Full Year 2026 DRDGOLD Ltd Earnings Call
Speaker #1: Okay, it's 10 o'clock. I suggest we start. Good morning, everyone. Thank you very much for joining us today for this presentation. Before we start, I just want to pause for a moment to remember a very good friend and advisor of ours, John Weber, who was, as long as I had been with the company, he was one of our professional advisors, an attorney, with the firm Cliff Becker & Hoffmeyer, who passed away the week before last.
Speaker #1: After he was very, very sick, we'll remember him and he was a valuable—he was a dear friend and a valuable service provider. All right, so it's a privilege, again, to be presenting to you today.
Speaker #1: This is the 19th time that I've been doing this. The year-end results, or that I was part of the team that presented the year-end results, some of you were there the very first time.
Speaker #1: Many new faces. I'm joined today by my colleagues, Henriette, who's our CFO, and Jaco, who's our Chief Operating Officer. And then there are also several members of senior management who are here.
Speaker #1: So please, afterwards, we have to eat the food; it's expensive food, so we can't leave before it's been—all of it's been eaten. So please ask them questions if you want any clarification on anything.
Speaker #1: We will be around for a few minutes after the presentation. Please also just take note there's the customary disclaimer, so there will be forward-looking statements in this presentation, and some of those forward-looking statements are based—or those forward-looking statements, rather—are based on assumptions, and some of those assumptions we don't have control over.
Speaker #1: So just be mindful in the interpretation of those that they are contingents upon a number of factors that we don't necessarily control. It's been a very good year for DRD Gold.
Speaker #1: It is the 19th consecutive financial year we'll be paying a dividend, and the final cash dividend for the year is $120 per share, which is just over a billion rand.
Speaker #1: Which was roughly the market cap of the company when I first did the presentation, 19 years ago. And it was, as a consequence of a number of factors working together, and obviously in order to have the revenues and the cash flows from which you could pay this cash dividend, you need the production.
Speaker #1: So production was pretty pleasing. We managed to come in just below the 5 tons of production. And 5 tons is prominent because you would have seen it in our communications when we talk about Vision 28.
Speaker #1: And what was pleasing in particular was the fact that it was roughly 5,000 ounces higher than the higher end of guidance for the year.
Speaker #1: And that was because of what I thought was very smart management of the throughput mix of the material going into the mix. You'll see that we achieved an average yield of just under 0.2 gram per ton, which was the 2% increase.
Speaker #1: So the plants were working really efficiently. Obviously, the big role player this year was the increase in the gold price. And being a deliberately unhedged producer of gold, we've never hedged with the exception of a very small period of time, when we needed to protect.
Speaker #1: Cash flows in order not to test some of the ratios that form part of a financial arrangement that we had at the time. This was in 2018 when we bought Far West Gold.
Speaker #1: We've never hedged, and deliberately so. So we were in a position to take full advantage of the 40% increase in gold price. And that translated into revenue for the year of just over $11 billion rand, 42% increase in revenue.
Speaker #1: Cash operating costs for the year was just under $1 million rand a kilo, which was also better than guidance. And the 7% increase year-on-year, which, considering the number of double-digit increases that form part of the cost basket of gold production in South Africa, I think was testimony to some really good cost discipline.
Speaker #1: Cash operating costs, slightly higher increase of 10%. $188 rand per ton. And that is because there was a larger component of trucking that still formed part of the cost composite this year.
Speaker #1: And in the current climate, trucking your high-grade material expanding the higher costs in order to truck those cleanup materials and remnant materials is always a good idea.
Speaker #1: Because of the higher grade that invariably form part of those tons. And at the current gold price, it does offer a very attractive margin.
Speaker #1: If the gold price decreases, then obviously that margin shrinks, and you lose some of that gearing. So you do want to take advantage of the higher gold price.
Speaker #1: And truck in some more materials. And there'll be some of that also in the year going forward. It's the trucking will be part of the profile of the throughput profile for the foreseeable future.
Speaker #1: That obviously then translates into your operating profits. So 6.4 billion rand in operating profit, 83% increase. That's a very nice number. Which, in forms your headline earnings, 4.2 billion in headline earnings, 89% increase.
Speaker #1: Free cash flow, which is very important parameters for us, because as a dividend-paying company, cash-generating cash is a very important measure of internal measure of our efficiency.
Speaker #1: So to have generated 2.2 billion rand in free cash flow was very pleasing. That was an 85% increase. And that was after capital expenditure of 3.5 billion rand for the year.
Speaker #1: Jaco will take you through some of the capital spent this year, as well as the capital planned for the next 2 years. And it's an important number to remember, because we're talking final dividend of just more than a billion, against free cash flow of 2.2, and capital expenditure of 3.5 billion.
Speaker #1: And remember, a big part of our story of the Vision 28 story is that at some point in the future, this number is going to become considerably smaller, the 3.5 capital expenditure.
Speaker #1: Whilst at the time, hopefully that number, if the gold price holds up, will not have shrunk, or will not have diminished significantly. In fact, it could be significantly higher because remember, we're targeting about a ton of additional gold production.
Speaker #1: These margins is the margin the cash margin these margins potentially also, if everything stays the same, could potentially also remain very favorable. And then as a dividend-paying company, start factoring in substantial portion of that into what's available for your dividend.
Speaker #1: And that's the DRD promise. That's really what we're working towards. And we're hoping that it will find its way into how share price is being interpreted at some stage.
Speaker #1: Over the next few years, as we get closer and nearer to completion of the Vision 28 subparts. So my point number 9, that was the free cash flow.
Speaker #1: My point number 10, that's the capital expenditure. My point number 11 is on the sustainability. This did not come at the cost of our people.
Speaker #1: This did not come at the cost of the health and the well-being of our people, because you see, that trend is still a good one.
Speaker #1: From 1.65 to 1.25. 0.8 to 0.7. On those lost injury scales and ratios. And that also is not coincidental. Obviously, we're very aware of the fact that sometimes there are near misses where it's only the amount of time that you spend on your knees that saves you from something really bad.
Speaker #1: But we're also very deliberately focused on how we manage safety and improving safety awareness amongst staff. Some of the other sustainability measures that we enjoy sharing, because sustainable development is core to our business, is the usage of potable water.
Speaker #1: Many, many years ago, I forget how many years ago it was, it may have been 15 years, it may have been 18 years, we very deliberately took the decision to reduce potable water usage by 10% every year.
Speaker #1: And that trend, if you follow our reporting, on our integrated reports over the years, you'll see that trend has been healthy. And it's taken us to a point now where very little of our processed water is actually potable water.
Speaker #1: And once again, you saw 900 million liters of water potable water saving this year, 23% decrease. Also a very deliberate part of our sustainable development value pursuit.
Speaker #1: Carbon emissions is an important one. So only, well, still a lot, 233,000 tons of carbon that went into the atmosphere because of our activities.
Speaker #1: But that's down from 303,000 tons of last year. And that's because of the obviously because of the solar farm. We haven't stopped. We still have other ambitions with regards to renewable power.
Speaker #1: We've spoken about some of those in the past. But I think we're on a good trend here. With the solar farm really working really, really well.
Speaker #1: And we're seeing that both in the bottom line as well as in the nature dividend that we're in pursuit of. I think that's what I'm going to talk to in terms of the first slide.
Speaker #1: There's obviously quite a lot more detail that my colleagues will talk about as we go forward. So you can report these numbers. If you produce and at this stage, we are in an interim phase.
