Thungela Resources Limited (TGA) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Thungela's First Interim Results Presentation. I'm Ryan Africa, Head of Investor Relations for Thungela. I'd like to take a couple of minutes to introduce today's agenda and also to explain how the webinar will run. But before that, please allow me to draw your attention to a couple of important messages from our lawyers. I'll take a moment to read through the cautionary statement. A reminder that the full interim report, including today's presentation, is available on the Thungela website at www.thungela.com. You can find it by navigating to the Investors tab in the ribbon and then clicking on Results. Today's session will be recorded, and the recording will be available on the Thungela website from later this afternoon. A transcript of this session will also be made available on the website next week. Let's start with the agenda for today. I'm joined, of course, by our CEO, July Ndlovu; and our CFO, Deon Smith. July will provide an overview of the results and will also present operational performance. Deon will talk through the financial performance, and July will then come back to wrap up the presentation. We will then have a Q&A session of approximately 45 minutes to give those on the call in the webinar the opportunity to ask questions. Turning to Q&A. [Operator Instructions] It is possible, of course, to follow today's session across both platforms simultaneously. Although you'll have to mute one of the sessions to avoid interference. And please bear in mind that there's a 30-second delay on the webcast. It is also possible to dial in the conference call facility only shortly before the Q&A session and directly from your computer. If you are planning to do this, I do encourage you to please register for the conference call in advance of the Q&A session, as you will need the link sent to you upon registration. Now with those logistical matters out of the way, allow me to hand over to our CEO, July Ndlovu, to take us through the interim results.

Thank you very much, Ryan. It is with great pride that Thungela shares its inaugural set of interim results as an independent pure-play thermal coal operation. Our listing on the JSE and LSE on 7 June 2021 was a significant milestone for our business, for the new shareholders and partners we have embarked on this journey with us. We've started our journey on [indiscernible] The loss of our colleague, Moeketsi Mabatla, was a devastating blow for us as the Thungela family. Moeketsi lost his life during an evacuation underground at Goedehoop colliery. Our condolences go out his wife, [indiscernible] his 3 children, his colleagues and everyone whose life he touched. We've also lost 12 colleagues to COVID-19, and many of our colleagues have lost family and loved ones to the pandemic. We grieve their loss and offer them our deepest sympathy. These losses will continue to shape our safety behaviors as we champion a fatality-free business. Turning to earnings. We reported operating profit of ZAR 990 million and an adjusted EBITDA of close to ZAR 1.9 billion. These earnings were driven by the strong recovery in thermal coal prices, underpinned by the global economic recovery, together with improvements in our portfolio such as productivity improvements, disciplined cost management and taking out higher-cost production assets. We are in a robust financial position with a net cash of over ZAR 3 billion at the end of the first half, driven by the capital injection received as well as strong cash generation in June of this month as a stand-alone business. We are pleased to confirm our 2021 production guidance as previously set out in the pre-listing statement and at our Capital Markets Day held on 6th May. Notwithstanding the current challenges regarding TFR, Deon will pick up on this later, we expect to produce between 15 million and 16 million tonnes of export sellable production. We also confirm our cost guidance of ZAR 830 per export tonne. At the Capital Markets Day, we said that we would revisit our capital structure using the Thungela lens, and this work is well underway. And we are pleased to confirm that our CapEx spend is likely to come on the low end of the range we guided previously of ZAR 2.6 billion to ZAR 3 billion. With continued strong prices as well as improved performance by TFR through the remainder of the year, the group is likely to achieve positive adjusted free cash flow for the remainder of 2021. Our strong balance sheet, coupled with the above, tells the wave for the Thungela board to consider the declaration of a maiden dividend at the annual results for 2021, in line with Thungela's stated dividend policy of a minimum payout of 30% of adjusted free -- adjusted operating free cash flow. Now let me turn to safety, office value. Running a fatality-free business is front and center of everything we do, and we continue to work tirelessly with our stakeholders to ensure that our people return home safely every day. It is, therefore, with deep sadness that we report the loss of Moeketsi Mabatla. Learning from incidents such as this is an important part to continuously improve our certain response and controls across our operations. Let me pause and share with you what we are doing to prevent injuries and fatalities at our mines. Our program for the elimination of fatalities has 3 pillars. The first pillar is back to basics. Focusing on the core fundamentals for self-production. It addresses aspects such as rigorous planning, self work area design, systematic change management, effective supervision, correct tools and equipment, and trained and competent people. The second pillar is work management. We seek to ensure that all work we do is not only planned, but resourced and executed to plan. It is now knowledge that planned work is safe and productive work. The third and last pillar addresses our culture, transforming our behaviors to align with back-to-basic fundamentals and our work management principles. We are making encouraging progress. And for the period, our total recordable cases per million man hours worked was 1.66. This number was impacted by events at Goedehoop colliery on 23rd June. The COVID pandemic continues to have a profound impact on our business, operations, people and communities. We have developed a resilient and effective response, such as COVID-19 critical controls and mental health support programs on the mines. These interventions have gone a long way to keep our people safe. We are pleased to share that Thungela Highveld Hospital has been accredited as a vaccination site, and we are currently administering vaccinations to eligible employees and contracting partners. We plan to extend this program to employees' families and our communities as we support South Africa's vaccination program. We are very pleased that we successfully transitioned our business without any material administrative or other challenges. We are now a fully placed stand-alone business with critical functions and services having been moved in-house. However, in order to ensure a smooth transition, some other services continue to be provided by Anglo American in terms of transitional services agreements. However, this will be wound down in time as we set up our own functions internally. The first 2.5 months of independent operational and financial performance have been very pleasing, and we are proud of our people who made this outcome possible. As expected, we initially saw some volatility in our share price as our ranges have transition into longer-term roles focused on benefiting from the exposure to co-end the markets we serve. The shareholder base has settled, and we are pleased that it currently represents good liquidity and a broad free float. At our Capital Markets Day on 6th May, we said that Thungela intents to spike on the air in ESG, and we continue to make significant strides in the social sphere. Positively impacting the lives of the people closest to our operations in a meaningful and authentic way is at the core of our campus. Our newly established employee and community partnership plans signify this commitment. Each of these now hold a 5% fully funded interest in our core operations in South Africa, setting them up to share in the financial value that we generate. To be clear, these structures are unique in the industry as they are debt-free, an important milestone for the South African mining industry. The first distribution of ZAR 6 million to the community partnership plan was made on 30th June 2021. We're also pleased to report that trustees have been appointed, and the process is underway to appoint trust administrators to start implementing the mandate of the trust. Before we delve into the detail, you have seen from the announcement this morning that a number of -- there are a couple of nuances around the presentation on the interim results, which were on the explanation. In preparing the financial results, which Deon and I will walk through today, we focus on 2 sets of information to assist the user to form a view from 2 distinct perspectives. Firstly, we present the consolidated interim financial results based on international financial reporting standards, which more clearly represents the various restructuring steps undertaken to create and prepare Thungela for damage. The days from which various entities are included in the so-called IFRS perimeter are set out on the left side of the slide. For example, Mafube was only acquired on 31st March 2021, and therefore, the IFRS asset perimeter for the period ended 30th June 2021 only includes 3 months of Mafube's operating and financial results. The IFRS perimeter comparative period ending 30th June 2020, therefore, only includes Zibulo and exclude Mafube, which was only included from 1st April 2021 and also excludes the other mines, which only included from 31st December 2020. Secondly, we also present pro forma information to better depict the results of our business on a like-for-like basis as if all the entities were included in the perimeter from the start of the comparative period ending 30th June 2020. Note that a pro forma financial information is thus prepared for illustrative purposes only. The pro forma financial information I'm referring to is set out in Annex 3 to the interim financial statements. Now with this context out of the way, let's look at our results in a little bit more detail. Now we turn to -- let's turn our focus to our operational matters. Starting with export production. As I just said, this production information has been prepared on a pro forma basis in order to understand comparability. Remember that the IFRS figures would only have included Zibulo in the comparative period of H1 2020. Export sellable production for the first half of 2021 decreased by 9% compared to the same period last year, mainly as a result of placing the high cost for of Bokgoni pit at Khwezela on care and maintenance. Deon will give a bit more color on this later in the presentation. Another important message on this graph is the relative split between H1 and H2 for 2020. You can see that H2 production is significantly higher. This is because our business is an element of seasonality in it and H2 typically sees higher production volumes. The same can be expected this year. On this slide, we break down the movements between the current and comparative periods into more detail. Firstly, on this graph will show both IFRS and pro forma information. Let's start with IFRS. In H1 2020, the business produced export saleable production of 1.5 million tonnes, reflecting only AAIC, which holds the Zibulo mine. On a pro forma basis, however, H1 2020 figure is 7.8 million tonnes. When you consider H1 2021, the IFRS figure is 6.7 million tonnes compared to a pro forma volume of 7.1 million tonnes. The difference is due to the fact that Mafube is only included from 1st April 2021 as I just said. Turning to the pro forma figures. The 9% decrease that I referred to on the previous slide is broken down more clearly. The Bokgoni volumes come out as the volumes from UmlalaZ is the reserved at this pit are depleted. We also see increases due to the ramp-up of navigation. And finally, volume increases from productivity improvements and the underground operations, which is the result of the implementation of the prime section project we referred to during the Capital Markets Day. A story that doesn't necessarily come across clearly when looking at the figures in this graph is the impact of COVID-19. We're impacted by the pandemic and we lost volumes in both the current and the comparative periods. Some of the H1 losses were made up later in the year by improved mine performance. Let me now hand over to our CFO, Deon Smith, to take us take through the financial performance. Deon?

