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Revett Minerals Inc. (NYSEMKT:RVM)

Q3 2012 Earnings Call

November 9, 2012 11:30 am ET

Executives

Kenneth S. Eickerman – Chief Finance Officer

John Gerard Shanahan – President, Chief Executive Officer

Doug Miller – Vice President of Operations

Analysts

Jeffrey Wright – Global Hunter Securities, LLC

Spencer David Lehman – Financial West Group

Annie Zhang – Octagon Capital

Robert Draper – Deeds Select Advisors

Operator

Good morning, my name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Revett Minerals Inc. Third Quarter 2012 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Mr. Ken Eickerman, CFO, you may begin.

Kenneth S. Eickerman

Thank you, Sarah, and good day, everyone, and thanks for joining our third quarter 2012 financial results conference call. I am Ken Eickerman, the CFO, and joining me today is our President and CEO, John Shanahan; and Doug Miller, Vice President of Operations.

Before we begin, I would like to note that this call contains forward-looking statements that are made pursuant to Safe Harbor provisions of the Federal Securities laws. These statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those anticipated. Listeners to the call are advised to review the risk factors contained in our most recent Annual Report on Form 10-K for descriptions of risks, uncertainties and assumptions related to forward-looking statements. Please note that this call is intended for investors and may not be reproduced by the media in whole or in part without prior consent.

At this time, I would turn the call over to our President and CEO, John Shanahan, who will recap the highlights for the first nine months of 2012. Following his remarks, Doug Miller will provide an update of operations, and then I will walk through the financials. And then John will wrap up with our outlook before we finish with your questions. John?

John Gerard Shanahan

Well, thank you, Ken. And thank you everyone for joining our call today. I will try and keep my initial comments brief. At Troy, our third quarter production was on target. It has been a difficult year production wise in some respects, weather, ground conditions, but we do have a committed and skilled workforce and I know that we do make the most of every opportunity we have. And we do adjust for the conditions. We are profitable operator and we have every intention of continued to be so.

We continue to focus primarily on safety. We’ve had some loss time accidents this year nothing bad or severe mainly sprains and bruises. But the fact is we do aim each year to have zero loss time accidents. Safety starts with me, as a CEO and finishes with the very last person hired. And it’s an area that we are going to continue to work and focus on. A commitment to safety defines us and it's important that we are all part of that process.

Financially of course, we continue to put cash in our balance sheet, while we continue to develop, explore and extend mine life at Troy having positive cash flow is a gem for a junior with one of the great silver development plays at end. And so as we look to Rock Creek, I don’t need to tell you that this is being a long and arduous process, but we focused and we geared to completing this permitting process, we have focused and geared to bringing the Rock Creek project to fruition.

We have spent enormous support from both at the federal and state government agencies along with the communities and businesses and business leaders and political leaders of North West Montana. But we are, we were hoping to have a draft of the SEIS delivered to the Forest Service on December 15. We’ve been told that this is not going to happen. It’s being pushed to January 15. So yes, we are going to see movement early in the New Year. Hopefully fairly soon that SEIS is delivered. It will be out for public comment and we will go through that process.

Eventually of course we are through public comment the period, we do look forward to having a revised record of decision issued. And I think as everyone knows, the record of decision is predicated on both the revised or the supplemental EIS and the record and the biological opinion that was upheld by the Ninth Circuit Court of Appeals. So with that, I’d like to now ask Doug Miller, who is both VP of Operations and the General Manager of the Troy Mine to give you an overview of operations and I look forward to answering some questions towards the end of this call. Thank you, Doug.

Doug Miller

Thank you, John. Good morning to all. As John pointed out, our safety record wasn’t stellar in the third quarter. We definitely are working on that. And as John mentioned, nothing real serious, we did have four lifetime actions but pretty minimum, minimum days of laws.

As far as the mill throughput for the third quarter as compared to the third quarter of 2011, we were about 10% less, so keep in mind the third quarter of 2011 we produced an average of 4,370 tons per day, so a pretty good quarter in 2011.

