Coeur Mining Inc (CDE) 2016 Q4 法說會逐字稿

Good morning, and welcome to the Coeur Mining, Inc., fourth quarter and yearend 2016 financial results conference call. (Operator Instructions)

Please note this event is being recorded.

I would now like to turn the conference over to Courtney Lynn. Please go ahead, ma'am.

Thank you, and good morning. Welcome to Coeur Mining's fourth quarter and full year 2016 earnings conference call. Our results were released after yesterday's market close, and a copy of the press release and slides for today's call are available on our website.

Before we get started, I would like to remind everyone that our press release and some of our comments on the call include forward-looking statements from which actual results may differ. Please review the cautionary statements included in our press release and presentation, as well as the risk factors described in our 10-K.

I'll now turn it over to Mitch Krebs, President and Chief Executive Officer.

Thanks, Courtney, and good morning, everybody. Thank you for joining our call.

The fourth quarter capped a pivotal year for our Company, and we achieved record production levels for both the quarter and the full year and delivered another year of improved cost performance.

Combined with higher gold and silver prices, we posted positive net income for the full year the first time since 2012.

LTM adjusted EBITDA was also up sharply, increasing nearly $90 million, or 68% since last year, to $215 million.

For the full year, two thirds of our metal sales came from our U.S. operations and our metal mix last year was 38% from silver and 62% from gold.

Together with our ongoing cost and efficiency achievements at each of our silver and gold operations, we also delivered on our commitment to meaningfully strengthen our balance sheet last year.

During 2016, we reduced total debt by $280 million or nearly 60%, cutting our anticipated annual interest expense by approximately $25 million, and bringing our total leverage ratio down to one times from 3.8 times just a year ago and down from 5.5 times just 15 months ago.

I think the only negative to this reduction in debt was an acceleration of $7.5 million in cash interest expense into the fourth quarter, and a one-time loss of $11 million related to the early redemption of $190 million of our senior notes that mature in 2021.

Together with the timing of metal sales from Palmarejo that spilled over into January, those were the major reasons for the fourth-quarter net loss and negative free cash flow in the quarter.

From our perspective, the main takeaways are that we now have a strong and flexible balance sheet capable of supporting our future growth initiatives, that we achieved our production and cost targets in 2016, and the timing of those metal sales I mentioned from Palmarejo will help us get off to a strong start here in 2017.

Before we open it up for questions, I'll offer some quick highlights on each of our mine sites.

Starting at Palmarejo, we accomplished several important milestones last year that have now positioned our largest operation for strong cash flow in 2017, and beyond.

We completed mining in the open pit and in the original underground mines.

We accelerated mining rates at the Guadalupe deposit by 40% from 1,700 tons per day up to 2,400 tons per day by yearend.

We began mining the new Independencia deposit.

We completed important processing plant upgrades in the third quarter, which are now boosting recovery rates as planned.

And we transitioned to the new, more favorable Franco-Nevada gold stream agreement late in the year.

Palmarejo's production levels declined last year as planned during this transition period, yet its cost metrics reached record lows.

We expect this declining cost trend to continue in 2017, as combined mining rates at Guadalupe and Independencia steadily climb throughout the year, leading to over 50% increases in expected silver and gold production this year.

At Rochester, we mined and placed nearly 20 million tons under leach in 2016, which was a 19% increase year over year and the highest level since operations commenced back in 1986.

While full-year production levels were flat compared to 2015, cost metrics continued to show incremental declines.

We are also pleased to report an increase of over 40% to the silver reserves and nearly 70% to the gold reserves at Rochester.

As for Rochester Stage IV leach pad expansion, we are well into construction and look forward to completing it midyear this year.

2017 production levels are expected to be higher in the second half of the year once this new pad is in place.

Up at Kensington, its fourth-quarter production was its highest of the year, topping off another year of strong production, as well as record low cost performance.

Kensington also delivered $14 million of free cash flow for the year, which was flat compared to 2015, despite a $13 million increase in capital expenditures there.

As for development of the adjacent high-grade Jualin deposit, drilling to expand its size is ongoing and production is expected to commence from there late this year.

Full-year production at Kensington is expected to be relatively flat compared to 2016, and our operating plan calls for lower production in the first quarter, followed by higher production in the second and third quarters of the year.

At Wharf, we had our first full year of gold production since acquiring the mine in the first quarter of 2015, and we saw full-year costs continue to decline.

Wharf generated nearly $60 million of free cash flow in 2016, and a total of over $86 million since we acquired Wharf almost two years ago for $99 million.

