DRDGOLD Ltd (DRD) 2016 Q4 法說會逐字稿

Good morning, everybody, thank you very much for taking the time to attend our yearend results. Riaan and myself will be presenting the results. Jaco's joined us. In case you have difficult questions that Riaan and I want to avoid and we'll pass you on to Jaco.

The rest of the management team is here as well. You can chat to any of them if you have any questions or anything that you want clarified.

Please just again, take note of the fact that there are some forward-looking statements in this -- forward-looking statements. You have the disclaimer in the pack that we distributed before we started.

So, let me get straight into the key features of the year. We finished the year with a decision on the part of the Board to declare a final ZAR0.12 per share dividend. It takes total dividend yield for the year to 7.3%.

Just looking at the actual number that was distributed, just over ZAR260 million and comparing that to where our market cap was this time last year, at round about ZAR700 million. I think as a percentage of market cap at the time, you work it out, but it's a big number.

Revenue is up quite substantially as well for the year. As I was saying to Martin earlier, the results that you're seeing, to a large extent, I think is consequence of our hedging strategy. Our hedging strategy is that we don't hedge.

And whilst, and you'll see this as we go through the results, whilst production is slightly down and costs are up -- unit costs are up, everything else performed quite well for us, because the rand price of gold really rallied towards the end of December and went up quite nicely for various events -- for various reasons.

That will be our strategy going forward. It's a gold mining Company that tries to bring about stability and reliability, and a degree of steadiness in its operations and its cost base; and then, take advantage of movements in the gold price.

If you're an astute investor, if you're a professional, and it probably is the domain of the professionals, I don't think amateurs should be dabbling in this, or people who take their own advice, you can make money on either side.

Personally, I would have wanted for this to be the sort of stock you can stick in a drawer and forget about it, but it's not that. We know that it responds to a variety of things other than the performance of the business.

I was actually going to say this when I spoke to the last slide, but it's something that I had to get off my chest, because I've been getting some emails from investors, who are not professionals, and who probably bought at the high. And they're hurting now, because I don't think they fully appreciate the volatility of the stock and it's connectedness to various things, other than the performance of the business -- fundamentals of the business.

Be that as it may, headline earnings are nicely up, close to 40%. That is on the back of an average gold price that is up 21%. There you can see tonnage is going along quite nicely.

We do have infrastructure and we've made some improvements to infrastructure; increased optionality that's assisted us to put 5% more tonnes through the plant. But there you can see that with a yield being round about 9% lower, gold production for the year was down roughly 4%.

Then, the free cash flow was up 25%. I think that number was ZAR308 million. Out of that ZAR308 million, roughly ZAR260 million was finding its way into the pockets of our shareholders, by way of dividends. Both the one we paid last year, which was paid in October/November, and the dividends that were paid up until the third quarter.

Looking at the operating trends. There you can see the volume throughput for the first and the second half, compared to the same period, in the previous financial year; and there also the change in the yield numbers.

So ended the second half at roughly 0.184 grams per tonne yield, compared to the just under the 0.2 grams. I'll give a little bit more color to these numbers towards the end. But we are very much now moving into the domain of slightly higher volume throughput and slightly lower grade, being the resources attributable to the resources that we are mining.

Particular for this period, for the last six months that I'm talking to, we are in the process of cleaning up one of our remaining sites in the far West Rand the CMR site. That's likely to continue until about January or February.

So these are high cost tonnes. They're high grade, but they're also high cost tonnes. And we're not going to be hitting any other resource any time soon, until such time as we have cleaned this site up completely.

That's part of, I think, our commitment to not just financial value creation, but also natural value creation. We're not going to leave the site until it has been responsibly cleaned and we can hand it over to the land owner.

Once you're off the site, if you're not producing, if you're not taking gold-bearing material into your processing plant, it's going to cost you much more, so we've decided to just see this process through.

In addition to that, and that also impacted on the yield, towards the end of the financial year, we did quite a bit of maintenance at our Knights plant, which is the last remaining sand plant, where we treat sand.

