Paula Myson - Managing Director, IR and External Communications David Pathe - President & CEO Mike Robbins - CFO

Alec Kodatsky - CIBC Robin Kozar - RBC Capital Markets Greg Barnes - TD Securities Anoop Prihar - GMP Securities Matt Murphy - UBS Steve Parsons - National Bank Financial Cliff Hale-Sanders - Cormark Securities Johannes Faul - BMO Capital Markets

Thank you. Good afternoon everyone, our results were released this morning and a copy of the release along with the MD&A, co-financial statements are available on our website.

Today’s call is been broadcast live on the internet; anyone may listen to the call by accessing our website homepage and clicking on the webcast link. A replay of the webcast will be available on our website later today.

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

On the call today are David Pathe, our President and CEO and Mike Robbins, our Chief Financial Officer. We will start with some general comments from David followed by a summary of the financial results for the quarter by Mike.

So to begin I will turn the call over to David.

Thank you Paula and thanks once again everybody for joining us this afternoon. Obviously we have all received our quarterly results, seen our press release this morning, it's clear much attention is been paid to the headline number and that’s not an attractive number on the face of it.

There is obviously some context around that and I will try and give you some of that today as well as Mike when he takes you through some of the numbers in more detail. What I would like to spend a few minutes on before as this in the grander scheme of things has actually been quite a productive quarter for us for my perspective and so I would like to give you some insights as why I feel that way.

The numbers themselves obviously we are in a negative position of the EPS number and that’s not and desirable place to be but it was still a strong quarter from a cash flow perspective. We are seeing positive cash flow out of all of operating businesses and it's a number of accounting adjustments that driver the results to where it was so, we will get to some of that but more broadly I’m really pleased about what we have seen developing in our business over the last quarter, two significant things come to the mind that I want to just give you a bit of insight into.

The first and most gratifying and rewarding to us here is the progress we are now making in our project in Madagascar, the Ambatovy Project we’re now in the position for the first time where we can report on you to production. In the quarter we have now produced over 2300 tons of nickel about 160 tons of cobalt.

More importantly than those raw numbers though is that we now have quite a successful ramp-up curve happening. We have included in the press release and the MD&A some statistics on ore throughput which is how we are measuring ourselves and the results we have had in the few months now that we have an operating show the natural choppiness that you see in a ramp-up of any facility of this nature but the trend in terms of what we are seeing in terms of getting more and more stability in the operations is giving us great confidence in our ability to deliver on the ramp-up of that project into full capacity and we’re really quite excited about it.

The quality of the product as well that we are seeing come out of there is above our expectations, at this stage of the ramp-up project I think we have put the statistics in the release as well but we are seeing very high quality metal come out of there and it is great confidence in our ability to produce metal arrival of what we see at our more Cuba operation in terms of the quality and marketability of it. In terms of the process itself we have now run the facility from one end of the plant to the other, we are mining, we are using the pipeline, though the Pressure Acid Leach, we have had all five autoclaves online over the course of the quarter and all operating in terms of chemistry and reactions you at or better than expectations would now run the refinery from one end to the other and obviously in producing we have been able to produce finished sintered nickel briquettes and finished sintered cobalt briquettes and we are now in a position where you will have our first exports of finished metal from the island to paying customers as early as next week.

So we really do think we will have a quite a compelling and an attractive ramp-up curve going on here and I think some of that is getting lost in the headlines both kind of global macroeconomic headlines and more share specific headlines and I really would try and draw some of that to your attention in terms of things that are happening there are good things happening on the ground of Madagascar. The other significant developments for us in the quarter was the debenture offering that we got done a few weeks ago for those of you that may have not seen it, we did a $500 million, eight year debenture at 7.5%.

The primary purpose of that there were really two motivations to doing it, the primary purpose was to refinance the series of debentures that we had maturing in 2014, by doing that now we have a very attractive maturity profile with new series of debentures maturing in late 2015, 2018 and 2020. It also gave us the ability to add after cost of the deal and all the cost and expenses involved in redeeming the 2014s, almost $250 million in liquidity in the form of additional cash reserves on our balance sheet that really in my view now put them it's in our balance sheet in a virtually unassailable position.

My motivation wanting to do that was the high degree of volatility and the uncertainty you see in the world at the moment is that continues over the in the coming quarters which there is a decent chance will happen. I think you will see resource companies with weak balance sheets quite clearly differentiated and de-marketed from resource companies with strong balance sheets and it's always been our attention to be on the right side of that mine getting that deal done, this quarter has ensured that and leaves us very confident that no matter what the world may bring our way we have got the balance sheet strength and depth that we will be unless you take advantage of the opportunities that whatever markets may bring.

