DRDGOLD Ltd (DRD) 2021 Q4 法說會逐字稿

Good morning, everyone. Before we officially start our results presentation, I would just like to briefly note a couple of house rules for this webinar. (Operator Instructions) Just to note that there is a handouts tab with all the handouts that you can download and access. (Operator Instructions)

Yes, so please settle in. Hopefully, you know where the coffee is, your own emergency exit and obviously bathroom facilities if required.

But on that note, I'm going to hand to Niël and also to take us to the start of the presentation. Thanks. Niël.

Thanks, James. Good morning, everybody. Thank you for joining us. I'm Niël Pretorius. I'll be presenting with my colleagues, Riaan Davel, our CFO; and with Jaco Schoeman. And at the end, we'll also be taking any questions that you may have. Thank you for joining us for the release of our results for 2021 financial year, a remarkable year it's been.

Well, we start. Just wanted to share with you again our disclaimer because this presentation will be containing a number of forward-looking statements, so just read for the necessary caution. And you might remember that last year, we went with people, climate and profit. This year, we go with Mine. Enhance. Sustain, which I think slots nicely to the ESG theme that has become very prominent.

Right. So just some of our key features for the year. It's been an exceptional year, mostly as a consequence of particularly the first 6 months of the financial year through to December. At the time, gold price was still really high, I think north of and in the region of about ZAR 1 million a kilo, which in gold mining universe is just -- it's the sort of thing that you never dreamt you would actually witness. But we're very well positioned to take full advantage of this. Production was really good. We had our costs under control, managed to keep our staff safe and they've made their contribution in terms of keeping themselves safe in terms of COVID protocols, et cetera, et cetera.

So all of this translated in what we have on this slide for you in terms of the highlights for the year. Revenue, up 26% to north of ZAR 5.2 billion. Operating profit was up nicely, 39%, to about ZAR 2.1 billion. Production just shy of 5 3/4 of a tonne -- or tonnes rather, 6% rise in production. And this was from both sites. We saw exceptional volume throughput from both of our circuits and also some really good plant performance indicators as well. Our teams really managed to keep their plants stable and operating well. This translated in an all-in sustaining cost margin of just under 32%.

Gold price was, as I said, pretty good to us in the financial year. We saw a 19% increase in the average gold price received in the previous year, north of ZAR 900,000 a kilo. Headline earnings, 127% increase on the back of both performance and the higher gold price.

And then, of course -- here we go, I'm just going to try and see if I can get -- here we go, a much better screen. And this enabled us to, for the 14th year in a row, pay a dividend. Final dividend will be ZAR 0.40, which takes the dividend for the year to ZAR 0.80 and Riaan will elaborate more on what percentage that was and what yield it is and how we compare to the rest. But this has always been for us, as a company, a very important indicator of where we are, are we making money, and some of that finding its way to our shareholders. So happy to say that for 14 years in a row, we've been able to do that.

Paid a lot of tax, as you might imagine, with the sort of profits that we managed to generate. So ZAR 452 million went into income tax. And then also employee tax, pay as you earn, ZAR 223 million. So new services and shareholders in terms of funds distributed more or less on an equal footing for the year at north of ZAR 600 million in respect of both.

Now with women's month, we're obviously also proud to report on some of the numbers that we've managed to achieve in this regard. We have 23% women in our total staff, which is about double the average in the mining industry. 38% of the members of our Board are female. And we're very thankful, firstly, and also very proud of the women in our staff contingent, personnel and staff. And we set ourselves the target of not only supporting their success and celebrating their success but creating an inclusive environment where all staff members are both physically and psychologically safe or emotionally safe. We really want to make sure that there are nothing inhibiting the performance of women in our environment, in our company, nothing in the way of reaching their full potential making the contribution that they do.

Focus in our company on socioeconomic development has always been key. Sustainable development for many years now has been an important theme in our strategic focus. And this year was no different, 50% increase on socioeconomic spend. It's not -- it doesn't come as a surprise. South Africa is in dire straits like many parts of the world as a consequence of COVID and the lockdowns and the impact that, that's had on the economy. We operate mostly in areas where a lot of the communities around us are per-day communities or they have a per-day economy where somebody's a guard or is a gardener or they do recycling of sorts. And with these lockdowns, that per-day economy suffered very, very significantly. A lot of people didn't have the ability to go out and work. And when they did, the opportunity was simply just lost because people who they used to do this for are just no longer around, are no longer able to offer that kind of employment.

So in that sort of situation, so those conditions, it's not surprising that there would be an increase in socioeconomic spend. Of course, our focus does remain sustainable development, sustainable communities. But this is an extraordinary year so there was a bigger element, and I'll elaborate on that when we get to the ESG.

And then, of course, our company, our operations. It's a gold producer in the middle of a city. We didn't go to the city, the city came to the mine, but that's notwithstanding. Fact is that there are lots of people living around our operations and we don't want them to suffer discomfort or ill health as a consequence of our presence. So we do a lot to suppress dust and we closely monitor what the impact is of dust. When I go through the environmental numbers later on, I'll elaborate on this.

But in terms of all of the measurements, and there are several hundred every year that are taken from just under 90 different sites across our entire belt, might be a little bit more, Jaco could elaborate on that if necessary, but the exceedances were limited. I think we've broken the back on dust emission. It's a case of just tying it up towards the natural end of this program.

I'll spend a bit of time on our operational trends for the year and just show what the story is that these trends are -- what the story is that the trends are telling us and what we can expect going forward. We've broken up in the 2 segments and then there's also a consolidated one.

So firstly, just looking at Ergo, you could see that volume throughput for the financial year has actually been really good. Both half years, we managed to go through 11 million tonnes. So our worst half this year outperformed our best half in the previous year. Of course, the 9.3 million tonnes in the second half of financial year '20 that's obviously COVID related, but recovered nicely from that. And you could see that volume throughput was most definitely one of the star performers.

The yield, starting to go down ever so slightly. Once again, just to interpret this slide, the second half of 2020, that's when we were focusing mostly on the high-volume sites. There wasn't much happening in the form of tracking of high-grade material, cleanup material and last-phase material. So slightly lower yield. And then you could see the difference is now starting to set in and that gives you a good peak into the future in terms of where we are relative to head grade and recoveries.

So we've been reporting in the past and telling our story that Ergo is going to start going into a high-volume, lower-grade scenario in the not-too-distant future. And it's basically made that step change now with the high-grade circuit of (inaudible) having been phased out in this financial year. So the yields, as you could see coming out of Ergo, are just under 0.02 lower than what they were in the past. So looking at about 15 million to 18 parts per billion, lower yields, and that's attributable to head grade. I'll elaborate a little bit more later on and what we're doing about this and how we're setting ourselves up for even at these levels to be sustainable and profitable and still offer very, very good returns in the way that we're just moving around our costs and setting up the business and configuring our layout particularly the number of sites, et cetera, et cetera. So I'll talk a little bit more about that towards the end. But this is where it's sort of settling in, in terms of head grade and yield going forward.

Production, just over 2 tonnes for the first half and just under 2 tonnes for the second one. And I must say the first 6 months of this year has been like no other period that I've ever experienced in our company in the -- since 2003 that I've been involved with DRD. It's just been one of those once-in-a-lifetime periods when not only was the gold price at record highs, but the gold just came out. It was gold everywhere. Our circuits performed so well and a lot of that admittedly relating to sort of late-stage cleanup, final stages of floors being lifted, et cetera, et cetera. And that's also in the final source of its high-grade resource, the 4A6 there.

