Earnings Call: H2 2017

Mar 8, 2018

Good afternoon, ladies and gentlemen. Welcome to MMG. Ladies and gentlemen. Hosting today's meeting is Mr. Jerry Jiao, Chief Executive Officer, and Mr. Ross Carroll, the Chief Financial Officer of the company. I would like to apologize for those who still haven't been arranged a seat. Apparently, the people showed up much more than we expected. It's probably something to do with the company's performance. What I'd like to do is to hand over to Jerry to start with the presentation with an overview of the company's performance in the year 2017. This will be followed by an analysis of the company's financial results by Ross, and then Jerry will put us in perspective about the company's strategies and outlook for the year 2018. Let me hand over to Jerry. Thank you, Mr. Sui, and good afternoon, everyone. Thank you for coming to this briefing conference. Thank you for your interest to the company. Really sorry for those people who stand at the back of this room. I promise you next time I will provide you enough seats. I trust many of you have read through our results materials, and today I will discuss the 2017 highlights, our outlook, and also our strategy going forward. Ross Carroll, our Chief Financial Officer, will also discuss the financial results in detail. I'm also joined by other members of our executive committee who are available to answer your questions. This includes Mr. Suresh Vadnagra, who has recently taken over the role of Executive General Manager, Operations, Americas. Also, Mr. Mark Davis, the other newly appointed Executive General Manager, Africa, Australia, and Asia. He's currently in D.R.C., Kinshasa. He just finished the meeting with the President. I know you may be curious about the meeting, and I will try to answer your questions. Also, we have Troy join us, our EGM for the stakeholder relations. We achieved a number of significant milestones for MMG in 2017. Most importantly, we delivered improved safety performance and record low injury rates. For mining companies, we use a term called Total Recordable Injury Frequency. We call that TRIF, and we realized 1.14, compared with the number 1.90 in the year of 2016. I am very proud to tell you that this number represents the top performer among all the mining companies worldwide. We returned to profitability. We delivered an outstanding first full year of production at Las Bambas and generated over $2.4 billion in group operating cash flow. We reduced net debt by $1.5 billion while still funding the Dugald River project. We delivered our first shipment of zinc concentrate from Dugald River in December 2017, two months ahead of our initial schedule. The project is perfectly timed to meet a growing supply-demand gap with zinc prices remaining at near decade-high levels. Importantly, this strong performance in 2017 is being recognized by equity markets. Total shareholder return over the past 12 months was 78%. As a world top 10 producer of both copper and zinc, we believe we have the right platform to continue to deliver significant value to our shareholders. Safety underpins our culture and is our first value. We continuously strive to eliminate all injuries and incidents from our workplace. Tragically, however, in October last year, an experienced truck driver at our Las Bambas mine lost his life following an accident at site. I strongly believe that achieving zero facility fatalities is possible for MMG, and we are committed to increasing our efforts to ensure our employees go home safely at end of each day. I will now briefly discuss the operational highlights for 2017. We delivered just under 650,000 tons of copper equivalent production in 2017. This is our sixth consecutive year of production growth. We will deliver production growth with the addition of Dugald River. Las Bambas was established as the sixth largest copper mine in the world and one of the lowest cost mines at the scale. Kinsevere delivered its third consecutive year of stable production at 80,000 tons. At Sepon, the team has delivered a range of efficiency measures with record asset utilization in 2017. Rosebery continues to deliver for us in its 81st year of operation. With very low cash costs, it generates good cash flow for the group. Finally, while copper and zinc markets have strengthened in recent months, our assets are facing increasing cost pressure. Mining industry costs have started to increase in line with stronger prices, and some of our assets are at the end of their lives. As a result, business improvement activities, production, and unlock the latent value that exists in our current asset base. It has now been 12 months since my initial address to you when I took over the CEO from Andrew Michelmore in February 2017, almost the same time last year. I wanted to give you an update and to remind you of the strategy that we are delivering at MMG. We aim to be valued as one of the top mid-tier miners in the world by 2020, and in the longer term, as one of the world's top miners. To