DRDGOLD Limited
Q4 2018 Earnings Call Transcript

Published: 6 Sep 2018

[Niël Pretorius:]

So thanks very much for joining us from -- and also for joining us at a slightly later hour to accommodate me because I'm dialing in from the United States. And hopefully, the results are good enough to make this worth your while to come in at this later hour. And I think the [indiscernible] will make up for it. So thanks for joining us early. Riaan will do the bulk of the presentation this morning. He has -- as he had done in the past. But all of the good news is into the financial slides. So I'll just talk around that. But I'll kick off with going to the first slide, the disclaimer, and ask that you once again just pay particular attention to the content of the disclaimer because we are going to be including or do include in this presentation some information that's forward-looking in nature, and hence, this is worth a read. Next slide, please. So the next slide, Slide number 3, key features. We spent a lot of time in 2017, and I think there was also the main message in last year's results presentation of just the various measures that we took to migrate the operations from the West Rand more towards the Central and East Rand, tying up a few loose ends in that area, cleanup of Crown and the CMR sites. And also, the cost implications that had and also the implications on production itself, we told you about the steps that we were taking to put new sites, reclamation sites in place, there were three of those, and also measures that we were taking to change our water reticulation system, to have a fully integrated closed circuit. And the expectation was that, that all of these measures were going to impact on this year going to impact on this year and also this year going forward. But I think a lot of what you're seeing in these results both insofar is just the efficacy of the business is concerned, but also on the cost side or as a -- of the direct results of the measures that we've taken in the previous year. So we're really looking at two years' results here, but just one year's result. Also, a part of this presentation would be incomplete without reference to the information management system that we put in place, and that's assisting us to stay ahead of the plan, which has become so important. So the key features for this year, as you could say -- as you could see, rather, is the very significant increase in production, just a different footprint altogether that we were mining this year. And another thing that we've managed to get through, the 150,000 ounce mark, but with this combination of assets. And the recoveries, you'll see later on also, I'll head back to where they were in 2016 with a 0.2 recovery as opposed to the 0.16 that we saw earlier in 2017. We're very pleased with the fact that we're able to report free cash flow, that we added to our cash balance year-on-year. I don't know if there are many other mining operations in South Africa that's had a free cash flow year from its South African operation. And then that's based, I think, to the way business is being set up. We have always been a cash flow focused business. This is one of the most important considerations for us and priorities for us. Business got to make cash. The 38% drop in externally sourced potable water, you would have seen, those of you who actually read through the integrated report, that we set ourselves the target to heavy year-on-year reduction in potable water usage. This 38% drop is not coincidental, it is also as a consequence of having set infrastructure in place. And that's something that's to be less of a burden on the environment. This sets us in establishing natural capital value. And for a country like South Africa with limited water, and a society like Johannesburg which is ever on the increase with influx of people, I think this is a good space to be in, to reduce the amount of water that we're using and that competes with potable water uses. The increase in operating profit, obviously, as a consequence of the rise in production but also the drop in unit costs. So this comes as a consequence of those two positives and notwithstanding the fact that there was a slight decline in gold price. All-sustaining cost margin, this is the thing that I think in the long term is going to bite many producers. Since we have been required to report all-sustaining costs or all-in sustaining costs -- and you could see how much in sustenance capital per ounce was required in order to keep your operations going, I'm much entirely convinced that all the sustaining capital that's required to be spent has been spent in the industry, broadly speaking. So if you were to assess production from production numbers -- but not from companies as a whole but from production units, from separate units, I wouldn't at all be surprised if you're actually starting to spot or see declines in standalone production units because of maybe saving a little bit on the substance capital, because this is now very visible. You need to say that you have operating costs of $650 or $700 an ounce, how much is the sustenance capital. And that number is now glaringly visible. And then that is, in the long-term, something that I think is good for the gold price, especially because of the dynamics happening now around paper gold or fake gold, the lending of gold and so forth. There might be a bit of a supply squeeze going forward, which might be a new dynamic that's not entirely factored into gold price at the moment, the international gold price. And then, of course, also on the dust side, mining has been happening in Johannesburg -- in and around Johannesburg for many, many decades. And a city is developed around the mines, which require new standards on managing the impacts of mining operations and dust in particular. The standards that were put in place many, many years ago assumed that there would be a buffer between community, between societies, communities and the mine. It's simply been ignored, both in the pre and post democratic era. And that has brought about a new standard of