Tharisa (JSE:THA) — December Investor Presentation

0:03 Good afternoon, ladies and gentlemen, and welcome to the THARISA PLC Investor Presentation. Corner of your screen. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your Investor Meet company dashboard. I'd also like to remind you that the presentation is being recorded. Before we begin, I would like to submit the following poll. I would now like to hand you over to Fivos Perulis, CEO of THARISA. Good afternoon to Good afternoon, Lloyd, and good afternoon to all of our listeners and viewers today.

0:52 It's a great pleasure for us to present what we believe to be an exciting business that we run and operate and the story that we have to tell really over this past year is the investment in our sustainability.

1:06 So we're a jewel listed company on the London Stock Exchange and the Johannesburg Stock Exchange. And if we just take a moment and reflect on our intent, our purpose statement, which reads, enriching lives through innovating the resources company of the future. And we'll touch on that theme throughout the presentation. But just before we kick off, who are we and what do we do? So we are one of the leading platinum group metals and chrome coproducers in South Africa. We're located in the heart of the PGM, short for platinum group metals, and chrome country. South Africa hosts more than two thirds of the world's known platinum and chrome resources.

1:52 And this is in the Bushveld Igneous Complex, one of the world's richest geological formations, which you can see illustrated on the right hand side of your slide. We're in the southwestern part of that Bushveld Complex, and our neighbors are notably Sibanye Stillwater, Impala Platinum and Anglo Platinum a bit further west of us. So in the right neighborhood to be producing these very valuable materials. Importantly, we're close to infrastructure, to rail, a very good road network in South Africa, and accessible power. We are a new mining company. So we're a product of the new mining legislation, came into effect in 2004, and we comply with all the regulatory requirements of this new mining code.

2:40 I think the key competitive advantage when you look at our business compared to other platinum group miners in this country is that we're an open cast mine, and we have a long life. We have a further fourteen years left life of mine in this large scale open pit mine with a mechanized skilled labor force. Now in the context of South African mining, these are very competitive attributes. One, the labor intensity for the productivity is very low. Two, our cost structures are very keen and put us into the lowest cost quartile on virtue of the fact that we have this large scale open pit as well as the fact that we co produce these platinum group metals and chrome concentrates.

3:27 In terms of our ethos and our culture, we strive to extract a maximum value for every cube of rock that we mine. You can imagine we put a huge amount of effort, energy and cost into producing or mining one cubic meter of rock. So we believe that there should be multiple opportunities to extract value, and that's exactly what we've done through our research and development team, and we'll unpack that a bit further in the presentation. But how are we positioned globally and in the South African context? So currently, we are the sixth largest listed South African platinum group metals miner. This last year that passed, albeit through curtailed production due to COVID nineteen disruptions, we produced some 142,000 ounces of platinum group metals.

4:20 Now if you were to position that in terms of global demand and supply, that equates to 1.3% of global platinum demand, point 3% of palladium, and importantly, and we'll again touch on this later, 2% of the world's rhodium demand. If you look at what we refer to as our split of PGMs, what percent do we contain of each of these metals? We are typically, as the geology dictates in South Africa, a platinum rich resource with 55.4% of our platinum contained in the prospect, some 16.2% of palladium, but importantly, 9.5% of rhodium. And this is important because South Africa is the supplier of more than 80% of the world's primary rhodium, and we'll talk about that rhodium price in a second.

5:14 In terms of chrome, we are the fourth largest South African chrome producer and most probably one of the single largest producers from a single resource and mine. This last year saw us producing just over 1,340,000 tonnes of chrome concentrate, and this equates to around 10% of Chinese import requirements of chrome units. Now it's quite a phenomenal situation is that South Africa has more than 70% of the world's resources. China literally has zero resources of their own. So they're wholly dependent on the import of these goods, and naturally, South Africa plays a key role in that. But importantly, we diversify our chrome product mix. About one third of our production is in the form of specialty grade chromites, which is what we refer to as chemical grade and foundry grade. And these are diversified industries and used specifically in the chemical industry and in the lining of castings in foundries throughout the world. Again, these specialty products do attract a premium.

6:22 But none of this is possible without our core value of safety and sustainability. We're very proud of our achievement this past year. We have recorded one of the lowest safety incidents reports of zero point zero nine incidents per 200,000 man hours worked. We've had five years fatality free and a number of other notable achievements, various fatality free shifts of 4,000,000 shifts, three sixty five days lost time injury free rates at our mining production unit and our Genesis plant as well as five years lost time injury free at our laboratories and R and D. Now we truly believe in education and upskilling and we have a very, very keen interest in educating and supporting not only our own employee employees, but also those within the communities in which we operate.

