SASKATOON Jan 8, 2016 (Thomson StreetEvents) -- Edited Transcript of Claude Resources Inc earnings conference call or presentation Thursday, November 5, 2015 at 7:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Marc Lepage Claude Resources Inc. - Manager of IR * Brian Skanderbeg Claude Resources Inc. - President and CEO * Rick Johnson Claude Resources Inc. - VP of Finance and CFO ================================================================================ Conference Call Participants ================================================================================ * Chris Temple The National Investor - Analyst * Joe Mazumdar Canaccord Genuity - Analyst * Richard Gray Cormark Securities - Analyst * Craig Johnston Scotiabank - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Claude Resources 2015 third-quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. Mr. Marc Lepage, Manager of Investor Relations, you may begin your conference. -------------------------------------------------------------------------------- Marc Lepage, Claude Resources Inc. - Manager of IR [2] -------------------------------------------------------------------------------- Thank you, Rob. We'd like to thank you all for joining us on our third-quarter 2015 earnings call. On the conference call today we have Brian Skanderbeg, President and CEO, and Rick Johnson, our CFO. Please note that today's presentation is located on the homepages on our website under the Corporate Presentation icon on the left-hand side. Also you can download and view our third-quarter 2015 Management Discussion and Analysis and Financial Statements located on the Investors page under Financial Reporting. During today's call, we may use forward-looking statements, which are based upon current expectations and involve risks and uncertainties. For further information regarding forward-looking statements, please refer to our cautionary note located on page 2 in today's presentation. I will now turn the call over to Brian Skanderbeg, President and CEO. -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [3] -------------------------------------------------------------------------------- Thank you, Marc. Hello, everyone, and thank you for joining us as we review our third-quarter operating and financial results. First, I want to acknowledge the outstanding performance of our people in achieving safe production. 2015, we're going to set a new production record, and more importantly, we are doing it more safely than ever before. Our environment and safety performances are outstanding, and I'm very proud of all our employees and their accomplishments. Keep up the great work, everybody. I'll now start the presentation on slide 3 with third-quarter highlights. Before I begin, I would like to highlight that our third-quarter cash cost in today's press release did not include royalty costs. Third-quarter cash cost per ounce including the royalty were CAD721 or $551 as opposed to the previously reported CAD677 or $517. Our third-quarter performance is a reflection of our operational flexibility and strength in generating free cash flow during a very challenging quarter. For the sixth consecutive quarter, we continued to see solid operating results of gold production of 15,722 ounces at an average grade of 7.29 grams per tonne. During the quarter, we generated net earnings of CAD5.7 million or CAD0.03 per share, and increased cash in bullion by CAD6.1 million to CAD27 million, which now exceeds our long-term debt to CAD20.3 million. We've also had success with our underground drill program at Santoy Gap, that indicated expansion updip and downdip to the current mineral resources. One of the most recent highlights of the program was a intercepted grade of 31.01 uncut or 11.08 cut grams per tonne over 7.06 meters true width. Also we secured a new debt facility with Scotiabank to replace our previous lender. The new debt facility lowered the cost of our debt to approximately 5% from 10%. This reflects the strength of our business plan going forward and that our production and cost performances are sustainable. Moving on to slide 4. Year-to-date gold production of 57,408 ounces was a new nine-month record for Claude, driven by higher grades at both the Seabee Goldmine and the Santoy mine complex. Our peer-leading cost performance continues to improve. Year-to-date, our total cash cost per ounce is CAD669 or $531, and our all-in sustaining cost per ounce were well below the current gold prices at CAD1,129 or $896. Higher revenues and lower unit costs have led to very strong year-to-date earnings of CAD21 million, or CAD0.11 a share. Based on our record performance, we have increased our annual gold production guidance and lowered our cost guidance for 2015. And our annual gold production guidance has increased to 70,000 to 75,000 ounces; cash cost per ounce to range from CAD685 to CAD750, or $535 to $600, and our all-in sustaining cost per ounce to range from CAD1,065 to CAD1,175 or $830 to $920. Now on to slide 5. Our ability to set new production records in 2014 and again in 2015 has been driven by the new -- by mining new and better ore bodies and by changing the way we mine them. The increase in Santoy Gap ore and the positive results we've seen from the Alimak mining method continue to exceed our expectations. Third-quarter gold production of 15,722 ounces was strong considering the 10 days of lost underground production from the precautionary shutdown due to local forest