Earnings Call: Q4 2018

Sep 5, 2018

Well, thank you very much for joining us from and also for joining us since the slightly later hour was to accommodate me because I'm dialing in from The United States. And hopefully, the results are good enough to have made it worth your while to come in at this later hour. And I think hopefully the catering will also make up for it. So thanks for joining us today. Rian will do the bulk of the presentation this morning. As he's done in the past, put all of the good news into the financial slide, so I'll just talk around that. But I'll kick off with going to the first slide, the disclaimer and ask that you once again just pay particular attention to the content of the disclaimer because we are going to be including we do include in this presentation some information that's forward looking in nature. And hence, this is worth a read. Next slide please. So the next slide, Slide number three, key features. We spent a lot of time in 2017 and I think that was also the main message in last year's results presentation of just the various measures that we took to migrate the operations from the West Rand more towards the Central And East Rand, tying up a few loose ends in that area, cleanup of Crown and the CMR sites and also the cost implications that had and also the implications on production itself. We told you about the steps that we were taking to put new sites, reclamation sites in place. There were three of those. And also measures that we were taking to change our water reticulation system to have a fully integrated closed circuit. And the expectation was that all of these measures were going to impact on this year and also this year going forward. I think a lot of what you're seeing in these results, both insofar as just the efficacy of the business is concerned, but also on the cost side or the direct results of the measures that were taken in the previous year. So we're really looking at two years results here, not just one year's result. Also, this presentation was being complete without reference to the information management system that we put in place, and that's assisting us to stay ahead of the plan, which has become so important. So the key features for this year, as you could see rather, is the very significant increase in production. There's a different footprint altogether that we were mining this year. And I don't think that we've managed to get through the 150,000 ounce mark, but with this combination of assets. And the recoveries you'll see later on also are right back to where they were in 2016 with a 0.2 recovery as opposed to the 0.16% s that we saw earlier in 2017. Very pleased with the fact that we were able to report free cash flow that we added to our cash balance year on year. I don't know if there are many other mining operations in South Africa that's had a free cash flow here from that South African operation. And then that's testimony, I think, to the way that the business has been set up. We have always been a cash flow focused business. So this is one of the most important considerations for us and priorities for us. The business got to make cash. The 38% drop in externally sourced potable water, you would have seen those of you actually read through the integrated report that we set ourselves the target to have a year on year reduction in potable water usage. This 38% drop is not coincidental. It is also as a consequence of having said infrastructure in place. And that's helping us to be less of a burden on the environment. It assists us in establishing natural capital value. And for a country like South Africa with limited water and a society like Johannesburg, which is ever on the increase with influx of people, I think this is a good space to be in to reduce the amount of water that we're using and that competes with potable water users. The increase in operating profit, obviously, as a consequence of the rise in production, but also the drop in unit costs. So this comes as a consequence of those two positives and not understanding the fact that there was a slight decline in gold price. All sustaining cost margin, this is the thing that I think in the long term is going to bite many producers. Since we have been required to report all sustaining costs, all in sustaining costs. And then you can see how much in sustenance capital per ounce was required in order to keep your operations going. I'm not entirely convinced that all the sustaining capital that's required to be spent has been spent in the industry, broadly speaking. So if you were to assess production from production numbers, not from companies as a whole, but from production units, from separate units, I wouldn't at all be surprised if you're actually starting to spot or see declines in standalone production units because of maybe saving a little bit on the Sustenance capital because this is now very visible. It's easy to say that you have operating costs of $650 or $700 an ounce, but just how much is the sustenance capital? And that number is now glaringly visible. And that is in the long term something that I think is good for the gold price, especially because of the dynamics happening now around paper gold or fake gold and the lending of gold and so forth. There might be a bit of a supply squeeze going forward, which might be a new dynamic that's not entirely factored into gold price at the moment, international gold price. And then of course also on the dust side, mining has been happening in Johannesburg, in and around Johannesburg for many, many decades. And a city has developed around the mines, which require new standards on managing the impacts of mining operations and dust in particular, the standards that were put in place many, many years ago, assumed that there would be a buffer between community, between societies, communities and the mines. That's simply been ignored both in the pre- and the post democratic era. And that's brought about a new standard of looking at these things. It's a costly standard. It costs a lot of money. But I think dedication to this program and the numbers I'll share with you later on in the program or in the presentation starting to pay off and we're definitely seeing a very significant reduction in dust emissions on the sites that we are responsible for. It's not the case in the whole of the industry. There are a lot of abandoned sites where dust is a major problem on the Far West Rand. In the West Rand, dust is a big problem. But the sites that we have in our footprint that's part of our portfolio of assets, the graph is certainly trending in the right direction. And this is consistent with our stated strategy of improving the quality of life of the people affected by our operations in and around the Johannesburg