Siren Fisekci - VP, IR Michael Steinmann - President, CEO Rob Doyle - CFO Steve Busby - COO

Cosmos Chiu - CIBC Justin Stevens - Raymond James Jessica Fung - BMO Capital Markets Bill Fleckenstein - Fleckenstein Capital Craig Johnston - Scotiabank Lawson Winder - Bank of America Merrill Lynch John Tumazos - Very Independent Research

Welcome to the Pan American Silver Third Quarter 2016 Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions [Operator Instructions]. I'd now like to turn the conference over to Miss. Siren Fisekci, Vice President, Investor Relations. Please go ahead. Miss Fisekci.

Thank you, operator and welcome everyone to Pan American Silver's 2016 third quarter conference call. We released our results after yesterday's market close and a copy of the press release, MD&A and presentation slides for today's call are available on our website. In a few moments I will turn the call over to Pan American's President and CEO, Michael Steinmann who will provide an overview of the quarter. We will then open up the call to questions-and-answers. Joining us for the Q&A portion are Pan American's Chief Operating Officer, Steve Busby; our Chief Financial Officer; Rob Doyle and our Vice President of Business Development and Geology, Chris Emerson. Before we get started, I'd like to remind everyone that our press release and certain statements and information in this call constitute forward-looking statements and information. Please review the cautionary statements included in our press release and presentation as well as the risk factors subscribed in our most recent Form 40-F an annual information form. I will now turn the call over to Michael.