Speaker #1: We are in a phase where we are managing volume throughput, because we need to manage our tailing stands very, very carefully in order to stay within the prescribed safety factors, some of those are prescribed, some of them are self-imposed, but it's important that we stick to those and therefore we are not sweating.
Speaker #1: Our tailing storage facilities. You saw earlier this week, again, a report of things going wrong on the tailings dam and that is just the unimaginable from our perspective.
Speaker #1: So tons are deliberately kept at 25 million tons between the two operations. The yields have been good. And those yields are good for two reasons.
Speaker #1: It's both the blend and also plant efficiency. Both of our plants are operating extremely well. And a big thing for us this year as well is that excuse me, everything that we're re producing, that one part of the process where we're at our most vulnerable, where our products are at its most concentrated, namely when it goes into the smelthouse, that is now universally treated at our own facilities, which was a big, big milestone for us.
Speaker #1: And Jaco will talk more about that. They get to talk about all the good stuff, the numbers and all the projects and stuff. I'll slip some of it in here and there.
Speaker #1: But anyway, the yields were good and we saw that in the production numbers as well. That is now on the ergo side. Far West Gold, similar.
Speaker #1: That volume line is a flat line. It's managed very, very carefully and deliberately. The yields have been pretty good. And that's as we're getting into a slightly deeper part of dam number 3.
Speaker #1: So as you go deeper into the dam, gold migrating to the bottom, obviously your yields do pick up. And you could see it sort of back to where it was when we were at the tail end of dam number 5.
Speaker #1: And some of those materials were still being dribbled into the bigger mix. And then production bang on target, 674 kilos for the last half year.
Speaker #1: And just over 1.3 tons for the financial year. And then on a crude basis, these are numbers that you'll see in more detail when Henry Ed talks to the numbers.
Speaker #1: But the volumes for the two operations combined just on 25 million tons, the yields just under 0.2 gram a ton, which is a good number for us.
Speaker #1: We're hoping to sustain that going forward. And then production just under 5 tons for the year. So on that note, I'll hand over to Henry Ed to take you through some of the financial numbers.
Speaker #2: Okay. Thank you, Neil. So maybe just to start off with, it's my privilege to present these excellent financial results that we have achieved during financial year.
Speaker #2: 2026. Just a huge thank you from our side. I mean, we couldn't have done it if we didn't have the exceptional teams that we have in the RD Gold.
Speaker #2: So from the operational guys, straight through finance team, putting this all together, and our support services. Each of us have our role to play.
Speaker #2: And I believe you've done it exceptionally well this year. Okay. If we move good operating, sorry. Okay. Ergo, financial results. So ergo had an exceptional last six months to the financial year.
Speaker #2: And the increase the gold production was about 150 kilograms the six months versus the next six months. Really taking advantage of that excellent gold price that we saw in the last six months of just about 2,460,000 rand per kilogram average.
Speaker #2: Ergo ended the revenue at 8.1 billion rand for financial year 2026 in comparison to 5.7 billion rand last year. This was mostly due to the gold price increase of 40% that Neil already alluded to, but also a 1% increase in gold sold.
Speaker #2: Then if we look at the cash operating cost slide, ergo's overall cash operating costs increased 7% year on year. Notwithstanding all of the things that Neil already mentioned.
Speaker #2: So I mean, we had a massive oil price increase during the last few months. That influences our machinery, our trucking expenses, reagent costs. We saw some exceptional high increases on carbon specifically, cyanide we had to use the briquettes, which is more expensive.
Speaker #2: All in all, though, cash operating costs well maintained. If you just look at unit costs on the ergo side, so 1,120,000 rand per kilogram in comparison to 1,060,000 rand per kilogram last year, which is a 6% increase.
Speaker #2: Then that excellent operating profit trend that you can see there, ergo more than doubled the operating profit from 2 billion rand last year to 4.1 billion rand in the current financial year.
Speaker #2: On the far west side, also a very stable operation, as you could have seen from the operating trends. Performing always on budget, on target, in expectation.
Speaker #2: So they ergo are far west, increasing revenue by 2.2 billion rand last year to 3.1 billion rand. And the current financial year, that was mostly due to that 40% increase in the gold price.
Speaker #2: Cash operating costs increased by 10% from 640 674 million last year to 744 million in the current financial year. As I already, I think I mentioned it a few times, far west is in a different operating cycle to ergo.
Speaker #2: It is growing. It is getting ready for this expansion project, more labor hire. It is an older plant. Only two sites operating of which one is a cleanup site.
Speaker #2: Different bank file. The strength increase in costs is expected to continue next year. Until we see the upside of that vision 2028, 1.2 million tons per month kicking in.
Speaker #2: But again, ending up in a very healthy profit. Margin 1.5 billion rand to 2.3 billion rand in the current financial year. This is a very high margin operation.
Speaker #2: So 76% profit margin, which is exceptional. Operating profit margin. Just even with the increase in the gold price, this is still an operation running at 561,000 rand per kilogram.
Speaker #2: Cash operating costs. And then all in sustaining costs of 639,000 rand per kilogram. So if that operation can maintain this, this will be a very successful operation going forward.
Speaker #2: Okay. If we move to the operating trends, very healthy operating margin, all in sustaining costs margin. Cash flow Neil already alluded to some of these excellent results that we've seen.
Speaker #2: But your operating margin last year 45% in comparison to 58% in the current financial year. All in sustaining costs margin. 39% for last year in comparison to 53% for this current financial year.
Speaker #2: In free cash flow, Neil stole a bit of my thunder with regards to the free cash flow. But this is the number that we are always very proud of.
Speaker #2: It's your operating activities minus your investing activities. So yes, that increased by 85% from 1.2 billion last year to 2.3 billion in this year.
Speaker #2: And just to stand still, this is one of the reasons that we could declare that 120 cents per share dividend. So if you take that interim dividend into account of 50 cents per share, we paid out 65% of our free cash flow.
Speaker #2: We We declared 65% of our free cash flow for the financial year 2026. Just then headline earnings per share, also a nice upward trend.
Speaker #2: 261 cents per share. Last year to 492%. In this year. Okay. This then all translated into a very healthy statement of profit and loss.
Speaker #2: If you look at that revenue line, 7.9 billion increasing to 11.2 billion. Again, just taking into account the 40% increase in the gold price.
Speaker #2: But also standing still on what Neil said. So we really did not expect to have a production year as we had. You would have seen our production guidance was quite lower than the previous year.
Speaker #2: So to achieve that 5,500 ounces is quite substantial. If you look at the cost of sales line, that increased 9% year on year. I already explained some of the increases in cash operating costs.
Speaker #2: Other than that, depreciation increased. And we had last year, we had a big credit of 98 million relating to our change in estimate in our provisions, which we didn't have in this current financial year.
Speaker #2: Administrative expenses and other costs, it's increased relating to our single incentives. And our long-term incentive, the share price that's increased. Then going into finance, income, increased due to our cash balances.
Speaker #2: That's much more in this current financial year. Although we didn't actually get a dividend from rand refinery, which was about 56 million rand last year.
Speaker #2: So that cash balance increase would have looked even better if we had that 56 million dividend from rand refinery again. Finance expenses, mostly related on our unwinding, on our provision for environmental rehabilitation.
Speaker #2: That takes us then to a very healthy profit before tax of 5.9 billion in comparison to 3.1. Income tax, quite a big line. If you look at that, most of that relates to deferred tax.
