Tharisa plc (THA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Tharisa plc Full Year Results Investor Presentation. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. [Operator Instructions]. The company may not be in a position to answer every question it received during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, I would like to submit the following poll, which will just appear on your screens now. And I would now like to hand you over to CEO, Phoevos Pouroulis. Phoevos, Good morning sir.

Good morning, Jake, and welcome everyone to this year-end results presentation for the financial year 2023 ended September of this year. It's a real pleasure to be able to talk about our business to all of you. And again, we appreciate your time. We ask ourselves the question, why mining, why now and why Tharisa. Mining is under a lot of pressure and a lot of scrutiny in terms of its necessity and impact. And it goes back to that old adage, if it's not grown, it's mined. And what is key is that the metals that are mined are critical to a decarbonization strategy for the planet. And these are key critical metals and are unique in their specific applications. Forecasts are that by 2060, minerals and metal demand will double from today. And the challenge is that there's a lack of investment, whether it's stay in business investment or expansion capital and certainly new investment for new projects. So we're in the situation where there's a necessity for these metals for the decarbonization strategy and plan of the planet and yet there's a lack of investment. And in fact, these are finite resources and take time and require patient capital. So why to reset? We must probably have chosen the more difficult path to be in this industry because we are mine builders. And when we look at mining, we look at it differently. We look at it, the impact it has over multi-generations. These are key strategic assets with key strategic commodities that we mine and we look at unlocking value through innovation, applying technology and potentially unlocking value where others have not seen it or have overlooked it. And we really embrace technology as the enabler for differentiation. I think it's pleasing to report this year that our co-product business model of producing platinum group metals and chrome concentrate is robust and has withstood the challenges that have been presented to us and the industry this year. It's important to note that chrome and PGMs are both designated as critical minerals with high economic importance and have a significant role to play in the decarbonization of the planet. PGMs historically have done a wonderful job of clearing the atmosphere through auto catalysts and continue to do that. Chrome is essential in the manufacture of stainless steel and both these commodities are more than 95% recyclable. So our Chairman has this saying, and I thought it would be apt at this point in time to just highlight the fact that mining is not an option, but the way in which we do it is. And I think we're very proud of the impact that we have made at Tharisa and will make in the future in terms of our strategy. When we look at this uncertainty, we unpack it into the headwinds faced and then the tailwinds that support in our business. As we know, living in Southern Africa and particularly South Africa, we've been plagued with load shedding load curtailment at the mining operations across the country. We have a strategy and a mitigation plan in place. We have invested already in diesel standby generators and are able to withstand the equivalent of 6 load shedding on the mine without disruption to our operations. However, with our partnerships with Total Eren and Chariot, we are underway with the building of the 40-megawatt solar project adjacent to the Tharisa mine and the environmental and water use license have been approved. And this will go a long way to mitigate, one, the carbon footprint; secondly, the reliance on grid electricity. We've all witnessed and seen the dire state of the parastatal rail network. And have we navigated that, we've moved our cargoes to road. So historically, the ratio was the other way around. Currently, we move 85% of our product by road. And we've also utilized the Mozambican port of Maputo successfully to make sure that our deliveries are on time and on schedule. I think it goes without saying that the macro environment is uncertain, whether it be geopolitical, inflation, interest rate risks, volatility of commodity prices, crime and corruption is a real challenge in South Africa and unprecedented localized weather events. We reported on a significant rainfall in the first quarter of this year that we're reporting on and we've put many mitigation measures in place to handle those events, and I believe we're equipped to deal with those and to-date have not had challenges due to inclement weather. And then over and above that, there is the fiscal and regulatory uncertainty. So these are the challenges we face during this year. I think what supported us is the coal product business model. The Chrome market has been resilient, and we've seen buoyant chrome prices and in many respects, has countered the decline of the PGM basket prices and Michael will unpack that later in detail. And we certainly do believe that the fundamentals or the demand fundamentals for both of these commodities are robust in the medium to long term. So we have conviction to invest through the cycles. In terms of the momentum behind platinum, ruthenium, iridium, there's a lot of investment going into hydrogen manufacturing, hydrogen facilities, green steel production, and this benefits Platinum Group Metals, and we're looking at this space very closely to understand where we can unlock value and support this initiative and drive and potentially be a user of hydrogen in our own operations. The Chinese stainless steel outlook still remains positive and was consistently buoyant during the last 12 months, and we're seeing that in the first quarter of this year. But I think really what underpins possibly a pricing improvement around PGMs is the supply constraint. And we're starting to see cracks in terms of mine suspensions and retrenchments, which are reported on and potentially imminent in terms of implementation. And this ultimately will result in fewer ounces being mined from these deep-level complex mines. With that, the byproduct of chrome from the UG2 reef horizon will also be felt. So on both fronts, due to supply side constraints and limitations, we should see fewer ounces and fewer tonnes meeting demand, and in turn, prices should recover. I think what's also encouraging is bulk freight rates have stabilized in this year, and we've moved away from those very high levels of freight that we experienced in the prior year. Safety is a core value, and I think we pass our condolences on to the terrible tragedy that happened at Impala. And we can see how quickly and how devastating these accidents can be. And in the first quarter, you will recall we had our first fatality in more than 6 years, and it hit us hard. But what really encourages us is that we've improved on our safety and re-entrenched it as a core value to that in our lost time injury frequency rate at Tharisa Minerals is 0.13 per 200,000 man-hours worked and Karo Platinum 0.26 per 200,000 man hours worked. So there's an overall commitment and improvement in terms of our safety. So when we touch on the highlights, we talk about the long life assets and the sustainable extraction of the commodities we mine. So we mined 4.2 million tonnes of reef. This was down, and we did guide the market on this, but we milled 5.4 million tonnes, slightly down from the prior year, and this was supplemented by third-party run-of-mine material. PGM production down almost 19.3% at 144,700 ounces and chrome production flat at 1.58 million tonnes. At Karo Platinum, pilot mining commenced in June 2023, which helped us define the mining methodology and provided us with bulk samples from the main sulfide zone or the platinum rich zone and then we also are interrogating and investigating economic extraction of what we refer to as the base metal reef, which sits right above the 3-meter platinum zone. And we also undertook an infill drilling campaign to convert some of our resources to reserves. And what's really pleasing and really one has to go to site to see is the extent and the span of which the project is encompassed in, which is a 3 square kilometer expense. Long lead items have been delivered and nearing completion. We've poured almost 1,800 cubes of concrete and we've completed over 500,000 cubes of bulk earth. So a lot of activity, a lot of momentum in Karo. And that leads us to the value sharing and the impact that we make at Tharisa and Karo. Across the group, we employ 5,263 people. The majority at the Tharisa mine permanent employees, 1,927, at Karo 135 employees and then contractors, you can imagine, it has gone up to 2,886 as we're building out Karo and then we have a number of third-party contractors at the Tharisa mine. Our female representation is good, and we are looking to improve that at around 26% across the group and we've lost no days to industrial action, and we have a very constructive, collaborative engagement with our employees and the representative unions. In terms of education and wellness, it goes without saying that we've got to give back not only to our employees, but our contractors and communities. And we have an open door policy where we provide facilities, equipment and sponsorship programs to upskill and educate those that are keen to improve their standard of education. Our wellness program is well received. It goes beyond the borders of our employees and into the communities and there's awareness campaigns and support for various challenges in terms of wellness. And I think when we stand back and we look at Liana who was a beneficiary of our bursary program and has just qualified as an electrical engineer. And we see that her mother worked for us for more than 10 years and retired this year. It really hits home the impact that our multigenerational mine has on people's lives. And as builders of mines, this is really with those benefits that we are proud of and really want to share with you today. In terms of value sharing, we've spoken about group employees and contractors. But I think what's key here is the multiplier effect. This business and what you're invested in and hopefully will invest in is supporting more than 50,000 people on a daily basis and it's a significant number when you think about the effort that goes in and the impact that our investments and that our operations have. And in the countries like South Africa and Zimbabwe, which have very high unemployment rates, this is a significant impact and we are proud of it. In monetary terms, the currency inflows into South Africa, some $451.6 million direct and indirect inflows, global direct taxes and royalties of $58.6 million and indirect taxes of $5.6 million. So a significant contributor to the economies within which we operate. So if we just unpack the high-level numbers, the vital numbers, as we call it, for the year, you'll see that our revenue was only slightly down at $649.9 million, generating an operating profit of $94.7 million and an earnings before interest tax depreciation and amortization of $136.8 million. And Michael has a very important graph later, which talks about the 42% drop of our EBITDA number from the prior year and the contributing factors. Notwithstanding that, we generated profit before tax of $114.3 million. And encouragingly, net cash from operating activities at $148.3 million. Cash and cash equivalents at the end of the financial year of $269 million and Michael again will unpack that for us. And this resulting in an earnings per share of $0.274 and a headline earnings of $0.283. And we're very pleased again to stick to our dividend policy, which is a minimum of 15% of net profit after tax to be distributed in the form of a dividend. We declared a final year-end dividend of $0.02, making that a full year total of $0.05, some 17.3% of NPAT. And before the question comes about buybacks, let me deal with it now. It is something that is constantly on the agenda, and we debate and discuss it at the board level and