Agnico Eagle Mines Ltd (AEM) 2007 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Agnico-Eagle Mines Q4 2007 and Year-End Results Conference Call. (OPERATOR INSTRUCTIONS.) I would like to remind everyone that this conference call is being recorded on Thursday, February 21, 2008, at 11:00 a.m. Eastern time. I will now turn the conference over to Sean Boyd, Chairman and Chief Executive Officer. Please go ahead.

Good morning, everyone, and thank you for participating in our Q4 '07 conference call. We have our full team available on the line here this morning to answer questions following the formal part of the presentation, but what we'd like to do today--we had the earnings release, but last week we also had the reserve and resource update with some exploration news as well. So we'd like to cover that, and certainly would be happy to cover any more detailed questions on the exploration side in the question and answer session.

But why don't we jump right into it. I know there are several conference calls underway here this morning and we'll just start with the highlights. As we indicated, we did have a reserve update come out. Our reserves are now at a record level, increasing 33% year-over-year to 16.7 million ounces. A big portion of that was obviously the acquisition of Meadowbank, but we did have growth in reserves through drilling and we'll take you through that. As far as the quarter and the operations at LaRonde, again, another very solid quarter in terms of tonnage, in terms of metal output, and more importantly for us, in terms of cost per ton. Very good performance.

We continue to do very well in running that mine very efficiently. We're still forecasting over 50% growth in output in 2008 going to a little over 350,000 ounces as we begin production at Goldex in April and at Kittila in September. And in December, we upped our dividend, which was our 26th consecutive dividend. We update--we upped that by 50% and we hope to continue to be able to increase the dividend as we move forward on this growth plan as we build the new mines.

In terms of a little bit more detail on the operating results, on a cost per ton basis, we were at $65. For the full year at 66, which was about 3% more than budget. So in an era of rising costs across the industry, only 3% above budget is very good cost performance from our team at LaRonde. In terms of total tons, we mined about 2.67 million tons, which was right on budget and was similar to what we mined in 2006, so very consistent steady production coming out of LaRonde, which is generating extremely good cash flows.

Our forecast going forward for this year is 358,000 ounces of gold, continued strong byproduct output with silver over 4 million ounces. Zinc, we're anticipating another strong year in zinc with 72,000 tons of zinc and also producing copper. Overall cash costs as we bring two new mines on-stream - we're looking for about $50 an ounce in 2008.

Overall financial results - and don't need to go into too much detail. They're broken out in the press release. What we had in the quarter is we did have a one-time non-cash tax recovery due to changes in the tax rate, which amounted to about $0.21 per share, so our normalized earnings in the mid-20 per share--cents per share were right around the consensus. We had a bit of movement on the revenue side where we had--quarter-on-quarter we had the zinc price realized cut in half essentially and the gold price made up for some of that with about a 50% increase in realized gold prices.

So I think the key for us is the cash flow generated as we build these mines. We need that cash flow to finance the construction of the five new projects. And we look at full year cash flow after working capital changes in 2007 at 229 million, a little bit more than what we did in 2006. So the LaRonde mine continues to generate very, very strong cash flows for the Company, which we'll be using to fund the growth of the five new mines. Our balance sheet - very strong - 400 million in cash. No debt. Shares outstanding. Fully diluted. 146 million. We have available bank lines, which were renegotiated last year with more flexible terms, so those are certainly available to us if we need them to build out the new mine.

As we go forward, the story is very simple. It's basically three countries with four large districts in pro-mining regions that will generate five times growth in production and that host what we think are several 5 million ounce deposits that will not only drive our goal production, but also drive our reserves over the 20 million ounce mark. So we can see continued growth in reserves. In order to get that growth we have to spend on exploration and we have the largest budget in our history underway, spending 65 million and we'll get into some detail on where some of our best targets are on the exploration side.

Our reserve position continues to grow. As we have said, 16 million ounces of gold in reserve. In addition, we have 7.5 million ounces of resource and as you know, we calculate our resource using the same pricing parameter as we use for gold. And it's that resource that we hope to convert as we move forward over the next 12 to 24 months to achieve our target. The short-term target in the next 12 months is 18 to 20 million ounces of reserves. And we hope in 24 months to exceed the upper end of that range as we grow these deposits.

In addition to the gold reserves, we have over 100 million ounces in silver reserve--118 million ounces, and also significant quantities of zinc and copper.

