U.S. markets close in 1 minute

Edited Transcript of ARI.J earnings conference call or presentation 28-Feb-20 1:00pm GMT

Q2 2020 African Rainbow Minerals Ltd Earnings Call

Sandton Mar 21, 2020 (Thomson StreetEvents) -- Edited Transcript of African Rainbow Minerals Ltd earnings conference call or presentation Friday, February 28, 2020 at 1:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Abigail Muelelwa Mukhuba

African Rainbow Minerals Limited - Financial Director & Director

* Jongisa Magagula

African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development

* Michael P. Schmidt

African Rainbow Minerals Limited - CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Brian Morgan

Morgan Stanley, Research Division - Equity Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good afternoon, ladies and gentlemen. And welcome to the 2020 African Rainbow Minerals Interim Results Conference Call. (Operator Instructions) Please note that this call is being recorded. I would now like to turn the conference over to the Chief Executive Officer, Mike Schmidt. Please go ahead, sir.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [2]

--------------------------------------------------------------------------------

Thank you very much. And then good afternoon who's on the call, and I'm obviously not aware; as you proceed, you may introduce itself. But on my side, I've got our FD, Abigail Mukhuba. I've got Jongisa, who's been with us and I trust every one of you, you know. And obviously myself. So many of you would have been -- and heard the results. Some of you may have even joined on the webcast. So I definitely don't intend to go through the entire presentation. I want a brief overview. I'll probably highlight -- probably 8 to 10 slides and just to highlight what I think is important. And maybe I can then get Abigail just briefly to touch on cash and capital allocation. And then we'll hand over to questions, if that's fine.

With that, from Page 5, just to turn, obviously we've seen the earnings -- the EBITDA and it's really a marginal reduction in where we were, notwithstanding a significant drop in the manganese and coal prices. But part of that was offset by good, strong prices out of PGM. If I take you to page 6, we're obviously pleased that we can continue with the dividend. We have a ZAR 5 dividend, 25% up on flat earnings and obviously, that's -- we're already in line with our criteria.

If I move you then on to Page 10. It's just an indication that it's been a consistent journey of improving on the dividends. And that's based on sustained growth. So that's -- it's obviously a pleasing slide to continue with. I'll take you -- move you to Slide 17, and that -- really about the iron ore. And so a little bit of background. So production volumes are pretty high. We've increased 7%. Sales volumes are down 15%.

--------------------------------------------------------------------------------

Abigail Muelelwa Mukhuba, African Rainbow Minerals Limited - Financial Director & Director [3]

--------------------------------------------------------------------------------

They are down 7.8 million tonnes.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [4]

--------------------------------------------------------------------------------

Okay. So the sales volumes on half year is 15% down. And so there's been quite a significant build up in stock. And I think that stock level is around abnormally high, at about 7 million -- 7 million tonnes. We managed to move a fair amount over Jan. and this month. So within the next 4 months, we will claw back that -- the sales volumes and get that back on par. It's really delays predominantly in the port with breakdowns and ups -- and maintenance. But we're pretty comfortable we'll get there.

So Khumani is a solid mine. It's got a long life, delivers quality into market. It demands lump and grade premiums, solid team. The average unit costs over the last 10 years, in fact, have been below inflation. So -- and it delivers well. The slight change you see this year was what was previously capitalized is now put into working cost because the capital component is more in line with the life of mine. So we had to carry that on working costs. So that's the only difference with the bottom line between the two, but still a well solid operation. Beeshoek's got a 7-year life, and we are exploring satellite orebodies which could easily extend that if the work is successful, and the early indications so far is okay. We've got about another 2 years of work before we pull the plug and make an announcement there, if anything. We're quite positive. I mean, although Beeshoek has been going since 1928, given that mine's run fatal too for the last 17 years, again, solid, solid management team and really as we commended for their good work.

