African Rainbow Minerals Limited

Hi. Good morning, everyone.

And welcome to the African Rainbow Minerals Results Presentation for the Six Months ended 31 December, 2023. Please note, this is a hybrid presentation, so we would like to thank everybody who's dialed in, but more importantly, the people who've made an effort to come be here with us in-person.

At the end of this presentation, we will go into Q&A. So if you've dialed in over webcast, please post your questions, while the presentation is going on.

Please help me welcome our Executive Chairman of African Rainbow Minerals, Dr. Patrice Motsepe, over to you Chair.

Thank you. Good morning.

It's good to see Martin Creamer. You're becoming younger and younger and my favorite.

Somebody was telling me many years ago, there were people who make us all proud. Martin Creamer is the salt of the earth.

Where's David Mackay, my other favorite person. He's not here.

Okay. Pass my regards to him.

Who does he work for now? He works for you, Martin.

Pass my regards to him and all my wonderful favorite people. I'm going to go as quickly as possible through the results, because you've got the documentation, my gratitude to the board members who are here.

So thank you so much, Brian, for coming, and all the other board members who are here and thank the media. Our partners are here as well.

Who's here from our partners? Mike, I saw Impala, Anglo Platinum.

I saw Sumitomo and who else? Yeah.

Well, the ones that I'm told you. Thank you so much.

As I said, the results are self-explanatory. I was in a meeting a week or so ago, and there was a presentation that the results were good in a very difficult environment.

In fact, very good, in a very demanding environment. You will see from the presentation the impact that the prices of the commodities that we mine, particularly PGMs have had on our results.

But I think it's during these challenging periods that the benefits of being diversified comes to the fore. And more importantly, that having a world-class management team, Philip is doing excellent work as our new CEO and Tsu and Mike Schmidt and Andre Joubert, Thando and Thabang and the rest of the team, I saw [indiscernible] and in every single one of the management team.

I mean, we are very fortunate to really have world-class South Africans who are as good as the best in the world. Okay?

The headline earnings decreased for the first half, decreased by 43%, and you'll see what the primary causes were to R$3 billion. And we've declared an interim dividend of $R6 per share.

In order to be a truly globally competitive company, you've got to deliver good results at the heart of which paying dividends is part of our policy and part of our commitment. And side by side with that, we are a growing company.

We've got some exceptional world-class assets that we are mining. But we also have to take a 3, 5, 7, 10-year perspective of what would continue to make African Rainbow Minerals a globally competitive company.

ARM Ferrous, there was an increase of 12%. Headline earnings at ARM Ferrous, the PGM said, essentially because of the price decrease of 121%, and ARM Coal went down by 85%.

We are committed to sustainability. We are committed to partnering and confronting climate change.

And our policies are part of what we call a just and a fair transition. And if you look at the slide, it indicates the impact of the decrease in platinum, the headline earnings, the impact that platinum had.

And Andre Joubert continues to do good work. David is here, is on the mine.

David is at the -- okay, that's good. And Coal and Corporate, six monthly headline earnings.

If you look at over the last five years, and you look at '21 and '22, we are currently globally in more or less the same environment. And as I said, essentially, and primarily in relation to PGMs, it's the decrease in the price.

And I saw palladium increase, Mike, by 10% yesterday. So that's good.

But again, our strategies and our focus is medium to long -- in fact, short, medium, long-term. And part of diversified mining company is that, there'll be times when the prices are depressed and there'll be times when the prices are very high.

And it's during those times when the prices are high that you invest to get ready for the next upswing. Dividends per share.

If you look at the dividends we've declared now in comparison with 2019 for the first half in 2020, it's higher than that. And as I said, it's part of our overall commitment to be a dividend paying company and ensure that at the same time we pursue growth in the minerals that we mine, but also in those minerals of the future.

The dividends we received, 14% when decrease to R$3 billion from Assmang. No dividends from declined ARM Coal, 87% decrease to R$253 million.

And Two Rivers, a lot of good work has been done at Two Rivers and in the medium to long-term, we will do well there. Safety and health is a key part and a critical component of how we run operations.

And Phillip will talk more about that. The decrease of 14% in lost time injury frequency rates, and a decrease of 19% total recordable injury-free frequency rate.

It's always extremely encouraging that there are zero fatalities, and we've got a huge focus on the safety and health of all our colleagues and employees. And this is the ARM strategy.

What makes ARM an exciting investment company? It's owner-operator.

We always talk about ourselves as having entrepreneurial management culture. The heart and soul of every business is the employees.

And we look at universities as well as in the corporate world, in the mines and in the industry to attract and retain the smartest and the best. And part of that is, not just about waking up in the morning as an employee, whether the mine or at the corporate office, and feeling that I'm working for the best company in the world, and being respected and growing and having a good future, growth path.

But it's also about -- we've got to pay our employees competitively based on performance. We have to -- it's part of our commitment over the last 30 years that we want to make sure that working at ARM is really indeed the best place to work in the South African mining industry.

We partner with our communities and other stakeholders critically, critically important. I was in Miami two weeks ago at the meeting of the ICMM, with the CEOs of the largest mining companies in the world.

And I'm very proud of the work that the ICMM is doing, and the commitment to partnering with community, stakeholders. The mining industry, like any other industry, we have to fight for our position in the hearts and minds in the first instance of the communities where we operate, but also in the hearts of and minds of stakeholders, communities, individual citizens globally.

And our commitment to ESG and climate change, as I said earlier, is to a large extent, expressing the principles that the top mining companies in the world that are part of the ICMM, BHP, Rio Tinto, Anglo American, Vale and many others. So communities are an important part.

And technology, I was in -- I spent some time in America and meet with some of the smartest and the brightest in technology. At Davos, there was a session with Moradi [ph], the people in the world who lead on the innovative and the impact of technology.

It's a huge learning experience, and I always feel comfortable when those who lead the world acknowledge that they themselves don't have a good understanding of the impact of technology and innovation on profitability and on efficiency in the medium to long-term. But there's a clear understanding, because many can see it that, that the technology, you cannot, in today's global economy, run any company without as best an understanding of technology and the impact of technology on your company.

And I'm very proud of the good work that's been done in at ARM, but also the relationships and the networks that we have with -- and the exposure we have, and the participation in forum and in meetings with the leaders in technology in the world. But you've got to be careful as well, because you can overspend and you can -- there's overzealousness, and -- but the bottom line is a continuous engagement and a continuous learning and partnering and exposure.

Segmental EBITDA split by commodity. I think the slide is self-explanatory.

But I think the key issue there is that, you can see where PGMs now, the contribution of PGMs during the first half, and if you compared with the financial year '23 and as well as '22. But look at 2019 where it was 16% and there was an increase in 2020.

Again, we are in these businesses for the long-term, and they'll talk later about Bokoni. I mean, we've spent a huge amount of money on Bokoni, and it's an investment in the future, and it'll create value for shareholders.

EBITDA split margins by commodity. You see that Coal contributed last year, I think there was a time when we got several offers to sell our coal interest.

And I think part of our focus at the time was this absolute commitment we have to the just transition and climate change. And we recognize that coal is important in the short term because we've got hundreds of thousands.

In fact, we've got millions of South Africans whose future and whose lifestyle and whose families depend on coal. And the clear commitment of the transition to zero emissions, because that has to be the -- that is indeed the ultimate objective.

Over time also entails training, educating, and the transition of those who currently depend on the coal industry, new training, new jobs, new opportunities, and I think, a good future. PGMs.

You can see the margins have gone down, as I said. Iron ore, again, in relation to iron ore, the importance of the diversification.

And I think, Phillip will talk a little bit about Transnet. I think the new CEO, excellent, we're very proud of the Michelle, the lady that they've appointed there.

It just emphasizes what we've always repeated over and over again. You have to employ the smartest and the brightest, and the best.

