Welcome to Yamana Gold's Q3 2014 Financial Results Conference Call and Webcast. (Operator Instructions). I will now turn the call over to Ms. Lisa Doddridge, Vice President, Corporate Communications and Investor Relations.

Thank you all for joining us this morning. Before I turn the call over, I need to advise that certain statements made during this call today may contain forward-looking information and actual results could differ from the conclusions or projections in that forward-looking information which include but are not limited to, statements with respect to the estimation of mineral reserves and resources, the timing and amount of estimated future production, cost of production, capital expenditures, future metal prices and the cost and timing of the development of new projects. For a complete discussion of the risks, uncertainties and factors which may lead to our actual financial results and performance being different from the estimates contained in our forward-looking statements, please refer to our press release issued yesterday announcing our third quarter 2014 results, as well as our Management's Discussion and Analysis for the same period and other regulatory filings in Canada and the United States. Throughout the presentation when speakers use the term ounces, they will be referring to gold equivalent ounces, unless otherwise stated. Gold equivalent ounces include silver production at a ratio of 50 to 1. I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12 PM Eastern Time. Replay information and the presentation slides accompanying this conference call and webcast are on Yamana's website. I will now turn the call over to Mr. Peter Marrone, Chairman and CEO.

Lisa, thank you very much. Good morning and thank you for joining us. We take a portfolio approach to managing our assets. And as with any portfolio, some assets perform and some don't and some need more time and care to get there. Those assets that best deliver value and we look at currently or in the near term and near term is a couple of years or less, those are our cornerstone assets, and these are the ones that some of the time, for many of them almost all of the time, contribute toward our goals and plans. They are by and large dependable. These assets are Chapada, El Penon, Gualcamayo, Mercedes, Canadian Malartic and Minera Florida and Jacobina of our producing mines, and in the case of one of our development stage projects, Cerro Moro, that will be developed and in production in the next several years. They are the assets that contributed now or soon will contribute in the case of Cerro Moro, most significantly to production and because of their lower costs or imminent opportunity for cost reductions; they most significantly contribute to our overall margins and cash flow. We rely on these more dependable operations to offset and mitigate the underperformance of other assets, as we determine how to improve those underperformers. Ultimately, we expect performance from our entire portfolio and if not, other actions to improve the portfolio have to be taken. We see the portfolio as a whole, rather than any one particular asset. Now you've heard me say this before. But I thought it was important to summarize the strategy and approach that we take the management of assets. We also seek to evaluate internal and external opportunities to optimize and reposition the overall portfolio, all in the context of balancing production,…

Thank you, Peter. Overall our third quarter results were as expected operationally and include some noise in the financial results that I'll talk to that a little later. Revenues for the third quarter were over $500 million. Revenues were partially impacted by lower sales volume relative to our production volume for the quarter. There were over 18,000 ounces of gold that were not sold in the quarter, but will be sold and contribute in our fourth quarter. Our adjusted loss for the quarter as approximately $12 million or $0.01 per share after adjusting for onetime items. However, we believe the financial performance of our company is better demonstrated by cash flow than earnings. In the third quarter, we generated cash flow of $0.22 per share, after adjusting for reorganization and demobilization costs that were onetime nature. This is in excess of the $0.20 per share baseline established in 2013, despite ongoing metal price volatility and an increase in the share count relating to the Osisko transaction. In the quarter, we successfully focused on our cost containment initiatives and demonstrated continued improvement. All-in sustaining cash costs were $807 per GEO in the third quarter, representing a 7% decrease from the second quarter. Year-to-date, our all-in sustaining cash costs were $829 per GEO and it should be noted that overall costs for production are trending to be better than forecast in our guidance of between $825 and $875 per GEO. When we look at our key assets which is as you know are those that contribute most significantly to production and cash flow, we’ve delivered all-in sustaining cash costs of between $650 and $670 per GEO in each of the first three quarters this year. These assets are producing at a steady low-cost level. This new cost structure that we’ve achieved through…

Thank you, Chuck. Production in the third quarter was in-line with budget with 391,277 gold equivalent ounces consisting of 332,342 ounces of gold and 2.9 million ounces of silver. Copper produced for the quarter 38 million pounds. Cash costs were $492 per ounce and all-in sustaining cash costs were $807 per ounce. Equity production in the third quarter was 18% higher than the second quarter, and we expect to continued production growth in the fourth quarter. Chapada delivered as expected in the quarter. At Chapada copper production increased by 15% from the second quarter, due to the fill-in grade in recoveries and copper costs decreased by 9%. Growth production remained relatively stable quarter-over-quarter. In the quarter there were two significant achievements with the completion of initial development of Corpo Sul which is higher grade and near to surface, (indiscernible) in-pit, and the completion of the in-pit crusher which (indiscernible) enhanced plant throughput going forward. Production in the second half of the year is expected to be higher than the first half, due to these improvements. I will now turn the call to Gerardo to discuss our other South America operations.