7:17 And you'll see that we talk about a resources company for the future because we truly believe that our employees, community members, and the greatest stakeholder community around us are the future. And investing in them really helps our country, which as we know has its challenges. So importantly as well, we are committed to a reduction in our emissions. So by 3030, we'll be putting together a road map. We've been in discussions with a number of our OEM suppliers. Those are the suppliers of a yellow mining fleet, which consumes diesel primarily as the as the fuel. And we're looking at technologies, ideally utilizing the minerals and metals that we mine to reduce those emissions even further than what they do already, but ultimately to strive for that zero emissions mantle that the planet is looking towards.

8:15 In terms of governance, we have a solid culture of governance with accountability and transparency, we subscribe to the equator principles and beyond that we believe in care, growth and supporting in the form of enterprise development, community development and various wellness campaigns. So if we cast an eye on the year that's just passed, we mined just short of five million tonnes, and that was up from the prior year, some 7.6%. And we need to put the overlay of COVID here. Some of you may know South Africa had one of the most stringent lockdown regimes where we went from a complete lockdown of 21 shutdown period to a multi sort of stage risk adjusted lockdown process from level five down to level one where we sit today. So in the context of that, these are quite strong results.

9:16 As mentioned before, PGM production up 1.7% at one hundred and forty two thousand ounces and similarly chrome up 3.9% at 1,340,000 tonnes. Now when we talk about strip ratio, that's the amount of waste rock that one needs to mine for every rock of ore bearing reef. So 12.1 cubes in this case of waste for one cube of reef. And this had a big jump year on year, 45.7%. And we see this as a very positive initiative because what it allows us to do is open up flexibility within the multiseam open pit that we operate and gives us accessibility to that run of mine or reef mine that's required to process through our two processing plants.

10:05 I think the real star performer for the year were the PGM basket prices, up some 57.6% year on year at some $17.00 $4 per ounce. Now that really has boosted our earnings and we'll touch on that in a moment. But if we just take a pause here and reflect on the current PGM spot basket price, which is sitting at just over $2,600 an ounce, there's a material growth in those earnings. So just to put it into perspective, for every $500 increase per ounce at our midpoint of our guidance of 160,000 ounces of PGMs for 2021, That is an extra $18,000,000 that reports to our bottom line. So significant upside to the PGM basket price.

11:01 Unfortunately, the chrome basket price slumped down some 13.6% at $114 per tonne, but we did get the relief and the benefit of a weaker South African rand, which depreciated by some 12.5. We are what we refer to as a South African rand hedge. Our costs are in rands and our prices, export prices and revenues are dollar denominated. So weakening of the rand supports a growing margin for us. In terms of the financial performance, revenue up on the back of those PGM basket prices and increased volumes at $4.00 $6,000,000 for the year, so 18.4%. Operating profit up at $87,600,000 resulting in earnings before interest, tax, depreciation and amortization, and we can put a C on the end of COVID, EBITDAC of $113,400,000 so an impressive increase from the prior year.

12:04 This all resulting in earnings per share of 16.2¢ up almost three times from the prior year generating operating cash flow of $73,000,000 And we're very pleased that we're able to propose a dividend of some $3.50 per share and that exceeds our dividend policy of some 15% of net profit after tax to be distributed to shareholders. Another metric that we focus on is how well do we invest shareholders' money and capital, and this is highlighted in this return on invested capital at 18.8%, so a solid return on invested capital in this prior year.

12:51 In terms of the tailwinds and headwinds, we've already touched on this and we report that the increased stripping ratio, the recoveries and grades, the performance of our processing plants, well as increased production were really the tailwinds that supported those earnings. But importantly, we need to take cognizant of the fact that PGM prices rallied through this year's 57% increase. In terms of headwinds, decreased chrome prices, we've touched on those, the pandemic obviously affecting all of us in direct and meaningful ways, And the volatility of the South African exchange rate, while it is supportive at a depreciated level, the movement in that exchange rate from a day to day basis makes it quite challenging to plan and forecast ahead.

13:46 Then we have this potential imposition of an export tax on metallurgical grade chrome, which has been proposed but not implemented, and it is something that this part of the value chain is considering defending quite strongly in terms of potential impact as we go forward. In terms of the PGM market and the markets that we play in, PGMs are truly valuable commodities and metals. They're known for their high purity and importantly in the world that we live in and with reducing emissions or increasing emissions standards. Their catalytic properties in terms of taking noxious impurities out of exhaust tailpipes and purifying them. So what we've seen over the last decade is the increasing emission standards globally, and importantly, Asia and China increasing their emission standards. What that means is that companies, OEM manufacturers of cars, have to increase the platinum group metal loadings in these auto catalytic converters to meet these new emission standards.

14:58 But not only are they used in auto catalytic applications, they are vast, versatile, and unique in their application, and in many instances, irreplaceable. So if we dive slightly deeper into rhodium, which is the most precious and valuable of all these platinum group metals and really is a South Africa centric supply side story, we talk about headwinds from deep mines and the growing demand. So rhodium really is responsible for cleaning the noxious gases, the nitrogen oxides out of emissions from diesel and gasoline drivetrains, importantly. And what we're seeing with increasing emission standards, demand is increasing, but supply is forecast to decline by over 4% from primary mine material from South Africa.

