Pan African Resources PLC (PAF) Earnings Call Transcript & Summary

Good morning to all of you, and a very warm welcome to the Pan African Resources 2021 Final Results Presentation. Thank you very much for taking time out of your schedules to join us today. The last year has again seen good progress with Pan African's strategy of positioning ourselves as a safe and sustainable, high-margin and long-life gold producer. We are excited to share some highlights and also our plans for the year ahead in the next slides. As per usual, we will try and keep the presentation fairly brief, and we will then be available to assist with questions afterwards. Joining me in presenting today will be Deon Louw, our Financial Director. You are welcome to refer to our SENS and RNS announcements and to the supplementary information available on the Pan African website should you require detail not dealt with in today's presentation. Please note the disclaimer and detail on forward-looking statements on Slides 2 and 3. On Slide 4, an overview of the presentation. The first section provides information on the continued impact of and our response to COVID-19 as well as information on the group's safety performance. We will then follow with some of the highlights and key features of the year past and also further detail on our unique portfolio of remining and underground assets. We will discuss the group's all-in sustaining cost performance and outlook and also how we continue to reinvest in our mining assets via capital spend to ensure the sustainability into the future. I look forward to spending a couple of minutes discussing progress on our ESG initiatives, where our aim is most certainly to go beyond compliance. Deon will analyze our full year financials, including details on a very robust financial performance. We will then conclude with an update on our growth and expansion plans and by demonstrating that Pan African is firmly on track in meeting our financial year 2022 deliverables. So moving along. On Slide #6. Firstly, our thoughts and prayers go out to all of those who have lost loved ones to COVID-19, including 4 of our own colleagues. We also again express condolences to the family of Mr. Marvin Bella, a Barberton employee who lost his life in a fatal accident in July 2020, just after this operation achieved 3 million fatality-free shifts. Now, most of our people do not have the luxury of working remotely during the COVID-19 pandemic. But Pan African's operational performance is testament to their commitment to continued delivery. As is evidenced from our infection numbers, we have managed to contain the spread of the virus very well with encouraging recovery rates when infected. Currently, we have less than 10 active cases in the group and a recovery rate of 97%. The South African mining industry now has a critical role to play in ensuring that we vaccinate our people. Pan African aims to have 75% or more of our employees and contractors vaccinated in the next month. I am pleased to confirm that our corporate office has already exceeded this target. From a safety performance perspective, we can always do better. However, our safety rates are encouraging with a marked improvement, specifically at the Evander underground. Barberton Mines continues to be an industry leader. The fact that we saw such a large proportion of our total production from service operations is certainly also a positive from a safety perspective. On Slides #8 and 9, some highlights from the financial year. We delivered an excellent production performance with gold produced increasing by more than 12%. We exceeded both our initial -- our initial and our revised guidance production numbers for the financial year. The Barberton team deserves special mention. Production from underground at Fairview, Sheba and Consort was up almost 30% year-on-year. When we reported our interim results, we promised a much better performance from the Evander 8 shaft pillar project in the second half of the financial year. Our Evander team has now really delivered with pretty much double production in the second half from this asset. From a cost performance perspective, the stronger rand as well as cost increases in excess of normal inflation impacted our numbers. We are targeting an all-in sustaining cost of sub-$1,200 for FY '22, assuming ZAR 15 to the dollar exchange rate. On Slide #9. Deon will speak more about the financial performance, but we achieved a record profit for the year. This one does not get you report on too often. We are also recommending a record dividend for approval at our upcoming Annual General Meeting in November. Even after all of the capital programs and dividends paid in the last year, we managed to almost halve our debt over the last 12 months. It is also worthwhile noting that as announced today, the Pan African Board has approved the initiation of a share buyback program. The buyback program will be executed in accordance with the company's general authorities to make on market purchases, which was approved at our previous AGM. We will make further announcements on this initiative in due course. Financial year 2021 was also an excellent period for Pan African's ESG initiatives. I am particularly pleased with our achievements on renewable energy, water recycling and our Barberton Agriculture Initiative. We will discuss these programs further in the sections ahead. If we then proceed to an overview of our operating environment and operations, starting on Slide 11. As we have said before, in