area. Next slide, please. We'll go to Slide number four or Page four, the operating trends. This makes for some good reading. I'll go to yield first, And this is what I was referring to the yields getting sort of bumping against the 0.2s again. That's where they were in the 'ninety rather the 2015s, 2016s as the yield just below the 0.2s. And this, of course, is as a consequence of two things. One, we managed to have much better density profiles this year because you didn't have sort of sterilization, so to speak, of the operating circuits that we saw in financial year 2017, the first half of twenty seventeen. That's when a lot of the cleanup material from the crown sites found its way into the operating circuits and the quality of material and the composition of material reaching the plants. That was difficult to maintain and manage compared to where we are now. So that's the one thing. It's a more consistent throughput. Second thing also is the fact that we did mine higher grades from certain of our sites. And we're setting up the business in such a way that we can extend this beyond the life of some of the current operating circuits. You'd see that as a consequence of those high grades and recovery numbers that we saw, The production was up both quarters, which brought us to the 150,000 ounces for the year. And that was not sustaining the fact that volumes had come down. And maybe what this graph is not telling you is the things that didn't happen this year that were problems for us in the past. And that didn't happen this year because the way that the business has been set up and the way that business has been improved and infrastructure has been set up. So the reduction in tons that you see right there towards the end, second financial year second half of the financial year. That's obviously when we hit the rainy season. And I sometimes get a sense that if there are two thunder clouds in the skies above Johannesburg, then the one would find its way just immediately over the Ellesburg Complex and the other one would go and sit over Oliver Tambo Airport. And because you would have sunny skies in the West Rain and just a deluge over those two areas. And in the past, what we saw was impact on densities, which in turn would then impact on carbon efficiency because with lower density, your carbon settles at the bottom of your CIL tank. So you got to manage that water balance very, very carefully. And what's happening is the method of mining has been adapted and adjusted. There's a very nice picture right at the end of this presentation that actually shows how the clear clean and dirty water separation systems are now better as a consequence of the way that the method of mining these facilities, how that's been adjusted. And that was a conscious decision, obviously. What we also saw, and this is maybe something that went unnoticed, is the fact that with the Eskom strike, the supply of electricity for the first time became very unpredictable, very unpredictable in the sense that we would have trip outs that were unannounced. Now typically what would happen and this is the arrangement that we have with Eskom is if there's going to be maintenance or if there's a risk of a trip out or some rather issue that they experience with the supply of electricity, then we would get advanced warning. But now with this track and with the funnies that were going on as part of this track, for the first time we did have unannounced trip outs. And the encouraging part of that is insofar as our operations are concerned, it's not encouraging to have trip outs and an interruption in supply, but it's how the business responded to that, how the infrastructure responded to that. This was three, four years ago, then you would have had massive checkups in pipelines. In all likelihood, you would have had one or two of your thickness tripping as well. And as a consequence, the better part of a week, maybe two weeks to train them, to clean them out and to get the system back up and running again. But the backup systems that we have in place and that we spoke about over the last few years, to keep this whole thing in motion, to keep everything in suspension and make sure that nothing settles down. I think those are the fruits that we're reaping now of those investments. The fact that the interruption lasts as long as the interruption in path, that you don't have this massive knock on effect. And make no mistake, we had some scary moments there because this that happened out of the blue. You can imagine a 60 kilometer long pipeline with filled up half a meter in diameter and with slowly rushing towards your plant and all of a sudden, there's no power. So it makes for a messy business if you're not prepared. And I do think that what the operating team has done over the last few years is just put systems in place that have made us far more resilient to this sort of thing. And that's why we're in a position to, despite the various contingencies associated with our environment that we can report numbers like this, take full advantage of what in fact has become a favorable set of circumstances price wise and otherwise. So those are the operating trends. I'm going on to the next slide now, Page five, which is the financial review and all the good news, which Rian has monopolized. Jan, so I'll hand you over to him. Thank you very much, Neil. Thank you for setting the scene for the financial results, not augging the spotlight on them. And good morning, ladies and gentlemen, from my side. Again, my privilege to take you through these results, which we are very proud of. As I said, Niel has set the scene brilliantly for us to talk through some of the trends on the financial side. Now the operating margin, a very healthy 14%. And remember, operating margin, margin of cash costs, say, to revenue. So in the context of revenue, remember, as Neil has alluded to it, the gold price year on year was down by 3% for us. So it ended up at just ZAR 534,000. You'll see on the half two half year reviews as well, we started off just under ZAR 550,000 for the first half and then that dropped to just over DKK500000 for the second half of the financial year 2018, which puts all the sort of half year on half year numbers into context. But still a very healthy 1450% up on the prior year, again with that decrease in gold price. So cash operating costs, as Ned has alluded to, we're very comfortable that management has worked very hard to have that under control, and that's also reflected in the cash operating costs per kilogram, and that is down 6% to under ZAR 460,000 per kilogram and as well as the all in sustaining costs just over DKK 500,000 per kilogram also down 5% year on year. If I jump to all in sustaining cost margin, again, the second