executive level. And certainly, we believe in the merits of our own share and the deeply discounted value that we currently trade at. I think in this volatile environment, where commodity prices are moving and our growth ambitions have been extended, we felt that rather stick to our capital discipline and be consistent at this stage without changing our policies and procedures at this point in time and so we elected to propose this final dividend, which will be voted on at the AGM. I think important and in this context of volatility, you can see that our PGM basket price for the year was down 26.2%, contributing to some of those lower earnings at $1,893 per ounce. But on the flip side, met-grade chrome prices up 25.8% to $263 per tonne, a very welcome number. When we touch on our strategy, and I will expand on this a bit later, I firmly believe that we are living the 6 pillars of our Vision 2025, which is expanding and rolling out our existing business sustainably, optimizing our operations through innovation and looking at unique entrepreneurial ways to unlock value, diversification through these downstream projects and innovative solutions as well as the Karo project in Zimbabwe and ultimately, we're looking at our business as an investment of choice and having the impact and benefits that we talk about and enriching people's lives. So just to remind the audience, we have a long-life multigenerational portfolio of assets. There is a difference in terms of our resources, particularly the Tharisa mine, whereby we've looked at the constraints, and I'll unpack this in more detail, and we've declared an open pit life of 13 years. If we worked on the depletion model, it would have been 17 years. So we've reduced that by 4 years, but in turn, have increased the underground life of mine to more than 60 years. At Karo, the open pits for Phase I cover a small portion of the almost 24,000 hectares of land, and we've explored only 12% of this potential 96.4 million ounce resource. So if we look at our resource endowment, we're blessed with what we have in terms of what's in the ground. And really, for us is now to unlock the value, like we have at Tharisa at the Karo project by looking at things slightly differently. So looking at unlocking value and flexibility, we've looked at the optionality at the Tharisa mine. So some of you will know that we operate from multiple pits. The East pit, which is the main open pit and generate 80% of our feed and then the West and Far West, which generate the balance of our feed into the processing plants. Now due to increased costs of diesel, yellow kit primarily, the proximity of communities, the limited operating times that we have in terms of the Western Far West mine and then waste rock dump limitations, we've undertaken a successful scoping study in terms of undertaking an underground decline development model on the west side of our operations and potentially looking at moving into feasibility study in this next financial year and looking at the capital vote and approval for financial year 2025. What this does is it gives us flexibility in terms of operating on reef mine development. So minimizing dilution into the processing plants, minimizing or reducing waste rock almost entirely and allowing us to operate on a 24-hour basis. So it's the vision and the plan for us to run a hybrid model. So we'll continue with the East pit open pit mining and transition to underground on the west pit in the next 2 to 3 years and thereby giving us that flexibility of underground operations and open pit. And in turn, as the East pit progresses through time, we will then transition into underground mechanized bord and pillar mining. So the capital to-date is really the studies. We've put $4.6 million into drilling and the feasibility studies in this next financial year. One of the offsets here is the renewal and the replacement of the yellow fleet, the mining fleet, which will be phased-out as we progress and ramp-up the underground operations. So really value-accretive opportunity on the surface, and we'll unpack that in the future. So moving on to the Karo project. You'll see that Tharisa has increased its equity stake at 75% in Karo Mining Holdings, which in turn owns 85% of Karo Zimbabwe Holdings in Zimbabwe, the balance being owned through Generation Minerals, a company controlled by the Ministry of Finance. It is a Tier 1 asset, and we'll look at some of the upsides in terms of optimization, but we're looking at producing in excess of 200,000 ounces with significant base metal credits. We've made great progress in terms of the bulk earthworks, civils and open-pit mining to-date. Unfortunately, we have had one lost time injury on site, and it's something that the team are very focused on minimizing and getting to that 0 harm status. We have almost all of our environmental approvals, mining, processing bulk water and power line approvals. And I think what's really key is the prioritization of local recruitment whereby 98% of the staff in Zimbabwe are Zimbabwean and we look at the skills development program. Like Tharisa, we are investigating with Chariot, a 30-megawatt solar project, which is advancing well and the team have been very good in supporting local communities and employees through health, education and carbon footprint projects such as 3 projects at the local schools and primary schools. So the capital cost for the original budget was $391 million. And you will note that from our prior announcements, we have extended the project by 12 months. We estimate that this will have an impact of around 10% on that capital number and that's really the time delay and the owner's costs and some escalation that creep into that delay. In terms of funding, Tharisa has allocated to-date $98.6 million and has a balance of capital that will flow in a total of $135 million commitment to-date and a successful bond listing last year of $36.8 million. The ring-fenced project funding is well advanced with term sheets signed with ECIC in South Africa at circa $160 million and the balance of the funding coming in the form of working capital prepays and your traditional project finance. So in terms of an update, the macro environment and in particular, the PGM basket price necessitated us to review the time line and we pushed out the schedule by 12 months to June 2025. This has allowed us a number of opportunities. Firstly, we've been able to increase the throughput of the processing plant by 10% and targeting over 200,000 PGM ounces. Moreover, and I touched on it earlier on, we have the opportunity to increase our mining with the base metal reef horizon, which historically was seen as waste, and we're undertaking test work, metallurgical work and ultimately, looking at reducing our cost of mining per unit cost and increasing the output of base metals and PGMs from the projects are very exciting. Furthermore, we've also been able through lot cycle test work, been able to improve our PGM recovery by optimizing reagent mix and the process, and that's very encouraging. And like Tharisa, we are updating the existing scoping study for underground at Karo, but this is less advanced than where we are at Tharisa. So we speak about innovation. And really, we put real capital behind this. To-date, we've invested $12.8 million in property, plant and equipment. And we have 3 distinct sites, Arxo Metals Beneficiation Site, this is where we run our 1-megawatt PGM smelter on a commercial basis and on a continuous basis and we also have demonstration scale testing of other initiatives that we're able to demonstrate and optimize. We have a second site, which is more of your laboratory pilot test work facilities, and that's Arxo Metals Technology Development Center at one of the local universities, and we collaborate with the staff there, and we test alternate processes before we move them into larger pilot scale and demonstration scale. And then we're very proud of our Renewable Energy Center, which was opened earlier this year. And this is where we trial and test our energy storage solution, utilizing the commodities that we mine and we look at different renewable energies. And this site is adjacent to where the Buffelspoort project will be built at the adjacent to the Tharisa mine. When we look at our decarbonization strategy of reducing our footprint by 30% by 2030 and becoming carbon net neutral by 2050, we're well on our way to achieving that. The 40-megawatt solar project, as mentioned, is scheduled for completion in Q1 of 2025. All licenses are in place. And once this is fully commissioned, this will reduce our Scope 2 emissions by more than 30%. So a huge offset there in terms of our carbon footprint reduction just from the solar project. The EPCM has been appointed. And really, this is also a pathway for us to produce greener PGM and chrome concentrates. In terms of our real exciting strategy of mine to megawatt, we look at the decarbonization pathways. And we look at the solar project. And then post that, we look at how do we store that energy and find the circularity in other words, utilizing the commodities that we mine. And we're very pleased to share with you a novel technology called Redox One, which is a long-duration energy storage program. And this is innovative and is proprietary and we'll unpack that. Furthermore, we're also collaborating with OEM, the fabricators of our yellow mining equipment, testing and trialing new drive-train technologies, and we have vehicles on site that are being tested and scoped as we speak. So the ultimate dream is the circular economy, utilizing the minerals and metals that we mine to lower our carbon footprint. And we see a specialized unique application for most metals in this pathway to a circular economy and decarbonized planet. When we look at PGMs, the catalytic properties are irreplaceable. We also see that battery electric vehicles have a slower uptake. And ultimately, the middle ground between internal combustion engines and battery electric vehicles is a hybrid model. And we see a lot more momentum and energy within that space in terms of being able to bridge the pros and cons of both technologies and provide a cost-effective solution to the population and to the world. And so we, well, not increased, but consistent demand of PGMs for continuous internal combustion engines in hybrid or large and industrial scale applications. And then we talk about the hydrogen economy and the application of hydrogen in electrolyzers and fuel cell technologies. Chrome is unique in its requirements. South Africa is blessed with more than 70% of the world's resources and we account for more than 80%, 85% of Chinese imports into the stainless steel industry. And I think it's not well-known that stainless steel touches all renewable energy project bid solar, wind, nuclear geothermal, hydroelectric and nuclear and stainless steel touches almost all sectors and all industries. It's a renewable energy application resource and is recyclable. So we see strong, robust demand for chrome and stainless steel going into the future. And now with the new application developed and progressed by our Redox One team, which is a wholly owned subsidiary, which has really pioneered a long-duration static, safe energy storage solution, utilizing iron and chromium, redox flow technology, and this really embeds our mine to megawatt strategy. So this is megawatt-scale storage. It's not yet to compete with lithium ion mobility type of solutions. This is good scale-type storage megawatt, 10 megawatt-plus type solutions. This technology is old. It was developed by NASA in the 1970s. And over-time, it's been improved. And what's unique about our take on this is the ability for us to utilize our own resource, our own ore to produce the electrolyte of iron and chromium. We have a fully dedicated management team based in [indiscernible] Germany, and they have a satellite facility here in South Africa, piloting the first batteries and we're scaling up and looking to commercialization within the next 2 years. And the demonstration scale megawatt installations are on track for 2024. So very exciting and really it keeps us motivated around the potential opportunities. At this point, I'd like to hand over to Michelle, who will run through our commodities and the outlook. Thanks, Michelle.

