Pan American Silver Corp.
Q1 2019 Earnings Call Transcript

Published: 9 May 2019

[Operator:]

Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver First Quarter 2019 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Siren Fisekci, Vice President, Investor Relations. Please, go ahead.

[Siren Fisekci:]

Thank you, operator, and welcome everyone to Pan American Silver's first quarter 2019 conference call. We released our results after yesterday's market close, and a copy of the news release and presentation slides for today's call are available on our website. In a few moments, I will turn the call over to Pan American's President and CEO, Michael Steinmann, who will provide a brief review of our results. We will then open the call to questions and answers. Joining us for the Q&A portion are Pan American's Chief Operating Officer, Steve Busby; Senior VP, Project Development, George Greer; Senior VP, Technical Services and Process Optimization, Martin Wafforn; and VP of Business Development and Geology, Chris Emerson. Before we get started, I'd like to remind everyone that our news release and certain statements and information in this call constitute forward-looking statements and information. Please review the cautionary statements included in our news release and presentation as well as the risk factors described in our most recent Form 40-F and Annual Information Form. I will now turn the call over to Michael.

[Michael Steinmann:]

Thank you, Siren. Welcome everyone joining us today to discuss our results for the first quarter 2019. We closed the acquisition of Tahoe Resources on February 22 and the results for the first quarter reflects the contribution from the mines we acquired starting on the closing date to March 31, 2019, a period of 38 days. Revenues in Q1 2019 were $232.6 million, up 12% from Q1 2018, mainly from higher metal sales except copper, including higher gold sales from the newly acquired mines. The higher metal sales were partially offset by lower metal prices. We also hand an $8 million settlement adjustment from the inventory build in Q4 2018. Net earnings for the quarter were $33.8 million or $0.19 per share. Adjusted earnings came in at $8.7 million or $0.05 per share. Strong operating cash flow of $65 million Q1 2019 before changes in working capital and interest and taxes paid, funded our sustaining capital tax payments and dividends. Taxes in the quarter were about $34 million as usual, tax payments are heavily weighted to the first quarter of the year and carry partially into the second quarter. The first quarter's cash flow was obviously impacted by cost associated with the completion of the Tahoe acquisition. We drew $335 million in our credit facility in the quarter to fund the $275 million cash payment for the Tahoe acquisition and to settle the $125 million previously drawn on Tahoe's credit facility. These uses of cash including $38 million in working capital changes mostly related to transaction closing costs, resulting in net cash used in the quarter of $12.9 million. At the end of March, we had a cash and short-term investment balance of $121.6 million and $165 million available under our credit facility. Working capital of $771.7 million, include the $376.4 million of net assets relating to the Bell Creek and Timmins mines, which are being classified as discontinued operations held for sale and does included in working capital as of March 31, 2019. Total debt was about $363 million, which includes $28.1 million in lease liabilities, the majority of which followed from the application of the new IFRS 16 rules. Operations in the quarter were strong, stable and on track to meet our updated guidance for the year. Consolidated silver production of 6.13 million ounces was in line with our expectations. The increasing gold production to 80,500 ounces reflects the contribution from the acquired mines over the 38 day period starting February 22. Meanwhile, we continue advancing on the cozy and work in development near our Manantial Espejo towards initiating production later this year. To better account for the impact of the gold assets we acquired, we have adjusted how we report cash costs and all in sustaining costs. We are now reporting unit costs on a segmented and ounces sold basis. The silver segment reflects our operations other than the gold mines we acquired through Tahoe with revenues from all metal sold except silver being treated as a byproduct credit to cost. The gold segments related to the acquired gold mines Shahuindo, La Arena and Timmins that all produce nominal amounts of silver. For the gold segment, the revenues from silver sales are a credit to costs. The consolidated cost metric includes all of our current operations and is calculated on a silver sold basis with all byproduct metal sales, including the gold revenue from the acquired mines as credits to costs. Consolidated all in sustaining costs also include all G&A and expiration expenses. These cost metrics are detailed in our MD&A, which I encourage you to review to help better understand these changes. We have also updated our 2019 animal guidance to incorporate the production