Meritocracy is non-negotiable. And there's no conflict between zero tolerance, put it more positive, non-negotiable of meritocracy and the rising and the occupation and the skills, and making sure that, that some of the top positions are occupied by the smartest, brightest women we have in this country.

We've got exceptional women, and we've got equally smart, bright, black South Africans, white South Africans, Indian colored. And again, if you look at Eskom and see the really incomprehensible failures and mistakes there, totally unacceptable.

But I think they did the right thing by appointing -- Michelle was there for about 20, 25 years. So if you grow up in a business, you have a solid understanding of what the challenges are.

I may be a smart, bright, financial person in one industry with excellent qualifications, with no experience in another industry. So we have to focus on those, particularly in this time that we have now, to make sure that those who've got the experience, those who've got the track record, get the jobs.

And I think, we are moving in the right direction that as Transnet did good work. Okay, so I'll hand over to Phillip and let's clap hands for Phillip.

Thank you very much, Chair. Good day, ladies and gentlemen, and a special welcome to those online and also all of you who are attending here in-person.

Also, just to mention, one of the board members, Dr. Rejoice as well.

I know that, Brian have been welcome and acknowledged by the Chair, our joint venture partners, the executive leadership team, and our operational management. During the past six months, the industry had numerous challenges operating and managing in a low commodity prices environment, together with a number of challenges, logistics, power, and above all inflationary cost increases.

Once again, we realized the value of a diversified portfolio. I mean, you can see from our diversification, the how strong ARM Ferrous really performed, not only at the back of the price, but also the delivery in terms of volumes, and also the sales volumes as well.

Cost reduction and cost containment, as we previously committed, had been a key focus area. And to date, we really made some good progress in three of the four operating assets.

We remain focused to enhancing quality mining, quantity in terms of volumes, and making sure that things that are within our control, we really take full ownership and execution of those. I mean, costs being that the great volumes creating, enabling environment for our employees and our workforce that is basically within our control.

So looking at the Ferrous, there had been a 23% increase in average realized iron ore price coupled with 9% increase in terms of the volumes and the sales volumes that were delivered. Iron ore sales volumes, we didn't have the same challenges that we had the same corresponding period last year.

You'd remember that in November, 2022, we suffered and experienced the 10 day Transnet strike. So during this comparative period, we didn't have that.

So obviously that added some days to us and created an opportunity for us to improve our deliveries. On the Platinum side, primarily negatively affected by the basket price.

However, there have been some benefits with regard to the weakening Rand and what has been very encouraging we saw our two assets, Modikwa and Two Rivers Platinum mines basically performing better year-on-year. So even there, the key focus area is still enhancing quality mining, optimizing mining rates and volumes, reducing waste.

And on the ARM Coal, the results were negatively affected by the price. In this slide, we can see an improvement in our production volumes on the iron ore 1% improvement year-on-year.

And then I'll say the Two Rivers also 2% and 3% at Modikwa. However, Manganese ore and Manganese business was negatively affected by some of the challenges, what we experienced at the operations.

We still remain committed to improving the factors within our control and also driving value enhancing production. Moving into the ARM Ferrous performance.

Looking at the top left variance analysis. You'll see the impact of price, the impact of volume to a tune of R$698 million.

And also, obviously, there were some accompanying and appropriate cost increases. However, if you look at the bottom slide, the changes in unit mine cash cost, you'll see that the iron ore only had a 3% cost increase year-on-year.

Regrettably, we've regressed on the Black Rock. As I mentioned, there had been some operational challenges, and to date, those challenges have been addressed.

I can really assure you that we are making good progress in really studying that ship. Khumani.

I mean, you have seen from the EBITDA segment that 80% of our EBITDA come from iron ore. And if we really have to single it out, Khumani has really been the star performer during this term.

It remains a Tier 1 asset with more than 20 years remaining of high life, high grade quality life with a lowest to pressure. And in that regard, we have really realized 6% improvement.

If you look at the volumes, export sales volumes, and 23% on the local sales as well. So that doesn't just happen.

There has been considered effort from the leadership of Andre and his team, and also the mine management team. As the Chairman has mentioned, with Michelle, having been acting for the past few months, we have really seen an improvement in terms of engagement with Transnet.

I mean, I would say for the past few months, maybe the past three, four months, I mean, we've really been having engagement with her almost on monthly basis. That's how accessible she has been.

She really took the effort, put time aside, brought a team along to come and really engage with a very strategic and very important customers to really understand, how we see things and how we can really move forward collaboratively to make sure that we turn this. Because at the end of the day, is SA Inc.

that is going to benefit, and we are also going to be the beneficiaries from that improvement. Various costs saving initiatives are being considered.

For an example, strategic sourcing of fleet and centralized procurement, basically looking for opportunities and continuous improvement is the name of the game. Just making sure that we can do things better, improve on what we have done today to make sure that tomorrow it's even a much better position.

However, the biggest risks that is facing our iron ore production and operation include among the three, the single customer risk at Beeshoek, the water supply challenges, it's ongoing, but we are doing something about it. We are not just lying back, but these are things that we just need to continue to really raise and to mention.

But knowing that there are some action plans to address them. On the Manganese side, Black Rock remains a high grade, low impurity, long life ore body with inflated capacity to produce over 4.6 million tons per annum with a recent investment that mine is basically set to deliver.

However, as I mentioned, we've really had some challenges, including also the issues of skill loss, skill retention, and also basically the mining challenges as well, ground conditions underground. But as I mentioned, those things are really being taken care of.

And we believe that next time when we come, we'll come with a much better and improved performance, because the ore body is still there, the workforce is still there, and we still have really invested our capital. Moving into the Platinum space.

This is where we've really had some serious challenges. I mean, all of you would've really been following.

Since May last year, we've really seen a sharp reduction on the basket price, so lost almost R$3.4 billion just on the -- which is price related. However, we've really had some response to that through quality mining, focus through optimization of grade and through delivery on the volume side.

As I mentioned, taking control and executing on things that are within our control. Pleasing to mention and to see, I mean, you remember that during the previous period, we reported over 21% and 25% unit cost increase.

But for this period, I mean, it was only kept and maximized the 7%. We continue to look for opportunities and to make sure that we maintain and improve our margins.

And that is basically just the breakdown of that. You can see the 4% improvement on the head grade at Modikwa.

And also that led -- that came as a result of having changed our philosophies. I mean, previously we were doing on-reef mining, so we've basically just gone back to off-reef development, so that we cannot really dilute and contaminate our grades.

And an effort also went into managing a split-reef at Two Rivers mine that is basically ongoing. However, we've really been able to sort of break it.

We're able to define the cut, the effective and also, the right cut. And at this point in time, pleasing to mention that at least we are mining on the planned mining grade.

So a lot of room for improvement going forward to make sure that at least we can improve that situation. Pleasing to mention that Bokoni's first PGMs were produced in November, 2023.

You'll remember that we acquired Bokoni with an infrastructure of 60,000 tons of UG2 plant and 110,000 tons of Merensky. Through the board approval process and permission, we're able to invest what we call early ounces capital into the business to basically recommission the 60 kiloton of UG2.

And it was pleasing to see, I mean, delivery on time and delivery on budget. And as I said, I mean, in November, we started sending concentrates to Anglo smelters.

So, we expecting the production to ramp up to 55,000 tons per month in the second half, and to continue to explore other opportunities whilst basically optimizing the installed infrastructure. ARM in no risk entered into an agreement, the purchase and sales agreement during this period where we agreed to acquire the 50% stake of Norilsk and becoming the sole owner.

So the process is still underway, just awaiting the conditions precedence that will have to be closed so that we can close that transaction. So together with that, I mean, we'll be taking the portion of the liability, and they also contributed an amount of R$325 million towards that.

