Jamie Porter – Chief Financial Officer John McCluskey – President and Chief Executive Officer Peter MacPhail – Vice President and Chief Operating Officer Andrew Cormier – Vice President, Development and Construction.

Michael Grey – Macquarie Rahul Paul – Canaccord Genuity Cosmos Chiu – CIBC Lawson Winder – Bank of America Merrill Lynch Kerry Smith – Haywood Securities Dan Rollins – RBC Capital Markets Anita Soni – Credit Suisse Mike Parkin – National Bank Financial.

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

Thank you, Operator. And thanks to everyone for attending Alamos' Second Quarter 2018 Conference Call. In addition to myself, we have on the line today, John McCluskey, President and CEO; Peter MacPhail, Vice President and COO; and Andrew Cormier, Vice President, Development and Construction.

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 Forms.

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 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 Vice President of Technical Services and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call today are in United States dollars, unless otherwise noted.

Now, John will provide you with an overview..

Thank you, Jamie. We had an excellent start to the year on a number of fronts. We raised production guidance after the first quarter, and we remain well on track to achieve this halfway through the year. With no expansion at Island Gold, its well on its way to being completed this quarter, and with no -- and the mill is currently being commissioned.

Exploration at Island Gold also continued to exceed our expectations, and we will be issuing an intern mineral reserve and resorts update in the third quarter, in which we expect a significant increase in resources. We also received the GSM permit for Kirazli this last week, a significant breakthrough for our Turkish aspects.

We produced 127,000 ounces in the second quarter at all-in sustaining cost of $996 per ounce. This exceeded production guidance of 125,000 ounces, and we just below the record we set in the first quarter.

This was driven by another strong outperformance from Mulatos and Island Gold resulting in the second production guidance increase for both operations this year. This more than offset a slower first-half at Young-Davidson, with the operation impacted by a downtime for unplanned maintenance. This maintenance was completed.

And with grades and throughput expected to increase through the rest of the year, we expect stronger results from Young-Davidson. We expect to produce between 120,000 and 125,000 ounces of gold in the third quarter at lower all-in sustaining costs.

The completion of the mill expansion at Island Gold and stronger production from Young-Davidson are expected to drive production higher in the fourth quarter. Combined with this solid first half, we remain on track to achieve full-year consolidated production guidance of 490,000 to 530,000 ounces at all-in sustaining cost of $950 per ounce.

Financially, we generated operating cash flow of $55 million reflecting the strong production and sales in the quarter. We also generated $22 million of mine site free cash flow, and $9 million of companywide free cash flow, both ahead of budget.

With the GSM permit for the Kirazli project now in hand, we will be ramping up full scale construction over the next few months. The permitting process took longer than anticipated, but I can assure you that it will be well worth the wait. With its low cost of capital, Kirazli is one of the highest-return undeveloped projects in the world.

It will take consolidated production to over 600,000 ounces per year, while significantly lowering our cost profile. Based on the current timelines, we expect initial production through Kirazli in the second-half of 2020.

Being debt-free, with $235 million of cash, we have one of the strongest balance sheets in our peer group, combined with growing cash flow from operations we are able to fund Kirazli internally. And with that summary, I'll turn the call over to CFO, Jamie Porter, to comment on our financial performance..

Thank you, John. We sold 129,000 ounces of gold in the second quarter at an averaged realized price of $1,307 per ounce for revenues of $159 million. Consolidated total cash costs of $832 per ounce and all-in sustaining costs of $996 per ounce were up from the first quarter, primarily reflecting the weaker quarter at Young-Davidson.

Both total cash cost and all-in sustaining costs are expected to trend lower in the second half of 2018. Operating cash flow before changes in noncash working capital was $55 million or $0.14 on a per share basis.

Through the first-half of the year, operating cash flow increased 48% relative to the prior year, to $117 million or $0.30 per share, continuing a trend of improving financial performance on both an aggregate and per share basis.

Our three core operations continue to generate positive free cash flow in the quarter, with combined mine site free cash flow of $22 million, and companywide free cash flow of $9 million, exceeding budget reflecting higher gold prices and strong performances from Island Gold and Mulatos.