half impacted by a lower coal price, but still a 70% overall increase year on year in all in sustaining cost margin. And as Neil said, a very important measure to measure the sustainability of an operation. As you know, over and above cash operating costs includes sort of sustaining capital expenditure, which we never hold back at our operations and make sure we spend the necessary capital also for projects that can improve the recovery and reduce the costs. So again, a very good number for us. All of this culminates, as Nela said in probably the most important measure for us, which is free cash flow, where we jumped from a negative BRL45 million in the full financial year 2017 to a very healthy BRL93.4 million for the year 2018. Again, gold price having an impact on that number in the second half. And then headline earnings per share, I just want to pause because that looks very much out of sync. So overall, a $0.017 per share headline earnings, a significant increase from last year. I just want to put some color into why that sort of if you look at the two distinct periods, which we don't report as two distinct periods, we report the half year, December and then the full year in June, a big chunk of that has to do with a Golding Process adjustment that throws it out for the two distinct periods. So though at the whole year, there was a CHF 40,000,000 gold in process positive adjustment to costs, for the full year it was SEK 24,000,000 that SEK 16,000,000 that gets it down to that, throws the two periods by about SEK 60,000,000. Then the second half was impacted by lower revenue because of the lower gold price as I've alluded to. And then there's always year end adjustments as we only update our life of mine on a yearly basis. And then measurements and remeasurements of things like long term incentive scheme, short term incentive scheme and then also the transaction costs of about SEK9 million that we incurred for the Sibanye store water assets acquisition impacted the distinct period as a period, but still a significant increase year on year in our headline earnings. Talking income statement, as Nela said, so revenue impacted by coal production up by 10% despite the decrease in the average gold price of 3%, which means a 6% increase in revenue year on year. The cost of sales line, as you can see, barely moved, so just under 2% change, which really is a function of the total cash operating costs only moving by 3% year on year, which again, I think is a really impressive achievement. And as I've alluded to, it's sort of offset by that CHF24 million gold in process, called investment as a cutoff at that point, which decreases that to the 2% movement year on year. Administrative expenses and, Alvarez, I've already mentioned, that is the which is included there is the long term incentive scheme change of about SEK 17,000,000 in the last period and then also the transaction costs making up that $19,700,000 number including the corporate costs that we carry. Finance income on all the REAP investment funds and related cash investments that we hold, Finance explains the majority of that noncash and it relates to the unwinding of the environmental provision, a finance charge that's booked through the income statement as a time value of money charge relating to the real liability. Then profit before tax looks very good. So I just want to pause here for a moment. We normally don't pause to talk about tax for various reasons. But I really want to put the positive spin on this negative tax charge. And to provide some color here, what it essentially does, as you know, accountants have this concept of deferred tax. That's not tax that's paid to SARS as current tax, but it measures sort of tax allowances that's available in the future against carrying values of assets and liabilities. And as you know, the gold mining industry does not pay a straight 28% corporate tax. It's a sliding tax scale depending on the taxable profit that the entity makes in that year and very much driven by the life of mine profitability. So what it says essentially, the more profits that you predict to make or taxable profits, the higher the tax rate that you'll be charged at. And in this case, as you know, there was a 10% increase in reserves year on year for Ergo, which means more profitable results from the Ergo life of mine, which means the deferred tax effective deferred tax rate changed from 18.6% to just over 20% in the current year. So it has to do with future earnings, but that raise or rise in the deferred tax rate impacts current earnings and ultimately headline earnings per share as well. So just to provide context to that number, the more profits you expect to make, the higher tax rate you're going to pay and that's why it closed down to a profit for the year. And then obviously, the headline earnings and earnings number is based on that number. Okay, going over to the statement of financial position. Property, plant and equipment, very much a function of capital expenditure that we incur, lesser depreciation, so it has declined slightly year on year. Non current investments and other assets mostly relate to our REIT fund assets that earns interest and grow year on year. Cash and cash equivalents, I'll elaborate in the cash flow statement, but as Neil already said, a healthy increase to just over BRL302 million. Other current assets, I've already alluded to slight increase in inventory, quite a big decrease in receivables in that number. On the equity line, why has it come down? Remember, there was a dividend paid, actually two in last year of CHF 42,200,000.0, so the one declared at this results presentation last year and then also the interim dividend of C0.05 dollars per share plus obviously the profit that goes through equity. Riet year on year pretty stable. There was an unwinding that I've alluded to in the income statement of a finance charge of about SEK 48,000,000. And then there was settlement of liabilities of about SEK 24,000,000. Again, I want to emphasize that. So I still believe that DRD is one of the few mining companies that actually incurred sector liabilities from their operating cash flow while they do their mining. So that's a very positive effect. Deferred tax, I've already spoken to, so that balance has gone up, a function of the higher effective deferred tax rate and also the decrease in mainly the decrease in the carrying value of property, plant and equipment. Other non current liabilities, some employee liabilities, finance leases, pretty stable year on year. Current liabilities, there was quite a big increase in creditors, our funded working capital at that point in time, which leaves us with a very solid textbook two current ratio. On the statement of cash flows, free cash flow, as