Half Year 2021 Bushveld Minerals Ltd Earnings Call JOHANNESBURG Sep 12, 2022 (Thomson StreetEvents) -- Edited Transcript of Bushveld Minerals Ltd earnings conference call or presentation Monday, September 27, 2021 at 10:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Fortune Tsepo Mojapelo Bushveld Minerals Limited - Co-Founder, CEO & Director * Francois Naude;Operations Director * Tanyaradzwa Tsitsi Wendy Mamie Chikanza Bushveld Minerals Limited - Finance Director & Director ================================================================================ Conference Call Participants ================================================================================ * John Richard Meyer SP Angel Corporate Finance LLP - Partner * Nicholas Robin Chalmers Alternative Resource Capital - Founding Partner ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the Bushveld Minerals Interim Results Presentation. I will now hand you over to Fortune Mojapelo, CEO. Please go ahead. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [2] -------------------------------------------------------------------------------- Thank you very much. Good morning, everyone. Welcome to our half year interim results call for the 6 months ended 30th June 2021. Thank you very much for dialing in. I am joined today by Tanyaradzwa Chikanza, our Finance Director; as well as Francois Naude, our Director of Operations. With vaccination programs now well underway across the world, South Africa included, economies are seeing significant uptick as restrictions are lifted and business reverts to something closer to normality. Industry renewable energy received particular focus with commodity prices tracking at higher levels as a result of increased demand. Vanadium has seen this trend as well with around a modest 30% rise in average price per kilo from a very low base last year. I will ask that we perhaps move to Slide #4. Before that, if I can just dispense with the disclaimers, which I will consider noted. 2021 marks a rebasing for us as a company, and it really has been about creating this space for us to implement some transformational changes in the operations. Changes that are required to sustain production on a consistent basis and provide the platform for growth. Our production was adversely impacted, as you will all know by now by the performance in January and February as a result of quite some significant plant instability that we experienced at Vametco particularly, combined with a planned 35-day maintenance shutdown and a slow post shutdown ramp-up, which was subsequently followed by an unprotected industrial election. Taking all of this into account, we revised our monthly production targets in line with historical performance in an effort to create the necessary space to implement the required operational changes. Francois will elaborate on these changes, which include building group operational leadership capacity, implementing an operational blueprint that prioritizes proactive preventative maintenance, increasing flow presence of technical, operational leadership and emphasizing integrated planning and as well as establishing standard operating procedures along the process flow. We revised our guidance, as you know by now, from an aspiration-based guidance to one that is based on historically proven numbers, setting targets that have been demonstrated in the past. And in revising our production levels, we continued spending on the plants as we need to build a stable production platform before embarking on significant growth. For this period, this reverse production downwards contributed to an increase in unit costs due to an unchanged fixed cost base. The implications for this are higher sustaining CapEx spending and increases in some operational costs as we implement these changes. This changes position us well to drive unit costs down as we bring the throughput as production growth is the biggest contributor to drive our fixed unit costs down on our journey to competitive unit costs. Our costs were driven by significant increases in sustaining CapEx and some costs at the operating level that we are spending deliberately as planned as we build the foundation for bigger volumes. Our head office admin costs have actually not gone up in real terms, and I'm pleased to say this. It is all about getting our operations to run efficiently on a higher throughput. Implementation of the funded Kiln 3 refurbishment at Vanchem is underway to grow its production to a run rate of about 2,600 metric tonnes of vanadium per annum by the end of 2022. And this is up from the current 1,100 mtV. This will contribute the most driving our overall unit costs down in the coming year. As we are investing more for stability to support sustained volume increases in line with our near-term plans to reach a run rate of 5,000 to 5,400 per annum by the end of 2022 and our medium and longer-term growth aspirations. I should emphasize that production growth ultimately is the biggest factor and driver for sustainable cost reduction, competitive unit cost and profitability. We will continue to invest in the plans to build a stable platform in order to achieve our growth targets. If we can move to Slide #5 that summarizes key numbers from the results that we released. The numbers that we released this morning demonstrate a revenue growth of approximately $4 million from $43 million to $47 million. And this was supported by the increase in the price of vanadium, but impacted by lower sales volumes, which were down 9%. Production numbers for the group, while down 5% from last year at 1,574 mtV, they showed strong production at Vametco following the maintenance shutdown, industrial action in April. Now we expect the operations to continue in the minimum monthly run rate of approximately 240 mtV that we have guided. Numbers from Q2 2021 are already up in Q1 of this year and up 13% from Q2 of 2020. These operational improvements we have implemented enhanced performance in Q2, but this was not enough to offset Vametco's weaker Q1 performance. The EBITDA loss of $10.8 million stems primarily from the stronger foreign exchange rate, which resulted in a negative impact of about $7.3 million on our costs. Spending on items such as repairs and maintenance and waste stripping, which is in line with our expectations and sets the base for the future, ensuring a stable platform for sustainable growth. Net debt of $54.4 million is up as a result of investing more. For instance, we have increased our sustaining CapEx for the period to $6 million, which is all intended to enhance operational stability. And this compares to the $139,000 we spent in H1 of 2020. As mentioned, the strong production at Vametco, coupled with the increase in production at Vanchem, mean that we are on track based on the run rate of the last 4 months to meet our guidance of 3,400 to 3,600 mtV. Vametco and Vanchem C1 production cash costs for the full year are also expected to be in line with guidance. We have the funding in place following the lifting of the PFA, which we raised from Orion, the lifting of the capital ring fence, which allows us to invest $18 million at Vanchem on the back of the stability of operations at Vanchem and also allows us to rapidly scale up our production towards 5,000, 5,400 mtV target we've talked about. Production growth is the key to margin expansion, unit cost reduction and increased profitability. During this period, at Bushveld Energy, we monetized our holding in Invinity to realize $13 million after an initial investment of $5 million. We also secured an indirect interest in VRFB manufacturer Cellcube of 25.25%, and we commenced the construction of the 200-megawatt hour electrolyte production plant, which will provide directly usable product for the energy storage and VRFB sectors. I will now pass on to Francois, our Operations Director, who will take you through the operational highlights of Vanchem and Vametco. Francois, over to you. -------------------------------------------------------------------------------- Francois Naude;Operations Director, [3] -------------------------------------------------------------------------------- Good morning, everyone. I think if we can move to Slide 7, please. I will start with elaborating on the context provided by Fortune in his opening slides, but I will be doing it at an operating level at Vametco and Vanchem before I move on to the operational highlights of Vametco and then on to Vanchem in the following