Exxaro Resources Limited

to Exaro Resources Annual Financial Results. My name is Lingling Motapo. I'm the Chief Investor Relations and Liaison. It's my great pleasure to guide you through today's discussion. First and foremost, I'd like to express our continued appreciation and gratitude for your continued interest and support in Exaros. I'd like to welcome all of you here, both online and present in the room, our shareholders, the board, our executive leadership and frontline here present in the room, led by our chief executive officer, Dr. Nombasa Tengwa. Let me also acknowledge my fellow colleagues in the room. A warm welcome to you and the investor community. And those, of course, joining us online, I'd like to specifically mention those joining on LinkedIn and via our webcast and chorus call. You are all welcome in the room today. I think it's appropriate at this point, before we go into our safety briefing, to please just ask you to keep your phone on silent. And into our safety briefing, as is the norm here in the Connections, in Centurion. Please note that we have not planned an emergency today so if the alarm is activated please do remain calm and evacuate to the assembly point which you will find in the front of the building by the parking area where we will do a roll call. We will remain at that assembly point until instructions are issued by a safety official to re-enter the building. And of course, for those who are online, we've not forgotten you. We will endeavor to keep you abreast of the happenings and developments on site. For those in the room, ablution facilities can be found just outside the room. As you step out of the auditorium, if you turn right, you will find them along the passage to your left. We've also not envisaged any load shedding for today, so if we do experience a power outage, please do not despair. We do have backup generators to help us with our proceedings of the day, which will then kick in in three minutes, starting with the emergency lights, the plugs, and then, of course, the Wi-Fi. Now on to the business of the day. As we review our annual financial performance of today, our Chief Executive Officer, Dr. Nombasa Trenqua, will take us through the group's performance. Chief Coal Operations Officer, apologies, Javi Macia, he will take us through the performance of the coal business, followed by the group's financial performance from Rian Copescar, our AFP. We will then wrap up the presentation with a view of what you can expect from this business from Dr. Mombasa. To set the scene, this has indeed been a very dynamic environment that we've had to operate in, and we're really pleased to report a robust performance. And with that, Doc, please take us away. By the all-powerful dispensation of the Providence, I have protected beyond all human probability and expectation. For I had four bullets through my coat, and two horses shot under me, yet escaped unhurt. These were the words of George Washington, posting to his brother, George, in July of 1755, about his luck and military prowess during the French and the Indian War. Yes, indeed, you are in the right venue for Zaro's presentation. Thank you, Linz. And good morning, ladies and gentlemen. Thank you for your presence here today and welcoming those who are joining us online as well. A very warm welcome also to our a lead independent director who just walked in, Ms. Geraldine Frazier-Moletetti, and other fellow board members who have joined us in attendance today. I'm also pleased to see the members of the Pensioners Club, but it seems as if there's only one member who keeps coming every year in and out. And I must say, the 21 years I've been in this company, there's one of the pensioners who has attended this 21 times. And before he attended as a CEO, but I want him to stand up so that we can give him a resounding round of applause. Dr. Kohn, please. So you need to really look for the other pensioners. I don't know what's happening. They're so disorganized. Okay. So thank you for your continued support. Really, we appreciate it. My team and I are pleased to present our 2022 annual results this morning compared to 2022 results. As always, we welcome your honest feedback. So now let me get straight into the business of the day. So 2023 proved to be yet another dynamic global operating environment post-COVID. It started with optimism. mainly due to the much-anticipated post-pandemic recovery sentiment. As the year progressed, global investor sentiment shifted and weighed negatively on global economic activity and commodity markets. The global economy averted a recession despite the continued challenges of elevated inflation, higher interest rates turbulence in the banking sector, the Chinese big property market, intensified geopolitical conflicts and gas supply risks. Throughout 2023, just looking at global inflation, it continued on its downward path, driven by monetary tightening, declining demand, supply chain resilience, declining commodity prices, and the reversal of many of the inflationary forces from COVID-19 pandemic. South Africa's headline inflation averaged at 6.15, while our mining inflation averaged at 8.1%. That is going to be very important to note as we present the cost slide later on by Hadi. Despite the property sector weakness in China, The sea-borne iron ore market was supported by resilience of China's steel output. As a much-anticipated steel capacity, parts remained modest in China, that is. In addition, the property market policy that eased off in August also supported our overall sentiment within the sector. Changes in demand and trade flows in thermal coal were observed during the year. Now, local coal prices also resulted in a resurgence in Indian demand, which is a good story for us, with both China and India taking more coal due to their economic growth activity and buoyant power demand. We also saw the resumption of Australian supply into China from the trade ban of 2020, also a drastic reduction in Russian supply that we've seen to Europe, Japan, South Korea, and lastly, Taiwan's gradual shift away from reliance on the Russian coal dependency. For most of 2023, three-bond thermal coal prices remain under pressure due to the weak demand for high-caloric-value coal, from Europe and Northeast Asia. High stock levels of both thermal and gas in Europe, Japan, and South Korea resulted in a significant price reduction. Furthermore, stronger renewable availability reduced the role of gas and thermal coal in the European energy mix. So, towards the end of 2023, natural gas supply risks and the Israel-Hamas war and the uncertainty of the Northern Hemisphere winter added to the energy market dynamics and pricing. On the back of all of this, we come back home. TFR continued to report the same challenges already mentioned previously to you, such as limited availability of locomotives, unending security incident and vandalism of the infrastructure, resulting in the lowest RBCP coal exports of 47.2 million tons, below 48.6 million tons achieved in 1992. So operational challenges, and the equipment failure at Ascom Power Stations impacted on the offtake of Power Station Co. in the Waterberg region, and being specific, at Kota Halak. And Haru will share more about how much those volumes were and the impact just now. So moving on, looking at our performance in this uncertain environment, you will recall that we had a loss of life. at Belfast in financial year 2022. And we had to recommit as a team to focus on basics so that we can achieve the much-wanted zero-hung. As a result, I'm very encouraged to report today that in the last year, that is 2023, we produced all the towns without a fatality. However, our last time injury frequency rates for the group, which we use as an indication of how well we're doing in safety, was 0.07 against a much reduced target of 0.05, which is telling us that we must continue to intensify our day-to-day efforts to achieve this much-needed zero harm in our operations. So looking at operational performance, and I must say that under Hadi's leadership, the cold team responded with resilience to an evolving operating landscape. It was tough. However, lower demand from ESCOM and continuing logistics challenges that we've talked about resulted in a 1.4% decline in cold production. from 43 million tons in the previous year to 42.5 million tons per annum. So with the continued logistics constraint, it is very important that I remind you what the design constructs of this business. And I've mentioned this before, that our operations are optimized to perform at 50 million tons per annum. with 8 to 12 million tons per annum of exports by rail to RBCT. Very critical information because there is, however, a threshold to these volumes, below which even the most stringent of cost containment measures will be rendered ineffective. So let's look at how we are producing today. We operate at 42.5 million tons per annum. not 50, oftentimes with full stock price, which really impacts the rhythm of operations back at the mines. And we are railing at 5 million tons per annum of exports, railing some of which are on trucks to Maputo and also to our RBCT ports. So I can say to you that the ops team and Meles are now feeling the pressure against inflation. And we're going to hear more about that when Javi and the copies are talking about it. So, consequently, if you look at our unit cost, it has increased by 16.7% on a year-on-year basis, from 413 rands to 482 a tonne, driven by all these constraints that I've mentioned to you, the off-take from ASTOM, full stop powers, and as a result of the acceleration of certain mining activities that Khabib will share with us. And surely, if we're tracking more than we have before, we still have to optimize that cost as well. So, we are really in a position, though, to really quickly respond to the demand from the market, despite the challenges I've just mentioned to you. And also giving you context on this increased cost per town. This does not mean that we have abandoned our operational excellence initiatives that we shared with you and the very intent of remaining below mining inflation. That has not changed. Our early value strategy, together with our market to resource optimization, enabled by our record average price realization of 97%, against the API4 index is cleansing. And this is an increase of 4% compared to financial year of 2022. So let's look at synergy for a little bit in terms of the operations. And we'll see that in terms of wind generation, it increased by 8% compared to the financial year of 2022 as wind conditions improved in the previous year. Now, coming to the financial performance, and you will hear more from copies, that we've achieved an EBITDA decrease by 29%, from all the reasons that I've already talked about, to 13.4 billion rands. And this is our second highest following our record thermal prices in the financial year of 2022. This decrease is driven primarily by lower export prices and lower sales volumes for both our domestic and our export markets. Looking at the core business EBITDA margin, it went down by 9%, from 42% to 33%, whilst the EBITDA margin of the synergy business remained stable at 80%. Headline earnings per share achieved for this period, 46 rands and 81 cents, which is 32% lower compared to the financial year 22, including a contribution from Sayoc and Left Mountain Equity Interest. We achieved a return on our capital employed of 35%. So this achievement is attributable not only to a high basket price performance, but also to our efforts on efficient capital deployment and cost management. Given this performance and considering the ongoing and prolonged logistics uncertainties ahead, including our growth aspirations, It is my pleasure to announce the final dividend as declared by a board of 10 rands and 10 cents per share. But that's so weak. Wow. Okay. Let's hear if you're going to do something now. And a special dividend of 572 cents. Maybe that's going to be louder. I'll see. It is tough. It is tough times. This is really heartwarming. But POPIS will elaborate a little bit more on that later. So it's not just a DV. There's also a specie on top of that. So as a purpose-driven organization, the sustainable impact of our business remains at the core of our strategy. We continue to integrate ESG into our day-to-day running of this business. with our steering committee, together with our board committees, playing a crucial role in ensuring that there is momentum and quantifiable outcomes coming out of the programs. As a result, we continue to benchmark above our peers on global ESG best practice. So I'll give you just a few examples on this. The Lillipala solar project, which is valued at $1.6 billion, which you have announced before, is under construction. and will provide us with a 27% reduction in scope to emissions upon completion in 2025. Moving on with water intensity improved by 30%, while our carbon intensity was reduced by 20%. You may have also seen the good news in the media in quarter four of last year, that we have signed an MOU with the Council of Geosciences to explore carbon capture usage and storage capacities and opportunities thereof to mitigate difficult to abate carbon emissions. All of these examples are an indication of demonstrable progress. In line with our commitment to diversity, equity and inclusion, the representation of black women in senior and middle management has improved by a whopping 75% in the past six years. That must be great. And in 2023, over 6% of our payroll allocation went into skills development and training of our employees, which included masterclasses that kept us abreast with industry development and best practice. We also provided over 200 CETA accredited courses for community SMMEs. And compared to financial year 2022, we awarded more than double the number of bursaries for previously disadvantaged youth. I think that's great news as well. And ladies and gents, If you look at the period between 19 and 2023 financial years, your contribution towards social investment was 7.4 billion rands, of which almost 2 billion rands of that was spent in the financial year of 2023. So really one area we spend a lot of time talking about. As we go through challenges, of course, everywhere, but this is one space we don't want to skimp on. So, Hadi will unpack a little bit on this when he speaks to his numbers. So, last but not least, as a result of our deep-disciplined capital allocation framework, we have consistently delivered shareholder distribution exceeding 45 billion rands over just the five years that have passed. of which 38.9 billion was allocated as ordinary dividend and 7.1 billion in a special dividend, while retaining a strong balance sheet and positioning this business for growth. Governance excellence is important to us and it is core to the function of this board, which is why we have decided to have a dedicated board governance session targeting business key critical business risks that have an adverse impact on stakeholder value drivers of the business, while at the same time exploring what could be in the emerging business trends that could add more value in the business. So our strategy scorecard is reviewed annually. Coming from that are key performance indicators that are assessed quarterly, and these have enabled the board to to monitor progress on the execution of the strategy. And for our business continuity, I'm proud to announce that we have maintained our triple BE score rating of 2. Now, achieving such VDs against a complex and ever-changing environment does not happen by accident. It is the commitment of the great men and women of Xerox. and the leadership of our board. So, on that note, I will now hand over to Hadi to take you through the performance of the coal business. Over to you, Hadi. Thank you.