you know, a function of the net cash inflow from operating activities less investing activities. So if you deduct those two, you get to the CHF 93,400,000.0 against a good cash generated by operations, some working capital release that I've alluded to in that, receivables and payables, interest received on bank accounts. As you can see there, the actual interest paid, the cash paid is very small in relation to the charge in the income statement. Acquisition of Property Plants and Equipment, again, similar to last year, even though we had a challenging year from a cash flow point of view, we're not withholding any capital spend. That's necessary to set up the business and make it more efficient in future years. And that was no different. And you will allude to three specific projects that made up the bulk of that capital spend. Process on disposal of Property Plant and Equipment, land sales slightly less this year. That also explains why the earnings per share is a bit lower this year because it includes a lower profit on sale of property, which as you know, that's always excluded from the headline earnings per share calculation. Again, just pointing out the environmental rehabilitation payments that I've mentioned increased by roughly BRL10 million year on year. And then the dividends I alluded to the BRL42.2 million that comes off as financing activities and leaves us with an increase in cash of BRL48 million and just over BRL300 million in cash and cash equivalents. So that's on the financial side, and I'm handing back now, Neil, on to Page 10, the Ergo projects. Thank you, Rian. So if we can get straight into the projects, page 11. This is the 4 L 50 Reclamation Site. This is the third of the new reclamation sites that we were working on in 2017 and then we got it ready to be included into the production circuit, into the operating circuit earlier this year. You can see the amount of tons that we're processing from there per month, 450,000, which is obviously taking a bit of pressure off some of the other sites. It's nicely accessible. A picture later on also shows how, as alluded to earlier, we managed to mine it in such a way that we have better control over clean and dirty water separation. And it's really all about making sure that we consistently deliver the right material at the right rate, right density, the right composition, right time into the plant. And this one is certainly making a contribution towards that point where two. Compare this to where we were eighteen months ago, pumping material from CMR into the circuit and the amount of space that that was taking up and the impact that that was having on plant efficiency, this is a vast improvement. Zinc presip is something that we're very excited about, both in respect of the greater optionality it provides. It does give us a bit of headroom insofar as volume throughput is concerned. It's a shorter process. I personally like the fact that you basically batch treat every consignment of EDUARD. And then of course, it also has the added advantage of cost saving and costing us less. So we're hoping to see the upside of that also coming through the initial indications and Jaco and Henry would both be able to give you more color on that. Initial indications on the zinc precip are positive and very much in line with consistent with what our expectations were, what our targets were. So I see Yaku waving is an amide on the wrong slide. Are you on Page 12? Are we good? Thank you. All right. So now I want to move on to Page 13. Sorry, I can't see the I can see the glare on the front page. So if I'm on the wrong slide, please just put up a hand there, Jaka. This is Page 13 on the boom mills. So with the closure of the crown plant, which if I may add looks really nice, you wouldn't know that there used to be a plant there. The cleanup work there has been nothing short of spectacular. Despite some very interesting challenges from the informal reclamation industry. We managed to salvage these and they've been moved to Ergo, where they're now been integrated into our system. And what this basically does for us is we're now in a position to these high pockets of sand materials scattered around the E3R. Instead of having to transport those all the way across to the heap where the other mills are, we now have a place for them and they can be integrated into the Ergo Circuit. And the City Deep space has now been opened up. So the remaining bit of sand material that's in and around the Central Johannesburg area, that can now go into the City Deep Circuit. And the impact of this is significant. It's actually surprising to see how a little bit of high grade material can impact on the average grade of your entire throughput. So this we believe is something that does fails nicely with the Knights plant now reaching the final phases of its life over the next two years or so based on current throughput, current materials. And it positions Ergo very favorably to become an acquirer to insource external materials, sand materials scattered around the East Rand that land owners want to get rid of because it's sterilizing their land and it's an environmental nuisance and an environmental risk. So moving on to the next slide, Slide number 14, on sustainable development. I said earlier that the mines were started in the rent and then the city came to the mine. In fact, the city was as a consequence of the mine. And Johannesburg is probably a textbook example of what sustainable development looks like, notwithstanding the fact that it was probably the furthest thing from the mines of the earlier pioneers that they wanted to build a self sustainable city with an economy that becomes independent of mining, but that's what it did. Problem is that there are a whole host of issues, legacy issues, because in those days they were maybe not as sensitive as we are today about impacts on society and also impacts on the environment. So social capital is an important aspect. Our target is to integrate the value add of the various capital stocks and to deploy resources and capital in such a way that value creation and one is also value creation and another. Our focus is poverty alleviation. That's what you see in the agricultural program, where we initially targeted two fifty families and we've now gone through 1,000 families. That program has been expanded to include two additions to the curriculum on self development professional professional rather personal growth and also we call it a mini MBA. So we're very proud of our association with MCC and the work that they're doing on that. And I think we are increasingly establishing ourselves as an organization that whilst we don't do much in the way of social capital infrastructure, we don't build schools and