So to my mind two significant accomplishments in the quarter and then I things that leave us very well positioned going forward and for the balance of this year and in 2013. To touch on markets, we have talked to on this call in past quarters about expectations of high degrees of volatility and commodity prices that’s certainly the story of Q3, nickel in the early part of the quarter tested low as below $7, I think they may down as well as about 680.

We saw a rally in nickel in September where it got I think up pushing 850 and we are now back I would say it's somewhere the seven and quarter range. So high degrees of volatility and the nickel price but the reality is that nickel realized pricing for us was down about 5% over the previous quarter and pushing 25% compared to the previous, the same quarter in 2011 and obviously nickel price are realized price on nickel has a big impact on our results.

Going forward I continue to believe that still the biggest driver of nickel prices despite the talk about and speculation of oversupply and undersupply is the general level of macroeconomic activity in the world, same thing is going to drive all commodity prices in 2012, 2013, 2014 and I think the only certainty in that world is the higher than average volatility is going to continue that was I think reality and that was big part of our motivation doing the bond deal. On the coal side most of our coal is actually is produced under the in our ferry operations into the long term contracts where we don’t have commodity price exposure and so we continue to make our margins in the coal business on the ferry side, export business though obviously thermal coal prices on the seaborne international market have suffered quite dramatically this year as well.

I think New Castle was $130, pushing $130 in the middle of last year, we have now seen I think spot prices today are down under 19 essentially in the low 80s. Our realized pricing on the Mountain side which is our export business has been better than that, part of that is based on the fact that probably 2/3rds of our production was priced earlier in the year at prices that were prevailing at that time and so we have continued to enjoy the benefit of that but there is no doubt that overall revenues in our Mountain Operations in coal are down as a result of the decrease in seaborne coal prices and the new council reference price up globally.

Then take a quick look at production and some of the cost trends in our business, it was something of a typical quarter for us in their metals business and the Ambatovy joint venture, this year our annual maintenance shutdown took place in Q3 rather than Q2 that effects the business in a number of ways and then obviously production is impacted so we see lower production numbers in Q3 relative to the same quarter last year. There is a bit of a knock on effect on our costs in the period when you incur a maintenance shutdown as well in that year.

Fixed costs are obviously spread against across a lower number of production units. You also have the incremental cost of performing the maintenance function itself that you wouldn’t be incurring if you ran the operation for the full quarter as well.

Other drivers of our net direct cash cost was obviously the cobalt price. Cobalt pricing was down pretty significant as well in the quarter.

There is a knock on effect from the maintenance shutdown as well and that not only are we getting lower re-device pricing for the cobalt but as a result of the maintenance shutdown we've got lower cobalt production as well which has the effect when you run that through your net direct cash cost for driving up your nickel cost as well. The one bit of good news that we saw on the cost side out of the business that we are finally seeing some of the input commodities come off of their hives, sulfur and sulfuric acid were both down in the quarter and have shown $10-$15-$20 a ton reduction since the beginning of the year which is encouraging we've seen that in past cycles where in falling commodity price environments for nickel, the input commodities that we consume in the course of production tend to come off as well but often there is a bit of a ladies and gentlemen there and now that we are seeing that come off, that's an encouraging sign for the business as well.

Same story in our mountain operations as the past couple of quarters with weaker thermal coal pricing we continue to manage the production levels in our two export mines, the Coal Valley and Obed to achieve kind of an optimal mix of production there and to try and maximize the revenue and cash flow in that business in the lower cost price environment. We continue to do that and we’ll continue to manage that actively going forward.

So what makes sense in the commodity environment that we find ourselves in? Prairie production was down slightly but not dramatically due to some plant in another couple of instances, the (inaudible) maintenance activities across the rest of the Prairie coal mines.

Unit costs, I think we've talked in the past how that's not the most meaningful measure as production varies a bit from mine to mine and based on where we’re (inaudible) the different mines, but generally the unit cost there are reflect the production trends. Oil and gas, much the same story.

In oil and gas as we have been seeing for a few quarters there now in terms of continued strong performance. Production, we've been maintain our production at pretty steady levels despite the maturity in some of those facilities are ongoing drilling and work over programs continues to be very attractive business with low unit costs and good healthy pricing with our ties to the gulf coast (inaudible) number six referencing.

So, it is once again for our oil business a very strong quarter with strong EBITDA and strong cash flow. Taking a quick look at our outlook and guidance.

Tinkering on the edges of a few things, but a couple of things I'll just mention on. You will have noticed slight reductions in our outlook in terms of production guidance from (inaudible).

It was the first provision we made to those numbers since we gave you some guidance at the beginning of the year to give you an idea. When those guidance numbers were put together, we were still really just finished construction.

