Impala Platinum Hldgs Ltd

Good morning, ladies and gentlemen, and welcome to the annual financial results presentation for Impala Platinum. Joining us today on the webcast and also on the call will be some other colleagues. As usual, we'll do a high-level reflection on the results and then provide an opportunity for robust engagement. I'll take questions in the room first, and after that we will divert to the webcast and the call for questions as well. So very, very welcome. You'll see today a slight deviation from what we've done in the past. I'm going to ask the expanded team to just talk at a high level to the results before we go to the Q&A. So following me, I'm going to ask our CIO, Patrick Marutla, to just reflect on the operations. mernisha kerber our cfo will then just give a highlights on the the financial side and then we'll ask nico just to close the formal proceedings before we jump into q a we operate as a team so we felt it's very important that you also get the faces and the sound waves of the entire team so you know hopefully that they don't disappoint me too much. So no pressure, guys. So without further ado, let's start. I just want to point out to our forward-looking statement. Just please take note of that again. And then without further ado, I'm going to hand over to Patrick. Patrick, please.

Good morning, ladies and gentlemen. Let's start first on the safety side. Regrettably, we had a regression in our fatal injuries. We recorded 19 fatalities for this year. And this is despite year-on-year sustained improvement on our LTE frequency rate and total injury rate. If you look at it from 2019 until last year, we've seen a 29% improvement on our rates, but it's not necessarily translating in reduction in fatalities. We have a plan, and I'll present that plan in the next slide. Moving over to operations, we had a strong performance from our operations, 13% year-on-year, mainly because of the inclusion of IBR, but we also had strong performance from our key asset, Drostenberg. We've seen a 4% improvement year-on-year. Zimpler, 6%. We also have seen 4% from Mimosa. And Canada, despite us changing our operating strategy in response to the low palladium price, they've actually also performed very well. uh the unit cost uh below the inflation of 4.6 percent primarily also driven by good production and also the cost cutting that we've done during the course of the year as a response to low platinum prices capital mostly is because we've now included ibr and also our expansion capital mainly from zim during this year we've also completed our key project All our three fenders and rusting bags have all been rebuilt, which comes in handy to work down the work in progress, stocks that we have. We have completed 35 megawatts solar project in Zimplats. We've also now completed our 38 megawatts failures in Zimplats. We should be bringing it online now in October. And also lastly, we have seen us completing the BMR debotting project that will give us about 10% more capacity. So very, very disciplined execution of our project in this year. So we also see improvement for this year at Marula and Stair Drift. Let me know for now, talk about Marula. So Marula did not perform up to expectation, mainly because we have encountered difficult geology that actually decimated our face land. We have plans in place to restore that face land. I'll touch on Stair Drift. In the following slide, Steldrift, it is still very key to our success and future at the Western Limb. Let me try and dive deeper on safety. So on the 24th of November last year, three days before the 11th fatality, we actually called a safety summit where over 150 of our leaders led by ESCO, we convened in Rostenberg. We also had a minerals council attending because we felt after the third fatality last year that we should reflect on the next steps and really come up with plans to eliminate fatalities from our business. We also had a follow-up in May this year, and from those two safety summits, what you see on the board, that's the plan that we've come up with. Because as employers, we believe without any shadow of doubt that Fatalities can be eliminated. We have points of excellence within our own group, which has proven that it is possible. And I'll just mention one. We have a shaft at Marula Dricop. Since its inception 14 years ago, it has never had fatalities. So we can learn from this point of excellence and actually eradicate fatalities. Since the implementation of this plan somewhere early May, I know it's still early days, but we've seen some promising green shoots. If you look at quarter four in particular, it was the lowest quarter in terms of LTE frequency rate and total injury frequency rate for the last 20 years. Within a very same period, we have seen what we call white flag days. We have seen three of them. Two of them actually happened now in August. So white flag days is a day where all our employees, all the way from Canada, all the way to Marula, they go on for 24 hours and none of them got injured, even in a medical treatment case. So we've never seen this before in implants. So we believe that this plan that we have in place It is starting to show that if we are relentless, disciplined in execution, we will definitely be able to see the elimination of fatalities. Personally, I have been part of this journey before, so it is possible to actually eliminate fatalities from high labor intensive environment like what we see in Rustenburg. So we beg ourselves. with the team that we have, both operational and also from the safety front, and all the changes that we've made to strengthen the team in this previous year to be able to eliminate a schedule of fatalities from in place. So what has happened has not deemed our belief and commitment to see fatalities being eliminated from our business. Moving over to Stellar Drift, you all remember that last year we stood here. Really, just this time in August after we've taken over IBR. And we told you that IBR have got three parts. We said BRPM, it is meeting the expectation. And you will have seen that despite the labor unrest that we've experienced in that shop in particular, it's still delivered according to plan. We told you at the time that processing, we were unhappy with the recoveries. And because of the extensive knowledge and expertise that we had in Rostenbeck and MIMPRO, we believe that we will be able within 12 months' time to reverse that trend when it comes to recoveries. And I'll talk about it now. And lastly, Star Drift, we acknowledge that it was lagging behind in terms of the ramp up. And we said it is about 18 to 24 months job for us to get it set up to be able to ramp up the full capacity. So today I want to take you through this simplified value chain. But before I dive deeper into it, I really need to tell you that it is supported by a very comprehensive framework of work that we're doing. For example, we are integrating IBR now into Impala Rostenberg to leverage the synergies that were identified before the acquisition. We have changed the reporting lines. The executive head of IBR reported directly to Moses. And from last year, the processing division has been reporting to Rustinburg. So now going into the value chain. Last year, we told you there's nothing wrong with the mine design. We still maintain that. The bulk infrastructure is still in place. We have no problem with that. Development is actually going very well to a point where we had to stop some of the main capital development because they're actually far ahead of schedule. Last year, it was very clear that our bottleneck was the mineable face length. And that's what we've been working on for most part of the last 12 months. So the graph at the bottom, you see that last year we had only seven workable phase length instead of the 16 that actually was planned. And just mainly because most of the sections were flooded. They had backlog in terms of support. ventilation issues, so literally you could not complete the whole mining cycle in those sections. So I'm glad to say that by the end of this financial year, we're now sitting on 16, we've got 14 stopping crews, so literally we're sitting with the flexibility of 1.2. So, yeah. Then the other problem that we had at that time was sectional infrastructure. That's your tip-to-face distances, your roadways. We have done a lot of work. You can see the graph tip-to-face distance that we've managed to drop it to 116. The ideal is about 110, so there's still work to be done together with the roadway conditions and also water management. At that time, also, we were not happy with the grade. So for us, it's quality before quantity. So there was a lot of work we've done to fix the grade. As you have seen, it's now responded. We're now at 4.01. There's still a bit of work to be done, but that turnaround has been effected. And so as I speak to you now, where we have a bottleneck, as you know, the value chain, if you solve the problem here, the actual move down the value chain, it is now our ability to move the ore. But like I say, it is also a component of some of the problems are talking about leadership that we're dealing with. We now have brought Sandvik on board to really look at the whole fleet management to really to empower ourselves to be able that if when we blast and generate this all from this section that we have now created, we have the ability to move that. For completeness sake also, as I said that another area of improvement was the processing division. We have brought the expertise that we have in Rastrimberg and we have been able to turn around the coverage now to about 82.2. The ideal we're looking for is 85, so more work is still to be done in terms of changing the reagencies, continue with the work that we actually put in place to embed those changes that have become now ways of how we do things. As I close on steel drift in particular, is that it is still a world class asset. It is still high grade, long life and shallow and mechanized fleet. And that's where we believe that the future of the Western Leap actually resides. And that's why we beg ourselves that in the next few years, we should be able to be exact about FY27 towards the end of it. We see ourselves that we will get steel drift to full capacity as stipulated on the nameplate. On that note, I'll hand over to Melanesia.