Speaker #2: Which I'll just stop on the balance sheet. But we also paid about 490 million in tax, mostly relating to ergo due to the profitability of that operation.
Speaker #2: And the unredeemed capex that we actually used, during the year. Okay. Statement of profit of the balance sheet. Excellent balance sheet. Again, debt-free. I don't think we thought in 2024, when we actually undertook this debt facility at Nedbank, that we would be in the position that we are in today.
Speaker #2: But yeah, standing still on property plant and equipment. Nice increase, 8.5 billion last year to 11.9, showing that 3.5 billion reinvestment in capital that we incurred mostly for vision 2028.
Speaker #2: Investments in rehabilitation and other funds increased nicely with our interest. Maybe just to highlight, included in there were most of that balance actually is our guard risk.
Speaker #2: Sell captive, that's ring cents for rehabilitation. In during the current year, we actually celebrated going over the 1 billion rand mark for that environmental trust fund, which is an amazing achievement.
Speaker #2: If you look at other investments, most of that relates to our 11% increase 11% investment in rand refinery. Which was measured at fair value.
Speaker #2: We added 220 million uplift in fair value. That went through that account. In cash and cash equivalents, I will just highlight when we go through the cash flow statement.
Speaker #2: Other current assets, fairly stable year on year. Maybe just to highlight that included in that balance, we've got a 117 million receivable from Sibanya.
Speaker #2: Which relates to the QF2 dump transfer. So we expect to receive that money regarding the environmental trust funds as soon as all regulatory approvals have been obtained.
Speaker #2: Then moving over to liabilities, provision for environmental rehabilitation. That increase that you see there from 558 million to 721, mostly relate to updated quotes that we got for demolition that was quite more substantial than what we expected.
Speaker #2: But then also the expansion on the forward side. So DP2, doubling up that plant and the RTSF. Increase that balance quite substantially. Then our single biggest liability on our balance sheet, that 2.9 billion rand deferred tax asset.
Speaker #2: Yeah, which grown quite substantially during the year. And this balance will continue to grow as we spend capital. And as we remain profitable. Included in that balance is actually a right change.
Speaker #2: So our weighted average right for ergo increased from 25% to 27%. And then on the forward side from 29% to 30%. That added 150 million swing in that line.
Speaker #2: Current liabilities, fairly stable. Increasing a little bit just due to our accelerated capital spent. Okay. If we move over to the cash flow statement.
Speaker #2: And what a beautiful statement this is. Net cash inflow from operating activities. 3.5 billion last year to 5.7 this year. Mainly driven by that cash generated from the operations of 6 billion rand.
Speaker #2: Finance income received. So there you can nicely see the increase in finance expenses. Our finance income that we actually received from the banks. No dividends received.
Speaker #2: Finance expenses paid very small at the income tax that I already alluded to. Net cash outflow from investing activities. Where you can see that 3.5 billion rand that we spent.
Speaker #2: I believe this is in the past 20 years anyway. The biggest capital reinvestment program that we have done. In one year. So quite substantial amount.
Speaker #2: Then environmental rehabilitation payments, although small. We're very proud of always continuously concurrently rehabilitating our mining site. So that is money spent on the BRAC one, on cladding on BRAC one and on our drift on time facilities.
Speaker #2: And then proceeds from assets out for sale. I'm sure you already all aware of the NOAA that we sold NOAA. In December. So that's just the proceeds that we received from that sale.
Speaker #2: Dividends paid. That's 780 million relate to our final dividend that we paid last year of 40 cents. And our interim dividend of 50 cents that we declared earlier this year.
Speaker #2: Ending up in an increase of 1.5 billion rand. To a closing cash and cash equivalence balance of 2.8. Just under 2.8 billion rand. I'll hand over to Jaco.
Speaker #2: To take us through vision 2028.
Speaker #1: Okay. Thanks, everybody. I would just like to agree with what Hindit has just said. To the operational staff. And even our contractors and our consultants.
Speaker #1: All the way through to the board. I think everybody right from the cleaning staff to the top to the board. Everybody had to fire on all cylinders to achieve the results.
Speaker #1: It feels like you've got to celebrate the wins. So hopefully this feels like the spring box will win on Saturday, 50 and 0. So that's the feeling we get here.
Speaker #1: But yeah, it's a privilege to present the operational results to you. Of everybody's hard work. That's just the picture of Dagga Fontaine. Which we'll speak to just now.
Speaker #1: So just to remind you, of the five projects. That makes up vision 2028. Two of them at ergo. Number one and five. And then two, three and four at far west.
Speaker #1: The first one is Dagga Fontaine. That is a tailings storage facility. Which we have commissioned. I'll talk about that a little bit later on.
Speaker #1: And that is at a estimated cost of about half a billion rand. And that is to reduce the deposition capacity or deposition rate onto BRAC one.
Speaker #1: By approximately 750,000 tons per month. Second one at ergo. I'm going to jump to number five. Is Vitok. So the Vitok tailings dam. That one is still in the authorization phase.
Speaker #1: And the purpose of that one is for us to get off the BRAC one tailings dam in totality. In conjunction with ergo. And to then maintain the deposition capacity.
Speaker #1: For the ergo operations. And that is at approximately 3 billion rand. Then two, three and four is actually one project with three different legs to it.
Speaker #1: The first one is the DP2 plant expansion. And that is essentially doubling up of the existing capacity of 600,000 tons to 1.2 million tons.
Speaker #1: And we'll talk a little bit about that. And that's at an estimated 1.9 billion. Then the pipelines for DP2. Two RTSF. That's the deposition site.
Speaker #1: But then also the Lebanon reclamation station. In total approximately 135 kilometers of pipeline. And then that is at a cost of 1.2 billion. And then the RTSF, which I think you all know about by now.
Speaker #1: One of the biggest largest tailings dams constructed on a liner in the world. 800 million tons facility. We approximately two thirds through the construction of this facility.
Speaker #1: But again, we'll go through that. At a cost of about 3.5, 3.4 billion. All right. So just an update quickly. At ergo, Dagga Fontaine as I've mentioned to you.
Speaker #1: Very proud to say that in June we started commissioning of the tailings dam. And we have achieved the rate that we expect to achieve.
Speaker #1: Which 25,000 tons per day. Which gives us the 750,000 tons per month. This facility gives us an additional capacity of about 120 million ton deposition onto this facility.
Speaker #1: Together with Vitok, it will sustain our mining operation for 21 years at ergo. Now Vitok, as mentioned to you, that's currently in the authorization phase.
Speaker #1: We've completed our public participation process. Our design engineer and his team has been approved by the dam safety office. And then our environmental authorization, waste management license as well as the water use license has been submitted to the department.
Speaker #1: And we're waiting approval of this. We hope to obtain these approvals by the end of this year. If we can achieve that, we then aim to complete construction of Vitok during 2029.
Speaker #1: And that will make sure that we then onto Vitok. Vitok is about 310 million tons deposition capacity. So between the two of them, it will then sustain us for the last for the 21 year life of ergo going forward.
Speaker #1: Onto far west. Again, very happy that we've ticked the box on DP2 plant. On the 14th of July, we commissioned the smelt house. Which is one section of the plant.
Speaker #1: And also produced our first gold bar from this facility. I'm glad to see Kevin is also here. It was a gold bar, not a copper bar.
