Eldorado Gold Corp (EGO) 2009 Q1 法說會逐字稿

Good morning, ladies and gentlemen, welcome to the Eldorado Gold Corporation 2009 first quarter conference call. This call is also being webcast at www.eldoradogold.com.

I would now like to turn the meeting over to Ms. Nancy Woo. Please go ahead, Ms. Woo.

Thank you, operator.

This presentation includes statements that may constitute forward-looking statements or information. Any forward-looking statements made and information provided reflect our current plans, estimates and views. Forward-looking statements are information which include all statements that are not historical facts, are based on certain material factors and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in or suggested by the forward-looking statements or information. Consequently, undue reliance should not be placed on these forward-looking statements and information. The information contained in our annual information form in our annual quarterly management discussion analysis available on our website and on CEDAR identifies factors and assumptions upon which the forward-looking statements or information are based on and the risks, uncertainties and other factors that could cause actual results to differ. All forward-looking statements made or provided during this presentation are express qualified in their entirety by this cautionary statement.

I will not turn the call over to Paul Wright, President and CEO of Eldorado Gold.

Thank you, Nancy, and good morning, ladies and gentlemen, welcome to the Eldorado's Gold first quarter conference call. Joining me this morning in Vancouver are Earl Price, Chief Financial Officer; Norm Pitcher, our Chief Operating Officer and Nancy Woo who you just heard from, our Vice President of Investor Relations. We'll follow our usual format with Norm and Earl providing an operational and financial review of the Company's performance in the quarter as well as some commentary on ongoing activities and then we will open up for questions. Before we begin with that I'd just like to make a couple of introductory comments. I mean we as the Company frankly remain pleased with the progress of the Company in terms of our start to the new year. Targets for production and costs for 2009 remain intact and attainable.

Kisladag, despite record precipitation in the first two months of this year as of March had a steady run rate of 20,000 ounces monthly and we are now pushing on with the necessary engineering required to support what we think is an inevitable decision to expand this mine. In China, the Tanjianshan Commissioning is coming to an end. We've stockpiled considerable quantities of higher grade ore to allow us to process from the balance of the year and we've recently had approval from the Chinese authorities to increase our annual through put from 800,000 tons to 900,000 tons and we are of the opinion that the combination of additional higher grade ore through the processing plant and, again, the ability to process higher tonnage than we originally planned will enable us to reach our 2009 targets.

The rest of the activities that relates to construction and expiration, Norm will take you through, but again I would like to highlight that the Company continues to have exceptionally low costs. We continue to grow our margins. If you look at our performance in 2008, with a realized Gold price of 876 and a total cash cost of $587 an ounce we had (Inaudible) -- of $289 an ounce we had a margin of $587, a cash margin Q1 2009 despite lower production we were able to maintain exceptionally low costs with our total cash cost of 315 realized price of 909 and a margin of $594 an ounce. We continue to as we always have done to run our business on a longer time frame than necessarily one quarter. With that we'll hand over to Norm and to Earl.

Good morning, everyone. Let's go through the operations first. We'll start with Kisladag. I'm sure everyone is getting sick of hearing about rain. We sure are but it did affect our production in January and February. However, March was better than budget. April's is on budget and we're looking good for the rest of the year. There were some good news to come out of all this, though, that the pit operated at budget levels even in the midst of the worst rain. Even more important we added about 180,000 cubic meters of solution to the system which puts us in excellent of solution to the system which puts us in excellent shape now as we start going into the drier season.

We also have recently released the expansion plan, preliminary expansion plan for Kisladag which is really fairly straightforward. It involves the mine is fine in terms of access capacity as is the primary crusher. We'll look expanding the crushing and screening, conveying and stacking in range of 30% and the ADR by 50%. We'll be releasing more details on that study within the next five months.

At Tanjianshan production was down. We did 15,234 ounces at 362. Production was down really due to the head grades coming out of the transition ore. We're now getting into the sulfide through the roaster. The roaster is looking a lot better. Commissioning has gone fairly well and there are really three parts to the roaster or to that circuit. There's the floatation ahead of it, there's the roaster itself and then there's the CCIL circuit afterwards and really when you're talking about recovery, you're looking at all three of those.

