Teck Resources Ltd (TECK) 2005 Q3 法說會逐字稿

Good morning ladies and gentlemen and welcome to the AUR Resources third quarter results conference call. At this time, all participants are in a listen-only mode. Following today's presentation, there will be a question and answer session. (Operator Instructions). As a reminder, this conference is being recorded, Thursday, October 27 of 2005. I would now like to turn the conference over to Mr. Jim Gill, President and Chief Executive Officer.

Thanks very much and good morning everyone and welcome to AUR's third quarter conference call. We're going to follow our usual format where I will review the technical results, following which John Knowles will present the financial results. After this, we will take questions, first from those attending by telephone and then from those present here in the room.

The third quarter of this year has been a very good one for AUR as the copper price averaged $1.70 a pound and copper production was approximately 58 million pounds. Earnings were $31 million, or Canadian $0.40 per share, and cash flow of $64.3 million, or Canadian $0.82 per share. We would like to remind everyone that AUR is a U.S. dollar reporter, so all dollars are U.S. dollar, unless stated otherwise.

We are currently forecasting net earnings for the year of $131 million, or Canadian $1.66 per share, and consolidated cash balances of $339 million, or $4.26 per share Canadian. In light of AUR's cash position and its strong operating cash flow, the Board of Directors has declared a dividend of Canadian $0.15 per share to be paid on January 1, 2006 to shareholders of record at the close of business on December 1, 2005. This dividend is comprised of a semiannual dividend of $0.05 and a special dividend of $0.10 per share Canadian.

Turning to the production highlights, in the third quarter, AUR's share at metal production was 57.9 million pounds of copper, 0.8 million pounds of zinc, 11,000 ounces of silver and 300 ounces of gold. Our cash operating cost per pound of copper sold, net of byproduct credits, was $0.71 as increased energy, assets, labor and transportation costs continued to negatively impact unit operating costs.

Cash flow from mining activities was 69 million and capital expenditures at the mines were $2.9 million, as well as 9.9 million at Duck Pond. In the first nine months of this year, AUR's share of metal production was 179.7 million pounds of copper, 8.8 million pounds of zinc, 138,000 ounces of silver and 4500 ounces of gold. Cash operating cost per pound of copper sold, net of byproduct credits, was $0.65. Cash flow from mining activities was 177 million and capital expenditures at the mines was 4.7 million, plus 14.2 million, which was spent on the development of the Duck Pond deposit. The mines operated in full environmental compliance during the first and third quarter and for the year-to-date.

For the full year 2005, we're forecasting total copper production of 266 million pounds from the mines at a cost of $0.66 per pound of copper sold, net of byproduct credits. Mining revenue is expected to be $425 million for the year with mine operating cash flow of $249 million.

Turning to the mines themselves, the Louvicourt mine closed on July 12 after 11 years of superior operating performance. The high metal prices in 2005 allowed us to increase production this year as low-grade material became economically viable at the end of the mine life. In the third quarter, Louvicourt produced 1.1 million pounds of copper and 2.8 million pounds of zinc from 51,000 tons of ore. The 2005 total production was 38 million pounds of copper and 29.5 million pounds of zinc, which was 30% more copper and 51% more zinc than what was in the mine operating plan.

Cash operating costs net of byproduct credits were $0.43 per pound of copper this year. AUR's 30% of cash flow from Louvicourt's operating activities this year was $16.4 million. Mine closure and site reclamation activities are now in progress and are scheduled for completion in 2006. The total cost to complete this work was $11.2 million, of which 3.3 million is AUR's share. In 2005, $6.7 million is expected to have been spent on this work of which AUR's share is $2 million.

We are very proud of the Louvicourt operating team which made Louvicourt one of Canada's most successful mines and which provided AUR with a return on our invested capital of about 45% after-tax.

Turning to Chile, the Andacollo mine performed very well from both an operating and financial standpoint in the third quarter this year. Material moved was 4.6 million tons of which 1 million tons was ore at a soluble copper grade of 0.74%. This resulted in copper production of 13.2 million pounds in the quarter, 1.2 million pounds above the budget. Our cost per pound of copper sold was $0.61 which we believe to be an excellent cost given the current global economic environment.

