Eldorado Gold Corp (EGO) 2009 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Eldorado Gold Corporation third quarter 2009 financial and operating results conference call. This call is also available on the Eldorado Web site 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 uncertain that could cause actual results to differ materially from those anticipated and/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 and in our annual quarterly management discussions and analysis available on our Web site and on SEDAR identify factors and assumptions upon which the forward-looking statements or information are based on and the risks, uncertainties and other factors that could cause results to differ. All forward-looking statements and information made or provided during this presentation are express qualified in their entirety by this cautionary statement.

I will now turn the call over to Paul Wright, President and CEO of Eldorado Gold.

Thank you. Good morning, ladies and gentlemen, and welcome to Eldorado Gold's third quarter conference call. Joining me this morning in Vancouver are Earl Price, Chief Financial Officer; Norm Pitcher, Chief Operating Officer; and the voice you heard just from Nancy Woo, our VP of Investor Relations. We will follow the usual format. Following my introductory comments, Norm will walk you through the quarter and provide some commentary in term of the balance of the year. Earl will then carry on with the summary of our financial results for the quarter, and then we will open up for questions.

We are all very pleased with the progress made in the third quarter. Operationally our mines continue to perform in accordance with the plan and with October's production coming in at 33,000 ounces we continue to maintain our guidance of 330,000 ounces at cash costs of $300 an ounce for 2009. I will remind you all that this guidance for 2009 has remained consistent since first being provided in December 2008.

In the quarter we announced the Sino Gold transaction which has received wide endorsement by both sets of shareholders and remains on schedule to close December 15. We look forward to integrating the Sino Gold and Eldorado teams and the opportunity to continue to strengthen and grow our business in China. As you have seen in recent announcements, Eldorado through drilling has continued to expand its reserve and resource base at Efemcukuru and at Kisladag. And in addition our recent announced discovery at Taniianshan highlights the prospectivity of that land position and the continued opportunity to further improve that mine site's performance.

In summary the Company remains financially strong, as evidenced by its continuing growing cash balance, is executing in accordance with plan, operationally and in its development projects, and post the Sino Gold close will continue on the path to build what we consider to be the premier intermediate gold company.

With those comments, I'll hand it over to Norm.

Thanks, Paul. Good morning, everyone. It was another busy quarter on all fronts at Eldorado. I will take you through the operations development and exploration, starting with operations at the Kisladag mind. We produced 57,902 ounces with cash costs of 276 per ounce. During the quarter we placed 2.52 million tons of ore in the pad at 1.22 grams per ton. We spent approximately $5.8 million on CapEx, the major components of which were leach pad work, core drilling and building upgrades. We also released a new resource that has the measure indicated increasing by the 2.5 million ounces to 10.4 million ounces, and we are looking forward to seeing the impact of that on the reserve base.

At the Tanjianshan Mine in China, we produced 31,016 ounces at cash cost of 338 per ounce. We processed 257,703 tons at 5.73 grams per ton. We spent about $5 million on CapEx which included a tailings dam lift and process plant equipment. The roaster performance continues to improve at Tanjianshan. We have finished an installation of the ceramic disk filter which has improved the density of the roaster feed, so we are seeing a steady improvement there.

On the development side, at Efemcukuru in Turkey, we announced a 23% increase in proven and probable reserve ounces. The question has been asked how much of this came from cut off grade and gold price. It is less than 10%. It is a very small amount because most of this material is falling well above the cut off. Major earthworks were completed during the quarter at site, including the plant site retaining wall and bridge foundations. We began pouring concrete for plant site foundations and continued work on the water treatment plan. We expect to start underground development in the first quarter of next year which will allow us time to finish the water plant and have it completed and tested. Spending in the quarter at Efemcukuru totaled about $8.7 million.

At Villanova, iron ore, the project remains on care and maintenance. We are seeing a slow improvement in iron ore prices. We are now looking at the possibility of reopening the mine and have entered in discussions with a couple of different groups who have been interested in purchasing the project.

