Harmony Gold Mining Company Limited (HAR) Earnings Call Transcript & Summary

Good afternoon, and thanks, everyone, for joining us this afternoon after the announcement of our acquisition. My name is Jared Coetzer, Head of Investor Relations for Harmony. I'm here with our CEO, Peter Steenkamp; Mashego Mashego, Group Executive of Corporate Affairs; Herman Perry, Group Treasurer; Marian van der Walt, Senior Group Executive. And I've got Johannes van Heerden, our Southeast Asia CEO and Head of New Business; as well as Greg Job for growth and resource development on the line. I'm going to hand over now to Peter Steenkamp for an introduction, and then we will go through the presentation with you. Please feel free to direct your questions over the webcast. Unfortunately, we can't take calls, but I will certainly address your questions as they come through on the webcast. Thank you very much. Over to you, Peter.

Thank you, Jared, and thank you, everybody, for joining us this afternoon. It's afternoon in South Africa. I'm not sure what time zone you all are at. But welcome, and really appreciate you taking such a short notice time to have this discussion. The last time we spoke was when Harmony released its annual results for the financial year 2022. At the time, we emphasized a lot about our equity story in four parts, which is our high-grade underground assets, those underground assets optimized for cash generation; our high-margin South African service business and then our international business currently in PNG that we plan to expand. Today's marks the next step on our growth journey. On that growth is long-term value for all our shareholders and stakeholders by introducing near-term copper production in the Tier 1 [indiscernible]. I will ask Johannes van Heerden, our CEO of Southeast Asia, but also our Executive in charge of new business and strategy, to take us through the rationale for the acquisition and also -- because he was actually working very, very closely with bringing this acquisition to the fore. Johannes, over to you.