Floatation and CCIL are now performing at budget recoveries, as is the roaster. And the roaster itself is performing quite well. We can shut it down, turn it back on and the temperature comes right back up quickly. So that's going quite well. We are just coming off a 13 day steady run of the roaster, we'll shut it down to do a little bit of maintenance and we do expect to declared commercial production on the roaster in this quarter.

As Paul mentioned, we have a fair bit of material stockpiled. We've got about 60,000 ounces of sulfide sitting ready to go through the roaster. Of course, we continue to mine sulfide material as well. Of those ounces at around five and a half grams. So considerably higher than what we saw in the first quarter. Additionally we have about 40,000 ounces of transition material that we can run through the whole ore CIL as needed. We've also got the approval for the extra 100,000 tons per year. We're going to continue with our guidance of 95 to 100,000 ounces at cash cost of 385 for the year.

On the development side at Efemcukuru, again the rain in January and February, slowed down the earth works, we are catching up on that. Detailed engineering with the Turkish subcontractors going very well. The major equipment including the Mills delivery is on schedule. The main focus on sight right now is really preparation of the plant site itself.

Vila Nova iron ore, we're going to put that on care and maintenance at the end of May. Plant construction is complete. Capital is basically spent for now. Wet commissioning has been done. We're going to run a 5 day 1,000 tons material through in May just as a test of the full process and that will be it for a while. Perama we had good meetings, Perama Hill in Greece we had good meetings there in Athens and Alexander (Inaudible) at the end of March. We put that in disclosure recently talking about the permitting time frame which the kickoff of that really is the preEIA which will be submitted by June 15, of this year and that gets us into the full permitting process. We also expect to release a technical report on Perama in Q3 of this year so it allow us to declare reserves on the project for the first time.

Exploration, usually the first quarter is a quieter one due to the sort of field season but we did continue drilling at Efemcukuru in the north shore chute. We had an excellent intercept that we disclosed a couple days ago. It was actually not the deepest in the north shore. It looks like it's probably the deepest in the whole system, still very good Gold grades and getting some fairly high-based metal grades as well. So we're quite encouraged by that. At Sayacik, we have recently started at 5,000 meter program, initial program I should say. We have two drills going, one diamond and one RC and you will see results out probably sometime in the third quarter for Sayacik.

In Brazil at the Tocantinzinho we've continued to drill, with two drills going. We've recently completed four metallurgical holes and that test work is just starting. The next big milestone for us in terms of the transaction or the -- is a July, 2010 auction payment. We think we'll be in a position sort of early to midyear next year to decide where we're going with that.

In China we've started rotary air blasts, RAB drilling in between the QLT and JLG pits. We're relogging some of the core in the QLT area and we expect to diamond drill probably starting this quarter at Tanjianshan. Over to you, Earl.

Thank you very much, Norm. Good morning. As usual, I will go through the three financial statements as to the significant changes that have occurred during the period beginning with the balance sheet. Our assets, our current cash balance as of March 31, 2009, was 107.9 million compared with 61.8 million at December 31, 2008. The increase in cash is the result of monetizing the remaining AngloGold Ashanti shares acquired from the sale of Sao Bento in 2008. The reductions in marketable securities and accounts receivable are also a result of the same transaction since at year-end 2008 we had receivables from the sale of these shares that were in our receivables as well as we had marketable share remaining which were sold in January of 2009.

You will note that restricted cash increased to 5.5 million. As we drew down an additional five million in debt in China during the quarter to assure sufficient funds in China during the startup of the sulfide ore treatment facility. Please note the offset to this restrictive cash is an increase in debt of 5 million in liability. This debt will be repaid by year-end and the restricted cash released. These are really the significant changes to the balance sheet and I will be moving on to the statement of operations.

In revenues Gold sales in Q1, 2009 were 52.2 million compared with 68.7 million in Q1 2008. Lower ounces sold of 57.4 thousand in Q1 2009 compared to 73.6 thousand ounces in Q1 2008 with a result of increased production at Kisladag offset by lower production at TJS in the quarter ending -- in the first quarter 2009. The lower production and therefore sales from TJS were the result of the commissioning of the sulfide ore treatment processing facility or roaster.

