Good morning, everybody, and welcome to our results presentation. Is the sound and picture okay on that side? Jaco, if you can just nod or put up your hand if it is.
Yes, we've got you. Thank you.
Okay, excellent. Thanks very much, Riaan. You'll be forwarding the slides as we go along, right?
Yes, we will.
Okay. Let's move on to the Riaan, you're going to be moving the slides forward as we go along. Is that correct?
Yes, that's correct.
Okay, lovely. Right. Thank you very much and for joining us this morning. I'm going to move straight into the presentation, and while we look at the disclaimer, where we have a picture, not coincidentally, of a lady. She's one of several others representing 23% of our labor force. Maybe just one or two words on what the focus of this presentation is going to be. This is the first year or the first period where we'll be reporting with Far West operations in full volume production. Obviously, this was almost the benchmark for numbers going forward. It's the first establishing the standard or the measure for the next reporting periods, the comparatives are slightly skewed as a consequence of that. They do make for good reading nonetheless, and I think they demonstrate just the impact of this combined circuit that we now have.
Moving on to the next slide, straight into the group highlights.
Moving on to the highlights. Slide. Riaan, if we can move on to number three there. Thank you. We've always been talking about production within the context of tons. One ton per quarter gives us four tons per year. What you see there now is that with a 33% rise, both as a consequence of Ergo performing really well over the six months, considering just the number of issues that we had to deal with, and I'll talk a little bit more about that later on, that we actually achieved production of three tons for the six months. That resonated in the numbers. You could see that there is an operating profit that's increased by 604% to just under three-quarters of a billion ZAR, and all-in sustaining margin up from less than 1% to 26.7%.
This translated into healthy headline earnings, just under ZAR a third of a billion. Riaan will obviously expand a little bit more on those numbers. As a consequence, we're also in a position now to, after six months, declare a dividend of ZAR 0.25 per share. This will be the thirteenth consecutive year where our company has been in a position to distribute free cash and pay out a dividend. We will reflect a little bit just on how we arrived at this dividend. You'll see that we made mention in our letter to shareholders and the pack on our thinking in this regard. Obviously, our philosophy has always been that we don't sit on free cash. We distribute free cash, and typically what we would do is look at near-term capital commitments. We also like to retain a buffer, and then the balance goes out to shareholders.
Then for good reason. A very large percentage of our shareholders are here in the United States, and us being an emerging economy, obviously we have a somewhat vulnerable or at least volatile currency. Maybe not as vulnerable as we thought it was, but certainly volatile. We don't want to be sitting on an asset that's diminishing in value. We'd rather give the cash to shareholders, and then they can apply it in whichever way they deem fit, and we'll look after the business. However, a big chunk of the free cash that came into the business this year came from the Far West operations. You'll know that we've been talking about the phase I and the phase II of the Far West operations now right from its inception. The phase 2 will involve a slightly different blend compared to what we've got now.
At the moment, we are mining a fairly high-grade resource. It needs to be applied within the context of the larger ore body, and it's not happening at the moment. It's very much in accordance with plan. We are in the first phase. We're establishing project track record at this stage and looking at the parameters of what this thing's going to look like as and when we implement. You do have to apply the proceeds also within the context of the entire resource.
To take all of the, let's call it almost the windfall portion of the operating profits that are being generated by this circuit now and just distribute all of that and not apply it back into the bigger project, I think would be maybe to not use it 100% in accordance with our approach, with our policy or our value system, if you wanna call it that. Some of that money is being retained, and Riaan could perhaps elaborate more a little bit on how we arrived at that. It's really the difference in the assumed gold price and what we're actually seeing. That's gonna go back into the project. It's maybe not as big a chunk of free cash as we did in the past, although we did reduce the buffer somewhat, the cash buffer somewhat. It's for very good reason.
There was some thinking that actually went into that. This was the first full six-month period where we had full production from the Far West Gold Recoveries. Of course, it was also a very important highlight in the subsequent events. This is something that you would have seen in the news following the end of this period, this reporting period, was Sibanye exercising its option. We'll talk a little bit more about that as well. That's also a big sum of money that's come into the business, and I'll reflect on that when we talk about looking forward and also on the sustainability slide. Moving on to page four, the next slide, to some of the operating trends that we saw coming through this year on a group basis.
You could see that for the two comparative periods or period on period, there's been a steady increase in volume throughput over the 12 months, but comparing the first half of financial 2020 to the latter half of 2019, you could see roughly a 700,000 increase in volume throughput. Just under 14 million tons went through our plants during that period. We recovered 0.217 g of gold per ton processed, and that gave us the three tons of gold production, which for us, I think is a good number. It's very much consistent, maybe slightly better than what we had anticipated or what we had planned. The operations are in a good space in terms of operating efficiency. On the Ergo operating results, the next slide. Thank you, Riaan. I see we're already there.
There you can see that there's been a decline in volume throughput, and it's a combination of a number of things. Ergo is a complex footprint. We are mining from several sites, and they need to be mined in a particular sequence. If the one is running at low volume, then you can't necessarily supplement the volume throughput from another site because you do have to run them, it's almost like phase advance. You can't race ahead because you'll be cleaning up certain sites at a time when they still need to be part of a broader throughput mix and production combination or else you're going to be running out of volume, running out of material at a time when you still have material left that needs to form part of a bigger blend.
