Kenmare Resources plc (KMR) Earnings Call Transcript & Summary

Well, good morning, everyone. Welcome to Kenmare's 2023 Capital Markets Day. It actually seems only a short while ago that we had our last Capital Markets Day in 2018, but time flies, and here we are again, 5 years later. And so I'm delighted to welcome many old friends and to see lots of new faces here. And I hope that the morning is worthwhile investment for you and it's not too boring that we have an interesting time. And so we'll be delighted to answer questions at various moments through the -- various points through the presentation. Just turning to the agenda. I am going to give a short overview, then Ben Baxter is going to address the meat of our presentation this morning, which is our plans for the transition of Wet Concentrator Plant B, which is the largest mining operation in our portfolio of concentrated plants and mining operations through from its existing location in the Namalope ore zone to the new location in Nataka and Nataka is the largest ore zone in our portfolio. And so that project is both how we are going to move that plant to an attacker, but even more importantly, how we're going to mine in Nataka and how we will address the various issues that arise from the different conditions that we face there. Then Cillian will provide us with an update on the experience Kenmare is having in the market today, what we're seeing, what trends are developing in the market and how we see it developing into the future. Ben will give us some discussion and some insight into one of the growth options that Kenmare is working to provide for the company. And Tom Hickey will then give us a review of the shareholder returns and capital allocation. And then I'll provide a final summary. I'd also like to say that we have our Chairman here, Andrew Webb and delighted to welcome our former Chairman, Steve McTiernan here with us today; and also Jeremy Dibb, who is our Corporate Development Manager and Investor Relations manager here also to help answer questions. So if I just move into a bit of an overview, what Kenmare does is it mines the Moma deposit, which is located in Northern Mozambique Nampula province. The principal product that we produce is ilmenite. Ilmenite is naturally occurring mineral, which is the main source of titanium element, titanium dioxide in the world. Titanium dioxide is used to produce titanium pigment, which imparts brightness and opacity to everything. So pretty well every industrial product in the world, which has either brightness or opacity in its surface, uses titanium dioxide pigment. Consequently, as we get more wealthy, we use more stuff, and therefore, we consume more titanium pigment. And its growth is closely correlated with GDP growth. It's also use to produce titanium metal and titanium metal while it's smaller -- it's much smaller segment of the market is rapidly growing. The ore body is huge. I think under present mining conditions, conditions are present mining rate. Our resource base will last for somewhere around 134 years. And we also believe that we will be able to extend that resource base beyond that. So it's a very large project. We mine it in a way, which puts us in the first quartile of the revenue to cost curve for the industry. It's a good position. And we are the largest supplier of that principal mineral, which is used to create pigment and titanium metal ilmenite, we're the largest supplier into the world market. There are other companies that mine ilmenite, but don't supply it into the world market that they have internally got upgrading our beneficiation capacity and they upgrade a value-added product and sell that. So in terms of actual TiO2 units, into the world market, we are not the first, we're the third, but it's still a significant position in the market. And the capital investment so far has been somewhere around $1.4 billion. We started operations in 2007, but the company has been in Mozambique for significantly longer than that because it took a long time to develop a project to get it financed and get it built and ready to go. And we make a meaningful contribution to the economy of the country with a local procurement spend in 2022 of $116 million, which is significantly up 12%, up from 2021, and that's as a result of a focused goal and activity -- focused activities to increase that internal spend in Mozambique. You can see the graph on the right-hand side of the page, makes that correlation between our sort of demonstrates that correlation, particularly in world GDP growth and the consumption of titanium pigment. So as we can assume that the world will continue to develop in terms of GDP, which has consistently done except for some very few exceptions, exceptional years. We can assume that consumption of titanium pigment will continue as well and at a roughly the same speed. So however, there are segments of the market that are growing much more rapidly, and Cillian will give us some feeling of those particular segments and there are segments, which Kenmare is particularly targeting. Titanium metal, I mentioned earlier, it's a smaller section of the market, but it is growing. It is the fastest growing element of -- fastest-growing segment of the market. It's a critical metal defined as critical by both the European and the American governments. It's a light, strong metal with the same strength as steel but 4x light and so therefore, it's particularly useful in aviation in terms of reducing the consumption of fuel. We have co-products, rutile, zircon and mineral sands concentrate. Rutile is another titanium minerals metal -- titanium mineral -- titanium dioxide mineral, but we don't have very much of it. So it's a small component of our revenues. Zircon is used in the manufacture of ceramics and for zirconium chemicals. It's a mineral, which has a very interesting supply dynamic, which again, Cillian will talk about it later. And our mineral sands concentrate contains monazite and monazite is a naturally occurring mineral, which is a precursor for rare earth elements, which are in turn used in the manufacture of magnets for electric cars and things like that. So just to continue. We see that the operation of this project in a sustainable and transparent way and with good governance is an important guarantor of this asset into the future for our stakeholders. And therefore, we do that. We try our very best to comply rigorously with every agreement we've made with the government to operate as a responsible citizen in the area that we operate. And so far, we have paid $200 million in taxes and royalties. We're the largest employer in the Nampula region. 97% of the people who are employed in the project are Mozambican. Many, many of those people are at graduate level. And we have been voted for several years as the most transparent company in Mozambique. And consequently, you can see on the table on the right-hand side that under the agreements that we have with the government, we have been gradually increasing our direct payments to government. And those direct payments are defined by a set of foundation agreements that we negotiated in the early 2000s and signed 2002, 2003, 2004. And the operation of the project is actually -- the project is actually operated by 2 companies, 1 which is a mining company, which performs the mining and concentration activities and the second company performs processing and export activities. The mining and concentration stuff is governed by the mineral licensing contract that governs all our mining, defines the taxation and royalty that is levied on the company as it transfers to the other company and also defines the transfer price that the mineral processing company is located within an industrial free zone in Mozambique. And we have a separate agreement, which covers the operation of that industrial free zone. The mineral licensing contract was issued for a 25-year term, completes in January 2027. And has explicit renewal terms in the agreement. The implementation agreement is effective until November 2024 and again, has specific renewal clauses within the agreement. And the final agreement is the power supply agreement, which is between ourselves and the state-owned electricity supply company, EdM. It runs until 2029. There have been 2 amendments to this agreement in 2013 and 2020, both at the initiation of Kenmare. We wanted those amendments and EdM complied. Now well, we have had significant issues with the delivery of power and the stability of power supplied by EdM, we have had no issues whatsoever with them -- with the agreement and the operation of the agreement and EdM's operational agreement. So we actually worked very closely together. And I would say that EdM is at present, making a very significant investment in 400-kilovolt line to Nampula, which will both increase the stability and the quantity of power available to the project. So that should be complete, that's underway at the moment and should be completed at the end of the year. So again, as I'm repeating what I've said previously, we feel that the operation of this mine in a harmonious fashion with the other people who live in this area has been a critical guarantor of the future success of this business and therefore the value of the asset. And our principal mechanism for this is a not-for-profit development association called KMAD. We founded KMAD in 2004. Before we commence construction and before sustainability was a fashionable thing and it is -- the objective of KMAD is to ensure that any particular person he or she in that local area feels that the presence of the mine in their area is good in their own lived life, not simply in the balance of payments of the company or taxed to government, but in their lived experience. And we believe that it has been reasonably successful in doing so. It focuses on 4 particular plans, one of them being livelihoods and economic development, and in this area, local people get together and propose businesses, we then work with them to develop that business proposal. We provide the financing, and we have 75 successful small businesses in operation at the moment. We've actually funded many more than 75 businesses, but we do allow a business that's not functioning well, where the business premise wasn't correct or where the people aren't putting sufficient energy or focus into it. We do allow them feel, and we think that, that failure is a learning process for the local community. We're also involved in healthcare. We built 2 healthcare centers. They are providing health care for about 45,000 people. We have built 83 classrooms. So we have transformed the educational infrastructure in this particular area in Mozambique. We've also built the first secondary school in the area, densification of secondary school and again, that's working successfully, and we have provided bursaries both to other secondary schools before ours was built -- not ours, but before the 1 in location was built and we also provide bursaries to university. Public health information would -- it tells us that the best way to affect the lifespan, to improve a lifespan of people and their general health is not through medication, but it's through the provision of potable water. And consequently, we have drilled and equipped to 30 boreholes in all of the villages around. So that's providing, again, potable water to about 45,000 people. So that's what KMAD does. And the objective is to ensure that the people think it's a good thing to have this mine here. And in general, we believe never is a case where you have a enough consensus with everyone. But in general, we believe that it's working well. And since then, since we established KMAD, sustainability has become much broader, a broader agenda. And consequently, we are not focusing on carbon dioxide emission, and we implemented a project called RUPS last year, which resulted in a significant -- which was a value-accretive project, but resulted in a significant reduction in carbon -- carbon dioxide emissions and will result in a bigger reduction of carbon dioxide emissions this year. Ben will talk about how our plans for mining in a Nataka will allow us decommission a very significant mobile equipment, mining fleet, which is powered by diesel, obviously, and we will transfer that energy from the burning of diesel and internal combustion engines into hydro-generated electric power, which has no carbon emission. In 2016, there were -- 4% of the workforce was women. It's now 15% and growing. And as I mentioned, we are very focused objective of increasing their percentage and the extent of local procurement, that's going very well with $116 million spent in Mozambique in 2022. Our -- the sustainability of our Board is very focused on biodiversity, and we have lots of different biodiversity projects underway and having a significant -- hopefully, going to have a significant effect on biodiversity in the future. So how do we do this mining? It's in concept very simple when you get down to the volumes and actual operation, even it can be a little bit more complex. But what we do is we create a pond, we flow dredges in that pond, and concentrator plants -- and a concentrated plant in each pond. The dredges mine from the front, pump sand and water slurry back into the concentrated plants, which uses spiral technology to separate the valuable heavy minerals from the gangue material. The gangue material is pumped out and replaced at the back of the pond creating a beach and building a beach and since you're mining from the front and building at the back, gradually the whole pond takes a slow walk through the deposit. And since the concentrator plant is floating in it, it goes too and therefore, you're bringing the factory to the ore rather than inconventional mining where you bring the ore to the factory and consequently, the costs are lower. That's the reason you do it. And the benefit of this type of mining is you replace the area, you've mined as you go along, so you can then rehabilitate the ground where you have been previously and handed back to the local community for farming. So between we compensate farmers for the crops and take the land, and it is then back in active farming activity. It's probably about 2 years. As I mentioned, most of the power that's supplied, it comes from hydrogen generated electric power. This is just a location on the East Coast of Africa. Mozambique is a very long country with the capital write-down at the southern end. So we're quite far from Maputo. So at the last CMD, we talked about the projects that we envisage to implement during the next 5 years. The first of those was an upgrade of Wet Concentrator Plant B, from 2,000 tonnes per hour to 2,400 tonnes per hour. That was implemented. It worked very well. Project was delivered on time and on budget. And then we built a Wet Concentrator Plant C, which is a new smaller Wet Concentrator Plant and associated dredging operation -- because it's smaller, it can get to areas in the ore body that the larger mineral separation -- mineral concentrate -- Wet Concentrator Plants can't get to and C is now working very effectively and has been producing for the last couple of years. And finally, we had to move Wet Concentrator Plant B, which at that stage was 2,400 tonnes and with somewhere around 7,000 tonnes in mass from its area, where it was mining in Namalope to a new mining area, Pilivili, and that was done during COVID, and it was successfully implemented. I think the distance of 23 kilometers we picked the plant up and drove it down the road on trailers. And our understanding is that, that was the largest mass ever moved by that distance on road on earth ever. And it was put in place in Pilivili and has been operating successfully and contributing ever since then. So those are the projects that we did at the last CMD. And we will -- that we mentioned at the last CMD and we're going to discuss a couple of projects at this one. One is as I mentioned, the transition of Wet Concentrator Plant A. And then we are also going to talk about an upgrade to Wet Concentrator Plant B. The move of Wet Concentrator Plant A is going to be very different to B, where B, we lifted up, moved it down a road we built. And with regard to A, the area between where A finishes, in Namalope, and where it starts in the new mining zone in Nataka is mineralized. It's just not mineralized as highly as either of the other specific mining zones. And so therefore, we're going to mine our way from Namalope to Nataka. It will take 2 years. During that period, because the ore is less highly mineralized, it will produce less heavy mineral concentrate, and there will be a dip in production. We signaled that dip at the last CMD and said then that we would spend some time in the intervening period, scratching our head, trying to figure out how we would resolve that particular dip in production in 2025 and '26. And we've looked at a whole bunch of different alternatives. And by far and away, the best of those alternatives is to upgrade Wet Concentrator Plant B. And we looked at that pre-feasibility studies being done on that. And it looks like a great project, great financial metrics and fills in the gap and then provides additional HMC in the coming years. So we think it's a really exciting project and one that well provide benefit, both in filling the gap and good financial returns and good supply of heavy mineral concentrate in future years as well. So the objective of those projects was to move Kenmare from its position in the middle of the cost curve for the industry into the first quartile, and that was successfully achieved. Kenmare now operates in the first quartile of the revenue to cost curve for this TZMI feedstock industry. And a huge focus of the pre-feasibility study that we have been doing on the A transition to Nataka has been to ensure that we retain that first quartile position as we roll into the future. So most of the money that's being spent is being spent on new capacity, new equipment, new capability, which will ensure both volume and the cost-effective mining of Nataka well into the future and guarantee our future. So those are the things that we mentioned that we have accomplished. One area where we haven't quite achieved as much as we thought is with regard to slimes management. And in 2018, I don't think we fully internalize or fully understood the comprehensive nature of the negative effect of slimes in the ore body, as those slimes percentage has climbed and remain at a consistently higher level. We have in mind of those consistently higher levels previously. Slimes are some very small particles. It's not some duck from Ghostbusters or any. It's just small particles in the ore body, smaller than 45 microns. And when those particles go into water, because they're still small, gravitational forces are not very high on them, and they are balanced by intermolecular forces in the suspension. And so therefore, it doesn't settle very quickly. And if you keep on mining more stuff and there's a lot of it in your ore body, the pond that you're floating in gets to be a sort of a bit of a soup of this material and it changes the viscosity of the liquid that you're floating and from water, which is a viscosity 1 to a higher viscosity. So how does it affect us? Firstly, when we dig this stuff in the first place, it's harder to dig. So therefore, our mining capacity -- the mining capacity of the dredge reduces. So a dredge that can do 1,500 tonnes an hour in relatively free flowing material and material of 5% slimes, if you put it into material of 15% slimes, probably does 500 tonnes an hour. So your dredge hour goes right down and how we balance that as we've balanced that by supplementary dry mining. And that's effective method of balancing the reduction in throughput of the dredges, but it's more expensive because you have to operate a dry mining fleet and you're burning diesel, which is a more expensive way of delivering energy. And then it affects our processing in a whole bunch of ways. It reduces our recovery. It reduces our throughput. It reduces the utilization of our equipment. And then the management of our products behind becomes much more complex and much more expensive. So as we fist into the coming couple of years as we complete in Namalope, and then we move to Nataka, we had to decide how we are going to deal with these slimes and we did a lot of test work and a lot of analysis during the pre-feasibility study. And we believe we've come up with a solution which effectively deals with it. It really is a good solution. Basically, it means that we're going to invest in significant new capacity on Wet Concentrator Plant A, which will -- as those slimes come on to Wet Concentrator Plant A, will separate them and then take them away entirely and place them in a tailing storage facility. So therefore, while we are presently facing a situation where our rougher spiral circuit, so the start of our separation circuits are being -- are having to deal with material, which is 16% slimes as it enters the circuit, that will be back down to 5% slimes and 5% it's way within normal operating levels and is actually a very good level. So we're excited. We think it's going to be a great day when that circuit gets implemented. And that slimes are gone. And so with that, I would like to ask Ben to come along and talk a little bit about -- in more detail about that. Thanks.

