Agnico Eagle Mines Ltd (AEM) 2014 Q4 法說會逐字稿

Good day and welcome to the Agnico Eagle Mines Limited fourth-quarter conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Sean Boyd, President and CEO. Please go ahead Mr. Boyd.

Thank you, Operator. Good morning, everyone, and thanks for joining our Q4 and full-year 2014 conference call.

What I'd like to do is just start out with some highlights and go through the operations and the projects and also give you some sense of what we're thinking on the exploration front, which is some exciting developments for us given the success we had last year.

In terms of the production highlights, in Q4 we saw record gold production combined with continued good cost performance. That allowed us to exceed our annual production and cost guidance for the third straight year. Our strong performance in 2014 -- it sets us up nicely to deliver more gold production in 2015. We're looking for 12% more gold production and producing more gold at lower unit costs. We're looking for cash costs in a range of $610 to $630 per ounce, and all-in sustaining costs in a range of $880 to $900 per ounce.

Another highlight for us was on the reserve side. We calculated our reserves this year at $1,150. That's down $50 from the prior year. Except for Canadian Malartic, the partnership decided to leave the reserve price at $1,300 an ounce for the Canadian Malartic mine. As a result, our reserves stand at 20 million ounces. More importantly, we saw a grade increasing at several of our key mines. We saw our LaRonde grade go up. It's now 5.2 grams per ton. At Kittila, now 4.9 grams per ton, up from 4.6. At Pinos Altos, we are seeing a 3 gram per ton or 3.2 gram per ton reserve grade. I think that is a good thing. We are lowering the gold price, and we're seeing the quality of the reserve base improve at several of our key mines.

From a resource perspective, we saw a jump in measured and indicated resource up 56%, and our inferred resource increased a little over 30%. The inferred resource included our initial resource at the Amaruq discovery, which is now 1.5 million ounces. We will talk a bit more about that later in the conference call.

As far as operating results, not only record quarterly but record annual production. We got solid contribution from all of the operations and very good Q4 performance from LaRonde, Goldex and Lapa, and the Abitibi. We also saw bounce back at Kittila, as we expected; and continued really good production both on the production side but also on the cost side in Mexico.

I just wanted to point out, in terms of metal mix, we continue to see a decline in the importance of base metals now. It, in 2014, amounted to about 1% of our total revenues.

As far as financial position, our net debt is $1.2 billion. Our available credit is $700 million. Our repayment schedule on our long-term debt is very manageable. The first principal is not due until 2017, and it is $115 million.

From a financial perspective, our strong production and good cost performance allowed us to generate very good cash flow performance. For the full year we generated almost $670 million from operations, or $3.42 per share. With increasing production in 2015 projected to come in at lower unit costs than in 2014, we are positioned to continue to grow both our operating cash flow and our net free cash flow. As a result of that we maintained our quarterly dividend at $0.08 per share.

As far as three-year guidance, we are seeing on average about 1.6 million ounces over the next three years. In 2015, approximately 1.6 million at cash cost, as we said, in the range of $610 to $630 per ounce. All-in sustaining costs, as we mentioned earlier in the highlights, to be below $900 an ounce.

The breakdown of our production for the next three years: we are seeing about 70% of the contribution coming from Canada, about 10% from Europe, and about 20% from Mexico. We are seeing improving costs at LaRonde. We are forecasting sub $600; at Malartic, around $600; at Goldex, about $620. Some key mines showing lower unit costs. In our Mexican business, we are seeing steady production and costs for the next several years.

I think the importance about the geographical distribution of our production is that we've seen significant weakness and declines in the value of both the Canadian dollar and the euro against the US dollar, which is a key factor in our US unit dollar costs. That is one of the reasons we are seeing the decline, as well as some optimization efforts at the mine. We can see from a cost per ton basis at our mine, our cost per ton is on target or better than 2014. We expect improvements in cost per ton at several of our minds going forward.

We talked about our three-year production guidance in the split. In terms of what we have, in terms of potential or possibilities beyond the three-year guidance, we have several projects that we are working on now that have the potential to come in, in 2017 and beyond. Firstly, at Meadowbank, we have in the past taken a part of the Vault deposit out of our reserve base. We now are in a position to possibly bring that back into the mine plan based on a lower oil price, based on a weaker Canadian dollar. We are currently studying that possibility. That would allow us to bring that production back in 2017 and continue into 2018, which gives us the potential to extend the mine life at Meadowbank.