We’re in the pre-testing and pre-commissioning kind of phase of the project. Now that we've progressed through commissioning and ramp up and actually have as a real operation there and some production we've got a clear idea of when we’re going to finish the year.

So we’ve given you some guidance on there but I wouldn’t want you to take away from that that the implication there is a ramp up that we’re not pleased with. Lastly, some of our capital numbers particularly in the middle; we revised downwards a little bit.

Nothing dramatic to that other than actively managing our capital spending in the face of commodity price environment in the early part of the summer when nickel was testing that below $7. We did look at some of our capital spending and nothing was cancelled but we did look at some deferrals.

We remained cash flow positive in that business though so we are not taking anything dramatic offline there but with some of the deferrals and when we looked closely at the capital some of that is just going to slip into next year and as a result, the capital profiles and guidance for 2012 has been revised down in a few instances. I think that is what I wanted to highlight for you today in terms of what I see despite the headline number is a very productive and strong developing quarter for us in terms of where it positions us as a company.

There is growing excitement on the ground in Madagascar and through the rest of the company in terms of the successes we are having down there and I wanted to try and give you a sense of that today. Mike is now going to take you through some of the detail in terms of and give you a few insights into what's driving some of the numbers you will have seen in our press release and financials and then we’ll take any questions you’ve got.

Thanks David. As you’ve highlighted already, it was a very strong quarter from an operational cash flow perspective.

We were actually 16% higher than last year when we had a strong commodity market. So that's a good way to discuss and begin the financial discussions.

David also introduced that during the quarter we included about $43 million of charges against earnings and as a result, we reported a net loss of $22.6 million compared to net earnings of $45.5 million last year. More than two thirds of those charges related to the redemption premium on our 2014 debentures.

So the total loss amounts to $0.08 per share compared to earnings of $0.16 per share in the third quarter of 2011. The remainder of the charges hitting earnings in the quarter related to changes in estimates of our environmental rehabilitation obligation in coals mountain business as well as our quarterly adjustment for the Ambatovy call option.

The analysis supporting the ERO change was in response to a new mine financial security program in Alberta that introduced new reclamation bonding requirements. As part of that process the coal business reviewed an updated cost in productivity data used to calculate the rehabilitation obligation and the revisions resulted in a $12 million pretax increase in our estimated future obligations.

The change in the Ambatovy call option was consistent with previous guidance in that the option will decline and value directionally by about $10 million per quarter for the rest of the option life. Last quarter, the inputs were fairly stable and the value change did not reach 2 million, but this quarter with relatively higher volatility and the inputs used to calculate the option, the charge will 3.2 million before tax.

So if we are to look at our performance before these adjustments and added back to make hold premium, ERO estimate and a call option change, the impact would be just over $32 million on an after tax basis. So that means that the adjusted earnings before these charges would have been positive $9.8 million in the quarter.

So net net, on this adjusted basis, the real difference to the prior year quarter stand largely from lower nickel prices and volumes and lower export thermal coal volumes as described by David earlier. The most significant change to the adjusted earnings came from the top line in our metals business where the weaker nickel and coal prices as well as the volume drop coming from the third quarter planned maintenance activities resulted in a net reduction 28% from the same quarter last year.

In the other businesses, revenue is quite stable. A small volume decline in Prairie call had little effect on the revenue or on EBITDA of the division as most of the change occurred in one of our contract mines and had a little impact on performance.

In fact, our EBITDA was up by over $6 million in Prairie this quarter. The reference price for export coal as Dave descried, was lower during the quarter, but with roughly two thirds as sales contracted earlier during the year, the impact on the market price change is relatively muted.

And our oil prices held relatively steady during the quarter compared to Q2 and EBITDA was pretty much equal to what it was in 2011. What deserves a little more color is the tax rate for the quarter.

Despite posting a lot, we are showing a small taxable payable for the quarter. This is mainly due to losses such as FX and jurisdictions where they are not deductible.

So adjusting for this, the effective tax rate was 26% for the quarter and 23% thus far this year. Finally, let`s touch a little bit on liquidity.

As David mentioned, the bond debenture issue added roughly $490 million in net proceeds to the balance sheet during the quarter. We repurchased roughly 21 million of the 2014 debentures during the quarter and the remainder of the 225 million principal amounts we purchased back in October.

So after the repurchase, including the redemption premium of 27 million, the net addition to the balance sheet from the issue was about $240 million. So as of the end of the quarter, we had cash and cash equivalence of $934 million on the balance sheet.

