B2Gold Corp (BTG) 2011 Q1 法說會逐字稿

Good morning, Ladies and Gentlemen. Welcome to the B2Gold First Quarter Results Conference Call. I would now like to turn the meeting over to Mr. Clive Johnson, President and CEO. Please go ahead, Mr. Johnson.

Hi. Thanks for joining us. We're here to talk about our quarterly results and what's been an excellent quarter for the Company, and then we're going to talk a little bit about what we see happening going forward for the remainder of 2011. So with that, I'll pass on to our Chief Financial Officer, Mark Corra, to go over some of the highlights of the quarterly results. Mark?

Thanks, Clive. I would just like to remind folks that we are now presenting under International Financial Reporting Standards, which is why we're a bit later than we would be otherwise, to report our first quarter. Like most companies in Canada now, that will be the way we report going forward. The presentation format's a little different than it was under Canadian GAAP, but the numbers really are not that different than they would have been under Canadian standards.

So with that, I'll start off with our revenue number, which was almost triple what it was in 2010 at $53.5 million. We had an outstanding quarter. Sales were a record at 38,750 ounces at a price of $13.81, which is a 25% improvement over the similar quarter in 2010. Gold sales themselves were up about 150% from 2010, and that's mainly due to La Libertad and the steady production that we're seeing out of Limon these days.

Production costs came in lower than our budget. They came in on a consolidated basis at $5.31 per ounce. We produced 34,700 ounces. That compares to last year when the cash costs were $7.72 per ounce on production of 16,300 ounces, which was a period that La Libertad was just starting up and obviously, it's now hit its stride and operating very well.

Our budget for the first quarter was 31,000 to 33,000 ounces, so we exceeded the upper end of our budget, and our cash costs were projected at $565 to $590 so we came in quite a bit lower than even our lowest projection.

Depreciation for the quarter was about triple of what it was in 2010, and that's due to the amount of gold sales and production in the quarter, as our depreciation is based on a units-of-production basis, like most gold companies. Depreciation was about $157 per ounce this year, versus $143 last year.

Royalties and production taxes also about tripled last year, and that's a direct result of the revenue number, as we pay a 3% royalty to the government of Nicaragua, and we have another royalty of 2% to the former Small Miners Association at La Libertad, and we have a 3% royalty at Limon to a third party.

Gross profit for the quarter came in at $24.2 million, which was a record for B2, compared to $1 million last year. G&A costs came in at $6.2 million, quite a bit higher than 2010. The biggest change is, there was about $2 million in bonuses paid out to Senior Management. That was the first time B2 has ever paid bonuses, and it was in recognition of the great year that we had in 2010 as well as the 2009, which were both transformation years for B2.

Foreign exchange gains came in at just over $800,000. The reason for the gains is that we have about just under CAD30 million in our accounts out of our $76 million, the rest is being held in US dollars, so with the Canadian dollar strengthening we realized some gains on that.

Under an Other caption, you can see that we had $400,000 in profit reported versus an expense of $500,000 last year. The big item there is that we booked an insurance claim for $780,000 that we actually received in the Second Quarter and that related to pinion gear breaking at La Libertad in the fourth quarter, so La Libertad was running with just one mill for about six weeks in the fourth quarter, and then still had a good quarter. That new pinion gear has now been operating very well and we've had no problem since.

That left us with operating income of close to $19 million versus an operating loss last year of $3.1 million.

The other big item for the quarter was we had deferred income taxes of $6.1 million. That relates to actually a booking of loss carry-forwards that we have at La Libertad that we'll be using in 2011. So we have to book that as an expense in our P&L -- kind of a strange thing, but that's the way accountants are these days.

Under withholding taxes there's about $1 million, and that relates to two main things. One is we have some inter-Company charges that go down to the mines in Nicaragua, and there's about a 10% withholding tax on those charges. And then there's also a 1% revenue tax that Nicaragua instigated last year. That 1% revenue tax, though, is offsettable against your income taxes when you're taxable. That left us with net income of $11.4 million, $0.03 per share, compared to a loss of $4.3 million last year. Adjusted income, which adds back some of the non-cash items, like future income taxes, came in at $18.1 million or $0.05 per share.

I should have mentioned at the beginning, I'm assuming people have downloaded the financials from SEDAR, as they were filed last night.

