Q3 2012 B2Gold Corp Earnings Conference Call

Nov 14, 2012 AM EST
BTO.TO - B2Gold Corp
Q3 2012 B2Gold Corp Earnings Conference Call
Nov 14, 2012 / 07:00PM GMT 

==============================
Corporate Participants
==============================
   *  Clive Johnson
      B2Gold Corp - President, CEO 
   *  Mark Corra
      B2Gold Corp - SVP of Finance & CFO
   *  Dale Craig
      B2Gold Corp - VP, Country Manager, Nicaragua
   *  Bill Lytle
      B2Gold Corp - VP, Country Manager Namibia
   *  Tom Garagan
      B2Gold Corp - SVP of Exploration

==============================
Conference Call Participants
==============================
   *  Shawn Campbell
      Macquarie Research Equities - Analyst
   *  John Calhoun
      - Analyst

==============================
Presentation
------------------------------
Operator   [1]
------------------------------
 Good morning, ladies and gentlemen. Welcome to the B2Gold third-quarter results conference call.

 I would now like to turn the meeting over to Mr. Clive Johnson, President and CEO. Please go ahead, Mr. Johnson.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [2]
------------------------------
 Thank you, Operator. Welcome to the B2Gold third-quarter quarterly conference call.

 We're here today, of course, primarily to talk about another very successful quarter of operations for the Company and also update you on progress we're making in various other areas of the Company. Mark is going to walk us through the financial results, and we'll have a quick update on the other projects.

 Highlights for the quarter included some record production, which Mark will go into, another very solid financial quarter of operations. And, in terms of other project updates, we'll talk about the significant advances we're making in other areas, including the previously announced intent to merge with CJ Mining. That deal is moving along very well. We'll update you on that. We'll also update you on some positive developments at Jabali, Otjikoto, and then the further enhancement of Gramalote, and we'll talk a bit about what you can expect to see from those before the end of the year in terms of exploration updates.

 So, with that, I'll pass it over to Mark to go through the financial highlights from the quarter.

------------------------------
 Mark Corra,  B2Gold Corp - SVP of Finance & CFO   [3]
------------------------------
 Thanks, Clive.

 B2Gold had another strong quarter. Our operating lines continue to exceed our budgeted projections. We had record gold production in the quarter of 42,156 ounces of gold and adjusted net earnings of $19.6 million compared -- and, for the year-to-date, $61.5 million. On the gold revenue side, we also had record revenues of $67.1 million for the quarter. That was 33% higher than the comparable quarter in 2011, as we sold about 10,000 ounces more. On a year-to-date basis, our revenues came in at $188 million, about $30 million more than last year.

 Production costs continued to come in a bit lower than our projections. Operating costs for the quarter were $571 compared to last year at $529. Costs are higher this year in on a per ounce basis due to higher power costs, wages, and also reagents, which is I think common for the industry. But our mines were able to mitigate these increases by continuing to improve their recoveries. And also grades have been slightly higher than budgeted.

 For example, Limon's grade in the third quarter was much better than last year. The average grade to the mill at Limon was 4.47 grams per ton gold, versus 3.57 last year, so a 26% improvement. Limon was actually able to keep its cash costs about on par with last year due to the improved production at that mine. La Libertad continues to perform well.

 On a year-to-date basis, our cash costs came in at $580, again below our projections versus $522 last year. Depreciation costs have increased from last year. That's mainly due to the increase in production as we depreciate our assets on a unit of production basis that was also a bit higher base to depreciate off of, as the improvements we've been making at the mines also gets depreciated.

 Just one thing to note is, on royalties and production taxes, you'll notice that in the quarter, it was considerably less than last year's quarter despite the higher revenue number. The reason for that is -- and we talked about it in the second quarter -- was we had applied to the tax administration in Nicaragua to look at Libertad's royalty rate there, in that the ad valorem tax, we were booking it as a royalty tax. But Libertad was still under the old mining law, which basically says you can take that as a prepayment of your income taxes or a minimum tax case. And so, the tax administration did agree with us, so we changed our accounting procedures on how we will record that. That brings down our royalty taxes quite considerably. There is still a royalty of 2% on Libertad that's paid to former miners at the property that form the coalition. As you can see on the year-to-date basis, those taxes are $2.6 million lower than last year despite having $30 million more in revenue.

 That left us with a gross profit for the quarter at $32.6 million, a 28% increase over the comparable quarter last year of $25.6 million. On a year-to-date basis, our gross profit is up 21% at $92.8 million.