Backdrop, it's going well. The ramp-up, the modernization, the capital that we've committed to over the period. Nchwaning is now 90% complete. Gloria is 40% complete. Towards the end of next year 2021, we should be commissioning everything, which will give us the potential to put us in a position to ramp up to ZAR 5 million. We expect to get close to ZAR 4 million this year. And obviously, we have to be sensitive to the market and wage and logistics being the compliance factors. Again, we're pretty pleased with what's happening. We see a reduction in unit cost in line with what we expect. But the real benefit will come once we convert from trucking to belting, significant drop in logistics -- underground logistics ore handling. So we're pretty pleased with that investment. I think it's going to yield good results for us going forward.

Alloy business on Page 19, alloys remain decreased. But the operations and the management team have done really good work in reducing costs by improving furnace terms and efficiencies, lowering input costs. Recycling of fines, bag of dust and stones, and we're putting that into a conglomeration, facing that into bricks, feeding that in. So that's material which was lost, brought back in, will have an easier reading and will have an impact in reducing costs. But it's a tough market out there. South Africa has also been plagued, particularly our smelting with power outages, and we consciously, we will power -- when the operation's needed, we just put the smelter on tech, [tech one], and so that we don't get too affected by operations.

I take you to Page 22. Talk a little bit about volumes out of the platinum. So obviously, we are not happy about the volumes that were delivered over the last 6 months and commensurate with that, you'd see a radical change in its cost performance because it is volume and unit driven.

So Modikwa had a lot of challenges with regards to safety stoppages both in and external. We needed and we were as partners really clear that we want the level and standard of work and compliance to standards to improve. So a lot of training, a lot of focus has gone into that, and we already see its yielding results. But it's an ongoing program. And then we struggled with low equipment availability and both partners have approved a substantial amount of working costs, allowing them to overrun their budgets to get the rebuilds and the maintenance on the equipment, so that we can get the availability and utilization. And again, in early days, but in the first 2 months of -- outside of this reporting period we're pleased with what's coming out of those interactions. So we're pretty confident we will improve.

Two Rivers was also impacted by safety stoppage today, a fatal, unfortunately. And we had to really go back to the drawing board to see if we're not missing anything. But the main problem with Two Rivers is obviously we're transitioning from what was historically a single-reef, high-grade mine into a split-reef, low-grade mine, 3.5 grams a tonne. And this is rebasing or repositioning itself. So we have, in the interim, accelerated the main decline sinking, we're doing 2 levels a year, industry norms at a push, if you can get one. So really doing exceptionally well to create flexibility to mitigate the impact of the new ore bodies we have to mine and delay as much as we can and reposition ourselves. So we also are pretty confident that we'd see better returns, volumes and combined out of those 2 comments, we'll probably see and hopefully see the unit cost coming down nicely over the next 6 months but some normality probably over the 12 to 18 months when the other interventions, which I'm going to touch on.

And if I just touch on Slide 23, I want to go back to Two Rivers. This was -- I -- exceptionally well, group managed, well run, good management. And what has happened over the last 14 years, we mined the single reef ore body, consistently delivering production at leading costs within the industry. But we are transitioning, and that's what the ore body isn't going to stay into a lower grade and split combination and moving over the life of mine now into a 3.5 grams, and we need to rebase ourselves and -- but it's still be well positioned, good contributors to our bottom line, even at the rebased statement.

We've also approved a plant expansion, which will take us over the next 18 to 24 months from a currently 300,000 ounces back up to the 360,000. And we -- we're also in the process of constructing a new tailings facility, and we're moving that up to 500,000 tonnes, and we want to dedicate 300,000 tonnes to UG2 and 200,000 -- we're doing the work now to do coextraction to start a new mine. If you start with the 200,000 tonnes a month mine, Merensky, that's under consideration right now. On -- studies are done, and we will engage and come back if that's going to -- if these prices hold, it's probably a good likelihood.

