At South32, we have been actively reshaping our portfolio for a low-carbon world. Consistent with this, we have entered into conditional agreements with Sumitomo to acquire their 45% interest in Sierra Gorda, a long-life, open-pit copper mine in the prolific Antofagasta copper region of Chile. The acquisition provides immediate exposure to copper, a critical metal in the decarbonization of the world's energy networks that has strong, long-term market fundamentals. It further improves our portfolio, and on the terms we have agreed, is expected to be immediately value accretive for shareholders of South32. It brings a substantial increase in our earnings leverage to the green energy transition, with approximately 80% of group earnings coming from base and precious metals once complete. Adding Sierra Gorda to the portfolio will build on our established presence in the Americas. We will have joint control together with KGHM, an experienced global miner. The upfront purchase price of $1.55 billion represents a discount to the share of over $5 billion of historical investment in high-quality, modern processing infrastructure. It also benchmarks favorably to the capital intensity of new copper builds globally, which has been rising steadily over the last 20 years. In addition to the upfront consideration, a contingent consideration will be paid out of future cash flows from the operation when certain production and price thresholds are met. This will be payable annually over 4 years and is capped at $500 million. Sierra Gorda is a high-margin asset. It has a mine life in excess of 20 years with a reserve of more than 1 billion tons. Operating performance has progressively improved since commissioning, and the operation is supported by excellent infrastructure, that includes access to renewable power and seawater for processing. Costs benchmark favorably, and the operation is expected to exceed 200,000 tons of copper equivalent production in the current calendar year. Sierra Gorda has recently been fully ramped up, de-risked, and is now unlocking further value through a capital-efficient debottlenecking project, supported by an experienced team on the ground. The debottlenecking project is expected to increase plant throughput by a further 6%, has low technical risk, and will continue over the next two years. There is further upside potential in the already substantial resource, with drilling underway to potentially extend the current open pit at depth. The regional exploration upside is also significant and includes near mine targets, such as the Pampa Lina deposit and numerous other prospects across a broader land package, which is located within a highly mineralized corridor. Separately, a feasibility study is underway to investigate the potential for a brownfield oxide project to process stockpile material at the site. In keeping with our disciplined approach to capital allocation and commitment to maintaining our strong balance sheet, we will fund this acquisition from cash on hand and an underwritten $1 billion debt facility. Current cash generation across our portfolio is strong, and we expect this will enable us to minimize our use of the acquisition debt facility. The group's net cash balance was $660 million at the end of September. Our $1.45 billion revolving credit facility is expected to remain undrawn. Our capital management framework is unchanged, and we will continue to prioritize our investment-grade credit rating through the cycle. Sierra Gorda is also expected to support higher ordinary dividends, with the acquisition being immediately earnings accretive. We will continue to flexibly execute the remaining $231 million of our capital management program. Today's announcement is another important milestone for South32 that will create long-term value for our shareholders. Adding this long-life, high-margin operation will further improve our portfolio. Together with our recently announced intention to acquire a further 25% interest in the hydro-powered Mozal Aluminium Smelter, we are delivering on our strategy and actively reshaping our portfolio for a low-carbon world. Thank you for standing by, and welcome to the South32 Sierra Gorda acquisition call. All participants are in a listen-only mode. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Graham Kerr, CEO. Please go ahead. Thank you. Good morning, everyone, and thank you for joining our call to discuss this morning's announcement of our conditional agreements to acquire a 45% interest in the Sierra Gorda copper mine in Chile. For those of you who are interested, there is a short video available on our website. On today's call, I'll be joined with our Chief Financial Officer, Katie Tovich, our Chief Development Officer, Simon Collins, and our Chief Commercial Officer, Brendan Harris. Before we get into the questions, though, I'd first like to start with some opening remarks. I'd like to draw your attention to the investor pack we released, which is also on our website, and I'll refer you to some of those pages. I've always said from day one that M&A needs to be opportunistic. While we exist to