Ladies and gentlemen, Thanks for attending. It's good to see such a good crowd for our first presentation of the year. Just before Richard starts, I just want to let everyone know that if you're leaving, if you've parked in the building at all as you go, you can redeem or get a parking voucher at the door. Please just remember to swap the tickets that you got for a parking voucher prepaid. Richard?
All right. Good afternoon, ladies and gentlemen. Thank you very much for joining us and to everybody online. Not sure where you are in the world, but good afternoon or good evening. I think it's a real pleasure to have you with us today. This is going to be the first session of a few that we plan over the next coming months. Today is very much just a high-level overview of the strategy that the team, ourselves, and the board are looking at for the next couple of years for the company. As we move a couple of months into the year, we'll also be having a couple of market days where we do some deep dives into the projects and the operations that we will be sharing with you today, both in South Africa as well as on the international operations.
We will certainly let you know about those going forward. Thank you again for being here today. I think just to kick off, we have a rather simple agenda that we have just heard at least for the safety side from the evacuation perspective for the JSE. Within Sibanye Stillwater, we start all of our meetings with a safety share. I think very privileged that our chairman today, Dr. Vincent Maphai, has kindly offered to do the share for us. With that, if I could just briefly hand over to Dr. Maphai for that safety share. Thank you.
Thanks, Richard. Good afternoon, everyone. When Richard asked me to do this, I thought I'll use it as an opportunity to share an observation. I've made and a perception of myself as a sucker puncher . Three things strike me. I work for alcohol. I was also associated with gambling and with banks, but not with cigarettes. What's interesting about these four is that they are always held responsible for any disaster that happens. We are responsible for all social problems. For us in mining, people don't recall that in every room they are, whether it's in Sandhurst or in an informal settlement, you are surrounded by products of mining from your roof, your electricity, everything. I think there is a reason for that. In our case, our products are not very visible. What people notice about us is when people die underground.
That's really our vulnerability. Nobody associates anything in this room with us, except maybe analysts. Outside there, we are seen as killers of people. This is something that makes us very vulnerable. As I say, in those industries I've mentioned, all of them are held for one tragedy or the other. I'm very privileged today in the presentations where we are dealing with a topic that defines. Who we are, our strategy. I'm delighted to be here. Before we talk about capital allocations, about returns, about growth, let us talk about the point I made earlier. Our safety. It is important. It is our priority. Safety is and will always be our number one priority because it underpins everything else we do. It's essential to our operational delivery to workforce engagement and to our perception by public.
Ultimately, it is the core of our sustainability. In other words, safety is core for our license to trade. Even more than our license to trade, it is a moral imperative because we are talking about lives about people. We have seen meaningful improvement in our safety performance over the years. That is encouraging, and it demonstrates our increasing discipline in our operations. However, we are very clear that positive trends and statistics do not diminish the pain that comes from fatal accidents. Safety is not our aspiration or a target. It is absolutely non-negotiable. It is a desperate imperative to us. We believe that every fatality is preventable. There's nothing ingrained about it in the work we do. Every employee and all of us at Sibanye have a right to return home safely.
As investors, you will rightly assess us on our ability to deliver predictable performance and sustainable returns. We believe that you also value strong safety culture in our work, and we do not regard safety culture and our strong performance as contraries. In fact, safety is a prerequisite for it. As we go through our strategy today, we ask you to see safety as the foundation on which our performance and long-term value creation are based. It is a mindset we carry into every decision we make, every action we take every day, because nothing is more important than that to us. Thank you for your attendance, and we look forward to your participation. Thanks.
Thank you very much, Vincent, and I think if ever there was a question that safety percolates throughout the entire organization, I trust that that has been answered. Just before we jump straight into our agenda, I guess firstly it does go without saying this is a strategy presentation. So, we have a lot of forward-looking statements. Please do read through the safe harbor statement at an appropriate time. Before we jump straight in, I thought it might be good just to share with you our strategy that we'll be discussing today is really focused on the next couple of years of where we're going to take the business.
Of course, as a management team and as a board, we have given some real thought to where could the business be going in a second chapter of this phenomenal company called Sibanye Stillwater. Where do we think it might be in the next five or 10 years? Some of this informs some of the short-term thinking. Just to share with you a little bit of that long-term vision. Really, we have a strategy about building a future-focused metals business. The world around us is changing rapidly. The way mining companies have operated for the past few decades is not going to be the way they operate going forward. Capital has changed. Supply chains have changed. The type of metals that you're wanting to be mining has changed. In fact, it's not just going to be about extracting metal onto an exchange.
It's going to be about inserting yourself into value chains. That excites us. This is a very rapidly changing world that's going to be different. We don't see it as a challenge. We see it as a massive opportunity. We're developing a strategy that will be underpinned by performance excellence, and I'll unpack that today. Spoiler alert, it's boring. It's back to the basics of good business. That's really where our focus is going to be. We're also looking at ultimately positioning ourselves to look at metals that will power clean energy and ultimately. In fact, just total energy demand of the future. This is one of the mega trends that I think will be driving the next super cycle in commodities. Very much still underpinned by a precious metals base which again, we'll touch on a little bit later.
One of the things where I believe we have a real strength and an opportunity going forward, and that's why we call it more of a metals business than pure mining business, is going to be how you deliver those metals into the market. There we have a model that we've embraced called our Resource Stewardship Model. We have three sources of metals that we provide the market. One is our primary mining, the other one is our secondary or waste mining and recycling. Why are these critical? I often get asked the question, how do we see all of these coming together? Let me start with primary mining. Today, a lot of the discussion around the world as we're seeing the geopolitics is around how we're securing metals for our own countries, our own regions. It's all about security of supply.
What's being missed is while we're trying to carve up the pie, is we better grow that pie. If we don't grow that pie, there's not enough metals for us to continue the livelihoods that we've come to know on this planet. Primary mining is the only way you can grow that pie. That's critical to our strategy. Secondary mining is probably the only form of getting hold of a metal where you can actually have a net positive environmental impact. What do I mean by that? These are dumps that have been mined already. They're sitting on surface. As we get better at processing, as we get better at extraction, as we get new technologies or economics change, we can actually extract metals out of those already mined dumps very profitably.
We'll show you some numbers on DRDGOLD, just what that's meant certainly in the gold space, we see it happening elsewhere. Finally, recycling. I think anybody who's dealing with a finite metal in today's environment, if you do not embrace the circular economy, you are missing a significant opportunity. Not only is it the right thing to do. Today strategically, I dare say, you look at countries who are trying to secure their own metals, and those that do not have significant resource endowments, where is the first place they end up going? Recycling. It's a different business. It's a different business model. It's got different risk profiles, but it's a business we are really starting to understand and can see significant opportunity in the future as we move forward.
Today I'm going to be sharing with you very much about what is going to drive our returns today, where is our focus going to be in the next three years. Please be assured that we are very excited as well about how we're going to position our business to truly deliver into a very different world and the economy that we anticipate coming tomorrow. I think whenever we are looking at strategy, it's always a good idea just to look backwards briefly and understand where you've come from. What are your strengths, what are your weaknesses, what have you learned? I'm going to assume most people know a bit of the history of Sibanye, so I'll go through this relatively quickly but just in case.
If I had to try and classify our journey to date over the last 13 years into three words, it would be entrepreneurial growth story. That's what our company has been about. We started off life with three gold assets, deep-level, high-cost South African gold assets. Through that, through a combination of good operational skills, applying good, solid, sound business models, as well as some very transformative M&A, we've built the company that we see today. Started off turning around gold assets. We used that operational model into PGMs to turn around PGM assets. We used the PGM assets to take our first step globally. People have often asked me about the Stillwater operation, let me repeat it again.
If you're a major producer of PGMs, but they all come from South Africa, Zimbabwe, and Russia, owning the only significant PGM operation outside of those regions is a real strategic advantage and something we're incredibly proud to have within our portfolio. One of the interesting things when we got into PGMs, though, was we studied the market. What we realized in studying that market was cars were going to go electric. I should note this was back in 2014, 2015. The only person who was making a lot of noise about this at the time was Elon, quite honestly, he wasn't given much credibility. We recognized this trend was coming, and that was the birth of the battery metal strategy. This was not about hedging against PGMs.
This was about recognizing that there was going to be a fundamental growth opportunity. The very customers we were delivering PGMs to would be the same customers who wanted battery metals, and we could offer a solution for them. That was the beginning of that strategy. We acquired the Keliber operation in Finland the Sandouville Nickel processing plant in France, and we had a look at a couple of others. A nickel operation in South America and a lithium operation in North America, which we ended up walking away from. In parallel with that, I think we started embracing our resource stewardship model. How was that born? We had significant resources on our gold operations in our tailings in South Africa. Resources that could sustain us for 30 - 40 years. There was a company who specialized in this called DRDGOLD.
