Anglo American (LSE:AAL) Q2 2026 Earnings Call

0:00 Okay. Well, good morning, everyone, and welcome to our half year results. And as some of you know by now, over the years, my tradition is to kick off the full year results. I don't normally come at half year, but there are a couple of reasons why I wanted to introduce today, and I'll come back to those. But as ever, let's start with safety. And I must say how delighted I am and all of the Board are for the excellent progress that we're making and the safety improvements, which are have been coming through in the last couple of years quite strongly. I know this will continue to be at the top of mind of Duncan and his team as he moves on and as he takes over indeed the helm at Anglo Tech in due course.

0:47 I'm also very pleased, as I hope you are, that with the solid performance of the current business and the benefits of our major portfolio restructuring, which is starting to come through in the numbers. So returning now, why do I want to introduce this session, albeit briefly? Two reasons, really. Firstly, if things go to plan, which I'm pretty confident they will, the close of Anglo American's merger with Teck to form Anglo Teck will happen. And this could mean, therefore, if the timing is as we expect, that it will indeed be my last chance to introduce. So that's one reason. The second reason is I did want to say just a couple of things about AngloTech and enormously exciting endeavor, which is going to bring really strong benefits to all of our respective shareholders and eventually collective ones and all of our wider stakeholder groups. I have spent nine years as Chair at Anglo, and I will be handing over that baton to my oppo at Teck, Sheila Murray, and on the closure of merger, of course, not before.

2:02 But I'd like to say just a couple of things about Duncan, our CEO, who will become CEO of Anglo Tech. Now in him, we have a CEO, which I can tell you is utterly determined to deliver all that he has laid out for us and will set out to deliver over the next several years and indeed delivering on all of the cost and the industrial synergies, which we have already announced to you. Post closure, I'll be watching from the sidelines as he does that, and how we'll, of course, he'll be ably supported by John as the CFO and Jonathan Price, who will join the, as previously announced, Duncan's executive team. That's all from me. Thank you very much for your continued interest in all that Anglo American is doing.

2:54 Let me now hand over to Duncan and then John to take us through the results today. Duncan? Thank you, Stuart. I am indeed very determined to deliver this. Right. Good morning, everybody, for those that I haven't seen outside. It does, of course, continue to be a very busy time here at Anglo American. And I think the overall headline is that we have made yet more progress on our operational, our financial and our strategic plans over the last six months. We delivered another period of solid operational stability, and that translated into operating results being on plan across the business despite a number of external challenges, particularly related to weather.

3:52 Market conditions were pretty tough in diamonds, but De Beers delivered a very robust operational performance, and our steelmaking coal business continues to make great progress with higher production rates now bedding in at Moranbah. We also made progress on two of the lowest capital intensity copper opportunities of scale in the industry, and we received final approvals for the Los Broncesandina joint mine plan and have now advanced early stage preparatory work for the integration of Coyoacci and Quebrada Blanca. In terms of our strategic plans, we took a big step forward on the outstanding portfolio work with the announcement of the sale of our steelmaking coal business to Dilma for up to $3,900,000,000 We continue to pursue the sale of De Beers, and I'll come back to that a little bit later on in the presentation.

4:44 The planning for our merger with Teck has been moving ahead well in parallel. And once we receive our final approvals, the two companies will come together to become a strong global mining champion with a compelling set of lower cost, long life copper assets alongside high quality iron ore and zinc. This will be a company with a track record and the resources to grow the supply of the metals and the minerals that the world is counting on for decades ahead, led, of course, by copper. Now safety remains the foundation of absolutely everything that we do at Anglo American. While our injury frequency rates have stayed at record lows, I believe that there is still room to bring them down further by focusing our activities on planning, raising our standards and, above all, getting the critical actions right.

5:38 This comes down to leaders being visibly pleasant and engaged on the ground, and we're working to embed our safety culture even more deeply with more active control checks out in the field. Now on safety, we can absolutely never be complacent. No matter how good the results, there is always room for further improvement. Turning to sustainability. We launched our updated sustainability strategy and targets for the simplified portfolio in February of this year, and we're now embedding that strategy and the businesses' progresses are making good progress to delivery against their plans. We are beginning to start to see now the benefits of a model that balances group level ambition and direction with locally relevant targets tailored to the priorities of each of our underlying businesses.

6:28 This approach allows us to deliver consistent outcomes at scale while creating value and driving tangible impact and value on the ground in our countries of operation. We are now three years on from moving the accountability of our assets performance closer to the site. And the evolution of that operating model is an important driver in consistently achieving our production targets. We also kept costs under control despite inflationary pressures stemming from the knock on impacts of events in The Middle East, and John is going to unpack those costs for us just a little bit later on today. The copper business produced 344,000 tonnes in the first half, and we're bang on track for our full year guidance of 700,000 to seven and sixty thousand tonnes with higher volumes half on half to come from both Coahuasi and Quehuaco.

7:25 Los Bronces was a real highlight for us. The restart of that second plant has added profitable tonnes, and the mine is gaining more flexibility with each quarter. In May, the permit for the desalination plant at Coahuasi was set aside by an environmental tribunal, five years after it had been granted. Production, however, from Coahuasi has not been affected because we are current because we do currently have access to alternative water sources. We are hopeful that a review of the environmental assessment services or the SCA's decision will allow us to restart the ramp up of that plant later on this year. We do continue to work very hard with the Chilean authorities to make that happen.

8:12 Still at Coahuasi, the team is managing the variability as we transition through the lower grade and oxidized stockpiles. And indeed, the recoveries have improved in the second quarter of the year. The mine is on course to access the fresh ore from the fourth quarter, which will be an inflection point after two years of limited flexibility. Now next year, the mine plan is characterized by much higher grade benches, but also some more complex faulting that we will need to navigate. But the mine has worked through this many times before, and we remain confident in our '27 and our 28 copper guidance. Beyond that, this ore body has so much potential, and I'm going to come back to that a little bit later on in the presentation. Quellaveco remains the leading contributor of cash flow to the group, and it is great news to be able to report that we have now paid back the initial investment that we made in building that mine.

9:10 They had another very strong quarter. Recoveries have picked up well, and we've also benefited from very healthy byproduct revenues there. Our iron ore business posted another period of steady performance despite some big challenges with higher costs from both diesel and freight. Performance at Kumba was notable insofar as it had to manage through some of the highest rainfalls that both the mines, Cision and Columella, have seen in decades, and they suffered that over April and May. Over in Brazil, Minas Rio continues to have some of the highest productivity rates that we have in the group. Now one of the management team's main priorities since the start of this year has been working with Teck on planning the integration for our merger.

10:01 We are cracking on at pace here with all of that integration work, and there is a lot of work to do, as you can imagine. We're particularly focused on getting the business position to stand up on its own on day one post closing and getting ready for the two new listings in New York and Toronto and all of those associated regulatory processes. We set up an integration management office very early on, essentially a team of senior leaders from both companies that can work closely with me to drive the planning and the state of the readiness forward. They have done an excellent job so far, and we still have plenty to do, of course, but I'm very confident now that we will hit the ground running on day one. As the combined portfolio comes together, we will be ready to realize the material value and the synergies that we have identified, and I'm clear that all of the assets can play a meaningful role in doing that.

