oz minerals asian roadshow · 2015. 9. 15. · oz minerals • page 2. disclaimer. this...
TRANSCRIPT
September 2011WWW.OZMINERALS.COM
OZ MINERALSASIAN ROADSHOW
OZ MINERALS • PAGE 2
DISCLAIMER
This presentation has been prepared by OZ Minerals Limited (“OZ Minerals”) and consists of written materials/slides for a presentation concerning OZ Minerals. By reviewing/attending this presentation, you agree to be bound by the following conditions.
No representation or warranty, express or implied, is made as to
the fairness, accuracy, or completeness of the information, contained in the presentation or of the views, opinions and conclusions contained in this material. To the maximum extent permitted by law, OZ Minerals and its related bodies corporate
and affiliates, and its respective directors, officers, employees, agents and advisers disclaim any liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or its contents, including any error or omission there from, or otherwise arising in connection with it.
Some statements in this presentation relate to the future and are forward looking statements. Such statements may include, but are not limited to, statements with regard to intention, capacity, future production and grades, projections for sales growth, estimated revenues and reserves,
targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow and debt levels,
the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe”
and “envisage”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future
and may be outside OZ Mineral’s control. Actual results and developments may differ materially from those expressed or implied in such statements because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign
currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation.
Given these risks and uncertainties, undue reliance should not be placed on forward-looking statements and intentions which speak only as at the date of the presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, OZ Minerals does not undertake any obligation to publicly release any updates or revisions to any forward looking statements contained in this presentation, whether as a result of any change in OZ Minerals expectations in relation to them, or any change in events, conditions or circumstances on which any such statement is based.
Certain statistical and other information included in this presentation is sourced from publicly available third party sources and has not been independently verified.
OZ MINERALS • PAGE 3OZ MINERALS • PAGE 3
SNAPSHOT
OZ MINERALS • PAGE 4
OZ MINERALS
Market capitalisation:
~A$4 billion
Prominent Hill: Open-pit copper and gold operation.
Underground development underway.
Underground ore mining in Q1 2012.
Carrapateena: New copper growth project.
Exploration: Priority area –
Prominent Hill.
Business Development:
Pursuing global opportunities in copper -
$750 million earmarked.
A$905.6 million: Cash at 30 June 2011.
Capital management:
First half distributions to shareholders of $1.60/share ($518 million).
On-market buy-back of up to $200 million underway.
Dividends: Interim 2011 –
30c/share.
Equity investments:
42.5% of Toro Energy, 12.9% of IMX Resources, 18.9% of Sandfire
Resources and others.
OZ MINERALS • PAGE 5OZ MINERALS • PAGE 5
FINANCIAL OVERVIEW
OZ MINERALS • PAGE 6
H1 2011 FINANCIAL OVERVIEW
•
Prominent Hill record revenue of $632.7 million.
•
Prominent Hill EBITDA of $384.2 million.
• OZ Minerals’
underlying NPAT of $189.1 million (excluding
impairment & litigation settlement).
• OZ Minerals’
NPAT of $113.9 million, a reduction on 2010 due to
• Foreign Exchange
• Litigation settlement expense
• Toro impairment
• Impairment reversal in 2010
•
Record cash flow from Prominent Hill operations $388.3 million.
• Cash balance of $905.6 million
at 30 June 2011.
OZ MINERALS • PAGE 7
INCOME STATEMENT –
CONTINUING OPERATIONS
•
Consistent good production and cost performance from Prominent Hill.•
Appreciation of the A$/US$ negatively impacted US$ denominated cash balances.•
Increase in exploration spend in line with strategy to increase life of Prominent Hill operations.
