Comstock Inc. (LODE) Q4 2013 Earnings Report, Transcript and Summary

Hi, everyone and good morning. My name is Corrado De Gasperis and welcome to our call. I'll provide a summary and some color, the information included in our press release from this morning and an overview of our financial statements that will be filed on Form 10-K, later this week. In addition, I'll provide our outlook for 2014. If you don’t have a copy of today’s release, you will find a copy on our website at www.comstockmining.com under News/Press Releases. Please also let me remind you that in addition to the outlook I may make some other forward-looking statements on this call. Any statement relating to matters that are not historical facts may constitute forward-looking statements. And the statements are based on current expectations and those statements are subject to the same risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed by the company with the SEC. Those risks are also identified in this morning’s release. And all forward-looking statements made during this call are subject to those same risks and other risks that we can’t identify. Over the past year, I have been starting my prepared remarks with production, but today I'd like to first highlight some of the more important strategic accomplishments from 2013, including a brief recap of our 2013 geological report, before moving back in the production. Earlier in 2013, we published our fourth NI 43-101 technical report authored by Behre Dolbear. The 2013 report declared a mineral resource estimate of measured and indicated resources containing more than 2.15 million gold equivalent ounces, the Lucerne increase alone was a 25% increase over the previous Lucerne measured in indicated estimates. We also reported 1 million ounces of inferred resource for a total of over 3 million gold equivalent ounces between the Lucerne and Dayton resources together. In Behre Dolbear's report which is posted on our website they state that the Comstock project represents a well explored epithermal, precious metal deposit within a world-class mining district. The density of geological data is high, and the reliability is excellent, particularly in the various Lucerne Mine areas. Page 4 of that same report highlights the critical, structural characteristic of our mineralization. It says that ‘we’re in northeasterly striking faults of which we have many ounces, intersect the main Silver City fault zone mineralization thickens and grade increases.’ this is exactly what Larry Martin our Chief Geologist and our geological team have a Chute Zone discovery and really is what motivates us easterly and these cross-striking faults within our mine plan. Page 4 continues on to say ‘a significant discovery of higher grade mineralization we’ve discovered in the east side drilling and this intersection zone hosts elevated grades of gold and silver that consistently average a tenths of an ounce of gold per ton over drill intersects of 50 to 270 feet long and has dimension of 150 by 400 feet wide’. And we know that the Chute Zone and that concentrated high grade discovery remains open now almost all of its sites. Page 5 goes on the comment that substantial resources have been identified to the south of the Dayton Resource property and encouraging exploration results have been discovered in the further south in the Spring Valley. And lastly page 49 on the Dolbear report concludes that based upon the structural controls of the newly discovered higher grade Chute Zone CMI has recognized structural similarities in higher grade zone (inaudible) and in other mineralized area within the property position. Expectations are high that further drilling at the appropriate (inaudible) will allow for important extensions to these higher grade zones. So just having recapped that let me say that many of our strategic achievements and actions in 2013 were designed to build substantially higher intrinsic value from increases of this significant geologically controlled foundation. We’re anxious actually to resume drilling and I will talk about that a little bit further when it comes extending these known zones. So accordingly in 2013 we restructured our Dayton land purchase including patented mine claims in this our second largest resource area extinguishing $2 million of cash debt obligations and canceling the future royalty obligations, improving our future cost profile and current balance sheet associated with that land position. We also received major strategic master plan and zoning changes from the Lyon County Board of Commissioners on these critical mining claims and other properties that are located in the Dayton resource area enabling accelerated exploration and further resource development there. Together the east of the Lucerne including the Chute Zone and the Dayton represent our two most immediate mineral expansion opportunities. These new approvals and discoveries paved the way for significant growth of ounces and mine development. We also went further and secured over 300 acres of additional private lands adjacent to the 78 acre American Flat processing area where we recently expanded our heap leach and positioning the whole property to accelerate our ability to grow production and processing capacity on these private lands. We have also significantly increased the mineral claims in BLM lands that we have taken control across the district. Overall the company now owns or controls almost 7,500 acres of mining claims and private parcels in the overall Comstock Mining district, representing a substantial increase over 2012, over 25% from the already large property position. We believe these accomplishments have significantly increased the intrinsic value of the company and we are working to unlock that value by implementing a broader district wide planning process that will include expanded exploration and resource development, engineering and feasibility studies for reserves and mine development growth all beyond the existing Lucerne Mine operations. These activities will produce more ounces in Lucerne, Dayton and ultimately Spring Valley, once drilling [recommences] as well as an expanded mine plan more immediately for Lucerne and future plans for mining ingredients. The district wide plan will also evaluate and enable centralized processing capability on the extended private land position. Our foundational understanding is a geological structure, strategic land consolidation and expansions coupled with the community wide network that supports it continue to grow for us in every respect. Now let’s review the results of our first full year production. Our production stabilized during 2013 and the expansion is still ramping up with higher grade materials now being delivered to the leach pad. We are enabling a year on year doubling of production ounces, while significantly reducing unit cost, overall cost and increasing the cash flow. 2013 was our first full year production and we produced 186,482 ounces of silver and 17,739 ounces of gold for a total of 20,814 gold equivalent ounces exceeding our full year guidance which will now all renewed. The major accomplishment is not so much that we exceeded that guidance but really that we operationlized all of our capacities. For example we established our haul road, confirmed our metallurgical yield for gold and silver, debottlenecked the critical components of our metal extraction processes and we’ve now moved into an expansion cost reduction and efficiency mode. We received a major modified water pollution control permit in late 2013, increasing our authorized capacity and processing rates on previous maximum of 1 million to now 4 million tons per annum and recently expanded our heap leach capacity to accommodate near-term expansion plans and long term growth objectives. Revenue for 2013 totaled almost $25 million with gold mining revenues of $24.1 million. This represents a realized average price of about $1,362 per ounce of gold and about $22 per ounce of silver actually not very far from where gold and