Thank you, Siren, and welcome everybody joining us today for our Q3 conference call. Q3 2016 was an outstanding quarter for Pan American. We generated earnings of just over $43 million or $0.28 per share. Adjusted earnings were $37 million or $0.24 per share. Net cash generated from operating activities topped $102 million in the quarter up more than 200% from a year ago. Lower income taxes in Q3 2016 played a part, but the strong financial results are largely a reflection of improved prices and lower costs. The cash we generated in the quarter exceeded all our capital requirements including our expansion projects at La Colorada and Dolores and our dividend, plus we repaid $12 million of short-term debt reducing our total debt outstanding to only $47 million. Our cash and short-term investments at the end of September increased by $41 million to over $245 million and our working capital position reached $434 million at the end of the quarter. As I said, it was an outstanding quarter highlighting the profitability of our business as a result of our cost cutting initiatives and strong operational performance. Cash cost in Q3 came in at $4.89 per ounce of silver net of byproduct credits, down 44% from last year. Lower direct operating costs higher, byproduct credits and export incentives at our Manantial Espejo mine helped to achieve this impressive result on cash cost. We are seeing substantial reductions in direct operating costs in 2016 as mechanization improved productivity in our Peruvian mines and we pursued efficiencies and cost reductions at all our other operations. Additionally, we see weak local currencies especially in Mexico and Peru and enjoyed lower input cost for consumables such as diesel fuel, cyanide and electric energy. We continue to be focused on a safe and sustainable cost reduction across all of our operations. We’re clearly realizing that in Peru through the mechanization efforts and we expect to see further benefits when the expansion of Dolores and La Colorada come into full operation. All-in-sustaining cost were $6.34 in Q3, which reflects positive net realizable value inventory adjustments at Manantial Espejo and Dolores higher byproduct credits export incentives at Manantial Espejo and cost reductions at Dolores and Morococha. As well all-in cost benefited from a draw down in inventories particularly at San Vicente. Given the strong performance we’re reducing our outlook for costs for the second time this year. We now expect cash cost to be between $6.25 and $7 per ounce of silver and all-in-sustaining cost of $10.75 to $11.50 per ounce in 2016. Relative to the original guidance we provided in January 2016, that represents a 33% reduction in consolidated cash cost and 22% reduction in all-in-sustaining cost. We are also revising our guidance for total capital expenditures in 2016 to $185 million to $200 million down from $200 million to $215 million. We are expecting lower major project spending at Dolores and as previously announced at La Colorada which is expected to come in 5% to 10% under budget. We’re expecting sustaining capital to rise by about $13 million to between $80 million and $85 million. The additional investment is earmarked for our expanded exploration programs; for additional mobile equipment replacement in Peru to continue on our mechanization success and for more pre-stripping at Dolores. We now expect silver production of 25 million to 25.7 million ounces in 2016 up from prior guidance of 24 million to 25 million ounces. The higher silver production guidance is largely supported by continued processing of stockpiles at Alamo Dorado and marginally higher production from our other mines. Similarly, we have increased our estimates for zinc, lead and copper production. Please refer to our Q3 press release issued last night for the specifics. We’re maintaining our forecast for gold production of between 175,000 to 185,000 ounces. Taking a closer look at each of our mines, at La Colorada we continue to enjoy solid steady operations. Silver production was up 5% in Q3 compared with last year’s period that’s the first of many future improvements from our mine expansion. The expansion project is ahead of schedule and on budget having achieved several major milestones in Q3. The new sulphide ore plan begun full production in early August 2016 with designed production throughput of 1,600 tons per day routinely achieved as ore quantities from the mine are ramping up. On September 8, the new 618 meters mine shaft was commissioned in fully automatic mode. Construction of the mine shaft was notable on several points. It was built during the downturn in the mining business allowing Pan American to retain the best expertise in its construction. It was executed under budget and ahead of schedule and most important it was completed with no loss time accident. I would like to congratulate the team for the exceptional performance on this project. Development of the underground mine at La Colorada is progressing very well. We’re seeing ore production ramping up nicely and expect it to continue to do so through 2017. And the project should be complete and processing rates rise to 1,800 tons per day. That should increase silver production from La Colorada to about 7.7 million ounces annually. At our Dolores mine we continue to see the shift to higher gold production as mine sequencing has moved to higher gold grades. Higher gold byproduct credits and lower operational costs were the main driver for the negative cash cost of minus $5.26 per ounce and all-in-sustaining cost of negative $4.70 per ounce. We also realized lower direct operating cost at Dolores and the good example of that is the new power line that was energized in early September replacing our onsite power generation. Annually the power line is expected to save $9 million in cost at Dolores. In addition to the power line the expansion at Dolores was marked by significant progress in development of the underground mine and construction of the pulp agglomeration plant. The underground mine has now advanced on the north and south lateral drifts as well as on the two declines to the lower levels. A total of 866 meters of development was advanced during the quarter and the first of two ventilation raise bore holes to surface was also completed. At the new pulp agglomeration plant the civil earthworks were completed and we have begun concrete forming and pouring. The pulp agglomeration plant is designed to improve silver and gold recoveries of the higher grade ore. The expansion at Dolores is on track for completion at the end of 2017 with the pulp agglomeration plant reaching mechanical completion by the end of Q2, 2017. Moving onto Peru, our Huaron and Morococha mines continue to demonstrate the benefits of mechanization with cash cost stand 57% at Huaron and 65% at Morococha quarter-over-quarter. Increased productivity and higher byproduct credits were also responsible for those cost reductions. At Manantial Espejo mine we also saw significant decline in costs with the main drivers being the devaluation of the local currency, lower diesel prices benefits from export incentives and higher byproduct credits. The improved economic conditions at Manantial Espejo have allowed us to extend open pit mining beyond our anticipated completion, which have been scheduled for the middle of this year. We will be stepping up mining rates for the remainder of the year and well into 2017 to access lower grade ore expansions that were previously deemed uneconomical. All-in-sustaining cost at Manantial Espejo dropped to negative $14.67 with the maturity of debt decrease reflect in net realizable value inventory adjustments. In closing, we are very pleased with the results, we have achieved in Q3. The over $102 million we generated cash flow from operating activities was only surpassed a couple of times in the history of Pan American Silver, this was in 2011 when the average silver price reached over $35 per ounce. Our productivity improvements on cost reductions allowed us to achieve similar financial results to-date at much lower silver prices and we expect the expansions at Dolores and La Colorada to further benefit margins and those projects reach their full processing rates by the end of 2017. Finally our strong financial position allows us to pursue growth opportunities both organically and outside the company. We have a rich suite of assets that offer exploration and production upside and we have a solid pace of long life producing mines generating attractive cash flows. That concludes my formal remarks and I would like the operator to open the call now for questions. Thank you.

