African Rainbow Minerals Limited (ARI) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the African Rainbow Minerals Interim Results for the 6 Months Ended 31, December 2023. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Thabang Thlaku, Head of Investor Relations. Please go ahead.

Thank you, Irene. Good afternoon, everyone, and thank you for joining us for this investor roundtable. As you know, we create this platform so that you can ask the detailed questions. Apologies, if we couldn't get to them at the results presentation. Yes, so we've got the entire management team here that you saw on the podium. So what we will do is go straight into Q&A. Thank you very much, Irene.

[Operator Instructions] The first question we have is from Brian Morgan of RMB Morgan Stanley.

Can I ask a couple of questions? Just diving straight into it. On Bokoni, I'm just trying to wrap my head around the modeling on this one. Could you just give us some pointers on a couple of inputs? You talk about hitting a steady state cash of cost number by 2025. Are you able to share with us what you think that number might be from the 2,117 that you quoted in the release? Then what recoveries should we be thinking about for Bokoni? Then what sort of grades should we be thinking about over the next little while? I'll stop there.

Brian, thank you so very much. It's Thando here. So I've got some of your questions. Others didn't come out quite clearly. So, If I may start with the grades. The grades that we're building up to in Bokoni, it's on a 60 basis. We are building up to about 4.5 to 5 claim per task. What was the next question?

The next question was the results. We mentioned the fact that Bokoni's production cost, I think they're around 2,115, I think -- correct. They're going to go to a steady state level in 2025. So, Brian is asking for color on what that cost level is going to be in 2025?

Can I just note that? I'll come back to that question.

And then the other one was what recoveries are we expecting at Bokoni?

Recoveries, I think, as we indicated, in the credit rate or in the high rates that we're anticipating, it should be in a region of about 86%-87% recoveries.

Brian, we'll email you. We'll come back to you with regards to the steady state cost.

Okay, that's cool. And then -- sorry about the question earlier on -- on the Merensky. Actually, I couldn't see the presentation, so I didn't know you had the same line in there. But -- if we could just go back to that one, in terms of your thought process around that, how are you thinking about ramping it up? I would have thought that it would make sense just to, given you're so far through the project, just to push as hard as possible and get volumes up as quickly as possible? But just sort of how you're thinking about that? And then sort of how you're thinking about unit costs on that one.

Brian, so, -- one-off -- as we indicated, our remaining capital spend is really on the ramp-up of the mining operation. We're currently sitting with a stockpile of about 820,000 tonnes that we can mill and put to the plant. So, the options that we are looking at, and we're sitting with currently with 3 crews that are doing stocking and one development. So, given the current prices, I think we're looking at probably focusing on milling the stockpile and then not increase our underground operation and focus more on the development, so that we open up the levels, mining levels, up to at least 4 or too far. And be ready that when the market turns around, we'll be able to exploit that opportunity and ramp up quite quickly. So, those are the various permutations we are looking at. With regard to the price, I think in general, you're looking at, and I'll quote it, say, in the kilogram phases, you're looking at about an incentive price of 850 -- 860 that's really the prices that we're looking at. On our costs, we are sitting and what we're forecasting is just under 680 grams per 60.

Is that what you're looking for at steady state or what we would expect to come through now with the stocks that have been milled?

No, that's a steady state that I'm quoting now.

Okay. Okay, cool. I'll leave it there.

[Operator Instructions] The next question we have is from Warren Riley of Bateleur Capital.

Hi, team. Can you hear me?

We can hear you, Warren.

Good. Okay. Just 1 question around the iron ore business. So, Kumba announced a reconfiguration of their business plan in line with the logistics outlook. It would include optimization of their mine plan, some lower production, reduced waste stripping, headcount reduction as well, I think close to 490 people. I just want to understand what you're doing at your iron ore business given the production outlook for the next 2 years of 12.5 million tonnes, if you're going to be doing anything similar there to reduce CapEx and control costs?

