Thank you very much. Good afternoon, everyone.

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

We've got Phillip Tobias, this is Tsundzukani Mhlanga, Mike Schmidt, Jacques van der Westhuizen, Thando Mkatshana, Maryke Burger, and Johan Jansen. 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.

We'll just give them some time, the participants, and then, yeah, we'll go straight to Q&A.

Hi, team. Just a quick one, can you guys hear me?

Yes, we can hear you, Tebogo. Oh,

perfect. I think my question is quickly to Thando, in relation to the ARM Coal.

I see domestic sales were down 15% year-on-year at GGV, and then PCB also was down 3%. Then I also see 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? Then in relation to Modikwa, I just wanted to understand, I saw that tonnes milled were up 5% year-on-year, but the PGM concentrate did go down by 3% due to that plant recovery.

How does the recovery's outlook profile with open pit combined look like for Modikwa? 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.

Tebogo.

Yeah. Oh,

I beg your pardon, Tebogo. With regard to the domestic sales, those in the main are supplies to Eskom.

As you probably know, the burn rate in terms of Eskom and power generated from their side has been reducing. We are having that impacting as to our domestic sales.

The positive thing out of that obviously and tying up with the improved performance from TFR is that some of that coal we do divert into the export market at opportunistic prices. In terms of our contract with Eskom, we are contracted for at GGV, it's about two 2.5 million tonnes at 100% for the full year of sales, but, yeah, we all depend on whether if they're responsible for the entire logistics as well in terms of getting trucks to go and pick it up.

From time to time, when they don't use or take that coal, we do divert it into the export market. I hope that kind of answers your question.

Yes, thank you. Sorry, and the water accumulation there in the coal business there, with Mpunzi, how will that impact production going forward?

That's at Impunzi. The bit of quick background is that that used to be an old underground mine where we're mining now, we are mining those areas through an open-cast method, and we had that accumulation of coal.

That has been, I would say, maybe a 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 rains that we have been experiencing in the last two years has been somehow a bit more than the normal range. Those have had an impact from time to time, but in the main, that challenge on the water accumulation has been addressed for now.

Thank you.

Thank you.

Johan, will you take the Modikwa question?

Certainly. Good afternoon.

I must state that the open cast 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 the 5.2 grams a tonne and the 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 oxidised, 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 20,200 rand per 6E ounce, while the open cast comes in at 16,000. Although you lose some ounces, you're seeing the benefit in terms of the cost.

We are going deeper with the open cast, so as you are proceeding deeper, the ore becomes less oxidised and your recovery goes up. We are confident in the outlook for the open cast as a temporary gap-filler at Modikwa.

Thank you.

Thank you.

Thank you. Yes, it does for now.

Operator, should we just let Nthabohang ask the rest of his questions? Okay.

Thanks, everybody. Can you hear me?

We can hear you, Tim.

Thank you. All right.

I've got a few questions. I'll sort of roll through them slowly.

Let's start with Beeshoek, 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?

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

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

Thank you. That's very helpful.

Thanks very much. 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 you've got the liability outstanding. Can you give us some kind of sense or guidance just for our models for the next, I don't know, two, three 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?

Tim, thank you for that. I will also ask Throu to help in terms of the rest of the rehab, but to understand this chrome, as you correctly pointed out, this chrome revenue subsidises the cost of care and maintenance, which as we have indicated in the past, for them at a month, I think we're going to be generating between 20 and 25 million of revenue.

That will come and subsidise that cost. I'm not sure if I've answered.

On the rehab side, did you ask on the rehab in terms of modeling? 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's very encouraging, and we're confident that when we take it forward to the board, it will get approval, and we'll make an announcement in due course. There's no really major rehab that's happening, save for the water treatment plant, which we have indicated in the past.

That's

Is that going back to nick—

commissioning.

That feasibility study, is that to open up another version of the nickel, Tim, you broke for a second. Sorry.

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.

That's what it will entail. It will entail really recommissioning the mine and bring back to life, but obviously in a much more, let me say, remodeled, at a maybe a smaller scale than previously.

That's what we are looking at, but, yeah, 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 it to the board. I think that gives you a good indication.

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

On the rehab liability,

Tim, so that rehab liability, oh,

Sorry, Tim, Throu's just giving more color on the rehab liability.

At Nkomati. At Nkomati, yeah.

Thank you.

Thanks, Tim. Just to let so that rehab, as at 31 December for Nkomati is just over 2 billion, it's 2,011 million, 2.0 billion.

