Northam Platinum Holdings Limited (NPH) Earnings Call Transcript & Summary

Okay. Good morning, everybody. It is now 11:00 precisely. Thank you for joining us at the Northam Annual Results Presentation. Welcome to our Chairman, Temba Mvusi; our Lead Independent Director, Hester Hickey; [ Aletta Coetzee ] and other members of the Board. Welcome to those of you on the lines on the webcast, and a special welcome to everybody who's managed to join us in person this morning. You're very welcome. The presentation and reporting suite contain detailed disclosure of the company's performance, and these are all available on the website this morning. Thank you once again to Aletta and her team for a very comprehensive set of documents. Here is the usual disclaimer regarding forward-looking statements that we may make today, and it is important once you have a little bit of time, if you could read through it. Aletta and I will endeavor to move through the presentation quite quickly this morning in order to allow more than adequate time for the Q&A session. I'll review some of the key features of the year, in which we have delivered a very strong operational performance and generated record revenue. This will include details of our disposal of our interest in Royal Bafokeng Platinum during July. I will take you through some of the ways in which Northam makes a sustainable social contribution. And then Alet will take us through the financials. Finally, I'll cover guidance for 2024 and beyond. This picture is an aerial shot of the metallurgical complex Zondereinde mine, this is where we smelt our primary concentrates on extracts, base metals, nickel and copper. We are upgrading this facility to meet the requirements of our expanding mining production. A strong operational performance allowed us to post record production and sales volumes and notwithstanding falling metal prices during the second half we generated record revenue of ZAR 39.5 billion. This is a 16% year-on-year increase. The higher inflationary environment has continued, but in spite of this, we delivered an operating profit of ZAR 15.4 billion at an operating margin of 39%. We've made further progress in respect of our project pipeline and we maintain our path to 1 million ounces production per annum. On the corporate front, as you are aware, we have disposed of a interest in Royal Bafokeng Platinum subsequent to year-end. The proceeds from this have strengthened our balance sheet at a critical juncture in the commodity cycle. Given the significance of the transaction, I would like to cover the disposal of our interest first step. This photograph is a mechanized drill rig at Booysendal in action. It's a very good face shape, and Willie assures me that all the faces look like that. Well done Willie. Northam exercised the material adverse change conditionality, embedded in our FIA in April of this year. If you remember at the time we flagged deteriorating market pricing for our metals. Prices have now fallen much further and are at levels where the Implats offer represents good value to Northam. Accordingly, we accepted the Implats mandatory offer of ZAR 90 in cash and 0.3 Implats shares for each RBP share on the 20th of July. This yielded approximately ZAR 9 billion in cash and approximately 30 million Implats shares. As you will have seen in a separate announcement this morning, we have embarked on a disciplined disposal program to convert this equity into cash. Northam has no justification to hang on to the Implats shares, and we will not speculate on future pricing scenarios. We will be orderly and disciplined until we complete the process. I refer the investment community to the CEO's Q&A section of the results of booklet that we published this morning. This highlights important considerations and outcomes of this decision. Post transaction, the resultant balance sheet metrics are strong enough to carry the company through a sustained period of lower profitability whilst maintaining our growth profile. We cannot discount the potential for low metal prices over the medium term. And in the light of this, we have prepared the company for potentially difficult market conditions. Northam's contribution to employees, communities and the broader community, the broader economy, excuse me, are important in developing and sustaining a stable operational working environment. Mining really matters, and I would like to highlight the significance of our industry through the Northam lens. This is a picture of one of our underground training facilities, and we integrate both surface and underground class-based and experiential training in order to prepare our employees for the workplace. Since the inception of our growth strategy, we've created over 12,000 new sustainable jobs in some of the least economically developed areas of the country. This has doubled our workforce against the backdrop of a shrinking mining sector and a struggling economy. In doing so, we are creating significant opportunities for women and 21% of this year's intake were ladies. We pay a fair and competitive wage and our salary bill for the year totaled ZAR 7.5 billion. In addition, all of our employees and their dependents benefit from health care, meaningful assistance with home ownership and the employee and community trusts that have recently received significant funding. On top of this, we've spent over ZAR 1.8 billion procuring goods and services from the enterprises within our local communities. Northam's tax bill was ZAR 2.9 billion, and we've paid an additional ZAR 1.5 billion in royalties. It is clear that Northam's contribution to society is significant and collectively, the South African mining industry still forms the bedrock of our economy. The metals that we produce are critical components in the drive towards a cleaner, greener and fairer world. We do, however, understand that the nature of mining has an environmental impact. And so we look to minimize this impact across our businesses. We have embarked on a decarbonization program, co-developing renewable energy facilities and focusing on energy efficiency. We're targeting a 60% reduction in carbon intensity by 2030, and we have a clear road map to be able to do so. We will also do this in a manner that will assist us in securing the supply of energy on the one hand, whilst reducing the overall cost on the other. South Africa is a water scarce country. And to this end, we recycle around 86% of all the water we use. This is a sector-leading achievement. 40% of the land we own is set aside for conservation, and we actively manage over 9,000 hectares. We've specifically targeted wetlands and water courses to optimize ecological diversity. We believe climate change, water management, land management and biodiversity go hand-in-hand. Load curtailment remains a challenge across the industry, and it's one of the group's single biggest risks. During the year, we were subject to 73 curtailment events with an average duration of 14 hours. Through a combination of switching off certain machinery and the use of on-site generation, we have been able to manage through to some extent. And most importantly, we maintain a safe working environment underground. And Zondereinde in particular, it's critical to be able to pull the shift at short notice. This challenge will remain for the foreseeable future and may deteriorate further. In order to secure our operations against Level 4 curtailment, which is the equivalent of Stage 6 load shedding that you experienced domestically at home. We're expanding our diesel generator fleet to 57 megawatts. Obviously, this comes at a cost, both in CapEx and OpEx, but the potential losses resulting from in action far outweigh this cost. Together with our renewable energy strategy, we hope to ensure the provision of power, whilst managing costs, carbon emissions and a safe underground working environment. This picture shows 3 of the 6 new generators we're installing at Zondereinde, they are 4.6 megawatts each, as you can see, gives you a good idea of scale. They're not small. And we expect these generators to be operational by December with similar time lines for Eland and Booysendal. We'll install the [ genes ], and we'll build the generator house around them. This is a nighttime short of the main shafts at Zondereinde. Production began here in 1993. And 30 years later, we are still going strong in one of the industry's exceptional ore bodies. If we can now move on to the operational and projects review. And firstly, safety. This remains a key focus area for the group and the Board, particularly as we expand the workforce and undergo a generational change at Zondereinde mine. Maintaining a strong supervisory level is key to safe mining practice and we're working hard to both recruit and train quality people at these levels. Despite this and as reported at the interim period, 3 of our employees passed away in separate incidents in the workplace. The Board extends condolences to the family and friends of our colleagues. On a positive note, Booysendal achieved 8 million fatality-free shifts, Eland recorded its first 1 million fatality-free shifts, and both operations continue to be fatality-free since the beginning of mining. Zondereinde has also achieved millionaire status once again, and I'm pleased to report that the group has remained fatality-free for calendar year 2023. Looking at some of the operational metrics at group level. Tonnes milled increased by 23%, whilst mined metal production grew by 13% and and a strong performance at our metallurgical complex resulted in refined metal growing by 18%. Unusually high mining inflation led to our cash cost per platinum ounce increasing by 13% and and inflationary effects are being felt across the board, in particular, in the prices for diesel, steel, chemicals and explosives as well as the cost of electricity. These are variable cost items, and it's very, very difficult to combat that type of inflation. Our cash margin fell to just below 50% accordingly, reflecting softening metal prices in the second half of the year. Looking at the individual operations. And firstly, Zondereinde. We do see the benefits of Merensky mining in the Western extension as well as the migration of UG2 to the East as we balance the mining effort. This has benefited mill tonnages for both reefs with Merensky and UG2 being both been -- being respectively, 5% and and 9% up. The completion of #3 shaft in 2024 will lead to further productivity gains in the future. The mine produced over 320,000 4E ounces, which is essentially on target despite the extensive Eskom supply interruptions. Additional employees and higher smelter volumes, together with higher mining inflation resulted in a 14% unit cash cost increase and a lower margin of 44%. CapEx of ZAR 2.5 billion was applied to work on the #3 shaft and expanding the base metal refinery. Here is a picture of the surface works related to #3 shaft. And this is, of course, located on the western extension that was purchased a few years earlier. You may be able to pick up the main shaft of Zondereinde in the background there 4 kilometers away. Currently, our people are traveling in that distance laterally underground. It's quite a long walk back and to. Construction of the headgear and winders for 3 shaft were completed towards the end of the year and shaft equipping has commenced. Pilot drilling of #3a vent shaft was also completed, and reaming is underway. We expect holding early 2024. Pilot drilling of 3b rock shaft was started, and we have just over 450 meters to hold. You can see the completed Eskom intake yard in the foreground and good progress has been made on the essential refrigeration plants to the right of the picture. Both 3 and 3a shafts remain on schedule to be commissioned and operational towards the back end of 2024 and into 2025. Underground development in the West continues to progress well on all 9 mining levels and production of almost 90,000 ounces for the year is as planned. The project is on track to deliver steady state production, that's an estimated capital cost of ZAR 4.8 billion. We commenced pilot drilling of 3b rock shaft this year. And while their shaft does not form part of the current capital plan, its development will further enhance the prospects of the Western extension. Market conditions will inform our decision as to whether we ream or not immediately after the pilot dream. Moving on to Booysendal. The mining ramp-up at Booysendal continues and all sections of the mine are now contributing. Booysendal's mill tonnage grew 20%, in line with expectations, and this was tempered by a lower mill feed grade, resulting from a combination of split reef at the North UG2 mine, and growing contributions in development tonnage from the South project. Mine tonnages will exceed milling capacity in 2024, and we expect to build a fairly substantial run of mine stockpile. The metallurgist will have their work cut out to keep up, but this is not a bad problem to have. Our philosophy will always be mining first, metallurgy second, with no disrespect to the metallurgists. Overall, metal production at Booysendal improved by 21% and despite a 13% increase in unit cash costs Booysendal posted an operating profit of ZAR 8.6 billion with an impressive cash margin of 59%. On-mine capital expenditure was ZAR 1.5 billion, mostly sustaining CapEx. Quick view of the various elements of the project. At the central UG2 mine, the capital footprint of the BS1 and BS2 modules has been reached, and the full complement of stoping crews are now in place. You can see the beginnings of the so-called upside down Christmas tree face shapes taking -- coming to fruition very, very nicely there. Head grade remains at 2.8 grams per tonne and production of ore has grown to over 250,000 tonnes per month. We will continue to develop the declines beyond the capital footprint to provide operational flexibility into the future. Overall, Booysendal South contributed this year gone to 105,000 4E ounces. All infrastructure at the South Merensky boxcut is complete and decline development has opened up 3 stoping sections so far. The module generated 390,000 tonnes for the year at a mill feed grade of 1.5 grams per tonne, bear in mind pleased that the majority of this tonnage is development. We will continue to focus on development this year and will ramp up stoping in 2025. Finally, the BS4 UG2 module stoping is progressing with 2 crews in place. This will build up to 3 crews on a steady state of 30,000 tonnes per month for 2024. Following geological evaluation recently, we've been able to extend the reserve beyond the original red dash line. and added considerable life to the early stoping sections. The capital phase of the greater Booysendal mine is now complete on time and on budget, a job well done by the Northam project and mine teams. The shareholders can look forward to strong cash generation from this asset for many years to come. Eland is in the early stages of development and progressing satisfactory. A high proportion of development tonnage and tailings retreatment suppresses the grade for now, and we only have 15 production teams on the face at the moment. Nevertheless, we produced 48,000 ounces in concentrate, together with a further 52,000 ounces from third parties. Unit cash costs remained steady at ZAR 55,000 per platinum ounce. This cost structure during the development phase [ aligned ] to the recent significant fall in metal prices, that is to recognize a prudent impairment of ZAR 2.7 billion, which will be revisited should PGM prices recover. The current year, we'll see the bulk of the remaining spend on the ZAR 4.5 billion capital investment, and we will progressively ramp up production over the coming 5 years. Some metrics which are important in the development phase, we've advanced the decline by 2,200 meters and opened up 8 strike drives. Strike development, which is the flat end development during the year totaled 5,300 meters. And importantly, this is now connected Kukama to Marula [ belt ] and Nyala. We've hold 11 raise lines with a further 12 in progress and 15 stoping crews in place. As the mining engineers will understand from the plan, it's still very early days, but we have mined 26,000 square meters to date. Steady state will require 35 raise lines and 75 stoping teams just to give you a feel for where we are in the buildup. The focus at Eland will remain development for the coming year and the growth of mineable reserves for the next 2 years. I will hand over now to Alet to take us through the financials.

