Harmony Gold Mining Company Limited

Good morning, everybody, and welcome to the results of the first half of FY20. A special word of welcome also to four of our non-executive directors, Andre Wilkins, Kevin Sibaya, Michele De Boek, and Gretel Motal. Thank you very much for joining us this morning. It's really appreciated that you're here. I think today is also quite a landmark in the history of gold mining in South Africa because it will be the last year results presentation of Frank Abbott as our financial director. Now it's actually since 1927, it was 23 years that he's been the financial director. On and off he's been through arm for a secondment and back again. And then also a little bit of retirement for six months and come back again. This time around, We think he's still going to stay with us and still work as an executive director in charge of business development for the foreseeable future. Frank said to me the first results presentation they made, 40 million rand in Harmony at the time, and that was a very, very good result at the time. So much so that President Mandela called them and asked for 5 million to build a school. So that was... You know, the results presentation at the time in September 97, that was the first one. We also would like to then to welcome Boi Pelo. I think he's well known to everybody. Boi Pelo will take over from Frank from the 3rd of March. And Boi Pelo, welcome. You all welcome the team. You've been part of the team for quite a while. But welcome as the Financial Director of Harmony. So let's start with the presentation. Just take note of our safe harvest statement, please. Just in terms of safety, let's start with our safety. We are pleased to say that we've actually had a very good run for the first six months of this year. As a matter of fact, probably our best, as far as fatality frequency injury rate is concerned, probably the best performance we ever had in our history of a 0.07. And then from an LTI perspective, we had a slight regression from the previous six months of the previous quarter. But all in all, I think the trend is also in the right direction. The key contributors to that is really the visible felt leadership and behavioral interventions that we had in the company. Focusing on critical controls. I think we're really far down the line now to understand what are our controls and what are our risks. And proactively managing those risks in a way that's become a way of life for us. And then obviously a lot of modernization of our safety systems over the time. If one looks Moving forward to a proactive safety culture, I think I've had this slide up the last time around. We've progressed quite a lot as far as that's concerned. Our foundation is really learning from incidents. The psychology of safety, which we started now, quite a lot of work being done on that. The Harmony Leadership Program that includes a huge part of that is really on the safety, the culture of safety that we want to embed in the country, in the company. And then also our values and the way that we work our values. And then obviously visible field leadership. And really be connected. We believe that we're on track with a very, very sustainable way of dealing with safety. On the capacitation side, we've done the top-down leadership circles, and the bottom-up behavioral discussions that we have is currently going, and we've seen quite a lot of good that come out of this. If you look at, we had quite a number of operations that were fatality-free in the last year. Obviously, this is a program that we believe will take us five to six years to implement. We started in 2016, and we are really rolling it out and getting a lot of traction as far as that's concerned. If we look at the highlights for the quarter, we talked about the safety of fatality injury frequency rate improved by 46%. Like I said, it's the lowest ever recorded. Obviously, we know that good safety supports good production, and our risk management is really key in what we want to achieve. If you want to look at our gold production, we had an 8% drop if you look at competitive quarters. But if you want to look at the previous quarter, on the South African operations, we had a 4% increase in production. That's on the back of a 4% drop in grade. So we really had good momentum on all the operations in terms of our volumes. The biggest problem we had in the quarter was