hospitals and so forth. That's too large a footprint to do this sort of thing. We have a sixty, seventy kilometer footprint. But we're becoming a teaching organization. We're imparting knowledge and equipping people to self empower. It's wonderful to see the effects of that. So that's the one part of our social capital focus. It's the poverty alleviation. The other one is youth education. Wayne Swanepoel, whose head I can see from where I'm sitting here in glasses, he can tell you more about our youth education. As Adelaide Dave Wayne did Adelaide join us? They can both tell you more about the youth education initiatives that we have and the successes that we're seeing there with eight schools participating in math, science and accountancy extra classes. So $14,500,000 spent on the community spend and the details are with those two of my colleagues. On the human capital side, this template is designed in such a way that it incorporates this is Page 15. You can just move to Page 15, Slide number 15, on the human capital side. So this slide is designed to align with the different new segments that we're seeing in the draft mining charter. Although the mining charter is still a hot topic of discussion, subject of negotiation, we are of the view that a number of the provisions in the third charter are pretty much a given. And we're adjusting the manner in which we report on some of these issues such a way that it align with the that these reporting topics align with the contents of the charter. So just from the top to the bottom, you can see the change in HDSA. In all honesty, this number is maybe a although the gross number suggests that we're right on target, we do believe that on the senior levels, we have work to be done. We're taking steps both the board level and also in the development of other senior executive management skills to bring, I think, more focus onto this particular aspect. And I think in the next few weeks, there will be further information shared in this regard. But the Board is certainly leading by example in this regard. On the women in mining, you can see we're right there on 20%, and we're very pleased with that. What we do find is that with our female colleagues is that the attention to detail when it comes to the management of equipment in particular is something that we could learn from. We should have done this decades ago. The fact that women were kept outside of these core and critical skills for so long, it was just to our disadvantage. We're happy to see this number. And I think it will spontaneously increase because the value is clear and apparent. And then on the individual training courses, you could see that Epta there is making a very large contribution, fifteen forty six individuals, taking advantage of some of the individual training courses that we're offering at Epta, and that also shows a healthy increase. On the natural capital side, I said earlier that our objective is to improve the quality of life of people living in and around Sandozburg area and that are in proximity to our operations. Because of the movement of people, the establishment of communities within buffer zones And sadly, also after we became a democracy, there appeared to have been either indifference or maybe lack of appreciation for the importance of these buffer zones. But it does require a different approach to the environmental standards that we maintain. And there you could see this is on top of a tailings dam. Vegetation that's being established, I'm referring to the picture now, and I'm just on Page 16. It's both vegetation costs and shrubs that's being established, but also trees to keep the wind away from the surface of these types. Big issue still for us is the fact that a lot of new vegetation gets destroyed in fires and we have those again over winter. But that notwithstanding, we are seeing very, very significant reductions in dust emissions, especially around the Crown Complex, near Natriq. If you were to compare the condition of these tailings now to where they were ten years ago, it's chalk and cheese. And I do believe that this has set a whole new standard in dust suppression, dust containment, making use of sustainable practices in an environment where water is a scarce commodity. And if there's one legacy, if there's one legacy that I believe the management team and DRD Gold can aspire towards, and it would be to neutralize the impact of the legacy of mining in and around the Johannesburg area. And this is certainly going a long way towards achieving that objective. Sadly, as I said earlier, a lot of abandoned sites that have not been lifted with this sort of detail and that's becoming an increasing problem. Hopefully, this will make some small contribution towards the quality of life of the people living in and around the Assueta and Riverly areas. Moving on to the next slide, Slide number 17, with Far West Rand gold recoveries, the update and straight into 'eighteen. Feel free to admire that picture just a little bit. The quality of the infrastructure that we acquired from Subania, very encouraging, enabling us to get into this very, very quickly, to get into production very, very quickly. So the transaction was completed on the 08/01/2018. At the time, we already secured orders for some of the long lead items in order to enable us hit the ground running and to have this thing up and running by the second half of the current financial year. And we are very, very pleased with this transaction. Saw that it's taken our gold reserves to close to 6,000,000 ounces of gold reserves on surface, accessible by way of our mining process of using high pressure water, capable of being linked up with existing infrastructure. I think what makes this an exciting project is if you look at the combination of assets and maybe some of the previous models, it was going to be tough for us to do this and to take full advantage of this reserve if we had to wait until after a very large plant been built and a very large tailings deposition facility has been built. And that's very much part of the future strategy for this project. We do want to as we want to do with Ergo, we want to optimally exploit our raw body. We want to see if we can mine all of these dumps and clean up that entire area and move it all to a well managed deposition facility out at Metohark and the Bracken Trading Standard. So we want to do exactly the same thing here. But to take the sort of dilution that we did in order to acquire this and then to have to wait for three, four years maybe of further capitalization and construction, commissioning and so forth and so forth, I think that was going to weigh heavy on DRD. And the DRD gold story, which is a cash flow story and a dividend paying story. So the fact that