We're in the process of refurbishing most of the CIL tanks there, just to get them up to spec. We also did some work to the mill circuit, and that's also impacted on lower throughput in that particular one.

Unlikely that that will have an impact on the numbers going forward, but it did have an impact on the numbers in the last six months.

There you can see the production, and it's particularly those two aspects that I refer to, or those three aspects that I refer to: the cleanup from the CMR site; the lower throughput at Knights; and the fact that we are mining increasingly into what is going to be an enduring ore body going forward, the high [0.27-s] to the low [0.28-s]. That impacted on the production numbers, and that came in marginally lower than the previous half-year.

I'm going to hand you over to talk to the financial trends, to Riaan. Then once he's finished, I'll talk to sustainable development and wrap things up.

Thank you very much, Niel. Morning, ladies and gentlemen. It's my privilege again this morning, to take you through financial trends, and the financial results for the year to June 30, 2016.

Firstly, starting with operating margin. As you all know, it's very much a function of the numbers that Niel has already talked about now, so looking at gold sold, obviously that's a result of gold produced, the price per kilogram, and then the cost to produce it.

So, revenue up by -- average rand gold price received up 21%, which impacted revenue quite nicely.

Operating costs, obviously, as a result of the increased tonnage throughput, also had an increase attached to it. But a very encouraging result for me, is that the rand per tonne increase on a year-on-year basis, stayed below 10%.

All those factors together, still leave us with a very healthy and stable operating margin, in comparison to the previous period.

All-in sustaining costs, not an IFRS measure for the financial analysts in the room, and listening over webcast. Very much a World Gold Council standard, so yes it starts with cash operating costs, but then it also has other non-cash adjustments through that.

For example, a changed environmental rehabilitation provision, which is annual assessment that we look at. In this year, there was a ZAR20 million charge, going through the income statement non-cash, whereas last year it was a ZAR20 million; so, a ZAR40 million swing year on year, in that charge.

Administration and general costs go through that as well. And then obviously sustaining capital expenditure, which is normally a number that you'll find on the balance sheet. But for this measure, all-in sustaining costs, sustaining capital expenditure is included.

So that, as with operating margin, is done as a trend of revenue. Again, that showed quite good results, even with those once-off rehabilitation charges, going through. So very healthy all-in sustaining cost margin and stable year on year.

Headline earnings per share, Niel alluded to the number in total, which showed a 39% increase year on year, the rand million number.

The headline earnings per share -- per share number showed a 28% increase, which is a good increase. But the market will recall that there were more shares as a result of the black economic empowerment, the flip-up transaction that happened last year, where our BEE partners now own a share in DRDGOLD directly.

Obviously per share, that has an impact on the headline earnings. Headline earnings is very much an earnings number. So even non-cash adjustments, deferred tax, everything that impacts earnings, depreciation as well, impacts that number.

The headline bit, where it differs from earnings per share, is that if there's for example, profit on disposal of property, plant and equipment, that's also taken out of headline earnings. It's still a very healthy increase of the 28% year on year.

Now, I've deliberately left free cash flow to speak to last, because I love talking about free cash flow. I've said it before, and I'll say it again, probably the most relevant number for any company, but even more so for a gold producer in this time.

Free cash flow increased by 25%, year on year. The majority of that generated in the second half, as Niel has said. Very much leveraged for any increases in the gold price. But still the best cash flow generating year that DRDGOLD has seen in many, many years.

Just a reminder, what free cash flow is, so it's the net between operating cash flow, less investing cash flow, which I'll show you on the next slide.

Okay, really a good story to tell, cash flow from operations, up by 40%, year on year. Then I wanted to allude to last year, included in cash flow, from investing activities, was the sale of the Village Main Reef shares. So if you strip that out, if you want to, that 25% increase on free cash flow will look even better.

The majority of other investing activity, cash flow relates to ongoing capital expenditure, that we spent on the plant.