Thank you, Ludivico. At El Penon, production of near 117,000 gold equivalent ounces was as expected and in-line with the second quarter and was impacted by higher silver pit grade, resulting in a 16% increase in silver production. Ore production in the quarter was slightly below Q2, impacted by the higher than planned dilution in one of the (indiscernible) stopes due to lower (indiscernible) conditions, though by the second month of the quarter, we’ve completed steps to reduce dilution to planned levels or below including adjustments to the mining and blasting sequences of that particular area. Plant cost improvements were achieved in the quarter, as new mining equipment is being used in the underground mine, resulting in a 10% reduction of the underground mining costs, compared to the second quarter. In the fourth quarter, we expect an overall increase in gold equivalent ounce production and silver grade is planning to increase by 14%, while gold grade is expected to be in-line with the third quarter. We also plan to continue improving the stockpile grades and advancement development and preparations to ensure flexibility at the mine. The operation is well-positioned to meet this production expectation for 2014. Gualcamayo continued its strong operational performance in the third quarter reaching near 43,000 ounces of gold. The mine also achieved 10% higher recovery rate compared to the second quarter through the use of lower stacking heights on the leach pads, in an effort to reduce the leaching cycle and improve permeability. It's important to know the ore from QCC Lower West has a different metallurgy and a longer leach time, compared to the main pit. In September, we completed commission of the conveyor belt to transport ore from the underground mine to the plant. The conveyor belt replaces truck haulage and is expected to…

Thank you, Gerardo. Good morning, everyone. First, Mercedes performed as expected with a 24% increase in production compared to the second quarter. The production increase was due to higher gold grade and we expect that to continue in the fourth quarter. In the quarter, we continued development work on other areas of the mine. We expect ore from Lupita to be contributing to the ore feed in the first half of 2015. And Canadian Malartic, we delivered as expected, a full first quarter of production. In the quarter we were able to increase average throughput to over 52,000 tonnes per day. (Indiscernible) put sustainability higher and up to design level continues to be a focus. As a result of optimization, we were able to get record average throughput over 58,000 tonnes per day in September. We continue to study several opportunities to optimize the asset and expect to provide further details early in 2015. However, I would like to highlight a number near-term productivity improvements underway. We’re advancing a project to improve current crushing and grinding constraint including redesign of the pre-crushing setup. We’re e improving drilling and blasting techniques in the open pit to produce a finer material to feed into the crushing and grinding circuit. Finally, we’re using a loader to manage the stockpile and keep the crusher full at all times which is also positively impacting the all-truck cycle time. We’re very confident the optimization process will help us to reach the target of 55,000 tonnes per day by the end of 2015. I will now turn the call over to Darcy.

Thanks, Daniel. The principle activity for the year at enterprise strategy has been the restructuring of technical services. We’re pleased to announce that we've hired Barry Murphy as the SVP, Technical Services in September and Barry is now firmly overseeing all project development activity including those activities at Cerro Moro, Gualcamayo and looking at process enhancement opportunities at C1 Santa Luz. We’re also actively enhancing the governance structure of technical services to ensure the integration of technical disciplines and cost controls. We've also refocused our LOM process to produce more reliable and predictable mine plans that will focus on free cash flow maximization. Lastly, we continue to provide oversight on new projects to ensure that we focus on and achieve the best possible returns on our invested capital. Barry is squarely in seat and looking at these opportunities as principle focus with the remainder of 2014 and going into 2015. At this point I would like to turn the call over to Barry so that he can update you on some of our current technical services opportunities.

Thank you, Darcy. I'll now give you an overview of some of the major areas of focus for the technical services group at Yamana. We’ve hired engineering consultancy N3, to update the feasibility study on Cerro Moro based on a throughput rate of 800 tonnes per day versus the originally designed 700 tonnes per day throughput capacity. We also are looking at options to further optimize the project's value through alternative execution strategies and throughput scenarios. The intention is to present the project to the Board of Directors for a construction decision in December 2014. At Gualcamayo, a concept study was started this year to identify possible exploitation options for the newly discovered sulfite resource located below the current QDD pit limits. Currently there are 2.4 million ounces available in this resource which can be expanded through further exploration. The study assesses various processing alternatives and mining options and has included some preliminary metallurgical test work. A preliminary economic assessment is planned to be completed in late 2015. At C1 Santa Luz, Yamana has contracted two engineering consultants, Mining Plus and Geco Systems [ph] to assist in investigating various processing alternatives to determine which options will deliver the greatest value from the remaining resource, based on the outcome of these studies, a prefeasibility study will commence in 2015 to begin elaborating the chosen alternative. And finally at Agua Rica and Suyai, we’re overseeing the evaluation of value creating technical opportunities. I will now turn the presentation over to Butch to discuss integration achievements.