edition from the acquired mines. Again, we have provided segmented guidance for our silver mines, gold mines and consolidated operations. On a consolidated basis, total silver production is expected to be 26.6 million to 27.6 million ounces and total gold production is expected to be 570,000 to 620,000 ounces during 2019. Cash costs on a consolidated silver basis with all gold revenues credited to costs are expected to range between negative $2.25 to about $0.50 per ounce sold. Consolidated all-in sustaining costs are expected to range from $7.75 to $10.75 per ounce sold. Again, including all G&A related expenses and exploration costs. An operational highlight in a quarter was the completion of the shaft upgrade to 1,080 meters at the Bell Creek mine in Canada in February. The shaft is already performing at full capacity with very limited ore or waste being trucked up the ramp. This remarkably rapid commissioning time has made possible because of a highly experienced and talented mining team at Bell Creek, who essentially completed the design and installation of the shaft in-house with limited contractor support. Capital expenditures in 2019 are estimated to $243 million to $253 million, of which $40 million is allocated to project spending, with the balance allocated to sustaining capital. We expect the second quarter to be the heavy capital spending quarter as we take advantage of the dry season in South America to advance leach pad construction and enhance water management infrastructure. We expect cash flows to improve in the second half of the year. Drilling at the newly discovered skarn deposit at La Colorada continues to return exceptional results with wide intersect of polymetallic mineralization. Hole U-26-19 returned over 276 meters at 34 grams per ton silver, 3.76% zinc, 1.69% lead, and 0.18% copper. Hole U-22-19 accounted 84.5 meters with 63 grams of silver, 5.18% zinc, 1.27% lead and 0.13% copper. That's just two of the drill highlights and full table of results is provided in our news release and conference call slides for the first quarter. Drilling of this exciting target will continue throughout the year with six to eight drill rigs from underground and surface. Drilling of a total program is about 50,000 meters. Due to its potential size, location and metal composition, we are treating this current discovery as a special project, independent from the current La Colorada silver production and we plan to release a first resource estimate at the end of the year. In 2019, our priorities are to integrate and optimize the Tahoe operations and capture available synergies. We're very pleased with how the integration is progressing, while we continue to hold the sector leading strong balance sheet. We would prefer to reduce the level of that we absorbed to complete the acquisition and are looking at opportunities to divest some of our non-core assets for a fair price and use those proceeds to reduce debt. As such, I note that our Q1 financial classify our Timmins mine assets held for sale. I would also like to highlight that we also have some non-core properties from the original Pan American portfolio that we could divest in the future as well. In Guatemala, our goal is to establish a reputation as an honest and credible partner with our communities and other stakeholders. At this stage, we are focused on gaining a deeper understanding of expectations and concerns about the Escobal mine. Meanwhile, the Guatemalan government is implementing the four-stage ILO 169 indigenous consultation process that was ordered by the Constitutional Court and its being administered by the Ministry of Energy and Mines. We are participants in the process and diligent responds to questions and requests being asked by the Minister, as the process take shape. We understand that the first stage of the consultation, but Minister of Environment reviewed, defined and recommended the mines area of influence boundary has been completed and the second stage pre-consultation process to define and agreed the terms, timelines and mechanism for the consultation process is underway. At this time, there has not been any timeline provided for this consultation process. We take consultations with communities of interest and indigenous people very seriously and are committed to support the process. The past quarter was a very busy period with large cash outflows associated with the acquisition transaction. Operations are performing well and we are looking forward to the contribution of new gold ounces from the acquired mines to ramp up of the underground mine at Dolores, the new shaft attainments, the mining rates at Shahuindo and to start of production from our new Joaquin and COSE Sur Este mine developments in Argentina. In addition to the strong diversified base of operations, we have exceptionally strong catalysts for growth with our La Colorada exploration discovery, potential development at Navidad and the potential restart of operations at Escobal. These are long term prospects that could become significant value generators for us. That wraps up my formal comments and I like now to open the call for questions.

