Earnings Call: H1 2020

Feb 12, 2020

Good morning, everybody, and welcome to our results presentation. Is the sound and picture okay on that side? Jakub, if you can just nod or put up your hand if it is. Yes, we've got you. Okay. Excellent. Thanks very much. Leander, you'll be forwarding the slides as we go along, right? Yes, we will. Okay. So let's move on to the Arjan, you're going to be moving the slides forward as we go along, is that correct? Yes, that's correct. Okay. All right. So 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 First West Far West operations rather in full volume production. So 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. So the comparatives are slightly skewed as a consequence of that, but they do make for good reading nonetheless. And I think that demonstrates just the impact of this combined circuit that we now have. So moving on to the next slide straight into the quarter. Moving on to the highlights slide. Oriane, if we can move on to number three there. Thank you. I think we've always been talking about production within the context of tonnes. So one tonne per quarter gives us four tons per year. And 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 a 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 750,000,000.00 and all in sustaining margin up from less than 1% to 26.7%. This translated into healthy headline earnings, just under a third of a billion. And Rian will obviously spend a little bit more on those numbers. And as a consequence, we're also in a position now to after six months declare a dividend of $0.25 per share. And 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. And 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. And 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. And you'll know that we've been talking about the first phase and the second phase of the Far West operations now right from its inception. And the second phase 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 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 We're establishing project track record at this stage and looking at the parameters of what this thing is going to look like as and when we implement. But you do have to apply the proceeds also within the context of the entire resource. Operating profits that's been that are being generated by the 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 want to call it that. So some of that money is being retained. And Rian 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 and that's going to go back into the project. So it's maybe not as bigger chunk of free cash as we did in the past, although we did reduce the buffer somewhat, the cash buffer somewhat, but it's for very good reason. There was some thinking that actually went into that. And this was the first full six month period where we had full production from the Far Westcott operations. Of course, it was also a very important highlight this in the subsequent events. This is something that you would have seen in the news following the end of the this period, this reporting period was Savania exercising its option. And we'll talk a little bit more about that as well. But that's also a big sum of money that's coming into the business and I'll reflect on that when we talk about looking forward and also on the sustainability slide. So then moving on to Page four, the next slide. Just some of the operating trends that we saw coming through this year on a group basis. You could see that the for the two comparative periods or period upon period, there was there's been a steady increase in volume throughput over the twelve months, but comparing the first half of financial twenty twenty to the latter half of twenty nineteen, you could see roughly a 700,000 increase in volume throughput. Just under 14,000,000 tonnes went through our plots during that period. We recovered 0.217 grams of gold per tonne 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. So the operations are in a good space in terms of operating efficiency. On the Ergo operating results, the next slide, thank you, Ren. I see we're already there. There you can see that there's been at a time in volume throughput that 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 lower volume, then you can't necessarily supplement the volume throughput from another site because you do have to run them almost like face of bones. 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 play. And 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. So 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. So 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. And then that has an impact on how we coordinate, for example, the movement, the pumping of water and maintaining our water balance. So 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. We can actually manage to a large extent, we can manage volume throughput, notwithstanding the fact that there are occasional incidents of load shedding. But as I said, this is a complicated site that we're mining. Some of those sites we are in the final stages. We're lifting material from the floor of that site. And 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 twelve 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 has slightly changed and you could see that although volume's gone down, yield has gone slightly up. And this is as a consequence of the mills that we had 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 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. Also early stages of mining, I mean, some of the early dumps that we're mining, it's the one right next to the highway on the way to Vauxberg 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 plant and stuff like that. So these are the little secrets that lie beneath these dams as you get closer to ground level. A few years from now, volume throughput profile is going to look quite a bit different. But then the grades are going to be slightly lower because your slime grades typically are slightly lower than the sand grade. So the other 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 