Eldorado Gold Corp (EGO) 2012 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Eldorado Gold Corporation year-end 2012 and fourth-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, 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 and in our annual quarterly Management Discussion & Analysis, available on our website 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 actual results to differ.

All forward-looking statements and information made or provided during this presentation are expressed qualified in their entirety by this cautionary statement and the cautionary statements contained in our press release dated February 22, 2013.

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

Thank you, Nancy, and good day, ladies and gentlemen, and welcome to our year-end and fourth-quarter financial and operating results conference call.

In Vancouver today, we have Norm Pitcher, Paul Skayman, Fabiana Chubbs, and the voice you just heard from, Nancy Woo.

Our format today will be slightly different than norm as I am presently in transit from Greece. I will in a few minutes bring you current on recent events in Greece that affect our business interests there. Paul Skayman will then provide details on our fourth-quarter and year-end operating performance. Norm will then follow through with commentary on our updated year-end reserves and resources statement, as well as taking you through our operating guidance for 2013. This will be followed by a review of financial results provided by Fabiana, and then we'll open up for questions.

As many of you are aware, the Company over the weekend was subject to what can only be described as a terrorist attack on its infrastructure at our Skouries project in northern Greece. Fortunately, none of our employees were subject to serious injury and the damage to our infrastructure was limited in financial terms to approximately $1 million of expense and will not impede our progress more than approximately two weeks. Indeed, the day after the event, our crews were actively cleaning up the site, and that continues through the course of the week.

This action was promptly condemned by the government and by all major political parties and by the broad Greek population. Investigation is being vigorously advanced by the country's specialized antiterrorist team, who have taken on responsibility for the investigation. Police have enhanced our security at our existing operations, and we are undertaking an independent review of our security systems, which will inevitably be further strengthened.

I have just spent three days in Greece and have met with the Prime Minister, Antonis Samaras, the Minister of Finance, Minister of Interior, and the Minister of Public Safety. The significance of this act is understood by all, and I am reassured by the commitment of the government to use all means to protect our investment and to bring the perpetrators of this crime to the courts.

In addition, I met the other members of the coalition government who have also made very strong public statements decrying the act of violence and reiterating their active support for the government in this matter and the support of our investment.

It is important to appreciate that although we continue at Skouries to engage a vocal minority who at this point in time question the merits of the project, the action of this weekend is quite different and reflects an element of society that is both criminal and violent.

In my meeting with the Prime Minister, we discussed the delay and political signoff of our Perama EIA, and I received an undertaking from the Prime Minister that this would be finalized and our EIA would be issued within 10 days.

Although the events of the weekend are disturbing, the overall response from political parties and from the society provides me with the reassurance that our investment is broadly welcomed and appreciated.

With that, I'll hand it over to Paul, who will take you through the year-end and quarterly operating results.

Thanks, Paul. Good morning, everyone.

Operations, I'll start with Kisladag. Kisladag had another good quarter. We produced 78,000 -- sorry, sold 78,000 ounces for the quarter, bringing our annual total to 289,000 ounces, which is pretty well exactly on budget. Cash costs for the quarter were at $324, giving us $332 for the year, a fair bit under budget due to higher-grade material being placed on the pad.

Inventory levels increased. Gold and inventory increased during 2012, and that will report to production during 2013.

At Efemcukuru, the mine and treatment plant are performing on budget. We traded 93,000 tonnes of ore at [9.3] and poured approximately 25,000 ounces into concentrate. We sold 37,000 ounces in concentrate during the quarter and we intend getting -- selling the rest of the inventory within Q1 2013.

Work continues on the metallurgical test work to determine the optimal process at the KTTP plant at Kisladag.

Tanjianshan continues to perform on budget. We produced 26,000 ounces during Q4 at $427 an ounce, bringing annual production in at 111,000 ounces at $415 per ounce. There is really nothing else to report on TJS.