Capital expenditures totaled $2.7 million, of which $2.1 million was spent on the feasibility study for the Andacollo hypogene copper gold deposit and the balance mainly on major truck overhauls. Cash flow from operations was $17.2 million.

For the first nine months of this year, the mine moved 14.1 million tons of material at a strip ratio of 3.5 to 1. 3.1 million tons of this material was ore at an average grade of 0.72% soluble copper. This resulted in production of 38.4 million pounds of 100% LME grade-A capital copper, 23.8 million pound higher than our budget. The cost per pound of copper sold was $0.63 for the first nine months of this year.

Capital expenditures to September 30 this year were $3.7 million, of which 2.4 million was on the hypogene feasibility study and 0.8 million was on equipment overhauls. Cash flow from operations was $43 million for the first nine months of this year.

On October 3, 2005 AUR announced an increase in leachable reserves at Andacollo mine of 17.2 million tons to 32.3 million tons. A new mine plan was put together based on these new reserves and this will extend the mine life to late 2010 and increase the remaining copper production by about 83 million pounds, or 58%, to a total of 227 million pounds in the period 2006 to 2010. The construction of the dump leach facility and a small heap leach pad expansion at a capital cost over the next five years of 4.5 million and 0.9 million, respectively, has been initiated in order to achieve the increased copper production.

The mine is running very well with copper production about 3.8 million pounds ahead of plan so far this year. We expect to set a new production record of approximately 52 million pounds of copper in 2005 with cash flow from operating activities of about $60 million. The final feasibility study for the Andacollo hypogene copper deposit is progressing well and remains on schedule for completion in the first quarter of 2006.

Turning to the Quebrada Blanca Mine, Quebrada Blanca had a very strong third quarter of 2000. There was 9.1 million tons of material mined at a strip ratio of 0.9-to-1. Of this material, 1.9 million tons was heap leach ore at a soluble copper grade of 1.1% copper and 3 million tons was dump leach ore at soluble copper grade of 0.36% soluble copper. Production in the quarter was 44.4 million pounds, or 2.3 pounds ahead of our budgeted plan. Capital quality was 100% LME grade-A and copper sales totaled 43.5 million pounds during the quarter. The cost operating -- cash operating cost per pound of copper sold was $0.74 and cash flow from operations was $45 million. Capital expenditures were $0.2 million, mainly on capital equipment overalls.

In the first nine months of this year, we mined 27.6 million tons of material at a strip ratio of 0.84-to-1. This is comprised of 5.6 million pounds of heap leach ore at an average grade of 1.1% soluble copper and 9.4 million tons of dump leach ore at an average grade of 0.34% soluble copper. Production was 129.8 million pounds, cathode quality was 100% LME grade-A and copper sales totaled 129.1 million pounds.

The cost per pound of copper sold for the first nine months of this year was $0.68 per pound and cash flow from operations was $118 million. Capital expenditures remained low, totaling $0.5 million mainly on mobile equipment, capital overhauls and other maintenance items.

In 2005, we expect Quebrada Blanca to produce about 176 million pounds of copper as budgeted at a cash operating cost of $0.69 per pound of copper sold. Capital expenses are expected to be as budgeted at $2.1 million and operating cash flow is expected to be very strong at $170 million in 2005.

Turning briefly to the development projects, development of the Duck Pond copper zinc deposit is progressing well and remains on schedule for production in the fourth quarter of 2006. The ramp has advanced to over 700 meters. Construction of the surface facilities, including the mill, is fully activated and the power line is expected to be energized in December. Most of the key senior operating staff are on-site and total manpower, including contractors, is about 130 people at this time. Capital expenditures were $9.9 million in the third quarter and at the year end are expected to have totaled approximately $33 million.

