African Rainbow Minerals (JSE:ARI) Q4 2026 Earnings Call

0:00 Good morning ladies and gentlemen and welcome to the African Rainbow Mnrls results for the 2026 financial year. We'd like to thank everyone who's joining us online, who's joining us via LinkedIn, but a special thank you to those of you who are joining us in person. Before I hand over, just some house rules. So we will allow the presentation until the end, and then we will start with questions. We'll start with questions from the floor, and then we'll move over to online questions, and then we will conclude the presentation. Now, please help me in welcoming our founder and chairman, Dr. Patrice Mzepe.

0:42 Thank you. Thank you. Just a few brief remarks here. Deep gratitude, my personal deep gratitude. I know I speak on behalf of the board and I also know on behalf of the management to thank each and every one of you for being with us and it's very important. Phillip will lead the team with Tzu and the executive management to talk about the results. Also, my deep personal gratitude to our board members, Dr. Narko, Bongani, and Tsifiwa, and Bitsi, thank you so much for being here, and the rest of the management team.

1:31 Just as I go and sit down, two important issues. Number one is, you know, we started this company many, many, many years ago. We've got some of our partners here, is that right? Yeah. Can you whisper some names, Thabang? Because some of the partners say I mention some and don't mention others. Sorry? Esau. Who's here from Esau? Oh, Sandra. Thank you so much, Sandra. Impala, Glencoe, Valtera, Sumitomo. You know, I was in... I was in Geneva two weeks ago at a meeting of the top CEO and Chairman of the largest companies in the world, and somebody came to me, I thought a young man, and said hello to me, and halfway said to me that you are my partner. Well, we work together, and I was a bit embarrassed. You know, sometimes you've got to pretend, yeah, I'm your partner.

2:43 Yes, I'm your partner. and thank God he didn't ask me who am I. And the CEO, the global CEO of Sumitomo, thank you so much. Please pass my deep gratitude to him and tell him that it was wonderful seeing him in Geneva and the partnership and the good work that they are doing with us all and through your shareholding, the partnership in S-MENG, very, very important. As I said, two quick issues before I sit down. Every company is judged by its results. We've always known that. We have to consistently, consistently, consistently, from an African Rainbow Minerals perspective, deliver competitive results, good results. And what is very obvious is, of course, there are circumstances which are outside our control. We understand and we know that.

3:42 We are no different in that regard from every single mining company in the world. So we take the price of our commodities, and our commodity prices are very volatile and cyclical, and we also take the prices of the currency. I should say, as a South African, I love a strong Rand, and I should stop there. It's good for the country, good for the poor. And we've always said we have a broader obligation. Of course, our number one duty is to make sure that in terms of our performance, and that's why I'm so proud of what Philip and Sue and Jacques and Mareike and Tandoor and Johan and Kajal, everyone who's part of the management, Thabang and the rest.

4:35 And as I said, thanks to the board. So... Our track record must reflect that we consistently, based on what the management does, deliver competitive results in our dividends and Phillip and Sue will talk about it in terms of the policy that the board has set is competitive and world class. But the second issue which is also important is a company that behaves in a manner that reflects integrity. That reflects honesty, that reflects governance, that reflects respect for legality, due process.

5:22 It's important for us to create value for shareholders. It's equally, if not more important that we do so in a legal manner, in an ethical manner. And that is what has always been the culture of our men and all of the other The last point is we've always had a commitment to all stakeholders. We're a company that South Africa has a duty to reflect the best based on meritocracy, the best of our people from all backgrounds and cultures, black people, white people, colored Indian, and everybody else must feel that this is their company, not in terms of what we say, but in terms of Our track record and how our employees and management feel that we behave and also duty to the country jobs and upliftment.

6:20 Now, we've also agreed that there'll be no, I'm not going to answer any question and any means any. If you, we are going to focus exclusively on The results are good. Of course the aim is to do even better. Thank you all for coming. We are so honored and grateful that you are here.

7:10 And I'm going to hand over back to Thabang and she'll call the rest of the team. Thank you so much. Thank you. Thank you very much. Ladies and gentlemen, I will now hand over to Mr. Philip Tobias to take us through the presentation.

7:34 Good morning, ladies and gentlemen, and to all attendees, those attending in person and online, special welcome to our chairman, Dr. Patrice Mutsepe, and to the board members in our presence, the joint venture partners, executive leadership members, operational management, and all the ARM employees. Improved earnings once again demonstrate the value and the resilience of a diversified portfolio in a highly volatile market. ARM is pleased to declare a final dividend of R7 per share. ARM has consistently paid dividends through the cycle. Net cash improved by 54% to R10.2 billion.

8:20 This gives ARM the flexibility to pursue value-enhancing growth opportunities. All operations have and continue to improve mining flexibility. Headline earning is up 19% to 3.2 billion for this financial year. Final dividend of 7 rand per share declared. Dividends from Harmony of 512 million was received for F2026, which is up 113%. Asmang is finalizing its final dividend for the financial year FY2026. Net cash of 10.2 billion, up 54%, underscoring the strength of our balance sheet.