Then just remember that we did receive the 325 from Norilsk, which was their contribution as part of the transaction, towards the rehab, water

specifically. Water rehab.

Tim,

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

Thando, current monthly productions of chrome, where are they now, and where are we planning to take

them? We're around 8,500 tonnes per month, what we're achieving,

but

we will peak at about 11,000 tonnes per month of chrome concentrate.

In steady state.

With the current project.

Okay.

Yeah. The bigger state, we're still finalizing a few items related to the metallurgical recovery process, and that one will probably, those volumes, but they're much higher than the current project.

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

We'll get 11,000 tonnes per month in the month, November, April. In April.

In April,

yeah.

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

That plant, it costs us about 10 10 million, I just want to check, Maritza, if you can confirm that. It costs us just under 10 million per month to produce.

We get that 20 to 25 million.

It's

between 15 and 10 million, dependent obviously on the chrome price.

Yes. Okay.

I think maybe just to come in, overall, just correct me if I understood well, I think over the next 12 months, we should be able to make at least a profit of 100 million with this 500 500,000 tonnes. That's correct, yeah.

Delta will be 100 million positive.

That's

Revenue or profit?

Profit.

Profit,

yeah. It varies between, as I said, 10 and 15,

yeah.

Yeah.

Then, Tim, just to add, with regards to the broader Nkomati questions, 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. 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.

Once we do have the details, we'll come back and guide the market accordingly.

Thank you very much. I'll ask one last question, please.

Just on Two Rivers, I was just reading your commentary about being impacted by sympathetic geological structures. 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 dykes.

Maybe you can just give us some timing. Thank you.

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

About 18 months ago, we started intersecting the fault. We've done redevelopments, went through the fault.

We've reestablished the faces on the other side of the fault, which was quite an effort.

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.

By the start of the next financial year, we will be back on 320,000 tonnes per month.

Thank you very much.

Tim, that's what I said, our forecast for F27 will be an improved output because we'll be moving towards strength out of this geological features.

Thank you, Phillip. Thanks.

Hi, good afternoon, everyone. I did get cut off a few times.

Please forgive me if I do ask questions that have been asked already. Earlier on during the webcast, Maritza talked about the value-in-use model when I asked a question about 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? It did seem as though she was

Hello?

No,

it's just not for the reasons. I hope it is.

Can you guys hear me?

Apologies, Thobela, please continue with the question. Yes, we can.

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?

That's my first question, and then I'll ask my second question later.

Thobela.

Thobela, yes. I would love to expand on that.

What a value-in-use model is, you take your specific ore, and you are correct, we've done it for manganese at Black Rock as well as iron ore at Khumani, and it is tested in various applications. Where it would be used in different smelters and for what purpose in that smelters.

You develop a model to determine the intrinsic value of your ore type to the customer buying it. Through having that value, you can maximise the economic value you get back in your pricing.

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. We know Black Rock as well as Khumani's got a very high-grade reserves, and we are doing this work in specific to ensure that we get the netback per product on maximising economic value.

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. Noted.

That's clear.

Maritza, the other question was,

Go ahead. Go ahead, Thabang.

Did you ask if it also applies to iron ore? Khumani,

yes.

That's

it. For both.

No.

Thanks, Maritza. Thobela, we can go to your next question.

Maybe just a follow-up on that is, would that then maybe mean that your sales volume remain the same in terms of how you are forecasting currently, or would this value in use, affect your sales, potentially given perhaps you may have to change your product spec there and there? No,

it would not have any impact on your volumes. The only impact that it would have is on your revenue line.

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

Okay. 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. Given that Beeshoek was the one that used to supply to your domestic markets, I'm guessing Khumani will be now the one supplying into that.

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?

Thanks.

Thobela, 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 the contract with AMSA, and it is not at a brilliant rand, it's 800 rand per tonne. Where our previous rand per tonne on Beeshoek was 1,221.

You can imagine it's say 25% lower than our previous based price is 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. Yes, the domestic market will definitely not be supplied by Khumani.

This is a isolated matter in specific pertaining to Beeshoek being on care and maintenance and we having that 1.48 million tonnes of stockpile.

Maybe just to come in, Thobela, just a bit of background, you'll remember that at some stage we said we don't have a long-term contract with with our sole customer, that we were still busy in negotiation with them, and then the last basically delivery of ore was done in July, during which period we were still negotiating. That was at the back of November '24 where they announced the potential shutdown of the long steel business.