Since we expect to complete mining of the higher grade golden reward deposit this summer, we expect Wharf's production in 2017, to be lower compared to the 109,000 ounces it produced last year, and its unit cost to be higher this year.

At San Bartolome, our fourth-quarter production was negatively impacted by an ongoing water shortage resulting from nationwide drought conditions in Bolivia. However, our full-year production remained consistent compared to 2015, and we continued to show incremental cost improvements with the help of higher margin third-party ore purchases and from processing plant enhancements that were implemented last year, which have boosted recovery rates.

As a result, San Bartolome generated $23 million of free cash flow last year, an increase of $3 million year over year.

Unfortunately, drought conditions in Bolivia have persisted and will likely result in first-quarter production being the lowest quarter of the year.

As we look toward the rest of 2017, and beyond, we remain committed to pursuing high-quality growth, prioritizing organic growth projects in near-mine exploration. We are planning to spend $115 million to $135 million in capital expenditures this year, a large majority of which will be allocated to continued underground development at Guadalupe, at Independencia, and Jualin, as well as completion of Rochester's Stage IV leach pad expansion.

I should note that this guidance range also includes about $10 million of carryover CapEx from 2016, as well as $11 million to $13 million earmarked for resource conversion drilling.

In 2016, this capitalized exploration drilling produced significant increases to Rochester's reserves and overall mine life.

In 2017, we will look to continue this momentum, focusing on resource conversion at Palmarejo, at Kensington, at Rochester, and at Wharf.

We are also continuing to make substantial investments in our expensed exploration program, following several years of limited investment. Our 2017 expensed exploration budget of $23 million to $25 million is nearly double what it was last year.

We're now able to take funds previously earmarked for interest expense and now allocate them to high-quality, high-return organic growth such as accelerating our near-mine exploration efforts.

Our priorities include re-expansion at our existing operations with almost a third of the 2017 budget set to be spent at Palmarejo.

Drilling also continues at La Preciosa, where we have five active drill rigs. We're continuing our efforts to confirm our new geologic model there, and hope to have an update for you later in the year.

Finally, we are allocating more funds to early-stage, high-quality exploration projects in Mexico, the United States, and Canada, to bolster the longer-term end of our pipeline.

So in summary, we covered a lot of ground in 2016, and, importantly, we continued to deliver on our commitments.

As I reflect on where we are now relative to where we were three years ago, the difference is remarkable and would not have been possible without the hard work and dedication of our employees.

We will continue to pursue a higher standard across all areas of our business, and we thank our stockholders for their continued support.

Now, that's the extent of our prepared comments, so let's go ahead and open it up for any questions.

Yes, thank you. We will now begin the question-and-answer session. (Operator Instructions) At this time, we will pause momentarily to assemble the roster. Joseph Reagor with ROTH Capital Partners.

So I guess the first, the big item is the revenue number versus, obviously consensus was quite a bit higher. But you mentioned this shipment at Palmarejo. It looks like there was also some inventory build across a couple of the other mines, which is normal quarter-to-quarter stuff. And adding to that, the Franco-Nevada stream I believe is being accounted for differently now, where it's basically a reduction in revenue rather than a cost item. So margin-wise, it's no difference, but it moves your revenue number down a bit.

Ex those three items, I'm coming up with there's about maybe a $30 million to $35 million impact into what your top line should have been compared to where it ended up.

Is that roughly the right number?

I think that's right, yes.

Okay. So you would have been more in the 190 range kind of similar to what's out there in the market if it wasn't for that. And I'm sure that also negatively impacted the EPS line.

Can you guys quantify kind of what the net impact was of that shipment on EPS? I'm sure you booked some of those costs sustaining G&A types of things during the quarter, and then those costs won't be booked against that revenue when it shows up in Q1.

Most of those costs are in inventory, Joe. So, yes, the revenue and the associated costs will hit the P&L in Q1.

Okay. Well, what about the sustaining? Isn't the sustaining cost not transferable year to year? So isn't there a little bit kind of a discrepancy there?

I'm thinking of it from a P&L perspective on a pure cost per ounce basis.

Okay. So effectively, it did impact kind of the all-in sustaining cost number that you would report because sales based, okay. So that's helpful.

And then, also on the guidance for this year, on the cost side for Palmarejo, what was the U.S. dollar to Mexican peso exchange rate used there? I think you guys might be a bit conservative.

Yes. We used 18 in our budgeting this year.