Our adjusted net earnings for the quarter were $5 million or $0.01 per share. Our reported loss of $9 million or $0.02 per share was impacted by unrealized foreign exchange losses recorded within both deferred taxes and foreign exchange of $15 million, as well as other one-time items.

Amortization expense was $42 million for the quarter, or $328 per ounce, up from a year ago, though slightly below full-year guidance of $340 per ounce. This reflects lower production from Young-Davidson during the quarter which carries a higher amortization per ounce charge.

Corporate G&A expense in the quarter was $4.6 million, among the lowest in our peer group and consistent with guidance. Capital spending totaled $53 million in the second quarter, including $12 million of sustaining capital, $36 million of growth capital, and $6 million of capitalized exploration.

Capital spending in our operating mines remains on track. With general development projects, I'm pleased to report the increase to the 2018 budget for Kirazli to between $50 million and $60 million now with the GSM permit in hand.

We've already spent $10 million of that through the first-half of the year, and the remaining initial capital, up $90 million to $100 million, will be spent in 2019 in the first-half of 2020.

With no debt and cash and cash equivalents increasing to over $235 million at the end of the second quarter, we have more than ample capacity to fund this growth. At this point, I'll turn the call over to Alamos' Chief Operating Officer, Peter MacPhail, to provide an overview of operations..

Thank you, Jamie. Island Gold and Mulatos continued to perform very well in the second quarter, more than offsetting the softer quarter at Young-Davidson. This allowed us to exceed production guidance and illustrates the importance of having a diversified operating base.

No single mine is going to perform well in every single quarter, but with three core operating mines, we're well-positioned to constantly perform well as a company. Young-Davidson produced 39,100 ounces in the quarter at a total cash cost of $890 per ounce in mine site all-in sustaining cost of $1,083 per ounce.

Production and costs were both impacted by unscheduled downtime to both the mill and the Northgate hoist. We had previously scheduled a four-day shutdown to change the head ropes on the Northgate hoist in July, but moved this forward into June to correspond with an unplanned shutdown to replace a bearing on the hoist drum which had failed.

This took eight days during which we weren't able to hoist ore, impacting throughput and production. This limited mining rate averaged 6,100 tons per day into the quarter. The maintenance was completed by the end of June and mining operations are expected to return to budgeted levels in the third quarter.

Grams mined of 2.35 grams per ton were also lower than planned due to mine sequencing as we did not get to the higher grade stopes planned for the quarter. No processing rates of 6,600 tons per day were impacted by unscheduled 11-day shutdown of the mill to replace funnels and repair the salt plate anchor bolts.

The liner change had been planned for July, but was moved up to coincide with the downtime for the repairs to the mill in the Northgate hoist. The work on the mill was completed in early July. With all this downtime behind us, we expect a stronger second half with greater mining rates expected increase for the rest of the year.

However, given the weaker first half, we produced 2018 guidance for Young-Davidson to 180,000 to 190,000 ounces of gold..

All-in sustaining costs were again well below annual guidance with some sustaining capital deferred to the second half of the year, which will result in higher costs during the rest of the year.

Mill expansion to 1,100 tons per day is on track to be completed in September and expect mining and milling rates to ramp-up in the fourth quarter supporting the strong production and free cash flow growth in 2019. Mulatos again exceeded expectations with production of 50,600 ounces, a total cash cost of $795 per ounce.

And mine site all-in sustaining costs of $854 per ounce. This reflected higher recovery from the EPH operations and longer than expected mill production from San Carlos. Mill production had been initially expected to end at the first quarter.

We've extended the mine life into the third quarter but can now see a definite end to the mining at San Carlos at this month.

Given the stronger than expected first half and extended production of San Carlos, we have increased our 2018 production guidance for Mulatos again this quarter between 170,000 and 180,000 ounces, a 13% increase from original guidance. With no production winding down in the third quarter, we expect lower production in the second half of 2018.

Production is expected to return to the previously guided range of 150,000 to 160,000 ounces per year in 2019 and 2020. El Chanate produced 10,100 ounces at mine site all-in sustaining costs averaging $1,442 per ounce.

Mining activities are now expected to cease in the fourth quarter, but will continue to benefit from ongoing production at declining rates due to residual leaching.