Good morning, ladies and gentlemen. Thank you, Nombasa. We've been on an exciting journey despite facing challenges in the macro environment. It is an honor to work with the coal team, the circus of this world, Melis, Chris, Lars, Lerato, Lundi. So the team has already supported us this year. Despite a challenge in 2023 on the safety side for the industry, we did not have any fatalities as mentioned by Dr. Mombasa in any of our operations. With ongoing logistical constraints, we managed to still maintain production as well as export sales of more than 5 million tons. and achieved a record price realization against depressed cold prices. We also effectively controlled our total costs and continued our focus on value-adding projects in capital execution. I'll now dive deeper into our performance. Starting with safety, which remains our number one priority and underpins how we do business. Positively, the group achieved zero fatalities since hours of painting However, the industry did experience the tragic loss of 53 lives in 2023. I would therefore like to take this moment to convey our deepest condolences to the families and friends who have lost their loved ones. Improved safety outcomes across business remains a continued and collective responsibility. Regressively, we did record 11 lost time injuries. And that has resulted in us not achieving our target. Our target was 0.05, where we end up achieving 0.08. And to address this, the team initiated enhanced safety campaigns across all our operations as we firmly believe that our commitment to zero harm is paramount and achievable. We'd like to highlight some no-duty achievements in our environmental performance. demonstrating our dedication to sustainability. A 20% improvement in carbon intensity with a continued commitment to achieve our 2026 targets of reducing our Scope 1 and Scope 2 emissions from our baseline of 2022. A 30% reduction in water intensity, staying well below our target of 180 liters per annum of mine time and surpassing the coal mining benchmark of 380 liters can of mine can. Our rehabilitation efforts resulted in 20% more deceptive land restored compared to 2022. Mongesi and team are leading that. We maintained a zero level three major environmental incident. However, there was an unfortunate level two incident recorded at one of our close operations. We are pleased to report a 14% increase in community investment, totaling 1.9 billion rand, as this was mentioned by Nombasa. Of this, 79%, which is 1.48 billion rand, was used to support our Black SMEs through local procurement and enterprise and supply development. This inclusive approach reflects our dedication to positively impacting lives and fostering a sustainable world. Next, I will focus on our operational performance. It is evident that our operational agility shielded us from major impacts on our business. The ESCOM operational challenges resulted in sales being impacted negatively by 1.2 million tons at an increased quality export remark. This impact was mitigated by increased production at Luban based on placement of products in the market, as well as Belfast ramping up to normalized production levels after the impact of the unfortunate fatality in 2022, resulting in overall products decreasing by only 1.4 million tons. Our sales decreased by 38%, mainly due to the ESCOM impact as highlighted above. Despite these challenges, our domestic sales increased by 7.1%, benefiting from our market-to-resource strategies, as well as maintaining export sales above 5 million tons. We forecasted product for 2024 to decrease by 1.4 million tons and sales to remain the same, mainly due to a 9% decrease in Mgumalanga production mainly driven by MATLAB, decreasing by 17% in line with the Life of Mine project. Global optimization will focus on driving value, not on volume, hence the reduction in terms of the numbers, and improvement at Belfast through alternative logistical export channels. A slightly improved S-COM of TIG is expected at Rotterdam, although it is still less than the full contractual volumes. Although the decline in the API for index poses a challenge in selling our product through alternative ports, we continue to pursue this option to enable our operations as long as it remains financially viable.