Speaker #1: And we do expect to have the balance of this plant commissioned by during this quarter. Just be in mind that once we've got this plant commissioned, it doesn't mean that we're going to immediately go up to the 1.2 million tons.
Speaker #1: So we're going to commission this plant. Move over to this plant operate this plant. And then do some refurbishment and maintenance work on the old plant.
Speaker #1: So that once RTSF is ready to take the full 1.2 million tons, we can then fire up both plants. So we will maintain that 500,000 tons per month throughput capacity until we're ready with RTSF to deposit onto that one.
Speaker #1: The pipelines we're waiting specifically for the water use license for the Lebanon reclamation pump station. And that we have received during July. So another obstacle is out of the way.
Speaker #1: And we're about 95% complete with the pipelines. And we can now start with the construction of the Lebanon reclamation station. To be able to put us into a position where we can produce the 1.2 million tons.
Speaker #1: Of material to RTSF. RTSF as of 30 June we were about two thirds through the construction. And that's the picture you can see in the background.
Speaker #1: Obviously hopefully I don't stuff this up. Yeah. So there you can see the black. That's the liner. This is the starter wall going around.
Speaker #1: And for those of you that did not that missed it in July, we provided the market with a full market update. And we spent some significant time on explaining the technicalities around the RTSF.
Speaker #1: If you want to just review that, you're more than welcome. It's on the website. But this facility we do hope to have available so that we can do the full 1.2 million tons in quarter one of the 2028 financial year.
Speaker #1: We have mentioned during the market update that we obviously are aiming to achieve beneficial occupation a lot sooner. But depending on what the weather does and how it rains, we will then make informed decision before we start up that facility in all earnest.
Speaker #1: It's as I've mentioned to you, one of the biggest in the world. It provides a 35 year life of mine for the operations. And it doesn't help us compromise in this facility.
Speaker #1: At any given point in time. So hence being very, very prudent in starting this facility up. All right. And just want to spend a little bit of time on this slide.
Speaker #1: I think what you can see here is a 2026 this year was our peak capital spending here. This was also the year a very important year for us as operational teams and well done again to the projects team.
Speaker #1: This year we had to hit a few milestones. If we miss these milestones, we would have made it very, very difficult for ourselves to achieve the final timelines.
Speaker #1: So and they've done so by making sure that DP2 has been started up or completed, commissioned as well as Dagga Fontaine. So what you can see here is that the majority being spent obviously on DP2 expansion and then RTSF.
Speaker #1: Going forward, you can see that DP2 is very, very little. Just essentially rollovers. We get the UFRs which is the upflow reactors. Part of DP2.
Speaker #1: And this is specifically technology aimed at improving recoveries. Which we implementing on that specific plant. You can see we continue with RTSF spending. And that will also run over into 2028.
Speaker #1: But then we also intend to bring hopefully some of Vitok expenditure online. During the later part of this financial year. And then very important battle continue then to 2028 and 2029.
Speaker #1: So although we're about halfway through our capital expenditure program, a very, very important year for us. And as a team very important milestones to achieve to set us up for achieving the balance of our requirements going forward.
Speaker #1: And then last slide just on reserves and resources. You'll see that we depleted our reserves with about 23 quarter 23 million tons. Of material that we've treated.
Speaker #1: But we've made that up by bringing online Cluf 2. Which provides us with about 67 million tons. So overall increasing the mineral reserves with about four years added to the life of mine of Far West Gold Recovery.
Speaker #1: All right. I'm going to hand back to Neil. Since he's a farmer, specifically at the sheep up there for him.
Speaker #2: Yeah. Is that yours? Thanks, Jaco. Yeah. No. We've got to have some sheep in any presentation worth its salt. So these guys keep the grass short at the solar farm.
Speaker #2: You can't go in there with the bush cutters because you're going to chip those beautiful panels. So it's part of our philosophy of full integration.
Speaker #2: So just talking a little bit about our environmental performance. Indeed made mention of the concepts of concurrent rehabilitation that you rehabilitate as you go along.
Speaker #2: And yeah, we flick through these slides and then you see a tailings dam in the distance. I do believe that the DRD team is achieving a goal that we had set for ourselves also many, many years ago, maybe 15 years ago, maybe 18 years ago of being the benchmark in terms of the activities, the various activities that we involve ourselves.
Speaker #2: And I'm not aware of current tailing storage facilities that are clouded to the extent that DRD is clouded crown facility, the crown cluster, the black pan facility in Dagga Fontaine.
Speaker #2: It's really if you want to show people what a tailings dam should look like if it's properly managed from an environmental containment perspective. I do believe that those tailings dams are benchmark setting in the standards that are being maintained by the team.
Speaker #2: And this has been through our so when we talk about hectares, vegetated, 43 hectares of vegetation, 44 hectares of vegetation, 40 hectares of vegetation.
Speaker #2: That pertains to those permanent tailings storage facilities that are going to be permanent features going forward or that are at least going to be around for many, many years to come.
Speaker #2: And where the only means of containing dust emissions from those facilities and runoff water from those facilities is by vegetating them to the point that they have.
Speaker #2: I did speak about potable water consumption and there you can see some of the trends as they had emerged over the last few years.
Speaker #2: Also dust emission exceedances. So many of our tailings facilities, the tailings storage facilities as well as our reclamation sites are in close proximity of where people live.
Speaker #2: So we have close to 300 air quality monitoring points scattered across the landscape in the Witwatersrand to learn. And that's where we check whether or not dust coming off our facilities and off our sites whether they fall within the statutory thresholds.
Speaker #2: And whether they in any way contribute towards a reduction in quality of life of those people living in the vicinity of those. And it's part of the geospatial reality of Johannesburg of where certain segments of society, where certain communities were placed and where they lived.
Speaker #2: And the reality is that many of the disenfranchised communities in South Africa are those that live firstly downwind of these facilities and in many instances also in close proximity.
Speaker #2: So very few things impact quality of life. As much as the standard of containment that's maintained on these facilities. And that's a good number.
Speaker #2: 0.5% of exceedances is a very, very good number. So one of the most complex numbers that we deal with or set of numbers that we deal with internally is reporting on electricity consumption, on savings on electricity, et cetera, et cetera.
Speaker #2: So we try to reduce those to a few easily understandable headline numbers. You want to go into any deeper detail then you'll have to go through the financial statements in order to decipher it from there.
Speaker #2: But what we've decided to do was to give you sort of headlines of just the impact of the solar farm now that it's been implemented over time.
Speaker #2: So the solar power produced this year is 146 gigawatt of power units that's been produced. And that is now net of grid losses and nets of efficiency losses.
Speaker #2: Actually, a high number of what's actually been produced, but that is what was available for use or that was used within our facilities within the group.
Speaker #2: Electricity consumption of to wheeling and offsetting so that is the electricity that Eskom supplied into our group. That's the 260 gigawatts of electricity that Eskom supplied into the group.
Speaker #2: So if you add those two numbers together, you can get some sort of a sense of what the total draw of DRD Gold was for the year or round about.
Speaker #2: So the Eskom units that were necessary to produce one ton of material to treat and not produce a ton of product, but to treat a ton of material.
Speaker #2: That's in the next line. And you can see that that's a very healthy trend. So in 2024, 13.6 kilowatt hours were required to treat one ton of material.