[Operator:]

Certainly, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Chris Thompson with PI Financial. Please go ahead.

[Chris Thompson:]

Good morning guys. Thanks for hosting the call. And just one quick question to start off. Just to looking at La Arena, I mean you're guiding for between $54 million and $56 million in CapEx guidance for this year. Obviously, it seems like it's a high cost to mine with the limited mine life. Can you just break that down for us? Where's that CapEx is going?

[Steve Busby:]

Yes. Hi Chris, Steve here. The vast majority of that is pre-stripping. There's about almost half of that goes into open-pit pre-stripping. We're in a waste phase on what we call Phase 7 of the pit lay back. So we're moving quite a bit of waste that will open up the ore towards the latter part of the year. And then there's also a major significant leach pad expansion going on. So combined, they probably represent three quarters of that capital.

[Chris Thompson:]

Got it. If you got a sense of the plans for the acid here, I mean, specifically La Arena 2, the porphyry opportunity.

[Michael Steinmann:]

Sorry, I didn't get that. Chris, could you repeat?

[Chris Thompson:]

Yes. Sorry Mike. I'm just questioning the plans for the mine, understanding that there is a porphyry development opportunity there?

[Michael Steinmann:]

Yes. Sorry, La Arena 2 that you're talking about.

[Chris Thompson:]

Correct.

[Michael Steinmann:]

I think it's very clear when you look at the reserves of La Arena outside. So La Arena 1, if you want to call it, like that's our current mine. It's probably somewhere in the three to four year of reserve depending a little bit on the exploration success that could maybe drag out a bit longer. But Tahoe identified that very large porphyry, which is called La Arena 2, which is a copper gold, porphyry, probably about 78, if I recall, right, about 70% to 75% of the revenue it will be from copper. Very large project, which is an interesting project for sure, but not the project that really fits in our portfolio, I think I was very clear from the beginning on that. La Arena 2 has as referred to, which is the sulfide part of La Arena that would fit into a very large base metal company than into Pan American Silver.

[Chris Thompson:]

Great. Thanks Mike. And then just finally, moving on to Shahuindo, maybe a little bit of an update there as far as operations are concerned. I understand that's not all the ore is being put through the agglomeration plant at the moment. So just describe the sort of mix that's going through that and you maybe just walk us through what the expectation is there in the near term?

[Steve Busby:]

Yes, Chris. We happy to – we're very pleased with what we're seeing at Shahuindo ramping up production there. We did during Q1. We were able to mobilize enough of the mining fleet now that we're now running at full capacity, 35,000 tons a day of ore being released. And very attractive, less than one-to-one strip ratio coming out of the mine. So at this current time, we're currently run of mine leaching that ore. That ore that we're finding in this phase of the pit development is really suitable for run a mine ore. We're not seeing the siltstones. These low permeability ore to any large degree and we don't – based on our current geologic understanding, we don't think we'll run into a lot of that type of ore during 2019. We'll see a little bit of it, but probably in quantities that we could sufficiently blend with our run of mine and run a mine. So right now, we are commissioning kind of dry commissioning and getting the crushing and agglomeration plant ready to run. But as I mentioned, we don't anticipate actually operating that because we went out to mobilize a fair amount of operators and mechanics and the costs for cement and such. It just isn't justified where the type of ore we're seeing. And it's really interesting because the geologic realities of what we opened up in this first phase of the pit, both in terms of gold grade and reconciliation, we're seeing a little bit different geology than what was interpreted from the wide space expiration drilling. And so far in the pit, we've seen some pretty attractive positive gold reconciliation where grades between 20% – 15% to 20% higher than projected. And that's coming from some cross cutting structures that were parallel to the drilling and we think that feeds this whole geologic modeling that there might've been a bit of over interpretation of the siltstone lithology that requires the crushing and agglomeration permeability control. So it's a real good news story for us in 2019. And as I say, we just now got up to full capacity kind of towards the end of Q1. So we're really excited about the opportunity there this year.