Thanks, Phoevos and hello everybody, and welcome and thank you for taking the time to join us today. Phoevos discussed a lot around the commodities that we produce and a lot of detail around the PGMs and Chrome. So I think for me, I just really want to take a few minutes because I'm very aware that Michael needs to spend some time and detail on the finances. But as to just stop for a moment and just reflect on a fact matter. Firstly, in terms of PGMs, clearly, one looks at supply and demand. From a supply point of view, there's a lot of commentary happening continuously around our PGM production globally, what's happening in South Africa and Zimbabwe in terms of reduction of supply coming online. Those producers that are potentially loss-making or lower margins are looking at what their development plans are. So there's no doubt in our mind that on the supply side, that there's a reset coming and it's a function of where we are on price. So firstly, we see some primary supply reduction coming through, which will be a catalyst in terms of PGM pricing in the next 12 months. Recycling is another part of the supply chain. Again, if you look at recycling, you've got to consider 2 aspects. Firstly, for a recycler, their operating efficiencies and their margins have been reduced as well given where the pricing is. And then secondly, as a consequence of the pandemic and the global economic situation that we find ourselves in, people are keeping their vehicles longer. We all know that one is battling your daily kind of costs. And so where an average person would have kept their vehicle for 10 years, they're keeping it for 14 years, which means that the recycling timeline is that much longer. So from a supply side, definitely 2 very serious constraints coming in, which will certainly affect that. And in an environment where one is living with a very tight balance between supply and demand, there has to be an effect on price. Similarly, if we stop and look at demand and in here, I'm not even going to get into the debate of us versus BEV versus hybrids. We've had that discussion. We just simply got to look at a couple of fact patterns. The first thing is buying patterns of automakers. We know that during the COVID pandemic, there was erratic supply of inventory. There was uncertainty around production happening, whether you were a minor or whether you're an automaker. So what happened in that environment? I mean that the automakers were using up all the inventory that they had, and they had an erratic buying pattern. They just weren't clear of what the next 3 months look like, be 6 or 12. What we are seeing today is a more normalized buying pattern happening. So at the back of the fact that we've seen automated sales up by 11% over the last year, we're also seeing a regular buying pattern, which bodes well for where we are, again, in managing or understanding those supply-demand fundamentals. There's no doubt that the very issues that we face in South Africa in terms of group infrastructure, electricity and so on and so forth affect the whole world. So that's got an impact in terms of the ambitions everybody's got around rolling out battery electric vehicles and the practicality of it. But as I said to you at the start, I'm not going to go into that debate rather than just focus on some of the simple fact pattern that we see coming through. From a Chrome perspective, I think, again, let me go to the next slide. I think one needs to understand that chrome producers, they are primary chrome producers, and there are those chrome producers who are co-producers or by-product producers. So simplistically, your UG2 producers who are producing PGM concentrates are producing chrome concentrates as well and the benefit of the margin coming out of that product. Similarly, one has to understand that if there is a reduction coming through from a supply point of view in terms of UG2 supply, that will impact chrome supply. So where that leaves us is even on the supply side in terms of chrome, we expect to see a tightening happening into the next year. So in spite of the fact that chrome prices are healthy, that there are good margins in it, as a consequence of UG2 producers reducing their supply of their production, they're going to reduce some of their chrome. And what we should see is at the very least stable pricing in terms of chrome, my expectation would be that it would increase slightly. And again, one has to go back to what the demand looks like. And from a demand point of view, we've seen stainless steel continue to grow this year between 5% and 8%. Now we've seen consistent growth in stainless steel over the years. We haven't seen it change. We haven't seen it reduced. We've seen lots of commentary about it. But stainless steel is such a vital part of your and my everyday living that we continue to see a demand for it, which means that there's a demand for chrome. And as a consequence of that, we've seen the Chrome market benefiting in terms of pricing. There are 2 other factors that have exacerbated matters from a supply point of view in South Africa, bearing in mind that the predominance of chrome supply comes from South Africa. The other 2 factors, as we know are electricity, constraints in terms of the grid will affect smaller producer that has deals with load shedding as opposed to load curtailment. And also infrastructure issues and the stuff that we're dealing with in terms of road, rail, port, those will affect all producers because you need to manage your logistics and I suppose your logistics to customer. That will be constrained for smaller producers because the costs are very different and how you're paying for it in advance clearly has an impact on your cash flow, so you need to manage it. Putting that aside and assuming it runs and it gets to port, and we are moving the material into China, what we have seen because of what's happened in South Africa is erratic supply happening into China. So if you track the port stocks in China over the last 12 months, you'll see that we've been at the lowest levels probably for the last 10 years consistently. So you'll see low levels of around 1.6 million tonnes and probably peaking at around 2.4 million tonnes. Now at the peak of the 2.4 million tonnes, that's around 4 weeks inventory, which means that the inventory holding in China is low and is very dependent on us getting those vessels through. So when the shipments are erratic and we find in the industry, 1 month is -- pick a number, there's 400,000 tonnes are being delivered. And in another month, there's 200,000 tonnes, that impacts their inventory, which is why you see the fluctuation happening. So where we are as of today and certainly what we see happening into the near future is that we're going to continue to see constraints in terms of logistics because of, again, the fact pattern in South Africa. And what that means is that from a chrome economy point of view, and let's talk pricing, certainly, in the medium term, we see continued stable pricing. If anything, slight movements upwards. As most things, it will go down slightly, it will go up, but I certainly do expect it to remain stable at these levels over the next 12 months. So I think with that, I've gone through that really quickly. I'm going to hand over to Michael so that he can get through the juicy part in terms of the financial numbers and tell you how he spends the money that we brought into revenue.

