SSR Mining Inc (SSRM) 2018 Q1 法說會逐字稿

Good morning, everyone, and welcome to SSR Mining's First Quarter Financial Results Conference Call. This call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to David Wiens, Director of Corporate Finance.

Thank you, operator. Good morning, ladies and gentlemen. Welcome to SSR Mining's First Quarter 2018 Conference Call, during which, we will provide an update on our business and a review of our operational and financial performance.

Our financial statements and management's discussion and analysis have been filed on SEDAR and EDGAR and are also available on our website. To accompany our call, there is an online webcast, and you will find the information to access the webcast in our news release relating to this call.

Please note that all figures discussed during the call are in U.S. dollars, unless otherwise indicated. All references to cash costs and all-in sustaining costs are per payable ounce of metal sold. We will be making forward-looking statements today, so please read the disclosures in the relevant documents.

Joining us on the call this morning are Paul Benson, President and CEO; Greg Martin, our CFO; Alan Pangbourne, COO; and Carl Edmunds, Chief Geologist. Also present is John DeCooman, Vice President, Business Development and Strategy.

Now I would like to turn the call over to Paul for opening remarks.

Thank you, David. Good morning, ladies and gentlemen, and welcome to our call to discuss our first quarter 2018 operating and financial results. We're off to a solid start to the year. We produced over 78,000 gold equivalent ounces, all 3 operations performed well, and development of the Chinchillas project continues on track. At Marigold, we produced nearly 43,000 ounces of gold, in line with our guidance and within our expectation of increasing production through 2018.

Material movement increased compared to the fourth quarter, and we expect further increases through the year as we introduce the 4 additional haul trucks to the fleet in the third quarter. Importantly, we expect a near record 7.1 million tonnes of ore in the first quarter.

At Seabee, we had another excellent quarter, building further on the team's records and accomplishments from last year. We achieved record average mill throughput of 1,036 tonnes per day, while recording the lowest quarterly cash cost since we acquired the operation in 2016 at $481 an ounce. In fact, if it weren't for a temporary buildup in in-circuit inventory for the newly commissioned gravity circuit at the end of the quarter, we would have set another quarterly gold production record.

All ore extraction has now transitioned to the high-grade Santoy mine, supporting higher production levels moving forward. At Puna, we produced nearly 940,000 ounces of silver for lower grade stockpiles, a strong performance that puts us well on track to deliver our first half guidance of 1.6 million ounces of silver. Development of the Chinchillas project continues to progress with several important milestones achieved, as Alan will detail later. We look forward to delivering first ore to the Pirquitas mill later this year.

From an exploration perspective, as Carl will speak to shortly, our 2018 programs at Marigold and Seabee are well underway, and we look forward to providing results as the year progresses.

We were also pleased with our financial performance. We added cash to the balance sheet for the 10th consecutive quarter, including from the sale of 4 million shares of our stake in Pretium. At quarter end, we held $473 million of cash and $44 million of marketable securities, maintaining our rock solid balance sheet with our strongest operating quarters in 2018 still to come.

Before I turn the call over to Alan, who will discuss our operational performance in more detail, I wanted to speak to his retirement.

Most of you will have seen the news release last week that Alan will be retiring from the company at end of this month. Alan joined the company in 2013, and has added immense value. He has made the most obvious contribution through his leadership of the assets, and in particular, the introduction and development of our operational excellence program. Alan has also played a key role in our successful M&A strategy, being heavily involved in the analysis, due diligence and integration of both Marigold and Seabee. He was also key in reviewing all the opportunities we have not pursued. Although it's always disappointing to see a valuable member of the team leave, I fully understand Alan's motivations. The COO role requires a lot of travel, and therefore, time away from family, particularly given the geographic spread of our operations. I'm sure Alan will enjoy not being on a plane as often and being able to spend more time with his family.

In the same announcement, we are pleased that Kevin O'Kane is joining the company on June 4th as our new COO, providing a smooth transition. Kevin is a mining engineer with more than 30 years industry experience and is currently in charge of BHP northern Chilean copper mines. I've known Kevin for over 15 years when we both worked at BHP. Having run Escondida, the largest copper mine in the world, for a time, and some -- and coming from the same schooling of continuous improvement as Alan and myself, I have no doubt Kevin will continue to drive to maximize the value of our portfolio.

With that, I'd like to thank Alan for his efforts and drive and enthusiasm over the last 5 years, and we'll now hand it over to him for the last time.

