African Rainbow Mnrls Ltd

Good morning ladies and gentlemen and thank you for joining us today for this presentation of the African Rainbow Minerals results for the financial year ended 30 June 2024. Please note this is a hybrid presentation so we have people joining us online via webcast and we also have people joining us in person. Thank you very much. For those online, please note that there is a question dialogue box that has been provided So should you have any questions, please feel free to type into the dialogue box and they will be read and answered as part of the Q&A session that we'll be having at the end of the presentation. At that time, we will also take questions from the floor. Without further ado, I would like to hand over to the Arm Executive Chairman, Dr. Patrice Mutsepe, to take us through the results. Thank you.

Thank you so much. Let me start by thanking everybody who's here. It's a great honor and a privilege to have you. And a very particular thanks to our partners. I'm told that the finance director from Assault, where is he? Oh, hey. So wonderful to see you. The women are usually better, smarter. That's what my mother said, and she was 100% correct. We are honored to have you. Pass my regards to Dest and to Patrick. We've got a partnership that we are deeply committed to and privileged to have. Thank you so much. And all the other partners, Anglo Platinum, Impala, and... Glencore, Glencore as well. So you've got the, and of course, Bongani and Bitsi, our board members, thank you so much. And the management team from ARM, I'm so proud of the excellent work and the excellent leadership that Philip is providing. And it's during these times when the businesses that we're involved in are very cyclical, and at times volatile, that you want to make sure that young men like Mike Schmidt, our former CEO, you keep on to them and every other one of the management team that we have that's world class. Any company is only as good as the the quality of the management and the people we have the honor to work with. Thank you so much, Mike. Andre, thank you for this. And the management team, everybody. Imran, where's Jacques? Imran, Jacques, Derek, excellent. Oh, and Kajalen, Mareike as well. And Roulette. I can spend the next 30 minutes mentioning names. But thank you so much. You are the people who make this company a world-class company. Michel, where's Busi? Busi, Busi, okay. So, this is going to be a quick presentation. You've got a booklet. I'm just going to highlight a few very important things. But the three points I want to start off with is to overemphasize. We've now been... We took over... I think more than 20 years ago and before that we started with Armgold and we merged Armgold with Harmony. I'm very proud of how Harmony has grown as the results and we continue to have a commitment and it makes me happy when many of the shareholders over the last 20, 22, 23 years since the merger have emphasized that not just the arm shareholding, but the historic merger. When we merged ArmGold and Harmony, they wanted to call it Harmony ArmGold, and I said, don't do that, just call it Harmony. And in the middle of Harmony, put ARM to show the historic link. And some of our shareholders were saying, what are we doing with the great share price and the copper in Harmony? I think in future years, there will be a question mark whether in the context of the importance of COP for long term and you also see that we've been to Canada and are looking at opportunities there but the bottom line is tomorrow the Springboks will be playing the All Blacks and all of us know who's going to win and at the end of the match it is the results I'm going to fetch a glass there. I'm worried the two will say I'm expropriating a glass and she'll say compensation. We don't have time for, we are not going to expropriate it without compensation. So the point I was going to raise is that Again, talking about the Springboks and the All Blacks, it's about results, results, results, results. You have to win. You've got to win. You've got to win. Shareholders buy arm shares, and we've got a clear understanding. We've got to win. We've got to win. We've got to win. We've got to deliver good results. We've got to deliver good results. The critical thing is we're in a long-term business, and when the good times come, Derek, so good to see you. Thanks for the great work. And Sue, thank you so much. Thank you so much for your leadership. When the good times are with us, you've got to invest in the future, save for the challenging times. The global market is going through a very challenging time right now. Africa is in China. They've been looking at China, discussions in China. China is going through a difficult period. It has an impact. not just on the commodities that we produce and sell, but also on the prices of the commodities. And so you will see from the results that headline earnings, dividends and various other indicators in line with mining companies all over the world have gone down. But for us, you know, I said this 25 years ago and 20 years ago, 15 years