African Rainbow Minerals Limited

Thank you very much. Good afternoon, everyone.

So we're all together in the room here. We've got the entire management team.

We've got Phillip Tobias, Tsung Shang, Mike Schmidt, Jacques van der Bijl, Thando Mkatshana, La Berger and Johan Jansen. So the entire management team is here to answer all your calls.

We're not going to do an introduction. We're going to go straight into Q&A.

So we'll just give them some time to take Q&A.

Perfect. I think my question is quickly on Thando or to Thando in relation to the ARM Coal.

I mean I see domestic sales were down 15% year-on-year at GGV and then PCB also was down 3%. And then I also see also on the revised guidance, particularly around those local sales volumes going forward, they've been revised downwards.

Could you please just provide some guidance on the contracts and downward revision of that coal business and how we should then be looking at it, particularly on the local sales side? And then in relation to Modikwa, I just wanted to understand, so I saw that like -- so tonnes more were up 5% year-on-year, but the PGM concentrate did go down by 3% due to that plant recovery.

How does the recoveries outlook profile with open pit combined look like for Modikwa? And if you could maybe speak more around that 4% unit cost reduction at Modikwa and how we should also look at it going forward?

I'll leave it there for now.

With regard to the domestic sales, the main supplies to Eskom. As you probably know, the burn rate in terms of Eskom and power generated from their side has been reducing.

So we are having that impacting our domestic sales. The positive thing out of that, obviously and tying it up with an improved performance from TFR is that some of the coal we do divert into the export market prices.

So in terms of our contract with Eskom, we have contracted for GGB, it's about 2.5 million tonnes at 100% for the full year of sales. But yes, it all depend on whether they are responsible for the entire logistics as well in terms of getting transport and picking it up.

But from time to time, when they don't use or take that coal and derivatives into the export market. I hope that kind of answers your question.

Yes. And the water accumulation there in the coal business there with Mundra, how will that impact production going forward?

Yes, that's a simple -- maybe a bit of quick background is that, that used to be an old underground mine where we're mining now. So we are mining those eras through an open cast method, and we had better accumulation of coal.

We have -- that has been, I would say, in the once-off matter. We have since revised the pit layout and we've added additional pumping capacity.

Having said so though, across all our business, I think the range that we have been experiencing in the last 2 years has been somehow more than the normal range. So those have impact from time to time.

But in the main challenge of the water accumulation has been addressed for now.

Will you take the Modikwa question.

Certainly. I must state that the open cost is not the preferred source of ore for Modikwa.

We're putting that through the concentrator while we are building up the reserves underground in the UG2. The 6E grades for the underground UG2 is 4.76 grams per tonne.

While for the open cast, it's higher, it's anything between 5.2 grams a tonne and 6.5 grams a tonne. The challenge, however, sits with the recovery.

Typical recovery for normal underground UG2 is sitting at about 84.5%, 85% while the open cast closer to surface, highly oxidized can be sitting between 50%, 54%. The benefit of the open cast is that it's a much lower cost operation.

UG2 cost per 6E ounce comes in underground ZAR 20,200 per 6E ounce, while the open cast comes in at ZAR 16,000. So although you lose some ounces, you're seeing the benefit in terms of the cost.

We're going deeper with the open cast. So as you are proceeding deeper, the ore becomes less oxidized and your recovery goes up.

So we are confident in the outlook for the open cast as a temporary gap filler Modikwa. Thank you.

All right. I've got a few questions.

I'll sort of roll through them slowly. Let's start with -- the finished stock that you've agreed to sell the 1.2 million tonnes.

Can you give us an idea, please, of just the sort of time frame over which you'll sell that, what the offtake is, what the contract is?

Yes. So the contract has been concluded for 1.2 million tonnes over a 12-month period, which started in February.

So the intention is to offtake 100,000 tonnes per month for 12 months.

That's very helpful. Let's talk about just how we should think about Nkomati going forward just in terms of spend.

You've got this chrome plant, which is going to give some kind of revenue credit. How should we think about it?

