費利浦·麥克莫蘭銅金 (FCX) 2002 Q1 法說會逐字稿

Ladies and gentleman thank you for standing by. Welcome to the Freeport-McMoRan Copper & Gold Earnings first quarter 2002 Earnings Conference Call. During the presentation all participants will be in the listen only mode. Afterwards we will conduct a question and answer session. At that time if you have a question please press the one follow by the four in your telephone.

Now I like to turn the conference over to Mr. Chris D. Sammons, Vice President of Investor Relations. Please go ahead sir.

Thank you operator. Good morning everyone, welcome to the Freeport-McMoRan Copper & Gold Earnings first quarter Conference Call. The earnings release has been released early in this morning. You should have a copy. If you need a copy it's available on our website fcx.com. Today's conference call is also being broadcast live in the internet. Anyone wishing to listen to the conference call may access the call through our website fcx.com. The financial press is also being invited to listen to the call. Replay of the call will be available for the next two weeks on the FCX website through Friday, May the 3rd. Before begin today's comment I would like to remind everyone that today's press release and certain of our comments on this call include forward looking statements regarding sales, production volumes, production cost, other cost, the impact of commodity price changes, capital expenditures, development projects, minimal reserves and resources, and other matters. The factor is that the quick calls future results different from these projections and statements are described in FCX's annual report on Form 10K followed with the Security Exchange Commission. Also with me today on the call are James R. Moffet, Chairman and Chief Executive Officer of FCX and Richard C. Adkerson, President and Chief Financial Officer.

As usual after our remarks we will have a question and answer session.

For the first quarter 2000, FCX reported a net loss of 4.2 million, 3 cents per share compared to net income of 38 million or 26 cents per share for first quarter 2001.Included in this years net loss for the quarter was 3 million dollars or 2 cents per share for the cumulative effect of change in our depreciation method. We will talk about that in a few moments further. Not including that cumulative effect our earnings would have been1 cent loss or simply breakeven for the quarter. Our first quarter 2000 results reflected the lower grade or that we are anticipated going into this quarter. We produce lower copper sales volumes approximately 296 million pounds compare to 333 million last year and lower gold sales 337,000 ounces compare to 645,000 ounces last year. First quarter unit cost of 29 cents per pound that net unit cost including gold and silver credits are compared to last year's 3 cents per pound and these reflect the lower grade in two ways. We have less units of copper to spread the site reduction cost much of which is relatively fixed rather than variable and our less gold announces to use its gold is byproduct credit on our net cost. Of course both of these were higher, great improvement during the year. We will have higher production and higher sales for the remainder of the year, which will reduce our unit cost and we expect that it will 10 cents per pound on average for the year 2002 and as assuming a 300 dollar gold price, which is approximately today's price.

First we will discuss operating results further a moment. Just like to mention also we are copper realization this quarter of 73 cents per pound versus 77 cents last year. Gold realization for 289 versus 261 last year. Our first quarter result also includes the effect of provisional pricing from fourth quarter. Final prices as copper prices improved this quarter had a positive effect on revenues of approximately 6 million dollars, which is 3 million in net income are 2 cents per share. With respect to the open pounds looking forward we have a 113 million pounds for provisionally priced at March 31, 2002, at 74 cents per pound. Most of which will price on a final basis during the next quarter. Once a change in final pricing with have about a half a million dollar effect, about a half a penny per share.

Now I would like to turn the call over to Richard to discuss operations, other financial matters.

