Perseus Mining's (PMNXF) CEO Jeff Quartermaine on Q3 2017 Results - Earnings Call Transcript

| About: Perseus Mining (PMNXF)

Perseus Mining Ltd. (OTCPK:PMNXF) Q3 2017 Earnings Conference Call October 23, 2016 6:00 PM ET


Jeff Quartermaine - Managing Director and Chief Executive Officer


Dylan Kelly - CLSA

Reg Spencer - Canaccord Genuity Australia

Michael Slifirski - Credit Suisse


Thank you for standing by and welcome to the Perseus Mining Quarterly Conference Call. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your first speaker today, Mr. Jeff Quartermaine, Managing Director and CEO. Please go ahead.

Jeff Quartermaine

Thank you very much, and good morning, ladies and gentlemen, and thank you all for joining me today on this teleconference to review our September quarterly report.

Now, some of you probably would know earlier this year Perseus completed the take-over of the Amara Mining plc and in doing so we had the Yaouré Gold project asset portfolio. Prior to that, our assets included the Edikan Gold Mine in Ghana and also the Sissingue Gold project in Northern Cote d’Ivoire, which at that time was in the preliminary stages of development.

In June, we’ve raised the $102 million of new equity capital to be used to get it with our existing cash, future cash flow, and debt financing to fund the development of our two Yaouré projects. And in the process, transform Perseus from being a single mine, single country business to a multi-mine operation with businesses into Northwest African countries.

Now having put these two key ingredients in place and having assembled the very capable team of people to carry out various tasks that are involved, the focus of Perseus then switched to execution and delivery of the plants we’ve articulated. Now, let me assure you that we are very conscious of the fact that the time of the talk is over and the demand shows you where we’ll continue to apply before Perseus true value is reflected in our share price.

In this context, the September quarter just passed and is subject to this teleconference. As we’re in the first quarter since getting a journey of transformation fully underway, and I’m very pleased we have the report that as of the end of September, we’re on track on all fronts.

Edikan is running as planned. Development of Sissingue was running on time and on budget, and the feasibility study of Yaouré is powering hit. So with that of the overview of the quarter, let’s look at some of the specifics starting with gold production.

Now, as I said earlier, performance in our Edikan Mine during September quarter has been very solid, which is pleasing after a challenging period, while we opened up new mining areas probably in the side of Edikan. Over the last three months, we’ve seen a material improved mill performance, which has served to more than offset the expected fall in head grade that occurred during the period.

As a result, gold production for the quarter totaled 43,776 ounces, which is 9% more than the June quarter and 18% more than the March quarter. And this has positioned us very well to achieve a half-year guided production varied to 100,000 ounces.

Unit mining costs, which major productivity are also fairly solid. The mining costs increased marginally during the quarter from US$3 a ton to US$3.09 per ton and that largely reflected the cost of increased debits that we placed on mine geology and grade control during the quarter.

In terms of processing, we experienced a large decrease in costs about 21% down from US$10.86 a ton to US$8.63 a ton milled. And this is largely due to an increase in the number of tons of ore processed, which I said earlier, with the result of better mill performance in terms of availability, utilization, and therefore run time. So we increased from 79% to 89%, and also throughput rates, we increased from 868 ton an ounce to 921 ton an ounce.

Now company-wide, has the performance of the mill has been improved, is an interesting question, and we’ve certainly been working very hard at trying to improve efficiency and effectiveness of that maintenance function, but it could also have something to do with the change in attitude of the work force. This is at least what the Ghana Mine Worker Union tells us in any event. But whatever it is, we’re looking for a continuation and to that end. We’re in the midst of a program of capital improvements around the plant, which should help us to do even better in the future, and I’ll speak to more about this in just a moment.

So as a result of the improved production performance, total unit production costs amounted to US$1,095 an ounce, which is about 6% lower than the previous quarter of US$1,168. Sustaining capital expenditure on a per ounce basis is down to 215 per ounce from 291 per ounce. And the all-in site cost of US$1,388 per ounce compared to US$1,542 per ounce that was announced in the prior quarter.

