Earnings Call: H1 2020

Feb 18, 2020

Thanks, ladies and gentlemen. A very warm welcome to the twenty twenty Pan African Half Year Results Presentation. To those attending in person, thank you very much for taking the time to be here today. It's always nice to see some familiar faces and then also some new ones. Welcome to those of you dialing into the conference call facility in South Africa, from The United Kingdom and from elsewhere. Rest assured that we will keep the presentation fairly brief, even though we again have a number of positive developments to highlight. There will be an opportunity for questions after our presentation. We will first take questions from the floor and then from our conference call participants. I know that some companies rate the Q and A part of their results presentations. I do, however, think that we, as a team, are fairly well prepared today, so feel free to fire away with questions when the opportunity presents itself. We run and manage Pan African for our shareholders and for our other stakeholders, and your views and comments are always welcome. Please refer to our scenes in R and E announcements and to the supplementary information available on the Pan African website should you require further detail, not dealt with in today's presentation. Are actually very proud of our new Pan African website launched only this morning. Please go have a look when you have a moment. Thank you very much to Neil Flemington from our office and to Germany's team from our perspective for putting all of it together. As per usual, our disclaimer and detail on forward looking statements can be found on Page two and three of the presentation. On Slide four, in summary, as part of today's proceedings, we will provide a brief overview of our operations and then spend some time on our half year highlights and key focus areas in the year ahead. Dion, our Financial Director, will analyze some of the half year numbers, and we will conclude with an update on organic growth projects and our outlook for the business. On Slide number five, our strategy for Pan African is simple, but we believe powerful, position ourselves as a sustainable, safe, high margin and long life gold producer. We are proud to say that in the first six months of this financial year, we've seen we've taken significant steps towards realizing this strategy. If I had to describe the first half year first half of the financial year in a single word, it would be robust. The dictionary defines robust as of a personal animal, strong and healthy, or of an object or system, strong and unlikely to break or fail. In terms of results, sure. Let us give some credit to the gold price, both in U. S. Dollars and in rand terms. The U. S. Dollar gold price provided us with some really nice tailwinds. This was further magnified by the weakening in the rand. When the rand appreciates materially, like we saw in our 2016 financial results and now again, It certainly assists our margins. Also worth noting with the current rand gold price is more than 10% stronger than the average for the six months we are now reporting on. I'm not so bold as to forecast the gold price or the rand. But what I can say with certainty today is that we're pretty close to an all time high in rand gold price terms. Goldust does not mean or imply that we are not presented with threats or challenges. In the last six months, we had to deal with community unrest, Eskom load shedding, the most extreme rain in probably twenty years and some geological issues at Barberton, and yet our portfolio, for the most part, delivered. Even more importantly, our assets are now well positioned for the second half of the financial year and beyond. The work our team has done in this regard, we will demonstrate clearly in the slides ahead. Slides seven and eight provide you with a brief overview of our assets. As most of you will know, all of our operations currently are based in Mpumalanga province in South Africa. The business that we have built now represents a unique combination of underground mining and surface remining. In terms of ounces produced, almost half of our gold comes from surface operations. These operations are low cost, not labor intensive, not that exposed and not that exposed to electricity woes. Some more detail on these assets. Barbaton Mines and the Barbaton Underground. This is where it all began for Pan African. We used to call Barbaton a universe of opportunity. I believe this still holds true. We will detail some of our plans and opportunities for Barbaton later. We do some 80,000 ounces per annum from underground operations, and our MRC ore body, the Clearview's life, is still some twenty years, sometimes at a grade as high as 100 grams per tonne. The DTRP or the bog containing retreatment plant and Ilukulu are our surface operations. As I've said, these operations now account for 50% of our gold production. GTRP again delivered an exceptional cost performance. In the period past, all in sustaining cost was less than $650 per ounce. Ilekuru, which means the big one, really is a big one for Pan African and for our investors. Initially, we forecast a payback of approximately four years on this project, dollars 120,000,000 of capital spent. Given the current performance and gold prices, this payback is much closer to three years, I think. You will have to go far to find a better gold operation. Ilukulu is also a testament that wants to get large scale projects done in South Africa on budget and a fee ahead of schedule. The way we now to think of El Akulu is a safe, long life and low cost gold annuity. In