Through our last call and every time we talked about our plans going into a particular year we always mention that we have a continuing process in looking at the opportunities described

body grasp or provide us to do things to improve results so in a continuous basis and when you look at our first quarter results, which we have been talking about you know for throughout the past year, we knew we were important time in our mining

plans and we are going to be taking material that had significantly lower gold reps and than is consistent throughout the ore body is just something, which you have to deal with as you go through the years in mining the ore body. We were able to make some changes though that resulted in our first quarter results being substantially above our plan going into the year and by producing 20 percent more ounces of gold for the quarter we were able to break-even enter the quarter at the operating results level and in quarter

these low gold price. It will also result in our being able to increase our expected gold sales for the year from the 2 million to 2.1 million ounces that we have previously talked about to 2.3 million ounces in our copper sales. We expect to be essentially at a 1.5 billion pound level that we have talked about earlier perhaps in about

. So we are continuing to work to maximize the

production from the plan as we look out we don't think this is not expected and certainly not expected to have any depreciation effect in our copper and gold production levels for next year 2003. But we as I said we continue work with our over plan try to move metal forward, move cash flows forward. We did have this accounting change for depreciation. It was bit unusual circumstances that led to it. We had an extension review by the SEC of our financial statements in our disclosures as a result of the registration statement that we had for our convertible bonds that we issued last year. The SEC has been own an extensive project and looking at the mining industries disclosures reserved the

relations and accounting policies. All mining companies that have gone through the SEC and there bit a number of calls of recent transactions have been subject to very extensive review as we worked. In a fact that some of the SEC related to the accounting center's executive committee

CPA encouraging them to undertake a project to look at the accounting in this closures in the mining industry because of the

practices. We went through this extensive review and we have no changes in our reserves. No changes in our accounting other than this depreciation change. We had the format certain about disclosures but we will find the fact and they say the things in different places. The SEC actually

. It has reviewed the newspapers about what other companies are going through, asked us to make an accounting change that lowered our depreciation expense on a going forward basis. In our old method we would have had 18 cents a pound, now we will have 15 cents a pound. We did have minor cumulative effect number of 3 million that we reported this quarter. Their concern was that we were found a depreciation method that are using our total undeveloped preserves and we were estimating the future cost to develop those reserves including that in our depreciation calculation. That was a larger number because 60 percent of our reserves are now underground and we have significant future cost as well developed of those return and they felt that we shouldn't be using those large future cost in current depreciation calculations. So we revised on that to one that was they considered acceptable and it will result in lower depreciation expense for us now and for the sale in few years. So that exploiting that situation.

If you have any questions I will be happy to answer them.

Our cost structure for the first quarter was on plan, our guys are doing great job in managing our cost and the entire unit cost that crude sales simply reflect the lower volumes of copper production and formally net cost standpoint to lower gold sales because of our gold sales. With our cost structure and as we return to more normal levels of copper production, our unit cost was come down substantially. If we move through the year and with gold prices being a current levels and our net cash cost will be back to the variable levels that we experienced in the recent past. Even during this quarter when we had such low gold sales and we also had a 60 million working capital requirement that was simply reflecting the timing cash receives. Over the end of the year we were able to fund our capital expenditures. That level remained essentially the same and with our new operating plan and if prices were to remain at current levels we will be generating over 500 million dollars of cash flow for the year with capital expenditure estimated approximately at 200 million dollars we would be looking in that case to reduce our debt by 250 to 300 million dollars during the year 2002. Total debt at the end of first quarter was 2.7 billion, and that reflects the Nusamba transaction, which we previously reported in which we acquired an additional approximately 5 percent interest, direct interest in PT-FI, our operating subsidiary in Indonesia for making the 254 million dollars payment that resulted from our guarantee of Nusamba transaction. So our net debt was 2.7 billion dollars and the Nusamba numbers will be in our numbers now going forward. We will have some additional depreciation expense that will be more than offset about the reduced minority interest that was attributable to the Nusamba interest was going by upsides and as we repaying the debt interest requirement in any of them that will be same on a going forward basis. Our Smelters continue to be a fruit to be effective by low PC and RC environments that's prevailing in the Smelter industry and yet the physical operations of both the

copper are holding on Spanish Smelter and PC Smelting the Mitsubishi operated Smelter and

in Indonesia where we have a minority interest continue to operate very effectively and that low levels of cost from the industry structure standpoint. So the Smelters are playing their role in our copper marketing strategy of providing our home which is significant part of our concerned trading, giving us power in the marketplace as we negotiate PC RC rates with outside parties and they are pleased to have that investment before these assets are operating.

