San Gold's (SGRCF) CEO Greg Gibson on Q2 2014 Results - Earnings Call Transcript

Aug.12.14 | About: San Gold (SGRCF)

San Gold Corporation (OTC:SGRCF) Q2 2014 Earnings Conference Call August 12, 2014 11:00 AM ET

Executives

Tim Friesen – IR

Gestur Kristjansson – President

Greg Gibson – CEO

Mandeep Rai – CFO

Mike Michaud – VP, Exploration

Analysts

Ernie Melish – PMG

Mitchell Haus – Haus Holdings

Todd Johnson – BCV Asset Management

Graham Servings – Private Investor

Operator

Good morning. My name is Melanie, and I will be your conference operator today. At this time, I would like to welcome everyone to San Gold Corporation’s 2014 Second Quarter Financial and Operating Results Conference Call. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

Mr. Friesen, you may begin your conference.

Tim Friesen

Thank you, Melanie. Welcome to San Gold’s 2014 second quarter results conference call. Today’s presenters are Gestur Kristjansson, President; Greg Gibson, Chief Executive Officer; Mandeep Rai, CFO; and Michael Michaud, Vice President, Exploration.

Before we begin today’s management presentation, I will make a cautionary statement regarding forward-looking statements. This presentation includes statements that may constitute forward-looking statements or information. Any forward-looking statements made and information provided, reflect the company’s current plans, estimates and views.

Forward-looking statements and information, which include all statements that are not historical facts, are based on certain material factors and assumptions that are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated or suggested by the forward-looking statements or information. Consequently, undue reliance should not be placed on these forward-looking statements and information.

The information contained in our Annual Information Form and in our quarterly Management Discussion and Analysis, which is available on our website and on SEDAR, identifies some factors and assumptions upon which these forward-looking statements or information are based on and the risks, uncertainties and other factors that could cause actual results to differ.

All forward-looking statements and information made or provided during this presentation are expressed, qualified in their entirety by this cautionary statement and the cautionary statements contained in our press release and the company’s management discussion and analysis dated August 11, 2014.

With that, I’d like to hand the call over to San Gold’s President, Gestur Kristjansson.

Gestur Kristjansson

Thank you, Tim, and good morning, everyone. As you are likely aware, we’ve undergone significant changes in the last few months. Greg, will be articulating some of the changes to the mine plan, the mining methods, snow recovery, our reduction in capital spend, our optimization of inventory and general improvement in our working capital utilization.

I’ve noted in the past the depth and scope of the changes being undertaken, being over completely different scale than those in the past. And I would reemphasize that now.

We’re reducing our guidance to 50,000 to 55,000 ounces but significantly reduce cash costs between $700 and $800 an ounce by year-end. This moves us towards profitability and a lower throughput. Many of the changes that will take us there were conceived up in March and largely implemented by June.

We have described the LOI with Kerr Mines Incorporated indicating we’re currently in discussions with Kerr Mines to combine forces. This is an exciting opportunity to create a growing mid-tier North American gold producer, with multiple operations and safe and mining friendly jurisdictions.

We contemplate a merger of equal so allowing shareholders to fully participate in future growth and value creation. A key driver of this transaction is the opportunity to restart the high-grade Copperstone Mine and add it to San Gold’s existing gold production. We expect to accomplish this before the end of 2015.

Once the Copperstone mine is operational, this transaction will give the combined company annual production excess of 100,000 ounces across two separate producing assets without requiring a large array of cash.

It also gives angle, the foothold within the highly perspective Walker Lane gold belt that starts with border of Arizona and California and hosts the famous San Bernardino mining area. The Copperstone mine is already built with significant infrastructure in place. The wholly owned mill is permitted for 450 tons per day and has a capacity of 600 tons.

The deposit is very high grade with early indications of mining grades in the neighborhood of 12 grams per ton. We intend to leverage our team and what we’ve learned in the set as the Copperstone asset as we started, and as we pursue our long-term strategic goal of operating multiple efficient high-grade gold mines within mining friendly jurisdictions.