10:57 As far as the future growth path is concerned, we will get into that once we have full visibility of all of the information of both companies post completion. Clearly, that's not possible to do given currently given the antitrust and gun jumping rules. So in terms of what that means for market disclosure going forward, we'll start out with the details of the essential architecture that we need to manage the business from day one and then get through the more detailed planning that is enabled by full integration. So the initial disclosure will likely cover organizational structure, the group's key financial policies and accounting as well as the disclosure frameworks. We will then update the market in the ordinary course thereafter and continue to evolve as we have more information.

11:44 On the timing of completion, the final regulatory approval we need is, of course, as everybody knows, from China's State Administration for Market Regulation, or SAMR. And we've been continuously engaging with them and cooperating with them over the last six months. We are of the view that the formation of Anglo Tech can only be positive for increasing global copper supply, and it is, therefore, also a positive for our customers. We believe that we will be on track to complete later this year or early next as we announced at the outset of the merger. I am conscious that many of you are going to have loads of questions related to the detail of these interactions and what that might mean. But as I'm sure you can appreciate, this is a confidential process and a really important one, and we don't want to misstep anything in the way to getting these final approvals. So I'm afraid I'm really not going to be commenting anymore on that at this stage.

12:44 As I mentioned, we have moved forward on the portfolio transformation. The sale of our steelmaking coal business to Dilma for up to $3,900,000,000 was an excellent outcome from a highly competitive process that gives us both cash upfront and the ability to participate in price upside over the coming years. We are working towards satisfying all of the closing conditions and targeting close by Q1 of next year. On nickel, we are continuing to work through the EU antitrust process on the proposed sale to MMG for up to $500,000,000 This has taken a lot longer than we had anticipated, but we now have some positive momentum following that protracted delay. And we believe that there are no market supply issues that arise from this transaction and supply has increased and diversified, in fact, further since we agreed this deal.

13:37 And so we are optimistic now that we will receive this final regulatory approval and complete in the coming months. Now that takes me on to the last leg of our portfolio transformation, which is the sale of De Beers. Now the team there has been working incredibly hard in a terribly complex environment over the last few years to achieve a responsible separation of that business. And I am pleased to say that things are advancing. That said, we are now in the final phases of our process, and that also is the most challenging phase of our process given the number of parties that we need to take along to the final point and get signing of the final agreements. Our focus remains on bringing this process to a conclusion within an acceptable terms during the second half of this year.

14:29 And with that, I'll now hand over to John, who will take us through the financial results. Thank you, Duncan, and good morning, everyone. I'm once again pleased with the financial performance for the first half of the year. We remain on track to deliver our annual production guidance. We've managed costs well in what's been an inflationary environment, and we further strengthened the balance sheet. As we continue to progress through our portfolio transformation, the financial reporting, of course, remains complex. As we've done at our recent results on this first slide, I've set out as simply as possible the basis on which our numbers are presented.

15:18 As a reminder, our continuing operations include both the simplified Anglo American portfolio and De Beers. Our discontinued operations include steelmaking coal and nickel. Our simplified portfolio focused on copper and premium iron ore delivered EBITDA of $4,100,000,000 an EBITDA margin of 46% and underlying earnings of $1,000,000,000 all showing significant improvement on prior year, driven by favorable commodity prices and good cost control. De Beers incurred a marginal EBITDA loss of $100,000,000 reflecting the continued challenging market conditions mitigated by our restructuring actions. Discontinued operations reported a loss during the period, mainly due to lower volumes at SMC as a result of poor weather and the ramp up of Morne Bay North, which is now again operating at normal levels.

16:17 Combining continuing and discontinued operations, the group delivered total earnings per share of $0.58 and a dividend of $0.23 per share, in line with our 40% payout policy. Net debt has continued to decrease, ending the period at $8,200,000,000 down from $8,600,000,000 at the end of December last year. Although that does reflect some favorable timing, which I'll come back to later. I'll take you through each of these items now in a little bit more detail, starting with the simplified portfolio. Our basket price was up 22%, reflecting significant increases in copper, partly offset by small reductions in iron ore. Iron ore price realizations were impacted by the diversion of Middle East bound product to other markets due to the Iran conflict and rising freight costs on an FOB basis.

17:12 Production increased 1%, as Duncan mentioned, with slightly higher copper offset by lower iron ore. The higher prices supported a 22% increase in revenue and a 31% increase in EBITDA to $4,100,000,000 with around 70% of this EBITDA being driven by copper. The tax rate in the simplified portfolio was 40%, slightly lower than last year due to the relative mix of profits and reduced impact from loss making businesses following our restructuring program. This all resulted in a 60% increase in underlying earnings to $1,000,000,000 and return on capital employed improved by four percentage points to 19%. It's pleasing to see these higher margins and higher return on capital materialize as that was exactly the basis of our portfolio restructuring.

18:07 Turning now to costs, where we've got quite a lot to unpack, with actual costs increasing due to macro factors in volume, while copper unit costs reduced significantly due to by product credits. Starting with total operating costs for the simplified portfolio. You can see here, costs increased by $600,000,000 to $4,800,000,000 with the most significant factors being FX, CPI and fuel. There were then a number of smaller impacts, including freight as well as movements in Peru related to the rehabilitation provision and employee profit share provision. Finally, the restart of the Los Bronces plant and the return to higher activity at Manganese had an associated impact on costs.

18:53 But of course, both of those were EBITDA positive. Moving on to unit costs, we saw a gross 13% increase. However, that is before the impact of by product credits and TCRCs. The combined effect of which was a credit of $600,000,000 compared to 300,000,000 last year, with all of that benefit in copper. The $600,000,000 credit is roughly evenly split between Chile and Peru and is driven by molybdenum and silver. Given the scale of the relative cost basis, with Peru gross unit cost being about half that of Chile, this meant that the credits had a much more material impact on Peru than Chile.

19:39 Copper unit costs with the credit benefit, therefore, reduced by 12% from $155 to $136 with copper Peru at $0.45 and Chile at two zero six Iron ore unit costs increased by 17% to $41 per tonne, reflecting the underlying cost position that I've just described, with most of the FX impact being related to iron ore. This left total net unit costs up four percent versus last year. Bringing everything together now in the EBITDA reconciliation for the simplified portfolio. As you can see, the vast majority of the increase from 3,100,000,000 to $4,100,000,000 is due to macro factors. Our favorable basket price driven by copper and by product credits resulted in a £1,200,000,000 price benefit, partly offset by FX on the South African rand and Brazilian real as well as CPI to take EBITDA before controllables to $4,000,000,000 Moving on to the controllables. Sales volumes were slightly lower, mainly reflecting timing of shipments in copper.

20:46 The Los Bronces and manganese cost impacts from the plant restart and increased manganese activity, respectively, totaled £200,000,000 and are spread across each of volume, cost and the other category. These and the other incremental costs I described previously are then offset by the final corporate cost savings, lower TCRCs and manganese volume to leave this controllable side of the chart a small net positive in the first half of the year, taking EBITDA to $4,100,000,000 Moving now to our existing businesses and starting with an update on the actions we're taking at De Beers. The diamond market continues to face both cyclical and structural challenges, but we have taken and continue to take proactive action to preserve value and reduce the net impact to the group.

21:40 This is evident in the results, which show an EBITDA loss of $100,000,000 compared to 200,000,000 last year, even as prices have moved lower. This reflects the impact of cost savings, but more materially, a lower cost inventory base as recent purchases have been at lower prices. Although the losses have been stemmed, we're not resting, and restructuring action continues while ensuring that we retain upside optionality as markets recover. The most significant action is at Venetia, where production will be paused for around two years, and capital expenditure on the underground project will be rephased. This protects near term cash flow and will allow us to reduce CapEx in 2026 by $300,000,000 while preserving the long term value and future production potential of the asset.

