Agnico Eagle Mines Ltd (AEM) 2007 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 2007 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. (Operator Instructions.) I would like to remind everyone that this conference call is being recorded on Thursday, October 25, 2007 at 11 a.m. Eastern time.

I will now turn the conference over to Mr. Sean Boyd, CEO. Please go ahead, sir.

Thank you operator, and good morning everyone and welcome to our third-quarter 2007 conference call. We are presenting here in the Abitibi region of Quebec at our offices at Goldex, which will be the first of our five new gold mines starting production in April of 2008.

With us here at Goldex are our Chairman, Mr. Jim Nasso; Ebe Scherkus, our President and Chief Operating Officer; we also have Alain Blackburn; Daniel Racine; Jean Robitaille; and Marc Legault; as well as some senior management people from our regional office and from the Goldex team.

In Toronto, among others we have Dave Garofalo and also Dave Smith; so at the conclusion of this presentation, we're all available to take your questions.

What we'd like to do -- is certainly go through the quarter and talk a bit about our operations and we're certainly available to answer questions specifically on the projects. But just before we get into some of the details, I just would like to reiterate that the focus remains on maintaining our steady state operations at our flagship LaRonde mine, which continues to generate very steady metal output, continues to generate very strong cash flows that we are going to use to fund our gold growth.

The focus will continue on mine building. Our projects are moving forward as anticipated. We'll talk a little bit about the Goldex project. That is the newest project and we've been here for the last day and a half. And that project is moving forward very smartly at this point.

From an exploration standpoint, the focus remains. It is a priority for us. All of our large deposits which are under construction and are part of the growth plan are all open for expansion. We continue to get good drill results, suggesting that these deposits will get bigger and that's certainly part of our value-creating equation here at Agnico. So we will continue to spend heavily on exploration as we move into 2008.

Just moving through the slides; there are a couple of forward-looking statements which you can read at your leisure. We're on to our quarterly highlight slide, for those following.

It was a strong operating quarter; again, steady metal output at LaRonde, very good cost control on a cost-per-ton basis. We had solid EPS before our translation loss; a very, very good cash flow which continues to put us in a strong financial position to fund all of our projects. Costs [were] low. Cash cost obviously still negative with the strong byproduct metal production; cost per ton between $66 and $67. We're still looking for 12-month cost per ton around that $65-per-ton mark which is very close to budget, despite increases in several of our input components in that cost structure.

Our gold production growth; we continue on that plan. As we've said, the first of the five new gold mines, Goldex, is literally only six months away from start up. So that's exciting for us from a production-growth point of view.

LaRonde; not only does it continue to perform and produce steady metal output at very good cost, but it continues to be a very safe place to work with remarkable safety achievement of 33 consecutive months underground at LaRonde without a lost-time accident. That's more remarkable when you think that it is a large mine, producing well over 7,000 tons a day; but it's also under heavy construction with LaRonde extension. And even with that construction, it continues to be a very safe place to work.

And on the exploration upside; again, we have several large deposits- Kittila, Pinos Altos and Meadowbank. They're all open for expansion, as we said. And we continue to get results outside of the reserve-resource outlines at these projects, which to us indicates that there is further growth in reserves and resources in our story.

As far as the operating results go; again, steady metal output; we're looking for higher metal output in the fourth quarter, particularly on the gold side. We're also looking for lower cost per ton in around the $62-63-per-ton range, which puts us right around that $65-65.5-per-ton for the year range. Again, very steady, steady performance from LaRonde which gives us that significant cash flow that is funding our gold growth.

When we look specifically at Q3 '07 earnings, we had a large foreign exchange translation loss in the quarter, amounting to about $25 million or $0.19 per share. That caused earnings per share to be $0.08. When we add back the foreign exchange translation loss we're basically around target of about $0.27 per share. So we were hurt essentially in the quarter from a stronger Canadian dollar. We were also hurt by our lower realized zinc price. Offsetting that partially was a higher gold price and lower exploration expense than we expected, in the third quarter of '07.

As far as cash flow generation; if we look at nine months, we've generated about $185 million in cash flow. So we're certainly looking to repeat or come very close to our cash flow generation of 2006, which was a very strong year for us. So that puts us in a great position from a financial standpoint.

