Impala Platinum Holdings Limited

Good morning, all. Welcome to the Implats half year results presentation for financial year 2025.

It's certainly good to see everybody here, especially people joining us in the venue here at the JSE this morning. We also have a large contingent on the webcast and some people joining us on Chorus Call.

So welcome to everybody. As a standard practice, we'll do a short presentation of the results.

With me today, Nico, our CEO; Meroonisha and Patrick will both be speaking, and then we'll open up the floor for Q&A. You would have seen the comprehensive set of results that we've released this morning.

So, certainly looking forward to engaging with all of you. To start off, we're just going to play a short video just to contextualize the last 6 months, after which Nico will open up with the presentation.

So, thank you very much. [Presentation]

Good morning, everyone. Welcome to our results presentation.

Nice to see a few old familiar faces. Let me go to the start of the presentation, I'm not going to go through the cautionary statement.

Usually, everyone knows that they should not be making investment decisions based on our uncertain predictions of the future, but it's required. Typically, when we listen to the news, Twitter X, CNN, we are overwhelmed by Trump and Elon Musk, and we feel like we are operating in a very volatile world.

And we quickly convinced ourselves that the world is very complex. But I want to assure you that the world has been very stable for the last -- over the last year.

From the following point of view, if you look at the global economic growth from 2000 to 2019, it was roughly 3.7% compounded on an annual basis. For the last few years, it's been just over 3%, predicted to be 3.3% for 2024, '25.

It's not shooting sparks, but it is stable. If you look at inflation rates, it has reduced from 6.5% in 2023 to 5.5%.

It's predicted to go down to 4.5% this year and 3.5% next year. If you look at interest rates from Central and Reserve banks, we have seen easing of interest rates and all of these things are generally supportive for demand including commodities, including our PGMs that we produce.

So from that point of view, the world in which we operate in spite of all the noise is relatively stable. What is true is that given the elections that have been in over 90 countries and particularly in the States and the whirlwind that Trump and his team has created is creating a lot of uncertainty.

We're seeing institutional uncertainty, NATO, we've seen transatlantic trade relationships being threatened. And so all of these things have had a negative impact on sentiment.

And then on the other hand, is implying downward pressure on commodity prices. But actually, if you look at the commodity price performance over the last year, the dollar prices of PGMs has been almost entirely flat.

I mean platinum and palladium has been at around $950 and rhodium has been at around $4,500 roughly there. I mean, it has moved down 3%.

It is the strengthening of the rand by 5%, which for me is the negative in the brand basket price that we initially referred to. So in the last year, in spite of what we may think, it's probably been one of the more stable periods that we have operated in.

And I'm very happy to say that we have leveraged that. And our intention as a company is to create continual strength in the organization called Implats.

So we have an assured but cautious outlook on PGM prices going forward. We see, at the moment, marginal deficits in all 3 of the major metals, in particular, platinum.

We see that changing for palladium and rhodium from 2028. Those 2 metals running into surpluses, creating increased liquidity.

But platinum, we foresee granted on the basis of a material increase fueled by the hydrogen economy as well as fuel cell electric vehicles. But we see continued demand for platinum to the extent that we see sustained deficits and therefore, continued eradication of excess surface inventory.

We do believe that there is going to be some switching between platinum and palladium that will offset the surpluses created by palladium. And of course, platinum is less reliant on the automotive industry than the other 2 metals.

Our metals are unique. I mean, a majority of the great economic jurisdictions in the world that declared PGMs as strategic critical minerals, including Japan, Canada, the U.S.

and some countries in the states. So I do not think that there is going to be a discontinued use or demand for our product.

We have to be cautious of the long-term threat of electrification and secondary supply. But we believe that there's going to be a future.

So against this backdrop, the intention of the company is to make sure that it not only survives, but also prospers at the current market prices. So if you look at the results for the last 6 months, it talks to achieving some of those ambitions.

Our production was more or less stable with refined production going up by 2%, sales going up by 5%. Our unit cost went up by 3%.

I think that's industry leading for this reporting period. Capital came down 42%, ZAR 3.9 billion.

And that is a consequence of investment discipline being applied by the company. In addition to that, we have made operating strategy changes at a few of our operations, in particular, Canada.

I think we reported previously that we have amended the extraction philosophy to a higher-margin business. So you will see a reduction in production probably a more accelerated wind down.

I mean, I think we previously communicated this year wind down. We are continuously evaluating the performance of the business, costs as well as palladium price performance.

But to the extent that future viability or future cash flows are threatened, it will not be unsurprising that we will come with an announcement at some time in the future about potentially a more accelerated, but responsible wind down of that operation. Similarly, we are continuously involved with portfolio evaluations in the company to make sure that we honor our statement that we will not support loss-making operations.

