Tharisa (JSE:THA) — FY2021 Annual Results Presentation

0:01 Good morning, ladies and gentlemen. Welcome to THARISA PLC Full Year twenty twenty one Annual Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged. It could be submitted anytime via the q and a tab situated in the right hand corner of the screen. Just click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question you received during the meeting itself. However, the company review all questions submitted today. We'll publish responses where appropriate to do so. These will be available via our investment company dashboard, and you'll be notified when they're ready for your

0:31 review. We also like to remind you that this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Phovis Polaris, CEO Michael Jones, CFO Michelle Taylor, COO of THARISA PLC. Good morning. Good morning, everyone, and thank you for joining us for this annual results presentation for our year ended, 09/30/2021. I think we can really sum this year up as

1:01 PheVos, unfortunately, we've just lost your sound there a second, sir. Let me just make sure that that is connected. Please bear with me one second. Just requesting control just to make sure we're connected to the right, device there.

1:32 Do apologize for the attendees as well. We get reconnected here. If he was could you just say a couple of words just to test? No. We're let me just try again. That connection seemed to have just dropped out. So bear with me one second, please. Phevis. Are you able to hear me now? Yes. We are. Thank you very much indeed, and apologies to the attendees. Thank you. Please carry on. Okay. Great. Apologies for that. Good morning, everyone, and welcome to this year end results for the year ended 09/30/2021. So as mentioned, this has been an exceptional year for us on all levels, strong operating performance, significant cash generation, and very pleased to declare a record dividend, in terms of our full year payout.

2:32 So if we just jump quickly to the highlights for the year, really, we look at the foundation for the sustainability of our growth. And to this end, safety is a core value of ours, and we celebrated six years fatality free, 5,000,000 fatality free shifts. All our employees are on medical aids and contribute to provident funds or retirement funds. During the various degrees of lockdown and and levels of, the pandemic, the different waves, we equipped ourselves to to manage the various challenges that this pandemic has brought to that end. We've set up a COVID nineteen clinic. We have isolation centers as well as vaccination facilities at, Theresa Minerals.

3:22 Currently, with the onset of this new variant Omicron, we have recorded eleven active cases, and that, that really come off a zero base for the last three months. So definitely seeing a rise in in those cases. But I think importantly, recording a ninety seven percent recovery rate, and approximately sixty five percent of our employees and, permanent contractors have been vaccinated. Earlier this year, we announced our carbon footprint reduction plan. And to that end, we are planning to reduce our footprint by 30% by 2030 and achieve carbon neutrality by 2050. We're currently installing some small solar solutions on the mine, but looking at more sustainable significant solutions in terms of large installations of solar projects.

4:19 You will have noticed that our r and d team has been very successful, and that very team is looking at renewable energy projects across the group and looking at different technologies and the application thereof. So very exciting developments on that front. Just in terms of our social contribution, the communities within which we operate are 6% shareholders of THARISA MIND or THARISA MINERALS, and we also provide infrastructure services to the community. We directly employ more than 700 people from the local communities. We offer internships, graduate, and learnership programs, to multiple individuals that qualify. And, also, we offer adult education training to those wishing to achieve a matriculation, and that is to the broader community and our employees. And, currently, we have 60 employees signed up.

5:12 In terms of our contribution to, the broader economy, in this past year, we paid direct taxes of $39,300,000, indirect taxes of some $22,300,000. And importantly, we funded from internal cash flow the Vulcan plant circa $55,000,000, of which 90% of that spend was locally procured. We contracted around 1,000 employees during the construction of the Vulcan plant, and this plant will create a 100 new permanent jobs at the THARISA mine. Importantly, we've also taken on a new committee at the THARISA PLC board level chaired by our lead independent director, doctor Carol Bell, and that is the climate change and sustainability committee.

6:04 And that committee is attended by all board members. So if we just touch on the operational performance, we we spoke about our excellent safety achievements, but when we look at the lost time injury frequency of point three four per 200,000 man hours work, it is above the zero harm that we strive to achieve. So a lot of focus and attention being applied to that. We have seen fatigue creeping in and just general malaise on the back of all the COVID nineteen stresses and strains, but it's something that we're actively managing. Nonetheless, still an industry leading statistic and something we wish to maintain. I think this year saw us delivering on our promises.

