Agnico Eagle Mines Ltd (AEM) 2010 Q3 法說會逐字稿

Good morning ladies and gentlemen and thank you for standing by. Welcome to the Agnico-Eagle Q3 results webcast conference call. (Operator instructions) I would like to remind everyone that this conference call is being recorded today, Thursday, October 28, 2010 at 11:00 am Eastern time. I will now turn the conference over to Sean Boyd. Please go ahead, sir.

Thank you Operator and good morning everyone. We have our full team here in Toronto and prepared to answer your questions. What I'd like to do is go through some slides, some of them we'll go through quite quickly. But I think we would characterize this quarter as continued improvement in our production. We saw a decline in our cash costs from the previous quarter but there's still some work to do at a couple of the mines but I think more importantly for us, we're starting to see the cash flow generation ability now that we have six mines up and running. So I think we look at that as an important driver for us as we look for continued expansion and output in the coming years, using that cash flow to expand output but also to increase the dividend.

We've been asked after our announcement yesterday about dividends and if you recall, we paid 28 consecutive annual dividends. We decide on those dividends towards the end of the year, so we've kept the same schedule so we'll be announcing that mid December when we put out our five-year plan.

In terms of the financial results, just moving through the slides, I think the biggest difference was Q3 to Q2 comparison where we produced 28,000 more ounces or about 11% increase in production and our cost went down about 10% or $46 per ounce. We saw a dramatic improvement year-over-year from last year to this year, due to the production coming from the new mines that were commissioned in the last year. The key for us, as we mentioned, was the cash flow generation before working capital changes in the quarter of $171 million. That's a record. It beat the Q2 record of $139 million, so that will be the focus as we go forward is generating not only gross cash flow but also cash flow on a per share basis.

In terms of production for the quarter, we had 285,000 ounces, which was a dramatic improvement from the prior year. As we look out through Q4, we expect a bit more production in Q3 at roughly the same costs. In terms of the cost side, our cash cost per ounce was 441. As we said, there's still work to do on the cost and part of that will come from as we get into discussing each of the mines, coming from increasing throughput, where we'll be able to reduce our cost per ton, we'll have increased gold output and that should be reflected in lower unit cost.

From the CapEx front we're right on target in terms of our CapEx spend for the year of about $500 million.

From a financial perspective, we still have tremendous liquidity. We've got liquidity of about $1.2 billion with our large mostly undrawn credit facility.

From the strategy perspective, there's really no change; we're focused on expanding production mostly from the existing asset base and over the next nine months we'll have the results of studies for Meadowbank, for Pinos Altos and for Kittila and we'll be able to share the results of those studies which will result in increasing output as we look at not only optimizing but also expanding the asset base.

From an M&A perspective we're asked all the time what are we thinking there, well, we're thinking the same way we've been thinking for the last several years; earlier stage opportunities and opportunities that we can get positioned in maybe with a share position so we can help the company advance their assets and get a better sense of the risk and the opportunities associated with those assets. I think you saw in the quarter we did have some profits from sale of investments so we don't just buy, we also will sell when we determine there's no strategic advantage to continue holding either the property or the share position.

As far as reserves go, we'll have our reserve update in February and that reserve update will be focused certainly on Kittila but also on Meliadine where we've had some good drill results from the recent drill program. We'll actually be putting out an exploration press release around mid December, which will provide an update on the drilling program since our last update which was in September.

From a production growth point of view we've still got some very good growth over and above the 2010 production rate as we move out through 2014, anticipating getting to about 1.4 million ounces and that wouldn't include expansions in Finland and Mexico an at Meadowbank and then beyond 2014, we're looking at Meliadine as being a big part of our production profile beyond 2014.