tonnes coming out of Ergo. Far West gold recoveries, new kit on the block, I think they are out the blocks really well. And we're very happy with what we've seen at Far West, maybe 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. But they managed to get their own target in terms of volume throughput. They need to do 500,000 tonnes a month and 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 is consistent with the ore body, with what we anticipate and also its recoveries. And it managed to produce three quarters of a tonne of gold over that period. And when Rian takes you through some of the finances later on, we'll just see the difference between the difference that grade makes and also the difference that a more compact, concise operating footprint, less complicated operating footprint difference that it makes. But these are 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 Rian now to take you through the financial review and then he'll hand me back later on during the presentation. Thank you very much, Neil. Good morning, ladies and gentlemen, from my side. Neil always provides perfect context to what I'm going to do under the financial review. And it's always my privilege to take the audience through the financial results. And the reason for that is I believe in the purpose of the company. So not only to make money, but as Neil puts it in his letter to shareholders well, to roll back the environmental legacy of mining starting in the Witwatersrand. But hopefully, we can take that further as well. But maybe this morning is extra special, the results, because from my point of view, I believe the results are Niels provided that context and also in his letter to share all this, 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 because someone can say that your results are good because you had a healthy increase in the gold price. And yes, that is true. But the business 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. So from my point of view, most of the credit, I believe, must go to the operational teams at Ergo and Far West. And as Nelos 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, Neil mentioned nuclear on the block, completely different than Ergo, but also the same, small footprint, one side, high yield, high margin. And you'll see that and perfectly setting that business up for further growth. So just from my point of view, the context of the results that I wanted to start off with. Getting some of the detail there. Ergo revenue, healthy increase as a result of a 2% increase in gold sold and as I've mentioned, the twenty six percent increase in the average gold price received, leaving it up revenue of just below ZAR1.6 billion. Cash operating costs, yes, there's been a slight increase period on period even though the volumes are down that Neil alluded to. And the main reason for that is the introduction of High Grade Sand into the circuit. But as you can see in the yield improvement and in the operating profit, that very much paid off. So the cost for me very much control at Ergo. And then in an increasing revenue model, obviously, your contribution to operating profit is significant at over ZAR360 million for the six month period. Looking at Far West, nearly alluded to the fact that really just very small toll treatment that we did in the December 2018 period, but from a comparison point of view, it doesn't make any sense. Then as you know, the first period of commercial production of first of three months in the last quarter of the financial year 2019, April to June, started generating revenue. And then, as Neil mentioned, hitting planned throughput in the last six months. The molds kicking in, in September as well and that operation really doing well. As we planned it, it's delivered. And 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. So it picked up on all of that. Obviously, the cost increase that's effectively three months of costs, that's six months including milling, but as planned and doing extremely well. And yes, smaller operation, but because of its higher margin, Niel almost yielding a similar operating profit than Oker. But as Niel said, yes, it's because we know we are mining that higher grade resource, Refundein five. Hitting somewhat the group financial interests with that background. Obviously, it has a huge impact on operating margin. Ergo contributing if you do Ergo's very healthy 23% Far West, a much healthier 68%. But yes, we understand why the operations are much different, but all of that helps to get us to a 34% operating margin. Neil mentioned the 26.7% all in sustaining costs, which is very good. From a free cash flow point of view, more than ZAR400 million generated in the six months with also a big chunk locked up in working capital, more than ZAR 100,000,000 impacting that number, but we're very happy with that ZAR 400,000,000 free cash flow. And then all of this and we'll go through the income statement now, obviously resulting in an headline earnings increase and a very healthy ZAR333 million or S0.48.4 per share. Looking at the detail in the income statement, so with all that background, what happened with revenue, so we had a 34% increase in gold sold, 26% increase in the average rand gold processes 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 costs for Ergo, higher yielding sand material. But 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 ZAR43 million increase in the cash settled phantom scheme liability as a result of measuring it from thirty June, I think, at ZAR4.37 to just below ZAR7 for the period and that increase all goes through the income statement in this period. But the AALFI results from operating activities of just under ZAR 500,000,000. Finance income, up ZAR 20,000,000 of that sits in growth in our rehabilitation assets. Finance expense, as you know, the majority of that noncash and you'll see it on the cash flow, majority unwinding of the rehabilitation liability as a result of time value of money. Then yes, a number that has crept into our income statement that we must take cognizant of