Tharisa plc (THS.L) Earnings Call Transcript & Summary

Good morning, and welcome to the Tharisa plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to set the following poll. I'd now like to hand you to CEO, Phoevos Pouroulis.

Good morning, and welcome, everyone, to this very exciting presentation that we would like to share with you this morning, and it's the phased transition to underground mining. As you all know, we've been an open cast miner for last 15 years of our existence. And as we deplete our open pit resources, we transition from the open pit and the west mine to start with to underground mining. And what's very exciting about this is that we've been studying and contemplating this for a number of years. We've always planned to go underground, but it gives us the opportunity to redefine our resources to innovate again with purpose and to empower futures. And so this really is an introduction from my side, but I'm joined by my colleagues to my left, Michael Jones, our CFO, whom you know well, to my right, Vulela Makuni, our Managing Director of Tharisa Minerals, the Tharisa Mine; and Roy Murley, our Executive of Operations. So when we look at the next slide here, unlocking multigenerational value through integrated mining. So we have a vision, which sees a fully integrated complex where we unlock value beyond the world-class open pit that has proven its resilience through the coproduction Platinum Group Metals and chrome concentrate through very, very volatile commodity markets geopolitical storms and many headwinds. And through this, over the last 11 years, we've remained profitable. We've been able to distribute dividends to shareholders, and it really has proven the business case of the Tharisa model. By going underground, it allows us to continue the sustainable delivery of this co-product business model, but on a more efficient, more environmentally friendly and cost-effective manner. If we look at our ethos of empowering futures responsibly. We really do believe in creating opportunities for people, for the communities within which we work and for generations to come. So unlocking this multigenerational value that we've been given at the resource at the Tharisa mine. Safety is a key and core value of ours, and we're very proud of an industry-leading safety standard of 0.02 last time injury frequency rate per 200,000 man-hours worked. We employ a vast number of people including contractors across the group now, and that number is just over 4,800 people. Importantly, we all have invested consistently and continuously through the cycle in our business. To date, we have invested $832 million. But importantly, we've also through our capital discipline, returned some $115 million to shareholders in the form of dividends. So when we look at the guiding principles of what drives us as a business, we have safety at the core of everything that we do, and it's entrenched in every decision that we make. We strive for superior returns for our shareholders in that multidisciplined capital disciplined approach, a multi-pillar approach. We committed to the upliftment of the communities within which we work, and we also conduct ourselves with integrity in honesty. We have given a commitment to reduce our carbon footprint by 30% by 2030, and we're well on track to achieving that. And ultimately do take responsibility for the effect that our operations have on the environment. And I think -- you'll see today that with the unique approach to the underground mining, we challenge convention, and we use technology and innovation to differentiate ourselves. And these are the guidance principles of our business. For those that are new to the Tharisa story, we're situated in the largest geological complex for Platinum Group Metals in the world, the Bushveld Complex, hosting more than 70% of the world's Platinum Group Metals. And you'll see that our second development project, the Karo Platinum project is situated in the second largest geological formation in the world called the Great Dyke Zimbabwe, and we're in the middle chamber at the Karo Platinum project. If we take a zoom view of the Southwestern limb of the Bushveld Complex, you can see that we're well situated in PGM and chrome country, and we have the benefits of co-extraction through a very unique and innovative approach of mining the multilayered middle group reef horizon for both PGMs and chrome concentrates. So when we look at our aerial view of our operations. You'll see that we currently operate 3 open pit mines, the East pit, the major supplier of our run of mine to our ROM and processing facilities, approximately 70% to 75% of our production comes out of the East pit. The West pit and the Far West supply the balance of the ore. You will see from the team and the video that we'll share with you, we're proposing to start, and we have indeed started with early work preparation and make safe the important development in the West pit and ultimately transitioning to dual-port access from the East pit as well. So when we talk about a smarter way forward for long-term mining success. We have the benefit of starting a new mine and accessing new technologies, artificial intelligence, smart equipment and installing infrastructure that future proves our ability to extract the raw materials, the run of mine that we need on a low-cost, safe and efficient manner. And this really transitions beautifully from our open pit mine, which has proven to be a low-cost supply run of mine and chrome PGM concentrates to the world and allows us to sustain that momentum on, we believe, a more efficient and more cost-effective basis on a mechanized bord and pillar on-reef development, which the team will run through in more detail. But I think as an introduction, before we move on to Roy and Vulela, we would like to share an underground video summary of what it is that we are embarking on during this transition to underground. [Presentation]

Back over to the team for the presentation now.

