Agnico Eagle Mines Ltd (AEM) 2003 Q3 法說會逐字稿

Good morning ladies and gentlemen and thank you for standing by. Welcome to the Agnico-Eagle Mines third quarter results conference call. At this time all participants are in a listen-only mode. Following the presentation we will conduct a question and answer session, instructions will be provided at that time for you to queue up for questions. If any one has any difficulties during the conference, please press the star followed by the zero for operator assistance at any time. For the live web cast please go to Agnico-Eagle at www.agnico-eagle.com and follow the links. I would like to remind everyone that this conference call is being recorded today Thursday, October 30, 2003 at 11 O clock Eastern Time and I would now like to turn the conference over to Mr. Sean Boyd, President and Chief Executive Officer. Please go ahead, sir.

Thank you operator and good morning every one here in person and those that are listening on the telephone or on the Internet. For those of you that are on the phone that have access to the computer it would be helpful if you can log on to our website at agnico-eagle.com to view the slides. We will be talking to the slides and it would be quite helpful if you can see the slides, they help to illustrate some of the points and go through some of the challenges. What we like to do is present an overview of the quarter and the future outlook for the company, we'd also like to provide you with a detail review of the challenges we have faced and how we have addressed those challenges and we would like to take you through our regional growth strategy and provide you an update on those opportunities and how they have progressed in the quarter. This slide to open up with obviously another disappointing quarter in a very disappointing year for us and all though we have made steady progress in resolving some of the operating issues at LaRonde, this progress has obviously been much slower than we had anticipated or expected. We are taking the necessary steps though to ensure that LaRonde will become a strong cash flow generator for many years and as you'll see, we are in a position despite revising our forecast for the future, there is some offsetting revenues that is may not be apparent in the story and we will go through that today and that will give you a better sense that when you look at the headline reduction in the gold production that this will be a profitable company and this mine will generate significant cash flows as we go forward. But despite the operating challenges, we have not stood still as a company; we have made very good progress and advancing our regional opportunities in and around LaRonde. We have increased our gold resources; we have improved the prospects for building a multi mine platform in northwestern Quebec along these two major gold trends. This is our Safe Harbor statement, which is a standard Safe Harbor statement that is presented in every presentation and just highlights the fact that there can be no assurance that the statements in this presentation or actual results, will be accurate. There are certain risks and uncertainties with any forecast and just put that out there for you this morning. I like to go through a bit of a chronology and talk a little bit about the challenges, which is really a recap of operations for the last year and that experience has caused us to take a different approach to the way we will mine the deposit going forward.

So this is a bit of the background. As you know, going back even to the last half of last year, our major issue at this mine was not having enough development in place to get the lower level mining blocks out as fast as we had anticipated. As Ebe will show you in his part of the presentation, our development is ahead of schedule, we've got essentially all the mining blocks we planned to mine in the fourth quarter all redeveloped. On the infrastructure side, in the first half of the year, we were less efficient because we didn't have the availability of the underground crusher system, which is now in place and is functioning, has improved the efficiency and also improved the ore flow along the lower levels. Added to that, in the third quarter was the lower level ramp system, which now gives us much more flexibility in moving man and equipment among the levels, which should help us going forward. So we've addressed that issue. On the rock fall issue, which was an issue, which began to hamper us in the second quarter, we have completely backfilled that area. We have mined in the immediate vicinity of that rock fall area and we are having no continuing or ongoing effects from that rock fall. So these were the major challenges that we have adjust in throughout 2003 and we've successfully met those challenges. As we move forward into the third quarter, we had a different challenge as we identified in the July conference call, on the second quarter numbers, which talked about an inability to get and extract the mining blocks as quickly as we expected, due to some drilling challenges. We have addressed that. We'll talk about what we've done to deal with that.

The other issue is dilution on level 194. Although we extracted all the blocks we intended, as you will see in Ebe's presentation, we did have slightly higher dilution in that particular area. But that was offset by much lower dilution than we expected along the 215 level. One of the things that caught us a bit off guard in September was the grade reconciliation between the mill and underground and that required an enormous amount of work to work our way through, because we had to employ a large scale sampling program, and Ebe will get into the detail, to isolate the problem in the mill. And it's not a metallurgical issue, it's a operating procedural issue, which carried into the early part of October, but based on the latest mill sheets, we are getting the grades that we expect out of the mill that the underground is telling us we should get. So we've really dealt with those. The response, in a little bit more detail on the blasting and extraction technique, is we tried several things.

In July, we didn't have the answer; we didn't really have the answer through August. The solution is, appears to be now, is a bigger slot rays, a blasting of the entire block rather than as a series of four events and Ebe will go through how successful that's been. It's been actually quite positive and it's the best way to proceed we think at this point. So that's improved the cycle time going forward in to the fourth quarter and the next year. We talked about the sampling and grade, tonnage audit that which was conducted and was led by John Roberti (ph) who is our expert on metallurgy as we say. It is not a metallurgical issue, it is more of than operating issue that appears in the second half of October to have been resolved. So, we continue to meet those more immediate challenges that appeared in the third quarter. As we sat at the mine last week and looked at sort of the start of the planning processes we went forward, our experience over the last year has really dictated that we should take a much more conservative approach. As a result of that, we've revised back our quarter four and 2004 goal production estimates. But what is not really apparent in that revision, when you look at it on the surface you would say, okay let's reduce the goal production by - revenue stream by 20% or 25%. There is an offset, because there will be significant quantities of byproduct metal production, predominantly zinc and silver and maybe minor amounts of copper, that will offset that. What will also be an offset in terms of total cash flow would be a lot less development. As most of you know, the three major mining horizons at the deposit are on 152 and above, where we have basically all of the development done. Those are very large stopes some of them in excess of a hundred feet thick. They contain high-grade zinc and higher grade silver. Basically what we've done is we've said in a rough sort of way, instead of taking roughly 6000 tons from the lower mining levels 194 and 215, let's take somewhere around 5000 tons from that level. Let's take an additional 1000 tons from the upper level. We are still working on that process, we don't have definitive numbers as to what that does or the ultimate byproduct metal production number, we will work through November and get those numbers and we have a board meeting on the budgets in December. But based on what we see, this thing has very much turned the corner, although it may not be obvious in the press release.

Turning the corner from a point of view of development or availability, ability to extract it and drill it. But we are feeling confident that this will be a very profitable, long life mine that generates significant cash flow. But we know we have to demonstrate that, it is not just a matter of us standing here. Because we've disappointed you so many times. But as we sit here, and we will get into a little more detailed fashion, you will definitely turn the corner here and we've decided that it made much more sense to sort of approach this thing differently, not just what is the maximum gold that we can extract here, but really what is the best way to generate strong cash flow, solid profits and do it in a way which minimizes or lowers the mining risk. It is sort of that simple. Talked about some of the points on the next slide, but despite our challenges as you can see, one of the key things is how much tonnage are we getting from the lower mining horizons 190-04-11215 (ph) that's increased every quarter. It is not where we expected it to be in the third quarter, because we basically didn't get five stopes from the level 215 area out which contained a higher-grade gold mineralization, but the trend is certainly in the right direction here. Another indication of how, that sort of mine is behaving underground is our ability to achieve development target. We've exceeded our development targets in almost every month and we will show you a graphic on that. And in terms of increased goal production, we have been able to increase it at this mine on a steady basis over the years, but it hasn't been upon to your expectation. It has still been up, but it hasn't been what we expected to be and that is our mistake and over estimating our ability to manage the overflow at the lower levels, at the same time we are being - we are involved in a lot of construction activities, simple fact is, in the gold business there are very few companies out there, particularly in North America, that are extracting these types of volumes below 7,000 ft. We have learned a lot in the last year, and that experience is going to bode very well for us as we go forward.

Before I turn it over to Ebe, I just want to highlight some of the things on a regional story and I'll come back to that after we deal with a lot of quarterly operating issues, but on a regional scale, in the regional context, the outlook here is actually quite positive. And although you may not look behind some of the long numbers, there are some very good things that are happening in the region. Lapa continues to look good, we are obviously onto something. A new look at our latest drill hole, 1.7 ounces per ton, uncut over 25 feet. We have another drill hole further up in what appears to be a new zone 2.25 ounces uncut over 13 feet. This is a high-grade gold system and is wide open. We are drill it with seven drills at the moment and we are seeing encouraging signs there. Our ability to move this company forward will be how we can take that project and move it forward and develop a multi-mine platform for ourselves in the region. On Bousquet Ellison, that is an interesting exploration play, we can talk about it in more detail later. All we are saying there is when you look at it, there is a [Inaudible] doom package of rocks, which is simply the host rock for all of LaRonde deposits. On the Western side of Bousquet and onto Ellison, that favorable rock package is as thick there as it is on LaRonde and that's why we have multiple zone o LaRonde because the package is so thick. Next weak we have three drills in there, drilling from Bousquet lower level half of the Bousquet to shaft. LaRonde II, we are starting to get higher great gold hits in the core, continuing to get them. That significantly changes the economics of the LaRonde II. We will talk about that. In Goldex, the market doesn't give us a lot of credit for it. It is a relatively simple deposit with simple infrastructure, simple mining, very simple metallurgy. There is a great question. We feel there is a way to deal with that with volume, but we're steadily moving that forward. Just an overall picture on our - we started with one property in 1985. Has continued to add to our property position along the belt. We spent roughly $15m to consolidate that property position around LaRonde.

If you look at all of our resource ounces on that belt and including Goldex you've got about 3m ounces. But what we've paid and we have gold on the book for is about 5 an ounce. So, our job right now is to put plans in place for each of these opportunities and build them for an all-in cost of buying and discovering and drilling, capital to build, and an operating cost. If we can do it in the $250 an ounce range, then we have a winner Rather than going out and paying $80 to $100 an ounce, we need to find out how good these opportunities are and move them forward into a mine. Now I'll turn it over to Ebe and he can do some of these issues in a little bit more detail.