A$M H1 2011 H1 2010
Revenue 632.7 589.9 Cost of goods sold (210.8) (190.7)Net foreign exchange (loss)/gain (32.7) 40.8 Exploration expense (33.6) (18.2)Other expenses (24.5) (23.6)
Underlying EBITDA 331.1 398.2 Litigation settlement expense (60.0) -Impairment (15.2) 190.4 EBITDA 255.9 588.6
Depreciation and amortisation (83.3) (66.8)EBIT 172.6 521.8
Net financing income 20.7 10.2 Income tax expense (79.4) (160.4)NPAT from continuing operations 113.9 371.6 Underlying NPAT from continuing operations 189.1 230.5
Includes raw materials, consumables, direct employee costs, movements in inventory,
freight and royalties
Regional and near mine exploration, excludes capitalised
resource development
Corporate and site G&A
Impairment of investment in Toro
Statutory tax charge, utilisation of losses results in no cash tax
payable in relation to the first half result
OZ MINERALS • PAGE 8
Cash flow for the half year - June 2011
700
900
1,100
1,300
1,500
1,700
1,900
2,100
1,334.2 669.3 (267.2) (44.2) (33.6) (7.4) 13.8 1,664.9 (241.2) (129.5) (388.6) 905.6
OpeningCash
Receipts from
Customers
Payments tosuppliers
andemployees
PP&Eand
capitalisedexploration
Exploration
FXon cashbalances
Other Operatingcash
balance
AcquisitionsDisposals
Dividend CapitalReturn
ClosingCash
(A$M)
CASH FLOW 2011
OZ MINERALS • PAGE 9
BALANCE SHEET
•
Balance sheet remains strong with significant cash holdings and no debt.
•
Post balance date OZ Minerals entered into US$200 million debt facility with four relationship banks, facility provides prudent financing flexibility in short to medium term.
Decrease in cash balance from December due to payments for Carrapateena and distributions
to shareholders
Includes investment in Carrapateena and Sandfire
shareholding
Includes class action settlement and GST on Carrapateena
Increase due to utilisation of losses.
A$M
Consolidated
Jun'11
Consolidated
Dec '10
AssetsCash 905.6 1,334.2 Receivables 172.7 180.9 Inventories 259.7 259.5 Other 14.4 8.0 Investments & exploration assets 513.3 316.2 Property plant & equipment 1,245.1 1,288.1 Total Assets 3,110.8 3,386.9
LiabilitiesCreditors 147.4 64.6 Net deferred tax liability 94.2 14.8 Provisions 18.6 16.5 Total Liabilities 260.2 95.9 Net Assets 2,850.6 3,291.0
OZ MINERALS • PAGE 10OZ MINERALS • PAGE 10
OPERATIONS OVERVIEW
OZ MINERALS • PAGE 11
SOUTH AUSTRALIA
OZ MINERALS • PAGE 12
PROMINENT HILL SITE
TAILINGS DAM
MALU PIT
ROM PAD
PROCESSING PLANT
VILLAGE
ANKATA DEPOSIT AREA
NORTHERN WASTE DUMP
SOUTHERN WASTE DUMP
OZ MINERALS • PAGE 13
PROMINENT HILL PRODUCTION
Product: High grade (~50% Cu), high quality, copper concentrate.
Production H1 2011: 53,725t contained copper, 86,129oz gold.
Production Guidance: Contained copper 100,000t to 110,000t. Optimising
gold production while ensuring
maximum copper production.
Mine and Plant: Open pit, mine, crush, grind, flotation.
Cash costs: Competitive C1 cash costs US62.9c/lb for H1 2011.
Estimated C1 costs 2011: <US70c/lb.
Workforce: Approximately 800 (including contractors).
OZ MINERALS • PAGE 14
Inte
rim D
eclin
e
Ankata Decline
VR2A
FinalPortal
VR4A
PROMINENT HILL -
ANKATA UNDERGROUND• Ankata
underground will enable production of 100,000t to 110,000t copper to be maintained.
• The portal was accessed in November and decline advanced to 1,300 meters in August 2011.
• First ore to be produced from stoping by Q1 2012.
• Full mining rates (1.2Mtpa) by Q3 2012.
August 2011
OZ MINERALS • PAGE 15OZ MINERALS • PAGE 15
GROWTH
OZ MINERALS • PAGE 16
NEAR MINE EXPLORATION
•
Now drilling from underground.
•
Munda
zone drill out 2011.
•
Decline extension to provide access beneath pit in 2012.
