Kinross Gold Corp (KGC) 2008 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to Red Back Mining's first-quarter results conference call. (OPERATOR INSTRUCTIONS). I would like to remind everyone that this conference is being recorded today, Wednesday May 7, 2008 at 9:00 AM Eastern time.

I would now like to turn the conference over to Mr. Richard Clark, President and Chief Executive Officer. Please go ahead, Mr. Clark.

Yes, good morning, everybody, and thanks very much for attending. We're very pleased to be presenting the first-quarter results for Red Back for 2008. How I propose to conduct the call is that I will make a couple of comments at the outset on some issues that I think are current in the market in respect to Red Back and other companies, particularly in regards to Ghana. And then I will pass -- I will turn over the discussion to our Chief Financial Officer, Alessandro Bitelli to go through the numbers and the quarterly statements themselves. And following that, I will give a brief forecast of what is going to happen for this quarter and going into the rest of the year. And we will then go Q&A, and after that, I will just have a couple of closing comments.

So starting off, I think everybody knows in terms of Ghana there have been some statements by the Minister of Mines recently suggesting that Ghana is having a rethink of their mining laws and essentially their share of the pie. I can tell you the statement by the Minister at the UN conference a week or so ago was the first time anybody in the industry has heard about this. And we obviously have been on the ground in Ghana for some time and have done a lot of checking with our sources, not the least being our government representative on our board in Ghana, and nobody has any idea where the Minister is coming from. There is no official statement from the government on what is going on.

That being said, I can fully expect that just about every country -- any developing country is rethinking or considering what they can do given current commodity prices.

That being said, Ghana is not like every other country in that it is a very well-established mining economy. Very established laws, a very large mining industry and a huge labor force in that industry. And there also it is a country sitting with sort of the largest gold producers in the world active in that country.

So, as I said, to the best of our knowledge, nobody has been consulted, neither the Chamber of Mines or the companies. Red Back has a meeting with the Minister of Mines at the end of this month to get some clarification on this. But I can tell you at this stage this seems to us to be a bit of a tempest in a teapot and likely some sort of election rhetoric. There is an election being held in Ghana at the end of this year.

So we are business as usual. We do not anticipate any changes certainly this year and other than potentially an increase in the royalty, which is currently permissible under the mining laws in Ghana up to a maximum of 5%. Right now, Red Back is paying between --

6%, Rick.

Sorry, 6%. Thank you. And we expect there will be an increase, but I cannot tell you when or how much. But I doubt and am very, very skeptical that it will be outside the current statutory limits. Anyway, and I'm happy to answer questions on that during the question period.

In terms of Red Back's performance, obviously we're very, very pleased. This was the commissioning quarter for Tasiast that exceeded our expectations and continues to do so, and I will go into that after Alessandro has gone through some of the numbers. Everything is on target, on track for expansions at both projects. I'm very pleased with the progress there. We still are looking at Chirano at bringing high-grade underground ore into the mill in the fourth quarter and with full commissioning of the expanded plant in the first quarter and similar timeframes for Tasiast.

So again, as I said, I have got nothing negative to report. Everything is either as we have forecasted to the market to this stage or better. And on that basis, I will pass the meeting over to Alessandro to go through the quarterly results.

Thank you very much. As Rick has stated, we are indeed very pleased with the first-quarter results, and this reflects the significant steps that we have taken in 2007 to ensure growth and profitability for the Company. We started the year debt free and unhedged, and with the purchase of Tasiast, our total gold production for the first quarter has exceeded 63,000 ounces, which is online with the forecast for the year. The average gold price that was realized as I love to be unhedged with respect to both mining operations was $935 per ounce, and that was against the cash cost for the Company of an average of $400 per ounce with that number for both Chirano and Tasiast individually being in line with our forecast for the first quarter and expect to do this over the course of the year as a result of efficiencies achieved in the operations. These results mean that there are approximately $10 million of cash flow from operations in the first quarter per month, and ultimately it will bring down the results on a net income basis of almost $20 million and $0.11 per share.

