Pan American Silver Corp Q2 FY2022 Earnings Call

Thank you all for joining us this morning. Before I turn the call over, I need to advise that certain statements made during this call today may contain forward-looking information and actual results could differ from the conclusions or projections in that forward-looking information, which include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the timing and amount of estimated future production, cost of production, capital expenditures, future metal prices and the cost and timing of the development of new projects. For a complete discussion of the risks, uncertainties and factors which may lead to actual financial results and performance being different from the estimates contained in the forward-looking statements, please refer to Yamana’s press release issued yesterday announcing second quarter 2022 results as well as the management’s discussion and analysis for the same period and other regulatory filings in Canada and the United States. I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12:00 p.m. Eastern Time. Replay information and the presentation slides accompanying this conference call and webcast are available on Yamana’s website at yamana.com. I will now turn the call over to Mr. Daniel Racine, the President and CEO. Please go ahead, sir.

Thank you, operator. Thank you all for joining us and welcome to our second quarter 2022 conference call and webcast. Presenting with me today is Jason LeBlanc, our Senior VP, Finance and Chief Financial Officer. Peter Marrone, our Executive Chairman will also talk about the Gold Fields agreement. The rest of senior management team is also available for the Q&A portion of the call. Peter is in transit returning from meetings with South African shareholders. So, we hope this connection remains adequate throughout the call. The health and safety of our employees always come first. Our total recordable injury rate was 0.81 for the first six months of 2022. And I would like to thank all our employees for remaining focused and committed to our safety values. Despite our excellent track record, this is something we are always working on improving. The company continues to implement its climate action strategy during the quarter, including work on the analysis to support the conversion of approximately 50% of Cerro Moro’s electricity requirement from diesel to wind power. This will help meet the greenhouse gas emission reduction required between now and 2030 to achieve the company’s 1.5 degree Celsius science-based target, reduce operating costs, expand mineral reserves and extend the mine life. Work also continued on other climate action objectives, including advancing the evaluation of operational projects to reduce greenhouse gas emissions and the estimation of our Scope 3 emissions. I am very pleased that Yamana was named one of Canada’s best 50 Corporate Citizens by Corporate Knights Magazine for the second consecutive year. The company’s ranking improved to 30th overall and we remain the top-ranked Canadian mining company on the list. We are very proud of this exceptional recognition achieved by the dedication and hard work of our employees and business partners. Further demonstrating our deep commitment to ESG excellence, earlier this week, Yamana’s ESG rating, as determined by MSCI, was upgraded to A from BBB. The upgrade is the result of improvements in our corporate governance rating, reflecting our effort to further improve our corporate governance and management policies and practices. Yamana has a long history of prioritizing the health and safety of its people, protecting the environment and the community where we operate, and we are committed to continuing to improve our responsible development strategy. Turning now to our second quarter highlights, we continue our track record of operational excellence and produced over 232,000 ounces of gold, exceeding our plan for the quarter. The standout results were driven by Canadian Malartic’s Cerro Moro, Jacobina, and El Penon. Notably, Jacobina achieved record quarterly gold production. Silver production of nearly 2.36 million ounces was in line with plan, as Cerro Moro delivered strong results with increased mill feed from higher grade zones. GEO production of nearly 261,000 ounces was in line with plan despite the gold to silver ratio being near an all-time high and significantly above budget. With the strong year-to-date performance, Yamana is well positioned to meet its annual guidance. As you know, during the quarter, Yamana entered into an Arrangement Agreement with Gold Fields. More information will be provided by Peter later in the call. While I won’t spend too much time on the numbers on this slide, given that we pre-released our operating results, I want to take the opportunity to comment on our operational staff and the excellent results achieved to-date. Turning to the individual drivers of our performance, Canadian Malartic delivered a strong second quarter, which exceeded our plan. We are also continuing to advance the development of the underground Odyssey project, which remains on budget and on schedule. The underground front is now at 380 meters vertical depth below surface and 2.3 kilometers of ramp completed to-date. Shaft sinking is scheduled to begin in the fourth quarter of this year, and we expect first production from Odyssey South during the first quarter of 2023. We continue to see huge opportunities at Odyssey in the future. Exploration work has delivered promising results at East Goldie, extending mineralization to the east as well as the Odyssey South Internal Zone, which demonstrates the potential to add mineral resources. Jacobina had a record quarter driven by higher ore tonnage mined with production for 2022 on track to increase for the ninth consecutive year. Underground mine development work continues to gain access to new mining panels. Together with the higher ore tonnage mined, it provides additional flexibility to the development of stockpiles supporting higher throughput expected from the ongoing phased expansion. This positive trend should continue as the Phase 2 expansion throughput objective was realized in July, establishing Jacobina's