From a capital expenditure point of view, on this slide really only includes the sustaining and what it takes us to build the current production base to get us to about 1.4 million ounces. We do expect to increase this CapEx for potential expansions and also for Meliadine. Just to give you a sense of Meliadine, I think it would be fair to say that the cost to build Meliadine would be very similar to Meadowbank. We're looking for a large tonnage operation up there in the neighborhood of 6,000 to 7,000 tons a day with an open pit and underground component. So I think if you want to benchmark it, although we haven't completed the study and the feasibility won't be done for a couple of years, we're still looking at, I think it'd be fair to say CapEx in the neighborhood of Meadowbank.

From a cash flow per share perspective and the net free cash flow, this transformation of our business by building these mines has put us in a position to be among the industry leaders in terms of cash flow per share and free cash flow, as you see on the slide. The operations; LaRonde continues to have exceptional performance; cost per ton on budget. It's certainly benefiting from higher than budget byproduct prices because we're still producing some strong zinc output and some strong silver output. As we move forward into later next year and beyond, we'll be able to access that higher grade gold from the deeper part of the mine, all of the infrastructure and construction to access that deeper material is on time and on budget.

At Goldex, had excellent performance here. Our cost per ton in the quarter was CAD$21 which is below budget. We've almost achieved the 8,000 ton a day target and we're about six months ahead of schedule there, had an extremely good quarter from a tonnage perspective. Cost per ounce below $300 an ounce so exceptional on the cost per ounce side. Because we've advanced our development and we'll have the ore body effectively all blasted by the end of this year, we started development on the satellite zones and that will allow us to extend the mine life. So we're having good exploration results at Goldex and we expect to be able to add additional resources and reserves as we now turn to more of an exploration focus on this project, where in the past the focus has been building the asset and building the infrastructure.

At Lapa we had very good performance. Our tonnage is exceeding plans. Cost per ton below budget. We are doing exploration there, looking to extend the mine life. We have two exploration drifts moving to the East into open areas and that will give us drill platforms to look for additional mineralization along the main contact which hosts the Lapa deposit.

At Kittila, again very good turnaround. We reached our design tonnage of 3,000 tons per day and we're very close to design recoveries. Recoveries averaged 81%, actually almost 82% in the quarter. We're anticipating 83% by year-end so record production because of the increased throughput and because of the improved recoveries. We're still optimizing there. We're still focused on reducing our cost per ton. We continue tan extensive drill program there as we drill the structure as it moves to the north and we'll have an update on some of the recent exploration in December and that will be part of our reserve update, also in February. We have a longitudinal section slide up, just an update, as we continue to drill we continue to work on the expansion study which had been delayed by about six months as we worked on the recovery issue. We still expect to be in a position around midyear 2011 to update the market on the results of the expansion study.

At Pinos Altos in Mexico we're continuing to ramp up throughput. We saw about an 8% bump in throughput to around 3,800 tons a day from the previous quarter. The two new filters are in place and running and that gives us some added flexibility to increase the throughput. We're now moving into the underground mine where we have higher grades, because of the increased throughput we did see record quarterly production at Pinos Altos. Looking out into 2011, we hope to see increased throughput but also the start of the Creston-Mascota property which is the first of what we think may be several satellite deposits being built.

That project remains on time and on budget and we expect production in 2011. The cost per ounce were higher than we had hoped. We had onetime stockpile adjustment which is about $90 an ounce, so the $690 figure isn't truly representative. We can talk about that in the question and answer. We also had not accrued a midyear bonus which is about $40 an ounce or so. So, we expect unit costs to come down here as we increase throughput and as we get access to higher grade material as we move into the underground part of the deposit.

At Meadowbank we did see increased tonnage but we're still below the design capacity of 8,500 tons a day. We have a temporary portable crusher installed; we're seeing improvements from the third quarter, so we expect our cost per ton to come down at Meadowbank as we increase the throughput up towards design capacity. That will increase gold production. And to be fair to them, we've only really had two quarters of commercial production so we're still optimizing the mining operations we're still optimizing processing. We do see better equipment availability, we're improving on maintenance, we have larger equipment now in place and all of that should help us reduce our cost per ton. But there's still work to do and that's a major focus of the company is to reduce our cost per ton at that operation.

