Earnings Call: H1 2024

Feb 22, 2024

Good afternoon, and welcome to Sylvania Platinum Limited Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Jaco Prinsloo, CEO. Good afternoon to you, sir. Thank you very much, and thank you. Welcome to everybody else who's joined us on the webinar. As always, we welcome the opportunity to share our information with you and, myself and Lewanne Carminati, our CFO, will be taking you through our presentation today. We are presenting our half year results, the first half of the 2024 financial year that ended up until 31 December. As we go into the presentation, I will show you just to point your attention to the disclaimer that the information we share here is not intended for you to make investment decisions, but give you an overview of the performance. Okay. If we look at the company and just what Sylvania is about, maybe for those of you who are not familiar with Sylvania, we are a cash-generative, dividend-paying, mid-tier platinum mining company that has been in operation for just over 15 years now. Explaining both our historic success and also looking how the strategy and vision we apply going forward, the board and management continuously focus on maintaining safe and profitable production, and ensuring that we maintain the strength in our license to operate. We focus on strategic investments in R&D and business improvements so that we can ensure we maintain a sustainable cash-generative business. That has been the key enabler for us over the past couple of years to grow our operations and also for us into the future to pursue further growth opportunities and to return attractive value to our shareholders. Over the past number of years, we have reinvested most of the cash we've generated back into our operations, growing our operations from one to six operating units, and we are currently building the seventh unit. We've also been able to do significant share buybacks and pay stable dividends since 2018. If we go just into what the business is about and where our operations are located, the results we're going to share with you today, the revenue and production figures you will see is primarily originating from the current Sylvania Dump Operations. That's the six current chrome and PGM beneficiation plants that we have operating. Three of them, Mooinooi, Millsell and Lesedi, are on our western limb of the South African Bushveld Complex and Lesedi, Tweefontein and Lannex, Doornbosch and Tweefontein on the western limb of the Bushveld Complex. To the north of the western limb is also the new Thaba JV, the joint venture operation we've announced in August last year. That's currently the project in execution. That is a similar process flow and design and business model than our other businesses. Then in terms of the other side of our business and all the assets we own is the exploration assets in our portfolio, and these are a number of attractive shallow open-pittable resources and mining projects that the company have owned for more than 10 years already, and we've acquired a number of years ago, for which we own approved mineral rights and that we are currently improving studies to better understand and improve the resource classification on these projects. I'll deal more about that in the rest of the presentation. If we just look at a glance at the results for the half year just concluded, I think the first thing, like with most other operations in the industry or other PGM companies, the PGM basket price is probably the most prominent factor and something to consider. We have seen in our basket in particular, we have had a 48% decline year-on-year or this half year period compared to the corresponding one in 2023, where we've been at $2,513 per ounce in 2023. We are now at $1,311 an ounce. A significant decline. However, and I think due to our position in the market, we have still been able to post good financial returns for this period. Despite the heavily declined PGM price, we've still been able to post a net revenue of $40.8 million, a group EBITDA of $7.3 million. After paying our final dividend during December and funding our capital commitments of our project pipeline, we're maintaining a cash balance of $107 million at the end of the period. Given the strong financial performance and also taking the cash balance into financial account, the board has approved 1 pence dividend per ordinary share as the interim dividend, the first interim dividend for the year. Lou-ann will elaborate a bit more on the dividend in the finance part of the presentation. Then obviously, worth noting that the financial performance is always underpinned by the strong production fundamentals in Bushveld Complex. This half year, again, has been no exception. We have had a very good production performance achieving 58,405 ounces, 4E ounces. If you equate that to 6E, it would be 48,670 ounces, for the period. Which is basically on par with the corresponding period in 2023. Also very important when you're in a price environment like we currently are, I'm very proud that we've been able to maintain our position at the lowest quartile of the industry cost curve, at $833 per ounce before we group cash costs. Overall, I think a really satisfactory performance for the year and