Eldorado Gold Corp (EGO) 2013 Q1 法說會逐字稿

Good morning ladies and gentlemen. Welcome to the Eldorado Gold Corporation first quarter 2013 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 and analysis available on our website and on 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 expressly qualified in their entirety by this cautionary statement and the cautionary statement contained in our press release dated May 2, 2013.

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

Thank you Nancy and good morning ladies and gentlemen. Welcome to Eldorado Gold's first quarter financial and operating results call. Joining me this morning in Vancouver are Norm Pitcher, President; Fabiana Chubbs, Chief Financial Officer; Paul Skayman, Chief Operating Officer; and of course Nancy Woo, Vice President, Investor Relations.

We'll follow the usual format. Following a few comments from myself, Norm will provide some color on the first quarter operational performance and Fabi will then take you through the financials.

I would like first to comment a little on how Eldorado views itself in the context of a continued volatile gold price environment, and specifically more recently when we've seen some sustained downward pressure to lower levels. Frankly, this is the sort of environment that sets El Dorado apart in terms of its fundamental characteristics, strong balance sheet, low-cost operations, delivering healthy cash flow, high-quality development and expansion projects that are investable at much lower gold prices. And that's what we're experiencing today.

At the end of the quarter, we ended with in excess of $825 million in cash and the term deposits and an unutilized revolver of $375 million. And our mines continue to perform generally perform to plan. As a result, we are delivering free cash flow from the operations.

At the end of each year, we engage in a rigorous budgeting process which allows us to estimate with a high level of confidence what our operating cost and our sustaining capital levels are going to be for the next year. Generally speaking, we deliver results which correspond with these numbers.

Sustaining capital plans and budgets are developed in a manner to be responsible and timely and effective in terms of how capital is deployed through the year for the optimum performance of the assets over its life.

Simply because the gold price has dropped $200 an ounce, we will not suggest to you that this provides the opportunity to reduce costs by $100 an ounce. If that opportunity existed, rest assured we would not wait for the gold price to decline by $200 an ounce to grasp it.

Also, in regards to sustaining capital, you don't invert [a commas] cut sustaining capital. You at the very best defer it at a cost, and that cost is reflected in diminished operational performance and additional cost when that capital eventually has to be invested. So, we will not be cutting sustaining capital.

As it is our custom after the second quarter, we will provide you with firm targets for operating costs, production rates, and an updated view of capital spend and construction projects across all of our expansion and construction. This will of course -- as a group, it will reflect the progress on the sites as well as our view on the likely metal prices through the period of construction.

As I have indicated previously, my view at this time is that if there is to be a reduction in -- sorry -- there's likely to be an extended period of reduced metal prices, our response would be simply to perhaps prioritize and slow down on certain capital spend on lower priority projects.

I'd now like to make a couple of comments on the Perama Hill Project. As you are aware, we are awaiting approval from the Greek government for our EIA for the Perama Hill, and as many of you are aware, the prime minister of Greece a number of weeks ago publicly stated that his government was going to approve the Perama Hill Project within 10 days. Well, that hasn't happened. At this juncture, all I can say is that we are continually actively engaged with senior members of the government and our conclusion remains at this time that the government is committed to seeing the development of the Perama Hill Project and, of course, the delivery of our approved EIA.

Onto the Eastern Dragon Project which has been a frustrating permitting exercise for all of us. And as I've said previously, we have to wait patiently for the better part of six months and through this period, where there's been a transition of central and provisional government personnel. In this time, we have engaged senior ministerial support from the Canadian government to assist us in the resolution of this impasse. I'm very pleased to say that through the active intervention of Minister Fast and the Canadian ambassador in Beijing, meetings with both provincial and central government authorities in recent weeks have, I believe, created the will and a mechanism through which this impasse can be resolved. The provincial government of Heilongjiang, the Canadian Embassy staff of Beijing and ourselves have committed to forming a working group designed to resolve the outstanding issues enabling the resumption of construction activities at Eastern Dragon. The working group's first meeting is scheduled for next week.