It’s also important to note the potential of the land package Kerr has compiled within the Kirkland Lake, Larger Lake Timmins region. Generally exploration stage projects have been hit the hardest during our recent downturn and we’ve received very significant value potential there.

In short, there are significant benefits to us in completing this deal and we will be providing additional details regarding the proposed tier ratios Chair ratios, management team and go-forward plan of the new company in the coming weeks as we complete the final steps in this process.

With that introduction, I turn the call over to our CEO, Greg Gibson for his view of our performance and opportunity.

Greg Gibson

Thanks Gestur. Good morning, everyone. Thank you for taking the time to call in. When we talk about San Gold, we’re really talking about a changed company and we’re talking about a company that had to change. And we can be very blunt and very real which we have to be in this market.

And I’m really off the belief that if we didn’t make the changes we made in March, next Tuesday we wouldn’t be having an AGM, we’d be having a Creditors’ meeting. In saying that I guess, so bluntly and rudely, it gives me a whole lot of pleasure to say what I think we fixed the problems. And we can see the light at the end of the tunnel and we know it’s not a train.

But it took a whole lot of work, we’ve had to rebuild the mine plans, we’ve had to change the mining methods. We had to do a significant amount of work with the mill to increase recoveries. And we’ve had to of course reduce the capital spend.

Unfortunately, that’s taking a little bit longer simply due to the fact that when you take a mine then try to be a big mine, and you turn it back into the size it should be in a smaller mine, it costs a whole lot of money in re-digging the mine with new equipment. We have to get smaller equipment. We have to get new people. We have to do new development.

So, there is a whole number of costs that all of a sudden jump into the fray in order for us to be successful. We’ve had to deal with a number of issues, I mean, I’m the first to say and then many people in our industry will always hear me say, you know what, mining is not easy, something is going to go wrong. And we’ve had to deal with replacing man-ways (ph) in shaft, complete man-ways in shafts.

We’ve had to deal with loading pockets that are ready to crumble. We’ve had to deal with drifts that we had to replace 2 kilometers, 2.5 kilometers of rail re-equipment with proper rail haulage equipment. But the end result in all of this is going to mean that we’re going to have a nice 50,000 to 55,000-ounce a year producer.

We’ve taken our employee numbers from what was 521 including contracts to below 313. So, that 313 is cut in half because we’re working two weeks on, two weeks off. So there has been a dramatic change there. So, we’re sitting here today saying you know what, since March 18, we have eliminated approximately $15 million to $18 million a year in spend just by making simple, very clear changes to the way we mine, the way we conduct our business.

So, we look at Q1, and it’s a wonky, we lost money. Our shares are trading at $0.15, we come into Q2, we’re losing money, our shares are trading at $0.15. But you know what, our costs are going to down and they’re continuing to go down and that’s what we’re trying to do.

So, my belief is a small gold mine or a gold mine works very well at 50,000 to 55,000 ounces per year. If we go back in time and we look at the way that gold mines were operated, all these small gold mines of 50,000 to 55,000 ounces a year, they made money. However, when you look at a basically fly-in, fly-out operation like San Gold, the costs are much higher simply because of the remote location.

So this, 50,000 to 55,000 ounces really cut it and allow you to make money. Does it allow you to payback this huge debt burden that we’ve created for ourselves? You know what? It doesn’t really allow us to make money, it allows us to spin our tires, it allows us to trade dollars.

So, what do you do? Let’s look at combining companies eliminating $6 million to $8 million in G&A, sharing resources, sharing equipment, sharing skill-sets. And you know what? All of a sudden you’re back up to 110,000, 103,000 to 110,000 ounces, now you’re back up to that institutional stage where institutions want to talk to you once again. You’re operating a mine in Arizona, it’s much cheaper. We’re not remote, we’re not ploughing snow we’re not spending $3 million a year on propane.

