Valterra Platinum Limited (VAL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm Leroy Mnguni, Head of Investor Relations for Volterra Platinum. Thank you for taking the time to join us for our 2025 final results, both in person and online. Let me start by welcoming our Board members who are here with us in the room today as well as our executive leadership team. From a housekeeping perspective, we do not have any fire drill planned for today. Therefore, if you hear an alarm, we request that you exit the venue safely through the doors at the back. For those of you that are near the front, please note that there are exits on either side of the venue on the lower level as well. Our fire marshals and security officials will be stationed outside the venue and will escort us to a designated assembly point. To draw your attention to the cautionary statement, I would encourage you to read it carefully in your own time. Now for the agenda for today. Craig Miller, our CEO, will take you through a brief overview of the significant milestones achieved during 2025, followed by a review of our operational and market performance. Sayurie Naidoo, our CFO, will then take you through the financial results. Finally, Craig will wrap up the presentation. As usual, we've allocated time for Q&A at the end of the presentation. I'll now hand over to Craig.

So thank you, Leroy. Good morning, everybody. And once again, thank you for joining us. I'd like to begin by reflecting on safety. So tragically, we lost 2 of our colleagues in work-related fatalities during 2025. Mr. Felix Kore at Unki Mine on the 20th of April and Mr. William Nkenke at Amandelbult's Dishaba mine on the 22nd of July. We extend our sincerest condolences to their families, friends and colleagues. The lessons learned from these tragic incidents are being implemented across our organization. And while we mourn these losses, we also recognize that we've made good progress on safety overall, and we've achieved a number of milestones at our operations, including 14 years without of fatality at Mototolo, 13 years at Mogalakwena and 9 years at Amandelbult's Dishaba mine. We've also improved our total recordable injury frequency rate by 11% to the lowest level in our history, placing us in the leading quartile amongst our peers. Safety remains our highest priority with our unwavering focus on achieving zero harm. Our teams are committed to proactively preventing injuries, and we will not compromise on safety under any circumstances. We're also fully dedicated to delivering on the commitments that we have made. And with that in mind, I'm delighted to say that 2025 was an exceptional year for Valterra Platinum despite navigating a challenging external environment. Some of the progress highlighted here reflects discipline in action from strengthening our operational excellence to executing consistently across all of our strategic priorities. Most significantly, we launched as an independent company, having successfully completed the demerger from Anglo American plc as well as our secondary listing on the London Stock Exchange. Subsequently, Anglo American plc sold their remaining minority interest, fully completing their divestment from Volterra Platinum. Our simplified organization structure has been well embedded with a reconstituted executive committee focused on the delivery of the strategy with clearly understood accountability lines. We've reinforced our operational capabilities through the recruitment of critical skills and services, and we will have exited all of the transitional arrangements with Anglo American by the end of 2026. Our reconstituted Board comprising of 11 nonexecutive directors and 2 executive directors brings the required diversity of experience and expertise. Our relentless pursuit of operational excellence has delivered a really good performance, having exceeded our production guidance despite the weather-related impacts experienced in the first half of the year. Financially, we exceeded our targeted cost savings in 2025, which has brought our total cost and capital savings delivered over the last 24 months to ZAR 18 billion. I'm particularly pleased with this result given the macroeconomic factors impacting our cost base. Our entire organization is focused on maintaining this cost and capital discipline, notwithstanding the higher commodity price environment. And as we've previously said, each of our assets plays a well-defined role in the portfolio, and I'm glad to report that they have all contributed to the progress during 2025. Our extensive endowment of mineral resources provides an exciting growth prospects for Valterra Platinum, and I'll take you through the progress that we've made developing these projects, particularly Sandsloot and Der Brochen in just a few slides. We continue to actively seek opportunities with industry players to drive demand to ensure the long-term success of our industry. Over the past year, we've maintained our focus on enhancing PGM usage in mobility, jewelry and investment. And on the industrial front, the recently announced partnership with Johnson Matthey and Sibanye-Stillwater is evidence of our commitment to working with industry players to grow industrial demand. And we would certainly welcome other producer peers to join us in this venture and of course, not to preclude us from working with other fabricators in other areas. And finally, the recognition of Mogalakwena by the initiative for Responsible Mining Assurance with a 50 accreditation means all of our mining operations are now accredited. This is a rare global feat that sets us apart in the mining industry and reaffirms our commitment to embed sustainability into absolutely everything that we do. So now let's dive into the detail of our performance. I am encouraged to see the delivery of our strategy has led to an improvement in our underlying performance. While we've obviously benefited from the increase in the PGM basket price, the drivers of which I'll walk through a little bit later, the 68% increase in EBITDA is substantially supported by our internal actions as well as that macroeconomic price environment. And consistent with our commitment to drive down our all-in sustaining costs in real terms, we've consistently driven down that all-in sustaining cost and have maintained this at below $1,000 per 3E ounce. Our balance sheet has strengthened materially over the second half from a ZAR 4.5 billion net debt position at the end of June to an ZAR 11.5 billion net cash position at the end of the year, reflecting the outstanding free cash flow generation. This has allowed us to pay a special dividend on top of our base dividend, bringing the total dividends for the year to approximately ZAR 12 billion. It's certainly not just our shareholders who are benefiting from the additional value that we are creating. As you can see, Valterra Platinum continues to be a significant contributor to both our local communities and the broader South African economy through the combination of local procurement, capital investment, social investment and of course, salaries, wages, taxes and royalties. All in all, we've contributed more than ZAR 83 billion to our stakeholders. Valterra Platinum is truly playing its part in sharing value to better our world. So turning to a bit more detail on our operational performance. We outperformed on operational delivery this year due predominantly to the improved performance in the second half of 2025 when our operations demonstrated far greater stability and efficiency underpinned by our focus on safe and responsible mining. A record number of tonnes were milled at Mogalakwena, which helped to more than offset the weather-related decline at Amandelbult, resulting in total tonnes milled increasing 1% year-on-year. Amandelbult's strong second half performance, aided by the faster-than-anticipated ramp-up to steady-state volumes exceeded guidance with total production at 484,000 ounces. Our mass pull improved by 9% compared to 2024, underpinned by notable improvements at Mogalakwena as well as Amandelbult. Overall, our refined production, which was supplemented by inventory optimization, exceeded our 3.4 million ounce guidance. Sales volumes included refined margin -- refined inventory destocking totaling close to 3.5 million ounces. So delving now into the performance of some of our assets. Mogalakwena's pit optimization efforts led to a clear improvement in its operational performance. Our strip ratio has declined 22% to 4.5x. This means that we mined 15% more volumes despite an 8% reduction in total tonnes mined. The efficiency improvements have allowed us some flexibility in the selection of ore grades. So in line with our value over volume strategy, we've been able to process some of the lower-grade stockpiles while still reducing unit costs. This has resulted in the lower head grade, which was offset by higher tonnes milled, delivering similar ounces to what we achieved in the prior year. I'd like to take a brief moment to really emphasize that these developments provide a significant value-enhancing opportunity for Mogalakwena. We can mine fewer tonnes and supplement the expert ore with surface level lower-grade ore stockpiles, resulting in lower operating cash costs, while our volumes are maintained within our guided range. But most importantly, we can keep this Tier 1 asset anchored in the bottom quartile of the cost curve. Other operational excellence initiatives at Mogalakwena have resulted in notable improvements in both mining and in concentrating activities. We've seen a 9% advance in drilling efficiencies and a 15% improvement in redrills, while our load and haul efficiencies have improved 24% and 18% year-on-year, respectively. These positive developments have started to materialize in lower operating costs and