In business development, AUR's expenditures on its exploration projects and the identification and evaluation of acquisitions was 1.7 million and 4.4 million in the third quarter and in the year-to-date, respectively. AUR copper projects in Chile are at the drilling stage with drilling now in progress on the Montoya and Juan de Doya (ph) properties. Progress on resolving the land access issues at La Verde has been slow and drilling to evaluate this copper discovery made earlier this year remains suspended.

The search for development-stage deposits and producing mines which will meet AUR's investment criteria continues and includes Africa, Eastern Europe and CIS countries now, as well as the Americas. A number of assets have been identified and are currently under evaluation.

I would now like to turn the meeting over to John, who will take you through the financial results for the third quarter and the year-to-date. John?

Thank you, Jim. AUR Resources had another excellent quarter from a financial performance perspective with strong revenues, earnings and cash flows. In fact, record cash flows and cash balances were achieved in the third quarter. As a significant copper producer, AUR continues to reap the rewards of higher copper prices which averaged $1.70 per pound in the third quarter this year. Before getting into the numbers, I will remind you again that all figures are in U.S. dollars unless we state otherwise.

Looking at the statement of operations and focusing on the third quarter, net earnings were $31 million, or $0.33 Canadian, $0.40 per share in the third quarter of 2005, compared to net earnings of $20.7 million, or $0.22 per share, in the same quarter last year. Operating revenues were $108.1 million, approximately 35% higher than the 80.1 million in the same period of 2004, largely due to the fact that AUR realized an average of $1.88 per pound of capital copper sold in the quarter, a $0.50 per pound higher realized copper price than in the same quarter last year.

Looking at expenses, mine cash operating expenses were $41 million in the quarter, compared to 37 million last year, due to higher energy asset, foreign exchange, labor and transportation costs. AUR's operating cash operating cost per pound of copper sold overall was $0.71 for the quarter, net of $0.01 per pound byproduct credits for the Louvicourt mine, virtually all from zinc revenues. There were no unusual items this quarter. All other non-mining combining expenses before taxes and noncontrolling interests, with the exception of depreciation and amortization and miscellaneous other items, were essentially the same as in the corresponding period in 2004, so I won't go over them in detail.

Depreciation and amortization expenses were 8.2 million, a $400,000 decrease over the same period last year due to the increase in reserves at both the Andacollo and Quebrada Blanca Mines. The net amount of miscellaneous other expenses and revenues was positive $100,000 in the third quarter of 2005 compared to $50,000 positive in 2004. The net revenues in the third quarter were primarily comprised of interest income of 2.6 million and 400,000 in gains on disposals of plant and equipment from the Louvicourt mine, partially offset by a $2.1 million copper price participation accrued for the quarter and payable to Anami (ph), a Chilean government entity, by Quebrada Blanca early in 2006.

Provisions for taxes was $9.1 million in the third quarter of 2005 compared to 4.7 million in 2004 as a result of higher earnings this year. The cash component of these taxes was $7.6 million, of which 7.3 million related to Quebrada Blanca's income and 300,000 related to Québec mining duties on AUR's share of Louvicourt's income. Non-cash future taxes totaled $1.5 million in the quarter. Noncontrolling interests on income statement represents AUR's partner share of earnings in the Andacollo and Quebrada Blanca mines and was 12.2 million in the third quarter compared to 3.9 million in 2004.

Turning to the nine months ended September 30, 2005, net earnings were a record $108.8 million, equal to $1.06 U.S. or Canadian $1.30 per share for the year-to-date compared to net earnings of 63.4 million or $0.67 a share in 2004. Operating revenues were a record $314.2 million, or 31% higher than the 239 million in 2004, largely due to the fact again that we realized a net high average price of $1.71 per pound of capital that sold for the nine months ended September 30 compared to $1.34 per pound last year.

Looking at expenses, mine cash operating expenses were $124.4 million to the end of September compared to 105.6 million in 2004. 5.4 million more pounds of copper sold to the end of September compared to the same period in 2004 resulted in 3.8 million higher mining costs while higher operating unit costs resulted from $15 million of material price increases primarily and were for the same reasons that I had previously mentioned. AUR's cash operating cost per pound of copper sold was $0.65 a pound, net of $0.05 per pound of byproduct credits from the Louvicourt mine, of which $0.03 a pound was from zinc revenues, compared to $0.57 in 2004.