There are different ways to navigate through this. You can finance your way through loss-making by raising equity or debt or streaming deals or anything.

It's our belief that as an industry, we should, wherever possible, exercise discipline. And to the extent that we have loss-making ounces as an industry, we should seek not to persist with that production to create equilibrium between the supply and demand curves.

The other thing that I am satisfied with is that there's an overall improvement in our social license to operate, particularly from -- if I look at overall safety point of view, we did have 5 losses of life in our operation from 4 incidents. And I do not wish to comment positively on that.

So our aim will be to continue reducing our fatalities to get to a position of zero harm. But if you look at the overall injury frequency rate, both last time as well as total injury frequency rates, both of them have declined.

Even if you take out the 27th of November 11 shaft incident, you'll still see 6% and 11% improvements, respectively. We've done -- we've taken material steps in improving our carbon footprint or reducing our carbon emissions through some of the things that were on there.

We've completed the 35-megawatt solar plant installation at Zimplats. The Board has approved an additional phase for 45-megawatt.

Sifiso secured 90% of the electricity demands of the refinery through a renewable energy offtake with Discovery Green. So that's great.

Lee-Ann team has continued to act responsibly in the communities in which we operate. We've done several great initiatives on that side.

So I think when I stand back, I think the company performance, particularly the cost management has been fantastic. Part of that has been very strict management from the leadership team that sits with me.

We did go through a significant labor restructuring that affected 3,000 positions in our company. That's roughly 5% of our labor force and included right up to corporate office.

It will result in a cost reduction of ZAR 1.2 billion. But the thing that I'm most pleased about that not one of those 3,000 positions was a forced retrenchment.

Lee-Ann and our HR teams were able to make sure that we use either natural attrition or voluntary processes to reduce our labor force by 3,000. So from my side, I want to assure everyone that Implats is improving its competitive positions at the current price.

We also have the opportunity to leverage into our additional concentrating smelting as well as now elevated base metal refinery capacity should the markets turn. We've got a footprint in the northern, in Zimplats, which is where I see future ounce growth in the PGM should it happen.

Strong balance sheet, no debt and a team that are able to execute major projects. Thank you.

I will now hand over to Patrick, who will deal with the production and then Meroonisha will end up with the finance. Thank you.

Thank you, Nico. And yes, so on the safety side, I just want to add on what Nico said.

We have seen a meticulous implementation of our 8-point safety plan, and that is what has led to the downward trend in all our injury frequency rate. But also to add, when you look at our top 3 safety risk being fall of ground, winches and also machinery, we've also seen double-digit improvement of 34% for fall of ground, 14% winches and also 73% on machinery.

So in tandem with our 8-point safety plan, we are also working on improving the culture, which really tries to embed that people have a right to stop work that is unsafe and also accountability, holding ourselves accountable to implement and to follow rules. So we still determined to achieve our goal for 0 fatalities.

We believe that as we implement 8-point safety plan, the disconnect that we see now between fatalities and injury frequency rate will diminish and we'll start to see fatalities also coming down. I mean tomorrow being the end of February, it will actually mark 3 months without any fatalities.

So those are Selous that we see. Yes, one Selous does not make a summer, but also they don't fly in winter.

So moving over to production. Over and above what Nico said in terms of the 4% decline in our 6E group production, the other contributor is actually Zimplats where in preparation for the commissioning of the expanded smelter, we had to build up stock.

There's about 31,000 ounces that are locked there. So 10,000 of them won't come out because they will form part of the ongoing furnace field, but we expect 21,000 of those ounces to come out in H2.

Marula is the other contributor, 10% down year-on-year as we are still battling to create face length. When you look at the strategy that we employ in terms of equipping new face length, that was done.

But unfortunately, the amount of face length that we lost was actually outstripping what we are equipping. So we've got a new team in place there, which I believe that it took us a bit longer, but we got the right people.

So myself and them, we understand that it is very agent that we turn the performance around, failure to do so, the future of Marula might look different. So moving over to refined, which we saw 2% additional.

It's mostly driven by an improved processing capability. Last year, during this period, we had 2 furnace failures, hence, why we talk about improved processing capacity.

Look in terms of the sales, 5% up year-on-year, broadly in line with what we have refined, but it has also helped to really offset the 8% drop in our basket price. Moving over to the unit cost, as Nico has already said, below the money inflation of 4.6%, really driven by the group-wide labor restructuring and a stronger rand that benefited our dollar-denominated operations, Canada and Zimplats and Mimosa.

