Harmony Gold Mining Company Ltd (HMY) 2013 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to Harmony's quarter-four and year-end results for the financial year 2014.

I've got a few colleagues in front here with me. From your left it's Herman Perry. He's our Financial Manager, standing in for Frank, who is at the moment recuperating from an operation. Then Mashego Mashego, whom you know. And Alwyn Pretorius, our Chief Operating Officer. So they're very capable of answering all the difficult questions and I'll answer the easy questions. I'm hopeful.

Our Safe Harbor statement, you should read this sometime. The only thing that changes year on year is the dates.

But the agenda for this meeting is going to be me going through a few of the highlights. And then we'll talk a little bit more about Harmony, the story of Harmony. It often gets lost in some of the detail and some of the excitement that we always have here in South Africa. And so I'll take you through some of those details and try and emphasize the story of Harmony.

On the highlights, year on year, despite the challenges of the year, we managed to increase gold production. It was a lot about reducing costs. And you'll see that there's a substantial reduction in all-in sustaining costs. There's an improvement year on year in grade.

And we've really been looking at our capital expenditure and we came in on target, as we said. And going forward we've obviously put out the release on the Phakisa decline and the subsequent impairment of that.

Quarter on quarter, a 7% increase in gold production. And all-in sustaining costs remained static.

Harmony's investment case. We are efficient miners and sometimes this gets lost in that Harmony is an efficient mine. Remembering that, in the next slide I'll show you some of the grade trends of us versus our competitors.

We fund our own capital. We've been doing that for several years now. We've spent a lot of capital here in South Africa on the operations, on getting them right, on Kusasalethu, on Doornkop, Phakisa. And we've obviously been spending money on exploring in Papua New Guinea. With a lot of the explorers -- exploration budgets now been cut by a lot of other companies, we've found more and better ground in Papua New Guinea. So we'll continue to do the exploration.

And then Golpu. We'll talk about Golpu. I'm still very excited about Golpu, despite what some of the (technical difficulty) about it.

Just to indicate a little bit of our efficiency in mining. This is a 2013 cost per tonne, cash cost -- cash operating cost per tonne from the three big miners in South Africa. And you can see that we're the lowest on that scale.

Looking at this, and there's that diagram on the top left again, if you look at the South African underground grade, we have the lowest-grade operations. You can do the interesting math by plugging in some of the other grades from the other companies and see what the bottom line would look like. Even at the lower gold price at the moment there's some startling numbers that you get to there. Capital spend and also the all-in sustaining costs in a comparator there.

So despite the challenges, this is year on year, we had a 3% increase in the gold production. You can see the gold price there is 5% down in rand-per-kilogram terms. In, of course, dollars-per-ounce terms, 19% down, down from $1,603 down to $1,299. That's quite a dramatic drop. Cash operating costs fairly static, down of course in dollars. And that -- if you look at the bottom line you'll see the exchange rates there.

Underground grade increased. I've got a graph on underground grade.

So all in all, of course we're quite satisfied with the year. As I say, the challenges were fairly abundant on some of our bigger operations. However, with the lower gold price we did get a lower revenue.

All-in sustaining costs there, down 18% in dollar terms and 4% in rand-per-kilogram terms.

Quarter on quarter, 7% increase in gold production. You can see the other figures are fairly static amongst most of them there. Underground grade, questions on the underground grade there, the 5.1 of the previous quarter versus the 4.66. You have to really look at the detail here in total and averaging.

And if you go back to last quarter you'll see that Bambanani in Target 1 over-performed, so our higher-grade operations over-performed. And our lower-grade operations underperformed. And you can see that from the tonnage and grade number. So you really have to dig down into the detail there to see the differences.

Grade improvements year on year, quite a pleasant change. And looking forward, we're being, I think, slightly more conservative on our grades. So going forward we're looking at somewhere between 4.7 and 4.8 grams a tonne for the next year.

All-in sustaining costs, there's that decline of 4% and 18% in dollar terms. We have to continue to focus on costs. We'll continue to focus on costs during this next year. And the intent is to come down, even get the costs -- all-in sustaining costs down even further.