ago, and I'll say it for as long as I'm Executive Chairman of African Rainbow Minerals, these are times that create opportunities for those who have been there long enough, and we are confident, very confident, that in the medium to long term prices will stabilize. You will see from what Philip is saying, there's a there's a huge focus on cost, there's a huge focus on efficiencies, and there's also a huge focus because when prices are down and you've got a capacity to increase volumes, it has an impact on your profitability. So, you know, through started off by saying that she wants to highlight this. Headline earnings for the financial year 2024. Martin Kramer, good to see you. You are becoming younger and younger and younger. Very good. Very proud South African. So headline earnings decreased by 43% to 5.1 billion. You see the gap between last year. You know, if you look probably five, six years before that, you'll see that the 5.1 billion is much higher than what it may have been six, seven years ago. We are very clear in terms of our global competitiveness, the commitment to continue paying a competitive dividend, because shareholders buy arm shares for, of course, because we have to compete with all the others, but the bottom line is the sort of value that they receive from arms. So dividend is very important. Our financial position remains robust with $7.4 billion in the bank. So that's very, very important. Okay. Next. Okay. Disclaimer. There's wonderful staff members. And just as a repetition of what I said, I'm Ferris, 9% down to 5.1, I'm platinum. This is the whole issue of what does the future of platinum look like. And as I said, we have to take a 3, 5, 7, 10 year perspective. And we remain confident. We, you know, I... A week ago I was at the Hamptons in America with some of the top CEOs in the world and also some of the top politicians in the world and they talk about what's happening with China, but in the context of platinum, China in terms of its importance in global trade. But for us in platinum, the whole emphasis on climate change and CO2 emissions and reduction of those CO2 emissions, the hydrogen economy, you know. So we look carefully at what our partners are saying, Anglo-Platinum and Empower, in the context of our investments in platinum, because we were in Lubambe, in copper, about 10, 12 years ago, and we had a partnership with Vale, world-class whole body, but for a period of two to three years, the prices went down enormously. So copper is a commodity of the future. We have confidence that our PGMs will be part of that suite, because There isn't any single commodity that will be able to make a significant contribution. The hydrogen economy, green hydrogen, blue hydrogen, there has never been a more realistic assessment of the transition to a global economy where all the cars are electric vehicles. There were some ambitious targets that were set about two, three, four years ago and there is now a much more realistic assessment that the transition is going to take a little bit longer. The objective initially was by 2030, I know California passed the law and the thinking was there would only be electric vehicles in California and Europe also took a very aggressive line. Now, we are deeply committed to climate change, to initiatives that reduce climate change, deeply committed to making sure that we make a contribution to significantly reducing emissions. Anybody who doesn't take cognizance of the challenges of climate change is not just unrealistic, lives in another world. But we also have a duty in terms of job creation, in terms of the livelihoods of our people, that the transition must be a responsible transition. And I think there's greater consensus now, worldwide, in terms of the tempo and the momentum. And from an arm perspective, it creates exciting opportunities for us in PGMs. We've got 391 million from our investment in coal and it's a great opportunity for us. Dividends per share, this slide is self-explanatory, 9 rands. Do you want to say $9? 9 rands, okay. 9 rands per share. Philip wants to make it 9 euros, but let's stay with 9 rands per share. And the dividends we received, 5 billion from Aspen And you see that the dividends in Amcol went down by 29% to 422. And the dividends from two rivers in comparison with last year, it's 100% downwards. I mean, last year we received 486. And Harmony paid a dividend of $166 million. which is good in comparison with the 17 million Rand. And of course Harmony is switching on a lot of cash, but it also has huge growth projects. And if you look at the segmental EBITDA split by commodity, last year the contribution of INO was significantly less than what it is this year. This is when your diversified portfolio comes into play and is hugely beneficial. But it also indicates that if you look at platinum's contribution in terms of the segmental avatar, in 2022, it was 42, it went down to 36. And in future, we think the contribution of PGMs will be significant. And I&O is going through challenges in the short term. We were told that even though the Chinese economy has got