Freeport-McMoRan Inc. (FCX) Q1 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Copper & Gold First Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ms. Kathleen Quirk, Executive Vice President and Chief Financial Officer. Please go ahead, ma'am.

Thank you, and good morning, everyone. Welcome to the Freeport-McMoRan Copper & Gold First Quarter 2012 Earnings Conference Call. Our results were released earlier this morning and a copy of the press release is available on our website at fcx.com. Our conference call today is being broadcast live on the Internet. Anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call. As usual, we have several slides to supplement our comments this morning, and we'll be referring to the slides during the call. The slides are also accessible using the webcast link on fcx.com. In addition to analysts and investors, the financial press has been invited to listen to today's call, and a replay of the webcast will be available on our website later today. Before we begin our comments today, we'd like to remind everyone that today's press release and certain of our comments on this call will include forward-looking statements. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings. On the call today is Jim Bob Moffett, our Chairman of the Board; Richard Adkerson, our President and Chief Executive Officer; and Mark Johnson is also with us today. I'll start by briefly summarizing our financial results and then turn the call over to Richard who will review our recent performance and outlook. As usual, after our remarks, we'll open up the call for questions. Today, FCX reported first quarter 2012 net income attributable to common stock of $764 million or $0.80 per share compared with $1.5 billion or $1.57 per share for first quarter 2011. The first quarter 2012 results included $149 million or $0.16 per share in losses on the early extinguishment of debt in connection with the refinancing of $3 billion in senior notes during the quarter. Our first quarter 2012 consolidated sales of 827 million pounds of copper and 288,000 ounces of gold were lower than the January 2012 estimates of 875 million pounds of copper and 425,000 ounces of gold. Our copper sales in the first quarter were higher than the revised March 2012 estimate of 795 million pounds, and gold sales were slightly below the revised estimates of 300,000 ounces. As we previously reported, labor-related work interruptions and temporary suspension of operations affected production at PT Freeport Indonesia during the first quarter 2012. This was partly offset by higher sales from North America. The estimated impact of the work interruptions at PT Freeport Indonesia during the first quarter totaled about 80 million pounds of copper and 125,000 ounces of gold. Operations and productivity at PT-FI have improved recently, and for the quarter-to-date period, our milling rates averaged approximately 200,000 metric tons of ore per day compared with just under 115,000 metric tons of ore per day in the first quarter. Full operations, which are dependent on our ability to maintain security and productivity in the workplace are expected to be restored during the second quarter of 2012. Our molybdenum sales in the first quarter of 21 million pounds were slightly higher than our estimate of 20 million pounds and the year-ago level of 20 million pounds. Our realized prices during the first quarter averaged $3.82 per pound. That was lower than last year's first quarter of $4.31 per pound. And for gold, we realized almost $1,700 per ounce in the first quarter 2012, which was higher than last year's $1,400 per ounce in the first quarter of 2011. The molybdenum price recorded realization averaged $15.34 per pound in the first quarter of 2012 compared to the year-ago average of $18.10 per pound. As anticipated, our consolidated average unit net cash cost net of byproduct credits of $1.26 per pound of copper in the first quarter of 2012 were higher than the year-ago level of $0.79 per pound, primarily because of lower copper volumes in Indonesia, higher mining and input costs in North and South America and lower byproduct credits. Our operating cash flows during the first quarter totaled just above $800 million and that was net of $720 million in working capital requirements. Capital expenditures during the first quarter totaled just over $700 million. That included expenditures to advance our growth projects, which are targeted to increase our annual copper production by over 25% over the next several years. We ended the quarter in a strong financial position. Our consolidated cash totaled $4.5 billion, which exceeded our total debt of approximately $3.5 billion. During the quarter, we sold $3 billion of senior notes in 3 tranches with a weighted average interest rate approximating 3%. We used the proceeds to reduce higher cost debt. We redeemed the remaining $3 billion of our 8.375% senior notes and will generate interest cost savings associated with this transaction of $160 million per year. In February of 2012, our board authorized an increase in our common stock dividend to an annual rate of $1.25 per share, with the first quarterly dividend at the higher rate to be paid on May 1 to shareholders of record on April 13. I'd now like to turn the call over to Richard who will be referring to the slide materials on our website.