Good. Thank you, Michelle and Good morning to all our participants and really thank you very much for joining us as we present our results for the financial year ended 30 September. I think our results really need to be seen in the context of the global macroeconomic environment. There were strong inflationary pressures over the year, and that necessitated central banks increasing interest rates. Now while the interest rates -- thanks, Michelle. While the interest rates themselves do not impact materially on the results of Tharisa because we are in a net cash position, there are the knock-on effects of the slowing of the global economies, which did impact on both commodity markets and increased volatility within the currency markets. If we actually look at our current basket of commodities with our co-product production model, both Platinum Group metals and Chrome Concentrates. Again, has proven the resilience in delivering on our financial results. Platinum Group metal prices, as mentioned earlier, were down 26.2% but the Met grade chrome concentrate prices, which is really a late cycle commodity were up 25.8%. As a consequence of this, we are still able to generate strong cash flow generation of $148.2 million generated from cash flows, and it enabled us to continue investing not only in our own operations and sustainability thereof, but also growth assets and we invested some $97.1 million during this past year. We did negotiate successfully some new debt facilities, and I'll go into those in a bit more detail later. There's a $130 million term loan and revolving credit facility. Phoevos mentioned the successful listing of the bond on the Victoria Falls Stock Exchange to part fund the Karo Platinum project, and we have an agreed term sheet in terms of the Karo Platinum funding for $160 million. Also very pleasing is we have continued to maintain our dividend policy of distributing at least 15% of consolidated net profit after tax. If we now start looking at the numbers in some more detail. Our total revenue of $649.9 million, a decrease of 5.3%. On a segmental basis, and look at this on an FCA basis, now that's ex-work to strip about the shipping and freight costs of the chrome to make it more representative, our Platinum Group metals contributed 37.7% to our overall revenue and that's on the back of PDM sales of 144,000 ounces and an average basket price of $1,893 per ounce. Rhodium, while the price is under pressure, still made a significant contribution. It is less than 10% of our full split, but contributed just under 40% of the PGM segmental revenue, followed by the platinum segment at just under 34%. Chrome contributed 53.1% to our overall FCA revenue. Metallurgical grade comprised of 85% of the total and there the sales of 1.2 million tonnes of chrome concentrate at an average price of $263 per tonne. Specialty grades, and this is a premium product in terms of our foundry and chemical grade comprised 14.1% of our overall revenue from Chrome. Touching on the costs, and there are a number of factors that actually contributed to some of the cost pressures within the unit costs. The first of those is that we decided to appoint a mining contractor. It's a short-term contract to assist us in with the waste removal and waste mining. So what that does now is we have the cost now, but we get the future benefits of being able to sustainably access our reef horizons. In addition, some of the restrictions on access to the pit whether it's due to weather or proximity of the community, there is street decision taken to effectively purchase and run of mine ore and this meant that the plants were able to continue operating optimally. It wasn't all negative news on the cost front. There's also the positives coming through as our Chrome logistics and freight costs decreased by some 12%. And this is in respect of the Chrome product. So moving the product from mine through to final port destination, either in China or Indonesia, and that decreased down to $81.4 per tonne. From an exchange rate perspective, Tharisa mine does operate in a weak currency environment and it was beneficial in this particular case of the rand weakening by some 15.2% and those benefits flowed through. So if we then start looking at some of the numbers in detail, reef tons mined were down 24.1%, 4.2 million tonnes. The cost per reef tonne mined increased by 19.9% to 38.8%. Tonnes milled very pleasing with fresh round of mine ore and dropping only by 3.5% to 5.4 million tonnes, and the consolidated cash cost per tonne milled, up 17.7% at $62.2 per tonne. We are a co-product producer of both Platinum group metals and chrome concentrates. But if we were to look at ourselves as a platinum group metal producer only, and we take the credits from the chrome sales against the PGMs, we get an all-in cost per PGM unsold on a 6E basis. Now it's all the elements included of $206.7 per ounce. Gross profit for the year amounted to $153.3 million and a healthy gross profit margin maintained and all factors concerned the economic environment at 23.6%. Phoevos mentioned the slide earlier and I think it's a very useful slide in how it reconciles between our EBITDA of some $237 million at the end of FY22 to our current EBITDA of $136.8 million. And there is 2 red chart bars on the left that really tell a story. There is a PGM volumes and there is a reduction in sales volumes and the PGM basket price, which reduced by 26.2%. Very pleasing, as you said, with the co-product production was the chrome price and the increases in that chrome price, partially offsetting those decreases. Mining commodities, that is the purchase of the run of mine ore and that has an impact. And then the processing costs and mining costs related to inflationary factors coming through. State royalties, while it's been reduction is actually on the bad news front of it because of the reduction in the PGM selling prices and therefore the reduction in royalties. And that reconciles through to the $136.8 million of EBITDA. We have invested in our sustainability operations, and we'll continue to invest going forward, but not only in our existing operations, but also our growth projects and our R&D. For this past year, we spent $97.1 million of which $46.3 million was capital spent on the Karo Platinum project. The mining fleet, Tharisa Minerals, the yellow kit in the open pit, 27.3 million. And then to touch on research and development and innovation, $3.5 million was spent on that capital cost. If we look at the year ahead of us, we have budgeted $79.1 million. This is excluding Karo. I'll touch on that separately, of which $40.1 million is going to the mining fleet. And you'll see an increase in our R&D and innovation to $7 million as certain of our projects start nearing commercialization. We also exclude deferred stripping in this particular number. And then if you look at Karo Platinum, we did go through some detail on the capital and capital costs. If everything was aligned in terms of closing out the funding and we're all very well aware of the challenges with the current PGM price and the address for the Karo Platinum project, we'll be looking to spend $244 million on capital on Karo Platinum. Our balance sheet remains healthy, and I really do believe that it puts us in a position to deal with the uncertainties in the current commodities price cycle that we are busy facing. Cash and cash equivalents stood at $269 million. And just to mention that, that does include $80 million of the term loan. We drew that down in September. So both the cash and the debt included $80 million. And for those who reconcile back to the face of the balance sheet, you need to also add in other financial assets. There's a certain amount of about $14 million that's restricted cash flow. From a blenders point of view, they require minimum cash to be held, and that sits as our other financial assets. Net cash flows from operations are $42.6 million and a net cash loss off take of the debt of $139.7 million at $129.4 million. I have touched on the new facilities. So it's an $80 million term loan and a $50 million revolving credit facility. The $50 million remains undrawn. And as part of that facility, we are required to hedge certain of our platinum palladium production to match the capital repayments. And that is on a 12-month rolling basis. So not for the full duration of the 42 months. And as 1 month drops off, we then have to enter into a hedge for the following month. Of our total debt, 90.4% is dollar-denominated and 9.6% is rand-denominated. And just touching some of the ratios, net debt-to-EBITDA negative 0.9%, and the current ratio is still a very healthy 2.2%. I think the chart on the right really sets out the composition of the overall debt. The term loan, it does have an accelerated debt repayment profile over the next 12 months of 55%, asset-backed facilities. This is the financing for the yellow fleet 23% and the VFEX bond of 19.5%. It's interesting to reflect back for a moment in that the bond actually listed on the December 16, and we've just made our second coupon payment on that particular bond. It's a first of its kind and the highest raised on the Victoria Falls Stock Exchange to-date. With respect to uncertainties going forward, what is our capacity in terms of undrawn facilities, some $81.4 million. This includes revolving credit facilities, overdrafts and asset-backed finance facilities that we have. In addition to that $20 million in trade finance, which is pre-shipment and post-shipment finance associated with Chrome and the Chrome market. With a strong chrome pricing environment as well as the high interest rate environment, we took a decision not to utilize that funding, and there's been no need to draw on it. So it still is available for us to draw. As mentioned, I'm very pleased that we've maintained our dividend policy, and the Board has approved a final dividend of $0.02 per share, which stays with an interim dividend of $0.03 per share, gives us a total proposed dividend for the year of $0.05 per share. The dividend power ratio, slightly ahead of our minimum 15% at 17.3% and a dividend yield would then sit at 6.5%. That's a very high-level overview of the financial results for the financial year, and I'd like to hand back over to Phoevos. Thank you.

