Earnings Call: H2 2020

Sep 1, 2020

Good morning, everybody, and welcome to our results webcast. Thank you for taking the time to come and listen. So first time that we broadcasting or releasing our results using this medium. So hopefully, it will go okay. I need to bring to your attention just a number of rules that apply. Everybody is in listen only mode except those who are on the panel. And all microphones will remain muted as well throughout the presentation. If there are questions, then you can click in the menu window. You can click on the questions tab and then you'll be able to type your question. And then we'll be reading those questions out after the presentation. And either myself or my two colleagues who are joining me on the panel, Rian Daufel, CFO, and Jocco Schumann, who's our Head of Operations. They can assist in answering those questions. There's also a handouts tab, which you can click on and then there you'll see the three documents that accompany this presentation. So you'll be able to also follow the presentation as we go along. We'll be clicking from slide to slide and hopefully the computer will listen. So to get straight into it, thank you very much. I'll introduce the two other panelists, Yashu and Rian, joining me on the presentation. For us, this has really been a year of contrasts. I think anybody will know what I'm talking about when I say that it's been a year of unprecedented challenge having to deal with something that was really unknown, the extension of impact, very difficult to gauge upfront. You're of great uncertainty as to where the COVID pandemic and our response to it was going to take both the country and also our business. Businesses were tested like never before when lockdown started and also now with a restart. And I think it was also a time when the values and the priorities of business leaders and leaders generally were tested with the list of priorities of where the health was prioritized above profit. And we saw the manifestation of both the best and the used and the worst in the humankind. We saw greed, so opportunity, empathy, awareness, care and in equal measure I suppose. In terms of DoD Gold, amidst all of these challenges, I think my two colleagues on the panel will agree with me that the employees of DRD Gold during this time really stepped up and they came through admirably. We saw wholesale buy in in terms of the health protocols that we implemented and the dedensification procedures that we implemented, keeping safe staying safe was high on the priority of every single employee. When we restarted operations initially with between 3050% of total staff, we relied exclusively on volunteers in the first few weeks and we were oversubscribed, so to speak. We had more volunteers than we had positions at the time. Obviously, because of the performance of the business, we were in a position to pay all of our employees the basic salaries during this time, but we were very encouraged with a response from our entire staff. In addition to that, our operating model was such that it showed itself to be resilient and flexible, which meant that we could get back into business quite quickly. The features of this model, which we'll deal with in more detail as we go through the presentation of mechanization and automation, really help the manner in which we deal with information or the digitization of our operating system and the monitoring of that stood us in good state. And all of this contributed for this to be more of a almost a challenge rather than a disruption. So against that backdrop, if we go to the first slide, which is the disclaimer, I'll ask you to read through that because there are some forward looking statements. And we'll ask you just to be aware of those and some risk factors. In fact, we also want you to just have a look at the picture in the background because that's really that's the backbone of our business, the activity taking place there in the background. The key features for this year, which as I said earlier was a year of contrasts were on the positive side, a very significant increase in revenue and that was on the back of both solid production, the challenges of the lockdown notwithstanding. We saw 52 increase in fact in revenue to above ZAR4 billion. We saw a 320% increase in our operating profit to above ZAR1.5 billion and we saw a 9% rise in gold production to just under 5.5 tonnes of gold produced for the period. Headline earnings came in at ZAR634 million. And for the thirteenth consecutive year, we managed to pay a dividend. A total dividend including the interim that was paid earlier amounted to $0.85 per share, which was also a very significant increase year on year. And that's notwithstanding the fact that there was a substantial issuance of new shares to Sibanye as part of their investments into the company. Our all in sustaining cost margin was up to just under 30% and we saw a 33% increase in the average gold price. And this, of course, was something that is meaningless unless you're in a position to take advantage of it. And I think we took full advantage of that increase in the gold price. In terms of women and mining, this being women's month and more, we tried to say that there was an increase in that regard as well with women making up 23% of our total staff. And these are in positions that are very much on the hot side of the business. These are in core positions. We're very pleased with the contribution that the women in our operation are making to the progress of the business. Social related capital spend was also up by 23%. This is something that we continue to look at as a business necessity. I think moment that your social spend becomes part of your marketing, you're on a slippery slope. It's impossible to conduct business in an unstable environment and with angry hungry people in your immediate vicinity. So social spend both in terms of managing the current risk and also managing future risk in terms of the availability of skills, those have very much become business imperatives. And as I said earlier, you shouldn't be confused with marketing or punishing your reputation. It's core aspect of business. And then in terms of past exceedances, of all the measurements that we took and we measure this at just under 200 different measuring points. We saw of all of those measurements an exceedance and the standards, the regulatory standards of only 0.5%. Having said that though, I mean, we are in the dry season yet again, and our environmental containment measures are very much part of a journey. And there's still lots of work to be done. So during these months with high winds just after winter and also lots of fires taking place, there are certain areas where we're not happy with the amount of dust coming off our operations and that's an ongoing area of focus for the business. Moving on to the next slide. There we go. So we're looking firstly at Pergo's operating results. And then you can see how from year on year, half year on half year rather, that there was a decline in total volume throughput at Ergo, the six months the latter six months compared to the earlier six months. And this, of course, was in part attributable to the fact that there was a lockdown. I must also point out that the not just sending the fact that we were technically allowed to go back to business, in fact, not even interrupt production, we elected not to do so. So we were very cautious, particularly here in Janusburg where the other operations are. We were very cautious in redeploying staff. We wanted to make sure that we could create an environment in terms of which the health protocols were we were able to apply health protocols. So as a consequence, initially starting up was limited to only three sites where we could produce these were high volume low grade sites. So a lot of the higher grade sites where we relied, for example, on third party transport and so forth, these sites only came on much later. So some of this was self induced, the reduction in volume throughput. We also see that it came at a bit of a multiple in terms of production because the initial restarting of operations, as I said earlier, was focused on mainly the sites where we could generate higher volumes, but typically of lower quality material. So all of those impacted on both the total production and also the yield grade. You could see that those grades are