Thanks, Peter, and good day, everyone. As Peter said, we have communicated to the market consistently our desire to grow and to grow into copper and copper gold acquisitions, targeting areas within which we've got an operating hub. So you'll see when we demonstrate the benefits of what Eva copper project will bring to our portfolio, there's some significant boxes that it ticked. It brings near-term copper production to our profile. It's located in a Tier 1 jurisdiction. If you look at that map on the right-hand side of the slide, you'll see it's basically located in Northern Queensland, a premier base metal district. So it's not just a project that we're buying, but we're actually buying into a region and into a potential province that could support long-term production. In terms of some of the metrics that's important to us, we believe it will add between 10% to 15% more to our production profile in gold and gold equivalents. It has got a good position on the cash cost curve. And for an asset of this size, it's got a very decent mine life, a 15-year mine life for these opportunities actually will stand us in good stead. And we believe that we will be able to extend that mine life through growth potential in this very mineral-rich mining jurisdiction. Also copper is a future-facing metal, and we believe that there's some significant tailwinds as it relates to the potential for copper demand going forward. Next slide, please. As I mentioned, copper has got a significant demand profile ahead of it. As you would see in the slide, where I demonstrate -- and this is a Wood Mackenzie slide where they demonstrate the total copper consumption, the top graph on the right-hand side, over the coming years. You could see that there's a significant compound annual growth, which will be driven by electric network as a key component. All of these renewables that's currently being put on the grid would require a significant network to facilitate that. And then also, if you look at the bottom graph, you could see some of the key demand drivers, electric vehicles, battery electric vehicles or plug-in hybrid electric vehicles is a key component of this. You would have noted recently a lot of countries in the world are articulating views of when they want to get to the point where electric vehicles make up the majority of their fleets as well as transitioning to renewable energy, whether it's solar or wind power. Now both solar and wind power as well as electric vehicles, the copper intensity of that is significant. So we've got a very strong view that the copper demand will keep on growing, and that copper demand and growth profile in demand would support strong copper prices going into the future. Next slide. In terms of this project, when we were looking around at opportunities in the world, there's actually very few assets or potential projects or regions of significant size available that's not held by the large market cap companies. So you'll see on this slide, it basically demonstrates the position of this project on the cash cost curve, the C1 curve, as well as the size of this project in comparison to some of the other opportunities that's out there and that's been -- not being held by majors. So what we believe this project and opportunity presents is -- it's a sizable production profile in a very good jurisdiction, and it's actually well-positioned on the cash cost curve. So we believe that those attributes which will allow us to bring it forward in terms of near-term production, it's an open pit mine in a Tier 1 mining jurisdiction, will stand us in good stead. Next slide. In terms of the financing, when we applied our mind to this opportunity, that was a key consideration. So the acquisition will be funded from our existing cash resources as well as our available debt facilities. Our net debt-to-EBITDA ratio will remain very manageable in terms of progressing the development of this asset. As you all would realize, I mean, as articulated at our financial year-end results we've got a very strong balance sheet. And we will deploy this to actually pursue this growth opportunity. In terms of the offer, we're paying $170 million in cash with a future contingent payment of up to a maximum of $60 million. So that $60 million is broken down into $50 million, which is a price participation mechanism which allows the seller to participate 10% of the revenue above $3.80 per pound up to a maximum of $30 million. In addition, because this is such a prospective region, there's also a contingent exploration discovery payment of up to $30 million. And once again, that is in terms of new resources declared and discovered with a multiple applied of $0.03 per pound of copper. In terms of the timing of this proposed capital, we are currently -- or we will undertake a study update. Currently, there's a feasibility study underway. So we will complete that. And as part of that work, we will be exploring financing options for this opportunity. In terms of the photo below, you'll see we did an extensive due diligence. So you can see the terrain within which we propose to develop this mine. On the right-hand side, you can see the process plant, the Little Eva pit as well as the TSF locations. On the left-hand side, approximately 11 kilometers away is MMG's Dugald River operation. And you'll see when we talk about the detail of the slide, there's actually quite a few mines proximate to this opportunity. So there's a lot of regional infrastructure in place. Next slide. As I noted, in terms of the map on the right-hand side, there's quite a few regional mines to this project. You'll see what we highlight there is basically the tenement map, Little Eva at the top end of the prospect, the mining lease there, the location of some of the infrastructure and then also the regional tenement holding. In terms of this region and this province, it's mostly iron-oxide-copper-gold style mineralization. So there's significant copper-gold opportunities within this package. This area of region has basically been explored and developed since 1860. It's very tightly held, the exploration area. So we -- this was a key focus for us to make sure that we actually, as part of this acquisition, don't just focus on the project but as -- on the whole region in terms of prospectivity. In terms of the mine itself, it's a very simple open pit mining operation. We will mine 7 pits as part of this project plan, a very low strip ratio. The process plant, the conventional process plant flowsheet, 11.4 million tonnes per annum, which will allow us to basically make sure that we can maximize the opportunity that's presented. As I noted previously, we do believe that there's significant opportunities in this tenement package to extend mine life. As noted, it will produce 45,000 tonnes of copper per year for 15 years, which is approximately 220,000 kilo ounces of gold and at a very attractive cash cost curve. In terms of some of the ESG credentials, we do believe that there's opportunities to use renewable power. Currently, the power is anticipated to be gas power supply into the mine from regional infrastructure. And in terms of the tailings storage facility, it would be designed to ANCOLD standards. Next slide. So in terms of the strategic rationale, you'll see there's quite a few things that we've taken into account. I mean, Australia is a Tier 1 jurisdiction. So we do see that a permitted project within this area will stand us in good stead in terms of our risk profile in the group. We have articulated our desire to grow in copper and gold. I mean, this project opportunity does have a very high-quality concentrate, which we will be able to deliver to regional smelters. In terms of the production profile and margin, it ticks all our boxes from a size as well as a longevity perspective, and it does come with quite a significant growth upside. In terms of capital intensity, we did look at financing opportunities, which opportunities we'll be pursuing as part of the completion of our study process. So it's a key element that we're applying our minds to. We do believe that with this quality project in this region, that there would be a multitude of financing opportunities available to pursue. As I mentioned, in terms of risk, it's a very simple mining process, conventional open pit mining, a very conventional flow sheet and it comes with the benefit of therefore being inherently safe. Next slide. What we always said is our acquisitions need to be value-accretive as well as improving quality of our portfolio. So we're very disciplined in what we consider in how we approach our business development opportunities. So you can see it basically focuses on capital prioritization. Safety is our #1 priority, huge amount of focus on that. And then we're looking at organic growth as well as opportunities outside the portfolio and comparing those in terms of key metrics. So you'll see some of these elements that is considered is the risk profile. I mean, obviously, from a margin perspective, it needs to improve the quality of our portfolio. It needs to improve the margin. It needs to generate a consistent return. And then also in terms of our production profile, there's a minimum requirement which we want opportunities to meet. So we've applied our mind for this opportunity, I mean, both from a project as well as from a regional perspective. And we believe that this ticks all of these investment requirements. It will allow us to grow it, will allow us to continue to reward our shareholders and it will take place within a balance sheet that is able to assist in the development of this. Next slide. In terms of our capital profile, we've previously articulated some of the key initiatives that we're currently pursuing. Obviously, two of the major ones is the Mine Waste Solutions capital program, the surface sources. And then also a longer-term one is the Zaaiplaats underground project -- high-margin underground project in South Africa. We will do a study update in terms of this Eva copper project. We will then basically take it to our Board for consideration in terms of capital allocation priorities. But we do believe that this actually fits very nicely in our capital profile. As the one project comes to an end, we'll be able to slot this in. And ultimately, all of these projects will improve the quality and the margin of our portfolio and allow us to pursue the development of Wafi-Golpu, which is our Tier 1 copper-gold asset in Papua New Guinea. Next slide. So just basically in summary, we have said we have growth ambitions. We've told the market that we're looking at copper and gold opportunities. In pursuit of that, we've demonstrated that we're disciplined in our approach as it relates to that, whether it's optimizing our underground portfolio in South Africa, growing our surface high-margin opportunities as well as our international opportunities in addition to our South African underground high-grade opportunities. So this opportunity fits well into our communicated strategy, it's consistent with that. We believe it will demonstrate clear margin improvement, quality improvement as well as risk diversification for our investors and allow us to therefore reward them by pursuing this. Next slide. Peter, over to you.