In terms of the capital, minus 42%, but I think I need to really emphasize that the biggest drop is actually on your replacement, which is 73% and also a growth project, which is 58%. The 18% that we dropped in terms of SIB has more to do with the development that we've cut in Canada and also in Rustenburg in shaft that are nearing the end of their life.

But there was also about 40% of that 18% is the project that we have done in the processing division, some of the smelter built in ZIM was done on SIB and some smelter rebuild and some tailings. So in terms of the operations being capitalized to continue to deliver strong performance, I think we are properly capitalized to deliver a strong performance.

So I want to now go to the key highlights. Some of them Nico has already touched on them.

In terms of major project for the period, Bimha Mine has now come to full production. That is about 3.1 million tonnes a year, circa 270,000 ounces.

Nico's already talked about Zimbabwe, the new furnace, but I just want to add that, that new furnace giving us 20% more capacity for the group. We've also completed the refinery BMR debottlenecking project that is giving us about 10% more capacity.

In terms of Stewardship, the only thing I can add that Nico has not spoken about is the fourth year running inclusion in S&P Global Sustainable Yearbook. Operations, we have continued down the line -- further down the line with the Western Limb integration.

We should be really putting it to bed before the end of this year. Styldrift, as you know that we have spoken about it at length, we have seen a 4% improvement year-on-year.

But what's more pleasing is that as we improve production, we have seen the unit cost coming down 15%. We've spoken about Canada, but also you need to emphasize that during this time, when we delivered this comments our performance, we had to navigate a lot of challenges, being water at Rustenburg and also at the refineries, power up in particularly in Zimbabwe.

The labor restructuring was done, as Nico said, without any entrenchment. And we had to do 2 furnaces, furnace #3 in Rustenburg.

We had to pull forward the rebuild in December. So it will be coming back to operation now in April.

And we had to do repair on furnace #5 for 2 weeks at start of February. It came back into operation on the 18th of February.

So yes, so we had a very strong operational performance, navigating all these challenges. And looking forward, we believe we should be able to deliver into the market guidance that we've given at the start of the year.

Thank you.

Thank you, Patrick. So our financial performance for the period, as you can imagine, was materially impacted by the softer rand PGM pricing.

Sorry, let me just get to the right slide. You'll see that, revenue was down 3% or ZAR 1.1 billion due to the impact of the 5% stronger rand and the 3% lower dollar basket price, particularly on the palladium and nickel pricing.

The combined impact of the lower rand basket price resulted in a ZAR 2.1 billion variance, and we managed to offset some of this variance by 5% higher sales volumes, which amounted to ZAR 1 billion. Given the lower revenue, clearly, the focus of the business was on the items we could control.

So there was strong production performance, as well as good cost containment. You'll see that, we managed to keep the group cost of sales flat at ZAR 40.2 billion, with cash costs increasing only at 1%, which is well below mining inflation of 4.6%.

Our cash costs in the period benefited from the labor restructuring we talked about. On an annualized basis, the impact of the labor restructuring is about ZAR 1.2 billion.

It benefited from the translation of Impala Canada and Zimplats costs, at a stronger rand, but also because of a number of cost-saving initiatives that our operations embarked on to try and manage their unit costs. As a result, as we've talked to, we have delivered a strong unit cost performance, with unit costs only up 3%, despite slightly lower production from our managed operations.

If you move on to then the profit metrics. So the group generated a gross profit of ZAR 2.1 billion and EBITDA of ZAR 6.5 billion at a 15% margin.

Clearly, the lower profitability resulted in headline earnings decreasing by the 43% you see there to ZAR 1.85 billion and on a per share basis to ZAR 2.06 per share. Basic earnings were more or less in line with headline earnings this year, so at ZAR 1.87 billion.

Remember, in the prior year, we had impairments of ZAR 1.7 billion, which caused a significant difference between your headline and your basic earnings. So despite the softer pricing environment, I'm very pleased that we still generated positive free cash flow in the period.

Clearly, this was aided by the receipt of ZAR 1 billion of a concentrate debtor relating to the prior year. And this was despite funding about ZAR 3.8 billion worth of capital expenditure.

So our cash capital expenditure declined by 44%, as some of the projects -- key projects neared completion, but also because we reclassified spend at Impala Canada from capital to cash costs in line with our group accounting policies. So we ended the year with closing net cash of ZAR 6.7 billion.

So cash net of overdrafts of ZAR 9.6 billion and the debt that we include in this number increased slightly to ZAR 2.8 billion. Very pleasing is that, the RCF remained undrawn at the end of the period and throughout the period and that we ended the period with group liquidity of just under ZAR 18 billion.