really the performance of Cusazaletu. Most of the other issues we were expecting and were performing more or less in terms of our plan, but the Cusazaletu mine was the one mine where we had quite a drop in grade, which was unexpected, and really on the back of where we had geological features that came in and actually dropped some of our high-grade panels, and then also mining into a fascist that was unexpected into the VCR, and those of you that understand the VCR know that it's quite erratic, and we mined many of our panels into what we call a terrace fascist. Being a sequential grid mine is not that easy to move, so we've done the moves that we could, and we actually had a total replan and Kusasa led to, should be out of the, by the end of this financial year, be back on the six grams, but then recovered. And then we had the 63% rise in operating free cash flow margin. The margin is now at 13%, really at the back of a gold price that increased with 19%. So very thankful for the gold price that we received. If we look at our continued opportunity to increase our margins, and so this is now since I took over, and we obviously had also a change in leadership on the South African operations. In FY16, we really focused on stabilizing our operations at 1 million ounces, South African operations at 1 million ounces. We introduced our hedging strategy. We repaid our debt during that year, and we actually put the target out there we'd like to get to close to 1.5 million ounce producer going forward. FY17, we bought Eden Valley. The rest of Eden, we recapitalized Eden Valley, and we actually had a very good run in the South African operations to be more predictable in our production targets. In FY19, Moab Kotsong, we acquired Moab Kotsong, we did the Hidden Valley E3 investment, we completed that, and our South African operations actually had very good momentum during the year. FY19, Moab Kotsong and Hidden Valley boost our production during the year, and we mined 1.45 million ounces, which is in line with our production guidance. Our focus in FY20 is to acquire quality assets, permit, fund and build Wafi Gold Pool, and I'll give you an update on that at the end of the meeting, increase margins from our current operations, and evaluate organic growth opportunities. When they look at our relational results, compared to the previous six months, the comparative six months, the first half of FY19, we had an 8% drop in production. I've actually to articulate the reasons for that already. Underground grade is really in the back of the grade that dropped from the 5.65 to the 5.29. Our gold price received was 19% up. Production profit, 21% up. Cash operating costs were down. And it's really not in back. If we look at the total cost of the mine, we've had about a 6% increase in cost, which is in line with inflation. Remember, that's the time when we actually do the adjustment for salaries during the first half of the year. And then also, obviously, the increases that we had on electricity and other inflationary things. It's really in the back of the lower grade that we had an increase in unit cost. And then operation-free margin is up with 63%, down to 13% from the previous, you know, the red and the black money. So, talking about raising our game, three, four areas that we need to really focus on. First of all, what has CASASA led to? We have the turnaround plan in place. The improvement in grades is expected in the quarter-fall of FY20. Target, the reinvestment project is proceeding well. We're really doing well in terms of the project. And the improvements expected in FY20-21, as a matter of fact, we're at the moment in quite good rate of masses, of masses that we're mining, and we should have a very good six months in there. Joel, the 137 level is completed. It took us quite a while to develop those extra levels. And the improvement is expected in early 2021 as the race lines get through. And in Hidden Valley, we really transgressed from stage five to stage six. We're in the top part of the ore body as we mine down the mountain. That obviously had much lower grade. So we expected that lower grade. We'll get into the higher grade latter part of this year, this financial year. And as we speak at the moment, we are actually mining much better grades at Hidden Valley, but that was expected. And then ask Frank just to talk a little bit through the financial results.