Finally, before handing over to Norm, I'd like to just make a couple of comments on the Kisladag expansion. As you know, part of the expansion requires the approval of a supplementary EIA to complete our construction activities here and to operate at the higher production rate. It now appears that the approval will not be delivered until Q4 of this year rather than Q3, as planned. This unfortunately will inevitably see the push-up/start-up that was originally planned for the end of 2014 into early 2015.

With those comments, were lengthier than normal, I'll pass over to Norm.

Thanks, Paul, and good morning, everyone. I'll actually be a little briefer than usual. It was really a pretty normal quarter for us. On the operations side, Kisladag produced just a little over 70,000 ounces at a cash cost of $334 per ounce which was over the budget for ounces and under for costs. Efemcukuru produced 19,856 ounces and sold just over 50,000 ounces at a cash cost of $582. The difference there between the sold and produced ounces is of course the concentrate that we had stockpiled both at Kisladag and Efemcukuru. Both ounces and costs were below budgeted targets.

The main issue affecting Q1 production was back-fill and availability and delivery which has improved significantly after modifications were made to the system.

At Tanjianshan, we produced just over 26,000 ounces at $442 per ounce. Ounces were on budget while costs came in about 9% lower than budget.

At Jinfeng, we produced 21,742 ounces at $832 per ounce, doing better than budget for both ounces and cost. We expect production from the open pit to ramp up this quarter as we start to get into the main ore zones in the open pit. I'd also like to mention that the underground at Jinfeng is going very well, where ore, tonnes, grade and development meters are all exceeding budget.

At White Mountain, we produced 20,915 ounces at $634 per ounce which is a very good start for the year. At Olympius, the tailings re-treatment project treated 89,000 tonnes of tailings and produced 4827 payable ounces of gold. We expect to be in commercial production by the end of the second quarter.

At Vila Nova, we sold 130,000 tonnes of iron ore at a realized price of $117 per tonne versus operating costs of approximately $66 per tonne. As mentioned in our disclosure, there was an incident at the port in the first quarter that is owned by Anglo Ferrous, a third party. Basically, the ship loading facility was severely damaged which will affect our ability to ship ore out for the rest of the year out of that port. There is another port nearby, a public one that we will be able to gain access to. Right now, we're just trying to determine how many shipments we'll be able to get through from the public port.

Stratoni sold 13,968 tonnes of concentrate at $995 per tonne versus operating costs of $829 per tonne.

On to development. I'm pleased to say that we have hired a Vice President of Capital Projects, Rick Thomas, who will be in charge of all the main capital projects for Eldorado. At Kisladag phase 4, procurement of long lead time equipment is on schedule. The first shovel and haul truck has arrived last month. The focus between now and receipt of the EIA will be on engineering and integration of the new mining fleet.

At Olympius, refurbishment of the underground is proceeding on schedule as is the development of the 8 kilometer Stratoni decline.

At Skouries, we've recovered from the arson attack in February and all project site facilities have been restored. Construction of the underground portal is essentially complete and work on the decline will begin this quarter. The contractor is currently being mobilized to start on earth work and civils construction at the plant site.

Briefly, on exploration, we drilled about 27,000 meters during the quarter, 15,000 of which were at the Certej project in Romania. In China, drilling at near mine targets at both Jinfeng and Tanjianshan and in Greece, we'll start drilling Piavitsa in May and the Olympius re-logging exercise is nearly completed at this point.

With that, I will turn it over to him Fabiana.

Thank you Norm, good morning, everyone. I will go through the financial statements, highlighting changes in significant accounts.

Commencing with the balance sheet, we ended our quarter with a cash and cash equivalent balance of $669 million compared to $817 million at the end of 2012. The decreasing cash balance is the result of cash and related operations net of amount invested in term deposits and uses of cash for dividend payment and capital program.

The decrease in inventory, as Norm mentioned, relates to the sales of Efemcukuru concentrate stored at Kisladag. At quarter end, all concentrate stored at Kisladag has been sold.