Speaker #2: That is Eskom generated and supplied kilowatt hours. This year, on a group basis, that number reduced to 8.6 kilowatt hours. So if you do the numbers and if you limit those numbers to Ergo in particular, you'll see that we actually got very close to the range that we guided when the solar farm was in construction phase.
Speaker #2: Of a saving per ton of between 9 grand and 15 grand. And it looks as though it's somewhere between 13 grand, 50 and 14 grand, 50 per ton saving at Ergo.
Speaker #2: That is a number that pertains to Ergo itself. But there are a number of movable parts here. So an exact number is very hard to say simply because we're talking about different rates that's being charged by Ergo.
Speaker #2: So if you look at direct savings, you're also looking at different times of the day. And a variety of other moving parts, wheeling and offsetting charges, et cetera, et cetera.
Speaker #2: But that sort of are the headline numbers. The solar gave us 146 gigawatt that was used. Eskom gave us 216 that was the net number from Eskom and the trend.
Speaker #2: And of course, you've got your scope two carbon emissions and I did mention that earlier as well. How that's reduced over this period. So on the whole, I think considering that we're a company that proclaims to have committed to the ideas of sustainable development, of generating value at different levels, or multi-dimensional value, but integrated, I think this gives a very good idea of how your environmental dividend and your financial dividend or your financial return go close hand in hand if you do this properly, if you plan it properly and if you execute well on it.
Speaker #2: So on the social performance side as well, or the social capital side, I mean, this is very much it's not a story of impact quite yet, but our teams working on the impact of the social capital programs that our company is involved in.
Speaker #2: But just on the numbers this year, you can see where the socioeconomic development number has landed. And these are initiatives directly benefiting communities through small enterprise development and socioeconomic development programs, sustainable livelihoods, and now increasingly also infrastructure.
Speaker #2: When we keep off 15, 18, 20 years ago, on the social capital road path and setting ourselves goals of what we wanted to do, because of the size of our footprint, we do have the largest footprint, I think, in South Africa.
Speaker #2: It starts in springs, maybe even further, and it ends in Carltonville. The most densely populated part of South Africa. You simply cannot be everything to everyone.
Speaker #2: You've got to be mindful of not only what you want to do, but also what your capacity is, what you can deliver. And still impact as many lives as possible.
Speaker #2: So for a very large part of that whole program, our social initiatives were aimed primarily at poverty alleviation and youth education. And then in terms of poverty alleviation, providing knowledge and a nudge, small capital nudge here and there, to assist people to sort of trade themselves out of abject poverty and improve their own quality of life.
Speaker #2: So it was these were programs that provided knowledge, material to self-empower now we're getting to a point where we're actually and I used to say in those days, Anglo-American builds infrastructure.
Speaker #2: We do knowledge and a nudge. Now we're getting to a stage where DRD is also starting to build infrastructure. And next year, there's a clinic that's being planned.
Speaker #2: There's a refurbishment of a school that's being planned. And these are big numbers. That are being committed. And they're worth spending. Because every life that's changed provides just that tiny bit more of social stability in the areas where we operate.
Speaker #2: And you need a socially stable environment within which to operate. The business successfully. We We believe that and I'll continue to believe that for as long as I as I'm around.
Speaker #2: Then in terms of share price movement, I think what has been encouraging in terms of share price movement in the more recent past, the last 24 to 18 months, it does seem as though the lag that we're experiencing in 2024 when we were talking about all of these big programs and the production numbers were simply not there.
Speaker #2: It does look as though that lag is being reduced and maybe it's not there at all. We are tracking the other members in our industry.
Speaker #2: We're tracking our peers. And our peers, we're tracking the gold price, like most of us do. So it's definitely showing signs of having stabilized and hopefully that is something to do with maybe slightly more confidence in the performance of the business and also restoring a measure of credibility in terms of delivering and delivering on these big projects.
Speaker #2: And I did show you the numbers earlier on. It's been part of our narrative now for the last few years of how we believe setting up all of this infrastructure, spending all of this capital will set us up in terms of net cash flow.
Speaker #2: And our company hasn't changed its value proposition or what it seeks to deliver in terms of its value proposition. Dividend flow is still a very big part of that.
Speaker #2: And we do hope that if things remain more or less the same, if we can contain costs, if we can drive us throughput numbers and production numbers, and if the gold price doesn't weaken significantly, that once this capital phase is over, the net cash flow profile of this company could look considerably more attractive.
Speaker #2: And hopefully that will also then reward those shareholders who got their timing right and that remains supportive of the stock. If you sold shares in March, you would have been about 60 rand a share if you got your timing right.
Speaker #2: And I think some of you may have. And maybe those were shares that you bought for eight rand or 15 rand or 25 rand.
Speaker #2: So it is a stock that does reward very significantly if you understand the dynamics that drive the performance of the stock. And hopefully in terms of a production delivery and future investment perspective, we could give you some material to work with.
Speaker #2: Then you need to go and do your numbers with regards to gold price performance and so forth. And the one undertaking that I do give is that for as long as we can, we will remain unhedged and we will provide you full exposure to movements in the gold price.
Speaker #2: So that you can trade the stock on either side of the cycle. Right. So then in terms of looking ahead, I can't get enough of this picture.
Speaker #2: It is just such an impressive piece of engineering. And it is enormous. The scale is not fully appreciated by just looking at the picture, but just in terms of 2027 guidance and I mean, we did try to be realistic in terms of our guidance.
Speaker #2: It's obviously quite a bit more than what it was last year. And not all of that is to do with the increase in volume throughput.
Speaker #2: There are some of these guidance numbers that also pertain to the materials that Ergo is going to be mining for the year going forward.
Speaker #2: So we're guiding between 160,000.000 ounces. For the financial year. And again, the assumption premised on volume throughput and on head grade and on a particular standard of recovery efficiency.
Speaker #2: Cash costs, just over a million rand a kilo. All in sustaining costs, 1.2 million. And then planned capital reinvestment into infrastructure, excuse me, of just over 3 billion rand for the year.
Speaker #2: Important milestones for us. Jaco spoke about some of those, but important milestones for us. Obviously, is the completion of the DP2 plant expansion. And that's just about ready to happen.
Speaker #2: We have a board meeting in October. And the intention is to take the board members to that plant and to show them a plant that is completed.
Speaker #2: And that at that stage, that particular section, the new section, to be close to operational, if not operational, so that the service of the existing circuit, that that can take place.
Speaker #2: That we can have two virtually new sections up and running and ready to accommodate the 1.3 million ton a month throughput that's envisaged for farways gold from next year onwards.
Speaker #2: It's important that we complete RTSF or beneficial occupation. And if you want to have a better understanding of what beneficial occupation means, please just run through the presentation that we did in July.
Speaker #2: We'll give you some sort of an indication as to where it needs to be. It doesn't have to be the dam doesn't have to be finished, the facility doesn't have to be finished in order to do that.
Speaker #2: It's going to be sort of two-thirds finished and more or less where Jaco is now, but there's some odds and ends that we still need to take care of.
Speaker #2: There are a few regulatory hoops that we need to jump through. So beneficial occupation is a technical term that basically means that we are now ready to start impounding material onto that facility.
Speaker #2: And a big part of that initially will be the successful commissioning as a complex process, one that we need to get right. As Jaco said, you're not going to be taking shortcuts now on a facility that's supposed to last for 35 years.
Speaker #2: Commissioning of the Lebanon reclamation station I was so relieved when we got the water usage license for the Lebanon reclamation station. And there were a number of not just our own colleagues, but also individuals working at the department of water and sanitation that I know pulled out the stops to facilitate this.
