Alamos Gold Inc

TSX:AGI

Earnings Call Analysis

Record Gold Production Drives Robust Financials

With a record-breaking year, the company reached the high end of its gold production guidance, delivering 529,000 ounces, marking a 15% increase from the previous year. Cost-efficiency improved with a 4% reduction in expenses, achieving $1,160 per ounce. Financially, revenue surged by 25% to hit $1 billion with operating cash flow following suit, rising 44% to $520 million and free cash flow reaching $124 million. Looking ahead, the company anticipates further growth, with production expected to climb by 3% in 2024 and 7% by 2026, while costs are predicted to drop by 11% to approximately $1,000 per ounce. Additionally, further potential developments at Lynn Lake may come to fruition by the second half of 2027. The company remains alert to inflationary pressures, notably a 4-5% impact from labor costs, which are built into the budget. The mill's potential expandability is strategic for scaling production.

Impressive Production Growth and Cost Management

The company has hit a new high-water mark by producing a record 529,000 ounces of gold, achieving a notable 15% increase from the previous year and meeting the top end of their increased production guidance. This has been matched by commendable cost-efficiency, with costs decreasing by 4% to $1,160 per ounce, demonstrating their ability to control expenses in a cost-conscious industry.

Record-Setting Financial Performance

Financially, the company witnessed a stellar year with a 25% increase in revenue to a record $1 billion. Their operating cash flow surged 44% to a record $520 million, complementing an impressive 2022 with robust year-on-year growth. The achievement of generating $124 million in free cash flow underscores their capability to effectively convert earnings into cash while investing in high-return growth.

Future Production and Cost Outlook

Looking ahead, the company is optimistic, expecting a 3% increase in 2024 production to approximately 505,000 ounces, with costs anticipated to remain flat. By 2026, they foresee a further 7% uptick in production to around 540,000 ounces and a significant reduction in all-in sustaining costs by 11% to roughly $1,000 per ounce, indicating not only growth but also an improvement in cost structure.

Strategic Expansion and Reserve Growth

Strategic projects are set to contribute to this optimistic outlook. The Phase 3+ expansion at Island Gold is on track for completion in the first half of 2026, and the updated feasibility study for the Lynn Lake project presents a lower-cost operation with promising financials. Moreover, the company has a consistent track record of growing reserves, with a five-year streak culminating in 10.7 million ounces at the end of the year.

Solid Quarter Performance and Strong Sales

In the last quarter, the company sold 129,000 ounces of gold at an average realized price of $1,974 per ounce for revenues of $255 million. It continued the momentum for the full year, selling 526,000 ounces at a realized price of $1,944 per ounce, thus reaching record revenues of just over $1 billion, marking a 25% year-over-year increase.

Cost Metrics and Cash Flow Strength

The fourth quarter saw total cash costs at $900 per ounce and all-in sustaining costs at $1,233 per ounce. Throughout the year, the company maintained costs below annual guidance, with all-in sustaining costs falling 4% from the previous year to $1,160 per ounce. The operating cash flow reflected this strong cost management with a 44% annual increase to a record $519 million.

Net Earnings and Capital Expenditure

The company's adjusted net earnings stood at $49 million for the quarter and $208 million for the full year. Capital expenditures remained controlled, with the company reinvesting $110 million in the quarter, including significant growth capital and capitalized exploration efforts.

Free Cash Flow and Capital Allocation

Highlighting their investment acumen, the free cash flow in the quarter was $14 million, contributing to a total of $124 million for the year. This substantial increase from 2022, while also reinvesting in the Phase 3+ expansion, demonstrates the company's strategic capital allocation and growth-focused discipline.

Operational Updates and Production Targets

Notably, the Island Gold mine produced 31,600 ounces in the fourth quarter, putting the operation on track for completion in the first half of 2026. Projections for the Mulatos district are also positive, with production exceeding expectations, and the PDA deposit emerges as a future growth driver with significantly increased reserves.

Aggressive Exploration and Development Plans

The company has set its highest ever exploration budget at $62 million for 2024, emphasizing the continued focus on resource development and value creation through exploration.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning. I will now turn the call over to Scott Parsons, Alamos' Senior Vice President of Investor Relations. Please go ahead, sir.

