Tharisa (JSE:THA) — H1 FY2023 Financial Results

0:01 Good morning, ladies and gentlemen, and welcome to the THARISA PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab It's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. 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, and these will be available via your investor meet company dashboard. Before we begin, if I may just submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CEO, Phevis Perullis. Good morning, sir.

0:46 Good morning, and thank you, everyone, for joining us today for our interim results presentation for the six months ended 03/31/2023. So I think before I kick off, you know, our purpose statement is to enrich lives through innovating the resources company of the future. And I really do believe that we have a balanced approach in achieving this this goal. And these six months that we'll report on, I think, are a point in case, highlighting the resilience of our business, our team and the focus that we have on delivering our stated strategy.

1:24 So when we stood back and reflected on our business over the last decade and the challenges that we've navigated and the opportunities that we've been able to seize and unlock value, we have framed our business as being profitable, investing, paying dividends and delivering on our Vision 2025. So when we look at our profitability, we've been profitable since 2015. And in a cyclical market as commodities are, this is quite a major achievement. And this really is borne out by the co product business model that we have with these multi commodities delivering into different demand sectors and different cycles.

2:13 So once again, this business model has proven its value and resilience. But importantly, not only have we been driving our business to generate free cash, we've also been investing in the business over the last decade. And to that end, most people haven't quantified the scale of investment, which comes to $530,000,000 And really, what this has allowed us to do is to ensure that we maximize the return and the extraction, the recovery of the metals that we mine through innovative processes, through unconventional thinking and really looking at first principles and extracting maximum value.

3:00 Coupled with being profitable and investing in our business, we've been able to return value to shareholders in the form of dividends. We've returned over $90,000,000 in cash to shareholders when we include the dividend that we proposed and approved, in fact, at this interim period. And it really talks to our commitment and our discipline in terms of returning cash to shareholders. This all while paying over $2.00 $2,000,000 in corporate debt during the same period. So really, a cash generative engine that's allowing us to grow our business, invest in it, share in those cash flows with our shareholders while maintaining an active balance sheet and enabling us to grow. And where do we see ourselves in 2025 is unlocking this multigenerational mineral endowment.

4:04 We have over 60,000,000 tons in multi jurisdictions, multi mine, multi commodities within our control, and it's ultimately unlocking value within these resource bases. But beyond that, looking at value unlocking or unlocking value through innovation. So if we reflect on the last six months, we believe that we've navigated uncertainties successfully. So what supported us during this period? Our co product business model has proven its resilience again. The chrome market has been extremely buoyant, and we're seeing very high spot prices at the moment of $300 per ton, average for the half of $247 per ton. So while PGM prices have softened, the chrome market has has really rallied in in essence, and we're able to take advantage of that being a large producer of that.

5:07 We have what we believe countercyclical commodities in our basket, and we've seen that with rhodium when rhodium prices rallied. You know, people are calling us rhodium mine. People call us a chrome mine or a platinum mine. So so we have the benefit of being able to produce these metals into these different demand cycles. I think, importantly, the fundamentals are still robust across the basket of the commodities we produce. Macro factors supporting our business during this period. We've seen the rand weaken significantly to the dollar. This offset some of the inflationary pressure. While we are a predominantly US dollar denominated business, the majority of our costs in South Africa are rand based, so we do get that benefit. We've seen bulk freight rates normalize from the peak pricing that we saw in the prior financial year, almost $10 straight through to the bottom line saving from the comparable period.

6:06 What's really been encouraging coming out of platinum week and following general policy, global policy, is the momentum behind the hydrogen economy, and this truly benefits our PGM basket and particularly platinum, ruthenium and iridium. When we look east, we see that Chinese stainless steel outlook is positive and really post the COVID lockdowns, we're starting to see that late cycle commodity moving in a positive trajectory, putting pressure on raw material supply, and we'll unpack that when we look at Chinese port stocks. And I think the real theme for this past six months and going into the second half of our financial year is supply side pressures. There's no doubt that the headwinds that are unpacked now are putting pressure on supply chain, primary supply So when we look at the, in particular, the South African context of electricity, our current requirements at the THARISA mine are some 27 megawatts.

7:16 The main energy source for us is diesel, hence us being an open pit mine and benefiting from that competitive cost structure. But we did install standby diesel generators to manage load curtailment or load shedding as it's known for domestic users. And we're able to withstand up to the equivalent of load shedding level six with our standby generators without impacting operations significantly. With anything beyond that, our dual processing plant setup allows us the flexibility to manage electricity curtailments and shocks whereby we'd shut down certain parts of our process without impacting materially the flow of of product through the processing plants. I think what's encouraging and and very pleased to report on is that our environmental approval for the 40 megawatt solar project has been granted, and that paves the way for us to deliver on that project, which will allow us to offset daylight operations from the grid. So something significant for us.