If we adjusted for the repurchase of the 2014 debentures completed this month, that number would be about $700 million. Our long-term debt to capital ratio was about 33% at the end of the quarter and if we adjusted for the full repurchase of the 2014, it would have been 31%.

Generally that's a comfortable level for us as a commodity company. I am going to return the mike back to Luke and open it up for any questions.

Had a couple of questions for you here. I guess starting with Ambatovy just in terms of your definition on the commercial production in 70% of mixed sulfide throughput.

I guess the questions, why did you sort of arrive at that as the definition. I mean obviously we need a definition.

Just curious why you elected that one. And are there any relationship to the lending agreements and just any color there would be helpful.

Sure. Frankly there is no magic to the 70% of throughput number.

I think that was arrived at in discussion with our orders and looking at different projects. There is no connection between that number and any of the lending agreements.

The only significance of that is just when the data which we achieve that will change accounting treatment from capitalization to more conventional revenue recognition and expense accounting. But there is (inaudible) to it, and that's what you just need to choose a point and that was the point that was agreed that made sense based on a review of other projects and discussions with our orders.

And the other question with Ambatovy at this point, capital as far as, your development cost has been halted and now everything is moving into a project cost I guess account and for the quarter was about 170 million. I am just curious what is in that number.

Presumably it represents an element of the operating cost and certain other activities that are going on. I am just trying to get a sense for is that number coming down in the future quarters?

Is that in some way representative of where you think the operating costs are going to settle out on a quarterly basis? Just trying to understand what sort of context that number caries.

Sure, basically everything that gets spent in Madagascar goes through that number now. Our original 5.5 budget was still at the 5.3 and changed.

There is the odd occasional piece as modifications are made at the plant site but still goes to that budget for the most part. Just all the money we’re spending in Madagascar now goes to that capital number until we achieve that 70% of milestone that you were asking about a moment ago.

so going through that is everything that will eventually be an operating cost from labor to input commodities, all the various things you need on the ground and the all the other activities we carry on to be able to carry on business there. It includes the cost servicing the $2.1 billion financing because it’s just the way interest payment dates and that will fall that a bit lumpy because of that.

There is also built into that an element of the ongoing cost that you are in the course of ramping up a project as we replace key pipes and replace pumps that don't work and all that kind of stuff that all is lumped into that number as well. It is something of an indicator of operating cost but far from a perfect one because of some of the other things that all get lumped together and that as well.

So there will be some elements of that that ultimately when you start reporting as an operating entity so probably float up to the corporate line and some of it will float into a financing component and is sort of your strip down number for an operating cost.

Exactly and unfortunately, we’ll end up having to show you a fair bit of that in the notes and the financial statements rather than in our financials itself just because of the way IRFS works. We actually you’ll see Ambatovy is a line item on our balance sheet but as we when the Ambatovy statements switch from capitalization to revenue reorganization and expense will give you some insights into that and the financial statements and the MD&A.

With respect to the coal business, you say you’re managing production. Is it managing to volume in terms of demand or are you managing to a specific quality.

Just sort of curious to what your approach is there.

Well we’re primarily managing cost in the pricing environment that we’re in. we haven't had any significant issues moving coal that most is I think were fully contracted for the year and well underway being contracted for 2013.

So it’s not necessarily a volume issue. It’s really a blending and managing the production was optimal in terms of getting a product that achieves as high a level of pricing as we can relative to the new castle and also bears in mind the obviously narrowing margins in our export coal business as new castle prices fall.

So there is an element of quality management and cost management.

Couple of questions on my end as well. First, just focusing on the Moa JV.

You touched upon the maintenance have an impact on production during the quarter. Are there any other key factors that negatively impacted production during the quarter that you can mention, whether its recoveries or grades or moving to different mine area?

No, nothing significant at all Robin. In fact, in our full year guidance is unaffected.

We still expect to be JV production consistent with what we have been saying all year and what we talked about and consistent are better than previous years. So there is nothing beyond that, the only real meaningful driver in terms of changes year-over-year was the shift in the timing of the maintenance shut down from Q2 to Q3.

Okay, so really one offer temporary impact for the quarter.

Yes, and it has a few knock on effects as they try to give you a bit of a…

That's right into the console. Okay, the second question or topic I guess which should be CapEx.

You touched on it briefly David, but in terms of I guess two portions of that. You mentioned in the MD&A, I am just looking for it now, page nine, I have noted that you talked about deferring capital in the metals business initially because of the nickel price environment but also now you mentioned something about development delays due to the timing of execution.

Is that have anything to do with cumulative finances? Can you just elaborate on that a little bit more?

There is no issue with the Cuban finances. All that CapEx gets funded out of the cash flow of the joint venture and the joint venture is still cash flow positive.

