Q2 2020 Sierra Metals Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by welcome to this year a metal Q2 2020 consolidated financial results Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During this session you will need to press star.

One on your telephone if you require any further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker today, Mike Mcallister, Vice President of Investor Relations. Please go ahead Sir.

Thank you operator, and good morning, everyone welcome to fear mental due to 2020 results conference call.

Today's call, we're joined by lose Marchese, our CEO and your Maris our CFO today's call will be followed by question and answer period and the accompanying presentation for today's call is available for download both through the company or both through the web site.

The webcast and the company's website, that's your metals dotcom.

Yesterday's press release, the financial statements and the management discussion and analysis are posted on the company's website.

Before I turn the call Overdid Louise I would like to indicate that the earnings call contains forward looking information that is based on the company's current expectations estimates and believes its forward looking information is subject to a number of risks uncertainties and other factors.

Actual results could differ materially from our conclusions forecasts or projections as reflected in forward looking information.

Additional information about the material factors that could cause actual results to differ materially from the conclusion forecast or projection in the forward looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking information.

It's all contained in the company's annual information form which is available publicly.

On C., Dar or Edgar by a form 40 F or on the company's website. Please note that all dollar amounts mentioned on todays call are in U.S. dollar unless otherwise noted.

With that I would now like to turn the call over to lose more KZ CEO of CRM metals.

Thanks, Mike.

Before it is because our coupon highlights on insights I would like to [laughter] mom is something you are the most recent probably my team developments in Mexico.

Turning to slide four.

At the beginning of June groom them. If you don't go and that's how low do some some of whom I'm on my new related.

The young sounds like you mean.

On the previous ones.

The company from from college filling in for USANA Media reports from volume our minds, most who wants a person who would you. Please <unk> venture working on communities. If you will recall if we use the rest will be used truck immigration funded through but.

We also see because with me are there any specific outgrowth of both supercritical employees and their communities, which feels very.

Well, that's where we can you just what you're talking about sort of the work stoppages.

And Bill USANA persisted core team.

Before it's really Betsy works.

I also want something might well use that money they would sell shakes.

Well. This season has served us well, it's not the perfect solution.

Since I've had some positive cases, most likely the workforce.

Just a warranty on single simply Useful's maybe college.

We also need to remove any and please if I can pump, placing from the work was something there are many countries you're going to you.

For example, two weeks ago, we have two parcels somebody who the mandatory pension system that we talked to bleed.

On a deal today, we have to remove boy hunger employees from the Dirty quotes from Mike.

Well. This is this sort of exhibition, though we are.

Looking at.

I can mother's day difficult situation would be to Cobiz must be currently booked into Mexico, we must continue to be barely begun access.

They can kill nickel industries, where we operate so very important to us for them. So there will be.

We have what are we to community how committed BD medical supplies.

Glenn you know nations will not come fundraising inform you know the coach amount for the purchase who are seeking production plants.

Jim You mentioned trust supply it's good to go for those what you would probably thank you.

We will continue strengthening our engagement support to our workforce the problems on the local communities.

Okay.

Well remain sufficiently books.

Since the two something.

Then to highlight certain into a lifestyle.

The company it seems remarkably because she's probably been African became something probably my due diligence.

Well I suppose so did the throughput corporate growing production on Green you were low adjusted EBITDA was coffee.

We finished the quarter Weve for 2.7 million Bucks in cash how it's Tony called given the South it's beautiful inquiry.

We were raising a mix by mid health continues to migrate <unk>.

Corporate thinking on deemed all total bi fuel.

Go [laughter] also seen I couldn't be does increases because since the mix.

Hey, this is Mike good products I recalled vehicles.

On supported by higher gold prices.

You can't do we faced lower base metals realized prices, but saw improvements which was a healthier lifestyles.

This was myself continuous improvement Q3.

It's Michael supposed to be grouping southern copper over Q2.

Turning to slide six.

When compared to the [laughter] <unk> costs were down on both the only go time when do we.

Which wasn't to use the whole, notably in cost of its good management on the topic of expanding business, but the balance sheet.

We also realized the group head grades favorable foreign exchange rates.

I'd like to comment on I'm pleased to management, who despite the challenges facing the courts, maintaining a high level or maybe you sold in finance you find strong cash.

<unk> Q2, you'd be how posted because even though going to me and then I'm going to 1.2 million.

When they say the most important also took the many ideas you want to do good.

Excuse me, it's tough to earlier than anticipated imagery like I used some truck oney well on its way through that Bill Cosby tons per day, who could there.

Got it costs us who see or they could do we loaded the newco call Plenti frenzy, as we ramp up production.