silver prices are today. Last year we crushed in fact 1,072,000 dry tons of mineralized materials from Lucerne west mine delivering about 22,000 ounces of recoverable gold and over 396,000 ounces of recoverable silver to the heap leach pad. We mined the permitted limit that we were authorized for and we mined most of the lower grade segments of the western mine area. In fact in 2013, we averaged about 0.02 ounces of gold per ton delivered to the crusher. And the western and southern parts of our Lucerne mine where the Hartford and Billie the Kid patents are, we are very near complete mining the ore out of those sections and are very excited about getting into the real heart of the mine, which is the Lucerne and Justice patent. By comparison, just for last three days of March, we delivered respectively 0.031, 0.037 and yesterday 0.048 ounces of gold per ton delivered to the crusher. So the grade is absolutely improving. Our 2014 mine plan delivered higher grade and actually the range of the mine plan is between 0.02 and 0.06 ounces of gold per ton but probably leverage closer to 0.03 which is a significant improvement over 2013. From the mining perspective, the latter part of 2013 and the first few months of 2014 managed through some areas of higher strip ratios in our mine, as we tackled some of the more challenging parts, wrapping up really those few segments that I just talked about and positioning us now to move north into the best area like the Lucerne and the Justice. We’re seeing that real grade improvement and we’re going to see significant and steady improvement over the next six months of our strip ratio, in some cases quite dramatic where the heart of Lucerne area has very, very low strip ratio. During the fourth quarter, we produced a record 6,345 gold equivalent ounces, representing 5,256 ounces of gold and 66,874 ounces of silver, an averaging run rate of nearly 25,000 gold equivalent ounces on an annual basis. Costs applicable to mining totaled over $30 million or $26.5 million net of the silver by-product credit, which was in line with our initial guidance but more importantly continuously and steadily dropping. Cost applicable to mining dropped sequentially on a per ounce per basis every quarter during 2013, starting in Q1 when we were just getting ramped up and running at full capacity -- full permitted capacity at that time, when we were over $2,000 per ounce and then dropping down to $989 cash cost applicable to mining per ounce on average during the fourth quarter. So, we had steady and continuous improvement despite that. And despite the fact that we expect an increase in production tons going forward, we’re now estimating real dollar cost reduction applicable to mining of over $6.5 million when we compare 2014 to 2013. In addition, we’re also reducing non-mining cost. During the third and fourth quarters once production stabilized, the company continued focusing on streamlining the organization and reducing general, administrative, consulting, contracting and other related costs resulting in a 24% reduction of those costs year-on-year from 2013 to 2012. But the company has identified another $3.5 million of these administrative cost reductions from the 2013 level. Combined, we expect the total of $10 million in annual cost savings when we compare 2014 to 2013. We didn’t impair any of our assets, long life fixed assets or mineralized lands but we did breakdown $1.5 million of inventory associated with known low grade stockpiles, primarily inventory stockpile grading below 0.01 ounces per ton. Although these inventories are below our processing cutoff grade, the company is stockpiling and accounting for low grade material for possible future use. Financially, in addition to lowering cost, we continue to strengthen and work on our balance sheet. Net cash used by operating activities was reduced by $12 million when compared to 2012, the actual use of $10 million included the use of $2.7 million of accounts receivable that we had used to repay our working capital debt. So actual operating uses for the year was $7.6 million and improving during the course of the year. Net cash used in investing was $6.7 million, we invested in the debottlenecking of the Merrill-Crowe facility. We invested in the expansion of the heap leaching. We invested in the utility comps surrounding and the infrastructure. We also increased our bonding during the year by 1.3 million and we are planning a similar level of bond increase for 2014. From a pure sources and uses perspective, by the fourth quarter, we had a positive source of cash before CapEx, debt and bonding which was our most important intermediate objective. We got to a run rate despite the lower pricing of gold and silver that allowed us to show a positive source of cash. And that is absolutely the point we wanted to get to and build from. During the year, we also reduced long-term debt obligation by almost $5 million from $13.7 million at 2012’s year-end to just under $8 million at 2013’s year-end. Let me conclude the prepared remarks by saying that I believe that the strategic achievements that we have accomplished, not just in acquiring critical lands, not just in reconstituting the zoning and positioning of the use of those lands but also in terms of the significant infrastructural stabilizations of our operation, have really positioned ourselves extremely well for valuation growth in this market. We are moving to the best part of our Lucerne mine plan now and all of our structural controls tell us the more we move easterly, the better it gets. Our capital base remains strong and our shareholder base is knowledgeable, engaged in growing of their position. Visitation to the site is continuously growing where we now have weekly visitation at our mine and had to literally build a tour process to such visitors. Very few people, overall if any that I can imagine, I know one or two, were positive on gold last year-end. It seemed like it was all doom and gloom. We are still clearly at historic lows in terms of equity valuations, but something even more profound continues to develop in our industry. Discoveries are shrinking, grade is dropping, jurisdictions are destabilizing and costs of course continue to rise around the world because of all of the above. The growing companies that we will win, must produce the lowest cost. And we believe Nevada is the place to be for the all-in lowest cost operations in our industry, not just because of the grades, not just because of the excellent mineralized structures, but because of the jurisdictional stability and control. Our $10 million of year-on-year reduction replaces an enviable very low cost position. Our performance should put us below the $750 an ounce that we are guiding. And really we’ve positioned ourselves from a macro perspective to deliver low cost, operating frankly between 1.5 million and 2 million tons of processed material per year, delivering up to 40,000 ounces. Just as a point of fact, we built our infrastructure to do twice that amount. And we are working now primarily on all the plans to expand the mine to east, to expand the haul road to allow for the higher capacities and ultimately to grow and leverage the infrastructure for even lower cost in the future. There are very few, and I think fewer and fewer quality juniors developing the quality projects like we just described and even fewer that control the entire, an entire, let’s say well understood geological district like ours at such high grade potential. We are very anxious to expand the resource base to further exploration and development. And once we’ve stabilized ourselves further in this ramp up, we’re going to get to that sooner rather than later. We feel that we’re really positioned now for sustainability, expansion and growth. Over the next two days, I’m scheduled to meet with about 35 investors in just the New York and Boston area, and then on Thursday morning, I’ll back to Nevada. So with that, let me pause and turn it over to questions. Tracy, can we go to questions?