his slides, Dion will demonstrate how we expect a very attractive cash flow generation from this asset to translate into a very rapid degearing for Pan African and also imminent increased cash returns to our shareholders. The last asset is the Evander eight shaft pillar. Last year, we were asked, why don't you just shut or close the Evander 8 shaft and what will the cash burn be on the Evander underground? I think we have now done the hard yards, and we forecast the payback on this project of less than a year. We anticipate that the pillar will produce 30,000 ounces of gold or more per annum at an all in sustaining cost of less than $1,000 per ounce, also a very nice cash cow. Now let us spend a bit of time on the highlights for the first half. Slide number 10. And I have to say, these are actually fairly easy results to present. From a production perspective, the gold produced profit increased by some 15%. Iluculu, the first period of steady state and full scale production, the production at Iluculu increased by more than 90%. Any HR, as we've said, is on track to achieve steady production pretty much in the next couple of weeks. From a financial perspective, the profit after tax increased by 125%. EBITDA demonstrated a very significant increase, more than 80%. Earnings per share in dollar terms more than doubled. Group net debt decreased. And at the same time, we reinstated and reinitiated our dividend. So I guess the one sort of rate point on the slide is the all in sustaining costs have increased, and I'm quite happy to detail how we will deal with those cost increases in the period ahead, further on in this presentation. Also, I think from an EBITDA adjusted EBITDA generation perspective, it's a good performance. All of our operations contribute to positive cash flows, even scratching around on 24 level at the Vanda underground. This is why our expectations for HYAF Pillar are justified, we believe. And just have a look at The U. From Ilukulu. This performance was at a lower gold price, and we expect an even better operational performance from Ilukulu in the second half. On Slide number 12, safety and group safety. If we cannot mine safely, we cannot mine. I, along with the rest of the South African mining industry, am very proud of the achievements over the last years. It was definitely a team effort with contributions from the respective companies and our employees, our regulator and our unions. In an industry that has made significant improvements as far as our safety record is concerned, Pan African's operations stand out for our performance. We can, however, not rest on our laurels. We need to continue to do better. Some years ago, I stood before you and committed that our senior management would regularly engage with individual employees on safety in a small group environment. This continues to happen. We are also now involving the families of employees in safety campaigns. I again implore each and every one of our employees and contractors to take charge of your own health and safety as you continue this incredibly positive journey for our group. Slides thirteen, fourteen and fifteen provide you with information on some of our ESG initiatives. We do not operate in a vacuum. We are dependent on the need to safeguard the ecosystem and the broadest definition of the word in which we operate. We build clinics, libraries and schools. We invest in the training of our people and communities. We rehabilitate old workings and our closure liabilities on slide number 15 of fully funded. Our tailings retreatment operations clean up historic liabilities and free up land for agriculture and for development. Our employees and contractors number more than 4,000. In the last six months, we paid almost R400,000,000 in salaries and wages to these employees. In the current South African environment, you can imagine what a difference that makes. I'm proud of the positive impact that Pan African's operations on all of our stakeholders. I think we need to, however, become better at telling our story in this regard. If we then move on to Slide number 17, I think I'm moving through these slides quite quickly. Now more time for questions. So what are the key focus areas in the year ahead in addition to continuing to mine safely? We need to deliver into the pre production guidance. We need to reduce our all in sustaining costs across all operations. As I've said, we're certainly seeking to reduce all in sustaining costs for the year to below $1,000 per ounce. We need to continue to operate successfully in South Africa, and we have to reduce debt levels and increase dividends. So on Slide number 18, group production. In terms of production guidance, the first half provides a solid platform, which will allow us to meet full year production guidance. So in terms of Ilekulu, we believe that we're well positioned for the second half. We have a new satellite pump station that's being commissioned. Over the next six months, Ilekulu will be in the higher grade dam one and two remining areas at Kinross. So certainly, we expected even better performance at Ilekulu. In December, we were actually targeting 180 kilos of production at Ilekulu. That didn't materialize because of intensity of the rain. I'm very happy to report that in January, actually, of this year, we had a record month in terms of production. We produced almost 180 kilos. So that's a fantastic run rate for Ilekulu. The Boston we will also be in our new two fifty seven high grade platform during the month of March. We will then again have three platforms in this incredibly high grade MRC ore body. So