challenges in the short term, but in the medium term, there will be strategies to try and resuscitate because there's hundreds of millions of people that have to be brought out of poverty. Our safety indicators are self-explanatory, 90% decrease in lost time injury frequency rate. We unfortunately had one fatality. There is one fatality to many. We want zero harm, zero fatalities. And the commitment in that regard is as strong as it has always been. And 19% reduction in the total recordable injury frequency rate. Black Rock Mine achieved 12 million fatalities. Free Shifts over 15 years, Mujiqua, achieved 3 million fatalities. fatality, free shifts over two years. Excellent. Our commitment, as I said, the carbon emissions, the 5% decrease in carbon emissions and 4% reduction in the water, the withdrawal of the extraction of water. And I think the key thing for us is that Arm Ferris Northern Cape mining operations have definitive feasibility study for solar. You know, we look at how the impact of solar from a cost perspective, how that impact will have a hugely positive contribution to reducing our costs but also in the process contribute to profitability and also diminish our dependence on what has happened in ESCOM over the last few years. It's good that we haven't had load shedding but it just indicates the world-class nature of the CEOs we have in this country. We've got a problem with ESCOM, we've got a problem with electricity, and this requires innovation and creativity to make sure that we continue with operations, and a lot of good work has been done, diminishing dependence on ESCOM. ESCOM will always have a role to play, but in the medium to long term, we will be significantly have a significant portion of our electricity being from this partnership that we've established for renewables for solar the solar partnership we've built and the strategy slide is self explanatory at the heart of this is what distinguishes us what makes us different from our competition we operate We have a management skill and a culture, and that's why we recruit the smartest and the best, both young and those who are not so young. We are entrepreneurial, which is very important. And we are privileged to have a world-class management team, but also a world-class employee workforce. And part of our duty is to make sure that every single employee... of the tens of thousands of employees that work at ARM believe that this is the best company in the country and in the world that they should work for. We've got a huge duty and a commitment to the communities that are neighboring our mines and we make significant contributions to their development and growth. And the whole role of technology is something that we're intensely involved in because There's some exciting innovation, really world-class innovation that is taking place within Armand. We will make announcements in that regard in due course. Philip Tobias will now come in, our CEO. Can we clap hands for our CEO? Thank you.

Welcome to all attendees, those attending in person and also online. And also just to say thank you very much, Chair. And a special welcome to our board members, our JV partners, and also the executive leadership team and operational management. Good morning. Just taking you through the production performance. Production volumes at Mudikwa and our iron ore operations were largely flat. You can see just a 2% improvement year on year on the iron ore side. And then on the platinum side, very flat. Manganese ore production was down 15% due to some operational challenges at Chwaningshaft. And I think during the previous results, we did comprehensively give the details of what challenges we're faced with. Please to mention that we have really had a turnaround intervention plan, and that plan is really on track. We are now on track getting back to the levels where we ought to be in terms of performance. On the manganese alloy, production down 10% as a result of the soft market demand. Iron ore division, headline earning as a percentage in terms of the total headline earnings amounts to about 97%. The executive chair has already mentioned, I mean, we see the importance and the impact of a diversified portfolio. You know, when some of the commodities are on the lower side, then you have something that can really come in and still have a positive contribution. Cost reduction remains our key focus, and we're making progress in that. We remain focused in terms of enhancing quality mining, in terms of making sure that we increase and improve our volumes, improve our mining rates, and reduce our waste dilution. And we'll talk to that when we get to the detailed slides. Amferas headline earnings were 9% lower, driven by a 90% decrease in headline earnings in the manganese division. This was partially offset by a 19% increase in headline earnings in the iron ore division. Headline earnings in the iron ore division were largely driven by an increase in the average realized iron ore prices, slightly higher sales volumes, and the weaker rent did also play a positive contribution to our bottom line. Lower