[Chris Thompson:]

Thanks, Steve. Thanks. And congrats guys for the 25 years.

[Steve Busby:]

Thank you.

[Operator:]

Our next question is from Sherry Deng with Scotiabank. Please go ahead.

[Sherry Deng:]

Hi, guys. Thanks for taking my call and just a quick question. Could you please give us some color on the sustaining CapEx going forward beyond 2019 for the new gold assets?

[Steve Busby:]

Hi, Sherry. Yes, this is Steve. We don't really have that put together yet. We're looking at another lay back phase opportunity in La Arena. That may change that quite a bit. Shahuindo, as I mentioned, we're kind of reevaluating the whole geologic model there as to what may be required in that aspect. So we're really not prepared to provide any more sustaining capital beyond 2019 at this time.

[Wayne Vincent:]

Yes. It just – the Wayne here, again we gave only the guidance for this year 2019, obviously, before Pan American showed longer guidance, and as still a strong believer that that's the right thing to do over longer term. But right now, until we have the integration finalized, this is just what we do that I think it's better to give the 2019 guidance here in detail, finalize the integration and then look at the longer guidance, outlook again.

[Sherry Deng:]

Okay. Thank you. That's it for me.

[Steve Busby:]

Thank you.

[Operator:]

Our next question is from Lawson Winder with Bank of America Merrill Lynch. Please go ahead.

[Lawson Winder:]

Hello and good morning and I'll also congratulations on the 25 years. I hope the celebration is fun. Several questions from me, maybe I'm not sure if you comfortable answering some questions on Timmins. But basically, one key question that I'd love to get an answer to is what the sort of mining dilution was that between those two underground mines in the quarter?

[Michael Steinmann:]

Yes, Lawson. Relative to the Bell Creek, we've got really good control on the mining dilution there. Don't quote me on the numbers, but I've heard numbers like 10% to 15% of what I'll call external dilution, which is well within what they kind of planned. With the new shaft, Bell Creek is really looking positive. We're starting to see the efficiencies of the shaft, reduction of the trucking required, I mean elimination essentially the trucking required up the ramp. I think, I view it kind of like we viewed La Colorada almost two years ago. Now when we started that shaft and it just there is lots of upside to capture there and it's really brought a dose of efficiency to that site that's generated a lot of enthusiasm. It's very exciting. And they do mine very controlled there. We have had some issues over Timmins West in the Gap 144 Deposit. There was a couple stopes where we were – we did incur a little bit more dilution than we had anticipated during Q1 and they were in some lower grade parts of the initial developments of some of those stopes. The team has now gotten control of that and we do see that turning around to meet kind of guidance, grades, and throughput from that point on. So we're not real concerned about any excess dilution at either of those mines going forward.

[Lawson Winder:]

Got you. Okay. And then just what were the average underground mining cost per ton if you have that?

[Michael Steinmann:]

For the quarter, I would say that Timmins, they were roughly call it $90 a ton overall. That includes the G&A and the processing and the haulage from Timmins West.

[Lawson Winder:]

Okay. Okay. And that's on U.S. dollars, right?

[Michael Steinmann:]

Yes, correct.

[Lawson Winder:]

Okay. Great. And then I'm just looking at Peru. It seem like Huaron saw cost per time fall quite dramatically in Q1 versus 2018 whereas Morococha seem to have gone the other way. Is there any color you could provide on what might be driving that?

