Eldorado Gold Corp (EGO) 2010 Q1 法說會逐字稿

Good morning, ladies and gentlemen, welcome to the Eldorado Gold 2010 first quarter financial and operating results conference call. This call is also being webcast and is available on the Eldorado Gold website at www.eldoradogold.com.

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

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 or 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 and in our annual quarterly management discussion and analysis available on our website and SEDAR 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 and information made or provided during this presentation are express qualified in their entirety by this cautionary statement and the cautionary statement contained in our press release. I will now turn the call over to Paul Wright, President and CEO of Eldorado Gold.

Thank you, Nancy. Good morning, ladies and gentlemen, and welcome to our first quarter financial and operating results conference call. Joining me today in the call from Vancouver are Norm Pitcher, Chief Operating Officer, and Ed Miu, Chief Financial Officer, and the voice you just heard from, Nancy Woo, our VP of Investor Relations. We will proceed with the customary manner. I will provide some brief introductory remarks. Norm and Ed will walk you through the results and outlook from an operating and financial perspective, and then we'll open up for questions.

We are all, I think, understandably pleased with the strong start to the year. Our mines all performed well in the first quarter, including an exceptional performance by Kisladag. Based on [QT] performance to date, we anticipate a strong second quarter.

These factors have contributed to a modest positive adjustment in our guidance for 2010, which now anticipates production at 575,000 to 625,000 ounces at cash costs of $375 to $395 an ounce. We continue to operate with strong cash margins and with higher realized price than we planned for. And as a result, are accumulating cash beyond our capital requirement needs. These factors have contributed to our decision to adopt a dividend policy at this time, perhaps a year earlier than previously envisaged.

We look forward to this dividend being sustainable, and we'll continue to work hard to ensure that over time it becomes an increasing valuable reason to invest in Eldorado. The results, I believe, speak to the successful ongoing integration of the Sino Gold assets and the teams over the last six months.

Briefly, on the exploration front, as we have described previously, 2010 will be a very active year for us with a budget of approximately $35 million, and in excess of 125,000 meters of drilling planned. Given that the majority of our projects are in the northern hemisphere, exploration activities tend to be focused on the second and third quarters in terms of physical activity, with news flow tending to be biased towards the third and fourth quarters. For those comments I will hand it over to Norm who will take you through the performance of the operations.

Thank you, Paul, and good morning, everyone. I guess if I had an option not to say anything about the operations, I'd do that, because I think the results speak for themselves. But, I would like to thank all of our operating team throughout the world for an outstanding quarter. We have some hardworking, dedicated employees out there. And we have some hardworking, dedicated new employees as well from the Sino Gold transaction who are working very, very hard to make this work along with our own operating teams.

Onto Kisladag, we produced 82,240 ounces at cash costs of $305 per ounce, which is a quarterly record for gold production. We placed 2.9 million tonnes of ore on the leach pad at 1.12 grams per tonne and mined at a strip ratio of 1.17 to 1. The higher gold production was largely as a result of intermediate leaching, where low-grade solution can be recirculated back to the leach pad and larger carbon columns. We are reviewing our recovery rates for sulfide ore as [Anga] mentioned in calls before.

We've got a couple of different alteration types in our sulfide ore that probably aren't giving us the exact same 61% recovery. It looks like one of them maybe somewhat higher, so we're reviewing that now and we'll report on that later on in the year. We're on track for the planned expansion at Kisladag. We'll take us up next year to 12 million tonnes per annum. During the quarter, we spent $5.6 million on capex, which included the start of construction on six new leach pads, diamond drilling and general construction.

At Tanjianshan, we produced 25,423 ounces of gold at $432 per ounce. That came from milling 249,738 tonnes of ore at 4.01 grams per tonne, and the strip ratio in the open pit mine at Tanjianshan for the quarter was 2.5 to 1. We did mine quite a bit lower ore and waste this quarter, and that was simply due to the 60-day break that we gave the contractor during the spring festival.

We were able to do that because we built up significant stockpiles in 2009. Part of the reason we wanted to have stockpiles of that nature and that size at Tanjianshan, is so that we can blend both grade and sulfur content through the roaster, particularly sulfur content is very important to keep the roaster running correctly. The capex at Tanjianshan is $1.6 million, and that was for diamond drilling, processing plant upgrades and we started on a new tailings dam lift there as well.