[Operator Instructions] The first question comes from Cosmos Chiu with CIBC. Please go ahead.

Congrats on a very strong quarter. Maybe first off a question for Rob, if Rob’s there. The NRV adjustment for the quarter was a big contribution, it was a big part of the cash cost per ounce calculation. Can you remind us once again, how that works and given how silver prices have kind of come down a bit in Q4, if that kind of continues, would that have a negative impact on earnings in Q4?

Sure, well the first thing to clarify is that NRV adjustments did not get reflected in our cash cost. They are incorporated in our AISCSOS number, but cash cost did not include NRV adjustments for the period, it’s done on a production basis. So NRVs are really, if you like, an accounting treatment of marking the inventory to the lower of cost or net realizable value and to the extent that the inventory that we’re carrying has a value less than our cost than we would write down, have a negative NRV adjustment and then in future periods as that inventory value gets, is determined to be higher based on metal prices then we would have a positive NRV adjustment. So specifically to your question, yes, all things being equal they would likely be some negative NRV adjustments in Q4 given that metal prices today are lower than where they closed at September 30.

Does it really matter Rob, I guess it doesn’t really as you said doesn’t really impact your cash. It just in terms of when we have to meet our earnings we may have to take that into consideration.

That’s absolutely right, so again it’s, it will only effect AISCSOS, it doesn’t affect cash cost and to your point that is a non-cash entry and in our disclosure we do very carefully show you an AISCSOS what the NRV impact is, so you can either include it or exclude it depending on your view of whether that is a normal course entry or not.

Yes, of course. Maybe Rob since I have you here, could you remind us again. I’m just looking at taxes and it seems like you, in terms of Q3, 2016 there wasn’t much cash taxes paid, could you remind us once again how taxes work for the company and when would you anticipate paying a bit more cash taxes.

That’s very true, in fact in Q3 we didn’t - had a net refund of taxes. So there were no cash taxes paid in total, that’s really a function of the fact that we pay instalments based on previous year’s income. So we will expect these great operating results to result in higher tax payments in 2017, so probably in March, 2017 would be when we’d to expect to pay down on the tax that we’ve accrued, so in the tax expense account on the income statement of course we’re accruing for current taxes, but from a cash point of view we will only see that accrual paid probably beginning in March, 2017.

Okay, so only the current tax portion, Rob, and not the deferred tax portion.

That’s correct, but in our current tax portion we are of course accruing for the taxable income that we’re generating in 2016, it’s just that we haven’t had to pay for that yet.

Got you.

It’s in our income statement, but not in the cash flow.

Maybe switching gears a little bit here, just looking at your sustaining CapEx budget for 2016, it looks like you know you’ve moved or refined some of these numbers here. Maybe first off are the La Colorada and Dolores numbers they’ve been revised down. I’m just wondering if that’s a function of as you said La Colorada of course, you’re about 10% under budget. How about Dolores, is there - it doesn’t sound like you’re behind; it sounds like you’re on time, on budget or below budget. So I’m just trying to understand the decrease in sustaining CapEx.

Well, in the sustaining capital portion, Cosmos, we’ve actually increased. We’ve increased at Dolores, originally we had $39 million to $42 million invested in ours.

I guess I was looking at the project capital number. Sorry about that.