If I can then move on to -- sorry, capital allocation. So as you might be aware, our group dividend policy is based on -- which is aligned to our capital allocation framework is based on a dividend payout of 30% of adjusted free cash flow pre-growth capital.

So if we had taken the free cash flow that we generated of ZAR 639 million and adjusted for the non-discretionary expenditure of ZAR 0.5 billion, which is largely the costs for our share incentive schemes, and we added back the expansion capital of ZAR 0.9 billion, which is largely capital spent on the furnace at Zimplats, we would have ended up with an adjusted free cash flow of ZAR 1 billion. And if we applied our dividend policy, that would have amounted to a dividend of about ZAR 0.32 per share.

However, given the constrained free cash flow because of the range-bound PGM pricing and our working capital requirements going forward, we have decided to defer the dividend decision to the year-end, where we believe that full year free cash flow generation will be supported by the destocking of excess inventory. If I can then move on to lastly, just to deal with the group outlook and market guidance.

So we've talked about -- I'm sure many of you might be aware that we took one of our furnaces down for earlier than planned maintenance, and that furnace is only coming back up in April. But despite this, we are reconfirming our refined production guidance to remain within the range that we announced at the beginning of the year, but also our unit cost guidance to remain within the range for the full year.

Where we have made some adjustments is on -- as you've heard Patrick and Nico talk to, the change in strategy at Impala Canada and some of the challenges that we've had at Marula have resulted in us lowering their guidance in line with the actual performance to date and our forecast performance for the rest of the period. On the IRS third-party material, we've lifted the guidance slightly, and that is really in response to the better-than-planned performance that we had in the first half of the year.

So the one item that we did adjust significantly is the group capital expenditure guidance. The initial range, we had provided was ZAR 8 billion to ZAR 9 billion.

We are now dropping it to ZAR 7 billion to ZAR 8 billion. And there's a few reasons for that.

The first one, which is the reclassification of Impala Canada spend. So we've taken out of capital and it now gets included in cash costs.

The other 2 items, the one -- the rest of the capital is related to a capital project that we had planned that the timing of it is such that it's going to fall now into -- partially into the next financial year. So that's just the timing of capital spend, but also the deferral of some capital spend in line with our cash preservation measures.

And that is particularly at Marula, where you've seen Marula's performance. So we've deferred some of the spend on the Phase 2 after taking that into consideration.

So with that, I'd like to thank you and hand over to Johan.

So, thank you very much. So happy to jump straight into Q&A.

So just for good order, I'm going to start in the room here. There will be some people handing out microphone.

So if you could just wait for a microphone. Just for the benefit of people online, if you could just state your name and the question and then we'll handle it in the room.

After that, I will go to Chorus Call. Hopefully, we can also take some questions of Chorus Call and people listening to us on the webcast, there is a facility in which you can type a question and we'll endeavor to try and get to as many of those as possible.

So without further ado, if we can jump into the room, I've seen a couple of hands. Arnold, let's start with you.

It's Arnold Van Graan from Nedbank. Two questions from my side, Nico, probably to you.

So the one is just on the destocking and your processing performance. It feels to me, and maybe I'm a bit harsh where every reporting period, there's another challenge in destocking and getting the material out and selling that and turning it into accounts.

So can you just give us a sense of the reasoning behind some of these challenges? You talked about repairs at the one furnace and pulling forward the furnace rebuild.

So has that got to do with load curtailment? Or what are the main reasons behind that?

And then my second question relates to Styldrift. So the last time we asked you -- okay.

What are the challenges at Styldrift? And you gave a long list of items.

And I just want to get a sense of how that's progressing? I think, that list was about 10 or so items, if not more.

It feels to me like you've ticked off a few of those and that it's getting to the point where it's turning a corner? Or is that a bit too optimistic?

So you aimed your questions at me, but I think we've got operational experts for smelting, either Johan or Patrick to talk to the 2 smelters. And then I think Moses, if you can provide us with an umbrella view on the progress made with Styldrift.

In terms of the furnaces, you remember that we did the rebuild -- we rebuilt all the 3 smelters in Rustenburg. But Furnace 3 in particular, it was due for maintenance July this year.

So when we had a leak, we actually then kind of investigated. We found that there was excessive work on the side and also on the upper half.

So because we had additional capacity and because for the safety of our people, we then found it prudent to bring it forward. So -- and if you look also at the furnace 5, I think that was just a precautious repair because we also had a small leak, but we then decide let's rather replace the whole copper block.

Previously, we used a refurbished copper block. So we said let's use a new one so that we have a long life out of this furnace.

So if you look at now that we have expanded smelter in Zim, I believe going forward, we are actually set up to deliver into our guidance. I think something, I want to put on the table is that previously, we used to treat a lot of Merensky.