Thank you, Peter. This is the extraction of our income statement. And this is for the six months ending December 2019 compared to The six months ending December 2018. We start off there with the revenue. You can see our revenue is up to $15 billion. This is 11% higher than we had previously. The increase was due to a 19% increase in the gold price and that was unfortunately offset by 8% reduction in gold production. Our cash operating costs went up by 8%, as Peter said, this is the normal inflationary increases on those wages and on electricity. Our production profit went up by 21% to $4.1 billion. Amort was slightly lower because of lower production in this period. Expiration expenditure went up by $50 million and this was as a result of the expenditure at Wafi Gopu in this period, in the six months. We had a gain on our foreign exchange. This is from our dollar debt in this period. We paid tax on our foreign exchange gains and then our net profit was up to 1.3 billion from a loss of 19 billion in the period before. This is our US dollar. If we look at our net debt reconciliation, there we had the $4.9 billion at the beginning of the six-month period at the end of June. We generated cash of $3.1 billion. We spent capital in South Africa of $1.5 billion, $700 million at Eden Valley, and then there was some other expenses. And, you know, that takes us to our net debt position at the end of the year where we paid off 630 million net of our net debt. This is just in dollar terms. And I'll hand back to Peter.

Thank you. Our second whole focus area is going forward. Our strategy remains to produce safe, profitable ounces, increasing our margins. We have four strategic pillars. The first one is operational excellence. Our key focus remains to improve our safety performance and increase our productivity by doing that. and we really spent an enormous amount of time and effort to improve our safety. I mean, most of the time that both Bayes, the Chief Operating Officer, and myself are spending is really on safety issues and trying to improve and really mobilize the whole operations as far as safety is concerned. We revised our guidance due to the lowered rate, and this morning we had some feedback from some of our analysts that said, why do you actually adjust it for such a small margin? But we do believe that we need to have you know, be transparent. And so we dropped the production with 4% to 1.4 million ounces. And really on the back of the underground grade that we say now is between 5.50 and 5.57. That's in line with last year's performance as far as grade is concerned from the underground operations in South Africa. And our oldest standing cost on the back of that will now be between 600 and 610 rand a kilogram. From a cash certainty perspective, we'll focus on repaying our debt and hedge to manage our short-term volatility. And I think we've been quite good at that over the years. It's proven to be, you know, we're really making a lot of money because of that. And the hedges that we do going forward is an aspect of very, very high price. The third pillar is really effective capital allocation. And here we live under secure Wafi Gold Pool permitting. And we, this morning, had some very good news from out of Papua New Guinea. For those of you, just to take a little bit back in terms of where we were with Wafi Goldpoo, we submitted our application for a special mining license in 2016. It was a lot of negotiations. At the end of 2018, December 2018, we signed a memorandum of understanding with the government that actually governed the whole Wafi Goldpoo transaction. just after we signed it, there was a change of Prime Minister. The previous Prime Minister had a vote of no confidence in him. New Prime Minister came into power and at the time there was also a court case brought against the government by the Governor of the province, Marobi province, not being included into the negotiations and there was a stay of negotiations that was ordered by the court. So for quite a long, for a whole year now, we couldn't actually negotiate anything as far as Wafi Golpu is concerned. Both parties then agreed to withdraw from the MOU and then we got the stay of order then lifted this morning from the court so we now can continue with our discussions with the government on Wafi Golpu and we know that the government is very keen to permit this transaction so we believe that we're going to get some good traction going forward. So at least that is a good outcome and we can help us pursue and going forward with the permitting of what we go to. We'll pursue organic growth opportunities and mergers and acquisitions opportunities and obviously complete the hidden values access to stage 6 during the course of this year. From responsible stewardship, we maintain our strong stakeholder relationships. I think we as a company have been very been able to have very strong stakeholder relationships and continue to be a responsible corporate citizen with good governance in place and obviously focusing on environmental management. Just a bit about operating free cash flow and sensitivity of the gold price. If one look at the last six months' performance, the 1.9 million operating free cash flow, If we have a 5% increase in the gold price, it can easily increase close to 30%. Obviously, it's 10% more. If you look at the current spot price, around about the 10% level, it can easily be 60% more in terms of the performance. So we're really looking forward for a good quarter, giving the fundamentals that support the gold price. So our investment case, we are a 1.4 million ounce producer. We're a responsible gold mining company with an experienced creditable management team. We've got quality growth prospects at attractive returns, and we are really leveraged to the gold price because it's a real grand hedge stock. Thank you all. We'll take any questions.

I'd like to thank Frank very much for all the help that he's given us over the years. It's been very appreciative, thank you, including the help that you gave me when I tried to climb Everest back in 2006. Thank you. Just two questions, and Target North. There's a lot of talk in the market about you having a look at Mpuneng. What is the state of that? Are you going to look at it? Are you going to walk away from it? What is the story there? And secondly, Target North, what could be like the blue sky for Target North in terms of life?