Just -- I mean, you've got the liability outstanding. Can you give us like some kind of sense or guidance just for our models for the next, I don't know, 2, 3 years of what we should model in terms of -- how we should think about Nkomati in terms of the plant and then offsetting and the spend on rehab, please?

Thank you for that. I will also ask Tsu to help in terms of the rest of the rehab.

But to an extent, this, as you pointed out, this revenue subsidizes the cost of care and maintenance, which as we have indicated in the past, I think we're going to be generating between ZAR 20 million and ZAR 25 million of revenue that will come and subsidize that cost. And yes, so I'm not sure if I've answered.

On the rehab side, did you ask on the rehab in terms of margin, we are currently not really undertaking major rehab because we are completing this feasibility study in terms of looking at optionality going forward. As we have indicated, we have quite advanced on that.

And I think it is very encouraging and we're confident that when we take it to the Board, it will get approval and we'll make an announcement in due course. So there's no really major rehab that's happened.

Same for the water treatment plant, which we have indicated in the past.

Okay. So that feasibility study, is that another version of a nickel -- is the feasibility study just to open up another nickel mine effectively a new Nkomati in some different form?

Sorry, I don't know much about it.

Yes. That's what it will entail really recommissioning the mine and bring it back to life.

But obviously, in a much more, let me say, a remodel maybe a smaller scale than previously. That's what we are looking at.

But yes, we'll be able to share the details in terms of the actual volumes and so on after we've finalized that study and taken further report. But I think that gives a good indication.

And in line with that, obviously, also with the very encouraging chrome prices, we are looking at a potential a bigger chrome production than what we are currently doing.

And on the rehab liability, Tim. So that rehab liability.

Sorry, just giving more color on the rehab liability.

Yes. Thanks, Tim.

Just to let you know, so that we have as at 31 December from Nkomati just over ZAR 2 billion, so it's ZAR 2,011 million or ZAR 2.0 billion. But then just remember that we did receive the ZAR 325 million from Norilsk, which was their contribution as part of the transaction towards the rehab water -- water rehab.

Sorry, it's Thabang. I just -- I want to ask additional questions on your behalf, so we can just clarify some things.

So current monthly production of chrome, where are they now and what are we planning to...

Around 8,500 tonnes per month that we are achieving. But we will peak at about 11,000 tonnes per month of chrome concentrate.

At steady state?

With the current project. The bigger at the stage we're still finalizing a few items related to the vent recovery process, and that will complicate those volumes, but they are much higher than the current project.

When do you expect to get to 11,000 tonnes per month?

11,000 tonnes per month in the month of April.

In April?

Yes.

And what kind of profit margins are we seeing with the chrome production at Nkomati more or less?

That plant, it cost us about ZAR 10 million, so I just want to check. It cost us just under ZAR 10 million per month to produce that -- ZAR 20 million to ZAR 25 million.

So it's between ZAR 15 million and ZAR 10 million dependent obviously on the chrome price.

Yes. I think maybe just to come in, overall, just correct me if I understood well.

I think in the next 12 months, we should be able to make at least a profit of ZAR 100 million with this 500,000 tonnes as the EBITDA would be positive?

It's revenue or profit?

Yes. It varies between as I said.

And then just to add -- with regards to the broader Nkomati question, I think it's too early for us to give too much information. As you can imagine, with the geopolitical changes that have been happening, there are some offtakers who've been looking for nickel supply out of Indonesia because of their relationship with China.

As a result, Nkomati has become a little bit more attractive to other nickel producers. But it's still early stages.

We're doing the study, and we're only sort of going to go for board approval later in the year. And once we do have the details, we'll come back and guide the market accordingly.

I'll ask one last question, please. Just on Two Rivers, I was just reading your commentary about being impacted by sympathetic geological structures.

I never heard of those before. Can you just chat to how long it's going to take before your productivity improves as the geology improves?

Just how long -- you sort of spoke about it improving over time now that you're getting past the docs, maybe you can just give us some timing.

This is Johan Jansen. What we encountered was a fault parallel to the advancing phases.

So about 18 months ago, we started intersecting the fault. We've done redevelopment, went through the fault.

