McEwen Mining Inc.
Q4 2016 Earnings Call Transcript

Published: 2 Mar 2017

[Operator:]

Good morning, ladies and gentlemen and welcome to the McEwen Mining Full-Year and Q4 Financial Results Conference Call. I would now like to turn the meeting over to Mr. Rob McEwen, Chief Owner. Please go ahead, Mr. McEwen.

[Rob McEwen:]

Thank you, operator. Good morning, fellow shareholders, ladies and gentlemen. Today, we’re going to discuss our 2016 financial and operating results and provide you with our outlook for 2017. Andrew Elinesky, our Chief Financial Officer will review our 2016 financial performance and then Xavier Ochoa, our President will review last year’s operation and then discuss, what we have planned for this year. Before I asked them to present, I’d like to make several comments. I was very pleased with our performance in 2016 for several reasons. First, we significantly improved our financial strength. Our treasury doubled in size, and now stands at $55 million. I want to emphasize that this growth in the treasury was achieved from operations. It was not the result of a debt or equity financing or a sale of metal streams or royalties. Second, the change in government in Argentina who are pro-business pro-form investment administration, coupled with improved gold silver and copper prices has definitely increased the value and contribution of these assets in our portfolio. Third, we added significant depth to our senior management in areas of project management, construction, and underground and open pit operations. These additions were done in preparation for our next phase of growth, which we are now entering. This phase of growth includes new production coming on stream in Nevada, and a change in the ore type in Mexico, and the belief that the exploration potential there is greater than originally envisioned. I’d now like to ask Andrew to tell you about our financial performance in 2016.

[Andrew Elinesky:]

Thank you very much Rob, and thank you to everyone else for joining us today. I am pleased to report the company had another solid performance in the fourth quarter to allow us to finish out a strong year. Firstly, each operation at the annual guidance for the production of gold silver ounces, while we also beat our annual guidance for both cash and all sustaining cost per ounce. Secondly, the company swung to an annual net income of $21 million or $0.07 per share. And as a result of this performance, we’ve grown our working capital and treasury balances as Rob said, and ended the year significantly higher with $59 million in liquid assets and no debts. On a consolidated basis, the gold equivalent production for the year came in at just over 145,000 ounces, which was just slightly above our guidance of 144,000 gold equivalent ounces. Before moving on to the cost per ounce discussions, I’d like to point out that going forward the company will start providing guidance and results as you have seen in our press release yesterday, for this metric. It’s going to be reported on the per-operation basis instead of the consolidated basis. So with regards to those cash costs, both of our operations exceeded our improved guidance as opposed to our original guidance by over $20 per gold equivalent ounce, along sustaining cost of both sides were both comfortably under guidance as well. As a result of these decreased costs and higher gold and silver prices our earnings from mine operations increased by 23% to just over $64 million, when compared to 2015. As mentioned, this performance for both of our mines was obviously reflected in our improved Treasury balance. As he said, we ended the year with just under $59 million, which compares to the ending balance of the end of 2016 of $32 million, plus $3 million in debt that we were caring at that time. This balance is now - as of the 27th of February it is just over $55 million. This increase in liquidity allowed the company continue with its increased investment plans both on the exploration and product development fronts, as well as maintaining our semi-annual dividends or return of capital. Moving to the sites, in Mexico we had our second consecutive year of strong production and low cost. This was the result of operational improvements and strong grades combined with cost and input savings, as well as a weaker Mexican peso when compared to the US dollars. All great declines in the second of half of the year as expected due to the planned transition to the lower grade Lupita pit during the year, and obviously we maintained our focus on reducing our cost and keeping them low, so as to continue our strong operational cash flow generation El Gallo. Moving over to Argentina, a continued steady operation performance of the San José mine for the year was held by the export tax eliminations, which the federal government's eliminated early in 2016, as well as the continued foreign exchange savings they allowed the peso to come more free-floating. Our attributable income for the mine was significantly higher in 2016 when compared to 2015 when it rose to an income of just under $30 million for the year, compared to just over $2 million in 2015. This increase in profitability allowed the joint venture to issue to us, just under $18 million in dividends for the year, which was an obviously significant increase over 2015 when we only received total dividends of $0.5 million. Given the revised operating environment in Argentina, as well as improved metal prices we are not expecting an interruption to dividend payments. Regarding our financial statements, as mentioned at the start of the call, the strong operational performance has resulted in the company reporting a net income of $21 million or $0.07 per share, which was an obvious significant change from the prior year when we reported a net loss of just over $20 million or $0.07 per share. This is primarily driven by the result of the previous discussed increases and our income from the San Jose mine, although decrease in revenue in Mexico was offset by an 18% reduction in the cost of goods sold at the El Gallo 1 mine. Once you add these improvements in operating income, to the absence of any impairment charges, unlike the ones that were reported in prior years, the end result is a swing from a net loss in 2015 to a net income in 2016. Moving over to cash generation, cash flow from operations for the year was $25.2 million or $0.08 per share. This was an increase of 61%, when compared to 2015, which saw $15.6 million or $0.05 per share generated. During the year, we were also able to execute on a number of corporate initiatives. The first of which was a continuation of our dividend or the return of capital payments, which we commenced in late 2015. Secondly, the redemption of all the remaining exchangeable shares issued as part of the Minera Andes acquisition back in 2012 has left the company with only one class of share and a reduction in administration costs. And finally, the conclusion of the stock repurchase program, which the company initiated in late 2015 as well saw a spy back and cancelled total of 2.5 million shares at an average price just $0.96 per share. At this point, again I would like to thank you very much for taking the time to join us today, and I will now turn the presentation over to our President and COO, Mr. Xavier Ochoa.