down six months on six months, down from 0.209 gram a tonne to 0.184 gram a tonne. Now it might not look like a lot. And in fact, it's within the margin of assay arid in your typical, your traditional mining environment. But in our environment, it's a lot because everything in our business gets multiplied by $2,000,000 or just north of $2,000,000 So obviously, the impact of that is more profound in our operation. On the whole, though, I think the response to the lockdown was responsible. If we'd been offered these numbers at the beginning, I think we would have certainly taken them. Our concern was that they would be considerably lower, that it would be far more disruptive. We were genuinely concerned of phantom infection rates upfront. We didn't know how these infection rates were going to manifest in the workplace. But as I said earlier, our staff really came up to scratch. They managed the infection rates really well, maintained good discipline in that regard. We've had in total fifty infections. At the moment, there are only three instances where the of employees who have not fully made a full recovery. So on the whole, I think managed to contain this really well. And if this is the price we had to pay for it, I think it was a price well worth paying to be to on the safe side of caution and the circumstances. In terms of Far West Gold, its operating results, obviously, mining only from one reclamation site at this stage. And with Straub living a lot closer to the operations, for them, the disruption was far less significant. So you could see that volume throughput was virtually flat almost and the same also in terms of production and recovery. So far we've got to full advantage of the higher gold price following lockdown and the international economy, the global economy's response to COVID and returned exceptionally good results. At the moment, there's not a single active positive case of COVID at the forward operations. They were subjected to audits early on in the whole process and managed to get through those audits, audits by the Health and Safety Department of the Department of Minerals and Energy, came through those with flying covers. And the same also applied to Ergo. So there, too, we are very proud of the way that our personnel managed the implementation of safety protocols. And those were borne out by the feedback that we got from the regulator in that regard. So a good and very responsible response, we thought, from our entire staff. So then on a consolidated basis, you could see where we ended up in terms of both volume, in terms of yield and in terms of production. And as I said earlier, if we've been offered these March, when the whole world looked like it was banks employed, I think we would have gladly accepted those. A lot of hard work going into this. So moving on to the next slide. There we go. Sorry, it's not skipped. Sorry, Rian, I've now taken your opening slide and gone into the next one. So Helane will take over from this point onwards, and he'll take you through the financial results for the period. Thank you very much, Neil. Just want to click one back to start with the Ergo financial results. There we go. Good morning, ladies and gentlemen. It's really my privilege to present the financial part of the results with Neil and Jakub. And I say humble, we're very proud of our achievements under difficult circumstances, but we do realize that it's a tough economy in the world and locally at the moment. And that's why there's a huge jumbleness in what we present. But at the same time, as Nir has explained, I'm also very, very proud of every employee working at the Ody Gold from any safety security personnel to someone operating the, on the reclamation sites twenty four hours a day during winter and also the finance team to get us to this place in a virtual world nowadays. So it was quite a challenge, but we're very proud of that achievement. So just the financial side of what Neil has set out. So obviously, the revenue, it has mentioned through Ergo, tough last quarter, where we've seen six months on six months a decline in gold sold of 25%, but then averaged out by an increase in the average gold price for the six months of 23%. And we know year on year that increased 33%. So still good revenue coming in from that point of view. Obviously, we've reduced tons in volume that Neil alluded to. We'll see that the cash operating costs for the second six months of the year also decline in line with that 15% decline in volume, second six months versus first six months. And then both those factors contributing still to a very, very good operating profit performance of Ergo. In total, ZAR792.1 million and up a very solid 180% year on year. So really again, as we've talked about the resilience of Oga in the past and it's again showed that resilience under difficult circumstances. And as Dylas explained, more challenging vast areas versus Far West Gold recovery, which is single site and much closer together. So going on to Far West. Much more stable as Neil has explained, just a 6% decline in gold sold for six months to the second six months with that same 23% increase in the average gold price received, boosting that revenue for Far West to just under ZAR600 million for the second six months. Very stable from a cash operating cost point of view around ZAR58 a tonne, but so is Ergo. And as you know, that is a measure that we have a close eye on because that rand per tonne is just multiplied by $2,000,000 plus every month. So it's something we're very proud that we contain and we're very proud that we keep that in check. So stable costs, but increasing revenue flowing through to an operating profit combined of $770,000,000 for the year. Obviously, everyone would remember that in the comparative period Faraway Phase one just came on to stream. So just three months of commercial production in the revenue and profit numbers from 01/2019, so just the last quarter of the last financial year. But we were very happy to see that it contributed fully for the full twelve months of the June 2020 financial year. And that all gives us, if you look at the operating profit for the group that Nelio alluded to on the first slide, of just over ZAR1.5 billion, and that is up 320% year on year. Then looking at the group financial trends as a whole, obviously assisted year on year by the 33% increase in the average randall cost received. The operating margin obviously takes cash operating cost versus that rand gold price. Overall, we saw a 3% decline decrease year on year in the cash operating cost per kilogram, Again, assisted by Far West Gold recovery, which produced gold at a cash operating cost of only DKK 244,000 a kilogram. So that obviously, as Neil explained, the other volume and yield decreases due to the challenges in response to the pandemic had an impact, but again assisted on the rand gold price side. So a marvelous change on the operating margin and very healthy at 40.6% in the second half of the year. All in sustaining costs, a similar trend. As you know, the measure there then that I normally look at is sustaining CapEx, which grew from $23,000,000 last year to over $160,000,000 of which the majority of that was spent in the second half of the year. Again, four ways coal with a twelve month contribution producing at an all in sustaining cost per kilogram of just under DKK 300,000 per kilogram gives the group cost in check or overall per kilogram in check. And that's a very, very healthy all in sustaining cost margin and a wonderful trend. On the free cash flow side, also really pleasant reading. Obviously, in the negative $361,000,000 was mainly our investment in Faraway's Gold Recovery Phase one. And that turned out to be, from a timing point of view, such a marvelous investment in that already sort of contributing, as I've mentioned, towards the end of financial year 2019. And then with both operations for the full twelve months and an increasing gold price environment, that investment had some handsome returns for us. So we're very proud and humble of $926,400,000 of free cash flow generated in the financial year. Healthy headline earnings per share for the year in total of $0.824 and it's a very nice comparison to what Neil mentioned as our total dividend for the year. So two interim dividends declared and then a final dividend of $0.35 which gets us to $0.85 per share, which is very