We've established the faces on the other side of the fault, which was quite an effort. And at this stage, we are busy bringing the supporting infrastructure up to date the conveyor belts, moving them back to within 60, 80 meters from the face.

We've already seen an improvement in the productivity, and we will continue to see that over the next quarter. And by the start of the next financial year, we will be back on 320,000 tonnes per month.

I think, Tim, that's what I said that -- Tim, that's what I said, our forecast for F '27 will be an improved output because we'll be moving towards strength out of these geological features.

I did get cut off a few times here. Please forgive me if I do ask questions that have been asked already.

Earlier on during the webcast, you talked about the value in use model when I asked a question about the realized pricing on the manganese. Could you just expand some more what is meant by value in use model for ARM?

And how does that potentially improve your realized pricing? And it did seem as though -- and it did seem as though she wasn't just talking about just sort of the manganese operation, but this perhaps could be applied in other divisions.

Can I just get clarity on that as well? So that's my first question.

And then I'll ask my second question later.

Thobela, I would like to expand on that. So what is value in use, you take your specific and you are correct, we need -- for manganese at Black Rock as well as iron ore at Khumani and it is tested in various applications.

So where it would be used in different smelters and for what purpose in the smelters. And you develop a model to determine the intrinsic value of your ore type to the customer buying it.

And through having that value, you can maximize the economic value you get back in your pricing. And to just further explain it, obviously, in a smelter, they don't only use your specific type of ore.

They would use different suppliers type of ore, which has got different grades and contaminants. And we know Black Rock as well as Khumani has got a very high-grade reserves.

And we are doing this work in specific to ensure that we get the netback per product on maximizing economic value. So it would mean that we would receive above an index price realization for premiums for our specific product based on our product's value.

Okay. No, that's clear.

Go ahead, Thabang.

Your answer also applies to iron ore question. Okay, Thobela, go to your next question.

Yes. Maybe just a follow-up on that is, would that then maybe mean that your sales volumes perhaps because you may -- I mean, would your sales volume remain the same in terms of how you are forecasting currently?

Or would this value in use kind of affect your sales potentially given perhaps you may have to change your products back there?

No, it would not have any impact on your volumes. The only impact that it would have is on your revenue line.

Intent is to see if we can get better prices due to the specific ore type, and we can engage on that. So no, volumes will remain the same, both for Black Rock and Khumani, which is currently in the 5-year plan.

Okay. And then my second question is around the domestic sales in the iron ore division.

I think my question, I guess, is you've talked about having signed a new contract to sell for domestic sales. Where would those -- given that Beeshoek was the one that you used to supply to your domestic markets.

So I'm guessing Khumani will be now the one supplying into that. And is that -- I mean my understanding was that your export sales, you derived better revenue there versus perhaps on the domestic side.

Could you just clarify as to why perhaps go via this route.

So for clarity, the contract on Beeshoek was signed with AMSA, and it was for 1.2 million tonnes. We're sitting with a stockpile of 1.48 million tonnes.

The only reason why we signed a contract with AMSA and it is not at a brilliant rate, it's ZAR 800 per tonne, where our previous rand per tonne on Beeshoek was ZAR 1,221. So you can imagine it's 25% lower than our previous base price.

That's the best option we could get to get some value for the stocks currently lying at Beeshoek. The intent is never to supply the domestic market from Khumani, no.

Khumani is an export mine. And our revenue receiving from exports is much better.

So yes, the domestic market will definitely not be supplied by Khumani. This is an isolated matter in specific pertaining to Beeshoek being on planned maintenance, and we're having that 1.48 million tonnes of stockpile.

And maybe just to comment to, I mean, just a bit of background. You remember that at some stage, we said we don't have a long-term contract with our sole customer, but we were still busy in negotiation with them.

And then the last basically delivery of all was done in July, during which period we were still negotiating. And that was at the back of the November '24 when they announced the potential shutdown of the long steel business.

So that being announced in November, they were still taking some products for us. And with us being in the mining, obviously, you have to be producing, delivering stockpile so that we can really deliver whatever quantities that are required.

