NovaGold Resources Inc (NG) 2010 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the NovaGold fourth quarter results conference call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Rick Van Nieuwenhuyse, President and Chief Executive Officer. Please go ahead, Mr. Van Nieuwenhuyse.

Thank you, Operator, no problem with the pronunciation, there. Welcome, everyone, to the quarterly call for 2010 year-end. We'll give a summary and plans for our 2011, as well as giving you the results for the year 2010. I'm actually calling in from Alaska, so I'm at a remote location. I hope everyone can hear me. First off, I would like to introduce Elaine Sanders. Elaine will be joining on the conference call, and I am pleased to announce she is joining us at our Chief Financial Officer now.

Just a couple of things before getting started with the formal presentation. We do apologize for not having the call sooner. We've all had some challenging travel schedules here but in the future, we will announce in advance before releasing our quarterly result financials, as well as hold a conference call within hopefully one or two days of the releases of our quarterly results. So, we will endeavor to stick to that schedule in the future.

I will direct you to the Forward-looking statement slide here, as our discussion obviously will include Forward-looking statements. I will start by giving you an overall brief review of the summary of the results in the conference from 2010, then followed by having Elaine give you a financial -- a summary of the financial results for 2010. And then we'll wrap up by having a update on our existing product portfolio and project activities, as well as a brief summary of our plans for 2011.

So with that, focusing on our core assets, Donlin Creek, we re-negotiated the -- the mining lease with Calista Corporation. The release -- the lease was originally developed for an exploration, probably, project and obviously, we've advanced significantly since then. So it's appropriate to re-negotiate that for accommodating our plans for developing and operating a mine for the next 25 years plus. We also spent a lot of time on optimizing environmental and engineering studies related to the Natural Gas pipeline, and then incorporating the natural gas option as a source of fuel into an updated feasibility study, which we'll be releasing in Q3 of this year.

We also, obviously, have a lot of work with maintaining our ongoing community outreach and engagement, and think that the project is really on-track for the next stage of development, which will be essentially permitting. On the Galore Creek, we've maintained the road infrastructure that exists to the property, and have a number of things ongoing. Obviously, with the pre-feasibility study that is underway, engineering and environmental review studies, as well, on that project. In summary, there's been a lot of activities both at Donlin Creek and Galore Creek in 2010, and the projects, I think, are really gaining a tremendous amount of momentum going forward.

On our non-core assets, Ambler, we have had also a number of engineering studies to evaluate an access road into the project area, and to prepare ourselves for undertaking the pre-feasibility level study. We have signed a letter of intent with NANA Regional Corporation, basically for the collaboration and development of the entire Ambler district. I think this is -- this is a signature of how we how we approach projects engaging with the local community early on, and it certainly is the approach that we have taken in the past with our other projects, and Ambler is no different in that way.

With respect to Rock Creek and our Nome Gold assets, we have an ongoing program -- formal program ongoing for Rock Creek to divest of the assets, and we've had a similar plan to sell the Nome Gold assets, which is the Alluvial Gold on the Nome lands, as well. So, we expect to monetize those assets this year. We continue to, obviously -- even on our non-core assets, we continue, obviously, to develop and have community engagement with the local community there, as well.

Moving onto slide six. We've published our first sustainability report . I think we are very proud of that. Going forward, we see that is certainly very important in terms of open and honest communication with the local community, and the broader community, as well. In the area of corporate governance, we made some changes, appointing Gerry McConnell as Chairman. I think that is a very positive move in having a chairman of the board, rather than that being the same as the Chief Executive Officer, as we've had in the past. So, we think that's very positive.

In terms of corporate governance, in addition, we added two Directors. Marc Faber joined the Board. Marc, obviously, is a very well-known Macro Economist, and we're certainly pleased to have him on board. And Igor Levental, as well, joined the board, and Igor, or course, has a well-known history with -- formerly with very big companies like Homestake and Corona, so he brings a tremendous amount of wealth to the board

We've also been expanding our team to help meet the objectives and goals with our core assets as we go forward. We're pleased that the Gil Leathley joined the team as our Senior Vice President and Chief Operating Officer. Gil, also formerly with Homestake as their Chief Operating Officer, brings a wealth of experience and depth of knowledge in operating mines, building mines, that has been really critical as we work with our partners, Teck and Barrick, to advance our two big projects. As a mentioned earlier, Elaine Sanders has now been appointed Chief Financial Officer, so we are very pleased to have her experience -- eight years of experience now with the company, working as our Chief Financial Officer.