So an exceptional half year that sets up really well for the future and enabling us to do the stuff that we want to do to take the business forward.

Far West Gold operating trends, no surprises there. Far West Gold is consistently hitting the volume mark. These are very straight lines in terms of volume throughput.

In terms of yield, you also see the slight dip in the second half of last year and this is actually -- the scale here is probably more pronounced than what the real difference is. But this is a circuit that's taking full advantage of the high-grade resource achieving very, very good yields and improving as we go along, some of the initiatives that I will talk more about later on. Very, very good second half with just 3/4 of a tonne of gold production contributing to the total number for the year.

If you combine the two, our group operating trends, exceptional value throughput and yield per tonne that, as I said earlier, about that 15 parts per billion on average lower than what we saw earlier in the previous quarter and focus as to how to shrink that through better recovery efficiencies going forward, have a good indication of more or less where we landed following the phasing out or the conclusion of some of the high-grade sites at Ergo and move towards more of a slow high-volume throughput scenario. Then total production for the year, you could see also just under 3 tonnes and 2 3/4 of a tonne of gold production for the second half.

So with that said, I'll reflect a little bit more on this towards the end with the summing up and the looking forward.

But I'll hand over first now for the time being to Riaan to take you through the financial review for the year. Thank you.

Thank you very much, Niël. Yes, it's, as always is, my privilege to take you through our results for the year ended 30 June 2021. And yes, of our 126-year old company, as Niël said, it's definitely one of the best periods that we've seen in a very long while. And it's usually also personally rewarding and I think these already wonderful results.

As Niël has done, just starting with the Ergo financial results and sort of broken up into half years. And the theme that Niël mentioned around the 2 halves, very much true also for the financial results. For example, Ergo, half year-on-half year, down 26% on revenue, obviously impacted by the rand gold price, it was 14% lower in the second 6 months versus the first 6 months of the 2021 financial year. However, overall, as Niël mentioned, the gold price increased 19% year-on-year to just under ZAR 918,000 per kilogram. So up revenue 29% year-on-year for Ergo. Obviously, the volumes impacted for COVID in the last quarter of the previous financial year.

But we're very proud of and continue to manage very carefully is a bit under our control, obviously head grade isn't. Yield, we obviously like to -- and we do manage to keep the plant stable. But it's really costs [ramp to time]. And you can see that costs for Ergo up 17% year-on-year, but also the volume is up 13%. So really managed to maintain our ramp to time , which will continue to be a huge focus for our business.

And then the operating profit year-on-year up a massive 57% increase. And again, Ergo, again, showed its resilience. Wonderful volumes that it has achieved. Under most circumstances that we sometimes amazes us with load shedding, many, many challenges also in July at the year-end that we've experienced, supply challenges. So a wonderful, wonderful performance for Ergo overall.

The Far West financial results. As you all know, much simpler operations. So the 1 site, high-grade Driefontein 5 that we're mining. Also period-on-period there, revenue down by 13%, very much responding to the 14% revenue decrease between the 2 periods. But year-on-year, a very handsome 18% increase, responding to the increase in the gold price.

Cash operating costs year-on-year increase of 15%, very much because the milling costs came into effect for the first full year this year but good impact on yield, as Niël alluded to.

And looking at operating profit, a very solid increase of 20% year-on-year. And again, just to note always for Far West astonishing when you just look at it as an operation as a stand-alone operating for the year ended 30 June 2021 at a cash operating cost of just over ZAR 276,000 a kilogram or in dollar terms at USD 558 per ounce, which is remarkable. Obviously, we know the reason we're targeting in the Phase 1 for 4 weeks the actual high-grade resource there and obviously we're building back towards the next phase of that operation.

The group financial trends. Operating margin, again, showed a slight decrease in the second 6 months. It's still a very healthy operating margin, obviously impacted by the lower rand gold price in that period, but a good increase year-on-year.

The all-in sustaining cost margin, obviously, both on the operating margin and what good to note there, yes, also a decrease in the second 6 months of the year. But what we've seen from our point of view is a 16% increase second 6 months. There was a third 6 months in sustaining capital spend. And year-on-year, an increase of 100% in sustaining CapEx spend. And that, for us, is very positive because we're continuously investing in our business, making sure it's as efficient as it can be to deliver the best possible results for the ore body that we're actually mining. So still very encouraging all-in sustaining cost margin overall.

Free cash flow, absolutely wonderful numbers to look at. Overall, for the year, a 22% increase year-on-year to over ZAR 1.1 billion generated in free cash flow. As Niël has said, that remains our key focus to make sure that the business generates cash so that we'll be able to continue to pay dividends as we've done for the last 14 years.

And then headline earnings per share, again, that ZAR 1.11 for the first 6 months of the financial year just highlights the absolutely magical period that you all referred to as high gold price, high gold production and was really a wonderful period for us. But overall, headline earnings at ZAR 1.684 for the year and that's up 104% year-on-year, which is a wonderful achievement.

Then hopefully, all of that background through the operating trends and financial trends will put our primary financial statements into context. Revenue, up 26% year-on-year as a result of the gold price increasing by 19% to just under ZAR 918,000 per kilogram and gold sold increasing year-on-year by 5% to 5,734 kilograms.

That cost of sales line that you see there, up 15% year-on-year. But it responded to an 11% increase in volumes year-on-year and then also a 6% rand per tonne increase. As I've emphasized, a really important measure for us is to keep our costs intact and the rand per tonne because of the number of tonnes that we process is a really important measure. But we're very happy to report that we'll continue to focus to keep our costs in check because that is the one aspect that we have control over.

Then just going to administration expenses. Just noting the anomaly around -- anomaly around share-based payment expense. We'll look at our share price a bit later on as well. That was the last 50% of the 5-year cash-settled share-based scheme. That obviously responded to the massive increase in our share price to 30 June last year and subsequent to that period, but came back just before the settlement of that last tranche, and that's why you see partly that reversal of the ZAR 28 million in the current financial year. That resulted in results from operating activities of just over ZAR 1.8 billion.

Finance income also boosted this year by some dividends, specifically from Rand Refinery of ZAR 72 million and finance income. And then the finance expense there mostly relating to the unwinding of our rehabilitation obligation. So not a big cash portion there, which we'll see on the cash flow statement.

And then the income tax, as Niël alluded to, obviously, year-on-year increase in the overall income tax charge, which comprises current and deferred tax of 52% year-on-year.

And then that ZAR 1,439.9 billion, so just over ZAR 1.4 billion profit for the year. If you do a quick update, so there's a number of ways to do it, but you take that number over equity on our balance sheet, it gives a return on capital of just under 30% for the year, which is quite an impressive number, and I believe, relative to the mining industry, a very attractive return on capital invested.

Statement of financial position or balance sheet. Yes, very much stability is the theme here for me. So property, plant, equipment, obviously reflects the capital that we keep on investing less depreciation.

Noncurrent investments and other assets, mostly our rehabilitation assets under various vehicles, but also our Rand Refinery and other investments in that line.

Cash and cash equivalents we'll elaborate on the cash flow statement, but a positive increase year-on-year. But I'll allude on that -- look at that on the next slide.