sustainable production profile at 230,000 ounces per year. Cerro Moro continued to benefit from access to additional mining phases, which supported the increase in mill feed coming from higher grade underground ore, which now accounts for over 80% of the stabilized throughput. At Cerro Moro, we are continuing to advance the scalable plant expansion study and potential heap leach project and are evaluating options for alternative sources of power, which include the connection to the grid and wind power. Increased mill feed coming from higher grade underground ore and improved recovery has contributed to a step change in year-over-year production. This trend is expected to continue in 2022 with additional contributions of ore from Zoe. As planned, El Penon delivered solid gold production results driven by access to higher gold grade. We expect that gold production will remain stable throughout the year, but a strong second half will account for approximately 60% of the silver production due to mine sequencing. One of the key strategies to increase value at El Penon is to establish additional mining sectors and increase mining flexibility. With exploration success, the objective at El Penon is to utilize the excess plant capacity and increase production. Minera Florida delivered production in line with plan and we expect annual results to be in line with the plan. Operational efficiencies remain an area of focus at Minera Florida and we have identified several new opportunities to increase recovery at the processing plant as we continue to work towards the planned debottlenecking study, which is expected to allow for increased throughput in 2025 when it receives its permits. Yamana continues to advance strategic initiatives across its portfolio, and we were pleased with our partner Agnico Eagle to announce positive exploration results at Odyssey and Wasamac on Wednesday. These results further support the strategic outlook and the company’s efforts to meaningfully extend its sustainable production platform. Notable highlights at Odyssey include East Goldie exploration and infill drilling, which continues to highlight significant expansion potential. Recent drilling has extended the East Goldie deposit to the west by approximately 225 meters and to the east by approximately 500 meters, expanding it to more than 1,700 meters from the current mineral resource outline. Shallow drilling at the East Goldie expansion also extended the mineralized plane by an additional 900 meters from previously reported drilling. With 12 surface diamond drills active on East Goldie as well as 4 underground drills on Odyssey South, ongoing drilling is expected to convert a significant portion of the 2021 year-end inferred mineral resources to indicated mineral resources for the 2022 year-end reporting and significantly expand the inferred resources envelope. These new indicated resources will provide the basis for the updated technical study in 2023 that will allow definition of mineral reserves for the Odyssey underground project over the next few years starting at the end of 2022. We are very excited about the potential generational mine life at Odyssey, and the project represents one important step towards realizing the full potential of Yamana’s 1.5 Plan, as it will establish a large sustainable annual gold production platform between 500,000 and 600,000 ounces on a 100% basis, with a strategic mine life well into the 2040s. Importantly, only 47% of the current mineral resources are included in the 2021 mine plan. As our exploration success has shown, we believe there is potential for significantly higher production well into the future. Equally as important, the capital expenditure to achieve this is largely offset by pre-commercial production. Assuming the current gold price, 72% of the initial expansionary capital through 2028 will effectively be offset by peak commercial production as we move into the upper part of the ore body starting in early 2023. The exploration success continues at our Wasamac development project. Infill drilling results continue to confirm or exceed expected grade and highlight the continuity and tenor of mineralization. Exploration drilling also delivered a positive step-out drill result from Wildcat South, where drill holes provided confirmation of the new mineralized plane, which remains open at depth. Additional exploration targets under the property, including the adjacent Francoeur, Arntfield, and Lac Fortune properties, provide further upside. The positive infill and exploration drilling results to-date provide support for an expanded production scenario within and adjacent to the known mineral envelope. We believe there is potential for a strategic mine life of 10 to 15 years at 200,000 to 250,000 ounces of gold per year compared to the life-of-mine average of 169,000 ounces in the feasibility study at very attractive all-in sustaining costs. These exploration results, together with Jacobina reaching the Phase 2 throughput target and the Wasamac bulk sample approved by our board, demonstrate that we are delivering step by step on the sensible growth and value creation we laid out in our Yamana 1.5 Plan. Our Board approved Yamana 1.5 Plan has identified a path to progressively increase production to 1.5 million gold equivalent ounces via a series of projects and optimization with very modest capital requirements and low capital intensity. This responsible growth is fully aligned with our capital allocation strategy, which balances shareholder return, balance sheet, and low capital intensity growth. This low capital growth is designed to strengthen our already leading free cash flow generation. It’s also important to note that this responsible growth is underpinned by multiple low-risk, low-capital projects that have the ability to be mixed and matched to optimize free cash flow generation. Such flexibility allows us to rearrange, adjust, defer, or move forward projects at our discretion, thus having confidence in achieving our overall growth plan while ensuring cash flow growth and growing shareholder returns. And with that, I will now pass the call over to Jason who can go over our quarterly results in more detail.