With this background of operations very positive, we've also successfully increased the (inaudible) forces and reserves at Tasiast 63 and 58% respectively as a result of ongoing drilling. We also confirmed higher reserves estimates at Chirano inclusive of the underground at Akwaaba Deeps.

These results are indeed very good, and with respect to the contributions to the $20 million of net income, Tasiast obviously contributed significantly in terms of the revenue and the operating profits. And also, we saw significant increases in realized revenue per ounce at Chirano because of the increased gold price and our ability to take full advantage of the spot price of gold during the quarter.

The other depreciation costs that you see on the statements are really a function of commencing the production at Tasiast and the depreciation of the mineral property, which reflects the purchase price paid in 2007 for the acquisition of Tasiast.

Offsetting that was to an extent is the income tax recovery shown on the income statement, which is effective an accounting requirement to record an income tax liability on purchase and amortize it against the amortization of the related purchase price acquisition allocated to mineral properties.

With respect to other items on the income statement, I just want to point out that the fact that we no longer have interest expense, and we continue to have interest income as a result of our held for cash position of $68 million. And during the quarter, we also incurred a gain of $1.7 million as a result of our purchase and sale of marketable securities.

With respect to minority interest, which is in relation to the 10% ownership of Chirano by the government of Ghana, no amount has been recognized because Chirano currently has an accumulated deficit following the recognition of the cost of buying out the for sale contracts in late 2007.

Going forward, we expect production to continue to be as forecasted, approximately 135,000 ounces at Chirano and 110,000 ounces at Tasiast. Cash costs are expected to decrease with efficiencies achieved at both sides. For example, the Heavy Fuel Oil powerplant installed at Tasiast will bring the cost of fuel down significantly. And the crushing circuit that is being installed in the third quarter, late in the third quarter will also achieve efficiencies at Chirano.

We do not expect to have an actual tax expense for the year as a result of a tax holiday in Mauritania and as a result of existing tax pools both in Mauritania and in Chirano. Our capital expansion continues as planned and on budget, and we expect it to be funded operations and cash flow at this point in time and of our significant cash flow from operations. And we are looking at the possibility of establishing a revolving line of credit to give us more flexibility should we want to change our plans as we move forward and take advantage of other opportunities.

This is a brief summary of the results to date. Rick, over to you.

Thanks very much. Yes, just to emphasize what Alessandro just said in terms of our capital budgeting, for the expansions we're effectively on budget. There has been a little bit of tweaking at Chirano, but that has not resulted in an increase in the capital budget but an adjustment on exactly how we're going to do part of the expansion. And we will be reporting on more of that in the next couple of months.

But suffice it to say, we're on budget. We are effectively on-time and we are looking at significantly increased production from both these projects as a result of the expansions in 2009 and certainly fully realized in 2010 as we have been forecasting to the market.

And on that basis, I will pass it off -- well, before going, let me briefly -- to Q&A -- let me briefly touch on what is going on with exploration. At Chirano, as many of you know, we are the ones that have stopped the drilling at Akwaaba Deeps at about 450 meters. At depth we are now putting a fence of holes in, about six holes approximately 800 meters deep. The tests are down to the extension of Akwaaba Deeps, and we will be reporting on that in the next couple of months.

At the same time, we have been continuing our drilling program under other deposits and testing geophysical targets at Chirano, and again I expect to be in a position to put out results in the next two months and give you an update on the success of those programs.

Suffice it to say that we're incredibly encouraged by what we are finding, but we're waiting on some more drillholes before we come up with any definitive statements.

In terms of Tasiast, the infill program that we commenced in August last year has almost been completed. The final infill program is now taking place at a posit called West Branch to the south of the main orebody, and we expect to be reporting an updated reserve and resource on the whole project, particularly focused on West Branch in June and July of this year.

