John McCluskey - CEO Jamie Porter - CFO Peter Macphail - COO Alamos.

Rahul Paul - Canaccord Genuity Dan Rollins - RBC Capital Markets Anita Soni - Credit Suisse Mike Parkin - Desjardins Securities Phil Russo - Raymond James Operator Good afternoon, I would now like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer, please go ahead..

Thank you operator, thanks everyone for attending Alamos’ Second Quarter 2015 conference call. In addition to myself we have on the line today John McCluskey, President and Chief Executive Officer and Peter Macphail, Vice President and Chief Operating Officer. I would like to remind everyone that our presentation will be followed by a Q&A session.

On this call we’ll be making forward looking statements. Please refer to the disclaimer on forward looking statements in our news release and MD&A as well as the risk factors set up in our annual information form. All forward looking statements on this call are qualified by these cautionary statements.

There can be no assurance that the forward looking statement even though considered reasonable by management based on information on hand will prove to be accurate.

Future results and events could differ materially, technical information in this presentation has been reviewed and approved by Chris Bostwick, our VP, Technical Service and a qualified person. Also please bear in mind that all of the dollar amounts mentioned in this conference call are in U.S. dollars unless otherwise noted.

Now John will provide you with an overview..

Thank you, Jamie and good afternoon everyone. There’re only a handful of intermediate gold producers in the market today and we believe we have created one of the best equipped to deliver sustainable long term value to shareholders. We have diversified production from three North American mines which are all benefiting from the strength of the U.S.

dollar. We have a peer reading low cost, low capital intensity growth pipeline. We have a strong balance sheet to support this growth and provide us with financial flexibility to successfully navigate the challenging gold price environment. And lastly, all of our assets are located in safe political jurisdiction.

Among our peers most possess one or two of these attributes we possess all four and we believe this makes us standout as a result. Operationally, we had a strong quarter with combined production 95,000 ounces of gold. We remain on track to achieve full year guidance of 375, 0000 to 425,000 ounces.

Young-Davidson continues to perform well with production of 39,400 ounces in the quarter. The underground mining rates increased to a new record of 5,149 tonnes per day and remain on track to achieve the year-end target of 6,000 tonnes per day.

Reflecting to productivity improvements with the ramp up and the favorable weakening of the Canadian dollar, we achieved a new record in terms of unit mining cost of $33 a tonnes.

As underground mining rates continue to ramp up and supplier growing contribution to the mill feed we expect to see further production growth and productivity improvements driving costs lower. Our gold production from Mulatos totaled 33,000 ounces in the second quarter.

The open pit heap leach operations continue to perform well with total crusher throughput and heap leach grades above the annual budget.

As discussed with our first quarter results, we ran the high grade mill below capacity and pushed through lower grade ore until the vertical grinding mill was installed to ensure we achieved the best recoveries with our highest grade stockpile. The mill was installed in July and is currently being commissioned.

We are working on ramping up throughput rates and combined with higher recoveries, we expect significant production growth from the mill in the second half of 2015.

El Chanate had a record quarter with production of 23,200 ounces of gold and has been a strong performer in the face of weak gold prices generating positive free cash flow in the first half of 2015. The operation benefited from higher grades and recoveries and remains well positioned to achieve full year guidance.

The weaker gold price environment has presented a significant challenge to the industry for which we are well prepared. We have built the Company with assets and the financial flexibility which can be profitable over the long term and at gold prices below today’s level.

We expect higher production and lower cost from both Young-Davidson and Mulatos over the next two years and expect both assets to largely self-finance their capital spending. In the meantime we are committed to cutting cost across the organization and are already realizing significant synergies through the merger.

Our development pipeline consists of low cost, low capital intensity projects that are economic at the current gold price. We are committed to developing these assets in a disciplined fashion and we intend to allocate capital where we can generate the highest returns.

We received some very positive news during the quarter with respect to the most advances of these projects with the EIA for Crosby reinstated by the Turkish high court. Our share price represents a compelling opportunity at current levels.

We are focused on delivering value to our shareholders and with the combined attribute we offer, we are well positioned to do so over the long term. And with those remarks, I’ll conclude my comments and ask our CFO, Jamie Porter, to make comments on our 2015 financial performance.

Jamie?.