So, all of a sudden, you know what? We’re a company that’s real. We’re not a three-dressed up as nine and we’re not pretending to be something we’re not. We’re a company that’s going to run small 50,000-ounce a year producers.

So, take the Q2 numbers, sure we lost some money but we haven’t lost near the money we have in the past. And now look at the reasons why we’re losing money. We’re not developing to mine what we can’t mine we’re now developing to mine ounces. And the whole focus at Rice Lake is simply ounces.

We don’t care about tons. We’re going to mine 55,000 ounces of gold. If we mine 65,000 ounces of gold, it’s just simply because the grade has been higher. The tons will not creep up.

One of the things we did in March, when we started March 18, is we reinitiated an underground drilling program at San Gold. What this has allowed us to do is almost what we’re thinking, create a new mine. And Mike Michaud will get into this in a minute, our drilling, the gross amount of money we’ve spent on underground drilling has paid off 10-fold.

And it’s something that’s going to be extremely exciting and I guess, all I can say very humbly is you know what, it’s given Rice Lake a second chance to be a mine again. So, we’re looking forward to that.

Mike Kurnik, we’ve installed at Rice Lake as he mine manager, he’s done a tremendous job. He’s brought in a group of individuals that have basically gutted the operation, focused on ounces, focused on cost cutting.

I as CEO, I’m still saying spend money because if we don’t spend money we’re not going to get the development ahead of us that will allow us to get the ounces. So, until September, we’re spending money to redevelop, to re-equip, to get rid of our big equipment, bring in small equipment and really focus on what we’re good at doing and what Mike’s group is good at doing and that is mining small mines.

So, in saying that I’m not going to really get into where we’re going, where we think or what we’re going to be when we grow up, but San Gold is not the same company as it was. It’s not the same company today as it’s going to be tomorrow. But it’s a company that is going to be focused on ounces.

So, we’re making some drastic changes from the bottom of the shaft to the corporate offices. We’ve brought in new people new skill-sets and we’re focusing on making money. So I would ask you as shareholders, give us a few more months, I know that you’ve been patient, be a little more patient and I think you’ll be pleasantly surprised on where we’re going and what we’re doing.

So, with that I’ll hand the call over. And I’m happy to take your calls at the end. Thank you.

Mandeep Rai

Thanks Greg. Good morning everyone. As Greg already outlined, a lot of changes have been implemented since March. During the quarter, we incurred one-time charges of approximately $2 million related to implementing these changes. Revenues were also reduced as a result of the reduced gold production target.

The cost savings associated with this new production target are expected to result in significant reduction and cash costs going forward.

Exploration expenses were reduced by more than $5.6 million this past quarter and our capital spend has decreased by $8.6 million. Company ended the quarter with $10.4 million in cash and short-term investments. And our balance sheet remained strong with current assets of $24.3 million and a working capital surplus of $12.9 million.

Total and comprehensive loss was $8.5 million or $0.02 per share compared to total and comprehensive loss of $3.6 million or $0.01 per share in the second quarter of 2013.

Cash flow from operations was $3.9 million, in the second quarter compared to $5.1 million in the same quarter of last year. The company is continuing its critical review of all planned capital development spending for the year and may elect or differ to cancel previously scheduled projects.

That concludes my review of the financials. If anyone has any further questions, I’d be happy to answer them during the Q&A session.

With that I’ll turn the call back over to Greg. Greg.

Greg Gibson

Okay, thanks Mandeep. I think some of the things that we really have to look at when we start changing mining methods, when we start looking at what is it we’re really trying to do with Rice Lake.

And one of the big things is, if you just looked at the grade, the focus on grade that we’re doing, we’ve kept the grade up from 3.5 grams up into pretty much 4.5 grams. We’ve gone from massive development, massive ore development to smaller ore development.

So, I think the financials as we come into the third quarter, you’re really going to see a big change and what we’re really trying to focus on and you’ll start to see our focus on ounces.