So the sum between the ZAR415 million and the ZAR107 million is the ZAR308.7 million, free cash flow generated, that Niel also alluded to.

The ZAR24.5 million is the last of the -- any outstanding debt, the external that DRD has, which was settled right at the beginning of the financial year.

Again, that number that Niel also mentioned, ZAR252.9 million, of dividends, in cash paid, during the financial year, that increased percentage-wise probably off the chart. We're very, very proud of returning that amount of cash to our shareholders, and then, still leaving the DRD with a healthy cash position.

There's some restricted cash in that balance, which you'll see in note 4 to the detailed results. I always say please work through all the detail reviewed results, that was issued this. This is obviously only a summary of those results.

As always, we maintain a healthy buffer -- cash buffer throughout our operations. But we're really, really proud of the cash generated this year.

Statement of profit or loss. Revenue increased by 16%, as we said assisted by the increase in the average rand gold price received by 21% year on year; and then a slight decrease of 5% in gold sold, as a result of the 4% reduction in gold produced during the year.

A 15% increase in that line; I've already mentioned one big change year on year, the change in rehabilitation expenditure that you also see on the detailed results. Then the rest of it is additional tonnages and, as I said, below 10% rand per tonne increases in that line, that leaves us with a gross profit from operating activities just under ZAR200 million.

The increase in the administration expenses and general costs refer mostly -- relate mostly to the increase in short-term incentive benefits.

Also, the change in the cash settled phantom scheme payout, that is based on a very healthy increase that Niel alluded to in the share price. I looked at market capitalization June 30, 2015, to June 30, 2016, and it was a 265% increase. Obviously, those cash settled phantom shares respond to changes in the share price, and that resulted in an increase in that charge.

Finance income/finance expense; fairly stable. The majority of that charge, just over ZAR40 million, is an unwinding of the rehabilitation expense; that's a non-cash charge sitting in the income statement. Included in the ZAR51 million last year is the ZAR20 million fair value uplift for the Village Main Reef shares that were sold.

I just quickly want to explain the income tax line. It almost looks out of sync at face value. It's one of the consequences if you become more profitable, because the gold mines pay tax on a sliding scale. So, the more taxable income or profit you predict that is, unfortunately, then at a higher rate.

Deferred tax in accounting then says you must make that adjustment in that current year. Although it's a non-cash adjustment, the majority of that, but it relates to tax that you expect to pay, based on the current estimate in future periods.

Then the ZAR61.9 million is then also adjusted by profit on sale of property, plant and equipment, to get it down to the headline earnings number.

Statement of financial position. Property, plant and equipment, so effectively the ZAR100-odd million increase, through sustaining and growth capital expenditure less ZAR180 million is depreciation, leaves you with the ZAR1.6 billion.

Non-current investments and other assets indicate some growth on some of our rehab assets, and some fair value changes in other investments.

A small increase in the deferred tax asset at the corporate office.

Cash and cash equivalent, explaining the cash flow statement.

Other current assets, stable year on year, did decrease mainly as a result of the decrease in trade and other receivables.

The movement in equity, the profit obviously goes through there, and the other reduction is that ZAR250 million dividend paid that goes off that line.

Then, I've mentioned already the increase through the long-term incentive scheme, which is a fair-value adjustment non-cash. That resulted in that other non-current liabilities increasing from the prior year; still no external debt.

The rehab provision, lots of effort every year to re-estimate that based on the current estimate, so a slight increase.

Deferred tax increased, as I've mentioned, due to the slight increase in the rate on that sliding scale into the future.

Current liabilities stable, which still leaves the Company in a very healthy current ratio of 1.9.

I'm going to hand back to Mr. Pretorius now.

Thank you, Riaan. I've mentioned in previous presentations that we took on board the idea, and the ideals, of sustainable development as part of our strategic deployment of resources and capital from a very early stage.