What it really is, they were in back in the summer when nickel was down below $7, they were looking at some of that deferring, some other CapEx just to be insensitive and trying to be prudent sensitive to the nickel pricing environment. When the nickel price recovered later in the quarter, they actually looked at resuming some of that deferred CapEx but the reality was having diverted for two or three months, it wasn’t all going to get done before the end of the year anymore.

So some of it was would have been originally scheduled to be done in sort of H2 of 2012 is now being down in Q4 ’12 and Q1, ’13.

So just a knock on effect and there is a delay or the natural is capital spending. Just one another question with CapEx and this is kind of a broad question.

I mean historically shares looked at managing each of its division by making sure that they are cash positive or self-sufficient, self-funding than having to do one of the corporate balance sheets. You want to be prudent in this environment, there is uncertainty and volatility but in terms of cutting back production or CapEx for the last few quarters, is there anything beyond.

I mean look at the coal division for example and its cash positive and there is (inaudible) and CapEx. Is there anything that's changed in terms of that mentality or is this just prudence in terms of how much is being spent, how much is being generated in each of the divisions?

As a general operating division, we would still look to all of our divisions to operate no worse than cash flow neutral no matter what the cost, whatever the pricing environment is. But really the capital management you see is nothing more than what I would suggest is prudent management in a volatile commodity price environment.

That's all we are trying to accomplish here. When you see your margins narrowing over the course of the year, its only prudent to make sure that you’re not spending money today that you don't need to spend today and we’ll continue to do that.

We are not doing anything dramatic that going to jeopardize our production capacity now or next year in to the future but they are invariably when you’re running the business, things that you want to spend money on and when margins get a little together you look again at whether you need to do that today or whether you can wait on that and that's what happens in our businesses actively all the time.

David you said in the press release that you’ve gained insights at Ambatovy at this point. It’s been in operation for several months.

What kind of insights are you getting on recoveries, cost, just general operating parameters?

The insights we’re getting really are relative to any other, obviously we've had our series of delays in the last few years getting to the point where we can actually starting running this plant but the insights we've gained since we started doing that are that we are getting more and more comfortable than ever that we have a really robust strong operation here and are challenged now I think as to convince the market of that and try and overcome some of the skepticism that's been around Ambatovy in the last couple three years. We’ve now operated all of the auto plays.

We've now run the power. We produce mix sulfides.

We have a much better sense and confidence in the robust nature of the process and the reactions that we’re getting. We’re getting reactions that exceeded our expectations for the early stages of the ramp up.

We are getting quality nickel and quality of cobalt that exceeded our expectations for the early stages of the ramp up. So in aggregate giving us greater confidence that we've ever had before in terms of our ability to bring this plant up to nameplate capacity and have a long life, low cost finished nickel, finished cobalt operation.

And that's 39% throughput or availability I guess what I don't know what it is in September. How does that track?

This is what the feasibility study was saying you were supposed out of this point?

It’s certainly consistent with our ramp up in terms of what we’re anticipating, in terms of being able to guide you towards that achieving that 70% milestone, that Alec was referring to and I think the ramp up that we have on underway in terms of what we’re seeing thus far and having actually just operating this plant for three, four, or five months since we first turned the auto plates on. I think backs up remarkably well.

I think it is unprecedented for a latter nickel plants, hydrometallurgy plants of this type. I can pretty comfortably say there hasn’t been a ramp up that has been this successful this early.

So that's the why people think anything anyway today from the call today. I would like it to be that we have greater confidence in our success and ramp up here the quality I think at the early stage in our ramp up is really quite a remarkable achievement.

As we continue to operate, we get more insight, our operators get more familiar with the machinery and the processes and we get more comfortable in the environment. Every day that you’re operating, you learn more and more about the nuances of operating the jurisdiction and I think we’re getting better and better.

So on that note, just one final question. Again, as mentioned in the press release that the government is launching up the audit of economic and environment impacts of the mining sector.

What's that all about?

That we knew was going on and it came up at the time a few months ago. I think we talked about it.

The government, not just us but a few of the large scale mining projects in the country, they are under the (inaudible) their right to go and inspect all the projects they are looking at and the way the ramp up is going, they are looking at a variety of things. We will see what they come out of it with but it was expected and anticipated time and maybe announcement of our operating permits and we’ll just see how that plays out.

I am not anticipating at this stage it will have any material impact on our operations going forward because this project has been thoroughly reviewed by all sorts of international bodies on behalf of the lenders and we’re comfortable we got a good project and we’re happy to work through with any legitimate audit that anybody wants to perform.