slides. H1 was about stabilizing the operations. We achieved a sustainable steady state production run rate at both plants in line with our strategic initiative to invest for stability and providing a sustainable platform. Our initiatives included a rigorous implementation of a proactive maintenance program as part of the plants were previously started of capital, requiring increased maintenance as expenses time gap. Also implementing the new operating model and organizational restructuring of both the plants in order for senior management to be closer to the plant. The technical personnel supporting operations in ensuring process control parameters are maintained or improved. A lot of effort and work is going into leadership and people development interventions. This required spending on maintenance and sustaining CapEx to ensure our operations are stable and then driving volume growth to reach a steady state and reduce unit costs to a competitive level. The key is steady state production on a stable platform. We therefore made decisions to invest at Vametco so that we can deliver consistently and sustainably. H2 production at the Vametco is demonstrating what we have done as the H2 volumes for Vametco are the driver to get our cost base to a steady state rate. We are ramping up production at Vanchem, spending on operating expenses upfront so that we can hit the ground running when we commissioned in Kiln 3. To support the growth, we have to start spending on operating expenses upfront, already staffing and scaling the required headcount ramping up well ahead so that we hit the ground running on commissioning. The cost and spend increase seen at Vanchem is to enable us to achieve the 2,600 mtV production run rate, which is more than double current production. At 2,600 mtV, Vanchem costs are expected to be in line with the Vametco cost at a steady-state production of 2,800 mtV. Can you move to the next slide, Slide 8. Thank you. The group recorded a 78% improvement in total injury frequency rate to 5.17 relative to corresponding period last year of 23.75%, as a result of risk assessment, additional mitigation measures and obviously also the stability that we've got from the operations. As of 31 August 2021, the group had 5 active COVID-19 cases and a 96% recovery rate. Sadly, Bushveld reported 2 COVID-19 related deaths among its employees during the period, and we extend our deepest condolences to their families. We continue to prioritize the safety of our employees. In July, we recommenced the vaccination program for both of the Vametco and Vanchem employees. Slide 9, please. During the period, and I'll talk about Vametco first half highlights now. During the period, production of 988 mtV at Vametco was down 19% from that of the same period last year, owing to the unplanned stoppages due to the instability and weaker plant performance, that was followed by a 35-day planned shutdown in March and then the strike action in April. Based on the decisions we've made, we spent significant amounts with sustaining capital and maintenance, and this, combined with other operational improvements, which includes process control and reorganization, has now set it's firm foundation to ensure operational stability. This ensured production in May and June, if you look at the top right-hand graph, of 278 and 261 mtV, respectively, and in the start of H2 post-interim period, 251 mtV in July and 260 mtV in August. Vametco is now running at a steady rate, and therefore, we are confident of meeting our minimum monthly production run rate forecast of about 240 mtV for the remainder of the monthly basis. Now unit costs are now lower based on the steady state production rate as shown in the Q2 figures, clearly demonstrating that production volume is the driver to competitive unit cost. H2 production is showing the results of implementing our strategic initiatives to reset the base and provide a sustainable platform going forward. In light of these figures, we are on track to meet our guidance for the Vametco at between 2,300 mtV and 2,400 mtV. In addition, we are maintaining Vametco's production cash cost of between $23.70 per kilogram V and $24.20 per kilogram V. Q2 2021 C1 cash costs improved by 2.6%, in line with the improved operational performance since the maintenance shutdown, and we expect lower unit cost from H2 to normalize full year costs in line with guidance. Next slide, please, Slide 10. H1 2021 production cash costs for the period was 29 -- of $25.90 per kilogram V, a 52% increase relative to H1 2020, which was $17.10, mostly due to the lower production volumes, a stronger rand to the dollar exchange rate and higher maintenance cost in order to improve operational stability, and there was an increase in our mining services costs. We're preparing the Upper Seam that is the material that we will sell through to banking. Now H1 2021 total sustaining cash cost was $38.30 per kilogram V, a 66% increase, mostly due to the fact as mentioned above in addition to an increase in sustaining capital. The sustaining capital expenditure for the period was $3.1 million relative to last year's period of about $200,000. The increase is in line with our plan to establish a stable and sustainable base. Production rebasing led to about $10 per kilogram V cost increase, which will unwind as production increases over time, meaning that if production had not been revised in H1 2021, our all-in costs would have been $29 per kilogram V at the current exchange rate.as per the chart at the bottom where we showed the effect of the rebasing the production volumes in H1. Volume increase is the main factor to cost reduction, and the H2 production at Vametco is already demonstrating what we have done, as the H2 volumes for Vametco are the driver to get our cost base to a steady state track. I'll move now to Vanchem. The next slide please. Thank you. We have maintained consistent plant performance over this period, resulting in production of 586 mtV, up 35% from last year. With this sustained reliability, we therefore have forecasted a minimum monthly production run rate of 90 mtV to 100 mtV, a guidance of about 1,100 to 1,200 mtV and at a cost between $30 per kilogram V and $31.10. The cost increase is due to ramping up well ahead as growth touches a year, but you have to start spending on operating expenses upfront. We are already starting skilling the required headcount. We took the decision to double production in Vanchem, and we will reach steady-state production at a run rate of 2,600 mtV by the end of 2022, and we will then obtain steady-state unit costs of our current fixed cost price. Confidence in production is there, which is why we are already ramping up. The stockpile of ore we acquired with the plant has depleted, but we will source ore going forward from the Upper Seam at Vametco, which came online this September 2021. The Upper Seam can supply Vanchem a significant proportion of its ore requirements for 18 months and has the ability to supply 34,000 tonnes of ore per month. We have enough resources at the Upper Seam to support Vanchem beyond even the 18 months. In addition, we have also successfully secured third party ore. Next slide to the costs, please. H1 2021 production cash cost was $29.50 per kilogram V, a 46% increase relative to H1 2020, due to the stronger rand and U.S. dollar exchange rate, the higher cost of raw material due to the test work performed with different concentrates in order to optimize the process parameters at Vanchem, which, by the way, has now been resolved with the Upper Seam identified as being the mine feedstock into Vanchem. There was also increased maintenance costs, which is in line with the group expectations, and other costs as well, which was obviously partly offset by the higher volumes compared to last year. The increase is cost is in line with the group expectations as Vanchem is ramping up. H1 2021 total sustaining cash cost of $30 -- $38.20, 25% increase relative to H1 2020, mostly due to the factors mentioned earlier in addition to an increase in sustaining capital. Sustaining capital expenditure spend for H1 2021 was $2.8 million relative to last year early for $400,000. The increase in sustaining capital is in line with group's expectations as Vanchem was still ramping up in H1 2020. We are currently investing to more than double production to 2,600 mtV, which will significantly reduce unit cost and will be in line with the net cost sales. Next slide, please. Just