Executives: Paul Conibear - President & CEO Marie Inkster - SVP & CFO Peter Quinn -

COO
Analysts: Alain Gabriel - Morgan Stanley Orest Wowkodaw - Scotiabank Fawzi Hanano - Berenberg Greg Barnes - TD Securities Stefan Ioannou - Haywood Securities Matthew Fields - Bank of America Matt Vittorioso - Golden Tree Asset

Management
Operator: Good morning, my name is Dan and I will be your conference operator today. At this time, I would like to welcome everyone to the Lundin Mining Third Quarter 2016 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions].

Thank you. Mr. Paul Conibear, President & CEO, you may begin your conference.

Paul Conibear: Thank you very much, Operator, and thank you everybody for joining Lundin Mining as we give our third quarter earnings call. I naturally point you to our cautionary statements through the course of today's presentation, there will be several forward-looking aspects to information we give.

So please take note of that. Joining me today to support answering any questions that you may have at the end of the presentation are Marie Inkster, our Senior Vice President and Chief Financial Officer. We also have Peter Quinn, our Chief Operating Officer, on the line as well to assist with clarifying things at the end of the presentation. We are pretty pleased with the performance of the company year-to-date and including in the third quarter. We feel we are very well-positioned to meet or exceed the guidance on strong aggregate operating performance from all of our mines.

All of our mines continue to generate positive operating cash flow despite the low commodity price environment that we're in. Notably Candelaria copper production guidance has been improved to reflect year-to-date and performance and planned higher grades in Q4 of this year. Eagle copper and nickel production guidance has been increased again based on performance year-to-date and our forecast for what the mine is expected to do in Q4. Also at Eagle, we've been able to slightly improve the guidance on the cash operating cost based on their operating performance. Neves-Corvo Zinc plan operations exceeded expectations with a very stable throughput and significantly improved Zinc recoveries from the improvement programs that we had over the course of the year and the Zinkgruvan mine production was completely in line with planned levels for the quarter and year-to-date.

Majority of our sales naturally from copper at Candelaria, but we have notably improving contributions from Eagle as nickel prices improved and an increase in profit contribution from the improved Neves Zinc production and improved Zinc price. I'll turn over next two slides to Marie Inkster, our CFO, to go through the financial aspects of the quarter and year-to-date.

Marie Inkster: Thanks, Paul. Looking here at the third quarter operating earnings we are $49 million higher in this quarter compared to last year's Q3. Last year's third quarter was significantly impacted by negative period and mark-to-market adjustments on the provisional sales.

So in the third quarter of this year prices have remained generally low but have been relatively stable, so the mark-to-market impact this year was not impactful. There is some other small items and I should note that the Aguablanca cost are no longer in the operating earnings. They are now below the line and other expenses with our other closed mines. So moving on to the financial highlights. Here you see the comparison of our realized prices for this quarter to the same quarter of last year and this includes that impact of the mark-to-market adjustments on the realized prices.

So copper 8% higher, Nickel 28% higher, and Zinc 39% higher. Our revenue as a result was $22 million higher despite lower sales volumes compared to last year's Q3. And the effect as I previously mentioned on operating earnings of $49 million ahead of last year leading to strong operating cash flows including changes in working capital we were significantly less than last year, but once stripping out the working capital changes, you can see that we outperformed last year by $0.05 per share in terms of cash flow per share. Looking at the income statements were things that could be affecting the results that are not normal course we see a very clean quarter here. Last year we had some tax losses recognized that we previously had valuation losses against that were not related to the quarter's business and we also had an amount come through related to some historical claims.

If you recall when we bought Candelaria there was a dispute -- historical dispute with the surrounding community to the mine and we settled it last year with an agreement for Community Investment and social and environmental program. The first payment was made during last year's Q3. So we continue to spend on our program as part of this agreement but it's now just part of normal operations. And our balance sheet overall continues to be a highlight net debt improved $132.5 million during this share. We'll pay $40 million interest on November 1 for our bonds and we expect that we will continue to improve our net debt position to year-end.