So that was a decrease of about 10% in the all-in site cost. And look, just to remind you when we talk about all-in site cost at Perseus, we mean everything. There’s no additional cost to be added to that. That includes all capital, all royalties, all stripping and all direct production costs. So that’s just reasonably focused outcome, which you may indicate that we’re on track to achieve what we will be doing.

Now, in terms of other initiatives on the South, the September quarter has also been very productive. We’ll just run through those. So the construction of housing that is required to relocate residents of the Eastern pits in the Esuajah North area is on schedule on budget. To remind listeners, we are constructing 179 structures, including 12 institutional buildings to house former residents of the Eastern pits area and also current residents of Esuajah North. After the 15th of the month, the 142 of the buildings that incurred a 136,006 institutional buildings area are fully completed and all other structures are in various stages of completion.

And of the houses 179 are fully occupied and we’re currently moving people at the rate of about 20 families a week. This insider exercise will be completed by the end of the year, so that’s ahead of schedule and materially under the budget that we originally announced.

In fact, we expect that the whole exercise incurred in the purchase of land compensation for crops building houses et cetera will end up costing around $30 million, which is fairly reasonable compared to the original budget of $46 million.

And on the other front, commissioning of the diesel fired power station to give us a 100% power source proficiency was completed. This has been put in place to safeguard against possible future power shortages out in Ghana and grid [ph]. What we’ve done is, we’ve installed 16 diesel power generators each type generating 1.4 megawatts each.

We’re down right there slightly and gives us about $19.2 million megawatts of capacity, which is more than enough to power our operation. The plan is to draw 100% of our power from the grid, but if for some reason that is not possible we will be able to produce our own power albeit at a higher cost and grid path, but very much lower when compared to the cost of not running it all during power outages.

The total cost of the mill – the power section is about $8 million, $8.2 million, which is below our estimate. And I should note that since we commissioned the plant in July, we’ve only have one occasion on which the generators needed to be switched on and that was only relatively short-term, when the national grid suffered a hiccup.

Still having the insurance just in case that’s something goes wrong was certainly worthwhile on our opinion. I mentioned some planned upgrades around the processing plant. They’re also well and truly underway. So the purpose of this is to do some work around both the pressure in the mill to improve run time and reduce maintenance costs.

Now, before anybody asks about the impact of this, I can show you that the downtime that is involved in doing this installation and tie-in has been effective in throughout forecast for the December half-year. The planned changes, which include, for example, the installation of a low profile feeder to replace CV6 around the crusher and the installation of a newly designed mill discharge going along with the whole host about the smaller jobs, should materially reduce downtime going forward and in the process reduced maintenance costs and perhaps has importantly free-up maintenance staff to do a more effective job preventative maintenance.

All of this means higher and more reliable run time in the future. In other words, the chances of maintaining and even improving on the very good performance that we’ve seen during the September quarter are reasonably good. I I should say at this stage none of those improvements have been built into any of that forecast. These works have a title budge of $8.4 million, some of it’s already been spent. But all of this will be completed during this December quarter and that work will be completed in conjunction with some other works and start to open up the new Esuajah North pit, so we need to do some [indiscernible]. As well as investing capital, we also need to continue elevated amounts of waste stripping for the next three or four months largely in the Esuajah North as I say we are opening that pit now as we speak.

But after this capital is spent, it reduces – the total spend reduces very materially as does the strip ratio and the cost of waste stripping. So with this our cost base will shrink quite considerably. Now, current siding with the fallen capital, you should see a steady increase in head drive which will translate into higher gold production. So what we’ve got in front of us for the next three months is as follows.

For the next three months, we’ll continue to involve high spending and gold production in line with the September quarter, which means the continuation of relatively high all-in sustaining costs at Edikan. However, once we hit the second half of this financial year, i.e., from January 2017 drives do pickup which in turns, this gold production. And at the same time, as I said, our cost base falls and the cost per ounce falls and our margin increases.