Other current assets, very much stable period on period.

And then the equity number that I mentioned to calculate return on capital, obviously the profit goes through there less any dividends that we declare.

Provision for environmental rehabilitation, again stayed stable although there's always this unwinding of interest that I referred to. But the difference for us is that we continued to settle that liability as we continue to vegetate, clean up old sites. So that number has actually come down if you take out the impact of inflation or unwind it, which again, I'll allude to just on the cash flow statement as well.

Deferred tax liability, yes, we also mentioned we will see that grow as our forecast around taxable profit becomes bigger as we generate more taxable profit for our business.

And then the current liabilities, obviously, that included, as I've alluded to last year, short-term settlement of incentives that was settled in the current year.

The current ratio, extremely healthy for us as it is presented there.

Then on the statement of cash flows. Again, just to lead, the cash generated by operations over ZAR 1.8 billion there, an increase of 41% year-on-year. And that's always a sign of a truly healthy business is the cash that its operations generate. There you can see the interest and dividends that I've alluded to in cash. Interest paid, very much smaller the cash portion of that than on the income statement. And that's the number Niël alluded to as well, the ZAR 452 million current tax paid in cash to the receiver of revenue and it is a massive contribution to the success. We also mentioned that we've paid on behalf of employees. But yes, we'll obviously continue to make that contributions and continue to hope that, that money is well spent in the South African economy.

The acquisition of property, plant and equipment, again, big increase, just under ZAR 400 million cash spend year-on-year and that will continue to grow. We've alluded to guidance and Niël will elaborate on that later on, around ZAR 600 million in the next year. That's why we continue to invest in our business. And that, for me, again, is a very positive sign that we continue to operate things and improve things under our control. So that will definitely continue.

And then I alluded to some spend, that ZAR 51 million is mostly relating to more than 100 hectares of vegetation that we've done -- completed on our major tailings facilities, which is very encouraging that we do take cash flow that we generate and vegetate as we operate. So no, we do not wait until end of our operation.

And then the ZAR 641 million dividends. That's obviously last year's final dividend and interim dividend. And Niël mentioned that was the ZAR 0.40 that the Board has declared, now takes us to ZAR 0.80 relating to this financial year. And if you do a dividend yield calculation at 30 June of what our share price is, the dividend yield is higher than 5%, which is, I believe, a wonderful dividend in the context of the mining industry and something that we're very proud.

And then we've all taken into account with all those flows sitting with cash in the bank of just under ZAR 2.2 billion.

And then I may just say a couple of things before I hand back to Niël on the share price, I think he wants to elaborate slightly on it as well. But just if you look at that 2-year picture there, absolutely marvelous total shareholder return if you just look at, sort of, say, May 2019. Then over that period, together with healthy dividends that shareholders received illustrates huge returns, the total shareholder return, and both capital growth over that period plus dividends, which is very, very encouraging.

Yes. So maybe I can, at this point, Niël, hand back to you if you want to maybe continue with some comments on the share price and bring the rest of the presentation.

Thank you, Riaan. Since we decided to include the performance of the share price chart for a slightly longer period, I think the last 2 years in particular are relevant to see how the share price responded to various dynamics. Obviously, there was the uncertainty last year associated with COVID and some -- a lot of investors came back to gold as a safe haven investment with the rest of global economy becoming unstable and uncertain. I think we also saw a very significant support of liquidity when one of the large index funds came back into the stock, this one June to July that maybe provided some additional impetus. And then with the world sort of settling into a new rhythm and having taken stock and developing a different perspective on where the global economy is going to go and where investment money should be going, it could taper off quite a bit and follow the industry down to current levels.

I have to admit that with the share price north of ZAR 20, you were wondering how do we sustain this? So maybe, just maybe, the levels to which it's returned to are more relational in terms of production and outlook and potential performance. Well, it seems to also find itself slightly in an indecisive period at the moment. So a period of indecision. What is comforting though is the fact that support -- rebase, I think, is the term that you support seems to have come in at a slightly higher level than what we saw in the past. There was the dumping of -- it was close to $4 billion worth of gold a few weeks ago pulled the price down by $100 a little bit more in a single day. And then it bounced off to $1,700. So Yes, it's interesting to see where support for gold actually comes in.

Be that as it may, ZAR 850,000 a kilo and north, gold still finds itself in a very interesting position and certainly high enough to justify the CapEx that we're looking at spending and supportive of our operations going forward. I was saying to somebody earlier today that out of the last 10 years, it's still better than maybe 7, potentially even 8 or for 10 years. So I should probably be careful not to start looking at last year as the new standard, as the new benchmark.

So looking at some of the other performance indicators and some of the other issues that we'd be focusing on. I'm sure I'll get this to move anytime soon. Yes, here we go.

So ESG. I'm very pleased that as a company, we decided to take sustainable development onboard as it's a very important thinking to -- a guide to how we thought about investing CapEx and the sort of value add that we wanted to offer broadly speaking.

So when ESG finally became prominent as prominent this ought to be in our view, I think we already developed a very good factual base to slot into this newly development narrative of particularly the environmental and social value add. We refer to that as social capital and nature capital. So our story is one that I think has been developed over time. We're very much approaching this on the basis of overlapping value add or integrated value add. And I think we are seeing that in the results coming through quite nicely.

So moving on to the substance of the presentation. There we go. All right, now I want to talk just a little bit to the picture -- to the photo on this slide. This is the Crown Tailings. And maybe to give a bit of perspective of what we mean when we say that sustainable development has positioned us very favorably for the emphasis on ESG and how that's impacting on just the investability of companies. So this picture, Crown Tailings is right next to Soweto. And it's -- and certainly, one of the things that I think, as a company, we are very proud of how this particular complex has improved from an environmental and social perspective over the last 10-odd years. And this is not coincidental. Lots of people live in close proximity to this facility. And I think it was in 2007 that for the first time, the senior management of Crown at the time presented a budget that specifically provided for vegetation. It was no longer just an operational expense. This was something that we wanted to bring in as far as an ongoing campaign. And we wanted to have this done over a period of time, I think our target date still remains 2023. But that first ZAR 16 million to new budget item, service fee. The one was, first, for vegetation of the Crown Tailings and the other one was a capital vote for the repair of pipes that just kept on bursting.

And now this thing has developed a mind of its own, jumping on to the next slide. Here we go.

So 2 new items that featured on the budget for the first time coming out of the operations, this vegetation since 2007. Coming from the Free State from Parys driving through that little bridge, a little flyover, that almost frames this dam, this particular site. As I said earlier, it's one of the things that gives me great pleasure to see that every time that I drive up towards the mill from the Free State of just how this is beautifully framed and how the best nuisance and the impact on the quality of life of the people in that area that has improved as a consequence of this vegetation. And it's a good program, it's a sustainable program. It takes about 3 years to settle and then it's on [turn]. It involves mulching and cladding and a very interesting cocktail of vegetation that takes to this particular area. And this is happening in [semi dry] South Africa.

So just looking at some of the numbers at the bottom there, 12% increase in externally sourced potable water. This is a year-on-year number that has perhaps emphasized somewhat in a slightly distorted way by the reduction in water consumption last year when we had the lower volume throughput. But there is nonetheless one additional dynamic that has added to this, and that is that we're getting less water from sewage plant. So we built a beautiful sewage plant a few years ago that were treatment plant for sewage water and that can find its way into our central water circuit. You will remember that we have a centralized water circuit. Everything is distributed from one point or it stays in a close circuit and this is one of the sources.

