Earnings Call: H1 2018

Feb 13, 2018

Ladies and gentlemen, welcome to the Pan African twenty eighteen Interim Results Presentation. To those of you attending in person, thank you very much for taking the time to be here today. Welcome also to those of you dialing into the conference call facility in South Africa from The United Kingdom and from elsewhere. We've changed the format of our results presentation somewhat this time around. In addition to Dion and I, I've asked other senior members of our team to provide context and detail to these results and to the strategy and profitable growth prospects for our group. Jonathan Ijens, our Group Metallurgical Manager, will provide detail on the status of our existing low cost trading operations and also on the excellent progress on the Ilekulu project. Bats van der Berg, our Group Mining Engineer, will deal with our underground mining assets. His section of the presentation will also include detail on the progress in terms of increasing flexibility at our world class 11 block or MRC ore body at Barberton. Then Mr. Barry Nyka, our group mineral resource manager, assisted by Hendrik Pretorius, will elaborate on our more focused approach to mineral resource management and converting gold resources into cash flows in a manner that generates the appropriate return to our shareholders and other stakeholders. They will also share further information on the medium term profitable growth for our group in the form of the Royal Sheba and Igori or previously called the 2010 project. In terms of proceedings today, we will only run through the main body of our presentation during the session. For further detailed information, please refer to our Sins and R and S announcements and to the supplementary information available on the Pan African website. As is customary, there will be an opportunity for questions after our presentation. We will first take questions from the floor and then from our conference call participant. Please can I ask that you note the disclaimer and detail on forward looking statements on Page two and three of the presentation? With the conclusion of the sale of Phoenix Platinum in late twenty seventeen and the sale of eight Combs Colliery earlier last year, Pan African is again a pure gold producer. Most of our shareholders prefer this simpler story and wish us to focus on extracting value from our internal portfolio of producing gold assets and value accretive growth projects. We realize that this focus is even more critically important in the current depressed rand gold price environment. And despite challenges in the last six months, I believe that Pan African has either dealt or is in the process of dealing in a clear, structured and definitive manner with those issues that have impacted production and that we are well positioned to perform much better in the year ahead. We cannot hope for a weaker rand or for a stronger U. S. Dollar gold price. We have to focus on those issues that we can control, which include gold ounces produced, the cost of producing these ounces and new long life low cost initiatives such as Elukulu to increase production and lower our overall all in cost of production. We've tried to shorten our presentation slightly this year while still dealing with all the key issues. I think we will start on Page seven. Thank you. We'll start on page seven of the presentation. Just dealing with some of the key issues the features of these results. In terms of safety, what these two reported, we have significantly improved our reportable injury frequency rate that really relates to serious accidents. Last time injury frequency rate is fairly stable. Barbotan Mines, which we'll go into a lot of detail further in the presentation, we've had operational issues, which we have proactively dealt with and are dealing with. We have been increasing our capital investment in Barbaton over the last years. Examples of this investment include the refrigeration plant now installed and up and running at Preview in the last year and also the cyanide disruption plant at the BTRP. New capital projects include the sub vertical shaft at Fairview and also the BTRP regrind mill. I believe that we are seeing the results of last year's refurbishment restructuring at Evanda Mines. Gold sold from underground operations increased by more than 20% in the period under review. We still have experiencing issues with H Shaft infrastructure, principally the pipe column that will be fixed by the March. Very positively, Ilukuli Tailings reaching project below budget, ahead of schedule, we would expect first gold from a project in August to steady state sometime in September, which I think is very positive. If we then move on to Slide eight, group safety statistics. Even though we are not yet where we need to be as the gold industry, I believe that working with government, with the Department of Mineral Resources, with our employees and unions, we have made very good progress in terms of safety. From 02/2016, in terms of gold mining, the lost time injury frequency rate has improved by some thirty five percent. If we compare Pan African's lost time injury frequency rate to the South African gold mining sector, we compare fairly well. I think we've previously detailed some of the safety interventions currently underway. These include the fact we've introduced behavior based safety interventions. We have elevated safety managers to the management committees of each operation with the same authority as other Exco members, with these managers reporting directly to the General Manager of their operation. We are focused on disciplinary action with safety transgressions were identified. We have also continued external audits, benchmarking as well as infrastructure and equipment upgrades. I previously said that for me, of the most important initiatives and interventions still underway is the one on one session, so to speak, conducted by operational management committees with groups of employees. These sessions entail an hour or more of small group discussions focusing on behavior and on safety. It can leave no doubt in the mind of any employee as to how serious we are about safety, but literally as to look employees in the eye, and that is what we are doing. I'm pleased to report it at Barbourton. We've now undertaken this initiative, and we've spoken to each and every employee on that mine. We again implore all employees and management to continue to work with us to ensure that FY 'eighteen is our safest year yet. I will now ask our Financial Director, Dion Loe, to give some more color to our financial results. Thank you, Kurviz, and good morning to everyone. Slide 10 summarizes the group's results for the six months ending thirty first December twenty seventeen. And as is evident, revenue declined by 9%, a function of rand gold price as well as lower ounces produced. Comparatively the cost of production increased by only 5% which based testimony to the cost containment measures implemented in the past twelve months. By way of example, salaries and wages which represent 43 the of