and I do see it as a result of generating lots of profit and also taxable profit at the same time. You see it on the cash flow as well, that's a combination of current and deferred tax. It goes through, but yes, we did make first provisional tax payment and I'll allude to that on the cash flow statement. And that's the profit for the period of ZAR353 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 launch pad. Now I'm happy to say based on our six months number, yes, it's definitely started to launch. You could see decreased depreciation on those assets, those assets being used, and it's showing you really good results from both operations. Healthy investments in rehabilitation obligation funds over SEK 600,000,000. Cash and cash equivalents, I'll elaborate on, on the next slide and also provide some further context that Niel 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 status slight increase, obviously, Far West will have its debtors and inventories also sitting on that in that line item. Equity, obviously, it shows simplistically the profit for the period and then the healthy dividend that we declared as a final dividend of SEK 0.2 per share relating to the 2019 financial year. Rehab liabilities, just under SEK 700,000,000. Obviously, deferred tax, I mentioned on the 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. And then other noncurrent liabilities, before I get there, just stating that it's still a zero borrowing balance sheet. So we was like that at thirty June twenty nineteen, still no borrowings on our balance sheet. Included in that number is SEK 43,000,000 applying the new IFRS 16 standard on leases and some employee benefits and then also some employee benefits sitting in current liabilities, but overall leaving us with an extremely healthy current ratio of of more than ZAR2 at 2.1%. And then statement of cash flows. Cash generated by operations of ZAR500 million. As I've mentioned, included in that number is working capital lock up of over SEK 100,000,000, which in our working capital cycle flows quickly through to cash just following year end. So very, very healthy cash from operations. There you can see the smaller cash numbers specifically on interest pay coming through as the majority is noncash. And then there is the provisional tax payment that we made at the December, just under ZAR60 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 one of Far West gold recoveries. And 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 you refer 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 months period, just under SEK137 million. So even with that, leaving us a very healthy increase in net cash and cash equivalents, leaving us with the SEK $543,000,000 in cash. So as Neil said, yes, what we wanted our philosophy is yes, to still reward shareholders out of free cash. But almost to say, we planned the Far West project, as you know in the competent persons report, R564,000 a kilogram. So averaging then just under R700,000 a kilogram. And we said we know that as 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, EORGA 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. So 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. So really, really exciting times for us ahead. Neil, that's it from my side. I'm going to hand over to Neil in New York. Thank you. Thanks, Rian. And so I guess on the sustainable development side, these are slides that six, seven years ago almost went unnoticed, I think, to a large extent. But with the introduction of ESG or the emphasis on ESG, which is, I think, a development from sustainable development and or the new theme around sustainable development and the emphasis on that in the investor market, I think we do have some history that we can talk to. And the work that we've done in this regard stands us in good stead in terms of developing our ESG narrative. So 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. And it's being used as a qualifier in many funds before investment in a company is allowed. Now 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. And 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. One is the containment of environmental impacts. And this is really what do we do about dust. Our mines are in the middle of Johannesburg. And remember, the mine didn't go to the city, the city came to the mine. And 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. And their lives can be an absolute misery if the potential impact, environmental impact of those installations fortune has been spent over the last ten, maybe twelve years on containing the impact of particularly the permanent storage facilities, the tailings dams that we have. So 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 environmental the health impacts that it potentially have, that's been a very important part. It's been a big priority for our company. And obviously, if you're dealing with a legacy that is more than 100 years old, you don't do it all at once. But I think what we are seeing now is ten 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 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. So fires on these tailings dams do cost us a lot of money and that's I can't imagine why people would think it's a good idea to burn them down, but be that as it may. But we're winning that battle and we're seeing that the dust emissions and this 0.71% dust emissions exceed us. What this basically means is that of all the measurements that we take and there are several thousand measurements that are taken every year and dust buckets in and around all of these areas. I think they're in excess of two ninety correction, there are around 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. So it's a race that we are winning. It's not over yet. We'll probably only finish in about 2022, '20 '20 '3 with the vegetation of all of these sailings dams. But it's well worth doing because I think it profoundly impacts the quality of life of people living in and around those areas. So 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 filled. So mine dumps