well in line with expectations, except the basket price that obviously impacted on our outlook and operations. If we just now focus a bit more on the operations itself and how the ounce production came about. I've already said to you ounce production was about on par with previous performance, and that is despite quite a significant drop of 9% in PGM feed grades for the period, but we have managed to improve PGM feed tons by about 2%, PGM recovery by about 2% as we optimize the recently commissioned MF2 circuits at Lannex and Tweefontein during the period, also lower work in progress stock at the end of the period. I'll deal on one of the next slides a bit more about the feed grades. I think, if we look at the dump operations, and the next financial year, the whole of the financial year, we are looking at optimizing the Lannex fine grinding circuit and also the fine screening circuits that are add-ons to the MF2 that's recently commissioned. That should be optimized during the next quarter or two. We're hoping to bring further efficiency improvement. Also at Doornbosch, we are supplementing the feed with a higher grade third-party material. We sourced the external source for the next 18 months. In terms of the addition of our Thaba JV project, you will see on the 2025 and 2026 production bars, right at the top of the green blocks are the Thaba JV contribution coming in with the project on track to be commissioned in the second half of the 2025 financial year as we originally announced. Eventually taking our overall production profile just over 80,000 ounces, about 83,000 ounces full year or 104,000 ounces 6E for the period. This is just some detail on the individual operations, and I'm not going to take you through all of it. Probably just worth highlighting are the two aspects already I've mentioned in terms of the lower feed grades, and that was primarily at Lesedi. At Tweefontein we've had lower feed grades. Lesedi was due to lower dump sources being mined and where they were on the current mining plan with a surface dump. At Tweefontein we had lower volume and grade of current arisings from the host mine. At both these operations, we have secured and ensured that we have higher grade third-party resources to supplement the feed grades. We're also working at Tweefontein with the host mine collaborating in terms of improving the current arisings volumes and grade for various initiatives. Overall, we still anticipate our annual production to be between 274,000 and 75,000 ounces for the financial year, and we expect operations to perform well. I think the one other thing probably worth pointing out, and a lot of people ask about the power situation and risk in South Africa. As I've pointed out from previous presentations, the one operation from Sylvania that has been exposed to load curtailment has been Lesedi. We've suffered 300 hours of production downtime during the 2023 financial year. However, with lower load shedding during the past half year, that reduced to only about 81 hours downtime. As of this third quarter, so post the period end, we have successfully commissioned the Lesedi backup generators. Lesedi will therefore now be able to run even if there are load curtailment periods. We don't anticipate any other operations to be impacted by load curtailment or load shedding going forward at the moment. Okay, I'll hand over to Anne to take us through the financial results, and then I'll close off the presentation again. Thanks, Jacques. Looking at the financial results for the reporting period. For the first six months to 31 December, the company reported a net revenue of $40.7 million. This includes our 4E PGM revenue, by-product revenue from ruthenium and iridium, as well as base metals, copper and nickel. It also includes the sales adjustment for ounces delivered at 30 June 2023, but only invoiced in the 2024 financial year. The cost of sales, we had a $3 million increase in cost of sales, which I'll provide a little more detail on in the next slide. Our royalty tax came down as a result of a drop in the basket price. The calculated percentage is applied to the revenue, resulting in the lower royalty tax for the period. The other expenses line is mostly administrative and corporate costs, and these are incurred in rands, dollars, and pounds sterling in South Africa, Bermuda, as well as the U.K. Finance income includes interest on invested cash, and this cash has earned an average of 5% per annum, as well as interest on the loan to Promtek for their portion of the Thaba CapEx, as well as the loan to Forward Africa relating to the sale of the Grasvally that was concluded last year. The income tax expense line includes the normal income tax on taxable profits generated at our SDO plant and taxed at the South African corporate rate of 27%. It also includes the deferred tax movements and dividend withholding tax on the dividends declared by Sylvania Metals to the parent entity. If we look at our financial performance and our revenue and cost in a little more detail, you'll note that revenue for the period was impacted almost entirely by the drop in the basket price, much like the rest of the industry. Although the production profile has remained fairly consistent, the movement in the