fires. Strong grades of 7.29 grams per tonne and recoveries of nearly 97% made up the lower tonnes milled. Year-to-date, record gold production of 57,408 ounces was a 13% increase over the same period of 2014. This was driven by a 16% increase in grades, positive reconciliation on grade and ounces, and the mine plan at both the L62 and Santoy Gap deposits, and the replacement of the lower grade Santoy Gap 8 ore with higher grade Santoy Gap ore. During the remainder of 2015, mill throughput is expected to average 750 to 800 tonnes per day while grades are expected to be modestly above Q3 actuals. As I touched on earlier, we have done an excellent job in meeting and exceeding our production and cost targets, while ensuring safety and environmental performance remain our number one priority. Moving on to slide 6. The addition of the Santoy Gap deposit to our production profile has been instrumental in our improved operating performance. Santoy Gap is a high-quality asset due to its high grade nature and wide mining width. To better illustrate, the Santoy Gap contains approximately 2,000 ounce per vertical meter, whereas the Seabee mine historically contained approximately 1,000 ounce per vertical meter. As such, we are able to mine more ounces with less capital development and at a lower cost to drive better margins and significant free cash flows. Production and development at Santoy Gap has been well ahead of schedule and prefeasibility signed. Demonstrated by the colored boxes on the Santoy Gap long section, we have now exposed the eastern and western portions of Santoy Gap ore body. We are developing on levels 24 through 36, and anticipate that by year-end, the main decline will be at 38 level. Development on 38 levels is important, as it is an internal ground pillar that will allow us to ramp up long-hole mining in the first half of 2016. Mining width Santoy Gap averaged 6 meters wide for individual veins, and in some places can be up to 30 meters wide. This drives low-cost, high-margin production. Slide 7 outlines Santoy Gap production performance in further detail. Santoy Gap deposit averaged 584 tonnes per day or 77% total mill throughput during the third quarter, which is well ahead of schedule. Year-to-date, Santoy Gap deposits increased overall head grades at the Santoy mine complex by 46%, and combined with the 53% increase in mill throughput, has improved gold production by 125%. Since we started mining at Santoy Gap in May of 2014, it's produced approximately 164,000 tonnes at 8.12 grams per tonne, for a total of 42,845 ounces. Throughout this time, development and production rates have been well ahead of prefeasibility designs, and schedule in grades have been reconciling above reserves on grade and ounces and below on tonnage. For the remainder of 2016 -- remainder of the year and into 2016, plans are to move from one mining front to three, driving increased production and scope availability while reducing production risk. Santoy Gap production is expected to account for approximately 60% of overall throughput in 2015 and will play an even larger role in 2016 and beyond. The infrastructure upgrades and development needed to increase production rates to 600 and 750 tonnes per day in 2016 and 2017 are ongoing, and capital expenditures are minimal. I will now pass it over to Rick Johnson to discuss the financial results. -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [4] -------------------------------------------------------------------------------- Thanks, Brian. Before I begin on slide 8 with the financial highlights, please note that all figures presented in the table are in Canadian dollars unless otherwise stated. Gold revenue generated during the third quarter of CAD24.5 million was slightly higher than the CAD24.3 million reported in the comparable period of 2014. Year-to-date, gold revenue of CAD80.5 million increased 24% from the first nine months of 2014, a reflection of an 18% increase in gold sales volume and a 6% increase in Canadian dollar gold prices realized. Net earnings for the quarter were CAD5.7 million or CAD0.03 per share. Year-to-date, net earnings of CAD21 million or CAD0.11 per share were a CAD15.9 million improvement over the CAD5.1 million or CAD0.03 per share reported during the first nine months of 2014. The significant improvement in financial performance has been driven by an increase in ounces produced and sold for mining entire ore grades and continued improvement in operating efficiencies. During the quarter, earnings were negatively impacted by a CAD0.8 million non-cash expense, a result of the yearly retirement of the term loan with the Company's previous lender. Cash flow from operations before net changes in non-cash operating working capital of CAD11.4 million or CAD0.06 per share was up from the CAD10.4 million reported in the third quarter of 2014. Year-to-date, cash from operations of CAD36.3 million or CAD0.19 per share increased 65% from the CAD22 million or CAD0.12 per share reported for the same period last year. Now on to slide 9. Our margins in Canadian dollar terms were very strong at CAD396 per ounce for the quarter and CAD351 per ounce for the first nine months of 2015. Canadian gold mining continued to benefit from the currency tailwinds. The weakening of the Canadian/US dollar exchange rate year-to-date has had a positive CAD10.6 million impact on earnings and cash flow. It is our strong operating performance, improved grades, and a successful utilization