[Michael Steinmann:]

Yes, that's a good catch. At we're on – we are seeing some efficiencies on this deeper level development. So when we developed into that deeper level where we kind of incurred some operating costs as we kind of developed into that area. And now that we're fully developing down on the 100, it's kind of – we're seeing a bit of reduction to that development charge to operating costs. That's what you're seeing there. At Morococha, it's a matter of sequencing. We were – there were a couple key underground equipment deliveries we needed at the Manuelita area of the mine that hadn't come in as we had planned early in the quarter. And that equipment we have to tear down and dropped down a shaft to get into operation. So we didn't get those into operation as planned and it forced us to do re-sequencing a little bit of the mine away from some of the silver rich ores into more zinc rich ores. And unfortunately given the width of the veins that we mine, that's really what drives the unit cost per ton. It depends on the type of mining we're doing and then it moved into that type that carried little bit higher cost.

[Lawson Winder:]

Okay. So where on – I mean it sounds like those are fairly sustainable efficiency. And then on the other side, it sounds like Morococha those higher costs could continue for a couple of quarters. Would that be a fair characterization?

[Michael Steinmann:]

I think that's a fair characterization, Lawson. I will say that typical in Peru, we typically do are collective bargaining with the unions towards midyear and sometimes we have to clawback or capture back some pro rata costs. So we do anticipate higher costs in the second half of the year as these inflationary costs and escalation costs hit us, which is what we planned for when we provided our guidance. So we do think we'll come in towards guidance on both mine at this time.

[Lawson Winder:]

Yes. That's great. That's very helpful. And then, so I might just ask a couple of questions on the financials. So as a result of the acquisition and there was a fairly substantial working capital build. Just curious if that's something that you guys can start to work back down over the next couple of quarters. Is there's something that might just kind of stay there?

[Michael Steinmann:]

Yes, I'll pass that on to Cam Paterson, our VP of Financial Reporting.

[Cam Paterson:]

Yes. Thanks, Lawson. In terms of working capital on the balance sheet, I think important to note that the essentially doubling of working capital you're seeing is the direct result of the classification of the Timmins assets says held for sale. So the assets and liabilities are now in current assets. So that's really what you're seeing that's increasing that amount.

[Lawson Winder:]

Okay. It looked to me like though there was it just an increase in accounts payable excluding those assets? Or am I incorrect?

[Cam Paterson:]

Either there's directions both sides, but those – the net impact of the not discontinued operations are related to the acquisition. We've seen increases in inventory. Obviously, we've seen an increase in accounts receivable related to the timing of some of our concentrate sales. And of course, accounts payables have increased with the scale of the company.

[Lawson Winder:]

Okay. So those are just likely to maintain going forward.

[Cam Paterson:]

A lot of it has to do with timing, but of course with the increased size of the company that we're going to see working capital balances that are higher than they were prior to the acquisition.

[Lawson Winder:]

Yeah. Okay. No, that's great. That's basically – that's exactly what I was getting at. And then also just on the care maintenance guidance for Escoba1 $22 million to $24 million. Is that a full cash number or is there some sort of non-cash inventory component in there?

[Steve Busby:]

No, that's a full cash number loss. However, we do still have – we're anticipating the significant amount of that recovery during the year. That could be as much as half of that coming back out us. And I want to keep in mind that was from February 22. It's not a full year.

[Lawson Winder:]

Okay, great. And then, probably a question for Michael, just – are you able to talk at all to what assets in the legacy Pan American portfolio might be considered non-core at this point?

[Michael Steinmann:]

Well, I think, I gave some hints on that. If you look on some of our presentations further back, for example, we own 25% free carry into production in a large – very large zinc project in Peru called Shalipayco that is run by Nexa Resources right now. And they earned in into that project that belonged to Pan American way back. And as I said, 25% free carry to productions. So that for sure a non-core asset for us, we don't need – not looking for a minority interest in a large base metal mine. We still have a few properties around there like La Bolsa and Pico Machay for example, one in Mexico, the other one in Peru, two gold assets that are for sure with the new size of the company and are too small for us, that we would look to diverse. So there's a group that we are going through it and while I might add just a general – a few general comments here. Obviously very early days of the transaction, I'm incredibly happy and really impressed how the team handles the integration is going really well. But it is early days. Especially when you look at the quarter, it's only one month and eight days, that we included the Tahoe, so that's in our production numbers and financials. And I would also like to caution everybody that when you look at the guidance, obviously for the same reason, the gold guidance, production and costs, et cetera for Tahoe assets is only given from February 22 on. So you can't really very easy compare it to some former numbers that Tahoe would have put that last year or before for a full year production guidance.