bottom line is I think we're well positioned to meet the production guidance of 185,000 ounces for the full financial year. In terms of reducing the all in sustaining costs of the group, again, to the magical $1,000 per ounce level, we have tangible and concrete plans to get there. So if we analyze our operations, excluding Consort and the Iranda Underground, we actually delivered at below $1,000 So that's for certainly Ilekuru, BTRP, Fairview and Chiba Mines. The more problematic operations, so to speak, really is the Iranda Underground, which came in at a high number of almost $1,800 and then also the Kong Sort Mine. So let's talk about the Evander Pillar and how the pillar in the next six months will assist in driving down that all in sustaining cost to the group. As we said, the pillar access development at H Shaft is being completed. Secondary development and hedging operations are ongoing. Currently, I think we have five stoping trues in the pillar. By March, we will have all of our nine stoping trues in the pillar. So Attila will be mined at a rate of almost 12,000 tonnes per month. We were very conservative in terms of our head grade. I think we planned for Attila, it was about seven grams a tonne. Currently, we believe we could potentially do better. Again, estimated all in sustaining cost for Pillar below $1,000 and production of more than 50,000 ounces per annum for three years. So to pick up other points on the Pillar, what's going to assist us to bring down the cost and actually deliver into the guidance? Environmental conditions, due to the fact that the pillar is much shallower and it's right next to our Intake Airway, environmental conditions will be significantly better. Productivity numbers should increase dramatically. We will have increased face time, so the pillar being right next to the shaft, expect the traveling time to the workplaces to be about ten minutes from the station compared to the roughly one hour and forty five minutes to the 24 level stopes. This equates to a gain of roughly three hours of productive face time per day, which makes it much, much easier to achieve a quality daily blast. And then lastly, reduce ore handling. As I've said in the past, sort of mining on 24 levels is bit of a nightmare. So and the pillar ore will only be transferred three to four times before it continues to the plant compared to approximately 22 times from the 24 level stopes, or will also only be transported about four kilometers from the pillar versus 14 from the 24 level stopes. We combined effective fuel transfer points and reduced transport distance will equate to a big improvement in our mine pool factor we anticipate. Yes. We then moved to twenty twenty one. The other other sort of very key area of focus at Barberton is a consort mine. And during our final presentation last year, I stood here and I said to yourselves that we will find a solution for Consort. Now an easier solution, probably, or or more convenient would have been to to close the Consort mine. That would would have impacted 348 of our employees, and we didn't wanna do that. So we looked at alternatives, and I think we've actually come up with a very good plan. So we will line a PC shaft for that Consort that can give us another 10 to 20 kilos per month for a three year period. And that will give us enough flexibility to do more exploration, open up more areas, and keep Consort to be a sustainable operation over the long term. People forget that some years ago, Consort was actually the highest grading ore body in Burlington. And ideally, that's what our exploration geologists need to get us back to. So we have a number of exploration targets at Consort, 36, I believe, Ingrid. So we're looking forward to some exciting results there. In addition, we've upgraded the plant capacity at Consort. We've increased the plant capacity to almost 10,000 tonnes a month. We have sufficient surface stock cost to actually see that's ongoing for some years. So that's also going to help me assist in margins and keeping Concert sustainable. So certainly, we're now in the throes of executing on our plan. We very much look forward to reporting an improved performance for Concert during the next set of results. Lastly, Shiba, it makes profit. It's a long life operation. We still have nine years at Shiba. That excludes Royal Shiba. It's too high cost at the moment. We've spoken about project at Benissa before, which really looks to combine some of the infrastructure of Fairview and and Shiba. We've made very good progress, working on an implementation plan at the moment. And again, please watch this space, but we certainly will work to get Chiba down in terms of all in sustaining costs. That has the other added benefit of freeing up infrastructure for our Chiba project, which we will discuss and speak about a little bit later. Now, I mean, in terms of Slide 23 and all in sustaining cost, which is so critical for our business and internationally, It wasn't a bad performance for the last six months, just over $1,100 per ounce. And really, what we need to get to is $1,000 an ounce benchmark, and that's what we've got guiding to. And that will put us very solidly into a sort of low cost range in terms of production, not only from a South African perspective but also internationally. So let's talk about another key area of focus for us in the next six months, continuing to operate successfully in South Africa. On slide number 25, security. We have completely overhauled and professionalized our security function. I have to say that the onslaught is constant, and we have to continue to