 G&A costs are slightly higher than last year in the quarter. That's due to, basically, additional employment costs and travel relating to the Auryx acquisition, as now we have another important project that we're developing. And that does increase our G&A costs. On a year-to-date basis, the costs are only slightly higher, but just remind everybody that in 2011 we actually paid out cash bonuses of $1.6 million. If you subtract that from the 2011 amount, it would show about a $2 million increase in our G&A for the reasons that I stated.

 What we did was, in 2011 we paid these cash bonuses. But in 2012, rather than paying cash bonuses, we issued restricted stock units to management and some other employees that deserved bonuses. That has resulted in our share-based payment number increasing quite substantially from last year. But the biggest portion of that increase actually relates to 10.6 million stock options that we issued this year at $3.13 a share.

 I just would like to point out that those stock options -- none of those options went to senior management, as senior management has taken an unusual position that since we're founders of the Company, we have not taken any stock options since B2 started five years ago. Instead, we reserve stock options for hiring additional talent. And also, we have the policy of having options to even people in our corporate offices located in Nicaragua, Colombia, and now in Namibia. So, I think we're very good with sharing -- or, motivating our employees to help see our gold price -- help see our share price improve as they're also rewarded for that.

 That resulted in net operating income of $23.8 million for the quarter, 54% increase over last year. On a year-to-date basis, we came in with $62 million of operating income, an 8% increase over the previous year. You'll notice, too, that our current income taxes have increased dramatically from the previous quarter last year to $6.1 million this year compared to $1.4 million last year. And, on a year-to-date basis, $10.7 million versus $3.3 million last year.

 That mainly relates to La Libertad, as we've used up all our loss carryforwards from -- since we started operations. We're now in a profitable position, so as the mine continues to perform well, we will be rewarding the Nicaraguan tax authorities as well. We're quite pleased to do that, as we think it's important to share the wealth with the country you operate in, which is partly why we've actually spent a lot of money in community relations as well. Net income came in at $14.5 million, a 60% increase over last year's quarter, and on a year-to-date basis, net income was $41 million, a 15% increase over last year.

 Now, have a look at our statement of cash flows. Again, an excellent quarter for B2. Operating cash flows came in at $28.4 million for the third quarter of 2012, a 42% increase over last year's operating cash flows. And, on a year-to-date basis, our cash from operations on a consolidated basis was $83.3 million, an increase from $73.6 million last year.

 Under investing activities, you'll see that we continue to invest a lot of money in our two development projects. Again, feasibility projects being Gramalote and Otjikoto. We also have invested a lot of money in continuing to explore around our two operating lines as well as some other exploration projects we have. We think our money is being well spent, and we should be having updates in the next couple of months on the progress we've made on the exploration side as well as on the development side for our projects. Total cash invested in our operations was $33.5 million in the quarter, an increase of $25 million last year and $107 million on a year-to-date basis.

 Also like to point out that a couple of our projects have spent significantly less than what we budgeted for the year, but they are on -- we haven't changed our guidance. Like at Otjikoto, we think they'll come in about $10 million under budget this year compared to what we originally forecast. But they are completing everything as scheduled, and we do expect them to start production in 2015 as we have been stating. The difference there is really just the timing issue on the expenditure of the funds.

 We've seen a lot of long lead time items. The lead times have actually come down, for example, on a lot of the mobile equipment. There were long wait lists -- up to two years on some equipment. Now, we've seen that come down to seven months. Some of it even -- the equipment is available currently for certain things. So, we haven't had to put down as big of down payments as we were expecting, and have been able to delay some of the equipment orders because of that. But we remain on schedule.

 Similarly, Jabali will probably come in about $10 million under budget this year. Again, though, we're not changing our expected production from Libertad. We do expect it to increase 135,000 ounces next year with the delivery of ore from Jabali. Everything remains as previously; just the expenditure timeline was changed a bit. So maybe we were a bit too aggressive in our assumptions on expenditures, but everything is as forecast. That left us with a very strong cash position at the end of the year at $73.2 million. So our cash flow from operations continued to fund our --

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [4]
------------------------------
 End of the quarter, or end of the year?

------------------------------
 Mark Corra,  B2Gold Corp - SVP of Finance & CFO   [5]
------------------------------
 End of the quarter -- yes -- sorry. End of the quarter. Yes. Our cash from operations continued to finance our aggressive investment activities.

