Gem Diamonds Limited (GEMD) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to Gem Diamonds Full-Year Results Presentation for the year ended 31 December, 2023. Our presenters today are Clifford Elphick, the CEO of Gem Diamonds; Michael Michael, the CFO and Brandon de Bruin, COO. Please note that you will be able to pose questions using the Q&A function at the bottom of your screen. All questions will be answered at the end of the presentation. I will now hand over to Clifford. Clifford?

Right. Good morning, everybody, and thank you for your attendance. As Jannine mentioned, this report deals with the financial year ended 31 December, 2023. If you turn over the page to Page 3, Page 2 being the disclaimer, this is a summary of the year. Top left-hand corner; 109,000 carats recovered, which is just about on plan. But the main issue which flows through our results from beginning to end is the dollar per carat achieved, which you will see is $1,334 average dollar per carat received for the sale of all of our carats. Now, this is a substantial drop some 30%, 26% below what we achieved in 2022. And the result of that lost revenue flows through the entire income statement. And we will speak about that. Net debt of $21 million. This is unusual for our company to have a net debt position, but this is the result of a transaction which occurred during the course of the year, which was to acquire the mining fleet and to transfer all the staff associated with the mining and drilling contract. This business has been successfully carried out for us for some 20 years by Matekane Mining. And of course, as you all know, Matekane Mining was majority owned by the subsequent Prime Minister of Lesotho, and this was a hot potato, which we needed to grapple with. And I'm very pleased to say we finally managed to get this over the line, this transaction over the line, canceled that contract early, bought all the equipment and assumed the debt associated with it. And I'm happy to say that, that process went relatively smoothly and that we are already seeing the benefits of that. And we'll talk about that later. Bottom left-hand corner, our safety record has been very good over a long period of time and I'm pleased to say that, that trend has continued. And again, we are at one of our lowest injury rates ever. As far as decarbonization is concerned, we're making excellent progress. And then the other important point is we have some $46 million of facilities, which are undrawn available to us. Turn the page over. Comments on the diamond market fall into 3 categories. The broader economic backdrop remains challenging, particularly the uncertain and very weak performance of the Chinese economy, which has in recent years emerged as a significant consumer of diamonds. It is unclear what the pathway out of this problematic economic backdrop is in China, and the policies which have been put in place and which are being put in place don't seem to be delivering the results to drag China into a substantially greater growth rate than what has been forecast. Inflation and interest rates remain high. This, of course, is problematic for our customers who are effectively manufacturers and traders who rely on funding. And added to that, of course, the 2 wars, Russia-Ukraine and Israel-Hamas, in particularly, Israel-Hamas. You can imagine the effect of that on productivity in Tel Aviv, which is a major manufacturing center and trading center too. The Yemen-Houthi problem has of course directed a lot more shipping around the southern tip of Africa, extending delivery times and negatively affecting much of the supply chain, but not really that important from a diamond point of view. As far as the specific diamond market itself is concerned, there has been continued pressure on rough and polished prices and mainly as a result of the reaction to COVID, which led to an overstocking situation. And this has had an effect on prices. Very grateful that De Beers in particular and also India took steps to deal with the issue and this has helped. Certainly, it appears that prices have stabilized and have started to move up. One of the major factors in the diamond market and I'm sure you will all have seen that when you open any of the high-end magazines, I'm talking Vogue, Tattler, Cosmopolitan, et cetera, you will see the proliferation of advertisements for diamonds themselves in jewelry or in watches containing diamonds. And certainly the ultra-high brands seem to all now be focusing quite substantially on creating high-end diamond lines. And, of course, from Gem Diamonds' point of view, the right-hand side column, this is extremely encouraging and helpful. We have put our toe in the water in a direct supply arrangement with some of the ultra-high brands, ultra-high luxury brands, and this is certainly paying off and we intend in the future to expand upon that. I'll pass over to Brandon to talk about sustainability and then operations, and that will be followed by Michael for the financial results.