[Lawson Winder:]

Okay. Thanks for that. And then just maybe one more on the exploration at the La Colorada skarn. And I noticed in one drill hole there was like – there's really high intercept, which the massive silver intersection, I mean, was that skarn mineralization that intercepted that or are you seeing a different type of mineralization at those sort of heights?

[Chris Emerson:]

Sure, Lawson. Chris here. Obviously we're drilling up from the upper part of the – the lowest part of the mine but within the system relatively high. So as we drill through, we're going through epithermal veins and then we're going into mantos and then into the skarn. So yes, we are hitting vein – high grade veins and obviously that is what you're seeing in that 86, which you are referring to as the 46 kilos of silver. I just one of the highlights, great drill holes, which obviously we're very encouraged with.

[Lawson Winder:]

Okay. Great. Thanks guys.

[Michael Steinmann:]

Thank you, Lawson.

[Operator:]

Our next question is from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

[John Tumazos:]

Thank you very much and congratulations on all the recent and longer-term successes.

[Michael Steinmann:]

Thank you, John.

[John Tumazos:]

Concerning, the Ontario gold assets, might you consider keeping the non-Timmins prospects or projects, Pan give us about two hours east, Juby is at least in our south, it wouldn't use the Bell Creek mill. I think they're each 4 million or 5 million ounce resources with a lot of optionality. First question.

[Michael Steinmann:]

Yes. Thank you, John. Look, as we stated, these assets are – in our financial stated as assets held for sale. Process is obviously going on. So we are looking at many different possibilities and opportunities to generate value for our shareholders out of these assets. I always made the statement before that there is no urgent need for us neither to do anything, neither on the Tahoe nor the Pan American side, we can be very patient. We are in an incredible strong financial position here still after the transaction. But we are looking at many different opportunities here for the Canadian assets as well, John. And it's probably not the right time as we are in the process to go in this kind of details. But yes, I want to assure you that we look in any possible way to dice and slice it.

[John Tumazos:]

Concerning the La Arena sulfides Tahoe's technical study February last year, it was very impressive. They drilled the La Reyna sulfides by comparison 35 times more densely than Northern Dynasty and 3 times more densely than Rosemont and QB sulfides that Hudbay and taker [ph] putting into production. They also have a very good mining costs per ton. The sulfides are a known quantity underneath an oxide where you already have a truck shop, workforce, et cetera. Why not put that up for sale? The copper companies are rosy eyed fool of themselves, electric cars tomorrow, all that kind of thing where there's 20 or 30 gold assets for sale or about to be for sale.

[Michael Steinmann:]

Yes. So I think I have been pretty open and straight forward with that La Arena to copper deposit or copper gold deposit that you are referring to is a non-core asset for us. I think I was clear that from the beginning on, but I still maintain that position. I think this is a much better hands. I really like the deposit. But we are a silver or precious metal producer and this kind of deposit, very large, very interesting copper deposit is in much better hands with a large copper producer. I absolutely agree with you.

[John Tumazos:]

I think there's a chance you get more for that then for the Timmins district gold. Last question, forgive me, I'm just a dumb American. My U.S. account list zero for the value of a contingent value rate. What has it been trading at up in Toronto?

[Michael Steinmann:]

It is not publicly trading, so I don't have a number for it, John.

[John Tumazos:]

If you've got it listed in Toronto or have five character NASDAQ symbol for it, it would be very convenient for the loyal Pan Am shareholders that came in from Tahoe. Thank you.