Yes, I think we realized what was happening before Kumba. So, if you look at our profile, we're supposed to do 14 million tonnes. I haven't done 14 million tonnes in the last 3 years. So, we've closely matched our production capacity with the reality of what runs. In the previous year, we did just 12 million tonnes of rail. This year 12.8 million. So, we already set our mind up at that level. I wouldn't like this to go out in public statements, but we started with a lot of moratoriums on recruitment and things like that. So, we actually responded to this a lot earlier. And we also matched our production profile, basically on a month-to-month basis with Kumba. Of course, there is still some further optimization to do. We're doing a lot of work engaging with our partners on that. But we've got the guideline and there is some further optimization work that's doing. I think Phillip did mention that in the presentation as well, is that there's optimization in terms of centralized procurement. We're going to look at shared services, that type of thing between Beeshoek and Black Rock -- Beeshoek and Khumani Mine. Then, depending on what happens, for now, AMSA is pretty much we know that they're doing what they're going to do. We've also put that into our forecast. So, we're also going to right-size Beeshoek Mine for that volume. So, although we haven't officially announced any retrenchments of such, because we obviously have to go through a process and a very strong legislative process in that regard. So, I can't make any announcements at this point in time. But we are obviously looking at ways and means to optimize our business. I think on the positive side of that, we can, through this process, I'm very confident that we will be able to reduce our operating costs less than what it is now. And also, through the process, we'll obviously lengthen the life of our mines. But we will be ready when Kumba picks up, not Kumba, when Transnet picks up again.

Okay. And just one follow-up. Beeshoek, if you are to reduce supply to AMSA, is there a possibility to use some of those trams to increase your export volumes at all? Was that out of the question?

No. Part of the optimization with Transnet is, remember, our Beeshoek trains is that 350,000 tonnes that we had from Beeshoek. It was -- those trains were actually loaded at 63 tonnes per wagon. And they did not go through an automated rail balloon. It was a very old, antiquated system. And to get part of the process and part of the effort to get Transnet's efficiencies up, we transferred that capacity to the Khumani Mine, not we, Transnet. And there we see some improvements on the line. So if it wasn't for that, I think the overall performance of the Transnet whole system would have been worse than what it is, because that 350,000 tonnes translated into 410,000 tonnes. So we're currently loading that tonnage through Khumani Mine. And everything at Beeshoek is now, let's call it inland bound. And we've done the work. It just does not make sense to build a proper load house station with a link line, with a stockpile automatic stacker repayment, all of that type of stuff. That's going to be in excess of ZAR 2 billion rand just to build that. And maybe, and then on top of that, Transnet doesn't have that capacity for the next 5 years. So it's going to be a silly exercise. We've done the work. We knew what the answer was going to be before the time, but we had to quantify it. And so that's not an option for us at this point in time. So we're going to right-size Beeshoek mine now to do the requirement from AMSA Edge.

Okay. And then on the manganese operations, the export volumes are 3.4 million tonnes. You do talk about high-grading that a bit. What kind of production mix are you looking at from the operations?