Thank you. (Operator Instructions). And our first question today comes from James Dale, private investor. Please go ahead.

Hi James. Can you hear me?

Mr. Dale, your line is open please unmute your telephone.

All right, I got to be on mute. So good morning Corrado. Thanks.

Good morning.

Do you have a date in mind when you expect to go cash flow positive exclusive of -- let’s put it this way. Two numbers: One, exclusive of exploration costs; and two, ore costs?

Yes. I mean we’re -- well, okay, so on the first one, we’re effectively there. Let me give a little color on that. We really affected that in the fourth quarter. We were running at a rate of 25,000 ounces. And despite somewhat lower prices, we saw nice stabilization of our cash-in, cash-out there. Now the last month of the year in December and the first two months, the January and February, we were transitioning from the heart of the Hartford Billy The Kid mine, really our Western mine plan is almost an amalgamation of three or four mines in one general facility. And in the transition from Hartford Billy The Kid into Lucerne and Justice, we had some infrastructural work to do, which really from our perspective increased our strip ratio. We've been working at a strip ratio which is hardly been above 1:1 let's say 1.5:1. And in reconstituting into the second phase of the mine, we did some, obviously in December we did some work on the heap leach pad, but we did some reconstitution of the ramps, we did some reconstitution of the Hartford Billy The Kid and we set ourselves up for some very, very efficient reclamation in short waste haul, but in doing that for January and February, we had higher waste, we actually moved more tons in January and February than I recall during in two months, but substantial majority of it was waste. As we shift now into a normalized strip ratio, I would say we’re there in terms of being cash positive, let's say pre-CapEx and debt repayment. And once we move into the higher rate of ore production, which is scheduled in weeks in front of us then we should turn cash positive fully. The profile [evokes] and sometimes I wish it would evoke faster than it does. But we have sort of two relatively positive variables that is improvement in front of us; strip ratio which I just spoke about. And in the scheme of things if we’re running at a 2.5:1 or 3.5:1 let’s say in January and February, we average a normalized closer to 1.5:1. And there are points in Lucerne run, long run where we will be at something like 0.5:1. So, the next six to nine months the profile will just get better and better. Grade isn’t as linear in that regard, but is continuously improving. When we look at the rest of the year’s mine plan and we consider that last year on average we were at about 0.02 ounces of gold per ton. We did have some good grades in October and November that are comparable to what we’ve been seeing this year, but it improves where the range of grade is from 0.02 to 0.06. And so on a sort of a macro basis, our cut-off would probably be below 0.02, but the grades in front of us range between 0.02 and 0.06. So I think efficiency from mining and hauling when it comes to strip ratio and then improved throughput from grade really, really puts us to where we want to be in terms of profitability. So, when is that full all-in point, for everything I would say in the second quarter for sure.

Okay. So, next time as you report to us you should be more grown in the (inaudible) rise and all that, you should be kind of telling us that you are cash flow positive?

Yes. Next time we report we will be in that second quarter we will be reporting the first quarter results, but we will be into that run rate, yes.

Okay. And obviously it all depends upon the price of gold and how it looks forward whether these are rebounds or [recalculate] was trending for a while there. Well, thank you very much. And good luck and keep up the good work.

Thank you, James. Appreciate it.

Thank you. Our next question comes from Lawrence Danny, private investor. Please go ahead.

Good morning, Corrado.

Good morning, Lawrence. How are you?

Good. The Dayton mine, are you on schedule and when what is the timeframe like and when should that be up and running?

So the Dayton is a great point to discuss, it’s our second largest resource area. Some of the evaluation that we have done sort of off peak has even given us sort of more encouragement about what’s there and its potential. What we really need to do is get back into and complete the drilling program. We drilled two phases with what I would call spectacular results both in terms of concentrations of ore and grade. We have probably one meaningful drill phase to go. We weren’t really willing to initiate that drilling until we got some of the zoning corrected because it’s a $45 million program, but that zoning was unanimously approved and changed on January 2nd by the Lyon County commissioners and we are working now to consider when we can schedule that drilling. We certainly would like it to be in the second half of this year. So the drilling can be scheduled and completed in the second half of the year. We believe that would give us all the geological data required to finalize the assessment, develop the mine plan and commence permitting process, but really (inaudible) is that all of the properties are on private land and we have assessed a permitting process there to be in totality less than 10 months. So that could even be faster because as we shift from a notion of being sort of an independent project to the district supporting centralized processing of the various mines, a lot of that permitting really would already be covered by the American Flat operations. So tying these pieces together, the reason owning the Dayton which from my perspective is a breakthrough success enables us to advance forward. We are buying the adjacent land at American Flat gives us all of the expansion capacity, we could ever walk for a centralized processing facility and as those two accomplishments converge, we should be highly motivated to accelerate the resource development, accelerate the mine planning and move forward on the permitting. So I guess if you add up everything that I just said, by third quarter of 2015, it’s a real, real, real possibility. I think that it’s very exciting because we really were less fueling after the completion of the last drilling phase of Dayton, but there were so much more resource there, we had built a plan based on three senses, north center and south. We drilled each of those senses, we hit on every hole. So we actually weren’t successful in defining the scope of the resource, meaning it was still open to the north, open to the west, open to the south and open at depth. Larry Martin went down and drilled some holes at the [Jenesse] and in Spring Valley and had a couple of additional discoveries connecting that up even more open to the south. So I think that we're going to have meaningful updates in terms of ounces in Spring Valley, ounces in Dayton and then that will all converge I believe to the most intelligent mine plan and then that will segue into the permitting process.

So you think it will be up and running by third quarter 2015?

It could be and then I think the most important contingency to that statement is when we start and finished the drilling. So starting we have control over, we’d like to do it sooner rather than later. Finishing it’s kind of a funny concept to the extent that you keep hitting and defining more and more resource, it could extend the life of the drilling program and that’s a positive. So the six months estimate of drilling probably is fair for a third phase, the third phase could be the final phase or there could be some additional drilling that was required. But I think that we have a lot of -- we do have a lot of structural understanding [today] and so I really feel a higher level of confidence that if we finish out this drilling, we would be able to get our arms around a very good mine plan.

Thank you.

Thank you sir.

Thank you. And our next question comes from Alex Goran with Goran Brothers. Please go ahead.

Hi, Corrado.

Hi, Alex. How are you?

Fine. First of all, congratulations on the good job that you’ve all been doing.

Thank you sir.

Basically, what I'm interested in a little bit is knowing; I was thinking about share price movement.

Yes.

And I think that, that can only be affected in a serious way; a, by increasing production; and b, by increasing proven reserves. So, if you could repeat please in case you’ve settled distance. When do you expect to be at 40,000 ounces and when at 100,000 ounces of production?

Okay. So the 40,000 ounce run rate that -- well, we've got it for 40,000 this year from the Lucerne, I would expect to be at their run rate by the second quarter. We are also working to expand the Lucerne mine to the east. And so, the ability to get to, let's say 75,000 to 80,000 just assuming comparable grade for a minute, would really depend on us expanding the Lucerne mine to the east and expanding our haul road capacity. We expect to do those things in the second and third quarter respectively. So the infrastructure for Lucerne could have much higher, tonnage capacity as earlier the third quarter of this year and that would represent to 75,000 to 80,000 ounces. What we said conceptually about the Dayton is that it could add anything comparable to that depending on what the final mine plan is. So to think of Dayton as a 40,000 to 80,000 ounce producer is not unreasonable. So, maybe just short of your point, we’d like to be to the 40,000 ounce level with the current plan as soon as practical and we really require two sort of permitting steps expanding the mine to the east and then getting our expanded haul road approved which we believe would happen in the second and third quarter respectively. So that would position us to increase tons and increase ounces to the level that you described.

80,000, you said.

So 80,000 yes because, I am just assuming current grade, obviously if the grade continues to improve, it could be higher. And I think the 20,000 ounces for every 1 million tons, if you get to 4 million tons you are at 80,000 ounces.