In January of this year, the government of Greece enacted legislation increasing the corporate income tax rate from 20% to 26%. As required by IFRS, when an income tax rate changes, the deferred tax liability must be adjusted to reflect the change. This non-cash adjustment is required to be charged to income tax expense. This resulted in a $125 million increase in the deferred tax liability balance and an impact on profit for the quarter of $125 million, or $0.17 per share.

Moving onto the income statement, we reported a loss attributable to shareholders of the Company of $45 million or $0.06 per share compared to a profit of $68 million or $0.11 per share in the first quarter of 2012. Excluding the $125 million adjustment related to the change in Greek tax rate, the adjusted profit for the period was $80 million compared with $68 million for the same quarter in 2012. The difference in adjusted profit year over year was mainly due to higher gross profit from gold mining operations during the quarter.

Revenues for the quarter of $338 million are up $39 million from a year ago due to higher sales volume at Efemcukuru, partially offset by lower gold prices. Production costs increased by 36% compared to the first quarter in 2012, reflecting higher sales volume at Efemcukuru and unit cost increases at our Chinese mines due to lower grades and gold production.

On the income tax expense, excluding $125 million adjustment, the effective tax rate was 36% for the quarter as compared with 27% for the quarter last year. The increase in the effective tax rate over the first quarter of 2012 was due to an increase in nondeductible expenses in Canada and the impact of foreign exchange fluctuations in Turkey.

On the statement of cash flows, during the quarter, we generated cash flow from operating activities before changes in nonworking capital of $140 million compared to $103 million in the first quarter of 2012. The main uses of cash relate to our capital program $101 million, dividend payment of $50 million and investment in term deposits $159 million.

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

Thanks, Fabi; thanks, Norm. Operator, we'll open up for questions please.

(Operator instructions). Anita Soni, Credit Suisse.

My question is with regards to the Kisladag him and commentary that you had about the start-up in early 2015. How should we think about the throughput rates in 2014?

You can think about them the same way we're thinking about them right now. We haven't -- we will give guidance -- better guidance or more complete guidance as it becomes available. We haven't yet revised our forecast production for 2014, Anita. Once we have that, we'll give that to you.

Sure, so -- but the --

I mean, what we're giving you now is just very recent in terms of our assessment based on our people in countries view of one we're going to see the EIA approved and what -- I think what we said consistently is that if the EIA gets delayed, then the schedule will get pushed out. So you can take a rough cut yourself, if you wish. We are probably looking at about a quarter's delay or thereabouts on what was originally envisaged.

Alright, thank you.

Cosmos Chiu, CIBC.

Good morning and thanks for hosting the call. I've got a few questions here. Maybe first off font for Olympius, I noticed that there were 4000 ounces produced in Q1. No sales in terms of the concentrate, Paul or Norm, if you can give me some guidance terms of when we should be expecting some kind of sales sometime in 2013.

The material was sold. It's noncommercial, or pre-commercial I guess. We expect to announce commercial production in Q2, so will be registering sales at that point.

Okay so all 4000 ounces of production were sold in Q1.

Yes.

And the terms of that contract is kind of similar to what you kind of guided to in the past I would imagine.

Yes it is, yes.

Maybe in terms of Efemcukuru, to confirm most of the inventory that was remaining at the end of 2012 has been sold, right?

That's correct. We are just left with a working inventory associated with sort of moving material from the site to the port and getting it on vessels, etc.

Okay. And then to kind of confirm, the cash costs of $582 an ounce, that was given in the press release yesterday. That includes all the smelter charges and everything else that -- all the off-site costs that you've incurred at Efemcukuru; am I correct?

Yes it does.

Okay. And then, if I were to -- I did some detailed calculation on it. I guess if you multiply out the tonnage and the grade and the recovery in terms of what's been given in the press release yesterday, it doesn't really get me to the number in terms of -- that you've kind of looked at in terms of production. I guess I'm missing the payability factor. Is that correct?

That's correct, yes.

Well, yes, what we are giving there, Cosmos, for recovery is recovery into floatation concentrate.