I'll now go to the statement of cash flows. We had a record cash from operations in the quarter, it came in at $26.1 million, or $0.08 a share. Again, I think the cash flow is probably the truest showing of how a Company has performed in a quarter, and you can see that we had an excellent quarter.

Under financing activities, we had some stock options exercised in the first quarter, which brought in about $900,000. In the comparable period in 2010, we did a financing in February of 2010 that brought in $29.5 million that was at about $1.25 a share. We also drew down about $5.5 million on our operating and revolving line of credit that was later repaid in 2010.

Under investing activities, we had a very active first quarter, as we spent $20.1 million on projects in the quarter. Of that, about $8 million was spent at La Libertad on improvements there, and mainly for pre-stripping of the two pits, so that we could access more ore in the future. We also expended about $1.3 million in expiration at La Libertad. At Limon, the capital expenditures were about $4.4 million in the quarter. Most of that went towards a new tailings pond being built, and we also spent about $800,000 on exploration. The other big item for the quarter was exploration at the Gramalote, which was 51% to 49% Anglo to B2Gold. We invested $3.4 million in the quarter, as they're working towards a pre-feasibility study and eventually a feasibility study at that project.

That left us with a net increase in cash for the quarter of $6.8 million. We ended the quarter with close to $77 million in cash, so we have more than enough cash to do all the things that we plan to do in the next year. I should also remind readers that we do have available a $25 million revolving line of credit that has no outstanding balance at this time.

Under the consolidated balance sheet, I think most of the numbers there are pretty straightforward, and there were some adjustments that were made because of IFRS, and those adjustments are disclosed in Note 13 to the financial statements. I'm not going to go into that, but if people are interested to see what those adjustments are, they can then look at that note and it will give them a full explanation of what the changes were. Certainly, there was nothing material in the difference between the two reporting standards.

I would like to point out, we ended the quarter with $89 million in working capital, which is quite a dramatic increase from January 1, 2010, when our working capital number was about $5.1 million. So that shows in the last five quarters we've had outstanding growth in our working capital and in our cash balance, which at January 1 was $2.9 million and now, as I mentioned, it's $77 million. We continue to see cash flowing very strongly from the mines, especially with the high gold prices that we have now.

With that, I'd like to turn it back to Clive.

Thanks, Mark. If there's any questions, we'll just wait until the end to ask them. I'd like to hand over to George Johnson, our Senior VP - Operations. George is going to talk about the operations for the quarter. George?

Thanks, Clive. I'll start out with La Libertad operation. Mill throughput at Libertad was very good in the first quarter. It's saving an average of over 5,600 tons per day versus the design rate of the plan of 5,500 tons per day. The mill grade was 1.66 grams per ton, and slightly better than what we had planned at 1.55 grams per ton.

Mill recoveries were excellent in the quarter, averaging 91%, and exceeding our expectation of 87% recovery. Gold production was 24,614 ounces at a cash cost of $452 per ounce, which is favorable to the budget of 22,278 ounces at a cash cost of $478 per ounce. That positive variance was mostly due to improved recovery in the plant.

For the second quarter, we expect production of about 22,000 ounces, at a cash cost of $475 per ounce, and for the year we expect to produce 88,000 to 94,000 ounces, at a cash cost between $440 and $460 per ounce, which is the same guidance as we had provided last quarter for this year.

In 2011, the CapEx at Libertad will be about $28 million, and the majority of that capital is for the expansion of our two main pits, lift on a tailings pond, which is now complete, and various mill and infrastructure upgrades. We expect 2012 sustaining capital to be much lower than that.

We'll move on to Limon now. In the first quarter at Limon, the tons, grade, and recovery through the mill met our expectations, all a little bit slightly better than budget. Gold production for the first quarter was 10,119 ounces, at a cash cost of $724 per ounce, versus our budget of 9,578 ounces, at a cash cost of $778 per ounce.

We were able to source more of the mill feed from our Santa Pancha ore body than what we had planned, which resulted in the lower operating cost. For the second quarter of 2011, we're on track for production of 12,000 ounces at a cash cost of approximately $721 per ounce. And for the year 2011, we expect production to be between 42,000 and 46,000 ounces, at a cash cost between $720 per ounce and $740 per ounce.

We've increased our capital estimate for Limon in 2011 by $4.8 million, up to an amount for the year of $24.5 million, and that's based on a revised cost estimate to complete the tailings pond project. That's ongoing now and will be done in July. The majority of the CapEx in 2011 is for the tailings pond and development of Santa Pancha underground, some process plant upgrades, and spares, and several infrastructure upgrades. As with Libertad, we expect the 2012 capital at Limon to be substantially less than what it was in 2011.

