Impala Platinum Holdings Limited

Welcome to the webcast presentation of our results for the six months ended 31 December 2024. I am Nico Muller, the CEO of Implats.

This presentation provides a high-level overview of our group's performance over the first half of the financial year. Before we begin, I draw your attention to our normal disclosure statement pertaining to any forward-looking statements that may be made today.

I will start today's presentation with an overview of the group's performance and the key features. This will lead into a more detailed account of the group's operating performance, presented by Patrick Morutlwa, our Chief Operating Officer, followed by the financial results, presented by Meroonisha Kerber, our Chief Financial Officer, and then Sifiso Sibiya, our Group Executive for Refining and Marketing, will provide an overview of the PGM markets before I finish off with our key focus areas and the outlook for the remainder of financial year 2025.

Implats has intensified its efforts to cultivate a safety-first culture across all operations, including actions to highlighting care for your own safety, holding employees accountable, and improved teamwork. Eliminating fatalities and life-changing injuries remain core values that the group is determined to realize, in line with our vision of achieving zero harm.

It is deeply disappointing that the safety interventions implemented thus far have not yet translated into a meaningful improvement in the group's fatality rates. A persistent disconnect between the steady reduction in the overall number of injuries and the severity of injuries remains a key challenge.

It is with profound sadness and disappointment that we report five employee fatalities in four incidents at our managed operations during the period. In a period overshadowed by the loss of life, we acknowledge the improvement in safety delivered across our managed and joint venture portfolio.

Excluding injuries related to the 11-shaft incident which skewed reported metrics in the prior period, the group's lost-time injury frequency rate and total-injury frequency rate improved by 6% and 11% respectively. Implats seeks to demonstrate best practice in environmental management, guided by our environmental strategy and ESG framework.

I am proud to report that we have achieved further progress in our sustainability journey during the period. The Phase 1, 35-megawatt solar plant at Zimplats was commissioned in the period and the Board also approved the $54 million Phase 2A of the project for a further 45 megawatts.

In addition, a five-year Renewable Energy Supply Agreement was concluded with Discovery Green. This will provide wheeled wind and solar renewable energy for up to 90% of the electricity demand at Impala refineries.

We also delivered a sound environmental performance with no major or significant environmental incidents. We seek to leave a lasting positive legacy in the communities in which we operate, and sustainability remains a key pillar of Implats' strategy.

Despite significant financial constraints, Implats' focus on key, high-impact and strategic community investments was maintained as we invested in projects focused on community well-being, education and skills development, enterprise development and inclusive procurement, as well as the development of resilient infrastructure, which collectively benefited more than 42,000 people and supported approximately 3,000 employment opportunities in the period. Implats delivered a commendable performance in the first six months of our 2025 financial year.

During this period, we concluded a group-wide labor restructuring and adjusted the operating parameters at several assets. Lower volumes at each of Marula and Impala Canada were compounded by a build-up of inventory at Zimplats, which offset the strong operational delivery at our other managed as well as joint venture operations.

Group 6E production declined by 4% to 1.82 million ounces. Refined volumes, which include saleable ounces at Impala Bafokeng and Impala Canada, benefited from increased available processing capacity, despite intermittent interruptions to both water and power supply.

Strong cost control, easing input inflation and a lower labor complement all supported our unit cost performance, and we are reporting a 3% increase for the period, well below mining inflation. Capital exponential also eased meaningfully.

Several replacement and growth projects were completed and were commissioned in the period, and we have transferred spend at Impala Canada to working costs in line with our group accounting policies. Strong operational delivery, higher sales volume and excellent cost containment were offset by the continued weakness in the rand PGM price, which impacted group profitability.

We generated EBITDA of R6.5 billion, headline earnings of R1.9 billion and generated free cash of R639 million. Our balance sheet remains strong and flexible.

We closed the period with adjusted net cash of R6.7 billion and liquidity headroom of R17.8 billion. I will now hand over to Patrick Morutlwa, our Chief Operating Officer, who will take you through an overview of our operational performance in the year.

Thank you, Nico. We navigated a group-wide labor restructuring, elevated project activity and changes in operating parameters at several of our assets to deliver commendable production and cost performance.

Turning to the specific contribution to group PGM production from the different operations, production at our managed operations declined by 5%, another operating result anchored on the strong performance at Rustenberg, where we maintained mining flexibility and positive operating momentum. Zimplats faced poor machine availability and power challenges.

