Jamie Porter - Chief Financial Officer John McCluskey - President and Chief Executive Officer Peter Macphail - Vice President and Chief Operating Officer Aoife McGrath - Vice President of Exploration.

Michael Gray - Macquarie Capital Markets Michael Parkin - Desjardins Securities Cosmos Chiu - CIBC World Markets Lawson Winder - Bank of America Merrill Lynch Dan Rollins - RBC Capital Markets Anita Soni - Credit Suisse.

Good morning. I would now like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead..

Thank you, operator and thanks to everyone for attending Alamos' Third Quarter 2016 Conference Call. In addition to myself we have on the line today John McCluskey, President and CEO; Peter Macphail, Vice President and Chief Operating Officer; and Aoife McGrath, Vice President of Exploration.

I would like to remind everyone that our presentation will be followed by a Q&A session. On this call we will 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 out in our annual information form.

All forward looking statements on this call are qualified by these cautionary statements. There can be no assurance that our forward looking statements even though considered reasonable by management and 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 of Technical Services, 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 morning, everyone. We delivered strong operating and financial performance in the third quarter. Despite working through the challenges of the rainy season that Mulatos and rehabilitation work on the ore pass at Young-Davidson.

Gold production of over 99,000 ounces mark the strongest result this year and second highest level in our history. All in sustaining costs decreased $979 per ounce marking the lowest level this year. A trend we expect to continue in the fourth quarter and 2017.

Capital spending was consistent with the plan and is running nearly 30% below 2015 levels through the first three quarters. We remain well-positioned to achieve full-year guidance on all fronts production, costs and capital. Further we generated positive free cash flow from all three operations for the second consecutive quarter.

We expect free cash flow growth to continue in the fourth quarter and into 2017. We're making excellent progress in meeting our 2016 objectives both with the ramp up of underground production of Young-Davidson and expanding and developing La Yaqui deposit at Mulatos.

We reported near record production at Young-Davidson despite having throughput limited by the ore pass rehabilitation. This work was completed in September and underground mining rates have improved averaging 6,300 tons per day in October.

We expect to achieve our year-end goal of 7,000 tons per day driving stronger production and free cash flow growth in the fourth quarter and into 2017. Production also increased at Mulatos to its highest rate this year.

The heap leach operation performed well through a heavier than normal rainy season and the transition to flotation concentrate production from the mill is driving higher recoveries and stronger than expected gold production.

We're having a great year at La Yaqui having announced a near doubling of the resource in September to 450,000 ounces, including reserves we've grown the project from 80,000 ounces to nearly 550,000 ounces in a little over a year of drilling. With positive ongoing exploration results we expect this project is only going to get bigger.

The environmental impact assessment for the first phase of La Yaqui’s development was approved in October and we’re remaining on track for initial production in mid-2017. These are higher grade and higher margin ounces which we expect to drive strong free cash flow growth at Mulatos, as La Yaqui evolves into a larger operation.

We expect substantial free cash flow growth from our operations over the next few years driven by Young-Davidson and low cost production growth from La Yaqui and Cerro Pelon. Combined with a strong balance sheet we remain well positioned to fund our portfolio growth projects headlined by Kirazli and Lynn Lake.

We've also seen political risk over levered balance sheets and single asset risk continue to rear its head across the industry and more and more we're seeing companies phase with declining production profiles.

We believe this highlights how well-positioned we are with the diversified North American production base growing free cash flow a deep portfolio of growth projects and one of the strongest balance sheet in our peer group. I’ll now turn the call over to our CFO, Jamie Porter to comment on our third quarter financial performance..

Thank you, John. The John is calling in from overseas will be leaving the call early to attend to another commitment to myself and the rest the team will be available for the remainder of the call. We sold approximately 95,000 ounces of gold in the third quarter an average realized price of 1,325 per ounce for record revenues of $126 million.

This included record gold sales from Young-Davidson of 44,287 ounces. All three of our operations were free cash flow positive for the second consecutive quarter. Collectively generating more than 9 million net of all capital and exploration spending. We expect this trend to continue in the fourth quarter and into 2017.

Our consolidated total cash costs were $785 per ounce consistent with the first and second quarter and below full-year guidance. All-in sustaining costs were $979 per ounce consistent with full-year guidance and down from $1,037 per ounce in the second quarter. Cost declines for the third quarter a trend we expect to continue going forward.