together with the benefits of higher co-product revenues has resulted in an 8% reduction in our all-in sustaining cost to $835 per 3E ounce. And so no doubt, you're all keen for an update on the Sandsloot underground, not only because it's genuinely exciting, but because it has the potential to truly move the needle. Here's a reminder of why this project has the potential to be a significant strategic catalyst for Valterra Platinum. Our declines begin at the base of the Sandsloot open pit, providing close access to the reef. This substantially reduces project lead time and lowers capital intensity compared to other projects in the industry. Unlike other Bushveld complex reefs, its height is between 40 and 120 meters with a 45-degree dip on average, characteristics well suited for bulk underground mechanized mining. At 4 to 6 grams per tonne, the reef is materially richer than other mechanized mines in the PGM industry. Growth uplift is driven by higher grades rather than increasing volumes, enabling us to leverage the existing concentrator and tailings facilities. This approach will save us billions in upfront CapEx and costs. And this year, we plan to commence trial mining, which will provide critical inputs to our comprehensive feasibility study. The conclusion of the prefeasibility study has reinforced our confidence in the 10% to 50% uplift in Mogalakwena PGM volumes and a 10% to 20% reduction in costs that we've previously communicated, numbers that we believe will truly move that needle. With the scale of the opportunity in mind, over the past year, we've made great progress in bringing this closer to reality. The team has completed a further 30 kilometers of exploration drilling, which has informed the total upgrade of 13 million ounces to measured and indicated mineral resources, which is available for future ore reserve conversion. The underground development has advanced a further 3.2 kilometers, while the team also successfully completed the pass for the ventilation shaft 1. Trial processing of the bulk ore stockpile is underway, which has accumulated to approximately 80,000 tonnes by year-end. And we've invested about ZAR 1.4 billion in CapEx to advance the project, while over the medium term, our CapEx guidance remains unchanged. I really hope that you're as excited about this as we are given the potential of this opportunity for Valterra. So moving on to Amandelbult. I am incredibly proud of how our teams responded to the flooding. Not only did their decisive actions ensure safe and responsible evacuation of all of our employees, they also accelerated the dewatering well ahead of plan and enabled a faster-than-expected ramp-up to normalized production. So a huge thank you to everyone that was involved. And as I've mentioned, this has enabled Amandelbult to exceed its revised guidance in the second half of the year with the second half performance outperforming that of what we achieved in 2024 despite Tumela mine only reaching steady state by September. This performance highlights the strong operating potential of this asset with our 2026 guidance indicating an approximately 25% recovery. Despite the severe flooding impacts, Amandelbult delivered positive free cash flow, further supported by the insurance proceeds. The resilience of the quality of this ore body with its favorable prill split and rich chrome products driving the highest basket price in the PGM sector at around $3,000 per 3E ounce at current spot levels. So moving on to Mototolo. The Der Brochen project development has progressed well through 2025 with all development ends successfully intersecting the reef having navigated the [indiscernible] zone. Total develop more than doubled, reinforcing the long-term optionality and sustainability of the operation. We also achieved a 9% increase in immediately available ore reserves, enhancing near-term operational flexibility. At Mototolo, our operational excellence initiatives delivered a 12% productivity uplift. Despite the dilution from the development tonnes, production remained consistent with that of the prior year. So looking ahead, the ramp-up of the new, more efficient Der Brochen mine with the continued improvement in chrome recoveries and further optimization of the 3 declines are expected to drive Mototolo's cost further down the cost curve. Our processing operations have also seen improvements beginning with our upstream performance. We achieved a 1% to 2% improvement in concentrator recoveries at both Amandelbult and Mototolo, aligned with our strategic objective to enhance recoveries and improve margins. At Mototolo, recoveries -- sorry, beg your pardon, at Mogalakwena, recoveries remained flat, a notable achievement given the 13% reduction in our mass pull. Amandelbult's 7% reduction in mass pull also contributed to the reduction across the business. And I have already mentioned Mogalakwena's record milled tonnes were supported by the ongoing improvements in plant availability and proactive investment into reliability. And so now for the much anticipated update on the Jameson Cells. Sorry, that was like really dramatic, I'll take a sip. We have optimized the plant to further deliver improvements following the first half commissioning. And we are expecting additional improvements at the Mogalakwena concentrators on top of the 13% I've just mentioned as optimization continues and the plant's annualized impact is realized. We're also really encouraged by the almost 1 percentage point improvement in the adjusted North concentrator recoveries since the commissioning. And while the recovery uplift was not the primary objective of the introduction of the Jameson Cells, the team is optimistic that further improvements may follow. So to put that impact into perspective, volumes at the Mogalakwena North concentrator declined 14%, while concentrate grade increased 16%. Importantly, there are many wider benefits to the mass pull reduction. In 2025, we saw a 21% reduction in trucks transporting concentrates, a 4% decrease in smelter electricity consumption and a corresponding 5% reduction in CO2 emissions, delivering an estimated cost saving of about ZAR 123 million with additional savings expected in 2026, commensurate with further improvements in mass pull. So now turning to our markets. There were several positive developments in the PGM markets during 2025. While we've all seen the overall increase in the basket price, it's important to note that there were multiple factors that contributed to the increases with a few dominant drivers standing out. Firstly, the year began with moderate price gains owing to a weaker U.S. dollar. Prices accelerated as the market tightened over concerns about tariffs and weaker mine supply. And although primary supply normalized in the second quarter, stronger price gains followed from May onwards with a large price differential with gold prompting strong Chinese buying. This was then accentuated in June and July by renewed tariff concerns, prompting further sizable U.S. imports. The second half of the year benefited from strong investor purchasing, driven by the debasement trades and the launch of the Guangzhou Futures Exchange. Specific factors also contributed, such as a robust hard disk purchasing in ruthenium and the recovery of rhodium demand, particularly in the fiberglass applications. And while price movements were dynamic, they were firmly underpinned by market fundamentals; tightening supply, stronger-than-expected demand as automotive sales prospects improved and inventories that proved less abundant or more tightly held than many had anticipated. The second half of 2025 was an exceptional period for PGM prices. The full basket price ended the year 86% higher than at the start of 2025. All metals contributed to this increase with platinum, palladium and rhodium being the largest contributors. There are 2 potential bullish drivers already making an impact. You may remember that we called these out specifically at our Capital Markets Day last year. Firstly, BEV penetration forecasts have been revised downwards, particularly in Europe and the U.S.A., markets where vehicles are heavily loaded with PGMs. Political developments in both regions have further supported the internal combustion engine vehicle demand. Meanwhile, the price of platinum rose considerably, but it is still trading at a substantial discount to gold. This has enabled platinum jewelry to gain market share in several key geographies and heightened interest in substituting PGMs for gold in various industrial applications. Our total supply and demand outlook for PGM markets points to continued tightness in the medium term. We expect global car sales to continue growing alongside an expanding world economy. Downward revisions to BEV growth in key markets are also supportive. Mine supply is expected to decline over the medium to long term, though at a slower pace than previously anticipated due to higher prices. Elevated prices will also encourage recycling volumes, but still face headwinds. And importantly, even at current price levels, new mine projects are unlikely to come online soon nor will vehicles be scrapped any earlier. Structural constraints to materially higher supply, therefore, remain. Our outlook is broadly consistent with prior expectations. And in 2026, we anticipate a sizable deficit in platinum, while palladium's anticipated surplus again fails to materialize. Beyond that, platinum should remain well supported, while palladium and rhodium will shift more to balance, but at an uncertain pace. These balances exclude investor demand, which enjoyed strong tailwinds in 2026. PGMs are increasingly recognized not only as critical minerals, but a safe haven assets, reinforcing their strategic appeal. I'll now hand you over to Sayurie to take you through the financials.