The net result of that could then be that you end up with a site that still has lots of material that needs to be moved, but running at less than optimal volumes, which translates into rehabilitation or cleanup costs. We need to run these sites in a coordinated fashion, and we don't always overcompensate for reduction in volume from certain sites by increasing volume throughput from other sites. The circuitry just doesn't lend itself to that. From a combination of things, obviously, there is some impact in terms of Eskom. It's not as profound. I saw some other results coming through this year or during this reporting period on the impact that Eskom has. Obviously, our arrangement with Eskom is that we use a little bit less power, so we reduce it either by 10% or 20% of total pull when there is load shedding.
That has an impact on how we coordinate, for example, the movement, the pumping of water and maintaining our water balance. For long, uninterrupted periods of load shedding, we don't like the risk that results from that and the impact that it has on our water balance, but it's not the most important aspect or the most profound aspect in terms of volume throughput. To a large extent, we can manage volume throughput, notwithstanding the fact that there are occasional incidents of load shedding. As I said, this is a complicated site that we're mining. Some of those sites, we are in the final stages, and we're lifting material from the floor of that site. It has been challenging to maintain volume throughput in a manner which is consistent with our budgets and with our plans. Hence, the slight reduction over the 12-month period.
I think what the team has done, though, and this is part of, I think, the whole idea, the philosophy of creating embedded resilience to the realities of our operating environment is the model is slightly changed, and you could see that although volume's gone down, yield has gone slightly up. This is as a consequence of the mills that we've moved, amongst other things, the mills that have been moved from Crown across to Ergo and slightly higher grade material coming into the Ergo site and translating into that slightly higher yield over that same period of time. It will change again at some point or another, and a few years from now, you will see much higher volumes when the mining footprint looks different, when the combination of sites that are being mined, when that looks different and there are more higher volume sites and less complexity.
Early stages of mining. I mean, some of the early dumps that we're mining, 4L50, it's the one right next to the highway on the way to Boksburg on the right-hand side. This thing is really going really well simply because it's in midlife. It's not a complex footprint that needs to be lifted. We're not finding our way through several decades of Johannesburg history and coming up with little surprises like the little bit of rock that had been deposited in the middle of a tailings dam or uncovering old foundations from a farm and stuff like that. These are the little secrets that lie beneath these dams as you get closer to ground level. Two years from now, that volume throughput profile is going to look quite a bit different.
The grades are going to be slightly lower because your slime grades typically are slightly lower than the sand grade. The Ergo production on a whole, as a consequence of the way that I think this business has consistently been reimagined and evolving in order to be more resilient to the realities of our operating environment, you can see that the production was actually pretty good at Ergo with 2.2 tons coming out of Ergo. Far West Gold Recoveries, new kid on the block. I think they are out the blocks pretty well. We're very happy with what we're seeing at Far West. Maybe they're racing ahead a little bit on the volume throughput. I get nervous when I see this, but I'm told that it's entirely consistent with the plan. They managed to get their own target in terms of volume throughput.
They need to do 500,000 tons a month, that is what you're seeing in terms of volume for the half year. In terms of yield, not much I can say about that. It's consistent with the ore body, with what we anticipate and also its recoveries. It managed to produce three-quarters of a ton of gold over that period. When Riaan takes you through some of the finances later on, we'll just see the difference that grade makes, and also the difference that a more compact, concise operating footprint, less complicated operating footprint, the difference that it makes. I think it's a good combination of assets. You've got the high volume throughput on the one end, the lower volume throughput at the other, and a very nice combination in terms of resilience and risk.
I'm going to hand over to Riaan now to take you through the financial review, and then he'll hand me back later on during the presentation.
Thank you very much, Niël. Good morning, ladies and gentlemen, from my side. Niël always provides perfect context to what I'm going to do under the financial review. It's always my privilege to take the audience through the financial results. The reason for that is, I believe in the purpose of the company. Not only to make money, but as Niël puts it in his letter to shareholders as well, to roll back the environmental legacy of mining, starting in the Witwatersrand. Hopefully we can take that further as well. Maybe this morning is extra special, the results, because, from my point of view, I believe the results are pretty good.
Niël's provided that context and also in his letter to shareholders, he makes mention, and he mentioned it earlier, of the resilience of the operational and support teams throughout the group, but specifically at Ergo and Far West. Someone can say that your results are good because you had a healthy increase in the gold price. Yes, that is true. The business must be set up over many years, and it has been, to be able to benefit from this increase in the gold price that we've seen over the last six months. Yeah. From my point of view, most of the credit, I believe, must go to the operational teams at Ergo and Far West.
As Niël has described, Ergo, our mothership training center, where we've learned to do high volume, low grade, complex business, but making a huge impact on the social environmental value. Far West, Niël mentioned, new kid on the block, completely different than Ergo, but also the same. Small footprint, one site, high yield, high margin. You'll see that and perfectly setting that business up for further growth. Just from my point of view, the context of the results that I wanted to start off with. Hitting some of the detail then. Ergo revenue, healthy increase, as a result of a 2% increase in gold sold. As I've mentioned, the 26% increase in the average gold price received, leaving it of revenue of just below ZAR 1.6 billion. Cash operating costs.