So we -- at the back of hope that we're going to enter into an agreement, we still carried on mining and we only need to do the line on the sand out end of October, we said we cannot carry on. At that time, we've already accumulated 1.486 million tonnes.

So we just have to basically sell this and clean up everything at...

Okay. No, that's helpful.

I have my one last question on Two Rivers. I think if I recall well, in terms of your ramp-up profile of prior to the Merensky project being put on care and maintenance.

It was quite significant just in terms of what was anticipated then? And then if I look at the current ramp-up profile with the Merensky project being sort of pulled back again into production, this one, this ramp-up profile seems a bit softer.

Could you just explain what's the thinking now versus before you put that particular project on care and maintenance.

Thobela, on the Merensky project, like we communicated earlier today, we started the decline development in October last year, a limited development whilst we're just finishing the feasibility study to recommence with the project. And we plan to complete all of that work as well as the review work and third-party work by May this year, and then we'll take it to the partners for approval with the planned restart date of the 1st of July.

The current -- we have redone the whole life of mine model and optimize the mining cuts, et cetera, we get the best value out of the project. And extracting the resource at the maximum grade.

And with this latest ramp-up schedule, the schedule that we've done, we ramp up to 200,000 tonnes per month over a 3-year period. So from July 3 years we have steady state production.

We are benefiting now obviously from the fact that we've already got 3 levels developed and we are proceeding down towards Level 4, of which 2 are already equipped. So we do have quite a big head start compared to the original feasibility study.

Thobela, Tsu just actually made me aware. When you're looking at our PGM forecast, the Merensky numbers are not there.

So you can't compare this to the numbers that we gave you in 2024 because we're still to include that once we go through the government -- yes. Once the governance process is done, then we'll update the Merensky guidelines.

I'm actually looking at the year before that, 2023, where at the time, the Merensky project was due to come in online. And then if I look at your ramp-up profile then, I have it right in front of me.

I think from '23 to -- let's say, well, from '24 to '25, you're going to move from 313 cores to 485 cores or kilo ounces. So that's that big jump versus perhaps, I guess, the current softer profile.

Yes. But that's because those numbers did include the Merensky estimate and these don't...

I can add I think we haven't disclosed in the we haven't disclosed in the current numbers the Merensky ramp-up, like Thabang and Tsu rightly say that we still believe that governance process. However, I can share that the work that we've done with the mining schedule, that ramp-up is over a 3-year period.

So I think it's substantially still in line with what we've guided before.

Okay. So -- Go ahead.

Just to help you -- just to clarify, I mean, remember what Doug said, where we stopped in August '24 we were already at Level 3, and this is going to be a 5-level operation, delivering 25,000 tonnes per half level. So we need to develop to Level 4 and to Level 5.

And that is basically going to take us about 2 years to do that. Then the third year that Jacques is referring to is when we ramp up to steady state, so which is basically from the beginning, it will be a total of 3 years to get to steady state.

Okay. Because my -- I guess my understanding was that the bringing back of the Merensky project would take a lot less time than what I'm hearing now.

I guess that's where the misunderstanding would have been.

I can maybe also just add too that obviously, with the concentrated plant finished, we could sequence now and see exactly when is the optimal that with a combination of building stockpile upfront maybe for the first 6 months or a year and then only starting that. So it doesn't mean that it's a 3-year ramp-up, you're only going to start seeing ounces -- do incremental additional ounces from Merensky in 3 years' time.

You could, as quick as within about 12 months, you start to see additional ounces coming from Merensky.

Just a quick one on the Two Rivers production currently, yes, there were like some geological challenges faced in 1H. I just want to quickly confirm as to going forward, is the 3.09 head grades that was reported for 1H sustainable going forward?

Or if you could maybe guide us more on how you see that head grade improving as then the geological issues improve? And then in relation to the Two Rivers Merensky project, I mean my understanding is that there's around ZAR 2.6 billion of working capital that needs to be put for it to then be able to get back online.

With the current planning, I don't know if it's fair for me to ask if you could maybe provide just some form of color in terms of how you're going to be spending that ZAR 2.6 billion over the next 2 years, if it is then what is approved. And then I think my second last question or my last question is mainly around project priority.