Thank you, Paul. Good morning, everybody. PGM mineral reserves are rare, finite and depleting assets, maintaining or growing production is not possible without the allocation of sufficient capital to replenish or grow these reserves. Whilst we need to be cognizant of metal price movements, we cannot, as a mining company lose sight of the longer-term imperative. This starts with exploration. At Booysendal, for example, we control a very large resource of over 100 million ounces. We have to date through exploration and planning, converted 11 million ounces to reserve, and this will allow us to produce 0.5 million ounces per annum for more than 20 years. but it is necessary to continue exploration and planning to extend that life even further into the future. This is 1 of 9 exploration drill rigs deployed at Booysendal for this purpose. We are running similar programs at our Zondereinde and Eland operations. Looking at the key financial features for the year under review. We have consistently followed a strategy of growing production down the sector cost curve whilst at the same time reducing business risk and this has both yielded improvements in our operational and financial results as well as added resilience for market downturns. The prevailing PGM market conditions and the material decline in the basket may signal a potentially protracted cyclical downturn, our scale, operational and revenue diversification as well as our improved liquidity position will be our best defense against these headwinds. Growth in metal production allowed us to post strong financial results for the year. Sales revenue increased by 16.1% to ZAR 39.5 billion. Operating profit grew to ZAR 15.4 billion and EBITDA was unchanged at ZAR 16.5 billion. Net debt decreased to ZAR 9.4 billion essentially on the back of strong cash flows from operations, and this is despite us continuing to invest in organic growth against all our operations. Earnings per share and headline earnings per share for the year amounted to ZAR 6.55 and ZAR 24.15, respectively. Please note that earnings per share included the impairment of both Eland by ZAR 2.7 billion as well as our investment in RBPlat by ZAR 4.1 billion. both of which are noncash items. In line with the fourth element of our group strategy, we have implemented a dividend policy. And are declaring a maiden dividend for Northam Holdings. I will unpack these highlights, but firstly, let's look at our growth in revenue. Revenue for the year was ZAR 39.5 billion. This is ZAR 5.4 billion or 16.1% increase on the previous financial year. The main components of this growth were a 20% increase in sales volumes ahead of our interim guidance, which was, however, offset by an equal reduction in the average U.S. for e-basket but tempered by a 16.3% weakening Rand against the U.S. dollar. Further weakening of metal prices post year end will place pressure on revenue. Looking now at cost of sales. Additional revenue was a comparable increase in cost of sales led to growth in operating profit of 3.8% to ZAR 15.4 billion. This translated to an operating profit margin of 39.1%. Operating costs were impacted firstly by an increase in square meters mined, our key cost driver of 16.8%. Secondly, by an increase in the average number of employees in service of 9.5% as we full staff complements at all of our operations. Employees received salary increases of around 8.5% on average with higher increases received at the lower levels. In addition, employees benefited from contributions to the Toro and other employee profit share schemes. Thirdly, by an increase in the value of metal held in inventory of just over ZAR 1 billion due to all stockpiles built at Booysendal as well as additional material in the pipeline. Fourthly, by an increase in the cost of purchase concentrates to ZAR 4 billion due to a 93.4% increase in volumes purchased with the purchase price based on ruling commodity prices and metal splits. And lastly, by the higher-than-normal inflation relating to variable cost and particularly electricity and consumables. Our focus in the coming year must be and will be on cost containment while we continue to grow the business. Looking at our income statement. Our accounting profit for the year has been impacted by 2 noncash items. The first relates to the impairment recognized in respect of the Eland, which resulted from the application of a discounted cash flow model to determine the recoverable value for this currently developing assets. During the buildup, revenue at current prices will be insufficient to settle the required capital and working cost. Accounting standards will allow us to reverse this impairment should market conditions improve. But for now, we are following a prudent approach. The second relates to our investments in RBPlat, which was written down to the value ascribed under the Implats mandatory offer. These 2 items totaled ZAR 6.8 billion. Other significant movements impacting the statement of profit and loss include our share of earnings from associates, which reflects RBPlat's performance as well as the investment income and finance charges relating to the cash confirmation pertaining to our proposed RBPlat offer, which was terminated on the 5th of April and taking into account these items, the group generated a profit before tax of ZAR 6.7 billion and accounted for a tax charge of ZAR 4.2 billion, of which ZAR 2.9 billion was paid in cash. Moving on to the working capital management of the group. At the end of June, inventory increased to just below 400,000 4E ounces. At Booysendal, we will continue to stockpile ore ahead of the concentrators until the completion of the expansion of the South tailings storage facility. Inventory had a carrying value of ZAR 7.5 billion and after applying the basket price and exchange rate at year-end a sales value of ZAR 13.7 billion. A large portion of noncurrent inventory relates to furnace slag that will only be processed following the commissioning of the upgraded slag retreatment plant scheduled towards the end of the current calendar year. Moving on to the group's cash flow. Under the current adverse market conditions, the importance of liquidity has come to the full. Thus, together with falling equity valuations were key considerations in our decision to sell our RBPlat holding in a large part for cash. Despite us recording a lower accounting profit, we were able to generate significant cash during the year under review, ZAR 5.5 billion of which was invested in capital expenditure, and this resulted in free cash flow of ZAR 8.5 billion. This ultimately allowed a reduction in net debt from ZAR 16 billion to ZAR 9.4 billion at the end of the year, which, together with our facilities, will assist us in weathering the current challenging price environment. Looking now at our borrowing facilities and debt position in more detail. Our net debt of ZAR 9.4 billion and EBITDA of ZAR 16.5 billion for the year resulted in a net debt-to-EBITDA ratio of 0.57. However, subsequent to end, the company has moved into a net cash position following the acceptance of the Implats mandatory offer. On top of this, we have undrawn banking facilities of ZAR 11 billion available to the group. We recognize the importance of returning value to our shareholders. And this has always been one of the key drivers behind our growth strategy. We have already returned significant value to our shareholders through the accelerated maturity of the Zambezi transaction. The RBPlat sale has strengthened our balance sheet and liquidity position. And this has in turn enabled the Board of Northam Holdings to declare a maiden dividend of ZAR 6 per share. In addition, the Board further approved an earnings-based dividend policy of a minimum payment of 25% of headline earnings and a share buyback program of up to ZAR 1 billion. I will now hand you back to Paul to take you through the operational guidance.