Yes, there's been a slight increase period on period, even though the volumes are down, that Niël alluded to. The main reason for that is the introduction of high-grade sand into the circuit. As you can see in the yield improvement and in the operating profit, that very much paid off. The cost for me is very much under control at Ergo. In an increasing revenue model, obviously your contribution to operating profit is significant at over ZAR 360 million for the six-month period. Looking at Far West. Niël alluded to the fact that it was really just very small toll treatment that we did in the December 2018 period, from a comparison point of view, it doesn't make any sense.
As you know, the first period of commercial production of three months in the last quarter of the financial year 2019, April to June, started generating revenue. As Niël mentioned, hitting planned throughput in the last six months, the mill's kicking in in September as well. That operation really doing well. As we planned it's delivered. As I said, from a timing point of view, from a gold price timing point of view, we almost couldn't have planned it even if we tried. It picked up on all of that. Obviously, the cost increase, that's effectively three months of cost, that's six months including milling, but as planned and doing extremely well. Yes, small operation, but because of its higher margin yield, almost yielding a similar operating profit than Ergo.
As Niël said, yes, it's because we know we are mining that higher grade resource, Driefontein 5. Hitting some of the group financial trends with that background. Obviously, it has a huge impact on operating margin. Ergo contributing, if you do Ergo's operating margin on its own, a very healthy 23%. Far West, a much healthier 68%. Yes, we understand why. The operations are much different, but all of that helps to get us to a 34% operating margin. Niël mentioned the 26.7% all-in sustaining cost, which is very good. From a free cash flow point of view, more than ZAR 400 million generated in the six months, with also a big chunk locked up in working capital, more than ZAR 100 million impacting that number, but we're very happy with that ZAR 400 million free cash flow.
All of this, and we'll go through the income statement now, obviously resulting in a headline earnings increase and a very healthy ZAR 333 million or ZAR 0.4840 per share. Looking at the detail in the income statement. With all that background, what happened with revenue? We had a 34% increase in gold sold, 26% increase in the average ZAR gold prices received. That results in a 69% increase on the top line, which is very healthy for this period. Cost of sales, the biggest impact there is around Far West. It's six months cost coming into the picture, and as I mentioned, some cost for Ergo, higher yielding sand material. Yes, it comes at a cost, but we believe it was very much worth it and you could see it in the higher yield at Ergo for the six months.
Administration expenses and other costs, just to mention, there's a ZAR 43 million increase in the cash settled phantom scheme liability as a result of measuring it from 30 June, I think at ZAR 4.37 to just below ZAR 7 for the period and that increase all goes through the income statement in this period. The healthy results from operating activities of just under ZAR 500 million. Finance income, ZAR 20 million of that sits in growth in our rehabilitation assets. Finance expense, as you know, the majority of that non-cash, and you'll see it on the cash flow, majority unwinding of the rehabilitation liability as a result of time value of money.
Yes, a number that has crept into our income statement that we must take cognizance of, and I do see it as a result of generating lots of profit and also taxable profit at the same time. You'll see it on the cash flow as well. That's a combination of current and deferred tax. It goes through. Yes, we did make our first provisional tax payment. I'll allude to that on the cash flow statement. That's the profit for the period of ZAR 333 million. Statement of financial position or balance sheet. I mentioned in September during the presentation, looking at the June 2019 balance sheet, that it very much looks like a launchpad. Now, I'm happy to say, based on our six months number, yes, it's definitely started to launch. You could see decrease there, depreciation on those assets, those assets being used.
It's showing really good results from both operations. Healthy investments in rehabilitation obligation funds, over ZAR 600 million. Cash and cash equivalents I'll elaborate on the next slide and also provide some further context that Niël alluded to from how we thought about it from a dividend and near-term capital projects as well. Other current assets, slight increase, obviously Far West will have its debtors and inventories also sitting in that line item. Equity, obviously it shows simplistically the profit for the period. The healthy dividend that we declared as a final dividend of ZAR 0.20 per share relating to the 2019 financial year. Rehab liabilities, just under ZAR 700 million. Obviously, deferred tax, I mentioned on the income statement that will flow through to the deferred tax liability on the balance sheet, saying that there's tax expense down the line that will happen.
Other non-current liabilities. Before I get there, just stating that it's still a zero borrowing balance sheet. It was like that at 30 June 2019, still no borrowings on our balance sheet. Included in that number is a ZAR 43 million lease liability applying the new IFRS 16 standard on leases. Some employee benefits, then also some employee benefits sitting in current liabilities. Overall, leaving us with an extremely healthy current ratio of more than two at 2.1. Statement of cash flows. Cash generated by operations of ZAR 500 million. As I've mentioned, included in that number is working capital lockup of over ZAR 100 million, which in our working capital cycle flows quickly through to cash just following year end. Very healthy cash from operations.