Thanks Sean. Before proceeding with my part of the presentation, we have a couple of people in the audience that came down from the mine this morning and they'll be here to answer any questions that Sean, David or myself will not be able to answer. We have [Inaudible] Regional Manager, he's right there, Daniel [Inaudible] our Mine Manager and we also have [Inaudible] Manger of metallurgy and Marketing and we also have [Inaudible] our chief geologist. So, we have people here from all facets. As Sean referred this last quarter was a very difficult one for us. But I can also assure you that the LaRonde of today is not the same LaRonde that it was 50 months ago or 18 months ago. So, we have come to the realization that deep mining isn't necessarily easy. There are only three deep mining operations in Canada currently, and we have really been become battle hardened. We have learnt a lot, and as you will be able to see where my presentation at this mine has developed significantly and though as Shawn (ph) mentioned the figures don't fully reflect it, we have made significant progress. If you look at our issues, I think what I would like to point out this morning is that our issues are focused at one particular mining area and that's the lowest mining area at LaRonde, 215 level mining block. This particular area did not achieve the time at which it was forecasted. That is basically the issue in a nutshell. We also had some other issues like higher than expected development on level 194 and I'll get into that. And than the third issue which occurred mostly in September and that was where we had some difficulties reconciling grades and tonnages from underground with respect to the mill.

Now the key after the second quarter and the first quarter was to establish the 215th mining horizon, and with that you are familiar with this mining arrangement. We had to basically establish as pyramidal system and move the stresses out to the east and to the west and you can see the accumulation of stresses on this particular slide, they are highlighted in red and orange up to the eastern and western apartments. Also, what we had to face this year is we had a high ratio of primary stocks. These are the original stocks and these are the ones that really provided us with the challenge. The ratio of primary to secondary this year is about 90% primary which means 90% of our stocks could conceivably cause us problems and 10% secondary which are a lot easier to extract. So, we have this obstacle to face. Going forward to next year's mining plan, that will change to 50-50 which is a much more normal mining sequence. But probably the main issue with respect to getting the tonnage out was production, drilling, and blasting. All of these stocks that we had planned for the third quarter and even the ones in the fourth quarter are ready to be mined unlike previous years, like last year especially where we a re be having the [Inaudible] development. This year all of the mining blocks, we are ready for extraction; we just had difficulty extracting them.

As I mentioned earlier, if you look at this is a longitudinal section of our 194 mining horizon. You can see 194, we actually extracted the tons that were planned. We only had one block that was planned but not mined highlighted in red, but that was offset by another block there wasn't planned and that we mined. So, essentially on this mining horizon we met plan. On the lower levels, here is the whole story in a nutshell. These five mining blocks that were planned to be mined we did not mine and if you look at the reconciliation on the side, you can see there is a shortfall of about 140,000 tons, which equated to roughly 27,000 ounces. We did not get those mining blocks out and I'll discuss that in a bit more detail. Here is the problem that we essentially had. It is quite difficult to see on this particular slide. But you can see right in here this is the production drill hole and there is a longitudinal crack down the length of this particular drill hole. Now this drill hole was only drilled about a couple of hours ago before this picture was taken. That is the just a reflection of that production drill holes, it is four inches in diameter of it closing in and when this production drill hole closes than we have difficulty loading the holes with explosives to blast it. We tend to lose holes, so we blast the holes we did use the blaster holes that we had, so that resulted in poor fragmentation, with poor fragmentation, that goes down the ladder, we end up with poor productivity, large ore, large muck, difficult to extract, difficult to handle, and then of course, because it becomes difficult to handle then it takes a lot longer to extract, therefore, we end up with more dilution. So, it was in essence a very vicious circle. We also when you look at it from a dilution point of view that was another one of our issues, 194 that figure was 30%. However, on a more encouraging note, level 215 the deeper part of the mine, where we had our larger ore blocks, so far dilution has averaged about 4%. So, that bodes well for the deposit at depth where we even have larger thicknesses. So, on the whole, the mine plan for this past year, we had budgeted 12%, and we came in at 17%, so, 5% over. However, as you'll see later on in the presentation with the modifications in our blasting sequence, we believe we can go and get that additional 5% and we think we have that solution presently.

Well here are some other things that we did. Now, once you are dealing with a mine that is over 7000 feet deep, some of the logistical aspects aren't quite that simple, but nonetheless over this quarter we reacted very quickly. And I think the approach is you cannot try very many things all together at one time. You have to systematically go through the mining problems, identify them and then correct them one-by-one. And this is some of the things that we did. Now the first thing we did, we got additional production drills, longer drilling times, call in more troops, and these were some of the drills that we had acquired from the Bousquet acquisition, well also the drill holes tend to squeeze well can we go to a larger diameter drill hole, so that it would take more time before the actual holes closed in on us. So, we went from four inches to five inches. Most importantly, we changed the way we blasted. We use to blast one stope footage four to five blasts before we would be able the whole 30,000 tons. We went to a one-power system with using different blasting agents. Also what is really encouraging, we are starting to enter a phase where we have more secondary stopes have come out as planned. They have been very simple and very straightforward. So that is encouraging, but also on a mine planning level, we have gone to great detail where currently we know almost on a daily basis what each stope throughout the whole mine, and we are talking distances of many kilometers now, where we know exactly what phase each mining block is at, where it has to be at, and when the ore will be coming from that particular mining block. So this we now have a mining plan that gets tracked on a 24-hour basis.

Here are some of the results. Probably the most important thing that we did do as you can see by this photograph, we have changed our blasting. And on the right, you can see electronic blast, now the key there is timing is very precise and they are detonated by electricity or electrical charge versus the traditional non-l (ph), which is basically a concussion initiated by concussion. So the timing on these particulars caps is very erratic. So, what we have found so far, larger drill holes do work. Now, this is only on the basis of four stops that we have mined in the over September and also the beginning of October.

Electronic blasting, the mass blasting has been very successful. We have had excellent fragmentation. We went up to the mine last week as Sean mentioned and the material is bigger than football size. Also more importantly, we do not get the violent concussion damage and vibration that we had initially, and as a result on these four stops, dilution has been reduced significantly, where in some stopes, we have been able to reduce dilution by over 50%, especially on the key 194 area. And then of course with that the result is the increase in productivity, where we have been able to extract those stopes very quickly. As I mentioned earlier, we had an issue with reconciliation and that came out at the end of September. We found out that there was 15% variance with what the underground had that predicted vis-a-vis what the mill finally obtained. We have two main issues to grade and then we also have tonnage where there was a variance of 6.5%. Well, what we did, we conducted a very thorough sampling and audit program, throughout the underground operations and also throughout the mill. We actually weighed over 250 tons on a truck-by-truck, skip-by-skip basis from underground and we weighed it on our mill concentrate load out and the underground figures were confirmed within 1%. We had a 24-hour/seven day a week sampling program. Where we actually went and sampled each individual skip that came up the penna shaft and that figure corresponded with diamond drilling it corresponded with other samples that we took out of our crushing plants and also it corresponded with what we had indicated by muck samples or at the drop points.

So, clearly, the underground reconciled and that was not an issue with the reserve estimate or the underground grade or the tonnage. We did the same thing in the mill and that meant sampling every single pump box of mud sampling. The tailings line it meant sampling the tailings pond it went into the refinery and here we found we had some issues especially in the corporate circuit also in the refinery we had abnormally high values in the tailings pond and we have isolated that as an operational issue which is currently being corrected and its not a metallurgical issue. While that is being corrected as I speak. But despite all of these difficulties, and you will see the next graph. We did achieve as Sean mentioned record tonnage from the lower levels, a pattern that we have been able to maintain over the last year but once again not as quickly as we had expected. Also low dilution on level 215 and I think that's a key factor for mining at depth. I know some of the initial feedback that we got back. Well if you can't mine at 7000, and what are you thinking about at a 10,000 feet. Well I think we've made significant progress to show that it is a technical issue. It's a drilling issue. We've been able to develop the mine and we've been able to put infrastructure in down to these depths but we've learned an awful lot and I think that is what we have learnt over the past 18 months or so will be applied to any of our studies that we will deal at depth. Most importantly, we did achieve our development targets. Last year we were way behind on our development and as you will be able to see every single month this year we have made or exceeded our development targets and currently all of our stopes into December and even into January of next year are ready. We just have to get by this production, a drilling issue. Last year we had down time. July, August because of heat, we had a record heat that particular summer, but we've corrected that. We've had no downtime due to heat issues so far at LaRonde this year. And then of course we continue drilling at depths and Sean will talk to that. Where we've seem to have identified a high grade core and that could be very important with respect to the economics of debts and secondly, we think we have found a potentially new 20 south zone, it's across the boundary on the pareks (ph) horizon. But I think having multiple ends of that depths could also have a very positive impact on the deep development study. Well if you look at some of the numbers, here are the numbers of production from the bottom part of the mine.

Currently our estimate for October is 150,000 tones and we believe we will be able to do better than that. Our overall objective historically, it was 175,000 tones from the bottom of the mine, we are very close to that objective in October. Matter fact over the last three weeks in October, we have managed over 6000 tones per day from the bottom of the mine which is even better than what we show here. So, yes we can mine at those rates. From the bottom of the mine, but as Sean mentioned I think we would like to take a much more conservative approach. We would like to throttle it back a bit and that way at least would be sure to be able to make our objectives going forward. I think with respect to preparing the ore, making sure we have the mining blocks ready. This is some of the delay that we had encountered last year. And this is our performance, right all the way up to September. Preparing the mine to be able to get those blocks ready so that we can extract them even during the hot days of July and August, the summer months we exceeded our objectives and we completed our development. So, that bodes well for the fourth quarter and also going forward. That was a major operational issue for us last year, but systematically we have attacked each issue and we have been able to solve them. And they haven't been easier, there's been a lot of blood, sweat, and tears and I would say we're pretty battle-hardened at this point in time. But nonetheless with the people that we do have, we're pioneers, it hasn't been easy and I think going forward you'll be able to see further proof as we solve these various problems that we will be able to make the objectives that we have outlined for that, for us. So, and with that I like to turn it back over to Sean.