Thank you, Kathleen. During the quarter, we published our annual report to shareholders for 2011 and Slide 3 talks about the themes that we spoke to in the annual report about our leadership position in global copper markets, the gold production we have out of our Grasberg mine in Indonesia, our world-leading low-cost molybdenum business, our growing cobalt business and our company, with its very substantial proved and probable reserves of resources -- and of reserves of our products, as well as our significant resources, is particularly well situated to take advantage for the global demand in the future. For these products, we are geographically diverse, long-lived reserves. Within our set of assets, our existing assets, we have a very attractive growth profile, both in the intermediate term and the longer term. Our financial position is strong with our recent financing and with our focus earlier in reducing debt and we continue to recognize our responsibilities for environmental, social and sustainable development activities and it’s an important part of what we do. In the mid May, we celebrated the 5th year anniversary of the Phelps Dodge deal. When I visited our mines and our team here in mid March -- when I visited with our team at a number of our mines and here in Phoenix and Indonesia, I was just so encouraged by the quality of our people, the very high morale that we have and our focus on creating shareholder value. Kathleen reviewed our financial results, and it showed strong performance in the Americas and in Africa, which reflects the geographic diversity impacts of our business. I'm happy to report that we are making continuing progress in restoring normal operations in Grasberg, following the 3-month strike and the issues associated with returning the workforce after the strike and our work with the Indonesian security organization in terms of dealing with the security situation in Papua. We are advancing our growth projects. We're targeting increasing sales of copper by 25% over the next 3 to 4 years and that is progressing well. Kathleen mentioned that we took advantage of these favorable credit markets and our company's strong financial position to refinance debt on very attractive terms and our board has increased our common stock dividend. The details of the financial results are reflected on Page 5. Now, I just referenced that for your information as Kathleen has just gone over that. To give you an update on where we stand with Grasberg, following a 3-month strike, we reached agreement with our basic labor union on a new 2-year labor agreement for PT-FI employees in the mid December. During the first quarter, we continued to face some work interruptions in connection with our reintegration of the labor union workers back into our operations and we had a roughly 3-week suspension of activities as we met with our workforce to resolve certain issues and to undertake a socialization of the new labor agreement. And that had an impact in the first quarter of about 80 million pounds of copper, to 125,000 ounces of gold. We are seeing progress in returning to normal operations. Second quarter to date, our mill is operating at over 200,000 tons per day after being limited to 115,000 tons per day in the first quarter. And full operations are online to return to normal levels in the second quarter, of course, depending on our ability to continue the productivity in our work force and a secure workplace. Slide 7 shows our first quarter unit production costs. Indonesia was affected by the lower volumes. It was also affected by lower grades that were available to us in our open pit operations. Our costs in our other operations were in line with our plans. It does reflect higher input costs than in the prior year. And also, the fact that as we expand operations, unit costs are higher but our team has done a good job in managing these costs and results in an overall consolidated attractive cost level for our company. Markets continue to be very positive this year. For copper, we saw a stronger-than-expected start for our business in the first quarter in the United States. Europe is weak but it is not as weak as some feared going into the second half of 2011. China has taken steps to control growth, and there's a lot of commentary about the outlook for the Chinese economy but China continues to spend money on infrastructure projects, its fundamental economy appears to be strong, and overall, the copper market is very positive, given the uncertainties of the world that we've been living with. 2012 appears to be another year of a deficit in the copper markets. Gold prices remain at strong levels. Molybdenum prices are relatively stable and these levels supports our expansion plans and our high profitability of our moly business. China remains the important demand driver. As I indicated, investments in urbanization and infrastructure support that marketplace. All of those investments require significant amounts of copper. While the government has taken steps to control inflation by limiting growth, it's done so in a very effective way and growth levels, growth percentages, on the increasingly large Chinese economy still results in significant consumption. As I mentioned, the first quarter in the U.S. started out strong. Of course, there are uncertainties in our economy that all of you are aware of. But manufacturing, particularly auto sales, have contributed to this positive situation in the U.S. In the U.S. and Europe, we see very low inventory stocks as that's been managed to be low because of the economic uncertainties and on a big picture basis, copper has tended to move more into China than in Europe and the U.S. and the market remains tight there. But global inventories overall remain relatively low. The industry continues to face supply constraints from interruptions to existing operations and the challenges of bringing on new production because of a whole variety of issues: technical, cost constraints, environmental constraints and so forth. So the fundamentals of the copper market remain strong. Slide 10 gives some comments about our PT-FI contract of work. We signed a contract in 1991 that had a 30-year primary term and provided for 2 10-year extensions through 2041. On the terms of the original contract, applying for those extensions, which we have started that process now, requires government approval but the contract provides that, that approval cannot be withheld unreasonably. The contract provides for fixed taxes and royalty rates. After several years of consideration, Indonesia has now passed a new mining law which applies to new projects that are developed within the country. Under our contract of work, we pay a 35% income tax rate. The current statutory rate in Indonesia is 25%. We pay royalties at these prices of 3.5% on copper. The new mining law provides for 4% and 1% on gold while the new mining law has 3.75%. We also pay a 10% withholding tax on payments of dividends from PT-FI to FCX. And in total, including the 9-plus percent equity interest that the government has, the government gets more than 50% of the benefits of the cash flow that's generated by Grasberg. Also, our COW payments to the government are higher than prevailing law, and in fact, they are higher than would be made if the laws of any other country were applied that has mining operations. There's been a lot of discussions about in-country processing of minerals within Indonesia. We arranged for the construction of Indonesians’ only copper smelter in the 1990s and it is world-class, arguably, among the most efficient copper smelters in the world, processing 280,000 tons of metal per year. We are in compliance with our COW during all of our years of operations since 1972 in Indonesia. We've had 2 COWs during that period. The government has also complied with the COW. We have no issues of noncompliance on either side. We have no divestiture obligations under our COW. The new mining law provides for 20% of divestiture obligation but we are under our existing COW, not the new mining law. We have, as we've reported for several years now, voluntarily agreed to offer a 9.36% interest in PT-FI to Indonesia nationals. That's fair market value on a business-to-business basis. We have a very positive relationship with the country of Indonesia and with its government officials. The government has undertaken a review of all mining contracts. We are working cooperatively with the government, and I'll say that we will continue to do so to be responsive to issues raised by the government in the context of protecting the values of our contract for our shareholders, and we're very encouraged about the outcome of that process. Our financial benefits to Indonesia are large. We contributed over $60 billion to national GDP in Indonesia since 1992. With our development of our underground resources at Grasberg, we have plans to spend $15 billion in new capital. We're by far the largest employer in Papua and one of the largest if not, the largest, income taxpayer in Indonesia. We're 2/3 to 3/4 of the GNP in Papua and in the Mimika region, we're roughly 95% of the economy. You can see the very large taxes that we pay under our existing COW, $2 billion in 2011 plus dividends and royalties and we make voluntary contributions to the community. We have a partnership fund for a community development, and we've contributed over $500 million for that fund since 1996 through 2011. We do have a diverse set of assets geographically, and we are focused on converting these very large mineral resources that we have to reserves, to evaluate our reserves aggressively, to identify development projects that will lead to production growth and cash flows. When I say large resource reserve base, our recoverable reserves at an average copper price of $2 is 120 billion pounds of proved and probable reserves according to SEC definition requirements. In addition to that, based on drilling and exploration analysis we've done to date, we have contained copper at a long-term price of $2.20 of mineralized material that's not included in these reserves of over 100 billion pounds of copper in place. Together, this is an enormous resource that gives us the chance to have growth both in the near term, midterm and long term. And we have that growth without having to make acquisitions with spending capital prudently on projects that make sense from an economic standpoint. We have a greenfield exploration program but we're not dependent on greenfield exploration for growth. Slide 13, you can see these resources and reserves summarized and you can see the location. It's noteworthy that over half are located in North America. Not too many years ago, the Southwest copper district was considered to be uneconomic and short-lived. With the demand for copper in the world today, we have plans that will lead us to invest billions of dollars, employs thousands of people in North America as well as growing in South America, Africa and continuing to maintain our profitable long-term, low-cost operations in Indonesia. Our near-term projects, copper projects, include as shown on Slide 14, our projects that were deferred during the 2008, 2009 financial crisis. We've restored the Morenci mill, our flagship operation in the U.S. here in Arizona and we've increased our mine rates. We have begun to mine and produce copper from the Miami area, the historical Miami Globe area where we have significant reclamation obligations and we're making money out of that as we fulfill those reclamation operations. We restarted the Chino mine in New Mexico and are ramping it up. And in South America, we've completed the Sulfolix project which replaced the depleting oxide production that had been the basis for that El Abra mine for years. All of these projects are going well. In Colorado outside Leadville, we have started up the Climax Molybdenum mine. We had invested in this project and deferred it in 2008. Now, we've gone back in and we've spent the capital. Construction is essentially complete. We're ramping up to 20 million pounds of molybdenum a year during 2013 and depending on market conditions, we can increase it to 30 million pounds a year. We'll be responsive to the market. Of course, we produce molybdenum at our Henderson mine in Colorado and it’s a byproduct in a number of our copper mines. I mentioned earlier, the very