production, electricity which represents a further 60% increased by only 2.94.6% respectively. Mining profit and adjusted EBITDA declined disproportionately to 103,000,000 and 186,000,000 respectively as a result of the large fixed cost component typical of underground mines cost structure. This led to commensurate decline of more than 70% in profit after tax to 58,000,000 and headline earnings to 63,000,000. The difference being a small loss on the sale of the Fenics mine and a fair value adjustment on assets held for sale. Earnings per share and headline earnings per share declined by approximately 80% as a number of shares in issue increased by 19.3% following the placement of 291,500,000.0 shares to fund the R700 million equity tranche for the Ilekulu project. The earnings from the deployment of this capital will only accrue in the first half of the 2019 financial year following commissioning of the El Akulu project. In the interim, there will unfortunately be a dilutive impact. Net debt increased to $653,000,000 which comprises term debt of $772,000,000 and a cash holding of $119,000,000 at reporting date. All the net debt $512,000,000 relates specifically to the Ilekulu projects funding. Slide 11 shows a cost history of the group over the past five years relative to the gold price in rand terms. It is evident how the lower ounce production has contributed to an increase in the unit cost over the past two years and the flat gold price in the last twelve months has not either assisted as an offset for the cost increases. The dollar cost on Slide 12 demonstrates the same trend over the past two years with all in sustaining costs for the group increasing to $1,268 an ounce for below a thousand dollars in the preceding two years and a relatively flat gold price depicted by the green line on the slide. The two drivers of unit cost in our control is volume and obviously operational costs and Kubis will discuss both in greater detail further in the presentation. Slide 13 shows the capital spend over the last two years, which increased with increased capital spend at Evander in the 2016 financial year and a substantial increase in Elacudis capital expend in this reporting period. The 2016 figures for Evander includes initial seven shaft pipe column expenditure and other capital expenditure infrastructure upgrades at this mine. The 2017 figure includes initial capital expenditure of million for the Ilekula project. The sub vertical shaft expenditure at Barbaton of R105 million dollars is not yet evident in the Barbaton figures but will become evident in subsequent reporting periods as that development is ramped up. Slide 14 projects the group's total debt levels over the next eighteen months using a gold price of R520,000 a kilogram. Obviously under the current gold price environment this is a major concern to all mining companies and we spent a great deal of time analyzing our cash flows and our projected cash flows. Debt is forecast to increase until the Elekulli facility is commissioned where after it decreases over the next nine months. Now even at peak forecast debt levels, the debt to equity ratio is expected to remain below 0.6 times which although historically high is still at a comfortable level given the operational risk associated with the Elukulla project. Throughout the forecast period, we remain covenant compliance in all respects. Although the debt to EBITDA ratio is breached at a level of 2.5 times during the course of the 2018 financial year, it is only measured from 2019 for compliance purposes. I'll now hand over to Kubis and the rest of the team for the operational overview. Thank you. Thanks, Dion. I'm gonna ask our group metallurgical manager, Jonathan Irons, to deal with the low long life, low cost tailings retreatment operations. Just very briefly, a summary of these operations as they stand at present. Barbaton tailings retreatment plant, life of mine, fourteen years. Current all in sustaining cost, very competitive, still $650 per ounce. The initial capital outlay was repaid in eighteen months, so quite successful. A Vanda tailings retreatment plant, again operational, life of mine as with Ekulu fourteen years, all in sustaining cost of $735 per ounce. Initial capital outlay was repaid in less than three years. And I mean, in terms of in addition to the tailings operation, we have secured surplus sources up to 06/30/2019. And we believe we will continue to secure surplus sources post that date. And again, I mean, Ilukulu, which is our major growth project at this point, forecasting 56,000 ounces of production in the first eight years, all in sustaining costs. In terms of the feasibility study was $550 per ounce. That's at the rand dollar exchange rate of $14.50, which appeared quite reasonable at the time of releasing the feasibility. So if one adjusts that reduced dollar number to current ZAR 12 to a dollar, that comes after the USD704, which is still very attractive. Again, initial capital estimate of 1,740,000,000.00 for Ilekudu or roughly $125,000,000 We are forecasting a payback of four years post commissioning on that project. In terms of the profile of after Surface Tatings operations, Slide sixteen eighteen, apologies, The detailed approach profile historically and then also going forward. Again, massive ramp up with the commissioning of Ilekulu. If one was to do a steady state six months period with Ilekulu running and and BTRP performing at 20,000 ounces, which is which we'll do going forward. That's just under 50,000 ounces for a half or 100,000 ounces for a year, again, at a very attractive cost below $700 an ounce. Just to put that into context, globally, the average all in sustaining cost in 2016 for primary gold mines covered by S and P Global Market Intelligence remained relatively flat from 2015, and that number was quoted as $879 an ounce. So again, this is competitive both from a South African and international perspective. I will now ask Jonathan Irons to provide more feedback on our current surface tailings operations and also progress with Elukulu. Thank you, Corbus. Good morning to everybody. I'd take the next few minutes to talk through the operational issues that have been and are and are to be concerning especially the tailings operations. Now the last six months, bulbs and tailings operations have had a few challenges. We did not anticipate the coarseness of the material that we were moving into. We knew that there was going to be a grade decline, but we moved into the Harper South dump and became too coarse to treat conventionally. And that is what caused us to have a reduction in the ounce production profile through the bulbs and tailings operation. So what to do about that to bring correction? So in bringing correction, we identified the need to regrind the material, which we subsequently engaged with DRA who partnering with us on the Elukulu project to look at a solution. And we found that in regrinding the material, we will be able to increase our production profile by the subsequent slide, you'll see that we're going up by 3,000 to 4,000 ounces again to to 50 