So, with what we’re really achieving here is we’re turning a mine that tried to be a big mine, a mine that expanded their mill, a mine that bought big equipment and really wanted to be a nine. Unfortunately there were three dressed up as nine. And now we’re going back to 2-yard scoops. I think the largest piece of equipment we have is a 3.5 yard scoop. We’ll have ore cars, 5-ton ore cars.

So coming into the third quarter, you’re going to see a huge change. You’re going to see the losses dissipate, you’re going to see the amount of capital spent reduced. I’m looking forward to next Tuesday at the AGM when people can stand up and throw darts at us and say what – you blew our investment, you did a whole bunch of things.

But let’s give some credit what creditors do, let’s say what thanks to Dale Ginn, thanks for making the changes you made for recognizing where we were going and fix this thing. Because had he not made the changes when he did, I’ll say it again, we were heading for a creditors meeting.

And this is a management group and it was led by Dale, it was led by Hugh that when Dale stepped down, there was $86 million in the bank, okay. When they finally said enough is enough, we were $73 million in debt. So, we’re going to go back, we’re going to get some ounces. We’re going to get rid of the debt. It’s going to be a bit more painful. But we’re going to do it.

And the nice thing, lucky, I’m lucky again, I’ve been able to come into a company and say, we have a new discovery. San Gold has got a new zone that is going to be comparable to the Rice Lake zone, to the Sam unit. And I’m thrilled about it.

And with that, I’ll turn it over to Mike Michaud, who can give you a little bit of an example of what we’re doing with exploration.

Mike Michaud

Thanks, Greg. Well, as Greg mentioned we’ve had our issues over the last few months. But we certainly have continued to with our drilling program. In the first or in the second quarter we drilled over 30,000 meters which is significant increase over Q1. Really, this drilling was completed for two main reasons. In support of the mining operations at Rice Lake as well as at the Hinge in 007 mines and also to explore for zones adjacent to existing infrastructure that we could bring to the mine plan and develop over the course of the next six months.

One of the most significant achieved that we’ve had in the first half of this year has been the extension of the 16-level at the Rice Lake mine eastwards in order to be directly beneath the Hinge mine as currently accessed via driver surface. Not only does this provide an essential link between the Rice Lake and Hinge future mines introduced but in the immediate term provides a platform for drilling to further down to the extensions of the L10 08 zones.

The initial drilling is complete and the positive results have been returned. As such, access to these zones is continuing on 16 level and mining of these zones almost ready to commence which would thereby add to the production profile for the Rice Lake mine.

Once 16th level is developed further to the East beneath the 007 zone, drilling will again become a priority in order to better define down to the extension of 007 zone and prefer the large and forward infinite resource that we have there to measure and indicate resources.

However, the most substantial drilling that we’ve been doing is deep at the Rice Lake mine. And this drilling from 26-level continues to return excellent results from the 710 and 711 zones that occur within the mesic unit located only 100 to 200 meters north of immediate hang-wall of the Rice Lake Mine.

But we think this new mining horizon is parallel for this end and can continue from that depth which is approximately 26 levels from surface which is approximately 4,000 feet. So there is a lot of potential here. The recent drilling has extended pulverization over 500 meters with the down-depth extension of approximately 150 meters, so it’s getting quite sizeable.

And what we’re seeing there (inaudible) is emerging, that’s emerging is very similar in size, and geometry and grades, the original Rice Lake mine. And it continues to be opened up and down depth and also to the Northeast.

So, this new mining area under development not only holes, exploration appeal are the early indications point to a repeat of the Rice Lake deposits. It also has immediate practical value given access to high grade stakes that add to the mine flexibility and more cost in the short term.

So, this is certainly an area that we’re going to continue focus for the rest of this year and exist even there. So, in a mind, significance is probably similar to a 007 to start with and we’re hoping that continuing in size to be similar to the original Rice Lake mine. So that’s something that we’re going to be pursuing for the rest of the year. We should have some results to release in the short-term. So we’re looking forward to those. Thanks Greg.