What's the enclosing we mentioned that we are proceeding with our plan to combine the A and B shares that has been approved by our Board of Directors and has been submitted to our shareholders for approval at the shareholders meeting on May the 2nd since the announcement the difference between the share price between the A and B shares as then virtually eliminated and will proceeding on the fact to give that accomplished, which would occur immediately a

approval by the shareholders on May 2nd.

So with that

I would turn call over to you for your comments.

Thank you Richard. Good morning everybody. Thanks for being on our call that Richard given you completes update. What I will do is give you some of my overview thoughts and I will focused principally on where we think from the

standpoint and manage going to go in the next several quarters, which is outlined to you that we as advertised of come up of a low quarter in the cycle of our mining the geometry of the open feet.

We will jump from the 336,000 ounces up as high as 800,000 in third quarter and just over 500,000 in fourth quarter. So we know that we are going ahead that lay, which will by the way continue end of 2003 just because of the fact that the first quarter of 2002 was as I said manually a low quarter for the year but in the cycle of mining

. What else can affect us, obviously prices and you know I have never tried to be agreed over the prices. Just review with deal that what's going around in the world today is very confusing as to what may happen with the price of copper. So obviously as we know copper is an infrastructure metal some people say its a metal of ore and we much rather have the infrastructure emphasis of price in terms of what would talked to have this surplus we would talked of the alignment conference talks. But having said that since copper is driven by economy and we look around the world today some people plan today as it was improving but improving at a what. They improving at a required mark that takes place in 1997 when the restructuring of all those countries principally

by the IMF, money did get

around and Asia. So some people felt that South-East Asia improving. It's still a question about whether the Japanese part that improved. The people definitely feel that South-East Asia is common all from the bottom. China is a

. The people had

had track what they are doing. But the people still optimistic about their development

specially migrate to the copper market just ahead. Tremendous infrastructure demands in China where we feel the market comes to a considerable fashion. In Russia for the first time I advised Henry

is optimist about Russia and of course if Russia continues to have rebirth we know they are going to have a huge infrastructure demand because the Russians are driven their principle cities Moscow and others basically had to rebuild all of the countries of they now. Still that have an influence on the

. For that's the huge infrastructure for everybody. So with Asia, Russia, China, and Japan that one economic place we can look for that can be a tremendous, have a tremendous impact what happens to demand for copper. As we go around the world, we don't know what's going to happen on the Europe and the US. The driving engines mostly in the US because of the lack of confidence as a result of the post Enron base we see our companies including the blue chips as we are accounting that was being questioned and that had and impact on the maybe not the direct economy of the United States but the lack of confidence even in blue chip type companies and their corporate government. I don't know where that's going. The numbers that we see in the US, which showed that usage of profit out of

would be in the ones where we have seen companies announced their restocking inventories. I think the last time we talked, all of us noted that at the end of 2001 the fourth quarter was being record low for draw of that inventories and close all the

last years specially September 11, people just shut down and nobody was restocking inventory. As well as we predicted the last time we talked you can come up over record low inventory gone and without any impact in the next quarters and we will see in that. So we have seen a lot of people restocking, you being know same times that I am living that how long finish restocking drive the what is apparently is driving the good economic policies for

and yet the trade came out and said we are not going raise interest rate right now. So I have additional feeling about what's going to happen to the US and what happens in the US and some ways it turns what happens with Europe. If as Europe

go through its starting some of the sign confident factors that the US is another word a more developed financial groups that had their stock markets in

like dotcom, telecom, and post Enron are still trying to shake off the effects of those three finds. But if the numbers in the

where the people have started restock and then if considerably people restocking then we consider