Okay. And then maybe looking at your -- Paul, you talked about the CapEx, but in terms of your exploration budget, have you had a chance to kind of look at that as well? Because look at the AGM material that was sent out yesterday. If I were to look at how you calculate all-in costs and multiply out the exploration cost per ounce, I get to somewhere for the year in terms of expectation of about $50 million in exploration expenses. I think before, you had previously guided to closer to $98 million for the year. Am I correct in thinking that you might be scaling back on exploration?

Well, there's two questions there, Cosmos. One is just, how does the industry actually report sustainable cost as it relates to exploration?

That's true.

And I think -- so that's -- we have taken a stab at that and we don't necessarily include grass roots exploration in that calculation.

You know, are we looking potentially at some trimming of exploration this year? That's a possibility, but if we elect to do that, we would comment more at midyear; and if there is anything, it would certainly be sort of the trimming of the early grass roots stage of exploration. It certainly wouldn't be anything around the mine sites or our projects.

Great, that's all I have. Thank you.

David Haughton, BMO Capital Markets.

Thank you for the update. Just returning to Efemcukuru, do you still intend to process that material at Kisladag? And what do you need to do if you are to do that to get the operation going?

Well, we are right now looking at, and have been for a few months now looking at the circuit at KCTP to determine what changes need to be made to that facility to get it working properly. As we said before, we're getting pretty good concentrate terms on this material. It's a high-quality concentrate and it's, I'd say, fairly in demand. So, certainly KCTP is going to have to be able to beat those in terms of both recovery rates and operating cost. And that's -- we're not going to know that until we finish what we are doing now, which is probably a quarter or two off anyway.

Right, because there were a number of issues (multiple speakers)

It'll be this year.

If I could just jump in, David, I mean I'll just -- what we are seeing in terms of payabilities on this concentrate and the level of interest for this concentrate in terms of long-term contracts, this gives us payabilities that are frankly far in excess of what we ever expected to get from KCTP. So, KCTP is not going to have to be just fixable to what was original design. To be frank, we are going to have to see it bit be improved to an even higher level, and we're going to have to have the confidence and believe that the investment makes sense, right?

Well, that's convenient to have that flexibility.

To be perfectly blunt, the sorts of payables -- payabilities that are available on the concentrate right now, if we had known that 3 or 4 years ago were available, we never would've built KCTP in my opinion. We would have simply shipped the concentrate.

All right. Elsewhere at Kisladag, I understand from what you were saying earlier that it's still very preliminary. But, should we be thinking about any additional capital as a consequence of a potential delay in the startup of the expansion?

It would be minimal, David. I mean, as part of our midyear review, we'll be giving you updated guidance on scheduling capital estimates for all of our projects. But in terms of an additional three-month delay, shall we say, in reaching the starting point, that will be fairly modest. It will be owners cost really.

Right. Flipping over to Greece, if I may, Skouries -- what do you need to start mining at Skouries? Are there any permits or licenses that you need to be able to start mining and processing at this stage?

Well, there's a number of licenses that we get through the process of building and constructing any project, whether a blasting license or installation like this. There is a number of small licenses. But, we're not at the stage right now, as you are aware, David, I mean, that has (multiple speakers)

Still need to build a plant.

We've got to build a plant. I mean, the waste that comes out of that pit, which is pretty minimal, frankly, goes to the tailings dam, for tailings dam construction.

Okay. And from what you've seen, getting those bits and pieces, whether it's a blasting permit or some construction permits to be finished off, etc., you don't see any major impediment at this stage?

No.

All right.

I think, the Council of State decision in the last month is quite significant in terms of sending a very clear message across all the government agencies that this project has the full support of not only the government but, obviously, the judiciary.

And since the really nasty incident, have you seen the protests, etc., die down? Have you seen any change in the attitude of the NGOs, etc.?

Yes. I think they are slowly starting to lose steam, and certainly, the Council of State will -- decision will help that. And, I think what's going to help even more is that we are now mobilizing the contractor. There's going to be a significant amount of people and equipment on site all the time. So, I think it will die down.