Thank you, Craig, and good morning, everyone. I am pleased to be reporting a strong set of financial results for 2025. Despite the demerger activities and headwinds faced during the year, our performance underscores the robustness of our business and the strength of our operating model in driving long-term value creation. To summarize our performance, revenue increased 7% year-on-year to ZAR 116 billion, driven by the uplift in the PGM basket price. This was partially offset by lower sales volumes, reflecting reduced M&C production, mainly from Amandelbult and the prior year's larger release of built-up work-in-progress inventories. Our disciplined cost management approach delivered a further ZAR 5 billion of operational and corporate savings, more than offsetting inflationary pressures. As a result, EBITDA increased 68%. And on the back of this, the company generated sustaining free cash flow of ZAR 20 billion. This meant we ended the year with a strong net cash position of ZAR 11.5 billion, boosted by a stronger second half. In line with our disciplined and balanced capital allocation framework, the Board has declared all net cash as a final dividend, equating to ZAR 43 per share. The company delivered a solid EBITDA performance despite the operational challenges in the first half of the year. EBITDA was supported by a 26% stronger PGM dollar price of $1,852 per ounce, partially offset by the strengthening of the rand. Input cost inflation of 5.4% reduced earnings by ZAR 2.8 billion, while royalty expenses reduced earnings by a further ZAR 1.1 billion, in line with higher revenue. Our success in delivering on our cost-out initiatives made a significant contribution to the uplift in earnings. As you are aware, earnings were also affected by the one-off demerger-related expenses, which have been largely completed and the impact of the Amandelbult flooding event, although insurance proceeds mitigated the majority of that impact. Mining operations contributed ZAR 29 billion to EBITDA at a mining margin of 38%, while POC and toll contracts contributed ZAR 9 billion at a margin of 21%. Since launching our operational excellence drive, we have delivered a decisive reset of our controllable cost base, which is down 18% since 2023. The ZAR 5 billion saved in 2025 was achieved across several areas, including consumables optimization of ZAR 2.2 billion, ZAR 1.4 billion from labor and contractors, reflecting the flow-through benefits of the operational restructuring undertaken in 2024 and a further ZAR 1.4 billion as a result of the simplified operating model post the demerger and other corporate cost reductions. As a result of our cost-out program, we achieved a cash operating unit cost of ZAR 19,488 per PGM ounce, in line with our revised guidance. Guidance for 2026 is ZAR 19,000 to ZAR 20,000 per PGM ounce, reflecting a partial inflation offset from ongoing cost-saving initiatives and increased production from Amandelbult. We are also targeting a further ZAR 1 billion to ZAR 1.5 billion in cost savings for 2027 as a result of the demerger with some of these benefits expected to materialize in 2026. Full year capital expenditure amounted to ZAR 17 billion, at the lower end of our guidance. Sustaining capital expenditure was ZAR 12.5 billion with a primary focus on asset maintenance, furnace rebuilds and mining equipment replacement. Sustaining capital also includes capitalized waste stripping, which declined ZAR 1 billion from 2024 due to lower waste tonnes mined, consistent with our value over volume strategy. Discretionary capital of ZAR 4.5 billion was directed to Sandsloot underground development and drilling as well as surface infrastructure and development at Der Brochen. We also commenced work on the repurposing of the Mortimer smelter. As we move into 2026, total capital expenditure is expected to remain broadly in line with 2025 at ZAR 17 billion to ZAR 18 billion. This is ZAR 1 billion to ZAR 2 billion lower than our previous guidance of ZAR 19 billion, again, reiterating our continued commitment to cost and capital efficiency. Of this, ZAR 12.5 billion will be incurred in sustaining capital to maintain asset integrity and ZAR 4.5 billion to ZAR 5 billion on discretionary capital. Turning to the impact of our cost and capital efficiency on all-in sustaining cost, which was $987 per 3E ounce, below guidance and flat year-on-year. Notably, this represents a 13% decrease from 2023, underscoring our cost control. I would like to highlight that going forward, we have revised our calculation methodology for all-in sustaining cost to include life extension capital to align with our updated capital definitions. On this basis, the all-in sustaining cost for 2025 was $1,039 per 3E ounce. Looking at the cost curve on the right-hand side of the slide, all of our own mine assets are firmly in the first half of the cost curve. Amandelbult's strong co-product credits, together with the benefits of the insurance proceeds have contributed to its positioning in the second quarter despite the impacts of the flooding. Our 2026 all-in sustaining cost guidance is around $1,050 per 3E ounce, assuming an exchange rate of ZAR 17 to the dollar. The company closed the year with a robust balance sheet, ending in a net cash position of ZAR 11.5 billion. Since 30th June 2025, the company generated cash from operations of ZAR 28 billion. And of the total ZAR 17 billion capital expenditure, ZAR 9 billion was incurred in the second half of the year, alongside the payment of the interim dividend. I have already talked to the one-off cash impacts relating to the demerger, which had an impact of ZAR 2.9 billion in the second half. We also received ZAR 2.5 billion in insurance proceeds. The flood claim is now in its final stages, having reached the end of the indemnity period, and we anticipate receiving the final payment during the first half of 2026. Liquidity headroom at the end of the period was ZAR 43 billion. Our banking group remains broad and strong, comprising both local and international institutions with committed facilities in both rand and the U.S. dollar. 2025 marked a major milestone for our stand-alone journey as we secured our inaugural global credit rating from S&P, achieving investment-grade status. In addition, we established a domestic medium-term note program, enabling us to issue listed debt in the South African bond market. This will provide an opportunity to diversify our debt funding sources and potentially lower our cost of borrowing. And in line with our capital allocation framework, the Board has declared a final dividend of ZAR 11.5 billion or ZAR 43 per share, comprising a base dividend of ZAR 23 per share or ZAR 6.2 billion, in line with our policy of 40% payout of headline earnings and a special dividend of ZAR 20 per share or ZAR 5.3 billion. This brings our total 2025 dividend to ZAR 12 billion or ZAR 45 per share. This marks our 17th consecutive dividend since reinstatement in 2017, affirming our commitment to industry-leading and consistent shareholder returns. I will now hand you back to Craig to wrap up.