. You turning the South America, everyday we see down there some finds remove what the price going to be. Argentina is going to mess. Chile is a stable country. Peru is just trying to get back into the frame after having

out of the and have a lower socialist type of government in there. Who knows what's going to happen down there. But it's all the same with the South-American economy. So we go around the world so that I don't take too much of your time. We got a very interesting situation as far as what's going to happen to copper

prices as a result of rebounding economy. And now on the other hand with all of we turmoil in the world as a result of this ongoing increase prices, which really has been

by this re-advance in the Indonesia and Palestinians situation and the effective side on the over that countries. What's the effect that on the economy, where would defective that is. Is people aware to that is going to happen

. The all prices that up right now and will prices that. So ironically acting principal products gold and copper we just talked about what might happened to the copper prices. The gold price right now is not a matter some people keep gone underway if there is a big growth of demand. I am not going there. The gold reported last year

they still not have signaled that they

quick selling. I think that being in that gold putting in the supply

asked to do that even with the demand asking some of the supply down because the mining committee starting and continuing the set on this high cost demands. There will be a demand to few of the gold supply. But I think just like our old prices, which have gone from the middle 70s January amounted 25, may have even higher because of the uncertainties of what might happen to the old mortgage and at this time I think it is going to also meet that goal. We will continue to find if people are uncertain.

So when we look at our price outlook, what obvious going to favor copper prices that is people becoming more certain and driving the economy might not

for goal. On the other hand all the uncertainties if it drives gold prices like it's old prices then copper prices will probably not the as buoyant as we talking about. But

We have got interesting situation here because of the volume of the gold that we producer and volume of property produce. What are the advances I just talked about, were the price buoyancy. So after coming at the bottom in the copper market even the copper is still in the low 70s with the 300 dollar gold price and that's going

to have some interesting goal quarters that we just discussed. We got a great opportunity to add the cash flow that we should talked about and the 500 million out there with the volatility some of the pricing we are talking about using our price charges the impact that what happens if we get another 25 dollar ramps running gold and if we get another 10 cents a pound running copper of the rest of the year. I am not going to

. So I hope that due some

about what we think that geopolitical situation is going to have on the economy and the geopolitical situations are going to have on prices of our products. So I am not optimistic first while when the gold prices throughout the

like the reasons why they are up, have the world of piece and have the economy not yet better. But

is going to have much impact and what happens there all I can do is to give you the outlook we are to be frank about. What we have talking about is we plan the largest hopefully and

. CAPEX is that is going have to do it. So we are going to start the low cost, fortunate we have the low cost old body in world because of our gold credit. We are going to stay low cost continue to drive prospect. So we will be prepared for any prices environment that hopefully on presume matters in quarters that are complete electronic manners. But I think

interest to talk about the when you all next come here and we will come here.

With that I would turn the meeting back to Richard.

Thank you Jim. Operator we are ready for questions.

Thank you sir. Ladies and gentleman if you would like to register a question please press the one followed by the four on your telephone. You will hear three times pound to acknowledge your request and if your question has been answered and you would like to withdraw your registration, please press the one followed by the three. If you are using a speaker phone please take up your handset before entering a request. Once again to register for your question today please press the one followed by the four at this time.

Our first question is from Karen Spitlin [phonetic] - TSO & Associates, please go ahead

Good morning. Thanks for the

. Could you tell me what portion of your nil requirements in the first quarter came from open debt? What portion from underground for the remainder of this year, what the blend is? Thank you.

Yes. We normally want an average of about 10 percent from the underground, the first quarter we were about 12 percent and we expect that to run within that range, depending on how the new mines ramp up.

Okay. Richard the second question is actually on the Samba loan, how did you finance and can you remind me and two if I look at that number can I actually extract a value for the Free-port asset based on that number? Thanks.