Moving into Coal. Pleasing also to see some contribution, though negatively impacted by the price.

But there've also been some positive contribution and also returns from our Coal business, focusing on things that are within our control. You can see the unit cost increase year-on-year of 1% for PCB participating Coal business and also for [indiscernible] only 3%.

So you can see that within the Group, there's that really aligned focus to those things that are within our control. I mean, we took advantage of good prizes, and we employed tracking to complement our volumes.

And you can see that as a result of that, there have been 25% improvement on the domestic coal's volumes, and also 18% on that. However, at this point in time, we had to really stop it, especially when the price went sub hundred dollar ton, because, it's not really profitable at a certain stage, but we continue to monitor those prices, and also make sure that we are ready to maximize and take advantage of whatever opportunities come our way.

And you can see, on your bottoms, right slide on the stockpile volumes, how much movement we've already had as a result of that. And that is just a breakdown, summarizing most of the things that I've mentioned.

Also mentioning as well that we have really seen some increase on the volumes. So, the performance is really on the right path and the right direction.

Coming to our projects. I mean, very key and important project Two Rivers and Merensky Project.

We are now running the last lap of that project. We will be starting our commissioning towards the end of April.

Between April and June. We'll basically be doing the coal commissioning just to make sure that the delivery is in line with our expectations.

And then following that, we'll make some other decisions in terms of the long-term view. On the projects as well and the capital, I mean, we've taken a stance of making sure that we review, we scrap, we identify any potential cost that we can really defer some of the things, I mean, you can really be able to do without like your office structures and other things.

So some of those will really be deferred, and we will execute them later. Just making sure that we optimize our capital expenditure, and that also we adopt that capital -- cash preservation mode.

With regard to Bokoni, as I mentioned, we still confident in the long-term profitability of Bokoni. It's a high quality ore body.

It's a second largest ore body. And we do believe that with the right infrastructure and with the employees and the workforce and the right level of capitalization, we will be able to get Bokoni into a much competitive cost, global competitive mine.

We need to sweat our existing assets with mixed minimum capital outlay. And that's basically what we busy doing at this point in time, looking at optimal solutions for Bokoni and growth as well.

In closing, our key focus area, and also in response and prepare ourselves for the future against all these headwinds that we are facing with. We want to ensure that our operations are profitable and globally competitive, very crucial that we maintain a good position in the global cost curve.

I mean, our desire is for operations to be in the first quarter, and Two Rivers have been there before we intersected and mined split reef, and we'd really like to see it really be going back to that position. I mean, Khumani, with the quality delivery results that we have seen is basically in that position.

Maintaining a robust balance sheet, and as I said, the cash preservation, making sure that we spend wisely in line with the needs and identifying what the ones, the ones delaying them, but making sure that the needs that we need to really secure the future are actually taken care of. Aligning production capacity to logistics and infrastructure constraints.

I mean, I mentioned that if you look at Black Rock, I mean, the installed capacity, there's about 4.6 million tons, but at this point in time, we focus in 3.7. So the cost structure really need to be aligned to that so that we can really improve our profitability and our margins, and ensure the sustainability of that business.

Exploring value, enhancing growth opportunities. We continue to look for opportunities, and then we'll make the right decisions when those opportunities come our way, because we do believe that by diversification is the way to go, and we've really seen it that, it has enabled us to basically wither the storms that we have really gone through.

Thank you very much. I'm going to hand over to Tsu.

Good morning, everyone. So in these challenging times, sound capital allocation is more important than ever.

When we look at capital allocation at ARM, we prioritize investing in our existing business. Now, when we talk about our existing business, I'm referring to our sustaining capital expenditure, or some people call it stay in business capital.

So that's what I mean when I say investing in our existing business. We then actively seek to grow our existing business, all of them, as well as pursue acquisitions that make commercial sense to us.

Now, when we look at these opportunities, they battle it out for capital, where we look at a number of different metrics, which include return on capital, employed payback period, hurdle rates, depending on the maturity of the project and so on and so forth. We, however, remain committed to paying dividends and returning capital to shareholders, which we have demonstrated over the years.

This slide illustrates how we generated cash and how that cash was allocated in the six months ended 31 December, 2023. If you look there, we generated cash of R$449 million from our operations.

If we look at this compared to the same period last year, this was a decrease of 92% compared to the prior corresponding period, which Phillip has mentioned, really is a function of the lower PGM basket price. And that cash generated from operations also takes into account a R$786 million increase in networking capital during the period.

If we look at our dividends received, we received R$3 billion in dividends from our assets. If we look at our net cash, so our total borrowings reduced by R$49 million during the period to a balance of R$193 million.

The balance relates to the ARM BBEE Trust loan that's owing to Harmony, which is interest free, as well as our IFRS 16 lease liabilities at a number of our operations. This means that ARM has 6%.

Yesterday, Assmang declared a dividend of R$4 billion, of which R$2 billion is attributable to ARM. This amount is not included in the numbers that you're seeing there on the screen.

So the capital expenditure for the reporting period was covered by Phillip in each of the divisions sections. Just some things that you could note, the segmental capital expenditure on an attributable basis was R$4.4 billion for the six months, which is R$1.4 billion up when we compare it to the prior corresponding period.

Most of this was spent at our ARM Platinum operations, specifically Two Rivers, with R$3.1 billion of that amount being spent there. R$1 billion at our ARM Ferrous operations, and then R$274 million at our co-operation.

This is on an attributable basis. If we look at our segments, our segmental capital expenditure guidance.

So the guidance for the financial year ending 30 June, 2024. So the one that will end come June, shows a marginal increase of a R$100 million compared to the R$7.6 billion that we had guided, and communicated to the market in August last year.

This is due to the board approved capital that has been incurred at Bokoni for the development of the [indiscernible] portal and associated infrastructure, which will be beneficial to the early ounce project. Now, CapEx for 2025 and 2026 includes approximately R$3.5 billion on a normalized level of sustaining capital expenditure per annum, which includes circa R$700 million to R$800 million per annum on an attributable basis of capitalized wastes dripping for our iron ore operations.

Thank you very much.

Thank you very much to our leadership team for that great presentation. Today, we're going to do things a bit differently.

We're going to take questions from the floor first, and then we will move over to questions on the webcast. Ladies and gentlemen, can I please kindly ask that questions for today are limited to the results?

If you have any other questions, uh, please feel free to get in touch with me or Betty at the end of the presentation. Thank you very much.

Yeah. I mean, Martin Creamer always would like to know about Transnet and various others because they've got an impact on our business.

And so we'll take whatever questions. Please don't ask me whether the Blue Bulls is going to win tomorrow.

I can't deal that. But just one quick issue in terms of a question that came in relation to Transnet, I think the reason why we spoke about Transnet is because it's very important to the whole mining industry, and it's important to our ability to create value for our shareholders and stakeholders.

And I must say, we are pleased with the progress at Transnet and we are confident that they'll do the right things at Eskom as well. Just one quick issue in relation to Eskom.

I think it's important. Eskom is crucial for our businesses as well, and an efficient Eskom that provides and sells the cheapest possible electricity.

It's good for industry, but one other important point is, Eskom is crucial for the poor. And that's why a remark that was, that I made, which people took out of context, is that, it's critically important that all of us work together to protect Eskom and to make sure that Eskom is a world-class electricity company.

But the most important thing for Eskom, of course, it's important for business, but in my view, the most important thing is for the poor. The poor needs electricity that is as cheap as possible, but also as reliable as possible.

And the issue about the private sector and the IPPs in particular is in relation to the technology that has been developing and that we saw 15, 20 years ago, which will have an impact on the competitiveness of utilities like Eskom and others. So -- but the bottom line is we all have to work together and make sure that Eskom is continues to be a competitive provider of electricity.

And as I said, the single most important issue for me in relation to Eskom is the poor. It has to be able to provide the cheapest possible.