Our experienced Management team in Nicaragua and Vancouver continues to meet all the challenges that are put in front of us on the operating basis and support for our operations in Nicaragua continues to be strong at both the local and national level. That's all I have on operations.

Thanks, George. I'll give you just a bit of an overview of some of the other things that are going to happen for the remainder of 2011.

At the existing mines we're going to continue, of course as George said, with a view to optimizing production. We also have major exploration programs, particularly at La Libertad. And you've seen our recent news release that came out in the first quarter, we came out with a new resource, a significant new resource at Jabali, some 10 kilometer to the east of La Libertad mill. This is a major development for the mine, because obviously, the cheapest ounces are the earliest ones you find, and the best ounces you can find, the most valuable ounces are near a mill. So what it gives us the opportunity to do is to, in the near term, get some of the Jabali ore to the mill at Libertad, which will have the effect of increasing annual gold production from the same tonnage throughput, but also potentially decreasing the operating costs, as many of the costs are on a per-ton basis.

We have two opportunities at Jabali, one of them is some colluvial material, which is waste material from very high grade mining in the past. It's very good grade material, higher than the grades we're currently mining. Remember we're mining an average of 1.6 grams of gold per ton. We're milling that on average of 5,500 tons a day. So in the short term, starting later on this year, we going to start moving some of this colluvial material. We have permits for that, and start trucking it down to the Libertad mill, which will positively impact our production for next year, above and beyond the 90,000 ounces that we are targeting so far. We'll be coming out with guidance on that as we further develop a plan for the Jabali colluvial material. So that's starting in the fourth quarter this year.

The other opportunity is with a new resource, which is substantially higher grade material than we are processing today. The opportunity there, and we're doing a full EIS study under the Nicaraguan laws as we speak -- we've started that process -- and our hope is, our intention is, by the fourth quarter of next year to begin hard-rock mining from Jabali. The two -- the recent other very important development there has been the recent news release with further dealing with results from Jabali that show that it's clearly the half a million ounce resource that we published. We're clearly seeing that looks like it's getting larger. In fact we have good grade holes in drilling now, 570 meters to the west of the central zone, so we're seeing it between the central zone and the antenna zone. It appears that the mineralization does continue and it's still open.

In addition to that, we've seen good grade material in drill holes 100 meters below the current resource estimate so clearly, a very exciting picture is developing there and significant impact on Jabali as we develop it further. So extensive drilling going on now to infill the Jabali resource, to have it as an indicated category for the end of the year, which we'll release in the first quarter of next year, but also to continue to explore it and to see how much bigger it gets.

In addition, we've had very good success around the Mahone pit, which is right next to the mill. We're finding great results 300-meters, step-outs from the pit boundary, or the protected pit boundary, at Mahone. We're getting very good grade material, much better than the average grade we've been seeing so far. So it looks like we have another potential source of higher-grade ore there, as well, and more drilling to come.

I think it just underlines the point that we've made before that the 20 kilometer in the La Libertad belt has really over time been largely under-explored, and it's starting to bear fruit.

So the idea over the next few years is, can we take, how much more of this higher-grade ore can we get? We're running those kind of numbers over the next little while, can we take the 90,000 ounces a year to 120,000, 130,000 ounces a year and perhaps beyond? That's the plan, and we'll come out with more detail. Obviously the indications there are not only just the potential for more annual growth production, but of course you could have a positive impact on the operating cost on a per-ounce basis.

So some of the other things that we're doing, in addition to all this drilling at Libertad, we're continuing to explore around the Limon mine. We have numerous targets. We've had some successful hits there and we're looking for --bottom line is, we're looking not only to extend the current five-year mine life, but we think there's excellent targets that both open pit and underground, that could extend the mine life further, but perhaps, not unlike La Libertad, we think there's some better-grade targets.

It's worth pointing out that in the year 2000, the Limon mine produced 80,000 ounces of gold, and it's around 45,000 ounces this year. Now that was the same 1,000-ton-a-day plant -- which we've actually improved upon to some extent -- but that was the same 1,000-ton-a-day plant, but it was double the grade. So the same type of potential at Limon, can we get the 45,000 ounces a year up to a higher number by outlining and drilling off some higher-grade opportunities? So we'll have two rigs drilling there and continue to drill.

