African Rainbow Mnrls Ltd

and welcome to the African Rainbow Minerals results presentation for the six months ended 31 December, 2023. Please note, this is a hybrid presentation. So we would like to thank everybody who's dialed in, but more importantly, the people who've made an effort to come be here with us in person. At the end of this presentation, we will go into Q&A. So if you've dialed in over webcast, Please post your questions while the presentation is going on. Please help me welcome our Executive Chairman of African Rainbow Minerals, Dr. Patrice Muzepa. Over to you, Chair.

Thank you. Thank you. Good morning. It's good to see Martin Kramer. You're becoming younger and younger. My favorite... Somebody was telling me many years ago, there were people who make us all proud. Martin Creamer is the salt of the earth. Where's David Mackay, my other favorite person? He's not here. Okay, pass my regards to him. Sorry? Okay, who does he work for now? He works for you, Martin? Pass my regards to you and all my wonderful favorite people. I'm going to go as quickly as possible through the results because you've got the documentation. My gratitude to the board members who are here. So thank you so much, Brian, for coming and all the other board members who are here. And thank the media. Our partners are here as well. Who's here from our partners? Mike? I saw Impala, Anglo-Platinum, Assore, Simitomo, and who else?

I think Simitomo.

Yeah, well, the ones that I'm told are here. Thank you so much. As I said, the results are self-explanatory. I was in a meeting a week or so ago, and there was a presentation that the results were good in a very difficult environment. In fact, very good in a very demanding environment. You will see from the presentation the impact that the prices of the commodities that we mine, particularly PGMs, have had on our results. But I think it's during these challenging periods that the benefits of being diversified come to the fore. And more importantly, that having a world-class management team, Philip is doing excellent work as our new CEO, and Sue and Mike Schmidt and Andres Joubert and Tando and the rest of the team. I saw Kajal and then every single one of the management team. I mean, we are... Very fortunate to really have world-class South Africans who are as good as the best in the world. The headline earnings decreased for the first half, decreased by 43%, and you'll see what the primary costs were, to 3 billion, and we've declared an interim dividend of 6 rands per share. In order to be a truly globally competitive company, you've got to deliver good results at the heart of which paying dividends is part of our policy and part of our commitment. And side by side with that, we are a growing company. We've got some exceptional world-class assets that we are mining. But... We also have to take a 3, 5, 7, 10-year perspective of what would continue to make African Rainbow Minerals a globally competitive company. Arm Ferris, there was an increase of 12%. Headline earnings at Arm Ferris, the PGM said, essentially because of the price, decrease of 121%. And arm coal went down by 85%. We are committed to sustainability. We are committed to partnering and confronting climate change. And we are... Our policies are part of what we call a just and a fair transition. And if you look at the slide, it indicates the impact of the decrease in platinum, the headline earnings, the impact that platinum had, and André Joubert continues to do good work. David is here. He's on the mind. David? David? Okay, that's good. And coal and corporate, six monthly headline earnings. If you look at over the last five years, and you look at 21 and 22, we are currently globally in more or less the same environment. And as I said, essentially and primarily in relation to... relation to pgms it's it's the decrease in the price and i saw palladium increase mike about 10 yesterday so that's that's good but again we our strategies and our focus is is medium to long in short medium long term And part of a diversified mining company is that there'll be times when the prices are depressed and there'll be times when the prices are very high. And it's during those times when the prices are high that you invest to get ready for the next upswing. Dividends per share. If you look at the dividends we've declared now in comparison with 2019 for the first half and 2020, It's higher than that. As I said, it's part of our overall commitment to be a dividend-paying company and ensure that at the same time we pursue growth in the minerals that we mine, but also in those minerals of the future. The dividends we received, 14% decrease to $3 billion from S-MENG. No dividends from Mudikwa and Amcol, 87% decrease, 253 million, and Two Rivers. A lot of good work has been done at Two Rivers, and in the medium to long term, we will do well there. Safety and health is a key part and a critical component of how we run operations, and Philip will talk more about that. The decrease of 14% in lost time injury frequency rates and the decrease of 19% total recordable injury-free frequency rate. It's always extremely encouraging that there are zero fatalities and we've got a huge focus on the safety and health of all of our colleagues and employees. And this is the ARM strategy, what makes ARM an exciting investment company. It's an owner-operator. We always talk about ourselves as having an entrepreneurial management culture. The heart and soul of every business is the employees. We look at universities as well as in the corporate world, in the mines and in the industry to attract and retain the smartest and the best. Part of that is not just about waking up in the morning as an employee, whether at the mine or at corporate office, and feeling that I'm working for the best company in the world and being respected and growing and having a good future, growth path, but it's also about we've got to pay our employees competitively based on performance. We have to It's part of our commitment over the last 30 years that we want to make sure that working at ARM is indeed the best place to work in the South African mining industry. We partner with our communities and other stakeholders, critically, critically important. I was in Miami two weeks ago at the meeting of the ICMM with the CEOs of the largest mining companies in the world, and I'm very proud of the work that the ICMM is doing and the commitment to partnering with community stakeholders. The mining industry, like any other industry, we have to fight for our position in the hearts and minds, in the first instance, of the communities where we operate, but also in the hearts and minds of stakeholders, communities, individuals, citizens globally. And our commitment to ESG and And climate change, as I said earlier, is to a large extent expressed in the principles that the top mining companies in the world that are part of the ICMM, BHP, Rio Tinto, Anglo-American, Vale, and many others. So community is an important part. And technology... I spent some time in America and meet with some of the smartest and the brightest in technology. At Davos, there was a session with most probably the people in the world who lead on the innovative and the impact of technology. It's a huge learning experience. I always feel comfortable when... Those who lead the world acknowledge that they themselves don't have a good understanding of the impact of technology and innovation on profitability and on efficiency in the medium to long term. But there's a clear understanding, because many can see it, that technology, you cannot in today's global economy run any company without as best an understanding of technology and the impact of technology on your company. And I'm very proud of the good work that's been done at Arm, but also the relationships and the networks that we have and the exposure we have and the participation in fora and in meetings with the leaders in technology in the world. But you've got to be careful as well Because you can overspend and there's an overzealousness. But the bottom line is a continuous engagement and a continuous learning and partnering and exposure. Segmental habitats split by commodity. I think the slide is self-explanatory. But I think the key issue there is that You can see where PGMs now, the contribution of PGMs during the first half, and if you compare it with the financial year 23, as well as 22. But look at 2019, where it was 16%, and there was an increase in 2020. Again, we are in these businesses for the long term. And they'll talk later about Bocconi. I mean, we've spent a huge amount of money on Bocconi. And it's an investment in the future, and it will create value for shareholders. Evidence of margins by commodity. You see that coal contributed last year. I think there was a time when we got several offers to sell our coal interest. And I think part of our focus at the time was this absolute commitment we have to the just transition. And climate change, and we recognize that coal is important in the short term because we've got hundreds of thousands. In fact, we've got millions of South Africans whose future and whose lifestyle and whose families depend on coal. And the clear commitment of the transition to zero emissions, because that is indeed the ultimate objective over time, also entails training, educating, and the transition of those who currently depend on the coal industry, new training, new jobs, new opportunities, and I think a good future. PGMs, you can see the margins have gone down, as I said. INR, again, in relation to INR, the importance of the diversification. And I think Philip will talk a little bit about Transnet. I think the new CEO, excellent, we're very proud of Michelle, the lady that they've appointed there. It just emphasizes what we've always repeated over and over again. You have to employ the smartest and the brightest and the best. Meritocracy is non-negotiable. Meritocracy is non-negotiable. And there's no conflict between zero tolerance, let me put it more positive, non-negotiability of meritocracy and the rising and the occupation and the skills and making sure that, that some of the top positions are occupied by the smartest, brightest women we have in this country. We've got exceptional women. And we've got equally smart, bright, black South Africans, white South Africans, Indian colored. And again, if you look at ESCOM and see the really incomprehensible failures and mistakes there, totally unacceptable. But I think they did the right thing by appointing... Michelle was there for about 20, 25 years. Yeah. So if you grow up in a business, you have a solid understanding of what the challenges are. I may be a smart, bright financial person in one industry with excellent qualifications, but with no experience in another industry. So we have to focus on those, particularly in this... time that we have now to make sure that those who've got the experience, those who've got the track record get the jobs and I think we're moving in the right direction as Transnet did good work. Okay, so I'll hand over to Philip and let's clap hands for Philip.

