Centerra Gold Inc (CGAU) 2005 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Centerra Gold Third Quarter Results Conference Call.

[Operator Instructions].

I would now like to turn the conference over to Sharon Loung, Director of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to Centerra Gold's Third Quarter 2005 Conference Call. Present to speak today are Len Homeniuk, President and CEO; David Petroff, Executive Vice President and CFO; George Burns, Vice President and Chief Operating Officer; Rob Chapman, Director of Mergers and Acquisitions; and Ian Atkinson, Vice President of Explorations.

As usual on our calls, Len will briefly review the quarter and give an update on the Company's growth initiatives. George will then review the operations and David will follow with a summary of the financial results. We will then open up the phone for questions.

Today's conference call is open to all members of the investment community with media in the listen-only mode. There is a slide presentation that's part of the review today, and it is available on our website, www.centerragold.com on the investor section. Please note that all figures are in U.S. dollars unless noted otherwise. Before we begin, I'd like to caution you that certain statements made on this call maybe forward-looking statements and as such, are subject to known and unknown risks and uncertainties which may cause certain actual -- which may cause actual results to differ materially from those expressed or implied. For a more detailed discussion of the important risk factors associated with Centerra's business and industry, please refer to our security filing on the SEDAR website and more specifically, our annual information form dated March 15th, 2005.

Now, I'd like to turn the call over to Len.

Thanks, Sharon. Good afternoon, everyone, and thank you for joining us today on our call. Before I review our growth initiatives, I would like to note some important changes to our team, which underscores our commitment to growth. First, Rob Chapman has assumed the role of Director of Mergers and Acquisitions. In this new role, Rob will coordinate our technical team on the evaluation of merger and acquisition opportunities. As you know, Rob has been doing an excellent job spearheading our exploration efforts.

Taking over from Rob to head up our exploration program is Ian Atkinson. I'm sure many of you have met him at some point. Ian is a well-known, highly regarded geologist who has contributed to the discovery of several major deposits. In addition, assuming the responsibility for the evaluations and development of new and expansion projects is Ron Colquhoun, who brings over 30 years of experience in these critical areas.

We are very fortunate to have these particular professionals joining us at Centerra. And I'm sure you will agree that they provide added depth to our already impressive team. The third quarter results announced earlier today add to Centerra's track record of good operating performance. We reported earnings for the quarter of $9 million or $0.12 per share. This bring our nine month total to 36 million or $0.50 per share.

We generated 17 million of cash from our operations during the quarter for a total of 79 million for the 9 months. This is the seventh consecutive quarter of solid earnings and cash flow since our inception in June of last year. Despite the fact that as we had previously advised, Kumtor is processing lower grade ore in the second half of 2005. Our exploration results are outstanding as well.

I would like to draw you attention to an important statistic that we really think underscores our commitment in growing Centerra. During the quarter, we invested about 9.5 million or about $0.13 a share in various growth initiatives. This is a substantial investment and we are confident that we will generate compelling returns from it. At the time of our IPO, we stated our objective of adding 1 to 1.5 million ounces of reserves at Kumtor. As you know, by the end of 2004 we were well on our way with the addition of approximately 800,000 ounces. Drilling results so far this year give us confidence that we will significantly exceed our objective with a multi year extension to the Kumtor mine.

At the SB and NB zones in the southern and northern portion so the Kumtor pit, we are encountering thicker zones of mineralization than we anticipated. At the SB zone, we received additional encouraging drilling intercepts with widths of up to 44 meters and average grades of up to 12 grams per ton. Similarly, in the NB zone, we are encountering wide intercepts of up to 44 metes thick with grades in the range of 3 to 7 grams per ton.

Both of these zones are open and require further drilling. So, we are continuing the aggressive program and we currently have 6 drills in operation. Located just 5 kilometers from the Kumtor mill is the early Sarytor target, where we are in filling along a known mineral line zone. Early drilling has confirmed a thicker part of the mineralization. We are continuing to work here with 3 drills onsite to determine the limits and to better assess the grade and size. With these kinds of results, you can see that we are definitely on track to a multi year life extension at Kumtor.

Switching to an update on the political situation in the Kyrgyz Republic, since our last conference call, both the President the Prime Minister have assumed office and have completed the task of forming a new government. The process of transformation of power has not been entirely smooth, including the recent protest sparked by the death of a parliamentarian. We believe, that the government is on track to resolving these issues and will continue to stabilize the country. We are monitoring the situation very closely. And as is our policy, we will update the market if there is some material on our operations.