Thank you, Alet. In line with our growth profile and taking cognizance of the ongoing Eskom challenges, we have provided the following guidance for the market. PGM production from own operations to be in the range of 850,000 to 880,000 4E ounces. Group unit cost to be between ZAR 40,000 and ZAR 42,000 per platinum ounce, reflecting both the impact of production growth and expected inflation experience. Sales will be higher than production in the range of 950,000 to 990,000 4E ounces, including material from third parties. Our forecast CapEx for the year is expected to be between ZAR 4.5 billion and ZAR 4.8 billion allowing for Eland and the 3 shaft project as well as provision for the renewable energy program. We present this guidance, as always, as our considered view and we do wish to highlight that the sector is currently experiencing heightened business risk on a number of fronts. We expect growth from Booysendal and Zondereinde over the next few years together with the progressive ramp-up of Eland. This will deliver our medium-term target of 1 million-ounce production, adding third parties will enable total saleable metal to climb to 1.2 million ounces over the coming 5 years. Our view of primary PGM supply is unchanged. And -- we forecast a contraction in the 3 main metals over the coming 2 decades. If, however, we overlay the current economic headwinds and -- on the natural depletion profile, the natural depletion profile is the orange line here, a very different picture emerges. We can reasonably expect earlier closure of marginal mines and the potential to delay projects. This will lead, as you can see, potentially to a dramatic contraction in mine supply should current prices prevail. For palladium, we expect significant pressure on supply and the potential for not in substantial declines from the middle of the decade if palladium prices remain as they are. And for rhodium, we forecast a similar profile to that of platinum. As many will know, the mainstay of production for rhodium is in fact, UG2 on the Western limb and these operations are amongst the oldest and highest cost in the industry. They are vulnerable to a low price environment. We anticipate lower production into the future, even if rhodium prices recover somewhat. Based on these curves, supply of PGMs will become increasingly constrained. And if the world truly needs these critical and strategic metals, then the markets must incentivize additional supply from here. If this is not the case, the world's primary production base will rapidly shrink. A combination of global inflation and consequential rising interest rates, together with Russian metal flows into the Chinese market and producers destocking, producers I'm referring to here now at the motor manufacturer, the OEMs, led to a second half drop in our average price received from over ZAR 80,000 per platinum ounce to ZAR 67,000 per platinum ounce at the end of the period. Prices have declined further post year-end and today's spot for Northam hovers around ZAR 53,000 per platinum ounce. In addition, the fiberglass industry has liquidated rhodium into an already soft market, leading to fairly extreme -- a fairly extreme price reduction and subsequent negative impact on the basket. This depressed price environment may last for some time in our opinion. And we will act accordingly, maintaining focus on operational performance and productivity, cost control and prudent management of our balance sheet and liquidity position. Current pricing will place great stress on the sector. And at Northam, maintaining our position in the lower quartile of the sector cost curve is a business imperative. I'll leave you with a snapshot of the cost curve estimated at 30th of June 2023. And in order to manage what we think could be a difficult period, we will focus on, of course, safe production, continued project execution, efficient mining at the right cost. Northam has a very capable team in place to do this. We know how to execute on a plan, as you've seen. And I would like to thank all of our employees for the exceptional operational performance this year despite the challenging circumstances. Ladies and gentlemen, that concludes our formal presentation. I hope you have found it interesting and informative, and we can now move to the Q&A starting perhaps in the room. followed by the phone lines, and Damian, please don't forget the webcast. If I could ask that you introduce yourselves once you receive the microphone and let us know which organization you represent before you ask the question. Much appreciate it.