Thank you, Daniel and good morning everyone. Turning to our second quarter financial performance, our continued operational strength helped revenue reach $485.6 million, up over 11% from the same period last year. Gross margin, excluding DD&A, rose nearly 17% to $292.9 million, up from $250.9 million in the year earlier period. Earnings during the quarter were $72.1 million or $0.07 per share compared to a loss of $43.9 million or $0.05 last year. On an adjusted basis, earnings were $0.09 per share versus $0.08 per share last year. We delivered strong cash flows again in the quarter, with cash flows from operating activities before net change in working capital at $195.9 million, up nearly 17% from the same period last year, while cash flows after working capital were $187.8 million during the quarter compared with $153.5 million last year Q2. We also generated free cash flow before dividends and debt repayments of $53 million during the quarter or up about $2 million from last year, despite about $30 million of higher capital spending planned, primarily from the advancement of the Odyssey project. And we ended the quarter with cash and cash equivalents of $545.1 million, inclusive of $218.3 million available for use at the MARA project. As Daniel already noted, we expect free cash flow to increase quarter-over-quarter with the strongest free cash flow generation anticipated in the second half of the year, particularly during the fourth quarter, which is expected to result in cash balances steadily increasing throughout the year. Lastly, although inflation has been a headwind to our financial results, we have successfully mitigated the impact with our strong production and productivity initiatives at our operations, in addition to our ongoing procurement efforts and provisional inventory builds from earlier this year. We are confident we will be able to continue this trend for the balance of the year. And with that, I will hand it back to Daniel for some final remarks.

Thanks, Jason. Before completing our presentation, as we have Peter on the call, perhaps Peter, you can give a summary of the status of the Yamana-Gold Fields deal.