15:55 Coupled with that, we've seen an increase in loadings and a decrease in auto catalytic recycling. And the reason for that is that during the mid-2000s when rhodium had another spike, we saw that the OEM started thrifting around 10% less rhodium into the autocats. So those autocats that are now being recycled have less material to be supplied into a growing demand and growing loadings into these new auto catalytic compliant vehicles. And we all remember very clearly the diesel gate scandal, so the OEMs are in no position and are not desirous of cutting any corners because of the massive implications of of being caught out in terms of cheating emission standards.

16:45 The second string to this bow is the fact that the largest rhodium and second largest platinum producer, Anglo Platinum, has had major issues with the refinery and converter process in South Africa. And they're forecasting that there will be a pipeline delay of up to six months to twenty four months depending on how soon they can recover those processing units. So all of this supporting the current $16,000 per ounce price that we're seeing for rhodium. If we look at the uses of palladium, this is mainly a gasoline story. So post diesel gate, we saw the consumer market moving away from diesel drivetrain and moving to gasoline drivetrain. And that has really pushed the demand for auto catalytic consumption in the palladium market. This is not a solely South Africa story. We know Russia and North America do supply palladium in material quantities as well as recycling.

17:52 But with growing growth in automobile sales in China, tighter emission standards, and the increase in gasoline as a preference for passenger cars, we see a growing deficit of palladium supply

18:07 versus I mean, versus supply. I think we're all surprised by how quickly China bounced back from the COVID nineteen outbreak and pandemic, and we saw auto sales slumping very sharply but rebounding to pre COVID levels very shortly thereafter, and that driving the demand particularly for the palladium side of the auto cat market. Platinum is more diversified, but really talks to the diesel drivetrain engine, light industrial, heavy industrial application, and that accounts for 34% of demand. I think one of the big sponges in demand factors that play a big role in platinum is the jewelry segment. And we've seen increased buying in Asia, in China specifically, boosting demand for platinum.

19:02 Industrial applications from medical, dental to petrochemical applications still a growing market in the glass industry as well and new applications being discovered continuously. And then I suppose the star performer this year in terms of platinum, which has really been the laggard behind palladium and rhodium, which have really rallied over the last two years, has been investment, borrowing coins and ETFs. And I really think that when we look at the trends of decarbonizing the planet, the real future for platinum lies in the hydrogen economy and in the fuel cell drivetrain and fuel cell energy conversion as well as the catalysis of water into hydrogen and oxygen.

19:52 So a bright future for platinum in terms of decarbonizing our planet. In terms of chrome, chrome is what makes stainless steel stainless. It is irreplaceable and as mentioned earlier, South Africa hosts 72% of the world's supply and we as a single company supply 10% of Chinese requirements. The chrome market is very buoyant. Even though we had a lower price this last year, we still generated a decent 25% gross profit margin. But if we look into what drives the growth for stainless steel, it is this huge Chinese economy. And it's not driven by export consumption, it's driven by domestic consumption. So when we think about stainless steel, it goes beyond cutlery, crockery, basins, it goes into white goods, washing machines, tumble dryers, air conditioners in particular. So as China urbanizes and people start consuming more stainless steel, so does the growth increase.

20:58 So in this year, where we all thought we were going to see a decline in stainless steel growth in production as well as consumption, we will see a positive growth in stainless steel. Looking forward into 2021 calendar year, we're still forecasting a a 5% growth in stainless steel. Now what does that mean in terms of the chrome units that need to go into that stainless steel to make that corrosion resistance and all the other properties that chrome provides to stainless steel. That's an additional 1,800,000 tonnes of chrome in the form of concentrate, the form that we produce that is required. So that's another hole to recent mine and some that needs to come online to feed this growing market. So a very strong medium to long term fundamentals around stainless steel and with hopefully the rest of the world recovering post the COVID world, we should start seeing North America and Europe consumption growing as well.

22:02 So just looking at our financial performance for this past year, we've broken it down into various key themes. We've benefited from our co product business model, the weaker exchange rate, we've generated some strong cash flows, But importantly, we've continued to invest in our business. And this is very important. These are capital intensive businesses and you need to invest throughout the cycle to ensure your continuity and sustainability. Our balance sheet is robust and liquidity throughout the challenges and uncertainty of COVID-nineteen really was well managed. So talking about our investments. In 2019, a tough year for us operationally, we took the decision to invest not only in our people with retraining and upskilling, but in investing in yellow mining equipment, rebuilds, as well as reconfiguring our mine design to set us up for sustainability going forward.

