ERO Q3 2020 Earnings Call
Operator: Thank you for standing by. This is the conference operator. Welcome to the Ero Copper Third Quarter 2020 Financial and Operating Results Conference Call. 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. [Operator Instructions] I would now like to turn the conference over to Noel Dunn, Executive Chairman of Ero Copper. Please go ahead, sir.
Christopher Noel Dunn: Thank you, operator. Thank you and good morning, everyone. The news release announcing ERO's third quarter results is available on our website, and on SEDAR, as our financial statements and MD&A for the three and nine months ended September 30, 2020. As usual, we will be making forward-looking statements on this call that involve risks and uncertainties concerning the businesses, operations and financial performance of the company. We would refer you to our most recent AIF also available on SEDAR for a discussion of the risk factors of our business and their potential impact on future performance. Unless otherwise noted on this call, all amounts are in US dollars. Joining me on the call today are David Strang, ERO's Co-Founder, Chief Executive and President; Wayne Drier, ERO's Chief Financial Officer; and Makko DeFilippo, Vice President, Corporate Development. As our results have demonstrated, this was another excellent quarter for the company building on a strong foundation from the first half of 2020. Our operations have continued to achieve new quarterly records for operational and financial performance contributing to the most consistent quarter-on-quarter improvements in key corporate level financial metrics. More importantly third quarter results yet another reflection of the shared commitment throughout the company, an organization to keep our employees, contractors, their families, local communities safe during this period of COVID-19. Highlighting these efforts on September 30, we celebrated one year without a loss-time injury at our MCSA operations despite many challenges associated with mitigating the impacts of COVID-19. While new case counts moderated in Brazil during the third quarter from the peaks of July and August, we remain vigilant and continued to implement extraordinary mitigation efforts at site to ensure continuity of operations. Year-to-date we have contributed approximately $1.5 million to local community relief and on-site COVID-19 mitigation efforts. As a result and aided by the hard work and commitment of our in-country colleagues, we continue to experience no disruption to our operations, supply chains also sales channels to date. From a financial and liquidity perspective, we saw a noteworthy improvement in our working capital position, as well as a reduction in net debt relative to the second quarter. We ended the period with a significant improvement in our cash position despite paying down several short-term lines of credit during the period. We continue to remain excellent shape as a company, well positioned with levels in hand to navigate any uncertainties associated with the current macro environment. We achieved another quarter of record cash costs during the third quarter, benefiting from the ongoing currency tailwinds. While the Brazilian real remained weak relative to the US dollar during the third quarter, a significant decrease in volatility of the underlying currencies lessened the non-cash impacts on our earnings and working capital during the period. We closely monitor and have continue to settle some of our forward-dated FX option contracts as well as opportunistically roll a portion to the future in line with our overall strategy for managing currency volatility, which is designed to protect the business in the event of a rapidly strengthening Brazilian real against the US dollar. More specifically, we continue to see a persistently weak Brazilian real, if we continue to see a specific consistently weak Brazilian real, our underlying business will benefit, and we will continue to sell a portion of our existing contracts. On the other hand, the export-driven Brazilian economy is likely to benefit on a relative basis at the first signs of sustainable global recovery as we come out of the COVID-19 period. We are focused on ensuring our business and profitability are protected against the rapid strengthening of the currency. With that I will now pass the call over to David to provide a brief review and update of our operations, and then Wayne will provide a review of the company's financial performance. We will all be available for questions immediately following the call.