Thank you Ebe. I would like to talk little bit about the regional strategy in a little bit more detail, just to provide you an opportunity to look at some of the targets, some of the successes we've had with drilling. It's an interesting trend, we have the dominant coverage of two major gold trends, the Cadillac-Bousquet Belt, which hosts LaRonde and Bousquet and Doyon obviously, and the southerly trend to that which is the Cadillac-Larder Lake Break, which has had a lot of historical production there from narrow deposits with higher grade and that's the trend that the Lapa deposit is on. Within a distance of about 10 miles, by next week we will have 21 drills going on a 10-mile stretch of one of Canada's most prolific gold belts, and these aren't just grass-roots targets, these are legitimate structures and geologic targets that we're drilling, and also all of these deposits are opportunities that we have on this development and are identified, Bousquet Ellison, LaRonde II, Lapa, and Goldex, all of those deposits are open for expansion. So our job now is to gather that exploration information and feed that into our regional development team that has now been setup, it is offsite from LaRonde, it is using the whole Bousquet officers and their job is to take these opportunities, get a better understanding of them through drilling and put them in to a mine plant to create a multi-mine platform for our company. We'll go into them in a little bit more detail now, and we'll start with LaRonde II. And as Ebe mentioned, on this ore body, we've had some higher-grade holes in the core of the deposit. We're seeing in one recent hole, maybe 20 south emerging at depth. We were unable to drill that horizon because of the property; boundary restrictions and we'll show you that in a minute. But most importantly, this deposit is still wide open to the west. We're now drilling a deep hole off to the western target without boundary limitation. So, we can actually extend some earlier holes that were drilled. So, this has really three dimensions to it, from an exploration point of view. It has a westerly dimension as we move to the West and it's wide open and I think you may recall a year and half ago we did have a hole out there that was drilled much earlier, it was drilled from the shaft, it was 6,000 feet of drill core, it was stopped in ore. So, that's the area we're trying to get back to because it was outside the resource outline.

So, that's the western dimension. The high-grade core is it seems to be developing, we announced a hole at our annual meeting here in June of 0.29 ounces or 65 feet, we repeated that and we'll show you that in minute with another hole in that particular area. So, that could bode well for the LaRonde II study. I think all of the things we're learning about deeper mining will bode well and I think we've demonstrated if you look at it, we're now extracting roughly 6,000 tons from our lower mine. We are going to scale that back a little bit, maybe to 5000 tons, but it can do 5,000 tons a day. And a 20 south context is emerging here. A horizon that was previously unavailable for us for drilling. This looks at LaRonde in more detail at depth and we talked about the expansion possibility. So, we have seen consistently over the last few years that the trend seems to get thicker and better gold grades if we go deeper. The hole I which referred to was 0.28 over 50 feet which has returned in the quarter and we also had hole in that area, which was 0.29 over 65 feet. So, those grades are 50% better than the grades that are really driving our current production over the next few years. So, we are looking to follow that up aggressively, the several drills; the key exploration drift is Level 215. It will be out to the Bousquet boundary by the first quarter of next year and then we will make a decision based on some drilling we are doing at Bousquet, whether we continue to extend that. That just gives you a better picture of some of the potential as we look at the LaRonde II. 20 South is one that's developing, the hole is low grade, 0.18 over 9.2 feet, but we are seeing the same type of, sort of alteration and mineralization that we saw in the upper part of 20 South, and it was an area as we said that was off limits to us because we didn't have the Terrax (ph) property which we purchased in the Bousquet acquisition from Barrick. So, the first hole of across Terrax, 150 feet in, we have got mineralization and structure there. So, we need to follow that up and that's part of our active drilling program right now. As Ebe said, a multiple zone of depth could significantly improve the economics for LaRonde II.

Lapa, I have one slide, but I am going to spend a bit of time on this because we are getting high-grade gold intersections here. We have an increasing resource space, which we increased. We increased that resource space from about 4m tons to 4.4m tons and that's a cut resource. The grade increased to 0.27. So, we are better than a quarter ounce in this particular area. About a 17% increase in overall ounces on an uncut basis and about a 9% increase in grade on cut basis. On an uncut basis, we have a resource of 1.7m ounces and so we are on to something here. If the hole 1180335A, 1.7 ounces per ton over 25 feet. That's the deepest hole in this property. We've put it in the context of exploration where there has been discovery recently in Canada like that and we are just in the very early stages. We got into it a year ago to test a theory and that theory proved to be correct and now we find continuity. That was what we are finding late last year and now, not only do we have continuity, we have got, we have identified high-grade mineralization here, visible gold throughout the core and an another thing, some people say well, metallurgy is going to be an issue. We are doing metallurgical test. We are getting 85% recoveries in the lab. Interesting enough on that deep hole, 1.7 ounce per ton, very little sulfide. Looks like it's going to be easy to melt, potentially easy to melt, and we are going to drill more holes but the indications of that hole, not only from a grade point of view, but from a recovery point of view, look awfully good.

We are excited about. I know people don't pay much attention to it because of the black clouds sort of on the belt because of LaRonde, but our view on creating value is get LaRonde going, we know it will work, demonstrate to you it will work and then maybe, you will take a closer look at some of these regional opportunities starting with Lapa, seven drills going, we expect some good news coming from this as we forward. We will talk about Bousquet Ellison and we will talk about the structure. We will talk about the opportunity here. When we were in Denver, somebody said, 'oh! You cartooned a larger felsic dome after the west of Bousquet. No, we didn't. It is as large out there as it is on LaRonde. And that's why we were fortunate enough to have multi, large multizones on the LaRonde side. For this horizon, it dips steeply to the south, as you go to the south and it moves down on to the southern boundary. Barrack basically couldn't drill it. And the bottom portion of the Ellison property, which moves off to the west, was not owned - was owned by a prospector. When Barrack owned Ellison, it couldn't drill that block and that block has the felsic dome on it. We now have it. Our boundaries are not an issue, and one of the things we've been very good at in the past are finding mines for other people. We found Bousquet 2 for Lac (ph) , which became Barrack and we found El Coco for Barrack. So, without boundaries, hopefully we'll find a couple for ourselves.

Here is the drilling program. Starts next week. We have put back some services on that drift. It's a lower level drift on the level of mine drift on Bousquet, I believe. We have three drills going. And those three drills have specific targets, but essentially they are drilled to test the felsic dome, and to look for a repeat of mineralization. We do know, when looking at Barrack's records that they did encounter mass of sulfide on the Norman lake property. They actually, inadvertently drilled over the boundary. They let Chemical know, Chemical tried to drill it from the south, but that wasn't the best set up. It's not Barrack did an effective job drilling this property, they just couldn't drill far enough south to pick up the felsic package, which we can now do.

Here are some of the targets in more detail. Ellison Bousquet 1, which is the felsic dome, Bousquet 3-1 zone, which is open, we need to drill there. Their mines are pretty good great from there. And we're looking to drill just on the other side of the LaRonde-Bousquet boundary, was not properly drilled by Barrack because they didn't have the right infrastructure or the right set up. So, those are the target areas that drilling starts next week with three drills and those three drills are part of the 21 drills we have on the belt. This is looking west and unfortunately for you just on the phone, you can't see this, but what this also does is it identifies the fact that the favorable horizon, the felsic dome appears on the southern portion of the Ellison property. So, that's a property that nobody could drill in the past. That is now part of our Ellison package and we will start that drilling next week, very thick, it has never been tested.

In a short period with [Inaudible] , I'll just talk briefly about it. It's the one that is a solid resource, it's open, it's [Inaudible] as we said, the mining plan and layout is relatively straightforward, metallurgy is basically straightforward. We're looking at it now, we've done a feasibility, we're having it reviewed by an independent engineering outfit. We expect that report by the end of the year. The feasibility study that we did is positive. Our decision now will be, do we take an interim step with this, do we do more exploration, but it is one that we own, there is about a 1.5m ounces here, it is open, doesn't cost us much to keep it. We've held it for many years and we think, given the potential synergies with the LaRonde in our team of players that this is some thing we need to make our mind. Mines generally are not found, they are made, and we need to focus our efforts on taking all of the regional opportunities in building a multimine platform there. And we need to do this quickly over the next six months, gather the information and give you our thoughts, lay out our plans, lay out our ideas, and we think that will come on the back of a much stronger performance from LaRonde. We have taken a lot of time here. We want to take questions. We'll stay as long as we have to on the questions. We appreciate your patience on the presentation part of it. But we just wanted to close with - we have all been at this company for many many years, and over our long history we have faced a lot of challenges and we have challenges now. But we are well positioned to deal with those challenges. We have a strong balance sheet, we have good regional opportunities, we have a mine that will work and will generate cash flow for many years. I know we have disappointed, we disappointed our shareholders, our employees, we disappointed ourselves. One thing we aren't that is, we are not down, we won't quit, we won't give up. We have got a lot of experience, we have had a good company, we have got good people and we have got a plan and we stayed focus. Despite the challenges we kept working regionally. We just didn't sort of give up and we didn't become paralyzed and stop working and we will continue to do that. We will continue to use our expertise on this belt and in this region to generate strong profits, generate strong cash flows. Restore our premium, we have lost our premium. We need to get that back and we are going to work hard at doing it. On that I'll wrap it up and we will be happy to take questions on the phone or here in person. If you have a question here, if you could step up to the microphone and then everybody can hear it on the telephone. Okay, we can start in the room, we have all of our technical people here, the key people, the financial people, everybody's here so, if there is anything you need to know or concerned about, please ask us.

Maybe you could, could you just give us a bit more of a fix on what's happening at the mill. You said there is a reconciliation issue. What is the fix because it sounds like it's a metallurgical issue and that will improve the results. If you can get that dealt with I suppose your great problem.

It isn't the metallurgical issue Don. What we found are that there is some operating procedures that were improper. We had problems with calibrating our weightometer into the seg. That's been resolved. We also had issues with part of our clean up procedures. We had a larger number of hydril problems over the past summer. And as a result of that, as you well now, when you have a power failure that the mill becomes a mess. And some of our procedures were, originally they were to pump all of that, especially the copper circuit material back into the tanks where we found out it didn't go into the tanks, it went into the tailings pond, so that's not good. So, these are the types of things that happened also in our refinery, in some of our filters we found that just maintenance etc. wasn't quite as thorough as it should have been. Also in our slag, at the end in the refinery some of the grades in the slag were abnormally high and the quantities were also much higher than what we had envisioned. So these are all clearly operating things. They are not - we haven't been able to recover the Gold from the Copper or etc. like that. So these are things that are corrected very quickly. And originally we had the concern well when we started having this problem with the mill. Well is it a problem with the mine, is it the problem with the Ore body or the Gold just isn't there. And I think in queue with our sampling program, I can certainly sleep easier knowing that the gold is there and that these issues in the mill are operating issues.

So, in terms of timing and what you said that might ultimately do, if - - things stay the same, what might that do to your costs?