Thank you for those kind words, and I'd just like to add that it's been a great 5 years here at SSR, and an incredible journey under the leadership of both you and John Smith. We took this company's single-operation Pirquitas, turned it around and increased silver production from 7 million ounces to over 10 million ounces, while significantly reducing operating costs. We then purchased Marigold 4 years ago, integrated the operation into SSR and increased reserves, resources and production from about 150,000 to 160,000 ounces of gold per annum, to consistently over 200,000 ounces of gold per annum, whilst maintaining an 8-year mine life and lowering costs as well.

More recently, with Seabee we've done it again. We have been able to increase production and lower costs with the expectations to exceed 100,000 ounces of gold next year as we continue to ramp up with minimum capital expenditure.

When you look back at the change in the company, it has been an amazing journey and truly a lot of fun turning SSR Mining into a successful mid-tier precious metal producer.

So now to the details of Q1 performance. Overall operationally, Q1 was a successful quarter across all 3 sites, achieving the expected quarterly company production, and we remain on track to deliver annual production and cost guidance. In total, we've produced over 78,000 gold equivalent ounces with a cash cost of $766 per ounce. In Q1, Marigold and Puna operations were in line with expectations, and Seabee delivered a strong quarter.

Starting with Marigold, in Q1, we produced almost 43,000 ounces of gold, within our expected range of quarterly production. Q1 cash costs increased to $720 per ounce. Production and costs were predominantly impacted by the few ore tonnes stacked and increased cost of inventory from Q4.

Mining rates recovered in Q1, and a near record 7.1 million tonnes of ore at a grade of 0.37 grams per tonne ore stacked. The grade was similar to Q4.

Total tonnes moved also improved in Q1 to 16 million tonnes. As tonnes moved increased, we saw a reduction in the mining costs now down to $1.80 per tonne. We expect the trend of increased total tonnes moved to continue in Q2 and in the second half of 2018 when the 4 new trucks arrive and start working in Q3.

Moving on to Seabee. The operations performance for the quarter was strong, and continued to show improvements as a result of the operational excellence initiatives on site. In Q1, we produced 23,700 ounces of gold. The approximately 2,400 ounces of in-circuit inventory build was due to the recent commissioning of the gravity circuit, and we expect it to return to normal levels in the current quarter.

Cash costs for the first quarter were $481 per ounce, significantly lower than the fourth quarter last year of $605 an ounce, primarily due to the higher throughput leading to increased gold production and in-circuit inventory at similar operating costs.

The mill feed grade of 8.95 grams per tonne in Q1 was similar to Q4. The last of the ore from the original Seabee mine was extracted in Q1, and decommissioning and rehabilitation work has commenced. The mill performed well in the quarter and continued to ramp up, now achieving 1,036 tonnes per day in Q1, a quarterly record. Our best day in the quarter was 1,300 tonnes per day, which we feel is close to the maximum mill capacity. And so we are now focusing on mill stability and availability and maintaining over 1,000-tonne-a-day averages. These results reinforce our confidence in delivering the results contemplated in the PEA over the next few years.

This year's ice road restocking was completed without incident and included an additional truck and scoop for the Santoy mine. We also took delivery of several refurbished camp units to replace all the parts of the camp. So we're optimistic that Seabee will perform well and continue to set new records this year.

At Puna operations, we've continued processing stockpiled material at the Pirquitas plant while also developing the Chinchillas pit and construction of infrastructure and plant modifications related to the Chinchillas project. The Pirquitas plant continued to operate well, but at a lower throughput rate of 4,144 tonnes per day for the quarter. The lower throughput was a result of planned crusher shutdowns to allow for the construction of the stockpile dome and was also impacted by various heavy rain events experienced during this wet season. We're continuing with the stockpile dome construction and we'll be executing a significant plant shutdown for major plant maintenance and other modifications related to future introduction of Chinchillas ore.

(inaudible) continued to drop as expected, and we produced 0.9 million ounces of the 1.6 million ounces silver production guidance for the first half of this year.

Recoveries and concentrate grades continued to exceed expectations. The combination of lower tonnage and lower grades lead to higher cash costs of $17.07 per ounce as production levels declined. However, it is important to note that cash cost include the accrued costs associated with the stockpiles of approximately $5.75 per ounce in the first quarter.