David Strang: Thank you, Noel. Following up on what Noel mentioned, our Brazilian colleagues throughout this entire year frankly have demonstrated their results and keeping our operations running safely, while managing and mitigating the impacts of COVID-19. The achievement this quarter of reaching one year without having a lost-time injury at MCSA is a fantastic milestone for the company and we are incredibly proud of the efforts throughout our organization that went into improving upon our safety performance and setting new high bars for operational excellence. Implementing new improvement initiatives was made all the more challenging with the onset of COVID-19, and again credit to all our frontline workers, supervisors and senior leadership, many of whom are listening on this call for making this possible. Focusing on operational highlights and outlook for MCSA up in Curaca Valley first. Operations continued to perform well throughout the third quarter. We produced 10,961 tonnes of copper in concentrate in line with second quarter performance and our year-to-date results continue to track on guidance. During the period, we milled 553,148 tonnes of ore grading 2.18% copper, and achieved metallurgical recoveries of 19.8%. Decreases in tonnes mined and processed during the third quarter were more than offset by a 10% increase in grade and an increase in recoveries relative to the second quarter. Strong quarterly performance was driven impart contributions from the Vermelhos Mine where 222 -- excuse me 227,963 tonnes grading 3.76% copper were mined. A 15% quarter-on-quarter improvement in grades mined. At Pilar 375,296 tonnes of ore were mined grading 1.36% copper, in line with the first and second quarter of 2020. As Noel mentioned, we achieved a new quarterly record with respect to C1 cash costs of $0.63 per pound of copper produced, reflecting continued operational performance, currency tailwinds and improved by-product gold and silver prices. Year-to-date in 2020, C1 cash costs have averaged $0.66 per pound of copper produced. We are maintaining our 2020 production guidance for our are Curaca Valley operations of between 41,000 and 43,000 tonnes of copper and maintaining our previously revised C1 cash cost guidance of $0.70 to $0.85 per pound of copper produced. Given the strong operating cost performance year-to-date, we expect full year C1 cash costs to be at the low end or slightly below this range. Similarly we are maintaining our previously revised non exploration capital expenditure items range of 56 million to 68 million. We have increased our full-year exploration spend by approximately $5 million to between $25 million to $30 million to reflect continuity and expansion -- excuse me, our ongoing drill programs in the Curaca Valley through the fourth quarter. As we now look to prepare both of our operations for extensions in mine life, we expect full year capital to fall at the high end of our guidance range. Most of the growth projects we set out to deliver this year and even now been completed or remain on track for completion prior to year end. Among others, this includes the installation and commissioning of our high intensity grinding mill, the HIG Mill, which was commissioned in the September. While based on preliminary data and feed and control system integration work remains got ongoing, we achieved 92% recovery during the month of September, a monthly record for us this year and certainly a strong leading indicator as it relates to improving recoveries and stabilizing overall mill performance. In late September, we completed the test work of our ore sorting trial campaign, excuse me, successfully demonstrating the excellent upgrade ratios and minimal copper loss can be achieved a commercialized run rate. As a result, we fully expect this technology to be an integral component of our efforts to further optimize our production portfolio across the various operations of the Curaca Valley. We currently view the Vermelhos District as a most logical place to integrate ore sorting operations due to the results obtained in Tesla combined with expected savings in transportation costs. Our 2020 resource reserve and life of mine plan update for our MCSA operations continues to remain on track for completion prior to year end. One of the primary near-mine exploration objectives in support of this effort was to undertake an aggressive drill campaign focusing on the high-grade deepening extension zone of the Pilar Mine. This program started in earnest around this time last year, during our analyst visit, and we continue to be extremely pleased with exploration results and progress on engineering and mine planning over the past 12 months. These efforts have effectively taken this project from concept to nearly completed engineering study in the years' time. For the cut-off date for this year's report has passed, drilling of the zone remains ongoing, including front surface using directional drilling technology. When balancing all factors, we see this project is having considerable potential to not only meaningfully extend the life of the Pilar Mine, but certainly carries a potential to expand production volumes. Engineering work on these fronts has well advanced and we expect to provide further details on these plans in the fourth quarter. Throughout the Curaca Valley, we have 26 drill rigs operating, including those allocated to the Deepening Extension zone. Our exploration focus during the fourth quarter can be summarized in three areas. Continues to demonstrate down plunge high-grade continuity within the Deepening Extension zone using directional drill technology from surface and underground. Two, aggressively target a recently discovered mineralized zone between the Vermelhos and Siriema deposits. Results to date within this zone, which extends approximately 700 meters on strike length suggests that multiple spec high-grade lenses may be present. And three, expanding the breadth and priority of our regional exploration campaigns throughout the Curaca Valley on select priority targets, which we continue to remain very excited about. Consistent with our scheduled quarterly updates, results from our ongoing exploration programs will be further detailed in our upcoming exploration update, which