At Goldex, given the fact that the mine is producing extremely well, mining lower grade for an underground mine, doing it very profitably, that opens up the opportunity to develop the deeper resources at Goldex. So we are currently studying that. We recently had a very good drill hole in the Deep Zone, which is indicating the potential for better grades in the core of the Deep Zone. We also have potential at Goldex to add more throughput to the mill. It is an 8,000 ton per day mill. We were mining in the fourth quarter about 6,200 tons a day. We have purchased the Akasaba West property, a couple of years back, for $5 million. That has the potential to provide satellite mill feed to Goldex and allow us to leverage off of the infrastructure there.

At Kittila, we're accelerating ramp development towards Rimpi. At Rimpi we see better grades and thicknesses, so that could allow us also to take advantage of the expanded plant capacity, as could the Kuotko satellite deposit. The plant has been expanded at Kittila. We were there a couple of weeks ago. It has a rated capacity of 4,000 tons per day. Originally it was 3,750. We are confident it can do more than 4,000 tons a day based on the performance we are seeing now. That's why it brings into play possible satellite material coming from Kuotko.

We have a detailed reserve and resource slide. I won't go through it. Just to point out a couple of highlights that I didn't touch on previously, was the Meliadine reserves are up 0.5 million ounces. We are seeing a slight increase in grade at Meliadine. The combined reserve and resource at Meliadine now exceeds 10 million ounces.

As we indicated earlier, we are seeing gold grades increase at a couple of key operations. Our sensitivity on a reserve to the gold price is also important. If we see gold fall to $1,000 an ounce -- so down $150 from our calculation $1,150 -- we'd see a reduction in reserves of about 6%. So not that sensitive to a decline in the gold price. Conversely, if gold was to go up $150, we would probably see about a 6% increase in the reserve base.

Another point just like to mention is, at LaRonde our resource has increased at depth, and that opens up the LaRonde III study. We're doing preliminary work on that. What we are looking at is ultimately establishing mining horizons between 3.1 and 3.7 kilometers below surface.

Just moving into the assets in detail, starting with LaRonde. Our production up 13% year over year. Cash cost down $100 year over year, or 13%. What that tells us is, we are starting to see the benefits of getting more ore from the higher-grade lower mine. Our reserve grade, as we said, went up to 5.2 grams per ton from 5. We mined 3.24 grams per ton in 2014 to drive those production results. There's certainly a lot of room to improve our cash flow generating ability at this mine as we continue to open up the lower mine and access the higher grade material. The conveyor system in the lower mine is set to be commissioned in the second half of 2015, so that will give us more flexibility in the lower mine.

LaRonde continues to perform. I think its best years are still ahead of it. It's shown itself to be a world-class mine with a world-class team. It's been operating since 1988, and it still has a reserve and resource of over 5 million ounces. The team continues to do a good job there.

Meadowbank had a great year; we expect another strong year in 2015. It is certainly helped by the lower diesel price. They are a large consumer of diesel. Also certainly helped by the Canadian dollar. I think more importantly for Meadowbank is that -- two developments there. We talked about the potential to extend the mine life into 2018 with an extension of the Vault pit. I think more importantly for Meadowbank is the discovery of Amaruq, which is about 50 kilometers north of Meadowbank, or about 62 kilometers by way of a road. We, certainly, based on what we see now, with 1.5 million ounces at Amaruq at a grade of a little over 7 grams per ton, given its proximity to the Meadowbank facilities, that it certainly looks like we will be shipping ore at some point from Amaruq into Meadowbank.

We have an extensive land package, now, just north of Meadowbank. We started with a little over 40,000 hectares. We added more than 60,000 hectares through additional staking after our drill results. I think what our expectation is this year -- we've got a very large program. We expect to spend $20 million at a minimum. We anticipate actually having that $20 million spent by July, which would leave a little bit more than two months of drilling time available to us. Based on results, our expectations are that we will continue that program.

The largest part of the 1.5 million ounce inferred resource is coming from Whale Tail. It is 1.4 million ounces of that, but it really only encompasses the two ends of what we think is a larger structure. In our drilling program last year, we were not able to drill the central part of the Whale Tail area, so there is a gap there in our resource. That is where our initial focus will be when we start the drills next month. Our objective is to fill in the gap between the two ends of the Whale Tail resource. All designed to provide a mid-year resource update on Amaruq, which will be the basis for continuing with the scoping study on turning this into a satellite operation.