There you can see the smaller cash numbers, specifically on interest paid coming through, as the majority is non-cash. There's the provisional tax payments that we made at the end of December, just under ZAR 60 million, that we made to the receiver of revenue. Property, plant, and equipment, obviously quite a decrease that mostly related to the construction of phase 1 of Far West Gold Recoveries. You can see that even as a sustaining CapEx number for six months is fairly low, and that's why in our planning in the next six months and going forward, we're looking to up that quite a bit, to do some spending also around keeping the business resilient, what Niël referred to.
We'll keep on settling our environmental liabilities, and that's where our model is different to, I believe, any other mining company, that we settle those liabilities as we mine, as we continue each period. Dividend that I alluded to, our final dividend that was paid in the six-month period, just under ZAR 137 million. Even with that, leaving us a very healthy increase in net cash and cash equivalents, leaving us with the ZAR 543 million in cash. As Niël said, what we wanted, our philosophy is, yes, to still reward shareholders out of free cash. Almost to say, we planned the Far West project, as you know, in the competent person's report at ZAR 564,000 a kilogram. Averaging then just under ZAR 700,000 a kilogram.
We said we know that is a high-grade resource, but some of that difference or upside purely from gold price, we want to keep aside and say, "Yes, there's a much larger project there. There's more blending that will come in the future." We don't want to declare that as a dividend. Maybe Ergo as it is, we looked at each short-term and medium-term projects from a cash point of view, but still declared the majority of its free cash flow out as a dividend. With all of that into account, we believe it's a good match between still rewarding shareholders with a dividend, but making sure that we have enough cash to deliver into our short and medium-term growth prospects. Really exciting times for us ahead. Niël, that's it from my side. I'm going to hand over to Niël in New York.
Thank you. Thanks, Riaan. Just on the sustainable development side, these are slides that six, seven years ago, almost went unnoticed, I think, to a large extent. With the introduction of ESG or the emphasis on ESG, which is, I think, a development from sustainable development or the new theme around sustainable development and the emphasis on that in the investor market, I think we have some history that we can talk to. The work that we've done in this regard stands us in good stead in terms of developing our ESG narrative. Maybe I'll start spending a little bit more time on this again, as I did several years ago, now that the market actually takes this stuff seriously. It's being used as a qualifier in many funds before investment in a company is allowed.
We do set very specific targets, in terms of both the containment of our operations on the environment, our installations on the environment, and also what needs to be left after we've mined. Looking at the impact of our mining operations in the broader scheme of things, I think there are four, one could argue maybe five distinct parallel initiatives in this regard. The one is the containment of environmental impact. This is really what do we do about dust. Our mines are in the middle of Johannesburg. Remember, the mine didn't go to the city, the city came to the mine. As a consequence, you would find that there are lots of communities that have sprung up around our installations and typically, around the tailings dams as well.
Their lives can be an absolute misery if the potential impact, environmental impact of those installations aren't looked after. A small fortune is being spent, not a small fortune, in fact, a big fortune has been spent over the last 10, maybe 12 years on containing the impact of particularly the permanent storage facilities, the tailings dams that we have. Ongoing vegetation as a measure to contain dust and ensure that we don't cover those surrounding communities in a cloud of dust with both the nuisance and the health impacts that it potentially have. That's been a very important part. It's been a big priority for our company. Obviously, if you're dealing with a legacy that is more than 100 years old, you don't do it all at once.
I think what we are seeing now is 10 years of dedicated work in that regard, of consistently making sure that the area that's covered by vegetation every year increases, improves, that we reverse the impact of maybe some unthinking behavior in burning down some of the vegetation that we established. You can see the little picture there in the left-hand corner, with the irrigation. It needs irrigation for two, sometimes up to three years before it's independently established. Fires on these tailings dams do cost us a lot of money and I can't imagine why people would think it's a good idea to burn them down, but be that as it may. We're winning that battle, and we're seeing that the dust emissions and this 0.71% dust emissions exceedances.
What this basically means is that of all the measurements that we take, and there are several thousand measurements that are taken every year in dust pockets in and around all of these areas. There are about 90 sites where we do measure dust in different areas surrounding the mines. Less than 1% of those measurements that were taken through the entire year exceeded the statutory limit on airborne particles. It's a race that we are winning. It's not over yet. We'll probably only finish in about 2022, 2023, with the vegetation of all of these tailings dams. It's well worth doing because I think the impact, the quality of life of people living in and around those areas. That's the first thing that we do, the first dynamic in terms of environmental containment.
The second one, obviously, is the rehabilitation of sites that were previously sterilized. When mining started in Johannesburg, it was open filth. Mine dumps were established, the deposition sites were established in areas that were convenient, lower-lying areas. What we find is that lots and lots of areas are affected, low-lying areas, wetlands, vlei areas, and so forth, by unthinking deposition techniques and policies dating back 18, 19 years ago. This is now slowly but surely being reversed. It's being restored around the Crown plant, for example, you'll see that there's a huge area there where the riverbed has been cleaned up. It's resuming its natural flow path. We envisage more of those going forward. There is one area in particular, not far from the Riverlea community, which is one of our future priorities when it comes to quality of life and so forth.