Thank you, Barry. The focus of Yamana's $75 million exploration program in 2014 is on upgrading and converting the significant increases in mineral resources achieved in 2013. Consistent with our focus on allocating resources to opportunities that can most quickly contribute to cash flow, our exploration program is supporting the discovery of new high quality ounces at select existing operations. An underlying theme to all our efforts this year is to do more with less. In 2014 we've been able to deliver results with a reduced budget as we aim to become ever more efficient with exploration efforts. I would like to briefly outline some of the significant results that we’ve have delivered in the first nine months of the year. At El Penon, drilling to date reports the replacement of mineral reserves at or above reserve grade. In addition significant exploration opportunities continue to be developed, most notably with discoveries of new secondary structures. These new structures include discoveries of Northwest trending mineral occurrences throughout the property. And a new North-South trending intercept located in the Northeast sector of Penon. At Minera Florida, results are supporting the mineral resource upgrades and expansion, as in-fill drilling is intercepting multiple narrow to moderate width veins in most holes that are at or above reserve grade. At Chapada we discovered an entirely new Santa Cruz target which is Southwest of Corpo Sul. The discovery of Santa Cruz, combined with Corpo Sul which itself was only found a few year ago and Suruca, suggests the potential of a system that is significantly larger than originally planned with the standalone Chapada mine. At Pilar, we’ve been focusing on tightening the drill spacing to increase certainty of the location of higher grade areas. This increased certainty is expected to support more efficiency mining and reduce…

So ladies and gentlemen going forward, we expect a new quarterly production record for Q4 and further production increases in 2015 and 2016. We expect to make a construction decision as Barry mentioned at Cerro Moro by end of year. We will be providing several updates, improvements to certain of our mine plans, the most significant one that I can highlight in addition to Cerro Moro being an update by year-end on the development of these new underground areas at Gualcamayo. Clearly with those robust intersections and already sizable resources it's important to focus on that. One additional thought before I turn the call over to questions, you've heard me say before that we’re committed to returning value to shareholders. And as part of that, we have issued a dividend -- we’ve a dividend policy and have issued a dividend consistently since 2007. This is well before we were the company that we’re today and well before we were generating the cash flow that we're generating today. This is before Chapada was declared into commercial production, given the confidence that we had that we would be able to generate the cash flows required to pay dividends and consistently pay dividends quarter-over-quarter. The current level we believe provides a yield and a payout ratio that is in-line with peers. We’re committed to continuing to pay dividends and we'll continue to evaluate the dividend level in the context of current and expected future cash flows and the conservation and reinvestment of capital. One should not infer from this, however, any challenges to cash flow. With increasing production in Q4 and next year and then going forward, with a greater certainty of those production goals, remember these are producing mines now, not development stage projects, our substantially reduced expansionary capital level next year and what is already a low all-in costs, likely become lower with a reduction in costs for consumables, reduction in G&A as I mentioned earlier in the presentation, benefits of devaluations of local currencies and greater efficiencies; our cash flow is presently impressive and will become more impressive. We’re reflecting in our dividend an emphasis to increase cash balances in our treasury. While we give a yield and a payout at more modest levels but consistent with peers. And with that, ladies and gentlemen, I will open the call to questions.

(Operator Instructions). The first question is from Andrew Quail of Goldman Sachs. Please go ahead.

I've just got a couple of quick ones. Just on the Geo, obviously you guys use to 50 to 1. And this year it's obviously been a lot higher end, so you're averaging 65 and some (indiscernible) too. When will you guys sort of revisit that for your cost and production guidance? And sort of for me, it's about, round about a 5% sort of impact. Is that something you'll visit in 2015 or be more conservative?