And the 100,000 you are talking about are the goal to reach specifically?

So, actually what we’re saying is we can operate 2 mines at a 150,000 plus like 75,000 ounces each that would be from -- and as we talked earlier the Dayton would really come on line in later 2015 given the drilling and permitting schedule that it would require. So I think that covers production. In terms of ounces we have a relatively short path to validating reserves in two ways. One is just permitting which is a known certain exercise schedule in front of us. And then secondly obviously drilling the east side of the Lucerne further and drilling out the Dayton further, we believe would add tremendous reserves to our balance sheet because we have such a well understood structural geology that for us expanding the known mineralization is literally drilling along the known strikes. So when you combine those drill results with the permitted envelope you get reserves. So…

And when do you expect you would be ready to announce new reserves?

Well frankly the lead time from the point we start drilling are the two the drill programs that we have defined; one for Dayton which is about six months; and one for Lucerne which is about eight to nine months. Really we need to start drilling this year to be able to announce update on this purpose by the end of this year or the beginning of next year.

Do you expect to be able to announce something came about a year’s time?

Yes, once we start that drilling it will be a very defined path.

One final question and that is the very beautiful looking bonanza in your draft (inaudible) with that.

Yes, that’s the Chute Zone that I was referring to, but probably not only internally but by our two strongest external geological advisers saying it’s one of the most exciting geological structures and discoveries that they have seen in a very long time. The Chute Zone is on the east side of the Lucerne, it starts at about 800 feet deep and what’s really remarkable about the structure is not that, not just that it’s larger by a significant percentage then the Woodville Bonanza, that was one of the most southerly bonanzas discovered on the Comstock, but more importantly it’s on a very known and defined structure and we only have about 20 holes drilled into just a very top of it and so it remains opened in terms of definition. And let me make sure I say this clearly, what you see in that picture is a 150 by 450 foot concentration of high grade ore that’s been validated not only by us, by two other external parties, but it remained opened practically on all sides and depth. So we don’t yet know the real extend of that structure. So that’s one of the first things we would like to expand our knowledge on with drilling and/or drift exploration.

So that may increase substantially the proven reserves?

You know, it’s certain that it’s tend to increase because it’s open on all sides, we haven’t found the extend of it, it’s very likely it can increase substantially.

And when do you expect you will have some reserves in that?

It’s actually in the same context of what we talked about before, yes, six to nine months of drilling yes.

Okay, thank you very much and everybody says just keep up the very good work.

Appreciate it very much. Thank you.

Thank you. Our next question comes from Jeff Wright with HC Wainwright. Please go ahead. Please go ahead.

Hey good morning Corrado, how are you doing?

Hey Jeff. I am fine. How are you?

Pretty good. Got a couple of questions here, bouncing around a little bit.

Sure.

So when we talk about exploration both at Dayton and Lucerne in 2014, what would you say the budget for that is on a project basis if you…?

Yes, for the next phase of Dayton we have about 4 million and for the next phase of Lucerne we have about 6.5 million. So just over 10 million would be for the two combined. And that’s just to say I refer to six months and nine months, it’s combined, probably -- it’s not sequential, but it’s like 12 to 13 months of drilling.

Correct. So theoretically if you start on January 1st, it would take 12 months, right?

Yes, although the Dayton would be completed sooner.

Yes. I got that. And how many feet or meters of drilling would that equate on each project?

So yes, yes. So I know exactly on the Dayton we're talking about 50,000 feet. And the Lucerne, I’m going to say the Lucerne we are talking about 85,000 feet, but I have to carry out that as that’s probably still going to be of third phase with more to go, there were certain areas not only vaster but with the Chute we’ve gone much deeper.

Correct and it seems to me I’m not trying to put words in your mouth, but with Lucerne it does seem to be with the budget and the amount of drilling you want to do that you have some flexibility by the way either expand of the program out or you can maybe scale it back if gold prices went back towards a lot of hunger, is that…?

Yes, I mean I would even enhance that a little more. In Dayton’s case we need to do $4 million/6 months worth of drilling to develop a mine plan, right?

Correct.

In Lucerne case, I mean we could just infill drill for rest of the decade. I mean to your point exactly, I mean we could spend 800,000 or 900,000 and expand the next phase of the mine, spend another $1.5 million, expand the next phase of mine. And at such a known structure that that would work, it’s just when you hit the Chute Zone and a couple of other concentrations like that, you get a little aggressive in mind, you expand it faster.

Shifting gears a little bit to the production side, obviously you, like a number of other companies are looking at cost savings, and any dollar saved is a dollar earned, a lot of people…

Yes.

Is there anything specific or any low hanging fruit you see that or is it really just scalability, as you increase production, obviously your variable costs do come down. What can you give us on that?

Yes. So, I think that from our perspective the opportunities for saving absolute dollars, there is two or three main components. First, we have worked hard through some higher strip ratios and some more -- it’s not -- the word extreme is not right, but sort of the more remote parts of the mine. I was using an analogy the other day. It’s like we’ve been mining the monster seats and the bleachers at [San Luis] Park and now we’re heading into left in center field.

Yes.

So, the strip ratios and sort of the haul roads and the logistics of the mine are going to get much, much tighter and more compact going forward, okay? So that’s number one. Number two, we really just completed an almost end-to-end assessment of all of the operating expenses, be it fixed or variable in nature and identified over $2.5 million of ability just to streamline and reduce. The third thing is that our crusher has been performing very, very, very well. And we stress tested the system from August to November. We had a dual shifted running fall, and we’re confident when we go upto the higher levels that the previous gentleman was asking about, it could handle it. But right now the crusher can actually handle all of our tonnage with one shift. So, we’ve just downsized the [passing] there too. So from fixed cost to sort of logistical sort of and strip mining efficiencies to then just normal efficiencies, I mean when we said we look end-to-end, we look at [higher ware] with the years worth of experience, we look at literally the stemming and packing of our blast holes. We actually ran a program at the end of last year when we were expanding heap leach pad to create our own stemming rather than buying it externally. So, I think we’re going to start to see the benefits of frankly having a year under -- of experience under our belt, probably a year characterized with having to get over among conventional hurdles like the BLM haul road and some experiences with the ore from the resource model to the reserve model. We worked in [muscle drawl] of those and now we’re really focusing on the lowest possible cost at each stage of production.

That makes sense. And the final question was when you are talking about guidance for 2014 and into the press release 40,000 ounces what gold to silver ratio are you using to get that number?

We are still seeing -- we actually did better than 10:1 and -- but we are using a 10:1. The mine -- it’s interesting that we average better than 10:1 throughout the entire year. And Lucerne floor actually has some higher silver to gold ratios but we are staying with 10:1 as we project forward. The metallurgy -- our metallurgical results which I mentioned briefly in the call, were one of the most important things that we validated in year one. The gold, it’s remarkable but on average, you get some pluses and minuses and the variation but on average, the gold totaling up almost to our original column testing of about 68%, the silver has done better. So we’ve been yielding better silver in terms of the overall processing.