of the Alimak mining methods that has decreased both year-to-date total cash costs and all-in sustaining cost per ounce. Total cash cost per ounce decreased to CAD721 or $551 for the quarter and by 16% to CAD669 or $531 per ounce for the first nine months of 2015. All-in sustaining cost per ounce of gold were up slightly to CAD1,089 or $832 per ounce during the quarter, and year-to-date costs per ounce have decreased by 11% to [CAD1,149] or $896 per ounce. On to slide 10. During 2015, we have focused on improving the strength of our balance sheet by reducing debt and its cost, as Brian stated earlier, and increasing cash on-hand. We have made significant progress over the past two years and have improved our financial position by CAD48.5 million. Year-to-date, the Company's ability to generate free cash flow has resulted in a CAD15.8 million increase in cash and bullion to CAD27 million at the end of the Q. The strong financial performance has also allowed the Company to reduce its long-term debt by CAD2.3 million year-to-date to CAD20.3 million. At quarter-end, our working capital position was CAD37.9 million, a significant improvement over the CAD23.9 million working capital we had at December 31, 2014. For the remainder of the year, we expect our financial strength and flexibility to improve with our ability to generate free cash flow at current gold prices. I will now pass the presentation back to Brian to discuss our 2015 exploration programs. -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [5] -------------------------------------------------------------------------------- Thank you, Rick. Now on to slide 11. There is significant exploration potential to find more gold in the underexplored 19,500 hectare Seabee land package. We feel the best opportunity to find more gold is within or in close proximity to current mining infrastructure, and at the Santoy mine complex, we have the excellent opportunity to grow resources as most of the mineral reserves and mineral resources are above the 500 meter level. In 2015, the primary focus of underground drill program has been infill and expansion of the Santoy Gap resource and reserve. The program has had positive results to date as an expanded economic mineralization updip to the southeast and at depth. Full [sub 15048] grade and 43.28 grams per tonne uncut, 30.5 (technical difficulty) cut grams of gold per tonne over [1.15] meters true width. And at 675 meters, is the deepest hole ever drilled in the Santoy mine complex. This intercept is important as it confirms continuity and demonstrates that grades remain robust at depth; follow-up drilling in the immediate area is ongoing. We've also had very good success with holes [sub 15 -- 315] that targeted the updip continuity at 140 meter elevation, as it returned 31.1 uncut and 11.08 cut grams gold per tonne over 7.06 meters true width. This high-grade wide intercept is approximately 75 meters up-plunged from current development and links to near-surface inferred resources. Results from the drilling in the updip extends from the Santoy Gap are consistent with underground development sampling and will be included in the year-end reserve and resource update. In addition to the ongoing 2015 program at Santoy Gap, the Company has initiated an additional 6,000 meter deep exploration program to target the plunge continuity of the Santoy Gap deposit proximal to hole [right 13692] is graded 30.08 grams uncut or 22.89 cut grams over 5.9 meters true width. Drilling [were cut] from 450 to 800 meters below the surface with drill spacing between 50 and 100 meters. This program is particularly significant as its drill testing in the continuity between the Santoy Gap and Santoy E orebody deposit limited and the inferred resources remain open along strike downdip and down-plunge. We are confident that the system continues at depth and optimistic that drilling results will translate to a larger resource and larger -- a longer -- long mine life at Santoy mine complex. On to slide 12. The underground 2015 exploration program at Seabee is the targets are outlined in red. Drilling at the Seabee mine consists of -- will consist of 10,000 meters targeting seven high priority underground near-mine targets. These near-mine targets are analogous structures and down-plunge extensions to the Seabee and [L62] deposits. There is limited drilling in these areas and we believe the target to be highly prospective for [L62 all-ins]. This program ramped up earlier in the second quarter and will continue during the remainder of the year. The first target success includes the [three] veins and updip [Celtix two] targets followed by the 15 and 18 veins in the eastern section of the mines. The first of these targets will be completed with some follow-up work planned for the first half of 2016. Underground drill programs exploring the 15 and 18 veins are slated to begin in the first quarter of 2016. In addition to the two exploration programs, we will also complete approximately 55,000 meters of underground infill and definition drilling at Seabee and Santoy mine complex to expand reserves and resources. Our total budget for 2015 is approximately CAD1.3 million or CAD20 per meter. Our ability to drill at a very low cost is a competitive advantage and translates to a very low discovery cost per ounce. Now on to slide 13. Our outlook as the [gains] improved as Santoy Gap continues to exceed our expectations. Our strategy and focus will remain on grade and