Looking ahead, the company anticipates maintaining production of approximately 500,000 ounces per year from existing operations with higher margin growth from Island Gold replacing higher cost production at El Chanate. It will take us over 600,000 on an annualized basis.

I'll now turn the call over to Andrew Cormier, Vice President of Development and Construction to touch on our recent successes in Turkey..

Thank you, Peter. We are very pleased to have received our GSM permits for the Kirazli project this past week. A lot of progress has already been made on Kirazli's infrastructure projects to date. 75% of the site is now cleared of trees and 80% of the road construction and 45% of the power line are complete.

Construction of the reservoir is also underway and is 40% complete. All of these infrastructure projects are expected to be finished by the end of the year. Detailed engineering has been ongoing and purchase orders for process equipment have already been placed.

The tender process for the construction management and civil constructing contracts is complete and mobilization will begin over the next six to eight weeks. We have a strong team in Turkey led by our country manager, Metin Demir [Ph].

Metin has over 27 years of experience in the mining industry and includes three mine development and construction projects in Turkey and was previously the general manager of the Kişladağ mine. We are well-positioned to ramp-up the full scale construction over the next few months and expect to be [indiscernible] second-half of 2020.

With that, I'll turn the call back to John..

Thank you, Andrew. That concludes our formal presentation. I'm now going to ask the operator to open the lines for your questions.

Operator?.

Thank you. We will now take questions from the telephone lines. [Operator Instructions] And the first question is from Michael Grey from Macquarie. Please, go ahead..

Yes, good morning, John and team. I got three questions.

First, on Mulatos, the favorable recoveries, were they related to pad height or do you see a long-term positive impact from the La Yaqui ore [indiscernible]?.

Michael, it's Peter. You know, the recoveries at La Yaqui, I think we budgeted for $75 initially and it's running $85 or even better than that. We expect that to continue -- those kind of recoveries on La Yaqui. And that bodes well for La Yaqui Grande, which is very similar ore..

Okay. Thanks for that.

And can you comment on how the grades are consolidating at Island versus the block model?.

Yes. So in the second quarter it reconciled bang on grade wise. But year-to-date we're plus 10% is our reconciliation on grade..

Okay, appreciate that.

And then finally, were you able to get a breakdown on the capital expenditures to Kirazli the $90 million to $100 million, how much in 2019 versus the first half of '20?.

Sorry, could you repeat that question?.

Yes, just with the Kirazli CapEx, the $90 million to $100 million budget for 2019 in the first half of '20, are you able to break that down into 2019 and 2020 CapEx expenditures?.

It's a little early to do that now, really depends on the [indiscernible] we get for the balances of this year and it gets to that [indiscernible] construction. So we are in better position you know, with our guidance next year to break up the two years..

Yes. Assuming construction goes right through to the first half of 2020, you could probably put $70 million in for 2019 with the residual $20 million to $30 million in 2020..

Okay, thanks, appreciate that, that's it. .

Thank you. The next question is from Rahul Paul from Canaccord Genuity. Please go ahead..

Hi, everyone.

Peter, at Young-Davidson you mentioned not getting to some of the higher grades to sign for the for the quarter, was that largely related to the hoisting constraints holding back development or were there some other challenges as well?.

It's just the lower mining rate that we saw in the quarter versus planned. You know, we're kind of sequenced drilling there, and some of the higher grade stopes were to come on late in the second quarter, been pushed into the third quarter and we're actually seeing that now..

Okay, thanks.

And then just moving on to Mulatos, with San Carlos mining coming to an end soon, will the mill be effectively put on maintenance, or are you looking at alternate sources of feed for the mill?.

Yes, the mill will be put on care and maintenance later this quarter once we're finished mining the hit and the stockpiles that remain at San Carlos -- from San Carlos and yes, I mean, just having that mill gives us the ability to you know, should we find some more higher grade sources in the area we'll be able to process them.

Right now, we don't see -- we don't have anything for it, but we'll hang on to the mill..

Well, we're not specifically targeting higher grade structures, we're -- our exploration right now is mostly very grassroots-focused and targeted I would say primarily looking for open pit style generalization..