Yes. Again, a year ago, we planned to do -- actually we plan to do 4 million tonnes. And then we said that out of that, we're going to load all 600,000 tonnes. That was the original plan. But then the reality of the low manganese ore prices hit us, and we stopped all the road transport. That's what brings us back to the 3.4 million tonnes. Then so we did a lot of work, a lot of optimization work, and it just does not make sense. Even the high-grade materials in this price scenario, it just does not make sense to put anything on the road. Just the delta between road and rail is delta -- is more or less equal to our mining costs. So, you can almost say, all the efficiencies that we destroy by putting it on the road. Therefore, we went for the 3.4 million tonnes. And we are working now on -- again Black Rock Mine is quite a complex mine in terms of the grades and so forth. There's a lot of management work and input that needs to be done. But we're definitely setting that mine up for the long run for the next 2 years at 3.4 million tonnes. In that scenario, we've already cut back our Gloria Mine from 10 tonnes per annum to 600,000 tonnes. Then, we have a product that we call R5, which is a 41% material but with a manganese to iron ratio of 5. We've stopped that area as well. So we've stopped all the areas and the places where the actual quality of the ore that we mine is in the current scenario is loss-making. We're not going to put it just on rail or on road or whatever just because it's there. And then, of course, we have to go through the rationalization exercise and we're doing the work. Once we complete it with that, we will make the necessary announcements. We're in the process of that. In terms of the manganese ore pricing -- asking the question around manganese -- from the position of the cost curve of all the manganese producers, we believe the prices that we saw in December is not sustainable. We already see a slight up-tick in the manganese ore prices. It's not going to recover quickly but there's quite strong growth and that still supports our original vision or strategy of growing our manganese business. That growth is still going to happen and we believe it's going to happen. So we're now setting our mine up, getting into a steady state for 2 years or so and then ramp up to 3.7 and 3.4 and then be ready and then we can do what Transnet does. And in that context, that ramp-up and engagement with Transnet is not something that we wish for. It is with real engagement and plans and understanding what Transnet wants to do on the manganese side. For very little -- relatively little capital, we can go through Saldanha and maybe do something clever in Port Elizabeth or [ Kuka ] and then have a situation that's going to be optimum for Transnet and for us as producers in 5 years' time. The positive thing is both the iron ore and the manganese ore, we're responding, we're reacting, we're looking at the lower stripping ratio to the mine and on the manganese side, we're looking at the higher grade portions of the mine and to bring that in that sense to optimize both of these operations for the reality of what Transnet is going to do in the next few years.

The next question we have is from Thobela Bixa of Nedbank.

I've got a couple of questions. Maybe let me start with Bokoni. Why not just delay the Bokoni project, given the current market that we find ourselves in? Or perhaps maybe ask differently, in what scenario would you consider perhaps not pressing ahead with that project? That's the first question.

Yes, Thobela. Obviously, as I said earlier on, I mean, we, the quality of body, and it has a lot of opportunity possibilities. So, and we understand that in terms of optimal, I mean, I mentioned it's 240, so we just see a gradual, modular, responsible build-up, I mean, I think even the Executive Chairman mentioned the issue of flexibility, you know, so that when the price turns, because where we lose it is that you don't get ready. And when the price turns in the next 6 months, you know, you end up losing out. So, we want to do a very responsible thing. We, not a big bang, modular, and make sure that what is basically necessary, because we want to do mechanized. You remember the old installed infrastructure was unconventional. I mean, our principle, our strategy is mechanized the whole body. And to mechanize that, I mean, we're setting up a new layout, basically. I mean, if you look at that, we currently build with a box cut -- with a box cut establishment. After the box cut, I mean, we want to hold the clip cut deadline. There was left only one of the 3 deadlines is left with about 300 meters to go. You know, basically setting up a new infrastructure, because what was done previously was, you had very small shafts. I mean, like a vertical shaft that could only do 40,000 tonnes. You had a metal set here that could do 60,000 tonnes. You had a -- so you had about 3 or 4, infrastructures that you had to manage. And those infrastructures each need an engineer to be appointed. It needs maintenance. And as a result, in terms of cost structure, it becomes a heavy cost structure. So our picture is to set up this new and make sure that we mechanize it. And obviously, there's a time for everything. So we -- that's why we take a view of saying, we're not just going to burn cash, and be responsible, but we're doing it modular. And then the study as well that we're busy with will inform us, in terms of what would be the capital bill and how do we basically take that and execute responsibly taking into account the issue of capital allocation, because it competes against any other project that we have. It's not like it's a given, it's a full on, when there's other opportunities that come and we have to rank, I mean, there's that ranking tool that we apply and whatever comes first is what we need to do. But in a nutshell, we believe that just a modular staged approach and we need to do some of these things, because if we don't do them now, even when opportunities come, we're not going to be ready to optimize and really fully exploit those opportunities.