You will notice we began reporting a cost of sales metric this quarter which in addition to mining and processing costs and royalties also includes amortization. Regulators have been increasingly focused on the use of non-GAAP measures and are requiring the reporting of GAAP measures such as cost of sales.

Some of our peers have also recently started reporting this metric and we expect the rest of the industry will be following suit in the coming quarters. We realized quarterly net earnings of $4.8 million or $0.02 per share which included a mark-to-market gain of $8.4 million on the prepayment option related to our high-yield debt.

This was offset by an unrealized foreign exchange loss of $2.1 million and foreign exchange losses recorded within deferred taxes of $4.9 million.

Our operating cash flow before changes in working capital was $46.1 million or $0.18 per share, the strongest result thus far in 2016 reflecting growing gold production declining costs and a higher gold price. Capital spending in the third quarter totaled $37.2 million consisting of $12.5 million of sustaining and $24.7 million of growth capital.

Through the first nine months of 2016 capital spending totaled $109 million consistent with our annual budget and running nearly 30% below 2015 levels. Amortization expense was $27.8 million for the third quarter or $293 per ounce down from $321 per ounce during the first half of the year.

Our corporate G&A expense in the third quarter was $3.7 million consistent with the previous two quarters and our full-year budget of $16 million this remains among the lowest in our peer group. At the end of September we had cash and available-for-sale securities of $287 million an increase of $2.1 million from the end of the second quarter.

With strong free cash flow growth from Young-Davidson and Mulatos over the next several years we've remained well positioned to fund our near and long-term growth objectives. At this point I'd like to turn the call over to Alamos’ CEO Peter Macphail to provide an overview of operations..

Thank you, Jamie, and good morning everyone. We've produced 43,600 ounces at Young-Davidson in the third quarter the second highest rate in the mine’s history. This was despite the fact that underground throughput was limited for most of the quarter while we completed the ore pass rehab.

The lower throughput was offset by higher grades and low recoveries. Total cash costs were $607 per ounce and all-in sustaining costs were $849 per ounce a 12% decrease from the second quarter and a near record for the operation.

The decrease was primarily attributable to higher mine grades, record mill recoveries and lower sustaining capital spending. We expect all-in sustaining cost to continue to trend lower in the fourth quarter and into 2017. Underground mining rates averaged about 5,500 per day during the third quarter.

That's previously disclosed in the second quarter, underground mining rates were impacted by rehab work we fired on the ore pass infrastructure at the 9590 level, which limited both ore and waste movement. The work was successfully completed by mid September and mining rates of cents increased to current run rate of approximately 6,500 tons per day.

With the rehab work behind us, we’re in a position to achieve our year-end guidance of 7,000 tons per day. Underground mine grades averaged 2.82 grams per ton an 18% increase in the second quarter. Year-to-date underground mine grades are averaging 2.6 grams per ton pretty much in line with plan.

Mill recoveries averaged a record 93% in the quarter and are running 92% year-to-date significant improvement from year-ago. The changes implemented to the flotation circuit earlier this year have resulted in a step-change improvement in recoveries which have historically running at an average of about 89%.

We continue to optimize the new mill liners in the quarter in an effort to minimize wear and maintenance cost from which mill throughput averaged 6,800 tons per day. The mill continues to exceed underground mining rates with an excess capacity processing lower grade stockpiled ore.

The work on the liners is complete and we expect a significant improvement in the mill throughput going forward. El Chanate continues to be a steady and strong performer with production of 17,100 ounces at all-in sustaining costs of $1,062 per ounce.

The mine is on track to meet the high end of production guidance and well positioned to beat on costs with year-to-date all-in sustaining cost of $1,032 per ounce trending 6% below annual guidance. With continued cost control on higher gold price the operation generated $2.5 million of free cash flow in the quarter.

Mulatos produced 38,500 ounces in the third quarter, a significant increase from the second quarter despite the heavier than normal rainy season. Total cash costs were $888 per ounce and all-in sustaining costs were $965 per ounce.