Thanks, Michael, and good morning to you all. So I'd like to walk through a bit more of the detail of how we're going to get successful mining in Nataka and how we're going to bring WCP A up to capacity so that we deliver long-life and low-cost production. So our aim is to get Nataka and use the Nataka ore body, which is 75% of our ore and match that to our largest dredging and processing operation, WCP A. WCP A completes its life in the Namalope deposit in 2025. And as you can see from this chart, the Nataka represents 75% of our ore body. And so it makes sense to put our largest piece of equipment into that ore body and make a success of this 6 billion tonne deposit. The plant is immediately adjacent, as Michael was explaining, we have to transition into the heart of the high-grade part of Nataka, but it's a direct transition. So we don't have to pick up WCP A and move it on the trailers as we did in the past with WCP B. Nataka though is a different type of ore body. It's -- first of all, it's a good thing. It's got big dunes and big dunes mean that your advance rates, you get more tonnes for every meter that you advance through the ore body. That means higher utilizations and lower costs. So that's a good thing. But we also see that the grades are different. And in Nataka, the grades will be 3.1% total heavy minerals. This is slightly down on the overall grades that we've been seeing in Namalope recently, but it's significantly more than the dredge grades that we've been seeing in recent times. And you can see we're rising up from 2.7% to 3.1% in the future. Probably the largest difference though that has concerned us and has taken us through most of our challenges of this PFS has been how to overcome the increase in slimes that will come in the future. As Michael explained, we've had increasing challenges with slimes in the last couple of years. And we knew that it's going to -- we going to have more slimes in the future. And so the goals of our pre-feasibility study has been really to make sure that we can bring WCP A to its maximum capacity, make sure we restore the recoveries that WCP A experiences in high slimes, bring them back to their designed recovery. And then -- and we do that by having to overcome all of the components that slimes brings to the operation, whether it be in mining, in processing or in the tailings management side. And do all of this at the same time whilst retaining our first quartile revenue to cost position. So improving the delivery of WCP A, it starts with the mining side of things. And to do -- to bring the feed to the mining feed of ore to the right tonnages, we need to invest. And we need to invest in 2 large new dredges. These will replace the existing equipment. And our studies have shown that dredging is by far and away the best way to mine in Nataka. We've done studies in all sorts of different mining methods. And -- but we can't get away from the fact that dredging is high productivity and low cost. And that is 1 -- that is Kenmare's competitive advantage. So we've looked at new dredges. They've been scoped to deliver in the hardest conditions that we will encounter in Nataka. So we knew that dredging was a good way to mine, but our existing fleet is under powered to deliver to the tonnages that will require to fill WCP A in the future. This graph on the right-hand side shows the existing throughputs that we're getting from our dredges, supplemented with the dry mining and we're not able to achieve the capacity of WCP A, but by increasing the cutting power on the new dredges that we're going to buy, they're going to go from an 800 kilowatts of power to a 2,700 kilowatts of installed power. It's a huge jump in cutting capability and productivity and that will cause our operating window to move above the concentrator capacity. And that will happen in all conditions. The hardest conditions, which are relatively rare, we'll still have 10% capacity -- overcapacity available. In normal conditions, we'll have about 50% overcapacity. That gives us the ability to keep the concentrator full and therefore, that gives us consistency of the HMC production that will come from WCP A in the future. We've also looked at a system called hydromining. Hydromining is the commonly used mining method in the industry for mining high slimes deposits. And we've tested it in Nataka. It's been a very successful test and some clear advantages to hydromining have come through. What we recognize, though, is that the right way to use hydromining is to marry it to the high-productivity, low-cost dredging system. And we used -- and on the next slide, I'll be able to show you some stuff. But we saw that the tonnages improved as we brought in hydromining. This is -- I'm sorry, I haven't explained that. Hydro mining is the use of high-pressure water using through a water monitor gun where you blast that water onto the mining phase and it brings steady collapse and you can see the photograph there on the right of us testing it in Namalope -- in Nataka. That advantage is, first of all, it brings consistent throughput, but it also delivers higher throughput and safe face angles, which mean that the dredges will operate safely and productively in the future. Now with us, therefore, focusing all of our production into dredging, we see some excellent simplification of the WCP A operating footprint. We will be eliminating the dry mining that we currently do, and that brings significant cost reductions. Michael explained how the dry mining that we've been using in the past is a high-cost form of mining, but was needed to supplement in order to make sufficient heavy mineral concentrate. That heavy mineral concentrate will now come from dredging only. So I'd like to give you a little bit more confidence of how we're going to achieve these improved metrics. The mining method that we're going to be operating with, as I said, will always deliver to the nameplate. And we've done -- we're confident in dredging and we're confident in dredging in Nataka because we've looked at many different types of mining method. We've studied dredging, dry mining with front-end loaders, bulldozers, bucket-wheel excavators, we kept coming back to dredging being the right way to mine this deposit. And then -- but what we really needed to do was match the dredging process to the hardness of the ore that we encounter in Nataka. That has been done firstly, by extensively drilling across the Nataka ore body using hardness drill method. So we came out with a map of where the hard areas are in 3 dimensions. And we understand the hardness of that ore body. We then verified what the drill holes were telling us by digging a geotechnical test pit into the ore body 25 meters down, 100 meters across. We exposed the ground and now -- and gained an understanding, got our geotechnical engineers to actually touch it, feel it, make sure that they were comfortable that what the drill holes were seeing was how that ore would behave when it was exposed by a mining method. That hardness information has been taken and put into the design of the new dredges. And we -- and in bringing that design in, we've sized that cutting capacity so that we always exceed the plant concentrator capacity. So feed will always be available to WCP A. We then took that geotechnical pit, and we converted it into a mine. And we did the hydromining testing in the pit, in Nataka and verified the way the mine will behave when we get to mining in Nataka. And I'd like to just show you a little video, which shows you how the hydro mining assists in delivering feed and how it will work with the dredger. So you can see the hydromining operating here and he's cut a slot, 2 vertical lines and a horizontal line and is busy undermining that piece of ore and the idea is that the dredge will be underneath this area. Now you see the collapse coming down in a controlled fashion, a constant fashion. And the dredge cutter will be at the base waiting to take that sand that has been deposited in front of it. And by mining in that fashion, in a swinging way, which is how a dredge works, you will find that the feed comes in a consistent and safe way to the dredge cutter. And that -- so we took that learnings from that test pit and then we took the hydro gun and put it on the dredge at WCP A. And the photograph there, you see at the bottom is us testing how that method would work when you integrate the dredging and the hydro mining together. And I'm happy to say that whilst those dredges are undersized to deliver the capacity and why we need new dredges, the principle of the integration worked very well, and we saw increases in throughput coming through when we integrated relative to the normal mining conditions that we currently receive. So when I wrap all of that up, it gives us a lot of confidence around the future mining capacity. We've got tested methods. We will have a safe and productive method. Slimes is mitigated. And because we're removing that supplementary high-cost mining component, we remained in the first quarter costs. So after we've done the mining, we've gotten our processes ore. And the intention of our changes at WCP I -- WCP A are to remove the slimes at the very beginning of the processing stage. So that downstream from there, we have clean heavy mineral feed, and we can return to the throughputs that the concentrator spirals can achieve and the recoveries on those spirals. It's a pretty fundamental change to WCP A and what we're going to be doing is replacing this current screening and feed preparation area, which is the surge bin and the screens and incorporating screening, a surge bin and upfront desliming into one new plant and this is a picture of the plant on the left-hand side there. The reason we're doing that is it's easier to build a plant to the side and then float it in, ready to go uncouple with the old plant and reattach and go, you keep your downtime low, and you create a lot less risk -- project risk in terms of delivery times. The aim of this is to be able to get the spirals to receive slimes grades of less than 5%. And the upfront desliming has been sized to be able to take ore from an average 16%, but as high as more than 20% and bring it down to the 5% level. That will allow us to get clean tonnage, full tonnage onto every spiral and to be able to get those spirals to separate light minerals from heavy minerals in a less viscous fluid, which creates the recoveries that we need to get back to. There is early benefits in this. You've seen that recoveries in recent times are not achieving the 90% level, which is what we expect. And so early implementation of this project will deliver a return to those levels of 90% heavy mineral recovery on the spirals. And we'll be looking to implement this project in early 2025 when -- after the construction period. Okay. So I've talked through the mining side and how we're going to get the capacity up, talk through the processing, how we convert it into heavy mineral concentrate. But the slimes that we generate still has to be disposed. And so this is a little bit of a talk through how we're going to ensure that the settling process doesn't interfere with the production of heavy minerals as has been the trend in the last couple of years. So we're approaching our operating limit with the -- with the trailing paddock system that we currently use at WCP A. This is a system of a hierarchy of paddocks that carefully and slowly settle out the slimes and release clean water back to the mining process. In the future, we're going to eliminate that process because the slimes will be removed upfront and sent to an external facility called a tails storage facility. That tail storage facility will be decoupled from the production process. What happens when you do that is you get higher utilizations in your production plant and you get the -- and the failures of the paddock system, which dropped recoveries is no longer there and able to impact on the production process. The tail storage facility is designed