Gold price for Q1 2009 was $109 per ounce compared to $933 an ounce Q1 2008. The Q1 2008 higher price was, of course, the result of the startup and production of 27,000 ounces of Gold at Kisladag and therefore, those Gold sales occurred at the $1,000 price that we had in March of 2008. Lower volume and price resulted in $16 million reduction in revenues.

Interest and other income, were lower a result of decreased interest rates which we see throughout the world today on cash balances and no electrical power sales from Sao Bento in 2009. In 2009, we were still selling power from the Sao Bento mining operation in the market at the conclusion of 2008 Sao Bento had been sold and so therefore, no power sales in the first quarter of 2009. Depreciation was substantially lower in the first quarter of 2009 compared to 2008 a result of the lower sales volume since we used the unit of production method and the sales volume was lower, therefore, the unit of production flowing to the depreciation in the P&L was substantially lower. You will also note that the were no mine cost in the first quarter 2009 compared to 2008 as Kisladag is now up and operating very well. The net income of 13.1 million in Q1 2009 compared to 20.7 million in Q1 2008 and an EPS of $0.04 a share in Q1 2009 compared to $0.06 a share in 2008.

Moving on to the cash flow statement, my comments on cash flow statement is just related to our capital expenditures of 19 million in Q1 2009 compared to 12.7 million in Q1 2008. This is higher than last year and we expect higher expenditures for the remainder of the year as we increase spending on Efemcukuru going forward for the remaining of the years. You will also note that we received 30 million in cash during the quarter from the sale of the remaining AngloGold shares.

These are now my comments and I will turn the conference back over to Paul Wright.

Thanks, Earl and thank you, Norm and operator, we'll turn it over to you and for questions, please.

Thank you. (Operator Instructions). The first question will be from David Steen with Cormark Securities. Go ahead.

Good morning. My question is about Tanjianshan. I'm wondering can you -- or would you be willing to, I guess, discuss how much Gold's been produced in March and April at that operation like you did with Kisladag in terms of the -- how that's going with the switchover with roaster and maybe if you can discuss the recoveries that you're getting from the sulfide plant at this stage as well.

Well, I think the more important thing there is that we've gone -- in the first quarter we've had almost no production in the roaster and then in April it was about half through the roaster and now in May we're looking at almost all the production will be coming from the roaster. In terms of recoveries we're sort of -- we're looking at overall recovery from the entire roaster circuit should be at about 80%. We've budgeted a little bit lower than that for the year and we're coming very close to that budgeted number right now.

Okay. And this first roaster where you started to feed through in April, is that the 5.5 gram stuff that you talked about before that was stockpiled for?

Some of that would be, yes. It would be a combination of the -- yes. We have higher grade sulfide material. We got lower grade sulfide material. So we're going to run a combination of that.

And then what from a technical perspective what will take you from 800 to 900,000 tons per day? What do you have to do to the mill?

We don't. The capacity is there, David. It's simply that we were limited by the permit under which we operated and we applied for permission to expand simply as we recognized that the plant itself as constructed had that capacity.

Okay. Great. Thank you very much.

Thank you. The next question will be from Paul Burchell from Dundee Securities. Please go ahead.

Good morning. Oh, a couple questions. First of all, I was just wondering if you could give us a little bit more detail on Efemcukuru, what the timing now is to commercial production and what kind of costs are remaining and then the second question is also on Tanjianshan, just wondering if you could give us -- you did mention grades sort of in the 5.5 gram range which was what I thought might be happening, but was wondering if you might give us some more information on recoveries that you are looking for for the remainder of the year. Thanks.

Yes, Paul. This is Paul. I'll sort of field the question on Efemcukuru and then Norm will take you through the Tanjianshan. At this point we've lost several weeks on the schedule of the wets and I guess it remains to be seen whether we can claw that back through the summer months. So bear with us that we're probably at this point not going to be changing our schedule or our production when we're targeting mid-2010 and we'll keep that date until we frankly have a better handle later in the summer as to whether we've been able to claw that schedule back or not. The spend, of course, is being affected by the schedule. We haven't been able to get as much work done on site, so the spend is down and the money is up. We would expect that to change now that we're into the second and of third quarter and work is continuing. We updated the budget or the capital plan for Efemcukuru from July of last year and we had an estimate there I think of $142 million but in doing so we managed to capture the strongest Turkish lira, the highest energy prices in recent history. So again we haven't gone through an exercise of realizing the capital. I would suggest that that capital number is certainly a good number.