We have $428 million in cash at the end of September; still no long-term debt. Basic shares outstanding, 135.9 million; fully diluted around 146 million. We have still our available bank lines of $300 million. We expect within the next three weeks to get additional funds in through the exercise of warrants which expire on November the 14th. So that will further strengthen our already strong financial position.

From a reserve-growth perspective, we continue on track for our target of 2008 of 18 to 20 million ounces. We see an ability to have additional reserve from resource conversion from four main projects- Pinos, Goldex, Kittila, and Meadowbank. They all remain open.

As we've said many times, the story continues to be unique from the perspective of the size of our deposits and we have the potential for several 5 million ounce deposits. And that's why we continue very active exploration on those projects.

Very strong record of growing reserves per share; that we feel that will continue based on the upside in the large resource that we have at the existing projects. If we go back, our shares outstanding have only gone up in the last almost ten years, 2.5 times roughly. Our reserves have grown over 12 times.

All of these reserves at Agnico in fact, all of the resources which are attached to these reserves, are under construction. They remain part of that growth strategy. So we don't have a bunch of resources that are not part of our growth plan. And our expectation, based on some of the drilling, is we will continue to convert as we move forward into the February update. But we are also like to see an increase in our resource, based on some of the recent drilling.

As we move into the projects, as we've said they're moving forward, as we had anticipated. All of the management teams are in place. The senior people are in place to build and operate all of these projects. We will have a more-detailed project update, an update on 2008 forecast. The update will include sort of life-of-mine plans, revised FX assumptions on those; and it will also include our annual dividend announcement. All of that will occur on December the 10th.

As we move into the projects; at LaRonde we continue on the LaRonde extension. We're getting extremely good performance. The first year of construction; we started middle of last year, has all gone according to plan. We're in a position now to start shaft sinking very shortly. We're using the same shaft-sinking contractor and in effect the same shaft-sinking crews that were on the Lapa and Goldex shafts. So we got very good performance at both of those shafts, so we anticipate having the same crews, which we expect to give us very good performance at the LaRonde extension shaft.

We're still looking for 2011 for initial production coming from the LaRonde extension area, averaging over around a 10-year period about 320,000 ounces. We continue to do exploration off to the west at depth along the 215 level exploration. We continue to encounter an interesting structure, but at this point we do not have any economic grades in our drilling results.

Moving to Goldex; which is the first of the new mines construction, ahead of schedule; the deposit does remain open. We're still anticipating, based on reserves and not including the resource, of about 700,000 ounces. We're looking at about 10 years of 170,000 ounces of production. The shaft sinking will be complete in a couple of weeks, in the middle of November.

The processing plant; construction is going extremely well. It will be complete in the first quarter of 2008, although we continue to stockpile ore. And that stockpile is now at about 220,000 tons. We don't anticipate starting the plant until April of 2008 so that we can run the plant seven days a week. We don't want to get into a situation; although we could start the plant in the first quarter, of stopping and starting that facility. We'd rather wait and start it and run it on a continuous basis for optimum performance. So it's going extremely well.

As we move to Lapa; Lapa is still on track for production in Q2 of '09. The shaft sinking is now complete. We are now in the changeover phase. The shaft is at a depth of 1370 meters below surface. We begin within the next month a lateral development of the orebody. Again, our smallest producer will produce about 125,000 ounces of gold for roughly a ten-year life based on reserves. And there is about 400,000 to 500,000 ounces of additional resource there, which we hope to convert over time.

At Kittila we continue to move that project forward. As you know, that's a 2.6 million ounce reserve. There is another 1 million to 1.1 million in resource. That deposit is not only open at depth where there is an emphasis on drilling right now, but it's also open along strike. Based on reserve, we've got about a 13-year mine life at roughly 150,000 ounces. We think we can extend that mine life based on the large resource, based on some recent drilling. We're looking for production at the end of Q3 of 2008.

What that ramp access has given us; the ramp is down, has advanced to about 1800 meters. We'll begin underground drilling from that ramp in the middle of November. That opens up an entirely new horizon for drilling. We've been drilling the deeper horizon below the main Suuri zone from surface. That's been difficult to get those drill holes down below 1,000 meters. We will have more results, the drilling has gone well in the last couple of months; we'll have more results in the next couple of months there focused on the Suuri zone in an area of around 600 to 1,000 meters below surface.

So that update should come out within the next three months. The only additional news from an exploration front besides the focus on Suuri; we're also focusing on potential depth extensions at the Etela zone and the Roura zone. But we've also encountered some high-grade values in the main pit area, which we did not anticipate. So we're certainly following up on those results as well.