At the Perama project in Greece, the PEIA has been submitted which is the first step in the permitting process there. This PIA incorporated some major design changes including a dry stack tailing system and all of the facilities in one infrastructure which we think will help with the overall permitting process. We expect approval now of the PIA probably in Q2 2010, however we are still on track for the overall EIA approval estimated in the second quarter of 2011.

On the exploration side, at Efemcukuru, we finished the north ore shoe drilling and moved the drill over to the [Cokar Pinar] structure which is a parallel structure to the main [Kastani Baleni] vein. We are looking at a five to six hole program over there. At Sayacik, which is the volcanic center next to Kisladag, we finished the planned drill program which was two diamond drill holes and 6 RC during the quarter and the interpretation of those results are ongoing. We are also active on two new projects, where we did first pass soil and rock chip sampling.

In China, as Paul mentioned, exploration focus there was the new 3-2-3 zone which looks like an extension of the QLT structure in the northern part of the property. We drilled 15 holes there, diamond drill holes, during the quarter. It is an interesting zone. It does appear to be an extension. It is still early days there, but that will be a focus for the rest of this year and next year, as well. Finally, at Tocantinzinho in Brazil, we finished the planned drill program during the quarter and are now interpreting results and doing reconn type work in the surrounding area.

With that I will turn it over to Earl Price.

Thank you, Norm. Good morning. As usual I will quickly go through each of the financial statements highlighting the accounts with significant changes and then we will turn the call back to Paul from which we will then take questions.

Commencing with the balance sheet, under the assets, cash and cash equivalents in Q3 2009 of $149,551,000 compared to year-end 2008 of $61, 851,000. This increase in cash is really directly related to the monetization of the AngloGold shares that we carried over until January of 2009, and higher gold prices and continued strong production during the year. Marketable securities Q3 2009 of 10,854,000 compared to year-end 2008 of 43,610,000. This is a result of the monetization of the AngloGold shares which I referred to in the cash balance from the sale of Sao Bento 2008. Inventories of $177,477,000 Q3 2009 compared to $86,966,000 at year-end 2008 have increased as mining at TJS continued during the start up phase of the sulfide treatment plant. This increase in inventory and the resulting gold productions during that period resulted in an increase in ore inventories and process inventories within the process circuit. This inventory will begin to come down now as the roaster is operating at full capacity. Mining interest of $345,415,000 in Q3 2009 is the mark to market of the Sino Gold shares acquired from Gold Fields in July of 2009.

Those are my comments on the balance sheet since there were no really significant changes in the liabilities. I will make one comment. In the past we have had a restricted cash balance of approximately $5 million that is no longer showing on the balance sheet. That was related to a loan facility at our TJS mine site. That loan was paid off in the quarter. There was no loan in December 2008. So that is why it doesn't appear. But all of the restricted cash has now been released to the Company and the loan has been paid.

Moving on to the statement of operations. Revenue, gold sales of $81,608,000 for Q3 2009 compared to $65,013,000 were higher as a result of increased gold price during the year and volume. When comparing comparable nine month results, higher gold price offset lower production in 2009, thereby both 2009 and 2008 appear with very similar results. Interest in and other income nine months 2009 of $1,583,000 compared to nine months 2008 of $9,366,000 was lower due to the fact that in 2008 we were selling electrical power during this period from our Sao Bento mine which was shut down. At the end of the year the Sao Bento mine had been sold so there are no longer power sales from that operation.

Expenses. Depreciation of $9,017,000 Q3 2009 compared today $6,772,000 in Q3 2008. This increase is due to the additional CapEx for roaster that were completed during the year and is now flowing through to the P&L from an inventory capitalization on our balance sheet.

