Hudbay Minerals Inc.
Q4 2018 Earnings Call Transcript

Published: 21 Feb 2019

[Operator:]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Minerals Inc. Q4 2018 Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, February 20, 2019 at 10 AM Eastern Time. I will now turn the conference over to Candace Brule, Director of Investor Relations. Please go ahead.

[Candace Brule:]

Thank you, operator. Good morning and welcome to Hudbay's 2018 fourth quarter results conference call. Hudbay's financial results were issued yesterday and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is also available and we encourage you to refer to it during this call. Our presenter today is Alan Hair, Hudbay's President and Chief Executive Officer. Accompanying Alan for the Q&A portion of the call will be David Bryson, our Senior Vice President and Chief Financial Officer and Cashel Meagher, our Senior Vice President and Chief Operating Officer. Please note that comments made on today's call may contain forward-looking information and this information, by its nature, is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in US dollars unless otherwise noted. And now, I'll pass the call over to Alan Hair. Alan?

[Alan Hair:]

Thanks, Candace. Good morning, everyone. I’d like to begin today’s call with a quick outline of the items I’ll be discussing this morning. I’ll start with an overview of our corporate achievements in 2018 and consolidated financial results. I’ll then review each operating business units speaking to the 2018 performance, development milestones and regional growth potential along with highlights from our 2019 operations guide. I’ll spend a few minutes reiterating the elements of our growth strategy and will conclude the presentation with a summary of our near-term catalysts. I wanted to note that the shareholder has put forth [indiscernible] at our annual general meeting and recently released further details about the claims against Hudbay. Our Board expects to provide a [frozen] response in due course. The purpose of today’s call is to discuss our quarterly results and business outlook. So when we get to the Q&A portion of the call, I’d be happy to take any questions on our business. Reflecting back in the 2018 year, I’m very pleased with the work completed in each of our operating business units to utilize process improvements to drive additional efficiencies in our operations. In Peru, our continuous improvement initiatives in the processing plant resulted in record mill throughput in 2018, record copper recoveries and high utilization of the moly plant. As a result Peru copper moly production is better than expected. In Manitoba we overcame the operating challenges we had in the first half of the year and through ongoing operational and maintenance improvements to Stall mill record throughputs in 2018. Also the Lalor mine is on track to achieve 4,500 tonnes per day after the commissioning of the paste backfill plant and improved availability of skilled labor in the second half of 2018. As a result of the business these operational efficiencies, consolidated copper production exceeded 2018 guidance midpoint by 14% and zinc and precious metals production were within guidance ranges. Combined unit costs in Peru were in line with 2018 guidance ranges after reflecting the cost of increased moly production and Manitoba unit cost was in revised 2018 guidance ranges. Total capital expenditures were also in line with expectations. As a result the business continues to generate incremental free cash flow of $274 million in 2018. In addition to the operational achievements we made several advancements on the growth side of the business in 2018. At Lalor we completed the test mining of the gold zone, additional infill drilling of the copper gold zone and processing trade off studies in the gold and copper-gold zones. And in October of 2018, we concluded that the optimal long term processing scenario is to refurbish the New Britannia mill realizing incremental value through the improvement. We’re pleased to have [indiscernible] having resource estimates at Lalor along with the updated mine plan incorporating the refurbishment of New Britannia which I’ll discuss in detail shortly. In January 2018, we acquired control of a large, contiguous block of mineral rights to explore for mineable deposits within trucking distance of the Constancia processing facility. And in December 2018, we completed the acquisition of Mason Resources for approximately $15 million adding the large Greenfield and Mason copper deposits asset portfolio and adding leverage to high copper prices by increasing resources per share. In the fourth quarter of 2018, we continued our trend to generating strong operating cash flow as we remained focused on our strategic priorities of developing and operating our portfolio of high quality assets in mining friendly jurisdictions. We produced 57,000 tonnes of copper-equivalent in the fourth quarter and 237,000 tonnes for the full year 2018. We’re proud of the operating performance in both Peru and Manitoba resulting in consolidated copper production exceeding guidance two years in a row further generating cash flow beyond expectation. All-in sustaining cash cost in the quarter were higher than the previous quarter primarily due to higher sustaining capital expenditures and capitalized exploration in-line with our annual capital expenditures guidance. All-in sustaining cash costs were $1.52 per pound of copper for the year. Earnings and earnings per share in the fourth quarter were primarily by non-cash deferred tax adjustments driven by foreign exchange movements which would have increased earnings per share by $0.05 on an adjusted basis. We ended the year with $550 million in cash further adjusting our net debt position to $466 million and increasing our liquidity to almost a billion dollar putting us in a strong position to fund our future growth initiatives. Since early 2016, our management team has focused on free cash flow generation and reducing our net debt is apparent through the trends shown in the chart on slide 6 of the presentation. We achieved a $100 million cost reduction charge during the downturn in copper prices in 2016 and continue to generate significant free cash flow over the last few years through un-hedged production and stable low-cost operations. In the fourth quarter of 2018, operating cash flow before change in non-cash working capital was $107 million with total operating cash flow generation of $493 million in the last 12 months. Since 2016, we have reduced our net debt position by more than $750 million, notwithstanding weaker copper prices in the second half of 2018. Now let’s turn to our South American unit, our Constancia mine where we continue to achieve operational milestones. Our processing plant in Constancia continues to perform well averaging approximately 90,000 tonnes per day during the fourth quarter and after accounting for the five day semi-annual mill maintenance shutdown that was scheduled in November. We continue to be pleased with the mill’s performance achieving approximately 85% copper recoveries in the quarter. While recoveries will vary from quarter to quarter depending on the complexity of the ore feed, we continue to see good results in the improvement initiatives that we are implementing and we expect to continue to deliver the recoveries anticipated in the 2018 technical report. A key part of our programs optimized recoveries has been our stock piling and blending strategy which had the effect of delivering somewhat higher grades in 2018 and then contemplated in the technical report as we adjusted the mine plant to facilitate the blending strategy. We expect copper grades in 2019 to be in-line with the technical report. During the fourth quarter of 2018, Constancia produced 31,000 tonnes of copper and 18,000 ounces of precious metals. The moly plant continued to operate at substantially higher rates during the quarter, resulting in the production