8:35 We're anticipating having that project completed in the second half of next year. In terms of transport, this has been well reported on. The rail infrastructure has many challenges, primarily with sabotage and theft of cables and rail infrastructure. And so what that has meant is that most producers and ourselves included have had to adapt to moving from 80% rail allocation to now 85% road allocation. And this has also necessitated and created the opportunity for us to export not only out of South African ports but out of Moputu in Mozambique as well. Then we look at the macroeconomic factors, the geopolitical issues with Ukraine Invasion and war, inflation and interest rates increasing in environment is is uncertain and certainly increase in inflation and interest rates putting pressure on supply chain, on consumption of goods globally, and that certainly has an impact on demand.

9:48 And then in South Africa, crime, corruption, a major concern and factor that one has to navigate and manage. We have reported previously that our first half was impacted by unprecedented rainfall, which did create certain bottlenecks and challenges in the open pit. But if we just move on to the highlights now. Safety is a core value of ours, and I'm pleased to report that our safety statistics have improved over the last 200,000 man hours worked to 0.27 incidents.

10:25 Unfortunately, we did have the fatality in October last year, and so there was a it was a big shock to everybody, and we reinstalled safety as a core value. And and really, through strong leadership, have we turned that trajectory around. Pleasing to report that Cara Platinum remains project free and LTI free at the project, and that's since 2018. So a significant milestone there. When reflecting on fatality and the lives lost within the broader THARISA family, we erected a memorial garden at the THARISA mine. It's a famous sculptor, Anton Smith, a bronze statue called Faith. And and I think the Helen Keller quote is very apt in in challenging environments, which states that faith is the strength by which a shattered world shall emerge into the light.

11:20 And this was very well received by our colleagues, friends, and family. Moving on to the highlights. We control significant resources, and I and I think, you know, that old adage that he who has the resources king really holds true in an environment where there's a scarcity of resources that are becoming more capital intensive and more challenging to mine. And so so we are privileged to be in this position. In terms of our mining, it was down due to those weather challenges and delay in waste stripping at 2,100,000 tonnes. PGM production for the half at 77,000 ounces at an average PGM basket price of $2,216 per ounce.

12:07 Chrome production just shy of 788,000 tonnes and a metallurgical grade chrome price of $247 per tonne. Caro platinum, again, controls a significant resource. And bear in mind, this is merely Phase one at 152,100,000 tonnes. And we're targeting for this Phase one steady state operations an additional 190,000 ounces of PGM production. So when we look at our four pillars of discovering, developing, delivering, diversifying, we're very pleased that we perform in each one of these pillars. We're delivering healthy margins and strong cash flows despite these operational headwinds. We're developing the Cara Platinum project, and construction is progressing well and funding advancing as planned.

12:59 And then in terms of diversification, we are in the process of commercializing a number of our research and development projects and very exciting, and we'll share that with the market. In terms of capital discipline, again, a core value of ours. We spent $49,300,000 on CapEx, ending up with a net cash positive position of $112,700,000 and very pleased to report back to our shareholders the interim dividend of $03 per share, which exceeds our policy of 15 percent distributed of net profit after tax. In terms of our guidance for the full year, this is the revised guidance, a range of 158,000 to 167,000 ounces of PGMs on a 6E basis and similarly, 580,000 tonnes to 1,670,000 tonnes of chrome concentrate.

13:57 When we look further north to Cara Platinum, some of the construction milestones, the earthworks are primarily complete or

14:07 materially complete. First concrete is to be poured in June, and that's the civil contractor that's been appointed. And we have elected to commence with a trial open pit mine, and that will also commence in June and will be completed by September of this year. And this really will give us in situ on the ground experience in terms of mining the main sulfide zone on an open pit basis on the dike. And then we will commence with mechanical construction in September of this year as well. So when we look at the snapshot here of the highlights, we really do believe that we've been delivering value in a challenging environment. We often forget the impact that our operations have on our employees and the broader community, and it's quite a sobering thought to consider that 4,600 people's lives are dependent on the operations that we control.

15:06 And this includes group employees and contractors. And if we consider the multiplier effect of ten:one in Southern Africa, 45 odd thousand people are impacted by the activities in a positive way that that the employment that we've created at THARISA and KARA over the years. We have four forty employees and contractors on-site in ZIM, so you can see that ramp up progressing well and in line with our time lines. And importantly, we have a strong female representation of greater than 25% in our employees. Pleased to report that there have been no lost days to industrial action, and we are nearing the end of our four year wage agreement with our unions, that has been a very healthy and sound relationship.