At the Chinchillas project, with permits in hand, construction and mine development commenced in earnest in Q1. Contractors have mobilized and infrastructure earthworks are almost complete, and prefabricated buildings are starting to arrive at site. During the quarter, all the required equipment to start mining was transported to the Chinchillas site, almost 100% of the new employees for the mining operation were hired from the local communities and training of the various groups is in progress. Mining operations have commenced, and we've just switched to continuous 24/7 operations. During the quarter, 172,000 tonnes of waste were moved, allowing the establishment of the 2 key mining areas. At the Pirquitas site, concrete works for the dome were completed, and the structural erection work commenced.

Earthworks and concrete installation continued for the tailings pumping system, and the majority of the pipe and electrical cable was received. So now with construction activities moving along, we remain confident the Chinchillas will deliver ore to the second -- in the second half of 2018.

Operationally, SSR delivered a strong quarter, and we expect to deliver to guidance.

I'll now hand over to Carl who will take you through our exploration activity.

Thank you, Alan. For 2018, we increased our exploration budgets at Marigold and Seabee in order to step up the pace of reserve and resource addition and to give us exposure to early-stage exploration discovery.

At Marigold, we completed approximately 17,000 meters of drilling in 48 holes in the lower northern portions of the Mackay Pit and on test sections in the Red Dot resource area. Our phased concept at Red Dot is to drill off 2 sections at a spacing that satisfies our indicated resource classification criteria for Phase I. And if that work meets expectations, we will then proceed to Phase II, which completes the drill off the indicated spacing over the entire Red Dot area. We should complete the Phase I drilling by end of the second quarter.

Drilling in the northern sections of the Mackay Pit has encountered high-grade mineralization at depth, just outside the resource pit with results such as 22.9 meters grading 4.6 grams per tonne gold. We expect this mineralization to add to the resource.

At the Seabee Gold operation, underground drilling amounted to approximately 10,000 meters, exploring the resource areas of Santoy 8 and 9 and the Gap hanging wall target. Drilling rates were down from previous years as we focused on stope definition work. We are now at full capacity, with recent access to the drill bay on the 46th level, which provides a platform for the conversion of the 8A-inferred resource.

Notable results since our last update are 8.1 grams per tonne gold over 2.2 meters from the 8A, located 150 meters below inferred resources; and 11.3 grams per tonne gold over 4 meters from the gap hanging wall target, which currently has no resources ascribed to it.

Staying with Seabee but moving away from the mining infrastructure, surface-based exploration drilling was active on the Carr, Santoy 3, CRJ and Fisher targets during the quarter, with work that amounted to approximately 10,000 meters in 16 holes. Four holes were completed on the Carr target where geologic results have deemphasized the priority of the area. Best result was 4.6 grams per tonne gold over 2.8 meters, and we have reallocated approximately 4,000 meters of the planned drilling to the CRJ Santoy 3 area.

Drilling at CRJ encountered visible gold in 2 of the holes, with one of the holes having a significant result of 7.2 grams per tonne gold over 6.3 meters. Follow-up work is underway.

At Fisher, by quarter's end, we had only completed 2 holes for just over 1,100 meters on the extension of the Santoy Shear, and assay results are pending. With the changeover from winter ice drilling to summer land drilling, rates will pick up midway through the second quarter.

At the SIB exploration project in British Columbia, we are in the final stages of planning this year's $3.2 million exploration program, including approximately 9,000 to 10,000 meters of drilling supported by EM and IP geophysical surveys. We plan to begin the geophysics in May, followed by drilling in late June, depending upon snow levels.

With that, I'll turn the call over to Greg for a discussion of our financial results.

Thanks, Carl. Operationally and financially, no surprises in the quarter as each mine tracked somewhat better-than-expected combined with gold prices trending positively.

As anticipated in our guidance discussion early in 2018, the first half of the year is solid, setting us up for a strong second half as Puna operations ramps up and Marigold gets into a better part of its sequence.

For the quarter, we generated revenues of $98 million, and income from mine operations of $17 million. Margins were generally as expected, considering higher depreciation charges across all 3 assets impacted income from mine operations relative to previous periods. G&A and exploration were right on track as were financing expenses and income.

As we advance the closure of the Seabee mine at Seabee Gold Operation, we expense the remaining residual value of $2.8 million. We reported a minor loss in the period of $2.3 million or an attributable negative $0.01 per share.

Normalizing for the noncash Seabee expense and other items, adjusted net income was $5.7 million or $0.05 per share. Importantly, cash flow generated by our operations remains strong. As discussed at year-end, the first quarter consumes working capital due primarily to Seabee ice road restocking of consumables and delivery of full year capital items. We generated $33 million of operating cash flow before working capital, moratorium payments and taxes. So the operations continued to deliver strong cash.

