OceanaGold Corp (OGC) 2009 Q1 法說會逐字稿

Please go ahead.

Thank you and welcome to the OceanaGold 2009 First Quarter Results conference call and Webcast. My name is Darren Klinck, Vice President of Corporate and Investor Relations.

Joining us on the call today from Melbourne is Stephen Orr, Chief Executive Officer and Marcus Engelbrecht, Chief Financial Officer. The format will consist of a Company presentation discussing the first quarter results followed by a question and answer session.

I note that this presentation contains forward looking statements which by their very nature are subject to some degree of uncertainty. Additionally, all references in the presentation are in U.S. dollars and adhere to Canadian Generally Accepted Accounting Principles.

I would now like to turn it over to Stephen Orr, Chief Executive Officer of OceanaGold Corporation.

Thank you Darren and I'd like to welcome our participants today in our first quarter conference call. The first quarter of 2009's results represent the best production and cost performance that OceanaGold has achieved to date. This is actually the fourth consecutive quarter that we have increased gold production while reducing cash operating costs. The results that we'll discuss today demonstrate the potential of our New Zealand business that we've been building over the last three years. We now have three mines operating at or above design levels and are exceeding our internal performance targets.

Our 81,000 ounces of production was slightly ahead of our budget and the cash costs of $279.00 an ounce, as you'll see later in the presentation reflects lower input costs throughout the business, particularly diesel fuel and power, and a decline of the New Zealand dollar against the U.S. dollar. The net result is that we have increased cash generation and ended the quarter with about $17.5 million U.S.

Now that the New Zealand operations are performing to plan we're reassessing Didipio. Due to the lower cost environment combined with some design modifications it appears that we will be able to complete the construction on Didipio for significantly less capital than we announced in May of 2008.

For those of you who are unfamiliar with the Company, this map shows the location of our operations on chart number four. We have three operating goldmines and two processing facilities in New Zealand and the Didipio gold copper development project on Luzon Island in the Philippines.

Turning to the chart number five, as demonstrated on this chart gold production has increased consistently for four consecutive quarters and reflects progressive improvements in production rates and most notably, recoveries in our Reefton and Macraes processing facilities.

While gold production has increased by 38% over the last four quarters, cash costs have declined by 62% due to the compounding effect of the higher gold production, lower commodity costs, and a decline in the value of the New Zealand dollar against the U.S. dollar. As CFO, Marcus Engelbrecht will discuss the influence of each of these factors later in the presentation.

So by way of comparison with our peers, our Q1 cash costs have placed us in the lowest quartile of gold producers worldwide. This chart on slide number six indicates the Q1 2009 reported production and cash costs from a number of our industry peers.

The net result has been that our earnings before income tax and depreciation have increased thirtyfold over the last four quarters due to higher gold production, a lower cost profile, and the higher gold price.

So those are the headlines, performance metrics. I would now like to provide you with some detail on how we achieved those numbers, starting with slide number eight.

While we sold just over 81,000 ounces during the first quarter, the operations actually produced over 84,000 ounces due predominately to overperformance at Reefton where that mine has been operating at about 20% above design levels. In fact, we've been stockpiling excess Reefton concentrate for future processing through the Macraes autoclave.

The 13% increase in feed grade to the process plant compared to the fourth quarter of 2008 is a reflection of the higher grade from the Frasers Underground combined with mining of a higher grade ore block in the Macraes' open pit.

On slide nine we've provided some performance detail on the Macraes production complex which consists of the Macraes open pit, the Frasers Underground mine, and a six and half million ton per annum capacity processing facility which is where our final gold product from all mines is produced through our pressure oxidation circuit.

About 80% of our first quarter production came from the two mines at the Macraes complex with Reefton providing the residual 20%. The 26% increase in production compared to Q4 of 2008 was due to higher grade, higher throughput, and improved recoveries. You'll note that the Frasers Underground produced the grades that were 13% above our expectations. We're seeing a generally higher grade profile in Panel Two of the Frasers Underground which is where we're sourcing all of our production from that underground mine.

In addition, we're also extremely excited about our Frasers Panel Two Deeps discovery that was announced to the market last week.

Just turning to slide ten, we've shown you a plan view of the drilling to date for the Panel Two Deeps. It appears to be a parallel structure that sits directly underneath the current development of Frasers Panel Two. The fact that we have the existing development above it has enabled us to effectively drill this zone from current development in the underground mine.