Thanks, John and good afternoon everyone. The second quarter was unique for us from a financial reporting perspective, in that we reported standalone second quarter financial statements and MD&A for each of former Alamos and AuRico. The merger closed on July 2, 2015.

As a result, the second quarter 2015 financial results have been reported separately on a non-consolidated basis. We have however, included a discussion on the operating and financial results of both companies in the press release we issued this morning and I will address these separately on the call.

Going forward, in the third quarter, we will be reporting consolidated financial and operating results for the newly merged company. Though our transaction was structured as a merger of equals, IFRS accounting rules required that an acquirer be determined.

AuRico was determined to be the acquirer for accounting purposes, which means that AuRico’s financial statements will continue and form the basis for the newly merged Alamos’ go forward financial results.

As a result of this and the spinout of assets to AuRico Metals as part of the merger, there are a number of significant non-recurring valuation related charges in the second quarter of 2015. Starting with AuRico’s financial results. AuRico reported a loss in the second quarter of $380 million or $1.43 per share.

This included approximately 365 million in after tax impairment and valuation related charges and approximately 11 million of after tax transaction cost related to the merger.

Impairment charges were recorded in the second quarter with the value of the Young-Davidson mine being written down by 326 million on a pretax basis to its current net carrying value of approximately 1.2 billion.

This impairment reflects updated macroeconomic assumptions including a lower long term gold price forecast, a reduced NAV multiple, an increased discount rate and updated life of mine assumptions. The company believes that the revived net sharing value better reflects fair value of the current gold price environment.

Updating the long term gold price assumptions and reflecting higher processing costs resulted in a $40 million pretax impairment charge at El Chanate. The entire capitalized mineral property balance at El Chanate has been written down to Nil. The remaining capitalized cost associated with El Chanate with respect to its leach pad inventory.

In addition to impairment charges net realized gold value adjustments to gold inventories was 4.8 million and 7 million both pretax and recorded at Young-Davidson and El Chanate respectively. Again reflecting a lower long term gold price assumption.

Finally a 40 million pretax impairment charge related to the Kemess projects being reflected at fair value and transferred to AuRico Metal was recorded in the second quarter. Accounting rules required that we segregate the assets and liabilities to be transferred to AuRico Metals on the AuRico balance sheet at the end of Q2.

As a result the 20 million cash and related assets are presented within a separate asset account on our balance sheet with the related liability reflecting the obligation of transfer of these assets on July 2nd. Adjusting for the charges described above the financial results for AuRico for the second quarter were strong.

Between Young-Davidson and El Chanate AuRico sold 59,700 ounces of gold for revenues of $72.1 million. Operating cash flow after changes in non-cash working capital was 20.8 million. After deducting capital and exploration spending of 40.7 million free cash flow for the quarter was negative 20 million.

Note however that this including non-recurring care and maintenance and exploring spending at Kemess of approximately 6 million. In addition to certain transaction cost related to the merger. We expect a rate of capital spending at Young-Davidson and El Chanate to decline in the second half of 2015.

I will now touch briefly on former Alamos' financial results. Alamos produced 33,000 ounces of gold from Mulatos in the second quarter and sold 36,748 ounces at an average realized price of 1,198 per ounce for revenues of 44 million.

Alamos reported a loss of 14.2 million or $0.11 per share in the second quarter which was impacted by 8.2 million or $0.06 per share of transaction cost related to the merger and a 1.4 million or $0.01 per share unrealized foreign exchange loss. On a combined basis the company had approximately 380 million in cash at the end of June.

Alamos' balance sheet remains one of the strongest in the industry providing significant flexibility in a challenging gold price environment. The new Alamos is fully funded on its near term growth opportunities with Young-Davidson and Mulatos expected to self-finance the majority of their development spending over the next few years.

This is expected to drive production higher and costs lower, leading to strong free cash flow growth from both operations in the coming years.

Additionally the company is continuously seeking opportunities for further cost saving and synergy, through the merger a minimum of 10 million in annual savings has already been identified from corporate G&A, tax and purchasing efficiencies and we believe there are opportunities to increase this further.

At this point I’d like to turn the call over to Alamos' COO, Peter Macphail to provide an update on operations..

Thank you Jamie and good afternoon everyone. Young-Davidson had another strong quarter with underground mining rates increasing to an average of 5,149 tonnes per day, up 25% from the 4,130 tonnes in Q1, is well on track to achieve the 6,000 tonne per day target by year end.