Thanks very much, Sayurie. And to conclude, so our strategy remains clear and disciplined, maintain capital efficiency, drive cost reduction and maximize cash generation to enhance shareholder returns. Over the last number of years, we have invested consistently to maintain both asset integrity and reliability, which will enable us to sustain and grow our own mine production, improving margins. And as a result of the new ways of working and our discipline in terms of capital efficiency, we expect medium-term capital, as Sayurie has said, to stabilize at between ZAR 17 billion and ZAR 18 billion, inclusive of growth investments. This does position us distinctly from our peers who are raising CapEx guidance to arrest declining production profiles. With a stable capital base, our leverage to free cash flow at spot prices is significantly enhanced. So to illustrate, had current spot prices prevailed throughout 2025, free cash flow would have been about 240% higher. We have consistently demonstrated the delivery of our strategy and disciplined capital framework, returning excess cash to shareholders through dividends. The track record speaks for itself. Over the past 5 years, we have returned almost twice as much in dividends as our peer group combined. And so that you are left in no doubt, we offer a distinct investment proposition. Our substantial resource endowment provides exceptional longevity across our Tier 1 operations. With a high-quality, reliable and efficient processing infrastructure, our ability to create value throughout the value chain sets us apart within the sector. Our strategy is clear. Our experienced leadership team is well positioned to continue optimizing the business, unlocking value and delivering strong operational outcomes. And we remain firmly committed to disciplined cost and capital management to safeguard the integrity and sustainability of our assets while executing our growth agenda effectively. And with a robust balance sheet and strong cash flow generation, we're well placed to sustain those industry-leading returns to shareholders. I think it's fair to say that Valterra Platinum has certainly demonstrated in its first year of independence that we are a company that delivers. In 2025, we delivered on all our strategic priorities. We reinforced our skills and technical capabilities across the business and executed operational excellence activities with discipline and set the company up to accelerate those growth projects. I'am truly excited about the momentum that we have brought into 2026 and our unwavering focus on value creation for all of our stakeholders. That concludes our presentation. So thank you once again for joining us. I hand you back to Leroy to facilitate the questions and answers.

Thank you, Craig. I think we'll start in the room. There are a couple of revolving mics. The first hand was Chris. If you could please introduce yourself before you ask your question as well, please.

It's Chris Nicholson from RMB Morgan Stanley. I've got a couple of questions around volumes, and I think Mogalakwena in particular. I noticed that you trimmed your production guidance for your own mines for 2027. Could you just chat to what's driven that trim? Second question might be linked to that. At your Capital Markets Day last year, you were talking about grades at Mogalakwena from the open pit getting back to 3 grams a tonne, supporting 1 million ounce profile. We're still a little bit below that. Is it still your expectation that you get back to 3 grams a tonne? And then final one, also probably linked to that. I see you put a comment there on the lease on the Baobab plant expiring at the end of '25. I think we did know about that. So it's not a surprise. But I just wondered at these prices and just with the profitability of Mogalakwena, whether it made sense to try and extend that in any way, even if you had to put more CapEx into the tailings dam or incentivize Sibanye to do so.