Just after the quarter we signed an extension to our revolver, it builds in flexibility by allowing for our leverage ratios step up for four quarters following significant acquisition. So we have extended that to 2020 which gives us the ample liquidity and some flexibility in borrowing at a lower cost I might add. Moving on to the capital expenditure on exploration guidance our CapEx has been very well control this year and is on track we're running some additional tracks stripping ahead of the original plan so we have increased our guidance for stripping in Candelaria and we've a few other minor items that we are undertaking. So we expect CapEx to come in under $200 million or $195 million and is well controlled. So Paul hand it over to you again for the production and cash cost.

Paul Conibear: One second. Yes, thanks very much, Marie. I think I'll remind the listeners that in Q2 for most of our mines, most of the commodities we improved the guidance that we are giving compared to what we started the year with. Once again we are pleased to be able to improve the forecast production and lower cost in number of our assets. On the slide anything in blue, bolded blue is a change from the guidance for last quarter.

So notably we're expecting a little bit better copper production from Candelaria narrow the range and likely to be in the high side of that. Same with Eagle copper production should exceed what we expected last quarter. We've had some complex orders go through the copper circuit and we will continue to go through at Neves-Corvo. So we have been a bit more conservative and downgraded the copper production guidance for the year at Neves. At Zinkgruvan, we've got a very small amount of copper production; we can actually use that circuit for Zinc.

We are getting much better margins from zinc, so we stopped producing copper few months ago and processed zinc through there, so that's enabling us to stay on the high-end of our zinc production expectations at Zinkgruvan and as I noted already Eagle is performing really well. So we've improved guidance there and similarly zinc production at Neves-Corvo. At Tenke, I'll talk a little bit more about the production but again it remains to be an extremely competitive mine from a cost perspective. Moving to few comments on each of our operations, here is a great slide of the Candelaria Mill which has really been outperforming in the two years that we've been operator, two years anniversary for us with operator Candelaria in mid-November. Looking at the specifics of what happened in the quarter, we produced just over 31,000 tonnes of copper and concentrate attributable to offset the 80% basis with a very competitive cash operating cost of $1.34 per pound and that's after taking into account the stream to Franco Nevada.

On a year-to-year basis, the cash operating cost at Candelaria are lower than Q3 2015 as a result of the improvements that we've made overall in operating costs and benefiting from the higher by-product credits. Notable things during the quarter one of the key issues that we work very hard on as new owners was to finalize and get approval of the EIA for a very large new tailings facility that we've acquired there from Los Diques. The Los Diques Tailings project is progressing on schedule and trending under budget. Milestone in the quarter were the approval of a major dam construction permits from the key agencies in Chile. The minute we got those approvals in July and August, we quickly ramped up the projects, it's going full speed ahead and we had already started early construction activities earlier in the year and they are now substantially complete.

The next slide is a pictorial of the Los Diques area. You could see the scale of this large moving project it's one of the largest capital expenditures in the mining industry in Chile. Currently this year we had our President Marshall to the site to commemorate the start of the big dam a couple of months ago, so we're getting great national and local support for this important aspect of employment in the region. You could see the subgrains we got about 600 people that will probably pickup on employment for this large project. The overall schedule for the Los Diques project is this Phase 1 of dam and tailings facility construction will be up and operational in the first quarter of 2018.

The existing tailings dam with current practices will be full in about Q3 of 2018. So we have at least a half a year buffer there and take additional steps if something were to happen with either increasing production rates in tailings still or slowdown on the construction projects. So we're quite pleased with how the project is progressing and is quite key to the Candelaria operation. Eagle Mine as I noted has had a great year to-date and a solid quarter behind us. We've had production of 6,000 tonnes of nickel in concentrate and about that same amount of copper in the quarter and we've been able to improve our overall guidance to $1.90 pound of nickel.