Well, I think obviously if we lose like this over September, that reconciliation issue was which I didn't point out on the slide, but there was 6000 ounces, that's what it came to -- or indicated -- came to, so, I think from a cost point of view, once we resolve these issues that in the mill, our costs should go back to normal around $14.50, $15 per ton or closer to budget. Our current figure is still quite reasonable, because the denominator is a much slower tonnage rate, but where we don't see it is on the revenue side where we don't get the gold. That's where the real penalty is. I think from a general point of view, the mill operates well, our operating times are reasonable etcetera, it's a clean facility, but there is these things slip through the cracks especially in September.

Yeah Ebe, Barry Cooper. Just wondering, I am assuming the go forward number of 300,000 ounces a year, is not a through put on the tonnage basis short fall, in other words you are going to get the tons through with more a grade issue.

I would well obviously, if we go to the Zinc Zone and we take less out of the Gold Zone that the grade will go down. The overall grade, but its tonnage will remain the same, expect it will be tonnage that will be easier to extract because more of it will be from the upper mine.

Okay, so others are dropping a grade in our forecast for the gold and upping the Zinc and Silver, what else should we expect on, lets say 8 per ton mining base?

Well, I would say number since we will not develop as much at the bottom part of the mine, there should be a decrease in unit operating costs, especially in development. We foresee a lower mining cost because we do not have the drilling issues on the upper part of the mine than we had on the lower part of the mine and I think strategically, we would like to have more time to work at resolving the drilling issues at the bottom of the mine and we found out that when we push the bottom of the mine and we have these grilling issues. We end up chasing our tail and that is not the best way to resolve this issue. We have to work, it our way through systematically and by doing that we have to do at one step at a time. So, we thought it would be prudent of throttle back and go and get the tons from the upper part of the mine instead.

Now, correct me if I'm wrong, when you say less development, most of that is capitalized, is it not?

Sorry, I didn't catch that.

It was most of the development that you are talking about that you all come back on this capitalized cost.

A lot of it is capitalized cost, but there is also some operating development, but most of it you' re right is capitalized. However, we're looking at some other consumables, we're looking at, what we have in essence done is we have tried to slow back the development below 215. We have, in our plan we haven't finalized it yet, very so this is subject to change, but I will just put the big picture. We have reduced our development or eliminated development on 20 South at depth. We just in essence want to get the bugs out of 20 North, because that is the ore body that has to work and we want to put all our energy in making 20 North work.

Okay, then I am the secondary stocks, you talk about them being much easier to mine, although in the task of report it implies that there are some elements of risk dealing with the secondary stocks as well that, there could be issues that come up. Have you seen any of those develop at this point in time and what sort of reassurance is do you have there in deeply secondary stocks are going to be much easier. We can only base that so far on fifteen years of operating history at the Shaft number one, also the 20 South Zone, and also the 20 North Zinc Zone, where the secondaries have come out a lot easier. Yes, there is issue there will always be risk, backfilled cave in and cause you grief. That is always an issue on the basis of the quality of your backfilled, but so far, if you look at the longitudinal section, the secondary stopes especially in the 215 area we have probably mined, one of the worst areas that could possibly be mined, and that is where we had those Mickey Mouse ears. Where, we had caved in from the first quarter or the last quarter of last year. So that was not an ideal stope, that was not an ideal shape, and we went and we extracted that particular stope. So, as any backfilled failure, that would have been an ideal place for it to happen, because that stope when we first mined it on either site should have caused us difficulties, and it didn't. We just extracted another one last week, which is in part of the four, and it came out cleanly. So, I think, it boards well, but to say that there wouldn't be any risk. I can't say 100% Barry that, there will be no risk, we are dealing with mining that's a very dynamic environment and but it holds well.

Okay. Thanks.

(Audio gap) questions with regards to again the secondary stopes. When you start producing 90% of your - I think that is the number you were suggesting?

No. We produce 90% this year, and next year, once the pyramids get high enough it will be about fifty-fifty solid.

Okay. Once you go to that fifty-fifty split, and you start putting more emphasis on the secondary stopes, and you do the one stope blast to break all that. What is going to be the situation with regards to the dilution on either side?

Well so far, with the one blast that we - the results that we have obtained is number one, the vibrations are significantly less, because they are very controlled. Normally in previous production blasts, they have gone on over a period of about 3 seconds to 5 seconds, and obviously when you have something with that much energy, you will tend to get a lot of concussion damage. With this electronic blast -- with these electronic caps that I highlighted on the slide, a blast may take up to 15 seconds. So it's very controlled. So, you don't get that sudden impact where everything, where especially the hanging wall gets damaged. To give you an example, we actually put a scaling bar, a steel rod in the ground right in front of the blast, a mass blast. And under normal circumstances, that thing should have been blown right out, and into the [Inaudible] and that bar, steel bar remained vertically implanted right in front of where the blast took place. So it's a much gentler, more progressive blast that will do lesser damage to the backfilled. We should have fewer problems with backfilled, but more importantly, we believe that it will damage the hanging wall less. We had two stopes on 194, where we had; this is probably one of the worst-case scenarios, where we had two stopes that had diluted up to 40%. And now, when we took out the secondary, you would expect that that spoke would break to the same hanging wall to where the two adjacent stopes broke, and we were able to cut that by 50%. The dilution on that stope was 20% rather then 40, under very adverse conditions. So, we are encouraged to about, it's new technology, and we have been working with it for about a month and half. There are other things that we can do with squeezing production grow holes, we are looking emulsion, rather then handful (ph) . So, we will be able to load holes that are even partially squeezed. So, these are all other steps that we are going to progressively be taking. There is a cost associated with all this, which might be different than initially [Inaudible]

Well, yes there is a difference in cost like the difference in caps. One of those caps is $20 versus the old one, which is $2. However, we used to use four of them because we had at least four blasts per stope (ph) , but then there is also a hidden cost of keeping up production drill tied on to a block cleaning holes, which we will no longer have. So that's a significant saving. We will have better fragmentation, less secondary blasting, which is a saving. So ultimately we think, yes on one side it costs more but they will be more and over offset by productivity gains by less dilution and better fragmentation.

So you are going to take an estimate what you might give a little trifle (ph) for cost and [Inaudible] to.

We haven't gone that far David, but I think obviously what we have learnt over the past year will be applied very seriously with respect to LaRonde to - I think a year ago we had - just to give you an example we had difficulty developing at depth. And we are now been able to even improve our productivity. Next year we will be - we think we can wrap it up even further and these are in the very same conditions. There was a deep mining conference coincidently with the Denver Gold Show and a lot of these issues were addressed and I think when you look at mining all over the world the Abitibi, the Timmons mining camps [Inaudible] offer a lot of opportunities especially at depth. Forty years ago we didn't mine - we went down to 3000 feet, 25 years ago we are down to 5000 feet. Now we are mining down at 7000 feet and there's projects that go down to 10,000 feet now in North America, I am talking about South Africa, conditions are quiet different from South Africa. Infrastructures are similar but mining conditions in all bodies are different.

You had some channel officers in charge of with the mines, that's an understatement. The cost I think were about $12 a ton this quarter is from mining. You are going to give me -

Well that is largely due to re-drilling blocks David. And then also of course, if we don't get the productivity when you are low on tonnage, your denominator increases. But the main cost attributable to that is re-drilling holes, losing drill rods etcetera. Putting extra machines on it over the short-term. That is the main reason why those costs are higher, but lot of our improvements have come in at the tail end of the quarter and therefore are not fully reflected in these particular numbers. So, time will tell and perhaps if you come up on November 20 we'll be able to give you a more precise answer.

Okay one last question. And you are going to have two mines going in 2004. You are going to have the upper levels and still the lower levels and you are going to have effectively two budgets for each one of them. Can I take an estimation of what your costs are going to be for each one?

We have an overall - what we have done the bottom line will probably be somewhere in the neighborhood of $1 to $2 more expensive per ton, but I think where we have a big advantage this year compared to any other year since we have been involved with the Penna Shaft, for the first time in our history we are not going to be building. We don't have an underground crushing project. We don't have a load out. We will not have major ventilation raises going on coincidently with production. I think for the first time, we are going to work on our operations. We are not building a mill to 7000 tons anymore. So, we don't have any of these major capital projects that have an impact on daily operations. So, this coming year 2004 is basically to get the bugs out of LaRonde then optimize it. So that's a big plus in itself

Thanks.

Steve Butler, Nesbitt Burns. Ebers, could you give us the implied tons per day assumption for 2004? I think we're talking 5000 tons per day from your lower levels are we losing 3000 from the upper?

We will be mining about 5000 tons per day from the bottom of the mine and 3000 from the upper and the big difference with the previous mine plant, level 215 where we have these production drilling issues and we will be throttling that or reducing that from roughly 3500 tons to 2500 tons per day. And that is less than what we are presently doing.

I think using those numbers; we imply that you probably have a head grade next year of no more than above 0.115 ounce per ton.

We figure it be about in the 0.12 range.

Okay. So why is the [Inaudible]

Again, this isn't cashed in stone (ph).

Right.

This is very recent and we feel more comfortable talking about it in about 2-3 weeks.

And the reconciliation, you said in September, I didn't go back to look the graph, but 6000 ounces shortfall is - I mean can you give us the total shortfall on the mine, no reconciliation issue for Q3. I mean is that the bulk of the difference here, because I mean, I'll be throwing (ph) 6000 ounces of gold both into the tailings in the month of September.

We are not sure whether it's and there is more than one issue, Steve. It could also be, we haven't reconciled with the smelters yet in our copper concentrate. We haven't reconciled with our zinc concentrate. There are some higher values there, we haven't measured the total slag, we have indications, but probably a good share of that would be in the tailings, but it isn't just, say 6000 ounces went out the tailings pipe.

Yes.

And that number could be subject to change as well as the reconciliation's from the smelters come in.

And Sean, one last question. Timing of Goldex feasibility study, GoldFix (ph) and does any production decision here hinge up on results at lab [Inaudible] ?