A breakdown of the reserves by--which is interesting--by country and certainly by jurisdiction. In Quebec--Quebec of the 16.7 represents almost half of our current reserve position. When we add Meadowbank to Quebec our Canadian reserves of 11.1 million ounces represent two-thirds of the overall reserve base, so very strong. And that also goes for resource. If you break down the resource, it almost breaks down along those lines as well. So of 24.2 million of reserve and resource, two-thirds of that is in Canada, so that's certainly our base. And the biggest growth going forward will come from Meadowbank, will come from Pinos Altos, will come from Kittila. That's where we're going to drive the reserves. And we're also seeing some interesting results at Goldex, which we think will also add to the growth in reserves going forward.

Moving to the production growth, the CapEx and the projects, we're still on track to achieve the growth objectives which are on the slide which came out on December 10. So in order to meet those objectives we've got Goldex starting in April of this year and Kittila starting in September. To break out the growth in production again by country and district, in Quebec as we move forward we're looking for in 2010, 2011 averaging about 500,000 ounces coming out Quebec, which represents a little over a third of our production. When you add Meadowbank in 2010, 2011, you're producing about 1 million ounces in Canada on average between those years. Moving forward, in 2012 and beyond, about 1.1 million ounces of our total production or 75% of the production will come from Canada. So that's our backyard, essentially. That's our strong base to build this Company.

Our capital expenditures, no change there. As we move forward the big year is this year's spending, about $550 million on our projects, dropping off significantly after that. And the offset of that is that we've got 400 million in cash. We are generating over 200 million in cash flow on average over the last two years. That will increase this year as we bring two new mines on, increase again in 2009, as we bring another two mines on. So as we move forward, we can fund this with internally generated funds, existing cash, and the bank line, if we need it.

A little bit more detail on the project at LaRonde. In addition to the reserve of 5 million ounces, we have 1.3 million ounces of resource, so a world class deposit. We've mined almost 4 million ounces from this deposit. So at the end of the day it will mine out at over 10 million ounces. So that's the foundation and mainstay of the Company. LaRonde II Extension is going extremely well. A production hoist was commissioned in December, shaft sinking started in December, so everything's on track to reach our objectives there. We're looking for average life of mine production of about 340,000 ounces at about $150 cash cost announced.

We're continuing to do exploration there to the west of the ore body and also to the east. Some of our competitors have had good success in the region. We continue to have targets to drill. That remains a focus of ours because it's a prolific belt and we've got some definite targets there. At Goldex everything's on track. Just a fine tuning in terms of completing construction at the processing plant. As far as the reserve position goes, the resource continue to grow there. In addition to the 1.6 million ounces, we posted at the end of the year 900,000 ounces in resource. There's still good exploration potential. We've had some recent good drilling results. We continue to drill, so we'll put out an update on that as we move through the first quarter.

Again, everything all set for April. We've got 250,000 tons stockpiled of development ore with an average grade of 2.2 grams per ton, so we're ready to go for startup in April.

At Lapa, 1.1 million ounces of reserve, 300,000 ounces of resource, still on track for a startup in the middle of 2009. Shaft sinking was completed on schedule and we began the lateral development of the deposit in November. So everything on track at Lapa.

At Kittila, we continue to see growth in reserves and growth in resource. In addition to the 3 million ounces of reserve, our resources now have grown to 1.7 million ounces. So as we've been saying for the last little while, we have the potential to have several 5 million ounce reserves to--seven--several 5 million ounce reserve deposits. Kittila, it's our expectations, will be one of those. Total reserve and resource right now at 4.7 million ounces, that does not include some recent drilling below the 700-meter mark where we've got some drills. That comes up on the next slide. So we can see that at some point this year, we are in a good position to likely push the total reserve and resource at Kittila over the 5 million ounce mark. Everything's on track in terms of meeting the production timing for September startup. The autoclave is onsite. We're anticipating delivery of the grinding equipment shortly. So everything on set--onsite for production startup in September of this year.

In terms of a little bit more detail on the exploration, as we've said, the deposit continues to grow. Where we see the potential for the most meaningful growth is that depth below the main Suuri zone. We've got several holes that have encountered a consistent [lens] that we see at the top. There's potential for additional lenses that we see down there and none of these recent results have been factored into our current resource number of 1.7 million ounces. So we're looking for--we continue to drill and we're certainly looking at some point to be adding additional resources at Kittila.