Reflecting on the productivity improvements with the ramp up and the pivotal weakening of the Canadian dollar. We achieved a new record with respect to unit mining costs in both U.S. and Canadian dollar terms. Unit mining costs decreased to $33 a tonne down substantially from the $45 a tonne a year ago and $39 a tonne in Q1.

We expect further improvements with the ongoing ramp up in underground mining rates. Gold production of 39,400 ounces was up from 38,100 ounces in the previous quarter reflecting higher throughput, partially offset by lower grades.

Underground mine grades of 2.64 grams per tonne in the quarter were lower than the previous quarter due to plant's belt equipment [ph]. The ongoing ramp up in underground mining rates is expected to drive lower grade and production higher in the coming quarters. The operation remains on track to achieve full year production and constant cost guidance.

Total cash costs at Young-Davidson were $697 per ounce excluding the net realizable value or NRV inventory adjustment, down from $745 per ounce in Q1, reflecting the strong improvement in unit mining costs.

All-in sustaining costs of $108 per ounce excluding the NOV adjustment were consistent with full year guidance, including the NRV adjustments total cash cost and all-in sustaining cost were $80 per ounce higher.

At Mulatos, the open pit, heap leach operations continued to perform well with great stack 0.83 grams per ton and total crusher throughput of 18,100 tons per day both above the annual budget.

This was offset by lower, higher grade mill production as the mill was running well below capacity at just over 200 tonnes per day during the quarter and was feed with lower grade stockpile ore from San Carlos, until the vertical grinding mill was installed. The mill was installed in July and is currently being commissioned.

We are currently meeting to require grind size to achieve 75% recoveries and are focused on ramping up mill throughput. The mill is expected to operate at or above the full year budget of 550 tonnes per day, once the commission is compete, with an emphasis on ensuring that we’ve maximized recoveries.

Underground production will be supplemented with the 45,000 tonnes high grade stockpiles, grading in excess of 7 gram per tonne. Mulatos produced 32,000 ounces in quarter and 71,000 ounces in the first half of 2015.

And with stronger high grade mill production expecting in the second half of the year, the operation remains on track to achieve full year guidance. Total cash cost of $861 per tonne were consistent with full year guidance.

All-in sustaining cost per ounce $1,154 per ounce were above guidance of $1,100 per ounce, though are expected to decrease in second half of 2015 with the ramp up of high-grade mill production.

La Yaqui and Cerro Pelon are two higher grade satellite deposits at Mulatos that remain a development focus with a mix of nearly 10,000 meters of infill, exploration, and combination drilling completed in quarter.

With reserve grades roughly double the 2015 budget of grades these deposits were expected to supply significant low cost production growth while also lowering overall cash cut in 2017. El Chanate had an excellent quarter with record production of 23,200 ounces.

This was largely driven by higher grades and recoveries including one of the mines material stocked on the pad. The average grade processed with 0.73 grams per tonne, up sharply from 0.4 grams per tonne year ago. This translated into lower costs and contributed to deposit free cash flow generation in the first half of the year.

Total cash cost that also at El Chanate of $621 grams excluding the NRB adjustment remained we below full year guidance. Further all-in sustaining costs of $878 per ounce were down from $1,043 per ounce in the previous quarter reflection of a record quarterly production.

With the strong first half behind it the mine remained well positioned to achieve full year production in cost guidance. With that I'll turn the call back to John. Thank you..

And that concludes the formal presentation. I'll now ask the operator to open the line for questions or questions and answer period..

Thank you. We will now take questions from the telephone lines. [Operator Instructions] Our first question is from Rahul Paul from Canaccord Genuity. Please go ahead..

Hi everyone. I can appreciate the work involved in integration in acquisition like this so first of all thank you for publishing on a timely basis full financials and MD&A for AuRico as well.

My first question on the impairment that Young-Davidson, you mentioned the number of reasons including a lower gold price and also updated life of mine assumptions, what changes did you make to life of mine assumption that impacted your valuation and maybe I'm just wondering if you could also talk about some of the other assumptions that support the 1.2 billion valuation, maybe the gold price discount rates and add multiple?.