in summary from my side. We have seen improved operational stability following the integration initiatives at our assets, which have provided stability and improved process control and reduced variation. These work streams are ongoing. And while this program will deliver sustained impact over 18- to 36 -month period, we are already seeing visible progress with control charts showing reduced variability and more consistency and improved plant conditions. We have seen an improvement in our production numbers for the last 4 months since the planned maintenance shutdown at Vametco, with an average monthly production of 260 mtV. Even though we have been producing an average of 260 mtV per month, we are maintaining our guidance of 240 mtV per month, and though we have quite a sustainable improvement in production. I will now pass the baton over to Tanya to talk through the results for 2021. Thank you. -------------------------------------------------------------------------------- Tanyaradzwa Tsitsi Wendy Mamie Chikanza, Bushveld Minerals Limited - Finance Director & Director [4] -------------------------------------------------------------------------------- Thank you, Francois. If I can move on to Slide 15. Good morning, ladies and gentlemen. I am pleased to give you an overview of the company's financial results for the 6 months ended 30th June 2021. To summarize the first half of 2021, as Fortune mentioned, Bushveld Minerals generated revenue of $47 million, up from last year's $43 million, supported by improved average realized prices, partly offset, however, by lower sales volume. Cost of sales, excluding depreciation, increased to $43.3 million in comparison to H1 2020, which was $30.1 million. And I will elaborate on this increase in the next slide. EBITDA loss was $10.8 million for the period, a $9 million swing when compared to the EBITDA loss of $1 million for H1 2020. As you can see from the EBITDA waterfall, the increase in loss was primarily due to a stronger rand to U.S. dollar exchange rate on costs in H1 2021, resulting in a negative impact of some $7.3 million. In fact, the impact of the strong rand costs accounted for about 80% of the EBITDA swing. Depreciation is flat over the 2 periods. And the net finance costs increased to $3 million compared to $0.8 million in H1 2020 as a result of the interest cost of the Orion Mine Finance PFA and the convertible loan notes with Duferco and Orion. You will recall, this is the first year we incurred in the Orion costs. The income tax credit of $3.7 million is to account for the deferred tax asset. We closed off with a loss after tax of $19 million. Slide 16. As I mentioned, we saw the cost of sales escalate by 44% over the half year to $43.3 million, with a stronger rand, against the dollar contributing 41% of the increase. Our maintenance costs increased by 30% as we saw to sustain the plants and improve operational stability, as Francois spoke about just now. Energy and raw materials increased by 11%. Mining costs are mainly as a result of bringing online the Upper Seam project started this year in Vametco to supply ore to Vanchem, and this increased by 83%. Operating and administrative expenses were contained on a rand basis. Sustaining capital was up $6 million -- to $6 million, owing to planned maintenance at the assets, in line with the group's maintenance plans to improve operational stability. Last year's minimal sustaining capital was an anomaly due to the effects of COVID-19 on the operation. The group cost per unit sold, including sustaining capital for the period was $59.70 -- USD59.7 per kgV, up from $25 per kgV in H1 2020 and in line with the unit cost of circa $38 kgV at Vametco and Vanchem. This is demonstrated more clearly in the waterfall chart on the next slide. And if I just turn to Slide 17. The exchange rate difference in sustaining costs make up a large portion of the increase in unit costs. As Francois explained, the increase in cost per unit sold is an asset level was driven by the decision to continue spending on sustaining capital and maintenance to support the plants and the recent operational stability. Employee and contractor costs also increased in line with ramp-up of headcount at Vanchem operations as well as organizational restructuring. We are already witnessing the impact of higher volumes at Vametco when reducing unit cost and we expect to target this throughout H2. Moving on to the balance sheet on Slide 18. Property, plant and equipment increased due to assets under construction, both at Vanchem and at Vametco. The group cash balance at the end of the interim period shows cash at $31.6 million relative to 50.5 million as of 31 December 2020, with total net debt of $54.4 million, up from $33.7 million at December 31, 2020. We have renegotiated been the testing terms under the ZAR 125 million net bank revolving credit facility and have made positive progress in negotiations with Duferco on the remaining balance of $11.5 million of the convertible balance. We expect to pay $5 million to Duferco in November and $6.5 million will be converted into Bushveld shares, as we previously reported. Slide 19. This table summarizes the main components of the cash flow during the period, with the free cash flow decreasing based on the operational reasons already outlined in the previous slide. Net cash from financing activities of $8.5 million includes proceeds of $9.6 million from shareholder subscriptions at the Bushveld Energy level. This process came from Acacia Resources and Mustang Energy, and they are offset by final costs, lease payments and Orion PFA repayments. Net cash invested of [$13.1] million includes disposal of Bushveld's investment of 8.71% in Invinity for $12.7 million, offset by investing in growing capital of $4.5 million, excluding the sustaining capital of 6.1 million that I spoke about earlier. And there's additional investment in EHL of $19.6 million, the holding company for Enerox. Now closing cash and cash equivalent position as of 30th June was $31.6 million. We realized, post year-end -- post period end $3.5 million from the sale of the shareholding in the AIM-listed Afritin Mining Limited. We will continue to balance cash conservation and investing for growth at Vanchem. As Francois mentioned, and Fortune as well, that the production volumes are important in us drive to reduce unit cost and achieve profitability. So our focus will continue to be on that. Thank you for listening. I will now hand back to Fortune. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [5] -------------------------------------------------------------------------------- Tanya, thank you very much. I will now go on to talk about our growth plans. If we can go to Slide #21. Bushveld is still very much in an investment and growth phase. While in this investing phase, all-in sustaining costs can be expected to be elevated as assets require a certain minimum throughput to optimize costs. However, as our production volumes increase, we expect that our costs will reduce significantly. Production growth is key to unit cost reduction to margin expansion and to increased profitability. The operational stability that we've been talking about allows us to set the right platform for driving this growth. We have outlined that we anticipate to get to a run rate of 5,000 to 5,400 mtV per annum by the end of 2022. This comprises mainly Vametco operating at 2,800 mtV annualized per annum, and Vanchem increasing its production from approximately 1,100 mtV to 2,600 mtV, which is more than 2x by the end of 2022. You will recall that we have talked about the multiphased growth plan for the company, with the immediate short-term target being 5,000, 5,400 tonnes and the more medium-term target of between 6,500 and 6,800 tonnes on the back of further work in terms of the refurbishment work at Vanchem and all the expansion work at Vametco. We have indicated that we are currently engaged in studies that will define that growth road map beyond this 5,000 to 5,400 mtV per annum. And at the conclusion of those studies, we expect to provide a much clearer picture on the additional growth that we still are committed to beyond these levels. What is worth highlighting and emphasizing, however, is that the growth that we have outlined here to 5,000, 5,400 tonnes is based on funded work that is currently underway in respect of the kiln 3 refurbishment at Vanchem. The successful negotiations with Orion to uplift the PFA capital