Earnings Call Transcript - EGO Q1 2021

Operator, Operator

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Corporation Q1 2021 Financial and Operational Results Conference Call. The conference is being recorded. I would now like to turn the conference over to Jeff Wilhoit, Interim Head of Investor Relations. Please go ahead, Mr. Wilhoit.

Jeff Wilhoit, Interim Head of Investor Relations

Thank you, Carol. And thanks everyone for taking the time to dial into our conference call today. On the line with me are George Burns, President and CEO; Phil Yee, Executive Vice President and CFO; and Brock Gill, Senior Vice President, Projects & Transformation. Brock Gill will present operations today as Joe Dick is joining the call from a location that may experience connectivity issues. He may be available for portions of the question-and-answer period as technical conditions warrant. Also on the line for questions are Jason Cho, Executive Vice President and Chief Strategy Officer; Peter Lewis, Vice President, Exploration. Our release yesterday details our 2021 first quarter financial and operating results. This should be read in conjunction with our first quarter financial statements and management's discussion and analysis, both of which are available on our website. They've also been filed on SEDAR and EDGAR. All dollar figures discussed today are U.S. dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. Before we begin, I would like to remind you that any projections included in our discussion today are likely to involve risks, which are detailed in our 2020 AIF and in the cautionary note on Slide 2 titled forward-looking statements. I will now turn the call over to George.

George Burns, President and CEO

Thanks, Jeff. And good day everyone. Here's the outline for today's call. I'll provide a brief overview of Q1 results and highlights before passing it to Phil to go through the financials. Brock will follow by reviewing operational performance. Then we'll open it up for questions. For those of you who joined us on last year's first quarter earnings call, you will remember a very different tone as we discussed and evaluated the challenges COVID-19 imposed on our business. While we continue to contemplate the impact of the pandemic on all of us, there is also a sense of renewed hope and optimism for the future. On behalf of our management team and Board of Directors, I again extend my deepest thanks and appreciation to our employees and their families, who tirelessly commit and persevere to ensure that Eldorado will emerge from this stronger and more resilient company. Turning to our results in the quarter, I’m very pleased with our solid start to 2021, both operationally and financially. Since we last spoke two months ago, our signed Amended Investment Agreement governing the further development of Skouries in Olympias and Stratoni, collectively known as the Kassandra Mines, was submitted and ratified by the Greek parliament and has officially entered into Greek law through publication in the Government Gazette. These are key milestones in unlocking the compelling value of our Greek assets. We also reached important milestones at our Canadian operations as QMX shareholders voted overwhelmingly in favor of the transaction with Eldorado that officially closed on April 7. With the strategic land position now 5.5 times bigger, a newly discovered 800,000-ounce gold resource at Ormaque, and a host of high potential exploration targets, our Quebec team is now focused on continued growth in this key jurisdiction. I've mentioned our success in de-risking milestones in Greece achieved during the first quarter. I’m very pleased with the latest milestone in Greece that we announced just yesterday. We now have approval for the use of dry stack tailings at Skouries. This EIA modification will reduce the environmental footprint of the tailings facility by 50% and will create a more efficient, safe, and streamlined operating mine. This was a tremendous piece of work by our teams and regulators and evidences our mutual desire to design Skouries with the lowest possible environmental impact. The updated feasibility study for Skouries continues to advance towards completion in the third quarter, which will accelerate the process of finalizing the funding and financing for this world-class project. In parallel, we are also getting ready to submit an EIA for the Kassandra Mines mirroring the development plans outlined in the investment agreement. Following that, we are pursuing a construction decision by year-end and will look to restart construction in early 2022. With timely completion of the construction in two and a half years, low-cost production from Skouries represents significant upside to our current five-year production profile. Just a bit more color on dry stack tailings. Eldorado is an industry leader in using this best available technology. We deployed dry stack tailings at the majority of our mines and pioneered the use of it in Turkey and Greece. I am excited to now be able to implement this at Skouries. In addition to strengthening our business in Q1, I am pleased to report that Eldorado made significant progress on key sustainability initiatives during the quarter. Notably, we advanced articulation of our new sustainability framework and launched our global Sustainability Integrated Management System or SIMS, for short. These reflect our commitment to doing business the right way and putting responsible practices at the core of all that we do. Our sustainability framework articulates four key pillars that are our commitments across environment, social, and governance indicators. In delivering on these, we believe we will continue to be a preferred partner for host communities and countries, and have access to capital to grow our business for the benefit of all stakeholders. Also, in Q1, we rolled out SIMS that integrate sustainability, responsibility, and accountability across all of Eldorado’s core business functions at all levels of the organization. This management system is a set of performance standards by which we will be able to better measure and track our ESG performance. We have integrated other responsible mining frameworks, such as the Mining Association of Canada's Towards Sustainable Mining and the World Gold Council's Responsible Gold Mining Principles into SIMS, so that in adhering to our own standards, we are also complying with these leading frameworks. In short, the core objectives of SIMS are regulatory compliance, compliance with voluntary commitments, responsible risk management, and continuous improvement. With that, I’ll turn things over to Phil for a review of the first quarter financials.