Certainly. It's Jamie here. I'll comment on that. The majority of that adjustment was related to changes in the macroeconomic assumption so the gold price, our long-term forecast for gold previously 1,300 has been used. We drop that to 1,250 which is consensus long-term -- it’s average of consensus long-term pricing. That has the biggest impact.

We updated the discount rate from 5.5% to 6%. We reduced the NAV multiples in 1.05 down to 1.21 [ph]. Generally taking a more conservative view in terms of those assumption. On the life of mine operating assumption there was some tweaks here and there, recoveries for example the previous model used 92%.

We dropped that down from 91%, though we've had months where we hit 92%, 91% is a bit more conservative and consistent with our mineral reserve disclosure.

So generally the assumptions that are in our model at still consisting with our plans and more aggressive that been far more aggressive than where we are currently and we think that the 1.2 billion valuation reflects the fair value of asset at the gold price..

Okay thanks Jamie that’s very helpful.

So from an operating standpoint basically not too many changes and in terms of -- on guidance standpoint you indicated that consolidated production guidance is unchanged but didn’t talked much about cash cost guidance, is that because you still reviewing things on a consolidated basis, so is that unchanged as well for the assets?.

It is unchanged at the asset level we’re still working towards establishing a base line in terms of corporate G&A and share based comp and some of those other factors that work into the all sustaining cost calculation. But my view is that we’ll come in below 10.50 for the full year..

And then last question moving on Mulatos, you did mentioned the new mill is being commissioned.

How quick do you expect to ramp up to be? And then from a mining standpoint should we expect significant grade variables at San Carlos from one quarter to the other, because we’ve seen in the last two quarters, I am just wondering what to expect going forward?.

The mill commissioning is going well and by the end of this month we’ll be -- I would expect it to being full commissioned. And then we’ll ramp up the expense that grind size and recoveries allow us to.

As we mentioned the 550 tonnes a day budgeted rate for the year is going to be good, that’s well within sight and we hope to push is past, somewhat past that, we’ll see. Grade wise we’re not providing anymore analysis than what we have here. It will be budget aligned, if we get lucky it will be a bit bigger than that. We’ll see..

The following question is from Dan Rollins from RBC Capital Markets. Please go ahead..

John, I was wondering if you might be able to talk on where the permitting situation lies right now in Turkey with respect to Krazli.

Have you applied or submitted the applications for the land use and operating permits to start to get that project moving?.

We haven’t done that yet. We’re ready to go virtually at any time. But the mitigating factor is we’re required to have the written decision from the court in hand before we can make that application. So even though the decision was published and it’s even been gazetted, we haven’t actually seen a copy of the fully written statement from the court.

And they can be quite punctilious about this kind of paper work in Turkey. So that’s been the limiting factor. But we put everything together from our side in order to take the permitting to the next step. And we’re prepare to do that as we receive the written decision from the court.

It’s normally is expected it to be in place right now, but the court’s been in recess and it gets back on September 1st, so sometime after that we expect to get the written decision..

And typically do you know how long that process is, again I am just wondering given the, how much --..

As I said --..

It’s all, to get the -- once you have the permits submitted, is it a set time frame or is it just going to work its way through the bureaucracy?.

I would say it’s a bit of both. It has to work its way work through the bureaucracy of course, but we’re expecting that to be no more than a 60 day process from the time we applied, to the time we get our response. But when we ask for guidance as to what typically is a time line, that’s the kind of response we get. So, that’s what we’re looking to.

We expect to have the permits in hand sometime this fall. So how does that fit with our overall schedule? Well, as you know, we haven’t planned on breaking ground in Turkey until the spring of next year. The start date we had in mind was the first week of April.

So from that point of view, a month one side or the other it does really affect our time lines. There is a number of things that we can work on in advance of that and we’ll continue to do that over the course of the fall.

And then when the spring comes around, we’ll be obviously keeping a very close eye on the gold price and the market in general and if we feel that the conditions are right and we’re comfortable with starting the capital expenditures we’ll make the construction decision and breakdown.

And if we perceive market weakness and we see the necessity for preserving our balance sheet and postponing that decision, we’ll be in a position to do that. But I want to be in the position where the Company can make that decision as to when to start, not have the decision hanging on whether or not we’ve got all the permits in hand.