Together with them, through vending those resources into them and taking a position, we've built up a substantial secondary mining business with DRDGOLD. Have subsequently expanded that into our PGM operations, which we are looking to grow, as well as taking a position in a company called Century or acquiring a small company in Australia called Century Mining that was zinc. What came with Stillwater that was quite unique and I think a little bit of a hidden gem was that at the time we acquired it was the largest PGM recycler in the world. That gave us an incredible insight into what is effectively 30% of PGM supply globally comes from recycling. We started understanding that market. What drives that market is very different to primary mining. We started realizing the importance of what recycling was going to have.
While most of our peers see recycling as a significant threat, we embraced it as part of our business. Getting to learn and understand that is where we then branched out further with the acquisitions of Reldan in the U.S. 2024, and Metallix last year. These are very specialized recycling businesses that I dare say have got a huge strategic opportunity and will have an impact on our business going forward. It has been an entrepreneurial growth story. We can look back on it from hindsight's 2020. Some things worked spectacularly well, much better than we ever thought they would. Some perhaps not quite panned out as we thought. If there's one thing that you cannot deny about this story is had we done nothing that's the company we would be today.
We would have about two years left at Driefontein Gold Mine, Kloof would have closed, Beatrix would have closed, and we would be busy closing Sibanye Stillwater. What we actually have is almost 3 million ounces of equivalent precious metals production. Let me put that into perspective. That is comfortably in the top 10 of all precious metals companies. Largest new mine at 6 million, you quickly come down. I actually think we might be in the top five but I couldn't quite verify that today. This is a substantial business that's been built. I think when we look forward, a profile that still gives us 2 million ounces after 2040 is a profile most people would be envious of.
The implications for us and what we are proud of and I believe very fortunate to have as a management team is we look at that profile and say, we don't have to continue on the aggressive entrepreneurial growth route that we had to undertake during the last period. We've got a huge amount of value sitting within our portfolio and how do we unlock that going forward? That will be the strategy. I'll discuss with you today. I think many of you will be familiar. I mean, we have diversified the earnings. That's helped us through difficult cycles and different cycles. We've always said we'd like to maintain gold in our portfolio because the rest of our metals are industrial. Typically, it's supposed to be countercyclical.
Who would have ever thought we'd be sitting here today with both of these precious metals rising at the rate they are and we're getting exposure to both? We have ended up with a pretty extensive geographical footprint through this period of growth. I think in some ways, quite strategic. In many ways, we recognized when we got into battery metals that you could follow one of two routes. You could mine and concentrate metals and ultimately sell it to the East, which is the common model, where they are beneficiated, fabricated, and sold the rest of the world. Or we could go a step further, do our own beneficiation and fabrication and try and sell towards Western supply chains, where we saw ourselves being far more competitive. We have positioned ourselves for that.
The second point to note on there is South Africa remains very dominant in terms of our earnings. South Africa is a country we are comfortable to operate in. We know how to operate here. We've made significant value and that will continue to form a significant part of our base as we move forward. While we have a lot of optionality, arguably, we could look at how to optimize that footprint to align with our strategy going forward. Then finally, I think just to say, part of what really attracted me to Sibanye, and I think so many of our leadership was back in 2013 and 2014, we defined a model that we called shared value for all stakeholders. Today, I think that's something you see in most companies' strategies or documents. Back then, it was quite unique.
It was still very much companies were there for shareholders and shareholders only. We recognized how important this was today's stakeholder capitalism. Not only did we talk about it, this has become the ethos of the business, and we've delivered on it. Our shareholders have got phenomenal returns. We've invested huge amounts of money in our communities. It's not about the money, though, I think. When we look at that, what does a 600% return mean? It means people have retired more comfortably than they would've, we not delivered on this. What does ZAR 30 billion mean into our communities? It means we've put kids through schools, we've built, we've put teachers into and given them the opportunity to uplift themselves. That is a modern mining company.
The strategy I'm going to describe today again, if I had to just pick three words to describe it's about unlocking unrealized potential within our existing portfolio. Let me try and give you the executive summary on a page, and then we'll unpack it. I want to come back to the ethos of the business. This will not change. This is who we are as a company. This will outlive any managers. This is who we are in terms of our Umdoni tree. Our values remain the core of the company, and our entire purpose is about value creation for our stakeholders. I think as our chairman so aptly said, our purpose is actually about delivering metals that are going to improve the lives of people and the planet. Mining is what enables us to live the lives we live today.
We can do it in a way where those metals not only improve our lives, but in a way that the planet is protected at the same time. The first part of our strategy is very much around strengthening our fundamentals, performance excellence, as we call it. We'll unpack that a bit more but it's a holistic look at the business and how we can run that holistically. Very simply put, it's about increasing our operating margins by focusing on the basics of our operations. It's about increasing efficiency of how we work through applying a new and appropriate operating model, and it's going to be about simplifying our portfolio again, to get focus and return on capital into the right place. Ultimately, all of that to be successful does need to be underpinned by the right systems.
We will be looking at technology and how that can help. Again, it is about our and these might sound like soft factors, but what pulls things together, we are a labor-intensive business. We're about people. We're a people's business. It's about our performance culture and our culture of care that ultimately will enable the strategy to be delivered. We are successful on that, and we certainly believe we will be. We have the opportunity to solidify our business essentials, and fundamentally today that is our balance sheet. We will strengthen our balance sheet by reducing our total gross debt, and we'll have a disciplined capital allocation model that looks at returns to shareholders, that manages our debt, and ultimately looks at growth and how we can move forward. Get all of that right and it'll give us the flexibility to position ourselves for that economy of tomorrow.
Our first focus will very much be on organic projects. We'll go through which those are in a second. Of course ultimately, I think entrepreneurial growth remains in our DNA. It will be part of the company as we move forward in the longer term. We will look to continue to build on this resource stewardship model we have built. We'll share with you a little bit of the geographies where we believe we do have a competitive advantage. Then on the metals again, I think we very much are focused on having a precious metals underpin and looking at how we can grow into the more, I guess, what is commonly called critical metals today that will facilitate clean energy in particular going forward.
The reason for that is I think many of these critical metals are actually quite difficult metals to build businesses off. We're seeing many people trying to do it. Small projects, short life of mines, rapidly changing supply dynamics. To have that critical underpin of a precious metals base is a way I believe that this can truly be unlocked in a value-accretive manner. The context that we're operating in, I think many of you will be familiar with and I don't need to spend a lot of time discussing the geopolitical fragmentation. Again, it's something we picked up probably five years ago and started talking about in some of our presentations. Multipolarity, we called it. We had to explain what that was. I think today, fully understood. This is changing the way we're operating. It's changing where we find capital. It's changing the supply chains.
It's changing who we can sell our metal to. It's changing where we're going to build our mines. Life is becoming far more complex in this world. I think we all know overall, growing middle class, boost for commodities across almost all of the commodities. Then tied up with that geopolitics, I think the regulations reshaping value chains. This is where I think we have again, very distinctly made some key strategic decisions. Almost all of the metals we produce, we take through to a final product. Our PGM, we mine to market,. We produce refined metal. When we built Keliber a key consideration in building Keliber is do you produce a spodumene concentrate that can get shipped to the East or do we build refining capacity for a final product? Sandouville actually was part of that thinking as well.
A nickel refinery was part of getting to that end product. Why is that important? Because it allows you to deal directly with supply chains. It allows you to offer a product into supply chains as to what they want. Today we see how beneficiation is being shaped. Resource-rich countries want beneficiation. Countries without resources don't want mining, want minerals in, want beneficiation, becoming a key strategic advantage to mining companies, and hence my comment about a metals business going forward. Growing energy demand, I've touched on. Then technology. Technology, a bit of a two-edged sword. Certainly, it's got real benefits in terms of helping us run our business more efficiently, but the rate at which technology is changing the demand for so many of these critical minerals, we all know mining cycles.
10 years to find, 10 years to build at least 20 years to get a return. That is not the rate at which technology is changing today. If as producers of these metals, if we can't get our heads around how to manage that volatility, we are not going to be able to grow in the economies of tomorrow. Moving on to our strategy, I guess certainly for the next couple of years, we define it by four pillars: simplification, performance excellence, growth, and capital allocation. We'll unpack each of these. Talking about simplification, and I think five years ago, we had a model as a company, we were very much about growth. We had strategies in different regions. Our strategy was to grow a significant battery metals business in Europe. Our strategy in South Africa was very much about our operations producing cash.