Speaker #2: They knew that it was on the critical path. They were sensitive to the fact that there was a lot at stake and they came in and they made sure that we got this hopefully in time to delivering to the expectation that we've created with regards to 1.2 million tons a month in financial 2028.
Speaker #2: Obtaining the relevant approvals to commence construction at Vitoke, we spoke about the complexity associated with that site, the fact that there's some underground geological features that we need to look into, that need to be insulated from the facility over and above the liner that's going to go in, some of the design complexities as well, especially where the two dams abut where Vitoke abut the Brackband Tailings facility.
Speaker #2: It's not a simple process and therefore we've built in some additional time to do that. It's not going to meet the 2028 timeline that we had aspired towards when we first set out with this.
Speaker #2: The initial gap, the initial hole in the volume throughput though, we explained through until 2029 when Vitoke. Online, is 150,000 tons per month. So it's a relatively modest impact in the near term.
Speaker #2: It's essential though that this dam's built. By 2029, because that 320 or rather 310 million tons of capacity that it provides, is very important for the remainder of Ergo's life of mine.
Speaker #2: And then, of course, we also want to continue to explore opportunities for growth beyond South Africa. And this is something that we have been talking about.
Speaker #2: And there are companies that we've had conversations with to see whether our model is appropriate for what they have left on their side. With the margins that our model has been generating and other companies have been managing to also achieve, I think a lot of the focus on Tailings 3 treatment has sort of moved away from the impact that it has from a sustainability perspective or from a mine closure and an environmental restoration perspective to commercial aspects.
Speaker #2: And I think there's a lot of expectation and maybe even some political maneuvering with regards to legislation and so forth. That's starting to overemphasize the commercial aspect.
Speaker #2: However, things have changed in the world in the last 30, 40 odd years. The standards that we insist upon in terms of environmental closure, in terms of restoration of mining footprints, in terms of biodiversity, and the restoration of ecosystems, those standards have changed.
Speaker #2: And corporates are giving and the takings, they're making promises in that regard. Promises that are going to have to be fulfilled with money that did not form part of the initial modeling.
Speaker #2: And that's really where Tailings 3 treatment hits the sweet spot. Tailings 3 treatment is that part of your business that latent value that's remained ignored for many, many years or unrecognized.
Speaker #2: That can now kick in and that can delivering to that without eroding the shareholder return or the expectation of shareholder return. That is the essence of Tailings 3 treatment.
Speaker #2: Yes, it's nice to have these super profits. Yes, it's nice to have all of these programs. But. Essentially, what's happening here is a profitable, sustainable restoration of a poor legacy.
Speaker #2: And that's something that needs to take place globally on a global scale. And it's worth doing it because it has become a compelling financial proposition as well.
Speaker #2: Seven years ago, Sabanya Stillwater had a project that they spoke about. In the far west land. If, however, you looked for financial reporting on that project, the only evidence that you would have found would have been a 250 million provision in their balance sheet, an environmental provision.
Speaker #2: So in other words, a cost, a liability. Today, seven years later, Sabanya, after having merged that project into DRD Gold, owns a 15 billion rand asset.
Speaker #2: That's the value of their shares in DRD Gold. So they've gone from 250 million negative or 300 million negative to 15 billion positive in terms of the value of the company.
Speaker #2: Have earned or they will have earned after this dividend, that's declared today. In the last two years, 955 million rand in dividends. From their 50.1% interest in DRD Gold.
Speaker #2: That's the value proposition that DRD Gold can bring to your business, to your waste. You want to do it yourself, carry on. You want to achieve success in this sort of inventure or endeavor, let us through the front door.
Speaker #2: Maybe we could do something with your tails. That's our story. All right. We'll be taking sorry, that was maybe a little bit of a cheeky note to end it on, but anyway.
Speaker #2: We'll take questions now. You guys want to join in.
Speaker #1: Questions in the room. So please raise your hand and then state your name and a gentleman will bring a mic to you. And then once the questions in the room are done, we'll go to the online questions.
Speaker #3: Just for the benefit of people dialing in, just state your name. First of all, congratulations. This is the third set of results. And my dear lead, the DRD is a world leader in terms of what it's doing.
Speaker #3: And I just wanted to just state that the one aspect that you said that you're tracking the SA Gold companies, and that to me is what is my statement is that I don't really understand that because you have no geological risk like they do.
Speaker #3: So yes, gold price is a proxy and it's going to follow gold. But to understand more from a geological point of view is just something I don't understand.
Speaker #3: But for me, it's really well done, guys. And it's so good to see that there is life in the South African gold industry through people like yourself.
Speaker #2: Thank you very much. We appreciate that. And look, I'm not again trying to explain the performance of the stock. Mayor is an expert. He's been doing it for 60 years.
Speaker #2: He would be able to maybe explain those trends. But the fact is there does seem to be a correlation. And we don't want to lag.
Speaker #2: I think that's the main thing. And we were lagging. And we seem to have overcome that. It is tracking the industry a little bit more closely.
Speaker #2: But thank you very much for your kind words. Hopefully, we can continue to deliver into those expectations. It's a long way down. Mr. Dorfel, welcome.
Speaker #4: Thank you. Yeah, Arianne Dorfel previous CFO and. Shell. Yeah, from my personal point of view, just considering the significant capital expenditure substantial contribution to the fiscus and a very healthy 50 cents interim dividend.
Speaker #4: I just want to comment relative to the final dividend of 40 cents last year, the one rand 20, is definitely not a stingy dividend.
Speaker #4: So thank you very much. For that, so just a comment and well done with the results.
Speaker #2: Thank you. Look, and a lot of thinking went into that dividend because what you obviously don't want to do is be silly about the dividend that you pay because next year you hopefully declaring another dividend.
Speaker #2: And do you really then want to have a sort of a 40% drop on your dividend? And do you have to go to I mean, thank you very much, Nedbank, for this facility, but if you don't need to draw against it, you shouldn't want to draw against it.
Speaker #2: So we did put a lot of thinking into that in order for it to be a responsible dividend in the circumstances. And by the way, just on the point of tax and you've given me the opportunity to do that, you know it's one of my favorite topics.
Speaker #2: As a proud taxpayer, so it's not only the 490 million in income tax, was it 490 million in income tax? There's also the 312 million rand in pays you earn.
Speaker #2: So it was close on 800 million. Paid in taxes and that doesn't take into account rates and taxes and VAT that was paid this year.
Speaker #2: So I think there was probably a contribution towards fiscus and excess of a billion rand this year. I don't know about operations.
Speaker #4: Martin Cleaver from Mining Weekly. You said you've got a greater ambition when it comes to renewable energy. What is that ambition? What do you see as the final part of it?
Speaker #4: And secondly, there's definite grid metal tailings around the place. There's an opportunity in platinum, is there not? Have you really studied that to the full or how far are you from doing something with regard to platinum?
Speaker #2: Yeah, certainly. No, thank you, Martin. In terms of additional renewables, Jaco worked on a program. You saw the 145 million asset for sale. So he worked on a project and in fact, the team took it to licensing to the point where they can start constructing.
Speaker #2: And we sold it, but we locked in a number of units. 30 megawatts? Yeah. So we've got a 30 megawatt facility coming our way through the grid in a few years from now.
