Comstock Inc (LODE) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Comstock Mining Full Year 2017 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Corrado De Gasperis. Please go ahead.

Thank you, Naomi, and good morning, everyone. This is Corrado Gasperis, Chairman and CEO of Comstock Mining, and welcome to our 2017 year-end conference call.

Last night, we filed our fully audited financial statements on Form 10-K, including a clean audit opinion from Deloitte & Touche, and solid servings actually complaint system of internal controls absent -- absence excuse me, of any deficiencies. I'll provide a brief summary of the information included in both our 10-K and our press release from this morning.

2017, for us, in every respect, was a year that positioned us to finally start growing the company again. It was difficult but productive in almost every sense, except delivering a higher share value. Although even there, we saw the bottom turn the corner and are really positioning ourselves now for growth, moving forward. If you don't have a copy of today's release, you'll find a copy on our website at www.comstockmining.com, under News/Press Releases.

Please also let me remind you that in addition to the outlook, I may make forward-looking statements on this call. Any statement relating to matters that are not historical facts may constitute forward-looking statements. Statements are based on current expectations and are subject to the same risks and uncertainties that could cause actual results to materially differ.

These risks and uncertainties are detailed in the reports filed by the company with the SEC and in this morning's release, and all forward-looking statements made during this call are subject to the same and other risks that we can identify.

I'll try to focus my prepared remarks on the 2017 results, the progress that we've been making on Lucerne and Dayton, and what we're positioned to deliver in 2018.

As I mentioned, recently, over the past year, our board has thoughtfully assessed our plans for developing the Comstock and most importantly, ensuring that our plans are sufficient for safely achieving the goal of truly becoming a sustainable 6-figure annual producer. We feel, the Comstock is an incredible platform for achieving the goal, and as we've discussed, capable, on its own, achieving that level of native production.

During 2017, really, in all respects to position ourselves to achieve that goal, we've reduced our cost, really to record-low levels across every expense category. We've cut our liabilities, including our current liabilities, by more than half, about $1.3 million reduction, while also recently paying down over $1 million in longer-term debt during the fourth quarter of last year alone.

We also just entered into a formal agreement to sell the Daney Ranch for $4 million in cash, about twice what we paid for it just a couple of years ago. That will take our $9.6 million in senior debt down by almost half by the end of the next quarter. The profit from that sale is also sheltered from any federal taxes because of our existing tax assets. And we've also began getting significant interests on our other properties, our other nonmining properties, as local economy continues to explode with industrial development. We won't belabor it, but the Tahoe Reno Industrial Park has now sold, the brokers have now sold all of their properties to companies like Google, Tesla, Walmart, Switch and most recently, BLOCKCHAINS, LLC. And they're all starting to either expand their facilities or breaking ground for new development. The early completion of the existing USA Parkway has only accelerated all of these developments, and more importantly, the activities in the periphery around all of these developments. We very much expect to monetize these nonmining assets and pay off the existing debt obligations with cash to spare this year. And we think that the announced sale of the Ranch is a huge step in that direction.

Let me just highlight the mining results for 2017. We reduced our annual operating expenses by over $6.3 million, with year-on-year reductions in every category. For example, real estate operating costs are down 60% year-on-year, bringing the hotel and real estate operations to a second-straight cash positive and profitable year. Although it's small, it's great that those assets are covering themselves.

Environmental and reclamation was down 40% year-on-year, despite a hell of a wet winter in January, February, March of 2017.

G&A costs were reduced by 25% year-on-year, representing almost $1 million year-on-year reduction. Those costs would've come down even further if it wasn't for the wet winter, where we spent quite a few hundreds of thousands of dollars managing water during that period. Yet those costs were all still down dramatically year-on-year. And despite all of those reductions, we also were awarded the 2017 Nevada Excellence in Mine Reclamation Award for Lucerne-related mine reclamation. It's actually our second Nevada Excellence in Mine Reclamation Awards in just the past 3 years. It's a coveted rare type of recognition. To get it twice in 3 years is truly remarkable effort by our team.

In 2017 -- in late 2017, we also signed a strategic joint venture option agreement for advancing the assessment and development of Lucerne Resource area. This is not only advancing the assessment of Lucerne Resource towards economic feasibility, but it's also started to subsidize some of our costs and has potential to reduce those costs even further, potentially by over $1 million a year.