Thank you very much, July. So let's now look at the financial results for the first half of the year. And as we do that, let's start with market overview. Export of South African coal to South Asia, in particular, India, Pakistan, Sri Lanka and Vietnam accounted for approximately 75% of SA thermal coal exports in the first half of 2021 and reflects the continued demand for thermal coal as part of the energy mix in these rapidly urbanizing and developing economies. Supply constraints out of South Africa, Australia and Colombia continue to support prices, whilst the ongoing geopolitical tension between China and Australia is likely to result in opportunities for South African coal with improved quality and trace element requirements to be exported to China. Reflecting back, the result of the improved demand, coupled with the supply constraints, delivered firmer prices during the first half of 2021, with the average monthly benchmark price increasing by around 18% from January month to June 2021. And if you look back at the last year, the average realized price for the first half of 2021 was around 36% higher than H1 2020. So whilst product adjustments, which we also refer to as nonlinear product discounts for coal qualities that are lower than the 6,000, widened with the increased prices, the short supply and firm demand for the high-quality 6,000 benchmark coal resulted in a premium to the benchmark price index for those coals. Given our portfolio of higher quality and the revised marketing fee paying payable to Anglo American from the 1st of June 2021, the discount the FOB Richards Bay Index reduced from 26% in 2020 to around 23% in the first half of 2021. So all things being equal, the new arrangement with Anglo, which became effective in June 2021, therefore, also supports a slightly narrower discount in the second half of this year and going forward. On export sales, I'll talk to pro forma figures here. For clarity, we are referring to export equity sales, which is coal product tonnes that we mine and sell, so excluding any third-party traded sales. Export equity sales at 6.6 million tonne decreased by around 9% in H1 2021 versus the comparative period, in line with the lower export salable production volumes July spoke of. Compared to export production of 7.1 million tonnes in H1 in 2021, we have built around 0.5 million tonnes of finished inventory stock piles, which has contributed to the net working capital build. And this is in line with what we anticipated as we needed to replenish inventory after stocks were sold down in the last quarter of 2020 off the back of recovering prices. You will again notice the seasonality effect, which July mentioned earlier. And we are accordingly, also expecting a higher sales outcome in the second half of the year compared to the first half. In making this statement, we need to either carefully consider Transnet Freight Rail's performance. Like the rest of the industry, we have now faced a sustained period of underperformance by TFR. The underperformance is driven, as we understand, by 2 issues: first by infrastructure and locomotive failures. TFR's performance has a direct impact on our business as lower railings mean that we are unable to move as much product as planned to the port in order to take advantage of the current strong market conditions. This results in sales being deferred and also an inventory build on mine, whereas ideally, we would want to build stocks at port. Whilst unlikely, a sustained poor performance by TFR could put us at risk of becoming stock down at our mines. Based on the current rail performance, the industry is set to achieve materially lower exports compared to its installed capacity. The current status, therefore, presents a very unfortunate missed opportunity for the industry and the country, recognizing strong prices and favorable demand outlook for South African coal. We accordingly, continue to engage TFR at all levels to pledge our assistance where required and remain confident that this is a transient challenge. If I now turn to revenue. So we've had revenue of approximately ZAR 10 billion for the first 6 months. And that represents a significant improvement over the prior reporting period. So when you compare to H1 2020 IFRS revenue of approximately ZAR 1.7 billion, the most significant difference is clearly the internal structure, which July mentioned. And therefore, the inclusion of 7 operations for most of 2021 first half relative to the prior period revenue, which only reflects the Zibulo colliery within the Anglo American Inyosi Coal entity. The H1 2021 pro forma revenue is around ZAR 2 billion higher than the ZAR 8.2 billion in the comparative period. This increase is due to 36% higher realized prices in rand, but offset by lower volumes from the Khwezela operation following our decision to place behind on care and maintenance in the beginning of 2021. The reduced production volumes from Khwezela were also partially offset by higher output across our underground operations as well as from the new -- sorry, navigation, but as that operation continues its ramp-up. Whilst not on this page, the IFRS cost comparison is similar to revenue, mainly driven by different asset perimeters between the comparable periods. If I now look at the like-for-like pro forma basis, comparing H1 2020 with the first half of 2021, FOB cost per export tonne is flat at ZAR 782 a tonne. The removal of Bokgoni production and cost, which was the highest cost per tonne in the prior period, helped reduce the average cost per tonne, notwithstanding a lower-volume denominator and clearly, the associated lower services and central cost absorption. Whilst inflation was consistent with rates commensurate of the geography we operate in, which is typically mid-single-digit percentage in rands, incremental costs pertaining to the management of COVID-19 also added to the cost pressures across our business. We only managed to keep our cost per tonne flat due to productivity improvements, which only attracted incremental variable costs across the underground operations. Turning to our earnings for the period, as July mentioned earlier, the business generated ZAR 1.88 billion adjusted EBITDA on the IFRS basis and approximately ZAR 2 billion on a pro forma basis for the 6 months ended 30th June 2021. The ZAR 2 billion compares very favorably with a pro forma 2020 adjusted EBITDA of ZAR 107 million. The key drivers for the materially improved adjusted EBITDA as realized prices for coal, offset to some extent by the strengthening of the rand against the U.S. dollar over the 6-month reporting period. The decision to place Bokgoni on care and maintenance also contributed to the uplift in earnings and was further supported by the incremental earnings from additional volumes due to productivity improvements in underground mines, coupled clearly with the continued ramp-up of navigation. It is important to note that all the figures on this slide are now based on the IFRS asset perimeter. our profit for the 6 months ending June 2021 was impacted by a number of one-off as well as noncash charges. These one-off or noncash items are shown in gray on the bridge and amount to approximately ZAR 970 million in the 6 months. So of this, the ZAR 248 million one-off restructuring costs, mainly related to the demerger preparation and separately, the Khwezela restructuring decision and include the cost we incurred at the operation, but also in the central and services structures, which had to be rightsized following the decision to place Bokgoni on care and maintenance. If I can then point you to the middle of the page, the most significant noncash item is the fair value loss we booked to the P&L on the derivative, which relates to the capital support agreement with Anglo American. The derivative was initially recognized through equity and valued at ZAR 916 million, recognizing the more modest coal prices at the time and therefore, reflective at the time of the probability of benefiting from further capital support from Anglo American during the period up to the end of 2022. You may recall that such capital support is available to Thungela should benchmark coal prices fall below ZAR 1,175 per tonne. The value of the derivative reduced materially since its original measurement, mainly due to the continued strengthening of the rand, coal price and was valued at around ZAR 332 million at the end of June 2021. The capital support arrangement and, therefore, the derivative ends December 2022. So the impact on earnings is really a short-term consideration. To wrap this matter up, it is important to note that whilst the recovery of coal prices in this instance was not favorable for our earnings to the tune of ZAR 584 million, it is a pain that we gladly take as the potential positive impact on the cash flows of the stronger price outlook is clearly more desirable. Other than depreciation and amort of around ZAR 512 million, we also incurred noncash restructuring costs of ZAR 138 million and noncash finance cost. So that's mainly pertaining to the unwind of the environmental provisions of around ZAR 117 million. The resultant net profit after tax of ZAR 351 million includes noncontrolling interests for Anglo American Inyosi Coal of ZAR 57 million. We are B partner in Inyosi Coal owns 27% of Zibulo and Rietvlei ZAR 61 million in which we earn an effective. So this is now Rietvlei 34% of the economics. The Rietvlei NCI is pronounced as that business sold down stocks during the first half of 2021. It is important to note that the AAIC NCI is mainly a profit and loss entry as the cash generation in that business continues to fund loan repayments to other group companies. Based on an attributable net profit at the bottom of this page, around ZAR 233 million, we are reporting earnings per share of ZAR 3.13 on an IFRS basis using a weighted average number of shares of approximately 74 million due to the timing of the issue of those shares. This graph, on a highly simplified basis, seeks to depict the operational cash generated during the first half of 2021. So it starts from adjusted EBITDA as a proxy as well as the deployment of that cash. In addition to funding the one-off restructuring costs, so the ZAR 248 million, we deployed cash mainly into working capital of around ZAR 1.7 billion and also into sustaining capital expenditure of just over ZAR 1.2 billion. The working capital build, as mentioned, was anticipated given the need to replenish stocks and all things being equal, should not reoccur. These activities as well as the extension of the intercompany loan with our former parent company were concluded prior to the demerger of Thungela. So therefore, these investments and working capital build were mostly incurred prior to Thungela's economic and operational independence. Strong cash generation, our first month of economic independence, being June, helped us achieve a net cash position of ZAR 3 billion at the end of this reporting period. So we previously guided that our 2021 capital expenditure full year based on our business plan is expected to be between ZAR 2.6 billion and ZAR 3 billion. During the first half, we spent around ZAR 1.3 billion, which, based on purely a percentage of annual spend outlook, is higher in the first half than in past years. We have, however, now completed a review of our second half 2021 priorities and opportunities to improve our capital intensity, looking at it through a Thungela lens. This work delivered the targeted savings profile for the second half as well as some deferrals of projects that are not yet time critical. As a result, we are now comfortable to confirm full year capital expenditure outlook at the low end of the capital guidance range, so approximately ZAR 2.6 billion. We have started a similar review of the 2022 CapEx plans and expect this work to be completed in the last quarter of this year. We also continue to study a number of lifex project options to determine the most optimal development path and potential sequencing, assuming these projects attract capital investment based on the relevant investment evaluation criteria. As mentioned a bit earlier, we started our journey as a stand-alone listed business in a very enviable position, finishing June with ZAR 3 billion in net cash as well as healthy inventory levels. In addition, we spent around 50% of our full year capital expenditure forecast, which is high in percentage terms for the first half of the calendar year compared to past calendar years. Furthermore, based on our history, we also expect stronger production and, accordingly, sales in the second half of the year. If we turn to the Green Fund, again, during the first half of the year, we invested the full ZAR 188 million to further improve our environmental liability coverage, which, coupled with the ZAR 3.1 billion already held in trust, improved our funding coverage to 52% at the end of June 2021. This is up from the 47% at the end of December 2020 on a like-for-like basis and clearly also benefited from the recovery in asset prices in the first half of 2021. We are satisfied that our exposure to current environmental obligations is adequately provided for in our balance sheet. Based on the work we have done in the first half to prepare our business and, indeed, our balance sheet to operate on a stand-alone basis, we believe that we are very well positioned to generate healthy cash flows through the remainder of the year, assuming prices and rail throughput holds, of course. We, therefore, also expect the Board to consider the declaration of a maiden dividend at our annual results for 2021. With that, let me hand back to July.