22:33 Phoenicia was also contributing loss making carats in the first half, so pausing this production will also assist forward profitability. Alongside this, De Beers is reshaping its corporate structure, simplifying the organization and reducing the central cost base. This builds on the progress already moved already made to remove overhead costs and improve efficiency across the business. Overall, these actions demonstrate a clear emphasis on cash preservation, cost reduction and value protection while also setting the business up for a successful divestment. Briefly now on discontinued operations. EBITDA was a loss of £200,000,000 reflecting principally driven by steelmaking coal, while nickel was broadly breakeven.

23:23 I'm pleased with the operational progress at steelmaking coal with Moranbah, as I said, having a successful ramp up and they're effectively back at normal operating levels. The equity shareholders' loss of $1,200,000,000 reflects the underlying earnings, plus a £900,000,000 impairment of SMC to reflect the terms of the Delmar transaction. Applying a consensus based annual pricing to our DCF calculation doesn't attribute any value to the price link consideration. But in reality, of course, we would expect there to be option value from price volatility with payments being calculated on a quarterly basis for five years. Meanwhile, we've initiated arbitration proceedings against Peabody in respect to the previous transaction, which is ongoing.

24:15 Capital expenditure reduced to £100,000,000 primarily reflecting the removal of PGMs from the portfolio. And the net debt impact was a £200,000,000 outflow, including the cash received from the steelmaking coal deposit from Delmar. Looking at capital expenditure, we've maintained a disciplined approach with CapEx and continuing operations decreasing by 6% to $1,500,000,000 This reduction was driven primarily by lower sustaining capital expenditure as the Minas Rio filtration plant completed and the Collahuasi desalination plant approached completion. We do expect higher capital expenditure in the second half, but we've made some cost efficiency gains, which I'll touch on in the guidance section shortly.

25:02 Growth CapEx increased modestly year on year, reflecting investment in a small number of projects, including the first phase of the Coahuasi debottlenecking initiative and Coomba's UHDMS project, along with Woodsmith. Moving now to cash generation, which, as always, remained a priority during the period. EBITDA of $4,000,000,000 translated into £3,500,000,000 of cash flow from operations. Working capital remained flat with the adverse impact of rising prices largely offset by a number of timing benefits across multiple categories, including receivables, payables and marketing activities. I wouldn't expect all of these timing benefits to endure and therefore anticipate an increase in working capital through the second half.

25:52 The £300,000,000 outflow from other operating cash flows is primarily due to timing of market derivative settlements, which offset in EBITDA and working capital. Cash tax and interest payments, distributions to minorities and sustaining CapEx totaling $2,300,000,000 resulted in a 1,200,000,000 of sustaining attributable free cash flow, up around 90% compared to last year. Similar to working capital, where we will see some increase in the second half, both cash tax payments and distributions to minorities were lower than the income statement charges, and this will reverse to an extent in the coming periods. Nonetheless, it is pleasing to see the business continue to generate increased cash flows.

26:39 Looking at net debt, we've seen a further reduction to £8,200,000,000 The £1,200,000,000 of sustaining attributable free cash flow during the half was more than sufficient to fund growth CapEx of 0.4 the dividends paid to Anglo American shareholders and the outflows from discontinued operations. And I'm pleased that our net debt to EBITDA ratio is now at 1x, while the group continues to maintain a strong liquidity position. Looking ahead now for the balance of the year, the business remains in a strong position with all operations and controllable costs trending as planned. The only change to unit cost guidance relates to a reduction in copper unit costs, which is a reflection of the byproduct credits, which I described earlier.

27:28 As I noted in February, our original guidance was conservative on byproduct pricing and foreign exchange, given we were in the very early stages of the Middle East conflict and the associated macro uncertainty. In Peru, with updated full year guidance of $0.65 compared with the first half of $0.45 we continue to be somewhat conservative on pricing of moly and silver relative to current spots, reflecting the sensitivity of unit costs to the size of the credits in Peru, as I described earlier. In Chile, where the size of the cost base means their unit costs are less sensitive to those credits, we've guided full year at $2.10 compared to $2.00 6,000,000 in the first half. In iron ore, we've kept cost gains the same for the second half. However, we would note that these businesses are more susceptible to oil price movements and do not benefit from the byproduct credits in the same way as copper.

28:26 As you will see in our usual sensitivity analysis, which is in the appendix, for every 10% move in oil prices, we would expect a £43,000,000 impact to six month group EBITDA. Moving on to CapEx. Our projects team is continuing to deliver optimized outcomes, and the work on both the filtration plant at Minas Rio and the plant debottlenecking at Quellaveco have come in under budget, which allows us to reduce our CapEx guidance for the simplified portfolio by $100,000,000 And as I mentioned before, now with the temporary suspension, Phoenicia, we've reduced our expected spending at De Beers in the second half by $300,000,000 Therefore, collectively, for the continuing portfolio, this amounts to CapEx savings of £400,000,000 bringing our total twenty twenty six CapEx guidance now to £3,200,000,000 for the year.

29:24 Finally, as I've mentioned previously, for 2026, we will incur £200,000,000 of special costs for the restructuring and merger, and we will have £500,000,000 of noncash increase in our net debt arising from lease for the infrastructure related to the Los Bronces desalination plant, which we'll complete in the second half of the year. So to finish, let me briefly recap on those key financial messages. We delivered strong profit growth with EBITDA from our continuing operations up by 35 to $4,000,000,000 aligned with our portfolio restructuring and a higher exposure to copper. We managed the controllable costs well, and stronger by product pricing enabled us to reduce copper unit cost gains by 12% to 136¢ per pound.

30:17 Our focus on capital management and project execution has allowed us to reduce planned 2026 capital expenditure by $400,000,000 which should further underpin higher return on capital employed, which is now at 19% for the simplified portfolio. The balance sheet also continues to strengthen with net debt reducing to $8,200,000,000 and leverage reducing to 1x EBITDA, while, of course, retaining significant liquidity. Overall, the simplified portfolio continues to provide resilient earnings with attractive exposure to copper led growth and delivering higher margins and returns. Thank you very much, and I'll now hand back to Duncan.

31:09 Thank you, John. So one of the biggest differentiators in our portfolio is the potential for us to deliver meaningful copper growth with higher returns and lower complexity relative to peers with the benefit of building from some of the best copper assets in the world. Now as the slide shows, bringing new copper production online is becoming ever more expensive. The rate of inflation of for capital intensity is running at almost double the increase in CPI. Capital is therefore now a bigger part of the project's economics than ever before, and returns need to be higher just to justify those elevated costs. As capital inflation continues, the economics of many growth projects projects are at risk without higher prices.

31:59 And this is why we believe the copper price has to be structurally higher. It's also taking a lot longer to actually build and deliver these projects. Back in the 1990s, it took about seven years from the time that you discovered an ore body to bring it into production. Now over the last decade or so, that has stretched out to almost eighteen years. And if that carries on, the cycles will take longer to move from trough to peak, and we'll see much bigger swings in price. This is especially true when so much of the demand for copper is coming from strategic buyers who really aren't all that price sensitive. So in that kind of world, projects that you can deliver in the short to medium term without spending a fortune to build them become hugely valuable.