9:14 In terms of the headline earnings, improved headline earnings, as I said, demonstrating the resilience of the diversified portfolio. A strong rebound from the PGM operations, whilst the other divisions were largely affected by the stronger rent compared to the US dollar. By division, Amferas posted 2 billion rent, which was 42% down comparing year on year, Amplatinum 1.3 billion rents, and Amcol a 428 million rent loss. Headline earnings per share increased by 20% to 1,660 cents. The 19% increase in headline earnings was driven by the platinum division, where headline earnings for two reverse platinum mines increased by 495%, headline earnings for Mudikwa increased by 1,668%, and this was partially offset by Amferas, 1.4 billion lower, and Amkol, 475 million lower, where earnings were negatively impacted by the stronger rent.

10:32 The Amferas division was also negatively impacted by the closure of Biasuk in October 2025, where local sales decreased by 1.4 million tons. We remain committed to paying competitive dividends to shareholders whilst maintaining a robust financial position. Dividends received, we received 3.4 billion from Asman and 512 million rands from our investment in Harmony. Subsequent to the year end, ARM received a dividend of $77 million from ARM Coal and $200 million from Mudiqua via ARM Platinum, and evidence of improving cash generation across the group.

11:25 The segmental EBITDA slide demonstrates the value and the resilience of our diversified portfolio. In a highly volatile market with a significant contribution from the PGMs this year. With continued improvement in the rail performance on both the coal and the sardana lines, ferrous and coal volumes should improve over time. Maintaining a safety and a healthy working environment remains our foremost priority. We are very pleased to report a fatality-free year, a significant milestone, and our first fatality-free since the financial year 2017. It is possible.

12:13 It is doable. The lost time injury frequency rate improved by 9% to 0.29 per 200,000 man hours. Key milestones just to mention, Kumani achieved 7 million fatality-free shifts, Two Rivers achieved 3 million fatality free shifts, Mudigwa achieved 2 million fatality free shifts over 18 months period, and Black Rock achieved 1 million fatality free shifts over a period of one year. This reinforces our commitment to zero harm and to ensuring that all employees return home safely to their loved ones on a daily basis. ARM remains committed to the responsible stewardship of natural resources, environmental management continues to be embedded in the way we manage our business, and we are encouraged by the progress achieved during this financial year.

13:11 Scope 1 and 2 carbon emissions decreased by 33%, to 1.06 million tons of carbon dioxide equivalents, mainly due to reduced activity and the adoption of renewable energy at our PGM operations. Also realized a 19% reduction to 21.30 million cubes in the water withdrawn. Construction of the 100 megawatt solar plant is completed, marking an important milestone in our transition to a lower carbon energy mix. Our PGM operations began receiving up to 50 megawatts of the renewable power in December, with a full 100 megawatts expected to really be realized by the end of, by the first quarter of the financial year 27.

14:02 And a long-term, unfair decision is expected by December 2026. The slide strategy underpins our business focus, our direction, and our organizational culture. ARM continues to deliver on its strategy by operating globally competitive minds, disciplined capital allocation, decisive action on underperforming assets, and pursuing value-enhancing growth. Production by commodity Iron ore production volumes decreased by 9% to 13.2 million tons, mainly due to Biasuk mine being placed on cairn maintenance in October 2025.

14:51 Manganese ore production increased by 5% to 3.9 million tons, reflecting targeted operational and technical improvements at our Black Rock mine. PGM production was marginally lower. Two rivers came down 1%. as a result of the great deadline. And Mudiko was down 3% as a result of the open pit ore that was actually delivered to the plant to substitute plant feed with a lower plant recovery factor. The cessation of Biasuk and the closure of Cato Ridge demonstrate our commitment to take decisive action on non-profitable businesses.

15:39 The slides highlight the importance and the resilience of the diversified portfolio in securing sustainable earnings. Amplatinum headline earnings increased 204% to 1.345 billion on a stronger PGM basket prices. Amferas eased to 2 billion on a stronger rent and lower iron ore and manganese rent prices. Armcoil reported a $428 million loss on lower realized coal prices and a stronger rent. Our outlook on earnings remains positive. We remain focused on quality mining, improving quality production volumes, and mining to all reserve grades.

16:31 A strong and improved margins from the PGM business on the back of ephemeral PGM basket prices. Our decisive actions to exit manganese-alloys businesses is in line with our stated position to deal decisively with loss-making assets. The increase in PGM prices drove earnings with a segment result benefit materially from higher realized U.S. dollar prices and also positive mark-to-mark adjustment. Two Rivers and Mudikwa unit costs will improve as volumes increase. We remain focused on great improvement and quality production to support unit cash costs. We continue to focus on factors that are within our control, the cost discipline, mining flexibility, and quality mining.

17:32 PGM production at Mudikwa as mentioned decreased by 3% due to lower plant recovery from the increased processing of open pit ore and the unit cash cost rose by 8%. Two rivers production declined marginally by 1%, impacted by sympathetic geological structures affecting mining flexibility. Unit cash cost was further impacted by increased development that was realized, which contributed an additional 1% to the total increase. Volumes are expected to improve as we mine away from geological disturbances and additional phase length flexibility to be created. Capital expenditure at Mudikwa increased, driven by fleet refurbishment, critical spares, and open pit waste stripping.

18:28 Very pleased that the board approved the development of the Bukoni 180,000 tons per month project following the completion of the successful definitive feasibility study in June 2026. Bukoni hosts the second largest PGM mineral resource base in South Africa, underpinned by a world-class high-grade UG2 resource. The project is expected to deliver an NPV of 5.9 billion, an IRR of 28%, and a payback of 6.3 years, based on the capital expenditure of $15.2 billion. A phased brownfield-led approach de-risks execution and positions Bikoni below the 50th percentile of the global PGM cost curve.