looking at these things. So cost spend it costs a lot of money. But I think our dedication to this program, and the numbers I'll share with you later on in the program or in the presentation, are starting to pay off. And we're definitely seeing a very significant reduction in dust emissions on the sites that we are responsible for. It's not the case in the whole of the industry. They -- there are a lot of abandoned sites with dust as a major problem. For West Rand, dust is a big problem. But the sites that we have in our footprint, that's part of our portfolio of assets, the graph is certainly trending in the right direction. And this is consistent with our stated strategy of improving the quality of life of the people affected by our operations in and around the Johannesburg area. Next slide, please. We'll go to Slide number 4 or Page 4, the operating trends. This makes for some good reading. I'll go to yield first, and this is what I was referring to, the yield getting -- sort of bumping against the 0.2s again. That's where they were in the '90 rather the 2015s, 2016s. The yield just below at the 0.2s. And this, of course, is as a consequence of two things. One, we managed to have much better density profiles this year because you didn't have sort of a sterilization. So to speak, of the operating circuits that we saw in financial year '17, the first half of '17. That's when a lot of the cleanup material from the Crown sites found its way into the operating circuits and the quality of material and the composition material reaching the plants. That was difficult to maintain and manage compared to where we are now. So that's the one thing, it's a more consistent throughput. Second thing, also, is the fact that we did mine high grades from certain of our sites. And we're setting up the business in such a way that we can extend this beyond the life of some of the current operating circuits. You'd see that as a consequence of those high grades and recovery numbers that we saw, the production was up both quarters, which brought to us to the 150,000 ounces for the year. And that was notwithstanding the fact that volumes had come down. And maybe what this graph is not telling you is the things that didn't happen this year that were problems for us in the past. And they didn't happen this year because the way that the business has been set up and the way that the business is being improved and infrastructure has been set up. So the reduction in tonnes that you see right there towards the end, second half of the financial year, that's obviously when we hit the rainy season. And I sometimes get a sense that if there are two thunderclouds in the skies above Johannesburg, the one would find its way just immediately over the Elsburg Complex and the other one would go and sit on the Tambo airport, because you would have the sunny skies in the West Rand and just a deluge over those two areas. And in the past, what we saw was impact on densities, which in turn, would then impact on carbon efficiency because with lower density, your carbon settles at the bottom of your CIL tanks. So you got to manage that water balance very, very carefully. And what's happening is the method of mining has been adapted and adjusted. There's a very nice picture right at the end of this presentation that actually shows how the clean and dirty water separation systems are now better, as a consequence of the way that the method of mining these facilities, how that's been adjusted. And that was a conscious decision, obviously. What we also saw, and this is maybe something that went unnoticed, is the fact that with the Eskom strike, the supply of electricity for the first time became very unpredictable, very unpredictable in the sense that we would have trip outs that were unannounced. Now typically, what would will happen and this is the arrangement that we have with Eskom, if there's going to be maintenance or if there's a risk of a trip out or some other issue that they experienced with the supply of electricity, and we would get advanced warning. But now with the strike and with the -- the [indiscernible] that were going on as part of the strike, for the first time, we did have unannounced trip out. And the encouraging part of that is -- insofar as our operations are concerned, it's not encouraging to have trip outs and interruptions of supply, but it's how the business responded to it, how the infrastructure responded to that. Now if this was three, four years ago, then you would have had massive choke-ups to pipelines. In all likelihood, you would've had one or two if your [thickener] is tripping as well. And as a consequence, the better part of a week, maybe two weeks to drain them, to clean them out and to the system back up and running again. But the backup systems that we have in place and that we spoke about over the last few years, to keep this whole thing in motion, to keep everything in suspension and make sure that nothing settles down, I think those are the fruits that we're reaping now of those investments. The fact that the interruption lasts as long as the interruption had passed, but you don't have this massive knock-on effect. And make no mistake, we had some scary moments there because that happened out of the blue. You can imagine a 60-kilometer long pipeline with [full to] 1/2 meter in diameter and with slurry rushing towards your plant, and all of a sudden there's no power. So it makes for a messy business if you're not prepared. And I do think that what the operating team has done over the last few years is just put systems in place that have made us far more resilient to this sort of thing. And that's why we're in the position to spot the various contingencies associated with our environment, that we can report them just like this, take full advantage of what in fact has become a favorable set of circumstances price-wise and otherwise. So those are the operating trends. I'm going onto the next slide now, Page number 5, which is the financial review and all the good news which Riaan has monopolized. Riaan, so I'll hand you over to him.