I think one of the other interesting things, when we look at potential targets is, not only do we have a strong target in the center of the Whale Tail zone, but we also have a second boulder train identified in our field season last year. We have, in addition to the original boulder field, we identified a second boulder field. We think the source of both of those trains of boulders is in the Mammoth Lake area. That's an area we could not do a lot of drilling on last year from the lake -- these are shallow lakes -- so that is also a primary target for our drill season as it starts up in March from the ice. We certainly think there's good potential to add to the resource here, and we will be providing more information midyear on the resource, also on some of our scoping parameters. These are not deep holes, so we expect to have a series of updates on our Amaruq drill program as we go through 2014 [sic].

Moving to Canadian Malartic. We saw very strong second-half performance at Canadian Malartic. The partnership took ownership in mid-June. For the second half of the year, the average throughput in the mill was 53,000 tons per day, versus 49,500 tons a day in the first half. The mine site costs per ton were better than our guidance, coming in a little less than $20 per ton. We are forecasting production in 2015 to be, to our account, about 280,000 ounces. We are still seeing positive reconciliation in the block model.

There are still more optimization to go. We've got several initiatives underway on cost savings and optimization. As we indicated, this is a mine that benefits from the lower diesel price. It consumes about 45 million liters of diesel on an annual basis. The lower diesel price and the weaker Canadian dollar certainly help this operation. We are forecasting a cash cost in 2015, including the royalty, to be in the low $600 an ounce. A good solid mine, producing good quantities of gold, in an area that Agnico knows very well.

At Goldex, a faster ramp up in the mining rate than we anticipated. As a result, we processed over 6,200 tons per day in the fourth quarter at CAD34 a ton, so extremely good cost performance. We produced almost 30,000 ounces in the quarter with cash costs below $600. Very good performance for a mine that is mining grades in the 1.6 gram per ton range. We continue to look at, because of that cost structure and the proven mining method there, we are looking at the deeper zone and also some additional satellite zones. As we have always discussed, this is an area that, once we started the base case operation back, we thought we had additional potential to continue that value there. We are seeing that potential being more realized now with the proven cost base there. We are working on a technical study now to outline minable reserves in the deep zone. We expect it later this year.

I think of note, when we look at exploration in the long section, we have recently drilled a hole through the deep zone which returned over 4 grams over 157 meters. That is telling us there is potential to see a higher grade core in the deep zone. The reserve grade there's in the 1.5 grams, 1.4 to 1.5 gram range, so there is potential, hopefully, to see better grades as we go deeper. As we said, the mill has an 8,000-ton capacity. We are currently operating at around 6,000 tons a day, so that's why the Akasaba West deposit could add some value, create some flexibility, allow for us to take advantage of some synergies with the Goldex plant and the Goldex facility.

At Lapa, a short mine life, but the team continues to do an excellent job in controlling its costs. They continue to beat their budget on a cost-per-ton basis. Generating good cash flow, very low capital. We continue to put some money towards exploration. We've had some success on Zone 7 with higher grades. We are hopeful that possibly we could extend the mine life a few months.

I think more importantly, we've now moved the exploration drills onto the partnership ground with Yamana on Pandora, which is immediately adjacent to Lapa to the west. Recently we've had some good drill results, so we'll continue to drill that to see if that can take advantage of the potential next to Lapa, but also take advantage of the capacity we will have at the LaRonde plant when the main Lapa deposit ends.

At Kittila, we processed almost 4,000 tons per day in the fourth quarter, so the tie-in of the expanded plant was successful. In fact, the recoveries are bouncing back nicely. Our recoveries in Q4 were about 80%; in January, mid 80%s; to date in February a little bit higher than the mid 80%s, up to about 87%. There is still more work to do, but it is nice to see those recoveries coming back at Kittila. We continue to focus on the Rimpi Zone and accelerating the ramp over to Rimpi. That is just to take advantage of the better grades and thicker mineralization we have on that part of the deposit and to utilize the head room that we have in the plant. We believe this plant can do more than 4,000 tons a day based on how it's configured without any significant increases in capital.

At Meliadine, we talked about the increase in reserves, now up to 3.3 million ounces at 7.44 grams per ton; reserve and resource now over 10 million ounces. We continue to work on our study. We will have our 43-101 study, which is simply based on the reserves, out shortly. We are also working on a study which incorporates a portion of the almost 7 million ounces of resource into the study. It will be that study that we will use to ultimately make a decision on construction for this deposit.