adapt and devise new strategies in this regard. I really feel that it's time for government to stop stop talking and start doing as far as policing and enforcement is concerned. Electricity situation in South Africa has been well publicized. I don't think Eskom will fall over, but we need to anticipate and plan for load shedding in the years ahead. And fortunately, as I said before, our operations are not as exposed as the rest of the industry who relies on massive refrigeration plants, massive power consumption, etcetera. From a tailings perspective, the power cost is only about 15% of our total input cost of production, and we have a much lower power consumer than the rest of the industry. And then also, quite exciting from our perspective, we completed a bankable feasibility study into a 10 MCA solar plant at Evander. We're now working to get all of the boxes from a regulatory perspective and also exploring non dilutive funding options. And for a plant like this, which makes economic sense for a long life long life asset like Ilekulu, we believe that the funding should not be a major issue. Mining tenure, that continues to be a challenge all over. Now our advanced mining rights are actually valid until 02/1938. So it's not something we worry about on a daily basis. It's quite long and and and good time frame. In Barberton, our existing mining rights expire in 2021. We've actually, in a in a very timely fashion, submitted the renewal applications, and we believe those applications are in progress at the DMR. So again, ten year from a ten year perspective, I really think we have things under control. Thank of the engagement, which is the fourth point and seriously critical and important for our business, and this relates also to our community. As we said before, our people in South Africa are desperate. They are unemployed with very limited prospects, And a situation where people have nothing to lose is very dangerous. We have and we will continue to up our game in terms of community engagement. We make a massive positive difference in the areas in which we operate. And it's important that we have our communities understand how interlinked our future fortunes are with their own. Now these challenges might appear daunting, but for the most part, we have equipped and scaled ourselves to manage successfully in this environment, and we have a proven track record of doing so. It's also important to note that South Africa is not unique in its challenges. I'll ask Dion to please spend a bit of time on the numbers and cash flow generation. Thank you. Thank you, Kurus, and good morning, everyone. As Kurus stole my thunder on the financial results analysis, I'll indicate to contextualize the group's cash generation and deleverage potential in the next couple of slides. Slide 27 provides a breakdown of the group's cash flows for the reporting period. Notable is the decline in net cash generated by operations to $13,000,000 relative to the $21,000,000 of the corresponding period. Now this is a bit of anomaly as the cash flow consequences of the 20,000 ounce gold loan entered into in July 2019 is recognizing cash inflow from financing activities and not cash generated by operations as the proceeds were used to refinance a portion of the RCF. Of May 2019, cash inflows from operating activities to that of the corresponding period, an amount of $11,200,000 representing 10,000 ounces delivered during the reporting period in settlement of the gold load has to be added to net cash generated from operations, which then, together with the net dividend of $2,900,000, increases cash inflows from operating activities to $27,100,000 relative to the $21,300,000 for the corresponding period. The gold loan was entered into as it was entered into to benefit from an interest rate arbitrage between the gold mix rate and the rate that of the RCF interest rate at that point in time. There are no principal installments due on the RCF during the recording period. As redemptions only commence in June, as I've demonstrated in a subsequent slide. There was a comment from an analyst that we entered into the gold loan because we needed to redeem an installment on the RCF, which is just simply not the case. With the construction of the Ilekula project completed in the corresponding period, cash outflows from investing activities declined to $12,000,000 as capital expenditure reverted to more normalized levels. Commensurately, cash inflow from financing activities also declined as the group's requirements for external funded debt declined. Net cash increased to $7,400,000 relative to $3,500,000 in the corresponding period. The RCF facility enables us to deposit and redraw from the facility. In this manner, we make use of surplus cash to reduce the group's interest burden to a minimum. We do, however, monitor available liquidity on a daily basis and ensure that we have access to immediate available short term facilities, such as undrawn balance on the RCF facility and our general banking facilities of no less than R250,000,000 or the equivalent of approximately $18,000,000. As of this morning, we held 233,000,000 or approximately $22,000,000 in immediate available liquidity. Slide 28 summarizes the movement in mid debt for the recording period. We commenced the recording period in July with negative of a $150,000,000 and since then have redeemed $21,000,000 of the senior debt during the recording period. Senior debt comprises the revolving credit facility with a capacity of R1,000,000,000 and the Elekuda 2 facility, which originally had a R1,000,000,000 exposure after Ilepuna's