Thanks, Alessandro. I'd like to hand over to Roy now, who will run through some of the technical aspects of the underground mine.

Thank you, Phoevos. Good day all. A truly exciting journey ahead of us. Our product assets moved to transition to the underground mining will secure long-term sustainability as a coproducer of PGMs and chrome ore for decades. Early work shown in the top right-hand photo focuses on stabilizing the high wall and enable minimal off-reef mining during the decline in development. The 10-year DFS graph illustrates the decline in the open cost output, while the underground mines at Apollo and Orion are set to reach full production by 2033, that supports and exceeds our future production requirements. Underground mining improves -- sorry, you can move -- underground mining improves ore quality and metal recovery while cutting waste mining and diesel use mechanized mining methods, enable leaner cost-effective operations with smaller fleet and streamlined infrastructure. The shallow nature of our orebody reduces surface impact, energy use and enhances safety, supporting long-term sustainability as well as our ESG goals. The geotechnical design focuses on group support with strong pillars. As we know, our open cast -- our open pit are approaching the end of their economic life, driving the transition to a substantial untapped underground resource with multigenerational potential. This next phase of the mine development expands the reserves beyond the current pit boundaries, enabling stable, low risk reduction by tapping into an extensive underground resource base. The definitive feasibility study, or DFS, includes an upgrade, updated geological model and additional drilling to verify continuity of the mining below the open pit boundaries. The database comprises of 639 diamond drill holes, totaling a staggering in 80.6 kilometers with 96 holes within the 10-year DFS footprint identifying 60.7 million tonnes of measured and indicated resource at 1.71 grams a tonne 6E PGMs and 19% chromic oxide. After applying modification, mining and mine [ schedule ] factors, the estimate mineral reserve for the 10-year underground footprint is estimated at 30.4 million tonnes at 1.45 grams a tonne 6E PGMs and 16.4% chromic oxide, classified as proved and probable. This evaluation and development process will continue throughout the life of mine. Next slide, please. On this slide, the blue solid line on the top illustration represents the previous indicated reserve, which has been expanded for the 10-year period in the blue area through additional drilling. We have a strong confidence in the orebody's consistency with drilling being crucial. But Google Earth map below shows the UG1 and MG1 outcrop separated by the open cast pits. High-density of boreholes is visible and including and the in-pit boreholes and newly drilled ones in orange within the underground footprint area. The Apollo mine complex with a phased portal development approach enables early safe cost-effective access to reef horizon while minimizing off-reef development through [ underground ]. Apollo Portal 1 provides quick access to the MG2 reef horizon followed by Apollo Portal 2 accessing the MG4 reef horizon. So important to note that the MG2 mining will be leading the MG4. Apollo Portal 3 is planned for 2029 to accommodate infrastructure installation, and this allows the current open cast mining to be completed within that specific area. The infrastructure referred to include conveyor belt systems, a permanent ROM pad and the ore transfer system to the plots. Key partnerships is very important to us. Our business partners played a crucial role in advancing the underground phase by providing specialized mining services that it enhanced safety and efficiency in our operations. Trusted partners ensure projects are completed safely, on time and to the highest degree of quality and standards. Additionally, our partners supply a comprehensive range of explosives and accessories for blasting alongside high-quality engineered mining and construction equipment across South Africa. Thank you, and I will ask Vulela to continue with the presentation.