Nickel price is still under pressure but we've made great margins at this mine even at a volatile market. Notable progress here on future value add for the Eagle investment is the Eagle East, very hybrid discovery. We did a pre-feasibility study based on the very positive results of that. We have started advancement of the exploration ramp we started that in July and is progressing well. We are updating the feasibility assessment of Eagle East; it will be published prior to year-end, the summary results, don't expect any surprises there except probably a few on the positive and we're progressing well with the Michigan regulators in regards to appropriate permits to go ahead with expectation of Eagle East.

Conceptually, assuming everything goes according to our plan, we would like to have Eagle East high grade ore coming into the mill by 2020. Neves-Corvo, Portugal. Zinc production as I noted benefited from excellent recoveries, I think the highest sustained recoveries that we've had for the zinc plant since the zinc plant was built several years ago. Last year was a challenging year for zinc recovery at the plant for a whole factory -- a variety of factories there. We did make some important management changes, technical changes and we're now getting in the 83%, 84% zinc recovery pretty significantly improved from last year.

Copper production year-to-date has been a bit of a challenge because the complex ores recoveries are down, grades are good, throughputs are okay, and we got some initiatives underway to improve those for next year. Regardless the cash operating costs for Neves-Corvo we know it's been in line in the quarter with historic norms they're $1.76 for the quarter and we are expecting better than that as the yearly average guidance maintained at $1.55. Looking forward to upside on Neves-Corvo, the big thing there is to extract more value from a very unique, large zinc resource space that we have there in Lower Lombador, the Big Lombador deposits. We have done a lot of feasibility work there. The criteria that we set for getting that project was three fold.

First get the existing zinc plant operating to original design criteria and I believe we're there. We're looking for metal price improvements and definitely the zinc at $1 or better, I think checks the box there. And the last important I think check the box there to enable this project to go to our boards with full approval will be progress on the EIA and permits from the Portuguese government. We had the first stage of success in permitting effort which is an approval that we got of the overall scope of the project; we achieved that in Q2 this year. We've been in close dialogue with the permitting agencies in Portugal back and forth on technical details, expectations of the EIA, and we expect to submit that EIA prior to year-end and we would hope to have approval of that in Q2 of next year.

Zinkgruvan has had a very steady year-to-date, this mine typically doesn't give us too many surprises has very high margins even at the bottom, lower end of zinc price obviously its margins have been improving as zinc price have been improving. We've got a very modest capital investment there that I think have an excellent return on investment by modernizing the frontend of the plant, coming along with the less than $20 million of investment is 10% increasing capacity of both zinc and lead and we hope to commission that in Q2 of next year. We also have a small but important tailings project advancing there called Enemossen it's a new series of dams beside the existing dams and Phase 1 of that project which is on track for completion in the Q3 of next year. Moving to Tenke. Obviously there is a great curiosity of what is likely to happen in regards to Freeport's announcements we submitted on May 9 in regards to their attempt to sell other operating position to China Moly.

I will not be able to answer any questions during the Q&A of the presentation. But all be assured that Lundin Mining is working very hard to maintain the high value of this important asset one way or the other as we go through what I hope are soon to be final events in regards to that. Looking specifically at the operations which can easily comment upon. We had a good quarter predictable quarter for Tenke and Freeport is a very able operatorship to this asset. I believe we will probably achieve records in copper capital production this year at Tenke, probably achieve records in cobalt production.

The new asset plant we started up in Q1 this year is performing as expected or better than expected. So probably some records in asset production and asset for I've said copper operation is critical to production. One of the issues that Tenke and all the other copper operating facilities has faced over the last few years was less power than people hope to get to operate their operations, pleased to say that power has not been an issue at Tenke this year in anyway compared to the past. So that is contributing to I think really good performance here and you can see that with the cash operating cost of $1.16 for the quarter. Cash distributions to net to Lundin Mining from Tenke are still expected to be in the $50 million to $60 million range for this year and between Tenke and Cobalt year-to-date we have received about $39 million.