6:50 We achieved market guidance in terms of our production. And to that end, we also achieved record mining rates, PGM, and chrome production. I think that the key difference between this year going into, our new financial year compared to last year is the significant growth in our run of mine stockpiles ahead of the crushers. What this allows us to do is blend the appropriate reef types into the various processing plants, maintain stability, But in the event of inclement weather or disruption to our mining operations, we're able to continue feeding from those run of mine stockpiles. So close to two months of feedstock, sitting on our ROM stockpiles, at year end. I think if one looks back at the previous year and the growth quarter on quarter in terms of, feed grades, in terms of recoveries, I think we're really set up well to achieve our guidance for financial year 2022, continue with that momentum, with the added buffer of that gold mine stockpile, and hence us providing improved guidance for this new financial year of a 165 to a 175,000 PGM ounces and 1,500,000 tons to 1,850,000 tons of chrome concentrate.

8:15 I think what's really exciting for us and and really unlocks huge value when we look around us in the context of, resources and the scramble to find, expansion of PGM growth, and that is the extension of our open pit life of mine by seven years to 2041. But moreover is the fact that we are derisking the transition to underground mining whereby we'll have a hybrid open pit underground model where half production will come from each, of the open pit and underground as we transition from 2041 onwards. So a really significant value addition. And importantly, there's no additional CapEx that's required for us to continue operating the open pit for those additional seven years. So a significant value addition to our open pit mine.

9:07 I think, very exciting is the commissioning of the Vulcan plant with first commercial production of chrome concentrate expected, shortly in this month of December. And that's, just to remind everyone, is the fine ultrafine chrome recovery plant, which, we started with coal commissioning in October of this year. We also established the Arco Metals beneficiation site, really driving our r and d, aspirations, looking at new applications for our metals, and products that we mine. And then we successfully acquired the, 100% equity in saline chrome. Mining has commenced on the Great Dike, and we've started with cold commissioning, and we can expect first production in this, month of December.

9:58 So when we unpack the vital numbers from this this prior year, I think on every metric, it was an improvement from the year before financial year 2020. Reef mined up at 5,380,000 tons, up 8.2% in the prior year. PGM production just shy of a 158,000 ounces, up 11%. Chrome concentrate production at 1,510,000 tons, up 12%. But, if we unpack that into the financial metrics, we see revenue jumping almost 47% to $596,300,000, operating profit at a $178,800,000, up a 104%, and EBITDA almost doubling from the prior year to $224,300,000, resulting in, profit before tax of a $185,300,000, generating an EPS of 37.4¢ per share, up a 130.9%.

11:04 Free cash flow at a $102,000,000, and importantly, we measure our performance on return on invested capital and that upper 25.5%. I think the year end dividend proposed at 5¢ results in a full year, half year of 4¢, and final year 5¢ of 9 US cents, a significant,

11:30 growth in that payout to shareholders, bearing in mind that our policy is to pay out 15% of net profit after tax, and this equates to just, 18.5%. Importantly, we deleveraged the the business during this year, and we ended in a net cash positive position but with cash and cash equivalents of $83,400,000. Just touching on our strategy, we're an integrated PGM and chrome producer located in the key geological regions, the most, prolific region for platinum and chrome in the world, the Bushveld Complex. We have a ten year operational track record and, with the extension of the life of the open pit of twenty years further in that open pit followed by at least forty years underground thereafter.

12:25 R and D is starting to play a critical role in the development of, products and technologies, around the metals that we produce, providing solutions for a greener planet and a decarbonization strategy. I think, importantly, while we've enjoyed very buoyant PGM prices this last year, we have been profitable throughout the cycle. And I think that's key being a low cost, producer of both platinum group metals and chrome concentrates. And importantly, we are a consistent dividend payer. You'll see there on the map, we highlight the second richest geological formation, the Great Dyke, and the future, expansion of the KARA platinum and saline chrome opportunities in Zimbabwe.

13:16 So if we look at our six pillar growth strategy, and, really, this is something we've been focused on rolling out, and that is to expand and roll out the business sustainably. We've achieved that with the Vulcan plant, Celine, Chrome, and the Karo project implementation study being completed. We've optimized our existing operations. Throughputs have increased. Feed grades have improved. PGM and chrome output, improvements. MetQ, the engineering business that we acquired, manufactured the bespoke Vulcan plant key components as well as the entire saline chrome plant. So getting those linkages and those synergies between the various businesses that we own and operate. And then importantly, investing in innovative thinking, commercializing the Vulcan fine current technology, the expansion of our r and d beneficiation sites at Arco Metals, looking at PGM production of, PGM alloys and further downstream beneficiation of those PGMs to final nickel as well as a unique alloy production.