metal prices has shifted the revenue contributions of the six key metals, with the biggest change being that of the platinum and rhodium contributions. Platinum increased 17% to 40% of our 6E revenue, and rhodium decreased 12% to 30% of our revenue. With stable production, the operations still remain cash generative despite the drop in the basket price, and we continue to focus on what we can control, being costs and optimizing production. We did, however, have higher than inflation increases for electricity and reagents. As well as an increase in our labor complement compared to the prior year corresponding period. As a result, our cash cost for 4E PGM ounce for the reporting period was $682 and group cash cost $832 per ounce. All our operating costs are incurred in rands, and the largest contributors, as you can see in the bottom right of the slide, are our labor, power, mining costs and consumables. Despite the increase in our costs, we're still one of the lowest cost producers on an all-in cost basis, and you'll see that in the Nedbank industry cost curve, which is later in the presentation. Touching on our EBITDA, we have a $7.3 million EBITDA for the reporting period, again impacted by the lower basket price. At our current production guidance and the basket price based on the average forecast metal prices of a number of institutions, we've estimated a full year EBITDA between $22 million-$24 million. If prices remain at the current spot, then this EBITDA is estimated to be around $18 million-$20 million, as is indicated by the orange dotted line. Details of the price assumptions are included in the appendix on slide 39 if you'd like to have a look at those. Even in the current price environment, the company has a strong balance sheet. Cash generated from operations was $10.7 million for the six months to December. $4.8 million was paid in taxes to the South African Revenue Service, and there was provisional income tax in December, as well as dividend withholding tax. We spent $7.4 million on capital, and this includes capital for our SDO, $1.3 million on the Thaba JV, and $400,000 on exploration projects. The spend on the SDO capital includes tailings dams, the milling and fine grinding project at Lannex, last payments on the MF2s, as well as the backup power. The capital estimates for the second half of the year include all budgeted capital, but as cash management and preservation in the current price environment is critical, the management and board are constantly reviewing the capital, and each project is assessed prior to commencement, and we take the cash flow payback and contractual requirements into account. The company also paid the final dividend declared for the last financial year in December, and that amounts to an outflow of $16.7 million. Returning value to our shareholders has always been a priority for the board, and since 2018, the company has paid out $98 million to shareholders in dividends and $3 million to employees under the employee dividend plan. We've bought back 61 million shares and canceled 24 million shares. As communicated last year in February, the board has revised the dividend policy with the intention to distribute a minimum of 40% of the annual adjusted free cash flow. It's split into a one-third interim and a two-third final dividend. Based on their free cash flow forecast for 2024 and adjusting for the Thaba capital, the board has declared a GBP 1-pence interim dividend per share. If we have a brief look at our ESG. ESG is entrenched in the daily lives of the company and its employees, and we continue to align our ESG strategy with the company's values. To just touch on a few of the highlights for the six months. On the environmental side, the revegetation trial has been progressing well. It's currently in the final phase, and we will be concluding the trial in April 2024. Initial reports indicate that there are two possible solutions to rehabilitate the tailings dams, with a third one that is currently being tested. This solution will significantly reduce the cost of rehabilitation and the impact on other areas, as we'll no longer need to truck topsoil to rehabilitate these dams. We've also partnered with the Endangered Wildlife Trust in conservation and protection of threatened species and ecosystems in South Africa. On the social side, the Doornbosch plant remained more than 11 years LTI-free, and the company's had no fatalities since the first operation was commissioned in 2007. Our female complement has increased to 23.47%, and safety and awareness campaigns are run regularly. For the reporting period under review, the annual safety campaign over the festive season was run from November to January, and the anti-gender-based violence campaign was launched in November. The company maintains its clear and transparent reporting to all stakeholders and continues to make a significant contribution to the South African economy. We are also in the process of reviewing the QCA corporate governance code updates, and we'll apply those where applicable for the full financial year. I'll now hand back to Jaco to take you through the growth strategy and the market outlook. Thank you, Anne. Now that we have discussed and reviewed the past period's performance, I