I would like to reiterate that Centerra's current management has worked in this environment for more than a decade, and has a great deal of experience in dealing with these types of challenges. Also, the political events, while distracting at times, have not had a material adverse impact on our operations and we continue to work cooperatively with the government to the benefit of both the country and Centerra.

I will now turn the call over to George, for a review of operations.

Thanks, Len. The Kumtor mine had another good operating quarter. Production of 123,000 ounces was 4% over our forecast at the end of the second quarter on account of higher than anticipated ore grade and no recovery. The cash cost of production at 277 per ounce was right on forecast. As expected, the no debt grade of 3.4 grams per ton was lower than the third quarter of 2004, which averaged 4.3 grams per ton.

Kumtor's major productivity and proven projects are all on schedule and budget. In fact, the ultra-fine grinding mill, which is expected to improve gold recoveries, is now online and performing as expected. The expansion of the mind sweep for development of the southwest zone and the main Kumtor pit is nearly completed. We see production going from 123,000 ounces in the third quarter, to 110,000 ounces in the fourth quarter as a result of lower grades. Needed cash cost is expected to reflect this decline in increase to 307 per ounce in the quarter. We expect that grades will increase going into 2006.

The Boroo mine recorded another excellent operating quarter. Gold production of 71,000 ounces was approximately 12% above forecast, due to higher grade ore at 4.1 gram per ton, and slightly higher throughput than anticipated. The higher mine production and mill throughput established early this year with productivity improvement projects, are all being sustained and fully integrated into the operations. Boroo's cash cost of operations remains amongst the lowest in the industry at 187 per ounce.

The outlook for the fourth quarter calls for gold production of 67,000 ounces at a cash cost of 1.78 per ounce. We've increased the forecast for the year to just under 285,000 ounces, and an average cash cost of 1.73 per ounce. To put it all together, Centerra's third quarter production and cash costs were better than forecast, reflecting continuing benefits from productivity improvement projects, which are helping offset the higher cost of fuel, steel, reagents and Sarbanes-Oxley implementation. We expect the fourth quarter production to be lower than compared to the previous three quarters at 177,000 ounces. This is mainly a function of lower forecasted ore grades at Kumtor. Despite this, our unit cash cost of production is expected to remain very competitive at 258 per ounce.

Now, I'll turn the call over to David to review the financial results.

Thanks, George. For the first time, our year over year quarter comparisons are not influenced by different ownership levels. The results for the 2004 and 2005 third quarters, as well as the 9 months of 2005, reflect a 100% ownership interest in Kumtor and full consolidation of Boroo.The results for the 9 months of 2004, reflect proportional consolidation for Kumtor and full consolidation for Boroo, which began commercial operations on March 1.

Now, it's my review of the income statement. Revenue of 77 million for the third quarter was, as expected, about $10 million below the revenue of the third quarter of 2004. This was the result of 18% lower sales volume, which was due to the expected lower ore grades. And therefore, the lower production. Grades at Kumtor and Boroo were 3.4 grams per ton, and 4.1 grams per ton for the 2005 third quarter. These compared to 4.3 grams per ton at Kumtor, and 5.3 grams per ton at Boroo in the same quarter of 2004.

The lower CL's were partially offset by the higher realized price of $429.00 per ounce in 2005, which was almost 8% higher than in the same quarter last year. The 9 month 2005 result was positively effected by the increased ownership in both mines, and a full period of operations at the Boroo mine, which as I mentioned before, started commercial operations in the March of 2004.

The cost of production in the quarter, including cost of goods sold, and non-cash charges of depreciation, depletion and amortization was $57 million. It is slightly higher than the $55 million in 2004, mainly because of higher stripping costs a Kumtor, due to the lower grades, increased mining mill throughput at Boroo and the higher cost of consumables. Exploration in the quarter totaled almost $7 million. About 80% ahead of the investment in the third quarter of 2004. And the majority of the program was focused in the Kyrgyz Republic, where we are getting the excellent results that Len detailed earlier.

The Company continues to have no interest bearing debt, and therefore, no interest expense. And for Q3 2005, interest earned on our cash was $1.4 million. And in addition, we realized a foreign exchange gain of $2.1 million on our Canadian dollar denominated cash. Administration cost was $6 million in the quarter, for a total of $15 million for the 9 months. The year to date comparison over 2004 are impacted by our current status as a stand alone public company, as well as costs associated with our business development activities.