Income taxes. Current taxes Q3 2009 of $13,812,000 compared to Q3 2008 of $8,976,000(Sic-see press release) has increased due to an increase in the tax rate in China. During the quarter, we were notified by the Chinese Government that all preferred tax treatments for the gold industry were canceled and that the standard tax rate of 25% was now applicable back to the beginning of 2008. This higher tax change reflects the additional tax for both 2008 and 2009. On a go forward basis, all taxes in China now for income tax purposes for the gold industry should be calculated at 25%.

Net income for Q3 2009 of $30,154,000 or $0.08 per share compares to Q3 2008 of $17,040,000 or $0.05 a share.

Moving on to the cash flow statement. Statement of cash flows. Operating activities. Cash flow from operations after changes in working capital were $27,585,000 compared to $1,703,000 in Q3 2008. The result of higher gold prices and strong performing operations.

Investing activities. Capital expenditures of $24,151,000 Q3 2009 compared today $39,923,000 Q3 2008 were lower than expected, due to the expenditure rate at our Efemcukuru construction site have been lower than planned.

Comprehensive income. Usually we have not spoken about the comprehensive income statement, but this quarter, other comprehensive income shows an extremely strong gain. This unrealized gain on available for sale investments represents the mark to market gain on the Sino Gold shares acquired from Gold Fields in July of 2009. I specifically call to your attention on page two of our MD&A is a more detailed explanation of this calculation and the results. In calculating the increase of the mark to market on the Sino Gold shares results in a liability increase in the future income tax that is also reflected on the comprehensive income. Under the accounting rules, this liability increase on the comprehensive income is offset by a P&L impact on the P&L statement resulting in a $9.9 million increase in income on P&L. Upon completion of the Sino Gold merger, successful completion of the Sino Gold merger, this $9.9 million would be reversed in the fourth quarter.

These are the summary comment that I have regarding the third quarter Eldorado Gold financial statements. I will now turn the call back to Mr. Wright.

Thanks, Earl. Thank, Norm. Operator, we will open up to questions please.

(Operator Instructions) The first question is from Tony Lesiak from Genuity Capital, please go ahead.

Good morning everyone. Paul, given the significant increase in the resource at Kisladag has the magnitude of the ultimate expansion potential there been impacted positively?

Tony, I think at this point we don't know what the ultimate expansion production capability of Kisladag is. As you know, a couple of months ago we made an announcement as it related to an initial study where we looked at, frankly, taking advantage of certain surplus capacity we had in the circuit, and looking at what we could do with fairly modest capital to take advantage of that. And suffice to say, we are pushing on with that and expect before the year end to be able to make that decision and make that commitment. That expansion really as I described, will take advantage of opportunities that we see in front of ourselves and would really be done, frankly, even if there was no increase in resources or reserves. That type of expansion would be justified strictly on the basis of the present reserve 5.5 million ounces.

As you can see from this year's drill results -- and Norm, you may want to add some comments afterwards -- we are still a ways from knowing and defining the ultimate size of the mineralization that may be relevant in terms of defining what this ultimate mine looks like. Each year we drill and we drill some more and we add ounces and we create new targets. So to me, to all of us, there's still the potential for, frankly, a much larger mine here and we have to continue to drill to try to gain answers to those questions. Because it all starts, as you know, with what is the size of the resource. That's a long winded answer but that's where we sit.

I guess the plan is to announce that to the market before year end.

In terms of what I would call the no brainer expansion, certainly. What we're wrestling with a little bit right now because of this year's drilling results is how do we, the type of expansion we envisage is a fairly modest capital, how do we make sure we don't waste capital. Because clearly when you look at the way this body is growing, it would be a surprise if a few years from now you didn't have a larger mine there.

Okay. Just a question on TJS, obviously the recovery there is still below expectation. How would you expect the recoveries to improve on a quarterly basis so we can track that?

We are actually getting every quarter getting closer and closer. We're very close now to where we expect to be. But Norm can give you some details of capital spend to get us there.

