Paula Myson – Managing Director, Investor Relations David V. Pathe – President and Chief Executive Officer Michael Robins – Chief Financial Officer and Senior Vice President, Finance

Matt Murphy – UBS Securities Canada Inc. Alec Kodatsky – CIBC World Markets Inc.

Anoop Prihar – GMP Securities L.P Greg Barnes – TD Securities Equity Research

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

Today’s conference call is being broadcast live on the Internet. So anyone may listen to the call by accessing our website home page 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’d like to remind everyone that today’s press release and certain of our comments on the call will include certain forward-looking statements.

We’d like to refer everyone to the cautionary language included in our press release and to the risk factors described in the CEDAR filings. On the call today are David Pathe, our President and CEO, and Mike Robins, our Chief Financial Officer.

Our call today will start with some general comments from David Pathe followed by a summary of the financial results for the quarter by Mike Robins. So to begin, I’ll turn the call over to David.

All right, thank you, Paula, and thank you everyone for taking a bit of time to join us this afternoon. Ms.

Paula said I will go and have Mike who would take you through a few numbers in a few minutes here, but I want to just touch on a few things first. Overall, a pretty good quarter, all our operating businesses running as where we – better than what we expect them to be in a more difficult commodity price environment that was a year ago, but generally a decent quarter for us.

Few things I just wanted to touch on, I’ll start with Ambatovy, that’s top of mind for many people for us, when they’re thinking of us these days. We had a pretty good quarter from a start-up and ramp up perspective.

We produced mixed sulphides in May and we’re able to produce sufficient quantities of mixed sulphides and we’re going to start feeding that in the refinery. Before the end of the quarter, we’re able to start-up – run a test batch of nickel briquettes and actually to show that the project was capable of producing finished nickel.

So that, we saw as they makes achievement and we're pleased to see that. We had good results over the quarter with – in terms of ramping up our autoclave performance through April, May and June, July more and more hours of operating time, more throughput of ore and generally a pretty good response from what we are expecting to see.

We’ve had our share of [season] problems in terms of leaky pipes and valves that don’t work and pumps that fails and the kind of stuff you would expect to see at a start up, that this is continue – but the chemistry in the order place, and the hardest as the power process is continue to perform as well better than we could have expected. So we’re pretty pleased overall with the way the projects coming along.

From a cost perspective, we had a budget of 5.5, we’re still confident we will be within that. I think we are at about $5.3 billion right now.

The vast majority of the construction people have been demobilized at this point, so we're getting very close to be able to close the books on the capital cost number and we’re certainly comfortable it is going to be within that 5.5 number now borrowing any foreseen large expenditure. In terms of total project cost, I think we’re at $6.3 billion at the end of the quarter, Where that number will end up is really just a function of what the ramp up curve will be now, I mean some other extraneous factors.

You probably recall the difference between that number and the 5.5 number is that 5.5 number doesn’t include working capital, foreign exchange, interest expense on the project debt, those types of things. Especially what we’re doing now is we are capitalizing operating costs until we get to the point where we reached what we have considered to be commercial production and what point the accounting treatment will switch over from capital accounting to regular revenue recognition and expense accounting.

What – that is what we have to consider to be commercial production will take place when we get to about 70% of operating capacity. When that occurs and what the total cost will be largely a function of the ramp up schedule, what nickel prices are in terms of what we’re able to get for the nickel production that we’re producing as we work our way up to the 70% level, as well as foreign exchange rates and those sorts of things.

So, we’ll keep you updated each quarter on where we are in that total cost number, but it will ultimately flip over sometime early next year when we achieve the 70% of throughput on our way to ramping up to full production. The other disclosure you would have seen this morning was a bit of disclosure on the Operating Permit.

I thought I’ll just give you a bit of color on that as well. The Operating Permit like other jurisdictions in Madagascar is a series of permits that requires a project like this proceeds.

We initially had an exploration permit, and then a mining permit and then we’ve had permits that have been required for the commissioning and start-up activities that are being going on with the project for most of the last six, nine months now. The next step in that was an Operating Permit.