19:17 steady-state production of between 350,000 ounces 6E and 400,000 ounces will be achieved and delivered at steady-state. Following the acquisition of full ownership in July 2025 at Nkomati, we streamlined our governances and accelerated decision-making, establishing a clear pathway to unlock value. In July 2026, the Board approved the recommencement of open-pit mining and nickel concentrate production, fulfilling one of the remaining conditions of the Bulletin of Take Agreement which was announced earlier.

20:02 The restart is a low risk. Immediately executable opportunity that leverages existing infrastructure and re-establishes South Africa's only primary nickel producer. The stronger rent and lower US dollar index prices for manganese ore and alloys impacted profitability and free cash flow generation. and also its volumes decreased on the cessation of the local sales to AMSA, which was followed by the placing of Biasuk Mine on cairn maintenance. Improved rail performance, taking into account the introduction of an additional shutdown. I mean, this was the first time that we had two shutdowns per annum.

20:53 Basically increasing it from 10 days shutdown to 20 days shutdown for the first time. And we did communicate that this is coming as a measure of really making sure that over a period of time, over the next years, we'll be able to catch up with the maintenance backlog that has been communicated. And also the considerable unutilized production capacity position unfair us to unlock upside potential as rail availability improves. Kumani remains our tier one asset with a long life of high grade ore. The water supply remained consistent during the year with no significant operational disruptions.

21:38 Heavy rains and more rains did also help as well, even though it has a negative impact on the production as well. Despite adverse weather, Kumani increased production by 92,000 tons Demonstrating operational resilience, unit cash costs increased by 10% on inflation and higher diesels, blasting power and labor costs. At Biasuk, management is considering all value accretive options. 1.2 million tonne offtake agreement was concluded with AMSA to sell down the stockpiles. Local sales decreased by 1.5 million tonnes for this year. Black Rock Mine increased production by 5%, reflecting the success of management-targeted operational and technical improvement initiatives.

22:34 Unit cash costs increased by 7%, driven by inflation, higher safety and compliance-related labor costs, and battery electric vehicle maintenance. Significantly, this number came down. I mean, at H1 reporting, this number was around 18%, so there was quite a lot of considered effort that went into improving the volumes and really driving this cost increase down. Capital expenditure increased by 18% on a higher development capital against lower prior year base. While unit cost sales decreased by 1% on lower marketing and distribution cost. Production at Kato Ridge Works and Alloys ceased at the end of May 2025, following the permanent closure of the operations.

23:27 Existing stock is being sold at the Kato Ridge Complex. Sakura's production until 31 October 2025 was 81,000 tons. The investment was successfully sold, avoiding significant losses and liabilities. By taking decisive actions on loss-making operations, Asmang has strengthened its financial position and set itself up for sustainability. Lower coal price and stronger rent weighed on the coal results, were partially offset by the higher export sales volumes on improved rail performance.

24:12 GGV demonstrated a strong cost performance. Stockpile levels were managed across GGV and PCB. GGV and PCB remain well positioned on the cost curve and continue to have long lives. The average realized USD export thermal coal price for GGV and PCB decreased by 5% and 3% respectively. Saleable production at GGV increased by 2%, supported by a modest improvement in Transnet freight rail performance, enabling higher production and sales. On-mine unit production costs at GGV increased by 5%, as higher diesel prices were offset by increased saleable production.

25:06 Arms investment in Harmony was positively revalued by $310,000. was positively revalued by $388 million in financial year 26 and is reflected at $8.67 billion based on the 30th June, 2026 share price. 18? 18.67 billion? Oh, thank you very much. 18.67 billion based on the 30th June share price. ARM received 512 million in dividends from Harmony. Subsequent to the year end, Harmony declared a final dividend of 750 rand per share. ARM owns 74.65 Harmony shares.

25:59 ARM remains fully committed to Harmony as a strategic investment and remains confident in Harmony and its management's ability to drive growth and value for shareholders. We are pleased with the progress in advancing the BERC project, confirmed by the pre-feasibility study as a large-scale copper molybdenum development with a 28-year life of mine. Following the top-up offering and the private placement, arms shareholding in surge increased to 19.9% on a non-diluted basis. The project is progressing now into the feasibility level studies, environmental assessment and permitting, with ARM assessing its participation through defined decision gates as it is de-risked.

26:58 ARM's key focus areas, operating globally competitive, profitable and safe mines. We are proud of achieving a fatality-free year and remain committed to achieving zero harm. On the discipline capital allocation, we'll prioritize opportunities that deliver competitive margins and superior risk-adjusted returns and deferring or rephrasing capital where appropriate. Decisive action on underperforming assets, With regard to Bukoni, the board approved the development plan. With regard to Nkomati, the board approved the restart of the mine and the divestment of Kato Ridge and Sakura.

27:45 Maintaining a robust balance sheet by generating profits, reducing costs, and deferring non-essential capital expenditure whilst running our current portfolio of assets profitably. Pursuing value-enhancing growth, the phased development of Bukoni, developing Komati's open pit operations, strengthening copper exposure through Search Copper, and implementing the phased approach also to our Merensky Restart. Collaborating with key stakeholders to optimize logistics and infrastructure constraints, including rail, port, and water recovery. and private sector participation on the Kebecha and the Saldana export corridors.