Everybody in our operations know that this is an important priority for both board and for the executive, that this is addressed. There's a vlei area there too, where whatever the financial upside turns out to be is maybe of lesser importance, not of no importance, but of lesser importance, in deciding whether or not we're going to be doing it. Those two, it's a catchment area where sediments have been accumulating for several decades. We're the only company in South Africa, in Johannesburg, with infrastructure capacity and the will to actually want to lift this, clean it up, and do it in such a way that it's not costing the shareholders money. We can at the very least, do it in a cost-neutral fashion, and we might actually even turn a small profit.
It will be the cleanup of an area that ultimately, in five, six, seven, eight years from now, when it's been cleaned up will be restored to the pristine condition that it was in before contamination started taking place, before sediments started accumulating there. This is the reversal of the environmental legacy aspect, cleaning up sensitive sites. The third one, obviously, is the fact that a lot of the sites that are being cleaned, and we're talking about several hundred hectares. I think last year alone was 135 hectares of land that had been restored. Not all the mine dumps, thankfully, have been built in wetlands and vleis. Some of them have been built in areas that are perfectly suitable for development, industrial and even residential development. More and more of that is taking place as well. The landscape, Johannesburg is changing. These dumps are being moved.
The position of the recycling takes place on a modern dam that is managed to modern standards, increasingly transparent sharing of information and so forth. That's being required of mining companies increasingly. That's on the governance side, and we're perfectly comfortable with that. We have those structures in place and we're developing those. That's the third thing, is the development of these sites for purposes of other residential or for industrial sites. That is how I think the activities of our company, which has a commercial focus, has the added benefit of reversing something that had happened over many, many years in terms of environmental cleanup. There you can see 31 hectares of additional deposition area that's been vegetated. The difference between the dust coming off these dams now compared to what they looked like 10 years ago is chalk and cheese.
Hopefully, those looking at this objectively would actually see that and acknowledge that. Our purpose really, our objective, Riaan alludes to purpose. It's the word that he uses often. I think that's the modern approach. People nowadays want to be assured that what they're doing has purpose. The purpose really, ultimately, is to have reversed the impact of the environment in and around the Johannesburg area, and now also in Carletonville area, where is the issue of aquifers and tailings stands that have been built over dolomitic aquifers. It can play a big role. 20, 30 years from now, when we reflect back on the career, then these are the things, hopefully, that we'll remember and that will stand us in good stead. About 31 hectares of additional deposition facilities vegetated.
There has been an increase in the amount of water that we're using in terms of potable water, but that is because of the addition of the new plant and the water usage there that's now being consolidated into our numbers. We continue to look at reducing usage of externally sourced potable water. We don't want to compete with the communities, and with other users of potable water. Recycled water is a big theme in our company, and we will continue to develop that theme. We're getting both treated AMD from TCTA, and we also have an arrangement for sewage, retreated sewage. We've got a lovely plant that feeds sewage water, and we take most of the water that they feed. I think the big issue now, unfortunately, in Johannesburg, is that not all the sewage reaches the sewage plant.
Hopefully our partner there can lift its game, make sure that infrastructure actually delivers the sewage to the sewage plant, and then most of that water will find its way into our circuit, into the Ergo circuit. That too, I think resonates both in terms of health and also the right sort of usage of the environment. That was the fourth point that I was going to make in terms of how we impact the environment is a slightly softer footprint, using less power through technologies that are conducive to that. Setting up the plant optimally in terms of our management systems to make sure that we don't overdraw power and also in terms of water usage, making sure that our footprint is as light as it potentially could be. Environmental spend in our business is-- thank you, Riaan.
This is not a generic summary of or a generic story. We can show you the actuals here. There's some real money that's going into environmental containment and rehabilitation on an ongoing basis. This is of the highest quality. We used to do this in-house and at a very good rate. Vegetation has now also taken on a development side, a small economic development side, small enterprise development side. We've involved members of the community that also do some of this vegetation. I think what we're also finding out is that community is a simple word. It's not hard to spell, and it's not difficult to pronounce, but it is a very interesting concept. There are several communities within each community, and everybody wants to be part of something, and not everybody's happy when somebody else is part of something, and they're not.
Managing these community relations are turning out to be complicated, but we are persevering, and we are determined to make sure that we add some value in this regard, too, whilst at the same time achieving an outcome. Ultimately, these tailings need to be vegetated, and if we pay for something, then we expect a result. This is how we drive it. That's the underlying value, and we stick to it. Saying to my colleagues the other day, we remind we're not the Department of Education. The standards will stay the same. That may become higher as we go along. We will never adjust our standards only because there's some sort of a social dynamic that's introduced into an initiative. If there's a contract, there's a contract, and people need to deliver into that. We intend to stick to that.
We owe it to our shareholders to look at their funds responsibly. Moving on to the guidance aspect. You would have seen in the results. Thank you, Riaan. You would have seen that in the summary that we are sort of bumping against the higher end of the production side because of both Ergo and the Far West Gold Recoveries circuits performing really well. It's a good space to be in. Riaan made the comment that, yes, the gold price has been exceptional. It has been unbelievably exceptional. You need to be able to take advantage of that. As a [Non-English Content ], and we've got both. We've got a big bucket and an even bigger spoon, so we can take advantage of these conditions.