ring fence has allowed us to reallocate that funding towards the Vanchem refurbishment and expansion, which allows us to secure this growth -- immediate growth target that we're referring to. If we can go to Slide #22, please. And I want to talk very briefly about Bushveld Energy. Our priorities for the second half of this year include making further progress on the construction of the electrolyte plant, which is set with an initial 200-megawatt hours’ worth of capacity, scaling up on the vanadium electrolyte rental product that we have previously talked about as well as attaining financial close and commencing construction of the Vametco hybrid mini-grid. We have spoken before about the significance of this mini grid in an environment where the government is encouraging large energy users to self-generate with the regulations significantly eased to allow for self-generation projects of up to 100 megawatts. We believe that this mini grid will showcase the business case for the self-generation projects combining renewable energy with long duration energy storage and in the process will create significant opportunities for Vanadium Redox Flow Batteries. We continue to support Cellcube despite the ongoing litigation that is going on amongst the shareholders. And we believe that as a producer and manufacturer for VRFB, it is very well positioned to benefit from this increasing momentum that is backed by the energy transition towards greater and greater energy, stationary energy storage deployment. If we can move to Slide #24, I want to spend the next few minutes talking -- commenting about the recent developments in the vanadium market. The Ferrovanadium price this year has averaged $33.40 per kilogram V, which is 30% up from last year. Current prices across markets are $34 per kilogram V in Europe, $32.50 per kgV in China and the United States is registering higher prices at $37.80 per kgV. Iron ore had until recently reached new highs at $200 per tonne, which is now dipped to levels of about $120 per tonne, and Roskill expects prices to decline further towards the end of the year, due to reduced demand in China as a result of restrictions in steel making volumes. Iron ore is obviously very important for vanadium market dynamics because when iron ore prices are significantly below $100, the lower they are, the more incentive they create for coproducers to blend their ores with seaborne hematite iron ore in the steelmaking facilities, with the result being of a reduction in vanadium slag that gets produced. Indeed, what we have seen in the past 12 months with vanadium price, sorry with iron ore prices running as hard as they did, is that the incentive to blend was completely eliminated, resulting in most coproducers operating predominantly with exclusively the magnetite feedstock. And we also have seen that they were operating at near full capacity. And what that means for disruptive vanadium supply is that the 70% plus worth of supply, which comes from coproducers, is significantly limited in terms of its ability to continue growing vanadium supply into the market. I think, if anything, with iron ore prices continuing on their march downwards, it can be expected that the opportunity and the incentive to blend seaborne iron ore with magnetite deposits may well return. The medium- to long-term fundamentals for vanadium remain quite attractive. Another consideration that is worth highlighting is the movement of the South African currency relative to the U.S., with the rand reaching a 2-year high this year. The strong South African rand in the period was supported by increased exports from mainly the mining sector, which is driven by the rapid growth in commodity prices that we saw helped by manufacturing figures that were also stronger than expected post the reopening of the economy and high interest rates relative to the U.S. The South African currency is expected to remain at similar levels for the rest of the year. If we can move to Slide #25. Vanadium Redox Flow Battery adoption continues to grow, especially in China, which is towards largest vanadium market. And this has been supported largely as governments focus on accelerating the energy transition to low carbon energy with VRFB adoption, particularly growing notably. As you can see from this slide, China is the largest market for VRFBs, with about 1.5 to 2 gigawatt hours of projects underway and major projects also established across the rest of the world. It is multiple that some of the largest stationary energy storage projects that are being deployed in the world are Vanadium Redox Flow Batteries. And a number of these are in China. China has made it clear -- has demonstrated clear support to not only growing renewable energy penetration and stationary energy storage. It is encouraging to see also some explicit support that's been given towards Vanadium Redox Flow Battery deployments. But as I said, beyond China, it is also very encouraging to see the developments in the rest of the world, which bode very well for future growth of Vanadium Redox Flow Battery deployments. If we can move to Slide #26. We move on to 27, apologies. And this will give us just a brief overview of the company's objectives for the year In the coming half. Now to summarize our 2021 and near-term plans. Our financial objective is to strengthen the balance sheet. That is our near-term key focus, cash conservation as well as investing for growth in Vanchem and increasing cash flow through margin expansion and debt reduction. In the slightly longer term, we intend to implement a cost savings program from 2022. On production, as we touched on earlier, the objective for group production for 2021 is between 3,400 and 3,600. And we also intend to complete the studies at Vametco and Vanchem, which will map the way for further production growth beyond 5,000 to 5,400 mtV per annum. Looking ahead, we intend to achieve the production run rate to 5,000 to 5,400 by the end of 2022. And we'll do this by prioritizing a sustainable and consistent output of 2,800 mtV per annum at Vametco and the refurbishment and ramp-up of kiln 3 at Vanchem to produce at an annual steady-state production run rate of 2,600 mtV annum. In addition to the increased revenue generation that this provides, it will also play a significant role in driving our unit costs of production down. Now to conclude, on Slide #28, please. Bushveld continues to be a leading primary vanadium producer and energy storage solutions provider with 2 of the world's 4 operating primary vanadium processing facilities. We believe that the vanadium market is a compelling one, with very attractive features in the short and medium, even long term as well. To investors, we provide access to both the steel and the fast-growing VRFB battery storage sector. And as I said, our vanadium market outlook in the near and medium term is strong. We continue to target production stability at our operations in order to set a strong base from which to continue growing our production further, given the significant depth of inventory of our resources. I'm going to stop here and thank you very much for your time and for your attention, and we'll open up now for questions. Thank you. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions). We'll now take our first question from John Meyer from SP. Please go ahead. -------------------------------------------------------------------------------- John Richard Meyer, SP Angel Corporate Finance LLP - Partner [2] -------------------------------------------------------------------------------- Thank you very much for the presentation and particularly for drawing up those waterfall charts, so we could better understand the cost base and the elements behind that. There's quite a lot of questions that I could ask, but I'll just have a few. Can you tell us what sort of condition kiln 3 is in at Vanchem? And how this compares with the kiln at the co? Can you talk us through what the cost implication is of the concentrates coming from the mine over at Vametco for Vanchem? And what else -- what other material you're going to need to buy in? And what's happening with the Mokopane mining project? And then could you tell us what you see as acceptable as group unit costs going forward? Because clearly, there's quite a lot of admin and other costs that bump up those group unit costs. And then lastly, could you just give us some more visibility of VRFB battery demand and sales? I know you've talked a bit about this, but could you tell us a bit more about what orders you're seeing through Cellcube and through other people? And then as you increase production at the Bushveld Energy Electrolyte Plant, at what point does Vametco or Vanchem get paid for that -- for the vanadium material that goes into that plant because clearly, there's going to be quite a lot. There's a certain pipeline and timing issues involved with the production and then sale of that electrolyte. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [3] -------------------------------------------------------------------------------- Thank you very much, John. I will ask Francois to comment on the first part of your question, which talks to kiln 3 at Vanchem relative to Vametco. There is a particular reason that we targeted kiln 3. It was likely to do with its dimensions, which, as you saw earlier on, gives a significant increase in our production. By the way, the 2,600 number we're talking about, it is based on a single kiln operation, which is kiln #3. Francois Naude, you may want to just provide a bit more color to the question from John. -------------------------------------------------------------------------------- Francois Naude;Operations Director, [4] -------------------------------------------------------------------------------- Yes. Thank you. Just to give you context. So Vanchem has got 3 kilns. Kiln 1, kiln 2 and kiln 3 as we refer to them. Kiln 1 is only 25% of the installed capacity. Kiln 3 is [30%] of installed capacities. So that's the biggest kiln at Vanchem. It's similar length, 90 meters in length, similar diameter, 4.2 meters diameter, also 3 degrees voice throughput. So it's very much same kiln as what is at Vametco, and its historical performance also indicate that we have steady-state production that we are targeting for kiln 3 was achievable and is achievable. Obviously, with the feedstock now, which is actually a better quality now that we are feeding from the Upper Seam from Vametco into the kiln (inaudible) is better than what we get from the third-party ore suppliers in general, the 2,600 number is achievable. I hope that answers that question. I don't think I need to go in further detail. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [5] -------------------------------------------------------------------------------- Thank you for that, Francois. The second question, which I will ask you to just stay on was the cost implications of getting concentrate from Vametco to Vanchem. Just as a precursor to any additional color that Francois may provide on that. The -- you -- let me just make a couple of points. The first one being that when we bought the Vanchem, obviously, it came with the stockpile that we was from a [Mapbox]. We also indicated that in terms of ore supply, we would continue to look at third-party supplier, but Mokopane would be a key source of ore. And that at Vametco, we have a significant resource base, which can also support Vanchem. The -- you will have heard us talk about additional third-party ore that we have procured. Our measure is always, especially with third-party sources, it will only consider it if it comes in at a cost that is more competitive and more attractive. Our default at the moment, if we don't use third-party ore source is to rely on our resource base that we have. And when we talk about Vametco, particularly, there is a couple of things that we have done. I mean we can talk about the concentrate that comes from Vametco, which is fed into Vametco's kiln and sending some of that to Vanchem. On a more sustainable basis, our plans are as follows: Number 1 is we've initiated what we call the Upper Seam Project, which Francois will just talk about in a second, which is able to support ore supply to Vanchem and can do it cheaper than it costs us to source that project ore. And then longer term, there is some work that we're looking at to ensure that the upstream crushing and milling capacity that we have at Vametco is actually able to support our ore requirements, not only Vametco, but at Vametco, operating at a level of about 6,500 to 6,800. So that is essentially ensuring that even with implementation of Phase 2 at Vanchem, we're able to support our ore requirements from our deposits at Vametco. That does not mean that the Mokopane project is not key animal. It remains an important part of our ore supply story. But certainly, what we want to try and do is, at any point in time, pursue the cheapest tonne of ore that you can feed into our operations and the material coming from the Upper Seam Project. And in time, a scaled up concentrate production at Vametco are the more attractive sources. But Francois, can I just ask you to just come in and perhaps just add a bit more color around the Upper Seam Project and the longer-term concentrate volume production -- concentrate production that will also support Phase 2 at Vanchem. -------------------------------------------------------------------------------- Francois Naude;Operations Director, [6] -------------------------------------------------------------------------------- Sure. Thank you, Fortune. Yes, just to color in the Upper Seam, it's targeting the Upper Seam material. That's the massive magnetite ore body, which has got at least for the next 18 months already exposed and the reserve base that can support Vanchem feedstock to its full capacity, 34,000 tonnes. It comes up cheaper than what (inaudible) or any other third-party material at this point in time. Obviously, we are, as Fortune said, it is third-party material available that comes in cheaper than what we can produce ourselves, they will look at that. It is a separate stream. So it's a mobile crusher and stream with a dry magnetic separator system, which -- and they support Vanchem's material and feedstock requirements. It's upgraded to 85% max and then turned over to Vanchem, similar as the (inaudible) because that was also a massive (inaudible) just a better material. For the medium term, we are doing work around improving the -- a permanent installation at Vanchem to upgrade the [Upper Stream], sorry, to upgrade the concentrate section so that concentrate section can supply concentrate to both the Vametco and Vanchem at production run rates, which we're targeting for the next medium-term phase, which is around 6,000 to 6,500 production run rate. But that's the medium term. That's the studies we kind of the -- are working on that as we promoted studies that will be concluded by the end of this year. And therefore, there's no risk in the short term of supply in Vanchem with its full requirements to support kiln 3. We will obviously also increase the reserve base. There's a massive resource base of the Upper Seam, and as we start mining the Upper Seam, we'll start increasing our reserve basing at the Upper Seam as well. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [7] -------------------------------------------------------------------------------- Thanks for that, Francois. And I think if I may just add at the point that the supply of concentrate from Vametco to Vanchem, we don't expect it to result in greater ore cost relative to what we were sourcing from third-party sources, like Mapbox. So in terms of -- I imagine, John, asking the question as you think about your model, our plan and our approach is that our own ore sources, our own ore sources should come in at a cost that is cheaper than getting from any third party, which is why we're kind of moving in the direction that we have outlined. Then there was a question you asked just around overall group unit costs. And I think one of the points you alluded to is the difference between the cash costs and the total sustaining cost. On Slide #9, and I'm going to come to this slide, Francois, that you talked to earlier on. One point that I would emphasize is, if you look at the bottom right, the total sustaining cash cost during H1 2020 compared to H1 2021, you'll see a significant increase. But if you look at our C1 cash costs, you see that there is quite a gap between C1 cash cost and the total sustaining cost. And I think the point I want to emphasize is we've made a very deliberate decision that getting stability means investing, it means implementing our proactive maintenance. We did 35-day maintenance shutdown this year. It means that our sustaining CapEx investments are significantly higher than they were also last year. The big driver, actually, when you look at a buildup of our