Fair enough. And hearing just on that topic is that I mean you should be expect much in terms of care and maintenance cost going forward is nearly not being used or..

It's a very small middle of there will be no people, I mean that cost will be zero. I think that nowhere..

Fair enough, okay, that's all I had. Thanks a lot..

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

Hi, thank you John, Jamie and Peter and team, may be a few questions from, maybe first half Young Davidson, certainly your underground mining rates were impacted by the eight day shutdown but if I were to grossed that up eight days of ninety days if I were to grow set up, I get a number if it was running for the full quarter at both 6,700 tons per day that's still sort of lower than what you had targeted 7,000 tons per day for the year.

Peter are you still targeting 7,000 tons per day ranking you get there in the second half. It's a second time Peter..

I'm already are here..

Maybe two..

Look, if you look back at our performance over the last year. It is around that 6700 ton per day mark. We having 7200 ton per day in Q4 of last year, this way, this mine was designed at 6,000 tons a day at for the upper part of the mine and we're pushing it to 7,000 tons a day, 7,000 remains our budget. The guys are bonus on 7,000 tons a day.

We've averaged 67,00 tons a day for the last year but lower mine which we're currently they're getting, we can see it coming into focus now.

Fourth quarter of next year hope to be bringing that online and that is design at 8,000 a day difference is being skipping from that lower mine we can 24 tons in a skip and stayed 17 tons in a skip that currently has that has to do with the friction voice stand, weight of the ropes and various things like that.

We'll be using or putting in place significantly more or storage capacity in the lower mine 6,000 tones of the storage where is currently have around a 1000 tons that really makes a difference when the, if you're glass fading or you're doing a shift change and there's no one underground.

We can skip on automatic and keep that thing going but you run out of pretty quick when you've got 5,000 to 1000 in a bid, you got 6,000 tones been you can skip through almost a whole day on automatic. The lower mine has being designed for 8,000 tons a day.

I think our target remains 7,000 and I think you'll see us probably where we are now and between 6,500 and 7,000 for until we get that lower mine build out..

Okay, Peter I guess doing some issues with the bearings and then on the host and what not in the Q2 and those issues of now been fixed but could you remind us again, do you know is that horses getting replaced anyways or as you link up the lower mine with the upper mines in late 2019?.

Yes, so what happens there is well first of all those bearing hit last 20 years and it was really disappointed that we had a problem with one.

What happens when we commissioned the lower mine is that we, it is still the same hoist on top of the head frame we just change the ropes lying on the ropes, that will continue to be the same piece of gear that we have there..

Maybe switching gears a little bit at Island Gold here, you mentioned there's going to be an interim reserve resource to be released sometime in Q3 I believe.

How many meters, how many additional meters of drilling are you including at that new reserve resource and what would be the focus here would the focus be on the conversion of resources under reserves or would the focus here be expanding your resources or both?.

Yes, so we put out a fairly complete exploration update in May just for we had our visit to island with you guys and if the drilling that went into that I don't remember the meters but it's all in that release and in fact most of the information within that release the cut off for our drilling would have been just maybe several week or may be a month past to that, so I think most of the information is out there and it's going to be.

It's going to be used for this resource update. You asked whether it be more reserve a resort and need more resources its seeing it's that step out drilling to the down flung planet on the mean so and it's some that drilling up in that operation it's all of that, so it's really a reserve in resource but the lights are the resource..

Great, thank you. That's all I have. Thanks..

Thanks, Cosmos..

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

Hi, guys thanks for taking the question, so it's quite good to log join John getting on your call this morning. It's really late and I missed did you mention what the underground mining cost per ton was for ID and if not there either way you might sharing. Thanks..

Everything we mentioned at Boston it was just over CAD 50 per ton with the lower tons driving that higher number..

Yes, okay that makes sense. And then just in terms of why do you looking into H2 so there were two sort of like surprises there is Q1 with the pay sequencing and then the very next quarter.

I'm just curious Peter is there anything for H2 that kind of like I guess put it this way, keep you up at night and you kind of worry about, are you very confident heading into H2 in terms of YD?.

Yes, I think we're confident in our guidance now that we produce it. I think we're confident at that level, I think with this maintenance work behind us where you can shape..

