Sibanye Stillwater Limited (NYSE:SBSW) Q4 2023 Earnings Call Transcript

Sibanye Stillwater Limited (NYSE:SBSW) Q4 2023 Earnings Call Transcript March 5, 2024

Sibanye Stillwater Limited isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Neal Froneman: Ladies and gentlemen, welcome to our 2023 H2 and Year End Presentation. Please take note of the international piggyback. We gave considerable thought as to what would be the appropriate way to signal our focus on the balance sheet and we thought this was the most appropriate way to indicate our focus. For a challenging 2024, we are not trying to create a silk purse out of a sow’s ear. So let’s move on. First of all, please take note of the safe harbor statement. There are lots of forward-looking statements, especially around what the markets may or may not do. What we intend to cover today is, I will go through the salient features of 2023. We want to start with it all starts and ends in the market. We really just want to focus on the PGM market.

I think that is the priority. We want to share with you our proactive focus and our protection of the balance sheet. That is definitely our priority for 2024. I will also discuss a concept that I introduced, at the last presentation, a little bit more on resource stewardship. I will then hand over to Charl Keita, our CFO, who will do the financial review. Charl will hand over to the Chief Regional Officers, Richard, Charles, Mika, and Robert for the operational review. And then I will pick up again to conclude today’s presentation. So let’s, just look at the salient features, for the year ended 31 December, 2023. I think in terms of embedding ESG as the way we do business and work, we certainly can celebrate a record low serious injury frequency rate.

Unfortunately, we did suffer regression in fatalities year-on-year, predominantly due to the Burnstone Conveyor contractor incidents — incident, where we unfortunately lost four human lives. We are pleased to say that we well advanced with our renewable energy projects with 267 megawatts in construction. We’re also pleased to say that we achieved conformance, for our storage facilities — tailing storage facilities according to GISTM. And in line with our capital allocation model, we established the Sibanye Stillwater Foundation and the first allocations for the benefit of social upliftment have been made. And Richard will cover that, in his section. In terms of financial performance, earnings and cash flow were significantly impacted by steep, a steep decline in PGM process.

We have been looking after our balance sheet not only recently, but for some time. And I’m pleased to say that we ended the year on a net debt to adjusted EBITDA ratio of 0.58x. We have a low risk and well stated — staggered, I should say, debt maturity ladder. And of course, we applied our dividend policy. But due to the losses in the second half of the year, there is no final dividend. In terms of the South African PGM operations, again, another really consistent and solid operational performance. We achieved industry leading cost control with only a 4% increase in our — all in sustaining costs to approximately R20,000 per 40 ounce. I want to point out, and Richard will do more of this, we — with the significant revenue generated by our byproducts and in particularly Chrome.

And I think that it’s not well understood how much revenue comes from chrome. But in terms of byproduct, credits, R10.9 billion it was the impact. Load curtailment was very well managed, and we ended up the year with effectively zero inventory, which is a good outcome considering what other, companies have had to report. We were proactive in restructuring many parts of our business. But in the South African PGM operations, we started just after mid-year results presentation, and that was — that restructuring was completed in February of 2024. The South African operations, I’m pleased to say, both gold and platinum are profitable despite, the depressed PGM basket price. In terms of South African gold operations, again, another good outcome.

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Q&A Session

A very significant turnaround from a R3.5 billion adjusted EBITDA loss to a R3.5 billion adjusted EBITDA profit. That’s a R7 billion swing. Load curtailment was also managed, very well. Kloof 4 shaft was restructured again proactively, due to a constraint resulting from seismicity and the implementation of our safety strategy resulted in the closure of that shaft. Obviously, the final catalyst was a shaft accident in the shaft. The South African gold operations, as I’ve said, are also profitable and generating, a positive cash flow. Important, we often ask, why do we continue to pursue gold as part of our commodity mix? Well, I think it’s very clear in global economic downturns that, gold safe haven status is a positive. And just to note, if we could create value by growing our gold portfolio, we would.

Gold is a good commodity to have when you have a large base of industrial commodities as well. In terms of the U.S., the first half of 2023 was also impacted by a shaft accident at Stillwater West. We moved in quarter four to right size the operations for the lower palladium price environment that has worked extremely well. We’ve got another a number of other levers we can pull, and there’s ongoing work, to ensure that these operations become profitable. They’re still loss making at the moment. I will note when we look at reserves and resources that store is a strategic asset, both for ourselves as a company and for the U.S. And we have really no option but to ensure that it, becomes profitable even at these depressed palladium prices. So that’s not due for closure at this stage.

In terms of the European region, the construction of the Caliber Lithium Refinery is on schedule and on budget. Late last week, we received a court ruling on the appeal regarding the environmental permits, for both the Rapasaari mine and the concentrator. The court upheld the permit, but referred certain of those conditions back to the permitting authority. We suspect that may have an impact on when we bring Rapasaari mining to operation. And it may also require some rescheduling of capital. And once we have done that work and we are clear on the impact of this, we will provide the market with more guidance. The Sandouville nickel refinery in France was severely impacted by the collapse in nickel process. However, we had a very good outcome from the work that we initiated to look at the conversion of that refinery into a nickel sulfate, processing plant, incorporating battery recycling.

That study, as it was done morphed into a study on PCAM, on producing PCAM. And we had a positive outcome from that transition, and we will now take this to the next level of engineering. For the first time, we have I think a positive way forward for Sandouville. In the Australian region, again, good news. We completed the acquisition of New Century Resources. We now own a 100% of the company. The adjusted EBITDA turned positive in Q4 after the very extreme weather event in March of 2023. And we also ’23 to acquire a 100% of the Mount Lyell copper project. So let me move on to it all starts and ends in the market. And that’s a quote, from one of our previous Non-Executive Directors, Barry Davison. And as you know, Barry was instrumental in building Anglo Platinum, and we learned a lot from Barry.

And this is one of the — one of the things I would like to do acknowledge, that he taught us and Barry often listens into our calls. And, if you are listening in, Barry, greetings. I’m not going to get into the nuts and bolts of supply and demand as it relates to the PGM. I want to take more of a bit of a philosophical view of the market. Our view has been consistent. We recognize the issues of the day in very solid and very positive. And let me share with you why? The graph on the right hand side, indicates the makeup of light vehicle production by powertrains. On the left hand scale is millions of units of light vehicle production. And you can see the different colors indicate, what is ice? What is hybrids? What is BEVs, and fuel cells are hardly seen in this period.

The point that needs to be made is the following: is that absolute light-duty vehicle production is forecast to grow over the rest of this decade, to well in excess of a 100 million units per annum. I think the second point is that electric powertrains are expected to increase in market share in coming years. Now, that does mean that, battery electric vehicles will increase in market share. But for some time, we’ve been saying those penetration rates are overstated. But what seems to be forgotten is the role that hybrids will play and what’s becoming much clearer to us, as we get to understand supply constraints, consumer preferences, and technology advances. The use of PGMs in the hybrid and internal combustion engine segment to the market is well supported.

More recently, you had GM Ford, Toyota, BMW. And in fact, about a week, 10 days ago, Mercedes have all made public announcements pulling back on battery electric vehicle plants. And that type of messaging drive sentiment. Sentiment impacts short positions in the market. And from a palladium point of view, you are starting to see that unraveling. The point of all this is that, those technologies that use Autocts, and that’s ICE engines in the purest form and plug in hybrids, in this decade are expected to provide approximately 70% of the powertrain mix, which is a very solid underpin to the PGMs. I think that’s clear and it’s well understood that the majority of PGMs, especially platinum, ruthenium, and iridium have significant industrial underpin as well.

In other words, they’re not really impacted, by what happens in the Auto segment. So, again, another underpin to the demand side of PGMs. We do expect, primary supply cuts from loss making production. We’ve cut back 40,000, 50,000 ounces on shafts that have come to the end of their lives, on some loss making production. And I expect other companies will do exactly the same. So called recycling and extrapolating, recycling of AutoCAD in straight lines is not going to happen. Recycling remains subdued for very good reasons. There’s very little price incentive, to collectors. Logistics are difficult at the moment. People are not scrapping cars. The steel price is not underpinning the scrapping of cars either. So where we’ve ended up is in a bit of a volatile situation where supply chains have created major disruptions for end users who, through the experience, stocked up and built up inventory.

And what we’re seeing in the depressed environment at the moment is that that inventory is being reduced, and there’s destocking taking place. That’s what depressing the price. None of the fundamentals have been impacted negatively. And, of course, inventory is finite, and we are already seeing a little bit more activity in the spot mark spot market from end users. So we remain positive and constructive regarding the PGM markets. Now, this is some company information, coupled with of course forecasts of others from a base data point of view. But it’s not, it’s very difficult to look at platinum and palladium as separate metals. And we initiated the substitution of palladium with platinum for very good reasons, and we’ll get to more of that later.

But the graph that you see here indicates, a base case market balance in red. It indicates through the gold bars, the — our view as a company of lower BEV growth. And, of course, you can see in terms of platinum and palladium looked at from a 2E perspective, the deficits increase from the base case just through that out into 2028. And when you look at supply rationalization, and you develop what we call a combined scenario of both BEV — lower BEV growth and supply rationalization. You can see why we remain constructive and bullish regarding these two metals with deficits all the way out in our view to 2030. In terms of rhodium, it’s also not too different. When you factor in our view of lower BEV growth, which we’ve maintained, as I’ve said, early on in the presentation for some time.

