Paula Myson – Managing Director, IR and External Communications Ian Delaney – Chairman and CEO David Pathe – CFO Dean Chambers – COO

Matt Murphy – UBS Securities Anoop Prihar – GMP Securities John Hughes – Desjardins Securities

Thank you, Luke, and good afternoon everyone. Our press release was issued this morning.

A copy of the release, the MD&A and the financial statements are available on our website. In addition to analysts and investors, the financial press has been invited to listen to today’s call and a replay will be available through a link on our website later this afternoon.

Before we begin our comments, I would like to remind everyone that today’s press release and certain of the comments on this call will include forward-looking statements. We would like to refer everyone to the cautionary language in our press release and to the risk factors described in our CEDAR filings.

On the call today are Ian Delaney, our Chairman and Chief Executive Officer, Dean Chambers, our Chief Operating Officer and David Pathe, our Chief Financial Officer. After our opening remarks, we will open up the call for questions.

So to begin, I will turn the call over to Ian Delaney.

Thank you, Paula and thank you to the folks on the phone for taking the time to listen to us this afternoon. You have probably seen our press release outlining the results of the quarter and I can say like fairly predictable quarter in terms of revenue and profits.

The company is running well. We are in middle of our operating businesses.

We are meeting or exceeding expectations and had a very good quarter in metal production in the past quarter, and it has been the case for the past few quarters. It is delightful and predictably boring the big event for us of course this year will be the completion of our Ambatovy nickel project.

I was on site last week and much, much progress from my prior visit five weeks ago, looking good and clearly getting down to the finish line there. Things are getting completed almost on a weekly basis.

Mine is now complete, pipeline is functioning. Our refinery actually better progressed then we had anticipated.

In general, I am very pleased with the progress in spite of the increased cost. Not to say that the ultimate cost is completely predictable simply because we are held hostages to things like weather and such like, but much, much progress in the last five weeks.

So I will come back in a short while and answer questions that people in the phone may have, but in the, next I would like to ask David Pathe to review the financial detail and standing by we have our Chief Operating Officer, Dean Chambers. I will be on the line and we will all be able to answer questions at the conclusion of David’s remarks.

So David please proceed.

Alright, well thanks Ian. Not too much to talk about this quarter really, but I did want to just touch on and highlight a few things for you.

Few headline numbers first. You were seeing obviously earnings per share this quarter was $0.20, as well as the $0.17 for the second quarter of last year.

We had strong operating cash flow, $48.5 million this quarter, that’s well above the cash capital expenditures of nearly $26 million if you exclude Ambatovy. This quarter our balance sheet remains relatively unchanged from Q1 $1.5 billion in long-term debt, net debt of less than $1 billion if you net off the approximate $600 million, we are currently carrying in our balance sheet of cash, cash equivalence in short-terms investments.

I would suspect taxes the effects of tax rate for the quarter it was about 27%, that was a bit lower than I think we were expecting 30% for the first half of 2011. In terms of where that’s likely to go with a bit more volatility in the tax rate under IFRS for a variety of reasons including impact of foreign exchange in different jurisdictions that come into play.

It will generally be higher under IFRS than it was under Canadian GAAP in no small part due to the Ambatovy partner loans for which interest was capitalized under Canadian GAAP. It is expense to drive for us.

That alone had about $12 million impact in our net income this quarter. As we are now finding our equity contributions, we don’t expect that balance to change much apart from the capitalization of interest going forward and as the Ambatovy project gets up and running and start to producing cash we do expect to see those loan balances go down.

In term of a guidance for the tax rate going forward, it’s difficult to predict but the 30% year-to-date number is probably as good number any of this stage. Just to run through each of our businesses and as Ian mentioned Moa joint venture is running very well for the fourth consecutive quarter we had a mixed sulphide production record in Moa.

The refinery in (Inaudible) made a couple of maintenance turnaround this quarter both the annual refinery turnaround and the biannual maintenance event with the acid plant. No material impact on finished nickel and cobalt relative to second quarter last year because the same turnaround happened last year in terms of the refinery.

