Pan American Silver Corp (PAAS) 2014 Q2 法說會逐字稿

Thank you for standing by. This is the conference Operator. Welcome to the Pan American Silver second-quarter 2014 conference call and webcast.

(Operator Instructions)

The conference is being recorded.

(Operator Instructions)

At this time, I would like to turn the conference over to Ms. Kettina Cordero, Manager Investor Relations. Please go ahead.

Thank you operator, and good morning ladies and gentlemen. Welcome to Pan American Silver's 2014 second-quarter results conference call. Joining me here today are our President and CEO, Geoff Burns; our Chief Operating Officer, Steve Busby; our Executive Vice President of Corporate Development and Geology, Michael Steinmann; and our Chief Financial Officer, Rob Doyle.

I'd like to start this call by reminding our listeners that this call cannot be reproduced or retransmitted without our consent. Certain statements and information in this call will constitute forward-looking statements and forward-looking information within the meaning of applicable securities laws. All statements, other than statements of historical fact, are forward-looking statements and reflect the Company's current views with respect to future events, and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political, and social uncertainties and continued [peace].

Many known and unknown factors could cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. And the Company has made assumptions and estimates based on or related to many of these factors.

We encourage investors to refer to the cautionary language included in our news release dated August 13, 2014, as well as the factors identified under the caption Risks Related to Pan American's Business in the Company's most recent Form 40-F and annual information form. Investors are cautioned against attributing undue certainty or reliance on forward-looking statements. And the Company does not intend or assume any obligation to update these forward-looking statements or information, other than as required by law. With that, I will hand over the call to Geoff.

Thank you Kettina, and good morning ladies and gentlemen. I will briefly discuss the highlights of what was another solid production quarter, continuing a trend we established in the second halves of last year, and then you will hear from Steve, Michael, and Rob who will provide some additional granularity on our operations and projects, our exploration programs, and our financial results for the recently completed second quarter.

I'm happy to begin by letting you know that yesterday our Board of Directors approved our third quarterly cash dividend of the year in the amount of $0.125 per common share. The dividend will be payable on or about September 5 to holders of record of common shares as of the close of business on Monday, August 25. At yesterday's closing price on NASDAQ, our dividend provides an annual return of approximately 3.3%. Continuing to pay this sector-leading dividend is a clear sign of the financial strength of your Company, and the confidence that I and our Board of Directors has in our ability to deliver strong production and financial results.

Turning to the second quarter of 2014, we produced 6.56 million ounces of silver, 6% more than in the second quarter of last year, and 37,700 ounces of gold, which was about 26% more than in the comparable period last year. Our cash costs for the second quarter of 2014 were $12.09 (sic - see press release "$12.06") per ounce of silver, net of by-product credits, very similar to where we were last year; however, our all-in sustaining costs per ounce of silver sold were $18.23, down 14% from the second quarter of 2013.

As we expected, and as we discussed at our last quarterly conference call, our gold production was lower this past quarter than it was in the first quarter of this year, and consequently our cash costs and our all-in sustaining costs were higher with the reduction in the by-product credits coming from gold. However, both were right in line with the guidance we provided at the start of the year, and both are meaningfully lower than they were at the same time last year.

Year-to-date, our silver production was 13.2 million ounces. Our gold production, 83,800 ounces (sic - see press release "83,600 ounces"). Our cash cost, $10.92 (sic - see press release "$10.15") per ounce, while our all-in sustaining costs were $16.82. For the first six months of 2014, we were able to increase our silver production by 4%, increase our gold production by 35%, reduce our cash costs by 13%, and reduce our all-in costs by 17%.

In addition, our base metal production of zinc, lead, and copper were all higher for the first six months of 2014 than they were a year ago. Dare I say, but I think we've delivered a very good first half for this year.

Our adjusted earnings for the second quarter were $1.8 million, or $0.01 per share, a significant improvement as compared to the same period in 2013, in spite of a 14% decline in the average price we received for our silver sales at $19.58 per ounce and a 9% decline in the price we received for our gold sales at $1,289 per ounce. Increased silver, gold, and base metal production and lower cost helped push our earnings back into the black, even as we've continued to fight the headwinds of lower prices.

Our mine operating earnings also showed a marked improvement, and rose almost threefold as compared to the second quarter of last year, from $3.8 million to $10.2 million. This was due to our strong production in sales quarter, which even includes a $10 million non-cash negative adjustment on the value of inventories at Dolores and Manantial Espejo as a result of weaker consensus-forward silver and gold price estimates.