Moving to our market slide.

Our robust and diverse Product portfolio resulting from the LVD strategy and our market resource optimization initiatives enabled us to increase our R1 sales from 58% in 2022 to 73% in 2023. This resulted in record price realization of 97% achieved against the index across total export volumes. 2023 saw the API for index lower by 55% compared to 2022. However, the exchange rate assisted somewhat in countering the impact of lower realized rent price. Looking at the pie charts at the top right, you will note the following regarding our market. Sales to Europe have reduced by 36% in 2023. And these levels, we believe that they will be sustainable going forward. This reduction in sales was on the back of much lower demand for coal, influenced by a very high inventory level coming into 2023 and much higher availability of gas at very low prices, causing coal-to-gas switching. We have increased coal volumes into Asia by 19% and Africa by 15%. in line with our longer-term strategy. Our robust product portfolio continues to enable us to play our strengths in different markets. As much as coal evacuation to our markets remains a serious challenge, the team continues to focus on finding solutions across numerous domestic and export logistics channels, and we expect to continue to build our past successes to move products via alternative ports in 2024. With the initiatives in place, exports are expected to increase by 18% to 6 million tons in 2024. I'll then move to our costs. During the half-year presentation in August, we highlighted the fact that we have installed capacity to produce 50 million tons. Nombasa did spend time on that because it's quite important that we understand an investment upfront where you're sitting with a capacity of 50 million tons. So that is an important one as I go through my presentation. We indicated that should there be off-stage and logistics constraints, that additional cost pressures will result. And our remaining guidance of remaining within coal mining inflation will be at risk. Subsequently, The catch-up of 1 million tons on the ESCOM of TIG at Rotorhelag did not materialize, and actually recurred further, and the TFR performance also didn't improve, resulting in higher volumes through alternative channels. This impacted the operational regime and required us to pivot regarding our mining processes. We therefore utilized this opportunity to prepare our operations to be more responsive to this new ongoing reality. At Swethelek, we accelerated the enlargement of the footprint of the sump to more effectively manage our water balance, especially during periods of excessive rain. At the Mpumalanga mines, we made a conscious decision to trade value by increasing the amount of export coal and restore operations to their normal activities. This resulted in total tons handled, increasing by 27 million tons, resulting in an additional 1 million tons of runoff mine produced to the plants. This enabled continued production and sales volumes through our alternative logistics channels. We achieved a 1% decrease in our cost per total turns handled, as depicted in the graph on the top right, underlying our operational efficiency in handling additional volumes, despite the external pressures we have just discussed. Given this macro impact, the above value trading decisions has temporarily resulted in our cost increasing by 16.7%, And in our cash cost, the TAN was being higher than mining inflation by 8.1%. As we opened, an additional 5.7 million TANs were moved at a cost of 89 million RAND, enabling us to produce 600,000 TANs, and a movement between peak resources targeting higher product quality. Belfast moved an additional 4.8 million TANs at a cost of 181 million RAND. And after a first quarter delay in mining, as discussed before, and they've managed to produce 473,000 tons additional. The water halal establishment to enable water management in the mining pit, as mentioned, requires us to move about 2 million tons of material at a cost of 111 million rand. We can confirm that the stripping ratios are still aligned to the life of mine guidance and levels indicated previously, where the street ratios at Leopold and Belfast decreased in 2024, while the Haute Halle street ratio will increase slightly. All these movements are linked to the normal resource geology. I will now unpack the production costs as indicated by the shaded area in the bottom graph. Even though our rent per total town center decreased by 1%, Our production costs on a rand per ton basis increased by 53 rand per ton, which is about 12.8%, due to the sales volume constraints as mentioned above. Then the key contributors included the following. We've handled additional material, and that resulted in increased contract activity, rental of equipment higher, and we've also enhanced maintenance as we're operating more equipment. And that came at a cost of about $4,000 per ton, which is about 9.7%. Employment cost increases are due to normal labor increases, which were about 1.7%. and energy costs increased by 1% due to 16.5% increase in electricity rates. And these were offset by improved effects in our operations. The above cost was offset somewhat by the decrease in the rehabilitation liability, mainly due to increase in discount rates. Popis will later unpack the general and distribution costs, What I'd like to end on the cost side is in the face of challenging microenvironments, our commitment to cost containment remains steadfast. We are comfortable that the work performed during the last six months has set our operations up for a sustained and resilient response to ongoing external market impacts. This is supported by our commitment to driving digital programs targeted at obtaining insights from advanced data analytics. We therefore see ourselves returning to normalized cost and street ratios as guided previously. We continue to actively investigate economically viable logistics strategies. Finally, I'll move into our capital expenditures. Our total capital spent for 2023 demonstrated our commitment to financial prudence and operational efficiency. It is noteworthy that we achieved this while maintaining alignment within the 5% guidance provided in the November 2023 FD3 clause, with the actual expenditure at 3% below the forecasted basis. Further on our capital excellence journey, our commitment to capital excellence is reflected in our continuous review and reprioritization of the capital pipeline. This ensures that our investments align with impactful business objectives, driving sustainable business and value creation. Looking ahead, we forecast our 2024 capital expenditure to remain in line with our overall guidance, for getting an average spend of 2.5 billion rands per year in real terms. Team areas of focus include equipment replacement as well as a license to operate infrastructure in Mpumalanga. I would like to take this opportunity to express my gratitude to the operations team and my colleagues here at the connection for the exceptional agility and resilience demonstrated through the year. Their efforts have played a significant role in our final financial achievements. Now I'll hand over to Copies who will provide a detailed overview of the financials. Thank you.