23:05 And the fruits of those investments were realized in part in 2020 and more in full will be realized in 2021. We talk about 2020 being a year of delivery where at the forefront safety was well managed and with those low safety records and low infection rates, we're very proud of the team. But I think in terms of operational performance, we're extremely proud of the fact that we're able to meet all the metrics on our mining and processing operations. And the real kicker were the PGM basket prices for us during this year. If you look at our EBITDA growth profile over the last five years, you'll see as mentioned 2019 was a slump, but normalizing again to twenty seventeen-twenty eighteen levels at the $113,400,000 and this really talks to that investment into our profitability.

24:08 Again, we look at our profit before tax resuming in fact exceeding twenty eighteen levels and getting close to those 2017 levels where chrome prices, the inverse of what we've seen rallied on the back of physical shortages and we benefited from that. So having the exposure to both markets gives this business a resilience. But I think also just to note, our return on equity has grown substantially in this last financial year to some 12.3%. If we look at the revenue and the gross profits of our business, it stands to reason that PGMs were the biggest earner for us at some 39.4% gross profit margin, but contributing the most to our profitability.

25:00 If you look at those PGM revenues at 65% and chrome at some 29.5 and we have a trading and logistics business generating some 5% of revenue, you'll see that the business benefited from those strong PGM prices. And then if we break that down even further, rhodium contributed more than 51% of our PGM revenue with platinum only at 25%. So the impact of that rhodium price at some $8,300 per ounce for the prior year really had a boost to our earnings. Just to note again, the price for 2020 was $8,300 current spot price for rhodium 16,100 per ounce.

25:55 Looking at cash flows, this is a strong cash generative business, so very pleased with the $73,000,000 of operating cash flow that we generated. And importantly, we had a movement in trade and other receivables of some 50,600,000 With COVID, we had a big surge in our fourth quarter of deliveries, and so that reflects really the increase in deliveries to our customers in the fourth quarter in terms of those receivables of some $50,600,000 as well as the increase in the PGM basket price having a growth in that trade and other receivables. So most people don't know that we have been paying a dividend for the past five years and our dividend policy is to pay a minimum of 15% of net profit after tax to shareholders in the form of a cash dividend.

26:48 So the quantum in dollar terms has varied year on year, but we have consistently exceeded that 15% minimum target of net profit after tax. So very pleased with the ability to continue paying albeit through a challenging year. In terms of our balance sheet, it is strengthening year on year. We have a total debt of some CAD70.4 million, of which $17,300,000 is short limited recourse trade finance giving us a total debt to equity of 21.9%. Cash at the end of the period was some $49,300,000 giving us a net debt to total equity ratio of 6.6%.

27:39 So we're very pleased with the fact that we are paying down our debt. We'll continue we will have a trade and other facilities in place in the normal course to manage our working capital. And ultimately, we'd like to see a normalized debt to equity ratio of around 15%. So when we talk about investing in our business, we invested some $70,600,000 of CapEx in 2020, dollars 24,700,000 in our mining fleet, our yellow goods, and then we talk about a deferred stripping asset or investment of some $22,700,000 These are the additional waste tonnes that we mined beyond the life of mine strip ratio, which are capitalized and utilized later as we mine below that life of mine strip ratio.

28:33 We invested in other mining assets and in terms of expansion optimization initiatives as well. The depreciation for the year was some $27,900,000 We have a very exciting project this year called the Vulcan Fine Chrome Recovery Project, and this was delayed due to COVID-nineteen, but we've recommenced the construction of that, and that has a planned CapEx for this year of some $46,400,000 This is a very unique process which was developed in house and this is geared to recover the fine chrome that we currently deposit and allow us to capture up to 25% of 400,000 tonnes of chrome that we currently deposit on the waste tailings dam. So CapEx excluding Vulcan is $54,400,000 for the year.

29:25 So if we just look at the outlook and look at our business and in terms of our commitment to research and development. We're the first mining company in South Africa to mine what's referred to as the middle group Reef Horizon's MG one, two, three, four and 4A for PGM and chrome on a co product basis. Historically, only the MG one and two was mined for chrome and the PGMs were disregarded. The fact that we took a unique approach and looked at a large scale multi seat open pit mine defied convention and really talks about the way in which we look at R and D and the approach to value extraction. So to date, we've invested over $500,000,000 in the group and of that $81,000,000 has been borne out of our own research and development and commercialization.

30:21 And if we look at some of the success stories, we currently run a one megawatt PGM pilot scale smelter and the intention there is that once we have fulfilled our contractual terms in terms of our PGM concentrate sale, we want to beneficiate further and capture that additional margin that has been locked up in a concentrate supply agreement. So within the next three years, we'd like to see us capturing that additional margin through our own smelting and refining complex. We've again defied convention in terms of our PGM recoveries averaging around 80%. Typical operations of this nature are well below that level. And when you look at a co product business, I think these initiatives have really paid off.

31:11 In terms of the Challenger plant and fourth stage crushing, these are designed to produce those specialty or premium chrome products. And on average, the chrome industry in South Africa produces six percent to 7% of these specialty grade products as a proportion of the chrome product production. We produce between 2530%, and it's really brought out through these two processing initiatives. And then we touched on the Vulcan ultrafine chrome project, which is under construction as we speak. It should be completed by the end of this financial year, which is September 2021. So if we look forward and we look at the value proposition of our business, I think we've really been under the radar for a long time.