kilograms and per month, which will restore us for the next two years at least to the profile that we had in place prior to the problem with the Harpersouth dumps. The ETRP continued as per the slide. We've seen a reduction due to the displacement of surface sources that we put through that plant. At the moment, we're anticipating potentially folding the ETRP into the Elukulu operation. Benefits of that would be a lower cost profile due to the scale of the operation and also the increased recoveries. We anticipate that the Elukuru plant is more efficient and will have a higher recovery rating than the ETRP currently. Part of that has to do with the condition of the plant and also different technology that we're employing on the Elukuli project for the pre ops situation. Now addressing the BTRP recoveries, as you can see from the slide, we will be installing 1.6 megawatt regrind mill. It's a second hand mill that we've identified with DRA. The mill project will be installing at a cost of million, part of the capital that Kurvos described earlier. The solution that it brings will be the higher throughput rates enabling us to put through the course material and also in regrinding the material the recoveries do improve. So we are expecting 50 kilograms to realize as from the April month of this year onwards for the next two years until June 2022. The regrind operation will really be a differentiating factor in the tailings treatment at Barberton. Something that's very exciting for us and that Hendrik will talk into later and Barry is the potential of using this model to treat the Royal Sheba ore body, which has a significant play on the capital required for the Royal Sheba project. It negates the complete capital cost of a plant, which in today's terms is not insignificant, which lends itself towards the higher level of feasibility for the Royal Shiboh project, but a little bit more of that later. Now as you've heard, Kervis and Dion speak about the Elukuda project, we're very excited about it. Its production is progressing very well. For those of you who may not be familiar with it, the aim is to treat the tailings operations, the previous tailings operations at Evander which consists of the Kinross, Bracken Leslie and Bunkelop deposits. Huge amount of tons, the details are in the numbers. We'll be treating these dumps at 1,000,000 tons per month which is a nice scale. It will obviously, if we fold the ETRP into that, it will go up to 1,200,000 tons a month. And if we tweak it slightly, maybe we'll get a bit more. We've appointed Fraser Alexander as our remining operators and also deposition operators. And we're looking forward to working with them, continuing working with them in pushing this project. For those of you who maybe are not familiar with the layout, that is the new we have to build a new tailings storage facility that will be located there. The new plant is there. That is the first TSF that will be treated in the Kinross facility. And if I have to take you, that will be the second one. And then the last will be the Vunkelop complex. We'll be sourcing water from the Lupan Dam in conjunction with underground sources. That's what the production profile looks like. The average over the first eight years as Gribus mentioned was 56,000 ounces, but we're targeting obviously the Kinross operation, the Kinross dump first, which will give us a slightly higher ounce profile initially, which is the right thing to do. Something that differentiates this project, the Ilukulu project in perspective of where we've come from, I think is that there was an accelerated decision making process from the study phase into the execution phase. And I think Pan African lends itself to the agility in making this level of decision as quickly as things have happened. So that is definitely one of the advantages. Another advantage is that as a client, we've taken a different approach with the contractor in terms of DRA who are executing the project. We have worked with them from the design phase through the execution phase and ensuring that the deliverables that we require are in actual fact achieved. And that level of technical skills and level of technical decision making capabilities, I think they've also been a definite differentiating factor in this project. So we're looking forward to commissioning ahead of schedule. First gold anticipated in August. At the moment, we're also on schedule in terms of our expenditure curves. And we are trusting if nothing untoward occurs that we should be coming in on the budget at just under billion, which is really well done. This project, think, is beneficial for Pan African but also for our subcontractor DRA and that they're looking forward in shining with this opportunity. So thank you very much for the opportunity to share this with you. And I'd like to introduce Bert van der Hag, our Group Mining Engineer to take us into the underground facets of the operation. Thanks, Bert. Thank you, Jonathan. To start off, let's go to Barbaton. I think what you the first thing you'll notice on this slide is despite the challenges that Ko has mentioned earlier in his presentation, we have actually been able to sustain the underground tonnage profile and even slightly increase it. The next thing that you will obviously notice as well is the lower grade from the previous period. And the first thing that you will notice is that over the five year period, there is a gradual decline in the tonnes and in the grade. And I'll be addressing these things in the next couple of slides, telling you what we are doing to address these and to then in the future be able to sustain and increase the ounces that we produce from underground. Firstly, the lower grade was mainly driven by delays, as Kob has mentioned, in getting into the February and the three fifty eight platforms. These delays are because of development and amount of waste that you're able to handle in the underground infrastructure at Warwick and Fairview especially. I think some of the guys in the room actually went to visit with me about a week and a half ago, and we visited the 272 platform, which has now been established. It is in full mining cycle. The grades we're getting there currently is between twenty five and forty grams a tonne. So that is operating and mining. You'll see the current phase position there of the development towards the 358. We have intercepted the ore body on the 358 platform. We are mining towards the higher grade center part of it, which will have similar grades to the two seventy two. So the issue that we had in the previous six months not being in those platforms, we have addressed those. We're in those platforms going forward. We will be getting the grade for the next six months. Then still short to medium term, Very exciting project that we're doing, the subvertical that we're doing at Fairview Shaft. As I said, the main driver behind the declining tonnage and grade profile is the flexibility in the MRC ore body. It is a high grade ore body. It is where most of our tonnes from Fairview come from. So flexibility there will have