or it's in design, but it's certainly, it's gone into definitive feasibility design right now. It's designed to last for 7 years. That 7-year period is to deal with the early years of mining in Nataka. Thereafter, we move the tail storage facility to an in-path storage facility further to the West in the ore body, so that we can keep the pumping distances low and therefore, keep our costs down as we move slimes from the wet plant to that fixed tail storage facility. You can see the design on the top right there. It's actually in a valley. So it's quite a simple process to place the berm across the front of that valley and store the slimes behind that berm. We have the drainage -- the civil engineering required in creating the drainage facilities so that we can recover water from that tail storage facility and bring clean water back to the mining operation. And slowly but surely, we fill that over that 7-year time period. With the move of slimes to one external facility, we create a lot of simplification behind the wet plant. Right now, those who've seen the way our tailings work, it's quite a complicated and expensive method of in-placing tailings and a lot of infrastructure is required for it, a lot of bulldoze hours to create those paddocks. We will not -- no longer need that. We will have clean tailings, coarse tails, which we can bulk stack immediately behind the mining plant, and that brings down the costs, but it also reduces geotechnical risk significantly, and that brings a lot more assurance for the business. Again, there's benefits in doing this early. We're already experiencing that the paddock system is a challenging thing to manage. So we would like to get this implemented as soon as possible as well. I'm going to move on to the capital. So the costs of these various components of the project are phased over a 3-year period and amount to $247 million. We can see on the right-hand chart that the dredging, the upfront desliming and the tail storage facility are all scheduled to be delivered in the first part of 2025. That's prior to moving into Nataka. We can get early benefits of about a year by pursuing these projects sooner and get real benefits in Namalope as well as when we get to Netaka. Then the infrastructure for Netaka obviously, comes a bit later as we move into the Netaka area. As Michael said earlier, this is not capital that's for the move itself. This is capital in equipment, which then facilitates the future mining and the future productivity of the business. So it's -- whilst it's an appreciable amount of money. It's money that actually delivers tons. We see that the new dredges, they deliver the first quartile production because of the excess capacity. We have further work to do in our DFS phase to get the tail storage facility to a better price. We think there's opportunity there. And one last point to mention, is further down the line in around 2028 as the distances as mining in Nataka start to increase our power consumption starts to reach the limits of our current infrastructure. And so we expect that there could be about $25 million of additional power voltage support infrastructure that could come in at that later date. OpEx, and this is a very pleasing chart for me in that we remain broadly flat on OpEx going into the future. That's how we remain first quartile on the revenue to cost curve and this has been a key consideration of the pre-feasibility study. We're offsetting the additional distances and the lower grades that come in time by having savings by removing the high-cost mining method of supplementary mining. We're doing that by having greater pumping efficiency by reducing the diesel consumption that we have and converting to the hydroelectric power that we have available to us. And you can see that in the graph on the right, that currently our diesel costs relative to electricity costs, the ratio changes quite significantly as you move from today through to 2027. We also see the elimination of the trailing paddock system as removing diesel, maintenance costs on mobile fleet and production overheads as well. So that is essentially how we balance the OpEx for the future. So in summary for Nataka, the long-term plan is to have this plant running at capacity and that's what we believe we've achieved with this plan. The -- there is an enabling nature here where consistent operations at concentrator design capacity gives assurance to HMC production and removes the risks and the outcomes that highest slimes has delivered to us in the past. The mining feed constraint is gone, and we see that it's gone in all mining conditions. There's 10% overcapacity in the hardest conditions in normal conditions, that 50% overcapacity is what we expect to be able to give us consistent delivery. We've dealt with slimes in the process. We've dealt with slimes in the tailings storage and kept our first quartile position. The picture on the right walks us -- we can just walk through what actually this mine plan now looks like. So you see where we are in April 2023 today, as we move through to -- from the right side to the left on the gray path, we go past where our new tail storage facility will be before the dredge reaches the transition channel in Q4 2025, we will have cited our location for bringing in the new dredges, for bringing in the new plant that will do the upfront desliming and we will have got the tail storage facility commission. We get to the beginning of the transition path Q4 2025, that takes us 18 months to 2 years to get through. And by Q2 2026, we're starting to mine what we call the high-grade 20-year path. And that will then open up ground for the in-path tail storage facility to come at that later date. The path where we still have a challenge and which I'll move on to talk more about in a moment, is getting through the low-grade transition period. And that's going to be the focus of my next slide. So you'll see in -- if we remind ourselves of what we said in the Capital Markets Day of 2018, that we would have an ilmenite shortfall as we crossed that transition. We already had a view of this dredge path or something similar to it back in 2018. And we also said that there would need to be additional capacity post 2027 to maintain the business at 1.2 million tonne ilmenite production rate. Those 2 situations haven't really changed very much. And so we've been spending time over the last few years, 3 years probably, looking at different options of how to close the gap and bring in that additional capacity for the future. And today, what we really want to explain is that we believe that the expansion of WCP B is the right way to deliver on those 2 gaps. We do that. We believe that because the grades in Pilivili are the best grades that we currently mine. So whilst the gap is in place, it makes sense to close the gap with the highest grades you can so that you need the lowest capacity increase. But also the fact that there's a contiguous dredge path that goes all the way through to 2050, means that the increasing the size of this plant to 3,400 tonnes an hour doesn't bring big move costs or relocation costs forward in the future. We're moving directly into the next ore body. And so we see that there are not the issues of bringing forward capital in the future to concern ourselves with. So what will we be doing? We are going to add 1,000 tonnes an hour of additional capacity to WCP B. And that is sufficient capacity to close the gap and also bring additional HMC on future years after the gap is closed so that we always have sufficient HMC in front of the mineral separation plant and can deliver the 1.2 million tonnes level. We do that, firstly, with mining. The mining process is currently a single dredge feeding that plant. We will bring one of the dredges from WCP A that has been replaced and take that to WCP B as a very capital-efficient way of bringing 1,000 tonnes an hour of additional capacity into the operation. We will also upgrade the existing dredger to get some incremental benefits from the dredge that we already have. And that will deliver the 3,400 tonnes an hour that we are looking for on average. The processing side is an upgrade really that just deals with having more of the equipment that we already have. There are no changes in the process, so to speak, it's just capacity upgrades, we need more screening, we need more spirals and we need more tailings management in order to cope with the additional material that we're going to be mining. And on the graph -- on the picture at the bottom right there, you can see the bright colors are the things which are new. So it's really screens at the back, spirals and a little bit of extra buoyancy to cope with the additional mass that will be on the plant. But this plant, it's not a new plant, it's the existing plant and it's retrofitting equipment to that existing footprint. So on to the returns that the project gives and I'm really very happy with the way this project has come out because we see, first of all, that we do the physical things. We closed the ilmenite gap, and we deliver good HMC production thereafter, about 250,000 tonnes per annum thereafter. But it's front weighted because of those high grades in Pilivili. And so the gap is closed by producing 430,000 tonnes of additional final products in the first 3 years. Thereafter, steady quantities of heavy mineral concentrate so that we can deliver the 1.2 million tonnes. And this is for a capital cost of $41 million. If you think -- well, firstly, $41 million for those additional products, it's a 2-year payback, which is very, very compelling, but it's delivered in the GAAP years so that gives additional benefit, immediate benefit. And what -- maybe just to give you a sense of the value of this project, we built to, in 2019, the WCP C project for about the same money for 500 tonnes per hour. This project, we're now going to deliver double that amount of capacity in the ballpark same amount of money. The maximum benefit, obviously, the benefit of this project lies in closing the gap early. So moving forward, into the definitive feasibility stage is imminent, and we will be moving through to get us an earlier commissioning date as possible to maximize those benefits. And so to pull this together and look at what does our longer-term mine plan really look like once we've delivered both of these 2 projects. You can see that we -- well, from what I've described, we eliminate the bottleneck of the traditional bottleneck that we've had at Kenmare, which is that the mining fell short. We have the processing capacity in the mineral separation plant, but we couldn't fill it. We now will have sufficient HMC in all years going forward. That allows us to be happy to deliver the 1.2 million tonne production level. The combined capital for the next 3 years to deliver that is $288 million. We're doing that whilst now mitigating the slimes that we have. We have an ilmenite gap that's closed. And you can see there that in some years, one, we hope that we will have excess HMC production, primarily that our goal is to have a healthy HMC stockpile in front of the mineral separation plant that gives us consistency of delivery because the feed is there to treat through the mineral separation plant. But there is potential if that becomes excess that we can then start to look at future optionalities such as further debottlenecking of the MSP and to convert more material into final product. I'm happy with the first quartile position that we're retaining. It's a great place to be and it will help us through the commodity cycle to always be producing profitably. And maybe my last point is just to say that this process of the feasibility studies has been very thorough and it provides a lot of confidence in the plan, and that's what we really want to express today is that we really think that we have found a mine plan here that can deliver with confidence going forward. And with that, Michael, I'm going to pass back to you to open up the floor for questions.