At Meliadine we touched on it earlier; we look for it to be a big part of our production profile beyond 2014. As you know, it's a 5 million ounce deposit that's characterized by very good grades. We've had a successful season of drilling where we've drilled successfully outside of the known mineral resource outline and that will be part of the update in February in terms of reserve resource and it will also be part of the update in December when we provide that exploration update.

So that's a quick summary of the slides and a rundown of our quarter and we'd like to open it up for questions.

(Operator instructions) Our first question is from Michael Curran, RBC Capital Markets.

I just had a question on unit costs at Kittila; it looks like you've resolved the recovery issues so I think you have the process sorted out. So of the 58 euros per ton operating costs, what percentage of that would be from the plant, the milling, is it half, is it more than half?

The milling cost would be about 35%. That includes mill services and milling both together.

Then just a quick one on Lapa; can you give us a sense of the dilution improvement, the cost coming down there; what are you seeing in the way of the percentage dilution these days?

The average dilution for the year so far has been 53 and we planned 50, so that's down significantly from the over 60 we had last year at this time.

Your next question is from John Flanagan with Fundamental Equities.

Sean, I think you're on US GAAP, is that correct?

Yes.

Is it possible that you will follow others in your industry and shift over to the new international GAAP and if so, what impact might that have?

I'll turn it over to our CFO. The plan was to stay on US GAAP and not go onto IFRS. It has some accounting implications but I'll turn it over to Ammar Al-Joundi, our CFO.

Right now we are US GAAP. Obviously there is discussion of convergence in the future and we will follow that but right now we're under US GAAP. The fact that we're under US GAAP makes our costs frankly look higher than they would be under IFRS, largely because of the stripping. We take all of the stripping as an expense rather than being capitalized. That impact is for us right now in the neighborhood of $15 an ounce.

Your next question is from David Haughton with BMO Capital Markets.

Sean, you had mentioned during the question time you talked to the Pinos Altos cost, a couple of one off weird things there so perhaps this is the opportunity to run through some of your thoughts and whether these are really one off or can we expect to see them in future years?

Several of these adjustments are one off. One, the stockpile adjustment, we lowered the stockpile inventory, that's the first thing, by about 100,000 tons and then the material that we did place on the stockpile was lower grade as well. So we reduced the value, took a charge for the reduced value of the stockpile. So this would be a onetime charge. As far as the bonus that we paid in all of our other operations that was accrued over the 12 months whereas at Pinos Altos they took a onetime charge in this quarter. So, that won't happen again. Also what we have done is we've moved more waste material with respect to pre-stripping over this quarter; it's accelerated. We are actually ahead of plan, so that has been also expensed but on a life of mine basis we should see those costs come down in subsequent years. So those are the three main items that occurred.

The other outstanding issue would be increased maintenance still on our filters on the back end of the mill, but now with two additional spare filters we expect that to come down significantly as well. So these were some of the issues that we faced in the third quarter at Pinos Altos.

Also there you had made reference to transition to some underground mining. I was wondering what kind of ramp-up should we anticipate there?

I would say over the next couple of months we should be somewhere in the neighborhood of 2,000 tons per day. We have already had several days where we were able to mine or produce 3,000 tons a day from underground. Presently we are still in an area where there are more artisanal workings than what we had expected or on our survey plan and so the odd time we get thrown a curve and we delay a mining block because we have to backfill these artisanal workings. But we've gained control of that. Our development is ahead of plan. The stopes are developed so we foresee an excellent ramp up that by the beginning of the first quarter next year we should be in the 2,000 to 3,000 ton per day range.

And are you seeing similar grades there to the open pit?

No, the grade will be significantly higher in gold and silver. The reason our grade is down in the open pitable material is not because of Santo Nino but because of the upper part of Oberon to Weber which is lower grade than in our block model.