The grades were very similar in third quarter of 2012 as compared to third quarter of 2011, 1.18 ounces of silver and 0.42% copper in the third quarter of 2012, as compared to 1.18 ounces of silver and 0.49% copper in the third quarter of 2011.

I’m happy to say that our contractor has completed the primary assets into the East Ore Body through some major faulting, and has advanced approximately 100 feet past. The fault zone appears to be fairly decent ground and is nearly completed with the secondary access, which would be our secondary escape-way out of the East Ore Body in the third quarter. So we are anticipating that in the fourth quarter, we will be seeing a bit more production out of that East Ore Body.

The development drifting plan, North C-Beds and the I-Beds are continued during the third quarter with advance of about 375 feet. And that leaves about 265 feet to get into the North C-Bed Ore Body. And also in the third quarter, there was a joint record of decision issued by the U.S. Forest Service in Montana, DEQ approving the revised reclamation plan for Troy and pretty much just some minor changes from the original and we’re personally waiting for the revised bond calculation from the Montana Department of Environmental Quality.

I will now turn it back over to Ken Eickerman.

Kenneth S. Eickerman

Okay, thanks Doug. For the third quarter, we had a net income of $4.4 million or $0.13 a share on revenues of $19.4 million, when you compare that to the net income of $2.9 million or $0.08 a share on revenues of $16.7 million for the third quarter of 2011. This increase profit is primarily a result of higher revenues as we saw the price of copper and silver increase in the third quarter from the second quarter of 2012. Our cost of sales also increased though by $1.9 million when compared to the third quarter of 2011. The increasing cost of goods sold was primarily the result of increased labor costs, higher treatment, refining and freight costs along with a $1.1 million change in our concentrate inventory value which was valued at 600,000 at the end of September 2012 as compared to $1.7 million at September 30, 2011.

Our exploration and development spending of $1.2 million, which is double what we spent in the third quarter of 2011, is that expected in these costs are primarily related to increased development with the Rock Creek EIS and for the contractors and then the planned exploration, we plan to spend more money in and around the Troy Mine.

Our balance sheet continues to gets stronger as we improved our cash and short-term investment positioned to $32.6 million, which is a 30% improvement since December 31, 2011. At the end of the third quarter we had working capital of $33.1 million compared to $27.8 million at December 31, 2011. I will now turn the call back over to John Shanahan for some final comments. John?

John Gerard Shanahan

Well, thanks again Ken. Just one final comment for everybody and that’s to say once again that all we’ve work for is coming to ahead. I don’t think we can really wait for next year to get here so we can get Rock Creek back on the table. We know this deposit, we know the geology of the region, we know we can finance, develop and operate Rock Creek and when I say that I don’t mean just to operate.

We can do this beyond any environmental standards beyond all expectations. So with that I would like to ask our moderator Sarah if she would facilitate questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Jeff Wright from Global Hunter Securities. Your line is open.

Jeffrey Wright – Global Hunter Securities, LLC

Hey, good morning John. How are you doing?

John Gerard Shanahan

Good Jeff, how are you?

Jeffrey Wright - Global Hunter Securities, LLC

Good. Two quick questions here on the Troy Mine permitting update, I understand that the bond calculations are complete, but should we assume that that bonding requirement would go down or is it potentially to go up I just don’t have a good read on that?

John Gerard Shanahan

Well, even if you ask Jeff, you ask Doug he does assume it’s going down. But I think the bond calculation back in 2006 was $12.9 million, I think when you take into account industrial inflation and a host of other things even despite the fact that water treatment requirements are off the table, it’s probably going to be around that or more. But it’s not I don’t expect it to be significant; we certainly have a bonding requirement in place, with some room. So until we really see the number coming from the DEQ I know they are working on at the moment it’s difficult to comment but it’s not I don’t expect it to be a significant change.

Jeffrey Wright - Global Hunter Securities, LLC

Okay, so we anticipate that current bonding requirement plus a 5% to 10% you think that would be a fair range?

John Gerard Shanahan

Well, if you took industrial inflation sort of runs it around 5% per year. So I mean if you took that 12.9% back 12 years ago you probably looking at $3 million or $4 million in addition that to me is not significant because we have bonding insurance and everything in place.

