Eldorado Gold Corp (EGO) 2006 Q1 法說會逐字稿

Please be advised this conference is being recorded. Welcome to the Q1 2006 financial results conference call. Some of the statements and information contained in this call and in our news release, are forward-looking statements and information within the meaning of the United States Private Securities Reform Act of 1995, and the Securities Act of Ontario. These forward-looking statements and information are subject to known and unknown risks, uncertainties, and other factors, as described in our Annual Information Form and Form 40 F dated March 23rd, 2006, under the risk factors filed with the Securities Regulatory authorities in Canada and in the United States.

Please treat these forward-looking statements and information with caution, as many factors might change, which may cause future events to unfold differently than originally anticipated. The Company may not update forward-looking statements and information except as required by law. Forward-looking statements and information concerning mineral resource estimates, also may be deemed to be forward-looking statements and information to the extent that they involve estimates of the mineralization that may be encountered if a property is developed, and in the case of mineral reserves, such forward-looking statements and information reflect conclusions, based on certain assumptions that the mineral deposit be economically exploited.

I would now like to turn the conference over to your host for today, Mr. Paul Wright, President and CEO. Please go ahead, sir.

Thank you, operator. Good morning ladies and gentlemen. And welcome to the Eldorado Gold first quarter results conference call. Joining me around the table in Vancouver I have Earl Price, our Chief Financial Officer, and Norm Pitcher, our Chief Operating Officer. In a few moments Earl will provide a brief review of the first quarter financial results, and that will be followed by Norm taking you through what's going on out in operations and exploration and mine construction. And then we'll follow this with the opportunity obviously for questions from the group.

Before doing so, I would just like to make a few general comments on the state of the Company. And I think given that both more Norm and I have returned in the last week from China and Turkey respectively, we are very current with the major assets in the Company, and I would say in general are in very pleased with the progress that the Company has made in the quarter. The progress that we see the Company continuing to make through the balance of the year.

Specifically in Turkey, I was very happy to be in Turkey with production starting the week that I was there. We had solution break through from the heaps. We are now in a position where the solution is being loaded on the carbon, but we are probably within 7 days of announcing our first gold pour.

The mine is a busy place. The mine itself is functioning well. We're well on-track to be placing 0.5 million tons of ore a month on the leach pads. The usual commissioning bits and pieces are being sorted out, but by and large we are all very proud of what's being created in Kisladag, and feel good about the future of the operation.

In Efemçukuru, the work plan for the year is pushing forward and as Norm will describe in a few moments, it's going to be the full compliment that we've laid out, in terms of feasibility, additional drilling, and moving forward on land acquisition, where we have already started in terms of acquiring lands. Exploration is ongoing in Turkey, and we will be drilling on 2 or 3 sites in the course of the year, and probably by the third quarter be in a position to start to disclose results in a meaningful context.

China, again, relating to Norm's comments coming back from China, construction at Tanjianshan is going very well for us. After an initial slow period associated with the Chinese New Year. We have had good weather and good conditions and we are on-track, in terms of start up in October, and in-line with the budget. Again exploration activities are just getting started in China.

Brazil, as we previously stated, Sao Bento is coming to an end. We have struggled with Sao Bento, in terms of its imminent demise, but we have also struggled obviously in our inability recently to be able to deliver to a plan. Glad to see back in the first quarter that were actually delivering to a plan, and we expect that to continue through the balance of the year. And we continue to have discussions with groups, in regards to possible more favorable outcomes at the end of the mine's life, in terms of use of infrastructure and metallurgical plant.

And with that, I would like to hand it over to Earl, who will take you through the financials.

Thank you very much, Paul. Up good morning, everyone. What I will do is just go through our balance sheet, our profit loss statement and our cash flow ,and just highlight the significant changes that have occurred from the year end through the first quarter. And then if you have questions regarding the statements, we will take those later in the conference call.

Commencing with the balance sheet, the significant changes really occurred on our balance sheet over the first quarter is in our cash and cash equivalents. With an ending balance in December of 2005 of $33.8 million, at the end of March we now have 162.1 million. This is the result of the financing that the Company completed in February of the first quarter, with net realized cash of $155 million to the corporation after expenses.

On the inventories, inventories you will note are up in the first quarter, from 7.6 million to 10.9 million. This is a result of timing of gold shipments from Sao Bento in the month of March, where we had minimal shipments, just slightly over 2000 ounces, but we had on the first or second of April, a sale of 3000 ounces, which was recorded now in the third quarter. This is the differential between our production of over 19,000 ounces, to our sales of just under 16,000 ounces for the quarter. We will be seeing this inventories number drop during the second quarter.