Turning to other expenses for the year, non-mining expenses before taxes and noncontrolling interests, other than depreciation and amortization and miscellaneous items, were essentially the same as in the corresponding period in 2004. So again, I won't go over them in detail. Depreciation and amortization was $24.8 million to the end of September compared to 27.8 million in '04, again, due primarily to the increase in reserves at both Andacollo and Quebrada Blanca. The tax provision was $25.1 million through September 30 compared to 14.3 million in 2004 as a result of higher earnings. The cash component of these taxes was $20 million, of which 18.1 million relates to Quebrada Blanca and 1.9 million related to Québec mining duties on AUR's share of Louvicourt's income. Non-cash future taxes were $5.1 million for the nine months ended September 30.

Non-controlling interest expense was 23.5 million to September 30 compared to $12.1 million in 2004. The debt obligations of both Andacollo and Quebrada Blanca were fully paid in the second quarter of 2005 and following the end of June, AUR no longer has preferential rights with respect to cash flow coming from those two mines. AUR's entitlement going forward is the right to receive 76.5% of Quebrada Blanca's income and 63% of Andacollo's future cash distributions, respectively.

Turning to retained earnings. AUR's retained earnings at the end of September of 2005 were $225.6 million, 96.9 million higher than at the beginning of the year. This was the result of net earnings of 100.8 million for the year to date, less the $3.8 million dividends of $0.05 Canadian per share paid on July 1.

Looking at the balance sheets, total assets on the balance sheet were $701.1 million at September 30, 119.7 million higher than at the beginning of the year. The Company's current assets were just under 400 million at 399.8 million at September 30, including cash of $326.2 million, compared to $206.5 million at December 31, 2004. AUR's cash exceeded its senior unsecured notes of $125 million by 201.2 million at the end of September. The cash increased by 119.7 million, principally the result of higher operating cash flows from the mines. Property, plant and equipment increased by $2.7 million to 276.6 million in the first nine months as the amount of expenditures on property, plant and equipment exceeded depreciation and amortization for the same period.

Included in the Company's long-term copper inventory was $18.7 million for recoverable copper contained in the base at the leach pads at Quebrada Blanca which will not be processed until the end of the mine life. Total liabilities at September 30 were $290.2 million, 26.4 million higher than at December 31, 2004. Current liabilities were 79.9 million, an increase of $28 million from the beginning of the year. And the difference is primarily due to the current portion of noncontrolling interests of $24.6 million and the $3.1 million price participation accrued so far this year expected to be payable to Anami by Quebrada Blanca in 2006.

Other liabilities showing on the balance sheet totaled 210.4 million, $1.5 million less than at the beginning of the year, primarily due to noncontrolling interests of 30.5 million, $4.8 million lower than at the beginning of the year with the reclassification of the $24.6 million to current and future income and resource taxes of $22.3 million, 2.9 million higher due to strong earnings in the first half.

Shareholders equity increased by $100 million exactly to 410.9 million at the end of September on the strength of the Company's higher earnings for the year-to-date. With respect to cash flows and focusing on the third quarter, cash flow from operating activities was $64.3 million, or $0.68, or Canadian $0.82 per share in the third quarter of 2005, compared with $31.6 million, or $0.34 per share, in the third quarter '04. Financing activities totaled $3.2 million in the third quarter of 2005 with 3.8 million pertaining to dividends paid to shareholders, $900,000 related to capital lease principal repayments, partially offset by proceeds received on issuance of common shares.