Jeffrey Wright - Global Hunter Securities, LLC

Okay. Then secondly shifting over to Rock Creek, thanks for the update there I guess the question I would have is once these supplementally I asked is resubmitted is that appealable at any level?

John Gerard Shanahan

Well, I mean appealable probably it’s not the word. The supplemental EIS goes out for comment it comes back to the Forest Service they take that in form of, and if you going to call it a final SEIS that along with the biological opinion and form a, or produce a record of decisions. At that point is that appealable or challengeable, the answer is yes. But as it has been over the past years, in terms of what can be challenged or appeal, while good luck that the biological opinion has been challenged, our decisions made, it’s been appealed to the Ninth Circuit Court of Appeal, it’s there, it’s a solid and that you can appeal it, but I mean I am sure the Judge is going to look and say being down this past before, decisions have been made, it’s rock solid.

So, will there be challenges, I don’t know, but I assume there will be, but you got to remember I mean we have been in back and forward on this and always, I am not going to say improving, but adjusting Court providing the latest information. So it’s difficult to imagine what is going to be the places of a challenge given a lot of it already has been challenged and dismissed.

Jeffrey Wright - Global Hunter Securities, LLC

Okay, thanks a lot.

John Gerard Shanahan

Thanks Jeff.

Operator

Your next question comes from the line of Spencer Lehman from Financial West. Your line is open.

Spencer David Lehman – Financial West Group

Hi, John.

John Gerard Shanahan

Spencer, how are you?

Spencer David Lehman – Financial West Group

Pretty good, thanks, hey just a follow-up on the last question then all this hope permitting process gets a little confusing to me. But it looks like in mid-January is EIS and in mid-year then is the state MPDES.

John Gerard Shanahan

That’s right, we should back up a little bit that I mean look there is a whole range of permits that we need to have most, and some of them you need straight away, some of them that you get as you move along a quality permits for all these types of things, I mean it’s what we do at Troy as well as. The two main permits that we need to have in place to start Phase 1 development at Troy is from the state, we need a storm water permit, because we will be doing some road upgrade and with that comes a need for storm water permit. How are we going to manage any storm water coming from along that road? And the second piece we need from the federal government of course is a record of decision.

We had applied and the Montana DEQ, so that’s just a general storm water permit, well, I think back in 2007 was appropriate for Phase 1 development at Rock Creek and environmental conservation groups did appeal, but saying that hey you should go through basically the long form process of an MPDES permit, which is an individual permit rather than general permit. And they took that to the Montana State Court and in middle of 2011, Montana State Judge did rule, but yes, you really should go through the full individual MPDES program.

We didn’t agree with it, but we accepted that. I’m going to say we accepted, we didn’t started working with the DEQ through the MPDES permit. But at the same time, we felt like that needed to be reviewed again at, it was the decision we didn’t agree with and that went to the State Supreme Court. So in the mean time, we’ve been working with the DEQ on an MPDES permit. And last two weeks ago, the State Supreme Court in a 4-2 ruling reiterated that local decision that yes, you do need a an individual or a MPDES permit. So we are in that process, I think early next year that comes out once again, it’s a public comment period, the good part about that I think for our neighbors and people in Sanders County. It’s an opportunity for us to go through the program once again to go through this project for them to see exactly what the project about that it is not going to be endangering fish or wildlife that we’ll use best practices in terms of how we mitigate for any dust or dust controls or sedimentation issues. So the good thing about it is, while we are waiting for the record of decision. We get to explain our project to our neighbors in greater detail. So we expect that at early next year and by the time once again that gets reviewed by the DEQ, we’re expecting mid-2013 to have that in place.

Spencer David Lehman – Financial West Group

Okay. So then assuming the EIS gets approved and then by June that gets done at that point say mid-year how then how soon how close are you to the Green Light?

John Gerard Shanahan

Well, yeah, Spencer, so let's if you look at timeline wise in that first quarter of next year we’ll have the draft of the SEIS with the Forest Service. They will then start to review that and put that out for public comment and that will probably happen sometime second quarter I would imagine. From there it’s a matter of just how long it does take and for the Forest Service they have a number of projects on their plates. So it depends really how quickly they will be able to turn everything around than its, I'm going to say it sort of unfair of me to put a date on that because it’s really is not within the control of us it is the work of the Forest Service. So by mid next year I think we’ll have a better idea but it’s going to be sometime after that not weeks.