Thank you very much, Deon, for that comprehensive overview. Let's now turn to what we expect to see for the rest of the year. We provided the guidance to the market just a couple of months ago at the start of May. And I'm pleased to say that we remain on track to meet this guidance. Today, we confirm the guidance for export saleable production of between 15 million and 16 million tonnes and flat FOB cost per export ton of ZAR 830 for the full year. As Deon has pointed out, we're well on our way to reviewing the appropriate level of capital expenditure with the Thungela lens. Capital expenditure is now expected to be on the low end of the range of ZAR 2.6 billion to ZAR 3 billion previously provided for the full year. With continued strong prices as well as improved performance by TFR through the remainder of the year, the group is likely to achieve positive adjusted free cash flow for the remainder of 2021. Our strong balance sheet coupled with the above paves the way for the directors to consider the declaration of a maiden dividend at the annual results for 2021. This is in line with our stated dividend policy of a minimum payout of 30% of the cash flows from operating activities after funding sustaining capital expenditure. In conclusion, let me leave you with the following key messages. Thungela remains committed to running a fatality-free business. And every effort is made to ensure that everyone returns home safely every day. We expect to see strong coal prices holding for at least the rest of 2021 and potentially into 2022. A key area of focus is operational delivery and settling our stand-alone business to operate sustainably. In order to take advantage of the higher prices, we need the tonnes and we need the tonnes at the competitive cost targets we have set. We continue to work on applying the Thungela lens on both operating and capital costs. On capital, we continue to improve our capital discipline and that -- and the fact that we spent half of our projected capital for the full year in the first half talks to this discipline. Of course, we realized that we do remain dependent on external factors: prices, discounts, foreign currency exchange and TFR performance. We will continue our engagement with Transnet to ensure that rail performance improves in H2. Let me reiterate our commitment to the dividend. At the Capital Markets Day, we spoke to our dividend policy to pay out a minimum of 30% of adjusted operating free cash flow. That is 30% of operating free cash flows after funding sustaining capital on any first basis. In other words, we must end the funds and only then are we able to pay. Now of course, we've only been economically and operationally independent for 1 month. And for this reason, we flagged at the Capital Markets Day that we'll only be paying a dividend -- we will not be paying a dividend at this set of results. For the full year, however, we remain committed to our stated dividend policy. And should price remain strong, we are well on our way to generating positive adjusted operating free cash flow for the remainder of the year, which will pave the way for the Board to consider a maiden dividend declaration at the release of our full year results. With that, let me now hand back to Ryan to take us through Q&A.