Okay, good to talk to you. Talk to you soon.

Thanks again, Jeff. Bye, bye.

Thank you. Our next question comes from Carl Frankson, private investor. Please go ahead.

Hi Corrado.

Hi Carl, how are you?

Good. I had some drilling questions but most of them have been answered in terms of Dayton, Lucerne, Chute and what not.

Okay.

What about public reporting? In years passed, you would put out here is a 20 holes that we drilled, here is the mineral intercept at various levels and everything. It was pretty exciting, if you kind of -- you weren’t updating a 43-101 or anything like that, but you were reporting mineralization. And it was pretty exciting for the stock, and a lot of times the there’d be some pretty good movements based on drill results. Will there be any public reporting to that or we just have to wait for 43-101 update next year or…?

No, it’s a great point, I am glad. And thank you for bringing it up. So just two things, first of all, I know that most of 2013 was dedicated to production. And I’d like to give some color on that too as I answer your question. It’s interesting -- as we went from our resource model to our internal reserves and mine plan to starting the mine, some of the outer perimeters, sometimes the estimates hold up, sometimes the estimates don’t hold up. Initially this year, we had some disappointments in the Hartford which is also our grade area of the mine. We are getting some exciting discoveries as we get into the details of the Justice especially grade. And then Lucerne is proving out to be very, very robust, stable. But the point is that, we were mining, we were mining, did some infill drilling, we got a tremendous amount of intelligence from our blasthole assays. But just the nature of the beast was we refocused the effort on mining, and we just had less drilling, substantially less, I mean almost none to really report on. But to add some light to that comment, our geological team has never been more intimate with the structure as it is now. I mean what we’ve gained in the last year in terms of intimacy of the geological structures is remarkable. And just over the last few weeks with Steve Russell, our Senior Mine Geologist and exceptional professional, Larry Martin, which a lot of you know, we’ve been outlining these structures east. And there really -- even in addition to the Chute Zone, the [soccer] and there is so many these like streaming across -- cost structure in four zones. We’re very anxious to start putting some holes into those areas. And so I guess what I can certainly commit to is that once we start the drill in process, I would say we’re built to report even more frequently than we were before, because we can put context on things very, very quickly. Previously, to your point, even though you are making it positively, we would not only do a full drill campaign, not only get full assay results back, but then we had to do a lot of cross sectional analyses and contexts and then we would report even before the 43-101 accumulated. I would say now, it’s not right to say we have real time context but the context that we have is very fast because we’re anticipating the structures, we’re anticipating the extension of the known mineralization. And we’d be able to report very, very quickly, not only what we found, but what it means. And so yes, I commit that as soon as we start getting those drills going and those results flowing, we’ll be able to give not only strong transparency, but I think faster understanding of what it all means to us.

That's great. We don't have to wait for a formalized…

No, no, yes. That was the Alex's earliest point, the 43-101s are always a milestone, there are big, big objectives and they have a lot of debts and meaning. But the heaps, the grades, the extensions, the structures, we can map out, draw out and context out and communicate well in advance.

Right. So we can look forward to some public announcements before formal things?

Yes, yes.

That's great. My second question is kind of a broken record since I like to ask this every quarter. I’ve heard your breakeven cash flow analysis and whatnot, has there been any equity financing necessary to complete what's on the table here?

We are solely and totally focused on ramping up these grades and ramping up these tons and spending all of mine coming coordinating our organization ore, minimizing the cost and delivering those ounces. That's all that we’re doing. That's all that we're doing and we expect to be more than successful. I really feel like it’s the lot of heavy lifting. It’s a lot of heavy lifting to bring a mine online and I couldn't be prouder of the organization at large, but I really feel like we have to muscle through over and around some new hurdles and I feel like, those are behind us, we're ready to run this mine and we're looking at how do we expand it to the use and how do we expand the resource? So, we have no plans to do that.

Okay. Thanks Corrado.

Thank you, sir.

Thank you. Our next question comes from Jeb Handwerger with Gold Stock Trades. Please go ahead.

Hey Corrado, how are you?

Jeb, I am great. How are you sir?

Great, great. Can you comment on the cash costs considerably went down in 2013, I may have missed it, do you have any guidance for 2014 where those levels are going to sort of settle down at the cash cost? And in general how does that compare to other miners and other producers in the industry?

Okay. So yes, in the first quarter our cash cost let’s say with mining I mean we were just starting out -- we were at a fraction of our permitted capacity which was only 1 million tons last year there were over $2,000 an ounce. We ended averaging the fourth quarter at $989 and that we’ve [gulped] in our sources and uses of that quarter being profitable before CapEx debt and bond obligation. So that was very positive for us. It was really we’re hoping that we could accomplish that before the end of the year. I don’t want to over dramatize it, but it’s very relevant. What we guided to was getting cost below $750 an ounce, but we also guided to some significant cost reductions. So let me say it this way. I am confident that we’ll have the cost that we guided to, but if we can converge the higher run rate with accelerated cost reduction activities, we could be in a very exciting place; we’ll be less than $700. We were running at 40,000 ounces and we’ve fully implemented the cost reductions that we are targeting, we could get below $700 an ounce. We would add just under $200 an ounce for all other administrative costs and if we take the $3.5 million that we set out faster that number could be as lower as 150. So I think from my perspective it puts us in the top quartile without question, but remembering that we are a small operation. So I think it positions us even better than that because the optimal Lucerne operation is not a 1.5 million to 2 million tons of ore, it’s probably like 3.5 million tons of ore, 3 million to 4 million for sure as the range and that sounds like a big range, but it’s really not. Our mine has varying sections to it, it has varying strip ratios. So you are always going to have some combination of a strip ratio to a metallurgical yield to a grade. And so from our perspective, doing 40,000 is important, cutting 10 million is important, processing the grade is important, but the most important thing is just sustaining and growing the cash flow. So we could do more than 40,000 ounces, we could do less than 40,000 ounces, but we are driven to have a real quality of earnings and sustaining it. And I guess what I am saying is that, if all of the best of these possibilities come together, it could be very exciting. But we are comfortable that it will be $750 million an ounce as we progress here in for this mine plan.

Corrado, one last question, you mentioned about this drilling exploration program in this year, has the drilling commenced yet or when will it commence or do you have any targets or timelines that you could -- for this exploration for these high priority targets such as the Chute Zone or the East side of Lucerne or other targets that you mentioned out?