Okay. And so as it's obviously moved higher to start the year, is it fair to say if that were to stay the same that there's room to have better than that cost range, but, obviously, the budget's got to be based off of something?

Yes. I think it's our back of the envelope mass is for every peso, one peso change for the full year results in $3 million improvement or change for us in terms of cash flow.

So if there's a three peso difference between spot and our budget there, and that on a per-silver-equivalent-ounce basis for 2017, that gets to the $0.50, $0.75 an ounce range just that peso different assumption.

Okay. And then one last one, if I could. On the reserves, the increase at Rochester was pretty significant.

Could you give us some additional color? I think kind of the revenue might have overshadowed that for some investors.

Yes. This is Frank, Joe. At Rochester, we drilled in some what was previously measured and indicated classified material on the west side and the south ends of the open pit. And that's where the conversion came from to create those reserves.

Okay. Thanks. I'll turn it over. Thanks, guys.

Thank you. Chris Thompson with Raymond James.

A little surprised by the market's reaction this morning. Couple quick questions. Palmarejo, first of all, you mentioned Guadalupe's currently producing at about 2,400 ton a day.

Is it sustainable at this level at the moment? Is that what's in the mine plan?

Yes, Chris. That's Guadalupe, and that's where we're at.

Okay. Can you give us a sense of Independencia, where do you want to be as far as production rates towards the end of the year?

We're targeting 1,400 to 1,500 tons a day by some point in the fourth quarter this year.

Okay. Thank you for that. Just quickly moving on to Rochester at the moment.

Can you give us a sense of sort of average stacking rates for this year?

And just reading, I guess through some of the information mentioned was (inaudible) the East Rochester expansion. What effect will that have on production at Rochester?

I'll handle the stacking rates. We averaged in the neighborhood of 50,000 tons a day placement rates on the Stage III leach pad at Rochester. That's a significant increase over the last two years before that. All ties back to a pretty large event in the second quarter when we put a fair bit of run of mine material out there for purposes of bolstering 2016's production and getting some carryover into 2017.

And East Rochester, that would become a part of a future expansion permitting cycle that doesn't come into play for the next few years. When we just received permits last June or July for the current expansion, we're now starting the next expansion permitting process three to four to five years, and it would be in that plan and scenario and permitting application that East Rochester would be incorporated into that.

Okay, that's good. And then just finally, Wharf, obviously, lower production anticipated this year, I would imagine on the back of the ceasing of production from Golden Reward there.

Is there an opportunity, I guess from an exploration or discovery perspective to locate and execute on additional high-grade?

Yes. Hans, you want to take that?

Hi, Chris. I was just at Wharf, in fact, talking to the guys about our program for this year.

We're looking at some targets that are near Wharf, and these are pure exploration play. So the success of those and then how those will grow into production would be a longer term than just this year kind of proposal.

But there are targets, and we will begin drilling on those in August this year.

Okay. Thanks. And just finally, you do mention your CapEx budget for this year.

Could you give us a breakdown on a mine-by-mine basis quickly?

Frank has that, and I know there's a good slide in our materials that breaks that down by percentage.

Okay. No worries. I'll go back and we'll look at that. Thanks, guys.

You want me to take a stab here?

Chris, Frank will give you a quick overview, and then you can look at those slides later. Go ahead, Frank.

Yes. At Palmarejo, we're at $43 million, $43.5 million for 2017. Rochester is, rounding up slightly, $34 million. That's the bulk to do at Palmarejo with underground development, continued development of Independencia largely, and our Stage IV capital project out at Rochester.

At Kensington, we've got $42 million in our plan for 2017, driving the Jualin development. Sandbar grade de minimis about $2.6 million. That's all wrapped up in very small incremental increase in the dam height on one of our tailing structures.

And at Wharf, we've got $8.9 million. A good portion of that capital is aimed at increasing the capacity of our denitrification plant infrastructure.

Okay, guys. Thank you very much. Thanks.

Mark Mihaljevic with RBC Capital.

So I guess kicking it off at Kensington, I guess first on the exploration side, you had a nice increase in the M&I as you were able to convert some of the inferred, and upgrade that.

So was just wondering how you see that playing out into your reserves over the next couple years and how much upside do you think we should see there?

Yes, this is Frank. That M&I increase ties to last year we had booked an inferred resource at Jualin, somewhere in the neighborhood of a couple hundred thousand ounces. Half of that converted over to the measured and indicated category in 2016.