Our strategy in the U.S. was mixed between operations of Stillwater and growth and recycling. As a result, we set up decentralized regional teams, essentially to run their own strategies in line with that business model. I think today with our focus, what we are going to look at is a slightly hybridized model where we still have decentralized teams on operations, very much empowered to run our operations, but operationally focused. We will look at opportunities where we can centralize some of our group services to realize synergies. Then we were looking at a complete centralization of all things growth-related. How do we rank our projects? Number one. How do we look at capital allocation? Number two. Critically, also developing project skills within the business.
I think when I talk about growing that pie, and when I talk about a lot of the metals of the future, these are not metals that are currently being mined. Many of these will require new resources, new ore bodies, and new mines to be built. Certainly, we see the development of that project skill as a key driver for our strategy going forward. The benefits of doing this, I think we have a far greater focus across the entire team on operational accountability and operational delivery coming back to that core starting point of driving higher margins. Of course, it's about efficiency and cost saving through synergies. Ultimately, how to get agile decision-making on the ground.
We do see some opportunities in terms of the productivity improvements just from changing this model to increase our revenue or production by about 2.5% over the next 12 - 18 months, and to realize about ZAR 3 billion in cost savings through the new operating model. I think of course, when it comes to centralizing our growth amongst the group, the ultimate objective is to increase our return on the capital that we invest and deploy as well as developing project execution as a core competency within the group. I think I'm extremely lucky and proud to have a very experienced team who's been with the business for a long period of time. As you can see, our new model does reflect delivery. Structure follows strategy. This does reflect the strategy that I have outlined.
What we will have going forward is recognizing South Africa as the key base that I mentioned to you and the importance of the South African operations. We have dedicated operational focus in South Africa, and that will be looked after by Richard Cox. The new model, as you can see is no longer a Chief Regional Officer, which was essentially a regional type of CEO. It is rather a COO model focused very much on operational delivery, and Richard will be looking after the South African operations. Charles Carter will take over looking after the international operations, which will include recycling. Then Ralph Lombard will be stepping up to look after projects specifically, and that's projects going all the way through the value chain from pre-feasibility into execution and building that capability that I have discussed.
On the right-hand side are our support functions, starting off with Rob Niekerk. Rob's previous role was Chief Technical Officer. The T has actually changed in this one. He's now going to be the Chief Transformation Officer. Rob will have two separate focus areas underneath him. The one is he's still got a core technical team, and that core technical team will be going through all of our operations and looking at how we can optimize the long-term strategic extraction of those, and I'll touch on those in a second as well on that part of the strategy. In addition to having effectively subject matter experts in his team who will provide support to the operations.
Themba remains as our Chief People Officer, Melanie as our Chief Sustainability Officer, Mika will be taking on a new role for the next year, in terms of Chief European Advisor is what that stands for. Currently, Europe is critical to our success around Keliber and how we integrate that into the European strategy regarding securing their own critical metals for batteries, Mika will be heading that strategy for us. I was very happy to have Mdudu join us in October of last year. Mdudu will be taking on the growth portfolio, but I think please read those words underneath growth there. We're actually talking about a role that needs to optimize our portfolio. It could be about capital allocation, it could be about divestment where that's needed, and of course, also looking at the longer-term growth that I outlined earlier.
Charl, under this strategy of course, he's key driver really around the disciplined capital allocation. Just in terms of the portfolio simplification and how we're thinking about that, we are currently going through a process where we are looking at every single one of our assets. We're putting that through a process that I don't think would be new or terribly different to what many people have done in the past. Putting it through a process of looking at how does this any of our particular assets or projects align with our strategy in terms of geographies in terms of commodities in terms of whether or not we can add anything competitive to it to add value or if it adds any competitive advantage to us.
Of course, looking at projects on normal project economics, we have developed very strict criteria on hurdle rates as we take projects through their development stages. I've mentioned a couple of times how capital is changing. The old historical way of thinking of just equity, vanilla equity or vanilla debt, the type of capital we see today is very different. People upstream coming in and funding projects, different project structures, sovereign funds getting involved. There are multitudes of capital options, which we will look at with some of these projects as well to see whether or not there's an optimal way to fund these if it doesn't fit our balance sheet and capital allocation. Of course, an ultimate measure is it generating cash flow for us today or in the near future? Finally, value realization.
Naturally, if we think we can realize more value by exiting an asset today than what we can in the future that is of course, something we will look at. Where are we today? Much of this is still ongoing work. What I can share with you today is what do we classify as being a strategic priority. To put that very simply, these are operations or assets that have found their way underneath the COO, and therefore, they are gonna get the attention of that COO to drive that operational excellence we discussed. South African gold is a priority, and that includes Burnstone. South African PGMs is certainly a priority, and that includes the projects that I'll be discussing today. Keliber Lithium is a strategic priority that we will be developing going forward.
When we look at our secondary mining, DRDGOLD remains a strategic priority for us. We don't manage it, of course. It has its own management team. That remains very strategic to the business, as does the responsible mining of Century Zinc for the next 18- 24 months as that comes to a close. Our recycling operations, which are currently being consolidated into a single business. That leaves the other projects. We are evaluating and reevaluating carefully. I think many of these, some of these have got feasibility studies which are currently being completed. A project like Mount Lyell, copper project in Tasmania, very exciting project at the moment but we need to complete a feasibility study, which will be done this quarter to understand what does the economics look like and how it fits in with the strategy going forward.
I think clearly from what I've been saying, some of these others are not necessarily within our strategic priority, and those we need to evaluate what is the most responsible way to realize value going forward for those assets. What we hope to achieve through this portfolio simplification. Of course is a focus of our resources, our human resources, our management resources, focusing on those assets that are generating the best returns and cash for the business today. Financial resources, where are we investing capital so that we can maximize those returns and of course a portfolio that's aligned with a more focused strategy as we move forward. Any exits that are or divestments that are realized of course will crystallize some immediate value for the company. Looking at performance excellence as I mentioned, when we talk performance excellence in the business this is about holistic improvement.
I think we've heard the terms operational excellence coming in more and more recently this is really about looking at the business as a whole I dare say you heard from our Chairman today about the importance of safety. Without a doubt, our initial milestone that we absolutely have to hit in safety before anything else is elimination of fatal incidents. That is our first and foremost commitment that we continue to drive with an absolute passion. Operational excellence once again, I'm not gonna spend a lot of time on here. I don't think this is rocket science. I think this is things you've probably heard from any business. It's about focusing on productivity. It's about focusing on cost efficiency. It's about consistent and reliable delivery, and it's about executing on your capital plans.
Resource optimization is possibly the one where I see a lot of opportunity for us that we haven't necessarily done in the past. Today, we've got extensive resources. We've got less than a 25% conversion from resources to reserves. We also haven't really spent a lot of time strategically looking at these assets to say, how can we optimally extract them? What I mean by that is when you think about mining companies, we all know the easiest way to reduce your unit costs is to mine more. We all want to reduce our unit costs when prices drop, which means we mine more when prices drop, and you actually end up mining more at lower margins. These are the trends that need to be reversed. You actually want to mine more with higher margins and less lower margins.
Do not extract a finite resource when you're not making money. How do you tactically get that embedded within your operating psyche, within your planning, and within your flexibility? That is resource optimization, and that is something that we're going to be driving hard going forward. Finally, sustainability. I think we, again, as geologists, as engineers, as miners, this is the soft, fluffy stuff. It most certainly is not. We hear people talking about social compacting. This is something we are doing. It's not just something we talk about. You take our Good Neighbor Agreement in Montana. This is a legal agreement between us and the neighbors on our property. What does that mean? Montana's probably the only mine in the U.S. that has not had any legal environmental action against it in two and a half decades. That's got an impact on the bottom line.
That's sustainability, something we take very seriously and drives so much of the business today. Again, the last soft, fluffy stuff, but it's not. These are the people of our business. The strength of our tree is our people. Continuing to foster a culture, a culture of care, a culture of performance, and a culture that embraces what I call the Sibanye spirit, the entrepreneurial part of the business, is what will enable us to deliver on this strategy. Looking at the growth side, I think, as I've mentioned, the best opportunities we see for growth at the moment is within our own portfolio. Within that portfolio, the highest priority will be at our South African PGM operations. Worth just stepping through this a little bit.