construction. During the reporting period, we repaid 394,000,000, approximately $28,000,000, of the RCF facility from the process of the gold loan, and we also repaid the first two coffee installments of the Ilepuna 2 facility of a R100,000,000, equivalent of approximately $7,100,000. Since inception of the gold loan, we redeemed a 197,000,000 or $14,000,000 of this gold loan, which is equivalent of 10,000 ounces. The remainder of this loan of $14,000,000 will be redeemed by the end of this financial year. Also included in net debt of R1,740,000,000 at thirty first December two thousand and nineteen are two noncash debt components comprising $77,000,000 of operating leases now capitalized in terms of IFRS 16 and an unrealized hedge profit of R44,000,000. Slide 29 shows the accelerated rate of de gearing due to the prevailing robust rand gold price and the increased production profile. As all our debt is random nominated, if the rand price of gold, approximately R750,000 a kilogram or $1,514 an ounce, holds for the next eighteen months and subject to the other assumptions mentioned in the slide, are disciplined to be fully secured by June 2021 as is depicted by the green line graph. This forecast also provides for an increased dividend for the 2020 financial year. The blue line graph is the contractual debt repayment profile of both senior debt facilities. The bar chart in the lower section of the slide shows a senior debt contractual principal repayment obligations, with the red bars representing in the cruise principal debt redemptions, and the green bars representing the extent to which the RCF's capacity reduces over the next couple of years. The RCF balance was, as of yesterday, R697,000,000 or $47,000,000 at an exchange rate of 14.9 for the dollar, which is already well below the balance of R750,000,000 to which the facility must be reduced by fifteenth June of this year. The electronic facility balance is now 800,000,000 or $54,000,000 after the first two quarterly installments of R50,000,000 in September and December. To clarify, the only further contractual principal debt redemptions required for the remainder of this financial year are the two quarterly and accrued installments of R50,000,000, $3,400,000 each, and the remainder of the gold bond of 197,000,000. Together, these obligations amounted R297,000,000 or approximately $3,000,000 for the second half of this financial year. Post June, the contractual debt repayments are relatively muted until June 2022 when the RCF facility terminates, and the senior balance of 500,000,000, which is $34,000,000 approximately, is redeemed as a bullet payment. The graph shows the full repayment of this bullet in 2022, which is unlikely as it will probably be extended as a core indebtedness if there is still a requirement for a revolver at that stage. Slide 50 shows existing zero cost common hedges in place for the next twelve months. For the remainder of this financial year, we have 50,460 ounces hedged at a floor price of approximately $656,000 a kilogram, approximately $1,370 an ounce, and capped at $856,000 a kilogram, approximately $1,745 an ounce. For the first half of the 2021 financial year, we have 40,000 ounces hedged at a floor of $690,000 a kilogram, approximately $1,440 an ounce, and kept at $925,000 a kilogram, approximately $1,931 an ounce. These hedges underpin our cash generation for the next twelve months and by implication, our ability to redeem our debt. Finally, Slide 31 shows the group's historical dividend yield. For the 2018 financial year, we suspended dividends following the cessation of large gold mining at Vanda's eight shaft and in light of the resources required to complete the Iroquila project. For the 2019 financial year, we reinitiated dividends at a relatively pedestrian level when compared to prior years, but it signaled our confidence in operational and financial stability of the reposition group that I just referred to. Our dividend policy is to distribute a minimum of 40% of discretionary cash flow after capital expenditure and debt redemptions. Historically, our dividend yield was set for leading. And since we restructured the RCF debt in the 2019 financial year, the gold price has in rand terms increased by approximately R200,000 a kilogram. If this prevailing rand gold price holds and based on a constant 185,000 ounce production profile going forward, which is just used for assumption purposes, the forecast annual incremental post tax cash flow amounts to approximately R800,000,000, which is compelling in our belief that the deleverage of the balance sheet and converting to the historical sector leading dividend yields can occur in unison in the short term. Thank you. Thank you. I think it's conclude by a couple of points on significant and us investing in our future and then also the outlook for the year ahead. So I think most of you would have seen these graphs before on Slide 23. We have a great excellent internal organic project pipeline. We have more than 3,000,000 ounces in resource, which is not insignificant. That's really sort of the likes of a gold major. But in this market, we recognize that ounces in the ground mean nothing. Shareholders need to see profit. They need to see dividends. And that's really what we will be targeting. So, you know, I do think we have a good track record of bringing internal projects to account. Recently, can speak about the the BTRP That was a payback of eighteen months. We can talk about each of these in three years. Ilekulu, we're now saying also in the two to three years. I think that's a very good track record. And