Pinos Altos in Mexico, again reserves continue to grow. They are now at 2.5 million ounces of gold and 73 million ounces of silver. We have an additional 900,000 ounces of gold resource at Pinos Altos. In terms of the project, we're set for startup. We're estimating Q3 2009. We've begun our construction of the project there and we continue to drill it. We've got several drills as you'll see on the next slide in several target areas. The main target areas are to the west of Santo Nino in the Cerro Colorado area where we've been doing some active drilling. Also, a critical target for us is below Oberon de Weber, where we continue to drill below the proposed pit outline. Those are two key areas of focus right now. We've got five drills that are actively working in the main reserve resource corridor along from Cerro Colorado through Santo Nino to Oberon de Weber.

As we move away from the main reserve resource corridor we have an additional--initial resource estimate on Creston Colorado Mascota, where we've--estimating about 400,000 ounces there. We continue to drill there actively with two drills. That has potential to continue to grow as we drill it. On a cross section, we have a north-south fault, which is on the west side of the Cerro Colorado structure. That seems to have shifted the Mascota portion of that zone further up from the main Creston Colorado structure. We're currently drilling along the fault. We're looking for potential feeders along that fault into the main area. So certainly we think that this has potential as we drill it to continue to grow as well.

On Meadowbank, that reserve and resource also continue to grow and we've only been onsite there since April of last year. The combined reserve resource is now 4.9 million ounces. So again, another deposit that with further drilling will likely surpass the 5 million ounce mark. So we continue to drill that. We'll go through some of the targets there on the future slide. We're looking for startup there in January of 2010, so we're certainly on track to achieve that startup. We're quite active on the site there. Construction underway on the main camp, which will hold about 350 employees. We've got a lot of our mobile equipment onsite, so we're ramped up for a major construction push in 2008 and a major delivery or push of equipment to the site in 2008 to continue construction through 2009 for startup in early 2010.

As far as exploration, we've got four main priorities. The number one priority is between Portage Bay and Goose Island. There is potential to possibly increase the size of the pit in between that area. An additional potential, our second sort of target area would be between Goose Island and Goose South. We've certainly seen in earlier drilling that there's a potential to link that up at a depth of about 150 meters below surface. The third priority would be around Cannu, where we have to do a bit more condemnation drilling to fine tune the plan around that pit. And the fourth priority, as we get further on into the year in May we will be drilling the Vault zone, where it appears that the grades get better as we go deeper there. So there's certainly a lot of potential on the main sort of reserve/resource horizon to increase the overall size at Meadowbank.

So as we summarize before we take questions, we continue to generate very strong earnings and cash flow underpinned by great performance and operating performance at LaRonde. We're on track to increase production by over 50% in 2008, on track also for five-fold production in 2010. Our reserves continue to grow. Our resources continue to grow. We've got the largest exploration program we've ever had underway in 2008 with very good targets.

And as you can see, with LaRonde at 5 million ounces reserve and over 1 million ounces of resource, with Kittila now at 4.7 million reserve and resource, with Meadowbank at 4.9 million reserve and resource, and with Pinos Altos reserve and resource at 3.5 million with significant reserves in silver with wide open targets, we certainly feel that that will be 4 and possibly 5 million ounces as we continue to drill it. So we're in a good position to continue to grow reserves. And that's certainly our formula to build further value is to build up the reserve base of this Company on the existing projects and increase our production through construction of the existing projects.

With that, we can turn it over, Operator, to the callers and we'd be happy to take questions.

Thank you. (OPERATOR INSTRUCTIONS.) Your first question comes from Tony Lesiak from UBS. Please go ahead.

Good morning, Sean. A quick question on Meadowbank. Can you remind us what the CapEx there is?

The CapEx--good morning, Tony.

Hey.

The CapEx is CAD414 million.

Okay. Because there was an inconsistency with one of the slides showing 110 spent as at December 31, 2007, and then if you look at the desktop notes I think there was 167, so I'm just trying to reconcile the difference.

Yes, the one in the slide I think is in U.S. dollars. So maybe Dave has--.

--Actually, Sean--there is an inconsistency there, Tony. The 110 was the forecasted number that we gave out in December and we did spend some of our capital earlier than expected in the fourth quarter. But the overall spend on the project is actually US390. That hasn't changed, so it's just a question of timing of capital expenditure. So the slide is a bit out of date.

