SSR Mining Inc (SSRM) 2008 Q1 法說會逐字稿

Good morning ladies and gentlemen. Welcome to the Silver Standard first quarter financial results and project update. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded today May 15th, 2008.

It is now my pleasure to introduce your host, Mr. Robert Quartermain. Please go ahead sir.

Thank you. Good morning ladies and gentlemen. Welcome to this Silver Standard first quarter conference call, updating you on our projects, and reviewing our financial results. On the call with me in Vancouver this morning I have George Paspalas, Senior Vice President Operations, Joe Ovsenek, Senior Vice President Corporate, Tom Yip, our Vice President Finance and Chief Financial Officer, and Ken McNaughton, Vice President, Exploration, and Paul LaFontaine, our Director of Investor Relations.

Our financial statements, as well as management discussion along with our project reviews, have been filed on SEDAR, and are available on the Company's website. We also have a visual presentation which will accompany our comments today, and that can be found at a web location, which is in the news release at http://events.snwebcastcenter.com/silverstandard/20080515/.

We have had a busy first quarter. We have enhanced our balance sheet and we continue to aggressively advance our many projects, with Pirquitas as our priority. We will update you in a few moments on our many project activities, but first I would like to turn the call over to Tom Yip, our Chief Financial Officer, to run you through our financial statements. Tom.

Thanks Bob. For the first quarter of 2008, we had net earnings of $2.2 million, or $0.03 per share, compared to a net loss of $1.6 million, or $0.03 per share in the first quarter of 2007. This quarter's results include three main items, we recorded a $23 million gain from the sale of our 1.9 million ounces of silver bullion, this represents the difference between the original purchase price of US$5.85 per ounce, and the sale price of US$20.30 per ounce.

We assessed the fair values of our financial instruments, and took a further write-down of $18 million on our asset-backed commercial paper. There continues to be no market for these ABCP investments, and this impairment takes their fair value down to those indicative values contained in the report issued by JPMorgan, who are the independent financial advisors to the Pan Canadian Committee. Although we consider the JPMorgan report to be a conservative view of fair value, it is nonetheless the best information available at this time in the market.

In addition, during the quarter, we completed a convertible debt financing of US$138 million. Related to this, we expensed 3.7 million for commissions, legal and accounting fees, as well as interest expense of approximately $600,000. During the quarter, we approved our financial strength, specifically increasing our cash position by $148 million, to $229 million at the end of March. As mentioned, we completed the US$138 million convertible debt financing, and net proceeds after expenses were $133 million. This debt will bear interest at 4.5% payable semi-annually, and the notes are redeemable at our election after 2013.

We sold our silver bullion for proceeds of 39 million. During the quarter we spent $30 million on our projects, of which the majority was at Pirquitas. To-date we have incurred approximately US$76 million in construction costs of the total estimated $220 million for the project. In summary, we ended the quarter with working capital of $244 million, an increase of $127 million from year end. With our current liquidity, we are well-positioned to complete the Pirquitas construction, as well as the planned activities at our other key projects.

Back to you Bob.

Thank you Tom. I wish to take a moment and discuss one of the matters that Tom has raised in his presentation, and that is of Asset Backed Commercial Paper. As we closed out 2007, we knew that we had to reposition our balance sheet, to ensure that we achieved all of our project objectives for 2008, strengthening our balance sheet was part of our strategy for this year. I believe we accomplished a substantial part of this goal in the first quarter. Specifically we raised $138 million by way of a convertible debenture, and a further 39 through the sale of our silver bullion. As of March 31st, exclusive of our asset-backed paper, we had over $240 million in working capital, more than sufficient to implement our plans for this year.

Looking at Asset-Backed Commercial Paper, like many of our peer companies, we have taken write-downs over the last two quarters while awaiting resolution of this issue. In March, JPMorgan, as advisor to the Pan Canadian Investors Committee, made what we believe might be conservative estimates as part of the restructuring of asset-backed commercial paper.

Using JPMorgan's calculations, the 57 million in asset-backed paper that we owned, may have a liquidated value of approximately 27 million. Accordingly, to be prudent and to move beyond this issue, we have written down the value of our asset-backed paper in accordance with accounting principles. Under the proposed restructuring of the 57 million in asset backed commercial paper which we own, approximately 85%, or $49 million will be rated AA, the highest rating of this paper when market is reestablished.