We are looking at, the next improvements we are going to have will be on the flotation side, flotation recovery. We are putting in a flash fold system next quarter, that should get the float fairly close to where, up to design. That will be the next big one. So I would look for next quarter results on the recovery.

One thing, Tony, if I can just interject, you may have trouble with, and I am sure you do is that we are giving you the mine grade and the ounces produced but we are working with a lot of concentrate. That's in the system. So just doing the metallurgical recovery to what's being mined and checking it against ounces produced isn't, unfortunately, going to give you the recovery for that quarter.

Okay. Because if I do the math it is about 65%, and if you just remind me where the the feasibility parameter was.

It was low 80s.

Where would you say it is right now, knowing all of these balance issues?

Where it is right now is probably low to mid-70s.

Okay. And just finally on Efemcukuru, obviously there has been a bit of a delay on the capital spend there, how comfortable are you that you will still hit your commercial production target by the end of next year?

Where we sit right now is we see production starting up in the final quarter and commercial production is probably going to be the beginning of 2011, Tony.

Okay. Great. Thanks very much.

Thank you. The next question will be from David Haughton from BMO Capital Markets, please g ahead.

Good morning, Paul, Earl and Norm. Got two accounting questions with regard to TJS, how to look at the depreciation number, and on a per ounce in the September quarter it seemed very high, getting up well over into the $200 per ounce. Just wondering what it should be on a go forward basis.

What we have is we have coming through, because of the inventory build, that we have been placing on the ore stockpiles as we have been going through the flow, we had a major flow through coming as we are converting over to looking at how we are capitalizing depreciation into that inventory flow. And so what we have done is we basically have a $2 million flow through in this quarter that will no longer be going through in the future quarters. So look at your TJS depreciation, subtract the $2 million and that will become the go forward depreciation.

Okay. That brings me to the second question, and we have noticed over the course of this year quite a build in inventory. What does that represent in ounces in inventory, and the time line we can expect for that to unwind, is it all in next quarter or spread out over a longer period of time?

It will be spread out over next year because you are starting with a significant build. I don't know the number of ounces. Norm and I will have to find that number out for you. But it will flow through because it is basically starting with the ore inventory in and of itself. There will be the improvements on the flotation, that Norm referred to earlier, which will get the recovery rate out. There's just a lot in the circuit as far as concentrates.

And also stockhouse that will be reduced during the spring festival, as well.

You are going to see a flow through I would say probably throughout the year, but a significant portion coming through in the first six months, seven months.

All right. Just looking at the resource statements, just for clarity, your M&I is inclusive of your PP reserve?

Yes.

Okay. Good. And having a look at the update for the CapEx for Efemcukuru, you have got $152 million there. How much of that is already spent?

The numbers about $50 million.

All right. And the kind of protocol that you've got for that expenditure, what would you expect for the balance of this year and into next?

For remainder of this year at Efemcukuru, we are looking at $25 million to be spent.

Okay. Does that take into around $50 million, $55 million-ish for the year.

No, no, it will take you up to $75 million spent on the project, and you subtract that from the current $152 million. What you are going to see is probably, the reality is, you are probably going to see $75 million spent because you always get to the timing of the holdbacks on construction projects such as this, and then the difference will flow through, probably paid in the first quarter of 2011.

All right. That's it for me. Thank you.

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

Good morning, Paul, Norm, Earl. Norm, can you give us an indication of the strip ratios this quarter and what you are planning for 2010, and also the sulfide, oxide split.

Strip ratio wat Kisladag was about 1.4 to 1, I think, for the quarter. Tanjianshan was probably, I think Tanjianshan was about to to 1. The [Waifa] mine at Kisladag is about 1.1 to 1 so we'll get back to that either this quarter or the next quarter. And Tanjianshan will continue to go down. We have finished the major part of the stripping at Tanjianshan.

The life of mine at Kisladag is .8, right?

I think it was .96 as of the 2008 end of year reserve last year. As you appreciate, we are in the throes of updating the reserve reflecting the new resource statement now.