Phil Yee, Executive Vice President and CFO

Thank you, George. Good day everyone. Starting with Slide 8. Solid operational results and revenues in Q1 2021 were consistent with plan and expectations. Production is in line with our 2021 annual guidance. However, adjusted earnings per share were lower than expected due to increased taxes resulting from the weakening Turkish Lira during the quarter and higher depreciation. Turning to a brief review of the numbers, strong operating results and a realized gold price of $1,723 per ounce in the first quarter led to a 20% increase in adjusted EBITDA to $108 million compared to adjusted earnings of $90 million in the first quarter of 2020. The realized gold price reflects negative provisional pricing adjustments related to concentrate sales from the previous quarter. The company reported net earnings to shareholders in Q1 2021 of $8.3 million or $0.05 per share, compared to a net loss of $4.9 million or $0.03 loss per share in the first quarter of 2020. After adjusting for one-time non-recurring items, including a $12 million non-cash loss on foreign exchange translation of deferred tax balances related primarily to the Turkish Lira, adjusted net earnings for Q1 2021 increased to $21 million or $0.12 adjusted earnings per share, compared to $12.5 million or $0.08 adjusted net earnings per share in the same quarter one year ago. As stated earlier, adjusted earnings per share of $0.12 was lower than expectations due to higher current taxes as a result of the weakening Lira and higher depreciation in the quarter. Tax expense totaled $28.2 million in Q1 2021, compared to $21.4 million in Q1 2020, approximately $9 million of current tax expense in the quarter related to taxable unrealized foreign exchange gains. These gains were primarily due to the significant weakening of the Turkish Lira during the quarter, which went from 7.44 Lira to the U.S. dollar at the start of the year to 8.24 at the end of Q1. This weakening Lira increased the value of our U.S. dollar denominated cash in local currency terms, leading to a taxable foreign exchange gain. Another development related to tax was the recently announced temporary increase in the corporate tax rate in Turkey, whereby the current effective tax rate of 20% will increase to 25% for 2021 and then decrease to 23% for 2022. The rate is then expected to return to 20% for 2023 onward. This increase will be retroactive to January 1, 2021 but has not been reflected in our Q1 interim financial results due to the timing of the announcement. The increased tax rate, including the retroactive adjustment for Q1, will be reflected in our Q2 results. Depreciation expense totaled $56.3 million in Q1 2021, compared to $52.4 million in Q1 2020. The increase was primarily a result of higher tonnes mined in the quarter compared to Q1 of last year. The lower average grade at Kisladag in the quarter contributed to increased depreciation on a per ounce sold basis as compared to Q1 2020. This increase was partially offset by lower depreciation resulting from a change in estimate, whereby a portion of inferred mineral resources are now included in the depreciation calculation commencing at the start of 2021. I am pleased to report continued increased financial strength and liquidity as shown on Slide 9. At quarter-end, we had unrestricted cash and cash equivalents and term deposits of $533.8 million. We also had $99.6 million undrawn and available under our revolving credit facility. Eldorado is in a net cash position as at March 31, 2021, and lowered our net leverage ratio to effectively zero compared to 0.89 times at the end of the first quarter of 2020, reflecting continued reduction of debt. Our Q1 2021 free cash flow totaled $24.6 million, significantly higher than the $7.2 million generated in Q1 2020. Looking to the balance of this year, our free cash flow generation in future quarters will be deployed increasingly towards those capital investments essential to our continued growth. With that, I’ll now turn it over to Brock to go through the operational highlights.