And then the rest of the ounces that flowed into there were from Block M, a lower part of the Kensington main mine, an area that we call Zone 12, which is out to the west of the main Kensington mine.

And then a few ounces came from a Zone 28 in the upper part of the mine.

So, yes, it was a helpful addition to those resources. We'll continue drilling in those areas and we'll be able to add. It's a little bit difficult to say exactly how much, but we will be adding more valuable ounces in our drilling plans this year for sure.

Okay. And I guess kind of sticking with Kensington and the upside there, so you're on track for getting into drilling late this year.

Do you have a sense of how much benefit you expect in 2018, as you ramp into there?

And then kind of following on that, how things have been developing with the ramp over, and whether all the ground conditions and everything is as expected.

Yes, it's Mitch here. I'll take a crack at it, and, Frank, you can fill in any blanks that I miss.

But the development did get off to a slow start, I think as we've said, with some water slowed down our advance rates. That has improved a lot and development rates have accelerated, which has then led to our ability then to start the drilling, which is now, as I mentioned in my comments, ongoing there at Jualin.

I think the budget for this year includes about 5,000 ounces out of Jualin in the fourth quarter. So a fairly small component of the overall production in 2017.

When you look at 2018, to your question, the way I think about it, the way we think about it is running the mill at, call it 19-ish-hundred tons a day to have 350 to 500 tons of that coming from Jualin is kind of the plan. And to sustain that as a source of high-grade kicker to the mill to supplement what comes out of the Kensington main, which would be more sub 0.2 ounce per ton material, with the Jualin material, which on an undiluted basis, that grade is right around, I think 0.6. So that'll have a material impact on the overall head grade going through the plant and should have a big impact on not only ounces, but, more importantly, on margin and costs and cash flow.

Perfect. And swinging back to Rochester, I just want to clarify whether any of the increase in reserves reflected East Rochester. And if you could just quantify what you have at East Rochester right now.

It doesn't include any East Rochester material. It's all in the west side of the pit and a little to the south.

What the resource is at East Rochester, I don't have that number off the top of my head. We can come back to you with some information on that.

Okay. Thanks. I'll leave it there.

Thank you. Chris Terry with Deutsche Bank.

Couple of questions for me. I apologize if I missed it at the start of the call. But just on the shipment at Palmarejo, you would expect that that reverses in the first quarter of this year, so that when we get the 1Q result sales will be above production at that point. Is that correct?

That's right, Chris. Yes.

Okay. And then just generally over the course of 2017, what do you see in terms of other working capital movements? Are there ways to reduce that overall or have most of the wins been made over the last couple years already?

I think it'll be a modest source of cash, Chris. It's Peter. Certainly with that build in finished goods inventory, that will provide a source and then, I think, generally, we're going to make that a focus to squeeze some additional cash out of working capital. Tough to quantify a specific.

Sounds good. And then on your asset sale program just looking at divestitures or acquisitions and changes to your asset base, are there other assets at this stage that you might look to divest or is that largely being done with the recent announcement to Pan-American?

I'd say there's still some little things sitting around that to the extent we can monetize them, we will and we're trying to do that.

The total dollars, though, would not be nearly close to the kind of number we had last year or even the size of the sale of Joaquin to Pan-American. So a few things left, but not a big impact. But we're still pursuing those.

Okay. And then, obviously, you've got more favorable terms now on the Franco-Nevada streaming deal.

Would you ever look in the future to potentially buy that back or is that not top of mind at all?

We just got onto the new terms just a couple months ago. I think for now it's not top of mind.

Obviously, any time you want to buy anything back, you have to have a willing seller on the other side. And you could ask Mr. Harquail that question. But I think that might be a pretty big bid-ask spread. I'm just guessing.

But for now, we're focused on the operational side of Palmarejo and everything that we put in place there, and we're pleased with the new terms that we have. That gives us a lot more margin to work with there.

And then with everything coming on the east side of Independencia that sits outside of that, the area of interest on that gold stream with Franco, that's just all to the benefit of our shareholders.

Okay. And the last one for me, just on the pretty rapid change in the balance sheet over the course of 2016.

Now with the net debt in quite a good position, what's your strategy with that going forward? Have you got a range or metrics that you're trying to keep your overall debt below in the next few years or would just depend on different opportunities?

Chris, it's Peter again. I would say our sort of overall target is around one times total leverage, which is where we are right now.

And certainly keeping our toe in the water in debt market such that should we need to debt finance other opportunities in the future, that we have a presence and a debt rating in place, et cetera. But one times is our target.