Yes. So we have 12 to 13 months of cumulative Lucerne drilling. We do not have the formal start date. So the key -- I think what we would like to do is stabilize this thing early here, stabilize our cash flows early here in the second quarter, draw victory on that and schedule and proceed forward with drilling. But we have not -- the Board, we have not raise the flag and said go, but we are preparing for it.

Okay. Thanks so much.

The answer to when we finish really is tied to when we start.

Okay. Congratulations, great quarter. Thank you.

Thank you, Jeb.

Thank you. (Operator Instructions) Our next question comes from Dr. Dennis [Boss], private investor. Please go ahead.

Hi Dennis.

Hi Corrado. I am a long time holder, first time caller. And I just, I have listened to you so many times and I am always so impressed with both the depth of your knowledge and your approach. You are really to be commended, I think one area that you should be commended in this, the one that a lot of investors really don’t see because it doesn’t quantify so well and that’s in terms of both your relationship to the communities surrounding you and also building goodwill and faith in your regulators. Those are two really essential things that don’t quantify, but I think you’ve done a terrific job and they are essential to the long-term in functioning of the corporation. And that’s why I want to thank you for that. I also -- I know you have been hedging to do some more exploration and I don’t blame you, but at the same time I also want to commend you for holding off what is probably your greatest desire in order to get the cash flow. I think your priorities have been just right; you are doing it in the right order. I was -- I am concerned of this as an earlier caller had been though about the cost of that exploration program and whether it -- I’ve suffered delusion twice and I’m not anxious to do it again. And I was wondering what’s the chance is that that can be done out of cash flow or with debt as opposed to equity?

Yes. I might think it all depends on how well we stabilize the existing cash, if we get a little more wind at our backs in terms of the market and the gold price; it becomes more and more feasible for sure. We now end -- I think we do have our priority straight, it is frustrating because we know the structure so well. The track record of the hitting mineralization and significant mineralization on almost every single hole that we drill, tells us there is value accretion there with growing ounces, there is. But ultimately that value is [subsentently] (inaudible) its ability to generate cash right. So that’s the discipline that we try to hold and we've done it. Let me comment on what you said earlier. I think Nevada has to be the best place in the world to mine. And there is that little pitch 22 in there. But one of the reasons it is the best place in the worlds to mine, besides its famous geologies, is the infrastructure. And we're I'm actually leading with a group of industry and regulators, a process to enhance the industries and it's not just the mining industries, it’s industries’ relationship with Nevada’s Division of Environmental Protection because NDEP wants you to be permitted, ease for business, ease for jobs, but sometimes here especially in the U.S. we get over burdened by regulation. And so, it's really unbelievable the basis of the conflict resolution, we're working on it that there is no conflict between the need to protect the environment and the need to grow prosperously. And once we were able to verbalize it that way, both sides started moving forward pretty interestingly. It's really not to be understated the effort that it takes to achieve that goodwill, the effort that it takes to sustain that social license, because it’s a difficult extraction process and even good people can make mistakes. So I would say when in the areas where we actually hope to be more efficient it’s almost like we have built a house and now we don’t to need to rebuild it, we just need to maintain it. So a lot of our external relation efforts are they’re increasing in effectiveness but through maintenance not building. In other words the relationships are built, the trusts have been established the powerful way but it’s hard. It’s probably the area that I underestimated both in terms of management time and external cost to affect, but yet we have a quality intangible asset now and we need to leverage it. And that’s why we’ve been more aggressive in terms of land consolidation rezoning because I think if you bump into a miner on the street he is going to know about the Comstock role. If you ask him about it he is not going to question our geology, it’s [intimus]. But if you tell him it’s operating again he might scratch his head and say really, how did they do that. And I am [goading] a little bit because the team has I mean sometimes I mean literally culturally training your drivers to be super polite to always smile, you’re in a community that is a national landmark representing not just the legacy of the state but the legacy of a nation. It was Comstock that funded the north and Abraham Lincoln to keep the union together. It’s a really important part of Nevada’s culture. And so that’s been good for us because people care but it’s been bad for us because we get a disproportionate amount of attention, a lot of attention.

But you proved that mutual trust can be a sort of self re-enforcing thing and it can keep -- the trust can keep increasing as long as it isn’t violated.

The actual, it’s amazing you say that because the actual philosophy that we have is that, if positive result isn’t created on both sides and another way to say it is if mutual trust isn’t established and created on both sides, it’s not sustainable. So in our view it has to be that way to be sustainable which you said just now in a slightly different way.

Let me ask a second question to follow on to something you were talking about and that’s about Nevada. As a regulatory state and as a place to do business I mean clearly to me it is the number one jurisdiction in the world. Of course I am an American so I am a little bit bias, but to help am I here rather than somewhere across the world in the potentially unstable government. I just think -- I was wondering about the institutional base in the past, you talked about what you considered to be an improving quality of the investor base. First of all, our people becoming more aware of the value of where you are. And number two probably more significantly, I am wondering, I am noticing looking at the ‘13 -- from ‘13’s having and increasing looks like concentration of institutional ownership. What percentage are we at, of institutional ownership, just a rough guess, I know you don’t know….

It’s very hard…

And then I just also wanted to know about your partners. You do a wonderful job representing us, but how are we represented in terms of market markers, public relations people?

Yes, it’s goods. So I think -- so first of all, I think we are well over 70% institutional, I would include Winfield Group as -- and the intergroup companies as part of that percentage as institutional ownership which they are. And that’s remarkable because four years ago, we were the opposite. So we built an institutional base over the last four years that is high quality. It’s kind of -- and to answer your question about the increasing of it, we’ve increased our institutional ownership over probably the most difficult two year stretch that you could imagine doing it.

That is right, yes.

Right. So, we improved the quality tremendously, the concentration of quality institutions tremendously, but not the quantity. So although we have many shareholders and many institutions, relatively speaking, we still have a big universe out there to tap into. In terms of increasing awareness, we built that base from sort of let’s say 2011 to -- over 2011 and 2012. We maintained it and it sort of self grew in 2013 while we had our noses to the grindstone. January was almost like everybody woke out of the slumber, like there is a lot of inquiry, even a lot of new names and names that although they are -- you would know them because they are famous institutions, they don’t typically focus on junior miners. So, we’re seeing a broadening of interest. I think that there is a logic to that in two regards: One that the valuations are still low across the whole industry, historic lows, or absolute historic lows; and there seems to have been a turn in January or in the New Year, so people are really coming on now. So I think that that’s all very positive for our prospects going forward. From the market making perspective, I think we’ve struggled a little bit. We need to really -- and part of that struggle, we are getting some quality name banks interested in us, of the highest quality. But all of they are analysts like every single one of them and their mothers on top of it, were negative on gold. So you guys are even at Morgan Stanley and Wells Fargo saying, we love you, but our analysts don’t like gold right now. So, kind of dividing our time a little bit, but I -- that’s kind of a little bit maybe of an excuse. We need to roll-up our sleeves and get some coverage. We got some good guys, [Jeff Wright] is out there, paying attention to us for two to three years very well, and we’ve got some good junior bankers looking our way. But I do think we need to roll-up our sleeves and make that happen, let’s say more naturally in the market than it has been, get some more people dedicated to it. And so, I think we’ve got a little work cut out for us here to do that.