We provided for the financing of that frame in the financing plan that we put together last year and that included amending our Bank credit facility in conjunction with issuing the 600 million dollars of convertible notes. We provided for the financing and we drew down our bank credit facility to pay for that amount. So that was putting place and that's what we did. So going forward, we have a 734 million dollars availability in our Bank Credit facility. We currently have 564 million dollars drawn and we will be paying down on that facility aggressively with our excess cash flows as we go forward for the year. For example, the kind of debt levels we were talking about, we have a roughly a 130 million dollars of maturities outside the credit facilities this year and so any excess over there and we would be adding to the availability under our bank credit facility that matures at the end of 2005 with really no amortization requirements before that. Go over the second question was,Richard where you can employ the value of the asset by strong what we paid for the 5 percent.And that's really, you really can't do that because that was based on the purchase price that in Samba incurred in buying that interest back in 1997, and at that point the amba part is 5 percent interest for 315 million dollars and paid 60 million dollars of cash equity under the deal and to finance the remaining amount with this bank credit facility which we guaranteed so that we could have a control over that interest and so the payment that we had will simply the amount of that Bank credit facility.

Enough, thanks guys.

Let me just comment that technically what Richard said is exactly correct. If you run the numbers on based on the price of gold and the ground giving 10 cents a pound for copper. If you take the volume of gold that, we have compared to the most recent transaction the New Man Franco [Phonetic] and the American Based Home stage and look at an average price for gold in the ground that was paid and 108 dollars, if you average those two transactions interestingly you can come up with a number for the value of our company and take 5 percent of it and what you find it gives you the value, which actually is greater then the amount that was the 254 loan. So Richard is technically correct that you can't just take that number and say that you can calculate the value of the company, but on the other hand you've all seen our numbers if you run the gold value calculation attributing 10 cents a pound for copper in the ground. You come up with evaluation today for our shares for the value of this company compared to the value put on the most recent consolidations of somewhere in the high 20's and low 30's depending on what price you want attribute to gold in the ground. But it's 108 that's for you come and so the answer of your question is yes or no, you can get through the value based on people have planned for gold in the ground today and that would give you that value that's actually higher than what we paid for the 5 percent in PT-FI. I hope that answers your question.

by seeing those numbers before. I appreciate that. Thank you.

Thanks

. Next question please.

I have to reminder you ladies and gentleman to register for your question please press the one followed by the four.

Our next question is from Mark

- Mark Colin

. Please go ahead.

Good morning gentleman. Richard I have a slight question. On the change in this appreciation and the amount of copper you produce annually that should generate on an after tax basis about 20 million dollars of incremental earnings?

Yes, that rights Mark.

As you move forward in the mine that will remain well for the same? Is that the SEC ruling?

Yeah. This is the way that it will happen Mark. What we are doing is we are amortizing common infrastructure cost for all the mines over the total proved reserves. We are amortizing the historically incurred cost for the existing producing mines, the grasp per

and the housing DOZ complex and that's based on developed reserves. As, we develop our major underground mines in the future and incur those costs to develop those cost would be developed, those cost would be amortized over those reserves. What you will see is the rates that approximately to current levels until the point we start placing those underground mines into production and recognizing the new depreciation expense for those, which under our current plans will be many years in the future.

Thanks. With essence of what happened hear is the SEC has given you roughly the 1.5 billion pounds of copper, has giving you the incremental 20 million dollars of earnings. Your bottom line, which should make the valuation of the company significantly higher than it is today?

Well Mark you know we always say that the value of our company is driven by our cash flows in our reserves. Depreciation is simply the method of allocating the costs over time and over time those costs are going to be charged to expense. What the SEC has done and this is in my experience, which is really very expensive in working, pretty unusual for them to request the change in the accounting the method that does benefit earnings, so you are right in saying we do get benefits in reported earnings currently in many years into future as result of this we just always come to see the fundamental economics of our business is what drives the valuations rather than accounting numbers.

Presume if they also done in, they have also given a change to your cash flow?

No, cash flow is going to be the same.

Cash flow will be the same?

That's right, depreciation expense doesn't affect cash flows.

Okay, so on that level if you want to go down [Indiscernible] for your cash flow. Okay no problem, and just to make sure that it was an appropriate level of

.