Our annual costs in 2018, before any benefits from that joint venture or the subsidiaries thereto, and despite the reductions that we've already banked in 2017, will still be over 25% lower year-on-year, representing about another $1 million reduction.

We've guided in the outlook that our cash operating expense in 2018 is $3.6 million.

We've also advanced the Dayton Resource development with an extensive array of metallurgical testing. Really quite remarkable. Working with multiple external metallurgical labs here in Nevada as well as our own in-house metallurgical labs and with our partners. Most of this testing either came through third-party funded metallurgical testing, including processing, screening, assaying for higher gold and silver extraction results or through federally funded grants through Cycladex, our strategic investee. Most of the work with Cycladex has been done on the Dayton Resource area.

Recent columns for Dayton are showing gold yields of almost 85%. In fact, we had gold yields of 82% to 85% in the most recent tests. Another test work that we've done has even shown higher yields. We believe that we can enhance the economic feasibility of Dayton dramatically and very possibly, with noncyanide solutions. A lot of our test work has been with noncyanide materials. Some of our test work, in parallel, has been with cyanide materials. With Dayton, we also staked an additional 30 unpatented Lode claims last year adjacent to the Dayton Resource area, including 472 contiguous acres, which, frankly, increases our southern landholdings by over 25% and overall, takes us to almost 9,300 acres, representing over 10 square miles. This work has really positioned us to provide a more detailed and a broader update for the Dayton Resource, including towards economic feasibility and in fact, without additional drilling, with the goal of publishing an updated technical research report and hopefully, a preliminary economic assessment to go with that by the fourth quarter of this year. But we are going to update it. We are going to provide a stronger, more robust report, and we are intending for it to have at least preliminary economic feasibility.

With the Lucerne area, we're very pleased to have been able to advance the assessment over the past 4 months. As all of you know, in early October, we entered into the Option Agreement with Tonogold. And Tono has really been diligently assessing the existing resource with the objective of assessing it, its potential, both near and longer term, and its feasibility. The work's very detailed. They're working hard, and it includes independent third-party geological and engineering consultants to provide that assessment of Lucerne and its potential. We're very happy with the way the collaboration has been to date, the process, the diligence that's being exhibited by all parties. And we just ask you to stay tuned over the next month or so for meaningful updates. Ultimately, this work will result in updated third-party assessments, technical reports and ultimately, same as Dayton, with the objective of reporting economic feasibility.

We have technical committee in place with representatives from both companies. We have scheduled to be meeting here in February and beyond. And again, I just ask for a little patience to stay tuned on all that work.

From a corporate perspective, I've already mentioned the cost and liability reduction, the reduction to debt and the positioned land sales. I also want to note that we have $2 million of cash on hand, and it's our intention to maintain excellent liquidity, stability, as we start to really pursue these strategic advancements. And we have a number of these things moving forward, and I will be reporting on them as they're completed, be it the metallurgical developments, the joint venture developments or other strategic initiatives that we're working on to get us broken out and really start recognizing the value of this platform that we position. So I ask you to be a little bit more patient, but there's going to be a meaningful amount of communications that will continue.

I've also been able to finally hear in 2018, get back into the investment community, attended an outstanding investment conference in Vancouver in January, have met with investors in New York. And we're really starting to see a renewed interest in the company. And I would say, at this point, in a much more meaningful way. We've also had interest just beyond Canada and the U.S. from the Asian community. We've been approached and reached and met with Chinese investors, both in the U.S. and Canada, for both mining and nonmining opportunities for investment.

So everything on our plate is moving forward, probably, for the first time in quite a while. All of the activities are progressing forward. Feels like all that traction is coming back, and we have a really strong plan to actively market to our investors and to new investors throughout 2018.

We're positioning the company to build that production profile. We really want to be a 100,000 ounce producer or more and grow from there. The path is clear for us on how to do that here in Nevada. And we really believe, and we continue to restate that ultimately, that will result in valuations in the hundreds of millions of dollars. We're targeting $400 million to $500 million. We've been public with that. We continue to say it, and we continue to work very hard toward it.