Acid plant turnaround did have some impact on fertilizer production. The lower production did have an impact on fertilizer sales but frankly the greater impact were in terms of reducing fertilizer sales was a result of the heavy rains in Western Canada this year and the impact that had on the spring planting and applications season.

Cost sides in Moa we are still seeing pressure on input volume prices, sulfur prices, which are up substantially the Q1 have increased 20% since the first quarter this year and they are up over 65% from the second quarter of last year. Sulfuric acid is up as well, 13% over last quarter and 45% from the previous quarter of 2010.

The impact of that is that it is driving up our cash nickel costs. They were up to $4.26 a pound for the second quarter, that’s up 5% from Q1 and 38% from Q2 2010.

Taking a quick look at the Ambatovy project, as Ian mentioned, progress down there continues and we are very pleased with the way things are progressing there now. Dean and I were down there on site last week as well, and you do see things are progressing and things getting accomplishments each week.

We have fed 5000 tons of ore through the ore processing plant at the mine site and that’s producing slurry consistent with the design. Ian mentioned we now have slurry come down the pipeline the pipeline is operating within its design parameters.

Power plant, we have spoken in past quarters about the issues of the power plant. We are still have workmanship issues there in some cases, but the power plant is now been producing some power for several weeks.

I might have abundance precaution we are also requiring some backup diesel generating capacity there to ensure we’ve got power supply throughout the commissioning process but progress in the power plant has been good.

Sulawesi, we’ve now taken over and we are working our way through the issues down there and that will take will continue for the next quarter or so here. We’ve begun making qualifying expenditures under our own agreement with (Inaudible) towards earning our interest in that project and in terms of the agreement that we entered into with them last year that includes land tenure payments as well as some other activities, baseline, environmental and social studies and the like.

Looking at coal, pretty good quarter overall. Prairie operations, which is our mine business, production and sales, were both down little for the quarter, two primary drivers for that, one is lower production at our Highvale mine where the customer took two units out of the generating capacity there that we talk about in Q1.

The other major driver of that was the impact again with a heavy rainfall in Saskatchewan this spring and that affected production primarily at our Boundary Dam mine. There was some good news (Inaudible) where production was actually up a bit that help offset those declines, that was primarily increased customer (Inaudible) where customer there was actually I think providing some of the short fall into the group that was result of the reductions at Highvale and Boundary Dam.

Mountain operations, sort of a mixed story there. The Obed Mountain mine is operating very well.

We are pleased with the production there, production at Coal Valley was off a little bit from expectations primarily due to some issues with the loading equipment given the high levels of demands in the industry at the moment, parts availability has been a bit of an issue and we are working with suppliers there to try and expedite that, the obtaining of replacement parts. We’ve seen an increase in the realize price for export coal this quarter, that’s due primarily to the strong price and settlements with some of our Japanese export contracts.

Following the earthquake and Tsunami disaster in Japan, some of those pricing contracts and settlements were delayed, we talked a bit about that last quarter. Those have now largely been resolved, new gas [ph] spot prices moved on somewhat during that delay though and so some of the prices were not quite as high as we were potentially anticipating realize of those settlements that occurred on the typical time table, New Castle [ph] pricing just for your reference or interest with, is high as $130, $140 a ton early in the year, it’s about $120 a ton now.

Some of the contracts as well are now being referenced more to current New Castle spot prices rather than being fixed for the year, so potentially we see the coal price for the balance of the year attract New Castle a little bit more close then it has in last year’s. Oil business, not much to say there, the production is going very well, gross working-interest production in Cuba was consistent with Q1 about 20,900 barrels a day and we expect it to be there for the balance of the year.

Very good time, really for the Oil business to be running as well as it is, operating costs have remained low, pricing is buoyant, so we’re generally very pleased to have that business running well at the time under a good healthy margins to be made. Power business, power generating was off a little bit this quarter compared to the same quarter last year, two drivers for that one, we had a turbine failure in relatively late in the quarter, we still have some continued gas availability issues as well.