We're just much more forgiving on the furnaces. But with more Unit 2, we see much more corrosive material.

So I think we need to probably accept that we used to have like 8-year life. I think for now, more or less rather settled around 5 or 4 years life of our furnaces.

But I think our furnace are in good hands going forward.

So I also just want to confirm, historically, we have spoken about the impact of load curtailment and the heating and cooling. I don't think we can attribute the stoppages over the last reporting period to Eskom.

There are some design improvements that we need to make. Johan, you can talk to it, which we have applied to the new Zim smelter.

And so it's not the fact that, we have taken the plants off for repairs or maintenance. It is what you are talking to is the -- bring it forward or the unplanned nature of it.

And that's why I think that we do have -- we have got a team led by Adelle at our corporate office, and it's something that we also have an aspiration to improve on.

Yes. I'm giving my age away now.

But 25 years ago, when we built those big furnaces, that was really the first generation of those type of furnaces in South Africa. We've had the benefit now in Zimbabwe to relook at it and really it's probably 3 or 4 generations further in terms of the technology that we're using there.

And obviously, that's also a learning point. And a lot of the things there, we'll be taking back to our furnaces in Rustenburg.

We can't change the steel structure, but there's a lot of internal things on the monitoring that we are going to be implementing the bricks, how they fit together. But more importantly, I think with the power variation that we're seeing and some of the corrosive material that Patrick is talking about, we're also going to be lifting those tab blocks a little higher just to make sure that, that flow out of the furnaces is less disruptive into the future.

So there's a lot of improvements we're going to be making.

I think, it's a key important question on Styldrift. So maybe perhaps before I answer your question, I mean, we are quite encouraged with the current performance that we've seen at Styldrift in this reporting cycle.

And we believe that this performance will continue. And if this performance continue, we also believe that we will reach a steady state at the time that we've planned, which is financial year 2028.

So our COO, Pat, spoke about the labor reduction that we've done at Styldrift, I'm not going to talk about. Coming back to the bucket of list of items that we've listed in the previous reporting cycle, we spoke about the turnaround strategy that we are going to execute at Styldrift.

Today, I'm happy to report that there are items that we are prioritizing in the turnaround strategy. I think in the reporting cycle that as we spoke a lot about the fleet, we've made a material advancement in our fleet challenges.

The program is still in place. It's got time slot that we are following.

We are managing it weekly. We report to our Board on a quarterly basis on the progress.

The second thing that we spoke about was to look at our organizational structure. So I'm happy to report today that, we went into the market and had hunted the experienced leadership in mining and engineering, who got memorable surplus experience, and we are looking forward for them to start adding value.

They've already started all of them. They are settling in as we speak.

We are quite happy with our stakeholder engagement and our -- from the labor front, we are quite happy with the relationship that we are building and we are concentrating on the culture transformation in that operation. The list is long.

We will knock it one by one actually get that mine to steady state.

Chris?

It's Christopher Nicholson from RMB Morgan Stanley. My question revolves on the CapEx and some of the sensitivities of that.

So specifically in this period, I see you've obviously slowed the Marula Phase 2. Maybe could you just talk to that?

Is that a mine operating performance issue? Is it a market issue?

Is it a bit of both? How long can you defer that for before it impacts future production when Marula starts rolling off?

And then just maybe more broadly on the CapEx, I'd be interested in hearing and obviously, it kind of feels like prices have had a bit of a steady state and kind of a low level over the last little while. But if things were to take a step low or get worse, what type of flexibility would you have in the existing capital budget?

And what could come under pressure first?

Do you want to talk about Marula Phase 2?

Yes. So Marula Phase 2, you are right, it is both.

First of all, we're pushing out some capital to preserve cash. As I said earlier, the performance of the place has been very much unsatisfactory.

So it is only fair that Marula must actually pay for its capital. So I'm working with the team to turn around the performance so that then there is money to put into Marula, because we do not want to subsidize operations that are making losses.

So we will -- if you ask me, probably we've got about another 2 years. If we have not actually then ramped up Phase 2 to where it's supposed to be, then we would have actually run out of runway, then Marula definitely will to be -- like I said, the future will be different.

So there's about 2-year gap.

Chris, on the general capital investment and where the opportunities are, I think SIB for me is almost binary. I think that, our current level in SIB investment is appropriate.

And it's not an area that we would typically want to make major cuts. I mean, you can look at -- so I mean, SIB stay-in business capital is largely related to maintaining existing infrastructure.

I mean, we had shaft incidents and so forth. So we want to operate our business responsibly.