significant investments that we're making underground in Indonesia. The Grasberg pit, which we began to develop in the 1990 timeframe, is -- will reach depletion of the surface mining opportunities in roughly 2016. That's a fluid number depending on our experience between now and then. But we have very significant underground reserves, aggregate reserves total and these are reserves, 37 billion pounds of copper and 32 million ounces of gold. Our existing DOZ underground block caving mine has a capacity of 80,000 tons per day. We are developing the Big Gossan mine, which is a high-grade mine with 7,000 tons per day production rate. The Grasberg block cave, which cannot commence until we complete mining in the pit is being prepared to do just that. And then as an extension of the DOZ mine, we have, where we begin mining in this area in the early 1980s, the Deep MLZ mine where we've completed a feasibility study and has a startup in 2015. Our underground production is expected to reach 240,000 tons per day for our mill and our share of development costs will be spread over a number of years. The aggregate is large but expecting to average about $550 million per year over the next 5 years. The Grasberg block cave and the Deep MLZ mine will be the source of ore to our mill as we complete mining from the pit. We've completed significant development for access to these orebodies and over recent years, have made very good progress. The development capital is significant but it is spread out over a number of years. We're showing at the bottom of this chart, the ramp up of the Deep MLZ as we transition from the DOZ mine to the Deep MLZ mine and when -- and the startup of the Grasberg block cave. Because of very high grades at the Deep MLZ mine and because of our plans to have a significant stockpile of material from the Grasberg open pit, we see that we have been able to offset to a significant extent, the drop-off in production from the open pit and with these higher-than-average ore grades, our share of production is expected to average 1.1 billion pounds of copper and 1.4 million ounces of gold between 2017 and 2021. This transition is obviously a big focus of our team and will continue to be. Beyond the startup projects, we do have very significant investment projects that we are progressing and investing capital in. At Cerro Verde, we are -- have a project to triple its mill throughput. This would be the largest concentrating mill operation in the world, a significant capital at $4 billion. We've filed our Environmental Impact Statement in the fourth quarter, engineering and long lead line procurement -- lead time procurement is progressing and we expect to achieve full rates in 2016. We are also investing in a mill expansion at Morenci to take advantage of the resources that our exploration program has identified for us there. And we are involved in our first expansion project at our Tenke Fungurume mine in the Democratic Republic of Congo where operations have progressed in a very reasonable fashion. This project is going much more smoothly than our initial development project because of our experience in that project and in conducting operations there. These 3 projects involve $6.3 billion of capital and roughly 1 billion pounds a year in incremental copper. Now, some information on the Morenci mill expansion which is a very high rate of return project is included on Page 19. It involves increasing the mining rate, expanding the mill to 115,000 tons per day, 1.4 billion pounds of capital for 225 million pounds of copper a year. We've completed the feasibility study. Permitting is going well. Engineering and procurement is going well. We expect to achieve full rates in 2014. And as we do this, because of positive exploration results, we're continuing to look for a larger mill expansion to mine sulfide material at Morenci. The details of the Cerro Verde project are shown on Page 20. As I mentioned, we will be going to 360,000 tons per day through a mill, basically expanding our existing mill facilities and footprint. All aspects of this project are very favorable for this sort of development. Significant increase in mine rates take advantage of the resources that we have. Our exploration is expected to continue to add to these reserves and resources. This is the same basic technology that we've had with our existing operations, which was -- had its last major expansion that was completed at the end of 2006. We've developed a plan for obtaining water for this operation. And water is -- those of you who follow the industry in Peru and also in Chile, anywhere in mining, is really a critical factor. But by working with the local community of Arequipa, we are working to develop the wastewater system, which will be of benefit significantly to the community but also, will provide the water for our project and we believe this will avert any controversy over water for our project. At Tenke, the project that we're currently investing in, it would expand the mill to 14,000 tons a day. Our mine rate would increase. We're adding tankhouse capacity. It's about $850 million of capital to give us 150 million pounds incremental copper per year. We are under construction and we're targeting completing at the end of next year. We're continuing to conduct exploration drilling and analysis of this large 600-plus square mile concession, which has additional oxide resources, additional -- significant amounts of sulfide resources are indicated. Some of it's mixed ore but all of the metallurgical work and exploration work we have there are expanding, and we are very optimistic about future expansions at Tenke. We also have, beyond these projects, additional significant projects that our team is working actively on. And this includes taking advantage of those U.S.-based resources that I mentioned earlier. Looking at a further large-scale expansion of sulfide processing in Morenci, looking at the Sierrita and the adjacent Twin Buttes property for expansion activities, expanding our Bagdad project, potentially reopening the Ajo project in Southern Arizona, which is a historical mine for our organization. And at Safford, looking at the Lone Star project that would add significant life to the Safford facilities. In South America, we've had great success through our exploration program in addition, identifying new sulfide resources at El Abra and we believe we will have the opportunity to consider investing in a concentrator operation there to expand production beyond the Sulfolix project. And in Africa, there's still opportunities to expand based on our oxide resources and to have a major expansion in the future with what appears to be a very significant attractive sulfide resource. 23 shows the growth outlook just for the Americas. Our operations in the U.S., Chile and Peru. With that expansion, you can see that we have a very attractive growth profile in the Americas, looking at 3.5 billion pounds of copper per year for a company that's been producing consolidated worldwide, about 4 billion pounds a year. And then, the projects that I mentioned beyond the ones that we're investing in currently have additional potential production volumes in a range of 1.5 billion pounds of copper a year incrementally. At Tenke, we've got a chart that shows our growth from our original project of 150,000 tons and now, we're moving up with our Phase 2 50,000 pounds -- 150 million pounds to 2014 with 400 million pounds. We see another further expansion with oxides and then, Phase 4 would involve processing the sulfide and there's question marks about that but we think it will be a significant improvement to our existing production. We are spending money on exploration, $275 million this year. You can see that's a global spend spread around the world. It's really focused on our existing orebodies in these great brownfield expansion opportunities that we have. For 2012, we are currently providing an outlook for 3.7 billion pounds of copper sales, 1.1 million ounces of gold, 81 million pounds of molybdenum. Our current outlook for unit costs adjusted for our experience in Grasberg in the first quarter is $1.43 a pound, which reflect the lower volumes that we've had. Cost in future years at Grasberg are expected to decline to historical levels as we get back to normal levels of operation. At those levels of production, at $3.50 copper, we would have $4.2 billion of operating cash flow. We do have some $1.1 billion of working capital used as anticipated this year, a significant leverage to copper prices. Our capital disclosures, capital expenditures disclosures have been increased to reflect the Morenci mill expansion and now $4.3 billion this year. Page 27 gives our outlook for copper sales. You can see the growth that occurs. We've added in, in 2014, 200 million pounds for the Morenci expansion, moving towards a 5 billion pound level with our current projects. Gold sales this year at Grasberg are affected by both grades and the situation of low productivity in the first quarter, returning to more normal levels in 2013 and 2014. Our quarterly outlook for sales of both copper, gold and molybdenum are presented on Page 28, again, showing the ramp up at Grasberg. Our operating estimates in terms of cash unit costs and sales by region are shown on Page 29. As I mentioned, the consolidated expected net cash cost of $1.43 is impacted significantly by the abnormal year that we're having in Indonesia as a result of the first quarter situation at Grasberg. The reconciliation of unit costs are presented on Page 23, showing our $1.01 net unit cost in 2011 reconciled to $1.43. $0.24 of that is resulting from the higher cost of Grasberg because of volumes and work productivity. As I indicated, with a successful ramp up, we would back to normal levels going forward after this year. Page 31 is our standard slide that we show, showing average EBITDA numbers and operating cash flow numbers. This is at $1,200 gold, $12 molybdenum and varying copper prices. At $3.50 copper, we would have $9.3 billion of EBITDA and just under $7 billion of operating cash flows and you can see how that varies as prices change. And then, for your use in looking at sensitivities to these outlooks, we present on Page 32, the impact of changing commodity prices in certain of our important input costs. Capital expenditures, as I mentioned, have been increased in 2012 and 2013 for the Morenci mill expansion, now stand at $4.3 billion this year and roughly, the same level next year. Our balance sheet is strong. We've gone from 5 years ago with $17.6 billion of debt, now down to $3.5 billion of debt, with consolidated cash at $4.5 billion and you can see that our credit ratings have improved over time and we took advantage of our investment grade credit rating to do this very attractive debt refinancing, and the details of it are presented on Page 35. We issued $3 billion of new notes in mid February, which in hindsight, turned out to be out to be a good time, with varying maturity rates but with an average interest cost of 3%. We used these proceeds to redeem $3 billion of debt that carried a coupon of 8.375% which we issued in connection with the Phelps Dodge transaction. This gives annual significant interest cost savings. We don't get a significant tax cover because of our structure from interest costs, so this is a significant savings for us, and since 2009 through repaying debt and refinancing debt, we've got $420 billion (sic) [million] of annual interest cost savings, which is very significant. From a financial policy standpoint, we're committed to a strong balance sheet, strong liquidity. We are investing in attractive growth projects. And I want to emphasize attractive projects. We're going to be disciplined in the way we look at this so that we add to our portfolio of assets, those that provide incremental benefits in positive times but we will have a portfolio that we can manage if we have to adjust it in response to, let me just say, non-attractive times like we did in 2008, 2009. We're increasing our common stock dividend. We have increased it. That reflects a long-term Freeport board philosophy of shareholder returns and our board discusses financial policy with us and reviews it on an ongoing basis. That is a summary of our current situation and outlook. We'd be happy now, operator, to open the line for questions.