Moving to the southern business, at Pinos Altos we continue to see increasing tonnage through the mill at Pinos Altos. The shaft is on schedule for late 2015. That is going to give the operation more flexibility in the underground mine, so the shaft sinking is going well at Pinos Altos. The grade is a positive increase. They continue to have a low-cost operation.

At Creston Mascota we had record Q4 and annual tons stacked on the heaps there, so that small deposit continues to produce good quantities of gold at low cost. At La India we saw a record quarterly production, so we are seeing part of our increased guidance going forward as coming from La India now that we have got it up to full production coming on the back of a good solid fourth quarter. So, good solid operations in Mexico.

In Mexico, we also have a project acquired through Cayden Resources called El Barqueno. We have a $15 million drill program on Barqueno. That project has extremely good exploration potential. We're pretty confident that our $15 million drill program is going to come up with some good drill results, allowing us to calculate an initial resource before the end of this year. That information will be important in terms of how we move that project forward. The reason we bought it was not only exploration potential, but it has a lot of similarities to Pinos Altos in terms of having near-surface heap leachable material as well as underground potential from some deeper drilling on that deposit.

That is a good rundown of our quarter, our full year, our expectations on production costs going forward; but also we wanted to give you some good sense of our exploration potential, particularly at Amaruq and Barqueno.

Operator, I would be happy to open the call now for questions.

(Operator Instructions)

Your first question comes from the line of David Haughton of Bank of Montreal. Please go ahead.

Good morning, Sean and team. Thank you very much for the update.

You've got a lot of opportunities, well beyond your base case. I just wanted to ask a couple of questions about that if I may?

Sure.

You had spoken about Vault and the potential for it to extend the life at Meadowbank beyond 2017, what sort of grade and size should we be thinking about for Vault?

Vault would be about 200,000 ounces. It's similar to the grades we have now. It would be 2.6, 2.7 grams per ton.

We were expecting Meadowbank to be finished around the end of third quarter of 2017. If we do a Vault, there's really two phases here. We could do Phase 1 or we could also do Phase 2. We're looking at both phases. Whether we do 1 and 2 will determine how far into 2018 we could go.

I think why that is important is that although we are drilling Amaruq quite quickly, and we're getting a lot of information and we will calculate a mid year work resource and we will work hard at moving that project forward. The further we can push Meadowbank back, the better it is for the Amaruq development and the potential for a smaller gap between the startup of Amaruq and the mining out of the last remnants of Vault.

Okay. At least it gives you another year to close that gap. Do you have other deposits that you could bring on stream given the benefits you spoke about of the currency and energy?

Not a Meadowbank, no. The focus will be on the Vault pit extension Phase 1 and Phase 2 and Amaruq, then ultimately Meliadine and the Nunavut business.

All right. You've got two operations that are exceeding expectation on throughput, Kittila and La India.

Just on Kittila, design capacity 4,000 tons a day. You're moving up through that already. Where could you see it going to?

I will turn that over to Yvon.

I think with the expansion in the plant, we are seeing probably additional capacity going forward. Unfortunately, the capacity of the mining will be driving the show for the next few years. That opens the door with the Rimpi development and a third mining horizon, so somewhere 2017, 2018. That is presently not incorporated to get past 4,000 ton in our life of mine, so that's an opportunity to grow moving forward.

When we were there couple of weeks ago they were saying that 4,500 tons a day is certainly possible there. The autoclave, it looks like it has that capacity without making any modifications to it. Because one of our challenges early on was it was somewhat oversized for what we needed at the time at 3,000 tons a day. That is a good thing at this point, as we are looking at the potential to open up another mining horizon or bring in a satellite deposit at Finland.

The ramp capacity is also at the 4,500 tons a day level, too, from my recollection.

Yes.

Over to La India, that stacking rate keeps on growing, what should we be thinking about as where the ideal stacking rate?

Tim?

I think Q4 -- we are topped off on our rate on Q4. Actually, we are using a contract crushing plant that is adding 1,000 tons a day just to clean up some ore that is in front of us. It is going to be around the range of our Q4 rate looking forward, maybe a little lower actually, but around that rate.

All right. Thank you, Tim.

Our next question comes from Andrew Quail of Goldman Sachs. Please go ahead.

Good morning, Sean. Thanks very much for the update and congratulations on a very strong quarter, again.

Thank you.