Thank you, Clifford, and good morning, everyone. As Clifford mentioned, operationally, we had a challenging year in 2023, but very positive year, with a number of significant changes in our operations and some very positive results coming out. Also, we look forward to the positive results proceeding into 2024. Starting at safety. As Clifford mentioned, we achieved our lowest all injury frequency rate at 0.67. And this is a culmination of a number of initiatives that we have implemented over the past 3 years, in particular, our safety culture maturity program, which we completed last year and has led to really good safety culture on site and at Letšeng in particular and within the group. We had 0 fatalities, unfortunately 2 LTIs. But as Clifford mentioned, all injury frequency rates are lowest on record to date. We had no major significant environmental incidents and no major or significant social incidents in 2023. If I turn the page to climate change, I'd like to just start at bullet point 3. We have completed our final phase of our 3-year TCFD adoption. We've now fully adopted TCFD into our financial disclosure, and that is a project that has been well completed over the 3 phases. In terms of decarbonization, we did in March last year adopt a 30% decarbonization target by 2030 based against our 2021 baseline. We have achieved a 26% reduction in 2023 against that baseline and our Scope 1 and Scope 2 carbon emissions. A big portion of this is related to our Scope 1 emissions, which is heavily impacted by a reduction in waste tonnes that we've seen over the years. But as we will talk about our mine plan a bit later, that portion of it may well increase again as we increase waste mining going into the future, but certainly significant focus on energy reduction of our consumption initiatives. We've reduced the waste tonnes, as I've said, in a number of ways, one; through the mine plan, but also significant changes to the design of the mine plan, which has reduced the required waste on slightly steeper slopes and stepping in, in particular in Cut 4 West in the Main pipe. And that has reduced the waste tonnes for the same ore we get out of that cutback. We have also reduced haulage distance. We've introduced energy-saving light, which has had a significant effect on energy consumption and we are introducing our electrical load management system, which will give us a lot more control over power used in particular during load shedding, which has been a major challenge for us over the past few years and significant increase in the period of load shedding and the frequency of the proceeding 2023. At Ghaghoo care and maintenance, we constantly reduce our costs as much as possible and we've made a significant reduction of costs by introducing solar and getting rid of the diesel generators and associated diesel and transport costs. Throughout the group, we're also assessing lower carbon and renewable energy sources and that work is continuing. We're hoping to find a solution to that in the near future. We turn over to sustainability. Our focus remains on education, infrastructure and SME development. We've again sponsored tertiary scholarships. We've constructed and renovated 4 classrooms -- sorry, classrooms at 4 schools. And we've further developed our egg and dairy farm projects, which required further support in 2023, but moving positively forward and hoping to be in a position to hand these over in a sustainable fashion in the near future. We've also increased the employment opportunities at our project-affected communities and that obviously brings a lot of relief to those communities. From an environmental perspective, we have completed the construction of our 300,000 liter per day bioremediation plant and that's ready to treat the water that leaches off the mine dumps and the nitrates in that prior to leaving mine gate. So that's a project that was completed in December, with commissioning commencing in December and finishing in February this year, and we look forward to the results and outcomes of that as we process more water through there. Briefly, we retained our ISO 14001 and 45001 safety and environmental certifications. We retained our FTSE4Good status for the fifth consecutive year, and we continue to integrate our UN SDGs into our business and it becomes part of our business with adopting 2 new SDGs last year being 0 hunger and climate action to add to the 6 we adopted previously. If we move over to the operational review, as I mentioned, we've had a very positive year operationally with a lot of challenges and also with a lot of good initiatives that have been changes that have been implemented. We've focused throughout the year on operational efficiencies and cost reduction and containment. We completed the right-sizing at Letšeng, in particular in June, to align it with our production requirements. And as Clifford mentioned, we had a significant project of insourcing the mining activities. And along with that, we've insourced a number of other activities, including housekeeping and laundry, and a few others as well. From a production