On slide 11, you can see there appears to be blue continuity of mineralization and the tenor of the grade is higher than the current grades we have profitably mined in Panel Two. The structure is still open in two directions and seems to be generally following the trend of Frasers Panel Two in depth.

Turning to slide number 12, overall I'd have to say that Reefton has been an absolute stellar production performer for us ever since the (inaudible) section last year. The one area where we need to improve is in safety. Unfortunately we've had four lost time accidents in the first quarter at the mine and this is unacceptable. We're now devoting full attention to improving safety performance and I'm confident that there will be significant improvement in the coming quarters.

The processing plant throughput there has consistently been 20% to 25% above its design capacity of one million tons per annum and the feed grade to the plant has been above that which is forecast in the geologic model due, we believe, to the existence of small, coarse veins that contain (inaudible) gold. Many of these veins are not detected in the exploration drilling.

While Didipio remains on shared maintenance, we've been conducting an internal reassessment of the cost to complete construction and commission the project. To date, that work is indicating that we can finish the project for significantly less capital than we previously indicated in May 2008. At this juncture, I don't want to say much more than that. However, we intend to outpace the market during the third quarter of 2009.

Just turning to exploration, in the Philippines we've been negotiating with a number of companies to conduct JD (ph) exploration programs at our tenements outside the Didipio FTAA. This is a work in progress and we'll update the market in coming quarters.

Our exploration focus this year is on increasing reserves and resources in New Zealand. To that end, we're going to conduct exploration programs to test the northern extension of the mineralization along the Macraes sheer zone and we'll be mining an exploration drive over the top of Panel Two in the Frasers Underground to explore the downdip extension of that mineralization. The Panel Two structure is still open at depth. At the southern end of the Reefton gold field, we'll spend just over NZ$5 million to test for continuity of mineralization below the previous workings in the Blackwater Mine.

I have to say that the Blackwater Mine is a fascinating exploration prospect. Historically, this mine was the most prolific producer in the Reefton gold field. Development and production progressed to 800 meters below the surface. However, in 1952 it shut down following a fire in the Blackwater shaft and the mine quickly flooded. Gold exists in a quite consistent quartz vein structure that averages .6 meters in width but over that width the grades average anywhere from 20 to 60 grams per ton. In 1996 the drillhole intercept returned an AV (ph) setting of half a meter at 59.5 grams a ton within a broader intercept of .7 meters at 24 grams per ton. The objective of our exploration program is to drill below the previous development to determine if mineralization has continuity below the workings.

At this juncture, I'd like to turn the presentation over to Marcus Engelbrecht, our Chief Financial Officer, for our financial summary.

Thank you Steve. Let me turn to the first financial slide. I'm pleased to report that the gold revenue was $55.3 million for the quarter. That's up 15.7% from the quarter four of 2008. This is primarily as a result of increased production mainly attributable to the Macraes Underground mine which resulted in sales volumes being up 8.4% to just over 81,000 ounces.

We also claimed increased gold prices during the quarter with our average price achieved increasing from $640.00 to $682.00 per ounce, a 6.5% percent increase.

The cost space of operations in New Zealand continued to be impacted positively by the crown economic fundamentals. The New Zealand to U.S. dollar exchange rate, energy crisis, and the volatility of labor have all contributed to providing stronger results. Consequently, we can report that our earnings before interest, taxes and depreciation excluding any CAGE adjustments was $31 million as opposed to just over $24 million for quarter four 2008.

Other than the impact of lower input costs, improved operational performance and an increased gold price have resulted in the Company reporting net earnings of just over $9 million for the quarter. This compares to a net loss of just over $13 million for the last quarter 2008.

Operating costs on a per ounce basis were lower for the quarter with a decrease attributable primarily to lower consumable average costs including steep drops in the cost of fuel and electricity and higher production output.

If you can just go back one slide -- operating costs for the quarter are reported at $279.00 per ounce as opposed to an average cost of $532.00 for 2008 and an adjusted cost of $416.00 for the previous quarter.

All current projections for quarter two indicate that the economic benefits I mentioned about will be maintained in the short term.

Operating cash flows were $23 million for the quarter. That's up 15% from quarter four '08. This reflects an increase in labor and production and higher (inaudible) in the lower cost (inaudible).

If you'd like to turn to the following slide, the group results schedule, quarter one 2008. This slide shows a table of (inaudible) results for the current and previous quarters in the fiscal year 2008. As reported, the ratings for the quarter were slightly over 55 million. We reported (inaudible) in quarter one 2008 62.3 million. This was a fully unhedged number as during that quarter we were able to successfully roll over our hedge obligations which came through as higher income.