Spencer David Lehman – Financial West Group

So would it be optimistic to think you could start digging by September or October?

John Gerard Shanahan

Spencer, I don’t think so. So first of all it’s a seasonality is important to us as we do those road upgrades we’ve got to make sure that we’ve got enough time to get everything done and done correctly before the snowfall so I don't think it’s going to be in that third quarter of 2013 unfortunately.

Spencer David Lehman – Financial West Group

Okay. And then…

John Gerard Shanahan

Now we could get surprised but being pragmatic, I just don’t think so.

Spencer David Lehman – Financial West Group

Yeah, got you.

John Gerard Shanahan

I think what we need to do is, it’s one step at a time for us it’s really honing on the MPDES and hone in on the SEIS that make sure that they are out and up and running and then we would take a next step at a time from there.

Spencer David Lehman – Financial West Group

Yeah, got you. Speaking of the federal government the recent election would that did you foresee federal being any more stringent or is it more of a local political situation?

John Gerard Shanahan

Well, of course, Spencer the answer is – it’s not really political because a [neat little] process that we have to go through is embodied there in the federal government. Having said that the two senators from the State of Montana, Senator Baucus and Senator Tester have both been to the Troy Mine and both well aware of the Rock Creek project and I think both understand just how environmentally benign and what operation these are.

So now I don’t think it changes a lot for us we’ve got to go through the process that’s there and edged in stone, and we’ve got to do it correctly. We do, we are very pleased with the fact that politicians particularly both at state and federal level acknowledge what we do and understand that the need for these projects to move along.

Spencer David Lehman – Financial West Group

Okay, thanks.

John Gerard Shanahan

Thanks, Spencer.

Operator

Question comes from the line of Annie Zhang from Octagon Capital. Your line is open.

Annie Zhang – Octagon Capital

Thank you, good morning, gentlemen.

John Gerard Shanahan

Good morning, Annie.

Annie Zhang – Octagon Capital

Hi, thank you for the call and a couple of quick questions now following the fact on the (Inaudible) on Rock Creek. With regard to the InterVideo MPDES permits that’s required. Other than it’s a longer process that requiring public comments is there additional study that’s required to be done?

John Gerard Shanahan

Yeah, it’s more involved, there is no doubt. But the end game is still the same. I haven’t been intermittently involved with the MPDES permit, but we look at all sorts of effects from sedimentation, the aquatic life that’s near by and so it’s a complete document. It does take more time that’s generally for a project like this you would expect it to be under a general permit, because an MPDES permit does take longer, but we committed to the process, not only committed. We’ve been asked and directed to go through that process. So we will do it. But we are almost at the end of that and I think January also that’s ready to go out. So we’ve already done the work Annie on it.

Annie Zhang – Octagon Capital

Okay, as it is, okay, let me just get clear is this something that with that has to file an application separately or it has been filed and waiting for the…

John Gerard Shanahan

No, it won’t, it’s something that we have to filing an application and that was done months and months ago.

Annie Zhang – Octagon Capital

Okay.

John Gerard Shanahan

So we are towards the very end of that MPDES, I mean, I know our team was in Helena last week I believe, but just finishing off and everything that we did it. So yeah, it does take time. I mean it's been probably about 12 months, so there is time and yes it involved in, but we are well on the way.

Annie Zhang – Octagon Capital

Okay. So you expecting to be issued to [event] early next year and then following by a public comment period.

John Gerard Shanahan

That’s right and then we hope to have that in effect by mid-2013.

Annie Zhang – Octagon Capital

Okay. So should we expect your budget for all the expenses of the (inaudible) Rock Creek to be about a same at least first half of next year?

John Gerard Shanahan

Yes, I think the cost of permitting and the cost of putting together, completing the SEIS, I think keep it pretty steady anyhow it’s I expect it to be the same.