Moving on to the liabilities, you will note to that we have a decrease from 19.7 million to 16.8 million in our liabilities. The this is a result of the year end, assuring that all of our accruals were in place on our payables for the 2 construction projects, Tanjianshan and Kisladag. And since the first quarter and the completion of the financing, all invoices and the completion of many of the invoices paid for Kisladag have been completed, and the drop in the liabilities. Those are my comments on our balance sheet.

Moving to the operations and statement of operations and deficit, revenues gold sales, while actual sales of gold during the first quarter compared to the first quarter of 2005 were slightly less, the price of gold was significantly higher, approximately over $120 an ounce greater, than what we saw in the first quarter of 2005. Our operating costs have dropped, though, compared to 2005, this is a result of costs that we were expensing in in 2005, mainly the shaft deepening project we were expensing to our operating costs. The project has been completed, and therefore results in lower operating costs.

Our actual costs per ounce were higher in 2006 compared to 2005. This is a result of the strengthening of the Brazilian Real, which has increased in the first quarter by approximately 6.7%. Exploration expenses are higher than 2005. This is the result of the very aggressive exploration program we've now initiated in the 3 countries in which we operate, in China, Brazil, and Turkey.

Finally, the most significant issue that we really note on our profit and loss statement, is the fact that we had some significant currency valuation differences. You will note that we had a foreign currency loss of 1.5 million. This is a direct result of the weakening of the Canadian dollar that occurred in the first quarter.

We have now seen a significant strengthening of the Canadian dollar, and with our Canadian dollar balances that we currently hold from the debt financing, the equity financing that occurred in February, we would see a substantial swing into a favorable gain on foreign exchange in the second quarter. And finally, you will note that we have a loss on future tax. Again, this is directly related to the strengthening of the Brazilian currency. These are the significant numbers that I am going to speak about on our operation and deficit statement.

Moving onto the cash flow statement, my only comment on the cash flow statement is to note that we spent $21.3 million on our capital projects, compared to 12.9 million in the first quarter of 2005. We are taking the funds that we have raised, and we are investing those and building gold mines.

Those are my comments. Thank you very much.

Thanks, Earl. Norm?

Thank you. Well, it's obviously a very busy time for us here at Eldorado, given that we're bringing two gold mines into production. At these gold prices, it's also a very happy time.

I will just go through the operations and development projects first, and then talk briefly about our exploration progress and plans. Sao Bento, our production was up from Q1 2005 mainly because of the completion of the shaft project. We did 19,111 ounces at a cash cost of 421, which is pretty much in-line with what we budgeted, and we think that will continue for the remainder of the year.

At Kisladag, as Paul mentioned, things are going well. We expect the crusher system, the screening, and overland conveyor systems ready by the end of this month. As of last Sunday, we had placed about 1.2 million tons of ore on the pad, which is a combination of crushed and run of mine ore. And we expect to pour gold either late next week, or early the week after.

At Tanjianshan in China, we have moved about 4 million tons of waste. Most of this coming out of the Qinglongtan pit, which is the higher grade of the 2 pits, and the one where the first production will come from. We're actually a little bit ahead of schedule on that one, in terms of material movement. Construction looks very good. I was there last week. Very pleased with that. The SAG mill is in place. CIL tanks are in place. The thickener base is constructed. We're working on the motors and wiring for the SAG mill now.

The campus is completely finished. It was done last week, so we will start moving in there this month, and expect to occupy that by the end of the month. And the tailings is essentially done, except for the liner, which is a fairly simple system that doesn't need welding. So that shouldn't take too long. And we're currently placing orders for the mining fleet, which is a mix of Chinese and offshore equipment, most of it is being sourced out of China.

At Efemçukuru in Turkey, the drilling plan has been finalized. We are currently permitting the roads and pads for that. We expect to be drilling later in the quarter. The preliminary engineering that we needed to do for permitting requirements and initialization of the feasibility studies has been completed, we expect to start the feasibility study this quarter, which will be done by the end of the year. And the land purchase has begun, which is the first step that we need to do to start on the zoning plan, and we purchased our first package of land last week.