The areas that you could look at in severe pressure is the amount of development that you are doing, but we know that, there are long-term consequences losing face because it bites you at some point. But that's possibly the only area that we would possibly look at SIB.

So the areas that, you would typically look at is the expansion and replacement. And to be quite honest, if the prices reduce far enough, all of that will come out as would ESG-related projects like solar panels and things like that.

So I think, it is largely on those and not some -- on the SIB, if you save 5% or 10% of SIB, that's going to be the limit and that will not be sustained.

Nkateko Mathonsi from Investec Bank. My question is very much related to Impala Rustenburg and also related to what Nico, you have mentioned that you have a cautious outlook on metal prices going forward.

If you look at some of the shafts at Impala Rustenburg at current prices, they were not generating cash profits, positive cash profits. If you look at shaft #1, 10, 11 and 16, they actually generated negative cash profit.

So I just want to know how you're thinking about those shafts and also maybe talk to life of mine on shafts like shaft #1. So how are you thinking about those shafts in this pricing environment and also considering that you have a cautious pricing environment going forward?

I think when I look at Impala Rustenburg, the positive cash profit was generated from the remining portion. Can you talk about the life of mine on that remining portion, which seems to be supporting Rustenburg at this point in time?

And then my last question is on Two Rivers. I know you're a JV partner, but we saw CapEx actually declined significantly, I think about 70%, but the cash burn or free cash was still a negative ZAR 1 billion.

So if you can talk about -- if you can give us a little bit color on that operation.

Chris, you would like to talk to Rustenburg shafts? You want to talk?

Okay. This reporting cycle 6 months, it has been tough in Rustenburg.

And I'm glad that you've mentioned the shaft that has actually seen some safety stoppages except 1 shaft. I'll talk about 1 shaft in particular.

So if we remove the safety stoppages that we had at 10 shaft at 16 shaft, I think this shaft would have looked probably different. I'm quite happy that, 10 shaft, we've got -- the team hasn't changed 16 shaft, the management team that has developed that has delivered in that shaft hasn't changed.

The management team is still the same. I'm quite happy about it.

And this is the management team that has got strong experience. They delivered before 16.

I'm sure they will be able to do it because there's a safety stoppage this time around, including 10 Shaft, especially on the TM. All this has been addressed.

Talking about 1 Shaft. 1 Shaft is an interesting one, because it's got a life of mine of about 1.5 year.

But at the same time, 1 Shaft when we put on cane maintenance, it's a return shaft to 16 Shaft. So in other ways, 1 Shaft will remain open because it's a return to a neighboring shaft, which is 16 Shaft.

However, there is -- in this 1.5 year, there is reserves that we need to extract and mine. I think that's -- I think we are doing good work to extract that reserves even though it's contributing to its direct cost.

However, when you put it on cane maintenance which a 1.5 year from now, 16 Shaft will carry those costs. You are correct when you refer to the remining.

Remining, it's got a life of mine of between 7 to 10 years at the moment. And yes, most of the profit comes from remining.

We also now and then have challenges at the remining that, I should just perhaps bring it forward. We've mitigated that challenge to the water supply in the past 6 months.

We've got 2 water boats that supply us with water during the strategic maintenance of one of the water board that supplied us with water in December, they did strategic maintenance and water was a bit unreliable. We are putting mitigation in place to address this so that we can protect this cash cow of ours.

Isn't it lovely that you could quote cash flow per shaft all in across the operation and net pick, which is fantastic. I hope you demand the same level of disclosure from the competitors.

Next question.

There was a question on Two Rivers.

Two Rivers, the reduction in capital has all have to do with Merensky project that we've put on cane maintenance towards the end of last year. But there was still about circa ZAR 700 million overflow to close the project that actually came into H1.

So that's what you see contributing to the losses. So Two Rivers, like we said earlier, I think their performance has turned around, not yet where we want to be, but we believe that we're now back at about 300,000 ounces a year.

So towards the end of H1, on the market basis, we're starting to generate positive cash flow. So I think that now that we've taken care of the overflow of -- from last year of the maintenance project, we should see a positive cash flow going forward.

Follow-up question, Rene.

It's Rene Hochreiter from NOAH Capital. Just 3 questions from me.

Nico, you said, you will not support loss-making operations. But how long will you take before you pull the plug?

Will it be like 1 quarter of losses, 2 quarters, 3 quarters, 4 quarters of losses? Or how do you -- how would you measure that you've had enough and you're going to close it?

Secondly, Meroonisha, I think you said you had about ZAR 0.32 in the first half that you could have declared as a dividend. If it comes to the second half and there is another few cents that you could declare, would you declare a dividend for FY '25?

Or is it just too dangerous in this sort of market situation to actually declare any dividend? And then thirdly, the last question on safety.