We are now stepping out on strike at Tasiast. We have made a discovery to the West. We have made a footwall discovery under the main orebody, and we are significantly extending the potential of the operation to the South and both the North at Tasiast. So ongoing exploration of both projects for the rest of this year with steady updates to the market.

And we will be commencing drilling programs in Cote D'Ivoire very shortly on two projects that we have there. We have not said very much about it to the market. I don't intend to really touch upon it more than I have just said until such time as we have got some drilling reports results to report.

So that is effectively the exploration update. What I suggest now is we go to the question and answer period.

(OPERATOR INSTRUCTIONS). Trevor Turnbull, Scotia Capital.

It is hard to find much fault in the results this quarter, but we will give it a shot.

Thanks.

Actually just a quick question for Alessandro. I heard you discussing the capital programs. But did you actually give the figures for capital spent in the quarter at each of Tasiast and Chirano?

No, we have not broken those out at this point in time. We have combined the financial statements. They are combined at approximately $20 million, and they include initial spend with expanded capital expansions of just I believe just under $5 million, and the balance being $60 million is cost incurred with respect to the significant drilling taking place with respect to the resource definition and increasing the reserves.

As you can see, not a lot of the cost went towards the capital expansion at this point in time.

But that said, can you give us a sense of how much including that reserve definition drilling was Tasiast versus Chirano?

You are probably looking at roughly $9 million at Chirano and $6 million at Tasiast.

Okay, great.

For the mineral properties for the resource definition.

But that will be capitalized?

And that has been capitalized.

Exactly, okay. Can you give us a sense of depreciation per ounce at Tasiast given there is not a lot of capital sunk into it, although there's the acquisition cost. I was not sure what we should be looking at in terms of depreciation on a per ounce basis going forward.

We're looking at roughly -- at this point in time, you are looking at roughly $10 million of -- sorry, $8 million of depreciation and amortization in Mauritania per quarter and on the basis of, say, 30,000 ounces in the quarter. You can do the math more easily than I. I'm only an accountant.

Alright, that is good enough. And then I had a quick couple of questions on exploration, one of which relates to the deep sense of holes coming into Akwaaba or underneath Akwaaba. I realize assays are going to take a long time, but when do you expect to have the holes down to that level that maybe even visually you will get a sense of what you have got there?

It is probably going to be, on the first hole, Trevor, it is probably going to be another week or so, and that program effectively has just commenced in the last week. And the reason for that is we have had the drills doing some other things and have just moved to dedicate a drill back to Akwaaba Deeps.

Great. Okay. And then last question related to some of the drilling along Chirano but outside of Akwaaba specifically. Any sense of when you might be able to look at doing your first resource estimates for areas below the pits but exclusive of the Akwaaba area?

We probably could do some, a couple right now in terms of initial discoveries. And really that is a reflection -- it is a bit of a tug-of-war between the mining department and the exploration department in some cases because, for example, under one of the pits Akoti extended, they have discovered some high-grade material directly under the pit, and that pit is almost completed. And so there is a lot of push to do a resource and reserve calculation under that so that we can make the decision whether or not to extend the pit or do a quick underground operation.

So that is a long answer to your question, but on some of these things, we are looking at a quick resource assessment. On some of the other things that we're targeting and we are onto right now, that is going to take some time. I think all I will leave with you is that once we made the original discovery in Akwaaba and sort of had an idea what we were doing, it took us about a year, a year and a half to finally come up with our first definitive reserve numbers on that. And that is going to be I would say we can shorten that to about a year on at least one or two of these things we're working on now.

Okay, sounds good. Thanks, guys.

Jacques Wortman, GMP Securities.

Great results. Congratulations there. A question that I have, I will leave Alessandro alone here with my question now. I want to focus on this heap and dump leach test work you have done. I know you told us a little bit about this in April. Can you give us just a bit more of an update on where things sit and any kind of update beyond what you have maybe put in the MD&A, Rick?