Thank you very much, Patrick. Maybe just to start off with, notwithstanding the combination of a very commendable operating performance, excellent cost controls, and several initiatives that we implemented around prudent capital allocation. The key feature of the results was essentially the lower PGM prices. That affected profitability and free cash flow generation. If you look at our earnings for the year, there were two notable once-off non-cash items. The first was the combination of impairments at our Impala Rustenburg, Impala Canada, and both our JVs. And that was largely just due to the lower pricing environment, as well as the elevated levels of interest rates that we're seeing at the moment. The other significant charge that we had during the year was a 1.9 billion Rand once-off IFRS 2 BE charge. And that arose on the conclusion of our landmark empowerment deal, which we did for value. and which basically underpins our commitment to sharing value even whilst the sector faces reduced profitability and margin compression. If I look at the cash flow, similarly, the cash flow was impacted by two large items. The first one was the conclusion of the RB Plat transaction. we had an 11.4 billion rand outflow to acquire the remaining equity of RB Platt. But we also funded almost 900 million rand worth of transaction-related costs, largely from Impala buffeting. The second material item on our cash flow statement is really, and you'll see it, the significant increase in capital expenditure. As we basically progressed many of our processing expansion projects, as well as the installation of solar at our Zimbabwean operations. Despite the lockup in working capital, so you'll see our in-process inventory went up to 390,000 ounces as a result of constrained processing capacity, but also the receipt of Impala Buffer King data, which is really just due to contractual terms. I think what we're very pleased with is that all of the growth we managed to fund from our internally generated After three years of really elevated capital expenditure, following the decision we made to strategically expand our processing capacity, you should see the business return to more normalized levels of capital intensity. I'm particularly pleased with where we ended up on the balance sheet. We ended the year with strong adjusted net cash, with only one billion rand worth of, Nico calls it real debt. And that was largely on, you know, Zimplat's drawing down to fund its peak capital funding requirements. But also, more importantly, 17.7 billion of liquidity headroom. So when I look forward into FY 2025, I certainly think the company is going to benefit from the labor rationalization or restructuring that we did, which underpins our commitment to controlling costs. Secondly, reduce capital intensity. This is because of decisions we made around the portfolio around Impala Canada and Merula, where we adjusted production and project plans. But also given that most of our operations are through the peak funding of expansion and replacement projects. Patrick talked about our expanded processing capacity. I'm very pleased with that because that now gives us the opportunity to basically systematically work through the 390,000 ounces of excess inventory that we've built up over the last three years as we've rebuilt our Rustenburg furnaces. The unlock of the stock should support free cash flow generation and more importantly, protect the balance sheet. I think all of this actually positions the company well to navigate through and provides it with the flexibility to navigate through a period of low pricing environment. I will now hand over to Nico. Thank you.