Looking at cash, we recorded a strong quarter with net operating cash flow of $48.7 million, or $0.32 per share, a vast improvement from the $0.5 million we generated in the second quarter of last year and a testament to the ability of our mines to generate cash even at these lower prices.

Our ability to generate strong cash flow has allowed us to maintain our strong financial position. At June 30, 2014 our cash and short-term investments had declined a modest $12.7 million from the end of the previous quarter to approximately $382 million.

Even after spending $37.3 million in sustaining and project capital, paying $19 million in dividends to our shareholders, and repaying a $12 million Argentina operating loan, we ended the second quarter with $647.5 million in working capital and total debt of less than $50 million, a good financial position to be in, which continues to afford us opportunity to look at new value-creating projects within our own portfolio, or indeed perhaps acquisitions. And now, it's Steve's turn to provide you with commentary on our operations and development programs.

Thank you, Geoff. I'd like to jump right into our mine-by-mine results. According to the figures that are on the slide up here, looking at the web slide projection. La Colorada's quarterly silver production of 1.2 million ounces rose nicely from last year's performance, thanks to greater mining rates accomplished as we step our ways towards the first phase of our expansion project, targeting 1,500 tons per day by mid-2016.

La Colorada's quarterly cash cost of $8.26 per ounce came in well below our expectations, mainly as a result of better than expected productivity rates and equipment maintenance sequencing. We expect La Colorada's production rate to remain at these levels for the remainder of the year, with cash costs rising slightly as equipment maintenance cycles through, solidly achieving our full year guidance of production and cost.

Alamo Dorado produced 1 million ounces in the quarter, somewhat below what we had anticipated, as we processed a greater amount of lower-grade stockpile orders while we navigate our way through more constrained final benches of the open pit mine, which essentially reduced grades and recoveries. The processing of lower-grade stockpile ores also drove cash costs higher to $11.11 per ounce for the quarter. Irrespective, we still anticipate meeting our full year production and cost guidance as we mine more higher-grade open pit ore later in the year and reduce our reliance on lower-grade stockpiles as we had originally anticipated.

The Dolores mine produced 1.1 million ounces of silver in the quarter, well ahead of plan, thanks to greater crushing plant achieved during the end of the dry season, as well as greater recoveries achieved from the aggressive Pad 2 to Pad 3 staged leaching and longer primary leach cycles achieved with the larger areas available on our new Pad 3. Dolores produced nearly 17,000 ounces of gold, which was just a little shy of what we had anticipated, given a shortfall of gold grades partially offset by the higher throughputs and recoveries.

Cash costs of $12.36 per ounce were higher than we had anticipated, due to the shortfall of by-product gold production and greater inventory reduction costs that roll through with the higher recoveries reducing the end heap inventories. Actually, we have seen a nice 17% unit cost per ton reduction at Dolores compared to last year's second quarter performance if you take away the effect of the inventory drawdown costs, thanks largely to increased productivities. Looking forward, we are solidly on track to achieve our full-year production and cost guidance at Dolores, as we expect to see production come off a little during the third quarter in the height of the wet season, coming back strongly in Q4 as we expect to mine into higher-grade ores.

Our Huaron mine is performing on plan, producing 900,000 ounces (sic - see press release "780,000 ounces") in the quarter, up sharply from the 760,000 ounces (sic - see press release "700,000 ounces") in the comparable quarter of last year, thanks to increased mining rates as some of our multi-year mechanized development advances really begin to produce results.

Huaron's $8.49 per ounce cash cost for the quarter was well below our expectations, fueled by better than expected by-product base metal grades being achieved in the mechanized stokes coupled with the greater throughputs, further helped by reduced smelter and treatment costs. Huaron is on track to meet or exceed our full year production and cost guidance.

Morococha produced 540,000 ounces (sic - see press release "460,000 ounces") of silver for the Company at a cash cost of $16.74 per ounce in the quarter, below production and above our cost expectations. We have not completely found our footing with the mechanized mining to the same degree of success that we have at Huaron at our Morococha Mine. With that said, we are anticipating steady improvement at Morococha through the remainder of the year, as we complete some key preparations of some important stokes during the next few months.