perspective, you'll note that in 2023 we only mined 8.8 million tonnes of waste. This is in line with our mine plan, also with the optimized new design of Cut 4 West in the Main pipe, which as I mentioned, has significantly reduced the waste with minimal ore being reduced at the end of life of mine as well. I'll touch on that -- the impact on that when I talk to the life of mine plan a bit later. And then we also aligned our waste stripping from a cost containment perspective to tie into our lower tonnes treated in the year. From a tonnes treated perspective, you'll note that we have about 500,000 tonnes less than last year. The significant impact of that was the AV contribution in H1 in 2023 and that was about 400,000 tonnes. And as we reported last year, AV's contract came to an end in June last year. And therefore, no contributing ore from any third plant in '23. Challenges that we had, which also impacted tonnes treated. Although well managed, it does have a significant impact on operations with the continuous and ever increasing load shedding interruptions. And then in H2, we made a conscious decision to slow the plant feed, the instantaneous plant feed rates down, to avoid sort of choke feeding and to improve stability. And this has significantly improved the overall plant utilization in H2 and have seen significant improvement there. And that continues into 2024. We also completed the construction and commission of the new PCA, the primary crushing area. And that has contributed significantly to the fragmentation, or good fragmentation that feeds into the plants and assists with the stability and the running of those plants. We flip over the page. From carats recovered was certainly a year of 2 halves. We saw, once the plant started stabilizing, in particular in Q4, our grade improved. This is impacted by a few things. One; resource performance and where we mine and some domains have higher grades than others. But also in terms of plant recoveries and stability, we certainly saw an improvement there, which was very positive to see. And we've seen that continue into 2024. Clifford mentioned the low dollar per carats. This is significantly influenced by the recovery of high-value large diamonds. As you'll see in the table below, we set this up just with 2023 compared to 2022 and our 15-year average. And you'll notice that in the greater than 100, and in particular the 60 to 100 carat categories, we are lower than our 15-year average, in particular in the 60 to 100s. That has a significant impact on value and dollar per carat. And as Clifford mentioned, that resulted in our dollar per carat last year with just over $1,300 a carat. Positive news is that in 2024, we had a really good start with 3 plus 100 carats, 2 very nice Type II D color diamonds and unfortunately 1 plus [ 100k ] bought. But what is positive is the recovery of the larger stones coming through. We're hoping that proceeds positively as we move further into the year. Moving on to our resource and reserve statement. We are very pleased that we have finally commenced and were able to complete an extensive 8-year resource development program, which included a huge amount of work and many work streams to get this right, the major challenges and work streams are highlighted there. For the purpose here, I'll highlight there that the 3 phases of drilling was extremely challenging. It's nearly 20,000 meters of core drilling in operating pits with very small space area. Main Satellite pipe less than 5 hectares and challenging times to manage that along with the production times as well. There was petrographic, mineral chemistry and diamond analysis. We had to do discrete domain sampling. There was in-pit mapping. We updated the 3D geological models and size frequency distributions. And we've applied the latest prices to each of those domains and obviously, brought this up all the way to our open-pit topography as of 31 December, 2023. So the latest information that we've got has been now filtered into our resource and reserve statement. This has significantly improved our knowledge of a complex ore body. Previously in Main pipe, for example, we had about 5 domains. We now have 11 kimberlite domains and in Satellite, it was previously 2 domains. We now have 5. So as I said, a lot of work in a complex ore body culminating in a much updated and resource and reserve statement. This statement -- our resource and reserve statements are both included in our Annual Report. You'll find them there and will be published on our website. This statement replaces our 2015 Resource Statement, which was SAMREC based. And just for information, this current 2024 report is based on the Canadian National Instrument 43-101 Technical Report. We just flip over the page. I think it's worth just highlighting here as we talk to the reserve which impacts the value of Letšeng in particular. As we proceeded through the resource work, our inventory in Main and Satellite pipes aggregated at 123 million tonnes. Once you apply the constraint of a reasonable prospect of environment -- sorry, of eventual