Q4 2019 Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the knows the goal 2019 year and financial results Conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
She joined the question Q you May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, operator by pressing star and zero.
I'd now like turn the conference over to Melanie Hennessey, Vice President of corporate Communications. Please go ahead.
Thank you aerial and good morning, everyone.
We're pleased that you've joined US for novel 20, 910 year on financial results and for an update on the Donlin Gold project on today's call, we have Dr. Thomas Capline, nor the gold chairman.
Greg Lang, Novagolds, President and CEO , and David Ottewell, Novagold, Vice President and CFO .
At the end of the webcast, we well take questions both by phone and by tax.
Well before we get started I would like to remind our listeners that I've stated on slide three and he says that statements made today may contain forward looking information such as projections and goals, which are likely to involve risks detailed in our various Edgar and SEDAR filings and forward looking disclaimers that are included in this presentation.
Got it had the pleasure of introducing Greg Lang, Novagolds, President and CEO Greg.
Thank you Melanie and good morning, everyone.
Our primary asset is the bed really permitted donlin gold project in west during Alaska that is 50% on buying over gold and 50% by our long term partner Barrick gold.
As shown on the emerge on slide four Donlin is located approximately 300 miles west of Anchorage, Alaska.
Slide five highlights the 2019 activities with the receipt of several state permits.
The advancement of the Geo technical field program.
And progress on our ongoing optimization efforts.
With the receipt of the final estimates for the access road and fiber optic.
Cable land use permit.
Insight authorizations for the proposed transportation facilities, our track record of successfully permitting this project what's enhanced.
Additionally.
Alaska's Division a boy when gas is finalizing the right away authorizations for the natural gas pipeline.
Which is expected to be received in the first quarter of this year.
This work takes an unwavering attention to detail and transparency from Donlin gold with the support and contributions.
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The communities that are closest to the mine site.
We greatly appreciate the dedicated efforts have the entire team and the state of Alaska, and advancing permits and approvals for the project and their commitment to environmental and government its best practices.
Approval of the dam safety certificate for the tailings storage facility and water retention structures is a multiyear commitment to deliver the final design package to the state.
Activities commenced in mid 2019 to advanced engineering work on the tailings facility another structures to a feasibility level.
Stage as required by the dams safety certificate application.
Donlin Gold also progressed on its optimization efforts in 2019.
And gathered additional data to establish a solid plan in 2020, it will give the owners a greater understanding of the geologic model and the higher grade.
Gold mineralization controls all of which have the potential benefit the project.
And surface the basis for an updated study.
We are dedicated to keeping our community partnership strong and engage on environmental safety and cultural initiatives.
To that end 2019, Novagold and Donlin gold participated in numerous community activities in projects, including those highlighted on slide six.
We were the key sponsors of a program to remove nearly 100000 pounds of hazardous material from 14 isolated village is on the cost Quim River.
We supported education and training to prepare you entered the workforce.
With the support of its owners Donlin Gold continued its outreach efforts with our Native Corporation partner try West Corporation via meetings and tribal councils and other stakeholder engagement throughout the year.
We believe that community engagement and support can act as a catalyst for sustainable improvements in the quality of life for many affected by poverty.
And the lack of opportunities in the projects region.
And with that I'll turn the call over to our Chief Financial Officer, David Ottewell.
Thank you Greg.
Slide seven highlights our operating performance for the fourth quarter and here.
Our fourth quarter net loss from continuing operations increased by one and a half billion to 7.9 million.
Primarily due to get the Geotech program, the Greg mentioned.
Partially offset by lower DNA costs.
For the year share based compensation expense, including G and H.
Decreased by one and a half million due to changes in the company's long term incentive program.
The vesting period for new stock options and P.S. use were extended to three years from two years.
Other income was favorably impacted by interest income on funds received from the sale of Galore Creek in July 20 team.
Cash flows are highlighted on slide eight.
Cash used in continuing operations during the fourth quarter 2019 and for the year included higher spending at Donlin gold due to the Geo technical field work offset by lower DNA costs and higher interest income.
We ended the year with cash and turned deposits of 148.5 million.
Turning to slide nine we note or help the treasury.
We also have a 100 million receivable from newmont in the next three years and the potential for another 75 billion should the Galore Creek project orders approve a construction plan.