14:23 We look to become a globally diversified business. And to that end, Celine, Chrome, and the Cora project in Zimbabwe, achieve that partially, and we continue to look at opportunities, across the board. But imminently, we're looking at taking control and acquiring the controlling interest in the KARA project through the option agreement that we have in place. And then importantly, we strive to be the investment of choice in our chosen sector. To that end, we've seen an improvement in the shared liquidity, the inclusion in the JSC all share index of THARISA, as at September of this year. We've expanded our shareholder base. We've deleveraged the balance sheet, really positioning ourselves for growth, and we've recorded a record dividend proposed to be paid out to shareholders.

15:17 And then importantly, sticking with our purpose to responsibly enrich the lives of all our stakeholders, we do this in a safe manner and a sustainable manner. We are committed to the reduction of our carbon footprint, and we continue to invest in the upliftment of not only the communities, but all stakeholders within our business. Just at a very high level, unpacking our commodities and the sustainability of these commodities. Now there's a huge focus on future metals, and, pleased to report that both PGMs and chrome play a vital role in decarbonizing and the future of of the planet. In this medium term, we see auto sale demand to increase, tightening emission standards.

16:06 There's still territories around the world that can increase their emission standards through auto catalyst loading of both platinum, palladium, and rhodium, and we see that increasing, to be more and more stringent and make the emissions cleaner, in the medium term. When we look, at the irreplaceable or or the essential role that they play, in the various auto catalytic converters, we see strong demand coming on the back of, the chip shortage being resolved in, we believe, the second half of financial twenty twenty two. So we should start seeing, improved sales and demand for all three of those commodities.

16:51 When we look at the hydrogen economy, it it really is a zero emission solution when we look at green hydrogen, and and we see demand and interest, aligned at the moment for, electrolyzers and fuel cell technology and, really, the commodities that are of great interest and great use and value are platinum, ruthenium, and iridium. So almost dovetailing the internal combustion engine demand cycle, is the hydrogen economy. Then when we look at stainless steel, highly recyclable, chrome is the substance that makes stainless steel stainless. It is irreplaceable, and we see growth of 3.8% over the next, five years supporting chrome demand.

17:38 And I think when we look at the application of of stainless steel, we see it playing a vital role in the hydrogen economy, as well as water reticulation, looking at sustainable solution in terms of infrastructure spend, in terms of corrosion resistant bridges, airport refits. We've seen the the trillion dollar plus refits of The US economy, and that bodes well for the global demand of, stainless steel going forward. And then touching again on our r and d initiatives, we're evaluating expanded uses for these commodities and the application, in terms of renewable storage, renewable energy generation, and just providing solutions, for for decarbonizing the planet.

18:31 Really, just a snapshot here of the platinum group metals market. You can see the pricing graph there. We saw unprecedented PGM basket prices in the first half of our financial year hitting over $4,000 an ounce, and that really on the back of the fact that we have a very high contribution of rhodium, some 12% on a four d basis as can be seen by the bar chart on the bottom right hand side of the graph, compared to our peers, one of the highest

19:04 in the industries. And that then results in revenue contribution from rhodium of some 61% and a significant contributor to our profitability. Not underestimating the importance of platinum and palladium, And as we see platinum being used to substitute palladium in the petrol or gasoline drivetrains, we should see demand increasing, albeit that platinum was in a surplus for this year. Looking at chrome, as mentioned, set to grow for the over the next five years at a CAGR of 3.8%. The market fundamentals remain robust.

19:49 The demand is strong. I think the biggest challenge for bulk commodities globally has been the supply constraints, with inland rail logistics and port constraints as well as vessel availability and the increased freight rates, that have eaten into our margins over this year and continue into this new financial year. As as mentioned, we moved considerable amount of our cargoes by road to compensate for some of the constraints on the rail linkages. But not only are we seeing positive outlook for economic growth in China, we see this as a global phenomenon.

20:34 I'd like to hand over to our CFO, Michael Jones, who will run through the next portion of the presentation for us. Thank you, Phevis, and good morning to all the attendees. I know we ran through some of the production numbers a little earlier, but I'd just like to touch on some of those again to set the context of the financial numbers that will follow. So firstly, there's a mining volume increase, so that increased to 5,400,000 tonnes. We maintained the stripping ratio at above the life of mine stripping ratio to ensure we have pit flexibility going forward. And as Pheos mentioned, we increased our run of mine stockpile, thereby derisking operations still further. Reef mold also increased up to 5,600,000 tons and has increased in PGM and chrome production over the period.