Unfortunately, the throughput of this particular sewerage plant has decreased in the recent past as a consequence of maybe not as much sewage actually reaching the sewage plant, and it's consequently getting less water coming out of that. But it will remain an important focus area for us.

These numbers look a lot better than what they looked like 10 years ago when we started targeting a reduction in potable water, and we do still make use mostly of recycled water. But this year, the trend is in the opposite -- or the number is in the opposite direction, not so much a trend but as an event comparatively speaking.

I spoke about the dust and in the background there you could see the reason why there's less dust. Environmental spend is ZAR 105 million. We'll show you the comparative numbers on the next slide. All of 115 hectares of additional vegetation was established. It's also almost a doubling of last year. I'll give some of that perspective, too. And then 87.6% hectares submitted to the NNR and awaiting approval. The significance of this simply is that before land can be put to sustainable use once it's been cleaned and cleared because these are areas that previously sat under tailings dams that have since been recycled. Before that land can be used, the NNR needs to give it the green light that it doesn't pose a radiation risk. And 87.6% -- rather 87.6 hectares of land has now been -- and this is in the context of the city, this is in Johannesburg, has now been submitted to the NNR and we're awaiting their approval. And obviously, we only submit these if we can demonstrate that the site has been cleaned of radiation, that it doesn't pose a risk and can be used sustainably.

Tailings management has become a very big part of the -- both the environmental, the social and the governance composite in the sense that because of recent events, it's very prominent in the public eye. And quality of tailings management, by and large, is also a good indicator of quality of management generally. We've been setting ourselves up for, I think, an environment that is going to demand more transparency and more access to information in terms of just where you are, in terms of tailings management. And these are the tailings on which we deposit, not the tailings that we're recycling.

So in order to make sure that we are trending consistently towards the best standards, we established this tailings review board in 2018, made up, amongst other things, of some independent authorities in the field. And they provide guidance to management and assurance to the Board. And these are some very interesting conversations taking place on exactly what the tolerance levels ought to be and what the standards ought to be that we aspire to achieve in terms of managing our tailings properly. We've established an interactive management system, tailings performance management system. This is a web-based system that is regularly updated, and here, we track and monitor a whole host of things.

Firstly, in terms of status, what's the status of the phreatic surface, what's the status of the -- what does the freeboard look like, the size of the pond, what are the open items that we are working on to ensure that the condition of the tailings spend every year is an improvement compared to the previous year.

What we also have started doing a few years ago was to rely less on independent service providers in terms of assurance and to establish line of sight literally deep into our tailings dams with own personnel and own oversight to make sure that we maintain the standards that were required for the safe operation of these tailings there.

We're bringing technology on board. It's a fantastic kind of technology that's available nowadays for this sort of thing. And this InSAR technology, which is basically satellite imagery, but in a slightly more sophisticated application, which shows you if there's been any movement in the tailings dam, is it exactly in terms of shape the same condition that it was in when the previous image was taken. And then this is important to detect early detection of any kind of movement in the tailings dams. And I remind you that the tailings dam isn't really a dam. A tailings dam is it's a very interesting and subtle balance between wet, gravity, water and material, which you need to manage very carefully in order for it to stay in balance. It's a live thing, it breeds, it sweats and it's not supposed to move, but it can move and you need the sort of technology to make sure that you pick up any sort of movement, any sort of early indication that an imbalance is developing. So this is a big comforting part of technology that we're using in this regard.

And then of course, there's the ground surveillance that we also do on a quarterly basis, which helps a lot. Any change in texture or color of your vegetation on top of your dam, for example, might be an indication of a change in the water balance or phreatic surface or a problem with drainage or anything like that. So these things are looked at long and hard and on an ongoing basis.

Right, so moving on to the next slide. This is just the spend, the environmental value add or spend at our plants. Once again, I want to reflect on the picture. This is the top of a tailings staff. So the best way to bind the swell on top of the dam is to put a vegetation into it. So the root system binds it. And the best way to also make sure that, that doesn't come off it is to keep the wind away from the surface. And therefore, you see this combination, this cocktail of plant material. That's established on top of the tailings dam. And after 3 years to see earlier, it becomes self-sustainable and the irrigation is no longer necessary. These are a picture of one of the tailings dam -- top of the tailings dam to the southwest of Johannesburg, yes, Soccer City. And as a farmer, I mean I'm just loving the [lushness] here, that's a healthy plant, very nicely established.

So just looking at the spend itself, ZAR 105 million was spent on environmental containment and these sorts of measures. Now let me just also add that this is not part of the steps that we take, which is part of the day-to-day running of the business, the operating costs. The very nature of our business is by removing dams and by sort of following the face of the dam as we're removing it. There's rehabilitation taking place, that's part of operating cost. This is what's categorized -- clearly categorized and classified in terms of financial reporting terminology as environmental spend. You could see that it's double year-on-year. And of course, that's what the performance of the last 2 years.

What has really enabled us to do is that our focus is a balanced one. It is obviously to deliver into -- to have solid economic performance. We need to pay out our dividends. We need to make profit. We need to offer a convincing investment opportunity to the market and acknowledge the interest that the market has in that regard, economic interest. But then again, there's a social and environmental value add that is equally important from a sustainability perspective.

And when fortunes change and you're in a position to do a catch-up and just sort of just close the lag between the remainder of the life of your operation and the work that has to be done in terms of closing those sites and rehabilitation that needs to take place and maybe some of the sites, which in the past when our reality was different, is not close to a particular standard and you can throw this sort at it. And then we're running 4 legacy sites at the moment where there's a lot of moving parts, a lot of machinery moving around to make sure that we bring those up to standard and we can close them down fully.

We moved, as I said earlier, into a lower grade, high-volume period. And the last thing that you want to do is towards the end of life, and we're talking 10, 15, maybe even longer years from now as this business develops and as it adapts to its situation, you don't want to be in a situation then when the revenues are maybe lower or margin is under pressure to then have the obligation to do the sort of catch-up. So rather catch up now and make sure that these 2 track each other. It's all about concurrent rehabilitation, which is a term that we use a lot.

Hectares of vegetation also doubled -- or almost doubled compared to last year and the year before at 115 hectares. This is not just environmental in nature, but this is also our social dividend. This is making sure that the people living around those dams that they don't live in a dust cloud, that they don't have the nuisance of dust and also the potential health issues associated with dust.

I spoke earlier about the radiation standards. Our largest tailings dam and this particular one that's on this picture is no longer classified. It's no longer under the conditions of -- it's no longer under the conditions of a nuclear license, which means that people who work on that dam no longer need to wear protective gear from a radiation perspective. So it doesn't pose a risk in that regard to surrounding communities, but the dust needs to stay under there because if it gets blown into these communities, then obviously, some of that advantage, some of that benefit, the airborne stuff, you lose that. And that's why this is so terribly important from a social capital perspective and why it's been a very key focus area for us in the last decade.