we typically release four to six weeks following our financial results. With respect to our ongoing exploration activities and improvement projects, our ability to conduct multi-element analysis in-house is now complete and daily sample volumes have reached steady state. In accordance with our schedule and best practice, we have implemented the standard quality assurance, quality control program is that using third party laboratories, as required to ensure a calibration of the equipment and to ensure consistent and reliable assay results can be obtained. We expect this addition to our laboratory to significantly reduce costs and turnaround time for Platinum Group Metal assay results in the future. At the NX Gold Mine, production during the quarter totaled 9,436 ounces of gold and 5,736 ounces of silver from total mill feed of approximately 41,749 tonnes grading 7.64 grams per tonne gold, after average metallurgical recoveries of 92%. While gold production, mill throughput and recoveries continued to improve quarter-on-quarter, an area of the Santo Antonio Vein, we expected to mine this year accounted suboptimal ground conditions that will require an enhancement of our inherited ground support capabilities in order to effectively mine. Since encountering this zone, our team has acted quickly to implement characterization work and -- excuse me -- and engineering studies for the installation and implementation of a small, modular paste-fill plant on site. While a modest investment of approximately $2 million, we view this as a significant first-step in securing long-term production stability and extending the life of the mine for the NX Gold. We fully expect the implementation of paste-fill will allow us to not only recover the area that we had intend to mine this year, later in the mine's life, allows to improve overall resource conversion on mine recoveries in the future. We expect to incorporate these plants into our 2020 resource reserve and life of mine plans to NX Gold, which also remains on track for completion prior to year end. While longer term, we expect a net benefit as a result of operational changes and re-sequencing in 2020, we have lowered our full-year guidance for NX Gold to between 36,000 and 37,000 ounces of gold, and increased our non-exploration capital spend by approximately $2 million to between $9 million and $11 million. We are maintaining our previously revised C1 cash cost guidance range of between $425 and $525 per ounce and expect to be in the lower half of this range for the year despite lower production guidance. Full year exploration expenditures have been increased by approximately $2 million to between $3 million and $5 million as we continue to grow our exploration footprint and at NX Gold during the fourth quarter. With that, I will now pass it over to Wayne, who will provide an overview of our financial performance.
Wayne Drier: Thank you, David, and good morning, everyone. Echoing what has been said previously by Noel and David, the third quarter of 2020 was simply an outstanding one for the company. Quarter-on-quarter, sales volumes were up 9% and 17% for copper in concentrate and gold, respectively, contributing to a record $94.3 million in quarterly revenue, a 33% improvement over the prior period. As mentioned, we achieved another great quarter with respect to C1 cash costs across our operations. Impressive quarterly revenue paired with these low operating costs contributed to another record quarter of cash flow from operations and adjusted EBITDA totaling $44.4 million and $62.5 million, respectively, during the period. Quarter-on-quarter improvements in the Company's consolidated financial metrics continue to be underpinned by the strong operating performance, favorable exchange rates, and increases in underlying commodity prices. During the first nine months of 2020, adjusted EBITDA totaled $138.4 million, exceeding our full year 2019 number of $134.1 million. This performance continues to speak to the growing strength and profitability of the business. As Noel mentioned, we did continue to benefit from the sustained weakness of the Brazilian real against the US dollar, while the reduction in underlying foreign exchange volatility did less than the impact of non-cash adjustments on our third quarter results. During the period, we recorded approximately $6 million in actual losses related to the settlement of maturing foreign exchange contracts. The non-cash adjustments included a further $1.1 million in unrealized foreign exchange derivative contract losses, based on the fair market value of these contracts at September 30 versus June 30, and a further $2 million related to the translation of our US dollar denominated debt in Brazil, as a result of our functional currency being the real. Our headline net income for the quarter was $31.1 million or $0.34 per share. And after adjusting for the non-cash components of the foreign exchange loss, our adjusted net income was $36.7 million or $0.40 per share fully diluted, which much better reflects the performance of the underlying operations. The strength of our balance sheet continues to improve quarter-on-quarter. The company's total cash position at quarter end was $54.3 million compared to $51.6 million at the end of the second quarter. Increased sales volumes and rising commodity prices also contributed to a significant $16.3 million improvement in our working capital position as compared to the prior period. Increases and accounts receivables at quarter-end were primarily, driven by increased sales volumes, the timing of these sales and a modest positive provisional pricing adjustment at the end of the quarter. The company's net debt improved by $12.5 million quarter-on-quarter, primarily as a result of the repayment of certain short-term lines of credit that withdrawn during the first quarter of the year as a precautionary measure. Repayment of these lines reduced the current portion of loans and borrowings by approximately $8.5 million relative to the prior period. In summary, our business continues to run extremely well and generate significant free cash flow, particularly at prevailing metal prices and foreign exchange rates. On that note, I'll hand the call back over to Noel for some concluding remarks.