Most recent turbine failure was a bit different from other we’ve experienced in the last couple of years this one actually took place on start up of the turbine following a regulatory schedule servicing. We are still trying to get to the bottom of what the root cause of that failure was.

Some of the earlier turbine failures we’ve had in the last couple of three years have been caused by moisture getting into turbines through the air intakes moisture and just the climate and which those turbines are operating is always an issue. Some of the turbines are being retrofitted with modified air intakes to try and guard against that risk.

With respect to the gas available, the issues, the gas that is actually bit better than budgeted and I think we are seeing some upward provision in our power estimates for the years, as a result of that, but we’re continuing to work with CUPET one of our partners in that gas to try and address those gas supply issues. Lastly few slight modifications in our 2011 outlook in the press release this morning, I’ll just highlight a few of those.

Metals we’ve revised our production estimates up a little bit for the year, that’s due primarily just to the strength, the production we are seeing this time and the robust nature in which those operations are performing. Capital spending estimates in Ambatovy now reflect the revised capital cost estimate of $5.5 billion that we announced last month.

In coal, we’ve reduced production forecasts for the year both in Prairie and in Mountain, those are primarily for the reason that I’ve touched on and when a moment ago talking about the coal business rather than expected production issues going forward. Our oil production remains largely unchanged, our capital spending has been reduced three primary drivers to that, some delays from what was anticipated at the beginning of the year in terms residing formal approval for some granting of the new blocks, I mean delays in receiving permits for the EOR project in Cuba.

We are also doing a little less drilling in jurisdictions outside of Cuba then what was anticipated at the register of the budget process at the beginning of the year. Lastly in power, our capital spending estimate is down there as well, the primary driver of capital spending in the power business is our phase 8 expansion.

The budgeting CapEx for that beginning of the year included a lot of the CapEx required for the project many of those orders have been placed now, but the spending profile for that, some of that capital spending actually slips into 2012, so the CapEx spending they were expecting this year, was less than previously anticipated. That is really all I wanted to touch on and highlight for you this afternoon.

So with that I think we will pass it back to you Luke and take any questions that people may have.

Sulawesi, we’ve now taken over and we are working our way through the issues down there and that will take will continue for the next quarter or so here. We’ve begun making qualifying expenditures under our own agreement with (Inaudible) towards earning our interest in that project and in terms of the agreement that we entered into with them last year that includes land tenure payments as well as some other activities, baseline, environmental and social studies and the like.

Looking at coal, pretty good quarter overall. Prairie operations, which is our mine business, production and sales, were both down little for the quarter, two primary drivers for that, one is lower production at our Highvale mine where the customer took two units out of the generating capacity there that we talk about in Q1.

The other major driver of that was the impact again with a heavy rainfall in Saskatchewan this spring and that affected production primarily at our Boundary Dam mine. There was some good news (Inaudible) where production was actually up a bit that help offset those declines, that was primarily increased customer (Inaudible) where customer there was actually I think providing some of the short fall into the group that was result of the reductions at Highvale and Boundary Dam.

Mountain operations, sort of a mixed story there. The Obed Mountain mine is operating very well.

We are pleased with the production there, production at Coal Valley was off a little bit from expectations primarily due to some issues with the loading equipment given the high levels of demands in the industry at the moment, parts availability has been a bit of an issue and we are working with suppliers there to try and expedite that, the obtaining of replacement parts. We’ve seen an increase in the realize price for export coal this quarter, that’s due primarily to the strong price and settlements with some of our Japanese export contracts.

Following the earthquake and Tsunami disaster in Japan, some of those pricing contracts and settlements were delayed, we talked a bit about that last quarter. Those have now largely been resolved, new gas [ph] spot prices moved on somewhat during that delay though and so some of the prices were not quite as high as we were potentially anticipating realize of those settlements that occurred on the typical time table, New Castle [ph] pricing just for your reference or interest with, is high as $130, $140 a ton early in the year, it’s about $120 a ton now.