an effect on your performance. So we have initiated this project, the Fairview sub vertical. It's a sub vertical shaft that we're going to raise bore as we have bottom access. It's going to be in two phases. Phase one will take us down to 64 level, which is currently where we're mining the three fifty eight. The shaft will be handling men and material and then it will free up the three decline to purely do ore. Currently, the three decline does main material and ore. It doesn't have separate conveyances. So currently, it's wasting rock about 50% of the time. So we'll see a dramatic improvement in the amount of tons we can do from that bottom section. What will we get then once we have the sub vertical? Firstly, it will allow us to develop faster. So you'll get into the MRC faster, you'll open platforms faster, you'll be able to sustain the grade once you have two platforms cycling. The last time we had two platforms in cycle was the twenty fifteen-twenty sixteen financial year and the results in those years spoke for themselves. Once you have platform cycling in the MRC, you get gold out the mine. So firstly, it will help us to develop faster into the MRC. The feasibility estimates 7,000 to 10,000 ounces a year extra from that benefit. The next exciting thing that we'll be able to do is develop out to the inferred down dip extension of the ZK ore body, which in the past we've mined at Chiba Shaft, a very good ore body. Before the MRC was the big ore body at Barbaton, the ZK was the highest grade ore body in the world pretty much. So this gives us the chance to actually develop. It's about 400 meters, so it's not very far from our current infrastructure at Fairview. That, in turn, will give us extra straddling, giving us the ability to actually chase depth slower. So you don't need to go down as fast. You'll have the two ore bodies that you can cycle and the more platforms on the MLC that you can cycle to sustain your grade and your tonnages. So medium to long term, we're sorting out that flexibility. A little bit longer term, although still on a very short term horizon, a very exciting project that we've looked at, the Royal Sheba project. Historically, Royal Sheba was mined on a much lower tonnage, 3,000 tonnes a month roughly. The method was a very labor intensive method where they tried to high grade the ore body, basically go pick out the ice, which wasn't very efficient. And in 1996, they basically ceased operations there because it wasn't making money. So obviously, you'll ask the question, why we don't intend to do it now. There's quite a few synergies they have developed since they closed it in 1996. For one, we have developed a drive from Sheba on 23 Level, which is about eight fifty meters away from that ore body, which will give us bottom access. There was a study done on 2010, a concept study in '20 on Roshiba in 2010, sorry, a concept study by Turges, and it was a viable project. It made money. Big capital outlay that made it a bit pervertive to go into that. What we can currently do, if you have bottom access, we can raise bore a shaft there quite a bit cheaper than having to blind sink and put spirals down. What we're also looking at to accelerate this project is to put a vein shaft up in that drive that we currently have that we can get into multi blast conditions, which we don't have at the moment, which will reduce the development time to get to the ore body quite considerably. And then the third thing that we have or second thing is a different mining method. We are looking with Jonathan, it's the other big synergy, BTRP being able to handle 35,000 tonnes as it is free milling. We don't need to build a plant. That saves quite a bit of capital. After that, the other synergy that we have is the mining method, the new way that we're looking at it. This ore body lends itself to mechanized sublevel open stoping, which is a higher volume, mechanized, lower cost, less labor intensive, obviously, unit cost as well. So if you put all these together, we're expecting Royal Shiva to be a very nice project and I'm very excited about it and will sustain and increase the low cost ounces that we have at Barbaton. We have commenced with a study on this. Currently, we are basically doing a costing study for the major capital infrastructure to a feasibility level. Geologist will talk a little bit after this. They are upgrading the ore body, maybe going to do a bit of drilling to make sure we have sufficient life to sustain this project. And once I get those figures, we'll do the detailed scheduling and get this into a feasibility study. So very exciting times. I'm very positive about the results that's going to come out of this project at Borbiton. Okay. Then moving on to Evander Mines. Again, what you'll notice here, increase in tons and increase in grade. Quite a nice picture. This shows that the initiatives we've taken both from the clean mining that I've discussed with many of the people in this room before and infrastructure repairs are starting to bear fruit. We are seeing that we're getting more consistent results at Evanda. Challenges in the first half, like Corbus mentioned, the eight shaft pump column, what we call the 10 stage pump column, whenever we have a power failure with Eskom, it tends to be bit of hammering on that column, we have breakdowns, which then shut down production for us to go and fix that. The seven shaft column, the one that we had the big failure in the fifty five day stoppage has been sorted out. It's working beautifully. We haven't had any issues with it. So carrying on, just to remind you of some of those initiatives that we went into about a year, year and a half ago, mining cost optimization initiatives and just clean mining. Number one, we appointed a few new people there capable of executing into clean mining. And we've really seen the results of having experienced guys on the ground. Mine core factor improvement, we've done quite a bit of work on fragmentation and ramping and all those sort of things. We have actually been able to improve the mine call factor by roughly 5% over the last year. As a no gold mine, it's no small feat to increase the mine call factor by 5%. What we're also looking at blasting frequency improvement. The project that we went on is enabling our crews to actually be able to blast on a daily basis. That involves blasting shorter rounds, cleaning your gullies to enable them to actually get that daily blast, get the good cleaning in. So making sure you get that daily blast. We're seeing the results. You'll see some of the graphs we put on later. And then old gold project, obviously, a mine like Evander that has historically had a mine pool factor of just below 70%. It's quite a bit of gold underground. So we have several projects with chemicals that we're putting on the mud. We're doing quite a bit of mud pumping out of old areas where we're seeing some returns on gold, and we're looking forward to actually increasing the amount of gold we get from that as well. Cost curtailment, obviously, we went through a rightsizing exercise, six twenty eight