With year-to-date production of 109,000 ounces and all-in sustaining cost of 909 per ounce, the operation is on track to meet the top end of production guidance and beat on costs. The heap leach’s performed well through the rainy season with increased carbon column capacity helping to mitigate the seasonal build up in gold solution inventory.

With this fundamental improvement to the ADR plant for better able to manage solution inventory and do not expect to see the same seasonal variability in production we've experienced in past years. Total crusher throughput averaging 17,500 tons per day, in line with expectations.

The grade stacked on the leach pad were 0.82 grams per ton up slightly from the second quarter and expected to continue to trend higher in the fourth quarter. The high-grade mill has also performed well following the reconfiguration of the circuit in the second quarter to produce a flotation concentrate.

Throughput and recoveries, both up sharply driving production higher. Mill throughput averaged a little over 400 tons per day in the quarter at an average grade of 9.8 grams per ton with high-grade stockpile supplementing underground ore production.

These stockpiles will continue to supplement underground ore production through the rest of this year and into 2017. We began selling the gold concentrate in the third quarter though not at the same pace as production resulting in an inventory build up of about 8,000 ounces of gold in concentrate at the end of the quarter.

With the leach pad performance through the rainy season and improved mill recoveries, the combined recovery ratio increased to 72% in the quarter. For the year, remains right on target at 67%.

Mulatos generated another $5.1 million in free cash flows in the third quarter bringing the year-to-date total to $16.7 million which is net of nearly $14 million in exploration and development spending at La Yaqui and Cerro Pelon.

With higher grades stacked and increased concentrate sales we are expecting even stronger production in free cash flow in the fourth quarter. In addition to the exploration success we are having at La Yaqui, we also had another very positive development having received EIA approval for Phase 1 of the project in October.

Road construction is well underway and project construction is expected to start later this quarter. We remain on track to see initial production from La Yaqui in mid 2017.

Company-wide, we are realizing the benefits of the number of enhancements to our operations including step change improvement and recoveries at Young-Davidson that transitioned to concentrate production from Mulatos and improved ADR plant performance which is negating the impact of rainy season.

I will now turn the call over to Aoife McGrath, our VP Exploration to go into more detail on the exploration success for having Mulatos..

Thank you, Peter. As John mentioned our expanded exploration efforts at La Yaqui translated into a 93% increase in combined mineral resources to 447,000 ounces in our interim resource update that we announced in September.

The resource update incorporated over 27,000 meters of drilling completed across the 132 holes during the first eight months of 2016. This included infill and extension drilling on two of the zones of mineralization that occur along the large northwest trending ridge at La Yaqui.

A third zone further to the northwest not included in the resource calculations to date is currently undergoing scout drilling. La Yaqui is our highest priority exploration target with six rigs currently working and an additional 9,055 meters of drilling completed since the September resource.

We continue to see very promising results with infill drilling in zone 2 returning some of the best interest I've seen to date including 4.37 grams per ton over 76 meters and 3.17 grams per ton over 76.8 meters.

We expect to drill an additional 5,000 to 6,000 meters by the end of 2016 with an aggressive ongoing drill program that continues to generate positive results, we see strong potential for further reserves and resource growth at La Yaqui.

As noted within September interim resource update, we've greatly expanded our area of focus at Cerro Pelon to include several promising new targets including to the north and northwest of existing resources and reserves. We drilled a total of 5,692 meters and 20 holes in the third quarter.

Pyrite mineralization structures, vuggy silica and advanced argillic alteration intersected over a broad area in the northwestern zone. Many results are still pending, but those received today show a multi-element geochemical signature usually associated with mineralization.

Exploration will use these results to help us vector in towards areas believed to have potential for higher-grade mineralization. While La Yaqui and Cerro Pelon remain our main focus at Mulatos. We have a large 29,000 hectares exploration package with 70% of the drilling has historically been focused in a relatively small area around the Mulatos mine.

We're now applying knowledge gained from our successes at La Yaqui and Cerro Pelon across the rest of the district and have added and number of high priority prospects to the near-term exploration plan. These include Los Bajios, El Halcon, La Yaqui Norte and El Carricito.

Systematic mapping and sampling will be carried out over these projects to outline first pass drill programs. With a number of targets and a highly motivated team we believe will be unlocking the potential in this Mulatos district for several years to come. And with that, I'll turn the call back to Jamie..