Andrew, you've preempted what I wanted to give as some final closing comments after questions. So perhaps I'll address it now, as part of our effort to create more efficiencies, we’ve been looking at that Geo ratio. We've been looking at Geo and the applicable ratios. We’ve applied a fixed ratio historically and it has been for several years of gold to silver. But we've been listening to our shareholders and to analysts such as yourselves on looking at ways to simplify this, changing the ratio quarter-over-quarter leads to anomalies as you've heard me say before, in comparisons. Although clearly, it better represents gold equivalent production quarter-over-quarter based on the actual ratio rather than an implied fixed ratio. It will however, create as I mentioned anomalies in comparisons. As you know, we provide gold production, silver production and copper production separately. The GEO was intended always to be just an easy reference point. But effective in 2015 we will adopting a different approach and we are evaluating the different approaches that we think delivers the best transparency and is the easiest for our shareholders and analysts and others to evaluate. We will always report the three principle metals by production separately, as we’ve done in the past and as we're currently doing. But we'll take one of the following approaches and we're just evaluating that now. We welcome any insight that you provide to us. We'll stay with the GEO, although with an actual gold-to-silver ratio quarter-over-quarter or perhaps annually. We will report gold only and silver only without gold equivalent. In that case, as you know, we apply copper as a byproduct credit or we will report gold only and apply silver and copper as a credit. This is a simple approach. It means showing only our gold production, not gold equivalent and not silver as a gold equivalent in production. Although clearly it would be at much better costs because silver would be taken as a credit. In all cases, what we're trying to do is to provide a simple measure for our production and costs, on a per-ounce basis that is easy to compare quarter-over-quarter and provides the best and most transparent representation of production and cost quarter-over-quarter. So we’re looking at that now. We would implement that in early 2015.

In page 6 on your release, in your last paragraph, I think you sort of allude to that you made -- and actually give three-year guidance. Can you sort of comment on production guidance?

Well, we have historically given one-year to two-year guidance. We’re adopting a different approach, as we complete the evaluation of all of our operations, have a more refined approach to our development stage projects. That will give us more comfort in terms of being able to say -- there is life of mine plans and shorter term plans, but it will give us more comfort on what we should expect by way of production and costs for our various operations. And so on that basis, what we're anticipating is that we'll be in a better position than we've been in the past with those new mine plans, the refinement to those plans, the refinements to our development stage projects, Cerro Moro being the most immediate. It will allow us a better opportunity to be able say; this is what you should expect over a longer intermediate term, taking ourselves from a 1 to 2 year horizon, to a three-year horizon. That's what we plan to do in early 2015.

And last one, just I think probably will be asked, just on the Brazilian assets, specifically the non-core. Is it easier or are you seeing sort of -- what's the trend? Obviously you can't give too much. But what sort of trends are you seeing with sort of any sort of correction in metal prices? Is it more favorable or less favorable to offload or try and divest? And is it easier to package them up as one or are you trying to sort of look at them as individuals to try and divest?

All or none and all of the above, Andrew. I think the best way to deliver value is you've heard me say before is flexibility, recognizing. The first step is to try to make an operation perform; take the time to be able to do that. I've said that on several calls. What follows from that then is to make sure that we protect that mineral inventory. In the case of C1, that is why we took the action that we did on putting it on care and maintenance, while we develop a better metallurgical plan. Whether or not we sell these assets will depend on how they fit into the portfolio. I want to be sure that I'm very clear on the approach that we take on portfolio management. Portfolio management for us is if an asset is a comparatively small asset, Fazenda Brasileiro fits into that category. It's comparatively small, still delivers to our cash flow even though it's been in production for many decades. Some would say it doesn't fit into the portfolio of Yamana, but it takes so little time to manage it. It's self-sustaining and self-sufficient, that we would critically look at it and say, why not keep it in the portfolio. It continues to produce. So we look at it from the perspective of what management time is required. Can it be better deployed somewhere else? And then ultimately, what capital needs to be deployed? And can that be better deployed somewhere else? That is an important part before coming to any conclusion on the sale or disposition of assets. But should we come to that conclusion, I think it's important to also say that we want to make sure that we've got it right, make sure that we have packaged it correctly and making sure that we see the upside, so that we can properly reflect its value and deliver that value to our shareholders. Presently, I think that we can improve on the carrying value of those three assets in Brazil and that's what we're evaluating and in the case of C1 Santa Luz, that's one of Barry's tasks to see what the proper metallurgical process would be. Once we have completed that program then we'll evaluate, are they responsible citizens so to speak, in the portfolio. Not requiring a lot of management time or are we better off to sell them. And we'll look in that context at do we do it as a package or do it individually. Who is best suited to be able to provide the value that we're trying to get from those assets?

Thank you. The following question is from Adam Graf of Cowen. Please go ahead.

Just a couple of quick questions; one on the currency, you mentioned it briefly. We’ve seen significant depreciation in the Mexican peso, the Argentine peso and the Brazilian real. And I just haven't seen it come through on the cost side. And I was curious if that's a lag impact from your currency hedging and if we should expect to see the benefits of those depreciating currencies going forward into 2015.