Daniel, thank you very much. As you can see from our second quarter results, our Board of Directors took a business as usual approach. This is a forum for the discussion and promotion of Yamana’s operational strength, financial performance, prospects, and opportunities. Our board felt that there were forums for discussion of the deal. This was a forum for discussion of the second quarter results. However, an important point is at the substance of the Gold Fields-Yamana deal is Yamana and its value and prospects. In taking a business as usual approach, we are implicitly promoting the deal with further explanation of what we see as value and what Gold Fields saw as that value in its diligence. As an update on the deal itself, we have begun engagement with our and Gold Fields shareholders. Some are aware that we were invited by Gold Fields shareholders in South Africa to present our company to them. As mentioned earlier, I am returning from that engagement and it seems that those meetings and presentations, including some in London and New York, have gone well both on substance and governance grounds. The value proposition and the industrial logic of the deal is in focus. While shareholders are expressing an understanding of the deal and support good governance principles, it tells us that it’s critical that shareholders want to see full detail and that full detail is provided when we and Gold Fields provide our information circulars. Interestingly, our circular will provide context for the deal in background, which is typical. We will go into great detail on that background not only on the deal, but more broadly, but similar to London Stock Exchange rules, the Johannesburg Stock Exchange requires that we include a valuation on the company and that valuation will demonstrate that the implied value in the offer is modest and there is considerably more value in our company than what is on offer. Next steps include continued engagements with our and Gold Fields shareholders, Gold Fields’ publication of its first half year results in August, likely in late August, publication of Information Circulars in September, and shareholder votes in October. One final comment that I’ll make before passing the call back to you. On operational synergies, we have been taking a responsible and almost literal view of these operational synergies and optimizations. We have identified several and are critically assessing their dollar value. However, they are substantial and more than support the deal terms. Some of the obvious ones are Salares Norte, the asset in Chile that is in development by Gold Fields, likely garnering more production based on a faster and better transition from development-stage operations, particularly with El Penon steering that transition, a possible fast-tracking of Phase 4 Jacobina, advancing a more aggressive exploration program on the Jacobina Greenstone Belt with Gold Fields' experience with Paleo-placer deposits. Possible development and optimizations of MARA given Gold Fields’ experience, along with ours, in South America with the development of large open-pit projects. Finally, as we reported on Wednesday and as you mentioned earlier on the call, Odyssey is bigger and better, and with the extension to the west and up dip, our and Gold Fields’ deep shaft underground experience will look at how we can, with the support of our partner at Canadian Malartic, fast track for a possible second shaft to the west. We will have more to say on these synergies and optimizations likely before our information circulars, and we expect to be able to do that in time for the Denver Gold Forum in September.

Thanks, Peter. This quarter further demonstrates our operational excellence that our Americas-focused portfolio is continuing to deliver as we progress towards the Yamana 1.5 plan in a financially prudent manner, with exploration optionality providing even greater upside. And with that, I will turn it back over to the operator for questions.

Yes. Thank you. Our first question is from Anita Soni from CIBC World Markets. Please go ahead.

Hi, good morning, Peter, Daniel and team. I just had a couple of questions. Peter, you’ve sort of addressed it. Firstly, I was going to ask why the Wasamac update was with this release and perhaps not with the Investor Day that you had, where you targeted the 1.5 million ounces and you’ve shown the market all of your projects on tap but didn’t release this one. So is this – was Wasamac not ready yet at the time 3 months ago when we had that Investor Day?

It wasn’t ready, Anita. We got the results on exploration after that. We knew it was coming. We knew that the drill holes were intersecting zones, but we didn’t have all the information at that time.

Okay. And then the second question was with regards to shareholder engagement, and that’s probably a question for Peter on the Gold Fields deal. Could you just give us a little bit more color in terms of what you’re seeing with the investors that you meet with and the kinds of color and detail that you’re giving that is incremental to what you put out there publicly?