economic extraction and to get our resources, we have a resource total of 100 million, being 75.5 million in the Main pipe and 24.6 million in the Satellite pipe. We then applied the constraints of what we are able to convert into reserve and that is just your indicated resource and that totals 75.5 million. And then as we went into our -- and applied the relevant and required resource constraints, the current economics, the optimized mine plan, we come out of an in-situ probable reserve of 62.1 million tonnes, that being nearly 48 million in the Main pipe and 14.2 in the Satellite pipe. Just to put this in perspective, on a like-for-like basis, if we take our 2015 probable reserve and we deduct what has been mined, which is 55 million tonnes of depletion, you would have come to a total of 82 million, which was 71 million in the Main pipe and 11 million in the Satellite pipe. Positively, we have improved our probable reserve in the higher value Satellite pipe by 3 million tonnes. So the reduction in reserve is all sitting in the Main pipe and for 2 reasons. First reason is the application of the latest economics, which has got a lower price and higher costs that we experienced in 2023 and '24 versus 2015. And the second reason, the reclassification of certain material within the Main pipe, where previously it was classified as indicated and could be included in the reserve, was now classified as inferred and sits just below the indicated line in the main pipe. So effectively, there's about 23 million tonnes of less indicated resource in the Main pipe, but an additional 3 million tonnes in the Satellite pipe. An opportunity here is that in the Main pipe, the mine plan that we've designed incorporates the flexibility to access this inferred resource and we've got the ability to upgrade this inferred resource back to indicated, and that'll add an immediate 12.5 million tonnes to our probable reserve. We turn the page to our long-term mine plan. Taking into account the latest resource and reserve statement, we've obviously based our revised mine plan on this. And just briefly, comparing to the mine plan that was based on the old resource and reserve, 2 material things have changed. Firstly, our Satellite Cut 5 West, we were extracting at about 3 million tonnes. We have changed that to 2 million tonnes in 2024, with the remaining approximately million tonnes to be extracted in 2025. We've also pushed out the waste stripping, or the commencement of the waste stripping of Cut 6 West to Q3 2025, mainly for 2 reasons. Firstly, from a safety perspective, we would like to mine out Cut 5 West before we start mining above yourself on Cut 6 West. And secondly, we are considering an opportunity which I'll touch on a bit later to apply a steeper conventional cut to Cut 6, which will significantly reduce the waste and improve the economics of that cutback quite substantially. In terms of our mine plan, we're well aware of the considerable waste stripping required for the current Cut 6 plan. And this is why we're working to optimize this in a number of ways. We've looked at -- firstly, we did look at the underground study for Cut 6, which last year we said we would complete and also do the trade-off against the continued open pit. That study has been completed. A lot of work was done on that to see if there was any way that we convert to underground mining, in Satellite pit in particular. Unfortunately, the economics -- the current economics when we applied that to that cut did not make it viable. And certainly, when we traded that off against the open pit, the open pit was certainly a more viable option to adopt. That's why we've adopted the current open pit mine plan with the objective now of optimizing that as much as possible. And that is where we're looking at a steeper conventional concept in Cut 6 West, which essentially does 2 things. One, we start the cutback in the pit to avoid quite a lot of waste stripping on the outside of the pit, and then to come down a bit steeper in the bedrock and then we use the same conventional cut in the ore. We have had technical sign-off on the technicality of it. We're now looking at the support that we would need for this. And that work has been done from both a cost perspective, the required support to ensure that it's safe. And if we are able to do this, we will significantly reduce the waste, improve the economics of that cutback and we'll come back to the market and change our mine plan accordingly. That work is ongoing, and we're hoping to have the study and the analysis completed in Q3, Q4 of this year. The final optimization, as I've mentioned, we're looking to upgrade the inferred resource and we're considering doing that. And that essentially would convert the inferred resource in Main pipe and Cut 4 West. And add another 2 years to our life of mine plan, taking it to 2038 from a reserve perspective. As I did mention, our current plan does allow for the flexibility of accessing this ore as we currently mine down on the current cutbacks. On that, Clifford, if I can hand back to you on the sales and marketing.