Some of the other projects -- the Gramalote project in Colombia, that's our joint venture with Anglogold Ashanti, Anglo at 51% and the manager of the joint venture, and B2Gold at 49%. As many of you are probably aware, we're expending on a 100% budget of $30 million a share, well under way, and that's a very aggressive exploration and pre-feasibility projects on exploration. There are numerous targets around the Gramalote ridge zone, which hosts the resource of 2.4 million ounces of right around a gram. That's being in-filled, but also there's numerous targets around.

And to the northwest there's a target -- well it's more than a target now -- there's a zone called Trinidad, which we did quite a lot of drilling in, and drilling is continuing there. So we think the potential for the 2.4 million ounces at Gramalote to grow is very good. We would hope to be, over the next month or two, starting to release exploration drill results from the Gramalote joint venture.

In addition, there's a lot of drilling going on for metallurgical testing, a lot of met testing happening, a lot of baseline studies, permitting activity happening as well. I think with the pre-feasibility study that we're targeting, the joint venture is targeting to come out within March of next year, that pre-feasibility study's going to be a lot closer to a final feasibility study in many ways. So a lot of the detail work we're doing in metallurgy is beyond what you would normally see in pre-feasibility. Hopefully by doing that, we can speed up the process to complete a final feasibility study, which is currently targeted for April of 2013.

I can tell you that both joint venture partners are very positive on the project. Anglo has talked publicly about the potential for Gramalote to be a 250,000- to 300,000-ounce a year mine, and we share that view. Everything we're seeing so far has been very positive from metallurgy to additional drilling, et cetera., So this is becoming -- as time goes along this year, I think we'll see metallurgical come into focus as a very important part of the projected growth from B2Gold.

In addition, we've recently --lots of news lately. We've recently come out with initial drilling results on two excellent exploration targets -- one being the Trebol property, which is a joint venture with Radius in northeastern Nicaragua. We did the first 2,000 meters of drilling, and came out with some very positive initial results of good grade material. I think the key there is that if you -- and some of the analysts were on a conference call with Tom a while about talking about this is a very good start with good grade material starting at surface, but it's because of the shallow dipping structures starting at surface that this is potentially an area that could be mined very cheaply, if we continue to get positive results and drill off an economic ore body.

It could be a very cheap operation because of the fact that the zones start at surface and are shallow pit. So a lot more work happening there. It's the full on rainy season there, so we'll be doing more trenching for a while, and then start drilling again, I guess, in the fourth quarter of this year. We're very pleased with those results at Trebol today, and obviously this is a country where we know how to build mines in.

Additionally we put out the first drill results from the Cebollati in Uruguay. This is an exciting target that we came across a year -- I guess a little over a year ago now, year and a half ago -- because of the amount of very high grade gold on surface, where there was outcropping and quite a bit of visible gold. Once again, we held a conference call with analysts recently for Tom to give some detail on what we're seeing there. We're seeing some very good grade intercepts from the first round of drilling. The bottom line is, there are numerous targets throughout the property, and we're sufficiently encouraged by the initial results to continue on with a large program there for the remainder of the year.

This is a very large property. We have about 15-kilometers by 45-kilometers of mineral rights, and interesting enough, there's been a lot of ground that has been picked up by others around us. The potential here is for a new district. As Tom was talking about, it's very interesting geology here and we think it's highly prospective.

So that's really kind of the highlights for the rest of the year. We're able to do all of this with the capital expenditures that George was talking about, extensive exploration on all these projects around the mine and others. But we're able to do all that from a very strong cash position, and projecting to -- what did we put up for the end of the year? Cash?

No, we didn't.

Where we expect to, with all we have on our plate -- assuming a gold price of $1,300 an ounce we projected before cash at about $60 million by the end of the year, so leaving us in a very strong position to further advance the assets. I think our strategy is, we've got a great quarter, great start to the year, and I think our strategy is really paying off.

I think we may have mentioned it before, but the strategy of B2Gold is, we're a bit of a hybrid Company, because we're not only good at finding gold, but we're very good at building mines and running mines. As many of you are aware, that's a bit unusual in our industry, because most explorers who are fortunate enough to find gold in economic quantities never produce. They get bought out, as they probably should, by the big guys. Most producers don't find enough gold to maintain their production levels, let alone grow, so they're forced to make what we think are rather expensive acquisitions. We have not in our careers paid out for a gold project. We not about to start buying ounces in the ground at $1,500.