When you look at supply rationalization, and yes, we’re very mindful of the changes occurring in the fiberglass industry in China. You can see again, from a combined scenario point of view, rhodium remains only moves into a surplus in 2030. All of this bodes very well for the underpin to our PGM business. In addition to that, and I said I was going to come to this, we have as a company been driving, what we believe is innovative market development. Now I referred to the tri-metal catalyst work that we did with BASF in 2020. We felt that, the palladium, palladium demand had entered a phase where it was not sustainable in terms of the way we are mining. We looked at the international basket waiting and recognized that it was important to look at potential — the potential substitution of palladium with platinum.

Now today, we received many comments that you’ve actually undermined your own business. That’s not true because the reverse is also true as platinum, will increase in price that provides the underpin at a logical point in time for palladium to be substituted for platinum. And therefore, we are very confident that we’ve done the right thing from a sustainability point of view to ensure that our baskets are balanced. In addition to that, we’ve more recently embarked with Heraeus Precious Metals on two projects. I’m not going to go through these in detail, but the one is a ruthenium based catalyst for PEM electrolysis. And again that is to ensure that there are cheaper options for producing hydrogen and not having to revert to scarce iridium. The other one is we are exploring new applications for palladium in the hydrogen economy.

So, palladium has had in our view, very little market development investment. And we are following through on that. I’d like to now move onto what we believe is a very proactive focus and protection of the balance sheet, which is going to be a key focus for us in 2024. But before I go into the details, I think it’s important to just look at the external context in terms of the world we’re operating in. And again refer to the gray elephants. And the gray elephants, you would know are those highly probable, high impact, yet often ignored trends that are shaping the 2020s. And we spent quite a bit of time on talking about these gray elephants. Today, I really want to pick up on just a few. And we had noted previously the increasing trend in temperatures.

2023 was the warmest year on record. That’s accelerating this imperative for climate change. And of course, our metals are key and underpin what is necessary to protect the world from this runaway climate change. That’s not the focus of this, but I think the global trade patterns and supply chains are being significantly disrupted. And geopolitical developments are making deeper and deeper impacts. I referred to the destocking that’s currently taking place. I have not yet referred to palladium that we believe is coming from Russia via China at a discount and impacting and undermining, what is a commercial palladium price. Those are all patterns that come from the gray elephant of big squeezes. We are very cognizant of them and of course have strategies to deal with that.

I have said many times in these presentations, the issue of multipolarity or in another word, the deglobalization of the world is happening at an accelerated rate. Our positioning in Europe and the U.S. was not by chance. It was taking recognition of this multipolarity. And of course, those are markets that are short of these critical metals. Those are markets that we can support and jointly prosper in together with our stakeholders. I think when you look at the fact that 64 elections will take place, country elections that is in 2024. And you look at what is happening in the division between the East and the West. This is a very significant platform for angry people to express their discontent all over the world. And it is something that can really undermine very quickly, the underpins and the changes to market.

So it’s something we are monitoring very, very closely, but that is the broad external context. When we bring that into the company, you are all familiar with our strategic thinking, our three-dimensional strategy, the strategic foundation, the strategic essentials and of course, they are strategic differentiators. In a challenging environment, the primary focus has to be on strategic essentials. And that is where our focus is. And just to remind you, what does that actually mean? It means, first of all, we’ve got to ensure the safety and well-being of our employees. So safety first. Prospering in every region in which we operate. That means having good stakeholder relations, with all stakeholders in the regions we operate in. Achieving operational excellence and optimizing long-term resource value.

We’re going to cover a number of those aspects in this presentation. You saw increases, within our South African PGM business of only 4% in a high inflationary environment. I will get on to recently declared reserves and resources and show you how we’ve optimized long-term resource values. Those are some of the key assets within the company. Maintaining a profitable business and optimizing capital allocation. In this presentation, I believe I will talk about capital allocation. Charles will talk about capital allocation, and Richard will talk about capital allocation. But dealing with loss making shafts in a proactive way dealing with loss making parts of our business in a proactive way. Considering capital allocation and even rescheduling capital such as Burnstone and perhaps even Keliber is important.

Embedding ESG is the way we do business. That was the very first strategic highlight for 2023 that I covered. So that’s what we mean by strategic essentials. And focusing on the strategic essentials to protect the balance sheet is what is critical in a year like 2024. So let’s talk about the proactive actions we’ve taken to protect and strengthen the balance sheet. And I want to do that against the backdrop of the table on the right hand side. What we’ve got listed there is some of the restructuring benefits that have been achieved in our business over the last year and early into this year. I’m not going to go through it in detail, but you can see that our gross savings and CapEx deferrals from the period that we’re going to talk about now has amounted to R6.6 billion or $375 million.

And this, you do not do overnight. This has been a journey, and I will share with you that journey. So in February 2022 at our year-end results presentation, we noted the prospects of a global economic downturn post the invasion of the Ukraine by Russia. And we knew that was going to drive up energy prices. We knew that was going to drive up inflation. And of course, the only way central banks can really manage inflation is to raise interest rates. So we could see that coming. In August of 2022, we recognized that our U.S. PGM business could well be delivering additional palladium into an anticipated palladium price weakness in 2028. And that was the first round of restructuring at our U.S. business. In [indiscernible] processing plant from May of 2023, we started to protect the downside in terms of gold price at let’s call it significant levels, probably even record levels.

That is protecting the balance sheet. In November of 2023, instead of using our balance sheet to acquire Reldan, we raised $500 million through a convertible note to fund the Reldan acquisition. And that was actually raising $500 million at an interest rate of 4.25% in a time where interest rates were well north of that. Bond rates were sort of at 7%, 8%, 9%. Yes, you can talk about dilution, but there’s no — there’s no reason why this convertible note has to actually convert. In November of 2023, we closed Kloof 4 shaft, mainly due to safety reasons. In November of 2023, we went through a further round of USPG on operational, restructuring with the very fast decline in the 2E basket price. 2024, we completed the 189 process for the closure of Simunye shaft, the rightsizing of Siphumelele and Rowland shafts and conditional operations of our 4 Belt shaft.

That is in my mind being proactive and being on the front foot in dealing with changing economic circumstances. Our operating guidance for 2024 again, I’m not going to go through it in detail. But you will note that the U.S. region is now being pinned from primary mining at about 440,000, 2E ounces a year. Our U.S. recycling business excluding Reldan is expected to generate about 300,000, 3E ounces. Our South African PGM operations again solid performer at about 1.8 million ounces of production with costs around just under R22,000 of 4E ounce. Gold is profitable with an expected production of about 600 — just over 600,000 ounces. The Sandouville nickel refinery is unfortunately still going to be loss making but we are working our way to reduce those losses at the current nickel prices and of course minimize the losses as we progress the feasibility study to convert that plant into a pCAM plant.

The Keliber lithium project is ongoing. As we noted early on in the presentation, we are still understanding the impact of the court judgment and that might require a little bit of rescheduling both on the capital and the output side. The Australian region is profitable. And of course, we exercised as I said earlier our option on the Mount Lyell copper mine and we will continue to take that up to the value curve. As I said right at the beginning, I wanted to talk a little bit about resource stewardship. I did introduce the concept at the previous results presentation. And I think it’s really about saying that, if you are going to position yourself as a metals producer which, are designed to address climate change. You need to think broader than just primary mining.

Secondary mining has been something we’ve been part of for some time through DRDGOLD and of course more recently Century. We are looking to grow that business. Recycling or open mining is an area where we’re quite active and we have recently announced the Reldan transaction, which I’ll get to now. But those are the three operating legs of the company. And let me just provide you with a bit more detail on Reldan which is a U.S. based metals recycler based in Pennsylvania, and has joint ventures and operations in both India and Mexico spreading our footprint. So in November 2023, we announced the acquisition of Reldan at a $211 million enterprise value. And of course taking from enterprise to the cash consideration will result in a $155.4 million cash outflow.

It’s anticipated to be value accretive on day 1. That’s not a big ticket in the big scheme of things. At reprocesses, industrial and electronic waste, to produce various metals. And I think it’s important to understand the scale of these businesses. So we’ve really highlighted the amount of gold, a recycler produces. And in this case for 2022, that was a 140,000 ounces of gold. Now that compares very favorably 264,000 ounces that DRDGOLD produces. And DRDGOLD is considered a large gold mining company. It also produced just under 2 million ounces of silver, 22,000 ounces of palladium, 25,000 ounces of platinum and 3.4 million pounds of copper. So a significant producer, significant scale. As I’ve said, got a presence in Mexico and in a number of environmental certifications and accreditations, which attract blue chip suppliers.

And we expect this transaction to close during this month. So let me then move on to the bigger part of resource stewardship and just talk a little bit about our reserve and resource base as recently declared. And obviously the pie charts on the right hand side of the slide are important. What stands out before I even go into the test is the very large reserve base that we have in the U.S. And you can see why that is so strategic in terms of our own company and as I’ve said also for the United States. So really pleasing to announce a 55% increase in attributable lithium mineral resources. And we will — I do believe in the not too distant future, be able to upgrade the mineral reserve as well. We have a very sizable PGM mineral resource and reserve base with long life operations and lots of optionality.