Okay. That's noted. And then perhaps moving on to Transnet, from your perspective, given that independent assessment that you have done, or you would have been part of with a bigger group of other companies, what would you say are the low-hanging fruits? So that's the first question. And then linked to that is, if one looks at Transnet's, especially TFR's CapEx over time, that has reduced quite substantially over the years, in your view, I know this may be hard to sort of answer, but what's that requirement to try and bring the CapEx up back to levels where they were in the past or where they need to be given, just the issues that we were currently having. So that's another one. And then perhaps looking at the fact that National Treasury is quite constrained, do we perhaps see companies taking on a bigger role in terms of also providing financial support to Transnet? For example, we have seen Sasol, there was that announcement about 2 weeks ago, with regards to them having to maintain those particular work-ons. Is that something that we are most likely to see also related to the iron ore line? I know perhaps details have been sort of, it's behind closed doors, but if you could give us any sort of understanding on that, that would be great.

I can hear that you're even sort of asking that question. It's more difficult answering that question. But I think I can give you the assurance that from that independent technical assessment that we've done, the very, very encouraging thing for me was with the previous, if we can say the previous leadership, they even declined that we ever do such an audit. So the new leadership said, come on guys, we work together. So we had initially paid for that audit. And the agreement was also that the outcome of that audit will not be shared with us as individuals. It will be shared with the group whenever it is done. That happened last week, Friday. And I must say that the Transnet team, the leadership team was extremely, and I say, now let me rather say it in a positive way, they were not defensive at all. And in fact, they welcomed the outcome and acknowledged the outcome, which to me is a major, major step forward. So, at least there's no denial in terms of what the finding was. I think the finding in general says that there's been many years of neglect, or you can say stalled investment in that line. And I must be honest, obviously, we're going to keep that line going, but there's nothing like low-hanging fruit here. I think that was plucked and taken a long time ago already. So, there's going to be a very systematic approach to this, to fix this problem. And currently, as we speak, we're working with Transnet on that. And there's a joint forum where we engage with the Transnet, right from the Chairman of the Board, the CEO, and then the MEs, or the management executives of the different, the port, the rail, and the engineering section of Transnet. And there's extremely good cooperation there in realization that we're going to -- as I say, I think historically, it was a denial, now there's realization. And I think we're going to make very good progress here. But I have to warn and say, and I think there's also maybe one of the reasons why Kumba made that announcement, is that this is not a quick fix. So, if you push for volumes beyond the, what we say, the 88% of the nameplate capacity, you're going to take away time to fix the railway line. If you don't do that, it's going to deteriorate. So, there's a fine balance. What it actually means in real life, in our simple way of saying things, is that currently Transnet has a 10-day shut every year. And it may mean that they will -- and this is -- please, this is not a creed or anything. I'm trying to put it in a simplistic way. It may mean that Transnet will have to do a shut twice a year, a 10-day shut every 6 months or something. We haven't gone to the conclusion, but if I look at the work that needs to be done and the effort there. But the nice thing is, the positive thing about this, since we all work together, we're putting as industry, we're assisting Transnet now through our project. And because the one thing that we can do, we can build mines, we can build projects, we can manage that. And they've accepted the hand that we're reaching out to assist them specifically with what we call the shutdown planning. That's one major element that I think we can -- there were instances, I could use a very simple example, where they had to replace sleepers the day they need to replace the sleepers, the sleepers are not there. It's just a simple planning. So, we're going to assist them with that. And then there's also very, very extended periods, a timeframe around their procurement program. So, through the joint forums that we have with Transnet and the other producers, and it includes iron ore and manganese ore, we're doing something what we call a mutual cooperation agreement. And it is something that we sort of learned, I wouldn't say copied, because it's not the same. But the coal system through Richards Bay already has something like that in place. So, we're going to take that enhance it and work on a program that we can actually assist Transnet in terms of the project planning, execution and the procurement of the material that needs to be done at that stage. At this point in time, there's no talk of funding. And I think, in terms of the longer-term strategy of Transnet, I think that which was announced, where the Transnet is going to divide into 2 divisions with the rail infrastructure. Let's say, they're going to become the landlord of the rail system. And that whole system is going to transfer to the Department of Transnet -- of Transport, and they're going to manage that system. And then Transnet themselves is going to become a concessionaire on the system. If this was supposed to kick in on the 1st of April of 2024. But I think it's very ambitious, and it's way too quick. And I think the people who's much closer to how it works, the management that the leadership that's there now, realize that that's a bridge too far too soon. So, I think we're going to still work together for about a year to formulate all of those issues. And then -- but at least again, I want to repeat, in a very positive way, that at least there's now a plan like to see that. So, yes, with this -- and then the challenges that we put forward in terms of our outlook is then married to that program and that outlook that we currently have.