Our San Vicente Mine produced an excellent 1 million ounces for the Company at a cash cost of $12.96 per ounce, solidly in line with our expectations. As we had announced, we did suffer a two-week work stoppage in July, which will impact our Q3 results relative to the second quarter performance. I'm happy to report the mine is back to steady-state operation, and we do expect to meet our full year production and cost guidance, thanks to the excellent first quarter results we had achieved and in anticipation of a strong forth quarter.

Manantial Espejo produced 800,000 ounces of silver and 14,500 ounces of gold during the quarter, both well ahead of last year's comparable period and pretty much according to what we had anticipated coming off the outstanding first quarter results, which had been fueled by the sequence of our high-grade open pit ore mining. We remain on track to meet our full year production and cost guidance, anticipating a similar third quarter result compared to the second quarter as we move into higher open pit grades again during the fourth quarter, albeit not quite to the degree we saw in the first quarter.

We are right on track with our sustaining capital projects across the board at all of our mines and are advancing our projects reasonably well. We did not quite complete our Dolores leach Pad 3 project before the rains came, so that project has been buttoned up for a few months, after which we will bring the crews back to complete the pad lining before year-end, as planned.

We are just about complete on securing the right-of-ways for our new power line project at the Dolores mine. Overall, we are maintaining our full year guidance on both sustaining and project capital spending.

Moving to the La Colorada expansion project, we have advanced on the sulfide process plant expansion design and equipment procurement, as well as significantly enhanced our understanding of the geotechnical rock conditions necessary to make the final design for our new shaft. Our underground developments are advancing as planned and we continue to anticipate mobilizing the shaft development contractor early in 2015.

As promised, we issued our preliminary economic assessment for building a novel pulp agglomeration processing plant, as well as the development of an underground mine at Dolores. The project combined has a potential to increase annual silver production by 38% and gold production by 33% above our current expected production rates with the existing heap leach operations.

The combined projects would expand ore-loading rates to the heap leach pads by more than 20% from the current 16,500 tons a day to 20,000 tons per day. The expansion concepts include the addition of a new crushing and grinding ore processing circuit, which would treat 5,600 tons per day of high-grade ores from both the open pit and a new 1,500 ton a day underground mine, combining that ground high-grade ore product with the lower-grade crushed ore from the open pit, together with some cement to help bind the finally ground slurry to the coarsely crushed low-grade ore, before placing on the leach pads for conventional heap leaching as we are currently doing at Dolores.

The overall incremental cost of the expansion is estimated to be $104.5 million and could generate an after-tax net present value, discounted at 8% of $90 million using our current reserve metal prices. Furthermore, the expanded operation would drive cash costs down to an average of a negative $3.99 per ounce over the current estimated remaining life of the mine.

Although the project possessed very attractive economics for a silver mining project, we are deferring the construction decision for as much as one year to allow us time to further de-risk certain aspects of the project, allowing us to get our La Colorada expansion project comfortably underway, further stabilize the existing heap leach operation at Dolores, and increase our confidence of our new mineral resource estimates, all the while we watch the general trend of silver and gold prices. Furthermore, since our open pit mining will still be moving its way towards the higher value ores that exist deeper in the deposit, the one-year deferral does not have a huge impact on the overall economic returns for the project.

To finish off, I'd like to extend my personal gratitude to the Mexican Mining Chamber who has recognized the exemplary safety performances at all three of our mines in Mexico by awarding our La Colorada mine a third, and our Dolores mine its first prestigious Casco de Plata country-wide safety recognition awards in their respective underground and open pit mine sizes. In addition, our Alamo Dorado mine was a close runner-up in the smaller open pit category, and has recently surpassed a remarkable 5 million safe work-hour accumulation that would be hard to match anywhere in the world.

I'd like to thank all of our employees and contractors at our mines in Mexico for their unwavering commitment to ensure their personal safety is never compromised while performing their duties for the Company. With that, I'd like to turn the call over to Michael Steinmann for the exploration update.

Thank you Steve, and good morning. During Q2, we drilled a total of 42,700 meters, mostly in and around our operations. Only 430 meters of drilling was done on one Greenfield project located in Mexico. This ran just about $4.1 million in the quarter for drilling-related costs, slightly ahead of our budget due to accelerated programs at Morococha and Huaron. Most drilling took place at La Colorada, with over 14,500 meters, and at Huaron, with over 11,100 meters.

The reason for the increased drilling activity at Huaron is the new discovery of the Manto Sevilla ore body. The positive results prompted an increase of the Huaron exploration budget by $0.5 million.