Thanks, Harvey. Good morning, ladies and gentlemen. It's a pleasure presenting the results for the year in the 31 December. The results will be compared to the 22 financial year. As mentioned, I think our results must be viewed in the context of a very difficult operating environment where we had a bumper 2020 financial year with cold prices at elevated level. Despite this, we posted the second highest EBITDA as Nombasa mentioned in the history of the company, which is definitely testimony to the robustness of the business. The IFRS results will also be adjusted with headline earnings adjustments to make them more comparable, and details are included in the backup slide. So on the first slide, the high-level overview of the group results highlight the performance of our own operations depicted on the first two graphs on the top, followed by income from the equity-accounted investments on the top right. So following the record performance on the back of high coal prices in 2022, the tougher conditions we experienced in 2023 are evident in the lower revenue and EBITDA numbers. However, looking back at the five-year performance, the significant compounded growth rate demonstrates that shareholders are handsomely rewarded for our efforts to enhance efficiency and our cost control as well as our conviction in our early value and market to resource strategies to deliver value for our stakeholders. Revenue and EBITDA will be unpacked in more detail later on. The total contribution from our non-managed operation was in line with 2022 and equity income from SIOC was 1.3 billion Rand higher offset by a weaker performance from Afube, a 50% joint venture with Tungela, mainly as a result of the lower export coal price. So this translated into headline earnings per share of R46.81 per share. Our cash generation remains robust at R13.3 billion for the year, enabling us to bolster our net cash position with an additional R5.2 billion to R10.5 putting us on a strong footing to execute on our growth strategy. On this slide, we split out the EBITDA for the coal business between Waterburg and Mpumalanga. EBITDA decreased at both the Waterburg and Mpumalanga commercial operations compared to financial year 2022. The decrease in EBITDA at Waterburg of $1.5 billion was driven by a decrease in revenue of about $1.1 billion due to lower export prices realized on higher export volumes, offset by higher prices that we achieved in the domestic market, although on lower volumes. There was a corresponding decrease in royalties of about $480 million and inflation added about $579 to our cost base and production costs increased mainly due to the additional volumes that Habi already alluded to that we moved of 208 million, plant and truck maintenance of 101 million, and energy costs of 96 million. Distribution costs increased in line with higher volumes of road transport to other ports, the Richards Bay MPT port, at a higher cost of about R276 million. We also had the favorable impact of a higher discount rate used to calculate the rehabilitation liability, which resulted in a positive variance of R120 million. The Mapumalanga decrease in EBITDA of R5 billion is attributed to lower revenue of R7 billion from our Mapumalanga mines, mainly due to the lower export volumes at lower prices. There was a saving on distribution cost in line of the lower export volumes of about 220 million, and we had a positive variance of 2.5 billion at the Mafube JV due to us buying the coal in at lower volumes and also at lower pricing. At Mupumalanga, we also experienced inflationary pressure adding about 260 million to our cost base, as well as the additional costs that we incurred to move the additional volumes of about 220 million. The EBITDA for Matla remains fairly stable, with a slight increase of 8%. This translated into a 33% EBITDA margin for the coal business. Moving to energy, Energy generation at the synergy wind operations increased with 56 GWh as the wind conditions improved in 2023 following the low wind conditions in financial year 2022. This was partially offset by a 15 GWh generation lost at one facility due to an Escon distribution line fault in the first quarter of 2023. We're proud that we've now also reached financial close and construction commenced on the 1.6 billion Lepalale solar project. This facility will provide 68 megawatt of clean solar energy to the Groote Geluk mine. Synergy's operational EBITDA margin was stable at 80%, underpinned by the annuity nature of the long-term off-take agreements. The project financing of 4.3 for the Synergy wind farms will be fully settled in 2031. And to remind you, it has no recourse to the Exaro balance sheet and is hedged through interest rate swaps at an effective interest rate of 12.8%. The increase in the project finance debt reflects drawdowns for the Lepalali solar project, which is also project finance. So hedge accounting is applied on these hedges and therefore has limited volatility on the profit and loss account. If we then look at the EBITDA waterfall, firstly the price bar. So our exports at lower prices resulted in an average realized price of $117 a ton, 53% lower compared to financial year 2022. As Harvey mentioned, we are proud about our price realization compared to the benchmark API 4 price, and it increased by 4% to 97%. This impact was partially offset by higher prices realized in the domestic market, and if we look at volumes, export volumes decreased 105,000 tons as a result of the ongoing logistical challenges. We also experienced lower offtake from ESCOM due to equipment downtime and unplanned maintenance at both the Madupi and Matimba power stations. Inflation, similar to the rest of the mining experience, we continue to experience pressure with electricity costs increasing 16.5%, labour 6.8% and the rest of our cost base at 6%. 6.8%. There was some relief on our diesel cost and the diesel decreased by 4%. As mentioned, buy-ins from the Mafube JV decreased with 485,000 tons at the lower price of about 1,183 rand per ton. Looking at the other costs bucket, the increase in operational costs was unpacked by Javier earlier on and is associated with the biggest contributor for the $1.2 billion variance due to the additional tonnage that we moved. The royalties expense decreased in line with the lower revenue, resulting in a positive variance of $795 million. Employee costs overall, including incentive payments, were lower in line with the lower profitability of the group, and not achieving all performance targets. The impact from external surveys on rehabilitation costs at their operations, combined with a favourable movement in the discount rate, was partially offset by an increase in water treatment costs at their mines' enclosure. The net positive forex variance is due to the impact of the Rand dollar exchange rate on revenue, as well as realized and unrealized forex differences on debtors and foreign cash balances. Included in the other bucket are positive fair value adjustments on foreign exchange contracts of $508 million and our funds in the Environmental Trust Fund and in our insurance captive of about $300 million. Also included here is the accounting treatment of new insurance products we are now entering into resulting in premium expense that will now be classified as financial assets on the balance sheet and not expense through the income statement anymore. We then come to the cash generation and capital allocation. So in employing our capital allocation framework, we aim for a net debt EBITDA of below one and a half times, excluding the energy project financing. Cash flows in 2023 totaled $15.6 billion, comprising of $10.7 billion from our own operations and we received dividends of $3.4 billion from Soil and $1.5 billion from Afube. In terms of our framework, we used this to sustain our operations and support functions with capital of $2.5 billion. We paid dividends of $8 billion consisting of of a pass-through of the SIOP dividend of $3.4 billion and $4.6 billion from our own managed operations. Included in the other bucket of $706 million are shares required to settle Vesta Chair-based schemes in 2023 and also insurance deposit facilities that we made of $360 million. So excluding the M&E net debt of $4.3 billion, This resulted in a closing cash position at the end of December of 14.8 billion, excluding the energy debt, which gives us considerable flexibility to execute on our growth strategy. We shared the economic value generated of our shareholders, including 6.5 billion of employees, 5 billion to government through taxes, and we paid 7.4 billion to the external shareholders as dividend and we shared $90 million with communities. So as Nombasa also pointed out, I'm pleased to resolve that the board has resolved to pay a final dividend of R10.2 at an overall group cover ratio of 2.2 times. This is a pass-through of the SIOP dividend and a cover of 2.5 times on the Exaro adjusted group earnings. As previously signalled to the market, we aim to balance the level of cash retention with our growth strategy, as well as returns to shareholders. We also take into account plausible downside scenarios and want to retain a balancing flexibility. And as indicated to the market, we earmark cash retention of between $12 to $15 billion, excluding our energy project financing for the growth strategy. So considering the level of cash in the business currently, the board has resolved to pay a special dividend of R5.72 per share. Our cash retention will continuously be reviewed, taking into account the economic outlook and the pace of the implementation of our growth strategy. So with that, also I'd like to thank all the people in Exaro that make the results possible. Whether you're situated at the business unit or at the connection, thanks very much for your efforts. Also, my finance team, I'm not going to single them out. Hard work to put all of this together. I really appreciate it. Thanks very much.