[Scott Parsons, executive]

Thank you, operator, and thanks to everybody for attending Alamos' Fourth Quarter 2023 Conference Call. In addition to myself, we have on the line today John McCluskey, President and Chief Executive Officer; Greg Fisher, Chief Financial Officer; Luc Guimond, Chief Operating Officer; and Scott R.G. Parsons, Vice President of Exploration.

To address any questions with respect to our reserve and resource update earlier this week, we also have on the line today, Chris Bostwick, Senior Vice President, Technical Services. We will be referring to a presentation during the conference call that is available through the webcast and on our website. I would also like to remind everyone that our presentation will be followed by a Q&A session.

As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release and MD&A as well as the risk factors set out in our annual information form. Technical information in this presentation has been reviewed and approved by Chris Bostwick, our Senior VP, Technical Services and a qualified person.

Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in U.S. dollars unless otherwise noted.

Now John will provide you with an overview.

[John McCluskey, executive]

Thank you, Scott. I'd also like to welcome everybody to the call. I'd like to turn your attention to Slide 3. 2023 marked our 20th anniversary, and it was a record year on multiple fronts. With a solid fourth quarter performance, we produced a record 529,000 ounces of gold for the full year achieving the top end of our increased production guidance, a 15% increase from 2022. Our costs, which are already well below the industry average, decreased 4% to $1,160 per ounce, meeting guidance once again.

With a record production, lower costs and stronger gold price we set a number of financial records in 2023. Revenue increased 25% for the year to a record $1 billion. Operating cash flow, working capital increased 44% and to a record $520 million. We also generated $124 million of free cash flow, a significant increase from 2022 while continuing to invest in high-return growth.

Now looking at Slide 4. Earlier in the year, we announced our updated 3-year guidance, which included a 3% increase in our 2024 production guidance to approximately 505,000 ounces, with costs expected to remain flat year-over-year. By 2026, we expect our production to increase 7% to approximately 540,000 ounces and all-in sustaining costs to decrease 11% to approximately $1,000 per ounce with the completion of the Phase 3+ expansion at Island Gold.

Our PDA underground deposit represents further upside that we plan on outlining in a development plan later this quarter. Beyond 2026, the Lynn Lake project represents further upside with initial production as early as the second half of 2027 and the capacity to increase our production to an annual rate of 800,000 ounces per year.

At current gold prices, we expect to continue generating strong free cash flow, combined with $225 million in cash and no debt, we are well positioned to fund this growth internally.

Now looking at Slide 5. In addition to record operational and financial performance, we delivered on a number of our growth initiatives in 2023. After receiving the key environmental permit for the Lynn Lake project in March, we completed an updated feasibility study outlining a larger, longer life, low-cost operation. The project has attractive economics that we expect will continue to improve as we capitalize on its considerable exploration upside.

We have doubled our budget at Lynn Lake to $25 million for this year, with the focus on upgrading site infrastructure and derisking the project ahead of the expected construction decision in 2025.

At Island Gold, we made a significant -- we made significant progress on the Phase 3 expansion with the completion of key shaft infrastructure, including the headframe and hoist house. This allowed us to start with shaft sinking in December which is a significant milestone for the project, putting it on track for completion in the first half of 2026.

We also released our year-end 2023 reserve and resource update earlier this week, which outlined growth in all categories. Reserves increased for the fifth consecutive year to 10.7 million ounces and slightly higher grades reflecting another year of high-grade additions at Island Gold and PDA. Over the past 5 years, reserves have grown 10% net of depletion, with grades also increasing 9% and as we continue to improve on the quality of our overall reserve base.

We continue to create value through exploration and investing in high-return growth projects. We expect that trend to continue in 2024 with a number of upcoming catalysts starting with our PDA development plan later this quarter. Ongoing exploration updates with our largest budget ever, continued program with the expansion at Island Gold, and a study incorporating the Burnt Timber and Linkwood satellite deposits into the Lynn Lake project towards the end of the year.

I'll now turn the call over to our CFO, Greg Fisher, to review our financial performance.

[Greg Fisher, executive]

Thank you, John. Moving to Slide 6. We sold 129,000 ounces of gold in the fourth quarter at an average realized price of $1,974 per ounce, $3 per ounce above the London PM fix for revenues of $255 million. For the full year, we sold 526,000 ounces at a realized price of $1,944 per ounce for record revenues of just over $1 billion, up 25% from 2022.