In addition, Ron Rimelman joined us late last year as our Vice President Environment, Health, Safety, and Sustainability, underscoring our emphasis on the importance of those four areas. And certainly, again, with our large projects, Donlin and Galore, we certainly see him bringing his expertise to those. Ron has had a tremendous amount of experience working in Alaska on a variety of projects up here, so we're very pleased that he's joined. Probably in the next few weeks, we'll also be announcing some additional appointments to some other Senior members of our Executive team.

Just highlighting -- our shareholder basis is really a blue-chip shareholder base. We did a strategic financing in late March of last year with Paulson and Soros funds coming into as shareholders in a very significant way, just really adding to the depth of the really blue-chip shareholder base that we have. I think -- I can't speak for our shareholders, but I think that by and large, they're seeing -- they've taken a long-term view on Gold, and they really see that NovaGold really provides them a maximum leverage to that. So, we are very pleased to have that shareholder base.

In 2010, NovaGold really outperformed our peers and the indices with 117% share price appreciation, so 2010 was a great year for NovaGold. We're certainly well endeavored to match that performance in 2011, and there's a lot of hard work in front of us. But we think we've -- as we outlined before, that the team that we've built, we can certainly advance these projects, and we think that's the best way to add shareholder value. Certainly, these are big projects, and we are very pleased to see them continue to move forward with the updated studies that we expect to be releasing this year.

Gold, obviously, continuous to perform as a metal and Copper. We don't really show Copper here, but I think it'd be a similar graph, and NovaGold really provides great leverage to both of those metals, and to Silver, as well. What you do see here, however, is continued volatility. You see a price range of about a little lower CAD200 an ounce there. On a daily gold price moves up and down in a band, obviously, continuing to move up, but it does create a lot of volatility, and that has a very leverage play to Gold. We certainly experience that volatility on a daily basis.

But we will continue to move our projects forward, achieve the milestones. And that is what's different, really, about NovaGold than a lot of our peer group, is that leverage. We have similar leverage to Gold that a Barrick has, but we do achieve -- we do trade more with the milestones that we achieve. Each time we achieve one of the milestones, we add value for the shareholders, and that is, obviously, what we are focused on here. Currently, as a value play, we're currently valued at about CAD115 enterprise value per ounce. That's kind of in the middle of the developers pack. We certainly see the path forward on being able to add that value. We have a resource and reserve base comparable to the mid-tier companies who trade more in the CAD300 or CAD400 range. That is the objective over the course of the years, here, as we continue to advance and achieve the milestone of the company.

Obviously, we know we have tremendously great assets located in favorable geopolitical locations, and when you look at the recent acquisition prices that major companies are paying for high-quality resources, some of them in more challenging geopolitical locations than British Columbia and Alaska. When that averages to [CAD745] an ounce, we can see that we have a lot of value to add to the shareholders here. So with that, I will invite Elaine to come in and give us an update on the 2010 year-end financials. Elaine?

Thank you, Rick. Good afternoon, everyone. I will now provide some highlights from our 2010 year-end financials. We finished the year with a very strong cash balance of CAD151 million, compared with the balance from our previous year-end of CAD38 million. The increase was the result from the financing we completed with Paulson and Soros at the beginning of the year. This cash amount is providing us with a healthy working capital balance to begin fiscal 2011 with. Total assets on the balance sheet at November 30, 2010, was CAD801 million, which is largely comprised of 100% of the Galore Creek assets in the property, plants, and equipment, and mineral properties categories. As a reminder to everyone, under variable interest and C accounting, we are consolidating 100% of Galore Creek.

We recorded a loss for the year of CAD203 million, compared with a loss the previous year of CAD73 million. In 2010, we recorded a one-time write down of the Rock Creek project. We took an asset impairment charge of CAD116.4 million into the income statement, and wrote off the Rock Creek asset from the balance sheet. We generated CAD195 million of cash through financing activities and warrant exercises, compared with CAD117 million in the prior year.

At our two core projects, Donlin Creek and Galore Creek we have different accounting disclosures. At Donlin Creek, we are applying equity accounting, and therefore only show our 50% share of funding. The project expended over CAD40 million during fiscal 2010, and our share of that cost was just over CAD20 million. Barrick and Placer Dome, prior to the merger, had spent close to CAD200 million to-date since NovaGold' involvement with the project. At Galore Creek, we are consolidating 100% of the activities of the operator, Galore Creek Mining Corporation. We show on our accounts that CAD16 million was spent in fiscal 2010 at Galore, even though Teck contributed 100% of those funds. Teck has spent approximately CAD360 million in total at Galore, and we anticipate that their total spending will be approximately CAD375 million when they finish completing their earning.