•
Under pit resource drilling 2012/2013.
•
Aim to add 1-3 years mine life from immediate near mine program.
•
Deeper infill drilling to follow with access.
OZ MINERALS • PAGE 17
UNDERGROUND DRILLING -
CONCEPTUAL TIMING OF DRILL PROGRAMS
Plan view
ANKATA
MALU
MUNDA
Remaining Resource tested beyond 2013
2013
2012
2011-12
2012-13
2012-2013
OZ MINERALS • PAGE 18
REGIONAL EXPLORATION –
NEW MINERAL PROVINCE
•
Sizeable exploration program.
•
Large, approximately 7,000km2
tenement area-
4,000km2
OZ Minerals-
3,000km2
IMX JV
•
$17 million spent on regional exploration in H1.
•
Detailed geophysical surveys undertaken, more in progress.
•
Three drill rigs dedicated to the OZ Minerals regional program and two rigs for IMX JV exploration.
•
Many holes have intersected IOCG alteration.
•
Some wide intervals of low-grade copper mineralisation.
•
Program continues.
EL4390
EL3387
EL4446
EL3730
EL3730
EL3518
EL3729
EL3445
EL3830
EL4390
EL4025
EL4429
EL4429
EL4132
EL3795
EL4283
EL4429
Gravity
OZ Minerals tenements
IMX tenements
Coober
Pedy
20km
Airborne Magnetic Surveycompleted in Q4
Hallifax
Danae HillMetis
NeptuneCressida
Epsilon
Rouse
Taurus
ArapilesShadwell
IP Surveys in Progress
Near Mine
Future OZ Minerals Prospects
IMX JV target areas
PerseusBlue Duck
Bluebird
Prominent Hill
OZ MINERALS • PAGE 19
ACQUISTION OF THE CARRAPATEENA COPPER – GOLD DEPOSIT IN SOUTH AUSTRALIA
• Acquired in May 2011.
• Large IOCG deposit –
similar to Prominent Hill.
• An initial Inferred Resource of 203Mt at 1.31% copper, 0.56g/t gold and 270ppm U3
O8
in the southern area of the Carrapateena deposit reported by OZ Minerals.
• Scoping studies underway –
mining, deposit access, underground infrastructure.
• Drilling to continue to upgrade resource.
OZ MINERALS • PAGE 20
CARRAPATEENA DEPOSIT -
INITIAL INFERRED RESOURCE TO SOUTH
0m 250m
Mineralisation not well understood, potential for
extension to the east
Exploration & Inferred Resource
status area
Exploration area
Chalcopyrite shell in yellow
Exploration & Inferred Resource status areaExploration area
Historic drillhole
collar
Historic drillhole
trace
N
0m 250m
Main depositPotential for
extension at depthMineralisation
open to the east
Target range:
25-45Mt @ 1% Cu, 0.4g/t Au, 140ppm U3
O8
, 4g/t Ag
Inferred resource:
203Mt @ 1.31% Cu, 0.56g/t Au, 270ppm U3
O8
, 6g/t Ag
OZ MINERALS • PAGE 21
CARRAPATEENA CROSS SECTION –
6543400N LOOKING NORTH –
HIGH COPPER GRADES
• CAR073 –
905m @ 2.17% Cu, 0.89g/t Au from 506m (incl. 82m @ 4.78% Cu, 1.13 g/t Au from 518m)
• CAR031W1 –
410m @ 1.88% Cu, 1.20 g/t Au from 582m (incl. 134m @ 2.85% Cu, 1.48g/t Au from 858m)
±50m clip
Bornite
shell in blue
Chalcopyrite shell in yellow
0.5 –
1% Cu1 –
2% Cu2 –
3% Cu>3% Cu
Cu values
PLAN N
0 200m
-100
-500
-1000
-1500
OZ MINERALS • PAGE 22
MINING OPTIONS STUDY
Options:• Block caving.• Inclined sublevel caving.• Selective mining. • Stoping at higher levels, then caving.