Overall, we are certainly optimistic that we've been goofball, great efficiencies I put this higher metal prices, we will see us from the report them to Pittsburgh.

Looking [laughter].

Turning to slide seven.

We will see us.

This strong growth for the company operations returns.

I don't recall, we've had the fleets immediately to become a somewhat lost production for the second quarter shutdown during a difficult color for you.

We're also excited to see what did you ever go see ramping up to the target the capacity of 5000.

So positive tonnage per day, respectively.

Furthermore, we will also continue to see depart from is to increase or any color trust throughput through a couple things he's held the punishment be levels.

I'm also pleased to announce.

That's good ongoing something every company you brought up the right [laughter] <unk> management.

One of the expenditure study further expands facade ultimately mine beyond their current capacity ramp up Smith.

This time with incorporate the lift as.

Looking to me well, while you know resource updates <unk> music I mean that off the coast and produces a body refer to put this in December 15 opinion marched in between.

The company has excellent men I guess, just sort of men. So school potentials to support further organic growth Oh my.

The company today, you should we have I think the principle that some guidance. We now anticipate a fitness 90 corporate grew up in collection would range between how have things line up into 2 million pounds to sort of running collection will range between 17 point 418.4 million ounces artsy and growing up a lesser with Richard due to commence excuse.

56.8 to see how this 19.2 medium.

The revised guidance assumes no further shutdowns that work is topic, just because what we called management team I'm Debbie.

He's based solely on what managing expects the companys corporations completions this year.

In conclusion on slide eight.

The company has had a solid Barclays by diversity, we faced with the Colby 19 I'm Dave.

Oh wait till they went through image, we just thrown by that's you I'm caskets each.

While we certainly continue to operate anything when they're all of our average it's probably mindy.

We remain optimistic that sort of their cash flow.

Weve improvements are picked up in difficult year.

So then if you feel hyper license a mid pellet prices that's come probably difficult.

We remain committed to the crude on sustainable growth of the conflict.

More importantly to school in the first her budget offering which benefits.

Oh shortfalls, we that's.

Ill now turn to go back to Mike.

Let me that ends the presentation portion of the call with that we would now like to open the call up two questions from participants operator could you. Please open up the line.

Thank you as a reminder, chaska question you want me to press Star one on your telephone to withdraw your question press the pound or hash key please standby will become pilots you any roster.

Our first question comes from the line of Mark Reichman from Noble capital markets. Your line is open.

Good morning.

So we use when you look at the cope with 19 situation in Peru and Mexico.

How are you thinking about.

Required functions and activities.

Versus what's discretionary.

Oh, thanks for the.

But from my.

Mark I can't.

Jimmy rhythm and with Oh.

Got it 19 in both through ridiculous he's he's a very rewarding.

Great <unk> rule yesterday, we caught the highest number.

The people who starts with different bebe.

Well, we're carrying the highest number.

Well this people on this is paul across the country, it's sort of come easy case, you're our creation Jodi coach.

Mexico institutions is also quite boring.

Well go where we operate.

Pieces to bill.

But hopefully we remain the nowhere.

Uh huh.

Well, the lower level of who picks up but the rest of the concept.

What we're doing these were prioritizing.

No. It's good to marry capital expenditure, but couldn't years will help safety on your violent.

I'm also were probably facing corporation on Capex, So as we speak with trying to.

Who is going on we are required topics to must be operations at the level that we acquired in the last quarter go every week wood on the do it filled mining activities, we have to stop some of our development, which we're constantly bringing but I do right liver, so we'd be happy right.

Before I read about floor for production.

In the future. So it can be we've picked to.

Uh huh, some cash flow to start looking are different.

Topic, a initiatives from no discretionary and we're going to do expansion studies that I've just mentioned among other size or we have to make.

To put a feature of the company as properties grew frustrated.

My follow up is when you think about the potential to increase production capacity at all three mines beyond what is already planned at this juncture.

Which ones appear to be the easiest versus the toughest to accomplish and what are the most critical questions that you hope to study.

We'll provide help with.

Well. Thank you Mark gave us the funniest Scoop Roy Armes, first who who do.

Mhm.

Hi, I'm really one body I was hoping to three expenses the rightsizing.

We are rightly out.

Well they support them makes its not something for structural I'll walk through growth environment. I mean, frankly, it's good refinance phones requirements rental and nice from me.

So we're going to look up all of those firewalls, who decided to be honest with so we had to see what appears to be auction, but he is the most value it could be for the company. If it wasn't that we would develop in the future.

So that's why be is tight aiming for.

And the board has supported the dark we do this is tight quarterly.

Quarterly three mine because we are very optimistic.