Okay. Thanks. Thanks, Peter. Thanks, Mitch. Appreciate it.

Thank you. Jean-Paul Tsotsos with BMO Capital.

I just have a question about La Preciosa asset and what your plans are for this year for that asset, if you can provide a bit more detail.

Yes. So the drilling is -- or let me back up. Last year some work was completed on re-logging all the old drill core that exists. Out of that work came a reinterpretation of the geologic model there.

We're now drilling there, spending about $3.5 million to kind of confirm and validate that geologic model and do some infill drilling that could, assuming success, help us in some new mine planning and development work.

So as that drilling proceeds and we see the results, our hope is that it gives us reason to move right into a PEA that we would look to have done here later in the year based on a different approach that would be, hopefully, much less capital intense and much more economic even at today's or lower prices.

So that's what we're doing and that's where we hope to go with La Preciosa.

Okay. And will you guys be using similar metal assumptions and FX assumptions that you used at Palmarejo for your decision there?

Good question. Hadn't really thought about what a peso assumption would be in La Preciosa.

But I think we'd probably take a fresh look at where things sit at that point and, like everything, use some sensitivities on prices and on peso and everything else and see what it looks like, and, hopefully, we'll have something there that's robust enough to move on to the next level of engineering and planning.

Perfect. Thank you, Mitch. And great job, guys.

Thanks.

Thank you. Craig Johnston with Scotia Bank.

A lot of questions have been asked, so I'll try and keep it short. Just on the Rochester mine plan, based on what I had from the previous mine plan, it looks like, obviously, mine life's doubled or close to it, which is great, but lower production in, say the first five years on lower grades.

Just wondering what was the cause of that? And kind of what's the thesis behind that, say if you're considering present value?

This is Frank, Craig. Are you talking about the technical report?

Yes. Yes. So looking at the production profile, say over the first five years of mine life when you compare those years to the last technical report. I think production is, I don't know, I'd throw a number like down 15% over that first five years.

Yes. In the latest cycle of drilling work in our recently published reserve statement here, we see grades drop down a bit on silver and we're holding the line on gold, which is a very good thing.

So the mining rates and those grades being a little bit lower in the early part of that new life of mine, which as you probably noted, has been increased by seven years, makes that period a little bit tougher.

We used our reserve prices for gold and silver in that model that we used to do our research estimates this year, reserve estimates, 1750, 1250. Then we stepped that up in successive years to [19], and I think 1275.

When you get out there a little bit further, this expansion that we'll be working on next will require some capital. Our current mine plan takes us right through the area where our existing crushing plant sits. So it's going to have to be moved. And we've got some capital in there for a pretty good size crushing plant to carry our needs through the end of the life.

And so you see capital up. Because of the additional seven years of operating life, you're going to see additional bulk spending for mining and processing in site-based G&A.

So as a result of all those factors, you noted the drop in MPV. Some of that's driven by some of the lower grades that we model right now in the early period of that 12 years.

And some of this effect you're seeing is to do with when you get out to some of those years, 9, 10, 11, and 12, the discounting effects start to take a little bit [more] impact.

I was pleased with the fact that we were able to increase the life of the mine so substantially. That carries out through 2029, and there's a couple of years residual leaching on the tail end of it. This is definitely a core asset that will go past the 50 year mark.

Yes. No, for sure. And I agree it is nice to have an asset in the portfolio that is plus 10-year mine life in reserves. That's nice.

Just with respect to sensitivities around fuel prices, I could probably check this in the technical report. But what fuel price assumptions did you guys make in the tech report?

Craig, I can't recall exactly what's in the tech report. I know that for the 2017 budget, we did raise those because we're seeing fuel prices increase.

Yes.

But I'd have to look that up and get back to you on that.

Okay. No worries. I can look that up.

And then just on Palmarejo, a previous caller had mentioned your conservatism around exchange rate. Is there anything factored in, coming back to fuel prices -- I know there's been a lot of talk about Mexico increasing fuel prices. Has that been considered in your cost guidance?

Yes, it has. We've seen prices increase. In fact, there was an increase mandated by the government, created quite a bit of turmoil in Mexico. Another incremental increases is being discussed.

But we covered as much of that as we could in our 2017 plan, hopefully offset with some of the benefits of the peso. But we pay for fuel in local dollars down there.

Yes, okay.

(Inaudible) up here, it helps.

Yes. No, for sure. Just a couple more. Just looking at the cash flow statement, it seemed like there's a big buildup. And I know we know there's a buildup in finished goods inventory with the Palmarejo timing.