28:37 With that, I'll hand over to Tzu, who will come and take us through the capital allocation. Good morning, everyone. Chairman just asked that I also recognize André Joubert. He says he forgot to recognize you earlier. Hello, André. So during the year, we prioritize investing in our existing businesses. and we invested around 2.5 billion during the year and if we look at it on a segmental basis that comes to around 4.9 billion and that would include our attributable portion of Capex and the Asmang operations.

29:35 So in terms of how we allocated capital, we allocated capital to the deepening of declines, fleet refurbishment and replacement, to infrastructure and waste stripping at our open pit operations. During the year, as part of our capital allocation, we also sought to grow our existing business. So this is evidenced by the recent announcements we made that Phillip referred to being the Bukoni 180 KTPM development project and the restart of operations at Ngomati. And both of those projects, we are confident, will enhance shareholder returns. We remain committed to declaring dividends and returning capital to shareholders, which we continue to demonstrate in the form of the seven Rand final dividends that we've just announced.

30:36 This slide illustrates how We generated cash and how that cash was allocated during the year. If we look at the cash generated by operations, we generated 4.2 billion, which is a significant increase in the cash generated specifically by our ARM platinum operations compared to the prior corresponding period. So last year, same time, we generated cash of 45 million, 45 million versus 4.2 billion, quite a marked increase. and the cash generation also takes into account an increase in net working capital of 803 million. In terms of dividends received, we received dividends 3.4 billion from our S-Mang JV with SO, which is 1.1 billion lower than the dividend received in the prior corresponding period.

31:34 During the year, we also received dividends of 512 million from our investment in Harmony. If we look at how we actually applied the cash that came in, So we paid our tax to the tune of 445 million. We invested 2.7 billion in capital expenditure, which was the largest cash outflow in terms of our cash flow statement. And in terms of our CAPEX, it's relatively consistent with what we spent in the prior year. The majority of that spend was for stay in business capital, totaling 1.5 billion, of which 718 million was spent on mine development at Bugoni and 524 million was spent deepening the declines at the main and north shafts at Two Rivers.

32:34 Okay. If we look at our net cash, our total borrowings during the year decreased by 1.9 billion to a balance of 157 million as at the end of June 2026. The decrease was due to the repayment and settlement by Two Rivers of its term loan and revolving credit facilities, which had been taken out by Two Rivers to complete the Mariinsky plant. Now, despite that, ARM still has a relatively low interest-bearing debt from a group level and closed the year at a net cash-to-equity position of 16%. The capital expenditure for the reporting period was covered by Phillip in his sections, but I will just highlight a couple of things.

33:32 So segmental capital expenditure on an attributable basis, this is segmental, was $4.9 billion. for the year under review, which was 880 million higher than last year. So most of this was spent, as you'll see there, 2.8 or 2759 million, 2.8 billion at our Arm Platinum operations, 1.8 billion at our Ferris operations, and 299 million and our coal operations. In terms of the unfairest capital expenditure, it includes capitalized waste stripping costs of 400 million. That's on a ASMA 100% basis.

34:17 And last year, that figure was at 848 million. If we look at the guidance for 2027, 2028 and 2029, so if we look at 2027 firstly, it shows an increase of 2.1 billion and increasing to 7.2 billion. Now that is compared to the guidance we had communicated in March, wherein we expected that the 2027 CAPEX would be 5.1 billion. Now the reason for the increase is obviously due to the approval of the new projects, namely Bugoni and Gomati that have now been brought into the guidance. So Bugoni project capital between the period 2027 to 2029 will come to about 8.4 billion just for those three years as the project ramps up.

35:15 Also included in the capital guidance are waste stripping costs at our I&O operations, which increased to $1.3 billion on an attributable basis in F-2029. Thank you very much. Okay. And then sorry, just an addition from Chairman. So he then also said, feel free to ask anything ARM related. So don't have to restrict it to the financial results, but as long as it's ARM related. Thank you very much. Thank you, Philip. Thank you, too. We'll start with questions from the floor.

36:01 Do we have a question? Go ahead, Brian.

36:07 Excuse me. Thanks very much. It's Brian Morgan, RMB Morgan Stanley. Just a question on Medecwa. If we could just dive into that a little bit more. Last year you started milling opencast material through the concentrator. I always get a little bit worried when mines do that, because it tells me that there's not enough coming from underground. You are spending a bit more money, but it doesn't look like a lot of money at Medequa. Could you just chat to us a little bit about the way forward there? The guidance is about a 10% lift in volumes over the next three years. Can you give us a little bit of color there just to give us a bit of confidence that that's actually going to materialize?

36:53 Okay. Brian, do you have another question? We're going to take three questions at a time. Thank you.

37:09 Good morning, it's Thabang Thlaku from NetBank CIB. Just a couple of questions from me. I think the first one is on, I guess, the valuation of the company. If one takes into account your harmony proportion, your S-Ming attributable net cash, as well as also your net cash on the balance sheet, I think that accounts for over 90% of the valuation of the business. So could you just take us through as to what your thinking is with regards to the undervaluing of your PGM assets and what is management planning to do about that? So that's the first question. And then, just with regards to your Federalist Division, even though perhaps Transnet did a bit better in the period, it doesn't seem to translate into some of your export sales volume numbers.