Similar questions for Kittila with regards to underground there; just starting in the current quarter, what's your ramp-up and grade expectations going forward?

We're actually processing underground ore as we speak. Kittila's ramp-up will be slower than Pinos Altos. We still have the paced backfill plan to put in, so we're backfilling it with cemented rock fill but we expect to have about 30 to 40% of our ore next year from Kittila underground.

And to get that kind of level are you anticipating similar grades at the underground to the open pit or would you have better grade; what kind of split should we be thinking about?

The grades will be similar. There's not a variation vertically as there is at Pinos Altos. We saw that in our block model from the open pit to underground. The underground grades will be similar in the 5-5.5 gram per ton range.

That means then we should be looking at something like 300,000 to 400,000 tons for the year from underground?

Yes, to start and then within about two years it will be totally underground.

Just looking at the P&L now, the exploration expense was a little bit higher than what we've seen in previous periods as far as the rate; would we expect to see more expense versus capitalized going forward or how should we think about that?

More expense certainly in the fourth quarter because we still have the balance of the much larger 2010 budget to spend in the fourth quarter.

Your next question is from Richard [Heroman], a private investor.

My question is about the quantitative easing program that the Federal Reserve in this country is about to begin; that depending on the number of billions of dollars or trillions of dollars that will be coming into our economy here over the next six months or so will have probably a negative effect on the value of the dollar, which would be a positive effect on gold prices. But my question is basically, what negative effect would it have on your company specifically with respect to the currency devaluation vis-à-vis the Canadian dollar, the Finnish currency and the Mexican dollar and also on your overall cost of production?

I think if you look at some of the last few months where we have had some weakness in the US dollar, we've only had modest strengthening of the Canadian dollar, so I wouldn't anticipate if we get a big QE2 package and we have further weakness in the US dollar, I don't think we're going to see a significant strengthening in our other operating currencies, so we don't think it's going to have any negative impact. If we see a big QE2 initiative we can just see positives because of its impact on the gold price.

Your next question is from John Tumazos with John Tumazos' Very Independent Research.

Congratulations on the huge profit margins in output. As we look forward the next five years or so, how should we expect the operating cash flow to break down between dividends, let's assume share repurchases don't happen because you want to grow, and reinvestment in existing mines and projects already defined as opposed to new projects?

I'll try to answer that, John. I think we've been fairly consistent and we base this off of sort of ramping up to sort of 1.4 million ounces by 2014 with the expectation that we have some expansions of the current production base in place. So if you anticipate some expansion over the next five years plus some CapEx for Meliadine which would come in in late 2015, you'd be looking for sort of average production over that five year period of maybe in the 1.4 million ounce range. You'd be looking at EBITDA of ability out a billion dollars or so. We ball parked our CapEx for expansions and for Meliadine over that period of maybe 400 million a year for four to five years, so you'd still see a significant wall of free cash flow there.

We haven't set a dividend; we're going through that process now during our budgeting for next year and our five year plan which we'll put out in the middle of December. But from a dividend perspective, we're paying $30 million now which is very small compared to the free cash flow generating capacity of the asset base after building all these new mines. So we should see a nice bump in the dividend.

We're certainly focused on our pipeline. In the pipeline now is the expansions plus Meliadine. We have capacity for another project, so we continue to look at opportunities there. What we'd like to do with some of that cash is continue to make cash investments in other sort of promising situations that we see and those cash investments may be in the sort of 25 to $75 million range, so we'd like to use some of that cash to position ourselves in those situations, very similar to what we did with [Riddterhitten] and we did it in a little way with Cumberland. So that's how we see it but we don't have definite percentages now of what we're going to do with that net free cash flow.

Do you think a bump in the dividend, Sean, as a double or a triple in the dividend, given that the dividend is sort of more a one mine dividend than a six mine dividend?