Thank you, Michael. And this leads us to the conclusion of our presentation, whereby we give guidance for the financial year 2024 whereby we're guiding Platinum Group Metals production on a 6-year basis of 145,000 to 155,000 ounces. And this looks low in light of our aspirations to achieve 200,000 ounces. We've based this forecast on the ore mix we received in this last financial year, which was predominantly oxidized. And in an oxidized form, our recoveries are impacted negatively. However, on the flip side, we are forecasting a decent growth in chrome concentrate productions from the 1.58 million tonnes to between 1.7 million to 1.8 million tonnes. And really, that's the improvements in terms of Vulcan plant recoveries and overall processing plant recoveries and stabilization of more consistent feed going into the plant. So we believe on the PGMs, there's some upside potential and chrome, we believe we're on track if we look at the first 2 months of our production and all things going equal and according to plan in December, we'll be on track to meet that guidance. In terms of Karo Platinum, we've spoken about the extension. And really, what's the focus of the team now is to secure the funding to make sure that the project can be executed on the extended timeline, and that's really where we guide Karo. The existing packages will continue in terms of long lead items, civil works and earthworks in parallel. So we present this I think, every year at this time, and it doesn't require much explanation other than to say that comparatively speaking, we still offer a deeply discounted value proposition. But when we look at our key investment case criteria, we're involved in strategic commodities. We certainly have the conviction and belief that demand for PGMs and Chrome will continue. And in a supply constrained economy being a low-cost producer will stand us in good stead, and we'll be able to benefit from higher prices going into the future. When we look at our assets and we look at Karo coming online, albeit later, it does double our output of PGM production. So we've become a more significant player in the PGM space and our chrome business stable and a key supplier into those vital economies. What we've worked really hard on is operational flexibility, unpacking the underground mining, looking at our open pit strategies, stripping ratios going forward and really looking at our cost structure and making sure we are future proof and we continue to remain in the lowest cost quartile. And a lot of that comes through technology and diversification of processes. And part of that is the approach to the resources, whether it's open pit in parallel as a hybrid model, which is really where we're heading into the next 2 to 3 years. Our platforms work exceptionally well. And Michelle touched on the logistics team and their competence and ability to move product in a very difficult environment. With that comes a very astute and capable marketing team that are front-facing with end users globally in the distribution of our chrome products primarily. And then I think it's important to hammer home the capital discipline. We are responsible custodians of our capital. We are able to invest in our existing business. We're able to grow through innovation and organic growth and also support larger growth aspirations and then importantly, return value to shareholders. And I think that's something we're very proud of. And with that, I'd like to hand over to Q&A and Jake, back over to you.

Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that is situated on the right-hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already. I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your invested dashboard. Ilja, as you can see there in the Q&A tab, we have received a number of questions from investors that were both pre submitted ahead of today's event as well as during the live meeting as well. So if I may just hand over to you just to share the questions with the team. And if I pick up from you at the end, that would be great. Thank you.

Let me get going with the questions. Michael, let's start with you. There was a question around our need to hedge some of our PGMs as part of our debt facilities. Could you go into just a little bit more detail with regards to how much we need to hedge, what prices and how the hedge actually works.

In terms of natural hedging, what would be required to do is it's a monthly net repayment and we're required to hedge the capital amount of that repayment using platinum palladium only in terms of what you need to hedge, and it's a rolling 12 months. So just keep right as one hedge drops out, we then take out the next hedge for the subsequent payment. We do have an accelerated debt repayment profile. So the current hedging is probably sitting at about 25% of our overall PGM production. That would drop quite significantly going into the new financial year, probably about 15% for that year. at the moment, actually, at the end of the financial year, we had a fair value adjustment, a favorable one. So the pricing is good. When the prices go down, we do get to benefit and that was some $4 million of benefit that we received in terms of the pricing. So just if I have a look at the average pricing, if I recall correctly, and it's subject to my recollection on this at the moment. I think platinum, we were hedging about $929 on average over the 12-month period as at 30 September, and palladium at some $1,250-odd an ounce. So in the money at the moment, but things do turn.

Staying with you, Michael. Technical accounting question, non-controlling acquisition. Can you clarify the non-controlling interest in accounts? Is this simply the value up to May 23 when the acquisition occurred. And for next accounts will there be no non-controlling interest in accounts following acquisition.

The non-controlling interest effects in the accounts are related to the Karo Platinum investment. So at this point in time, we own 75% of Karo Mining Holdings. So therefore, we've got a 25% minority. Karo Mining Holdings owns 85% of Karo Platinum indirect is an intermediate company and the government of Zimbabwe through Ministry of Finance and Generation Minerals is a vehicle they use, owns 15%. So that is the non-controlling interest that non-controlling interest will be on the accounts going forward. So just to go back a little bit in history. We did acquire the 100% of the shareholding in Tharisa Minerals, everything else is wholly owned.