Going on to exploration, we are very active in Turkey, Brazil, and China this year. In Turkey, we've got 2 drills churning at the AS project. We continue to hit copper and gold mineralization in most of the holes. We're working our way now south towards the [Soulack] anomaly, which is a big copper geochem in the southern portion of the property. We will be doing a geochemical and geophysical survey back in that area prior to drilling. And we are also as of this week mobilizing 2 drills to our Mahmur Tepe property, which is in the Western Pontides.

In Brazil, were back active in the gold project again. We drilled 7 holes so far this year, most of them in the [Croato] and Gaivotas pits, which are sort of the 2 main [Gerim Fero] workings down there. We of one drill currently going, probably by the end of May we will have three.

The iron ore drilling is on the last hole, so we will move the drill over from the iron ore into the gold, and we are going to bring another additional drill to do some scouting type type drilling to the south. The iron ore was mostly infill drilling, although we also drilled a new zone called [Leal], which is to the west of the main iron ore showing. So that will be included in the resource statement that will be part of the scoping study that we hope to have completed late in the third quarter, early fourth quarter of this year.

In China, we have two drills on site. They arrived last week while I was there. The plan for exploration in China is infill drilling at QLT and JLG, the main pit areas. We have some inferred resources, particularly in JLG that we can convert to measure and indicative from drilling. We will drill extensions of those 2 structures. We also have 2 new targets that we're looking at, that are sort of a long strike kind of in between the two, the two main pits, and we will do geophysics and geochem on both of those, and probably drill one of those targets as well.

Paul?

Thanks, Norm. That's a quick trip around Eldorado's world. We do indeed have a lot underway this year. In terms of exploration results, just the nature of the programs is such that we will be into a probably significant news flow on expiration in the third quarter.

Operator, would like to turn it over for questions please.

Thank you. We will now begin the question and answer session. [OPERATOR INSTRUCTIONS] Your first question comes from the line of Paul Burchell. Please go ahead, sir.

Good morning. I just a couple of questions, Paul, the first one, you have quite the war chest now developed. Are there any plans that you can relate to us as to what the future is, with respect to Eldorado vis-a-vis acquisitions, things like that?

Nothing specific other than generalities, Paul. We have articulated that we believe in exploration, and as you can see in terms of budgeting $14 million for exploration this year, we're going to keep a healthy exploration program under way.

Are you know, our strategy in China specifically includes targeting acquisitions. Are you know, we articulated that we believe there are other opportunities in China. The nature of some of these opportunities, a strong war chest is a significant advantage in terms of accessing those. But I can't be specific.

No, that's fair enough. I appreciate that. The other question is a little bit more mundane, just on the issue of remaining expenditures at Kisladag. You're still on budget I understand for the 83 million. But what would be remaining of that to expense in the second quarter and whatever for the rest of this year?

We have remaining currently about $7 million remaining to be spent.

Okay. Thank you very much the gentleman. I have a great day.

Thanks.

Thank you. Your next question comes from Kerry Smith. Please go ahead.

Thanks, operator. Good morning, everybody. Two questions. Paul, firstly, on the contracts at TJS, what percentage of the capital cost has been committed now, that you're sort of [firmer], in terms of locking in the capital cost?

You know, I don't have that, you know in my head, Kerry, I would have to get back to you on that.

I just was curious as to whether you got, you are saying you're on budget for the capital, I just wonder how much more capital is sort of technically at risk on a go forward basis?

Given that all of the earthworks are done, the concrete is done, the bulk of major procurement is complete, you know, we're down largely now to frankly, you know, installation. I don't want to just take a thumbs-up, we can give you a better number. But if you look at where we are in terms of percentage complete the construction, the nature of the construction, I think we are over the hump in terms of potential significant overrun.

Okay, and you talked about the land acquisition at Efemçukuru. Could you remind me what you budgeted for land acquisition and are the costs that you're seeing, and the acquisitions you've done so far, sort of in line with what you were expecting?

Again, and you will remember and appreciate from the Kisladag land acquisition strategy, that we're not specific in terms of what amounts, because it's not necessarily conducive to doing the plan. Suffice it to say, that we established what we felt was a reasonable maximum number, and we've been able to remain within that --.

Okay, so you're on track for what you'd expect for that.

That's right. Yes.

And just for Earl, the expensed exploration in '06 out of the 14 million, what would that number be?

We're expensing all of our exploration except for what's on the iron ore project, our accounting policies state that once we have an identified resource on a project, we will start to capitalize it, and that's approximately $600,000 on the iron ore project.

Okay. So 13.4 then this year in expense.

No, there's 14 million that expensed.

Oh, it is. I'm sorry.

It's 600,000 additional that will be capitalized.