This leads me to our 2011 outlook for our projects. At Donlin Creek, we have approved a 2011 budget of CAD41 million on a 100% basis. These funds will allow the projects to complete feasibility study revision, to incorporate the gas line option, and prepare permit applications. At Galore Creek we have an initial budget approved for 2011 of CAD12 million to complete the pre-feasibility study. Approximately CAD13 million is remaining for Teck to complete its earning obligations, which at that time, NovaGold will begin funding our 50% share again. A preliminary budget has been presented to commence the feasibility study, begin permitting, and advance road construction, all of which is dependent on the results of the pre-feasibility study.

At Rock Creek, we have a 2011 budget of CAD8.5 million for care and maintenance. At the Ambler project, our 2011 budget is CAD10 million for exploration, environmental, engineering studies, and community engagement. For our Exploration group, we have a 2011 budget of CAD4 million, which is allocated for the first drilling program at our San Roque project in Argentina. The money also allows the company to continue searching for new exploration opportunities.

I will end my financial update with our IFRS transition. As everyone knows, effective for all companies with fiscal year ends beginning on or after January 1, 2011, we all are required to report under the new IFRS standards. For NovaGold, this means it's our year-end ending November 30, 2012, so next year. We are working this year through the transition phase, and will adjust our 2011 quarters to the comparative quarter under IFRS. The largest impact for NovaGold is the US dollar-denominated financial instruments on our balance sheet. We have to apply mark-to-market accounting, and we are currently working with warrant holders to amend the currency from US dollars to Canadian dollars to avoid significant impacts, which in some respects are meaningless to the company's profit and loss statements. Although we do not need to be IFRS compliant until 2012, the company has made this a focus, and we are well underway to transition fully to IFRS. I will now pass the presentation back to Rick.

Thank you, Elaine. Great, great summary on the financials. Giving you now an update on the projects and plans for the projects going forward, here. Starting, of course, with our flagship property Donlin Creek. With the reserve and resource statement here, this again is a 50-50 partnership with Barrick and our native partners, Calista and TKC. The reserve and resource statement here is based on the CAD825 Gold price. This will be adjusted up as we use a different Gold price going forward, here.

The feasibility study that was completed. Really, although we are updating the feasibility study itself, we really aren't changing anything at the mine site, other than the source of fuel for the power plant. So, the design -- the location of waste and tailings facilities and mill and fuel storage, et cetera, none of that really changes. The mine plan, obviously, will be updated using the fuel source of gas as a source of fuel and, of course, using a different Gold price. Essentially, the mine site footprint, as you will, really won't change with the with the updated feasibility study.

Of course, main drivers this year have been the study of the gas line, which is outlined here on the map on the lower right. Which basically, leaves just north of Anchorage at a place called Beluga, which is the collection point of the gas and [inlet].It will take off and then go through to the Alaska range and then due west over the project site at Donovan Creek. The many benefits that we see due to looking at the gas line, obviously, gas is a cleaner-burning fuel than diesel in terms of air quality emissions and such. It really simplifies the logistical supply chain and takes a lot of the fuel off the river. We think these are positive and minimizes, as I mentioned, the impacts to air quality and certainly CO2. If we ever see attacks on CO2, obviously, gas will benefit more than diesel in that. We do see that there are synergies with local communities, as well. And overall, just a better risk profile, we think, for the project.

Now, we are just wrapping up all of the studies, and we see that -- we'll incorporate those in the feasibility study, which is now due in Q3 of this year. That will provide an updated capital and operating cost for the project using gas as for source of fuel. We are only using gas to power the -- to fuel the power plant. We think there are upsides in using it to power the rolling stock as well, the trucks. But that will wait and take a look at that in future years. Obviously, this will update the reserves and resources as I mentioned earlier, and obviously, the cash flows, as well.

We are planning, once the feasibility study is completed, to then file for permanent applications. That will be the next step, either late this year or perhaps early next year, with an expectation that this would take on the order of three years to permit and the once permitted, we would be looking at a three-and-a-half to four year timeline for construction. This is a very, very big project. A lot of work to do, and a lot of work has been done. I really would like to compliment and thank the Donlin Creek team. They've done a tremendous job this year, and continue to do so without any lost time accidents. So, a very effective and well-functioning team out there.