Let me close my prepared remarks by thanking one of our former directors, Bob Reseigh, for 9 years of service to our board. Bob remains with us on our newly formed Mining Advisory Committee that can also have both Dan Kappes and our newly appointed Director, Leo Drozdoff, 2 giants in mining, as far as we're concerned, especially here in Nevada. It's probably worthwhile to mention that Leo has participated in almost every aspect of Nevada -- the Nevada mining industry, from engineering, mine engineering, legislation, environmental regulation, economic development statewide and even historical preservation. He ran, he was literally the top state official, running the Nevada Department of Conservation and Natural Resources for the past 6 years, reporting to Governor Sandoval and Governor Sandoval's predecessor. He was the cabinet to the governor. And prior to that, he ran NDEP, Nevada Division of Environmental Protection, for over 6 years. And even prior to that, he was Bureau Chief over Mining and Water Control, two of the most critical Nevada-mining Bureau responsibilities.

So we're honored to have Leo on our team. His knowledge of the whole industry, but maybe even more so all the people and the regulators across the spectrum is truly second to none. I thought I had a lot of great relationships from Nevada, but Leo takes it to another level. So he is especially valuable to us, as we look forward to develop and commercializing new technologies, and the permitting that, sort of, comes with that.

So anyway, I will pause there, briefer than normal, and Naomi, maybe we can just turn to questions?

(Operator Instructions) We will take our first question from Jon Howe from Wedbush Securities.

Would you go through, again, the non-cyanide solution work with Cycladex and Itronics, just to clarify?

Happy to, Jon. Yes, I'm happy to, thank you. So we really see Cycladex broadening the footprint of their work. They're under a federally funded grant. We've done tremendous amount of column testing. We've done cyanide, non-cyanide side by side. Yields have been very impressive. And they are now working on, I guess, I would call, pilot-scale simulations of processing, working on a number of various alternatives. Interestingly, rather than all the column tests were essentially done on site. What they're doing now is, they're actually setting up and piloting at certain locations, certain customer sites. So it's kind of fascinating. They're looking at and expanding and defining the market, and then they're doing test work on, literally, on-site, in some cases, funded by their customers to test out the solution on a more, I want to say, practical, nonlab scale. So not full commercial scale, pilot scale. And I know that they've had at least 2 of those scenarios in non-U. S. countries where cyanide is prohibited. So very exciting. The results of that test work should help them get to commercial feasibility. We're monitoring it with great interest.

Now from the Itronics perspective, we've just run an extensive battery of metallurgical testing, primarily on existing ores. We've -- we started off using the Leach pad ores, because it was probably some of the most challenging, but majorly, the Dayton ores. And we've expanded that testing way beyond just bottle rows. And we've done some additional processing crushing. And we're getting remarkable results. That work has been funded by Itronics, and they're extremely keen to see their solution play out here. I don't think of the 2 of them as our competitors in the sense that they have very, very different solutions, both very incredibly, actually, environmentally friendly. And I do expect that -- first of all, I expect to update the Dayton feasibility, as I mentioned in my prepared remarks. And I am having an increasing expectation that the work that's being done behind the scenes, in both cases, could enhance those feasibilities. So I mean, ultimately, for every non-cyanide solution, it's a breakthrough. But we're only interested in having that kind of solution if it enhances our economics as well. So right now it feels like we're on the path, and I do expect that we will have substantive updates during this year. It could be as soon as the next couple of quarters, but it certainly will be in the calendar year.

We will take our next question from J. Gunn from RockPort Global Advisors.

Can you just comment how the year is looking going forward for your liquidity? And just where you're at on your debt obligations, please?

Yes, thanks, Jay. It's a great question. So we have one main debenture. It's $9.6 million. It's a longer-term note. It goes out until 2021. But we have, as one of our top corporate objectives, to pay off our debt. The announced sale of the Ranch for $4 million cash. And we had announced, previously, a deal to sell the Ranch, which was going to result in about $3.6 million of cash proceeds. We've enhanced the transaction. It's going to take, maybe, an extra month or 2 to close up. But now we're looking at getting $4 million in cash. So we're very excited about that. I mean, it takes a huge wack off of the obligation. And then our other nonmining assets. We probably spent most of our time working on the Ranch transaction in terms of our nonmining focus up until now. But over the last month, maybe 3 or 4 weeks, we've been getting and engaging a lot of conversation in the other nonmining assets. So I fully expect the monetizations to occur this year. I fully expect the debt to be gone this year, and I fully expect to have some excess cash associated with that. So I really -- I think we're positioning for a homerun here. We have been patient, because we knew that USA Parkway coming in by the end of last year was going to be an accelerator. It actually came early in September. And as I mentioned, the economic interest, the industrial development, the lack of housing, the growth of employment and people, it just can't be exaggerated. I mean, it has to be the #1 location in the United States in terms of economic growth. So we're liquid. We have $2 million cash. We're monetizing these asset sales, and we're maintaining the lowest cost structure, but we're even taking it down further. So I'm really looking forward to some updates in the near future on all of that. It's really teed up and scheduled to be wrapped up this year.