That being announced November, they were still taking some product from us. With us being in the mining, obviously you have to be producing, delivering stockpile so that you can really deliver whatever quantities that are required.

We, at the back of hope that we were going to enter into an agreement, we still carried on mining, and we only drew the line on the sand end of October where we said we cannot carry on. At that time, we've already accumulated 1.486 million million tonnes.

We just have to basically sell this and clean up everything at Beeshoek.

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.

Then if I look at the current ramp-up profile with the Merensky project being sort of pulled back again into production, 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?

Yes,

I can. 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 finishing the feasibility study to recommence with the project.

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 a planned restart date of the 1st of July. We have redone the whole life-of-mine model and optimized the mining cut, etc., to get the best value out of the project and extracting the resources at the maximum grade.

With this latest ramp-up schedule, the schedule that we've done, we ramp up to 200,000 tonnes per month over a three-year period. It's from July, three years forward to get steady-state production.

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

Yeah. Thobela, Throu just actually made me aware, when you're looking at our PGM forecast, the Merensky numbers are not there, you can't compare this to the numbers then that we gave you in 2024, because we're still to include that.

Once through the governance. Yes, once the governance process is done, then we'll be able to give guidance.

I'm actually looking at at the year before that, 2023, where at the time the Merensky project was due to come in online. 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 are going to move from 313 koz to 485 koz, well kilo ounces.

That's that big jump versus perhaps I guess the current softer profile.

That's because those numbers did include the Merensky estimate, and these ones don't. Yes,

if I can add, I think we haven't disclosed in the current these ones. Yes, yes.

We haven't disclosed in the current numbers the Merensky ramp-up like Thabang and Throu rightly say that we're still busy with that governance process. However, I can say that the work that's been done with the mining schedule, that ramp-up's over a three-year period.

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

Okay. In the

Just to help, Thobela,

Go ahead.

Just to help you, just to clarify, remember what Jacques said. Where we stopped in August '24, we were already at level 3, and this is going to be a five-level operation delivering 25,000 tonnes per half-level.

We need to develop to level 4 and to level 5, and that is basically going to take us about two years to do that. The third year that Jacques is referring to is when we ramp up to steady state.

Which is basically from the beginning, it will be a total of three years to get to steady state.

Because 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.

Thanks.

I can maybe also just add, Thobela, that obviously with the concentrator plant finished, we could sequence now and see exactly when is the optimal to start the concentrator plant. With a combination of building stockpile up front maybe for the first six months or a year and then only starting then.

It doesn't mean that if it's a three-year ramp-up that you're only going to start seeing incremental additional ounces from Merensky in three years' time. In as quick as within about 12 months, you will start to see additional ounces coming from Merensky.

Okay. No, thank you.

Thank you again. Team, just a quick one on the Two Rivers production currently.

Yes, there were some of geological challenges in facing in 1H. I just want quickly confirm as to going forward is the 3.09 head grade 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?

Then in relation to the Two Rivers Merensky project, my understanding is that there's around 2.6 billion rand of working cap, or 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 with just some form of color in terms of how you're going to be spending that 2.6 over the next two years, if then what is approved.

Then, I think my second-last question, or my last question, is mainly around project priority. I just want to have sort of a greater clarity around your growth projects.

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 project, right?

Are you able to explicitly rank those growth projects in the order of capital priority for us? I'll leave it there.

Yeah. 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 3.09 is a fair outlook of what we could expect going forward. We've moved into an area with split reef, the grade will no longer be as high as it had been in the initial phases of the project.

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

Thank you very much. Then, Tebogo, in terms of the projects, yes, you are correct.

We've got the trade-off studies that is currently underway at 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.

That is going to be at the Nkomati complex. You come to Two Rivers, obviously that is the project there that's still need to be concluded is the Merensky.

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 at Two Rivers mine.

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

We're doing the value engineering, firm up the numbers. These three will have to be ranked in the order of priority, and a investment decision will be made at the right time in terms of how we stagger them.

The Surge, where we are, the 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 into the definitive feasibility study with some regulatory approval process. We see that process being concluded most probably the best case towards 2029.

Then, if everything else work well, that mine should really go into execution around 2030. If you look at the project staggering, Surge is still about, last year we used to say five years, it's about four years now from execution, unless if things are really expedited in terms of the approval, because we've also seen the response from the Canadian government in as far as expediting some of these critical mineral projects.