Meanwhile, on our Galore Creek project, again, this is 50-50 with Teck located in northern British Columbia. The activities there were mostly directed at optimizing the development plan and continuing to work on that. The scenario sees mining in the valley and conveying ore through a tunnel to the mill site and tailings facility located in the upper reaches of More Creek. You can see the line on the map there -- the yellow line is the access road. It is roughly half completed, where it joins up with Highway 37.

We've all had some really good news here lately with the government's proposed 287 KB Transmission line receiving its environmental assessment certificate, here, I think it was about a week ago or so. And we saw that BC [high-jo] has announced that they put up their RFP for contracting the construction of that power line, so that is moving along well.

We see again, a lot of activity work on the pre-feasibility study that has been underway. We will have that ready in Q2 of this year. We will be looking at a 90,000 ton throughput rate. We will be using much higher metal prices commensurate with long-term view of -- long-term metal price view in today's world. Probably using a 250 Copper price. Obviously, this with the completion of a pre-feasibility study will get additional Gold reserves that will credit to NovaGold's 50% credit as well as, obviously, Copper and Silver reserves. The pre-feasibility study will outline the production levels on a year-by-year basis, as well as cash flows, capital, and operating costs as well.

Next, the next steps would be than, assuming a positive outcome of the pre-feasibility study, we would look to advance the project through feasibility to initiate permitting in the next year and to resume road construction. Those are all activities that we would expect to take place over the next two years. We would look at completing feasibility, completing permitting, and then completing the road construction. Once permits are received, we would then look to a four year timeline for construction. Again, these, obviously, are Forward-looking statements and it's just an expectation of the time-lines to give you an idea of the length of time it will take to bring Galore Creek into production.

Obviously, the next big step for NovaGold is looking at financing for the project. And that's -- we've really been building up the team with that in mind at the forefront. Our one goal objective is really to get Galore Creek and Donlin Creek into production, be producing on the order of a million ounces of Gold a year. The next big step to that, is to raise the money.

We are well-positioned currently, with about CAD150 million in the bank. And we think we are in a good place to meet our existing obligations over the next couple of years. We have a great shareholder base, as I mentioned. There are about CAD60 million-plus in warrants in the money, so that's additional money that we, obviously, will use to continue to advance our main objectives here. Galore and Donlin are both, obviously, long-life projects. I think both have a 25 year mine life with the current reserve base. And so, certainly strong production and cash flow potential going forward here.

Our objective is to maximize values from the non-core assets until we can redirect that towards our objectives of financing Donlin and Galore. We think because these projects are partnered with major companies like Barrick and Teck, and that they are long-lived in the safe jurisdictions, that they can attract a project debt load of perhaps 50% or 60% percent. We will be working hard then to raise the balance of those funds necessary to bring those projects into production by looking at leveraging Copper and perhaps leveraging Silver, particularly from Galore Creek. I think we see a path forward there on how to finance Galore Creek. Of course, on Donlin Creek, there is a lot of Gold there. It is something that we might look at, whether we do the straight equity or financing for the balance of the project, or do we look at some sort of a royalty or Gold loan type of a structure for financing of our shared equity for Donlin. We think those are all things that could be part of the mix.

Moving over to Ambler. Although this is non-core, this is a tremendously valuable asset. We've really worked hard over the years to advance this project. We now own 100% of it. We have done a formal letter of intent with NANA, our regional corporation. NANA is one of the Alaskan native corporations. They are very familiar with mining. The own the Red Dog deposit that has been mined by Teck for the last 25-plus years, so they are very familiar with mining and the benefits that mining brings to their region. As I mentioned, we have signed an LOI. We're working on the formal agreements and hope to have those completed soon.

The Ambler district is really comprised of an entire district. What we refer to as the Arctic Deposit is one of a series of Deposits. Arctic contains about 32 million tons of 4% Copper, 6% Zinc, 0.8 grams of Gold, and almost 2 ounces of Silver. So, that is about 8% Copper equivalent, probably one of the highest grade BMF positive in the world. And it is not small, either, it is very, very sizable. We see the ability to add value here. We're looking at a number of ways of what the best way to achieve that added value to the company. We don't really think that the true value of the asset's reflected in our share price, and we will be looking at a variety of options including a sale or something that could be financed by private equity, or perhaps even an IPO. So those are -- that work is ongoing, and we would expect to be reporting on that going forward here.