Just in terms of following up on Tony's question with regards to the planned expansion, when would you, what are the next dates for engineering design in terms of figuring out what type of an expansion you are going to do?

Well, again, I think you can assume that the type of expansion, the first, the Phase 1 expansion, we are very close to finalizing in terms of being able to disclosure what we envisage in terms of the capital and schedule and makeup. But that's going be, call it a modest expansion, similar to what we previously described. The question, the opportunity, I suppose, is as it relates to how large this resource becomes and that's a very difference question on a very different time line, and realistically we are probably two years away from answering that. That's a significant decision that can only be made when we have a better handle on what the ultimate resource size here is.

When I was converting about 50% of your (inaudible) I have it going out to 2030, so pretty long. With respect to the $9.9 million gain on the P&L, did that come through this quarter or is that coming through in future quarters?

No, that's come in. That's reported in this quarter. That's why we are making note once the Sino Gold transaction is completed that $9.9 million will reverse out of the P&L.

Where is it exactly in the P&L?

Under the future income tax. That's where you've got a current charge of $13.8 million but now you have a recovery of $8.8 million. That $9.9 million is inclusive of that $8.8 million.

Okay. And then just one last question with regard to the current tax rate. What was the tax rate you were paying in China?

We were paying 15%. We had a preferred tax rate that was to run through 2010, and that has now been canceled.

And the impact of that, you've retroactively taken that this quarter already or is that going to flow through?

That was made retroactive by the Chinese Government to January 1st of 2008.

I am wondering did you already take the hit?

It has all been taken. Everything has been taken.

Thank you.

The next question will be from Steven Butler from Canaccord Adams.

Just to clarify, on the capital expenditures at Efemcukuru, it is rare that capital spending committed is the same -- $50 million, is that the exact amount spent and committed because it is rare that the two numbers equate?

No, no. That is not the case. Where do you get the committed number of $50 million?

I think it was in your press release saying capital spent and committed to date is $50 million. So the question is what has actually been spent through the end of -

It is spent or committed.

Can you tell me what's spent through the end of Q3, Earl?

No. I think there's a misstatement there. We have spent $50 million. Commitments going out to the future actually reflects in our commitment that there's an additional that's been committed of $9 million. It is in our commitment schedule. So that should be spent. We have spent $50 million.

Perfect. Sound good. And then just to clarify, Norm, you mentioned life of mine, the (inaudible) will come down at TJS, or Tanjianshan, what would that be roughly going forward? Is it 4 to 1 or 5 to 1 roughly?

Yes, 3 to 4. We haven't redone the plan for next year yet obviously. That's not a bad range.

Okay. That's all I have. Thanks, guys.

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

Good evening, everyone. Paul, just I want to understand at Kisladag the resource increase. Should I really look at this as a separate event from your expansion that you announced back in June I guess it was, maybe July? Presumably when you did the expansion plans in July, you knew there was going to be this increase in resources. But did you count on that when you talked about the resource increases or should I really treat them as two separate events?

They're really two separate events, Barry. The type of expansion that we have articulated a number of months ago was very much based on the reserve that we had of 5.5 million ounces and the opportunities that we saw in the system to cost effectively improve the system, lower the costs and increase throughput. It was a type of expansion, or is a type of expansion that your general manager after operating it a couple years comes up with and says we should do this, this is a way of getting more out of the system. The backdrop to that was clearly an environment in which we had confidence that we were going to grow the resource base but we recognized, and continue to recognize, that it is going to take a time period measured in years to do so. And that ultimately this may lead to a much larger mine in the future.

But in the interim, if there was something that can be done, relatively cheaply, relatively quickly, and where the results were going to be compelling, let's get on with it as long as we can do it in a manner that doesn't waste capital. That's very much the exercise we are doing right now. You have two exercises going on. You've got the moving very quickly to finalize what I describe as a phase one expansion. The other is starting to come to grips with the fact that there's potentially something much larger, much more significant here and how do we get to decision points in a timely basis, recognizing it is years, it's not months.