Mostly, it is information, Anita. There’s nothing that is new other than, of course, what we publish as new information similar to what you asked about Wasamac. But it’s informational – in some respects, it shouldn’t be startling to us that we feel that we are a company that should be well-known in the market, but it’s a big market, and many people don’t know the company. What I mean by informational is that what we’re doing is we’re educating the shareholders of Gold Fields on what Yamana is all about. I said earlier that the substance of this deal is Yamana. What’s being paid for it? Is there more value there? How do you recognize some of the synergies to which we’ve alluded? So mostly, this is about engaging with shareholders, presenting the company and giving an indication based on our experience and knowledge of the company of what the company is all about and the value proposition to which I referred. And I have to say that those meetings have gone well. Certainly, on some of the governance side, shareholders, principally in New York and London, have asked how we got to this point. I think that they’ve taken comfort in that. On the substantive side, it certainly seemed to us, in particular based on sidebar discussions after these presentations, that those shareholders were becoming very comfortable with what Yamana was all about and the value proposition to which I referred.

Okay. And then just one more. I think when you presented a couple of weeks ago and noted that you were going to be increasing the dividend, I noted that Gold Fields will be listing in Canada. You mentioned something about other approaches, and that information would be in the circular. I didn’t follow up on that call, but I was wondering if you could provide a little bit more color about the approaches that you’ve had. And if anybody has approached you since this deal was announced.

Well, we would not be in a position to say anything about that, Anita. What I would say is, if you see our arrangement agreement, it contemplates what is the level of engagement that we have with this company, why we’re committed to this deal, and it also talks about as is typical under governance principles with Boards of Directors. It talks about what would be and would not be superior proposals. The more important point is the first part of your question. For our Board of Directors in 2020, our conclusion was that while substance and quality will always matter, we’re increasingly in a world where relevance comes from size. We looked at how we can grow organically. You are aware, based on our 1.5 plan and what we announced at our Investor Day earlier this year, how we get to those 1.5 million ounces? Daniel has discussed that on this call earlier and how that number could also be larger as a result of what’s in the portfolio. But we looked at a host of other things as well. What can we buy? What are the possible transactions where it is closer to business combinations of mergers of equals? And if we were to sell ourselves, who would be the interested parties and how would those deals make sense? So it was a broader engagement than only this one. This one was the bright shining light for our Board of Directors, understandably so, because of the level of experience that Gold Fields has that’s comparable to ours, the fact that we are a plug-and-play with this Americas portfolio by comparison to their assets, the nature of the geologies of their ore bodies and mines by comparison to ours, and where we can get some synergies as a result of the combination of the two companies. The result is not just the size of the company, but also the quality. It’s not just that we’ve become a bigger company among the super elites in our industry, but we also have longer mine life, better free cash flow generation, better growth, although managed growth, as Daniel earlier said, this is growth that comes at very low capital cost, and with a true value proposition because our market capitalizations combined is still well below those of the companies.

Okay. Thank you very much. Congratulations on a solid quarter and keeping costs under control in this inflationary environment.

Thank you, Anita.

Thank you. Next question is from Fahad Tariq from Credit Suisse. Please go ahead.

Hi, thanks for taking my questions. First on Wasamac, and I appreciate there’s a lot of information that’s been provided. Can you just remind me on the ASIC commentary that it’s likely to be below the feasibility study average of around $830 an ounce and that the CapEx for the project is unchanged at $416 million? Can you just talk about how to think about that in relation to inflationary pressures? Has that been considered or are there production offsets? I’m just trying to understand how that’s factored in?

Alright. Thanks Fahad. Good question. The guys are working constantly to see on the cost, and we have identified opportunities to reduce costs in some areas. As you mentioned, we have pressure on other areas. We are looking at improving recoveries – improving recoveries by 1% or 2% will make a big difference. This is on the cost side. We think our – and if we produce more ounces, the divider is higher. This is why we are very confident that we are going to come with a revised feasibility study at some point with the success we have in exploration to reduce all-in sustaining costs. It will be one of the best. Maybe I will pass it to Yohann to complement my answer.