And then just it's one more on YD the gold sales are have been trending nicely ahead of production in H1 and H2 I just curious for the second half [indiscernible] I think, yes when do you expect that to sort of reverse or catch up here is this a longer term..

On an annual basis it's going to have to be equal because it's what we produce that we saw the inventory it can go up and down by may be far as much 5,000 ounces in any given quarter..

Okay, so you would expect some sort of truing up in I know there Q3 or Q4, okay all right that's great and then just finally just sort of longer term on Mulatos. So you guys have guided to the production they're coming back down to that I believe it was 150 to 170,000 range post in St Carlos.

Once you bring in La Yaqui Grande in 2021 should you guys think of La Yaqui name being additive to this new range or supplemental like being able to turn a key range?.

That 150 to 160,000 ounces that we talk about is knowing what we know now about research that we have there not firing any sort of resource conversion or anything like that I just thought of reserve base and the next eight years or so eight, nine years we should be able maintain that that run rate, that includes SAS start file, La Yaqui, Yaqui sale below..

Got it. okay, that's great. Thanks so much for taking off the questions Peter and thank you everybody else..

Thank you..

Thank you. The next question is from [indiscernible] Bank. Please go ahead..

Thank you.

Just a couple of quick cost questions, first off, for sustaining capital first half spending was $23 million for the low end of your guidance spending in the second half would be $45 million, so a very significant step up are you still comfortable with that sustaining capital guide and is there anything in particular where that those dollars are being allocated?.

Yes, Josh it's Jamie. You're right the majority of that deferral sustaining capital with that Island so we do expect we indicated that in the MD&A and press release, we do expect sustaining capital allowed to be a fair bit higher through the second half of the year.

I think it will probably come in within $5 million of the low end of our guidance the capital budget under sustaining capital signed off and get deferred until the following year, so I wouldn't expect that due to be above the low end of our full-year guidance..

Got it and then similarly for YD and maybe assist to granular but yes first half total cash costs at 850 versus full-year guidance 675 is it reasonable to assume that the cost in the second half will be that much lower that those that action specific number will be achieved?.

No, it's not we're not going to get to the 675 for the year but I think we tried to indicate the set on a overall consolidated bass the lower reported cost that Island at Mulatos we're hopeful to offset the higher cost of YD. .

Understood and when just last question for YD and obviously your mine rates are expected to improve in the second half is there any waiting to a particular quarter or is there any sort of impact of that downtime for the second quarter leading into third quarter we should expect maybe higher throughput in the fourth quarter versus third or is it going to be somewhat balanced..

There's a good job it is going to fly in our in our corporate presentation that showed I think that the five year history of Whitey if you look back over that history of is the fourth quarter is always the strongest quarter YD, so we would expect that a young Davidson.

We did expect that at Island as well our forecast for Island is that's why we hire great in the fourth quarter relative to the third quarter, so we as indicated in the MD&A we expect our quarterly production to drop to between 120 and 125,000 ounces in Q3 that we should go up from there in Q4..

Understood, great. Thank you very much..

Thank you. The next question is from Kerry Smith from Haywood Securities. Please go ahead..

Thanks Operator.

Can you just for the back half of 2018 I'm assuming the grieving they are going to get some higher grade still I'm presuming the grade is not going to be much better than reserve grade or 2.65, 2.7?.

Yes, that's the rate..

And the other question I had was the anchor belt failure that you had was that, was that a failure of the concrete or was a failure of block itself?.

I mean it's hard to say, I think you get a better what happened there was the sole play was probably a little bit loose in the concrete and cause the full detail, you can run like that for a while but ultimately you want it go down and tare that Sole play chip way of the concrete and start fresh, so that's what we did..

Okay, I guess where I was getting I was is there a chance to even have initial item with one of the other boards are you kind of?.

Well there's always a chance but there's no sign of that..

Okay. And Jamie you, I know you guys had to talk with sort of revisiting on the capital side, just given what's happen with some, are you doing that now or are you planning to do that and can you maybe had you little bit of that there exposure just kind of lock in some of those currency rates.