Greg Gibson

Okay, thanks Mike. With that, I just like to close here people and open it up to questions. But I just want to say that, it’s been a real struggle at San Gold for the past number of years. The company has spent $400 million on infrastructure and it’s one of the best sets of infrastructure I’ve ever seen on a gold mine. It’s absolutely fabulous, it’s tremendous. People would be happy to have this.

However, it’s 12 times bigger than what it should be. So we don’t have to spend any more big money on infrastructure. We just have to concentrate on going underground and really just focusing on ounces.

The deal with Kerr, people might say what’s San Gold doing, why are they buying another junior, another struggling junior. Well, you’ve got two struggling companies that are going to make a very successful company. You’ve got the addition of the ounces coming out of Copperstone which has developed the mills in place, its 12-gram deposit. And it’s much cheaper mining situation.

So that is going to give us as I said earlier that platform to be 100,000-ounce a year producer where I feel we should be. But I struggle to say that you know what small gold mines can produce 100,000 ounces. They will, San Gold produced 87,000 ounces of gold. They were the king of the crop but what did they do, they produced 87,000 ounces in the last like a zillion dollars. We don’t want to do that. Let’s just stay small, let’s throw some longevity into what we’re doing and focus on ounces.

So, with the Kerr merger, we’ve got the Copperstone, which is going to require a very small amount of capital to get it back into production of 50,000 ounces. There were fundamental mistakes made at Copperstone. It was easy to see what went wrong at Copperstone, which allows us to be confident in starting it back up.

So, we don’t have any huge issues there, again small capital, the result is more ounces which makes us at 100,000-ounce producer.

So, next week at our AGM, we’ll get more into the merger details. I think over the next couple of days, you’ll see some announcements perhaps that will allow you to look deeper into what we’re doing. But I assure you and I stand here today and say, we will be a profitable company.

So, thank you for taking the time to listen to us. And I’m happy to open the floor up to questions, now. Thank you very much.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). The first question is from Ernie Melish of PMG. Please go ahead.

Ernie Melish – PMG

Yes, I understand that you have 373 million shares outstanding and Kerr has 1.3 billion shares. Could you go over little bit what the implications of the merger are going to be as far as your total flow?

Greg Gibson

Well, I believe Kerr has 80 million shares because they’ve just completed a consolidation a week and half ago. So you can get rid of the 1.3 billion down to 83 million I believe it is Ernie. I don’t know the exact numbers.

But at the end of the transaction, when you look at what the combined entity looks at from an asset point, it will throw the total capital structure up into the 600-million area. But certainly still in the workable ranges and it still allows us to do what we have to do in the running of the company and create shareholder value.

Ernie Melish – PMG

Okay. Here you’re going to throw another 200 million shares in order to do the consolidation more?

Greg Gibson

I believe it’s in that range Ernie, I don’t know the exact number off the top of my head, that’s the stupid part of me. It’s in the neighborhood of 200 million, I believe. And I think Gestur would probably give you the number.

Gestur Kristjansson

We’re just finalizing the ratio, so that starts in the public domain. But I mean, we have disclosed the merger of equals which contemplates sort of a general market value approach towards the transaction.

Ernie Melish – PMG

Okay. And this Copperstone mine, could we go a little bit into the history of that mine and is that operating now or what’s it going to take to bring that into operations?

Greg Gibson

Okay. Now the Copperstone mine, it was mined by Cyprus, who was purchased eventually by Freeport-McMoRan. It was an open pity plea that it mined 0.5 million ounces out of the open pit. Freeport bought Cyprus for basically for other assets. And the Copperstone just was too small for them to keep in their fold.

So, it was eventually sold. American Bonanza went in and took the property over and develop the underground. And one of the things that was done at Copperstone Ernie was there was a fabulous surface infrastructure put in place. It was a right-sized mill at 600 tons a day for 12-gram deposit.