16:00 We have various employee forums and engagements, and our HR team has has really adapted to the current challenges and environment and and embarks on roadshows. And this is coupled with our education and wellness programs, whereby we offer adult education training and skills development to our own employees, but also to the communities within which we operate. We support the local schools. We donated an IT center. We maintain that for them, give them connectivity as well as basic needs, shoes, stationery outfits, supporting their football teams and so forth. So really entrenched in the communities. In terms of enterprise development initiatives, we support small, medium enterprises, and we look at upskilling.

16:50 The wellness program has been around for a long time, and and it really it's really important to provide support, and and it's called, each other, and and the the wellness wellness facilitators are really entrenched within employees and the community. Moving to the environment now. We have committed to reducing our footprint by 30 That's our carbon footprint by 2,030 and achieving carbon net neutrality by 2,050. I spoke about the 40 megawatt solar plant, which goes a long way to achieving some of those carbon reductions, But we're also looking at new technologies, e fuels, biofuels, to replace diesel in the future as well as electric or hydrogen fuel cell drivetrains for our vehicles.

17:38 Also pleased to report that the first 30 megawatt solar plant in Zimbabwe, coupled to the first phase of KARA, has been initiated and progress has been made. So as reported, the production numbers for the first half have yielded the following financial metrics. So revenue slightly up at $335,300,000 for the half and really on the back of the strong chrome prices. Operating profit down to $63,500,000 Earnings before interest, tax, depreciation and amortization at $81,200,000 profit before tax, 72,400,000 and then net cash from operating activities at $97,100,000 resulting in cash and cash equivalents of $205,700,000 and Michael will unpack these numbers for you in more detail.

18:36 This resulting in an earnings per share of $0.01 $74 and a headline earnings per share of $0.01 $76 Again, Michael will explain the differences between the two. And this allowing us then to declare a $03 interim dividend. So in spite of the challenges, still generating healthy margins in our business. As mentioned, PGM basket price for the half, 2,216 per ounce and metallurgical grade chrome prices at $247 per ounce. So when we look at our Vision 2025, enriching lives through innovating the resources company of the future, it's really built on the six pillars of expansion, which is really expanding and rolling out our business sustainably and using optimization in our existing operations, the Vulcan plant being a perfect point in case, yielding more out of every cube of rock that we mine and then utilizing innovation to constantly invest in that process technology, but also downstream opportunities in terms of new applications.

19:50 Diversification is key to us, looking at not only the multi commodity suite, but also jurisdiction, multi mine strategy, which is consistent with our intent from 2014 when we first listed. And then when we look at investment, we do want to become the investment of choice. We certainly believe there's a huge value proposition, and there's such a disconnect between where we currently trade and what the true value of our business is. So we believe there's great opportunity there. Delivering on our plans, I think, certainly will give confidence in our ability to become the investment of choice. And then importantly, enriching lives but responsibly, and this is for all stakeholders involved in the ecosystem.

20:43 So I've touched on the long life portfolio, and I think this often is taken for granted. You know, we've got a multigenerational resource base here. We can produce at the volumes that we produce at and grow from these two significant resources in Karo in Zimbabwe and Theresa. And whether you see them as sixty years or beyond, it's still meaningful in terms of the mineral endowment. So we have, at the THARISA mine, for the full extent of the mine, some 40,300,000 ounces of contained PGMs. And at Caro, just for the first phase, we have 10,000,000 ounces. We know historically, 96,000,000 ounces have been declared over the concession, the 23,900 hectic concession.

21:32 And then in terms of pure chrome metal, 171,100,000 tonnes. So these are strategic long life assets. And we're able to unlock value through our pit to port strategy because we control our resources, we control our ability to produce and then manage the export successfully, primarily of our chrome concentrates to end users at final destinations. And we maximize the value across the chain, whether it be mining, processing, trading, logistics, but also beneficiation to come in the future. So this product diversity has really given us the opportunity to reinvest and to grow while returning cash to shareholders, and we'll touch on the ethos of innovation.

22:22 So we certainly believe that technology is the key enabler for differentiation. We can't compete with our balance sheet with the major producers, but we can compete with applying unconventional thinking to a conventional industry. So we've reported on historically our one megawatt PGM smelter, which is running commercially, and we're selling that alloy, albeit on a small scale, but it has formed the basis for our front end engineering design for our full scale PGM smelting complex, which is busy being completed as we speak now. That is the study. And at the facility, Arco Metals, we are demonstrating various technologies and other initiatives, whether it be in the chrome or the PGM space, a very exciting site that we have operating in Brits and South Africa.

23:16 We've also launched our Arca Metals Technology Development Center. This is in collaboration with various institutions, and we run laboratory and pilot scale test work there. And it's really focusing on downstream beneficiation of our commodities. And we're looking and testing actually currently certain unique processes on a pilot scale for these various beneficiation processes. So really, the incubator for ideas and processes. And then we will be launching our renewables energy center. This is adjacent to the THARISA mine. It's land that we own, and we'll be trialing and testing various storage solutions. We have an in house large scale, long duration storage solution, which hopefully we'll be launching in the next quarter, a very exciting initiative as well as the solar photovoltaic project and other technologies that we'll be demonstrating at that site.