This means that the first-half of 2017 will be cash negative; but the second-half will be strongly cash positive, which means that for the total financial year 2017, it will be about break-even for us at $1,200 of gold per ounce gold price, which obviously is – that’s a long way of achieving today.

I’m also very pleased to say that once we’ve established that trend, the trend that we established in the second half of fiscal 2017, it continues in fiscal 2018 and beyond. So, from January 2017, we are into a seven-year period of sustained very heavy cash generation. So it’s genuinely a case of accepting that we will experience modest financial performance for another three months, before we move into cash harvest mode. That is and net cash harvesting is expected to be of the size to not only repay our total investment in Edikan, but also deliver a fairly handy return.

And given that our other projects that we have around the drawing board and the funding this is scheduled to happen at just the right time. So what we would change to Edikan in the September quarter does I think serves to demonstrate that we’re on track for delivering our plan with this mine. And I do appreciate that once well it doesn’t make [indiscernible], but we’re certainly encouraged by what’s happening and I trust that you also are encouraged by these results.

Now turning to our other projects, let’s talk about those. So the first of these is our next-producing mine, that is Sissingue Gold mine in Cote d’Ivoire. Full-scale development of Sissingue was initiated during the quarter and everything is on track for the first production of gold to occur in the December 2017 quarter if not before.

From the end of this quarter the title forecast cost to complete constructions about $87 million. You’ll recall that the original budget was a 106 and some of this was spent last financial year on preliminary works leaving about $100 million to spend once we kicked into full-scale development.

During the quarter, contracts that accounted for about 50% of the estimated construction scope of works rewarded to members of the Lycopodium group. Lycopodium’s team commenced work as of 1, September. Procurement of fee items are plant and equipment is very well advanced as is the design. And Lyco team is expected to mobilize decided to Sissingue [indiscernible] actually late October, and we expected supporting the concrete for foundations as the mill will start shortly thereafter.

Often our owners team, the Perseus’s construction team which is responsible for managing the remaining 50% of the scope of works has continued to build during the quarter. We currently got about 17 extracts on site and quite a number of [indiscernible] workers, very material progress, as we made on procurement of items of plant and equipment, construction of the camp [indiscernible] the area that will mined later on and for evidence of those you can refer to further graphs that were attached as appendix side to the quarterly report.

Our interaction with our host community up around Sissingue is progressing very, very well. We have established community – employment committee who are driving on the employment of locals to various jobs obviously, we’re trying to maximize local employments, but expectations do need to be very carefully managed in that areas, because everybody wants a job and that’s not kind of practical.

On issues close to the home, Macquarie Bank and BNP Paribas have received credit committee approval with US$60 million project financing facility, which approximately fund the development of Sissingue, and this is achieved during the quarter. Documentation of landowners is expected to complete during the December quarter, which means once CP [indiscernible] we’ll be in a position to drill cash as needed.

Now given the quality of the project planning and the assembled project management team, construction and commissioning of Sissingue is expected to progress reasonably with Cote d’Ivoire and hopefully with that incidence, which as I said earlier, first gold production is now scheduled to occur in the December quarter of 2017. Certainly what has been achieved today, because there’s a lot of confidence this goal is generally achievable and we look forward to bring in use of a rapidly developing second mine in coming months.

Our second development project introspectively our third operating mine is the Yaouré Gold Project is still so located in Cote d’Ivoire. Now following the acquisition of Yaouré contracts for all material work packages to prepare definitive feasibility study full-year Yaouré have been awarded to a range of consultants and contractors, including Runge Pincock Minarco who will perform the role of lead consultant for the study.

I should note that Amara had previously prepared a preliminary phase of building study and the task of Perseus is now engaged upon, is to convert this work into definitive feasibility study. And in the process to define the project is not any affordable and that what can we do, but also developing a way that will generate satisfactory we said in funds employed going forward. And that is a bit of a difference actually from the early works.