If I may also just add, Phillip, because you've touched a little bit on the capital. Just in reference with Nkomati, and Thando alluded to it, the volumes that we are looking at on the initial open pit mining is less than what we had did before and also the fact that the mine was a producing mine when it 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 if you had to go and build a new greenfields mine. It's certainly, I think a lot more affordable.

Depending on how the economics stack up, because it's open pit, ramps up production very quickly, it should become potentially cash positive generator in a much shorter period of time compared to, for instance, the Bokoni project where there's a new concentrator plant that needs to be built and substantial underground development. With regards to Merensky, I think the biggest amount of money that would have to be spent is on that mining, specifically building working capital and stockpile to consistently be able to feed the plant.

Where Two Rivers is substantially stronger balance sheet, the forecast is to set Two Rivers would be able to fund the full capital required to complete and ramp up Merensky from straight to fund the balance sheet from its cash flow generation without requiring additional funds from the two partners. That really just leaves Bokoni that we would have to see, and we're busy with finalizing that work.

We've also said as we are looking at a much smaller study at 120,000 tonnes, we believe is the right size, which strikes the right balance between capital required as well as sufficient volumes to ensure sustainability and cash competitiveness from our unit cash cost point of view. We would be able to provide further guidance on that cash flow required to support that project during the next results in June.

Ntebogang, is your question answered,

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

Yeah. That's the sense that I got, Ntebogang.

We were sort of giving you detail on what we're doing at the project, but we're not ranking them. If I had to summarise 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 study phase.

Until they're completed and we've got board approval, it's very difficult for us to say we're going to prioritise Project A over Project B, right? That's number one.

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, when in two, three years' time, once the studies are done and we've got board approvals, the world has changed.

We can't give an explicit project ranking right now, specifically because a lot of these are still in study phase and don't have board approval.

As Jacques 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 to 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 a 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. We will be 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 them.

Then maybe just one last point, it's absolutely, we see him like at this time, we are still busy with the study work, and we will review the results as well as the cash flow returns on a portfolio view very carefully before a recommendation or decision is made.

Thanks, team. Maybe to finish off, my question is mainly around balance sheet, right?

Your balance sheet has strengthened to now currently with net cash of around 8.4 billion. Then I'm also then taking into account of the Harmony hedge collar.

One can possibly consider that, I'm not an accountant, but a lazy balance sheet. I'm trying to understand with the excess cash that you guys have based on my view, what is management thinking around using that cash for future growth?

That's why 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.

No, thanks, Ntebogang, for that question. No, yeah, 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.

I think, you're quite right, our balance sheet has strengthened from June, where we are now sitting still in a relatively strong net cash position. 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 the Harmony collar and.

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, we do not wish to be strained or find ourselves in distress in terms of having to honor commitments and you don't have enough cash. 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. Then it's really just a quite a tight balancing act that we're going to have to make.

That also the balance sheet will be also be informing the decisions that we make in terms of which project we are actually going to proceed with, what is palatable for us, and what we can comfortably deliver on without straining the balance sheet. Then again, if we find ourselves in a place where, and I don't think we are there, where we decide not to go with any projects, then instead of sitting then on the cash, we would 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?

That's where then we would deploy that cash towards if we believe it can get you, as a shareholder, a better return than our weighted average cost of capital. If not, then the default then, say, okay, then let's rather then return to shareholders.

I hope that helps a little bit.

Thanks, Throu.

Hi there, guys. I am seeing you next week, but I thought I'd ask this question now anyway.

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 were you just saying these are all the things that are considered?

Because it is quite an interesting ordering which is displayed. I guess that's the first question.

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, 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 sitting with significant value for your Harmony stake.

Yet, there doesn't seem to be any real initiative by management to try and unlock any of that value. 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.

Maybe you can just remind us just how much you're allowed to buy back at this point. Thank you.

Thanks, Andrew. With regards to the first question around the capital allocation guideline, the way they are documented there, it's not in order of priority.

I think we do have a footnote right at the bottom of the slide where we do say that. Then, secondly, the question around Why the collar if you're not going to use it?

Yeah. I can speak to that.

I think that when that collar was put in place, it was because if you reflect the time and the strategic intent behind it, which I'll share now, at that point in time, specifically in our PGM basket and 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, the substantial inventory above surface, the metal prices were not reflective of the supply-demand fundamentals of the three metals, specifically platinum, palladium, and rhodium. The strategic intent behind the collars, there was at that time, even a strong rally up in the gold price.