close to the $0.824 per share headline earnings. Just a brief explanation on the second half why that headline earnings is down. And it had a look or comparative to the first six months. And it had to do with the long term incentive scheme that was granted to members of senior management already in 2015. It's a cash based scheme and it reflects changes in our share price as that instrument vests over its five year period. So if you're closer to its vesting date, that increase doesn't all relate to this one year period. It's actually over a five year period of vesting. But again, just to give you a sense, our share price itself just moved from December closing price 2019 to thirty June twenty twenty by 259%. So that increase in that share price is reflected obviously in the second half as that happens and that will have an impact on earnings. But I'll show you that number as well in the income statement. Let's move into the income statement. The one back. So profitable loss for the year. As Neil mentioned, revenue up 52%. This is by gold sold, which is up by 10% year on year and the average rand gold price, which increased by 33%. Ventures were very comfortable with our cost containment, so that increasing cost of sales mainly attributed to now four weeks contributing costs for twelve months of the year, whereas in the previous period, that's only in commercial production for three months. So very healthy, just under 500% increase in gross profit from operating activities to just out of the ZAR1.2 billion. And then that share based payment expense that I alluded to, which impacted airline earnings per share in the second six months as a result of the increase in the share price that we saw. So that's charged through the income statement in this period. Well, that actually relates to a five year period, but this is found through a cash support scheme that has picked up. So that had an impact on earnings. Finance income from the cash balances that we hold, some increase there. The finance expense line unwinding most of that of the rehabilitation liability through the income statement. And then yes, very healthy profit before tax was just under ZAR1 billion, which resulted in even though we used some capital allowances that was carried over from the prior year, which had an impact on the deferred tax charge, a very healthy current tax balance, and I'll point that out in the cash flow statement as well. So direct injection to the fiscus in the form of income tax that the already bought contributed. But I'll point that out further on the cash flow statement. I'm just talking to the statement of financial position. And it's always such a privilege for me to talk through this. And I'll just say something at the end, making reference to what I mentioned last year. Just briefly talking to the line items, property plant and equipment, so year on year simplistically slightly less CapEx than depreciation, so that line item decreased slightly. On the non tariff investments and other assets, what is included in that combined item, the share is an increase in the fair value of the rent refineries. We show our 11.3% interest in rent refineries at fair value through other comprehensive income and that business has also shown remarkable cash flows and profits with the increase in demand for Pruvarais, just general increase in the gold price as well. So just $180,000,000 is included there. And very important, we still have rehabilitation assets in that line item of ZAR626 million. And I'll lead to that number again when I talk to the provision for environmental rehabilitation later. Cash and cash equivalents, we'll analyze on the next slide. Other current assets, some back receivables, source in there and just normal working capital cutoff. Equity, I'll also explain on the cash flow statement that's basically losing profit. Obviously, the shares we issued to Sibana in January 2020, less dividends, simplistically, we've paid. So I'm going to pause on provision for environmental rehabilitation and the decrease year on year. And they look quite innocent in this balance sheet. But what I want to point out is the story behind it. And two main reasons for that decrease is under these COVID conditions. Obviously, our real rate that we used to discount that liability increased as a result of increase in long term SA government park rates, decrease in inflation. But the other big impact on that liabilities because of the way we look at our assets and the way we rehabilitate those sites, two more sites came on to each our former life of mine based on positive coal price outlooks, which then changes the way we rehabilitate those assets. And in other words, I want to say the moral of our story is we take what is earlier liability and in situ rehabilitation at a huge cost And through our infrastructure, pipelines, plant, tailings dams, we're able to relook at the way people see a liability. So then it's not possibly in situ rehabilitation, but it's a reprocessing and then to a red soil for us to then have sustainable land use. And I know you will talk about that later as well. But just in that small decrease, you can see it's part of our model and that's why we believe we can do a lot more of that as well. And just the other number that I referred to, our rehabilitation assets is at $626,000,000 which is more than our liability at the moment. And it's really a good position to be in. The other part of that reason is that we do rehabilitation as we go along. So we don't wait for the end and we take cash flows that we generate and we'll rehabilitate throughout the last month. So then on deferred tax, slight increase as I've mentioned utilization of allowances and an increase in the deferred tax rate as a result of forecast taxable profits becoming bigger, so slight increase there. Other non current liabilities, mostly lease liabilities. And then current liabilities that contains the long term incentive scheme that I've mentioned in the income statement. And then if you would allow me just to again spend as I've done last year, I know Neil will elaborate on it later as well. Just to mention, I mentioned when I talked to the balance sheet last year that it very much looked like a launch pad to me. And it still does this year. And I probably couldn't have envisioned last year when I said those words where we would have ended up and where the year would take us. But I really believe that is still the case. And it's a launch day for us to keep on rolling back the environmental legacy of mining through to various growth opportunities. We obviously have no debt on the balance sheet, no bank debt, which is a really great position for us and strong cash flows. And obviously, yes, some of those growth differentiators is again what we've shown for twelve months now for Far West that we've got proven technologies and a tailings reclamation track record. We can operate these sites. What I refer to you as what I wrote here is sort of a fuel injection, what we saw from the Sibanye share issue and share subscription of just under ZAR1.1 billion. I think that really boosted our company further in January. And we will continue to look at synergies and economies of scale in our journey forward. And then the other bit that excites me, although we have no debt, we can look for growth opportunities and try and look to sustainability financing, green financing because our model, as I said, is focusing on environmental cleanup and driving back that environmental legacy. And then yes, we have so many opportunities through the wider use of technology innovation and also looking at diversification into other metals. So it's really a great balance sheet for us to leverage on further. And now I'll refer to the share price in two slides, but it's just phenomenal in that our share price year on year increased by more than 500 percent and our market cap year on year grew by 680%. And again, we're very humble saying that, but it's we're very proud that the business that's been built up over many years, we're able to launch to those levels. And then just a couple of words to finish off on the cash flow statement, which for me is always the most simple statement, but definitely, in my humble opinion, the most useful as you just talked to cash. So if you can see there, healthy cash generated by both operations contemplating for the full year of just over ZAR1.3 