32:53 Now you'll have seen this slide before, but it makes this point well. Our key copper growth options really stand out where it matters the most: on complexity and on capital intensity. Over the last fifteen years, the industry's CapEx estimates have mostly come in far worse than what was promised at the study stage. So in that world, low complexity and low capital intensity is exactly where you want to be. Starting from lower capital intensity projects, our returns saying from lower capital intensity protects our returns, and it leaves us really well placed to benefit from price upside that these supply dynamics should drive. And that's on top of a demand outlook that is structurally strong.

33:41 Now with all of that in mind, the integration of Coyoacion and Quebrada Blanca is a really exciting prospect. Arguably, it is one of the industry's best options for capital efficient copper growth at scale, and that is actionable in the near term. Now as a reminder, there is a potential to add an incremental 175,000 tonnes of annual copper production at around $2,000,000,000 of CapEx. So that's about $11,000 of CapEx per tonne of copper growth. Importantly, the integration would still allow for further growth and both from both assets, and this also provides increased flexibility for future options, including leaching and other plant expansions. We are busy putting the building blocks in place to make this integration a success.

34:28 We are focused right now on the technical groundwork and on engaging with shareholders across both assets. And just like any other adjacency that we bought over the last few years, it is important that we take our time and we do this properly. Much of what drives the extended schedules for copper projects is the time needed for permitting, planning and stakeholder alignment. So we want to get that right from the outset. We continue to believe that this is, by far, the best way forward for both Coyoacci and Quebrada Blanca. It sits right in that sweet spot, low capital intensity, relatively low execution risk, high confidence and near term copper growth at real scale. And I'm genuinely confident about the potential here.

35:15 We can build something pretty special, one of the largest and most competitive mining complexes in the world with decades of accretive growth ahead of it. Now last month, we announced the final regulatory approval for the agreement to form a joint mine plan between Los Bronces and Codelco's Andina mine right next door. Now if you'll forgive the pun, it's really groundbreaking work there, a very thoughtful and innovative structure that meets the objectives of both sides without compromise to value creation, and it allows the respective shareholders to participate in the upside on a pro rata basis. Now as we've said before, this joint mine plan will add another 120,000 tonnes of annual average copper production, which will be shared equally between the parties.

36:04 This and when we announced this deal, we identified around $5,000,000,000 of pretax value uplift to share with Codelco, and that was at a copper price of around $5 a pound. So this is probably the clearest example of us benefiting from exactly the copper dynamics that I've just been speaking about. Now that we're through completion, the teams are moving into the joint mine plan integration design work. We've got a governance framework in place, and we're now working towards the environmental permits where we're aiming to have them done by 2030. And just like Quehuasi and Quebrada Blanca, there could be more growth to come down the line. For example, here at Los Bronces, we've kept the right to develop the underground, if the markets can support it.

36:58 We're really excited about our future as Anglo Tech and the upside that we can unlock from this in terms of the synergies and the growth. Now as I've said just now, it is going to take some time before we can talk to the deal aspects of project sequencing. However, that should in no way detract from the core of the value proposition because it will continue to be primarily driven by Anglo American and Teck's current portfolio of assets. The key value driver for us going forward, therefore, remains operational excellence. Now that we've built a more stable operating platform, we've got a solid place to plan from, and we're continuously working on systematically optimizing productivity, costs and stability. We're also looking further out to see how we can best manage the natural variation that occurs over the lives of mines as well as the inevitable pressures on grades over time.

37:53 So at Quebeco, we've just completed a debottlenecking program at the plant, recoveries are up and the mine is operating very well. Now this stability gives us the ability to focus on maximizing the future value. And in this context, we're continuing to shape the production profile over the next decade. As you know, over the next few years, we're going to be moving from the supergene into the hypergene orebody, and the hypergene ore body is characterized by lower grades. Now the work that we're doing there is looking to smooth out the production profile during that transition period. And as a consequence, we may take an earlier step down in annual production volumes towards the end of the decade in order to sustain that rate over a longer period of time to maximize value rather than taking a much bigger step down a little bit further out.

38:45 Although, to be clear, these changes should not impact our current production guidance, and we are continuing to pursue new ore sources that could come into the mine plan over time as we look to optimize Quellaveco's value. It is a highly profitable business, highly cash generative and is well set to be a cornerstone of the Anglo Tech portfolio through the next decade and more, and we will continue to push for further options to enhance its value. At Kumba, what we're doing there with the UHDMS technology is already setting us up to get more out of Sushin. It's going to treble the share of the high grade product, and that is exactly the quality of product that plays into the key demand trends over the medium term.

39:31 And we're getting more optimistic about what we can deliver from Cision over time. However, there is scope for other upsides from Kumba's performance in the near term, and Npumi is spearheading a full potential program there to improve productivity, costs and return on capital. Minas Rio is another mine that is operating well. And as we look forward, we remain excited about the full potential of Serpentina, which is an excellent ore body. Now our focus at Minas Rio is, therefore, now working through the most capital efficient and value accretive pathway to the Serpentina resource with a particular focus on confidence in execution in the context of what we now see as a very much increased challenging and permitting landscape.

40:20 We have the time to do this work. And to be clear, it does not impact our guidance and the operating stability that's now in place creates a solid platform for us to unlock the full potential of that Serpentina adjacency. So we are continuing to work hard on how we optimize the long term potential across the portfolio. And through the merger, we will continue to challenge ourselves as to how we can strengthen sustainable performance even more over time and allow us to make the most of what I see is shaping up to be a fantastic company. So to close, operational excellence is right at the heart of how we're driving better performance across the business, and there's definitely more to come as we set ourselves up to understand and then to deliver that potential from the merged business.

41:09 After two years of hard yards, the portfolio work at Anglo American is nearly done, and we're in great shape to start life as Anglo Tech with a focused set of assets. In addition to that, we've got near term growth, we've got medium term growth and a whole suite of assets and project options to keep us delivering well into the long term. And on a personal note, I am properly energized by Anglo American or how Anglo American is performing right now and by everything that lies ahead. I am really looking forward to seeing this merger through and to leading Anglo Tech over the coming years to deliver its huge potential. I am determined, Stuart. And with that, John and I are happy to take your questions now. Tyler, you're going to moderate.

42:02 All right. Thanks very much. I think what we'll do is we'll start with Mac, as I promised last night, and then we'll do the traditional analyst conga line of questions. Thanks, Tyler. Good morning, Duncan. It's Mac Green at Goldman Sachs. I just want to touch on your copper, probably the near term. Congratulations on the Los Bronces and Andina agreement there. But when we think about this preparation period between now and when this JV kicks in, in 2030, what needs to be done to get this asset ready? You've touched on the tailings, the D cells ramping up. But anything else that we need to be considered off here? Anything else? No. I mean the critical path now at Los Bronces and Dina runs absolutely through the permitting process. We've got a very good view of what the shape of the mine should be from the agreement work that we did.

42:52 We've got to keep doing what we're doing in terms of the removal of Paris Caldera. So that's pretty important because as soon as Paris Caldera is moved, we can bring back the second plant because you know the Los Bronces plant comes down again to move Paris Caldera. But we need that plant when we, when we start the joint operations with, with Andina. So so that's, you know, that's part of the critical path, but, but all all on track and and making good progress there. Just as far as the permitting process goes, look, it's complex permitting environment. Generally, in South America, it's complex. In Chile, it's quite complex, particularly in and around, where Los Bronces is because it's so closely located to the city of Santiago. So normally, these sorts of permitting process can take three or four years, but we have a very, a very front footed forward looking government there who's, who's very excited about the prospects of good and responsible copper growth in the company in the country. And, and so look, I'm, I'm expecting that we've got a number of legal processes that we need to go through.