As I’ve said, the U.S. resource and reserve base is strategic and significant. The South African PGM basis is also significant and large. The South African gold resources and reserves went down impacted mainly by the closure of Kloof 4 shaft and Beatrix 4 shaft. The new Century operations, we have an attributable zinc mineral reserve of £1.7 million which we’ve declared for the first time. And for the first time, Mount Lyell has just under or just over I should say £1.6 million of copper mineral resource, which was added. Lots of questions on uranium. As you know, we’ve been sitting on our uranium waiting for the process to be what they are. We have £32 million of uranium resources on the cooke tialings down with DRD having now finalized their regional tailings facility.

That can be brought to account, very quickly. Then of course, we’ve got the Beisa uranium mine, with £27 million of resource. And we’re actively progressing, the thinking around that. So with that, I’m going to hand over to our Chief Financial Officer to take us through the financial review. Thanks, Charl.

Charl Keyter: Thank you, Neal. Good morning and good afternoon to all participants. Having now spent almost 30 years in the mining industry, you very quickly learn that summers are short half of 2023, financially speaking, we enter a period which is beginning to feel like autumn as we saw a pullback in commodity prices, specifically PGMs. This has had a significant impact on our results, as you will see during the financial review. Our balance sheet remained strong and we maintained our financial flexibility. However, for the first time in four years, we moved into a net debt position. Net debt to adjusted EBITDA increased to 0.58x and this was driven predominantly by lower commodity prices, capital expenditure and timing of year end payments.

Now debt maturities, as can be seen on the slide, remains manageable. Gross debt, including borrowings, increased by approximately R15 billion and this was due to R4 billion drawn under the Rand revolving credit facility due to earlier payments in December 2023 associated with the South African mines closing around ’23 December. We also issued the convertible bond at the end of 2023. Cash on hand was at R25.5 billion and net debt was just under R12 billion. Liquidity still remains very strong and we have headroom of just under R50 billion which is split roughly half cash and half available facilities. Our North Star remains the capital allocation framework and the decisions taken around cost cuts and production rightsizing base testimony. Looking at project capital, Burnstone has been slowed down and we will continue to review this based on the financial position of the group.

For now, we will continue with our two major projects, K4 and Keliber. If we look at stakeholder shared value, as stated and based on the financial performance and in line with our dividend policy. No dividend has been declared at year end. If we now move to stakeholder shared value again. The Sibanye Stillwater Foundation non-profit company was conceived at the end of 2021, but it was only finally registered in 2023. The historical allocation of R212 million has flown and more on that later. At the end of 2023, we issued a convertible bond of $500 million and the proceeds will partially be utilized for the funding of Reldan. The message I want to leave you with on this slide is that we are well aware that we are on a much tighter period, but we will continue to evaluate all investments and expenditures based on this capital allocation framework.

Looking at the income statement, revenue at R114 billion was down from R138 billion in 2022. Volumes at all our major primary producing operations were up, but were offset by pullbacks in PGM basket prices of between 24% and 32%. The gold price was the shining light and was up 21% year-on-year. Costs were down almost R5 billion and this is a function of solid cost control by the operations and a major contributor was lower volumes from recycling. Adjusted EBITDA halved year on year and still came in at a respectable R21 billion and we forget that not too long ago this was considered record performance, but it has been completely overshadowed by the last three years. We also, as signaled in our trading statement, booked in payments to the value of R47 billion.

This was at our USPGM operations, Mimosa, Sandouville, New Century Resources, and the Burnstone operation. The biggest contributor was the significantly lower consensus price outlooks. We also fully impaired the now closed Kloof 4 shaft. Taxes and royalties were much lower and reflects the lower profitability. The net impact of all of the above was a loss for the period of R37 billion or R13.34 per share, and this was primarily driven by the impairments that we booked during 2023. I’m now going to pass you back to our Chief Regional Officers to take you through the operational reviews. Thank you, Richard.

Richard Stewart: Thank you very much, Charl, and good afternoon or good morning ladies and gentlemen. It gives me real pleasure today to share with you our operational update. I will specifically be sharing some of the group safety and South African regional update. I’ll then hand over to Charles to talk us through the Americas region. Grant will update us on the recycling, and then Mika on the EU region, and finally Robert will pick up on the Australian region. Thank you very much. So I guess just starting off with what is our number one priority both on our operations and as a group in terms of safety. 2023 was really a story of two tales. I think it was very regrettable that we saw an increase in the number of fatal incidents that we had from five in 2022 to eight in 2023.

Very sadly, one of these incidents was a multiple fatal where we tragically lost four contracting colleagues when a conveyor belt that was under construction at Burnstone collapsed. Our sincere condolences go to the families and friends of all of our lost colleagues. I think while the number of fatal incidents experienced is deeply regrettable and I think it was took a hard toll on the team. We have since 2022 been implementing our fate elimination strategy. And I do think that there are many underlying trends that show us that we are progressing well along this journey. This strategy at its heart really looks at eliminating high energy or high risk incidents, and we mitigate against those risks through our critical controls of behaviors and also through our management routines that make sure we enable safe work.

Some of the trends that we have seen that tell us we’re on the right journey would be instances such as our serious injury frequency rate. This we use as a measure since the energy that’s involved in a serious incident is quite often similar to what could result in a fatal. And having seen a consistent year-on-year decline with many of the serious injury frequency rates we experienced last year, the industry leading and certainly records for ourselves does tell us that we are on the right trend. I also think last year for the first time, we saw that frontline stoppages, safety stoppages by our frontline employees exceeded the number of safety stoppages we saw from management and from our safety officers. This is important because it really tells us two things.

Firstly, that our frontline employees are able to identify risk within their working areas, but more importantly that we’re developing a culture where our frontline supervisors stopping for safety incidents rather than continuing work is embraced and really seen as part of our overall commitment to not working in unsafe environments. We’ve also seen a real reduction in risk where historically some of our top incidents that resulted in fatality such as fall of ground. We’ve now gone 25 months without seeing a fall of ground incident showing us that where these controls are implemented we are able to eliminate fatalities. And I remain absolutely confident that if we can continue to implement the strategy and drive it throughout our organization, we can show that deep level mining is possible without fatal incidents.

Moving on to Social, I think Charl did highlight the formation of the Sibanye Stillwater Foundation last year. I think a key achievement towards delivering on our ultimate vision of shared stakeholder value. The specific foundation allocated its first funds to the South African region last year. And through that, we’ve just imbursed our first set of funds to two very esteemed partners in gift of the givers and Breadline Africa. This specific foundation is really aimed at uplifting our communities around our operations also from where many of our employees originate with a focus on infrastructure. And Gift of the Givers will be working with us in uplifting infrastructure around schools, around our operations, and Breadline Africa investing those funds into creating sanitation and replacing put between toilets in many of our originating areas.

I think two absolutely key initiatives that really underpin our commitment to social upliftment and ultimately education in our country which is core to providing equal opportunity for all South Africans. Onto Energy and the E and ESG, I’m very proud to say today that Sibanye is one of the top three private power purchasers within the country and in fact as we stand today have the largest amount of energy projects currently under construction. Last year we concluded the financial close of three significant projects that are currently in construction and will deliver 267 megawatts of solar and wind renewable energy to our operations from 2025 onwards. This is estimated to contribute about 15% of our total electricity requirements from 2026 and will also significantly reduce our Scope 2 emissions by just under a 1 million tonnes of carbon dioxide per annum.

In addition, we’ve got five further projects that are currently under in development, and we are looking forward to reaching financial close on those during the current year. And those should be in operation by 2026. These five projects will deliver a further 365 megawatts of energy, that will ultimately provide about 30% of our total energy requirement from 2027. Not only does this have a significant impact on our Scope 2 and emissions and carbon footprint, but in addition comes in at tariffs that are lower than current Eskom and certainly where we forecast Eskom tariffs to be going over the coming years. This has come at a significant capital investment of between €12 billion and €14 billion largely funded from third-party balance sheets with ourselves providing power purchase agreements to underpin that capital investment.

Moving on to our SA Gold operation, I think 2023, we saw a very pleasing turnaround from 2022 moving from an EBITDA loss of about $3.5 billion in the previous year to an EBITDA profit of about €3.5 billion last year. This came on the back of a 30% higher production output, coupled with a 20% increase in the gold price received over the year. With the increase in output, our all in sustaining costs dropped by just over 10% year-on-year. And I think this output was particularly pleasing given two significant operational disruptions we experienced during the year. One being the curve fore shaft incident where at the end of July, we had steel on the counterweight of a conveyance system that fell down the curve shaft and resulted in the decision to close that shaft, a process that was concluded in December of 2023.

We also had a significant fire at our Driefontein 5 shaft, our largest operation at Driefontein. And that largely resulted in no production for the third quarter of last year and a ramp up during the fourth quarter with more production only normalizing in November and December of 2023. The net impact of that fire was almost a ton of gold that was dropped out of our production. DRD production decreased by about 8% to just under 165,000 ounces, and all in sustaining cost rose by about 10% to just under R900,000 per kilogram. Nevertheless, this did contribute a 13% higher EBITDA to the group of R1.75 billion driven largely by 20% increase in gold price. As was mentioned earlier in the presentation, we have made a decision to defer much of the Burnstone capital over the coming years, and this will be evaluated on an annual basis.

Moving on to our PGM operations, I think production from PGMs was pleasing and consistent year-on-year. In total, we produced just under R1.75 million ounces and that excludes about 21,000 ounces that came from Kroondal towards the end of the year in November and December, where we now account for 100% of production given the transaction with Anglo Platinum, which I’ll talk on in a bit more detail in a second. Very pleasing was the continued and sustained industry leading cost performance. Our total unit costs last year only increased by 4% to just over R20,000 before the ounce, significantly below both inflation and mining PPI experienced across the industry. This of course has given us the benefits of continuing to move down the industry cost curves, and increasing our resilience to the overall PGM environment that we are facing at present.