We have an additional 8 million in Class B, Class C and tracking notes. As a result of this write-down, we are pursuing all avenues available to us, including litigation, in order to maximize the return on asset backed paper. We will continue to pursue these avenues aggressively. The foundation of our business is silver, and yesterday we announced a significant increase in silver reserves at our flagship Pirquitas project, which will be our first mine. This reserve increase shows the robustness of the project.

With that, I will now turn the call over to George Paspalas, Senior Vice President Operations. George will run us through the advances that we are making at the project, as we move to commissioning in the fourth quarter of this year. George.

Thanks, Bob. I will continue talking about the reserve updates at Pirquitas, which is slide 5 for those of you following on the webcast. By incorporating a lot of drilling we have been doing over the past nine months, and elevating metals prices to approximately 3-year trailing averages, we now see a 43% increase in proven and probable reserves to 195.1 million ounces of silver. Tin and zinc are up commensurately by 41 and 32% respectively. Total measured and indicated resources are now 221.2 million ounces, with a further 18.8 million ounces in the inferred category.

The reserve grade remains comparable to the grade in our last reserve update of November 2007. So our average annual production guidance stays in the 10 to 11 million ounce per annum range.

The important significance of the reserve increase is an extension to the life of the mine of nearly 50%. Taking us now to an anticipated 14.5 years. This obviously improves the attractiveness of the asset, and provides for a greater window of opportunity for further exploration success, both in pit, near the pit, and also regionally. One of the best places to find additional reserves is where you are building a mine.

Moving to slide 6, we embarked on a long-term strategy to purchase the mobile equipment for the mining placed well in advance of the required date for open pit production. This has worked really well for us while limiting cost exposure, enabling training of the local people, testing the transport routes into the mine with large pieces of equipment being transported to the site, and being able to conduct bulk earthwork in the most cost effective manner.

Slide 7 shows the size of the components transported to the site with no problems at all. We also see the assembly and now operation of the fleet. A lot of the fleet has been in operation for eight to ten months now. During this time, the fleet has been utilized to assist construction with some of the plant earth works, provide training of the local people, simulators and then working flat ground, easy operations. As slide 8 shows, now involved in the development of the 7 kilometer haul route, from the open pit to the process facility, as well as building the pit waste and ore haulage routes.

Moving into community relations, which is slide 9, our objective with local communities is based on the four pillars of, first, capacity building within the communities, truck training, some safety awareness, and environmental training, are examples of this. Secondly, creating employment opportunities. Thirdly, business development programs that will provide opportunities past the closure of the mine. And finally, community improvement projects such as potable water, sewage, et cetera.

Moving into the process facility, which is slide 10, the civil works now are complete. The foundations are nearing completion, structural steel is rapidly going up, equipment deliveries are rolling in on-schedule, current focus area is the hiring of process staff to compliment our commissioning team.

Slide 11 shows the main process building the structural steel erection. This building houses all of the process unit operations to produce their concentrate, and the construction is going really well. Our strategy to precast the concrete footings at lower altitudes, and pre-fabricate as much structural steel as possible also at lower altitudes has worked well for us, from a work and productivity point of view. All of the process equipment for the facility has been ordered, and is either being manufactured or transported to the site.

Slide 12 shows the truck shop and warehouse facilities, which will be completed next month. Turning to infrastructure now which is slide 13, we are really good shape here. The 38-kilometer gas pipeline has been installed in the ground, and passed all QA/QC requirements. We are now moving into the final valve and transfer station installations.

The gas-fired power generators are going through testing regimes now, and shipping commences next week. Two of three units have passed their full load testing inland. The backup diesel generators are on their way to the site. We have a 7-kilometer process water pipeline being installed, it is about 20% in the ground, and will be completed next month. As mentioned earlier, site access has been proven reliable, with all of the heavy transport activity seen over the past year.

So to summarize, which is on slide 14, construction is progressing really well. And we are on target for commissioning in the fourth quarter of 2008. The project is on-budget. The government and community support we have is important to achieving our execution of the project. The mine crews are ready to start grade control now, and prepare for ore delivery in Q4 2008. Our operations focus is now building and training the process teams. And finally, the reserve increase announced yesterday, again talks to the quality of the Pirquitas assets, and exploration is ongoing around the pit area.

So looking good at Pirquitas. Bob, back to you.

Great, George. Thank you very much for an excellent summary of the status at Pirquitas. I would now like to run you through our other project developments. I will start with slide 15 on the webcast.