Lower mining costs
Lower development costs
<$10/t $10‐20/t $20‐50/t
Block
cavingSublevel
cavingSublevel
open stoping
Visual representation of the Carrapateena deposit
OZ MINERALS • PAGE 23
CARRAPATEENA CONCEPTUAL PROJECT SCHEDULE
2011 2012 2013 2014 2015 2016 2017
Exploration drilling to complete initial Inferred Resource, 10,000m
Option studies for mining
Phase II exploration drilling to move to Indicated Resource
Geotechnical drilling
Pre-feasibility
Exploration shaft
Feasibility study
Construction
OZ MINERALS • PAGE 24
•
Commodity:
copper or copper with gold.
•
Scale:
50,000t –
150,000tpa production or future production potential.
•
Jurisdiction:
Global “low”
to “medium”
risk countries.
•
Terms:
100% or with partners depending on project.
BUSINESS DEVELOPMENT –
ACTIVELY LOOKING FOR OPPORTUNITIES
OZ MINERALS • PAGE 25
SUMMARY• High quality copper asset at Prominent Hill
underground production from Q1 2012
strong performance
competitive cash costs
new underground development
aggressive exploration program at Prominent Hill -
near mine and regional• Significant cash holding
$905.6 million at 30 June 2011• Active business development
clear strategy
disciplined approach
flexibility of cash• Capital management program
Capital return 12 cents per share or $388.6 million completed
Share consolidation completed
Share buyback up to $200 million underway• Dividend stream
Interim dividend of 30 cents per share• Strongly performing commodities
good outlook for copper and gold
APPENDICES
OZ MINERALS • PAGE 27
PROMINENT HILL PRODUCTION SUMMARY
•
Increase in mining rates due to increased waste movement under current mine plan.
•
Increase in plant throughput and increase in recoveries, partially offsetting reduction in grade.
'000 tonnes H1'11 H1'10 Var
Waste mined 29,197 25,559 3,638 Ore Mined 6,314 4,131 2,183 Total movement 35,511 29,690 5,821
Ore milled 4,964 4,568 396
Milled grade Cu (%) 1.19 1.48 (0.29)
Recovery Cu (%) 90.7 88.7 2.0
Cu in conc
(tonnes) 53,725 60,145 (6,420)
Au in conc
(ounces) 86,129 90,821 (4,692)
OZ MINERALS • PAGE 28
DESIGN OF FINAL PIT
• Geotechnical studies complete.• Re-optimisation
using flatter wall angles to increase stability.
• Additional 30Mbcm over five years.
CROSS SECTION –
NORTH-SOUTH
Complete
August 2012
June 2014
October 2017(Stock piles continue to be processed after mining of open-cut complete)
• Remaining life of mine strip ratio now 5.5:1.• Approximately $150 million extra in NPV terms.• $3/t milled extra mining costs.
NB: Deferred mining provision to be lower than planned due to higher strip ratio.
OZ MINERALS • PAGE 29
CARRAPATEENA COMPARABLE WITH OTHER GLOBAL BLOCK CAVES
Cu/Au grades and relative deposit size global block caves (Mt)
Red Chris
Grasberg GBCGrasberg DOZNorthparkes Lift 2
Bingham Canyon SE mine
Grasberg IOZ
Northparkes E48
Northparkes Lift 1
Bingham Canyon NE mineWafi-Golpu
Carrapateena
Ridgeway Deeps
Oyu-Tolgoi Hugo North Lift
Cadia East
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Au g/t
Cu %
Source: OZ Minerals research* NB: Carrapateena based on target range not Resource or Reserve
Operating mines
Development project
Size = Reserves Mt
OZ MINERALS • PAGE 30
-
10
20
30
40
50
60
70
80
90
EVc/
lb C
uEq
Advanced Projects / Producers
COMPETITIVE ACQUISTION
Exploration / Development Construction / Production
OZ
Min
eral
s/Ca
rrap
atee
na
OZ MINERALS • PAGE 31
BLOCK CAVING INCREASINGLY COMMON
Source: New Gold
OZ MINERALS • PAGE 32
CARRAPATEENA CROSS SECTION – 6543300N LOOKING NORTH
• CAR051W1 –
903m @ 2.15% Cu, 0.66 g/t Au from 608m (incl. 169m @ 4.30% Cu, 0.74 g/t Au from 1174m).