If Eskom -- we should hope that Eskom should provide cheaper electricity than the independent power producers, that's where we should focus on. But that's a separate issue.

Yes, Martin.

Martin Creamer from Mining Weekly. Just talking firstly about energy and competitiveness of energy, can you give us an update on what you're doing about self-generation?

And are you finding that competitive besides helping the climate and everything else, is there a good business case for this? And then my second question, there are so many things disrupting the world.

There are so many things we can't control at the moment. There's so many things out of control.

Just like some sort of input from you on what you're doing about what you can control, and of course, those costs you've spoken about and volumes you've spoken about, but grade particularly, is there anything you can do about your grade? Is there any different way of mining that you can approach that you increase that grade, which can cut your unit costs?

Thank you.

Yeah, very important. Just very quickly, I mean, we're going to try and answer these questions as quick as possible.

I mean, South Africa is a compassionate, let me say it. South Africans are compassionate people.

And you cannot have a successful mining industry without an equally growing and an improvement in the living conditions of the poor. And Martin spoke about Eskom and Eskom is crucial.

So, we've got to clearly understand that if electricity is expensive, it has an impact on our capacity to create jobs. It has an impact on the competitiveness of the mining industry.

It has an impact on the competitiveness of the South African economy. So, I really want to say this so that I can get it out of the way and focus on what we should be talking about at the results presentation, which is whether it's energy, as you said, or even Transnet and -- so let me say it in, get out of the way.

Our focus as a country has to be that we will only succeed as a country is if poor unemployed South Africans also have a future. You cannot have rich people and rich companies living side by side with poor people unemployed.

I mean, it's just a recipe for disaster. And I mean, people talk a lot of rubbish.

I only succeed and my family only succeed, and all of us only succeed because poor people, unemployed people have a future. And I need to say this, because there's a lot of nonsense that's being said, a lot of lies that's being said in the public domain and understand it's election time so that you'll have this sort of crap.

But we have a long-term duty and our long-term duties, we are not just by what we say, but we are just by how the unemployed the poor are impacted by what we do. And that's why, if you look at many of the mining companies are retrenching because, their businesses in the platinum in this, because their businesses are under stress.

And I've got no doubt that every single one of them is looking at what they have to do in the context of their long-term commitment to their employees and to the country. So I just want to conclude on the electricity side that I'm very confident.

South Africans, we all -- we sometimes, and I think Churchill Creamer [ph] said the same thing in the context of America, but we sometimes do the most inexplicable and incomprehensible things. And then we realize after some time that, again, in the context of Eskom, for example, as well as Transnet, that we've been doing the wrong things and we now have to do the right things.

And I'm confident the right things are being done with Transnet. And I'm also confident that the right things will be done with Eskom.

Now you are asking about the mining, how we mine, and will you do that quickly?

Thank you very much, Chair. In terms of the grate, I did mention that what we did at Modikwa, one of the things that we did was to move from an on-reef development back to off-reef, thus basically reducing the chances of diluting your reef, and improving the grate.

And at Two Rivers, we were able to optimize the mining cut within the split drift area. You remember that over the past periods we've really been saying, we faced with this challenge, and it seems as if we really were able to really crack that nut to optimize.

Now we are mining at an optimized cut, which is in line with our average mining grade. And basically getting rid of waste in our reef system.

But I was told this thing about 25, 30 years ago, Mike, and I think Phillip said something very, very important. You want to add on that?

Because at the end of the day, [Technical Difficulty] I forget it, I said it a few weeks ago. But anyway, will you comment on the question that he asked?

Yeah. Martin, there's no doubt that the industry…

Mike, Sorry. It's mechanism.

They said they mechanize as opposed to -- they said, it's mechanization, and the other one is technology. I don't understand what it means.

25 years ago, I still don't understand what it means. But as long as Mike, we see it in the result in the productivity and the efficiency in the profitability.

Sure. Thank you, Patrice.

So, Martin, I mean, South Africa is cleaned out with narrow tabular deposits and very dependent on labor intensive, which with all its inherent challenges and safety, be it that, but dilution and grade important. So we are, and have been, as an industry developing low profile equipment.

Various mines have pushed that including ourselves. And in fact in Bokoni, we've laid out the mine going forward to utilize what we call recognized low profile equipment, which can fit under the table to optimize grade, improve safety.

And that is going to be starting up sometime this year. Medium term, we still believe that what the industry needs from a transformational point of view is to eliminate explosives underground.

And long-term, we continue as an industry and particularly in ARM, to look at cutting technology, which in the next couple of years, I have no doubt, will come to the fore and again, significantly improve productivity, efficiency and safety, and a significant improvement in grade going forward.

Thank you.

Are you satisfied, Mike – Martin. Thank you.

Yes. There's a question there.

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

If you can just introduce yourself.

Sorry. My name is [indiscernible] and I'm CEO at Kuji Consulting.

I am very pleased that you spoke about ESG reporting. Dr.

Patrice, honorable, thank you for this opportunity. I think what I would like to see is a direct reporting within these type of forums regarding ESG.

What exactly is ARM doing to ensure we mitigate carbon emissions? It may not be directed to any numbers or success of the organization, but it certainly speaks to security and safety, because there is a term called materiality on the financial impact, which speaks to security, because if climate change is at a disaster, and it's not managed, and I think [Technical Difficulty].

Thank you.

I think it's a very good question. I mean, I was in Davos again, where you've got -- the focus on ESG and climate change, nowhere in the world is as intense as it is there.

And there's talk about greenwashing whitewashing, because I don't think it's so much what you say. Of course, reporting is crucial, but -- and I spend a few days at COP, I think, my wife was on a panel with Bill Gates, again on this, at COP on climate change and Impala, I mean, the whole of the mining [Technical Difficulty] on what is called patient capital for the next 20 years, we are part of what's called Breakthrough Energy Ventures.

You must go and look at it. I mean, they're doing incredible work.

And it's led by Bill Gates and we spend close to a $100 million of family money, and we've got a 20-year perspective on mine. But having said that, we have a duty to maintain and to create jobs.

And the perception that there's a conflict between climate -- effective strategies on climate change and ESG reporting and job creation and job preservation is false. It's not true.

We will not allow that our commitment to ESG and climate change is at the expense of workers and job creation, in a country with such a high unemployment rate. It's not going to happen.

But having said that, we are judged by what do your results look like? What is happening to your share price?

What's happening to the dividends? What does the future of your company look like?

So, I'm -- and thank you for that. You can ask anything as long as you don't ask about sports, because I don't know what the result is.

Yes. Just what is your name?

My name is Thobela Bixa, and I am from Nedbank CIB.

Nedbank?

Yes. Yeah.

And I have a couple of questions with regards to the Platinum business, and one follows up on some of the comments that Phillip made earlier on. So when you talked about having changed philosophy at Modikwa to mining on-reef versus off-reef, why the change?

And then also, did cost have to do with anything with regards to that?

Okay, good question. Sorry, I want Thando to answer that.

Thando is running our operations at -- he's the Chief Executive of ARM Platinum. Proceed Thando.

Thank you.

You heard the question?

Yeah. I heard.

You were asking about why they change from off-reef to on-reef?

Yeah.

Rather the other way around.

The other way around.

Yeah. And then your second question was?

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

Okay. Thank you.

I've got that. So, the main reason as Phillip highlighted why we've changed to off-reef, sorry, to on-reef, which means basically we were mining the ore as part of our horizontal development, and we changed to mine underneath the ore as off-reef, was to be able to realize the increase or change the grade as we've reported now.

And the reason that has driven that is that we were able, as we reported the last period that we were also supplementing our ore to the plant with Merensky. Also, we had an increase in the ore supply to the processing plant.