Hidden Valley's been a very good story. Nice graph there. You can see from the ounces produced, one of the -- simply the best quarter we've had. Cash operating costs down. All-in sustaining costs down. Hidden Valley is making money.

Our capital. We fund our own capital. I've said that before. But you can see that the capital expenditure year on year is down 30% in rand terms, 41% in dollar terms. I will give you an estimate of what it's going to be in the next year.

I'm going to hand over to Herman now to talk about the next four slides on the financials.

Thank you, Graham. Good morning, ladies and gentlemen. I would like to highlight a few aspects of our financial results for the 2014 financial year.

Firstly, looking at the cash flow statement there, extracts from it, as they say, cash is king. You can see our cash flow from operations was over ZAR2.5b. And you can see that number is just a little bit more than the total capital figure about four lines down. So that capital is sustaining capital as well as growth capital. So we've been able to sustain the business, pay for the growth capital. And the only additional item you see, the exploration expenditure, mostly in Wafi-Golpu, and that's really an investment in Harmony's future. That leaves us with a net debt of ZAR1b there.

Over to the next slide, you see the net debt number in dollars. Less than $100m, or alternatively less than one month of gold sales for Harmony.

Moving to the next slide, the revenue line. Now the revenue line, quite importantly, Graham has spoken about the increases in grade, increase in production. We've also had increase in sales. Ounces sold up year on year. And we've been able to limit the effect of the price decrease year on year. The gold price decreased just 1%, do 1% down on the revenue line.

Moving to cash operating costs, 4% increase year on year. And that's really a testament to our operational colleagues managing the costs very well, particularly labor cost year on year only up by 2% and contracting costs year on year up by only 1%.

Further down the income statement you see the amortization expense. That's roughly in line with the increase in production.

The impairment charge that we flagged to the market last week, that is really largely the -- largely the Phakisa impairment that we told you about. And that is really change -- annual change on the life-of-mine plans. And that -- we've taken the decline out. But it's also important to remember it's a number of other factors, gold price assumptions, cost assumptions, inflation assumptions and also cost of capital.

Cost of capital, we've been using higher discount rates this year than last year, in line with market parameters. And because Phakisa is still a relatively long-life mine, it is quite sensitive to the rate at which you discount those cash flows.

Then the exploration line, as we said, it's mostly expenditure on Wafi-Golpu, a little bit else in that region as well. And it's really down year on year because the drilling program has largely completed during the current financial year. And the studies are still going at full steam. Graham will tell you more about that just now.

Taxation line shows that credit, ZAR279m. That's a little bit unusual. And what that is, remember in the gold industry we've got a gold mining formula for tax. So we calculate deferred tax by estimating the average life-of-mine tax rate that we will have in each of our legal entities. And that has come down year on year, resulting in that credit. Leaving you with a net loss of ZAR1,270m, but importantly positive headline earnings of ZAR0.26.

On the next slide you just see the same figures in dollars, translated at ZAR10.35.

Then if we look at normalizing the profit and also how we get to headline earnings, there's only really two add-backs to the ZAR1,270m to get to headline earnings, and that's the impairment of assets and a few other small items. So that leaves us with ZAR114m positive headline earnings for the year. And that's equal to the ZAR0.26 you saw on the previous slide.

Moving on, just normalizing it for two items. So one is the -- we've made provision for a loss on Rand Refinery. And that is really the problems they experienced after implementing their ERP system. And also the foreign exchange loss on our dollar borrowings, denominated in dollars. When we translate it back into rand there's a translation loss that we record in the income statement. Normalizing for those item, we have a normalized profit of almost ZAR400m, or alternatively looking at it almost ZAR1 per share.

So I think the Company, despite significant headwinds that we had in the industry during the year, a very credible and solid result where we ended.

With that, I'll hand back to Graham

So I think from what you see in Herman's presentation, we have got financial flexibility. We continue to invest in our assets and throughout this lower gold price, even in exploration. Obviously we are highly geared to the gold price.