Thank you very much. Thank you very much, Chair. Good day, ladies and gentlemen, and a special welcome to those online and also all of you who are attending here in person. Also, just to mention one of the board members, Dr. Rejoice, as well. I know that Brian has been welcomed and acknowledged by the Chair, our joint venture partners, the executive leadership team, and our operational management. During the past six months, the industry had numerous challenges operating and managing in a low commodity prices environment, together with a number of challenges, logistics, power, and above all, inflationary cost increases. Once again, we realized the value of a diversified portfolio. You can see from our diversification how strong Amferas really performed, not only at the back of the price, but also the delivery in terms of volumes and also the sales volumes as well. Cost reduction and cost containment, as we previously committed, had been a key focus area, and to date we've really made some good progress in three of the four operating assets. We remain focused to enhancing quality, mining, quantity in terms of volumes, and making sure that things that are within our control, we really take full ownership and execution of those. Cost being that, the great volumes, creating an enabling environment for our employees and our workforce, that is basically within our control. So looking at the ferrous, there had been a 23% increase in average realized iron ore price, coupled with 9% increase in terms of the volumes and the sales volumes that were delivered. In all sales volumes, we didn't have the same challenges that we had the same corresponding period last year. You would remember that in November 2022, we suffered and experienced the 10-day transnet strike. During this competitive period, we didn't have that. Obviously, that added some days to us and created an opportunity for us to improve our deliveries. On the platinum side, primarily negatively affected by the basket price. However, there have been some benefits with regard to the weakening rent. What has been very encouraging, we saw our two assets, Mudikwa and Two Rivers Platinum Mines, basically performing better year on year. Even there, the key focus area is still enhancing quality mining, optimizing mining grades and volumes. reducing waste, and on the AMCO, the results were negatively affected by the price. In this slide, we can see an improvement in our production volumes. On the iron ore, 1% improvement. year on year, and then I said the two rivers also 2% and 3% at Mudikwa. However, manganese ore and manganese business was negatively affected by some of the challenges that we experienced at the operations. We still remain committed to improving the factors within our control and also driving value-enhancing production. Moving into the Ampharos performance, looking at the top left variance analysis, you'll see the impact of price, the impact of volume, to a tune of 698 million. And also, obviously, there were some accompanying and appropriate cost increases. However, if you look at the bottom slide, the changes in unit mine cash costs, you'll see that the iron ore only had a 3% cost increase year on year. Regrettably, we've regressed on the Black Rock. As I mentioned, there had been some operational challenges, and to date, those challenges have been addressed. I can really assure you that we're making good progress in really steadying that ship. Kumani, you would have seen from the EBITDA segment that 80% of our EBITDA came from iron ore. If we really have to single it out, Kumani has really been the star performer during this term. It remains a tier one asset with more than 20 years remaining of high life, high grade quality life with a low strip ratio. In that regard, we have really realized 6% improvement. If you look at the volumes, export sales volumes, and 23% on the local sales as well. That doesn't just happen. There has been considered effort from the leadership of Andre and his team, and also the mine management team. As the chairman has mentioned, with Michel having been acting for the past few months, We have really seen an improvement in terms of engagement with Transnet. I mean, I would say for the past few months, maybe the past three, four months, I mean, we've really been having engagement with her almost on a monthly basis. That's how accessible she has been. She really took the effort, put time aside, brought her team along to come and really engage with a very strategic and a very important customer to really understand, you know, how we see things and how we can really move forward collaboratively to make sure that we turn this. Because at the end of the day, is SA Inc. that is going to benefit, and we're also going to be the beneficiaries from that improvement. Various cost-saving initiatives are being considered. For an example, strategic sourcing of fleet and centralized procurement, basically looking for opportunities, and continuous improvement is the name of the game. Just making sure that we can do things better, improve on what we have done today to make sure that tomorrow it's even a much better position. However, the biggest risks that is facing our iron ore production and operation include among the three, the single customer risk at Biasuk, the water supply challenges. It's ongoing, but we are doing something about it. We're not just lying back, but these are things that we just need to continue to really raise and to mention, but knowing that there are some action plans to address them. On the manganese side, BlackRock remains a high grade, low impurity, long life ore body with inflated capacity to produce over 4.6 million tons per annum. With a recent investment, that mine is basically set to deliver. However, as I mentioned, we've really had some challenges, including also the issues of skill loss, skill retention, and also basically the mining challenges as well, ground conditions underground. But as I mentioned, those things are really being taken care of, and we believe that next time when we come, we'll come with a much better and improved performance because the ore body is still there, the workforce is still there, and we still have really invested our capital. Moving into a platinum space, this is where we really had some serious challenges. I mean, all of you would have really been following. Since May last year, we've really seen a sharp reduction on the basket price. You know, so lost almost $3.4 billion, which is price-related. However, we've really had some problems. some response to that through quality mining focus, through optimization of grade, and through delivery on the volume side. As I mentioned, taking control and executing on things that are within our control. Pleasing to mention and to see, I mean, you remember that during the previous period, We reported over 21% and 25% unit cost increase, but for this period, it was only kept and maximized at 7%. We continue to look for opportunities and to make sure that we maintain and improve our margins. That is basically just the breakdown of that. You can see the 4% improvement on the head grade at Mudikwa. And also that came as a result of having changed our philosophies. I mean, previously we were doing on-riff mining, so we've basically just gone back to off-riff development so that we cannot really dilute and contaminate our grates. And an effort also went into managing split-riff at Two Rivers Mine. That is basically ongoing. However, we've really been able to sort of break it. We're able to define the cut, the effective, and also the right cut. And at this point in time, pleasing to mention that at least we are mining on the planned mining grade. So a lot of room for improvement going forward to make sure that at least we can improve that situation. Pleasing to mention that Bocconi's first PGMs were produced in November 2023. You remember that we acquired Bocconi with an infrastructure of 60,000 tons of UG2 plant and 110,000 tons of Merensky. Through the board approval process and permission, we're able to invest what you call early ounces capital into the business to basically recommission the 60 kiloton of UG2. And it was pleasing to see, I mean, delivery on time and delivery on budget. And as I said, I mean, in November, we started sending concentrates to Anglo smelters. So we're expecting the production to ramp up to 55,000 tons per month in the second half and to continue to explore other opportunities whilst basically optimizing the installed infrastructure. Arm and Norilsk entered into an agreement, you know, the purchase and sales agreement during this period where we agreed to acquire the 50% stake of Norilsk and becoming the sole owner. So the process is still underway, just awaiting the conditions precedence that will have to be closed so that we can close that transaction. Together with that, we'll be taking the portion of their liability, and they also contributed an amount of 325 million towards it. Moving into coal. Pleasing also to see some contribution, though negatively impacted by the price, but there have also been some positive contribution and also returns from our coal business. Focusing on things that are within our control, you can see the unit cost increase year on year of 1% for PCB. participating called business and also for only 3%. So you can see that within the group, there's that really aligned focus to those things that are within our control. I mean, we took advantage of good prices and we employed tracking know to complement our volumes and you can see that as a result of that there have been a 25 improvement on the domestic calls up and volumes and also 18 on that however at this point in time we had to really stop it especially when the price went sub hundred dollar ton because then it's not really profitable at a certain stage but we continue to monitor those prizes and also make sure that we are ready to maximize and take advantage of whatever opportunities come our way. And you can see on your bottom right slide on the stockpile volumes how much movement we've really had as a result of that. And that is just a breakdown, summarizing most of the things that I've mentioned, also mentioning as well that we have really seen some increase on the volumes, so the performance is really on the right path and the right direction. Coming to our projects, a very key and important project, Two Rivers, a Merensky project. We are now running the last lap of that project. We will be starting our commissioning towards the end of April, between April and June. We'll basically be doing the call commissioning just to make sure that the delivery is in line with our expectations. And then following that, we'll make some other decisions in terms of the long-term view. On the projects as well and the capital, we've taken a stance of making sure that we review, we scrap, we identify any potential cost that we can really defer. Some of the things you can really be able to do without your office structures and other things. Some of those will really be deferred and we'll execute them later. Just making sure that we optimize our capital expenditure and that also we adopt that cash preservation mode. With regard to Bocconi, as I mentioned, we're still confident in the long-term profitability of Bocconi. It's a high-quality ore body. It's the second-largest ore body, and we do believe that with the right infrastructure and with the employees and the workforce and the right level of capitalization, we will be able to get Bocconi into a much competitive cost, global competitive mine. We need to sweat our existing assets with minimum capital outlay, and that's basically what we're busy doing at this point in time, looking at optimal solutions for Bukoni and growth as well. In closing, our key focus area, and also in response and prepare ourselves for the future against all these headwinds that we are facing with, we want to ensure that our operations are profitable and globally competitive, Very crucial that we maintain a very good position in the global cost curve. I mean, our desire is for operations to be in the first quarter. And two rivers have been there before we intersected and mined split reef, and we'd really like to see it really be going back to that position. I mean, Kumani, with the quality delivery results that we have seen, is basically in that position. Maintaining a robust balance sheet, and as I said, the cash preservation, making sure that we spend wisely, in line with the needs and identifying what the wants. The wants delaying them, but making sure that the needs that we need to really secure the future are actually taken care of. Aligning production capacity to logistics and infrastructure constraints. I mean, I mentioned that if you look at BlackRock, I mean, the installed capacity there is about 4.6 million tons. But at this point in time, we're focusing 3.7. So the cost structure really needs to be aligned to that so that we can really improve our profitability and our margins and ensure the sustainability of that business. Exploring value-enhancing growth opportunities. We continue to look for opportunities. And then we'll make the right decisions when those opportunities come our way because we do believe that by diversification, is the way to go, and we've really seen it that it has enabled us to basically weather the storms that we have really gone through. Thank you very much. I'm going to hand over to Tsu.