Thank you, Aoife. That concludes our formal presentation. I’ll now turn the call back to the operator to open the call for your questions..

Thank you. [Operator Instructions] The first question is from Michael Gray with Macquarie Capital. Please go ahead..

Yes, good morning, everyone. Thanks for taking my questions. On Young-Davidson last quarter there were some negative reconciliations on two stopes which brought down the overall grade.

And in Q3 we've seen nice bounce back? Was this a function of positive reconciliations or higher grade plant stopes or a combination of both?.

Its bit of both really we've had some positive reconciliations in the quarter, which offset the negative reconciliation we had in Q2, but it was also planned to be a higher grade quarter break from the start. So they balance out and we’re reconciling pretty much to the grade..

Yes, if you look at year-to-date where our budget 2.68 and we're running at 2.6, we’re pretty close..

Was that variability in stope reconciliation fairly typical?.

Yes, I mean it's we mined - lets say 80 stopes in a year and will average right on during that period and you can get you know 10% swings in each stope even higher than that in each stope. So it balances out over the course of the year, but if you have a couple of bad actors in a particular quarter you can drive your sounds for that quarter..

Okay thanks. Next question just again Young-Davidson recovery continues to see the increase quarter-on-quarter as you mentioned with the flotation circuit implemented.

Is 93% recovery sustainable recovery rate or would you guide a little bit higher or a bit lower?.

I think we now expected to be plus 90 and that’s what we’ll keep budgeting. So we get a few more let’s say quarters or years kind of in the where it’s running now. We will plan on it but you should be using 90-ish..

Okay. Appreciate it. And last one question just on exploration La Yaqui. Is in zone 2 we’re hitting the high grade infill are you defining a feeder zone.

Can you help us a little bit on the anatomy of what you're sketching in?.

Hi, Mike. Aoife here. We are drilling those particularly higher grade there are certainly some interesting features, I would try to define with the geology. Ands some of those due to - it could be some sort of structural longevity in the direction to.

It’s a bit early to say we are focusing really right now on infill to get that up to the cases for year-end and next year we will come market looking at deeper picture in more detail..

Okay. Then the third zone that large resistivity anomaly.

Can you let us know what the previous results were from limited drilling there? And also then what's the scope of the scout drilling and will you be testing to the north outside your geophysical coverage?.

We are still waiting for a lot of results from zone 3. There is a couple of [indiscernible] I don’t have the number just on top of my head that I can certainly get into. But all holes are in the zone. It’s a very large area as you may recall from the presentation in September.

So all the holes are in the zone [indiscernible] and we are just trying to factor it a bit more. We had couple of really good stuff that we are focusing on in particular. It’s a very large area. It’s going to take a little of time to define..

Okay.

And you are staying within the area where you have geophysical coverage right now or you getting outside that?.

At the moment we are staying within that for 2016, yes..

Okay. Thanks very much for taking my questions. Appreciate it..

Thank you. The next question is from Mike Parkin with Desjardins. Please go ahead..

Hi, guys just a comment on the Young-Davidson. Looking for what your thoughts are on underground mining unit cost per ton. They're up in the third quarter. I would think that’s expected given the rehabilitation work on the ore and waste pass.

Are we going back kind of towards the lower 30 numbers for Q4?.

Yes. Mike, I’ll take the first part of your question and then put it over to Jamie perhaps. With the lower tons and kind of dancing around that waste and ore pass system and some extra maintenance around there and some extra trucking we would have expected the cost to be a bit higher in Q2 and Q3.

So going forward with the higher tons we're going to see those costs come down and I'm not sure we’ve given guidance on what we expect those costs to get to at this point..

I think I mean our guidance for this year was within around the mid 30s and I think that's where we expect to get to longer-term..

Okay.

And that’s in Canadian Dollars, mid 30s or U.S.?.

I think our guidance was 39 Canadian..

39 for this year, yes, we will go to the mid 30s longer-term..

Okay. And then just on the high-grade structure done at La Yaqui.

Do you have a minimized envelope of – like how big that area is?.

That’s what we would be telling together towards the year end resources calculation. We put for the interim and that’s our goal as well as being sold. So right now it’s in progress, we are just waiting for some final results and then we infuses that we modified final shape and when the final calculation is done..