Let's start with Mpuneng. I think everybody's going to ask this question, so I'm going to answer it once. You know, we continuously said that we will look at opportunities both in South Africa, Papua New Guinea, the rest of Africa. If it makes sense for us to invest, we will do. in those opportunities. Obviously, you need to be affordable too. So, you know, where we are with, you know, we continue with that. We don't want to specifically talk about any specific, you know, opportunity until we get to a point that we have some, you know, real clarity or real, you know, certainty about that. So that's where I'm going to stop with in Penang, and so I'm not going to answer any more questions about in Penang. Target North is quite exciting. We've drilled the first hole. We started that about seven, eight months ago. We obviously want to firm up on our view of what the VCR is. That is the first VCR is on top of the greater scale or the Ellsbergs and the massive mining. And we intersected the reef just at the end of December. About a week from now we'll have the grades of the first intersections and obviously we're drilling other deflections now. So, you know, when we get that information, we will make it available to probably the next results presentations and see where we are and what we have. But so far it looks very exciting. Obviously we are gold miners, so we are optimistic. So it is very exciting stuff. But it is like a mine that if ever it is worth something, it is very far in the future. But we are confident that we have something there.

Good morning, team. Just a couple of questions from me. It's Shilin from UBS. Peter, just more of a long-term type of question. How are you thinking about your portfolio? You have quite a few assets that have less than five years left, a couple of assets that have one year left. So how are you thinking about those assets? And then secondly, what's the impact of load shedding on your operations? What was the impact in the last year? Tuesday last quarter, and then what do you think is the impact going forward? What's your mitigating strategy for that?

Thanks. First of all, in terms of what we have is that if we look at 2016, where we had about a five-year life ahead of us. I think it was about a million ounces. Where we are today, we've got 1.4 million ounces, and it is probably another five years or six years. So we've managed to to absorb four years and still have the five years ahead of us. We have a lot of organic opportunities. We've got a lot of retreatment facilities. You know, it is also about, you know, getting our, CalGold is quite an advanced stage in terms of having a bigger mine at CalGold. We're trying to find just the whole body to support that. Drilling a lot of work, doing a lot of drilling work at the mine. And obviously through mergers and acquisitions, you know, the head of Mabkatsong, And, you know, that will obviously get us there. So we are quite confident that we will be able to extend it with another five years or so, so it will be a 10-year life or so going forward. Having said that, on the ESCOM side, obviously the stage six didn't help us a lot at the end of the year. The impact was, you know, a full shift and two night shifts that we couldn't put the shift down. That is about 80 to 90 kilograms of gold that we lost due to that. because we had to keep people on surface during stage 6. But the issue was really about the momentum break that we had, because we were really having a good momentum up to the Christmas break. And normally people work very hard up to the Christmas break to ensure that they have a good bonus and everything else. But then, you know, you sit on surface for a day and you break a lot of that momentum on the operations. So that was not a good outcome for us. Going forward, what worries us at the moment is that we have this continuous stage one or stage two load shedding or containment for our site. And that means that we have to cut around about 10% of our power usage. And that's not a good outcome for us because what normally happens in the past is that we could make it up over weekends or make it up about, you know, in the nighttime where there's no load shedding. Having this continuous load shedding is a problem for us. We're in a discussion now with ESCOM to try and see how we can alleviate that and see how we can manage it better. Obviously, the first thing is that we have to cut back on production or something like that. It would be our high-cost mines, and obviously those are very close to the end of their life. Typically, it would be Massimo, Unicel. But we can also cut back on waste retreatment, which we can always do for a later day. But, you know, the continuous... you know, stage one, stage two, not a good outcome for the mining industry if we all continuously need to cut back on things. Just to get you some color in terms of where we are with the power, I mean, our biggest consumption is really on refrigeration and then also pumping and then also compressed air delivery to the mines. And those you cannot just switch on and off. You know, refrigeration needs to run all the time. The moment you switch it off, the mine heats up, you cannot mine. So we need to continuously have those things. So the things you can play with is really milling and hoisting, you know, to do those cuts. And that is what we need to have a way forward with ESCOM, because every day they say cut 10%, cut 10%, cut 10%, and every day we're going to run into trouble. Because remember, our base is really on our previous year's consumption, and we haven't closed any of the mines yet that we operate at this point in time. So we have to sit down and find a way forward with ESCOM, we have some appointments for them to have that discussion.