Good morning, everyone. So in these challenging times, sound capital allocation is more important than ever. When we look at capital allocation at ARM, we prioritize investing in our existing business. Now, when we talk about our existing business, I'm referring to our sustaining capital expenditure, or some people call it stay in business capital. So that's what I mean when I say investing in our existing business. We then actively seek to grow our existing business, all of them, as well as pursue acquisitions that make commercial sense to us. Now, when we look at these opportunities, they battle it out for capital, where we look at a number of different metrics, which include return on capital employed, payback period, hurdle rates depending on the maturity of the project, and so on and so forth. We, however, remain committed to paying dividends and returning capital to shareholders, which we have demonstrated over the years. This slide illustrates how we generated cash and how that cash was allocated in the six months ended, 31 December 2023. If you look there, we generated cash of $449 million from our operations. If we look at this compared to the same period last year, this was a decrease of 92% compared to the prior corresponding period, which Philip has mentioned really is a function of the lower PGM basket price. And that cash generated from operations also takes into account a $786 million increase in net working capital during the period.

If we look at our dividends received, we received $3 billion in dividends from our assets.

If we look at our net cash, so our total borrowings reduced by $49 million during the period to a balance of $193 million. The balance relates to the RMBE trust loan that's owing to Harmony, which is interest-free, as well as our IFRS 16 lease liabilities at a number of our operations. This means that ARM has 6%. Yesterday, SMA declared a dividend of $4 billion, of which $2 billion is attributable to ARM. This amount is not included in the numbers that you're seeing there on the screen. So the capital expenditure for the reporting period was covered by Philip in each of the division sections. Just some things that you could note. The segmental capital expenditure on an attributable basis was $4.4 billion for the six months, which is $1.4 billion up when we compare it to the prior corresponding period. Most of this was spent at our arm level. Platinum operations, specifically two rivers, with 3.1 billion of that amount being spent there, 1 billion at our armed ferries operations, and then 274 million at our coal operations. This is on an attributable basis. If we look at our segmental capital expenditure guidance, so the guidance for the financial year ending 30 June 2024, so the one that will end come June, shows a marginal increase of 100 million compared to the 7.6 billion that we had guided and communicated to the market in August last year. This is due to the border-proof capital that has been incurred at Bugoni for the development of the Klipchat portal and associated infrastructure, which will be beneficial to the early ounce project. Now, CAPEX for 2025 and 2026 includes approximately 3.5 billion on a normalized level of sustaining capital expenditure per annum, which includes circa 700 to 800 million per annum on an attributable basis of capitalized waste stripping for our iron ore operations. Thank you very much.

Thank you very much to our leadership team for that great presentation. Today we're going to do things a bit differently. We're going to take questions from the floor first, and then we will move over to questions on the webcast. Ladies and gentlemen, can I please kindly ask that questions for today are limited to the results. If you have any other questions, please feel free to get in touch with me or Betty at the end of the presentation. Thank you very much.

It's on? You can email. Martin Creamer always would like to know about Transnet and various others because they've got an impact on our business. We'll take whatever questions. Please don't ask me whether the Blue Bulls is going to win tomorrow. I can't deal with that. Just one quick issue in terms of a question that came in relation to Transnet. I think the reason why we spoke about Transnet is because it's It's very important to the whole mining industry, and it's important to our ability to... create value for our shareholders and stakeholders. And I must say, we are pleased with the progress at Transnet, and we are confident that they will do the right things at ESCOM as well. Just one quick issue in relation to ESCOM. I think it's important, ESCOM is crucial for our businesses as well, and an efficient ESCOM that provides and sells the cheapest possible electricity, it's good for industry, but one other important point is people, ESCOM is crucial for the poor. And that's why a remark that I made, which people took out of context, is that it's critically important that all of us work together to protect ESCOM and to make sure that ESCOM is a is a world-class electricity company. But the most important thing for Eskom, of course it's important for business, but in my view, the most important thing is for the poor. The poor needs electricity that is as cheap as possible, but also as reliable as possible. And the issue about the private sector and the IPPs in particular, is in relation to the technology that has been developing and that we saw 15, 20 years ago, which will have an impact on the competitiveness of utilities like ESCOM and others. But the bottom line is we all have to work together and make sure that ESCOM continues to be a competitive platform. provider of electricity and as i said the single most important issue for me in relation to escom is the poor it has to be able to provide the cheapest possible you know if escom we should hope that escom should provide cheaper electricity than the independent power producers that's where we should we should focus on but that's a separate issue yes martin

Martin Kramer from Mining Weekly. Just talking firstly about energy and competitiveness of energy. Can you give us an update on what you're doing about self-generation and are you finding that competitive besides helping the climate and everything else? Is there a good business case for this industry? And then my second question, there are so many things disrupting the world. There are so many things we can't control at the moment. There are so many things out of control. I would just like some sort of input from you on what you're doing about what you can control. And, of course, those costs you've spoken about and volumes you've spoken about, but grade particularly. Is there anything you can do about your grade? Is there any different way of mining that you can approach that you increase that grade which can cut your unit costs? Thank you.