terms of a track record of operating successfully in South Africa, Pan African's Barberton has a pedigree second to none. This mining complex has been mining continuously for more than 130 years. Few mining jurisdictions are without challenges. It is therefore key that you have quality assets and a management team experienced and equipped to deal with problems and challenges as they arise, or even more ideally, to preempt and avoid some of these issues altogether. We continuously seek ways of making our business less susceptible to adverse external impacts in South Africa. Some matters to highlight in terms of our operating environment over the last year include: as previously announced, we are reducing our reliance on Eskom, the South African electricity utility. Our first 10-megawatt solar plant at Evander will be complete late this year. We have been awarded a generation license for this operation, and we hope to connect to the grid by February 2022. In the next weeks, we will also report on progress with the expansion of this initial phase as well as the results of a feasibility into a similar plant at Barberton. The recent government announcements on increasing self-generation thresholds will certainly also stand us in good stead. We received a 30-year mining right renewal at Barberton in June 2021. This right is now valid until 2051. Evander's mining right is also still valid until 2038 in its current form. From a security perspective, our efforts to safeguard our people and our operations and minimize the impact of illegal mining are ongoing. We are rolling out a number of new technology-based solutions to increase the effectiveness and reduce security costs into the future. In terms of stakeholder interaction, we continue to invest in our social license to operate. I believe it would be very difficult for any party to say that Pan African's operations do not have a meaningful positive impact in the areas where we operate. I'm also again very pleased to highlight that we recently finalized a multiyear wage agreement with our respective unions at Barberton. This agreement should underpin operational stability at our mines in the year ahead. On Slide #12. Pan African's business represents a unique combination of surface re-mining and underground mining. The surface mining reduces unit costs whilst the underground provides long life of mines, solid returns as a result of a large sunk capital base and also attractive optionality, which we are now bringing to account. On Slide #13. I think this is a very good summary of our current operating assets. You have Elikhulu and you have the BTRP, our surface retreatment operations. These plants are highly automated and have generated fantastic returns for the group. I am pleased to report that Elikhulu has now repaid its initial capital investment of some ZAR 2 billion in a period of less than 3 years since starting operations. On the underground, Barberton Mines, as I've said, is one of the oldest mining operations still running in the world with a 20-year life and more. And Evander 8 shaft is now really delivering with what we believe to be a great future ahead. If we move on to the next section, let's spend a couple of minutes on the operational performance of each of our core assets. Elikhulu on Slide 15. Now I must say, Elikhulu is the 1 operation that disappointed during the year, with production down 16%. It's previously flagged in the first half of the financial year, we were constrained on tonnage throughput as a result of remedial work to our deposition compartments. In the second half, recoveries from this plant did pick up, but not as much as anticipated. On a very positive note, we have managed to retain the life of 12 years on this world-class operation and, as is evidenced by Slide 16, we expect to increase production to approximately 55,000 ounces in the year ahead. Elikhulu's costs on a rand per ounce basis should also not increase by more than 5% in the coming year. This also excludes any benefit from the solar plant in the later part of the year. On Slide #17. The current year, again, saw a very good performance from the BTRP, with the asset generating EBITDA of $12.5 million. We can maintain this level of production from the BTRP for approximately 3 more years. However, the future of the BTRP now is, we believe, processing Royal Sheba ore. We've commenced a 20,000-tonne bulk sample. Some pictures of the added and initial underground workings are on the bottom of the slide. Just to recap on Royal Sheba and our development plans on Slide #18. Royal Sheba is a large ore body with a strike length of more than 800 meters and a width of between 5 to 20 meters. It's been drilled to almost 800 meters below surface. The ore body is still open down dip and on strike at depth. Royal Sheba contains more than 1 million ounces in mineral resource, grading approximately 2 grams per tonne. Now, the ore body also contains 3 million gold, which represents an upside to the head grade during mining. Also historical mining by [indiscernible] has proven the amenability of this ore in our metallurgical facilities and plants. The ore body's dimensions make it suitable for low-cost long-haul open stoping mining methods. Now for Royal Sheba, we have 2 attacking points, the Royal Sheba uppers and in the lowers, as we call it. On Royal Sheba uppers, we were accessing this ore from surface using the existing added, as I've said. After our initial development encountered unexpected old workings, the mining layout had to be