The -- if I move on to Page 24, that's my second-last slide, is that if you look at Modikwa again, it's a high-grade, long-life -- there is an extensive strike distance. The mine benefits quite handsomely today with a favorable platinum to palladium ratio with good volume content. That recapitalization which I spoke about is yielding positive results. We still got another 6 months of it, but it will certainly improve availability and utilization. And then we have appointed contractors to come and assist with doing additional development on reef. I'll touch on that in a sec. This is obviously to improve reserves and flexibility so that we can continue with the ramp-up program, which we want to get that -- those tonnages up over the next 24 months to -- in the region of 240,000 tonnes per month, that will put you over 400,000 ounce per full mine.

We're also transitioning from what was historically off-reef, large ends into smaller on-reef. And that will also open up ore a lot easier. And obviously, we -- if -- the development actually pays for itself being on-reef. So that's a good transition.

And I mean, last but not least, we obviously with the -- holding the [current] recovery, and that -- once it's commissioned in the next 15 months, will certainly improve to the bottom line profitability. So we're pretty confident once we achieve that, we thought seeing some normality within costs around about the inflation level within the next 12 to 18 months. It's not going to happen overnight, but we're really positive. And obviously, on that, Merensky -- overlying the Merensky ore body with exactly the same characteristics of Two Rivers. And it's something that's being considered. In fact, we are going to do, over the next 6 months, we're going to go back into that ore body and produce some Merensky, which we want to do further processing, enhancements and studies. We'll do that on a batch consignment. And if it proves what we think it's going to prove, there's absolutely no reason why Two Rivers -- Modikwa cannot resuscitate exactly what I've been telling you about Two Rivers. So great future for -- and for our platinum and platinum exposure. It's something we've been very focused on for a number of years.

So, things I'm telling you now has got nothing to do with price realization. It's something that we've consciously been doing as a management team to improve this. And if prices hold, then we'll certainly capitalize on that. I don't know why you want me -- still want me to talk to Slide 28. But let me dive in. She's the boss.

Coal is -- has been negatively impacted about with regards to seaborne coal prices and a reduction in sale prices. So it's also impacted over the last 6 months with heavy rainfall. We do think the volumes will improve, but the price volatility to us is a concern. I'd just conclude by saying both PCB and GGV still have in excess of 15 years' life, well positioned on the cost curve. Our capital -- or the interest -- our capital debt is coming down nicely, even with these lowered prices and in the next couple of years, I think that's quite a good return for our shareholders.

With that, I'm going to hand over to -- yes, so maybe just closing, in Nkomati we are -- we've made that call about closing down. There's a slide on it on Slide 25, is a little bit about Nkomati. So I mean, the results out of that are reflective of high availability associated with mining operations, which are in ramp down and ultimately, into closure. So they -- and we don't have flexibility and the latitude of running. It is what it is. We're driving down. We are trying to get on top of what the ultimate care and maintenance costs are. So a lot of the once-off costs, which I think was disappointing because the expectation would have probably been that nickel should have come out neutral. But with -- just the provision for the diesel rebate with the dispute we have with SAS that's ZAR 243 million, which we believe we had to recognize. It doesn't mean we've given up on it. In fact, we feel pretty confident that we shouldn't be paying that and it's absolutely correct. But the challenges with SAS are what they are.

There is a provision for restructuring. We have to write-down some of the inventories as we're closing down stock or waste. And those penalties are short delivery and certainly not meeting the grade specs in closing down. So I think the decision -- our decision to close this mine down is the right decision. And you'll see that happening towards the end of the year.

With that, I'm going to hand over to Abigail to touch a slide or 2 and straight onto Q&A. Thanks for your indulgence.

--------------------------------------------------------------------------------

Abigail Muelelwa Mukhuba, African Rainbow Minerals Limited - Financial Director & Director [5]

--------------------------------------------------------------------------------

Thanks, Mike. I'm just going to talk through slide 31 and 32. In terms of Slide 31, we show how we allocate -- how we generated and allocated some of the cash in the 6-month period. We generated just about ZAR 1 billion rent from the operations, which was after we took into account ZAR 1.2 billion increase in working capital of outflow. Further, we received ZAR 2 billion in dividends from Assmang, and this was about 11% higher than what we received in the corresponding period. From these 2 sources of funds, we then paid our taxes, and we invested about ZAR 492 million into the sustaining capital expenditure, which I'll cover on Slide 32. And then the biggest chunk of the money that was allocated was more towards paying a dividend of ZAR 1.7 billion to the ARM shareholders. And this was about 15% higher than the ZAR 1.5 billion paid in the previous period.