[Xavier Ochoa:]

Thank you, Andrew. In terms of operations on projects, I’d like to start by recapping our 2016 production performance. Consolidated gold equivalent production in 2016 totaled 145,530 ounces, consisting of 90,264 gold equivalent ounces from our 49% interest in the San José mine in Argentina, and 55,266 gold equivalent ounces from the El Gallo mine in Mexico. In terms of our different operations, I would like to start with the El Gallo Gold Mine. At the El Gallo Gold Mine, we met our 2016 production guidance of 55,000 gold equivalent ounces with production of 55,266 gold equivalent ounces. Ore grades processed during 2016 averaged 2.14 grams per ton gold, compared to 3.41 grams per ton gold in 2015. And this was the result of having the mined out the highest grade portion of the [indiscernible]. We plan to produce 29,700 ounces of gold and 24,000 ounces of silver totaling 50,000 gold equivalent ounces from the El Gallo Mine. Production costs are expected to increase on account of lower grade and mining deeper portions of the deposits with the presence of sulfide materials is increasing with an impact on our recovery efficiencies and our unit processing costs. The total cash cost for the El Gallo Mine is forecasted to be 760 per gold equivalent ounce and an all-in sustaining cost of $900 per gold equivalent ounce. During 2016, we will be mining from three pits, out of which one is nearing the end of its life. Relative exploration at the El Gallo Gold Mine site is focusing on previously unidentified satellites of the current operation and exploring what appears to be extension of the ore bodies be mined as we speak. For 2017, we have budgeted a total of $3.4 million in sustaining capital and $1.5 million for exploration activities at the El Gallo Gold Mine property. For the El Gallo Silver Project in Mexico, during 2016 we further advance studies on the feasibility and development of the El Gallo Silver Project with the objective of identifying opportunities to reduce the initial capital investment, required to start the project, as well as identified certain synergies within the El Gallo Gold Mine, which will help us together reduce capital and operating costs to bring the financial decision threshold to a lower point on the silver price curve, that is to say give us the financials we seek at lower silver prices. We’re also looking at the adoption of marginalization such as for crushing plants and simplification and support facilities that will help improve timelines and costs. The work conducted has also indicated the opportunity to schedule differently the deposits which are part of the El Gallo Silver Project to improve the project's economics. In addition, other significant opportunities under evaluation are bolting on to the El Gallo Silver Project other deposits we have been exploring in the districts, which could be processed using the plant there and reassessing the location of the different facilities to take the most advantage of these other deposits. We expect to have a better picture of what these opportunities are by the end of the second quarter of 2017. For 2017 our budget for El Gallo Silver is approximately 6 million consisting of 3 million for exploration and 3 million for development related activities. At the San Jose mine in Argentina, during 2016 a 49% interest in the San José mine production amounted to 90,264 gold equivalent ounces, which was slightly above our guidance of 89,000 gold equivalent ounces. Production for 2017 is expected to be 50,000 ounces gold and 3,300,000 ounces of silver totaling 94,000 gold equivalent ounces from the San Jose mine. As of year-end, measured and indicated reserves were estimated at 1.817 million tons containing an average gold grade of 7.6 g per ton and a silver grade of 465 grams per ton. This represents a contained total 412,000 ounces of gold and 27 million ounces of silver, which on an equivalent gold basis is 789,700 gold equivalent ounces. Measured and indicated mineral resources at year-end were 3.5 million tons containing a gold grade of 6.4 grams per ton and a silver grade of 404 grams per ton of silver. For 2017, total cash costs are now interested in cost for the San José mine are forecast to be $780 and $990 per gold equivalent ounce. Also in 