It's hard to say. It's really up to the Board. I think you know how Mr. Pena used to treat the dividend and we used to pay dividends when we didn't have the money to pay them in the old days and I was even the CFO back then, so it's a little bit more disciplined this time. But the big difference between now and then is we have much more cash available to us to pay the dividend. And I think all we can say there is that like hedging, most people eventually come around to our position and we paid a dividend for 28 years and everybody wants to pay a dividend nowadays, so we were the leaders in that, among the leaders in paying a dividend, so we're proud of our record. We like to pay dividends and so that would be our bias as we consider it.

Sean, do you view a doubling in the 1.4 million ounces or 3 million plus kind of size a good thing or would you rather the organization be smaller and very high quality mines?

Smaller and very high quality and that's part of the strategic exercise we're going through right now with the Board, because we're at the tail end of a five year plan which transformed the business and so as well look out, we can actually see the ability to grow a 1 million ounce production base currently, over the next 10 years and do it consistently sort of year-on-year. In order to do that, as we said, ideally we'd like another project in the platform.

One of the things we try to avoid is a magic number, so we won't post a magic number out there because if you try to reach for a magic number you can tend to get yourself in trouble, so we've never, as you know, viewed it as a race, so we would like to just continue in a very measured focused way, drilling our current deposits, taking advantage of expansion opportunities as those deposits grow and making quality investments in early stage opportunities where we can sort of bring some of our expertise to the table, whether as a investor early on or whether we take the entire asset. But more sort of smaller, not bet the company type of things, I think will get us in the right position. Really what we try to do is take something that has a low NAV and try to build that NAV and then get our higher multiple attached to the growth in the NAV of that story.

Your next question is from Anita Soni with Credit Suisse.

Congratulations on a good result this quarter. I have two questions, first off, the cost per ton at Goldex, how will that be reduced now that you've almost completed the blasting there?

I'll turn that over to Ebe; that's cost per ton at Goldex, Ebe, how will that look going forward?

The cost per ton will decline slightly by about a dollar or so. We will be expensing some of the development on the satellite zones, but we do expect a decline of about 10% going forward.

The second question is with respect to year-end reserves and resources. The target out there is 20 to 21 million ounces; your last reserves were at 18.4 so that implies a good 10% bump this year. Are you on track to achieve that?

So far we are, Anita. We've had some excellent drilling success at Kittila, so Kittila is on track. So we've got a bit of work to do between now and the end of the year when we will be recalculating but we did a recalculation in the middle of the year and so far we're on track.

I would just add to that, Anita, I think the way it's likely going to unfold because we have delayed the Kittila study by six months, I think what you will see is a number come out in February and then get updated again in the middle of the year when the study comes out, because we have deeper resource there that we can't move into reserve unless we have an expansion study completed. So I think you should look at it now in two stages; the first stage being February and the second stage being midyear and the midyear update would take you likely nicely above the target. We are likely in a position in February to add some of Meliadine to the reserves but not the deeper material at Finland because we haven't completed the 43101 feasibility study. So I would look at it in two stages next year.

Okay, so the February update may or may not get you to the 20 million ounces?

It should with Meliadine because we'll be able to convert, because we're working on an economic study there, it may not be ultimately how we configure that mine but it is economic. So, I would suspect that when we add Meliadine we'll be over the 20 and then we'll have another update in midyear once we get that feasibility study done on the Kittila expansion.

And the just one last question. I came into the conference call a little bit late. Were you mentioning anything in terms of smaller asset divestitures?

What we were just trying to do is provide some color on our thinking with respect to the strategy and the strategy is to still continue to make strategic investments in situations that we think have some upside and we have a willing sort of partner where we cannot just put our money on the table but also provide some technology expertise and a perfect example of that was Ridderhitten. But on the flip side, what I was mentioning is we did see some profits on the sale of some investments in the quarter and really what that demonstrates is that we do have a very active portfolio where we're moving things in and out.

And which assets were those?

I don't want to say right now on one of the stock positions that we sold because we still have part of that position. I just don't want to telegraph that.