Thank you. Our diamonds are in great demand. Letšeng's brand and the quality of its goods are well understood by the market and are highly desirable. The bidders are normally confident that what they see is what is going to emerge once the goods have been polished. And by that, I mean, if they see a D color, generally 9 times, 95% perhaps, 9 times out of ten, they get what they can see. And there is no graining in these goods. So, our goods are highly sought after. We do not struggle to sell them. But the reality is that last year from a price perspective, we have, as you can see from the bottom left-hand graph, it was a significant movement from around about the $1,800 a carat to $1,300 a carat move. And if you look at the pie chart on the right-hand side, you'll see that approximately 70% of our revenues comes from larger diamonds. Now, that number, for those of you that have been involved in the company for some time will recall that, that number was generally higher than that, 75% to even 80% at times. And this goes back to the point that during the course of 2023, we recovered a disappointingly low number of large diamonds. By that eye, we classify as greater than 100 carat goods. So, disappointing year from a large carat recovery. It has been, as Brandon has mentioned already, a good start to the year. We've recovered some 2 of the 3-plus 100 caraters, were really top quality goods. Both have been sold well, and we hope that, that trend continues and that we catch up to our normal long-term run rate in respect of larger goods. The bottom bullet point above, as you can see, approximately an additional $1 million of revenue post rough sale. Whilst this is not going to move the dial significantly at this level, we have adopted quite a cautious approach to this. We have seen some other approaches which haven't turned out that well. And so our approach was a cautious and steady way of getting involved downstream and slowly but surely building this up. We have, over the course of the year, established very good and strong relationships with some of the foremost brands in the diamond industry and we intend to expand on that. So, a difficult price year, but not a difficult volume year. And everything that we supplied, as I say, sells extremely well. There has been, as you might be aware, a move by the G7 nations to bolster and enforce the sanctions regime against Alrosa. That process starts now end of this month, and there is a trial period during which goods are going to have to be certified as not emanating from Russia or from the Alrosa business as well. This is going to be run. The plan is to run this through Antwerp. We are well positioned, and we are participating in that trial period and it has no major impact on us. The question is, with those goods being more under focus, Russian goods being more under focus, will this assist? I have some doubts as to whether it will be 100% successful, but I have no doubt that there will be some support for price because of a significant number of goods, which are now no longer available to retailers who are in the Western Hemisphere or subject to the dollar and sales in developed markets. What one would expect, of course, is that goods will flow to Russia, not so much to India anymore, because of the fact that manufacturers are required to vouch for the fact that the goods that they received have not come out of Russia. So, there will be an impact. We shall see how it goes. Turn over the page. There's some photographs of some of the significant recoveries. Always nice to see beautiful diamonds. And we hope that during the course of this year, those numbers, of course, just to remind everybody, the largest diamond we've recovered is 910 carater. So whilst 120 is nice to look at, it's not in the record books. I'll pass over to Mike for the detailed financial results.

Thank you, Clifford, and good morning to everyone. I suppose the backdrop to this is we had a strong operating year, as Brandon alluded to. But again, in the introduction, Clifford spoke to the market and the dollar per carat that we achieved. And the impact on that is seen in our results, which resulted in a disappointing set of financial results for the year, but all driven by revenue. So, average dollar per carat for the year was $1,334, $1334 against $1,755 in the prior year, so down some 24%, resulting in our revenue ending up at $140 million, slightly less carats sold in this year compared to last year $104 million compared to $107 million, resulting in a 26% drop in revenue. Royalties and selling costs, we pay 10% royalty to the state in Lesotho, and then we've got some sales and marketing costs for the office and sales and marketing business in Belgium and that was 15.3%. And that ratio obviously dropped relative to the revenue. Cost of sales, you'll see a big drop in cost of sales, and that was driven by a couple of matters. Our local currency costs in operating costs in Lesotho was slightly lower in the current year, notwithstanding increases in inflation and other costs such as energy and diesel usage costs, which I'll touch on when I talk to the unit costs, but also aided with the weaker rand, resulting in a dollar improved cost. So, that's $102 million versus $116 million. Corporate expenses, also down on the year. Another area where we focused and tried to maintain our costs. There have been some savings on some key areas of costs, such as insurance, travel and other areas where there has been some reductions in underlying costs. And that's also been aided by some foreign exchange weakness in rand terms versus the U.S. dollar. All of that has flowed through to our EBITDA being 65%, down at $15.2 million. And the differential between those 2 lies all in the