Question for you, Phoevos. Putting 3 questions into 1. It all relates to the opportunities at Tharisa Minerals and the mine itself and some questions around a slightly disappointing production over the last year and what are the plans in terms of rectifying this also in line with previously stated targets of achieving those? How do you intend of going from the current output to the higher outputs that we've previously spoken to the market about.

Yes. And I think it's a fair question. Our performance was below guidance and certainly not in line with what we would like to achieve, particularly on the PGM production side. I think when one puts the challenges and the issues we had to contend with right from the first quarter where we were called with unprecedented rainfall and we were on the back foot pretty much from the first quarter of the year, trying to play catch-up and processing sub-optimal ore to keep the plants operational and yet still yielding the results we did. I think we're pleased with the outcome and especially the team that we have that are committed and innovative and creative in terms of being able to keep the mills turning, we mold slightly less than last year, 5.4 million tonnes. So there are 3 levers we have and they're already embedded in our business is 1, throughput, quality of the reef horizons that we mine, head grade of PGMs, head grade of chrome and the fact that we need to process un-oxidized ore. In this last year, as I mentioned, we processed a large portion, majority of oxidized ore from a lot of third-party material inventories that we had on stockpile from the beginning of our operations. So not an ideal scenario, but taking that into account, I think the team have done exceptionally well in terms of that. Now looking forward, and I think that's important, where do we see ourselves and how do we see ourselves growing. So in terms of chrome, we certainly believe in the 2 million tonne potential. And along those 3 levers, plus some of the campaigns that we've got in terms of the Vulcan plant getting up to potential, we've seen big improvements in recoveries and yields in the Vulcan plant with stability of the process. It's a multi-stage process and understanding how the components work and impact each one sequentially. There are some SIB programs in the Vulcan plant itself and backwardly integrated into Genesis and Voyager to improve our chrome output. And I think we're on track to achieve some really good performance results on the chrome side. The PGMs, we've proven, and we know that we can deliver over 80% recovery with consistent feed grade. So it's really all about that feed and being fresh ore that we process. Our plants are very well engineered and can cope with the lower head grade, but require consistency and require a fresh ore. So with all those levers in play and being able to operate on a continuous uninterrupted basis without power surges, without weather interruptions, we can see ourselves in the next 2 years getting closer to that 2 million tonne and 200,000 ounce target that we set ourselves and really it's ingrained in our aspirations to achieve. With the underground mine coming into play, in fact, the quality of the ore improves because there's less dilution. And I think one of the questions I saw was, is it going to be able to meet the requirements? And the answer is yes, the way we're scheduling it, we'll continue to run the open pit on the East side and will transition on the western side to underground. And the 2 together collectively will provide adequate feed into the plants and the correct quality. And then we will supplement once we will continue with the development of the East underground portal at the appropriate time as we start nearing the end of life for the East pit. So very well thought-out and planned and ultimately looking to unlock value beyond the current state. Ilja, have I answered all the questions?

Yes, there's a follow-up on the underground with regards to the complexity. I think you've addressed the complexities and also the dilution in terms of going underground, but there is a question around capital given that we are developing Karo, where do we stand on capital if we go underground and do we have an estimate for CapEx yet on the underground?

Yes. So it's a very good question. And yes, underground portal development does require CapEx. And the beauty is that within a few months, you're generating income from your development because you're on reef mining. So it's not sinking a vertical shaft. This is a decline shaft. So within a couple of months of setting up your infrastructure and driving your barrels, you will be generating reef, and we call that development ore. And that then compensates for the development costs or the capital cost. So we estimate peak funding in light of the fact that we're generating reef tonnes circa ZAR 1 billion, and that's over a 24-month period. So really within our capacity to fund internally, when you consider also that we're not replacing a full yellow mining fleet. You saw Michael's CapEx number for yellow feet replacement and rebuilds of $40 million. So it's in that elements within that ballpark.

With regards to the Karo development [indiscernible] in the event of continued difficult PGM market, are there any plans to continue delaying Karo or executing any optimization scale down mining studies to reduce both CapEx and operating costs.

Yes. I mean it's a very good question. Certainly, subject to us securing the funding and market conditions improving, there will be an iteration of an extended project, whereby we would optimize, continue to optimize, continue with the programs that are in place and that are funded. And I think it's key to point out that we haven't committed beyond the funding that's in place already. So the program, as it stands today is linked directly to the capital that's been invested and not beyond that. So we haven't appointed the mining contractor to start work as that is a big project and is a 5-year contract. So those type of commitments are held back until the funding is secured for the project. But yes, to answer the question directly, if conditions do not improve, there will be a further extension of the project.

A question for you, Michelle, more on the operating side, 1 at the back end with regards to exports, which harvest do we use? And do you have any indication how much we've exported through Maputo. And then more on the front-end, are there plans in place to continue buying third-party ore into the operations for the current financial year.

Sure. So firstly, as it relates to the port, we ship to Richards Bay in Durbin as well as Maputo. So historically, we were predominantly to Richards Bay and we took a decision some 18 months ago to give ourselves more flexibility and we've been able to move successfully through Maputo. So at this stage, we're probably moving around 42% of our materials through Maputo, and it's going well. In terms of buying in run of mine, yes, it is something that we continuously look at. And again, one looks at what you've got in terms of the resource and what the planning is on mining. And there's a function of economics that drive it in terms of pricing, getting the best grade. So as Phoevos said, whilst we did get some oxidized ore during the year that we understood that, we knew some of that was coming. It's not something that you like, but you knew it was coming. So we will continue to look at how to blend the appropriate remix ahead of those plants. So yes, we'll continue buying in some run of mine and we'll manage it together with our own reef.

Phoevos, question for you, 2. Point one is around our own beneficiation strategies and what contracts do we have in place and when will we see benefits of our own beneficiation strategy and in line with beneficiation, this relates to the solar plant, can you explain the cost of the solar plant and how it works with our partners on the solar plant?