Yes, okay, I know what that sounds.

I think in a nutshell, or just saying in a nutshell, just to add on what Andre's saying, there is hope, because we are now in much more collaboration front. I mean, Andre didn't mention in one of the incidents that would have taken days and days to recover. The industry stepped in, we provided the crane, a huge crane to sort out the development, and that thing was equally reduced by almost 40% to 50%. That collaboration helped the whole system. So, very important, and I think it's the right attitude.

Yes. Okay. No, that's clear. If I may just add a follow-up to this, and yes, it's, you say that there's no talk in terms of having to provide funding for Transnet, but I think just given that the balance sheet for Transnet is stretched, and National Treasury is as well also constrained, do you perhaps foresee yourselves engaging in those conversations with Transnet? Or is that something that you guys wouldn't be interested in? That's my last question.

Right. So, I think it's early days, but we as an industry are definitely, definitely interested, and we are engaging. And I think the channel to engage is through the Department of Transport, and because you engage with Transnet, you can engage with your future. So, that engagement is starting to happen. Through these industry forums, we have a forum on the iron side, which we call the AUF, the All Users Forum, and on the manganese side, we call it the Manganese Producers Forum. And through these forums, we actually have -- we as producers, and you can imagine that we are also competitors. So, the competition lawyers sit with every meeting that we have and listen to every word we say. But what we're doing here is that we see if we can collaborate collectively in the best interest of ourselves and the best interest of South Africa, become -- because we are really interested in affected parties here, see to what extent we can get involved in this and take it on. Just on the Sasol one, Transnet actually offered that option to us. It is what they call a hook-and-haul system. I mean, if the rail tracks are not fixed and the trains can't move at this speed, that will help us nothing. So, there's a lot of work that we would need to do on the actual infrastructure that sits on the ground, and then only once that's done, we can focus on this. But all of this will be crystallized during the course of this year, because the government and the parliament have recently announced this issue about this new structure that they foresee for Transnet. But I want to go one step further and tell than Phillip, don't hope, there's no hope. Where's the plan?

The next question we have is from Nkateko Mathonsi of Investec.

I hope you can hear me. So, I just have a clarification question on Bokoni, especially the breakeven price of 800,000 tons to 900,000 tons that was mentioned at the presentation at 11 o'clock. This is currently above sport, and it's very much very close to the 90th percentile of the industry cost curve. And for an industry that is facing long-term headwinds, depending how you look at it, it can be very scary. So, maybe if you can give us a bit more guidance on the potential reduction on this breakeven price, should you operate at 240 kilotons per month? As you've said, that volume, you actually need the volume to be competitive. And I mean, a lot has been said about Bokoni being a world-class asset. But if you can give us a bit more comfort on the mechanization, I'm of the impression that the risks are very thin. And I mean, most of the mines that are mechanized within the PGMs, they've got very wide rifts. So, it's not necessarily the norm. So, if you can give us a bit more comfort in terms of the confidence level that you have around mechanizing these ore bodies, that will be very helpful. And then lastly, on 2 Rivers, if you can guide a bit more in terms of the ramp-up plan in line with the reduced CapEx?