Everything was just the right size, the workshops were the right size, the driver surface was absolutely brilliant. And that what’s really caught our eye on it. We went underground and unfortunately we’re new ground was a complete debacle.

It was just one of the worst disrespects of mining I’ve ever seen. So we were very quick to see what went wrong. And being able to determine what went wrong you can very quickly determine what you have to do to write it.

So, we’re confident that within 90 to 120 days, we’ll be mining, the property at the rate of up to 600,000 tons a day. We have to re-develop one part of the mine. There was probably 10% of one of the zones that we sterilize just doing proper development.

And well, probably, and we’re going to do this for a very, very low cost of capital. And you’ll see over the next few days I’m thinking how low that capital really is. But it’s a 12-gram deposit it’s got huge upside on exploration. And thank god for incompetence because it’s given us the opportunity to go in and fix this.

Ernie Melish – PMG

That’s all I got. Thank you.

Operator

Thank you. The following question is from Mitchell Haus of Haus Holdings. Your line is now open.

Mitchell Haus – Haus Holdings

Okay, thank you. I have a question just in regards this, issuing 10 million shares to settle a debt. I was just wondering how much that debt is and the approximate value of per share to settle that debt?

Greg Gibson

Mitchell, we’ve settled so much debt in the last little while, I don’t know what debt you’re referring to.

Mitchell Haus – Haus Holdings

Okay.

Greg Gibson

But to give you a little bit of an idea, when Kerr first formed and the debt settlements are all on the Kerr side, okay. When we first formed Kerr, it’s basically taking over the management of Armistice Resources. Armistice, when we took it over was in the tank for I don’t know $8 million. And we approached the owners of the debt and they kindly reimbursed what we said, yes, okay, we’ll convert it to shares.

Mitchell Haus – Haus Holdings

Okay.

Greg Gibson

Then when American Bonanza, when we looked at American Bonanza, there was $8.5 million gold loan. And I believe there was $6 million or $7 million in unsecured debt. And again, the debt holders of Bonanza agreed to convert into shares.

Mitchell Haus – Haus Holdings

Okay.

Greg Gibson

That’s where these your 10 million is not even close to what was converted.

Mitchell Haus – Haus Holdings

Yes, this is in regards to the – what the shareholders can vote on?

Mike Michaud

Okay. I can maybe clarify that for you a little bit. So, with our secured debt facility, there were broker warrants of 10 million units, so that they would pay $0.28 a share to acquire a San Gold share.

But because of the volume of shares being beyond sort of 25% of the equity of the company, if you were to interpret that debt as equity, we would need shareholder approval to be able to issue those warrants to the brokers. So that’s what went out in the information circulars for the AGM, perhaps that’s what you’re referring to.

Mitchell Haus – Haus Holdings

Yes, that’s right yes. So, then you guys are looking for shareholders to vote for that?

Mike Michaud

Yes, that’s why we’re there, yes.

Mitchell Haus – Haus Holdings

Okay, all right.

Greg Gibson

I apologize we’ve converted so many shares and debt to equity in the last little while.

Mitchell Haus – Haus Holdings

No, no, you’re ambiguous.

Greg Gibson

I didn’t realize what you were referring to but yes. We are looking to our shareholders to allow us to look after that issue with the 10 million.

Mitchell Haus – Haus Holdings

Okay. So that 10 million shares could be issued, what’s the debt amount on that?

Gestur Kristjansson

That would be equity so it’s just the ability, that’s actually really options. It’s only to compensate the secure debt holders or the brokers of the secured debt. But it also puts money in our treasury. So it’s and it’s currently above our market value. So it’s effectively a commission.

Mitchell Haus – Haus Holdings

Okay.

Greg Gibson

Basically what it is, is paying off the skinning we got on our financing from the bankers we were using.

Mitchell Haus – Haus Holdings

Okay, okay, well, I’ll look into it further. Thank you.

