Mark Sander – President, Chief Executive Officer and Director

Benjamin Asuncion – Haywood Securities Brian Martin – Raymond James

Thank you very much, Melissa, and good morning, everyone. Thank you for dialing-in to our conference call.

I would like to begin by making just a few remarks just at the stage for what I hope for some challenging and interesting questions. So in the quarter, we did generate strong revenue and EBITDA and actually despite the fact that metal prices are lower than the quarter a year ago.

We’re actually on a pace so far this year to exceed last year’s revenue and EBITDA and really the star of this performance is our low cash cost per saleable gold equivalent ounce of $751 that helped us to generate 34% EBITDA margins even in what we all hope for our bottom of the cycle metal prices and really allowed us our generous dividend of $3 million declared from the quarter and this is according to our 6% of trailing gross revenue policy. During the quarter, we did repurchased the royalty on Cerro Bayo from Coeur Mining for $5.7 million, a $4 million of which is cash – for less cash.

And actually what this does is it leaves us in kind of a good position of having no private royalties on any of our producing properties. So as we come out of this price cycle and increase the grades in our operations, the full impact of higher revenues will actually flow to the shareholders either through dividends or through the performance of the company.

In terms of how we were doing each operation, I would say that that Costerfield continues in its very strong crew. We have had record mine output in terms of tons at record low cost per ton and the same of the mill at record high mill throughput at low milling cost per ton.

And so the difference in the actual financial performance of Costerfield is to grade during the quarter. And the grades were quite good allowing us a record low of $512 per ounce of gold equivalent cash cost.

And gratifyingly at Björkdal, our long signaled grade control program underground has really started to payoff in a way that we can now see in quarterly results. We'll have – if you look at the investor presentation that went up this morning, you’ll see that for two of the – three months of the quarter, we are delivering quite good grades from the underground on-vein development and still bring to the mill.

The developed state of the mine was such that we couldn't quite sustain that for full quarter, but we have accelerated our on-vein development grade range and should be able to sustain that more months than not going forward. And then at Cerro Bayo, we continued to work through the issues generated by the slightly earlier than planned mine outs of Dagny and Fabiola what that amounted to is delivering slightly – modestly lower grades from the mines to the mill.

We are fully engaged in development now at Coyita, where the permits came in earliest in the quarter and at Delia Southeast. We are planning to bring in a contract development crew about mid June to accelerate the development rate and really open up Coyita faster than our previous plants.

This will allow us access to the extremely high grade Coyita Southeast quite a bit earlier than previous development plants and we’ll remedy the grade situation over the next several quarters. In terms of sort of annual outlook, we are maintaining our guidance for corporate consolidated production.

Cash cost and capital spending is previously established. Although the balance between the metals are may vary slightly and certainly what you can take from that is a possible underperformance at Cerro Bayo will be more than offset we believed by the continued over performance at Costerfield.

I think, I have said enough at the moment. Why don’t we open it for questions?

Good morning, Mark, and thanks for taking my question, just three quick questions here. So for Cerro Bayo, you mentioned that the contract will be placed in mid June and you’d be able to see that the grades would turnover the next several quarters.

Yes.

Are we still kind of looking at a similar performance in Q2 than to what we saw in Q1 or we start to get some uptick in grades?

In Q2, we’ll look remarkably like Q1.

Okay.

It’s going to take again several quarters of rapid capital development to really open up Coyita as fast as we need to get out to the high grade partners of the resources.

Okay, perfect. And looking at Costerfield then you mentioned again with corporate guidance remaining unchanged and the reshuffling of balances.

Are we looking for similar – I guess are the grade sustainable from Costerfield for what you delivered in Q1?

We believe so, I guess.

Okay. And then just lastly at Björkdal, how does the underground ramp up look in terms of being able to – when do you feel that you'll be able to sustain the underground production rates and what's your ideal blend in terms of proportion of underground ore?

Underground ore to open pit.

Yes.

Yes. Yes, so the mine traditionally supplies about 2,000 tons a day of underground and 1,500 tons a day of open pit in a typical month.

We – one of the obscuring factors in performance numbers is that when we implement our underground grade control. We actually end up throwing away 30% to 50% of the on-vein development material that we did – that the mine used to just send through the mill.