 Just one other thing I want to point out -- on the balance sheet, people may have noticed that our inventories are quite a bit higher than last year-end, and last quarter's end. That mainly has to do with the mines really had a good last three weeks of September in production. They were both running quite a bit higher grades than the average for the quarter, and also throughput was very good. So, we ended up with about 7,100 ounces of gold poured but not shipped or available for sale at the end of the quarter. That's an unusually high number, and of course, will go to benefit our fourth quarter numbers.

 We're also seeing a bit of an increase in our inventory as we built up our cyanide inventory a bit more than normal just to warrant in case we have a cyanide crunch like we did about eight months ago when DuPont had some flooding at their plant. So, now we're well positioned should there be any hiccups there. That was the major items I wanted to point out.

 Clive?

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [6]
------------------------------
 Okay. Thanks, Mark.

 I'm going to turn it over now to Dale Craig, who's our Vice President and Nicaragua Country Manager to give us the highlights of anything Mark didn't cover in terms of an operations update. And Dale, can you also update us on the status of Jabali as well?

------------------------------
 Dale Craig,  B2Gold Corp - VP, Country Manager, Nicaragua   [7]
------------------------------
 Sure. Will do. First of all, can hear me okay there, Clive?

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [8]
------------------------------
 We can hear you here. Yes.

------------------------------
 Dale Craig,  B2Gold Corp - VP, Country Manager, Nicaragua   [9]
------------------------------
 Great.

 The La Libertad open pit mine continued to perform well in the third quarter of this year. The mine -- the mill produced 29,441 ounces of gold at an operating cash cost of $513 per ounce, compared to a budget of 27,347 ounces at an operating cash cost of $510 per ounce. Mill throughput was good as well -- 517,656 tons of ore against the budget of 501,953 tons for the quarter; and the average mill rate was 5,626 tons per day against a budget of 5,456. Grade was better as well -- average grade was 1.91 grams per ton compared to [fine] grade of 1.38 grams per ton for the quarter. Recovery was excellent at 92.3% against a 90.4% recovery value indicated in our budget.

 La Libertad mine operating cash costs were about $3 an ounce more than budget, as the operation increased waste movement compared to what we saw in Q2. And we also saw increased consumption of reagents, [mill] balls, and explosives. Total cash costs for La Libertad mine was $547 per ounce compared to the budget of $589 per ounce.

 So, in summary, for Q3, La Libertad experienced a better throughput, slightly better grade, and better recovery than the budget for the quarter. The improved recovery is the result of ore management, as we saw in Q2, and also continued work throughout the [mysolease] project in our plant. Going forward, drill production from La Libertad continues to improve with a very strong management team dedicated to finding ways to improve operating efficiencies. We forecast that La Libertad mine will produce approximately 105,000 to 110,000 ounces of gold in 2012 at an operating cash cost of approximately $550 to $575 per ounce.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [10]
------------------------------
 Dale, you're starting to fade a little bit. Can you just keep your voice up a little louder, thanks?

------------------------------
 Dale Craig,  B2Gold Corp - VP, Country Manager, Nicaragua   [11]
------------------------------
 Sure. Can do. Thanks, Clive.

 CapEx costs at La Libertad in 2012 totaling approximately $27.7 million, are mostly from pre-stripping in the Santa Maria pit, development of access related for future pit expansions, and completion of the tailings pond expansion; and that tailings pond expansion is now done.

 Jabali central pit area will commence mine development in Q4. The mine permit has been received, and we have been upgraded. All roads available to us right now. The construction permit for a twin private road has been received, and construction on that road has just commenced. To date, we have completed about 2 kilometers at the Santo Domingo Lane with some prior work. The road will be completed near the end of Q1 in 2013, and the road is about 15 kilometers in total.

 For Jabali, the 2012 budget for the development of the deposit and associated infrastructure is approximately $21 million, which includes construction of the private haul road for transporting the Jabali ore to the La Libertad mill, for engineering and metallurgical and socioeconomic programs. The addition of Jabali ore to our mill feed in 2013 will result in an increase in production to 135,000 ounces with long-term production benefits.

 For El Limon -- in summary, the El Limon mine has had an excellent quarter. It is tracking to its budget projections. Production was 12,716 ounces compared to 12,170 ounces budgeted; and that puts us back on target for the year. Recovery was 91% against 90.34% in budget. Processed tons were 97,385 against a budget of 105,140 tons. Plant maintenance and the installation of new crushers took four days from our plant operations this quarter.

