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Endeavour Silver (NYSE:EXK)

Q3 2012 Earnings Call

November 07, 2012 1:00 pm ET

Executives

Bradford J. Cooke - Chief Executive Officer and Director

Daniel W. Dickson - Chief Financial Officer and Principal Accounting Officer

Analysts

Heiko Ihle - Euro Pacific Capital, Inc., Research Division

Benjamin Asuncion - Haywood Securities Inc., Research Division

Chris Thompson

Laurenn Russell - Dundee Capital Markets Inc., Research Division

Operator

Hello, this is the conference operator. Welcome to the Endeavour Silver Third Quarter 2012 Financial Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Brad Cooke. Please go ahead, Mr. Cooke.

Bradford J. Cooke

Thank you very much, and welcome to this conference call at Endeavour's third quarter financial operating results.

In summary, Endeavour had another fairly strong quarter on the operating side, both Guanacevi and Bolanitos, by and large, met our expectations. We did have a difficult quarter as expected at El Cubo, but there are green shoots of a turnaround in the operations at El Cubo, and we do expect more of that going forward.

On the financial side, not the best quarter, we obviously took a hit on earnings. The net earnings were only $16,000. So they're down from 1 year ago. Adjusted earnings were also down, but cash flow was really only lower on the basis of lower metal prices, et cetera.

Revenues were up and our working capital was also reduced, largely due to the $100 million cash payment to AuRico on the closing of the El Cubo mine acquisition in July.

By the way, I have with me here in the boardroom, Dan Dickson, our CFO, and so he would be happy to provide any answers he may have on the financial side. I would just like to finish off with a brief recap of the performance of the company, and then we'll just open it up for Q&A.

So I already flagged that El Cubo had a difficult quarter. Clearly our attention, as well as our shareholders' attention, is very much on El Cubo and what we propose to do with it.

I gave in my quote to the news release, an example of what we were able to accomplish at our Bolanitos mine, which when we bought it in 2007 was, to be honest, in more difficult shape than El Cubo.

Just to flashback, 5 years, Bolanitos was a small, underperforming mine in an historic district that had no reserves or resources to speak of, and was barely putting 100 tonnes a day of low-grade ore and old Spanish fill into a 500-tonne-per-day plant. My example of Bolanitos was that in the first 8 quarters, post-closing, we did, in fact, affect a turnaround of that operation. And most of that turnaround was prior to making any new discoveries that have, since that time, fueled the growth of our Bolanitos operation.

In fact, cash costs were north of $30 an ounce. I think they were $32 and change. And we were able, over the course of the first 8 quarters, to bring those cash costs down below 0, largely as a result of the increases in production and the increased size and value of the gold credit. Bolanitos, I think their relationship of silver to gold by value is closer to 50-50 or 55-45, in silver's favor. And so there's a large and rising gold credit that really helped out on the cost side there.

We have that same gold credit at El Cubo. And even though the cash operating costs at El Cubo this quarter were in the high 20s, we are already here in the fourth quarter seeing signs of those costs, should start coming down this quarter, and hopefully in every subsequent quarter until we get to the same level of performance that we accomplished at Bolanitos within the first 6 or 8 quarters.

So that's very much the model of what we're trying to achieve at El Cubo. We've seen an increase in production grades in the first 12 weeks since closing. They're going to plateau now through year end while we focus on other issues such as our multiple capital programs, which are under way. And also on mine development, which -- even though it's a CapEx program, very much will drive our ability to continue to increase production grades in 2013. We need more choices of where to mine our ore. Right now, we have over 90 stopes at El Cubo and virtually no mine development. That was the state of the mine that we inherited in July.

And because of that, we're still doing some hunt-and-peck mining, to be honest. Where, if you're in a stope, you pretty much have to take the ore in that stope, regardless of the grade, unless it's absolute waste.

So we are making changes to that approach, obviously, by accelerating the mine development. We've ordered a bunch of equipment. We've taken delivery of some. We have some equipment in rehabilitation, and we're focused on improving the maintenance. I made a comment in our news release about safety, that also is, by the way, a symptom of a well-run mine. And obviously, the safety track record of El Cubo before we closed, was not very good, and it was a symptom of the many issues at the mine. I'm pleased to say that symptom is starting to come around, and we did, in fact, have lower lost time accidents in Q3 compared to Q2 and Q1. And while we have a long ways to go on safety, at least there's a new attitude and new policies and practices that are being put in place.