32:01 We see ourselves as a leading producer. We have an excellent safety record and excellent track record of investment and return on investment and sustainability. I think THARISA provides an exposure to platinum group metals in London, really on the back of the strong demand fundamentals for palladium and rhodium, and we're starting to see platinum rerate slowly, but really on the back of growing demand and we should see that increasing with the hydrogen economy kicking into play. We have no issues with the fundamentals around the stainless steel market and the growth contained therein and we're perfectly exposed to leverage off that increased demand.

32:46 I think it's important to note that we have strong capital discipline and we are committed to returning value to shareholders, either in the form of dividend or capital growth. Our balance sheet is strong and it supports our expansion and strategic growth plans. And importantly, this team has done this before. We have discovered, we've developed and we've delivered, and we see ourselves going forward as diversifying, increasing the cash flow of this business. If we look at the comparables, EV over EBITDA at on a forward looking 2021 earnings, this is based on analyst forecast, you'll see that there's lots of upside potential similarly on a price to NAV at 0.5x where our platinum peers are nearing one or trading over 1.1 times.

33:41 So I think we certainly believe the timing is right now for a rerating of our business. In terms of guidance for financial year 2021, we're guiding between 155,165 ounces of platinum group metals and between one point four five million and one point five five million tonnes of chrome concentrate.

34:06 So if we look forward and we look at, in closing, our six pillar growth strategy, we are looking at expanding and rolling out our business sustainably, which we've done successfully over the last two years, but continue to look at opportunities to optimize and extract that extra margin within our business. We believe in innovative thinking and research and development, and we've illustrated that, and we'll continue to invest in that. We want to become a globally diversified and significant business and become the investment of choice in our chosen sector. But we want to do this responsibly, and we want to enrich the lives of all our stakeholders. So thank you for your time and attendance.

34:51 I think we will be moving over now to the Q and A section of the presentation. PheVos, thank you very much indeed. Ladies and gentlemen, please continue to submit your questions using the Q and A tab situated on the top right hand corner of your screen, just while the company takes a few moments to review those investor questions submitted already. I would like to remind you the recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Dashboard on the Investor Meet company platform. I'd like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can become better and can better understand your views and expectations.

35:36 Vivo, so know you haven't had too long to review the questions submitted today, but I wanted to hand back to you to respond to those where it is appropriate for you to do so. Could I ask that you read out the question and reference who it's from? Thank you. Certainly, thanks. So let's get stuck straight into it. So Michael W has asked the first question. Is the aspirational target of 200,000 ounces still in place? If so, when is it expected to be obtained? And how will you get there? So good question. We spoke previously about Vision 2020, which sees us producing 2,000,000 tonnes of chrome and targeting 200,000 ounces of PGMs. So in terms of the current target upon the commissioning of the Vulcan plant, we should achieve that 2,000,000 tonne target.

36:25 The PGM target really is dependent on two factors, one of which is the increase in feed grade from the open pit as well as increase of PGM recoveries to above or to 85%. You would have noted that in this last financial year we achieved just on 80%, so there's a 5% improvement in recoveries which we're targeting and working on, as well as approximately between a 57% increase in feed grade of PGMs from the open pit as well as one or two optimization tweaks within the flotation circuit. So, yes, we are still targeting 200,000 ounces. I would put my sort of hand up and say that 2022 financial year would like to start achieving that aspirational target of 200,000 ounces.

37:22 The next question comes from Debbie Kay. What are the current plans of your neighbors to expand capacity? So this is a very, very important question. PGM mining, in particular, is hugely CapEx intensive. With the last, let's call it, six, seven years of low price environment, there has been a reduction in investment in one, say, business CapEx, development CapEx, but in particular, expansion CapEx. So the barriers to entry for new entrants is virtually impossible based on the accessibility to resources. But those that are established can increase the current operations, in other words, mine additional material, but are limited by processing capacity and refining capacity.

38:13 So the supply side response is muted to this increased demand. Now every company will obviously look at producing more to capture that additional margin as we benefit from these boiler prices. But there are no major plans. There are two projects in the Northern Limb that have been spoken about. One is still conceptual and feasibility study. The other one is has a very high CapEx number but is under development most likely a couple of years out. So we don't see major supply side response on the PGM side in the short to medium term. So the next question from Tony Kaye is, will our 2021 production be affected if there are further lockdowns in South Africa?

39:00 I don't believe that South Africa can afford to go to complete shutdown. And and when I mean that, that all activity ceases to be. The economic impact of the first round of lockdowns has been devastating on employment figures. Some 3,000,000 people have lost their jobs during this time. So we can even afford to shut the economy down. But importantly, because we operate an open pit mine and because we run a yellow fleet, inherently we have isolation embedded within our activities. And so even during the shutdown period, we were able to continue even on a partial basis, but we never shut our operations down completely. So it didn't have that issue of going from care and maintenance straight back into operations. So we don't necessarily see any further lockdowns impacting our operations.