Thank you, Johannes, and thank you for your presentation there. We have the questions, and Jared, I think I will ask you just maybe just if you can bring the questions forward and then we can, between the team of us, try and answer the questions that we have had.

Okay. Great. Thanks, Peter, and thanks, Johannes. So I'm just going to read the questions, but quite a few that have come through. So I'm going to start with Adrian Hammond from SBG, your questions. His first question is, will Harmony consider raising equity to fund project CapEx? If not, what options do you have that will not overextend your balance sheet? How soon could Eva reach first production? And how will this acquisition impact dividends? Have you put gold for now on the back burner for good?

I'll answer the second part of that. Adrian, we are a gold mining company, and we'd probably be a gold mining company for numbers and numbers of years. But we also would like to be a copper mining company. So gold and copper, we believe, is hand in hand. But I'll ask Herman maybe just to talk a bit about the potential financing and everything.

Thank you for the question, Adrian. Yes, I do believe there's a number of things we can look at. But do first remember that we've just taken over this asset so we will review the study that has been done on it. And we will optimize that in terms of our capital process and -- before we go into that. And once we've done that, we will determine what the optimal capital -- the funding mechanism is for this. However, firstly, we've mentioned that this does go well with our own capital profile as we had it. We have a higher capital profile in the next 2 years, which drops off. So internally generated cash can play a key part. And then at the asset level, being located wherein lease project finance can also play quite a significant role. And then on top of that, then we can look at any other -- many options that is available to us at the corporate level. But we don't want to say too much about which ones we will consider but we will say we'll do something that's optimal for the assets and optimal for shareholders.

And maybe just one thing to add to that, Herman, is that it's actually very, very short to both. I mean, the whole world is 2 years. And certainly, I think also a lot of kind of project certainty in terms of being an open cast mine, low strip ratio, those type of things. So it's not -- as you said, we have to lock in capital for a number of years to come. Thanks, Herman, for answering the question.