At Jinfeng, we produced 21,100 ounces at $986 an ounce in the quarter, bringing 2012 production to 108,000 at a cash cost of $817. Higher costs reported were due to the lower-grade material being processed and the resulting lower ounce production. The quarter's production was low compared to budget as we anticipated access to open-pit ounces, but were delayed due to mining delays in the lower pit. Equipment was used to capital stripping in the interim.

Q1 is also expected to be low production quarter, but we expect to get into open-pit ore in Q2, which will increase ounces from there on.

At White Mountain, we produced 25,000 ounces of gold in Q4 at $607 an ounce, bringing out 2012 production to 81,000 ounces at $625. The ounce production was on budget at slightly higher costs due to increase of mine development requirements and back-door placement needs to sustain future production.

Vila Nova had a good quarter. We sold 220,000 tonnes of iron ore, bringing the total for the year to 604,000 tonnes at an average price of $76 a tonne. Operating costs over the same period were in the order of $60 per tonne. Iron ore prices recovered during Q4.

At Stratoni in Greece, the mine continues to perform well. It produced nearly 16,000 tonnes of concentrate at a cash cost of $843 a ton. Production was approximately on target.

Olympias, we continued commissioning the tailing retreatment plant in Q4. We realized our first concentrate sales in Q4 with approximately 800 ounces of gold being sold. Our commissioning continues, and we are starting to see steady improvement in production levels.

With that, I'll hand over to Norm.

Thank you, Paul.

I'm going to take you through the 2013 guidance. I'll talk a little bit about the updated resource and reserves statement, development projects, and onto exploration. Because of the amount that we have to talk about, I'm not going to go into a huge amount of detail on any particular project, but I would refer you to our guidance that was released in January and our press release that came out early this morning.

In 2013, we plan to produce between 705,000 and 760,000 ounces of gold at cash costs of $515 to $530.

Let's take a look, sort of mine by mine. We'll start with Kisladag, which will produce between 290,000 and 300,000 ounces at cash costs of $350 to $360 per ounce. Capital costs for the year are estimated at $200 million, which is roughly broken down into half sustaining and half construction for the Phase IV expansion. Phase IV expansion will continue in 2013 and is scheduled for completion in Q4 2014.

At Efemcukuru, we will produce between 125,000 and 135,000 ounces during 2013 at cash costs of $470 to $490 per ounce. Approximately 25,000 ounces of this production will come from existing concentrate stockpiles. Capital expenditures at Efemcukuru will be in the range of $44 million, of which approximately $15 million is a pretty rough estimate for modifications to KCTP.

On to China, Jinfeng in 2013 will produce between 105,000 and 115,000 ounces at cash costs of $800 to $820 per ounce. As Paul Skayman mentioned, we get back into the open-pit ore late in the second quarter. And capital expenditures for the year are estimated at $55 million, which includes approximately $22 million for capitalized waste stripping.

At White Mountain in 2013, we'll produce between 60,000 and 70,000 ounces at $760 to $780 per ounce. Generally, costs are up at White Mountain, largely due to lower grades as compared to 2012. And capital costs there will be in the order of $29 million, the bulk of which is for mine equipment and infrastructure, as well as capitalized development underground.

Tanjianshan will have production of 90,000 to 100,000 ounces in 2013 at cash costs of $485 to $500, and capital is estimated at approximately $10 million.

On to Greece, production at Olympias will come from the tailings reprocessing, which is part of our environmental commitment to clean up the Olympias Valley and return it to its natural state. This reprocessing will yield between 35,000 and 40,000 ounces at cash costs of $780 to $800 per ounce. Capital at Olympias for 2013 will be about $69 million, all of which is for development of the Phase II and Phase III operations, where we produce 400,000 tonnes per annum in Phase II, ramping up to 800,000 tonnes per annum in Phase III.

And of course, ultimate production levels at Olympias will be defined on the basis of ongoing resource and reserve work.

Stratoni, Stratoni will process 240,000 tonnes of ore, which will produce approximately 21,000 tonnes of lead and silver concentrate and about 40,000 tonnes of zinc concentrate. The capital costs there, about $5 million.

Vila Nova iron ore, they'll produce between 620,000 and 640,000 tonnes of iron ore at cash costs of $50 to $60 per ton, with also $5 million capital at Vila Noah.