We’ve been working with the development authorities for sometime on that (inaudible) for the permit until you can show that the plant is capable of operating. So we’ve been working with the Malagasy as they’ve had success and made some progress on the commissioning side.

We think we have now satisfied all the requirements and there have been some reviews done that site and the number of meetings taken. The only reason for the disclosure in there is that we’ve had some recent communication from the government that they may want to do some further review, and we don’t have much detail yet as to what that is actually going to look like.

In terms of what this meetings for the projects going forward, we don’t have a lot more really than what we put in the press release this morning. We are continuing to dialog with the Madagascar government.

We’re getting some different information from different sources, but we’re trying to figure out exactly what the concerns maybe. Is there anything with respect to any further review that they want to do from an operating permit perspective, and we’re continuing to work through those and hope to have that result shortly.

But since we didn’t have it in hand, at this point, we want to just make a disclosure that permit remains outstanding and we’ll see how things unfold from here. In terms of markets, it’s obviously a difficult market environment at the moment.

And we were anticipating a pretty choppy and volatile nickel pricing and we’ve seen that. Nickel prices are clearly off and that’s probably the single biggest driver of our financial results, and our net income being down from the same period last year.

In second quarter last year, we were seeing nickel prices well north of $10 and we’re now under $8. So I think spot for nickel right now is in the $7.10, $7.20 range.

Going forward, I think we’re going to continue to see that bounce around a fair bit. I – myself still believe that the global macroeconomic factors driving demand or at least the biggest factor is the various supply concerns that have been expressed in the last year or two.

The Indonesian (inaudible) raw ore got to be taking effect on what we’re seeing about 80% of the oil that was previously coming out of the Indonesia is now being held up in country that doesn’t have a dramatic effect on the market price shift. We’ll continue to watch to see whether that happens, but I think the only thing that we can be sure of for the balance of the year with respect to the nickel prices.

It’s going to continue to be volatile. Coal, obviously we have Prairie Operations, where market prices are in concern.

But it is in our Mountain Operations, where it’s an export coal operation. Market prices there off as well, and I think last year, we are probably looking at a Newcastle reference price as a $110 or better above the piece under $90 now.

For 2012, most of our production, I think by two-third, 65% and some of our production is now contracted at fixed prices for the year. The remaining 35% is still subject to quarterly resets or just spot price.

So we still got some exposure to the Newcastle price going forward. But we’ve got some protection based on what sort of contracted at the prices (inaudible) on the year.

And we’ll see how that continues to unfold over the course of the year. But again, I think the big drive, one, the big drivers of that is the level of the international demand and that’s a function of the general level of macro economic activity.

Operationally, I mentioned off the top that our businesses are all running well, in terms of production target metals, coal, and oil are all hitting their targets. Thermal coal, we’ve reduced the output there a bit because we scale that production at the Obed mine as we blend coal between the two mines to optimize pricing in this more reduced price environment as far as to see volumes off a little bit in our export business overall.

Oil business, production is maintained itself pretty steady. Pricing has remained pretty strong or else come off a little bit, but not much.

So, we’re seeing a still pretty good margin in the oil business and still seeing the receivables and we getting paid off in a pretty timely basis. So, the oil business continues to run well for us.

Costs, on the input side has been a big factor and a good start for last few quarters as well. Input commodity prices have been maintaining themselves at stubbornly high levels in the last few quarters compared to declining price for output commodities.

We did see commodity prices for some of the input start to come off a little bit in the second quarter for things like sulfur and sulphuric acid. We will be watching to see if that trend continues.

We did see quite a significant improvement in our net direct cash costs for nickel, I think goes down to 4.15, 4.16 for the quarter, quite a significant improvement over the first quarter. That was largely attributable to a very strong fertilizer season which catches in our net direct cash cost as a by product credit similar to the cobalt treatment.

So we won’t see that entirely repeated in the third quarter. There will be a second fertilizer season in the fourth quarter, but that was one of the bigger drivers of the improvement in cash costs for Q2.