Again looking here as we have more frankly commitments in place, more work done to be able to give you a revised number that makes some sense, makes more sense and, you know, on the operating cost side, you know, at the same time last summer we gave operating estimate costs I think was $285 an ounce again capturing high energy costs, strong Turkish lira and other factors which I think have inflated the costs. As Norm mentioned earlier, we have a big drilling program underway in the north ore shoot and I think we all expect that the mineralization that we're firming up in the north ore chute will be coming into or be eligible for reserves and we're going to quantify that in a new mine plan I think before the end of the year and I think that would be the right time for us to then update our operating costs projections for the project. Long winded answer and I'll let sort of Norm deal with the Tanjianshan.

Okay. Thanks.

Yes, on Tanjianshan, Paul, our initial guidance for the year was around 4.9 grams per ton and we -- as I said, we got some higher grade material around five and a half sitting in stockpile ready to go. We also have the ability to mine over the pit as well. We're willing to sulfide ore right now. We don't want to run the highest grade material until we're completely confident with the roaster and we're getting very close to that now. As I said to David in terms of recoveries we're looking the whole circuit. If you put all the pieces together you're at 80% recovery. We took a more conservative view of that for budgeting this year, so sort of mid-70s let's say and we're getting very close to that now.

Okay, great, thanks very much.

Yes

Thank you. The next question will be from Haytham Hodaly from Salman Partners. Please go ahead.

A couple quick questions on the 117 CapEx that was stated in you quarterly. What's the breakdown. I know that might change. What was the original breakdown on that 117?

Well, we were looking at approximately we'll say 84 million going into Efemcukuru. We have approximately 10 million going into the Vila Nova project and we have approximately 12 million going into TJS and then some remainder on some drilling and exploration. That pretty much gives you the --

That's perfect and I guess just with regards to the expansion of the ability to begin mining that 900,000-ton level? Have you already begun to do that.

No issue at mining at 900,000 tons.

No. Excuse me. Have you actually started to mine at that level and is that what you're putting through right now?

Yes, we are.

Okay, perfect. That answers my questions. Thank you.

Thank you. The next question will be from Steve Butler from Canaccord Adams. Please go ahead.

Well, good morning, everybody, and Nancy, guys and Nancy I should say. Guys, if I try to work through the Q1 and maybe it's because ounces at the roaster are probably still not commercial, so is the 15,000 ounces obviously excluding any roaster ounces? That's the first question.

Yes.

Okay. And in recoveries, Paul, seem quite low unless I'm doing math incorrectly, 52% on four gram material and 228,000 tons. So can you comment on recoveries being quite low in Q1?

Well, some of those tons are actually going into the roaster circuit which is --

Oh.

Which sort of answers your question of before as well.

Okay.

Yes. Transition recovery is low, you know. It's lower. It's not quite that low, but it's a combination of the transition recovery and some of those tons in the roaster.

And not coming out. We've got a lot of Gold now. I would say not tracked but let's say in inventory of the floatation circuit of going into the roaster.

I shouldn't say the roaster. They're going into the flow to the concentration to the stockpile.

Okay. So there's some precommercial tonnage in your quarter. Is that what you're saying? , precommercial roaster tonnage in your

Still in the circuit.

Still in the circuit but it didn't come out to be sold.

Okay.

Okay?

That is fine. Book value, guys for Vila Nova right now?

Right at 32 million.

Okay, 32 million, thanks. And last question, sorry, slipped my mind there. Tanjianshan, guys, go forward, mine what's the processing costs -- I mean what's the processing costs at this site before the roaster were X dollars per ton and what are they going for? Thanks.

Well, I think from our calculation what we're looking at within it is between 22 and $25.

Okay. And what were they before?

Between 12 and 15.

Okay.

The off-site ore circuit was in that range.

In that range.

Okay, thanks.

You have to be very careful with costs in the roaster. This thing is, you know, we're just getting ready to declare commercial production and we've had some very good runs with it including 13 days steady, you know, but the costs are going to obviously still need to be determined.