At Jinfeng, we produced 45,615 ounces at $411 per ounce. We processed 390,000 tonnes at 4.23 grams per tonne. Strip ratio for the open pit was 12.4 to 1, that versus 17.8 to 1 overall for 2010. So, we're mining at a lower strip ratio during Q1. Both the open pit and the underground performed well.

We continue to develop the plan for the ultimate pit at Jinfeng. Once that's done, then we'll start looking at optimal rates and mining method for the underground. We expect the open pit plan to be done probably late in this quarter. Capex during the quarter at Jinfeng was $4.4 million, which was mostly on tailings management improvement.

Onto White Mountain, we produced 11,650 ounces at $545 per ounce. That came from processing 130,000 tonnes of ore at 4.09 grams per tonne. As we had mentioned, the production at White Mountain was negatively affected by poor recoveries. We had increased sulfide content in the ore.

Just a quick comment on that, there is some higher sulfide, partly refractory ore at White Mountain, and due the way the stopes were configured early in this quarter, we ended up mining the bulk of the material from a high sulfide area. We're looking at the mining plan now, and in the future, we will be looking at blending that material both for mining and in the mill to decrease the effect of that.

On the development side, at Efemcukuru we focused on closing the concentrator building. The SAG and the Ball Mill are in place. The underground development will start this quarter. We continue the land purchases during the first quarter, and we spent $13.6 million in Q1. Villa Nova Iron Ore, we will start mining this month and expect to start shipping iron ore in the third quarter.

Perama, the Ministry of Environment is reviewing our PEIA. We are still projecting construction to start in the second half of 2011 and commissioning in 2013. Eastern Dragon during the quarter, activities were limited mostly to permitting and exploration activities.

Onto exploration, as Paul mentioned, we generally are more weighted towards the second, third and fourth quarters. But we did get started on nine drilling programs during the first quarter for both 13,000 meters and that was in China, Brazil, Turkey and Nevada. At Kisladag, we drilled 11 holes for over 7,000 metres. We have discovered a new zone beneath the ultimate pit limits on the south.

At Efemcukuru, we drilled two holes in the Kokarpinar vein, which is parallel to the main vein at Efemcukuru. And we also worked on three earlier stage projects in Turkey. We are drilling one project in Nevada. We also drilled in Brazil at Tocantinzinho, nine holes there, and in China, we drilled the 323 Zone at Tanjianshan, 13 drill holes there and three drill holes in the regional areas around Jinfeng. So, really just getting started on the Chinese exploration outside of Tanjianshan.

Forward-looking for the exploration, we have drilling budgeted for 26 different programs over the course of 2010. That's over 125,000 metres. We will be releasing an exploration update in the second quarter, late in the second quarter. We hope to have a 323 Zone resource done also late in the second quarter. We will be updating Kisladag resources and probably reserves in the third quarter based on the new drilling program. With that, I'll turn it over to Ed.

Thank you, Norm. Good morning, ladies and gentlemen. As mentioned by both Paul and Norm, Eldorado had a very strong first quarter in terms of production and operating costs. That translated into very strong financial performances, as reflected in the financial statements. Starting off on the balance sheet, first quarter end asset balance increased our 2009 year-end balance by approximately $49 million. Cash balance was $283 million, an increase of $18 million from year-end. Plus $25 million increase in mining interest as a result of capital expenditures in both Turkey and China during the quarter.

On the liability side, the first quarter recorded a decrease of about $20 million in total liabilities from the 2009 year-end balance. The lion's share of the reduction was from the payments of transaction fees related to the Sino Gold transaction, which was shown as outstanding liability at year-end last year.

Moving on to the statements of operations and retained earnings, this year first quarter's gold sale revenues of $181.5 million exceeded first quarter 2009's revenues by $129 million or 248%. This was accounted for by production increases in both the Kisladag and Tanjianshan mines, coupled with the additions of Jinfeng and White Mountain from the Sino Gold acquisition. Another contributing factor for the substantially higher revenue is the fact that realized gold price per ounce increased from $909 in quarter one '09 to $1,110 in the first quarter this year.

With the higher production and the Sino Gold inclusion, operating costs, DD&A and interest expenses all went up year-on-year. G&A costs also increased by $6.8 million, mostly due to stock-based compensation being higher as a result of the Sino Gold acquisition.

Net income of $52.8 million in the first quarter increased from the same period last year by almost $40 million or 304%. In terms of earnings per share, there was $0.10 this quarter versus $0.04 for Q1 2009, an increase of 150%. On the cash flow statement, close to $81 million of cash was generated from operation in the quarter, compared to $20.7 million in Q1 '09.