Sure. Where we sit now, and I was just on-site, is we have done to two test heaps. They are ready to go. We have been sitting and waiting on some delivery of some wobblers to get that going. At the same time, we are in construction of a number of columns to do the test work.

We have done a lot of benchscale work. We're pretty confident on which way this is going to go. But until I get certainly the column results and the first results coming out from the actual -- from irrigating the heaps, I do not think we're going to be coming to the market within any further statements until we have got those kind of numbers. But I would expect that we will be back to you with those within the next 60 days.

And are you willing to share a little bit of conceptually what it is that you expect this to grow up to be, or do you want to wait?

Well, leave it like this. What is going to happen is part of this (multiple speakers) go the way we want them to go and we expect them to go. Then right now the orebody has got a 0.8 gram cutoff, and what we intend to do is take it down 20.3. And we expect to put certainly all the oxide fraction point from 0.3 -- oxide ore from 0.3 to like 1 gram. We will put on heaps, and anything over a gram, we will put through the mill.

So you can sort of quickly have a look and run your numbers of what that does to reserves if we change the cutoff. And then it is just a question of how much material is that and how fast we want to keep leaching it.

And do we know how many tons of oxide faction between 0.3 and 1 gram, how many tons that might be?

I do not have those numbers off the top of my head, sorry.

Okay. Thanks, Rick. I appreciate that.

What what I can tell you is, on the internal studies that we have done, it is a considerable addition to annual production.

David Haughton, BMO Capital Markets.

Just following up on Trevor's question with regards to CapEx, can you give us a bit of a guidance split between the two projects what the CapEx total for the year would be at Chirano and Tasiast?

(multiple speakers)

Maybe I can (multiple speakers) addresses that. Right now (multiple speakers). The numbers that we have in (inaudible) including MD&A confirm that for Chirano and Tasiast expansion projects, we're looking at 35 and $40 million each respectively. And on top of that, there is the cost for the underground development of Akwaaba Deeps, and those are forecasted at 25. So you're looking at approximately $100 million for the year between the CapEx on the capital expansion and the underground development.

Okay. And then on top of that, you would have sustained CapEx and exploration?

That is correct.

And what sort of sustaining CapEx are you expecting in each of those operations?

We're probably looking at something like 2 to 3 at Chirano and maybe 3 to 5 at Tasiast.

Okay. And then going on into 2009, because these projects are not likely to be -- all expenditures not likely to be done in '08, where would you see the CapEx going in 2009?

As Rick indicated, the (inaudible) will be going into commission in effectively bringing in the additional production in by Q1 '09. So although we do expect some of the cost to spill over into 2009, that will not be a significant component of the cost. And we're looking probably at a few more million dollars, 2 or $3 million each of the projects. Not much more than that in the first of '09.

Okay. But based on additional development, natural developments -- (multiple speakers)

On the underground developments, we're looking at roughly $25 million for four years for the Akwaaba Deeps underground development.

Sorry, was that $25 million each four over four years or in total over four years?

No, each.

David, the total decline in cost is budgeted to be about $82 million, and I think Alessandro is right, I think it is 25 each for the first three years and then the balance in the fourth year.

Got you. Alright. And for the underground development, what kind of grades are you expecting? Because, you know, the reserve grade here, we are looking at just short of 6 as is the (inaudible) indicating exclusive of reserves. Would we apply some sort of dilution factor to that, or would you expect to see --?

Well, the dilution will be in that in terms of that modeling as it is now, David. But what is going on is, as I said June, July, we will come out with what I hope is the definitive final lining methodology and economics. And my guess is, what we're hoping is that the grade stays pretty close to what we have reported. But obviously we're going -- it is going to be a little bit more in both tonnage, and there might be a slightly different more dilution creep on that. But we don't expect any significant change to the grade.

And what is your preferred mining method? I have seen SLC mentioned at some stage.