employees. You'll see the financial figures there and a reduction of about 147 contractors. So then this next slide is just to put it into context. Our underground gold output has increased by 23%, 23.6% as Kwaba said. And this has come our mine cool factor has improved. We've enabled our crews to blast more efficiently. Our crews are actually averaging at about three forty, three fifty centres per crew, which is, in my experience, some of the best in the industry. And you can see the results coming through here. So despite having 630 people placed at Evander, we have almost, year on year, doubled the amount of centres that we produce from underground. Centres being your unit of production from underground. That coupled with a better grade, Yvon is in a much better position than it was before. And we can see all initiatives that we spoke about and that we've embarked on before is bearing fruit. A little bit in the future. Barry and Henrik will elaborate on this. It's just the Iguali project, formerly known as the twenty ten project. Also, again, very nice project, quite a few synergies with the existing infrastructure at Evander. You don't need a new shaft. You don't need a new plant. This is an extension that you can mine from our current infrastructure. Very good numbers. We did a feasibility of mining feasibility study through DRA. We have IRR, real pretax of 46%, which I don't think you see many projects like that around and very healthy NPVs. You see we have quite early cash flows as well, early ounces that is as we mine a ground that's available closer. As we go deeper and we get the longest strike length, obviously, ounces increase. So with that said, I'll hand over to my esteemed geology colleagues, Barry Naika and Henrik, to take you through a bit more detail on the geology of these projects and the exploration that we're doing going forward. Thank you. Thank you. Thank you, boss. Pan African has been moving forward from a junior exploration company to a middle tier company and in doing so we've built the mineral asset base from in our junior exploration company to now a middle tier. Our group mineral resources are sitting at around 34,400,000 ounces, which is there at 11,200,000 ounces. And it's given us the opportunity to then look at the growth profile and look at how we could advance this mineral resource that we have into sustainable mineral reserves. The growth portfolio has several attractive organic opportunities at varying stages of development. The most being the most advanced being the Ilekulu at construction phase and in second the Fairview South Vertical Project, which will optimize the MRC ore body at Fairview mine. Good progress has also been made on the Ikoli project at Uvanda and on the Roarashiba project. Both of these projects at a feasibility status and ready to look at options to optimize them. Part of the mineral resource management disciplines has been to look at opportunities and how we could get more value from our mineral resources and reserves. And recently, we've taken on board Hendrik Pretorius, comes as a group project geologist to move some of our growth projects higher up into the value chain. Hendrik will give much more detail into the geology of both Chawal Shiva and Ikoli. Going on to Slide 41. The group has over the past couple of years embarked on an exploration strategy to identify geological upside both at Barbaton and Ivanda. The Barbaton Mountains have been mining their deposits for over one hundred years and we set back over a strategic session and look at where the opportunities in terms of all the satellite deposits and near mine deposits that what could exploit. Further to that, we embarked on a session at Evander to ascertain what could be the possible potential for the Evander Basin. And through that workshop, we came up with the Igoly project where we conducted some surface drilling to confirm a secondary channel that runs parallel to the Kindros patients. In that surface drilling, we concluded by drilling 2.5 kilometers of drilling with a mother hole that drilled to about two kilometers and five deflections. The results on the drilling was that we were able to identify this prospective geology based on the two, the grade that we are mining at the current HR operations. We've also initiated a surface drilling program at Barbaton, which we're going to gain much more resource definition in the royalty of ore body. More of the geology will be spoken by Hendrik. Further to this, decided that from a regional point of view, we have an asset base and a mining permit base that one could look at trying to design much more regional exploration targets. And we mandated a geoscience firm called Shango Solutions who are involved in generating geological models and mineralization models for both Barbizon and Evander. They will be focusing on medium, short and long term exploration plans. I will now hand over to Hendrik. He is going to give you much more detail on both the Varadshiva and Ikoli projects. Thank you very much, Barry, and good morning to everybody. So looking at Royal Shiba, the geology of Royal Shiba is that the mineralization is closely associated with the Shiba Fault. And this fault actually goes through the banded chaired carbonatized shale unit of the Fig Tree Group. And this unit actually underwent brittle deformation and in so created pathways for the fluids to flow and your subsequent gold mineralization to occur. So historically, we had a scoping study from Turges, as Bert has mentioned, which identified a viable, economically viable project. But it requires large amounts of capital for declines to access ore body as well as a vertical shaft. And this only to take out about 15,000 tonnes of material per month. Current optimizations that we're looking at includes the 23 level development that Bert has showed you. This whole development has got a total length of about 1.8 kilometers, of which eight fifty meters is still left to do. The proposed raised bore vein shaft will improve the development rates as well as the proposed raised bore vertical shaft once we get into the ore body for man and material will decrease the amount of capital required. Further to this, the increase of nine tonnes from the proposed 15,000 tonnes to approximately 35,000 tonnes will decrease the amount of capital required and as well increase the project economics. Other optimization strategies includes the BTRP plant that can handle up to approximately 35,000 tonnes. DRA is currently looking at a basic economic assessment of the trimming and mining optimizations. And while this is underway, Pan African Resources is conducting a full three d geological modeling overview as well as resource estimation of the Royal Shiva deposits. And once this is being completed, everything will be fed over to DRA to finalize a feasibility study. So just looking at Slide 40, this is a cross section that Bruce spoke to earlier, but also denoted on this is the 14 surface holes as planned to intersect the down dip extensions of the Royal Sheba deposits, which will take indicated resources further