Christopher Noel Dunn: Okay. Thank you, Wayne. Our performance year-to-date can be summarized as follows; one, proactive and ongoing efforts to mitigate the impact of COVID-19 on our operations, and prioritizing the safety and well-being of our colleagues, contractors and local communities. Two, continued advancement of key growth projects and objectives, including on the exploration and mine-planning fronts, in spite of challenging conditions; three, exceptional operating and financial performance across our core business bolstered by ongoing currency tailwinds. To reiterate what David mentioned earlier, we are looking forward to the completion of our 2020 resource reserve and life of mine plan updates for both MCSA and NX Gold, which we expect to incorporate -- will incorporate many of the objectives we set for ourselves this year. All of which have progressed largely on schedule. Thanks very much for joining the call. We will turn it back to the operator to open the line for questions. Thank you.
Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Jackie Przybylowski with BMO Capital Markets. Please go ahead.
Jackie Przybylowski: Thanks very much. Congrats on the great quarter guys. I guess I just wanted to circle back with the comments made by both Noel and Wayne in the preliminary remarks. Your balance sheet is in great shape. And as a result, I'm still kind of not understanding why you're holding cash strong from your credit facilities. I know initially a lot of companies did that to preserve liquidity during the first early days of the COVID pandemic. But most other companies have repaid that. Can you give us some thoughts into was -- how long you might hold that for? And sort of what the liquidity needs are that that you're holding thus far? Thanks.
Christopher Noel Dunn: Yes. Sure. Look we are conservative bunch [ph], we live in uncertain times as we know from what's going on south of the border in terms of the election. So we're paying things back progressively. Could we do it all today? Yes. Sure. We could. But we just said out why don't we just wait and see what happens. And we'll go from there. I think that's just generally just our mindset. We'd like to be conservative both, as you know, in terms of -- as you've commented on, in terms of our projections or expectations for the year, but also in terms of how we manage our liquidity. Wayne do you want to add to that?
Jackie Przybylowski: Okay. So…
Wayne Drier: No, I think, Noel said it very well, Jackie. I think we are -- we watch that very closely. Our cost of borrowing is extremely low given our leverage ratios. So, the holding cost of that is immaterial in the scheme of things. And so, when you sort of match that up against the uncertainty as Noel put it, it wasn't that long ago when the world was a very uncertain place. So I think we'd like to see a little bit more stability in the world, in the markets. And absolutely, we will continue to sort of work to bring down the lines of credit when we feel appropriate.
Jackie Przybylowski: So just -- just I guess hopefully not to be deliver the point, but there is no immediate liquidity need that you're anticipating. This is just a conservative approach just given what's going on?
Christopher Noel Dunn: Correct.
Wayne Drier: That's correct.
Jackie Przybylowski: Okay. And I guess it's just, sorry to take --
Christopher Noel Dunn: No. No. Carry on.
Jackie Przybylowski: This is not a different question then -- you put some really good looking results in terms of Siriema and potentially the lenses that might move across towards Vermelhos. Can we expect to hear more about that? Or can we expect to see that wrapped into the life-of-mine update that might be coming out later this month.
Christopher Noel Dunn: Good question, Jackie. It's too soon. We have now moved, I believe, we now have six rigs on-site between Vermelhos and Siriema. And we are now going to systematically drill that zone out. Like we did -- as we mentioned on the call with the deepening project last year when we ultimately put five rigs down in the deepening project and have now drilled that zone out -- the intent is here to try and do the same thing to be in a position, hopefully this time next year to be able to include resources from the new zone into our life-of-mine plan at that particular time.