A press release came out about a week-and-a-half or couple of weeks ago noting that our right of first offer to purchase the Freeport at 56%. We extended the ROFO to November 15 that was in mutual agreement with China Moly and Freeport. We maintained very regular constructive communications with China Moly with Freeport. We expect to meeting the DRC government and I would hope that there will be resolution of the ownership aspects of Tenke in the near future. With that, that ends the formal part of our presentation, operator, and I'm pleased to turn it over to those on the call for questions-and-answers.

Operator: [Operator Instructions]. Your first question comes from the line of Alain Gabriel with Morgan Stanley. Please go ahead.

Alain Gabriel: Yes, hello, two questions if I may. Firstly on the CapEx budget for 2017, how should we expect your group CapEx to evolve and more specifically on the capitalized distributing at Candelaria? And secondly on the decision making on the dividends, what are the next milestones that we should be looking out for? Thank you.

Paul Conibear: Sure thanks, Alain. I will answer your question and then Peter feel free to pipe up, we won't be giving formal guidance on 2017 until I think it's about may be November 28 or November 30 or something after we've gone to the board with next year budgets. But I think it's been pretty clear that with the significant decline in metal prices that started already in 2015, in fact that we've taken pretty aggressive steps to back off on what we consider to be not essential on sustaining capital investments. We are starting to catch-up with those now. So you should expect a reinvestment in sustaining capital across all of our mines for next year and in addition to obviously the greatest spend that we'll have will be the Los Diques tailings dam that we've guided I believe $150 million for that.

So we expect significant step-up in CapEx for next year for sustaining capital and we will get figures out in I guess probably about six weeks or so. And the CapEx -- sustaining CapEx that we have deferred in 2015, 2016 we wouldn't expect that all to come back in 2017. Some of that will be spread over 2017, 2018, and 2019 and particular at Candelaria on stripping the team down there has been working quite hard on optimizing once again, the open pit plans and Peter anything more to comment on Candelaria at least approach on the pit?

Peter Quinn: Paul, just a quick comment, I think it's fair to say that if we go back a year or so, there was many questions about the 2018 to 2020 production profile at Candelaria that's now been addressed. We fix those at earlier dips but the consequence of that we have some additional stripping on more aggressive stripping to do in 2017 that's particularly in the Phase 10 with at all be coming from to address earlier dips that are now being fixed in the mine plant.

Paul Conibear: Okay, thanks and I appreciate for the analysts that are on the call that obviously Candelaria spend over the next few years and production profile are quite material to your views on value.

So it's hard to enhance production profile with that comes investment and we will I think give some pretty wholesome disclosure at the end of November on that. In regard to dividends, we had brought -- we had the intent to bring in a maiden dividend to Lundin Mining as a regular dividend. We had brought a formal package to the board in July of 2015 but that was coincident with some dramatic step-downs in particular copper price. So being appropriately conservative we shelved that. It would definitely be discussed with the board concurrently the outcome in our next meeting which is at the end of November.

But I think it's certainly management's opinion and I think supported by some of our key large shareholders that get some maturing step for Lundin Mining to bring in a dividend and will do so as soon as we feel the time is right.

Operator: Your next question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi good morning. I was wondering if we could get some color on terms of what happened at the copper at Neves-Corvo this quarter, certainly both from a throughput and grade perspective and sort of how long you see that taking to recover to more normal levels.

Thanks.

Paul Conibear: Okay, thanks Orest and may be Peter do you want to respond please?

Peter Quinn: Firstly it's nervous during the quarter obviously processing complex ore there in the mining side of the operation. We put some more diligence into compliance the mine planning which resulted in some lower than expected grades in the third quarter. In conjunction with that, we saw some processing difficulties in the plant again complex ore that are being processed there. Fundamentally we had a processed ore to chemistry issues similar to what we discussed in the zinc plant a year ago where we understand that chemistry will was addressed in the quarter when plants are in place to remedy that and see the plant improve during the fourth quarter of this year at a more normalized standards with copper recovery.

Orest Wowkodaw: Can you give us an idea of where you expect copper grades to be in the fourth quarter?