Thank you, Roy, and good morning all. The underground transition will be aligned with the regulatory requirements. As mentioned earlier on the early works commenced in June 2025, this part of the work included the high wall safe making, the aboveground civil and infrastructure to access to the portal, which include water handling facility, and that work is currently underway. We have derisked the other account transition because the environmental, social and technical economies are aligned, positioning Tharisa to execute underground phase without any regulatory delays. We have also created a long-term value by regulatory alignments that underpin sustainable production ESG credibility, which allows us to operate within the rules. The Section 102 the Water Use License and the Chief Inspector of Explosives approvals are currently progressing while the specialty studies, the public participation is already completed, and this ensures full compliance. Thank you. Our portals are located and sequenced strategically to ensure that the Apollo at the West and Orion in the East is around the key infrastructure, which is the processing plant, the water supply, electricity and tailings storage facility as well as the waste rock dumps. The rollout starts at West with the highlight of the key important date, as you can see on the slide, which is our Apollo that is starting, the ramp-up of Apollo the steady stage, which is then followed by Orion, the ramp-up of Apollo as well as the combined shaft complexes that are going into steady states later on in 2031. This is not just a mine plan, it's a blueprint for sustainable extraction, balancing economic efficiency, the technical ability, the social responsibility, which underpins Tharisa's ability to deliver long-term value while reducing risk exposure. In terms of the choice between the different reef types, the MG2 in green and the MG4 in blue, there are a couple of considerations that we have put into place but the one to highlight it is the midlink, which allows us to mine geotechnical safe, the mineralogy and the grades that drives the drill split as well as the time per area, which is giving us the [ reef width ] as well as when their volumes are coming from. The next consideration was a kind of mining that we opted for, which is the mechanized mining methodology. This the consideration was efficiency as well as safety. As mentioned by Roy in the earlier slides, we have chosen partners that have got a very good track record in the area of mechanized by the kind of machines that you use which allows us to remove the people from the risky area because of the use of the mechanized mining equipment and mining metals. This is going to be done by applying the skills of the current workforce such is working in the open pit. We have already started with the work of reskilling and retaining these people so that we are ready for the transition into the underground. This is supplemented to the help of our service provider, which has got a training facility with a very good track record. That is going to be upskilling the community. And this proactive labor transition allows us to reduce social risks, protect community trust as well as ensuring that we are within our license to operate. We have planned this underground so that we deploy the smart mining, connected mine and people by introducing the backbone that allows us to use technology. The benefit of this is the ventilation safety, which allows us expansion certainty [indiscernible] and heat control systems that protect workers while enabling phased underground growth as well as optimize costs, hence, we're making use of the [ rent on ] demand program. In terms of how we deploy electricity, we have allowed for power redundancy in order to protect our production by making use of reliable electrical backbone which standby capacity secure uninterrupted operations, ensure returns from downtime risk this by making use of the ring fleet method so that when one area of the supply fails, the backup kicks in immediately. And then as mentioned earlier on the kind of fleet that we deploy is from service providers that have got the approval track records on mechanized TMM fleet, which secures safe operations, reliable and predictable cost as well as operational consistency across all our operations. When we plan for the water we have considered 3 areas, the one is the source, the recirculation capacity and how we discharge the water to ensure that we protect the ecosystem. We've got a reliable water supply and risk control because we've got integrated water management system that ensure sustainable water balance across all catchments and the infrastructure is designed withstand extreme weather storm events. Safeguarding both operations and the environment. The hydrology is strategically built into mine planning and the facility layout, optimize the water flow, storage as well as the use. This alignment reduces operational risk support continuous mining and ensure regulatory compliance. And most importantly on this slide, we hold environment stewardship and sustainability close to our hearts because the site hydrology zones are engineered to minimize discharge to the Sterkstroom river which is a protected ecosystem downstream. We are also using advanced systems to deliver efficient water use, reduce environmental footprint, which show ensure compliance. We are championing sustainability across our operations in line with our vision, as mentioned by as Phoevos earlier on. The social economic value creation, which ensures stability and trust. By this, we ensure we do significant contributions via the taxes and the community investment, which underpins our license to operate. Environmental stewardship ensures operational resilience in terms of water security, the climate action that secures ensures long-term operational sustainability. From an ESG alignment point of view, we are citing strong ESG performance to ensure investor confidence. These are just some of the examples that we employ locally because 43% of our employees are from the host community, we also ensure that we are advancing gender diversity, 26% of our employees are female. We're supporting education and skill development. We focus investing in training in learnership, academic sponsorships, producing some of the brightest professional engineering, safety and environmental management. For example, the lady that you see on the screen is one of these students that is a top achiever who is a child to one of our employees that we have sponsored. We are also empowering local business partnership to ensure local enterprises that provide jobs, training and supply development opportunities. These initiatives ensure that valuation extends beyond the mine and critical small business ecosystems. And lastly, in my slides, the introduction of the undergrounds doesn't change any system in terms of our processing capability because all the materials that you're going to be from underground is going to be treated in our existing plants, which is the current Genisis, the Voyager, the Challenger, as well as the Vulcan complex because the reef type in the mix doesn't change any significant. Thank you.