Annie Zhang – Octagon Capital

Okay, thank you. And also John could you remind me like with regard to the two Phase 2 development project for Rock Creek. Upon the completions of Phase 1, is there any additional permit required to start the Phase 2?

John Gerard Shanahan

Annie, it’s a connected action, so what happens is once we complete and during that process of completing Phase 1, we drift along the ore body. But the agencies themselves they get the opportunity to reconfirm all the EIG technical information, such as water quality and ore. We have a great knowledge base on Rock Creek, not only because of the number of holes in excess of a 120 holes on the project, but also technical knowledge those from the Revett formation from our operation at Troy. Yes, the agencies do come in and reconfirm all the geochemical and geotechnical assumptions.

Annie Zhang – Octagon Capital

Okay, so is upon their satisfactory of Phase 2 to go forward?

John Gerard Shanahan

That’s exactly right. We will be back and have to sit down with them and go through that they hear and they get to review it and then we go ahead with Phase 2.

Annie Zhang – Octagon Capital

Okay, thank you. Just switch gears to the Troy operation. Now this is a very good quarter, congratulations on that. With regard to the operating cost per ton of all mills, that’s a little bit high not if I look at quarter-over-quarter comparable purpose, the wage increase with the half become effective in the second quarter. So am I right to assume that I proud of the increased cost is related to the, maybe productivity bonuses.

John Gerard Shanahan

You are talking quarter-over-quarter Annie.

Annie Zhang – Octagon Capital

Yes.

John Gerard Shanahan

Yes, you got remember that the third quarter of 2011 was by far the best quarter we've ever had, I think we had mill throughput there at around 43 [preps] and approaching 4,400 tons.

Annie Zhang – Octagon Capital

Sorry, John, I am looking at compared to the previous quarter Q2.

John Gerard Shanahan

Yeah, well, third quarter 2011 was if memory says me correct is around 4,350 per day, whereas the third quarter 2012 was just shy of 3,800. So when you look at a unit cost per ton of Rock processed, it’s really a reflection, the major path areas of reflection on volume of throughput, so that’s why you see cost up, higher per ton in the third quarter of 2012.

Annie Zhang – Octagon Capital

Okay, now whether if I compared to…

John Gerard Shanahan

And to that of course there is ongoing cost. There is higher bio-fuel or bio-diesel costs all the consumables we’re seeing higher all the way through from steel, drill bits, wages and everything like that. So there is cost pressures year-on-year there is no doubt but I would say big factor was if we’re able to run at 4,400 you’ll see our cost down by a couple of dollars per ton. And for 3,800 it creeps up a little bit.

Annie Zhang – Octagon Capital

Okay. All right, was that more comparing to the second quarter of 2012?

John Gerard Shanahan

Okay. Yeah, once again I think its well I just trying to remember where that was but it is probably a function of just those consumables and in terms of steel and fuel prices.

Annie Zhang – Octagon Capital

Okay. Maybe with other business a bit more in late…

John Gerard Shanahan

Well, there is a little bit there in terms of production bonus as well you are absolutely right. But it’s not it’s not adding dollars per ton.

Annie Zhang – Octagon Capital

Okay. Another question is on the development on the North C-Bed now given the progress, think like you’ll be able to finish the a declined development by the end of this year and you’ll start the I-Bed development?

John Gerard Shanahan

I certainly hope so but what I’m going to do Annie is ask Doug Miller if he would mind commenting I know he is on the ground just about everyday. So Doug would you mind just giving Annie an update there on timing.

Douglas Miller

Yeah. Timing is exactly right Annie, our anticipations by year end we’ll be in the north ore body C-Beds and actually the I-Beds we should start that maybe a little bit prior to the end of this year as it’s starts back prior to entering the North Sea bed ore body.

Annie Zhang – Octagon Capital

Okay, thank you and at this point would you be able to give us some budget in terms of exploration in 2013?

John Gerard Shanahan

Annie, we are working on that at the moment probably about mid-December we’ll go through our full planning face and so before the end of the year we’ll put out some guidance for production for 2013 and certainly I’d be out at that stage if that’s okay give you a better idea of how exploration budget for next year as well.