In the third quarter of 2004, financing activities totaled $3.9 million, of which 2.3 million was for payments to noncontrolling interests and 1 million was for capital lease principal payments. Investing activities in the third quarter totaled 11.8 million, of which -- or with 12.8 million for investments in property, plant and equipment, including 9.9 million at Duck Pond, offset by proceeds of 1 million on the disposition of plant and equipment from the Louvicourt mine. In the third quarter of last year, investing activities totaled 1.2 million, which was primarily for investments in property, plant and equipment. AUR's cash balances increased by 49.3 million in the third quarter of 2005 and ended the quarter at $326.2 million.

Turning to the nine months ended September 30, 2005, I've mentioned the cash position increased by 119.7 million and working capital increased by 98.4 million to $320 million at the end of September. Cash flow from operating activities was $160.5 million, $1.69 U.S., or Canadian $2.06 per share to the end of September, compared to $106.2 million, or $1.13 U.S. per share in 2004. Financing activities totaled $15.8 million in the first nine months of '05 and included $11.8 million of dividends paid to AUR shareholders, 3.6 million paid to noncontrolling interests, 2.8 million in capital lease principal payments and proceeds received of $2.6 million on common share issuances. In the nine months of 2004, financing activities totaled $14.6 million, including $10.3 million paid to noncontrolling interests and $3.7 million of capital lease principal payments.

Investing activities were $25 million in the nine months ended September 30, of which $10 million was for the copper price participation payment to Tech Cominko (ph) in January. $18.4 million was for investments in property, plant and equipment, which included $14.1 million at Duck Pond, offset by $2.2 million proceeds on the sale of marketable securities and 1.2 million proceeds on the sale of property, plant and equipment. In the first nine months of the prior year, investing activities totaled $6.5 million.

That completes my review of AUR's financial performance in both the third quarter and the nine months ended September 30, 2005. I will turn the meeting back to Jim, who will present a brief overview of our expectations for the full year 2005. Jim?

Thank you, John. Just very briefly, it's pretty clear that 2005 is going to be another very profitable year for AUR. At a copper price of $1.75 per pound in the fourth quarter, which looks somewhat conservative at the moment, we are forecasting record revenues of $425 million, net earnings of $131 million, or $1.66 per share Canadian, and operating cash flow of 230 million. At year end, our consolidated cash balance is forecasted to be $339 million, or $4.26 per share Canadian, of which AUR's share will be 321 million, or $4.03 Canadian per share.

AUR expects to continue to achieve the highest operating margins in the industry with our earnings expected to be 31% of revenues in 2005, in-line with the 32% achieved so far this year. At last night's closing price of $9.28 per share, AUR's shares are trading at a priced earnings ratio of 5.6 and a price to cash flow ratio of 3.2, based upon our 2005 financial forecast.

Well, things are looking very good for the company and we're looking forward to a strong end of this year and to a solid 2006. Now I would like to open the floor for questions. We will start with those who are present by telephone if we could operator.

(Operator Instructions). Tom Meyer, Raymond James.

Good morning. I have noticed with respect to Quebrada Blanca that you're guiding higher for 2005 by about $0.05 a pound versus what you were guiding in the previous quarter. Can you comment on some of the cost initiatives? I know you're being hit by the higher energy costs and the appreciation of the peso, but are there any initiatives? Because you are mining at about a 17% higher grade than your stated reserve grade on soluble copper. So how's it looking going forward?

Perhaps, we can just give you a bit of an overview on where the differences in costs are. John has some information on that, and maybe it's best for him to just take you through it. John?

Sure. The great majority of the increase in costs comes from prices, which I think you're suspecting, and maybe this is a good opportunity to look at our unit costs overall. The increase in expenditures for the year to date is $0.08 a pound to $0.65 a pound overall. And then as you mentioned, Quebrada Blanca, QB is by far the majority of the influence in those costs.

About 50% of the cost increase is due to energy costs, primarily diesel and bunker sea fuel, and essentially all of this price increase -- all of this cost increase is price-related. There are other costs that are significant. Asset accounted for about 25% of the total cost increase and about two-thirds of that increase was in consumption and one-third in prices. Other costs that we have seen increasing during the year include tires and spare parts, as well as contract services, and those account for about -- the remaining 25% of the total cost increases.