changed, and we now expect to intersect reef in the second half of the FY '22 financial year. Initially, 20,000 tonnes of reef will be mined via a bulk sample. After the bulk sample, development will continue on reef and spiral inclines will be developed to access the reef on the lower levels. Initial reef from the reef development will be used to fill the Sheba and Consort plants and facilities. On Royal Sheba lowers, we will access this ore body from 23 level at Sheba [indiscernible]. So Royal Sheba lowers is being developed concurrently with the upper levels. Development on 23 level is now only 150 meters away from the refill horizon. It will take approximately 2 years to establish all of the footwall infrastructure, return airways and the secondary escape ways. Once all infrastructure is established, the spiral incline will be developed up and down, providing multiple attacking points on reef, where the ore body will be developed out to the boundary and the long-haul stoping will begin. Conversion of the BTRP plant will be timed to coincide with the required tonnage profile. Slide #19 to 21 provides more information on the Barberton underground operations. Again, credit to our geology and mining teams for an excellent performance during the last year. I think the flexibility afforded by the 4 operational platforms at Fairview's 11 blocks certainly assisted with the underground's almost 30% increase in gold output. On Slide #20. In addition to having more platforms available, we have also increased the mining footprint of these platforms, basically doubling the size of our mining area at excellent grades. Lastly, on the Barberton underground, Slide 21, we are pleased to report that the declining trend of underground production from Barberton has been reversed, clearly benefiting from priority development and our other initiatives. Project Dibanisa is also progressing well and should be complete in the next 18 months. If we then conclude on our current operations on Slide 22, the Evander 8 Shaft pillar. Again, the Evander team really redeemed themselves in the second half of the financial year, producing some 24,000 ounces during the half at an all-in staining cost of sub $1,000 and an excellent safety performance to boot. With the addition of 24 level, this operation now has a life of mine of 5 years. We plan to at least double this life of mine with the initiatives detailed later under our growth section. Slide 24, all-in sustaining costs. Now more than 75% of our portfolio produced at an all-in sustaining cost of just over $1,150 per ounce. In the next year, we will add the Evander underground to our lower-cost operations. We are guiding an all-in sustaining cost of below $1,200 per ounce, assuming a ZAR 15 to the dollar exchange rate. A final word on costs on Slide 25. I think we can demonstrate that our cost performance on core operations is very much in line with the average for the global sector. On Slide #27, group capital expenditure. We continue to invest in our assets. In a lower gold price environment, we can cut CapEx to maintain cash flow margins. But for the time being, we are able to balance a fairly large reinvestment into our assets with debt reduction and increased dividends. In the last year, we invested again a significant amount into the Barberton underground fleet and also in expanding the Barberton tailings storage facility. This will continue in the year ahead. We are also developing the Royal Sheba ore body, as we've detailed. For FY '22, we have quite a sizable capital spend planned. We'll be moving to a new remining site for Elikhulu and extending its tailings storage facility. We are also pretty much doing all of the 24 level development at Evander 8 Shaft. In 2023, as you will see, the group capital expenditure is expected to drop significantly once the Elikhulu move to Leslie/ Bracken is complete and the underground 24 level development and cooling plant is commissioned. Slide 29, Environmental, social and governance or ESG. For us at Pan African, the increased focus on ESG in recent years has required the group to explore opportunities of improving our operations and ensuring we future-proof our business. This year marks the first time we are releasing a dedicated ESG report, reporting in terms of the Global Reporting Initiative, or GRI. Some of the highlights in this report include details on our future plans on renewable energy. The fact that our Board has now approved the construction of a reverse osmosis water treatment plant at Evander, which should almost completely eliminate the use of potable water at this operation. The capital cost of this plant, some ZAR 30 million, is expected to be paid back in less than 5 years. We continue to progress a number of community infrastructure projects. In July of this year, we handed over the Cathyville Clinic to the South African Department of Health. This clinic has a capacity to treat 120 patients daily. Now, I am particularly proud of our partnership with Conservation at Barberton and also of our large-scale blueberry farm now fully commissioned, also at Barberton. Only the first phase of this modern agriculture initiative will create 400 seasonal jobs in an area where this is desperately needed, with room for significant expansion in the future. Please refer to our ESG report, also released today, for further information on this and other initiatives. I will now hand over to Deon, who will provide an overview of the full year financial results and outlook for the year ahead.