I think the operations team and everybody supporting them is deserving of our praise, and we're very proud of what they achieved over the last few years to put themselves in this position. Of course, now we want to move full steam ahead. Sibanye have exercised the option to acquire the additional 12%, and now own 50.1% of the equity in our company. The focus there is also very much one of this very unique combination of revegetation through mining. The emphasis in Sibanye when it comes to ESG, when it comes to responsible mining, the green economy, green energy achieving and maintaining the highest standards in terms of environmental practice, of social relevance, and also of governance. These are things that are being run at big company scale and big company standards. We slot nicely into that.
I think the fact that Sibanye has invested ZAR 1 billion into a company that is developing environmental cleanup and dealing with mining legacy issues as part of an emerging brand identity is testimony to the model and its relevance in mining in this contemporary environment that we find ourselves in. The focus from investors and also from those who on a professional basis run other people's money. There's nice alignment. I think there's very good alignment in terms of what we're capable of doing and what Sibanye as our major shareholder is expecting from us. Obviously, this investment will assist us to accelerate these initiatives to expand our footprint. Firstly, in terms of the Far West Gold Recoveries and hopefully increasingly also in terms of other metals and products where they have an existing presence.
We intend to leverage that for the benefit of all of our shareholders. As I say, I think it's a very good combination. It's a very elegant combination of environmental and social responsibility coupled with high standards of governance, whilst at the same time delivering value to shareholders. This investment has certainly accelerated our ability to develop. We want to become a company that is associated not just with cash flows, dividends, profit, something that we've now done for 13 years, a 13-year dividend run. We also want to be associated with the environmental aspect, the cleanup and the rehabilitation aspect, and earn the trust of those communities where we're active, by keeping our word and improving the quality of their lives through environmental remediation. That's really where we are after six months.
We're sort of just trundling down the initial few meters of that launchpad. We've got a clear runway ahead of us, full tanks, and I think the plane's being serviced. It's ready for takeoff, and now we just need to stay on course and stay disciplined to our value system. Hopefully we'll be able to continue to do this. Also, once the gold price does go down, because undoubtedly it will at some point or another be much lower than what it is now, have systems in place to ensure that we can come through that cycle and again, take advantage of the next bull cycle as and when it takes place. That's the wrap for now. I think Riaan will take a few questions. I'll chip in to the extent that I'm required.
Thank you very much for attending this presentation and for listening to it.
Hi, Niël. Brendan Ryan here, Miningmx. Now that Sibanye is your major shareholder, you touched very briefly on what may be coming. Can you elaborate on that, please? Are you going to expand, diversify into platinum tailings recoveries, and what is the potential for enlarged more gold treatment per plants, given the scale of Sibanye's assets? Thank you.
Morning, Brendan. Yes, thank you for the question. We hope to be able to do that. Obviously, the immediate one, the near-term one, is to develop the Far West Gold project to its full potential, and take it to a 1 million ton a month project. Once that is up and running, we would have established very good infrastructure on either side of the Witwatersrand, from Carletonville all the way through to Ergo, to Boksburg and Springs and Brakpan. I think that there's a lot of opportunity that we could then leverage. We could leverage basically this infrastructure, our presence on both ends, and develop that opportunity. That is certainly something that we're looking at to basically expanding to there.
Yes, Sibanye has hundreds of millions of tons of other tailings material at all of their other operations, and I think that the model works really well. If you consider what's happened here now with the Far West Gold Recoveries and how it actually came together quite nicely. Before we did the transaction, I think if you broke up the Sibanye share price, in terms of different components of their business contributing to the aggregate of its share price. Let's say platinum was 20% or whatever, or 40%, and gold was whatever number you pick. I don't think that in their share price, these tailings was really recognized or contributed much. If it was 1% or 2%, I'd be very surprised.
I think what's happened with this transaction is something that was invisible and not receiving any recognition from the market, in terms of its share price, was vendored into a company that is a bespoke company and that's associated with this sort of thing. Following that transaction, and considering our share price this morning, following that transaction, something which was worth zero from a market perspective, not zero per se, but from a market perspective, received zero value, this morning has a value of ZAR 4 billion. That's a compelling commercial consideration for wanting to do more of this. I think some of the other tailings out there were also not receiving any sort of recognition in terms of value.
Whilst this is a unique transaction, and maybe there won't be similar value uplift, maybe this took the market a little bit by surprise, because I think there was skepticism expressed initially when we did the transaction as to what the impact would be in terms of project ability and capacity and funding and so forth. Maybe this time the market will be less critical about or less skeptical about the ability of how this thing will pan out in terms of value add. I do think that there are still loads and loads of other assets within Sibanye that are not core, that's not receiving any kind of value recognition, that may receive recognition as and when it comes into DRDGOLD. There's that commercial consideration, and we're definitely wanting to be part of that conversation.
We want to start the conversation and move it forward now that the option has been exercised and share price sensitivities and so forth are out the way. In terms of governance, there's a requirement for the flow of information. That's the one component. Then, of course, when I make mention of that, it's very high up on the strategic agenda of Sibanye, this whole green mining and green economy and cleanup and so forth. To have within the group, as one of its subsidiaries, a visible company with an independent personality and independent brand, to be actively involved in this and having just funded it to the tune of ZAR 1.1 billion to continue to do that, I'd be very surprised if we don't receive a very clear message from Sibanye that this is the route that they would prefer for us to go.