I mean the costs, Steve, the projections of costs for 2009 I think have embedded some fairly conservative views on what it was going to cost us in the roaster and, you know, our own view was and I think our view is there's probably more upside in terms of doing better than down side.

Right.

You're going to have to bear with us. We're going to get a couple of quarters under our belt before we can really with confidence say what these costs are going to be.

Okay. And Q2 maybe not -- well, time will tell, commercial production timing on the roaster, it sounded like you're saying May was almost or May was expected to be almost all through the roaster, April one half. So commercial production I guess we'll have to see how you declare it but it should be a reasonably full quarter with the roaster. Is that the idea?

Well, given the production level that we're giving you guidance now we will be in commercial production in the quarter.

In the quarter, okay.

Thanks very much, guys.

Thank you. The next question will be from Kerry Smith from Haywood Securities. Please go ahead.

Thanks, operator. Paul, could you tell me what the actual crusher capacity is today? I know you're running 10 million-ton a year, but just how high with the existing circuit through the primary how high with the existing circuit through the primary only?

Yes. The primary we're running 55 to 60% utilization right now, Kerry, and that's where when we back up what is a maximum utilization of a piece of equipment, that's where the additional capacity comes from and so we see the ability to be able to pump that up sort of 30 to 40%, all right?

Right.

That's there. That's in the --

I've seen that and the rest of these you have to expand the screening and the secondary crushing.

Secondary and Teri, yeah. We've got a -- and Tertiary. We've got a situation where Norm described and hopefully came out in our disclosure where we're creating an awful lot of finds in the pit just through drilling and blasting and then we're creating a lot more finds in the primary. So we need to be more efficient at scalping those primes off because they don't need to go through the secondary and Tertiary.

Right.

And then on top of that, we need to take advantage of being -- of additional primary crushing capacity and expand the crushing and secondary and ultimately the conveying capacity to the leach pad. Now, you know, I'm sort of going beyond, I guess, answering your question, I mean but it is a question that people have asked, you know, why are we expanding the and how are you going to get more in the short term more ounces than 30 or 40% expansion would suggest? I mean one of the things that we've recognized is that, you know, operating our plant -- our process right now we are somewhat undersized with our ADR plant and so, we're tending to build up inventory and, you know, we can remedy that by when we expand our process plant, expand the process plant beyond, the expansion through the crushing and screening so that we can build up an inventory and claw back the buildup that we're presently contributing towards, all right? And so if you look at our projections, 2012, 2013 you see more than 30 or 40% but that really is the claw back of inventory that we have been and will continue to build up until we actually have more solution processing capacity.

Right, right, okay. And just on the CapEx that you've spent so far in Efemcukuru how is that tracking with your sort of control budget or your original CapEx?

Oh, it's lower. We had contracted basically couldn't even almost reach the mine site because of the wet roads and all the mud. No doubt about it, it's lower.

I think overall we're on track in terms of what we would expect to pay for items of work. It's just as Earl said and you appreciate the site, key, with everything being on a slope and the contracts frankly haven't been able to work on the site because of the conditions.

Yes, okay. I was just wondering whether in the CapEx so far you've seen any tangible evidence of because you're doing all silver works you maybe aren't seeing any benefit yet.

Well, I think again, look to us to give meaningful guidance answer on that later in the year when we have frankly, more of the procurement behind us and we're actually, you know, raising steel. Then you can --

Fair enough.

It's hard in the industry, to frankly get ahead on this whole business of costs coming down. I mean I think we're going to actually see them in front of us.

Right. Just for Kisladag, the strip ratio was a little bit higher in the quarter than what you're sort of expecting for the year. The grade was much in line, the tons were lower obviously. The cash costs were still pretty good. I'm just wondering are you seeing benefit on fuel costs and maybe your costs per ton is coming down a bit. Why were the costs on a per ounce basis probably a bit lower than --

We probably are maybe seeing some benefit there, Kerry. Strip ratio wasn't much different. I think we're looking at 1.06 for the year and we're around 1.2, so it's not much different. It's up about right it should be now.

But you are seeing some benefit on the cost per ton side, then, which is helping, I guess.

You're seeing on a cost standpoint you're seeing lower fuel costs and you're already seeing some favorable results of the foreign exchange, too.