Thank you, Cobus. Slide 31 summarizes the group's results for the '21 financial year. Evident is the increase in turnover by 35%, resulting from a combination of a 12% increase in gold produced and a substantial increase in the dollar gold price of 16% and 14% in rand terms following a 2% year-on-year depreciation in the average rand/dollar exchange rate. Earnings increased year-on-year by 69% and earnings per share and headline earnings per share increased commensurately by 68% and 69%, respectively, as no new shares were issued in the financial year. Adjusted EBITDA increased by 67%, contributing to a 46% decline in net senior debt to $34 million. Post year-end, we paid down the ZAR 1 billion or $70 million RCF to $3 million resulting in only the Elikhulu term facility and the Redink solar facility remaining. Although profit before tax increased by 101% relative to the 2020 financial year, a punitive tax charge of ZAR 30 million, comprising a paid component of $15.4 million and a deferred tax component of $14.6 million, adversely impacted earnings. The deferred tax provision, which is based on expected future gold prices, production, operating costs and capital expenditure over the life of the operations has increased the projected future tax rate to 26% as opposed to approximately 19% of the prior financial years. Given the long life of the underground operations and the likely extension to these ore bodies, this provision is probably on the conservative side. Slide 32 shows a decline in the rand gold price during the financial year commencing at ZAR 970,000 per kilogram, peaking at ZAR 1,152,000 per kilogram on 10 August 2021 and then declining by 16% to ZAR 812,000 per kilogram at the financial year-end. Although our reporting currencies are U.S. dollar, our cost base and debt is rand-denominated, and the rand gold price directly influences our profitability and cash flows. This decline in the rand gold price unfortunately undermined our ability to completely repay the existing senior debt in the manner that we contemplated last year this time. Notwithstanding the decline in the rand gold price during the second half of the financial year, net cash generated by operations increased during this period by 92% to $82 million relative to the $28 million generated in the first half of the financial year as the group benefited from the full momentum of the pillar projects production, good grades and production from Barberton and a reducing all-in sustaining cost. Slide 33 alludes to our senior debt facilities. As mentioned in the announcement this morning, we are finalizing a new ZAR 1 billion RCF facility for the group, which will consolidate the existing 3 senior debt facilities into a senior debt facility. The golden line in the slide demonstrates the rate at which the existing 3 senior debt facilities are expected to be repaid. And the blue line graph shows available capacity on the new RCF. At the prevailing gold price of ZAR 815,000 per kilogram, the group should be de-geared of its existing senior debt by the final quarter of the 2022 calendar year. The new RCF is required as existing RCF expires in June 2022 and the group believes that a more cost-effective and flexible RCF can be secured. The new RCF is priced at 24% lower than the existing senior debt and also provides for additional third-party debt of up to ZAR 1 billion. This facility should be in place by the end of next month. To diversify the group's sources of debt funding, a domestic medium-term debt program with a nominal value of ZAR 5 billion or approximately $323 million has also been registered with the JSE as a mechanism to raise capital from the domestic debt capital markets should it be required in the future. Circumspect capital allocation is key to the success of our business, and Slide 34 illustrates the deployment of the group's capital in the '21 financial year. Our primary objective is the sustainability of our operations, and we invested $44 million in the '21 financial year in pursuit of this objective, and we have again generated a return on capital deployed in excess of 30%, demonstrating the efficacy of our capital allocation decisions. We paid back an almost identical amount of principal debt in the 2021 financial year, retained $35 million to ensure the robustness of the group's liquidity and distributed $18 million to shareholders in the form of net dividends. Slide 35 gives an indication of the extent to which we've de-geared the balance sheet or senior debt since 2018 with a debt-to-EBITDA ratio now below 0.5. It is not our intent to have no debt on the balance sheet. But given the cyclical nature of the gold mining sector, we prefer to have all senior debt linked to specific cash flow ringfenced projects such as the Elikhulu project. Slide 36 illustrates the historical dividend yield and yields on the proposed record rand dividend for the 2021 financial year. The proposed dividend of $28.3 million for the 2021 financial year is a 36% increase on the $20.6 million paid in the prior financial year, amounting to a 5.3% yield based on the share price at 30 June 2021 of ZAR 3.41 and a yield of 5.9% on the prevailing share price of ZAR 3.06. The Board proposed dividend of ZAR 402 million or approximately $28.3 million is equal to ZAR 0.18 per share or approximately USD0.013 per share or 0.92p per share and is well in excess of the group's dividend policy guidelines, but takes into account the robust cash generation in the 2020 financial year, the de-gearing already achieved and the favorable prospects for the 2022 financial year. Thank you.