billion, some interest received and paid. And then number $240,000,000 in cash paid to the Fiscus direct in the form of income tax. So it is a great contribution into the Fiscus. We'll continue to spend capital. I think we have an exciting phase ahead of us, but obviously decreased from last year where we had the Phase one expansion. Then rehabilitation payment, that will continue, probably increase. As I've mentioned, we do spend cash every year, not wait until the end. So that will definitely continue. Sort of Jetfield boost, as I've mentioned, the capital subscription by Sabana, the share issued in terms of adoption, just under ZAR1.1 billion. And then a very healthy margin of the cash that we generate, we physically paid out in cash. Obviously, this is last year's final dividend and then the two interim dividends. But yes, a very out portion in cash that have to pay out. And then yes, we are able to report closing cash of BRL1.7 billion. And then yes, just a picture of the share price. As I've mentioned, it's probably not in many years that we'll be able to say this, I will say it again. So year on year share price increased by 500% and our market cap by 680%. So and it's great that there is support for the price, and we're very proud of this. Yes, so Neil, that's it on the financial review. If I may hand back to you, Mr. Batoryz. Thanks, Elia. Yes. Sorry, I've slipped the slide into each part of the presentation, so I don't get to say it, but that's all right. I've got some other stuff to talk to. So on sustainable development, I think the sustainable development has been a theme of our approach with our strategy for as long as I can remember. And what we're seeing now is how the sustainable development objectives, what we're trying to achieve with the value creation on a much broader scope and in terms of more than just financial capital, how that has now found its way into the ESG narrative. And I think we're really well positioned to take that narrative forward. This is not something that we have to now start thinking about right now because it's been core to how we've been approaching the deployment of capital and resources now for quite some time. So just on the human capital side, I mentioned earlier the trend in women and mining and obviously we want to increase that by quite a bit more. Women and Core positions, 14%. There's still room for improvement in that regard as well. And then Women and Management, up slightly to 19%. The two is room for improvement and there's a slight increase also on the spend in terms of training courses. Maybe this doesn't quite tell the story on in terms of our reach. Our reach goes beyond what the numbers suggest in terms of training. I may have mentioned in the past and you may have heard that we offer extra classes, math, science and accountancy in seven schools in our area of impact. Very proud that two of the candidates who actually made use of those courses are now also a business of the company. I was sent remarks of one of our business students the other day. I didn't know if it was possible to get 90% full financial accounting at university of free state, but these are the numbers that are coming through. So and that really that says everything about our reach and our efforts in this part. We want to see more of that. But then in terms of natural capital, how we look after the environment and how we track our performance. I did mention earlier that it's a journey, it's not a race or a marathon, it's not a sprint. And there's still lots to be done. And really, I think we would have completed our purpose in terms of what we can do in and around the Johannesburg area. When all of these dumps that have been deposited in lower lying areas and that have since become encroached through urban development and all of those have been moved and the residue has been stored on large modern well contained tailings facilities. That's really where we're heading and that's where we're going. Obviously, we want to do that in a manner that's also conducive to some environmental practices. We want to limit the impact on the environment of our efforts to rollback the environmental legacy, if that makes sense. So we always keep a keen eye on our water usage. This year, we didn't see the reduction in potable water that we saw in the previous years. We set ourselves the goal to reduce that every year by 10%. Obviously, it's a bigger company now. There's a larger footprint, so it was steady, which seems that the addition of Far West did not lead to an increase in the use of externally sourced potable water that stayed flat. And with our focus on vegetation of older tailings dams and also on dust suppression, more often than not, the irrigation of those need to be done it's required to be done with potable water and not the recycled tray water that we get from underground in terms of recycled AMD and also water sourced from sewage water that's pretreated. I did mention the dust exceedances. That too, I think 0.5% is still too high. We don't want any dust to come off our selling plan. So a lot of progress has been made in this regard since the very first capital work that I remember fourteen odd years ago in this regard where we budgeted R16,000,000 for the vegetation of the crown tailings. So I think we've broken the back on this, but we still want to contain it even further. And especially now in the dry months, there's still dust coming off some of the sites, which we want to contain. There was a ZAR 54,000,000 spend on rehabilitation. This is now, as Rens explained earlier, that categorized as rehabilitation, but we do concurrent rehabilitation. So every ounce that we every ton that we mine, and I see our average cost for the group is ZAR 100 per tonne. It's essentially also ZAR 100 per tonne spent towards rehabilitation in the longer term. 65 hectares of closed tailings. We vegetated this year. So incrementally, we're also getting there. We're hoping to finish this project and crown in the foreseeable future, but two years from now that all of the crown tailings will have been vegetated. And of course, out in the East on Brackton or the Charles Simonds facilities we call it now, that will keep up with rate of rise. So every new bench that's established, cladding takes place on the bench just below that with interim wind dust containment measures or netting on the top bench. And then as we move on to the next one, there's further cladding and vegetation. So a lot of that happening too. And then 26 hectares of cleared land. This is 26 hectares of land that was previously sterilized because there were tailings stands on top of it or mine dumps on top of it. These have now been submitted to the NNO for clearance so that they can be developed and released back into society for use. Right now, also one of the very important aspects of ESG is transparency and governance around tailings management. Also, our relationship with Sibanye obviously requires that we're not the one responsible for embarrassment in the larger group. So a lot of focus is going into this. I think line of sight management from our office, the executive office through the office of the operations head of operations and through the divisional head that line of sight has very much been strengthened over the last few years. We've appointed additional staff and our staff to also assist in this regard based on independent tailings review board. And they take a very, very keen eye to our governance and that we've got different perspectives of what the different standards should be. So, it's healthy debate taking place in this regard. It's certainly not just affirmation for the sake of ticking a box, vibrant and very energetic group of people. And the exchange of ideas is interesting to witness. But I think all of it comes together in producing a product that gives a lot of comfort to the board and to management in terms of the standard of governance and managing our tailings. These tailings are enormous and they need to be looked at very, very carefully. And I was asked a question earlier today about what is the safest upstream, downstream, etcetera, etcetera. Simple fact of the matter is the the downstream dam that's poorly managed is always going to be more unsafe than an upstream dam that is well managed. Ultimately, it's the standard of governance, the standard of control that determines whether or not