Yes, okay, fair enough. Project capital, yes. So the issue at Dolores is, we did take longer to do the civil earthworks than we anticipated so that pushed off a lot of the mechanical construction into 2017 and that’s what’s driving that. Now we were able to do the equipment purchases and we were able to get the equipment shipped to the site. So we’re gearing up construction at a higher pace than what we originally plan, so we’re hoping to make back that schedule that we slipped on that mechanical work.

Okay, at La Colorada the decrease in project CapEx is just a function of Pan American Silver coming in below budget?

It’s a combination of that plus we did have the power line and we have a little bit of well it’s really the power line that slipped into next year; we’ve got a $2 million spending that slips into 2017 and the rest being really a savings of the overall capital on the project.

So it’s really a little fraction Cosmos of building a project while nobody else is expanding and building mines, which as we talked about many times it has a very positive effect to your capital expenditures.

Of course and maybe one last question following up on the sustaining CapEx hopefully I get it right this time. But the sustaining CapEx number for the two Peruvian assets increased in 2016 as a function of mobile equipment replacements. I guess my question is two parts, number one, well what’s the replacement cycle for some of this mobile equipment here in Peru and I guess part two is, was it something that you anticipated going into 2016 as a possibility for replacement and given how strong these quarters have been that’s why you went ahead with it and you know and decided to go ahead with the replacement.

Yes, great question Cosmos and it’s largely and we kind of used the word replacement, we shouldn’t have, it’s largely, we’re finding given the strength that we’re seeing on those operations and a lot of that strength is being put into mechanized mining into these larger ore bodies, we’re seeing the opportunity and the benefits of that and been able to pass that on to the smaller narrow vein mining area, so a large part of that is buying new equipment that’s geared more toward narrow vein mining. There’s a company in Peru that’s come out with some really high quality narrow vein mechanized mining equipment now, jumbos and loaders and drills and so we’re taking advantage of that, given the strength both of those operations, where we’re seeing base metal prices today, seeing what we saw during the last three quarters there, we’re going to try to expand upon that and move that into 2017. So that’s a large part of that capital increase. In addition, the normal rebuild cycles on that equipment we’ll typically do a major overhaul after about 15,000 to 20,000 hours on those equipments.

Of course, and sorry, maybe one last just follow-up question here. I saw that you also increased your production guidance for the base metals, how does that usually work, does the base metal grades positively correlate to your silver grades, I know that’s the case maybe for La Colorada, but overall how does it work?

Yes, I almost turned that over to the [expiration challenge] [ph]. That’s a tough question.

We can take it offline.

Cosmos, also in La Colorada its normally we see higher base metal grades when we go deeper down in the assets. In general, we can’t say it always but in general so in La Colorada we have to - a very nice situation where we have higher base metal and higher silver grade deeper down. In Peru, it’s really also [indiscernible] horizontally so it’s very complex depending which zone we’re in the mine.

And restructure correct.

Okay, great. Thanks once again and congrats again on a very strong quarter.

The next question comes from Justin Stevens with Raymond James. Please go ahead.

Couple quick question from me, so these [indiscernible] costs that we’ve seen in the third quarter here, how representative would you guys say those are, what we might expect going forward.

Justin, this is Steve. The key thing about Dolores is that’s really driven by that high gold production and we forecast, as we look back if you go to our 43-101 technical report you’ll see that the gold production by year steadily increases at Dolores for the next three to four years, where we really peak in the gold production, where silver production is kind of off and on again and gold production that’s driving those cost down. So we’re moving in and out of that gold zone every year, we’re getting more and more quantities of that. So we do anticipate to see the cash cost go up a little bit, the gold production to go down a little bit. I would say from the next four to six maybe four months and then early in the New Year towards Q2, will move into that gold zone. We’ll have stronger gold zone through the rest of the year and next year. So it’s just reflecting as we get deeper in the pit and we expose more and more the high grade gold zone with each years, that passes, we’ll see more and more gold production. So if you look back in the history of Dolores typically we’re producing 60,000 ounces a gold year, we got up to 80,000 last year. This year you will see, we’ll be at 100,000 ounces and it just kind of incrementally kicks off to the next four years going forward.