Operating costs came down both as a result of lower inputs and the positive impact in unit sales reported due the drop in the New Zealand/U.S. dollar exchange rate.

Net interest was lower as well (inaudible) project (inaudible) as well as the foreign exchange movement. As you can see, the fair value adjustment of our hedge position had come down appreciatively but as a result of the steadily rising gold prices and continued delivery into our BD commitment.

Late earnings reported for the quarter of just over $9 million. This was clearly helped by the lower hedge adjustment. (Inaudible) note here that the Company would have delivered all its hedge obligations by the end of (inaudible) next year.

If you would turn to the following slide, this slide shows a waterfall chart which reflects the Company's cash cost variance analysis between 2008, the full year 2008, and the current quarter. This starts with the 2008 cash cost number, $532.00. This number was affected by a period of high cost and negative exchange rate environment, labor shortages, and final ramp up of our Frasers Mine in New Zealand.

If you look to the next ball, you see the exchange rate impact on our current cash cost number is $79.00 per ounce which reflects the drop in the New Zealand/U.S. dollar exchange rate, an average of about $0.70 to around $0.53 for the current quarter. We do not expect the exchange to strengthen appreciatively in the short term.

Production efficiency gains, another $23.00 per ounce. That's attributed mainly to higher grade ore and higher than planned throughputs. Fuel costs remain low and resulted in a drop of $69.00 per ounce when compared to 2008. These ore prices are currently $0.50 lower than the peak in last year.

New Zealand, the majority of the electricity generated is from hydro and the country experienced drought last year which resulted in extremely high power costs. This year that trend has been reversed and the dam is overflowing and the result is that the kilowatt cost of power is extremely low. This had led to a sizeable variance per ounce of around $57.00.

The cost of rain stripping increased during the quarter, about $60.00 per ounce. This is due to a combination of geology and geography. The mining activity up in the Macraes open pit operation moved into a zone which required high levels of rain stripping. This is going to play in a moving budget.

We achieved efficiency gains of our contractors which was due in part to increased volume in the Frasers mine moving to full capacity as well as higher gold grades achieved.

Our maintenance costs delivered another positive. This can be attributed mainly to our successful planned maintenance program as well as higher volumes.

That brings us to our quarter one cash costs which is a drop of 47% from the $532.00 to $279.00 per ounce. Please note that less than a third of that improvement can be attributed to the movement in exchange rate. The balance relates to improved operation performance and lower commodity prices.

Thank you. That ends my presentation. I'll hand it back to Steve Orr.

Thank you Marcus. So given our performance so far this year, we're confident that we'll attain the production guidance and better the cost guidance that was previously provided to the market. In fact, we're now reducing our cost guidance to U.S. $365.00 to $405.00 per ounce for 2009.

Our commodity costs continue to decline and we're just beginning to enjoy these benefits. Until recently we've been consuming higher cost inventory. The New Zealand dollar, as Marcus mentioned, is expected to remain weak compared to the U.S. dollar throughout 2009 and in fact, yesterday The Reserve Bank of New Zealand once again lowered interest rates by another 50 basis points to bring the rates to 2.5% and they have indicated that they may lower them even further.

Q2 was expected to be our lowest production quarter this year since we had to rebrick the autoclave this month and the pressure oxidation circuit has been shut down for half of April. However, due to effective planning our gold production has been higher than expected during this period and will exceed our expected gold production in April. We are producing more concentrate from resin than we budgeted and this provides a fallback buffer if you will, to ensure that overall production targets are achieved but for the first time in the Company's history we have flexibility from multiple production sources to achieve consistency of performance. The Frasers Panel Two Deeps discovery will, given the grade, add more profitable life to the Frasers Underground. In the coming quarters we have more good news regarding other projects that are forthcoming in New Zealand.

Finally, we believe the Didipio project construction can be completed and the project commissioned at significantly less cost than we reported last May.

At this time I'd like to turn the presentation back over to Darren Klinck.

Thank you Steve. At this time I would like to open up the line to questions. For those that wish to ask questions we are taking them only through the telephone and ask that you dial in.

We will now pause for a few moments while we wait for callers to queue and I'll turn the call over to the Operator to assist with facilitating this.

Thank you. Ladies and gentlemen we will now conduct the question and answer session. If you have a question please press the * followed by the 1 on your touchtone phone. You will hear a tone acknowledging your request. Your questions will be polled in the order they are received. Please ensure you lift the handset if you are using a speakerphone before pressing any keys.