Very important. Just very quickly, we're going to try and answer these questions as quick as possible. I mean, South Africa is a compassionate... Let me say it. South Africans are compassionate people. And, you know, you cannot have... a successful mining industry without an equally growing and an improvement in the living conditions of the poor. And Martin spoke about ESCOM and ESCOM is crucial. So we've got to clearly understand that if electricity is expensive, It has an impact on our capacity to create jobs. It has an impact on the competitiveness of the mining industry. It has an impact on the competitiveness of the South African economy. So I really want to say this so that I can get it out of the way and focus on what we should be talking about at the results presentation, which is whether it's energy, as you said, or even Transnet. So let me say it and get it out of the way. Our focus as a country has to be that we will only succeed as a country if poor, unemployed South Africans also have a future. You cannot have rich people and rich companies living side by side with poor people, unemployed. I mean, it's just a recipe for disaster. I mean, people talk a lot of rubbish. You know... I only succeed and my family only succeed and all of us only succeed because poor people, unemployed people, have a future. And I need to say this because there's a lot of nonsense that's being said, a lot of lies that's being said in the public domain. And I understand it's election time, so you have this sort of crap. But we have a long-term duty, and our long-term duty is we are not judged by what we say, but we are judged by how... The unemployed, the poor are impacted by what we do. And that's why if you look at many of the mining companies are retrenching because their businesses in the platinum industry, because their businesses are under stress. And I've got no doubt that every single one of them is looking at what they have to do in the context of their long-term commitment to their employees and to the country. So I just want to conclude on the electricity side that I'm very confident. You know, South Africans, we sometimes, and I think Churchill, Kramer, said the same thing in the context of America, but we sometimes do the most inexplicable and incomprehensible things, and then we realize after some time that, Again, in the context of ESCOM, for example, as well as Transnet, that we've been doing the wrong things, and we now have to do the right things. And I'm confident the right things are being done with Transnet, and I'm also confident that the right things will be done with ESCOM. Now, you were asking about the mining, how we mine, and will you do that quickly?

Thank you very much, Chair. In terms of the great, I did mention that what we did at Mudikwa, one of the things that we did was to move from an on-reef development back to off-reef. That's basically reducing the chances of diluting your reef, you know, and improving the grade. And at Two Rivers, we were able to optimize the mining cut within the split reef area. You remember that over the past periods, we've really been saying we faced with this challenge, and it seems as if we really were able to really crack that nut to optimize. Now we're mining at an optimized cut, which is in line with our average mining grade. And... basically getting rid of waste in our reef system.

When I was told this thing about 25, 30 years ago, Mike, and I think Philip said something very, very important. You want to add on that? Because at the end of the day, I forget it. I said it a few weeks ago. But anyway, will you comment on the question that he asked?

Yeah, Martin, there's no doubt that the industry... Sorry, Mike, sorry.

It's mechanism. They said they mechanize as opposed to... That's right. They said it's mechanization and the other one is technology. I don't understand what it means 25 years ago. I still don't understand what it means. But as long as, Mike, we see it in the result, in the productivity, in the efficiency, in the profitability...

Thank you, Patrice. So, Martin, I mean, South Africa is still endowed with narrow tabular deposits and very dependent on labour intensive, which with all its inherent challenges and safety, be it that dilution and grade, important. So we are and have been as an industry developing low profile equipment Various mines have pushed that, including ourselves. And in fact, in Bocconi, we've laid out the mine going forward to utilize what we call mechanized low-profile equipment, which can fit under the table to optimize grade, improve safety. And that is going to be starting up sometime this year. Medium term, we still believe that what the industry needs from a transformational point of view is to eliminate explosives underground. And long term, we continue as an industry, and particularly in ARM, to look at cutting technology. which in the next couple of years, I have no doubt, will come to the fore. And a grain, again, significantly improved productivity, efficiency, and safety, and a significant improvement in grade going forward.

Thank you. Yeah. Sorry, are you satisfied, Martin? Thank you. Yes, there's a question there. It's fine. Don't worry.

Don't worry. I've got a question, and mine is not necessarily directed to the result. It's more regarding climate change and ESG reporting.

If you can just introduce yourself.

My name is Benazir Sindhi Mukhteni, and I'm CEO at Kuji Consulting. I'm very pleased that you spoke about ESG reporting, Dr. Patrice, honorable. Thank you for this opportunity. I think what I would like to see is a direct reporting within these type of forums regarding ESG. What exactly is ARM doing to ensure we mitigate, we mitigate carbon emissions. It may not be directed to any numbers or success of the organization, but it certainly speaks to security and safety because there is a term called materiality on the financial impact, which speaks to security. Because if climate change is at a disaster and it's not managed. Thank you.

I think it's a very good question. I mean, I was in Davos again. where you've got the focus on ESG and climate change. Nowhere in the world is as intense as it is there. And let's talk about greenwashing, whitewashing, because I don't think it's so much what you say. Of course, reporting is crucial. And I spent a few days at... At COP, I think my wife was on a panel with Bill Gates, again at COP on climate change.

I mean, the whole of the mining.

on what is called patient capital for the next 20 years. We are part of what's called Breakthrough Energy Ventures. You must go and look at it. I mean, they're doing incredible work. And it's led by Bill Gates. We spent close to $100 million of family money. And we've got a 20-year perspective on But having said that, we have a duty to maintain and to create jobs. And the perception that there's a conflict between climate effects and strategies on climate change and ESG reporting and job creation and job preservation is false. It's not true. We will not allow that our commitment to ESG and climate change is at the expense of workers and job creation. in a country with such a high unemployment rate. It's not going to happen. But having said that, we are judged by what your results look like. What is happening to your share price? What's happening to the dividends? What does the future of your company look like? And thank you for that. You can ask anything as long as you don't ask about sports because I don't know what the result is. Yes, just what is your name?

My name is Tobela Bikla and I am from NetBank CIB.

NetBank?

Yes. And I have a couple of questions with regards to the platinum business and one follows up on some of the comments that Philippa made earlier on. So when you talked about having changed philosophy at Modigua to mining on-riff versus off-riff,

why the change and then also did cost have to do with anything with regards to that okay good question sorry i want tanda to answer that tando tando is running our operations at uh he's the chief executive of arm platinum proceed tando

Thank you. You had the question. Yeah, I heard you were asking about why they changed from off-riff to on-riff, or rather the other way around. The other way around, yeah. Yeah, and your second question was?

The second question is, did cost, given that we've seen high inflation environment and costs have been creeping up, so did cost have to do with the change in philosophy?

Okay, thank you. I've got that, Patrice. So the main reason as Philip highlighted why we've changed to off-riff, sorry, to on-riff, which means basically we were mining the ore as part of our horizontal development, and we changed to mine underneath the ore as off-riff, was to be able to realize the increase or change the grade as we've reported now. And the reason that has driven that is that we were able, as we reported the last period, that we were also supplementing our oil to the plant with Merensky oil. So we had an increase in the oil supply to the processing plant. Hence, we could afford to go off reef and realize a higher grade. feed to the plant. With regard to the, there's no really a cost in terms of doing that, but the benefit that you realize with higher revenue associated with the higher grade. Thank you.

But you know, this is such an important issue. As I said, you know when gold fields still was involved in platinum, I'm talking about many, many years ago, there's a lot of Focus, research, R&D that has gone into this. And, you know, I don't know whether you know, you remember there was a guy called Calvin Williams, Martin. You know Calvin Williams? Calvin was the finance director at Anglo American. And he was, I'm talking about many, many years ago. And they were saying that South Africa has got some of the most advanced, what you would call technology nowadays, right? And at the heart of it is what Tando and Philip and Mike was talking about. How do we make sure that we mine in a more efficient way? in a more profitable and in a more productive manner. You've got another question?