During the quarter, the Stage 1 of the DFS was largely completed. This work confirmed that there were no fatal flaws in the work previously done. Some areas of study were identified along with a number of optimization opportunities focused particularly on the optimization of drilling and blasting and comminution then with that certainly were in closer examination and provide significant opportunities to get an even better outcome than was originally contemplated there.

A 42,000 meter diamond drilling and reverse circulation resource infill program will commence shortly. The program includes grade control drilling in some targeted areas, particularly around the Yaouré resource. Also we have a 40,000 meter RAB drilling program plan and that will be done in order to sterilize the planned sites of mine infrastructure.

Now, for those of you who will be following us closely, you’ll note that, we were planning to get this underline during the September quarter, but the start of drilling has been delayed, pending finalization of arrangements around landowner compensation and a few other things. What we learned from our Edikan experience is the time spend upfront sorting out this sort of details in all areas is time very well spent in the context of the overall life of the project.

Now, we don’t believe that the delay that has been incurred to date should impact significantly our overall plans in completing the DFS and developing the project. But obviously, we’re keen to move forward as soon as we can and to do it in a way it’s going to serve us well over the life of the project. We have put everything in place to move that program forward, we’ve got the infrastructural outside and we’ve drilled rigs in the country, but we should actually deploy it up to idealize softer demands but as we say, it is a fact that getting things right upfront does pay dividends down the line and we’ve certainly come to learn those lessons through our Edikan experience.

The environmental permit for Yaouré is pretty much on track and should be received during the current quarter we would expect. The overall effects – the fact about about 12 months to complete from commencement. So we should be starting to see full study results being available around the middle of 2017, provided, of course, that we get underway with the drilling fairly shortly. And we certainly believe that this target is achievable.

So in the immediate future as far as our operating and development activity is concerned, we’ve got a pretty cool side of things in front of us. So at any time clearly we need to continue producing gold at whole inside customer in line with guidance. We need to continue implementing improved grade control practices and investigate potential opportunities to grade estimation. We’ve got a complete the toe end of the plant modifications and get the plant up and running and operating, as well as it can we know it can. We’ve got to complete construction of the housing – relocation housing and get into mining in Esuajah North. And we’ve got some geological work that we want to do as well to try and identify future areas for exploration around the Edikan mines.

At Sissingue, we want to complete the detailed design and procurement and get all of the key contractors aside. We want the development to continue online. The environment schedule and budget as it is doing at the present time. We want to finalize that project debt facility and get funding available just to draw should it be required. And we want to do some drilling around the Bele deposit to expand the Mineral Resource ahead of optimization and possible inclusion in the Sissingue mine plant where the Sissingue mine reserve, the reserve at the moment has a lot ahead of us and we’re working pretty hard to try and extend that beyond that period.

At Yaouré, we will advance work on the feasibility study, including getting the drilling program underway, hopefully get the ESIA in place, which is the environmental permitting, and hopefully, we’ll get our compensation arrangements in other areas bits and pieces sorted out with the landowners as soon as we possibly can covering the entire footprint of the Yaouré project for the full life of the project.

Now turning briefly to corporate matters. At the end of September, we had available cash and bullion on hand of about $137 million, $136.9 million. This is about $30 less than the cash balance of cash and bullion at June 30, and largely reflects with the heavy capital investment at Edikan and Sissingue and also it reflects a concerted effort on our part to reduce our accounts payable, which at the end of June were higher than normal just due to timing of payments, but we have worked to pull those back in line as we feel comfortable.

So there has been a reduction in cash and bullion on hand during the quarter. At the end of the quarter, we had no debt other than creditors at the payable in the ordinary course of business. But as I said, we have made steady progress towards finalizing the $60 million project debt facility to be used at Sissingue. As I said, the credit committee approvals come through and we are working on documentation as we speak and hopefully we will have that done fairly shortly.