43:57 But, this a good outcome environmentally. It's a good outcome in terms of utilization of resources like water and land. So the environmental impacts are much better than two stand alone growth options in the same place. So I'm expecting that we'll have a reasonable ride through that permitting process, but it'll probably still be around about three years to get it done. That's great. And then just longer term, Quellaveco, outstanding first half year, so congratulations on the performance there. When you scope this, the concentrator, you were limited by water. You've been able to manage that. You're pushing to 142,000 tonnes a day by the end of this year. I think the scope to move to 150,000 beyond that, where do you see this as well the concentrator tapping out? And then how do you think about the next leg here for Quellaveco? Yes.

44:48 Look, I mean, I think this is a great example of continuous improvement and innovation all at the same time. The ore body is the ore body, and it has the grades that it has. And of course, we were limited by water in terms of what we could produce at the time. I think when we permitted the project originally, we could only process 127,500 tonnes a day. As you say, we sort of managed to iterate ourselves to around about 140 and now probably have liberated the possibility of processing almost 150,000 tonnes a day. So what did or how did we do that? Well, first of all, it's a complete optimization of the internal water balance within the plant making sure that we're recycling as much of that water, not allowing it to evaporate, etcetera, etcetera. So there's a whole bunch of processes that go in around that. Of course, we implemented, our first full scale coarse particle flotation unit there, and that made a very big difference in of the application and use of water.

45:54 And then there's been, you know, a little bit of debottlenecking. In every plant that, that you have, you know, you really want your primary constraint to be your SAGMO. And, and so to the extent that you can debottleneck any anything around that sort of gives you, you know, gives you the benefit. So the the primary constraint here will continue to be water. We're not using any more water than we were going to use for 175,000 tons a day. And I think, you know, given given the combination of, of where the primary constraint is in the SAG mill now, probably correlates with the primary constraint of water. So around about 150,000 tons is where it's going to be. So that really just helps us smooth out the production variability, particularly during that transition period to the hydrogens.

46:45 Maxime Koch from ODBHF. So first question is on Kolawasi because it's a bit difficult to understand situation there with regards to the diesel plant. I mean a lot of money has been invested, more than EUR 3,000,000,000 over the last few years. It has required three years of investing, and yet we had this eleventh hour stoppage. So what are in our view the stumbling blocks there in your discussion with the administration? And when can we can you give us some sense of the time line for restart there? Yes. So look, as I say, this is a permit that was granted by the more than five years ago and and, was was granted off the back of a full fully fledged, consultation process with all the stakeholders that, that were involved in it. What has subsequently happened is that, that a stakeholder group has, has taken the permit on review. It then escalated through a number of steps to get to the environmental tribunal who suggested that the SEA who granted the permit, will need to review it. So it's just the components associated with the desalination plant. So this is the whole of the EIA for Kauaiwaisi. So it's just the component of the desalination plant that was taken under review.

48:03 And this is a process that now the government has to reset, including the consultation process. But, we are hopeful that within the next six months or so, we should be able to get back on track and be able to restart that plant. As I said earlier, it's had no impact in terms of production so far because we have a number of alternative water sources. But in terms of the long term, we will need the desalination plant to come back on, which we're expecting it will do. All right. And just a second question on copper. You had just about the big spike we've had in sulfuric acid prices. I was wondering what was the net balance for you because on the one hand, you have this smelter and shale gas. On the other hand, you have some consumption in issuing ops. So is it net positive balance? And do you see opportunities in terms of smelting going forward?

49:02 And conversely, hindrances in terms of leaching production? Yes. Look, I mean, as far as smelting is concerned, I mean, we have the Shagres smelter. It's one of the best operated smelters in that region. So it continues to perform very well. It's an integrated smelter for us, right? So we take custom material through it. It's really our own material that we put through it. We don't I mean, of course, there are very interesting views today on the role of smelting the system. But as we see it at this particular point in time, we're really not looking to expand our smelting capacity within the group.

49:50 It's it is quite capital intensive. We're very happy with the capacity that exists in the market today. If that environment changes, then we would relook at it. But right now, so long as Shagres continues to perform in the way that it does, it's a very viable component of our portfolio. In terms of, leaching per se, another technology that's getting a lot of favor, you know, it's it's one of these things that the mining industry has been, has been poking at for a very long time in terms of a technology breakthrough, and and many mining companies have got various different views of which technologies are good and which technologies are not. I I am very clearly of the view there isn't a silver bullet in terms of leaching technology that applies to all mining.

50:39 Leaching works in varying degrees on different types of ore bodies, and there are many different types of leaching that you would, that you would pick appropriate to a specific ore body. Generally, you know, leaching technology has been, at the point where it works very, very well on oxidized ores, but not as well in terms of recovery basis on sulfidic ores. The technology does seem to be changing and moving, so much higher recoveries on some of these technologies are coming through on, on the sulfidic ores. That would be a very big positive if we if you had an ore body that was amenable to that sort of leaching because the capital intensity of leaching plants is just so much lower than the capital intensity of, of, concentrators.

51:24 It does come with other environmental permitting issues and so on. But, I think, yeah, to the extent that you have operations like Coyoacie, who has a leaching operation already and will, you know, it's a it's a shuttered operation, but we can bring it, bring it back on. You know, it gives you a lot more opportunity to to make, to make use of a technology that does work for you, in, in that space. So yeah. So I think leaching technology is a is an interesting space to watch, but it's not a silver bullet for the whole of the industry. So it's not something that I see at this point in time that is a mass implementation that completely drops the cost curve of copper mining. It's Ian Russo from Barclays. Just sort of follow-up on that copper side. And, obviously, with the restart of the Los Bronces plant earlier this year, you've been able to add additional volumes.

52:22 You mentioned the Coahuasi leaching plant. Is there opportunity to do more of that, I guess, into next year, maybe run that Los Bronces plant a bit longer before you move the Peres Caldera Dam or bring back plans to bring back that leaching at Coahuasi? And then a second question, just on the steelmaking coal business. Obviously, the unit costs were pretty high. Obviously, a large fixed cost component within that as Maranva ramps up. Should we think about profitability in the second half? I know you don't give guidance on unit cost and volumes, but just how we should think about that. Okay. So Los Bronces plant. Remember, when we shut Los Bronces down the plant down, it wasn't making any money at all.

53:08 And there were two key drivers of that. One, it was just the fundamental underlying base of Los Bronces per se, but that plant specifically. And secondly, the quality of the ore that we were able to feed to it. The mine was very, very constrained. In those days, you'll remember we were monophasic, stuck in Infinii-five, really struggling at the bottom of that phase to get the volumes at a quality that could support both of the plants, Confluencia and Los Bronces. And so the decision was an economic one, right? So value over volume was a very important drive for me. It still is today. And hence, the decision to shut that plant down.

53:55 What has changed subsequently is that the mine has progressed extremely well on their cost management focus, right? They have focused on where the real numbers need to be, and they've implemented a number of programs that have sustainably delivered better cost performance across the whole of Los Bronces. But secondly, and probably far more importantly, is that the progress that they've made on the development of Denosso two, which is the phase that will ultimately replace Infinii V, is ahead of schedule. And the consequence of it being ahead of schedule means that one, we have access to more ore two, that ore is softer and processes better through, through the plants than the harder ore that comes out of Infineo five and thirdly, is, is slightly higher grade just given where it is in the mine. It's higher up in the mine than where, where InfiniO five is. So the combination of those things then made the restart, of course, in the in the back of, of, some very robust copper prices, a materially viable value solution. So we started up.