So when we look at what we bought, it's a significant challenge. Not as much of a challenge, by the way, as Bolanitos. El Cubo has a much larger and more robust reserve and resource base than Bolanitos ever did. And it's currently operating at a size that qualifies as a core asset for the company. We just have to make it much more attractive financially. And the way to do that is by making changes over the next 6 quarters, both in the operations and in the capital programs. Dan, did you want to add anything to that?

Daniel W. Dickson

No. I think you hit the key stuff. I mean, we saw the costs at El Cubo at up $119 and it wasn't unexpected for us to be that high. The key is we've got a lot of initiatives that we're putting in place right now, from training on safety, training on grade control, training in the plant, on reporting, et cetera, et cetera, bringing in consultants, headhunters, adding staff and severance, removing some staff. So there's going to be a lot of cost going through, that we're saying, raise [ph] the cost of sales. That's going to keep our costs up there for this quarter and a little bit into Q4. But we should see that dissipate come end of the Q4 and then into the new year.

Bradford J. Cooke

Okay. So I'll wrap up my comments on the adjusted production guidance for 2012 and our outlook for Q4. We are expecting that there will be some improvements in the operations in Q4. Probably not much change in our financial position. Basically, even with higher gold and silver prices and higher precious metal production, we're now into a high spending mode, mostly at El Cubo to be honest. And so we do expect to consume much of our cash flow in the next 3 quarters, making a difference at El Cubo by completing all of the CapEx programs that we've initiated.

After that, however, looking into the second half of next year, I think that there should be a very real impact, a positive impact on our financial performance as a result of a pending turnaround at El Cubo.

So we did reduce our guidance for El Cubo, down to 400,000 ounces of silver and 7,000 ounces of gold. That's simply the reality of the slow start at El Cubo. We should get very close to our forecast silver at Guanacevi and we'll beat our gold production guidance on Guanacevi. And Bolanitos is having another great year. We'll meet our silver guidance and beat our gold guidance at Bolanitos.

We, therefore, revised our 2012 year-end guidance to slightly lower silver productions, slightly higher gold production and cash costs at the low end of the previously forecasted $6 to $7 range.

On that note, operator, I think what we'll do is close off my comments and open the call up for questions and answers.

Question-and-Answer Session

Operator

[Operator Instructions] The first question today comes from Heiko Ihle of Euro Pacific Capital.

Heiko Ihle - Euro Pacific Capital, Inc., Research Division

Brad, just I guess, with today's cut in guidance, should we expect somewhat lower-than-expected figures for 2013 as well? I guess, what I'm trying to say is how far along is the turnaround at El Cubo, which is obviously the biggest driver in the somewhat lower-than-expected production compared to where you would have thought you would stand today, 2 months ago?

Bradford J. Cooke

Well, Chris, we haven't provided any 2013 guidance. And given our slow start here, we'll certainly be careful when we bring it in January. We're going to see a significant jump in production, consolidated production, thanks to El Cubo. For instance, pre-El Cubo this year, we were guiding 4.3 million ounces of silver production, and what was our gold guidance?

Daniel W. Dickson

20...

Bradford J. Cooke

26,000 ounces of gold. Yes, we're going to get close to 40,000 ounces of gold this year and kind of -- the kind of 4.6 range. I think there's a very real opportunity to add significantly to our production next year, along the lines of what we've discussed in the management team, and that guidance will come in January. So I don't think there's any major changes, to be honest, in the management side of the [ph] book.

Heiko Ihle - Euro Pacific Capital, Inc., Research Division

That's fair, I guess. And I know you haven't -- I know you're going to be very careful to answer this question given it's a 2013 question. But just maybe some sort of soft indication on 2013 cash costs, given with the progress at El Cubo, I believe you said in the past that most of the onetime items are going to be done in May, correct?

Bradford J. Cooke

Yes. The CapEx programs are scheduled for completion in the beginning of May next year. There'll still be, by the way, some significant spending after May. It's just that by May, we expect to have a fully functional rebuilt plant and related surface infrastructure. It may not look pretty, but it will be fully functional by then. And then, through the rest of next year, we'll finish off those CapEx programs, so that the mine starts to look more and more like Bolanitos towards year end.