So we’re going to continue to work diligently towards having all the permits in place and then have our Board be in the driver seat from that point of view, have the decision making rest with us. And that’s what I think we’ll be able to achieve over the next six months..

While we’re on Turkey, obviously the economic study we’ve done in at different price environment, specifically the Turkish lira. Have you guys done any work to see what savings you could have on the project level with the recent depreciation on lira against the U.S.

dollar?.

We are already doing that. That work has been taking place over the last couple of months and the study is basically well under way, in fact should be completed within the next 30 to 60 days..

And will that be released to the market or is that an internal study?.

Jamie, that's an internal study and I think once we show some progress here on getting the outstanding permits we'd likely really the update economic in conjunction with dues on the permanent front. .

Okay, roughly do you know how much of the capital or operating cost are lira based?.

In the pre-feasibility study that we've released in, middle of 2012, the currency exposure was 1/3, 1/3, 1/3 between lira, USD and Euro. What we're doing through this study is looking at what we can source from Turkey directly, so we're looking at upping our lira exposure to north of 50%..

Okay, great. And then just with Mulatos, obviously you're going through a low grade phase, [indiscernible] phase, when do you expect to be back sort of towards reserve levels and life of mine strip at Mulatos, does this more, gets better in '16 and then back to steady state in '17 or is '18 a better year..

I think in 2016 we're forecasting return to our life of mine grade, closer to 0.9..

Okay, and that's without the positive reconciliation you have seen to date within the main pit?.

That's right. And with that we'll also see, revert back to our life of mine strip, so you should see corresponding improvement in cost nets here at Mulatos..

That's great, and just with the Pallone and La Yaqui, are they all still on the path for first production in '16 and then again in early '18.

Have you got all the permits in hand?.

Yes, we're looking at -- I think it may have flipped the quarter, we're looking at '17 now, beginning of '17 but we're working -- things are progressing well there..

Is there any reason to believe there could be more slippages, is it a permitting issue or they’re just initial delays that this sort of backlog?.

This is John, probably Peter wasn't fully apprised of what caused the delay because most of them are already incurred prior to him coming onboard the management team, with that in mind we had two factors which pushed things back a little back.

One was the actual timing for the closing of the land purchase, it took a little bit longer because the owner hadn’t protected title and had some outstanding issues with the local Lahito [ph], so we took some additional time to close so that he resolved those matters and that was factor one.

Factor two was in areas where we have planned to do, where we had planned to locate leach pad and so forth.

We had not undertaken any condemnation drilling previously and when we did some preliminary work just to see whether that was an issue or not, we did find some decent ore values that surfaced and so we ended up taking an extra quarter and conducted some further work including drilling in that area just to make sure we weren't going to cover anything up with the leach pads.

So those were really the two factors, as far the process that we undertook to achieve permits that's right on track. [Multiple speakers] whether on that front..

That's great, that's all the questions I have, thanks and congrats on the deal and look forward to seeing the company grow..

Thank you, the following question is from Phil Russo from Raymond James, please go ahead. Mr. Russo your line is now open, you may proceed. [Operator Instructions] Hearing no response we will move on to the next caller. The following question is from Andrew Quail from Goldman Sachs. Please go ahead..

Good afternoon guys, this is JP, I'm filling in for Andrew today and thanks for taking our questions.

My first question is on El Chanate operation, so we saw significant improvement in grades and recovery this quarter so we're wondering like, can we expect similar levels going into second half of 2015, given the guidance was unchanged for the mine?.

Well the guidance was unchanged, that's correct, the guidance was unchanged. But we, you know if you look at how we've done in the first half we're well over half of guidance, so we would expect, we did go through a particularly good quarter in Q2, it's continuing.

Whether it continues, wouldn't be expected to continue for the rest of the year and we would expect to come in within that guidance range. Not particularly above but which is what you’ll get to if you actually double the H2 production.

I'll agree the [multiple speakers] so the accurate response --that's was a good response, but I think what you're looking for is we’ve got -- we're getting better recoveries than we were getting, plus the grade, we also had in addition to better recovery we had better grades this quarter.

We don’t expect the grades to continue above reserve grade until the end of the year. That’s correct, not part of the plan. The grade is going to revert back to plan but the recovery looks like we're going to --. .

We’re going to do better going forward..