As we move to Pinos Altos; that project got the go ahead in August. We've moved that project forward in terms of building the team. The team is in place for construction and for operation. We're optimizing right now the new reserve. That's in progress. That will be part of the December 10th update. Exploration continues at a very aggressive pace. We begin drilling from the ramp in the fourth quarter, which again gives us much better access to drill the main mine horizon. Those deposits are still open; open at depth, open to the west.

As we move to Mascota, that's an entirely new area, as you know. We've drilled about 50 drill holes in there. The structure right now is about 500 meters long and about 200 meters across, so a very large structure. It remains open to the west and it remains open to the north. So we'll be providing a full exploration update on that project also within the next three months, before the reserve update in February. And this project is still on track for production by the middle of 2009.

As we move to Meadowbank, we're making very good progress on the road and on the infrastructure construction. Road access should be complete in early December, which puts us in a very good position for the construction season in 2008 and 2009. We're still looking for production in 2010. We've said middle of 2010; we hope to come in earlier than that, so we'll have a bit of a better feel for that by December the 10th. We've done a very, very good job over the last six months, putting an excellent team in place with a lot of extensive experience in building large open pits and in mining large open pits.

Also, we've done a good job in getting people from the metallurgical community to come on board. Environmentally, we've got an extremely strong team there. So, I think we've exceeded our expectations on that front. As far as capital goes; we're looking for about C$415 million in capital in Canadian dollars on that project. But that includes all of the mobile equipment which wasn't in the original feasibility by Cumberland. They we're going to lease that equipment. So that includes over $30 million of mobile equipment which is in that number, which should in a sense possibly lower the operating costs. We're still working through those numbers because we won't have lease costs for an operating cost for some of that equipment.

The exploration continues there. We're got an extensive program ongoing there. That to us, we see a lot of potential upside here in making this deposit bigger. It's already large at 2.9 million ounces of reserve, another million ounces of resource. Our recent drilling; based on the last release and the results we've drilled since then, definitely linked up the Goose Island and Goose South zone. Both the Goose South and the Goose Island are both open at depth. We've also extended the Portage pit to the south. We've also encountered very good gold grade intersections at the bottom of both the Goose Island and the Portage pits.

At Cannu, the possibility exists to extend this zone to the west. There is additional potential at Vault, which we'll be able to talk about in an exploration update prior to our reserve update in February 2008. At Marge Bay, we've identified another gold-bearing iron formation. We've got five drill rigs ready to go for the upcoming winter drill program. We're planning 34,000 meters of drilling in 2008, which is roughly double what we're drilling in 2007; so a very extensive exploration program at the Meadowbank property.

In terms of the timeline going forward; December the 10th we have our 2008 forecast, our life-of-mine project update and also our annual dividend announcement. Then as we move towards our reserve update in February of 2008, we anticipate between now and that reserve update that we will have exploration updates on Kittila, on Pinos Altos, and on Meadowbank.

So that's it for the formal part of the presentation and Operator, we'd be happy to take questions.

Thank you. (Operator Instructions.) The first question comes from Mark Smith of Dundee Securities. Please go ahead.

Yes, hi gentlemen. I just wondered-- could David give us a little bit more color or guidance as to the increase in taxes in Q3?

Yes. Mark, the tax rate is really just a function of the heavy capital expenditures we've had at Meadowbank and we're able to actually set up deferred tax assets for that. And that's reduced our overall effective rate. So we're guiding for the balance of the year 30 to 35%, but I expect it will be in the very low end of that range, perhaps below that in the fourth quarter.

Would you expect that to persist through 2008, given that you'd still be in construction?

Yes. We'll provide more specific guidance on that in December when we get through our budget cycle, but yes; I would say so because we're going to have another heavy capital year in Canada, particularly at Meadowbank. And that will help offset our tax liability on our other operations.

Okay. But just on the-- I was just looking at the, sort of the bottom line below your operating cash flow, before your cash flow statement. The income in mining and capital taxes paid during the period were 20.4 million, up pretty significantly. Can you kind of give me an idea of where that was and should we be expecting also just going forward, higher other taxes, not just income taxes?