24:20 Touching on the Cara project, really, this is our growth project, it is a Tier one asset. The first phase is targeting a potential seventeen years open pit mine, producing 190,000 ounces of PGMs with significant base metal credits of copper, nickel and even some cobalt. We're targeting first ore in mill in July 2024. And as reported on, we started our construction in December last year. Earthworks nearly complete and trial open pit mining in first concrete in June of this year. From a safety perspective, very pleased with our performance as reported on. We are IFC compliant in terms of our environmental approvals. And to date, we've received ESI approvals for mining, processing and the overhead power line, everything in line and in time with expectation.

25:16 I think what's key and what really cements the local impact is recruitment and employment. And 99% of our recruitment is local Zimbabwean workers and and skilled labor, and and we're providing skills training and upliftment through the process not only of the construction phase, but also being ready to operate when we go into operations early next year. Total Eron, as mentioned, are developing the 30 megawatt solar project for our first phase and potential to scale up as we grow that business. The capital to first ore and mill is some $391,000,000 and we've utilized multiple funding streams to fund the project to date.

26:06 We were the first successful U. S. Dollar bond listing on the Victoria Falls stock exchange, a great achievement and credit to Michael and the team for getting that done. We raised a short of $37,000,000 and that's traded on that exchange. We partially leveraged our existing assets to the tune of $130,000,000 and the team are progressing well in terms of the $260,000,000 syndicated senior project finance facility. Moving on to the commodities. I did touch on it briefly, but really, we have a complementary PGM basket pro split between South Africa and Zimbabwe, and you can see that on the right hand side in the pie charts.

26:52 South Africa, obviously, having a very favorable rhodium content on a 6E basis, just short of 10%, but platinum dominated. When you look at Cairo, very nice gold credits at 8.3%,

27:04 platinum at 42, palladium 39, and rhodium at 4.1%. So on a group basis, when you combine it, a very favorable exposure to these key and critical elements that have decarbonized the planet today with tailpipe emission control, and we'll continue to do so into the future. So where are we today with the PGM market? It's generally agreed that we're heading into a record platinum deficit this year, and that's really on the back of supply chain constraints as well as increased demand. Palladium with supply constraints primarily out of Russia, also forecast to remain in a deficit. Rhodium, balanced market to deficit depending on above ground stocks that have been released and have had a negative impact on the price. So we're looking forward.

28:01 We do believe there is some upside in terms of pricing. And if we look at demand drivers, the new Tier four and Euro seven emission standards still coming still to be enforced, that certainly will have an increased loading in the auto cat, supporting more demand, coupled with supply chain primary supply chain constraints. The hydrogen economy is real. It's happening, and I know there's a lot of skeptics out there. But if we look at the capital, we look at the policy and we look at the technologies, they're all aligning. And certainly, we see this as a multi decade drive to energy independence for countries, for regions to provide a green zero emission solution to decarbonize the planet.

28:58 When we look at Zimbabwe and potential new supply coming on, we don't see it as additional supply but more of a substitution to shortfall in supply coming out of South Africa.

29:09 On the chrome front, port stocks have reached critically low levels of some reports reporting around 1,400,000 tonnes. To put that into context, that is less than four weeks supply in terms of that major ferrochrome and stainless steel complex in China and Indonesia, who are our main terminal markets for our metallurgical grade. We are seeing record rand prices on the back of the week rand nearing almost ZAR6000 a tonne. And what's key here, South Africa is the main supplier of chrome units to the world. We supply 80% of Chinese chrome needs, and our Theresa mine accounts for 10% of Chinese chrome demand. So looking forward, we still see support for strong prices in the second half, so very healthy margins.

30:00 Importantly, we'll see our specialty chrome production increasing in the second half. We went through a spiral replacement program in the first half that is now complete, so we'll start normalizing. And those chemical and foundry grain products still command a premium over even these lofty chrome prices of $300 per tonne. I would like to hand over now to Michael to run through the financial highlights. Right. Thank you, Phebe Ros, and good morning to those who have joined us on the presentation this morning.

30:41 Our results for the six months ended 03/31/2023 really reflect the challenges that our business has faced over this reporting period. However, our business model has again proven its resilience. And with the robust coproduction model and the favorable chrome prices, it has benefited our business. In addition, the low cost open pit mine has also resulted in strong cash flows being generated. So if we look at strong cash flow generation, our net cash flows from operations amounted $97,100,000 for the year. It has also enabled us to continuously invest throughout the cycle, and we've been able to adhere to our dividend policy of distributing at least 15% of consolidated net profit after tax.