Provided what are we aren't good enough resources. That's of course, basically specious, where would we are now we will be able to read all these vod due to the company of pollution.

Thank you very much.

Our next question comes from the line up HEICO ill from H T. W. Your line is open.

Hi, guys. Thanks for taking my questions there.

So just one through a couple of past press releases January 23rd you initiated guidance of 135 million copper equivalent pounds, you spend that May 13, no you're at 110 to 122 million pounds. I mean, all things considered it's really only a 14.1 decrease up the midpoints that's actually.

Really strong.

We're sort of halfway through Q3 at this point can you just sort of tell us what you're seeing in the quarter and how much room for error or this guidance actually allow us.

Thank you Heiko.

When we were.

Oh, I'm getting official mining activities.

We we.

Work on ER.

On the most profitable you referred to mine, that's what we tried to be.

Hey, while also maintaining albeit right violence in place.

Oh, that's why do you see our guidance as compared to 10 P. 19.

We are we are aiming to reach more or less on gold silver.

And copper.

Even though you're actually consumer we.

Who see for or.

Almost four months.

So that's why did you can see look good throughout the philosophy is not that much.

Yeah, we have to remain there.

Well looking ahead. We are also very carefully plenty, what we do have the rest of the year.

Uh huh, so far we're getting there my only concern.

Ah we agreed to reduce.

<unk>.

He can impact us.

The development Offsite area. We are currently planned well definitely we are providing these no outside guy that's what we're supposed to you.

<unk>.

And then just building on that it states in your release that the fighting the quote assumes no further shutdowns of work stoppages as a result, with the coldest 19 Dennis.

Can you just sort of walk us through some factors that may have changed on your internal outlook and the loss 14 days and or what it has started the concern you more maybe maybe also things that started concern you left in the very recent past.

Okay.

But if you compare actually our operations with operations in Peru.

Oh, we have being able to manage it fairly well we have most to stop operations.

Any moment.

Our strategy you sounded very benzene.

On a daily controls and we have high crisis committee that meets.

It really often.

Has worked quite well.

So that's big.

Yeah.

That's a good part okay, Oh, we certainly.

Turning to remain that way, but when do I found the other host division. They continued to rule on the Mexico is really concerning.

I say fitness gets big just somebody wants the worst days.

The beginning of India, So we tend not to state that.

No we won't have paid me.

Nice or actually dire consequences from these funding there in the future.

We are having as we speak also some operation not restrictions.

Like it did a we had two warranty on where that comes with.

Workers, because we're in general culture.

We cheese.

Pretty much 15% book and work with or without the I'll do my other time.

For one day to be all there because we cut to isolate some some cases that have appeared even though we had this funny defense. He it's nothing so these sorts of sufficient.

To happen.

We're doing our best to control, but you know where we are part of a community was part of the bottom in school.

It's really difficult to to find any sort of went away.

Officials in the future.

Right.

And then just just finally and I I know I've asked this question on one of these calls before and we were actually hasn't even lower cash bigger them, but I mean, just just thinking about low you currently have for over 40 million in cash that's essentially in line with beyond the 2019, but it's doubled the cash you had a D N. The 18 and 17 I mean it.

What point in time do you think that's a little bit too much firepower and you'd be willing to spend that down a little bit are returning to shareholders or do something else with it.

That's it for me thank you very much.

Hi, I call. Thank you all and I'll take that question on.

Yeah I can you know that's a very good point with the cash position that we we happened to assuming Q3 in Q4 I continue as as Q3 has started off I, we will continue to build cash he.

Communities continue with our original 2020 capital approved capital expenditure plan, which if you recall.

On the original guidance back in January was $52 million. So we've only spent approximately 15 million halfway through the years. So there would be another 38 million available for that.

As well as consider further spending for other growth programs and exploration as well and yes.

You know should there's still be excess cash a portion of that could be returned to shareholders, but it's important to note that we're still nowhere near the words with with Kobe and and as Luis just mentioned yesterday was.

One of the worst stays that through has seen in terms of cold. It. So it's still very much here.

Yeah, I'm not unfortunately, unfortunately, you're right with coal would be nowhere near or thank you that I appreciate it.

Our next question comes from the line of Lee Cooperman from Omega family Office. Your line is open.

Thank you I have a few questions they can put them out there.

The market capitalization of the company's Jewish $35 million, which is almost in a relevancy in today's market as people want larger.

No more established companies.

President management and predecessor management than a good job. So we really can't criticize management. It's just that nobody is interested in us I'm just curious whether they are you guys are willing to undertake a strategic review.