And David, I think what you've got within that dynamic, and there is an ideology there, that it's just frankly fundamentally against what we represent. They don't -- they're sort of disrespectful of law and order. They don't really care about Council of State decisions. They don't care about civilized behavior. The forces that exist in a democracy will deal with those. But I think, as Norm described, I think the more rational elements of the opposition are certainly seeing the significance of the Council of State decision as it relates to this investment.

Okay, thank you very much.

Dan Rollins, RBC Capital Markets.

A couple of questions, one on Kisladag -- the grade was pretty high of 1.29 versus the 1.08 that you were guiding to. Is this a similar incident that we saw last year where you were into the pit and actually ended up going through some high grade that wasn't modeled, or is this part of the planned mine sequence for the year?

This is planned material. We are pretty well exactly on budget for the quarter, so we're obviously mining some lower-grade material later in the year.

Okay perfect. And Paul, maybe you could touch base on -- you mentioned that a working group has been formed for Eastern Dragon to get through the impasse and that it needs to get it through a couple of key issues. Could you maybe describe or let us know what some of those issues are?

Well, I think I'll pass this over to Norm, but the principle parameter was referred to as the PPA. That's really what's been holding us up and this is a permit that comes out of the provincial entity, the PDRC.

Yes, I think probably the main one comes back to the -- who grants this permit? Is it the provincial PDRC, or is it the national NDRC? PDRC had at one point several months ago sort of said well, this needs to go to NDRC for approval. NDRC has sort of looked at it informally and given the indication that no, this should be done at the province which was -- and it was really something that Minister Fast brought up as well in the meeting he had with the Party Secretary.

So I think that's the big one. That depends partly on what's included in the overall project capital costs. That's the main one, really.

I think our general sense, just to carry on from Norm's comments, is that in the discussions that were held with Mr. Fast, both provincially and in Beijing, I think the issue of -- I think the issue as to whether it's NDRC or PDRC is less of an issue now. I think it seemed to be that the consensus view was yes, this is a PDRC ball to handle.

Okay. But that being said, I guess a while ago it looked like PDRC was willing to provide those permits and then there were some changes. What's the situation at PDRC to issue the permit? Is there something else that's a key item that needs to be addressed, or is it just getting through the bureaucracy?

I think getting through the bureaucracy, but, again, as I tried to describe, we've been through a period of six months here where the outgoing group weren't really prepared to do anything and the incoming group weren't prepared to do anything until they were sitting on their chairs. We've gone through that. We've got a new people that we are dealing with provincially who are open and recognize that this is something that should be dealt with. And again, in central government, we seem to have a desire to see this resolved as well. And, the impetus provided by -- [seated] ministerial intervention by the Canadian government, bringing it to the attention both in Beijing and Harbin that this matters to the Canadian government that this get resolved I think is -- I'd say provide the impetus to create this working group which I think is what's needed.

I mean we will have -- Eldorado's participation, we'll have the Canadian government is sitting there and we'll have the provincial government. Certainly, the feedback we've got, there seems to be a commitment and a recognition that time does matter here. We have taken a very conservative view in terms of pushing this -- I think, a pretty conservative view in terms of pushing the startup of this to late next year. You know, we could actually get problems resolved in the next couple of months, and I'm not saying we will. It's still going to be a bit of a stretch. Then, we could potentially improve upon that schedule. So -- and everybody is aware of the seasonality as it relates to this project.

Okay. So that being said, latest you could get the permit to maintain your guidance for next year of late 2014 start-up.

No. Look, what we've assumed is historically is that it would take us basically all of this year and the early part of next year to resolve the permitting impasse, allowing us next summer to basically complete the construction for start-up late 2014. What I'm highlighting now is that maybe there's a slim chance for us to do a little bit better than that. I mean, if this working group frankly quickly comes to what the conclusions are, maybe we can do a bit better than that.

Okay perfect. And then just maybe to keep on the permitting side, obviously by your opening remarks, you are disappointed at the speed at Perama Hill. What sort of change between the Prime Minister and the President's very vocal outline of a 10-day commitment to getting the EIA and the realities that have set in since then? Is this becoming a political football for you guys in Greece right now?