In 2020, we anticipate spending approximately 31 million, which includes 20 million to fund our share of expenditures are the Donlin gold project.
The majority earmarked for the drilling program with the balance on permitting and community engagement.
And 11 million for DNA cost.
Right.
Thank you Dave.
These are exciting times to be in the gold space and particularly invested in a unique project like Donlin gold.
Federally permitted.
Project with strong long term partnerships.
With the communities in Western Alaska.
And we're in a jurisdiction where the rule of law, it's not a novelty.
On slide 10, we compare donlins, almost 40 million ounces in resources to 14 other development stage projects in the industry.
Compared to the peer group Donlin is better than twice the size of the average.
And more and double that of the nearest comparable.
The scale or the resource is a key attribute.
Another is the grade as shown on slide 11.
The average grade of Donlins.
Sets it apart from other open pit deposits at June of quarter grams, it's double the industry average.
With scale and great. If it was built today donlin wouldn't be the largest producing gold mine in the industry.
For the long term investor there's additional value that comes with a mine it has a multi decade lifespan.
That's currently in Beijing, and its first five years Donlin would average one and a half million ounces year production.
Followed by over a million ounces throughout its life of mine as shown on slide 12.
There are few mines in the world existing or proposed with that level of gold production.
Looking at comparable scale mining operations around the globe Donlen would rank among the top operations.
Slide shirt 13 shows the 10 largest producing operations globally only four are expected to produce more than a million ounces a year in 2019.
Further illustrating that projects like donlin are scarce and they are needed.
To replenish the industry's diminishing reserves.
As shown on slide 14, <unk> and Louis deposits contain 39 million ounce resource.
Occupy only three kilometers of an eight kilometer trend.
We have done extensive drilling over the years and our focus is on continuing the optimization program.
However, there are clearly opportunities.
For substantial expansion of the resource along the known mineralized trend.
When the time is right, where we will resume exploration drilling.
As highlighted on slide 15, being at a geopolitically safe jurisdiction is another key attribute of the Donlin Gold project.
Some of the largest gold miners in the world our recalibrating their risk guest count for many of the world's mining jurisdictions.
As the second largest gold producing state in the United States, Alaska supports and welcomes responsible development.
Recently, the Frazier Institute ranked Alaska fit globally using gets investment attractive indexes.
Something that many other gold development projects do not having their paper.
Alaska is a great place to do business.
There's tremendous value and having a project like Donlin gold located on private land.
As seen in Blue on Slide 16 checklist to owns the mineral rights and locally the cuts Quim corporation onto the surface rights.
Donlin has life of mine agreements with both partners, who and who have been deeply involved and supported from the start.
We've been partner since 1995 in our thankful to check list and Teekay see for their commitment to donlin gold and for the projects continued success.
We support their mandate through the Alaska Native claims settlement act to help them develop their land for the economic benefit of the region and all the stakeholders involved.
We have an ownership interest.
In seeing the project go forward.
No go came has reached some significant milestones, particularly with the receipt of the key federal permits and many of the major state permits as well.
The timeline for development is now within the owners control as shown on slide 17.
We look forward to carrying out the plan drill program in 2020 and continuing work over the next few years to advance the dam safety certificate to final construction package.
It's exciting to be drilling again, it's been 12 years since we had a program of this scale at Donlin gold.
The owners will continue to advance donlin and a financially disciplined matter with the strong focus on environmental stewardship and.
And social responsibility.
As shown on slide 18, we implement our social responsibility programs in four important areas.
Promoting the safety and health of our people onsite and throughout the region.
Supporting the well being up communities and assisting their youth and education.
Partnering to improve the environment.
And recognize the importance of preserving traditional lifestyles, while bringing tangible long term benefits to the communities.
With that I'll now turn the call over to our chairman Dr., Thomas Capline, who will give us his insights into gold.
Tom.
Thank you Greg I hope everyone can hear me its a pleasure to be able to follow a such an exposition.
Hi, Greg Lang and Dave Shotwell on the strength of the Donlin project and no, but gold as a vehicle with which to be able to play gold.
We believe that the Donlin project.
Represents the great thing.
Single option for warrant on the upside of gold that.
Exists in the marketplace.
And Fortunately there have been a number of the other events, which you're taking place over the last year, which have only reinforced our conviction.