For those who are not familiar with these operations, they comprise three separate companies that we acquired and put together, the intent of acquiring contiguous operations was very intentional. On the right you have what was the old Marikana operations or Lonmin. Today, we call Marikana. On the left, the Rustenburg that belonged to Anglo Platinum, now Valterra, and then the Kroondal operations following the shallow mechanized mining on this part. When we put these operations together originally, when we acquired them back in, I think ranging between about 2016 to 2018, we were able to realize about ZAR 3 billion a year's worth of synergies. That initial round of synergies came from cutting overhead costs and optimizing infrastructure, optimizing concentrators, et cetera. That was the first round of value that we saw.
In fact, if we hadn't have done that, I dare say many of these operations would not be around today. Those synergies are what made them survive the downturn. Where another round of value exists is by being able to drop those mine boundaries, and I come back to that resource optimization piece of the performance excellence. How do you drop mine boundaries and optimize the extraction of this resource in the most profitable way? In order to truly unlock that, we had a couple of last little hurdles we had to jump through. The Kroondal operations were in fact owned 50/50 between ourselves and Anglo American, now Valterra. We needed to own those 100% to utilize that infrastructure. We concluded that transaction in 2024. We bought those operations for a rand and picked up the historical liabilities with it.
What that unlocked is most of these operations at Kroondal are reaching the end of their lives and mining down towards the boundary. Challenge with mechanized operations is the deeper you go, your productivity levels drop off simply because of the time taken to get people underground, their working faces. What we have on the other side is a vertical shaft. You can put people down vertical shafts very efficiently and very quickly. By linking a vertical shaft to the deeper portions of Kroondal, you can now get people underground and take productivity levels up exponentially. That also means you can mine resources of Rustenburg now in a mechanized manner that were never even contemplated being mined before because you could not access it through conventional vertical infrastructure.
We have just unlocked a significant amount of resources, UG2 resources, mine mechanized, that were never previously considered and could not be considered because of mine boundaries. That's the value of putting contiguous assets together. Likewise, when we look at Marikana came with a rather onerous chrome contract. Again, when we look at PGMs, particularly in difficult times, it's often chrome that is actually the savior of those assets. Chrome is what carries it through when PGMs go through down cycles. Through extensive engagements with Glencore and the Merafe JV, by pooling all of our chrome assets, we've been able to come up with a model where we can realize value at Marikana for our chrome a lot quicker. What that's done is give us the confidence to start opening up what I would argue are the best shallow resources in the entire PGM industry.
These are not depth extensions. These are shallow resources on strike, mined from surface in a mechanized way. To put this into perspective, the UG2 today, which was always the poor sister to the Merensky Reef. Today, because it contains rhodium, iridium, ruthenium, and chrome, on our operations, has anywhere between a 20%-30% higher revenue per ton than the Merensky. These are the ore bodies of the future in PGMs, and we have got four mechanized projects that we are looking at implementing across our existing operations, not yet looking at the rest of the open area that hasn't been considered. The last piece we had to unlock to really optimize the timing of these projects was processing flexibility.
We do have our own processing facilities, but we have very recently been able to renew the tolling contract we have with Valterra, and that gives us significant flexibility on the timing and how we can bring these projects to book. This is what a profile could look like. Some of these projects we actually— I know we often hear about investing through the cycle, and people have been quite critical about not investing through the cycle. We have been. Through the cycle, we've invested in Q4. That was the original profile when we acquired these assets, the gray, that we put out to the market. We have through the cycle invested in Q4, which is here, the light gray we see. We very recently towards the end of last year, announced that we're starting with what we call the Siphumelele mechanised Project.
That's that vertical shaft I spoke about, which is the first line. Here are the balance of the projects which range from pre-feasibility and feasibility study that we will be looking to progress. Assuming that meets all the hurdle rates, and of course goes through our capital allocation framework and gets approval, these projects would ultimately sustain about a one and a half million ounce production profile for the next 10 years for our company. Which when we look at where the PGM markets are going and our view of the PGM markets, that for us is an ideal position to be in terms of these assets. As I've mentioned, we've done some comparisons to capital intensity here, and that's just comparing to other brownfields mining projects. These are low risk. We understand the geology. They're extensions of our current mines.
They do not require any additional surface infrastructure or capital. These are probably the lowest capital, lowest cost new projects that can come online within the entire PGM industry, and they can come online fast. I think looking at our gold business, and here I would like to just step back for a second. I showed you the slide up front where we should have been with our gold assets. Beatrix should have been closed, Perth should have been closed, and Rietfontein we would be wrapping up today. In fact, we still have almost 10 years of Rietfontein. We've just opened a whole new area at five shaft on the VCR. Rietfontein is still a reasonably long life asset. The reason I raise this is these assets are inherently becoming more difficult to mine. These are big fixed infrastructure operations.
We run big vertical shafts, big cooling systems to run them. They have got big fixed costs, and they no longer have the flexibility that they had 10 years ago. That does mean that when things do go wrong, they have quite a significant impact. That is the reality of these mines today. But where the gold price is today they are generating significant value for us and they will continue to generate significant value for us while these prices remain where they are. We've kept these operations going, and not only have they added huge value to shareholders, they also still employ about 25,000 people. In a country where our dependency ratio is 10-1 , that is looking after a quarter of a million people, that is responsible operations and we will continue to mine them for as long as we can.
Recognizing these are tough assets, they have gone well beyond what anybody ever imagined their useful and valuable life would be. Riebeek west, in particular, we do still seeing having a significant life. How we see our gold business in South Africa is actually transforming over the next five years from what has historically been deep-level, high cost, difficult mines to operate, transforming into a much shallower, higher margin business over the next few years. That comes in through our exposure to Durban Roodepoort Deep Gold. As I mentioned, I think that is probably been one of our most successful investments, both from a production and a financial perspective. Today, DRD is worth, in total, I think we invested about ZAR 2 billion to get our stake in DRD. Today, it is worth ZAR 27 billion to us.
More importantly, we have exposure to a 40-50 year life of mine of a substantial low-risk gold business. We also have the Burnstone operation. Shallow, could produce at about 120,000-130,000 ounces per annum. Burnstone has been going through a full review, and that review will be completed during the current quarter and ultimately towards the end of this half. We will look at an investment decision on Burnstone. Then we have other conceptual projects. Some we have been working on, our Cooke tailings dam, gold and uranium project. I dare say uranium, another commodity we said we would get excited when uranium went through $60 per pound for that particular project. We have sustainably been above $80 for the last couple of years. An exciting project that we are also finishing a feasibility study on.
Then we have some significant shallow resources in the Free State. These are resources that we have not looked at for many years. We actually acquired them back in 2014, and we have not looked at them because growth gold in South Africa was just not on the table. Shallow gold in the current environment. I dare say, definitely deserves being dusted off. With where we could see a business potentially with all of those is not too dissimilar to what we have had in the past, but a shallow a very different profile to that gold business from where we have been. We would like to continue to grow in gold. Clearly, today is not the time to be considering external gold acquisitions, but down the road that is always a commodity which we would like to hold in the portfolio. Then I think finally, Keliber.
Keliber for us is a very strategic asset. Why do we say that? When we look at processing capacity of lithium outside of China, more than 70% of all lithium processing capacity sits within China. In fact, across the whole of Europe, there are only two other refineries, and they are standalone, one in Germany and one in the U.K. We have the only project now that has been built that is mined to refined final product of lithium within the EU. It has been declared a strategic project, and I dare say with the rising discussions now. Europe, the EU has never been closer to starting to take some real action to develop its own supply chains of critical metals, and we sit in the middle of being able to offer that, particularly for lithium. We have come to market.
I think we said last year that we would look at a responsible way to ramp up this project. What did we mean by that, and where have we landed? A responsible way meant clearly we had to take account of the markets. This is not about trying to perfectly time the lithium market. The lithium market has been under pressure. I think a very clear message was, unless we can yet support ourselves as a company, taking on that level of risk, against China, who essentially had been oversupplying the market, was not a risk we were prepared to take. Was there a way we could start it up a bit more responsibly in a phased manner?
I think through a very detailed set of work that's been done by technical teams, by commercial teams, looking at sales options, what we've effectively come up with is a way we can start up the project in phases initially with the mining and the concentrator. We have already commenced slowly with the mining. We'll be looking at commissioning the concentrator, in the third quarter of this year. That gets us to a point where if we wanted to. We could in fact stop there, and today, in today's market, be commercially viable at settings. What do you mean concentrate, if that's the level we want to go to. Depending on where the markets are at the time, we could commission the refinery and take that to an initial step of producing a technical grade lithium hydroxide.