So David, the spend expected for 2008 for Meadowbank is still in the 170 range?

I'm going to have to revisit that. Overall, the project spend left now is going to be lower by about $50 million, so 230 over the ensuing couple of years. As to the split of that, I'm just going to reserve comment on that until I look at some of the expenditures we accelerated in Q4.

Okay. A question for I guess either Ebe or Sean. Just looking at Kittila, I mean, you're looking at about a 30-year mine life now based on reserves and resources. How easily could you double production there?

Well, I think the main option to double production would be to sink a shaft and that would access the whole bottom part of the mine.

And in terms of the mill capacity and expansion potential there?

I think we would have to add to it. I think--back to (inaudible), have you got any ideas on how to expand it?

Yes, we have a place to add another grinding units. For example, we just have a single stage unit. (Inaudible) autoclave presently we'll be able to increase capacity, but we'll be able to add another one, so I don't see a big issue to increase double eventually capacity.

I guess it is something you'd probably look at in 12 months time after the mine has started up and you've done some more drilling.

That is correct. Also I think once we've completed the--this year's drilling program underground and get a better feel for what we have at depth, as Sean mentioned, all of those lower results have not been incorporated in that 1.7 million resource figure. So once we get a better handle on that, we'll gear up and start thinking again.

Okay. And just finally, on the resource reserve expansion at LaRonde I, the upper mine. Ebe, maybe you could just talk to the Pinos shaft capacity enabling it to mine at that 6,100 ton per day rate in the underground mine, plus maybe access some of those additional resources reserves from the upper mine.

Currently we're hoisting about 20 hours a day, et cetera. So we as far as capacity is concerned, we are pretty much maxed out. We're averaging around 7,300 tons imperial--I mean, metric tons per day. It has never really been an issue to extract tons from the upper part of the mine. That's very easily accessible. Our challenge will be to keep--as we go deeper in the mine, last quarter we averaged over 2,400 tons per day just [trucking] from below level 215. So that's where we have to focus our energies and that's where also the bulk of the gold is.

So, I mean, what I'm trying to get at here is, I mean, is it possible to kind of take that 340,000 ounce annual target from LaRonde longer term and maybe adjust it higher to reflect the additional [stokes] available in the upper mine?

Yes.

And can you talk to maybe a number that we should be potentially looking at?

Well, when we--what we have done, we've increased the life of the mine now by two years. So if we do the math you're going to look at something in the range of close to 400,000 ounces per year.

Okay, great. Thanks very much. Great quarter.

Your next question comes from John Tumazos from John Tumazos Very Independent Research. Please go ahead.

Congratulations on all the progress.

Hi, John.

Hi. Doing the five projects at once is so extraordinary and the industry environment of course is difficult. Could you describe which of the projects you are your own general contractor for? And which outside contractors are your leading contractors? And with regard to Goldex, the 230 forecast for operating cost is most extraordinary given that the cost profile actually went down in the last five years as the industry costs went up and the currency went against you. Please elaborate on all those good progresses.

Good morning, John. Ebe, here.

Good morning, Ebe.

We are our own general contractor on all of the projects. We have our own construction managers on every site. As far as general contractors, our--as far as contractors or the main contractors, I would say one of them would have to be [Dumas Contracting], our shaft sinking contractor who has provided us excellent performance at Goldex Lapa and is currently on LaRonde Extension. We have a great crew of pipefitters and electricians from Northwestern Quebec. In terms of engineering, we are spread right throughout the industry. We use the [SNCs], we use the [Hatches], we use the [Cassidy], we use [Vinnie Varr] from Northwestern Quebec. So we have access to excellent engineering across North America and even in Finland.

With respect to Goldex operating costs, it all comes down to a matter of economies of scale. We have 18-yard machines underground. Goldex, once it's all blasted and all the 22 million tons are blasted, will essentially become just an open pit underground operations materials handling. We are very close to the shaft. We also have a bit of elasticity within the processing plant and also within the shaft, the hoisting capacity itself. So that provides us with great flexibility with respect to being able to get the tons out. As far as drilling performance is concerned, we are right on target. We expect to have well over 1 million tons drilled off within the next half year or so. So as far as Goldex is concerned, the processing plant is essentially ready. The underground mine is in the final stages. So we're on time and I would say we're ahead of schedule and on budget.