55:01 Now the constraint is absolutely, the removal of that Paris Caldera tailings dam. So this is a commitment that we have, as you know, that this all sort of emanated from actually a very long standing commitment, back to the Exxon days to remove that tailings dam, but even more important in terms of what we understand about tailings dams under the GISTM process. So we are going to move that tailings dam. It needs the water because we're so water constrained in that region that, that we're currently using in that plant. So that is what, what we're going to to to do next. And and rate at which we can move that dam, of course, the big prize here is to have everything back up and running when we've combined Andina Los Bronces so we can optimize the copper production from the combined asset, at that point in time. So the real critical path now runs through the removal of, of Paris Caldera.

55:59 That, as I said earlier, is like on track. It's, it's running very well. I'm not sure whether we can accelerate it yet. It's a little bit early days, but to the extent that we can and optimize the way that we extract it, there is a small probability that we can either delay, but I'm talking about months, not years, the shuttering of the Los Bronces plant or starting it up a little bit earlier, if we get the permits back. And then Koyawasi leaching and met coal? What was the Koyawasi leaching question? Yes, just how we should think about the timelines for bringing potentially bringing that? Yes. So look, I mean, the team is working very hard on that right now. I mean, I think there is a view that we might be able to bring some of that in during the course of next year, but don't know quite exactly where they've got to at this particular point in time.

56:55 We have a plant there, so it's obviously it's going to have to be refurbished a little bit. It's a specific process. I think, what we're also looking at is what the full leaching potential of Coyoacae is. So leaching at Coyoacae, you might think about in two phases. One is the restart of the current plant because current copper price environment probably substantiates and supports, the restart of that plant. The guys are busy doing the feasibility study now as when that might come on. The second phase is actually an application of one of these new technologies that is amenable to the Coahuasi ore body, and we have two options here, which is an absolute pleasure, right? One is we've got this massive mineralized waste pile, which is a stockpile that the mine's actually been running off for the last eighteen months, which, which is probably more amenable to leaching than it is to, to concentration.

57:52 And, you know, if, if some of these, sulfidic technologies work in leaching, you know, we have, we have the Ohina pits and we have a portion of the Rosario pit that would probably be amenable to that. So it's probably a little bit further out, but that's the technological dream and the optionality that we have embedded in Coyoacie. Then you asked on steelmaking coal and the unit cost. So look, the guys have the guys had a a pretty rough start to the year with with weather, right? We had three mega weather events across the group. One is one is in in Australia at the beginning of the year where the open pits were completely inundated with water. Honestly, and I've never seen anything like this in my life. We had conveyors that are already 10 meters above the ground that were submerged.

58:43 So, you know, all the all the resilience things that have been put in place were were were beaten by mother nature, this year round. I mean, so probably a one in a four hundred year flood that they had there. So it took them some time, and so some of that that is embedded in in the cost base. And then, and then, you know, we had to we had to be very cautious in how we were ramping up Moranbah, and so, you know, a bit a bit slower to to get it right. But I'm thrilled to say that, you know, over the last sort of two months or so, the guys are absolutely consistently hitting their straps, kind of getting around about 150,000 tonnes a week, of production out of Morumba. On that basis, we should see some adjustment to, the unit costs because the production is increasing.

59:31 And so long as we don't have another weather event, in this year, the open pits are well on their way to recovery there too. This is Alan Gabriel at Morgan Stanley. Duncan, a couple of questions. One is on the integration with Teck. Your teams are clearly doing lots of integration planning. What have you learned so far that has surprised you, either positively or negatively, given the limitations of what you can and cannot say? And the second question is on the B is probably for John. What are the stand alone provisions and pensions and long term liabilities for taxes as well that you can share with us at this stage? So on the integration, I'm thrilled to say no big surprises. So the challenging work is the volume of work at this point in time because, of course, we're prevented from seeing commercial data on either side. The companies are actually competitors until the day that we close, and that's really cool stuff that I really want to get my teeth into big time. But I can't do that until we've completed. But on the other hand, what we do need is, I mean, we've got a very clear view of where the synergies are that we've announced, and we need to set the organization up now to be able to hit the ground running hard in terms of the the the rapid delivery of those synergies.

1:00:50 And secondly, we've got you just got to have an operating model for the company that everybody knows and everybody understands from day one, and that's a lot of work. So just, just understanding, you know, what the asset bases are. We rely very heavily on on how tech think about certain things, and they have to rely very heavily on how we think about certain things. And then we've got to we've got to put the right operating model in place. So that's all that's all been very good progress. And then, of course, the company has to actually operate. It's got to have a management system on that day. You know, we've got we've got two new listings in in New York and Toronto. You know, what you're required to do in terms of the the statutory information, financial reporting, the Sarbanes Oxley stuff and so on, that's an enormous amount of work to to one, understand and then, and then plumb systemically through, through the businesses, both, both in tech and Anglo. So that's the volume of work.

1:01:45 So not the most exciting work. Well, unless you're Siobhan. She she loves this sort of stuff, but but but very important work to get run to get right if we're going to have a chance of driving those synergies out in the time that we said. John, you want to do the Yes. Alan, just to clarify the question. I hit my picked up tax, but I didn't get your specifics What on are the long term provisions and pension liabilities that are sitting in the De Beers entity? Oh, in De Beers. So the pensions in De Beers are in great shape. So like they are across all of Anglo American, so very well funded. We're in the process of moving the majority of those long term defined benefit plans to buy in or buy out, which effectively means we transfer those liabilities to insurance providers.

1:02:35 On taxes, nothing of concern on De Beers on long term tax liabilities, all pretty in the ordinary course. No unusual long term liabilities. Of course, the big long term liabilities in De Beers as they are with any mining company is the closure provisions and rehabilitation provisions, etcetera, but all in the ordinary course. And are you able to quantify these long term provisions? No, not at this time. Okay. Thank you. Myles Allsop, UBS. A few quick questions, maybe for John to start with. Could Could you give us a sense of how much you are looking to get from Peabody? Is it GBP 500,000,000?

1:03:25 Is it 1,000,000,000? Is it GBP 1,500,000,000? Obviously, you've got kind of a better sense now of what you're going to realize and the losses that have been incurred and so on. But it would be helpful just to get a sense of what that potential could be. Maybe I know it's early days and it will be the new board decision, but how you're thinking around the dividend policy for Anglo Tech? Is it more likely to be aligned with the current Anglo policy or a more North American sort of structure? And maybe for Duncan, just on manganese. Obviously, you've done most of the heavy lifting on the restructuring. Is that now kind of on the list of things to tidy up?

1:04:16 Okay. Morning, Myles. On your first question on Peabody, obviously, the arbitration, as I said, has been initiated. That's a confidential matter, and therefore, I wouldn't comment any further in terms of quantums or amounts. But as we've said consistently, we are very, very confident in our legal position on that case. And your second question on the dividend for Anglo Tech, quite you rightly say that will be a decision for the Anglo Tech Board, which, of course, is not yet formed. And so that would be one of the things when Duncan talked about the phasing of communication that we'd hoped to be able to clarify that very early post completion of the merger.