Okay.

Does that end or does that continue to adopt?.

We have stopped our drilling once we get through the upside day sights into the lower end effect. We have seen so far particularly in the higher grade section of zone 2, we have seen zone 1 deeper down the hole, but we are not actually focused on defining those.

So it’s still open and that will be our focused exploration once we have taking different window of oxide..

Okay.

Is this material or something you would still consider to put on a heap pad or would you run it through – look at it as a potential ore feed for the mill?.

Anything that we've got in the current resource is oxide and would be constrained and go to the heap leach. We haven't really focused on sulphide yet all..

Okay. All right. That’s it for me. Thanks guys..

Thank you. The next question is from Cosmos Chiu with CIBC. Please go ahead..

Hi, everyone. And thanks for taking my call. A few questions here, maybe first-off on CapEx. As you mentioned in your own MD&A you're tracking about 28% lower in terms of CapEx this year compared to last year.

Fully understand you haven't done the budget for next year yet or future years, but would you expect that trend to continue in terms or lower and lower CapEx?.

Absolutely, we would. It’s Jamie here..

Hi, Jamie..

We’ve talked about the capital of YD dropping by about $20 million year-over-year and we stand by that. We expect to see capital continue to dry up at YD that’s what's going to help grow cash flow..

Great. And then on YD as well, you have reached about 6,300 tons per day in October, you're trying to get up to 7,000 tons per day by year end.

Could you remind me once again what you need to do to go from 6,300 to 7,000 tons per day?.

Really just having enough broken inventory in front of you to maintain those mining rates and I mean all the equipment and infrastructures in place it’s just- it’s development, it’s production drilling, it’s all of those things..

Okay. And then I guess again YD you know looking your full-year guidance for cash cost, you had guided to about $600 an ounce cash costs. You have averaged about $654 per ounce so far year-to-date. Just want to confirm that would in terms of simple math that will workout a cash cost that’s super low in Q4.

Is that what you're expecting?.

I think what we're reaffirming is our guidance for the year on a consolidated basis. You're absolutely right. I mean the ore and waste pass rehabilitation has set us back in terms of our costs in YD for the year. We're not going to be seeing $400 an ounce total cash cost at the end of the fourth quarter.

So I think what you'll see is the outperformance that we’ve had in Mexico should continue into Q4. YD will certainly be better in Q4 than it has been in Q3, but we maybe a bit above our cash cost guidance for the year at Young-Davidson. But the trend – and everything is going in the right direction.

It has since the second quarter of this year cost should continue to decline in 2017..

Yes. Gotcha. And maybe one last question. There was a build up of 8,000 ounces from the switching over to the concentrate, would you expect all that to get released in Q4 or are we going to continue to see a build up of concentrate in Q4.

Just understanding that it is shipping and timing of shipping, but how should we model that for Q4?.

Yes. I don't think you'll see the drawdown of that inventory. We are approaching kind of steady state there, so you shouldn’t see a drawdown or build up which means we should be able to sell most of what we produce in concentrate in the fourth quarter..

Great. Thanks Jamie, Peter and team and congrats..

Thanks..

Thank you. The next question is from Lawson Winder with Bank of America Merrill Lynch. Please go ahead..

Hey guys. Thanks for taking the call. And during the call today just wanted to follow-up a little bit on Parkin’s question there on La Yaqui, the drilling at zone 1 and zone 2. At the exploration Investor Day, you talked about how zone 1 and zone 2 could potentially be connected.

I'm wondering if you can say whether or not that still might be a possibility or as you can say they are two discrete zones at this point?.

Winder, at this point we are still waiting for a lot of the results from the northern end of zone 1, certainly in the west it looks like we’ve had a little bit of structural movement along the main zone and the trend to the north was trending mainly to north.

It’s changing [indiscernible] slightly, this is J&J and it looks like it’s setting off in the northeast to any direction with gentler dip.

We are still waiting for the results and that’s the primary indication, there is still a zone that needs to be drilled to whether northeast as the two zones are actually linked, but there is definitely something changing at the northern end of zone 1 as the support to zone 2 it begins to look more or like it. That’s all we know to date..

And then in terms of the timeline on those results are you waiting for – can we expect those with Q4 results?.