we were able to acquire these plants, the Prefontaine plants as part of the parcel of assets, the fact that we got a deposition facility in the No. 4 Dam. And it's really like it's like the Springboks scrum in the old days, you could cover them with a blanket, they're so close together, it's a very nicely concentrated footprint shaft. And this is enabling us to for relatively modest CapEx, get this thing up and running and up and running in such a way that it provides additional optionality. So we're not locking ourselves into one specific model here and to start with production in the first quarter of the new calendar year. So we're very excited about this. And our objective, our target is to not bring about a dilution of the earnings from Pergo, so that the cash flows coming out of the revenues coming out of this project are such that it fully makes up the 38% dilution of Ergo earnings and not just make it up, but in fact contribute towards that, so that the net aggregate value add per capita is in fact positive and the indications are that it would be. For us, this is very much a step change. Right. So what we also did was for the first time in a very, very long time, I think the first time since 02/2001, we've decided to take on a bit of price protection. So we've agreed a collar with our bankers and we committed 5,000 just over 5,500 ounces per month towards this product. And we have a put at 565,000, which obviously at this stage is of no use because of where the rand has gone following yesterday and the day before's events in South Africa, the numbers that came up. And then we sold a call at just under 609,000. This is done on a monthly basis. It's netted up on a monthly basis, and there'll be a cash out depending on which way the color went. It was important for us considering the fact that we are taking on debt and obviously now with a gold price that is still favorable in the last few days, we'll probably take on less debt because the business is doing well, operations are doing well. We are seeing cash flow. So we're probably being a little bit overly conservative here, but then again, you don't know if the gold price is going to go down tomorrow. Certainly, the international price seems to be a bit under pressure. I see here in New York, it's $11.90 dollars per ounce. So that's come off a little bit of its size yet, but it also came out about $10 The international flavor seems to be a little bit on the unattractive side. But in South African terms, gold price is such that it's good for cash flow. And being good for cash flow, it means less of a drawdown from the facility. But in doing our numbers and just making sure that we consider that from every risk angle and making sure that we don't run the risk of cover ratio breaches, etcetera, etcetera, because because we are going to be spending the bulk of this money, beauty of this kind of project. We're not talking about a five year project or a seven year project. We're talking about a four, five month project that we'll be spending the bulk of the capital to get this show on the road and get that up and running before we start pumping the first slides and seeing the first production. But there is going to be a period of high capital outlay investment without revenue flows coming in from that site. And you've got that two, three month period, which we don't want to be vulnerable. We don't want to go into something knowing that there's a risk of some cover ratio breach or something like that. And for us, this was a comfortable level because we looked at a gold price of R25,000 kilo where it was a few weeks ago at R550,000 kilo. And we thought that if we could lock in this number of ounces at R560,000, then we could for all intents and purposes break even with the rest of our production. And there's some guidance on where that break even number is. And we'll make enough to cover the interest that we need to pay on this facility, assuming that we have drawn down 100%. So it's good cover to ensure that this new risk or this new obligation rather, new liability that we're assuming that that's covered, that's looked after. So typically, I think what we do is we do have a modular type of operation. We do have switch on switch off capacity, and we've done it in the past where we defer certain expenses and we maybe hold back on some of the capital expenditure. But interest payments are due when interest payments are due. It's a date, it's a fixed date. And you don't want to find yourself in a situation where you can't pay your interest, especially now that the environment has become favorable. We wanted to do this a few months ago when the gold price also went through, I think, $5.75 and it sort of turned at 5.78%. And it required a very long discussion at board level because as a company, we think that 90% of our appeal to the investor market is the fact that we are unhedged and that we offer full exposure to the gold price. If you look at the trade patterns, the liquidity, the volatility in our share price, then that's probably why most people invest in the stock. Even the ones that are in the stock long term, they seem to trade it over and over and over again in the long term. Increasingly, I find myself leaning towards that as well. I think you know that you would have picked up that I bought just over 600,000 DRD gold shares in the last year after having sold most all of my DRD gold shares or most of them the year before. So these are the opportunities that the share offers and I think full exposure to gold price is just the sort of thing that the market is looking at. But in order to continue to offer that opportunity, we need to make sure that the business stays in business. And in order to do that, we need to make sure that we pay our commitments. And this is a new commitment. It wasn't part it's not an operating commitment. It's not something that you can defer. And hence, a strong argument was made out in favor of establishing this and the board gave us the go ahead. It comes to an end in May. We want to get back to full exposure to gold price as soon as possible. And by May, we would have we should have established revenue flows also out of the new circuit. I mean, there's no need for this anymore. Now looking at protecting margin, this is a risk management tool, ensure that we have enough revenue flows to pay the interest commitments if we were to draw down fully on this product. So now looking ahead, we are targeting between 302,000 ounces coming out of the Ergo combination. This doesn't include any production coming out of the Far West Rand. And you could also see our cash operating costs slightly up on where it is this year. The business has been set up in such a way that these targets are realistic. Our management's