a tailings dam is safe. These things need to be managed proactively and responsibly, and we're certainly taking it very seriously. And it's amazing the sort of technologies that are available nowadays. With satellite imagery, which is what we're introducing now, you could see movements of a millimeter, which is just mind boggles considering that the T Sterling Sands, the one in the picture, is more than 200 hectares in size. And that's the sort of movement that's picked up, but no compromise in that regard. All right. Then in terms of social capital, this is what's been spent on skills development and project for local communities. A lot was written in the recent past on our broad based livelihoods program, that's the urban farming program. There's a second and the third leg to that as well in terms of management skills and life skills, decision making skills. And we're using this platform now, all 3,000 odd families in different communities, this network. We're using that for the next phase of our social development in bringing knowledge into the development of the informal economy. And we've established a relationship with an academic institution or the research arm of an academic institution. And we're hoping to see some interesting information coming out of that as well. We do believe that the informal economy is going to lead the way out of poverty in large sections of community of society. We think that it's under scaled, but there's huge room for skills development in the informal economy. It is not an unsophisticated economy. It might be informal, but it's anything but unsophisticated. So it also requires very particular skill set. We think that the capitalization of that informal economy of the monthly recapitalization to the social grant system that that has been adequately leveraged, it could be applied far more effectively and we're going to be driving programs off the existing network that we had that have further expanding and building that in collaboration with Emsizi and hoping to bring value to that as well. As I said earlier, this is the most likely way out of abject poverty in large parts of South Africa. And it will remain a big key focus area for our organization. Then in terms of our COVID response, I think we're all relieved with how well in terms of our own organization we've managed to contain the impact of COVID. So straight into the last block, one point nine percent of our workforce tested positive. We haven't had COVID related death. Unfortunately, we've lost one colleague We had a coma, but in fact, he was really ill and was receiving treatment for his illness and then contracted COVID-nineteen hospital and then suddenly passed away. In terms of as primary cause of death, COVID has not been we haven't had any in terms of our own numbers. The three cases out of fifty two still alive. And as I said earlier, this best testimony to the wholesale buy in and support. And the right sort of attitude amongst our employees and just addressing this issue. And this is really the sort of attitude that we want to take to every aspect of the business and our interaction with society as a whole. And then just in terms of some of the relief, now clearly, a lot of the communities around our operations are on a per day economic cycle. So what you eat today or if you buy what you eat this evening with money that you earn today, either as a car guard or working in somebody's garden, these are the informal settlements. And if you then have a strict lockdown, and you can't move out, then it means on that day you don't earn anything, which means that evening you don't eat anything. So this was a recipe for disaster in terms of just general stability in the areas where we conduct business. So I think the response was really quick. And once again, in collaboration with NCC, our personnel got busy. Our security department played a big role in this regard as well as did our human resources. Everybody plugged in. The salary sacrifice for its solidarity fund was $1,600,000 but this freed up capacity on the part of the company to match and further improve on the funding required for the MSE initiative. And MSE stands for Marafong, Suetta and Ekoroleni, which is where these families were assessed with Sussman and Stacks that provided nutritional adequate nutrition for a family of four for a period of about three weeks, so they were three cycles of these. And then of course, what just came through beautifully was the broad based livelihood program during this thing. More than 3,000 families have established these. I think more than two fifty of them are in fact almost like commercial farmers and a lot of food is produced, which softened the impact of the lockdown for those families considerably and also the communities around them. People could take advantage of that. So now in terms of looking ahead, okay, I think we are well positioned now to continue to take advantage of this extraordinary high gold price. The business has shown embedded resilience in terms of dealing with some of the restrictions that resulted from the lockdown. The staff and personnel certainly, they stepped up to the plate and they made sure that the business is looked after, that our source of livelihood is managed, that it's preserved. And we have a platform, as Rian said, we have a wonderful launchpad or platform for taking what we've got and expanding it further, building on it and expanding it further. So internally in terms of Ergo, there's a lot to be done in developing its own volume capacity and extending its own life of mine. So plenty will happen in that regard this year. There's a lot of focus on its tailings deposition capacity in terms of the Far West operations Phase II. It's now becoming a reality with construction on the tailings deposition facility, probably about eighteen months away from now when we will start. So in about a year from now, a lot of that will start happening. We've got a fairly good idea of what it is that we're going to have to spend going forward. And I think sort of at the top end, we're still somewhere between ZAR2.5 billion and ZAR3 billion in terms of capital expenditure. But then again, ultimately, it will be determined by and large by the environment into which this is going to be spent. What is going to be the gold price at the time? What is going to be the state of political governance locally? What's going to be the state generally in terms of crime, of security, of interference? And the ability to fund. Rian made mention of the fact that we may get some access to we'll be looking at green bond finance, focus more on the environmental side. So all of these things we will consider. Ultimately, the decision is to how much exactly we need to spend will be determined on the sum of all these factors, the sum of all these dynamics. Is it going to be a very large tailings dam where we've managed to tweak the design in order to address some of the very serious safety aspects that we believe a full liner hold for tailings of this nature or whether we need to build a much smaller one, but build a full liner. So that's going to be have an impact on exactly how much money we'll spend. Clearly, we want to spend we want to build a really big tailings dam because a really big tailings dam means in the long term a complete environmental solution for the entire Westland. All of the tailings in that area could ultimately be then deposited onto this tailings dam. And all that needs to happen then beyond that point really is just collaboration between the different role players. So that really that's first price. A very large plant that can receive $1,200,000 and maybe even more tons per month. We're talking of maybe quite a bit more And that could be a reality depending on what the situation is like in a year from now when we take the final decision. And then the same applies also in terms of just the configuration. Is it a two plant configuration or one plant configuration? Is it an upgrade of the existing one? Or is it an entirely new one? So we know what the numbers are. We're not going to stretch ourselves. We're not going to overexpose ourselves and it's going to be a decision that we take with new regard to exactly what the situation is at the time. And I'll talk a little bit more about what that time is. For the time being though, in the near term, there's going to be a lot of focus on making