Thank you very much and a hearty welcome to everyone here from my side. I just want to acknowledge Patrick and Mary Nisha, who was far more eloquent than I could ever be. And also our silent weapon at the end there, Moses, who is the chief executive of Rustenburg. He will assist us in answering questions. Further to that, Mark, Kathania, Sofiso, and online, Leanne, as well as our chief executives. Tim from Canada and Alex from Zim. On top of that, the management teams and the other 60,000 people that have assisted the company to deliver its results. We often say, but it remains true, without our people, we are nothing. A company is not steel, brick and mortar. It is the people. It's wonderful to have them to share the load with me. From my side, I'm going to restrict myself to just giving a broad 30,000-foot view of the company. And I'll start off with a bit of a guidance. One of the key features of this year is the conclusion of the OBIPLAS transaction, thankfully. And on that note, it was associated with very important transformational elements, such as us joining hands with a new partner, I'd like to welcome Lindani as well and Imran as our new partners. They're sitting on some of our boards and already they've added significant value to the conversation, so welcome to you as well. If you look at the left-hand side of the slide, it really depicts the market conditions. We know that there's been a 30% decline in the Rand basket price. From our point of view, the analysis that Imran assisted us with, we see the markets Certainly for the next year or two in deficits. However, we are also aware that the prices of PGMs are not determined purely by market dynamics. There's also the global economy, global sentiment. We see persistent high interest rates. It has a negative bearing on sentiment. And so if you want to think about how do you divide your attention to respond to that on the right hand side if you just look at the the elements the company is really focused on a a defensive posture it's strengthening the internal business our attention predominantly is not an m and a and growth and and all of the the wonderful things that we do when we are in in a super profits cycle it is about making sure that we can strengthen ourselves to the point where we can remain successful even at current spot, which for our company is around 24,000 grand an ounce. We are cautiously optimistic that there may be price support. We have seen some indications, some signals that interest rates may start to be lowered late in the year, certainly in the US, and that may be followed in other jurisdictions as well. So if I look on the right-hand side, No mining company has ever been successful when they have had a large number of fatalities and poor safety records. Patrick spoke about two things. For us, it's really important that every employee who arrives at work returns safely at home to their families. We have to develop a shared vision, shared behaviour. If you want to reduce the speed on the freeways. You can have traffic police fines, but ultimately it only works when the population desires safe conditions and desire to travel at lower speeds. I think that's the challenge that we have, is to make sure that we've got a shared vision, a shared passion and shared behaviour towards this improved goal of zero harm. From an internal operational point of view, Patrick spoke about successes. We've had our three biggest assets, Rustenburg, Zimplatz in particular. We've seen strong performances. Canada has done exceptionally well under the current conditions. I know we've got our annualized numbers in the financial statements, but in the fourth quarter, they produced palladium at $948 an ounce. When we acquired the asset, we spoke about $1,000 an ounce objective. Soon after, our operating cost went up to $1,200 an ounce. For that operation to change its strategy, to improve profit margins on the ounces that you're producing and to come in at 948 is just an unbelievable achievement and we are so proud of the effort so part of our thinking is to take the the positive momentum that we have at the assets that we that we have and to continue driving that and to bleed that into the other parts two big areas of improvement marula uh he spoke about it and naturally stale drift which is our the the latest um part of our portfolio, it's got so much potential. We've now been part of it. There's nothing wrong with the ore body. It's exactly what we anticipated. We're currently producing 483. I mean, we produced 483 that mine has got the potential to go up to 650 by 2027. I've got absolute belief in the support of Moses and Patrick, I think that we will get there. I'm very encouraged with the progress that we're making with developing our understanding of where all the critical constraints are on the business. So we have to maintain operating momentum where we have it and then develop improved performance in the areas that we have perhaps not done particularly well in. One of the things that I think the company did particularly well is cost leadership. So if you exclude RB Platts, integration into the company, our unit cost went up by 3%. And that's below mining inflation, it's below inflation. On top of that, we made changes, we restructured the labour side. That's going to assist us when we get to the guidance later on. We're also guiding a 3% unit cost increase for next year. And so I want to thank the team for hosting us in the commodity industry. You have to compete on unit cost, and that's one of the things that I think we've done particularly well. And then there is, I mean, Marilisha spoke about the strategic decision to invest in our processing capacity. Base metal refinery improvement at Springs, the smelters at Zumplass. We've got all three furnaces in Luxembourg operating. massive opportunity to leverage that capacity. There's the processing of excess inventory. There is potential opportunity to look at partnerships to utilize the surplus capacity to expand through total arrangements with other partners to the extent that that's possible. So these are things that we can focus on. And so whilst I've said that our posture, our focus is predominantly internal to strengthen the business, given the markets, through Catania's thought leadership, we are keeping an eye out on our long-term competitive position. We want to make sure that we've got flexibility in our portfolio, that we manage the portfolio to suit the conditions. We do a lot of market analysis, as does the rest of the industry, but we know that we can only do it on the best information of the day and this changes. We don't quite understand the rate of technology development, whether it's battery electric vehicles or hydrogen. We take positions and then that changes depending on how the technology evolves. And so we want flexibility. And so one of the strengths that we have as a company is that we are exposed on the Eastern Limb, Western Limb. We've got some interest in the Northern Limb. And then in particular, we've got a very substantial footprint in Zimbabwe. And that's also where we believe future world-class assets is located. So we want to make sure that we always consider the movement in markets and how we organize the company's asset portfolio to suit the prevailing conditions. And then the other thing that we want to focus on is, I say growth, and by that I don't necessarily mean ounce growth, I mean value growth. And it is associated with portfolio management. So we want to make sure that we own and operate assets that we are able to operate at a position below the prevailing price at the day, and make sure that we've got the right balance to ensure longevity and robustness to prosper throughout the cycle. And then just the last point I want to make on that is organizational leadership. For me, it's very encouraging today to sit with the team. During the past year, we've had a number of critical changes. Mark came up from Rustenburg. He's now the Chief Technical Officer. Patrick joined us as the Chief Operating Officer. And Moses transferred from Arula to take the very onerous role task of managing Rustenburg. During the past year, we've had in those three positions, as well as in our safety, we've had the retiring of very strong pillars in the company. We've had positions move. Now, a year later, I think that we have established some maturity and continuity in those positions. I think that's going to help us in the next few years. I then just want to talk to our group, Outlook. I'm going to start with 6e ounce production, which is essentially the second blue line. Oh my goodness. Okay. I will have to just talk to the slide as is. It's a fantastic animation, but I'll have to forego that. So the group production, you see, we are guiding between 3.5 and 3.7 million ounces, and that's broadly in line with what we achieved in the past financial year. But if you look internally, there are a few changes. There are two operations where we are forecasting an improvement, and the one is Buffer King. so you look at we achieved 483 and the other so we are guiding 490 to 530 and that is as a consequence of our assurance that we are engaging with the process i mean as i said earlier we want that operation to grow to around 615 financial 2027 so we are confident that we are going to increase production during this coming year and the other one is marula As Patrick has mentioned, once we have dealt with the geological challenges that we've encountered, we re-establish the available working phase. We are guiding that to go up from 223 to between 230 and 250. But then there are two areas where we are guiding lower production. The one is Canada, if I can remember correctly. I can't see Canada. Oh, Canada. Canada. It was 281 for this year and we are guiding 250 to 270 and that's as a consequence of the change in strategy where we are favouring higher profit ounces and foregoing some of the lower profit ounces. We can see the positive results that Canada has achieved as a consequence of that. And of course then the last one is our third party treatment, IOS. The way we guide on IRAS is always based on the existing contracts. We had two contracts that lapsed in the past year. The guidance there purely is based on the existing contracts and the volumes associated with that. If you then look at refined production, I'm going to go to the top now. Refined production, that is taking a step up. There are two ways I look at refined production. First, refined production in relation to group production. You always have processing losses so it's always going to be a bit less but you'll see that the guidance of 3.45 to 3.65 is higher than what we achieved this year and in part that is as a consequence of us Guiding between 100,000 and 130,000 ounces of excess inventory, given the fact that we've got all three furnaces in Rustenburg Plus, the Zimplatz furnace kicking in, and so we will have excess inventory coming through as we find production. Group unit cost I have spoken to earlier. If you take the 21,000 to 22,000, the midpoint, that's 21,500. That is essentially 3% higher than the 20,922 that we achieved this year. And then the capital expenditure is going to decline from 14 billion to between 8 and 9 billion. And also for the next few years, we are estimating capital to remain steady at between 8 and 9 billion. I would like to thank everyone again for being here. We are very happy to take questions. Thank you so much.