Thanks, Ben. So remarkably, we're ahead of time, which hasn't happened I don't think before, but anyway, we'd love to sort of discuss this with anyone who has some questions and to answer those, Richard Hatch. And guys, we -- this has been filmed I think, is it filmed? Yes. And so if we could use the mic for the questions, I think it would be great. I will go on the website afterwards.

Rich Hatch, Berenberg. Two questions. First one, just on power, seems like you're going to be using a lot more power in a A and then upgrading B. The big challenge for this mine over the last 10 years has been supplier power into the mine and the variability of that. Are you comfortable with the grid actually coming into the mine that you've got what you need to hit that 1.2 million tonne per annum level. Or is that just something which the market is just going to have to continue to factor in as a risk factor? And then secondly, just on the tailings storage, do you need to permit that? Is there anything that worries you? Or are you comfortable with the timing of that on the critical part?

Do you want to...

I will like...

I'll take those questions. So the power situation at Moma has not really been ever about capacity of delivery of power. So as the power, we believe that we have the power available there may be a shortfall, as I explained later in 2028, and we'll need some minor upgrades there. On the reliability side, EdM have put a lot -- but you know as well, we've put a lot of effort into power resilience reliability through [ Dip Doctor ], through the recent RUPS implementation. EdM have also been working on power reliability and are busy putting in a double line to eventually feed through to nonpolar where -- so we expect good -- good reliability or improving reliability going forward. We can't obviously say it's going to be perfect because that's -- it's not all a double line all the way to Moma. But we do believe that we're in a better -- we will be in a better place going forward. The second question was -- on the tail storage facility permitting. So yes is the answer. We do need a permit. The environmental impact assessment is currently started. We have looked -- and we are designing that tail storage facility according to what's called the GISTM, which is the world standard on how to develop tailings storage facilities, bringing in all the knowledge that's been learned over the last 5 years and so since the Brazilian events and so on. So we believe that we have the right design process going on and the permitting process follows with that. So yes, there will be a permit, but we believe that we have -- our design location which doesn't have communities downstream doesn't have community resettlement in the footprint of the TSF means that the permitting process will be more easier than it could have been -- otherwise been.

If I could just make a few complementary remarks. And so Richard, in the early part of this year, there was a lightning strike on the line. And I think that's a risk that we're just going to have to -- that was very proximate to the -- to the project. And things like that happen, and that will be an ongoing risk that electrical storm activity can damage the transmission lines and so -- so unfortunately, I think we will still have to live with that. However, we have a good confidence that the combination of our [ Dip Doctor] the RUPS facilities, which ensure that the mineral separation plant can continue to work come what may, and the increase in capacity in mining, which will allow us build a larger inventory of HMC, well, all in all, ensure that the situation is better than it presently is, for sure.

It's Colin Grant from Davy. Just a couple of questions. Firstly, you mentioned at the start, you've invested about $1.4 billion to date in terms of development of the mine. I'm just wondering what you think the replacement cost would be if you were to start from scratch today or somebody was and to build what you have, what that cost would have increased to, presumably, it's moved higher with inflation over time? And I'm just trying to get a sense of replacement costs within the industry today.

More, I suppose, what I would say is that in the development of the project, the original -- where concentrated plan -- where concentrated plan A was bought secondhand in Australia and transported to -- the coast of Mozambique and landed on the beach and then reassembled as was the mineral separation plant. So within that USD 1.4 billion, there is significant saving from the very, very low-cost secondhand purchase of that plant. And then there is a significant increase in capital associated with doing anything these days. Well, certainly more than 2, I would have thought.

Okay. That's helpful. Just in terms of the cash operating cost point then, just on the graph you gave, it looked like there might be a slight reduction in cash operating cost per tonne for the next few years adding to 2026 on a small basis. It seems to be coming from labor costs. If you've got an increase in your power share and a slight reduction in the labor share of those cost. I just wondered if you could just give us a comment just on the next few years in terms of the outlook for that, please?

So I think what we would say is that we wouldn't like to commit to them going down at this point in time. It's nice to see that a model at this point in time is predicting them maybe a little bit of potential there. But I think to say that it will happen at this point in time, there are many variables out there. I would like to rather say that we expect that the costs will be flat.

That's probably a function of increase in production because a lot of the cost of fixed cost if the production goes up, your cost per tonne goes down.

I'm [ Mark Burn ] from [ JBM ]. Michael, you said that the mineral licensing and the implementation agreements are both renewable in '27 and thereabouts, what sort of terms, are they on the same terms as the original ones? Or is it -- are we going to spend this capital and then find that we're getting new governmental terms?

Our expectation is that there will be renewed on roughly the same terms. There might be some minor adjustments, but our expectation is that they'll be renewed on roughly the same terms.

And can we bring that forward before we spend the money or they just set in date of -- the dates are set?

Well, the implementation agreement, which is due in November 24, we have already initiated the process and we are in process with government on that. And there's nothing untoward has occurred in that process, [ Mark ]. So it would be -- it would be -- interesting decision to say, okay, well, we're not going to move ahead with all of this stuff. Just in case the government might behave erratically. So far, the government has behaved responsibly and we don't believe that there should be any change in that.

So acceleration is not something you're considering or thought?

No, not really. No, not really.

[ Andrew Chubb, H&P ]. It's a question for Ben. Could you give a little bit more color on the technology or the sort of how you're going to manage the slimes upfront before they go to TSF? How do you separate them?

So yes, thanks for that, [ Andrew ]. The process is a conventional process. We already do it at WCP B. The plant receives the feed over screens and the underflow of those screens which contains heavy minerals and slimes goes to a set of cyclone separators, centrifugal force separates the sand from the water in a cyclone. And because of the fine nature of the slimes, the slimes goes with the water. And that's a process which we currently use. It's currently at WCP B. It's not in the design of WCP A currently. But obviously, this is the way that we will de slime in the future. And so we've sized the cyclones to be able to cope with slimes conditions up to 25%. So we're taking that quite well beyond the average that we expect to see over the future.

That's great. And one for you, Michael. Is there any impact by the issues in Northern Mozambique and Southern Kenya with ISOS or the derivative thereof? Or is it...

None. None. We have no experience of any issues that have occurred [ near ISOS ] or anywhere in the vicinity [ ER ]. Even in some significant distance away. So it's just not an issue for us -- certainly at all.

[ Hi, all ]. It's [indiscernible] from [ Liberum. ] A few questions, if I may. First of all, has there been any -- is there more clarity yet on the OpEx and CapEx cost of the lightning strike?

No, I don't think so.

We haven't yet concluded the analysis. It's quite a lengthy process of understanding the root cause of the lightning strike, and we haven't completed that yet. We are incurring some additional costs. It's not material to the business to get those spares restocked. So we're not, but I don't have a cost to yet give you would say how much that will exactly be.

We did give some guidance around the time of results, and it hasn't really changed, which was high single-digit millions that falls into 3 categories: physical damage, effectively increased cost of working as a consequence of responding to it. And then the production loss during the period and we're going through the process with our insurers. And the last industrial visit site in March, just to wrap all those open effect if we get some extra possibility, but it does take time.

That's great. Given how well hydromining seems to be working, seem to work at Nataka. Do you think you might also integrate that with the other WCPs. I can't remember whether they have them. I don't think they do.

In WCP A Namalope is urgent.

No. I mean what about -- B and C?

So presently B has very low mining faces. So there's really nothing to aim your hydrogun at and see, potentially, same, the other thing about C is that what we did was when we developed C, we said, okay, we never want this wet concentrated plant to suffer from not having enough ore supply. And therefore, we sized the dredge in such a fashion to ensure that, that was never the case. And so C always has enough supply. But we are thinking about putting those hydroguns on to the existing dredges that wet concentrator at Plant A, while it's active in Namalope. And we're saying, look, it does give a good effect. Why not get that early and get the benefit of it. So -- and the photograph you saw was, in fact, of a hydrogun on our existing dredges in Namalope, and it was very effective. So yes, that is an operating plan.

Very good. In terms of the -- in terms of the storage of the slimes in the TSF, would the concept be that you let water evaporate or drain from -- and therefore, let the slime settle. If that's the case, then what happens if you have an extreme rainfall event, will you get liquefaction? Is that going to be an issue?

So the process by which the design is taking place is that when we take slimes to the W -- to the tail storage facility, the intention is to create a beach. So as that slimes hits the floor, it creates a trailing beach, then that allows then for water to drain downwards into the drains that we've designed to recover clean water back. But also, there will be some evaporative drying. Now to deal with extreme events such as a big rainfall event or something like that, the walls all the way around the tail storage facility are significantly high. And it's a natural valley with very steep sides. So we don't foresee that extreme events would become a risk to the plant. Rain that collects in there will be part of that, we'll land on to those beaches and clean water will emanate to the sump or to the -- or be drained through the tail storage facility and collected in the -- from those drains.

On -- also to say given that particular valley was chosen because there's no habitation [ done ] valley of the tailing storage facility. So people are not in the way of -- at harm's way. Okay, well at which point, I think we have some teas and coffees available for everyone to resuscitate themselves for the next part of this meeting. So thanks very much. [Break]

