion including the current facility.

Great, thanks a lot, and then just a last one on Bald and Round Mountain, obviously where you are targeting, quite a bit of exploration. What would be the timing we should think about with - it could be addition changes maybe in the reserves - in the resources, is it next year, or could be before that.

Yeah either it will be - we are growing now and as I indicated, we hope to do more drilling once we get some permits in there, we are pursuing midyear, and it will come in pieces through the year, as I am thinking, we are going to host an analyst site visit in June, and we are really excited to get you guys all down there and get some app sold, you have a good amount of time onsite and that’s what we really hope to get the guys up to speed and have to see what we see. Anything to add there, Warwick or Tony?

Yeah we should be - a lot of drilling in a short period of time, in fact some [indiscernible] in the first two months of the year. And those have been confirming the expectations that we had except we have enough discipline to do any way. We want to show it and bring you all those results during that visit at the end of June. So there will be a conversion, I am not going to speculate those numbers right now, but certainly we are looking it.

And again though, with the drilling will continue throughout the course of the year but typically in our company, we don’t update our reserves within a year. We usually do it on an annual basis, with our annual reserve, resource update, which will happen next February, but you will see the results of the drilling, and that’s really the point is that I would make is what we are pleased about is the results of the drilling are, seem to be improving out our business of what we expected.

Okay, thanks guys. I appreciate it.

Our next question is coming from the line of David Haughton with CIBC. Please go ahead with your question.

Good morning, Paul, Tony and Warwick. Thank you for the update. Perhaps to Warwick, if you could just outline to us how you could see Moroshka and September feeding or into the Kupol mill, the condos, tons that is expected of Moroshka for instance if it’s open pit, underground potential etcetera.

Okay David. We are very excited that we can continue to extend the line of Kupol and Dvoinoye and any deposits that we find within that area, we will establish a strategic plan, which ensures that the timing of the mining of those deposits fall in the context of the more capacity we have at Kupol, which as you know is 4,500 tons per day. So if I could just reflect on September North-East deposits, it will be a small very high grade, 15 kilometers away from Dvoinoye and in essence it’s at the top of the mountain, so it’s an open pit, and we would mine that over a couple of months an truck it down to Kupol at a time where we are starting to the grades diminish up to Dvoinoye and as you know that happens during the quarter of 2017 into 2018. As far as Moroshka is concerned that had been left to Kupol some 12 kilometers as I mentioned earlier, and there is an underground operation, 185 ounces, we would believe to extract from there, it’s about 240 to 300 meters below surface. We are putting a decline, as it is typically the case of Kupol itself and we would mine that during the period of 2018-2019.

Excellent and the kind of mining rate we should expect from each of those.

The mining rates - at September as I said it’s small tonnage high grade, and so we would keep it in the order of about 500 to 800 tons per day. As far as September - as far as Moroshka is concerned, a very similar to 1000 tons per day, supplementing tonnages that would normally come from Kupol.

Okay and I appreciate that in the case of Moroshka, which is already in research as you had mentioned for Kupol that there is outside potential with additional drilling if we are able to add something there as well.

Yeah we have drilled the area perhaps significantly in the immediate area of Moroshka, and it is in fact closed in all directions. However, the area around it and really we are talking about the ground between Moroshka and Kupol itself is very perspective. We certainly do come across positive results in our drilling, we are doing lot of drilling in that area, and it is the case of getting it to hang together, and that’s being and continuous to be a challenge for all its rocks and targets I guess. And we are still excited about the area, nothing that we could put together in a reserve resource right now, but certainly we will talk about more at the end of the year.

I guess it’s fairly typical about an epithermal system where you can have veins or all clustered around in the same area and it is just the way of juggling them with the weaker link.

Exactly.

I have a question if I may Paul, just switching over to Ghana if I may, Akwaaba, how much is left there?

David, I assume that you are directing that to me, I will take it. Akwaaba really is coming through at the end of its mine lapsing sector, we have extended its lapse by the development of a further sublevel at June - Q4 of 2015, and we continue to pursue those ounces. So we are talking in the order of 15,000 to 20,000 ounces as it was at the beginning of this year. We did strike earlier some challenging grounds during the course of this last quarter, which we have to check our operations, because of that we since are seeing a lot more settlements, and we will get back down during the course of this year. There is in the order of 5000 to 10,000 ounces pulled down there.

Excellent, thank you for that Warwick.

Our next question comes from the line of Anita Soni with Credit Suisse. Please proceed with your question.

Good morning guys. First question is with regards to Toronto. I am just wondering what the split on underground open-pit tons this quarter, and how that plays out on the underground with at Paboase and Akwaaba?