Basically my understanding is we're going to be looking at what -- I love this, we get into engineering -- modified sub-level caving. In other words, we are not doing a straight SLC. There is some slight modification to it, and that is predominately related to the fact that the hanging wall here is very competent and we don't think is amenable to what you might call a traditional SLC process. So it is going to be just the slight variation on the theme.

It will be interesting to see a diagram by what you mean by that.

Yes and unfortunately Kevin Ross is not on the call, but by all means, give him a call or I will get him to call you. Everybody is extremely relaxed about this. I don't think there is any magic to it, but I do not pretend to be a mining engineer.

And given the exploration success that you have at basin elsewhere along the strike, can you see what sort of timeline would you envision for the next underground development at Chirano?

It will not be before a year. Let's put it that way. My view on this and how we go is that it basically would take us about a year to drill it off to the point where we would get an economic call to go underground. That is a heck of a lot quicker than we did at Akwaaba, but given what we know and how we understand the geology and the infrastructure we're putting in place, we would probably bring it on that quick. That would be on sort of a Akwaaba look-alike, but it is very likely what we're doing is some smaller underground as I said quick grab the high-grade below some of these pits sooner than that.

Okay. On a separate matter, more of a political situation, have you got any update for us about the taxation, kind of greater participation in revenue statements coming out of Ghana?

Well, as I said at the outset, all anybody has heard is the reports on the ministers what sounds like relatively off the comments at a UN conference in Accra. There has been no follow-up statement from the government. There have been obviously rebuttals from the Chamber of Mines. The mining companies have certainly read that decision. They are taking a position that until we talk directly to the minister, we're not going to come out and guesstimate on what the government is doing.

However, that being said, we still have no confirmation that the government is doing anything officially. And I think what everybody has to keep in mind is this is an election year. And certainly one of the topics given commodity prices in the developing world is going to be from opposition parties in particular are going to be is the government doing enough to get a fair share for their country.

You know, that is going to be done -- that type of rhetoric is going to happen anywhere, and I think we will probably see more of it in Ghana as we get closer to the election. However, again as I said, Ghana is a very, very sophisticated mining environment, and it is certainly not going to be as easy may not be the right word but for the government to unilaterally make changes to laws -- (technical difficulty)

You also have standstills in place that give you some protection as well.

Yes, now Red Back does not have a standstill. My understanding is that Red Back and Golden Star are the only operating countries companies that do not have standstills, and also they have to qualify that with Golden Star because on certain of their operations I think they do have standstills.

But when we came in, we were with the first new mine in Ghana for many years when Chirano was built, and it was built under a new mining code. And the government took the position at that time to get a standstill agreement with the government, you had to have a capital investment of $400 million, and obviously Chirano did not cost us that.

So but that being said, yes, the majority of gold production in Ghana is covered by standstill agreement.

Just to add to that, David, the current mining law in Ghana was enacted in 2006, so it is -- they have only just recently gone through this process, and part of that new mining law in 2006 added in a clause that talks about an initial investment of 400 or $500 million, I cannot remember the exact number, to qualify for a stability agreement.

What we have in place is a kind of watered-down agreement with the government, which concerns a lot of the fiscal terms, but does not -- it's not as strong as it's (technical difficulty)-- which may be some of the bigger companies have.

Yes, and it is also overruled by the mining law.

Stuart McDougall, Jennings Capital.

Congratulations on the quarter, guys. Just a quick -- most of my questions have been answered. But just on the operations for the remainder of the year, in the case of Tasiast, are you expecting a drop in grade from Q2 to Q4, or is it going to be a bit of a function of throughput rates and grade? And similarly along the same lines for Chirano, any color would be appreciated.

Yes, I think we have been -- in the first quarter, we were fortunate. We had some unexpected high-grade. I think that we are much more for the second quarter looking at what was in the mine plant, and you're looking at approximately 3 gram dirt going through the mill for the quarter.

That being said, we could have some surprises. Certainly we do not think that this orebody was properly drilled, and we are still going and doing a lot more grade control than I think would have otherwise been the case so that we can catch up on remodeling.