One moment please for your first question.

Your first question comes from Hunter Hillcoat with Austock. Please go ahead.

Good morning guys. Congratulations on an exceptional quarter. It's the first time in memory that I've covered the stock where it's done as well. Just a couple of questions -- can you give me an idea in terms of the Macraes contribution? I know that you blend Frasers with the (inaudible) ore but I'm just trying to get an understanding of how much actually came out from underground in terms of volume.

In terms of tonnage.

Yes.

Yes Hunter, just hang on a moment. We may not have the split in front of us but we can call you back with it.

Yes, I think in terms of tonnage Hunter, we're still running kind of to that 900,000 tons for the year in terms of actual so I think you're probably in that kind of 240,000 tons coming out of Frasers for the first quarter, roughly.

Okay, good. The received gold price obviously includes hedge delivery. What, can you give me an idea of what amount of ounces you actually delivered in the quarter?

There was about 28,000 ounces that was delivered into the hedges.

Okay great and expiration and evaluation spend, you've obviously got a few projects on the go. You're relooking at Didipio, some sort of idea of what you expect to consume on expiration and evaluation this year?

NZ$10 million and regarding the Philippines, our expenditures will be quite modest but I did mention that a number of gold companies have approached us with an interest JVing into our broader expiration projects throughout the Philippines and we're in final phases of discussions with them so it could be that our expiration, (inaudible) stop in the Philippines but it'll be through varying agreements with other companies.

Alright good and I'm sorry, last question. In terms of your cost guidance that you provided this year, is that based on an assumption that the New Zealand dollar stays pretty much where it is or have you got some sort of forward assumption on the NZ dollar?

We do have a forward assumption on the NZ dollar. It changes slightly but we have a view that the dollar won't change appreciatively from where it is now.

Okay, alright.

We're running off some numbers that are consistent with Bloomberg consensus, Hunter.

Okay great, okay thanks.

Your next question comes from Mike Harrowell with Merrill Lynch. Please go ahead.

Hi, good morning gentlemen and congratulations again on the result. I just wanted to revisit the guidance you provided longer term for both gold production and on operating costs. In a couple of releases, presentations you've had in the last couple of months the forecast for 2009 of 300,000 ounces and then dipping down to 270,000 and 280,000 in subsequent years and the I guess amended gold price forecast of around about 360 in 2009, 410 2010 and back down to the '09 levels in 2011. Given the performance of Frasers and the expiration prospects and given that you can get outperformance from Reefton that gives you bending opportunities, when would you be updating those forecasts?

Well, that's a good question Mike and we have had quite a few internal discussions regarding the amendment to our current cash cost guidance and how that might influence future costs. We want to wait until later in the year before we address whether or not we're going to amend our guidance. We are quietly confident in our ability to supplement more ounces into 2010 for many of the reasons that I mentioned in the presentation but we're uncertain about exchange rates and a few other androgynous factors so we just want to see how the year goes.

Okay but in terms of the ounces themselves, a lot of it is geological serendipity -- that is, that the stuff is going to be there. What is the relevance of the cost outlook to the production outlook?

Clearly if we were able to supplement the 30,000 ounces difference between 2009 and 2010 then mathematically we would be able to just about determine the influence on the cash costs to that and we think we are going to be able to supplement most of that through overperformance at Reefton. Reefton is producing so much concentrate we typically can't get it through the autoclave because the autoclave is at capacity. But we would be able to do that in 2010 and the other is the Frasers Underground and the fact that it's producing at slightly higher grade.

Okay, just the point being I guess that the earnings for next year, given you've got a, you do have a relatively fixed cost base, is that right, relative to -- so if you come up with those extra ounces particularly if they're grade related, it'll just be straight revenue and EBIT at the same time with very little additional cost. Is that--?

Very close to that, that's correct.

Okay, another one is what's the timetable for updating reserves and resources? What's your normal sort of procedure and when would we next hear from you on that?

This year it will be abnormal because we're working on revised NI 43-101 which will be inclusive of one of our forthcoming good news announcements to include a new reserve, a new source that hasn't been previously included in New Zealand and that will come out towards the third quarter.

Okay, I'll leave the questions for others at the moment but I would like to revisit if there's time why it is that we can't get a clearer view on the volume at this point in time, thanks.

A clearer view on the production volume?

That was it for other questions at the moment. We'll come back to it, thanks.

Oh sure, okay.

Your next question comes from Andrew Mikitchook with Thomas Weisel Partners. Please go ahead.