Thanks. And just on that, Peter, I mean, Adrian's next question which came was, has Harmony ever built a mine like this and how will we manage that risk? Maybe just starting in terms of developing a copper mine, shifting from gold to copper.

Maybe, I can help on that one, Peter. Maybe just another question in terms of this -- I mean, you also asked the question about Wafi-Golpu, Adrian. I mean, we do see that Wafi-Golpu has got a development time line that will progress postpermitting. There's a lot of very constructive conversations going on with the government after the elections. So we do want to progress this. As Herman said, we do see that this opportunity fits nicely in that time line, and it should be up and producing by the time of the significant capital burn in Wafi-Golpu. In terms of project skills, I mean, we do have quite a few people that's been part of our Hidden Valley development and recapitalization story. So if you look at that photo that we showed out earlier in the presentation, you can see this terrain is very simple compared to some of the challenges that we faced as a team in Hidden Valley. So we've got a lot of technical skills that we think we can deploy there really well. In addition, we do have some of the key members of the project team that developed the Wafi-Golpu project update and feasibility study to a very high quality within Harmony. Suffice to say, even the Project Director that actually led that process is a Harmony employee. So we do believe that we actually have adequate skills in-house to progress this development and to supervise this development. In addition, there is Copper Mountain employees that will be joining the team that has been involved in the study update. So we do actually have access to quite a lot of skills in-house. Then the other benefit of this is it is in a, call it, a mining region, which people are very familiar and comfortable with. So we do believe that this project will actually attract quality people and skills, whether it's from a contractor perspective or whether employee perspective. So we think we're actually well-positioned in there. Thanks.

Thanks, Johannes. Thanks, Peter. The next question I've got is from Arnold Van Graan, Nedbank. How comfortable are we with the initial project metrics, like the CapEx, the time lines, the cost? We've often seen metrics deteriorate when you open run to the numbers in all detail. Is this not a risk?

Johannes, maybe can I ask you to maybe comment or two because you guys were closely involved with the due diligence.

Thanks, Peter. Yes. Arnold, you're 100% right. I mean, we definitely will make sure that when we present the study outcome and we update the market, it will be based on work to a quality and the level that we are comfortable with. That's why in terms of process, we actually have allowed a period for us to update this study outcomes to make sure that we are happy with what's being proposed in terms of some of the technical elements as well as then in terms of some of the capital estimates that's related to that. So we will make sure that we don't rush into anything. We will consider it diligently. I mean, we've got a lot of operational background and history in this regional office. So we will deploy and apply that to make sure that when we propose something to our Board for consideration, that it's a robust project which is sufficiently de-risked. Thanks, Peter.

Thanks, Johannes. Our next question is from [indiscernible] at [ Wester Catcher. ] Why did Copper Mountain sell the project, not develop it themselves? And what is our expected payback period on the acquisition?

Johannes, again, I'm going to ask you to answer that because it's...

Yes. No problem, Peter. Copper Mountain, for those of you that go look at their website, you'll see they've got an asset in British Columbia, which has got significant expansion potential. They are focusing their attention on that and they want to grow and expand within that region. So in terms of that, their capacity to growth is constrained from a funding perspective. And this is why they are focusing their energy on that operating mine that they've got. You'll note that in terms of their press release, they do see this disposal as actually supporting them in that growth ambition there. So that's the reason why they exited very reluctantly, I must say. It was a very robust conversation to conclude this process. Both parties, I think, eventually felt that it was appropriate in terms of way forward.

Thanks, Johannes. I've got a couple of questions on CapEx. So I'm going to try and group them together. I think let's start with Patrick Mann's question from Bank of America. Just questioning the risk that in this inflationary environment, the current feasibility study estimated CapEx of around $600 million and an NPV of $622 million. In this environment, is there a risk that all the NPV is absorbed by higher CapEx? That's the one question. Just to follow up on that, Herbert Kharivhe from Investec has asked about the CapEx guidance changes for the next 3 years from FY '23, '24 and '25. I think it's just assuming the purchasing price according to this financial year and what happens thereafter. And then Jared Hoover has got a question. Because of the large CapEx build expected between FY '23 and '27, will this impact our hedging strategy? And will we change our hedging limits to limit or reduce any balance sheet risk?