Okay Soni, Anita, sorry. I will just give you the answer there. We are building up tons let me first say at the Paboase operation. And as you would have seen that during the course of this last quarter, we were down on tons and grade. But we also are being supplemented by surface sources. So the split of underground to open-pit tons I would say is in the order of about 80 - 70% to 30% favoring underground, with some supplements to open the surface coming from the stockpiles.

Okay, and then could you provide us potentially with the grade of - the average grade of Paboase underground deposit?

Yeah we are - the average gold is in the order of 4 grams per ton.

Okay, so moving on Tasiast, the dump leach. How many tons do you plan to put on the dump leach this year?

Let me first explain to you that we have a budget obviously, which was in the order of about 800,000 tons for the year and that’s really mining open pit oxide material that we had found during course of the second half of 2015. As you know, majority of our open pit material in the past has come from Piment and I did confirm the end of the Piment operations during 2015. But in 2016, we’re always scouting out for open pit oxide material and we in fact came across lanes in the West Brom’s [ph] pit and that’s what you’d see during the course of this last quarter and you’ll see a little bit of that into quarter two, more oxide material which is outside of what we were expecting. So those numbers would increase by about 50% on the number that I just gave you.

Okay. And then Kupol, I’m just wondering why there is a variance this quarter between what was mined versus - that’s not typically the pattern there? Just your mill was a little bit later versus the mining rate.

Let me just give some thought to that question.

Maybe, 492 - 492,000 mined and then 416 milled. I was just wondering if that’s going to reverse out for the rest of year.

The mill tonnages are influenced by the rates in which we feed both Kupol and Dvoinoye in material. The Dvoinoye material being a lot harder than the Kupol material and so there is a blending process there and it depends on how many days we would mill one versus the other. As far as mining rates are concerned, we typically try and pick up our mining rates during the first quarter of the year, because of dealing with the winter rate that starts to deteriorate as we go into summer. So we increase the mining rates when we can to develop stockpiles and move the material over to Kupol as soon as possible prior to the winter months. So it will balance out during the course of the year, and certainly we don’t see any changes, our restrictions really are the number of tons we can put through the mill.

Great and then the last question is with Fort Knox, I’m just looking back through, I guess the mining rates and the mill processed and the mining rate is - the process - what’s processed through the mill and processed through the heap leach exceeds with the mining rate. I’m just wondering in your reserves, are you just looking at specific facet, I guess the heap leach not in the reserves heap leach tons.

No, why don’t you repeat the last that question Anita?

You’re basically, I mean, what’s being processed is basically 25 million tons per annum, and that’s being mined somewhere in the range of 19 to 16 over the past few years. I’m just wondering, why there is an excess of what being processed between - yeah, between what’s being mined and what’s being actually processed, via the mill and via the heap leach heap leach?

Yeah, I would say Anita that the mine over the years has developed a number of stockpiles, which initially depending on the - a pause of mining processing as well as gold price have been retained. And as things change, we do supplement some of our - we do find that we can put these deposits on to our pads and device or we see returns that are favorable.

Alright, so that I guess, I’m listening back to the same question which was, are those stockpiles embedded with end users?

Yes, they are.

Okay. Alright. Thank you.

Thanks.

Thank you. Our next question is from the line of Steve Parsons with National Bank Financial. Please proceed with your question.

Yeah. Good morning. Thanks for taking my call. Just with respect to the organic growth projects, noted in your remarks Paul, can you help, I noticed that La Coipa was not mentioned? What if you could just talk to, how your thinking efforts and timing has changed with the respect to the La Coipa given events surrounding Maricunga and SMA’s claims and may be if you could sort of comment, whether or not La Coipa is drawing from the same water basin as Maricunga and may be, whether the same is true for Lobo-Marte. Thanks.

I guess in general, the quick answer will be, nothing has changed for us at La Coipa, to us the La Coipa is a good news story. It’s again one of a situation where - as we were contemplating now with Maricunga, we weren’t happy with the cost structure, we weren’t happy with the margin and we decided to suspend obviously. Then we went to drill satellite deposits we got higher grades and now we have a very attractive PFS. The only thing, we would like to see more of is a bit longer life, with the current mine life of about 5 years. So we are going through the environmental permitting process for work to restart, at the same time though are continuing to drill and try to add to the resource. I mean, the - as to the water, I would not - what I would say is, we are both - all three deposits are in, what they call Region III. Region III does have the same regulator, but it is a different water source at La Coipa than at Maricunga, same regulator.

Alright, that’s helpful, thanks.

Thank you.

Thank you. There are no more questions at this time.

Okay, well, thank you operator and thank you everyone for joining us today on the call. Thanks. Bye, bye.

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