of 329 tonnes of moly during the quarter and 904 tonnes in the full year. Combined unit cost in Peru were higher than the most recent quarter primarily due to maintenance shutdown in November which increased spending in ore throughput. We continue to operate the moly plant substantially more than expected in 2018 following ongoing plant optimization initiatives and the increase in revenue from moly sales from 2017 to 2018 more than offset the additional moly plant cost over the same period. We expect continued high utilization of the moly plant in 2019 resulting in higher moly production and moly plant cost which is reflected in the 2019 guidance I would describe shortly. I’d like to reiterate the strong performance track record consensus achieved on cost side. Slide 8 shows Wood Mackenzie unit cost data for role sulphide open pit copper mines in South America and I’m proud to say that Constancia’s 2018 unit cost is leading the industry as the lowest cost open pit copper mine in South America. I’m also proud of the enhancements we made in the processing plant of Constancia incorporating both the copper recovery, mill throughput and moly plant optimization initiatives. In addition, I feel it is important to note the success we’ve had in the development and ramp up of Constancia. To put Constancia’s development into perspective, we acquired the deposits in 2011, [indiscernible] project developed in 2012 after completing their own detailed engineering studies and achieved commercial production in early 2015. The mine was completed on time with a 10% increase of development costs. Constancia was constructed during the last major copper build cycle and when compared to other Greenfield open pit copper mines in the Americas Constancia capital cost performance was best in class. In addition, Constancia commission schedule was the fastest ramp up timeline achieved in the industry. Other global mining companies have recognized this achievement and [indiscernible] Constancia as the benchmark for their own mine. Having completed the initial ramp up in 2015, our priority was optimizing ore throughput based on these optimized operational initiatives we’ve achieved that objective and ore throughput is consistently running at or above design rate. We next turned our focus to improving copper recoveries. We’ve made significant progress on this in the second half of 2018 and I continue to work in improvement initiatives. We’ve also made significant progress on moly plant optimization initiative. We expect to continue add value to Constancia through starting to mine the Pampacancha satellite deposit, which will extend the current high grade profile into the next five years. Our discussions with the local communities require the surface rights of Pampacancha are progressing. Turning to the rest of the Constancia region, we’re excited to test the potential of the other nearby satellite deposits we acquired last year including Maria Reyna, Caballito and Kusiorcco target which could provide higher-grade feed to the Constancia mill after the Pampacancha ore body has been mined. Geophysical characteristics indicate these satellite properties of the potential to be more perspective than the Constancia and Pampacancha ore bodies. We’ve commenced permitting, community relations and technical activities required to access and conduct drilling activities on these properties and have been successful in reaching a community agreement covering two of the properties to-date with plans to drill in 2019. Given the prospectivity of these satellite deposits, we continue to be disciplined with the community negotiations around Pampacancha to ensure that any agreement supports our longer term development plans for Constancia region. Moving on to our Manitoba operations total ore milled in Manitoba was lower compared to the third quarter due to the planned closure of the Reed mine. Gold performance continues to improve quarter-over-quarter and achieved record throughput in 2018 as a result of the ongoing operational and maintenance improvement and better methods of understanding the Lalor ore as I mentioned earlier. Manitoba combined operating costs were higher in the fourth quarter compared to the third quarter due mainly to the Reed closure, higher mining costs of 777 in Lalor and Flin Flon mill maintenance. At the Lalor mine we overcame some of the challenges we experienced in the first half of 2018 successfully commissioned the new paste backfill plant and Lalor is on track to ramp up 4,500 tonnes a day in Q1 2019. We’re also very pleased to release an updated Lalor reserve and resource estimates, details of our Lalor gold business alongside our fourth quarter results. The updated Lalor mine plan demonstrates the significant value we’ve unlocked so far by leveraging our existing processing infrastructure and several innings of expensive acquisitions to develop a compelling strategy to maximize the value of our gold mineralization at Lalor and nearby deposits. In October 2018, we announced the refurbishing of the New Britannia mill as the optimal processing solution for Lalor gold. Gold recoveries are expected to increase to 93% at New Britannia from 53% at the Stall mill. Also through the addition of a copper flotation circuit in New Britannia, copper recoveries are expected to increase approximately 94% and 84% outstanding. The new reserve estimate of Lalor increased in-situ contained gold by 65%, copper by 23%, zinc by 11% and silver by 15% compared to the most recent reserve estimate in our 2018 annual information form adjusted for 2018 production depletion. Similarly, life-of-mine production increased gold by 91%, copper by 16%, zinc by 13% and silver by 21% compared to the 2017 Technical Report for Lalor for the period starting January 1, 2019. The revised mine plan is based solely in proven and probable reserves and supports a ten-year mine life utilizing the existing mining capacity of 4,500 tonnes per day at Lalor for the first six year of the mine plan. Based on the technical work completed to-date we believe that a nominal 4,500 tonnes per day is the optimal throughput rate for Lalor from a net present value perspective although the production shaft has the capacity to hoist at higher rates. The production plan has the gold and copper-gold rich material feeding a refurbished New Britannia mill in 2022 that's an average feed rate of 1,100 tonnes per day for seven years based on the current reserve estimate. An estimated investment of $95 million will be required between 2019 and 2021 for the refurbishment of new Britannia. During this period the Stall mill is expected to process approximately 3,500 tonnes per day and approximately a 1,000 tonnes per day of Lalor base metal ore is expected to be transported to the Flin Flon mill for processing. Lalor's annual gold production is expected to be more than double from current levels once a New Britannia mill is refurbished with average annual production of approximately 140,000 ounces during the first five years as a sustaining cash cost netted by product credits of $450 per ounce. That will make Lalor one of the lowest cost gold mines in Canada. The net life-of-mine revenue at Lalor shifts from primarily zinc to 50% precious metals, 33% zinc and 17% copper with precious metals revenue increasing to approximately 60% of total life-of-mine revenue from 2022 when New Britannia is expected to be in production. The current 10-year reserve life could be extended and total throughput 4,500 tonnes per day to stay in for longer with successful conversion of additional mineral resource at Lalor and additional resources at our satellite deposits in Snow Lake region within tracking distance of Stall and New Britannia. We discovered the Lalor deposit in 2007 on a 100% owned land using our innovative technologies and it is the largest VMs deposit found in Snow Lake region to-date. In 2009 we started construction with the initial ramp access in the north mine. The construction of the main production