The idea of maximizing value for shareholders and in that regard you know we used to publish a slide where you are listed that you're in a v. I get that disappeared because you're going to this supplementary economic assessment and waiting for the results, but I'd be curious if you looked at M&A activity in the mining industry.

What is a typical multiple of EBITDA it any the at least the these transactions taking place.

And what would that portend for US Debbie question number one a question number two you really almost yourself or opened up to.

Pandora's box you you made a reference in your press release that looking at returning money to shareholders. So what do you Gotta mind, we announced a intention of doing the buyback earlier. This year I think your stock price is actually unchanged from where it was at the beginning of the year, even though the fundamental performance of the company looks to be.

Had a very second question in terms of the buyback.

Third I looked at the trying to get your projected to produce in 2021 versus 2020 with Atish should want assume that you production in gold and silver is likely to be greater than 2021 that is in 2020.

Doesn't even my questions for now.

[noise] densely oh I'll take that on and then that and then Luis could complement so uh huh, but in terms of strategic reviews, yet that's something that is ongoing.

We do strategic reviews managements of presenting to the board and we do these twice a year and there and just recently we approved.

Studies for a possible expansion scenarios it all three of our minds and and.

And I can go a long way in terms, what I was referring to strategic review as regards the possible sale of the company to a larger entity. There was trying to say $5 million. We just don't attract any interest silver and gold to at record high prices you'd have stock price is no different than it was a decade ago. So.

My question is whether there you have a 50% owner a 59% to the stock is owned by management.

ER and Alberto.

Is the time that can you gradually step out and see if there's an alternative home for a she era that would the you know get proper value for us I'm not talking about strategically to view of your expansions.

Okay.

Thanks for clarifying labor I think that that question is more I think should depots to two alberto into the are fine in terms of what's their strategic plans are for for their interest in the company and because it is 52% what they decide ultimately.

You know, whether its 52 or 100% at that point, they can control what takes place.

Oh, Luis I don't know if you want to add anything in that regard.

You're on your on mute.

Oh I went to.

Maybe the mixed with some new year on because cash flows when it came in somebody's, though we how hot topics backlog.

There are we carry $10 million from Capex backing up from 2018 to 23, Andy we took any hop on larger topics backlog.

Due to the coffee, we kind of being able to do not not even what we believe will not be squeeze from there. There's no question about that but that wasn't like fighting through a lot. If they my question, let's focus on the first question was if you look at M&A activity in the mining space terms of multiples of EBITDA and any the what what would you.

I think the value is of a Sierra.

In emerging markets versus the auction market. The auction market is the market, where one or two shares trade for 102 industry trade what is the value of sea area two strategic buyer.

And while the company consider that.

Yeah, I think if we.

We are providing guidance for.

Well that's true.

We have provided guidance in the past I think there is a group of finally caught a certainly our view on them I leave the company and they are going to support your view that the company have room to growing from so first we're finding.

That's where they can comment on that.

Hi, Andrew so well.

Well the stoppage of your mentioned I think it.

It's just a very fine that you know the company Uh huh.

He is controlled by one party.

So.

Well I thought of as well, but the tissue you seem to have hooked up from 20 Park.

<unk>.

What about the question I assume that if I look at your tonnage.

That you're expecting to producing 2021 will be fair to reason that you would anticipate that your production of gold and silver it ounces would be higher in 2021, then you forecasted in your ER in 2020.

Absolutely absolutely, we're aiming to reach full capacity other three mines.

Well you want to go skewed by the end of the year and we are aiming to the permit to both the took a few times the punished per day.

Not so which is 50% more throughput in Germany could chime I just south of the next year. So my delightful throughput on grade not because it is we are certainly aiming to hop.

Hi, your production.

Lets beyond that we are also do you need to have lower costs, what we're doing because it's a good combination more production lower question, absolutely absolutely and that's done or were there any for them. We are equally committed to that.

The cash.

Any a ability to make a guest as to how much cash would generate the second half for the year.

New words.

We currently have 40.7 million in cash and 99.5 million debt do you think you'll generate how much cash you think agent generating the second half of the are you.

Given the view that at this point in time.

I mean, we because we suspended guidance on earnings guidance, where we're not prepared to make that staying than what we can say the we we expect the second half of Q2 to be much stronger than the first half assuming there's no coated related good work stoppages and if.

Yes, yes metal prices stay where they are closer to spot as opposed to consensus.

Ah, yes, we should be in a position to to generate cash when I'm not prepared to right. Okay. That's understandable finished animal again, I think we have to stay a little bit more attention to looking at strategic alternatives for the company because I think the stock has disconnected from the fundamental value the business and.

I think it's incumbent upon the board and most areas to basically.