think we'll try to take you just through some of the projects looking forward and also our strategy for growth. I think before I start this, it's important to stress that despite the current PGM price environment, we still maintain a robust outlook for the industry, and certainly, we still see an opportunity for growth, especially from our position in the industry. We will continue to explore and do continue to explore low-risk opportunities, especially where there's a high yield potential and, especially where they can be brought into production fairly quickly. To this end, our growth strategy focus on a few items. Firstly, as we've discussed in the SDO graph already, we look at how can we further unlock potential from our existing suite of assets. That's both the dump operations where we have improving technology, rolling out new, like the MF2 circuits we've done, fine chrome beneficiation, so that we unlock more value from the dump operations we already have, but also from the exploration assets we already have. That I'll cover here in just a moment. We further focus on how we can replicate this proven business model outside of our current operations, but on similar kind of operations. The Thaba JV is a perfect example of such an initiative where we have taken a business with proven business model from our current operations and a similar process technology and flow sheets and apply that to another operation. Finally, we continue to explore external growth opportunities where we also can replicate or can employ our current technology, but in different metals and jurisdictions as well. That's a continuous area for our exploration and R&D teams to focus on. If we go into the Thaba JV first, then and as I mentioned already, we've announced it last year and I covered it in the previous presentation. I won't go through all the key features of the project, but I think one aspect, for instance, to highlight on the Thaba JV is the fact that it's transformative to the company in the sense that it's the first project that introduced a chromite concentrate revenue stream. It's not just a treatment charge, it's the full revenue stream from the sales as part of the joint venture. Especially when you view the current PGM market, it brings a very attractive revenue stream to the market. At our attributable portion of 200,000-210,000 tonnes of chrome a year, this project could add between $30-$35 million of revenue to Sylvania's revenue stream per year. It's a nice diversification of that. I think then also just in terms of the progress, we have progressed very well with the detailed design. Most of the process design is complete. There'll always be some design in terms of structure and the final electrical up until the final construction. We are on track with our detailed design. It enabled us to place all our long lead item orders already. The procurement of that has been done. The procurement of the other items and equipment is on track and in progress. We have commissioned earthworks and civil construction towards the end of quarter two. That was November, December last year, and that is currently in progress with teams on site. Our operational management teams are currently busy with operational readiness planning as well to make sure we have all the infrastructure and logistics in place before the project commissioning. Overall, all the work streams are on track for us to ensure we deliver the project on time, during the second half of the 2025 financial year, as we've indicated before. Just moving to the exploration projects. Again, as I said, the aim here is for us to see how best we can unlock value for shareholders. I think a lot of people say it's fundamentally different from your dump operations. Are we planning to go into mining? I think I've said it a couple of times before. The intention is not for us to say, "Listen, we're suddenly going to mine these projects," but they have been on our books and balance sheet for a number of years. By improving the resource classification from an exploration target to a mineral resource estimate, completing a feasibility study, at every step, we improve the value that we could potentially unlock for our shareholders. That will enable us to make the right investment decision to decide, do you spin these operations out? Do you do an outright sale of it? Do you partner with somebody who has the mining expertise and you stick to the processing of it? Those are decisions we can take only once we fully understand the value of these projects. In terms of understanding the value, in terms of False Bay, some of you might remember we announced the first mineral resource estimate for the False Bay project in October of 2022. At that stage, we focused only on the north ore body on the project, and as a proof of concept study initially. Also at that stage, the south ore body and the rhodium assays wasn't at a JORC compliant level yet. We spent the last year now to improve the classification of the south ore body and also to include the rhodium at the JORC compliant level so that we can then ultimately publish an updated mineral resource estimate. That was republished on the 16th of February. The table at the bottom of the slide just gives you an idea of this. It