Peter, continuing on the theme of electricity. So obviously the minister has opened up the path for IPP and self-generation. So what projects do you have? What are your plans regarding that? And how will that be funded? Is it possible to fund this externally, or will you take it onto your balance sheet?

Good. Thanks, Arnold. What we have in that, I think, 700 and something megawatt that is on the table, that the mining industry had on the table of the minister, was 30 megawatt solar plants in the free state. We're very thankful for the minister to give us the go here to continue. We believe that all regulation hurdles will be will be probably overcome in a month or two from now, so we can start with the program. We already had, you know, went out on provisional tenders to build it, and what we're looking for is really somebody that we'll take and pay, that we'll build with our own capital. There'll be somebody else that will build it for us. So that's the first 30. We have on the table, on the cards now, we still have another 40 megawatt that we can do in the future, But, you know, we obviously would like to see what, get the maximum out of our being more self-sufficient as far as electricity is concerned. But the 30 megawatt was already in that list of ones that was on the table of the minister for approval. So that will be our first step. So all things being equal, we by the end of, middle of next year, we should be in this position that we can, and that was about 50% of our production, of 10% of our production, usage, At the time when we made the application, obviously with Moab, it's bigger, so we certainly would like to increase our self-sustainability as far as electricity is concerned. At the moment, that particular one is on a, you know, we will just take, somebody else will build it for us.

If I may, you talk about productivity improvements as one of your key objectives. Can you just elaborate on that? Where are the opportunities? Where do they lie? What exactly does it entail?

Yeah, we do quite a lot of work on business improvement, and certainly some of them need a bit of capital in terms of how you need to do that. But certainly on things like, you know, getting people quicker to the face by using, you know, alternative transport methods like, for instance, chairlifts, horizontal chairlifts and things like that. So we're looking at a lot of things that we're currently looking at. Every miner's got his own list of of issues that we believe that's bottlenecking that particular mine, being it ventilation, being it transport of people into the place, being it hoisting capacity. Mines like Pakiso is actually quite full as far as hoisting capacity concerns. We find that every one of those mines has got a business improvement plan, which we would like to see quite a good result out of that going forward. Obviously, from a technology perspective, we're also looking at whatever we do through the the Mandela Precinct that we've done through that process, we are also looking at trying to improve. But we've got a specific plan for every mine to improve.

Hi, Peter. It's me again. Just a question around the use of the cash. So you gave us a sensitivity of your operations, your cash and routine sensitivity to the gold price. What are you going to do with the cash? Are you going to reinstate the dividend? What other options are you looking at? Thanks. Frank, would you like to answer that?

During the last 20 years, we've been through an enormous growth. That was with the capitalization of Eden Valley and also with the acquisition of Goa. And so we've been through a very big growth phase. and our first objective is to reduce our debt levels and you know at this goal class we will be able to do that and you know of course it is also our intention is to pay a dividend but at this stage we first want to reduce our debt and you know it also helps us with possible future funds. deleveraging then potential investments and then dividends or what's the order of preference I mean the first thing is deleveraging and then of course if there are opportunity for a for growth we would consider that and only lastly we would look at the dividend at this stage yes okay so could I consider a dividend more of a long data type of option yes okay thanks Just a question on Wafi Golpu. It seems like there are delays in your permits. Can you give us a little bit of colour on that?