sure that we build on the resilience of our business. We saw how mechanization automation and also digitization, how all of that contributed to the resilience of the business and we think we need to leverage that. And we want to take some of that, particularly the digitalization, the technology aspect. We want to take that into the social aspect of the business as well. Big data is going to be a big theme for us this year. The derisking of the business, particularly in terms of quality and cost of electricity supply, that's going to be a big focus area for us going forward. So there's a lot of internal stuff that needs to take place and that we'll be focusing on. I think Jakub mentioned to me the other day that there are 118 individual projects that he and his team are running with this stage. Now obviously, some of them are very tiny projects, but some of them are really big projects. So we are looking, we're giving each of these the priority that it deserves And we're building on that to make sure that we're not only to take full advantage of the opportunities to expand, but we also take care of business as it is now and that we make sure that we do not under optimize or under exploit our ore body. And ultimately, the key strategy for this business is to mine as much of our ore body as we possibly can and to have the biggest impact that we potentially can in terms of the Johannesburg landscape. So gold production, again, the range based on the same considerations as in the past between 350,000 ounces for the year with a total combined cash operating cost of around DKK55000 per kilo. That's maybe a little bit conservative, but maybe it's not. We live in uncertain times. And then, of course, there are the metrics for decision making that I referred to earlier. We saw that large portion of society had sort of take a step back in terms of the security of their lives because of the lockdown. And I think that brought about quite a bit of anger, rather quite a bit of frustration, maybe not anger, maybe quite a bit of frustration. When it became apparent that there was also looting of public funds aimed at addressing some of the impacts of the lockdown. I think that frustration turned into anger. And it's within that environment that we are running a business. When anger and frustration and hunger, when all of that spillover, then the area will be environment within which you function is inherently unstable. That needs to be reversed. That needs to be stabilized. We buried a very dear colleague late last year. We had no intention of burying another one. The safety of our employees is of paramount importance and we're not going to be closing our eyes to the realities of the environment in which we expect of our colleagues to operate in which to work. So obviously, there's been significant increases in the security complement. We're not using this as an excuse not to produce. But then at the same time also you need to react proportionately. So there's been quite a bit of an increase in that regard. But I think there are certain key perceptions that need to be addressed in South Africa. We cannot have large sections of society living with this idea that the community doesn't care or that our leaders don't care. And I think we're all very encouraged by the words of our President yesterday afternoon when he came out to these very important executive committee meeting saying that corruption is the number one priority and putting down very firm measurable rules. And I think that's a good first step towards restoring, firstly, the long road towards restoring trust and confidence in the political leadership. But there is still a lot that needs to be done and it needs to find its way into the quality of life of the citizens of our country, the people who live in this country. And it needs to find its way into the communities that are already suffering. And not suffering in having fewer choices, suffering in not having food, not having shelter, not having hope, not having jobs. Those are the things that we need to address. And those programs, we need to drive as hard as government does in order to make sure that in the longer term that we do have an environment where it is safe to invest money. So key considerations for us over and above the economics of the investment that we want to make, Key considerations will remain the integrity of private ownership. It's very hard to justify an investment of capital, especially when you're talking billions, when the integrity of private ownership is compromised. So clarity needs to be given in that regard. And to think that that's farmland and nothing else and that that wouldn't find its way into the thinking of the investor in terms of other infrastructure and so forth, I think is naive. The integrity of private ownership is I think an important lever to justify additional investment. Political governance is key. One cannot invest money of this nature, which was less than a year ago, the equivalent of our market cap, when criminals can vote out the President only because he poses a risk to them because they're going to get prosecuted. That's going to be dealt with. And I think the first steps have been taken in that regard and we're encouraged by that and we hope to see a lot more. And then social stability and crime, and we said quite a bit about that. We're really encouraged by the reintroduction of the murder and robbery specialist units. I think that will go a long way as well, because these are visible and very emotive types of crime. But then also the quiet crimes, the ones that we don't see, the pilfering of infrastructure, the theft of copper cable, the destruction of government property, public property. And also those that are cancerous in terms of just the health of our society, the onslaught against against women, our women and children, women in particular getting brutalized, especially over weekends after drinking and so forth. These are the things in society that need to be fixed. And oftentimes, there is a result of deep frustrations and we need to go to the core of those frustrations. So that social stability is undoubtedly going to be an important part also of our decision making matrix, our investment decision making matrix. We at the ODGold is for long live by the motto that if you want something done, then you do it yourself and it's working. It's working by and large, but it's working sort of in a localized manner. We need a much broader, wider national environment or climate within which we can make these investment decisions. And we are undoubtedly, in my opinion, able to make those investments. We are very keen to make these investments because without them, we're not living out our full purpose. And we are keen to live out our full purpose. So we're hoping to see those improvements so that the environment is in fact conducive. So that by and large, I think covers what we wanted to present and what we wanted to say. Yes, that's it. So there have been a few questions. I encourage you to ask them. The difficult ones, I'll refer to to Rianne and Jakku. Yes, that's I'll try to do with myself. And I'm going to try and see if I can read these. The window is not particularly big, so I'm going to scroll through them and then see if I can open them. So Arnold, I knew you were going to ask this question when we will release the updated operating and CapEx metrics of. Arnold, you'll be the first in that. No, I'm just joking. It's probably going to be in about a year from now. And I think I explained the three or four contingencies that we need to take into consideration in that regard. But sort of at the upper end, it's between ZAR2.5 billion and ZAR3 billion for the Super Deluxe model. Right, I'm trying to see the so what proportion of your share based payments was as a result of the high gold pricing? What was the proportion based on operational improvements over the last five years, of course. Yes, so the share based payment is based entirely on share price. So five years ago, the management of PRD Gold issued a number of Phantom shares and they matured over incrementally over a period of three, four and five years. And that was going to be that was packaged as the market reward for whatever effort management for them and hopefully what they managed to achieve over time. So there's a sound in the background. Somebody who should be on mute is not on