Paul Conibear: Copper grades will be very much aligned with what we forecasted for fourth quarter, we're back on track with the mind plan and everything should be quite normal in the underground operations at Neves with copper during this fourth quarter.

Orest Wowkodaw: Okay. So something around like 2.6% tight range?

Paul Conibear: Yes, I believe that's the number 2.6%, 2.8% in that range.

Orest Wowkodaw: Okay, thank you very much.

Operator: Your next question --

Peter Quinn: Sorry just a clarification -- sorry just a clarification just because we get higher grades with copper ore at Neves-Corvo doesn't mean that we will get recoveries up necessarily it really depends on the zones where we are taking the material from.

Operator: And your next question comes from Fawzi Hanano with Berenberg. Please go ahead.

Fawzi Hanano: Hi, it's Fawzi Hanano at Berenberg. Hi Paul just a couple of questions. Firstly on Zinkgruvan, seems that you're going to be running only zinc through the mill to take advantage of I guess the better pricing.

You have done this last year just a question how long do you expect to do this and not to be producing any copper at certain group? And secondly more broadly any -- hello.

Paul Conibear: Yes sorry. Go ahead.

Fawzi Hanano: The second question is on M&A at the last results call, you had mentioned that there were no -- there was a lack of quality targets out there but just wanted to know do you still have this view and if it's changed, any change there?

Paul Conibear: Sure. So on Zinkgruvan I mean we haven't put out our production guidance for next year.

We will do that after our budgets are done and approved by the board but we're going to be processing zinc ore through all circuits for the balance of the year. We have regularly done that and sometimes we just track what's happening respectively between copper and zinc price and that mill contains over pretty quickly. Having we only produced 2,000 or 3,000 tonnes of copper ore, so it's immaterial there and our focus always at Zinkgruvan is how much zinc and lead we produce. So that would be up for loss I believe for all the years ahead as well. On M&A well certainly nothing has changed quarter upon quarter as far as the availability of assets of quality or otherwise, we had talked with the Serbian assets team off would be ideal for our company, we worked hard on that, we didn't get it, so that was March I guess I went to some since then we've been very focused on our own assets and we've got nickel expansion potential Eagle East, we've obviously got significant zinc expansion potential at Neves-Corvo, and we think there is some good upside at Candelaria on copper and modest upside on zinc at Zinkgruvan.

So each of our assets has got some I think some real value added investment that we should be making and will be making and we will be patient, we got a good balance sheet but we are in no hurry to deploy it, but we will be very disciplined and wait for the unexpected to happen in over the next year or two or whatever it takes to come up things that we think would be good to add to the company. I think the -- we covered in the base metals sector earnings going to be pretty bare, for things that are other than fourth quartile assets. So the industry can back out there and start drilling and finding.

Operator: Your next question comes from Greg Barnes with TD Securities. Please go ahead.

Greg Barnes: Yes thank you. Paul along the same lines of the question just asked but let's assume you get through the 10-K uncertainty and coming out the other side, what is your mandate, what is the board want you to do with the company?

Paul Conibear: Yes, Greg, that hasn't changed since 2011 I guess when we changed approach and that's to build the company incrementally in the commodities that we are currently in to stay away from fourth quartile asset quality which we would call swing producers and just to continue to protect the balance sheet, we are growth oriented and think that's in the Lundin DNA but I hope that we have proven over last five to six years that we'll only pull the trigger after a very careful homework when we're pretty confident that our new asset is going to be meaningful to the company. We are fortunate in each of our locations that we have some upside and that's what we are focused on. You should expect an increased exploration budget from us next year not only we're going to continue to invest heavily in exploration at Candelaria and at Eagle we're going to rejuvenate our exploration budgets around Neves-Corvo and around Zinkgruvan I think there's gives value to add there. We pulled those back in the last couple of years because we didn't need traditional life of mine, we are going to rejuvenate things and you should expect us to do some junior deals or early days exploration on higher grade targets with the focus being Europe, Eastern Europe through Chile in the year ahead.