Jackie Przybylowski: Okay. That's helpful. And just really quick one, last question for me. You normally put out your exploration update, I think about a month after earnings come out. But that's -- seems like that's kind of around the same time that you're thinking of the life-of-mine update. So, -- I just wanted to understand, are you planning to put out both updates over the next month or so?
Christopher Noel Dunn: Yes. Mac is going to be very, very busy. So we have both the updates on the 43-101 for the Curaca Valley. We have the update in the 43-101 for NX Gold along with our normal exploration -- quarterly exploration update that will occur, I think, towards the latter part of this month going into December.
Jackie Przybylowski: Got it. Yes, I was just not sure if you were going to still do the exploration update given the other update that's coming out. But that's helpful. I'm going to pass the baton on to somebody else. Thanks very much.
Operator: Our next question is from Raphael de Souza with CIBC. Please go ahead.
Raphael de Souza: Hi, good morning. Congrats on the strong quarter guys. I had a quick question on Vermelhos. So despite the strong C1 cash costs for the quarter in local currency, you reported an increase in mining costs. I'm just wondering what's expect going forward in terms of like that number in Brazilian reals [ph]?
Christopher Noel Dunn: With regards to that, Raphael, it's -- that number bounces around on the quarter-by-quarter basis due to the allocation of the development costs between operating development and capital development. So where you see a slight increase in costs on the quarter, that is more likely -- more reflective with respect to the allocation of the development than anything else. So operations there on a month-by-month basis in terms of our normal operating that we have not seen any real deviation in costs at that mine month-to-month with respect to direct operating mining costs.
Raphael de Souza: Okay. And just then changing gears a little bit, so I saw the processing costs also increased a little bit on Brazilian real terms. Any comments on that as well?
Christopher Noel Dunn: No, again, it's the -- things will jump around from a quarter-to-quarter basis. I think you need to -- in terms of how you look at our costs, you have to look at it on an overall basis, on a per tonne basis over the year, because both -- you also see similar situation that Pilar as well where we have this allocation between capital and operating development. And so when you -- and that is not a -- it's not a fixed variable between the two on the month-by-month or quarter-by-quarter basis sometimes we do more capital development, sometimes we doing more operating development on a particular quarter. It's just jumps around like that. But as I said, from an operating cost perspective, we haven't seen anything go adverse. There is obviously a little bit reflecting some materials that are priced in US dollars, particularly on the maintenance side of things, where we have seen those cost increase in real terms because of the direct correlation over with regards to the pass-through in terms of the pricing of that. But in general, we haven't seen anything that has shown an adverse change in terms of our real [ph] operating costs.
Raphael de Souza: Okay. Yes, I mean, I understand that. I would have expected the allocation to impact the mining costs manifest early the processing costs, but, okay. And then just on a different subject. So you came out with the ore sorting plant results, and I believe your plan going forward is to focus mostly on another [ph] majors and the impact of that to transportation costs. But do you have any -- do you have any comments open-pit because I believe -- this was your initial goal with this project. Correct?
Christopher Noel Dunn: When we talk about the Vermelhos -- we talk about the Vermelhos District and when we look at -- so when we you look at Vermelhos, don't necessarily allocate that to the Vermelhos Mine but rather look at it in terms of the ore sorting working with regards to the various open-pits -- open pittable resources that we have in the Vermelhos District. That's really where we're looking at right now at using ore sorting technology.
Raphael de Souza: Okay. So may -- so then, you can probably use that upgrade like N8, N9 and like that --
Christopher Noel Dunn: Exactly. Exactly. Exactly. That's really where our focus is right now.
Raphael de Souza: Okay. Fantastic. Well, thank you. Thank you again.
Christopher Noel Dunn: Thanks.
Operator: Our next question is from Stefan Ioannou with Cormark Securities. Please go ahead.