Do you still own -- what's that one called attached to Westwood? You have a small reserve, I've forgotten the name of it, but it would be somewhat close to the Westwood property.

We have the Ellison property which is right next door to Westwood.

So you still own that?

Yes, we still own that.

Your next question is from Steven Butler with Canaccord Genuity.

Question for you on Meadowbank, Ebe, you alluded to or suggested here that throughput is actually coming closer towards 8,500 tons per day, I'm not sure if it's there yet or not but the two temporary portable crushers, when were they installed? I think it may have been installed when we were there in June; I can't recall. And so you saw an increase in production in Q3 from Q2 which is good on the throughput but still well below 8,500 tons per day but are you on track for that and can you get there with those two portable crushers before the mainstay is there next year?

Yes, we feel that we will be able to get somewhere between 8,000 and 8,500 tons per day before the end of the year. We've got some other grinding issues in the SAG mill that we have to resolve but one thing is certain that we did some maintenance on the portable crushers over a week ago and we saw a drop of anywhere between 75 to 100 tons per hour so we know it works and therefore we also know that the permanent solution which is currently under construction and will come on stream at midyear next year will work and resolve the issue and will also lower the cost per ton. Currently we're paying in the neighborhood of $4.50 to $6.00 per ton to crush this material and we are not crushing 100% of the ore, whereas with the permanent installation which is very similar to the one that we installed at Goldex, we will be crushing all of the ore.

Your next question is from John Bridges with JPMorgan.

Just wondering, you've given great color on the expansion projects with your front line mines, but just wondered what the longer-term plan was with LaRonde now? You've got the expansion project, extension project coming on; that's a pretty target rich environment. Has there been any developments there as to what happens after the extension or are there opportunities to put something there in parallel?

LaRonde extension is on plan, on budget and on schedule. We expect to have the first production from it in Q4 of next year. The deposit is open at depth; we do know that and like any of our other projects we want to get all of the infrastructure in, get it built. Currently we're excavating the crusher room and the maintenance facilities and the ore silo, but once that is done, we have ideas or plans to drill the deposit at depth, so that will happen once we start ramping up production, very similar to what we did in the early '90s at LaRonde, very similar to what we're currently doing at Goldex and Lapa.

Great. And congratulations at Goldex.

Your next question is from David Christie with Scotia Capital.

Just quickly on the LaRonde extension, just want to know what the grade is supposed to be next year and how much of the ore will be coming from the old part of the mine versus the new part?

It will actually be very similar to this year, David, because the ore from LaRonde extension is back ended towards the end of the quarter, so it won't make a significant difference. So we're just going over the mine plan and budget now, so it should be a very similar year to this past year.

So you move into more and more ore from the deep part of the mine as the year goes on kind of thing?

Yes, but the first production stopes will be in the fourth quarter. We'll have preproduction ore, development ore, things like that which really in the big picture isn't significant but then the first blocks will be coming on-stream in the fourth quarter. And any time you develop a pyramid it's always a bit slow until once you start building up the pyramid.

Okay and how has the R2D been down there so far?

We have had no ground conditions; it's been very very surprising. There's been no really significant increase in seismicity and as a result, the development is on track. Even the larger excavations like maintenance facilities we really haven't had any problems whatsoever and that's a tribute to our ground control programs and engineers at LaRonde. They've done a great job for us.

Perfect. The other question just on Goldex, I can't remember the name of the new zone you discovered at depth there below, but are you going to have some of that in reserves do you think by the end of the year?

No, we won't, David, because there's a lot more drilling to be done at depth, like we've got some interesting thick intercepts. It's got the potential to grow, so before we are able to do anything we'd like to fully delineate the zone and we're drilling it right now and then be able to do a resource estimate on it and the complete a feasibility study. But there are thicknesses in there that are similar to the Goldex extension zone.

It does look good. Thank you.

Your next question is from Greg Barnes with TD Securities.

Ebe, what do you think cost per ton are going to be at Meadowbank going forward once you get the secondary crusher installed?