Heiko Ihle - Euro Pacific Capital, Inc., Research Division

Can you maybe breakdown the CapEx program, the 2013 CapEx program a little bit like quarter-by-quarter? Or how much do you think you see in the first half, something along those lines?

Bradford J. Cooke

We had announced already a $67 million, 18-month CapEx program at El Cubo commencing July of this year. $34 million of that was actually assigned to this year. And Dan, can you refresh my memory on what next year's $33 million looks like?

Daniel W. Dickson

Yes. A big chunk of that $33 million is basically split between mine development, which is going to happen throughout the whole year from January to December, and the remaining balance was the completion of the plant at El Tajo. I don't have the plant figure in front of me of what 2013's budget was. But I would assume it would be about the $15 million -- $13 million to $15 million range, which would be complete by May, which is when the plant is scheduled to be completed. And then the mine development, the remaining $20 million in mine equipment would be purchased throughout the year. Off the top of my head, that's what I recall. Mine development is going to push all the way into 2014 and 2015. So we'll have costs related to that in those years as well.

Operator

Our next question comes from Benjamin Asuncion of Haywood Securities.

Benjamin Asuncion - Haywood Securities Inc., Research Division

It's just a few things to cover off from the quarter. With respect to Bolanitos with what we saw in operating costs, when do you see, I guess, the inflection in costs to come back down just on the basis of the higher throughput?

Bradford J. Cooke

That would be for you, Dan.

Daniel W. Dickson

Yes. Ben, thanks for the question. It's something that we, as a management group, were down and actually visiting Bolanitos with our directors this past week and walking through the 4 veins that are parallel to one another, all about 50 meters apart, some less. That's a question that we were asking ourselves, is when we will see some synergies happen here with the efficiency of the discoveries that we've had over the past years. And we've done a lot of training with long hauling [ph] in the past 2 quarters, opening all that up, hiring individuals, spending money on headhunters to get these individuals. Hopefully, we expect to see some of these efficiencies to take hold late in this quarter and then also in Q1. But I can't give you a definitive when it's going to take hold, we just expect it to happen soon.

Bradford J. Cooke

And to be more specific, Ben. This is Brad. When we were on our mine tours last week, what we did see is that there's been significantly more ore development at Bolanitos. Thanks to the opening up of effectively 4 new ore bodies, specifically Karina, Fernanda, Daniela and Lana. And we also saw, by the way, some other opportunities, both exploration and development opportunities, while we were there, and more on that next year. So those costs of accelerated ore development aren't capitalized. They went to the expense [indiscernible] as well. And once we've opened up, fully opened up those ore bodies, then I think you'll see a return to the norm on our cost per tonne.

Benjamin Asuncion - Haywood Securities Inc., Research Division

Okay. And I guess, just switching tracks here to El Cubo. With respect to recoveries, I guess, on the last quarter, you're talking about recoveries in around this sort of 70%, if you account for the in-process material. Any comments on what we should be looking at for recoveries going forward, and how does that compare with the recoveries that AuRico reported historically?

Bradford J. Cooke

Well, first of all, maybe, Dan, you can comment on the difference between what AuRico reported and how we report, and then I'll comment on how we're going forward.

Daniel W. Dickson

I believe AuRico is receiving something -- somewheres in the rounds of 85%. We did do our due diligence on the 85% and it made sense. We've seen from our first 2.5 months it was -- we've got only 75%. We've got metallurgists in there working and looking at it. However, we don't have resolution of why we're only getting 75%. It's still reports that we're looking at, and trying to get some questions answered. But we do fully expect that to come up.

Benjamin Asuncion - Haywood Securities Inc., Research Division

Okay. And then, just lastly here. With respect to the revised guidance, could you give a breakdown of the gold production at Guanacevi and Bolanitos?

Daniel W. Dickson

Do you remember offhand or should I go get my notes?

Bradford J. Cooke

What was the question again, Ben?

Benjamin Asuncion - Haywood Securities Inc., Research Division

With respect to the revised gold production guidance, I think it was around 31,000 ounces between Guanacevi and Bolanitos. Could you give a breakdown with respect to what the gold was at each operation on the new guidance?

Bradford J. Cooke

Actually, it's in the news release. Guanacevi, where we had guided 6,000 ounces, so we're going to beat that. And we had guided 20,000 ounces at Bolanitos, we're going to beat that. So were you looking for what share of the new guidance goes to each mine?