I'd like to -- Herman, start. But some of it that maybe, Johannes, just add to some of the things that -- but I think, Herman, you probably can cover most of those.

Yes. No. I mean, I think we [indiscernible]. We'll probably keep it the same and, if anything, implied similarly, Remember that our hedging strategy is relatively short term, so we will not do any hedging until we have good line of sight. This project has a 2- to 3-year bullet period. So we will only really look at that when we get there. So we don't see a change in our hedging strategy.

And maybe then just in terms of some of the capital estimates and also in terms of the previous question from a study perspective. As I said, we've allowed enough time for us to make sure that we thoroughly review what's being proposed. We are aware that this is an inflationary environment. We have taken it into account in our investment decision. We will firm up these capital estimates as part of our study update and then communicate it to the market accordingly. Those numbers that you quoted in terms of NPV and IRR are historical numbers that Copper Mountain released, I mean, that's based on a set of assumptions that they used. I mean, what we will do as Harmony, we will use our own commodity and exchange rate assumptions and also make sure that we scrutinize the capital and operating costs. So what we will present to the market and to our Board would be a thorough review of all of those elements. And it will basically be, as I noted previously, a conservative benchmark against what may have been previously put out in the market. Thanks.

Johannes, maybe just one, if you could just touch on the time lines. I know you did speak about it in the presentation, but I've seen a couple of questions coming through again in terms of the 2- to 3-year construction period. Given the next steps, our planning process, approvals, construction, just what we expect in terms of commissioning the mine and when we would expect the first production to take place.

I mean, a few elements in that, Jared. Firstly, what we're saying is we're allowing ourselves up to 12 months to complete and review the study. The reason for that is there are some significant elements that we want to make sure we apply our minds to. And also then in terms of the market, as was highlighted in some of the questions, the market is currently running very hot in terms of some of these inflationary pressures. We are seeing that it's starting to slow in some areas. So we want to make sure that when we take something to our Board for consideration, that it is actually appropriate and that we want to execute a project in the right environment. So that's why we've allowed this 12 months, for us to finalize that work, go to our Board and present it as an opportunity. Then it would be for the Board to allocate capital in terms of our allocation priorities, in terms of which project they would want to support. In terms of project construction, as Peter noted, it's a relatively short construction period. I mean, it's supported by very good regional infrastructure, whether it's road, rail, water or electricity. So that derisks the project. As I said, in terms of location and skills, it's also derisked. I mean, Queensland is a good destination for fly-in, fly-out workers. And we believe that all of those elements will actually contribute to allowing us to build this project quite quickly. What that will allow us to do is, as Herman pointed out, consider various financing options and then also basically support our capital program going forward in terms of converting very quickly into strong operating cash flows.

Thanks, Johannes. Another question from Patrick Mann, Bank of America, as well as Arnold just in terms of the construction of this project. I'm just asking, who's going to build it? I mean, given that most of our skills typically is a focus -- we've obviously got the PNG operations at the Brisbane office. Will it be contract binding or will you operate the mine with Harmony employees?

There's quite a number of elements to be considered in this study update. So once again, there is currently not the EPCM contractor appointed in terms of construction. We will have to consider our construction methodology. Once again, we have experience in that both from the Hidden Valley construction process, and some of our key members of the team here were part of that process. So we've got good experience in terms of that. And then in terms of some of our opportunities, we will do the various trade-off studies in between contract mining, potentially acquiring the mining fleet ourselves. I mean, various financing options, we'll be exploring around that and then also employees in terms of that. So we are currently not ruling anything out or in. These are some of the opportunities we will be pursuing as part of our study update and optimizing the current work that's in progress.