Coal, we don’t see the same impact in input commodities as we see in metals business either particularly in the Prairie operations. Prairie operation costs were up a little bit primarily due to some repairs to some major equipments at the couple of mine site.

You may recall we also generally see a bit of volatility in our overall unit costs in Prairie just depending on production levels and the mix of production levels across the different mines. That will continue.

Royalties – good cash flow and the royalties continues, potash royalties were up a little bit. And I think we have reduced our guidance on those for a bit for the year as a result that primarily driver there is weaker than expected potash prices.

When potash prices are low, our royalties take a bit of a hit both because of the lower pricing environment and potash producers tend to scale back their production a bit in lower price environments as well. Going forward on that, and it’s difficult to know what to expect.

We are seeing higher commodity prices for food commodity so, and often potash pricing will track with the commodity pricing like corn will be watching to see whether that continues. But then as I say we have scale back our guidance on potash royalties a bit for the year.

Lastly, quick update on page eight, we haven’t talked much about that lately, our power project in Cuba that in a further 150 megawatts of generating capacity in a combined cycle facility there. That project continues on time and on budget, I think total budget there as about a $270 million.

We’ve spent around about $200 million now, and we’re still expecting that project to come in on time and start producing in the first half of next year. I think those are the main points, I wanted to just touch on and highlight for you today.

I will turn it over to Mike, and let him take you through a few of the numbers, and then we’ll be happy to take any of your questions. Mike?

Thanks, Dave. As Paula said, I will give a brief review of the results before we go to the questions.

And so, let’s start with the results were about as expected with decline in commodity prices. We reported earnings of $40.8 million regarding compared to net earnings of $60 million for the second quarter of 2011.

This translates to about $0.14 per share compared to about $0.20 last year. Revenues were down just a bit, but at 3% quarter-over-quarter as a continued softening in nickel prices was largely offset by the great spring fertilizer sales that David alluded to earlier.

Revenues also had some help from the foreign exchange side due to somewhat weaker Canadian dollar versus the U.S. dollar.

As a result, our EBITDA was down about 12% to $139 million, as continuing pressures on the cost side hadn’t impact as well. Last quarter, we highlighted a couple of one-time items that hadn’t impact on earnings.

This quarter there were no one-time earnings to speak us, that affected EBITDA, but our effective tax rate was about 18%, and that was help by the recognition of previous losses that are now available to us to reduce taxable income. The normalized rate was 30%, which is consistent with previous guidance.

Our net finance expense was up about $7 million compared to the second quarter of 2011. This is due to less finance income on lower investment balances, as well as an increase in interest expense from the higher loan balances that we have.

As mentioned, in the first quarter we drew your attention to the impact of the one non-operating item. The change in the value of the Ambatovy call option, this quarter due to somewhat lower volatility and the inputs were calculating this option, the change in value was minimum.

As we guided last quarter, the option is expected to decline a value by about $2 million per quarter for the rest of the option life. So now, let's look at some of the drivers of the top line.

Overall, our sales volumes are fairly stable for the quarter, as mentioned one difference with our fertilizer sales about two thirds of the sales of nitrogen fertilizer business in Western Canada happen during this spring application system, and as David said, this is particularly good spring with over 70,000 tons of fertilizer sold. In coal, the Prairie Operations stable sales picture, well slight decline in the Mountain business reflected a previously disclosed in tension to optimize our export thermal blend, by reducing the amount of Obed production.

In metal, sales were stronger this quarter, when compared to the last year, and we're in line with production. The realized prices in our coal and oil business held steady for the quarter, although we are now seeing downward pressure on both the export terminal coal pricing and the international oil reference pricing.

That said, it did not have a material impact on the quarter. And metals continued downward pressure on the nickel price reflected the continued uncertainty and skepticism in the base metals market resulting from international financial volatility and the potential of additional production coming on-stream in the near-term.

This top line reduction coupled with the higher cost drivers as described by David drove earnings lower and as a result operating cash flows dropped by about 43% to $28 million. So at June 30, we had cash, cash equivalents and short-term investments of $479 million.