2017, the San José mine will continue to its exploration activities on its property, as well as the surrounding area. Now changing to the Los Azules Project, also in Argentina up in the Andes, during 2016, we continued to advanced baseline environmental and optimization studies and other activities required by the Los Azules Project. The 2017 drilling season was started at the beginning of the year with an initial budget of $6.4 million to be spent in the first quarter with further drilling dependent on the weather and results. Some of you may know the weather pick up significant factor on the length of a drilling season. Also in 2017, we plan to spend $3.2 million on further studies, particularly focusing on project enablers such as infrastructure for transportation and power supply, as well as other works to advance the Los Azules Project. In the United States, at our gold bar project, which promises to be our newest mine soon, we conducted during 2016 environmental studies, and other requirements to complete the permitting process for an open pit heap leach mine. The key areas of development included an updated mine plan leading to operational improvements, completion of additional metallurgical work to confirm the previous gold recovery assumptions, and the awarding of the contract for detailed design to M3 Engineering who are a leading engineering and infrastructure form based in Arizona. Altogether in 2016, we spent 2.7 million on these activities for the Gold Bar Project. The Draft Environmental Impact Statement for the Gold Bar Project will be polished on March 3, 2017 by the US Bureau of Land Management in the US Federal Register. Following the publication, the 45 day public comment period will end on April 17. Both the BLM and McEwen Mining will address public comments received prior to the approval of the final environmental impact study and the awarding of a record of decision enabling us to proceed with the project. Looking forward to receiving a favorable decision we have plan to continue with the permitting process and to initiate early stage construction during the fourth quarter of 2017. In the planned production output from the gold bar mine is an average of 49,300 ounces of gold per the year or its seven-year mine life. We believe that with the purchase of the Gold Bar South exploration property we will be able to further extend the mine life. Cash costs and all-in sustaining costs of production for the Gold Bar mine are forecasted at 728 and 995 per ounce of gold respectively. In terms of exploration, our main focus at this time is the El Gallo district. And there are focus is transitioning from having been looking in the past and the majority of the deposits that could offer outside gold and silver mineralization targets into more complex ore body modeling, which we are looking primarily at three different stores that appear promising in the area, largely containing sulfides. This new target outlook is cohering with what we see at El Gallo Silver and the deep proportions of the ore bodies being my mouth and some other minimal occurrences in and around the district, as well as historical production of gold, silver, and copper from the district always been sourced from sulfides. Our exploration program is aimed at delivering new ore feet and production to extend the life of the current operations at the El Gallo complex, and also generating new opportunities for the company. Thank you very much. Turn it over back to you, Rob.

[Rob McEwen:]

Thank you, Xavier. Recently, we announced a proposal for a friendly acquisition of Lexam VG Gold. We anticipate that the Lexam shareholders will be voting on this offer in April and the attraction of Lexam to us is that its assets will provide us with several high grade advance development projects in Timmins, Canada, which is one of the world's greatest gold districts. This acquisition is one of many steps we envision going forward in order to achieve our goal of becoming a part of the S&P 500. We continue to look for opportunities to build our resources, production, and earnings in order to achieve this goal. And I would like now to ask the operator to open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Stewart Bailey with Bailey & Company. Your line is now open.