were established and the deposition sites were established in areas that were convenient, lower lying areas. So what we find is that lots and lots of areas are affected, low lying areas, wetlands, flay areas and so forth by unthinking deposition techniques and policies, breaking back eighteen, ninety years ago. This 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 going it's resuming its natural flow path. And we envisage more of those going forward. There is one area in particular not far from the Riberli community, which is one of our future priorities when it comes to quality of life and so forth. And everybody in our operations know that this is an important priority for both the board and for the executive that this is addressed. There's a flay 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 because the Stu is a catchment area where settlements 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. But 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 sediment started accumulating there. So 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 had been bolting wetlands and flays. Some of them have been built in areas that are perfectly suitable for development, industrial and even residential development. So 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 and so forth. That's been 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. But that's the third thing is the development of these sites for purposes of either residential or for industrial sites. And 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. So they could see 31 hectares of additional deposition area that's been vegetated. And the difference between the dust coming off these dams now compared to what they looked like ten years ago is chalk and cheese. And then hopefully, those looking at this objectively would actually see that and acknowledge that. And our purpose really, our objective and Rian alludes to purpose, it's a 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. And the purpose really ultimately is to have reversed the impact of the environment in and around the Johannesburg area and now also in Coltonville area, where is the issue of aquifers and tailings dams that have been built over Dolomagic aquifers. It can play a big role. And twenty, thirty years from now when we reflect back on Korea, then these are the things, hopefully, that we'll remember and that will stand us in good stead. So 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. But 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. So recycled water is a big theme in our company and we will continue to develop that theme. We're getting both treated AMD from key CTA and we also have an arrangement for syringe, retreated syringe. We've got a lovely plant that treats syringe water and we take most of the water that they treat. I think the big issue now, unfortunately, in Johannesburg is that not all the sewage reaches the sewage plant. So 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 the Ergo circuit. And that too I think resonates both in terms of health and also the right sort of usage of the environment. And 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 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 and Kiran, 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 site, small enterprise development site. So we've involved members of community that also do some of this vegetation. I think what we're also finding out is that it's not difficult to pronounce, but it is a very, very interesting concept. There are several communities within everybody wants to be part of something and not everybody is happy when somebody else is part of something and they're not. So 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. And 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 on as we go along, but 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 and we intend to stick to that. We owe to our shareholders to look at their funds responsibly. So moving on to the guidance aspect. You would have seen in the results, thank you, Ren, 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 recovery circuits performing really well. It's a good space to be in. Rian 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. I said, Paparin, mittjeskipme at the Leopold and Emmernurag and we've got both. We've got a big bucket and an even bigger spoon. So we can take advantage of these conditions. And I think it's the team, the operations team and everybody supporting them is deserving of our praise and we're really proud of what they achieved over the last few years to put themselves in this position. Of course, now we want to move from scheme ahead. Sibanye have exercised the option to acquire the additional 12% and I own 50.1% of the equity in our company. And the focus there is also very much one of this very unique combination of mining rebuffation through mining. The emphasis in Sibanye when it comes to ESG, when it comes to responsible mining, green economy, green energy, maintaining achieving and maintaining the high 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. And we slot nicely into that. I think the fact that Zabania has invested 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. And 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. And obviously, this investment will assist us to accelerate these initiatives to expand our footprint, firstly, in terms of the Far West Gold operations and hopefully increasingly also in terms of other metals, We intend to leverage that for the benefit of all of our shareholders. But 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 Badi to share on this. And this investment has certainly accelerated our ability to develop into that. We want to become a company that is associated not just with cash flows, dividends, profit, something trust of those communities where we're active by keeping our work and improving the quality of their lives through environmental remediation. So that's really where we are after six months. It's a we're sort of just trundling down the initial few meters of that launch pad. 