below the 23 level haulage and increases the mine's life essentially. The current mineral resource for measured and indicated sits at about 1,700,000 tonnes at just over four grams per tonne for around about 240,000 ounces. Now these are slightly low grade for Barbaton deposits. But if you take in the increased amount of tonnages that you mine with a decrease in capital that's required, it actually makes for a very good project at the end of the day that we're very excited about. If we skip over to Slide 41 and we look at Evander's Igoli project. So this project as we heard previously was called the twenty ten project back in the Harmony days. And historically, the Igoli pay shoot has been looked at in isolation. It has always remained out and it didn't consider any geological information of the adjacent ore chutes and so on. So this along with the historical lack of sampling as it was only about five surface holes intersecting the Igoli pay chute as well as one wind resulted in a very low confidence estimates at reasonable grades. The reasonable grades come from the log normal distribution that gold deposits follow where the majority of your deposits or majority of your samples come from the lower grade regime and undervaluate the mean grade of the deposit. Corporate strategy at the time focused mining on the very rich and persistent Kinross Patriot, which you can see just off to the southwest of the Iguali Patriot. And with the massive amount of capital required to access the lower portions at that time of the Iguali Patriot meant that the Iguali base ship was never developed and it was left behind and everybody focused on the Kinross base ship. Suburban African Resources embarked on a strategy to review the whole geological regime and the positional environment in which the Iguali project finds itself. And we looked at this in totally different way that nobody else ever looked at it. So we try to find similarities between the Iguali base sheet and the Kinross base sheet looking at the lesser variable geological indicators. These include but is not limited to the reef width, the pebble composition, the size of the pebbles, the percentage of the pebbles within the reef, what is the football conditions like and grade accumulation rather than grade specifically. And this analysis actually indicated to us that there is a great similarity at very high confidence levels between the Iguali patient and other high grade patients such as the King Rose and the Five Shark. So this actually influenced the estimate in such that we were able to use the global mean grade from the King Rose and other pay shoots that was mined into the estimates of the Igorle pay shoot. So resulting from this with the Ordinary Creek and Simple Creek interpolation, where you actually use the global mean, means a lot more robust and accurate and higher confidence estimates at the end of the day. Also just note on the slide towards the Northwest of the Ugali pay sheet, we do see occurrences of very similar geological indicators still persistent within the Evander mining rights, which is currently held by Pan African Resources. If you skip over to Slide 42, we look at the tabulation of the mineral resources as found for the Iguali Pei Sheet. And we look at a measured and indicated resource of about 3,300,000 tonnes of material running at about 9.7 grams per tonne to give you just over 1,000,000 ounces of material within a measured and indicated resource applicable for mine planning and feasibility study, which has been concluded by DRA. Further to this, we have another 6,000,000 tons of material in the inferred category, which can be proven up with sampling as we get into the Iguali Basin. I will now hand over back to Mr. Kobusluets to complete the rest of the slides. Thank you very much, Hendrik, and to the rest of the team, much appreciated. Wrapping up very briefly, operational cost comparison that's on Slide 44. Let's start with the U. S. Dollar versus the rand gold price. We cannot present results today and pretend as though we're not sort of troubled by the current rand gold price. Clearly, at this above ZAR500000 per kg, it's something that we have to deal with as a business together with the rest of the South African industry. It's clear that in the last five years from a rand gold price perspective, there has not been a large increase in prices despite inflationary pressures. If we then analyze our own businesses on Slide 45, it's clear that we have, broadly speaking, lower cost businesses, which principally include the tailings operations and then also the Fairview and the Sheba underground mines at Barberton. Admittedly, the Fairview mine has had some challenges, but generally speaking, when we increase our gold production, you're going to find that the all in sustaining cost will come down. So for the lower cost businesses, we currently, again, assuming that the crude comes in latter part of this year, we're sitting below 400,000 per kg. That's really where one needs to be and where we'd like to be as a group. The higher cost operations are those that require attention from ourselves, and we need to reduce the costs associated with those operations principally. Despite all the good work at Evander H Shaft, we're still producing at quite a high exceptionally high Rand gold price or cost, and that's something that we need to attend to in the near term. In terms of the outlook and the strategic focus for the next six months and the year ahead, we will continue to improve our safety and compliance across all operations. We will conduct and continue to conduct an operational review of the higher cost operations in light of the depressed rand gold price. We will further improve stakeholder relations to minimize stoppages. As we've mentioned elsewhere in the presentation, in the last six months, we lost eleven production days or more than 3,000 ounces at Barbaton, but clearly, that's not acceptable. We have obtained interdicts against communities and employees at both Barbaton and Evander. We have also commenced section 189 discussions about both operations. And they demonstrate to be very serious about not tolerating these sort of stoppages going forward. Jonathan dealt with the BTRP, so we will ensure that the BTRP throughput and recoveries increased to previous levels. We need to keep close watch on Ilekulu to ensure that it's commissioned on time and on budget and hopefully below both time below below budget and ahead of schedule. And then we'll continue to progress the Vande Gully project and finalize the definitive study on the Roelshiba project. Thank you very much. We'll now go to question. Martin Krumov from Mining Weekly online. Obviously, the rand gold price is the big elephant in the room. Are there any sort of vulnerable points that could be touched early if the price remains below ZAR500 per kilogram? Well, I mean, obviously, I mean, what we've already engaged on in terms of cost curtailment, we've engaged on several initiatives. Clearly, as I've demonstrated on one of the previous slides, the higher cost parts of our business, three