Our next question comes from Eliot Cohen from Oppenheimer.

It's good to see your results. I want to thank you again for another quarter and year of operational excellence.

Appreciate that, appreciate that. We really spent a lot of time in 2017 doing things that although were critically important in prerequisite, we'd much rather be spending our time growing our resource, growing our asset base and growing our equity value. But I'd like to think that with those things behind us, that's where all of our focus will be in 2018.

Right. So I have a question or 2 regarding that, here. So your joint venture with Tonogold. As I remember correctly, the -- some of the verbiage that came out of that agreement was, "Well, we're reexploring this, and it might not be as great as we originally thought." So to my mind, there -- that lowering of expectations doesn't make a lot of sense here. So I really wonder why they would say something like that when you've already proved up a pretty good resource there.

Well, yes. So that's a good point. So let me comment that. I think that -- I think, it's important to acknowledge, right, that in both Lucerne and Dayton's case, we have resources, right? Resources are not reserves. So our -- I don't know if it's a lowering of expectation or just really trying to focus on what the economic reserves ultimately will be. It's not as common for a company to go into production the way that we did from 2012 to 2015 without proven and probable reserves, right? But we had an usual circumstance, right? We had a very limited permitting footprint. We had a community that properly was demanding that we prove ourselves step-by-step, and show that we're not only competent to mine but socially responsible. I feel like in that regard, we really did a fantastic job. We learned some things about the resource estimate. And we've been focused and talking about a much higher-grade corridor that sits on the east side of it. We, positively and factually, we aimed towards that, sort of, higher-grade resource with an underground drift and a crossover to kind of surround it with underground tunnels with, frankly, a less-than-successful effort to establish an underground component to mining. But we learned a lot in every case, right? So what's great about Lucerne? We have a lot of data. We have underground tunnels positioned, ultimately, for more -- much more efficient development. But I do think that there needs to be reassessment of the resource from almost solely economic perspective, right? You can't do an economic assessment until you have a resource assessment, right? But once you have a resource assessment, you can then really calibrate, really focus on what's mineable, and how you would mine it. And in all fairness, given the way Lucerne's positioned, where it is, how we've mined it so far, the state route, I mean, you name it. There are some complexities there that justify that kind of reassessment. So I'm not -- I mean, we're not ashamed, embarrassed or concerned about anything relating to the past. But what we really want to focus on, what does it look like going forward, establish a good economic parameter, establish a good target of ounces that someone other than us says will be mineable. And I don't mean Tono, I mean, third-party validated technical reporting. And then move it forward in the most intelligent way from there. And do the same exact thing with Dayton. Like both of them have resources. Let's step up now and move them towards economic feasibility, so that you and the rest of our investors know not just how many ounces there are, but what's the cash flow. And that's our focus. And it's more narrow. It's more precise. It's more meticulous, and I'm very pleased with the work that's being done. So more to come. I apologize. I'd love to have results today. But I think good news to come with the work that's being done.

So could you give us a guesstimate on when we may ultimately see a feasibility study on these properties?

So I think, ultimate feasibility, 2 definitions, right? You have prefeasibility, and you have full visibility. Full feasibility with Dayton would require additional engineering and work. But prefeasibility, really, just requires a good understanding of the economic shell, a framework of what's mineable and the cost and revenue projections associated with that. So I think we should be in position. I'm not the technical guy, and the technical guy always cautions me that it could take a little more. But I think, given what we know about both resources, we should be moving towards prefeasibility specifics this year. And I can't say before the fourth quarter, because somebody will probably hit me if I do. But that's what we will say.

Okay, one more question...

Updates as we go, Eliot, right? I cannot -- not -- hold on, I'll get back to you in 9 months, right? You'll hear updates next month, you'll hear updates next quarter. And then -- but we'll be moving towards that goal, which I think because with a lot -- what I'm hearing from our investors is that's what we really want.

Okay. And are drills turning right now in Tono?

So drills not turning. No, drills are not turning and for the right reasons, right? The reassessment of the resource gives you an incredibly precise view of what you have and where the gaps are. And then I -- it will ultimately result in much more -- much better planned and much better -- much more efficient use of drilling dollars to the same end. So I think they're doing it the right way.