Yes, sure. So I'll start with the solar plant. So it's an off-balance sheet contract. We commit to a 15-year PPA, the purchase of power agreement at a pretty decent discount to the current Eskom tariff. It does have escalation embedded in that contract, but it has taken that it will continue to be competitively priced in terms of cost per kilowatt hour. So the capital for the project is circa ZAR 800 million, which is funded by the consortium of Total, Chariot and H1, and they fund that and we signed the PPA, a 15-year PPA with them. So a very nice strategic fit, whereby we are not investing our capital, but we are substituting or replacing Eskom power with renewable green at a discount. So there is a saving on an annual basis that's been calculated and unfortunately, confidential due to competitive reasons. But we're looking forward to those savings. And importantly, with our battery technology, once commercialized, we'll be able to utilize that solar-generated power, it's beyond daylight and into the night. So that's something we're very excited about. And then Ilja, the first question?

Was around our PGMs beneficiation and off-takers.

Yes, sure. So currently, we sell our PGMs to Northern and Sibanye, which is publicly known on an equal basis and those continue for a couple of years each. And we have completed a feasibility study on the downstream beneficiation, the smelting, and we have recently had a breakthrough in our unique beneficiation or refining of base metal and PGMs, which is very exciting, and we'll be reporting on that in the new year. Now in light of our strategy, the PGM market where it stands today reduces the margins and one has to look at being capital efficient in terms of those downstream initiatives. So we have the original feasibility study and we are busy cost engineering at now and looking at refining it down and potentially going into smaller modular units. So that's something that's in the pipeline and certainly the 1-megawatt process with the converter has proven that the processing is viable. It's now managing, 1, the capital cost and 2, the operating cost. And this is also really important with the renewable energy coming in to Tharisa looking at green PGM production were at the very least partially green utilizing some of the wheeled solar energy or wind energy that is available through the network. So yes, it's still intact. However, the margins have reduced significantly due to the basket price. And so it's necessitated us revisiting the capital and operating costs.

Staying with you Phoevos, more with regards to shareholder returns, a comment here around the dividend being somewhat disappointing, but also the shareholders are asking when are they going to see some of the returns. And obviously, that relates to commodity prices also. But on the other hand, in the same line is the company not a takeover target given the valuation metrics that we are dealing with.

So let's talk about our dividend policy to start with. It is fairly conservative, and it's linked to the profitability of the company and in turn makes it affordable to the business. So it allows us to continue with our strategy of investing in our business growth and returning some and obviously not enough value to shareholders. And we've been consistent since we've listed and started paying a dividend in the UK, which was 2016, we've been consistent with that. Now is there room for improvement? Certainly, something that we consider and debate going forward. In terms of the value to shareholders and the valuation of our business and returns, yes, certainly, at these deeply discounted levels, if I were a competitor, I'd certainly be looking at opportunities of consolidation. Having said that, we're not for sale. We want to see this business reflect its true intrinsic value in the capital markets. And everything we're doing is consistent, measured and planned for us to deliver on what we commit. And ultimately, the numbers speak for themselves, and we'd be judged on that, and we believe that the price will follow in time.

Phoevos, just to finish off with some of the questions and I'm going to paraphrase a couple of these into one because it relate around what keeps you awake at night? What are your achievements? What are the complexities that you're dealing with. Maybe sort of summarize the challenges that you've dealt with and the success factors that you look forward to over the next year before we close-off.

Sure. And I think it's a relevant question considering the environment we operate in. And it really is contextual when we look at South Africa as our main operating jurisdiction. Mining operations are under attack from all sorts of interest groups, whether they be criminal syndicates, whether they be community-related requirements and where government has failed to provide services and support for communities, mining companies are looked at to provide that relief and that support. So there's huge expectation, huge pressure on mining businesses, and it comes from all fronts. Over and above that, we have erratic electricity supply. We have recently spikes and drops in terms of feed into our processing plants. So these are things we have to contend with on a daily basis. So the environment is challenging. The logistics environment we've spoken about. And I think what really gives me hope and let's talk about the positive is we have a phenomenal team that are dedicated, committed and make a plan. South Africans are resilient and robust, generally speaking, and I think we've embedded that culture in our business of looking outside the box and finding solutions that may not be obvious. So that gives me great hope and confidence that it's not just a small team. We're a broad team and the dedicated team in each of these businesses. Our business has grown. You've seen the numbers of employees, and we have key strategic people experts in their field driving each of these businesses, and they know very well what the expectations are for them to meet our global or consolidated outlook. I'm also very excited about the technology aspect and the move into a renewable type of solutions. Redox One has huge potential in terms of its application, its cost, the kilowatt hour of storage is highly competitive. And we have seen remarkable interest from all over the world in terms of partnerships, whether they would be first-class universities to big parastatal looking for demonstration scale units. So we see a beautiful link of producing the chrome concentrate, converting it into electrolyte and providing this energy storage solution, which in our own home country here is desperately needed. So potentially a real winner for us. And then all the other initiatives that we don't talk about that are operating in the background, the R&D teams are working on novel unique approaches to unlocking value. So yes, that gives us hope and excitement. And we love what we do, albeit challenging every day is a different obstacle and challenge, but it keeps us focused. It keeps us committed, and I'm really grateful for the team ultimately that is at Tharisa.

I may just jump back in here. Thank you very much indeed for addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll get all those responses out on the platform. But Phoevos, perhaps before really just looking to redirect those on the cord to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap-up with, that would be great.

Yes. Thank you, Jake. Firstly, I'd like to thank all of you for your time and attendance. I know we've run over time today. I really think one has to look through the current challenges and the current obstacles that we're facing. Commodities are cyclical, and we are in a low point in the PGM cycle and we have to look through it. And so when one invests in these long-life projects, you have to be able to invest through and see through to the other side. And we have no doubt that these precious metals will be in demand for the foreseeable future in various applications. And in many instances, applications we are not aware of at this stage because of the unique properties. So we have a conviction in what we do, the impact that we have and really, that's what keeps us going. If you look at our mission statement, enriching lives through developing the resources company of the future, this is really what we're doing, balancing the extractive industry with technology and beneficiation and application to enrich and make a meaningful impact to not only to our employees, but the host communities that we operate in, the countries that we operate in. So with that, I'd like to thank you all for your time and wish you all and a very happy and safe Christmas and New Year.

Phoevos, that's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Tharisa PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So Good morning to you all.