21:25 So if we look at this financial year, it's been a very rewarding year financially. We delivered an operational performance with an increase in both PGM and chrome concentrate production. We also enjoyed the benefits of a favorable commodity pricing environment, so PGMs up 80.4% and chrome and that's metallurgical grade chrome up 10%. And all of this translated to a very healthy cash flow generation. So net cash flow from operations, 208,400,000, and we applied some of this to the deleveraging of the balance sheet ending the year with a net cash position of $46,600,000. We continue to invest for the future, so our sustaining CapEx and our expansion CapEx incurred some 106,000,000 of that cash flow.

22:13 And we have a record dividend payout with the board's proposal of 5¢ per share, making a total dividend of 9¢ and $24,300,000 payout for that year. Just look at the revenue itself, the revenue increased just under 70% to $596,300,000. And if you look at the breakdown of that revenue, and that's a pie chart on the left, looking at an x works basis, fits with the mine gate, the platinum group metals contributing 72% overall, and the chrome segment just under 25%. In terms of the revenue segment, the rhodium was a stellar performance and while comprising less than 10% of the overall pill split contributed just over 60% to our overall revenue line and then platinum just over 19, palladium just under 20 overall in the contributions.

23:08 Chrome production metallurgical grade stood at 75% and the specialty grades, just under 25% in total. Now the specialty grades are the foundry and chemical grade products that typically command a premium to the metallurgical grades and have prices of some 30 to $50 premium. We did have an improved gross profit, so gross profit margin of 34.8%. And this is really on the back of this increased sales volumes and increased commodity prices. And this translated to a gross profit of $207,400,000 for the year.

23:45 Just touching on the cost aspects, on mine cash costs, the mining, 32.1% of the total diesel 12.2. The diesel is used on principally on the fleet in the, pit itself. So all in all, the mining cost comprising 44.3% of our online cash costs. Labor then at 20.2%, and increase there, and we'll touch on it later, on royalties now comprising some 10% of our on mine cash cost of sales. In terms of reef tons mined, that increased 8.2%, 5,400,000 tons, and the cost per reef ton mined up 21.3% at $31.9 per ton. And I'll touch on the reasons for that shortly. I think as we look at the mining itself for the year, we did build up the run of mine stockpile that came at a cost of some $17,600,000.

24:37 And also because we were stripping ahead of the life of mine stripping ratio, a deferred stripping cost capitalized to the balance sheet of $25,400,000.

24:48 Tons mold were up 11.2% at 5,600,000 sorry, five, yeah, 5,600,000 tons for the year, and a consolidated cash cost per ton mold, up 15% at $44.4 per ton.

25:05 We are a co product producer of both platinum group metals and chrome concentrates. But to put in context, if we're a platinum only producer and we took the byproduct credits of the other platinum group elements including rhodium and the chrome concentrates produced, we have a negative all in cost and this is after CapEx of $568 per ounce. I'd like to spend a little bit of time just looking at the movements on the EBITDA year on year. So the prior year, our EBITDA was a $113,400,000. This year, $224,300,000. And what were the key drivers? From a revenue perspective, we had increase in sales volumes as well as commodity prices. And then there were some cost pressures.

25:53 We implemented improvement the drill and blast operations. The focus was to achieve improved fragmentation that helps with the grade control and also enables us with the high mill throughputs that we've seen in this past year. We also revisited the strategy around our environmental rehabilitation and we have submitted and amended environmental management program through to the DMRE for its approval. And from an accounting perspective, that accounted for some 6,300,000, dollar charge. It's a non cash flow item, and that's an accounting entry that was put through.

26:28 There were some constraints on the chrome inland logistics and sea freight, and globally, sea freight race rates have increased significant significantly. And particularly in the last quarter of our financial year, so the average for the year, in fact, of our total logistics chain from mine to final customers, Main ports China, for the chrome, up 22.3% at $72 a ton. We do typically benefit from being in a weaker exchange rate economy with most of our costs of the trees of mine being rand based. The rand over strengthened over the period against the dollar and had an implication of some 9% on our costs. The mining royalties, is under 10% of our online costs, increased the charge through cost of sales $23,800,000 for the year and that's really on the back of the significantly higher commodity prices on the PGM basket in particular and the fact that we have utilized our tax shield, from unredeemed CapEx that's permitted in terms of the calculations.

27:33 Our net cash flows from operations, dollars 208,400,000. As mentioned, we spent 106,000,000 on property, plant and equipment, and this is both sustaining CapEx and expansion CapEx. The expansion CapEx being the Vulcan plant and that's been funded mostly internally from our internal cash flows, the saline chrome, the construction of that plant, and then the beneficiation site at Avarco Metals, and investment in that particular site. The cash dividends paid for the last year amounted to 21.3, and this is a cash tax paid, so it's really the last year's final financial, year dividend as well as the interim dividend. As a consequence of this, we had a net increase in cash of $32,300,000. The board has proposed a final dividend of 5¢ per share.