• CAR050 –
905m @ 2.08% Cu, 0.98 g/t Au from 487m (incl. 75m @ 4.63% Cu, 1.10 g/t Au from 1203m).
±50m view
Bornite
shell in blue
Chalcopyrite shell in yellow
0.5 –
1% Cu1 –
2% Cu2 –
3% Cu>3% Cu
Cu values
PLAN N
0 200m
-100
-500
-1000
-1500
OZ MINERALS • PAGE 33
COPPER OPPORTUNITIES -
SIZE & TYPE−
50-150ktpa copper mines are often too small for the major companies
but have significant technical, financial and marketing challenges for smaller companies.
−
50-150ktpa represents a “Window of Opportunity”
for a company of OZ Minerals’
size and capability. Not a lot of other companies compete in this space.
−
Porphyry and IOCG deposits dominate this window and are hence the main exploration and acquisition targets.
Source: OZ Minerals
GLOBAL COPPER DEPOSITS –
EBITDA VS PRODUCTION
Major Companies
OZ MineralsWindow of
Opportunity
OZ MINERALS • PAGE 34
Variance Analysis - Underlying NPAT, H1 2011 vs H1 2010
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
230.5 125.8 37.8 (172.0) 222.1 (17.0) (21.4) (10.9) (4.7) 21.0 189.1
H1 2010 CopperPrice
GoldPrice
FX SalesVolume
Cash NonCash
Exploration/Expl. Impair't
IncomeTax
H1 2011
A$M
UNDERLYING NPAT
Increase in copper price
(32%) and gold price (25%).
Increase in A$/US$ 16%.
Decrease in copper sales due
to lower processed
grades.
Increased mining costs due to diesel and increased
volumes partially offset
by interest income.
Reduction in deferred mining
credit and increase in depreciation,
partially offset by increased inventory
adjustment.
MARKET DRIVEN CONTROLLABLE
Increase in exploration activity partially offset by
exploration impairment in 2010.
OZ MINERALS • PAGE 35
C1 COST GUIDANCE Q1 2011 –
FOREIGN EXCHANGE IMPACT
Previous C1 cost guidance
<60 US cents
Sensitivity to 1 US cent movement in A$:US$
(12 months) 1.8 US cents
Revised C1 cost guidance
<70 US cents
Sensitivity to 1 US cent movement in A$:US$
(9 months)
1.3 US cents
Previous guidance was issued at analyst consensus rates of A$:US$ 0.96 for FY11, current guidance issued at current consensus A$:US$ 1.01. Current spot rate 1.05.
OZ MINERALS • PAGE 36
OZL SHARE PRICE & TSR
•
Eighteen months ended 30 June 2011 saw a 4.7% increase in share price and 19.8% TSR.
•
$611.6 million returned to shareholders over the previous twelve
months*
Source: Bloomberg
$1.90 in total distributions to shareholders over 12 month period.
* Includes: dividends paid in respect of 2010 earnings and capital return paid in 2011
OZ MINERALS • PAGE 37
INCOME TAX
• Tax losses fully sheltered first half earnings –
no tax payable for the half.
−
Utilisation of losses in the first half partially offset by upfront deductions on Carrapateena purchase.
• Unrestricted tax losses of $14.8 million (tax effected) remain as at 30 June 2011
−
Unrestricted losses expected to be exhausted in the second half,
resulting in a provision for tax in 2011 and associated tax payment in June 2012.
−
Tax payments in 2012 would allow franking of dividends.
OZ MINERALS • PAGE 38
2011 SENSITIVITIES
Sensitivities of EBIT in 2011*
A$/US$ +/-
1c Copper +/-
5% Gold +/-
5%
$5.3 million $23.3 million $5.5 million
Prices as at 30 June 2011
Copper US$4.22/lb
Gold US$1,507/oz
A$/US$ 1.0683* Sensitivities are for remaining 6 months of 2011.