But just throughout the year, there's been a kind of gradual buildup in inventory. And so if you look at the cash flow statement, you have $36 million in the year going out for inventory or on leach pads.

Is that fair to assume the bulk of that would be just stacking at Rochester, or is there something else I'm missing there that would have caused that?

No, that's it. With the placement rates that we saw last year, that definitely resulted in a steady inventory build throughout the year like $20 million.

Okay. Okay, so that's the bulk of it. Cool.

And then last question is just on expectations around free cash flow. Your guys' thoughts on, say at current prices or even your guidance prices, are you guys modeling free cash flow for this year?

Yes. We ran our budget that the Board approved at [$17.50]and [$1,250], which ironically now are, I guess almost right spot on.

Yes. You guys are pretty good, yes.

We're still good in January, but I guess we are for the day, at least. And at those prices, yes, there was a healthy, as kind of we've been pointing to in 2017, a healthy free cash flow number that sits at the bottom there of 2017, for sure.

Okay. Okay, great. Well, that's it for me. Thanks, guys.

Thank you. Brett Levy with Loop Capital.

I think most of the questions have been asked. I wanted to ask sort of, I know you've got this 1.0 times debt to EBITDA guidance number. You're doing very well with it now.

Can you talk a little bit about kind of, because you will have free cash flow and continue to have some opportunities, as you look at acquisitions, are you looking tuck-in size or are you looking sort of game-changer size? Are you looking to continue the move more towards gold and away from silver?

I guess, talk a little bit about how active you are at looking at M&A project size and also mineral.

Yes, sure. Our basic premise is anything that we look at has to first meet a basic criteria of does this make our Company better? And by better, that means lower costs, better jurisdiction, longer mine life, and accretive on a per-share basis to the main metrics.

And based on that set of criteria, a lot of things don't make it through that filter, some big, some small.

We spend more time looking at more of what you would call, I think what you did call tuck-in incremental.

But there are also some things out there that could be more transformative and meet those criteria that we have laid out.

But we look at a lot of things. It seems like a lot of activity right now in the sector. But we say no a lot. And I think that's the sign of having some good discipline, hopefully, if nothing else.

In terms of metal mix, we prefer, ideally, to have a balance between the silver and the gold. I think as a U.S. company with a longstanding silver reputation, I think it's important to maintain that prominence as a silver company. But having a healthy contribution from gold is a nice mix and one that we're very comfortable with.

That all said, we're more driven by opportunity and returns. And if that's silver or if that's gold, we would be led down the path based on those criteria before we would be led down the path based on, well, is it silver or is it gold?

We're trying to make money and generate high rates of return. As long as it's in the silver and gold sandbox and it can make us better, those are things that we're considering and evaluating all the time.

And then sort of towards that, high return type commentary that you have as a parameter, it's easier to make it accretive if you debt finance it and it would also almost imply that you are much more looking for a producing asset rather than reserves.

And with both of those in mind, how long a time after an acquisition would you target to give yourselves to get back to that one times leverage level?

Good question. Peter, do you -- ?

I think, obviously, Brett, it would be a function of whether it was a debt funded transaction or an equity funded transaction. But, I mean, it all really ties in with all the factors that Mitch tied in, in terms of accretion to the various metrics of the Company, et cetera.

So, I think probably the overarching principle is, after all of the heavy lifting that we've done over the past few years in de-leveraging the business and getting it within target range, we wouldn't lever off the Company to affect M&A, that would just be a sort of --

Well, [it'd be like here] never again?

I don't know what my exact terminology was, but --

Oh, okay. So another words --

General rule of thumb for us, and I suppose this applies to pretty much any mining company, if it's producing and it's generating strong cash flow, using some debt and maintaining that one-time ratio is not a -- for the shareholder especially, is kind of the way to go, I think.

If you're looking at something that's not producing, incurring debt to buying a development stage property probably won't go there, much more of a focus on an equity transaction.

How something then would be built again would be a separate financing decision that we'd have to evaluate at that time.

But those are some thoughts, at least, around how we look at the world.

No, that's excellent color. Thanks very much.

Thank you. And as there are no more questions at the present time, I would like to return the call to management for any closing comments.

Okay, great. Well, we appreciate everyone's time this morning. Thanks for joining in.

I also want to thank everyone again at the Company for their continued commitment and hard work. And we look forward to speaking with you again in April to discuss our first-quarter results. So thanks again and have a good day.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.