Stefan Ioannou: Yes. Great. Yes, thanks guys. And again congrats on the quarter. Just curious, obviously, with the exploration getting the sort of full Q4 budget into the mix as well and a shift to regional exploration this quarter. Just wondering -- is that a theme, I know, you haven't been set aside from a guidance of budget for next year yet, but is that going to be a theme that carries into next year as well? Or will we see a sort of revert back to near-mine exploration for the first part of next year as well on anticipation of the subsequent mine plan update? Or just can you give a bit of color of that? Or are you going to stay focused on that regional stuff going forward for now?
Christopher Noel Dunn: Well, as, yes, regional as always an important part of the project and everything that we do in terms of the development of new resources in the district. And as we pointed out, I believe in the press news release, we still focused on these four or five areas in the district right now. We're still very encouraged by what we're doing there in terms of the work. And so we see no reason to really get out of those areas in terms of the regional exploration program until we fully understood what's going on there. Obviously, as I've highlighted here, there is a big focus now on drilling between Siriema and allocating six drill rigs to that program there as well. And then we will continue, how many rigs we are going to be using with regards to the Deepening project in terms of ongoing drilling there is still being worked through in terms of the budget. But we will still also continue to drill and continue to expand and drill out the Deepening project as well. So those are the three sort of main focuses in terms of exploration, but regional is a very important part of all of that
Stefan Ioannou: Okay. Okay, great. And then, I'm not sure if I missed it, but I just obviously at MCSA for the quarter, the mine production was strong it. But the mill throughput kind of lagged like the mine output. Was there any particular reasons or was it because you're now [ph] retiring in the Hig Mill and things like that? Or can you maybe just provide a bit more color on that?
Christopher Noel Dunn: Yes. It's just, again, you know, I think everybody takes place on the firm. When you look at us on a quarter-by-quarter basis, everything is going to be exactly the same whether things lagging or not lagging. It's got nothing really to do with that. It's just -- we just have some fluctuations in terms of things. We've had one of our mills down in terms of doing some repairs on it. So at the end of the quarter, I think we've built up a bit more material sitting in the yard, in terms of that. So nothing that's untoward from a month or quarter-by-quarter basis in terms of how we are operating whether we have material sitting in the yard or running through the plant. It fluctuates.
Stefan Ioannou: Fair enough. Fair enough. That's good. That's very helpful. Thanks very much guys.
Operator: Our next question is from Orest Wowkodaw with Scotiabank. Please go ahead.
Orest Wowkodaw: Hi, good morning guys. I realized it's probably a little bit premature, but I wanted to see if we can get a bit of an understanding of how you're thinking about the new mine plan that will be coming out about a month. And I don't mean specifics, but more of just from a philosophical perspective, whether you're thinking that of the approach to be more of a lower throughput, higher grade type of mine plan? Or does the addition of the ore sorting technology kind of make the larger throughput lower grade type of mine plan more economical, say than last year? And just kind of wondering where the thinking is right now?
Christopher Noel Dunn: It's a good question Orest. And certainly, what our -- excuse me, the philosophy of this management team as we've put out in the marketplace as we are returned on capital focus, first and foremost. So the highest return on capital that we can do. And as part of that -- and as we've highlighted to the marketplace, is a targeting of operating costs at or below a dollar or a pound. And so as we move forward here, we are not is necessarily interested and looking at grade, but how do we maintain high profitability? As I said, we are targeting low operating costs as possible. The lower dollar pound ideally with maintaining our high return on invested capital. That's the philosophy that has gone into how we're doing this mine plan this year. If a project is able to maintain our high return on invested capital, while at the same time looking at the long term with regards to maintaining our life of mine average operating costs at or below dollar or pound. We will look to include that in our production plan. We are not NAV-focused. So we're not just going to throw anything through the mine plan, but if we are able to maintain that -- those targets as of outlined, then we will be looking at, I think that materially.
Orest Wowkodaw: Okay. No. That's helpful. Thank you. And then just a follow-up, I mean, do you have a sense of in terms of -- the Pilar Deeps been very exciting from a drilling perspective. Can you give us a sense of what the earliest could be in terms of that material actually making it into the mine plan, like it's not going to take a couple of years in terms of development?