That's quite good and it raises the head grade to the mill for that period of time, but unless you have more of that material and you’re mining 30% to 50% faster, they're left with having to replace it with low grade stockpile material, which doesn't help. And so for instance in Q1, the stockpile material to the mill was something like 0.6 or 0.7.

So you have to actually be in a state to replace the low grade material, you’re throwing away with more high grade material. And again, we were able to do that for two months out of the first quarter, and we're working towards being able to do it 24x7.

Okay.

Exactly when that occurs, I can't – I don't have that information. But I would say that also this month we will be starting our optical ore sorting trial.

And what that has the potential of doing given our pilot scale test is that the average stockpile material that is now 0.6 or 0.7 grams a ton has the potential being upgraded to 1.1 grams, 1.2 grams a ton and by itself that will supply quite a bit more recoverable gold to the mill feed. So that’s kind of…

Okay…

It’s kind of the worst case at the moment.

Okay. And the recovery – the metallurgical recovery that you’re looking at optimizing, is that still on the slate for 2017 then?

Okay. We have completed in Q1.

We’ve completed commercial scale pilot tests of our new coarse gold and ultrafine gold flotation equipment. We will be getting the reports back this month, but assuming those workouts, they’re quite low capital to implement a full scale and assuming it’s financially justifiable.

We would be installing those either in latest this year or put it in the budget for next year. I would say that that what we see is when we’re putting through 1.5 grams to 2 grams a ton material, the recoveries end-up being about 92%, up from 88% at the traditional 1.3 grams or 1.4 grams a ton mill feed.

And if we get much higher than the 2 grams a ton in the mill feed, we end-up getting flotation issues and we have high deals. So the flotation improvements are really to deal with the high grade material that we’re starting to generate.

Okay, thank you.

Thanks, Ben.

Yes, Mark. Thanks for taking my question.

Just going a little bit of detail on the mining costs at Björkdal, given now that the new program is running. What kind of underground mining costs you guys are seeing there?

Our average mining cost in Björkdal has gone up a little bit from $20 to $24.57 per ton. That’s average open pit and underground, we have to – it’s variable depending on the – in terms of the open pit obviously with the low cost strip.

And in the underground, it’s a bit tricky because if we’re throwing away again 30% to 50% of the material because it’s sub-ore grade. We’re then increasing the mining cost just over fewer tons.

In terms of total operating costs, we’re more like a fixed cost operations the way we plan for this. So may put in more gold or the same amount of gold through fewer tons of rock.

So the cost per ton is higher, but the cost per ounce is the same or lower. And you can see that in the per ounce costs in this quarter, its $821 lower than the $900 some odd in the past two or three quarters when the head grades were low.

So or I guess what I want to say is that our hypothesis underpins the acquisition. We’re very comfortable that’s been proved that it’s in average of fixed cost operation and put more gold through it and your cost grams comes down.

I would say that the underground mining costs have gone up by a bit, but it’s – again it’s mostly because we’re putting – we’re outputting fewer tons at the moment.

That’s great. Thanks Mark.

Hey, Mark, just one follow-up question here on exploration. Can you give us a sense of how testing below the King Cobra Fault is looking and kind of when we would, I guess, see an update, a boarder corporate exploration uptick?

Yes, so we have our traditional exploration uptick coming at the close of Q2. And we haven’t released any results since the end of year update last year that came out in early January.

I would say we’re still drilling there. We are dealing with relatively deep holes at relatively awkward angles from underground.

And we’ll be faced with an option of sort of getting up, trying to drill it from above and bringing the contractor to deepen our workings. And so that we can get across the King Cobra Fault with a ramp and then drill short holes from already below the fault.

We haven’t made that decision yet. And all the supporting data for making the decision we’ll release at the end of...

Okay, perfect. Thank you.

So, thanks everybody for most of you getting up early to attend the call. I’m really excited about the – actually the exploration across all our sites at the moment.

And I look forward to speaking to you again at the end of quarter two when we release the interim exploration results, as well as our Q2 production numbers and financials. Thank you very much.

Bye-bye.