Annie Zhang – Octagon Capital

Okay, sure, that’s good. Thank you very much gentlemen.

John Gerard Shanahan

But having said that I think our focus next year is we’ll be ramping up on exploration so we are working on getting that in place which is a good thing.

Annie Zhang – Octagon Capital

(Inaudible) okay, thank you.

John Gerard Shanahan

Thanks, Annie.

Operator

Your next question comes from the line of Robert Draper from Deeds Select Advisors. Your line is open.

Robert Draper – Deeds Select Advisors

Thank you. Congratulations John on a good third quarter and come back out of that second quarter issues with the water here, it’s nice to see you guys make that movement and adjust?

John Gerard Shanahan

Well, thanks Robert. And then as we always say, we can’t operate a company quarter-to-quarter I think with our targets and try and do the very best we can over the course of the year. But if you look around the industry, mining seems to be getting more and more difficult rather than easier. So we’ve just got to adjust [please] that there is a little bit more flexibility in our operation. But we do have to adjust for those conditions. Certainly those conditions that are out of our control.

Robert Draper – Deeds Select Advisors

Well congratulations you did a great job. And I was on the second quarter call and was really pleased with just your adaptation then and so didn’t speak up but I want to let you know that, lot of the questions I had were in regards to the Rock Creek and so several of the questions have filled in some of that. So I’ve kind of wanted to ask one question in regard to that, because I think there is some sensitivity all around. The what if and what next about Rock Creek and I guess the question I pose is two fold is one, because I think everybody that has been a long-term shareholder understands the – or at least just trying to get their arms around the risk award of that decision and the potential disruption that might come out of that decision and what would happen next. So one is have you guys all really analyze that risk reward nature of that and what you would do next if there were a hick up that would put this out further or create some midterm difficulty in the decision coming through.

John Gerard Shanahan

In terms of the risk reward Robert, it’s what we are focused on. And as I mentioned like a little bit of cliché but every thing we do at the Troy Mine is it for us being the best operator that we can be at Rock Creek. We are very lucky to have Troy that gives us all that not just those experiences in the Rivet formation that cash flow it certainly give us that all importance social licenses as we move forward. But I think that the number of analysts covering us I think it would be absolutely consensus of them that if you look at their own value of the Troy Mine, our share price or market cap hardly reflects the NAV of Troy. And we sort of there is a very little value frankly zero value in there for Rock Creek. So I don’t feel like it’s a major – there is millions and millions or hundreds of millions of dollars sort out there on Rock Creek. That’s irrespective of that it doesn’t change our approach.

Our approach is to complete this SEIS and make sure it’s done correctly which I believe it will be and to go through the process. Unfortunately, permitting and it’s not just Montana it’s the U.S. really I’ve no short cut and we got to go through this process correctly. In terms of contingencies or what happens if it doesn’t go to plan. We work away at that and the best thing we can do is make sure that there is complete, and defensible, and exact, and accurate what SEIS has produced. And I think from the work that’s being done and once again the body of work is belongs to the Forest Service and I believe that’s going to be the case. So that’s how we prepare, if you want to go with a contingency, we just make sure that the documentation coming out is complete and accurate.

Robert Draper – Deeds Select Advisors

Okay.

John Gerard Shanahan

I’ll be honest, so that’s what adds to the length of time, because, the agency is producing this work one exactly the same thing. They want to make sure it’s complete. They want to make sure, it’s accurate and it’s going to pass any scrutiny that legal scrutiny that may come before it.

Robert Draper – Deeds Select Advisors

Okay. Now I know Silver Wheaton is the major shareholder. My next question would be, as in the course of the path a 12 months to 24 months, any other company or anybody, I don’t know if you can answer this in our approach to in regards to we’re seeing Juniors being acquired, we’re seeing big property potential being acquired, does anybody talk to you, or is that still a risk, or potential positive or negative in the foreseeable future?

John Gerard Shanahan

I mean – first up, it’s so much like that do you concern or deny, you had been, so I mean, I can’t really say even if, yes, or no, because it’s just not appropriate to say that.

Robert Draper – Deeds Select Advisors

Okay, okay, I got it.