In spite of that overage, net increase in cash in first quarter this year was $17.7 million, which was less by comparison to the $46 million increase in Q1 '09. The year-on-year decrease was attributable to capital expenditures being $28 million higher this year, coupled with the $30 million cash receipt in Q1 last year, pertaining to the sale of Sao Bento. All in all, it was a very strong quarter for Eldorado in terms of financial performance all around. With that, I now turn the floor back to Paul.

Thanks, Ed. Thanks, Norm. And Operator, we'll open it up for questions, please.

Thank you. We will now take questions from the telephone lines. (Operator Instructions) The first question is from Haytham Hodaly with Salman Partners. Please go ahead.

Good morning, Paul, Norm.

Good morning.

Just a quick question on Kisladag. Obviously, production there was phenomenal last quarter and the measures you've taken to improve recoveries have done very well. What would you say, just based on a cursory look, your overall life of mine recovery potentially could go up by, based on the limitation of these new measures?

I don't think we'll put a number on that yet, Haytham. Part of what's going on, too, is we finally got -- don't underestimate the ability of the intermediate leaching, because we're now starting to pull ounces off inventory in the pad as well. And the bigger the pad you have, the more flexibility it gives you to be able to do stuff like that, and we're just now getting to a point where we can start to do that. So --

Is there any limiting factors going forward here, Norm? Is there any reason why you couldn't keep doing exactly what you're doing and keep recoveries in this range?

If I can just interject, and then Norm will come back on this. It is very important to, I think what Norm is trying to highlight here is, the effect in the first quarter was very much due to the fact we put a lot of extra ounces out on the pad in the fourth quarter. And secondly, as Norm described, we now have the leach pads big enough that we can do counter current leaching, which means that you have an ability to be able to increase the preg grade that you plant through the solution, and that's largely because you've got an excess inventory of ounces on the pad that you can gain access to.

On the issue of ultimate recoveries, we are very cognizant of the significance of potentially getting higher recoveries from these pads. And that's why we're going to be very, very cautious and appropriate in terms of doing the level of metallurgical test work we need before we come out with any type of suggested number, numerical increase. Because we are aware of the significance of that number, given the size of the resource and reserve that it could become applicable to.

Okay. No, that makes sense. Just maybe, could you just give us your current guidance for Kisladag for this year, roughly production wise?

I think we've given you upward guidance for the year.

Yes. We said our original guidance for Kisladag was 230 and 240 at cash costs of 310 to 330. We've upped our guidance. We've taken the middle range of the guidance and upped that. So.

No, that's perfect. Thank you.

Thank you. Your next question is from Dan Rollins with UBS Securities. Please go ahead.

Thanks. Just two quick questions. Just one on Villa Nova, when you start actually shipping ore out, are you going to be declaring that commercial production so it'll go to the revenue line or will it be backed out against capital costs?

I guess we haven't made that decision yet.

Okay. Okay. That's fine. And then, just, I guess moving on quickly to Efemcukuru, what's the current status of the land acquisitions?

We're basically done there. We have acquired the vast majority of the private land now. Yes, it's pretty much done.

Okay. Great. Thanks very much.

Thank you. Your next question is from David Haughton with BMO Capital Markets. Please go ahead.

Yes. Good morning and thank you for the rundown. I have a few questions probably for Ed, but, Paul, you can decide. It's in relation to the depreciable rate at both Jinfeng and White Mountain, quite a bit lower than what I've been anticipating and I saw some commentary with regard to preliminary allocation of purchase costs. Can you just talk us through what we should be expecting?

What we're expecting for Jinfeng is about $230 per ounce, White Mountain, $280, and for Tanjianshan $210.

Okay. So, then what we saw in the first quarter of around about 120 at Jinfeng is still awaiting the full allocation of the purchase price?

No. That's already includes the allocation of the purchase price.

Okay. I guess I got a little bit surprised to see the lower rate and it's quite a bit lower than what you just ran through, so I guess I'll just adjust it for the balance of the year. Having a look also on an accounting issue, TJS, there's quite a change between production and sales. Is this just a build up of inventory that you'd expect through timing differences to flush through the balance of the year or is there something else there?

The short answer is yes. Inventory in the first quarter did play a role in the financial numbers.

Okay. But we'd expect that to be caught up for the balance of the year?

Over the balance of the year that will be adjusted forward, going forward.

Okay. And another question, I guess for Norm. Having looked at the [met] issues at White Mountain, can you just give us an idea as to whether this is in a portion of the ore body or pervasive? Will it be sequenced in or out? Can it be diluted? How should we be thinking about it?