[Riaan Davel:]

Thank you very much, Niël, and thank you for setting the scene for the financial results, not hogging the spotlight on them. And good morning, ladies and gentlemen, from my side. Again, my privilege to take you through these results, which we are very proud of. As I said, Niël has set the scene brilliantly for us to talk through some of the trends on the financial side. Now the operating margin, a very healthy 14%. And remember, operating margin, margin of cash costs, say, to revenue. So in the context of revenue, remember, as Niël has alluded to, the gold price year-on-year was down by 3% for us. So the end of that are just 534,000. You'll see on the half – to half year reviews as well, we started off just under 550,000 for the first half and then that dropped to just over 520,000 per kilogram for the second half of the financial year 2018, which puts all the sort of half-year-on-half-year numbers into context. But still, a very healthy 14%, and 50% up on the prior year, and there was that decrease in gold price. So cash operating costs, as Niël has alluded to, we're very comfortable that management has worked very hard to have that under control. And that's also reflected in the cash operating costs per kilogram. And that is down 6% or under ZAR460,000 per kilogram; and as well as the all-in sustaining costs, just over ZAR500,000 per kilogram, also down 5% year-on-year. See, if I jump to all-in sustaining costs margin, again, the second half impacted by a lower gold price, but still, a 70% overall increase year-on-year in all-in sustaining costs margin. And as Niël said, a very important measure to measure the sustainability of an operation, as over and above cash operating costs includes sort of sustaining capital expenditure, which we never hold back at our operations. We make sure we spend the necessary capital, also for projects that can improve the recovery and reduce the costs. So again, a very good number for us. All of this culminates, as Niël has said, in probably, the most important measure for us which is free cash flow, where we jumped from a negative ZAR45 million in the full financial year 2017 to a very healthy ZAR93.4 million for the year 2018, again, gold price having an impact on that number in the second half. And then headline earnings per share, I just want to pause because that looks very much out of sync. So overall, ZAR1.7 cents per share headline earnings, a significant increase from last year. I just want to put some color into why that sort of -- if you look at the two distinct periods, which we don't report as two distinct periods, we report the half year in December and then the full year in June, a big chunk of that has to do with the golding process adjustment that froze it out for the two distinct periods. So although at half year, there was a ZAR40 million golding process positive adjustment to costs, for the full year, it was ZAR24 million. That's ZAR16 million that gets it down to that -- froze to two periods by about ZAR60 million. Then the second half was impacted by lower revenue because of the lower gold price, as I've alluded to. And then there's always year-end adjustments, as we only update our life of mine on a yearly basis. And then measurements and re-measurements, so things like long-term incentive scheme, short-term incentive scheme. And then also the transaction costs of about ZAR9 million that we incurred for the Sibanye-Stillwater assets acquisition impacted the distinct period as a period. But still, a significant increase year-on-year in our headline earnings. Income statement, as Neil has said, so revenue impacted by gold production, up by 10% despite the decrease in the average gold price of 3%, which means a 6% increase in revenue year-on-year. The cost of sales line, as you can see, barely moved. So just under 2% change, which really is a function of the total cash operating costs only moving by 3% year-on-year, which, again, I think is a really impressive achievement. And as I've alluded to, it's sort of offset by that ZAR24 million golding process, let's call it investment, as a cut off at that point, which decreases that to the 2% movement year-on-year. Administrative expenses and rates, I've already mentioned, that is the -- what we just included there is the long-term incentive scheme change of about ZAR17 million in the last period, and then also the transaction costs making up that ZAR19.7 million number, including the corporate costs that we carry. Finance income, and although we have investment funds and related cash investments that we hold, finance expense, the majority of that is noncash. And it relates to the unwinding of the environmental provision, a finance charge that's booked through the income statement as it's on value of money charge relating to the rehab liability. Then profit before tax, looks very good. So I just want to pause here for a moment. We normally don't pause to talk about tax for