Okay. And one more question. On your green mining solutions for, I guess, it's leaching the gold out of the rocks here. The recovery rates are, obviously, very good. But what do you think the ultimate, all-sustaining inclusive cost is going to be for an ounce of gold per ton of rock?

So two answers for the question, right? So the yields have been good. And I guess, there's a little bit of a caveat on that -- in that, our yields, on our words, have always been good, right? So that's great news, right, that we can use alternatives that are as good and hopefully, better than what we see before. And then what we're seeing -- and there's two different paths going here, right? We have more intelligence on the Itronics metallurgy in terms of cost than we do with Cycladex so far. But we're looking at scenarios where the cost is lower. So I don't have a number for you. But if it's not lower, ultimately, no one's going to care, right? It's got to be -- well, that's not fair. If it's feasible, and it's environmental friendly, people will care, right? But if it's lower cost, a lot of people will care, right? So right now we're working very hard. And that's where the feasibility then comes in, right? If you've done the lab testing, if you have the yields and extractions that you want, if you're seeing that the specific consumption of these new materials is low, those are all the variables, right, for a breakthrough. But you have to get the final feasibility work done. So that'll take a number of months, and we're preparing to do that now.

We'll take our next question from [Harvey Mordka]. He is a private investor.

Could you enlighten us a little bit, how many actual shares are -- of comm stock are out there?

49.7 million.

49.7 million. So of the 9.5 million that you sold for $0.78 a share back in the end of December, is that in the -- that's in the 49 million?

Yes, that's all in, everything from last year, everything through, I think, yesterday, 2 days ago. Whatever the accountants cut off on the face of the 10-K.

Okay. And we're selling 23% insider. But then when I look for insider, the only insider I come up with is you. And we know that you don't have a 23% share. Who the...

Yes, no. I think that 23% number has to include the John Winfield and the Winfield Group as an affiliate. There's -- I think there's probably 3%. I have to go back and just check the numbers. But it's about 2% board, including me, and about 20% or 21% the Winfield Group.

Okay. It appears as though institutional ownership has decreased significantly. But I don't see any declaration of a major sale?

Yes, no. I don't think it is significant. Like, I do see that there is a little bit of trimming with one fund. And -- but when I go through the top 6, and I did mention this on the call, but I've had really good thorough updates with the top 6, really, with the objective of making sure they understand exactly where we are, and what we've been doing, very consistent with this call. And they're stable. Everyone's very stable. Everyone's very aware. Everyone's, frankly, say, everyone, but quite a few of them are excited about the prospects that we're looking at here in 2018. So I actually think -- obviously, we had tremendous turnover in 2017. I think it's a remarkable outcome in that you have your top 5 or 6 that are solidly in place, including the Winfield Group, including Century, including Sun Valley, including U.S. Global. So you get these guys in place, right? Not happy with the share price, none of us are. Very, very disappointed with the share price. But stably in place. And then you have, sort of, a more of a high net worth retail base that's, frankly, a lot lower because of buying activities in the range that we experienced. So there's two bad things, right? Low share price and catastrophic destruction of your capital base. We've only had the first one, not the second one. The base is actually very stable and strong, which is not intuitive, right? It's not what you would think, given where the share price is. But I've validated it. I've met. I've coordinated. And so I think we're positioned now to move forward. 2017 was a tough year for us. It was a tough year for the industry. And then when you get into the equity market disparities, you have tough tableau selling. It's all behind us, right? That's all behind us. We've got a base now, and we see much more productive trading, much more positive trading, and we're going -- we're just going to get the final traction, and I think it's just getting some of these things we're working on to the finish line, including the debt reduction as a sale of the Ranch, including some of these feasibility prospects moving forward. It will reestablish strongly the credibility of the assets, the resource and where we're taking it. So it didn't feel good, despite a pretty tough 15 months.

It appears to me that Van Den Berg Century has reduced its position close to 25%. Is that correct?