In fact, that in its own right, lower cost, lower risk to get to that point, that is commercially viable in today's environment. You can go the whole way to producing a battery-grade lithium hydroxide, which of course is the end point. We are now able to assess each stage before we commence with it. Certainly the first stage that we are starting with now, we see as relatively low risk and we'll commence with that commissioning. Well, we have commenced with that commissioning from the beginning of this year. With all of this, I'm sure a question on everybody's mind is can we afford this? We will be coming onto capital allocation. If we look at the capital profile, the gray bars based on our 2024 life of mines, those will of course be updated within the coming months.
Those are the projects that we have already committed capital to. Essentially the K4 project at South African PGMs, Keliber in Finland, and more recently the mechanised Siphumelele project . The orange is the projects that are at a feasibility study level and I think you could say we've got a pretty high confidence those are gonna go ahead. I would not have been discussing them today if we didn't believe that we'd be pushing ahead with those projects. Of course, they do need to go through our necessary approval frameworks. Then the not yet at feasibility, either conceptual or pre-feasibility projects, if we were to develop all of them that is what the capital profile would look like. This is not a capital profile that is very different to the past few years that we've had.
It's not like this growth has a significant capital hump immediately ahead of us. It's very much the type of business that we have been running for the last few years, I dare say in much tougher economic times. How will we assess external growth? Our focus is very much on the organic. That's where we're going to be going. How are we thinking about external growth as we move forward? Well, as I mentioned. I think very much still a precious metals underpin, and then looking at those commodities that will enable, particularly the energy transition. We do still look at our three pillars. We will still be driving, recycling, primary mining, and secondary mining. Of far less of a priority would be standalone smelting and refining. That's not really a business we're into. Manufacturing of any sort of product or commodities.
Those are areas we would either look to realize value for or form partnerships with. The geographies we're looking, primary mining, I think we do believe we have a real advantage in South Africa. We understand operating in sociopolitically complex areas. We understand hard rock mining. We understand underground mining. We know how to run those operations. Both here and within Africa, we see significant opportunity to look for the metals that are needed. Doesn't mean we will not, should opportunities arise in other jurisdictions, consider them. We do not necessarily see a significant competitive advantage we have in those regions unless something comes up that suggests otherwise. On the recycling, we'll very much focus on our existing footprints and develop commodities where we understand those supply chains, we understand the businesses. We also crucially understand the importance of responsible sourcing and recycling.
Critical that you are driving responsible sourcing. We've been part of designing responsible sourcing policies across the world, regulations across the world. Key aspect in recycling easier to implement in developed countries. Secondary mining again, we have had a look across the planet. Where do we see a lot of Tailings Storage Facilities, a lot of rock dumps, where there is potential to apply new technology to extract real value? Africa, North America, and Australia all come up favorably in those jurisdictions. Finally, to deliver this, I guess how are we thinking about capital allocation going forward? Again, I think a very simplified model. Shouldn't be surprising to anybody any net cash we will generate from our operations, we have two let us call them non-negotiables. That is the money we will invest into sustaining our current operations.
In other words, delivering the life of mines and the basis of what underpins our equity value today. We also do believe in keeping a buffer of liquidity, roughly two months' worth of capital and OpEx, for which we'll retain a bit of cash to ensure we have that flexibility. The balance, we are looking at broadly three buckets in equal proportions, shareholder returns, debt reduction, and growth. That available capital allocation is pretty close to what we already call today in our dividend policy. We talk about returning 25%-35% of normalized earnings. That is our dividend policy today, normalized earnings, pretty close to that capital available, not a significant change in that regard. When you think about our debt, we have historically said that what we want to target on our debt is manage a net debt to EBITDA of below one times.
I think in today's environment, we are comfortably below that. Certainly, we have seen that when times are tight through the commodity cycles, that has been a little bit uncomfortable. As a result, reducing our gross debt, and we've set a target of reducing gross debt by about 50% over the next two to three years is certainly part of our capital allocation strategy moving forward. If you look at that broad makeup, when we put this plan together, which was at prices lower than where they are today, we could comfortably see for the next couple of years being able to meet all of those requirements comfortably on our capital allocation. Ladies and gentlemen, I think this has been a huge amount of information that we've dumped on you today. I'd actually like to use the last couple of slides to try and summarize it.
If there's a couple of points I would like you to take away and just think about, what is the strategy? How should you be thinking about us? Quite frankly, what is 90% of our internal executive meetings looking at and discussing? It's the following. We have come through a period of phenomenal growth. The history of the company I'm proud of has set us up in an unbelievable position to look at huge optionality as to how we can take this company forward in a second chapter. A lot of that optionality is first, how do we realize the inherent value we have within our existing portfolio? We've looked at the world around us. We're excited by the change that's coming, and we can see ourselves building a modern metals business moving forward. As a first step, it's about driving our margins through operational excellence.
It's about getting stability on our balance sheet, and it's about value accretive growth predominantly from our organic projects. We've set ourselves some hard numbers that we would like to achieve through this, some real value realization in the very short term. I think this is often quite an interesting one. When we looked at this and built it, commodity prices were nowhere near where they are today. That's almost one of the risks we often fall into. When commodity prices go high, you start losing touch with some of these small drivers, but that's the real value that gets driven when prices are low. That's the discipline we've got to help hold ourselves to continue to driving a tight and efficient ship. We see an opportunity to increase our revenue base without any investment.
That's no investment considered or any changes, just through our new model by about 2.5%. Of course, when you do the numbers that flows straight through onto the bottom line. We can see about ZAR 3 billion in cost savings through our new operating model. Through a much more focused and centralized focus on growth and capital allocation, we certainly look to improving the return on capital we employ as we move forward and potentially some value realization from assets that's not solely within our control, but certainly something we will be looking to realize. The projects, the organic projects that I've shown you, just the feasibility versions not the conceptual ones or anything else. When you looked at that profile that I put up front from where we are today at just shy of 3 million ounces to 2035, we dropped by about 30%.
That's roughly what we dropped by, which in fact is pretty normal for most companies if you go out there and look at it. Just these organic projects alone fill half of that decline. More than 15% can be filled just through the feasibility projects we are fairly confident of today. Of course, we have significant resources and over 10 years opportunity to more than fill that and continue to grow going forward. We have a very disciplined capital allocation framework we'll be working towards to ultimately continue strengthening our balance sheet. This is something I know as a management team, we look at a lot and wonder about. We know we trade at a discount to our peers. I think we sometimes think we know why.
What we really believe is that if we can drive some of these fundamentals of our strategy, if we can maximize our margins through our operational excellence, if we can increase our capital returns through our capital allocation model, if we can focus on our growth and returns through our growth, we might close some of that gap. That is pure upside in value for our shareholders. Ladies and gentlemen, I think once again, I'd really like to thank you for joining us today. I know this has been a long session. It's been a pleasure to have you with us. I'd really like to invite you to join us on this journey as we move forward in creating what we truly believe in as a high-performing modern metals business for tomorrow's economy. Thank you very much. Great.
I think we do have some roving mics happy to take any Q&A. We've got a lot of the team here today. We also have the team who couldn't be here today online. I'm pretty sure between us, there shouldn't be much we can't answer.
Sorry, can I just ask that everybody announce who they are please, before they ask a question?
Sorry. Ed Stoddard with Daily Maverick. Thanks, Richard. Very interesting. I just wanted to ask, it seems to me that if Sibanye had not have diversified, we'd all be writing Sibanye's obituary in about two years' time. It was a case of diversify or die I guess. Now that you have this very diversified asset base, your strategy now seems to be to focus on organic growth. Is that a fair summary?
Yeah. Ed, I think that's exactly a fair summary. Perhaps the only thing I would maybe tweak a little bit in your statement, it wasn't just about diversification, it was also about growth. I think, let me give you a good example around how I think about this and why we have this opportunity. Let's just take the PGM asset as an example. When we bought Rustenburg was losing ZAR 1 billion a year. When we bought Lonmin, it was losing close on ZAR 2 billion a year. The only way Lonmin could survive was with a capital hump of about ZAR 13 billion invested per annum over the next three years to get themselves out of that hump.
There was no ways we could go to shareholders at the time and motivate buying assets that required a ZAR 13 billion per annum capital hump and were losing ZAR 1.5 Billion per annum. What we were able to do with those assets was to actually cut the capital, cut the life of mine profiles, and justify the acquisition just on a much more diminished life of mine, but that we could motivate and still, in its own right, created value for that period of where we were in the cycle. We've never really gone back to say, now what? Now we've got through that. Now we've got stable operations. Now we've got operations that are making money again and we've got flexibility. How do we go back to optimize it?