Onto the more -- the pure development projects, starting with Perama where we will begin construction there following approval of the EIA. We have re-estimated cash costs to $288 per ounce there and construction capital total of $220 million, of which we expect to spend about $80 million this year.

At Certej, and I'll talk a little bit more about Certej when we go on to the resource and reserves, obviously the nature and scope of Certej has changed significantly since we started drilling both the link zone and other targets in the immediate area. We are currently proceeding with metallurgical test work on both the [aldean] process and alternatives. And once drilling in the main pit areas is completed, we'll be re-doing the mine plan and restating reserves.

Capital for 2013 will be around $26 million to complete land acquisition and to start on clearing and prepping tailing facilities in the plant site, as well as powerline and road access construction.

Skouries, we spent a little bit of time on already. The CapEx for this year is estimated at $132 million. Big-ticket items there are the process plant, site earthworks and prep, and tailing dam construction.

At Tocantinzinho, 2013 will be a year where we really look at the project and draft feasibility numbers to see if we can improve the financial performance of the project.

And then, Eastern Dragon, not too much to update there. Between the change in the government and Chinese New Year, there hasn't been a whole lot of business conducted there lately, I would say. The PPA still resides at PDRC, and we'll update you when we know more.

Onto resources and reserves, and I won't -- I don't intend to go through the tables in detail at all. I'd just make some general comments there. We did bring the EGU assets into the fold this year and increased P&P reserves significantly. We rebuilt the Skouries model; left Olympias the way it was, basically; and then with Certej, just to give you sort of an idea, we didn't include the -- what we're calling the historical resource now. Really just because of the magnitude of the change in the resource and with the increase of sort of around 1.5 million ounces there, we were sort of stuck between. We couldn't get the reserve out in time, but your resource model has changed enough. It's not really appropriate to use the old reserve, which was based on a smaller, older resource model.

So that's where we are. As I said, we'll continue with this metallurgical test work, get into the reworking of the mine plan, and expect somewhere around mid-year to be able to restate the reserves there.

At Olympias, also, we are doing, as we have explained before, a pretty significant core re-logging geologic interpretation exercise there. There is gold mineralization outside of the main lead zinc zones that has not been modeled in the past, so we're currently in the process of doing that.

And based on that, we'll rebuild the block model and then we'll redo the reserves and redo the mine plan. Again, Certej and Olympias probably come out about the same time, mid-year, third quarter, somewhere in that timeframe.

On the resource side, as I have mentioned, we had very good gains at Certej. Very happy with the initial resource, inferred resource, at Piavitsa, which turned out to be about 1.7 million ounces. We also gained in inferred at Efemcukuru and Tanjianshan. So a big focus of the year will be to convert these inferred up into the measured and indicated categories.

Last, but not least, onto exploration. Our 2013 exploration program, we have a budget of about $98 million, which includes approximately $52 million in capitalized spending, focused on ground fields exploration and resource drilling programs, and $46 million in expensed exploration.

By country, the budget includes $23 million in Greece, $22 million in China, $16 million in Turkey, and about $12 million each in Romania and Brazil.

In Greece, we plan about 48,000 meters of drilling in the Chalkidiki and Perama districts, which includes an aggressive program of infill and stepout drilling at Piavitsa, as well as underground and surface drilling to further define the Stratoni deposits.

In Romania, we're currently drilling with four rigs on the Certej deposit, further defining the extent of gold mineralization on the link zone and several other target areas. We had budgeted for approximately 20,000 meters of drilling in the first half of the year. Based on that, we'll design the rest of the year program for Certej.

And then, in the latter half of the year, our Romanian exploration programs will also focus on defining and drill-testing newly-acquired exploration licenses.

In Turkey, we plan 15,000 meters of new drilling at Efemcukuru, testing both the new zones of high-grade mineralization, identified in 2012 at Kokarpinar and further testing down-dip stepouts on the principal ore chutes in the present mine area.