28:22 Taking this interim dividend that is a total dividend of 9¢ per share and a total payout ratio of 18.5 of our net profit after tax. And as Phoebus mentioned, our policies distribute a minimum of 15% of a net profit after tax. And this distribution again proves our commitment to maintain fiscal discipline and balancing our expansion requirements with returns to shareholders. Just touching on the balance sheet, the cash and cash equivalents stood at $83,400,000. We did repay our corporate facilities. We had in place a term loan revolving credit facility in overdraft in March of this year. And we've put in place a new overdraft facility. It's much more appropriate from a security perspective. It's more security light and additional asset backed finance facilities of additional 20,000,000 to take into account the fleet expansion programs.

29:17 Total debt stood at $36,900,000 and short term 16,300,000. Most of that is trade finance related, and typically is on the back of the letters of credit from the chrome business, nothing longer than ninety days. Ended up the year with a net cash position of $46,600,000. If we just look at the year ahead from a CapEx spend point of view, some $80,000,000 has been budgeted. Just to note that this excludes Cora Platinum, we're busy evaluating our rights on the farm and to take a controlling interest and also excludes any deferred stripping capitalized. So all in all, the mining budget looking at some 14 just under 40,000,000 on the mining assets and processing about 10,000,000 and very importantly from a growth perspective optimization initiatives of some $14,300,000 committed on the budget spend.

30:11 I'd like to now hand back to PheVos to take us through the outlook going forward. Thank you, Michael. So I think, it would be remiss of us not to unpack the current activity in the PGM industry, with the majors vying over resources in the Bushveld complex. And, what what we decided to do was unpack this and understand the metrics of of how valuable these resources are. And on the lower of the two premiums being paid, we did an equivalent valuation of THARISA mine and the resources we have. And, basically, on those metrics, it gives us an equity valuation of just over a billion dollars and some 56% discount to our current market capitalization.

31:11 So just another proof point that there's huge upside value in the THARISA mine as a stand alone and with the expansion and all the additional value that, we've we've unpacked through our growth strategy, a compelling investment case, and that can be seen on an EVEBITDA basis, based on our 2021, numbers and, price to NAV still, showing real upside potential. So for those of you that have supported us, we thank you, and those that are on the fence, I think the time is now, to jump in. So just in closing, we've got a great business, at at the THARISA mine. It is our foundation. It is the core, value generator, and it fits squarely into our strategy of rolling out similar operations of scale and low cost strategic importance.

32:09 I think we, in many respects, can't compete with the majors in terms of balance sheet, but where we do compete is through the application of technology and innovative thinking and using that as the differentiator. And the THARISA mine is a point in case, ten years ago or even more fifteen years ago when we anticipated the prospects of the THARISA mine. Everyone said to us we're crazy. MGs are not a a valuable resource, and and pleased to stand here today and year in, year out, show the robust structure of the coproduction business model that we have. I think it's important for us, to to understand, where the planet is going and the role that we can play through the metals we mine, and we're very excited about the potential, of the metals and their application in terms of future solutions, and and we'd like to be part of that transition.

33:08 I think we've always remained and realistic in terms of our outlook and our forecasts, and and we may going into our expansion projects. And you can see the success of the Vulcan plant and the the significant scale of of what it entails to recover those ultrafine chrome units, boosting our chrome production by 20% at very incremental, operating costs. So it's significant cash generator booster for our bottom line. And then you can see the saline chrome plant, and we have real pride in that because our engineering business, built that plant entirely and shipped it up and commissioned it in Zimbabwe. So so really pushing, the platforms that we've invested in. And all of this with keeping safety at the core of our our value system and focusing on ESG as we move on to the next chapter of our growth.

34:10 So that ends, the formal part of the presentation. Ilya, can I hand over to you for the, to moderate the q and a for us, please? Fantastic. And, Ilya, just perhaps before I I'll jump in before we do so. And thank you very much, Vivos Michael, for the presentation. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated in the top right hand corner of your screen. But just while the team take a few moments to view those questions that have already been submitted, I'd like to remind you the recording of the presentation along with a copy of the slides and the published q and a can be accessed via investor dashboard on the investor meet company platform. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback in order the company can better understand your views and expectations. Ilya, if I may just hand back to you. We've had a number of questions in from, attendees today. And if I could hand back to you to read those questions where appropriate to do so and and direct to the team. Thank you.