Looking at the electricity consumption. You probably want to look at the 2019 numbers compared to 2021 because there was the interruption with less electricity use, particularly in terms of milling during the lockdown last year. So you'll see that the megawatt consumption and megawatt-hour consumption was higher this year than last, but not compared to 2019. So it's also a profile that's changing slightly with the change in material that's coming through. And in that regard, that's really where you also make up some of the value per unit in the sense that the process becomes simpler with slimes material that doesn't require the degree of milling, et cetera, that typically would do with your coarser high-grade material. That makes up some of the margin loss in terms of high-grade material.

Potable water consumption, I spoke about that, too, which is rather look at 2019 and 2021 as a direct comparison. And we want to reverse that. Obviously, we need to -- sewage needs to reach the sewage farms, all the other storm water needs to reach the storm water areas, et cetera, and there we could draw down, make use of more gray area. We're still taking full advantage of the acid mine drainage that's being treated out of the central shop by the tunnel authority with whom we have an arrangement. So not only do we get water from them, but there's also the transportation of the byproduct there arising, which ends up on our tailings dam on which by virtue of the fact that it ends up there also makes a contribution towards our water balance. But we don't really want to be competing with society in terms of potable water, and the recycled water is cheaper than the portable winter. So that's where you have that lovely overlap or value add where your environmental value and your financial bottom line where these 2 actually meet up with good environmental practice also costs less on contributes to margin.

And then on total carbon emissions, take a good, hard look at this slide. Obviously, 2020, again, lower power consumption because of lockdown. But compared with 2019 and '21, it's trending in the right direction. And that is the one number that will change a lot over the next 24 months because a lot of the CapEx that's going to go into this business is directed at green energy and some of those will come through in the next 12 months already and come through more prominently in 24 months. Those are good programs that are on the cards.

All right. I'm pretty sure that will land on the next slide soon, there we go. This is our social spend for the year on socioeconomic development. This is the S part of our ESG. I did mention where we are in terms of women in mining. HDSA accounts 72%. And in terms of social economic development, it's up quite a bit. It's close to ZAR 50 million for the year. And it's set to remain at these levels or maybe even increase going forward. And what's really nice about where we are now is with the Broad-Based Livelihoods Programme, that's an extensive program over 7 districts or 7 areas, it really facilitated the programs that we launched in terms of COVID relief. And it's going to facilitate hopefully also the work that is being done at the moment in terms of the research that we're doing to leverage our Broad-Based Livelihood Programme and expand it into something a little bit more ambitious, all part of the initiative to mobilize the informal economy, to put to use the vast amount of social grant capital coming into these communities on a monthly basis and using that as a platform, as the building blocks for, let's call it, microeconomic development and increased independence.

I think it's important that these communities start looking more towards themselves to delivering to essentials. And we're developing the material that can assist in that regard, which we are quite keen to start rolling out once it's done and we're partnering with University of Pretoria in that regard, a lovely program.

In terms of governance, I did speak about the governance surrounding tailings safety and the systems that we've got in there. But these are the, let's call it, the aspirational standards that we look towards and that we are cognizant of and we're trying to get closer and closer to those.

On integrated reporting, we've got some very good feedback this year on the quality of our integrated report. I think it was rated excellent.

And then in terms of the rest -- the global reporting standards, the Sustainable Development Goals of the United Nations. These are very closely aligned with what we've been trying to achieve in terms of our sustainable development focus over the rebuild since forever basically that this team has been involved.

And then with Sibanye-Stillwater, as a member of World Gold Council, these are standards that we are familiarizing ourselves with and that we're trending close towards just make sure that we're not an embarrassment to our primary shareholder and that we do confirm with these standards and with these expectations.

And these are some of the Sustainability Goals coming out of the United Nations Development Goals at the bottom there that resonate with us. They are aligned with the initiatives that we're looking at. And I'm just looking at the last one, the partnership for these goals, and we really want to be economic enabler within this broader social partnership of improving quality of life and establishing sustainable communities. Some of the commentary that came out now especially after the protests of just making sure that whilst increasingly South Africa might be moving towards more of an enclave type society, it's very important that we're inclusive. This is a (inaudible) opinion that I'm referring to here. We've got to be inclusive in the solutions that we find. New partnerships, new arrangements, to not leave anybody out in finding a broader social solution.

Also understanding that we're not government. Our role will never be that of government. We're not the primary supplier of these primary services, but we can be an enabler. We can provide support in the form of both economic capacity, financial capacity and also the knowledge that we can gather and that we can make available through programs. We can be an important partner in enabling communities to look themselves over this hopelessness and build a better future for all South Africans that.

And suppose if you're not concerned by the numbers that came out again this week in terms of unemployment, then I don't know what is going to concern you because those are devastatingly morbid numbers in the sense of just what is the burden that it's going to place in society as a whole. And it's time to roll up our sleeves and get involved and assist in building an alternative economic structure, new ways of doing things. People are not going to find work in the formal economy. We won't able to accommodate everybody in the formal economy. But the informal economy is dynamic, it's vibrant, it's very sophisticated and it has enormous potential. We could leverage that provided we work from the inside out and see what we could do without assuming the role of we know what's best for you, but rather we want to be part of what's best for you through and enabling contribution.

The response to COVID is on the website for all to see. Other than to say that I was genuinely impressed with the standard and also just the attitude of staff as a whole, and attitude is an important word in our organization. Attitude towards everything is a vital part of your -- of what you bring to the workplace. And we saw the right attitude towards COVID protocols, making sure that I keep myself safe, also I don't pose a risk to my colleague by following these rules, by following these protocols. And then our numbers were low. We unfortunately lost 3 colleagues to COVID. But I think that we created a safe workplace with the protocols that we had. And that coming to work did not present a COVID infection risk for our employees. And for that, we have all of our employees to thank in just how they bought into this and how they just took the right attitude to what was made available and which they then used to overcome this virus.

And we're seeing a similar attitude when it comes to vaccination. We are fully supportive of vaccination. We do believe that through vaccination, ultimately, COVID will become a bad flu in terms of symptoms and danger. And this is where we need to be as a society and DRDGOLD is playing its role in that regard.

All right. I could speak a little bit about how our Broad-Based Programme, the entrenched program enabled us to play a role in this regard. And you see this, pretty sure, in most corporate presentations, but just over 6,000 families who couldn't participate in the per-day economy at least had some relief as a consequence of what DRD staff and its partner, MSE, that managed to roll out from Springs all the way through to Carletonville.

But moving on to the next thing. So this is something that is going to become increasingly importance in our business. In fact, it's always been important, but I think we'll attach more prominence to it because of just the role that it plays in optimizing the per-unit value contribution. So although we're treating more than 2 million tonnes of material per month, we dissect every single one of those to make sure that we don't overspend on a single tonne and that we don't leave behind any value in any single tonne. So it's a big business that's being managed on a per-tonne basis. And you'll see that we actually report those numbers: what is the cost per tonne, what's the revenue per tonne, margin recovery, et cetera, et cetera.

This is a beautiful facility that was built at our Far West Gold operation. Because of the high copper content in this resource, the purity of our dore bars delivered to the Rand Refinery attracted a penalty. We didn't get full recognition of all the gold. And this plant has now just taken it to beyond a purity of 60%, which is giving us a much better gold recognition. So we're getting more than 99% recognition at this stage and probably closer to 99.5%.

And I just love looking at this because remember, our company is a company that's made up really of infrastructure that is sort of like reflecting our man growing up years. We're a hand-me-down company. We took other sort of discard equipment and plant and infrastructure and so forth. And then we bought the right stuff and set it up in such a way that it gave us these fantastic results in terms of efficiency and throughput and just being able to monitor and see what's going on in the business.