Yes. I believe that we should, this is a bit speculative, Adam, but I think the answer is yes. We're not factoring that -- our assumptions as we complete our budgets to the end of this year and as what we'll report in our guidance next year and the years to follow. We'll take a more conservative view on what to expect out of currencies, but there is a lag effect. We recognize that. But we also recognize that there is higher probability today than there was in the past on devaluations of the currencies in the countries in which we operate. We have begun to see it on the Canadian dollar for Canadian operations. We are beginning to see it in Chile. We've begun to see it in Argentina, we certainly think that that is going to become more evident in Brazil as well. On the question that you asked about our currency hedging, we have hedged as you are aware, only our Brazilian reais and that really expires this year. So 2015 is a fresh start for us and it will coincide with a period where I think there will have to be some adjustments to those currencies and certainly the inflation rates in those countries suggest an adjustment to the currencies. The pundits are saying that there has to be some adjustment to those currencies. What we've done in our budgeting presently is we've said we’re assuming the high end of the inflation rates for our cost structure, but the low end of expectations for the currencies. So we should be able to get some windfall as the currencies devalues into next year and the year to follow. The Brazilian reais and the Argentine peso are the ones that I believe likely would have the greatest level of adjustment to currency, certainly over the course of a period of time, say of a year to a couple of years. And the inflation rates in those countries are suggesting that that would be true.

Yes. And while those currencies depreciate, are you guys able to hold your costs, your local costs in place and fight the inflation?

As you know, there is this seesaw and this balance between inflation and the currencies, a rapid devaluation of a currency runs a risk of a rapid increase in inflation. But I believe that in the countries in which we operate and in Brazil and Argentina in particular. I believe that the inflation level is forecasting what to expect out of the currency and not the other way around. So if we are assuming presently and into our guidance for the years to follow, a higher end of inflation, but the lower end of currencies. Then I should think that we get the windfall of the improvement or cost structure when the currencies ultimately do adjust. It's not a representative market in Argentina as an example because the blue market in Argentina is a very thin market. But the blue market is at 14 pesos, whereas the official currency is at 8.5. So there is a lot of spread in between, and I believe and certainly many who are far smarter than I'm -- are taking the position that it is likely that that currency will devalue to somewhere between the current level and what the blue market is forecasting at 14 pesos to the dollar. That provides a huge windfall to us on our cost structure and also on the development costs for Cerro Moro. While we've already taken into account the inflation rate at the high level.

Yes. I was also curious on your view of our Argentina and is the environment there improving as far as the inflation? And clearly you guys are willing to go forward there.

Argentina is -- I have perhaps become a proponent of a very positive view for Argentina, certainly over the intermediate and longer term. But I think there's good reason for it. When we look at the impressive potential for mining and for oil and gas one of the largest, if not the largest shale gas and oil deposits in the world. When we look at a willingness of a government to bring investment into the country in order to exploit these efforts, if you look at what we've done with Agua Rica with the national government support and the provincial government support, this mining district that we've created. One very rare, never been done before in Argentina, when we look at that willingness to create mining enterprises, oil and gas enterprises, encourage investment into the country. When we look at Argentina as having settled with the Paris Club, settled with 96% of those bondholders with the default that occurred in 1999 to 2001. When we look at all of these things, these are very positive things that are taking place. The reintroduction of a new inflation index that is supported by the IMF, I believe if the country is taking steps that are important steps to re-encourage itself -- to reingratiate itself into the international community. What is interesting about Argentina is that Argentina is technical default today because of a judgment in the United States that relates to holdout bondholders. It is a technical default, but what is particularly interesting to me is that unlike many developing parts of the world, it has zero investment internationally into the country and a lot of international investment trillions of dollars of international investment are looking to come into the country once this default is settled, it is a technical default. It means that they have to settle with these bondholders. They have to deal with this litigation and judgment in New York. But once that's occurred, it seems to me that Argentina is on a good path to reinvestment back into the country and we will be a beneficiary of that as a result of the assets that we already own in the country that we bought at very low value.

You see Chile heading the other way with this tax judgment?

Our Chief Financial Officer, Chuck will tell you that the protection of earnings is sacrosanct and he will likely say, which is a good thing that you should always try to maximize earnings and maximize cash flow and it's understandable. I take this view on what's happening in Chile. Clearly we've prefer to pay a lower tax-rate, but equally, it seems to me, as a businessperson, rather than as a tax consultant or as an accountant, it seems to me that what Chile is doing is trying to harmonize the inefficiencies in its tax system. So while it means, it implies that we will paying a slightly higher tax, we will have less opportunity to defer tax; it also creates greater efficiencies. My hope is that that then gets applied to improvements in infrastructure, power being a principle one and that it ultimately means that our cost structure will be lower. We're there for the long term. These assets are long term assets and I think ultimately we will benefit from that.

Thank you. The following question is from David Haughton of BMO. Please go ahead.

Peter, you spoke about some structural improvements at a number of mines. One of those that I would like to just explore a little bit further would be at Chapada. Could you just let us know what your expectations are of the cost improvements or benefits of the crushing and what the grade uplift could be for Corpo Sul please?