The future capital expenditure, so we give you two years of history here and the forthcoming year. Financial year 2015 is an estimate. [Clearly] the significant change (technical difficulty) the maintenance capital. We continue to spend a lot of money on maintenance capital. And that maintenance capital of course is in the bigger machinery, pumps, cables, rails and the like, where they are substantial. And we continue to develop our ore bodies.

So those are the two big significant capital expenditures in the forthcoming year. And our prediction at the moment is ZAR2.96b. That's just converting the same numbers through, I think, ZAR10.5 to the dollar.

Phakisa decline, important that I just point this out, the area there in the browny color as it is on the screen is the decline project area. You can see where the decline actually was planned to come down. It gets us to the bottom level there and then try and extract that whole region.

The capital expenditure for that is high, and therefore we've decided not to do it at the moment. That has led to the impairment. What we have decided to do, there's an existing decline here at Tshepong, getting down to that level, to extend it down one level to 77 level.

The potential is that we can mine this when economic situation changes a little bit. So we can still get there. It's not going to disappear. And Phakisa mine, we'll continue to focus on these areas. There's a little bit of an extension to the life of Tshepong in that.

So that's what's led to the impairments and that's the technical explanation behind it.

We continue to explore and, of course, emerging economies are quite important to us, being here in South Africa as well as in PNG. Just to show you, this is one of the bridges built across the river in PNG. Lots of water and rivers in PNG. And before, the locals had a pretty harrowing time getting across this river. Not very pleasant experience at all. And you can see it's somewhat different now.

So we are a significant player here in South Africa and in PNG. We are still the leading exploration company, with costs less than $9 an ounce discovered. We certainly embrace all the social and community efforts. And in South Africa I'll show you some of the figures. We really go beyond compliance. It's not a case of compliance; it's the right thing to do in these economies.

We create value from low-margin assets. Where others have sold their assets because they could mine them no longer, we can still extract value from those. And that's left us with a fairly diverse portfolio of 10 underground mines. We've got a surface mine, Kalgold. And we have some waste and tailings operations.

Hidden Valley, the first mine that was developed in the last 15 years in Papua New Guinea. So we've managed to do that in the highlands of Papua New Guinea. And as you can see from the financials, it's very successful now.

We continue to assess our portfolio. But we definitely are focusing a lot more on safety, I'll talk a bit more about safety going forward, and intend to get all our operations into a profitable situation.

Just a little bit on being a truly empowered company, and we're talking ownership about here in South Africa. At the moment we're about 38% ownership. If you look at our equity, previously disadvantaged South Africans. The target from the mining charter is in that column there at 40%. And you can see the numbers here all exceeding 40%. And this is talking about a Company as a whole; it's not necessarily talking about asset by asset.

What we're doing in the environmental area is very significant. What we do do is look at our assets from an environmental perspective. We try and convert whatever we have into some sort of value. If we have land that can be used usefully, we try and use that. If we've got assets on those lands, like old hostels, we convert them into living units. The intent is handing them over to the municipality.

And we've been very successful. At Masimong 4 we've done that. I think there were 460 units there. We're in the process at the moment at Merriespruit 3, that's near Meloding in Virginia. That's about 488, if I remember rightly, units converting. Actually we're about 50% done on that.

But what we have discovered here in the Free State is that this stuff here, which is -- that's about, in old terms, 12-foot high, so double a man's height, that's king grass. It's not an invasive grass. But you can see what it's growing on here. This is sugar beet. We've discovered this stuff actually grows very well on impacted soil.

So the intent here is we've got a project. It's a ZAR47m capital project, where we're going to build a plant and create bioenergy. That will replace some of the fossil fuels we use in the plants for various things. So there's good potential of extending this project. So a very nice project, fairly unique, I think, to the mining industry. And certainly a different way of looking at our environmental impact, turning something which is pretty barren in the dry Free State soil and converting it into energy.