38:06 Could you just talk to us as to what perhaps could have constrained your export sales? Thank you. Thank you, Tobela. Okay, we'll deal with those questions. Yuhan, can you please deal with Brian's question on Mudigwa? Yes, certainly. Good morning, everybody. Yes, your observation had been correct. We started producing opencast as a result of the lack of flexibility from the underground UG2. Now, we had been suffering on the development side for quite a few years. We have, however, turned that around. So compared to last year, I just want to give you an accurate figure. We've done 2,000 meters more in terms of development this year than what we've done last year. That is a 28% improvement in the development.

38:57 So the open cast is essentially a gap filler. As soon as we have adequate reserves available from underground, we will switch back to underground. I must also add that the opencast at this stage is profitable. The grade is higher than the underground grade. This area is closer to surface where it's oxidized. You see lower recoveries than typical, but it makes good business sense to produce the opencast. Thank you. Thank you, Johan. Phillip, will you take the question on the Harmony issue and the undervaluation of our PGM assets?

39:39 Thank you very much for that question, Tobele. I think firstly just to acknowledge that we are a diversified portfolio, a conglomerate and not necessarily A pure player, to a certain extent you do have that conglomerate discounting that you operate at. With regard to the undervalue of the PGM, I think if you have a look at the period, I would say over the past three years, you would remember that we've really mentioned on the performance side that there has been some constraint, especially on the two rivers. We mentioned that we're going through geological features, we're going through fault structures. As a result, the operation has not really been Thank you very much.

40:49 We brought in that gap filler and you remember that last year we took a decision to put the South One shaft on can maintenance because it was not economically viable. So with that, one would say There's still areas of opportunity on the performance side, on the PGM side. We're not really on that full output. So we do believe that also with that, optimizing the performance to a certain extent, we'll also be able to sort of really unlock that value and be able to uplift the valuation on that. And then, yeah, I'll stop there. Okay, I'll come back to you guys if you have any follow-ups on that.

41:36 And then Marijke, could you please take the ferrous question? Yes. So, under iron ore as well as manganese railings, we did result better year on year, specifically within ferrous, on iron ore 2%, year on year better railings, and 4% on manganese. The total system delivered 1%. What is positive about that is we had two shutdowns, so we in effect had another 10 days out, but the result of that another 10 days out had a positive impact in more railings towards Saldana. However, it's a very good positive for Ferris, but it is not only indicative of the maintenance. We did receive several trains that were allocated to us due to and other mining companies and emerging miners that could not take up the capacity allocated to that, and that really assisted us, where Kumani railed 12.6 million tons versus the 12.3 of last year, and Blackrock railed a 3.8 versus a 3.68 of last year.

42:51 So it is a short-lived increase because the sustainability is not there. Due to the maintenance on the line having to be prioritised, having to be attended to, which is going to take time for the industry to up. And obviously that is our main target. For our business, manganese and iron ore, we need volume. Thanks Marika. Brian and Tovel, I just want to ask if you have any clarifying or follow-up questions. Yep.

43:29 Sorry, just to press you a little bit on Medecra. I'm still not entirely clear how we're going to lift those volumes from 10% from where we are today to 2029. It's not a mine that survives through the cycle. It gets cross-subsidized by the other mines. Is there a way that this mine can stand on its own two feet? Or is it just, this is always going to be a mine that struggles through the cycle? That's just a clarification on that one. Maybe just to be cheeky, just add another one, if I may. We heard from Impala yesterday that the Marinski Reef at Two Rivers hasn't been board approved. I would have thought in those price environments, and it looks like an attractive project from our perspective, that it would have been. Maybe just some comments from your side on what's holding that process up.

44:27 Thanks Brian. Johan, can you please answer that again and then on Marinski I'll ask Jacques to answer that one. Broin used to clear up The key issue at Modikwa had been availability of stoping areas. So through the additional development we're doing, we are opening up additional stopable reserves. We also invested money in Real enabling structures, infrastructures, so we're pushing the deadlines deeper and as you push the deadlines deeper you can move away from the upper levels with a longer trailing distance. So we've introduced level costing models, we can have a look at the profitability of every level if it's making sense, we will continue to push it, if it doesn't make sense we cut back.

45:20 But we're also looking at other things that helps us to get better results. You look at the cost control, the cost had been very close to budget, the actual expenditure. The volume had been the thing that impacted on the unit cost. We've maintained the grade very well, so grade control is absolutely well controlled. In the concentrator we are doing a lot of additional work to push up the recovery. We've looked at statistical process control so we know where the sweet spot sits in the concentrator and we've also started investing money in advanced process control so that you automate the adjustments in the process and that you ensure stability in the concentrator.

46:11 So I'm very confident that looking at the team we have, looking at what we've achieved compared to what we planned, we are on the road to success at Medecor. I must also mention that in the past we had some issues with instability in the community. That is something of the past. The communities are very supportive. Labour relations are very good at Madikwa. It is a good team and you will see the success coming from Madikwa. Thank you sir. Thank you. Good morning, everybody. Good morning, Brian. On your question with regards to Two Rivers Marenski, that project was placed on care and maintenance in August 2024.

47:01 Since then, we have invested resources to better understand the geology based on the info drilling that we have done. So a revised, updated block model was completed, as well as analysis of the 1.2 million tonnes that we did mine during the Mariinsky project itself. And that then informed a restated feasibility study restart plan that was completed in May this year, in 2026. The outcome of that was that to ensure the optimal mining cut, we are transitioning from high profile fleet to low profile fleet to provide a bit more flexibility for the teams to be able to follow the optimal cut, which we do believe will provide us with an increase in grade. and the overall outcome of the feasibility study was positive. It exceeded our hurdle rate.