Hence, we could afford to go off-reef and realize a higher grade of feed to the plant. With regard to the -- there's no really a cost in terms of doing that, but the benefit that you realize with higher revenue associated with the higher grade.

Thank you.

Okay. But this is such an important issue.

As I said -- when Goldfields still was involved in Platinum, I'm talking about many, many years ago. There's a lot of focus research, R&D that has gone into this.

And I don't know whether -- you remember there was a guy called Calvin Williams -- Martin, you know Calvin Williams. Calvin was the finance director at Anglo American, and he was -- I'm talking about many, many years ago.

And they were saying that South Africa has got some of the most advanced, what you would call technology nowadays, and at the heart of it is what Thando and Phillip and Mike was talking about. How do we make sure that we mining in a more efficient, in a more profitable and in a more productive manner.

You've got another question?

Yeah. Just two more questions with regards to Bokoni.

So you talked about having deferred the bankable feasible study to when should we expect some announcement coming with regards to that? That's the first question.

And then the second one is, what would you need to see in order to press forward with the project. Thank you.

To press forward? We are pressing forward with it.

Yeah. Thank you very much for that question.

As I said, in terms of installed capacity, we had two plants, the 60,000 tons per month, UG2, which we've commissioned. There's a second plant 110, which was Merensky.

So we currently doing the study to basically see how do we move forward in a phased approach, taking into account the current market conditions. Ideally, I mean, this mines optimally to really make sure that you are in the right position, should be running at about 240,000 tons, which is almost the same design capacity that Modikwa has.

I mean, if you look at Two Rivers, it was a 280,000 tons. We increased that to 320.

So volume is very key to make sure that you have your fixed cost dilution and improve your margin. So those are the studies that we are doing.

And as soon as those decisions or those studies are done, we basically review and make sure that we take the next step.

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

And when we bought [Technical Difficulty] presentation, because it could be interpreted that we are waiting for a study whilst side-by-side, whilst we are pursuing the assessment, the analysis of how best to mine Bokoni in the context of this, of the depressed Platinum mine, sorry, PGM prices, we are also proceeding, if you saw the notes and anything disappointed, Philip was making, the 60,000 process that we are busy with is to make. We think we can make money now at -- because infrastructure there.

But the bottom line for us is that Bokoni is a world-class ore body, and we will create significant value for shareholders. You want to add on to what has been said, because Mike, you and Phillip are doing good work with Thando.

I think that's pretty well captured. Thank you.

I think it's a prudent thing to do in a responsible way. And the uncertainty -- and when PGMs and thrifting changes, we have to be ready to capitalize on that.

But in the meanwhile, we must do it in a stage responsible manner. And the ore body and time allows us to do that, and get as quickly as possible into a sustainable and a profitable position.

I mean, I was in -- I mean, they talk about the hydrogen economy and the opportunities that will be created for PGMs as a result of the hydrogen economy. We merged our gold interest many years ago with Harmony to form -- at the time they said it should be called Harmony ARM Gold.

And I said, no, it should just be called Harmony. And in the name Harmony, you'll find the Rainbow.

Where you've got the names A R M is to reflect. It was about more than 20 years ago.

And of course, copper is exciting, but the problem with copper is it's overpriced. But -- I mean, what Mike and Phillip are saying, part of the problem is, and this is what sort of irritated me about Transnet, is when the prices of the commodities are at an all-time high, you need an efficient transport system.

Because we've got to maximize, and then we'll started twiddling with our -- doing the sort of things that are just totally inexplicable. But anyway.

So, we are proceeding with Bokoni in an appropriate, responsible manner. Because we know that the cycle is going to come and if the cycle is there, you've got to be able to sell into the cycle.

Otherwise you're going to miss out on the -- I think there are people that Betty likes more than others. So I think everybody should try and sit next to Martin Creamer and then you'll always get questions.

Hi, good day everyone. And thank you very much for the live presentation.

Bruce Williamson, Integral Asset Management.

Just could you give us an indication of what your current Coal rand per ton rail costs are versus your tracking costs? And then secondly, Kumba took quite a hard stance two weeks ago when they said they believe that on the Sishen–Saldanha rail line that …?

My apologies. Just repeat the second question.

Second one is, Kumba took a stance…

You said Kumba.

Kumba Iron Ore, and said they believe that the Sishen–Saldanha rail line will run at about 16% below capacity. So, they're going to adjust their production to lower rail capacity.

And that means retrenchments, less procurement, et cetera. What is Assmang view on that?

Very good questions. Very good question.

I mean, Andre Joubert will talk on the Bokoni. And you see, these are the things that sort of justifiably makes people in my position very impatient, because if the South African mining industry does well, it's taxes for the government and those taxes -- of course, our duty as well is to shareholders and create value for shareholders and declare dividends.

But there's income for government to use that income and focus on our -- the big challenges that this country has, the poor, the unemployed, and I mean, this load shedding, I mean, really, we shouldn't be having load shedding. It's inexplicable.

The potholes. I was in -- I know I'm going to get trouble for what I'm saying.

I was in Ivory Coast and I had to travel around, on the philanthropy, one of the things we do on the philanthropy parties is football and the youth and the impact of football to teach the youth using football, get educated. Don't commit crimes, don't get believe, reject corruption.

And I mean, the roads were, no potholes. Every time I go to the airport, I've got to tell my drivers relax.

Because when I drive, I always lose my tires and my mag wheels. So, I mean, those are important questions you ask.

Thando, will you deal with the Coal? So I just wanted to say, the question you ask is key.

And I think Kumba is a excellent company. We work with them, the CEO of Kumba, the guys at Anglo doing excellent work.

And we need those -- Kumba to do well. We need the Assmang to do well.

Will you deal with the coal the Johan and Andre? Andre, you will deal with the question on Kumba?

Yes. Okay.

Thank you, Patrice. The rail costs, it's R250 per ton.

The tracking, which comes at a very high premium, it's a thousand rand premium per ton. So hence, as Phillip indicated, at this current prices, at the current rand prices, we've stopped the tracking.

So we focus on the rail and quite pleasing as was indicated also is that there's an improvement on the rail volumes that we are seeing. Albert is still early, but we quite encouraged with those improvements.

Thank you.

Thanks, Phillip. I mean, Thando.

Andre?

Yeah. Again, a very good question.

I'm going to attempt to answer the question, including the Manganese, because it impacts both sides. So, we've been very, very actively, and Patrice did mention that since the new leadership of Transnet have been engaging us, the level of transparency and engagement has been much, much improved.

So -- and Transnet can almost say also opened their soul a bit, and they allowed us to do assessment, the independent assessment or independent technical assessment of that line. Collectively, all the producers collectively.

And then also we engage very, very through various other industry forums with Transnet. We've got the mineral council that we have regular.

I've got a meeting once a quarter with the Transnet Board Chair and with the Transnet CEO, through this new entity they formed that's chaired by the president of the country, which is called the National Logistics Crisis Committee. There's effort going in.

So, with having said all of that, having seen all of that, we all realize that the state of Transnet is not what it was, and that it's going to take a lot of work and a lot of effort and money to get Transnet back to the nameplate capacity. The other thing is, you're not going to happen in a week.

You can put the best management team there. And we are working very closely with Transnet in that regard.

And the other industry players, and there's various programs at play. So based on that, we agree with the Kumba numbers that, you look at about 87%, 88% of nameplate capacity for the future.

And that's why you would've seen the slides that Phillip showed is that our forecast for the iron ore is about is 12.5 million tons of export per annum. So we did adjust our rail volume to that.

And we feel we are not a 100% at this point in time. I can't say to you exactly how long it's going to be for, but we definitely see that that'll be for at least the next three to five years that we will be operating at that system.

Of course, we pray that that is going to be quicker than that, but we can't base our strategy on hope. So, we now based our strategy on what the reality is that we see in that regard.