Right, okay. And just last question, if I could, for the north ore chute just remind me, there are no current resources in the north ore chute. Is that right, Paul?

No. There is a small amount indicated and the rest is inferred.

There's no reserves, though, Kerry.

No reserves. It's almost all inferred.

Okay. And can you remind me -- or I can just look it up. It's probably disclosed, so that's fine and just on the base metals that you're seeing there there obviously weren't really any other base metals on the other side in the other vein but is it something as you get deeper you're obviously getting into this higher base metals Halo and I just wonder what your thoughts would be on a go forward basis as to how it would be in that stuff. I guess you have to change the (Inaudible).

Wildly interested. It's something we're -- it's a little surprising to us that we're hitting the base metals with the high grade Gold in it. You'd think generally in a system like that you're getting into the base metals and your Gold is decreasing. It's obviously not in the north chute. Whether that represents a different phase of mineralization, you know, we're not clear on that yet. You know, in terms of changing the processing plan to accommodate that, I don't think you're going to have enough tons at that kind of grade to make it interesting enough.

Okay, okay. And there's no -- is there a processing way to strip out the Gold from the sulfide? Not really, I guess.

Strip out the base metal from the sulfide?

Yes. To sort of preferentially get it to float off or anything and get the Gold. I guess not.

We'll just do the normal flotation in our recovery of Gold.

Right. Okay, great. Thanks very much.

Thank you. The next question will be from David Houghton from BMO. Please go ahead.

Yes. Good morning and thank you. Just going back to TJS with the commissioning of the roaster during this quarter likely would we see a higher D&A rate over and above the $140 per ounce that we saw on the previous quarter?

Well, yes, you will because then we'll be selling more ounces.

Yes. I don't mean in a dollar figure. I mean in a unit cost figure. Those --

Oh, yes, you're going to see because once we declare commercial production then we will start amortizing the costs of the roaster.

Yes.

So then it will go up, yes.

And what kind of figure would you guide us to for a dollar per ounce figure go forward with the roaster in place?

With the roaster? Place?

Yes.

You're going to be probably looking at at least another $25 per ounce.

Okay. So about $165 an ounce sort of thing?

That's correct.

All right. Thank you very much. The other question relates to Kisladag and the expansion. You're doing the work now. When would you expect approval to be granted?

We'd expect it to be early in the fourth quarter through October time.

Okay.

No. Really I mean as soon as the study is done. As soon as the border is appraised of the situation and we will not be delaying once we have the physical evidence in front of us in terms of a completed study.

Okay. So that 45 mill will be spent all in 2010 basically.

Vast majority of it, yes.

Okay. And having a look at the profile that came out the other week with your guidance on this, back calculating the grades have to hang up around the 1.2 if you're going to continue with the stack to recovered ratio about 60%. That's quite a bit. That's 20% above your reserve grade. Is that the sort of thing that we would be looking at over the next number of years?

David, I think -- I don't know if you heard my answer or maybe my expansion on a question that wasn't asked. I mean part of what you see in terms of ounces being recovered, particularly 2012 through 2014 is actually a claw back of inventory, all right? And I think that is where you're calculating higher than reserve grade.

Oh, okay. I see. So it's more a function of the recovered ratio stacked versus recovered ratio.

Yes. Right now we're building inventory. I mean this really became whenever we were forced obviously into that temporary closure and then sort of ran down the inventory and then looking at since we started up we continue month by month to add inventory because there's a bit of a mismatch between our ADR ability and our ability to stack ounces. So again part of our expansion our planned expansion is to the amount of ADR plant so we can actually remedy this. So if you look out sort of say beyond 2014, you then have a balance because we now have the ability to be able to not build inventory. You'll see inventory sort of plateauing out.

All right. And the other thing talking about inventory, there was a difference between production and sales during the quarter. Would we expect to see any reversal of that in the next quarter? I'm presuming at some timing difference here, any timing difference?

Yes, you will.

Okay. So in this current quarter that we're in?

Well, you're going to see it start in this current quarter.

Okay.

The reality is if everything runs perfectly which it always done in mining, then it will come out in this next quarter, but I think you'll see it stretched out over the next, each quarter getting -- the inventory coming down.

All right. And that inventory coming out would be essentially at the cash cost that we saw in the first quarter?