revenue. About 89% of our revenue that we achieve, any extra dollar flows through to EBITDA and that impact of the $40-odd million lower revenue has hurt our EBITDA. Depreciation and mining asset amortization, $7.3 million, again aided by some exchange rate weaknesses. But that is generally quite consistent year-on-year. I'll talk to the impact of the insourcing project, where we should see some improvement in costs next year. I'll get to that on the guidance, but we should also see an increase in depreciation, now that we own all the fleet and that depreciation will flow through to our income statement. Other operating costs ironically is reflected as zero, but in essence that's the Ghaghoo costs, roughly of about $1.5 million sitting there, net of some rehab adjustments and then an insurance claim refund we received, which has offset all those costs. And as a result, that's just reflected as 0. Net finance costs of $4.7 million. $1.5 million of that relates to the unwinding of our environmental rehab provisions. So it's a non-cash interest charge, and the difference or the balance of that is actual finance charges we paid. And as we mentioned on our net debt on the front page, we've got an increase in our drawdown facilities and that has resulted in an increase in our finance costs. Non-cash items predominantly relates to foreign exchange gains, which we made during the year. Profit before tax at $5.7 million. Again, that's just a function of our lower revenue and just flowing through. Income tax, we only pay tax in Lesotho. That's the majority of our tax at 25% tax rate in country. The higher effective rate is driven by the lower profit we've made at Letšeng and then some of the other companies, group companies that don't have credit deferred taxes raised or debit deferred taxes raised to reduce the impact of tax losses. All of that then flows through to our non-controlling interests. 30% is paid out to the government of Lesotho, $3.7 million allocated to the government of Lesotho. Nothing was paid out. And that reflects that Letšeng still made profit during the year, but unfortunately, our attributable position from a group perspective was a loss of $2.1 million, resulting in a loss per share of $0.015 based on 139 million shares in issue. If I go to unit costs on the next slide, the unit costs per se have been impacted by the lower volumes. You'll see that we concluded or treated 5 million tonnes during the year versus 5.5 million as Brandon alluded to being, that AV no longer mined during the year. But I'd just like to concentrate on an area of our cost that has been quite a challenge for us. Energy costs in the form of Eskom supply energy or in the event when we have power supply disruptions through load shedding, the use of diesel and the diesel costs to run our generators and operate uninterrupted. In 2023, we had 335 days affecting us from load shedding and that compares to 205 days in 2024. So it's a significant increase. As a result, our processing plant diesel costs have increased significantly. Overall, though our diesel costs were very similar due to the lower volume of mining done. So net net, we've ended up in a similar position. But our costs between mining and processing have been distorted. On energy costs, notwithstanding the fact that we've got less power usage because of additional load shedding, we've had a 7.9% increase in our energy costs from the energy supplier and as a result, our energy costs for the year were very, very similar year-on-year. Taking all of that into account, our direct cash costs were 288 Maloti a tonne versus 252. Again, overall in aggregate, we had lower costs, but in unit cost basis it was slightly higher. The non-accounting cash charges, which relates to the waste amortization movement in diamond inventory and movement in stockpiles is very, very similar to that of the prior year at 85 Maloti a tonne, resulting in total operating costs of 374 million. And again, that ties then into the cost of sales number I spoke to earlier. However, on an exchange rate of 18.45, which was the average exchange rate for the year versus 16.37 in the prior year, we've ended up with a lower U.S. dollar cost of 20.29 versus 21.08. On the waste side, we've also had a reduction in volumes down to 8.8 million. Total waste costs again were similar to that of prior year. Slightly cheaper, but on a unit basis was on line. But in exchange rate dollar terms, it's turned out to be 12% cheaper. If I just go to the next slide on the financial position, looking at our balance sheet. Notwithstanding that we've purchased the fleet at the end of the year, you'll see that our balance sheet on non-current assets is very, very similar to that of the prior year. And that again was just the impact of the exchange rate at the end of the year, which resulted in a very, very similar number on our property, plant and equipment. Current assets have increased and we've had an increase in our stockpile, mainly driven by relooking at our strategic stockpile and insurance stockpile position. We've increased our stockpile tonnes from 700,000 tonnes to 1 million tonnes and therefore, there's an increase in our carrying value of our cost on the balance sheet. Income receivable of $3.7 million. In Lesotho, you're able to claim 100% deduction of any capital assets you acquire in the year. And as a result, the transaction for the insourcing of the mining services has resulted in us being in a tax loss position this year because we're able to claim all that capital upfront. However, we've had to pay provisional taxes during the year and as a result, we will have a refund which will be recovered during the course of 2024. We still ended up the year on cash of $16.5 million, but you'll see on