On the Manganese side, I just want to sort of -- in closing with -- about the iron ore side. I think last with the previous results presentation, I sat here and I had a positive, pretty positive outlook on Transnet.

I must say it eased better than it was previously. And that's why if you look at last year, our outlook, our actual performance on export was just, just, just short of 12 million tons.

But that included the impact of the strike. So this year we are looking at 12.8 million.

So there is definitely improvement, but that improvement that we saw is not going to sustain, because there's going to be more time out, if I can call it that, on that line to fix that line properly so that we can have a long-term sustainable improved performance on that line. On the Manganese side, we were impacted by -- I mean, we invested quite a lot of capital in our Black Rock mine.

And that mine, as Phillip brightly said, was then set up to do 4.5 million tons per annum. When this year started, we planned for about 3.7 million, close to 4 million tons, and we said, that portion that Transnet is not going to do, we are going to do on road.

And we started off the year with that. And with a process dropping, it became very quickly, very evident that the road transport is not profitable.

So we just -- we simply were forced to stop the road transport. And it -- when I say forced, I mean the economics of it, we took the decision to stop the road transport.

And then again, in line with all of these engagements with Transnet and everything, and the real allocation that we got, our forecast and our outlook is that we say every ton of material that we -- you heard the numbers that Thando was talking about in terms of the differential between road and haul, ours is not that expensive because the tariff is not exactly the same, but road haul does not make sense for us in the Manganese business. So therefore, every ton of ore that you road haul, you might as well keep that ton underground and delay the expenditure and the sale of those tonnages until such time the Transnet get their act together and that again, collectively.

So there's a lot of projects happening. So if you look again at our outlook, we said we took -- I wouldn't say a conservative, but certainly a realistic view that the next two years we'll see a 3.4 million ton rail on Manganese, and then we'll push it up to 3.7 million and then to 4 million tons.

Our mine is set up for that. We can do that, but for now, we have to look at repurposing our mine.

And I think somebody asked, I think it was Martin that asked, do you go high grade or better grade or whatever. So what we also going to do is to see can we balance our ore body and the mining that we do for better revenue generation with a smaller, with a lower volume, that we going to put out.

And that's our strategy. And so we are marrying that strategy exactly with what the information that we have with Transnet and the sharing that we have with them.

So for us, road hauling is really done only if there's a serious emergency and we need to fellowship, but it's not in our plan. Thank you.

Before we go to the quick next question, it's important that we've got -- that's Bruce. It's very important, that there are so many reasons why we should be optimistic, because sometimes we talk ourselves into a stage of paralysis and not without justification, because I mean, people talk about, we score so many own goals, but I'm talking about just the simple maintenance at Transnet, the maintenance at Eskom that should have been done over some time.

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

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

Yes.

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

Standard Bank?

Yeah.

Okay.

So I've just got two questions also on the iron ore and Manganese. At last results you spoke about rail optimization and potentially rerouting to increase the sort of export volumes.

Have we seen that, did that come through now in 1H, or was this purely just based off a low base from the previous year? And then the second question relates to the Manganese operations, and I know there's been a few operational issues.

I just want to know. I mean, you've mentioned in the presentation that it has been sorted out, but maybe just some color on what they were, and potentially, if we can expect the same volumes from two periods ago to come through?

Yeah. At the time when, when I made those comments about the improvement in efficiency, remember we were under a different leadership at Transnet at that time, and I think there was promises made and engagements and discussions we never materialized.

So, to your question, the improvement that we saw, there's twofold, two reasons for that. The one is it's against the low base of the strike.

And then the other one is -- but also remember that in this period that we reporting on, we also had a shutdown, the annual shutdown, which was not in the previous period. So this next six months that we are going to see now, I'm very confident that on an annualized basis, so let's say for the next six months, previous six months, 6 million tons, next for six months, I see 6.8 million tons.

So there will be improvement because the rail, there has been some work done. But as I said to Bruce as well, is that that improvement is not sustainable because we've got to take time out on the line to fix the line proper.

We in the collective of Assmang and Transnet. So we've got to do that and that will pay off.

We don't do that. We are going to see just further deterioration.

So the idea is to stabilize at that level and then do the work. And then in a couple of years’ time, we pick up and we get our volume.

So our mine is geared up for that. So when that happens, be there, we can make it happen.

On the Manganese side, I think if I can describe the problem as threefold. Number one is that, because of the volume that we had to stop, because of the road haul that -- we took a decision that we are not going to do the road haul, and there were some low grade material that we were mining at the mine.

So we had to stop all those workplaces and redeploy those people to areas where you have a better grade product. And that's not something that happens overnight.

And when the guy started in those new areas, we also had some -- it's different -- if I may say it's different to a gold or platinum mine that we had quality issues. In other words, the exact grade that we thought was there and the material that we put on surface wasn't exactly correct.

So there was a -- we had to do a quite a bit of a correction to get that quality issue sorted out. Manganese ore it almost like the 37% is like bananas, and 42% is like apples, you don't blend the two.

So there were some of that happening, which made the product more difficult to sell. And we had to rectify that.

But we've done that now. We've got through the process.

We positioned where we should be positioned, and there's a lot of positive feedback. And we've got audit teams now going to the mine basic on a monthly basis to help the teams to get through and get themselves established.

And that's happening. So I'm very confident that by, literally two months from now, we've already made like a 70% improvement to where we are today.

So there's still about a 30%, but that's more related to the quality of the material that we mine. And we will be ready and we will go strong from the New Year based on our new production profile, which is aligned with and match to the Transnet profile.

Thanks.

Bruce, I was taken to a room in Boston many, many years ago, and one of our shareholders said, I couldn't get damn about the problems you have, whether it's Transnet or any other eternity. I just want good results.

And it's our responsibility. And I think, we'll make progress.

You want to add anything?

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

Thank you. Yeah.

You like members of the Communist Party because the left is getting all the answers. You're coming to the more moderate members of society as well, who says communists can be moderate, they're moderate as well.

Yes, please proceed.

Leroy Mnguni from HSBC. Thanks for the opportunity, Chair.

In your PGM business, the unit cost inflation has come down to single digits, which is quite pleasing to see. Just curious as to what's driving the improvement and your outlook for inflation going forward.

Can these sort of increases be sustained of the medium term? And then at Bokoni, assuming you are running at the current installed capacity, what PGM prices do you need there to breakeven at a free cash flow level?

And then my third and last question is at both Modikwa and Two Rivers, your chrome concentrate sold volumes came down, but PGM concentrate produced went up. So what's driving that decline in the chrome volumes?

Thank you. HSBC?

Yes.

Yeah. Great.

Will you start, and then Phillip will add. Thando is the Chief Executive of Platinum.

Thank you, Patrice. On the side of the unit cost, yeah, Zimela [ph] we're quite pleased with the podcast that we've seen and we think it's [Technical Difficulty] Two Rivers also, we indicated last year, or rather the last reporting period that we were also -- in addition to our normal diesel consumption associated with load shedding, we were also running the additional capacity with diesel.

We have since commissioned the SCOM supply in around December. So that has also kind of contributed in terms of reducing our costs.

But the main was just the focus on efficient and mining the right grade. Let me go to the issue on the Coal.

Both Modikwa and Two Rivers. We have also been milling some of the Merensky ore.

And that Merensky ore hasn't got chrome associated with it, hence the reduction on those volumes. However, our focus and where we put in a lot of effort in terms of increasing the volume is still on UG2.

And we do anticipate that going forward we'll see again, recovery and the increase on the UG2 ore because it gives the benefit of the chrome recovery. Lastly, Bokoni, as we said, we currently running at 55, 60,000 tons per month, that we've just commissioned late last year.

And indicated that we are studying phases of improving that at the current price, which I'm sure you'll understand. That is not efficient running at those small volumes.