OZ MINERALS • PAGE 39
Unit Cost C1 - H1 2011 vs. H1 2010
20.00
25.00
30.00
35.00
40.00
45.00
50.00
55.00
60.00
65.00
70.00
49.1 (24.5) 23.4 5.6 1.7 1.7 5.9 62.9
H1 2010 Commodity Price FX Volume (By Product)
Volume (Cost Driver)
Costs Volume (Payable Metal)
H1 2011
(US c/lb)
C1 COSTS 2011
25% increase in gold price
16% increase in
A$/US$
Reduction in payable gold production of
4,400oz
Increase in volume related mining and deferred mining expense, partially offset by
increased inventory credit due to more ore being mined
Higher TC/RC's and site admin
costs
Reduced copper grades
OZ MINERALS • PAGE 40
EXPLORATION
•
Exploration program primarily focused on Prominent Hill near mine and regional targets.
•
Carrapateena exploration program to commence in H2 2011.
•
Approval of underground exploration decline, funding to come from existing 2011-2012 budget.
•
Cambodia in fill drilling in progress.
2011 H1 Exploration expense
Prominent Hill - Near mine, $8m
Prominent Hill -
Regional , $13m
IMX - JV, $4m
Cambodia, $3m
Other, $6m
Investor contact:Natalie WorleyHead of Investor & External [email protected]
THE INFORMATION IN THIS PRESENTATION WHICH REFERS TO MINERAL RESOURCES AND EXPLORATION RESULTS AT CARRAPATEENA IS BASED IN INFORMATION COMPILED BY STUART MASTERS WHO IS A MEMBER OF THE AUSTRALASIAN INSTITUTE OF MINING AND METALLURGY (AUSIMM) (108430). STUART MASTERS IS EMPLOYED BY CS-2 PTY LTD AND IS A CONSULTANT TO OZ MINERALS. HE HAS SUFFICIENT EXPERIENCE WHICH IS RELEVANT TO THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITY WHICH HE
IS UNDERTAKING TO QUALIFY AS A COMPETENT PERSON AS DEFINED IN THE 2004 EDITION OF THE ‘AUSTRALIAN CODE FOR REPORTING OF EXPLORATION RESULTS, MINERAL RESOURCES AND ORE RESERVES. STUART MASTERS CONSENTS TO THE INCLUSION IN THE REPORT OF THE MATTERS BASED ON HIS INFORMATION IN THE FORM AND CONTEXT IN WHICH IT APPEARS.WITHIN THIS PRESENTATION REFERENCES TO EXPLORATION RESULTS RELATING TO PROMINENT HILL ARE BASED ON INFORMATION COMPILED BY MR MARCEL VAN ECK MSC WHO IS A FULL-TIME EMPLOYEE OF OZ MINERALS, IS A MEMBER OF THE AUSTRALIAN INSTITUTE OF GEOSCIENTISTS AND HAS SUFFICIENT EXPERIENCE RELEVANT TO
THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITIES UNDERTAKEN TO QUALIFY AS A COMPETENT PERSON AS DEFINED BY THE JORC CODE (2004). MR VAN ECK HAS CONSENTED TO THE
INCLUSION OF THE MATERIAL IN THE FORM AND CONTEXT IN WHICH IT APPEARS.ALL OTHER REFERENCES TO EXPLORATION RESULTS WITHIN THIS PRESENTATION/STATEMENT ARE BASED ON INFORMATION COMPILED BY MR A HOUSTON BSC WHO IS A FULL-TIME EMPLOYEE OF OZ MINERALS, IS A MEMBER OF THE AUSTRALIAN INSTITUTE OF GEOSCIENTISTS AND HAS SUFFICIENT EXPERIENCE RELEVANT TO
THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO
THE ACTIVITIES UNDERTAKEN TO QUALIFY AS A COMPETENT PERSON AS DEFINED BY THE JORC CODE (2004). MR HOUSTON HAS CONSENTED TO THE INCLUSION OF THE MATERIAL IN THE FORM AND CONTEXT IN WHICH IT APPEARS.