They wouldn't characterize the gift, but I appreciate the question.

Thank you.

Thanks Mark. Next question please.

Our next question is from Lehman

with Cobalt

, please go ahead. Mr. Cooperman your line is open for question.

Hai Jame. Just given your outlook for much higher or grade for the second half of the year and the recent improvement in the commodity prices, you were looking for substantial free cash flow. Just curious you know what are the uses were going to be and how much debt you need to pay down before you start getting comfortable you know buying back stock?

I let Richard to answer that. I am a stock buy backer. He is the stock buy backer and he is the cash flow counter.Well we are deluded to using this cash flow to reduce our debt under the arrangements that we negotiated last year with our bank group. So as I mentioned earlier the cash flows will be used to reduce this scheduled infrastructure debt for this year, which is about 130 million dollars for remainder of the year, the excess will reduce down our bank debt. We are continuing to look at and with the there is an improving situation for capital markets transactions for companies in Indonesia and there have been a number of recent transactions despite the fact that

agencies still maintained their low credit ratings for the Indonesian

Credits and it just an indication that markets are changing in the positive way and we continue to look at that markets for opportunities that would allow us to move to our ultimate goal and our ultimate goal is to re-finance our balance sheet in a way that reflects the fundamental economics of our business, so the step that we will need to take to gift to the point of considering things like stock buybacks will be moving towards re-capitalizing our balance sheet and those opportunities are opening for us is very positively now. For example our senior notes that we issued back in 1996, we move our rated in investment grade credit by S&P, have had a very little trading a year ago those were a deals of 18 percent those deals have come down to about 11 percent now, there is still way too high considering the fundamental credit of our company and so there still improvements to be coming, but it is just an indication that this cloud that hung over our company, since 1997 from Indonesia, is lifting and it will give us lot of opportunities financially to do things in the future.

How about your existing banks are they warming up to deal in, to working with you or they still are that interested?

Forget about the factor whether they were they do not, wanted to just explain what the government currently says as to when if we were to want to buy some stock what the current government says is the barrier in the

that you have to exceed in our

back before you refinance.

When you exist credit facility there is no it's prohibited from us buying stock back?

We do have a bar that want you pay back extra amount of credit that a portion of your cash flow become something that you have some corporate waiting for but what do you say until you wind is that when we had the corporate group tighten up by loan agreement they took away a lot of

stock bag just the kind of move they were in, even we paid the 600 million dollars debt. So I hope that answered your question. We got less flexibility then we get it to have to exercise our feelings about stock buy back because of the bank governments the way they get to the point where we can have more flexibility is to refinance the bank debt which is our ultimate goal if the market give you long term money that would be competitive with lower

buying back today.

If the

winds up, what are the odds that are just working with the existing banks and you are having a more favorable bank agreement or do they have any interest or not in the participating?

I am going to answer that question, in today's post-Enron environment there are no favorable banks.

What we did last year with this very large bank group that it changed a lot because of mergers particularly with the Japanese banks which have been long time positive participants but with there mergers and there financial problems they have change, there been other changes. As when we negotiated this deal with other bank with the bank of last year we put that deal in place, and we really don't have to go back and deal with that group again. Our future would be either through capital markets transactions and potentially our deal with the new bank group would give us the ability to go to the new flexibility that we want to have for our company.

Thanks and look forward to some big numbers later this year.

Thank you.

Our next question is from Gorda Guana [phonetic] from RBC Capital Market [phonetic]) please go ahead.

Good morning gentleman. I want you to give comment on what caused the improvement in gold production versus the forecast earlier in the year was it combination of grade [phonetic] production? And then second just your tax rate for the quarter was both 65 percent. Just wondering what is your guidance is for the rest of the year? Thank you very much.

With

gold production came about through a combination of higher grades than we were anticipating in our plan and higher recoveries than we were anticipating plan and that was achieve by modifying our mines land that resulted in a better mix of grade then our original mines land provided, and that happens as a result of just ongoing process of the reviving trainings as we see new opportunities to improve metal production. Our grade was that 0.73 grams per ton where we were anticipating 0.6 gram per ton going into the year.