Good morning, everybody. Today, I'm going to talk through our markets and really first give a brief overview of titanium feedstock market as that's our primary market around 75% to 80% of our revenue comes from that [ pipe ]. Going to talk to the current macro dynamics and a bit of an outlook and then talk about the trends we're seeing within that. Finally look at our position in the market and how we're acting as a supplier to it and then look at our co-product revenues as well because that's been growing quite rapidly in recent years and kind of a nice picture to start on there, it's the zircon product, and that is being, I think, emptied as we speak today. So starting off with the market and the titanium feedstock uses, titanium pigment is the biggest use for our products, ilmenite and rutile, and [ spent ] 90% of the market. That's things like paint, plastics, paper, anything that needs really opacity and brightness, titanium pigment is used as the preferred pigment and really nothing of substitutable quality has been discovered as of yet, and we don't see anything coming. So it's very important really to everyday items. And that's why we have seen and continue to see a strong link between the demand for TiO2 pigment and the demand for -- and global economic growth. Welding and other is 5% of the market, but another growing part at the moment, it says 5% is titanium metal, and Michael touched on it, but we'll show later in the presentation what reasons why we think that's going to grow and take up a greater part of the market in the coming years. In terms of the producers, I think there's -- you can see us there, we're about 7% of the market through our ilmenite and rutile supply. And we are the largest supplier of ilmenite to the market. Others tend to upgrade it themselves, that will be Rio Tinto and Tronox are above us there. An important one to look at there is Chinese ilmenite as well. So it's 35% of global supply now. It's very significant, but it does have quality issues, which we will talk to later as well. Now looking at the sources, I think everybody talked about chloride slag, synthetic rutile as potential other sources of feedstock, but really they are just upgraded ilmenite products. So when we look at ilmenite or feedstock produced today, 93% of it is ilmenite and the rest is rutile, leucoxene, so natural high-grade feedstocks. And both of those have a depleting profile. So ilmenite is becoming a more and more important factor in the market, growing to, I think, above 95% by 2026. So it is the key player. And then the graph on the right is a simple kind of value chain of how ilmenite can be consumed and is consumed. So sulphate ilmenite can be consumed directly in the sulphate pigment process, and that is really a historical way that a lot of pigment has been produced. Chloride ilmenite can be directly in the Chloride pigment process. And again, that's only by one major producer. But chloride pigment, the most common route for Chloride pigment production is taking ilmenites such as Kenmare's or integrated ilmenite and upgrading it to a chloride slag or synthetic rutile. Ilmenite is about 50%, chloride slag is about 86% TiO2 and synthetic rutile is about 94%, 95%. So most chloride pigment plants need higher TiO2 products for the process. And that's why there's this intermediary pipe that has really a growing segment that we'll talk about. And it's the same for titanium metal. They can't consume ilmenite directly, so they consume beneficiated ilmenite products. And support enough to top think, there's 2 ways that's done at the moment. There is integrated producers that is a mine that's beside chloride slag smelter or a synthetic rutile kiln, and then there's also people like Kenmare, who don't have a smelter beside it, so we would sell into that, and we will talk a little bit about that later. So what are we seeing at the moment in the market? And this comes from our internally developed supply-demand model. And to start with, we've got the existing supply is the green block. What we do is we look at all the production that we can see out there. We think we have them all in there and we see what the forecast is for them using lots of different sources. And we can see there's a generally declining profile. And then we take our look on demand, look at GDP, urbanization, and we come up with a demand growth forecast, and this is how they match. Importantly here is the gap on the right-hand side that it's around 1.5 million TiO2 units per annum is needed to be developed by 2027, and that's the equivalent of around 3 million tonnes of ilmenite. So huge significant investment needs to come into this market to fill that gap. We do look at new projects, potential new projects, and this is our estimation of what could come online in the intervening period. And you can see there is still a deficit of supply not as big, but that deficit still exists. And I think it's important to remember that there is a lot of uncertainty around new projects as well, and we've seen even in recent years, community issues, cyber issues coming in the way of projects. To a point that Ben was speaking of earlier filling that gap, I think this is the reason why we're so keen on doing that. We believe that the demand is there. Our customers will need it. You can see '24 of that gap starts to emerge again '25. So if we can't deliver that, our customers will be forced to look elsewhere or not produce. Coming from the same analysis is our estimation of inventories of titanium feedstock in supply chain, kind of in and around normal levels. And really, what we want to show here is that the feedstock supply is not sufficient that we can see to build inventories anywhere near to the previous levels when there was a huge supply go from China, from Kenmare came expanded. We saw other suppliers come into the mine into the market at the same time. and that led to a large inventory buildup. But as that's been coming down, prices have gone up with that. And we're struggling to see how enough new supply comes into the mine to -- or into the market to really build stocks again and to be honest, we see it really becoming short. That all takes into account the new supply we showed on the last graph as well. Taking a look just at the key economic drivers that we're seeing at the moment. And the graph on the left tries to compare TiO2 consumption per capita with GDP per capita. So on the Y-axis, you've got TiO2 consumption and X-axis, you have GDP per capita. And the size of the -- or the bubble represents the population size. So over time, really what we've seen is as countries develop, become wealthier they are consuming more pigment per persons of people buying bigger houses, buying a car, buying a second car, more clothes, they're all consuming more and more TiO2. That's a trend that we expect to continue. And what's important here is we've got Indian, China mapped down, but you can look at Indonesia as well, Malaysia. These huge populations and the next one to really go up that development curve. And as they do, we expect each of those people to be consuming more and more TiO2. And we are already seeing it when we look at a country like India, it does not have a lot of pigment capacity itself. So we've seen huge growth in pigment imports into India in the last 12, 13 years at 8%. On the right-hand side, construction spending is viewed as one of the key leading indicators for pigment demand. It consumes paints, plastics, and we're seeing quite strong forecast being put out on the construction side. That's countries investing in infrastructure, in housing. So that's another reason why we see that as a positive development for demand for our markets. I will talk to one more in a couple of slides. That's titanium metal. That's another growth sector that we're seeing. But it's important now to look if demand is going to grow and there's a need for more and more pigments, where is it going to come from? And what we have seen really over the last 10 years, is that has all been China. So the green columns here show pigment production outside China and then the yellow is China. You can see since 2010 through to 2022, China has really been all of that growth. And we expect that to continue, and that is forecast to continue, but we do see a change. The orange line there is the percentage of that pigment production. That is the chloride process. So the chloride process tends to be more environmentally friendly. There's less waste associated with it. So the Chinese government have been really encouraging more and more of the chloride pigment process rather than the sulphate pigment process in China, and we can see the results of that. Why that's particularly important to us is that the domestic Chinese ilmenite, which we saw was a big part of the market, it is unsuitable for -- its unsuitable quality for the chloride pigment process. So they're going to need to import ilmenite or use high-grade feedstocks. So it's going to be positive for either benefits here for ilmenite or natural high-grade feedstocks. And we're seeing similar on titanium metal. Titanium metal is probably the fastest-growing market for us and for the market. And it's considered a critical mineral by EU, the U.S. and in China as well. And one of the large -- we're seeing many kind of growth markets for it, but one of the largest is the aerospace. And both in the aircraft structure and in the engines, more and more titanium is being consumed per plane. In the engines, I think it's anticorrosive and it can operate at high temperatures. So it allows the engine to run more fuel efficiently. And again, comparing it to other alternatives, it is much lighter. So therefore, it needs less fuel. So it's a key part to what you see Airbus Boeing talking about, but they need to consume more titanium in their planes in order to make them more fuel efficient. And thankfully, there's been large backlogs in aircraft production for quite some time, but we are seeing increasing production from the major producers there, which will continue to increase the consumption of titanium metal. Again, we are seeing China lead that production. We've seen 25% pigment growth last year -- or sorry, metal growth last year, in terms of production in China alone, and that's a market we're quite exposed to. And we were in China maybe 2 weeks -- 3 weeks ago and met one of the major producers there. And again, we're seeing them build further capacity. So I think, this year alone, the current producers of titanium metal in China are adding another 20% capacity. So we don't see that slowing down. And Kenmare it was another record quarter in China -- a record month in China for metal production. So it's a strong market. And again, same as chloride pigment that domestic ilmenite cannot be used for this process. They need to use the upgraded chloride slag or synthetic rutile and they cannot use domestic sulfate ilmenite for that process. So imported ilmenite is being used, and we expect that to continue. So what does that all mean for us? And I think it paints quite a good picture that with chloride pigment production growth and titanium metal production growth leading the way, there's going to be a need for either rutile or upgraded ilmenite feedstocks. And our analysis here on the top right shows that both -- well rutile in particular, is decreasing. rutile is the green and leucoxene is yellow. So we expect the supply of those to shrink. The orange is the ilmenite added by integrated producers of chlorate slag and synthetic rutile. So they are the guys who can take it themselves, produce those high-grade products and then sell them to chloride pigment or to titanium metal. Their supply of ilmenite is also decreasing. So that is not the new source of supply for these markets. So when we look then at the graph on the right bottom, that's us taking into account that feedstock demand is going to grow, but taking into account the supply shrinking from other sources, other feedstocks, what does that mean for nonintegrated ilmenite producers such as Kenmare. And really, it shows much stronger growth, and it's double growth. It's been happening since 2010. And as indexed to 2010, and we expect it to continue to grow at twice the rate of the general market. And that's a market we're quite strong in. So moving to the next slide, kind of thinking about how does Kenmare fit into this market? And how do we act with our customers and really how do we capitalize on those trends? We are seeing similar to, I think, the whole world at the moment that the supply chain is becoming more complex and what customers require of their suppliers is becoming more complex. So the green is kind of what has always been expected of us. But we are seeing more requirements come on suppliers, and we think we're in a good position because of that. So there's always needed security of supply. But what we've seen over the last 3, 4 years in our industry is quite a lot of disruption to what they supply. So they need us to be flexible to say, okay, well, we can't get supply here. We've been a long-term customer of yours, can we get it from you? And we've been able to do that with recent expansions. They're quite focused on sustainability. They continue to push us, which is great. We think we're leading on that side. They always need competitive pricing because otherwise, they can't be competitive in their markets. But they need quality and they need quality over time. And that's a key thing that Kenmare can offer that others can't. We have high-quality products, which we'll talk about in a minute, and we have the ability to tell them we're going to be here for years to come, so we can grow with you, work with you. And the quality point, I think, is important. So I'm going to take a minute to just talk through what we're trying to show here. On the Y-axis, are the market -- is the market broken down to different segments we sell into. So direct chloride pigment is taking ilmenite and producing chloride pigment straightaway. Beneficiation again, is producing chlorate slag or synthetic rutile out of ilmenite, we split that between China and ex-China because they have slightly different requirements. And the same on sulphate pigment we've split that between China and ex-China. And the column for the buyers represent the TiO2 content they require for their production process. And finally, the lines are then our products. So IP2, IP1 and IP3 are Kenmare's 3 ilmenite products. So what this shows is that all of our products can be sold into at least 3 different markets. So we can be quite flexible on who we want to sell to. And we cover all 5 of the markets. So we have exposure to it all, and we can really decide who's got -- who's the fastest growing, who do we want to partner with, most importantly where is our product most valued and that's a trend that we've been following in the last few years. And when we talk about the beneficiation, that's a market that we saw as potential for high growth, one that valued our product. And this is the result really in the last 7 years of our sales into that beneficiation market. So it used to be quite a small part of Kenmare sales. I think it was less than 100,000 tonnes in 2016. And 2021, it was over 500,000 tonnes of ilmenite sold into those beneficiaries in China and the rest of the world. 2022 was a little bit less because of the dry dock of our primary barge, but it's an increasing trend, and we're already seeing strong demand in 2023 as well. So that's, again, the chloride pigment driving, titanium metal driving that, that is increasing that. And they are quite specific in their quality needs. They need relatively high TiO2 They need low calcium. They need low magnesium and they need a relatively coarse grain size as well. And that's something that Kenmare can offer really with all its products where others would struggle. So we become really a favorite and a key supplier to that market. Turning to coproducts. The graph on the left really shows how important coproducts are to Kenmare. So when we talk about coproducts, we are saying zircon, rutile and our rare earth contained in the monazite product. So the growth there is partly price, partly volumes due to, I think, better recoveries at the mine of the zircon and the rutile products and also the added margin of adding a new product of the mineral sands concentrate in 2019 to the market. So just to talk through zircon. We -- while it's a smaller part of our revenue, we are a large player in the zircon market, and we're actually the fourth as of last year, the fourth largest and we see it having very similar dynamics to the titanium pigment market. It's used in ceramics, refractory, foundry applications. And all these are generally linked to construction, to development. Positive development we're seeing on the zircon, particularly in the ceramic side is you always would have associated zircon or ceramic tiles with your bathroom and small tiles. Recent technologies are allowing them to produce much bigger tiles, and that's increasing the amount of places ceramics can be used. So it can be used in panels like walls, tables, everywhere surfaces, furniture, they're being used in increasingly amount of spaces instead of marble, wood, which we think is going to be a big growth driver for the ceramics market going forward. In terms of our market or our customers, we supply 4 different products that contains zircon, and we supply for 3 different regions with that zircon. But importantly, it's the same with our ilmenite side where we like to keep our long-term customers. And again, I'm quite proud that we've had customers there buying our zircon since day one since the mine started. The zircon market is quite interesting and different to the titanium feedstock market that's quite consolidated and 3 producers are around 50% of the market, it used to be even higher and they did quite a lot of control over the market as a result. And then to touch on our newest products. So in 2018, we started to produce a mineral sands concentrate, which contains monazite and we started selling it in 2019. And the mineral sands concentrate contains monazite, which contains a lot of very important rare earth elements, and they're going to be vital to the energy transition because of their use in permanent magnets. Permanent magnets are used in lots of different things, but their major use at the moment is electric vehicles and wind turbines. The key rare earth elements for that are neodymium, praseodymium and dysprosium, all of which are contained in our monazite product. So when we look at the potential growth in those industries, I think we are quite positive towards our sales of this product. Electric vehicles, you can see the graph on the right bottom there, is expected to see very strong growth in production. And the permanent magnet using the motor for those uses about 0.5 kg to 1 kg of rare earth elements. And we don't see -- I think on top of substitutable elements, we don't see that as a likely advantage because those other permanent magnets are much heavier and require a lot more maintenance frequently changing them. And the same on wind energy, I think consumes -- these permanent magnets are consumed in the wind turbines, the generators for the wind turbines. And again, the thing that the neodymium in particular adds compared to other potential magnets is longevity. So if you have an offshore wind in particular, which is the fastest growing part of the market, you don't want to be changing those magnets frequently because it will be expensive and challenging. So it is the preferred magnet used there, and that's another strong growth sector. So just to finish before I hand over. What are we seeing at the moment is we think we've got positive demand dynamics coming through for our markets. We spoke about that in the titanium feedstock. And with that, we do think that there is insufficient supply being incentivized at the moment to meet that. When we look at how that demand is going to be met on the pigment side, we think it suits our products. It's going to be chloride pigment and it's going to need the type of ilmenite we produce to produce that beneficiated product to produce that pigment. So it's all growing in the places where Kenmare is strongest. And we work closely with those customers. We partnered with them. We've supported them to grow. And now they are consuming a significant part of our production each year. So we think we're well positioned for the areas the market is going to grow as well. So we think generally that we have very supportive conditions for our ilmenite and our zircon rare earth products. With that, I think back to Ben.