shaft was approved in 2010 and it was completed on time and on budget in 2014, a mere seven years from initial discovery. We acquired the New Britannia gold mill in 2015 for approximately $10 million as a potential long-term processing option for the Lalor gold and copper-gold zones. Since acquiring New Britannia we've conducted significant technical work to assess the grade, tonnage, mine ability and metallurgy of the gold and copper-gold zones at Lalor to support and de-risk investment required to refurbish New Britannia and maximize the net present value of Lalor. Lalor is an example of a low-cost high-return organic growth opportunity creating value through all stages of exploration, mine development and operations. It was also one of the fastest development timelines from discovery to post production in the industry similar to our very fast lead times at Constancia and Reed. Refurbishing New Britannia is expected to significantly increase gold production from Lalor and enable new gold and copper-gold exploration opportunities in the Snow Lake region by having an operating processing facility with substantially higher golden copper recoveries. New Britannia demonstrates the opportunity to create additional value through owning multiple processing facilities in the Flin Flon and Snow Lake regions as we pursue low-risk brownfield development opportunities that could unlock further value in the region. During 2018, we were focused on drilling and test mining the gold rich Lens 25 and have confirmed the existence of a continuous high grade gold mineralization within the wider low-grade mineral resource estimates reported in the 2017 Technical Report. In parallel we've revised a geological model of the copper gold-rich Lens 27, which better reflects the steeper orientation of the mineralization observed during [indiscernible] this reinterpretation indicates there was a simple and more consistent mineralized in book and together with additional drilling conducted in 2018 has resulted in an increase in tonnage of this high-grade mineralization. The revised mine plan for Lalor optimizes net present value by preserving gold rich silver for processing at the New Britannia mill and zinc-rich ore for the Stall mill which is expected to result in significantly higher gold and copper recoveries as I previously mentioned. On a gold equivalent production basis, the new mining plan for Lalor delivers value beyond the previous mine plan in 2017 Technical Report growing an annual production at industry low cash costs. Based on this optimized plan and comparing Lalor to other gold mines in Canada, Lalor ranks in the middle of the group for a new gold production but is one of the lowest sustained cash cost gold mines. That makes Lalor a meaningful gold producer, a industry leading boss, the potential for substantial cash flow generation. Beyond Lalor's strong production profile from proven and probable reserves and the upside from the conversion of Lalor inferred material, Hudbay controls a very large land package perspective for gold mineralization in the Snow Lake region. Geochemical sampling and geophysical surveys conducted in high priority areas during the fourth quarter will be used to define drill targets to be tested in 2019. The upside potential for mineralization amenable to processing the New Britannia mill extends from Lalor to the old chisel mine where we have several historical currencies of copper and gold mineralization beneath the existing ramp. As shown on slides 19 and 20 non-mineral resources at nearby satellite deposits include over 4 million tonnes of indicated resource estimates and over 11 million tonnes of inferred resource estimates of Hudbay’s New Britannia and Pen II deposits as well as the recently acquired WIM deposits. The WIM deposit was acquired for approximately $500,000 and it's a copper-gold deposit that starts from surface and it's located approximately 15 kilometers by road from New Britannia. Hudbay is developing a mine plan and conducting metal testing in the deposit with the objective to upgrade the resource to reserve. WIM has the potential to be developed via an underground ramp and could feed the New Britannia mill after the richness portions of the Lalor reserves and resources have been heated. New Britannia is a former gold mine with significant mineral resources which mean accessible in three zones with some investment in the existing mining infrastructure. We plan to initiate technical studies in the second half of 2019 to determine the technical and economic viability of the existing mineral resources and the potential to process this material in New Britannia mill. Pen II is a low tonnage and high grade zinc deposit that starts from surface and it is located approximately six kilometers by road [indiscernible]. Pen II constitute a supplemental source of feed for this mill. There remains yet another area of further growth potential in addition to upgrading the known resources to reserves there is an opportunity to expand the gold zone through on what is currently defined. We plan to drill Len 17 from underground during 2019. The date Len 17 has only been explored from surface holes and through a two-phase underground drilling approach this year, we will test both the upper and lower portions of this analog to the copper-gold rich Lens 27. Lens 17 is not currently included in any Lalor mineral resource estimate. The opportunity to extend Lalor's mine life is further demonstrated by the success we've had in adding several years beyond the initial reserves that many of the mines have operated in Mansilla over the past 90 years. To conclude on Lalor we are very pleased with the results of a work to set out a strategy for unlocking the value of the gold potential at Lalor and the Snow Lake region. As Lalor evolves from a significant zinc mine to becoming one of the lowest cost gold mines in Canada we will continue to assess all options to maximize value for Hudbay shareholder. We believe there is substantial additional value to unlock from the exploration potential at Lalor and in the Snow Lake camp generally and through execution of our plan to refurbish New Britannia and build the necessary related infrastructure. The work completed at Lalor is another example of our ability to add value to deposits through exploration. Since acquiring Constancia we've almost doubled the reserve estimate. Their exploration success at 777 mine, we've grown the reserve by over 30% and with the new reserve estimates at Lalor, we've nearly doubled the reserves through exploration success. I'll touch now briefly on our Arizona business unit. We understand the Army Corps of Engineers have completed the consultation process and we believe that they're in the final stages of the preparement review. We are well-positioned to move the Rosemont project into construction soon after permitting is complete. Rosemont is expected to increase Hudbay’s copper production by 45% over the next five years. Once we receive the final permits, we will finalize the financing construction plans for the project. We have a number of options available to us to fund Rosemont and our approach will be designed to minimize Rosemont’s cost of capital while ensuring we take a prudent approach to project development. As we consider our financing plans for Rosemont, we are working within a disciplined framework that we developed in 2017, which was carefully considered and approved by our Board of Directors. That's cleared criteria and financial risk tolerance and our disciplined approach to financing our pursuit of long term growth and value creation initiatives. As I pointed out in the past, unlike many of our peers we were not forced to issue discounted equity, sell assets or hedge cycle or metal prices in 2017 and notably we did not enter into a gold stream in Lalor in 2017 and 2016 to place some pressure from analysts and investors to do so. Our framework is intended to ensure that we continue to grow our business prudently while