It's Thando again. Perhaps let's start with 2 Rivers. In terms of the ramp-up plan, as I indicated earlier on to Brian, we've got about 800,000 tons of stock. And I think you're referring to Merensky. That's where my response is. So, we're going to be feeding, yes, we're going to be feeding that. We are currently evaluating in terms of whether we slow down on those mining crews or we bring additional mining crews. But we are more likely from our evaluation to slow down the underground ramp-up up until we get to, let's say, a comfortable position in terms of the stability of the prices. And we will review and then ramp-up that mining. We are, however, carrying on with underground development, that is to open up your mining level so that when you ramp-up and you decide to bring in additional crews, you've got enough areas to start stopping. So, you can deploy and ramp-up your underground production quite quick.

Okay. Just maybe let me make sure I understand this. When you say you are going to slow down the underground ramp-up, it means what you will do is just to process what's on surface now and not necessarily have anything coming out from underground? Or is it lower volumes will come out from underground?

Yes. As I said, we currently with the 3 crews that we've got on, we're doing about 60,000 tons per month. So, we are saying, we're not looking at ramping that up. We can -- we are actually evaluating and slowing that down. So, we'll consume what is in the stock and consider a process of maybe putting the plant on a temporary shutdown and not ramp-up or pay additional threshold from underground. So, we'll consume the stockpile.

100%. That's clear.

And Nkateko, maybe just to come in on that, remember what motivated the Merensky project? We had a street drift. You are no longer at the 4.2 gram a ton or 4 gram a ton. So, you are running at about 3.2 gram a ton. Basically, that's sort of putting you on a higher cost curve position. So, the strategy was to bring in a Merensky and push this mine to 500,000 tons, so that in terms of scale, you sort of are able to dilute your cost base or your fixed cost base from that. So, very important that, obviously, whatever we do that we really fill up the 2 plants so that we can realize the full value. So, I think those are the trade-offs that we're currently looking at to say, is it the foot on the pedal? Is it slow? Is it doing this? Can we fill up that one? Run it at full capacity, 320, 350, whatever? And what will those scenarios do? I mean, we're still basically at the planning phase where we're optimizing, where we're really assessing these things.

Yes, 100%. I mean, it will be helpful if you also give me my -- give us a bit of a view in terms of how you look at both Bokoni relative to 2 Rivers. I mean, for my cost curve, I actually have 2 Rivers at a better cost position compared to Bokoni, meaning in this environment, I would actually go full force and look, this is me on my spreadsheet. So, I just want to get a better understanding of how you view the 2 assets compared to each other.

Yes. Can I proceed? Perhaps just maybe clarifying the issue. On 2 Rivers, you'll remember that you are actually optimizing most of the infrastructure and management that is there. So, there's quite a lot of synergy in terms of already investment that has been put in place. And as we indicated, the infrastructure for the surface in terms of the plant and the supporting infrastructure for mining has already been invested. So, we've got that synergy. Whereas Bokoni, I think it's an area where, as Phillip indicated, you have a lot of infrastructure to develop and open up your underground access so that you are not constrained in terms of the volumes that you want to produce. So, our ultimate goal is the 240,000 tons. However, given the current, call it, less revenue generated from the platinum division, we are slowing down so that we don't have a huge cash ban out of Bokoni. Correctly so, if you look currently, 2 Rivers and taking that advantage in terms of the existing infrastructure and having an insurance already in place, it fits quite well on the question. However, then Bokoni, as it's also developed in our forecast and the plan is that when it hits the ultimate 240,000 tons, which we have delayed, Bokoni is going to be your lowest cost per user compared to 2 Rivers. At 120, as I said, it's sitting almost at 50th percentile. That's what we are looking at. And perhaps just coming back to the question that Brian asked earlier on, we're currently at 2,117 in terms of per ton mine. When we are mining at 60, we're going to be at 1,900. When we ramp up to 120, it's going to come down to about 1,000 -- it should come down to about 1,500. So that I think, will then be able to assist in terms of your model. Yes, perhaps I can pause then here if you've got follow-up questions.