35:03 Absolutely. Thank you very much. Let me direct the first question to Michael. With a building cash balance, what is the strategy for increasing dividends? Sorry, it did take a while to unmute. Apologies for that. If you look at where the strategy of the group is going forward, we are going to maintain our fiscal discipline. The current strategy remains a Michael, you've just gone to mute there. Thank you.

35:50 Please continue. Thank you. Michael, can you hear us okay? Thank you. Apologies for that. And we do are looking forward to the construction of the Cora project. It's it's going to be a capital intensive project going forward, but our intent is to remain and distribute the excess cash. In this case, here, the policy of at least 15% to our shareholders going forward. So that's where we currently are at the moment. Thank you. The next question, you have budgeted for CapEx of roughly $80,000,000 for FY 2022. Looking beyond 2022, what sustainable level of CapEx should we be looking at? Sure. Thank you for that question. If we look at our normal business, I'm talking now about THSRISA Minerals and the Saline Crown, which is now in production.

36:39 Our typical level of sustaining CapEx should be of the order of between 55,000,000 and $75,000,000. It does seem quite a wide range. It really depends on when we're going through significant fleet replacement in the pits itself. That excludes Cora and when we've dealt with the Cora numbers, at a future time, we will then be able to share some of those numbers with you. But I'd work on between 55,000,000 and $75,000,000. Thank you. A question on on the operations. The load and haul costs increased, roughly 64% year on year. Is this only attributable to Celine Chrome? No. That is principally attributable to the trees and minerals operations. There were some accounting anomalies in terms of load and haul in the previous period where there was a credit coming through an environment rehabilitation.

37:29 So it has impact on those numbers because then there's an allocation of the charge that went through of that $6,200,000 that I mentioned earlier, and the longer, load and haul distances as well as the higher volumes busy being moved, for that. There's a slight impact from the diesel side, on the overall cost on the load and haul, but as mentioned earlier, that was not a significant cost driver in this particular point in time. Looking forward, where Brent has been for some time, I would expect to start seeing some pressures coming through on the the diesel price going forward. Thank you. Question for Pheboz, and I'll combine two questions in in one. On the basis of valuation mismatch, what do you see driving the change to this? And what is the m and a landscape looking like in the sector? Are you seeing strategic buyers active?

38:19 And at the same time, the question relates to despite a solid set of results, mister Market hasn't responded. So both questions relating to how we're going to address the the valuation mismatch that you addressed in the slide earlier. Yeah. So it's a fair question, and and we appreciate it. And it's something that we ask ourselves continuously. And and the answer we have is just to keep our heads down and keep delivering on what we say we're going to do in a structured, measured, and disciplined manner. And and we believe that while we've seen liquidity improve, you know, on the back of successful deployment of of capital return to shareholders' return in terms of cash flow from from investments, we we believe the rerating is imminent.

39:09 In terms of m and a activity, I think we're we're encouraged by what we're seeing because it really underpins the race for resources. And we we have a long life asset, 40,000,000 ounces of PGMs at at THARISA, and we're sitting on a tier one asset in Zimbabwe and the option to acquire that historically declared resource of 96,000,000 ounces. So I think in terms of us looking beyond our own portfolio, I think we've got ample expansion for growth and and for for exciting returns. And I think the valuation will follow on on the continued delivery of of our strategy. Yes. We will continue to promote and and market our business to broader audiences, and, we're starting to see institutional support creep onto our register, which is encouraging with the indexation on the all share index. And it's it's almost, as we grow, it's a self fulfilling strategy.

40:12 As we grow, liquidity improves and and the one forgets the other. So we're we're not immune to to the challenges, but we believe we're on track to achieving that. Thank you. Continuing in this vein, Phoebus, what keeps you and what threats might keep you awake at night if you're looking at the company from a SWOT analysis point of view? It's a it's a good question. You know, we we do run strategic risk registers, and and the macro issues that are generally beyond our control are you know, create a degree of uncertainty in in line of with the pandemic's closures, in terms of travel, the ability to to actually engage in in meaningful discussion, face to face discussion. And and, you know, we're talking about promoting our business, being able to do it, in in conferences and face to face settings becomes limited, and then we resort to online strategies.

41:15 So so, you know, beyond those macro events, you know, where we saw market devalue on Friday with the announcement of the Omicron virus and and and, you know, fortunately, a rebound this week, Those are things that concern us. Volatility around exchange rates, around oil prices, those all impact our business. But truth be told, they're beyond our control. I think we've put in the mitigation measures that we can. We monitor them on a regular basis, and make sure that that we are, you know, applying best practice to to what we can, do to mitigate those risks. In terms of, threats, you know, substitution is is a threat in terms of the commodities. But when we look at the underlying applications, we we we're less concerned on that front.