No, we are going to have the independent review finished in the fourth quarter and what we will do is, we will look at the regional strategy in its entirety. We will look at synergies and the mine building development team basically got started in September. So, they need to - their job right now over the next two quarters is to gather that information for us and I wouldn't expect us to make a production decision on Goldex this year. Production decisions are more likely to come on these things next year, once we have gathered all of the information. We understand the synergies; we understand how we can put these things together. We can understand what we can use with our existing infrastructure on some of these deposits (ph) . Just on the budgeting process, I know we're trying to get a feel for 2004 and - we are at a bit of a disadvantage because we made a decision to change the approach last week when we were up at the mine and the headline number on that change in approaches, obviously the gold production number and that's the number people are reacting to. In order to do a mine plan and put the stopes and blocks and re-sequence some, we stand here and we can't give you a feel for the quantification of the by-product uplift. We're going to get revenue and we can't give you an impact of how much less development we are going to do. So we are at a bit of a disadvantage, it is a fluid process. We need to work through it and certainly given our challenges and meeting targets, we want to make sure we want to make sure we are very careful as we do that budgeting process and we want to make sure we understand it. We want to make sure there are cushions in there and, but what we do know is that the revenue that will come from the by product stream will increase significantly and we are not saying it is a full offset, but there is going to be a significant offset to the reduction in the gold revenue stream. And then you've got the addition of how much less development will we be doing, which will come out in the end in cash flow. So, what we have done is we have [Inaudible] . So, now we are sort of starting to peg the revenue stream and then we have to go back to the cost side and say where do we have to trim or where can we trim, what can we do ourselves versus contractors. So, that can't be done overnight, we are doing it right now. But I think the first indication that we won't have all the numbers done, because the board doesn't look at it until December. But the first indication of getting a feel for where we are is the mine trip. So, we just like to remind people on November 20, we are having a trip up [Inaudible] , it will be a usual one day trip, where we will have a plane available here in Toronto. Space is limited, but that trip will get you up there, get you underground in the morning as usual. We'll probably spend the afternoon over our [Inaudible] talking about a lot of these regional opportunities, where we are at Lapa and what we are thinking on certain things as far as the exploration goes. So, we are trying to pack as much into it as we can. But I think it will be helpful to get up there, because one of the things on these mine trips is, sure our people are tired and they have worked hard and they are disappointed just like we all are, but they are not broken and you'll be able to see that when you go up there. They are motivated to get this thing turned around. There is a heck of a lot of pride here at this company, because we have been at it for so long and we will get it done, we will get it turned around. Anything else?

Just on El Coco. It has depleted at the end of the year. Can you give us information on the impact that's going to have on your cash cost next year?

Sure. This year George, the impact on cash costs year-to-date is around $60 an ounce. It will probably average around in the 50s in full year. We don't expect to have any residual royalty expenses next year.

That was one of my questions, but if the $45 to ton that you indicate in long term Canadian, is that related to 8000 tons per day?

Yes.

And what is the fixed and the variable cost?

I will estimate the things could probably be in the range of about 60%, 40% breakdown.

Okay. Thank you.

Thank you ladies and gentlemen. If you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Your questions will be polled in the order that they are received. If you would like to decline from the polling process, please press the star followed by the two. Please ensure you lift the handset if you are using a speakerphone before pressing any keys. One moment please for your first question. Your first question comes from Bodem Patnam (ph) from Eastbourne Capital.

Hi, hello Sean, can you hear me?

Yes, we can hear.

Thanks. A little bit on El Coco if we could. What were the tons that came from El Coco during the third quarter and what was the grade?

Tons at an average grade of about 0.2.

I am sorry, could you repeat that, there is a problem with the audio.

3000 tons at 0.2 ounces of gold per ton.

Once more on the tons please.

150.

Sorry, there was a [Inaudible] . And what was it on the second quarter?

Roughly the same.

And how many tons and what grade remain?

I would say currently there is probably may be another 150,000-200,000 tons left. We expect it to be depleted by the end of the year, may be a 50,000 tons or something like that spill over into January, and as of the zone will be mined out.

Okay, I just wonder how much the El Coco hasn't really been a cost problem as it much -- it might have been a benefit on both grade and on cash cost because it's obviously much higher grade and at shallower depths, might have a lower cost. Does it have the same mining cost per ton as a lower level material or is it less?

Can you repeat that with respect to the lower level Bodem?

Yeah, I am trying to understand whether El Coco being in the shallower depth has lesser mining costs than the, say the 215 level or 194 level?

Well, it does have -- I would say it is probably a loss because El Coco tends to be narrower and so there is a probably more development attributed to a narrower zone and narrower tons versus the bottom level, so it is probably awashed. And then also, if you look at a 0.2 El Coco ton, it has a 50% NDI (ph) on it and that sort of translates to a 0.10 LaRonde and at the bottom part of the mine, we are mining any where between 0.15 to 0.19.

Okay, you said there were 361,000 tons from the lower levels, how much -- what was the breakdown between the 194 and 215 levels for this quarter?

I would say the breakdown would probably be 200,000 tons for the year for 194 and the 150,000 tons for 215.

Okay, and you speak about dilution of that 215 level being less of a problem than you might have anticipated, if -- do you -- are you getting over breaking, in other words, are you getting unplanned or coming into the stops, are they over breaking like the 49 stop on the 215.20 was?

If you look at the [Inaudible] even on the website, the presentation, the color blocks do not essentially cover the out line, we are not getting the Mickey Mouse ears or ores sloughing from adjacent stops anymore, they are coming out very clean, so that is not -- that hasn't been an issue.

Okay, the webcast was a little delayed, I didn't get all the slides, may be Barry could load them afterwards or I could talk to him. But, the test report talks about the, when you go and mined that 215.2052 stop that you might be developing a double wide pillar between that in the 49 square foot, and that would result in some very high stresses in that area, what you know at this time, I know that is in the November plan, but that might be pushed back, when is that going to occur and what do you think of now?

Well, we have mined within 60 feet of the given area and we did not have any issues with that particular stop whatsoever, and where we have had issues have been really on the parameters of 50 stop all away out of the eastern, but these have been more stresses due to, I mean, stresses.

Okay, on the -- in the press release, you talked about some stop-start cycles of the mill. What was the total number of mill down days during the quarter?

I would probably say our operating times during the quarter averaged about 88% compared to a more normal 94% and 95%.

And you mentioned that that was due to availability of ore in some instances, what is the problem in the hoisting or in the mining, where is the problem in supplying ore to the mill?

It was with the mining, and it was a level 250 mining horizon. We did not get the tons we averaged, about 6,200 tons to 6,300 tons and the short fall is predominantly 215.

And you mentioned in the second quarter conference call that you are going to do some realigning at the mill during July, was that work done and did you collect any answers from that realigning, and was included in the 88% that you gave as far as availability?

We relined the mill during the quarter, but we did not sample behind the liners.

Okay. And, on the reconciliation do you...

I would say the availability was probably a good part of that of core, was electrical, Bodem, we had major issues with Hydro Quebec, we believe we will be able to get a credit. We had one incident where we had a power surge, which was 40% higher than normal and it literally blew all of the drives on all of our pumps in July, so that was one of the main issues where we had to replace 36 drives over a 48-hour period. So, that was an issue - we had power spikes where by our on-stream analyzer went down for over a week during this same period. And, we also had our main transformer going into the mine that went down at the beginning - at the end of September after it had been given a clean [Inaudible] on September 1, by our independent electrical consultant, the people that had rebuilt the transformer. So, we had all sorts of these other issues that actually didn't help mill performance.

Okay, on the reconciliation, if I recall I wanted to talk to Sean previously - is there or is there not, is there not a head sampler at the mill?

Is there not or what?

A head sampler at the mill?

Yes, there is.

And, so your reconciliation issues are between the head sample and the, delivery to mill grade as you predict from your short-term model?

Head sample is a calculated head.

That's what I thought - off the tail sample, correct?

Yes.

So, is it possible that maybe you are getting more waste into the hoist than you might have thought. I am just looking for other sources of the problem, and may be it's not.

We know that the weight of the tonnage into the mill is around 6% to 7% higher than what is indicated on by the mill belt sample. We know that already.

And so - explain to me what that means, because I am a little confused by your answer.

Well, that means we actually put more tons through the mill than we've actually reported.

And so - but the grade of those might be less if in fact maybe more waste is getting into the feed if you will from various locations just because you might be a little [Inaudible] . I am just searching for understanding on what this.

That would be assuming that you do not get any additional gold if you end up with more than the same amount of gold recovered than the actual head grade could be 6% to 7% less, that is why we adopted an underground sampling program and we now know for sure that the grade going into the mill is not an issue that we've confirmed the underground grade also by conducting these audit throughout the mills starting from actually the SAG mill all the way out to the tailings pond, we do know we have anomalies. We have anomalies in the tailings pond, we have anomalies in the tailings pump box, we have anomalies in the sump below the grinding base, so these are all we know - we know we have losses in the mill and they are not just in one location, but to be able to quantify how many ounces at each particular location in hindsight is a very difficult task, so we know there is an issue there.

Now, I appreciate your answer and not to beat on the dead horse too much, but in talking to Sean I was concerned when I've been there that without a head sample no matter how much sampling you do underground, without a head sample you really don't know what is coming ex the shaft and that's the complication in your reconciliation, it's just a comment and I guess.

You know Bodem, we do know what is coming up the shaft, because we had a sampling program for two weeks where we had geological technicians that sampled everything [Inaudible] and came up a shaft and that was sampled on the load out on 220 and 152, and that is exactly what is sent to the mill, and you can't get a better head sample. We had about 1,500 samples over that period on a skip-by-skip basis, and those samples are about as close to a real head grade that you could possibly get other than the head grade of the belt going into the SAG and I like that sort of program, I am just a fan of head samples in a routine basis. One last comment I guess I feel that or you guys can feel that either yourself or so on the -- this what third or fourth quarter here of disappointment is making me concerned about the viability of LaRonde II and the economics of that because a lot of the NPV would be predicated on a relatively aggressive mining rate. And with now you, I think just I will reserve backing away from a higher tonnage of the 215 and 194 levels. I think that is justified, it makes me worried about the LaRonde II economics and because the grade is not better down there, then it is for the 215 level from what I understand maybe you guys could help me out a little bit on this?