At the end of the quarter, gold forward sales contracts were in place for 184,848 ounces of gold at an average price of $1,275 an ounce. And this includes the 100,000 ounces of additional hedging at an average price of $1,308 that was specifically done to support the proposed Sissingue financing.

We noticed the gold price has strengthened a little in the last week or so and saw at around $1,266 hedges around the margin and the money. And as we’ve said many times before gold price hedging is part of our overall expiration strategy and while it’s through type, particularly when prices are rising, but of course the reverse does apply when they are falling. It is what we do and what we will continue to do, in order to partially underwrite financially performance going forward.

The other area of interest in the corporate side of things is in our key management personnel. So, in anticipation of explaining our operating activities to include by Edikan and Sissingue by the end of 2017 and with the prospect of developing Yaouré a couple of years later, we have appointed Mr. Chris Woodall to the role of Chief Operating Officer of Perseus. This is a fairly recent employment and one that we think is very important in going forward for the company.

Chris is an Australian mining professional who comes to us equipped with a large amount of highly relevant operating experience. Most recently he was the Senior VP Operations, Canada and the U.S. for Goldcorp and immediately prior to that role he was Global Director of Mining, Operations Support for Barrick Gold Corporation.

Chris is a semi-Australian guys fairly keen to come home. He will be based out of our Perth, plus reporting to me, but he will be spending quite a lot of time in West Africa overseeing the growth of our gold mining operations over there.

The whole issues human relations is one that is very, very important process. I said that earlier that we would work hard to assemble high quality team here and this is very important in terms of being able to deliver on our growth plans. Keeping the same together though is the market for good quality employment is going to be a challenge, because at the end of the day it’s only fair much recent approach to pay an individual, no matter how good they are and when our best competitors get desperate some of them have been known to do some silly things in terms of salaries, but nevertheless we are working to keep the team together and I think that’s going to be a very important part of whether or not they can deliver on the plants that we’ve laid out to you.

So his inclusion with the successful acquisition of new pre-development assets, together with the equity and planned debt capital raisings, plus the future cash flows from Edikan and Sissingue, plus the excellent payment cycle that we go to execute, we are now very well positioned to fund and execute the growth strategy that will transform this company from a single country single mine enterprise to a multi-million multi-country gold producer with production and commensurate cash flows in excess of 500,000 ounces of dollars in about five years without having to go back to shareholders.

I’d encourage you very much to watch your progress carefully and if you think that the timing is right, jump on board for the rest of the journey if you are not already there. The quarter that just past is a clear indicator that we are on track to deliver, and we are very much looking forward to doing that in coming periods.

Thanks very much for listening and let’s open up the floor to questions.

Question-and-Answer Session


Thank you. [Operator Instructions] Your first question comes from Dylan Kelly of CLSA. Please go ahead.

Dylan Kelly

Just as a quick question on – firstly, on the mill improvements, it looks like your costs have come down quite considerably there, and your availability has come up quite a lot as well. You mentioned that there has been a change in attitude and the workforce, just wanted to get a bit of an understanding of how sustainable that looks into the next couple of quarter. I mean the high availability rights, is this an indication of the power of capacity that you got on site to sort of while the outages that make occur, is that part of it or is it just more of a case of the maintenance team is just getting ahead of their PM works and making the best gold? The second one if I may just changing to DFS with the Yaouré?

Jeff Quartermaine

Let me just add to that one because I will also have to your second question, if there is a question, by the time you get to the end of the second. Look, all of the things that you said apply, I mean I do think that we had a lot of bad luck in the June quarter, but nobody accepts bad luck, but we did have a lot of outages that seem to us to be fairly unusual, but anyway all of those things apply so the moment things are working harder we have cut down on lost time due to power that was not outgoing, basically the goods work better.