Concentrate volumes were around 2% weaker, but matte volumes declined 15%. This was largely due to the temporary build-up in concentrate due to smelter and converter commissioning in the period.

At Canada, as previously communicated, the production profile is tapering on a shortened life of mine. Marula struggled and we continue to invest significant time and effort in supporting new leadership to deliver to potential.

At Impala Bafokeng, some really pleasing improvements as Styldrift were offset by challenges at BRPM and production losses due to safety stoppages in the period. Production from our JVs increased by 2%, encouraging to see stability returning at Two Rivers and Mimosa remains a consistently strong operation for the group.

Finally, lower third-party deliveries reflect the underlying contract mix at IRS. Refined 6E production, which includes sellable ounces from Impala Bafokeng and Impala Canada, increased by 2%, benefiting from increased available processing capacity despite intermittent water and power interruptions.

Implats ended the period with excess inventory of circa 375,000 6E ounces, about 25,000 ounces lower than at year-end. In December 2024, a decision was taken to expedite the full rebuild of Furnace 3 at Impala Rustenburg, while in early February 2025, further unplanned repairs were completed at Furnace 5.

These events have resulted in constrained processing capacity in Q3 FY2025. And while the commissioning of the expanded furnace complex in Zimplats offers us increased flexibility to navigate these events, processing constraints will slow the previously anticipated release rate of excess inventory in FY2025.

Capital expenditure reflects the material slowing in growth and replacement spent at the group as major projects were commissioned in the period. Over the past five years, Implats have invested significantly in a series of mine replacement, growth, environmental, and processing projects to strengthen the competitiveness of its portfolio.

The focus during the period was on prioritizing the commissioning and optimization of several growth and replacement projects that enhance mining flexibility, secure processing flexibility, and reduce our carbon footprints, utility costs, and energy dependency. Meroonisha Kerber, our Chief Financial Officer, will now outline the group's financial performance for the period.

Thank you, Patrick. Group profitability remained challenged by lackluster rand PGM pricing, and despite commendable operational delivery, higher sales volumes, and strong cost containment, we are reporting lower earnings metrics for the period.

We have benefited from improved cash flow generation, however, and our balance sheet remains strong, in an adjusted net cash position with adequate liquidity headroom, delivering on a key strategic imperative for the group. Looking at some of the detail, financial metrics were negatively impacted by the combination of lower metal prices received in the period, particularly palladium and nickel, which together with a stronger achieved rand, more than offset the positive impact of stronger sales volumes, resulting in lower revenue.

I am really pleased with the cost performance delivered by the team in the period. Mining inflation of 4.6% moderated from the prior period, and was partially offset by lower labor complements, and the benefit of the translation of the dollar cost base of Impala Canada and Zimplats at a stronger exchange rate, and in total, we achieved a 1% retracement in cash costs.

Prior impairments at Canada and Rustenburg, and the currency appreciation to a lesser extent, also aided the decline in depreciation and the royalty line, which previously included the amortization of the prepaid royalty. The movement in stock reflected several factors, higher quantities of refined metal, the lock-up of ore and matte at Zimplats on commissioning of the new furnace, the write-on of in-process inventory following the annual stock-take, which was then partially offset by the release of in-process metal by the Impala smelters.

Implats accounted for several significant once-off cash and non-cash items in the prior period. There were impairments at Impala Canada and at Two Rivers, the latter impacted income from associates, and we incurred substantial expenses on conclusion of the RBPlat acquisition.

There were no impairments in the period under review, and rather, other income benefited from insurance receipts of approximately R400 million and fair value gains on rehabilitation investments. The tax rate normalized in the period versus the prior period, which was impacted by deferred tax credit at Zimplats.

Collectively, these factors contributed to a decline in reported EBITDA to R6.5 billion and headline earnings of 208 cents per share. Group stock-adjusted unit costs increased by 3%, group mining inflation of 4.6% at our managed operations accounted for R909 per ounce of the increase, while the translation of the dollar cost base of Impala Canada and Zimplats at a stronger exchange rate benefited the unit cost performance by R188 or 1% per ounce.

The lower labor complement following a group-wide restructuring resulted in a further R401 per ounce or 2% benefit. Stock-adjusted volumes at managed operations declined by 2% in the period, however, gross refined volumes improved by 4% and resulted in a cumulative R194 per ounce increase to unit costs.

Maintaining an optimal capital structure and a strong and flexible balance sheet through the cycle remains a key strategic priority. Net cash from operating activities improved to R3.6 billion from R1.3 billion in the prior period.