Benjamin Asuncion - Haywood Securities Inc., Research Division

Yes. Because you had broken apart El Cubo. I'm just wondering if I can get more clarity on how that splits apart between the 2.

Bradford J. Cooke

I think of the approximately 3,000 additional ounces of gold production that we're anticipating. About 1,000 will be attributable to Guanacevi and 2,000 will be attributable to Bolanitos.

Operator

[Operator Instructions] Our next question comes from Chris Thompson of Raymond James.

Chris Thompson

It's just -- I got a couple of questions here. We'll start off with sort of level of inventories to be expected, I guess, in the quarters ahead of us. Brad, what's the intention here? Are you guys are going to be liquidating this? Do you want to hang onto it? Can you give us any sense of what you guys are going to be doing with the inventory levels here?

Bradford J. Cooke

Chris, I should probably comment on how we treated the inventories this year as an indication of what we're going to do going forward. If you recall, we did actually withhold sales and build a significantly larger inventory at year end last year than we've ever had. It was largely because of the significant correction in metal prices in December of last year. We did actually sell a bunch of that inventory when the metal prices ran up in February and that was simply a profit-taking, if you will, on a portion of the inventory. We replaced those sales with renewed inventory building in the second quarter. We did have to sell, chose to sell a portion of that inventory at the end of the second quarter, largely to make sure we were in a good position cash-wise for the purchase of El Cubo. So that decision wasn't profit-based. It was based on cash needs and risk management. We did resume rebuilding inventories in the third quarter. And we did actually sell on a profit-based incentive when the metal prices ran up in the second half of September. We have largely withheld sales in October, again, on a profit-based motive but with a correction after the run-up in September. And so to answer your question, I do actually anticipate a reasonable move in the metal prices between now and year end, and therefore, we will once again, based on a profit motive, be looking at how to capture more than spot on our inventory sales from now to year end. And it will be a reflection of how strong the metal prices are.

Chris Thompson

Have you got any -- it's a pointed question, but what sort of metal price would you be happy with? What are you looking for here? I mean...

Bradford J. Cooke

Well, my expectations are we're going to get back into the high 30s on silver and the -- possibly 1,800s, mid-1,800s on gold. And those are pretty healthy prices for inventory that was built in the kind of low 30s and low 1,700s. We're not trying to hit the top of any market. We're simply trying to improve on spot. So if I rate on my outlook, that's going to be a good level of profit, additional profit for the company in Q4.

Chris Thompson

Great, thanks. So just moving on to some of the operations, Brad, just Bolanitos, we'll start off with Bolanitos, first of all. So where do we stand with the Lucero vein at the moment? And my understanding is that we're going to be winding that up in Q4, is that right?

Bradford J. Cooke

No. No. We will see the production from Lucero next year. But it's past the midway of its life and quickly being mined out. It carried us now for the last 3 years. Lucero was the bulk of our production at Bolanitos for 3 years, and it will certainly be a significant contributor to production next year. But on a percentage basis, it's now falling. It was 60% to 80% over the last 3 years and it's going to start falling 50%, 40%, 30% as Karina, Daniela, Fernanda and Lana are more and more into production.

Chris Thompson

All right. When are we going to see, obviously, those 3 coming into production?

Bradford J. Cooke

We're currently setting a development mark on all 3. And my comment to Ben earlier was that we had increased costs in the quarter, thanks to increased ore access, ore development. So we fully expect -- by the way, we're already doing 1,600 tonnes per day at the mine. So the mine has now met our guidance for the year. We had a couple of expected bottlenecks in the plant and they should also be ironed out this month, so that the whole unit will have consolidated production of 1,600 tonnes per day in December. And then going forward into next year, we haven't obviously guided any additional expansions, but we are seeing significant opportunities for future expansions. Whether those are embraced next year or the year after, it is yet to be decided. But for now, I would expect next year's production at Bolanitos to come, let's say, a 100 tonnes per day from Cebada, and 1,500 tonnes per day from Lucero, Karina, Daniela, maybe a little bit from Lana. And instead of Lucero carrying the bulk of that 1,500 tonnes, let's say, it was carrying up to 1,000 tonnes in the past, that will drop significantly. And I can get back to you with some specific numbers, maybe closer to year end. But 1,500 tonnes per day is going to be more equally spread out from Lucero, Karina and Daniela.

Chris Thompson

And just the plan, are we still on track for delivering throughput of about 1,600 middle of the year, do you think? The plant?