interest-bearing borrowings of $38 million, it's higher than we normally had. But we have financed the majority of that equipment that we purchased in December of the year. And through utilization of short-term facilities, we are looking at restructuring that into some longer-term facilities. But at this stage, there was a utilization of our short-term facilities. Non-current liabilities mainly relates to the mining rehabilitation provisions we're obliged to hold. And then current trade payables have also increased slightly because there was a portion of the equipment that wasn't paid for by year end. We had a split payment period that ran into January, which was settled during the course of January. If we then just go on to the next slide. Cash management, I've spoken about the cash position and we spoke about the net debt of $21 million, resulting in an available facility of $40.9 million (sic) [ 45.9 million ]. I've also just put a graph on the top right there, just detailing our corporate costs over the period. And at least, we can see the reduction or the trend of our corporate costs being managed downward. Our cash movement graph reflects that we -- Letšeng generated $65 million during the year of cash. Our net financial liabilities increased $28 million. I've spoken to that, and that's just some utilization of our revolving credit facilities. And then also the primary crushing area that Brandon alluded to. That was also a long-term debt facility and we drew down the balance of that facility. Letšeng's waste capitalized, that was 8.8 million tonnes that we mined during the year of $37 million. Investment in property, plant and equipment, the majority of that was the mining fleet. It was a portion, as mentioned, that was not settled, but from a cash perspective, that was sitting in there. We paid $4.5 million for the primary crushing area to finalize that project. $1.2 million for the underground project, again, the one that Brandon alluded to in terms of concluded during the year, and then $600,000 or $0.6 million for the bioremediation plant. All of that then just flows through to the end of the year where we've ended up with $17 million -- $16.5 million of available cash. On the next slide, I've got the guidance for the year. Our waste stripping volumes that we're looking at is between 6 million tonnes to 7 million tonnes. Again, that's down from this year or last year of 8.8 million tonnes. Ore treated of 4.9 million tonnes to 5.1 million tonnes. And that's in line with the current structure of about 5 million tonnes, obviously no AV going forward. So, that would be a constant number in terms of our processing plants 1 and 2. Brandon alluded to the 1.8 million tonnes to 2 million tonnes of Satellite pipe we'd be doing in 2024. And all of that results in the carats recovered and sold as depicted on the table. Direct cash costs, 245 Maloti to 260 Maloti. That's down from the current year or from the prior year, should I say of 288 Maloti. That's driven now by a bit more efficiencies. We will hopefully come through on the insourcing of the mining activities, together with some other initiatives looking at the processing plant. And all of these costs are notwithstanding inflation-adjusted costs. Again, operating costs at 345 Maloti to 360 Maloti is down from 374 Maloti of the prior year. Again, that just flows through from the direct costs. And then again the mining waste cash costs is 60 Maloti to 70 Maloti against 66 Maloti,. It's not as low as what we'd wanted it. However, the impact of the lower tonnes being 67 million versus just under 9 million has impacted the unit cost. We'll see an aggregate reduction in overall costs, but that has impacted the unit costs. And then total capital, we're looking at is about $5 million to $7 million, of which there is some projects to work on the sorters and recovery plant of about $2 million. And then on the tailings facilities, there's another $2 million of capital allocated to that. That is the end of the financial section. I'd like to hand over -- hand back to Clifford to talk about 2024 focus areas.

Thanks very much. We've grouped this under 3 columns. Maximum value from our operations. As Brandon has spoken about at length, we have done excellent work on updating our resource and reserve statement. We have seen the impact of the fall in price and therefore, we have had to look at our mine plan and optimize that. And that is really going to be the majority of our focus is how do we extract the maximum number of carats at the cheapest possible operating expenses. Given where the diamond industry finds itself from a price perspective and because of the cost pressures, huge amounts of work are being done in respect of all expenses from operational contracts, capital projects. All those elements of our business have got absolute maximum focus and attention. And I'm happy to say that we make excellent progress there. We really -- I think it's fair to say we are doing well there. As far as the strategic issue around energy and energy supply and our consumption is concerned, we had a very busy year in 2023 looking at alternatives and there are alternatives available. But we simply have not been able to -- yet able to mobilize the government of Lesotho to accept various proposals that we've made to them to switch our power from Eskom-supplied power into locally supplied power, which emerges from a hydro scheme. There are all sorts of quite difficult technical challenges around this and changes to legislation which need to be made. And this does require quite a large change in the government's attitude towards power. But we are not without hope. We have made some significant inroads, but I can't tell you that we are over the line. We have