Thank you and congratulations.

Your next question is from Victor Flores from HSBC. Please go ahead.

Yes, thanks. Good morning. Just coming back to your exploration budget for this year, the 65 million. Could you give us a sense of where that money is being spent and if there are perhaps a couple new projects that you'd like to talk about at this time?

I'll just give you the overall and maybe Alain will have some of the details. Of the 65 million, Victor, about 37-38 million is around the projects and that's largely at Pinos, Kittila, and Meadowbank. And then, we have additional sort of grass roots exploration. But the main component of that is to convert the resource to reserve at the projects to continue that growth, and then we've got some grassroots exploration. Maybe Alain has some sense of where some of the grassroots are focused.

Yes. The total budget for the grassroots is around $34 million. Just in Finland would be 5.1; in U.S. it's 4.4 million; in Mexico it is 7.6. And we are looking to open a new office in Vancouver that would be around 2 million. And Quebec I'll tell you is around 3.7. And (inaudible) will be around $11 million.

Great, thank you. And of that 65, that is all being capitalized, or sorry, all being expensed, or is part of that capitalized?

About 29 million of it is expensed and the rest is capitalized.

Great, excellent. Thank you so much.

Your next question comes from Mark Smith from Dundee Securities. Please go ahead.

Yes. I just have a couple of quick questions for you. Could you just give us maybe, David, a little bit of tax guidance for the next year or two?

Yes. We're looking for statutory--or not statutory--but an effective tax rate of about 35% across the organization in 2008. Probably slightly lower or similar levels in 2009 and the cash component this year will probably be quite negligible, but next year we expect to start paying again significant Quebec mining duties and probably not income taxable for several years hence.

Okay. Just a little bit more color on that. So the 35% effective rate this year, you'll basically be [cloning] it back on the cash flow statement. But the--in 2009 you start paying what proportion of that 35%?

12 out of the 35.

12 out of 35?

Yes, so that works up to about a third roughly--the cash.

And give me an idea of when you would be fully taxable?

It really depends on your metal price assumption, but say we're at current metal prices, I would say four to five years.

Okay, thank you very much. Oh, okay. I've got a couple of other quick questions. Just in terms of cost cutting, you were looking at $48 an ounce in December. Are you still at that range, because I don't see it in the current release.

Yes, it's still--it's on one of the slides, about $50 an ounce.

About $50?

Yes.

Okay. And then, maybe you could just give me some guidance, David, on sort of where you expect the investor adjustment to be this quarter, because there's been a massive rebound in the metal prices.

Yes, I would say that speaking in very macro terms because it's hard to quantify until we get to the end of the quarter. I mean, obviously, if the metal prices stay at these levels then we're going to have positive settlement adjustments on virtually all the metals, all four of them, because they've all shown appreciation since the end of the quarter.

No, I gathered that. I just was trying to get a feeling for the magnitude that might be if today's price were the price you were settling at, which I assume it would be since the shipments are like 30 days delayed.

I haven't--to be honest with you, Mark, I have not done that calculation.

Okay. And then, maybe just give me a general feeling, the 300 meters along that you're at Kittila below the existing resource depth. Is that extensive along the strike of the entire structure or is it just a small shoot that you're seeing that in? Just some color on that.

Those intersections are open to the north and south. If you want to [arm wave] what we're basically seeing is a potential repeat.

Of the existing resource. So another up to 30% of the underground portion. Does that sort of--.

--Roughly.

Okay. All right. Thank you very much, guys.

Okay.

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

Good morning, gentlemen.

Good morning.

Just a couple quick questions to follow up just on a question I think that Tony asked with regards to capital. At LaRonde in your PowerPoint, I think there's also another inconsistency maybe for LaRonde and Lapa. It says 40 million invested, but the notes that were put out said 52 for '07. Which one's the right number?

Sorry, the--sorry, the LaRonde number?

Yes, the LaRonde number in the PowerPoint says 40 million was actually invested on the extension. But in the desktop notes it actually said 52.7.

And again, I haven't had a chance to--it was just a miss on these slides, because we took them forward from the December release. So there is a slight inconsistency on timing, but the overall capital number hasn't changed. So the remaining spend will be lower for both of those projects.