This is all brand new, and I'm loving it. It's like getting my first pair of own church shoes and owned suit when I was in standard 5. We're loving this. It's such a beautiful picture and it works really, really well. So very proud of what we've managed to achieve here.

And we spoke about it a little bit in terms of the -- we have these hot button features. Now why we decided to put this in here is to listen to me rambling on every 6 months about investment, doing that and so forth while everybody else is also reporting. I think we're missing an opportunity to just share with the market some of the exciting stuff that our business is on about and the stuff that we do and the copper elution circuit was one of those. And there's a nice little writeup, we call it the hot button feature.

Now hot button was supposed to sort of be a button on the website, but it's now -- this is how suppose the brands develop for this particular feature. And we will be wanting to tell you more and more about this. So watch out for -- or look out rather for the hot button features as they progressively are released. And everything that's coming in on our capital investment schedule for the next few years or for the foreseeable future rather is going to feature in one of these hot button features. And we try to have a nice combination of everything of both operational stuff, engineering stuff, there will be some of the -- we'll provide updates on the research that we're doing on the informal economy model that we're wanting to help co-create. So all of that will find its way onto our website, the hot button features.

There's another word, 4L25, which is one of the older sites where it was halfway mined, very acidic, needed lots of lime, it needed lots of cyanide and it's stood for, for many, many years. And still it's a bit of a reminder and maybe also an eyesore, a reminder of a different time when reality was different. Also an eyesore in the sense that this is not how we want to leave a site behind. And this one is now actually finding its way into the production profile and it's going to be gone in a few months, just more than a year, but it will make a handsome contribution. And the contribution will not just be in terms of gold and in terms of margin and the per-unit contribution towards costs, fixed and variable, but it will also be part of Johannesburg that have been sterilized for decades because waste -- that was used for the storage of waste and it will now be freed up and could be put to a sustainable land use.

So this is delivering into our purpose and doing it in a way that makes a bit of money for the company and for its shareholders.

So we're close to the end. Now looking ahead, picture here on guidance and especially, I think, on the capital aspect of guidance. Base on what you're seeing here in terms of cost and capital, as is the product, a number of things, but one of those things, obviously, is also the fact that we are in a position to spend a bit more now on environmental cleanup. And we're also wanting to spend -- there's a lot of money that's not being distributed that we've been carrying over from reporting period to reporting period we're covering around ZAR 2 billion. It's not going shareholders because it needs to go into capital projects. And budget for this year or the plan is about ZAR 600 million of that and that is squarely aimed at optimizing our resource, increasing our -- what we call our embedded resilience, in other words, being able to weather the down cycle because there will be another down cycle and we need to see it through so that we can take full advantage of the next up cycle. It just seems as though these cycles are getting short and the amplitude is just getting for steeper. But be that as it may, we need to start spending this money now. We need to start investing it into the future. And obviously, there's a very particular -- very specific process that we follow in deciding what gets spent and where.

And what you will find, there will be more and more information going into the market this year. We want to give you more details and a clearer picture of where we're going over the next 3 years in terms of life of mine, for example, there's going to be a the resource update. We want to tell you more about some of the stuff that we're doing on the green energy side, the solar power generation and power storage. So we'll have a day for that before the end of this calendar year. We'll give a lot of detail in that regard. And we also do want to tell you more about how we're doing in terms of Far West Phase 2 and the infrastructure.

But I think what I want to share at least at this point in time is just how we're approaching this because we are living in interesting times. A year ago, we were very nervous about expropriation without compensation. I'm just thinking that, that is sort of undermining, that is part of the ideology of how we think about the economy and how we think about preservation of capital, then it's going to become harder and harder to not just get capital, but also justify spending capital. It's one thing to go and buy a farm and a crew with your own money, it's another thing to go and take your shareholders' funds and build huge infrastructure in an environment where you cannot guarantee that the integrity of ownership is taken seriously and that it enjoys the sort of protection that it requires in a constitutional democracy in an emerging economy where capital investment is really the one thing that we need more than others, anything else to just lift ourselves up.

So the way that we're looking at these capital projects is as follows. We plan them as ambitiously or as extensively as we can. So in other words, to give you an example, when we talk about Far West Gold Phase 2, the plan -- and that which we're subjecting to bankable studies. That plan extends beyond our 250 million tonnes resource and the rate at which we want to treat it and will be going to positive. It extends beyond the size-wise, it extends beyond our own needs. And the reason why we do that is that we want to make sure that while we plan big, considering our immediate circumstances, we are going to have to be just a little bit more circumspect in terms of execution. So plan big, but execute carefully and execute incrementally. That is a very important part of agility, of being able to do what you need to do in order to make sure that you can maintain your production rate, that you do not lose any sort of optionality in terms of your resource and also that you do not close the door on the potential to explain, the potential to become a regional consolidator, the potential to not just treat your own resources, but to become that economically viable -- in fact, economically robust environmental solution to that entire area.

So that's how we're looking at these projects, and we'll give some more detail on that going forward. But if I can leave this one concept with you today is our planning big but implementing carefully, implementing with care and in such a way that we do not close any doors on ourselves in terms of optimization of our position, our footprint, our resource and also the potential of the business.

So big theme items this year in terms of the ZAR 600 million capital. Obviously, Ergo is going to be green energy, the solar plant, both generation and also storage. And unfortunately, the speed at which the regulator moves, notwithstanding the fact that there's been huge improvement in that regard with the 100-megawatt threshold that's been introduced, regulator doesn't quite move at the same speed and where municipalities get involve, I mean it doesn't move at the same speed.

So we need to make sure that we can start executing notwithstanding the fact that the regulators are sort of deciding whether it wants to keep pace. But there's going to be some interesting stuff happening in the PV space. And we'll share that, as I said, before the end of this financial year. But a big chunk of the ZAR 600 million, I think about what is ZAR 110 million for this year alone dedicated towards that in preparation and setting ourselves up in that regard.

In terms of phase -- in terms of deposition capacity, Phase 2, in particular, at Far West, about ZAR 150 million to secure land and to do some of the initial work that -- and then I think we want to definitely share with the market at some stage in the -- before the end of the calendar year when construction will start with our tailings dam and what it will look like, whether it will be a big one or whether it would be slightly smaller, how it will fit in and how do we make sure that we're not painting ourselves into a corner that notwithstanding how and where we start that it will be part of the bigger story and as much as we are given the opportunity, circumstance, environment, financial reality to actually deliver into the big story. So that's starting this year, ZAR 150 million.

Then in terms of volume throughput at Ergo, about ZAR 19 million for the development of another site and that will be on a hot button feature, we'll update you on that.

And then enhancement at -- further enhancement at Far West Gold. We did the copper elution. There's a close circuit milling, circuit that also is a big priority. It's going well. This is another hot button feature that we'll feature this year. But those are the big theme items in terms of our CapEx for the new year. And we're quite keen to advance those.

Can we just make sure -- yes. So last year, as I said, political. The expropriation debate was a concern that seems to be sort of have lost some of its momentum, expropriation without compensation. But there's a new reality and that is how well are we positioned in terms of called social unrest and anarchy and where is the stack in that regard? How prepared is it? How does that impact design? And also how does that impact investment decision?