Great. Thanks, Johannes. A question from [indiscernible], JPMorgan. Could we clarify what is an environmental authority grants it means? And is there environmental permits? What is the heritage status of the projects, original land owner status? Herman is undertaking a review of the feasibility study. At this stage, do you foresee any upside risks to CapEx?

I think it's quite a number of questions in there. Maybe just from an ESG perspective, once again, all the various permits in terms of that has been pursued and granted. There is one amendment that's still underway in terms of some of the project layout. But in most -- the various environmental approvals are in place. In terms of the First Nation status, I mean, there is an agreement in place. They have been thoroughly consulted as part of this permitting process. They will be granted opportunities in terms of this mine development. So that has been -- that box has been ticked. And then as you noted, in terms of the capital we will be applying our minds and making sure that when we present something to our Board and to the market, that the capital estimate would be robust and take into account the operating environment.

Yes. And if I may add, it's Marian here. We should also remember that because it's a copper asset, because it takes into account all of the ESG requirements and we believe it will promote our ESG credentials as well as our commitment to responsible stewardship, I do believe or we do believe that this project will potentially attract debt capital. And so it will be quite attractive for the markets, financial markets to get involved in. Thanks, Jared.

Next question I've got from [indiscernible] Capital. Maybe for you, Herman. At what gold price does our statement about gearing remaining below 1x net debt to EBITDA not hold anymore?

I don't think we link it to direct you to a gold price. We will -- in response to changing the gold price, we will come and go back and manage our business. So we will then adjust the business and make sure we maintain free cash flow margin.

Thanks, Herman. From [ John Aaron ]. In terms of jurisdictional risk, we talk about a low-risk jurisdiction. How comfortable are we given the increase in royalties in Queensland?

Yes, Johannes here. That's an interesting question. The royalties referred to there is what was imposed by the Queensland government on the coal mining industry currently here. Basically, in terms of some of these very high coal prices being achieved, the Queensland government basically said they want to deploy the benefits of that -- some of that to the regions. They recognize that coal mining is the industry with a, call it, limited future. And therefore, they wanted to make sure that they set up, call it, a just transition using the South African term in terms of renewables. So that was imposed. They didn't impose it on any -- in terms of copper or gold. So that was a specific element to a specific industry.

All right. Thanks, Johannes. So a question from Peter Cromberge Mergermarket. Does this now mean Harmony will look at gold acquisitions in Australia? How much of the Eva acquisition will be funded through cash and how much through borrowings?

I'll let Johannes answer the first part. On the second part, I mean, we said we're going to fund the acquisition component with cash and [indiscernible]. And we do have headroom. And so we will use that, then we will look at other funds. And Johannes can also add to that.

Thanks, Herman.

Thanks, Herman. Basically, in terms of acquisitions, once again, we've actually articulated our strategy very clearly. We're looking at opportunities in South Africa, in Africa and then in Southeast Asia around our operating hubs. So -- and in terms of metals, we're basically looking at opportunities, whether it's gold, copper or copper and gold associated. So in terms of that, we've never said that we won't look at gold opportunities in Australia. Having said that, we do need to make sure that it meets our focus. And once again, that it's margin-enhancing and value-accretive. So we remain very disciplined in what we look at, how we look at it and then consider it in terms of our filters to make sure that it achieves the specific hurdle rates that we've got in mind. Thanks, Jared.

Thanks, Johannes. Arnold's got another question here. And in terms of -- I think you're trying to put the pieces together, so something doesn't make sense. We're paying [ 3 billion ] for an asset, which could then take to the Board to consider as an opportunity. Taking into account the capital needs to -- taking into account the capital needs across the group, could we end up in a situation where the project is a nonstarter when it comes to that point?

Maybe I can quickly answer that. Arnold, that will probably be very unlikely given the -- just kind of the probability of this or actually the value of this kind of project. It's probably one of the projects that will get the [ knock ] ahead of anything else, so yes. But the acquisition costs, if you look at the acquisition cost of that is fairly low. It is not per dollar. So it's a fairly a good price that we pay. We know that, and I think many times we've also said that we most likely both find another type of acquisition that we've done with [indiscernible] what -- anything we buy going forward, we'll probably be more market related. But even given that, I think we've actually got the thing at the price that we feel very comfortable with.