First of all I am looking at your outlook for 2012 with respect to Ambatovy and it seems as though you’re looking to produce about little over 4,000 tons of nickel in the fourth quarter. So my question is, how do I translate 4,000 tons of nickel in the quarter to some sort of utilization rate?

Because if just take your 60,000 nameplate and divide it by 15,000 for the quarter, I am not coming up as a number that you’re currently operating at.

Right. So you’re taking 15,000 being a quarter of 60 and looking at our…

4,000 budgeted for the quarter. So what am I doing…

I think there is a few factors to drive that. One is the rate of recoveries.

The greater the ore, I think in some cases when we’re starting up and still working on the reactions, we’re not necessarily sending through the highest quality of ore and the focus initially in the startup is getting the ore throughput and getting your (inaudible) running consistently and constantly. When we have achieved that and as we get more and more into higher levels of production, we will get more and more focused on the recovery rates and that's the other challenge in these.

We’re seeing good quality metal coming out. As you get more constant in your level of operation and your ore throughput and you’re not dealing with your autoclaves going up and down consistency of process and consistency of mixed sulfide feed into the refineries and lets you then start playing with your and optimizing the recovery.

So I think the other thing you will see that comes up over the course as ramp up progresses is not only you will see the percentages in terms of ore throughput continuing to be achieved but the level of extraction go up as well. So to the extent there is a discrepancy in your simple math there in terms of percentage of utilization and factoring that against the 60,000 ton nameplate capacity, the balance of that will come up as recoveries get optimized.

And then has the sort of 10 to 1 ratio of nickel to cobalt, is there any reason to believe that that's going to change maturely?

At this point what we’re finding in the ore bodies we’re providing, processing is very consistent with all the drilling in previous testing we’ve done. So that ratio subject to relatively minor natural variations that should generally be the rule of thumb.

Okay and then second question, was there any hurricane damage in Cuba?

No, nothing significant. We were fortunate we came through that well and the Cubans did have a tough time in some parts of eastern Cuba.

I think they are still working hard to recover but at our mine and processing facility in Moa we went through the same procedures we've gone through many times and focusing on safety and we battened everything down, rode the storm out and we’re back up in production pretty quickly after and we’re not anticipating it having any impact on aggregate production for the quarter.

Just another guidance related question on Ambatovy. On the mixed sulfide guidance for 2012 of 9,000 tons from Ambatovy, am I doing something wrong when I take 700 tons in Q2 close to 6,000 in Q3 implies 2,300 in Q4?

Off the top I would say that we’d be expecting to see mixed sulfide production continue to increase. Actually so if those numbers don't quite make sense, we’ll take a look at that and get back to you but generally speaking as the throughput numbers continue to go up, as we’re anticipating through Q4, we would expect to see mixed sulfide production continue to reflect that.

So, I don't have an answer for you off the top of my head on that and I don't want to try and do the math now but generally we would expect to see mixed sulfide production continue to increase for the balance of the year.

And then on just the Madagascar question, just a follow-up, why did they do only a six month approval at first rather than just the full thing?

Let me give you a bit of context on the operating permit thing overall because I think in all last year it probably got more attention than it deserved. It all is going to tie to what's going on at Madagascar.

As you know there was there a coup there three years ago and they now working their way towards elections potentially as soon as I think May of next year. But there is now heightened political environment in Madagascar and all through the process we've been allays able to get our various operating permits, import permits, visas and all on reasonably manageable timeframes.

When we did our Q2 release, we didn’t have the operating permits in hand as we’d expected so we felt it prudent to make mention of that in Q2 and (inaudible). When it did come through later where we released again to have a bit to my mind not having it at the end of Q2 was not cause for jumping out of any windows and similarly getting it a few weeks later was not necessarily cause for widespread celebration.

It’s a political charged environment in Madagascar at the moment and we are the biggest thing going in Madagascar so when people are looking for attention, there is no better place to get it than our front gate and any developments that we need to achieve will undoubtedly with the government and interactions with the government will go through the lends of how this impacts anybody’s perceived chances in upcoming elections whenever they may occur. So in that context, that's the environment that we’re working in.

We've managed it for the last four or five years and we expect to be actively managing those sorts of issues for the next 30. In terms of the operating permits, specifically, there was discussion early on about Ambatovy government’s perspective of granting a temporary permit and I believe they wanted to maintain that positioning and so where we came out was a permit that was six months in the face of it that renews automatically at the end of that six month period and that's still the presumption that we’re operating on in terms of what will happen.

And they are not asking for any fees or revisions to your agreement?

No, they are not today but I think the reality of being there is that we’ll face those challenges from time to time over the next 30 years. That's not unique to us.

It’s not unique to today and it’s not unique to Madagascar. You see that the world over and we’ll manage those challenges.