Thanks, Chris. I'll answer some of the questions, and I'll ask perhaps Willie and Agit also just to comment on and reemphasize that value over volume strategy that we have in Mogalakwena and then also Agit, if we can just talk through the Baobab and the improvements that we've seen through North concentrator, improved recoveries and why we've sort of -- well, we've ended the Baobab contract. I think certainly, as we've said around our M&C volumes for next year between 3 million, 3.4 million ounces and into 2027, slightly lower. And that is on the back of us maintaining Mogalakwena's production at between 900,000 and 1 million ounces. And that's really our focus. And I've touched on that value over volume strategy, and I think Willie can articulate that in more detail. But that's what we fundamentally believe is the right sort of approach for us because it really drives that all-in sustaining cost. And we need to maintain that throughout the journey of Mogalakwena, sort of certainly in the lower half of the cost curve. And that's what really enables us to be able to do that. We've also maintained our production at Amandelbult at that sort of 580, 650 sort of mark. And that's what we'll sort of maintain. That continues to keep the longevity of Amandelbult intact, particularly from a Tumela and Dishaba perspective. And that's really what those sort of the 2 sort of revisions are there. But you'll see that we've guided now. We've moved away from guiding around the grade. So we've given you guidance around the actual production profile. And so that then enables us to be able to manage just how we extract the value through processing some of those lower-grade ore stockpiles, reducing the amount of volume that we actually mine, particularly at Mogalakwena and therefore, continue to drive its all-in sustaining cost to where we fundamentally believe it should be for this Tier 1 asset. So Willie, I don't know if you want to add anything in terms of the sort of the approach in terms of how we think through the grade. Kimi has got your mic ready.

Good morning, everybody, and thanks for the question, Chris. I think I'm not going to belabor the point on the all-in sustaining cost that Craig has already spelled out. I think a big component, if you look at Mogalakwena in particular, is the low-grade ore stockpile. It's sitting roughly on 5 million tonnes. That is a key deliverable aspect that we have stripped in essence, waste, where we stockpiled the low-grade ore. And our approach in terms of this value over volume is to, over time, for the next few years, and [indiscernible] made the percentage right about 35% to use that as part of the blend into the concentrators. But even at about 35% on average that we use it as a blend into the concentrators, we maintain a 5 million tonne stockpile on the low-grade ore. And this is why this value over volume and driving the all-in sustaining cost to maintain that position. And also from what I've spoken now, that's only from an open pit point of view. That is not taking into consideration anything that we do at Sandsloot. So the 900,000 to 1 million that Craig is referring to is open pit and with a 35% on low-grade ore stockpile as part of the blend and maintaining that at about 5 million tonnes. It's significant differentiator in terms of that ore body.

Thanks, Willie. Agit, do you want to just comment on Baobab and just how we're thinking North and South.

Yes. Thanks for the question, Chris. So obviously, we did consider Baobab with regards to the future of Mogalakwena with regards to milling. But first of all, Baobab was not the cheapest concentrator in our portfolio. And North concentrator and South concentrator has got a significant amount of effort over the last couple of maybe 1 to 1.5 years. And that effort has come through significantly around the way we operate the plant from a throughput point of view. So the more throughput we can get through North or South, the better it is for us from a unit cost point of view. It links back directly to what Willie and Craig has been speaking about with regards to the blending strategy and keeping the ounce profile. So we're very confident that with the North and South concentrator and the work that we've done with regards to the feed that we're putting into North and South, the work that we're going to be doing at the South concentrator around the refurbishment, the work we've already done at the North concentrator with regards to the Jameson cells and optimizing that flotation circuit that we will be able to deliver what we need to deliver with regards to the blending strategy that we have coming through from Willie and the team. So it's a very well-integrated thought process that we've taken from mining all the way down through the concentrators.

I think the next hand was Gerhard and Arnold.

Gerhard Engelbrecht from Absa. Maybe just two questions is, how do you think about your debt levels at this point in the cycle? So do you have a targeted debt range or debt-to-equity or net debt-to-EBITDA? Or how can we think about debt going forward and how you then utilize cash? And then maybe if you can just remind us of the insurance payment, the quantum of that, that you expect in this half.

So we've guided in terms of our net debt-to-EBITDA at about 1x -- less than 1x through the cycle. However, at current prices, as we've declared our dividend of ZAR 11.5 billion, that gets us to a cash-neutral balance sheet. And we believe that, that is actually the prudent approach, which will actually strengthen our balance sheet and ensure that we can even sustain it in a lower price environment.

And then the insurance.

On the insurance proceeds, as we said, we've received ZAR 2.5 billion so far. However, we are still in discussions in terms of what the total quantum of that insurance proceeds will be, but we expect to receive that in the first half of the year.

It's Arnold Van Graan from Nedbank. Two questions for Sayurie. The one is on your cost savings. I mean that's a phenomenal number, saving ZAR 5 billion and then ZAR 1.5 billion going forward. So I guess my question is, where is that coming from? And how sustainable is it? I know we've talked about this before, but I guess my question or concern is that some of this comes back into the system over time. So that's the one question. Second question relates to Unki. It looks like there's a bit of a cash lockup there currently. It doesn't matter now given where prices are. But yes, just give us a sense of how you're addressing that and how you see that playing out? That's it for me.