Some of the contracts as well are now being referenced more to current New Castle spot prices rather than being fixed for the year, so potentially we see the coal price for the balance of the year attract New Castle a little bit more close then it has in last year’s. Oil business, not much to say there, the production is going very well, gross working-interest production in Cuba was consistent with Q1 about 20,900 barrels a day and we expect it to be there for the balance of the year.

Very good time, really for the Oil business to be running as well as it is, operating costs have remained low, pricing is buoyant, so we’re generally very pleased to have that business running well at the time under a good healthy margins to be made. Power business, power generating was off a little bit this quarter compared to the same quarter last year, two drivers for that one, we had a turbine failure in relatively late in the quarter, we still have some continued gas availability issues as well.

Most recent turbine failure was a bit different from other we’ve experienced in the last couple of years this one actually took place on start up of the turbine following a regulatory schedule servicing. We are still trying to get to the bottom of what the root cause of that failure was.

Some of the earlier turbine failures we’ve had in the last couple of three years have been caused by moisture getting into turbines through the air intakes moisture and just the climate and which those turbines are operating is always an issue. Some of the turbines are being retrofitted with modified air intakes to try and guard against that risk.

With respect to the gas available, the issues, the gas that is actually bit better than budgeted and I think we are seeing some upward provision in our power estimates for the years, as a result of that, but we’re continuing to work with CUPET one of our partners in that gas to try and address those gas supply issues. Lastly few slight modifications in our 2011 outlook in the press release this morning, I’ll just highlight a few of those.

Metals we’ve revised our production estimates up a little bit for the year, that’s due primarily just to the strength, the production we are seeing this time and the robust nature in which those operations are performing. Capital spending estimates in Ambatovy now reflect the revised capital cost estimate of $5.5 billion that we announced last month.

In coal, we’ve reduced production forecasts for the year both in Prairie and in Mountain, those are primarily for the reason that I’ve touched on and when a moment ago talking about the coal business rather than expected production issues going forward. Our oil production remains largely unchanged, our capital spending has been reduced three primary drivers to that, some delays from what was anticipated at the beginning of the year in terms residing formal approval for some granting of the new blocks, I mean delays in receiving permits for the EOR project in Cuba.

We are also doing a little less drilling in jurisdictions outside of Cuba then what was anticipated at the register of the budget process at the beginning of the year. Lastly in power, our capital spending estimate is down there as well, the primary driver of capital spending in the power business is our phase 8 expansion.

The budgeting CapEx for that beginning of the year included a lot of the CapEx required for the project many of those orders have been placed now, but the spending profile for that, some of that capital spending actually slips into 2012, so the CapEx spending they were expecting this year, was less than previously anticipated. That is really all I wanted to touch on and highlight for you this afternoon.

So with that I think we will pass it back to you Luke and take any questions that people may have.

Sulawesi, we’ve now taken over and we are working our way through the issues down there and that will take will continue for the next quarter or so here. We’ve begun making qualifying expenditures under our own agreement with (Inaudible) towards earning our interest in that project and in terms of the agreement that we entered into with them last year that includes land tenure payments as well as some other activities, baseline, environmental and social studies and the like.

Looking at coal, pretty good quarter overall. Prairie operations, which is our mine business, production and sales, were both down little for the quarter, two primary drivers for that, one is lower production at our Highvale mine where the customer took two units out of the generating capacity there that we talk about in Q1.

The other major driver of that was the impact again with a heavy rainfall in Saskatchewan this spring and that affected production primarily at our Boundary Dam mine. There was some good news (Inaudible) where production was actually up a bit that help offset those declines, that was primarily increased customer (Inaudible) where customer there was actually I think providing some of the short fall into the group that was result of the reductions at Highvale and Boundary Dam.

Mountain operations, sort of a mixed story there. The Obed Mountain mine is operating very well.

We are pleased with the production there, production at Coal Valley was off a little bit from expectations primarily due to some issues with the loading equipment given the high levels of demands in the industry at the moment, parts availability has been a bit of an issue and we are working with suppliers there to try and expedite that, the obtaining of replacement parts. We’ve seen an increase in the realize price for export coal this quarter, that’s due primarily to the strong price and settlements with some of our Japanese export contracts.