If you looked at the slide on page 18.
The point here is to.
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Does that while it's not quite true that history repeats itself.
It often arrives.
Thinks that this chart represents something which will be akin to the kind of move that we see in gold.
Variety of reasons I believe that the fundamentals.
Oh suggests that the moves can be even larger I'm only so it's not scare people. We don't put up the chart what gold really could do based on what the Dow Jones is done since the early 19 eighties, but I personally would not be surprised.
If that happens.
Most of that but not all of it.
I would be a function of supply and demand.
We now live and unchartered waters in political economic and social spheres.
[laughter] make sold a cornerstone the whole thing of any portfolio. The question is not weather.
When it also do she aries realized that they have to go back to being able to have some presence in goal when that happens that's kind of a chart as we see on slide 19.
Could turn out to be a more akin to an appetizer then the main course, because the gold simply isn't out there and to the extent that it is.
When you consider that a project like Donlin, which would be the largest single gold producing mine a pure gold mine in the world. That's produced the feasibility study and we reckon it'll get there in one or two phases.
That's only a million then I have found says yes, that's enormous in terms of the gold industry that will be the tier one tier one.
And it's one jurisdiction, but it's still isn't going to move the needle and when you take into account the time lag between discoveries of which there are really not in the industry to speak up and production a timeline that now goes into two decades or more on that.
You can see that the horse is already left the Barton, but those raised I can tell you that when you look at the state of the industry itself. This chart on slide 19, we didn't beat proved to be an understatement.
One of the most interesting aspect of 2019, but the gold investor in general is the speed with which we have seen an acceleration.
And except since.
It's a bullish gold narrative.
What I would call boldface names people, who have extraordinary track record.
Or who are regarded as really a great source of expertise in their space, even if they're not investors. This is incredibly important.
And I want to make sure that I parse that the Golden that's there by nature tends to be contrarians. So when he sees a number of people starting to agree with him I'm. It tends to make him nervous so even if those names happens to be people with the exceptional long term track record.
The Golden Investor tends to feel more comfortable being alone.
So why don't take away from this call is throw that out the window.
Because the reality is that.
We have seen in 2019 will represent a watershed for the gold space and ultimately the gold price the fundamentals for gold have never been better.
From a macro standpoint, you have to own it or a dozen reasons.
Most importantly, without recourse to any of the fear factor's, which relate to a reasons why gold and protect the portfolio.
The current each within the gold industry itself is one that is leading to a major supply demand. This equolibrium in other words, even a non gold, but 10 look upon goal just on the basis of economics, when no one and say that's something that I want to own secrets.
That industry is challenged and I'd like to be able to be a beneficiary of that either by owning gold or by owning those very few et cetera.
Which gives me extraordinary leverage to go into jurisdiction that will allow me to keep the fruits of that leverage. So when you see people who are hyper rational like rate valeo, making the case for gold or just done block or pull tutor Jones <unk> child.
Sure Paul Singur, or even 10 wrote off talking about it from a completely different standpoint, you really have to ask yourself, what's going on here one of the beauties of recent commentary on gold is that people have chosen reasons to be constructive on a gold.
Well wildly different rationale it's some of it as macro some of it is micro what you're going to see as a characteristic of the next leg in the bull market and of course I always provide this caveats. If we could have a head fake did the downside before you get that next a big move.
But I do believe that next big move will take us well beyond 1900 into a whole new equolibrium level, but the point is that as that.
Lake.
Establishes itself and gains momentum.
We'll probably get surprised by how many people come out of the wouldn't work to say that their constructive on gold because it is after all is recognizable brand probably more so than Coca Cola or Apple, but also.
I'm willing to give very different reasons for their newfound optimism that in turn will provide validation for a wider range of institutional investors.
For whom.
There is no representation in the portfolio so.
Well when considering that despite the fact that we're looking at very smart money, which is starting to become constructive on gold over the last couple of years and gaining momentum over the last year.
Yes, smart money is going to be able to provide the intellectual hook and the credentials for the worlds big money.
To be gravitating towards having and location to gold.
Even a 1% allocation to gold, which caused scope to multiply because the fact is we now lives in an era in which two of the most dynamic economies in the world, China and India compete on who's going to be buying more gold at the time when what used to be the previous.