I expect we’ll be putting out with the Q4 for sure and everything we're doing at the moment even those results we are waiting for it will all be included in the year end calculation as well..

It’s Jamie here. We're planning on releasing our reserves and then resources in conjunction with their Q4 earnings so that'll be late February, at that time we'll have a full update on exploration at La Yaqui as well..

Okay. That's great. And then just sort of on the permitting in potential construction timelines for these various zone. So let's say assuming that you were to go ahead and develop zone 1 and zone 2 and assume maybe they were discreet.

I am just curious would the timeline be similar or maybe the same to what they were for Phase 1 of La Yaqui and I guess where I'm coming from is are there land rights that have to be negotiated in order for mining to go ahead that could slowdown that permitting process or what the timeline actually be quite similar..

Hey, Lawson, it’s Peter here. We're going to continue to drill La Yaqui and find how big it is. That said we’ll also get going on making sure we have the baseline work done for permitting we've already started thinking that way it started expanding our footprint in terms of the baseline data collection.

The land is we've got enough land there currently for all - for what we see now at La Yaqui Grande, La Yaqui Phase I, II, and III.

So we'll start thinking about what the projects going to look like next year, we’ll perhaps by next year be in a position to maybe get a project description together and start looking at permitting and then it's probably a year that and construction, you’re looking kind of probably three years out before we got production there something in that range.

And then it'll be a Phase from La Yaqui Phase I and started growing and I wouldn't say zone 1, 2 and 3 are the when we go one first and zone 2 second, and zone 3 third it would be more or like wherever it's best first more likely zone 2 first at this point looking at..

Are like you say La Yaqui Grande..

That’s what we call it internally. Now the idea is obviously to ramp up production from this 30,000 ounces that will have from Phase I of La Yaqui as we are comparing on La Yaqui Grande and hopefully get up closer to 70,000 to 100,000 ounces a year if of course the deposits justify that..

And then just one point of clarification from Aoife. On La Yaqui Norte I just wasn't sure what that name referred to that the region between zone 3 in El Halcon..

It is, yes. Its several in silica ridge and everything around that..

Got you. And then just one final question on YD's. It seems as though perhaps the testing is the liners or the mill might be complete now and if that is the case. Have you learned anything or see any potential to reduce costs as you thought might be the case? [Technical Difficulty].

It seems the testing of the new liner of YD in the mill had been completed.

Is that correct? And if so, did you learn anything in terms of potential cost reductions?.

Yes. We’ve done that. I mean we took the opportunity well that the underground throughput was a bit lower to do that work. And yes, we’ve gone over the years, we’ve gone from steel liners that are costly and hard to maintain to kind of up hauling that system which is rubber and steel.

We've got to play around with the great discharge and a number of things and angles, lifters and various things and we're in a good shape now, we're back to kind of historic levels of throughput with low liner cost going forward. .

Okay. All right. Thanks for that..

Sorry about our dropping out there..

Thank you. The next question is from Dan Rollins with RBC Capital Markets. Please go ahead..

Yes. Thanks very much. Peter just on that throughput of YD. It’s designed for 8,000 ton a day. You do have the ability to go up to a 10,000 ton a day on a daily basis.

How comfortable you know that once the underground is running at 8,000 ton a day you are going to be able to fill that, basically that the mill is going to keep up with the underground because we haven't really done 8,000 ton a day yet consistently..

Let’s put it this way. We’re looking to install a pebble crusher next year and that's going to remove all though. So 8,000 tons a day will not be an issue from a mill perspective..

Okay. Perfect.

And then how much of the benefit on recoveries right now is right now, just the fact that the mills not running at full-bore and you're getting additional retention time in the back end or is really all the change in the recovery really due to the new circuits upfront?.

Yes. I don't think any of that is due to its tonnage maybe there's a 0.5% of that, but I really – it's hard to say. I mean we’ll see as we go forward. It's really attributable to getting as much gold floated in the front end and in that regrind mills, we can and that's what we prefer.

It was a step change as soon as we did that it was not a tonnage thing that increased our recoveries..

Okay. Perfect. Just moving on to something more broader based not a lot of chatter on Turkey and others, there are some bureaucratic changes going on there.