It's Leroy Mnguni from HSBC. Firstly, well done on the continued execution of your strategy and resuming dividends. It's good to see from someone who's followed your company for a number of years. Now congratulations on that. My first question is a couple of days ago, Gold Fields was talking about the battle for skills, particularly the boom rig operators. I know that's been a challenge at Booysendal in the past. I was just wondering if that is impacting you currently and the extent to which it's affecting you? And then, how should we be thinking about the Zondereinde cost once you commission that third shaft? Because I understand that it's inefficient right now to move that are 4 kilometers to where the current shafts are. But once you commission that, there's more fixed costs that come online as well. So if you could maybe just help us think beyond 2025, how that would impact your unit cost? And then my last question is, in your planning, is there a price scenario where you would put Eland on care and maintenance instead of continuing with the development there? And maybe if you could share with us what that price environment is.

Thanks, Leroy. Damian, while I'm answering the first question, could you just put the 3 shaft slide back up again, because I'll speak to that. So the first question, the competition for skills, I would agree with the Gold Fields statement, it has -- it is quite prevalent, and in particular, mechanized drill rig operators, the picture of the drill rig you saw, for those who don't know, that's the machine we're talking about there. And at the beginning of this financial year, if we go back to the first quarter, we had pretty serious problems with operators turnover. We were losing our people, which is quite well established mechanized mine to younger, newer project work, like as a good example, [ Venetia ] would be a good example, that the [indiscernible] Project, the Merensky Two Rivers project, Booys -- and Styldrift of course, would be in that mix as well? So we were seeing quite a lot of turnover, very detrimental like 27% turnover; very, very high numbers. We were clearly out of the market. And at the time, we readdressed our skills allowance or it's actually more of a shift allowance than a skills allowance and that helped us to stem the flow for now. So it's -- you can see the performance isn't too bad for the year. In fact, it's very good. But at the beginning of the year, we were extremely concerned as to what we were seeing. And the only combat we have there is to make sure, first of all, we're in the market financially, which we believe we now are. And secondly, to train, train, train. I think you know, in South Africa, traditionally, we are a conventional mining business. Historically, we have been and the mechanized operations are fairly young, and we don't have an extensive mechanized skill set. So everybody must train. We at Booysendal and Northerm trained novices from the community over a -- for to full competence, a 3- to 5-year period. starting in the classroom as we've seen and then into the mining workplace for the experience and slowly but surely, people attain the skills, and that's that we will continue to do. This is the picture of 3 shaft. This shaft infrastructure is actually reasonably -- shall we say, light. It's not -- you must not consider this as a large 10 meter shaft installation. This shaft is a 4.8 meters diameter shaft with a single winder. I mean, what I'm trying to point out is that overheads here are less than normal. But nevertheless, it is, of course, additional overhead and the refrigeration plants on the right certainly will draw power. And that will be balanced by the additional production that we get from the Western extension. As you pointed out quite rightly, our people are traveling over 4 kilometers. You can see that distance, how far it is. It's a hell of a distance to walk underground. They're then back to work. And the productivity increments that we will receive will more than outweigh the overhead cost that we had for the 3 shaft infrastructure. It will be tremendously beneficial actually. I know intuitively, you will you will understand that. And it's not just about people either. It's about the ventilation because there's a ventilation shaft here. There's also cooling requirements through the fridge plant and services, backfill -- backfill currently enters the mine in 1 and 2 shafts at the back. That backfill then goes down and laterally moves 4 kilometers to the requirement of backfilling the stopes, the pressure loss over that 4 kilometers is quite extensive. So things like water, air, power, backfill, electricity, being able to drop them right down there into the workplace will be a tremendous benefit for Zondereinde. And of course, beyond here, if we go back down through the page and into the west, there's another 4, 5 kilometers of strike to be exploited in the long-term future of this mine. This operation will add over 30 years life extension to Zondereinde, so it truly is Zondereinde without end. And then on Eland. Eland as you know, is a development project. It's very, very early days. Most of the activities is in the capital phase, a long way to go. Our position on the cost curve for Eland is between Zondereinde and Booysendal, maybe slightly towards Zondereinde rather than Booysendal because it is a conventional mining operation in the stopes and a mechanized development -- a mechanized operation in the development. So we peg the unit cost somewhere between Zondereinde and Booysendal and on that basis, once we've developed Eland, it should do well. As to the actual pricing, I think at today's pricing, I think you would probably know already as the analysts will know as a community that the current basket price puts around 70% of the South African production base underwater when you consider replacement capital requirements on top of the working costs. So that's why we point out that the industry at this price is in a very substantial squeeze and a pretty precarious position should prices not recover. But for Eland , it is a great ore body. It's shallow. It's large, 19 million ounces. Got the same mining parameters as we experienced at Zondereinde, it should do and it deserves to be developed on that basis. Thanks, Leroy. We have questions on the left here. And maybe we move from the rows backwards, starting with Adrian or anybody whoever has got it?