There of gold big seller other than miners central banks are now competing with those countries and with private investors.
This is the kind of sea change that's a smart investors should be positioning himself for.
The kind of sea change that enable.
The youngsters in the Red spenders to make the money is that the old timers couldn't make after 30 years of watching paint dry and gold and does the Dow Jones trade in a range when the Dow finally pop in the eighties. It was people looking at it with fresh eyes.
No actually said, yes, I know, it's usually means Wow. This time difference that a lot of things going on in the United States. It's the Reagan and Satcher Revolution, there are other issues going on.
Maybe the Dow is a place that even though it's broken out over a thousand it's interesting maybe it really does have legs I believed that this is a very similar juncture in gold I think that whether you look back then you you bought it at 1500, 1600, 1200, 1100, where 2200 it won't matter.
That years from now you'll look back on that and you'll say it was up by at any level and interestingly enough Mark Mobiuss, whose expertise is of course the emerging markets.
Basically said I think you have to be buying at any level frankly, that's sounds like bull market euphoria, but considering that this is probably the most often don't own leased crowd you trade in the financial World.
I view this as being incredible validation for the bull market that hasn't even yet picked up steam.
Now when we go to page 22.
We get back to a that supply demand.
Equation that I was referencing the supply pressures are very obvious and they're very few assets like donlin, which can even make that 10 in those issues. So we know that discovery rates are lower than they have been in modern times, how many times you actually find 5 million ounces.
As these days, it's extremely rare then of course, where did you find it. So if you have a world class assets, but it's not lets say part of the world.
Maybe they'll be worth euro.
The exploration budgets are not big enough to be able to solve the problem, but even if they were as I mentioned previously I think about this for a moment.
The time, it takes to be able to find a.
Hey, prospect and take it through to a mine are now on the average over 20 years.
In other words for all intents and purposes, while you people and I are in the prime of our lives in drilling up all marketing goal the gold that it sounds today, probably still will not have come out of the ground, while you're still holding that trade.
That's a profound.
I.
Don't forget it.
So if they aim is already over people just don't know it yet and Oh by the way, let's superimposed on to that reality check that the odds of being able to make a discovery that leads to a mine.
These size that's been variously estimated it between 1000 to one to 10000 to one so when you have an asset like donlen.
Which to the benefit of Barrick shareholders as well as well the shares or shareholders is really one of those unbelievable.
Yeah, I'd say, it's unicorns, we could still use that word.
Is that really has to be taken into account I mean that Dan donlan has more ounces.
Just in the immediate vicinity of the pit that could be put into the reserve category with more with if it with a few more drill holes then one of the largest discoveries modern times in ER and elsewhere. So.
You really dealing with some things that is a unique feast within the context of an industry that on a quantitative basis is producing faster than they can replace reserves haven't been able to make meaningful discoveries.
We're up because of that the production costs are rising.
And force that's a direct function of the fact that ore grade have collapsed. So you're not only have potatoes. It's equolibrium. You also have a qualitative that's equolibrium, which directly goes to the bottom line of water production cost of an asset will be central banks, who are buying gold.
And most countries no longer favorable jurisdictions in which to mind. It so the Holy Grail as we say about donlin is to be able to get assets. If you leverage to all of those issues.
In a place that will allow you to keep it but if you look on the left hand side why buy gold in the first place.
Well.
It is as Ray Deleo said once you strip away the emotion just another currency like yen the old see the switch the dollar the euro except it's the only currency that can't be debased by FIA and that's we've seen the mining companies can't even produce it. So it's an asset diversifier as a safe Haven appeal.
As a protection against the currency to basement that really in their hearts every central bank wants to promote.
Central banks have shown their hand by being buyers of gold.
At a time when they know better than anyone else the value of their real reserves you have to appreciate that.
The outlook for gold is extremely bullish by the way on Central Bank fine.
This is the ultimate insider buying.
Because they more than anyone else no the true value of their treasuries and get their saying we want to be able to have something that it's in someone else's liability.
Look upon that kind of insider buying as reinforcement for your own interest in gold, they're not done money for decades, they were making money by selling old now the smart ones are starting to make money by buying gold and its gold goes up.