39:55 But again, these have been unprecedented times, so I suppose we should say never say never. But based on our 2020 experience, I don't think so. Nicholas a asked the question, do we see our capacity increasing above 200,000 ounces in the future? I think it would be hard pressed due to the geology and the head grades to exceed 200,000 ounces. It doesn't mean that we couldn't expand beyond our current mining footprint and introduce higher grade materials. But I think as it stands with our large scale long life resource, I think 200,000 ounces and 2,000,000 tonnes is pretty much the steady state optimal output of our operations.

40:49 So there is a question from Tony T. What is our all in sustaining cost for PGMs and chrome productions? We don't have that for chrome at this stage. But for platinum, if I'm not mistaken, it is on an all in cost $578 per ounce on an all in sustaining cost including CapEx. So, Tony, to your question on an all in cost per PT platinum ounce, $578 per ounce. We'll come back to you on the chrome front. Thank you. Tony, again, is asking the question, will the $46,400,000 be funded through existing cash assets, cash flow, or part debt funded. So, Tony, the intention there is to fund it from cash flow as well as existing revolving credit bank line facilities that we have in place.

42:05 Alright. There's a question. There are two questions again from Tony t. Are there plans to hedge PGMs, And do we have any color on that? So the hedging that we do now is ready to average out the price on a monthly basis. So we take daily hedges, but it's purely to smooth out some of the spikes within the pricing from one trading day to the next. So we don't take any speculative positions and historically we've allowed our business to be fully exposed to the underlying commodities. And now there may be a strong case for hedging going forward in terms of the basket price, but just to reiterate, it is not a policy of our business.

42:53 So what you one can imagine, you took out a hedge at eight thousand three hundred dollars per ounce, fantastic margin, and you're sitting at a spot price of $16,000 unimaginable really. So there is a lot of risk, but it does, in some instances, provide downside protection. In terms of our shareholder base, just a further question, the shareholder split is really split amongst some key shareholders. The founding shareholder being Medway sits at around 40%, that is the family and founders that started the business from greenfield exploration projects right through development and into delivery.

43:40 We have key strategic shareholders in Hong Kong, the New World Securities at some 10%, Fidelity out of London at 10%, and then we have Chinese, Fuji and Wuhan stainless steel at approximately 7%. But I think we can share that. We can update the share register and share it with the attendees of this conference call to give you more detail. This is just off the cuff. So there's a question around CO2 emissions and what are we doing around that. Certainly we are committed to reducing our CO2 emissions. We are primarily a light electricity user by comparison to our peers. Our main source of fuel is diesel. So we're looking at various initiatives with OEMs, the supplies of the yellow fleet in terms of different drivetrains, in terms of different fuels.

44:44 So there's a lot of work and successful deployment of synthetic fuels, of synfuels, which combine various forms of combustible material, still through internal combustion engine, but reducing emissions. So those are that's one of the initiatives we're looking at. We're looking at hydrogen fuel cell technology, which albeit very exciting hasn't been applied to heavy industrial applications commercially yet. There's a lot of work through AP Ventures and Anglo Platinum in terms of the really have been at the forefront in the automotive sector, but also looking at the hydrogen economy as a holistic solution.

45:31 We're also looking at renewable energy in terms of the electricity that we currently utilize, and that is solar primarily and with storage potentially in the future. So it is something we're very open to. We are, for the first time in South Africa, allowed to generate our own power for captive use, which then opens the horizon and allows us to look at all these sorts of opportunities. So we will be providing more color in terms of our roadmap over the next ten years in terms of carbon emission reduction, but also would like to see that circular economy kicking in and ideally utilizing those metals that we mine to clean the environment and reduce our carbon emissions.

46:23 Sam asked the questions Sam M. Once the Vulcan project is completed in late twenty twenty one, assuming precious metal prices are still strong, THARISA should be producing very strong free cash flows. What will the priority for the use of this cash flow be? So we've been pretty open about our growth aspirations. We have a very exciting option in Zimbabwe on the Great Dike. We currently own 26.8% of a project called Caro Platinum and this is the next richest PGM resource globally after the Bushveld igneous complex. With the Karo team, we have been undertaking exploration on the Great Dike and are currently in the second phase of that exploration program.

47:16 The results of that should be out in the first half of twenty twenty one calendar year and that should give us a real sense and guidance of what the potential and opportunity is on the Great Dike. So to answer the question, we see potential particularly in the light of the PGM deficit, growing deficit in the short and medium term to expand into ZIM. We believe that we can return greater value to shareholders and we'll look at expansion opportunities as they arise. I did mention that we would like to beneficiate our own platinum group metals and that is another project to go from the pilot scale PGM smelter into a full scale PGM smelter. And just, you know, the margins that we're talking about, they're capturing a substantial and material and they flow straight through to the bottom line in terms of those moving from a PGM concentrate producer to selling final metal. We only get a percentage of the quoted price that we report on.