We do measure ourselves against this metric of the value that we create and, of course, our objective is to create value overlap. That what we save on, or what we enhance, insofar as environmental value add is concerned, that that potentially adds to the financial bottom line.

I must say that this is becoming more and more organized. It's a slide that's becoming easier and easier to talk to, and insofar as our integrated report is concerned.

I think it's also something where we can relate our day-to-day activities, what we do and what we put in place, that that increasingly finds its way into the integrated report in terms of real value add and changes in real circumstances.

Obviously, when it comes to our financial capital side that remains our primary objective, is to offer some sort of reward to shareholders for investing their capital in the equity of this Company. Riaan took you through the numbers there; we're pleased with the revenue; we're pleased with the operating profit; pleased with the dividend; and also, the performance of the share price of the Company.

In addition to that, I think enhancing the quality of life, and I'm talking from the perspective of social value, of natural environmental capital and also social and human capital; improving the quality of life of people in and around the Johannesburg area remains a high priority.

Then there's no, unfortunately there's no finishing line here, there's no gold medal for this. There's only criticism if you don't do what you're supposed to be doing.

I think we're increasingly progressing towards a point, making steady progress towards a point, where the impact of what we do is becoming less and less felt in the surrounding environment. Some NGOs might feel a little bit threatened about this, because they have to find a source for raising capital, because they also have to raise capital somewhere else. But be that as it may -- maybe that's also not a bad thing.

We are focusing a lot on bringing dust exceedances down off our tailing dams. We do that by way of vegetating those tailing stands and a lot of money goes into that.

Despite the dividend payment of this year, and despite having paid dividends in the last nine years, the money spent on this particular aspect of the business still exceeds the total return and dividend to shareholders. I think if money spent is an indication of where your priorities lie, or at least your awareness of what needs to happen in order to be sustainable, that number is indicative of that.

We almost treated 1 billion liters of sewage water this year. We might get to it next year. That's water coming into our sewage -- into our circuit through the sewage treatment plant at Rondebult. Plans for building something similar at one of the other sewage farms, to have wider access to water also in the West Rand. And then, a total of 62 hectares of land that's been rehabilitated.

Riaan spoke about the increase in volume throughput. That is as a consequence of installing additional technologies, new technologies for better optionality towards volume throughput. We'll do more and more of that.

A life of mine beyond -- conceptual life of mine beyond the current life of mine assumes a fairly significant increase in volume capacity and that remains on the planning radar screen of Jaco and his team.

Insofar as human capital is concerned, you know that we are striving towards establishing a knowledge-based labor force. It's the lowest risk type, we believe. We're seeing that. Our employees have rewarded us this year by agreeing, without any disruption to operations, to another two-year wage agreement with additional benefits.

I choose to believe that some of those benefits, which have been included in that wage agreement, are long overdue. It involves a housing scheme, in terms of which assistance is provided by way of top-up finance to make home ownership a real possibility for those of our employees, who don't have that security of tenure just yet.

A whole lot of employees trained. I think we've put more than 1,000 courses of own employees and also those of service providers, 1,300 courses were offered this year. Amongst those, financial literacy; we don't want our employees to go and incur irresponsible debt. We want them to be financially secure.

Then about ZAR15 million spent on community projects. Our community projects, categorize those basically in two main categories; it's youth education and poverty alleviation.

The person that you're seeing there, if I may just digress a little bit, that's a vegetable garden, one of the informal settlements not far from our operations. A plan's been devised and it's put in place where on a piece of land the size of a door you can feed a family of four.

This has taken off wonderfully. More than 500 families have already taken this up. Some of those are now also green-shooting out and becoming entrepreneurs, becoming bona fide vegetable farmers.

Looking ahead, you cannot turn a blind eye to the trend in yield and the trend in cost per kilo produced of the last year. Obviously, if we want to be around, going forward, we need to make sure that we do the right things to ensure that our volume throughput capacity is enhanced and increased.

There are things that can impact on that, that we have that in hand, additional access to water.