We are fundamentally an exploration company. We've done that very effectively over the last 12, 13 years, and we will continue to do that. Elaine mentioned our initial exploration program on the San Roque project in Argentina. Very exciting new target, and we look forward to reporting on that. But we certainly won't forget our roots and finding Gold and Copper, Silver. It's something we've demonstrated we're good at, and we'll continue to do that.

Value drivers, we think there are a lot of milestones going forward here for 2011. The pre-feasibility study, the additional reserves of Gold, Copper, and Silver coming from that pre-feasibility at Galore. That will give capital costs, production estimates, and construction time lines. We think Galore is a great project, and certainly have a great Copper market, with Copper trading well above CAD4, and so we look forward to advancing that to feasibility under initiating permitting and re-starting road construction in 2011.

On Donlin, the feasibility update, again, great milestones there, we'll update capital and operating costs. We think gas will help reduce the operating costs and make it overall more efficient and a more logistically simpler project. Obviously, we'll update reserves with higher Gold prices there, as well. With Donlin looking to apply for its permits towards the end of this year, perhaps early next year. And maximizing value of Ambler, Rock Creek, and our Nome Gold projects.

So, a lot going on, but we'll focus on our one goal, bringing Donlin Creek and Galore Creek projects into production, working with our partners Barrick and Teck. And continue our strong community relationships and working in a very low geopolitical risk part of the world, where mining is really part of the culture in Alaska and British Columbia. We'll continue to look for new opportunities, but we'll get underway drilling at San Roque soon, and we hope to be able to report on that. We continue to provide great liquidity and great leverage to Gold. With that, I will open it up to questions.

Thank you. We'll now take questions from the telephone lines. (Operator Instructions). The first question is from Imaru Casanova.

Hi, everyone. Thank you for taking my questions. Just two questions for clarification. One is regarding the resources and reserves at Galore Creek. I do understand that as part of the pre-feasibility you're going to see an increase in your reserves. But do you expect -- besides an upgrading of resources to research, do you expect a significant increase in resources as a total?

No, we have not done any more drilling on Galore Creek, so we don't expect any resource expansion from additional drilling. All the drilling in activities over the last couple of years have been focused more on geotechnical and metallurgical work. The only resource increases would come from using different gold prices and different copper prices and different silver prices. So, I hope that answers your question.

Yes, thank you. My other question is, I thought maybe you could talk a little bit about the Copper Canyon and what's happening there. Can you share how many shares have been tendered, or just anything that you can tell us to help us understand what's happening there?

There is not really a lot I can share with you. The bid is outstanding. We think it is a good offer for Copper Canyon shareholders. It was a 40%-plus premium offer. We have not made a decision on extending the bid at this point. We think it was the right timing to -- we think for our purposes, it was the right timing, given that we do expect a lot of news flow out of Galore in the years it goes forward. And of course, NovaGold offers great liquidity, exposure to Galore and exposure to Donlin Creek, both of which are, as I've just outlined, really advancing to construction decisions. So, we think it is a great offer for and great time for our Copper Canyon shareholders to take advantage of our offer.

Okay. My last question is on Ambler and the timing there. Do you expect to come up with that decision, you say you are considering different alternatives there, as far as monetizing the value and helping with the financing. Do you expect anything to happen before you come up with the results of your preliminary economic assessment and your resource estimate? I know you have a (inaudible) for the first half of 2011. Should we expect to hear anything before that, or should it be after you come up with those results?

We are working on the PEA now, and of course, that really will be part of our decision point going forward on which of the various options we go forward on. Ambler, just as with copper over CAD4, and zinc over CAD1, it certainly has attracted a lot of attention from a lot of different places. Some of which we didn't really expect to have to consider. So I think it is a good news thing that we have a lot of interest from a lot of different areas, and we will just do a diligent job of assessing all of them and deciding which is the best path forward.

Okay, thank you, that's it for me. I appreciate it.

Thank you. Your next question is from John Bridges. Please go ahead.

Hi, Rick. Hi, Elaine. Good afternoon. We've seen some CapEx growth in capital bills at some of the other mines (inaudible). Are you still comfortable that you can come in below the five level at the two operations?

Great question. We certainly -- I was just down at the BMO Conference in Florida and that was probably one of the certainly several top questions being asked, and certainly just see oil prices creeping up and with all the issues that are going on in the Middle East in general, there certainly could be tendencies for that to go up. And then we see that one of the responses of higher oil prices is an inflationary push. So, I don't have any answers for you. We are working hard to bring all the information together on the feasibility study update.