Sounds good. The only other thing with the strong cash position you guys have sort of build-up period, any thoughts on the dividend or room for increase there?

Yes, Justin as you know we’re long time dividend payers since 2010. The full intention is obviously keep paying dividend. Dividend will vary with metal prices as we’re on a very cyclical business here. This have been very positive results, but don’t forget we’re still in the construction phase at Dolores and I think really good time to look at this once we finish this two expansions few months in or like half year into 2017, but for short [ph] the board is looking at that very hard every quarter.

Perfect, that’s it from me. Thanks guys.

The next question comes from Jessica Fung with BMO Capital Markets. Please go ahead.

At La Colorada now you’ve got the shaft up and running which is great news, what you anticipate in terms of cost savings or efficiencies there?

Hi, Jessica. This is Steve here. First off I’ll say we couldn’t be more pleased with the project. It’s just an outstanding project it’s a totally automated shaft, it’s world class, its’ cutting edge technology throughout. I was down there few weeks ago, just an impressive installation and our operators are getting more and more comfortable, more and more confident with their ability to operate that. I see us continuing to ramp up production and efficiencies for the next six months or so as they get more and more comfortable with it. I think I can safely say that the efficiencies and the productivities we’re going to see from that we’re going to exceed what we had projected in our 43-101. I cease [ph] to make any kind of quantitative estimate on that at this point, but I do feel confident that we will do better than what we said.

Give us a few more months Jessica, it just started up obviously. I agree with Steve, I think it looks very positive and very good. I’m sure in another quarter or so we’ll have better numbers for you on the real phasing that we achieved but very positive outcome.

Okay that sounds good. It’s always good to beat on a quarter anyway. Mexico, in terms of the cost there what percentage of your cost at the Mexican operations are denominated in Pesos. Just to get a sense in terms of FX we’ve seen recently.

We’re hesitant to really give out quantitative data there because it’s of complex picture, even though where lot of costs maybe in Pesos, they’re denominated in dollars before they’re converted and paid so, even though the percent that we actually pay maybe higher, we generally say somewhere between 30% to 40% of our total we’re being paid in a Peso denomination which is primarily for the salaries and wages we pay our employees and that’s really the part that we say is kind of variable, where the other ones might be tied more to US Dollar basis.

Okay, perfect that makes sense. And as well for the power tariffs in Mexico, now that you guys are connected to the grid. We’ve been hearing that the tariffs are rising in Mexico. Rule number one, is this true? And number two, do you guys have any kind of contract in place?

Well it’s an industrial supply contract that we do have with a government entity that runs the power distribution throughout the country and we have forecasted and we’ll be revealing as part of our budget, but there is slight kind of I’ll say 5% to 7% increase anticipated in tariffs going into next year.

All right, that’s it from me guys. Thank you very, very much.

The next question comes from Bill Fleckenstein with Fleckenstein Capital. Please go ahead.

Michael, I was wondering if you could comment at all if there’s any progress in terms of moving Navidad forward down in Argentina.

Good morning, Bill. I mean we see definitely some moving parts down there. I don’t know if you had a chance to go through some local news. I think two major advancements there. The federal government is working on new mining framework for the entire country, which should regulate [indiscernible] environmental aspects of mining, so that’s for the entire country. I’m not sure about the timing of this probably earlier part of next year. Second one, there was a change in the cabinet in Chubut. The head of the cabinet was replaced last week with the new Head of Cabinet, who I don’t know yet I will hopefully have a chance soon to meet them and discuss, but so far we had very productive meetings with everybody and we’ll see how that goes forward. As you know, the project can only move ahead with the law change in Chubut and that’s obviously a political process that we have to wait for.