It's a very good combination, Brendan. You've been following our story for many years. We've always wanted to create this value overlap. Sustainable development has been very important in our strategic thinking, and we've always pursued some sort of a value overlap. We want to be profitable, but we also want to do stuff in terms of social value and environmental value that impacts on the bottom line. This, I think, is a very good example where there's been a value unlock just from a Sibanye perspective of ZAR 4 billion. Obviously, the rest of the DRDGOLD shareholders are also experiencing that with a market cap that's gone from, where was it in, what's it?
1.7 billion-ZAR 8 billion, and the additional cash flows, where there's that aspect, whilst at the same time also having a very soft impact on the environment and also rolling back some of those environmental issues. The story just works in this day and age.
Thank you. My name is Sibuisa. I'm the shareholder. The first question relates to the last question that was asked in terms of that Sibanye-Stillwater transaction. I see that also on the media release towards the, on the last paragraph, it talks about moving to PGMs. One would be interested that does this mean that here the strategy is changing towards diversification into other resources area, and also what has been sort of influence of this Sibanye-Stillwater transaction in this statement? I'm not sure if I can just ask all three of them.
Yes. Certainly the strategy is to develop into other metals as well, precious metals, those associated with PGMs. I think Sibanye-Stillwater demonstrated in how the market responded to their movement into the hard rock aspect of both gold and PGMs, that it's something that the market finds attractive. I think their share has been one of the best performing shares in the JSE in the last 12 months. To the extent that there may be concerns that the market doesn't appreciate this combination, I think those concerns have been addressed by the market itself. The market speaks unequivocally. We don't have to think for the market. It thinks for itself, and I think its message is clear. Yes, I think the reason why DRDGOLD and Sibanye-Stillwater moved close together is because there is synergy in thinking.
We have a shared vision of what this combination of mining tailings profitably, and in such a fashion that it rolls back environmental legacies and environmental impacts. It's a vision that is shared. It's a relationship that I think works, and one that we would want to obviously develop going forward.
Okay. The second one is around the load dependence on Eskom. I think that looking at the results, that has to be commended. You did very well in that regard. My question is around the contribution of that towards the sustainable development. What's the contribution of that? Maybe if you can quantify.
Yes. On Eskom, it's really a matter of carbon footprint. It's how many units of electricity you use. By using low friction liners in pipelines, it means that the amount of energy that you require to push all of this material through those pipelines, if the amount of energy is less, and as a consequence, your carbon footprint is also lower. That's how we really approach that in terms of Eskom, to use as little energy as possible and to be as efficient in terms of energy use as we possibly can. Obviously, over time, there will be an acceleration nationally, I think in the whole of South Africa, towards alternative energy sources and so forth. We're looking at more from the perspective of managing costs and storage of power at this stage than as an alternative.
I don't think that the industry can be entirely independent of Eskom. The South African economy and Eskom, there's a relationship that you cannot break. The one cannot exist without the other. We need to work with Eskom towards finding solutions for its problems and so forth. That doesn't mean that we cannot look at ways and means of reducing risk and also managing our costs. That's the direction that we're moving in. More to your question, it's really about carbon footprint and efficient energy usage just at this stage.
Okay. Thank you. The last one, there was a comment on the DRDGOLD website that despite the improvements in technology, the ore waste still contains minute particles of gold. Has there been maybe a further improvement and maybe what's your general comment in that regard? Thank you.
Thank you. Look, there's a lot of R&D taking place on an ongoing basis to see if there are other technologies that could be employed. At this stage, it's really a matter of setting up your plant infrastructure and circuit in such a way, and your metallurgy in such a way that you optimally run the plant. It's staying ahead of the curve. It's not new technologies. It's just managing those technologies as well as we possibly can from an efficiency standpoint. That's basically based on our management system, which assumes a free exchange of information, and running the plant towards very specific parameters and keeping them within those parameters and doing monitoring on a 24/7 basis.
I think Jaco will be able to elaborate on that where we have 40,000 data points collecting or reporting into a central data and information management system that enables us to keep this plant within range, our operations within all the key dynamics within range.
Martin Creamer from Mining Weekly online. I just wanted to get some sort of insight into the technologies involved where you recover platinum. Is there much difference in technology in the recovery of platinum? Will you have to do a lot of research and development in that? When you say other metals and minerals, are you talking silver? What are you talking about?
No, no. I think at this stage, it's limited to the opportunities arising from our relationship with Sibanye. It's the stuff that Sibanye is involved in. We'll continue with the gold and to the extent that there's an opportunity for us to move into the PGMs, then that's where we'd want to go. Our skill set is logistics. We move large quantities of material, volumes of material, and deliver it at the right rate and in the right condition to a plant, and then the management systems around that plant to monitor the key drivers there, the key dynamics within that plant. In terms of the metallurgical responses, I think operationally we do understand how it works. There is some skills that we would have to bring into the company in that regard. They're there, they're out there.
We don't have to go and develop those skills from fresh, we certainly don't want to make mistakes that other people have made as part of a learning curve. We'll do sort of a mini Sibanye-Stillwater thing here where when it came to tailings, Sibanye-Stillwater thought that maybe DRDGOLD is a good idea. When it comes to PGMs, there are individuals out there, we would want to bring them into the organization on the metallurgical aspect.