Just two more questions with regards to Pokoni. Go ahead. Yeah, so you talked about having deferred the bangable feasible study. To when should we expect some announcement coming with regards to that? That's the first question. And then the second one is, what would you need to see in order to press forward with the project? Thank you. To press forward.

We are pressing forward with it.

Yeah. Thank you very much for that question. As I said, in terms of installed capacity, we had two plans, the 60,000 tons per month UG2, which we've commissioned. There's a second plant, 110, which was Merensky. So we're currently doing the study to basically see how do we move forward in a phased approach, taking into account the current market conditions. Ideally, I mean, this mine's optimally to really make sure that you are in the right position should be running at about 240,000 tons, which is almost the same design capacity that Mudikwa has. I mean, if you look at two rivers, it was at 280,000 tons. We increased that to 320,000. So volume is very key to make sure that you have your fixed cost dilution and improve your margin. So those are the studies that we are doing. And as soon as those decisions or those studies are done, we'll basically review and make sure that we take the next step.

I mean, we've been at Modigua, Philip and Mike, now for, I think, more than 20 years. And we've learned a lot of things there.

And when we bought Modigua,

because it could be interpreted that we are waiting for a study. Side by side, whilst we are pursuing the assessment, the analysis of how best to mine Bocconi in the context of the depressed platinum mine, sorry, PGM prices. We are also proceeding, if you saw the notes, and I think there's a point that Philip was making, the 60,000 process that we are busy with is to make, we think we can make money now because there is infrastructure there. But the bottom line for us is that Bocconi is a world-class ore body, and we will create significant value for shareholders. You want to add on to what has been said? Because, Mike, you and Philip are doing good work with Tando.

I think that's pretty well captured. I think it's a prudent thing to do. Do it in a responsible way. And the uncertainty and when PGMs and thrifting changes, we have to be ready to capitalize on that. But in the meanwhile, we must do it in a stage-responsible manner. And the ore body and time allows us to do that and get as quickly as possible into a sustainable and a profitable position.

I mean, I was in... I'm going to talk about the hydrogen economy and the opportunities that will be created for PGMs as a result of the hydrogen economy. We merged our gold interests many years ago with Harmony. to form, at the time they said it should be called Harmony Armgold, and I said, no, it should just be called Harmony. And in the name Harmony, you'll find the rainbow where you've got the names ARM to reflect. This was about more than 20 years ago. And, of course, copper is exciting, but the problem with copper is it's overpriced. But, I mean, what Mike and Philip are saying, part of the problem is, and this is what sort of irritated me about Transnet, is when the prices of the commodities are at an all-time high, you need an efficient transport system because we've got to maximize. And then we'll find it twiddling with our, you know, doing the sort of things that are just totally inexplicable. But anyway, so... So we are proceeding with Bukoni in an appropriate, responsible manner because we know that the cycle is going to come. And if the cycle is there, you've got to be able to sell into the cycle. Otherwise, you're going to miss out on the... I think there are people that Betty likes more than others. So I think everybody should try and sit next to Martin Kramer, and then you'll always get questions. Yes.

Hi. Good day, everyone, and thank you very much for the live presentation. Bruce Williamson, Integral Asset Management. Could you give us an indication of what your current coal rent per ton rail costs are versus your tracking costs? Yes. And then secondly, Kumba took quite a hard stance two weeks ago when they said they believe that on the Sishun-Soldana rail line that... My apologies, just repeat the second question. I'm busy. Second one is Kumba took a stance... Kumba, you said Kumba.

Kumba, Kumba Iron Ore. Yeah.

And said they believe that the Sishun-Soldana rail line will run at about 16% below capacity. So they are going to adjust their production to lower capacity, rail capacity. That means retrenchments, less procurement, et cetera. What is Asmang's view on that?

Very good questions, very good questions. I mean, Andre Jube will talk on the Bukoni. And you see, these are the things that sort of justifiably makes people in my position very impatient because if the South African mining industry does well. It's taxes for the government, and those taxes, of course, our duty as well is to shareholders and create value for shareholders and declare dividends. But, you know, there's income for government to use that income and focus on our, the big challenges that this country has. The poor, the unemployed, and, I mean, this load shedding, I mean, Really, we shouldn't be having load shedding. It's inexplicable. The potholes. You know, I was in... I know I'm going to get trouble for what I'm saying. I was in... in Ivory Coast, and I had to travel around. On the philanthropy, one of the things we do on the philanthropy part is football and the youth and the impact of football. To teach the youth using football, get educated, don't commit crimes, don't reject corruption. And I mean, the roads were no potholes. Every time I go to the airport, I've got to tell my driver, relax. Because when I drive, I always lose my tires and my mag wheels. So, I mean, those are important questions you ask. Tando, will you deal with the cold? So I just wanted to say the question you ask is key. And I think Kumba is an excellent company. We work with them. You know, the CEO of Kumba and the guys at Anglo are doing excellent work. And we need those, you know, Kumba to do well. We need S-Meng to do well. Will you deal with the coal and Andre? Andre, you will deal with the question on Kumba.

Thank you, Patrice. The rail costs, it's 250 rands per tonne. The tracking which comes at a very high premium, it's 1,000 rand premium per tonne. So hence, as Philip indicated, at these current prices, we've stopped the tracking. So we focus on the rail. And quite pleasing, as was indicated also, is that there's an improvement on the rail volumes that we are seeing. Albert is still early, but we're quite encouraged with those improvements. Thank you.

Thank you. Thanks, Philip. I mean, thanks, Andre.

Brian, again, a very good question. I'm going to attempt to answer the question, including the manganese, because it impacts both sides. So we've been very, very actively, and Patrice did mention that since the new leadership of Transcend have been engaging us, the level of transparency and engagement has been Much, much improved. And Transnet, can I almost say, also opened their soul a bit, and they allowed us to do an independent technical assessment of that line collectively, all the producers collectively. And then also we engaged through various other industry forums with Transnet We've got the Mineral Council that we have regularly. I've got a meeting once a quarter with the Transnet Board Chair and with the Transnet CEO through this new entity they formed that's chaired by the President of the country, which is called the National Logistics Crisis Committee. There's an effort going in. So having said all of that, having seen all of that, we all realize that the state of Transnet is not what it was, and that it's going to take a lot of work and a lot of effort and money to get Transnet back to the nameplate capacity. The other thing is it's not going to happen in a week. You can put the best management team there. And we are working very closely with Transnet in that regard and the other industry players. And there's various programs at play. So based on that, we agree with the Kumba numbers that you're looking at about 87, 88% of nameplate capacity for the future. That's why you would have seen the slides that Philip showed, is that our forecast for the iron ore is 12.5 million tonnes of export per annum. So we did adjust our rail volume to that. And we feel we're not 100% at this point in time. I can't say to you exactly how long it's going to be for. But we definitely see that that will be for at least the next three to five years that we will be operating at that system. Of course, we pray that that is going to be quicker than that, but we can't base our strategy on hope. So we now based our strategy on what the reality is that we see in that regard. On the manganese side, I just want to sort of in closing with about the iron ore side. I think with the previous results presentation, I sat here and I had a pretty positive outlook on Transnet. I must say it is better than it was previously, and that's why if you look at last year, our actual performance on export was just short of 12 million tonnes. but that included the impact of the strike. So this year we're looking at 12.8 million. So there is definitely improvement, but that improvement that we saw is not going to sustain because there's going to be more time out, if I can call it that, on that line to fix that line properly so that we can have a long-term sustainable improved performance on that line. On the manganese side, We were impacted by, I mean, we invested quite a lot of capital in our Blackrock mine. And that mine, as Philip rightly said, was then set up to do four and a half million tons per annum. When this year started, we planned for about 3.7, close to 4 million tons. And we said the portion that Transnet is not going to do, we're going to do on road. And we started off the year with that. And it worked. With the prices dropping, it became very quickly very evident that the road transport is not profitable. So we simply were forced to stop the road transport. And when I say forced, I mean the economics of it. We took the decision to stop the road transport. And then again, in line with all of these engagements with Transnet and everything, and the real allocation that we got, our forecast and our outlook is that we say every ton of material that we... You heard the numbers that Tandu was talking about in terms of the differential between road and all. Ours is not that expensive because the tariff is not exactly the same. But... Road oil does not make sense for us in the manganese business. So therefore, every ton of ore that you road oil, you might as well keep that ton underground and delay the expenditure and the sale of those tonnages until such time that Transnet get their act together and that, again, collectively. So there's a lot of projects happening. So if you look again at our outlook, we said we took a, I wouldn't say a conservative, but certainly a realistic view that the next two years we'll see a 3.4 million ton rail on manganese, and then we'll push it up to 3.7 and then to 4 million tons. Our mine is set up for that. We can do that. But for now, we have to look at repurposing our mine and I think to... Somebody asked, I think it was Martin that asked, do you go higher grade or better grade or whatever? So what we're also going to do is to see, can we balance our ore body and the mining that we do for better revenue generation with a lower volume that we're going to put out? And that's our strategy. And so we are marrying that strategy exactly with what the information have that we have with with transit and the and the sharing that we have with them so for us road hauling is really done only if there's a serious emergency and we need to fill a ship but it's not in our plan thank you yeah thanks just before we go to the next question you know it's important that we we've got that's bruce