Brock Gill, Senior Vice President, Projects & Transformation

Thanks, Phil, and good day, everyone. Starting with Slide 10. Our positive first quarter operating performance set the tone for what I believe will be a strong year for Eldorado. I've been impressed by the pace, energy, and agility of our teams at site. We produced 111,742 ounces of gold in the quarter at cash operating costs of $641 per ounce sold and all-in sustaining costs of $986 per ounce sold. Our cornerstone Kisladag mine deserves special recognition for its strong finish to the quarter, but all of our operations may head on to continued challenges brought about by the pandemic and its impact on the ongoing global operating environment. Staying with Kisladag, first quarter gold production totaled 46,172 ounces at cash operating costs of $492 per ounce. The team now proactively managed through a minor geotechnical issue in the pit high wall that deferred access to higher plant grades. The resulting lower average grade in the first quarter was partially offset by outperformance on tonnes mined in place. Mining has since resumed in the affected area and the high wall issue has been resolved. Benched stability at Kisladag is very good. On the processing side, two new CIC trains were successfully brought online during the quarter, which has increased our solution processing capacity going forward from 3,250 to 3,750 cubic meters per hour. The installation of a new carbon column regeneration kiln remains on track for completion in mid-May, which is expected to drive improved gold recoveries in the circuit. The commissioning of the high-pressure grinding roll circuit remains on track for the third quarter. As you can see from the picture here, the HPGR building has been erected and partially clad in preparation for equipment delivery, which is on route. The commissioning manager is now onsite. We are also progressing well on our multi-year pre-stripping campaign and studies are ongoing to assess the potential for accelerating this work in an effort to bring forward value at Kisladag. Over to Efemcukuru, our first quarter gold production totaled 23,298 ounces at cash operating costs of $525 per ounce. The recently installed flotation columns continue to operate well as we also evaluate optimum ranges. This will result in significant improvements in the quality of our gold concentrate. Turning to Canadian operations, first quarter tons in greater Lamaque came in as expected. First quarter gold production totaled 28,835 ounces at cash operating costs of $759 per ounce. The underground decline between triangle and the single mill has reached the approximate midway point of the total plant distance of 3.3 kilometers. We remain on track to connect the two drives by the end of this year. Completion of the decline is expected to reduce operating costs, as surface haulage costs are eliminated and the current ramp-up underground route is replaced with straight line haulage to the Sigma mill. At Ormaque, early results of infill drilling on this 800,000-ounce gold resource have been positive. Preliminary mine planning studies are underway to assess the initial scope of this resource within the Lamaque operation. Once completed, the underground decline will enable the team to drift over to the deposit and gain additional information to integrate this promising new discovery into future mining plans. Over to Greece, at Olympias, first quarter gold production totaled 13,437 ounces at cash operating costs of $1,145 per ounce. We recently initiated leadership training surrounding our overall group transformation plans. This is a wide-ranging sustained effort that touches every part of our business in Greece, from employee education and training to physical plant and business systems upgrades. As Skouries continues to advance, we want to ensure that it does so well adopting best practices and a culture of success before the first shovels are in the ground. Implementing this scale of change at an existing operation like Olympias is challenging, but the long-term benefits in productivity, efficiency, and safety will result in a stronger operation with significantly enhanced economic opportunities. Touching briefly on our two key growth projects in Greece, the project management contract for Skouries has been awarded and pre-construction work is proceeding, including structural cladding for the mill as well as continued preservation activities. Completion of the feasibility study is expected late in the third quarter. At Perama Hill, an updated 43-101 study remains on schedule for completion this year. We also continue to see great exploration potential in the Thrace region, supporting opportunities for growth in and around Perama Hill. With that, I will turn it back to George for closing remarks.

George Burns, President and CEO

Thanks, Brock. Whether it's de-risking the Greek assets or exciting capital investments underway at Kisladag, or optimizing our high-potential Canadian operations, Eldorado remains well positioned for success. Our balance sheet continues to emerge as a major strength, which will enable us to maximize this potential and surface value for our shareholders and our stakeholders where we operate. Thank you everyone. I will now turn it over to the operator for questions.

Operator, Operator

Thank you. We will now begin the question-and-answer session. The first question comes from Cosmos Chiu from CIBC. Please go ahead.