Hi Fahad. Yohann here. Thanks for the question. Just to add to what Daniel is saying here that to support the bulk sample, we redid the cost analysis and mining sequence and all that. For sure, we adjusted slightly the cut, but we found some cost-saving initiatives that offset those costs. Overall, even by increasing throughput, we don’t see additional, I would say, CapEx investments in the processing plant. The underground is still about the same because it’s a wider zone. We have some good results with infill drilling. We find a stope slightly bigger. So that supports nicely the increase of that new plant. For now, considering the cost, we came up to about the same CapEx.

Okay, great. So, would it be fair to say that by 2024, when maybe the production begins, there is productivity offsets you’ve mentioned, but it could be the case that we are in a more normal cost inflation environment? Would you see potentially lower CapEx if things normalize?

Yes, if it’s normalized. But this is why I said, and Yohann said we are working and looking constantly how we can improve. At the end of the day if costs normalize and they go back down to where they were before, the CapEx will be similar or even lower – and like Yohann mentioned too, the big thing we are finding is the flow sheet we have for the mill designed at 7,500 tons per day, and we are going to process 7,000 tons per day. We see that even that mill can process a lot more ton. Jacobina is a good example, running at 85% now. By optimizing recoveries, optimizing the flow sheet, and reducing costs in some areas or changing equipment, this is how we arrived at now in today’s world, with today’s cost of equipment, at the same CapEx. It’s possible by 2024 when we get the permit and go ahead with construction that costs will be similar or hopefully lower.

Okay, understood. One question for Peter, not to belabor the point on the Gold Fields transaction, but are you finding at a high level, is there a different sentiment when you talk to Yamana shareholders versus the sentiment when you talk to Gold Fields shareholders? Are you finding different lines of questioning from each shareholder base? Thanks.

We have only begun to engage with Gold Fields shareholders. We have only recently begun that, literally over the course of the last few days and this past week. I would say that the engagement is similar to the extent that our shareholders are looking to learn a bit more about Gold Fields, at least those who did not know the company. We are finding something very similar with the Gold Fields’ shareholders as it relates to us. Our shareholders are not as interested in the question of what is being paid for Yamana; they understand that. Gold Fields shareholders are more interested in that. The implied price when the deal was launched was $6.7 billion. They want comfort that amount is not reflective of the total value for the company. The flip side of that is the way we have managed the growth of the company is modular, as Daniel mentioned, can be sequenced and the capital intensity is comparatively light. In other words, it doesn’t impinge on our free cash flow. There certainly is a tendency to focus on free cash flow, not dissimilar to our shareholders the importance of free cash flow and balancing between spending money on growth projects and cash returns to investors. One interesting point that I think might resonate, consensus models do not take fully into account all the value that’s in Yamana. Our internal model certainly shows a net asset value that is substantially in excess of the net asset value that’s in consensus. What Gold Fields has been saying, and we now punctuated, is, this was essentially a normalization, a bit of an equalization like payment to reflect what is on the common in the next few months and not longer than the next year. Implicit in that, there is considerably more value. This is where we highlight greater value. That’s the distinction I think I would make between the amount of shareholders and what they focus on and what we are now seeing as the focus of the Gold Fields shareholders.

That’s very helpful. Thank you.

Thanks.

The next question is from Ralph Profiti from Eight Capital. Please go ahead.

Good morning Yamana team. Thanks for taking my questions. Daniel, if I can start with you. Just some rough estimates, in the context of the strategic life of 10 years to 15 years at Wasamac, gets me to around a 3 million ounce deposit in terms of the reserves required to support that conceptual plan, which is about 60% higher than where we are now. Is that the right way to think about deposit size in terms of growth potential, and how long do you think it will take you to get there?