Approximately $1 million of taxes were provided for in the quarter, of which 200,000 was paid in cash. And a balance was added to the future income taxes accounts on the balance sheet. And although we estimate that at Kumtor we will be non-cash taxable until after 2006, we did provide for income taxes at Kumtor at the rate of 20%. At Boroo, we are in the second year of our 3 year tax holiday as per our stability agreement.

The bottom line net earnings were $9 million for the quarter, and $36 million for the nine months. The year to date earnings were just slightly ahead of the 9 months of last year. And the third quarter 2005 results show the impact of the expected lower grades, which effected production, and the costs associated with our stepped up business development activities. Turning to the balance sheet. The cash position at the end of the quarter stood at $212 million. This is up almost $50 million from year end 2004, and was all provided by our operations.

Supplies and prepays increased about $10 million over the December 31, 2004 balance, and reflect the timing of payments for equipment. Goodwill remains at $155 million, after tests during the quarter showed no impairment in the value of the associated assets. Moving onto the cash flow statement.

Cash generated by operations totaled $17 million or $0.24 per share for the quarter. Other operating items, including working capital, increased by almost $8 million, mostly due to the timing of gold shipments. We invested a further $8 million of capital in our operations, of which 3 million was spent on growth projects such as the ultra fine grind mill, and the expansion of the mining fleet (ph) at Kumtor.

Now, looking out to the fourth quarter of 2005, as George mentioned, we expected production of approximately 177,000 ounces at an average cash cost of $258.00 per ounce. And as a result of surpassing the forecast in the third quarter, our forecast for the year is essentially unchanged at approximately 800,000 ounces of production, at an average cash cost of $232.00 per ounce. Our forecast for the year for exploration and administration remains unchanged from the second quarter at 24 million, and 22 million respectively. We are however, lowering our capital requirements by $2 million, to 32 million. And of this amount, we expect that almost $20 million will be invested in productivity improvement projects.

To summarize, our operations are doing a fine job of keeping costs relatively in check, considering the challenges of higher market prices for essential items. Centerra's financial position is very strong, and the Company continues to be in excellent shape as we pursue growth opportunities.

And with that, I'd like to hand the call back to Len.

Thank you, David and George, for your reviews. Now, Operator, could you please give the polling instructions, as we would like to start the question period?

Thank you.

[Operator Instructions].

Our first question comes from the line of Victor Flores from HSBC. Please proceed with your question.

Yes, thank you. Good afternoon. I was hoping you could give the sense -- given the expiration results that you're getting, when we can expect a reserve or resource calculation to be made public? And which zones do you think it will include?

Victor, Len here. We will issue a reserve report at the end of the year. So, it will be sometime in -- mid-January. It'll certainly be reserves that we identified in the Kumtor paths (ph) and likely resources in the Sarytor area.

Great. Now, follow-up to that, I mean, you're talking about grades increasing next year again at Kumtor. Can you give us a sense of by how much they would be increasing? And can you give us a sense as to whether that's just normal course mining into higher grade area? Or if you're thinking of changing your mine plan with those results that you're getting on the exploration side?

This is George Burns. The comment was really reflective of the lower grade in the fourth (ph) quarter of Kumtor. We expect, based on the current life of mine, the grades in 2006 to come back to life of mine type average grade. On your second point, we'll be aggressively working on new mine plans relative to our exploration success this year. And obviously, with the higher grade results that we're seeing in the south end of the pit, we'll be moving to get that higher grade into our life of mine plan as quickly as possible. Engineering will be underway in the next couple of months, and we'll have answers in January.

So, you think you will actually have a new mine plan in hand to discuss with us in the new year? When do you sense you'd begin to implement that?

From a strategic point of view, our strategy is each year to update all of our resource models on all of our assets at the end of each year. And announce the results of that process with our fourth quarter results. And in terms of speculating how quickly we're going to be able to implement the higher grade ores in the south end of the pit, I just can't do that at this point.

Yes, sorry. I wasn't trying to draw you into speculation. It's just that this seems to be quite a material change to the ore body with these results. I was just trying to get a sense as to whether, you know, there might be some changes that might be short term or whether this is going to be a rather significant change to the mine plan that might take, you know, I don't know, a year or two to implement?