So, I mean the -- our understanding is that the project has basically gone through full environmental approval and it's essentially waiting political sign-off. This is a coalition government and there are realities associated with a coalition government that affect eventual sign-off.

And, I guess, look, Dan, I mean to be blunt, obviously, we have ongoing direct discussions with the government, and it's not appropriate for us necessarily to comment in any detail. Suffice it to say, we are not less -- left with any impression that there is a reduction by the government to see this project approved and see this project developed. You know, we didn't make the commitment that this was going to be done in 10 days. We were very much responding to the Prime Minister's action, not at our behest.

Okay, and then just maybe one last question, just on Efemcukuru, last quarter, Q4, there was a lot of production, I think 30,000-plus ounces. Was some of that just -- was that just in the way you guys accounted for that inventory sitting at Kisladag? You basically said once you sold it, it was then production. Is that what happened there?

Yes.

Yes, that's correct.

And then I guess there was none of that in this quarter?

No, there was, yes. I mean, we produced about 20,000 ounces out of the mine and into flotation concentrate and sold, and then we sold a total of (multiple speakers)

50,000, yes.

That's right. The difference of 30,000 is coming out of concentrate that was already -- that had been -- (multiple speakers)

Being production from Q4?

Well, no. I mean it could've been from (multiple speakers)

Earlier than that (multiple speakers)

From any time last year, basically, or part of the year before 2011.

Okay, because last year you weren't deeming anything production unless it was physically poured from the gravity circuit or actually produced in a concentrate at KCD, correct? Sorry, process from the concentrate at KCD.

We were reporting -- well, it was pretty well all pre-commercial at that point, wasn't it?

Yes.

So, by -- I think I Q4, we were starting to move -- we were starting to move concentrate out and then reporting that as sold when it was well effectively money in our bank.

Okay, that's great. Thanks guys. Appreciate it.

(Operator instructions). John Kratochwil, Canaccord Genuity.

Two quick questions here. First, on the CapEx in the quarter, because everybody is kind of going to these all-in sustaining costs. We're all trying to figure out ways to calculate them. Could you give us a breakdown of what you would consider sustaining capital versus growth capital in the quarter?

Sustaining will be around $38 million.

$38 million, okay, and the remainder, okay, growth. And then, just quickly on production versus the guidance, I mean commercial production in the quarter was about 159,000 ounces. If I just kind of smooth that over the year, obviously, you're expecting a bit better from some of your mines, but if I smooth it out over the year and add in some for Olympius, I don't quite get to the guidance range. So, where are you expecting some boosts?

Yes, don't smooth it out over the year. We know that Kisladag -- and I tried to sort of point that out as I went through. The only ones that for us that kind of missed in terms of what we were expecting compared to the budget was Efemcukuru and Olympius. And Olympius is a very small -- very small part of the overall production. So, particularly at Kisladag, which has a seasonal effect to it, we produce less in the first couple of quarters, and that really starts building up in sort of later Q2, Q3 and into Q4 and of course, Jinfeng, where we are getting into the open pit really this quarter. So, none of this was -- with the exception of Efemcukuru, we are on target.

I mean all the other mines as Norm described basically did better in production and lower in costs. So we are where we expected to be with the exception of Efemcukuru at the end of the first quarter.

Yes.

Okay.

The problem is, there's no winning on quarterly reporting, because if you take the total and divide by 4, if we're less than that, you'll oft conclude we're not going to reach our target. If we are more than that, you multiply it by 4 and you raise (multiple speakers)

Say you're going to be ahead, yes. Fair enough, fair enough. Then, the [pace] treatment plant, what were the issues there? And like the availability and quality, how are you improving the quality there and how close are you to fixing that problem?

Efemcukuru?

Efemcukuru, yes.

Sorry, sorry, pace treatment. I guess a lot of it was sort of start-up and getting familiar with operating, you know, getting the right material, getting equipment underground. We've done a fair bit of work over the last month or so, so we're seeing in this quarter a lot better reliability out of that material and a lot better quality as well.

Okay, fair enough. Thank you guys. That's all the questions I had.

Kerry Smith, Haywood Securities.