Good question, Ralph. You have it right. We have about 2 million ounces now based on what we had when we bought it. When we look at the drilling we are doing – Yohann mentioned earlier that we are infield drilling, what we are finding are wider zones and better grades; we also have new discoveries. I mentioned that we are going to start drilling Francoeur, Arntfield and Lac Fortune and we can complement those. Exploration is returning amazing results in 2022; we still have half of the year to drill, and next year and 2024. We are confident that by the time we get the permit to go ahead, build the mine, and put it into production, we will reach that number quite easily. Remember, we are in the process of asking for the permit to start the ramp. We will develop that ramp starting next year for the next few years to get the mine ready for production, when the mill will be built. We will have the chance to drill from underground because everything stays open. It’s open in all directions; it’s open going deeper, as it’s drilled from surface, but it’s still open in all directions, and we are finding new zones. We don’t think it will be a challenge to reach that.

Yes. Ralph, just to add to that. I mean we do have about 2 million ounces in our plan, and we have measured inferred resources that can be transferred as well. We are talking about 400,000 to 500,000 ounces there. We also studied some zones initially that are going to be put into production; maybe we will look at different mining methods. We also sterilized a big block around the old excavation that can be put into the plan as well. You also have to consider that based on the mining sequence we have, we have four good years of 250,000 ounces per year with what we have. That gives us until 2030 to find those additional ounces and sustain that plan. Between now and 2030, I think we have plenty of time to increase the value of a project we bought about no more than two years ago. It’s really promising. We have to consider Francoeur and Lac Fortune that are close by, which we are starting to explore. We are expecting really good news coming up on those two projects as well.

Okay, great. That’s a good update. I do have a question for Peter. Peter, I am hoping you can help me qualify the shareholder engagement as it pertains to the 75% thresholds for Gold Fields – which in some circles are seen as a high hurdle rate. Is the goal, when it’s all said and done, to reach a substantial portion of the shareholder base at the end of the day? Is that one of the main goals?

At this juncture, we are in the information communication stage. We have not asked any shareholders; Gold Fields has not asked any of its shareholders to indicate their support for the deal. Understandably, as I mentioned earlier, shareholders normally, from a governance point of view, want to make sure that they have checked all the boxes. That includes looking at the disclosure in an information circular; that’s very difficult. Related to that is the proxy advisory services, Glass Lewis and ISS and their commentary on one deal or another; that would apply in this case as well. I would say that my impression, and our broader management impression, is that the 75% hurdle has to be seen in the context of a 66% and two-thirds hurdle, which is of the shares that are represented at a meeting. So, 75% is higher than 66% and two-thirds, but it’s more than incrementally higher, but it’s not substantively higher as a hurdle. Furthermore, if we look at the shareholder profile of Yamana and the shareholder profile of Gold Fields, Gold Fields has a greater concentration of shareholdings, which means that a smaller number of shareholders will be in a better position to be able to carry their vote. In contrast, we would have to reach out to more shareholders in our case to get to that lower threshold of 66% and two-thirds. So, unbalanced, we are not seeing the difficulty of a 66% and two-thirds for us. Equally, we are not seeing the difficulty of 75% of the shares that would attend and be represented by proxy at a meeting for them. There are enough large shareholders, particularly those who take a longer-term view, who are going through their information gathering stage, learning about our company and the value proposition being created. Our impression is that ultimately, those shareholders, I don’t mean to be presumptuous, would be supportive of the deal. They take comfort in what we are saying because it underpins what Gold Fields has been saying, which is that we have conducted, I am speaking for them, but we have conducted seven months of diligence. This is what we come up with. One more comment that I think is germane here is this requirement of evaluation. We are required similar to what we have done with the London Stock Exchange. We are required to provide a valuation in the proxy materials. That valuation, I think, will give even more comfort to our shareholders and the Gold Fields shareholders that the offer price is not reflective of the true value of the company.

Yes, much better understood. Thank you, Peter. And thank you, Daniel.

Thank you, Ralph.

Thank you. We have no further questions at this time. So, Mr. Racine, I will return the meeting back over to you.

Thanks operator. Thank you all for joining us today on our second quarter conference call and webcast. Please take care and stay safe. Bye for now.

Thank you. Your conference is now ended. Please disconnect your lines at this time, and we thank you for your participation.