Fourth quarter total cash cost of $900 per ounce and all-in sustaining costs of $1,233 per ounce were consistent with quarterly guidance. For the year, total cash costs were $850 per ounce and all-in sustaining costs were $1,160 per ounce, both in line with annual guidance and down 4% from 2022.

Operating cash flow before changes in noncash working capital was $120 million in the fourth quarter or $0.30 per share. For the full year, operating cash flow increased 44% to a record $519 million or $1.31 per share. Our reported net earnings were $47 million in the fourth quarter or $0.12 per share. This included unrealized foreign exchange gains of $13 million recorded within deferred taxes and foreign exchange, offset by other losses of $15 million. Excluding these items, our adjusted net earnings were $49 million or $0.12 per share.

Our full year adjusted net earnings were $208 million or $0.53 per share. Capital spending in the quarter totaled $110 million and included $27 million of sustaining capital, $73 million of growth capital and $10 million of capitalized exploration. For the full year, capital expenditures totaled $349 million, including growth capital of $217 million. This was in line with guidance and up from 2022 with the ramp-up of construction activities on the Phase 3 expansion at Island Gold.

Free cash flow in the quarter was $14 million and totaled $124 million for the full year, a significant increase from 2022, while continuing to reinvest in the Phase 3+ expansion. This reflected the strong operational performance of Young-Davidson generating more than $100 million of free cash flow for the third consecutive year and the Mulatos district generating an impressive $142 million. Given the increased profitability of Mulatos through 2023, we expect to pay significantly higher cash taxes in Mexico in 2024. This includes a 2023 year-end tax payment of approximately $40 million due in the first quarter of 2024.

With the strong free cash flow generation, our cash balance grew nearly $100 million to end the year at $225 million, while remaining debt free. We expect to continue generating strong free cash flow at current gold prices and remain well positioned to fund our growth initiatives. I'll now turn the call over to our COO, Luc Guimond, to provide an overview of our operations.

[Luc Guimond, executive]

Thank you, Greg. Moving to Slide 7. Young-Davidson ended the year on a strong note with production of just under 50,000 ounces, taking full year production to just over 185,000 ounces, in line with guidance. Cash costs and all-in sustaining costs were also in line with guidance, both for the quarter and the year.

Young-Davidson continues to demonstrate strong operational and financial consistency with mine-site free cash flow of $35 million in the fourth quarter and a record $118 million for 2023. This marked the third consecutive year the operation has generated more than $100 million of mine-site free cash flow.

We are expecting production and all-in sustaining costs to be in a similar range in 2024 supporting another year of strong free cash flow. With Young-Davidson's 15-year reserve life maintained in the year-end update earlier this week, we expect similar levels of free cash flow over the long run.

Over to Slide 8. Island Gold produced 31,600 ounces in the fourth quarter, a decrease over the previous quarter due to lower grades mined and processed as planned. Costs in the quarter were above annual guidance, reflecting the lower planned grades as well as onetime costs associated with the transition from contractor to owner development and production drilling, which was completed in the quarter.

Full year production of 131,000 ounces was in line with the midpoint of guidance and costs came in slightly above guidance. The operation used $34 million of cash in the quarter and $68 million for the year reflecting a ramp-up of capital spending on the Phase 3+ expansion as well as a significant ongoing exploration program.

At current gold prices, Island Gold is expected to continue to fund the majority of the Phase 3+ expansion growth capital. Production is expected to increase 16% in 2024 to approximately 153,000 ounces, a 12% lower all-in sustaining costs driven by higher grades. We expect further production growth in 2025 with another increase in grades, followed by another significant increase in production and decrease in costs into 2026 with the completion of the Phase 3+ expansion.

Over to Slide 9. The Phase 3+ expansion continues to advance well, with the majority of the shaft site infrastructure completed last year, including the hoist house and headframe. The project achieved a significant milestone in December with the start of shaft sinking, which is ramping up towards an ultimate rate of over 3 meters per day. The focus in 2024 will be on shaft sinking down to a depth of 1,000 meters by year-end.

We also expect to start construction activities on the mill expansion in the second quarter, followed by the Paste plant in the second half of the year.

Over to Slide 10. We remain on track to complete the expansion during the first half of 2026. At year-end, approximately 51% of the total initial capital of $756 million had been spent and committed on the project. Our capital spending is tracking well for the work completed to date. However, we are seeing some pressures from ongoing labor inflation in Canada.