We have the strength of our partners, we have the strength of our lenders in terms of support and the importance of this project and the financing to Madagascar and we’re confident in our ability to manage those sorts of issues.

And then just another question on the cobalt as you’re ramping up. What is the strategy in placing that in terms of trying to minimize market impact?

We actively sell that because there’s cobalt out of the Moa joint venture and we’ll be actively selling that the advantage of Ambatovy of cobalt is that unlike the Moa cobalt it’s also capable of being sold in the United States. So we’ll be looking to move some of that product into the US.

But as you’re aware and certainly alluding to, cobalt is a more challenging than some commodities because of the nature that most of the cobalt production the world does not direct to, but in direct cobalt production also is produced as a by-product of nickel or cobalt production so you do see more volatility in cobalt pricing than you do in some other commodities because of that by-product nature of most of the production. But having access to the US market is a significant factor for us and we will actively manage that as best we can.

And then maybe just one last one. Just wondering if we see Ambatovy continue to ramp up well in your commercial production in a couple of quarters.

Would you take a look at other projects, it comes to mind (inaudible) headlines that they may look at sales of nickel assets. Does any of that do you think play a potential role in share future?

More broadly I'll say that I still have confidence that there is nobody in the world better in making these nickel projects run. I think we've shown that for 20 years in Moa.

I think we are in the process now of demonstrating that once again in Madagascar and as we get more and more confident with where we stand in Madagascar and more importantly as you guys and the investor community gets more and more confident in Madagascar, I think we will have more opportunity to go and do more things and I think this kind of mining and processing is one of our core competencies where we really have a competitive advantage over anybody else you would stack us up against.

Just sort of back to the percent capacity at Ambatovy, your 30% Q2, 39% in September. Could you mind to sort of say, where are you exiting October at this point in time?

We had to do a bit of reworking at our hydrogen plants at the beginning of the month and so we started at a bit of a deficit in the first few days of October but I haven't seen final numbers for October but we’ll see that into next week. And so frankly it maybe a little off where we were in September but my instinct is this is where we are, it won’t be far behind that and we’ll be looking to exceed that next month again.

The history of this says is not perfectly linear and it’s not an upward trajectory. You see a bit of a choppiness.

So we might see a slight step down in October but the October is finishing strong. As of yesterday, we had four of the autoclaves running and running well.

So we’re putting up good numbers at the moment but that's the nature of these startups. But it won’t be far off of, off of September having started in a bit of a hole at the beginning of the month.

Okay and would you be able to provide any color as it relates to recoveries?

At this point we haven't really focused on that. The finished metal has been coming out has been good quality but we haven't focused yet on recovery.

So I think as we get further into production, but until you’ve got your autoclaves running at a pretty consist level, it really, really probably after we get past that commercial production number that we’ll get more focused on that. To a great extent, your recoveries start to get more optimized as you get more consistent you’re running and come with volume.

Okay one another question, just a follow-up on Alec’s question on the total project cost, the 170 million. Of that 170, how would you breakout the split of fixed and variable on that?

If you could provide some rough guidance on that, I’d appreciate it.

We can maybe take a look into that and get back to you but everything is variable at this point. Our labor cost are up and down a bit as we complete the demobilization and there is great variability from the interest expense and when that's incurred there is great variability from what we have to do in terms of reworking as part of the ramp up process and there is variability in the commodity prices because our commodity consumptions go up and down not just from commodities pricing of the input commodities but the volumes that we’re consuming depended on where our level of production is at.

So, we can have a chat after if you’d like but there isn't a lot that's going to point out to any kind of significant fixed number that's going to persist into a more consistent operations phase.

Just maybe earlier in the year, obviously it was hard (inaudible) at the time and slightly different kinds but there is an indication, I think a suggestion that you could be cash flow neutral by the end of this year or maybe early next and again, that was at the hard nickel prices at the time. Is there any sort of updated guidance you’re providing in that regard in to context where you’re now with production and where we are now with nickel prices and cobalt prices?

I can comfortably tell you it won’t be by the end of this year. it will be at this stage somewhere over the course of next year but I really can't be more specific in this point from that because it really does depend on some things that are out of our control, nickel price being the significant driver of that but also just the strength of the ramp up curve.

And so we haven't tried to give any specific guidance on that. It obviously takes longer at 700 quarter nickels than it does to 9 to $10 nickels and has production increases the leverage the nickel price does get quite dramatic.

So we’re beyond saying that we would achieve that over the course of next year. At some point it’s hard for me to give you anything really concrete on that.

Now the balance sheet is in great shape, your operations are running cash flow positive across the board, Ambatovy is moving in the right direction. Hopefully that would continue obviously that's the big question mark.