You should be thinking about it as definitely in a portion of the ore body, and this wasn't, to be honest, a surprise. Sino sort of knew and we sort of knew and it just turned out with the sequencing of stopes, partly as a result of the shutdown and development getting a little behind, et cetera, that was where we ended up mining predominantly during the first quarter. It can be avoided, it can be blended.

There may be some metallurgical things we can do in the plant with it, but it is kind of less than 10% of the overall ore body, and we pretty much know where it is. There may be some surprises down the road. But in terms of more or less, but we certainly knew that this material was there.

Do you have the option going forward to adjust your mining sequence to sort of blend it out or -- ?

Absolutely. That's our first line of attack, just don't mine so much of this stuff in a particular quarter. You don't need to once you have more stopes developed.

Right. And the final one, probably for you, Paul, I noticed in the press recently, that European Counsel or European Parliament has voted in favor of banning cyanide in mining. Where do we go from here? What's the implication for your assets and is it really going to be moved forward to a ban or is it just hypothetical at this stage?

It's the latter. The implication on us is zero. The Commission's formal direction is to enforce the existing directives, so it really doesn't have any significance on our assets at present or in the foreseeable future.

So, a couple of parties that take a view of anti-mining I guess have just got an avenue of venting their hot air and it's not going to go any further?

That's our take on it at present.

Okay. Thank you very much.

Thanks.

Thank you. Your next question is from Anita Soni with Credit Suisse. Please go ahead.

The question, first of all, congratulations on a great quarter. Just a question with respect to the new zone you're talking about at Kisladag. In terms of exploration, you said that was below the existing pit limits. How far below is it right now?

Well, it looks like it is sort of parallel to the south wall, and looks like it would daylight up into the south wall, so it's not entirely below pit limits. It is sort of a plainer zone oriented east-west along the long side of south wall basically.

Do you have any plans or section views on that?

Not really yet. We'll put it out in our update.

Okay. Coming out at the end of this quarter?

Yes.

Okay. So, I am not quite sure I understood whether or not the Jinfeng 323 Zone would be included in that exploration.

Tanjianshan 32. Yes, that will probably be a separate disclosure for a 323 at Tanjianshan.

Okay, so --

We may end up doing them all together, but we're both saying end of the second quarter.

So, we've got basically about two or three updates coming over the course of the end of Q2 into Q3?

Yes. Yes.

Okay. And I just wanted to ask a little bit more about the recovery rate improvements at Kisladag, and see if I could get a little bit more out of you in terms of the uptick. I think for the year we were -- you guys were looking at somewhere in the mid-60 level, and this one I am back calculating to be about 73%. Could you isolate how much of that was due to extra ore being placed on the leach pad in Q4, and how much was through the extra -- the actual process improvements?

Anita, if I can jump in for a minute here, I think it's really important and I'm not trying to be flippant about this, but it's a heap leach circuit, okay? So, trying to, on a quarter-by-quarter basis, to calculate recoveries based on what's going on the pad versus what's come off is a bit of a mug's game.

The guidance that we're giving now is the same guidance that we've given since the beginning of the project to the extent that oxide recoveries are in the low 80s, sulfide recoveries are in the low 60s. I think what we've seen over the last three or four years of operating, I think is -- summarized very quickly is that on the oxide recoveries we're getting the recoveries we expected and maybe a little bit better at perhaps, of course, a crush evidenced by the fact we put run of mine material out on the leach pad. I think as Norm has --

At a little bit faster rate.

At a little bit faster rate, yes. I think what Norm has highlighted, is as we're getting more and more sulfides, and we're doing, as a result, more and more column test work on the sulfides, we're seeing that there are certainly parts of the pit in sulfides that are giving us higher recoveries than the low 60s. Again, because we're dealing with such a large resource and such a large reserve, we're very sensitive to the fact that small changes here can have a material difference. And therefore, we're hesitant to give you revised numbers until frankly we're comfortable that we've done sufficient met test work to justify that.

But, you are going to see the swings from quarter to quarter on production reflecting just ounces that go out, the ability and the staging of putting areas under leach and those are going to be exacerbated, or have been exacerbated positively, obviously, by the introduction of this counter current leaching. So, yes, sort of long-winded couple of comments, but maybe Norm can give you a bit more detail on that.