Speaker #2: So hopefully that will, with the additional power that's going to be used at Paul West, it will have the impact or the effect that carbon footprint isn't growing size because of more power from ESCO.
Speaker #2: And look, the power station I'm trying to encourage. I'm the main cheerleader when it comes to maybe more investment into solar. I think my team is still recovering from the previous process, but I think there's opportunity too.
Speaker #2: We've got this fantastic expertise in the group. I think we should take advantage of it. I don't know if we should only earn only one solar farm.
Speaker #2: Maybe we should earn more than one. But yeah, I'm not getting a fully supported from the team on that one just yet. What was sorry, what was oh, they're on the platinum.
Speaker #2: It's really up to I mean, obviously the obvious partner for platinum would be Sabania Stillwater. And it would be entirely up to them to invite us into the room.
Speaker #2: There was planning done a long time ago on that and we do know that there's plenty of opportunity. Multi-billion rand NPV opportunities in that regard.
Speaker #2: I don't think we'll buy anything, but there's no reason why we can't participate. Technically, and maybe you get paid a fee as a member of the group.
Speaker #2: So the opportunity is there and it'll be a case of Sabania inviting us into the room. There's a lot of work happening in Sabania in terms of tightening up on the asset portfolio and I know that there's a program and they'll talk about that.
Speaker #2: I'm sure that they do talk about that. Spoke about that at their markets, capital markets day as well. So it's a big company with a lot of moving parts.
Speaker #2: So and everything has its turn. And everything has a priority. And I'd be very surprised if we're not involved in that conversation.
Speaker #1: Okay. We're going to take some questions.
Speaker #2: Camilla, sorry, there's another question. Sorry.
Speaker #3: My name is John Krenzlu. What about uranium? Is there an opportunity?
Speaker #2: I think uranium will be the next CEOs. Sort of focus area. So I'll tell you exactly why. When uranium became a thing, many years ago, when who was it?
Speaker #2: Outfit Mine Waste. Gordon Miller and then uranium. That wasn't rand uranium. It was Mine Waste Solutions. Remember that Mine Waste Solutions was going to be a uranium primarily uranium and they raised a lot of money, 125 million Canadian dollars, sold their gold forward, sold their gold for $400 an ounce.
Speaker #2: In order to fund a uranium circuit. I went to go and see a gentleman who worked at a rebar called Daniel Wooters. And he'll forgive me for reminding him of this conversation, but I think he was right.
Speaker #2: And said to him, listen, everyone is doing all this uranium stuff with tailings. And I'm feeling am I the only idiot in the room?
Speaker #2: Not wanting to pursue that because we have the largest tailings portfolio. And he said, whatever you do, don't do tailings. Don't do a dual product stream.
Speaker #2: In terms of tailings, focus because you'll favor the one at the cost of the other. So you're going to be producing lots of uranium, but not much gold at the cost of your gold efficiency.
Speaker #2: Or you're going to be producing a lot of gold, but at the cost of your uranium efficiency. They're not happy partners in the same circuit.
Speaker #2: That's in terms of secondary mining. Primary mining is obviously the opposite. So I have a bias when it comes to uranium from tailings. And there's going to have to be a very compelling argument made by my colleagues.
Speaker #2: Yeah, to justify or motivate large quantities, large capital amounts to build a tailings uranium circuit as part of our current throughput profile, not a fan.
Speaker #3: If I can expand on that.
Speaker #2: Yes, please do, Jaco.
Speaker #3: So the two processes on the opposite side of the PH scale. So uranium recovery happened in a city side of things where you're leaching it with sulfuric acid.
Speaker #3: And gold obviously happens in the alkaline stage right at a pH of 10.5. So it's exactly what Neil is saying. You're going to sacrifice one for the other.
Speaker #3: To do that recovery. Ergo did that pre I think it was before 2000s. Ergo treated uranium and gold. Stopped it for that reason. Mine Waste Solutions did the exact same.
Speaker #3: Also treated uranium and gold and at a point in time stopped doing that because you sacrificed one for the other.
Speaker #2: So sorry, is there no new technology?
Speaker #3: No, unfortunately not at this point in time. No.
Speaker #2: So if you look at our average yield, the second the third slide, our very first third slide. And it's important that we because we quote these numbers and we this becomes so much part of our language that we don't really appreciate every exactly what they mean.
Speaker #2: I mean, look at that number there. Where's the recovery? Yeah. Look at there. 193. There's a reason why we say 0.193 gram a ton.
Speaker #2: Very good reason. And if that was 0.183, you multiply that by 3 million. That's 30 kilos gold. That's 60 million rands of revenue that you lose.
Speaker #2: Because you got that second digit wrong. So your uranium has got to give you an additional 60 million rand in net profit. In order to justify sacrificing 0.01 gram of gold production.
Speaker #2: That resource doesn't exist. Not in South Africa. Not at these throughput rates. Right, Camilla, I think we've is there anyone else in the room?
Speaker #2: Oh, Martin?
Speaker #3: I just want to hop on what the minerals council of South Africa and a whole group of individuals has been saying. South Africa is falling behind the rest of the world when it becomes when modernization of technology is involved.
Speaker #3: I can't see that quite happening with you guys on the operational side. Because there are so few people that do what you do. But there was a clear picture that they painted.
Speaker #3: That some of the main jurisdictions in the world were ahead of us. And that we quite badly behind on the modernization front. Have you people looked at that?
Speaker #3: Are there any ways you can do things better? Of course, there's AI crops up all the time. But how you use that is important.
Speaker #3: Most of the time when they explain the use of it in this when they discuss the modernization, was that it was creating jobs rather than actually diminishing jobs.
Speaker #3: Particularly in the operational front. But I don't know whether there is any modernization mechanism that you can bring in that would help matters. Would you think you reached the stage of modernization that is needed?
Speaker #2: In terms of digitization and using AI and so forth, I think AI is very helpful to better understand data. AI shouldn't be a decision-making tool.
Speaker #2: It should be an analytical tool. Something that you use to understand more data better in order to inform your decision-making. So I think very reluctant for people to sort of just mechanically follow numbers on a screen and then say, all right, well, AI is saying I must do this, that, and the following.
Speaker #2: It's important that people understand what it is that they're dealing with. Because if things go wrong, AI is not going to fix it for you.
Speaker #2: You need to understand your process and you need to be able to do it yourself. I think in terms of big data, we've been doing big data in any event now for the last 15 years.
Speaker #2: To track and understand and maintaining stable state, the throughput rates that we're doing. We're separating out 200 parts per billion. You do need big data.
Speaker #2: And that's being reported on an ongoing basis. With regards to new technologies, the UFR, the upflow reactor, could be part of that cracking the code.
Speaker #2: And making that small incremental change. And I mean, there's never not any kind of some kind of rather research happening. It's just being able to scale it.
Speaker #2: So that process will never end. It will continue. I mean, we're still putting back 0.17, 0.18, 0.15 gram of gold per ton. We're still putting back onto our tailings in some instances a little bit more.
Speaker #2: At some point or another, there might be a different kind of process. It can actually probably extract what's remaining there as well. So it's a never-ending endeavor.
Speaker #2: But we're excited about the upflow reactor. It is showing good promise.
Speaker #3: Why are you excited about it?
Speaker #2: That increases your it reduces your residue crate. So it's one more pass. So once it's gone through CRL, it goes into the upflow reactor.
Speaker #2: And then there's some more adsorption taking place.
Speaker #3: We're convinced the last time.