is the Vanda eight shaft and then GLSX in console. So those are the operations that require attention to make sure that they can survive in this gold price. Can you just give us a sort of an overall picture of all these initiatives you've got that could increase resources and reserves? What are we talking about in total? And does that look low cost at this stage? Well, something like a Royal Sheba certainly looks low cost and that we have the infrastructure in place. And, I mean, in terms of looking at opportunities, I mean, we sort of recently went to Zimbabwe and we spent quite a bit of time looking at the the mining methods, which is why we came back to say, well, at four grams plus a ton, Royal Sheba makes a lot of sense. So, I mean, we're not about increasing production ounces or increasing resources and reserves. It's about sustainable profits and returns to shareholders, and that's the way we look at these these projects. Thanks, Cluis. It's Charlotte Matthews from Financial Mail. Could you consider closing consult? Well, we have to be very careful in terms of of of commenting. I think what we have said is we're engaging in terms of section one eight nine with both employees at Evander and and Barbaton. It's it's a sort of normal process. So I mean, we're not ruling out any initiatives. However, we have to work together as a group with our labor, with our unions, with government and get to where we need to be in terms of sustainable businesses. And we're not unique in the space in South Africa. I can assure you that assure you that other South African gold producers are having similar discussions at this point. I think where we have a benefit is that we have very low cost surface tailings operations and that's about to increase be increased quite substantially with Elukulu. And that puts us in a very different footing to the rest of the industry. Hi. It's Yatish from Macquarie. A call is twelve to eighteen months ago, Parvaton had issues with community unrest, etcetera. How effective are court interdicts and threatening employees with, I'm assuming, disciplinary action really going to sort out the issues at Barberton? It seems like it's a part a part of the the business. I'm not saying part of PAN's business, it's part of the operating environment and will continue to be irrespective of whatever can be put in place. Yes. Yeah. Tush, I mean, we as you point out, it's not unique to ourselves. We are vulnerable and that we have certain roads and access ways to operations that that that that people know that if those are blocked, then it makes life quite difficult for us. We have seen that the interdecks have have been quite effective at at certainly at Evander. You'll recall late last year, we had issues with certain road groups in that area. Things have been quiet, Touchwood since we've obtained the InterDict. And again, you know, it's working with law enforcement and police. These guys are also quite stretched, but we've seen an impact. And, again, you know, as a responsible company, we need to engage. And, you know, that's what we're doing. Group aside, Bruce Williams in Integral Asset Management. Could you give us an estimate of the number of people employed at the two big operations, Evander and Barberton? And what what are sort of average wage packages? Yeah. I don't wanna so in total, we just have think I we have just over 1,800 people at Evander after our rightsizing exercise of last year. We have a similar number at Barberton, contracted at Barberton, another 600, so 2,400 people. Evander, a little bit less, just over two two thousand people. Average wages are compared very favorably to the industry. So the average the lowest paid worker under correction is under close to the sort of 12 and a half thousand thousand marks. Our employees are well paid relative to the industry. K. Thank you. Brandon Ryan, Mining and Mix. Could could us what are the issues that the communities are raising with you around Barberton? How are you trying to deal with them? And and could you give us an update on the status of illegal mining in that area, which used to be a huge problem for you? Thank you. Yep. Brandon, it's a very good question. We generally, the the demands are not dissimilar to what you see everywhere else, principally relate to employment opportunities and also procurement opportunities. So those are I mean, obviously, to the extent we can, we employ local people from the communities, Bogarton specifically. I mean, that's the case. So one does what you can. If you look at the initiatives that we've embarked on at as part of Ilekulu, as part of the whole construction process, we have engaged more than 40 local businesses that actually provide services on-site. So I mean, as you know, in the current environment, our resources are constrained. We do what we can to provide both procurement and employment to the community surrounding our mines. In terms of illegal mining, it remains an issue. More more less so than what it was in 02/2009. You'll recall that we closed the mine for two weeks in December 2009. But it's still a challenge, not only at at Barberton, but at Evander and certainly at the on the rest of the rest of vets operations also. So what you're seeing principally at Evander is not so much underground mining, but more more so surface and guys riding old shafts and cutting down steel structures, etcetera. So it's a massive challenge. I mean, we have interventions with the SAPS on a very regular basis. You have guys arrested and you find that, you know, they sort of make bail or they are back a couple of weeks later. So it's all a product of, I mean, lack of economic growth and lack of employment and and the like. And it's not unique to ourselves, it's something that you have to attend to on a daily basis. Hi, Kovas. It's Myron from Metal Industries. You you guys touched on the debt covenants earlier. Can we talk a little bit about the details of that and who the bankers are? And once you plug in, you know who knows. Right? But once you start talking of a rand less than R11 to the dollar Yeah. Things look a bit tight there. Well, look, I mean, I I admittedly, that's correct. Our bankers are the consortium. It's Nedbank. It is RNB, and it's Absa Barclays. They have been our bankers since we brought them on board, I believe it was 02/2011. They've always been very supportive. And yes. I mean, that's why we're taking this gold price very seriously. We're looking at cost curtailment. We're seeing where we can save. And we can't sit back and open price for a lower for a higher exchange rate. I think in the short term, certainly, the optimism will prevail. It depends, obviously, also on what happened later today. But that's what we have to plan for. And I think we're in a better position because we do have access to these very low cost surface tailings that comprise a large part of our production and our profit. Well, I mean, effectively, Dion, you have access to those. But I think Dion mentioned that the one that might be an issue is the EBITDA, but that is waived until we have steady state production