then also looked at completely alternative energy sources; wind, solar and similar potential solutions. But as of yet, we haven't successfully cracked the code. The issue of working in a developing nation and making the contributions not just to the fiscus, but also to the hearts and minds of the project-affected communities and therefore, maintaining and getting support for the social license to operate is something we take extremely seriously. And we're proud of our record and we continue to focus on this area to make sure that we don't drop the ball and that we continue at the high rate of successful delivery of projects which are meaningful and which are developed from the bottom-up and not from the top-down. Looking at the future. There are some practical and important issues on a day-to-day basis, which fall into Mike's bailiwick and that is, of course, renewing and extending our revolving credit facilities. We look, as I've spoken to about the medium and long-term mine planning. As far as external growth and expansion opportunities are concerned, we do not think there are opportunities for us in Lesotho. We have looked over the ore bodies in the country with fine toothcomb, examined them carefully. We can't seem to make any of them work, given the great knowledge of our cost and operating programs in the country. So, we haven't found anything. South Africa is difficult in hard yards and therefore, we've looked elsewhere. Angola certainly is an interesting place and the country is opening up and is much more user friendly. There have been a reentry into Angola by Rio Tinto, who are working hard in the diamond space, De Beers. We've seen the success of Lucapa and other businesses. The operating environment is improving and certainly the authorities have adopted a much better view as far as foreign investors and operators are concerned. I can't say that we have anything to report, but certainly we are active and looking at many things. And that I think brings to an end our formal presentation. Happy to go into questions and answers. And Jannine, are you going to manage that?

Yes. Thank you, Clifford. I don't see any questions yet. Perhaps we should just -- I'm sorry, now I'm moving to first question. Give it a minute and see if we receive any questions. Please use the Q&A function at the bottom of your screen if you would like to ask any questions. We don't have anything yet. Let's just give it another minute.

Okay. Thanks, Jannine. I think if that's -- if nobody's posting any questions, I think we can leave it at that. Please feel free to contact Michael, Brandon or I directly, or to send us an email, you've got our telephone numbers. I'm happy to take any questions if for some reason, technically, this is not working at the moment, or if there's something that you think about in the future. Thank you, everybody. And Jannine, I think we can bring this to an end.

Thank you, Clifford. Thank you very much. We just got a question. Can you see it? Should I read it?

Yes. We can't see it, but read it up.

Okay. Sorry. Hi, Clifford. Thank you for the presentation. Could you kindly update us on the status of the Ghaghoo mine?

Yes. So, this has been a long and tedious process, attempting to extract ourselves out of the Ghaghoo project. And the reason being is that the diamonds themselves, we were unable to sell them at prices above what our cost base was. In other words, we could only run that mine at a loss. We have gone through a long process of trying to sell the operation. And indeed, we've had, I don't know, 5 or 6 expressions of interests. We've taken these seriously. We've taken them through the process and got to the end. And they have failed for one reason or another. We are currently in the process of engaging with the government as to the opportunity to hand the license back to the government. And this has taken longer than what we would have hoped, because the government, on the one hand, does not want us to fully rehabilitate and turn the mine site back to its original state, remove all the plant and equipment. Because they being a diamond producing nation of some of the greatest standing, they regard this as an opportunity for the future, for somebody who might be able to do it differently and mine the ore body under a different method or using different processes. And so they don't want us to sterilize the opportunity. But on the other hand, they're not getting to the point of sign-off so that we can extricate ourselves. We have made significant progress, and there are meetings set up towards the back end of this month after Easter, at which point we really need to ratchet up the pressure here and get to a point where this matter comes to an end. They continue to be expressions of interests, but we have put quite a high hurdle rate on those before we will even engage. What I mean by that is we require deposits, non-refundable deposits to be paid, et cetera. So, that's the status of Ghaghoo. As far as the costs is concerned of the ongoing sort of care and maintenance of the plant and the site is concerned, and the safety, we've managed to cut these costs down dramatically, and in particular by the installation of a solar energy process, which has removed the need to truck in fuel to keep generators running, et cetera. So in the Main, all of the rehab work has been done for a partial closure. If the government finally tips over and decides that a full closure is required, then we will go into that. But that is not our current expectation. If that changes, we will let the market know.

Thank you, Clifford. We haven't received any other questions. So, I think we can end it. Thank you very much all for your attendance today. Goodbye.

Thank you. Thanks very much. Bye-bye.