South32 Limited

Thank you for standing by and welcome to the South 32 FY24 results investor and analyst call. All participants are in listen-only mode. There will be a presentation 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 Kirk, Chief Executive Officer. Please go ahead.

Thank you and good morning everyone and thanks for joining us today. On the call with me today is our Chief Financial Officer, Sandy Sabunala. Financial year 2024 was a pivotal year for our business, a year in which we accelerated our portfolio transformation towards commodities critical for a low-carbon future. Before I go into more detail on the milestones we achieved this year, I'd like to talk about safety. We assess our safety performance through a range of both leading and lagging indicators. During the year, our significant hazard frequency, a leading indicator, increased by 34%, indicating a positive reporting culture and increased hazard awareness. Our total recordable injury frequency for FI24, a lagging indicator, also improved by 14%. However, our lost time injury frequency rate increased by 19%, underscoring that while we have had a fatality-free year at our operations, we are still seeing too many serious injuries and we must be relentless in our pursuit of a safer workplace. During the year, we also continue to embed our safety guarantee across our business, which is used to instill a belief that everyone can go home safe and well and create a sense of chronic unease and to assist to reduce risk tolerance. Turning now to FY24 results. Improved operating performance, disciplined cost management and high commodity prices supported stronger financial results to finish the year. We recorded FY24 underlying EBITDA of $1.8 billion and underlying earnings of $380 million and lowered net debt by $320 million in H2 FY24. Reflecting our strengthened financial position and disciplined capital allocation, the Board has resolved to pay $140 million fully franked ordinary dividend in respect of H2 FY24. The Board has also resolved to allocate $200 million to our ongoing capital management program to be returned by an on-market share buyback. During the year, we achieved significant milestones that have transformed and simplified our portfolio. Construction of Hermosa's Taylor Zinc Led Silver Deposit is progressing to plan, following our final investment decision earlier in the year. Taylor is expected to deliver attractive returns over multiple decades, increase our supply of commodities critical to a low-carbon future, while sustainably lifting margins due to its first quartile cost position. At the first stage of our regional scale opportunity, Taylor will unlock value for future growth phases at Hermosa, such as the Peak Deposit, where additional exploration results announced today highlight the potential for a continuous copper system connecting Peak and Taylor. The sale of Illawarra Metallurgical Coal for up to $1.65 billion completed earlier this morning. This will unlock value for shareholders and streamline our portfolio to be focused on base metals, zinc, copper and the aluminium value chain. While also simplifying our business, reducing our sustaining capital intensity and strengthening our balance sheet to self-fund our growth options at Hermosa, Cerro Gorda and our pipeline of options in study and exploration phases. improving our portfolio and providing shareholders with high-quality exposure to growth and attractive commodities. FY24 was not without its challenges. At GEMCO, we suspended operations following a significant damage to critical infrastructure and widespread flooding due to Tropical Cyclone Megan. We have commenced a phased return to phased mining activities and expect to recommence wharf operations in Q3 FY25 returning to normalised production rates in FY26. Our insurance have confirmed that damage from tropical cyclone Megan is covered under our property damage and business interruption insurance, and we continue to work with our insurers to assess the timing and value of recoveries under these policies. We expect to receive the first insurance instalment this quarter. At Worsley, following a five-year process, the West Australian Environmental Protection Authority recommended that a development proposal in respect of the next mining areas be implemented subject to conditions. Several of these conditions go beyond reasonable measures for managing environmental risks of the proposal based on scientific assessment and decades of operating experience. They are also not practical and inconsistent with our other government regulation and policy. We have lodged an appeal and we are working collaboratively with the WA government to secure environmental approvals with reasonable conditions by the end of 2024. Despite these challenges, I'm pleased to report we've had a strong finish to the year with improved operating performance, a strengthened financial position and the restart of the on-market share buyback. We remain focused on driving operating performance across our business. We have transformed our portfolio and have a strong balance sheet to self-fund our growth in highly attractive end markets. And our unchanged capital management framework is designed to reward our shareholders as our financial performance improves. Thank you. I'll now hand back to the operator for 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 Paul Young with Goldman Sachs.