Look at this and try to decide the best way to deal with it. Thank you and good luck stay healthy.

Thank you.

You too.

And again, if he'd like to ask a question that star one on your telephone keypad. Our next question comes from the line of James Young from West investments. Your line is open.

Yeah, Hi, thanks, very much in there. Thank you for the a strong performance in the second quarter.

A couple questions I guess I'm a quarter train number one is can you just remind us how are there any upcoming labor contract.

At our do for negotiation that we should be aware of.

And any and all of the tree mine.

[noise].

Okay, well before the question.

Nothing to really near future.

The mix discussed from where you.

Yeah and of course are unions should be a early next year.

Uh huh.

So, but we are certainly caused some publications we.

[laughter] remained integration costs.

Certainly disrupted the whole realism.

[music].

We'd be workforce, because we've we've had to put some of their workforce and sustain Sean.

Having some changes in days the shifts are.

Well, we did so did you have to go up so often to the mine and go through these quite the process Oh, we are constantly talking to them.

And I agreeing on different things.

About the contact US itself. We we we have to me what should the Oh by the end up the Euro early next year.

Okay.

Secondly, agriculture.

Could you just help us understand where exactly give me scan with respect to the permit it will enable you to expand your production from 3000 tonnes, a day 3600 calendar day and why.

Kermit kind of required.

Are there any different wanting permit or their multiple parents can just help us understand that process. Thank you.

Yeah. The thank you James or what we required to expand.

[laughter] permanent he's not going to close the idea is the idea is he saw sharp cumbersome.

44 billion environmental permits.

Which applies to to be sort of you know 90% expansion.

Oh, we have already contracted the government Huff will really give me out there do you still want to require.

To get that Uh Huh Army [laughter]. So we're currently completing be there looking ambition on despite the tough to be filled to live or me.

So this process should take.

Into early next year.

Good if they do you see but I mean, he swimming pools, what about the bromine financed from its approved then we go to the minister for their minds horribly.

Well actually permit.

Should be right away. So all in all right. They didn't have the journey.

Early next year.

Okay, [laughter] and there and so.

Has there been any other permits there have been granted she is part of this whole process or just [laughter] actually after you're really waiting for it got to Q1.

That's about 51 be atheists, yes, okay.

All right third in the yet [laughter] Mdna on page 10, you mentioned that yeah about copper energy strong demand, you're seeing out of China and supply constraints like Peru, and Chile can you help better understand I mean.

The demand that you're seeing out of that out of diner overall encana and he can quantifying and these numbers would be helpful. Because while you kind of very good job on Colgate I would assume and this is something on the supply side and then other mines and other minor not done as well in Peru, Chile around the world.

So can you help I tried to better understand exactly how the demand recovery in China is benefiting.

The pricing environment for copper not from the supply constraint that machine in the a in the market.

Okay. Thank you did well what we see I mean, there they're down demand from China sounds girl.

And we see a strong demand coming into the market on the supply side. So premier as you mentioned, both [laughter] achieved there.

I've been here by the hobby the promotional proper lets you do have been kid. So that we talked about but we seem to market that the price when the little to 40.

Each end to end to pick up in it and be me, if we weeks ago and I'll wait to do to 90, we we have no expertise in copper no markets, you know already Expensed Bob Oh.

But I, certainly where we are optimistic but in the long run I'm, hoping to show run a copper is a key component you are asking I always talk to you all our assets when we were going to.

To be a.

Really successful know, they're dealing with all of our resources Bonnie our he's he's a great mine.

So low cost base.

It's it's not so you can see from the first house hopefully you seem to see how we're hiring gravies whos on the mine, which is something you're speaking to lose so for the future.

Okay, and then you know seeking a bowl of our you'd mention on that page seven or the Mdna you had a comment of the.

Oh, the porphyry [laughter] them and that is president Boulevard, where you're.

Where you're drilling 540 49 meters.

Additionally, the previous CEO heads at one point in time Kinda Gadhafi porphyry like characteristic.

And now you seem to be officially behind it and they porphyry system.

So my question is how do you actually found a porphyry add all of our or what are your plans to develop porphyry potential ACA and boulevard.

Okay.

[laughter] tough some defining characteristics and and I sort of three and Ah So component to the wrong then some type of Ross and we have found that will you.

On its there so we are.

Going to keep our Howard's trucking into.

Searching for the sweet spot.

But hopefully we'll be there we read the right raised to how sick.

Porphyry mine.

So that's where we are at the moment, we have how the recent book or it seems to be urea.

And we were going to keep exploring put that we're engaging with.

With consultants or.

But a specialized can be sold so you know systems.

Myself I've worked imports into the Pos.