At this point, that south end is much higher grade than the current average grade of the deposit. And we'll be aggressively trying to build that into a new life of mine plan.

Fair enough. Thank you very much.

Thank you. Our next question comes from the line of Terence Ortslan of TSO & Associates. Please proceed.

Hi, guys. A couple of questions, one on REN (ph). You put the holes out, how do you signify the holes in the intersection in terms of overall big plan (ph) of what you're trying achieve at REN? That's the first question.

I'm sorry, Terry, I'm not sure that we got all of it. Could you try it again?

You said with respect to the deposit, you've got about 10 or 13 holes. I'm not so sure what that will mean in terms of whether you've got 10 or 13 holes in the big picture. What was the add, in terms of value to add in the quarter or, in the period? That's the first question.

Okay. On REN, our drilling program is continuing. As you know, these holes are very deep and it takes a long time to put them into context. So, we anticipate once we've finished off our drilling program, we will make an announcement with regard to what it means in terms of the situation there.

Well, this part of the holes that you quantify, what do they add in terms of knowledge or value to the property?

Rob, is there anything you want to comment further on that?

We're projecting various targets. It's adding competence in our Boroo (ph) model.

Better grade successions (ph) with -- something better to report, or something status quo?

Well, I think a lot of these holes have been outside of the main target area to investigate other target opportunities there. So, right now, we are looking at what that will mean in terms of improving the reserves, if at all. And I think we'll have to just let you know on that, Terry.

Great. Just come back to the appointment to the board. The new Kyrgyz (inaudible) person. Are these political appointees within Kyrgyzstan that you have to -- in other words, the political person -- the political appointee as in the right party and the right government orientation?

Yes, what we have agreed with the Kyrgyz's prior to the restructuring of the project is that Kemoko (ph) would vote in favor of a Kyrgyz government appointee to the board. And that appointee is generally the president of state concerns Kyrgyzaltyn, which is the local gold mining concern.

Is he a professional or, is he a political appointee himself --?

Oh, no. Generally, in this case and in the past case, they've been professional managers. And in this case, Mr. Djakypov (ph) is a mining engineer.

Okay, great. It seems to me Boroo is doing quite well and congratulations to the team out there. The stability agreement for that (ph) -- where are we on that?

Right now we are in the process of finalizing our submission to the government on the feasibility agreement -- or sorry, stability agreement. And we hope to do that before the end of the year.

Is another unnamed stability agreement holding you up?

I would say that we're watching closely to see what happens there. But in all fairness, we're asking for the same stability agreement that we have in Boroo. So, right now we see no reason why the government wouldn't comply with that. And that stability agreement that we have for Boroo just complies with the current legislation in Mongolia. So, we're not asking for anything more than legislative.

Correct. I just wanted -- just remind you, though, to keep your political paths on line and the schedule on line. When is the latest you want to get the stability agreement done for Gatsuurt?

Yes, we would hope that we would have the stability agreement in place by the end of the first quarter of 2006.

Okay. And last question, I mean -- the more like mining guys are looking at cost per ton numbers. Could you just talk about your cost per ton issues, rather than grade issues? Maybe in net (ph) some a bit more, and (inaudible) as well. What impasse are you seeing in Mongolia and also in Kyrgyzstan? Thank you.

David, do you want to comment on that?

Well, Terry, most of the change in the costs per ounce relate to the change in the grade.

No, David, I want to talk about cost per ton. I appreciate the grade. I want to get down to cost per ton, which is the real issue in the mining business.

Yes, so our cost per ton, though, have been increasing a little bit because of the input costs in terms of the consumables and the steel and the reagents. But on the other hand, particularly at Boroo, we've had productivity improvements which we instituted in the first quarter, which is more -- has offset most of the impact, not all of the impact, but some.

Looking at the fourth quarter of next year, just from the point of reference, cost per ton number, do you expect any near changes? In hauling (ph) distances or the other input issues?

I'm sorry, for what period, Terry?

For next year.

Oh, for next year. Well, we'll be releasing the numbers for next year with our fourth quarter report. You know, and we are subject to the same input cost that everybody else is around the world in the gold mining industry.

Yes. Sure, and I sympathize with that--

... and there -- that that's hard to fight.

Thanks, David, thanks. Last question, then, maybe Robert, you've got the new responsibility. Can you talk about the -- let's say, corporate development program? How much of an advance have you done and have you achieved? And how much for people who are - all coverage (ph) were discarded in the analysis and operation (ph) of these? And where are we in the process of looking for new operations in Asia? Thanks.