Well I look at our present mining rate that we are mining from 215 and also 194 presently Bodem, we are mining at 6000 tons per day. If you would ask me that question a year ago, we'd be lucky to say that we were barely cracking 300 (ph) tons a day. So obviously, over the last 15 months we have learnt something to be able to improve the productivity to those particular levels. Also when you look at LaRonde II, if you look at the strike length, the proposed strike length it's significantly longer than what we have currently on level 194 and 215. Also when you look at dilution, thickness is down there close to a 100 feet, I would say the average thickness is probably between -- would probably average around the 60 feet. And if you look at what we have been able to accomplish on 215 and these are probably the most adverse mining conditions that we have encountered recently. Our dilution is 4%, in any of our mine plant we have used 15%, so there is a cushion there. Also the recent diamond drilling when you look at it there is a very distinct high grade core and that high grade core is not only based on two drill holes and on the webcast presentation we didn't include all of them. But that is a definite high-grade core of grades at anywhere between 0.25 to 0.3, and now in any of our modeling even in our internal modeling we have used straight line. We have used the average overall resource grade, we have not looked at being able to access the higher-grade core at all. So, we think that that would have a positive effect. I am not saying it is going to be easy, but certainly when we look at the tonnages we have down there we look at the grades level we have down there plus the experience we've acquired and we pay dearly for that experience. These are all things that we will apply in the--in our mine planning and economic evaluation of LaRonde.

Well I would appreciate that answer, and is important that is to get volume, it's the costs that are going to be, you know, obviously what determine the economics. Lastly, on the stockpile you mentioned there is 283,000 short tons on stockpile, where are those stockpiles? If you had to surface or underground or both and if so can you give me a breakdown on where they are in their grades?

We, well I can't give you the grade of the actual breakdown. But what we have done they include drilled off reserves broken tons, waters in the ORB pass system, water's is in the ORB and at the end of the month. So these are spots (ph) that are basically ready for mining, and I would say the lion's share of that would be below 194 and 215, because that was our mine plan we have focused very little on the upper zinc zone. So, I would -- I could get you that figure, but I would say at least three quarters of that would be on the lower levels.

So that's stockpiles in this sense means broken not ready to be loaded?

Our definition is ready to be blasted.

Already to be okay -- but I am confused. But again, so none of this is at the surface that all has to still be hoisted, correct?

It has about 12,000 (ph) tons of stockpiles.

Okay, well thanks for your patience, I appreciate you. Good luck.

Your next question comes from Mark Smith, from Dundee Securities please go ahead

Yeah. Hi guys. I just wonder if you can help me with this. Just give me awesome guidance on what sort of levels of encourage maybe able to from the upper levels.

As we said earlier, we are still doing the mine planning, but Ebe, Mark wants sort of, in that particular area, what sort of zinc grades do we have up there.

We have Zinc grades in as high as 12% in that particular area. So, I would say the average grade would probably be in the 6%,

7% range.

What's silver, Ebe?

Silver could probably be in the 2 to 4 ounce range.

And we'll be puling this stuff in the fourth quarter? Straight in the fourth quarter?

Well, as soon as the budget process gets approved, we will be starting that. So, I would imagine we would have the initial impact the first quarter and then ramp up during the year.

Okay. All right, good. And just can we go back to in terms of reconciliation, we looked at the, [Inaudible] versus the Mining. How is the reserve rate for those block held up against what's being going to the well?

Actually, when we did the reconciliation with respect to reserve, as it was very close Mark, it was been a couple of percent.

Okay. And then for, maybe, just look at this $236m, sort of initial proposal for the new shaft. How much that cost is incurred in advance of completion of the new shaft [Inaudible] . The collateral development, how much of that is actually carry forward later in the mine. Does that include as to any capital?

[Inaudible] to refer the actual breakdown in Canadian, what we had for the shaft of our 375m Canadian dollars, what was the shaft component; I don't have the figure on the top of my head.

The shaft and the headframe was $82m.

Okay. Did you got that Mark.

Okay, with the $82m, but in terms of the reminder of the money, some of that is sustaining capital. Right?

The reminder of that was underground development infrastructure, ventilation rays etcetera.

But, is it all, sort of, before the deep mine comes into production or is some of that later?

Share of it, yes because there would also be several mining horizons, several mining horizons established. So, I would say probably an 80% of it -- 85% of it before production. Yes, and it would be spread out over at least, I would imagine seven, eight years.

All Right. Thanks a lot, Ebe.

Your next question comes from Weister Halt (ph) from Halt & Shepherd Capital Management.

I promise, I wont ask you as many questions as Bodem did. I just have one general question for management. I just want to know what's your rational was for not being more forth coming over the past couple of months regarding these problems, or the extend to these problems rather than the way to not to drop this bond shell (ph) ?

I'll deal with that. The major production issue in the third quarter was the drilling issue, which was identified on our conference call in July, was also talked about at the Denver Gold (ph) show. What was a surprise to us was the mill issue because until that time until September we had a net positive reconciliation coming from the mill. But the major issue was really, how are we casting this mine going forward and that was not decided on until last week. When we may remind is and started the mine planning process and we are sitting here now having recast the number based on a revised approach and unfortunately we can only give you one side of the equation, which is the gold number. We are at a bit of disadvantage, because we can't, because it is a process, give you the high product metal component of revenue that we gain back against the gold ounce revenue that we lose and also on the development side, and we are working on that. So as far as the big issue, we are all here right now with this decision that we made last week at the mine.

But you didn't feel a need to, sort of filter some of this out into the marketplace, you know even before you made that last decision?

We made the decision at the mine, middle of last week that we would back off little bit on the lower level tonnage coming up and replace that with the upper level tonnage. We had a menu option presented to us and collectively when we were up there, we decided that, that with the best way to approach it. Then we had to take that to our board, which we did yesterday and the press release went out yesterday, and here we are here just trying to explain what our rationale for that was and what that does for us going forward. I don't answer as I say on the offsets, but there will be offset, so the headline number is not what it will be going forward in terms of the impact on cash flow and profitability.

Okay. My last question is -- has there been any insider selling, any insider activity at all in the couple of months?

Absolutely not. And I have actually been adding to my position this year, when I'm not within the blackout period and I will add to my position in two days, when I'm out of the blackout period.

Okay, thank you very much.

Your next question comes from Haytham Hodaly from Salman Partners. Please go ahead.

Good morning, guys. You have obviously been inundated with questions I just want get a couple of other questions out of the way. Tonnage in the fourth quarter was between 7000, 7500 tons a day that kind of thing?

That is what we are planning.

Okay, so you definitely won't get up the 8,000 tons a day in the fourth quarter, right?

You look at the forecast we are throttling it back or reducing at the 70,000 to 75, 000 ounces now. If we average 8,000 tons a day, well we - we can do better than that. So we are still, we are not out of the woods yet, we still anticipate more problems, not as much but we believe we are going to be able to do better and so far in October we have done better than our average in the third quarter.

Can you give me Ebe an idea of just what type of grades you are seeing now in October, gold, silver, and copper roughly? And is that indicative of what we could see through the next couple of months?

Well, I think if we achieve our mine plan then we will be able to achieve our 75,000 ounces and the average grade for that would be in the neighborhood in terms of gold anywhere between 0.12 to 0.14, in terms of copper it could be anywhere between 0.05 to 0.07 ounces, silver would be in the neighborhood of about an 0.015 to 0.02 ounces, and zinc would be in the range of about 2.5%, 2.5 to 3.5 that is what we have been averaging.

Okay, that is a reasonable number going forward then. Can I ask another question, just on the El Coco royalty now -- I think David mentioned that, you know year-to-date it is $60 per ounce roughly in the fourth - by the end of year you expect it to be down at the $50 per ounce for the full year? That would imply a very low El Coco royalty in the fourth quarter, whereas based on the 75,000 ounces I would guess the rate is probably going to be somewhere between 50 and 60 instead per ounce in that quarter

No, we in the press release, we were quite explicit there, we said it would be about $30 an ounce in the fourth quarter.

Definitely, that's if the 75,000 ounces is achieved. Correct?

That's right. Because the grade in El Coco is quite below now than it was earlier in the year.

Right, okay. Next question I guess on, just surprised David didn't ask this question. Could you break down the operating cost per ton?

The operating cost would be definition drilling $0.26, development 767, mining a 1153, milling 1709, sorry underground services 1709, milling 1727, surface services $1.04, admin. 351.

Okay. And looking into 2004, obviously that brings you right to about $56, is that correct?

Roughly, yes.

2004, you expect significant improvements in which key areas? Obviously, mining cost would be one and milling cost will definitely be the other results of the two primary areas?

Development as well.

Development. What do you see that coming down to you?

While we're going back into an area, let's say the upper part of the mine. Now this is still very early in the budgeting process as Sean mentioned, but that part above 152 is significantly developed. So, we expect to see a drop in development as well. We expect to see a minor drop in milling, we're getting better cyanide rates than we had previously. Also, we would, because of less gold production there will be less cyanide consumption, offsetting that Hydro Quebec is sending us an increase of 6% in energy cost. So, we think we will be in a range of about 45 to [Inaudible] per ton Canadian.

Okay, and

That is our objective.

Okay. Fair enough. One last question. I guess, just you gave us some ranges of grades for the fourth quarter. We haven't touched on this in a while. Can you give us an idea of just the recoveries for each one of those amounts for gold, copper, silver, zinc?

Going forward

Yes. Or just what you're seeing right now and what you're expecting going forward?

Well, I would say in terms of gold recoveries, so far in October we are averaging about 91.5%. With copper we're averaging around, John correct me if I'm wrong. John is in, copper we're getting over 80%, zinc as well, we're getting over 80%. I don't have the silver numbers.

Okay, and looking forward into 2004, do you see any of those improving?

For the fourth quarter, silver will be in the area of 80%, zinc will be a little bit lower than that, probably 78%. For next year, the zinc will be higher because the head grade will be higher. And in the gold content, we can expect something, the head grade between 92% and 94%.

Okay. But, you know, copper will stay just over 80 and silver just over 80, then?

Copper, we expect something in the area of 82% for 2004.

And silver, still over 80 as well?

In the area of 80%. I do not have the right number now.

And, where do you see zinc going to from the 78 now to potentially what?

It will be over 80%, could be 82%.

Around 82%. Okay. Thank you very much Sean.

Your next question comes from Peter De Bois, Private investor. Please go ahead.

Good morning, guys. It's now - by now good afternoon. Two big picture questions. What are your revised targets announces for gold production in 2003 and 2004? That's the first question.

235,000 to 240,000 in '03 and 300,000 number for '04.

Now, you did some aggressive equity financing this year. What is the outlook for equity or debt financing in the 12 months to the next October?