we're not gonna undertake any other projects if we can't see the same sort of return metrics. Now briefly on Slide 34, I just wanna emphasize that sort of if you look at the way we think about the cash flow generation and the pause on our cash. So clearly, first priority is to continue to reinvest in our asset portfolio, and that's what we've been doing. So the high gold price allowed us to put more money into the ground at our operations at Barbourton. We've increased the capital. We've doubled our rates of production on some of these ore bodies. We've invested in new LHTs. I think that we bought bought five new very expensive LHTs in the last six months. So reinvesting in our assets is critical. Let's ensure the long term sustainability of this business, and it's very important on growth in our own portfolio. Let's talk a little bit about the Egoli project at Evander. Most of you, again, have seen the slide before. Quite a bit of excitement around Igoli and then also some concern, which I think is fair. Igoli is a deep level mine in South Africa, and understandably, we still have some work to do here. We have completed a mining feasibility study with DRA projects. It demonstrated very robust returns, and this study is currently processed of a third party review by the Mineral Corporation. We'll only release the results once we are comfortable that we have an executable project plan. Now on Egoli and in terms of funding the project, let me say this categorically, we will not cannibalize the current very attractive group cash flows to fund EGOLI despite our view that this is a very attractive asset and much better than anything for sale in this market for that matter. If EGOLI cannot stand on its own feet as far as funding is concerned, it will not be developed. Funding options for ZOLI include bringing in equity partners, we've discussed this before, and alternative financing arrangements such as gold streaming. On slide number 37, Royal Sheba. Again, this has been on our radar as a project for some time. We have scaled back plans for large big bang approach here. We just don't think the ore body can accommodate sort of massive capital on day one. We do, however, see Royal Shiba contributing ounces in the next year to Goldilocks production on a smaller scale. So and again, you know, we have the Royal Shiba upwards and we'll start trial mining at Royal Shiba upwards in the next three months or so. And then we have a very attractive phase two of Royal Shiva, which we've actually been developing towards from the JK Shaft for some years. We're now only about 390 meters from phase two. When we get there, we'll start opening up certainly preparing that ore body for mining. So waiting next, FY 'twenty and beyond, I think what we've said, hopefully, in this presentation gives you some sense of our priorities and where we plan to focus our time in the year ahead. And, you know, we started this presentation with some some comments on group strategy and on our robust performance in the period past. Please bear with me for some final closing remarks in this regard. So we are often asked about M and A and our appetite for acquisitions. At the recent mining in Java, we were again questioned by senior journalists journalists on African gold opportunities. Understandable that deals in the mining space are a lot more interesting than companies that keep their heads down, stick to their netting, and get on with the job. You have to know that we have looked at gold mining opportunities in South Africa and in many African jurisdictions, both producing assets and also development opportunities. At the moment, I have to say it is very difficult to see value. South African resources does not need to do a deal, and unless we can keep compelling value and pay back similar to Elekulu, ETRP, the BTRP, we will not do a deal. We will be speaking to our net team, as I've said, and focusing on realizing value from our own portfolio. Most of our shareholders want to see the balance sheet be geared, and they want to see a significant increase in dividends. This is what we plan to achieve in the next year. I would like to conclude by thanking each and every Pan African employee for your hard work and dedication during the past year. The fruits of your labor reflect in our safety performance, our production numbers, and our profits included in the results. There's a lot to be said for continued positive momentum. We all know what is required of us in the year ahead, and we will give our very best. Thank you very much. So so I guess, shall we open the floor for questions? Michael, was well done on your results. Nice nice nice cost reduction in in mines anyway. A little bit concerning the cost increase at El Hooloo, but I hope after the rains you had, it's come down a bit. Concerning about about an African is the very high both in is a very high security cost So that was put to you guys earlier, about 7% of total cost. You said Eskom was about 15% of total cost. Now that 7%, how is that compared to the rest of the industry? And do you think you can ever get that seven percent down or you can't deliver that? Thanks, Rene. Yes. So just quickly on Elukudu, the sort of we've reduced it like $700 an ounce for this half year. If we increase production, which we anticipate to do, we have we're in high grade at the moment, and we've commissioned the satellite substation. So we're comfortably doing a 40 odd thousand tonnes a day. So I would expect with Ilekulu increasing production, you will see that all in sustaining cost come down. There are also some ongoing costs included in the