Sure. So just in terms of our cost savings, so it's really in 3 broad categories. So the first one, if I look at the total ZAR 12 billion, about ZAR 5 billion of that is from supply chain and procurement benefits. So we've reviewed all our supply chain contracts over the last 2 years, we've been able to get lower pricing. A lot of this is from prior to COVID or during COVID, where we had escalated pricing in some of the consumables, we were able to reduce a lot of that. So these are sustainable pricing. Obviously, they would increase with inflation going forward. But from an operating perspective, that's where we found a lot of the efficiencies. The labor and contractor reductions. So we undertook a restructuring in 2024. So that was about 2,700 people at Amandelbult. So that is a sustainable reduction in labor. We've also reviewed all our contracting companies, and we took out about 450 contracting companies. So that's sustainable reductions. We also did some review of our corporate costs. And as I said earlier, there were some demerger-related cost savings that we were able to realize as well. But a lot of the savings that we've also achieved is as a result of the operational excellence work that we've done. So the mass pull benefit that Agit has been working on in processing, the pit optimization at Mogalakwena, all of that has been sustainable cost reductions. So mass pull, for example, a ZAR 250 million annualized cost benefit that we'll realize from that. The pit optimization, we've been able to bring down waste stripping costs by about ZAR 1 billion so far and another ZAR 1 billion going forward. And then the demerger-related costs, the ZAR 1 billion to ZAR 1.5 billion that we expect to come, that is really from the simplified operating model as a stand-alone company, simplification of some of the systems that we've got, our IT systems, for example, moving to an outsourcing arrangement for some of our shared services. So that's where we're seeing some of the reductions that we expect to realize in the next 2 years. So really sustainable cost savings. Going forward, as we've guided, you expect -- we will continue to look for initiatives to offset inflation, again, mass pull, renewables that will come through from the Envusa project this year. So that will offset about -- that will give us about a 10% reduction on the current Eskom tariffs that we're getting. So there will be continued cost optimization initiatives to ensure that we maintain that cost discipline as a business. So as you see, our cost is relatively flat over the next year. And then in terms of the Unki, so we do have -- so as part of operating in Zimbabwe, our export proceeds is a retention mechanism. So 30% of our export proceeds are retained in local currency. In the last year, we haven't been able to access some of that. So it's about $100 million that hasn't been able to be accessed by us. However, and you'll see that we've obviously recognized a provision on that. But we have been engaging with the Reserve Bank as well as the Ministry of Finance, and we are receiving some funds in 2026 so far, and we do expect to receive that over the next couple of months.

There's a question from David.

David [indiscernible] from Phoenix research. I would just like to, first of all, congratulate the technical and the mining people. First of all, congratulations on getting Amandelbult up and running so quickly. Very impressive, very impressive. And secondly, also, congratulations on the Jameson Cells. When I saw that number of 40% reduction in mass pull, that's quite amazing. So if I may lead my first question on that one is, is that in any way transferable to the other concentrators? I mean, obviously, I know that the metal mix is very different, but is that at all transferable? And then just a very general question. On the Merensky Reef, are there any plans to mine more Merensky Reef at all? I mean, it's now UG2. I'm talking about the East and West Limb, are there any plans to mine Merensky projects?

Thanks, David. Thanks very much for the question. I'm going to try my best to answer them, and that will be my team members giving me a report card in terms of whether I've been paying attention. So in respect of the Jameson Cells, so clearly, they've been really successful at Mogalakwena, at the North concentrator. Agit referenced the refurbishment of South. And so we will look to see whether we can install the Jameson Cells at the South concentrated Mogalakwena. So that process is underway, and we're evaluating it. I think it's less impactful at Amandelbult, particularly just given the scale of Amandelbult and the installed capacity. But our real primary focus is really then driving that efficiency at Mogalakwena. That looks to be our biggest opportunity at the moment. Did I get that right? Good. And then on Merensky, I think our primary focus is really around continuing on the UG2 routes. There's not a great deal of Merensky that we have immediately available, just given sort of what we've mined out at Amandelbult and in particular focus for us at Der Brochen and Mototolo on the Eastern Limb. Those are sort of -- our key focus will be around the UG2.

We've got Steve in the back.

It's Steve Friedman from UBS. Firstly, congrats on the strong results. Maybe just a follow-up on the capital allocation framework question and more regarding the prepayment, specifically around the remaining duration. I know this is something that's been extended previously. But if you could sort of give us some indication on that. And understanding this is a volume-based contract. So very much that value will be linked to PGM prices and FX, if you could give us some sort of sensitivity on what that means in the current environment?

Sure. So our customer prepayment at this point, it's about ZAR 12.8 billion. You're correct, it is linked to price and FX. So it's probably increased about ZAR 1 billion since 2024 as a result of that and volumes were relatively stable on that. In terms of the renegotiation, so it comes to an end in 2027. However, we are in negotiations with the customer, and we don't have any reason to believe that we won't be able to extend the customer prepayment. It may be on different volumes and different period, but it's still something that we firmly include in our working capital numbers.

I see no further hands in the room. Can we please go to the conference call and see if there are any questions there?

We have a question from Adrian Hammond of SBG Securities.

Yes, well cone on solid results and outlook, Craig, your payout was significantly higher, I think, than the market expected. So give us some guidance on how we should expect future payout of dividends. I noticed 70% is what you used to pay in the last bull market. And is this something we should be expecting going forward? For Sayurie, you've been quite explicit on the cost savings for another ZAR 1 billion to ZAR 1.5 billion over the next 2 years. But I do note you're certainly seeing more benefits from the Jameson Cells. And should there be other benefits as well that perhaps your ZAR 1 billion, ZAR 1.5 billion is still a conservative number. And I just want to clarify when you mentioned earlier that the Mogalakwena pit optimization on waste stripping was banked at ZAR 1 billion, but a further ZAR 1 billion going forward. Just correct me if I'm wrong, if that's further ZAR 1 billion is in your current guidance. And then Hilton, perhaps premature to ask that your customer prepayment with Toyota is still being negotiated. But do you foresee additional volume offtake in that agreement going forward? And perhaps you just give us an update on customer flows and orders for PGM autocat businesses and as well as the minor metals.

Thanks, Adrian, for the questions. So I'll take the easy one. So I think, Adrian, as we've indicated, just once again, quality of the assets that we have, our focus around operational delivery, investing in the assets that we have and really maintaining that asset integrity and reliability really sets us up well. And as a consequence of that, that enables us to be really deliberate and focused around how we return value to shareholders. And so in line with that discipline and our capital allocation, any excess cash that we generate, we would look to return that to shareholders. And so as Sayurie said, we've done it for 17 consecutive periods where we've paid a dividend and we've paid specials. And I think you can expect a continuation of that discipline for periods to come. And so we'll wait to see what happens in July when we report the half year results.