[Operator Instructions] Your first question comes from the line of Michael Gambardella with JPMorgan. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: I have a question though on this contract of work in Grasberg. Can you explain to us how the extensions will work in 2021 and 2031? And then the second question is I understand how the contract of work supersedes changes in taxes, changes in the law in Indonesia, and that you're paying actually a much higher tax rate than the current or the proposed mining law suggests. But why is it that government officials seem to come out with statements contrary to the contract of work issue almost on a weekly basis? And I think yesterday, I saw a story on Bloomberg quoting the Director General of Minerals and Coal at the Energy and Mineral Resource Ministry saying that you'd have to stop shipping concentrate by 2004 and specifically saying Freeport.

I think you meant 2014. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: 2014, sorry.

Yes, because that's provided for under the new mining law, which is -- which we're not -- our contract is technically -- has a status, it's called the lex specialis, which means that it was adopted by law and has a status of law there. The situation in Indonesia is -- in terms of resource nationalism, is something that the mining industry is facing globally right now. It comes of course, from the very high levels of commodity prices that we've had in recent years and comments about resource nationalism are popular politically. Indonesia is a country today that's a democracy. It has a free press; that's a different situation than it was during the 1990s. Just like comments we hear in our own political process, there are things that are often said that are changed as the reality of facing a situation comes to bear. We have great respect for the government. For years, people have talked about headline political risk in Indonesia whether it was because of the change of the government in the 1990s and the Asian financial crisis and the number of presidents that have happened since then. It's been a constant feature of our being in Indonesia and yet, what's also been a constant feature is after operating there for 40 years now, the government has honored the contracts. Indonesia as a country has become more prominent in the world from a financial standpoint. They're an active member of the G20 now. Their credit rating has increased, the internal economy has grown. They're actively attracting foreign investments particularly for infrastructure, and we're a big infrastructure investor. So I would just remind you of all the history of press reports and so forth that we've lived through. We're very experienced with this. We're working very positive with the government. We listen to them and we respect them and we want to find ways of working forward that is responsive to the issues in Indonesia but is also in a way that protects our assets for our shareholders. And as we talk to senior government officials, there's a mutual recognition of achieving both those objectives. So there will continue to be press reports, we'll report our progress and you can be assured that -- Jim Bob's had years and years of dealing with this. It has our attention, we're focused on it and we're confident we're going to work this way through that at the end of the day, the government will be happy and our shareholders will be happy. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: And what's the process though to get the extensions?

