whenever you're ready thank you can morning your honour's charles prevent appearing on behalf of andre solemnity in the putative class on january eighteenth caldwell was clear that allied was very very good at predicting how much gold is produced there was no speculation no whims of customers no competitors they were not factors the only wild card here was that the leeching was not occurring due to blinding in two thousand and twelve with the increased mining blind he became allied biggest obstacle to achieving production after buffington and bukan made a deep dive into how this came about they blamed and fired caldwell like an umbrella you have line you imagine a truck that's the size of this room and the belly of the truck opens and dumps the entire contents of the lime on top of this pile of war that hundreds of feet high they then drip on top of it the solution and because it's dripping imagine that it becomes like concrete like a slurry like a clay and now it's an umbrella and then they dump more  on top of that and they expect that when they put the leaching solution which only works by gravity they put the leaching solution on top and it it hits this umbrella like barrier and that's why if you read the record and i'm sure you have you've read about how it horizontally moved to the side and came down the slopes because it couldn't go down by gravity like it's supposed to the leaching solution is it works by capillary action that the oars porous and so they drip it because if they just pour it on it will bypass the or so they drip it it catches the side of your soaks into the or and then it pulls out the gold through a chemical process and then continues its way down to the liner that's hundreds of feet below the top of the of the pad and goes down because of a slope to a collection ditch and then the collection ditch has what's called pregnant solution and the pregnant solution is of a certain grade they know what the grade should be which is what i'm trying to explain because they know how much gold is in the us they know exactly what's going to have they know how much gold is extracted through this process assuming it's doing what it's supposed to do but if elite shape can't if the leeching solution cannot reach the or it can extract it so that was a prime not clear on trying to visualize is piled hundreds of feet high and or is huge this is not crushed or this is what they call run of the mine or so it's huge chunks of war that are supposed to have been coated with a lime to begin with but they weren't because they were increasing the mining rate so much so that they had to do this thing that was the biggest problem they barely dumped this lime on top causing this umbrella and prevent and created all this dr who are and so the dry were if it's dry it's and you're never getting the gold out and if you're not getting the gold out you can't meet your production numbers and can i can ask you this blinding condition that you described is it basically once you've screwed up that badly you can't fix it you can't there's only one way to fix it and they did at the end of the day they they finally succumbed to this fifteen year old solution of drilling cores and they're drilling the cores hundreds of feet deep and they get the core out and they can see now where this line is and where the dry are then they create these metal tubes and they put the holes in the tubes where the dry or is and then they pressure inject the solution in to now get to that and then bring it down and that's that's exactly what they did and it's wasn't a new solution and it was really is this all done acid pile or that yes that's it and it's done over millions of square feet so you're talking about the initial test this letter that we talk about time and time again was it was the initial fifteen wells on louis that ultimately was twenty seven and it ultimately took two years so you can imagine how many wells and how much injection and how many permits and it was a massive massive effort and there f their decision to try and poor leach leaching solution on top of this in the first quarter of two thousand and thirteen it was it was a no brainer it was never going to work it's an umbrella here you're not going to permeate that umbrella with with visitors were they lied in the statements i mean if you if you look at buffington on on the first of may and analyst asked him and let  i don't want to be going to be accurate so he said and buffington by the way was responsible for overseeing permitting so he knew about the letter and then he was asked what is the biggest risk to allied not and thirteen production his response was a bogus explanation that never mentioned the letter that was going out the next day that he knew about never mentioned the drilling in injection program never mentioned the blinding never mentioned the dry or this was in the face of a direct question he lied by omission straight out said basically throughout the class period that mean they were disclosing that we have problems that they'd never do what you say they never said was that the problem was blinding that's my understanding of your theory because the theory of the case is they never said that there was dry were from which they could not extract the gold in order to meet their production numbers caused by blinding they kept saying well if solution application will solution application is a very simple process of drip drip drip drip drip that's all solution application is solution breakthrough is when this dripped solution comes all the way down through the your after saturating the your and then pulling out the gold and going down to the pad and they never they said in the beginning of the class period caldwell said straight out nope no hesitation we saw solution break through as expected on lewis and we saw excellent