[Stewart Bailey:]

My name is Stewart Bailey, and four or five years ago the former President Ian Ball ordered a ball mill for the El Gallo Silver Project, has prepaid $10 million for it, where is that located? Is it still at the manufacturer or is it on the site?

[Rob McEwen:]

Thanks for the question Stewart. The ball mill is sitting in a warehouse right now. We didn't it wasn't a $10 million order, it was a $5 million order. And we are looking to utilize it either at El Gallo, and we haven't had some offers recently to purchase it.

[Stewart Bailey:]

Okay. Can I ask you another question?

[Rob McEwen:]

Please.

[Stewart Bailey:]

One comment. Couple of years ago I looked at the numbers on the tails of your silver and gold and they were quite a bit below the current market value of the daily thought price at the comment, and I just want to comment that you would improve and you did, you were only eight-tenths of 1% below, which seems appropriate. So congratulations, you follow through another one of your promises.

[Rob McEwen:]

Thank you, Stewart. Appreciate it. In the past we were timing some sales. And some sales were beyond our control with our partner Hochschild Mining.

[Stewart Bailey:]

Right. Hey I have got one more question for you, I noticed your investment in Golden Predator and I went on the website to make sure that you are your fully diluted position in that company is about 11%, if you exercise all of your warrants; that worked out the other day to about $20 million. Now is that included in the 55 million?

[Xavier Ochoa:]

I can answer that for you Stewart. We do not include any value for the warrants I believe, it is just the investments and the shares.

[Stewart Bailey:]

Why not, there are sales you can tell them.

[Rob McEwen:]

Just a degree of conservatism.

[Stewart Bailey:]

Okay, but you do agree it was a one-time worth $20 million?

[Rob McEwen:]

Yes.

[Stewart Bailey:]

All right. I have been a long time shareholder, I have got stock at 5.5, I am still holding to try to get even, but I also bought some at $0.90, so I’m not unhappy. Anyway, thank you very much Rob.

[Rob McEwen:]

Thank you, Stewart. Appreciate your questions.

[Operator:]

Our next question comes from Michael Riley, Private Investor. Your line is now open.

[Michael Riley:]

Okay, it’s my belief that twice material and stock has been attacked by aggressive short sellers, with price smashing results, and so my question is, in the future will MUX management defend the stock price against aggressive short sellers?

[Rob McEwen:]

Thank you, Michael. It’s difficult to get on top of a short position. We tried to come bad with delivering results, it’s - we've looked into it before and found it hard to discern who are the short sellers, and so I’m not sure of whether it is a strategy for dealing with the attacks other than being very forthright in what we are doing and delivering on what we've said we're going to do, if you have any suggestions, I would glad I would be glad to entertain them.

[Michael Riley:]

Okay. I just want to thank you for the share repurchase program and consider enlarging the share repurchase program, thank you.

[Rob McEwen:]

You're welcome. Thank you.

[Operator:]

Our next question is from [indiscernible]. Your line is now open.

[Unidentified Analyst:]

Hi Rob.

[Rob McEwen:]

Hello.

[Unidentified Analyst:]

Hi. Do you have any more geological details about Lexam, what you are paying and what you getting and all that stuff?

[Rob McEwen:]

You can go to the Lexam website, we are not really able to provide a lot while we are making this proposal.

[Unidentified Analyst:]

Okay.

[Rob McEwen:]

So, it is all published and then…

[Unidentified Analyst:]

And then you are neglected to do that, don’t do that. And then second, another comment when are you going to submit your full financials to SEDAR, roughly?

[Andrew Elinesky:]

You should see them on SEDAR now, they were on EDGAR as soon as we filed yesterday in the afternoon.

[Unidentified Analyst:]

Again I neglected to check, and finally as to short sellers, the – two part of the advice come, one from telling around, what I believe was Napoleon's finance minister and develop your business and the short sellers will get carried out by themselves. And in the meantime if anybody advises you to consider any action against short showing - I'm not short of course - it distracts you from building your business, just focus on your business. The rest will take care of itself.