As I said, I remain excited about Golpu. You have seen that drilling machine there. We're really looking at a scalable mine now, with much lower capital. Cash costs from copper credits, of course, all to the advantage of a gold miner. It's going to be a long-life asset, there's no doubt about that.

And one of the things that we are trying to do right now is really de-risk the project. A lot of skeptics around it, but it's intended to be a mine that we can mine at much higher grade in the short term. And if copper prices, gold prices increase, we can easily expand it. And so that's the intent of the project at the moment.

I remind you, you've seen this slide before; I showed it last quarter. But I think people have been missing some of the points here. We've been talking about these bore hole intersections, nice long bore hole intersections at good grades. But we have also been talking about the smaller intersections at much higher grade.

So the opportunity here obviously exists of mining the higher-grade portions of the ore body during times when commodity prices are low. And this exists in this bore hole as well. You can see there 560 meters at roughly 2% copper and 2 grams a tonne. So with that sort of guidance, you can imagine how you can improve the economics.

So our consideration here is really looking at what investors are looking at. And they want a return on investment, of course. They want much lower capital, and that we're looking at. But they also want to look at the future and they don't want to sterilize any of the ore bodies. So looking if it's scalable, something that you can scale up in time. And we think this asset is certainly going to add value. And it's going to be a very sustainable mine going forward.

So our targeted outcomes there is really looking at it modular, so looking at a plant that you can double up. So it obviously needs to have some space to it. A lower total capital cost. Remember the block cave would have been a cave which you have to spend a lot of the capital up front and then you get the production later. By looking at sublevel caving you can actually mine as you go. It's not such intensive capital up front. And then targeting around about 2.5m tonnes to 5m tonnes a year. Obviously the infrastructure built with the flexibility of that modular and scalable mine.

Hoping to get some results from the current studies out towards the latter part of this calendar year. We have to go through some gate (technical difficulty) processes as well.

Just in conclusion, and this is on safety, we've had far too many fatals during this year. We've done external audits. We've focused a lot more on safety. Alwyn has increased his team and we now have three regional general managers supported by senior engineers. There are regular visits underground by executives, not just when accidents happen, but we're trying to be very proactive.

We've got an improvement plan in place. It's requiring a lot of hard work, but we are quite optimistic on improvements in safety. So there's been a lot of focus in the last months, much more than before. And I'm not saying there was less focus before, but we have upped our safety efforts quite dramatically.

Here in our planning, I think we are really positioned to deliver. Those assets that we had problems with last year, we're focused on. So Doornkop, Phakisa, Kusasalethu has got a lot more focus. We're much more optimistic about where we are.

We're giving some guidance for next year around about 1.2m ounces. We've given a range of all-in sustaining cost there of ZAR410,000 to ZAR430,000. And if you use an exchange rate of ZAR10.50, that's the gold price range you get to in our all-in sustaining cost.

We intend to continue to develop Golpu during this year. During this coming year the expenditure's going to be fairly low. Herman was talking about drilling. Drilling really takes up a lot of the costs when you look at exploration. Remember that most of the costs on Golpu have been exploration and not capital. And so during the studies of next year, the costs are going to be fairly low.

With the focus on safety, safe, profitable ounces, and safety being our number-one value, we believe that this mine, Golpu, will be robust at any gold and copper price.

We've refreshed this slide a little bit on our strategy. And we've got three bullet points there, really self-explanatory. If you read through it, a lot of focus on the top and first bullet point, and also the second in growing our PNG value. We will see value in that, there's no doubt about it. It's a prized asset and it's certainly got the grade to make a decent and long-life mine.

We continue to look around the world at potential acquisitions while companies are stressed, and looking at either going to the market or selling some assets to support their -- to pay off some of their debt. I think there will be opportunities. So we'll continue to look at those.

Ladies and gentlemen, thank you very much. And if there are any questions.

Morning, Graham. Just three quick questions, please. You spoke earlier of using higher discount rates, or maybe it was Herman that spoke of using higher discount rates when you reassessed your assets. Could you give us some steer as to what you use in terms of discount rates and your currency and gold price assumptions when you were rerunning your business plans, please?