 Operating cash costs were $704 per ounce compared to the budget of $717 per ounce for the quarter. So, production continues to improve. We've received a permit for a new pit. That's in [Nuevos], and that is now coming onstream to contribute to the mill feed for the current quarter, Q4. The Company maintains its projection of 48,0000 to 50,000 ounces in 2012 with an operating cash cost of $700 to $725 per ounce.

 CapEx at El Limon mine will total approximately $21.3 million this year. CapEx includes expansion of the tailings pond facility, which is now complete; development of deeper ore in Santa Pancha, including improvements in ventilation, and water control infrastructure. The ventilation phase of that project is now complete, and temperatures in the mine have declined about 5 degrees centigrade, which significantly improves the operating environment.

 Thank you, Clive.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [12]
------------------------------
 Thank you. Thanks very much. Great job.

 I think we'll perhaps -- just while I think about it -- we're going to come out with by the end of the year, we'll have guidance for next year's production from the two Nicaragua mines. So, we'll be coming out with that before the end of the year.

 I think we'll now go to Otjikoto, and ask Bill Lytle, who is our Country Manager and Vice President, to take us through the recent developments. We're making great progress towards advancing Otjikoto. Over to you, Bill.

------------------------------
 Bill Lytle,  B2Gold Corp - VP, Country Manager Namibia   [13]
------------------------------
 Okay. How can you hear me, Clive?

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [14]
------------------------------
 Very well, thanks.

------------------------------
 Bill Lytle,  B2Gold Corp - VP, Country Manager Namibia   [15]
------------------------------
 I'll start out with permitting -- the permitting remains on track to meet our 2015 goals. The environmental impact assessment for the project was approved in August. The feasibility remains on track for an end-of-year completion. Currently, we have construction activities on site to include the de-bushing -- the de-vegetation of the site. We're commencing placement of security fencing, and we're ordering a construction camp. We will be increasing site activities in the first quarter of 2013 to maintain our schedule of full production in Q1 2015.

 As Mark indicated already, we are under budget due to the current shorter lead time requirements for the long lead items, but we expect to start making orders in the fourth quarter of this year. As I stated earlier, we continue to remain on schedule for a Q1 2015 full production schedule.

 That's all I have.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [16]
------------------------------
 Bill, I think we put in the news release that we are expecting the final mining license from the government of Namibia by the end of the year?

------------------------------
 Bill Lytle,  B2Gold Corp - VP, Country Manager Namibia   [17]
------------------------------
 Okay. That is absolutely the case. We have had discussions with the Minister of Mines, and we absolutely believe we'll receive the license by the end of this year.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [18]
------------------------------
 Okay. So -- on schedule with that as well?

------------------------------
 Bill Lytle,  B2Gold Corp - VP, Country Manager Namibia   [19]
------------------------------
 That's correct.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [20]
------------------------------
 Great.

 The other thing we're going to come out with, too, by -- in the next number of weeks before the end of the year, will be an exploration update on the various projects that Tom and his team are working on. We've done lots of drilling, and we'll have updates for our next separate exploration news release before the end of the year -- updating on what we consider to be exciting targets such as Otjikoto and other things that we're working on.

 I guess the next thing to talk about is Gramalote. We put in the news release that we are continuing, obviously with AngloGold Ashanti, our joint venture partner, on a very aggressive program that now totals $54 million for 2012 of further exploration work, infill drilling, and a lot of metallurgical test work, land purchases, and all the other things to go into completing a pre-feasibility study and fast-tracking the project going forward.

 We are working with Anglo now to agree on a three-month budget and interim budgets that will take us through November of this year -- actually, December 1 of this year to the end of February of next year. And that interim budget is to complete work on looking at various cases in the pre-feasibility stage and looking at various cases in terms of scale of mining, the opportunity for the project. And, by the end of February, we should be in a position to come out and talk about where we sit on the project, and looking forward to -- we expect the decision to go forward to a final feasibility study. So, the key thing now is to -- there's been a ton of work done. Very good quality work done. Putting it all together and coming out with a view of the project forward with looking to make a decision by the end of February.

 Hopefully, the positive decision to go from a pre-feasibility study into a final feasibility study. So, we're looking at a final feasibility study being completed around the first quarter of 2014, and that's our current schedule. We'll confirm that budget announcement soon, I expect with Anglo, to confirm this interim budget as we go through into the next three months.