So you've got me back for a couple of moments. I'm going to just walk you through some of the optionality work that we've been looking at how we might take the Moma mine forwards with future potential. As we saw from Cillian's last slide there, we're seeing more and more market, more supportive market conditions. And our job as the executive running this company is to look for opportunities for this business to take advantage of those conditions ahead in the future. And so we're looking to be ready to grow should the opportunity arise and should the timing and the conditions be correct. How are we going to do that? Well, we have this enormous resource base. It's on us to make the maximum value of that 100-year life of mine plus and leverage the options of bringing forward some of that long life into earlier periods. And we've been looking at one of our lease areas called Congolone and as a preferred option for growth in the future. We've been conducting a pre-feasibility study now for about 6 months, and we're getting into the advanced stages of that pre-feasibility study. But before I walk you through what we've been finding, let me just give you a few of the orebody characteristics that we have in the Congolone ore body. First of all, Congolone is situated not immediately adjacent to our Moma operations. It's about 90 kilometers away, and we have significant river and town between us and the Congolone area, which means that transportation of products if coming back to Moma would need to be done by sea. In the work we've been doing, we -- there is an adjacent area that's also described in our resource reserve table called Marrua. And we've seen that we can actually link the Congolone resource up with the Marrua resource. And that makes this piece of ground significantly more attractive because it brings quite a lot of tonnes. And so the combined tonnage there is 338 million tonnes grading at 3.5% total heavy minerals content. On the right, you can see the grade distribution of that. The areas which are largely reds and oranges there are the more well-defined areas by drilling. And the reds and oranges signify mineralization that's above 3% in that graph. Thereafter, we have quite sparse drilling after about 12 years of mining, we think. And right now, at this point in time and through to the end of this year, we're actually drilling out the areas in the southern area of that graph to try and build up greater knowledge and we see there's potential to expand that 300-plus million tonnes level even more. As I said, sufficient. If we take a conservative view on throughputs, we think a 2,000 tonne an hour operation would deliver about 20 years of operations at those current levels. And one of the nice things that we found with Congolone is that the quality of the mineralization is extremely good. So nearly all of the ilmenite produced here falls into the categories of IP1 and IP3, the high-grade feedstocks that are preferred in the market and feed not only direct chlorinatible ilmenite, but also the beneficiation whether to make slag or synthetic rutile. Over and above that, the ore body is quite strong on zircon content in the first 12 years comparable to the Pilivili deposit. So in general, what we see with this deposit is that it's a really quite a strong value creative, accretive, should I say, deposit and brings the potential for future value. Let's have a quick look at what it looks like. And Congolone is really, maybe I'll go straight to the photograph. Congolone is typically made up of 2 distinct types of geology. In the background of that picture, you have what we call the Congolone main dune. It's a high dune. It's got good free-flowing sand content and also then some red sands as a core inside of it. You see that, that is suitable for dredging and for dry mining. And we believe that quite good low-cost mining can be done with a large mining phase there with lots of opportunities to leverage what we've learned in the recent past with hydro guns as well, and that's being incorporated into this plan. But in the foreground, we have significant quantities of clean white sand, good grades and suitable entirely for dredging very similar to what we currently do in Pilivili and what we previously did in Namalope as well. And we see that, that is really makes this quite an attractive ore body. The drilling, as I was saying, is very much focused to the first 12 years at this point in time. And we believe that once we've completed this PFS and gone through that economic analysis, we'll be -- we'll have sufficient drilling there to transfer from out of resource categories and declare a probable reserve on the first 12 years of mining. And as we go through beyond that 12-year period of mining we'll be filling in the resources and getting more clarity on the years thereafter. As I said before, 2,000 tonnes an hour seems to be the right size at this point in time. It delivers a 20-year life of mine. And we think that, that would be delivered through a combination of dredge mining and dry mining. Now as we've talked earlier, we're replacing 2 dredges at WCP A. One of those dredges is going to go to WCP B, but that leaves another dredge essentially as free issue to a future growth option should we decide to do it. And so that means that we've got quite capitally friendly way of getting capacity again into a future deposit. The dry mining, well, we don't expect that, that dredge would be able to deliver the full 2,000 tonnes an hour, but we would have fairly simple dry mining to support that and may even be able to use some of the equipment that we already have from our existing operations that goes out of service once WCP A moves into an attacker. The development of an integrated dredge path is quite well advanced now. And we're moving into the next stages on that of how to cost the future mining of that deposit. On the processing side, the deposit is very much dredgable. Therefore, we would operate in the similar ways that we currently do, where we have a dredger within a mining pond with a floating concentrator following it. Giving us the advantage that we currently enjoy of those short distances of pumping run-of-mine feed from a mining device to the concentrator. And we expect that what would happen is in that first 12 years, we deliver around 400,000 tonnes of heavy mineral concentrate per annum. That's about roughly speaking, equivalent to 300,000 tonnes of ilmenite. And so that's a pretty healthy addition to the current expectation of 1.2 million tonnes and that is the potential of this Congolone ore body over at least the 12-year -- the first 12-year period. And as I said before, we've got drilling underway to expand that resource base and hopefully take it beyond that timing. So in terms of the progress of the project, we, as I said before, this is a development of an option. We don't know when the right time will exactly be at this point in time. We haven't made any decisions on that front. But what we've come to realize is that there are 2 distinct ways to take this project forward. The first is to make that heavy mineral concentrate in Congolone and then ship it down to Moma and process it to final products at the Moma existing MSP. And that way, you keep full control of your marketing and your product mix and that's maybe the more conventional way to do it. It does add some complexity, though, because we would need resources to do the shipping of that intermediate HMC down to the existing mineral separation plant. We need to expand the existing mineral separation plant and then have additional products, so more shipping capacity of our existing transshipment fleet to put it on to customer vessels. So we have also been looking at another option and no decisions are made, but a simpler way of doing this would be to perhaps sell the HMC directly from Congolone. And there is downstream capability to do that you obviously lose some potentially some of the control on the products that you're making and you're selling on a concentrate rather than final products. But we have existing customers who have capacity to do that. And we're further exploring that right now. And there will be a cost analysis done and we will decide which of those is the preferred way forward. The PFS pre-feasibility study is underway and is due for completion by the end of the year. And we've already also scoped out how to do an environmental impact assessment on this area. The main mining dunes are not covered with housing. There is some -- in fact, as you saw from the photograph, much of it is bad dunes, not even with agriculture taking place on it. But we do have some housing on the inland side and require servitude to keep a safe distance away from those areas. And so that will be the main focus of our environmental impact assessment on that area. And should the PFS be finished by the end of this year to give you a sense of our timing and potential. We think that it would take us about a year to deliver a definitive feasibility study and about 18 months or so to bring this mine into a reality, should that decision be taken. It's important to say we're developing optionality here. We want to be agile. We want to be in a position to be ready should the time be right. We're not presenting a plan today to execute on. The future direction of the business is really dependent on the returns that come from this project, when we've done the costings and the capital allocation process that we will go through. And that's really what I wanted to talk about on this. I think the words capital allocation, a good segue for Tom to come forward and take us through shareholder returns.