At the San Luis joint venture in Peru, and initial resource estimate for the Ayelen vein was reported during the fourth quarter 2007, with measured and indicated resources totaling 265,000 ounces of gold, and 7.1 million ounces of silver, at a grade of 12.24 grams of gold per ton, 329 grams of silver per ton. The Company's joint venture partner, Esperanza Silver Corporation, has raised concerns that the resource estimate may understate the [cojoured] resource.

To address this matter the joint venture will have a new resource estimate prepared, which will incorporate all available data, including additional data not included the previous resource estimate. We have received permits to commence surface exploration, which will include approximately 5,000 meters of diamond drilling, that will be carried out at a number of targets on this large 96 square kilometer property.

These targets include the BP zone, or brecciated volcanic rocks, plus copper, zinc, lead sulphide mineralizations, as well as testing additional high-grade vein systems where channel sampling has shown structures enriched in gold and silver. Exploration timing on the Ayelen vein is scheduled to begin in the third quarter of this year, which will lead to a feasibility study examining the development of the Ayelen vein. Silver Standard presently holds a 55% interest in the San Luis project, and has elected to increase it's interest to 70% by completing a feasibility study. Silver Standard has the right to increase it's interest in San Luis to 80% by placing the property in production.

At Pitarrilla in Mexico, measured resources now total 105 million ounces of silver, indicated resources total 277 million ounces of silver, and inferred resources total 193 million ounces of silver, placing Pitarrilla amongst the largest recent silver discoveries. Infill and exploration drilling of the Breccia Ridge zone is ongoing, as we extend this zone to the east and north.

Work on a 2.5-kilometer long decline to provide underground drilling stations for the higher grade silver and base metal mineralization of the Breccia Ridge zone is ongoing. The portal is more than 500 meters at depth along the ramp in excavation to date. And engineering scoping study will focus on the economics of developing the underground sulphide associated base metal and silver mineralization beneath Breccia Ridge, ahead of lower grade near surface mineralization. Pitarrilla is of course owned 100% by Silver Standard.

At Diablillos in Argentina, the Company has completed a 12,000 meter program of diamond drilling at this wholly-owned silver/gold project, to better defined the inferred resource of 93 million ounces of silver, and 815,000 ounces of gold resources. An updated resource estimate is anticipated mid-year. This will be followed by a pre-feasibility engineering study, to estimate the economics of placing the Diablillos project in production. Because of its proximity to Pirquitas, we can use our in-country expertise to continue to advance this project.

During the quarter, Silver Standard reported a significant increase in gold resources at the Snowfield project in northern British Columbia. There are now comprised of measured and indicated resources totaling 3.1 million ounces, an increase of 724,000 ounces from the initial Snowfield resource announced in 2006, as well as inferred resources of 466,000 ounces of gold.

The Company is planning a major drill program this summer with four drills and over 15,000 meters of drilling, primarily focused on the recently identified Mitchell east zone where hole MZ-1 intersected 259 meters, grading 0.71 grams of gold per ton, and 0.14% copper. This hole ended in mineralization with the bottom 31 meters having the better grade. MZ-1 was call it approximately 550 meters east of Seabridge Gold's Mitchell deposit, and has been interpreted as a potential continuation of that zone. The objective of the diamond drill program is to outline the potential continuation of the Mitchell deposit, which contains indicated resources of 16 million ounces of gold, and inferred resources of 13 million ounces of gold mineralization.

In addition to these projects, we have a number of properties which will be advancing through the year. With respect to our noncore silver projects, we will look at monetizing these on a project by project basis. We currently have a letter of understanding with Harken on the Shafter project in Texas.

Harken has agreed to pay us approximately $1 an ounce, or $42 million in cash and stock for this resource, which we purchased many years ago at a few cents per ounce. The transaction is subject to formal agreements and closing in late June, monies would be added to our balance sheet, and focused on out priority projects. We have had a successful first quarter, with the strength in balance sheet, and advances on many projects, and the tempos of these activities will increase through the rest of this year, culminating in our transition to producer status with the commissioning of Pirquitas later this year.

At our Annual General Meeting yesterday, all of the Directors of the Company were reelected, and at the ensuing Board meeting, Peter Thompson was elected Chairman of the Board. We look forward to the guidance that Peter will bring to the Company, in this role from his extensive industry experience, as we move into producer status.

Those are the formal remarks that I wanted to make this morning, and we would like to answer any questions which you may now have, with respect to our activities. Thank you.

Ladies and gentlemen, (OPERATOR INSTRUCTIONS)

Stand by for first question. Rodney Stevens, please go ahead.