You had a fall of ground and you had a drowning. Could you just tell us what exactly happened?

I mean, that's quite surprising that you had a drowning.

Let me handle the first question and Meroonisha you can answer the dividend and safety, you can go to the inundation. Rene, I think the way to think about it is it depends on the nature of the operation.

So let me take Impala Canada. It's coming to the end of its natural life, because any further development of life of mine will require significant capital investment, which under very few pricing environments will make sense.

Similarly, at Rustenburg 1, 6 Shaft ENF, those are end-of-life shafts. They are getting to the end of the depletion of reserves.

So if you are sitting with a shaft that is getting close to the natural end of its life, then the switching decision is a lot more rapid. If you do not have the prospects of future cash flows, I would suggest that it would take a maximum 2 quarters of negative cash flow for us to get to a position.

On the other hand, when you're sitting with a 16 Shaft, a 20 Shaft, a Styldrift, a Two Rivers Zimplats, it is the nature that is causing temporary -- I'm saying temporary, that is causing negative cash flow that has to be examined. If it is believed like in the case of Zimplats, I mean that's our lowest cost producing asset, but it had -- its capital intensity was ZAR 7,000 per ounce over the last 6 months reporting period, it was 31% of its total cost.

So if you look at its profitability, it was severely impacted by our ambition to create smelter capacity and to open up Bimha, Mupani. So in a case like that, we may support it on the basis that it's perceived to be temporary.

Then let's look at the mid-range because -- so when we have got long-term strategic assets, that would be far more difficult. And I would suggest that I could name up the assets where that's unlikely to happen because we believe in its future.

But then you get to the mid-range assets like, let's say, Marula, where it's got a life of mine of x number of years, but it is in a negative cash flow position, which is unlikely to change. So if I look at Marula, it's got 2 things.

It's got -- I mean it's had an underperformance over the last 6 months. I mean the decline in production is 10% and we'll talk about geological complexity and so.

But those are things that as management, we need to change. If we do not, I would suggest that you will not see an incredibly long time period.

I think closer to the 2-quarter period. I mean that's -- in 2019, when we had agreed with the Board that was more or less a time period over which we look.

So there will be a pretty high level of urgency. If it is performance related, where we believe that we have the ability or that we should have the ability and it's not forthcoming, then we will make the announcements like we did in 2019, not by virtue of being a threat, it's just that we do not want to go into financial difficulty as a consequence of prolonged cash losses.

So -- that's a vague answer, but I hope it give you some way of thinking. Safety inundation.

Yes. The incident happened at BRPM South shaft.

So basically what happened, you had an old working area. While during the time of mining, there was water ingress from geological feature.

So the way they manage, they actually build the wall and they were pumping the water. Now it is connected through a sandbag gallery to a new working play where people were working.

And they continue to pump the water using normal pumps. But what happened on the day is there was a massive FOG that all of a sudden displaced all this water, and the wall and everything could not actually contain it.

Unfortunately, 3 of our people, they were actually working on the pump and one of them was actually was down the [ indiscernible ] and it was inundated by both the water and the mine. That's basically what happened.

Dividend?

Yes. So on the dividend question, so I think the simple answer is yes.

I think we were just a bit more cautious at this half year because we had a furnace down for a full rebuild. So we obviously will look forward to that restarting.

We are also busy commissioning Zimplats. And we've just come off the last high capital spend on the Zimplats furnace.

In H2, the destock of about the additional 65,000 ounces will come through and Zimplats' destock of the lockup that they had of the 31,000 ounces, about 22 will come to -- will be released as well. So I really believe if all of that pans out as we expect, we'll definitely be in a better place to declare the dividend.

I'm conscious that we've got a couple of minutes left, and I also want to go to Chorus Call. So if you don't mind, I'm going to hand over to the Chorus Call operator now.

And I see somebody is already queue there, but if you could just take you through and maybe we can take 1 or 2 questions from the call as well.

Nico, cost controllers, the system has been very, very good. Have you seen -- this is the fact that's been removed from the system, in terms of rightsizing linear assets?

And are there -- is there more to come perhaps, or more levers you can pull? That's the first one.

And then secondly, when do you -- or if you intend to consolidate low carbon can into Rustenburg? And then perhaps, on Zoom, I'd like to just chat about how the operating environment is playing out for you.

You have invested a lot of capital into that asset. Also just curious why you borrowing money, you have a very high interest rate there, despite being in a mid-cash position.

Has there been any change in ethics and costs?

I will let Meroonisha think about how to respond to the operating environment, and the change in monetary policy, and how that affects our thinking. Let me start off talking to the cost control, and the extent to which I believe we've got more levers.