Yes, we're paying Quebec mining duties. We're currently-- we really exhausted all of our Quebec mining duty [pools]. So we're essentially currently assessable in Quebec and that's a 12% tax or duty on our gross income at the mine. So that's basically revenue minus onsite operating costs. So when we talk about a statutory rate of 40%, 12% of that is mining duties and the other 28% is income tax. Our income tax pools are still quite substantial and we're building on them with the Meadowbank expenditures. So I don't expect we'll be income tax assessable for at least a couple of years or so.

Okay. So that guidance of 30 to 35% includes sort of the $2 million you paid in provincial and so on this last quarter.

Yes, that's right. It's a blended current and deferred rate.

Okay. Alright, so-- and on your pull back on the tax [pull], we'd expect to see a similar sort of go forward tax recovery on the operating and cash flow statement?

Yes.

Okay. Thank you very much, guys.

Your next question comes from David Stein of Cormark Securities. Please go ahead.

Thanks, good morning; a couple of things. First, the foreign translation of $23 million; what exactly was being translated?

Dave, we have deferred tax liabilities in Canada and in Europe and those largely resulted from the purchase price allocations on the acquisitions of Riddarhyttan in Finland and Cumberland in Canada. So we have about $400 million of deferred tax liabilities in Canada and we have about $100 million of European deferred tax-- Euro-denominated deferred tax liabilities. Those have to get translated at the current rate at quarter end. And so we had significant depreciation in the US dollar against both Euro and the Canadian dollar in Q3, and that resulted in the foreign currency translation adjustment.

Okay. So that-- now if it went back the other way, would you have to add--?

Yes, there would be a gain. Yes, if it went the other way there'd definitely be gain. It's a mark to market you do every quarter based on the current exchange rate at quarter end.

Okay. Thank you. Alright, my other questions are exploration related. On the Pinos Altos, the drilling that you're doing at Santo Nino as at depth; is that more for infill or are you trying to extend that zone?

Good morning, Dave; Ebe here. That's more for extending the resource and then being able to convert some of the resource at that into reserve.

Okay. So I guess both extension and infill, then?

Yes.

Okay. And then on the Mascota or the Creston Colorado; so I understand that's a flat-lying kind of lower-grade orebody. Do you know how thick it is? Is there enough drilling that you can kind of get a sense of the thickness and the average grade?

Well, the thickness is a variable, David; it's anywhere between 10 meters all the way up to about 40 meters in thickness. It also seems to have been faulted in a couple of locations. The grade is -- I would say it's variable. It varies from about a gram and a half to over 3 grams in locations. While what we can say is that we're encountering other parallel structures of similar thickness and the zone in itself is still open to the south and to the northwest.

Okay. And out of curiosity, why have you chosen to focus on heat bleach at this time? Do you have very good bottle-roll tests? Is it just because the grade is too low, you think?

We believe we're looking at heat bleach or evaluating it. We've got a lot of work left to do. But the fact that the -- particularly Mascota zone outcrops. It's very thick so it would be, from a heat bleach point of view, very simple to bring into production. We're doing some initial bottle roll testing. We haven't got any of the final numbers, but this is mostly thinking from a logistical point of view, slowly.

Okay. Thanks. That's all I have for now.

Your next question comes from Chantal Gosselin of Genuity Capital Markets. Please go ahead.

Good morning; just a couple questions. My first is related to Goldex. You have over 200 million tons in stockpile. What's the average grade of that?

Two grams.

Two grams?

Yes. It's mostly development ore from the cones and the trenches that we're developing and the drill drift; so all of that material is from mostly the eastern side of the deposit; so it's development muck.

Okay. And at Meadowbank, I see that you're planning to be in production some time in 2010. Can you give us a little bit of better sense when exactly?

Well right now, based on our view of the situation, a couple of the key components; namely the mills and also the power plant, are scheduled to be delivered some time in the next year or so in the 2008 season. Now the power plant itself is scheduled to be delivered in 2009. So we feel that most of the heavy lifting will be completed towards the end of 2009 and then the first half of 2010 will be mostly commissioning, etc. So that's our target to date, but there could be improvements on the schedule once we have some of the other equipment deliveries finalized and also once we have a better idea of the dike construction, perimeter dikes around the open pits.

But having said that, we've already had the first of four 100-ton trucks of our mining fleet delivered, a drill, backhoes, shovels; and they've already been delivered and we were very, very pleasantly surprised and pleased. We delivered over 60,000 cubic meters of freight. We had over 60 barges that came in. We've got all of our fuel for the coming season construction. The camp is a permanent camp; has already been delivered so we're very pleased with progress at Meadowbank.