resulted in ultimately 28 million tons of ore at about 2.2 million ounces of 4E PGMs. I think through the exercise, and I'll just briefly touch on the next slide. I've included the tables for reference, so people can see how the individual metals are making up the mineral resource estimate. I think, just notable on the description or the summary on the left is that the south ore body contributed an additional 38% to the overall volume of the resource. Rhodium constituted about 6% of the overall 4E grade. We also managed to almost double the PGM content. The original mineral resource estimate at 1.1 million ounces of PGMs, and we now have 2.2 million ounces. Certainly this exercise have added significant value. The next step for False Bay now is to complete an updated preliminary economic assessment or scoping study, as it's also known. We have commissioned SRK in that regard. The study is already in progress, and they are using the updated mineral resource estimate. In that study, we should have those results by the end of our financial year, around June, July, in order for us to decide if we progress to a pre-feasibility study or what the next step for the project would be. In terms of the Far Northern Limb projects, that is Aurora and Akron. At the moment, we don't have any new information to publish on that. We have, however, continued by understanding and defining the mineralization along the strike in order to determine and prove the continuity. We have an initial mineral resource estimate we published on Aurora, for instance, was only over La Pucella area that only constitutes about 12%-14% of the overall strike length. That constituted about 16 million tons. If there's continuity across the entire strike length, this resource is potentially significantly more. Our work at the moment is to better define that continuity and then to work towards declaring a mineral resource estimate on the entire strike length. Then only will we decide on next steps of a scoping study or what next to do with that project. I think this slide, again, just summarize a lot of what I've said into timelines and the different streams, looking at both the existing Sylvania dump operations, the new dump and chrome tailings facilities and their own exploration assets. On the existing dump operations, I've already mentioned the Lannex optimization that's in place. I've mentioned also that we, in the short term, have quite attractive high-grade third-party material that's available to us to supplement feed. Longer term on the existing operations, we believe that if we can progress our fine chrome technology, we can unlock potential in some dormant dams as additional revenue stream and also the extending operational life in certain areas. On the new dump operations, I've covered the Thaba operation already in quite detail, so I'm not going to talk about that again. Just worth noting that we have also opportunities at both the Eastern and Western Limb, respectively, where we're engaging with specific host mines in terms of technical commercial due diligences, where we have exclusive right to chrome tailings material, both the chrome tailings and run-of-mine material. We're hoping that that can translate similar to the Thaba JV into new operations at the East and the West, respectively. We're working towards finalizing those studies in order to determine the way forward. The exploration assets, I think I've just explained, maybe just the one point worth pointing out that if there's an investment decision taken on that, time to production is typically 4-5 years from it. It is a lot faster than underground operations because of surface operations, but it is still quite a significant amount of time. Just briefly touching on some of the market fundamentals, and people always ask us about it. Just to put into context how the market impacts on Sylvania, and I've included just the platinum, palladium, and rhodium trends here, as gold is less than 1% of the gross profit. You can see a significant decline in palladium and rhodium over the period. Palladium, 43% decline over the past year, and rhodium, 63% decline. You can see then at the top right graph how that translates into the 4E grade impact and, as I mentioned earlier, a 48% decrease over the past year. That is significant in the process. I think, bearing that in mind and understanding the prices, you start to better understand the importance of managing your costs and maintaining a position very low on the cost curve. If you look at how the prices have declined in recent years, if you look at the industry cost curve, you can see that the red line is the spot basket price trends. You can see that most operations in the industry are not able to turn a profit under the current price environment. That has an important play, first of all, in terms of sustaining your operations. Secondly, on the longer term, might impact supply and demand fundamentals. That's always worth noting for. We are very fortunate and grateful that we are able to maintain our position in the bottom of the industry cost curve. Looking at the specific metals and just in terms of users to try and understand the market a bit better. I've been talking to various analysts over the last couple of weeks, and