Thank you very much, Deon. Now, in addition to our current operating assets, Pan African also has exciting near-term growth projects. If we move to Slide 38 and 39 which sets out our plans for the Evander underground. As mentioned earlier in this presentation, with 24 level included, we have now secured the future of this operation for at least the next 5 years. A new phased approach to Egoli means that at prevailing gold prices, this development can be self-funding. On Slide 39. We are also not ruling out the option of extending 24 level to 25 and 26 as an add-on or substitute to Egoli. The study work on this project will be complete in the next month, whereafter we will update the market. Our final growth prospect, Mintails. Now we are pleased to report on Slide 41 that we have completed the pre-feasibility into the Mintails' tailings facilities, specifically the Mogale cluster. At a gold price of just below $1,700 and an exchange rate of ZAR 15 to the dollar, the payback on the initial capital investment of some ZAR 2 billion is estimated at less than 3 years from when we start producing gold. We are now progressing the definitive study, which should be complete early next year. You will recall that a decision on whether or not to proceed with the Mintails transaction is solely at Pan African's discretion. A legal development in the last months, which may complicate the closure of the transaction is that the major Mintails creditor and shareholder has applied to the High Court in South Africa to have Mintails' SA put back in business rescue from the current provisional liquidation arrangement. Now, we understand that this matter will be before the court in the next months, after which we should have clarity on the way forward. On Slide 42. A high-level schematic of how of Mintails operation can potentially look after construction, quite similar to Elikhulu. We could be treating 800,000 tonnes per month from 7 tailings facilities over the 11 years life of mine. There's a mineral resource of more than 1 million ounces, recovering approximately 50,000 ounces per year and producing at a cash cost of less than $1,000 per ounce. There's also a large-scale upside in the addition of the [indiscernible] some further 120 million tonnes grading 0.3 grams per tonne, totaling 1.2 million ounces in resource. This will assess our other potential of in Phase 2 of the project. If we proceed with this transaction, it will potentially not only be a positive for Pan African but also for the current stakeholders and Mintails. Our pre-feasibility study has calculated that if we process all of the Mogale tailings facilities, the environmental liability can be reduced to a final number of approximately ZAR 100 million, a significant improvement to the current situation. Let us now wrap up on Slide 44. Pan African is firmly on track to meet our full year deliverables for the next financial year. Key focus areas for us in the year ahead include the following: We'll continue to manage the impact of COVID-19 and our journey to Zero Harm. We will deliver into our minimum production guidance of 195,000 ounces for the financial year. We will successfully execute into capital projects that will sustain and increase annual gold production in the future. We will endeavor to reduce all-in sustaining costs at all operations through optimization and increased unit production. We will progress the 8 Shaft organic growth opportunities, the Egoli project and also the evaluation of the Mintails assets. We will also continue to investigate potential exploration and gold mining opportunities outside of South Africa. Pan African will continue our ESG focus through partnerships to ensure sustainable host communities, the increased use of renewable energy and recycling initiatives. And finally, we will endeavor to increase dividends and further reduce net debt. Thank you very much for your time this morning. We look forward to continuing to mine for future in the year ahead. The team will now be available to answer questions.