Well, no. It would be a little higher because you've got higher -- you're going to have some higher operating costs, right?

Okay. And --

By definition the roaster has a higher operating cost.

Oh, okay. So that's mostly associated with the roaster, not material, okay. All right. All right. I think that does it for me for now. Thank you.

Thanks.

Thank you. The next question will be from Anita Soni from Credit Suisse. Please go ahead.

Hi. Most of my questions have been answered but Earl, would you mind going over the CapEx breakdown? I'm sorry, I missed that when you were going through that with.

You're looking about this was the breakdown of the 117 million, right?

Yes.

Okay. Just want to make sure we were all -- you're looking at approximately 84 million at Efemcukuru. You're looking at 10 million iron ore, approximately 10, 11 million at TJS. You're looking at 10 to 12 million at Kisladag.

And if you can just direct me if it's already in the release. Did you put what you spent to date in Q1 for each one of those yet?

I don't have the detail right there of each operation. Can I give you a call back on that question?

Yes, you can. And I think that's it for my questions. Thanks.

Thank you. The next question will be from Barry Cooper from CIBC. Please go ahead.

Yeah. Good day, everyone. Norm, I was just wondering with all the rain that you had at Kisladag what happened with the PH of heap and was that at all kind of impaired or did you have enough lime on there to start with such that it didn't dip down or is there a chance that that PH is -- needs to be worked on even as we speak?

Yes. No, PH wasn't affected. We had enough lime in the heap that it wasn't a problem.

And just to educate me, so when you get double or triple the amount of rain that you would expect, how do you compensate for that? Obviously you have the lime on there, but do you double up the lime in anticipation or what?

Yes. The lime goes into the solution. You add additional lime in the solution.

So you're adding it as the stuff is going on even as it's raining sort of thing.

Yes.

So there's no changes there. So why does the PH in the rest of the heap, then, not change all that much because obviously you wouldn't have enough to affect the whole heap Leach, would you?

This is Paul. I'm not quite sure we understand the question there.

Well, I guess if you're putting lime on the stuff that you're adding, what about the stuff that's been there two and three and four months which obviously you're still getting material off of? Is that -- are you putting in sufficient lime to compensate for the rainfall that's affecting that portion of the heap as well?

Yes. I mean you've got rainfall -- of course, rainfall isn't selective. VUE got the rainfall, Paul, going on the -- on parts of the heap which aren't actively being processed, right?

Right.

And so that -- that solution will not be passed through the process plant but which will just basically come back as barren.

Right.

And then pumped back onto the new ore where you have lime added.

Okay. So when you start stacking on material that you wouldn't have been adding the extra lime to, does that impair the integrity of the PH at a later date?

No. Because you simply add more lime on the new area.

To compensate.

As you're moving your Leach emitters are up around to new areas that you're bringing under Leach you simply add more lime.

Right, okay. Got enough. Thanks.

You're welcome.

Thank you. The next question will be from Dan Rollins from UBS securities. Please go ahead.

Good morning, a couple questions. One on Vila Nova, what are you assuming will be the cost to put the operation on care and maintenance?

Less than a million a year.

And what's the plan going forward for that? I know, you know, I guess you're waiting for the iron ore market to pick up. Are you still looking at going with a marketing agreement with one of the major iron ore producers or with a Chinese outfit or are you actually maybe looking at selling it to a Chinese steel mill so they can actually have control over our iron ore supply.

We will keep our options open.

Okay.

This is not a core asset. The bottom line is we have no intention of operating or need to operate this in the near term.

Okay. And quickly on TJS you have the new mining permit up to 900,000 tons. Are you still going after the permit for a million tons?

Yes, we are.

Okay. And is that -- like how long will that take to get? Because I guess you were going after the million before. Was it sort of a compromise at 900 then come back to us or --

I wasn't even a compromise. We were going for with the permit for a million and it was just sort of the 900,000 was just basically given to us. It doesn't preclude us from going for the million. If we go to that, it will be next year.

Okay, perfect. And Efemcukuru, with the access road basically being delayed, is that a critical point? Do you need that access road done to start bringing in the key components of the mill?

No. The access road is done. The access road is complete. It was done last quarter.