maximizing value through the metal price cycle. It is important to note that since our acquisition of Rosemont we have secured six new permits for the project including the final record decision from the U.S. forest service and we have been involved in the successful defense of five lawsuits related to Rosemont permits. The next milestone is obtaining the Section 404 Water Permit from the Army Corps. While the permitting process for Rosemont has been lengthy, we respect the diligence exercised by the permitting agencies in ensuring that their processes are robust. We are confident that we will receive the remaining required approval based on our parenting track record to-date. We're also pleased to provide 2019 production and cost guidance with our results yesterday. Compared to 2018, our copper and zinc production guidance reflects the successful and planned closure of our Reed mine as well as lower copper and zinc grades in-line with our mine plans. The precious metal guidance also reflects our plan to defer the mining of higher grade gold ore from Lalor until we've completed the refurbishment of New Britannia in 2022. We've also taken a conservative approach to our Peru guidance; have included the capital spending to develop Pampacancha leaving the higher pressure metal grade material from that deposit out of 2019 guidance for the time being. Our unit cost guidance reflects lower anticipated cost after some of the one-time costs we incurred in 2018 in both Manitoba and Peru. Our CapEx guidance reflects higher spending for Peru and [indiscernible] as anticipated in a technical report and higher spending in Manitoba in large part to support underground development for Lalor and initial work in the New Britannia refurbishment. We have included $20 million in Arizona spending in our guidance that amount would be expected to increase significantly once we receive the remaining permits and initiate early works at Rosemont. Based on our proven strengths and exploration of mine development, we developed a corporate growth strategy back in 2010. We have a long-held belief that the most significant opportunities for value creation are through exploration and mine development. Applying our expertise in these areas together with mission opportunities against a number of long standing stringent criteria we target copper deposits and select mining friendly jurisdictions in Americas with a potential [indiscernible] mining and answer significant assets pipeline for development after Rosemont. [Indiscernible] engineering permitting and construction to maximize project's ultimate value for our shareholders. Our strategy is focused on assets with long line license significant expert -- at base assets all have mine lives of 19 years or longer from post-production which provides exposure to multiple commodity price cycles. Equally important is having assets with low cash costs providing the ability to withstand the low periods in the commodity cycles. Hudbay is positioned in the first quartile of the C1 -- previously mentioned we're focused on per share accretion and has been successful in growing reserves per share by 142% and resources per share by 467% since 2007. As a result of our consistent growth strategy, we offer the best growth profile in the lowest political risk jurisdiction group in addition to be one of the top investable pure played copper producers globally -- the social practices. Based on a successful development of Constancia and proven ability to build a social license to operate, we are recognized, we are recognized in Peru as a leader in community relations and our track record compares very favorably to other nearby mining operations. We are proud of our success community relations and we're still to receive several awards in Peru recognize in our industry leading community relations processes. As a primary copper producer, one of our objectives is to provide shareholders with meaningful and growing leverage to copper prices. We've seen a consistent path in Hudbay providing investors with this leverage over the past several years with strong performance in 2016 and 2017, here is a rising copper prices. In 2018, with the decline in copper prices, it was not surprising there's a shift price performance as it did. While we don’t control metal prices, the execution of our plans in 2018 has positioned us well for improving copper prices in the future as evidenced by a significant high performance versus our peer group year-to-date in 2019. As we continue to execute our strategic plan, we believe our share price will continue to provide shareholders with leverage to rising copper prices based in the quality of our asset base of low cost long life assets, in mining for any jurisdiction in the Americas and our strength is proven mine developers and operations. We are constantly evaluating new opportunities in screening for high quality assets such as growth particular criteria. I want to highlight the lack of actionable opportunities in the copper space. Ann Mason was the third largest resource held by a junior company in our higher operating jurisdiction and then the U.S., Peru, and Chile. It's also important to know that when you evaluate new opportunities and apply real-world operating in cattle cost numbers, a number of actionable opportunities --. A success of executing on a consistent growth strategies since 2010, which has provided us with a diversified portfolio of operating mines and makes sense of development pipelines perpetuate production growth and support long-term value creation for shareholders through both organic exploration and our prudent acquisition strategy. We have developed a large portfolio of other state opportunities to provide -- since we grow the business with the highest return assets. We believe with several mid-term and medium-term catalysts within our robust growth pipeline. I've already touched a few of our upcoming catalyst, right, presentation but summarized, we've a number of near-term catalyst. We have a near-term Rosemont -- 404 water permit in the final stages of review. On this, we look forward to unlocking value by advancing the project through financing and construction. There are several upcoming catalyst at Lalor with the eminent ramp-up to 4500 tons per day, inversion of resources to reserves, incorporating the satellite known resources into the main plan and also achieving fiscal production of new Botania in 2022. We expect to be drilling as our satellite deposits make us stands here later this year and expect to commence mining some of these Pampacancha also later this year. In Snow Lake, we intent to explore our land package to provide potential additional need to install new Botania mills in additional to testing in-mine exploration targets at Lalor. We expect to drill high grade targets on Mason this year with a focus on enhancing project economics along with advancing exploration activities on our other perspective grassroots exploration opportunities in Chile, Peru, and Canada. In conclusion, we have continued to execute on our consistent long-time growth strategy and developing our world-class asset base. We have demonstrated our proven track-record of successful project development, so best in class construction and ramp-up Constancia and Lalor. Our flagship mines are expected to be the lowest cost of the respective regions confirming our operational excellence and we've added value through successful exploration at all of our mines. We are pleased with our operating results in financial performance as we continue to generate strong cash flow from unhedged copper and zinc production position us well for our future capital allocation plans. We have a robust pipeline of near-term and medium-term catalyst, we have the team in place to deliver on these catalyst and we look forward to continuing to deliver on our objectives through safe and responsible practices. That concludes the presentation portion of the call and we'd be pleased to take your questions.