Okay, I understand, okay, great. And just one last question for Norm on the closure cost at Sao Bento, can you just remind me what your plans were? Because I know you're obviously try to see if you can sell the infrastructure or do something with that, because obviously there is significant infrastructure left there, but what should we see for sort of closure costs in the short term for next year?

What we need to do first is I think come up, is finalize our closure plan. The thing that we are sure of right now is that the mine is going to cease production towards the end of this year or early next year. Besides that in terms of what happens with the plant, what happens with the tailings [empowerment], we're just not there yet with that. You know, I think our budgeted closure was , Earl --

-- 10 million.

That's certainly a worst case scenario.

But that 10 million would be assuming you couldn't get any residual value out of --?

Right, selling the plants for scrap, and everything else gets shut down.

And that's an independent estimate, assuming you use contractors, Kerry, and everything else. If you look at the mine itself, it's an underground mine where the bulk of the reclamation is associated with tailings down. So the 10 million would be absolute worst case scenario then?

That's correct.

Okay. Thank you very much.

Thank you. Your next question comes from the line of Haytham Hodaly. Please go ahead.

Thank you. Kerry just asked a couple of my questions but I have one more I just want to talk about the Sao Bento mine, obviously in a winddown stage. Cash costs are going higher. Is there any potential to bring some of the costs down? Are you expecting any higher grade zones here in the next little while as your mining?

No, not really I think what your seeing, you know, in terms of costs are pretty much where we're going to continue to see. We're just limited now, because you're playing the end game now. You're sort of towards the bottom of the ramp you are limited as to what you can mine. Because of the mining method as well, you need more development to get in there. So it's going to stay about where it is.

And the reality is at the end of mine life, obviously there will be no ore development. There is no waste development now, there will be no ore development. But at the same time you are ratcheting down your production levels, so that your fixed cost component becomes higher, so your unit costs end up being about the same.

Fair enough, just confirming, G&A for this year is somewhere around 10 million, does that sound about right?

Yes.

Perfect. Thank you.

Your next question comes from the line of [Philippe Lanone]. Please go ahead.

Hi, everyone. I was wondering how you're going to control costs and bring forth some shareholder value as you go forward through the end of this year?

Well, I mean it in broad terms by continuing to execute the plan which sees us successfully bringing on two mines, is the principal driver for creating shareholder value. I think beyond that, there is no magic formula to controlling costs. You just work at it day-in and day-out, using skilled management teams is the answer.

I think what people have to appreciate is that the two mines that we're bringing on this year will at steady state production, add about 350,000 ounces to Eldorado's profile. With sort of a weighted average cash cost of around 225 to 240 an ounce, at these metal prices I would suggest that will bring significant value to the shareholders.

At Kisladag, in your mind there, you really will get up to full production until when? Closer to the end of the year?

It's always tough with these big heap leaches to accurately pick when you're going to get to steady state. You know, we're probably, realistically we're probably still 2 to 3 months before we can really get the fly wheel going. All right? It just isn't as simple as frankly stuffing it in a milling circuit. It takes a while for each heap dynamics to get up, and every one is a little bit different.

But I think what's encouraging is at this stage, as far as the performance, our planned performance for the year, is that we're getting good performance from the pit. The ore is there. The grades are there. The material is grading what we'd expected. If anything, we're seeing waste to ore reversals, in other words, we're gaining access to more ore. The material is well oxidized. It's a very pryable, which has allowed us to push forward and actually enhancing what we're putting out to the pad, in terms of run of mine.

We literally have only had the pads on the leach for a couple of weeks. We've had good performance, breakthrough came very quickly. We're not seeing any clays in the leach pad. So you know, so far things look very good.

But getting a pad this size, or this facility up, and the point of steady state, is a bit of -- you work your way forward, and you can be out frankly by a month, in terms of how long it will take to get it up to steady state.

And you had mentioned earlier, I think, that you're going to be pouring in the next couple of weeks?

Will probably, you know around 6 to 8 days away from having our first pour.

Okay.

Again I'm not trying to be simplistic about it, but it's a great relief when you add cyanide solution to see a solution coming off of the bottom of the heap that has gold in it.

You know the gold is there, but you're always glad to see the rock give it up in solution. It's doing that, and now we're loading the carbon, and we're seeing the carbon loading is going well, and our metallurgist's are saying we're probably a week away from making our first pour.

No, that's great. Thanks very much for your time, keep up the good work.

Thank you.

Good bye.