Bruce, it's very important. There are so many reasons why we should be optimistic because sometimes we talk ourselves into a stage of paralysis and not without justification because people talk about we score so many own goals, but I'm talking about just the simple maintenance at Transnet, the maintenance at ESCO that should have been done over some time.

But having and focusing on them. So the question you asked about Kumba, very good work there.

And I've got no doubt that with this partnership between government and, of course, Transnet and the private sector, a lot of good work will be done. And as I said, hopefully we will learn from the mistakes, both in the context of Transnet and ESCOM, and fix them and make sure that we don't repeat those mistakes. Yes?

Morning. It's Nicholas Wooden from Standard Bank Securities.

Standard Bank?

Yeah. Okay. So I've just got two questions, also on the iron ore and manganese. You know, at last results, you spoke about rail optimization and potentially rerouting to increase the sort of export volumes. Have we seen that? Did that come through now in 1H, or was this purely just based off a low base from the previous year? And then the second question relates to the manganese operations, and I know there's been a few operational issues. I just want to know, I mean, you've mentioned in the presentation that it has been sorted out, but maybe just some color on what they were... And potentially, if we can expect the same volumes from two periods ago to come through.

At the time when I made those comments about the improvement in efficiency, remember we were under a different leadership at TransCenter at that time. And I think there was promises made and engagements. discussions which never materialized. So to your question, the improvement that we saw, there's two reasons for that. The one is it's against the low base of the strike. And then the other one is, but also remember that in this period that we're reporting on, we also had a shutdown, you know, the annual shutdown, which was not in the previous period. So this next six months that we're going to see now, I'm very confident that on an annualized basis. So let's say for the next six months, previous six months, 6 million tons. Next six months, I see 6.8 million tons. So there will be improvement because there has been some work done. But as I said to Bruce as well, is that that improvement is not sustainable because we've got to take time out on the line to fix the line properly. We, in the collective of us and Transnet. So we've got to do that, and that will pay off. If we don't do that, we're going to see just further deterioration. So the idea is to stabilize at that level and then do the work, and then in a couple of years' time, we pick up and we get our volume. So our mind is geared up for that. So when that happens, be there. We can make it happen. On the manganese side... I think if I can describe the problem as threefold. Number one is that because of the volume that we had to stop. because of the road oil, that we took a decision that we're not going to do the road oil. And there were some low-grade material that we were mining at the mine, so we had to stop all those workplaces and redeploy those people to areas where you have a better-grade product. And that's not something that happens overnight. And when the guys started in those new areas, we also had some... You know, it's different, if I may say, it's different to a gold or platinum mine. We had quality issues. In other words, the exact grade that we thought was there and the material that we put on surface wasn't exactly correct. So we had to do quite a bit of a correction to get that quality issue sorted out. Manganese oil is almost like the 37% is like bananas and 42% is like apples. You don't blend the two. So there was some of that happening, which made the product more difficult to sell, and we had to rectify that. But we've done that now. We've got through the process. We positioned where we should be positioned and there's a lot of positive feedback and we've got audit teams now going to the mine basically on a monthly basis to help the teams to get through and get themselves established and that's happening. So I'm very confident that by Literally two months from now, we've already made like a 70% improvement to where we are today. So there's still about a 30%, but that's more related to the quality of the material that we mine. And we will be ready and we will go strong from the new year based on our new production profile, which is aligned with and matched to the Transnet profile.

Thanks. You know, Bruce, I was taken to a room in Boston many, many years ago, and one of our shareholders said, I couldn't care damn about the problems you have, whether it's Transnet or anything, or any other utility. I just want good results. And it's our responsibility. And I think we'll make progress. You want to add anything?

No, I think it's covered. Thank you.

You like members of the Communist Party because the left is getting all the answers. You are coming to the more moderate members of society as well. Who says communists can't be moderate? They are moderate as well.

Yes, please proceed. Leroy Mguni from HSBC. Thanks for the opportunity, Chair. In your PGM business, the unit cost inflation has come down to single digits, which is quite pleasing to see. Just curious as to what's driving the improvement and your outlook for inflation going forward. Can these sort of increases be sustained? Sure. over the medium term. And then at Bocconi, assuming you're running at the current installed capacity, what PGM prices do you need there to break even at a free cash flow level? And then my third and last question is, at both Mudikwa and Two Rivers, your chrome concentrate salt volumes came down, but PGM concentrate produced went up. So what's driving that decline in the chrome volumes?

Thank you. HSBC? Yes. Great. Will you start, and then Philip will add. Tando is the chief executive of Platinum.

Thank you, Patrice. On the side of the unit course here, Zemela, we're quite pleased with the progress that we've seen, and we think it's... At Two Rivers also we indicated last year, or rather the last reporting period, that we were also, in addition to our normal diesel consumption associated with load shedding, we were also running the additional capacity with diesel. We have since commissioned the ESCOM supply in around December, so that is also kind of contributed in terms of reducing our costs. But the main was just the focus on efficient and mining the right grade. Let me go to the issue on the crow. Both Mudikwa and Two Rivers, we have also been milling some of the Merensky ore. And that Merensky ore hasn't got a Chrome associated with it, hence the reduction on those volumes. However, our forecast and where we're putting a lot of effort in terms of increasing the volume is still on UG2. And we do anticipate that going forward we'll see again a recovery in the increase on the UG2, because it gives the benefit of the Chrome recovery. Lastly, Bukoni, as you said, we're currently running at 55,000, 60,000 tons per month that we've just commissioned late last year and indicated that we are studying phases of improving that. At the current price, which I'm sure you'll understand that is not efficient, running at those small volumes, we are looking at a break-even cost of about 900,000 rands per kilogram of PGM. And as we mill more, as we improve base, of course, in terms of our capital allocation and improvement, we see that improving. And our incentive price is is going to be around 800,000 rands per kilo. Thank you, Chair.