[Operator:]

Thank you. [Operator Instructions] And we'll take our first question from Orest Wowkodaw from Scotiabank.

[Orest Wowkodaw:]

Hi, good morning. Cash and or I was hoping we can get a bit more color on what's going on with the mine plan Constancia. And specifically, I mean when I look at the tech report issued last year, 2018 Constancia was supposed to do a grade of 0.42. And it looks like you came in at 0.48, so much better than expected. How should we think about 2019 and the tech reports basically showing I think 0.43. How much upside is there to that number and what's driving it?

[Alan Hair:]

As Orest, I think we've explained before part of the difference is just changes in the short-term mine plan compared to the long term mine plan that the 43-101 was based on. This has been partly driven or mainly driven by a better understanding of the impacts of impurities like zinc and lead on copper recoveries. And last year saw quite a movement on material tune from stockpile to help that -- that's a blend, those zinc levels and so that they don’t didn’t have an impact on recovery or concentrate quality. Within that there's also some other minor changes related to be used mine waste for tailing some construction and dependent on the material properties of about waste we sometimes have to switch mining areas as well. So, those factors we believe are the main things contributing to the difference in grade and at this stage for 2019 we're just sticking with what's in technical report.

[Orest Wowkodaw:]

So, are you getting a positive grade bias anymore from the original block model or is there all other factors?

[Alan Hair:]

At this point, we'd say that any bias is within what we the normal statistical range. So, where when it's not leading us to look at any revision currently.

[Orest Wowkodaw:]

Okay. Thank you, very much.

[Operator:]

And next we'll go to Matthew Fields of Bank of America Merrill Lynch.

[Matthew Fields:]

Hi, everyone. I want to touch on something I read in the MD&A which was that you altered your stream agreement with Silver Wheaton. Can you give us first at a high level kind of why Silver Wheaton felt the need to change that agreement with you or was it you felt the need to change it with them, how do that come about?

[Alan Hair:]

We just we worked with Silver Wheaton and Precious Metals. I mean, obviously we'd be the long relationship with them and we worked just to make some improvements on the simple operability of the agreement.

[Matthew Fields:]

No. it says you now have the option to take cash or shares for the deposit. Why would you take Silver Wheaton shares to fund CapEx rather than the cash?

[Alan Hair:]

I'll let David work through some of the details.

[David Garofalo:]

Matt, it's something that's similar to what we had in the Constancia stream agreement with Wheaton, something that they had requested and we were willing to accommodate. There is a mechanism that's included in that that allows us to liquidate the shares on an orderly basis at the same price that's used on in a number of shares issued. And so, what happened when we received the Constancia stream payment is we were able to realize cash proceeds from those shares that was sort of within 1% of the face value. And so, we don’t expect it to expose us to any market risk.

[Matthew Fields:]

There's no lockup period?

[David Garofalo:]

Correct.

[Matthew Fields:]

And then lastly, it's said that now you are providing apparent guarantee to Rosemont's obligations. Two questions on that. One, is that like the uptick financing loans to your Korean partners in the stream obligation, any other debt at the project level that we're kind of now thinking about that maybe wasn’t in the plan before?

[Alan Hair:]

I'm not sure, would you restate that?

[Matthew Fields:]

Yes. So, you're going to Hudbay the corporate issue where we now offer a guarantee to Rosemont's obligations. What debt is at Rosemont proforma for this financing that we're going to be thinking about that you are now going to guarantee?

[David Garofalo:]

At present, there is no debt at Rosemont obviously.

[Matthew Fields:]

Right.

[David Garofalo:]

But we and are currently anticipating a financing for Rosemont. That's very similar to what we did for Constancia, the Constancia uptick financing was secured at the project level with a corporate guarantee and to the extent that we do an uptick or cost over right in that financing at the Rosemont level. We'd expect the same structure.

[Matthew Fields:]

And then lastly, I'm sorry for all the questions. But will Rosemont be a guarantor for the existing Hudbay debt now, now that you're guaranteeing it?

[David Garofalo:]

No, there isn’t express carve out for that.

[Matthew Fields:]

Okay. Thanks for that, that's it from me. Thank you.

[David Garofalo:]

Okay.

[Operator:]

And next we'll go to Ralph Profiti with Eight Capital.

[Ralph Profiti:]

Thanks for taking my question. Just a quick one on the Lalor gold zone versus the base metal zone, Alan. When we think about issues like ground conditions and mining methods and even tailings deposition. Were there any differences that stood out in the study? What I'm getting at is that $92 a ton mining cost consistent across all zones and lenders?

[Alan Hair:]

Sorry, you're a bit faint there, could you repeat the question?

[Ralph Profiti:]

Yes, sorry about that. It's my questions on Lalor gold versus the base metal zone, and when we think about mining methods tailings the position, I did mean some of the ground conditions, are there any differences that stood out in the study on the gold zone versus the base metal zone. And what I'm getting at is whether or not we're going to see a pretty even distribution of that $92 a ton mining cost?

[Alan Hair:]

I think given that the golds coming from a variety of different zones within the mine, I think it's the -- that average should be a good average.

[Ralph Profiti:]

Okay. And is there any issues, Alan, with regards to tailings that position as you get further and further away or you mean into the gold and the copper gold zones?

[Alan Hair:]

No. the project predicates using the think Anderson tailings facility.

[Ralph Profiti:]

Okay.

[Alan Hair:]

And obviously with a significant proportion of tails gone come back on the ground as paste.

[Ralph Profiti:]

I understand, okay. Thanks for the clarity.

[Operator:]

All right. And next we'll go to Matthew Murphy with Barclays.

[Matthew Murphy:]

Hi. Another question on Lalor. Just trying to square the cash unit cash costs with the unit operating costs. I know the unit cash cost include G&A, the unit operating cost down. I'm just wondering what kind of unit G&A you're assuming beyond the closure of 777 that would be attributable to Lalor?

[Alan Hair:]

So, what we're anticipating is obviously once the Flin Flon facilities sort of -- mine lines that we would see a significant reduction in G&A as we rationalize around the lake. And so, that reduction is reflected in the sustaining cash costs and cash costs that are set out in the press release.

[Matthew Murphy:]

Okay. And the other element being offsite cost. I'm assuming that those cash cost include kind of market treatment charges et cetera?

[Alan Hair:]

Correct.

[Matthew Murphy:]

Okay, thank you.

[Operator:]

All right. Next we'll go to George Topping with Industrial Alliance.

[George Topping:]

Great, thanks. Hello, everyone. Alan, are you planning to do any update or provide more information on the 777 cleanup cost that Flin Flon in this matter?