Thank you very much, July and Deon. We will now move to Q&A. [Operator Instructions] For who have submitted questions via the webinar platform, I will be reading those out. Operator, please could I ask you to open the line for our first question?

The first question we have is from [ Tim indiscernible] of SPG Securities.

Can you hear me?

Yes, we can hear you.

Yes, we can.

Thank you. Well, congratulations on a great results, good going, the cash flow is good so that also a very good news. When you do the -- [indiscernible] comment on the sort of CDR and the documentation as prepared sometimes almost and quite a lot of trends in the whole world [indiscernible] I wonder if my first question -- I wonder if you could indicates us how your thinking for trends, particularly around the investments and projects, given the whole process which July -- spend is a little bit higher. My second question is on capital allocation. If you look at the cash generation and the current cash balance ZAR 2 billion and the trajectory of cash generated, you guys being a very strong cash-generating company in the current market. And I wondered on capital allocation, you could give us some indication of, let's call it, a buffer cash level like the old, Kumba keeps a ZAR 5 billion cash buffer and then returns more cash to shareholders than the policy beyond those levels. And I wonder if you could just share with us what your thinking of, is of what sort of level of buffer Thungela should retain? And then my last question to you, and it's more of a statement, is that in order to model together -- we really -- it would help us a lot to have your pro forma numbers at an underground open casket and other level. And I certainly haven't seen them. So if they're there, please point me to them. But otherwise, it's going to remain quite opaque with just group level numbers for quite some time. And I wonder if you could just comment on how to help us kind of understand those splits.

Thank you very much for those questions. Just before I ask you like to respond on those, it seems that there is a slight difficulty on the conference call. It seems that those out in the webinar are starting to hear the conference call questions. I'm going to ask your patience for just 30 seconds, that will be resolved.