achieve that, we will pursue value accretive growth. We have delivered Las Bambas and the Dugald River. These are world-class assets that will create significant value for MMG shareholders. Beyond that, we will look for the next opportunity through M&A, exploration, and brownfield expansion projects. I reiterate, however, that we will be disciplined and won't grow at expense of value. We will not grow for the sake of growth only. We have business improvement programs in places across all operation and group functions. Efforts in this area will accelerate in 2018. Our greatest asset is our people. At MMG, we strive to provide a safe workplace that promotes collaboration, accountability, and respect. We are proud to have recently promoted two new members to our executive committee from within, Mark Davis and Suresh Venkataraghavan. This highlights the strong team that we have developed at MMG, and we look forward to continuing to provide our employees with opportunities to develop themselves and the business. Finally, we are delivering development community investment every day and to be adding to the communities in which we work. I would now like to hand over to Ross to take you through some details of our financials. Thank you, Ross. Well, thanks, Jerry, and welcome everyone. As slide 10 highlights, our financial performance has improved significantly since 2016, and we're now in a far stronger position. The group is now generating significant profits, and our net debt is down by $1.5 billion. Across the board, all our financial indicators are up, and they're up to a material extent. This is on the back of the following: a full year of production from Las Bambas with 453,000 tons, higher prices across all our commodities, and continued strong performance from Rosebery and Kinsevere. I will discuss the split of earnings between MMG equity holders and minority interests a little later in this presentation. From a cash flow perspective, we generated operating cash flow of $2.4 billion at an average copper price of around $2.80 a pound. This gives a significant upside at current spot prices. In conclusion, we're in a much stronger position with higher commodity prices and with the inclusion of Dugald River yet to come. Slide 11 looks at the EBITDA bridge between 2016 and 2017. Starting from the left in the small red box, we have the impact of the loss of earnings of the divested assets, divested assets, I should say, which is largely Golden Grove. We then have the positive impact of a full 12 months production at Las Bambas. As you will recall, we only had six months contribution in 2016. We also have a $263 million add from increased prices across all commodities, and this covers all the operations except Las Bambas. The main impact here was a 27% increase in copper price and a 38% increase in zinc price. The last of the external items is royalty, FX, and inflation. The main impact here being royalty, higher sales revenue, and some FX fluctuations on balance sheet items. Now, across to the right-hand side with controllable items. We have a negative volume impact, which is primarily attributable to lower sales volumes at Sepon and Rosebery. Both those mines were encountering lower grades. Despite a number of headwinds at our older operations, operating costs were tightly controlled during the year. The net result was a $12 million improvement in cash costs, with lower costs at Sepon more than offsetting increases at Kinsevere and Rosebery. We also had a $46 million swing in our hedging program that we entered into in late 2016. As you will recall, we recorded a profit of $22 million in the second half of 2016 and made a $24 million loss in the first half of 2017. That is all in the one program. The net impact was a loss of $2 million, which is quite immaterial, but it did lock in $600 million of revenue at very attractive prices. Lastly, to the right-hand side, we had the pretax profit on asset sales, which included Golden Grove, the Century Tailings project, and Avebury. This next slide 12, seeks to explain the profit that ends up being attributable to MMG equity holders. There was some confusion over this number at the 2017 half-year results, so we thought we would give some clarity. As you will see from the table there, the starting point is 300 corresponds to our 62.5% interest in Las Bambas. We then add the profit of $54 million from the other operations. I should point out that this number will increase significantly with the addition of Dugald River in 2018. We then deduct exploration and corporate overheads of $88.9 million. Finally, we have the non-LB finance expense of $154.1 million. Now, this item is a little bit misleading and perhaps counterintuitive. The reason why this amount is so high is that MMG borrowed all its equity for the LB project from our major shareholder, CMC. So effectively, it relates to the Las Bambas project, but it is sitting in the non-Las Bambas part of MMG because it is our equity. So if you were to see our joint venture partner