Thank you, Kopi. And now that we have looked at the year it was. So I'd like us to just start looking at the road ahead. And I want to start by reiterating our strategy. So our purpose and vision of powering better lives in Africa and beyond by responsibly investing in resources that power a cleaner world remains core in the execution of our sustainable growth and impact strategies. which remains unchanged. We aspire to build on our strong foundation as we transition towards a diversified minerals and energy business. To enable this vision, we must first continue to recognize that we have built a robust coal business over decades, which continues to deliver great value to yourselves and as such, it remains a critical strategic lever for Exara. We thus remain committed to creating optimum value through this business by executing our Elu-Velu strategy and our market-to-resource optimization strategy. We are building a resilient, diversified and sustainable minerals and energy business within the next decade. while advancing in our efforts of achieving carbon neutrality by 2050. To achieve these aspirations, we will continue to leverage our position of strength, utilizing the following, our bulk commodity mining and energy experience, as well as our technical and project execution skills, our business integration experience, our balance of strength, and the strength in the skills and experience of our people. Success in executing the strategy will be measured by growth in diversified mineral earnings and energy generation, the decarbonization of the portfolio, return on capital employed of over 20%, as well as agility and effectiveness in our response to material ESG issues and opportunities thereof. We remain positive and confident in our ability to create value for you, our investors and also our shareholders, despite the complexity and challenges of our operating context experienced both globally and domestically. We believe in our defensive strategies, such as our early value delivery, market to resource, and the digitalization of our value chain, which have really protected the margins. You can see in our record a realization of 97% levels against the API4 index. The challenge of all times for Hadi and his team is what he's talked about earlier. of always finding a new optimized operating level in response to the volatility and uncertainty that we've seen in the last three years, coupled with structural challenges in the local and the global economies that have become a norm from a market to resource intelligence that we have gathered over this period. And we've heard that they've shifted and they continue to shift. The involvement through special private sector investments into the development of our infrastructure, as far as our energy and rail, has changed the nature of doing business in the country as we knew it. It has become more complex and requires more involvement from ourselves as a private sector. So we believe that the developing business partnerships with government under Business Unity South Africa under the custodian of private sector CEOs and gladly now having also our former CEO having joined BUSA as his president, the National Logistics Committee, which he also leads, and the National Energy Crisis, called NECOM, really gives us confidence that we will get the impetus that is necessary to address socio-economic crises facing our country. With the combined and focused intention, resources, capacity, and all that is brought in by these bodies, we believe that we can leverage on our operational resilience and turn these challenges around. So for these reasons, we have confidence that Hadi's team and their ability to deliver within the following guidance for the 2024 finance year worth mentioning, meaning that we expect coal production of between 39 and 43.2 million tonnes. Total coal sales expected to be at 38.4 to 42.4 million tonnes. Then as far as the total coal exports ranging between 5.7 and 6.3 million tonnes. We expect to spend between 2.5 billion rands, which we have already, I think Coppice did advance or advise you, between that and 3 billion rands in sustaining CAPEX for the coal business. And with wind conditions remaining favourable, we expect our wind generation for the year to be between 700 and 780 gigawatt-hours. So we are very clear about our strong value proposition. Our coal resources and reserves are of distinctive quality, enabling a unique market position through our value-vary strategy and market-to-resource optimization strategy. We believe we'll be able to realize more value. This unique market offering enables us to produce coal that meets customer expectations in terms of quality, and enables us to achieve maximum export prices relative to the API4 index. And I think we've seen, as our RB1 content in our product mix, we saw more and more improvement in our realization of price. The steady operations at your wind farms continue to perform at high EBITDA margins of what we've had already of 80%, and geared up to grow its generation base further. so that we can contribute in the decarbonization of our own operations, but also to meet the challenges of decarbonization of our economy, of its 2050 net zero target. The business has delivered strong cash generation from the coal business and the iron ore investment, which has supported a healthy balance sheet. On the back of this, we are a business solving for current energy needs here in Africa and beyond, and gearing up for a strong generation of future green energy demand through our synergy business, alongside a portfolio of future critical minerals that we're busy pursuing. Our assets are cost competitive, and we've been able to demonstrate that historically. From our track record, we can keep our cash costs at hand, below mining inflation to protect our EBITD margins. And we are aware that we are challenged currently, but we still have that goal of optimizing so that we can really retain a business that is resilient, that is able to generate strong cash flows through appropriate digital applications as well, cash optimization, and obviously our resource efficiencies when we look at the energy sector. and water to our ESG optimization programs. We have demonstrated robust financial performance and stable earnings, achieving the second highest group EBITDA performance of 13.4 billion rand in the history of Exaro, and an average ROCE of 32.4% over the past five years, demonstrating our commitment to consistent stakeholder value creation. Our gold strategy is well-defined, and we have shared it with the market over and over, and we continue to do so when we do our roadshows. And what we premise it on is a responsible transformation and trans-seasoning from coal to a lower carbon through M&A's diversification into minerals that are critical to a clean energy future and developing an energy solution system We believe an optimum amount of net cash to be retained of 12.15 billion rands that Gopis talked about, both really to enable the strategy and execution of our M&A strategy or program that we've mentioned, and obviously retain healthy sales to our shareholders. We do not intend to build our cash beyond this range. And we get this question all the time, and we still maintain 12 to 15 is enough for a company that is not as geared as we are. So as I conclude, ladies and gentlemen, let me reiterate that our strength and success is rooted in our fearlessness, our ability to unlock impactful and sustainable resources, and the conviction to deliver on our dreams. All being said, we cannot forget that our strength lies in the great women and men of this organization who, like George Washington, have the bullets through their coats and had Hussle shot under them and yet still standing strong. so to contribute to the value of your business. So allow me to go on the 14th of March 2024 to brag on their behalf. So I'd like each and every one of them to know that we're grateful and we thank them for their continued dedication, resilience, and loyalty. They know that we are hashtag cruising nicely. Thank you very much, ladies and gentlemen, And now I'll give over to Ling Ling. Thank you, Doc. Thank you for your continued leadership and vision. Thanks to Javi, Rian, and Doc for a very insightful and thorough presentation. As you've heard, I'm sure you'll all agree, we've delivered on a robust set of of results facilitated by our early value strategy and market to resource optimization strategies with an exceptional focus on operational excellence, cost containment, agility, and delivering, as our CEO has highlighted, the second highest EBITDA in the performance of Exaro's history. This brings us to the end of our presentation. I would like to thank those of you who have joined us via LinkedIn. Our live stream will now end. For those of you who have joined us through the chorus call and webcast, please remain on the line as we facilitate our Q&A session. We will then now move into the Q&A session of the day. And in remaining true to our commitment to honesty, transparency in our communication, We invite robust questions and dialogue to ensure that you have truly understood the performance of the business as well as the outlook as outlined by the CEO today. So without further ado, I would like to open the floor to questions. I will start to take questions in the room. And as I do so, I would like to invite our MD Energy, Leon Kronenbolt, to join us. up on stage just so that he can hand some of the questions from the energy business. Okay. Are there any questions? Thank you. We'll start with Tim Clark. Thank you.