it's very difficult to make an outright prediction. What we can try and do is look at what the supply-demand do. Certainly from Palladium and Rhodium point of view, it's primarily driven by the automotive sector. The primary use is in the auto catalyst. We're seeing Palladium is about 84%, Rhodium is about 90% of the use, where Platinum is a bit lower at about 41%. Looking at the supply and demand, platinum is expected to be in deficit and continue to be in deficit in the short to medium term. While palladium is in deficit at the moment, it's expected to move in slight surplus in the medium term. That is if nobody cuts palladium production. I just showed you the industry cost curve. It's unlikely that people will sustain their production. If we assume the production stays on, palladium will be in surplus. Rhodium is in a slight deficit at the moment and a bit balanced for the medium term. It varies between slight deficit to slight surplus. I think the important thing is if you look just at the supply-demand fundamentals, you would have expected the price to be stronger for all the metals at the moment, which suggests that it's not just the supply-demand that plays a role. I think the global sociopolitical status plays a role. I think when you have conflict in Israel and Gaza, the Russian-Ukraine conflict, some of the inflation pressures internationally, that all plays a role on the current prices. The fundamentals are still strong. In platinum, with the use in the hydrogen economy and the industrial use of platinum, also the investment demand of platinum demand should be strong. Even in palladium and rhodium, there's always the big debate about the internal combustion engines being substituted with electric vehicles. I think it's been generally accepted over the last couple of months or years that that transition will probably not happen as fast as everybody anticipated. There's a lot more structural issues to consider, charging infrastructure, raw material availability. We believe that Palladium and Rhodium demand will be stronger for longer and so on. With that in mind, you look at the price forecast, and I probably should have included the spot prices on the current outlooks we have here from some institutions. You can see that the forecasts are currently quite a bit higher than the current spot price. Everyone's expecting the price, even in 2024, to recover. To what exactly it's going to be is the more difficult question. You can see with how the different outlooks from Standard Bank, for instance, for platinum to Liberum and Nedbank differ, that every analyst and every institution have their own views on exactly how it's going to play out. We always include this as sensitivities, but it's very hard to pick an exact number. These are just the prices that's associated with the sensitivities Lewanne Carminati explained in the EBITDA graph earlier in the presentation. I think, just in closing then, looking at the investment case for Sylvania, I think our shareholders would agree that Sylvania remains an attractive, low-cost, low-risk cash generative business. I hope that we have developed a track record over the years of strong performance and ensuring that we can deliver significant value to our shareholders through a combination of stable and growing dividends as well as significant share buybacks over the years. that we're well-positioned to continue doing this. For the years to come, especially where we are positioned on the cost curve. I think we're in a unique opportunity to look at opportunities to grow and to take our business forward. Yeah, that concludes the current presentation. I'll hand it back to Alexander now for some questions, if there are. Perfect. Yeah. Lewanne, thank you very much for your presentation. What I'll do is I'll just bring your cameras back up at this point. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab, which is situated on the top right-hand corner of your screen. Just while the company take a few moments to view the questions that have been submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Jaco, if I could just hand back to you just to read out those questions and give responses where it is appropriate to do so. I'll pick up from you both at the end. Thank you, Alexander. I'm just looking at some of the pre-submitted questions on there. I think the first one Luan did answer in the presentation, and somebody asked, what blended interest rate does the company enjoy on the significant cash pile? And I think there's, and I liked it in the financial performance. It's a- Average of 5%. average of 5% because some of it is offshore, invested and some of it is in South Africa. The second question we had said, "Are you prepared to use some of the company's cash in order to pay dividends in the future?" I mentioned this because of the falling profits, due to the low basket price of the various elements such as rhodium. I think we have explained in our dividend policy that we have stated a minimum of 40% of the free cash flow, for instance, will be distributed to shareholders. We also said we will take into account the capital requirements and forecasts. I think this year already as an example, the 1 pence interim dividend be declared, taken that into