Well, we'll certainly.

Working with Bollywood actually.

The same thing applies to who don't because where we also need to work.

Pursuing but not the opportunity because [noise].

Okay. So [laughter], how big you think it's highly probable that there's actually a porphyry ample of our has the same party. There is I understand rise I understood you there's in their prior discussions.

With that with management that there were a day I'm not in mining company that had an M.D.A. add a year culture has the same party been engaged to look at the potential opportunity at Boulevard.

Oh, well, we cannot discuss the specific so all these parties and yeah.

Well they continue already culture is not.

Well its top exploring because of the coffee.

So oh soon this weekend.

Good back to Furby normal operations there in terms of coffee real we list on looking at Oxford and back in there.

Oh.

Okay. The next question really it pertains to the production levels that you see seem to be quite content per year, and confident that you're going to be able to exceed all of our anti calin kind of laid back in a year.

Interest here 1200 tonnes a day by day ended a year and continuing to operate care.

And recover a lot of the.

A lot of the.

Lost production at [laughter] coaches and my question really is.

Yeah, you been able to.

Reinstate the production at all three mine.

Where what can you help us get a better [laughter] to how that ramp in production looks like so.

Thank God I like what how much how many concur day, we're able to mine at all three mines in them on for July and August you know, we're getting right. We're halfway through the month already so where how is August unfolding.

<unk>.

Oh, well I'm delighted.

Hi, good C., we felt good operating.

I don't see life.

It's not.

Really well whatever.

Don't of course her were wrapping up still a we're having with me I mean, some be supposed disruptions from quoted so it is fairly fluid situation James.

So it's difficult for me to say number.

What I can stages, but the themes I agree I, great job a team in bringing.

So much production as possible.

But both Mike and I am certainly probably jump that they're doing.

Okay, well I would assume though that you're getting from daily production numbers and report out at all three mine for can you help us understand release, where I mean I could take for example, I guess you started in early July you Gotta Martin can it felt like can you give [laughter] to like what's the highest not.

All production has been able to produce [laughter] [laughter].

[laughter] restarted.

Oh, just those those numbers I'm, a public too so I I I'd, rather wait and our LIFO together I think I'm, telling you is not that.

The teams are doing a great job really doing a great. So oh.

So oh.

I I hope that Doug I'm sort of the numbers are going to be.

Well, this so called or something and we all want them to be.

Well I recognize you use that public representing approximately considered a public call fear earnings call and so this is an advocate to share that with the marketplace any public forum.

Yes, Tom.

I guess again I'll come back when that time can you help us understand like and both of our well what.

None of the production are you currently producing at your culture.

The production I agree CNN cookie.

Because this is critically important for the company and shareholders too.

So it's going to come up in here. Jim. This is not consider public farm enough that it meets disclosure requirements for all people the only way that we disclosed the meat disclosure requirements for everybody is through a press release. So you know because right now we currently have seven people on the line and so that's not considered public disclosure in the sense that we can put.

Something out in the press, we so we cannot disclose the actual numbers as to what the mines are doing right. Now we can tell you that we're very optimistic things are going well, but that's all we can say the production press release will be out mid September for Q3 and at that point I think you'll be happy with the numbers, but that's all we can say.

Okay in D. and when do you think you'll be prepared to provide better guidance going forward after that in the mid September.

Right leases is provide can markets or is there shouldn't be a historical number.

Hi, Hi, Jim et cetera, So the third quarter numbers will come out and Oh, it's going to come out well into November and at that point, we shouldn't have a much better grass in terms of where cash flow cash position.

One is again, there is still possibly a cope with risk, but having three quarters of the here in place we should be in a better position.

Okay.

I can move over then too I can see for a second.

Can you help us understand if new [laughter]. He talked about you had a press release of the northeast southwest system.

How are you I guess you pick the press release had on June 18.

And how Ah how much production and how much or are you expecting to be able to practice at the it's about half a mill.

From that area in.

Area.

Oh, what we found is very encouraging on very positive <unk> you'd be your legally Prepositioning goes he was a fault, what's like a harder bonds RBC urea with all we don't hear we know or okay sold into petition lumpy order was fine alone but for whatever.

He wants it's called works, we watch that well.

For me when they walk that I'd be very simple to you wrote that but that was crack a default okay.

Did you only have looked very carefully and what weve problem loans were mining near the area.

The interpretation now has changed just nice small.

So that they are actually extends to the other type of.

Oh default before we've we felt that the other side as opposed to look at all now we feel that they automobile site. So I'm pleased to stop work has begun must you come off base, but that's going to your site.

So that's where we are as we speak we are drilling into that area on they're not so we need the press release or sometime ago and another subject. We have found some tons will be area.