31:29 If we look on our ability to deliver on our growth strategy, have put in place a number of new debt facilities over this period. We did the first of its kind, Victoria Full Stock Exchange Bond, and that is to part fund the construction of the Cara Platinum project, with total subscriptions of $36,800,000 of which $5,000,000 of that was received post reporting period in a tap issue. The tenure of that bond is a three year bond, and the coupon is some 9.5%. We've also successfully concluded a $130,000,000 debt facility with Societe Generale and Absa Bank. And as of March 31, this facility is undrawn as we close out on the final conditions precedent. In terms of structure of that loan, 80,000,000 of that is a term loan and $50,000,000 is revolving credit facility.

32:18 In terms of progressing with the funding of the Cara Platinum project, we have agreed a term sheet with a syndicate of banks for a $260,000,000 senior project finance facility, most of this or the bulk of it associated with export import credit finance facilities, and we look forward to successfully closing that transaction over the rest of this year. All of these have enabled us to be positioned for sustainable growth. And our investment for the future, we spent some CapEx of $49,300,000 and I'll break that down further in the presentation, and we have substantially deleveraged the balance sheet with net cash of $112,700,000 again positioning us to deliver on our growth strategy. We do have a multi commodity revenue stream. Our revenue for the year totaled $335,300,000 And if you look at the breakdown or contributions with respect to commodities, and this is on an ex FCA basis. Now as we've taken out the cost of shipping and freight from chrome, which is a major cost component, we sell on a CIF basis.

33:20 Chrome contributed 48% to our overall revenue and PGMs, 45.5.

33:27 Rhodium remained the star performer and notwithstanding that it had a price reduction over the period, while contributing less than 10% of our overall pull split, its contribution to the revenue basket from PGMs was some 47%. If we just look at some of the numbers, PGM sales totaled 76,800 ounces. The average price was $2,216 per ounce. And the metallurgical grade chrome sales, 712,900 tons at an average price of $247 per ton. We actively managed our costs throughout this period, and there were inflationary pressures that we had to manage. And as previously reported in our production results, cubes mined were down some 29.1% at 7,300,000 cubes.

34:16 It results in increase in the cost per cube mined because of the fixed cost needs to be absorbed over the lower volumes, increasing by 22.4 at $10.4 per cube mined. In parallel with that, reef tons mined were down 25.6% at 2,100,000 tons, and that translates its increase in our cost per reef tonne mine of 16.4% at $38 sorry, 36 per tonne.

34:44 If we then look at the consolidated cash cost per tonne milled, that increased by 5.9%, moving up to $53.4 per ton. And one of the key benefits of this is as an exporter in South Africa, the commodities are priced in dollars. However, the cost base is principally in rand. And if you look at the exchange rate over the period, there is a significant weakening of the exchange rate. It weakened 15.7%, averaging 17.7%. And as a consequence of that, we benefited and it offset certain of those inflationary pressures that the company faced during this period. We are a co product producer of both platinum and chrome concentrates. But if we were to look at ourselves as a platinum only producer and we take the credits of the other platinum group elements on the chrome concentrates, our all in sustaining cost per platinum ounce sold is $288 If we look at the table, though, the second half or the first half of last year had a credit of $437,000,000 and this is really on the back of very strong rhodium prices and the credits of those rhodium prices impacting favorably on our all in cost per platinum ounce sold.

35:55 We recorded a gross profit of $93,600,000 on a very healthy gross profit margin at 27.9 percent. I've touched on the benefits of the weakening rand, but this indicates some of the inflationary pressures that we faced. Diesel, which comprised some 18% of our overall online cash cost, up 16.2%, and landside logistics, up 8.9%.

36:19 And the landside logistics really increasing because of increase in diesel prices, and we added long distance haul for the chrome as we successfully dispatching stock from Maputo Harbor as well. We continue to have disciplined capital allocation. We have a policy of distributing at least 15% of consolidated net profit after tax. And the Board approved an interim dividend of $03 per share, which matches the comparable period interim period dividend of $03 This equates to 16.4% of a net profit after tax and a dividend yield of 6.2%.

37:00 If we look at historically, since we've commenced the payment of dividends, we have had a consistent payment history and have effectively distributed some $91,600,000 to shareholders over this eight month period eight year period.

37:16 If we look at the investing for our business, dollars 49,300,000 was spent on our total CapEx for the six month period. Of this amount, 18,300,000 related to Cora Platinum. If we look at the six months moving going forward, THARISA, excluding Cora Platinum, is committed to spending $48,800,000. And if we look at Cora Platinum itself, where there's going to be significant capital spend, commitments as at March 31, amounted to $60,000,000, and we are looking at spending a total of $160,000,000 as budgeted to be actually spent as cash outflow over the balance of six months. If we have a look at how we've invested over the period, it's ensuring the sustainability, and not only sustainability, but the growth of our business operations, we have spent some $530,000,000 over the last period.