[Rob McEwen:]

Thank you.

[Unidentified Analyst:]

Welcome. I’ll see you guys.

[Rob McEwen:]

Yes, bye.

[Operator:]

[Operator Instructions] And our next question is from Mark Liner with Private Investor. Your line is now open.

[Mark Liner:]

Congratulations Rob and to the management team for a very good 2016. I have a couple of questions if I may and on a more macro level you’ve had predictions about price of gold would be much higher in the year or couple of years from now. Can you talk a little bit more about what your projections of the price of gold and view of the fact that federal reserve will probably raise interest rates two or three times this year and the price of the dollar they continue to increase, so that’s a general question about issue of gold. And then in the current mining, a question is, you said Lexam acquisition is one of many steps which - long term goal of joining S&P 500. Is it possible for you to tell us what are some of the other steps that you might be planning to reach that and what year do you think you will be able to reach that goal?

[Rob McEwen:]

Okay. Thank you, Mark. Let’s start with gold. The market has been trending up since the election, despite an improving price of the dollar, there seems to be a dining in the market, an appreciation that the spending that has been proposed on defense and infrastructure is going to be large that the unemployment rate is low and there is a reasonable chance that inflation is going to rear its head and become more evident in the not too distant future. And that is why you have this parallel course appearing in the medal, in the dollar. I think with the interest rate increases you are going to see people around the world putting money towards the dollar, but they will also be starting to put more money into hard assets such as gold and silver, but we are bouncing around a lot. There is a lot of volatility but the trend appears higher for gold, and I feel that we’re going to see significantly higher gold prices in the next several years. I tried prices, recently and I haven’t seen in materialize. So, I will just leave the cases going higher and most of my investments during the world, so least on putting my money where I am out of this. In terms of Lexam being one of the many steps, we’ve been looking for partners where we could accelerate our advancing towards the goal of getting into the S&P 500, and some people might not realize why we are going there, but the S&P 500 has one gold stock in it, and that is [indiscernible]. There is another way of getting gold through the S&P and that is buying shares of pre-port which is primarily a copper producer with gold, but there is an enormous amount of money measured in trillions of dollars that is invested by index funds directly in the S&P 500 and I feel that the waiting of gold in portfolios is going to be increasing as the price of gold goes up and 80% of the value of market in America contained in the S&P 500 stocks, and 99% of the precious metal companies in the world are acknowledgeable of getting into the S&P 500 by virtue of where they are incorporated. They are not American companies. Right now there are only three companies that market caps over $1 billion, I think they are still above a billion. Where there is [indiscernible] and ourselves and the field is very small and what you get is a more stable shareholder base and lower cost to capital and provides an engine for growth, a low cost engine for growth. So where we are looking, we are looking through the Americas, parts of Europe, we are looking for situations where you don’t have to pay top dollar for the asset, but that putting ourselves with someone else will create more value just by the combination. So those are the steps and it’s, I think today more than ever before we’re in a much better position to do it, last - in 2015 our share price was very week,2016 we improved. We have more cash today, we don’t have any debt. So we have clean balance sheet and a diversified asset today that I think is attractive to a number of companies and that’s, we want to just add to that asset base and build value under it. So not only are we increasing our projection and our resources, but we are increasing our profit on a per share basis rather than just in an aggregate number.

[Mark Liner:]

What is the criteria to get into the S&P 500?

[Rob McEwen:]

You need a $5 billion market cap, you need to be an American Incorporated Company. You need to have certain trading volumes and you have to have at least four consecutive quarters of earnings and there are a couple of other requirements, in total they are seven, but the biggest hurdle for us is the $5 billion market CapEx.

[Mark Liner:]

Alright and the last question is, for the year 2017 do you anticipate any need for more equity financing to raise the money for maybe these acquisitions for your plan or will you do it for other ways?

[Rob McEwen:]

We’re very opportunistic, so we will look for opportunities and then assess what capital we may or may not need.