Yes. Like I said previously, you know, we thought we had a huge breakthrough at the end of December 2018 when we signed the MOU with the government because it really gave us a lot of, you know, actually all the conditions were met and we had everything in place to actually take the project forward. Unfortunately, we had, like I said, we had that change of guard in terms of the prime ministers were changed. The new prime minister were wary of the previous prime minister's agreements that he made. And then we had this stay order from the governor that he actually went to court and said he was not consulted and he would like to, you know, he wanted to be part of this transaction. You know, according to the Papua New Guinean law, you don't necessarily have to consult the provincial governor in this transaction. But in any case, we had the stay order, so we couldn't progress anything as far as the permitting is concerned. So we couldn't have any meetings with the governor or government and the government team. And that took about a year to resolve. Now it's been lifted and the case was thrown out. So we can now continue with that. So we spoke to Johannes this morning and he's keen that next week we start with discussions in terms of how we're going to take it forward with the government and so forth. We've got at least what we say we had a huge amount of urgency from the government to actually permit this transaction now. I think the government is under pressure to deliver some of the projects in Papua New Guinea. So we We will wait and see, but we think we're going to have good traction going forward, and we're confident that it will be a good way for us going forward.

Okay, Peter, I think we've got some questions from the webcast. I'm going to start with the first one. Frank, I think this is directed at you. This is from Peter Combridge at Acurus, and he asks, at what point does Harmony expect to be debt-free, and will it leverage its balance sheet for future acquisitions?

Yes, thank you. If I can answer on that, you know, when will we be debt-free? Of course, that would depend on the gold production and the gold price. If the gold price goes where it is now, it would be actually by the end of next year at this production. And will we leverage it for future acquisitions? Yes, we will. We have been doing it and we will continue to do that. Thank you.

Peter, and I got a question here from Teleki from Maratori Capital. This is a question regarding our infrastructure and our engineering at our SPSF. Apparently, there's a misconception that we're sitting with aging machinery slash infrastructure. And he wants to know if that's true.

Yeah. Now, obviously, we do have old infrastructures, but I think we've done a tremendous amount of work since 2016 to fix that. If you recall, there would have been many, many unplanned stoppages on our operations due to infrastructure. We've hardly had any of that in the near, late future. One of the areas that also had a big issue was Hidden Valley. I think Hidden Valley in general has been working very, very well. We've been, we had HECAPSA from now on with power surges from PNG power. and we had to manage those. But other than that, our infrastructure is actually a very good mix. We've been good plant maintenance and the programs that our engineering team has put in place, I'm very proud of the work they've done. They can actually go and tell ESCOM how to do it. Also using old aging infrastructure and fix them up to a process where they can really work well for you and you can sweat them. But remember, our infrastructure is not under a huge amount of pressure. Most of the mines that we operate in, You know, we're much bigger mines in the past, so what we have now is that we do have time to work on infrastructure and have time to make sure that we have proper plant maintenance and conditioning monitoring, which is something that we introduced about four years ago, and that conditioning monitoring is working very well for us on our key operations.

Good, and it's Marianne from Harmony. I also want to remind our investors that with all of our IMIU audits over the last couple of years, that's our insurers, we've scored very highly on the infrastructure. So there's been definite improvement over the last five years.

It's amazing what the team has done over time to improve. If you look at our audits from our insurers, we are now one of the companies that they really believe we've got good infrastructure in place.

Peter, I got one more from Jared Hoover at RMB. And this is concerned with us readjusting our guidance. Previously, we were sitting at $1.5 million, which we've managed to achieve, but we've now downgraded to $1.4 million. And slide 28 indicates that you're going to produce $1.5 million in FY20. So you want to find out what your assumptions are regarding this level of production over the next one and a half years. And are there any brownfields projects affected into this guidance? And what do you consider EM&A as replacement or upside to this target of 1.4 million?

Okay, so the 1.4, I mean, if you want to look at back, this went with 1.5. We obviously had a full unicell. We stopped unicell. We're just mining the shaft pillar now. So we're just in the final parts of extraction. Unicell will have another six months ahead of it. Then it will probably be finished. It will be tough to get the full six months out of that, but we don't believe that we will have any forced retrenchment because of that, because we've planned for this for quite a while ago. We'll move the people to other parts of our operations. And then Masimung, which is the other one that we said had a very short life, We managed to actually get some very good grades and we believe that at least we have this full financial year we will be able to mine Massimong. We're in the process now of the re-planning and most probably we'll have 18 months out of Massimong in total from where we are now. So that will be the outcome. Massimong had very good figures in the last six months. Going forward, I mean, the brownfield streams that we have is obviously the increase in production from Joel. It will be increased in production from, you know, if we capitalise a target, it will also be increased in production there. We are, not that this is increasing, but we are mining deeper and deeper in the Pune, Pakisa and Tjepong, where we get to the higher grades part of the ore body. So I think all in all, we will probably be, South African, or the current operations will operate for that one point, 35 if you take Unicell out going forward for quite a sustainable future.