solution grades that means louis was operating properly on january eighteenth louis was the only source of the problem at the end of the class period it was never operating properly there were seventy thousand ounces of gold and you have to understand a ton of or they have a few bran talking twenty eight ounce twenty eight grams per ounce and so it's a massive amount of war that it takes but they had seventy thousand ounces of gold that was in dry or that they never mentioned once until january i mean july twenty second and they never explained that we have no why idea how long it's going to take to get it out of the or and produce this code until august fifth and or sixth well and that that disclosure i guess if that's what you called or the fraud was disclosed i mean they don't have to say anything about blind you know for them they don't but they didn't in order for there to be a loss causation here that the investors already knew now once they are told we can't meet our production and by the way this mill that we're building that's going to expand and allow us to meet these these numbers in the future like that it's not going to happen and that's the first time investors know so they don't know about blinding they never by the way to this day they've never disclosed the binding the only way we know about the blinding is pissed thirteen out of fifteen former employees who self corroborate have explained this process in detail and said this is something that's happening since twenty twelve i was in a meeting with buffington in february where this was discussed i don't remember any of the confidential witnesses saying blinding was known as of x date within that class period well we know that one person and i forget which one left in april twenty thirty he had been there and he said that blinding had been going on for a long time if you look at and this is not in the record but it r two thirty four in three fifty six the dry or was or that had been put on the pad in the third and fourth quarter of twenty twelve the miss of the fourth quarter production numbers was announced january eighteenth twenty thirteen so the blinding all happened in twenty twelve and it was a problem they knew about on january eighteenth for sure because this is a that they didn't disclose how that it was going to be much more difficult to extract the right then and so but ok but i guess i'm i come back to my point that they did disclose from the outset of the class period that we're experiencing difficulties this is not not on lewis on lewis they said we're seeing breakthrough as expected and we're seeing excellent solution rates that's what they said what give me the date for that starts january eighteenth that's during the conference call and that was caldwell who made that statement and it's very soon after they never mention lewis again by name with regard to this issue until july twenty second was once i don't know that's not consistent with my they only mention pads never lewis but i think while they are making reference throughout maybe you're right about that initial statement but from then on i remember multiple statements in which they're saying we're experiencing problems we think we're going to get a handle on this quickly i grant you that they're not saying that this is going to take years but there's nothing that says that they knew at the time that they meet each of those statements that in fact they they already were able to tell if this is not going to be as easy as we think so what they said at the end was we saw more of a dry war than we expected which means they expected that there was dr w they said it was severe the entire time but they said at the end when they finally got the core samples it's more severe than we expected  they said it's more severe than expected and that is indeed so they always knew the entire time how bad it was they fired caldwell for this i mean they fired this guy who was responsible for putting this mine in operation over a period of years that's not a small thing to do that i'm not sure how much time i have but i'd like to save some for probably stop now you have to  has already noted we began the period by that with the company saying how after having missed its projections for the end of two thousand and twelve i mean it's not good so they started out the class period disclosing that they were having a lot of problems and throughout the class just looking at i think this is the press release and the statement i'm looking at says we are confident that the challenges we have encountered with the hea operation if i pronounce that correctly are short term in nature and we are pleased to see the operation is moving in the right direction that sort of that's right here and they did they express confidence and you'll see that throughout the class period expressions of confidence are not the basis for securities fraud claim particularly in the absence of any allegation of knowledge are not the basis properly the basis for a securities fraud claim absent allegations particularly absent allegations that the pallies the piece people bank gave the statements here knew that their statements about representing to the investing public that for example we are confident that the challenges are short term in nature and we've got a handle on this obviously if you knew at that moment that oh my god we've made a colossal this is going to take years to unravel and we're never going to get this gold out in this quarter not not for the entire year and you don't disclose it obviously you would face liability for that so that's their theory that you earlier in the process that we have this massive blind problem that we ourselves created and there's only one way to fix it and it's going to take forever to do that right so that's that's what i think you have to respond