On Slide 32, our borrowings, they remained flat at ZAR 2 billion. The important thing to note here is that the borrowings are split 60-40. And that 50% of our borrowings are into 3 partner loans and the 40% that remains, that is interest-bearing, ZAR 300 million of which relate to ARM BBEE trust loan with Harmony, and they have about ZAR 500 million related to our Two Rivers operation. So in terms of our overall net cash to equity, we're sitting at about 9%. And since we closed the period, Assmang declared a dividend, of which our attributable portion is ZAR 1.75 billion.

Then on the capital expenditure -- maybe before I'll go to -- yes, on the capital expenditure on Slide 33. The total capital expenditure 100% was about ZAR 1.6 billion for the 6-month period, which is slightly tracking behind the full year guidance that we gave of about ZAR 3.4 billion. Of the ZAR 1.6 billion that has been spent, we split it 50/30/10 between ferrous, platinum and coal. The most chunk of it was spent on normal fleet replacement and refurbishment and then we also spent about ZAR 357 million on the Gloria mine modernization and optimization project. In terms of our Gloria projects, it's about 40% committed and spent, and it remains on schedule and within budget. You also remember that on the Nchwaning mine we spent about 90% of that capital expenditure.

In terms of the guidance of the ZAR 3.4 billion, we still believe that we'll spend ZAR 3.4 billion for the full financial year, especially the rents change that guidance. And of that number, about ZAR 2.2 billion to ZAR 2.4 billion is our staying business capital expenditure. Then we just highlighted also the 2 projects, 1 is Modikwa in terms of the coal recovery plant. We have previously communicated that it's ZAR 350 million. It's going to be approximately ZAR 440 million. And the main reason for the change is that we've adjusted the -- some of the procurement process in terms of putting the plant in place to deal with the project, and we've also adjusted some of the work in order to improve our coal recovery yields from 10% to 12%.

We expect that it will be commissioned in third quarter calendar year 2021, and we still remain confident that it will be [a] value enhancing addition to the Modikwa mine. Then on the Two Rivers front, the 40,000 tonnes UG2 plant expansion, that remains at around ZAR 427 million as -- which was approved and is expected to start in May 2020, completion is planned for 18 months thereafter. And we claim that it will dovetail the new tailings and commissioning in April 2021, which tailings then is expected to cost approximately ZAR 400 million. That's it from my comment side.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [6]

--------------------------------------------------------------------------------

Thank you very much. And with that, I hand back for questions. Thank you.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question we have is from Brian Morgan from RMB Morgan Stanley.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [2]

--------------------------------------------------------------------------------

Guys, can you hear me?

--------------------------------------------------------------------------------

Abigail Muelelwa Mukhuba, African Rainbow Minerals Limited - Financial Director & Director [3]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [4]

--------------------------------------------------------------------------------

Clearly, Brian.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [5]

--------------------------------------------------------------------------------

Okay. Cool, that's great. If I do disappear, just let me know. So a couple of questions. On the decision to get the contractors into -- to do development at Modikwa, could you just run us through that a little bit? It's not something you've done before. Why it is not something you've done before? Just as a matter of interest. And then in terms of coextraction of Merensky and UG2, I was always under the impression that there was a problem with milling -- with milling them together in the concentrator. So maybe just run us through the thought process there.

And then Abby, a question for you, under what circumstances would you reconfirm that the -- the [SPD]?