No, I think you covered it well. It makes it difficult, because when you look at a quarter like this, you got oxide ore that went on the pad late in 2009, you've got the effect of the counter current leaching and the larger carbon columns. And, yes, maybe we're getting a little better recovery on some of our sulfide material as well.

Okay. So that metallurgical test work, when is that coming?

We're always running columns. We're always running columns, and now we're going to, I think, over the next few months we're going take a look at the results and try to see if we can pin something down, if we can pin something down.

And then just one last question with respect to timing. I didn't catch it quite Eastern Dragon. When is that starting up again?

Well, we're permitting right now and doing some exploration there. We're looking at the second half of this year.

Starting construction.

Yes.

And then, sorry, also at Kisladag, the comment that you made about getting to 12 million tonnes per annum. What was that? By year end?

By next year. We're on track for that.

For early next year?

Yes.

Okay. All right. Thank you very much.

Thank you. Your next question is from Kerry Smith with Haywood Securities. Please go ahead.

Thanks, Operator. Norm, if you, can you give me some sense to how many extra ounces you think you might have might have got off the pad from the intermediate leaching or is that tough to gauge as well?

I can't. Yes, no. Like I just said with Anita, it's all three factors combined, right.

Right. Right. Okay. That's fine. And the news on Kisladag, can you just give me some indication as to how many holes you have in that zone now, and can you give me some sense of the size of it?

We've got four, four holes in there so far. It's defined over --

200 metres.

Yes, a couple hundred meters of strike so far. Yes, and it's sitting, like I said, it's sitting in the south wall fairly steeply dipping and looks like projected up, it would daylight up into the south wall.

Right. Okay. Okay. So, it's sort of dipping away from the pit wall, as it were, to the south base I guess is what you're saying, right?

No. No. It's pretty steep. That south wall is dipping to the north, right.

Right.

The zone is dipping fairly steeply. Yes.

Okay. Okay. And the permits that you need for Eastern Dragon, can you just remind me exactly which permit? I know there's a bunch of them. But what are the main ones that you still would need to get there before you could start construction? Or can you start construction with those permits still in process?

Yes, you can. You can start construction with permits in progress. The main one is something called a project permit approval. That's the big one that we really want to have before we pull the trigger.

Okay. So, you would need that one in place before you would start construction then?

Yes.

Okay. Okay. And then we should just watch for that sometime --

Yes.

-- in Q2 or Q3 I guess.

Yes.

Okay. Okay. And can you give me any sense as to what the unit costs are at Kisladag now just on a per tonne basis? What's your mining cost and processing cost and the rest of that or do you have that handy?

I don't have that handy, but I'll get it for you.

Can you do that?

Yes. Kerry, if I could just jump in there. I was just thinking as you asked that question, and Norm answered on the contribution of the low -- the counter current. We actually could, it's probably a bit of a meaningless number, but we could actually calculate that, because, obviously, on a daily basis, we know the tonnes of solution that went into the first stage of leaching and we know the solution grade that came off that. So, we could actually calculate the number, but to be perfectly frank, we haven't done and I'm not sure it would do you -- I'm not sure what you would do with that number if we gave it to you to be honest.

But, I guess as do you the secondary leaching or this intermediate leaching, you will be able to progressively do that on new sections of the pad, so you should be able to get an ongoing benefit from that in terms of extra ounces going to the columns, right?

Yes. That's the way it works. Basically, if you remember, you were one of the few on the call, Kerry, that will remember Highcroft, it's what we did at Highcroft. You basically take your barren solution and you put it over the older ore that's already being leached, to sort of boost the preg grade a little bit and then you take that somewhat impregnated solution and top it up and put it on top of your fresh ore.

But, I think what Norm has said over and over again, is that the first quarter was the best quarter because it was when we started and we had a lot of opportunity. The effect of that will come off a little bit and reach sort of a steady state. But it'll be there as long as we're doing that form leaching.

And then we'll be looking at an upgrade in throughput as well.

Right, right. Okay. And I think I heard you correctly, Norm, on Perama, you said your intention was to start construction in the second half of 2011 and production in 2013, is that correct?

That's correct. Yes.

And we would just assume 24 months of construction or 18 months?

Yes, 18 probably.

18? Okay, okay. Great. Thanks a lot, guys.

Thanks.

Thank you. Your next question is from David Christie with Scotia Capital. Please go ahead.

Morning, guys. Most of my questions have been answered, but on Kisladag, can you tell me what the sulfide/oxide mix has been in the first quarter?

We're probably around 25% to 30% oxide.