to that's their theory that there is a specific allegation of knowledge on behalf of any of the that this stuff that it was obvious for somebody on the property the big problem here and they were saying that this isn't a problem and they were inducing investors to invest based on what was essentially false representation with specificity it is not sufficient to just say that it is obvious that something called the core operations theory and that is permitted as a basis for pleading only in extraordinary circumstances and where there is some basis to say that it must be obvious then how do we know i think looking at the pleading that it's not obvious here is that the confidential witnesses of which there were many gave a wide variety of explanations for the problems so we heard the appellant's get up and explain that there that everybody knew that this was blinding when you look at what the confidential witnesses actually said about what they thought the problems were at various points in time some during the class period some before they said thing as privet to too much lime some attributed it to too little lime some attribute it to problems with the liveryman solution which as all get into the company disclosed through out the class period that it was having issues delivering the solution they some of the confidential witnesses said there was too much water some said there were too little water that the fact that it adds up to one conclusion is just an assumption by the appellants here that is based on no fact no confidential witness nothing in the pleading says that those is true nobody disputes that that was false at the time and that in fact is one of the problems that the confidential witnesses point to was that they had as a polish counsel explained added loads of or they greatly increase the rate at which they were adding or to the pat that was all true and when you do that mathematically you expect that if the leaching works as you expect it you will get the gold recovery out of that pat so it's essentially like an inventory that sitting on the pad the problem was and what some of the one of the confidential witnesses or several of the confidential and i says say was the problem was that there was too much or stacked on the path and then when they applied the solution in the wrong way that the recoveries didn't happen and the company disclosed those struggles throughout the class period they disclose struggles with respect to solution on february twenty fifth on april specifically sorry's april ninth says that solution is the biggest problem and maybe these statements aren't tied to every pad but these are statements regarding the operations generally and then we get to because they were they were putting more solution on the pad nobody disputes that that nobody said that that wasn't true the issue was it wasn't breaking through and they couldn't figure out why and when we get to april thirtieth  e they disclose it as an issue specifically with respect to the lewis pad on april thirtieth and that conference call mr buffington stated were for what we're focused on right now is getting the cyanide to the or by getting the ph up where we can carry more cyanide in the solution at the depths that we're seeing on the brimstone and the lewis pad right now they're quite high two hundred plus in most areas right now so some of those deeper tertiary coverage areas that we would like to get that we would like to target is where we're trying to get higher ph to carry that sign i deeper into the pad and this again would directly address the purpose of the drilling what they knew and what the confidential witnesses say that they knew or when they knew you know was in july and june july and august as the results of the drilling came back what about the allegation person's knowledge i assume has to predate april twenty third team when they left writers and why isn't that enough to at least advance the case forward confidential and this one says nothing about the knowledge of the defendants of the police here we have no allegation of scienter if that is the cause then as we've said what we see in the confidential witness statements is that there were a variety of opinions of what the cause could be i don't remember what a few one's position within the community was but i assume that person wouldn't have greater knowledge of catastrophe as great as blinding within the company than the executives of the plaintiffs i think that's a wrong assumption and i also think that does not correctly state the law the plants have to allege specifically that the defendants were aware of this condition and of course people that are working on the mine site day to day well have different observations as we've seen they did have different observations have different theories this one confidential witness who left early on in the process says of course it was blinding other of these fifteen confidential witnesses say other things their allegations about why you can't under the securities laws you cannot make the assumption that these a pelleas would have known that is not that's how they drift the solution into the pad so you have the or and then you put the solution on to the or and then you expect it to percolate through and deliver the gold as counsel described so you can put more on the pad and you can put more they have no specific allegation that we knew that it wasn't getting through there's knows what they allege as to these and i think it's important to know is nothing with respect to  experience in the industry and their tenure with the company with respect to mr buffington it's not sufficient under the securities laws under the securities la generally so your view is that for example there's a few one person has been alleged in april twenty third and i was in a meeting with the