Paul. it's Adrian Hammond Standard Bank, SPG. I have 3 questions for you. These -- one on strategy, one on CapEx and one on supply. So let's just reflect what's happened with the group strategy on RBP and the events that unfolded -- their intentions were to derisk Northam with various supply sources and various processing options. So that's somewhat changed now. And so where do you think you should like to communicate to the investors where the strategy now sets going into the future? Do you still wish to pursue further M&A opportunities? And if I could if you could answer that with your 1 million-ounce target, you mentioned in your last -- in Leroy's question, something about additional production from the Western extension. So is there upside to 1 million ounces from your existing assets? And then secondly, on CapEx, you've downgraded CapEx or you forecast lower CapEx this year, up 17% from last year. So that's quite a big reduction and have you reprioritized CapEx in any way for the group? And I also appreciate that Northam expenses a lot of CapEx. So perhaps you could just clarify the CapEx profile with the cost profiles, you got costs going up, but you've got CapEx going down. So this is a nuance there between the 2? And then thirdly, you have the slide on 37, I think, what were your assumptions around which operations you expect could shutter or reduce production in that forecast, please?

Thanks, Adrian. There were 4 questions there, not 3. And I have to remember them all now. So first of all, from a strategic point of view, Northam historically, as the older gentlemen in the room would know, people like myself and Rene, Northam historically has emerged as a PGM producing company from a single asset base. Not only is it a single asset base, but it also happens to be the deepest shaft infrastructure in the PGM industry across the world. and it's also fairly geologically challenging, as again, you may remember. So our strategy was twofold. One was to improve our cost position on the cost curve, which we've clearly done through the growth profile. But secondly, to diversify risk and diversifying risk inherently reduces the overall business risk at group level. Obviously, if you can think about Northam of old, if something happened, it's on Zondereinde, it was quite devastating for the group in terms of cash flows and ability to wriggle under difficult circumstances. Now the group today, Northam as today is far different from what that was. But we do value diversity of operation. from a pure risk reduction point of view. And that hasn't gone away. And this is why, by the way, also answering Leroy there, Eland is a good diversification of risk. It's a shallow large ore body and it's geographically differentiated from Booysendal and Zondereinde. So that strategy is a good strategy. At the moment, I think we have to be very clear with the audience. Northam will be conservative from here. in this market. We will be very, very careful in terms of what we do from here. We need to be inwardly focused rather than outwardly focused in this market. This market has changed very significantly over the course of the last 12 months. It's not what it was. There are very good reasons why that has happened. And we have a, we are cautious about the forward market condition, and we'll behave appropriately on that basis. Answering the question on Zondereinde. Yes, the 3 shaft project, if we were to put 3b in place, which is a rock-hoisting shaft has the potential to lift production. But I did qualify that hole in the ground by saying we will complete the piloting which is about a 1,500-meter pilot hole, and then we will have a look once again at the market. That's another year away. So let's see what the market brings. Before we remit, we may or may not remit depending on the market conditions at that point in time. Further M&A at this stage, we're not considering further M&A at Board level in the immediate because of everything I've said here about the market. But there are assets that we still value. We value assets that are in other people's hands as always, it's a heavily concentrated industry. And it's also worth remembering in reality, there are only really 5 significant PGM producers across the world now. We've lost 3 companies. over this last difficult downturn over the last 10 years, Aquarius, RBP now, Lonmin, all diaper. We're down to Norilsk, Anglo, [indiscernible], Impala ourselves, and we are the little one there of those 5. And of course, ARM is a diversified. So you can see how heavily concentrated the industry is. The valued assets are in essentially other people's hands. We do like the Amandelbult, we do like the Der Brochen, but they're not for sale as we understand at this stage, although that may change to give you a full answer, Adrian. Just remind me the fourth question.

On the CapEx.

The CapEx is just a soft review of CapEx with a a view on the market. I think we haven't stopped any activity stone dead. We have, shall we say, softened our approach on each individual elements of the strategy. to smooth out the capital profile over the coming years. So we -- it's a soft review of CapEx. It's not a hard cut at this stage. But we think it is, again, I think Alet use the word prudent. It's prudent at this stage of the market to do that. Is there anything I didn't answer?

There was on the supply on Slide 37. .

Yes, we have a whole list of of production that is under threat here. Some of it is project work, which we have originally allowed to flow through on the orange line, we don't think it's very, very difficult to see a greenfields project being funded in this market. It's very, very difficult for us to see. Other people may think differently, of course, it's not for us to say, who's who in the zoo, here, but in our humble opinion to fund a greenfields project in this price scenario will be extremely difficult. We are very pleased, as we've said in the earlier on to have completed the Booysendal project as we have done because the inflation also flows through into the escalation portion of greenfields projects and long-dated projects is a horrible thing. When you've got double-digit inflation cumulatively over the life of, let's say, a 10-year mining project, it's very, very hard to see a return. So project work, I think, very clearly would be a differentiator between the orange line and the blue line. And then I think some of the older, smaller shafts with little future left, if you're burning cash at that level with no longer-term future, then a sensible thing may well be to close them earlier rather than later. So those projects are all in there as well. And there is a long list of these things and it's probably not -- it's not the right thing to do it in public, but you're welcome to have a discussion, as is anybody, by the way, as to what our view of any particular project is.

That's clear.

We have 2 questions on the fourth row.

Jeff Hill, the Washington Times newspaper, Washington, D.C. First of all, my, congratulate you. That was a superb presentation. These things can be unspeakably boring. Yours was not -- it was entertaining, and it was good. This is -- you said there's not too many players in the field. Are there areas where you can work with your competitors to create an economy of scale in recruitment of a labor, for example, in verifying reputation of people that you deal with in gathering intelligence on Russia's sale of platinum to China, which affects all of you? Are there areas where you can work with your competitors? And do you have a good relationship with your competitors? And my second one is an odd ball one. You talked about conservation. What do you do with invasive wildlife? Somebody opens a cupboard and find there's a Mamba in there. You have baboons and monkeys coming in and serving. Do you kill them? Or do you safely relocate?

That's a very, very interesting last question, which I probably pick up on straight away. So in the areas that we preserve, it's the flora rather than the fauna that is invasive. And we eradicate, we've got quite significant eradication programs running there, especially in the riverine areas where black water creeps in from the old days. So it's hard work, and it's hard to eradicate and you've got to keep at it, but we definitely eradicate invasive species. On the fauna side, no, we don't, it's not necessary, actually these places are quite wild still. We do need to keep cattle out on the boundaries. So we tend to use fencing on the boundaries that, normal fancy. On the cooperate, I think the audience will realize we've probably stretched our relationships with our competitors in the last period and not spreading it mildly. But it is a highly competitive industry. And I think we all must recognize that it is sometimes underestimated just how competitive the PGM space is. And the reason is because it's so heavily concentrated. It's not only concentrated in terms of the entities, the commercial entities, but it's geographically concentrated as well. But where we do work together extensively is in the marketing area. And I'm not referring to selling now. We're not allowed to collude on selling, on prices and so on. That's against the law. But we can work together in terms of marketing effort. And we do that through the PGI and IPA, these are worldwide organizations that are both funded and actively promoted and we lend time and expertise to these entities, and we do work together. We do run Platinum Leadership forum once a quarter as well, where all the CEOs of the company get together to discuss those common issues that you referred to, Jeff. I hope that answers it.