Okay. And then just on Kisladag, you said you basically are building up inventory in the solution. What's the typical run rate? I guess you say 20,000 ounces a month from the ADR plant but how much can you actually push that?

We're not building up in the solution. We're building up in the pad. Okay, in the pad, okay. The issue is getting more solution through. That's why we're looking to expand it at ADR capacity.

Okay. So how much right now can you pull out of that ADR? Can you do more than the 20,000 ounces?

Well, we can if the grades are higher but, what we have here is a maximum flow rate through the ADR plant. So, you know, the only way you get more ounces is by higher grades and points in the mine's life, quarter to quarter you see fluctuations in grade and eventually given the lifetime because of heap Leach you may see that come through at higher levels, but we are -- we're capped. It's not an ounce capped. You've got a reserve rate and you've got a tons of solution limitation which we need to overcome and again what, we've found is that we're, you know, we're a what, we've found is that we're, you know, we're a little bit undersized on the ADR and hence the imbalance which results in a buildup of in-heap inventory.

Okay. So running at your 2.5 million tons a quarter, your 1.2 guidance can you get your [60,000] ounces a quarter?

Yes. That's what we're doing.

Okay. And I guess with all the water will there be the similar impact from last year's Q3 seasonality with the dry weather or do you have enough fluid now to get through that point.

We're feeling a lot better which is 180,000 cubic meters is not an insignificant amount. So we're -- yes, it's looking fairly good.

If I can just say, on the one hand you're probably sitting back saying one time they're talking about not having enough water. Then they're talking about having too much water. A big part of the problem that we had last year in the summer months was the fact that we were coming off a shutdown, all right? We'd had the mine essentially shut down for six or seven months and in that period of time we were -- we weren't adding water to the system. We were circulating. We were basically running down the solution inventory. So we started up in March and we ran into a very hot dry summer with our solution levels at very low levels, okay? So it was a combination of the starting off with very low levels, starting off in the summertime and a very dry summer which contributed towards the, you know, having less solution in the circuit than we'd liked.

Okay. So basically you're saying at a steady state you're going to have a more muted seasonality effect than you've had in earlier years.

Exactly.

Okay. That's all the questions. Thanks very much.

Thank you. (Operator Instructions). We have a follow-up question from Haytham Hodaly from Solomon.

Wondering what the strip ratio looks to be throughout the year and going through next year.

Life of mine is about 4.5 to 1 and I think our guidance this year is 7 to 1. So I think the 7 to 1 is probably good this year.

7 to 1 and decreasing event to 4 to 1, I guess.

Yes.

What's your cost per ton look like for material to be moved these days? Is that being affected positively at all by the variations in energy price and everything?

Oh, not really. We've got a pretty good rate with the mining contractor really, 19 that we're using, you know, and as such it doesn't fluctuate much.

Okay. What's that roughly at right now?

$1 a ton.

Just over a dollar. No, that's perfect. That's all I have, thank you.

Thank you. We have another follow-up question from Anita Soni from Credit Suisse. Please go ahead.

Hi. Just a question with regards to actually Haytham sort of asked it with the strip ratio at TJS. Did you say it was four over the one of a life of mine.

Life of mine is about 4.5 to 1.

So the strip ratio you had nine this quarter and seven for the year. Does that mean it will obviously dip down below the seven towards the end of the year?

Yes.

Okay. And then the last question was with respect to the $30 million that you had from the sale of the AngloGold shares, where does that show up in your financial statements?

Well, it's in the cash flow. If you'll see down at the bottom of the cash flow that we got $30 million from the sale of securities, whatever. So I was just making that point in the cash flow statement and where it shows up, of course, in the balance sheet, it shows up in cash and it shows -- and that's part of the reduction in marketable securities compared to first to the year-end and to the accounts receivable.

Okay, thank you.

Now, Anita, if you will look at section 10, the liquidity section of the MD&A, the paragraph is the total breakdown of the capital expenditures for the quarter by project.

Okay. Thank you.

Okay?

Yes.

Thank you. And there are no further questions registered at this time, so I'll return the meeting back to you, Mr. Wright.

All right. Thank you, operator and thank you, everybody, who has attended the call and look forward to speaking to you at the end of the second quarter. Thank you.

Thank you. The conference call has concluded. You may disconnect your telephone lines at this time. We thank you.