So we cannot give you much positive news on the price front. We don't have too much influence on that, and other than the fact that we hear and read that oil prices may be coming down. And actually, we already have seen some reduction in expected asset cost for next year.

Okay, so it sounds like just the standard industry cost pressures. And just one more quick question if I could. Could you comment on your view of Peru as a place for potential investments for AUR going forward?

Yes. We think Peru has a lot of mineral potential. As you know, it has a lot of major mining operations there. We think that from a geological point of view, it's a very attractive place. We recognize that it's not quite as easy to handle things there as it is in Chile. We love Chile, but we think Peru is an important place long-term to be looking for acquisitions.

Okay, thank you.

Tony Lesiak, UBS Warburg.

Good morning. Jim, does the Company's decision to declare only a $0.10 special dividend in any way reflect on the prospects for accretive acquisitions?

Well, I think that we've said in the past, and it's still true, that we are focusing our financial resources on being in a position to continue to complete the development of Duck Pond and for the Andacollo hypogene deposit. And we want to remain in a very strong position to aggressively pursue acquisition opportunities as they come along. So I think that it's prudent for us in light of that to share a portion of the additional benefit that we have in our income this year with the shareholders, but to retain a significant portion of that for those activities.

Has there been any change in the size profile that you're looking at?

Well, there certainly has been over the last six or seven years. I think the right now, we need to see something that's going to add at least 100 million in annual revenue, it's going to increase our production materially. And so we're looking at things that would be in the order of excess of a couple hundred million, up to 0.5 billion in an individual project. We're not particularly interested in something that's going to produce 20 million pounds of copper a year.

Thanks. Just turning to copper realizations and the LME premium that you achieved in the quarter, how do you see that tracking over the next few quarters?

Well, the LME premiums in the fourth quarter are essentially for 75% of our production are fixed because we entered into contracts for the full year. At Andacollo, they're a little over $0.08 a pound and at Quebrada Blanca, they're a little over $0.07.5. The other 25% of the production that was in our original budget is sold on the spot market, so it's subject to the vagaries of the spot premiums. Right now, the spot premiums have of course been significantly lower in the last second half of this year than they were in the first half, and they are currently picking up a little bit. They have gone as low as about $65 a ton there, the latest ones are pushing back up closer to 100. Perhaps the best way to answer it, is in over budget forecasting for next year, we are using $100 a ton.

Okay. Can you comment on what the cost structure might look like in 2006? Would that be similar to '05?

I would say that not having finalized our budget, that you're probably looking somewhere in the $0.65 range.

Thanks very much.

Steve Bonnyman, CIBC World Markets.

Thank you. Just following up on the last couple of questions, to clarify some of the cost issues that have taken place, we saw much greater jump in the QB costs than we did at Andacollo. Thank you for the guidance for next year, because that helps us out a little bit, but can you break down how QB was affected more than Andacollo so that we understand -- like, obviously, there was seasonality in the quarter as well, but from a --?

The biggest difference between QB and Andacollo is in the energy side -- aside from the fact that it's four times as big. So we consume four times as much. It also, remember, generates most of its power from a power plant we have in place which uses bunker sea fuel. So unlike Andacollo where the energy costs are principally from buying under a contract off of the grid, about 40 megawatts of our power from QB comes from our generating plant and 14 come off the grid. So we're much more subject to increases in costs for energy at QB than we are at Andacollo.

In addition to that of course, all of our other supplies and everything have a lot more distance to get them into QB than they do at Andacollo because it's a four-hour drive from Ikiki (ph) and Andacollo is 55 kilometers from La Sovena (ph). So every time -- everything gets impacted by increases in energy costs, being fuel or anything like that.

In terms of the fuel costs going into QB, do you think you have seen the spike pass through your system now? We've obviously seen WTI prices and things like that settling back. Is there a lag that we're going to see these higher prices, or potentially even higher costs, into Q1, or is the timeliness fairly closely linked to the things we see in the spot market?