I just want to have some like a greater clarity around your growth projects. I mean you've got Nkomati, you've got Bokoni, you've got Two Rivers Merensky project.

Are you able to -- or even other M&A and then there's also Surge also as well as part of your growth projects, right? Are you able to explicitly rank those growth projects in order of capital priority for us?

Yes, I'll leave it there.

Yes. Do you want to comment on the grade?

Yes. If I can go first on the grade, please.

Thank you for the question. The grade of 3 mining is a fair outlook of what we could expect going forward.

We've moved into an area with split reef. So the grades will no longer be as high as it has been in the initial phases of the project.

But the monitoring of the quality of the mining is excellent, and I expect to see the grade remaining where it is.

Thank you very much. And then in terms of the project, yes, you are correct.

I mean we've got the trade-off studies that is currently underway in Nkomati. We are now recovering chrome from the 500,000 tonnes stockpile that you mentioned, and there's another study as well on the chrome side that is taking place, a study basically to restart nickel.

So that is basically Nkomati complex. And you come to Two Rivers, obviously, the project there that still needs to be concluded is the Merensky.

And as Jacques says, also, we're basically at the tail end of completing that study. The numbers will be put on the table to see what are the returns, confirm the capital that is required, confirm everything and basically the contributions that, that project is going to bring to the Two Rivers mine.

And then we also mentioned that we already completed the DFS at Bokoni. We're doing the independent review, third-party review.

We do the value engineering, firm up the numbers. And these 3 will have to be ranked in the order of priority and an investment decision will be made at the right time in terms of how we stagger them.

The Surge where we are, we will most probably say one can say maybe the best guess is come end of June, we should really have the outcome of the pre-feasibility study, whereafter that will really transition to a definitive feasibility study with some regulatory approval process. We see that process being concluded most probably the best case towards 2029.

And then if everything else work well, that mine should really go into execution around 2030. So if you look at the project staggering, the Surge is still about -- last year, we used to say 5 years.

It's about 4 years now from execution unless things are really expedited in terms of the approval in cost. We've also seen the response from the Canadian government as far as expediting some of these critical mineral projects.

If I may also just add with regards to the capital. Maybe just in reference with Khumani, alluded to the volumes that we are looking at the potential open pit mining is less than what we did before.

And also the fact that the mine was a producing mine was placed on care and maintenance, the ramp-up capital that we would require to put that mine back into operation is not as substantial as completely building greenfields mine. So it's certainly, I think, a lot more affordable.

And depending on how the economics stack up because it's an open pit, it ramps up production very quickly. It should become potentially cash positive generator in a much shorter period of time compared to Bokoni project, where there's a new concentrator plant that needs to be built and substantial underground development.

And with regards to Merensky, I think the biggest amount of money that would have to be spent is on the mining, specifically building working capital and stockpile to consistently be able to feed the mill. And both Two Rivers substantially stronger balance sheet, the forecast is that Two Rivers would be able to fund the full capital required to complete and ramp up Merensky from the strength of its own balance sheet and from its cash flow generation without requiring additional funds from the 2 partners.

And that then really just leads to current that we would have to see and we're busy with finalizing that work. What we've also said is we are looking at a much smaller study and 120,000 tonnes and we believe this is the right size, which strikes the right balance between capital required as well as sufficient volumes to ensure sustainability and cash competitiveness from a unit cash cost point of view.

And we would be able to provide further guidance on that cash flow required to support that project during the next results issue.

Ntebogang, is your question answered?

The ranking part is the one that's not answered.

Yes. Yes, that's the sense that I got, Ntebogang.

We're sort of giving you detail on what we're doing at the projects, but we're not ranking them. But if I had to summarize what I think Phillip and Jacques are trying to say is that if you look at the current project pipeline, quite a few of these projects are actually still in steady state.

And until they're completed and we've got Board approval, it's very difficult for us to say we're going to prioritize project A over project B, right? So that's number one.