And the recoveries are, we have a quite a large inventory of gold on that leach pad, so it's not just a quarter-by-quarter ounces to go on and then ounces that come off. What we're leaching is really a leach pad that has been built over the course of last seven or eight years and we’ll continue to get gold from stuff that was stacked in years past.

So recovery is a -- really you got to look at gold production, not recovery and we guide on an annual gold production basis and we will be in that guidance..

Okay. My second question is on Young-Davidson. I think you have already mentioned that you expect six kilotonnes per day by end of the year, but I was wondering about the timeline around the 8 kilotonne per day targets.

So if any guidance on that?.

We remain on track and we are going through our budgeting cycle or we'll be starting our budgeting cycle for next year, currently and so we will putting our guidance in January but at this point we don’t see any deviation from our previously stated target to be at 8,000 tonnes per day by the end of 2016..

Thank you. The following question is from Anita Soni from Credit Suisse. Please go ahead..

First question was in respect to the closing of transaction. Do you expect any NRV or fair value adjustment on the closed transaction with this quarter? Jamie..

Anita its Jamie. No we don’t expect anything going into Q3, so I think most of the updates -- the changes in assumptions that gold prices and discount rates, that’s all been done in Q2, and you shouldn't see the same type of noise in our third quarter consolidate result..

Okay, and then Secondly with some of the outlook that you've put out for Young-Davidson. I think you talked about on free cash flow. I guess free cash flow neutral, just saying that the operating cash flow would pay for the capital, but said that it would be a little bit of a challenge of the current gold price environment.

Going back to original plan where you thought the free cash neutral.

What was the gold price assumption that you were thinking of then? Is That the 1,250 or was it more like spot at about 1,200 at the time?.

Yes. I think the comments that we make in our outlook is with respect to current gold prices at $1,100 gold. Our objective is for Mulatos and YD to both be able to sell finance, their development CapEx, that’s our goal. I think the cautionary language that we've introduced the outlook section is -- it is a challenge.

But the foreign exchange, I mean the strength in U.S. dollar against to peso and the Canadian dollar really helping us. If you look at Chanate, they’ve generated $7 million in free cash flow this year and YD was a breakeven with first quarter and negative 10 million in the second quarter.

But we're achieving record low cost and that’s going continue as we ramp up throughput but we expect free cash to continue to improve..

I think that’s it from my questions. Thanks..

Thank you. The following question is from Mike Parkin from Desjardins Securities. Please go ahead..

Hi guys, I'll ask the couple of questions. Could you comment on the rainy season, I know we have heard that the rainy season started a little sooner, didn’t seem to have any impact at Mulatos, your throughput rates were good there.

Can you give any kind of sense in terms of how it's been trending to date?.

Yes the rainy season started early and is continuing in good force. I think -- it will be like previous years where you see somewhat of a -- some of our gold going to the ponds, that gets leached during the quarter but then perhaps recover during the fourth quarter. I think we'll some of that.

I think that's generally expected in our guidance and in -- what you guys model..

And just following up on the El Chanate with move to higher cyanide concentration, what kind of -- do you guys have a sense of what kind of gold still in the pile could -- what percentage of it could potentially come out through the higher concentration impact?.

Yes. It is -- the recovery of gold there is a largely time depended and solution application depended, somewhat finite concentration depended. So time will tell, we’re up to cyanide early in the year, I saw some benefits in the past quarter and we would expect to continue to see some benefit, I can't quantify on that..

Thank you. The following question is from Phil Russo from Raymond James. Please go ahead. .

Thanks. Not sure what happened earlier so there. Apologies if I missed the portion of the call there, but just on YD -- these unit costs, is that you sort of stayed the same here and on that big improvement in the tonnage rates there. What -- how much low can these unit cost go.

Like is it another 10%, is it 15%, you obviously doing 5,000 tonnes a day here but still a long way to go.

Are these cost going to keep falling that sort of dramatically, if we kept FX the same?.

This is Peter. I mean, if you go back to the guidance that we would have put out a bit over a year ago, I think we guided that we would get into the mid CAD30 per tonne range at full 8,000 tonne a day. And I would say that we’re still tracking to that.

I mean if you look at this past quarter we were at CAD41 per tonne which is a record quarter for us and That’s a 5,000 tonne a day, if you’re going to eight there is certainly significant fixed cost versus variable there. And it might be -- it's a always a little bumpy it’s not a perfect straight line but it will turn in that direction..