This cost performance largely comes off the back of two things. The first one is a very tight and stringent cost control, but also through the increased focus we’ve had on delivering additional byproduct benefits, most notably in Chrome, which I’ll expand on, overall creating a credit benefit of about R6,500 before announced to our PGM costs. It was also mentioned that we were very proactive in terms of restructuring our PGM operations, with 4 shafts being impacted last year, a process that was concluded in February of this year. And overall we expect that to deliver about R750 million of annual benefits to the PGM operations. Adjusted EBITDA was down by about just over 50%, and that was largely driven by a 32% decline in the total PGM basket price that we received, largely as a reduction of palladium and rhodium prices.

I think we also highlighted that at the end of 2022, the deferred payment agreement with Anglo Platinum came to an end and that last payment was made in the first half of last year, the benefits of which going forward would accrue to the Sibanye Stillwater Group and of course our empowerment partners at the Rustenburg operation. I do think we’re in quite a unique position in many ways in the industry with our current processing capacity. We do have spare capacity, especially in our base metal and precious metals refinery. And that puts us in quite a unique position to manage load curtailment and ensure we can keep work in progress down to a minimum. But in addition, also the ability to unlock future value. And I’m sure many of you would have seen the announcement by Ivan Platts where we have agreed to purchase a concentrate agreement with them for their future expansion projects due to come online later this decade.

I’ll touch a little bit more just on the focus on byproducts. When we commenced our operations or started the PGM operation some four or five years ago, chrome sales amounted to about a R1 billion per annum. Over the last four to five years, we’ve placed a significant focus on enhancing our chrome production, both on our existing underground operations, as well as looking at ways to optimize a significant surface resource that we have in terms of our tailings. This has seen the production from chrome increase to where it was forecast to be currently. We’ve increased that by more than 25%, which when you combine it with the current chrome prices, means the revenue we received from chrome last year was just over R5 or 10% of our total revenue basket.

This is given that chrome comes at a very small incremental cost. This has had a significant benefit to the overall revenue or credit towards our overall PGM costs. We still see a lot of upside with chrome and look forward in the coming months to share with you some of the plans we’ve got to further increase our overall chrome production and become a significant provider into the global crone markets. Just moving on to the Kroondal transaction, this is a transaction that we’ve shared with the markets before and essentially includes us buying 50% of Anglo American share in what was called the PSA or the Kroondal operations. The consideration for that transaction was a delivery of 1.35 million ounces into the existing PSA structure, and we expect to complete that delivery by the middle of 2024.

In addition, we do pick up the closure liabilities for the infrastructure we have purchased from Anglo. This transaction has added significant value to the overall Kroondal infrastructure. In total, we’ve unlocked almost 1,700,000 ounces of additional reserves that could not have been done outside of this transaction. As we know, we had significant resources at Rustenburg that could not be mined from the existing Rustenburg infrastructure, but can be mined from the low cost Kroondal mechanized infrastructure. This adds about 1.4 million ounces to the overall Kroondal life of mine. In addition, through having this critical mass in terms of production, it also means we can unlock a lot of the Kroondal tail, and that’s about 300,000 ounces that previously would not have had sufficient production capacity or could not have covered its costs as a standalone operation.

But by being incorporated into Rustenburg, we are therefore able to unlock the 1.7 million ounces and extend the life of these assets out well into the middle of the next decade. I think importantly and as a heads up to the market, when we do close the transaction in the middle of the year, Kroondal effectively gets amalgamated into Rustenburg. And that also means that we will transform from a purchase a concentrate agreement that we currently have with [indiscernible] to a toll treatment agreement. What this essentially means is that our overall operating costs at Kroondal will increase. So essentially we will incur additional tolling costs that will increase the total operating cost base. However we also achieve 100% of revenue. So under the current purchase of concentrates agreement, we only receive a percentage of the total revenue basket, whereas under the toll agreement we receive 100% of the revenue basket.

The net increase in the revenue received does exceed the increase in the costs and therefore the overall margins will increase from the Kroondal operations once the tolling agreement is instituted around the beginning of this year, albeit you will see that increase in unit costs and increase in associated margins. Thank you very much. And with that, I will hand over to Charles to take us through the U.S. region. Thank you.

Charles Carter: Thank you, Richard. We’ve obviously come off a challenging year with production just over 427,000 ounces. We lost almost 25,000 ounces due to the shaft incident at Stillwater Mine, which impacted the West Mine in particular. The average basket price declined 33% year-on-year to $1,243 an ounce. And we’re obviously very focused right now on a 2E basket price in the 900s, which means that we have to continue to both meet the new plan that we’ve put on the table and indeed move beyond it where we can with an ongoing focus on costs in particular. Importantly, we did significant restructuring late last year. We restructured the leadership team. We took out the CEO position with the GM’s reporting direct to Kevin Robertson.

We strengthened the central technical function in the [indiscernible] and we did a number of other streamlining adjustments to the leadership spans of control and accountabilities. More than adjusting the leadership team, we revised the mine plan significantly with a lower for longer production profile and we constrained near-term growth and deferred growth capital, knowing that we can come back at this as prices permit. We also did a workforce restructuring. We took out 270 contractors and 100 employees for a workforce reduction of around 16%. This was well executed by the teams. And I want to thank all employees for their responsible approach to this reality and in particular to the United Steelworkers for the professional manner in which they dealt with a difficult situation.

The revised plan is starting to see an estimated $400 an ounce benefit on all-in sustaining costs. We are continuing to work on ways to improve this with every cost element currently in focus. We have already seen a reduction in gross mining costs of around 19% over the past four months at Stillwater mine. And we’re starting to see a much better run rate with improved efficiencies at both mines. And most importantly, we are seeing a good safety start to the year. While 2023 was a tough year from a performance perspective, we completed a number of key infrastructure upgrades at both mines that will better position these operations for the future. At East Boulder mine, we completed the tunnel through rail upgrade and we commissioned a heat exchanger line for additional intake resolving a longstanding ventilation constraint at East Boulder.

At Stillwater mine, we commissioned the new mill at the start of this year and that is working well. We completed and commissioned the West Fork ventilation infrastructure, and there will be a major event changeover late in the second quarter going into the third quarter but that’s all looking good. And we did significant restructuring on the fleet. We removed 140 units to simplify and focus our maintenance efforts and our efficiency gains. At the MET complex, we completed the second furnace rebuild, and we’ll bring this back online once recycling volumes pick up. As you’ll see in the numbers, we had an all-in sustaining cost of $1,872 an ounce as seen in these results, which is mainly due to lower than planned production, increased ORD and sustaining capital expenditure.

In the detail of our earnings report, however, you will see that in the new mine plan, we have production marginally higher this year than last year. We have development rates maintained at around 25,000 meters for the year. We have total operating costs reducing by at least 18%, and we’re looking to go beyond that. We have ORD and sustaining CapEx reducing by between 55% and 60%, and we have project CapEx reducing by almost 70%. As I’ve noted, the growth capital is deferred for the next several years, but we will come back to that as we are able to. We are repositioning for profitability and sustainability to ensure delivery of a significant long-term value while cutting across right now to meet the challenges of markedly lower pricing. As I’ve noted, we’ve had a positive start through the first two months of 2024, and we’re working hard to keep improving our safety performance and to ensure that we achieve our production plan while continuing to dose every element of spend as we move forward.

I’m confident that we have the right plan for the times that we’re in and our real pride in the hard work underway by all team members who are affecting significant shift at our Montana operations. We are also doing significant activities off mine sites such as lobbying for the Inflation Reduction Act tax credit at the moment, the latest draft from the IRS really hands this credit only in final refiners. And we believe the original intent of legislators was that this should also impact critical minerals mining and not just processing. So that’s an ongoing lobbying effort. We’ll see where we get to. But I think importantly, what’s happening in the U.S. right now is that we need to ensure that we are safeguarding the competitiveness of an industry that is pivotal for American green metals production in the U.S. for the long-term future.

And to that end, any enabling legislation is helpful. Improved operating performance we are seeing at the start of this year is also being seen in slightly stronger recycling volumes through the first two months. As I hand over to Grant Stuart who will take you through the recycling performance, let me just echo what Neal has covered, and I’m excited by the potential of the Reldan transaction. In short, it has scope to broaden our recycling feeds beyond order cuts. It adds new metals to the character of our Americas business, and it strengthens our earnings and free cash flow capability going forward. Our U.S. metals recycling business is an important complement to our mining business, and we are working aggressively to develop a cost effective and highly leveraged platform for any future price upside while ensuring a competitive cost base that is sustainable beyond the current price squeeze.

We have started 2024 on the front foot in all parameters of the business and all things permitting, you will see us moving down the global cost curve through the year.

Grant Stuart: It has been a cause for concern. PGMs from recycle totaled just over 310,000 3E ounces, 48% down on 2022 and influenced by a relentless and complex set of factors within the U.S. auto industry. Towards the end of 2022, a notable dip in the U.S. auto sales became apparent, driven by compressed disposable income levels, heightened financing costs and near record vehicle prices that deterred potential new vehicle purchases. Today, buyers grapple with the same impact of interest rates on car loans with average vehicle prices hovering around $48,000. These factors have no doubt contributing to various recyclers in the value chain. Beyond the macroeconomic complexities, lifestyle changes post-COVID, including increased remote work and reduced driving have led to a shortage of end-of-life vehicles.