And I think Jacques was also just trying to illustrate to you that some of the projects are actually going to be able to self-fund because they'll be generating some cash themselves. And some bigger projects like Bokoni and Surge, only once we've got the information in front of us, will we be able to make a decision going forward.

Because remember, your capital allocation model is continuously evolving. And it would be very premature for us to say we're prioritizing this now in 2, 3 years' time once the studies are done and we've got board approvals, the world has changed.

So yes, so we can't give you an explicit project ranking right now, specifically because a lot of these are still in study phase and don't have work.

And as just said earlier on, most probably when we come to the next reporting cycle, we will be having detailed outcome and the decision would have been made. We'll be able to update the market in terms of where we are.

If I may also just add, as part of this analysis, we're obviously doing very detailed cash flow schedules for all of these projects. And then we also look at it on a portfolio view, where we look at from an ARM's point of view, what is the forecast cash flow coming in from the operations, what would be the cash required to finance each one of these projects as well as our other commitments with regards to returning money back to the shareholders in the form of dividends that we are committed to.

So we're making a very prudent decision in terms of which project will start first. And also maybe we don't do all of them at the same time just because from an affordability point of view that we do stagger in.

And then maybe just one last point. There's absolutely no decision made at this time.

We are still busy with the study book, and we will review the results as well as the cash flow requirements on a portfolio view very carefully before a recommendation or decision is made.

Maybe to finish off, which is -- my question is mainly around balance sheet, right? So your balance sheet has strengthened to now currently with net cash of around ZAR 8.4 billion.

And then I'm also then taking into account of the Harmony hedge collar. So one can possibly consider that I'm not an accountant, but like a lazy balance sheet.

So I'm trying to understand with the excess cash that you guys have on my view, what is management thinking around using that cash for future growth? So that's what I'm trying to understand in your projects, the ranking and also the prioritization in terms of capital allocation.

I don't know if I'm making sense.

Thanks for that question. No.

So I might have a different view from yourself in terms of it being a lazy balance sheet, but be that as it may, that's okay. So I think -- so I mean, you're quite right.

Our balance sheet has strengthened from June where we are now, sitting still in a relatively strong net cash position. But the question you're asking, that was actually quite valid and quite -- one that we actually deliberate amongst ourselves with and specifically knowing that we've got these projects, we've got this project pipeline.

We have ammunition in terms of raising additional funds through using Harmony collar and end -- but at the same time, still looking at the projects that are in the pipeline and seeing those that can generate cash as quickly as possible because at the same time, you do not wish to be strained or find yourself in distress in terms of having to honor commitments and you don't have enough cash. So as Jacques was saying that you really do need to look at it from a portfolio perspective.

Yes, you're sitting on cash currently, but there is a pipeline. But there are also other moving parts where we're looking at the cash coming in from Assmang in the form of management fees as well as dividends and all the other commitments.

And then it's really just quite a tight balancing act that we're going to have to make. So that -- also the balance sheet will also be informing the decisions that we make in terms of which project we're actually going to proceed with, what is palatable for us and what we can comfortably deliver on without straining the balance sheet.

But again, if we find ourselves in a place where -- and I'm hoping we are there, where we decide not to go with any projects, then instead of sitting then on the cash, we will definitely look at returning that cash to the shareholders. Because remember, we look at the cash and we say, okay, how can we generate a return more than that cash just sitting in the bank, and that's where then we will deploy that cash towards to say we believe we can get you as a shareholder, a better return than our weighted average cost of capital.

But if not, then the default then say, okay, then let's rather then return to shareholders. I hope that helps a little bit.

I am seeing you next week, but I thought I'd ask this question now anyway. And it's just really following on the previous question.

The capital allocation slide that you showed, was that the order of priority in which you're looking at things? Or are you just saying these are all the things that are considered because it is quite an interesting order in which is displayed.

I guess that's the first question. And then the second one, maybe you can talk me through why you put the collar in place in the first place if you're not actually using it.

Again, to the previous point, you're sitting on -- I'm in the same camp. It's a lazy balance sheet.

18% of your market cap is now sitting in cash. You're also seeing a significant value for your Harmony stake.