You’ve got a robust dividend structure. Now what should we be looking for say in the second half of 2013 as where Sherritt is going with the company assuming Ambatovy is continuing in that right direction.

Is there any way we could look at the company or any thoughts you’d like to pass on about how you’re going to continue to grow the vehicle and your comfort level and things like the dividend because your dividend yield right now looks a little bit odd compared to the group, it’s very robust and obviously very stable in my opinion, but its open for debate.

Yes, I think the dividend is solid and the yields at today’s share prices are pretty compelling dividend yield. Obviously our hope as the market gets more confident in Ambatovy we will start to see some of that recognizing our share price.

I think the reality is that we’re not really seeing much of any kind of value attributed to Ambatovy project in our share price and that's the reflection of this skepticism there has been around the project and our aim is through our acquisitions to try to diminish that. As we accomplish that, I think our flexibility goes up to get this company past Ambatovy and that's where my focus is now that we are having some concrete success.

There are a lot of people working hard at that on the ground in Madagascar and now that we’re confident, they are going to be able to deliver on that. It’s time for us to be looking at how this company is going to grow.

We've talked in the past about our sort of lazy project, we will continue to spend the money to develop that and develop the option value on that project. It has the potential to be another fantastic large scale nickel and cobalt project.

But at the same time you look at the state of the world at the moment and the reality is I think you can buy existing production with good projects in the pipeline for a lot less than you can build at this point in time. So I think we’ll be looking to see what opportunities there are there.

A lot of it will depend as well on just how well the world hangs together next year frankly. Cliff I don't think it’s the most likely outcome but there is a possibility that can’t be easily discounted that the world goes to hell again next year.

And that was the big part of the motivation on getting the bond deals out and strengthening up our balance sheet but even if that were to happen that in it would create opportunities. So where we go from here today it’s difficult for me to tell you definitely what this company will look like in 12 or 18 months’ time.

But I think we’re as well positioned as anybody right now to be opportunistic and take advantage of what will present itself and that's nor more than ever where my folks are going to be.

Just for the sake of arguing, could you down the road somewhere look to introduce a new commodity or swap one of your commodities I guess would be the best description to become less diversified, more diversified and is that sticking in nickel all the time?

At this point I don't think there is much of anything that I would tell is completely off the table. There are opportunities with our suite of assets at the moment there which are good quality assets across the board, but as our share price, I think it’s clear that they are not being fully recognize the value and I think anywhere where we had, we saw an opportunity with our technologies business, we have got expertise and experience in many different operations in many different metals around the world and I think where the directions we go, we’ll turn very much in what opportunities present ourselves but I think we will be looking at anything a bit where we think we can add some value that hasn’t previously been added, where we have got some talents that others may not have as fully developed as us.

So, after five years of construction and development in ramping up on the Ambatovy project, the capabilities of a company like Sherritt are I think about to be more clearly demonstrated to the world and when we can do that, I think we’ll get a lot more room and opportunity to go and do different things and I think that's what most exciting for me now that I have been in this world by 10 months in terms of what we can do in the next few years.

David, just in terms of your coal outlook from Prairie operations, I noted that your (inaudible) is at two millions tons lower. I was just wondering is that a structural change there?

Is that the mandate that's going to come back next year or is it sort of a trend of lower coal demand now in Alberta?

This is the natural variation in that across the different mine sites. It’s certainly off a little bit of (inaudible) and I think is driven by demand.

I think that will continue to vary and not dramatically and relative to demonstrate of the size of our coal business. Whether you see that come back or not next year will in turn a bit suspect on power prices in Alberta but we’re not expecting any dramatic variations in our Prairie operation coal volumes from one year to the next at this point.

And just one quick follow up on the review of Ambatovy about the government of Madagascar. I was just wondering, in terms of timeline, is there any feel, is that really dependent on if we see elections in, I think you said May perhaps, next year or is that entirely independent of any political progress in the country?

Yes, it’s a bit of an open ended question at this point. As the timeline will be driven by the government more than us, but I suspect that will frankly play out over the next few months.

The election timing may or may not be a factor in this well and frankly it’s an open question whether the May elections happen or not as well. There have been a number of attempts at election dates in the last two or three years and the election dates have come and gone and not been achieved.

So it remains an open question whether they will be organized enough by May of next year to get in election together as well. So, regardless, we continue with our ramp-up in the audit process, we’ll go on separately from there.

And we have no further questions at this time. I will now turn the conference back to Paula Myson.

Thank you for joining us today everyone. Please feel free to contact us if you have any further questions and we look forward to speaking with you again in February with our 2012 year-end results and in the meantime we hope you have a safe and happy Halloween.