[Michael Steinmann:]

Thank you for your questions, John.

[John Tumazos:]

Thank you.

[Operator:]

Our next question is from Mark Magarian with Wells Fargo. Please go ahead.

[Mark Magarian:]

Hi guys. Good job and on a solid start following the acquisition. You may have already touched on this, I'm sorry, I've just been in and out on this call. But you've put down Timmins and Bell Creek as assets held for sale as far as you reported your results. Where are you with the process of those assets being disposed?

[Michael Steinmann:]

It's a normal process like any process that you would do when you run something like this. There's a large amount of companies that look at it. As you can imagine, there is a big interest in gold assets in a jurisdiction like Canada. And it's moving along with data room and site visits. So, that's where we stand right now.

[Mark Magarian:]

Okay. Thank you guys.

[Michael Steinmann:]

Thank you.

[Operator:]

Our next question is from Josh Kenter with Summer Road LLC. Please go ahead.

[Josh Kenter:]

Hi guys. Good morning. Just talking about the Escobal situation. You mentioned that the review process was completed. Can you kind of talk about how that went? Did it go in your favor? Was the government useful like in those negotiations? Maybe kind of just guide us as going forward how often we'll get updates from you guys about the next steps?

[Michael Steinmann:]

Yes. Thank you for the question. I told you in the call, yes. I mentioned that the first stage of the consultation process has been completed. We also aware that there have been some challenges on that and it's important to note that the consultation process is being led by the Guatemala Ministry of Mines with an oversight from the Guatemala supreme court. So what we do or can do is, fully support, obviously answer any questions that we get. As I always stated from the beginning on the transaction, there is no timeline to this. This will take time. We want to take the time to hear all the concerns and listen to everybody. And understand what the concerns really are and how we could address them in the future. So there is no timeline to it. Please be patient with us and that can obviously give updates quarter-by-quarter. But as I said, this is not advancing that fast right now as expected. So there won't be too much updates or big news every quarter. As I said, thinking longer-term here as a project.

[Josh Kenter:]

Got it. And the previous management team kind of guided us to December 2019, as kind of the end date of when this would potentially resolve. I know you don't want to give kind of a timeline, but would you say that that should be – we should push that back now?

[Michael Steinmann:]

Absolutely.

[Josh Kenter:]

Do you have any best case scenario versus kind of a worst case? I mean, would you say best case, a certain time, worst case a certain time?

[Michael Steinmann:]

No. I don't have any timing on this. Also I said, as long as it's going to take to get this done right this is very important to us and it will take time. We are working on it. As I said, we own the assets on four months and eight days. So, obviously we need more time to work on this. But no, I'm not able to give you any timeline on it.

[Josh Kenter:]

Got It. All right. Thank you.

[Michael Steinmann:]

Thank you.

[Operator:]

Our next question is from George Brickfield with BTIG. Please go ahead.

[George Brickfield:]

Yes. Hi, good morning. Just one follow-up on the Escobal mine. The pre-consultation stage that you're in right now, do you have any kind of estimate timeline on that stage completion?

[Michael Steinmann:]

No, the government doesn't give us any timeline on this. This process is run by the Ministry of Mines together with the help of many of the ministries. And as I said, at the moment we are obviously asking or answering any questions that they may have and collaborate with the ministries. But, no, there is no timeline given by the ministry for that.

[George Brickfield:]

Okay. And then last question. Do you know how many stages there are in the process with the Ministry of Mines?

[Michael Steinmann:]

Yes. There are four stages to the process.

[George Brickfield:]

Great. Thank you very much.

[Michael Steinmann:]

Thank you.

[Operator:]

This concludes the time allocated for questions on today's call. I would like to turn the conference back over to Michael Steinmann for any closing remarks.

[Michael Steinmann:]

Thank you everyone for calling in today. Looking forward to catch up again with our Q2 results, which will be in August. So have a good start off the summer. Thank you.

[Operator:]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.