Bradford J. Cooke

No. The plant will be the whole unit. Plant, mine and everything should be 1,600 tonnes per day by year end.

Chris Thompson

Okay, right. Okay, and then finally, very quickly, Guanacevi we've noticed some drop-off, I guess, in silver grades quarter-on-quarter, what's the -- why, I guess, and what can we sort of anticipate walking forward there?

Bradford J. Cooke

Part of it is it's our oldest and deepest mine. So in these bonanza [ph] ore bodies, the highest grades are at the top in the early years and the lowest grades are at the bottom in the later years, so that's a part of it. We have seen, not just a drop in grade this year, but small reductions in grade in each of the last several years. This year's reduction is just larger, which is why people are commenting on it now. The other part of it is metal prices. We were never able to mine, not to the cutoff grades in previous years that we're mining now. And so I think it's a combination of both. And I don't think there's any magic bullets in Guanacevi's future in terms of Porvenir Norte which is still the bulk of the productions -- the daily production of the 1,200 tonnes per day that we're mining there -- actually 13. More than half are still coming from Porvenir Norte. However, we are significantly delayed on our mine development at Porvenir Cuatro which does have higher than current production rates. And as you'll hear over the rest of this year, we announced earlier this year, some very interesting new drill holes on what looks like an emerging discovery North of Porvenir Cuatro called Milache. I'll have some more news on that shortly, and we'd love to have Milache into reserves and resources year end and into development next year. And there's no surprise there, we've already had some good results published. Those grades are significantly higher than current production grades as well. So the way to continually refresh a now mature operation like Guanacevi is to make new discoveries, develop new mines and bring higher grades back into the mix.

Operator

The next question comes from Laurenn Russell of Dundee Securities.

Laurenn Russell - Dundee Capital Markets Inc., Research Division

I was wondering if you could just touch on the contingent liability valuation. In the quarter, you guys recorded a $5 million mark-to-market loss. Can you give an indication of how you expect this to look in future quarters? Can we expect to see similar mark-to-market depending on gold price volatility?

Daniel W. Dickson

Yes. Laurenn, thanks for the question. It's Dan. We go out and get a third-party valuation done on the contingent consideration that we have to give AuRico related to the gold price. So in the agreement to buy El Cubo, there is contingent consideration of gold out at just $1,900, $2,000 and $2,100. A simple average for 1 year, we're going to pay $10 million, $10 million and $10 million. IFRS requires us to get that valued on a quarterly basis. The movement that we're going to see, so I think as of September 30, the liability end up being $12 million. Obviously, if we ever pay that liability, it will be $30 million. If we never pay any of that liability, it will be 0. It's going to move with how the gold price moves and how the gold forward curve moves as well over the next 3 years. As far as giving indications of how it's going to move quarter-to-quarter, it's going to be dependent on how gold moves. And if I can predict how gold moves, I wouldn't be working with Brad, and sitting across from the table right now. So I can't give you any specifics of how it's going to look quarter-to-quarter, but to look to the gold price and forward curve how gold is as of each quarter end.

Bradford J. Cooke

A reminder also that those contingent payments fall off the table 3 years from closing. So in July of 2015, they expire.

Laurenn Russell - Dundee Capital Markets Inc., Research Division

Okay, great. And then just one final question on El Cubo. You touched on it briefly earlier, but I just wanted to ask if you guys could be a little bit more specific about what you guys are expecting for OpEx per tonne once El Tajo has turned around. And AuRico is running at approximately $92 per tonne, but maybe you guys can just comment on that?

Daniel W. Dickson

Yes, this is Dan again. The -- currently, it was $119. I know AuRico was in the low $90s, sometimes in $95. We fully expect to get down into the $90s, and if we use as a model, base-case analysis, if we can consolidate the district and get more stopes in one working area, it will be a similar operation to what we have over at Bolanitos. One of the big things that we have right now, we have 900 employees producing the same amount of tonnes as 450 employees over at Bolanitos. That's what we're looking at. Our cost obviously at Bolanitos for the quarter was $76. If we can squeeze that and split the difference between $76 and $95, I mean, it kind of puts you at the $85 range. In this quarter, if we took out all these one-time charges for severance and new clothes, paint, access, development or development -- stuff like that, we would have seen somewhere -- just around the $100 to $102 range. Ian's [ph] getting our processes in place. The culture changed around and we should see that cost per tonne really come down to at least where AuRico was and then we want to see improvements on top of that.