So can we say like sometime mid 2010 for full production?

Yes.

Okay, perfect; thank you.

Your next question comes from Barry Cooper of CIBC World Markets. Please go ahead.

Yes, good day; a couple questions here. We'll start off with Ebe, because I think you'll want to answer this one.

Ebe, you're at C$67 per ton for year to date. Can you just walk me through how you're going to drop that? By my calculations you need to drop it by about 10% in the fourth quarter to meet your annual number. So could you just give me an idea of what you're going to do to achieve that?

Well, I think that the number has been biased by a stockpile inventory adjustment. Our quarterly number was actually $63 per ton and then we added $3.70 for inventory. And that was mostly related to some (inaudible) stockpile, which we accounted at approximately $120 per ton. That has all been depleted. The real mining cost for the quarter was around $63 per ton. And in September, when you look at some of the other inventory adjustments, it was just under $59 per ton. So a lot of that, you can almost forget that $3.70 of inventory adjustment. All the other-- when we look at the breakdown on a per-ton basis, are all very close to our budget of around $63 per ton. So that will play a major role in the fourth quarter.

And then on the ounce production; in order hit the 240, that implies that 70,000 ounce fourth quarter which is 25% more than what it was in Q3. How comfortable are you with that number and is it going to be a different blend of ore mixes such that you're going to get a higher grade ore?

Well, I think there are two reasons. One, the September and August were some of the best months of production from the lower part of the mine. And as you're aware, the geology and the distribution of metals, that's where the gold and copper is. So currently, in October where we can say that we're probably having one of our better months during the year where we are ahead of budget and forecast and that is once again a reflection of the performance from the lower levels, below level 215 where we truck up the ore.

So yes, I feel confident that from a gold production point of view, that this should be our best quarter yet in 2007.

Okay, good. Then maybe a question probably for Dave; on the exploration expenditures in Q2 you indicated $40 million or more perhaps for the year. And you're at a shade over 18 year to date. So what should we expect for the year at this point in time in terms of an expense, exploration expenditure?

The $40 million we've guided previously included an element of capitalization at some of our properties that are currently in construction. So we always guided exploration expense of around $23 million for the year and about 17 would be capitalized. And where we're not deviating significantly from that, we're looking probably at 6 or 7 million of expense to exploration in the fourth quarter to get us probably to the 24-25 range. And we're still targeting a similar amount of exploration that we previously guided; probably closer to about 20 million of capitalized exploration for the full year.

Right, okay. And then Dave, just on the revised guidance that's going to come out on December 10th with respect to particularly operating costs for the development projects related to FX differentials; what would be an [arrow] if we took the current FX that you've outlined and used let's say whatever par in the case of the Canadian dollar, is it as straight as that or is there going to be -- what component of that cost would be let's say not affected by FX? Are you 80% Canadian dollar influenced, let's say for the Canadian assets or it 100%, or what kind of figure would we expect if you're trying to make that adjustment?

I'm sorry Barry. Are you talking about the foreign currency translation adjustment--?

No, no, no; I'm talking about-- in your presentations you'll say okay, costs are 220 with the Canadian dollar to about 125. And so if I were to say, okay well we're at parity now and based on that, that should be a 25% increase in the cost if you just do that straight number. However, what you may have is only 75 or 80% of your costs are actually Canadian-dollar related. And so I'm trying to see where the-- where an arrow would be in just adjusting for the straight FX component?

I would say that virtually all of our operating costs at the Canadian operations are Canadian dollar denominated, with maybe a rare exception; like mill re-agents and the like. But it's largely Canadian-dollar denominated so I don't think you'd go wrong in assuming that we're more or less fully sensitive to the Canadian dollar at our Canadian operations.

Right and then presumably there will also be an impact on re-agents and all those other things that you're probably going to make that adjustment for as well.

Yes.

Okay. And then the final question; am I detecting some slippage on Kittila because I think Sean, you said in the opening remarks there that you said the end of Q3. And I guess I was kind of thinking at one time we were almost thinking it could have been April or May.

No, I've been for last year consistently saying end of Q3 for Kittila. And in fact I've been saying end of Q2 for Goldex. And today I'm saying April 2008 for Goldex. So the only change is with Goldex. There's been no change in Kittila.