I can say we certainly see some great benefits going with the gas line route, and I think Barrick and ourselves are very positive on the project going forward. In fact, we have a joint venture meeting here at the end of next week, to get an update. So, I can't really give you any further guidance than we have with the numbers that are out there with the diesel scenario. We'll certainly work hard to curve any inflation in the numbers.

Okay. You've already spoken about how the gas line can cut your power cost in half. What is the upside with the trucks, and whose technology is that, that you could possibly put natural gas into them?

Yes, it is fairly new, and they are -- not sure if experimental's the right word. I think they are actually being used and assessments are being made on how efficient and effective they are, and what the cost of operations, and things like that. The gas trucks themselves are undergoing some sort of a feasibility level study on the truck usage, which obviously is not complete yet. It is being looked at as an upside.

I think -- I'm forgetting the name of the group, but it's a Vancouver-based group that basically builds the catalytic converters that are used to efficiently power the buses, the gas buses that are operating in Vancouver. I think it is the same technology. It is just scaling that technology up to the big-tonnage haul pack-type trucks that operate in mines, which is obviously a lot bigger than a bus, but that is the technology that is being looked at.

I've heard the idea before, the idea being it's a sort of a hybrid where, when it's on full-load it runs off diesel, but when it's on part-load you can run it on gas. Is that the technology?

To be honest with you, I would have to get back to you on that, John. It's been a more recent set of discussions that have come up. Again, we just talked about it as being something that we would point out as a potential upside case in the feasibility study update.

Okay, cool. And then the target of Q3 for the feasibility study, is that being delayed from Q2?

We actually -- I think our guidance was always mid-year. We were hoping to have it done by July, and that was our original intent from the Donlin Creek joint venture. So, we did move it by several months -- a couple of months to September or October. Essentially, that really has to do one of the specific areas of study. We have two different up river port facilities that we have under consideration. As we looked into that further, we decided that we wanted to take a second and a little deeper look at the long-term -- the usage of either port from a long-term perspective. Looking at this project of what's this look like over a 25 or 25-plus year mine life with respect to water levels, and over the length of time, what would be the better port to use. Maybe looking -- we know there are a lot of exploration upside at Donlin Creek and the rest of the district, and at depths at long strike. If we, in the future, looked at doubling the throughput, what would that do to your decision to use a port that was further up river with a shorter road, or a port that's further down river with a longer road.

So, basically, in looking at that we just decided to take another couple of months to analyze it. Obviously, when you're looking to invest somewhere between CAD4 billion and CAD5 billion, you want those key decision points, like what port to use, you want to really look at them thoroughly and not make any quick decisions. So because we are entering the permitting process, now is the time do that. We don't want to -- we want to make this decision and make it final, so that when we start permitting we don't have to make any changes or adjustments into the documentation that we are applying with the permits for.

Absolutely. Okay. Good luck, guys, thanks a lot.

Thank you, John.

Thank you. Your next question is from Paola Lostritto. Please go ahead.

Good afternoon, guys. A quick question. You may have already covered this, but with the drilling that you are doing down in San Roque, what is your timing in terms of getting news out?

We actually probably did not mention that. I think the drills start turning mid-month here, and working in Argentina will be a little bit of a new experience for us. I don't know when exactly we will have drill results to report, but we'll certainly get them out as quickly as possible. I certainly think that within three months we should have something to talk about. Obviously, if we have something to talk about, you will hear about it. If we've -- if it's a duster, it will be non-material.

What is the plan right now, just bring one rig or do you have a couple of rigs that you are planning to bring in?

Yes, it's a very modest drill program. A couple of thousand meters, you want to test some geologic concepts that we think this is a potentially a large disseminated system. We are testing that theory, and if it's successful, we will do a second run of drilling, I think on the order of 7,000 or 8,000 meters.

Do you already have the option for those additional rigs lined up?

Yes. Joe Piekenbrock, our VP Exploration, has got the project well in hand. I mean, this is our bread and butter. This is what we do well.

Yes, I know, I sat down with that one and it looks pretty interesting. All right, thank you.

You bet.

Thank you. This concludes our question-and-answer session for today. I will now turn the meeting back over to the speakers.

Well thank you, Operator, and thanks, everyone, for joining us. As I mentioned before, going forward we will put out a release in advance of releasing our quarterlies to give everyone a heads up that they are coming. And then we'll endeavor to have our conference call within a day or two right after the release of the quarterly so we don't have a gap there like we did this time. We apologize for that, and we will get that squared away for next time. Thanks, everyone, for joining us and have a great day.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.