various reasons, but I really want to put the positive spin on this negative tax charge and to provide some color here. What it essentially does, as you know, accountants have this concept of deferred tax. That's not tax that's paid to source as current tax, but it measures sort of tax allowances that's available in the future against carrying values of assets and liabilities. And as you know, the gold mining industry does not pay a straight 28% corporate tax. It's a sliding tax scale, depending on the taxable profit that the entity makes in that year and very much driven by the life of mine profitability. So what it says, essentially, the more profits that you predict to make your taxable profits, the higher the tax rate that you will be charged at. And in this case, as you know, there was a 10% increase in reserves year-on-year for Ergo, which means more profitable results from the Ergo life of mine, which means the deferred tax, effective deferred tax rate, changed from 18.6% to just over 20% in the current year. So it has to do with future earnings, but that raise or rise in the deferred tax rate impacts current earnings, and ultimately, headline earnings per share as well. So just to provide context to that number. So the more profits you expect to make, the higher tax rate you're going to pay. And that's why it flows down to a profit for the year. And then, obviously, the headline earnings and earnings number is based on that number. Right, going over the to the statement of financial position, property, plant and equipment, very much a function of capital expenditure that we incur, less the depreciation. So it has declined slightly year-on-year. On current investments and other assets, mostly related to our rehab fund assets, that earns interest and grow year-on-year. Cash and cash equivalents, I'll elaborate in the cash flow statement. But as Niël already said, a healthy increase to just over 302 million. Other current assets, I've already alluded to slight increase in inventory, quite a big decrease in receivables in that number. On the equity line, why has it come down? So remember, there was a dividend paid -- actually two in last year of 42.2 million. So the one declared at this results presentation last year, and then also the interim dividend of ZAR0.5 per share, plus, obviously, the profit that goes through equity. Rehab, year-on-year, pretty stable. So there is that an unwinding that I've alluded to in the income statement of a finance charge of about 48 million. And then there was settlement of liabilities of about 24 million. Again, I want to emphasize that. So I still believe that DRD is one of the few mining companies that actually incurred settle liabilities from their operating cash flow while they do their mining. So that's a very positive effect. Deferred tax, I've have already spoken to, so that balance has gone up, function of the higher effective deferred tax rate. And also, the decrease in -- mainly the decrease in the carrying value of property, plant and equipment. Other noncurrent liabilities, some employee liabilities, finance leases, pretty stable year-on-year. Current liabilities, there was quite a big increase in creditors that funded our working capital at that point in time, which leaves us with a very solid textbook to current ratio. On the statement of cash flows. Free cash flow, as you know, a function of the net cash inflow from operating activities, less investing activities. So if you deduct those two, you get to the 93.4 million. Again, it's a good cash generated by operations, some working capital release that I've alluded to, in that receivables and payables. Interest received on bank accounts, as you can see there, the actual interest paid, the cash paid is very small in relation to the charge in the income statement. Acquisition of property, plant and equipment, again, similar to last year. Even though we had a challenging year from a cash flow point of view, we're not withholding any capital spend that's necessary to set up the business and make it more efficient in future years. And that was no different. And Niël will allude to three specific projects that made up the bulk of that capital spend. Proceeds on disposal of property, plant and equipment, land sales, slightly less this year. That also explains why the earnings per share is a bit lower this year, because it includes a lower profit on sale of property, which as you know, that's always excluded from the headline earnings per share calculation. Again, just pointing out, the environmental rehabilitation payments that I've mentioned increased by roughly 10 million year-on-year. And then the dividends that I alluded to, the 42.2 million, that comes off as financing activities and leaves us with an increase in cash of 48 million and just over 300 million in cash and cash equivalents. So that's on the financial side. And I'm handing back now, Niël -- to Page 10, the Ergo projects.