In the first quarter, we also had one of our semi-annual interest payments due on our convertible notes.

So I am pleased considering these seasonal and other impacts that we reported $11 million of operating cash flow. Capital spending and capitalized development were consistent with guidance, with investments in our operating assets totaling $14 million.

As noted earlier, we have a concentration of capital for Seabee as equipment and materials came in over the ice road. We also invested $11.7 million in Chinchillas, a portion of which was funded by cash on hand in Argentina, and a portion from contributions from our joint venture partner. We continued our program of disciplined divestment of Pretium in the quarter, realizing pretax cash of $28 million. And subsequent to quarter end, we fully divested of our interest, realizing additional pretax cash of $35 million.

We finished the quarter with a cash position of $473 million. Our cash continues to build, forming the bulk of our working capital position that now totals $686 million, allowing us to drive our strategy of disciplined growth. In addition, our $75 million credit facility remains completely undrawn and provides flexibility should we require it.

Looking forward, I want to reiterate the comment Alan made of the shutdown at Puna operations in June to prepare the plan for Chinchillas ore. This shut was considered in our first half guidance of 1.6 million silver ounces at Puna that will marginally impact Q2.

As we move later into the second quarter, we get into the Seabee summer construction season, and at Marigold, the start of the pad build and initial payments on the new haul trucks. So we will see some concentration of capital spending through that period. Of course, we will also see the bulk of the remaining Chinchillas capital spend in Q2.

I also want to note that the divestment of our Pretium interest is taxable under capital gains, and we will start making installment payments in the second quarter.

Finally, as part of the restructuring of our Argentine business, as anticipated upon the formation of Puna operations, we are advancing on merging the 2 Argentine business units into 1 Argentine company that will hold both the Chinchillas and Pirquitas properties. This merger will simplify the business model significantly by eliminating intercompany charges and duplication of administration and provide the stronger consolidated company to pursue development of the Pirquitas underground and other opportunities.

The reorganization remains subject to regulatory approvals, but we will need to book a onetime tax expense, likely in the second quarter, of approximately $7 million in order to effect the merger.

So to conclude, the first quarter puts us marginally ahead of where we expected to be. We are tracking well to guidance, with Seabee continuing to show the opportunities we saw when we acquired that operation. We are mindful of pressures in the cost structure with commodities, particularly diesel tracking higher. We have some protections through our hedge positions, and fortunately, had locked in many items to long-term contracts over the last few years. That being said, continuing to apply our operational excellence strategies to drive efficiencies remains essential.

With those comments, I'll turn the call back to Paul.

Thanks, Greg. In summary, we are pleased to be off to a solid start to the year. Our operations performed well, we continued to execute on our growth strategy, and we added cash to the balance sheet.

Looking ahead to the rest of the year, we have an increasing production profile and key catalysts are still in front of us, including delivery of the Chinchillas project, continuing to ramp up at Seabee, and our ongoing exploration program.

This concludes the formal remarks of our earnings call. I'll now pass the line over to the operator to take any questions you may have. Thank you.

(Operator Instructions) Your first question comes from Matthew Macphail with Canaccord Genuity.

My first question revolves around Seabee and the kind of impressive cost we saw that quarter, $59 a tonne underground mining. Pretty decent step change from Q4 as well as Q3 of last year. Is there -- can you provide any color on that, the reasoning behind the impressive cost? And also, is there any chance of us seeing that continue through the rest of the year?

I'll let Alan get to this, and Greg can follow up with anything else.

Yes, sure. It's a combination of things, Matt, but one of the significant ones is as we've shut down Seabee, we've moved the equipment and the miners over to the other areas in Santoy and the ore body is wider and we get more tonnes per vertical meter, and that helps us get our costs down. So Greg, if there's anything else on the cost side?

No. That was the comment I would've made.

Okay, that's great. So it is, now that Seabee is shut down, Santoy is the primary source of ore. That's kind of a run rate we can see going forward in terms of...

Yes, Matt. All of the ore will be coming out of Santoy going forward. They've started rehabilitation and pulling out all of the old equipment and stuff out of the Seabee mine. And so all ore going forward will come out of Santoy. I mean, over time, you'll see variation in quarters as you move from thicker to thinner parts of the ore body, that is not a straight line. But certainly, Santoy is a cheaper operation to run.