[OPERATOR INSTRUCTIONS] Your next question comes from the line of Michael Fowler. Please go ahead.

Yes. Good morning. A couple of things. Could you give us an update, Paul, on the status of those contested, I guess, some NGOs or whatever, are suing the government? And regarding the permits and specifically about Efemçukuru.

If you actually refer to our disclosure, I think it was our year end disclosure. We had a lawsuit that was filed against the Ministry of Mines and Energy at Efemçukuru, as it related to the license itself. And that had gone through various courts, and it ended up with decisions that, you know, have sort of gone against us, and that ended up in the Danistay, which is the high court in Ankara, where the decision was in our favor. Okay? That's Efemçukuru.

And in the case at Kisladag, we have a case that was--. these cases originate out of the same group based in Izmir. Wrote the case in Kisladag was brought against the Ministry of Environment, and again we were asked and became a co-defendant. This is still at an earlier stage in terms of the court.

There hasn't been any decision rendered in that regard. I think the reality, Michael, is that in this environment irrespective of whatever the decision is, it goes to the higher courts. And, you know, I think Turkey, like a number of jurisdictions, unfortunately, were a business that various groups are opposed to, and this is going to be our lot in life, being subject to these, you know, to what I view as being not much more than nuisance suits, but it's part of our business and we're going to have to deal with them.

Okay. Let's just play devil's advocate here. Let's say it goes to the high court and actually lose. What does that actually mean to you? Are you out of business or what?

It would depend on the decision. The nature of the decision. I can't speculate on a hypothetical decision, Michael.

Okay. But what about --

What's being questioned here in the case of what's being questioned at Efemçukuru was the integrity of the license granted by the government. In the case of Kisladag, what's being questioned is the integrity of the license that was given by the government having approved our environmental impact assessment report. These are pretty fundamental.

We obviously, in terms of us completing our environmental impact assessment report were very cognizant that there was likely to be challenges to that, and in completing our EIA, you know, frankly dotted every I and crossed every T, and brought that the EIA to the highest possible standards. Ultimately, you have to have some confidence in the integrity of the license and permits that are granted by the government. And we do.

Right. Okay.

That's probably about as far as I can go, in terms of speculating hypothetical decisions.

What about the timing then, Paul?

Years. Quite often are.

Okay. Fair enough. Let's move on to something else.

Are not trying to be evasive, Michael, it's just we can't predict these things. We can't predict these outcomes.

No, I understand. Is moving onto the TJS feasibility study, I noticed that in the study there's a fair, two very good years and then it kind of falls off a little bit, going towards the end of the mine life. Have you reviewed that, i.e., have you managed to sort of stop that falloff, in terms of production from your own work?

Yes, were actually rescheduling. We're rescheduling it right now, and you know, you're right. The first couple of years are high production because you're getting high grade out of the QLT pad, and then there's sort of a lull in the middle towards the end, where you're sort of stripping down into the main part of JLG.

So we're sort of rescheduling all of that right now, and putting in the factors of our own mining fleet. Are you know, I think we can take, from a combination of sort of scheduling and stockpiling, I think we can smooth that bump out considerably.

The other thing I would add to Norm's comments here, Michael, is this is a situation where we're frankly still drilling and defining resources in and around the existing pits.

And our expectation is that, you know, this drilling will be successful in terms of defining additional reserves around the existing pits. And that in itself will create additional flexibility, in terms of being able to smooth out and hopefully possibly increase production levels.

Okay. So just on the tax side, maybe Earl can comment, on what is the taxation in China? It's 15%, to understand, but is there any capital allowance so you wouldn't pay tax in the first few years?

Yes. What we have, is we have a letter from the government basically giving us a tax free holiday for the first 2 years of protection. And then we have a 50% reduction in the tax rate for the next 7 years after that.

So the tax rate in China is 30% at the central government level, and the 3% at the provincial. We have been given total tax exemption on the 3%, and then the 50% reduction on the 30%. That's where we come up with the 15%, and the first two-year tax holiday.

Great. Thank you very much.

Yes Michael.

Your next question comes from the line of [Kirk Dealer]. Please go ahead.

Yes. Have you given any consideration about hedging against the lost valuation of the dollar over the next few years?

Our strategy as management regarding currency valuations particularly, we've had a fundamental belief over the last 2 years, that the Canadian dollar was going to strengthen.