Thank you, Vulela and Roy. So our objective over the next 5 years is to deliver on this expansion and the growth opportunities, which include technology solutions, which we've shared with the market, whether it be downstream beneficiation of chrome products in the form of grinding media or special alloys and our downstream PGM beneficiation through our [indiscernible] process to refine our PGMs. And importantly, the growth in Zimbabwe at the Karo project. I think it's important to note at this juncture that while we're embarking on 2 large growth opportunities. The one is a transition and is natural in the form of progressing from open pit to underground. And Michael will unpack what that means from a CapEx profile. And it's not dissimilar from what we've been doing over the last decade. With dedicated teams focused on the underground mining with veterans coming out of the underground bord and pillar mechanized mining to my right, Roy and Vulela. We have a dedicated focused team that are here to execute and deliver on the Tharisa mine expansion. Similarly, in Zimbabwe, while we are under construction and building our processing plant and infrastructure bringing water and power to site, we have a dedicated focused team. So the risk of delivery, different profiles, different risks. And I think we have more than adequate resources to execute both simultaneously. I think moving on to the prill split and the key of the middle group reef Horizon, which has really been unique to the Tharisa mine is that we have an enhanced PGM basket price. Current spot prices, I think as of the first of October for the open pit prill split of around $2,100 per ounce with a mix of just short of 50% platinum palladium at 17.5%. And I think almost an industry-leading rhodium contents of 10%, minimal gold ruthenium at 17.5%. A lot of interest in ruthenium with data storage centers proliferating and the demand and requirement for storage and then Iridium crucial to the hydrogen economy electrolyzers going forward 4.7%. When we go underground and we transition to MG2 and MG4 only, the value difference is minimal. At some $2,087 on a like-for-like basis on the first of October spot price. But what you will see is an increase in our platinum content from the 49% to the 55.3% really to the detriment of palladium, which drops to 13.9% rhodium still at a very pleasing 9.4% ruthenium and a slight increase to Iridium at 4.9%. What's key here is that the chrome content and the consistency of the feed as Roy and Vulela mentioned, will ensure an increasing production profile. And as we look at that bar chart, going over the next 10 years, forecasting our annual production, you'll note that you read bar being the PGM production increases to beyond 200,000 ounces of PGMs as we integrate a fully underground mine by 2033. And similarly, chrome concentrate exceeded the 2 million tonnes from the 2033 points onwards. So a really creasing profile. And I've always stated that we believe that this mine on a sustainable basis should deliver 200,000 ounces of PGM and in excess of 2 million tonnes of chrome concentrate. And with the consistency and the quality of underground mining, we will achieve that in this next 10-year horizon and continue beyond that. I'd like to hand over to Michael now to touch on some of the numbers.