Now this, in order to keep the production at the same at Chapada. We’re using a larger amount of explosives to reduce the size of the material that (indiscernible). We expect that in future crush we are most certain, when we have in-pit crusher run that we can reduce this blasting factor around 50% and we’re going to keep because in-pit crush is going to reduce that. That's going to be one of the savings. The other saving that's really on the side of the in-pit crushes is related to reducing the hauling distance and is nearby the Corpo Sul area, hauling distance is longer. We expect for next year to have improvement at least around 3% on the feed rate of the (indiscernible) the plant throughput and with that all the cost is implicated on that.

And David, if you were referring to what I mentioned in terms of certain additional optimizations, we're looking at a regrind opportunity that exists at Chapada that would allow us to be able to -- again it's early stages we're just evaluating it, but to improve the recovery rates at Chapada--

Regrind on the con, Peter?

Sorry?

He was asking if it's a regrind on the concentrate.

Yes, that's two different things. We do have a regrind on the concentrate that we’re not going to change because it keeps it the same, but what we plan to do is a regrinding within the ball mill. That means you have a finer grinding on the grinding section and we expect with that increase, both copper and gold recover. We’re certain because with the testing we did, we see a lot of improvement by doing this regrinding here. I mean having a finer grinding, not on the concentrate but on the material that's sent to the (indiscernible).

Thank you. The following question is from Tanya Jakusconek of Scotiabank. Please go ahead.

Peter, I'm just having a bit of difficulties understanding the cut of the dividend and maybe just explain. Usually it takes Boards a while to decide on a dividend rise or a cut and when you look at your company, most of your CapEx spend is behind you, you're growing your production into 2015 and 2016, you see your cash flow flowing. You’ve one of the lowest all-in sustaining costs and going lower, that doesn't seem like a position of a company who should cut their dividend. So maybe you can help me understand that.

As I said in the presentation, one should not infer from this that there is any risk to our cash flow or to the generation over the course of -- into 2015 and 2016 and the years to the follow. But we expect to be improvements to our free cash flow. Part of what we are saying is what is a dividend level that better reflects the CapEx needs of a company, the risks to metal prices. I'm a big proponent and big believer that gold price is sustainable at these levels and likely will increase and increase far more dramatically than people think, but in managing a business, we also have to look at the downside scenario. And in the downside scenario, what would be a sustainable dividend that's something we can afford to pay and would not have a negative impact on our ability to complete capital projects such as Cerro Moro such as Gualcamayo that we see under the horizon in the next couple of years. Part of the analysis was also what is our yield presently and our payout ratio by comparison to some of our peers and we were well in excess of peers. And some might say, well why not? That's the kind of cash flow that you're generating. But part of risk of analysis was also -- and this Board of Directors took the past several quarters from the beginning of the year to come to this point. Part of the analysis was also, what level of cash balance issue should we be maintaining and over what period of time. We expect to increase our cash balances, that's the objective to this. As we increase those cash balances, we'll come back to the question of what do we do with our dividend. Chuck showed in his presentation a very, very manageable debt in this company. But equally, we think that we can make it more manageable. We think that increasing our cash balances gets us to a point where we’re a better company from a balance sheet point of view and that's the time to evaluate what we do with our dividend going forward. Those are the reasons that we undertook this effort. It was not something that was done over the course of a day or a couple of days. We've been evaluating it, looking at the build-out this year, where we were with our debt this year, where we expect it to be with our build-out next year, the cash balances we'd be building into next year and the year to follow and where we wanted those cash balances to be.

No and I appreciate that, because I know Boards take time to change a dividend. Is it then fair to assume that with your focus on increasing your cash that maybe your focus on M&A has increased over paying out a dividend?

Well, when we bought Cerro Moro, with the purchase of Extorre in 2012, you might remember that we did that almost entirely with cash and what I said at the time was that we intended to rebuild our cash balances. In early 2013, so several months really after that acquisition, I think it's fair to say that as industry we were somewhat blindsided with a 28% drop in gold price almost overnight and certainly over the course of a few weeks. And so what that meant is that the rebuilding of those cash balances that we had used on the purchase of Cerro Moro would take a little bit longer to do. And all we're doing is we're reflecting that in the context of risk reward, in the context of where gold price is where we think it might be, but also the risk on the downside. We think that it's prudent to reinitiate that plan that we had in 2012 of rebuilding those cash balances, that's what we're trying to do. And to go to Tanya's [ph] point, I mean this is something that was not done overnight. It's something that has been in contemplation, in discussion, in evaluation for many quarters. Again, it's not a secret that as we completed the build-out this year we've increased the borrowing on our credit lines. It's still at very manageable levels as Chuck mentioned, but we've increased quarter-over-quarter the borrowing on our credit lines. And we think it's prudent to build those cash balances and pay that down. That's part of this, while at the same time paying a dividend to our shareholders. And interestingly, when we look at $0.06 per share if we look at the progression of the dividend, it is at the level -- and that's per year -- it's at the same level that it was at when we started to get the run up in gold price several years ago. So if gold prices just stay flat at $1200 per ounce then that dividend is reflective of where we were before the run up in gold price when it got close to $2,000 an ounce.