48:29 And then, well, Ashik S does ask the question, will the Vulcan improve your Chrome recovery? Yes. It does. So currently, we're targeting around 65%. I think this last year, we achieved 62 odd percent. It will take us from that 65% target in a normalized environment to 82%. So that's the real kicker. So the operating cost is negligible because it is a tailings retreatment or treatment plant, it takes the flow of the current tails from our two processing plants, scavenges out that final chrome concentrate and recovers those ultra fine chromes, as I say up to 400,000 tonnes of fine chrome. And this will be the first time in the industry that this is done.

49:19 Sam asked again, if the South African government does impose an export tax on chrome ore, what effect would this have on THARISA's profits? Now it's a very good question. The the real the question we're asking ourselves is what is the size, shape, and form of this proposed tax if it does ever get implemented, and then we can answer that question more insightfully. But let's assume that there is a tax. The percentage of our operating profit that is exposed to tax is around 20% based on our financial year 2020. So a significant portion of our profit, but it doesn't necessarily mean that it's going to deplete that. There may be a slight margin attrition, but we believe that you know, through proper engagement, the implementation, if done properly, should have negligible impact. Yeah. And again, just to be clear, we're against and opposed to a tax on the exports of of chrome concentrates. We don't believe it solves the primary issue that the downstream producers of ferrochrome have, which is really escalating costs in the form of electricity primarily.

50:39 And we have noted that the government has stepped up and is offering some form of reprieve in terms of electricity prices. So hopefully on the back of that, the chrome tax falls away and we can focus on more positive things in the Chrome space. I see we've got a lot of questions. So the question Edward m is asking a question on. I'm not sure if I've answered it. The question was about the timing. Apologies. So he's noted, this is Edward m, that in the recent accounts presentation, car has been delayed by twelve months and that's correct. So we halted the exploration program due to COVID-nineteen.

51:31 We were not able to continue moving people and supplies up into ZIM during this time and we took a cautionary approach in terms of that initiative and we weren't certain what the impact would be in Zimbabwe of COVID-nineteen. As of September, we resumed activities and continued with exploration. So the twelve month delay is in line as mentioned earlier, should be receiving feasibility or pre feasibility study in the first half by which stage we will make a go no go decision in terms of our option to acquire the balance of the equity and invest in developing that very exciting operation, which again provides a low cost, high value shallow PGM resource.

52:24 Again, another question from DH. What is the value of your investments in Zimbabwe and what is the likely investment required before they become operating? So to date, we've spent about 8,000,000 just over $8,000,000 on exploration and licensing in Zimbabwe. We are budgeting an additional approximately $2,000,000 for this next financial year in terms of the exploration work and studies that we're undertaking. We can't give clear guidance in terms of what that CapEx would look like, but the intention is not to go in with a heavy CapEx number, but rather look at a measured stage approach very similarly to what we did at Theresa. He asked if we started with trial mining, pilot plant and then grew the capacity and the competency and ended up with a very large scale operation. We see a similar approach in in Zimbabwe.

53:23 So, hopefully, we'll be able to give you more color in in the half year. Year. Ashik S. Has asked a question about how load shedding will affect us in the future. So Ashik, a very important question because we know Eskom has had stability issues and has imposed various levels of load shedding. So we again, one of our investments over the last two years has been standby generator capacity. So we've invested in just shy of 10 megawatts of standby generator capacity, which is which could accommodate around 25% to 30% of our power requirements. But what that does is it gives us a buffer to withstand up to level four load shedding and continue operations uninterrupted with standby generation capacity.

54:18 We have a very good relationship with Eskom. So in the event that they do need to curtail power or redirect power, they call us and we say, okay, fine. We'll switch over to generation capacity. Very rarely do we have a failure or complete blackout. It has happened to us, but it's a very rare circumstance that that does happen. And you can imagine from a health and safety perspective that that is I'm lucky and an unwanted situation and invariably means that something has failed in terms of transmission or distribution. We don't foresee any disruptions going forward due to load shedding. I think under new management, Eskom is for all intents and purposes being managed correctly.

55:03 Maintenance is being managed correctly. I think there will be quite a lot of medicine to be taken in terms of the Eskom data and the restructuring of the business. But I think from an industrial user perspective, I think the worst is over, we believe. Edward M. Asks a further question here around CapEx. Are we able to provide a rough CapEx profile over the next few years? CapEx was around $25,000,000 and then in years 2014 to 2017 and then in 2018 it jumped up from 2018 to 2020.