Growth capital spending on the Phase 3+ plus expansion is expected to range between $210 million and $230 million in 2024. A similar rate of spending is expected in 2025 for decreasing considerably in 2026 following the completion of the expansion.

Over to Slide 11. The Mulatos district produced 48,100 ounces in the fourth quarter and 212,800 ounces for the full year, well above the top end of guidance range driven by the outperformance from La Yaqui Grande. Production from La Yaqui Grande totaled 33,700 ounces in the fourth quarter and 153,400 ounces for the year, well ahead of expectations, reflecting higher-than-planned mining rates and positive grade reconciliation.

All-in sustaining costs were slightly above annual guidance in the fourth quarter, but well within the range of guidance on a full year basis. Reflecting the exceptional performance from La Yaqui Grande mine site free cash flow totaled $27 million in the quarter and $142 million for the full year. As outlined earlier in the year, production guidance for the Mulatos district was increased 14% to between 160,000 and 170,000 ounces.

As previously guided, this is down year-over-year, reflecting the end of mining in the main Mulatos pit and stocking of stockpile order. The increase in production guidance was driven by higher expected production through residual leaching of the main Mulatos leach pad. The additional allowances recovered through residual leaching carry higher reported costs. However, are very profitable from a cash flow perspective with the majority of these costs previously incurred.

I will now turn the call over to our VP of Exploration, Scott R.G. Parsons.

[Scott R. Parsons, executive]

Thank you, Luc. Moving over to Slide 12. We had another successful year on the exploration front across all of our assets, with reserves increasing 2% to 10.7 million ounces of gold and grades also increasing 1%. The increase in reserve reflects higher grade additions at Island Gold and PDA and growth at Lynn Lake. This marks the fifth consecutive year that reserves have grown for a combined increase of 10%. Over that time frame, we've discovered more than 4 million ounces of reserves before mining completion of 3 million ounces. The majority of these additions have been higher grade, driving a 9% increase in grades over that time frame as the reserves continue to grow in both size and quality. Global measured and indicated resources also increased by 12% to 4.4 million ounces with grades increasing 9%, reflecting higher grade additions at Island Gold and growth at Young-Davidson. Similarly, inferred resources increased 3% to 7.3 million ounces.

Moving to Slide 13. Island Gold's significant pace of growth continued with reserves growing 18% to 1.7 million ounces and reserves and resources across all categories, increasing 16% to 6.1 million ounces. These additions have had a very attractive discovery cost of $7 per ounce over the past year and $13 per ounce over the past 5 years. Including monetization to date, 7.5 million ounces have been discovered at Island Gold as it continues to establish itself as one of the highest grades and fastest-growing deposits in the world.

Over to Slide 14. The growth in reserves and resources was driven by an expanded underground exploration drill program, targeting high-grade additions in proximity to existing underground infrastructure. This included zones within the main Island Gold structure which hosts the majority of the mineral reserves and resources as well as emerging opportunities outside of the main structure in the hanging wall and the footwall.

The program was successful on both fronts with nearly 1 million ounces of high-grade gold discovered within the main structure and in the hanging wall and footwall. As outlined in the long section, ongoing growth within the main structure occurred in Island East and Island West are 2 primary areas of focus.

These additions are all near our existing infrastructure will be low cost to develop and continue to increase Island Gold's ounce per vertical meter profile. Furthermore, global mineralization within the main structure remains open, both along strike and down plunge highlighting the excellent potential for this growth to continue.

Over to Slide 15. The expanded underground drill program also provided better access and more optimal drill orientations to target and expand the growing number of mineralized zones within the hanging and footwall of the deposit. The program has been extremely successful with initial reserves and resources declared and expanded on in a number of these recently defined zones, which now become significant contributors to the overall growth of the deposit.

In fact, more than 600,000 ounces of high-grade reserves and resources were added in the recently defined hanging wall and footwall zones, representing approximately 70% of the total increase in 2023. A few of the highlights of the growth in these zones include the NTH zones, where 146,000 ounces were added, including reserves of 53,000 ounces grading 12 grams per tonne. The E1D zone has more than doubled to contain 332,000 ounces of inferred resources, grading 16 grams per tonne and remains open in multiple directions. This zone is located on average 30 meters from the main structure highlighting both the near-mine opportunity and the lower development costs.