accounts, they would probably have a similar cost in their accounts. But the interest payable on this loan is about $110 million, so it is quite significant. Now, if we had to finance this money using equity, there would have been significant dilution, and that would have led to a significant dilution in our earnings per share. The table at the bottom of this chart also highlights we had some non-recurring items which impacted on the profit attributable to MMG shareholders. If we normalize the non-recurring items out, the profit attributable would have been $196.3 million, which is actually an improvement of $370 million over the correspond. Slide 13 refers to our cash flow and gives our shareholders and analysts an indicator of our sensitivity to both commodity prices and exchange rates. In 2016, we generated $722 million of operating cash flow. This increased to over $2.3 billion in 2017, and it would only get stronger with Dugald River being included. Now, the small table in the top right-hand corner is important because it shows that with a copper price of $3.23, which was a spot price recently, our operating cash flow would have improved to around about $3 billion. There is significant upside at the current spot prices. With our sensitivities, the main items are copper, zinc, and the Australian dollar, US dollar exchange rate. A 10% change in the copper price leads to $120 million impact on EBIT. A 10% change in zinc price is a $40 million impact. A 10% movement in the Australian dollar leads to a $45 million impact. For those of you trying to model MMG's earnings, that gives you the best indicator of how our performance will fluctuate with market prices. Now to slide 14. I think everyone would be aware that debt reduction has been a major focus for MMG. During the course of the year, we've decreased our net debt by close to $1.5 billion. Apart from reducing our risk, the reduction in net debt will lead to an annualized interest savings of around about $90 million a year. We're reducing risk at the same time as increasing our earnings. Slide 15 highlights our debt maturity profile. We've already prepaid more than our scheduled debt repayments for 2018 because we did have a $500 million prepayment at the end of January. I think that you can see with the current strong commodity prices, we can easily meet our debt commitments in the near term. We've also been very fortunate to have the support of our major shareholder, China Minmetals, which has enabled us to renegotiate our loan with them at reduced interest rates. It's a great benefit to the whole company at a time when interest rates are increasing. You'll be aware that we have made two debt prepayments in the last 12 months, and we'll continue to try and do this so we're getting on top of our debt profile. I think this slide's particularly important because it shows our historical C1 cost over time. Over the last five years, MMG has continually reduced its copper C1 cost by maximized costs and with the addition of Las Bambas due to higher costs at some of our older operations, which face declining grades, higher strip ratios, longer haul distances, and more challenging ores to process. In 2018, costs will come under further pressure with lower production at Las Bambas and a continuation of the challenges at our older assets. We're also seeing rising cost pressures across the mining industry, particularly with labor. In order to try and combat this, we have a group-wide business improvement program that's going to drive cost reduction opportunities and efficiency gains. This will be an ongoing and major focus for the company. I think it goes without saying that Las Bambas had a great year in 2017. Over 450,000 tons of production at a C1 cost of less than a dollar. Our EBITDA margin there improved from 54% to 59% and contributes about 80% of MMG's EBITDA. However, we seek to continue improving our performance with increases in mill throughput rates and total movement in the mine. It's essential that we continue to improve as our grade will start to drop in 2019. We need to reduce bottlenecks, increase recoveries in order to minimize the drop in production at the same time as trying to reduce our costs. Kinsevere had another very strong year production-wise with over 80,000 tons produced. There's also a return. You will note that it's not getting any easier at Kinsevere with the strip ratio increasing, and that's the table at the bottom left-hand side, and higher acid costs. Consequently, we are seeing an increase in C1 cost there. The ore grade in 2017 was 3.75%, but will drop to around 3.5% in 2018. As stated in our quarterly production report, we are likely to see a modest increase in C1 costs in 2018 whilst maintaining production at approximately 80,000 tons. Sepon had a very strong year operationally, although it was hampered by lower grades. Notwithstanding the drop in grades and the resulting lower production, Sepon was able to record an increase in profit due to higher copper prices and a number of cost