Thank you. Hello, everyone. Just a few questions. First of all congratulations on the increase in reserves at Pirquitas, and maintaining on target to achieve commercial production. That is quite a feat. Just with regards to Pirquitas, at this point what are some of the key bottlenecks you see towards impeding your commercial production timeline?

Thanks, Rodney. At the moment we are pretty well on track. The critical parties aren't encumbered by any bottlenecks. There are a few main jobs that we have to do. The bore mill luckily is in country. That usually trips people up. We have it in-country, we are transporting it to the site. The short answer is Rodney, other than an act of God, we are in pretty good shape.

Okay. And then with regards to the export tax, I guess it is around 3 to 5% potentially if you are required to pay that. What sort of probability do you think that you have right now of having to pay an export tax at Pirquitas?

I think, Rodney, we are in the process of building the project. We continue to have discussions with the government officials on that matter. We need to get the project up and running, we need to recover our capital from that, so we haven't been the target of the specific tax of that at this point in time, so we are still in discussions with the government on that, and can update you in a future call, but it is not impacting us because of where we are currently.

Do you think it is likely or not likely?

What I would say is after we conclude our discussions we will address it, perhaps in the next call or later, if you want to bring it up, but it is still something that we are under construction, and having some discussions with the government around that.

Okay, thanks. And when would you expect to have the next resource update at Pitarrilla?

We are currently working on that. Last year we did quite a bit of infill drilling, and it takes a while to get all your assaying and things through, but perhaps later this quarter, or certainly into the next quarter, but we would hope over the next month or two, we will have something out in that regard.

Okay, and that would be primarily based on infill drilling the next update?

There would be largely infill drilling, so we would look at enhancing the M&I as we move to starting to look at feasibility level studies on the underground Breccia Ridge zone, so we were focused there. We are currently now drilling both to the east as well as to the north of the Breccia Ridge zone and stepping out again. So there will be largely infill drilling, there might be some additional work which will come from that exploration as well.

Okay. Now, it might be early, but when would you expect to complete a scoping study then at Pitarrilla? Has that been pushed back, or--?

We are currently working on that. Once we get the drill result data out, then we would look at doing something on a scoping pre-feasibility level. We may be in that towards the end of this year, perhaps fourth quarter.

Scoping study by fourth quarter potentially?

Just looking at what we have been focusing on currently is the Breccia Ridge zone, and particularly the underground area, because that is where the higher grade mineralization is. Let's say the better value from a net smelter point of view. So we currently have some engineering studies which are ongoing. We have got this decline going down, and it will be down at it's full 2.5 kilometers by the third quarter.

We will start do some underground drilling at this point in time. So depending on getting that in schedule and the drilling we do underground would help us then be able to make a preliminary assessment of what we are looking at towards the latter part of this year.

Just on San Luis, can you comment on some of the primary issues were related to the initial resource estimate?

No. I just would say Esperanza Silver has looked at that, had some additional outside review of it, we did the same and decided to go back and look at the resource, and we will undertake that now, and will comment on that when we have a new report.

Okay. And do you have an estimated timeline when you might have a feasibility study on San Luis?

No. We will get the resource done and get underground on it, and then once we have had our meetings around that, then we will be able to make some comments on that, but currently we will get the resource update, continue with the underground exploration on the project, and then move that into a feasibility study level.

Okay. Thanks. Just finally, I mean, it looks like you have a good, you definitely have a strong balance sheet and have enough cash obviously to bring Pirquitas into production, but can you comment on your liquidity? You also have significant expenses related to exploration and feasibility studies. Do you think you have got enough available cash to fund all of these projects, all of these objectives this year?

Rodney, as I said, we have all the liquidity and more, that we need to build Pirquitas this year, as well as do all of our exploration programs, and then some for next year. Yes.

Okay. And then just related to timing of the sale of some other noncore assets, is that something potentially down the pipeline next year, or --?

No, as I commented, with respect to to the Shafter project, we currently have a letter in that that we would look at potential liquidation of that by the end of the second quarter this year, and then we will look at other projects going forward.

Okay. Great. Thank you very much.

Thank you. Our next question comes from Craig West from GMP Securities.

It is actually Stefan Axell on behalf of Craig West. Kind of similar to Rodney there at the end, you have mentioned before that Snowfield, Bowdens, and Diablillos are kind of noncore. Have you changed that at all with your recent comments and recent success?