I think let's go to questions from the conference call first, if there are any.

[Operator Instructions] And we do have a question now from Arnold Van Graan of Nedbank.

Cobus and team, well done on the results. Just a quick question. Cobus, you talk about security, cost and technology and things like that. Do you have a sense of whether your security cost at Barberton is on par with other operations? I'm not sure how you measure that, but let's say, on a total -- percentage of total cost or on a per ounce basis. Yes, if you can just sort of give us a sense of whether you are facing a bigger challenge there than some of your peers in other areas?

Yes, it's interesting. So I mean, we -- to the extent possible, it's difficult to benchmark, but we have the benefit of liaising with all the other South African gold miners on a regular basis, and there's actually sort of a security forum that meet. So we've done benchmarking to the extent that we can, and we're quite comfortable that certainly our costs are not excessive. We do have certain peculiarities that I think some other miners might not have. I mean, an example would be incredibly high grade that we have at some of the areas at Barberton that necessitates specific security and gate, et cetera. So those are costs that potentially other miners would not have. Certainly, in the year ahead, we will, as we said, look to engage, sort of, and have more technology focused and based solutions so we can reduce that cost over time. But Barberton has been an issue with illegal mining for, as you know, many years. We're comfortable that the issue is not escalating. Our security team is doing fantastic work. So yes, we'll sort of keep certainly doing what we need to. And I think you can expect in real terms, the cost to come down in the years ahead.

The next question is from Tim Huff of Peel Hunt.

Just 2, really. On your costs, your guidance for next year is for sub $1,200. It's a little bit higher than I expected. And I was just wondering if you could give us any guidance as to maybe the flexibility on that. I mean, obviously, you guys have been doing pretty well on the production front. But I was wondering, on the cost front, are there going to be any significant or specific cost savings programs in the next year or even 2 years that start to drop costs from FY '23. And then the second question was really just on Evander, just looking at the company's production profile over the coming couple of years. I see it lifting up towards 210,000 ounces, and I was just wondering, is a chunk of that expected to come from Evander because the production profile doesn't necessarily say so. But between, I guess, the flexibility of the different operations and your run rate at Evander towards fiscal year end of this year, it looks like you've got some leeway there to hit production targets pretty -- which gives you some flexibility.

Thanks, Tim. So let's start with the first -- second, but first, if you don't mind. So, the big plus for us in '23, '24 as we see it, is the forecast from Elikhulu. So currently, the test work we've done on Leslie/Bracken, which is a new area that we'd be moving to that will allow us to produce more from Elikhulu. That's clearly a great benefit because it's going to -- Elikhulu is an incredibly high-margin asset, and it's going to reduce the unit costs on Elikhulu. And then we do have some flexibility, we believe, to expand production on the Evander underground. So that's why you're seeing that sort of profile. And I think we're trying to be fairly conservative even for FY '22 with 195,000 ounces minimum, particularly given how we started the year. So we're quite comfortable with those targets. As far as the costs are concerned, if you recall last year, a big issue for us is the strength of the South African rand. So again, certainly, our expectation is the rand strengthen quite a lot. Last year, when we put out our U.S. dollar cost numbers, we were using ZAR 16.50. Now we're sort of forecasting at ZAR 15. So that's why you would have seen sort of quite -- the dollar costs go up. It's mostly a product of the exchange rate. I think in rand terms, we'd like to think we control costs quite well. The upside that we believe is quite tangible. Upside is certainly on expanding our solar footprint. So, that first plant at Evander will be up in the second half of this year. That will reduce the power cost or electricity costs at Elikhulu by about 5% or sort of 30-odd-percent saving on your total electricity costs. And we're very much engaged with the feasibility at Barberton to build -- construct a similar plant and then obviously also expand the initial 10 megawatts at Evander to also cater for the Evander underground. So that, in our mind, should be a tangible cost benefit that comes through quite clearly in the next couple of years. Other than that, it's sort of producing more ounces and reducing your unit costs. And clearly, we sort of will target whatever other efficiencies and cost savings that we can.