Speaker #2: Well, we did pilot scale. I think what we don't want to do is create expectations and say we believe it's going to give us this, that, and the following.
Speaker #2: But even on a conservative interpretation, I mean, we're committing a lot of money. And we're doing it because we think the technology works. Just before you start modeling it.
Speaker #2: We want to give you proper numbers before you start bringing it into a model.
Speaker #1: Okay. We're going to go to the online questions. Arnold van Graan asks, Neil, is it fair to say you're keen to see Vision 2028 through to delivery?
Speaker #1: And how do you think about how do you think about leadership continuity beyond that point?
Speaker #2: Yeah. I'd love to. Well, everyone in this room who works for the RD is younger than 40. Can you put up your hand, please?
Speaker #2: All right. So there you see it. A lot of young people working for the company. And I mean, there are a lot of smart people already being positioned for the next generation of management.
Speaker #2: So I'm confident that we've got the depth within the company to deal with both a crisis scenario and also with a managed and structured scenario.
Speaker #1: Okay. Nick Dillon, he says, Neil, are you pointing to a change in operating plans at ERGO with more reliance on trucked high-grade ore for the foreseeable future?
Speaker #1: And where is this coming from and how and for how long will this go on?
Speaker #2: So what we're pointing towards is not a change. The opposite of change. There will still be tracking going on for the foreseeable future. But not an increase in tracking.
Speaker #1: And then Nick Dillon asks another question. The deadline for approval of the TOC approaches. If no approval by December, can you give us a sense of how you'll play the uncertainty into your revised plans?
Speaker #2: We will just have to camp out and bang on the door and say, listen, can we please have it? Like we did with some of the other licenses.
Speaker #2: Yes, sir. You want to comment on that?
Speaker #3: So yeah. It's important that we do get to that timeline. If we don't, the backup plans would be that's why we've implemented the half on time.
Speaker #3: So the half on time takes 750,000 off the bracken tailings then. We've got a bit of leeway in that process. But it's important that we do hit that end of year timeline.
Speaker #3: But it's not a umpty dumpty fall of the wall exercise. We do have some additional capacity.
Speaker #2: Yeah. So if the talk doesn't come online in 2030, then it means until it does, ERGO would have to be running at somewhere between 750 and a million tons a month.
Speaker #2: So you'll shave another 650 off its volume profile. Not ideal, but as Jaco saying, it's not existential. Just annoying and inconvenience. And it's going to cost money.
Speaker #1: And then Mark Du Toit asks, well done on the great results. Could you expand on your capital allocation policy? What dividend payout can we expect going forward?
Speaker #1: And then two, what is the expected benefits from the upflow reactors costing 880 million in CAPEX?
Speaker #2: Okay. So if we. As the capital reduces and provided everything. Stays the same, the dividend will grow. Simple as that. And that's why we include the capital profile.
Speaker #1: And Lebumoffer King asks, well, says, well done, guys. Please guide on AIC. AISC and AIC for financial year 28 and financial year 29. Unit cash cost as well.
Speaker #1: Can you also guide on running CAPEX number post Vision 2028?
Speaker #2: No, I don't think so. I don't think we give guidance on those numbers that's falling to the future. They're just too many assumptions that we don't control.
Speaker #2: I mean, you could extrapolate them more or less and form a view on the assumptions the veracity of the assumptions that we use for our guidance.
Speaker #2: But I don't think we can do 28 and 29 all in sustaining cost guidance. CAPEX guidance is there. I mean, it's pretty much as far as I think we prepared to go.
Speaker #1: John Ray Pieters, your expectations, what are your expectations of cash tax versus accounting tax going forward?
Speaker #2: Oh, gosh. Somebody needs to explain to me what that is. So why don't you take that one in there?
Speaker #1: So again, on the income tax side, so deferred tax will keep on growing. On the cash flow point of view, our income tax balance will keep continue growing as well.
Speaker #1: In the foreseeable future, we've still have a big capital balance for four ways, for instance, for the year ahead. But if the gold price performs in line with what it's performed with in the past, even four ways can go into a tax paying position during the next financial year.
Speaker #1: ERGO will definitely still be, even with the planned capital spend on the talk side, they will continue to be in a tax paying position next year.
Speaker #2: And I think I'm correct in saying that with the solar less than two years ago, solar less than two years ago, and recognizing 125% of 125%.
Speaker #2: It's gone. It's been expended. So it disappears very, very quickly in this sort of margin gold price margin environment. And look, I think it's important that that number is out there because sometimes the contribution of the industry of corporate South Africa and the mining industry is understood in terms of social and labor plans only in terms of social and labor plans with some sort of equity participation thing and so forth and so forth.
Speaker #2: Somehow we ignore or we don't really spend enough time reflecting on the physical contribution, the contribution in taxes. That this industry is making. And something that I think I'm surprised that there's not more awareness amongst communities, affected by mining industry, that you see, and I just said mentioned a billion rand in tax.
Speaker #2: The sad reality is we see very little evidence of any of that billion rand finding its way back into our surrounding communities. If you look at the kind of services that's being provided there, at the kind of help assistance that our company needs to provide in order just for basic things to be delivered into those communities.
Speaker #2: And I really think that as much as we look at the social contribution of mining companies, in the context of regulation and so forth, maybe from time to time, we also need to reflect at just how efficiently tax revenues are being reinvested into constituencies.
Speaker #2: As a percentage of our contribution into the fiscus. We're seeing very little of that being ploughed back into our communities, into the areas where we operate.
Speaker #2: Very little.
Speaker #1: Thank you.
Speaker #2: Which is wrong.
Speaker #1: Dina Wafaka asks, good morning. Can you say where outside South Africa you are looking to expand?
Speaker #2: Yes. We're looking at Africa and South America.
Speaker #1: And then Herbert Karibe says, is diesel a meaningful input in your production process? So yes, brief. We do at this stage have got lots of yellow machine eye.
Speaker #1: If you look at the massive projects that we are undertaking on the RTSF, you're given how many yellow machines are on RTSF at this stage?
Speaker #1: So 167. Big pieces of equipment currently running at RTSF. On the operational side, from a cleanup operation, all of the cleanup sites, we use lots of machine eye.
Speaker #1: And then the trucking expenses, biggest portion of that is a diesel component. So yes, diesel is impacting us quite substantially. Especially on the ERGO side, less of an extent at this stage.
Speaker #1: On the four ways score recovery side. I think that leads Matthew Whitelaw to his question. What price have you assumed for diesel in your financial year 27 cost guidance?
Speaker #1: So look, we have done you've seen that the diesel price has gone up, and it has gone down. So we have built in the latest information that is good, and we built in some risk factors.
Speaker #1: So you're going to always have things that is directly impacted. From a diesel point of view, our diesel usage versus your deliveries is more expensive, etc.
Speaker #1: So we have brought in some risk factors into our budgeting process, but it was an interesting year to budget.
Speaker #2: What's that range between 11 and 17% risk factor on some of the components? That's part of a compass.
Speaker #1: Perfect. I think some of the other questions are a little bit more detailed, which we'll take time to respond after the session.
Speaker #2: Okay. Thank you very much, everyone, for joining us. And we really appreciate your attendance. And please join us for some snacks. Okay. It's 10 o'clock.
Speaker #2: I suggest we start. Good morning, everyone. Thank you very much for joining us today for this presentation. Before we start, I just want to pause for a moment to remember a very good friend and a.