These zones and other targets within the hanging wall footwall represents significant opportunities for further growth. There are nearly 2,000 intersections above 3 grams per tonne gold outside existing reserves and resources in the hanging wall and footwall, highlighting the opportunity for further near-mine, high-grade additions as ongoing drilling further test these areas.

The photo of the core on the bottom of this slide, one of those opportunities and nearly 1,400 grams per tonne over 3 meters, this is one of the best intercepts drilled to date at Island Gold. It is located 12 meters away from existing infrastructure, and is currently classified as an Unknown Zone, highlighting one of the many near-mine opportunities we're following up on.

Over to Slide 16. The PDA deposit represents the future of the Mulatos district and continues to grow, reflecting another year of exploration success. Middle reserves at PDA increased 33% to 1 million ounces at 16% higher grades of 5.6 grams per tonne. Mineral Reserves and resources now totaled 1.2 million ounces of PDA, a 26% increase from 2022 and a 116% increase over the past 2 years.

With the deposit open in multiple directions, and another significant exploration program planned at PDA in 2024, there's excellent potential for this growth to continue. This larger reserve base being incorporated into a development plan for PDA to be completed later this quarter. And we expect to outline another significant mine-life extension at the Mulatos district.

Following up on this broad-based exploration success and reflecting the potential we see across our assets, we've increased our global exploration budget to $62 million in 2024, the largest in the company's history.

With that, I'll turn the call back over to John.

[John McCluskey, executive]

Thanks, Scott. That concludes our formal presentation. I will now turn the call back to the operator to open the call for questions.

[Operator]

[Operator Instructions] Our first question is from Cosmos Chiu from CIBC.

[Cosmos Chiu, analyst]

Maybe my first question is on the inflation. I think, Greg, you kind of touched on it. What was it, Luc, that talked about labor cost. But could you maybe make a general comment in terms of inflation? Are you still seeing inflationary pressures? Or are they getting better? As you mentioned in the MD&A, I think added about $40 an ounce in terms of cost based on inflation, $20 an ounce, in terms of cost due to a stronger peso. So I got -- just a general comment. Is it getting better? Are you seeing it worse in Canada versus Mexico? Just maybe some comments on that?

[Greg Fisher, executive]

Yes, Cosmos. This is Greg here. I can give a high-level comment. I mean overall, we're seeing some relief in some areas, but labor continues to be the biggest headwind with respect to inflationary pressures. And that gets us to about a 4% to 5% overall inflationary impact year-over-year. And we've built that into our budget. But ultimately, I mean, labor pressures are going to continue to be active. I mean there's a lot of competition in the area. So we need to make sure that we're staying in line with that competition and paying our people appropriately.

[Cosmos Chiu, analyst]

Great. And maybe my next question is on Lynn Lake. I see that in your MD&A, you now talk about production as early as second half of 2027. Is that time line new. I don't seem to recall that time line from past conversations.

[Greg Fisher, executive]

Yes. We outlined that in the guidance release in January, Cosmos. But yes, I mean, it's not new. We've talked about the fact that this could come online as early as 2027. And we're looking at doing some early works in 2024 to basically set ourselves up that if we -- When we make that construction decision as early as 2025, it puts us in a position to be in production by, call it, the second half of 2027.

[Cosmos Chiu, analyst]

Great. And then as a follow-up, I see that there is a study on Burnt Timber and Linkwood satellite deposits to Lynn Lake that should be released in Q4 of this year. I guess my question is, number one, to confirm, I don't believe Burnt Timber and Linkwood is in the current 2023 study. And then do you need it? Like -- or is the current Lynn Lake already big enough to kind of justify development?

[Greg Fisher, executive]

Yes, I can start there, and then I'll hand it over to Luc. But I mean, ultimately, the project stands on its own. It doesn't need Burnt Timber and Linkwood. It's just between MacLellan and Gordon, it's a 20%-plus IRR project. It doesn't require that. We're just looking at ways to maximize the production after year 10. Because if you look at the production profile for Lynn Lake, it has a very strong production profile from years 1 to 10 as we're mining the grades -- the better grades at MacLellan and Gordon. But then we move into stockpiles, which are lower grade. What we're looking to do with Burnt Timber and Linkwood is just sequence that in at higher grades than what those stockpiles are to kind of maintain that 170,000-ish ounce profile for a longer term in the first 10 years.