Positive reinforcement of the price rise will quote central banks, if anything to accelerate their buying for sure the central banks, who own gold are not going to turn it could be major sellers because their populations now are completely cognizant of the fact that a lot of the stuff that they own simply is applicable.
And has little intrinsic value.
On page 23, as you can see discoveries or <unk>.
Historic low in modern times.
Exploration budgets, even if they make discoveries to date wouldn't yield fruits likely decade that points to wanting to be in great assets in safe places.
The younger investment in the old means that the majors I'd have to merge in order to be able to project. Some element of go of growth or they have to be able to buy projects, which are in development stage pipeline because the discovery phase grassroots discoveries.
The truth is that there are very few Ceos in this business will survive or who will be in the business long enough to see the fruits of the exploration discoveries. They made today. So the key is being able to get once again, great development stage assets in jurisdictions, where their shareholder base are saying.
This is where we want to be represented we want to be represented in countries, where the rule of law isn't a novel take.
The decline in discoveries and great as global production, it's peaking that you see on page 25.
Really suggests to us.
Is that gold production is peaking.
No I was in the energy business when people were talking about peak oil is a big difference between oil or hydrocarbons in general and gold.
First of all it's easier to find Doyle I mean, they're actually tools for it you have three D. Seismic we don't have that in mining.
Despite to make a discovery is with a seasoned yeah I'll, let just in a four by four used to be.
And on a donkey, but now it's a floor by floor.
And the reality is that unlike in hydrocarbons and this is the key this is why energy and mining are very different you do not have large quantities of on tap gold resources, which would be able to come into the market.
Very quickly in the event of a new technology like.
Right King or horizontal drilling it just doesn't exist. So the resources aren't there and the ability to make Virgin discoveries, it's far less than in hydrocarbons.
If oil were to go up there's plenty of to be able to come out suppressed price, but as I've said in goal it's completely the opposite.
Hopefully insider buyers.
They know better than we do the quality of the assets that they hold the fact that central banks, no well enough not to sell it and you Central bank in the marketplace for diversifying their assets are buying gold is absolutely positive they are ringing.
A bell.
In terms of the fear factor its I don't normally like to go there, but well I am talking to people, who managed portfolios on page 20, 760, a performance of gold in recession.
Not that we may ever have one again, apparently its extremely good and for those of you who gate survive. The recession of 2789 will remember that one of the only asset classes that really performed while equities and even commodities.
We're collapsing what's the currency that is so I would also say that having remembered selling my oil company in November 2007.
Went dollar euro rules around 147 in that area. The fact that sold its a multiple of what it was in 2007 with dollar strength show you that those who say that gold requires dollar weakness.
Our missing the point there are times when the dollar and gold can do very well if you get a dollar crisis of course, that's a whole other issue and like adult would only be accelerated.
So when we look at the gold space, we say to ourselves as investors where are we going to get the greatest leverage on page 28, what you can see and this is without any optimization. It gets based on the feasibility numbers in 2011, where the inputs were at their peak.
When you look at the leverage to gold that Donlin has U.S. every reason to I want to say if you want to be in that space I want to own some shares of Nova goals as a pure play on something that could literally be the next nevada or I want diversified.
Production.
With.
With strong managers and jurisdictional diversification and you'll buy back.
Either way Oh, good for us whatever is good for Patrick.
It's good for Novagold Contentedly Whatever's books for Novagold is good for Barrick because the truth is we may be a pure play on the asset, but they've got the same 50% as we do and I do believe that as the no buckled accelerates it could AD dollars per share.
Two barrick, so whether you want a pure play or what do you want diversified.
Production, you've got to great plays in the marketplace I wouldn't mentioned something again another prediction.
I do believe that as gold goes higher the advent of jurisdictional risk the pulse city of discoveries and a project with the kind of exploration upside that we have you will see the market go back to according U.S. sets that maybe Canadian.
Hopefully, even Mexican a zero percent discount rates, if they can show that there's exploration upside with leverage in its safe jurisdictions, that's going to be catnip.
Fortunately, we have investors, who know our story understand our story.
And are going to reach the fruits of Oh, great leverage to the gold price with a management that they have seen over the last.
Eight years has carried out every promise it ever made Barr Nunn has delivered on every milestone.
And has shown that I'm not only don't they do anything stupid, but that they do every task that they've been given correctly and what's the kind of best practices environmental stewardship.