We did not do financing this year, we've got over $110m in cash, we have a bank facility in excess of $100m. Our financing requirements will be determined by the strength of our regional development opportunities, and at this stage we do not know when we are going to built them, on what timeframe we are going to built them and that would really drive what our financing requirements are, but we do have a quite a strong balance sheet with a good cash position we do expect even though may not be apparent in the third quarter numbers to generate some significant cash flow next year as well. So financially we are very strong.

All right and one other question if I may, do you have any joint ventures with Gold Juniors (ph) outside Quebec or have you looked into the whole topic?

We have shareholding interest in a couple of gold juniors, one in Mexico, one we don't want to say who it is. So we do look, we have an office in Reno, we do keep ear to the ground, we are exploring in New Finland, so we are active outside the belt, but for our money the best bet for us right now is along those two major gold trends where we have totals (ph) going. That's where we can have the most immediate impact on evaluation by finding something in our backyard.

Okay Thank you.

Your next question comes from Larry Strauss from GMP. Please go ahead.

Thanks a lot. You moved to basically a sequence of one blast rather than four or five blasts to open up the stope, how much work has been done on the potential for seismic events, you are opening up a much bigger void hence there is potential for increased pressures and some sort of an event?

We did mention in press release, but we have installed the micro seismic system throughout the whole mine, and system was completed in August of this year and so far any of the events that we've had are actually in the footwall drives accessing the ore. We've had very minor events actually in the ore zone, the ore zone most of our events have been the squeezing drill holes which would indicate that it would be plastic and not really amenable to bursting type of conditions.

That would make some sense. You opened up, I believe you said certainly four different stopes in this manner. What has the micro seismic system shown for each of those or can you categorize it or characterize it as compared to what you were previously seeing?

All it would also have vibration monitors Larry as part of to be able to evaluate the effectiveness of the blasting and the vibration levels have been significantly reduced but also on a more daily practical basis after each mass blast that we had before, you would have normal things like sand pipe being ripped off just by the sheer displacement of air from these blasts and on all four of these particular stopes we haven't had any of those incidents also much lower vibration levels as well.

I don't have the exact numbers on the top of my head, but I can certainly forward them to you.

Okay. I would like to say that I believe actually that there has been a technical study done. If you could post that on your website that would be very helpful

Okay.

Thanks. You talked about offsetting by product credits from moving to the upper levels of the mine, but then could be an offset to the outset and that could be lower copper grades would that in fact occur because you are going to take less tons from the deeper part?

That could be a possibility, Larry. Yes.

Would you kind of characterize what the average grade would have been on the lower level 215 versus what you are going to be getting in terms of copper on the upper levels?

While I would think there is probably another issue if you look at the reconciliation that we had in the present presentation and that the goals was down by about 15% vis-a-vis underground, yet the copper grade was actually higher. So, right now, we want to make sure what the actual copper grade is, but we have to go through the budget process, Larry, which is too difficult to project right now. We have some preliminary figures and we'd rather not announce them until we have had time to look at them in detail, but as I mentioned we will supply them to you as soon as we have them available.

I could be missing something, I probably am, but basically what I got from the reconciliation that you were showing earlier was, you had improper or imprecise measuring and monitoring equipment in the mill, but that the mill was actually getting the head grades from the mines. So, and in fact, it was all coming up the shaft so that there was, in reality, very little reconciliation difference.

Proper sampling equipment because it has worked for many years, for 50...

I wasn't trying to say that you had improper measuring equipment, maybe, as you said, it wasn't calibrated necessarily a 100% appropriately and therefore, you have the reconciliation issues, but it is not that you are actually weren't getting the grade. It's that it was being measured properly?

Yes.

So, the reality is, I think, you have more confidence in what the mine was showing then what the mill is showing?

Yes.

Which would suggest that there wasn't a reconciliation issue?

Well, I am just saying that there was a divergence between the mill and the underground, and a normal procedure would say, first up, you dealt with ore body, as there is an issue with the ore body, so we sampled both locations underground and the mills to try and isolate the issue.

And it turned out now to be the ore body, which is better, I mean, I am not sure they have it not with ore body than have it be the ore body?

Absolutely .

When we look at LaRonde II, we see higher gold grades, but I believe substantially lower byproduct credit grades.

Yes.

In terms of in situ metal value, is there a materially positive impact because of the appreciation of the gold grades in LaRonde II or are they similar?

I don't quite understand your question, Larry, so...

Well every metal has a value, so if you loose on that byproduct credit side, and you gain on the gold side. Is that sum about equal or is it some still greater?

Well, I think, we haven't really evaluated with respect to higher great core, we sort of flat lined it ourselves internally. So I would think the NSR values, the average grade is probably 0.2 or 0.3 higher in general.

So the NSI would be equivalent or slightly lower on a per ton basis so far on LaRonde II, but we have not taken into consideration a potentially higher grade core and if you look at the envelope on the slide that we just posted that envelope appears to be as we do more drilling it appears to be wider spread than we had first thought. It's certainly bigger than the area that we had outlined on 194 and 215.

I am not looking at that slide right now. Roughly, what percentage of the tons would be in the core?

We really haven't quantified that Larry, but if you look at the surface area, just looking at where we have drawn a circle around the higher grade and thicker drill holes, that could possibly be somewhere around at least 50%, but I am guessing here. So, don't use that in your model.

That's right. As Barry Cooper said in earlier conference call, bigger than a breadbasket. Thanks a lot.

Your next question comes from Warren Pollock (ph) , Private Investor. Please go ahead.

Hi Sean. When you and I talked, I was sort of projecting 972 stock price and you were so shaking your head that that was an impossibility and what I see currently is that your listing [Inaudible] of problems anomalies and my question to you is how much of your time personally are you spending in the mine managing the day-to-day details and sort of marketing your stock?

I don't spend my time managing the day-to-day details of the mine. We go up on a monthly basis for three, four days depending on whether we are dealing with any exploration belt. I have spent most of time this year and more than I have ever spent on the road this year.

I think that's my point and that's why I am stating it pretty harshly. My position as an investor in your company is that all these great expertise that you are talking about, in terms of technical expertise, which you clearly know has to be applied to the business end of the business, not the marketing end and that's really my position?

Yeah, but I think that is not a correct analysis because despite what the numbers are saying, we have one of the most experienced crews in the business who have consistently up until the recent issues met or exceeded their targets.

Yeah, but that's your responsibility not theirs.

That is my responsibility, but we have a Chief Operating Officer in place that is second non in this business.

We don't need you to go out and market your stock. We need you to manage your company and that's not the feeling that I had the first time that we spoke and that's not the feeling that I am getting presently and that's all, I am just going to say that and that's it.

Okay. I will respond to that. I have been at this company for almost 19 years. In that 19 years, I think I have gathered a fair appreciation and a good understanding, not only the assets of this company, but on the people of this company and we have an asset that has stumbled, but we have a team in place that is dealing with issues that not many companies have faced or yet to face because of some of the debts we are dealing with. We have come up with solutions to that. We are close to it. The mine is six hours from Toronto. This is not halfway around the world. We are on top of this situation and we had some difficulties and we had some challenges. I wouldn't worry about the fact that we don't have our finger on the pulse of this asset and all. We have been shown a few curve [Inaudible] for giving that nature when you deal with mining and as far Ebe said on the point of being battle hardened, there are companies as the gold industry involved, one of the dimensions is to go deeper and in North America there was no gold company that has mining at 7000 feet, we've gained that expertise. And that's an expertise that we feel that we can use going forward to build this company. So it is not an issue that's not being on top of the situation at all.

Okay. Thank you.

Your next question comes from Deed Dohans (ph) from [Inaudible] .

I have a several compelling questions. First of all, you seem to comment yourself about the education that you are gaining from doing a deep mining and somehow I just don't understand that, the shareholders are suppose to be happy that you picked away $20m for this education and may be, it might be better idea to invite the South African deep miner to buy your company that had deep mining in expertise and they can expertise your education. I don't understand why shareholders should be [Inaudible] , I mean that's all I hear is how, you are gaining education in terms of all these issues, well, I mean I don't want to pay you for your education, I want you to be educated and I would like to know, if you know, that be education is there. If you don't have it bring the South Africa, invite AngloGold (ph) or somebody like that to buy wealth and maybe show you what you are not doing right.

AngloGold was involved on the technical side with the shaft. They set it is the straighter shaft they've seen in the world. We have [Inaudible] , we have FalconBridge, we have major companies coming to our property to learn from us.

The other issue is that, you know if you are mining, you chance at about $350 in cash, I don't understand why you do mining, I mean why don't you just take your cash and stick it in treasuries and earn interest if you better have to suspend operation in the company and invest the cash in treasuries and just bring in interest income, I mean I know junior exploration companies, they have nothing, but cash that to be raised from their shareholders, they don't actually mine and their stocks are doing better than your stocks by miles. So, I mean why you are in business?

I just agree with that because you are looking at one quarter over many years in the life of a mine and mines go through cycles and this one has gone through a down cycle, it will go through an up cycle, you don't shut down mines on a spur of the moment. You work at the issues and challenges and you move from forward.

If you don't mine the 350 an ounce and?

Well, we explained in the quarter, what issues we were dealing with and why they resulted in that cost. If we were sitting here and we looked and assess that mine and said, going forward it's 350, then maybe you have a point. But we don't see the 350, we see it significantly lower than that.

Another question that I has, you know you said that there are no insider stock sales in the part of [Inaudible] , but there should [Inaudible] a lot of auction activity in this cycles in which you had problems in each. Normally, Agnico has auction activity that's pretty light cycle-to-cycle, but during the [Inaudible] it's thousands and thousands of calls, written calls and put an aesthetical auction cycle, thousands and thousands of written calls and puts, do you know who is writing the call, are they frontiers (ph) ?

Are you referring to stock options?

Yes. Because to deliver those we've amounted transforming as long [Inaudible] that are at risk each cycle I mean find it very interesting that the shot has come in particular option cycles where there is heavy auction activity and I am just curious, I am curious [Inaudible]

I was not talking about stock options that are held by employees, you are talking about -

Right, I'm talking about what's available to the public exactly. Right Chris, I mean is it [Inaudible] that promotes a $5 appreciation of your stock I mean, who's riding the calls on this heavy position, on the very heavy positions. I mean, normally in some of the options cycles, you'll see hundreds of options written per cycle, but in these particular cycles that you have these shockers there has been thousands and thousands of derivatives at risk, who is writing them? Who's buying them?