Arnold, if I can add just to keep in mind that, yes, we really work the asset and then we need to develop it. So that is true. But because it is a relative short development because it's a shallow ore body, you have two benefits. The development cost is less shorter and then the ramp up we fast, and that makes it very fundable. But also sitting in the jurisdiction where it sits, it could diversify our [ proponent ] and our geographical profile. So that adds a lot more funding options to us.

Thanks, Herman. Just another question from Adrian Hammond on our dividend outlook. What's going to be the impact on dividends for this year and next year given the capital spend.

Yes, So Adrian, I think what we will do the Board will consider of the criteria each time -- at each half year as you may recall. I don't want to make a forecast on that, but we have given -- we done our policy. We've given the things that the Board will consider. And we will -- the Board will make the decision at each point.

I'll just ask one more question and then that's just from Jared Hoover at RMB. Just to what extent can the gold price fall before we need to further rationalize our assets? And does this acquisition imply a faster restructuring, such what happens at [indiscernible]? And what other -- what has driven the cheap purchase price other than being a development stage project? Do we have any -- do we expect any risks?

I think first of all, I don't think it was cheap but I think it was a fair value, to use that word but it was not -- we didn't overextend ourselves in terms of buying this asset. We always have to -- when gold price changes and -- especially with long-term gold prices changes, we always have to have -- we look at our plans in terms of how we're going to look at the sustaining CapEx, projects will take preference to other projects, et cetera, et cetera. So all of that will obviously be consistently being evaluated. Before we look at what we've done for the current year and the prices that we've used for planning and the current realized prices are going to be an actual fact in the [indiscernible]. So we're quite happy with the current prices at this point in time. So -- but yes, I mean, we go through a very, very stringent -- every year, we look at the strategy of the company, every year look at the long-term planning, every year looking at what are the projects that long-term makes sense and need to be we're going at. We have some fantastic projects both here in South Africa and outside of South Africa that make a lot of sense to develop going forward. And we will continue doing that.

Thanks, Peter. Just to -- we've almost done. There's one more question. In terms of buying development assets versus producing assets, Johannes, maybe you just want to touch on that. I know Arnold has asked about why we chose to buy as they needed to be developed rather than something in production.

Yes. I mean, maybe just to that question, referring to that graph that I used to demonstrate the position of this asset on the cash cost curve. I mean, there isn't a lot of operating copper mines with this margin available for sale. And those that would be available for sale would be at very, very high premiums. So this is why we actually saw this as a huge opportunity. As I noted in the presentation, it's got a sizable production profile. It's one of the larger ones sitting outside the majors. And it comes with a province. So you can turn it into a province development where you can keep on enhancing the quality of this producer and add additional production to it. So in terms of that, that's why we pursued this, why we looked at it. I mean, obviously, our first preference is always operating assets with immediate cash flow post acquisition. But we do have to temper that with what is available on the market. I mean, there isn't a lot of quality assets currently on the market, especially in the copper space. I mean, a lot of people have got very positive forward views on copper price and copper demand. So we thought this is actually a great opportunity, which can be supported by our operating hub. And that's why we pursued this.

All right. Great. I think we're done. So Peter, I hand over to you to close. And then if there are any other questions or if there are any particular points which you need more detail on, please feel free to reach out to me and we'll get back to immediately. Over to you, Peter. Thank you.

Yes. First of all, again, I want to thank you all for being on the call. We really appreciate that. I know a lot of things are happening, like the [indiscernible] all other type of things that take people's minds of this type of things happening. So -- and again, on short notice. But I do believe that acquiring Eva Copper is strategically important to our growth journey. Eva Copper lowers our risk and providing additional scale and meaningful diversification that positions Harmony for the future as a more global type company but also in more than one commodity. Now we're looking forward to this journey and we're also looking forward to taking you along with us on this journey. And I wish you all a very good afternoon, and have a good day further on. Thank you very much.