[Alan Hair:]

Well, we're actually working through you know all aspects of the Flin Flon closure planning. We basically announced 777 looks as if it will close in the end of 2021 currently and there's a number of studies in play to see what's the best way to maximize the value of those assets. So, the current thought is that we put the Flin Flon concentrator in tailings facility in some form of care and maintenance. If you look at new Botania and new Botania we acquired in 2015 where it been on current maintenance since 2005. We're going to bring it into operation close to probably some 20 years after was putting care and maintenance. These assets was associated tailings facilities, and already permitted obviously very value and provide optionality for developing future deposits that wouldn't necessarily support the capital associated with that level of infrastructure. So, in terms of what form the current maintenance might take in terms of what the ongoing carrying cost, George, we're still we got some of the detail working through, there's always a trade-off between what level of care and maintenance you go with and ultimate restart cost, so that's a trade-off has to be completed.

[George Topping:]

Right. So, it's sufficed to say it's probably no large payments in the near-term but it's --.

[Alan Hair:]

We'd look to go ahead with the -- 777 for example; I mean, it's a standalone entity. So, that is about 2.5 million associating closing that. Then we have to make the decision how best to optimize the remaining process assets and that as I mentioned is part of some of the studies that are currently ongoing.

[George Topping:]

And just follow up on Constancia, I notice the unit cost guidance is quite a wide range? Why is the range so wide, between 790 to 970 dollars per ton?

[Alan Hair:]

Sure I think that's fairly consistent with our past practice of unit cost guidance where we really intend to make a significant change in the sort of the width of those ranges.

[George Topping:]

I see. Okay. Thank you.

[Operator:]

And next we'll go to Greg Barnes with TD Securities.

[Greg Barnes:]

Thank you. If I understand it rightly the tailings from New Britannia will be pumped over to the Stall Lake, is there enough capacity there to handle everything that you're talking about now with a new Lalor 9 plan?

[Alan Hair:]

The tails will actually be pumped to the – be combined with the tails of the Stall mill so that they can then be an integral part of the overall paste backfill system and so they either go back underground at the mine or they go to the Anderson -- which has got the ability to be expanded further.

[Greg Barnes:]

And I assume that speeds up the permitting process for Newport as well?

[Alan Hair:]

It's certainly when we looked at the overall optimization approach and the various studies that we did that certainly makes life simpler. But also will be looking to filter the copper component of the material at the new brick facility -- so the new brick tails will go to Stall and Stall copper concentrate will go back to new brick just minimizing capital and maximizing the equipment that we've got.

[Greg Barnes:]

Just a secondary question for David Bryson. Can you give us a sense of what you think is your weighted average cost of capital?

[David Bryson:]

Greg, there's obviously a number of ways to measure that I think sort of the biggest driver is sort of the equity cost of capital and to the extent that we're looking at sort of requesting free cash flow generation from the business, we think of an 8% cost of capital on that equity. And then so to the extent that we're raising debt, I think when you look at the secondary levels on the high-yield bonds we have outstanding that's kind of 6.5% to 7.5% range obviously when we're looking at a required return on a new capital investment that needs to have a significant spread over our cost of capital in order to generate shareholder value at a high level that sort of what the key components would be.

[Greg Barnes:]

Thank you.

[Operator:]

And next we'll go to Stefan Ioannou with Cormark.

[Stefan Ioannou:]

Thank you very much guys. Just curious a fair bit of sort of detail and focus on regional exploration around Snow Lake. Are there any plans to spend any money on sort of exploration closer to the Flin Flon areas or is it very Snow Lake focused this year?

[Alan Hair:]

No. We actually, last year we did a large airborne geophysical survey some 400,000 hectares to the region south of Flin Flon. That generated a number of targets than the nature of especially the terrain down there lends itself more to winter exploration and would actually drill in some of those targets this year as well.

[Stefan Ioannou:]

Great. Thanks very much guys.

[Operator:]

And next we'll go to Jackie Przybylowski with BMO.

[Jackie Przybylowski:]

Thanks very much. Actually my question is pretty similar to Stefan's. I was just wondering when we could expect to get some of the initial results back from some of the satellite deposits you have I guess around Snow Lake and also at basin, I know you're doing some work on it this year. Are we going to hear anything about it later this year?

[Alan Hair:]

Yes, we will certainly, given as I mentioned that we are currently drilling in both Flin Lake those results will come out in the ordinary course and Mason we'll be drilling there by the middle of the year hopefully and in the second half?

[Jackie Przybylowski:]

Sorry can you repeat that last part Alan, you cut off for a second there.

[Alan Hair:]

With Ann Mason we should be drilling by the middle of the year hopefully and certainly having some results for Q4 would be reasonable to expect.

[Jackie Przybylowski:]

Excellent. Thank you very much.

[Operator:]

And next we'll go to Dalton Baretto with Canaccord.

[Dalton Baretto:]

Hi good morning guys, my first questions on Lalor, I'm searching for some context to round why the 4,500 ton per day scenario is your preferred alternative or a higher NPV than say a 6,000 ton per day scenario just given that you've got sufficient hosting and surface processing capacity?

[Alan Hair:]

It's more about the layout of the ore body and how you can sensibly address the infrastructure issues like ventilation and the likes.

[Dalton Baretto:]

So it's the incremental infrastructure spending underground basically?

[Alan Hair:]

Sorry, could you repeat that?

[Dalton Baretto:]

It has to do with the incremental cost of mining at a higher rate?

[Alan Hair:]

Yes. I think that would be a fair way of looking at it.

[Dalton Baretto:]

And then the next one is on Rosemont. Alan, you mentioned a number of times at the Army Corps in its final stages. So really two questions there. Number one when was the last time the Army Corps came back to you for other more information or more consultation?

[Alan Hair:]

It's basically just been a period now where we understand that the Army Corps had its interactions with – completed its interactions with both ourselves and other stakeholders. So that's why we believe that they're actually in the permit review phase.

[Dalton Baretto:]

And then, have you had any conversations with your Korean partners in terms of next steps moving forward and what the terms are on maybe buying back their stake if they choose to sell that sort of stuff?

[Alan Hair:]

Yes, well I mean, we're obviously in constant dialogue with them. I think it's reasonably well known that the Korean government has announced I think it was 18 months ago their intent to wind down [indiscernible] one of our partners there and so this business over a period of five years I think. So it wasn't exactly a great success for them and we're having discussions with the Koreans and we see that they could withdraw from the project but we've -- there's widespread interest in other people to come in JV with us, we are seen as a very popular partner and given the relative success of recent JV process these minority processes you've seen Anglo-American run a very successful process at [Kio Vaco], you've seen tech run a very successful – of two. That's like a successful process that’s on -- projects so we contemplate the Koreans exiting and bring them another partner maybe even for a larger stake. Rosemont is one of the best near shovel-ready projects out there. It's one of the few in our opinion that does provide acceptable rate at a long term called price of $3 so we think that there should be no problem attracting another partner to replace the Koreans.