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [6]

--------------------------------------------------------------------------------

Okay, good questions. So Brian, let me take your first question is why contractors now, we've never done before. Two reasons. We don't believe that we need that amount of injection because we're going to ramp up above, let's call it budget, for a period. We don't believe it's sustainable. If you employ your own people to do that, the retrenchments, very, very difficult beyond that. So it -- and then we looked at the cost implications of doing that. And the model indicates it's a lot better bringing in and to find and target experienced developing people, and -- so that you don't have to spend time training them up. The second reason why we then went to the contractor base is they're coming in with their own equipments. Otherwise, we would have to overcapitalize on equipment and then we're stuck with that equipment after 2 or 3 years. So that was the reason. But the drive behind this is to create the flexibility so that we can get the ramp-up to 240,000 in the next 24 to 36 months. That was that -- sorry, and your second question, what was it?

--------------------------------------------------------------------------------

Abigail Muelelwa Mukhuba, African Rainbow Minerals Limited - Financial Director & Director [7]

--------------------------------------------------------------------------------

Merensky.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [8]

--------------------------------------------------------------------------------

So good question. So a number of mines have coprocessed UG2 and Merensky. We've actually tried it when we've done bulk samples. We've done a 300,000 tonne bulk sample at Two Rivers and a 220,000 bulk sample, which we mined out of portals on the Merensky, 5 years -- 5 to 6 years ago, and we campaigned that stuff run. There was plant availability like Modikwa right now; that plant can do 240,000 and they're only doing 200,000. So the Merensky out of -- certainly out of Modikwa can be easily campaigned, but we will also look at whether the blend ratio, providing it's done properly and the metallurgists and the work we've done and other mines -- the feed rate proportionately, is not more than 15%. Obviously, Merensky prefers a MF1 circuit and you can choose on MF2. So if you then put Merensky into this, you're obviously displacing good UG2. And it takes longer because of the grind and hardness. So now we're very mindful. But ultimately, Brian, when I say the 200,000 tonne a month, the feasibility work that's going on, it's with its own stand-alone, stand-alone plant, MF1.

--------------------------------------------------------------------------------

Abigail Muelelwa Mukhuba, African Rainbow Minerals Limited - Financial Director & Director [9]

--------------------------------------------------------------------------------

Then on the GE question, Brian, the simple answer is that the only time you would deconsolidate it is if you didn't control it. And so purposes of analysis -- for accounting purposes anyway, control is not always necessarily. We have 50%, so you could have control because we are the key persons that make the decision for that institute, for that organization. And then as far as the BBEE trust is concerned, in order for us to guarantee the BBEE shareholding, when we gave them the loans in 2016 when we did the restructure, the trustee was crafted in a manner that is a lot of influence and a lot of control over the trust and as such, when you do an IFRS analysis of whether you control it or not, it comes out that ARM does control it. So to the extent that those loans are still not repaid, you cannot really deconsolidate it. But to the extent that tomorrow, as an example, if the trust went and sold their shares and they no longer were invested to ARM, it could be a different scenario where if the trust itself went and changed the structure then it would be consolidated.

So at this stage, because the trustor has a few loans with ARM, which are quite significant, we would still be consolidating it.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [10]

--------------------------------------------------------------------------------

Okay, cool. Can I just ask one on iron ore quickly?

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [11]

--------------------------------------------------------------------------------

Yes. Go ahead, Brian.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [12]

--------------------------------------------------------------------------------

So you said there's 7 million tonnes of inventory. I imagine that sitting on-mine at the port anywhere else or is it predominantly on-mine?

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [13]

--------------------------------------------------------------------------------

It's a combination of both, Brian. Because if you remember, and like Mike said, some of it has moved since the start of January, since the start of the calendar year. So it's no longer at the elevated level. But if you remember, there was some equipment breakdown at the port. And there was also rail maintenance. Or, I'm going to say, unplanned or higher-than-normal rail maintenance. So it ended up with a combination of the stock sitting at both the port and the plant.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [14]

--------------------------------------------------------------------------------

Okay. Is it possible that in the next 2 to 3 years, you could see sales volumes higher than production -- production volumes while you work down inventory, because you're sitting with basically half a year's worth of inventory, which is quite a lot?