For now we can repeat the question.I'll repeat the question that I'm answering. Yes. So your first question, Tim, was -- and thanks, Tim, was given the current price environment, and what has changed since we prepared the CPRs, how are we thinking about investments in our portfolio. I guess, Tim, we have said a number of things to the market. And I want to reiterate those messages is, that we delayed in June, we had 2.5 months down the road. The first thing we wanted to do is to get this business to operate sustainably as a standalone. There's a lot of focus still need to do to bed that part of the business. Secondly, we said we also want to make sure that the current asset portfolio that we've got, each asset is delivering to its full potential. And you can begin to see in some of the operating metrics that we delivered, that we're reporting to in terms of cost, in terms of productivity improvements that, in fact, we are well underway. And I think the work we've done on capital does provide that testimony. We've also said before we make any major investment decisions, we wanted to look at our capital intensity from a Thungela lens point of view. However, we were studying some opportunities that we've got for life extension. Deon always reminds me that, this is not exactly a brownfield opportunity, but it could be greenfield depending on how you think about it. We'll continue to start those concurrently. We also say very clearly, and I want to repeat this because that's quite important, that our investment criteria is not just going to be driven by how attractive the prices are. It's going to be driven by a number of factors, some of which are capital intensity, how competitive these projects are because this is quite important because if we invest on the basis of short-term price improvements, we run the risk that we invest in the wrong projects. We only want to invest in those projects that are short pay back, that enhances shareholder returns, that are in the right part of the competitive curve. None of those factors have changed as a result of the short-term price improvements that we've seen. We however said that we'll take our time and to be very intentional and deliberate to study and understand the long-term fundamentals of the markets within which serve. We believe that they are very attractive, but what those will do from a scenario point of view given policy issues and all other issues in terms of being price supportive is something that we need to bottom out and that will obviously determine how we think about investments in the shape of our portfolio. The last comment I'll make on that subject, Tim, is that as other trends continue to emerge. There clearly are opportunities that are beginning to emerge as people exit their own assets, that obviously a company like us we're a pure-play thermal coal asset can't ignore. But we're not at a stage where we need to rush into making investments. We'll look at the opportunities. We'll consider them carefully and make considered decisions. Then your next question was on capital allocation, give us an indication of buffer. Deon can answer that one just now. Your last question, actually, let me deal with that which is the segmental reporting. Yes, we've given you a portfolio picture, partly because we do run this as a portfolio rather than as a mine-by-mine consideration. But we hear the feedback and the comments from the market. We will look at that particular aspect and consider whether we can provide more detail on a go-forward basis. Deon, if you want to add to that one because I know it's an important one to you and then deal with the capital question.

Yes. Tim, absolutely, so as you might have picked up so far you've seen in the booklet that we've published. We've gone to great lengths to unpack primarily IFRS given that is driven from a regulatory and compliance requirement given our listing venues. And as a secondary concession, we were able to share level of pro forma information based clearly on the exception to the rules. We are motivated to share more information to the extent that, that is indicative and pro forma and very happy to extend and grow what we show over time to ensure that it gives the readers of the numbers the right type of information to make considered decisions. If I move to the cash buffer, we've not set ourselves any particular cash buffer, recognizing as we sit here today, we've been independent 2.5 months. A month of these results are really as an independent as we've noted. We started our journey with ZAR 2.5 billion cash and that was well considered given that it represented around 4 to 6 weeks at the time of spend. So that's all OpEx, CapEx and the like on a sort of rolling basis and gave us working capital comfort. Clearly, that type of number, therefore, is a good reference for us to keep in the back of our minds, and it will give the Board a good reference point also or as a starting point at least, recognizing that there are other potential cash investments and outflows that would need to cater for. One feature that clearly is more in our minds today as we sit here than what it was a couple of months ago is the TFR performance. And clearly, we are, therefore, comfortable that our balance sheet is really strong with that ZAR 3 billion in cash, given the volatility of the performance of rail throughput and our dependence on export revenue and, therefore, cash flows. So to answer your question short, no, buffer, no explicit number at this point in time, but absolutely top-of-mind for us to apply our minds when sit down to look at our capital structure into the future and in particular, as we start debating the appropriate level of the maiden dividend.

Right. Just I mean just a brief follow-up on the segment reporting stuff. I've covered Anglo for a long time and we've had reporting of their production mine by mine for all that time. So it would just be useful even if we just got production mine-by-mine total sales per division and then divisional splits, that would help us. Because at the moment to model with the portfolio level, just means we have to put uncertainty discounts into the model extensively, right? Because there's so much aggregation that's going on that we can't see the details of. So just a suggestion from my side. And congrats on the results.

Thanks, Tim. Noted.

Thank you very much for that. I've been assured that the technical difficulties have been resolved. So operator, I'm going to ask you to open the lines for our next question.

Of course, the next question we have is from Ben Davis from Liberum.

Can you hear me, guys?

Yes, Ben.

Yes, we can hear, Ben.

Cracking results. You picked a very good time to list. A couple of questions from me. Firstly, on -- you've had this sort of unintentional working capital because of trends now. I was just wondering what is the approach to that? Is that saying do you have much scope to increase those more? If there are further disappointments just to maintain productivity? Or is this sort of maximum level that you're happy with at the moment? And then the second question is just a clarification on the dividend policy. Is it post -- pre or post working capital changes? And also, is it reflective of the profile pro forma full year or from when you started trading?

Happy to pick those but if I forget to touch on a particular point, just please do remind me. To start your first part of your question, not all of the working capital build was unintentional. If you look at Page 119 of the PLS, you'll see in the operational outlook section, we've explicitly flagged that we envisage the replenishing of inventory, mainly as a result of selling down stocks in the last half or last quarter of 2020. As you might recall, prices started improving in 2020 from sort of mid-November. So part of it was intentional and part of the plan in order to also get us ready so that from the date of demerger, we are able to also implement the new arm's-length agreement with the Anglo American Marketing business, whereby we would then have sufficient stocks to deliver into that agreement. Part of the working capital build was not planned and intended. That part was clearly the receivables component. But that's mainly, as you probably know, driven by the higher realized prices and therefore, our receivables, which typically on exports, we get around 14 days after the end of the month was fairly pronounced at the end of the year given when prices started improving more rapidly towards the latter part of H1. So that's just apologies answering that first intentional, unintentional working capital build question. When we look at how much more headroom we have in working capital. Clearly, that is very much a one-off that I've spoken to now unless prices continue to climb as you can imagine. But we have continued to stockpile at mine, which is not ideal for us because ideally, we would like to enjoy stockpiles at port that gives us more flexibility to take advantage of market prices. We still have some room at most of our operations to increase that stock build. And clearly, in all the work we're doing with TFR if we are able to maintain at least the current pace, then we have time to build before we are -- we'll have to start unwinding or take alternative steps and measures to mitigate that type of productivity, throttle back in order not to run out of stock space. But that's something we're monitoring carefully, and we haven't made any decisions at this point. We have a bit of time to make that call if indeed, the unfortunate outcome is that we wouldn't need to make a decision. So that's on the working capital bit. In determining the operating or adjusted operating free cash flow, you would see in the alternative performance measures. We've defined adjusted operating free cash flow as a measure of operating free cash flow after funding what we term sustaining capital, which is essentially stay in business as well as our -- all of our spend in and around our existing installed infrastructure. So actually, the measure is net of SIB. Clearly, what plays into operating free cash flow is also the working capital build. So you would see that it plays in. But at these type of prices and if that working capital build is driven by a continued increase in price and, therefore, receivables. Clearly, the Board has the level of discretion to assert that it's a minimum of 30% rather than necessarily an absolute. And those factors will clearly be taken into consideration in making that type of decision. The last part of your question been related to the period that it would cover. Recognizing that Thungela's economic independence really started on the 1st of June, any and all generation of cash or otherwise up to the end of May was really for Anglo American's benefit and indeed, its shareholders benefit or cost. And as a result, when you look at Page 12 of the pre-listing statement, you would see that the second last sentence talks to admissions and then it goes on and talks to our first maiden dividend to be declared -- sorry? So our first -- the first dividend to be considered to be declared at our full year results. And then we said it would relate to the second half of the year. Clearly and practically, we would consider, therefore, the 7 month period starting from 1 June to the end of the year as we debate the appropriate level of dividend at the annual results.