Thank you Phoevos, and good morning to our audience. One of our core philosophy of Tharisa relates to capital is our capital discipline and our allocation of that capital, where we have continued to invest in the sustainability of operations throughout the commodity price cycles, the growth of our business as well as ensuring that we give a return to our shareholders. We have long a plan to transition to an underground mine from the open cost and the implementation of this plan is very much in line with that capital allocation and the discipline associated with it. In that, we will firstly be invested in sustainability operations, as mentioned, an additional 60-plus years of mining as well as ensuring long-term returns to our shareholders sustainability of those returns. If we just touch on the numbers for a moment, and this is just the key numbers, the CapEx for the Apollo complex is sitting at $363 million. And we're not talking CapEx in this context, it is the spend from the time the development commence until such time as the complex achieves steady state production. So in the case of the Apollo complex, steady states 255,000 tonnes per month and the plan is to achieved that in Q3 FY 2029. There's been a sequential development into the Orion complex, $184 million and commencing in Q4 FY 2030. [indiscernible] just to note that those are today's value numbers, so real value, real numbers. You'll notice that there's quite difference between the spend on the Orion complex and the Apollo complex, some of that is due to the -- I'm going to say a smart approach to accessing the Orion reef horizon. The other one is that, as Vulela mentioned, significantly spend our infrastructure that necessary for underground mine and it's a one-off cost of that development. Peak funding come in a very reasonable $173 million, and that's really on the back of the on reef development. We are in the first 30 leases. We start accessing reef on development slopes and that will then be processed through the plant. Just to touch on that number, though, that peak funding was at the time of the defensive feasibility strategy. At that point, the PGM basket price was $1,633 per ounce. Chrome price is very much a line where today and $280 and $285. And that still achieve an internal rate of return for the project that exceeded our hurdle rate of 25%. If we then move forward to the very favorable recovery in PGM prices to just over $2,000 a today, chrome price are very much aligned. That will, of course, reduce the peak funding requirements and also enhance the overall project IRR. The touch on the mining cost, inclusive of capital development. That comes in at $40.8 per ton very much in line with our current open cast mining. We look forward, we would expect to see an increase in the underground -- sorry, open cost mining costs as you go deeper additional waste to remove additional haulage distances. And I think that the underground mining will ensure that we made in the lower cost quartile of producers going forward. The question, of course, comes in as to how we're going to fund this capital project. And we have cash on hand at 30. That's the last interim reporting date we disclosed the cash. That is a group cash number of $165 million. Not all of that is available for the underground project. We are committed to various beneficiation projects Arxo metal, Karo Platinum, the Zimbabwe development projects as well as long term sustainable battery storage projects,Redox One project. So what we did is we put in place a bespoke funding package for the underground development. It is a corporate facility, that's not your traditional project finance, totaling $130 million. With an accordion, we can access a further $20 million should be acquired, structured a term loan, $80 million, a revolving credit facility, $50 million. In addition, while we are going with a mining contractor model, when we looked economics of a contract, it made sense for us to effectively procure the equipment necessary for the underground fleet and we are visiting the process of securing $45 million of asset-backed financing. The next slide is a much more busy slide. And I'd just like to focus on the dark red bars there. This is the monthly capital spend as we go through the transition capital. And then you can see in the first place, the spend on the Apollo project that Phoevos alluded in between and the sequential development of the Orion complex with a much lower capital intensity. The color line reflects the underground spend -- sorry, the open cast spend on CapEx over the last 10 years. So looking at about $75 million per annum over that period. So just putting in context the underground CapEx is very much in line with historical capital spend. We will, of course, as we transition from the open pit, reduced our capital spend has reached to the end of that life of mine, and we will transition that capital to be spent on the underground development. We all know that mining is a capital-intensive industry. So what we've really looked at it as well, just to give you an indication of order of magnitude is we looked at the last 10 years, what have we spent on capital, not only on the plant but on the underground on the open cast of machineries and plant, and that comes in about circa $625 million. So if you have then to take into context the $363 million for the Apollo project, the $184 million for the Orion project, very time manageable based on historical performance. That is a very high-level overview of the financial information. I'd like to hand back a Phoevos.

Thank you, Michael. So just to summarize the key milestones and the deliverables for both the Apollo and Orion shop complexes and development time lines. We anticipate first ore from Apollo shaft. This is development ore in Q2 of our financial year 2026. So next year, steady states achieved in Q3 financial year 2029 achieving a monthly targeted volume of 255,000 tonnes per month. The first ore from the Orion shaft complex will be in Q4 financial year 2031. and thereafter, achieving steady state in Q3 financial year 2033. You'll note that the monthly volume is slightly lower at 210,000 tonnes per month, and that's matched to our processing capacity of 5.6 million tonnes. Having said that, the Orion shaft is designed to deliver 255,000 tonnes per month. So the opportunity for us to increase our processing capacity to 6.2 million tonnes is available to us, and it's a decision that will take closer to the time as we reach steady state for the Orion shaft. And ultimately, this will deliver more chrome tonnes and PGM ounces, and we believe will be a normal transition again into further processing capacity as we will have the ability to mine and produce those extra tonnes from the Orion shaft. So in closing, really, we are powered by purpose. We believe in what we do. We believe in building projects, mines for generations to come. It's a natural transition for us to go underground. And it allows us -- if you don't mind, thank you. The ability to maintain our loss -- our lowest cost quartile position that we managed to achieve over the last 10 years. And I think what's important to maybe a differentiator is that we've not been scale to invest in our business. In spite of the cyclicality of the commodity cycle, we've continued to have that discipline to invest in our business to develop and this really talks to our continued commitment to unlock the natural resources that we have the responsibility to develop and create a multi-generational opportunity for all stakeholders. And when we look at what this really means, why are we doing this? It's really because there's real value in the Tharisa Mine. So when we run an NPV calculation at spot rates, post tax at a 10% discount rate and those spot price of $2,100 per PGM miles and $285 per ton. And this is over the life of mine, 60 years. We end up with a post-tax NPV of $985 million. So a significant value that we're unlocking and the Tharisa mine really is the cornerstone of the multibillion-dollar platform that we are building. And when we add the Karo Platinum production an additional 200,000 ounces to our book of PGM production. You can see how this scales very quickly within the next 5 years to be a significant producer of these critical metals and minerals that the world has realized on necessity to transition to a future world, and we believe we are future proofing our business with this smart approach to mining and resource extraction. So with that, I'd like to thank you all for your time and move over to questions and answers. Alessandro, over to you.