This is down a $114 million from the first quarter as a result of combined impact of lower cash generation in the weaker commodity markets, slightly higher capital expenditures and the funding of our proportionate share of the Ambatovy Joint Venture. Even so, our net recourse debt at the end of the quarter was approximately $560 million.

So we remained conservatively leveraged at 28% long-term debt to capitalization. We also refinanced and increased the size of our coal facility and our available liquidity remains above $1.1 billion.

So, with that, Paula, it’s now time for questions.

Ron, we can open up the lines please.

Good afternoon. I had a question on Ambatovy.

The 700 tonne mixed sulphide, you talked about introduced to the refinery. I was just wondering how much mixed sulphide was produced during the quarter, and if there is a decent step, I don’t know?

I know that a number of how much that we had, 700 tons, I think by the end of May. It would have been more produced in June.

It’s not like we’ve got a massive start part of mixed sulphides is falling up there. We have been feeling that into refinery and it’s in various stages in the refining process.

We are continuing to try and get the cobalt circuits up and running, so we can start producing that cobalt as well. But I have a number for you in terms of a mixed sulphide inventory, but there is not a significant one.

Sure, okay. So, I guess right now the refinery is waiting on the leach as opposed to the leach being held up as the refineries just getting ramped up?

Now, there isn’t really anything holding up – part of at this point, there is sufficient quantities of the mixed sulphide to continue with the refinery commissioning. The overall production levels of the different parts of the plant have gone up and down a bit naturally as you’d expect in the course of the start-up.

But how it’s functioning, subject to some of the maintenance, the maintenance that was done earlier this month, and there are sufficient quantities of mixed sulphides available to continue the commissioning of the balance of the refinery and the cobalt side of things and that was going on right now.

Okay. And I’m just wondering on the permitting discussion.

How much can you ramp up at Ambatovy without the plant permit?

Well, we can continue with those commissioning activities and we have sufficient permits for all of our startup and commissioning activities. What that means beyond that is it’s a bit grayer, but we certainly won’t be able to export products until we have an operating permit.

So that’s probably the most relevant metric.

Yeah, okay. Okay and then just one other and this hopefully isn’t two part for you to answer, if so we can follow-up after.

but I’m just trying to figure out what exactly happens once you’ve declared commercial production, the debt goes non-recourse, what happens in terms of your debt facilities, and can you remind me how the cash waterfall works after to that point?

I’ll give you the quick answer, and then Matt, we’re happy to two more of the detail about, if you like. The two different concepts there first of all, commercial production is an accounting concept, and that sort I think of about 70% of production and what happens to commercial production, it really has no meaning other than the accounting treatment for the project, which is from capitalizing all the costs to a revenue recognition in the determinations of an income or loss for the project.

That’s a separate test and a separate event from the financing going on recourse, which has a variety of operational and financial tests that need to be satisfied, and that will occur later in the year. At once the project goes on recourse, the completion guarantees obviously then follow away and then there is a first call on profits for business service, the senior debts in the cash sharing mechanism beyond that, whereas the partners can take some of their sharing profits, and some of our share will go to servicing our partner loans.

And I think we can take you through the detail of that off-line, if you want to catch up on that.

Yeah, okay. And so just on the financial completion, am I right in believing that it’s suppose to happen by June 2013?

It’s in the fall, I think of 2013 it’s still more than a year.

Okay, okay. And what happens if that doesn’t happen by the fall?

Okay, thanks. I’ll end it up.

Thanks Matt.

Thanks, good afternoon everyone. Just another question around the operating permit again.

Is there any indication as far as what’s precipitated the government’s reaction is there a particular issue or event that sort of led this – sort of led us down this path?

To my note there was no one triggering event that caused us that we aren’t entirely sure of what is always had as an indication that they want to do some further review. We don’t have any real insight yet, and so the extent of that review or what its – whether it’s motivating or what its focus will be.

That’s the kind of clarification we’re trying to get out of the government now, so where we don’t have much yet on what kind of process this will be or if there is a process that we had, we just don’t have much of that yet from where we stand today.