The contract provides that we have the ability to apply for the extensions, and we can apply for both of them at the same time. And we've started that process and we've started the discussions. And so, that is underway. At the same time, the government has separately started a process of reviewing contracts for all mining companies. And so those things are progressing together.

Your next question comes from the line of Brian Yu with Citi.

Rich, I just want to just switch topics a little bit over maybe to the U.S. here. At Morenci, you mentioned that the permitting is underway. I was wondering if you might be able to give us what's embedded in your expectations of when you're going to secure those permits. And then also, just on the cash cost side, how would these incremental pounds compare to your guidance for 2012 here in North America?

Yes. We've actually received -- we've already received our air permit for this project. As there's several permits to obtain; that is one of the critical ones. There are controversies in Arizona about new mine development projects. It's a different situation for us because we're expanding an existing mine and you just don't have the same degree of challenges with communities that you have in terms of expanding existing mines than building a new mine. Overall, we're in great shape with permits; we don't see any issues. The community in the county where we're working is supportive. The state government is very supportive. In fact, Arizona's celebrating its 100th year this year, and The Copper Club is going to recognize the state of Arizona as being -- rather than having a Copper Man of the year, we're having a Copper Club event here and I'll be giving recognition to the governor here. So it's a place where we feel we can operate where we are operating well and cooperatively with the community and the governmental authorities. Our cost situation, Kathleen is going to talk about that.

Yes, in terms of the incremental cash cost of the expansion at Morenci, it's a very attractive cash cost relative to the current levels. We expect that incrementally, these pounds that we'll be able to process through the mill will be lower than our current average cost at Morenci. So it's an attractive project in that we're able to expand the current mill. We have the footprint to do it there and as Richard said, the permitting for this particular project is pretty straightforward. So we see it as a very attractive project and we own a significant portion of Morenci so it's impactful to the company.

Your next question comes from the line of David Gagliano with Barclays.

I have a few quick questions. First, you flagged the -- obviously, the 25% company-specific growth and I was wondering if you could comment on your appetite for adding to your growth profile outside of your existing project pipeline and outside of your organic opportunities. That's my first question.

Well, we're very positive about the outlook for our commodities. We have this growth pipeline that you mentioned. It extends over many years. The challenge, and this is one of the reasons that the copper price is so high, is that it takes time to develop new sources of supply, both from permits and community issues and engineering studies, and construction cost escalation is a huge factor of the industry. It's going back to where we were during the first half of 2008 and that's also an issue. So we are -- we look at opportunities. We have an internal team that monitors the industry and bankers are constantly bringing ideas to us and if we did something, it would be from an opportunistic standpoint because of the attractiveness of a specific investment. We have the capability and the financial resources to do things but the challenge is seeing opportunities that are attractive to us on the basis of their economics after you -- if you were to pay for their values and a premium to those values and how that matches up. We're going to be very disciplined in terms of managing capital allocation.

Okay, that's helpful. My other question, I was wondering if you could just briefly comment on any concerns or lack thereof regarding water accessibility with regards to the Cerro Verde mill expansion?

Well, let me just say, water accessibility is kind of the major issue for expansions in the Americas. I mean, it is a very significant problem. We're building a desalinization plant now to support our operations in the Copiapó valley for Candelaria. As we look at expanding El Abra, water is a huge issue there, and you'll hear other companies talking about it. At Cerro Verde, it has been a major issue. We looked at a number of different alternatives including expanding access to the river through dam construction that we had but this approach that we have about using wastewater for Arequipa is really -- looks to be a really attractive situation for that community as well as for us. And so right now, we're very happy with where we are and the community seems to be very happy.

Okay, that's helpful and just my very last question...

They're getting a better standard of living and we're getting access to water without competing with agricultural sources in the same way you would by developing other sources of water.

My last question. Maybe it's a bit of a touchy subject but it does come up in conversation. I was wondering, Richard, if you could comment on succession planning at Freeport.

Well, we have a great team. We -- one of the things, as we brought the Freeport team together and we did have a team that was focused on essentially a single asset with this Phelps Dodge group that had been involved in global operations but when we put those together, we ended up with just an outstanding team of people with high morale, people who are working together. And s, we have a good team that will provide for potential leadership for this company for years to come. Jim Bob and I are both real happy with what we're doing. We're both focused on this business. It's a dream come true in a lot of ways. And so we're focused with working with our team on the future and we have a great group of people that will be able to sustain it for a long period of time.

Your next question comes from the line of Sal Tharani from Goldman Sachs.

First on Morenci, I see that the cash cost, particularly the site and delivery costs which was 180 pound in first quarter similar to the fourth quarter is rising significantly because you're giving an average of 192 pounds for the year. I'm just wondering what's going to drive that for this year. And also, your CapEx has moved up on that one about $200 million. What was the reason for that?

Well, the CapEx reflects the new project for the Morenci mill expansion. So I think Sal, as we've talked all along, as we advance these projects, at some point, we get them approved and both the project and the resulting production numbers start getting factored into our numbers. And that's what you're seeing with the CapEx standpoint.

Yes. The Morenci project was still in feasibility as of the last update. And so once we completed the feasibility study, we rolled that into our outlook. And then with respect to your question on the cash costs in the balance of the year, we are expecting to see slightly higher unit net cash costs in North America in the balance of the year and that's associated with higher mining rates and some mill maintenance activity that we have scheduled in the balance of this year.

Okay, great. One more question on Indonesia. Richard, you said that you -- in the end, you will find a solution which will make both government and the shareholders happy. So are you guys looking for some middle ground in this -- all these commencements coming out of the government?

We're always looking for a foreign approach that makes the stakeholders happy. And that's the way, historically, that this company has succeeded there and other places. We have a contract. It defines some legal rights. We want to listen to the aspirations of the government and try to find ways to be responsive to that and protect our contracts. So I'll just tell you, our experience has always been it's better to work with people than to work against them. And so -- and governments officials in Indonesia recognize what Freeport means to the country and that's why I feel confident about what we'll be able to do. Jim Bob, do you want to comment on this?