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. And hopefully, we'll be able to continue to do this. And 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 bill cycle as and when it takes place. So that's the wrap for now. I think take a few questions. I'll chip in to the extent that I'm required. But thank you very much for attending this presentation and for listening to Hi, Neil. Brendan Ryan here, Meining MX. You touched 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 Sabahneu's assets? Thank you. Good morning, Brendan. Yes, thank you for the question. We have to be able to do that. Obviously, the immediate one, the near term one is to develop the Far West coal project to its full potential and take it to a million tonne a month project. Once that is up and running, then we would have established very good infrastructure on either side of the bit Marxist run, all the from Coltenville all the way through to Ergo to Boksberg and Springs and Brackburn. And I think that there's a lot of opportunity that we could then leverage or we could leverage basically this infrastructure, our presence on both ends and develop that opportunity. So that is certainly something which we're looking at to basically expanding to that. And yes, we I mean, 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 operations and how it actually came together quite nicely. When before we did the transaction, I think if you broke up the Sibanye share price in terms of different components of the 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 the I don't think that in the share price, these tailings was really recognized or contributed much. If it was 1% or 2%, I'd be very surprised. So 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 vended into a company that is a bespoke company and that's associated with this sort of thing. And 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 ZAR4 billion. Now 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. And whilst this is a unique transaction and maybe there won't be similar value uplift, maybe this took the market a little bit price 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 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 Slovenia that are not core that's not receiving any kind of value recognition that may receive recognition as and when it comes into DRD goals. So there's that commercial consideration, I into DRD gold. So 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 of the way. And in terms of governance, there's a requirement for the flow of information. So that's the one component. And then of course, and I'll make mention of that. It is a it's very high up on the strategic agenda of Sibanye, this whole green mining and green economy and cleanup and so forth. And to have a 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 ZAR1.1 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. So it's a very good combination, Brennan. I mean, you've been following our story for many, many years. We always wanted to create this value overlap. We've always pursued 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. And this, I think, is a very good example where there's been a value unlock just from a Cybunian perspective of ZAR4 billion. Obviously, the rest of the DRD Gold shareholders are also experiencing that with a market cap that's gone from where was it in, what's it, 1,700,000,000.0 to 8,000,000,000 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 shareholder. The the shareholder. The the first question relates to the last question that was asked in terms of, that Sibanye transaction. And I see that on also on the media release towards the on the last paragraph, it talks about moving to to PGMs. Now one would be interested that does this mean that, the strategy is changing towards diversification into other resources area? And also, what has been sort of influence of this Sibanye transaction in this statement? I'm not sure if I can just ask all three of them. Yes, specifically, this strategy is to develop into other metals as well, precious metals, those associated with PGMs. I think Sabania 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. Their share price has been I think their share has been one of the best performing shares in the JSC in the last twelve months. So to the extent that the 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. And yes, I think the reason why the ODEGOLD and Subania 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. That's a vision that is shared and that's a relationship that I think works and one that we would want to obviously develop going forward. Okay. And then the second one is around the low dependence on Eskom. I think that looking at the results, I mean, that has to be commented. You did very well in that regard. But my question is around the contribution of that towards the sustainable development. What's the contribution of that? And 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. So 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, that the amount of energy is is less and as a consequence, your carbon footprint is also lower. So 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 are just the there's a relationship that you cannot break. The one cannot exist without the other. So we need to work with Eskom towards finding solutions for its problems and so forth. But that doesn't mean that we cannot look at ways and means of reducing risk and also managing our costs and that's the direction that we're moving in. But more to your question, it's really about carbon footprint and efficient energy usage at this stage. Okay. Thank you. And then the last one, there was a comment on DRD website that despite the improvements in technology, the Algo West 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. Now look, there's a lot of R and D taking place on an ongoing basis to see if there are other technologies that could be employed. But 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. So 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. And 