China's exploration focus will be on resource expansion and brownfields exploration programs at our Jinfeng, Tanjianshan, and White Mountain operations. At Tanjianshan, we will be drilling extensions to the ore zones adjacent to the Jinlonggou pit, as well as following up on the 2012 high-grade discoveries just north of the old Qinlongtan pad.

At White Mountain, we expect new underground development to provide access by the second half of the year to conduct resource definition drilling of the high-grade north ore lands discovered in late 2010.

At Jinfeng, we'll continue to systematically drill test structure defined exploration targets, as well as complete stepout drilling along the known mineralized zones.

And in Brazil, our exploration focus is split between advancing our projects in the Tapajos district and pursuing new project opportunities in other prospective regions of the country.

That's more than I usually talk in a whole day, so I'm going to turn it over to Fabby.

Thank you, Norm, and good morning, everyone.

I will go through the financial statements, highlighting changes in significant accounts. Commencing with the balance sheet, we ended the year with a cash and cash equivalents balance of $817 million, compared to a balance of $394 million at the end of 2011. The $423 million increase in cash is mainly related to cash flows generated from operating activities, net proceeds received from the senior notes issued in December, the net usage of cash in our capital program, and dividend payments.

The $70 million increase in accounts receivable relates mainly to concentrate sales at Efemcukuru and at Stratoni.

On the liability side, our debt balance increased by $512 million as a result of the senior notes that were issued in December for $600 million, net of [$17 million] prepayment on our debt with Chinese banks. The acquisition of European Goldfields completed in Q1 of this year had a substantial impact on the property, plant, and equipment balance, which increased to $2.7 billion; goodwill, which increased by $474 million; accounts payable, which increased by $117 million; and deferred income taxes, which increased by $496 million.

Moving on to the income statement, net income attributable to shareholders of the Company, was $305 million, or $0.44 per share, compared to $319 million, or $0.58 per share, in 2011. The main factors that impacted our profit, compared to the year ended 2011, where high production costs due to high operating costs at our Chinese operation, higher share and administrative expenses and transaction costs as a result of the European Goldfields acquisition; net of lower income taxes spent.

Revenues from gold sales for the year were at the same levels as 2011 as the lower production levels at Jinfeng was offset by sales of concentrate at Efemcukuru at higher realized gold prices. Vila Nova and Stratoni contributed $95 million of revenue in the year.

Production costs increased $82 million compared to 2011, mainly as the result of the addition of the Stratoni production costs and higher operating costs at Jinfeng and White Mountain.

General and administrative expenses increased $11 million from last year, mainly as the result for the additional cost of our Athens office as a result of the acquisition of the European Goldfields.

On the income tax expense, the effective tax rate for the year was 29%, as compared to 32% in 2011 due to the recognition of $15.6 million of investment tax credit in Turkey related to Efemcukuru and the impact of Turkish lira exchange rate changes on the tax basis of our Turkish assets.

I want to bring to your attention that effective January 2013, the government of Greece has increased the corporate income tax rate from 20% to 26%. And the IFRS, we are required to assess our deferred income tax related to our Greek assets. This will result in a one-time tax assessment of approximately $130 million, or $0.18 per share, in Q1 2013.

On the statement of cash flows, during the year we generated cash flow from operating activities before changes in working capital of $448 million, compared to $502 million in 2011. Additionally, [phase] of precommercial production from Efemcukuru generated $55 million.

The main uses of cash relate to our capital program, $426 million; dividend payments of $93 million; and repayment of debt with Chinese banks of $70 million.

Those are my comments on the financial statements. I will turn the call back to Paul.

Thank you, Fabby. Operator, we'll open up for questions now.

(Operator Instructions). Cosmos Chiu, CIBC.

Got a few questions here. I guess, first off, on the increase in the tax rate in Greece, maybe if you can comment on if you have any stability agreements in place. And what I'm trying to get to, is there the risk of negative impact from any other future tax increases going forward?

Well, we don't have any stability agreements. I mean, it's not -- fortunately not. I mean, it's a European Community country and there are no stability agreements in countries that are a member of the EU.