So these are important conversation points that take place on a much broader base. And we're very thankful that we get to listen to some of the intelligence analysis, not just from our own Board, but also because we are being made part of Sibanye-Stillwater's discussion in this regard. And a big part of our claims, and you'll see that also in the letters to shareholders, is to increasingly align with Sibanye-Stillwater, increasingly becoming involved in the green energy space, battery metal space. There is a part for us to play also in that regard in terms of tailings and metals that were thrown away many, many years ago that can now be recovered through recycling and that we'll also play in that regard.

Just how this whole thing comes together, if I may conclude with that really in terms of our sustainable development story. So we mine -- we produce gold out of tailings using recycled water. And increasingly, now we'll also be using green energy. Imagine if we also produce the metals used in the generation of that green energy, I mean there's a nice closed loop if ever there was one. Wonderful combination of financial -- financially robust ESG. That's really where we want to be.

I think I've covered everything. Yes, there we go. So those are the contact details. Thank you very much. I sort of went on and on a bit it, but hopefully this was helpful to just get a peek into our thinking and where we're going and allocation of resources, people, et cetera, et cetera.

But thank you also to the market for its support in the last 2 years, really. And hopefully, we will not disappoint and we will keep you up to date in terms of the decisions that we take with regards investments of your money and why we think it's a good idea. And we'll also be listening very keenly for your views on if you think we're on the right track, and hopefully we are.

So thank you for all dialing in.

There's an opportunity for -- there's an opportunity for questions. I see there's one from [Peter Cromberg]and while we wait for the rest. I'll just jump in and Riaan, Jaco if you can switch on your cameras and take forward in answering these.

So to what extent can we look at acquiring new businesses and consolidation opportunities?

So I think there are 2 aspects to this. On the one hand, we're a small part of a very large enterprise. And we want to become increasingly valuable within that larger enterprise. And we think that by being that, by making that, playing that role within Sibanye-Stillwater, there's also value to be unlocked.

The Far West Gold operation if that is a -- that's an example of how value can be unlocked at tailings which is noncore within Sibanye-Stillwater by bringing it under another brand and turning it into something that can be modeled, no longer just a rehabilitation liability. The mere fact that you have a program and that you have a project doesn't turn it into something that you could value. In order for it to be valued, it needs to be prominent enough within your portfolio of assets for the market to attach value to that. And I think the market has shown us how dynamic that could be a process that could be with the Far West Gold dumps. And I think there are opportunities like that, which we would want to develop. And obviously then it's nice to have capital because you want to pay your own way in that regard.

And then, of course, also in terms of just being a service provider, I think that the -- our teams become good at mopping up. Our teams become good at sort of late-phase, mature, bringing things together and let's call it bringing about optimized closure of our certain sites. And we think that there's a role to be played in that regard as well. But that won't be as prominent as assets coming across, but it's nice to be of use and I think we want to be more of use.

In terms of external growth, we're not going to come in at the top of the market just for the sake of being part of whatever the market thinks as sexy at this stage. So there, too, if opportunity does present itself, if there are projects and opportunities that are undervalued or that's not getting the sort of market attention that it deserves and by combining it with our brand, you might unlock some of that and then, of course, we'll do that. But we're not going to be chasing something that we're not convinced would add sort of to the value composite that we offer our shareholders.

But yes, there is a process and we might be looking at that. A lot of attention, though, will go into just not just optimizing existing operations, but also building it out for all the reasons that I mentioned during the presentation.

Yes. So [Peter], we're going to have a presentation later this year where we will be giving full details of exactly what the solar plant looks like. And the -- and I mentioned, too, the speed at which the regulator moves. So obviously, if you get all the support that you require including consent that you could feed back into the grid, then you start big. If you don't, then you start a little bit smaller.

So we're going to start and depending on where the regulator is at that exact point in time, it will either be big or it will be a little bit smaller, but it's going to be significant. I mean we're looking at total power requirements for the Ergo plant at the very least. Jaco, I don't know if you want to elaborate on that.

So we'll update the market in a full presentation on size and cost of the project later on during the year.

We're pretty much ready to go, as I said earlier. It's just that the regulator doesn't quite move at the same pace, especially the municipalities involved. But we know where we want to go. It's now in the case of just implementation and making sure that we implement in a clever way, but we're not going to wait.

So on the CO2 emissions here, I mean, in the final analysis, what's the equivalent of 20-megawatt actual consumption that is now coming from the sun and no longer from a core power block. That's the -- when I was talking about aiming big and planning big and then implementing sensibly, but in the long run, that's at least what we want to be aiming for or else why bother.

The dividend seems low given the level of cash flow generated. Is this to create a buffer? I think what we said -- let me read the question, maybe not everybody is seeing it. I don't know who is asking the question. The dividend is low, given the level of cash flow generated. Is this to create a buffer as you move into lower yields or fund Far West Gold Phase 2 or both?

Yes, it's the best application of our funds, I believe. We obviously don't want to not pay dividend in a situation where we can. But this is the first year in many -- in a long period of time where the dividends and earnings aren't almost the same. And that wasn't intentional, but that sort of what's happened. But I think you will recall, Arnold, that what we said in the past is that the investment that Sibanye-Stillwater made in our company of just over ZAR 1 billion, that money is project money. So that's going to go into Far West, please.

And then in terms of resource optimization, when you're mining a combination of tailings dams, and remember, everyone is almost like a new little mine. Everyone is different in terms of content, different people produce those [waste] dams and they don't get the -- they don't all give you the same sort of yield. So what you want to do in order to make sure that you mine the whole thing is manage your mix, the mix of your feed. You don't want to mine out the ores now and then leave the next generation with rubbish. You almost want to have like a constant head grade.

Now what's happened at Far West, in particular, is that because 5 dump is much higher grade than some of the remaining dumps. We haven't been able to manage that mix. So the other way that you can achieve this sort of outcome is to retain some of the financial upside. Some of the cash coming out of that dump.

And the way that we've done it really is to -- and this is more sort of a guideline than a rule. But the way that we've done it this week, we had a look at what the project gold price assumptions were, which I think at the time was ZAR 639,000 a kilo. And we said, all right, well, up until that number, that really we should pay in terms of dividends. But beyond that, a chunk of that, let's call it the windfall as a consequence of the higher gold price, that's the proportion of contribution over the next 18 years and that's going to co-fund some of the CapEx.

But we are also spending money on rehabilitation. We're spending money on cleanup. We're in a position to, as I said, bring that a little bit closer, that the lag of rehabilitation and sort of where we are in terms of life of mine that, that lag is shrunk. So when the money stops, the group rehabilitation is done. And then, of course, there's also the stuff happening at Ergo.

So your summary or short sentence is right. It's both.

Just going down to the bottom again, [Peter]. Yes. So you'll have a proper presentation and then the other one's fine.

Those seem to be all the questions, unless I'm missing anything.

Yes. That's pretty much all for the questions.

Riaan, anything else from you by way of concluding remarks.

Niël, no, just I think you've summarized it well. Maybe answering this last question also from Arnold. I think we responsibly setting inside around mixes and sustainability, around building the best possible business for the future to mine as long as we can, look at regional consolidation. And we're taking that step by step. So I think that is the message.

And we fortunately have cash on the balance sheet to go and do that because we don't hedge. We are exposed if the gold price comes down, while our profits are impacted as everyone saw in the second half of the year. It is -- it's a volatile market.