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 20 fourseven basis. I think Jacque 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 Krieber from Mining Weekly online. I just wanted to get some sort of insight into the technologies involved with 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? And when you say other metals and minerals, are you talking silver? What are you talking about? No, I think at this stage, it's limited to the opportunities arising from our relationship with Sibanye. So it's the stuff that Sibanye is involved in. We'll continue with the gold and to the extent that we that there's an opportunity for us to move into the PGMs, then that's where we'd want to go. So 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 have we do understand how it works. But there are some skills that we have to that we would have to bring into the company in that regard. And they're there, they're out there. We don't have to go and develop those skills from fresh and we certainly don't want to make mistakes that other people have made as part of a learning curve. So we'll do sort of a mini Sibanye thing that way. When it came to tailing, Sibanye thought that maybe the old gold is a good idea. When it comes to PGMs, there are individuals out there and we would want to bring them into the organization on the metallurgical aspect. Neil, coming back to Eskom, I mean, you've indicated that you can cope with what they've thrown at you so far. But 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 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 feed into that plant? The answer is no, I don't think so. The economics don't work. So 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. So yes, there are various models and I mean, 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, but also a risk of interruption thing because while you have those batteries, everything flows through that, your current flows through that, so you won't have it's like a large UPS. Ultimately, maybe combining that with solar, but Brandon, 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 Joakko. He'll tell you how extensively he's researched this already and what sort of models are out there that one could look into. But we're moving towards that cautiously. And as I say, not as a 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. Neil, we have some questions from the webcast. I see Gunther is listening, Gunther Aik from He just mentioned that you are presenting later at the Princeton Club in New York. And 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 all surface as our strategy is. But thank you for the comment and thanks for listening to the webcast. Good day, good day, and it's very good for you to dial in. Then a question from Anton Jiho, and I'm very impressed. Someone reading much detail in our 20 F, which is great. You mentioned that in your 20 F, you are evaluating the cost effectiveness of Ergo's fine grained circuit. Could you please provide us with an update on this evaluation? Niels, I don't know if you want to just kick off and we can maybe add Jakun and myself. Yes. 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 lower lower percentage of sulfates. And as a consequence, the mass pool 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 the sort of deep into the belly of the Ellesberg circuit. As we move further east, we saw a reduction in that. And following pier and maintenance, an interruption in maintenance rather when was it, JAKU? Was it in June of last year or July of last year? I see it in not we haven't switched it back on again. It's now been substituted basically by the percent moles, the higher fraction moles. And in terms of cost efficiency, we did not see towards the end, we did not see any significant change in the residue values of material leaving the Ergo plant. So there's a nice big saving in cost, about million saving in cost without sacrificing production and without seeing a change in efficiency. So 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 might want to use it once we open up something else that has similar characteristics as the material that initially justified its construction, but at the moment it's standing. Just to add a little bit to that. So currently, review for different resources going forward. So it might be put back in a different sequence, in a different configuration for a different resource going forward. So we're not just mothball it's currently just mothball with the idea of recommissioning it maybe at a later stage. Thanks, Joakim, Neil. And then a last question on the website from Ralph Milton. The comment is, Great results. Any idea on timing on West Rand expansion? Also two options were floated on Phase II. Any comment? Also are you marketing to the sovereign funds that place great emphasis on environmental issues? Yes, there is a lot of focus going into the environmental issues at this stage. And I think the market is 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. And now a lot of funds are actually leading with us. 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 in and maybe bring forward some of the capital projects that set us up to accelerate this and that's indeed being done. We approached our board at the last board meeting and we asked for some money. JAKU asked for some capital money that was only going to come in, in the next financial year. We brought that forward, not inconsiderable sum to start moving in that direction. So it's on the current horizon. Excellent job. Thanks, Rob. Obviously, we're looking at all the options and two options probably to increase the capacity of DP2 as it is now to a million tonnes and also to bolt the central processing facility, maybe do both. So we're looking at all the options as we indicated to the market. Neil, so nothing further on the webcast questions. I don't know if there's any final questions from the floor here. Nothing. Thank you, Neil. That's all the questions. Thank you. Thanks very much, everyone. Thanks for dialing in and also for attending.