Consumers are running their vehicles for longer periods and our customers are confirming average scrappage rates moving from averages of 12 to 15 years to beyond 20 years. In 2022, our adjusted EBITDA stood at $78 million whereas in the current period, it’s been adjusted to $33 million following a 24% drop in the average realized 3E dollar price received and a 45% decrease in the volume fed. Despite encountering volume challenges over the past three years, we maintain an optimistic outlook grounded in the resilience of our recycling platform to facilitate sustained growth within the circular economy. Several factors bolster our confidence, including palladium and rhodium in the short term. Additionally, the dissipation of China’s destocking cycle downgrades in battery electric vehicle sales, potential Fed rate drops, recategorization of hybrid sales as ICE vehicles, and IRA credits applicable to both battery electric vehicles and plug in hybrid electric vehicles, all contributing to this positive outlook.

Moreover heightened auto catalyst loadings to mitigate emissions and supply cutbacks further reinforce this position. Our outlook is underpinned by a comprehensive assessment of the order catalyst recycling landscape, with upside potential anticipated following Reldan’s integration as we explore consolidation opportunities, the integration of collector and logistics networks and anticipated resurgence in volumes. Over to you, Mika.

Mika Seitovirta: Thank you, Grant and hello, everybody. In Europe, we continued to implement our battery metals strategy during 2023 and our battery metals strategy is concentrated actually to two ecosystems for the time being. One of them being in France and the other one being in Finland. And when we talk about what we have achieved so far, we talk about mainly two assets, which are the Sandouville nickel refinery in Sandouville, France and then the Keliber project in Finland, in Kokkola and in Kaustin. If we start what was positive in Sandouville last year was actually the safety development. So in recordable incidents, we did better than ’22. That tells a lot about the employee’s discipline, and I’m really happy about that trend, what we have there.

Operationally, it was a big disappointment, Sandouville last year. We were badly hit by the decline. We started our hedging only in the mid of the year and also related bad market conditions when it comes to product pricing. We also had a big impact in our variable cost mainly due to inflation in the post war market. And also, we had a lot more maintenance than we thought we would need in order to stabilize the production during last year. However, we decided already in the beginning of the year to do a strategic review of the asset and the different options we have. So we have been doing a lot of work with the different visions for Sandouville including the current business model which we didn’t find long-term viable. Also we have been looking into a possible closure of Sandouville and then we have been looking into alternatives where we have a different feed and different end products for Sandouville.

What has been encouraging is that, we decided that the most preferred outcome for Sandouville is actually to start to transform it towards precursor market as a peak and producer. That’s very much in line with our strategy. It is exactly what the ecosystem in France and Europe needs. And we think that we can do it as a brownfield project, capitalizing on the asset we already have. And the scoping study what we finalized in the beginning of this year shows encouraging results. It’s a market where there is a huge deficit between the supply and demand and it’s a value chain position which we believe is going to be very profitable. We are going to use the chlorine route and not as usually the sulfate route. And that has many benefits. And we believe also that we can have less CapEx, less OpEx through this kind of a solution and the CO2 profile is going to be extremely good in comparison with the conventional processes.

Right now we have started the prefeasibility study and we expect to finalize that by the end of the year, including also a transition plan if the results of the feasibility studies are as encouraging as the scoping study results. Then let’s move to Keliber. Keliber safety development was also positive between ’22 and ’23. So we had less recordable incidents than the year before. And I’m happy about this safety trend as well. We achieved a lot during 2023 at Keliber. We started the construction of the refinery. We started the construction of the concentrator and we also started the construction of the mine, which means that we are construction for the time being in three different places. We are on budget and we are on time with that construction aspect today.

Keliber has also recruited a lot of people, and it has been really nice to see how attractive employer this project actually is. So we can attract good talents from the region, outside the region, and that has to do obviously that we are dealing with battery materials in the future, but also that we are now as Sibanye Stillwater, we are an international player and we can offer long-term development opportunities for the people who join us. After successful recruitments, let’s talk about permitting. We got the decision 23rd February, a court ruling concerning Rapasaar mine and Päiväneva concentrator. As you might remember, we had three appeals. One of them was our own and two private persons on top. Now the court upheld the permit, but referred certain permit conditions back to the permitting authority for a further review.

This is not unusual in these processes. That means that construction of the concentrator can proceed as planned on the environmental permit that remains valid. Commencement of production at the concentrator is subject to the permitting authority’s review and the issuing of enforceable permit decisions. Our current expectation for the review process timeline is that the concentrator operations can commence exactly as we have planned. Based on the preliminary analysis, we accept the process will delay the commencement of the Rapasaar mine. We are now in the process of assessing the overall impact, if any to timing of the Keliber project and we will keep the market updated accordingly. Thank you very much and over to you, Robert.

Robert Van Niekerk: Hello, everybody, and thank you very much, Mika. I’ll talk to the Century zinc retreatment operation and the Mount Lyell Copper Project. We acquired a majority interest of New Century Resources in March 2023 and 100% ownership of New Century Resources on 15 May, 2023. Since then, we have restructured the company to optimize both the regional as well as operational efficiencies. And I can report that the integration is progressing well. As of March, we have produced 76,000 tonnes of payable zinc metal and an all in sustaining cost of less than $2,000 per ton. Over the same period, we have sold 77,000 tonnes of zinc metal. As we’ve reported previously, adverse weather, in fact, the worst storms on record for that particularly — particular area strongly affected production in H1 2023.

Having said that, assisted by good cost control measures, adjusted EBITDA are returned positive by Q4 2020. Capital expenditure over the period was $9 million. This included $6 million sustaining CapEx and $3 million growth project CapEx. We have now also acquired 100% of the Mount Lyell copper project in Tasmania and are busy conducting a feasibility study, which will be completed by the end of the first half of this year. Having said that, I’ll hand over to Neal to conclude. Thank you.

Neal Froneman: Thanks, Rob. And, let me wrap up with some brief conclusions. So with the photograph of the Keliber refinery well progressing in Finland. Let me, just bring up what I think the key messaging you should take away from today’s presentation. So, we have delivered on guidance. We had a solid operational year. Financially, of course, we were impacted by lower commodity prices in fact all around. But we ended up with a net debt to adjusted EBITDA of just under 0.6x. And I think that that was a good operational outcome under the circumstances. Hopefully, you’ve seen the proactive austerity measures that we implemented, essentially over the last 18 months, recognizing the potential for a global economic downturn. That has resulted in savings on both the costs and, of course, rescheduling of capital to date of just over R6.6 billion or $375 million.

Very, very significant. Doesn’t mean we’ve arrived. There’s continuous ongoing assessment of all operations and projects and investments to further ensure longer term, sustainability. I do hope that the analysis on really just the PGMs, show that the fundamentals remain sound. And we’ve been very consistent in our view over the last few years about these fundamentals, about the fundamentals that underpin, battery metals. And today we didn’t cover lithium. But lithium also has in our view, good long term fundamentals. But we need to batten down the hatches for this year and work through this, destocking phase. But lots of positive signs on the horizon. Strategically, we’re absolutely convinced be in the right metals at the right time. We’re in the right global systems.

We’ve chosen the right partners. Also, at the right time, having identified multipolarity as a gray elephant. We are prepared for lower earnings in 2024, predominantly due to current commodity prices. And we are being very circumspect about M&A. But it’s also prudent to ensure that we do not miss county — countercyclical opportunities to diversify and grow our global portfolio. I think it should have come across that we are disciplined. We are focused on the strategic ascent essentials. We are very transparent in capital allocation and in fact, in terms of our strategic thinking. And, I want to finish with saying, the antifragility journey continues. And the strategic essentials and the focus on the balance sheet remain our priority for 2024.

So with that, over to you, James, for Q&A. Thank you.

A – James Wellsted: Thanks, Neal. I’ll try and find similar questions together just to save a bit of time. We’ll first ask from the webcast, and then we’ll go to some of the call questions on Chorus Call. So first of all, first up is, it’s about Stillwater. At what level — which level of palladium price will the still water operations be forced to cease production? When are you looking to turn positive from a bottom line point of view at Sandouville? Are you still looking for acquisitions? And at what level of price so let me just keep the Stillwater ones first. So what level of palladium price will the Stillwater operations be forced to cease production? CapEx is being guided to decline by 50% year-on-year. Can you specify which initiatives are behind this decrease?

And then all in sustaining costs are far higher at in the U.S. and in South Africa. Why are the PGM costs in the USA so much higher than in SA? And it looks like a bad investment to me. So I guess the question is, what’s our sense on costs at Stillwater and perspective on the future and on the value of the investment there, please?

Neal Froneman: So, James, let me start. And, Charles, if you could also come in at the right time. Listen, first of all, it’s absolutely not a bad investment. I think it’s pretty well known by now that, Stillwater has paid for itself. So we’ve got a high quality ore body with 50 years of life. I mean that’s not a bad investment. So I think the challenges in the short term to get the cost structure down to a level where the operations are at least washing their face. And I believe that is possible. And certainly, I think, with the — with enough time, Charles and his team could get that cost structure down to $1,000, a two-year ounce. But, Charles, you can you can comment on that. Just in terms of your question on the very different cost structures between South Africa, and the U.S., that is real.