Now we are working on most meals to quantify.

What are sort of Oh tonnage and grade we are going to hop on that area for.

<unk>.

We are very excited on the you know.

Hi days a week.

But we've done but we have found in days in the near by area.

And since it's really close to where we are mainly we applied to bring these into production in the mix.

Seeks to so per month part of it. So that's where we are working on the mother wherever you type we hope that helps in terms of grade profile for the future, but we have to do they drill the numbers on declining undermining makes with the it's there.

Okay. So [laughter] this news.

[laughter] the northeast southwest system next you're talking about here.

Is your sense that the grades are higher.

Or lower they much of what you're seeing at the interim they leaner.

Oh, so so far what we found on the Busybodies higher.

But we feel well it's real seats you know samples are we we have two to three or more and make sure about the volume based on what the final comments on Grace will be for mining no. We have talked council of dilution on graves with all of these files, but.

From what we found we are optimistic for the I'd like to be higher.

Okay, and then what about the how how how wide.

What can we expect you're finding [laughter] them because.

The one issue we agree with you over the years, you're going and they've been quite narrow, which is made and get a country economical.

Can you help us understand how how would they went to compare to what you're seeing out of control any leaner.

Jim It's pure the public disclosures Santa Rosa the limit at an average is the boat up to four meters and the press release actually stated that there are the with wants to 70 meters. In this new area. So they you know what we have from the information that we've seen so far is that their wider.

No that's and that's about all we can say right now.

Okay, and when Winglets when when we when would you expect to be able to really for more information about the overall carnage in quantity.

And other characteristics of that.

The North East South that has come from the market.

Well the drilling is ongoing right now as soon as the drilling is complete and we have assays well get that out to the market as soon as possible. We're excited about this and we want a shared as soon as we have it. So we're not holding back information here soon to be habit little try to get it up to you as soon as possible.

Right I understand that Mike, but I mean are you are we looking at something like say.

In September our we're talking about side. He ended the fourth quarter of 2020 or 2021 event.

Oh well.

But my sense is deemed we're feeling of them on them hopefully by the empathy year or limit yeah, we will have two.

All of the numbers.

Oh, no market Oh my.

Huh.

We are we are really into it. So we're we're speaking the numbers.

Who knows.

Possible Oh, we shouldn't we <unk>.

Brings up or into the plant on so super out.

Okay. If we can move back a little accord got Boulevard, where can you help us understand the incremental margins where have you didn't kind of for EBITDA margin to add whereby you know in the late late this quarter.

Your your we're producing at 3800 tonnes a day.

As you ramp towards 5000 country day, because you know.

And as soon as these incremental Marty should be fairly fairly robust.

So can you just help us better understand what does the incremental EBITDA margin for both of our please.

Hi, Joe Yes. So in Q2, we saw some real increase in our.

Your incremental margins if you will.

Operating almost sort of 53% margin and each one boulevard, which at around 50%.

Very strong we wouldn't expect that as we increase our ore throughput up to the 5000 tonnes per day, you are going to get the the advantage of the lower.

Ics unit basis, your lower costs for for her town per ton per pound. So we're we're highly optimistic but I'm not prepared to say to give you wait affirmed number at this at this point, but.

Very solid margins coming out of Bolivar.

Okay, well can you help us that understand then Moody's had benefits from the economies of scale that you're alluding to and what kind of cost per pound would you like a cash costs and all in sustaining cost.

He moved from 3800 885000 today would you expect if he had to have all of our.

Jim I think it with the benefit of Boulevard and separately from would be.

You know you could say it's in the most very close to the bottom courts out in terms of but its cash past proxy one costs and I'd expect it to maintain that and.

Oh, no one's going forward, but I'm not prepared to give you a.

Hi, Scott on the discipline.

Well, yeah, well, what what additional and train you need to see.

And when would we expect to know.

What these or what's your <unk> the cost trends look like handle that.

The cost trends, Jim are going yeah, they're going lower and it's just there's a lot of things that go into a you know there's grades there's all sorts of things that impact and the amount of development you're doing the amount of machinery, you're doing so that's really what's your neck.

On the line I'm not prepared to do that say that yeah, I can say that well the bars going to be X dollars per pound going forward at a 5000 tons throughput and much higher or lower depending on the throughput.

As we speak at the end of June Cas cost for Boeing forever around the like 16.

One of which which is a very good.

And there's also the FX.

Components, as well, which let's make a difference as well as the do you have a weakening.

Mexican peso and that has gone into to the the cost profile as well.

Mhm.