[Operator Instructions] Ilja, what I'll do is I'll hand over to you now to run through the Q&A and I'll pick up from you at the end.

Thank you very much. Let me go through the questions as we come along. The first question here is on the output figures, which I think you addressed. But just to confirm, is it the combination of the 2 underground weaves or does this also include the open pit when we reached 2 million and 200,000 ounces in the chart?

So on the chart, it's sees us achieving that steady-state number in excess of 200,000 ounces of 2 million tonnes at the point in time where we were fully underground 2033 I would like to believe that there's potential an opportunity to bring that forward. But at this stage, it's forecast to be achieved in financial year 2033.

Okay. I know we spoke about operational efficiencies and why we're going underground and the benefirs there, but maybe going to a little bit more detail now that we have the opportunity what operational efficiencies and cost savings do you expect underground versus open pit? And how will these offset higher capital intensity?

The open pit, especially at depth, it is mostly driven by the volume of tonnage that you need to move because we're currently mining close to 180 in terms of debt. So at this depth, you need to move quite a substantial amount of waste, which is where most of your cost is like is, of course, to when you go underground the amount of tonnage that you moving, there's less is because you're only taking away the reef packaging of 4.5 and 5.5 meter mining height. So that's where most of the expense or the cost line in terms of bigger machines for the open pit beside the amount of volumes that you're moving underground because most people will make a comment that open pit is a waste mining because you move mostly to get into your reef.

Staying with the operation, I know we spoke about in terms of the infrastructure that's required. And the difference between the money that we spent on Apollo versus Orion, but we may add a little bit more color and say as to what infrastructure really is required that's different for the underground versus the open pit that we currently have and also the area that we've laid out for that infrastructure.

All right. So firstly, the infrastructure that we referred to for underground is like we said in the beginning first 3 years. We'll be rolling out reef tonnes through trucks. And after 3 years we'll install a conveyor belt. As we superimpose the 2 reef horizons, MG4 and MG2, we'll be installing conveyor belts systems on the MG4, which is on strike. The main dip conveyor will only be carried on the MG2 reef horizon, which the lower horizon and transfer will happen through all past systems. We'll also have what we referred to roller feeder breakers at stoping ends it, which will use the ultimate last traction to able in terms of transfer. So in terms of the infrastructure, one of the changes there would be then, obviously, the conveyor belt system that will be installed. Secondly, the infrastructure that we also install basically, these will be the transfer from the ROM pad to the plant, and that will also be done by conveyor system. In the beginning in the first 3 years, that will be done by trucking and afterwards it then be replaced by a conveyor systems. So I think in essence that those are the major changes from open cast to the underground section.

Sorry, if I can perhaps just add the question also related to the surface infrastructure. There will be the necessary engineering workshops, change houses, store rooms and stuff that also need to be constructed and of course, some additional electrical work that needs to be brought to the mine for the power going forward at future dates. So those are just some of the additional infrastructure projects undertaken. And as mentioned, those would be for the entire mine and not just per shaft. So it's a one-off spend.

I would like to also add with Michael was saying as part of the difference in terms of equipment. When we move to the Orion shaft, 18 of those trucks will be used and not additionally purchased. So as we sort over system, those trucks will then move over to a rig. We'll also do some uptick development to ensure that, that cost is also reduced in terms of the right chart.

Thank you. I know this is something we've also discussed with the analysts and you did address it in your opening slide, on the financial side. But could you maybe highlight further what key risks you are seeing in Tharisa moving underground and how you balance that with the company in totality?

So in fact, going underground is a risk mitigant. So when we look at the ore profile, the decline in production coming out of the open pit, this is our mitigation and our measure to sustain our production and in fact improve the quality the sustainability of our mine. So we actually see it as part of our risk mitigation strategy. Execution risk is a factor that the team have considered and assembling a team of veteran underground mechanized mining extras. We believe we've mitigated that risk as well. The studies have been comprehensive. It was an extensive program that was undertaken through various stages of studies and I think we've ended up with a very unique smart approach that allows any access to reef horizon. So it's very different to a vertical shaft, where it takes many years to access the reef horizon. This is on the reef development. And so we get access to early cash flows and manage that capital intensity of a longer period of time, but on a measured basis. So I think it's been precision engineered as the team have said. We manage the process very systematically and sequentially with early works programs being undertaken derisking the project through all the geohydrological studies, geotechnical studies as well as the geological confidence through the enhanced drilling campaign. So I think from an execution point of view, we're comfortable that we're well the risks are well managed. And now I'll hand over to the team. Is there any other comments on the project risk.