headline earnings in manganese iron ore were mainly driven by a decrease in the average realized US dollar manganese ore prices and increased railage tariffs. Lower headline earnings in manganese alloys were driven by lower sales volumes due to lower demand. And that is basically reflected in summary on this slide. As you look at our variance slide, you see the impact of the lower prices on the PGMs and also on the coal side. We remain committed to improving grade so that we can have a positive impact on our arms production and also on our volumes that we produce. The key focus areas for us is to improve the quality of mining, as I mentioned earlier, is to continue to optimize mining grades and volumes so that we can really improve our profitability, enhance and also our margins as well. The summary of the EBITDA margin slides can really see the negative impact that the prices had. And also just to see the contribution that iron ore had. I mean, year-on-year, almost stable performance and contribution on the iron ore production. And you can see the regression that we had on the PGMs and coal as a result of the basket prizes. Just dialing deep into the Amferas project, The top left, variance analysis, you can see the decrease in USD prices, which were offset by a weaker rent. And something that basically was a challenge is the cost of sales. And as I mentioned, we have put plans in place and we are addressing the issues of the cost so that we can really continue to optimize on our margins. Production volumes at Black Rock mine, as I mentioned earlier, we had a 15% reduction due to those operational challenges at Chuaneng 3, and also we really had to make certain decisions, production decisions, stopped producing unprofitable ore. Unit cash costs increased by 20% on the Manganese site. Let me just go to the next slide. our unit costs increased by 20%. I mean, over the past two, three years, BlackRock have really been doing well as far as costs were concerned, but as I said, because of the operational challenges that had the subsequent impact on their unit costs. Looking at our I&O business, Kumani has our Tier 1 asset with 20 years remaining high life, and high quality great, our body with a low strength ratio has really continued to carry this business. I mean, total sales were up 4% when compared to 2023. Export iron ore volumes increased from just below 12 million tonnes to 12.2 million tonnes, an improvement of 2% when compared to the previous financial year. World-class safety stats that were achieved, and especially at Kumani, with 6 million fatality-free shifts over an approximately period of nine years. Various cost-saving initiatives are being considered. Strategic sourcing is one of the initiatives that we are pursuing and really looking at, and also centralized procurement. The biggest risk that we have set to our operation, iron ore operation, is the single customer risk at Biasuk. We still experience from time to time the water challenges. However, I need to mention that with measures and intentions that we've really put in place, we have not really had negative impact over the past six months. So we continue to work on that. And the logistics constraint, we're engaging with the new leadership at Transnet. We still have challenges but we do believe that through collaboration we can really improve the situation and we have really had an intervention where the stacker reclaimer was going to really take about 10 weeks to repair and because of the operators came together in collaboration with with Transnet, we were able to reduce that by four weeks. So that really communicated that message that we are strategic partners, we need to get involved and really influence also the performance of TRF. On the manganese side, just on the positive side, BlackRock mine achieved 12 million fatality free shift over approximately 16 years. And as I mentioned, that we did have some operational challenges. This mine, we've already invested a good capital in it. It has an installed capacity of 4.5 million tonnes. We can be able to ramp it up at really aligning our resourcing and all that. So we do have potential that we can really unlock on that. Export sales, volumes of 3.7 million tonnes, mainly driven by role-overship from the previous financial year. Various cost-saving initiatives are ongoing at this mine. As I mentioned that we had a 20% regression year on year, but there are measures that we have put in place to make sure that we turn that situation around. Manganese alloys, challenging sector with long winters and short summers, but the focus remains on improving efficiencies and reducing costs. High carbon manganese alloy unit cost at Sakura decreased by 12%, mainly due to a 23% increase. And then also Sakura is positioned in the first quartile. I mean, this is a Tier 1 asset. However, with that being the case, we still have some challenges because of where the market is in terms of demand and supply. But it's a Tier 1 asset, and it has a low cost quartile. Going into the PGM space, when we look at the variances analysis, you can see the impact