Okay, well I guess the at the last question here that it would seem that given your I'm optimistic view towards the ability to deliver on the production increases excluding any negative impact from coated.

And attracting environment, they were saying here at the upcoming.

At the record quarterly she got pretty thin even out basis have independent of 18.

About by around 29 million Bucks.

But any reason why that number should not be exceeded by the fourth quarter 2020, given that you've got writing volumes in the pricing environment too much better today than it was back in 18.

Yeah, I'm, assuming there's no cobot interruptions and hasn't really as mentioned on the call earlier, we expect a stronger second half than than first half. There's no question and it's it's all a matter of if spot prices.

If metal prices remain at spot prices that we should see a nice big bump again, just to remind you we do but he's our planning efforts on consensus pricing and consensus prices are still very much work their way below we where we have spot prices right now.

So.

It's really highly dependent on.

Right, Yeah, I totally understand the importance of pricing.

And a better but again that the question really is though.

Pricing environment remains where it is today.

Again, we're halfway through the third quarter and it continues out into the fourth quarter like that.

Is there any reason why.

We should not be able to exceed.

The June quarter, 18 that was at $28.9 million.

Not really shouldn't be making taking kobin I was just the equation Jim there should be really no reason.

Okay, Great I think very much I would I appreciate your time and all your thoughts here and most importantly, we.

Yeah, I wish you all the best and all the 60 tells me employee that cause your metal.

Thank you.

Our next question comes from the line of Lee Cooperman from Omega family Office. Your line is open yeah, I just had to come back in line with I listen to this exchange between you and Jim and I want to make an observation and I have a question. The observation. If you guys are working very hard trying to create value the market.

Does it seem to give it then you have more press releases for Dallas market cap than any company I've ever been involved in in the 55 years I've been a business.

We have seven people into like nobody gives a damn okay. They don't care about us and I hope, Alberta always listening because she should understand that there's a growing sensor frustration of those people like Mr. Young that have been long term support of the company.

Doctors unchanged for decades, the price of the commodities more recently is way up yes, we have the uncertainty of the coated a which is another factor, but the reality is that it's certainly should give us an opportunity. So I would say the times come for us to explore strategic alternatives. It may be the best thing is to do nothing as people can't pay us so won't pay us.

So what we what you guys have created [laughter] late second thing is a question when earlier this year before covert hit you announced they are intentionally with pursuing a Dutch auction tender I guess it was [noise].

Given just your assessment of the environment today, they financial position of the company your production capacity the price of the commodities you sell.

As the stock cheaper today than it was in January where you where you have no opinion on that.

I'm not prepared to comment on that.

Well I'll comment everything you said, Michigan the stock, which is unchanged from January is more attractively priced today than it was in January you have more production you have higher prices the commodity either you made a mistake unintentional buying back stock early this year, where you basically should really reenter the market.

Do you uncertainties that creates the opportunity that's it I I've said enough. Thank you.

Lee just the Republican that we when we announced that share buyback cobot was not anticipated a and this was supposed to be a much stronger year. We have not seen you know we could actually impacted in operations significantly metal prices came off and the other thing isn't we had no.

Debt repayments. This year, we're just paying interest on that line and so now I'm going into next year. We have you know we have to take everything back into consideration that getting everything has to be looked at so you know we had we do believe that the company is and strong flooding. We do believe theres a lot of upside we do believe in the metal price we have to read.

Valuate, because we have to look at how much capital we're going to meet that meet the Catholic finish your retirement excuse me I went directly but you did re evaluate you understandably withdrew the intention of doing the buyback would the question I'm asking you and I have it opinion on that question is now is the is the.

Appropriate thing to reassess that decision the whereas the commodity price today isn't materially higher than it was in January I believe your production outlook, assuming covert doesn't upset at again is for materially Greater production 2021, then you had in January of 2020, the price of stock is unchanged.

Changed.

I think at that time, you sweat the stock was it a big discount to the value of the business and I would say that the discounts they should probably even be greater that's just a it's just an observation I know just trying to see whether you agree with that or not but guess what time will tell time will tell I'm, not even though I'm 77 and that never.

Josh.

On patient, but I would suggest to Alberto if you listen to this call is a growing sensor frustration amongst those had been the loyal most loyal and longest shareholders in the company.

So.

Great. Thanks.

Operator.

We have no further questions in queue I'll turn back to the presenters for closing remarks.

Thanks, Operator that concludes today's call on behalf of management team I'd like to thank all the participants for joining US today, a replay of the webcast and all the materials can be found on the website CR metals background. If there any other questions. Please feel free to reach out to do up anytime after today's call a contact information can be found in today's presentation on the company.

That's great. Thank you operator, please conclude the call.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

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