I think we've commented previously that we have advocated to the government that it would be appropriate for there to be a royalty -- or revision to the mining law and a royalty applied. That hasn't happened yet. I would expect at some point it will and I would expect it, however, to be at an appropriately pragmatic level.

I think it's important to understand that the increase in taxes, corporate taxes and personal taxes in Greece, was very much as a result of pressure from the troika. It wasn't necessarily something that was generated internally from the Greek politicians themselves.

Certainly. And maybe if I can dig deeper into it, in terms of the $130 million charge that you'll be taking in Q1 2013, I'm actually surprised there's a one-time charge at this point in time, given that you haven't had any production yet in Greece. You haven't made any profits yet in Greece, yet it seems like you have to take a charge. So maybe if you can walk me through maybe the nature of that and if it's actually going to be payable.

No, Cosmos, if I may clarify, this is an accounting entry and not -- it's a non-cash item. At the time of acquisition, we have to recognize the liability based on the purchase price that was allocated to the assets. Now, that liability was calculated at the 20% deferred tax and now has to be recalculated at the 26%. And that's why you have the charge. I mean, it's an accounting entry that we had to do. It has no cash impact.

Okay. Great. Maybe if I can switch gears a little bit, at Efemcukuru, I guess, in Q4 2012 with some of the sales of the concentrate, we got our first look in terms of what costs could look like, and indeed that was, what, $583 per ounce. In your 2013 guidance, you're looking for costs, which are lower, at about $470 an ounce on the lower end. If you could walk me through in terms of what steps you plan to take in 2013 in terms of lowering that cash cost, I think that would be helpful.

Well, I guess we're seeing a more consistent production. Q4, we're still sort of messing around with precommercial issues and the inventory that would have been sold -- that would have been generated at a higher cost.

Yes, another significant item, Cosmos, is we now have our -- we've now got the backfill plant operating basically with the way it should be. And before that, a good portion of last year, anyway, we were actually placing waste rock -- cemented waste rock underground with equipment. So as you can imagine, that was more expensive.

We've also got the underground ore bins finished now, so everything is going through the underground crusher, as opposed to previously. And part of last year, we were trucking out to a temporary crusher and then tracking back to the middle. So those costs basically go away.

Okay, great. And maybe in that context, Norm, I noticed that your reserve grade at Efemcukuru actually decreased year over year. The reserve grade -- the new reserve grade is actually lower than what you had been kind of putting through as a head grade last year. How should we look at that in terms of 2013 and onwards?

Well, I mean, we gave grades for 2013. It all depends at Efemcukuru where you are mining, right? I mean, the north ore -- the middle ore chute is higher grade than the south ore chute. I guess about the same as the north, but the north is a little bit narrower. I think going forward, you have to sort of use the -- assume the average reserve grade going out.

But in 2013, should I be looking at something that's similar to 2012 or should I be looking for (multiple speakers)

Hang on a second. No. I mean, in our guidance, we gave the grade of -- I mean, this year we're processing about 400,000 tonnes at 9.3 grams per tonne (multiple speakers)

Okay.

Yes. And then really, again, as I said, it's a function of where we're mining. Yes.

Great. Thanks a lot and have a good weekend.

Dan Rollins, RBC Capital Markets.

Thanks very much. Just a couple of questions for you guys. Norm, I was just wondering if you could touch on the change in the, it looks like, reserve grade at White Mountain. A pretty big drop there, about 3.68 on the last reserves, down to 3.21. Has there been something going on there with the change in the block model at White Mountain?

No, not really. Again, it was kind of where we are mining and where we are sort of -- and where we are headed to now. I think of note there, Dan, is take a look at the inferred resource at White Mountain, which is (multiple speakers)

North of 5, yes (multiple speakers), yes.

(Multiple speakers) and sort of remember that -- remember the long section, if you saw it. There is a pod down to the north that we are just starting to access now that's been inferred. We weren't able to drill it this year, basically because of access constraints. We will be able to this year, and I expect we'll bring some of that up into M&I and hopefully into proved and improbable, which I think will at least get our grade back up to where it was before.