Cosmos Chiu, Analyst

Great. Thanks, George, Phil, and Brock. Just maybe a few questions for me here. First off, can we have a discussion on taxes? Hopefully without giving everyone a huge headache here? But Phil, as you said, earnings were lower than the numbers on the street. Just given taxes and also depreciation, but on taxes, I calculate that taxes were about 71% of earnings in the quarter, which is really high. Even if I back out some of the one-time items, it’s still 41%. I guess, given the continuing volatility in the Turkish Lira, could you give us a bit more guidance in terms of how we should model and look at taxes for the remainder of 2021?

Phil Yee, Executive Vice President and CFO

Sure. Thanks, Cosmos. Good morning. Yes, good question. I mean, the taxes – the effective tax rate you outlined is accurate, but that includes cash and non-cash types of adjustments. So, if you look at the current tax rate, it's about 30.6%. That includes the corporate tax which for Q1 was at 20%. The retroactive portion reflecting the increase to 25 has not been booked yet because of the timing of the announcement. So, that'll be picked up in Q2. The other part of the taxes in Turkey is tied to a foreign exchange tax and reflects a quarter-to-quarter adjustment. When the Turkish Lira weakens compared to the U.S. dollar, there's an additional tax that's imposed. Conversely, when a Turkish Lira strengthens against the U.S. dollar, that tax is then credited back. So, in Q1, there was a significant weakening of the Turkish Lira, which led to the higher tax. That was unique to Q1. In Q2, the forecast for the Turkish Lira is that there are still concerns with some of the economic policies and actions being taken with the Turkish Central Bank. The forecast is still for the Lira to remain around eight for the time being. So even if it drops to eight, there would be a slight credit back in Q2, and if it drops below eight, the credit would be higher. So, that's kind of a fluctuating impact. And again, it depends on what's happening in Turkey. And the other part of the tax, the current tax is really the Quebec mining duties, and that's just the provincial mining duties. The federal tax piece is offset by loss carry forwards in Quebec. So, the largest component is Turkey. Like I said, the one factor that we know for sure is that the corporate tax rate is going from 20% to 25%, and that will be reflecting in Q2 along with foreign exchange gains or losses.

Cosmos Chiu, Analyst

Okay, great. Thanks, Phil. I'm not sure if my Q2 tax estimate will be any more accurate, but we'll give it a try. Maybe switching gears to Greece, first of all, congratulations on getting the investment agreement ratified and also getting the dry stack tailings approved. And on that, George and team, as you mentioned, we're now working on an updated technical report. Clearly, the last technical report was completed in March 2018. Some of the input costs have increased, such as steel prices and other prices as well. I'm not sure how much you can share with us at this point in time, but could you give us a bit more color in terms of potential changes and how we should look at topics of this project on a go-forward basis?

George Burns, President and CEO

It's George. I'll maybe take a kick at it. And Joe could jump in. So, I mean, thanks for the congratulations. It was a fantastic first quarter for us getting the agreement hammered out, a state-of-the-art agreement that puts protections in place for Eldorado but also for the government. It was a mutually beneficial agreement. And in spite of COVID, we were able to hammer that out over the last year plus. And then it was great news yesterday to get the permit approved for Skouries dry stack. That's a massive improvement in benefits for everybody and an attribute to our company's commitment to ESG. Regarding the technical report, that is the next major milestone for us. I’ll give you a general characterization. Skouries is half built. The main infrastructure for the plant is in place. A lot of things are already on the ground. There's still substantial work to be done. We've got the dry stack filter plant to procure and construct. We've got the primary crusher to construct. So, in terms of the dry stack facilities, we need to procure equipment and materials. There will be some cost escalations on these materials; however, most of the necessary components are already on the ground. We’ve got the starter dam that will ensure that dry stack filtered tailings have perpetual control to prevent erosion. We've got the open pit pre-stripped, ready to deliver to the plant once everything else is ready. However, there's a lot of lateral development, vertical development, and test stopping to be completed for the underground to be ready for commercial production. Yes, I mean, there will be some escalation in costs for certain materials we need to procure, but we’re in a good position to push productivity and efficiencies in construction. I’m not expecting any material change in estimate. We need to ensure we are positioned to negotiate financing terms necessary to commence construction. Stay tuned, and we'll have answers as we finalize the study in Q3.