Greg Gibson

Thank you.

Operator

Thank you. The following question is from Todd Johnson of BCV Asset Management. Please go ahead.

Todd Johnson – BCV Asset Management

Hi Greg, my question is, you mentioned some elevated there continued capital spending on exploration until September. What is your forecast for run-rate exploration post September if everything goes according to plan?

Greg Gibson

I’m going to lie to you if I give you that number because we don’t have a stepping stone yet. What we’re doing right now and we’re talking about exploration, our exploration is simply underground definition in in-filled drilling, which is turning into underground exploration.

We’re trying to get caught up on what we would – just desperately lacking, we were unable to put mine plans together. So we had to throw a whole bunch of money. I think its $114, $116 an ounce right now to get caught on our underground drilling.

But what I can say is I said there will be no surface exploration drilling for the foreseeable future. With this new discovery that Mike Michaud and his exploration group have come across here in the 710, 711, I’ve added a surface drill to test the upper tensions of this thing. So it’s all going to depend on what that flow-through market is.

I’m not going to use hard dollars over the next year to drill a whole lot of holes. So, there isn’t really an exploration program other than the surface hole, the one surface hole we’re drilling, it’s all just underground definition and in-fill.

Todd Johnson – BCV Asset Management

Okay. Thanks.

Greg Gibson

I know that’s not a very good answer but we’ve been so focused on fixing the development and fixing the production and fixing the mine issues that I just haven’t had the time or the ability to really dig into exploration at this time. And again, it’s going to be driven on flow-through ability.

Todd Johnson – BCV Asset Management

Okay. That’s fine. Thanks.

Greg Gibson

If I can just add, let’s really worry about the 3 million ounces we have before we go out and look for more.

Operator

Thank you. (Operator Instructions). Following question is from Graham Servings, a private investor. Your line is now open.

Graham Servings – Private Investor

Good morning. I would like to know what your management team thinks about the price of gold. Do you see it go into $2,000 by the end of February of 2015?

Greg Gibson

God, I’m saying god that I’m looking for him for the answer. I’m happy with gold at $1,250 to $1,300 that’s where our basically numbers on. Do I see gold going to $2,000 by the end of February, I think it has a chance to do that. I don’t think central banks and our U.S. neighbors are going to allow that to happen before February.

It certainly has all of the strength to do that with all of the reasons in the world for it to do it. However, with the way that gold is manipulated – the price of gold is manipulated in my opinion, I can’t see it happening before February. So I think we really have to be comfortable with $1,250 to maybe $1,400 of gold going into the second quarter of ‘15.

Gestur Kristjansson

I would just add that San Gold has tremendous leverage for the price of gold to the extent that there is an up-tick. We’re certainly well positioned to harvest some of that.

Graham Servings – Private Investor

Okay, thank you.

Operator

Thank you. There are no further questions registered. I turn the call back over to you Mr. Gibson.

Greg Gibson

Okay. Thanks a lot for listening. Thanks for being easy on me. I look forward to some tougher questions here in the near future. We’re planning a couple of Analyst trips to try and get some love back. We’ve been – San Gold has been a real punching bag over the last while and rightfully so.

We’ve let shareholders down, we haven’t done what we said we were going to do but you know what, it’s a new day, it’s a new group. And give us a little bit more time and we’ll show you that we’re pretty good at what we do. And if we didn’t think we were going to do it, we wouldn’t stand up and tell you we could.

So, with that, I’d like to thank Mandeep, Gestur, Mike, Tim, all of you for joining the call. And I look forward to bringing you a little bit brighter news on the next quarterly call. But please keep an eye on us. A whole lot going on and we’ll fix thing. Thanks a bunch. Good day.

Operator

For more information please visit San Gold’s website at www.sangold.ca or contact Tim Friesen, Investor Relations at 855-585-4653 or by e-mail sgr@sangold.ca. This concludes today’s conference call. You may now disconnect.

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