And community by and that can make all of our shareholders extremely proud of the Novagold story and indeed, the Donlin story, we're extremely grateful to our shareholder base, we have no doubts that.
We're going to see a lot of new additions to this chart its not a question to us of weather, but Quinn.
So to sum up the novagold opportunity number one unlike almost any other company as you can see from slide 30, we combine attributes that are.
Extremely rare I believe donlin indeed in terms of its overall attributes size grade exploration potential production profile mine life jurisdictional safety is unique in the world now when you put that into a vehicle that has a strong.
Alan sheet, you've seen that our cash flow is more than eminently manageable, we have a fabulous tier one assets big high grade.
Federal permits the optimization work hopefully is going to show even better results were getting along beautifully with our partners it back our shareholders and our stakeholders.
Yes, our large shareholders or a small shareholders through to our native corporations partners I'm really couldn't be better our production profile will make that's one of the ultimate trophies the largest single pure gold mine in the world located in the state this place in the World The management team.
He has done everything it said it would and candidly they could run any of the major mining company isn't enough themselves.
Last but I think not later I think this isn't going to be de gating factor we are in.
Hey, jurisdiction, where the rule of law, it's not a novelty where when you go to sleep at night as an investor.
You know that when you wake up in the morning, what you thought you own the night before you still.
Back to me is going to be the gating factor from many investors one brokers come to them and they say we have a management team coming in with a world class assets, They're gonna say, that's great we'd love to meet them just one question.
[noise], where in the world is that asset if it happens to be an asset that they'd be willing to take their athletes to visit I think that's the one that they're going to take to their investment committee and we're glad to be able to provide the comps you make vehicle on being able to if they.
Portfolio manager that opportunity.
And so I will conclude with that and I do believe that are the team is opening itself up for questions.
Thank you.
We will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then to once again.
He joined the question Q. Please press Star then one now.
Our first question comes from Lucas pipes of B. Riley FBR.
Hey, good morning, everyone.
I wanted to ask about the 2020 drilling program and what specifically are kind of key objectives are for for this campaign. Thank you.
Oh good morning, good morning, Lucas or Yeah. This program is a really building on a program. We conducted a couple years ago. When we were advancing the hypothesis that the high grade structures are contiguous amounting to mine [laughter] discreetly.
And working with our partner, we yeah, we looked in revisited geologic model and.
The hypothesis Ah held up through the first round of drilling and this year's program will extend is targeted to extend the high grade mineral was I mineralized structures, we encountered before particularly in the early phases of the mine life. So we think the program as a.
You know sufficient value that we're investing over $20 million to advance seafarers and it you know it's always whenever we drill at Donlin. It's always you excited we've never been disappointed and we're looking forward to.
Updating all of our stakeholders as the results come out.
That's a that's sounds very very interesting yeah, no best best of luck with that campaign and look forward to to the results on that as well.
My second question might be just a touch early but.
When I when I think back to the second feasibility study and obviously a lot of Sumption sitting there and some of them under review such as if that drilling program, but.
Mining Psycho has come and gone a cost a capex inflation has come and gone in the in the mining sector.
When you think about kind of the capital cost us for this.
So donlen today.
Do you envision big pluses or minuses, where where are the kind of major pieces of potential variation compared to the second feasibility study. Thank you.
Thank you Lucas I think the probably the most material change to the the overall capital for the project is advancing the concept to build it and in two stages and that you know that in itself significantly reduces the yeah the capital upfront.
And that's something we've certainly done a with many projects over the years that I'm involved have been involved with and it makes a lot of sense for for both owners.
The and the <unk>.
Benefit of a smaller scale project to begin with as you can mine more discreetly and enhance the grade, particularly in the early years. So we think there's opportunity to Ah.
Through higher grade offset some of the economies of scale we lose.
With that back to your question.
The the market is still pretty much a in favor of projects like Donlin right now compared to where it was a five six years ago. Your heavy equipment demand is saw and most of the major inputs.
Through the project or Ah you know slightly down from where we saw a few years ago, you I wouldn't say, it's dramatic but there's no. The upward pressure has decreased and also the state of Alaska, where most of the labor wouldn't be sourced from is Ah, yes, experiencing an economic downturn with the weakness in oil prices. So.