We've done one or two, K4 was obvious. Now we're starting to look at okay, let's look at the slate now and how do we maximize that value, and bring that back to account. It is that kind of thinking, absolutely. We've got a huge amount of opportunity in our portfolio. It's how we bring that to account.
Yeah. Thank you. My name is Savhisa. I think for me it's mainly two questions. One is around the appointment of Mika as a European advisor. Is mainly that the reason because you've identified Europe to be more riskier than any other regions, such that you have a special person who looks after that region. The second one is around the growth and the capital allocation. You've indicated there that there's those assets that are tough because of the big fixed cost in that. Yet in the capital allocation, you're looking at reducing the debt. I think there was a number there around 50% or so. Then one then would be curious to say, what then becomes the impact of those tough assets in the working capital? Thank you.
Awesome. Thanks very much. Let me start off by saying no, it's got nothing to do with seeing Europe as a higher risk destination. Not at all. I think what we recognized is Mika just historically was the chief regional officer for the European operations. Clearly in our model going forward, that's not a role that we see. We've got dedicated focus on Keliber specifically. We do have other operations that we need to deal with looking going forward, being Sandouville, the GalliCam project. Also very importantly is how do we engage with European stakeholders and help promote the need to look at mechanisms to develop and protect their own critical supply chains. I think the European Union has realized fairly recently that they need to do this.
They've come out with lots of models, lots of proposals, whether that's got to do with stockpiling, whether it's got to do with driving local supply chains in terms of metals produced locally. There's a lot that's going on in the EU space today around how to manage this risk. What we would like to do is throw some of our highest capacities, been dealing with this problem over this next period of time to do that because we are a very material player, particularly in the lithium space in Europe. It's very much about putting the right capacity to drive that value for the Keliber project, not about a risk at all, but seeing that opportunity at the moment. I think to just talk about it, I'm guessing you're referring to our South African gold mines.
Our South African gold mines at the moment, I think the point I was trying to make, there's no new investment going into growth in those gold mines. I think they largely are reaching an end of their life and we were mining out those reserves. They still have significant value today, and as we saw on those earnings graph, and I dare say we'll show at our results later in February, these are still assets that are contributing huge value to us. I think we often get asked about them, and I think it's to acknowledge that these are assets though. Assets like Kloof, as an example is an asset that last year we made some very big decisions with regards to safety. We stopped mining certain areas from a safety perspective. The knock-on impact on that on the Kloof life of mine is significant.
These are assets at the end of their lives. We don't have other areas that we can suddenly replace with them. Therefore, we'll be looking at a new life of mine for Kloof going forward. That's the stage of the life that these assets are in. We certainly believe that we can still responsibly mine them with sustaining capital, but no growth capital or extension capital. We can still sustain those operations for a good period to come. Again, at these prices in particular, they're generating big value for us.
Hi. Afternoon, Richard Stewart. It's Chris Nicholson from RMB Morgan Stanley. Thank you very much for your presentation. Lovely to hear from you as the CEO, I think in your first big presentation to the market. I've got two questions. First question on the SA Gold. You're still using the ZAR 1,750 as a reserve price. I guess the question is we completely, I think, those of us in the market understand the context with the depth and the cost base and the safety issues. At a higher gold price, are there not further lower grade sections that potentially could come off and be mined, or do you just think of it from a broader portfolio aspect where maybe it makes more sense to allocate capital elsewhere? That's one.
Two, you didn't really talk to it in your presentation, but that wedge of U.S. PGMs grows quite materially post 2028, 2029, back end of the decade. What's the thought process there? Is that optionality around bringing Stillwater West back? How do we think about that around your whole repositioning plan and obviously with this whole multipolar world? Just maybe some thoughts behind that. Thank you.
Awesome. Chris, thanks very much. Good to see you too. Those are some great questions, well spotted. First, let me just make it clear. The life of mine, all the plans you saw here were our 2024 life of mine plans. We will be coming out with updated life of mines plans done at the end of last year. Those will be released in the next couple of months. Of course, there will be some updates to that, but that's the last publicly available information. The ZAR 1,750 that you see there, that was our reserve planning price for end of 2024. We are still planning quite conservative prices, and to be honest, I don't think a lot of the market's caught up with that yet.
The difference between planning a life of mine versus what are we doing now with prices, you're 100% correct. What we do tend to do is looking at long term. Where are you prepared to invest big capital for either growth or extension? There we use conservative through cycle prices as we see it. It will go up quite a bit relative to what we used in 2024, but it certainly will not be anywhere close to where spot prices are. In the short term, over the next 12-24 months, can we maximize output there through either accessing any other shallow or lower grade areas or add-ons? Absolutely. We push that wherever we can throughout our operations. I think you're almost picking up on what I describe as that optimal resource extraction.
Just during times like these where you want to maximize that output, even if it is higher cost ounces, you're getting significant margin for them and be able to turn those off. In fact, during the opposite time. We're absolutely looking at that, but what we don't see is any big projects per se within those operations where we'd be investing significant sort of growth type capital. For there we see that capital going somewhere else and being better spent, Chris. Are there some small opportunities? Absolutely. We will maximize those in the life of mine plan. Something like Kloof, if we were to plan at ZAR 1,750, we would be closing it tomorrow. Of course, that will not be the intention. I think we can still see significant value at today's numbers.
To touch on your second question, that's exactly what's still depicted in the life of mine. What you're seeing both in the capital profile and in the volume, was still a plan or the assumption that we would be turning on Stillwater West from 2028 onwards, I think it was. That is something that of course will be assessed. Where we are today, I think our strategy for Stillwater in particular, remains getting our costs down to about close to ZAR 1,000 pounds. Because that is where we see the through price. There is a distinct program to get there, which Charl and the team will unpack in a lot of detail at that capital markets day. It does take a couple of years for us to get there.
It is about a lot of investment and fundamentally changing the way that we're looking to extract the Stillwater ore body. Our initial focus is very much gonna be on Stillwater East and East Boulder. That is where the big revenues and drivers come on a capital basis. The amount of capital you've got to spend versus returns, that's where it will start. At prices sustained today, relooking at Stillwater West makes a lot of sense. I think what we would have to still do though is go through a proper evaluation again as part of our capital and say, when would it make sense? What's the sustained price we want to see to bring Stillwater West back online? As it stands in our plans, we have planned that capital.
If we were to take it out, it would be a drop in capital and an overall sustaining of those ounces. Basically pushed out longer life of mine, lower profile.
Thanks, Richard.
Thanks, Chris.
Good afternoon, thank you for the presentation, Richard. It's Nkateko Mathonsi from Investec Bank. I also have two questions. If you can just help us with how we should think about the cost profile of your SA PGM business. Even with the new projects, the trend is still downwards. What happens to the cost? You are bringing in mechanized operations, which should come in at a lower cost. Batho Pele, which was also a shallow mechanized mine is reaching end of life, I think by 2029. What happens to the cost of the SA PGM business? The second question is around your TSFs. I think on both Rustenburg and Marikana, you've got life of mine is up to 2026. Are you opening up new dams? What are the opportunities there? Thank you.
Absolutely. Thanks very much. I'm not going to try and give you absolute numbers on that cost profile now. What I will say is our new life of mines will be published in the next couple of weeks, I think, month or two. All of those profiles will certainly be in there with the economic models. You are correct. Listen, we do see some of the mechanized operations coming off. Batho Pele does close shortly, as does some of the Kroondal shafts. This is being able to extend that and therefore maintain those costs by continuing into Rustenburg and maintain that volume and output. That's sort of the way to think about it. There will be a slight increase. The shallow mechanized mining, that is coming to an end of its life. This is slightly deeper.
Certainly the mix in terms of conventional mining to mechanized mining, if you look 10 years out, is very different. That is where we will see a difference in terms of that balance of costs compared to the current life of mine plan, which will see costs increasing with that predominantly conventional mining, which is what you would see today. Certainly a lot of that detail will be in the new life of mines and definitely during the capital market stage later in the year, we will unpack a lot of those numbers for you. Similarly, with the deposition, that is something that's received a lot of attention on the PGM operations.
I think I did allude to, we're also looking at a big surface project, and how we can reprocess a lot of our tailings dams within the PGM, similar to what we've done on the gold side. The whole deposition strategy and plan is very much tied up within that. Again, I think we can share those details with you. What I can tell you today is deposition is not something I'm losing sleep over at SA PGM operations. That's well in hand.