Thank you, Nico and team. I think it's important that you heard more voices and saw more faces because truly we operate as a team and we deliver results as a team. So there's some microphones being passed around in the room. So let's start with questions in the room. So if you raise your hand, please just introduce yourself for the people online so they can also hear who's asking the question. And then we'll just deal with questions here. For people on the call, you can start queuing so that we can see people on the call as well. We'll give you a second chance. And then on the webcast as well, there's an opportunity to type questions. I'll receive that, and I can share it with the audience in the room. But let's start in the room. Chris, let's start there.

Morning, Nico, Patrick, Manush and team. Thank you very much for the presentation. I'm going to do what a lot of analysts always do and just focus in on maybe one of the problem children. But before I do that, it's probably worthwhile saying well done on the cost performance and volumes. It was a very good year, all considered. So I just... To chat a little bit more about Impala Buffer King, I think three questions around that. So obviously you're guarding volumes higher this year. In that current environment, do you think that the mine can be free cash flow breakeven, stale drift in particular, or do we still need to deliver more there in terms of volumes and costs to get that mine to a breakeven position? That's the first question. Second question, you talk about excess capacity. The 50% of the concentrate at Royal Buffer King, that's at your option. Is it not time to maybe bring that in-house now? What are your thoughts around that? And then the final question, you note that you're looking at chrome and tailings processing at Buffer King. Maybe if you could just give us a bit more info on kind of volumes, parameters, what you think that could bring to the asset. Thank you.

Thank you so much, Chris. I'm not sure, Moses, are you happy to lead in with some of the answers? Okay, cool.

So perhaps if you look at, if I can come through, I mean, the question is, will we be cash neutral this year? I think that's our intention. And if you look at the experience and what we are bringing from Rustenberg as a team, the capacity that we've got in Rastenbeck that we are taking into Bafugeng. If we look at the progress that we've made so far, I think we are on our way there. If we look at how we've taken our employees at Royal Bafugeng, into account because they are the ones who must make this difference. They are the ones who must improve. They are the ones who must have a buy-in. They understand the model that Rustenberg has used to produce. They understand the credibility that Rustenberg has managed to achieve with the performance that they've done. And they are running behind us with the experience that we want to roll out at Royal Bafoukin. so that we can easily get to cash neutral as soon as possible. So the signs are there that we can get to cash neutral. I think the most important thing, as we heard what Patrick said and what Nico said, there's nothing that prevents us from producing in that mine. We just have to address a few issues which we are currently addressing, and we should be able to get to cash neutral. Thanks.