 The other, of course, major initiative on our plate -- our undertaking is the completion of the merger between B2Gold and CGA. As everyone remembers, we announced the deal a while ago, which is the friendly merger of the two Companies. And that deal is going very well through the regulatory process. It is subject to shareholder approvals of both B2Gold and CGA. The response has been, I would say, very strong from both sets of shareholders -- very positive towards the new B2Gold, which will be a company that, with the closing of the deal, will add almost another 200,000 ounces immediately of annual gold production, and a project in Masbate that we're very excited about the value it adds today but also the potential going forward.

 We've spent a lot of time with the project over the last few months as we're moving towards the process of closing the deal. I must say that we continue to be impressed with the work that CGA did in building Masbate and running the mine, and the great people that they have involved on-site. We're working very well together to get to know the project better, and very impressed with everything we're seeing, impressed with the Philippines, impressed with the people on site.

 One of the great advantages to our shareholders of this deal is it is a largely de-risked project in the sense that, of course, it has been in operation for 2.5 years. It's well run and has a great team of people. And great contacts with the government in the Philippines. These guys have done an excellent job on something that's very dear to our heart, which is social programs in the Philippines that are very similar to the types of things that we pride ourselves in doing in Nicaragua and elsewhere.

 For the CGA shareholders, they've responded very well to the idea of becoming part of a bigger Company, and they've retained the B2Gold shares that they get in the transaction. They will become part of a Company that, based on our current projections and current assets, we believe can grow from almost 400,000 ounces of gold production next year to potentially 700,000 ounces a year over a three- or four-year period, based on the development of our existing assets including the Jabali, Otjikoto, and ultimately, Gramalote.

 We're excited to get the deal done. There's a lot of legal work going on, and the teams are working well together. We're on track to have shareholder meetings in the third week of December for both B2Gold and CGA. And, as I said, very strong support for the deal, and we'd be looking for the final legal court order closing the deal before the end of January. So, that continues to progress very well.

 I think we've touched on most of the main things that we wanted to cover. I think we'll open it up for questions.

 Just remind you, as I think I alluded to, news flow for the rest of the year -- we will be coming out with confirmation as we receive things like the Otjikoto mining license and feasibility study -- those sorts of things. And also we'll have a significant update on all of the exploration programs that Tom and his team have been working on for the end of the year.

 So, I think with that, I'll pass it over. Audrey -- back to you for any questions.

==============================
Questions and Answers
------------------------------
Operator   [1]
------------------------------
 (Operator Instructions)

 Shawn Campbell, Macquarie.

------------------------------
 Shawn Campbell,  Macquarie Research Equities - Analyst   [2]
------------------------------
 Just a question for Masbate. With the timeline laid out for the transition, in terms of having B2Gold people on the ground and moving into being the operator, what is the timeline for that?

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [3]
------------------------------
 Well, for now, of course, with the deal not being closed -- it's their mine. They are running it well on their project. They are keeping us very well informed, and we have access to the site. It has been very cooperative in that regard. I think as we get into the deal closing in the new year, we will have a series of meetings down there. We have -- there's a great team down there.

 We're not looking at coming into Masbate and making major changes. There's a very impressive group of Filipinos and some ex-pats who have done excellent job on the project. So, were looking forward to working with a very strong technical group and seeing what things we can do to add to that expertise.

 So, we will in the first quarter be looking at spending time down there and working with the group. We're very impressed with the talent that's there, and we expect -- we want them to and expect the talent -- technical talent to be staying -- to want to stay with the project. We've been down there and discussed it with them, and I think people are very excited about this opportunity to continue with the project and become part of a bigger Company.

------------------------------
 Shawn Campbell,  Macquarie Research Equities - Analyst   [4]
------------------------------
 Okay. That's good. The next question I had was for Limon. The Santa Pancha underground development -- sorry, the vein that is expected to add to the production life, is that at consistent grades with what is being mined today?

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [5]
------------------------------
 Tom, do you want to go ahead?

------------------------------
 Tom Garagan,  B2Gold Corp - SVP of Exploration   [6]
------------------------------
 I assume you're talking about in the area we've been drilling. It's actually at the north end of the Santa Pancha vein area called Pozol 5. We don't have a resource done on it, so I can't tell you what the grade is relative to the mine. But, the drill hole intersections seem to be consistent with or slightly better than the areas that we're mining right now.

------------------------------
 Shawn Campbell,  Macquarie Research Equities - Analyst   [7]
------------------------------
 Okay. Just one last question related to Jabali. Once that is part of the mill feed, do you expect any changes in the recovery coming through the plant?