costs, it's not the what you'd call group head office, for example. The contribution of group head office to our unit costs is actually very small. I think what you see there is the effect of 2 things. One is the fact that we rebased our production base. And two, it is that we're continuing to make investments, right? At Vanchem, we are implementing a kiln 3 refurbishment, and we continue investing in terms of staying business CapEx. And all of this is necessary to get us to the level of 5,000, 5,400. From there on, we expect to kind of normalize this sustaining CapEx or investments and to see a much closer relationship between your cash costs, C1 and your sustaining cash costs. But again, Francois, I talked to your chart on Slide #9. So I will again refer back to you to add any color that I might have left on. -------------------------------------------------------------------------------- Tanyaradzwa Tsitsi Wendy Mamie Chikanza, Bushveld Minerals Limited - Finance Director & Director [8] -------------------------------------------------------------------------------- Sorry, Fortune, you (inaudible) finish out, if I can just talk through the admin expenses, specifically after Francois. Thank you. -------------------------------------------------------------------------------- Francois Naude;Operations Director, [9] -------------------------------------------------------------------------------- I think just a quick one maybe to add. I think we need to understand that it is a bit of an anomaly specifically, if you look at the Q2 cash cost. We already, as I said, (inaudible) lower, even though with an April month that was also a challenge for us. So definitely looking at the remainder of the year. There will be a significant reduction in our cash cost position, with the production now running at a good steady state. There's no additional cost increase. Most of our sustaining capital has been spent in the shutdown period. So the sustaining capital component for the remainder of the year, it's still targeted at improving key areas of the plant, but it won't be that significant compared to what H1 was because most of that sustaining capital was spent during the shutdown period. So I mean, it's all the volume game. We're well structured. As Fortune said, it's now getting ramping up at same production levels and then for the group, I can confidently say we'll have a more stable cash cost position going forward. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [10] -------------------------------------------------------------------------------- Yes, And I think if I can just add, Francois, just refer back to Slide #10 because one of the things we did commit to doing going forward is to provide a bit more transparency as to the makeup of our costs because then we can have, I think, very pointed conversations around that. What we will see there on the production and cash cost is the impact of the foreign exchange rate as well as the production volumes. And if you adjust for those, you start to get a much clearer picture of what our cost numbers would be looking like now. The foreign exchange is what it is, there's nothing we can do about that. And to reiterate Francois' points, ultimately, what is important is that we drive volume both through Vametco and through Vanchem. And if we do that, we should get ourselves back towards a cost competitive position. Tanya, did you want to make a comment on the question? I think there was a part of the question from John related to our admin costs. And then I'll close off with just a comment on the VRFBs. -------------------------------------------------------------------------------- Tanyaradzwa Tsitsi Wendy Mamie Chikanza, Bushveld Minerals Limited - Finance Director & Director [11] -------------------------------------------------------------------------------- Yes. Thanks, Fortune. I think, John, your question was what are we going to do with -- where are we expecting the group cost to land and continuing our admin costs? And I think we've got a slide, Slide 16, which I was looking. It was our total all-in cost, which came in at 59.7, which if you think about the conversation we've just been having around what the all-in sustaining for the operations were, it should be around 38. So you can see what the delta is there in terms of what was basically sitting as admin outside operations. But in terms of the admin, our admin costs actually have been quite well contained this year. Clearly, we only drive to make sure that we bring them down. But when you look at them year-on-year, they're not necessarily the same buckets, but they have been impacted by the exchange rate movement. So in H1 2020, administration alone was 14 million. And in the current half year, it was 14.5 million. If you actually apply the same exchange rate of last year, you'd find that actually that admin came in at $12.7 million. So we have actually been containing those costs on a like-for-like basis. And if you look at that bucket, what actually makes up for it, the specific admin expense of 8.8% has got pre-stripping -- has pre-stripping of the exchange rate movement, have got staff costs in there. In those staff costs, just to remind you that, anyone who's not actually directly involved in the production of the units and operations, even if the operation is not included, so they will fit in this particular bucket. And in terms of the reorganizational cost -- reorganization that should place at the operations earlier this year, there is an element of cost, which actually sort of crept into those staff costs in terms of VSPs and reorganizing people. And I think that is the only bucket we did include a slide, I think Slide 33, which looked at those numbers to just show what the movement has been. But all in all, I would say that we remain focused on it. Obviously, if you look at the 14.5 million in total again, things like the selling distribution costs, they're really driven by what our those volumes will be, the idle plant cost because of what we saw happened in April with the plant not actually ramping up slower than originally planned for. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [12] -------------------------------------------------------------------------------- John, with your permission, your question about VRFBs, I'm going to hold it. There is a question that came through from Tim Huff that's still talking to the operations, which I would like to just attend to, and then I'll come and talk to the VRFB question you raised. The questions being from Tim Huff of Peel Hunt. You noted that sustainable CapEx has increased to parts of the Vametco plant to catch up for underinvestment in the past. Part 1 of the question goes, which parts of the plant are you having to reinvest in at the moment? And the second part is, and how long do you expect the reinvestment period to last for? And I will pass the question on to Francois. Francois, I trust you got the question. -------------------------------------------------------------------------------- Francois Naude;Operations Director, [13] -------------------------------------------------------------------------------- Yes. Thank you. I'll first answer the first question, which parts of the plant. Like I said, the biggest component of the investment was kiln, in the refractories of the kiln, because last year was the COVID-19 pandemic and cutting down on sustaining capital. We had to redo a lot of the refractories this year in the kiln. That was one of the reasons in January and February, where we had the instability because we have refractories that was filing. So in the kiln, there was a significant investment to get the refractories up. And that's something that one is this year. I mean that will be on an annual basis, but it won't be this than the magnitude that we had to do this year. So that's the one area of the plant that a big cost come from. The other area is the kiln is being stopped from concentrate, from the concentrate section due to lack of maintenance and the lack of process controls and the lack of asset integrity at our concentrate section. So most of our effort is going into getting the concentrate section up and running so that we can get a consistent feeds through the kiln, have enough calcine stocks available that we can send through further Kiln and that's where a lot of investment goes in to make sure that the throughput the kiln is not a hazard and it is consistent because we've seen kiln now in the past few months, if it runs, you get better recoveries, obviously, your throughput is also improved. The last area of the plant where a lot of investment goes into is the leach section. The leach plant is quite an old plant, with a high corrosion that took place over many years. And one of the areas that we also spend a lot of money was replacing one of the belt filters that was totally worn and some of the structural work was also getting fatigue. So those are the main areas. So outside of the kiln refractories that is an annual process, we've got an asset integrity risk register. We manage our asset integrity levels with (inaudible) is in the concentrate section and the leach section, which we have now done most of the work already this year, and we will start reaping the benefits as we go on. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [14] -------------------------------------------------------------------------------- Thank you very much, Francois, for that. Now finally, on the question of VRFBs. John, you asked the question whether -- how we are seeing the demand for Vanadium Redox Flow Batteries all? Can I just ask everyone else to be on mute, please? Because I can hear myself on echo, apologies. So on your question was what we are seeing in terms of deployments of VRFBs and what that means for the demand of vanadium. And what we are seeing in terms of the pipeline of companies, like Cellcube. Unfortunately, I'm not able to comment very directly on pipeline of company, like Cellcube or Invinity, that we involved with other than what has been, of course, disclosed. I think the point I would highlight though is that if you just look in the public domain on projects that have been announced that are underdevelopment, it's quite a number of significant developments to talk about. In China, we're talking about 1.5 to 2 gigawatt hours of projects that are currently underway. Just to put it in perspective, 2 gigawatt hours of VRFBs requires approximately 10,000 tonnes, if not 11,000 tonnes, of vanadium. That's just over 10% of the global market. Which projects are we talking about more recently, you will have seen VRFB Energy announce of breaking ground on a 500-megawatt hour project. And this project, it's not the first time we're hearing about it. VRFB Energy has talked about the projects that we were doing in those, I think, was an 8-megawatt hour project, and there was this particular one that they were working on. You will have seen Shanghai Electric also talk about the 500-megawatt hour project under development. And what China has done is, China has actually made some very explicit commitments towards the deployment of long duration and in some instances, particularly Vanadium Redox Flow Batteries. So it is good to actually see these projects now get underway. What we do also see is the level of demand vanadium units into electrolyte production. So yes, our own plant will come into production next year, 200-megawatt hours. But we're constantly fielding inquiries for supply of vanadium for purposes of converting into electrolyte. And I mean we've seen interesting inquiries from markets, such as China, which would corroborate the kind of momentum that we are talking about here. So -- what does this mean for demand? What we're seeing is the likes of Roskill, the likes of BMI, who used to be very, very bearish, if not very conservative around demand for vanadium from Vanadium Redox Flow Batteries. We've seen each of these guys significantly upgrade their forecasts in terms of focus of vanadium demand from the VRFBs. They're getting more and more comfortable with the players of VRFBs in the broader energy storage market. I will overlay all of this with recent statements by the Secretary of Energy in the U.S., which typically when she came out saying that in their view Flow Batteries are the answer for grid scale energy storage with the only caveat she makes that Vanadium Flow Batteries are the most mature. But if there is a concern, it is around the availability of vanadium to support the certainly large-scale requirements for energy storage. So those are the things that I look at in terms of vanadium demand from VRFBs and then compare that with what we are seeing from our sales and marketing team in terms of inquiries for supply of vanadium and there's certainly a significant increase in the very list inquiries, and we're starting to supply some vanadium units into that space as well. Any other questions, operator? -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- We have one further question from Nick Chalmers from Alternative Resource Capital. Please go ahead. -------------------------------------------------------------------------------- Nicholas Robin Chalmers, Alternative Resource Capital - Founding Partner [16] -------------------------------------------------------------------------------- I got 2 or 3 questions, if you don't mind. Firstly, on the Orion PFAs, it's clearly good news that you can now draw up on that facility for the current phase of refurbishment at Vanchem. Could you just clarify what that means for the servicing cost of that facility and specifically whether the revenue and unit production linked charges that were exclusive to Vametco, do they now also apply to revenue and production from Vanchem? Secondly, Bushveld Energy, it was -- obviously, H1 was a period of quite significant investment in that side of the business. Could you just give us a bit of guidance on what H2 investment is going to be both in terms of CapEx on the electrolyte manufacturing facility and also any other indirect investments in Cellcube or anything else? And thirdly, just touching on the previous question about sustaining CapEx. Once we get past this year of sort of catch-up of sustaining CapEx, what's a reasonable annualized figure for us to sort of be looking out at both Vametco and Vanchem going forward? -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [17] -------------------------------------------------------------------------------- Thanks, Nick, for the question. I will take the first question on the Orion PFA, and I will comment as well on the Bushveld Energy question you asked. And I will pass the sustaining CapEx question to Francois and to Tanya. So on the question of the PFA, the way the PFA was structured, it's based on production volumes in terms of which we pay asset in percentage of the realized revenue per unit, and it's split into 2. There is a percentage of realized revenue and a unit dollar cost per kilogram V, and together, they make up the servicing for the PFA. Now the whole premise on/off of the funding was us growing our production to 4,300 within a certain time frame and we agreed in our structure that should it take us a while longer to get to 4,300 at Vametco, we included a make-whole provision that essentially allows for volumes from Vanchem to contribute towards that 4,300 mtV. There was a reason we did it that way, and it was primarily because when we entered into the agreement with Orion, one is that we had just acquired Vanchem and the funding that we did with Orion was focused on Vametco and the growth at Vametco. Obviously, as we have been implementing our plan, doing our studies, one of the things that we did raise with Orion was the fact that if it is cheaper and if it yields more bang for buck, so to speak, to increase production in the short term at Vanchem relative to Phase 3 at Vametco that it would make sense that we should look to do that. Also, when you overlay that with the point we made on the prioritizing stability at Vametco, surely, we didn't want to rush the growing production to 4,300. There's a lot of work that Francois and the team are doing in the operations and stability is quite a key for us. So on that basis, what we sought to do was to lift the ring fence, which was in Vametco and was just ring-fenced to Vametco. So rather than this cash sitting there until such time as we are ready to do Phase 3 at Vametco. In respect of which, by the way, consider that where you're looking at Phase 3 Vametco, Phase 1 Vanchem, Phase 2 Vanchem and Phase 3 Vanchem, from a group perspective, we want to make sure we're optimizing our capital spend. So if it is cheaper and we can do it quicker to do a Phase 1 at Vanchem or Phase 2 for that matter, you want to do that rather than still prioritize for Vametco 3 just because that's what you raised the money for. So thankfully, around, we're very pragmatic about it and recognized