But I was wondering if you might give a little color on what you're hearing with respect to the permitting and if you have any sort of update from your personnel on the ground there?.

Sure. Dan, it’s Jamie. No significant update I mean we have had some higher level government meetings recently and all indications are positive. We're in the process of planning another visit later this year.

We continue to be optimistic that we'll get the permits by the end of this year, but the timing that's what our advisors inform us it’s possible, but the timing is certainly unknown at this point..

The forestry line use permits are the remaining permits you need to start moving forward these projects once they spending at YD dropped to more normalized levels, is that correct?.

Correct. The remaining outstanding permits are the forestry and operating permits, that’s right..

Okay, perfect.

Are you guys just – are you still tracking well for sort of a mid second half 2017 to be at YD on the underground given sort of just some delays you've had on the rehabilitation this year?.

Yes, Dan. The ultimate target for the mill was underground ore as you know. So we're running 6,500 tons a day now, we are looking to get to 7,000 by the end of this year and then by mid next year the MCM shaft – the shaft is actually down to the bottom.

Now we're hoisting from the bottom, but we'll be able to connect up the upper mines a bit to the lower MCM. And that allows us to get to the next level..

And just to recall, just remind me it's usually some pretty big stepwise changes there every couple quarters once you get these shafts up and running or you get through a breakthrough in the underground development.

You see a pretty big tick up in tonnage, is that still what you sort of thinking here?.

Yes. I think well what we'll see is pretty steady production through the first part of next year and then a bit of a step change after that..

Okay. Perfect. Just moving on to San Carlos at Mulatos, so obviously at beginning of the year you had a reserve life about a year there believe that you're picking up sort of more ore potentially a little bit lower grade, but the same amount of ounces.

How comfortable are you able to extend that mine life into 2017?.

We will go through out budget right now on that, but what we're seeing is that we will be continuing to run San Carlos underground into next year whether we get all the way through next year remains to be seen. But we continue to follow it and it continues to be there, so it's kind of one of those things that will go as longer that goes.

We still have fair bit of mining to do still in the main zone as well as a significant stockpile surface that will still be there at the end of the year. So yes, that's as much information as I can give you at this point..

That’s very helpful. Jamie could you just remind me what your local currency exposure is in El Chanate and Mulatos just given….

Sure. Yes, but third of our operating capital costs are peso denominated in Mexico. So obviously will benefit from the recent weakness, one peso move it results in – one peso weakness results in about $4 million in annualized savings. So it certainly benefits our operating cost profile for next year..

Perfect. Thanks very much for answering the question guys..

Thanks, Dan..

Thank you. [Operator Instructions] The next question is from Anita Soni with Credit Suisse. Please go ahead..

Hi guys.

Just with regards to the processing costs that you have at YD, could you give an indication on that, it seems like they were pretty good this quarter to sort of offset the mining costs?.

Yes. So processing costs I think in the mine will average somewhere around $14 a tone on allocating basis and that’s really the target. Should go down as throughout increased I mean we are – if we get backup to 8,000 tons per day through the mill you should see an incremental improvement..

Okay.

Were you at the $14 this quarter or was that higher – is that just an inventory adjustment that's causing your cash cost to be a little bit on lower side or is that processing at $14 a ton?.

Yes, part of it the majority adjustment, the processing cost will include our mid-14s in the third quarter..

Okay. And then just in terms of – this is a bit of an odd question, but if I think your contained ounces and the recovery rate I'm not quite getting to how much you actually produce to have about a 1,500 ounce differential on that.

What was produced versus I mean what you guys produced at 43 and change and I get to like 44 on the higher end and change for the quarter.

So could you just give me an idea of what that produced a number is actually about?.

Sure. Yes so the difference there is on what we call production. So our recovery rate would indicate how many ounces we're actually recovered and were available to be [forward] but our gold production is just - actually for us. So that would be the difference.

The implication is that we've got the difference is 1,500 ounces remains in inventory and that will get produced next quarter..

Okay. Great thank you very much. Thanks. End of Q&A.

Thank you. There are no further questions registered at this time. If you have any further questions that have not been answered. Please feel free to contact Mr. Scott Parsons at 416-368-9932, extension 5439. This concludes today's conference call. Please disconnect your lines at this time. And we thank you for your participation..