Okay. And then, for Lapa, I guess it says 120 more to be completed by 2009. Can you give us a bit of a break on how you see that breaking out in '08 and '09?

Yes. Actually, most of that spend for Lapa will be in '08. And I confess, I don't have the December press release in front of me, but we did provide that breakdown on the December 10 press release.

Okay, so that is the accurate one? I wasn't sure if it changed because the numbers all look different.

Yes, it will be slightly different, but it's certainly not material in the case of Lapa.

Okay. Then can we just look at a couple housekeeping matters? Just G&A forecast for '08 without stock-based compensation expenses.

Similar levels overall. The stock-based compensation will probably be slightly higher. I would say probably closer to about $15 million.

Okay. And then, you know what, I think that covers it. Thank you.

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

Good morning, guys, or afternoon, whatever the heck it is here. The question for you on the Vault zone - are there any resources yet established on the Vault zone?

On Vault, there's a reserve and the reserve is within a pit shell that we developed for the reserves. But there's also resource extending from the--down dip into the Northwest--Northeast. And that's what Alain is referring to and Sean referred to as well. There appeared to be slightly higher grades than we had seen in the--for the reserves estimate. So that will be the focus. And that's one place where we weren't able to go last year during the--when we had ice. And it's something we're going to look at this year while there's ice there until mid-June is to drill and see if we can increase our confidence in those resources extending below the bottom of the pit at Vault.

Okay.

That's an exciting place for us to go this year.

All right. Thanks, [Mark]. Second question, have you guys experienced any positive reconciliation? I know when you were up at the site last year at Goldex site visit going back a year and a bit ago, you had referred to some positive reconciliation potential. I think it was maybe in the raise pouring work that you did versus either blast hole or diamond drill sampling. Any positive reconciliations to comment on there or could there still be a positive reconciliation when you put that bulk sample, the bulk mine materials in through the mill? Thanks.

Well, when we did the feasibility study and we compared the raising with the mill processing, the bulk sample results, the diamond drilling, the muck samples, et cetera, the average grade through the mill ended up being about 082, and whereas with the other methods they averaged out to being about 072. So when we--we based the feasibility on an 072 grade. So as far as having positive reconciliation potential at Goldex, yes, there is that upside potential, but we haven't incorporated it in any of our budgets or mine plans or studies.

Okay, thanks, Ebe. Last question for you I guess, Ebe, as much as anybody. You're referring to the--being able to mine lower grade zinc [cores] obviously because of what's been record highs in prices extending the mine life by up to two years. We didn't see that in the reserve statement, i.e., year-over-year reserves did decline. So maybe you're talking more about these resources at--or these will be ounces and pounds mined outside of the reserve base. Is that correct?

That would be correct. It's still a matter of on a daily basis, like the metal prices that we use are the three-year [SECC] moving average and the metal prices when we actually mine our current or spot. So that's where the difference comes in.

And Ebe, how quickly can you modify the mine plan on a daily or weekly basis to say this week gold's up $1,000 an ounce and zinc's down $0.50 a pound, so let's go for different ore extractions? Can you adapt that quickly?

I think we can adapt fairly quickly with respect to the zinc because the zinc is in the hanging wall, so it's just a simple matter of how thick do we want to take the panel. With respect to gold, well, that is pretty well I would say cast in stone. What we may be able to do is on some of the fringes or eastern and western sides of the pyramids where the zone tends to peter out or pinch out, we would be able to add a couple of extra stokes, but that wouldn't be really material.

Okay, thanks very much.

Your next question comes from [Cosmos Chu] from CIBC World Markets. Please go ahead.

Good morning, gentlemen.

Morning.

Just a quick--a few quick questions here. For the quarter, tonnage production was down about 250--or 250 to about 300 tons per day. Could you give me a sense as to what might have caused that decrease in the quarter and what are you expecting for next year?

Well, we had a clutch failure on the ball mill and that cost us over 93 hours of milling time in December, so mill availability in December alone was something like 89%, so availability over the quarter and overall was down 2 to 3%, so we ended up stockpiling the ore and that is one of the main reasons. Other than that, we ended up changing a hoist cable as well, and so they were just maintenance and breakdown issues, but nothing to do with the mine itself.

Okay. My second question is at Kittila, so far about 181,000 cubic meters has been stripped, or about 350,000 tons. What is the stripping that is required to get into production and more specifically, what is needed between January and September to meet that task?