Thank you. Good morning. It's Tim Clark from HBG Securities. Firstly, congratulations on the results. It's been a very tough operating environment and I think the special dividend was greatly appreciated by shareholders. Thank you. can we just try and delve into some of the costs? I was trying to write down the numbers furiously that you were giving us, and it was quite a complex situation. It looks like you were stripping more on opening up areas. You incurred additional cost. It's quite a strange situation to have lower production, sort of a low production half-term, and then be opening up additional areas. Generally, you slow down stripping or slow down additional work when your volumes are low. So I suppose my question is, you know, if you were to normalise costs for the previous year and take out some of those one-offs that might not recur, what do you think our starting base is? And if you could give us some indication of that at a sort of maybe a Waterberg and a Pumalanga level, that would be hugely appreciated. My second question is just, it's second to that, but If you're set up for 15 million tons, which, Mombasa, you've very clearly outlined to us, at what point do you start trimming out some of the excess costs? And how much excess cost do you feel like you're living with as optionality at this point in time if you are set up for that higher volume, as you point out? And then my last question is just for Ria. I'm just on the net cash, 12 to 15 billion rand. As I said, we really appreciate the special dividend, but just to help us think about that, do we take your net cash ex-synergy, take off the dividend from the two and a half times cover on residual earnings ex-SIOC, and then look at that net amount and then say what excess cash is there between $12 and $15 billion, and then clearly you're indicating, or it looks like you're indicating that there's no deal on the horizon because you're if you're comfortable giving an additional $2 billion back to shareholders. If you could just outline a little bit more, it'll help us just on your thought process around the special. As I said, no negative on that. We're very happy with that. I'm sure Dr. Kahn is particularly.

Do you want us to take more links? I would like to take one more question before we move on to answering. Oh, maybe two. Yes, Mpumele Lopim, do introduce yourself first.

Mpumele Lopimbo from APSA Capital. So my first question is on Waterberg. I see your focus for production is flat, but your exports, or your sales rather, total cells for waterberg they're increasing is that a decreasing in inventories so that's the first question and then the next question is with regards to belfast um i see your whole volume cells are increasing that's for your forecast i just would like more color on that thank you

Thank you very much, Mpumalanga. Yes, there is a next question, so please introduce yourself.

It's Brian Morgan from R&B Morgan Stanley.

Thank you.

So, it's a couple of questions. Just looking at the segmental reports, if I'm not mistaken here, it looks like Mpumalanga It was free cash flow negative, about 112 million around last year. And I just hear comments on that, especially in light of the fact that the other two spots is quite a lot lower now than it was on average last year, right? So are we reading it wrong? Are there one-offs in that number, which would make free cash flow positive on a normalised basis? And then the other is, Fabio, if you could just chat to us a bit about it. about economics on road at the moment, where we are right now, if it actually makes sense at all.

Okay. Lynx, if you don't mind, can we stop right here? Yes. Otherwise we're going to forget all of this. 100%. Thank you. So, let's line up Nellis. And then Nellis will be followed by Isak to talk about the economics of the road, right? Yes. And also talking to us about the 50 million times up to which levels do we start cutting on fixed? Let's deal with that.

All right. Thanks very much. Thanks, Tim, for the question. And good morning, everybody. Just on the cost, and I mean, I think it's important, Tim, what Mombasa said in terms of the 50 million footprint, because that's kind of where it starts. You know, what is your business structure to do? And remember, the 50 million tons is basically 50 million to ESCOM. And then the balance, you're going to export and sell domestically. So it's ESCOM, and we started the, let's go, it's basically two halves, a discussion of two halves. If you look at the first half, we actually were well with about 4% below what the mining inflation number was. And what we indicated at that stage was that TFR, the situation was expected to improve. We also said that Eskom were going to catch up the 1 million tonnes that were behind at that point in time. So Eskom ended up being 1.7 million tonnes behind, so that's increased that gap. And then the TFR performance actually regressed slightly and we actually accelerated some of the activities through the optionality ports, which come at a higher cost. So then if you go to the business itself and what the footprint looks like and some of those activities that you referred to, we needed to use the opportunity actively to address some of the challenges that we had. So from a GG point of view, we've seen the weather patterns changing. There was a sump already planned. We accelerated that sump to use the capacity that we had to get that sump in place and put the infrastructure in place for our stormwater system and manage that in the new reality that we're having from weather patterns point of view. If you then look at... But Belfast we've talked about. Belfast, remember the first quarter we didn't produce. So all of that catch-up had to happen in the second half when we were ramping up. And Belfast actually had record production over the last six months. But that entailed additional tons. And then at Leopold as well, we're busy going from a two-pit operation to a one-pit operation. So there were two that we were operating previously. That pit has been closed. and we're moving across to a new pit. So we were in that process. Also, accelerating and making sure that we position ourselves to take advantage of when the market does turn, because we do have the belief, and you've seen it in our numbers that we're forecasting, that we are going to get back to the levels that we expect to be economically viable. So if you look at our rand per tonne, it went up by 69 rand per tonne from the 413. And if you take an 8.1% mining inflation figure, that should get you to around 35 grand a ton increase on the fall 13. So the balance of the activities in the waterfall are very much related to the 27 million tons additional that we moved in 2023 compared to 2022. So I hope that gives you some color around the reasons for them. So we're quite deliberate actions, but others were were external impacts that also had an impact on our rent per tonne. Because your divisor came down, remember, on a total tonne handle point of view, we actually reduced our costs on the total package. But on a per product basis, we had that increase against mining inflation.

And just maybe to mention that it's always been customary in our organisation to look at every efficiency opportunity before you start touching the fixed costs. So we still go by that rule. And we are not at the point where we believe that we optimize or leave us of control at this point in time.

Thank you, Mel. Ishak?

Thanks, Nombasa. Good morning to everyone. Behind your question on road transport, I think you will appreciate that with Edwara having exported 12 million tonnes in 2020, and as we've just reported, about 5 million tonnes in 2023, it is placing the business under serious constraint to be so constrained on our export side. So for us to create additional export capacity is really of strategic importance. Our current view on the truck logistics to other ports is that it's definitely value-creative to a business at the moment to still continue with that. We're also very aware that there's still a lot of room to optimize in the cost of those logistics channels. So looking forward into the future in terms of the volumes we plan to export and in terms of the opportunities to optimize those channels still. we think it's a big opportunity for us that will add a lot of value.

Okay. Thank you, Saki. Then there is the question around the $12 to $15 billion in terms of understanding our position on the dividends.

I will look at the $12 to $15 billion. We look at the net debt number excluding the synergy project financing as at our reporting dates, being now December and June. So this time around, that number was 14.8 billion. And based on that, we thought there is sufficient cash to pay a special dividend.

Does this indicate that there is no deal on the cards?

Indicates?

There is no deal on the cards. No, I didn't say that. This was part of the question.

Okay.