Okay, thanks. That's all I had.

Your next question comes from Steven Butler of Canaccord Adams. Please go ahead.

Oh yes guys, Barry got some of them as per usual. But just to ask you a bit on Sean, to elaborate or any party there; on Meadowbank in terms of where you talked about the CapEx up to $415 million; when you acquired the Cumberland was the concept at that time with the CapEx provided at that time and operating costs at that time; that you would assume a rental or leased fleet?

Ebe here, Steve. When we looked [at that], their CapEx was around 313 and our CapEx estimate that we came in with was around 375 and it did not include the mining fleet. They had included the lease costs in operating cost. So when we looked at it we decided to go ahead with our own mining fleet and we figured we could reduce the operating cost by at lease $1.50 to $2.00 per ton which Cumberland had in their model.

Okay. So the $1.50 to $2.00 a ton Ebe, is that implicit in your PowerPoint here today years one to four and life of mine $2.30 and $2.50?

Yes.

Okay. Last question there was just on; I think Sean you mentioned -- I couldn't write it down quickly enough, you're such a fast talker. On Marge Bay, was it Marge Bay or maybe one of the guys can elaborate a bit about what you're seeing at Marge Bay unless it's still very early.

Alain can address that.

Hi, Alain speaking. We started a prospecting program during the summer and starting July 1st and during two months we investigated a list of (inaudible). And Marge Bay was one of that showing. And we drilled a couple of holes in Marge Bay and we hit three new iron formations and we are awaiting the asset results. And what is incredible too on the 450 rocks and fill that we took, we're just receiving results and we received results with nickel on the west part. We have between .1 to 2% nickel on several rock samples. And another sector on the east part of the project we have copper, we have gold, too. And one of the particular samples we have over 10% copper and I think it's 2 grams of gold.

Okay. Thanks very much, Alain.

Your next question comes from (inaudible), CDP Capital. Please go ahead.

Hi Sean, Ebe; it's actually Steven Kibsey.

Hi, Steve.

I have two questions. The first one is just a little bit carry on in terms of the production levels at LaRonde. What I understand is we're getting to a better area in terms of gold grades in the fourth quarter. My question is- how sustainable is that because the mine has been pretty well -- been running somewhere around the 55,000-ounce-per-quarter range. Will it come back to that level later on in 2008 and 2009 or is this something that's going to be sustainable from what we're going to see in the fourth quarter?

Well, we're going to update that by December 10th, but really in our long-term mining plan we see a slight decline from present levels as we go down deeper in the mine and also as we start focusing on some of the zinc elsewhere. But there will be a transition by 2010 where we will be starting to access the original-- some of the first ore from the lower levels at LaRonde, so there will probably be a slight dip in 2008-2009 and then it will come back by 2010.

Okay. My second question is just to-- really dealing climatic change; here in Montreal at the climatic change conference for 2050, we had a speaker last night, Sheila Watt-Cloutier that was actually a Nobel peace prize nominee. And she was talking about the conditions changing up north and I'm just wondering -- what kind of challenges do you think you're going to face basically dealing with ice roads as well as drilling programs as we go through warmer temperatures over the next few years?

We have very limited ice roads. As you're aware, we're building that 108 kilometer road and that's an all-weather road, so we don't expect to have any issues with respect to ice roads. A matter of fact, if it gets any warmer in Baker Lake that would be a plus for us. And so even with respect to the shipping season, looking at this year it looks like Baker Lake will be open well into November, which is a first. So as far as being able to get materials into the site, we view that as a plus.

From a drilling point of view or from a construction point of view, we've taken all of the measures possible like January and February are pretty tough months up there. So our construction schedule is focused basically on installing the camp, installing some of the foundations; but the main heavy lifting will always be during the spring and summer season. So we hope by the end of next fall we will be in a situation where all of the buildings will be erected and we'll be able to work inside as far as mechanical and electrical installation is concerned.

With respect to some of the potential issues if it gets warmer; well, it is an area of permafrost. If we have longer periods, it might mean more road maintenance or more heaving because of the permafrost or the tundra would melt. But really we don't-- big picture, we don't really foresee it as being a significant problem.

Thank you very much.

(Operator Instructions.) We have no further questions at this time. Please continue.

Thank you, Operator. And we would like to thank everybody for your attention and attending our Q3 '07 conference call. Have a great day.

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