The grid is becoming an increasing problem unfortunately. While Eskom is producing enough electricity for South Africans to burn, the ability to get the electricity to the different points where it's being consumed, that ability is increasingly becoming a little bit wobbly. I think I mentioned that in the presentation after the half-year results as well, that the grid is taking strain.

We're finding that quite often now, once or twice a month where there is an interruption, because of a pylon that's failed, or the ring feed is under pressure, or between Friday 3 o'clock and Saturday morning at 9 o'clock there's no power at a municipal delivery point or substation.

These are things that we have to overcome. Obviously, for the longer-term sustainability of the business, we need to put measures in place.

We have more than adequate emergency electricity generation capacity, so we don't have a situation where thickeners start tripping and failing, and where the circuit starts choking because of power failures. But it impacts on the consistency of throughput. Obviously, this old lady wants to dance to a steady waltz. She doesn't like the cha-cha and then the tango and then back to a waltz. You've got to keep it rhythmic and steady.

The extraction efficiency issues. We're going to be mining these lower grades going forward. There is still some gold on the table; we're still leaving some gold on the table. Going forward, I think we would want to improve the efficiency with which we treat specifically the low grade material.

So the Ergo plant's hitting the target. They are getting the desired reduction in residue that we set out to achieve, which is doing the assays and doing the sampling. There's more room for improvement, and that is a catalyst for longer-term sustainability and enhanced profitability if we can crack that now. So there is going to be a lot of direct focus on that going forward as well.

Then also, just insofar as pushing decision-making deeper into the organization, we're running a very successful program now where instead of teams operating in a, let's call it, a vertical silo, we are now increasingly finding, through this intervention, more horizontal interaction. Interaction not through supervisors, but interaction of employees at operating level on the shop floor.

We're seeing that there's some system improvement coming through. We're seeing that there's some behavioral improvements coming through. That is something that bodes well for the future.

It's key to our endeavor to have a knowledge-based labor force, who can take decision-making as deep into the organization as we possibly can push it; but also who knows how to respond appropriately to certain events occurring and then addressing those in the appropriate fashion, through communication but also through conduct.

So looking at the year going ahead, it's going to be tough to beat this. It was an exceptionally good year. We had the benefit of some tail-end high-grade throughput at Knight. And, we had the added benefit of a gold price that came from nowhere and just shot the lights out. I think it turned at somewhere -- ZAR650,000 a kilogram at one stage, if I'm not mistaken.

So a tough act to follow, but I think the message into the market has been consistent. If there's free cash flow it'll be distributed. If there isn't, then there won't. Our endeavor remains to remain profitable and to generate as much free cash flow consistently through the optimal exploitation of our ore body.

Going forward, and I alluded briefly to that earlier, for the next six/seven months through to January, maybe early February, there will be some clean up done at the West Rand site.

It will continue to put pressure on the costs of material being fed into that before we hit the site that's been developed in the South of Johannesburg. We're going to hit that really hard, spend a lot of capital to put a decent site in place there for decent volume throughput. Those are going to be cheap tonnes to mine.

As I said earlier too, the work that we've done at Knight towards maintenance, we should see the effects of that going forward as well.

Come December, we should have a pretty good picture as to what the future will look like production-wise. We're not adjusting our production target just yet. I think we do say to the market that we want to produce between 145,000 and 150,000 ounces per year.

At this stage, I think we're going to be threatening the lower end of that range as opposed to the higher end. But we'll know, come December, how things pan out, and also how successfully we commission the new site in January/February.

So, reflecting briefly on the performance of the share price, was a very, very, good year. I do encourage all and sundry though to read the reports by analysts. They look at the fundamentals of the business. Sometimes, the trends take these shares a little bit further than what we can sustainably support through our operations.

The fact that the share price went to ZAR12 following the Brexit vote had absolutely nothing to do with how well, or how poorly, we're running this business.