defendants in which  that blinding is just causing us all sorts of critics i gather you'd say that's sufficient but what they've given us isn't specific enough and say enter has to be considered in the context of the entire complaint so certainly if he said that and he said it with into this with this experience would see that there's no there's no goal coming out because there's too much because the stuff isn't getting through that's exactly right that is the longstanding law of the ninth circuit and the u that even in cases where these sorts of meetings are alleged they have to leverage that as to everyone and it has to be the most cogent and compelling inference that you would draw from all of those specifics here and a case where we have zero specifics there is no contest there is no comparison of the most cogent and compelling under tellabs there is only an moved to the site and your honor made a comment about well if they're at this mining say and they're seeing what happened listen to the description of how this is a twelve hundred metres square pad with that stretched two hundred feet high this is not something where a person can walk around observe it in a look and say here's the problem and again that's exactly what the confidential witnesses in this case indicated that they all saw different things because you're observing a huge mass that you can't see the interior of it's two hundred feet high so there's no basis to say that that's evidence of santa or a pleading of center they allege that he spoke to people on a daily basis about what about this issue about whining not alleged they contradict on whether or not he was attending production meetings three says he was there says he attended when he first joined the company six said that he attended the daily beatings but makes no mention of mr buffington being there and with respect to mr buchan all they said was that he pulled the strings along that's just not honor that there is no alleged fraud there is no alleged actionable misstatement that plaintiffs have alleged to have been untrue at the time that it was made these optimistic statements regarding the women one that also was that raised in their opening brief and so should be waived but it was also properly decided under the standard of abuse of discretion here the district court provided a very detailed order and explained what it was that the appellant's needed to improve upon in order to state a claim they had a about a year to do so they didn't do it in her order and his order the district judge explain why it was that the it was futile for them to plead again and why was it flipped futile because they have now effectively pleaded themselves out of a claim they have pleaded all the statements that were supposedly fal and no basis on which to claim that those statements were false and nothing in the financial or nothing from the confidential witnesses contradictory statements could ever be done to cure that fall i think you hear from first this statement that solution application is the biggest problem is silly solution application has nothing to do with it if they can't get true you can put all the water solution you want it's not getting through f e eight  ninety eight of the complaint during his tenure at the mine it was an ongoing daily struggle to try to deal with the way that lewis leach pad was draining there was a lot of dry areas on the pad because of the way the or was loaded the permeation of the leaching solution through all the or was a problem because of blinding he stated that he learned of this issue with the lewis padded daily meetings he attended where there were discussions like a roundtable discussion they were going to do to see where the problems were and how they were going to deal with them he stated that these meetings included part of the project team and that included at the eight and the plant manager the production manager and buffington when he first arrived at the company the trees in that were two paragraphs that you just read from even though they place  permeation that's what prevents the permeation is the blinding so he's saying this is what we discussed at this paragraph ninety eight the paragraph ninety nine is where the person says he was in meetings and there's no discussion of blind to see how they were going to write i'm just saying that that's the whole position right now you've got these witnesses who are saying oh everybody knew that going was the problem i believe that this perhaps and it's an artful but i believe that's what this says and so if it's in artful then i guess that's my b that particular meeting i said yes i would and i also know that they knew right away because a solution break through when you see how much gold is in the solution at the end of the day that happens in days not weeks or months so they're putting all this solution on the pad for the first quarter of two thousand and thirteen yet they knew very quickly when they saw the quality of the solution that was in the collection ditch that it wasn't didn't have the gold content that they expect so they knew that and that's why defendant jones who is the c f o booked the or that was the goal that was on the pad they knew how much gold was on the pad they booked it as quote on the pad well i guess what i would say is that caldwell and no one certain terms and i think judge korman was was honing in on it he said things are looking good in january that we a solution breakthrough on lewis as expected and we saw a solution grades that were excellent that's not possible given the circumstances and given what happened at the end of the class period it's just not possible it was a straight out affirmative lie as was the april eighth and april ninth statements by bukan when he said the mine is starting to opt is starting to operate properly it w