1:05:07 And then on manganese, Myles, you probably wouldn't expect me to say much different from, we look at all the assets in the portfolio all of the time. And to the extent that we can see more value for them in a different way or in a different format, we would deal with that, and manganese would just be one of those. So nothing specific planned on it, absolutely, in line with how we think about asset management and planning for the whole of the business at a portfolio level, it will be looked at in the same way. Tony Robson, Global Mining Research. Possibly a question to John to Duncan. The $4,500,000,000 special dividend being paid out just prior, so we're talking days, weeks prior to the formal unification issue of shares to take and so on. And was there any thought about doing that as a buyback rather than a special?

1:05:59 Surely, that's in terms of the weighting of the assets, the ratio you require for as a merger of equals would have the same impact and reduction in shareholders' equity, I would assume. So it's why especially rather than a Yes. I mean, can comment on the detail of this, but I can assure you, when we were looking at the merger ratios of the company and what we needed to do to put it together, we considered all of the options. The best option for us was the return of some capital to the Anglo American shareholders, and so that was the decision we took. So it's not going to change now. It is a return of $4,500,000,000 just prior to completion. John, do you want to add anything to that? No, no. That's it. Thank you. Felicity Robson, Bank of America.

1:06:47 The steelmaking coal disposal is valued at up to GBP 3,900,000,000 with GBP 2,300,000,000 upfront. How can we think about the likelihood and the timing around any of the contingent payments? Yes. John may have to help me with the timing, but the key differential is, I mean, the key, contingency is just all price related. I think it's probably over a five year period or something, John, five years. So over the next five years, depending on where the steelmaking coal price is, I can't remember the term It that we look at moves around a little bit, but on average, it's in the high 250s. Yes, high 250s, but it's quarterly or Quarterly. Quarterly review tested, we'll get any participation in the upside of that.

1:07:39 Richard Hatch from Berenberg. Just a few quick ones. Firstly, it's been a while since byproducts were this attractive or got this much time in the limelight. So can you just remind us how much silver you're producing, how much moly you're producing so we can try and get our models sharpened for that sneaky little beat you gave us this morning? Second, John, you teased us on working capital, but how much do you think comes back in H2? And then thirdly, good old non controlling interest. You're making a lot of money from Quellaveco, but I saw there was a zero dividend to your JV partner or your minority partner, so in cash. So I just question when we're going to start to see some cash flowing out of Anglo PLC back to Mitsubishi? Thanks. Sure. Yes, first of all, on the byproducts, I mean there's a number of things in there. So a bit of silver, bit of gold, a bit of moly, bit of acid.

1:08:29 And so and of course, it moves around depending on where you're at in the ore body. So we're not giving volumes on that. Just now, we I think for the first time, given the quantum, felt it was appropriate to give the number, which was, I said, point six, I think five seventy five to be precise in terms of the revenue. So yes, no more detail to give on that given the variability, and of course, it changes by mind. In terms of working capital, it was nice to see that working capital remain flat in the first half of the year. Ordinarily, you would have expected an increase given commodity prices. A number of things causing that to be offset. One, the actual sales volumes themselves in December last year were very high in the December month, and therefore, that caused the receivables to be a bit higher. The June month this year, in terms of volumes, was actually a little bit lower, so that was an offset.

1:09:29 And then as I said, there was a number of timing benefits. So we got some receipts from customers a little bit quicker. There was a number of capital creditors that were delayed out a little bit, etcetera, etcetera. To answer your question, in the round, if you what would you have expected working capital to go up by in the first half of the year if we didn't have these offsets? Then the price impact, as you saw in my waterfall, was $1,200,000,000 If you took your receivables somewhere between thirty and sixty days, it's probably somewhere between $204,100,000,000 dollars of a sort of timing benefit that we had in the first half of the year. And in terms of the non controlling interest then, of course, yes, there will be and again, I mentioned this in my speech that there'll be there is a difference in timing between the earnings coming through and then when those dividends are actually paid out. So yes, I would expect to see over the course of the second half of the year in respect of not only Quellaveco but also AESU or some dividends paid out to those minorities.

1:10:37 There's a pattern how Tyler is doing this. He's broken the pattern. Liam Fitzpatrick from Deutsche Bank. Just one question on the Colawasi QB JV. Have discussions advanced much in recent months with Glencore and the other partners at both sets of assets? And in order to meet that 2028 construction start timetable, when would you need to reach an agreement and make the relevant permit applications? You. Liam, yes. So look, discussions are ongoing, right? So it's not only with Glencore, it's with all the other stakeholders too in terms of how we can shape this up. Fundamentally, this is going to rely on the stand alone options that exist in both of the assets and getting those to a level that people can value effectively, clearly, that sets the base, one, in terms of the combination ratio of the partners going forward, but also how the synergies will be shared.

1:11:45 So that work is ongoing. Those conversations have started, definitely not concluded at this particular point in time. I think we do need to get that technical work done properly. That is the bit that actually takes the time to get done. But we should absolutely have that done at a point in time where we are able to go into permitting to get us up and running by the end of the decade, which is where we said that we would do it because don't forget that here, the permitting is materially less complex than would be the case on either of the stand alone options, given that this is, by and large, a conveyor belt that just connects to operations as opposed to the construction of a brand new plant, which is on a stand alone basis, a massive plant. It would be kind of the size of Quebeco on a stand alone basis. So yes, I think that there is time to do this and get it right.

1:12:57 2021, coming out of COVID, you had two fantastic years. Grades were up, production was up materially, when workers weren't showing up to work, which was an impressive performance, but it was also somewhat surprising. Here we are five, six years later, you are having these geotechnical issues. It was transitional ore this year, these complex faulting issues that you need to deal with next year. I am wondering first if some of these problems that you are having today or some of these challenges today are a consequence of changes to the mine plan coming out of COVID. And then secondly, the complex faulting issues that you said you need to work through again next year. Think you said you've dealt with these in the past, but just wondering what sort of risks there are to your 2027 production? Are you going to slow down mining rates, etcetera, as a result of that? Yes. Great questions, Chris. And of course, my adage is once you stop mining to the plan, you pay the piper at some particular point in time.

1:13:48 And certainly, there's no doubt that Coahuasi is not immune from this. They have a little bit more insulation around it given the high quality of that ore body, but they are absolutely not immune. And without, you know, it doesn't take too much of a stretch of the imagination to know that during COVID, you know, they prioritize the resources that they had into the production benches. So the the development benches fell behind. The consequence of that is, you know, it played out, about two years ago when, when, they had to catch up the stripping, for for the next phase of the mine. So this is phase 15, I think it is, at the mine. And in the back of their mind, I mean, you know, in their defense, you know, they do have the stonking stockpile here, right? I mean, it is a 0.6% grading waste pile.

1:14:44 There are many, many fresh ore mines that would love to have that as their primary grade. What what they miscalculated here was the rate at which, this material was going to recover. So the grade is actually very consistent. It is there. The trials that they did and the tests that they did, during that period of time gave them some confidence that, that when they processed the stockpile, they would get the recoveries that, were consistent with the with the plan that they that they had put forward. So this wasn't like they completely screwed this up. They had a plan. What they what they, what they what they miscalculated was, was the, homogeneity of the the the refraction of that, of that, that ore source. So they have to kind of crack on and get that done. And so that's been the focus for that management team over the last two years, which is, okay, we know what we've got to live with now.

1:15:41 When does it get sorted out? Back end of this year is when we should have opened up those phases, and we're already starting to switch into a higher proportion of fresh ore compared to the stockpile ore. So that's all good. As far as the fault is concerned, the complex fault is concerned, of course, all mines have faults, right? If it wasn't for the fault, there'd be no mine at all because that's how copper porphyries are formed is through the fault. The complexity of this particular one is just the facets that exist within it. So as we get into this Phase 15, we are going against the grain, if you like. So instead of mining straight into the fault, we've got a number of cross faults that creates a bit of wedging, you get a bit of fallout. The geotechs are trying to work out whether we need to slack the angle on that slope. I don't know whether that's going to be needed at this particular point in time, but, it is something that we have to consider.