So yes, Kerry we are doing that, so the way we see about 50% of our capital is clear as nominated much of that labor but you got the depreciation is a layer of being offset somewhat by pretty high inflation in Turkey running, 13% to 15% over the last couple months, so there is going to be a positive impact but not going to drop our capital by 20% or anything I think where we're comfortable sticking with $150 million and we're confident that we'll be able to get project built for that on hedging where absolutely able to hedge where we're evaluating that currently..

Okay, that's great. Thank you..

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

Yes, thanks very much Peter I just wondering if you could just confirm again the throughput that La Yaqui Grande is going to be designed out there at Mulatos..

I think….

Thank you, Dan. So La Yaqui Grande were designing for an average throughput of 9,000 tons a day..

Okay, so there's trying to get that sort of run rate to 150 to 170 and when you've got a loan kicking in La Yaqui Grande, the existing heat fleets running for probably another five or six years it does seem like you'd be higher than that 170 range in an couple years and then drop off is that sort of that 150, 170 in average your recording?.

Yes, that would be average and then may be bit of fluctuation but I think maybe what you're saying is I when we and I look at, I'm looking on a reserve base certainly with the on resource conversion if you look at Mulatos pit reserves what assuming no resource conversion at that you don't, it's not a five year..

Yes, the Mulatos pit I believe is exhausted within the next three years and then the bulk of production comes from [indiscernible] and La Yaqui Grande.

The flood figure in that kind of calculation is the stockpile that will be processing leeching on the existing mulattoes leach pads and we can control really the timing of that, so our objective is to obviously get the gold out as soon as possible but the way it looks currently will be able to sustain around that 150 to 150,000 ounce production level for the next 70 years assuming that fine nothing else..

Okay, that's perfect.

And then just on the exploration at Mulatos you are spending a lot of money and I do realizing that you did have a lot of success there in 15, 16 in two degree last year especially Grande but with the budget right now is it more Greenfield grassroots type exploration activities that are going through because it's been a while since we saw any real drove results from Mulatos..

Yes, go ahead John..

Yes, that's exactly what it is, we're targeting a number of these big alteration zones that we had on the drawing board for quite a number of years, where you know that the mapping had been done but we had never had really there's been a very hard beyond that.

So virtually our entire budget this year has been directed in that way, so we're really with period where you really stocking through doing the see the higher risk but potentially it's very rewarding end of the exploration one zone that we're starting to drill now that we did know about eight years ago.

It's a big system, it has we were able to identify open authorization there but we're taking out a much bigger pass at this time around taking out, starting from doing more GSM, and more at the basic geology to kind of identify broader targets then the initial Approach we took when we just throw a number of years ago, so it's not going to be quick program where we go ahead and plug pulled into one specific area where it is 18 square kilometer authorization area this is the [indiscernible] zone and we're going to essentially design a program over a number of years that gives us a better chance of finding something there.

So that's how it describe the exploration budget at Mulatos this year quite different from the money that we're putting into Island Gold which is effectively building on an ongoing discovery story that's been in place for about four years..

Okay, that's very helpful and then I guess we can ask the question every quarter now about when the permits are coming from [indiscernible] so congrats on getting those but is there when do you have to start thinking about permitting for I know it's still a number of years down the road and I believe you're still plan of attack there is to get across the up and running and then use the cash flow from Crossley to fund but is there can you get those permits now or do you need to weigh closer to when Cross is up or running because there's a timing issue and when you receive those permits and when you need to start moving the project forward..

Certainly, we're going to keep our timing but there is two specific things I would think about in terms of next steps in Turkey, issue one would be just a cost of getting some of those permits in place, it's a fairly significant cost attached to force three permits in Turkey. So I definitely put those permits in place any sooner than it's required.

And then, secondly I believe that the whole process is just going go much more smoothly when everyone can see a successful Kirazli up and running. It's nice to have -- it will be nice to have a mine like Kirazli, which will be quite a show piece when it's done.

It will be a place where all concerns and comments and observe firsthand what we are doing instead of theoretically speculating on the risks and dangers of an operation like this in the areas. Once it's established we can show that it's a really safe environmentally sensitive project.

I think it's going to help pave the way for the next project that we undertake in that region..