John Gerard Shanahan

I’m going to a little bit of subjective here I think people look at what we do, they understand just how difficult, not difficult, just what’s involved in permitting. And I think most people understand that Revett is the company best placed to do that. And everything that we gear up for, I can tell you today, we can operate Troy, we can finance Troy, and we can continue to operate both Troy and Rock Creek. So that’s where our focus is. We are going to develop this project, we’re going to be the best operator that anyone’s ever seen, and we’re going to continue to run Rock Creek and Troy as I think we’re going to be a source of pride for anybody involved in what we do.

Robert Draper – Deeds Select Advisors

Well, thank you. We are committed to investors and that’s a good. I appreciate your answer and your honest answer. Thank you.

John Gerard Shanahan

Thanks Robert.

Operator

(Operator Instructions) And your next question comes from the line of (inaudible) from FRC Capital, your line is open.

Unidentified Analyst

Good morning guys. Two questions for you. What do you expect for silver production this year and what do you expect for copper production this year?

John Gerard Shanahan

Welt, our revised guidance after a difficult second quarter was for 1.325 million ounces of silver and 1 million pounds of copper. We haven’t revised that guidance, but I’m going to tell you that’s what we’re hoping for, but it hasn't been an easy year for us. So we haven't – as I said, we have not revised that guidance and we sit down with Doug Miller and look at it. We’re going to do our very best, but I can tell you it hasn’t been an easy year.

Unidentified Analyst

Sure.

John Gerard Shanahan

So I'm saying we hope to get that, or we hope to get close.

Unidentified Analyst

In the September quarter you did 348,000 ounces, which was up from 278,000 silver ounces in Q2. For Q4, do you think you can do 300 ounces, 325?

John Gerard Shanahan

Well it’s unfair of me to answer that. I mean we're sort of not quite half way through and for us sort of each day we do, if we come across in difficult ground yeah it’s a slow day or it’s a slow week and then when we get motoring things move on pretty well. But if you do the math there of where we have are year-to-date on silver, for example I think silver was sitting around at 950,000 ounces. So another 350,000 ounces, which sort of get us to that 1.3 million ounces. It's going to take – it's going to be difficult for us to do, but we're trying very best and focused on it.

Unidentified Analyst

Okay, so 350 is potentially doable, but it will be a – it won't be easily get there is that…

John Gerard Shanahan

It's not going to be easily to get there. Once again, once we get into a quarter we don't give out forecast. I think it’s unfair of us to be giving our forecast. But I suppose what I'm saying to you is, we see it's a challenge. It is a challenge and there is this times when we get into a good group and good ground and there is times when we don't.

Unidentified Analyst

Right.

John Gerard Shanahan

This years is one of those times when we don't. Once again, it doesn't take away from the skill sets of our guys, it's just…

Unidentified Analyst

All right and…

John Gerard Shanahan

(Inaudible) nature, it was froze some tough ones I guess sometimes.

Unidentified Analyst

Sure, now and I wasn't implying that.

John Gerard Shanahan

Yeah.

Unidentified Analyst

You got a great workforce there that tries really hard and mining isn’t easy. I am just trying to get mine…

John Gerard Shanahan

Its not, I suppose what I can tell you is, yeah I don't think we're going to blow by our guidance. If we get to our guidance its going to be through a lot of hard work and getting there, but we're not going to blow through that guidance.

Unidentified Analyst

Okay, great. Thanks.

John Gerard Shanahan

Thanks Walt.

Operator

And there are no further questions in queue.

John Gerard Shanahan

Thank you.

Unidentified Analyst

Thank you John.

John Gerard Shanahan

Once again I'd like to thank everybody for their interest in Revett, I think everybody knows, we're always available, always happy to answer questions. And we're very proud of what we do and as I said despite a difficult production quarter or produced a difficult production year. Once again we're meeting our objectives with where an operator with cash flow positive, profitable and we're moving towards what I believe is one of the great silver mines to the world. And so we're excited about it and nothing is going to dent our enthusiasm for that and we're going to – packing away. So I thank everybody and that’s all we need to do.

Operator

And this concludes today's conference call. You may now disconnect.

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