[Dalton Baretto:]

Thank you. So you prefer outcome is still having a partner as opposed to consolidate in the project?

[Alan Hair:]

I think realistically part of the overall financing absent a real running crop pricing, I think that would be a prudent way to approach it.

[Dalton Baretto:]

Great. That's all for me guys. Thank you.

[Operator:]

And next we'll go to Lawson Winder with Bank of America Merrill Lynch. Go ahead Lawson you maybe on mute. Your line is open. Lawson your line is open.

[Lawson Winder:]

Thank you. Sorry about that guys. Yes, just on Constancia and the $45 million and growth CapEx that you guys have budgeted for this year. You mentioned that I mean that is dependent on receiving land access by the end of May of 2019. I'm just curious because assuming that land access is not received by mid 2019, where does that $45 million go and then alternatively assuming that we're received today for that $45 million go up. I am trying to get a sense of some flexibility around that, that growth CapEx. Thank you.

[Alan Hair:]

Yes. The main number is a bit of a red herring. I mean that's just what was in the current mine plan to treat. I think there was 4 million tonnes in the technical report. To access Pampacancha, we obviously need to complete the whole road finish some of the pit dewatering, do the initial pre-strip I mean if we didn't get access until later in a year we'd still be spending those dollars. If we get access earlier we'd be moving into the operating phase sooner. So I think really in terms of from a guidance perspective given that were confident that we'll access, have access to Pampacancha before the end of the year that's a reasonable number regardless of the exact timing. It's not that we still got the ability to mine Constancia it's not that we're not treating material.

[Lawson Winder:]

No, of course. And then just in terms of the land access to discussion I think previously you guys have described it as being mostly economic in nature. Has anything changed or is that still the case?

[Alan Hair:]

Well, it's partly that. It's also, I mean there's a tendency to be it used to want to reopen some previous agreements and things. So it's a process that we've navigated I think very well in our time in Peru. I think as I mentioned frequently, I mean our community relations performance is second to none given that we're in a region that's our neighbors are [indiscernible] who both suffered from significantly worse community relation performance than we have and I think our approach has been good and we don't see any reason to change it especially as we now have another four communities we have to get initially exploration and hopefully exploitation agreements with through access what is really in our opinion some very-very prospective territory to the northwest of Constancia. So with all things with Hudbay when we look at in carrying out a strategy we've taken a very long term view and I think we've been consistent in growing the company and continue to take that long term view and really there's nothing particularly about the exact date of Pampacancha access it's anyway mission-critical. So we're continuing to do what we consider to be the right thing.

[Lawson Winder:]

And then I think in your comment you already mentioned that you hope to also be drilling some of those other satellite deposits around Pampacancha and Constancia in 2019. Did I hear you correctly and if so I guess you have some sort of similar timeline for land access there as you do for?

[Alan Hair:]

We have an agreement with one community that covers, one complete target and part of a second target. So we'll certainly be planned to be drilling by, I would take -- we've got their land agreements we have to run through the drill permitting process. So it would be reasonable to expect us to be drilling there by Q4 of this year.

[Lawson Winder:]

Thanks so much for taking the questions Alan, I appreciate your time.

[Alan Hair:]

Thank you.

[Operator:]

Thank you and next we will go to Oscar Cabrera with CIBC.

[Oscar Cabrera:]

Thank you operator and good morning everyone. Alan, if we could just get back to the capital allocation question. If we were to assume copper price stayed close to $3 what would be the main driver to slowdown the part of the Rosemont project and would you still consider being the operator of the project?

[Alan Hair:]

I think as I mentioned in the first part of the call, one of our criteria Oscar is to be the operator. We don't – we've actually looked at structures that where we could still be a minority in an opportunity but be the operators away. It's really one of our key points when we look at things because we think that's where we bring the most -- we've had a proven record obviously of building mines and operating mine. So we don't necessarily – we see that as something that we don't necessarily really want to give up on. I think the question of it you exactly what the capital allocation plans for Rosemont looks like will depend on the timing and where the current price environment is. We're fortunate with Rosemont that the project CapEx is very light at the front end. So if we did get the permits reasonably soon even in a lower price environment we think we're well placed to move the project forward with an early works program. We remain very bullish on copper fundamentals in the long term and I think we should start to see those copper prices fundamentals start to kick it sometime this year and drag the cost – copper price back up about $3.

[Oscar Cabrera:]

And based on David Bryson's comments on your cost of capital, it looks like there is still the preferred way to go. Can you just remind me what are the parameters that you're looking at just in terms of not exceeding net debt to EBITDA levels or any other metric that you are looking at?

[Alan Hair:]

Obviously our measure is very dependent what stage of the cycle we're at. So when you're in this of harvesting phase is going to be more like one-one and a half times debt to EBITDA when you're approaching the last few months of build-out obviously that numbers going to rise and more in the order of three times.

[Oscar Cabrera:]

Three times. Thank you and then lastly looking at your slide 11, talking about the Constancia optimization project the five-year average production about 105,000 tonnes would that assumes that Pampacancha comes on stream in 2019 i.e. you know your mining Pampacancha in 2019. I just wonder what that would look like if Pampacancha is not mining in 2019 and 2020?

[Alan Hair:]

Pampacancha was only 4 million tonnes like I have said 1 million tonnes Oscar, so really it wouldn't make a great deal of difference to the copper production. As we indicate in the guidance it would save some production.

[Oscar Cabrera:]

For 2019, would that be the case for 2020?

[Alan Hair:]

Well, we'd expect to be mining in Pampacancha for 2020.

[Oscar Cabrera:]

Now I mean, when would you need to get the land right by if you expect mining 2020?

[Alan Hair:]

Well, I think it's about four or five months four month maybe of lead time for pre stripping and some of the infrastructure.

[Oscar Cabrera:]

Thanks a lot.

[Operator:]

Next we will go to Mark Llanes with Credit Suisse.

[Mark Llanes:]

Hi thanks for taking my questions. Just a question on Constancia. Your guidance for -- 100 to 125 tonnes of copper does that include potential for positive -- at Constancia?