We are looking at a price even a cost of about R900,000 runs per kilogram of PGM. And as we mill more, as we improve base, of course, in terms of our capital allocation and improvement, we see that improving.

And our incentive price is going to be around R800,000 per kilo. Thank you Chair.

Thank you. Phillip, you want to add anything?

Just to add on what Thando said, I did mention that scale is very key for your PGM business, 60,000 tons per month. You're going to have to fund and pay for the GM, whether you run a 60,000 tons, 120, 180.

So 60 is extremely suboptimal, 240 for these mines, that's where you really start talking good cost care position, and good margins. So -- and it's a journey, we are really progressing towards that.

This is just a stepping stone, and we are really exploring those opportunities -- those studies to make sure that we can do it in a very responsible way and profitable way and sustainable way going forward.

Very good. Yes.

There's a question there.

Good afternoon everyone. [Indiscernible] from ABL.

ABI?

ABL.

ABM?

Yes.

What is, is it--?

African Bank?

I must -- on some occasion talk about the history of African Bank with Dr. Sam Motsuenyane.

I've got two unrelated questions. The first one is relating to the Bokoni transaction, where one of the conditions the competition authorities imposed was HDP transaction.

And I know in the full year results last year, you spoke about a 15% transaction split between five community, five employee, and five industrialists. Just any update on how far we are in that process and whether we'll be having any capital impact, whether it's a vendor financing transaction or anything of that nature.

And the second one is…

So the first question is about the communities and the industrialists. Is that what you're asking about?

The HDP transaction condition by the Competition Commission.

HDP?

Historically Disadvantaged Persons. There was a need for a transaction relating to Bokoni.

What is PDH?

The second question is regarding your sustainability mix. I know you've just recently concluded a 100 megawatt PPA, I think with the solar group, that your results is, will contribute about 30% of your electricity.

Are we in the mood for any more? Are we able to link it to what our IRP speaks about?

I think the 41% curve to renewable energy, is that where the group is going, or are we okay for now with this one transaction? Thank you.

You will deal with the, Tsu? Did you like the second question, Tsu?

That's fine.

You think you can, thank you. You cannot -- in the modern day and not even argue even in the 20, 30, 40 years from now, can't have a mine with communities not being shareholders in the mine.

It's just not sustainable. And so we started this for the first time many, many, many years ago.

And of course, it's at Modikwa and it's something that hadn't been done before, but because we had a clear understanding that, going to the future, community members wake up in the morning and look at the mine and say -- but it's even worse. In some instances, dams would be built, and then the water has to be transported for many, many kilometers from where the dam is to where the mine is.

And it goes past so many communities. [Technical Difficulty] I have a lot of expectations from my communities in the transactions we've done because, you don't want passive partners.

You really want them to be involved, and you want to build skills and expertise, and part of the tenders and the contracts give to the communities, but not because they're communities, but because, of course, we've got a duty to them. But because they provide a very good service, and sometimes you've got to combine -- you've got to do partnerships with established, experienced companies and do a skills transfer over time.

So, it's going quite well. And I've got a challenge because in another transaction, I was insisting that the community should get equity, because it's a mine that we inherited and the communities didn't have equity there.

But again -- and it's a waste of time because, it just doesn't make financial sense, but you have to. So we're engaging to see how we make -- it's a totally different transaction, how we make the communities equity shareholders in the mine that we are now running.

Yes, Tsu.

Thank you, Chair. So I think maybe just add, because you asked, how far we are in terms of the process.

So the black industrialists have been identified and we have signed NDAs with them. So those are in place.

And then in terms of the funding thereof, so we are looking at vendor financing specifically for the black industrialists to pay for their 5% in the transaction. So that's…

I think there's another deal we did about 20 years ago, and what you call, PDH or something like, and they ran into problems because the interest rates were just -- I tell you, it's a big challenge. So we then had to go and just cut the interest rates and say, even though the banks gave them funding, we will take over those loans.

But they'll never really be shareholders. They'll never have any benefits, because they'll spend the next 10, 20 years saying, yeah, but we are shareholders in this mine, but they've got nothing to show for it.

So we took out the interest rates and said, we will pay the bank, pay back our loans. Kennedy was very helpful in another transaction, Brian, but in another one, because we want them to be meaningful shareholders for the long-term.

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

It's just for the benefit of those who don't know what PDH mean in it.

Public partnership agreement, basically. I mean, in terms of our solar -- I mean, we announced and we kept everybody up to speed in terms of -- the debt construction is currently underway, and we did promise that we should be commissioning June, 2025, 100 megawatt, 33% of the platinum group business.

That was the starting point. Remember, there's limitations to this as well.

I mean, grid capacity and availability is one such a challenge. So we continue to look for and explore further opportunities.

What can we do behind the meter and what will that really mean? You have to look at, I mean, like this one is basically installed in Lichtenberg because of the surface, and that.

If you go to where we mine, the topography is such that you cannot do such things. We currently busy on the ferrous business with our studies also to explore what we can do.

And there as well, there's no grid capacity, so it's most probably going to be an energy solution that we'll talk to behind the meter, battery and all that. So this is not the stop, it's just the starting point.

Bear in mind that we want to show that continuous improvement, 15% on improvement over the next three years and eventually net-zero by 2050, and we'll continue to explore other possible solutions.

But the bottom line, there'll always be problems. If it was easy, everybody would've done it.

It's our job to fix and to deal with those challenges and to succeed. Yes.

Good afternoon. My name is Xolisile Nene.

I am from Absa Bank. I have two questions.

Absa?

Yes.

Many years ago there was a young lady who was from Absa, and then we employed it for 15 years. So.

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

But I think you may be very expensive, but we'll compete. Anyway, continue.

Yes. Just two questions.

The first one is around capital allocation strategy. Just in the midterm, if you can just talk to us around the balance in terms of strategy and reinvesting in the current business operations, dividends and also managing debts.

I asked this question because historically, ARM has always maintained a conservative leverage position for his operations. So I just want to know, can we expect the same going forward?

The second question is linked to your recent transaction with Norilsk. Congratulations on reaching the milestone with them Nkomati.

Given the current surplus in nickel supply driven by the Indonesia market, I'm very keen to hear your thoughts around the plan for Nkomati in terms of its operations in the near term. Thank you.

Thank you. Xolisile [ph], it's good to see you, excellent.

Will you, Tsu? You are my boss there, our boss, this capital location.

Sure, sure, sure, sure. So yes.

So, just on the -- yes, historically we have had very low levels of leverage. So I think also because the businesses that we've had have generated quite a lot of cash, so there wasn't really any need to go external in terms of looking for funding.

But I think in terms of going forward, we are looking at bringing in some debt into the business. Looking at using it particularly on Bokoni as -- and also we're introducing it into Two Rivers as well for the Merensky project to see that through to completion.

So I think in terms of the strategy and us still continuing to pay dividends, that hasn't changed. But I think you will see going forward, definitely over the next three to five years, where we will be introducing some debt onto a balance sheet, which would have a benefit in that.

Obviously, it would bring out -- bring down our weighted cost of capital as well. And then we'll be seeing some better returns going forward from our investments.

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

I certainly can, so thank you. It's a good question.

So Nkomati being on care and maintenance, it's our position at ARM. We can as ARM better manage care and maintenance and control the closure liability in our hands, as with partners and we are not really producing.

It is best served under ARM being a South African and its long-term commitments. We are in conjunct -- in addition to that, there's a number of options under consideration, and I want to close by saying, and that could be closure, that could be restarting or look within other partnerships or look within in playing with an integrated player as an end user.

But probably most important is if you look at that ore body, it's a class one sulfide ore body. It's carbon intensity to produce, it is pretty low.

It's a clean environment. And those options we need to look at.

It's also an operation that's well endowed with water. And water can be energy.