So no, it's not that high. I've met with Arnold and Jim on multiple, multiple locations. We've had some very frank, focused, diligent discussions. I think they're being fantastic fiduciaries for their investors in their involvement in there. Both visited the site for multiple days of review. They have distributed accounts, and in some cases, an investor will say "Hey, look, I just want to move out of sector or I want to move out of this company", which they honor, but -- and as far as their position, they're not in a cell, right? So they're stable, and they're keen on us delivering on what we say we're going to deliver. I cannot speak for them. But obviously, you have to speak for them. But they're focused, they're tough, they're great fiduciaries. And for them to both take the time to come out and, not just check on the mining operations, but check on the local real estate market, see the Gigafactory with their own 2 eyes, drive down and see the industrial park. It's a lot of time. And they did it.

Since Tonogold came on board, their stock has more than doubled, and ours has gone in half. So I'm trying to get an understanding of what's going on?

Yes. It's -- I think fundamentally, we have to reestablish the credibility of those resources. We have to move them towards feasibility, and then when that happens, evaluations will be there for us. I don't have any doubt.

Okay. Are there any bites on the Silver Springs industrial?

So there's -- there is visited interest, right? I would say a bite is an offer, so let's call them nibbles. But we went from having a lot of fanfare and no visits through November, December, last year, to visits from industrial developers, visits from commercial developers, discussions with local developers. And some interested people to invest or buy. So I think we're going to see something in the next 6 months, without a doubt, just because people are now getting engaged. The scarcity of water in that area is something that we predicted. It's probably more dramatic than we thought. And it's only lifted the values of our existing water rights. So we couldn't feel -- we feel like we're in a best possible position.

Have we had any sales on the water rights?

We sold 50-plus acre feet last quarter. It was sort of on 2 tranches, the last sale being 15,000 in acre foot. And we've got them currently listed at 19,000 in acre foot. And projects are getting approved, right? So people are going in and submitting residential developments for approval, industrial developments for approval. And they need the water to do it. So everything's working in our direction. We also have had 2 major properties that surround us. One is 160-acre commercial development in Silver Springs get full water allocation and commercial subdevelopment and zoning approved by the county and the state. And then a monster one, which is just south of the 80,000-acre industrial park. It's adjacent to an extension thereof. And it's -- we got 12,000 of those acres, which were zoned for residential, rezoned for industrial. And so, I should've probably mentioned that even though the Tahoe Reno Industrial park has now -- everyone has staked their claims, and there's no more property you could get there, if you wanted to. We understand the last purchase was 9 figures. But now a group out of Las Vegas, which owns 20,000 acres, south to an adjacent, which is in visual proximity of our property, had just rezoned the 12,000 acres that's in Silver Springs to industrial. And they have a 2-year development plan. And they probably, if I read the conceptual design properly, when they got the approval, I was actually at the permit hearing. They've got space for 4 or 5 additional anchor companies. So it's remarkable. And that's all coming -- it's just moving right toward us. It's going to bump into us, if it's not careful. So we're very happy about that.

Is there going to be another airstrip on the Tahoe Reno Industrial Center? Or Silver Spring is going to be the closest?

No, Silver Springs is the one. And there is an option by two California developers to purchase the Silver Springs airport. We know them very well, they've been working very hard on all the economic development happening around that. The master plan was approved and Tesla has landed their jet there at least once that I'm aware of. And a lot of interest is coming around that. Our property is adjacent to and has 2 points of possible through this and its access. And so, we've gotten people come to us with conceptual designs about airport hangers, airport maintenance facilities. It just -- it needs to be the people with the money that want to develop it. So I think it's just a matter of time.

My last question is, we were at -- when did the [5 to 1], we were at $0.20 or $1 a share. And now we're down to right around $0.34 a share. What's your prognosis to get back to the dollar share level on higher?

I think that -- I think the deleveraging gets us to $1 in all by itself. Just from our hearing from people and their interest in seeing that go away. I think that ultimately -- we think these feasibilities are going to start in the hundreds of millions. And they're going to move up from there. So anything we can do to enhance it with metallurgy, with better cost, that's wonderful. But the numbers are going to be big, right? And so the $200 million you're at, you're at $4. And then we will go beyond that.

We should be deleveraged by the end of this year?

Yes. Yes.

The time allotted for questions and answers has come to a close. I would now like to turn the call back over to Mr. De Gasperis for closing remarks.

Thank you, Naomi. I just want to thank everyone for the good questions. We're very focused. We're working very hard on all these value-creating initiatives. We'll be reporting updates as they come through. We expect to have them in the near future -- and immediate future, and all through 2018. If anyone didn't get a chance to ask questions, please feel free to follow up directly with me or Zach. We look forward to talking to you in the very near future. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.