control initiatives. To illustrate the strength of the performance of Sepon, record ore tons were processed at the mill and a record volume of waste and ore moved in the mine. The mine's functioning better than ever. It's just unfortunate the grades are coming off. Positively, the increased waste stripping in the first three quarters of 2017 has exposed a large section of high-grade ore, which will be mined and processed during 2018 and 2019. As a result, our production guidance in 2018 increases relative to 2017. We continue to review future options for Sepon, including the potential sale of the business. We expect to be able to announce an outcome in the first half of 2018. Finally, to the Australian ops. Australian ops had another solid year, with Rosebery again being a very consistent performer. If you exclude Golden Grove from the results in 2016, Rosebery delivered a 34% increase in EBITDA. With its strong operational performance and high precious metal by-product credits, Rosebery generates a good profit and a lot of cash. The mine is in its 81st year of operation and continues to deliver consistent results. We expect it to continue in this fashion for many years to come. Perhaps the most exciting chart on this graph is in the bottom right-hand corner, which shows the big uptick in zinc production in the Australian ops segment from 2018. We expect our zinc production to grow even further in 2019 as Dugald reaches its steady-state rate of 170,000 tons of production a year. With a projected C1 cost of $0.68-$0.78, Dugald River could add another $300 million of cash flow per annum. Thank you, and I'll now hand you back to Jerry to finish the presentation. Thank you, Ross. MMG has a unique market perspective as an international operator with support from China's largest resources company, China Minmetals Corporation, as a major shareholder. As a result, we are confident in the long-term fundamentals for copper and zinc, and the insights from our major shareholders support this view. We see copper and zinc supply and demand gaps widening from 2019. Supply constraints continues as a result of labor, political instability, grade decline, and the general under-investment across the sector. Importantly, we expect the recovery in the U.S. and the European markets and the Chinese consumption growth to underpin global copper and zinc demand fundamentals. The changes within China are quality and sustainability focused rather than pursuing speed and scale as the country grew the business before. China is helping other countries also to grow through the One Belt, One Road initiative. This is a major economic strategy that connects 44 countries and seven global regions, stretching from China to Europe with a major infrastructure focus. This will deliver stronger demand for raw materials, base metals in particular. MMG is a world top 10 producer of copper. Of the pure play copper names, we are actually the fourth largest and the largest copper miner in Asia. Once Dugald River is fully ramped up, we will also be a world top 10 zinc miner. On a consolidated basis, our C1 cost for copper is in the bottom of the global cost curve. On a copper equivalent basis, we have delivered consistent production growth every year over the past six years. Growth will continue in 2018 from Dugald River. We have a strong track record of delivery. Growth has been consistent, and our low-cost position indicates that we have a strong asset base. I wanted to also provide an update on revised mining code currently proposed in DRC. Just now I said that Mark Davis has just finished the meeting. The code has yet to be signed into law. However, in its current format, it could significantly impact current value and damage future investor confidence in this region. The mining sector accounts for of GDP and 28% of government revenue in the DRC. As MMG and the DRC mining industry, we are working hard to influence a better outcome. Discussions continue between DRC mining industry representatives and political leadership to discuss the limitations of the current code and propose a more constructive way forward. The meeting actually lasted six hours early this morning in Kinshasa, DRC. The DRC and the Zambian Copperbelt is a very important growth region for us, and we look forward to keeping shareholders updated on this important DRC development. Las Bambas is a transformational world-class copper asset. Las Bambas progress to steady state production has been remarkable, and it has already delivered its first 18 months of production above designed capacity. Despite the success, it should also be noted that production over the first 18 months has benefited from early access to high-grade skarn ore. In the first quarter 2018, we will mine and process lower ore grades, and we expect geotechnical conditions will temporarily constrain mining as we open up the pit for future production. Regardless, we expect to produce between 410,000 and 430,000 tons of copper at Las Bambas in 2018. We maintain on track to meet