On this, how do you expect me to answer who is acting in the market, in an option market that we have no involvement in or no control over?

Where you are acting as a proxy on behalf of certain gold houses (ph) , certain investment houses that are benefiting from this.

I think certain investment houses and gold houses and investments will not share with us their activities in the market and I think, if you look at it, if you are insinuating that -

Yes, I'm insinuating that.

There are heaps of information, look at the share price, we made a decision last week, that didn't leak out into the market. So don't tie us into as a company trying to run a business into option activity that we have no control over, it doesn't make any sense.

That's all I have to say.

Thank you.

Your next question comes from Bodem Patnam from EastBurn Capital. Please go ahead.

Ebe or [Inaudible] if I could have a follow-up kick at the Cannon El Coco, David I was a little confused by your answer to Haytham's question on the all Coco grades, you said that, and I'm paraphrasing that, that they were quite a bit less than they were earlier in the year. What are they going to be in the fourth quarter and what were they exactly in the third quarter? Just to make sure I've got it right. Sorry.

We'll get Ge Goswine to give you the precise figures Bodem.

Thank you.

Hi, Bodem.

Hi Ge, how are you?

Fine thanks. About El Coco maybe, for the next quarter we are expecting maybe to get out maybe 20,000 of ores, just revive the number, while other question were coming in, soon expecting to have that the aggregate (ph) of about 7grams, 8grams from what's less from El Coco and maybe we will be mining at about 15 ton to 20 ton per month. It's going to be more 60,000 tons at 0.2 to 0.22 over the next quarter. And maybe there's going to be something like 50,000 ton to 60,000 ton left, maybe not more than that after the end of the year.

That's the same great deal like 0.2 for the first quarter of '04?

Yes, roughly for what's going to be left of El Coco, yes.

Okay.

Just for next year in terms of the El Coco royalty, we'll have fully accrued for those remaining tons by the end of the year.

Okay, so that won't be flowing through the income statement on the first quarter. Is that correct David?

There won't be any income statement in fact in the first quarter, because in the third and the fourth quarter we will have accrued for any additional tonnage.

Okay, thanks David. And then, Ebe or Ge, check my math on this. If we had a 150,000 tons in the third quarter from El Coco, that was for 26% of the tons mined, but the ounces, El Coco contributed about 54% of the metal to your produced or your reported numbers. Am I close?

I am sorry about it, maybe I was on the border (ph) to the quarter. It's decreasing month per month from, I was roughly thinking about 60,000 ton per month, but it's going down from may be 40,000 in the first month of the quarter down to about 15,000 to 20,000 ton per month at the same grade, so it's less lower than that I talked to you about earlier.

And that's for the third quarter, do you some give (ph) the total tons from El Coco be for the third quarter.

Without going detail into that I can may be send you an answer by e-mail about that, but I said you saying that may be 40, may be for 90,000 tons compared to the 150 I was talking to you about. So, that's important to

Okay, so then if --

I believe we can give you breakdown of that easily. But, I don't have my computer all the numbers in front me right now.

Yes, that's okay.

I know what you are thinking of Borden because, you would like to think that the overall hit rate that there is more ounces attributable to 20 south of ElCoco then there is 20 north. But I think by the fact that we have sample continuously on a skip-by-skip basis from the 220 loading pocket and that has no impact or an influence what so ever from ElCoco or the upper part of the mine, therefore you know the grades that we are predicting from the bottom of the mine has been confirmed by the sampling program and also confirm our diamond drilling and reserve estimate.

No, thanks Sean, I appreciate that, and my perspective is not exactly that. My concern is that we talk about the ElCoco royalty being almost a burden to bear, but yet I've been looking at it lately from the perspective that actually it's been a bit of a cookie jar to the extent of providing ounces at times of need and we've leaned on it kind of heavily, it looks like during 2003 and I worry that now it's going away, I almost would rather see it still being there and still have a P&L impact because the grade and the ounces coming out of there have been very beneficial for you meeting your guidance. And now the cookie jar is empty and I am just worried about, we don't really know what the upper level grades are, you want to wait until you have a proper planning of that, so I am having a little trouble modeling Q4 and 2004 right now as far as total ounces and grades and therefore cash cost per ounce?

That cookie jar has been declining for the past year Bodern, and I think from a mining point of view, we have men and materials and equipment tied up, so to keep jumbos, productions drills of scoop on a stand by basis in the cookie jar alike on a, as required bases would not be a very good use of our mining equipment. So, naturally in our mining plan, we hit it hard to be able to get rid of the zone and basically over the past nine months, we've been mining narrow part of the zone, but that doesn't also take in the consideration 20 south, it is not only the ElCoco part, this is [Inaudible] we have also mined 20 south, we've also mined 20 north, and now we are moving that equipment down to the lower levels of the mine.

Okay, thanks, when will you have the upper level guidance that you can give us for the grade of that material that will be blended in as 3000 tone a day rate?

We said by December after the [Inaudible] had a chance to look at it.

Okay, thank you I am sorry, I missed that, thanks for your patience Sean.

Your next question comes from Susan Sterols (ph) Private investor. Please go ahead.

Hi, yes, [Inaudible]

I missed a lot of that, all I heard was -- all I heard, I will respond to it. All I heard was opportunistic takeover a bit with the three words that I heard.

Would like me to repeat?

Well if that's what it is then are you on a speakerphone, if you have a handset maybe you could pickup the handset.

No, I am not on a speakerphone.

Okay, just if that's what it is related to was an opportunistic takeover bit, we obviously have no control over that, we are not focused on that, we are focused on the operations, on making them work on building the regional strategy, and then moving forward, if that was the half in our job, changes to obviously create maximum value for our shareholders, then we have something else to focus on.

Sure. On a relative value basis, we have certainly suffered, and but if somebody is out there thinking that we are in a position where we wouldn't be prepared for that to try to maximize value for our shareholders. We have, as a company, been prepared for that for many years, if that was to happen.

Well it seems to me that if we [Inaudible]?

Yeah, I think the question was, if the mine was performing the way it should then we wouldn't be in a position of maybe vulnerability. In our mind vulnerability is weakness, we've had some setbacks. We will fix it and correct it and our job now is to get the premium back into the stock and do it on a steady deliberate basis and that's the program we are working on right now and getting the budget in place to deliver LaRonde as a profitable, strong cash flow generator, and bring those regional opportunities forward.

Your next question comes from the Joe Hamilton from RBC Capital Markets. Please go ahead.

Hi gentlemen. Getting into a bit of a marathon here. I think we are going into the third hour, so I'll try to be brief. Given any thoughts to totaling (ph) back to throughput in the mill in order to build a stock power to give you some operational flexibilities, so you don't miss production targets as badly as this in the future?

We should have a stockpile if things go according to plan. Also that's been the issue, but according to plan we should have a stockpile currently of about at least 30,000 tones by the end of the year, based on what we have, as I mentioned earlier, we have a large inventory underground of about 283,000 tones available. And so we would like to be able to get more of that up on surface.

Is that a broken inventory?

That is a blasted, drilled off, and also in the pass system and dens. Also, when we look at it going forward, obviously when we go to the zinc part, the upper part of the mine, we have at least 11,000 tones of capacity from there. So, just shifting a bit of the production will give us more flexibility with respect to getting a stockpile.

And that should smooth your production profile a little bit then?

Well, that is the intent.

Okay. Just one last question. I like to make a few observations for us, and I am not calling for a public winching, but you know that the fact is that your share price has been hammered this year. This year has been disastrous for the company. You are off 35% on the share prices since beginning of the year. Productions are off by an equivalent amount. Management owns 0.5% of this company, although supply and salary of the top-five executives in the company is about $1.6m a year or about 30% of the G&A. On top of that you got a good option package, you got an excellent pension plan as well. It seems to me, looking at the composition of the board, the board is very light on practical technical mining expertise. It's mostly loaded with accounts. Can you tell me whether there are any moves in management of foot or in the board, in the composition of the board that would align the objectives of management board more with the objectives of the investor. And by the way, if you did mention that your operating people have been battle-hardened, I would suggest that your investors have been battle-hardened as well. Maybe Sean could respond to that?

I can respond to that. As far as the board, the board has gone through an evolution over the last 18 months or so. We've not only reduced the size, we've added to that board. We do have mill expertise, we do have, as you said, financial expertise, but it's not loaded with accountants by any stretch of the imagination and I think from our perspective although we've had a rough year, don't forget this company has had some very good years in the past, and don't forget this company manages itself through some very difficult times in the gold business. So, we have had a track record of success but we've had a rough year and nobody is disagreeing with you on that point. As far as alignments goes of shareholder interests. Since you asked the question, my holding in Agnico is the vast majority of my net worth, and I don't like what's happening anymore than anybody else and that's just the fact. And most all of our management team and the Board all have shares in this company, and we're all shareholders and as I said earlier I've been building my position as time allows, we all participate in the share purchase plan and on a regular basis add to our positions as management, the employee is buying, the participation rate in the share purchase plan is over 80%. We just had [Inaudible] , the UFT just did a study on our Board and our Board ranks among all the gold companies as one of the highest and most effective boards. So, we've made tremendous strides in that direction. So, I know people are upset, were upset and it hasn't been a fun year for anybody, but our focus is on making it better and that's all we can do. And we've made a decision which we think is the right decision, we believe it is the right decision to build that base and move this company forward. And we're going to do it.

Very good, thanks.

Ladies and gentlemen, if there are any additional questions at this time, please press the star followed by the one. As a reminder, if you are using a speakerphone please lift the handset before pressing any keys. Gentlemen, there are no further questions at this time, please continue.

Thank you operator, I would like to thank everybody for their patience, it's been a long conference call. I would ask you, we've tried to answer as many questions as we could. If there are additional questions you can certainly get us at the office, call me directly, or call any of the management team if there are things that we weren't able to cover on the call that you need information on. Please, if it makes sense for you to come up to the mine, I mean see at first hand and although it's not apparent in the numbers, there are some things that are moving strongly in the right direction. And we know what we need to do, and we need to deliver and we're very focused on doing it. Thanks.

Ladies and gentlemen, this concludes the conference today. Thank you for participating and please disconnect your line.