I haven't got the exact figure, but at the end of the coming quarter the ore will be--we've already exposed the ore and now we are working on the--starting to work on the east side of the deposit to expose the ore as well, so waste--in terms of actual quantities I believe it's somewhere in the neighborhood of about 1 million tons to go and with additional waste stripping. So I think we are in a great position there. The ore, as we already--we visited, it's already exposed.

Okay. My last question, at Creston, right now do you have a minimum threshold in terms of what you need to build a standalone operation? I guess right now the resource is standing at 400,000 ounces and my guess is that could be a little bit small for (inaudible).

I didn't quite understand that question.

Do you have like a target in mind in terms of how many ounces you need at Creston before you can have a standalone operation?

Well, I would think just using the example, the minimum would be at Mascota and we have about 400,000 ounces there and we feel that could be a minimum for a heap leach operation at Pinos Altos. So when we started off--just a bit of history here, when we started off at LaRonde, we had 200,000 ounces and as Sean mentioned, we've almost mined four and we have another 5 million to go.

Okay, thanks. That's all I have. Thank you.

Your next question comes from Anita Soni from Credit Suisse. Please go ahead.

Good morning, gentlemen. My first question is for Dave on the taxes. Could you just elaborate, beyond 2009 the cash portion, does that remain flat at about 12% or does that increase upwards over the next four to five years to be (inaudible)?

It just--Anita, you're just breaking up. We didn't really catch all of that.

Okay. I will ask again. Dave, a question for you on the taxes. For 2009, you're 12% taxable of the 35%. And I was just wondering over the next four to five years after that, does it remain at 12% or does it continue to creep upwards until you're fully taxable?

No, it's a little more complicated than that. 12% represents the Quebec mining duty portion of our overall tax rate. And we will become quite fully assessable there next year. And starting in the next four or five years, we will start to pay income taxes in the various jurisdictions as these operations recover their initial capital expenditures. So it is a complex question that has to be looked at jurisdiction by jurisdiction because it varies from Mexico to Finland to Canada. But these metals say in four or five years will start to be taxable in each of these jurisdictions.

Okay. So just a question for Ebe in terms of the increase--the two-year increase in resources on--at LaRonde. You said that it was about 50,000 to 60,000 extra ounces over the 340,000 ounce life of mine for LaRonde II. Can you just give an indication either an absolute number of ounces how much that two years represents or how many years that 50 to 60 extra that we would see just from a modeling standpoint? And also, what kind of increases would we see to the zinc production? And thirdly, what impact to costs would the lower grades have?

In terms of the distribution of an additional 40,000 to 60,000 ounces per year, I would guess that would be possible over probably a four-year period and then it would stabilize in the 300, 350 ounce per year as the life of mine--as we have published in our life of mine model. With respect to the second part of the question with zinc, you broke up again and I didn't quite understand that.

Yes, I was just looking for how much extra--additional zinc production. I assume the 50,000 to 60,000 ounces is just the gold, or what that gold equivalent?

That would be gold in terms of additional zinc. There are years in our model where we exceed over 200,000 tons--up to 221,000 tons. As we--in the next couple of years as the grade dips slightly before we transition to LaRonde Extension, there are years with that sort of magnitude of zinc production.

Okay, and lastly, it was the cost. What kind of impact would that have to the cost over the life of mine?

Well, I think with respect to zinc prices going forward, David, what would you suggest? I think on a per ton basis I think when you look at our performance over the last couple of years we've been able to keep a lid on our operating costs on a per ton basis, so we can see escalation of about possibly 4%, maybe as high as 5% on a per year basis. But Dave, maybe you could speak with respect to the impact of increased zinc.

Well, sorry, Anita. You're talking about when the zinc drops off, what does that do to our cash costs?

Right. I mean, these additional ounces are--and additional tons for zinc are lower grade, right? So that would probably--.

--Yes, our zinc production kind of peaks out in around 2010, if you'll recall from our December press release. It actually is--he was referring to probably tons of concentrated. It's about 72,000 tons of refined zinc production in that year. And obviously, as it drops off, our byproduct [plants] will drop off quite significantly and the cash cost will start to get positive for LaRonde around that time after 2010. And we're looking at an average of about $150 an ounce of cash cost over the course of the entire mine life from here on through--to 2021.

Okay, thank you.