from Ilekulu in 2019. Dion, do you want We do set it up in the sense we actually show the compliance at the moment. The covenants are measured on a semi annual basis retrospective for the last preceding twelve months. Clearly we forecast in our part of our going concern assessment and our cash flows, we forecast the covenant compliance at different levels of the gold price. The one which is most stressed in a scenario such as this way substantial debt is being incurred on Helukulu ahead of the actual project generating cash flows is the debt to EBITDA ratio and that needs to be below 2.5. That is in excess of 2.5 during the course of the 2018 calendar year as a consequence of the debt peaking before the cash flow start being generated. And it's for that reason that we negotiated that that covenant is only measured in March 2019. The other covenants, interest cover ratio, debt to equity are all pretty robust. And that's under current scenario with the current operations as is. If we have to implement further cost containment across operations, then it will give us additional robustness in that. The debt is predominantly Elukuru debt, which as I said is dealt with specifically in terms of that facility agreement and has been provided for with the necessary covenant flexibility. Renna Harkrada from NOAH Capital. You mentioned Zimbabwe. Do you could you maybe comment on what you think of some of those operations that you had a look at and if you think you can make money up there? Yes. Again, we have to be careful. You would have seen the announcement that we put out a couple of weeks ago and then subsequently, we terminate the discussions. The nice thing with us, I mean, as you know, we've been looking outside of South Africa for some time. Zimbabwe is very similar to Barberton, doesn't have such sort of grades that you have on the MRC, but you have a very stable operating environment, great workforce. I mean, one must be careful that you don't have sort of rose colored glasses on when you look at these things. But definitely, there's opportunity in Zimbabwe. It's an area that we like. I mean, we came quite close to doing a transaction some years ago also. So they are very interesting ore bodies from a gold perspective. You also have the same refractory ore issue that you have in Barbaton, which makes Biox ideal for many of these deposits. For us though, as Pan African at this point in the next month, we will focus on the operations, commissioning Iluulu, making sure that the existing South African operations function like they should. Corbus, just maybe a question on Slide 29 where you've shown the vertical shafts at Barbaton. Just a question vertical shaft. So you're spending about $105,000,000 over the next two years. Have you considered equipping that shaft with hoisting capabilities? The reason why I ask is if you're planning on trimming or other tracking your ore across those spiral declines, has there been a trade off study conducted? Because the faster you move rock, the faster you advance, the more volume you move. Has there been any consideration around that? No. It's something we discuss on a very regular basis, I can assure you. Again, you know, it's sort of with Pan African, we we're happy to debate and discuss, and that's just the the our philosophies. At this point, if we do only main and material, it's obviously going to expedite the commissioning of the shaft. We will effectively double the wasting capacity we have at three d client. So that's quite attractive, but it doesn't prohibit us from at a later stage looking at this again. Obviously, you would then require a bit more capital and potentially longer lead time. So that's the sort of trade off that we are looking at. At this point, you know, we're quite happy that having made a material is gonna free up sufficient capacity. This is not the only constraint, obviously, that we have with this ore body, but it's something that we will revisit and we'll relook at again. Perhaps just a follow-up. On your on your machinery at at Powhatan at Fairview, what's the utilization rate? And in terms of breakdowns, could you just provide some color on that? Well, it's I mean, look, mean, if you're referring to to your three d client system, the utilization is pretty close to around the clock. So if it's not main and material, then you have ore wasting. So it's sort of I mean, roughly, it's fifty fifty. You would have been down there, so you can so now how constrained it is. No other questions then? I mean, can we check whether we have any conference call questions? Yes. We do have a question. Question comes from Simon Gardner of Peel Hunt. Hi, Simon. Thank you. Hi, I just wanted to ask about Evander and the Ugali project. You've highlighted that the Evander mine, the underground is the highest cost and so that's part of, I imagine, the real focus of the strategic review. I'm just wondering, the Ugalli project looks fantastic. I mean, would look fantastic as a stand alone, probably if it was near a surface. But can you talk about the interplay between making decision at Evander if you were to cut back or slow down or do something there, how that would affect the decision going forward or if it would at all ongoing forward with the Egoli to go and move into that area? Thanks, Simon. Yes. I mean, the way that we conducted the Egoli study was as incremental ounces. So to the extent we do curtail any of the other ounces, then obviously, it would have an impact on your overall cost, but it would not be significant in that you have stand alone wasting capacity at seven shafts. It's one single waste versus and four kilometers of underground transportation versus the current 13 kilometers from eight shaft. So all in all, it's an attractive project regardless of of how you cut it with the existing eight shaft production. I also think I was sort of chatting to somebody before this presentation, and they were quite optimistic around South Africa and just the mining regime given the changes that are currently sweeping our country. Obviously, we're taking short term pain in terms of the rand exchange rate. But I do believe that it will make certain ounces that in the past were simply disregarded. It would make these projects viable and attractive again for both South African and international investors. And that's what we need to work to as an industry making sure that we get value for ounces in the ground that you can convincing convincingly extract profitably. So Barbet and then you've landed collectively have more than 30,000,000 ounces in resource. And we get no value for those ounces on our on our share price. If we had a Egoli project elsewhere in in, say, in West Africa, you'd probably have a company with a market capitalization of $5,200,000,000. And there's simply no value in South Africa, and that deals with what needs to change. And I believe it will change, hopefully, quite drastically. Okay. Thank you. Okay. I'll now take the questions on the lines. Right. Thank you and to everybody for attending, and leave the awesome snacks and and drinks outside. Thank