Cosmos Chiu, Analyst

Right. And yes, it seems like ages ago now. But I remember being onsite three or four years ago now. Yes, you're right. A lot of the infrastructure was already in place at Skouries. Just a quick follow-up on my last question here. As you mentioned financing, you talked about the feasibility study coming out in Q3 or the updated technical report in Q3, and then potentially starting construction or continuing construction early in 2022. Should we expect you to bring in a financing partner? You've talked about potentially a joint venture partnership in the past. Do you need that in place before starting construction? Is that the timeline we should be looking at?

George Burns, President and CEO

Well, I’ll answer it at a high level and then let Jason jump in to provide additional comments. Yes, our strategy for the year is to get the technical study completed in Q3, positioning us best to finalize financing. A joint venture is a primary focus for us for several reasons: to provide capital, to bring another important voice to the investment, and considering the multi-decade life of these high-quality assets with various governments coming and going. I will let Jason jump in here with a few comments.

Jason Cho, Executive Vice President and Chief Strategy Officer

Yes, thanks, George. Cosmos, consistent with what George has mentioned, timing is critical with respect to the updated feasibility study and the updated EIA to ensure we land on optimal funding terms. There’s capital allocated to early-stage work, and we probably will continue that. However, making material commitments without a funding partner in place isn’t likely to happen. The idea is to progress through the balance of this year and, as George mentioned, aim to finalize something later this year or early next.

Cosmos Chiu, Analyst

Great. Thanks a lot. Those are all the questions I have, and have a good weekend.

George Burns, President and CEO

Thanks, Cosmos.

Operator, Operator

The next question comes from Kerry Smith from Haywood Securities. Please go ahead.

Kerry Smith, Analyst

Thanks, operator. George, what is the timing for the updated EIA for Kassandra, I guess, for the whole Kassandra operation? And does that EIA need to be approved before you could start construction in Skouries or is Skouries covered under the existing EIA with the amendment for the dry stack tails?

George Burns, President and CEO

Hi, Kerry. Thanks for those questions. The amended EIA that we're actively working on with the government is primarily for Olympias and Stratoni. We have the necessary approvals to proceed with Skouries. For Olympias, we plan to continue ramping up infrastructure and development in the underground mine to support higher production rates. By ramping up the underground production, our fixed costs remain fixed, and our variable costs will drop dramatically, providing significant margins. Therefore, productivity efficiency improvements are essential, but this permit submission and approval supports increased throughput and value. Expect to file the permit later this year and receive an approval sometime next year. There's no urgency on Olympias, as you can see from our five-year guidance, we have capacity for an early-stage ramp-up. We need this permit to deliver on the five-year plan, and the sooner we complete the Stratoni upgrades, the quicker we can reduce concentrate handling and shipping costs.

Kerry Smith, Analyst

Okay, great. Thanks for that. Secondly, on Perama, if you get the first 43-101 in Q2, is that report required for the EIA submission, or can the EIA be submitted before that comes out?

George Burns, President and CEO

The 43-101 is simply an update of our technical information and market appraisal of that opportunity. There’s a lot of work needed to complete the strategic EIA. Once we have that in place, stakeholder engagement with communities and government will follow. There is substantial groundwork over this year and next to position Perama for future construction opportunities. We will keep you updated as this unfolds.

Kerry Smith, Analyst

What is the rough timing for submitting the strategic EIA? Do you have a sense of the approval timeline?

George Burns, President and CEO

It’s still early enough; I can tell you that we expect to submit this year and anticipate an approval next year.

Kerry Smith, Analyst

Okay, that's helpful. Just one last question for Phil on the Turkish tax increase, going from 20% to 25% and their intention to reduce it back to 20% by 2023. How likely is that to happen? It's rare to see a government raise taxes and then lower them.

Phil Yee, Executive Vice President and CFO

Yes, hi Kerry. Good morning. The tax increase was announced on April 16, so it’s a recent development. It's a tax increase affecting everyone, not unique to the mining sector. It appears to be the government's response to current economic challenges. I suspect since they’ve made it official, that’s the general plan to raise it to 25% and slowly reduce it over the next couple of years. Ultimately, its success will rely on mitigating the country’s current economic challenges. So whether it will change or not remains to be seen, but that’s the enacted and communicated plan.

Kerry Smith, Analyst

Understood. One last point about the Kışladağ operations; the Q1 grade was lower, and it sounded like there was a wall failure that hindered access to a higher-grade section. Your guidance for the year is 0.77 grams overall, and you reported 0.69 grams in Q1. Will the average still meet the 0.77 guidance for the year, or should we expect it to be less than that?