[indiscernible]. Well, I just -- maybe it's a question for Damian. But I see that you've lowered your long-term price assumptions for the metals in your sustainability -- in your ore reserve report. Didn't really impact your reserves or resources. How does that working? And if you had to put today's prices into your models would have impact your reserves and resources?

Yes. I think, of course, it would, if you put spot prices in, it would impact everybody's -- the world's resource and reserves, that's absolutely factual. They would reduce significantly and pretty much would be reflected ultimately in our production profile that we put up there. But we have done quite a lot of work over the last 2 years. In fact, we've traveled the world all over the world, all over the PGM world to endeavor to understand the change that we see, which has, as I said, been quite extensive. And there are some changes that concern us, in particular in the rhodium space. And to give you a good -- technical example, in the fiberglass industry, predominantly in China. The mix of platinum and rhodium has moved -- shifted very deliberately so from a 80-20 mix in the alloy that's used in the furnaces to a 95-5 mix. And that change -- technical change released quite a bit of rhodium, which I think many people may be aware of and this is suppressing the price for rhodium. And we think that may be -- remain with us for a little while longer. Why is that so important? Because 2 years ago, rhodium was 50% of the basket. And if 50% of the basket loses 75% of its revenue or price, that means you lose overall 35% of your total revenue, which is exactly what's happened here. So yes, your point on reserves and resources, we've moderated that view, and Damian has took that into account. But of course, we can't use spot. That's also not the right -- you've got to take a view for the longer term because we're talking about potentially a 30-year plus of reserves and many more years of resource.

It's Arnold Van Graan from Nedbank. Two questions from my side. The first one is, can you give us a bit more detail on your renewables plan? And in short where and when. And I think more importantly, the capital cost over the next couple of years or so. I see you've got some CapEx in also some renewables in your CapEx plan. And the question is also against the backdrop of this quite tough market that we are in and that we're facing. So that's the first question. The second one is just give us your views on the share buyback. And again, I'm going to refer you to your comments on the market and the outlook, which is quite high. Is that cash not better preserved in the business, if it is a prolonged downturn? And don't you think that shareholders would have rather preferred another ZAR 1 billion of dividends as opposed to buyback? I'm personally not keen on buybacks. If you run the numbers, you're going to buyback maybe 5% of your shares in issue. These markets move 5% in half a day, 30%, so that's the backdrop. If you can just give us your thinking and your reasoning behind that?

Okay. Thanks, Arnold. On the renewable question, Damian might have to jump in and help me here, but my memory doesn't serve correct, Damian. We have a 10-megawatt PV at Zondereinde, potentially expandable to 80 megawatts. We have a 60-megawatt. Yes. So 20 Eland, expandable to 40, and then there are 2 wind farms, 1 in the Eastern Cape, 1 in the Western Cape and the megawatts there, Damian?

140 each.

140 each. When we say 140 that's the nominal capacity of the wind farm. Obviously, the yield depends on when the wind blows and when the wind doesn't blow. But those 4 projects are the basis for that decarbonization, and they're well advanced. Each of those projects are well advanced. So we have what I keep saying a clear road map to be able to do the [ 60% ]. We don't like putting targets up without substance behind them. So that target is doable. And the off-balance sheet, yes, that's important. We are in -- we're codeveloping those projects with third parties. .

Okay. So the CapEx estimate for this year, that's not renewables. Because I saw an asterisk in your capital expenditure forecast, including renewables.

Yes, some of it. So like the because the Zondereinde PV is behind the meter and is not subject to load shedding that's a self-built project. And also, the generators, there are ZAR 100 million total of generator set and another ZAR 100 million to install them together with all the tankage and housing and everything that goes with. So you can just bear those in mind as well. These units, by the way, are 40% less carbon-intensive than the unit carbon intensity of Eskom, an interesting point to note.

Okay. That's an important point because people who look at it and say, okay, you're putting in generators, the whole world is going green. So these things are actually greener than Eskom.

It's 40% greener than Eskom on a carbon -- unit carbon intensity basis. Yes, that's quite right.

Thanks for pointing that out.

But it's still counterproductive. I mean your point is also well made. I mean we we are burning diesel ultimately, and that we shouldn't really have to do that as frequently and as often as we do. And then on the share buyback question, it's a perennial discussion between and amongst shareholders and companies as to share buybacks versus dividends. And I'm not going to comment too much on it, if you don't mind, Arnold, as to what those parameters may or may not be that we foresee. But clearly, you would realize it's a reasonably modest program. And it's not a -- it's a program that is designed to acquire as many shares as possible for that price rather than a share price support mechanism in the classic long run buyback program that you see from other companies. It will be quite opportunistic in our view. But your point is made, I mean the -- and we also just publicly, we can save for the shareholders post this results presentation where the company and management will listen to the shareholders opinion on buybacks versus dividends. Just as you all know, some shareholders at sometimes would love buybacks, everybody loves dividends and it's a perennial argument. We have Rene.

Rene Hochreiter from NOAH Capital Markets. Nice to see you back in -- in a dividend-paying position. Well done on the results, are actually much better than that too -- the diversified that have reported over the last week or so. Just on the share buybacks. If you give me the dividend, I can decide myself if I want to buy a share again. So just a comment.

Yes.

Also just on guidance on costs going forward. I've got you at about -- and inflation is coming down right across the world. I've got you down for about 10% to 15% increases is that the right ballpark going forward?

I think it's on the high end now, Rene. I think probably it's moderate. We've seen 13% for the group. As you've seen in this set of results, I think it will moderate over the coming year, we believe because of the cycle does seem to be turning. And our normal inflation experience in SA mining is probably 8% to 9%. I don't think we're going to get there by next year, but we might get back down to that low double-digit experience, hopefully. Again, I just want to stress for the audience, very important to realize these inflationary experiences are in the variable cost items. It's tough to combat.

And just to push you a little bit on maybe long-term prices of particularly rhodium and palladium. What's your view?

Well, our view is if in particular, the easy one is palladium because it's the biggest market in the PGM space over 10 million ounces across the world. It's a big market. It's very liquid and price discovery there is pretty solid. If palladium prices remain as they are, we think some of the pure palladium producers are going to have a lot of difficulty. Then one must weigh up the geopolitics of palladium, I'm not going to get into that discussion, but I think everybody would know Norilsk is the biggest producer of palladium in the world. It is a Russian metal and in some areas of the world, Russia metal is no longer desired or acceptable. And therefore, the North American palladium is important from a geopolitical point of view. But if the North American Palladium is going to remain viable, then we need a better price. It's a good argument. I don't think as South Africans we are price takers in palladium, largely speaking, so it's more of a North American-Russian discussion as to where the palladium may or may not come from and at what price. On rhodium, it's a tough one. It's a tough one. What needs to happen with the rhodium is the metal that came back to market from the glass industry, the fiberglass industry needs to be washed out. It needs to be absorbed into the industrial process and used as [indiscernible]

How long do you think that will take?