Thank you.
Thanks. Arnold from Nedbank. On the gold side, DRD is clearly key to the strategy there. You don't have full ownership, but I am assuming or hopefully at this gold price, you are not looking at it, but longer term, I guess there has to be benefits to bring in the rest of that and have the full ownership. What is your thinking around that? Then maybe, sorry, a second question. On the recycling, to get your rationale around it, but those are still fairly small businesses, slightly lower margin than mining. How do you think that contributes to the valuation? Because it does also add to the complexity. I welcome the more simplified structure, but is there another round of simplification in the portfolio and the strategy, especially when it comes to some of these smaller businesses?
Arnold, thank you. Perhaps let me quickly address the recycling question. Let me say, with regards to DRD, you are absolutely right. To be clear, we have no intention of trying to take a bigger stake in DRD, not trying to generate that kind of speculation or thinking. In terms of where we go forward, you are 100% correct. If you do have a look at it today, we have DRD secondary mining at our gold business, and generating a lot of value. We are still doing secondary mining at our gold business as well, and we have projects like the Cooke Tailings Dam, which has significant value in terms of both gold and uranium. We are also ramping up.
As was the case with gold, we do these on little bitty pieces, but when you start looking at a big project and the volume and the scale of what it could be, that is where the real value comes. We are looking at that within our current PGM operations as a project at the moment and what could be realizable. Just looking at the South African footprint, would it make sense to be bringing all of these skills, they are very similar skills, similar processing, similar mining skills. Could it make sense to bring all of that together under a single basket? I think it certainly could if there is value to be created from that. Is there a model that could look like that going forward? I think there could be, but it is nothing we are working on now, just to be absolutely clear. The second question on the recycling.
Let me maybe just share with you how I think about recycling purely from a value perspective, and then I will come on to the complexity. These recycling businesses tend to, you are right, the margins are a little bit smaller than mining, but they are steady. That is the first point I would make. Some of them range from, it is not that easy to always just say one. Some of them range from a 2% - 3% margin through to a 30% margin. They are very different businesses, and we are focusing those businesses on where those higher margins are. The way to really think about the recycling is you have invested or fixed assets that are largely paid off in most of these businesses, and then they run at a high working capital. That working capital gets turned about every three months.
If you have a 10% operating margin in a recycling business and you're turning that every three months, what you're effectively looking at is times that by four, is a 40% return on that working capital investment. Those are phenomenal returns. That's the way to think about the recycling from a valuation perspective rather than purely a margin and a cash business. The strength and the strategic opportunities it brings is as I mentioned, one, being able to get access to metals. I mean, how many people can go and try and start new rare earth mines today or germanium mines or scandium mines, but are there ways you can look at it feasibly through recycling? Absolutely, there are. Gives you a much easier, lower capital, lower risk access to many of these critical metals, as well as the skills that come with it.
I think we're developing skills in those businesses which are going to hold us in good stead for the years ahead. Can we simplify it? Yes. I think that is where what we are doing at the moment is bringing all of those businesses together under a single leadership because there are also significant synergies between them. Reldan, Metallix, they also process PGMs. Huge synergies we can realize. Bringing them together as a single business, and quite honestly, the way I would think about looking at it in the future, that's another mine. You have a Driefontein vice president. He's running four or five very complex shafts. Running those three businesses together as one is far more simple than running Driefontein. It's not a significant added complexity to the business.
Thank you.
Thanks, Arnold. See you later. I think, James, do you want to.
Thanks. Let's go to the webcast questions. I'm going to try and consolidate them because there are a few that are similar. The first couple are in relation to Stillwater or the U.S. PGM operation. Talking about what the plans are given the current palladium price, but I think we've covered that it's already in that profile, and we'll be bringing more detail to the market later. I don't know if there's anything else you want to add.
No, that's broadly correct. I don't think a lot more to add.
In terms of the recycling business, do we foresee significant like for like volume growth in the recycling business given the current price environment? What is the lag between prices rising and recycling volumes rising? A linked one was from Adrian Hammond is what is the outlook for our recycling volumes? Some of our peers there, I assume it means in the U.S., have increased volumes substantially. There's a two-part question to that. It's when do we expect to see volume growth given the prices, are we losing market share maybe to our peers, I guess is the question.
One of the first things just to say on that is one of the interesting things with recycling is it's not purely driven by commodity prices. Particularly something like PGMs. These are working capital-intensive businesses, so they're often driven by the cost of lending, the cost of your debt and your working capital, how many cars are getting scrapped. Prices is only a small part of it, and of course, disruption to supply chain. One of the things about the recycling business is it's actually far more price inelastic than say, more primary or secondary mining. I don't think the price is necessarily is what drive it. It's often far more around the supply or obtaining that recycling material that is a far bigger driver. I certainly haven't seen any new numbers being put out.
I do not believe that we've lost any significant market share, if that was the question from Adrian. As far as I'm aware, I think. I don't know the forecasts might be different, but certainly looking back over the actuals, I haven't seen any significant changes. Adrian, would be happy to engage with you on that one. Not that I'm aware of.
Yeah, I think we can follow up on that. There is some talk about some of our peers having a bit of a margin war as it were to get market share, but we'll follow up with our team. Questions on acquisition strategy. There are a few different views. First of all, any interest in acquiring Barrick's Africa mines? Would we look at some of the South African copper juniors? What African markets except South Africa do we believe stand to drive growth in primary mining for the business?
Thanks, James. Let me just be absolutely clear with answering the first part of that. We do not have an acquisition strategy. Let me just say that. We have a strategy today to develop and grow off our organic resources. That's the strategy we have. That's where our focus remains. I think what we are trying to say is there's no doubt that acquisition and growth will be part of our DNA going forwards. It always has been and will be as part of the growth. We will continue to look at it, but our immediate focus on our strategy today is unlocking the potential we have within our current resources. We will continue to watch the market and should the right opportunity come up, of course, we'll look it up, but it's not part of the current strategy today. Let me just say that.
Are we aware of Barrick selling assets? Yes. Do we have a strategy to go knock on Barrick's door today? No, we don't. I think we'll continue to look at the opportunities. We've developed the framework I shared with you as to how we will consider external growth, but our focus today is on unlocking the value from our current resources.
Thanks. A couple of questions on the cost curve, position on the cost curve. How do we expect that to evolve as production transitions towards projects at the SA PGM and gold operations and slightly differently put, cost curve development in SA gold, SA PGM, and US PGM. Do we have any targets in terms of US dollars?
In terms of US dollars?
Yeah. What are the US dollar per ounce costs?
Okay. Yeah. Listen, I think looking at the PGM cost curve, when we started off with these assets, they were very much at the top end of the cost curve in the fourth quartile. I think today, looking at the cost curves that we've seen, generally speaking, most of our assets sit at the lower end of the third quartile. Marikana of course, has been slightly higher as we've been ramping up K4. With these initiatives, we can see all of our operations moving to the middle top end of the second cost curve with the projects as they get implemented and these coming through. One or two could be a little bit further down, but on average towards the middle and upper part of the second quartile.
I think on the gold side listen, certainly from our existing assets, our gold assets are on the far right of that cost curve. Not quite the extreme right, but certainly we are at the top end of the fourth quartile, I don't think that's going to change for the reasons that I have mentioned. These are high fixed cost assets. Ultimately, we are not looking at producing significantly more volume, and therefore they will remain there. The margins that we are getting, even at those high costs relative to prices today, are substantial, and that is why we will continue mining them in a responsible manner. I think with regards to U.S. as mentioned, we'd like to see our costs there getting down to the $1,000 per ounce number. The U.S. operations are in fact, I think in the second cost quartile.
They are quite low on the overall cost curve. The difference, of course, being the metal mix that they have, and therefore the basket price they receive is lower than most of their South African peers and the margins therefore tighter. On a cost basis, they actually are pretty competitive.
This question, I'll just summarize. What does it take from a capital point of view to improve our reserve to resource conversion rates? I think we've spoken about that already, in the PGM portfolio. Then under what average basket price assumption is it no longer economical?
What, the projects? Yeah. Well, I think we have done most of this planning before it took its run. Let me talk about it in South African rand terms. We were looking at this planning when the basket price was ZAR 24,000-ZAR 25,000 for four yards. Certainly anywhere sustainably above ZAR 30, which was our sort of through the cycle view on prices, all of these projects met our required hurdle rates. Let me put it into those terms. I think the spot price today is somewhere close to ZAR 50, was the last one I saw. Significantly higher. Low capital intensity obviously makes them attractive.