Right. Then that begs the question, when you back out your reserves from the resource figure, you are left with a, let's call it a mineralization that is not in reserves so an average grade of a little bit below 0.6 of a gram. So I am wondering just how, and given that in your class action that you had where you showed where those ounces were lying and they looked pretty deep, how much should we realistically expect will come into some sort of an expectation for an open pit? Is it half of that, is it three quarters, do you have any sense of something like that?

That's what is called a reserve estimate, Barry, and that's what we are doing right now. I am not trying to be flippant about it, but that's exactly what we are doing.

We're aware and you can see in our simplified section here where we see targets which are lateral as opposed to at depth which obviously will be targets for next year's drilling program. If we are successful in moving the mineralization laterally, then that in itself is positive but also gives potential to maybe access some more of this deeper mineralization.

Okay. Let me try and ask the question a little bit differently, to pick your brain once more. If you used the 0.3-gram cutoff, which you implied, there must have been some expectation that material down deep would have been making it into the resource in the first place because there is, be it right or be it wrong, there is some implied economic parameters associated with that, correct?

Yes. The reason we moved from a 0.4 to 0.3 for the resource calculation is because we are actually mining at less than a 0.4. Our mining cutoff for some of the material is less than 0.4. So it was, to be consistent, it made no sense to have a resource statement at 0.4 when you're actually mining and producing gold at $275 an ounce using a cutoff grade that's between 0.3 and 0.4. So that's the backdrop. Again, as the metal price gets higher, more and more of this mineralization becomes relevant.

The final question on that, what metallurgical tests have you don with those extremities there? Is it identical to what we have seen so far? I assume obviously it is going to sulfide like the bottom of the pit but you are still probably looking low 60s as a recovery or is there something different that might change with that, though you haven't done the work yet?

We did extensive work originally in some of the deeper drilling. Obviously we have gone deeper that that, deeper drilling, and we are going to be doing more. But I think the general comment we'd make is that in the test work we've done historically in the deeper drilling, the type of recoveries you've described are appropriate.

Okay. Thanks a lot, then.

(Operator Instructions). The next question will be from Steven Kipsey from CDP. Please go ahead.

Hello. This question relates to Efemcukuru, on the water usage. Can you just map out for me a bit what are your sources of water that you are going to be using there? Is it lake, river, ground water, precipitation? And how much of the water will be recycled? The reinjected water into the environment after it's filtered, could you give us some idea of the quality, the requirements, the quantity that will be moved? And perhaps as a final question, which other users do you share the source of water with?

The water is coming from ground water, it's coming from wells. Anything that is put back into the system is treated through, it is actually a double reverse osmosis system. So it is well above drinking water standards. And these wells we're not sharing with anyone else.

Okay. Thank you very much.

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

Thank you, Operator. Good morning, folks. Just a quick question. I was wondering in your MD&A you mentioned you are now going to focus on interpreting drill results from Tocantinzinho. I was wondering if that is going to include a resource estimate that might be released to market at some point.

We are still earning into this one and any resource update should come from Zoro and not from us. We obviously provide them with the data but we don't intend to be putting out a resource on this.

Okay, thanks a lot.

The next question will be from Dan Rawlings from UBS Securities.

Just quickly on Villanova, you stated you are thinking and evaluating the potential to restart the operation or you have had interest from additional parties to purchase it. What would be your best estimate on a time frame where you would actually go ahead and start producing and turn this on again given the improvement in the iron ore market, if you cannot sale the asset?

John, I think I have indicated previously that we would hope at year or by year end to be able to provide clarity as to whether we will reopen or sell the asset, and I think that's probably still a reasonable time frame.

Thanks a lot. Just quickly on interested parties, not mentioning any names, but is it a combination of existing iron ore producers or are you seeing interest from, let's say, Asian steel mills looking to get a hold of their own source of iron ore.