Our people are working better. We are working very hard to make sure that our relationship with our staff remains strong. We are looking very close at the sort of things that we think can improve our workforce. I mean training is one of the area, peer communications is another, and working more closely with the unions I think is something that’s important as well. So all of those things apply and you know the fact of the matter is, the plants can very well and we’ve demonstrated that. The changes that we are doing now will just underwrite that basically in the sense that they go a long way towards even improving availability to Central Ashanti. It is a multifaceted thing, but it is a matter of continuous improvement, which is something that we have been working on for something. Sorry, your second questions.

Dylan Kelly

Yeah, just relating into the DFS states and the latest version of the others development scenario, I noticed that just looking at the previous scenario details, it was looking at negotiations around hydro supply, do you have any sort of up that indication for how they are going at the moment in terms of contractor growth, I know that previously there was a number floating around $0.11 a kilowatt hour up from $0.08 or $0.09, given the understanding we are not clear about where that fits right now as part of the negotiation.

Jeff Quartermaine

We are looking – we not the guys trading at the moment, we are doing a feasibility study first to determine how much power we need and then we will negotiate, but I mean the power price Cote d’Ivoire is set by the authorities there and there is not a lot of room to negotiate favorable conditions. Having said that the cost is very low relative to other countries and the – actually the main hydro power station is like on a like 5 km from our front door. So, we are in an ideal condition position to access that power and it will be done at right and will be low at power costs, in other words separating countries.

Dylan Kelly

Could you just tell us then, I understand one of the options that was looked at in the early on feasibility in concert with studies we are potentially using ferroelectric shovels at the site just due to the low cost of hydro, do you know if that is an indication that the RPN [ph] guys are looking at the moment with currency as it would?

Jeff Quartermaine

No it’s not I mean we are looking at – we’re going back to square one basically and looking at identifying what works with the – to the old body as we see it. And certainly there was a case as far as one of the – because we are concerned to use large-scale mining equipment, not so much on the other one because it’s a more selective mining needed for that one, but no I don’t wasn’t able to go in that direction, I mean there is enough – certain of the durations out there to apply we’ve had that.

Dylan Kelly

Okay, that’s great. Thank you.


Your next question comes from Reg Spencer of Canaccord. Please go ahead.

Reg Spencer

Thank you, good morning guys, congrats on a good production quarter. Just a couple of quick question from me, just on the reported five year of the interim wall at the fattish pits, you note that’s subject to rescheduling of the scheduling potentially accessing answers in other pits, there is no chance to guidance even now that you tweet the extraction or mining around 5000 ounces, is there any additional capital cost duration like that that we need to be thinking about in terms of remediation of that wall failure or?

Jeff Quartermaine

It was just a split. We had a very, very wet weekend, a few day, actually very heavy and the world slipped on a geological structure and basically we claimed that they are not, but just with some lose material above it, we don’t want to particularly be mining down below and so what we’ve done is putting a bone and just stepped in a bit now. We are in mining around it, so when we do the next stage of that pit, so we will cut the walls for the second stage of it, then all of that gold will be picked up. And what we are doing at the present time is just looking at our mine planning to see if we can pick up ore from other areas and this is one of the beauties of having multiple pits running, so we are currently mining in Chirawewa as well and also over in Fobinso and we are now opening up the Esuajah North pit.

So that is having full work that gives us the ability to move things around and to ensure that we’ve got all supply, but that is the type [indiscernible] fairly recent news and we’ll be getting nice results through it shortly. But I just – we included that in the quarterly report, because as it is our policy, we try to be fairly transparent about what’s going on and not give anybody any surprises and that did happen and it does need to be worked around.

Reg Spencer

That’s great. Thank you, Jeff. And just very quickly in Sissingue, can you be able to give us an indication of your capital profile with the spend profile through the debt queue and through calendar 2017?

Jeff Quartermaine

Look, I can’t give you the exact numbers at the top of my head, Reg. But it is fairly heavily are entitled to the next six months. And so we’ll be using our equity for a period of time and then pulling down debt to fund this, but certainly, a big chunck of the money occurs in the next six months.

Reg Spencer

Understand. That’s great. Thanks, guys.