Just a question on capital allocation and talking about reducing our gross debt. I am not sure if you want to take this or Charl, but what are the plans regarding the upcoming bond maturity in November? What plans in debt capital markets for this year and the next year?
I am happy to take a sip of water if you are comfortable. Yes.
Thanks. Just in terms of the upcoming bond maturity, which is November. The plans are to refinance that in the first half of the year. As we've said and signaled all along, that is $675 million. The first step for us will be to take that down to $500 million. Clearly, in this environment, we would love to cut back more in terms of debt, I think we first have to fill the piggy bank before we can start spending that money. The upcoming maturity is November. We're going to refinance sort of mid-year, probably mid-May, that'll be the first step for us in terms of the upcoming maturity.
Thanks. Just quite an interesting one. A shareholder, Mr. Steve Shepherd, asking that now we're at all-time record revenue drivers that we enjoy. When can we talk about the likelihood of share buybacks or special dividends? It's funny how quickly you go from.
Steve, good to hear from you. For now, I'm just going to answer this question that I think our dividend policy is intact. It's been intact. I think as I mentioned last year and at the mid-years, we were very much looking forward to getting back into dividend paying territory. We look forward to our results coming up. Beyond that, Steve, look forward to having a beer in Barber if you're there.
A couple of questions on uranium. Clarity on future investments and options that we're considering with respect to Mayo Energy Metals and also just the overall uranium strategy. What is happening at Viceroy with the selling down of that asset to Mayo? I don't know if we can give any detail on that.
I think just on a very high level, of course that was an asset again, that was not one that's fit within our capital allocation. We saw an opportunity with Mayo, who were keen to bring the asset back online. Through that transaction, we have the potential to keep a stake in that and therefore the optionality to it. Mayo has been raising capital to proceed with that project. Once they've raised the necessary capital, we do still have a few regulatory hurdles before we can close that and it will continue. At the moment, there is no strategy necessarily except to maintain that optionality to that operation. I think the Cook tailings dam is a bit different. That's got significant uranium associated with it. Certainly, we will be looking as to how we can optimize that value.
We'll come to the market with more thinking on that once we've been through the feasibility study, there are several options that could be available. The gold in that dam alone is worth a lot. There could be optionalities of partnering on the uranium, there could be optionalities of funding it ourself or using it in a bigger uranium strategy. At this stage, we don't have any clear views. We'll decide that once the feasibility is concluded later this year.
Thanks. Some question from Mark Lawrenson on the tolling contract with Valtera. Any details that we can provide? Just explain again what the benefits of that would be of that new tolling contract.
I don't think we can provide a lot of benefits. We have signed a further extension to that for a period of about five years. The terms have gone up a little bit. I think our last one was very favorable. The real benefit for us, and it's something I've spoken about a lot, when I talk about looking at value across the value chains, where do we make most of our money? Is it on the mining? Is it on the processing? Is it on the refining? It doesn't make sense for us to be spending a lot of money on capital now, given the profile that we see and the change in mix in terms of the UG2 coming in. Does it make sense to optimize existing capacity that's within the industry?
Clearly, from a financial and return perspective, the answer is the latter. I think this is something that I have said on many occasions. I'm not sure I necessarily view processing capacity as something strategic per se anymore. I think it was when people dominated the market. Today, I think it's a simple cost to the business. As an industry, we can look at how best to optimize our costs across that value chain, ultimately for return to all of our shareholders. I don't think there's much more to say over and above that.
Thanks, Richard. This might be for Charl again, so you can have another sip of water if you want. It's more detail, I think, Charl on the gross debt reduction. What specific actions beyond the current strategy are being considered to accelerate debt reduction, especially if commodity prices remain volatile or decline? Then some questions on the dividends. We know we're going to resume the dividends. Are we considering a change in the dividend policy? René Hochreiter asking if we're going to look at a base dividend and a top-up, à la some of our gold peers, and can we expect higher dividends going forward?
Let me take the dividend question. Maybe you could take the others. Rene, at this stage, no. There's no intention to change the dividend policy. I think we will continue to discuss with the board what's appropriate. At the moment, no intention. I think as I shared on the capital allocation slide. We have a few aspects of the business that we're looking to allocate capital to. The thinking at the moment is roughly that third, which is largely in line with the current dividend policy we have. There's no intention to change that at the moment. Would you like to take any of that?
Yeah. If you look at our gross debt, basically sits in four buckets. It is the '26 bond, the '29 bond, the '28 convert, and then the Keliber debt, and that makes up about $2.2 billion. There's three opportunities. Obviously, it's the '26s, which we are going out with a smaller refinancing, so that already takes $175 million off the picture. Then the convert remains optionality to us. That is well and truly in the money. We are entering that call period towards the back end of the year. We will evaluate that. Then the other big bucket that we can look at is the '29 bonds. We can off-market or in a process look to reacquire or buy back some of those bonds. Keliber debt is a bit trickier.
The three buckets that we can look at are depending on cash flow generation are those three that we are going to aggressively target.
Thanks. There's quite a few different questions that I think are getting a bit too detailed and that I think we should leave them for the following presentations. The questions on Mount Lyell, what updates, whether it will be the main driver of our copper portfolio. I think we've said that we're still assessing the feasibility and we'll make a decision when we've got more information. A question just on hedging, Charl. Are there any hedging agreements in place, particularly on the gold?
Short answer is no. The only hedging we currently have is on zinc, where we are opportunistically looking at how we can lock in a floor for those operations. That is more from a security for the operations, considering that they still have about 12, 18 months left. It's really to preserve those operations through to mining it out responsibly. For the rest, we remain open to all exposures in the commodity prices.
Yeah, thanks. I think we'll respond to the other more detailed questions in person by email. We have got limited time here. If we can go over to the conference call questions, please. I think there are two. The first one is from Reinhardt van der Walt from Bank of America.
Yes. The first question we have is from Reinhardt. Please go ahead, sir.
Thanks a lot. Can you guys hear me?
Yep.
Yep. Got you clearly there, Reinhardt.
Perfect. Thanks, James. Thanks, Richard. Charl, appreciate the presentation and all the clarity. I just wanted to go back to the processing asset footprint in South Africa. You mentioned you're potentially swinging towards more UG2 production. What's the size of the processing footprint? I guess, how does that capacity profile over time? Does it match up to the amount of new UG2 you're looking to process or do we need to expect maybe some reinvestment in the downstream assets?
That's a great question, Reinhardt. Again, I think it's something we'll go into a lot of detail on in terms of when we go into Capital Markets Day, because it's actually quite a tricky question with a lot of moving parts. Let me try and give you a simpler answer as I can right now. That is, of course, it's both a combination of the type of material you put through those facilities, so being UG2 with a high chrome content, that effectively does have an impact on throughput, and then throughput just by design of the facilities themselves. The simplest way I can say it is we could not have taken on all of the projects that we'd like to take on with the capacity that we have at the moment.
In other words, we do have a couple of years where we would have been constrained. Essentially, what this does in terms of the new agreement that we've put in place with Valterra is provide us flexibility over that hump period. That's probably the way I can most simply answer you today. If we remain purely on UG2, there may be some additional investment that would be required down the line, in terms of dealing with the high chrome content, specifically on the smelter a little bit. That is the one piece of work we are still doing. It will be a couple of years out, though. It's certainly not in the near future but not in terms of any of the refining capacity. That's still work in progress. These strategies and optionalities and how it plays out, there are a lot of options.
We will unpack quite a bit in the Capital Markets Day for you, and I hope that helps.
Yep. No, that's very helpful. Thank you kindly. Bruce, sticking on the PGMs, maybe just the U.S. PGM business. Things have obviously changed a lot in the last six months.
Yes. I feel the same way, Reinhardt.
Did we get cut off?
Apologies. We have lost you there, yeah.
Operator?
I think we got cut off.
Are we still on the line? It looks like we've lost the conference call line. Just bear with us, please. Nothing is back. Okay. I think that's it. We'll follow up with Raj. There's only a question well, half a question from two more people, Raj and Ephraim. We'll get right back to them, and we'll respond to the questions offline. I think just a last one from the web call is just about when the next Capital Markets Days will be. I think we'll put out some reminders put them in their diaries in the next couple of weeks, Enrique for people to save the date. Yeah. We'll do that shortly.
Wonderful. Yeah. The next one of course, will be results later in February.
Yeah.
Very much looking forward to seeing everybody there and thank you again for your attendance. It's good to see everybody. Have a safe day. Thank you.