Christopher Noel Dunn: Yes. Yes. I think it -- why we did this work as early as we've done to give us the flexibility in order to optimize the development of the Deeps project, in the best way possible that gives us the highest return possible. And part of that is all transportation. And the team has spent a long, long time thing out to look at that and look at what gives us the highest return. And we are lucky that we have the flexibility now to be able to implement the deepening project on the timetable that allows us to generate the highest return possible. So I can't give you a specific date, but I will say is we have work to be developed the Deepening project as that fits with our philosophy of highest return possible. And we're pretty excited about what the outcomes are looking like right now.
Orest Wowkodaw: Okay. That's awesome. Thank you. And then just finally, in your last exploration update, I guess, it was sort of became clear that you were a bit behind schedule on where you hope to be on some of the regional exploration because of kind of COVID constraints. Do you feel like that's now behind you in terms of -- are you actually able to start drilling those targets now? Or should we expect more a longer kind of delay on the regional exploration program?
Christopher Noel Dunn: I think the thing to take away when we talk about the impact of COVID is the inability for us to travel, not only for us to travel from North America, and Mike and Pablo to be able to be on the ground with the guys and looking at what is going on in terms of that regional program, but there is also been constraints with regards to some of our team in Brazil. Some of our team are older. And as you know we have restricted people of the certain age to rather work at home, and we have a couple of our senior GOs who in that position. And so I have not been at the operation, and then some of our other GOs who work directly for Europe, when Brazil was in lockdown, when unable to travel. We were able to do one trip during the quarter to go site and it was fantastic trip in terms of getting the guys there and our GOs now in country are able to get a site. It's not so much that we haven't been able to drill. We have been evaluating projects. The issue more is about what we are seeing and then moving rigs to be able to more optimally drill some of the target that we are uncovering. And that's been the issue more than anything else. These ore bodies -- on big porphyry ore bodies we just have drilled here and then step out 150 years and drill again, yet it takes a lot of work and need the intellectual capital on site. So, we are drilling targets. We're pretty excited about some of the stuff that we seeing. But where we see the delay is understanding what we're looking at with material coming up to ground and to be able to move rigs optimally drill targets. We came a little bit more inefficient in doing that, I would say, due to the lack of the intellectual team being there to be able to review. Does that makes sense?
Orest Wowkodaw: It does. Thank you, David.
Operator: [Operator Instructions] Our next question is from Dalton Baretto with Canaccord. Please go ahead.
Dalton Baretto: Thank you. Good morning guys. Just one question from me. Now that you've got the lab on site Clidorph [ph] for multi-element, have you had any tiffany's [ph] sense?
David Strang: Dalton, we have -- we have tiffany's [ph] every day. Certainly we have some of tiffany's [ph] but there is nothing to really talk about. It's far too early to be able to talk about anything. There's a lot more work that needs to be done in a number of different areas. So it's no point even speculating that anything. Like anything else you see something, you get excited about it, you do some more work, sometimes the new work terms implicitly into us. Well, I guess we have to move on. Sometimes you keep scratching and keep going. We're really in that kind of phase right now. I can't tell you whether things will break one way or the other. But having that capability now on site, certainly is going to allow us to accelerate some of the work that we have been doing. But had significant delays in turnaround time because we are having to send samples up to labs outside of Brazil. So that's best insight.
Christopher Noel Dunn: So, to add David, the labs are just ramping up. It's not -- it will be really at full speed in January onwards. It's kind of we're in a ramp-up phase.
David Strang: Yes. Thanks, Noel.
Dalton Baretto: Got it. Okay. Thanks guys.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Christopher Noel Dunn: Okay. Well, I'll just pick it up. As no pointed out -- we're really excited and happy with regards to getting a major milestone for our team. And it's a real credit to our team in Brazil and our colleagues in Brazil with regards to having over a year now of safety with regards to no accidents. It's a real benchmark, a real milestone, particularly, for underground mining operations like us at Ero, and we're -- we really about heads-up [ph] for our team members and colleagues in Brazil. Helpful as that, [indiscernible] has pointed out, we are always available for calls and look forward to chatting to you all in the coming weeks. And as we come closer to updating the marketplace in terms of our 43-101s. So thank you, operator. And everybody have a good day. Thank you.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating. And have a pleasant day.