You know labor, which is a big input to projects like this is a you know down a little bit more also as we're getting a further advancing our thinking or the opportunity to bring in third party participation for some of the capital is Ah you know is very timely. So you know quite a few factors moving.
In the right direction and nothing really nothing worrisome in the trends that we've seen in recent years.
Thank you very much Greg that's that's very helpful. It maybe a.
On a when one question for Tom Tom. Thank you very much for all the color on on the project and the broader market environment for four for gold and I wanted to.
Ask you a little bit more about the comments regarding to insider buying.
As you put it from from the Central banks do you anticipate that.
[noise] trend to continue it may be to accelerate and what do you think is is ultimately driving them towards towards gold. Thank you very much.
First of all thank you look is.
Let me take that answer in two parts, what's driving them or is that more than ever before.
The central banks are in unchartered waters in terms of there.
When mandates.
Whether they acknowledged the mandate or not it's combination.
Inflation as well as promos and gross.
And a lower unemployment certainly in most of the Western World. There is a direct correlation between economic distress and.
The kind of political.
Dichotomy that you're seeing in Europe .
As well as.
Yeah.
So.
Social mandates to their work.
[laughter].
Economics, it turns out the window you now have.
Do a central banker.
They understand that in the end, there's no free lunch.
And being able to have Hess.
That represent.
Someone else's liability.
To honor its four to repay it when you own goal you really own something.
This is very attractive to them.
The first area of importance Goldman's, that's true is that central banks, who up until two.
Here's ago were sellers.
Particularly during the bare market for gold.
Has now pivoted the path at least resistance or a bureaucrats.
Isn't enough to.
To Buck the trend that's for sure. So the first thing that they do is to stop selling because when they see the prices go up if they've advocated to their bosses that they should sell goals and it turns out that.
It didn't work they can lose their jobs now think about the psychology of that they're not paid to and 22 actually take or a rich.
They're paid to first and foremost do no harm which means.
Although the trend, although the conventional wisdom and not get fired.
Or being Ah two out of their lane.
So what you've seen with the western central banks, but they're not going to be sellers those nobody wants to be a at the expression goes a schumacher.
So you stop selling.
But what do you have also seen in the developing world is that having booked unfolds.
They're making money on it.
Also it suffocation away from the dollar so you wont to be less tied to the dollar as for example, Russia and China like to be ideally for reasons that have to do with their own relations with United States Foreign relations in general its objective sections.
Then you tried to diversify away from the dollar one of those areas is oh.
So you're not only have central banks, not selling which in of itself would be a watershed, but do you have central bank buying competing with investors who are there.
Okay.
So you have the Chinese and then Indians over scarce asset that's already something you should probably some of when the central banks our talent.
He our reversing from a 40 year periods of divesting them.
That's a I came on the cake and I think that that.
That will continue but there will be times, where people say, let's say, a breather, let's pause because they'll get a little bit nervous.
Go to new all time highs and then people will you rationalizing.
Despite a 2500 than it was 800 and they'll have multiple hooked to switch to hang their hat. It's one of the reasons why I highlight smart money, making their own diversified reasons for.
Arguing in favour of gold now stubble, I deem apologizing, yet and take.
[noise] loves to hate and hated love to something that a smart man would take a look at that's huge.
I believed that we will take another step function when it becomes the S that have recruiting.
Needs to own and by the way if you look back that the history of the prudent man rule. It hopefully goes back to the essence of defining the safety even after <unk> versus the ultimate say that said, which is called so for all of those reasons I see that we have what turned out to be a very virtuous circle that.
I will only accelerate with rising prices.
It'll because it'll be very volatile because people will get scared you'll have down draft there'll be washed out of the market, but I think you should expect those vacuums would be filled relatively quickly by people coming into gold for reasons that I may not even understand poor understand today, but hopefully we'll understand at that time I hope that answers your glass.
<unk>.
Thanks, Tom that's very helpful. A very much appreciate it and ER to everyone on the team at best of luck and a great job. So far thank you.
Thank you Lucas.
This concludes the question and answer session I would like to turn the conference back over to Greg Lang for any closing remarks.
Well everyone. Thank you for joining us on our call. This morning, and we look forward to updating you on our progress throughout the year.
Okay.
Today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.