Those are types of things we've been working on. But our mandate really hasn't changed the criteria hasn't changed, the only thing that might have changed is the minimum size that we have the financial capability for used to be 30,000 tonnes a year and then 50,000 we think our sweet spot is probably 50,000 to 150,000 tonnes a year on copper basis, things that would be good things for us to invest in and of course largest size may be we will do with partner may be not.

Greg Barnes: Right. Would you consider if this producing assets are say hard to come by would you consider a larger open pit for freestyle [ph] project in South America is something that you think you could handle now?

Paul Conibear: We will obviously the Candelaria was I think an important component of that criteria when I looked in 2011 we realized we're expert underground miners, we don't have a large scale decent open pit Candelaria clearly gives to us with the great expertise they have there, they have been really, really good miners there. But we don't think we specifically we have our sites on anything right now, I think we will go step by step there.

Operator: Your next question comes from the line of Stefan Ioannou with Haywood Securities. Please go ahead.

Stefan Ioannou: Thanks very much. Most of my questions have been answered but may be just a follow-up on even a little bit more, just can you may be just give us sort of rundown on how the exploration has gone at Candelaria this year in terms of what you're looking at and what you're seeing there?

Paul Conibear: Yes I don't, but Peter you can probably help answer I mean we kind of started there or finished last year with 16 rigs we probably have somewhere between nine and 12 there focused on five different underground deposits. We updated our reserves and resource statements in 30 September I guess we got the press release out and you can see that we've added 50% I guess to reserves and resources since we've been owners but maybe Peter I mean you know the assets intimately if you can give a little bit more flavor there?

Peter Quinn: Yes, sure Paul.

In all three underground mines, I will start with Santos, we're being very happy with the results we're seeing in Santos very much aligned with that expectations on what we not see in exploration. Alcaparrosa has been a surprise for us in some ways in that drilling in the north of the Alcaparrosa mine district has come in slightly stronger than we expected. So good news there. The jewel in the crown really is that Candelaria Norte both in the north of that mine and in the south areas of that mine, we have been very, very pleased with the results we have seen in the exploration underground. Especially in the north, we talked about that as the lee-let area drillings coming very strongly there, very much along that thought so pleasing results.

In the south, with [indiscernible] those two ore bodies as well, it pretty well grow that mountain surface the next step is to get underground and finish that drilling in some detail but so far those results are being very pleasing, very aligned with expectations.

Stefan Ioannou: Okay. So I guess when you're talking about sort of additional exploration going in next year, was it sort of more the same and just continuing the pace with same targets that you've been working on this year and last year?

Peter Quinn: Two-fold activity, it's definitely more this time, there is plenty of targets in the existing underground mines to continue drilling on, there is also some other opportunity on our land package within the district which we will be exploring from surface.

Stefan Ioannou: Okay, okay great. Thanks very much guys.

Peter Quinn: To give a bit more context only took over as operator owner of Candelaria, we're doing may be about 12,000 tonnes a day from the underground mines I think currently we're doing 15,000, 16,000 tonnes a day kind of on a nominal basis and the pre-feasibility work we're doing on these various deposits as we get more exploration information is taking in the 25,000 to 30,000 tonne a day range and see what the implications of that might be. So that's our intent is to try to bring a lot more of this normally 1% underground ore into the mill over the next four to five years.

Operator: [Operator Instructions]. Your next question comes from the line of Matthew Fields with Bank of America. Please go ahead.

Matthew Fields: Hi everyone. Just wanted to ask about the revolver update, what is the grid for the interest coupons on the revolver go from and to?

Marie Inkster: That would be LIBOR plus 2.5 to 3.5 on U.S. dollar warrants.

Matthew Fields: That's the new rate?

Marie Inkster: Yes.

Matthew Fields: Okay, great.

And then what is the new covenant on permitted leverage following the acquisition?

Marie Inkster: 4.5 times for four quarters following an acquisition of over $100 million.