that there is more value to be had by going ahead with completing the kiln 3 refurbishment, uplifting production levels to 2,600. From an Orion perspective, we get to the 4,300 level that is required to service this facility. So lifting the ring fence does not create any additional servicing obligations on our part. We still are able to support and service the facility, which is essentially predicated on a production base of 4,300 mtV per annum. I hope that is clear. So I guess the short of it is, by lifting the ring fence and applying it to Vanchem, we are not growing while increasing our total tonnes committed to this facility beyond the 4,300 that we agreed in our agreement. Then on the question around Bushveld Energy. Look, on Cellcube, you will know we announced that we invested $30 million together with our partners in Cellcube in just early Q2 of this year. The expectation is that we do not anticipate to put more capital into Cellcube, certainly in H2. So the capital commitments for Bushveld Energy going forward, they are as we've guided before. And I will get Tanya in to talk about some of the specific CapEx numbers. But I think the only notable one to talk about is BELCO. And as you recall, BELCO is a plant that we are building together with the Industrial Development Cooperation. We own 55%, IDC owns 45%, and the project is funded with some debt and equity. And Tanya, if you could just come in, perhaps, and just talk to some of those specific numbers. But the capital spend on energy is very, very limited going forward. And in fact, I would say, is mainly in respect of our commitments already to the BELCO plant. -------------------------------------------------------------------------------- Tanyaradzwa Tsitsi Wendy Mamie Chikanza, Bushveld Minerals Limited - Finance Director & Director [18] -------------------------------------------------------------------------------- Thanks, Fortune. Yes, that's right. I think our philosophy at the moment is when you look at capital, Nick, we look at the growth capital, and then looking at the sustaining. From a growth capital perspective, as I mentioned earlier on, we are prioritizing Vanchem. So the Vanchem capital growth spend is important because that would get us the volumes that we need. And we expect in the coming 12 months, this year and next year, for Vanchem coming kiln 3 completion, to spend around $18 million and that will primarily be growth in a bit of regulatory capital as well that we need to spend around that, and that is a key focus. In terms of all the other capital, from an operations perspective, you'll have heard Francois talking about the importance of getting our operations to be stable. So we prioritize things, which need to be done, but there's a balancing act between that sustaining CapEx and cash conservation because that is important until we get that growth coming through. So we have spent sustaining of about $6 million in the operations. We'll spend a little bit more for the rest of this year, but you do not expect those numbers to be the same as what we've seen this year because cash conservation becomes more important. BELCO, we are fortunate that we do have the IDC as our partner. So we do continue to spend on that and the timing of that really depends on the status of some of the work that's being done in that game in terms of just balancing that, the cash requirements, and continue to focus on that capital spend. So all in all, we'll spend the capital that we need to spend, but you won't just spend capital just for the sake of it. -------------------------------------------------------------------------------- Francois Naude;Operations Director, [19] -------------------------------------------------------------------------------- Thanks, Tanya. -------------------------------------------------------------------------------- Operator [20] -------------------------------------------------------------------------------- As there are no further questions at this time, I'd like to turn the call back to your speaker for any additional or closing remarks. -------------------------------------------------------------------------------- Fortune Tsepo Mojapelo, Bushveld Minerals Limited - Co-Founder, CEO & Director [21] -------------------------------------------------------------------------------- Thank you, and thank you very much for everyone for spending time to listen to our presentation today. I think in conclusion, the one point I just want to say and it's something that I've said in the previous analyst call, and it is really a case of with the operational leadership capacity that we have created looking after Vametco, Vanchem and the BELCO plant that we're building. As unfortunate and disappointing perhaps as a revision of the guidance may have been earlier in the year, the big motivation was that we move away from chasing targets that are aspirational in terms of our guidance to a philosophy that demonstrates a consistent production at a certain level. And only when we've demonstrated that we baked that into the guidance numbers we provide the market and that we prioritize particularly at Vametco, getting plant stability because only when we've got that, can we then look at raising production in a way that is sustainable. If we rush with Phase 3 expansion at Vametco without getting a sustainable, stable operations, we're only going to amplify the inefficiencies. I think that since we met the call we did, it's been good to see month-on-month production levels at Vametco at about average of about 260 mtV. It's good to see the metrics that we track showing much less variability. And I mean, make no mistake, there's still quite a lot of work that we are doing within the plant in terms of establishing operating procedures, in terms of implementing our integrated planning and work management system in terms of the proactive maintenance and just being completely disciplined with respect to that. An important point that Francois made earlier on, which is around ensuring that operational leadership, their capacity is released to spend time in the plant and not spend a lot of time dealing with administrative matters. I think I'm very pleased to say that we are seeing the results of that shift. Our aspirations remain growth, but sustainable stable growth. And I believe, as I've said before, that we have turned the coin in respect of that. Pleased to see the kind of stability we've been seeing at Vanchem, which is one of the strong motivations for us to prioritize it in terms of getting kiln 3, getting the PFA uplifted so we can increase the production. Vanchem was never meant to operate at 1,000 tonnes per annum. And when we talk about -- we've got the resource base in terms of grades to be a low-cost producer. But what is really important is that we then get the tonnes through this plant at an optimal throughput to ensure that the cost position is commensurate, sorry to ensure that the production volume is commensurate with the fixed cost base that we do have. And certainly, Vanchem getting production 2,600 is the start. And that we expect to get with the single kiln operating. There's still another 2 kilns. Which ones we're going to prioritize between that and Vametco will be the subject of the studies that we're busy with, which we expect to complete by the end of this year. And only at that point, I think we will provide much clearer steer around what happens beyond kiln 3. But even before then, I think if we pause and we look at Bushveld as a company that is operating at 5,000 to 5,400 tonnes per annum, that makes us one of the largest primary vanadium producers in the world. And if we're doing that off a base, that is stable off a low cost base, then we've got a very, very good story to talk about. Beyond that, when the capital is there, we will make the commitments to increase production further in the medium term to the 6,500 thereabouts. And in the longer term, we've talked about 8,400. But I do believe that, that is sometimes tends to be a destruction. Let's look at the asset base we have, let's look at the production base that we do have today, and let's make sure that with that, we are generating good revenues, we're generating cash flows and we've got a competitive cost position. That is our focus, and I believe that we're well on track with that. So on that note, I'm going to propose to end this call and to thank you, again, for your patience and for your time with us this morning. Thank you.