all in sustaining cost. On Morbanton Morbanton's a long life asset and we have to safeguard the assets. And, you know, that's what we're doing in all respects. We're investing more money in the ground. But from an eagle mining perspective, and our people love to talk about this, Morbanton is not unique, but it is in a position where we're quite exposed not only to what happens in, let's call it, South Africa, where we're we're seeing influx in illegal miners from Mozambique, Zimbabwe, and from other countries as well. So about eighteen months ago, we were in a position where we we hadn't done and what we had done on professional ID security, I believe we would have been overrun today. So what I can say to you, Sunil, comfortably because it's not a comfortable situation, but I do think we've made great inroads. We we have a dedicated security initiative. As I said, we've professionalized the function. So I believe we've we've sort of made that business sustainable from a security perspective. Obviously, it's great to reduce cost and we'd love to do so. But our first and foremost priority is to safeguard the assets. So will the cost increase significantly going forward? I don't think so. I think we should have this situation under control. But is it a key area of focus? Yes. And we will do what we need to do to keep that mind going. It's Arnold Van Khan from Nedbank. Question on each of the pillar. What is the fixed cost to run that operation on a monthly basis? So, I mean, the key principle of this reducing all in sustaining cost is clearly that you have all of these fixed costs and it's pretty much the same versus, you know, mining 50 kilos a month or a 110 kilos a month. That's the principle coming down to AISC to a thousand dollars. I think the all in cost per month, a gentleman of eight shaft, you know, we'll we'll certainly sort of give yeah. It's about 20, I think, 25 odd million. Our cost is very significant. And then we have the labor cost and the contractor cost. So the key focus is, obviously, reducing more ounces. What you also see that will reduce the power cost because we don't have to do the cooling on 24 level. Okay. Thank you. Sure. Of course. Bruce Williamson, Integral Asset Management. I'm coming back to the Barbaton area. I mean, indirectly, our president has an interest in your company and and, I guess, in the area. And David Nabuza is a kingpin in that area. Have you guys had an opportunity to sit face to face with his people or people close to the president and the vice president and and find a way to to to just ease the whole situation. Yeah. Bruce, so just firstly, on on your first comment, the president does not other than sort of the sustainability of the industry, he no no longer holds a stake in in Pan African for for clarity. Is that absolutely nothing to zero. No. Is it not finished in the trust? No. No. There's no further stake. But that doesn't certainly mean that he's not interested in sharing sustainability of the business. You know, I've personally sat with our deputy president on a couple of occasions. He's a he's a keen friend in that area, but he is as is this the case elsewhere in South Africa, there are a number of dynamics at play, and you find an awful many interest groups. So there's not one united front, unfortunately, and now that's our job is to continue to manage all of these conflicting interests. Mhmm. As a matter of fact, the Barbaton the town of Barbaton at this point is under siege from sort of a point that want to break away from the Muella municipality. So, you know, I don't think any one individual can provide a solution to our issues. And that's why so we have to be quite vigilant, and we have to kick on our feet. Yeah. Thank you. Very good. Just another question. What what are the IRRs? Maybe you can't tell me yet, but on Royal Shiva and on on the EGOLI project, what are you looking at at the moment? Well, the easiest you know, what project would where where we go into the what IRR would be target on something like EGOLI? I would say a minimum US dollar return of 25, 30%. So we're busy optimizing that study, and it's, I think, pretty sure to comment. On something like ROCE, but it depends on how we undertake it. You know, I don't again, it's sort of dependent on your gold price assumptions. But we wouldn't do any project if we couldn't see, as I said, a payback of three or four years. So that's sort what we're targeting on any project we could do. So 20%? Yeah. Well, certainly more than 20% on dollar terms. Yeah. And the life not the life. The the production one to to full year production? Well, so on Egoli, we could get into production about first order in about two years, steady state in sort of three years sometime in year three. On the likes of Royal Sheba, as I've said, on Royal Sheba upwards, we'll start producing first gold in the next year and fully ramp that up as we get more comfortable with what we find in the ore body. On Rolled Cheaper Lowers, we should be in the ore body in, I'd say, the next eighteen months sort of planning another sort of twelve months to open up and develop. So you're looking at about a time horizon of three years to get Rolled Cheaper Lowers into a steady state production. Great. Thanks very much. 100%. If there are no further questions from the floor, shall we go and check whether we have any conference call participants that want to ask a question? Yes, sir. At this stage, there's no questions on the line. Fantastic. So looks like we covered most of this in the presentation. Thank you very much for attending, and and have a good week further. Thanks.