It had everything to do with the fact that a bit of fear has crept back into the global sentiment. That the order, as we have come to understand it over the last few years, of governments becoming a source of capital and that the mistakes that you make will be smoothed over the fixed by a combination of central banks throwing money at the economy and sustaining the size of that economy, but the fear has crept into it.

Maybe it is a fragile system. But it's not that fragile that, all of a sudden, people are going to be running away from financial instruments and investing solely in gold. There was maybe a bit of a flicker of that, potentially an overreaction of commodities -- of gold commodities.

Maybe ultimately the better thing to do is to just look at the fundamentals of the business. Our ambition is to sustain the share price, based on the fundamentals of the business going forward, assuming the gold price stays where it is. Don't go to sleep on the stock though, that's the bottom line.

All right. I think that wraps it up. Any questions? Brendan?

Brendan Ryan, MiningMX. I think it was at the beginning of last year when your share price was also volatile, and you made a few comments attributing that to retail investors. You said that you were seeing an increase in institutions holding your shares, which you felt would maybe bring some stability.

A year later -- or more than one year later, what does your share base look like? Are you attracting more institutional support from funds?

And then, in particular, your share price dropped like 20% after you'd put out the trading statement. Is there a reason for that? What do you think your investors were looking for in their reaction to that trading statement?

Thank you. I think those are good questions. Firstly, the register is definitely showing some signs of more institutional investors coming into the stock, but acting like retail. I don't get the sense that the weight has swung towards longer term.

You know, Brendan, I think once you analyze why the share price has moved, the gold price went up, not because of a systematic trend in a certain direction. The gold price in South Africa went up because the rand went from -- what was it, ZAR10 to $1, to ZAR15 to $1. But that's not a trend, that's an event, and something can happen to reverse that event.

The Brexit vote, I think very few people anticipated that England was going to vote to exit the European Union, that too. It's not indicative of a new trend. That's an event, and the market responds to those events.

So looking at those two events and then also looking at the performance of the share price after we had put out the trading statement, somebody explain to me why the share went to ZAR12 based on the numbers. If somebody can show me that the numbers supported that share price, then I'll try and find an explanation for why it came down when maybe the cold hard facts were, once again, presented to the market.

I suppose one could be philosophical about it and say, yes, so the headline earnings were down. Maybe there was additional information that should have been in there and the market didn't understand that many of that -- much of that was non-cash, and they thought it was cash.

I don't know. I think people understand reporting language. They know that headline earnings, and earnings per share, and so forth is a composite number; that it contains both cash and non-cash items. Maybe just in the cold light of day that's what the share price should be. I don't know.

I don't want to speculate about these things. But I do wonder at whether there was justification or support for a ZAR12 share price.

Hurbey Geldenhuys, Vunani. You've mentioned that there's a number of once-offs and non-cash in your all-in sustaining costs. What would that number have been if you were to exclude those? And what are the prospects for costs rising in the current year?

So the cost per tonne will remain pretty steady, because once we come of the West Rand the tonnes that we're going to be mining are cheaper tonnes, less milling involved.

Riaan, you had a number of about, was it, ZAR60 million/ZAR70 million?

Yes. The one specific one that I referred to was the ZAR40 million swing year on year in the rehabilitation change, which is a non-cash change and the estimate of the rehabilitation liability then goes through the income statement.

In last year's base, it was a negative ZAR20 million. This year it's ZAR20 million positive, or debit to the income statement, increase in liability. So that ZAR40 million swing year on year that impacts all-in sustaining costs directly.

And there's also the mark to market of the long-term scheme?

For sure.

It was about ZAR27 million, if I'm not mistaken?

That's right.

So those two alone take you to just under ZAR70 million. That's a big number.

[Kgosi], Momentum. I just wanted to -- I have a few. If you look at the fine-grind circuit, is it working as what you wanted? Or there are still some adjustments that you have to do on it?

Looking at the end result, in other words sampling the residue, we set out to achieve a 0.3 gram per tonne drop in the residue, and on average we're achieving that. But what our assaying is showing us is that there is room for further improvement. That will undoubtedly be a focus point for us going forward.