I guess it's good morning gentlemen. How are you?

Very good Andrew.

Look, I've just been working back and forth through the model and obviously you guys are trying to give us some ideas of diesel savings and this and that but I'm just sitting here trying to guess what kind of mining costs or milling costs could have been estimated to come down to 279 for this quarter. Can you give us at least an indication of what level of say, mining costs, you had at the open pit at Macraes because I'm assuming a lot of the savings came from Macraes but maybe that's wrong but can you give us an idea at least so -- I know you don't regularly release that but at least can you give us an idea so we have an idea of what it might have, what kind of savings in total you might have I guess attained?

The answer is yes, certainly we can and it's probably best if maybe Darren gets back to you but we're very happy to provide those, but by way of example we are averaging about $.80 a liter for fuel which is one of our highest consumable items and our budget was $1.10 and fuel is a significant component to our mining costs because we run large scale open pit fleets both at Macraes and Reefton.

Andrew, just to add to that as well, with regard to mining costs and New Zealand dollars I think at the beginning, or in December when we were budgeting for example NZ$1.10 a liter roughly for diesel and we're coming in quite a bit under that, the reagents are starting to come through -- roughly you're kind of looking at NZ$1.60 a ton I think is what we were kind of planning on. We're probably seeing that in round terms, 15% to 18% under early in the first quarter, ballpark. But it remains to be seen how things shape up in the second quarter as we see some of these other costs grow through as we burn through the inventory.

Our processing is also down under budget -- again, reagent costs and grinding media and the like.

Okay so maybe just a follow up, obviously you guys are stressing that you are not suggesting that anybody forecast these things out other than short term. Is short term less than a year at this point from your visibility?

Not too much. We're really quite confident about this year and even the performance to date for Q2 makes us supremely confident.

Okay, just to change, we grabbed your resource and reserve statements off the annual report and maybe I missed it but is there somewhere a breakdown of Macraes open pit underground?

Yes, we calculate those internally that way and when we publish our report and file it on CDAR, it is split. We can provide it for you, Andrew. That's not a problem. It's a public document.

Okay so you've published the totals on the annual report but you haven't published the 43-101 so that you just haven't published the split. Is that the situation?

That's right. The updated 43-101 as Steve mentioned, will come down in Q3 and that will take into account some of the other assets I guess, other work that we're doing right now that's not currently known to market.

Yes, what you see in the annual report is just a summarized version of that and we just don't include the detail.

But what we have in the annual report is without the new discovery obviously.

That's correct, that's correct.

Yes, as of December 31.

Okay look, I'm out of questions for now but I'll listen and see if I need a follow up. Thank you.

Thanks Andrew.

Your next question comes from Wilhelm Schröder with Schröder Equities. Please go ahead.

Hi guys. First piece, forgive me if you can't understand me properly. It's midnight in Germany. The bottle of wine is nearly finished. Anyway, my rates are already going forward for Oceana's debt servicing ability. All the convertible bonds, etcetera are outstanding. This comes back to free cash flow generation in the end so how long do you think the high stripping costs will go on in Macreas?

This is going to be the last year of high stripping for us, Wilhelm and then the out years, '10, '11 and '12 will all start stepping down progressively and then '13 will be the last production year for the Macraes open pit.

With the convertible trading at $0.40, are you planning something to do about that?

Well, if the convertibles trade they trade at $0.40 but they're relatively illiquid. That's the Barclays bonds which are listed in Singapore. The other bond is privately held. Look, we considered it but quite honestly it's relatively inexpensive debt for us and we're generating sufficient cash flow to pay the coupons on it and our cash flow forecast into the future indicates our ability to pay off the bonds when they mature.

If you can buy them back at $.50, it's expensive debt.

That's right, if we can.

Isn't Osprey a big holder?

Sorry?

Isn't Osprey a big holder of convertible bonds?

Yes, they hold 50% of one of our bonds which is the larger of the two.

Okay, alright. Frasers Underground, is it going to change the additional find you made, you announced last week -- is it going to change the production profile for the mines for next year?

Yes we are. We are planning to increase the production rate of Frasers in 2010 up to one million tons per annum and that is one of the ways we intend to mitigate the ounce shortfall that's currently indicated for 2010 relative to 2009.

Okay, perfect. That's all for me, thanks.

Thanks Wilhelm.

Your next question comes from Chen Lee with J. Taylor Gold and Energy. Please go ahead.