Okay, thank you. Chris, I think it is our ambition to get cash-neutral to that position in this next financial year. We don't want to have negative cash at any of our assets for any sustained period. It raises a lot of frustration within ourselves and things don't go well if we don't have at least a likelihood of being cash-neutral above. So as far as the excess capacity, Manisha, do you want to talk to the agreements?

So Chris, as you mentioned, in August 2027, we will get our 50% of material from Impala Buffer King. If you just look at the guidance we've given on the excess inventory, we are guiding that over the next three years, we will basically release all the excess inventory. So if you look, so FY25, 26, 27, Once we're done with that, the backlog of inventories is through the pipe. And so when the IBR concentrate comes in, that's actually perfect timing for us. It actually doesn't make sense for us to get the concentrate earlier and then stockpile it. So I think the way things have worked out with the capacity expansion coming online, it actually works well for us. Thanks, Chris.

Do you think you would want to comment on the IBR chrome and tailings, or should we ask maybe Mark or Adele? Do you want to give maybe a microphone to Adele? Do you want to comment on that? Adele, is our group metallurgist intimately involved in the chrome and the tailings treatments?

Thank you for the question. We are busy with a Chrome project as well as a scavenging project, and both those projects will come online in financial year 26, pending legal environmental approval. And we're looking forward from the Italian scavenging operation to at least see a benefit of 1% on our efficiencies in the specific concentrate where we will apply it. And similar to that is our chrome beneficiation. And we look to at least see some 200,000 tons of chromite concentrate to be produced and then sold. Thank you.

Yes, please go for it Gerhard.

Gerhard Engelbrecht from APSA. Nico, maybe just a little bit of a longer term strategic question. I see in the reserves report you show a hard stop to Rustenburg's production in 2034 with options to extend that with projects. Question is, when do you have to start spending capex on those extension projects? Is it something that is at the top of your mind and that you're thinking about at the moment? And are they large mega projects or small things?

That is a very appropriate question. Those projects typically are not large mega multi-billion projects. We currently have two underway. We've got 11 shaft and 12 shaft extension projects. These are typically mine replacement projects. They are much smaller. They are focused. There are some of our shafts where we are doing feasibility studies in order to do that. There obviously are the shafts like one shaft which you know, it has mined out its reserve and, you know, similar to six-year offer, that is more likely to close. But there is a pipeline of projects that will kick in at the appropriate time to evaluate it. The challenge right now is to initiate any extension project and to have a financial return. So, I mean, we don't want to just, you know, present life extensions. If you don't believe it, there's going to be some economic return on it. But I'm happy that we've got a very rich pipeline of projects at various shafts to look at the extension of Rustenburg Life in the event that we have supportive pricing.

Yes, Arnold, please go ahead.

Hi, it's Arnold van Graan from Netbank. Two questions from my side. Nico, one of your focus areas for this year is reducing sustained business capital. And you say without impacting the integrity of the assets and maintaining reserves and those type of things. But how do you do that? How do you achieve that? And how long can you run at this reduced capital level before there's some sort of catch-up? Maybe the other way to ask the question, are you not setting yourself up for a big catch-up stay in business capital in future? Then the second question is on stale drift. Also a bit of a bigger, broader, longer-term question. And you emphasize that the ore body is fine. But there are lots of assets that we know about where the ore bodies are fine, but they just never get to the production point that you envisage. So are you comfortable with the mine design and the mining method? And again, another way of asking the question, what surety can you give us that we're not sitting here year after year, and we're still talking about steel roofs ramp up? So is there a potential debasement of that production profile? that would be sustainable because you need a certain level of volume or volume level to maintain it. So yeah, broader big picture questions there. Thank you.