I think it's really keeping to our word, Tim, that we said we'll keep it in 1250. And I think that's one of the reasons. If there's excess, why not then retire?

Brian, your question I think on page 22 of the booklet shows the cash flow so you can see there so obviously as Malice pointed out the optimizing stuff like the mining contractor, the railage and transport and then specifically the Liupan operation is very important to improve the position of the Mopumalongwa operations at this stage. But yeah, there you can see on page 22, the cash flow between Waterbrook and Mopumalongwa.

Okay, and then if that question is answered, there's also a question with regards to the production volumes, which seems flat and the sales increasing. Javi, if perhaps you could elucidate on these aspects regarding the calls

core volumes yeah so they didn't talk to also the the inventors you have so the the things will come from the institute as well what you picked up here so the first question was on photocelic and then the second one was on power first

So on PowerFast, I wanted to understand why there's such a big increase from F23 to F24. So for the first question, I think you've answered.

Yeah, if you look at Belfast's performance, even last financial year, it's performing very well. It's actually performing at almost benchmark performance. Hence, for us, we're forecasting that we're going to improve our products in PowerFast, yeah. Maybe you can just, because you're closer to the numbers, I'm not saving your contract.

Remember, so GG, the big one is that we expect the ESCOM performance to increase slightly. So that's why you see the numbers in the detailed offtake splits between domestic ESCOM and export. You'll see the increase there to ESCOM. It's about 700,000 tonnes. And Belfast, I mean, we didn't produce for the first, for the last quarter of 22 and the first quarter of 23. So TLE24 is the first year that Belfast will be having a full year of production.

Okay, Mfumelelo, I think that you are answered. Would you like to rephrase? Okay, thank you. Please go ahead.

Good morning, everyone. It's Tobelo Peplos from NetBank. I've got a couple of questions. So the first one is just on domestic pricing. That seems to have gone up quite significantly in the period. If you could just elaborate as to why that is the case. And then my second question is on the export numbers. So based on your focusing, I think you are implying about 18% increase in exports volume. So which will then imply a significant improvement in terms of RBCT or rail volumes. So where do you see that increase coming from? And if we are looking at the current run rate of Transnet, where is that run rate currently sitting versus your implied increase? Yeah, I think I'll leave it at that. Thank you.

Thank you.

Can I just make sure, Tubela? Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. Tubela. But part of domestic pricing is driven by certain price mechanisms like international hard-cooking coal pricing to the Oslo or Mikkel prices that has assisted us. What also assisted us is a lot more FCA sales than what we had to do. So in the absence of logistics to our ports, we have to sell that coal in the domestic market and we sell that generally at export-related prices, which means it reports in the domestic marketing segment, but that has the effect of then also reporting a higher price on that. But generally, I think our domestic marketing team has done very well on the pricing. On the export number of jumping from about 5 million ton to 6 million ton over the guidance period, The majority of that is not RBCT. I would have liked for it to be RBCT. If you talk RBCT, you must talk TFR, row performance. We do, in our internal view, place a bit more volume to RBCT than in the previous year, but not to that extent of this. a lot of these tons will go to alternative ports, specifically to Maputo, to assist us to increase our export performance. Just to your question of guidance on TFR performance in terms of these export numbers, the year didn't start off well with a big derailment that has cost us quite a lot of tons. Quite encouraging trend over the past three, four weeks where we always try to get to that 1 million tonnes of railings per week on the coal line and the industry has not been able to achieve that for many months now. In the last 3-4 weeks we've seen numbers of between 1 and 1.15 million tonnes per week which is quite encouraging to give you a sense For the coal line to achieve 60 million tonnes of exports in a year, it must achieve average weekly rail rails of about 1.25 million tonnes. So we quite encourage that the current level of performance, even though it's not very stable, is definitely hinting at potential performance levels of above 50 million tonnes for this year in comparison to 47 point something last year. So this is definitely encouraging signs.

Okay, thank you very much, Saki. Are there any further questions in the room? Oh, I see a question right here.

Thank you very much. I'm Noluchango Langen from Sao Lumi. I just want to find out, are we worried about the fact that there is such growing mania about the carbon which our coal contains. And so where are we going to be going? If at all, you know, the noise is just too much. And then secondly, I am not sure as to whether my second question has been adequately answered. Living in KwaZulu-Natal as I do, There are too many trucks on the road carrying coal. How far is transmit expediting the repair of the railway line? Thank you very much.

Okay. And then, Doc, maybe if I can take one more question to add to this one. There is Shivani. Thank you.

Thank you so much. My name is Nomaito Kabata from Ososawini. I just want to check from the panelists. I see that there is a lot that is done for the communities and we appreciate that so much. But I want to check the spread of the impact that support is given to Is it concentrating on where you have operations or is it taken throughout the country?

Thank you. Do you still want to take some more? Is that enough? I think, Doc, perhaps we can just settle here for now and handle these two on decarbonization and impact on society. Okay, so let me start with our thinking around what we call the carbon mania. I think about 2016, it became very clear to us that a company that is or whose revenue is dominated by fossil fuels has got to think about its future. And thinking about its future meant de-risking the business from what we see as headwinds. But what we were struggling with at the time was to determine the so-called runway. To say, how long is this runway? Is it 20 years? Is it 30 years? How long is it? And we really didn't have a crystal ball to say what it was. But what we were clear of that we would not like in the long run to remain with stranded assets because you will lose, you know, as a shareholder. Therefore, we had to optimize. First we said, whatever we do, we need to make sure that what remains in our portfolio is a set of assets that are so competent and robust that they can compete in most markets globally. Because we knew that some of the players are going to fall by the wayside because the markets are shrinking. Therefore, you want to be able to optimize your reach out there globally. So we talked to the optimization of our portfolio to make sure that the assets that are remaining will withstand those headwinds. And at the same time, make sure that with the current operations, we decarbonize them. And you must be hearing about our process of taking carbon out of our operations. Some of the things we do is to take those assets we believe are not core, and that obviously rebates our carbon footprint, which we are very happy about, and we've done a lot in that regard. The one other big thing we're talking about is bringing in the synergy business to begin to clean up our current operations and others for that matter. So we're very clear on the fact that we've got a business that is future fit, a business that has also increased its high quality calls so that this call can burn in Japan when we could not burn it in Japan before. And this call can burn in other markets, you know, which are taking high quality calls because You can see even the Chinese are putting high-quality technology so that they can burn high-quality coal. So from a market point of view, from what we're remaining with, we've got a very strong business. Taking value out so that it doesn't remain for long on the ground. So whilst we're building these new businesses that we're telling you about. Our intelligence says that we still have some years. It's definitely more than 10 years. And we've seen that period, we believe that it would have grown a formidable minerals business and an energy business that can begin, you know, to almost replace, if not stand strong, next to our core business. So that's really how we're looking at it. We're very adamant that we will meet our carbon neutral status by 2050. And so, yes, that's really where we are. That's why we are keeping this test. so that we continue to look in the market to build these extra businesses that will de-risk this business. Because we want to have a sustainable business that's going to continue to generate jobs for our own generations to come and also for the world to come, for the world to move. So that's really where we're at. Then on the Transnet Focus, quickly, all we can say right now, just to help the team, is that The signs that we see in our interaction with Transnet are promising. We keep on saying this. On top of our own efforts, we've got the National Logistics Crisis Committee that is mobilized to make sure that it assists us in unblocking all the challenges we have, whether they're technical, whether they're policy-related. And we've seen the 47 billion guarantees that are given now to Transnet by government. That is promising to us. And obviously the efforts of us looking at alternative ports and alternative news devices, I think it's a very good initiative and I think innovation from Hadi and his team, which we are excited about. Are we hoping that the Transnet issue is going to be resolved tomorrow, the trucks are going to stop being on the road? I don't think it's going to be short term, but it needs each and every one of us to assist Transnet to get through this difficult time. So that's really where I can leave it at right now.