On your screen you should see now a cross-section of the Sevilla Manto showing some of the drill intersections. To date, we drilled nearly 10,000 meters on this ore body along a 400 meter strike and 230 meter deep expansion. The mineralization is located in the northeast part of the mine and could be accessed with 180 meter long development ramp on Level 420.

Width of the Manto vary from 3 to 12 meters, with high silver and zinc grades in most intersections. Examples are shown on the cross-sections, like 6.1-meters with 214 grams per tonne silver and 1.63% zinc, 12.3 meters with 101 grams per tonne silver and 6.33% zinc, or 6.6 meters with 184 gram per tonne silver and 5.85% zinc. We will continue our drilling efforts in this zone in order to convert at least part of the ore body into reserve categories by the end of the year.

Over 14, 500-meters of drilling took place at La Colorada. Similar to Q1 we focused our drilling on the NC2, Amolillo, and Recompensa structures. You can see their relative location on the geology map on your screen now.

I would like to share a few results, starting in the north with the Recompensa vein, which we turned into sections like 2.6 meters containing 1,085 grams of silver, or 4.8 meters with 1,786 grams of silver. Drilling along the Amolillo vein returned results like 3.7 meters with 467 grams silver, or 1 meter containing 1,025 grams silver, or 3% lead and 5.1% zinc. And finally a few results from the NC2 vein, which returned 3 meters with 1,457 grams silver, 2.35 grams gold, 4.1% lead, and 9.6% zinc, or 6.75 meters containing over 1,400 grams per tonne silver, 8.9% lead, and 16.2% zinc.

But some of the most exciting discoveries have been made at the east end of the NC2 vein with the discovery of several parallel structures named NC5 ti NC8. You can see their location indicated by the black box on the geology map. We developed several of these veins already on Level 498, shown on the level plan on my last slide.

I just printed a few of the sampling results along these more narrow structures. They are simply spectacular, with examples like 1 meter containing over 8.7 kilogram per tonne silver, 1 meter with over 5.5 kilogram of silver, or 0.8 meters returning over 10.8 kilogram of silver per tonne. The veins are about 50 to 100 meters apart and all mineable. Exploration, development and drilling will continue on several levels in order to increase our reserve base at the end of the year.

I'd like to finalize my presentation with a few results from our Dolores exploration program, which focused during Q2 on the south extension of the ore body. We drilled over 7,000 meters in that zone and were able to expand the mineralization further to the south and the [depth]. Most likely, these will be future underground mining targets.

Some examples of the drill results are 24.1 meters with 68 grams per tonne silver and 0.73 gram gold, 6.7 meter with 217 grams silver and 3.4 gram gold, or 6.6 meters returning 16 grams silver and 13.3 gram per tonne gold, just to mention a few. Dolores south is still open, is still an open target with further potential to the south and in deeper levels, but so far the area added already an inferred resource of nearly 5.5 million ounces of silver and 125,000 ounces of gold to Dolores. Drilling will continue to increase with confidence in these resources during the coming month.

Our exploration program delivered impressive results for the first six months, and many of them will be included in the resource and reserve update at the end of December. Assuming that we use the same reserve metal prices as last year, we are on track for nearly full replacement of the mined silver ounces. And with that, I'd like to pass on to Rob for the financial review.

Good morning, ladies and gentlemen. As Geoff has touched on, the pleasing cash flow generation that we achieved in Q1 of this year continued into Q2. We generated robust operational cash flow before taxes and working capital movements of $52.6 million.

Our operating cash flow, together with $5.6 million of realized FX gains, was sufficient to fund all of our sustaining capital expenditures, which amounted to $24.3 million (sic - see press release "$24.4 million"), our dividend payment of $18.9 million, and our tax payments for the period of $4.1 million. Cash flow generated in the period was also sufficient to repay loans in Argentina of $11.9 million, which together with some minor investing activities -- sorry, we did utilize our Treasury to fund our expansionary capital of $12.9 million, which together with some minor investing activities reduced our cash and short-term investment balance by $12.7 million to end the quarter at $381.6 million. This leaves us in an exceptionally strong liquidity position, with total debt of only 47.9 million.

Our Q2 and first-half consolidated all-in sustaining costs per silver ounce sold was presented in the table that you should see on your screens now, which provides the detailed reconciliation of this measure to the applicable cost items as reported in our consolidated statements for the respective periods on a per-ounce basis. We calculate an AISCSOS of $18.23 per ounce for Q2, 14% lower than the comparable quarter of last year.