Thanks, Ben. Good afternoon. So what I'd like to do is just take you through all of the sequence of planned activities that you've heard, the CapEx schedule that Ben has outlined and the opportunities that gives us, how that flows through into our thinking about capital allocation and shareholder return. And I suppose as we do that, it's probably important to think about the context, which Ben and Michael have outlined, we're moving into an area that represents 77% of our reserves. We're hoping to do it in a way that keeps us in the first quartile and the investments we make in contrast perhaps the big move a couple of years ago are predominantly in the equipment that will support the operation, enable us to enhance and maintain our output and enable us to kind of build on or continue to retain the reliability, flexibility that Cillian was talking about in terms of how we engage with our customers many of whom have been with us for a long, long time. So I suppose the first place that our investments will go is into that capital. The transition to an attack is nondiscretionary. It's something we need to do to perpetuate and sustain the business. But we want to do it in a way that's very carefully planned, very technically assured and effectively cements our ability to operate there for the decades that we will be there. To do that, we will have resource to our existing resources, our production, our revenues, which have grown significantly in recent years, and the financial performance of the business has accelerated over the last number of years, and we're now in a very comfortable position of being net cash and that net cash position is growing throughout this year as we advance into the capital process. We've had debt facilities, and I'll talk about what our plans for those might be. And obviously, we all need to do all of this in the context of maintaining a level of return to shareholders that matches their expectations with our abilities. And I think that's something that we're planning to do as well. These are the things we have to do. Ben outlined some of the things we might also want to do incremental growth. Should the opportunity arise, should the market dictate us, should we have the resources to pursue it. Additional capital returns. Many of you will recall that the share buyback we undertook back in 2021, considering additional capital returns in the form of special dividends or share buybacks is something we'll always look at M&A. I mean, we have many resources to pursue within the business. But equally, it's important certainly when we think about the gaps that are there that Cillian spoke about in terms of supply and the uncertainty that attend some of the projects that may fill that supply that if opportunities come our way that are accretive that we are flexible enough or opportunistic enough to pursue them. So just to kind of click forward, and just look at some of the building blocks of that. Prior to our last significant capital investment phase. We renegotiated our debt facilities in 2019. At that point, we negotiated a term loan and a revolving credit facility totaling $150 million. That amount is roughly 0.5x our 2022 EBITDA in itself would be comparatively conservative gearing level for a business with our revenue generation capability. Over the last number of years, we've been paying that down. We're paying it down at 7.5 yearly repayments. We've already made one of the repayments for 2022 -- '23, excuse me. We're also talking to our existing vendors who've been with us since 2019 about what the options might be for the future to more closely match our debt availability and our debt servicing profile with our potential cash needs over the next number of years as we invest. And we will certainly investigate the option to refinance our facilities during the course of this year to more closely match the maturity profile with the investments that we're making. And potentially to change the mix between term loan and our revolving credit facility to maximize our flexibility. I think it's important, obviously, to emphasize the fact that the credit metrics of Kenmare have improved significantly since 2019. We're in the fortunate position of being able to negotiate our facilities. While we're net cash, as I used to say [indiscernible] Group is we can fix it while the sun is shining. And I think that puts us in a good position for -- to execute on the plans that my colleagues have spoken about. So that's kind of thinking about the CapEx, thinking about the debt facilities. Then thinking about the dividends. We first announced our intention to pay dividends in 2018, made the first payment in 2019. The initial policy was 20% of profit after tax. Obviously, we've managed to continue to grow both the absolute amount and the proportion of profit after tax that we pay out and indeed, to look through individual years like 2020 to maintain payouts as well. In parallel with that, we've managed to undertake share buyback in 2021, which reduced the number of shares in issue by 15.6% and obviously enhances the dividend on a per share basis. And the performance in 2022 enabled us to increase the absolute level of dividends by 66% to just over $50 million. We're conscious though for all the positive trends and themes that we see, pricing is still a shade down in '23 on what it was in '22. And we're moving into a capital investment phase. So it's important to provide some guidance on how we'll think about dividends, how we'll provide with on what we feel about their current level as we move forward into that investment phase. So what we're doing is proposing to do is -- proposing to modify our dividend policy to provide stability, to enable us to look through an individual year, an exceptional event to adjust to market conditions. And to reflect the fact that having paid out or prepare to pay out is over $50 million in respect in 2022, we're comfortable that, that level is sustainable at that absolute level for the medium term. Clearly, the world changes that may change, but based on what we see today, based on what we believe about the business and how we feel about our plans, we're comfortable about that. Similarly, in recognition of the fact that, as I just said, market performance may move around and that policy or that commitment will be within a range of 20% to 40% of our profit after tax. So that we will always look at what our financial resources are, what our investment is, how -- what our absolute levels of gearing are and make sure that we maintain conservative gearing, but we believe we should be able to maintain our dividend at around the current level while we do that. We'll also look at additional capital returns should cash build on the balance sheet or other opportunities arise. We may not necessarily repeat the 2021 tender offer, but there are a number of other ways to pursue that sort of an objective. Finally, if we look at how the group is configured at the moment and in particular, how cash flows up to fund -- create the distributable reserves to fund those dividends. There is likely to be a tax exposure on the subsidiary dividends remitted from Mozambique to Kenmare Resources plc. Prior to '22, we had utilized the trading profits that sit within the top company or the proceeds of capital reconstruction of some of the subsidiaries to create the distributable reserves. But the primary route for creating those reserves as we move forward is trading dividends up from the subsidiaries based on our operational performance. And those dividends under current Irish tax law are likely to attract tax. The differential between the effective rate and Mozambique and the Irish tax on investment income at 25%. Again, we think ours is a low tax environment, not in all cases and certainly for investment in mining companies, it's a 25% range. So the effective tax rate in Mozambique does move around from year to year, depending on performance, depending on where we are in the investment phase of capital allowances. But in general, the effective tax rate has been of the order of 15%. So as we bring up funds to fund dividends, assuming that they were equivalent, for example, to the $50 million in respect to 2022, approximately a 10% tax charge would be levied on that -- and that impact, if we do nothing, we'll continue. We are looking at how we may mitigate that, and that would be solutions would include or be likely to restructure the Kenmare Resources Plc Group. And clearly, that's quite a significant activity, and we need to take a lot of advice and ensure that we're properly positioned before doing it, but we are making those preparations or investigating the options. It may have additional benefits in that. It may enable more efficient dividend withholding tax and stamp duty arrangements. But the primary objective is to avoid that incremental tax take on our dividend flow, if we can. So in summary, I think the business is in good shape. The financial performance of the last number of years has enabled us to make plans in a very orderly manner and the significant pre-preparation, pretesting and technical investigation enables us to believe we can make the investments that we've talked about today in a confident manner. We're structuring our finances to enable us to do that and to do it with a margin of safety and to do it at conservative levels of gearing and to do it in a way that enables us to maintain shareholder return in the range that people become accustomed to. And we're looking to make sure that we structure the group in the right way for the decades that lie ahead. With that, I'll hand back to Michael to sum up.

Thanks Tom. Okay. So I thought I'd just sum up a little bit. And I think -- firstly, thanks, everybody, for listening so attentively through a long set of presentations. I hope it was helpful. But for us, we think that the plans for Wet Concentrator Plant A and Wet Concentrator Plant A is mining capacity is transformative for this company. And we really look forward to the point where we will have that very significant additional dredging capacity and that the combination of that dredging capacity with high pressure monitors, water monitors, gives us the opportunity to take full advantage of those fine, high mining faces that we will be presented with in Nataka. And so it will be a much different mining operating model that we adopt when we are there. And then with the inclusion of the declining circuit on the concentrator plant itself, we will no longer have the utilization issues, the recovery issues, the product management issues that we presently have with Wet concentrator plant A is as well. And the combination of all of that, we believe we will have more consistent, more predictable and higher volume mining operation than we presently have. And is that lack of predictability with -- associated with the slimes has caused issues in ourselves to be able to know exactly what we're going to produce over the next quarters. We are delighted that the outcome is an outcome where we are able to say with good confidence that we will be able to maintain our first quartile position in the industry cost curve. That was critically important. It was a central objective of the long expensive prefeasibility study that we did and there are inevitable additional costs that arise when we move to Nataka. It's further away, and therefore, we have to pump the stuff and the heavy mineral concentrate further to get back to our mineral separation plant, water supply, et cetera, et cetera. It's all a little bit more expensive. And so we were conscious that these would be increased costs, but then we're delighted to be able to say that we're going to be able to decommission a very expensive heavy mobile equipment fleet and not use that in Nataka at all. So that's -- that's a very positive counterbalancing situation and allows us to be confident that those costs will stay low and keep us in the first quartile. The ancillary benefit of that, of course, is that we change from burning diesel to using hydro-generated electric power and consequently, our carbon dioxide emissions go down. And so then that's a great start. We're delighted by that day. The feasibility study was long, and the prefeasibility study was long, but we believe it's come to a positive outcome. And then with Wet Concentrator Plant B, we believe that this is a project with really great financial metrics. It has a very rapid payback, but then continues to deliver HMC, which will allow us create a significant inventory of HMC sitting in front of the mineral separation plant, which will address the point that [ Rich ] agrees, which is we can never be completely confident that the power situation from any particular day will be absolutely stable. Now we put a lot of equipment into the project, which means that we can absorb some instability, but it's a great comfort to have a large inventory of HMC sitting there. And with our RUPS, the mineral separation plant, we'll continue to operate whatever helps in terms of incoming bar. Wet Concentrator Plant B upgrade also is a very serendipitous usage of the dredge that is becoming free from Wet Concentrator Plant A and again, that affects the financial metrics because we don't have to buy a new dredge, that dredge goes down and provides additional supply into Wet Concentrator Plant B. And that's again, a very useful additional situation. Cillian mentioned when we went to China last about 3 weeks ago, that we encountered a very vigorous industry in China where everybody is busy building new capacity in the titanium metal area, new capacity in the ilmenite beneficiation area and new chloride pigment capacity. And it's really quite fascinating how vigorously and aggressively this is all being pursued there and they all need imported ilmenite. And in fact, it's very interesting there. They -- it was preventing them with quite a quandary as to why the mining industry was not also building at the rate that they were. It is really struggle to understand why we're not. And -- but anyway, we'll see how things move along. So we see the value chain as not having excess inventory right through the value chain. And we feel that supply growth is not sufficient to build up that inventory unless there's a significant downturn in demand. And those don't happen normally. So look, I mean, it's always possible, but it's not really likely without some exceptional event. And that being the case, we see the environment as relatively supportive of the prices of the products that we're producing as we're looking forward through the period of this review. So we are confident that we will continue to operate in a supportive environment for the next period. So with regard to shareholder returns, Tom said that we were comfortable with the absolute level of shareholder payout in 2022 as a number that we can seek to continue to pay as we move forward. And even though we are in a period of significant capital expenditure and that's something that we'll hope that the Board agrees with us. It's -- but we feel that that's a reasonable level of payout. And if things go better, there's always the opportunity for some form of share buyback, which was very successful the last time which without -- if we have the opportunity, we would very much like to pursue again. And finally, the presentation from Ben on the growth opportunity of Congolone is, for us, quite exciting. The project looks great. It's expanding all the time. We feel that there is good potential that the resource base will expand with the drilling program that we envisaged during the year, and we look forward to giving you guys an update on this as an option, just an option for further growth of the company as time goes on. So thanks, everyone, very much for your kind attention this morning, and we're ready to take questions on everything that we have discussed so far.

A couple of questions, just following on from the presentation you've given. Firstly, just on the titanium metal market, you mentioned 12% of revenues coming from that. And could you talk a little bit about whether that's above or below group margins coming from that? And also where that 12% has come from -- presumably, it's grown as a share of revenues within the group over time? Just give us a sense as to the trajectory of that within the overall group to start with that, please?

It would be above group margins. I think we have always sold to that market. Again, it's mostly our sales there are through the beneficiation. So the titanium metal produce wouldn't be our direct customers, they be customers of our customers. And we have always sold to them in Japan, and in particular, historically been the biggest region, growing in Saudi Arabia and in China. So we've been growing as the production in Saudi Arabia and China, particularly in the last 5 years, has really come on with that. And yes, I think most of the sales into that market would be currently on spot basis and spot prices have been really above average levels in the last few years. So we have been doing well off that part of the market.

Great. And just a second question then to do with supply. There's been a limited amount of new supply that's come in this cycle relative to past cycles. And we've seen quite a strong increase in underlying prices for ilmenite and others. Where do you see the kind of the price level has been critical in terms of new supply coming on stream in the market? Is it somewhere around $300 a ton? Or is it higher? Or how do you see that at the moment?