Question on Malartic, you guys outline many I suppose initiatives to optimize the mill. My question is, of all this bullet points here, what do you think are the key ones, the top two that you are focused on, Sean? Do you think you can get to that 55,000 times a day rate?

Thanks, Andrew, I will turn that over to Yvon.

I don't think there is one specific key activity. It is more a series of activities that will lead to the changes.

Some of these items that have been identified in the release have been ongoing and are part of the baby steps that have occurred from the first half of the year through the second half of the year to show some of the progress. So we will continue on that. The increasing in pre-crushing rate will probably get us to the next level, and that is the biggest factor moving forward to get to that 55,000 tons per day.

There is another area of focus there outside of the plant, it's in the mining areas. We are focused on the north wall. That's where we have the better grades.

The southern part of the pit was more advanced than the northern part of the pit, so we've got in an even floor in the pit. We are looking at accelerating the northern mining rate on the northern wall; that will make the pit more efficient. Also, there's better grades in the northern wall. That's an opportunity as well, and that's where we are putting some effort and focus.

Last one on Amaruq. It looks pretty good from initial spin. Is there anything that worries you about the infrastructure there or the infrastructure between Meadowbank and Amaruq? How much do you think you also need to spend to ensure that if you do, in time, truck or it will be up to show?

We have a good sense, Andrew, of the road, and we have looked at several locations for the road. The one difference in the area between Meadowbank and Amaruq versus Baker Lake and Meadowbank or Rankin Inlet at Meliadine is there's more changes in topography. So the road is a little bit more complex, which would make it a little bit more expensive.

On a relative basis compared to Meliadine, we could get a satellite operation started at Amaruq for a fraction of the cost of what the number is at Meliadine, so that's where the focus is. The road is the biggest single component of that, because the focus would be on starting a pit. We are also seeing a potential for underground given that we do have some deeper drill holes there, so that will come in time.

I think so far so good. Maybe what I will do is I will let Alain or Guy just give you some sense of what the focus is over the next couple of months on drilling and what they are seeing and why it is generating some excitement within their group.

I thank you for your question. Right now, we are looking to move the camp from the Meadowbank exploration, the whole exploration camp. We have already a camp in place for over 20 bit and we can start when we want, the three rigs, but we want to have a better camp with 80 bit and to bring the sixth rig and in place this winter. Then, what the plan is to have that resource titration this summer and to have the indicated resources and to start the thinking design.

The other target that we have along the 7 kilometer trend, that is the original program that we have two boulder train that we think is that the source is the Mammoth Lake. This is another program that we will follow this winter and this spring.

At the same time we will start the well data conversion infill program under the lake and to fill the gaps between the whole that we drilled last year. That means that the new resource calculation next summer will give us a good indication about the real size of Whale Tail.

Thanks very much, guys.

Thank you.

Your next question comes from the line of Anita Soni of Credit Suisse. Please, go ahead.

Hi, just a couple of quick questions on minor points. The Malartic Q4 cost per ton, the $22, that did include the royalty in the guidance for 2015 of $20 a ton, that does not include the royalties, is that correct?

Yes.

Okay. Then just on the LaRonde.

If I could ask, how are the TCRCs? Are they changing at all at LaRonde right now?

I'll to turn that over to Yvon. He's making a face, so I don't think we're really sure exactly where that is going. They're such a small component now of the process.

I don't have the exact number, Anita. I can check and relate that back to Brian, but I think the conditions have been pretty stable on that side.

Thank you very much, and congratulations on a good quarter.

Thank you.

(Operator Instructions)

Your next question comes from Mike Parkin of Dejardins. Please go ahead.

Hi guys, congrats on the solid fourth quarter. Just one question on Amaruq. Given that it is 50 kilometers away, do you have any sense of what the potentially cost per ton increase would be to pull ore back to the Meadowbank mill?

We have had some internal studies. They are preliminary in nature, but we are looking at about $11 a ton so far for transport.

Okay. So that added to the $70-ish that you guys are averaging now?

Well added to whatever mining costs will be determined on that project at that time.

Okay. That's it for me. Thanks.

Your next question comes from the line of Don MacLean of Paradigm Capital. Please go ahead.

Good morning, guys, well done. Just on the Amaruq, maybe a little bit more color on the timing for the economic analysis and production decision and permitting of this? When do you think it realistically we might expect it to come into production?

We are saying in the first half of 2019, and we have always said Meliadine second half of 2019, if we give it the go-ahead. That is roughly where we are now, and we will see.