No, I think I'm fine. It's clear.

The next question we have is from Shashi Shekhar of Citi.

My name is Shashi Shekhar. I'm calling from Citibank. My question is on 2 River mine. I noticed that FY '24 guidance for 2 River mine has been revised up by around 125 kilo ounce. I just wanted to know the reason behind it. Given that the prices are hovering at around ZAR 22,000 per ounce, which is quite low levels.

Okay. The way I understand the question is you're saying, we're showing a revised ramp-up. And this was at the back of the Merensky coming in. And you said, recently, the engagement and the review of the current environment, we're going to be minimizing that. However, you'll recall, sorry, I've missed the name. Shashi, we also have additional capacity at of UG2, which we are minimizing there. That will come without any further capital investment. It's just making sure that we mine at the correct rate and also open up in terms of the flexibility to be able to deploy all the crews all the time. So that -- overall, I think that guidance is going to be revised in the next year.

Okay. And this new revised production, the cash cost for this would be of similar level, right?

Shashi, could you please repeat your question?

Yes. This additional production, this revised up production, the unit cost is not going to get affected, right, negatively?

He is asking about production up guidance.

No. It should actually -- when we bring that production up, it should actually improve. As I indicated that, as we've got some issues with some of our fixed costs that will be able to be diluted by the additional volumes.

It seems we have no further questions at this time. And I would like to hand the floor back to Thabang Thlaku for any closing -- apologies. We have a follow-up question from Brian Morgan of RMB Morgan Stanley.

Sorry, guys. I thought I'd grab you quickly before we hung up. There's a comment in the release about labor constraints at Black Rock. Could you just run us through what's going on there?

It's a course skills, I think.

Oh, critical skills.

Yes.

Is that what you're referring to, Brian?

That's the -- yes, that's the one, yes. The reason for the drop in production.

Yes, I don't think -- yes, so what we had is we had quite an exodus of some of the, what I would call, the old hands, the people that knew how a manganese mine works and how that -- how to operate in a manganese environment. So what we did is, this is about 3 months ago, so we stepped in as management, and we made some changes to the top structure management at the mine. And we brought in a very, very experienced general manager that's been working for us for many, many years. He's actually worked for Aspen for 40 years. He's a highly regarded, experienced general manager. And I think there were some people challenges. And those very same people that left the mine actually came back. And we can immediately see the impact that they had. I'm talking at the level of mine captain in section manager and also some of the miners in that area. So without naming names, they are back at the operation and they're turning 3 shafts. In terms of Black Rock, the total complex Black Rock, we've got turning 2 shafts, 3 shafts and Gloria shaft. The actual problem was isolated to turning #3 shaft, and that's where we brought these experienced people back in. People with 20 years, 25 years of experience of manganese mining, and we can already see a significant improvement. So you can literally say that comment is historical. That was true at the time of writing the report and it did impact the production up to December, but we've taken the necessary action. And I can say with you with great confidence that you can know that that has been resolved.

Okay. That's cool. That's all. And then -- sorry, one more question if I may. With the impairments at 2 Rivers and Modikwa, can we expect changes to reserves and resources at the end of the year?

No, that shouldn't be the case, Brian. I don't think, except of course what we would have mined. There shouldn't be substantial changes on the resources.

Yes, so if I can add, Brian, so when we looked at the impairment criteria, it was the future prices, the lower prices that triggered the impairment. And so therefore the net asset value or the net realizable value of the operation. But no, it actually does not impact the pricing such that we'd have to reconfigure the mineral reserves. They still remain the same.

We have no further questions. And I would like to hand the call back to Thabang for any closing remarks.

Thank you very much, Irene. So, thank you to all of you that have dialed in. If you've got any further questions, please feel free to pop them over to the IR team, myself and Hoosain. And yes, we look forward to your research reports on African Rainbow Minerals. Thanks to the management. Thanks, Irene.

Thank you.

Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.