Thank you. The following question is from Don MacLean of Paradigm Capital. Please go ahead.

I appreciate how difficult it was for you to say you know, some of those things you were about the operations that didn't work out in Brazil, Peter. I think we all appreciate that and then all the steps that you've taken people-wise which can be quite difficult as well. It would be helpful if we know what the carrying value was now for C1, Ernesto and Pilar and I guess you and I have had differing opinions about Jacobina. Maybe you could touch on or Chuck could touch on the risk of any potential write-down on that asset. And then I guess lastly on a personal note, but I know I speak for a lot of other analysts that are on the line, I think we all want to wish Ludovico a great retirement. We've all appreciated his insight and comments over the years and his personal touch over the last eight years. So all the very best, Ludovico.

Don, that's very kind. And we appreciate that. I will pass the call to Chuck to deal with the carrying values on those assets. Then perhaps I could come back to our views on Jacobina.

Yes, it's in the MD&A. We have disclosed kind of the magnitude of the write-offs by mine and the net book value after the write-offs. On C1, we’ve a remaining book value of 70, EPP 30 and Pilar 350. We went through a very rigorous process of cash flow modeling, assessing what the recoverable values are. We think we've been very conservative in that process. I think we're comfortable with this carrying values that these assets are worth at least this much and that we can realize these values either through future cash flows or as we talked about earlier through a process of potential sales.

You were very candid, Don, in saying that we’ve had very good discussions, you and I, for me very eye-opening in many ways. I have often disagreed with you, but I have come to at least a better appreciation of certain things as a result of our discussions, so I thank you for that. And that discussion on many occasions has been about Jacobina. And as I said in this presentation, Jacobina is an outlier in the category of cornerstone. But I think we need to highlight certain things. First is that it is a complex of mines. Secondly, is that is a complex underground operation. Thirdly, is that its grade as an underground, we have been mining and processing at less than 2 grams per tonne. It has been 1.7 to 1.8 grams per tonne. We have a reserve grade of 2.8 grams per tonne. We’ve areas that are in excess of 3 grams per tonne. What has been the challenge at Jacobina is the complexity of the mining. What has been a challenge at Jacobina is doing the development work to get into higher grade areas. I will highlight some further challenges with Jacobina. Efficiencies, the level of sustaining capital to do development work as I mentioned, but efficiencies is also important. We’ve in several of our operations, 12-hour shifts for underground mines. In this particular place we have six hour shifts, that means that someone is at a mine face for about four hours. That is a legislative requirement in the state of Bahia. But part of what we need to consider is how do we make it more efficient so that we can better take advantage of that six hours. Can we come to conclusions with state authorities that there's a way to do this that…

It is a big resource, but clearly complex. Those situations usually benefit from more intellectual horsepower and you've done that, so all the best with it and all the best, Ludovico.

Ricardo Solovera is the point person. He is one of our vice presidents. You might remember Ricardo for many reasons one of which is that Ricardo was our general manager at El Penon. Ricardo was instrumental and part of the effort. A significant part of the effort that took that mine from 370,000 ounces to 460,000 ounces, Penon has made far higher grade than Jacobina, but has its own complexities and he was very successful there. We think that he will bring that same level of intellectual property to Jacobina and we should be able to get the benefit of that and that will coincide with Barry's efforts on looking at how we can improve development, with Daniel and Gerardo's efforts in making sure that we can make the operation more efficient, save costs. Some longer term projects as I mentioned for example, the shift work that would require more evaluation of what to do with governmental authorities and of course with the effort that Butch will undertake on finding new ounces.

Thank you. The following question is from Dan Rollins of RBC Capital Markets. Please go ahead.

Chuck, I was wondering if you could circle back to the comment you made regarding the secondary tax in Chile. I guess it would be for the repatriation of dividends.

Sorry, Dan. You're going to have to speak up--

The part two tax in Chile.

Okay.

The mark to -- yes, you said you could no longer defer that. One, I would like you to confirm first of all, you’re currently using intercompany debt to repatriate funds out of the country. And two, when do you expect you might have to start paying that secondary or that phase two tax in the country?