Following the earthquake and Tsunami disaster in Japan, some of those pricing contracts and settlements were delayed, we talked a bit about that last quarter. Those have now largely been resolved, new gas [ph] spot prices moved on somewhat during that delay though and so some of the prices were not quite as high as we were potentially anticipating realize of those settlements that occurred on the typical time table, New Castle [ph] pricing just for your reference or interest with, is high as $130, $140 a ton early in the year, it’s about $120 a ton now.

Some of the contracts as well are now being referenced more to current New Castle spot prices rather than being fixed for the year, so potentially we see the coal price for the balance of the year attract New Castle a little bit more close then it has in last year’s. Oil business, not much to say there, the production is going very well, gross working-interest production in Cuba was consistent with Q1 about 20,900 barrels a day and we expect it to be there for the balance of the year.

Very good time, really for the Oil business to be running as well as it is, operating costs have remained low, pricing is buoyant, so we’re generally very pleased to have that business running well at the time under a good healthy margins to be made. Power business, power generating was off a little bit this quarter compared to the same quarter last year, two drivers for that one, we had a turbine failure in relatively late in the quarter, we still have some continued gas availability issues as well.

Most recent turbine failure was a bit different from other we’ve experienced in the last couple of years this one actually took place on start up of the turbine following a regulatory schedule servicing. We are still trying to get to the bottom of what the root cause of that failure was.

Some of the earlier turbine failures we’ve had in the last couple of three years have been caused by moisture getting into turbines through the air intakes moisture and just the climate and which those turbines are operating is always an issue. Some of the turbines are being retrofitted with modified air intakes to try and guard against that risk.

With respect to the gas available, the issues, the gas that is actually bit better than budgeted and I think we are seeing some upward provision in our power estimates for the years, as a result of that, but we’re continuing to work with CUPET one of our partners in that gas to try and address those gas supply issues. Lastly few slight modifications in our 2011 outlook in the press release this morning, I’ll just highlight a few of those.

Metals we’ve revised our production estimates up a little bit for the year, that’s due primarily just to the strength, the production we are seeing this time and the robust nature in which those operations are performing. Capital spending estimates in Ambatovy now reflect the revised capital cost estimate of $5.5 billion that we announced last month.

In coal, we’ve reduced production forecasts for the year both in Prairie and in Mountain, those are primarily for the reason that I’ve touched on and when a moment ago talking about the coal business rather than expected production issues going forward. Our oil production remains largely unchanged, our capital spending has been reduced three primary drivers to that, some delays from what was anticipated at the beginning of the year in terms residing formal approval for some granting of the new blocks, I mean delays in receiving permits for the EOR project in Cuba.

We are also doing a little less drilling in jurisdictions outside of Cuba then what was anticipated at the register of the budget process at the beginning of the year. Lastly in power, our capital spending estimate is down there as well, the primary driver of capital spending in the power business is our phase 8 expansion.

The budgeting CapEx for that beginning of the year included a lot of the CapEx required for the project many of those orders have been placed now, but the spending profile for that, some of that capital spending actually slips into 2012, so the CapEx spending they were expecting this year, was less than previously anticipated. That is really all I wanted to touch on and highlight for you this afternoon.

So with that I think we will pass it back to you Luke and take any questions that people may have.

The demobilization of workers starting at Ambatovy, I know that has been some cause of unrest for workers in the past, just wondering how it’s going and how you will handle it through the rest of 2011 as the more people are getting sent off sight.

That’s a good question, Matt, this is Dean Chambers. Actually we’ve not experienced any ongoing problem as we do demobilize.

I think one of the reasons as we put in place what we call up an A program stands but A stands for a French acronym. But it’s where by, workers who have worked for the project for certain periods of time, begin receiving payments this fall, to help ease the transition from our project to back into their present (Inaudible).

We also have a number of training programs for example, an agricultural training program under there to help people go back to a farming lifestyle that’s what they chose. So far there’s not been any significant issues with the demobilization and we will continue with those programs and expect that, all the feedback has been very positive on the programs that we have in place.