But so far we have been very pleased to find that where there has been a lack of data, the grade has been better generally. But that situation is pretty much close to being rectified now. So we should have much more consistent numbers going through by the end of the second quarter.

At Chirano I think you can expect similar the numbers. Obviously we did about 2 grams. I expect we're going to do somewhere between in that range again and maybe slightly under for the quarter, the second quarter.

Kerry Smith, Haywood Securities.

Have you changed the exploration budget at all from the $18 million that you had previously talked about, or is that still the expected budget?

That is still on target to be the budget there. However, I can tell you that Hugh has come back to us and asked us for more money at Tasiast, which we're going to give them. I will be going to the board in July with updated budgets on all the projects including exploration for approval, and my guess is that Hugh is going to get a couple more million bucks at Tasiast.

Okay. And for the G&A for the quarter, it was like $930,000. Is that a run-rate that you think will be reflective on a go-forward basis? Or I was using a bigger number than that on an annual basis for the year. I'm just wondering what we should use.

Yes, I think the quarter as I show perhaps is on the lean side. I think a number between 1 and $1.25 million per quarter is probably a safer estimate on an annualized basis.

Okay. And you gave us the depreciation for Tasiast, $8 million a quarter. What is the number for Chirano just so I can see what it is, what was sort of --?

It is roughly, I think it is 3.5 to 4 if I'm not mistaken. Yes, it is actually -- yes, 3.5 would be a more accurate number.

And that is per quarter based on -- (multiple speakers)

Yes, 3.1 is the number for the first quarter. So 3, 3.5 with some of the capital additions that are taking place.

Okay. At Chirano the costs in the quarter were like 411. Your target is to be somewhere below $400 an ounce for the year. What will you do at Chirano to get the costs down from where they are today to sub-400? I'm just curious what sorts of things are being done.

(multiple speakers) -- sorry, go ahead, Rick, if you want.

I will let you finish it, but effectively I think you're going to see a big reduction in cost, operating cost, once the permanent crushing system is installed. Right now we are operating two portable crushers to offset the hardness of this ore that was identified a year and a half ago. And that is not going to be fully optimized until the third quarter where we're going to gain a lot on operating costs. You can add to that, Alessandro.

Yes, that was going to be my answer.

Okay. And just maybe a last question if I could. When do you think the minority interest at Chirano will actually start paying out? I mean you talk about it in the MD&A that you have not actually -- you still have a deficit. And when do you think that deficit would be eliminated based on the profit you're generating? You would actually start paying out to the government's minority interest?

We do not expect our minority interest to be recorded for 2008 in light of the large accumulated deficit. You will recall the number for the hedge buyout was in the neighborhood of $95 million, and therefore, 2008 I would safely say it will not see a minority interest recorded.

Simon here just to add to that. There's two factors there. One is the recording of a minority interest, which as Alessandro had pointed out, Chirano would need to make profits in excess of that $95 million before we start recording minority interest.

The second point is, as to whether when that minority interest actually start flowing from a cash perspective, and that really is a dividend payment from Ghana & Co., of which 10% would go to the government and 90% would flow up the chain to Red Back. And it is unlikely that any dividends would be repaid prior to the repayment of all the intercompany loans from Red Back down the chain to Ghana, which is ultimately a big number as well, somewhere in the region of by the time we get to the end of the current capital program, that number will be around the $300 million mark.

So I think we are looking quite a long time before we see any money actually flowing in relation to the minority interest.

Right, okay. And one other thing perhaps if I could, can you guys report your total cash cost, along with our actual cash cost on a quarterly basis? Would that be possible? It would be helpful.

Sure, we can do that. I believe total -- it depends on the total cash cost would probably include your royalties.

Right, right. (multiple speakers) because you guys know what the number is. It saves me calculating it if you can just report it. Okay. That is great. Thanks very much.