Okay, thanks.

The next question comes from Craig Johnston with Scotiabank. Please go ahead.

Lot of my questions have been answered and asked already, but just Michael on your commentary around the strong cash position and looking at internal and external opportunities. Can you maybe just speak to your strategy and thoughts on, if you’re looking externally how big would you be willing to go locations etc.?

Well you know we’re large silver mine [ph] Craig, if there are silver mines that can never be too big for us. If they exists that silver mines are normally smaller than gold mines, so there are all of them out there. They’re in kind of size range that we easy could handle. So that’s not the problem for us. Location wise, we have to go where the silver is and most of the silver is located in the Cordillera and the Andes or in the Cordillera all the way from Patagonia up to Alaska. This are the biggest silver producing countries in the world and that’s where we’re working, that’s where we are and we’re very happy there. If there is a large silver deposit somewhere else coming up in a different jurisdiction for sure, we would look at that. Additions can be obviously smaller and very productive and very positive, could be very positive for us and profitable if they are close to some of our operations. At the same time, so we’re always looking externally we always did that, that’s how the company grew by purchasing earlier or mid-stage projects in some cases even early production assets and then use our expertise to improve them and bring them into production. But I think what we did in the last few years with the change in Peru, with the huge change in Mexico, with the expansions at Dolores and La Colorada really shows you what we can do internally as well and easy finance that through our cash flow in this case now and that’s for sure something that we will keep an eye on as well, we have very long life assets with large reserves and as you know over 10 years of reserve replacement in the past, but also that’s, so we’ll for sure have a hard look at them as well to keep improving them and maybe look at future expansions in some of them.

Okay, thanks Michael, that’s a great answer. And then just one other question which is much very material, but just something we noticed. At Manantial Espejo it seems like silver recoveries have dipped down into the 87%, 88% range in the past two quarters. Can any of you just speak to the reasoning behind that and where we should expect silver recoveries going into say 2017.

Great question, Craig. Yes they have dipped a little bit, a large part of that is, we’ve been pushing the throughput pretty hard there and we have hit this harder ore in Concepcion and it seems to be a bit more encapsulated than we have seen in other ores, so some of the pit expansions and some of the expansions we’re looking at going to next year, it does include more Concepcion ore, so I think that we’re anticipating maybe a 1% or 2% below what our normal average is for that operation as we mine those ores.

Okay, thanks Steven. Is it too early to give a sense in terms of what potentially the strip ratio could be next year as well as say grades? As I’m sure some of us are modeling mining stopping stay at some point next year.

Yes, it’s too early to do that Craig. We’re still going through those budgets as we speak, so when we come out with our new guidance in January we’ll have all that detail for you.

Okay, well it sounds good. Thanks guys.

The next question comes from Lawson Winder with Bank of America Merrill Lynch. Please go ahead.

Just wanted to follow-up on certain on the based metal production and the guidance I think Cosmos had started asking about that, obviously as evidenced by your higher based metal production guidance. The base metal production it has been higher than expected and I guess my question would be, is this been driven by a conscious decision to change the mine sequencing or is this just been the sequencing you already had planned for 2016, that’s been surprising you to the upside.

Hi Lawson, Steve here. Relative to La Colorada base metal production with the new shaft in its bringing more sulphide ore and that sulphide ore is creating a bit better than we expected, so in that case it’s a case of finding more than we expected and the case in Peru in Huaron and particularly at Morococha that is kind of a mine sequencing. We were in the high copper zones early in the year and we’re moving into higher zinc and lead zones, so that’s really a sequencing thing, we’re seeing what we expected. It’s just where we’re mining at the time.

And then just on the copper production San Vicente I actually asked this question last quarter and kind of got the impression that copper grade is actually may have been following in Q3, but they’ve actually remained quite strong copper production there remained quite strong. I’m just curious if you have a sense now how long that higher production at San Vicente can continue for, maybe in terms of number of quarters and number of months?