So if you can find the ounces, it's a great way to grow a Company, and I think we're showing that we can significantly increase our production very profitably over the next number of years from our existing assets. Of course, we're always looking at acquisition opportunities, but I think the ability to grow from these existing mines and other projects is a great strategy to build shareholder value.

So that's the summary. I think we'll turn it over now to questions.

Thank you.

(Operator Instructions)

Our first question is from Raul Paul from Canaccord Genuity.

Hi, guys. Congratulations on a good quarter. Just a quick question for you on the recoveries at La Libertad. I see they were 91% higher than the 87% budgeted, and you mentioned this was due to a combination of plant upgrades and larger contribution from the [Crimea] pit, was it mostly due to the plant upgrade?

You're breaking up. I'm sorry, could you try the last bit again?

No, the recovery is 91% versus the 87% budgeted. You mentioned this was due to a combination of upgrades to the plant and the mix of ores, more of it coming from the Crimea pit. I was just wondering if most of this, most of the higher recoveries were due to the upgrades to the plant, as opposed to the mix of ores?

We've been working on the plant since we started operations. We've been making improvements in the carbon circuit, the ADR circuit and so forth. And so yes, I would say most of the excellent recovery results, or the improved recovery results, are from how we, what we've done in the plant, and how we are learning to operate the plant better. It's a constant learning curve and especially since start up, our guys are getting better and better at being consistent. So that's the quick answer.

Okay. So are you still budgeting 87% for the rest of the year, or should we look at something higher?

In our forecast that we gave as far as guidance, we have budgeted 87%. We're certainly thinking that it could be better.

Okay, that's good to know. The other question on Limon, I was just wondering if you could talk a bit more on any potentially high-grade targets that you identified there?

I'll get Tom Garagan to answer that question for you.

Yes, there's quite a number of high-grade targets on the property. The property, although its been mining since 1850, and has had periods of positive exploration, there was a period during the 1950s when Noranda did some work, and they did a fair bit of drilling on a number of vein targets. There's probably over 50 veins in the property. The number of vein targets where they drilled one or two holes got good results, but sort of passed on and went on to something else. Some of these are something like something called la tigre where they had a drill intersection of 26 grams over four meters and trenching into 38 grams over two meters. That's an example of one.

Some of our drilling in recent times, we've picked up some higher-grade zones within the Santa Pancha system that are near surface for potential open pit. One of being, a recent hole that was 15 meters through width of 14 grams, so that gives you an indication of what some of those better grades are.

The thing that's interesting about Limon is there's very large areas of cover on Limon that have not been explored at all with any sort of tools. What we're finding as we start exploring, we're starting to find more veins. That's interesting because the historic mining average grade for the Limon area was around 10 grams. It's only been recently, as the recent activities in the mine where there's no exploration, and guys are mining parts of veins that have already been partially mined historically. So the high grade stuff's been removed. That's why you see the 4.5 grams that we see to date. That's why we're optimistic that if we find a new vein under cover, or follow-up some of the old historic Noranda grade, the potential of getting the grade through the mill is significant, and I still stand by that.

Okay, thanks a lot, guys.

Thanks for your questions.

Thank you. Our next question is from Michael Gray from Macquarie Capital Markets. Please go ahead.

Good morning, everyone. Yes George, just on the recovery, back to the recovery at La Libertad at 91%. Going forward, do you see, as you displace the spent ore with the calluvium in the future, and potentially with Jabali, do you see the recovery also being enhanced by displacing the spent ore?

Yes, they could be. We will do metallurgical test work on the Jabali deposit and certainly, the recovery on the spent ore is lower than what we get for recovery on the ore from the pits, direct-mined ore.

Okay.

Yes, it could be improved.

And Clive, no mention of labor issues at Limon. Is that continued good news?

No news is good news. Yes, we have had, well, many months now, well over a year without any labor issues there. For those that don't know the history, there were a number of disputes historically, and in 2009 that sort of reached the peak. We dealt with the government and the local unions, and I think really what turned the tide here is our delivering on site. We talk about delivering for shareholders, but also a very important part of what we do is delivering for the communities that we work in, and for our employees. So the Limon mine had been starved of capital and exploration funding for a number of years.