Well, we're very aggressive, Terry, in looking in opportunities. I think I mentioned that we've spent over $9.5 million in exploration and M&A activities in the quarter. So, I don't want to put a date on when we might come up with something that's suitable for us. But we are certainly aggressively looking at strategic alliances here that would make sense for us.

Is anything pending, like, immediately or anything you're working on? Or it's still in the evaluation stage for most things?

Well, that's a question, Terry, that I'd like to answer but I can't. And I'm sure you appreciate why.

Yes. Okay, thanks guys. Thanks for the help.

Thank you.

(Operator Instructions).

Our next question comes from the line of Haytham Hodaly from Salman Partners. Please proceed with your question.

Thank you. Good afternoon, gentlemen. Just a couple of questions, I guess, some housekeeping issues. You talked about your G&A next year in your discussion -- or this year for this year, sitting around 22 million. Is that a fair number to use for next year as well, in the same range?

Well, we haven't yet taken our budget to the board. So, I would say that it's as good as any other number today to use.

I guess in terms of your -- for the exploration, would you expect to have more or less in terms of exploration expenditures next year? I mean, given what you're seeing at Kumtor, I would estimate that 24 million is a minimum at that point. But just some guidance on that?

Yes, I would agree with you, Haytham, that 24 million is a minimum.

Okay. And I guess, just one more question. Just looking at the consolidation we're seeing in the sector and opportunities for growth through acquisitions, et cetera, given what you've -- the time you've had to actually look for growth, is your focus staying on Asia? Or have you exhausted most of the options at this point and are looking elsewhere?

No, we haven't exhausted most of the options. We're still looking at a couple of what we regard as good fits for us in Central Asia. However, we're certainly, I think said before and still of the mind that we'll be opportunistic and look at anything that makes sense for us. You know, particularly in other emerging markets, Eastern Europe and Southern Asia.

Okay, thanks a lot.

Thank you.

Our next question comes from the line of Geoff Stanley from BMO Nesbitt branch. Please proceed with your question.

Thank you very much and good afternoon. A question relating back to your comments regarding, you know, the prospect of a multi year reserve increase at Kumtor. Can you give us some idea of potential implications for the size of the fleet, for example? If I remember correctly from visiting the property and looking through an options deficiency. You had a very large fleet of quite small trucks. Any thoughts about, you know, potential changes there?

And can you also give us some preliminary thoughts, perhaps, on overall processing volumes? Any optimization of the plant that maybe required to deal with, you know, the larger reserve, and perhaps issues associated with other infrastructure, like tailings capacity, et cetera?

George Burns here. Yes.

Hi, George.

Hello. In terms of the fleet, yes, we are reviewing the opportunity to increase capacity of the fleet. You're right. We have a large fleet of cat 777 trucks, 39 of them. And we've gone through an evaluation looking at our crusher shops, impacts on road widths and designs. And feel comfortable with a major extension in mine life, that an expansion of the fleet as we retire the old 777s makes sense.

We're probably looking in the 136 ton class type truck for that expansion. And hopefully loading equipment that would go with it. In terms of timing, you know, as I said earlier, we're looking at updating the resource model late this year and understanding how that will impact our life of mine plan early next year.

I think, Geoff, Len here. You mentioned productivity improvements and that sort of thing. We intend to keep the Kumtor mill pretty much as it is, operating at between 16,000 and 17,000 tons a day. And hopefully, with the IsaMill, which is working -- fine grinding mill, which is working very successfully, we'll be able to get another point or two out of the recoveries.

Okay, very good. And in tailings capacity, you have -- what's the kind of leeway in terms of tailings capacity to deal with substantial expansion of the resource?

The current tailings are (ph) and is capable of a significant expansion in mine life. It's subsequent lifts and construction that goes with that. But we do have significant expansion capacity with the current facility.

Okay, thank you very much. It sounds very exciting.

Thank you. We are excited.

Thank you. Our next question comes from the line of Steve Butler from Canaccord Capital. Please proceed with your question.

Good afternoon, guys. A question to follow-up on the productivity improvements that you were talking about, George. What are your key priority in terms of productivity improvement initiatives, that's a long verbiage, but that have yet to impact operating costs or productivity?