47:53 So what we have, what the Tour of Us board has approved with both partners in last October, we recommenced with the Mariinsky decline development and by June this year we've deepened it from four level to five level. That development crew for the decline development has now transitioned to a stoping crew. and we'll introduce a second stoping crew in November. It's progressing very well. In July we had one stoping crew at 22,000 tonnes and last month in August at 23,000 tonnes. And the emphasis over the next couple of months is to really just see the changes that we've done in the mining cut as well as the low profile fleet that we've introduced, what sort of grade can we achieve out of it.

48:43 and the plan is going forward that was approved is in March next year we'll introduce another sinking crew. Going forward We would progressively ramp up the stoping crews to a total of minimum requirement of six to be able to get 120,000 tons, which is the minimum required to restart your Mariinsky concentrated plant. We anticipate that we'll reach that level in about two years from now. In the meantime, the stocks that Mariinsky's stoping crews are generating, we are milling a portion of that through the UG2. We have also recommissioned the crushing plant of the Mariinsky circuit, which can crush finer than the UG2, and that increased our ability in terms of processing Mariinsky through the UG2 concentrator plant by about 10%.

49:35 Overall, the Mrenski project is looking quite positive. We are taking a disciplined, staged approach in terms of how we ramp it up. The key intention is that we need to get through that minimum 120,000 tonnes sustainably per month before we can recommence and start up the concentrated plant. Thank you. Do we have more questions from the floor?

50:04 Good morning. I'm David Rochekelly from Phoenix Research. First of all, I'd like to offer congratulations for your fatality-free year. That's always a great achievement. Congratulations. Secondly, I see that Bocconi, you're mentioning a number of 15 billion. That's a long time since any of us have seen something over 10 billion. So that's a big number. If anyone would like to say something about that, it would be much appreciated. And then just some small detailed questions on Madikwa. As per your previous announcements, the Ventshaft at North Shaft, is that finished now?

50:51 And secondly, your underground-to-surface conveyor belt at South 2, is that commissioned? And I see that you want to go up to 100 kilotons per month there. So just those two questions. Thank you. Okay. Johan and Jacques? Yes, I can go for the Madikwa one. The ventilation shaft at North Deetline had indeed been completed. We've picked up a few issues with water ingress closer to surface. That had been sealed properly and the shaft is functioning the way it had been intended to. Ventilation conditions at North has improved significantly.

51:40 Then the BA belt at South 2, that is due for completion in October. and that will also take pressure off from the overland tramming at South 2. Ramping up, ideal, yes, to go to 100,000 to 120,000 tons, but that is being delayed by the sinking operations. So with a focus on development, we will see that sustainable build-up at 2 shaft. Coming to the Bocconi project, you're quite right, R15 billion is a substantial amount of capital and that's certainly not an investment that the board has taken lightly.

52:25 But we do believe, if you look at the quality of the asset and the return that that asset through the cycle will generate, it certainly justifies that capital investment and it will generate very good returns for shareholders. I think if you look at the quality of the asset, and it's something that we have reiterated many times before in terms of the grade of the asset, focusing specifically on UG2, as well as the lower mining complexity of the UG2 relative to the Mariinsky that was mined before, we do believe that we can deliver a consistent superior grade into the mill relative to other mining operations. What that enabled you is that for a relatively lower volume at 180,000 tons with that higher grade feed into the mill, we can produce 350 to 400,000 ounces per year which is actually higher than what two rivers currently produce and have to mill more than 300,000 tons per month.

53:25 So all of those qualities combined then ultimately lead to a steady state, a very Thank you very much. So that even during periods of difficulty, where the PGM prices are lower, that you can still sustainably generate profits for the shareholders. It's a long-life asset, it's a high-grade asset, and we believe that with the appropriate capital investment, after a lot of rigorous work that we have concluded over the last four years, that it is an excellent project, and we've got a very high confidence level in our ability to be able to execute on that project.

54:23 It will generate very good returns for shareholders. Thank you. Thanks, Jacques. I don't see any more hands up on the floor, so we will move on to Capcom questions. So I will read two questions from Tim Clark and then from Cheng Yue, and then we'll address the invested questions later. Tim says, good morning. Please may I ask how you think about capital allocation going forward, balancing quite a deep list of cash requirements for Bogoni, 15 billion, Ngomati and Surge Copper, 3.7 billion US dollars, and potentially capital for Mundiikwa. And then his second question is, please may I ask how you think about potential synergies with Kumani and Sishun?

55:11 and if you see an opportunity for realization of these synergies. So two, I'll ask you to answer the first one. And then the second one, is it going to be Phillip or Mareika? Phillip, okay. And then the third question comes from Hingwe Mutawun from Dow Jones. Thanks for the presentation. How is ARM navigating the high iron content on the manganese product? Mareika, you'll take that. Thanks for the question. Thanks for the question, Tim. So I think in terms of capital allocation and the number of projects that we'll be embarking on as a company, I think what is important to realize is that all of these projects are not going to be happening at the same time.

56:05 So they will be phased. So let me just give you an example. So you have Bukoni. Yes, you've got a 15.2 billion bill, but that will be spent over seven years. So with the majority of the spend being in the first three years. and then it tapers off to basically nothing come year seven. In terms of how we plan on funding Bugoni, that would be a mixture of cash as well as cash generated by Bugoni itself. And that cash that is generated by Bugoni then also contributes to the peak funding of the project dropping. So instead of that 15.2 billion capital bill, the peak funding is actually only 10.2 billion.