Okay. And then it's been a while since you directed any real cash towards expiration and notable why that it was permitting and just some of the other aspects going on.

But there is a lot of smoke around that area of in the bigger peninsula, especially if you stand on some of those some of the air croppings or the Slica caps, you can seem them all over the place.

But when do you start putting real money back in the ground in expiration there and potentially start to flush out the district potential between Kirazli out on ÇAMYURT [Ph] here now?.

Well, part of the issue is the fact that we already have 3 million ounces of reserves there. We have enough reserves to provide as per the really good production profile for 10 to 12 years. From that perspective, nobody is holding a gun to our head to do expiration.

Now Kirazli, right now has about a six-year mine life and there is plenty of potential around it. So I would like to get going on additional drilling there but I think you can expect that to be timed when we have the mine finally up and running.

I really don't have much interest in spending more money on expiration until I'm starting to generate some free cash flow from those operations..

Fair enough, understand. Thank you..

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

Good morning, guys. My questions mostly have been answered. But I just want to circle back on stockpiles for both iron, gold and for YD. So I guess the quarter you had pretty good great, considering what was mined underground and I think the MD&A said that it was from stockpiles.

Can you let us know where those stockpiles stand now, what grade they are at?.

Which operation are you talking about? Island?.

Island first, yes..

Yes so we have full stockpile on surface, it's kind of been in and out and we do have the ability sometimes to segregate some high grade there and top of that there I think probably have in the order of 30,000 tons in any given time in the stockpiles would have been round there, which is quite a bit for underground mines, consider that's about a month's worth of production..

And I assume it's north of 11 gram per ton material?.

Sorry Anita, I can't hear you..

Sorry, is it north of 11 gram per tonner material or what's the average?.

I think in average it's around five or six, it's probably we can segregate it, so I think I did pull some higher grade stuff off their in the quarter. We did come back..

Okay..

Given the type of operation it is, the grade of that stockpiles will change from quarter-to-quarter..

Okay, all right. And then, just moving similar question why the -- I guess, why the others confused because the -- do you still have scouts left or the -- I mean, is that….

No we have multiple different kinds of stockpile there and in fact but you probably were confused at that is that we had for the first time an principal amount of underground or stockpiles at the end of the quarter was about 40,000 tons of 2.35, 2.4 grams material..

Okay.

So your stockpiles are stuck in your mining and then also then but -- then it's lower grade, more lower grade than normal rather than doing a -- because otherwise it's really hard to get to that 2.35?.

So the -- so what I mean, is that at the end of the quarter because we were shutdown underground continue to drive some stuff up. We ended up with about a 40,000 ton stockpile of underground ore at the end of the quarter.

We did also mill scouts and but would have been mostly scouts, in whole we have about 0.5 million tons of stockpile at around the graph of scouts plus we had at the end of the month. And that probably includes the 40,000 tons of underground now. In addition, we have 40,000 tons undergrounded 2.3..

Okay. Thank you very much..

Thank you. Next question is from Mike Parkin from National Bank Financial. Please go ahead..

Hi, guys. Just a couple of questions on La Yaqui, how is the grade reconciling there.

Is that a history of that district being timed to you? Are you seeing a similar trend to the earlier days at Mulatos pit?.

Well, if anything is positive that 5% is what I'm being told here, it's about 5% positive grade wise in La Yaqui..

Okay.

And any positive grade reconciliation on tons?.

No, I think we are flat there..

Okay, and then, on the hoist bearing failure, from your analysis of it, was it a load failure or just a manufacturing?.

Bearing has been setup for testing. So I don't think we have the results back on that yet..

Okay. Now that's it from me..

It is designed for the full load to the bottom of the shaft. This is very much if there is something wrong in the manufacturing of that particular bear..

Okay.

And did you do an inspection of the other side to see how it's holding up?.

Yes, it's just fine..

Okay.

But do you guys carry a spare for that or was it kind of a custom order bearing?.

We were well-spared for everything associated with that hoisting facility..

Okay. All right, that's it from me. Thanks guys..

Thank you. There are no further questions registered at this time. This concludes today's conference call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parson at 416-368-9932 extension 5439. Thank you. Have a nice day..