Cash generation remained constrained by lackluster rand PGM pricing and still elevated levels of working capital, but benefited from a retracement in capital expenditure to R3.8 billion as spend slowed on the Zimplats smelter expansion, a reduction in scope at Marula Phase 2, and the reclassification of Impala Canada's spend to cash costs due to the shortened mine life. The receipt of the June 2024 Impala Bafokeng revenue payment of R1 billion in early July and tax refunds of circa R0.5 billion.

No final dividend was declared for FY24, while R567 million was incurred on purchasing Implats shares for its long-term incentive plans. Adjusted debt of R3.2 billion includes the deferred revenue on the gold stream at Impala Bafokeng of R1.6 billion, undrawn facilities and an overdraft at Zimplats.

So we ended the period with cash balances of R9.6 billion net of the Zimplats overdraft. Implats closed the period with adjusted cash net of debt of R6.7 billion.

Our total committed revolving credit facility of approximately R8.3 billion remain undrawn, resulting in closing liquidity headroom of R17.8 billion. Our capital allocation framework aims to deliver, sustain, and grow meaningful value for all stakeholders.

As a reminder, we adjust free cash flow in each period for non-discretionary outflows and add back expansion capital. We then allocate the resultant free cash flow across three broad pillars of balance sheet strength, growth and investment, and shareholder returns.

Implats recorded an adjusted free cash inflow of R1 billion in the period. R900 million was incurred to fund growth and investment through expansion capital, with residual cash flow added to cash reserves following losses incurred in the previous financial year.

The group's dividend policy is premised on returning a minimum of 30% of adjusted free cash flow pre-growth capital. However, given the limited free cash flow generation, the uncertain macroeconomic environment due to new political dispensations, and still elevated working capital as we navigate reduced processing capacity utilization during smelting facility repair projects, no interim dividend has been declared, and the Board will reassess a dividend declaration at year-end.

Sifiso will now discuss the PGM market.

Thank you, Meroonisha. Consumer and investor sentiment remained cautious, with precious metal pricing still heavily influenced by the uncertain global macroeconomic outlook as political and geopolitical developments held center stage.

The period saw elevated levels of futures trading and rising open interest, continued market commentary regarding de-stocking by auto and industrial customers, and the outperformance of gold and silver, both markets are significant, deep, and liquid. These factors contributed to soft PGM pricing.

In particular, we achieved notably lower average palladium and nickel pricing. Palladium was vulnerable to elevated volumes of speculative trading and better-than-expected Russian supplies.

Struggling stainless steel markets and strong Indonesian supplies weighed on nickel. Rhodium stabilized and continues to trade in a narrow range despite intra-period volatility.

The average received platinum pricing also improved. Rand appreciation weighed on revenue, while our dollar received basket price declined by 3% to USD 1,334 per 6E ounces.

Rand revenue of 23,831 per 6E ounce was 8% lower. There were negative revisions to the peer group production profile.

Secondary supplies were softer than expected and investment demand was higher. Taken together, this resulted in tighter than expected PGM markets in calendar year 2024.

Each of platinum, palladium, and rhodium are expected to remain in deficit in 2025, but these forecast deficits, which exclude potential investment demand, are expected to narrow. Auto commentators continue to forecast a resurgence in battery electric vehicle growth in 2025 as legislative requirements drive higher mandated penetration rates.

Global industrial demand, while still robust, will ease slightly as the pace of recent capacity expansions slows somewhat, and the deferred recovery in recycling collections offsets the anemic outlook for mine supplies, leading to higher expected total supply. Looking more closely at the automotive outlook, global data estimates that the battery electric vehicle share of global light vehicle sales in 2024 reached 14% market share and grew by 13%.

This is a significant slowing from the 30% growth delivered in 2023. It is now clear that Europe saw a negligible regional battery electric vehicle expansion in 2024, with North American growth of 9%, also looking anemic given the significant subsidies available to electric vehicle buyers.

China remained the global driver of residual battery electric vehicle expansion, with annual growth of 15% of global light vehicle battery electric sales, resulting in a 60% market share. Globally, battery electric vehicle growth was comprehensively outstripped by the growth in hybrid sales, including both plug-in hybrids and range-extended electric vehicles.

After a year of stagnation, battery electric vehicle growth is expected to accelerate again in 2025, eroding PGM's demand off take. That said, US President Donald Trump's commitment to roll back strict emission legislation in the US and remove electric vehicle tariffs could shift the profile of the North American penetration.