Yes, Richard. I was just going to wait and see how the questions about this subject but went on. But let me reiterate what Richard said. The lex specialis on this contract is well understood by the civil servants and the ministries that will have the final say on this. Ministry of Finance, Ministry of Mines and Energy, Ministry of Industry, and they know that we're making this $15 billion capital expenditure to go underground. They also know that the programs in Indonesia that have been announced under this current President, and of course, there’s an election coming up in 2014 that their whole focus is on increasing foreign investment and in creating more opportunity for CapEx. So it's a little bit of an oxymoron to say that we're going to see a lot of changes in contracts. It will make it more difficult to go out and find foreign investors. So that's what the political landscape is today. But when it gets down to it, to reiterate Richard's remarks and substantiate my feelings, the lex specialis is very strong. There's only been one real contest to that, that was back in '98, and it was over a power plant that was going to be built by Mid-America. And there was a confrontation over in the Mid-America, filed for a hearing in the United States and there was about a $276 million award, and it was paid by the government of Indonesia. So the idea that this lex specialis, it says you can't change the contract without mutual agreement between the parties is well known. Now to say that there -- or a middle ground is your last question, what does that mean? That means that there are certain things that are not -- there is no middle ground. The arbitration cost, the International arbitration cost, there’s been middle ground here. We can't give it up. The government knows we can't give it up, and so therefore, that holds the real meaning of the contract together. The things about the contract that Richard and I and the board can think about that won't change in a major way, the value to the shareholders. But we obviously will sit down and make an effort to do that. We have in the past, for instance, we want to increase the mill rate from 200,000 to 300,000 back a number of years ago, and the government had a push back because it was going to create more tailings and the environmental considerations. And in order to do that we, without amending the contract, made an agreement that the royalty would increase on copper and gold if we went up on the rate, if certain price mechanisms were met. And so the government knows that Freeport has done more in Indonesia for the locals. As we were talking about this voluntary community, we came up with in '98 where we spent almost $500 million into the so-called 1% fund is the biggest revenue for the region of Mimika where roads, schools, hospitals, government buildings, community housing have all been built. There's nobody in the country that has contributed as much to the local community. We're the only company in Indonesia that built a smelter. We went out and brought the Japanese to Indonesia and invested and owned a substantial ownership in the smelter. And by the way, that smelter provides currently with our concentrate going to it, all the copper demand that the country of Indonesia uses. So a lot of the things that are in the new mineral law, we've already complied with. So middle ground is a word that's probably too strong. I think Richard's effort to explain it by saying that the government, because of the penalty, impunity nature of the Mid-American settlement back in '98 is well aware that they don't want to get into one of those and neither do we. But at the end of the day, the contract will be honored, the extension will be granted. There are some things that we'll accomplish. Our goal of not giving up the principal issues in the contract that Richard and I, along with the board, will certainly be aware that it is a lot better to not be hardheaded but to realize that extending in this contract from '21 to '41 is a must for the government. It's a must for us and we'll get it done.

[Operator Instructions] Your next question comes from the line of Aldo Mazzaferro with Macquarie Securities.

On the Freeport Indonesia situation, are you still operating under a force majeure there? And what are the prospects for you lifting that in the near term?

Well, we did give notice of force majeure during the course of the strike and we are working very cooperatively with our customers to meet their needs. We have long-term relationships with our customers. We do have a priority of providing concentrate to the PT Smelting smelter in Indonesia. And so we will lift this as we get back to full production and resolve some of the uncertainties that were faced in the first quarter.

Great. This full production at the mill, is that about 260,000 a day or is it higher than that?

No, it's not higher than that. It varies depending on the type of ore that we have. And so full production can range from 220,000 to 240,000, and there will be occasional days that we will go above that or below that depending on the nature of the ore that we process.

All right. If I could just slip one more in, do you think there's any possibility that the view of concentrate would be considered a processed ore in this whole regulatory discussion in Indonesia?

This whole area is one where the government is dealing with the new mining law, it's dealing with a number of different minerals which have different characteristics and it's really -- I wouldn't want to speculate on how these definitions ultimately get put down. But right now, there's not really specific regulations and so forth that deals with questions like that.

Your next question comes from the line of Tony Rizzuto with Dahlman Rose. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: I'm sorry to ask another question about Indonesia but I get a lot of questions from clients. And I was wondering if you can give us a sense as to how far along the process of this contract review and/or extension is at the current time? I just have a quick follow-up on that too.

Well, we're in substantive discussions. In terms of how to measure where we are in the process, that's really not possible. It is something you know that we're going to engage in discussions directly with the government and not indirectly either in the press or speculation and so forth. But the discussions are going well and we feel we're making great progress, Tony, and we'll just have to see how long this process takes. There is a sense of urgency though of dealing with it on both sides. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: Jim Bob and you Richard, when you were talking about the middle ground in the conversation there, and I know you're working hard to cement the extension, is it likely you'd have to give up something to achieve such as the higher royalties where there is a bit of errands versus the new mining code, if you will, and a possible sale as you indicated before? Is it likely that, that you'd give up a little bit but it sounds like you guys are very, very confident that a lot of the commentary coming out of the government is, as you said, there's a lot of things going on and a lot of things driving that but should we feel comfortable that it likely will be more minor kind of modifications to secure that extension?

Well, Tony, just -- it wouldn't be appropriate for us to get into the details of our discussion with the government as we're having those discussions. I think I'll go back and just repeat what I said and the essence of what Jim Bob said is we're going to find ways of working cooperatively. I think Jim Bob made a good point when we talked about middle ground. There are certain issues where there may be middle ground, there's certain other issues where we'll have to stick to our guns on. So -- but really, it's something that we will work towards getting to a resolution that the government's happy with, our shareholders are happy with. And at this point, it would not be appropriate to talk about any specific issues that we're considering. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: All right. Perhaps I could just change the subject a little bit to labor front. Obviously, you've got the Grasberg out of the way now in terms of the new contract there, and I think most of the operations in the U.S. are non-union. The operations in South America and Africa, can you give us an idea of any contracts that might be coming up for expiry this year?