42:09 Stainless steel, as mentioned, chrome is irreplaceable in in its core role of making stainless steel stainless. In terms of the PGMs, you know, the hydrogen economy has taken huge, huge momentum, and it's the first time we've seen policy capital and corporates driving the agenda at a level that we thought was maybe a decade out, and it really does provide exciting opportunities for us. So I think just in summary to answer the question, I think it's the macro factors that that beyond our control that that keep me awake at night. Thank you. Two questions on on Cora. One is what factors remain to be considered in order to exercise the Cora option?

42:56 And can you give us some views on the macro environment in Zimbabwe where KARA is located? Yes. So we had signaled to the market that we would be announcing the option exercising the option in this quarter. There have been some regulatory delays. Nothing fundamentally wrong, just just procedural matters to deal with. So we were hoping that, before this calendar year out is before this year is closed out, we can we can have all those agreements in place. In terms of Karu and the operating context, you know, there are very successful operations on the Great Dike, Zimplatz, Mimosa, and Unki have been operating for for decades in Zimbabwe, low cost, very safe operations.

43:53 The skill set in Zimbabwe is excellent. The work ethic is great. So so we're very excited. Our our team on the ground that has been working through the exploration phase and rolling out the Celine Chrome are highly capable and competent, and and are very excited at the prospects of continuing. I think the hyperinflation of the Zim dollar has created a lot of issues and concerns. And part of the the negotiations and the structuring of our our national project, is to to mitigate those risks in Zimbabwe, and and we'd rather take the time now to structurally embed those, those privileges into the business so that we don't encounter challenges that others have had, in terms of deflationary, pressures with the Zimbabwe.

44:43 But in general, the ministries are very open, very welcoming, and very keen to see investment going into Zimbabwe. We've seen a number of major, miners, publicly stating that they're looking at resources in across the commodity spectrum. Thank you for that. Two questions more relating to the operation. One is the increase in chrome production for forecast for the coming year. Is this all due to Vulcan coming on stream? And when do you expect recoveries to get to the levels you desire at Vulcan? And then secondly, can you add some more information on the work that's been ongoing and will be ongoing towards owning your own PGM smelter timing and potential costs.

45:30 Yes. So so the increased production to 1.75 to 1,850,000 tonne guidance is due to the Vulcan plant coming on stream. Typically, to get recoveries to the levels we want, it it takes around six months, we believe. So if we consider commissioning now first first production in December, I would estimate that for the first calendar quarter or Q2, we would be ramping up efficiencies and optimizing recoveries. And thereafter, in the second half of our financial year, start achieving those 80% plus recoveries towards the latter part of the second half. Ilya, the second part of the question, if you don't mind repeating it. It was about the smelter and what plans you have and the timing of such.

46:24 So so we currently operate a one megawatt PGM smelter at our Arco Metals beneficiation site. We are now converting that alloy into converted alloy, and downstream hydromet test work is being undertaken to produce a a more final product. And so the strategy there is to run that, plant commercially on a continuous basis. It was run on a shift basis. It's now to to move operations from a shift basis to a twenty four hour continuous basis and thereafter look at expanding the capacity to take on the full production of of THARISA.

47:09 In terms of our current obligations, we would have fulfilled our one contract, refining contract by October next year. So the timing, for us to construct and expand our operations, is within the next twelve to eighteen months, and we're busy assessing sites and opportunities for that as we speak. The intention there, obviously, is to capture the margin that we currently forego by selling a concentrate. And in simplistic terms, we're looking to to capture 15% of that basket price that we that we disclosed at $3,000. So significant contributor to our bottom line by by us being able to process our own metals and also giving us the ability to to market and sell metal to end users.

48:05 Thank you. Two questions relating to chrome and and transport. One is inland freight costs inland freight costs have been previously mentioned to be an issue. Can the longer lead times and use of road freight be considered the new norm, or is there resolution in sight? And secondly, your thoughts on the developments of the export Chrome text. What is the latest? Michelle, would you like to answer those? Yeah. Sure. So in terms of the first question around freight and the logistics costs, freight at the moment will continue to be constrained. We don't see a softening of of freight prices coming through just yet. In terms of sorry. Let me just close this.