Okay. Perfect. That helps very much. And then, maybe just touching on the payables. I know, if you could touch on it, what are you seeing payablized for the concentrate produced at Efemcukuru right now? Is in line with what you had said at the mine tour?

Yes. I mean, yes.

Okay. And then at Olympias, is it -- so if we look at a value there of roughly about 50% of the gross value you're getting on a net basis?

A little better than that, if I understand the statement. Yes, we're doing a little better than 50%.

Perfect. And just want to touch base, just on one of the inferred resources. At Kisladag, there's a pretty large inferred resource there, about 4 million ounces. I know it's lower grade, which may make it amenable to the dump leach. Do you expect some of that to start coming in or is that peripheral to the current pit design?

It's -- yes, a little bit of both, I guess. I mean, some of it's peripheral and some of it's below.

Okay. So that will -- some of that will start coming in as you drill down and do -- you take the pit down a little bit deeper.

Yes. Presumably, yes.

Okay. And at Kisladag, are you still seeing this area, which you viewed as waste material before, where you're getting a much better grade -- sort of the impact we saw last year? Are you still seeing that or has that sort of dissipated now?

Well, it's probably already been brought in to M&I, and based on the drilling and the information we had, [bauch] brought into M&I and reserves already. So we're not -- I guess we're not now seeing a lot of waste -- what we thought was waste turned into ore now.

Okay, so that was more of a one-time event.

Yes.

Okay. Perfect. That's great. Thanks very much.

John Kratochwil, Canaccord Genuity.

Hey, guys. I've got a quick question here on Efemcukuru, the reserve update. I noticed -- I know some people had mentioned the grade, but I noticed the ounces came down quite a bit, but the gold price assumption went from $825, I assume, to $1,250 as there was no other mention in the reserve notes. Is there -- could you explain what the reason was behind the reduction in ounces there?

Well, really, I mean, it's based on grade, and your grade is -- at Efemcukuru, you've got a fairly well-defined vein structure there, and really, changing the gold price does not have much effect. It's probably one of our least sensitive to gold price change projects.

Okay.

Yes. So it's really just more -- we've done a lot more drilling, and there is more information based on mining, and that's where we are.

Okay. Okay. Fair enough. That's pretty much my question. Thanks.

Salim Ben Mansour, BMO Capital Markets.

Thank you and good afternoon, Paul and team. Just an update on Skouries. I know following the unfortunate events on Sunday, there was some more positive news that came up on the wire yesterday announcing a fast track. Could you comment on that?

I think the article you're referring to reflects what I mentioned in my introductory remarks. I mean, as part of our discussions, myself and the Prime Minister, regarding not only Skouries, but extended to the Perama environmental impact assessment approval, it was made clear that the Prime Minister is supportive of, frankly, finishing off the signoff of that approval within the next 10 days. And it was an undertaking he made to me and then subsequently made to the news media. So obviously, we're looking forward to seeing that.

Okay. Thank you very much.

You're welcome.

(Operator Instructions). Kerry Smith, Haywood Securities.

Thanks, Operator. Paul, do you have any other demonstrations or gatherings of people that are opposed to what you're doing in Greece at any of the other projects (multiple speakers) or has it only been at Skouries?

No. No. The demonstrations are limited strictly to the Skouries project.

And as I've said before, as you appreciate from the trip last year, it's a greenfields project. We have been and continue to engage in tree cutting, and it's the type of location that's optically attractive. The operations at Stratoni or exploration at Piavitsa or operations of Olympias have not been subject to any demonstrations at all.

Okay. And for Perama, if you get that EIA approved in 10 days or two weeks or whatever, then at that point in time you would be prepared to start construction immediately, then, is that (multiple speakers)

Well, we have a technical report that has to be approved, as we did at European Goldfields. And when we acquired European Goldfields, we acquired it with an EIA. There's a technical report that then is submitted to the Ministry of Environment within the turnaround time, and on that is usually very quick. That report is essentially prepared and will be submitted within a week of approval of the EIA. Once that is approved, then we would be in a position to start construction activities.