So I think we set up very positively to take the next steps and we are doing that. So a very exciting next steps that were taking, but that's it from our side. Thank you.

There is a hand from [Nick Denham]. I'm not sure if you will give me permission to unmute him.

Sure. Yes, go ahead.

All right. [Nick], you can unmute it.

Okay. Can you hear me?

Yes. We can.

So question, sorry, I was -- I had my hand raised here. So I think the better way of asking questions was on that key list. One or 2 things, talking about costs, on Ergo side, you talked about your unit costs on a per tonne basis. So working roughly, they turned out they went up 4%. But at the same time, 15% increase in tonnes, which is in a very simple sort of way indicates that your cost pressures were rising in the order of 17%. So I add the one to the other and I get that sort of number. Now I know you're talking about electricity at 15%, but that only kicked in for the half year. And your electricity costs only account for 20% of the total. So those cost pressures to me, look quite high. Can you maybe just unpack that and then I'll have a further question.

Yes. Are you talking about total cost or the cost per tonnes?

Cost per tonne at Ergo on a rate tonne mill basis.

Yes. The total cost went up because we increased volume throughput by quite a bit. But the cost per tonne, I think that line is a lot more complementary. So your cost per kilo will be higher because your yield per tonne is lower. More tons produce -- doesn't produce the same on the rand. But the cost per tonne is actually quite well managed. It's not up by 17%.

So let me just rephrase that question. It went up by 4%. But it went up by 4% despite the tonnages increasing by 11%. So one would have expected some benefit of that expansion of tonnages on your rand per tonne cost. That's the point of the question.

I see. So what you're saying is that because there was an increase in tonnes, you ought to have had a more of a dilution on your per-unit cost.

Correct.

I wish we could give you a breakdown of everyone and exactly what sort of contribution it makes. But I suppose what makes that sort of breakdown (inaudible), and Jaco will give some more color on this, is that not every site is a site where we do reclamation by way of hydraulic pipe pressure water gun. Some of the sites will actually used trucks. And those tonnes are quite a bit higher on a per tonne basis than the hydraulics and that changes the whole time.

We've got -- between at any given point, between 15 and 18 sites where this actual activity taking place and on one of those sites for the better part of the last year, there's only been stockpiling. It hasn't come in through the circuit and it'll start coming through now in the new year. So if it was only 1 site and on that side we had an 11% increase in throughput, but only a 4% increase in cost, one would have expected that dilution to be better. But it's not just one side. It's a heck of a more complex than that.

Your answer is 100% correct. I hope you can hear me. I see my screen is imitating some of the regulated responses. So -- but your answer was 100% correct. We're mining a number of sites. And some of these sites, specifically the smaller ones, you're going into final cleanup and rehabilitation as also indicated in some of the environmental slides in this presentation and the costs associated with environmental cleanup, and that comes at a higher cost because you're tracking this materially.

So as we're cleaning up these sites and getting them into final rehabilitation handing it back, we're obviously moving towards bigger slime sites and hence your production cost overall will also start decreasing.

Thanks for that answer. Can I have another one, another question?

Yes. Go for it, go for it.

So I'm aware that you have a number of projects on the conveyor belt, and as you say, the regulators aren't quite as quick as you. It's so good to catch up with you, you would have quite a few things on your plate. So when I look at DRD, I don't see necessarily that you have the execution ability to do all those things in a relatively short space of time. Do you think this as a challenge, you're going to have to grow the company to match the project profile if they come through reasonably quickly?

Yes. Now we share your concern. We've scheduled a -- and the Board raised the same issue. So we've got to sort of maintain a balance between senior colleagues starting to feel sorry for themselves because they work so damn hard and making sure that we have had good resources, and the first I'm saying tongue in cheek.

But no, no, we're having a workshop -- series of workshops now over the next few months, where we'll be just looking at role clarity. Our team has been a very stable team now for long period of time, 6, 7 years. And certain members on that team came in to put certain things in place and they've been in place now for a while. So maybe it's time to sort of move on to the next level and be more strategic and less sort of focused on day-to-day stuff. And we have within our senior team, I can think of -- at the very least, not counting Jaco and Riaan, that have been core to their team from the outset. I can kind at least to your 4 additional senior members of management or works management that can increasingly start becoming more involved strategically and have some of their colleagues stepping into some of their day-to-day chores.

Ultimately, what we want to do is not just -- it's not limited to only the quality of the work that we want done. And I think the performance of our most recent addition, the Far West Gold plant, this little copper elution plant and the effect that it's having, the best testimony, I think, to the quality standard that our team takes to these projects.

But it's not just that. There's a very specific approach that we take to every site. There's a set of values that accompanies the -- everything that we do. And those values we don't implement. And for us, they're nonnegotiable. And they're not offensive. I mean the people that we enjoy working with take to those values intuitively. But they started implementation and rolling out of those values. So clearly, some of the more senior people have technical skills and the right sort of experience. They will become a little bit more stretched. But your observation is not -- it's not inaccurate. It's a good observation, and that's something that's getting our attention.

Thank you. Thanks for your questions. Appreciate it. Is there anything else or are we done?

Yes, there is one more question. There's a long question if you can just go about from [Des] (inaudible)

I see that. Thank you, [Des]. So Des is saying that in 2018, we concluded what was a game changer. In 2021, Ergo provided 79%, Far West '21. This year, Ergo is 57% and Far West 43% of production. Do you ever envisage the possibility of Ergo producing roughly 67% of production and Far West 33% of production. In terms of guidance for this year, what is the likely split between Ergo and Far West.

Jaco, you can venture a guess here. I don't want to. I mean it is something -- it's an answer that I would want to give. It's a question that I do want to answer. But I'm looking at the numbers sort of broadly in my mind. I'm not quite sure what that exact number is. I'm sure by looking at the budget, you can sort of have a number. But while you consider that, let me move on to the -- are you good to go? Are you happy to give an answer?

Yes. I can quickly answer that. So just in the next 12 months, very similar split to what we've had the previous year. Do not foresee a massive change happening. Going forward as soon as for Phase 2 of Far West kicks in, obviously, that picture will change substantially.

More favorably towards Far West, yes.

Correct.

Okay. We kind of have to wrap this up because I have another meeting that I need to attend. But let me deal with the (inaudible). What capacity utilization rate are you running currently Far West Gold Phase 2. How much can capacity increase?

So I think the capacity is really determined by one thing and that is deposition rate. So we're mining as quickly as we can deposit. And we're not, I think, overburdening any of our physical infrastructure at this stage in that regard. Jaco, tell me if that's roughly accurate.

That correct, Niël. So for the next 3 to 4 years, we do not anticipate any issues with deposition capacity. And some of the projects would go towards expanding that, obviously, after that period of time. And then in terms of the capacity of the plants, we do have some additional spare capacity. But at this point in time, obviously different plant on the schedule.

We're not sweating engineering infrastructure. We're sort of keeping pace with how quickly we can put tailings residue on our tailings dams.

I'm going to have to call an end to this. I'm late for an interview with a television station. So I want to once again thank everybody for dialing in and for participating. We really appreciate it. I see we still have 51 of our attendees online. So that's really awesome. Thank you for giving us so much of your time. And as I said earlier, hopefully, we won't disappoint this year. Thank you so much.

Thank you.