Operator

Your next question comes from Stephen Bruce [ph] of Minah Investment Fund [ph].

Unknown Analyst

I was wondering if you guys could just confirm that 2013 CapEx will be coming out of operating cash flows.

Daniel W. Dickson

Yes, at this point, our cash flows from Bolanitos and Guanacevi will be paying for the CapEx expenditures at El Cubo. We typically come out with guidance of production and our capital budget in January of 2013, but at this point, we fully expect everything to be paid for by cash flow.

Unknown Analyst

Got you. And then has there been discussions in terms of using leverage, given that interest rates are fairly low, to do like a share buyback program, given that your share price is below the price that you used in the acquisition for El Cubo?

Bradford J. Cooke

It's Brad here. In all of our spending, whether it's exploration or capital or share buyback, we try and consider where the biggest bang for our shareholder's buck is. And I think it's pretty clear. I hope it's been clear that, with the acquisition of El Cubo and the turnaround and expansion programs that we have in mind there, we feel that creates a far bigger bang for our shareholders's buck, in terms of company performance and, therefore, share price performance that a share buyback program would. It's not that we're allergic to share buybacks, but it's certainly not the right time to consider one perhaps in our future.

Operator

[Operator Instructions] Our next question comes from Richard Lloyd [ph], a private investor.

Unknown Attendee

My question was largely answered or asked and answered after I got into the queue. It was concerned with the table that was included in the press release on the consolidated mine operations and it shows data from 2010, '11 and '12 quarter-by-quarter. And the ore grades start at 270 and end with 171, and every quarter they go down a little bit. I wonder if you would comment on when we can expect these ore grades rates to turn upward time-wise? I know that you were earlier saying that the opportunity to enrich the ore grades was there, I'm just wondering how many quarters it would be before we can see this decline turn into a incline?

Bradford J. Cooke

Well, Richard, thank you for your question, it's Brad. And you have to keep in mind that Guanacevi was our first and largest mine and it was also our highest grade mine, and so in prior years, Guanacevi carried a lot of the consolidated production grades and that was why they were higher. Bolanitos and El Cubo are significantly lower grade for silver, but they have way more gold. So when you see the silver grades coming down on a consolidated basis, keep in mind that the bulk of our growth in the last 3 or 4 years has been Bolanitos. And in the future years, it could be Bolanitos and El Cubo combined. So will the consolidated silver grades increase? Probably not much. I mean, we're making headway at El Cubo because they were so low. But the rising throughputs of those 2 mines and the very fact that the silver grades are lower compared to Guanacevi, probably means that our consolidated silver production grades aren't going to be taken any big jumps. And where we've made big jumps is in the gold grades.

Unknown Attendee

So what is the cutoff grade for silver?

Bradford J. Cooke

Obviously, every year, we assess the metal price outlook, because metal price is impact to what we consider to be ore versus waste. And it also depends on each individual stope in each mine because there's different operating costs to open up stopes and mine stopes, and so you have to always have that in mind when you ask about cutoff grades. In terms of a blanket answer, look at the cost per tonne. They're in the low $70s at -- or have been in the low 70s at Bolanitos. They've been in the low $100s at Guanacevi. Well, that means that we have to produce on a break-even basis at Bolanitos, we have to produce 2.5 ounces of silver net-net to cover our cost per tonne. At Guanacevi, we have to produce about 3.5 ounces of silver net-net, in order to cover our cost of production there. However, the head grades consolidated are, what, north of 6.5, or they have been and this last quarter was lower. So there's still a very healthy operating margin in our silver grades.

Operator

There are no further questions at this time. I'll hand the conference back to Mr. Brad Cooke for any closing comments.

Bradford J. Cooke

I would like to thank everybody for attending. This has been an interesting quarter for us with a brand-new acquisition, the launching of some major capital and exploration programs. Our business model is still very much buying underperforming mines in historic districts that we feel have significant opportunities for growth, where we can make a difference. El Cubo is very much that, along the lines that Guanacevi and Bolanitos were. And if you wonder where we're going on El Cubo, I'll just ask you to look at Bolanitos and Guanacevi. On that note, thank you very much, and we will talk again.

Operator

Ladies and gentlemen, the conference is now concluded. Thank you for joining, and have a pleasant day. Goodbye.

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