So we've held substantial amounts of our cash balances in Canadian dollars. A comment that I'll just make here, what has occurred over the last month and a half with the Canadian dollar is that it has increased in value from 0.85 to 0.90 in just the last month and a half, had we had our close in March at today's current rate for the Canadian dollars, instead of booking a $1.4 million loss on foreign currency, we would have a $6.6 million gain.

So fundamentally, our belief that the Canadian dollar is going to strengthen against the U.S. is playing out. So that has been our position on the currency regarding the Canadian dollar versus the U.S. dollar.

On the Brazilian Real, traditionally the Real has been a weakening currency. Over the last year it has reversed and strengthened considerably. So what we're seeing, of course, is higher costs and were seeing a non-cash charge but just based upon our future income tax rules calculations, under Canadian GAAP particularly, we're having to put these future income tax losses.

But we've seen of course in a deterioration or strengthening of the Brazilian Real and higher operating costs, the net offset to that has been substantially higher gold prices, so currently that's been our position on currency, what I'll say our currency hedging position, is we hold Canadian cash because we believe the U.S. dollar is weakening, and we're taken the trade-off by seeing higher gold prices.

Would that also be true in China, if and when they start to appreciate their currency? Against the dollar?

Again, the issue in China is why I think we all believe in North America that the Chinese government will allow some movement in the [R&D], unfortunately were not in a position to speculate when that will occur. It will have the impact upon the cost structure in China when that does occur.

Okay, thank you.

Their next question comes from the line of Terence Ortslan. Please go ahead.

Thanks. Good morning. Just going back to China, the equipment that you have all ordered or purchased will be Western technology, but Chinese manufacturer, I assume, right?

Yes. The trucks are Chinese. The dozers and graders are Chinese. The shovels are not. And the production drills are not. They're both Western sourced.

And the equipment pretty well goes with the standard guarantees and performance criteria?

The guys have done a very thorough job of both examining the equipment and looking at the benefits of doing this ourselves. And they went to several different operations in China, and they also met with the manufacturers. And they feel quite comfortable that this is a good fleet.

Okay. I want to come back to the Turkish situation. I think Michael elegantly ask the question that I'm still a bit confused who controls what level of the decision making process. I'm going to back to Ovacik issue, I don't know where that stands anymore, but Kisladag and Efemçukuru, where does the buck stop? That's the question.

Well, as in most democracies, at the high courts of the land. That's where court cases will eventually be settled. And in the case of the Efemçukuru decision that was made by the Danistay, the high court in Ankara, that's where basically the decision was made in the government's favor, and as a result in our favor.

Could you remind me, my memory is failing me on the Ovacik court, where did the whole thing end up at the end?

Ovacik is presently owned by a Turkish mining company and continues to operate and produce gold.

But the foreigners couldn't let the locals --

With due respect, that's an over simplistic view of the whole history of Ovacik.

Okay.

This mine was being operated when it was turned over to the Turkish company, it was sold.

But the local view, I guess, there's a federal, there's the provincial, there is the local, whenever it is called,

There is no federal. It's actually a central government.

But the local view still has an overriding influence?

Of course they do. Absolutely. Ultimately our viewed and what is guided, the manner in which we have operated in Turkey for the last 10 years has been this. That we have from the very beginning, you know, sought the support, and understanding of the local community for the project.

And that's what we did in Kisladag and have carried that through to this day. And we started at the local level with the local people, the local committees, and have worked through the provincial government, and through to the central government. We have done everything that has been required at all levels of government in terms of the permitting.

And so we are adhering to the laws of the land, with the support of the communities. And I can't emphasize the importance that we put on the support of the local communities. Because I don't think it matters frankly where you are, and whatever laws exist. If you get to the point where you have to depend upon your existence on the laws of the land, and you don't have the support of your local committees, you're likely to come out on the short end of the stick, okay?

So our confidence in the fact that Kisladag is up and running and will continue to operate through its mine life, is based on what I described, those 2 characteristics. Having said that, the reality is that we are in a business that is going to be constantly challenged by groups that are opposed to our existence. The only defense that we ultimately have is doing what I described, and the fact that there are other mining companies that aren't necessarily as meticulous as we are, and that these groups ultimately will tend to move to the easier targets.

Sure.

That it, it's no more complicated or no more simple than what I've described to you.

Last question on the Chinese taxation. This is income tax that you are talking about, not the mining tax, or other forms of taxes, right?

Correct.

Thanks for your time.

There are no further questions at this time.

All right. Thank you again for joining us and as always please don't hesitate to contact us if you have any further questions. Thank you, operator.

Thank you. Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. And ask that you please disconnect your phone line.