Okay. Just…

But the market conditions should be more receptive now hopefully.

Yes, I feel like there has been a seat change in the attitude, and all of a sudden I think people are starting to look back at gold miners as a potential investment which for -- you’re correct, (inaudible) and for you to build it during that period that institutional support, I think is really commendable and absolutely the way to go; I feel strongly. You said one thing that [catalyzed] now, just got to ask about, you said that you could at this point probably keep expanding the mine without further exploration, a note -- with everything that you know. And it seems like you -- and one of the things I admire most is that your great understanding of the geology of the area. So, I guess, but what makes me wonder what is that critical information that you feel you are missing that you feel you need to do more exploration rather than to raise the value of the stock?

Yes. Let me clarify that point. When you say my good understanding of geology, really our geological team is the core, core competency there. I guess at this point, although the [Dayton] really once removed, ultimately this will be truth for both areas. But in Lucerne, the structures and the structural controls are very strong. And so when we say -- let’s distinguish, let’s verbalize clearly. When we say without exploration, that wouldn’t be synonymous we’re saying without drilling. Okay? So, what I mean to say is that we wouldn’t necessarily have to do $10 million, we certainly would not have to do the $10 million of drilling to sustain, continue the Lucerne Mine. But we would do infill drilling and maybe -- if there is a category between exploration and infill, there is probably step out for development. So infill drilling means, you have solid estimates to the ounces, you have good tight spacing between the data points and you can mine it. And then as you step out and expand the mine and that diminishes, you’d want to do more infill drilling to sure up your estimates as you go. And as you follow that structure, we can do that continuously. I mean any good mine would have some amount of infill drilling budgeted throughout the process. And as you learn, you get a lot of data from the blast assays. But as you learn and then understand the structures and the variations that you had in your estimates or structured, you do drill, you infill drill, you step out drill to solidify that and keep it at a high level of confidence. If you’re mining without that kind of a confidence, I’ll tell you a few things really of expense is, there is nothing more expensive than [hauling waste]. But in our case, you have convergences of structures like the Chute Zone that just have explosive value creating ability. When you find 1 million ounces, you spend $6 million to find 1 million ounces which is what we did in 20 -- who finds ounces at $6 an ounce. So you have the question and so my judgment is A, be capital sensitive always, be accretive in your actions, and understand your capacity. Finite capacity is the most important management consideration other than predictability. So if you have finite capacity, you don’t want to be using it in the wrong areas. So at some point, we would have capacity to be mining and start stepping out the drilling.

I see.

Start stepping out the exploration to let’s say, disproportionally expand that resource. And a cash purest would say be careful, but a junior minor investor usually has that in their thesis.

Great explanation. I again thank you so much. You are doing a wonderful job. I really appreciate it.

Thank you, Dan, thank you so much. Bye, bye.

Thank you. And there are no additional questions at this time. Pardon me, a question has just become available. And this would be from Paul Rankin with VSA Capital. Please go ahead.

Hey Paul, how are you?

Good afternoon, Corrado. Hi, how are you?

Great.

I was calling just to see that you still -- you have the forecast number out there for 40,000 ounces equivalent for next year, I was wondering if there was any change in what you thought the average grade would be from the grade that you had in 2013 is being loaded to heaps…

Yes, I do think that we could see a 50% improvement in average grade for gold. So, we average them, we averaged 0.2 head to the crusher, we are looking at a range of 0.2 to 0.6, although lion heart of it is fixed graded an gram about 0.3 or better in Lucerne area. So, I think that is probably the right number. It could be better as we get more and more into the base of the Lucerne but that’s what we are looking at.

And then is there any change in metallurgy you are noticing yet at this point?

No, we are not. It’s been remarkably steady, we just set up about 13 column test to revalidate, we experienced that we validated so far, because we are getting into different layers of the mine, it’s proven to do that. We have our own internal capabilities to do that. But now we haven’t seen any sort of material deviation.

Thanks Corrado, I appreciate that.

Thanks, thank you so much.

Thank you. Our next question comes from Jack Albright, an individual investor. Please go ahead.

Hey, Jack.

Good morning, Corrado.

How are you, Jack?

Just fine, thank you. Actually you answered most of my questions, I have the list. I mean that’s the reason I like to be last. You mentioned Chute Zone that’s already been kind exciting, but you also kind of snuck in other zones that you actually ran some?

Well yes, we have, let me see if I could just say it, we have this main fault, the Comstock Lode extending into the sourcing fault, which sort of represents the nucleus of our district, 6 miles of contiguous mineralized fault line. Now we have these cross-faulting structures, these northeasterly cross-faulty structures. Typically whenever we drill at intercept with the Silver City fault and northeasterly, we get high grades and thickening high grades. The two things that I said was that the Chute Zone was sort of a combination of that kind of a cost structure, but also that down south of the Dayton and at (inaudible) and Donnington Spring Valley, we’ve had a couple of higher grade discovery hits as well. Not quantified to the extent of the Chute Zone, but highly encouraging. And then on the east side of Lucerne, we have other stringing faults, the [sucker] is one example where there is just very, very high certainty of high grade hits. We will be drilling into those areas when we ultimately do step out of those certain mine and into the east again.

Okay. And that sounds exciting too. When do you think it -- what you’re aiming, what day you’re aiming for…

Well, that’s what I’ve been saying earlier, overall, we have 6 months of drilling in Dayton and potentially we have nine months in Lucerne, ultimately a year program, we don’t have a start date yet, but we’d like it to be in the second half of this year.

For drilling or actually growing assets of the Chute Zone?

No, to commence some step-up drilling of some form, in date we ended the third.

So you don't have a date line for the Chute Zone and you actually begin process and/or going to?

Not yet, no, no. As soon as we -- first thing we'd probably do with the Chute what we'd like to do in a digit of drilling it is actually drop an exploration drift right down into it. That would not only give us a tremendous amount of intelligence between it and where we are, but then it would give us some base to explore from underground.

So that kind of deeper for that or be off (inaudible) to do that type of mine?

It would be, it's about a -- the Chute Zone itself ranges for about 800 to 1200 feet, yes. That's why we're thinking of that, because that would be more efficient than drilling many, many holes from such a higher posture. So that's exactly the kind of the thing we're expecting now, most efficient way to develop the resource.