Hi, congratulations for the fantastic quarter. Can you give a breakdown on the hedge of gold delivered in Q1? I understand that you have the old hedge and some new hedges much higher priced last year. Did you deliver any of the new hedges?

The new hedges were a collar structure that were put in place with our banking syndicate just for that quarter. To specifically answer your question, we did deliver as Marcus mentioned earlier, about 28,000 ounces into the flat forward structure which represented just about roughly one third of our production and that was delivered at NZ$773.00. The other was a series of quits and calls. Because the New Zealand dollar gold price hit record highs at points in time during the quarter, we did get called away on some of those deliveries but in total that was about, for the whole quarter, 74,000 ounces I think was subject to that.

Yes, there was -- (inaudible) here -- that put call structure put in place was December, January, February, March so it's totally extinguished. There was 8,000 ounces per month but of those, not all of them were called away. There were a few that were called away in February I think, in early March, when the New Zealand dollar gold price did spike up but that facility is completely extinguished. As we sit right now from May 1 I believe, and I'll come back to you via email, but I believe the total ounces that remain to be delivered into the fix forward book for 2009, so the remaining eight months, is roughly 56,000 ounces so to Marcus' point and then the additional delivery that would have went in in April, they are slightly weighted earlier part of 2009 versus the latter part of 2009.

At the first of July we've had about 114,000 ounces due in our total hedge book and going through until the end of 2010 on the fix forward, of which just under 100,000 of those are deliverable in 2010 so this year most of our forward deliveries are weighted in the first half of the year.

Okay great, thank you. You mentioned your cash increased nicely to $17 million at the end of the quarter. Do you think that will be sufficient to cover any CapEx or are you still looking to get a credit line?

It is sufficient with our cash flow forecast and we project that we'll be building cash balance through the year.

Okay great, thank you.

Your next question is a follow up from Mike Harrowell with Merrill Lynch. Please go ahead.

Just wanted to revisit some questions in the earlier part. In terms of Macraes production and what went through the mill at 1.4 million tons, did I hear you correctly when you said that 240,000 tons would have come from places underground?

Ballpark, that's right Mike.

Okay, and the balance came from the open cuts?

That's right.

Now when the open cut finishes in 2013 or thereabouts, where would the material come from at that point?

The Frasers Underground would still be active. Reefton will still be active. We do have a couple of satellite tips that we are drilling now and we are looking again, and this will be reflected in our new NI 43-101 Reserve Statement, at reactivating the Round Hill East open pit which is one of the legacy open pits at Macraes. There was a relatively high grade pushback that was never conducted there which contains a meaningful amount of ounces.

By meaningful? So we can go to the last 43-101 to get a sense of what that is?

The resource on it Mike is just a bit over 400,000 ounces but it'll be detailed in the NI 43-101.

While we're waiting for that, can we go to the last one? Is it mentioned in there?

No, it's not in the resources now.

Okay, right, okay. The other one just on the forward book then just to be really clear, your total delivery for this year is likely to be how many ounces and how much is in the first half in terms of delivery to the forward book?

Sure, so the forward book Mike, for 2009 was 106,000 ounces and for 2010 it's 99,000 ounces and remaining from May 1 moving forward, so the next eight months, I believe there's another 56,000 ounces and change to be delivered into it.

Okay and it's the same structure in 2010 with the bulk of it in the first half?

Good question. I don't know that offhand but I can come back to you. I think it's actually a bit smoother. I don't think it's quite as heavily weighted at the front.

It's relatively smooth over the year next year.

Okay but in terms of the quarterlies, flat gold pricing environment, the worst gold price you'll be seeing is the one you're seeing in this quarter you just reported and it'll progressively improve through 2009 in terms of realized price in a flat gold pricing environment. Is that correct?

For 2009 that's right because we'll have fewer ounces effectively going into the hedge book.

-- second half of the year.

That's right and assuming that the production level was to stay exactly the same obviously as well and there will be some flex there in terms of revenue I guess.

Thank you.

Thanks Mike.

Ladies and gentlemen if there are any additional questions at this time please press the * followed by the 1. As a reminder, if you are using a speakerphone please lift the handset before pressing the keys.

We have no further questions at this time. Please continue.

Thank you. That concludes the presentation for today. On behalf of the rest of the team at OceanaGold, I would like to thank you for your participation and should you have further inquiries, please contact the Company directly. Thank you and we look forward to seeing you on our Q2 results call in three months time.

Ladies and gentlemen this concludes the conference call for today. Thank you for participating. Please disconnect your lines.