And then just last John and now that dust settled here on the merger and I heard the comments earlier about Turkey. But I am just interested in your comments, does your commitment to Turkey change at all over time? You’ve now strengthened your North American presence.

But do you start to think about making that -- being a North American centric in terms of development projects coming through in this part of the world? Does your commitment to Turkey waver at all here?.

I think we remained very committed to Turkey and the strength of that commitment is underpinned by the strong economics of the project.

I mean, the internal rate of return on a project like Krazli is very strong and it’s one of the few projects anywhere in the world that you’d still make a decision -- a positive decision to construct in the gold price environment that we’re in. And the only reason why we would potentially delay things would just be relative to our balance sheet.

We’re committed to developing this project pipeline without having to go to the market and issue any shares, we don’t want to take on any additional debt. So we’re not sure what the gold prices going to be going forward we’re not hedged so we’re -- we’ll be exposed to it.

And depending on what happens in the next six to 10 months is that it’s going to affect our thinking. But all things being equal that’s the project that you build at the current gold price, I think that’s also going to be the driver.

We tended to focus on countries that we think, there are safe places to invest and where we’re going to get a fair share from the government. And we haven’t had any difficulty at all with the Turkish government. There is this perception out there that they’ve been hard to deal with. And that’s not the case. We have had issues with respect to the court.

We’ve been taken to these local courts by small groups that have been opposed to the development of the project and it’s been quite successful in getting local courts to grant injunction that pretty much brought the whole project development to a grinding halt.

But by the time we’ve gone through the process as you know Crosby went all the way to the superior court and the court of appeal and we won. And that has nothing to do with the government. And one can say that even from the perspective of the court, we ended up getting a very fair hearing and a good result.

So, if anything having gone through this process, I am more committed to Turkey than ever. It’s the country that certainly come through with what I would have expected. You’re going to meet opposition everywhere in the world, where mine development is concerned, Canada included.

So, we’re not going to duck by becoming say a North American focused Company. I really like the idea that we have three producing mines in North America. It does underpin the quality of the asset base and call it the political risk security from that point of view I think investors feel very-very comfortable with what we’re doing.

Having a strong anchor in Canada makes anything else you take on is perceived to be somewhat riskier. It has a really good offset when we have a strong Canadian based production.

So I would say what we’ve done is in effect through the merger is we’ve skewed the political risk profile in a much safer direction but I don’t think we were taking very much political risk by being in Turkey in any case..

Great, that’s helpful. Just lastly then in Turkey once you get the permits there how long of a ramp up do you need to just get your presence beefed up? I understood that you let people go over time here.

I am not sure what you need to get going again once you get a favorable decision?.

We kept a crew of about a dozen people, all the key people that we felt were necessary to keep onboard to get things ramped up quickly. If the market conditions was at what they were eight years ago when we were trying to beef up our team and everybody else was trying to do the same thing, I would say that’d a big challenge.

But given the market conditions that we’re in, there is plenty of capacity in Turkey right now. There're people available, there're contractors available, long lead time items, there's one lead times item, long lead times are far shorter than what they previously were.

So as you see making a construction decision in spring of 2016 is, is a far more realistic proposition in terms of getting the people, getting the contractors and so far getting them all together it's a far easier proposition than it was say five years, seven years ago..

Thank you. The following question is from Mike Parkin from Desjardins Securities, please go ahead..

Hi guys just a quick one, any thoughts on hedging and locking in the Canadian dollar at where it is to help protect Young-Davidson's margins?.

Mike, its Jamie here, great question. We actually had a board meeting yesterday and sought approvals to do exactly that. So we’ve locked in about half of our operating cost disclosure for the first quarter of next year. Rates consistent with current spot and we're going to look to do the same for the rest of next year as well.

We might do half, we might do the whole thing, it depends on the rates and what numbers come out of our budgeting process..

Okay, sorry that was for the -- you've locked in for the first half or Q1?.

For Q1..

Okay. Thanks..

Thank you, there are no further questions registered at this time. If you have any further questions that have not been answered because of time limitations please feel free to contact Mr. Scott Parsons at 416-368-9932 extension 439. Thank you.

That concludes today's conference call, please disconnect your lines at this time and we thank you for your participation..