They’re two very different operations. The workforce is different. It’s less labor intensive. It’s more mechanized, and that is the nature of the cost structures in the U.S. I think it’s important to realize that that higher cost structure is also offset by a grade that is roughly 3x higher than what we mine in South Africa. So it’s horses for courses, and none of the fact that it has a higher cost base shouldn’t be seen as a business that is not well run. But, Charl’s, over to you on some of the other aspects, and perhaps you can confirm, your planning, to get the cost even lower and [indiscernible].

Charles Carter: Thanks, Neal. Well, let me just pick up firstly on the capital shift question year-on-year? So I touched briefly in the presentation on the fact that we put in a lot of infrastructure through last year. These were big capital items. So the vent infrastructure at both operations, we did the met furnace rebuild. And those kinds of things are behind us. So the stay in business capital has moved from a $118 million down to $54 million. And so that’s a good set of decisions for this plan for this year. So we’re not really shortchanging anything there, but we’ve been very prudent on what we want to spend on this year. The growth capital, we have pushed out without sacrificing future growth, and we can do that for a year or so.

And we also did accomplish quite a lot of growth capital through last year at the East Boulder tailings building the like. I think the shift really is also within ORD. So that’s R211 million down to R94 million. So our flag that we’ve kept the total development pretty much the same year-on-year. However, we’ve changed the mix within the development. So, we’ve reduced primary development, and we’ve weighted heavily towards secondary. Secondary, it’s really like comparing your cross cutting a South African operation. So it’s giving you access into the ore. And we’ve really created the flexibility to do some of that through last year. And now we’re really pushing on that, and we’re also favoring grade. And obviously, there’s a cost component to that.

So that’s really the key shift there. I think to go back to Neal’s question, I mean, nobody in Montana is complacent about a two year ounce price reality in the 950 or thereabouts. So we’ve got lots of work to do, but there’s no silver bullets here. We — I’m looking forward just getting to Q1, and you’ve been able to see that we’ve done quite a lot of heavy lifting from Q4 to Q1 to get production on track and to get our costs moving in the right direction. And obviously, we have more work to do. But, ultimately, you need that longer term lift towards higher volumes over the medium term to get your unit cost down. But we are already moving in that direction. And we pull in every cost lever we can. And the challenge is to get to breakeven. It’s very, very difficult in the 900.

But you will see the directional shift and you’ll see the delivery, and I’d rather have the runs on the Board and talk to that outcome than speculate. Thank you.

James Wellsted: Thanks, Charles. The next set of questions has to do with free cash flow generation, and what the annual cash burn of the group will be for 2024 at current spot prices. And then linked to that, have we done enough to curtail loss making operations? And, would we consider rights issue, or can some CapEx plans be deferred?

Neal Froneman: Yes. So, again, let me just lead into that. And, Charl — sorry, if you wouldn’t mind picking up. I think that the restructuring we’ve done is appropriate for where we are. I think if I didn’t get the message across in terms of the market, I don’t believe that the current depressed environment is an environment that’s going to be with us for a long period of time. Having said that, doesn’t mean that we’re betting the farm on improving or increasing basket prices. But I think, we’re in this for the long run. We are not going to damage our business by taking, knee jerk reactions. I think in terms of the question on, let me call it other levers or perhaps even when you refer to a rights issue, Of course, we’re very familiar with rights issues.

We’ve done them. But I would say that’s something that is, well down the line and something that, if we are wrong on the fundamentals that underpin, the PGM markets, we may have to resort to, but it’s not something we are considering now. Charl will share with you a number of levers that we can still pull on the revenue side, which we will do in the next probably three to six months. But, Charl, over to you on some of the more specifics.

Charl Keyter: Yes. Thank you, Neal. And, yes, I mean looking forward to 2024 and using our budgeted assumptions plus the guidance that we’ve put out today. We estimate the cash burn somewhere between R8 billion and R10 billion for the year. So if we look at our budgeted assumptions, PGM prices are slightly lower than what we had in our budget. But the gold prices are significantly higher. I mean, in fact today almost 28%, 29% higher. So I mean, we are well aware of the challenges with that amount of cash burn. But I mean, the levers we can pull and I think that’s been evident through the levers that we’ve already pulled, is obviously looking at how we allocate capital, how we spread capital, and possibly how we defer capital.

Historically, we’ve also looked at other sources of financing, and there’s a couple of vanilla ones, and those would typically be looking at. And that’s more sourcing liquidity, but those can come in the form of prepays. Historically, we’ve looked at streams. But as Neal says, rights issue, as I said earlier to somebody, that’s probably the fourth or the fifth parachute that you want to pull. Thanks, James.

James Wellsted: Thanks, Charl. The next set of questions are related to the Rhyolite Ridge and Keliber. So how do we plan to fund the equity injection to Rhyolite Ridge and what structure would funding at Keliber take and then do recent developments in Finland change the timeline for this funding needed for Keliber. And then similarly question on, the refinery at Keliber coming online before the mines. Do we have plans to process third-party materials and the status of Rhyolite Ridge? So perhaps we can just…

Neal Froneman: Let me kick off and Charles, you’re welcome to add to Charles and Robert. You’re both intimately involved on Rhyolite Ridge and Mika, obviously, on Keliber. So let me just say very broadly, as Charles said, we’re not hell bent on growth. We are not hell bent on acquisitions this year, and the message that, that I tried to convey, through the presentation is that our balance sheet takes first and foremost priority. So when it comes to Keliber or [indiscernible] for Rhyolite Ridge, it’ll be very carefully considered, at the right time. However, let me say that the Keliber project is well on its way. It was always intended to fund the initial portions of Keliber using equity, which is being done and will carry us through probably to the middle of the year.

The financing of Keliber through alone is also well advanced, and on Rhyolite Ridge. It’s a great project. We the ioneer team. It’s a project that deserves to be built. There is an impending record of decision, towards the end of the year. We will consider our role based on the economics of that project just like any other partner would. And I’ve always maintained that the funding of a good project, even in tough times is achievable based on good economics. You can fund just about everything, as long as the economics are sound. And we expect the economics of Rhyolite Ridge to be sound. So it is financeable. And again, we will make those decisions, towards the end of the year. Mika and Charles, Robert, anything you want to add?

Robert Van Niekerk: Thank you, Neal. I think you covered it well. But maybe I just add there that concerning this permitting situation, I just want to repeat the fact that we are doing this overall assessment whether it has any impact on the Keliber project timeline or not. And that is ongoing work. And at the same time, I just want to highlight to everybody that we have the permits. The crude rolling didn’t have any impact on the [indiscernible] mine permit nor on the refinery in Kokkola permit. So those are all valid. So there we can move according to the plan. And I think there was also a question concerning the external feed and that’s right. We are starting with the external feed as from 25 to ramp up to production. That plan is still valid and we have a couple of alternatives where we are going to get that feed from. Thank you.

Neal Froneman: Yes, spot on. And I think it’s important just to note that, that was in my mind a very smart and appropriate decision to use third-party concentrate to prove up the technology, debottleneck, debug what will inevitably be a challenging start up. But it’s also profitable to start up that plant in that way. So that third-party concentrate start-up was a very, I think prudent approach to starting up Keliber. Charles, anything you want to add on?

Charles Carter: No, Neal. I think you’ve nailed it and important decisions late here. We’re excited about what we’re seeing and we have a good partner. So time will tell. Thank you.

Operator: Thank you. The next, I think let’s go to the phone lines to Chorus Call, please for the next series of questions and we’ll come back to the webcast questions.

Unidentified Analyst: You’ve taken quite an watering impairment at Stillwater, R38.9 billion. I see from the notes that you’re assuming a $1,281 an ounce basket price, which is quite high than spot. Could you give us some details around what you have assumed around production volumes and level of CapEx relative to today into the future in that calculation? That’s the first. Second question is PGM costs, I see you’ve guided this high 9% to 12% year-on-year. I’m surprised by that. You obviously restructured those four shafts this last year. I would have expected that to be lower. And then the final one, I guess maybe perhaps less a question than just a comment, is that ultimately, we have probably market has been quite disappointed, I think by the level of net debt both free cash flow burn.

I’m not quite convinced that enough further R8 billion to R10 billion of free cash flow burn this year is really good enough. And from what I can see, I think the market’s primary concern is that you will actually have to raise more capital later this year. Welcome to comment on that. I think you already have. Thank you.

Neal Froneman: Yes, thanks Chris. So let me start at the back and I’ll ask Charl and Charles to comment on Stillwater, what was considered in the impairment. And then, Rich, if you can comment on the cost increases in the South. I can say that we are going to raise additional capital. But this perception that it’s going to be rights issue is completely wrong. I think let’s talk some nuts and bolts. We have very successfully used streams in the past. We have very successfully used prepays. None of that is debt. None of it is a dilution to shareholders. So the figures quoted by Charl are certainly our view. But I can tell you, we’re not going to wait until we see whether Charl is right or wrong. We’re already progressing some of those issues, and they are smart, they are smart ways of raising capital on assets, especially those that are difficult to find partners for or difficult to sell.

So please don’t think we’re sitting on our hands and not doing anything to further strengthen the balance sheet, but it’s also not. And I’ll try to explain that right at the beginning. This is not about a rights issue. That’s as Charl said, that’s maybe the fifth or sixth parachute that you pull. So I wanted to just answer your third part to that question and then perhaps we can go first to Charl or Charles on Chris’s questions around Stillwater and the impairment?