For the first six months of the year, our AISCSOS was $16.82, 17% better than for the same period of 2013, and nicely ahead of our guidance for the full 2014 year of $17 to $18. The calculation for Q2 benefited from higher by-product credits, lower exploration and sustaining capital, as well as more ounces of silver sold in Q2 2014 than in Q2 2013.

We present select information from our Q2 income statement on your screens now compared to the previous quarter, that being Q1 of 2014, as well as a comparable period of Q2 2013. Our revenues in Q2 2014 are past revenues from a year ago, as positive quantity variance of $28 million outweigh the negative price variance of $22 million.

In addition, we experienced a $19 million swing in the provisional price adjustments from a negative $17 million in Q2 2013 to a positive $2 million in the current quarter. Our sales for the quarter were roughly equal to the value of metal produced, as we drew down on gold inventories but built up silver and zinc inventories.

The higher volumes of all metals sold in Q2 2014 compared to Q2 2013 also explains the increased cost of sales and depreciation charge. Q2 2014 cost of sales did include a net realizable value inventory charge to Dolores heap inventory and Manantial Espejo inventory of $10 million, which negatively affected our mine operating earnings for the quarter, bringing our margin down to 5% of revenue.

We saw the Canadian dollar strengthen during the quarter, which was the main driver behind the FX gain of $3.4 million. As of June 30, about a quarter of our cash and short-term balances are held in CAD.

Our effective tax rate for the quarter was extremely high, over 300%, driven primarily by additional withholding taxes paid on repatriations during the period, deferred taxes on inventory movements, and non-deductible FX losses. In the long run, we still expect our effective tax rate to be in the 30% to 40% range.

After excluding net realizable value adjustments to long-term heap inventory at Dolores and some other minor items, we report adjusted earnings of $1.8 million for Q2 2014, which equates to $0.01 per share, an improvement from a year ago when we incurred an adjusted loss of $18.6 million. Adjusted earnings for the first half of 2014 were $14.6 million, or $0.10 per share.

The main factors causing the improvement in adjusted earnings from the comparable period of 2013 are shown on the waterfall graph on your screens now. Higher quantities of all metals sold together with positive swings in both provisional price adjustments and realized FX movements, partially offset by lower silver, gold, and copper prices and increased operating costs and depreciation associated with the higher volumes sold were the dominant factors affecting adjusted earnings between the respective periods.

Lastly, a brief review of our working capital portion of our balance sheet. We saw a decrease of $32.8 million in our overall working capital balances, with working capital just below $650 million at quarter end.

The change in working capital was principally reflected in lower cash and short-term balances previously described, in lower net tax receivables and inventory balances resulting from the $10 million net realizable value charge, and lastly by lower loan balances after the repayment of loans denominated in Argentine pesos. With that, over to Geoff for some closing comments.

Thanks, Rob. Indeed, Pan American had a solid and an as-expected second quarter. Silver production was up 6%, gold production up 26%, cash costs stable, and our all-in sustaining costs declining nicely to $18.23 per ounce. On the project side, as you've heard from Steve, we've been quite active, almost completed the multi-year Pad 3 Phase II liner at Dolores, nicely advancing our La Colorada expansion, while completing the pulp agglomeration and underground mine study for Dolores.

This gives us a very economically robust project in our back pocket as we patiently wait over the next 12 months to see where the silver price is headed before being compelled to make a go or a no-go decision. And again, we've approved the payment of a quarterly dividend of $0.125 per share, which offers a reasonably handsome yield, given yesterdays closing share price.

As you've heard from Steve, Michael, and Rob after a solid second quarter and at the halfway mark of 2014, we are right on track to achieve the goals we set for ourselves for the full year. With the first half of 2014 now well behind us, it is indeed rewarding to look back to see how we've improved our performance.

As you can clearly see from the table on your screen which is now being shown, we have been able to increase our gold and silver production and meaningfully lower our cash costs and all-in sustaining costs as compared to where we were a year ago, managing exactly the same group of mines. In short, I believe Pan American has responded extremely well to the stress of significantly lower silver and gold prices, and I cannot be more proud of the efforts of our operating and project teams that were challenged to make this happen.