Okay. Kathleen has a note on that so I'll let her answer.

Okay. We've got -- we did the Cerro Verde contract and the El Abra contract last year. We've got in South America, Candelaria that comes up next year and we'll likely work to try to renew that late this year in advance of the exploration next year. We also have waged discussions at Tenke Fungurume later in 2012. So really, we're well covered with the agreements that we had last year, and we've got some we'll be working on this year but they're not significant to the overall scheme.

And Tony, you're right. Except for one small unit at our Chino mine, New Mexico, we're non-union in the United States. This issue with dealing with unions and contracts is kind of a constant deal. I mean, you get one finished and you're shortly after that planning looking ahead, thinking about how to deal with it. We've had success in the past of often being able to get resolutions in advance of the formal timing for negotiations and that's what we'll work to do.

Your next question comes from the line of Paretosh Misra with Morgan Stanley.

I'm sorry to be asking another question about Grasberg. But regarding the 9% stake there that you own through a subsidy, if a sale of that stake were to take place, any thoughts on how the fair market value might be determined?

That 9.36% stake was once owned by Indonesia. Through a series of transactions that's fully reported in our corporate documents, we acquired it. There is no requirement under our contract -- a requirement for us to sell it. But several years ago, the Minister of Mines and Energy and Mines asked us to consider it and we have -- and I've looked at a number of alternatives on it but no transaction has happened. In the past transactions that we had during the 1990s, the sales price was always referenced back to the publicly-traded price of FCX, and that's the basis that we would be looking at in terms of considering what fair market value is. We -- over time and we continue to look for the possibility of actually having a listing of PT-FI shares on the Indonesian Stock Exchange, that would be received very favorably by the government. That exchange has developed over the years to where it's created a liquid market, and that's one step that we see as potentially a positive step in terms of increasing Indonesian exposure to PT-FI.

Got it. And just one more on your potential phase for expansion in Africa. What kind of additional infrastructure might be required for that, and that would be my final question.

Okay, any expansion requires infrastructure. I mean, it requires power and -- but the current investments that we made in power and infrastructure with some tweaking, we believe, would allow us to do one additional expansion beyond what we have now. Now to get back into -- and then to go to the major expansion involving sulfide or mixed ores, that would require significantly greater access to power, transportation. We're looking at different types of processing. And so all of that is important factor. We're working cooperatively with the government and looking at long-term infrastructure and with other mining operators in Katanga. Those infrastructure investments, by the way, are very positive for the community, for the government, for the country and so that's a positive for us being there.

Your next question comes from the line of Brian MacArthur with UBS Securities.

I hate to go back to Indonesia as well. But just -- you made a comment about planning $15 billion in new investments. Is that actually PT-FI share or because obviously Rio Tinto once you go by 2021, will fund stuff if we're going to do KL and everything else. What exactly -- where does that number get you to and what does it get you? Just the Deep MLZ and block cave or does that include KL and everything else?

It does include the aggregate cost of our share and Rio Tinto share. The bulk of that is ours but it would include Rio Tinto's participation in those shares, and it would include the development of the deep Grasberg -- full development of the deep Grasberg and full development of all the resources and that involves an investment over a period of time. The point that we need to ensure that people in Indonesia understand, that investments we're making now and will continue to make will generate production volumes and cash flows beyond 2021 throughout the period through 2041, and quite frankly, there's resources there to be produced past 2041. Right now, we cut off reserve determinations at 2041.

Your next question comes from the line of Richard Garchitorena with Credit Suisse. Richard Garchitorena - Crédit Suisse AG, Research Division: Just a quick question again on Grasberg and this labor situation there. Just wondering if you can give us some color in terms of the current tension? How much comfort do you have that they won't flare up again? Has the union been supportive of easing the tension?

Yes. We have -- we had an issue in the first quarter of people coming back to work. In some cases, there was not a full understanding of the CLA agreement so we had to go through with the union, a process of socialization, that's a word we use. But it's a question of communicating and getting people to work together. Not surprisingly, there were some tensions between the workers that were striking and our staff workers that did not strike and there were some non-staff workers who did not strike and so that was an issue. There were some implementation matters under the contract CLA that we've worked with. In many respects, the union has been supportive in terms of working with us, and we have a structure set up to consider issues that involve potential strife and to get those resolved. So I can't report that everything is resolved today. But as evidenced by the level of our operations that we're achieving now in the second quarter, we're making progress. And we're looking at this on a long-term basis. We're looking at quality-of-life issues for our workers as this is a remote, harsh area to live in. And so we're looking at working with the workers and the union to deal with those quality-of-life issues to create more harmony within the workforce.