Adrian, on the waste stripping, yes, that's already in our guidance in the ZAR 17 billion to ZAR 18 billion in the medium term. And then just in terms of cost savings, so the ZAR 1 billion to ZAR 1.5 billion, that's coming from corporate cost reduction. And as we've mentioned, there will be continued benefits from operational excellence. So your mass pull initiatives, the renewables. We're looking at some low-cost country sourcing, so alternative sources of some consumables from a supply chain perspective. So all of that will partially offset inflation. So input cost inflation, about 6% we're forecasting for 2026, but we expect that our costs should be below the 6%. So yes, there will be some more operational initiatives that will offset inflation.

Yes, Adrian, on the prepayment, as Sayurie indicated earlier, right, in the middle of negotiations. So we're going to be as quiet on the subject as we can be, but we expect to see volumes at least in line with what you'd expect given the pressures in the automotive industry and increases in recycling. But we'll work hard at that. And so more news to follow later. In terms of -- what are we seeing in terms of customer flows? You've seen the duty announcements out of the U.S. That means there's some rebalancing of portfolios going on in amongst customers. And so we're seeing changes in geographic flows as a result of that and inquiries that you'd expect us to be seeing in line with those geographic flows. But we expect that to balance themselves out around the globe and not have a material impact on supply-demand balances. And then minor PGM demand, we've seen healthy demand for contracts in that space, and we're still seeing good flows.

Any further questions on the call?

We have a question from Nkateko Mathonsi of Investec Bank.

Well done from my side on a very good set of numbers, especially I concur with Adrian, especially on the dividend, that was a surprise versus what the market was expecting. Another congratulations on inventory optimization that has allowed you to continue liquidating inventory from your processes. I mean, my first question is how much room do you still have to squeeze the pipeline going forward? At this point in time, it looks like it is creating [indiscernible] in the processing infrastructure, but that has been very positive for at least the past 2 years. I just want to know how should we think about it going forward? And then my second question is on Sandsloot and the prefeasibility study. Is there any indicated CapEx that we should work on as far as Sandsloot is concerned from that prefeasibility study? And then also on the better terms on the extension of the tolling contract by 5 years. Are you able to give us a bit of an indication as to the increment on that contract and how we should look at it going forward?

Thanks, Nkateko. Thanks very much. At least you like the dividend. So let me start on the inventories. I couldn't agree with you more that the processing team seems to find additional ounces. But I really do think that we've really optimized the pipeline now, and that's really sort of come through in terms of the optimization and the higher refined ounces that we achieved in 2025. We have indicated previously that we do have some inventory that is sitting in what we term wax. So that's material that has -- that you'll know better than me, comes out of the converter plant and that we haven't been able to treat to date. And as a consequence of that, we are repurposing Mortimer to be able to treat that material in addition to be able to just processing normal ongoing concentrate. So we do have some inventory and you'll see that come through in our 2027 number. So if you -- to Chris' earlier point, you've seen that slight reduction in our M&C volumes. But actually, our refined volumes in 2027 are maintained at 3 million to 3.4 million ounces. And so you see that liquidation coming through there as a result of Mortimer. So that's really where that will come through. But I think more broader in terms of do we have [indiscernible] and all the rest of it of inventory. We haven't found it, but we'll certainly keep looking. But genuinely, I think, we've optimized as much as we can at the moment. In terms of the feasibility study for Sandsloot, that continues, and that's underway. And so our capital guidance for the expenditure around that to ramp up Sandsloot to around about that 2 million, 2.5 million tonnes is maintained at that sort of ZAR 1.5 billion to ZAR 2.5 billion. Just remember, there might be some years that we'll spend slightly more because we need to build workshops, we need to purchase some equipment or something. But that broad range of between ZAR 1.5 billion and ZAR 2.5 billion is maintained from what we shared with you back in the middle of last year. And on the tolling contract, yes, we have extended the tolling contract with Sibanye. So that would have come to a conclusion at the end of 2026. We have extended that by another 5 years. Both parties have the opportunity to end that after 3 years. And I think to use Richard's words, I think it's on materially better terms than what they're currently paying at the moment.

Operator. Are there any further questions?

We have a question from Benjamin Davis of RBC Capital Markets.

Great set of results. Just a couple of questions from me. One on the CapEx guidance, very much going against the grain in terms of going down. I was just wondering if you could give any kind of what drove that delta from ZAR 19 billion to the ZAR 17 billion, ZAR 18 billion? And also given the price environment, is there any upside risk to that number in terms of kind of additional projects that are under evaluation, smaller projects? And then second question, just wondering if there is any evolution in the thinking around Modikwa?

Thanks, Ben. Do you want to do CapEx?

Yes, sure. So our previous CapEx guidance was around ZAR 19 billion. But there's a few aspects. So the one is once we concluded the feasibility study -- the prefeasibility on Mogalakwena underground, we were able to just redefine that CapEx. So that's where we got to the ZAR 1.5 billion to ZAR 2.5 billion. Due to the value over volume strategy, our waste stripping, as I mentioned, that's been reduced. So you see lower tonnes -- waste tonnes mined. As a result of that, you have lower HME replacement capital as well that will be required. So that's the other area. There's been some further optimization, for example, on the Mortimer repurposing project that has done more optimization as well at Amandelbult and Unki in terms of some of the capital spend there. The other area that's also benefited us is as a stand-alone company, how we actually execute on our projects. So we've been able to build in quite a bit of efficiencies there just in terms of using internal teams as opposed to third parties, just in terms of scoping and defining our scopes and being quite focused around that. So that's also been able to contribute towards that reduction, and that's how we were able to achieve the lower end of our guidance this year as well.

So yes, we agree, Ben, that's certainly sort of countercyclical, as I pointed out in terms of what we're seeing elsewhere. But yes, I think we will certainly maintain that cost and that capital guidance and it's important that we maintain that through the cycle. So very much focused around making sure that we operate within that envelope. I think specifically as it relates to Modikwa, to your question, I think one of Sayurie's slides actually illustrated just in terms of where our all-in sustaining cost was and where we're all positioned on the cost curve. The one outlier in the second half of the cost curve is Modikwa. And so we're not particularly happy, and I know our partners are not in terms of the performance of Modikwa and just how that sort of -- where it sits on the cost curve. And so therefore, we need to continue to evaluate how we improve its performance, how we rethink through what the operating structure is there, and we'll continue to evaluate our options, specifically as it regards to Modikwa in the coming months.