Your next question comes from Michael Slifirski of Credit Suisse. Please go ahead.

Michael Slifirski

Thank you. Just two little ones from me, first of all, the Yaouré DFS work you are doing, the discussion around the optimization drilling blasting and comminution that worked in close determination, [indiscernible] what that actually means is that because of upside you see the performance, or is it a capital intensity thing that perhaps [indiscernible] understand what the bias market there, please?

Jeff Quartermaine

Okay. What it talks about is that the ore is pretty hard as you probably aware. And you can break it in two ways. One is you can blast it or you can crush it and grind it or you have the combination of the two. So really what you need to do is to find where that sweet spot is, which generates, gives you the lowest overall combination of capital and operating costs and that’s the study that we’ll be doing. They’re trying to optimize the [indiscernible] project by getting the right balance between the investment in the crushing or combination circuit and the investment ongoing, investment in operating factors like drill and blast.

Michael Slifirski

Okay. Thank you. And secondly, with respect to the temporary suspension of drilling, I guess temporary suspension was suspended to me it was somewhat [indiscernible]…

Jeff Quartermaine

That is a wrong thing, we haven’t started it, haven’t suspended it, we just haven’t started it yet.

Michael Slifirski

Okay. That’s why I want to clarify. And so has something changed in terms of your understanding of compensation, or is it just a prudent thing to settle that’s given what’s signed off before we commence?

Jeff Quartermaine

Yes, look, I mean, we’ve got a fairly big foot print there and the larger the area project is it will be concerned in the feasibility, but it is in the order of 12 to 15 years. We’re going to be there for very long time. And what we found at Edikan was that, by sort of compensating and doing relocation in series of consecutive events ended up costing us a heck of a lot more money than it would have cost if we’ve done it all up front. And I suspect, we might have taken a bit of anxiety out of our relationship with the community if everybody knew what was happening right from the get go.

So what we want to do is to sort all these things out. Now, as is always the case in developing countries, when foreign investors come to town, people see it as an opportunity to get rich quickly and some of them unfortunately receive some fairly poor [indiscernible] and the like. And so, what we need to do is to manage their expectations against what we’re prepared to do, and that doesn’t happen overnight.

So we have had some the series of discussions. I think it is important that we get to sort it out upfront and then we can move forward and everybody knows what they’re entitled to and what they’ve got, and lot gets a bit simpler that way.

Michael Slifirski

So is there some sort of mechanisms constrain that time frame because it sounds like it could be somewhat open end, if you have an initial approach and they have expectations that are beyond what you think is there. What defines how quickly it can be resolved?

Jeff Quartermaine

Well, I think we just need to keep dialogue and to bring the authorities at the appropriate time. For instance, we had a similar time that was – not actually. We had a situation with the Sissingue at one point, where we were having trouble getting full agreement between the various parties.

So, the land chief and the village chief had a difference on opinion on how compensation should be allocated. Now, we worked on that for a period of time, but in the end, we got the government involved, because it’s in the countries interest not to have these things to align projects. And I’ve spoken to the Mining Minister about this particular mater and he agreed with me that it does need to be contained. What we wanted to do though was to have those discussions ourselves and try and reach agreement ourselves without having outside intervention, but that alternative is available to us should it be the required. But I have to say the dialogue is ongoing and it’s pretty constructive so I am not at this point particularly concerned around this expecting on for too much longer.

Michael Slifirski

Thanks, Jeff. It’s very helpful. Thank you.


There are no further questions at this time. I’ll now hand back to Mr. Quartermaine for closing remarks.

Jeff Quartermaine

Okay. Thank you very much. Well, thanks once again ladies and gentlemen for sitting in on this call. We’re fairly excited about the prospects that are in front of us. And we are pleased that we are able to demonstrate the things that we said we’re going to do we have been doing, and we’re looking forward to that continuing into the future. So once again, thank you very much and we will see some of you fairly shortly. Bye now.

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