Richard, let me talk about the strike just a minute. I wanted to wait ‘til we've had a series of questions. But let's face it, the reality is that the Grasberg is known as the largest mineral deposit ever found and that's because of the high percentage of copper and gold in the mine. So we start out with sitting on top of the biggest reserve in the history of the mining business. When we found the mine in 1988, copper was selling for less than $1 and gold was selling for less than $400. When you take the copper, it goes up above $3 and hits $4 and you have gold prices go to over $1,500, the value just explodes. So the answer is around, currently, the world, all copper mines -- all mines whether they’re in Mexico, whether in South America, Africa or in Indonesia are in play as far the unions wanting to get a bigger piece of the pie. We're going to make sure that we pay our people and provide, as Richard said, living conditions in a very tough place to provide living conditions. But the fact is that as we all know, if you look at the front cover of Time Magazine, there was no Man of the Year this year. The Man of the Year was the protester. And whether you're talking about a protest against corporate America that's going on in America or whether you're talking about the uprising that started in Tunisia and went through Egypt, went through Libya, continues in Yemen, Syria, this is a political year where people are being urged to speak up and express their viewpoints. So with the new democracy in Indonesia, where the President is now elected by the people and the parliament is elected by the people, we're operating in an interesting environment. But the good news is that as I said before, people know what we've done in a very tough situation and that we spent billions of dollars, which includes billions -- a $500 million coal-fired generator so that we can have power. We built a brand-new city and we built education and hospitals. It's 97% of the Mimika province economy. So suffice it to say that all of these issues about the strike, about the expansion and extension of the contract are going to be under the umbrella of the political mood and everybody around the world knows it’s going on. But know this and that is we found the mine when nobody else could find it. We developed the mine in the middle of a 13,000-foot terrain where there was no infrastructure. We have created not a mine but a culture and the local people know that this is a culture that has improved their standard of living from beyond anybody's imagination before this mine was found. So the answer is all of these issues are going to be prominent but we're going to go on with life out there and we will continue to provide jobs and pay to be one of the biggest contributors to the tax revenues in the economy of Indonesia. And I'd like to just also comment on one other thing. We're talking about brownfield projects, greenfield projects. Remember, we've said repeatedly that one of the things that we've done since the Phelps Dodge merger is to identify the complete orebodies on the Phelps Dodge properties. And remember, because of the price of copper before we took over Phelps Dodge, Phelps Dodge did a wonderful job developing the leaching prospect. The leaching prospect, as you all know, involves the oxide ore. It has to be oxide ore and it involves putting the ore through a leach pad using sulfur gases to basically get the copper out of the ore. And only because the price of copper has gone to the numbers it had, it is the sulfide ore which will require a mill, which was not there to do the leaching. But remember, the fabric of these orebodies and the shape of these orebodies is that the oxide ore is strictly the amount of ore that was exposed to the surface when you could get erosion, if you will, of the copper, the ore body. But we said, if I'm looking at a peach that's buried in the ground, and only the very upper edge of it is exposed to oxidation was mined because the mines had no mill to get the sulfide ore because you couldn't justify milling it and sending it through a smelter. Well, that's all changed. And that's why we have this enormous amount of ore that is still unmined in all of the Phelps Dodge properties. So the price of copper gave us the ability to take in, make a much bigger economic picture on all the orebodies. So you have this cone, we call it at $1 copper, it was a very small cone that included nothing but oxide ore. At $2, $3 and $4 copper, this cone expands the proportion of the ore that can now be mined. And with the infrastructure we have plus the addition of the mill and being able to justify smelting this ore, you have a brand-new set of assets. So our brownfield projects under this oxide ore, this sulfide ore, is bigger in almost every case than any new deposit that would be identified. So we're talking about huge numbers and it's a pipeline of resources that will keep this company busy for many years to come.

Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research.

It's pretty clear from the stock price and many of the questions this morning that the different political events and statements of government officials and power or out-of-power politicians, Indonesia and/or Congo confused the market and affected the stock price. Over the years, FCX has often bought back its own stock. I remember a soirée in New Orleans maybe in the '90s where Jim Bob read the bond rating agency press release and said I mean, where they were downgrading the credit rating because FCX was dedicated to the shareholders and bought back stock. And I think Jim Bob read that with pride and I certainly commend Jim Bob. It sounds like it's the right time to buy back a lot of stock because the market's completely confused by all this rigmarole. And would you be willing to delay a capital program a year or 2 so you could buy back some extra stock while the price is so lousy?

John, this issue of the stock buyback and financial policy with dividends are matters that our board discusses constantly and will continue to do so. To date, the board has directed returns to shareholders in recent years, let me just say to dividends and a number of our investors have responded positively to that. We do have a focus on projects and we've built a great momentum on looking at those projects. And the truth is it's difficult to turn these kinds of things just off and on. And we believe that these projects, with their high rates of return, ultimately create the value for shareholders and a lot of these short-term issues that affect the market and over time, there's a number of issues that affect the market. The concerns about Europe, for example, or issues in Japan, this resource nationalism is certainly an issue. But we really are focused on the long term and believe that by just continuing to invest in the kind of projects that we have is the right answer for shareholders.

Your next question comes from the line of Kuni Chen with CRT Capital Group. [Technical Difficulty]

Your next question comes from the line of Charles Bradford with Bradford Research.

You've talked a few times about water availability. What about labor and mining engineers and geologists? I keep hearing about shortage of skilled people. Are you getting delayed in any of the projects for lack of people?

Chuck, that's a very valid point and it's something that's increasingly become an issue in terms of being able to get outside resources to work on our projects. There's a lot of competition for engineering talent and increasing competition for equipment. We, fortunately, because of our relationships, are able to deal with a lot of those. But it does require us to have a focus on the most meaningful projects for our company. We're constantly in the market looking for good people. Others are as well. It's interesting, when we first went to Indonesia, there was very low mining talent. And now, we see Australian companies coming in to Grasberg and hiring Indonesian engineers away. We're using engineering talent in Africa and other places. It's a great opportunity for countries like Indonesia and Peru and Chile because of the experience they're getting. So it is a management problem. We had our Americas operating team here last week, and that was a major topic of what we're talking about. So like a lot of things we have to do, it's a challenge and we've got to be way -- able to find ways to meet it. With our global operations and our ability to use people in different places and give them good career paths, it's a real benefit for our company.

Your last question comes from the line of Paul Massoud with Stifel Nicolaus. Paul A. Massoud - Stifel, Nicolaus & Co., Inc., Research Division: I actually had one quick question on Tenke. I'm -- been a lot of discussions on Indonesia but I was more curious about the cobalt circuit at Tenke right now and one in part, the guidance that you're providing for the credit, is that based on the realized -- that $12 number that you put in there, is that for Freeport's realized price or is that for spot LME quality price?

We're producing an intermediate product called cobalt hydroxide and the price that you see that we talked about, a market price of $12, that's the price of the cobalt metal. And as we sell that to various processors, we receive -- essentially pay charges for them to process the material. So our realization would be reduced from the metal price to reflect the product that we're selling. It's generally in the area of about 70% or so of the metal price. Paul A. Massoud - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And I know you mentioned it before but maybe just a quick clarification on the infrastructure required to go, say from the 400 million pound range to the 600 million pound range. Does the infrastructure expansion in that step up include transportation or do you think transportation is something that you don't have to worry about until say, after Phase 3?

Well, worry about is one thing. Conceivably, we could handle it with the existing system but it's -- there are ways of looking at transportation alternatives that could be very economic for us in terms of reducing costs and bottlenecks. So we are looking at long-term solutions but we're also looking at some short-term alternatives in terms of warehousing, alternative routes, alternative transportation means and that's an ongoing process. We don't see it as being a constraint at that level to produce oxides but there are certainly opportunities for us to make our business much more profitable by dealing with different transportation logistic alternatives. We appreciate everyone's being on this call, and we look forward to reporting to you on our progress as we go forward. Thanks for your interest in our company.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.