It has extensive sunlight, that could be an option. And it also has the optionality of supplying clean green energy up to our smelting, which we are advancing.

So there's a lot of opportunity and options about the future of commodity that we need to manage it.

Thank you. I think she wants to say something.

Do you want to help her there? I think they're saying that you've got questions from -- 10 questions.

Okay.

Okay. Thank you Betty.

There are several questions on the webcast. Ladies and gentlemen, please remember we will be hosting a round table at 2 o'clock where you can dial in and ask more detailed questions.

So we'll take just a few and then we can wrap up the…

Read all 10, and then we'll take the easy ones.

Okay, Chairman. So the first question is from Tiisetso Nkosi from McCluskey [ph].

This question is in relation to Beeshoek. The mine's number one main customer risk with the possibility of closure of the AMSA Longs unit.

What are the opportunities to reroute this material to other domestic customers, or the export market?

Which company from?

McCluskey.

McCluskey. Okay.

We'll come back to that. You'll answer that.

Next?

Okay. The next question is from Shilan Modi from HSBC.

Shilan, I think a large number of your questions have been answered. So I will focus on the Bokoni one.

Is Bokoni a bottom of the cost curve producer on your revised smaller guidance? Is the new plan self-funding, and given the limited cash generation in the business and the need to fund dividends, does this mean further acquisitions will be on hold?

Very good question. The next one?

Next question is

He is from HSBC?

As well, correct.

So, okay. Next?

The next question is from Brian Morgan from RMB Morgan Stanley. Hi, there.

Impala said in their results, capital and operating cost inflation coupled with weak PGM pricing has necessitated a further review of the current project. Could you give comment on this?

This is with regards to Two Rivers.

Very good question, Mike, you will -- Mike, you will deal with it later. Okay, continue.

Okay. And then, the next question is from…

Sorry, sorry, it's Two Rivers. Sorry, Thando.

You will deal with that, sorry. Two Rivers.

Okay. And the next question is from Warren Riley from Bateleur Capital.

Please could you comment on the iron ore stockpiles, what is the current tons at the mine versus the port, and what does this mean for your production run rates? And then he's also got a question on Bokoni, but I think it's already been covered.

And then he says, your guidance shows Two Rivers' production of 437,000 ounces in 2024 and 516,000 ounces in 2025. This is actually an increase versus the guidance provided with the FY '23 results.

Yeah, Phillip, you'll take that one.

His question Chair is that, is this production increased, still likely given the pricing environment? And then the last one, Chair that will take from webcast is from Kateko Matunsi [ph] from Investec.

She's asking if we could comment on the Manganese business and the potential or the benefits of consolidation in the Northern Cape. Is consolidation in this space something or mis-considering?

Okay. So there are no further questions in here.

Is that right? There are none.

Thank you. So we're going to ask closure, and we'll go from the start with Andre.

You will answer what you think you can, and then we'll go to Thando, Mike, and then. By the time it comes to me, there's nothing to answer.

Alright. On the basic matter, obviously we are going to continue engaging with our customer there.

And only when -- I mean they also made an announcement that they're going to continue with some of their plant for a longer period than they originally said. So, we are not going to make immediate decision.

So we engaging with our partners that year, and we will come up with a solution based on the long-term view that we have on this customer. And also, based on the long-term view that we have of our mine.

So we are putting all of that together and there's a lot of work happening right now as we speak, and we are formulating the answer. We haven't got the exact answer yet, but we will certainly announce the outcome of that work at the next results presentation.

That's around Beeshoek mine. On the question of Khumani stockpile.

I recall that at the previous results presentation we announced that we've got very, very full stockpiles there. But as I showed in terms of our production profile, everything, we now matching our production profile with the logistics profile.

And we currently -- we sitting with a stockpile of about 1.4 million tons at the mine and just short of 300,000 tons in the port, which is a sort of a level that, that we comfortable with and that we wish to maintain going forward. I think if that's all the questions, then yeah, thank you.

Yeah. Because some of them, there's a bit of a repetition.

Thanks Andre? Yes, Thando.

Thank you, Chair. Covering the question on Two Rivers, perhaps I can refer Brian to slide 28 again because it's aligned with what our partner has reported, given that the project in terms of the infrastructure is almost complete.

Phillip did highlight that the commissioning is starting in April. What we are reviewing, having referred some of the support infrastructure, we've declared that capital.

We also now reviewing the rate of ramp up, and we are evaluating those options. So, meaning that we will not fully invest that capital required for mining ramp up, we'll come, or rather expend it in phases as the market improve and we'll keep monitoring the market.

Thank you, Chair. In terms of Bokoni, I think I did answer the initial question in terms of the incentive price and so on.

Bokoni, in terms of its position on the cost cave, currently, it's sitting on the high end as we indicated. However, as we ramp up to the initial phase, we targeting 120.

We'll sit on the -- or rather just below the 50th percentile, but at full capacity as and when the market improve, we invest in this asset. It's going to be positioned within the first quarter.

And the major advantages Mike did indicate is the extent of mechanization that we have planned this mine is to be able to mine most of our production, using a mechanized processes. Thabang, I think I've covered all the questions.

Thank you.

Thank you. Mike?

They were all covered.

Thank you. Sorry.

You missed the question.

I didn't answer the question about the consolidation in Manganese. So the question was, are we considering that the answer is no.

Okay. Thank you.

Mike, you've got no…

No, I think it was very well covered by Thando.

Thank you. Tsu?

No.

Phillip, you want to add anything?

Maybe just to add on what Thando says. In terms of the Two Rivers, we've already spent more than R$5 billion, two months to go from commissioning.

So the right thing to do is to close that. There could be questions, are you going to stop that project also?

It'll be more destructive, value destructive to do that. So we are going to basically commission and then you know that with a buildup, it's normally a gradual buildup.

That's why you see in terms of the forecast, that there's a gradual buildup. So those are the things that we have to really evaluate to make sure that whatever we do is going to be sustainable and profitable.

Thanks.

Thank you. I mean, so you -- Thabang will take over and so will Phillip and they'll be here to answer all questions for those who are here.

And then she spoke that there's a 2 o'clock conference call. Is there anything you want to say, Thabang, before we close?

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

Yes.

It's from [indiscernible]. I hope I pronounced your name correctly from the Sunny Group.

You can go ahead.

Hi, this is [indiscernible] from Sunny. I just find out I'm the only Chinese guy here.

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

We start with Chinese there everywhere already. Okay.

You're from China?

I'm from China, but I've been here for 16 years.

That's wonderful.

Also African.

Absolutely.

Okay. I'm representing Sunny Group.

It's the biggest yellow machinery company in China, currently is number four in the world.

Is the biggest?

Yellow machinery.

Yellow equipment?

Yes, in China. Currently number four in the world.

We produce the same machine like Caterpillar, but out of China, we are not that big. So my question is, will ARM be considering of bringing a new Chinese supplier in your operation?

And secondly, as we also do renewable machineries such as, hydrogen trucks and the electricity trucks, and we also do solar energies, the panels and the battery and everything. So my question is, do you have any plan maybe is that this country be ready to bring in electricity or hydrogen machineries in the country or in your operation?

Very good questions.

And my last question is, how can I start a relationship with ARM? Because-- which department I can talk to, to start with the ARM?

Sorry. You want to have a relationship with ARM?

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

Okay. She say she wants to answer.

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

Okay.

Just to add, I'll be in China, I think in two months. I go to China at least three times a year, and China is a very important country that buys our minerals and, of course, we trade with the rest of the world.

But the relationship between South Africa and -- well between South Africa and Africa and China is very, very important. And I'm very happy you must meet our CEO and the team and indicate to them that your company can compete and provide world-class equipment to us at a very good price.

Thank you very much. Okay.

Thank you so much. And thank you so much for coming.

Thank you very much.