of the price, the PGM basket price. I mean, we had approximately 33% drop year on year on the PGM basket price. But we remain focused on great improvement. and increase volume, which will have a positive impact on a unit cost, and also focusing on factors within our control. You'll remember that over the past reporting period, we had some few challenges with great challenges at Mudikwa. Strategic decisions were made. We converted basically from on-reef development into off-reef development, and subsequent to that, we've seen an improvement on the grade. So, we continue to focus on the quality and making sure that we do minimise the negative impact of the price. An improvement in head grade, as I mentioned, attributed to the on-riff development at Budigwa. The UG2 volumes were reduced significantly. due to negotiating of the dikes, restricting flexibility, and Merensky was used to fill up the UG2 plant at Two Rivers Platinum Mine. I mean, we've intersected some geological features, the dikes and the falls, And then we basically had to negotiate that, and in the process, had a stockpile of over 700 tons of Merinsky ore, and we were able to use that to make sure that the plant was run full. Bukoni's first PGMs were produced in November 23. For this year, it actually contributed 28,199 6E PGM ounces. During financial year 2024, ARM and Norilsk concluded their purchase sales agreement, which provides for the acquisition of ARM of 50% of participation of Norilsk. The transaction is subject to certain conditions precedent. The main outstanding condition at this point in time is Section 11. Pleasing to mention that over the past few weeks, we received an unconditional approval of the Competition Tribunal to go ahead with this transaction. ARM will take over Norel's proportionate share of obligations and liabilities relating to Nkwamati mine asset together with those other environmental liabilities. We continue to explore the options and at the right time we will come and really share what our intentions are, what our strategy is about Nkwamati. It's a critical mineral. It's something that we like to have in our stable. We have it, and we make sure that we make it work into the future. Going into the coal, we also can see on the variance analysis as well, as I mentioned, the impact of the lower or reduced basket prices. However, looking at things that are within our control in that business, you can see the excellent work that has been done on the cost control side. I mean, below inflationary, you know, actually 1% improvement on the PCB side and also 4% improvement on that. So we are also seeing increased volumes sales. At the back of tracking, that was actually exciting because we have seen the price really hovering above $110 a ton. So we took advantage of that, and we really commend management for that response and that positive reaction. Domestic sales volumes improved by 31% due to increase in cold sales at ESCOM. Online unit production costs has increased. improved in F2024, largely due to improved sales production volumes, and also, as I mentioned, the focus on the cost controls and cost initiatives as well. Going into the project slide, Two Rivers Merenzi project. Just an update. I mean, a decision was made to put it on can maintenance from July. This was driven by the current downward cycle in the PGM market. The Merensky concentrator was completed. It underwent the C3 commissioning. Basically, it's trigger-ready. Should the cycle really turn as we expect into the future, we'll be able to restart that and really ramp up to full production. So the future restart of the Two Rivers Merensky project will be evaluated when the PGM prices have recovered. With regard to Abukoni Platinum Mine, The current priorities to conserve cash was ramping up production in a phased and measured manner, considering all the depressed community prices and taking all those capital allocation decisions into account. Additionally, we are exploring a value-accretive opportunity, such as a chrome recovery option plant, and subsequent to the year-end, the construction of the chrome recovery plant was approved. So we're currently doing the detailed design, and at the beginning of next year, we'll really be starting with the construction of that, taking advantage of where the chrome prices are. We do believe that will enhance our basket price by at least 10% into the future. Investment in slash copper. We have communicated... Our desire to really have copper back in our stable. The Executive Chairman has already mentioned the strategic investment in Harmony, especially with those strategic projects, the EVA and the Wafi Gold Pool. And we did basically vocally say that we would like to really get back into copper. So we have really explored an opportunity at Copper Search. where we basically invested 15% in that company by 31 May 2024. Sage is a Canadian company that owns a large contiguous mineral chain packaged with resources such as copper, molybdenum, gold and silver. And the positive thing as well is that it is in a tier one jurisdiction. So it's a critical mineral