No, the only project which would be noncore would be Snowfield, Diablillos has always been a project we have considered part of our core group, and why we continue to explore it and work on it. The Bowdens project in Australia is one that because of it's location is perhaps not as core, but the Snowfield property in northern British Columbia, again because of the large gold resource, which is on it, we are spending money on it, and will determine how best to monetize it. So currently the only project we would consider noncore is the Shafter one we are looking at. And the Bowdens one in Australia is one that we have had expressions of interest in, but we want to get through the sale of the Shafter first, and then proceed from there, but Diablillos and Snowfield are certainly projects that we are focused on from an exploration point of view.

Also moving forward with your San Luis and Pitarrilla, how do you see yourself funding these? Do you see yourself waiting for Pirquitas to be up and running, and cash flow coming from there, or do you see yourself kind of mark it as those progress?

We will see. At the current plan with commissioning of Pirquitas in the fourth quarter, we should be looking at revenue coming from it through 2009, we haven't started the feasibility study yet on the San Luis project, and Pitarrilla is a bit down the road.

Our plan has always been to minimize our dilution and use both as much of our silver as we can, both the silver that we had received by way of production, as well as by sale of some of our noncore assets, and use that to continue to fund the Company going forward. That will certainly clarify itself as we go forward through the rest of this year.

Thanks, Bob.

Thank you.

Thank you. Next question comes in from Richard Gray from Blackmont Capital. Please go ahead.

Hi, guys. A lot of my questions have been answered but just a couple follow-ups here. On Pirquitas, what percentage of the construction is complete? What is a good round number there for what is complete versus what still has to be done?

Well, it depends how you want to slice that cake. On simple work done or money spent.

Work done.

Work done? We are probably 30% completed on construction.

Okay, close to what has been spent then.

Yes. Detailed design is heading towards 90% now, all the engineering is done, so when I say that, a lot of work has been done off-site. With ten trucks arriving in one week, you can actually jump from 30% to 40% very quickly. Work on the ground is about 30%.

Fair enough. Just what oil price was used in the feasibility study? Do you think will you need to update those kind of inputs before Q4?

Yes, and we have. In fact, I can't remember the actual oil price in the feasibility but it is quite low, given the time of the feasibility study. We have factored current energy prices in. Our power is supplied by gas.

Right. That is good. Good work there. Just on Pitarrilla, Bob talking with the focus study, is this going to be a scoping study on just the underground, or kind of an all-encompassing scoping study, it looks like the underground and then the lower grade open pit scenario?

We want to focus mainly on the Breccia Ridge zone first, Richard, as you know the Breccia Ridge zone itself incorporates about half of the resource, which is on the project. We are looking at a large potential bulk underground operation there, at least focused on that part of the Breccia Ridge, so we are going to focus on it, and then go back to some of the other four satellite zones, which are around that main zone at surface, and do that at a later time, just so that we can stay focused on this large bulk tonnage underground aspect.

That is it for me. Thanks guys.

Thank you.

thank you. Our next question comes from Trevor Turnbull from Scotia Capital.

Good morning, Bob. Couple questions, I guess first down at Pirquitas with the reserve update that you provided, you mentioned you don't envision needing to deepen the pit. I think you said specifically they were in-pit resources, so does that mean things that still look attractive out in the hanging walls of the pit, not necessarily deeper, but just adjacent to the current pit configuration, the new reserves would exclude that material I guess?

Yes, we are still drilling down on the site, Trevor, so we continue to expand outside the potential pit shell as we currently have. I think the point yesterday, as George was pointing out, is that based on the current pit, the reserve update we have done is certainly within it. There still may be exploration potential at the bottom of the pit. We just haven't drilled down to there. As we continue to develop and mine the project, there is lots of exploration potential going forward, so both within the pit outside the shell, and also below it.

Okay. And then switching over to when you are in production, obviously you have been talking to people regarding off-take agreements, I am sure, and I was just wondering if you could give us a sense, nothing specific, but it seems like the zinc smelters have a bit of an advantage over the producers currently. Just wondering what the environment was for things like tin? Tin prices have been going up. And if you had a sense of how those talks are going, generally speaking?

George will answer that question.

Thanks Trevor. As you know we make three concentrates, Silver, tin, and zinc. Silver and tin comprise over 94% of the revenue on the project. Our focus is silver and tin, less on the zinc side anyway. Tin, it is a good time to be making tin and selling it I can tell you. People are knocking down the door, so no problems on tin.