38:09 We continue being positioned for strategic growth. And if we have a look at our strong cash flow generation, how we've applied it to the three key pillars of capital allocation, we've deleveraged the balance sheet, we've invested in existing operations and growth, and we continue to adhere to our dividend policy. And if you look at the table on the right, it shows the track record since 2016 of how we've allocated our capital to these key capital allocation metrics and ensured that we also return funds to shareholders while at the same time investing in the sustainability of our business as well as positioning ourselves through the deleveraging of the balance sheet for this current growth phase. Just touching on the balance sheet. We still have an extremely robust balance sheet. We have $205,700,000 of cash and cash equivalents on the balance sheet net cash flow generated from operations, 97,100,000 and net cash of $112,700,000 Our total debt amounts to $93,000,000 and the short term portion of that is some $48,400,000 I'd just like to touch on some of the graph details on the right hand side, asset backed facilities, which are principally associated with the purchase of the yellow fleet at the mine itself, some 38, 9% of our overall funding.

39:29 We did put in place a bridge loan, which we've drawn down the amount of $40,000,000. That could be repaid out of the syndicated loan that we're busy closing out. So that is a bulk of the short term debt of 40,000,000 out of the 48,000,000 arising from the bridge loan. And then, of course, the the bond issue, remembering that the group itself subscribed for $10,000,000 of the overall bond, so there's an offset of that. I think very pleasing, if we have a look at where the business is, is that we do have access to trade finance facilities. We have typically utilized these facilities. And on the back of the strong cash flow generation as well as the very favorable chrome concentrate prices, as at March 31, we have not availed ourselves of these facilities. To give some perspective to that, at September 30, the amount was some $23,000,000 In addition to that, which is an off balance sheet financing, we discounted certain of our receivables previously on the receivables from Impala related to the platinum group metals.

40:28 That facility has now been fully unwound, and so effectively, that was a repayment of some $33,000,000 over the last period as well. Restoring at some of the ratios just to demonstrate again the strength and robustness of the balance sheet. Our current ratio is currently sitting at 2.4 times. Our net debt to EBITDA, a negative 1.4 and net debt to equity of 16.9%. So again, the strong cash flow generation, deleveraging the balance sheet, enabling us to undertake the expansion project going to Coro Platinum. I'd now like to hand back to PheVos. Thank you. Thank you, Michael. So when we look at our business and we look at the value proposition, we share these comparative graphs with you, and we really do believe that our equity provides value and growth.

41:26 The consensus target price from our brokers here in The UK is 2.20 per share. Currently, we're trading at a 2.2 times price to earnings multiple. The industry average for PGM miners is around 6x, so certainly a value gap there. When we look at our business in terms of its earnings capacity and ability to generate margins, we can see that we've been profitable since 2015. We're tracking from 2018 here. But those EBITDA margins have been healthy, albeit with these headwinds at 24.2%, we should see that growing into the second half, but really illustrating the capacity of our business to generate earnings.

42:20 When you look at a price to net asset value, trading at 0.4 times, and this was obviously dated on the May 10, I think our share price has retreated since then, so may even be lower than that today. When we look at a net asset value growth since 2016 being listed here in London, we've provided a compounded annual growth rate of 14.9%. So some significant upside and certainly something we think needs focus and attention and potentially unlock a lot of value for supporters and investors in our stock. With that, I'd like to hand over now to the Q and A and back to the moderator for that session. Thank you. Phevis, Michael, that's great.

43:17 Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. PheVos, Michael, Ilya, we did receive a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. Perhaps, guys, if I may just hand back to you to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Thank you very much. Let me start off with some of the operational questions that we have here.

44:07 Two of them relate to Vulcan and what is the current status of Vulcan? And then more importantly, we spoke about a contractor joining the company. Can you update the market on the contract and where we are with that? Yes. Thank you, I think both very valid questions. So the bulk waste contractor has mobilized, and they have started operations in the open pit with bulk stripping of our waste to assist with the backlog. The first team is is commissioned and and operating. The second team, I think, is going through induction as we speak now and should be mobilized in the next week or so. It it's a a four team crew over a three year period just to facilitate with our bulk stripping in the open pit to make sure we have that flexibility. So that's progressing well, and we selected a contractor that could mobilize quickly in terms of people and equipment.

45:11 So positive on that front. In terms of Vulcan, we've started seeing the incremental improvements that we had planned in this last quarter with some of the optimization and tweaking processes that were scheduled. You can see a slight improvement in Chrome recovery, and that's really on the back of and Chrome recovery and production on the back of those Vulkan initiatives. So we I I think I reported on previously that we see it as a journey over the next twelve months. It was eighteen months when I reported on it to get closer to that nameplate capacity, Bearing in mind that we are producing very low cost chrome tonnes there, we relooked at the breakeven numbers in light of the current prices and albeit that our production is lower, we'll still be achieving that financial milestone within the same time frame as originally envisaged.