56:54 And then obviously as Bukoni ramps up, that cash generation comes through, and therefore it then is able to then, that cash be divvied out to the shareholders. In terms of Ngomati, Ngomati, very low capital amount. The infrastructure is there. So that bill is not a lot. We're looking at 1.9 billion to be spent Over the next two years, but very quick payback period. And so then, again, that cash then will be generated. And we don't foresee issues there. Surge is a bit long dated. Surge copper, I think, is the other one that Tim mentioned.

57:42 So just to remind you, we hold 19.9% of surge. So the pre-feasibility study results that we showed was on 100% basis. So you need to look at What we would be in for as a 20% shareholder. In terms of the expected expenditure or requirement for us to put in our portion towards the project development costs, that's only expected to come through 20, financial year ending 2030 and 2031. Those amounts are around 2.2 for each of those two years. Again, by that time, Bukoni would be generating cash, Ngomati would be generating cash.

58:34 So, there isn't, I would say, we're quite cognizant that it is very important that these Thank you very much. And just to clarify, that 2.2, it's in rands and not US dollars. Yes, it's in rands, 2.2 billion rands. And then Tim also just asked on Mudiko, do you perhaps want to touch on our planned capex for Mudiko?

59:22 I mean, it's just normal run of business there. Yeah, so it is maybe in terms of the amounts, and then I'll speak to possible methods of funding. So in Madikwa, the capital guidance, it's just over a billion rand on 100% over the next year. It's primarily focused, as Johanna's correctly, there's a big focus currently on development performance to increase that, so that we can ramp up and increase our underground production levels over the next three years. We have seen a 46% improvement in year on year production. and going forward we would like to carry that momentum forward.

1:00:08 So the majority of that money is spent on the development increase as well as trackless fleet, TMM fleet required to support and increase that development. In terms of how it will be funded, it will be funded by cash that is generated by its own, by the actual operation. So for Mudigwa that will not require any type of external funding. and the estimate right now is actually it won't require any funding from from the shareholders either. Thank you too. Sorry, Thabang, if I can just put one correction on what I just said. The Two Rivers was a 46% improvement, Medicoil is 28%. Thank you. We don't want to mislead the market. Phillip, on potential synergies with Session and Colomela.

1:00:57 Thank you very much for that very good question. I mean, if you look at our operations in terms of Kumani, and Sishen. I mean, those are basically, one can say, next door neighbors. And we all basically challenged with cost, increasing cost challenges. Is there potential value that can be locked, synergies with most probably collaboration? I think the answer is certainly there is a potential, but at this point in time, it's not something that we... Thank you very much.

1:01:57 Should most probably the opportunity come away in the future, it's something that is worth really exploring. But potential opportunity unlock from any neighborhood, I mean, there's most probably that opportunity of value unlock. Thanks, Phillip. Marika, do you want to talk about the high iron ore content in our manganese? Yes. So, for starters, sure, the gods are coming down on us. We do not have a general high iron ore in our manganese. We're going through a specific batch in Sim 1, which has got a higher Fe, iron ore. In the application of manganese in smelting, it is not about a high, the iron ore, it's the ratio, the manganese iron ore ratio. So we have with one specific client received some complaints and what we've done with that specific client is to implement a value and use based blending application where we use special low grade which we call R5 which then brings down the MNFE ratio and then still allows our customer to get the same benefit in the smelters.

1:03:15 So it's definitely, I just want to clarify, It's not a general thing. It's just the pocket we're mining through. Thank you very much, Marika. I'm just going to scan the room quickly to see if there's any questions on the floor. No? Okay. Then I'll move on to Ndebohang Sokhone from Investec. Marika, these questions are for you. So he's saying on iron ore capex, FY27 guidance has come down by around 10% versus the previous guidance. But FY28 has increased by around 23% and spend remains elevated into FY29. Can you unpack what is driving this elevated capex cycle? More importantly, should we expect this higher level of capital intensity to continue beyond FY29? So that's his first question.

1:04:05 With Kumani unit cash costs up 10% in FY26, particularly reflecting higher diesel and other above inflation cost pressures, and the iron ore business entering a relatively capital-intensive period, how are you thinking about cost reduction across the Ferris business? Particularly against a muted commodity price outlook and a stronger end, where do you see the key opportunities to structurally lower the cost base and protect margins? Okay, thanks Thabang. So let me start with the increase in capital. The increase in capital is due to KM15. It's a specific bit that we need to strip, which we're starting to strip this financial year.

1:04:50 It's got a stripping ratio of over six. and about a reserve of 70 million tons of very high-grade iron ore. The stripping is starting this year. So the year that we just finished, we had a stripping ratio of 2.26. Our average stripping ratio is 2.86. We're moving into this year's stripping ratio to 2.4, gradually up, and the next five years, average stripping ratio is going to be 3.4. That's the reason for the capital increase. It was planned. It's always within the life of mine of Kumani. And you would also see that's why Kumani's year on year capital went up by 7% because of fleet replacement. We were getting The operation ready, getting in the new fleet, as well as on the cost question, I just want to answer one thing in this section. We decided not to buy new equipment and rather use Biasuk equipment. So we moved that over.