Okay. And so, then they actually have to approve that technical report or you just submit it for their review, effectively?

Yes, there is an approval required, but it is perfunctory. I mean, it doesn't really provide any new information. There isn't a detailed -- there is no new information, per se.

Okay. Okay. And then, at Olympias, you talked in the disclosure for this quarter, about the Phase II and III, which is 450,000 tonnes going to 850,000 tonnes a year, that that could be increased.

Yes.

Could you talk a bit about what the magnitude of that increase might be and why it's contemplated that it would increase?

Well, I think, I mean, Norm will probably jump in here and add a few comments, but it really relates to the fact that the Olympias ore body, when modeled, was modeled as a lead zinc ore body.

And this is something that we didn't appreciate, frankly, until after we acquired the assets. And we're looking in detail at the drill hole database. I mean, there is substantive gold values that have not been included in the geological model, and this brought a large exercise we have underway right now which includes relogging of 70,000 meters. We're optimistic it's going to change the geological model and change the resource model in a positive manner, and then, inevitably, affect reserves which ultimately affect production rate.

On top of that, we have, as Norm has highlighted, we are off to a good start with Piavitsa with our first season of drilling, putting 1.7 million ounces of resources on the books.

So I think between the two, the likelihood of an increased reserve leading to a larger production rate at Olympias and the impact to Piavitsa, there's a very real chance that the ultimate production rate at Olympias plant would be -- could be significantly larger. But, I mean, that's work underway. It won't affect Phase II. We don't see it impacting Phase II at this point.

Yes. In addition, Kerry, you've also got -- I mean, the ore body is still open down plunge, and there was a drill hole drilled quite some time ago that was about 650 meters down plunge that hit the ore body. So it's basically open between there and open down from there, as well.

Okay. Okay. And then, at Efemcukuru, if you take your guidance, Norm, for this year in terms of cash costs and production and tonnes milled, you can kind of get a rough sort of $150 a tonne milled all-in cost. How would that cost change by, say, 2014 or 2015? Where would you think the cost -- the total cost per tonne milled would kind of stabilize out at for that project?

You know, I think we are probably getting close to that. Run me by your numbers again.

I just took the cost per ounce, the middle of the range, $480 an ounce, times the ounces, divided by the tonnes milled, and that gives you a cost per ton. As a rough.

Yes, I mean, the other thing, Kerry, you have to think about a little bit is that we're presently working on looking at potential expanding Efemcukuru, so that's nothing that's going to affect 2013 or 2014, but it may very well come to effect in 2015.

Right, okay. But so (multiple speakers)

So you would, given the relatively large fixed-cost base, you would see a (multiple speakers)

Yes, a bigger drop. Right. But so, let's say, for 2014, Norm or Paul, do you think the cost per tonne would be significantly lower or modestly lower than the 2013 number?

I'd say probably similar.

Similar. So in that [150] range. Okay. So really, it would be the expansion that would bring that number down. That's probably kind of a reasonable run rate at the existing through-put rate of 1,200 tonnes a day.

Yes.

Okay. That's really great. Thanks a lot.

Anita Soni, Credit Suisse.

Good afternoon, guys. My usual boring question, Norm. What is the strip ratio at Kisladag?

Oh, Anita. What would we do without you?

Yes. The nitty-gritty.

Sometime, Anita, I'm just going to say I have no idea. This year's strip ratio is about around 1.7 to 1.

And sorry, I was looking for last quarter as well.

Last quarter, it was a little higher at 2.5. We were moving some extra waste because we recaptured the 12.5, so we turned everything over to waste removal, using the extra capacity that we had while we couldn't mine ore. So it's 2.5 to 1 for Q4.

All right. Thank you.

(Operator Instructions). There are no following questions registered at this time. I would like to return the meeting to Mr. Wright.

Thank you, Operator, and thank you, everybody, that has participated on the call. We appreciate you attending a changed schedule for us today and wish you all a good weekend.

Thank you. That concludes today's conference call. Please disconnect your lines at this time, and we thank you for your participation.