Sure.

Yes. So, yes, the -- it's all public. It's in the quarterly report that you have there. Last year we used discount rates between 6% and 10%. And this year we're using between 7% and 11.5%. Each asset you obviously evaluate based on its own unique risk profile.

Gold price assumption, ZAR425,000 a kilo, $1,300 per ounce, ZAR10.17. I think that's the key ones.

Thanks, Graham. And then the growth CapEx on slide 25, the guidance, in particular the ZAR300m for 2015 financial. Could you give us an indication of where you'll be spending that ZAR300m, please?

Yes. It's -- sorry, let me just find the slide for you.

Yes. That's the one. ZAR300m of other --.

Yes. So what we've looked at is this growth CapEx here is on completing the decline at Bambanani. It's the ice plants at Phakisa. It is some of the bigger capital. There's still some on Joel. Remind me if I'm missing anything there, Alwyn. So it's really probably around those four. Yes.

So it's really the decline on Bambanani will be finished during this year, so it's the final stages of that equipping. And that's to get the ore out of that while we're mining that pillar.

The Joel decline will probably take another couple of years to do.

The Phakisa ice plants, which is quite a substantial one. There's some other capital at Phakisa, but that's the biggest one. That will also happen during this year as well.

Okay. Great. And then just a last one on CapEx. When you looked at the Phakisa decline, if you could give us an indication of what the CapEx was and the timing of that decline, because it was a couple of years out, wasn't it, Graham?

Yes. So what we did during this last year was we redid a prefeasibility study on it and looked at it. And the CapEx is in the order of about ZAR1.6b.

Hi, Graham. It's Chris Nicholson from RMB Morgan Stanley. Just I know the question was asked earlier, just in relation to the comments around acquisition opportunities. I understand, given the stressed financial position of some other companies in the industry, that this might be attractive.

Just I guess the way I'd like to ask it is how does this stack up for you versus other competing internal capital requirements, specifically at Golpu, because I guess both of these would obviously involve a fairly significant amount of capital?

Yes. I guess what we do have is we've got the financial capacity. Herman, in the absence of Frank here, could probably write out a check for more than ZAR3b, if you wanted, if we needed to. So we've got some capacity. We've got obviously 1.2m ounces.

Although everybody is calling the gold price fairly flat. I think the bulls are at about $1,400, the bears of course at $1,000 but we think there's a nice floor at about $1,260 or so at the moment, where we don't see the gold price going below that.

So obviously if we buy assets, we're going to have to be efficient in mining those assets. We're going to have to be better than the previous owners. So we're going to be looking at those sort of assets where we can add value. So obviously I wouldn't want to go too much into how we would finance it and how much they may cost, but those are the things that we'd look at as we look at asset by asset. We're not looking at buying platinum mines or anything like that, by the way.

Mr. Briggs, I'm referring to the impairment and the explanation for the large impairment is provided in note 5 to the balance sheet. But in addition to that, there's an interesting item which states that the recoverable amount of Phakisa is ZAR4.26b. Now that's of particular interest.

And I'd like to know a little bit more about how you arrive at the ZAR4.26b. And I'm assuming that you use the same assumptions that appear in the explanation in the first paragraph, specifically post-tax real discount rates ranging between 7.03% and 11.56%. Now that's a very wide range. What range was used to arrive at the ZAR4.26b recoverable amount?

I don't think we make public the rates for the individual assets. The factors that go into it is is it a big or small asset and is it more leveraged or less leveraged? So the -- what -- we can consider doing that in the Annual Report, if that seems to be a big requirement from users. We can do that -- we can give you that detail in future.

But safe to say, Phakisa is still a big asset. And using all those parameters and using certainly more conservative assumptions than last year on discount rate, we still arrive at a ZAR4b net present value, more than ZAR4b.

If I may take that further, please. Over what period of time? Was it life of mine? And if so, what period is that?

It's the life of mine and it would be 11 years.

Thank you.

Morning, Graham.

Adrian.