our guidance set over two years ago that Las Bambas will deliver over 2 million tons of copper in its first five years operation. Las Bambas is one of the lowest cost copper mines of this scale in the world, and the 2018 C1 guidance is $1 to $1.10 per pound. Las Bambas remains our most highly prospective growth opportunity for MMG. Following the very successful ramp-up, our focus has now shifted to realizing this opportunity. Through expanded exploration, planned deep hole drilling, and the development opportunities, we expect to accelerate the development of Las Bambas in 2018. Our next major target is the successful delivery of the Dugald River Zinc Project in Northwest Queensland, which will provide us with increased exposure to zinc at a time of tightening supply. Zinc inventories remain at low levels, driving TCs lower, and we remain very positive on the outlook for zinc demand. We delivered our first concentrate shipment in December 2017, two months ahead of schedule, and we also expect CapEx to be well below $600 million. As you can see from key ramp-up milestones in the chart, we are well advanced to achieving commercial production in the first half of 2018. Here you can see some images from our Dugald River site, highlighting the remarkable progress that our team has made to deliver this project ahead of schedule and below budget. We are very proud of this project, and we will look to take the learnings from our successful Las Bambas ramp-up and deliver this at Dugald River. Once Dugald River is ramped up, we will be a top 10 miner for both copper and zinc. We have benefited from China-backed debt financing to deliver growth during the down cycle, and are now very well-placed to accelerate pay down of that debt and capitalize on improving markets to deliver value for all shareholders. We believe we are in the right commodities and have world-class assets. We are extremely positive on the medium and the long-term outlooks for copper and zinc, and we are well-positioned to benefit from this. We have demonstrated project delivery and operational excellence over a sustained period of time, and our operating philosophy is based around safety and driving continuous improvement. Finally, we are focused on delivering shareholder value. As Ross highlighted, our assets are highly cash generative, and in the short term, we have the capacity to continue to rapidly reduce gearing levels while we patiently await the next growth opportunity. With that, I would like to open the floor up to the questions. Thank you. Thank you, Jerry and Ross. Now the floor is open to questions. Before we start, I just want to remind those who require simultaneous interpretations, you can switch to channel one for English and channel two for Chinese. Okay. Thank you very much. Chris Xu from Boscobel Asset Management. Congratulations on the great results. I've got two questions. The first one is on capital management. Now that your company is generating annual cash flow in the order of billions per year, what are the priorities for deploying such cash? To what extent should we expect further debt prepayment in coming months or quarters? At what point would you consider this? Also, is there any sort of discussion with CITIC Metal in terms of taking over the minority stakes held by them in Las Bambas? That's my first question. Thank you. Thank you, Chris. Basically, we are still remaining the same strategy to deal with our available cash. I will ask Ross probably to give you a more detailed- Yeah, Chris, I think in the short term, repaying debt is still our main priority. If you think about the company, we've got a market Cap of about $5.6 billion, depending on the day, and we've still got $8.7 billion of debt. Certainly, I think debt repayment would be the primary focus in the next year or so. Also, just from a practical perspective, we still have to negotiate a mechanism with CDB, who is our primary banker, to get cash out of the Las Bambas joint venture. Now, we expect to have that done before the mid-year, but until we can get the cash flowing from Las Bambas into the rest of MMG, it's going to be hard for us to pay dividends. That's not really a pressing priority for us because the key to it is just trying to pay down debt at this stage. Now, with CITIC and Guoxin, we would probably love to take out their share of Las Bambas, but I think it being such a good asset, they are very comfortable owners. As much as we would like to buy a bigger interest in Las Bambas, I cannot really see that happening. We would like to, though. Okay, to the next questions. There is a question from the back. Hello. Hi. I would like to ask about Las Bambas beyond your 2 million production. What is the long-term production target and what is the steady state production for now? The second question is, how much do you intend to spend in terms of exploration? If you can give us as a percentage of the total mine, how much are you mining now and what are the potential for growth in this area? How much do you intend to