[Mark Liner:]

Okay, thank you very much. Congratulations again to you and your team.

[Rob McEwen:]

Thank you, Mark.

[Operator:]

Our next question comes from Karl Elkins [ph] a Private Investor. Your line is now open.

[Unidentified Analyst:]

Well congratulation Rob, another great year. I want to thank the short sellers the opportunity to buy more maturing and mining shares at $0.96 a share and about the upcoming “merger acquisition” thanks from the queue in capital, some of their publications years ago, I happen to own some shares of [indiscernible] and my question is this, are you going to have to refuse yourself from voting your shares, in other words where to come up a shareholder vote for the acquisition to the McEwen Mining shareholders.

[Rob McEwen:]

Yes, I will Carl. Thank you for the question, just for everyone else in the line, I own 27% of Lexam. The New York Stock Exchange requires, if there is a related party transaction McEwen Mining can issue no more than 1% of its stock to that related party, anything above that has to be put the shareholders for both had a meeting and if there is an excess, I would anticipate we would have a vote at our meeting at the McEwen Mining Annual Meeting for our shareholders to say, either we like it or we don’t. But there are two votes required for the Lexam shareholders, there is a – I believe it is better than a 50% vote in favor by the shareholders, but I called the minority, but they are excluding my shares as a vote and then I second vote where you need two-thirds majority of all shareholders. So, it is two-thirds of this minority have to approve and then a better than vote of all the shareholders again. So, yes…

[Unidentified Analyst:]

Thank you very much Rob.

[Rob McEwen:]

You’re welcome Carl, thank you.

[Operator:]

Our next question is from Joe Barnes a Private Investor. Your line is now open.

[Joe Barnes:]

Yes, I have two questions, assuming that the Lexam vote goes through, positive, how much will that dilute the shares of MUX for McEwen Mining? And my second question is, I wanted to get a little more update on the Argentina mine, are you getting any enquires from people interested in that? Basically, I just want to get up on that?

[Rob McEwen:]

Okay. Let me first deal with Argentina. The political environment in Argentina improved significantly over the last year. The government is trying to contain inflation down there. So far they are making limited progress, but the direction is going in the right direction and the City of [indiscernible] their Public Union just accepted a contract for an 18% increase in wages for the year, which is considerably below where they were in the last year. So, government seems to be getting on top on their economics a bit and I expect it to improve some more, there is still big price pressures and there is some hesitancy to come in to the market. However, we have seen interest been expressed in our copper project, but as far as our San Jose mine neither ourselves or Hochschild have been seller, there haven’t been any offers recently. So, I guess it’s easy to be that sense, we are not a seller if there is no offers. Goal Bar was just below us and they are building their production. They had a rough start, but they are moving forward, maybe one day if the government - there also is a government by-election coming up in October and the current government doesn’t have clear majority. So I think there’s some caution amongst investors whether they want to commit before that election result is announced.

[Andrew Elinesky:]

And over to the dilution Joe, on the time of announcements it was calculated that McEwen Mining would issue just under 13 million shares for the acquisition Lexam, which is just about 4%. So, spending on the final outcome it will still remain less than 5% of the current capital of McEwen Mining.

[Joe Barnes:]

The copper mine, what you were saying is people are not willing right now to consider purchase of that, but what about your plans as far as developing the mine yourself that was a possibility?

[Rob McEwen:]

Yes we were going - we’ve been doing studies on it from not only just what type of process we’d use, but we also look at the infrastructure we need to put in place, roads coming, power where would we ship the product that we produce. Would it be out through Argentina out through Chile, and a lot of work has been done in that regard. And we’ve looked at the process with the removal of the export taxes in Argentina, which was a very large plus for the operation. We’re able to envision a different processing plant that significantly reduced the CapEx at least in our model. And we’re looking at whether we should stage the development. The capital required to develop it is well beyond our treasury in terms of being able to finance it in a current state. But with the right economics and the copper price improving it is a possibility, but at the moment we’re looking more for a joint venture of that asset.

[Joe Barnes:]

If you’re looking more for a joint venture then you’re for potential sales of mine, is that it or …

[Rob McEwen:]

Well it could be sale as well, but I was just - it all depends on price.