I would continue to speculate if I were you.

Thank you.

The next question will be from Robert Danielle, a private investor. Please go ahead.

My concern is in terms of financing, what is your overall long term philosophy on hedging?

I suppose simply put our philosophy is tied somewhat to our philosophy as it comes to running the Company which is based on developing some of the best assets that the market has to work with, and as such we have our own natural hedge, as demonstrated by the cash flow and earnings quarter to quarter. We certainly have a view at this time that the gold price is likely to continue to grind itself higher, and frankly see no reason to limit the upside for our shareholders in participating in Eldorado.

Thank you.

Thank you. We have a follow up question from Anita Soni from Credit Suisse, please go ahead.

Can you just give me two minutes or 30 second synopsis on where it stands with the Sino Gold transaction, what are the next key catalyst dates?

There's a shareholder meeting December the 2nd, really. That's the next. And at this point we have no reason to believe that the shareholders won't endorse this transaction, certainly all of the feedback we've had would support that. And then the formal close is, I think, slated for December 15th.

Okay. Thank you very much.

It is a fairly laborious, lengthy process, unfortunately. But that's the process.

You just put out your information circular a couple of days ago, right?

That's right, it was the Sino Gold, the book, the scheme, the booklet as it is referred to which is a bit of a misnomer. It's a mighty tome that is sent out. It is on the Sino Gold site.

I have seen that. Thank you.

Thank you. We have a question from Heather Douglas from Thomas Weisel, please go ahead.

Good morning, everyone. I'm sorry if I missed it at the beginning. Can you you give us a little more color on how underground development is going at Efemcukuru? And then also what are the, in terms of the remaining capital to be spent, what are the key milestones of what needs to be done to deliver the mine by the end of next year?

The underground development is going incredibly well right now because we haven't started it but we expect to be starting it in the first quarter. Norm, carry on from there.

Yes, and that's really it. We are waiting. We need to finish up the water treatment plant and get the rock dump completely finished before we can start underground. That's what we are looking at, first quarter of next year. In terms of the spending, it is everything except $50 million, I guess $59 million now, about $152 million.

Currently we have spent $50 million, the project is $150 million -- I am rounding here. I would state we will probably spend $75 million in cash. Now I am talking about next year even though the mine will be completed and then the final $25 million will be paid for in 2011 because it's just the holdbacks you have on construction contracts and the final billings.

So most of that $75 million, will that just be the underground, or is it still the plant at Kisladag and --

Yes, yes. It is actually, it is in the Press Release what the overall capital is.

I am looking for what you get for the capital. So when should we expect the Kisladag plant to be completed?

Kisladag plant will be completed by the end of next year. You have got about $32 million in mining, this is total. So none of that has been spent yet. You have got almost $18 million in process, probably most of that hasn't been spent. Waste handling, $14 million, hasn't been spent..

You can look at the capital cost breakdown in the Press Release, and assume the numbers we have given that have been spent and committed so far, and I think you can see from there,.

In terms of the underground work, you did hire a contractor though already; right?

Yes. We have the contract signed and he's ready to mobilize.

Okay. Good. Thanks.

Thank you. We have a follow up question from Anita Soni. Please go ahead.

Last one I promise. The Efemcukuru, what was the reason for a little bit of a delay in spending at Efemcukuru?

Initially, if you remember, when we talked about the first quarter where we had a significant rain in that first quarter, that was the initial push back.

And then it was the footprint. Is that still the issue?

That's right.

Everything just basically got pushed out essentially a quarter, and that has affected the development schedule, it's affected the spend.

Okay. I was just trying to ascertain whether or not there was a further pushback, or just the same one.

No, the same thing.

Thank you.

Thank you. There are no further questions at this time. So I will return the meeting back to you, Mr. Wright.

Thank you, Operator, and thank you everybody who participated and look forward to speaking to you again.

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