You know we kind of touched on that last quarter when you asked the question. It’s an interesting issue because we actually produce the silver concentrate there, we call it silver con, some people call it bulk con, it’s really high grade like 20 kilogram silver per tonne and it does contain both lead and zinc. It will contain 8% lead and maybe as much as 10% or 12% copper and there is one zone that we mind that, that copper will actually go up to maybe as high as 14% at times. So the concentrate we can market as either a lead con or a bulk con or a copper con. So we look at the market as of where the best terms are and so we’re kind of in and out of whether we call that lead production or whether we call it copper production and we haven’t up until this quarter we were actually selling some copper earlier that we weren’t claiming, this quarter we decided to bring that in. Our anticipation is, that we will see more copper production for the next foreseeable future and again in January we will provide better guidance for the mine.

Okay that’s great, that’s really helpful and maybe just one more question from me on exploration. So on Q2 you raised your exploration budget for 2016 to $14.5 million and I think it was a pretty big increase over the original guidance for something like 30% or 40% and then this quarter you mentioned that part of the increase in the sustaining CapEx guidance was actually driven by exploration. So maybe where does the total exploration budget now stand for 2016 and then maybe you can provide some guidance on how that’s broken out between what’s expense and what’s capitalized. Thank you.

Well, we actually we mentioned the higher exploration capital last quarter but we did not reguide our capital so that’s why you see now in the guidance with this increase part of it is exploration, so that’s the reason why it’s not like twice in there, it’s just now we reguided it, first point. Second normally when we look at our exploration all the brownfield exploration is expansed [ph] if it’s kind of infill drilling or production that’s called production drilling. If it’s more like longer term exploration than it’s capitalized and obviously everything away from the operation is normally expansed [ph] until we see that the project is good enough that we have a resource and the definition on all that and then we would start capitalize it as well.

Okay, so just to be 100% clear the total 20% exploration budget still $14.5 million.

That’s correct.

Okay, that’s great. Thanks very much guys.

The next question comes from John Tumazos with Very Independent Research.

I want to thank you for the $0.28 you guys are earnings and a great performance, I’m a shareholder.

You’re welcome.

It amazes me that your stock trades about for the general stock market notable mid-teens and first majestic trades almost three times as much of PE and your company has a wonderful track record in lot of production from many mines which reduces volatility and risk, why do you think the market doesn’t pay more for Pan Am and do you think it would be good to spend two times or three times your exploration budget to try to extend reserve wise at some of the vein type mines where it’s expensive to document reserves to show the market your good asset is better.

Hi John. I’m absolutely convinced that quarters like this already last quarter was great, but quarters like this well for sure take - got the attention of the market. As you know when you go back few years Pan American had really the view in the lot of investors as a high cost producer, our costs were high in Peru especially all the mechanisation efforts we did now and the improvements there resulted in this beautiful reduction of cost in Peru and it will take a few quarters I think for the market to absorb all that but I’m absolutely positive that the market will react very positively, this is our very, very strong results and our cost reductions are really under payments, underline what we’re able to do with this assets. Going to the exploration, our exploration capital that we spend is actually quite fluid because we look at it very result driven. So it’s really, we’ve got good results [indiscernible] keep investing more. We have very long life assets, we have about 10 years of reserves adding most of our assets. So spending much more money in exploration to increase that to like 15 years I don’t - not so sure that will be very wise us of capital right now but we definitely work hard on it to replace and not only replace reserves but replace it with higher quality reserves. That means, if possible wider ore bodies, if possible higher grades.

Thank you.

[Operator Instructions] this concludes the question-and-answer session. I would like to turn the conference back over to Michael Steinmann for any closing remarks.

Thank you, operator and thank you everybody for calling in today. Great quarter, great story I’m really looking forward to talk to you again in February, where we will share the year end results with you until then have a Merry Christmas.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.