And what will be it for the rest of the year? Is it going to stay at that mix?

Yes, I'd say 25%, yes, it is. Yes.

Okay. And the tonnage rate you did in the first quarter is that going to be the same for the rest of the year?

Yes. Should be close to it.

Okay. And the other question, how long is the construction period for Eastern Dragon?

About nine to 12 months.

Okay. And when you do your exploration update in the summer, will have you done enough drilling on those veins you're going to drill that are proximal to Eastern Dragon?

No, probably not. That will come out in the next update.

Okay.

Yes.

Thank you.

Yes.

Thank you. (Operator Instructions) Your next question is from Khaled Sultan with CIBC World Markets. Please go ahead.

It's actually Barry. Just wondering on Eastern Dragon of the expenditures were extremely low for a mine that's starting up in the next year. I know you guys can be pretty frugal, but is there any chance that you are slipping on the timeframe of that at all?

We like to be thought of as frugal, Barry. Thank you for that. Look, it's tough when you are permitting, isn't it, really? We're probably better able to answer that question one quarter from now, Barry.

Okay.

Those expenditures, that was an expected level.

This is cold, cold country up there, and traditionally they don't do much. Not saying that we wouldn't. But they don't do much in the winter months.

Right. Is the $11 million that you paid on the agreement, is that part of the $50 million that you've allocated for capital or is that over and above that $50 million budget you gave us a few months back?

It's over and above.

It's over and above. Okay. Thanks a lot. That's all my questions.

Okay.

Thank you. Your next question is from Steven Butler with Canaccord Adams. Please go ahead.

Hello, guys. It's Canaccord's annuity on Monday. Sorry. Jinfeng. The tonnage mill there, not too bad a mix as expected, I think, for the year for open pit and underground. When does this thing entirely transfer to underground, Jinfeng?

Well, that's sort of what we're looking at with the open pit study right now, right. The current plan was, I guess it's a two to three year pit right now. We think there is, we're pretty darn sure there's a bigger pit than that. So, you're looking out probably five years anyway, four or five years.

Okay. At that sort of mix of open pit underground production or will the underground ramp up?

Steve, that's what we're doing, really, is determining what that is. Because the one thing that's certain, the present plan is not going to be the plan that is going to be executed in the future. So, you're going to have to --

Okay.

-- bear with us and let us complete the exercise.

Sure. At TJS how were you doing? How comfortable are you guys on recoveries there? I think the implied recovery near Q4 levels, which is isn't bad -79%, I think. Were you expecting to still be higher on recoveries at Tanjianshan?

I think we'll slowly -- I think we'll get some gains there point by point. We're up around -- we're up just over 80 right now. We're right on where our budgeted recovery should be. We're doing a couple of different things. There's little things we can do in the processing circuit, nothing that's going to give us 5% jumps, but I think we can squeak out one and two percentages here over the next year.

Okay. And not to beat a dead horse on this intermediate leaching, but may as well try. For all the historical production guides dating back to 2006 when the mine started up, is this intermediate leaching circuit going to benefit leaching stuff that was under prior leach? Is that part of the idea as well? Or is it only on incremental ore stacked to the pad from here on? Or is it dating back to historical ounces put on the pad that can be a bit more incremental extraction or recovery from those as well?

Yes.

Thank you.

Okay. No, look, Steve, it allows us to -- we have been building up excess inventory on the pad because of leaching constraints. So, it is going to allow us to access excess inventory because we have more leaching capacity, more tonnes of solution going out.

Right.

This would allow us to, and obviously, the secondary benefit of that is we have a higher preg grade we're treating through the plant. I think it's also going to give us the opportunity to extend -- add more tonnes of solution to rock that previously perhaps we wouldn't, which frankly will allow us to -- we can sit on areas longer. Which if there is, indeed, opportunity to see increased recoveries, we'll derive the benefit from that but that's modest.

Right. Remind me again, you mentioned the low 60s was the current life of mine plan for sulfides? Low 60s, and what is it on the oxides life of mine plan?

Low 80s.

Low 80s.

Low 80s. Okay. Thanks, guys.

The next question is from Harish Srinivasa with Dundee Securities. Please go ahead.

Most of my questions were answered. Thanks.

Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to Mr. Wright.

All right. Thank you, everybody, for attending the conference call. We look forward to the next conference call and we look forward to further discussion on counter current leaching. So, with that, have a very good weekend. Thank you. Thanks, Operator.

Thank you. The conference has ended. Please disconnect your lines at this time and we thank you for your participation.