Thank you, Arnold. So firstly, when we talk about capital reduction, predominantly we are referring to expansion capital and in some cases, replacement capital. So we're talking about the Two Rivers Mariinsky project, the North Hill project to provide life extension to Mamoza. Typically, it does not include material reductions in state and business capital. other than in isolated cases. And let me take one, and this is again going to sound counterintuitive. At Staldrift, we've got the North and the South, we've got decline extensions that have been planned, but it's so far ahead. You've got a multi-year buffer, which is not entirely required. So, I mean, those things have been advanced. It de-risks to some extent, but I mean, the length of buffer that you have is not required. So when you go into lean times, it's not necessary. So typically, it is not a major area of focus. So when we talk capital deferment, it is the things that I've mentioned. It is the base metal refinery in Zim. It may touch on expired solar plants, but it's not. So for us, the integrity of infrastructure And to be quite honest, I include in that the existing face length is critical. And I am not convinced that you can cut stay in business capital and not increase risk exposure in your business. Patrick mentioned in the beginning, of the 19 fatalities that we had, 17 were engineering related. We had the 13 shafts, we had conveyor, we had trackless mobile equipment, and two winches. Already, that is an indication that we have to be very intensely focused on all the integrity of our tractors fleet as well as our infrastructure. So, I apologize if we've created an impression that we are focusing on the reduction of SIV. And then the second question was stale goods. Now, I'm not sure with what credibility I'm going to speak because we spoke here about 16 and 20 shafts for 10 years. And today, in hindsight, we probably took a decade too long to bring that into fruition. I mean, thankfully, it did. So let me just talk to the mine design. It is a board and pillar mechanized mine design. To be quite honest, in mining, the only thing simpler than that is probably an open cast But it's probably one of the simplest mining methods that are out there. I mean, I always say it's like running 100 meters. It's not running the comrades. You must learn how to run 100 meters. It's not difficult. Most of us can finish 100 meters, but not all of us can do a sub-10. And so for me, that's the issue with mechanized board and pillar. The only complication is that you're doing it through a vertical shaft, whereas some plants, two rivers, the other operations, we are doing it through a decline, so you're going to have surface workshops and so on. So I don't think technically that the design is the issue. Also, if you look at the stoking width, it's matched to the ore body where it is at the moment. So I think that the mine design has always been absolutely perfect. That's not the issue. It has been the operating performance. So as leaders, our ability to do the things that we have to do properly. What is the guarantees I can give you that you won't sit here at the end of next year? I can just give you our expectation. Every time we speak, we will give you assurance of our perceived level of progress. I think that we have made progress. One of the things that we've done, which I think is absolutely key, is that we have integrated IBR under Moses and his team. If you look at Implats, we have got a very small corporate team. The bulk of our technical expertise in the company is in fact based in Rustenburg. We've seen the early benefits of that through the 2% improvement in recovery in the concentrator plant. We've not quite seen it as far as mining volumes are concerned. We've seen a great improvement, so that's another area that we have seen improvement. But I would suggest that in the year that we have now been in control of it, you have not actually seen the trajectory change. I think that it's been a year of getting the teams and the expertise and understanding to develop. I believe that we've got the absolute right skills within the company to deal effectively with the issue. And the fact that we have taken 16 and 20 from a decade of ramp-up constraints, and we managed to overturn that into a success over the last two years. I mean, that gives me assurance because all those people are still part of the company. They are all based in Rustenburg. We can apply the same methodology.

All right. Leroy in front, and then I'm going to go to the conference call. So just early warning on that.

Thanks, Johan. I'd like to echo Chris's sentiments. Well done on your operational performance, especially at Rustenburg, where you had to deal with the tragedy towards the end of last year. That was really impressive. Just for my understanding, in Parler Canada, the strategy there was to focus on higher grades. But when I look at the grade trend year on year, this year it's been pretty flat compared to last year. Is that still expected to change? And then on Marula, you had a very good year FY22. I think last year the issues were community disruptions. This year, it's geological issues that have affected your face length. I mean, do you believe you can deliver similar performance than you did in 2022 and what is really required to get back there? And then lastly, if you could please just comment on the IFRS third party material, the profitability of that operation as it relates to third party material, please. We understand prices have come off, energy costs continue to increase, and your outlook for those. Can you renegotiate some of those contracts?

I'll ask Mary and Isha to prepare themselves for a financial position on the IFRS contracts. Marula, Patrick, can start thinking about expressing a level of assurance or not on Marula. And I think Tim is on the line, but let me talk to Impala Canada. So I think Inplats has used the words, we are going to change to a high-grade strategy, hence your question, if you follow the grades. I think the right interpretation actually, Leroy, is we've gone to a higher margin production. So if you look at the production zones within Lactazole, Some parts of the ore body is deeper. It's more expensive to mine. It takes more effort to truck it from underground. So we are focusing on lower cost ounces, not necessarily higher grade ounces. So if we have spoken about a higher grade strategy, that possibly technically is not entirely correct. It's a higher margin strategy. And where you can see it is in the cost reduction. I mean, I spoke about the 948. So they have come from over $1,200 an ounce to below $950 an ounce, not only because of the high-grade strategies, also restructuring and optimization and cutting some costs, but a big part of that journey has been the higher margin strategy. We are nevertheless expecting marginal grade improvements in the next year, but I caution, the strategy should not be interpreted as a high-grade strategy. It's an improved margin strategy. Patrick, do you want to talk about Marula?

Yes, let me talk about it. I think it is not uncommon for a mine to lose facelift because of some geology that we do not anticipate. But I think it is how quickly do you bounce back from that setback. And I think my ruler was also hampered by a high turnover on critical skills, given the location of where it is. So we have worked very hard to appoint the right people so that we give ourselves the ability to execute the plan. And I'm very confident that we filled all the critical positions. We have made capital available to be able to access the new areas and to bring those we have lost through redevelopment. But like I say, it was also exacerbated by the fact that the high turnover, we did not have the people considered there to execute the plan. So I'm very confident that we will see the phaser coming back. As a matter of fact, I can report that six months ago, we were sitting with a penalty crew ratio of 0.5. it is now improved to just below one. We want to be around 1.2, 1.4 because then we have flexibility. So we are seeing exactly that. But we're also looking at broader issues, infrastructure, as you recall that Marula is now mining at the lower levels. But it is all anchored on having stability on the leadership front, which I believe we have now.

Also, the the Steel Perth Fault and all the mines to the south of that generally perform well. Boysen's Dole, Two Rivers, historically Everest South, all bodies are more benign. Communities generally are more mining friendly and to the north of the Steel Perth Fault, Madikwa, Maroola and everything north has always been challenging and one of the difficult things there is to attract and retain the right skills. Because north of the Steelport Fault, you start moving to Steelport Burgers Fort, which is not deemed the most attractive. So if you're a mining professional, people prefer to live south and live in Leidenberg. And so the regression happened when we transferred Moses to Rustenburg. So we have certainty that he could move back if we don't, you know, you must leave a lasting legacy and not allow... So I think, so Patrick, Patrick has worked with Leanne. So the changes, I think that the appointments that they're looking at now are people that have been there, that we have got assurance of they've been there for a long time. And so I think in the East and the North, I mean, we can talk about community. And this was my view that in the lean times, we probably underinvested in some aspects of Marula, for instance, the mobile fleet. But essentially, it's got to do with the strength and the continuity of leadership. And I think that we are at a point of changing that and creating consistency there. So I see his optimism. I think it can get back to 2022 levels and it can be maintained there.