Based on what we've accomplished in the first half of this year, we are confidently confirming the full year production, costs, and capital cost guidance we provided back in February. We are still forecasting 25.75 to 26.75 million ounces of silver production, 155,000 to 165,000 ounces of gold, and cash costs of $11.70 to $12.70 per ounce, net of by-product credits, and all-in sustaining costs of $17 to $18 per ounce. That being said, I believe we have a very real chance of finding ourselves at the high end of our guidance for gold production and at the lower end of our guidance for cash costs and all-in sustaining costs, if prices remain where they are.

Before opening the call for questions, I would like to echo some of Steve's comments regarding the Casco de Plata safety awards for 2013 that we have been honored to win at our La Colorada and Dolores Mines. As a miner, nothing concerns me more than the safety of the men and women who work at our operations every day. They are the backbone of our Company, and their well being is ultimately our own.

Safety has always been, and will continue to always be, the number one priority at Pan American, and these awards clearly demonstrate our commitment to provide safe work environments to everyone at the Company. On behalf of the Board of Directors and myself, I would like to congratulate our Mexican miners on this very special achievement. I could not be more proud of you. Operator, I'd now like to open the call to questions.

Thank you.

(Operator Instructions)

The first question today comes from Jorge Beristain of Deutsche Bank.

Good morning, Geoff, and everybody. I just -- one comment you were making during your earlier introduction just caught my ear. You mentioned something about how, with your finances stabilized, you may have some more cash. I thought you said to raise dividends and/or share buybacks. And then you also mentioned possible acquisitions.

Just wondering, along the acquisition front, if you had any kind of preconceived idea as to what kind of acquisition you would be interested in doing at this point? Is it like a bolt-on? Are you more interested in buying land in the current market environment? If you could just expand on that a bit?

Pardon me, is the speaker's line muted?

Yes. Sorry, Geoff. I'm not hearing anything you're saying. So, I think your line might be muted.

Okay. You got none? So, I need to start again?

Correct.

Okay. All right. Part A was: You made a reference to a comment made -- that I may have made on dividends and share buybacks. I don't think I made any comment there. I did make a comment that our cash would be certainly available to look at value-adding projects within our own portfolio, similarly perhaps to the pulp agglomeration project, which we've deferred a decision on, but certainly there we're looking at other opportunities within our own asset base. Our intention today is to maintain the dividend policy that we currently have in place.

In terms of acquisitions, you asked for type. I think we are less inclined to pursue potential acquisitions of, I'm going to say, greenfield/development-stage assets. I think we would prefer to see assets that are in production, where perhaps we can bring operating expertise to bear, to improve the value of that asset and/or where we could see potential exploration upside that may or may not have been -- or may not have been recognized by the current operator. So, I would call those -- I think you used the word bolt-on. That is much more the style of opportunity that we're looking at versus a buy-early-and-build opportunity.

Great, thanks. And I didn't want to put words in your mouth; maybe I misheard what you had said earlier.

And secondly, could you just give us any update as to your thoughts on Navidad, given the recent Argentine default? If this really pushes out the possibility of that project a few more years; or conversely, could it accelerate it if there's some changes at the provincial level that you're seeing down there?

Yes, Jorge, I think it's very difficult for us to interpret the default or non-default. I keep reading different things on what exactly happened with the Argentine debt, and how that runs through the entire economy and back to mining.

What I can comment on is: We have been, I'm going to say, seeing signs of more positive developments relative to mining investment. I think it hasn't gone unnoticed by either the Argentine people, or probably the mining industry, of First Quantum's purchase of the Taca Taca deposit, a very, very large copper deposit in Argentina. I think they're seeing -- I've seen some of the same things we've seen as things becoming more investment-friendly.

In terms of Chubut itself, we continue to talk to the local communities there, the local politicians there, the state-level politicians, and I think there is a window there for some potential to see a positive change and revision to the mining law. I think that window is perhaps open now until the end of the year. And we're doing everything we can with the various interest groups to convince them that Navidad is a very positive step for the province, and a positive step for the local communities and the economy. And I think I said this in my last call, I'm more optimistic about Argentina and about Chubut than I've been in probably two years, as a home for the development of Navidad.

Great. Thanks very much.

(Operator Instructions)

There are no further questions at this time. I will now hand the call back over to Geoff Burns for closing remarks.

Ladies and gentlemen, thank you for joining us here for our second-quarter results conference call, and I look forward to talking to you again in November when we release our third quarter. And it's full speed ahead, and as expected. Thank you.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.