company. It's something that we had before. I mean, the chairman mentioned earlier, and we would really like to follow the story all the way up to the end. We'll continue to follow it, make the necessary review, and in the long term make the strategic investment decision in that. With regard to Harmony, it is a strategic investment that aligns with Arms Copper objectives. I've spoken to their copper project, EVA, in Australia. and also the Wafi Golpu project in Papua New Guinea. So Harmony is currently in a very favorable position to pursue their growth ambitions. They've really delivered excellent set of results yesterday. So ARM's current board believes that it is in the best interest to retain the quality, to retain our equity in Harmony and to really follow and see them really realize and unlock even further value with their projects. In terms of our key focus areas, With all that we are faced with, even as we go through these challenging times, we're still very optimistic about the future. It's a mining industry, it's a long-term gain, and we do go through seasons. We do go through cycles. And during the low, we also have to make those wise investment decisions that will really realize higher return on investment at the right place. So we need to continue to ensure that our operations are globally competitive and profitable, Taking decisive actions for loss-making operations within our portfolio. I mean, an example of that was to basically put the Merensky two-reverse project on can maintenance subject to review at the right time. Value-affiliative opportunities that are being explored. I've already mentioned to you the copper recovery plant go-ahead that has been given for Bukoni Platinum Mine. Focus on revenue optimization and cost control through supply chain management. I mean, we've really just installed a very useful tool in our businesses, the IT tool called Coupa, which basically helps our staff. to look at opportunities when they do procurement. And to date, we have really seen some good savings in that. So we'll continue to look at those value-enhancing opportunities. Optimizing workforce productivity through training and performance incentives. Making sure that we create an enabling environment for our employees. Because one thing that we know is that when we enable them, they perform to exceptional levels. and it's our responsibility as executive leadership and management to create those operational conditions. Tailings and waste repurposing, we're looking at all those options, making sure that we can really enhance potential revenue out of those that we already have. Investing in automation technologies, For an example, narrow reef equipment. Pleasing to mention that our narrow reef equipment in Bukoni went underground last month and they took the first blast last week. So these are things that we are doing, you know, looking into the future with new technology and making sure that we embrace it so that it can really improve our performance. Maintaining a robust balance sheet. The current priority is to conserve cash. Maintain and run our current portfolio of assets profitably. Review the allocation of funds for capital expenditure, be it expansion or stay in business capex. Align in production capacity to logistics and infrastructure constraint. Good communication and engagement with new leadership focusing on improvement in performance, especially at TRP. Because they are very key strategic partners to us. And as I said, there is that ongoing engagement with them. We are progressing on the independent technical assessment to determine the actions required to addressing the deteriorating performance. I'm pleasing to mention that An independent assessor was appointed by TRF to do the analysis, and they came back with the findings, and those findings were basically communicated to the industry, especially with the All Users Forum, which is on the INR line. So the current plan is to put in action measures to really address those things. We must mention that there are challenges that are time-dependent, but we do believe that through collaboration we'll be able to address those issues. Structure and resource our operations appropriately. Make sure that it's fit for purpose. We know that we really have a good install capacity, but we need to really link the rail allocation also to our operational structures as well so that we can optimize our costs. Ensure that our operations are aligned to all these external constraints and that we are able to adapt through that. Exploring value-enhancing growth opportunities. Explore growth opportunities underpinned by metrics that measure the sustainability of value creation for stakeholders. And I've mentioned that one of the examples is the Chrome Recovery Plant and also our investment in Surge Copper. So we'll continue to look at these opportunities and make decisions in line with our investment metrics, explore them, and make sure that the right decisions are made and the correct capital allocation decisions are made and future investment. Thank you very much. I will hand over to Sue.