spend? I actually not quite followed the question, but I am lucky to have Suresh here with me, so I will ask Suresh to answer your question. Good afternoon, everyone. Yes. Yep. Good afternoon. In terms of our production profile for Las Bambas, obviously 2017 was a very strong year for Las Bambas with production over 450,000 tons. As Ross mentioned, that was fueled to a certain extent by early access to high-grade skarn ore. As we continue to develop Las Bambas, we will be accessing more and more lower-grade ores, the porphyry ores, and that is going to have an impact on the grade profile for Las Bambas. Having said that, our guidance for 2018 is between tons. We expect that kind of level of production to continue into 2019, depending obviously some small variations, and then for that to then start to gradually decline from there to around about 400,000 tons in the following years. We still remain very confident of exceeding the 2 million tons in the first five years guidance that we have previously provided. We are working actively on maintaining that higher production profile even beyond that five-year window. There is a number of programs that the guys mentioned in the way of de-bottlenecking, expanding the resources, and some additional discovery that we are working on to be able to sustain that. In terms of our exploration spend, I will hand over to Ross, who can answer that question. Yeah. Thanks, Suresh. On an ongoing basis, our exploration program is around about $35 million-$40 million a year, and the bulk of that is spent in the DRC and also at Las Bambas. We do not really have a fixed measure of how much we would spend, and I guess there is potential as we get more land access in Las Bambas to spend more on exploration. But I think if you are doing your models, you can basically work around about $40 million a year. Okay. Just a reminder for those who join us through the dial-in system. If you have questions, please notify our operator, who will bring you into the floor. Okay, the next questions. Oh, the lady at the back. Thank you, management, and congratulations on another very strong year of results. I have two questions here. Firstly is regarding the DRC Congo mining code. Can you share with us what's the latest development over there and your view on the likelihood of the introduction of higher royalty price, a royalty hike, and also the potential introduction of the super profit tax? Are there any timetable given for the final decision for the president to make? You mentioned about the instability of the wall pit in Las Bambas, which might impact the production volume. My question is whether you have any expectation on the impact on the first quarter, and also how long that's going to last. Thank you. I will answer the first question, and I will leave the second one to, again, Suresh. As I said, it's quite some time DRC tried to revise its 2002 mining code. Actually, we are very actively to work with our peer groups in that region and to have the continuous conversation with the DRC government. Anyhow, the code passed through the congress and is now on President Kabila's desk. The meeting was held early this morning. It seems, confirmed, but it seems the code will be anyhow signed by the president. The new code will be everything happened. But the good progress for out of that meeting is the government president, they did promised to continue further discussion with us. Also in particular, everybody stressed the importance of the stability agreement, the 10 years stability agreement. This is very key for everybody, and the government said they can be open to discuss that part. Another aspect is, it will normally take almost a year for DRC to issue a so-called regulation to explain the code. We will use that time to continue negotiating with the government regarding the remaining items like the super tax, which is not very clear to us, and also the other, like foreign currency things. In summary, this will seem to become a law. Also, the operating cost will be anyway increased since the royalty will be increased. But we continue to talk to the government and try to seek the best outcome for ourselves. We actually operate our business over seven years in that country, and we feel that country is a country that we can operate if the government simply wants to make the operation and investment more difficult. The thing is how we can address different parties' concerns regarding the economy growth in the country and also our benefits and also our shareholders' benefits. We'll update our shareholders about the progress because obviously this is a very important initiative. Now I will hand over to Suresh with the last round of questions. Thank you, Jerry. Our production profile or our production guidance for 2018 reflects, as I mentioned earlier, lower grade, but also reflects the impact of the localized geotechnical instability that we have experienced in the pit. This is a localized issue, which will defer some of the ore that was meant to be mined and