Yes, the reform package is structured in a transitional way. The end of that transition period is 2017. When you get to 2017, there are two ways you can elect to pay your tax in Chile. One is at an attributed basis and one is a semi-integrated method. Under the first, we would just pay 35% fully on an ongoing basis and then the semi-integrated. We would pay 27% on a kind of cash basis and then 8% would effectively get paid when there was a distribution. Under the new rules, there is nothing under the rules that compels us to repay and repatriate loans that we have made out of Chile that's allowed us to defer the payment of the category to withholding tax. There is mechanics in the new legislation that will deem an income on the loans outside of the country which is the aspect that, on a going-forward basis, restricts our ability really to defer that category to tax. I think there is various aspects of the legislation and our ways to deal with it in an effective way that is still subject to review and investigation.

Okay, if I were to make an assumption, I'm sorry. I'm not too familiar with the tax situation here. But should we assume as of the end of 2017 that you would go with the semi-integrated method where we look at cash tax of 27% go forward and then 8% when the company deemed a distribution necessary?

That's correct. It's one of the two methods. The other method would be the attributed method, whereby we would pay 35% just on an ongoing basis and we've mentioned that we're still evaluating the tax and part of that evaluation is when we get to 2017 which of those two methods would we choose.

Okay, and then maybe just to have a broad stroke, so we know just something to model going forward Peter, with respect to Ernest-Pau-a-Pique and Pilar, what type of steady state production should we, the Street, be assuming on an annual basis? And what type of all-in sustaining cash cost would be a good estimate to use on a go-forward basis?

We expect Pilar to be at a level 60,000 to 70,000 ounces per year. We think that we should be able to increase that, mostly coming from Maria Lazarus and we will better evaluate that at the end of the year. What we said in our MD&A and financial results is that we anticipate being able to take it from in the range of 70,000 to 90,000 ounces per year. We are still evaluating the cost issue and how we can get efficiencies and optimizations. Presently declaring commercial production, as you’re aware, is a technical aspect. An accounting requirement under GAAP under IFRS, once an operation has reached a certain level of technical proficiency not necessarily a businessperson's reflection of profitability. So presently we're still at a cash cost structure that is high and where it's below the gold price, but an all-in cash structure that is higher than the current gold price. We anticipate being able to improve that by the end of the year and have a far better handle on where it will be 2015, 2016 and the years to follow by the end of this year when we give our guidance early next year. What we've said in the past is that we are looking at all of our operations to have a cost structure all-in that is not higher than $1100 per ounce. That's what we're working toward and we'll see if we can better improve that. A lot will depend on our efforts on Maria Lazarus and what we see as a smallish, but clearly a windfall, because of the orientation of that ore body, the grade and our ability to mine it.

And then Ernesto-Pau-a-Pique going forward?

In Ernesto-Pau-a-Pique we are getting about 20,000 to 25,000 ounces per year. I would anticipate that that would increase into 2015 or 2016. Clearly it fits into the category of when we can sell it and if it's a good price to sell it, we likely will. One of the things that is important on Ernesto-Pau-a-Pique is that it's not just about that production level that's so modest by comparison to the size and scale of company that we are, it's also a very large exploration opportunity especially Ernesto-Pau-a-Pique is the open-pit Ernesto and the underground Pau-a-Pique. There is a potential for an underground below that shallow Ernesto pit that needs to be explored. It is not within our present thinking to spend exploration dollars on that because we’ve better use of exploration dollars, but I think that that could provide a good opportunity for someone else.

Okay, and then just quickly moving on to Gualcamayo. I realize you'll be providing some information later this year or early next year, but how much of the current reserve would you deem refractory in nature or sulfitic that you would need a mill to get the true recoveries? Or is it really that all coming from the drilling you've discovered here?

There is currently no reserve that we deem to be refractory. All of the reserve that currently exists at Gualcamayo can be treated by the current plants and facility or the current facility. Right now going forward on the resource basis, most of that carried in that inferred category. We're looking at about 2.5 million ounces of the resource that would be deemed treatable by another mining method. I wouldn't call it refractory or another process method, sorry.

You mean like a conventional CIL or CIP type circuit?

Right now we are looking at various alternatives. I don't want to nail one down right now. I think it's preliminary. But it would not be anything out of the ordinary as far as a process technology goes.

And then just in the current reserves, is it safe to assume a similar recovery of all the ore in the reserves versus what we're seeing today?

It's going to depend on what mining method we settle on, Dan, and that is currently under study. I think we'll give more guidance to that at the end of the year. Barry is leading that charge right now. He's just getting his feet wet on it, we're looking at different mining methods than we typically use, but it's not anything different than what we're currently doing at QDD Lower West as far as a sublevel cave or a sublevel stope. We're looking at those same methods.

Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Marrone.

Well ladies and gentlemen thank you. We've taken up a lot of your time and I know that there are many other calls that many of you want to get onto. So we thank you for your time and we look forward to catching up again on our next conference call.

The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.