Great. And then my second question moving to Marigold. You mentioned in the release that you'll be issuing -- you intend to issue a updated NI 43-101 report on Marigold before the end of Q3. Is that in order to kind of capture some of the new drilling that you've undertaken at Red Dot and the other targets on the property? Or is there -- are there other sort of efficiencies you wanted to get into a report?

Yes. It's before Red Dot. We're drilling that this year. It's really to capture the drilling up to the results we put out earlier, plus encapsulating the additional trucks, and we'll use that as a base case going forward. We then said, we'll look at the drilling results this year from Red Dot, and we're doing that in a two-phase program. And if the results from that are promising, that would then be the expansion scenario that we said we'd look at next year. So really, this would be the base case, and then we'll evaluate whether there's any potential next year to expand that fleet.

The next question comes from the line of [Mick] Sroba with Macquarie.

Just 2 questions on my end on fuel. Could you please provide some more color on what percentage of fuel has been hedged, the total expected fuel consumption? And what percentage of the operating costs are fuel related?

Alan -- Greg, do you get this?

Yes, sure. For calendar year 2018, we have about 35% of our fuel exposure hedged, provides protection, generally, at oil prices that exceed kind of $55 a barrel. So we're certainly benefiting from those positions, currently. I don't have the volumes of diesel at my fingertips, but at Marigold, the percentage of cost structure that's fuel is about 15%. And at the other 2 operations, it's approximately 10%. Obviously, Puna operations, it's been fairly limited over the last number of months. But as pre-strip now has commenced and is ramping up, it should return to approximately the 10% level going forward.

The other comment I'd make is, obviously, for Seabee, we have purchased all our fuel for the year, and it's now on site, and we purchased those and had locked in some advanced purchase agreements late last year into the early part of this year. So we're relatively neutralized at Seabee to price movements, positively or negatively till the next restocking season.

And just remember, the hedging program's at 0 cost collar. So it's not locked in at a single price where you have the upside and downside protection.

Okay. And just on Seabee as well, could you comment on how well the stopes have been performing underground, vis-à-vis dilution and grade reconciliations as per the plan?

Alan?

Yes, sure. I mean, Seabee, the stopes are performing extremely well. We get nice clean cuts against the contacts. Our grade reconciliations are within half a gram of what we're expecting. So it's going really well from that point of view.

(Operator Instructions) The next question comes from the line of Chris Thompson with PI Financial.

Congratulations on a great quarter. Alan, sorry to see you go, mate. Just want to -- we'll start off with Marigold very quickly. Two more questions, one relating to leach pad kinetics. I think you're forecasting, obviously, a stronger second half of the year. Are we going to see that -- very much of that sort of kick in in the third quarter?

Alan?

Sure. It's partly third quarter, predominantly, fourth quarter, and it's all related to new ore, close to plastic on the new pad that we're currently constructing.

Q2 will be higher than Q1.

Oh, yes. No, Q2 production's higher than Q1. The biggest quarter will be Q4, and that's sort of related, as I said, new ore, new pad, close to plastic and fast kinetics.

Great stuff. Those costs, $1.80. Again, you're telegraphing maybe a lowering of those costs on the back of some more trucks there. How should we be modeling that, again more in the Q4 than the Q3, benefit-wise?

No. I did expect to see benefit from those trucks in Q3, for sure.

Okay, perfect. Just moving on to Puna very quickly. You mentioned that you spent $11.7 million on the quarter, I guess, and the bulk of the remaining CapEx is going to come into Q2. Can you put a figure on that for us?

You have to do some work.

Yes. So we have -- as of the end of March, about $20 million has been spent. Certainly, a significant, more of that has been committed, so our share, about [15]. So in rough terms, remaining, there's kind of $55 million to $60 million in total, of which our share would be approximately $45 million.

A big part of that is pre-stripped, so the mining fleet operating, we're moving muck. It tends to be a fixed cost initially because there's people and fuel and stuff. But as the efficiencies go up, unit costs go down. But there's a significant cost per month now, that operation as it ramps up, and we're paying everybody their wages and things.

Perfect. My final question. Obviously, we're seeing a bit of a peso devaluation in Argentina, increasing inflation. Is one offsetting the other as far as your expected expenses are concerned? Can you comment on that?