Your next question comes from Greg Barnes from TD Newcrest. Please go ahead.

Yes, thank you. Just I may have missed it, but I was wondering if you've got the final permit or license for the autoclave at Kittila?

Can you repeat that?

You broke up, Greg and we didn't get the question.

Oh, sorry. I was wondering, I seem to remember you needed to get a final permit for the autoclave at Kittila. Are you anticipating getting that by the end of the year?

We've been in touch with the Lapland Environmental Authority and it looks like that permit will be delivered in March - next month.

Okay, great. Thank you.

Your next question is a follow up from John Tumazos from John Tumazos Very Independent Research. Please go ahead.

At what point in the completion or winding down of this big capital cycle would you--and I hate to ask this--feel comfortable building mines more or taking on additional projects? There's a whole world of companies out there that don't have the expertise to build their own wonderful deposits and I'm sure would love your help.

Well, we've got different parts of our technical team. Some are ready now. Some are ready in six months. Some are ready in nine to 12 months. So as far as looking, we always look. The type of things we're looking at would be similar to the type of things we've bought over the last three years. And I would think we're ready anytime within the next nine to 12 months for the next project, once we get Goldex and Kittila built. Our planners are already ready because all--most of these five mines are already planned.

Just to give you a bit more color on that, our construction manager who built Goldex because Goldex is so far advanced and so near completion is already in charge of the construction on the Meadowbank site. So once we fully complete Goldex and Kittila, we have all of those people available to go on to other projects.

Super. Thank you.

(OPERATOR INSTRUCTIONS.) Your next question comes from [Norbert Tam] from [Treveron Group]. Please go ahead.

Good morning, gentlemen. Looking forward in the years to come, are you expressing any interest in going into any other countries whether than you're at?

Not at this point. Most things we're looking at now are within the sort of jurisdictions we are currently building in or operating in. One of the things that we prefer to do is keep our political risk low. As we've always said, mine building is tough enough and we try to minimize the distractions around working in a lot tougher parts of the world. So we're comfortable in those jurisdictions. Eventually, we'll have to take on a little bit more risk. But we'll be prepared to do that because we'll have an international multi-mine profile at that time. But for now, a lot of the things we're looking at are right in the same regions we're currently in.

Okay. And also, you're saying you have expenditures of approximately 400 to 500 million this year to get the mines online and you have 500 million that you have in cash. Are you expecting to be in debt at any given moment for a short period of time, a semi-long period of time? And then, back to cash in the bank, again.

Well, we've got 400 million in cash. Our estimate for construction expenditures in '08 is 550. Last year we generated after working capital changes 225 million. So cash and cash flow should get us over the big hump in 2008. We do have that undrawn bank facility of 300 million. If we need to draw it down we will. But our whole plan and thinking is don't--we've been very good at not issuing a lot of equity over the last few years, which is unusual in this industry, so we don't want to issue equity to fund the growth and the build out of the current pipeline. So we're in a position to do that.

Okay, that's excellent. Thank you very much and all the best to you.

Thank you.

Your next question comes from David Christie from Scotia Capital. Please go ahead.

Hey, two quick questions, guys. Just first maybe for David. On the line of credit, do you think you're going to need to tap into it anytime this year or early next year?

We're likely to draw it this year and next year partially, but given the commissioning of all of those projects in 2010, we expect to revolve most of that back in by that time.

Exactly. Good. And maybe for Alain, I've been hearing some good things from some exploration you guys are doing with a partner in Nevada. Can you tell us any more about that?

We don't have other news now. [If you're looking at a UEX] press release, you can have a good update. What we have presently, we have two rigs on the site (inaudible). We continue to drill during the winter. I think we have around 10 holes waiting for (inaudible). And the plan is to stay [another year] on that project and drill.

How much are you spending on that project together collectively this year?

About 4 million is for Nevada and I can say 75, 85% of the budget would be on new (inaudible).

Okay, so that's pretty important to you, then. Okay, great. Thanks, guys.

Thank you.

Mr. Boyd, there are no further questions at this time. Please continue.

Okay. Thank you very much, everyone, for attending our Q4 conference call. And we plan on having a few mine visits this year, so we'll keep you posted. We'd like to get you up and see some of these operations. So thanks, again.

Ladies and gentlemen, this concludes the conference call for today. Thanks for participating. Please disconnect your lines.