So if you look at various margins, even in a low-price environment, because your material is bought at a cost that's related to the market, typically your margins will still be stable because we conclude them as purchase of material contracts. So I would use margins of between 9% to 10%, so similar margins to what you've seen in this year. Clearly, when prices are on an upward trajectory, then the margins, depending on the timing of purchases and stock releases, those margins can then vary either up or down.

Perhaps one truth that you touched on, it's not necessarily going to do with pricing, but we as a company have invested significantly in upgrading our purchasing capacity. So if you look at historical terms of these off-take agreements, it was purely based on the marginal increase in cost associated with treating that processing. But right now, for us to consider new off-take terms and agreements, it's not just the marginal increase in cost, it's also the recovery of that proportionate share of capital that we've invested. So I think the existing contracts, they are what they are. But for all new contracts, we have to consider a different financial position in offering firms to new customers.

Thank you, Leroy. We've got five or six minutes left. I definitely want to go to the call where we've got 50 participants. I see somebody is already queued, but I'm just going to hand over to the operator to just talk you through and then we'll take some questions from the call.

Thank you. Ladies and gentlemen on the conference call, if you would like to queue for a question, you may press star and then one on your telephone keypad. The question we have is from Adrian Hammond of SBG Securities. Please go ahead.

Good afternoon, everyone. Thanks for the opportunity. I'd like to ask a few questions. Firstly, Nico, you talked about long-term competitive positioning for the business with a couple of options within the portfolio. But you did allude to Zimbabwe as having quite a few options. Do you plan on investing more in there? And could you expand a bit more on whether that will sort of be metal-based and maybe tie that up with the expansion capacity you're currently doing? Does that allow... How much capacity spare do you have? And was that also earmarking the... growth you expect to get from Buffer King to 650,000 ounces? I think you mentioned 2027. And then just to qualify that, should we be modeling that now in our forecasts going forward for Buffer King? And is the CapEx guidance you've given, which is pretty flat for the next couple of years, does that accommodate for that growth? And then also, just perhaps you could just give us a feel of how you've integrated Buffer King into the business, given, particularly on the labor front, you do have two very different unions with very different leadership styles, and how is that going and being managed? And do you intend to ever consolidate Buffer King into the group, sorry, into Rustenburg, such that you could actually realize further synergies with those two legal entities? And then, Perhaps if there's time, if Johan can comment on the market dynamics. You did mention in the past there was some increased buying from your clients. Perhaps you could give us some color where that sits today and where do you think the destocking cycle is? Thank you.

That is helpful. What I intend doing is sharing the load, so let's just allocate. I'll talk about Zimplats and posturing and investment appetite. Mark or Adele, between the two of you, they need a mic. If you want to talk about processing capacity and what capacity we have. There was a question about the... Sorry?

Integration.

No, no. The guidance. the 8 to 9 billion capital and whether that provides the growth, I can touch on that. IVR integration, perhaps you want to lead, but Leanne is online, she can also assist. Consolidation, we will talk to Mary-Nisha, you can talk to that, and then you are in between yourself, Emma, you can talk to the market. So, As far as our investment appetite or investment posture is concerned in Zimplatz, we've been present in Zimbabwe since 2000, or just after 2000, so in excess of 20 years. It's always deemed a high-risk jurisdiction. For us, it has been an exceptionally positive experience. We understand there have been policy changes that happen from time to time. We frequently engage through Zimplatz with the government. We are aligned with them. On top of that, they have the remaining world-class assets. Shallow The great dyke is associated with mechanisable board and cellar assets. In my mind, if I look at the globe's PGM opportunities, that has to be the most attractive. I would suggest that if there's going to be any new developments in future in PGMs, if you're going to rebalance the assets of the industry, I am predicting a higher probability of us having new production emanate from Zimbabwe. We are not planning any new growth in Zimbabwe. We will do everything that we can to extend the lives of Mimosa and Northfield is not happening, and Zimplatz, the new portal studies are in process. Our current position is to maintain life. We've got 50% of the group's reserves in Zimbabwe, and so we see long life, but we do have the processing capacity, which historically was a constraint. Now we've got the Mark, you're not going to talk to the exact excess capacity, but at least we've got the ability to consider treating mimosas material or part of the material at Zimplast or potentially any new production that may emanate in that country. So don't take my comments as us having an investment option on the table that we are going to announce to the market. It's more a long-range strategic direction comment that I made. Capacities. Adele, do you want to talk about...

Thanks. Thanks, Nico. We're in a very fortunate position to have good capacity available at the moment. Based on our roadmap on how we're going to use the capacity, as Miranisha already mentioned or alluded to, For the next few years, we will use the capacity to destock some of our concentrated stockpiles. After that, obviously, we will get the buffering material in, 50% of that, and that is part of our roadmap. And then we will have excess capacity going forward for our own growth or for more third-party concentrates. And if I must give an estimate in terms of how much capacity will be available, depending on the base metal content of the concentrate, if we look at 660 ounces, I will say capacity-wise in the next three to four years will be between 600 and 800 that we will have available going forward over the next four or five years of the depletion of our stock levels. Thank you.