Thanks, Peter. Do you have any calls, any questions from the call?

Yes, sir. We have a question from Adrian Hammond from Standard Bank.

Good morning, Peter. A couple of questions, please. Could you give us some idea on when you intend on expanding Cargold to what production level? and what would the call on CapEx for that be? Secondly, on GoPRO, what is the timeframe for the expectation around receiving the SML, and what would then the call on CapEx be following that? And then, given all these capital requirements, and I guess with your intention around acquisitions, would you consider using your paper to fund all of this? And is there any lesson learned from your prior acquisition of Moab, given the, with respect to the level of debt to equity you used there? And what's the sort of target net debt to EBITDA for Harmony Gold, please?

Good. Okay. Adrian, first of all, in CalVault, What we've done at Calgold is that we did, if you recall, if we just take a step back in terms of where Calgold was, there was very little geological information about Calgold in the past. What they did normally is they just drilled enough to do the next year's plan, next two to three years' plan. We changed that philosophy a few years ago and actually spent some money on understanding the ore body a lot better. So we did quite a lot of drilling. I think we spent close to 90 million rand in drilling Calgold and understanding the ore body. So we did find quite a lot of exciting stuff there, which can be able to take Caldwell to a much bigger mine. Now we are looking at, we've done the pre-feasibility study of that, and we're taking quite a few options forward. The one is just to take the current mine and justify mining higher grades and see if that's a good outcome of that. The second of that would be to build maybe a new plant because the current plant is really at full capacity and it's also a very old plant and a very deliberated plant, so building a modern plant could be to the benefit. The plant will probably cost to the region of about 1.5 billion rand. building it over a year and a half or so to build it, if we do something like that. And then also to see if there's maybe a combination of the two. Because what we did is we did the magnetic survey, found quite a lot of anomalies. We did some soil sampling. Again, that was very promising. And we're looking at now drilling those areas to see. So we're quite a bit away from making a final decision as far as Calgeld is concerned. As far as Goal 2 is concerned, I don't have a timeframe on that, Adrian. You know, we'll see how things go. I mean, we just had this morning found out that the stay of discussions was lifted. So we will see how things go. So we'll keep you posted in terms of what we think the timeframe for Goal 2 will be going forward. Then on the, you know, on the SML, to get to the SML. We know that both parties are very keen to get it. And the last final question, I didn't write them down. On the debt levels, yeah.

Just whether you would use your paper to fund further growth and do you have any lessons learnt on the prior deal with Moab given the level of debt to equity for funding that?

Yes, thank you. If I can answer that... Yes, we, at the time when we acquired MOP, our net debt to Everdahl's ratio was 1.3. It's down to 0.7 today. So we're actually really happy with the way we funded it. And, you know, we don't have a problem with our net debt situation. You know, at these gold prices, we are very comfortable that we will be reducing our net debt in the next 18 months, two years. significantly. When it comes to, you know, other acquisitions, I think the question, of course, would be what the size of the purchase price is. You know, we would very much like to fund it with debt and not with equity if we can, you know, because we believe our share price is really undervalued and, you know, to the extent we can fund it through debt, we will do that. Thank you.

There are no further questions on the line, sir.

Okay, thank you very much, Peter.

Thank you.

Ladies and gentlemen, thank you very much. If there are any further questions, especially from the media, please come see myself or your one-on-one with Peter. And if any analysts have any questions, please go see Marianne and Herman Perry, and then they will answer all your questions. Thank you very much for coming.