Niël, coming back to Eskom, you've indicated that you can cope with what they've thrown at you so far. Given the scope of what you're looking at in terms of new projects, are you considering setting up your own power IPP to give you some security on the power situation? Thank you.
We're not looking at building a plant at this stage that will independently of Eskom's ability to deliver electricity to that plant. If your question is, in the next phase, are you going to build both the plant and also set up power generating capacity adequate to feeding to that plant? The answer is no, I don't think so. The economics just don't work. Eskom is key also for our future plans. We're looking at alternative power generation more as a cost risk management exercise and an interruption of supply risk management exercise. Yes, there are various models and they start with storage and charging batteries during off-peak periods when electricity is a lot cheaper, and then drawing power from those batteries, from the storage facilities during peak hours. That is a cost thing.
Also a risk of interruption thing, because while you have those batteries, everything flows through there. Your current flows through there, so you won't have, it's like a large UPS. Ultimately, maybe combining that with solar. Brendan, we live in Gauteng, we live in a hail belt, so I think I need to be reassured that the technology is capable of withstanding large hailstorms and other weather and so forth. I'm not sure if we're quite there yet. The work's been done, and you can have a chat with Jaco. He'll tell you how extensively he's researched this already and what sort of models are out there that one could look into. We're moving towards that cautiously. As I say, the philosophy, the thinking, and I think most of the executives in our company share my thinking.
The thinking is not so much one of becoming independent of Eskom, but rather managing the risks associated with Eskom, both in terms of cost and supply.
Niël, we have some questions from the webcast. I see Gunther is listening, Gunther Eich from Zurich. He just mentioned that you are presenting later at the Princeton Club of N.Y. Then he had a comment around technology that we can use to assist underground mines. I don't know if that's a robotic angle, and that's probably not something that we do focus on. We're all surface as our strategy is. Thank you for the comment, Gunther, and thanks for listening to the webcast.
Good day, Mr. Eich, and it's very good for you to dial in. Gunther, [Foreign language].
A question from Anton Yihu. I'm very impressed. Someone reading much detail in our 20F, which is great. He mentioned that in your 20F, you are evaluating the cost effectiveness of Ergo's fine-grind circuit. Could you please provide us with an update on this evaluation? Niël, I don't know if you want to just kick off and we can maybe add Jaco and myself.
Yeah, it's not so much a cost efficiency thing as it's really a matter of the extent to which it's capable of contributing meaningfully to the production profile. What we found is that the materials that we process at this stage contains a low percentage of sulfates. As a consequence, the mass pull has not been as efficient as it was in the past when we just started up. I think initially we saw a change close to 60 kilos in production per month as we started up when we were mining deep into the belly of the Ergo circuit. As we moved further east, we saw a reduction in that. Following care and maintenance, an interruption in maintenance rather, when was it, Jaco? Was it in June of last year or July of last year? I see you nod. We haven't switched it back on again.
It's now been substituted basically by the sand mills, the high fraction mills. In terms of cost efficiency, towards the end we did not see any significant change in the residue values of material leaving the Ergo plant. There's a nice big saving in cost, about ZAR 12 million saving in cost, without sacrificing production and without seeing a change in efficiency. In terms of the current material that we're mining, the current resource, it's run its course. It's being perfectly preserved, obviously, because we may want to use it once we open up something else that has similar characteristics as the material that initially justified its construction. At the moment it's standing.
Hi, Niël. Just to add a little bit to that. Currently it's also the review for different resources going forward. It might be put back in a different sequence and a different configuration for a different resource going forward. It's currently just mothballed, with the idea of recommissioning it maybe at a later stage.
Thanks, Jaco.
Thanks, Jaco.
Niël, last question on the website from Ralph Milton. Hi, Ralph. The comment is, "Great results. Any idea on timing on West Rand expansion? Two options were floated on phase II. Any comment? Are you marketing to the sovereign funds that place great emphasis on environmental issues? Thank you.
Yes, there is a lot of focus going into the environmental issues at this stage. That's the expectation. This is something that, as I said, in the past was by and large sort of an afterthought when it came to putting together these presentations or delivering them, at least from the market's perspective. For now, a lot of funds are actually leading with this. They're wanting to see a very specific standard being adhered to. In terms of the Far West, obviously the situation that we find ourselves in now is that we could be a little bit more aggressive and maybe bring forward some of the capital projects that set us up to accelerate this. That's indeed being done. We approached our board at the last board meeting, and we asked for some money.
Jaco asked for some capital money that was only going to come in in the next financial year. We brought that forward, a not inconsiderable sum, to start moving in that direction. It's on the current horizon.
Excellent. Thanks, Ralph. Obviously, we're looking at all the options still. Yeah, the two options probably to increase the capacity of DP2 as it is now to 1 million tons and also to build the central processing facility, maybe do both. We're looking at all the options as we indicated to the market. Niël, nothing further on the webcast questions. I don't know if there's any final questions from the floor here. Nothing. Thank you, Niël. That's all the questions. Thank you.
Good. Thanks very much, everyone. Thanks for dialing in and also for attending.