Well, there's obviously an averaging there. We are going to be using $60 for oil next year in our budget, and I think that is probably a reasonable one. I do not think we're going to see significant increases, say, in the fourth quarter compared to the third quarter in those costs. I think we're clearly going to see some reductions and we know that there will be reductions in transportation costs, there will be reductions in asset costs next year. I wouldn't be quite as confident of those changes coming in the energy costs.

Thank you very much.

David Charles, JMP Securities.

Most of my questions have been answered on the cost. I suppose two things maybe, if you could give us some color, Jim. One is in Mexico on the Verde. You mentioned that you've basically suspended all work there. Can you just maybe describe to us again what the issues are and when you think those issues might be resolved? And if you, can give us some on your corporate development. You talk about the Far East, Central Europe, Africa, whatever. Can you really tell us what you're trying to do there? Are you looking more for exploration projects, or are you really looking for mines that are in current operation?

The answer to the first question is that the situation at La Verde is that currently do not have an agreement with the Ahido (ph) that represent the local population of people who have the surface rights to the area which contains the La Verde deposit. Still, we have an agreement which has to be voted upon by the members of the Ahido. Our position is that we're standing back from it.

Having said that, we're spending a considerable amount of time in negotiating with them the complement arrangements that makes sense for us and is attractive to them. We did have an agreement earlier in the year. A certain small number of the members decided that this was not acceptable to them and they created the disruption in our ability to accept the property.

What it comes down to is that the process of getting an agreement which we can be -- we can rely upon is a very bureaucratic process because of the Ahido rules. And in fact, they have to get all of the members to vote because they're in the currently trying change the management of the Ahido.

So I think we really basically have an agreement in principle with the majority of the members, but it looks like it's going to take a little bit more time. And I am very hesitant to give a commitment on time because we've been expecting this to happen over the last couple of months and it hasn't. But we are hopeful and optimistic that this will be done sometime in November and we're working hard at it.

Is it safe to say that the issue is money?

The issue is always money. Yes, it's safe to say the issue is money. Some people want to have money distributed before the deposit is confirmed to be economically viable and some people don't want to pay on that basis. And I guess you can figure out which we are.

The other question, which -- what was the other question? (multiple speakers) Oh, corporate development. Well, first of all, I think the simple answer to your question is that our objectives in CIS countries -- Russia, Africa, and we certainly are not getting involved in the Far East under the current plan -- our objectives there are not to be searching for early stage exploration projects. Our objectives there are to identify and acquire a development stage for producing mining operations which meet our rate of return objectives, adjusted for political and other risks.

Have you had -- like you mentioned earlier that you seem to have identified a few things. Given that you have started this, what, six, nine, 12 months ago, I mean are you finding that there's more opportunities in these jurisdictions than you expected, or are things pretty much proceeding as expected?

Well, first of all, I don't think we have been fully active on a proactive basis in those areas for six to nine months. Nigel Wallace, who is responsible for that area, is operating out of this small office that we opened in London, which just started a couple of months ago; he is just in the process now of making a list of things that we're going to look at. Now we have been looking on a reactive basis in the past, and so we do have some things that are higher on our list at the moment than others. But I would say that we're at the early stages in that process and part of the strategy for opening the office in London was to ensure that we are there to have people bring us projects from those parts of the world because most of the business goes through London and we don't want to be sitting here waiting to get the dregs from that doesn't get done in London.

But, we are not ignoring South America and Central America either. We have, as you probably would understand, a fairly thorough knowledge of all the potential opportunities down there and we keep banging away at them and we keep evaluating them. But at current metal prices, the bid and ask can be quite far apart.

Okay, thank you very much.

Mr. Gill, there are no further questions on the telephone at this time. Please continue.

Thank you. I guess we will open it up to the people here. Does anybody have a question? Well that's great. That $1.86 price makes everybody happy, including us, and I hope our shareholders. So thank you very much. That will conclude our conference call for this quarter. We will keep doing our job and look forward to the year end when sometime I'm guessing the first half of February. Thank you very much.

Thank you, sir. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.