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [8]
------------------------------
 Dale, you want to cover that?

------------------------------
 Mark Corra,  B2Gold Corp - SVP of Finance & CFO   [9]
------------------------------
 Dale? I think we lost Dale.

------------------------------
 Dale Craig,  B2Gold Corp - VP, Country Manager, Nicaragua   [10]
------------------------------
 Hi, can you hear me now? I'm back. We've been doing metallurgical tests over some recent months -- about three to four months. The recovery that we see on most tests indicate that it's slightly better than what we are experiencing in the current operation.

------------------------------
 Shawn Campbell,  Macquarie Research Equities - Analyst   [11]
------------------------------
 Okay. Can you just remind me, the current recovery on the spent ore? What that was relative to the overall operation?

------------------------------
 Dale Craig,  B2Gold Corp - VP, Country Manager, Nicaragua   [12]
------------------------------
 Yes. Estimated recovery on spent ore was originally 80%.

------------------------------
 Shawn Campbell,  Macquarie Research Equities - Analyst   [13]
------------------------------
 Okay. All right. Thank you. That is all I had.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [14]
------------------------------
 Thanks.

------------------------------
Operator   [15]
------------------------------
 (Operator Instructions)

 John Calhoun, Private Investor.

------------------------------
 John Calhoun,  - Analyst   [16]
------------------------------
 I just have one comment. Several years ago, I hired you to make me some money by becoming a shareholder, and you have not let me down. I'm impressed with your options policy at the management. You have done what you said you would do. You've made that concept that so many struggle with of mine to build work. And, I'm just tickled to death to have found you, and thank you for all the good things that you've done and will do.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [17]
------------------------------
 Thank you very much. It's always nice to hear from a happy shareholder. We appreciate your support. Thank you very much.

------------------------------
 John Calhoun,  - Analyst   [18]
------------------------------
 Thank you.

------------------------------
Operator   [19]
------------------------------
 Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Johnson.

------------------------------
 Clive Johnson,  B2Gold Corp - President, CEO    [20]
------------------------------
 Thank you all. We're all available, obviously, to answer questions if you think of some subsequently, just talk to Ian or Kerry, and they'll put you onto the right person. One thing we didn't really talk about was financing alternatives going forward. That's a bit of a procedure -- bit of an issue in the industry. How do you finance your projects, et cetera?

 We've talked about it before, but just so everyone is aware we are in a very strong cash position, and we're looking at a very strong cash from mining operations going forward here. Before we did the Masbate deal -- with the Masbate deal, of course, even strengthening the cash we will be generating from mining operations, so that can fund a lot of our activity.

 But, also there are numerous alternatives out there for us to look at financing projects. We have the opportunity to look at corporate facilities. There's high yield bonds that are becoming very attractive these days and numerous sources. I think the key to financing in the gold mining industry today is cash flow and credibility. If you have those two things, then you won't struggle to finance good projects.

 We believe we're in a great position with our strong cash and cash from operations to fund a lot of our development, and as need be, we will tap into the financial markets with a view to minimizing dilution. We're looking -- Mark and I have been looking at a number of alternatives. We're getting pitched every week on different forms of financing, so the money is out there if you have the credibility and cash flow. I think that's all from us. Thanks for your time, and we'll talk to you soon. Take care.

------------------------------
Operator   [21]
------------------------------
 Thank you. The conference call has now ended. Please disconnect your lines at this time, and we thank you for your participation.




------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the 
Transcript has been published in near real-time by an experienced 
professional transcriber.  While the Preliminary Transcript is highly 
accurate, it has not been edited to ensure the entire transcription 
represents a verbatim report of the call.

EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional 
editors have listened to the event a second time to confirm that the 
content of the call has been transcribed accurately and in full.

------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other 
information on this web site without obligation to notify any person of 
such changes.

In the conference calls upon which Event Transcripts are based, companies 
may make projections or other forward-looking statements regarding a variety 
of items. Such forward-looking statements are based upon current 
expectations and involve risks and uncertainties. Actual results may differ 
materially from those stated in any forward-looking statement based on a 
number of important factors and risks, which are more specifically 
identified in the companies' most recent SEC filings. Although the companies 
may indicate and believe that the assumptions underlying the forward-looking 
statements are reasonable, any of the assumptions could prove inaccurate or 
incorrect and, therefore, there can be no assurance that the results 
contemplated in the forward-looking statements will be realized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2017 Thomson Reuters. All Rights Reserved.
------------------------------