Fair enough, I guess it falls into the same bucket but there is no sort of sense in terms of timelines or do you get the impression there is a sense of urgency on their behalf as for as resolving this?

I think everybody is keen for a resolution, we’ve had some meetings with different parts of the government and have more scheduled in the coming days and weeks and we’ll hope to get some greater clarity on that. We are obviously keen for a resolution to this sooner rather than later, but you’re right, today, I can’t really put a timeline on it for you.

Okay. And just in terms of the expenditures, your project spending was $217 million this quarter.

Do you have a sense for what the sort of spend rate would be in Q3 and Q4?

I think we’ve got some guidance in there in terms of what the capital spending would be for the rest of the year on our share. In rough terms, from that spending for the quarter, you can calculate a monthly burn rate.

I think you should see that come off a little bit as the loss of the construction activities and people get demobilized. You will also see that offset later in the year and more primarily in the fourth quarter, I would imagine with some – ideally some revenue from sales of nickel and how much that is will depend on our success in ramping up and ultimately what the nickel prevail – nickel prices at the time.

But from that you can probably get a formal rough view of what the spend is for balance of the year.

Okay, great. Thank you.

Good afternoon, just a couple of questions. First of all, the tax losses utilized during the first quarter to reduce our effective tax rate.

Are there any remaining losses available to you?

Let me ask Mike [for that one].

Yes, we have some ongoing losses that we can use going forward. That's part of our guidance in terms of the effective rate that we have.

So, the 30% you're guiding to for the balance of the year or normalized that that’s incorporating the use of those available losses?

Yes, it does.

And what's the magnitude of the losses available to you, because I don’t see that broken out anywhere?

I don't have that at the top of my head. I would certainly be willing to get back to on that.

Okay, that will be appreciated. And then second of all, in the disclosure on Ambatovy, you talk about continued liability in terms of a contractor that worked on the pipeline being in some sort of dispute or how much he was paid.

Can you give us a rough sense to the order of magnitude of the dollars involved in that dispute?

A claim has been made by the contractor that we don't think it has much merit. They are, I don’t have the number in front of me, they are claiming some astronomical number, but it's not a material number in the overall scheme of the project.

We’ll see how that plays out. It’s something in the low tens and millions of dollars if I had to put a number on it.

Okay, and then just lastly David. I mean, we're looking at Ambatovy coming on towards the end of this year, beginning in next year if you want the largest most modern facilities of its kind.

What are your thoughts as to how the existing shared structure would maximize the profitability or the value rather of an asset like that? I mean quite frankly you got five or six different lines of business that you are consolidating and everything kind of gets leveled up in the wash.

I mean is that really the best structure in which to introduce Ambatovy?

Then lots of view is expressed on that by lots of people, Anoop. And we think we’ve got a very good collection of assets that all have value.

I think in some cases we probably don’t get recognized the full value on that, but we’ll look at that right now. We’ve been focused on getting this Ambatovy project up and running.

I think the biggest think that overhangs our stock right now is people not giving us credit for the quality asset that we think we have there. And we’ll do whatever we think is best for delivering value to the shareholders.

Okay, thanks.

Yes, thank you. Having somewhat new to the story, I’m just wondering on cash cost of Ambatovy.

I know you’re in the ramp up and that was difficult to tell. But I think you said in the past that you expect cost there to be below the cash cost pound and you have a Moa, which in Q2 is 416, is that still what you are targeting?

We never provided any guidance in what we are and what we expect cost there to be. But we do expect one Ambatovy is running at full capacity that we think there is a number of compelling reasons, why is that – whatever level the – is our Moa Joint Venture is operating at, we should be able to do better than that at full capacity as Ambatovy.

Meaningfully better or marginally better?

Somewhere between marginally and meaningfully.

Okay. Fair enough.

Thank you.

Thank you, Ron. Thank you everyone for joining us today.

We will speak with you again in October with the third quarter results. Have a great afternoon, and enjoy the rest of the summer.