account already. We have promised shareholders before that we would, for instance, fund the Thaba JV out of the existing cash operations. When we do the calculation of the free cash flow in terms of how much we are able to distribute, we would already adjust for instance, the Thaba capital we have said we will do. In a sense, we're already using some of the cash pile to fund the dividend. We will continue to evaluate as we go forward, the financial position and also the need for cash allocation as we go forward. At every time when we have to make a dividend decision, we would review the strategic capital requirements for growth opportunities. We review our cash requirement for maintaining adequate working capital in difficult times. Yeah, that's always a decision. We do appreciate that a lot of people say you still have a large cash balance relative to what you probably need to hold just for working capital. It's also that what enables us in this industry, especially in the downturn in industry like we are, downturn cycle where we are now, that you can capitalize on opportunities if you are able to acquire or expand your operations. Somebody asked, "Are there any reason why Sylvania, why the share buybacks was paused?" Management said they would start after the previous investor meeting, but nothing happened. I think there's a couple of things and always with the share buybacks, we have to again, like with a dividend, the philosophy I just explained, decide how much money you have available to distribute for a dividend or for a share buyback. It's looking at what we strategically need the cash for and what the markets are doing. I think in the current environment, after the last meetings, we saw quite a sharp further decline in metal prices, and we're expected and hoping for a recovery. We didn't think it would be prudent at that stage to use more cash on the share buybacks at the time. We continue to evaluate our position and, when opportune and affordable in future, we will again look at share buybacks. Somebody asked, "What is the basket price break even?" They said, "Is it $1,000, for example?" Because of our different operations, some of our operations are larger scale and higher grade operations like Tweefontein, for instance, versus older operations of lower grade. That break even price would vary for operations. We got up there, a place like Tweefontein are well below $1,000. I think we're even below $600, $700 an ounce. Where then some of the older operations are higher. If you look at the profit margin for the company, you would see that we're probably closer to $1,200-$1,300 an ounce break even. Depending on what feed grades you are putting through the operations. As I said, it's also varying for different operations. The next question said, "Why has the basket price declined so significantly? The hydrogen economy, will it be a large boost for platinum demand because it's used in electrolyzers? How do you see that playing out?" I think I tried to explain that. As I said, one of the first things that we are seeing at the moment, and a lot of analysts frustratingly mention in their reports, is that the price is not currently following pure supply-demand fundamentals. There are other political and economic factors at play. Looking at the demand, you're 100% right, with Platinum having to play a more pronounced role in the hydrogen economy going forward. Also with Palladium and Rhodium, as I said, we're expecting stronger demand for longer. That should also be a positive boost for prices. Yes, it's not 100% sure why we're seeing the current supply. There's a lot of speculation in the market. One of them on Palladium specifically is that you potentially have Russian Palladium supply going directly to China because of some of the other economic constraints in trade. And that might even be going to China at a discount, and that might impact on us. That's not substantiated. Certainly, there's indications that there's more to the current price decline than just the supply-and-demand fundamentals. Somebody else also said that the decline in market prices suggests that changes in demand are not matched by changes in supply. In other words, PGM producers optimize production and sales, accepting whatever price the market offers. Would it be preferable to scale back sales at these prices and simply building inventories or simply reducing mining activity when prices are soft? Yeah. I think that is very difficult to do, especially if you have multiple commodities. We, for instance, in the production where we is, there's obligations to the host mine in terms of chrome production. If we would cut down operations, you have certain contractual obligations that we have in mind. A lot of the bigger mines, it's not always possible to scale down your workforce and ramp them up again, although we have seen some significant announcements. I think Anglo American Platinum announced potential 3,700 workers or jobs at risk, just Anglo American Platinum. There was another figure of up to about 4,000 workers between Impala and Sylvania mentioned. There are big announcements coming through. So far, some of the majors have announced labor restructuring and cuts, but not necessarily production. You can probably cut