Matthew Fields: Great and is that credit agreement going to be posted on SEDAR?

Marie Inkster: Yes, it's just right now it's with legal to see whether there are certain sections that should redacted, so we expect to have that up in the next day or so.

Operator: Your next question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi just a follow-up, Paul I heard you saw that you are targeting approval of potential approval zinc expansion at Neves in Q2 2017?

Paul Conibear: We're hoping we will be able to get the environmental approvals on the EIA by then.

My own view is that the third thing that we need to check the box on so obviously it will be an expenditure that will need to go to our board, so I can't speculate that they will approve that. I think the zinc world is improving as we expected it would. I think there is great value to add from doubling our zinc production, it's a relatively low technical and investment risk here to do and I think we're all keen to progress with this. But we do need to go through the final steps, which is the EIA and obviously board approval but --

Orest Wowkodaw: Okay.

Paul Conibear: Pardon me.

Orest Wowkodaw: No sir, go ahead, Paul.

Paul Conibear: Yes Q2 2017 is when we hope to have the EIA approved. We're already kind of ramping up review at the CapEx estimates because they're kind of year-and-a-half old, we're doing that right now external consultants we're looking ahead to updating our execution plan for the project, we've just had like a expert peer review just to refresh opinions on whether there is opportunity and issues that need to be refined. So we're keen on the project, got a couple of more steps to go through.

Orest Wowkodaw: Okay and assuming the board would approve the project in Q2 2017 does that put at a start up around mid 2019?

Paul Conibear: Yes it's about, it's worked sort of 24 to 28 month schedule from a hard approval date but normally these types of things we try to probably get a little bit of capacity done ahead of time and we are looking ahead to bit of a soft start and if we once we start to get some positive response from the government.

Orest Wowkodaw: Okay. And just finally do you think you can improve the €250 million budget that was put out?

Paul Conibear: Premature for me to say that's the peer review we're doing on right now with franchise.

Operator: [Operator Instructions]. Your next question comes from the line of Matt Vittorioso with Golden Tree Asset Management. Please go ahead.

Matt Vittorioso: Yes good morning, just a quick follow-up on the balance sheet and your recent revolver amendment. I hear you on one side saying you've got very solid balance sheet and you're in no hurry to deploy and then you got this revolver amendment that allows for 4.5 turns of leverage for a period of time. Can you just reconcile those two things and may be just talk about why 4.5 times I mean that sounds like a lot of leverage for any miner but you've got copper and uncertainty around the price, why the 4.5 times flexibility there?

Paul Conibear: I will make a couple of comments and then Marie you also address it I mean this revolver was coming due next year, we always attempt to renegotiate these types of facilities well before they are due, so that we're not levered on terms it's been unused virtually unused or really unused since we've had it. And there is no specific need to put it in place now other than strategic for timing. Marie if you want to comment further as you wish.

Marie Inkster: Yes, I think that stands out Paul and just in terms of the 4.5 times it's no magic number, it's just trying to anticipate, we're signing on for another 3.5 years. So being able to build in additional flexibility where we can was the objective and it's not that we would want to be 4.5 times that's not ideal for us, we have said many times in the past that we're comfortable at 2, 2.5 if we went above that, we would want to get it down very quickly, this is just some additional flexibility where in the event say that you buy an asset that has debt attached, we have a company that has debt attached, it gives you time to restructure that, it just gives you flexibility. So there is no magic and no we would not want to be operating at 4.5 times but we also would not want to be in a situation where as in Q2, Q3 of last year, the prices dropped quite considerably just after we do a major acquisition and we're caught out of hand, so that was what it was meant to try to avoid.

Operator: And we have no further questions in the queue at this time. I will turn the call back over to the presenters.

Paul Conibear: Great, good thank you very much everybody for attending at what looks pretty busy day for the analysts, so lot of earnings calls are coming out. Thank you very much and I look forward to speaking to you after Q4.

Operator: Thanks everyone for attending today's conference. This concludes today's conference call and you may now disconnect.