Our unit cost increased by 5% in the previous year and by 3% this year. I think the company has done an exceptional job and not me, but everyone, all the operational is in managing costs.

I honestly believe that we are at the end of making material changes by taking coffee and tea away by -- I do not believe that we are going to have access to material levers by more operating cost cuts. So we typically go in -- I mean that's the first domain that we generally, as a business, go into.

We optimize our expenditure. We cut capital.

We've done that. It's evident in the results.

So the moment you go to restructuring of labor, I mean, that would be a next level decision for us. And we've done that.

To that extent, Adrian, I do not believe that those 3,000 positions are going to come back into the organization. They are out and they are staying out.

I do not believe -- because it was a pretty intense restructuring, I do not believe that we necessarily have the ability to reduce further cost by further restructuring. I think a further deterioration in market conditions will necessitate us to make portfolio decisions.

I think that's where we are at, and that's where we are applying our mind is to understand which of the operating units remain and which do not. I think we are now having to contemplate that.

And we understand at the same time that any decision that we make at that level helps in 2 ways. It takes loss-making ounces out of the market from our point of view, from a company cash flow point of view.

And secondly, the supply-demand equation in the market is brought to equilibrium, not only by a single decision, but if that is the position of the industry, then I think we can get to a position where the industry that remains can operate more profitably. Then in terms of the consolidation with IBR, I mean there are experts that can talk to you.

But the -- so first of all, a lot of the integration that we think about has already been done. From a structural point of view, reports into -- we have joint Board meetings.

The processing has been taken over almost on day 1 by our processing division. You can see the improvement in recovery.

So from the way we operate on a day-to-day basis, it has advanced very far. There are some things that you cannot advance at the same rate.

For instance, information systems. You have to have harmonization of a number of things, whether it's payroll, pay conditions, systems and in particular, the organizational incorporation that is something that we are aiming at doing by end of June, mid-year.

So I think when you step into July this year, it is highly likely that we are going to have one Western Limb asset, which is under Moses' charge and has been on this charge for quite some time. Zimplats.

Yes. So maybe just to start off with, the reason that Zimplats has borrowed money is because of the retention.

Because I'm sure you're aware of the retention regime that applies to Zimbabwe, where all the U.S. dollar receipts are not -- a percentage of the U.S.

dollar receipts get surrendered to the government in exchange for local currency. So where Zimplats has had to borrow money is on the dollar side because the dollar receipts it's been getting from its sale of concentrate hasn't been adequate to fund all its capital, which is predominantly based in dollars.

So from a group perspective, and from a tax efficiency perspective, clearly, our preference is that the borrowing be done at the asset level. The other point that's important is that the money that is loan to Zimplats in dollars is off the IRS debtor because essentially, Zimplats has a debtor with IRS.

And of that debt, they basically borrow from a bank. So I think from an efficiency perspective, it makes sense to borrow there also from a disciplined perspective.

Because as we've said, all our operations need to fund all of their own capital. And maybe the last comment is that in South Africa, because of the IRS business, we do require sort of a minimum liquidity of about ZAR 6 billion to ZAR 7 billion.

So clearly, when we look at cash across the group, we've got to take into consideration the availability of cash in the various jurisdictions.

Before we step off that area, I just want to make one large comment as a group CEO. I mean we've always been very positive and constructive about our investment orientation with regards to Zim.

I do believe that the Great Dike offers the best possible resource out there. And we have had not because of us, but even in the prior -- in the period prior to any of us joining the company has had a very constructive, healthy long-standing relationship with the government, and that has not necessarily changed.

But we are concerned about the increased need for access to ForEx by the Zimbabwean government. It is something that has to be discussed between our company and the Zim government.

It is something that we are concerned about. I mean there's always where you are today and where you are going.

We have planned the official opening of our new solar installation as well as the new furnace. It is something that will be on the agenda for us to have a discussion with the finance minister as well as the principal.

So it is something that I do not want to just scrub under the car, but it's an issue and it has to be addressed.

Okay. I don't see any further questions on the call.

We've also run out of time. So I just want to thank everybody who's joined us today.

There's a couple of questions I've received over the webcast. Thank you for those.

We will certainly circulate back to you one-on-one. I think most of those we've actually touched on in the conversations today.

So we will certainly reach out and make sure we do that. And to the extent that you have any further questions, please reach out to me and the team.

We'll gladly take those questions and look forward to further engagements on the road in the next week or 2. So thank you very much.

Please come and join the team for coffee. Maybe we can have some further conversations out there for those who did come here.

That's the benefit. So love to have a chat with you.

Thank you very much.

Thank you, Johan.