Harmony share price responded quite positively. We said, given this 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 could be elective to generate cash above our weighted average cost of capital, we don't want to get into a position where you've drawn on your available cash on the balance sheet, and then the commodity price weakness continues, and you start to become under balance sheets stress.

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

In the context of where we were with the commodity prices, 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. If we do proceed with some of these projects, it might 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 a RCF. 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 can cover yourself in the event you have to do that, mate. I hope that sort of provides a bit of clarity.

The only reason why we haven't used the collar yet is because the use of proceeds, we haven't finished the study yet. We will do that over the next couple of months, and as soon as we make the 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, cuz your actions and the outlook comment 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.

If we look at what the basket price in particular for PGMs has done since then, iron ore, I think there's a consensus view to be lower, but it's still holding up. The rand, yes, was stronger, but it's now being 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 six months, which puts you in an even stronger position. 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 commentary that has made with reading.

In the context at least of the PGM prices, the prices will remain stronger for a longer period of time, which is positive. That the world specifically from our two operations, Two Rivers as well as Modikwa, should be, at these current basket prices, quite strongly cash-generative.

However, we've seen also how quickly things can change in today's world with the volatility. We have been wrong in the past where what we guided on the outlook didn't transpire.

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 overexpend yourself. The intent is, once the studies have been completed and we have properly evaluated, to make a decision on going forward with them or not.

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.

Thanks. 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 to the center. That cash will be used to fund the requirements of those businesses, on Two Rivers specifically on Merensky, what they, depending on what that builds in, 2.3 billion, I'm not sure what it is, will go towards that.

Then Modikwa as well, is some increased capex requirements that, the mine as it's 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 will we consider doing another share buyback. As Throu mentioned, is part of the things 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 two months, there's some serious decisions that we have to make in terms of those three project studies, and these things as well is weighed against all the other point that we have to consider. We do take note of what you've raised with the Harmony collar.

Super. Maybe one last one.

As you can tell, we're going to have an interesting meeting next week. Can you maybe give me a sense, because I'm sure you've done the calculations at current spot the sort of free cash flow that you'd expect to generate, or is that not a number you're willing to share?

Andrew, is that free cash flow in PGMs 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's 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'll have to get that information, sir. Can we give it to you when we see you next week?

100%. Or

we can,

yeah,

we can drop you an email once we have the numbers.

Great. Thank you.

We have a follow-up question from Ntebogang of Investec. Please go ahead.

Sorry, guys. Just a quick one, right?

If the cash flow from the PGM business will be funding this project, now my question is around dividends going forward. Your dividend policy is based on dividends received.

Ferrous outlook seems muted, you're not expecting as much dividends received from Ferrous as historic levels. Then now the cash from the PGM business, essentially, I'm assuming that now because it will be funding this project, it will then not be going to dividends to then African Rainbow Minerals.

How should we then look at dividends going forward for ARM?

We are committed to basically giving cash back to our shareholders, Tebogo. It's a capital allocation decision, but it's a commitment that we've 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.

Thanks, Phillip. Maybe I can add, Tebogo.

Our dividend policy remains that 40% to 70% of the dividends that we receive from the underlying operations. Yes, as you point out, before this rally in the PGM basket price, we were not expecting dividends coming through from those operations for the next three years.

Thankfully, we're in a better place. If those operations are able to fund their requirements, and there's anything that's left over, that will obviously be divvied up to ARM and for our partners.

I think what you can model, if you need to model, is work with that 40% to 70%. In the last couple of years, we have gone above that range, and that is when, 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.

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 out to its shareholders.

I think also, maybe just to add, and I think it just sort of links into the question that Andrew asked before. At current spot prices, and we'll run the numbers, but sort of my assessment is that, if current spot prices prevail in the PGMs, the cash that will be generated above both Two Rivers as well as at Modikwa is quite substantial, and I think that most likely there would be surplus cash available even after servicing the requirements to complete the Merensky study as well as the development at Modikwa.

There is a good chance that, if the current prices prevail, that there would be cash passed up through the form of dividends to ARM.

Yeah. Equally, as Ferrous is facing challenges due to pricing and costs and while the times to turn around that business, you can expect lower dividend from that side, definitely.

Thank you.

Ladies and gentlemen, with no further questions in the question queue, we have reached the end of the question and answer session. I will now hand back for closing remarks.

Thanks to everyone for dialling in. We appreciate your participation.

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

Thank you very much, everyone.