I think it's more than a year.

Good day, Paul and Alet. Bruce Williamson, Integral Asset Management. Paul, firstly, just maybe to pick up on and elaborate on Leroy's question. Could you give us an indication at Zondereinde? The stoping crews going down the shafts as they are traveling across to the west. How much actual time have they got on the stope face compared to when they come down the 3 shaft?

Yes. But it's currently 4 to 5 hours in reality. And if you go down a 3 shaft, it will be 7 hours, it's quite a substantial difference.

Okay. So that makes a massive difference. You pretty much insured getting your blast and not missing blasts, et cetera.

Yes, if you look at the Zondereinde plan that we put in the book there, you will see the position of the shaft, and we drop -- we'll be able to get these services and our people write down there, the [ work face ] right at the bottom of that chart with virtually no or very little traveling time in the beginning.

Okay. So I mean that makes a massive difference. And then secondly, I mean, you've alluded to that the market might stay down and low for a prolonged period. Can you maybe share with us maybe a couple of ideas of particularly why you think that might happen?

So we're in a heightened interest rate environment. Of course, the speech this evening is very, very important. In Jackson Hole. But that's reality. We're in -- compared to where we have been, we're in a very high interest rate cycle. Now it's very difficult for people, whether you be an investor or a user of the metals to hold metal under these circumstances, when you have a 4% to 5% U.S. government bond yield, and you have no yield on the metal, you have just vaulting costs on the metal. It's a cost. So can -- there's been quite a significant change over the last few years in the interest rate environment. And companies are -- but simultaneously come under pressure. I'm talking about the end users now, they also have balance sheets and liquidity and financial controllers, such as Alet to work to, and you cannot hold the metal so easily anymore under those circumstances. So that's from a producer investor point of view. I think when it comes to the metals themselves, I've explained the rhodium issue. We do think it's a short term issue, short term in the sense that a year or so, we should be able to wash out that stock as a world. On the palladium side, the -- the Russian metal is being sold into China. I think that's also become common knowledge and it is somewhat being discounted, which is also problematic. So I think that is -- I would mention that on palladium. On the platinum side, platinum would be our favorite metal from here. We think the fundamentals for Platinum are possibly the best of the 3 at the moment because palladium is being substituted now. Palladium coming out, platinum going in, possibly ultimately up to 1.5 million ounces of platinum substitution for palladium. But of course, if palladium comes down and it balances and we get to parity, that should sort itself out as to what ultimate level it comes to. But it's a very positive situation for platinum. Platinum is historically cheap and it is behaving, evidently behaving quite well really. It's held up quite well, if I can say it that way, against the others. So platinum, of course. So that would be our comment on Platinum. I think the hydrogen economy is also becoming very, very real in terms of policy drive from various governments across the world, but also money into the industrialization of what has already become a commercialized process. fuel cells and electrolyzers are already fully commercialized, but they're not yet at the industrial scale level of adoption, but that should come with policy push and funding. And effectively, I think the world needs all energy solutions to solve the problem. And I'm sure that the hydrogen economy will feature, and it's a very positive outlook for platinum iridium and ruthenium, should that be the case. I think we must also remember the lines in the webcast. I'm not going to cut anybody short, but just so we know.

Paul, I have only got one question. [indiscernible] from SBG Securities. Alet mentioned that cost control is going to be quite key in the next financial year. You guys have been good in controlling your costs. I'm just wondering what levers you'd be looking to pull right now because you've got your diesel generators coming in soon, there's going to be an additional cost. And you guys you guys take pride in paying your staff. So I'm just wondering, is it just going to be from the additional volumes? Or is there anything else you'd be looking at?

The primary defense is the volumes. That's true, but you can't just look at the volumes. We look at the cost inputs. So we have quite a -- an extensive look at the procurement processes that we use. We've actually beefed up under Alet's control the procurement management and control that area. There's a couple of extra people there, some heavyweights with a strong right arm that are able to compete with the pool from Nelson Ndlala and Willie Theron, and the engineers -- but it's not so easy. We're going to do quite a lot of benchmarking against our competition to make sure the inputs of those commodities. We can get the best price. -- and we're going to squeeze it hard. I think Alet do you want to make any further comment on that? .

Yes. And these sort of times you can't really cut back on tea and coffee, you need to look at bigger ticket items. So as Paul has mentioned, we are beefing up our procurement department. We'll be looking at all aspects around our stores, et cetera, what we hold, our store holdings, et cetera. And let's see how it goes, but cost control will be critical. And as Paul has mentioned, the units. So the production will be absolutely critical. .

Now what we won't stop is key safety and production elements that would be counterproductive. But we'll see what we can do. Okay. Perhaps we can move now to the lines and the -- we can come back to the room, but let's move to the lines and the webcast to give everybody a chance. Start with the telephone lines.

We have a question from Chris Nicholson from RMB Morgan Stanley.

Morning, Paul and team, sorry that I can't be with you there today. I had a couple of questions about the market, but I think we've dealt with that. Maybe one thing that we haven't dealt with is just the grades on Booysendal North, it does look like you've had ongoing issues with the split reef. I think it looks like your grades fell off a little bit in this half but you've just come out of it now. I remember your original prognosis was that it take about 18 months or so to work through those. I think that was this time last year. Just any update on that? And then if I can just kind of couple it with another question around Booysendal as complex as a whole. When you originally talked to that 500,000 ounce production level, I'm -- memory seamless to serve me that you hadn't included the BS4 module in that original production guidance. So this is a bit of upside and you've added additional stoping sections there. Is it possible that the modular or I guess, the complex as a whole could do more than that 500,000 ounces? Or -- or I guess at what point do you start running up against processing capacity, it would seem that you're nearly there on that now?

Yes. Thanks, Chris. The current -- let me start with the last question first, the easier. The current milling rate for this year will be about 6.9 million tonnes, excuse me. And the mining rate will exceed that probably could be as high, certainly north of 7 million tonnes and as we said earlier in the presentation, we do expect to grow ROM stockpile there. The key constraint for a higher production is, in fact, the milling capacity of the South. Now the South is a really big mill. So this is the mill we bought from Aquarius Platinum. It used to be known as Everest South and that mill has the capacity to do more for sure. But we have to be cognizant of the capacity of the tailings done to make sure we don't exceed things like rates of rise over time of the deposition of that material because it has to go somewhere -- so Willie and the team and the engineers there are expanding the tailings dam. We're also introducing a thing called dry stacking, which will increase the capacity of the tailings dam and therefore, enable us to lift the milling rate of the mill that we have. So that is work in progress and it remains to be seen what we can deliver there. So I'm confident in saying 6.9 million tonnes is doable in terms of total milling at Booysendal for this coming year, but we need to get it higher because clearly, the miners can do more. They're already exceeding the metallurgical current capacity. So we'll be working on organic, what I will call, organic technical solutions for increased mill throughput including the construction of the expanded tailings dam at Everest South. You might ask me why do you need to expand that tailings dam? Well, of course, it's the old Aquarius tailings dam that I'm talking about, and that was rather small. So it certainly has to get a new footprint, and that's what we're busy with. So there's some potential, you're right about BS4 that was on top, not inside, so to speak. So there is potential to go higher, but the metallurgical constraints will hold us back for the moment. And that's why we keep repeating 500,000 ounces is a good number for Booysendal for the moment. And this year, we'll be able to deliver to the smelter, excluding the build of ROM around about 480,000 ounces. In other words, in line with the guidance that we gave you there. Did I answer all the questions? I think so. There is split on the grades...