We want to see if we can get the high-grade tail down even further. We also want to see if some of the gold that we're picking up in the samples, but not seeing on the table, whether we can reduce that range.

And with regards to yield, I see you achieved 0.18. What should we expect going forward?

I think you should err on the safe side of conservative. I don't think, until after we've cleaned up our West Rand site, and until after we see how Knight responds to the engineering and maintenance changes that we've made, I don't think I would want to create an expectation of high yields, not at this stage.

Leon, Nedbank. Just a quick question, I know you hate hedging, or you don't like hedging, put it that way. But if you guys know the cycle of your mining; you know you're going to get into a cycle, you're going to clean up that's going to push your costs. Doesn't it make sense to, just before that at least, lock in some of your gold price, even if it's just 10%?

Do like Harmony did with one of --?

Yes, they were lucky there, I guess.

You know, Leon, I actually gave this some thought on the way here this morning. We don't hedge, because we believe that ultimately there's a wider equilibrium. Whilst there might be leads and lags in that equilibrium, it always catches up with you.

But I do have to wonder, and this is me speaking, there is some members on my Board, who will send somebody to tackle me into the ground if they know what I'm going to say now. But I sometimes do wonder if there is an event like we saw now, the rand goes from ZAR10 to ZAR16, you know it's going to come back again, because, hopefully at some point or another, we'll start acting sensibly again.

Maybe one should take advantage of a gold price. Say if somebody wants to offer you a hedge, you're not going to hedge your entire production, but maybe if you locked in a couple of thousand ounces at ZAR650,000 a kilo if somebody wants to give that to you? Why not? Maybe the Brexit vote as well.

I think if you look at this thing intelligently, and I don't think it'll ever become our strategy, but if I have to write a thesis on it or an opinion on it, and you said to me, when would you as an individual ever consider hedging? I think there's a distinction emerging here between events that are likely to reverse at some point or another, where you can have short-term gain and just global hedging.

We don't globally hedge, because at some point or another, the [oil] price is going to break out and then you may have hedged at [ZAR]650,000 and then the gold price is going to be ZAR800,000 a kilo. You're going to be stuck; it's going to cost you. A lot of good careers have been brought to a premature end because of hedging.

Martin Creamer, Mining Weekly Online. Niel, could you just elaborate a bit on the CMR site, the cleaning up of the old site and the new site. Are you going to use existing infrastructure to get that across to Ergo? And is this the last of the material on the West Rand, as you call it, CMR? Is that West Rand or is that --?

It's West Rand, yes, yes. There are two sites. There's one that was partially mined up until a few years ago, where we're trucking in some material into an existing reclamation site, where we're basically now hitting red soil. We'll be phasing, or systematically cleaning up, retreating off that site and bringing some of the material, which is across the road, about 800 meters away, but bringing some of that material in as well. So it'll be the last of that particular site.

The other site was next to the old [Mintails] dump, the tailings dam right next to Mintails dump. I refer to it as Mintails slime, because for the life of me, I can't remember the numbers of these tailings dams. So Mintails slime will be hit and hit hard come early next year. Everything has been built. It's been constructed. It's ready to go, we're ready to hit the switch.

Leroy, RMB Morgan Stanley. My question is around your yields versus life of mine. Obviously, with the gold prices at the moment, there's scope for you to maybe drop your yields a little bit, feed in more lower grade material and prolong your life of mine a bit. How do you think about that and do you have any sense of the sensitivities, to what extent you can extend your life-of-mine profile?

I think if the gold price was lower than what it is now, we would have been dribbling in some material off our new site and maybe taking a slower approach, a longer-term approach towards the clean-up.

But in so far as favoring higher grade areas and manipulating that process is concerned, it's difficult to do that. You take a tailings dam from the one end and you mine it through to the other end. We prefer not to play around too much with that.

That seems to be it. Anybody on the radio, or on the podcast? Good. Thanks very much.