[Joe Barnes:]

Okay. Alright, thank you.

[Rob McEwen:]

You’re welcome Joe. Thank you.

[Operator:]

Our next question is from [indiscernible]. Your line is now open.

[Unidentified Analyst:]

Hi, Rob how are you doing?

[Rob McEwen:]

Thank you, Robert.

[Unidentified Analyst:]

Okay. Last meeting, annual general lunch and meeting, I ask you about the property that we have in Mexico for silver and you mentioned that you would like to start working when silver prizes goes higher. Are planning in this stage or higher say over $20 over $25?

[Rob McEwen:]

We were, we've been maintaining for a while that we need it better than $21 silver price before we want to put a shovel in the ground. When we last spoke we were looking at having a central location at highly deposit of El Gallo silver. And then we had a satellite deposit called, subsequent to our conversation we have done exploration and found satellite deposit that might be better served being developed at a Palmarito site. And at the El Gallo, it is shorter hall distances and greater ease at building our facility. So the price still is at $21, the form of the development is changing as we speak and by mid-year we will be able to share with you our plans there. I am encouraged by the silver price going up right now. So, top of our list it is for the development projects.

[Unidentified Analyst:]

Wonderful, good encouraging news. Thank you.

[Rob McEwen:]

Thank you, Robert.

[Operator:]

And our next question is from [indiscernible]. Your line is now open.

[Unidentified Analyst:]

Hi Bob. I agree with everything, we talked about with your way back since your, at our first meeting in the Denver Annual Meeting at one time. The question I have is the election is the good move in the right direction, but since the gold silver ratio is so far out of line and I am a believer looking at all the data, we are moving closer to a, maybe a 20 to one or something like that, so the question I have is our - is why not be somewhat more aggressive on the silver acquisitions, while it is still very cheap at these levels, alright. A lot of guys are fairly at breakeven and I would say there must be some properties out there with some companies where they would love to combine with us and as a result we move ahead and two or three years earlier - then earlier on the New York than it seems likely, any thoughts on that? I think we talked about it one time two years ago.

[Xavier Ochoa:]

Thank you, [indiscernible], I agree with you. The ratio does seem quite out of the line. The Lexam transactions, let's call it convenient. Whenever you're buying a company, even though you might do a lot of due diligence there's always seems to be surprises. In the Lexam case, it's an affiliated company that we've known for quite a while actually and the accounting for. So we had firsthand knowledge of it and felt that it was a good tuck-in at this point. Looking outside, we're looking at both gold and silver. And if the right opportunity comes up, I take your point that a lot of the silver producers are hanging on. And we’re - I just want to assure you, we're looking at both of them, both types of ore. And I couldn't agree more…

[Unidentified Analyst:]

Okay.

[Xavier Ochoa:]

I think there’s going to be a swing in that ratio.

[Unidentified Analyst:]

Okay. One other comment, while I’ve seen a lot of people moving into the Yukon, you have some minor, or the company has minor interest in some companies in some companies in the Yukon and or this Northern BC/Yukon, any thoughts about how you see it out there?

[Xavier Ochoa:]

Well, the Yukon, I guess, most of our exposures has been on gold, but there’s silver as well, base metals. But the Yukon is becoming a very hot area right now, I mean, it was long ago, but people have found new areas of mineralization. I think it's an area one should be watching very closely. And as you said, we have some exposure up there already, and it gives us a good listening post for what's going on and possibly for opportunities.

[Unidentified Analyst:]

Okay, great. Okay, thank you very much. I mean, obviously, with the three majors having moved into the Yukon, you know, that this - this will finally emerge maybe a few years. Thanks very much.

[Xavier Ochoa:]

You’re welcome. Thank you.

[Operator:]

At this time, I’m showing no further questions. I would like to turn the call back over to Mr. Rob McEwen for closing remarks.

[Rob McEwen:]

Thank you, operator. I just want to ask everybody to remember that gold is money, it’s going higher so as price of silver. And I wish you well in your investments. Thank you for being a shareholder.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a great day.