1:05:50 So we had quite a bit of a cost saving there. With regards to the next five years, the answer is yes. Thank you very much. As we've communicated numerous times before, 33% is within our control. So within that 33%, we've got an extensive efficiency project called Boka Mosa, where we are targeting, targeting, reducing of cost the best as we can. Secondly, we're focusing on get more volume.

1:06:50 So when we get the opportunity, as we've gotten this past year, we will export more volume, and that will assist us during this five years. And lastly, I also just want to say, yes, it is a difficult market for iron ore, but Kumani's got a niche market. We've got a very high-grade ore. And secondly, the lumpy premium is really benefiting Kumani, as you've seen it sitting at $18 a ton. Thank you. Thank you very much, Marika. We've got two more questions on CorpCam. From Shashi Shekhar, who's from Citibank, are there any plans to increase ownership in the Surge Copper Project?

1:07:35 And the second one is from Klingu Mataung again from Dow Jones. Seeing flat volumes at lower earnings on manganese, can you elaborate on challenges you experience there? So I think Jacques, you can take the Surge Copper question and then Marie-Claire will answer the second. Certainly. Thank you Thabang. Surge Copper certainly has got the potential to develop in a tier one world class copper asset. It's a long life open pit asset with significant byproduct credits. If you look at the molybdenum, silver and gold The contribution in that pays for the total operating cost more. So it's actually got a negative C1 cash cost once it's in operation. So your copper that you produce essentially comes for free.

1:08:25 The volumes also and the work that the search team has done, it's become a much larger project. So total copper production for the first five years has gone up from copper equivalent from 120,000 tonnes to 200,000 tonnes. However, with that, there has been quite a big increase in capital cost as well, going up from 2.1 billion Canadian to 3.5 billion Canadian. So it's certainly a big project. We currently have 19.9% interest in Surge Copper, which is the limit in terms of the rules on the Toronto Stock Exchange where Surge Copper is listed. to prevent you from becoming a control person. And what that means is if you want to go beyond 20%, you've got to make an offer to all minorities to acquire it. Currently, we're very pleased with the work that the Surge Copper management team has done. We really think they've done excellent work up until now, and also they plan going forward now with the submission of the environmental approval process, which is a big milestone that they plan to do over the next couple of months, as well as the completion of the feasibility study, which is essentially their DFS.

1:09:33 and that is all planned to be completed over the next three years with the environmental assessment in British Columbia taking the longest period of time there. There's no fatal flaws that we've identified in that EA process. They've got a very good relationship also with their First Nations engagement and we anticipate that that work would be completed by 2030, 2031. For us to be able to, as ARM, we always pride ourselves firstly as a mining operator, which has got a big contribution towards the actual management and operation of the mines. And certainly in time to come, we would consider how it's possible for us to go beyond the 20%. But at this stage, given the capital priorities and development in our platinum portfolio that we are focusing on, it's not something that will happen in the near term.

1:10:26 But at the appropriate time, I think closer to completion of feasibility study as well as the environmental approval process, we would see from a strategic point of view working with the Search Copper team in terms of how we can be involved in the further development of that asset. However, given the significant capital size of that asset, it will most likely be in some form of joint venture. At this point in time, the capital would just be too much for us to consider 100% basis as arm. But very pleased with the progress done to date. The asset is actually surprising us on the upside compared to our original investment case. And it's looking very promising going forward in metals that are continuously going forward in significant demand. Copper, molybdenum, silver and gold have got a very much a positive demand outlook with regards to the energy transition and critical metals worldwide. Thank you.

1:11:19 Thanks, Jacques. So I think the short answer is we will decide in future as to... That's right, yes. Thank you very much. Marika? Yes. So on the manganese, firstly, I just want to say we are extremely proud of BlackRock. We had a 5% year-on-year increase in production, 7% year-on-year increase in cash costs per tonne, which is excellent. And it was mainly because of inflation, and Philipp has said then, The other 3% was diesel. Diesel explosives and freight, and then the compliance portion. So then the question on volumes remaining flat is pertaining to export volumes, if I listen to the question. So yes, the export volumes was 3.66 this year, 3.66 million, versus a 3.7, so about a 50 kiloton difference.

1:12:15 However, the earnings was almost 200 million lower The reason for that is twofold. The first reason is the stronger rand. So the rand came in at 16 rand 88, which was 7% stronger year on year. That had a huge impact. But the second impact that is more material for BlackRock is the high-grade manganese pricing. On your 44 lump and your 44 fines, the index price year on year was 5% lower. However, the realized CIF pricing for lumpy on the 44 grade was 11% lower and on fines was 7% lower. That impacted us materially. However, we have gone through our commercial team and did some extensive work to look into the future and we foresee a stabilizing In that price and a growth in that price. So we do not expect to see it in this year again. I hope that answers the question.

1:13:25 It does. Thank you very much Marika. And I guess we'll always be constrained by rail when it comes to BlackRock. And so those are the constraints we have to work within. I do not see any more hands from the floor and I don't have any more questions from Capcom. I want to thank you all for attending our results again. Please just note, for investors and analysts, we will be having a roundtable, as we usually do, at 2 p.m. We look forward to hosting you to answer your more detailed questions and modeling questions. And thank you to the management team for doing an excellent job. Before I conclude, I'd like to hand over to our chairman, Dr. Patrice.

1:14:06 Sorry. There's nothing to hand over. Thank you. I think that's the best outcome. Thank you everyone. Join us for lunch.