We're hoping to get our cost per ton down into about the low $60 per ton range. We have some other issues to resolve there as well. I think we've made headway with respect to mine performance equipment availability. We're starting to reduce contract workforce. So that is our objective and we're going through the budget process and mine plan right now. What we are also looking at at Meadowbank is accelerated stripping for the coming year, so we might be expensing a significant part of that. But in the life of mine, the total quantities that we will be moving will not have changed.

You did mention in the press release you had problems with equipment availability and other issues during the quarter. What were they?

The equipment availability, we had issues with the shovel performance, we had issues with drill performance, some of the availabilities were down in the low 40s, 25% and then we also had some issues with a truck, so generally with the whole mining fleet. And that was largely due that some of the maintenance facilities for those that came at the opening, saw they were completed in June and as a result now we have a fully equipped maintenance facility and we're able to tackle some of these maintenance issues.

Of course last year we just had temporary facilities and with the weather conditions being what they are in the Canadian Arctic, the working conditions, etc. were less than ideal and so we accumulated a backlog of maintenance that had to be conducted. We are catching up and more importantly, we've had new equipment deliveries, we've had 150-ton trucks delivered in this quarter, we've had an additional shovel. So that will provide us with more flexibility and more reliability going forward. And then of course we've got one year of operating experience in an Arctic environment.

Your next question is a follow-up from Richard Heroman.

This question is primarily about debt management and I'm wondering first of all if you anticipate any further significant drawdown on your credit lines or issuing new debt and follow-up to that is how do you feel about the current level of your debt equity ratio?

We are generating a lot of cash. We expect to continue to generate a lot of cash, certainly enough to fund all of our internal projects with as Sean identified, available cash to increase potentially the dividend as well. So we do not anticipate drawing down materially under our facility and we are quite comfortable with the liquidity we have.

I have one follow-up question if I may. With the price of gold continuing to go up, the junior miners out there may be a little bit more attractive even though they may not be in production and only have reserves and I'm wondering if you have a screening process and could even take a look at those on your radar screen from time to time for any possible acquisitions of gold or zinc or other reserves?

Well that's sort of an ongoing part of the business where we have our operators and mine builders participate in assessments of smaller opportunities so that's still a big part of our strategy so that is ongoing as part of the strategy.

Your next question is a follow-up from Anita Soni with Credit Suisse.

Is there a maintenance shutdown at Kittila scheduled for the fourth quarter and how long will that be?

No, we had the shutdown at the beginning of October, so the next scheduled shutdown is scheduled for April of next year in the autoclave, so we expect to have continuous operations from here on in.

Can you tell me how long that was?

It was about just over a week to nine days.

(Operator instructions) Your next question is from Tanya Jakusconek with National Bank Financial.

I just have a couple of questions and I'm sorry, I got on the call late and it was fading in and out. Sean, I got in when you were talking about Q3; were you mentioning that Q4 was supposed to be similar to Q3 operationally?

We're saying production slightly higher with around the same costs.

Okay. And then just on the news flow that's coming through in December, I think you talked a little bit about making a change on the dividend policy. Your life of mine plan is coming out, I think an exploration update; Kittila, Meliadine. Any expansion plans at all?

Not the major expansion plan. The major expansion plan would be Kittila. So I wouldn't think in our December we'd be incorporated. We delayed Meadowbank as well, as we worked on the commissioning over the last six months. It ought to be coming out earlier in 2011.

Okay. Then I guess the reserves and resource is coming out in February?

Yes.

Okay. Then just lastly, I remember you used to own some of the Gold Corp warrants; have those been sold?

No, we still have those.

Mr. Boyd, we have no further questions at this time. Please continue.

Thank you, operator. Thanks everyone for participating in our call and I look forward to the update in mid December for the five year plan and the dividend. Thanks.

Ladies and gentlemen, this concludes the conference call or today. Thank you for your participation. You may now disconnect your lines.