Thank you, sir.

Thank you, Tevoha, on the communities. Thank you very much for the question. With regards to the question that has been asked, allow me to start by saying the social impact strategy of Exaro is underpinned by our people's statement of powering better lives for all in Africa and beyond. And by so saying, is to mean that we are not limited to our host communities. So with the social investment spend that has been mentioned for the past five years, of $7.3 billion, and for 2023, where we have spent about $1.9 billion, it has been across different provinces. That will include our host communities, it includes our closed mines, and it included our labour sending areas. and the projects they spend from education, agriculture, and SME development. Thank you. Thank you very much, Saboho. I see that there is a question online. Maybe I can go to that one for now. So the question to Javi and perhaps Neles, what is your expectation of growth in ESCOM's sale price next year? And what is your expectation of cost inflation next year?

So mining inflation, you know, what we normally guide, PPI plus 2%. So that's going to be the same guidance that we're going to give. So Tim, to try and answer your question, it's not going to be against an elevated base which includes some of these ones that we will then indicate our costs against that. It's going to be against the normal mining inflation. I mean, remember we were 4% down in our year 22 percentage against mining inflation. We actually came in 4% better. So it does come in swings and roundabouts, but our guidance is still to remain within mining inflation.

Okay, thank you. And on the ESCOM side, any guidance there?

Yeah, the pricing mechanism, of course, is a difficult thing to talk about because it is a confidential contractual matter between us and ESCOM. But broadly, I can explain it that It is a mechanism that takes account of cost pressures in line with PPI and the actual cost index at the mine to protect those parties. So, yeah, I think that's the extent to which I can go on talking about price.

Okay. Thank you very much, Sasi. Perhaps at this point, I could just give those online an opportunity to to ask us some questions. Are there any questions on the chorus call?

Yes, we do have a question from . Please go ahead.

Good morning and congratulations on good set of numbers, especially the special dividend. We have a couple of questions. The first one, I just want to get a bit more color. Under increasing cold-sustaining care tax guidance for FY24, and it seems it's actually sitting in Tomalanga. Is it a once-off increase, or is it something that we need to price into... areas ahead. And this is mainly because at some point we used to talk about peak capex, but it would seem that capex continues. I think capex for the coal division is continuing to increase. And then I also want to get a little bit more around Europe. And I can see there's a lot of focus on that operation. At some point, it was not a continuing operation. And in this environment, as much as you're focusing on optimizing that that operation, are there other optionalities that you are actually looking at as far as that operation is concerned? And then on M&A, this is my last question, or maybe second to last question. On M&A, I think if you can give us a bit of guidance on whether the scope on the new energy transition method remains the same or whether it is a bit streamlined based on the attractiveness of the opportunities that you are interacting with at this point in time. And then congratulations on being able to pivot out of Europe into Asia. I just wanted to get an idea as to what do you see happening that would continue to help you optimize your realized price in FY20. Thank you.

A point of clarity on your second question. You mentioned the operation. Which operation specifically?

You go.

Thank you. Okay. So on CAPEX, Nellis, are you going up or down or sideways?

Thanks. We have guided that we're going to be spending, sustaining CAPEX of $2.50 rands per year in real terms. So the number's not going up. I mean, we're sitting at 2.4 for this year and we're going to 2.7 next year. So the 2.5 billion is in 2022 terms. So we are well within our guidance. Obviously, it's just taking account for the time value of money. The Mpumalanga is, you know, we see it as a business combined. We just showed the split for disclosure between Mpumalanga and Gigi, but Obviously, it would have just carried the bulk of the capital expenditure.

Great. So just on Leopold Optimization, do you want to add anything, Javi?

Yeah, so just going back, our focus for Leopold was to get stability in that business. If you look at how it has performed last year, it's not well. But if you look at going forward, we're not looking at volume, but we're looking at value. So we're continuously looking at optimizing that business. So we can then inform. if there's anything there.

And I think what was outstanding, which we had mentioned before, had been in the contracts that we want to get for that operation to add to the optimization, especially to the likes of Escom Sassels, who really take within the same, their outgrade for Lupin. So that really would set Lupin in the right stead. And we are in conversations with those two companies. Okay, thank you very much. M&A News. Thanks, Doc.

Thank you for the M&A question. In terms of additional commodities, right now we are still very focused on manganese and copper. We've spent a long time preparing for these commodities, and that's where we are spending a lot of our time. However, we do have leeway on those additional commodities that we had identified, and within the battery transition or energy transition framework, we are starting to consider other commodities which we would naturally then have to take to the board for approval.

So at this time, yes, there is leeway, but the overwhelming focus is on the commodities that we had identified previously.

There was a fork. Yes, Doc, the last question was on the core exports. What are we expecting will happen in our guidance going forward? The price realization. Oh yes, it's a very good 97%. Looks like we're looking for 100 here.

Thank you for the question. I was actually hoping someone will ask this question today. I think it's a number we at Exaro are really proud of. It's not something happening by itself. And the origins of this performance is important that we understand it comes from the time that Xaro defined the early value strategy and the market to resource optimization strategy, even at the time of Nombasa's tenure in Coal. Where we are today with the market resource, the implementation of the market to resource optimization strategy, under the leadership of Samantha Maharaj, is that we really are in a position where we can optimize our thinking of what do we produce at what mine and what do we put in the market and on what logistics channel. And I think that is really standing us in good stead. Our marketing resource optimization strategy is really guiding our marketing teams, whether it's refueling, So low in the domestic market, less than a cabela in the international market. To understand what products do we take away and how do we optimize the sales mix. We believe there is still value we can further get from this. The 97 number is quite a high number. But we believe a number of 95 and above is definitely achievable and something we will definitely continue to chase. So I think still a lot of value for us in that space. Thanks.

Thank you very much, Saki. I'm sure that answers all of your questions. Thank you. Thank you very much. Are there any other questions on the line?

We have no other questions on the conference call.

Thank you very much. Are there any additional questions in the room? Okay, perhaps not. So, at this point in time, I'd like to thank you all for your active participation. Thank you very much for all your insightful questions and robust discussions today, as we certainly hope that we've covered all the fundamental aspects that help you understand our financial performance for the year ended 2023. Not only that, but also our strategic priorities as highlighted by the CEO and our Chief Growth Officer and NB Energy. I would like to thank you very much for your continued interest and support in Exaro. I think that with this, all of this confidence really fuels our determination in continuing to deliver sustainable growth and value to you all. I thank you very much and a good morning to you all.