That will be interesting to watch. Okay. On the zoning issue that you guys are going through the -- somebody filed a lawsuit, is that having to do with the Chute Zone?

No, the zoning which was incredibly successful process got unanimous approval by the county commissioners to [use] them on our property. There are some residents who are not filled by that and then they filed a lawsuit, but we think it's almost impossible for us to imagine and may get an outcome of lawsuit, the commissioners have maximum discretion in two areas, master planning and zoning. So I don’t really think that much of a lawsuit.

Good news. Okay. And my next question here, public offering you’re having more of those coming up?

No I said earlier, we’re very focused on mining, we’re very focused on cash profitability. We don’t have any plans to raise money. We’re just moving forward with our nose to the [grind stone].

Okay. And also on the stock, your stock this morning dropped over $0.10 a share since you’ve been talking, do you have any reason for that?

Maybe they don’t like what I said, but I think…

I like what you said.

It’s a good opportunity for you, Jack.

Right. That’s the reason I’m asking about the public offering because whenever you have one of those prices actually goes down.

Yes. I know that the mining, the [drilling] and mining sector in particular always have this mantra of all these equity raises and I know that there is always an aspect of fatigue that -- and frankly almost paranoia that comes with it, I think that personally when we look back and we did raise capital, but we’ve always raised capital I would say sensitively I think we’ve always raised it timely, we raised it efficiently, but we’ve been building an asset. We’ve been building a land position, we have been building our resource, we’ve been building physical assets above the ground and we’ve been building a team, we talked earlier about building an unprecedented level of goodwill and intangibility. And I think anybody who understands the substance and ultimately the intrinsic value of what’s being created here, you couple that with the potential ounces I mean to have millions of ounces of the highest category having drilled on a tiny portion of two of our seven target areas. When you have validated already continuous mineralized strike, we are not supposing that the mineralization to be six miles in length, we validated it with discoveries at the most suddenly points in the Spring Valley. We have intermediately validated it with the Jennese and with the 14 holes that we did in the northern part of the Spring Valley. We demolished it with 63 hits in a day and over 0.5 million of gold equivalent ounces in a very, very small 60 acre area in the Dayton. So it’s, the potential of what’s being established here, the foundation of what’s being established here is tremendous. Now I know that it’s always relative to various expectations, but I think fundamental core of our shareholder base I mean either people have fives of millions, tens of millions of shares they are not the people that are selling right now.

I don’t think too many people selling; I’d kind of keep traffic, [temporarily] quite heavily. My next question would be on dividends, do you have any idea when you might begin paying those?

No, I think, -- I don’t think, I mean philosophically or of course not close to an ultimate company that had millions and millions of ounces and strong stable cash flow and long mine life paying dividends, we would be first to jump on that. We are not really near that point; it’s not foreseeable for me with the development that it really is going to happen both with expanding the firm and commissioning ultimately Dayton.

According to the expert they claim that your stock might reach $4 an ounce in this close future, you think that’s possible?

Without a question.

Yes. Time rise, I mean I do…

I know, I try not to predict the timing of gold price going up or the timing of our share price going up, but I do believe if we continue to create opportunities for real intrinsic value and then unlock those opportunities step-by-step, you’re going to see something meaningful, very, very meaningful. It might be that some don’t appreciate some of the steps that will required to get here in [fairness] we were delayed on some plans especially when we were going to get air quality permit and when we were ramping up initial production. So I think that it’s moving, it’s moving and it’s going to be moving in the right direction.

I think you guys are doing a wonderful job, I mean you’re really doing. One question, the convention do you have any idea what the base will be on that…

No I think we’ve (inaudible) annual meeting I think can (inaudible) on June 26th, but I’ll ask her to post that up on our website as soon as it’s finally confirmed, but I think it’s end of June.

Okay. And I’ll be happy to see you guys in applying on the tenure again. Okay. I don’t really have any more questions. Just thank you for the wonderful job.

Thank you, Jack. Appreciate the support and look forward to seeing you in the summer.

Right. Thank you.

Thank you. Bye, bye. So [Tracy], are there any more questions then?

Yes. Our next question comes from Jerry [Lennon], private investor. Please go ahead.

Hi Corrado.

Hi there.

And again I want to relate the report sentiments off about (inaudible) like I think you guys have got a great roadmap and you’ve been following it closely. But as the last caller mentioned, I’m kind of concerned about stock prices as well. Today we would -- your average volume stocks down nearly 7% after being down most of the week. Is there something that analyst and investment community was expecting with respect to the fourth quarter that was missed? I’m just baffled given following the junior mining site (inaudible) that they’ve had a fairly good run-up this quarter and sums stock back to almost just slightly above this year-end stock price. So, it's a huge amount of traction this week?

Yes. I guess I would think that the current dip is probably from negative reaction to finance back to the announcement. The only thing I could imagine is that, we expanded the capacity at year-end and then we just to make ounces hoping to ramp up quicker. We have some delays in the approvals of the heap leach, but we did get it done by year-end. We worked this over the higher strip areas of the mine. I think that where we wanted to be in the mine plant, we might have been a month or two quicker getting to these grades and maybe ramping up a little bit faster. But other than that, I don't see any substances negative at all. So I wouldn't, personally wouldn't put any stock in initial reaction. I think that, the sector is turning; I think that gold prices have improved meaningfully; I think there is a foundational reason for it. It's not just of ounce and I think that even at these levels, it's not better if those very well for us. So I'm for full speed ahead.

And last quarter, we had a brief discussion about the fact that you weren't really interested in being acquired by any of the major -- you gotten any inquiries or from one of the majors given all the trouble of date experience in terms of having the inventory?

We’re getting more and more inquiries like and I would just, I want to see that as a blanket not necessarily the majors -- but we’re getting inquiries like it’s interesting, we’ve been getting inquiries from companies our size, we’ve been getting inquiries from companies bigger than us, we’ve been getting inquiries from companies not American. Our file for inquiries is growing. But we haven’t engaged in any substantive dialogue on anything. We’ve been very, very focused on what’s important for us to accomplish.

Right. That’s great. I mean that’s in line with your previous statement that…

Yes, yes. I mean the market seems like its way getting up overall, but for us it’s just a higher rate of charter that we’re hearing.

Great. Well good luck in New York and hopefully your discussions will give us a boost towards the end of the week in stock price?

Yes, I am sure they will. Thank you so much.

Great day.

Thank you.

Thank you. And there are no additional questions at this time Mr. De Gasperis, please continue.

I want to thank everybody for your time and attention. And thank you Tracy for facilitating the call. I will be back in Nevada on Thursday morning. You can always call me directly at 775- 847-4755 is my office number. And we look forward to wrapping up this quarter improving our cash flows and really moving to a solid 2014. Thank you so much.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line. And have a great day.