Charl Keyter: Yes, so Neil, I’ll take that one. Chris, so what we have assumed is a production profile similar to what we’ve guided for the next three years. And then over a period of two years, it builds up to around 600,000, 650,000 ounces. And then we’ve kept it at that level based on the production profile, basically into the future. In terms of capital expenditure, again looking at this year, what we’ve guided that is the level of capital expenditure we aim to keep going forward. There might be some slight investments in ’25, ’26. But thereafter, we’re probably looking at R170 million to R200 million. So significantly down from what we’ve got now. I think the number you are seeing there, although it’s expressed as a per 2E ounce, it does include the 3E ounces from recycling as well.

So that was just expressed as a 2E ounce. But yes, I think that’s the numbers, Chris. Flat profile next three years, slowly building up and then basically a flat capital profile for the remainder of the life of mine.

Neal Froneman: Yes, thanks Charl and Rich, would you please pick up, Chris’ question on the 9% increase in unit cost at SA PGMs? Thanks.

Richard Stewart: Perfect. Thanks, Neal. And Chris, good afternoon. I think there are three aspects to the SA PGM costs that are worth noting. The first one is that when we do our forecasts and budgets for the year, we do build in our budgeted price parameters for byproduct credits. And as you would know at the moment, some of those byproducts, chrome in particular is at quite a high price. So our assumptions in terms of the credits we get from byproducts are a little bit lower based on our sort of through cycle pricing. That’s probably got in the region of about a 3% impact on those costs if spot prices were to persist. So that’s the one. I think the second point is just we obviously do quote all-in sustaining costs, not cash costs.

So those all-in sustaining costs do take into account development, and we are investing significantly in the development of our assets, especially around K4, where we’re seeing a ramp up in development at those assets during the course of this year. So ORD costs do feature. And then I think the final one which you touched on, yes, the benefits of the restructuring are considered in those cost forecasts. Importantly, of course in this year, there are some one-off costs that do come with that restructuring that we had to incur, and that gets built in. Benefit that we referred to is the annualized benefit we’ll see going forward, but that does need to be offset this year or some of the one-off costs with the restructuring. So overall, our base number was in fact still below or very close to inflation in terms of what we’re looking at.

Operator: Adrian Hammond of SVG. Please go ahead.

Adrian Hammond: Good day, everyone. Question for Charl. Just a bit more understanding about your balance sheet, please. I would like to know what your working capital needs are for the entire business. And could you clarify what debt facilities you have, including the U.S. dollar RCF and what you’ve drawn down of that? And then in terms of your covenants, it’s quite obvious you’re going to get close to that covenants by June. What mechanisms do you have in place with your lenders regarding extension of those covenants please? And then, I think a bit I’d like to ask a question around the gold business, massive free cash flow loss of R10 billion in 2H. How do you get there? I’m just trying to understand what’s happening within that business. And then on Stillwater, the cost that you’ve given us, is that IRA credit included in that stipulated cost? And if so, how much? Thank you.

Charl Keyter: Yes. Thank you, Adrian. And obviously, I’ll start. I just missed your first question. Sorry, there was just a slight dip on my side. It was something on the balance sheet. Would you just mind repeating that?

Adrian Hammond: Yes. Sure. Just your working capital needs, so much cash you need at all times and then on the debt facilities?

Charl Keyter: Yes, so Adrian, our financial policy is to have liquidity or working capital for the business of two months of operating expenditure plus CapEx. So if you look at our liquidity headroom sitting at R50 billion, that is probably between 5x and 6x or five and six months of operating cost and CapEx. So but on the numbers is two months. So you know just working back from that it’s probably in the order of about R20 billion that could be a safe number. In terms of facilities, we’ve got two facilities. We’ve got the $1 billon revolving credit facility that was fully undrawn, so we’ve utilized zero of that facility. And then we’ve got the R5.5 billion facility and at year end that was drawn R4 billion and that was mainly due to timing of payments.

We have an early closure in December, which does bring that working capital need earlier. Those payments would normally either flow month end or immediately after month end. So you have a little bit of a skewed picture over year end. And then we also at any one time have available facilities which are uncommitted lines, overnight facilities, roughly about R1 billion, R1.5 billion. So we also have the ability to utilize those. On the covenant side, our covenants are I think the two main ones are the leverage covenant, which is 2.5x net debt-to-EBITDA, and then the interest coverage one, which is EBITDA divided by our net finance charges and there we have to exceed 4x. So Adrian, I mean running the numbers and assuming that these prices stay where they are, we are probably getting to a number that starts with a 2 by year end.

But as Neal said, for that reason, that is why we are looking and that assumes we run the business full tilt, spend all the CapEx, do everything that’s required. That’s without pulling any levers. We know we have the ability to flex certain elements within CapEx. So that’s a big lever that we can pull. But we are looking at what are the other forms of bridging that covenant. So yes, as I said, we’ve been here previously and we’ll definitely make sure that we don’t go into breach. But it’s a number we’ll continue to keep an eye on. But I think probably by our August results, we’d be in a much better position to say how the world has moved on and then we can provide you with an update and the planning accordingly.

Adrian Hammond: Cool. Thanks.

Charles Carter: Based on the, 45.

Neal Froneman: Sorry. Go ahead, Charles.

Charles Carter: Yes, sorry. Sorry Neal. Just on the 45x credit, we’ve made no assumption of that credit in the guidance we’ve given for the costs range for the year. So we’ll lobbying hard to try and get that credit. If that comes through, that’s an opportunity, but it’s not in the guidance.

Adrian Hammond: Okay. Cool. And then on the gold?

Neal Froneman: Yes, that’s where I was going. Adrian. Charl, can you just comment on the free cash flow from gold? Adrian, maybe you just want to ask it again.

Adrian Hammond: Sure. Just a bit confused about the large loss in 2H.

Charl Keyter: Neal, do you want me to pick that up?

Neal Froneman: Yes.

Charl Keyter: Thanks, Adrian. Yes. Look, I think in the second half of the year last year, we had those two significant events that I mentioned. So in July, we obviously had the incident at the K4 shaft and we had the fire at Driefontein. So effectively, what it meant for H2 was that we carried the full cost of K4. That restructuring was only completed in December, but essentially carried pretty much the full cost of that shaft for six months without any revenue. And at D5, we carried the full cost for a quarter and then ramped up during the fourth quarter. So production was significantly lower. In total, the impact from each of those, Driefontein fire was just over 900 kilos of gold that we didn’t produce, so basically lost revenue. And at [indiscernible] was also just under a tonne of gold that we lost there. So I think that drives the major discrepancy with those two incidents I referred to earlier in the presentation.

Adrian Hammond: It just seems larger than what you’re saying. But if I can just ask Neal question. Neal, you’re sitting on one of the significant uranium resource. What would it take to monetize that in terms of bringing it to market?

Neal Froneman: Yes, so Adrian and again, Richard, stay online if I can put it that way. Adrian, we’ve been working for some years on how do we monetize the uranium assets that we have. The Cooke dump is a spectacular asset that is the primary reason we actually acquired Cooke, not for the gold business. So we’ve explored many options. It’s been difficult not being able to process the Cooke dam until more recently with DRD having now done. I think in line with protecting the balance sheet and being careful in terms of where we spend money. And what I can say is we’re not going to bring these assets to account using our own balance sheet. Richard has had a lot of inbound calls. We’ve got a couple ideas we can’t really share with you now and we will make a decision over the next probably quarter, two quarters on exactly how we’re going to take that initiative forward to realize value.

It’d be let’s say instantaneous cash. Value for those assets, by doing some smart things. Rich, I don’t know if you want to add to that.

Richard Stewart: Neal, thanks. I think you’ve covered the key aspects. I mean your point on the DRD unlocking it through the deposition, that was always one of the problems of that project. So that’s really been solved for now. Just to add, the Cooke Dam itself is really a co-product project. It’s got a significant amount of gold. So of course, there we’ve got the relationships with DRD. And as Neal says, I think we’ve got several opportunities to look at how we can optimize value with that through that asset. With partnerships, I think some of the other uranium assets are not assets that we would look to develop ourselves, but they certainly may have opportunity within broader strategies and groups. And we are engaging with various parties to explore what could be possible there. So Adrian, is receiving attention, but we have to give more detail in the future. Thanks.

Neal Froneman: If I can just come in quickly, Adrian, and I’ll give you we’ll talk offline on the cash flow issue. But if you look in the book, under the cash flow table, there is an explanation. And the big amount big part of that R10 billion you mentioned is due to intercompany working capital accounts payable. So it’s actually money flowing from the gold operations to the SA PGM operations. It happens every period, and there is an explanation, albeit a bit confusing, underneath the table, but we can cover it offline if you wish. And then just, I just wanted to ask at the SA PGM operations. In 20 or last year, we guided for, all in sustaining cost from the SA PGM operations of 20,800 per ounce to 21,800 per ounce. And this year, it’s 21,800 per ounce to 22,500 per ounce.

So that’s only a 5% and 3% respective increase in costs year-on-year in the in the guidance. And actually, we came in if you look on the front page, the actual all in sustaining costs came in well below the 28,000 bottom of the range that we indicated coming in at 20,054. So, yes, as Richard said, it’s a bit complicated due to byproduct credited movements. Can we take the next call?