The one that is coming to mind for me was the geohydrological work and how we deal with the water. Water is an issue, but the partners actually used to do the study is doing the work in a larger area than Tharisa is located. So we've got a bigger area in terms of understanding the behavior of the water. And our proactive approach allowed us to deal with it before as part of the mining prices.

I might add just to what said and in terms of the smarter design, we looked at when we develop into the reef horizon through the bord and pillar, it is at about 2 to 3 degrees up, which allows us to mitigate the risk of water ingress into the underground complexes and that adds just another layer of protection for water management. We'll then after the crown pillar, go directly into the reef as what has said. So that's also one of the mitigations as an example of what was placed into the risk register.

Thank you very much. Michael, a question for you. I know you addressed the underground costs, including capital. Maybe if you can elaborate a little bit more on that and compare it to our current costs and also maybe understand the difference between the mining cost and the processing cost. So just understanding where we sit on the cost curve, I suppose.

Sure. Thank you for that question. And if we look at the cost at the moment, your costs for underground and open pit are very comparable from a mining perspective. As I mentioned, mining costs inclusive of capital development, $40.8 per tonne. If we just look back at the September '24 numbers, it was sitting there at about $40.3 very much in line with your overall mining costs. There won't be any change in your processing costs. Those would be the same and in that you are processing the material and the same volume material through the same plant. I think we are going to have a short-term impact is that on an all-in sustaining cost, you will be seeing an impact because you've got a higher capital expenditure. It is a capital-intensive project, albeit that the capital is spent over a period of 10 years. So that will have a negative impact in the short term on an all-in sustaining cost basis. If we were to look at ourselves though on a longer-term basis, I do believe that we will remain in the lowest cost quartile. We are mining on a cost competitive basis, relatively shallow mining. The infrastructure is built, the plant is there. So I do believe that we remain in the lowest cost quartile going forward.

Okay. The processing cost, I think, are consistent. They remain the same. So there's no additional processing costs of approximately 255 grams per tonne based on our half year results. And then in terms of the current open pit mining costs in line with where we envisage $40.8. I think key here is that cost for the underground mining is stabilized over the life of the mine because that increase your development costs and your reef cost. So I think have more sustainable cost and less inflationary or increase due to depth, haulage distances and waste deposition.

Michael, I know again, you addressed this in the presentation with regards to the return that we were targeting at 1633. But we do have a question here with regards to what return profile are you targeting from the underground and how you expect the funding approach to impact balance sheet strength and shareholder return. And I suppose that ties in with the second question with regards to how you look at share buybacks versus dividends, so generally a question on your dividend, on your balance sheet and capital allocation.

I think if you look back historically, we have been very disciplined with our capital allocation, and we are in a net cash position as of today. Going forward, that is likely to change with the capital expenditure. But again, if you have a look at the debt that we're managing on our balance sheet, it is a very, I'm going to say, a conservative level of debt. We're not over gearing the balance sheet to any extent with this particular project. I mean this is effectively we recently had $130 million of financing on balance sheet. We've accelerated the repayment of that and have the facilities on place. So balance sheet strength, I believe it's still going to be a very stable balance sheet, a well-managed balance sheet, and we will continue to manage the CapEx against the plan on that side. I also think that we also need to take into account that there are strong fundamentals in both the chrome market and the PGM market. They have been historically at lows for some time. We are now starting to see the fundamentals improving those prices also impact favorably on our balance sheet in terms of cash generation. On the question of share buybacks versus the dividend, I think some of those are based on where we see the undervaluation of the of the company as a whole, and we then approach the Board with a buyback mandate. We've undertaken 2 such buybacks. There's one that's currently still in progress, but it's really aligned with where we see the value coming through and it's trading at a discount. And we do believe that it's trading at a very large discount to the underlying value of the company. We do have a stated dividend policy of at least 15% of consolidated net profit after tax. We will continue to review that, and we need to review that when we have a look at where the normal economics are of commodity prices, capital expenditure and so forth. So that will be an ongoing review as we go forward.

I have a question here. What does reef mean? But I think let's use the opportunity, Roy and Vulela to discuss the reefs that we are currently mining the co-product concept and why we've chosen MG2 and MG4. So I think maybe sort of highlight that. So hopefully, that answers question here on this gentlemenn.