Thank you. Philip, you want to add anything?

Just to add on what Tando said, I did mention that scale is very key for your PGM business. 60,000 tons per month, you know, you're going to have to fund and pay for the GM. Whether you run a 60,000 tons, 120, 180. So 60 is extremely suboptimal. 240 for these mines, that's where you really start talking good cost-care position and good margins. And it's a journey. We are really progressing towards that. This is just a stepping stone, and we are really exploring those studies to make sure that we can do it in a very responsible way and profitable way and sustainable way going forward. Very good. Yes, there's a question there.

Good afternoon, everyone. Oratile Mukubiane from ABL.

ABI?

ABL.

ABN? Yes. What is it?

African Bank.

Oh. I must, on some occasion, talk about the history of African Bank with Dr. Sam Mutsuenyane.

Yes, sir. I've got two unrelated questions. The first one is relating to the Bukoni transaction, where one of the conditions the competition authorities imposed was an HDP transaction. And I know in the full year results last year, you spoke about a 15% transaction split between five community, five employee, and five industrialists. Just any update on how far we are in that process and whether we'll be having any capital changes impact, whether it's a vendor financing transaction or anything of that nature.

And the second one is... So the first question is about the communities and the industrialists.

The HDP transaction conditioned by the competition commission.

HDP?

Historically disadvantaged persons. There was a need for a transaction relating to Bukohe.

What is PDH? PDH?

Okay. The second question is regarding your sustainability mix. I know you've just recently concluded a 100 megawatt PPA, I think, with the solar group. Your result says it will contribute about 30% of your electricity. Are we in the mood for any more? Are we able to link it to what our IRP speaks about? I think a 41% curve to renewable energy. Is that where the group is going? Or are we okay for now with this one transaction?

Thank you. You will deal with the two. Did you like the second question? You think you can... Thank you. Just... you cannot in the modern day, and I'd even argue even in the 20, 30, 40 years from now, can't have a mine with communities not being shareholders in the mine. It's just not sustainable. And so we started this for the first time many, many, many years ago. And of course, it's at Mudikwa. And it's something that hadn't been done before. But because we had a clear understanding that You know, going to the future, community members wake up in the morning and look at the mine and say, but it's even worse. In some instances, dams would be built and then the water has to be transported for many, many kilometers from where the dam is to where the mine is. And it goes past so many communities. I have a lot of expectations from my communities in the transactions we've done because you don't want passive partners. You really want them to be involved and you want to build skills and expertise and part of the tenders and the contracts give to the communities. But not because they are communities, but because organizations. Of course, we've got a duty to them, but because they provide a very good service. And sometimes you've got to combine, you've got to do partnerships with established, experienced companies and do a skills transfer over time. So it's going quite well. And I've got a challenge because in another transaction I was insisting that the community should get equity because it's a challenge. a mine that we inherited and the communities didn't have equity there. But again, and it's a waste of time because it just doesn't make financial sense, but you have to, so we're engaging to see how do we make, it's a totally different transaction, how do we make the communities equity shareholders in the mine that we are now running. Yes, Sue.

Thank you, Chair. So I think Just to maybe just add, because you asked how far we are in terms of the process. So the black industrialists have been identified and we have signed NDAs with them. So those are in place. And then in terms of the funding thereof, so we are looking at vendor financing specifically for the black industrialists to pay for their 5% in the transaction.

So that's... I think there's another deal we did about 20 years ago. And, you know, what you call PDH or something like... And they ran into problems because the interest rates were just... I tell you, it's... It's a big challenge. So we then had to go and just cut the interest rates and say, even though the banks gave them funding, we will take over those loans, but they'll never really be shareholders. They'll never have any benefits because they'll spend the next 10, 20 years saying, yeah, but we are shareholders in this mine, but they've got nothing to show for it. So we took out the interest rates and said, we will pay the bank, pay back our loans. Kennedy was very helpful in another transaction, Brian. But in another one, we... Because we want them to be meaningful shareholders for the long term.

Coming to the PPA, I mean, our commitment is to be net zero by 2050.

Just for the benefit of those who don't know what P...

It's a public partnership agreement. Basically, in terms of our solar, I mean, we announced and we kept everybody up to speed in terms of the debt. Construction is currently underway, and we did promise that we should be commissioning June 2025, 100 megawatt, 33% of the platinum group business. that was the starting point remember there's limitations to this as well i mean grid capacity and availability is one such challenge so we continue to look for and explore further opportunities what can we do you know behind the meter and what will that really mean you know you have to look at i mean like this one is basically installed in lachtenberg because of the surface and that if you go to where we mine the topography you know is such that you cannot do such things we currently busy on the ferrous business with our also to explore what we can do. And there as well, there's no grid capacity. So it's most probably going to be an energy solution that we'll talk to behind the meter, battery and all that. So this is not the stop. It's just the starting point, bearing in mind that we want to show that continuous improvement, 15%. on improvement over the next three years and eventually net zero by 2050. And we'll continue to explore other possible solutions.

But the bottom line, there will always be problems. If it was easy, everybody would have done it. It's our job to fix and to deal with those challenges and to succeed. Yes?

Good afternoon. My name is Kolisile Nene. I am from Apsa Bank. I have two questions.

Many years ago, there was a young lady who was from Apsa, and then we employed her for 15 years.

Maybe that's my story. Thank you, Chair.

But I think you may be very expensive. But we'll compete anyway. Continue.

Yes, just two questions. The first one is around capital allocation strategy, just in the mid-term. If you can just talk to us around the balance in terms of strategy in reinvesting in the current business operations, dividends, and also managing debt. I ask this question because historically, AMB has always maintained a conservative leverage position for its operations. So I just want to know, can we expect the same going forward? The second question is linked to your recent transaction with Novrils. Congratulations on reaching the milestone with them on Gomati. Given the current surplus in nickel supply driven by the Indonesian market, I'm very keen to... to hear your thoughts around the plan for Nkomati in terms of its operations in the near term. Thank you.

Thank you. Derek, it's good to see you. Excellent. Will you, too? You are my boss there, our boss. This capital allocation. Sure, sure, sure.

So, yes, so... Just on the, yes, historically we have had very low levels of leverage. So I think also because The businesses that we've had have generated quite a lot of cash, so there wasn't really any need to go external in terms of looking for funding. But I think in terms of going forward, we are looking at bringing in some debt into the business, looking at using it particularly on Bukoni. and also we're introducing it into Two Rivers as well for the Marinski project to see that through to completion. So I think in terms of the strategy and us still continuing to pay dividends, that hasn't changed. But I think you will see going forward, definitely over the next... three to five years, where we will be introducing some debt onto our balance sheet, which would have a benefit in that, you know, obviously it would bring down our weighted cost of capital as well, and then we'll be seeing some better returns going forward from our investments.

Thank you. Mike, you want to comment on Komati?

I certainly can. So, thank you. It's a good question. So, Komati being on care and maintenance, it's our Position at arm we can as arm better manage care and maintenance and control the closure liability in our hands as with partners and we're not really producing It is best served under ARM, being a South African and its long-term commitments. We are, in addition to that, there's a number of options under consideration. And I want to close by saying, and that could be closure, that could be restarting, or look within other partnerships, or look within... in playing with an integrated player as an end user. But probably most important is if you look at that ore body, it's a class one sulfide ore body. Its carbon intensity to produce it is pretty low. It's a clean environment. And those options we need to look at. It's also an operation that's well endowed with Water, and water can be energy. It has extensive sunlight. That could be an option. And it also has the optionality of supplying clean, green energy up to our smelting, which we're advancing. So there's a lot of opportunity and options about the future of a commodity, but we need to manage it.