mute. Of course, we've now stepped off the Phantom share, and it's now more on an incentive share and an equity based system that's going to be applied from now on. Somebody has said well done on your very good results, and we are very pleased to look at the fact that I'm also very grateful for how it all panned out. And the unit costs are not R58 million dollars It's R58 million dollars for Far Westgold. The combined unit cost for the two consolidated is R100 million dollars per tonne. Time. So that is if you were to look at the handouts, the three handouts, that summary, a very good summary is on the last page of the handout with all those operating results, which breaks it down very nicely, makes it quite easy to follow. So let's see if I can open this one. This year's awesome DRD goals results prove that recovering precious metals from waste. Dumps is a must. Yes. Look, I do believe that you haven't fully taken advantage of your ore body if you haven't put your residues through the multi leased ones, your mine tailings through the multi leased ones. And that's why one of the reasons we say that we are mining South Africa's mineral wells again is to get that lost. But then obviously, and in a change environment with much higher volume and the precision measurements that we can do through instrumentation and automation, it makes it it brings it within reach. And obviously also the changes in the gold price environment within which we function. But I think what the beauty of the story really lies in the fact that it falls neatly into what has become the contemporary measure for sustainability. It resonates strongly in terms of people, in terms of planet and the fact that it can be done in a financially sound way, financially sustainable way. You don't have to bring money from the outside, go to your national stakeholders, mainly your taxpayers and say, bring us your taxes so that we can go and fix the remnants of what was done yesterday. I think that is really the what makes us a truly elegant solution for an ongoing problem. And it's asked here is South Africa still scratching the surface when it comes to recovering gold from dumps. That's actually been going along quite nicely. It is really we've got to thank Harry Oplama for this. He was the one who, notwithstanding a relatively iffy financial model, decided that he liked it and he was going to invest in it. And I think he was the pioneer that made others sit up and take notice. The fact is that because we can do it, we now have a solution for environmental legacy issues that can pay for itself. And this is really the arena I think where DoD Gold can play going forward. The fact that we've developed a system and not from unique information, it's just a unique combination of different things. We've developed a system where the demands, the ESG demands that now require contemporary rehabilitation as opposed to rehabilitation post mining, that's the sort of value offering I think that we can present that because it's certain mining companies or certain operators simply just this is not within their contemplation. The rehabilitation is not within their contemplation. There might be environmental containment, but not final closure. They sell assets before they get to the closure part. We sort of we come in at the back end here and I think we now offer a solution where you don't have to wait until after mining is over. You can start and in parallel with mining do the rehabilitation so that as and when the revenues dry up that the rehabilitation is done as well. And it's become more than a reputational thing now. I think it's become an impact on the investability society to require a different standard also from minors now. So let's see if we can scroll through the rest of these. Are there opportunities to do much more for the good of the people of South Africa? Once again, I think this is an imperative. This is either a reputational thing nor a marketing thing. You're not taking a box. And if charity is the driver here, I'm sorry, you're going to end up on your boat. This is a business imperative. Cannot do business, then you can't be an island of business efficiency in an ocean of social instability. It's just not going to work. So I've got one little line where I can scroll through this and hopefully I'm seeing all of these. So is there as much scope in PGMs? I'm trying to open this. Yes. Yes, definitely there is. There's no reason why what we're doing in the gold space can't also be applied in the PGM space. And I think our skill set lies really in the logistics and also in the setup of the managing and the monitoring systems. We don't have any PGM plants right now, but Yako and his team have made up their business to become familiar with the peculiarities of PGM recovery, PGM's recovery. And I think we know what we know and we also know what we don't know and where we need to firm up on skills. Jakub, I don't know if you want to elaborate on that, but I think you've made it your business to really understand the different aspects of PGM recovery. Could and should South Africa, Inc. Be doing much more to incentivize recovering precious metals from tailings dams and the life of both financial and environmental points of view? Absolutely. So a point that we often stress is that in Johannesburg, the mine didn't come to the people, the people came to the mine. So these tailings dams were built at a time when this was opened farmland by and large. But the influx of people have had the effect that a lot of people are now living a lot closer to mine dumps than I think is appropriate. And it is in fact in disregard of some of the recommendations that were made early on in the 1950s in fact of how close urbanization should be, where what the limits are in terms of people living near Mein Dam. So there's that one aspect of just a simple health and convenience aspect, people are too close. Secondly, there's a profound piece of political legacy almost in the Johannesburg landscape of the Johannesburg, the Tailings Dams and then Soweto, traditionally the black townships where a lot of forced movements of people are taking place. So there's a reminder, a stark reminder, not dissimilar to the Berlin Wall of a divided society and it's still there. That needs to be taken away. But I think there's enormous symbolism and there'll be a lot of healing in removing that artificial barrier between what was at one stage segregated society. And then clearly there's the environmental impact as well. Many of these tailings dams were built in low lying areas in Flay lands and wetlands, etcetera, etcetera. I said earlier how they were built in the Far West over the dynamitic aquifers. And so they need to be removed in that regard as well. These are three compelling considerations, cycle, just for the healing of our nation and also environmental why they shouldn't be tailings dams where they currently are. So government should be falling over its feet to create an environment that is conducive to investing in the removal of tailings. And then we're putting up our hand. We'll remove all of them if given the opportunity. If we're given the systems with capital infrastructure, if the taxation regime remains favorable and if we given the scope in terms of the regulatory dispensation, that's very much what we could do. There are few things that can contribute to the improvement of the quality of life in and around the Johannesburg area than the removal of all of these tailings dams. It could be huge, it could be enormous. Just the commute for that matter, if these dams are removed and one could build housing development closer to where the workplace is, If you could save an hour on your commute or half an hour on the commute, mothers and fathers will be spending ten hours more at home with their families instead of having to leave it in the care children leaving the care of their global. So just the societal bonds would be so much more healthy. So I can't emphasize enough how important it is that government, invests, practically invests in dealing with the legacy of tailings dams. Financial, environmental, societal ticks many boxes. Just to the administrator, those are the only questions that I see and I've been managing I've managed I think to answer most of them. I don't think they were any real hard questions. So Rehan, is there anything that you wanted to add having had a look