1:16:43 I'm pretty confident in our copper guidance. What it means is maybe we just get a bit of lumpy production out of Coyoacie for a period, but there are other alternative sources of ore in Coyoacae, including the leach plant and so on and so on. So, just, nothing untoward here, but just to know that we are moving into that phase of the mine now. It's Grant Sporer from Bloomberg Intelligence. A question probably for John. Just you called out the net debt being ZAR 6,600,000,000, excluding shareholder loans. And I'm guessing you're referring to the Mitsubishi Vale shareholder loans of ZAR 1,600,000,000, if memory serves correctly.

1:17:30 Is there any specific terms for those loans when you have to pay them back? I'm just curious as to why you called it out in your in the presentation specifically. Yes. Yes. Thanks, Grant. The reason for calling it out is that there is some judgment in whether you consider that to be you know, true debt or whether it's more of an equity. And and in reality, you know, it's just how those shareholders chose to fund their share in the those partners chose to to fund their share in the project, which is more efficient from a tax perspective, etcetera, whether it's a loan, whether it's an equity injection. So some companies would present excluding shareholder loans, some would present including. So we're just putting it there so as people can make their own views as to which they consider to be the most appropriate measure. But I think the important thing is that when you're comparing the debt number with an EBITDA number in terms of the leverage in the business that you're comparing like for like, I. E, it's either 100% of 1100% in the other or if you take an attributable EBITDA, then it would be fair to take the shareholder loans out.

1:18:36 So that's the reason for showing it. Okay. And is there any sort of specific terms are you expecting to have to pay that back? Or are you sort of seeing it more as an equity They do get paid back over time, and they have been paid back. So those balances on the the most significant one is in Quellaveco with Mitsubishi, and that balance is coming down quite quickly over time given the strong performance of the business. And then perhaps just a follow-up one. Just in terms of your copper cost guidance, is it a case you've obviously lowered it. Is it a combination, I'm guessing guessing so, of better byproduct realizations in the first half and then also higher assumptions in the second half that has allowed you to drop that guidance?

1:19:25 When you say higher assumptions, higher assumptions in the second half on Or higher assumptions versus your initial setting at the beginning of Yes. The When you look at the makeup, then effectively take Peru as an example, $4.05 in the first half, moving up to £0.65 for the full year gains, then that would imply you can see it's not the second half is not quite at the original guidance level of £100 And therefore, our assumption on pricing, as I said, is not quite at current spots, but it's probably somewhere between our previous conservative assumptions, which was based on last year's pricing and what we achieved in the first half. Still a little bit of opportunity there through the second half. Thank you. Morning. Alan Spence from BNP. Just actually following up on the unit costs, you mentioned the more conservative byproduct assumptions into the second half.

1:20:21 But is there anything on a gross basis, I'm just talking about Quellaveco here, that you see inflationary or a headwind to costs into the second half? Mean to the second half, I mean, main one would be what's happening with oildiesel. And that we saw that through the first half of the year that the oil price on average was about 20% higher than the first half of the prior year, given the sensitivity for what would come through there. I mean I think difficult to say, but nothing dramatic in the sort of gross cost beyond diesel in terms of uncertainty. And as I said in the presentation, I'm really delighted with the how we've managed to manage those controllable costs through the first half. And so nothing surprising to come through in the second half on that. Okay. Thanks. And then back to Peabody, without asking you any kind of dollar amount, what are the pockets of compensation you'll be looking to go to? Is it what care and maintenance you had to do? Is it what a typical break fee would have been if there had been one? Or what are the little pockets you'd be going for? Yes. I mean, listen, it's a complex legal process to go through. So again, I wouldn't want to comment on any live legal dispute. And I think take us at our word that we're very confident.

1:21:44 We're initiating, we're pursuing. And when we have something to say, we will see it. So nothing more I can really say at this point. It's Patrick Mann from Investec. I've just got one quick question left that hasn't been asked already. Just on the beer sale, are you still considering the capital market options you were talking about before? Or are you progressed far enough with the sale that you're confident this is going to be the exit mechanism? Yes. No, Patrick. I mean, we one, we don't think that the market has capacity for a listing of De Beers at this particular point in time. But we probably got there a good few months ago, to be honest with you, and that was also helpfully supported by the fact that we had some real traction in the divestment process with a number of parties that were all deeply strategic type of partners. So we drew some confidence from that. So there is no work going on the listing at this particular point in time.

1:22:42 But to the extent that we ever did need it, we'd have to revisit it at that point. But, no. So right now, it's a trade sale that we're looking at. Ben Davies, RBC. Just two quick questions. One, on possible Canadian indexation proposed changes with the S and P. Does Anglo Tech qualify with the Canadian nexus? And then also just quickly on De Beers, assuming Botswana does give its blessing, any regulatory hoopla's after that? Okay. We have a czar in the business for indexation, and that is Mr. Broda. So I'm going to ask him to answer that question for you directly.

1:23:33 Great. Thank you very much, Ben. And thank you, Duncan, for bestowing the czar status on me for that. Let's all pray for me, especially it doesn't go wrong. So what's happened is is that the S and PTSX has come out back in April. They came out with a market consultation, so they were asking the market for feedback on any on the potential for adding companies that have material business in Canada, but are not domiciled in Canada to the TSX Index, which is obviously very relevant for Anglo Tech. And I think there's a very widespread base of support within the financial markets in Canada across the country for wanting it to be in the index. And so this is what the consultation was for. They finished that consultation a few weeks ago. I think it was last week. They've now come out with an official rule change consultation.

1:24:22 So it's the same thing, but this one is based on a specific rule. It would mean that it would be 50% attribute attribution to to Anglo Tech within the index. But I think from a a binary perspective, just being part of that index means we'll be part of the Canadian capital markets structure, which we're very excited by with some great investors and obviously the whole analyst cohort there. It is expected that, that will finish at some point over the course of the summer, and there will be a determination on a rule change at the start of September. And from that point, I'm not sure exactly how the mechanics would work with the timing of close and when we go right in, but we would be, in theory, eligible if that rule change was to go through. So it should be early September we get an update there. And back to you, Duncan. Very good answer, Tyler.

1:25:07 Good job. So on the statutory approvals for De Beers on AAL, of course, they will be. To some extent, it does actually depend on the final makeup of the consortium that we put together. I think we can probably expect the likes of The U. S, China, Europe and so on to be involved, at very least in this thing. I mean, the estimate is about a year, but, yes, we'll confirm that when we do transaction. All right. And with that, Myles, I have the mic now. And therefore, that is the end of the Q and A session. Duncan has to go off to do some more interviews, so we'll have to close it there. But yes, just I don't know if you have any last words, Duncan, or just close.

1:25:53 No. Thanks, everybody. I'd say a good half, I think, building off some tough work that we had to do in terms of resetting the portfolio and changing the accountability model within the business. It's mining. There are always going to be ups and downs in it, but I am confident that we've got the right people in the right place, to deal with that. And I'm very pleased with where we are, both from an operations point of view and from a transformation point of view and very excited by ultimately getting the merger complete so we can build on the strengths of both of these companies. Thanks. And any other further questions? Obviously, we're around. So thank you. Thank you.