I have two questions. Firstly just talk about your reserves on the gold price assumption you've used. You've increased that gold price to ZAR425,000 a kilo. You're guiding all-in sustaining costs of between ZAR410,000 and ZAR440,000. So it sounds to me like you're adding a lot of pressure on yourselves.

Why -- maybe you can explain why you've chosen that way and why it's actually probably the highest gold price assumption in the industry in South Africa? And maybe you can just answer that as well, giving us what would your reserves look like had you kept your gold price assumption the same. Thanks.

Yes. I think the one important thing about our ore bodies is that they are -- the inflection point on grade is not around the ZAR400,000 to ZAR425,000 and probably even ZAR450,000. You probably get very similar reserves -- [Jaco] is here if I get stuck in this thing, but -- so at ZAR400,000 and at ZAR425,000, you'll see year on year there's very little difference in ore reserves. And there's probably very little difference in grade of the ore reserves.

So that gearing is somewhat lower in our type of ore bodies. So if the gold price is much higher, if it were ZAR500,000, then you would see a dramatic change in the reserve quantum. But in the region of the small change from ZAR400,000, I think last year, was it ZAR400,000? So ZAR425,000 is hardly a change in reserve.

In fact if you use the information that [Jaco's] provided, the negative on reserves is 1.3m ounces mined. And the impairments, 2.9m ounces. Those are the only big changes. There's small -- other small changes but it's less than 0.5m ounces.

So it's not sensitive to the gold price at that region. And I don't know whether we're optimistic on the gold price or not in our reserve calculations. I'm not sure what the other companies are doing. We've probably been a little bit more conservative in the past than other companies. So there's a dramatic difference year on year for them.

Thanks. And just on Golpu, could you give us an update on Newcrest's position on carrying this project forward, as well as the PNG government?

Can't say much on Newcrest because they must talk about it themselves. I can just reiterate what I see in their press report and from their last quarterlies. I believe they've got their annuals on Monday. So maybe there'll be more information there. But they're still keen on preserving those assets that potentially have a good future. But it sounds like there's a lot of focus on their currents assets on cash flow.

As far as the government goes, we've had a lot of discussions with the government of late. Johannes van Heerden is actually up there right now as we talk. And they are discussing with the ministers on the way forward in actually getting some sort of predevelopment agreement and taking it forward. So the government is very keen.

Papua New Guinea, of course, is at the moment getting quite a bit of revenues from the LNG projects. But they recognize that mines actually provide jobs and infrastructure, those sort of things that LNG don't. So they're very keen on that project. But whether they'll take up their 30% stake or not, I do not know. But we are talking about a predevelopment agreement.

Hi. Good morning. It's Derryn Maade from HSBC. Graham, I'd like to speak a little bit about safety and safety performance. I'm sure you look back on the last year and are pretty disappointed with the safety performance. I'm a firm believer that it's a real strong driver of production performance. If safety performs well, production is pretty good.

With that in mind, and especially in the nature of most of Harmony's portfolio, what are you changing in terms of your approach to safety into FY 2015 now and what are your expectations for improved performance?

Okay. Why don't I ask Alwyn if he wouldn't mind telling us, because Alwyn's really driving it and so it's only fair that he talks about it?

I think to start off, we must admit there's a hell of a lot of improvement that is needed on safety. The Doornkop disaster has taken us aback emotionally, but also from a business performance point of view, as you've said. So there's -- everybody in Harmony realizes that safety needs to be turned around if we want to be successful. That's apart from the moral issues that goes with fatalities and the death of employees at our mines.

We've recognized that we need to change the way we do things in terms of safety. And we've asked an external company with lots of experience internationally about best safety practice to come and help us, to look at what we are doing on safety. We've made a lot of progress in the last three years in safety, but that's far from being good enough.

So what has come out of that study, and they spent significant amount of time in the detail on our strategy, they verified that, spoke to people at different levels of the organization. And the bottom line of that investigation or review was that in Harmony we have the hard stuff in place. So we have the standards in place. We have the risk management process and protocols in place. But our strategy is not proactive enough, so by that we need to focus a lot more on proactiveness.