at the questions? Neil, I see a question on just dividend policy in line with well, what I mentioned that we earnings wise, we paid roughly a dividend equaling earnings for the year. Just on that going forward, I don't know if you want me to just talk to that briefly. Yes, please, if you would. Renee, yes. I see that question. So we very much like to continue our dividend policy. But in context of what you mentioned around our capital expansion program and decisions that need to be made in the next year on that, It will probably impact the bottom of that dividend. But we'd very much still like to continue and pay a dividend that we generate from cash every year. But it won't be, as in the past, all the free cash flow or maybe all the earnings going forward. We want to do a combined policy there, so I think that's the intention. Guidance on CapEx. Renee, as Nir said, that needs to be confirmed up. We have indications, obviously, our forward model add indications to the market whether it was released in the competent persons report, but we'll actually firm that in the next year and based on the investment decisions. Yes. Could there's a question on automation and how that's helped on efficiency? So I don't know if you want to maybe have a look at that. The question is, has automation helped your grades improve? So obviously, the grades won't improve, but the recoveries may improve. I remember in 2011, you were getting two point three grams per tonne that had helped to improve on that in terms of ESGs and legacies. Do you think that the mind dumps around Johannesburg will be a thing of the past? Thanks from Arnaud Nachron. I think that's a question I've answered. Jafar, I don't know if you want to talk to the automation question by Arnold and how that is helping us in improving efficiencies. Just Arnaud, there's a lot of work being done currently on automation, but not necessarily only automation per se. It's also looking at bringing artificial intelligence. It's looking at bringing additional technology to review how we do our mine planning, how we do tailings, the positioning, how we the artificial will diligence obviously give you envelopes in which you narrow the envelopes for your parameters to give you the most economic recoveries. So automation doesn't increase your head grades, but it does assist in your overall efficiency of your operation. Obviously, one of the things that we're aiming at is to get as low as possible tail out of the plant, but at the same time, we're also trying to do that as effectively and cost effectively as possible. So looking at all kinds of improvements throughout the circuit. Okay. And then there's another question from Arnold. What gold price are you using for Far West Gold? We were running most of these plants at $7.35 or first six twenty five and I think then about $7.35 a kilo. And I don't think we've adjusted any of those. We don't want to adjust any of those. I don't think we're going to be changing anything because it's jumped 200,000 or R300,000 since then. And maybe we want to be a little bit cautious on the side of caution there. And has the required rate of return increased against the backdrop? Yes, it's either a good decision or not in terms of the backdrop, in terms of the sort of the background noise. I don't think we're going to walk into an unhealthy political governance risk only because there's a potential of a 2% or 3% higher yield. I don't think I've even running a financial model when it comes to that. It's more of an asset test. Jacque, I don't know if you want to maybe comment on that. I mean clearly, we will look at these numbers and see what sort of headroom there is. But I don't recall seeing a very significant increase in coal price assumed for purposes of the sort of the capital models that you are maximizing. Agree with you, Neil. We're not adjusting the model necessarily because of the gold price or changing that putting in that also always like you referred to earlier because of the gold price changing. It's more focused on funding, whether you're doing it internally, what's the requirement in terms of funding and so forth. That's got to be the role to play when you're looking at the gold price itself. But yes, planning has stayed exactly the same, and we're utilizing a very robust or conservative gold pricing models at this point Thanks, Jakku. And then there's one final question, I think. I think I've covered most, but there's one last one from Steve. Good morning and well done, guys. Thank you, Steve. Would you consider any M and A activity? For example, if you even look at an acquisition to facilitate this? Look, I think primarily, well, firstly, our focus is on offering a complete tailing solution or tailings management solution. So in that regard, it would make sense for us to improve or build our in house skill set and then that might have to be done by way of investments in entities that can bring those skills to the fore. In terms of out now M and A and in the PGM space, yes, undoubtedly, I think we are venturing into that. It would be nice to be able to invest in a team, not dissimilar to the way that Sabana Stillwater invested in our operating and financial team. Whether we'd be looking at doing this, everything is very expensive now. So there would be have to be a compelling value proposition in order to pay the sort of the premiums that the current climate may come on. So in principle, yes, but it has to come at the right price. And I think I've summarized that accurately. That's correct. And we'll obviously look at noncore assets as you put in your later in the Sipania portfolio, surface as noncore surface assets in both gold and platinum. We'll definitely be looking in that space. I know I think Nick just asked that question earlier. But definitely, it's in line with what you responded, Mark. I think that's very much the next obvious step for us is to see whether we can get involved in more of what Subania has and which has not seen which are not recognized by the market because of just the fact that it might be non core. I think we've covered everything. There's a question by Alan. I think it's Alan Skoumi for me. And it's with regards to battery storage, size of batteries, CapEx and timing and then as well as tie up with Subania's three point one million crew of mines. He actually We're busy with those battery and solar designs. At this point in time, we're still busy with the work. So we'll let you know as soon as we've got better indications of size for both the batteries and the solar plant. Obviously, with batteries, you don't require the same amount of regulatory requirements as you do with solar. So it does follow the same once it's one project, but two different processes that we're following. And then we are looking at possible synergies with Sibanye on the different kind of glufide, but that's still early stage development. Jaakur, just on that. Alan asked me about what battery technology you're looking at. Are you looking at the sort of the vanadium type or which batteries? No, no, no. It's still lithium, but it's the intelligent batteries where you can charge and discharge at the same time similar to your cell phone. All the technology you have to charge and then discharge, why until you discharge the battery prior to recharging your batteries, the ones that we're currently looking at are newer technology we can charge and utilize at the same time. And then obviously, the PV plants will be looking at significantly more capacity to be operating walls for some of the timing and at the same time recharging batteries so you can discharge in your peak period. Excellent. Thanks very much. Rehan, Jacob, do you just want to check with me that we've covered all the questions I think we have? I don't see anything else here. Let me just go right to the bottom. I think we have one. Oh, sorry. You have the one from Adam. I go ahead and see. Thanks, Helen. I hope that that answers your question. Okay. Good stuff. Alright. Well, thank you very much, everybody. I mean, I encourage you to also have a look at the free handout. There's a lot of information in that. And then once again, thank you for setting aside the time to to come and listen to our webinar. And I hope that this was helpful. I certainly enjoyed the medium. So, we'll probably do something similar again in future. Thank you very much and goodbye everyone.