Paul, or maybe Norm, at Efemcukuru the grade was lower this quarter. And I think the guidance you had given was 9.3. So, are you still expecting that you will get up to that sort of average for the year, then, as you work through the year here?

Yes, no. The grade should pickup, Kerry. Because of the backfill, part of it was because of the backfill issue. We weren't able to mine where we had wanted to mine during the quarter. As Paul has described, the backfill -- the backfill situation is better this quarter so far. We're actually getting more meters cubed than what we had budgeted for, so we are catching up. And the other thing is, dilution was a little higher, which is partly where we are mining and partly just need to be a little more careful in our mining practices.

Okay. And then the delay -- I guess three-month delay in the EIA for the Kisladag expansion, is that related to more work that's required by the Ministry to approve it, or is it just basically -- you think it's going to take longer than you thought to get it through the various approval processes?

Just simply more work, Kerry.

By them, right, so they haven't requested more information from you. It's just going to take them longer to process what they have, then.

Well, it's a bit of a combination in terms of our completing our work and their -- completing their work. This process is not one by which we sort of go up into a closet and prepare this and then just bring it in and say here, surprise, here's the EIA. There's a lot of interaction that goes on prior to the document finally going in, and it's just -- that process has just taken the little bit longer.

Okay. Okay. And then, Paul, one of the slides you showed, the $160 million of sustaining CapEx kind of split out in a little pie chart between the various operations. What would this sustaining CapEx look like, say, in 2014 relative to that? Would it be similar? Would it be lower? Would it be higher? I'm just trying to get a sense on a go-forward basis.

Wait for July, Kerry.

Okay. And then, I guess at Vila Nova, you're still producing iron ore. Obviously you're still producing concentrate and are you just kind of stockpiling it until you sort out what you'll do with the shipping alternative, then?

Yes, we've slowed things down somewhat and we're using the opportunity to sort of mine a little bit more waste and get us get ourselves in a better position. But, yes, effectively, what we're producing we're stockpiling on site until we get clarity on how we move that material.

Okay. And then just last question on the buyback, has there been anything happening there on the buyback, or what's the status of it now?

Buyback of the shares?

Of the shares, yes, sorry. I was just wondering if you had -- if you actually bought any stock in the quarter. It looked like you might have, but I wasn't --?

No.

No you did not, okay. Okay that's great. Thanks a lot.

Paretosh Misra, Morgan Stanley.

Just one question on your capital spending plans over the next couple of years. If gold prices were to go lower, could you just maybe elaborate a little bit more, what kind of flexibility you have in your CapEx spending plans?

Well, it depends on what lower really means. We are -- because of the high quality of the project, as I said, you know, gold, frankly, would have to go well below $1000 before these wouldn't be -- these would be projects that we would sort of look at, at shelving. You know, our approach, if we take a view of gold prices staying lower, would be to prioritize and simply match our rate of spend in accordance with the priorities and our ability to generate additional cash. We would not be sort of chasing development of these assets by increasing leverage on the balance sheet. We would just simply slow down development across the board with certain priorities being respected. Things like Kisladag, for instance would be the highest priority and then you work your way down the ladder. But it wouldn't be about shutting down any of the projects. It would be just probably slowing down the rate of spend on them.

Great, that's --

On some of on them.

Got it. Thanks. Maybe actually one more, probably for Norm. What kinds of trends are you seeing on the operating costs side recently, particularly on the consumables?

Not a big change recently, really.

No.

I mean, if you just look at our costs and what we projected for the year, our costs in our first quarter are slightly below what we projected for the year. So I think we typically don't -- and I guess I like to think I made that clear in our first -- my introductory comments. I think we do a pretty good job by and large getting our operating costs right in terms of what we project for the year. And I don't see that at this stage coming to the end of the fourth month or the end of the fourth month that we are seeing much that would change our thinking on that, hence, our retaining of guidance.

Got it, great, thanks guys.

Thank you. We have no further question registered at this time. Please go ahead, Mr. Wright.

Thank you operator, and thank you, everybody, for attending this call. We look forward to talking with you a quarter from now. Thanks again.

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