The first step is to continue the drilling, get the resource done, fine tune the road analysis. And then the drilling will really ultimately determine the extent of a potential underground. I would suspect it is open pit to start, hopefully, turning into an underground operation at some point. There could be multiple pits there, given that we haven't really drilled the Mammoth Lake area, and that's where we think the source of the boulders are.

Right. Is there anything that's a critical path item, Sean?

A lot of this sounds like it's just getting your ducks in a row. It is there a critical path item like the permitting process?

Permitting is the critical path in Nunavut, but we have done it is successfully before. It's really the same regulatory bodies and, actually, the same officials at these regulatory bodies, so they're very familiar with Agnico.

We have already started doing some preliminary work with the local community for Amaruq. I wouldn't see any issue at all in obtaining a permit for Amaruq.

Okay. Maybe a question for Alain on the Whale Tail. Maybe you could give us a sense of what the strike length of the undrilled portion in the center was relative to the total strike length of the existing resource?

Yes, as you know the trend is over, the mag that we find is over 7 kilometer. When looking only Whale Tail is around 1, 1.2 kilometer long. The western part and the deeper part is completely open.

When looking the western trend and we seeing that Whale Tail continues to the west. The last hole that we drilled at the west show another zone. We had another zone with Whale Tail. It's open, we don't know about that zone, that the blue sky is there.

The gap between the two ends of the currently calculated resource is about 300 meters. That will be the focus of the infill drilling, so we will have that incorporated in our mid-year resource update as well.

There's also a halo of mineralization that were also focused on drilling around the current resource. We would expect to add those two components to the 1.4 million Whale Tail. Then anything outside that, and as Alain indicated, moving to the west, it is open ended with a new zone.

The west is really Mammoth Lake where we have the boulder train. So there are lots of targets here.

When you are looking at what we have to do with the conversion program and filling the gap and filling between the holes, I think we can double the resource one day. I'm not sure when, but one day.

Just to clarify, when you -- Alain, you mentioned Whale Tail was one 1 to 1.2 kilometers is that the strike length of the resource footprint?

Exactly.

Okay. Is there anything in the infill drilling that you feel that could change the grade as you put in more holes?

The program that we designed is to do a drill between 70 by 70 meter and -- for the interior. Filling the gap, that give us probably I'm guessing the same grade. So we have a good understanding about the 1.2 kilometer and until 200 kilometer deep.

We're not expecting this bad surprise, but a good surprise, because we have to walk about also the capping grade. More sample in hand, we can improve the capping grade because we have three goal as well.

Okay. That was the heart of the question, because so often when we see infill drilling takes place where there are these high-grade elements sometimes the grade can actually go down as a gets tightened up. But that is not your sense?

There was also our two azimuth holes that were drilled in that gap, so the mineralization is there. It's a matter now, from the lake now, drilling into that 300-meter gap and seeing if we can connect the two ends of what we now have in the Whale Tail resource.

And that is important, because all of our studies right now are done on two separate pits on either end of Whale Tail are preliminary work. So filling in the gap gives us one bigger pit, improves the strip ratio, improves the economics and et cetera. So that information is important.

You bet. Sounds good. Good luck.

Thank you.

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

Just a couple of follow ups. The Whale Tail, what is the ratio right now that you're looking at?

It is more then Meadowbank, but it is two smaller pits. So we think ultimately with one bigger pit it's more like Meadowbank, maybe a bit better.

Then in terms of the inferred category at Meadowbank, that grade seems pretty decent even if you throw in some dilution. I'm not quite sure if you guys factor in dilution in your inferred or not. Is there anything about that inferred mineral inventory that you have at Meadowbank itself that I should be aware of? Why it's not something you're focused on right now?

It's below the pit, so it's unlikely that we are going to invest capital to put a ramp in to go after it.

Okay. Then last question is with respect to big picture plans for Kirkland Lake. I think it's a good deposit in Canada. Obviously, the CADs helping a lot of these properties, so I'm just wondering what you guys are thinking about that one?

Continuing to drill. We had some good drill holes at depth, which is suggesting the ore body continues, so that's part of an updated study. I think the partnerships agreed that the best approach now is to continue to drill it and then update the economics if needed.

When would you have that done?

I think just before the end of the year.

Thank you very much.

We have no further questions at this time. I would like to hand it back over to Mr. Boyd for closing remarks.

Thank you, operator. Thank you, everyone, for tuning into our conference call. Thanks again.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line and have a great day.