And yet there doesn't seem to be any real initiative by management to try and unlock any of that value. So maybe you can just talk me through some of that.

And again, in line with that, just looking at where you're ranking things like share buybacks and maybe you can just remind us where -- just how much you're allowed to buy back at this point.

Thanks. So maybe just the first question around the capital allocation guidelines.

So the way they are documented that it's not an order of priority. I think we do have a footnote at the bottom of the slide where we do say that.

And then secondly, the question around...

Collar, if we're not going to use that...

I can speak to that. I think when that collar was put in place, it was to reflect the time and the strategic intent behind it, which I'll share now.

But at that point in time, specifically on our PGM basket prices were a lot more depressed. We're talking about March, April last year, even though it was our view that the metals were in deficit, however, due to the destocking of the substantial inventory above surface, we haven't seen the metal prices were not reflective of the fundamentals, the supply of the 3 metals, specifically platinum, palladium and rhodium.

So the whole strategic intent behind the collars there was at that time, even the strong rally up in the gold price, Harmony share price responded quite positively. And we said, given those growth ambitions that we do have, the uncertainty around the PGM prices, how long it will take before it starts to recover, it may be good to just try and strengthen the balance sheet by having some fixed security in place that if we want to, for instance, in future, deploy some of our cash on some of these growth projects that we are -- that could be value accretive and generate cash above our weighted average cost of capital.

We don't want to get into a position where you draw down your available cash on the balance sheet and then the commodity price weakness continues and you start to come under balance sheet stress. So in that case, it's good if there's a facility available, maybe linked to a revolving credit facility that you do have access to.

So it's really just capitalizing at the time on the good Harmony prices that we saw. And with the benefit of hindsight, it sort of rallied even further beyond that.

But in the context of where we were with the commodity prices and not knowing exactly how long it will take, specifically for the PGM prices to respond. Where we are now, we still think it's a good facility because that strategic intent behind it hasn't fallen away.

So the -- if we do proceed with some of these projects, it may still be good to put a revolving credit facility in place. We will obviously use the cash first because that's a lower cost of interest compared to paying interest on the RCF.

But at least you've got access to that liquidity on a very short period of time if you need it. Because as a holding company and a commodity producer, especially in today's world, commodity prices are very volatile up and down, and you need a bit of headroom to make sure that you've got -- you can cover yourself in any eventuality that may happen.

I hope that sort of provides a bit of clarity. And the only reason why we have used the collar is use of proceeds.

We haven't finished the studies yet, and we will do that over the next couple of months. And as soon as we make a decision, then we will look at what is the most appropriate way to utilize that strategically to protect the balance sheet.

Maybe just a very quick follow-up on that. Because your actions and the outlook comments don't seem to be marrying up at the moment.

You're talking about a much stronger second half versus the one you've just reported. And if we look at what the basket price, and particularly for PGMs has done since then, iron ore, I think there's a consensus a little bit lower, but it's still holding up.

The rand, yes, was stronger, but it's now been weakening a little bit with the events in the Middle East. The sense is you should be generating very significant free cash flow over the next 6 months, which puts you in an even stronger position.

So maybe you could -- do you agree with that view, first off, what are your concerns at this point because the actions by the company don't seem to be marrying with the outlook. Just how good an outlook do you need before you start utilizing that significant cash balance?

I guess that's the question.

If I can answer that, you're quite right. I think our outlook is also very much in line with some of our peers and the commentary that Mats made that we do think in the context at least of the PGM prices, the prices will remain stronger for a longer period of time, which is positive.

And that we will specifically from our 2 operations, Two Rivers as well as Modikwa should be at least current basket prices quite strongly cash generative. However, we've seen also how quickly things can change in today's world with the volatility.

And we have been wrong in the past what we've guided on the outlook and it doesn't transpire. So that's why we do think that it is prudent to keep a certain amount of cash or access to cash in the form of RCF available that you don't overextend yourself.

But the intent is once these projects are -- studies have been completed and we have properly evaluated to make a decision on going forward with them or not. And at that point in time, we'll be in a much better position to see what resources do we need from the balance sheet to be able to support those projects.