Okay, good to hear. And then also just on the mention of enhanced oil recovery permits for your oil and gas business.

I remember reading something that a pilot test, you would lose access to the block in August if he hadn’t had a permit approved, is that still the case?

Yes, it is, it is still the case. However, I don’t think it’s a very material thing; we are still very much in the feasibility phase within the whole project fair amount of research to be done.

So I think that will carry on under any circumstances.

Okay. And then just lastly something on the accounting, on the cash flow statement under operating cash flow, I was just wondering on current income taxes being included as a addition to the cash flow there, $25 million this quarter?

Yeah, there is a bit more of a break out there then we have had I think in past quarters. What I suggest we do Matt is we can take you offline and take you through what that emphasis a couple of different factors to go into that, I think it was probably easy to take you through that.

Sure, thanks.

Good afternoon. Do you guys remind us roughly how many workers are currently onsite, I know you make reference to 2000 being finished over the course of the Q2, but how many are remaining?

I think it’s still in the order of magnitude of 14,000, yeah.

Yeah, from the peak of the year going above 22.

And then David, just a quick question. Can you remind us what the book value is for your share of the power business?

Anoop, I don’t have that number in front of me here.

But I just find it under the new accounting standards, I can’t seem to find that number.

Yes.

We will give you a (Inaudible).

I don’t want to scramble here and give you a wrong number but we can get that for you.

That will be helpful. Thank you.

Thanks operator. Two quick ones, on the Prairie operations specific to the Highvale mine, I know in Q1 you noted that there were two generating units that were shut down or removed from service by one of the major customers.

Are they coming back at any point or they down for good?

That’s the Sundance 1 and 2 units there and I don’t think we have any expectations that they will be coming back. There is another unit there Keephills 3 that is finishing construction and currently going into a commissioning phase I don’t know what the exact timetable on that is.

But that will be supplied out of the Highvale mine ultimately.

Oh, I see, so should we run for example, for maybe the rest of this year with production of the Prairie operations at this 6 million to 7 million ton mark versus what we’ve seen is sort of eight, seven to eight to nine in the past.

Yeah, I think you are probably by about right away here and anticipating there. The Highvale mine that’s the one mine, it’s a contract mine well we actually do that for fee-per-service and our revenue there is not particularly tied to volume anyway.

Alright.

But in terms of the aggregate volume number you are talking about that’s been pretty good estimate.

Okay. And on the cost side on the nickel and I know you verbally noted in the call as well the impact of the sulpur and the sulphuric acid.

And I’m just wondering, are they continuing through the third quarter at the same kind of levels on a per ton basis that you experienced in Q2?

Yes, is the short answer.

Well, that’s going to be market driven if there’s any change in those costs?

Yeah, we don’t have any long-term, we are exposed to the market on the sulpur.

Alright, okay. And for next year do you have a budgeted nickel production number out of Ambatovy?

No, some nickel would.

Yeah, I guess Q1 is what you’ve noted I hadn’t seen in the past and quarterly like any more of a precise quarter than we saw (Inaudible).

No, no too much of moving target.

We have never provided any guidance there.

Okay.

See it up and running and get a sense of how the ramp up is going to go with that then we will be able to start thinking about giving some guidance then.

Okay, well you are shooting for initial production and this would be a final nickel I would expect as suppose to intermediate product.

That’s correct.

But final nickel at some point in the first quarter leads us in the initial product.

That’s correct.

Very good. Thank you very much.

Thank you for those who taken the time to spend with us, as always Paula is more than happy to take calls on any of the detail and it was a couple of the people on the phone that want some follow-up in some of the finer tuning of some of the numbers and we certainly welcome that for others. Let me just say that we think a reasonable quarter, with respect to the bigger issue that occupies much reminds these days which is Ambatovy, much improved in the last quarter to this quarter and we are just very, very pleased with the progress that we have seen in the last month and I expect to see in the next couple of months.

So thank you very much for participating.