Excellent. Thank you very much for those questions, Ben. Operator, if we can take our next call on the line please.

The next question we have is from Brian Morgan from RMB Morgan Stanley.

Congratulations. So just a couple of questions from my side. Do you have any quick wins that you can take advantage of in this very high coal price environment? For example, and I'm not saying just as an example, you closed Bokgoni 2 years ago. Could it be reopened? Do you have any other mines like that, that could be restarted to take advantage of the high-price environment, notwithstanding, obviously, infrastructure constraints that we do have right now, which hopefully are transitory and will resolve themselves at some stage. Do you want me to do one at time or should I give them to you all in one go?

As you wish, Brian.

As you wish, Brian.

Can we take it one by one?

Okay. Let me answer that one. Operating or closing mines are big decisions and sometimes can be very costly decisions. You would not want to take that decision lightly. In answering Tim, if you listen to me, I said in our portfolio, we want assets that are competitive. We put Bokgoni on care and maintenance because it didn't quite fit that criteria. And I think the results actually show that it was the right decision. I would not rush to reopen it purely because at current prices, short term, it generates cash when actually strategically it doesn't fit our portfolio. So I wouldn't do that necessarily. Would we go out and look for quick wins? And you know it as well as I do opening mines is not a short-term thing, it's 2 to 3 years before you actually open it. And therefore, if you're going to do that, you want to have conviction about the medium to long term about where prices are going. Our opportunities are actually around our portfolio, making sure that this portfolio is delivering to its full potential, and we see value in that.

And Brian, if I can just add 1 or 2 things to what July sort of addressed the broader strategic point, which is spot on. But there's one further point to be made on that. If you look at Bokgoni, for example, whilst it was clearly in the bridge that we showed you on earnings the right decision to have closed it, I've also sort of reflected once or twice over the past day or 2 whether given what we've now seen in prices whether indeed it was or wasn't the right decision. Because that bridge is clearly based on the negative earnings of last year. If we overlay current prices that we've received year-to-date on a realized basis, it's a marginal decision, so given the higher prices. However, given the continued capital spend, it would have been the wrong decision. And in particular, given the current TFR challenges, what we consistently do is rank all of our coal from the highest to the lowest margin. And clearly, what we want to prioritize down the rail is the highest margin coal. And Bokgoni would not feature in that anytime soon. In fact, there's possibility that other coal that isn't in production today might rank even before that. So just to close off the financial analysis of your question.

Okay. That actually segues the next question very nicely. You obviously do you rank your products in infrastructure constrained environment right now. So presumably, you would be going out to the higher calorific content coal and maybe you would be going back on your secondary and middling products. I see you're still buying in quite a lots of coal. Is there a contractual obligation to buy in coal? And or is it more sort of ad hoc?

Yes. So Brian, on the first part of your question on the relative ranking, absolutely and on opportunities to therefore, to go back to your very first question, are they short-term opportunities. That is exactly it. How do we optimize the current constraint that our business is facing, and therefore, the ranking is extremely important. In terms of -- apologies, can you just remind me your...

He says we're still buying third-party...

Yes. So the third-party goal is really a feature of the past rather than the current as we sit here today because clearly, if you look at the rail constraints, that's not necessarily something that features clearly or is able to enjoy rail capacity. So it's much more a past issue than a current issue.

Okay. So you can say you're buying less coal now?

Absolutely. As we sit here today, there are a couple of anomaly contracts, as you can imagine, that has a longer period, but it's very, very small in current terms compared to what it was in the first part of the year.

So would you agree that in the current environment that actually pays you to be net long on rail capacity, if you like?

Absolutely. I think anybody in the country that's not long on rail is -- will benefit certainly from that proposition given current prices.

Okay. Then on the derivatives, the derivatives of P&L and the capital support. Is that -- did you book that just once? Or can we expect to see that every half for the next 18 months?

Yes, I saw your note this morning around the noise in H1. You're absolutely spot on. There's lots of noise as we prepared our business for demerger, which clearly you've seen through. This is one particular feature, which is exactly the same. We booked it in around March as IFRS compels you to book it when you sign that derivative contract rather than necessarily its effective date on the 1st of June. We booked it at ZAR 916 million. We had to take the charge of ZAR 584 million, which leaves around ZAR 332 million on the face of the balance sheet at the end of June 2021. With continued improved prices in terms of the forward curve, I expect currently most of that to also have to be booked. So you can probably, therefore, expect a further ZAR 332 million negative charge if we're lucky. And what I mean if we're lucky is clearly if prices continue to remain really strong.

Okay. Very good. And then just to reiterate what Tim was saying, I'd also really like to see production data by mine. It just helps us a great deal to model that with mine, et cetera.

Thanks for that Brian.

Just little bit of feedback there to.

Thank you very much for those questions and the feedback, Brian, much appreciated. Operator, if I can ask to take one more call from -- one more question from the calls before I move to the webinar questions.

Of course, sir. The last question we have is from [ Andre Peters ] from Rezco Asset Management.

Can you hear me clearly?

Yes, we can.

Firstly, congrats on the results. Just 1 or 2 quick questions. First one, quite simple. In terms of Page 16 of the results presentation, the exported equity sales, would that include Zibulo on a 100% basis or on an attributable basis?

It would be on a 100% basis and that we consolidate 100% of Zibulo.

Okay. Okay. And then I'm assuming Mafube would be on a 50% basis.

That's correct. I recognize that we also -- we enjoy 50% of Mafube's economics. Whereas in Zibulo, it's a bit more of a complex structure given some of the historic debt and then Zibulo therefore given the debt structures and some of that repayment that takes preference. We also enjoy the lion's share of the economics at Zibulo.

Okay. That's helpful. My next question is just around CapEx and lifex opportunities. Can you maybe provide some color in terms of how you think about order of preference currently of lifex opportunities? So in my mind, I would think Zibulo first, Khwezela second and then Goedehoop probably last or less likely slightly. Can you just add some color there on how you think about them?