[Luc Guimond, executive]

Yes. I would just add to it -- Cosmos, Luc here. I would just add to that as well as Greg mentioned. I mean we see that as a pretty prolific district for us. Certainly, Burnt Timber and Linkwood are the early targets on our radar, but we've got an extensive land package there of about 90 kilometers of strike length. And we see this as one processing plant with a number of deposits being able to be mined within our land package centralized to that one mill complex and extending as well beyond what we've certainly communicated with regards to our feasibility study, with regards to Lynn Lake at this point. So we expect to be in this district for a long, long time.

[Cosmos Chiu, analyst]

Great. And so what can we expect from that study that's coming out from Burnt Timber and Linkwood, is it really just you kind of conversion into reserves or better drill spacing, some kind of infrastructure study? Or -- what can we expect?

[Luc Guimond, executive]

Yes. I mean, the intent of that program is to get it into a more confident category from a resource to a reserve position. And then look to build that and incorporate that into our overall study and mine plan for the longer term. And as Greg mentioned, really, it's -- it extends the district for us for the longer term, and it really backfills the -- beyond 10 years with regards to the production profile. As we mentioned, the first 10 years are pretty solid at 175,000 ounces per year, and then it drops off, but the intent would be to bring Burnt Timber and Linkwood into the mix and sustain that for the long term.

[Greg Fisher, executive]

And just the comment on infrastructure, Cosmos, I mean, the key is that we have a centralized mill, right? So that's going to be where the infrastructure is in place and the tailings are in place there. So it's really looking at satellite deposits, no different than what we've done in Mexico. Where we have a kind of central processing area and we've had satellite deposits over -- beyond 20-plus year period.

[John McCluskey, executive]

Cosmos, it's John here. I think another point worth mentioning is. Yes, in year 10 and beyond, we're going to be processing stockpiles, which means we've got a fleet that's ready to go. So the incremental cost of developing Burnt Timber and Linkwood is going to be very, very low.

[Operator]

[Operator Instructions] Our [ first ] question is Ovais Habib from Scotiabank.

[Ovais Habib, analyst]

John and Alamos team, congrats on achieving the top end of increased production guidance. Just 2 questions for me. Number one, John, you're obviously looking to release a new mine plan at PDA by the end of Q1. Is the study still contemplating 2,000 tonnes per day processing plant? And what I'm getting to is, is there a potential to bring in additional sulfides in the area beyond PDA. So is there a potential to increase the size of the plant or do an expansion of the size of the plant going forward?

[John McCluskey, executive]

Answer to both questions are yes and yes. There is plenty of potential beyond what we're currently drilling to increase sulfides reserves in the district. And we've already indicated where some of those particular zones are even running parallel to PDA itself, there's another zone that goes through the gap and vector. There's a parallel trend where we've already started delineating sulfide mineralization . Over and above that, we've got some high-grade sulfides underneath the old Cerro Pelon pit, that we drilled previously and just left in place because we had no means of processing them.

So I would say that potential is very, very high. As far as expandability of the mill, that's certainly going to be one of the components that we will build into it. We're going to essentially keep that in mind, but in the future, we might increase the scale of production.

[Ovais Habib, analyst]

John. And then again, we continue to hear a lot of noise in Mexico regarding permits, especially open pit. Any color you can provide on any potential impact to your operations at Mulatos or even PDA or any other expansion possibilities there?

[John McCluskey, executive]

Yes. I don't really see it impacting us at all. Right now is sort of a pre-election period in Mexico. A lot of the comments are coming from the outgoing President. The chances of that. I think at this point are very, very slim, and I don't think, that's controversial thing to say. But over and above that, we're transitioning right now from open pit operations to underground processing sulfide through mills. And that looks like the way forward at Mulatos in any case. I hate to rule out the idea of [ gather or finding ] near-surface oxide, that's certainly not the case. There is potential. But right now, our focus is very much on building reserves for mill feed.

Politics in Mexico are always a relatively noisy affair. And there is a huge component of that -- country that recognizes that mining and resource development is absolutely key to their economy between oil and gas and minerals that employs most of the people that are working outside of cities. So I would -- I would say there's a very slim possibility of that ever happening.

[Operator]

There are no further questions registered at this time. So this concludes this morning's call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at [phone] extension 5439. Again, the phone number is [phone] extension 5439.

You may now disconnect your lines. We thank you for your presence.