Brock Gill, Senior Vice President, Projects & Transformation

Yes, we expect the grade for the year to align with guidance. Q1 was anticipated to be stronger. We experienced a minor high wall failure that limited access to the bottom, but we’ve since stabilized and returned. It’s a question of grade sequencing throughout the year. It's important to note that despite the lower grade in Q1, the improved throughput helped to mitigate expectations for this quarter. We’re committed to continuous improvement, and if we can maintain an increase in throughput, it will create more ounces and enhance value. We’re not changing our guidance as it stands.

Kerry Smith, Analyst

Great. That’s all my questions. Thank you.

Operator, Operator

The next question comes from Mike Parkin from National Bank Financial. Please go ahead.

Mike Parkin, Analyst

Hi, guys, congrats on that development at Skouries, that's encouraging. I just wanted to confirm that Perama is included under the same EIA that the Kassandra Mines are, or is it separate?

George Burns, President and CEO

No, it's a separate asset, and we are working on a separate EIA to support that project.

Mike Parkin, Analyst

Does the March 2018 feasibility study for Skouries include the economic benefits of what you're proposing to do at the Stratoni port in terms of transportation costs, or is that an upside scenario that we would be seeing with this updated feasibility report coming in Q3?

George Burns, President and CEO

As of 2018, the port changes were slightly less than we anticipate now, so there is potential upside in this technical report.

Mike Parkin, Analyst

Thanks, all my other questions have been answered. So, thanks very much again.

George Burns, President and CEO

Thanks, Mike.

Operator, Operator

The next question comes from Tanya Jakusconek from Scotia Bank. Please go ahead.

Tanya Jakusconek, Analyst

Great. Good morning, everyone. Congrats again on getting that tailings permit for Skouries. That's good news. If I could ask, many of my questions have been asked already, but I have two outstanding. Maybe just for Phil, we were off on our depreciation forecast for the quarter. Can you provide us some guidance on what to expect for this year?

Phil Yee, Executive Vice President and CFO

Hi, Tanya. Sure. Our depreciation, particularly at the Lamaque, was tracking higher on a per ounce basis than some of our other assets. We've introduced a change in estimate given that Lamaque is a relatively new mine and it's growing. So, we’ve added a portion of the inferred, which will reduce the depreciation charge going forward, especially for Lamaque. I think that's key. Additionally, it’s worth noting that our depreciation is based on tons mined rather than ounces produced. We saw a skew in Q1 at Kışladağ because the tonnage mined increased while the lower grade led to higher depreciation per ounce. These factors need consideration when aligning depreciation models moving forward.

Tanya Jakusconek, Analyst

I was thinking from a bigger picture. Like, is something like $150 to $200 million, would we be in the ballpark there?

Phil Yee, Executive Vice President and CFO

I’m trying to find the number that's in our budget. I don’t have that handy at this moment, but we are tracking consistent with those adjustments.

Tanya Jakusconek, Analyst

Okay. I would appreciate a follow-up on that number.

Phil Yee, Executive Vice President and CFO

I can get back to you with those numbers.

Tanya Jakusconek, Analyst

Thank you. And on the technical side, could you shed light on the inflationary pressures you are seeing in your cost structure, besides fuel, which we appreciate? Are you seeing anything in labor? What about cyanide, tires, freight? What’s your experience with inflation?

George Burns, President and CEO

We aren't seeing anything abnormal, which is a surprise considering the COVID issues. We're observing inflationary impacts in Turkey with the U.S. to Lira ratio. However, the negative impacts on inflation are generally counteracted by the exchange rate, and we have seen that over the 20 years we've been in Turkey. Although it's a tough year on the planet, we haven't encountered unusual inflationary pressures so far.

Tanya Jakusconek, Analyst

And your labor costs?

George Burns, President and CEO

As inflation rises in Turkey, our labor costs get adjusted upwards accordingly. However, due to foreign exchange effects, those increases are often mitigated. While wages increase annually with inflation, nothing unusual is occurring regarding labor inflation at this time.

Tanya Jakusconek, Analyst

Thank you for the clarification. I look forward to that detailed number. Thank you.

George Burns, President and CEO

Thank you.

Operator, Operator

This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.