48:51 In terms of the new norm in on road, unfortunately, it has become the new norm. There are a number of measures underway together with Transnet to improve the efficiencies with rail to try and open up the networks in in the port. It's an ongoing effort. It's certainly not something that's gonna be solved in the short term. So we will continue to use our flexibility between road and rail to maximize moving our product to the port and then on to our customers. And then there was another question there, I think. On export the export Chrome tax. Luca, as far as the export Chrome tax, that was something that was proposed some eighteen months ago. There was a lot of publication and and news around it. It certainly hasn't progressed any further. There's been no consultation with the chrome producers or the chrome and PGM producers at this point in time. So to the best of our knowledge, it's not moving forward at this time. Government may still be considering it, but it's not something that we see happening in the short term.

49:54 Thank you. Back to you, Phoebus. About energy needs, how much do you reasonably think will be supplied from solar power in the next few years? And then secondly, do you have a funding and or cost analysis with regards to the decarbonization strategy that you have announced? Yeah. So so those are great questions. In terms of the solar initiative that we're looking at now, we're looking at a 30 megawatt facility. And bearing in mind that the majority of the energy that we consume or use at the THARISA mine is diesel. So we we currently use 25 megawatts of Eskom supplied electricity. So the 30 megawatt solar plant would would dovetail with our current energy requirements.

50:45 In terms of funding, the solution we're looking at is based on an offtake or an energy power procurement agreement, whereby we would commit to purchase the power at a predetermined rate, which currently looks more competitive than the current energy levels or energy rates that we pay. So so it makes the the commitment a lot easier in terms of committing to that. And, typically, those are, you know, ten to twenty years. Fortunately, we have the life of mine, THARISA, to commit to those type of IPPs. And so it will not sit on our balance sheet, but we would have a a firm take or pay agreement with the provider of that solution.

51:34 And as I say, we're busy with the the feasibility studies. Site location has been identified, and then it's the residing and environmental approvals that are required. So it is in process, and and we'd like to see that, you know, being rolled out closer to this side of the the decade than the second half. And other than the regulatory approvals, we can't see any reason for it not proceeding on that basis. Thank you. A crystal ball question here. Are you concerned of the South African government seeking to nationalize mines? What are your thoughts on that? It's certainly not part of conversation, and and it's it's it goes against the the president's drive to attract foreign direct investment and and seeking out, you know, capital to help with employment and growth of the economy. So, no, it's not something we're concerned about, and I don't think there is a cause for concern.

52:40 Thank you. And then at this stage, the last questions. You think the shares are cheap. What's the company's view on share buybacks? Look, it's a great question. We've been debating share buybacks over the last year. It was rolled out by a number of our peers. And the jury's out as to whether it does add value and whether there is a case for us to to buy back shares. I think the when we debated it at the board level, we we looked at examples, historic examples, and there is no sort of compelling category case that says share buybacks are are guaranteed to work and, in many cases, actually don't work. So the view was, let's just stick to our strategy. Let's deploy our capital in terms of returning cash to shareholders in the form of dividend and provide growth as we've outlined and articulated and and successfully achieved from internally generated cash flows with the development of the Vulcan plant. So I think we stick to our guns and roll out our strategy. And in twelve months' time, hopefully, we'll have a lot of progress to report on.

53:57 Thank you. At this stage, I don't have any more questions. So let me hand back to you, for some closing remarks. Thank you very much, Aliyah. Thank you very, very much for hosting the q and a, and thank you to all those questions submitted and the team for answering everyone that's come through so far. Phevis, as Elias just said, if I could just hand back to you just for a closing snapshot to conclude, that would be fantastic. Yeah. Thank you, and thanks everyone for your attendance today and the questions. I think they're they're very informed and and creates a good debate. So I think we're in the most privileged position we could be in at the moment. We've deleveraged our balance sheet. We set for growth. We're strongly cash generative. We're in the right commodity mix, and, we we believe that THARISA as a value proposition, is compelling in the sense that we are generating cash, returning cash to shareholders. We have an exciting growth strategy in terms of developing a large scale open pit project in Zimbabwe.

54:58 Celine Chrome coming online, diversifying, to premium chrome products out of the Great Duck in Zimbabwe, all underpinned by the great coproduction business model that we have at the THARISA mine producing PGMs and chrome in the lowest cost quartile and remaining resilient and robust through the cycle. So, thank you for your time. And with that, I'd like to bid you well and wish you all a very safe December, and, see you all in the New Year. PheVos, thank you so much indeed. And thank you to Michael, Michelle, and Ilya as well for updating investors today. Could please ask investors not to close this session as you'll be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations.

55:46 This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of THARISA PLC, we'd like to thank you for attending today's presentation. That now concludes today's session.