Meanwhile, changes in EU CO2 penalties proposed in 2025 could ease pressure on struggling regional OEMs to prioritize battery electric vehicle sales and result in positive revisions to the catalyzed light vehicle focus. In short, it remains our view that the tail of auto-catalyzed vehicle production will be longer and more extensive than previously thought, and this should lead to positive medium-term revisions to expected PGM demand.

Turning to hydrogen, a sector that continues to offer significant promise of structural demand growth. Hydrogen adoption encountered notable headwinds in the final months of 2024.

The sector faced financial pressures and tepid market momentum. Leading firms tempered investment, citing escalating costs and challenging marketing conditions, and high-profile projects were shelved due to funding shortfalls.

Policy clarity on hydrogen imperatives and the alignment of newly formed governments should help steady the outlook over the course of 2025. We expect still modest annual demand to expand by around 50% to approximately 125,000 ounces during the year from off take in the electrolysis, storage, both stationary, and transport fuel cell markets.

We remain cautiously optimistic on the outlook of jewelry, recognizing the significant diversification of demand this consumer segment offers to the platinum demand mix. Demand expanded modestly in 2024, with better than expected growth in Western, Indian, and the Japanese markets.

This offset a further contraction in the Chinese market, where slow domestic economic growth, weak consumer sentiment, and high gold pricing dampened retail sales. Further moderate expansion in jewelry demand in 2025 is likely to be supported by some stock replenishment in China, the steel material price differentials to white gold, strong structural growth in India, and stable demand of the elevated base in the US.

Turning to supplies, refined supply in 2024 was bolstered from destocking of previously accumulated in-process inventory, and Russian output benefited from the shorter than expected duration of processing maintenance. Primary supply is expected to be stable for platinum and rhodium in 2025, but will retrace for palladium as production profiles at North American operations were revised down in response to weak pricing.

Any expansion in supply in 2025 is therefore predicated on a recovery in secondary markets, where collection rates have been a source of downgrade since the initial post-COVID recovery. The cost and the complexity of collecting, funding, and transporting spent, catalyst material remains high, and opinions are divided on how much catalyst holding has occurred.

The pace of secondary supply expansion is a key driver of easing markets in 2025, and is premised on a recovery in both Western outturn and growth in the emerging Chinese market. Nico will now conclude this presentation.

Thank you.

Thank you, Sifiso. As the world waits for US policies under Trump administration to unfold and settle, policymakers and central banks are operating amid ongoing geopolitical uncertainty while facing domestic fiscal dynamics.

The potential impact of tariffs, geopolitical tensions, and the increasingly divergent outlook for growth, inflation, and interest rates across major economies continue to present downside risk to the global macroeconomic outlook. Anecdotal evidence indicates that destocking by automotive and industrial end-users of PGMs is slowing, while a continued deferral of the expected recovery in recycling flows and secondary supply is tightening near-term market outlooks for each of platinum, palladium, and rhodium.

Despite these price-supportive developments, both business and investor confidence and dollar pricing remain anemic. There is a lack of conviction in the underlying demand outlook.

PGM rand revenue remains range-bound, and South African producer economics are strained. Weak rand PGM pricing has resulted in sustained pressure on operating margins and free cash flow potential.

We continue to develop and evolve our response to the sharp downturn in sector profitability. Several of our operations delivered well.

Residual challenges at the Others may require additional future interventions and adjustments to operating parameters. Group production in financial year 2025 will be supported by strong delivery at Impala Rustenburg, Impala Bafokeng, Mimosa, and Two Rivers, together with the expected partial unwind of accumulated inventory at Zimplats, countering the weak performance at Marula and the tapering production profile at Impala Canada.

Group smelting rates in the third quarter of financial year 2025 have been constrained by required maintenance and repairs at two of the Impala Rustenburg furnaces, which will serve to moderate the pace of excess inventory destocking in financial year 2025. Despite this challenge, I am pleased to reiterate Group's 6E refined and saleable production and unit cost guidance.

Forecast for Group capital expenditure, has been lowered with spend at Impala Canada transferred to working costs. It is now expected to be between R7 billion and R8 billion, including gross capital of between R1 billion and R1.2 billion.

This guidance includes the translation of the dollar cost base at Zimplats and Canada at an assumed exchange rate of R18.25 and CAD1.40 to the US dollar respectively. Thank you for taking the time to listen to this webcast.