cost control, productivity improvements and ramping up production at Santoy Gap. With better-than-expected results from Santoy Gap and continued positive reconciliation on grade analysis, we have increased our annual gold guidance to 70,000 to 75,000 ounces from our previously revised guidance of 68,000 to 72,000 ounces. With the increase in production guidance and our ability to remain on budget, unit cash cost with all-in sustaining costs were estimated to be 6% and 3% lower than original guidance, respectively. Our cash cost per ounce are now expected to be CAD685 to CAD750, or $535 to $600, and all-in sustaining cost per ounce would be CAD1,065 to CAD1,175 or $830 to $920 -- clearly well below current gold prices. By achieving an endpoint of production guidance, remaining on budget with our costs, and realizing similar gold prices for the remainder of the year, we expect to yield an annualized free cash flow margin of greater than 15% of revenues. Our cost structure and free cash flow yield positions the Company as leaders in our sector, and we will provide the Company -- and will provide the Company with the financial strength and flexibility needed to manage the volatile gold price and pursue growth opportunities. That concludes our presentation today. And we will be happy to entertain any questions that you may have. Thank you. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- (Operator Instructions). Chris Temple, The National Investor. -------------------------------------------------------------------------------- Chris Temple, The National Investor - Analyst [7] -------------------------------------------------------------------------------- Rick, would you clarify or maybe add a little bit of color to the currency issue? If I heard you correctly, you said something on the order of a CAD10.6 million differential to the bottom line, because of the currency translation. Did I hear that right? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [8] -------------------------------------------------------------------------------- Yes, that's right. Chris, what it is is what I've done is I basically taken our September year-to-date numbers with the currency that was -- that we earned from the 2014 year-to-date, and I've taken the US dollar [gold] price at that currency, and I basically calculate that as a CAD10.6 million difference. If we'd [add that] currency for this 2015 year-to-date. -------------------------------------------------------------------------------- Chris Temple, The National Investor - Analyst [9] -------------------------------------------------------------------------------- Okay. And at the present time, do you guys have any hedges or anything that you've got in place to -- in anticipation of any additional weakness in the Canadian dollar? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [10] -------------------------------------------------------------------------------- No. -------------------------------------------------------------------------------- Chris Temple, The National Investor - Analyst [11] -------------------------------------------------------------------------------- Okay. Thanks. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [13] -------------------------------------------------------------------------------- I'm just following up on the Canadian dollar question. What exchange rate do you assume when you actually generate your guidance? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [14] -------------------------------------------------------------------------------- [1.6] I believe we've been using, Joe. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [15] -------------------------------------------------------------------------------- Is that going forward too? Will that be going forward as well? Or is that constantly adjusted? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [16] -------------------------------------------------------------------------------- Well, that's full year. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [17] -------------------------------------------------------------------------------- Okay. So when you put out your guidance and your cost guidance, you lock in that for the entire budget? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [18] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [19] -------------------------------------------------------------------------------- Okay. And just looking at your MD&A, I think Brian was saying that the full-year exploration expenditure, which was 4,000 meters of surface and 16,000 meters of underground, was about [CAD1.3 million]? Is that right? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [20] -------------------------------------------------------------------------------- Just to correct that, Joe, the surface meterage would've been included in the 1.3 that I quoted you. So for us, we drill about [CAD20] a meter underground and we drill for about [CAD80 or CAD90] a meter at surface. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [21] -------------------------------------------------------------------------------- Okay. I was just looking at the MD&A and I was just saying exploration spending during 2015 is forecasted to be about CAD0.7 million? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [22] -------------------------------------------------------------------------------- That's the surface exploration program. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [23] -------------------------------------------------------------------------------- That's just the --? Okay, that's just surface. Okay. So the 16,000 meters is an additional [CAD1.3 million]? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [24] -------------------------------------------------------------------------------- Correct. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [25] -------------------------------------------------------------------------------- Okay. -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [26] -------------------------------------------------------------------------------- So if you added those two together, you get about CAD2 million in exploration for the total surface and underground program. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [27] -------------------------------------------------------------------------------- Okay. And then all those results, will they fall into 2015 or --? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [28] -------------------------------------------------------------------------------- Yes, we will have more results to be published in 2015 here. More so at Santoy Gap, and certainly we will have some that will carry over into the new year as well. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [29] -------------------------------------------------------------------------------- Okay. And that will just follow into your updated reserve and resource calc? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [30] -------------------------------------------------------------------------------- Yes, we will cut off in December. Usually sometime beginning of December, sometimes end of December, we will use cutoff dates. Then we crunch those numbers and they're published into the reserve and resource statement that comes out with our financials in Q1. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [31] -------------------------------------------------------------------------------- Okay. I guess lastly was just on the G&A, there was that increase in compensation. Is that something we should be planning going forward? Or is that a one-off that happens every now and then? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [32] -------------------------------------------------------------------------------- I think the increase was related to the deferred share units. I think we had four directors that earned several -- or we have CAD1.7 million outstanding right now, Joe. I mean, I think it really was a one-off. But as our share price continues to go up, we will have to have mark-to-market on those share units. So (technical difficulty) and it's a cost that's hitting our G&A, I think it was CAD1.3 million in our G&A expense were these deferred share units. So it's something we are aware of. We expect, as our share price goes up, that G&A costs can go up as well. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [33] -------------------------------------------------------------------------------- Okay. With respect to the compensation scheme? -------------------------------------------------------------------------------- Rick Johnson, Claude Resources Inc. - VP of Finance and CFO [34] -------------------------------------------------------------------------------- For the -- yes, on the deferred share units side. -------------------------------------------------------------------------------- Joe Mazumdar, Canaccord Genuity - Analyst [35] -------------------------------------------------------------------------------- Okay. Great. Thank you very much. -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [36] -------------------------------------------------------------------------------- Thank you, Joe. -------------------------------------------------------------------------------- Operator [37] -------------------------------------------------------------------------------- Richard Gray, Cormark. -------------------------------------------------------------------------------- Richard Gray, Cormark Securities - Analyst [38] -------------------------------------------------------------------------------- Just a couple questions. Can you give any color -- I know you don't have any guidance for 2016, but could you give us some color as to what to expect for production and CapEx next year? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [39] -------------------------------------------------------------------------------- Thanks for that, Richard. When we look at the production and the CapEx guidance, I'll start with CapEx. This year's budget between CAD20 million and CAD22 million of property plant and equipment and development capital, we believe that that is sustainable. So I don't see a big capital increase moving into next year. When we look at production guidance, that's not something we will formalize until early in Q1. But what we do believe is that [quote] is a sustainable 70,000 ounce a year producer, and that's really what we talk about when we talk publicly. The grade profile and tonnage profile will continue to shift out to Santoy. And we are comfortable with 600 to 650 tonnes per day out of Santoy and plus or minus 200 tonnes per day coming out of Seabee. So, that's about as much as we'll put out there for production guidance next year. -------------------------------------------------------------------------------- Richard Gray, Cormark Securities - Analyst [40] -------------------------------------------------------------------------------- That's extremely helpful. And just -- I guess while I've got you, just can you just give any kind of update on plans or evaluation being done on expansion at the mine and/or mill -- plans -- expansion plans for the mine or mill? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [41] -------------------------------------------------------------------------------- Yes. When we look at the scenarios we have ahead of us, gold has never been mill-constrained. We have always been mine-constrained. Moving into next year, we will approach mill constraint. And for a modest capital expenditure profile of CAD2 million to CAD3 million, we could look at a 20% throughput increase. Now that -- the payback on that mill expansion was really contingent on Santoy Gap ramping up to greater than 750 tonnes per day, or Seabee yielding greater than 200 tonnes per day, both of which are likely scenarios. And so as we move into 2016, we will look at our reserve and resource base, and we will look at the ramp and ramp-up profile of Santoy Gap and the comfort we are getting from the long-hole sequencing. And we will evaluate the payback on that expansion. It's a relatively low-cost expansion that could yield good payback for us, and I would expect us to be working internally on these -- on that evaluation in 2016. -------------------------------------------------------------------------------- Richard Gray, Cormark Securities - Analyst [42] -------------------------------------------------------------------------------- Okay, that's great. Thanks, guys. -------------------------------------------------------------------------------- Operator [43] -------------------------------------------------------------------------------- (Operator Instructions). Craig Johnston, Deutsche Bank. -------------------------------------------------------------------------------- Craig Johnston, Scotiabank - Analyst [44] -------------------------------------------------------------------------------- Thanks for taking my call. And yes, Scotiabank; I haven't moved to Deutsche Bank. But anyway, just a quick question on grade for Q4. You might have mentioned earlier in the call, and I might have just missed it, but any guidance you could give on what you're thinking for grade from Santoy and Seabee for Q4? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [45] -------------------------------------------------------------------------------- The language we used in the call here was modestly above Q3 actuals. So Q3 realized grade was 7.29, so I would expect somewhere modestly greater than 7.29 grams per tonne. -------------------------------------------------------------------------------- Craig Johnston, Scotiabank - Analyst [46] -------------------------------------------------------------------------------- Okay. No, that's good. I think you mentioned that earlier and I just missed it. And then just on the resource reconciliation at Santoy, I know you're saying a little bit lower tonnage but more ounces. Any kind of percentages you could throw out for us? Or just too early days there? -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [47] -------------------------------------------------------------------------------- You know, I mean, year-to-date and actually production-to-date from Santoy Gap has yielded 8.12 grams. Our reserves at Santoy Gap are, as a whole, 7.64. And I don't necessarily believe we are mining in any particular high or low grade area. That's a relatively well-distributed bulk sample of 165,000 tonnes. That corresponds to about an 8% grade increase. In terms of the tonnage decrease, that's a little more difficult to quantify. And at present, they don't have the best number on [ore] short tonnes. So plus or minus 5 -- plus 5% is a reasonable number on ounces. But as I say, it's still pretty early-stage, and we would want a larger subset of long-hole scoping profiles where we get a better idea of reconciliation data out of the CMS data. So, look, we will build in top-cut evaluations and -- into our year-end reserves and resources. And I would expect us, based on what we've seen to-date, to raise our top cut from 60 to 70 grams per tonne at Santoy Gap. That's about all I can say right now, Craig. -------------------------------------------------------------------------------- Craig Johnston, Scotiabank - Analyst [48] -------------------------------------------------------------------------------- No, that's great. Makes sense, Brian. Thanks. And that's it for me. Good quarter, guys. Thanks. -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [49] -------------------------------------------------------------------------------- Good. Thanks a lot, Craig. -------------------------------------------------------------------------------- Operator [50] -------------------------------------------------------------------------------- And we have -- -------------------------------------------------------------------------------- Brian Skanderbeg, Claude Resources Inc. - President and CEO [51] -------------------------------------------------------------------------------- Thanks, everyone, for taking the time to be on the call today, and I look forward to staying in touch with you all. Have a great day. -------------------------------------------------------------------------------- Operator [52] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
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