Well, at Kumtor, I think I've spoken this prior. We're working on an in-house rebuild program for components in the mining fleet. That project has been ongoing throughout the year. We started out with small components, and we've moved into complete engine rebuilds onsite. That's having a good positive impact on our costs.

Moving to Boroo, the big issues there have been productivity in both mine production rates and mill production rates. You can see we're up plus 20% in both areas. And we're continuing to focus on that. If you look at our shovel (ph) productivities -- the productivities have improved significantly month in/month out over the past year. And that increase is continuing. It has a lot to do with operator training, improved blasting techniques at the operation.

Moving back to Kumtor, you know, the capital investment in the IsaMill is a significant productivity improvement in that we're expecting to see 1% or 2% improvement in recovery and view there's some upside beyond that.

Are you seeing that recovery yet, George, or is that still to come? On the IsaMill?

The IsaMill just started up in the last couple of weeks and we're seeing improved grinds, are meeting expectations and the recoveries to go with it. So, our -- the couple weeks it's been running we've got good success in terms of the grind. And the recoveries are up 1% to 2% already.

Okay. Just a last question, I'm not sure if you addressed earlier in the call, I was a bit late. My apologies. But while you didn't meet Kumtor grade guidance, you exceeded Boroo grade guidance. You guys have been very great at giving quarterly guidance. That's very much appreciated. So, is there anything that explains the shortfall in grades at Kumtor and the excess grades at Boroo, versus guidance for the quarter?

You know, Kumtor, if you look at Kumtor, typically, we've come in pretty close on grade. Right on on throughput historically. We've seen fluctuations throughout the life of the deposit like any mine. I view the fourth quarter as a normal fluctuation in ore grade. And again, we expect to see the first quarter return to average life of mine grade.

In the case of Boroo, you know, that is a nugget deposit. We recover between a third and 50% of the gold via a gravity circuit. And we've improved our forecasting. I think we're doing a better job of getting the grade, but we're still seeing some benefits and we're continuing to dial in our modeling techniques to be able to forecast that more accurately.

George, is there any pending upward restatement at all for the nugget effect at Boroo? You know, you've had a fair track record of production now.

I think we've had a fair track record. I think if you look at the last couple of quarters we came in a lot closer than we were last year. I think you can draw conclusions that it's slightly conservative based on the last two quarters. But much closer to actual results.

So, no -- not necessarily should we expect a pending reserve grade uptick?

I would say, not at this point, Steve. You know, when you look at year end, as I stated, we'll be updating our resource models. We'll do a complete evaluation on the Boroo model and make any necessary adjustments. And if we make one, you'll hear about it in January.

Okay, thank you.

You bet.

Thank you.

[Operator Instructions].

Our next question comes from the line of Barry Cooper from CIBC. Please proceed with your question.

Yes, good day. A few simple questions here, hopefully. When would you start capitalizing your exploration in particular at Kumtor? A lot of that's right in the pit. I would have thought that would have been eligible for capitalization rather than expensing. Or do you just want to expense all of the exploration?

Barry, right now our policy is to expense the exploration.

Okay, so that's what -- it's going to be going forward, you anticipate then?

Yes, well, it is today and I think as always, at year end you sit back and look at it and talk about it. But as of today, we're expensing all our exploration.

Okay, sure. Then the other question. In the release you give an indication at Kumtor that production's down 10% in Q4 largely because the grades will be down. And say, costs will be up 10%. Almost applying kind of a one to one relationship there -- 1% move in the grades 1% move in the costs.

However, if you look at Q3 over Q3, the grade was down 21%, the costs were up 45. Should we assume, therefore, that that 45% increase in the cost may be half of what was related to grade and half of it was related to, you know, the proverbial evils of fuel prices and grinding media, et cetera, et cetera?

Barry, our cost increase -- probably about 70% to 80% was attributable to grade. And about 20% was attributable to input costs. So, that's the quarter to quarter comparison.

Okay, so if we have different -- wild expectations for fuel prices either going up or going down, then that really doesn't effect you as much as the grade factor, then?

That's correct.

Okay, thanks. That's all the questions I had.

Thank you. Mr. Homeniuk, there are no further questions at this time. I will now turn the call back to you.

Well, thank you, Operator. And thank you all for participating in Centerra's third quarter conference call. We look forward to talking to you next quarter, when in addition to our operating results, we'll be updating our reserves and resource estimates. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation, and ask that you please disconnect your line.