Thank you. The question on capital growth, the growth that I see happening in the company is from existing structure in the form of Marula, a bit of expansion at Zimbabwe. There's no new capital projects required. It's from existing infrastructure that has the capacity to yield this increase in production. So I'm not concerned that it requires more capital investment. There's no expansion capital required in order to get there. IBR integration, are you integrating or are you not? If so, what are you doing?

Nico, I can comment on that, then maybe Leanne can add. Adrian's question is really on how do we integrate the two entities and take into account that they've got different unions. I think our objective is very clear. We basically want to make sure that this integration, it makes sure that RB Plus makes money. I think that's very clear. And we obviously, we know it's a good asset. It will extend the life of mine in Rastenbeck. I mean, we take that into account during this integration. Nico spoke about a few projects as well earlier on. And we obviously are aware that we want to make sure that people's jobs are secured. So if we look at the operating model that we've put in place, we've taken these three points that I've mentioned into account. So IBR as an entity now reports to me i've spoken earlier on with regards to what we intend to take to ibr from the experience point from the from the performance point of view and i think we should be able to cover those those those three areas that i've mentioned um that's a program office that we've set in rostenberg the intention of the program office is really just to make sure that the law hanging fruits from the synergies point of view is rolled out as quickly as possible if it has to do with cost saving we need to do it as quickly as possible so that we can just get rb plus to cash neutral i think that's from the operational point of view if you move on and look at it from the the stakeholder the key stakeholder point of view we've got a framework and i think rostenberg has in a long time implemented a strategy where we engage unions openly in robust discussions We've made sure that we've set it up as such at IBR to make sure that if there are issues on the floor, the forums and the ability of allowing people to raise openly issues in those forums are actually addressed. Those issues are actually addressed. I think that's what we intend to do, Nico, from the IBR point of view. I'm not sure if Leanne has got anything to add.

Leanne, do you have any comments?

I think the one thing that I would like to add to the question specifically is that while it remains two separate entities, we will maintain and honour the recognition agreements that we have in place with the two majority unions there. At IBR, they do have the closed shop agreement that doesn't allow for other unions to gain recognition. And we are working through a CCMA facilitated process at the moment to look at the closed shop agreement. But once the business becomes one entity, then we are going to have to get the NUM and EMCO around the table so that we can go into a different recognition agreement. So we are foreseeing that that will happen. before the end of the financial year, but we have been engaging all of the unions with regard to consolidation and how it will affect the recognition agreements. Thanks.

Just to end off on that issue, when we acquired the asset, we made certain undertakings to management unions. It was... competition commission and so forth. And our undertaking was to provide job security and to make sure that there are no changes due to the transaction. And that was absolutely correct. The asset made R3 billion last year. So at the time that we were doing this transaction, we were at a different price point. and presented the ability and the security and fast provide that assurance. So when you make $3 billion loss, it changes things tremendously. It changes the landscape very, very rapidly. So we have to choose between production improvements, but clearly a $3 billion loss on an annual basis is not sustainable. It has to change. We're either going to change that or we're going to close it. It's one of the two. No company can support a $3 billion loss continuously. So it has always been our intention to, over a long time, to integrate it to and even to consolidate into a single company. But the undertaking was not to do that in the initial few years. So our ambitions have sped up. The position has changed. The urgency with which we do it has changed. There are many aspects. Leanne Moses spoke about the union. So you've got You've got the bargaining units and the unions represented. You've got terms and conditions of employees. You've got management structures. Then you've got processes. And I think that there are massive opportunities for us to do different things over different time periods. So to integrate SAP procurement systems, that probably is going to take some time. But we had the two concentrators report into our mineral processing division within the first month, we've seen a 2% improvement in recovery because there are skills that can join hands and work together. And I'm not saying that we are superior. I'm just saying there are more minds that can be applied to the position that can support one another. I think those opportunities exist in other areas. And I do think, ultimately, we will see a consolidation into a single formal company, the two assets, no doubt about that.

markets between yourself for the fees or in our client customer yeah i think maybe we can just close on that we are a little bit over time there's also some questions on the webcast that i've taken note of from jp morgan bank of america city noah and vizio sorry guys i will make sure we get back back to you but maybe just we haven't spoken much about the market I think the important thing is that I've spoken to Zafisa, we are seeing strong buying from our customers. So all accounts, the market remains constructive. We are hopefully seeing signs that we're nearing the end of the destocking period with prices coming down. It's obvious that people have been putting metal back in the market. So Fiso and his team are engaging with our extensive customer base and they're going to be looking at signing new annual contracts. So we are confident that we're going to see a request for stronger metal into the next year or two and some of the buying action that we've seen and some of the destocking that's run its course. But we'll be in a better position to report on that and I'll certainly welcome any conversation on the market where we have more time and we can bring in some of our local experts to perhaps add to that. I think there's clearly still a dislocation between what we're experiencing in the physical buying and the prices. And maybe we can explore that when we get together. So thank you for that. And thank you for my team. And thank you for everybody that has joined us today, either here or online. Please, as we close now for people in the room, the whole executive team is here. We would welcome some further engagement and conversation beyond this call. And for the people that we're going to be seeing in the next two or three weeks on the road, looking forward to meeting up and then perhaps exploring some further these issues that has been raised. Thank you very, very much. And with that, we'll just close the proceedings.