Gain on taxes?

You know taxes, our actual tax rate, that cash taxes that we paid is fixed of our contract, with the Indonesian government for the life of our operations. So the actual tax payment doesn't vary. What varies is the financial tax provision, that results from that because we are a cash tax payer in Indonesia we have taxes to pay in Spain and we have minimal taxes to pay on the corporate US and that the parent company, which does have certain expenses interest in administrative call and so in periods when we have our lower earnings in Indonesia we end up having a high effected tax rate and that happens every quarter when this paying were effected by lower earnings because of commodity prices are over grades but our actual tax obligations in terms of the rate of tax we pay is fixed and doesn't change. As we move higher to higher grades during the remainder of the year we would see our effected tax rate come back down to the 50, 55 percent level that we historically have had in those times of periods.

Very good. What coppers are you using for your current reserves?

We use 270 dollars but there is a practical matter because of the nature minimalization in our old body. Where we have copper and gold in the over body that's combined and our processing is based on getting the economics out of the over body. Our reserves are to start sensitive to gold price as other companies would be. So when we moved down from the 300 dollar level of the 270 level we really had no major impact in our reserves.

What are you using for copper price for the reserve calculation?

We are using 87 cents for some reason. I thought it was 85, it's 87 cents and actually our gold price was 285 dollars. It wouldn't have change if we have used 270 or 300.

Great. Thank you very much gentleman.

Our next question is from Thomas Van Leeuwan - Deutsche Bank Securities, please go ahead.

Good morning. Could you talk of little bit of about Indonesia's efforts to clarify there mining laws for operations in the forest?

Well there is lot of published about the forest laws most of it has to do with the terming [phonetic] for new mines. As usual, the comments get somewhat confusing. Some of the [indiscernible] mines that are under consideration that I got in for a new project which is received a lot of publicity and it actually is a question of what is the definition of boundaries of some of these forest and so what they going to let the new pits operated be permanent I should say. Are they going to give Amdels [phonetic] in areas specially where they have this very difficult boundary that the forest is climbing. So what's happening in that regulation they are basically trying to get the mines department and the forest department become some sort of better definition not so much for existing mines but for mines that they trying to permit and get people to come in and make investment. As they started talking about it, the thing has become pervasive and people are confused now whether it have an impact on mines that are currently operating and the answer to that is the mines which are currently operating that already have Amdel [phonetic] the answer is no. Could it have an impact on our operations in areas where we have reserves to the North and where we have prospects all of our current permitted pit and by the way our pit as you know does not up to 13,500 feet [indiscernible] there is a forest boundary, which is more of the preserve boundary but that's been set and not easy for as far as development of our pit to the lighter low open pit and there is no issue on the underground as you might imagine. The only place for our situation could have an impact would be in our [Indiscernible] deposition area but that is being currently divide by the [indiscernible] boundary also. So we don't have an Asia but over all the industry, the mining industry in Indonesia is going through a some retrospect's in here, where are they going to let the aggressive

environmental group block the development of future mines even if they waved their hands and stays to close to the forest, not in the forest but to close to forest. And obviously the natural indications are as the government not going to let that happen they need to development to bad. So you are going hear some things in very near future where you are going to have the forest and [indiscernible] administer is [indiscernible] been here fighting to get his permit approved and get this projects approved because he need the development that's what it created this controversies. I think it will get resolve very shortly.

Great, thank you.

Next question operator.

Once again ladies and gentlemen to register for your question today please press the one followed by the four at this time.

Gentleman there is no further question. Please continue with any closing remarks if you may have.

We appreciate everyone's interest. We are available to responding specific questions you have after reading our release and the company's financial announces and thank you for being and look all the day.

Ladies and gentlemen that does conclude our conference call for today. We thank you for your participation after that please disconnect the line at this time.