information system allows us to enables us to stay ahead of the plant, so it has become somewhat more predictable. Diagnostically, it's an easier operation. And also insofar as maintaining stability, I think the team has a lot more information at their disposal with which they can ensure that they do stay ahead of the plant. So Ergo is most certainly still leveraging the benefits of twenty seventeen's inputs and changes and it is set for improved performance also now with the new capital projects having been bedded in. And then insofar as far West Gold recovery's circuit is concerned, Obviously, we're looking forward to it also starting to make a contribution towards the to the bottom line by the second half of twenty eighteen. And this is the picture that I was telling you about. This is the four fifty picture where you could see how these different benches are being mined. And this is now looking towards Springs, from Johannesburg site looking towards Springs. And really taking it off bit by bit from the I think that is that would be the northeastern corner moving towards the southwestern corner and enabling us not just insofar as clean and water separation is concerned to have a better setup, but also the system manager, the way in which screen oversight is being managed to ensure that once we're done, we are in fact done. So this is the slide with 4L 50. Moving on to the last slide, which is the contact details. If you do want to have any more color on any of these slides and some of the information that we shared, then please feel free to contact us and we'll be sure to get back to you. I think we've covered just about everything that we did. This is the last slide, my connection. Rian, if you guys want to add anything or if there are any questions, then feel free to I'm just reading from the webcast, Neil. Should any business needs to protect margin at current rand coal price, I'm assuming a good margin can be locked in. And then it says, Solomay has shown an ongoing hedging program. Around 20% of production has been exceptional at good hedging prices. Surely, DRD can adopt this too. Yes, Moe. We studied probably one of the most interesting case studies in hedging as part of the representations that we made to our support in setting up this current instrument. And we don't think that based on the profile of our investor on what the investment story is, the investment proposition is, we don't believe that we should step off taking full exposure from gold price. It is a cyclical business. And while some of the dynamics that drive gold price have changed, we do believe that there's a balance that's restored off the time and a hedge that looks very clever now, which has turned out to be not so clever in three or four years from now. So we don't have a hedging strategy. We have a risk management strategy to protect liquidity risk or to protect us against potential liquidity risk having assumed new obligation. But once that obligation has been discharged, our intention is to continue to take full exposure to the gold price because we believe that that's the dirty gold investment story and that offers the opportunity to generate returns on either side of the gold price cycle. Yes. Then there's a question on trading volumes are very low. I'm going to get interest in the stock to pick up so that overhang can be cleared. Especially in South Africa, I'm a little disappointed. I was surprised to see that 5,000 shares can move the share price 4%, five %, which just silly. And but ultimately, we tell the story and I think it's a good story. Ultimately, what happens in the stock market is it's pretty much up to the shareholders. I can't trade every day. We're in an open period again from tomorrow onwards and that's when I can trade. And I think the market has seen that I've reinvested in the stock and there's no reason for me to stop because I do think it's a good story and that the stock is certainly offering some upside at this stage. Depending on where you stand with gold price, my sentiment insofar as gold price is concerned is that in the long term, two, three, four, five years, it's going to start moving again, international gold price. But the shareholders are in control of the share. We're in control of the business and we're putting information out into the market, which we believe is accurate, which we believe is current. I think that the value system of this business is such that we try to maintain a high standard of custodianship and responsibility in managing our shareholders' capital. But the market is the market is the market. We don't control the market. What we have done this last year and hopefully that will start to assist has changed the marketing approach somewhat. Fewer of these conferences, these very expensive conferences where you have five or six or maybe 10 interviews and more on a digital platform. So we're using proactive investors as an international digital platform here locally or here in New York. Wainwright is also assisting us in using their platform as a way of spreading the message. So we're reaching far more people. And obviously, this requires a slightly different approach to marketing, telling the story slightly more visual, using more imagery, a headline strong headlines and then hoping that that would get those who are scrolling through the 500 companies that they follow and maybe that something catches their eye and that they would dive a little bit deeper into the numbers, do a bit of analysis of substantial analysis, substantive analysis of the business and see that or recognize, as far as I'm concerned, that it's a business on solid fundamentals, fundamental analysis, a business on solid fundamentals. Ruben, a comment on no dividend at year end. And it says the Subania deal, capital requirements, it was mentioned in the promotion of the deal that this was not going to be a factor. Yes. So we paid an interim dividend just before we issued the shares to Sibanye to acquire the transaction. I think one of the concerns that was raised was that we will now be immediately diluting earnings and diluting dividends. We want to make sure that the next dividend that's paid is paid from the joint revenues and that the new circuit also contributes towards that. To pay dividends now, especially now at the beginning of this capital project, while we might be drawing down, I think it's beyond official, which is we're diluting the Ergo earnings without having established a new revenue source and what really are you saying to the market? So we're borrowing money in order to pay dividend. So So yes, we paid the interim dividend. So the uninterrupted yearly dividend record that we're trying to maintain that hasn't been uninterrupted. And clearly, once revenues start