[Niël Pretorius:]

Thank you, Riaan. So if we can get straight into the projects, Page 11. This is the 4L50 reclamation site. So it's the third of the new reclamation sites that we were working on in 2017, and then we got it ready to be included into the production circuit, into the operating circuit earlier this year. You could see the amount of tonnes that we're processing from that per month, 450,000 tonnes, which is obviously taking a bit off pressure some of the other sites. It's nicely accessible. The picture later on also shows how, as I have alluded to earlier, we managed to mine it in such a way that we have better control over clean and dirty water separation. And it's really all about making sure that we consistently deliver the right material at the right rate, right density, the right composition, the right time into the plant. And this one is certainly making a contribution towards that when we're to compare this to where we were 18 months ago, dumping material from [indiscernible] to the circuit and the amount of space that, that was taking up and the impact that, that was having on plant efficiency. This is a vast improvement. The zinc precip is something that we're very excited about, both in respect of the greater optionality it provides, and that gives us a bit the headroom in so far as volume throughput is concerned. It's is a shorter process. I personally like the fact that you basically batch tweak every consignment of [indiscernible] and then, of course, it also has the evident advantage of cost saving. It's costing us less. So we're hoping to see the upside of that also coming through the initial indications. And Jaco and Henry will both be able to give you more color on that. Initial indications on the zinc precip are positive and very much in line with consistent with what our expectations were, what our targets were. So I see Jaco waving his hand. Am I on the wrong slide? Are you on Page 12? Oh, we're good. Thank you. Right, so now I'm going to move on to Page 13. Sorry, I can't see the -- I just see the glare on the front page. So if I'm on the wrong slide, please just put up a hand there, Jaco. This is Page 13, on the ball mills. So with the closure of the Crown plant -- which if I may add, looks really nice. You wouldn't know that there used to be a plant there. The cleanup work there has been nothing short of spectacular. Despite some very interesting challenges from the, let's call it, the informal reclamation industry, we managed to salvage these. And they've been moved to Ergo, where they're now been integrated into our system. And what this basically does for us is we're now in a position to -- these high pockets of sand materials scattered around the East Rand, instead of having to transport those all the way across City Deep where the other mills are, we now have a place for them, and they can be integrated into the Ergo circuit. And the City Deep space has now been opened up. So the remaining bit of sand material that's in and around the central Johannesburg area, that can now go into the City Deep circuit. And the impact of this is significant. It is actually surprising to see how a little bit of high-grade material can impact on the average grade of your entire throughput. So this, we believe, is something that dovetails nicely with the Knights plant, now reaching the final phases of its life over the next two years or so, based on current throughput, current materials. And it positions Ergo very favorably to become an acquirer to in-sourced external materials, sand materials, scattered around the East Rand and land owners want to get rid of because it's sterilizing their land. And it's an environmental nuisance, an environmental risk. So moving on to the next slide, Slide number 14, on sustainable development. I said earlier that the mines were started in the rand, and then the city came to the mine, in fact, the city was a consequence of the mine. And Johannesburg is probably the textbook example of what sustainable development looks like, notwithstanding the fact that it was probably the furthest thing from the mines of the earlier pioneers, that they wanted to build a self-sustainable city with an economy that becomes independent of mining. But that's what it did. Problem is that there are a whole host of issues, legacy issues, because in those days, they were maybe not as sensitive as we are today about impacts on society and also impacts on the environment. So special capital is an important aspect. Our target is to integrate the value-add of the various capital stocks and to deploy resources in capital in such a way that value creation in one is also value creation in another. Our focus is poverty alleviation. That's what you see on the agricultural program, where we initially targeted 250 families and we've now gone through 1,000 families. And that program has been expanded to include two additions to the curricula

[Riaan Davel:]

I'm just reading from the webcast now. Should any business need to protect margin at current rand gold price? Surely, good margin can be locked in. And then it says [indiscernible] ongoing hedging program of around 20% of that has been exceptional at good hedging prices. Surely DRD can adopt this too.

[Niël Pretorius:]

Look, we studied probably one of the most interesting case studies in hedging as part of the representations that we made to our board in setting up this current instrument. And we don't think that, based on the profile of our investor, on what the investment story is, the investment proposition is, we don't believe that we should set off taking full exposure from gold price. It is a cyclical business. And whilst some of the dynamics that drive gold price have changed, we do believe that there's a balance that's restored over time. And then a hedge that looks very clever now, it just turned out to be not so clever in three years or four years from now. So we don't have a hedging strategy, we have a risk management strategy to take liquidity risk or to protect us against potential liquidity risk having assumed a new obligation. But once that obligation has been discharged, our intention is to continue to take full exposure to the gold price because we believe that, that's the DRDGOLD investment story. And that offers the opportunity to generate returns on either side of the gold price cycle.