David Stein, Cormack Securities.

Most of my questions have been answered, but I wanted to ask about the mining contractors at Tasiast. You inherited some high-priced contracts that (inaudible) signed, and I'm wondering if there's any progress in improving the economics there for the mine?

We should be in a position to come out with an announcement to the market within the next 30 days.

Okay. And just to clarify, you did not have any benefit of the HFO in Q1? That is all in the future?

Right.

And has that been (inaudible) until now?

The HFO plant was commissioned just at the end of the quarter, and the second quarter will be 99% reflecting power based on the HFO plant. The first quarter was all diesel.

Okay, great. I mean do you have enough capacity with that HFO plant to increase production and then even considering hypothetically this leach circuit that you may end up doing?

Right now the HFO plant has two (inaudible) sets, but it was built and we expanded it with a third bay. And we are ordered and will be putting in an identical third unit. And with that third unit, we have got capacity both for the expansion and for what we will need for the heap leach.

Okay, I think that is all the questions I have. Thank you.

[John Case], Paradigm Capital.

Hi, guys. I wanted to know if you could touch on the geologic understanding of what is happened at Chirano, and if there is anything you guys are seeing that is going to make you believe Chirano might -- that Chirano Deeps rather might be unique?

And the second part of that question is, if you could qualitatively on a scale from one to 10 sort of assess how confident you guys are that the system might hold more gold at depth? And I realize you guys are doing that in that sense, so you going to have a little bit more information shortly.

Look, in Chirano we have done a lot of work at Chirano. We think we understand what is going on. For the non-geologists listening in, I think the easiest way to explain what these things are, basically high-grade sub-vertical shoots that are exposing to surface or not has affected the geochemical anomalies, and we are mining on surface those geochemical anomalies.

What is controlling high-grade mineralization appears to be a localized kink in these high-grade structures. Those kinks obviously causing a lot of disruption in the orebody and allowing more gold to deposit out. An easy way to think about it is a series of pearls on a string. So what we're looking for now obviously are to target more of those pearls.

So this is not unusual for Ghana. We're not creating really a new geological model. There's a number of other instances in Ghana that are similar to this.

So what we're doing is we have done a lot of IT to see if we can identify these fractures in these vertical structures. What I can't tell you is that the geology and the genesis of these things are typical across the orebody. We think as we have reported, we have found high-grade shoots under all the deposits. We think we're on to a number of buried shoots that have been identified by geophysics. We will be systematically drilling off all of those over the next couple of years. But specifically we're trying to target some more of these pearls, which would give us another Akwaaba.

And, as I think I said it answering another question, I expect to be in a position to come out with some more definitive news on the work we have been doing in the next 30, 60 days.

In terms of your one to 10 scenario, look, we already know that these other deposits have high-grade underneath them. So I would have to say our risk factor of discoveries is probably zero on that regard.

As to whether or not we've got another Akwaaba, I cannot tell you that. I mean it is an amazing orebody. It is certainly in the lifetime of the geologists, most wouldn't even be exposed to one of these types of things. So if we can get anywhere close to that with any of these others that we're targeting, we will be ecstatic.

Great. Thanks.

Mr. Clark, there are no further questions at this time. Please continue.

Okay. Well, that concludes the quarterly report for Red Back for the first quarter of 2008. Thank you very much for attending. We're very, very excited about how this year has started, and we expect even better results going forward. At this point in time, we don't propose to change any of our forecasts for production or otherwise. But that may change as we complete the second quarter and we announce to the market upgraded reserves resources and a potentially further expansion plan for the projects.

On the exploration side, as I think somebody asked, yes, it is very likely that our budget is going to increase given the very early and the significant success that we are having at Tasiast. And I think that by the end of 2008, it will -- this Company, Red Back, with these two projects will be looking very much different and very much more like a significant gold producer going into 2009.

So again, thank you very much, and we look forward to reporting further on the success of Red Back.

Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. You may now disconnect your lines.