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [15]

--------------------------------------------------------------------------------

So Brian, that inventory will be worked out in the next 6 months. In fact, just to give you that number, we shipped 400,000 tonnes in Jan. and 50 now additional.

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [16]

--------------------------------------------------------------------------------

Higher than normalized.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [17]

--------------------------------------------------------------------------------

Higher than normalized. So we've worked there around quickly. Now all things being equal, ships float and ports don't break -- we're going to work that off quickly.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [18]

--------------------------------------------------------------------------------

So what's the normalized inventory level then? What's the, sort of, fact at that level?

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [19]

--------------------------------------------------------------------------------

Internal?

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [20]

--------------------------------------------------------------------------------

So it'll be 2.5 million to 3 million tonnes, Brian.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [21]

--------------------------------------------------------------------------------

It's just as far as you take it.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [22]

--------------------------------------------------------------------------------

So you'll work down 4 million tonnes of inventory in addition to what you normally do?

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [23]

--------------------------------------------------------------------------------

In the next 6-month period, yes, because we've got to catch-up.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [24]

--------------------------------------------------------------------------------

So what's happening is that some of the rights are not being taken up and opportunistically because we've got rapid load out and precision loading, we get those allocations. But it's not on -- it's not an allocation. It is opportunistic.

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [25]

--------------------------------------------------------------------------------

So the inventory number was 5 million at the end of the period.

--------------------------------------------------------------------------------

Brian Morgan, Morgan Stanley, Research Division - Equity Analyst [26]

--------------------------------------------------------------------------------

Not 7 million. Okay.

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [27]

--------------------------------------------------------------------------------

No, no. 5 million at the end of the period, of which approximately 3.5 million was sitting at the mine and then the balance was sitting at port. But the balance that's sitting at port moved very quickly at the beginning of January. So you've depleted some of it already that was earlier at port, which makes sense because we usually -- I mean, we do about 14.35, and you would have seen we did about 6.2 million tonnes of sales volumes in this year. So you almost have a 2 million catch up, and that we have to deal with, which makes sense because then it ties into the 3 million tonnes' normalized stock level, plus the 2 million that you're going to be winding down to get to the 5.

--------------------------------------------------------------------------------

Operator [28]

--------------------------------------------------------------------------------

(Operator Instructions) At this stage, there seems to be no further questions, sir.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [29]

--------------------------------------------------------------------------------

Thank you. Can I make a few closing remarks?

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

Of course, sir.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [31]

--------------------------------------------------------------------------------

Thank you. So generally, we're pretty pleased with the results for the reporting period. We recognize that there are challenges. And I hope that the way we've expressed it, that we are on top of that and that we're addressing it, and now we can't resolve it in 6 months, and no, the cost will not be resolved in 6 months. But certainly with these interventions and the organic growth is -- we -- we'll see a far better outcome, sustain our path going forward and within the next 18 to 24 months, we'll see an enhancement to our current tonnage and unit and nickel and PGM output. And certainly, just commensurate with that, the unit costs should come down to some level of normality, which we've historically had. And these figures are not -- they are absolutely abnormal.

So we -- so obviously, we continue to monitor very closely the situation around providers that -- and the shutdown in Loxton, we said we've had no pushbacks to now. But be mindfully aware that inventory levels and finished product stocks are rolling up quite rapidly. And we are looking at what alternatives markets are there to redirect if required because we do sell into different jurisdictions.

With that, I thank you very much for your participation, and good afternoon. Thank you very much.

--------------------------------------------------------------------------------

Operator [32]

--------------------------------------------------------------------------------

Thank you, sir. Ladies and gentlemen that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

--------------------------------------------------------------------------------

Michael P. Schmidt, African Rainbow Minerals Limited - CEO & Director [33]

--------------------------------------------------------------------------------

Thank you.

--------------------------------------------------------------------------------

Jongisa Magagula, African Rainbow Minerals Limited - Executive Director of Investor Relations & New Business Development [34]

--------------------------------------------------------------------------------

Wonderful, mates.