[Riaan Davel:]

Yes, Niël, there's a question on trading volumes, are very low. How can we get interest in the stock to pick up so that overhang can be cleared?

[Niël Pretorius:]

Especially in South Africa, I'm a little disappointed. I was surprised to see that 5,000 shares can move the share price 4% to 5% which is -- it's just silly. And -- but ultimately, we tell the story, and I think it's a good story. Ultimately, what happens in the stock market is it's pretty much up to the shareholders. I can't trade every day. We're in an open period again from tomorrow onwards. And that's when I can trade, and I think the market has seen that I've reinvested in the stock. And there's no reason for me to stop because I do think it's a good story and that the stock is certainly offering some upside at this stage, depending on where you spend with gold price. My sentiment insofar as gold price is concerned is that in the long term, two, three, four, five years, it's going to start moving again, international gold price. But the shareholders are in control of the share. We're in control of the business and we're putting information out into the market, which we believe is accurate, which we believe is current. I think that the value system of this business is such that we try to maintain a high standard of custodianship and responsibility in managing our shareholders' capital. But the market is the market. We don't control the market. What we have done this last year, and hopefully that will start to assist, is change the marketing approach somewhat. Fewer of these conferences, these very expensive conferences, we have five or our or maybe 10 interviews and more on the digital platform. So we're using proactive investors as an international digital platform. Here locally or here in New York. Wainwright is also assisting us in using their platform as a way of spreading the message. Now we're reaching far more people. And obviously, this requires a slightly different approach to marketing and telling the story slightly more visual, using more imagery, our headline and then hoping that, we'd get those who are scrolling through the 500 companies that they follow. Maybe that something catches their eye and that they would dive a little bit deeper into the numbers, do a bit of analysis, of substantial analysis, extensive analysis of the business and see that or recognize, as far as I'm concerned, that it's a business on solid fundamentals, fundamental analysis. The business is on solid fundamentals.

[Riaan Davel:]

And Niël, a comment in no dividend at year-end. I mean, it says the Sibanye deal capital requirements that was mentioned in the promotion of the deal that this was not going to be affected.

[Niël Pretorius:]

Yes. So we're paying the interim dividend just before we issued the shares to Sibanye to acquire the transaction. I think one of the concerns that was raised was that we will now be immediately diluting earnings and diluting dividends. We want to make sure that the next dividend that's paid is paid from the joint revenues and that the new circuit also contributes towards that. To pay dividend now, especially now at the beginning of this capital project while we might be drawing down, I think it's artificial. We're diluting the Ergo earnings without having established a new revenue source. And what really are you saying to the market, so we're borrowing money in order to pay dividend. So yes, we paid the interim dividend. So the uninterrupted yearly dividend record that we're trying to maintain, that hasn't been interrupted. And clearly, once revenue starts coming in from the new circuit, then it, too, will pay its proportion towards earnings for the whole of the DRDGOLD shareholder base.

[Riaan Davel:]

Thanks, Niël. And a question for me. I'll just recap, the headline earnings per share dropped from first half to full year. I tried to cover it in the presentation. Let me just recap. So one of the major moves was the golding process moved, it was at 40.9 million at half year and then ended up at 24 million credit to the income statement for the full year. Net movement as a whole was almost about 57 million. Then other major movements for the two six months periods, so revenue down roughly 20 million. And then long-term incentive, short-term incentive adjustments and transaction costs close to 30 million. And then cash operating costs in the second half of the year contributed roughly 5 million, which explains the two six months periods and the impact on headline earnings, specifically. Ralph, thank you for all your questions and the interest that you show. That is all the questions that I have off the webcast. Any other questions in the audience?

[Niël Pretorius:]

So I extend my thanks to Ralph for those comments. They're usually helpful and certainly keep us on our toes.

[Martin Creamer:]

Martin Creamer from Mining Weekly Online. Niël, could you please tell me what the life of your company is now, given the new Far West Gold Recoveries project. How far does that take you? And will you be carrying out the same sort of rehab philosophy on the West Rand as you have on the East Rand?