So we need to look at how we bolt leading indicators into our safety management system as opposed to looking at lagging indicators as well. So that would imply that the way we incentivize people and safety should focus on leading indicators, for example, physical conditions of my working place as opposed to people getting injured as part of my team. That's just one example. So we need to change the shift in the focus from rules and standards, to changing the behavior of our employers. So that is the most important thing that came out of that exercise.

So going forward, in the next year we've also asked for help also from outside companies who've had experience with some of the best safety performing mining companies in South Africa to come and give us assistance in a process that will ensure that we come out from the other side being a lot more proactive when it comes to safety and risk management -- safety risk management. We have started with that process.

We're also -- we're doing this not on our own; we're in collaboration with the DMR. The DMR unions were part of the decision to get help from outside. We're providing feedback, feed feedback to them as well also on the way that we're taking safety forward. So from that point of view, from a Company strategy point of view, that is what will change.

Down on the ground, we are making a big effort to change behavior and culture of employees. So compliance issues is probably the biggest focus with regards to that. So we need to make sure that our employees understand why they have to comply with certain standards as opposed to that being just another rule in the Company. So that's the focus from the Company point of view on safety.

Thanks very much.

No other questions? Marian, are you allowed to ask the question?

I'm going to ask you the difficult questions.

Okay.

Morning, everyone. These are questions from people who've joined the webcast. So the first two questions come from Kane Slutzkin from UBS. He asked about our all-in sustaining cost target, which was previously stated at ZAR380,000 per kilogram, while no operation would have been greater than ZAR400,000 a kilogram, as opposed to our current guidance targeting ZAR410,000 to ZAR430,000 in FY 2015. The question is does this change at all the sustainable all-in sustaining costs that we were targeting? Or is this only for FY 2015?

Yes. So what we've done on our plans is I guess I have been accused of over-promising and under-delivering in our plans. So what we've done in this year through Alwyn and his teams is really look at a lot of the technical issues, understanding all the bottlenecks and really planning. What we now have given as guidance is really achievable.

So the pessimists may have looked at our plans previously and said -- well, you're going to underperform by 10% or whatever. But we believe that these plans are really achievable. And therefore the main aim is actually to achieve those plans.

So a little bit of a relook at our planning parameters and what's achievable for financial year 2015. So we are talking financial year 2015 estimates; we're not talking about the estimates beyond that.

Thank you, Graham. Then the next question from Kane is really regarding the underground grades, with your new guidance of 4.7 to 4.8 grams per tonne for FY 2015. He wants to know whether our longer-term thinking changed with respect to meeting reserve grade.

No. I think the two main effects in the grade going forward, Bambanani really has been overachieving. It's been achieving 13.5 grams a tonne at some stages on an ore body grade which is probably going to get somewhere closer to 10.5 grams a tonne. So in planning going forward, we can't plan in the 13.5 grams a tonne; we can only plan what the ore body says.

Similarly, Target 1 has been overachieving quite dramatically. That ore body should be delivering somewhere around 4.9 grams a tonne. It's been well over that, 6.5 grams a tonne at some stages. Now we can't plan at 6.5 grams a tonne. So there's two of the operations that have really been over-performing quite extensively, which we don't plan will over-perform. They may well over-perform, but we can't plan on that.

And then we still have the waste going into the ore parcels at Kusasalethu. That obviously knocks the grade. It doesn't knock the kilograms that are coming out but does knock the grade. So those are the effects that we have in the plan going forward.

Then one last question comes from Johann Steyn from Citigroup. What is your new long-term steady-state production outlook for Phakisa?

That's a very good question, and I'm not sure. And I don't think we've got it here. Sorry. I just don't know the answer. But we can get it and we can get it to Johann today. I just don't have it on me, not off the back of my head.

Thank you. There are no further questions from the webcast participants.

Okay. Any other questions from the audience here?

Good. Well thank you very much, ladies and gentlemen, for joining us. Thank you.