On the silver, we make a very attractive silver concentrate. High-grade silver, low in impurities, so there is competition for our tin concentrate as well. The zinc, it is a small amount, and we have the potential to even place that in-country, so we are progressing our negotiations. Our focus is the silver and the tin, and the zinc will flow once we get the big ones done.

Following on about the tin, like you say, it is a great time to actually have some tin production, is it safe to say that your exposure to oil prices, and so forth, are kind of more than offset by your exposure to rises in the tin price?

That is pretty safe to say that, yes, absolutely. Remember that the majority of the energy cost at Pirquitas is natural gas, which is why world parity pricing is heavily subsidized in Argentina.

Right. Okay. My final question, relative to the export tax, I guess I am just a little confused on the process there. Is if government looking at doing something across the board, in terms of changes, or are they really sitting down with each individual producer to discuss the details? How does that mechanism look right now?

Trevor, I am going to let Joe, our legal counsel, who has been down there, take that question.

Hi, Trevor. They initially came out with an across the board, I think to get everyone's attention. They then have moved towards negotiating agreements with each of the projects that are affected by it, and because of the push-back they received over the last few months, they are now sitting down and trying to work out a consensus with the various groups. Things are still in limbo as to where it is going to come out.

Okay, great. That is all I had. Thanks.

Thanks, Trevor.

Thank you. Our next question comes in from [Danny Stein from Center Corp].

I wanted to address the asset backed commercial paper issue again. What I want to say is this. You guys are great when it comes to proving reserves and building mines. I am talking about when I say you guys, I am talking about the whole sector, the mining sector. That your expertise when it comes to financial matters, it is one company after another that engages in derivatives and forward sales, and asset backed commercial paper, and all sorts of esoteric matters they don't know anything about.

You crow about your profit on silver bullion sale. You nullified it with your asset backed commercial investment. I don't want to personalize it to you particularly, it is a problem in the entire sector. You guys have no clue what you are doing in terms of financial interest. You get your advice from bullion bank advisors, constituent members of the Federal Reserve, who are your enemies, your short players. They are the ones giving you advice.

It is far past time that you guys go off, get some Harvard MBAs of your own, and do some kind of in-house financial advice for the sector, but when you rely on these bullion banks, the Goldman Sachs and JPMorgan's, to give you advice in the area of financial instruments it is one disaster after another. How can you crow about your silver bullion profits, when you nullify it entirely with commercial asset backed paper? This is the real achilles heel in the sector. It gets to the point where you ask yourself why invest in this sector, because it is one company after another of financial [expletive]--

Mr. Stein, did you have a question you wanted to put to us, or is that your comment?

That is my comment.

Thank you very much for your comment. As you know, the write-down which we have taken on the asset back paper, is one that is required with respect to our financial statements.

We have yet to determine what the real value will be reflected in that, and we have hired Mr. Yip, who has come on as our Chief Financial Officer, and he brings great years of experience within the industry, and he will now be looking at the stewardship of our cash and capital going forward. So it is not intention to crow about our sale of our silver, it is merely to make sure that we take full advantage of the assets we have with the Company, to ensure that we can complete our plans going forward, and the Company is well-positioned to do that. Thank you for your comment.

It is not a personal issue. Again, it's a comment for the entire sector, not personal to Silver Standard.

Thank you very much for your comment this morning.

Thank you. Our next question comes in from Ronald [McGann], private investor. Please go ahead.

Yes, good morning. Just a quick question here. With respect to all of the projects you are undertaking, what is going to be put into production this year, if anything? I guess I am speaking primarily to the bottom line. Will any of that show up this year, or what is the timetable for the --?

Yes, as we have spoken about, the Pirquitas project has been our priority project. We currently are advancing it for commissioning in the fourth quarter, we are spending a total of $220 million that in project to advance it, so we will commission it within the [fourth] quarter, and that has been our first project to develop as a mine.

And you believe that will drop down in the fourth quarter as a result of the first quarter, fourth quarter?

We will be moving it and commissioning it for the fourth quarter of this year, that is correct. Yes.

One final question. May I assume hopefully that there is no hedging?

That is correct. We have no silver commodity hedging currently, correct, it is not our plan to have any hedging. Thank you.

Excellent. Thank you.

Thank you. That was our last question.

Great. Thank you very much, ladies and gentlemen. We appreciate your attendance on this morning's call, and we look forward to updating you on our second quarter conference call some time in August of this year. Have a great day. Thank you.

Ladies and gentlemen, this does conclude your conference call. We thank you for attending, and ask that you now disconnect your lines.