55:52 Investment has increased and is forecast to be around 17, obviously, in 2021. What is it going? What is the SRP CapEx number look like going forward? So I think there's a material event that occurred in the transition between 2017 and 2018, and that is that we transition from a contract mining business model to an owner operator mining model. So we brought all that CapEx of the yellow fleet onto our balance sheet. We moved all the employees onto our balance sheet. So the whole stay in business CapEx profile changed. And had we stayed with the contract mining model, those numbers of 25,000,000 to 35,000,000 would be appropriate and that is really what we apportion to the processing side of our business and general infrastructural SIB.

56:50 But when we look at CapEx going forward and we strip out the deferred stripping asset, which is really that additional waste rock that we mine and investing in our open pit for future exploitation, you're looking at around $55,000,000 free anywhere between $45,000,000 and $55,000,000 on a normalized basis for SIB going forward. I think that is a reasonable assumption. And it's really the balance between the mining fleet and the operational processing plants as well as the infrastructural spend in terms of tailing, storage facilities, water, waste dropdowns, etcetera. So there is a question from Michael. Do we have insurance in place to offset financial issues resulting from a closure?

57:51 He mentioned smelter closures. So just to be clear, in terms of smelters, we run a small pilot scale PGM smelter. But, we do have business interruption insurance. And in fact, we have a a claim pending for the curtailments and disruption due to COVID nineteen. And we would see that remaining in place going forward. Now it's not comprehensive. It's not going to cover everything, but it does cover a substantial portion of business interruption or revenue loss. So there are a few more questions and these are from Edward M. The question is, are we planning on providing unaudited financial reporting in our quarterly reports? It's a very good question, Edward. Thank you for that. Pity our CFO is not here because we're pressuring him to do it. But at this stage, we're providing a little bit more clarity in terms of pricing, in terms of volume, so you can work out pretty much the revenue line, but not the cost. It is something that we're considering and are in discussions with various analysts in terms of that. At this stage, no plans, but we may migrate to quarterly unaudited reporting in terms of some key numbers, debt, cash on hand, etcetera, just to give a sort of a health check on a quarterly basis, but

59:23 you can put pressure on us to report more. Appreciate the thank you. Thank you note from Edward, just highlighting the performance and the health and safety aspect of our business. So I think the last question and a good question to close on, Ashik S is asking, your share price is sorely or surely underrated. What are you likely to do other than webinars? My retirement plans are based on your share price. So a great question, Nashik, and I think your retirement will be safe because if we just look at where we stand and what we've been through, we've been through a tough a couple of tough years in terms of reinvesting in our business, making sure that we've got a sustainable platform to grow from. So there's no doubt that with these buoyant PGM prices, which we see no reason for them to retreat dramatically, they may rerate or come down slightly, but still the margins are significant, that our cash generation is well protected and the dual co product nature of our business is solid and has proven its versatility and robustness through the cyclicality of the commodity cycle. So what we're doing around the the share is talking

1:00:53 and speaking to more a wider audience, a broader audience. We are attracting some key institutional investors through our roadshows in London, and we're starting to see more liquidity. And I think you'll notice over the last few weeks an increase in trading and activity in the share. And so we believe it's just a matter of time before our share price reflects some form of real value underlying the investment case, which is THARISA. So we're strong believers and so we should be. But this is a really valuable long life resource and asset which we've managed to bring to book and generating strong cash flows for a long time to come. So, Ashik, thank you for your support and we encourage you to continue investing and hopefully we can meet face to face in person and celebrate the success of your investment.

1:01:58 So with that, I think that concludes the session. I'd like to thank all of you for attending today. It's been our great pleasure to share the THARISA story with you. Pheboz, thank you. I think you've addressed those questions that you came from the investors. And of course, the company will review all of the questions submitted today and will publish those answered on the Investor Meet company dashboard. Phebo, I know it's been a detailed presentation, a broad set of questions, but perhaps I could just hand back to you to wrap up, after which I will redirect the investors to give you feedback. Great. Thank you. So our motto of discover, develop, deliver and diversify. So we're proud of the fact that this project was a greenfields exploration project and we took it right through the value curve. And that is really the story of pioneering mining exploration and bringing it to book. And I think what really pleases all of us is the fact that we have such a strong team and the THARISA team that are resilient, resourceful, and have shown real metal in in times of challenge. And and through this COVID pandemic, we we relied heavily on our employees to dig deep and find that resourcefulness that required us to operate in very challenging environments.

1:03:17 And so a big thank you to the THARISA team that has shown a commitment beyond normal course. And thank you to our shareholders and to those new shareholders, welcome aboard. We're really set for an exciting time in these buoyant PGM prices, which really are underpinned by the fundamentals of making the world a greener place. So thank you again for all your time and attendance. And with that, I'd like to end the session as you will now be automatically redirected for the opportunity to provide your feedback? If you access this meeting from our website, the feedback page will appear. However, if you access from the link sent to you by the email, you'll be asked to log in and submit your feedback.

1:04:08 On on behalf of the management team at THARISA PLC, we'd like to thank you for attending today's presentation. That now concludes today's session.