46:11 So all in all, a successful project with lots of upside potential. Thank you. Some questions coming through here more on the macro side, which I know you addressed earlier in your headwinds and tailwinds, but it really is the challenges that you face in in South Africa. Maybe explain how we deal with load shedding on the upside and the down downstream issues. And then people are asking about the political environment in Zimbabwe and and what it's like operating there, if you can elaborate on that. So I'll start with Zimbabwe first. So so on the ground in Zimbabwe, it's it's really a pleasure to work. We find it an enabling environment from the regional leadership to the ministries of finance and and mining.

47:01 Certainly, there's huge support for the Cora project, and it is one of the key investments that will create employment, sustainable employment, some 1,000 jobs when we include the mining contractor in the in those numbers and has reported on this as a a massive resource and and has potential to scale. So from a skills, from a commitment, from a work ethic point of view, we've been extremely impressed and encouraged, and and it's really been a great experience. In terms of policy and and the macro political environment, I think our biggest challenge is uncertainty and the constant changing of parameters and and policy approvals and changes.

47:50 What we have done is we've engaged government. We we have certain concessions and provisions within the Special Economic Zone, which give us layers of protection, but we are finalizing the national project status and mining agreements with government, bearing in mind that government are our partners, to embed and enshrine the policy around mining regulation and fiscal, terms. And and all parties are aligned on this front, as the uncertainty and volatility does create some confusion. While we do have commitment, we need to record it and enshrine it in these agreements. So when we look at the the contrast of South Africa and Zimbabwe, we see Zimbabwe moving in the right direction in terms of progressive enabling environment. South Africa, unfortunately, on the other hand, is creating a lot of challenges not only for big business, but for for civilians and and domestic users of power. So there's no doubt that load shedding is is value destructive to the South African economy and is creating more unemployment in an environment where we need employment because small business enterprises can't manage their businesses on diesel generators because it's too expensive. We're we're in the fortunate position that we have an installed capacity and installed base. We invested in standby generation.

49:18 And then I and for for fear of repeating myself, we can withstand up to level six equivalent load shedding with our standby generations without our operations being impacted. Now beyond that, we would need to start shutting down primary crushers. So we have the two distinct processing plants, Voyager, Genesis. If we need to go release more power into the grid, we'd shut down the primary crusher of Genesis. If there was more requirement, we'd shut down the primary crushers of Voyager and run off crushed ore stockpiles. Now if we sequence this right and correctly, there shouldn't be disruption to throughput. However, you know, if we were to look at it in the cold, day to run off crushed ore stockpiles, we must probably go three to five days on Voyager and about a week on Genesys before impacting our throughput. But because we have the two plants, there is flexibility there. I think the bigger concern is around grid failure and complete blackouts, and that puts us into a different territory.

50:22 So we'll continue we'd still be able to mine in the open pit being mainly diesel power requirements for our yellow fleet, but processing would be impacted. Then we'd have to run certain components of our processing part with diesel gensets. So we're busy with updating our disaster management plan around power outages and and seeing how we manage and navigate that. There may be some short term investment in standby generation, additional generation, but at this stage, we've managed to balance the the equation well. I think a secondary impact is the supply chain coming into the mine and whether it's even employees getting to and from work because of load shedding and delays with traffic issues.

51:14 These are real issue factors that one has to consider. And then whether your spare parts service providers can operate in this environment then becomes a case of do we have enough critical spares? Do we are our stores well equipped? And we're speaking to our major suppliers with keeping additional stocks on-site and consignment stocks so that we manage that supply chain better in, let's call it, unpredictable environment. I hope that's answered the question. Michael, I don't know if you want to add anything. No. I think it's very comprehensive. Staying with Michael, I know this has caused some questions this week. But, Michael, can you explain the difference between Hips and EPS once again? I know we went through it in the presentation, but maybe go through the details.

52:04 Right. Thank you, Ilya. Earnings per share is typically your ordinary share profits or attributable to to ordinary shareholders after taking off the minority shareholders divided by ordinary number of shares in issue, excluding treasury shares. From a JSC perspective, there's a requirement to also declare or disclose headline earnings per share, And headline earnings per share is supposed to take out the anomalous areas to give you a normalized operating profit for the business. So, typically, you take out impairments and write offs. What is interesting in our particular case now, and it's strictly in compliance with the JAC requirements, is it was a fair value adjustment of some 9,000,000 associated with the generation minerals option that they had. It's a reversal through the income statement of the charge last year, and that is still included in headline earnings per share. So it's really Johannesburg Stock Exchange regulatory requirement that we comply with to disclose the two aspects.