Thank you, sir. We have no further questions in the queue at the moment.

Perfect. Thank you. So we go to the webcast.

Yes, we have few questions from webcast participants. The first one is from Martin Creamer, Mining Weekly. By what percentage will your renewable energy generation lower your dependence on Eskom electricity. And by what percentage will it cut your electricity cost? What other decarbonization initiatives are being contemplated and/or implemented? Thanks.

So yes, the models we run, again, on the initial 10 megawatts at Evander, we're not including any storage initially because most of those solutions appear to be quite expensive. But you can sort of work on about 30% reduction in your power consumption and reliance on Eskom. And clearly, if we expand it, our intent would be to effectively have pretty much all of our group in South Africa run on solar during the day time over the next 2 years or so. So you can assume then that will reduce our power consumption and costs by about 30%. On other decarbonization, the focus for now will be solar and making sure that solar works. And again, 10 megawatts will be the first plant and -- by early next year, it would have proven itself that the feasibility basically calculated to payback on the capital is less than 5 years at the Eskom current rates of escalation and we'd probably be closer to 4 years. So that's the big focus for us now is just getting our group to run off the grid, so to speak, during the daytime hours in the next 24 months or so.

Thank you, Cobus. And we've got a couple of questions from Mark Bentley from ShareSoc. First one is, when do you expect Royal Sheba to come into production? And what production profile do you anticipate once brought into production?

So yeah, I mean, as we sort of indicated in the presentation, we're the first ore from Royal Sheba during this financial year. And we have about 2 to 3 years to sort of ramp up Royal Sheba. And effectively, the idea is to replace the feed, as we said, over the BTRP and maintain margins and a very attractive profit that we're currently generating at the BTRP. I mean I think to some extent, we are very much spoiled with what we have at Barberton, i.e., grade generally on the underground 10 grams per tonne. So this for us is a very low-grade ore body. But the mining mix that we will employ will ensure that it's low cost, I mean highly mechanized -- on the Royal Sheba Uppers, there will only be about 40 to 50 direct employees. So that will ensure that we can sort of extract the ore at a decent margin and effectively maintain what we see currently from the BTRP from a profit perspective.

The second question is also from Mark Bentley. More finance related this time, I think, for Gideon, he says referring to Page 31 of your summarized audited results announcement, what do the solar project liabilities represent? And why do they exceed assets/CapEx?

Thank you, Mark. The way the solar plant was funded was with a loan, a dedicated loan from Redink Rentals of circa ZAR 140 million, approximately $9 million, $10 million. And this was drawn down as a single tranche to make it easier from an administrative perspective. It's a relatively small facility. And as we disburse to the contractor, we capitalize the costs. So at this stage, you will see the loan exceeding the capitalized cost. The difference is represented in cash flow on the balance sheet. Once the project is completed on budget and on time, then the liability will equal the asset.

Thank you, Deon. We've got a question now from Mark Du Toit of OysterCatcher. Could you expand more on the difference between the previously presented Egoli plan versus the more phased approach?