coming in from a new circuit, then it too will pay its proportion towards earnings for the whole of the DRD Gold shareholder base. Okay. And then a question from me. I'll just recap. This is saying the headline earnings per share drop from first half to full year. I tried to cover it in the presentation. Let me just recap. So one of the major moves was the Golden Process move that was at CHF 40,900,000.0 at half year and then ended up at SEK24 million credit to the income statement for the full year. And that movement as a whole was almost SEK57 million. Then other major movements for the two, six months periods, revenue down roughly CHF20 million and then long term incentive, short term incentive adjustments and transaction costs close to CHF30 million and then cash operating costs in the second half of the year contributed roughly CHF5 million, which explains the two, six months periods and the impact on headline earnings specifically. Ralph, thank you for all your questions and the interest that you show. That is all the questions that I have of the webcast. Any other questions in the audience? So my thanks to Rolf for those comments. They're helpful and simply keep us on our toes. Martin Pribit from Mining Weekly Online. Neil, could you please tell me what the life of your company is now given the new Far West gold recoveries project? How far does that take you? And will you be carrying out the same sort of rehab philosophy on the West Rand as you have on the East Rand? Yes, Martin, they're different models. So the West Rand the number three and number five dam, which are the which we refer to as the first phase of the Far West Rand operations, that has a standalone life of twelve years. But obviously, we've undertaken to also look at the incorporation of the whole of that footprint into a much larger initiative and that will be the subject matter of a two year study from when we start producing. And then it could be substantially longer. If my memory serves me correct, then I think it's a fifteen year model and there's also a eighteen or twenty year model, if I'm not mistaken. Jacque, you could maybe just confirm that. I see you nodding. So the different iterations, twelve, fifteen and twenty, Martin. And are you looking at any other assets on the West Rand that could be included in this West Vets? Seems to still be around. You have a slight footprint there. Is there anything else that you could incorporate? Is there a lot still to come in? Well, everything that we want to introduce, well, the only thing that we can look at now at this stage is what we own, what we bought. But this is not an island. Obviously, there are lots and lots of dumps around the Far West operations footprint. And many of those are attractive depths. That whole Western Deep Levels Belt, the Drieffontein Kueff Belt, those were spectacularly rich reefs. And the gold content in those tailings dams are the gold content is good in those tailings dams. So we certainly we will I mean they'll feel comfortable in our portfolio. There's no doubt about that. And of course, if you could add a few hundred million tons, it just makes your model for a larger plant so much easier that little rate drops. So the opportunity will certainly present itself. We don't want to one of our key filters, one of our key strategic considerations when we look at these things. And once again, it might be overly conservative, but it served us well. It served us well over the last ten, twelve years is that we started the surface story. We started building the surface story, expanding on the surface story with net cash flow as a core element of the story. And we're very conscious of net cash flow per capita, net cash flow per share. So the earnings are earnings. And these fair value adjustments, that could confuse you into believing that a company is financially very strong. And I think we were all caught unaware by something similar to that a few months ago when we saw a major corporate collapse in South Africa. Or they could give you the impression that maybe something is not as strong when in fact it is very robust and strong, which is probably where our results fall in this year. But net cash flow per share, it's money in your pocket. That's what you can use to buy bread and milk with. You can't buy most with a fair value adjustment or a deferred whatever you want to call it, although we have long conversations about it. But cash is something that you can apply to build infrastructure, to build a capital base. And so what we don't want to do is this is not a runaway growth story where deal momentum is the thing that's going to make this thing attractive. And we I think we will want to stay committed to our core philosophy of real value build, actual value and that there's underlying value that supports business. So yes, there will be plenty of opportunities I think to incorporate and we'll look at those with an open mind. And we will want to participate with those that I think share our value system and our commitment to dealing with these things responsibly. And then we've made mistakes in the past, so probably never sell another mine when I understand the matter. But we would want to maybe incorporate assets going forward and collaborate with people who share our investment. And that opportunity will certainly be there. But it would have to be done in such a way that we don't undermine the per capita value add philosophy that we have. So we don't want to be burning ounces on the one end because we're just acquiring ounces more rapidly on the other end. It's like a try to sprint a marathon, you're going to run out at some stage. Does that answer your question, Martin? Yes, it does. And then just finally, could you just give us a word on the yield that you'll have on the West Rand versus the yield you've got on the East Rand? So it's a higher grade. The initial phase is a does have a higher head grade. So we do anticipate higher yields, I think about 25% higher are the initial indications. But then again, this is tailings. And you'll know exactly how much you're going to make when you actually see that gold bar coming out of the smelter. So based on our past experience, based on our knowledge of this of the geology of this particular site, we have a fairly good idea of what we could target and those found its way into the market update that went out last year when we announced the transaction as part of the transaction. So I'm careful to say it will definitely be this or it will definitely be that, but it's probably going to be about a 25% high yield. So I think at the moment, we're just under 0.2. So with that, that's 0.225, zero point two five thereabouts. 0.25, Jaakou, can you maybe give an indication? 0.25 yields, yes. Thank you.