[Niël Pretorius:]

Yes, Martin, they're different models. So the West Rand, the number three and number five dam, which we refer to as the first phase of the Far West Rand operations, that has a standalone life of 12 years. But obviously, we've undertaken to also look at the incorporation of the whole of their footprint into a much larger initiative. And that will be the subject matter of a two-year study from when we start producing. And then it could be substantially longer. If my memory serves me correct, and I think it's a 15-year model, and there's also a 18 or 20-year model, if I'm not mistaken. Jaco, you could maybe just confirm that. I see you nodding, yes. So there are different iterations, 12 years, 15 years and 20 years, Martin.

[Martin Creamer:]

And are you looking at any other assets on the West Rand that could be included in this? West Wits to still be around, you have a slight footprint there. Is there anything else that you could incorporate? Is there a lot still to come in?

[Niël Pretorius:]

Well, everything that we want to introduce -- well, the only thing that we can look at now at this stage is just what we own, what we bought. But this is not an island. Obviously, there are lots and lots of dumps around the Far West operations' footprint and many of those are attractive dumps. That whole Western Deep levels belt, the Driefontein belts, those were particularly rich reefs. And the gold content in those tailings dams show a -- the gold content is good in those tailings dams. So we certainly be -- we will -- I mean, they will feel comfortable in our portfolio. There's no doubt about that. And of course, if you could add a few hundred million tonnes, it just makes your model for a larger plant so much more -- and so much easier, the little rate drops. So the opportunity would certainly present itself. We don't want -- one of our key focus, one of our key strategic considerations when we look at these things, and once again, it might be overly conservative, but it served us well. It served us well over the last 10, 12 years, is that -- and we started the surface story, we started building the surface story, expanding on the surface story with net cash flow as a core element of the story. And we're very conscious of net cash flow per capita, net cash flow per share. So the earnings -- earnings are earnings. This fair value adjustments, they could confuse you into believing that a company is financially very strong. And I think we were all caught unawares by something similar to that a few months ago, when we used to have major corporate collapse in South Africa; or they could give you the impression that maybe something is not as strong when in fact, it is very robust and strong, which is probably where our results have fallen this year. But net cash flow per share -- money in your pocket that's what you can use to buy bread and [water]. You can't buy most with a fair value adjustment or a deferred whatever you want to call it, although we have long conversations about it. But cash is something that you can apply to build infrastructure, to build a capital base. And so what we don't want to do is -- this is not a runaway growth story where real momentum is the thing that's going to make this thing attractive. And we -- I think we will want to stay committed to our core philosophy of real value gold, actual value. And that there's underlying value that supports our business. So yes, there will be plenty of opportunities, I think, to incorporate, and we'll look at those with an open mind. And we will want to participate with those that I think share our value system and our commitment to dealing with these things responsibly. And we've made mistakes in the past. We'd probably never sell another mine as far -- when I have a say in the matter, but we would want to maybe incorporate assets going forward and collaborate with people who share our in and that opportunity will certainly be there. But it will have to be done in such a way that we don't undermine the per capita value-add philosophy that we have. So we don't want to be burning ounces on the one end because we're just acquiring ounces more rapidly on the other end. That's like -- it's like trying to sprint a marathon. You're going to run out at some stage. Does that answer your question, Martin?

[Martin Creamer:]

Yes, it does. And then just finally, could you give us a word on the yield that you'll have on the West Rand versus the yield you've got on the East Rand?

[Niël Pretorius:]

So it's a higher grade, the initial phase gives -- does have a higher head grade. So we do anticipate high yields, I think it's about 25% higher on the initial indications. But then again, this is tailings. And you'll know exactly how much you're going to make when you actually see that gold bar coming out of the smelter. So based on our past experience, based on our knowledge of this -- of the geology of this particular site, we have a fairly good idea of what we could target. And those found its way into the market update that went out last year when we announced the transaction, as part of the transaction. So I'm careful to -- it will definitely be this or it will definitely be that, but it's probably going to be about a 25% high yield. So I think at the moment, we are just under 0.2. So with that, it's 0.225, 0.25 thereabouts -- 0.25. Jaco, can you maybe give an indication, 0.25 yield, yes?

[Riaan Davel:]

That's it. Thank you, everyone, for attending. Thank you, Niël, for standing up or getting up very early this morning in New York. And that's it. That's the wrap. Thank you very much, everyone.

[Niël Pretorius:]

Thank you very much, everybody, and goodbye. Have a good day.