Thanks. Yes, Mark. So I think what we've done is we've bought ourselves quite a lot of time now with the inclusion of the 24 Level into our life of mine for 8 Shaft. So that means we have sort of 5 years where we can maintain sort of a run rate of 35,000, 40,000 ounces plus from the underground. Initially -- or previously, we had sort of envisaged a sort of big CapEx number on Egoli that would be funded principally with a new facility. And we sort of felt in this market, it was probably more prudent to go a little bit slower with Egoli. So now the cash flows that we generate out of the pillar 24 Level at the current gold price will pretty much pay for the development of Egoli and potentially 25, 26. So it's a phased approach, slower ramp-up, but then clearly, CapEx and the required indebtedness will be a lot lower than what we previously thought or guided.

Mark also asked, you mentioned opportunities outside South Africa. Are there any geographies that you prefer? Or any geographies that you will not look at?

Yes. I think sort of whatever we do will be in the gold space. And I mean, as shareholders know, I mean, we do continue to look at opportunities. It's just difficult to find opportunities or operations where we sort of obviously have higher hurdles of return. It's difficult, and we often find it expensive to acquire these assets and then develop them and still generate the requisite return on equity. So we are quite selective. Clearly, it must be an opportunity that can add value to shareholders. It's not too dilutive and that we can bring account quite quickly.

We've got another question from Shoaib Vayej of Afena Capital. Shoaib says, hi, well done on the FY '21 performance. Can you discuss the environmental liabilities that will come with Mintails? What amount of liability will Pan take on? And are you certain that these liabilities have been accurately assessed?

Well, we -- I mean that's the purpose of us doing a detailed definitive study. So as we alluded to in the presentation, the current liability, we believe, is lower than what has been in the public domain. But the good thing was treating these facilities is that as you process, you reduce the liability effectively sort of depositing the tailings into the sort of final stake. So our indication is that sort of currently, the liability is about ZAR 250 million-odd, only for Mogale it's ZAR 250 million. And if we were to process all the tailings that liability would reduce to circa ZAR 100 million final liability. We're sort of quantifying and checking the numbers at the moment as part of the work. And again, it's solely at our election and discretion whether we ultimately choose to proceed with the transaction.

We've got a question from Gavin King regarding buybacks. What level of spending will your buybacks program be? And why choose a buyback instead of a higher dividend?

Yes. I don't think they're mutually exclusive. I think it's a question of making a call on whether buyback makes sense given where the share price is. I guess as most management teams, we feel our share price is massively undervalued. And I think given where the levels of projected cash flow generation is for the '22 financial year. There's no reason while we cannot do both, continue with our dividend, consistent with the policy and the same point in time, embark upon a buyback where we do see the share price just for sometimes inexplicable reasons, just losing a lot of value.

We've got the last question now from Raj Ray of BMO Capital Markets. At Evander, what should we expect in terms of development sequence for 25, 26 Levels on Egolo, also at Egoli, can you also talk to what's driving the increase in CapEx versus the scoping study?

Yes. So I guess we sort of are finalizing the numbers for 25, 26, which is why we can't give you more definitive guidance at this point as to what Egoli versus 25, 26 will look like. But suffice to say, as we previously announced, we have now 5 years generating very good cash flows out of the pillar in 24 Level. That gives us a bit of scope and time to finalize those plans. In terms of the increase in CapEx, obviously, there's been quite sort of a big inflation. The initial numbers was sort of put out about 2 years ago. You've seen big jumps in steel prices and other commodities that are required. And then there were some also design changes in terms of insulation and cooling that increased the costs. But I mean we have good flexibility now, an asset that we sort of fully impaired in 2018, so that's now generating very good cash flows and has a great future, we believe. So it's a good sort of starting point. Also, I think what's going to add to the competitiveness of that underground going forward is increasing the solar, solar energy usage, which is going to cut a 10%-odd of the unit costs. So I think that's quite compelling.

Okay. Thank you, Cobus and Deon. That's the end of the questions that we have lined up on the webcast.

Thank you very much again. And if there's anything else, then you know where to find us. Thank you, and have a good day.

Thank you.