I wouldn't just rank them just yet for a number of reasons. I mean as we improve the performance of these mines their ranking could change. That's one. Secondly, we also wanted to look very carefully at the capital intensity of these mines, of these new projects to make sure that we're only investing in the right project. We also wanted to understand their payback, where they are on the cost curve. I think where you potentially write is we did share the 3 projects on the Capital Markets Day. We said Zibulo -- in fact, 4. We said Zibulo, Elders, Khwezela and Mafube. I put this is not entirely wrong, but I didn't put a pin on ranking them just yet.

Perfect. Thank you very much for those questions, [ Andre ]. I'm now going to move to a couple of questions that have come in through the webinar. The first one is from David Baker at Baker Steel. The question, will the Board consider a share buyback as a means of capital return as opposed to a dividend?

Yes. David, clearly, all methods of returning cash to shareholders will be on the table. And clearly, there are certain advantages in the methodology that you're scratching it. In particular, in certain jurisdictions, and we do shareholders from those jurisdictions on our register also. So as we consider returns to shareholders all of those options will be on the table in order to come out with a balanced decision as to what that performance shape looks like. We are not in that position today, as you can imagine. And it's very nice to hear everybody predicting the cash generation based on prices. But we still need to see that in our bank account before we're able to necessarily have all of those debates in the fulsome manner.

Thank you very much, Deon. Deon, I think the next one is a related question. So I'm going to put it to you as well. The next one is from [ Nick Keher ] at Signal. The Richards Bay prices are currently over ZAR 2,000 per tonne. At these prices, Thungela is earning abnormal profits which could exceed the enterprise value of the business. Can you talk about the sustainability of these prices and the current discount to the benchmark price. What impact will the windfall profits have in the dividend policy? Will you consider a special dividend?

Nick, So I think your observations are correct. But also recognize that a realized price is average of a longer time series rather than necessarily only the price as we observe it today. And we also don't necessarily sell our coal on a spot on a particular day's price, but rather on an average of a period, such as a month, based on contractual commitments. So just to put them in perspective. Notwithstanding what I've just said, the full cash generation could easily trump the measures that you've cited. And therefore, it begs to question, is this sustainable or not? We don't really necessarily comment on the short-term price volatility and movements as we don't believe anybody can get that perfectly right. We're, however, quite comfortable and confident. And as we've said before, that the supply and demand dynamics in the structure of the thermal coal market into the east, not necessarily into the west, it continues to look very attractive. And therefore, the discussion that we continue to have is clearly the deployment of the future potential cash generation of this business, recognizing we've got 2.5 months of independents behind us. So it's really very much a forward-looking rather than a historic discussion. And in that, if you read our stated dividend policy carefully, you will see that the board is committed to a minimum of 30% of a particular measure rather than necessarily a cap. So the Board really has headroom to do the right thing for shareholders that opted to embark on this journey with us.

Thank you very much, Deon. The next question is from [indiscernible] Matonzi at Investec. Can you please comment on the quality of your product and the extent that you can potentially narrow the discount to the benchmark price in the second half of 2021 onwards?

Happy to take that. Our quality period-on-period has been broadly consistent in terms of CV, terrific value. And we, as I mentioned earlier, and optimizing the single biggest constraint, which is rail. Clearly, we're looking at options to ensure we -- that we rail the highest-quality product that we can possibly rail. That helps with the total discount. If you look at the first half, the discount was around 23% to the benchmark price compared to last year's 26%. So it's already narrowed a bit and that's really driven primarily by market forces. But in the last month of the last 6 months, the new agreement with Anglo American took effect. And under that new agreement, the marketing fee moderated to very low single-digit percentage versus what we've paid up to the end of May. That agreement, therefore, continues into the future. And all other things remaining equal, you should therefore see, and I'm not talking if I say all other things, I include market forces. So if the market nonlinear discounts remain consistent, just as a mechanic of the new agreement, you should see our discount, therefore, also narrow. And we think it could narrow to around 20% ceteris paribus.

Thank you very much, Deon. The next 2 questions are both related to railings. The first one is from Siphelele Mdudu at Excelsia Capital. The wagon coal train development impacted the ability to build stock at Richards Bay Coal Terminal, later the TFR plant maintenance shut, which was completed in July. How much stock do you currently have at RBCT? How do you plan to increase the stock build up?

So before we go into sort of any detail, I mean, recognize that we speak of TFR as if we have not railed at all, which is not the case. So a stock position at a point in time or on a particular day isn't the most relative measure. What's much more important for us is a consistent throughput of trains. Every train that comes in, we know it's 8,300 tonnes that goes out the door. And therefore, if you mathematically calculate it, we need around 50 trains a week for us to feel comfortable and happy about the world. So to us, rather than a particular stock position, and we were in a good stock position prior to shut, so our sales were decent during the shut. But having said what I've just said, it is the momentum of the throughput rather than necessarily where we were at a particular point in time because that could change rapidly if the train performance is materially below what we require or expect.

Thank you very much, Deon. July, I'm going to give the next one to you. It's from Benjamin [indiscernible] from Investment Group. Unreliable rail services at the Richards Bay Coal Terminal continue to constrain South Africa's coal exports in general. What assurances have been provided to you that this will improve in the short to medium term?

I guess the word assurance is a -- could have legal connotations that if we don't get it, there is recourse. I think what we've done as an industry is to engage very meaningfully with translated all levels, in particular, the senior leadership. As I said right at the outset, I mean, they've been very open and transparent about the problems that they're having. Issues of crime in particular, copper cable thefts is something that is bedabbling even the mining industry. We've agreed to work with them. We, as the coal industry, most affected by the corridor disruptions agreed to another shutdown to improve the availability of locos. They've just come out of that shutdown. And they've asked us to give them some time to get back to stability. But having said that, I think the most important thing is not a blissful promise that we'll get things right, but actually is a commitment by Transnet's leadership to say, let's engage let's work together, let's understand what is going on. Let's share with you the action plans that we've got to improve the situation. And let's see where we can work together with yourselves. And that, I think, is something that we appreciate. My own conviction is that these problems are transient. We will resolve them over time. How long it will take, I think, would depend on how quickly we can execute on the plans that Transnet has shared with us as an industry.

The next question is from Thibault Levacher at S14 Capital. It looks like Thungela is on greater than 110% spot free cash flow yield and greater than 20% yield using the Richards Bay 2023 forward curve. How do you plan on making sure the full value of the company is realized for current shareholders?