Just on the grade, the grades of the split reef.

Yes. So the solution for split reef on the north is, we still have to mine the split reef. And we are mining the split reef. So all the results you see here incorporate the mining of split reef on the -- what is the southern upper section of Booysendal North. It's a pity. I haven't got the plan here. and the way we will mitigate it is by extending down dip and repositioning teams from -- and slowing down our progression through the split reef areas in favor of the higher-grade areas and balance the whole thing out over time. But as you know, in mining, it does take time. Any further questions?

There are no further questions on the conference?

Okay. Can we move to the webcasting.

I think you've answered Steve Shepard's question about concentrator capacity to Booysendal. Just asks about, in addition, your views on DMTNs, whether you'll roll them as they mature? Will you maintain debt on the balance sheet was moved into what may be a protracted PGM down cycle?

Yes, I think perhaps just for the sake of my voice, if you can give Alet question?

Yes. Just in terms of our DMTN Note Programme, at the moment, it's ZAR 15 billion. For the current year, we'll have notes maturing to the value of ZAR 4.3 billion. with the acceptance of the implants mandatory offer, as I mentioned, as of today's date, the company is in a net cash position. We'll see how the market goes, but essentially what we would like to do is to reduce our debt profile, but let's see how it goes.

I think if I can add to that, we've also -- always give clear guidance to the market that we would be happy to pursue growth at a 1x EBITDA level. But of course, EBITDA will now fall. So that debt position. would have to be adjusted naturally. It's 1x EBITDA through the cycle. And we would only use debt to grow the company, not to operate the company. That's a huge distinction for Northam. The -- the access to capital that we do is to execute growth. It's not to stay the same. It's to build something. And -- we have 2 options as a company. We either access equity through a rights issue to do that type of growth or we access the debt market and the Board has chosen, and quite rightly so, for us to access the debt market during this 10-year period rather than issue more shares. The shares in issue today at Northam Platinum Holdings are virtually very little difference to the shares in issue 10 years ago. There's been no increase in the shares in issue at Northern. We often hear dilution questions about Northam. It's -- please look at the numbers. The shares in issue are pretty much exactly the same as they were 10 years ago, and how we did it and how did we triple the size of the company. You can't triple the size of the company on your own cash generation ability. It's not possible. You have to access some form of capital in the immediate and Northam chose to use debt. and I think quite rightly so.

Just a question from [indiscernible] and Shibani from [indiscernible] Mutual and it's just the converse of the question about the softer metal prices at the moment, what could lead to basket price recovery in your view?

Yes. I think first of all, on the macro, a peaking of the interest rate cycle is quite important for commodities as a whole. A clearer recovery in China. China is -- it's the largest market for PGMs in the world. We've visited China recently, and it's still stuttering. We haven't got a clear recovery there. And then washing out of of stocks from our customer base, if I can say it that way. They also adjusted their safety stock levels, that metal has come back to market, and it needs to be absorbed into usage. And that -- until that normalizes, I think there's enough metal around as we're seeing in the price.

Martin Creamer just asked when will you begin generating sun and wind energy? And is renewable generation, a good business case?

I think you can answer that one yourself.

Yes '25 -- F '25, F '26 if all goes well on sun and wind energy. And yes, it does have a good business case.

Yes. Definitely. I mean the Damian has been rather quiet there. But yes, first electrons flow '25, '26 and then the unit cost per kilowatt hour is substantially below the Eskom rates. So it very surely has a great business case actually. The problem we have, just in particular on the wind is a great connection -- and we have -- I mentioned 2 wind farms in progress, and the rules have changed recently, the investment community may be aware, there's a new set of rules and if you had your grid connection, which we did, we still have to go back now and we go through the process again in terms of the new ruling. So there's a bit of red tape there that the country is still struggling with, but yes, all things being equal, '25, '26. Thanks, Damian.

Nkateko Mathonsi from Investec. Could you give some idea of time lines on liquidation of the 400 kilo ounce work in progress inventory?

Yes, the main inventory there is what we call furnace slack. The slag plant will be commissioned, scheduled to be commissioned in November, so a couple of months away. Huge sheets of slag. I can't remember how many hundreds of thousands of tonnes there are, but it's a lot. And that will be worked away over the course of 5 years once the slag plant is commissioned. That's the main element of what we call sticky stock. In terms of the stock build that we referred to at Booysendal, we would be happy to carry a ROM level of around 500,000 to 600,000 tonnes. I think that's doable from a real estate point of view, and beyond that, we would need a metallurgical solutions to milling capacity, but it's organic increment. It's not a new mill. I think you've answered [indiscernible] question on CapEx profile, I think you've given some response to that. And same question from AB. Sorry, hold -- just give me a moment. Steve Shepard came back to -- just are you considering any other plant, say, DMS or optical sort into concentrated capacity of Booysendal?

Yes. Good question from Steve on that one. We definitely will consider DMS in the South. We have a DMS unit in the North of Booysendal but not in the South. Optical sorting, no. We don't believe it's industrialized yet. And there are other methods like upfront crushing that we will look at.

At what point in a -- of metal prices, would Northam consider starting cutting production? Yes. That's from Adams [indiscernible].

It's a very good question. I mean as long as Northam is producing in the first quartile of the cost curve, there is no reason whatsoever for Northam to cut production. That's the answer.

Thanks for [indiscernible] I may not be little bit on time here. Just give me a second...

I think to be fair, is it the last question, Damian? [indiscernible] everybody else?

Last question. Is there anything you could do to increase recycling of water? You've indicated very good figures. Anything you could do there to further increase your environmental benefits?

Yes, there is. At Booysendal, it's a fairly young mine. The Booysendal South area is water positive. The Booysendal North area is water negative, and we are busy connecting those 2 mining areas such we can take advantage of excess water. This is from the ground, by the way, from the underground workings to use that excess water to balance out the water pool from the north. It's not a complete balance, but we will reduce our consumption from the Lebalelo water scheme, which is the broader regional freshwater so we reduce our reliance on that basis. And Damian, I'm going to cut you short there.

I think everybody is [indiscernible].

I think we have kept everybody busy for 1.5 hours. Thanks very much, ladies and gentlemen. We do have some sandwiches and a cup of team in the foyer. Please join us. Thank you.