Yes. The reef is -- we're currently mining the MG1, 2, 3, 4. It varies in thickness just under 74 meters, the total package of the stratigraphy. In between these mineral hosting rocks, that's what reef is referring to. We've got some layers of waste with the current open pit, we're mining the total package. But when you are loading it, we are loading it differently because we've made our plant in such a way that they can deal with the infra mineralization in terms of the reef. When we then take it, we then mix it, we call it blending so that the plants that are predominantly for chrome will get a different mix versus the ones that are predominantly for the PGM because we are a co- extracting entity. That is one. However, when we moved underground, we did a couple of comparisons to mine 1 and 1 only, 1 and 2, eventually the choice that you came out with because it had the highest financial benefit execution in terms of safety was the mix between the MG2 as well as the MG4. There's a further discussion that as mining evolves, there might be other studies or methods that reveal that you can go back and extract the layers in between. So that's what reef is referring to is the rock hosting the mineral that you're mining.

Thank you, [indiscernible] I think a sort of strategic discussion addressed earlier that we have and mine on the Bushveld, and we also have a project up in Zimbabwe. The question here relates, can you talk to us how you think of the priority between 2 large projects you're undertaking and how you will tackle those and particularly, if there are any changes in market dynamics.

Yes. So I think we're in a fortunate position where timing is optimal market sentiment around PGMs, the fundamentals on supply and in particular demand growth around the criticality and the necessity for security of raw materials on a geopolitical basis supports our investment drive. As you know, these decisions take a long time. So we don't make an investment decision quarter-to-quarter. It takes on average 16 years to develop the mine from first discovery. As you all know and those who are new to the company, we started exploration in Zimbabwe in 2018, and we're developing now 7 years later, which is a relatively short time line. And from funding completion, we believe that the time line will be 15 months to first ore in mill. So near production. And what's key around Karo is it's been derisked because as Tharisa, we've invested almost $170 million worth of equity into the project, which has ensured that we've gone through the deep risk curve of establishing the site, infrastructure is underway in terms of water power reticulation and the civils earthworks are complete with the majority of the equipment being purchased and being assembled as we speak. So it's not a case of priority because we're actually executing the expansion at the Tharisa mine as we speak, and it has been approved by the Board and the capital is available. So I think it's key to differentiate the one from the other that this is a transition and a natural transition for us at the Tharisa mine, and it's business as usual, even though the mining methodology is changing and allows us many benefits that the team have spoken about, in particular, cost control, quality control, safety and sustainability of feed material for our processing plants. The exciting opportunity at Karo is that it's one of the only projects of its kind open pit, large-scale Tier 1 asset that has scalability beyond the 10-year open pit. And so we prioritize both in the sense that we think timing is key and critical and sentiment around resource security and delivery of raw materials is very favorable and very positive. A year ago this time, it was a very different world that we lived in. PGM basket prices were some 40% lower than they are now. And the drive to secure supply of raw materials was very different. So I think we're in a different world and timing in life is essential. And I believe we may be close to optimal timing on both fronts. So yes, we see them as great opportunities to unlock value and double our production of Platinum Group Metals within this 5-year horizon.

Thank you. I'm going to ask you to close the session. And then close the presentation. Thank you.

Yes. Well, thank you, everyone, for your time and attendance today. It's really exciting for us to embark on this journey, as Roy calls it, as we transition to underground at the Tharisa Mine. We have all the confidence in the world in the ability for our team to deliver on the project on time, on schedule and within the budget. And really cement ourselves in that lowest cost quartile position, which is really our focus and it delivers those returns to shareholders and proves and has proven its resilience through the cyclicality. We can't control commodity prices but certainly, we can control our costs, our efficiencies and effectiveness within which we mine and operate. But importantly, the positive impact that sustained, continuous employment opportunities, upliftment of communities, the ecosystem that's created around these mines that grow, develop over decades, is really rewarding to all of us as we see the positive impact that our investments through the support of our shareholders and stakeholders, regulators, government afford these environments is really rewarding. And with that, I'd like to thank you all and wish you a good day further.

That's great. Well, thanks very much for updating investors today. Can I please ask investors not to close the session as you now will automatically be directed to provide your feedback for the management team can better understand your views and expectations. On behalf of the management team of Tharisa plc. We would like to thank you for attending today's presentation, and good morning.