South32 Limited

Thank you for standing by and welcome to the South 32 H1 FY21 Financial Results and Outlook Investor and Analyst Briefing UK and SA. All participants are in a listen-only mode. There will be a presentation, opening remarks, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Graham Kerr, CEO of Please go ahead.

Thank you. Good morning everyone and thanks for joining us for our financial results conference call for the half year end of December 31, 2021. I'm joined at my end by our Chief Financial Officer Katie Kovic and on the lines I have our two Chief Operating Officers Jason Economides and Mike Fraser to answer any questions you might have around their operations. Look, I'll start by just calling out we provided a short video that provided an overview of our financial results and it's available on our website. But then if we take a step back and think where are we today, a couple of introductory comments. Look, we have a simple strategy we've had in place since day one of the merger that we believe is still fit for purpose across all cycles. It's underpinned by a strong balance sheet and disciplined allocation of capital, and it's built around three simple pillars. Optimise the existing operations, unlock the potential of those operations, and identify new opportunities to grow the portfolio. If you sort of look at those in slices and start with optimise, look, it was really great to see another period of good operating performance by the heads of the operations. We achieved three records of production for the half, at Worsley, Illumina, Brazil, Illumina and Jemco. We also upgraded full-year guidance at Illawarra Metallurgical Coal, Cerro Matosa and Kennington. And the work that's been done on the volume efficiency and cost control means that unit costs are well controlled despite the strengthening currencies we're actually seeing. It was really pleasing to see, and you'll see it in the slide pack, our core markets are rebounding. and we're starting to see prices increase as we start calendar year 2021, which has given us confidence for going forward. Today, you would have seen that we are paying a dividend, 1.4 cents per share, and we increased our capital management program by US$250 million, which means we've got $259 million to be returned by early September 21. We sort of move to the next pillar of the strategy about Unlocked, There's some great examples in the pack about what's been done in the operations to unlock the full potential of the business. After doing a great job with Les Esmeralda, the team at Cerro Matosa have now accelerated the development of the Q&P project at Cerro, and they're also progressing numerous improvement and life extension studies across the business to get us to a sustainable level and increase the life of Cerro Matosa. At the same time, we're in the middle of rolling out the energy efficiency technology at Moselle and studying its application to be rolled out at Hillside. And, of course, we're doing all the work around the decarbonisation studies that were spoken about in the past as we get prepared to release our updated targets later this calendar year. In terms of our mix of growing or changing the portfolio, we continue to exit lower returning businesses. In the half, Temco's sale was complete. metal lawyers on care and maintenance, who have made some good progress on South African energy coal with a couple of significant milestones. At the same time, we unlocked value through the sale of a non-core precious metals royalty portfolio, the US $55 million to Elementium. At the same time, you know, there were a few surprises in the period. I'm sure we'll touch on it. But the Independent Pending Commission's decision on refusing dendrobium next domain for the... Expansion projects certainly come as a surprise to ourselves and our stakeholders, and we can talk through the implications of that. On top of the things that we're working on that way, we've also made good progress, if you like, on the pipeline of growth options, particularly around Hermosa, where we continue to progress the Taylor study to be completed into quarter four, and the Clark to be finished in the first half of FY22 with regards to a scoping study. The Ambler PFS is progressing and will be back on the ground with expiration this season. following the COVID impact for the previous year. At the same time, you know, we've got 20-plus exploration partnerships where we have with junior companies for the bias towards base metals. So, in summary, our balance sheet remains strong. We exited the half of $275 million net cash, and that has grown to US$452 million by the end of January with working capital unwinding. Our buyback is continuing, and we have major catalysts coming up that will move the quality of the portfolio in the coming year as we start to see a strong uptick in our prices. With that, I'll open it up to questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tim Clark with SBG Securities. Please go ahead.