We have a question from Ian Rossouw of Barclays.

Two questions. Just first one on the Sandsloot project. If you do go ahead and approve the project in 2027, how can we expect the CapEx to change in '28, I guess, versus current guidance? And then just wanted to talk about the working capital just in the second half, I guess there was still some build in inventories if you strip out the prepayment and obviously, the receivables sort of based on prices. But how should we think about the working capital this year outside of probably the inflows you'll see from the prepayment due to higher prices?

Okay. Do you want to do working capital and then...

Yes. So in terms of working capital, so the customer prepayment, as I did indicate, that is influenced by price and FX. So as prices increase, you will see an increase in the customer prepayment. On the other one that's influenced by price and FX is your purchase of concentrate. So that's your inventory as well as your creditor. So those should offset each other because -- so from a price impact, so that should be relatively flat. So it's really just your customer prepayment where you'll see an increase in working capital.

And then just on Sandsloot. I think from our perspective, so the investment is taken -- the decision to invest in Sandsloot is taken in the first half of next year. Our expectation is that you'll continue to see that ZAR 1.5 billion to ZAR 2.5 billion expenditure sort of take place for us to ramp up to that sort of 2 million, 2.5 million tonnes. So that's what you can expect to sort of see in terms of annual CapEx associated with the Sandsloot development. Clearly, obviously, as I said, you might see 1 year a little bit higher than that ZAR 2.5 billion because we've got to spend on the workshops and all the rest of it. But I think importantly, as we then start to position that, whatever that capital profile looks for Sandsloot is then -- you could see then a reduction in our waste stripping capital and some of the capital associated with the open pit at Mogalakwena. So that's where the real benefit starts to play itself out. So you process this higher-grade ore, and then we're able to reduce the amount of material that we have to move in the open pit. And so you'll see that benefit coming through as part of the decision to invest in Sandsloot. But that ZAR 1.5 billion to ZAR 2.5 billion, if you take that, you model that, that will be great. Please just make sure that you model that 10% to 20% uplift in production as well.

Okay. That's great. And maybe just coming back. So any shift in inventories expected this year? Or is that broadly stable now just on working capital?

Yes. No, I think your inventories, we've sweated that drag. So yes, I think your inventories are more or less sort of back to normal levels.

Any further questions?

We have no further questions.

Right. There's a few questions that have come through online. Rene from NOA Capital says ZAR 11.5 billion net cash. I really believe you would do it a year ago. So thank you, Rene. He's got a question for Hilton. He's asking, what is your pick for the best performing PGM in 2026? And then sorry, Hilton, while you answer that, we've had a couple of questions on recycling. If you could please elaborate on some of the headwinds to a recovery in recycling, what are some of our expectations are in an increase in recycled supply given the higher PGM prices as well, please?

Thanks, Rene. I think the right answer to your question is it starts with an R as in Rene. Yes. So I'm going to go with it starts with an R. And then on recycling, we all know that recycling rates are driven by scrappage rates of vehicles. We know that vehicle prices are high. We know that cars are lasting longer than people would expect. We know that there's sort of technological or technology uncertainty in terms of do I replace my car with another ICE vehicle? Do I replace it with a PHV? Do I replace it with ICE? Or do I just hang on to what I have. So those are all playing out through the market, right? And yes, the value of an auto catalyst is up. It's not up to the same extent as it was in 2022. And the value of the auto catalyst isn't a player in people's decisions to recycle cars. So we think scrappage rates are unaffected by the value of the catalyst. What is affected by the value of the catalyst is the pull-through of inventory, right? So if people had scrapped cars, cars were sitting in the junkyard and they hadn't taken the catalyst off straight away. Now you're incentivized to go and get that catalyst off the cars and pull that inventory through. And as a result of that, we do have recycling numbers up last year and likely up this year. But there will be payback for that over time with reduced growth rates in recycling. So hopefully, that answers both of those questions, Leroy.

Thank you. There is -- we've had a similar question, but I think it's worth asking this again just to emphasize the point. So it says the Board has paid out 71% of headline earnings in 2025, well above the 40% policy. How should investors think about the balance between sustaining market-leading dividends and funding growth projects like Sandsloot underground ahead of the H1 2027 investment decision?

Sure. So I mean, as Craig said, I'll reiterate it. So there's been no change to our dividend policy. That's still at 40% of headline earnings. However, as part of our capital allocation framework, if we've got excess cash after we've actually invested in sustaining CapEx after we've paid our base dividend, after we've invested in the Mogalakwena underground and all our discretionary projects, whatever cash is there, we'll look to return to shareholders. So there's been no change to the policy. But we'll balance growth and we'll balance returns to shareholders.

But I think it's important that we also just emphasize that the CapEx that we have that we've given that ZAR 17 billion to ZAR 18 billion, that includes the ZAR 1.5 billion to ZAR 2.5 billion for Mogalakwena for the underground, yes. So that is our capital envelope.

Thanks, Craig. And then I just got to filter through all the requests for trucking contracts, even though we're reducing the amount of trucks on. We've got a question from Shashi from Citibank. How much is the benefit of mass pull reduction on FY '26 operating cost guidance? Can we expect a further benefit into 2027 as well?

Yes. So on an annualized basis, it's about ZAR 250 million.

Thank you. I think a lot of other questions are just repetitions of what we've already had. So maybe do one last call in the room. Anything on the conference call?

No questions from the conference call.

Over to you, my leader.

Is it me again? So once again, thank you very much for joining us today. Really, I think it's fair to say that we've really had a really transformative year in 2025 on a number of fronts. And we have a great deal of excitement and opportunity within our business in terms of continuing to really be that leading PGMs producer. And so the important thing for us is as we execute on what we need to do, that we do maintain that cost and that capital discipline. And that's exactly what my team and I are focused around. So if I can also just express my sincere thanks not only to the Board for helping us navigate what was 2025, but also to the executive team in terms of how they've showed up and really helped make a change to our business, but most importantly, to the whole team of Valterra Platinum for their enormous efforts and diligence last year and really turning last year into a really successful year and onwards and upwards from here. Thank you.