labor and maintain production in the short term, but I do believe on the long term, structurally, it will impact on supply if that is prolonged. I think that you do see those dynamics playing out in the industry necessarily going on. I think that ties on, there's another person who asked, are there signs of industry players shutting production? As I mentioned, yes, we have seen some of the majors making significant announcements already. There's another question that says, cost information was very useful. Was that just the platinum or does this also carry through to palladium and rhodium? The lowest cost producer. Yes, sorry. When we say the lowest cost producer, it is on the typical 4E basket price, so it includes rhodium and palladium. That graph, the industry cost curve we showed is on an average 4E basket price. Most of the producers there would have all the elements in their basket, although at different ratios, and that's why you saw the step up or step down on the cost curve. It's on how the individual baskets for individual mines might differ. It definitely is the 4E price. Somebody else also asked, are there any commercial sense in not selling all of the rhodium produced until prices become more profitable? I think I explained earlier, it's very difficult for us to. These four metals in the basket are all produced together. We produce one concentrate that contains all these metals. A typical polymetallic concentrate that gets sold to the smelters, who then have the offtake. It's very difficult for us to handle individual metals differently or to delay the revenue streams. There's a question that says, after the tragic events in Brazil in recent years, has there been systematic reassessment of risks of Sylvania's tailings dams? Yes, I think we've done, in terms of our ESG, significant work on our tailings dams in the last couple of years. Part of it is introducing audits and aligning with the GISTM, the Global Industry Standard on Tailings Management, which is currently at a higher standard than our existing standards in South Africa. We certainly do. This is significant focus, and there's always been a significant focus on our tailings dams. I think it's always worth pointing out that structurally, there are some big fundamental differences between our tailings dams and typically the Brazilian impacts. First of all, the weather conditions is a lot different. Topography is different, where a lot of the Brazilian tailings dams are built in valleys or up against mountains. Because of the topography, our tailings dams are mostly on a flat surface. Also, the Brazilian dams typically are hundreds of millions of tons and up to 100 meters in elevation high, the tailings dams. Our biggest tailings dam go up to 3.5 or 4 million ton and maybe 25 meters or 30 meters in construction. Certainly from a risk profile point of view, we are not nearly in the same category. However, saying that, tailings dams remains one of the highest priorities from a risk management point of view in the industry. It doesn't matter where you are, both in terms of the potential risk for health or safety of people, but also, the reputation risk if something goes wrong, as happened with the Brazilian. Yes, I think that brings us to the end of the questions I've seen on the presentation. So Sandro, I don't know if I hand back to you. It looks like- Perfect. Thank you very much for answering those questions from investors. Of course, the company can review all the questions submitted today, and will publish those responses out on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jaco, could I just ask you for a few closing comments? Yeah. Thank you very much. I think, while I've said during the discussion, it is a challenging time. We are cautious about the industry, but at the same time, I'm also excited about potential opportunities. I think if you position yourself in the industry, where you are, maintaining your cost low, keeping your production consistent and stable, you're able to capitalize on opportunities when they come around. We're certainly focusing to continue, to do the things well that we can control. The stuff we can't control, we're certainly making sure we put measures in place to mitigate against any potential risk. Yes, I think through our track record, the ethics and transparency how we operate, we would continue to hopefully continue in the market as a partner of choice for growth and further mergers and also the opportunities going forward. I hope our shareholders agree and support us on this journey. Hopefully we have some better news about the market and the PGM prices the next time we meet. In the meantime, as I said, we're doing what we can well and ensuring we return the best value to our shareholders that we can. Thanks. Perfect. Thank you once again for updating investors today. Could I please ask investors not to close this session? As you know, we automatically redirect it to provide your feedback in order that the management team can better understand your views and expectations. This will then take a few moments to complete, but it shall be greatly valued by the company. On behalf of the management team at Sylvania Platinum Limited, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you.