Yes, I think it's always a difficult one to try and estimate because it depends on so many other factors and products as well. I think what we have seen in the last probably few years now is that at the current levels and the recent levels of prices, we haven't seen enough supply coming online. And even now when we look out and though our projects starting to move, we still don't see them -- the ones that are starting to move as sufficient to meet that demand. So I don't think it doesn't look to us like prices have gone way above incentive level because we haven't seen it incentivizing enough supply and what that level is, it's difficult to say, but I don't think we're seeing those levels really consistently reach, yes.

Peter Mallin-Jones from Peel-Hunt. Just 2 questions around on M&A and one, the potential longer-term growth options. Looking at the growth option to start with, it seems that trade-off almost is more CapEx going into the MSP to expand that to give you more control over the product you sell and therefore, the prices you're getting versus lower CapEx and less control because you're selling HMC for a lower dollar per ton value. Are you able to give an indication of where you're leaning on that sort of trade-off? Or is it far too early to start going one way or the other?

I think it's far too early to start going one way or the other. But I think you've encapsulated that trade-off very, very succinctly.

Okay. Understood. And then on the M&A front, again, thinking slightly longer term. The obvious operational expertise is in the mineral sand industry. You've also been in country in Mozambique for 30-odd years, operating pretty successfully. Therefore, you have good into country relations with government officials so on and so forth. If you wanted to say in the mineral sands, but maybe think about other countries or use the Mozambique experience and look at other commodities within the country you know very well and are well known in?

That's a very interesting question. I think that with the program projects that we have outlined there Pete, we will be very busy for the next few years, just delivering what we have outlined. Nonetheless, we review every single titanium minerals project anywhere that we see. And Jeremy's department reviews them all, compares them with what we believe are the financial metrics of Moma before we would ever make any investment decision either at Moma or anywhere else. And so we run an ongoing review of the situation with all those other projects. As yet, we have not encountered any that provide us with a better return than the ones that we are looking at, at the moment. Yes, we've been in Mozambique for a long time. And we have reasonably good government relations because we operate as a successful producer there and operate our agreements carefully, but we're -- but we don't have a relationship where we go to dinner with the Minister and he says, "Oh, by the way, I've got this other project down the road." We have a normal functioning relationship between a regulator and an operating mining company within that country. So as yet, we are not aware of any particular project that is available in the country, that has got the characteristics that would suit us as a developer.

First question is -- just on the [ BD ] and Congolone I'm just interested, are you going to factor in considerations such as Scope 3 emissions, if you produce an HMC versus upgrading the MSP, is that sort of forming part of your thinking? Obviously, if you produce something that is slightly less beneficiated that's got some Scope 3 emissions down the line? And then can you just read if you aren't in a position to give us kind of CapEx and such like, can you just recap us on your hurdle rates, IRRs and such like and how much you're spending on the moment on that project?

So firstly, at this stage, we haven't brought in that thinking of Scope 3 emissions into our evaluation. But our evaluation is at an early stage. And sorry, did you ask for financial metrics on the Moma project, Richard, is that...

Just kind of like can you just give us some -- an update on where your head's out on if you bring this project to the Board, what kind of IRR, hurdle rates, are you kind of thinking about that they would need to get progressed?

No. I can't really share that with you. But what I would say is that we have not brought a project to Board as yet. I think the lowest IRR of any project that we brought to Board has been 36%.

Okay. And then Cillian, just a question -- a couple of questions on the market. Firstly, on Slide 35, you've got this global construction spending going up 7.1% compound over the next sort of 8 years. If we flatline that which perhaps might be bearish, but if we did, what would that do to the demand profile that you show in your slides? And then secondly, the recovery in China at the moment seems to be very consumer led rather than sort of construction led or industrial production led to the buying the [indiscernible] price. But what does that sort of mean for market dynamics at the moment for TiO2? And how do you see that playing out over the next sort of couple of years?

Yes. So the first question, I think trying to do some quick math in my head. But look, I think construction, we do see as a key driver for architectural coatings, industrial coatings, plastics. So they are huge markets with titanium pigment. So if you did flat line that, of course, there's no development in those things. That's going to really be a large part of the demand flatlined. Now we see titanium metal outside of that. We seeing fabrics outside of that, but they're smaller parts. So we do need growth in construction and housing really to feed into the demand for titanium feedstocks. So I think there would be no growth in construction, no growth -- and industrial activities are going to be negative to demand for our products. Second question on China. I think yes, most of it has been consumer led, but I think you have to look as well. Titanium pigment is like the largest part of it is produced in China, but a lot of that is then exported or the products produced in China then exported. So it is a large export market as well. And we are seeing them take an increasing portion of that and I think last month was again a record for chloride pigment, last month was a record for titanium metal. So we are seeing our markets rebound quite strongly at the moment, and we're seeing that demand for our products as well. Downstream, like we do expect that the government is trying to encourage development there. We do expect to see housing not return to the old boom, but we do expect it to improve on what we're seeing now, and they are investing in infrastructure as well. So all that will boost demand in country as well. But it's the combination of both, which is making us confident towards that market at the moment.

Okay. So your recent trips to China gave you confidence in the housing market and a rebound there?

That it will recover. It will start to improve, not I think -- look, we'll see, but it's going to be challenging for us to take the same proportion of the GDP growth as in the past, but they do expect it to steadily improve now. And the worst seems to be past.

Justin Baring, JBM. Just a couple of questions. The first sort of maybe on that is long-term prices. I mean you might not want to give us the long-term price that we're using for all these studies and what have you. But can you just talk us through how you think about where prices might be long term relative to where they are now and how you come to those sort of levels? And secondly, offtake agreements. Is that something that we might consider at all with our customers if they wanted to lock in offtake? Or are we happy with the spot relationship or a contract relationship? What's the thought on that?

Yes. So I'll take the second question first. We have a mix. We sell primarily to China on spot, but the rest of it would be offtake agreements and periodic price agreements, but volume fixed. China, to me, we talk about spot, we kind of say it, and it sounds uncertain. When we talk about our spot market to China, it's long-term customers who have been leading the growth, and we've been growing with them. So we have strong relationships. It's not that we go to the market and say, okay, who can take material this time. It's -- we're trying to work with these customers to sell to them. So there is quite a lot of certainty behind their requirements and really a shipping schedule with them through the year. I think I answer the second one. The first one, I think it's a similar answer. There's lots of other factors that come into play and other projects. I think an important factor that we haven't talked about is when we look at other projects that are -- have the potential to be developed and probably the better projects in the market, there are other factors that are out there that are stopping them being developed. And that, again, means the hurdle rate has to be higher for other projects because the quality of them is not as good. So we're seeing sovereign risk, community risk, environmental risk really in the last 2, 3 years, having an impact on some of the better projects out there not being developed, which I think is a positive for us, where that level is. I think we have internal views, but I think we can really share them when we think long term, prices will be at.

Just to add to it, Justin, where we think prices might go is not how we assess -- the price we use to assess projects. Our internal investments, obviously, were significantly more conservative in trying to develop the IRR projections that underpin the investments we want to make.

Juan from [indiscernible] again. I was interested to see that you mentioned dysprosium has been among one of the valuable minerals in your rare suite. Are you able to provide us with the breakdown of the split of the various rare elements for...

For our product?

Yes.

Yes, it's on my last slide, do I know the math by heart now, but you can see dysprosium, I think, is small content, but high value.

Sorry, which slide are we looking at?

44 -- Slide 44 that graph on the right top is the breakdown of the rarest elements in our monazite.

Okay. Do you have the grade of the total rarest oxide grade in it?

Yes. So our monazite would have around -- sorry, our mineral sands have about 20% monazite and of that, 60% of it is roughly rare earths and then that's the breakdown of the rare earths contained.

Very good. Do you -- have you ever considered possibly going downstream in terms of beneficiation whether for ilmenite, whether for the monazite, not necessarily in Mozambique given the power challenges?

With ilmenite, we have thought about beneficiation from time to time and had discussions with some of our customers from time to time, but we have never decided to move ahead with a beneficiation project for ilmenite. As far as rare earth elements are concerned, we do not have sufficient supply from our own operations at the present moment to justify a significant investment in downstream processing capacity that's necessary to create the rare earth elements that we could then sell on rare earth oxides and consequently, we would then be in the market buying them. And since the problem in the market is that they're rare and they're expensive to buy and difficult to get, we're just creating a problem while it seems to us that it's a better thing to sell.

Now just to investing in downstream facilities of your own. Is there the possibility of perhaps some sort of profit participation downstream because some of the other commodity segments like lithium people have been starting to do that, where they sell concentrate, but they participate in the profit downstream?

Yes. I think that you would consider that in a circumstance where you didn't feel that there was an effective market for the material. But if there is an effective market, surely, that market will find the true value of that material in its further use. And consequently, you'll get your value. So we believe that the market is effective and that we do get a reasonable representation for the contained minerals within the mineral sands concentrate.

Just a couple of general questions. Firstly, in the annual report, there was like some mentioning about like shortage of inventories. And I just want to know like what's the current inventory health? And what is a healthy level of inventory perceived by the company?

Are you referring to final product inventories?

Yes.

So I think we started the year with a slightly higher final product inventories than we previously expected as really, it was a feature of the return of the dry docking of the Bronagh J at the end of -- in the last year. As we have gone through Q1 and our production was shorter than we had expected, we saw that those inventories were drawn down. And I think current inventories are probably a little bit lower than we expected at that time, but they still got healthy inventories on site. I don't know whether you want to talk any more on that?

Yes, I think that's fair. I think when we look to quarter 2, we're part way through it now in our order outlook, like I think our inventories are probably on the low side rather than the high side, we started out on there. And to healthy inventories, I think somewhere around a month.

But it turns out that having those very healthy inventories at the start of the year was very helpful because we got hit by an electrical strike, which -- lightning strike, which knocked our production for about 10 days. And even after that, it was a little bit weak. And so we were able to continue to supply the market with that inventory and draw...

All right. That's very helpful insight. Just 1 more question. Also in the annual report, you did mention like some new balance sheet strategy to keep like a positive net capital? Would you mind elaborating on that?

Well, I think we -- obviously, we've talked about that we're moving into a capital investment phase. And it's very normal to match that sort of capital investment phase with financial capacity in the form of debt or potential debt. Most of our debt rolls off between now and the end of -- all of our current debt rolls opportunity now in the end of 2025, we're just going to likely amend that, extend it and match it more closely to the investment cycle that we're going into over 2023 to '26. So effectively, you invest and then effectively you pay down the debt that is one of those investments. Now to the extent which we need to draw all of that debt obviously depends on performance and pricing between now and then, we've built in quite a significant margin of safety. And obviously, our objective is to maintain conservative overall gearing, and we're starting from a position of strength through a net cash and we'll be higher net cash at year-end by the time we begin these significant investments. So I think I suppose the comment we made in the annual report is the balance sheet of the company is in very good shape, at least is well placed to enter this phase of investment, but we're kind of putting the various supports and enablers into that to match the fact that there may be peaks and troughs in terms of the CapEx over that phase. Well, if that's the last question, I'd again like to thank everybody for allocating the time to come and listen to us this morning. And thanks, everyone, and that wrap it up at that. So thank you very much.