[Alan Hair:]

No I mean we're assuming the rates are as per the technical report.

[Mark Llanes:]

And I noticed, your recoveries are little bit lower -- just slightly down from I believe in Q3, do you expect to maintain at the 84% - 85% for the rest of the year?

[Alan Hair:]

Yes I would, as we’ve indicated and we expect the coverage to vary from quarter to quarter and that will be the case through 2019. As I mentioned, we’re trying to control blending as best as we can. The numbers do vary depending on what particular two levels are. The main focus consists of a number of different ore types so combination of those and levels will impact the recovery. In all aspects, I think what we've been advising people is, is just use the numbers in the technical report. I mean, we might harvest some hopes that we can actually do better than that once we completed some further optimization work but right now the technical report provides a good base case for recoveries. We achieved what we’ve stated for 2018 right on money and like to continue that way.

[Mark Llanes:]

Thank you very much.

[Operator:]

Next, we'll go to Brian Lalli with Barclays.

[Brian Lalli:]

Hey guys thanks for taking me in. I will be brief. Most of my questions have been asked. David, just curious if your thoughts around the Rosemont funding has changed at all? Obviously given a lot of permitting timeline you generated more cash, you also have some growth projects lined up. So just be interested to hear your thinking about the funding requirements relative to potential high-yield issuance?

[David Bryson:]

Brian, I think as Alan mentioned once we have Rosemont permits we’re going -- value like all of the options are available to us based on the market conditions, offer prices at the time. We obviously appreciate that we have access to the high yield markets. Pricing back to more favorable levels compared to where it was a quarter or so ago. But we'll also look at other options that we talked about low priced hedging of our production period and as Alan mentioned that obviously we think that looking at joint venture partnership options are an important element of arranging a prudent financing plan for Rosemont.

[Brian Lalli:]

Got it. That's all for me. Thanks for the time guys.

[Operator:]

Next we will go to Sean Wondrack with Deutsche Bank.

[Sean Wondrack:]

Hi there. Most of my questions have been answered. Just one more follow-up here though. Should you not find a partner for Rosemont and received the requisite approvals would you continue to develop the asset on your own in the near term while try to find a partner and could that potentially impact your three terms net leverage ceiling, would there be any risk that you could possibly go through that? Thank you.

[Alan Hair:]

As I mentioned earlier the Rosemont capital spend profile is weighted to the years two and three. So to initiate an early works program we’re only talking consistent with the overall project schedule. We're only talking in the region of up just under $150 million so that's well within our capability. We see given that people have approached us to partner with Rosemont, we think and based on as I mentioned the recent experience with some of the other projects such as -- QB2 we actually don't really see a particular issue with getting a JV partner and potentially maybe even get one for a slightly larger buy-in than the Koreans currently have. And so as I mentioned I mean Rosemont people are well aware it does provide a greater than 15% rate of return along our price of $3. There's not many projects out there that have those sort of economics. So it is a valued asset in the marketplace.

[Sean Wondrack:]

Thank you.

[Operator:]

And next we'll go to John Tumazos.

[John Tumazos:]

Thank you for taking my question. Congratulations on Ann Mason deal. In some other commodities there's also acquisition opportunities, last year Glencore bought some coal properties at three four times EBITDA and coal price rose subsequently. Recently iron ore properties were not too popular and now Anglo gold and [New Mon] and Barek are selling a bunch of gold mines many of whom are built and running. Would you consider departing from copper and considering other commodities there's a lot of companies that want to buy copper mines some of these other things go begging?

[Alan Hair:]

I'd say John, a fundamental part of our strategy I mean, we stay, we’re geographically focused in finding friendly low risk environments in the Americas and we are geologically focused really on most of the jurisdictions are in – the focus is really on copper. Obviously Manitoba tends to be by its nature poly metallic and we wouldn't necessarily, a significant part of our portfolio remains zinc and precious metals. But really our focus, strategic focus and positioning is copper mining company.

[John Tumazos:]

Thank you.

[Operator:]

[Operator Instructions] Next we'll go to a follow-up question from George Topping with Industrial Alliance.

[George Topping:]

Thank you. Alan then it's a scope to expedite the exploitation of the Lalor gold, so this gold price rather continues and what's on the critical path there, is it the processing side or the access development?

[Alan Hair:]

It's actually will be the permitting timeline that really dictates the critical path George. We would always look to expedite a project, I mean that's just in a nature. So if once we've advanced the engineering further there's potential to maybe tighten up the schedule but right now we're just guiding to push production early 2022.

[George Topping:]

So the permitting is ongoing at the same time because the engineering work is taking about a year almost?

[Alan Hair:]

Correct, yes that's it.

[George Topping:]

Good. I will follow up later. Thank you.

[Alan Hair:]

Thanks George.

[Operator:]

Next we have a follow-up from Matthew Fields with the Bank of America Merrill Lynch.

[Matthew Fields:]

Hi everyone, understanding that when you get the permit you'll get for Rosemont sort of evaluate on your options on the debt markets bonds loans what-have-you. Just can you give us a quantum of, an idea of the quantum of debt at the various levels whether it's – if it's almost two billion to fund the whole project how much is going to be at the Rosemont level and how much is going to be at the parent level roughly in general terms?

[David Bryson:]

That I think it's really going to be a function of circumstances and so what I don't think that we'd want to sort of guide to a particular amount of debt at the project level. We talked about a couple hundred million dollars of equipment financing. We'd expect to put in place a cost overrun facility. But beyond that we're going to sort of stay within some of the debt EBITDA parameters that Alan talked about. We're going to make sure that the overall package is prudent and doesn't expose us to undue pressure sort of whenever copper goes into the next down cycle as this business inevitably does but we'll evaluate that when the time comes.

[Matthew Fields:]

You've said before it's about a billion one sort of funded by you and maybe 800 million or so from these collection of other sources is that still sort of the scale that we're thinking about?

[David Bryson:]

It depends on sort of the joint venture partnership that we might put in place.

[Matthew Fields:]

Thanks very much.

[Operator:]

And that does conclude today's question-and-answer session and I’d like to turn the call back over to Candace Brule for any additional or closing remarks.

[Candace Brule:]

Thank you operator and thank you everyone for participating. Please feel free to reach out to our Investor Relations team if you have any further questions.

[Operator:]

And that does conclude today's conference. We thank you for your participation. You may now disconnect.