Thank you. Thank you. I think she wants to say something. Do you want to help her there? I think they're saying that you've got questions from... Ten questions. Okay.

Okay. Thank you. Thank you, Betty. There are several questions on the webcast. Ladies and gentlemen, please remember we will be hosting a roundtable at 2 o'clock where you can dial in and ask more detailed questions. So we'll take just a few and then we can wrap up.

Just read all 10 and then we'll take the easy ones.

Okay, Chairman. So the first question is from Tsetso Nkosi from McCluskey. This question is in relation to BESOC. The mine's number one main customer risk, with the possibility of closure of the AMSA Longs unit, what are the opportunities to reroute this material to other domestic customers or the export market? Which company is it from?

McCaskey. McCaskey, okay. We'll come back to that. You'll answer that next.

Okay. The next question is from Shilin Modi from HSBC. Shilin, I think a large number of your questions have been answered, so I will focus on the Bogoni one. Is Bogoni a bottom of the cost curve producer on your revised smaller guidance? Is the new plan self-funding? And given the limited cash generation in the business and the need to fund dividends, does this mean further acquisitions will be on hold?

Very good question. The next one.

Next question.

He's from HSBC, yeah?

As well, correct.

So, okay, next.

The next question is from Brian Morgan from RMB Morgan Stanley. Hi there. Impala said in their results, capital and operating cost inflation coupled with weak PGM pricing has necessitated a further review of the current project. Could you give comment on this? This is with regards to two rivers.

Very good question. Mike, you will... Mike? You will deal with that later. Okay, continue.

Okay, and then the next question is from... Oh, sorry, sorry.

It's Two Rivers. Sorry, Tando. It's Tando. You will deal with that. Sorry. Two Rivers.

Okay, and the next question is from Warren Riley from Battelier Capital. Please, could you comment on the iron ore stockpiles? What is the current tense at the mine versus the port, and what does this mean for your production run rate? Okay. And then he's also got a question on Burgoni, but I think it's already been covered. And then he says, your guidance shows two rivers production of 437,000 ounces in 2024 and 516,000 ounces in 2025. This is actually an increase versus the guidance provided with the FY23 results.

Philip, you'll take that one, eh?

His question, Chair, is that is this production increase still likely given the pricing environment? And then the last one, Chair, that we'll take from... Webcast is from Kateko Matonsi from Investec. She's asking if we could comment on the manganese business and the potential or the benefits of consolidation in the Northern Cape. Is consolidation in this space something or misconsidering?

Okay. So there are no further questions in here. Is that right? There are none. Thank you. So we're going to ask closure. We'll go from the... Start with Andre. You will answer what you think you can, and then we'll go to Tando, Mike. By the time it comes to me, there's nothing to answer.

All right. On the Beershoek matter, obviously we're going to continue engaging with our customer there. And only when – I mean, they also made an announcement that they're going to continue with some of their – with their plant for a longer period than they originally said. So we're not going to make an immediate decision. So we're engaging with our partners here, and we will come up with a solution based on the long-term view that we have on this customer, and also based on the long-term view that we have of our mine. So we're putting all of that together, and there's a lot of work happening right now as we speak. and we're formulating the answer. We haven't got the exact answer yet, but we will certainly announce the outcome of that work at the next results presentation. That's around Beershoek Mine. On the question of Kumani Stockpile, I recall that at the previous results presentation, we announced that we've got very, very full stockpiles there. But as I showed in terms of our production profile and everything, we're now matching our production profile with... the logistics profile, and currently we're sitting with a stockpile of about 1.4 million tonnes at the mine, and just short of 300,000 tonnes in the port, which is sort of a level that we're comfortable with and that we wish to maintain going forward. I think if that's all the questions, then, yeah, thank you.

Yeah, because some of them, there's a bit of repetition. Thanks, Andre. Yes, Tandoor?

Thank you, Chair. Covering the question on two rivers, perhaps I can refer Brian to slide 28 again because it's aligned with what our partner has reported. Given that the project in terms of the infrastructure is almost complete, Philip did highlight that the commissioning is starting in April. What we are reviewing, having deferred some of the support infrastructure, we've deferred that capital. We're also now reviewing the rate of ramp-up, and we're evaluating those options, meaning that we will not fully invest that capital required for mining ramp-up. We will come... or rather expanded in phases as the market improves and we'll keep monitoring the market. Thank you, Chair. In terms of Bukoni, I think I did answer the initial question in terms of the incentive price and so on. Bukoni, in terms of its position on the cost curve, Currently, it's sitting on the high end, as we indicated. However, as we ramp up to the initial phase, we're targeting 120. We'll sit on the... or rather just below the 50th percentile, but at full capacity as and when the market improves and we invest in this asset, it's going to be positioned within the first quarter. And the major advantages Mike did indicate is the extent of mechanization that we have planned this mine is to be able to mine most of our production using mechanized processes. Thabang, I think I've covered all the questions. Thank you. Mike?

Thank you. Sorry? You missed a question. I didn't answer the question about the consolidation in manganese. So the question was, are we considering that? The answer is no.

Oh, okay. Thank you. Mike, you've got no...

No, I think it was very well covered by Tando. Thank you.

Philip, you want to add anything? Maybe just to add on what Tando says. In terms of the two rivers, you know, we've already spent more than $5 billion, two months to go from commissioning. So... the right thing to do is to close that. There could be questions, are you going to stop that project or something? It would be more destructive, very destructive to do that. So we're going to basically commission, and then you know that with the buildup, it's normally a gradual buildup. That's why you see in terms of the forecast that there's a gradual buildup. So those are the things that we have to really evaluate to make sure that whatever we do is going to be sustainable and profitable. Thanks, John. Thank you.

I mean, so you... Thabang will take over, and so will Philip, and they'll be here to answer all questions for those who are here. And then she spoke that there's a 2 o'clock conference call. Is there anything you want to say, Thabang, before we close?

Chairman, there is one pertinent question from the floor. Can we take one more question, Chairman?

Yes.

It's from Ming Xiangxin. I hope I pronounced your name correctly, from the Sunny Group. Okay. You can go ahead.

Hi, this is Meng from Sunny. I just found out I'm the only Chinese guy here.

It's not correct. If you look at me carefully, you'll see I'm Chinese as well.

We saw Chinese everywhere already. You're from China? I'm from China, but I've been here for 16 years. Oh, that's wonderful. I'm also African. Absolutely. I'm representing Sunny Group. It's the biggest yellow machinery company in China. Currently the number four in the world. It's the biggest? Yellow machinery. Yellow equipment. Yes, in China. Currently number four in the world. We produce the same machine like Caterpillar. But Out of China, we are not that big. So my question is, will ARM be considering of bringing a new Chinese supplier in your operation? And secondly, as we also do renewable machineries, such as hydrogen trucks and the electricity trucks, and we also do solar energies, the panels and the battery and everything. So my question is, Do you have any plan maybe that this country be ready to bring in electricity or hydrogen machineries in the country or in your operation? Very good questions. And my last question is how can I start a relationship with ARM? Because I'm curious to see also which department I can talk to to start dealing with ARM.

So you want to have a relationship with ARM?

Because I'm new here and I'm representing a new company here, I don't know how to start.

Okay. She says she wants to answer.

Sani, thank you for that question. Please, you can have a conversation with me after the results presentation. Yeah. Okay.

Just to add, I'll be in China, I think, in two months. I go to China at least three times a year, and China is a very important country that buys our minerals and minerals Of course, we trade with the rest of the world, but the relationship between South Africa and Africa and China is very, very important. And I'm very happy. You must meet our CEO and the team and indicate to them that your company can compete and provide world-class equipment to us at a very good price. Thank you very much. Okay. Thank you so much, and thank you so much for coming. Thank you very much.