So I think I've addressed the gist of the question. So your math is a bit higher than mine, but address the substance of a question in that dividend policy clearly allows the company to do more than what the percentage thresholds are that we were talking about. And clearly, if the cash generation on a forward-looking basis, which is what you flagging materializes, it puts us in a very healthy position to answer your question more than just verbally.

Thank you very much, Deon. The next question and there are actually a couple of questions in here is from [indiscernible] at Investec. Can you please give more color on how we should be thinking about the lifex extension projects, time lines and related costs. to address the short life of mine concerns.

So the answer to that question, we said we are likely to make any decision, material lifex decision unless there's something compelling to accelerate something before the end of 2022, maybe beginning of 2023. And the reason for that really is a practical issue. It's not because we don't recognize the short life issue for our mines, but actually is to allow us to reset our capital intensity and the competitiveness of these projects so that actually we can inform you much more clearer what capital you can put into your models in terms of those projects. What we have ever done is to give you a sense of where those projects are and what kind of resource quality we're talking about and how competitive they are likely to be.

Thank you very much, July. Deon, the second part of [indiscernible] question, I expect will be for you. Is there any portion of the unused tax credit ring-fenced to certain structures/entities within the group? Or can that be utilized against consolidated income?

The tax credit sits mainly in an entity called TOPL, previously AOPL. I think you might recall that we flagged that at the end of last year that the gross number was ZAR 5.7 billion. And then currently, it's around ZAR 1.6 billion, ZAR 1.578 billion. And that number is clearly, therefore, only available to profits that we generate in that AOPL or TOPL entity, which owns a number of our mines, excluding Mafube and Zibulo. However, for experience and given a number of other corporate reasons, we have had to structure that AO or TOPL remains our key single marketing entity opposite Anglo American and other buyers of coal. And therefore, Zibulo and Mafube coal is sold to that AOPL/TOPL structure. And there is, therefore, a broadly an ability up to a certain level to ensure that our affairs are optimally structured. And you also obviously see that if you look at our income statement, and you'll see that the cash tax number was around ZAR 20 million in the first 6 months of this year.

Thank you very much, Deon. Deon, another question for you coming a second question from Siphelele Mdudu at Excelsia Capital. In your cash flow statement, you show ZAR 1.7 billion working capital outflow. Is this likely to turn in the second half of the year? Why the large increase in trade and other receivables?

So let me answer the -- hi, Mdudu. Let me answer the first part of Mdudu's question first, which is you are correct, and it is about it's just over ZAR 1.7 billion. That's the cash component. The actual working capital build as you might see in the balance sheet is slightly higher than that, but that's the cash component, you are correct. The second half of the year, and let's take each of the elements more explicitly. Inventory is very much a factor of ourselves and what we expect to see in TFR. So absent absolute clarity on what we see in TFR, very difficult to comment on that. If I'm a betting man, I would have argued that inventory is likely going to remain fairly stable in the second half of the year given that we had to and we wanted to replenish up to a certain level and if we clearly want to sell everything that we produce in the second half. If I talk about accounts receivable, that's really not entirely in our control because the lion's share of that increase in the AR balance was driven by higher realized prices. And there, at the measurement period at every end of every month, the actual receivable that we are likely to get is higher as a result of the higher realized prices. Clearly, if prices continue to increase, that number should also increase and there will be a further working capital build on that item. However, we do have the opportunity clearly to convert that to cash within 14 days after the end of such a reporting period. There was also a bit of other noise in that, in that prior to the demerger. We also, in order to set up the business sustainably, Anglo American made a number of prepayments, insurance and otherwise, which also reports through that particular category of working capital. I hope that, that answers your question. But it's therefore more complex than just an overarching answer of yes or no. Apologies.

Thank you very much, Deon. Then we have another question from [indiscernible] Matonzi at Investec. Does the support that you will still receive from Anglo include the decarbonization program to reduce the carbon footprint of your operations?

We are an independent business from Anglo American since demerger and there isn't a technical support agreement. The particular aspect you're referring to is an IP owned by Anglo American and the best people to answer whether they will share that IP would be Anglo American. However, what they said really is that given our history, we should be able to share a lot of the learnings. But I can't answer whether they will share their IP with us or not because that will be presumptuous on behalf of Anglo.

Thank you very much, July. Then we have another question from [ Nick Keher ] at Signal. 100% of Thungela's assets are funded with equity. Do you use EVA when deciding to allocate capital? What cost of equity do you use? Does the Board apply their mind to the cost of equity? And what strategies have been considered to drive down this cost?

Let me take that question. Thanks, Nick, for that. There are 2 parts of my answer. So the first part, you have to have some level of empathy in that having operated for just over 2-and-a-bit months, this is not necessarily a discussion that is front and center just yet. Our focus as a board and the management team has been much more focused on operating the business through challenging times. I'm not only talking about COVID and TFR, but clearly settling a business post the process that we have been through. So apologies, that's just the first part of the answer. To the second part, we've previously said that as we look at our WACC, we recognize that we have a single commodity, single country coal operator. And as a result, we necessarily expect to see a higher WACC than some diversified miners might experience. And therefore, we were not blind to the fact that our cost of equity and our cost of capital is elevated. And therefore, the hurdle to approve any capital project is really higher and that is natural. But when we look at those projects that July mentioned earlier and evaluating them, project evaluation is much broader than just even one measure of EVA. I think it goes into the nature of the project and the life of the project and how many cycles of coal price that project might see if it's a longer life versus a shorter life, the payback on the different pricing scenarios. Obviously, the IRR and the IRR over the WACC, and I can go on for -- I think it's a holistic assessment of a project rather than necessarily one particular measure. But the one that you're talking to is very important given we know exactly who we are. Thanks, Nick.

Thank you, Deon. Thank you, July. And thank you to everyone on the call and the webinar for your questions. Unfortunately, I will have to wrap up the Q&A session here. If we are not able to get your question today, please keep in touch with me via e-mail. My e-mail address is [email protected], and I will get back to you. With that, please let me hand back to July to close out the day.

Thank you very much, everyone, for joining us for our interim results. Quite an exciting time for us. And I'm pleased to say that we remain on track to deliver on our ambition, to deliver on our purpose, to deliver on our short-term targets hoping that we have shared with you that we are making good progress in setting this company to be quite an attractive pure-play thermal coal asset that will deliver value to the shareholders. Thank you very much.