Unidentified Analyst: Thank you, operator. Good afternoon, Neal and team. My first question is a follow-up that Adrian asked on the gold operation. Your all in sustaining cost is sitting around $2,000 an ounce. Is there even a possibility to get it closer to $1600 or lower? Because remember two years ago, we were presented with this plan to get the cost down, it seems to be pretty stickier on the 2000. So we can talk to that. Other questions related to battery metals portfolio, one, caliber depending on that delay, how does it impact your CapEx? Second on Sandouville, is there a timeline like tentative timeline on when you make a decision? Because looking at losing $70 million in EBITDA, that was last year. We don’t know what this year is going to look like? And then third on new century, the flooding event last year seems to have repeated this year as well. What steps have the company taken to kind of manage the operations around them? Thank you.

Neal Froneman: Yes. Thanks, Raj, and good morning. So I’m going to ask my Chief Regional Officers to step up and talk about why don’t you start with, Keliber? And to, let’s say, protect the assets against these extreme weather events. Mika, if you wouldn’t mind starting.

Mika Seitovirta: Thank you, Neal, and thanks for the questions. If I start from Sandouville. First of all, we are doing a lot of work in order to reduce the losses at Sandouville, and we can do a lot of things there. So, we are moving forward. However, I want to emphasize that what we have said is that as an outcome from our strategic review, so Sandouville is not going to be profitable enough. So, therefore, we are doing now the feasibility study. The timeline is a good question, but it’s a little bit too early to give you a timeline. I’m absolutely sure that we can give the timeline of, the transition, when the feasibility study and the transition plan are ready, and that’s going to be later on this year. And then we can also say that the transition will take this time and then the ramp up of production provided that it’s as encouraging as the scoping study results have been.

So that will come later on and then obviously we can also tell to you much precise numbers concerning the CapEx demanded and, also the profitability numbers and the returns on that potential investment. Concerning Keliber, we need to remember that, as it is today, so most of the CapEx is already either used or committed, at this stage. We are constructing in three different places. So that means that the work goes on, and we shouldn’t have too high expectations that there are possibly a lot of CapEx that can be reduced for cash, we are assessing the full impact, if any of these new permitting decisions and we will come back to you and update to market as we are a little bit more advanced in that work. It came so recently, the court ruling that we still do need to do our homework first.

Thank you.

James Wellsted: Rob, will you go ahead on New Century?

Robert Van Niekerk: No, I will do that and [indiscernible]. I would like to say that the flooding we had last year at New Century is very, very different to the albeit difficult start we’ve had this year. Now last year, we had a flood which took our operations out totally for about 21 days, and it took almost a full month to recover from that flooding event. And at the same time, a lot of the infrastructure at the Century operations were damaged this year. We have had excessive rainfall in January. We’ve had excessive rainfall in February as well. So the start of the year has not been pleasant at all. Having said that, the terrain and the infrastructure has not been damaged nearly to the same extent as what it was last year.

And I am able to report that we are up and running again. And like I said, we didn’t go and lose 21 full days of production the first two months of this year. We did put a lot of call it anti-flood mechanisms in place. We put additional pumping capacity in place. We put additional access in place, and we made it possible to protect the water required for the operations and the infrastructure to dewater flooded operations a lot easier than what it was at the same time last year. Raj, I hope that answers your question.

Unidentified Analyst: Okay, thank you.

Neal Froneman: Perfect. Thanks Rob and Rich, if you can answer Raj’s question on the stickiness of the gold costs.

Richard Stewart: Raj, thanks. And yes, let me comment on it like this. I think so firstly, so I don’t think that these operations we’re targeting a cost at the moment of close to 1,600. I think what we are really looking at getting down to is probably closer to about 18 [ph] at the moment. Let me say that the first one of the first issues that we’ve got to get right in gold, we’ve had a couple of years with real disruption. So we had a strike impact in ’22. Last year, we had the two significant incidents as I’ve described at K4 and D5. All those incidents besides losing production, which obviously ups units costs, comes with their own costs and build up again. So getting stable production is one of the first keys to ultimately being able to manage your costs.

I’ll then say we’ve got a few levers that we are still looking at pulling to get the cost down in gold. The one that I did describe earlier was energy. And that’s been a big driver of the cost over the year that’s driven some of the stickiness you’ve referred to. With incoming some of our own energy sources, as I say, that should benefit some of that. I think the second big lever that we are looking to pull is you would have seen that the restructuring that we’ve done so far has really been on an operational basis. So we’ve been addressing loss making operations, restructuring those and operations that have come into the end of the life closing those. Clearly, with a slightly smaller operating base through that restructuring, we are also looking at how we can optimize our central and support services to those operations, which would reduce ultimately allocated costs and overhead costs that those operations are currently carrying.

So that’s the lever we’re pulling. And then I think the final one where gold carries quite a significant cost relative to most is on all care and maintenance assets where we have been battling to get closure of those assets for various regulatory and other reasons. And those costs continue to be carried by the Gold ops. There again, we do have a strategy to address those costs over the next year and two years and get those down, and that should again benefit the bottom line. So, Raj, I hope that helps. As I say at the moment, I think sort of 1800 is what we have in our sights. So it’s clearly not what we’ve guided to. Those are our plans that we have this year that we’d like to implement to get that down there. Thanks.

Unidentified Analyst: Thanks, Richard. That’s it from me. Thank you.

Operator: Thank you. The next question comes from Nkateko Mathonsi of Investec. Please go ahead. Nkateko, your line is open. You can ask your question. Not getting a response, going on to the next question, which comes from Arnold van Graan of Nedbank. Please go ahead.

Arnold van Graan: Yes, good afternoon, Neal. Yes, I’ve got an overall question. So you’ve been very clear on your strategy and your outlook for commodity prices. But looking at your asset base, you’ve got lots of different assets, different commodities, different jurisdictions, different life cycles, capital needs and nuances as we’ve heard from a lot of the questions on the call already. So for me, it seems as the business is becoming large and unwieldy especially in a down cycle environment. So do you believe that the business is still fit for purpose in the current environment — to cause lots of attention, lots of management time. So generally, when you see this in companies, they tend to move away from this, move away from these large unruly asset base. Maybe just comment on how you plan to deal with this especially in this environment. I guess it’s much easier in a higher metal price environment. Yes. That’s it for me. Thanks, Neal.

Neal Froneman: Yes, thanks Arnold. And that’s a good question. And it’s really a question that is best answered through the strategy that we’re pursuing. And remember, we have been pivoting into a producer of green metals, which we’ve done off a substantial base of PGMs. But the combination of PGMs and let’s call it other green metals, which in this case, we have direct investments in nickel and lithium, some in copper now are all part of that pivot. Now again you got to go back to strategically what is the purpose? Well, the purpose of our business is to safeguard global sustainability through our metals. And I dare say that, that is playing out very well for us. So it doesn’t mean it’s easy. And as you quite rightly point out in economic downturns, it becomes more challenging.

But having a purpose like that, having the base of metals that we have and being able to expand into the ecosystems that we identified early on are proving very actually helpful and constructive. Our relationship in both the European Union, and the U.S. is at the highest levels and we get good advocacy both from the U.S. and the EU. And we certainly are seen as part of the solution. That doesn’t help the pivot or your specific concern. But if you believe in your strategy, you continue with it, but you cut your cloth to suit, which is exactly what we’ve been doing. And yes, there might be some smaller assets, but they are smaller assets, that are building blocks in terms of growing let’s call it that portfolio. But also, as the operating legs, primary mining, which is normally of very significant scale.

So that’s hard rock underground, and open pit mining. The secondary mining is a business where you might say we have some small challenging operations, but they are again building blocks of expanding the tail. We’re not the only ones doing that. I think you’ve seen both Glencore and Rio start moving into that environment and where we are probably together with some other major mining houses at the leading edges on the recycling or the urban mining. And that’s off the base of AutoCAD recycling and building the urban mining recycling, the lake. And that we are — that we’re able to do in small byte sized chunks. And it’s the strategy, and the strategy remains very much intact and very much informed by the external environment and the gray elephants that we refer to.

Now in terms of being unwieldy, I think the new structure that we implemented about two years back and regionalized the business has worked very well. And certainly, I think internally, we don’t find it unwieldy. I think you should have seen today we have Chief Regional Officers that are totally on top of their regions and their assets. So I think from a group perspective, again it’s really, but we are a modern mining company. We are not going to be kind of dinosaurs in the mining industry and revert back to what is traditional. The world is changing and we’re changing with but it’s being managed and it has been well thought through from a strategic perspective.

James Wellsted: Thanks, Neal. Listen, we’re pushing over time. So I think — assets given the current boom in the prices. So maybe if you’ve got a final comment on that, and then I think we’ll have to close.

Neal Froneman: And much more other than uranium is something that, I certainly understand well and in fact, a lot of my team was part of the Uranium 1 experience. So we’ve got the knowledge. We like uranium. We’ve consciously held uranium assets. We have been in the background working on what is the best way to realize value portfolio. But under these circumstances, it is most likely going to be brought to account utilizing more appropriate structures and certainly not our balance sheet. We’re in a very good position with uranium production available in the short-term and relatively quickly and it’s not complex compared to many other projects in the rest of the world. So I can really only summarize and repeat, James what we’ve been said.

There’s a lot of hype and be careful of hype in the uranium market. It’s a bubble, that can burst, but I would suggest that there’s more solid fundamentals underpinning the uranium market at this stage, but these things can turn very quickly. So I’ll leave it at that. Thanks, James.

James Wellsted: Thank you. And, if there are any more questions, please, direct them to the investor relations team by email, and we’ll follow-up online. Thank you very much for attending the presentation today, and have a good evening and a good day.