processed in the first quarter of 2018 into future periods. There is no permanent loss associated with it. It just defers some of the ore we were meant to process into future periods. I think what I will also add is that this is a localized issue. It is not an uncommon issue. It happens from time to time in an open pit mine. As we continue to develop the mine and open up the mine some more, we will have more and more flexibility to absorb these kinds of issues with less and less impact. Thank you. Thank you. The next question? Yes. The lady in front. Congrats management on the very good results. Thanks, Jerry and Ross. One follow-up question from the DRC, because I have noticed different versions when you are talking about the royalty charge. Can I check with the latest status? What number exactly they are talking about? And the super tax, as far as you know, what is the number in the feasibility report and how likely you think the 50% super tax they will charge on top of that? Thank you. The royalty? Yes. Yeah. The royalty rate is currently calculated, 2, because we can deduct the selling costs. The new proposed royalty rate is 3.5% on the gross revenue, so it effectively doubles. Yeah. For the super tax, it's still not clear because they are 50%. That will mining company. That's a very bad thing for this change. But for the companies, many of them, for example, our case, we purchased Kinsevere from somebody else. Actually, our feasibility study obviously is not the original, was taken by somebody else. So how can you ask us to use the very original price? With Kinsevere, the very original copper price assumption is 120. This is very different from today. This is still some not very clear items we need to clarify with the government. Okay. Next question. I have another question. Sure. Regarding, because we have great metrics on copper and zinc, right? So what else we are looking at, and what is the progress, if you can share with us any other metals on that part? Well, first of all, we are still very focused on copper zinc, because we feel those two commodities are the best ones. In fact, in the last 10 years, copper zinc are the two best performers among all the base metals portfolio. We truly believe going forward that will run the similar case. At the same time, we do evaluate and look at other opportunities because we are the solid platform from the major shareholder. We do have a mandate to grow the business and also look to some maybe strategic commodities. The beauty is when we so we can be other opportunities not in the heart of the iron ore or other bulk commodities. But we will be very patient to look at the real long-term low-cost asset and also the right opportunity for us to get in. Kate? Any other questions? Oh, yes. This gentleman over there. Hi. Thank you, Jerry and Ross. I think with Dugald River almost completed by next this year, we wonder probably how the money will be spent on top of Dugald River. Thank you. The $550 million we have quoted at Dugald River, so it is a spend. For this year, we would expect our sustaining capital spend to be around about $400 million, maybe a little bit more, and 250 million to $300 million of that would be at Las Bambas, and the balance would be for the less significant operations. But Las Bambas can be quite capital intensive, particularly with the tailings dam. So we constantly need to do tailings dam lifts, and that is $45 million to $50 million a year in its own right. But I think for your models, use $400 million a year as sort of ongoing sustaining capital. Yep. Just one more minute from the dial system. If you want to ask, press one and be tuned in floor. And do feel the interpreter will help you to translate into English. Thank you. One more question. So we look at the latest announcements for the 2017 long-term incentive equity plan for MMG's employees and management. In addition to the Total Shareholder Return and also resource growth, the company has now also added ROE as an additional KPI for the management and employees. What is the purpose behind that? Behind the- Addition of ROE as our KPI. Well, this ROE is not a first time part of the measure. Actually, from the very beginning, we always have three measures for the LTI assessment. In the middle, I guess only for one year we chose two, and nowadays we feel we will be more balanced if we use three rather than two. This is nothing special. We just simply try to adjust the growth aspect and also the profitability aspect. Any further questions? Any questions from the member of the press? Not any more questions. I think basically everyone's very satisfied with the company's performance. Does Jerry Jiao have anything to add before we wind up this meeting? Do you have anything to add? No. Actually, thank you very much for your continuous interest and support. As we said, we're really a value-focused company, and we will try to create more value for our shareholders. Thank you very much. Thank you. Once again, thank you for everybody joining us today.