Yes. Obviously, the last couple of weeks, the peso has been quite volatile, devaluing significantly, as you noted. So it's early days, I think, to make any concrete prediction. Certainly, our expectation, over time is that those two things would offset. So I think, fortunately, as a U.S. dollar exporter, we're largely immune to the inflation piece as long as the devaluation matches, and that's what we've seen traditionally, and we do see and have seen historically, these periods where the peso moves and then stabilizes, so over time, it comes into line.

All in all, it's beneficial to our moratorium liability that we book, so we're getting some significant benefit from the devaluation through that, and it should have some short-term benefits, and we'll continue to evaluate the longer-term benefits on both the operation and the project.

Our next question is from Dan Rollins with RBC Capital.

Two questions. One just on the mining costs at Marigold. If you didn't have the hedges in place, do you happen to have an estimate of what the mining cost would have been during Q1? Just trying to gauge how much you're benefiting right now from the hedges in place?

In Q1, it won't have been significant. Dan, obviously, prices were kind of moving up through the quarter and have moved up since the quarter. I mean, to give you in rough terms, the mark to market on our positions is around $1 million. So if you take that over a couple hundred thousand ounces, it's about $5 an ounce.

Okay, perfect. And then just given the balance sheet continues to grow, which is always nice to see, any thoughts about installing a dividend policy any time soon? Just maybe that would be another incremental note to The Street and the market that you are generating free cash flow, although you have higher all-in sustaining cash costs? Because you fully (inaudible) demonstrating that free cash flow is now going to start to see a return on capital because you are building quite a bit of a war chest here.

Yes. A couple of points to that. It's something we obviously consider, we're in discussions with the board. At the moment, we haven't decided to go down that path. We note that there are a couple of internal growth projects that we've indicated we'll have a view on with more clarity, too, by the end of the year. So potential underground at Pirquitas. And we're reviewing Pitarrilla project in Mexico. This year, we said we'd have some studies out, and also next year, the potential expansion at Marigold. So it would be nice to be in a position to fund any or all of those if they happen to go ahead. So at the moment, I wouldn't expect a change in that in the short term, but obviously, at some point, yes, that is a logical thing to do. But we've shown disciplined investments. I think shareholders can take comfort that we spend the money wisely.

Maybe just a follow-up. I have 3 conference calls at the same time. So I wasn't sure if you talked about it. But do you -- what are you envisioning for Pitarrilla right now? Obviously, it originally was going to be a large open pit, which didn't make it to cut. And then it was going to be an underground, which didn't seem to work out. How are you envisioning Pitarrilla now going forward?

So if you think back, the original feasibility study sort of made sense in the price environment of which it was done. So silver was over $30. It's a huge low-grade resource. The initial concept was a large plant that could handle all 3 ore types at once: Low-grade oxide, high-grade sulfide and intermediate material, and it ended up with very large CapEx that looked attractive, USD 750 million at the time. Luckily, for our shareholders, we didn't build it because the silver price, obviously, dropped significantly. We wouldn't have got a return on capital. So it's being parked there for a while. And we've gone back to have a look. We did a back of the envelope, and saw that there were some changes, particularly if you focus on the higher grade underground sulfide. We think we can reduce the CapEx of the plant.

The other thing that's moved in our favor is the currency. When we did the original study, it was around 10:1; today, it's closer to 20:1. So those things, it looked to indicate that there could be a project that focus on the sulfide, and the nice thing is it doesn't sterilize the oxide. That's still a [cool] option on a higher silver price, so you could always come back and redevelop that. So that's what we're doing. It's not our absolute highest priority, but we will complete the study by the end of the year, and at that time, we'll update the market on it.

Okay. Was there an issue with water as well, getting access to the needed water?

For the larger open pit, yes, that was a constraint. But for the smaller underground, that's not an issue.

That's not an issue. The water rights, I think, that you're referring that we had applications in probably at that time have now been approved, Dan.

Okay, perfect. And then just the decision to start talking about Pitarrilla more often and some of the other growth opportunities, which technically have better bang for your buck. Does this sort of imply that it's very tough right now to find any accretive acquisitions in the space?

It's always -- I'd say it's always tough to find accretive acquisitions. At this point in time, I don't know if it's particularly any harder than before. We continuously look. If we see something, we'll try and move forward with it. But we're disciplined with it. So yes, it's always tough, I don't know if today is any tougher than other times.

But still a bit of a question on if there's a good quality asset, the ask is too high. And then the other problem is there's probably not enough quality assets.

Yes, that's fair.

This concludes the question-and-answer session. I will turn the call back to Mr. Benson.

Excellent. Okay, thank you very much, everyone. Have a good day.

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