So we said to the unions, give us a chance. We'll show you that we're here for the long term. We're doing exploration as you can see, we're doing underground development work at Santa Pancha Deep. We're clearly showing everyone, and also we've made significant improvements in terms of equipment, in terms of safety and environmental. Everything we've done, we've brought it up to a whole new standard. We, at this point, have very good relationships with the three unions, and expect that to continue.

Once again, it's really walking the talk that's changed the tide down there. Very positive. We're very important in the local community. We just opened a new health clinic for the mine, and we do a lot of other important things, supply water and other things for this poor area of Nicaragua.

Thanks, and last question for George. Can you give us the cost per ton milled for both La Libertad and for Limon?

Cost per ton milled?

Yes.

Yes, total cost per ton milled including everything is $72 at Limon, and total cost per ton milled at Libertad was $22 per ton.

Okay, great. Thank you.

Thanks.

Thank you. Our next question is from Catherine Gignac from NCP. Please go ahead.

Hi, thanks very much. Congratulations on a good quarter. It's nice to see the progress.

Thanks.

Specifically on Gramalote in Colombia, can you give us detail in terms of what the money was spent on in Q1, and progress in the field?

Sorry, the first part, you broke up on the first part. The second part was progress in the field, but the first part?

On Gramalote, how the money was spent in Q1, and specifically, amount of drilling or fieldwork? And how things are going in the field right now?

Okay, I'll pass that over to Dennis. You want to talk about what we're focusing on there?

Yes, the majority of the money in the first quarter was spent on drilling. We're drilling a lot of the outside targets and also infilling of Gramalote, so that was the majority of it. The focus in the field right now is really getting a lot of our study work kicked off. The baseline data collection, things of that nature. Flora and fauna studies are ongoing, hydrology studies, geotechnical studies, et cetera. All of those are kicking into gear right now, and that's what's really ramping up for this year as we speak.

But in Q1, it was -- we got the met samples all shipped. We got those programs under way, so we're in progress. We're getting results back on that which are very encouraging. So that was kind of the focus of the work in Q1.

Okay, fair enough. This is all your employees, or you have contractors working like for the environmental work and the met work and geotech and that sort of thing?

It's being done -- of course Anglo is the operator, so we have a management team down there that they've got into place, which actually includes some of our previous employees, which to support that. But most of this will be done by outside consultants. AMEC has been given the primary contract for over the metallurgical work, and they will be doing a lot of the design work and things of that nature that come out of that, so it's mostly being done with outside contractors. There's a whole list of them involved.

Okay, and any comment in terms of government relations or progress with the Columbian government in terms of advancing the mining regulations, mining law, et cetera?

Our relations with the government, our relations being B2Gold, we managed this stuff until late last year, and were excellent. We had very open-door policies with them. We could get meetings whenever we wanted. We were very open and transparent with the way we've done that, and as Anglo has taken over as operator, our key people that were instrumental in making that happen are still involved with Gramalote. Actually one of them works for Gramalote Limitada, so we've carried that through. I think the relationships as far as Gramalote goes are excellent. I think that's going very well.

We are in an area where there has been -- we've done all the right things, but there's also been very good local government support, unlike some of the other areas in Colombia.

Gramalote is located in an area where it's at low elevation, so you don't have some of the flora and fauna issues that some of the operators do at higher elevations, where there's a very specific ecoclimate there that is causing a lot of the issues that Colombia is worried about, so it's a very good location for a mine.

Okay, and as I say, a very good production quarter and nice to see the grades. Also in terms of Santa Pancha, sorry -- where you are mining material that you're anticipating in your budget would be low grade material, and you're looking for higher costs. Sorry, particularly Limon, up to $778, I think, was your cost, and you were looking for a lower grade. You were able to replace that with continuation of higher-grade material.

Are we going to see a little bit more of that through 2011 in terms of, say, production surprises on the upside, or would we just see what we've seen in the past, and that is volatility on grade, and for example, the first quarter being very positive may be offset later in the year by a weaker quarter, and we shouldn't be too aggressive in terms of changing guidance right now?

Catherine, most of the last couple of sentences we didn't get at all. It's very garbled. Maybe it's better if you want to, I think you're asking about production levels and can we maintain them. Maybe you could call George separately, it might be better.

Okay, I'll give George a call.

Okay, great, thanks.

Thank you.

(Operator Instructions)

There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Johnson.

Well, thanks for your participation and if there's other people and you want to pass this call along to, it was recorded and we look forward to talking to you soon about hopefully some more very good results. Thanks for your time.

Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.