52:58 One is your on the face with income statement earnings per share, and the other one is a more normalized one taking off abnormal items such as write offs and impairments. Thank you. There's a question here, I think, more more broadly, you will, on strategy. What happens after phase one at Coro, and how does that all impact the dividend policy that the company has? Obviously, the company is spending quite a bit of capital at the moment. What will happen after phase one at Coro, and how will that affect the company's view on dividends? So so if we look at the growth strategy in parallel with the Coro development, we've discussed the beneficiation sites, primarily the PGM smelting complex in South Africa.

53:44 So we would see investment well supported by financial institutions in South Africa to capture that additional margin that we currently lose when we sell our PGMs in concentrate form. So so we need to look at that as a value accretive investment, also with a very healthy payback period. So that most probably would would exceed the commissioning of the Cara project. But I think the question really talks about with the enhanced cash flows and cash generation, will we maintain the same policy? Certainly, we'll maintain a dividend policy, but we potentially could revisit the ratio or the payout percentage and consider maybe distributing more dividends on in a balanced production environment.

54:35 But we are investing in growth, and we are investing in technology at a much smaller scale than than, let's put it this way, in the car phase one capital intensity. But, yes, we'll continue to manage all three aspects of our our capital discipline. Thank you. Michael, just back to the SocGen and Absa facility. Can you give some details, Tenor? What rates are we looking at? How will you be managing this facility? Okay. So in terms of that particular facility, it comprises two components. It's a term loan of $80,000,000 and revolving credit facility of $50,000,000. The tenure of that is forty two months. The interest rates are variable, so it's your normal SOFA these days, plus between 350 and 425 basis points.

55:25 There is an element of commodity hedging required on those facilities in terms of just platinum palladium. It's a rolling hedge over a twelve month period, and that's really just to match through a derisk on the capital repayment profile of that particular debt. Imagine the normal course. This cash flows that's raised at Theresa Minerals level are very strong, and we'll repay that in the normal course over that period. Thank you. Anything else, Lydia? Sorry. I'm just going through the questions here. There's one question here. We've spoken in past around resettlement around the THARISA mine. I know that's a program that we're extremely busy with. Can you give us a quick update for you on before we have to end the Q and A session? Yes. Thanks, Celia. So there's active engagement with the stakeholders and interest and effective parties. We've appointed internationally renowned adviser to undertake engagement on a formalized basis and conduct surveys and censuses within the communities.

56:37 And, you know, we need to remind our shareholders and stakeholders that the communities are shareholders in our business through the community trust. So they benefit from the positive results that we generate in the form of dividend distribution. You'll recall last year that the equity in the THSIS mine was converted to PLC shares, so they have a direct exposure to to the broader group. And this really aligns our interests with the broader community. So this is a commitment, a lifelong commitment to upliftment, enriching the lives of the communities, and we need to do it in a systematic, responsible manner so that we we manage this process appropriately and and with the right care of duty so we don't make hasty decisions that that potentially create secondary issues. So it's progressing, and and we'll continue to give feedback, but engagement has been undertaken on a formalized basis.

57:40 THS, Michael Ilya, thank you very much indeed for being so generous of your time there and addressing all of questions that came in for investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review and to then add any additional responses, of course, where it's appropriate to do so. We'll publish all those responses out on the investor meet company platform. But, THS, perhaps before just really looking to redirect those on the call and to provide provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that would be great. Sure. Thank you. So I think we've navigated these uncertain times successfully in the last six months. There have been not only headwinds with regards to the environment in South Africa, but also macro factors coupled with unprecedented weather challenges.

58:35 Really proud of the team that have dug deep to deliver and shown resilience in the face of adversity and really talks to the foundation of our business being robust, a coproduct, cash generative business, which allows us to do the things that we're doing. And I think someone mentioned to us yesterday, for a company our size, a mid cap, albeit we're trading lower than where we should be from a market cap point of view. We do a lot more than our potential peers in the space. And when you look at our R and D initiatives, you look at our engagements across stakeholders, the fact that we've been a dividend payer for the last eight years and profitable accordingly really talks to the robustness of this business. So so I think the takeaway for us and the message we'd like to impart is that we are investing responsibly and wisely in all aspects of our business, and and we are disciplined, and we're consistent with the messaging and and the strategy.

59:40 And really excited to deliver on these initiatives, primarily Caro, bringing that on stream. It gives us that multi jurisdiction, multi project advantage. And I'd like to just end with thanking everyone for their time and attendance this morning. PheVos, that's great. And Michael and Ilya as well, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of THARISA PLC, we would like to thank you for attending today's presentation.

1:00:26 That now concludes today's session. So good morning to you all.