Sorry, I just wanted to add something to what Jacques, yes -- just to add to what Jacques said, I think someone said it on the podium earlier. Yes, the platinum operations will be generating cash, but that won't necessarily come through the center.

That cash will be used to fund the requirements of those businesses on Two Rivers, specifically on Merensky. So depending on what that built in, I'm not sure what it is, we'll go towards that.

And then we do what as well is some increased CapEx requirements that, that cash -- the mine as it is, is generating that cash will go towards funding that. I just wanted to add that.

Andrew, the last question was on the issue of the share buybacks. You did ask a question as to whether we consider doing another share buyback.

I mean, as Tsu mentioned, it's part of the thing that we consider whenever we have a capital allocation review decisions to say which ones come first. Where we are now, as Jacques mentioned, in the next 2 months, there's some serious decisions that we have to be made in terms of those 3 project studies.

And this thing as well is weighed against all the other points that we have to consider. And we do take note of what you raised with...

Super. Maybe one last one.

And as you can tell, we're going to have an interesting meeting next week. The -- just can you maybe give me a sense because I'm sure you've done the calculations to at current spot the sort of free cash flow that you'd expect to generate?

Or is that a number you're willing to share?

No, is that free cash flow in CVM or at group level?

Either way, just an indication because, again, from what we've seen so far and what things have done, if anything, the one number that surprised everybody is just how strong cash generation is. My worry is that management is coming across a little bit too conservative given the current market conditions, hence the question.

We have to get that information, sorry. Can we give it to you when we see you next week.

Or we can drop you an e-mail once we have found the number.

Sorry, guys. Just a quick one, right?

So if the PGM -- if the cash flow from the PGM business will be funding these projects. Now my question is around dividends going forward.

I mean dividends, your dividend policy is based on dividend received. Ferrous outlook seems muted.

So you're not expecting as much dividend received from Ferrous as historic levels. And then now the cash from the PGM business, all of all, essentially, I'm assuming that now because we will be funding these projects, it will then not be going to dividends to the African Rainbow Minerals.

So how should we then look at dividends going forward for ARI?

We are committed to basically giving cash back to our shareholders so -- and it's a capital allocation decision, but it's a commitment that we have made in the bigger scheme of things. As we weigh this project that we need to advance, we also basically take into consideration the dividend payment as well.

Yes. Maybe I can add, Ntebo.

So our dividend policy remains that 40% to 70% of the dividends that we receive from the underlying operations. So yes, as you point out, we might not be expecting -- and I mean we were not expecting actually before this rally in the PGM basket price.

We were not expecting dividends coming through from those operations for the next 3 years. So thankfully, we're in a better place.

But if those operations are able to fund their requirements and there's anything that's left over that will obviously be given up through to ARM and to our partners. But I think what you can model if you need to model is work with that 40% to 70%.

In last couple of years, we have gone above that range, and that is when we -- looking at the cash that we're actually sitting on, we say, okay, actually, we can afford to go beyond that range and we make that decision. We've made it a few times quite often.

So -- but just to be on the conservative side, still use that 40% to 70% as a guideline for the dividends that ARM would then be paying.

I think also maybe just to add on, I think it just sort of links to the question that Andrew asked before, at current spot prices, and we'll run the numbers. But sort of my assessment is that if the current spot price prevail in the -- the cash generative -- cash that will be generated above as well as is quite substantial.

And I think that most likely will be more than what the -- so there will be surplus cash available even after servicing requirements to complete the Merensky study as well as the development at the Da. So there is a good chance that if the current prices prevail, that there will be cash passed up through the form of dividends to our book.

And equally, as ferrous is facing challenges due to pricing and cost and while we try to turn around that business, you can expect more on that front.

Thank you, everyone, for dialing in. We appreciate your participation.

We will be on the road next week -- investors. If you've got any more questions or you feel like we may be didn't answer some of your questions to your satisfaction, please feel free to call me or send an e-mail and we'll endeavor to give you accurate answers as soon as possible.

But thank you very much, everyone.