create value for our shareholders, we need to be disciplined in how we approach that and any decisions we take around allocating capital. We have a team that is regularly reviewing opportunities to improve our portfolio, but often they are discarding more opportunities than we progress. ...The challenge is to find an opportunity that is not only undervalued, but also has a clear path to realize the full value. With our agreement to acquire Sierra Gorda, we believe we have identified an opportunity and agreed a deal to purchase an ownership share of an asset that can deliver real, identifiable value to our shareholders. We expect our transaction and funding structure will support us in realizing that value. As can be seen in Slide 8 of our pack, our upfront consideration benchmarks favorably to historical investment, valuation, and production multiples. Looking at this, not just from the asset's own historical investment, but also from the increasing capital intensity across the industry, you can see again on Slide 9, how well this benchmarks against other builds. This profile has been increasing over time and is only expected to increase further in the future to offset industry grade and resource decline. By splitting our consideration between upfront and contingent consideration, we have also demonstrated the acquisition is not based on near-term copper pricing. We have secured an important tax indemnity from Sumitomo up to an agreed cap, while our funding structure maintains our balance sheet strength and flexibility. As can be seen on Slide 15 of our pack, the acquisition meaningfully lifts group margins. Looking forward, we expect the investment to immediately contribute to group earnings, improve our portfolio, and further strengthen our balance sheet through the cycle. In terms of the asset, it benefits from $5 billion of historical investment in high quality, modern infrastructure. It is on track to produce in excess of 200,000 tons of copper equivalent production this year, has a cost profile that benchmarks favorably with other similar assets in the Antofagasta region, and has a long life with greater than 20 years of reserve. Beyond that, it has a number of opportunities in resource life extension, oxide project potential, and regional mineralization. Looking at Slide 28, you can see the significant improvement in the operations performance. It has been de-risked through its build, and following a tough commissioning, is now fully ramped up. It's starting to benefit from the significant historical investment made by the joint venture partners, and the current debottlenecking project is starting to realize the next leg of efficiencies. This view has been validated through our 9 months of extensive due diligence, including multiple site visits by our senior operational management teams in the Americas. Specifics of the history of the planned improvement and the current work are summarized on Slides 26 and 27 of our investor materials. We see this as a compelling opportunity to acquire an asset at an attractive valuation that will be earnings accretive from day one, and support our efforts to reshape our portfolio for a low-carbon future. It provides immediate, meaningful exposure to copper, a critical metal for green energy transition. It improves our portfolio by lifting margins and further increases our exposure to base metals, building on the recent decision to increase our ownership in the green aluminium smelter in Mozal. Slide 7 of our pack, which excludes the impact of our increased ownership in Mozal, demonstrates how substantial the shift in our earnings will be with the inclusion of Sierra Gorda. Using our FY21 earnings, base and precious metals account for more than 80% of our earnings. The acquisition will be funded from cash on hand and an underwritten debt acquisition facility. Our business is generating strong cash, and this will help to minimize our debt draw once conditions to the transaction are satisfied. The impact on our balance sheet is best shown on Slide 21 of the pack. As can be seen, our gearing remains modest, with more than half of our pro forma debt relating to very long-dated liabilities, including Worsley's multi-fuel generation lease. Looking ahead, we will continue to flexibly execute our capital management program, which has $231 million remaining to be returned. While our capital management framework remains unchanged, we'll continue to prioritize an investment-grade credit rating, and our strong balance sheet remains core at our, at our strategy. The announcement today is another important milestone for South32 in what has been a busy year. It further improves our portfolio, will be immediately earnings accretive, supporting higher dividends, and creating longer-term value for our shareholders. I will now turn the call over to the moderator and look forward to taking your questions. Thank you. Your first question comes from Rahul Anand, from Morgan Stanley. Please go ahead. Hi, Graham and team. Thanks for the opportunity. I've got one question on the transaction value. Obviously, it looks like a good price. I just wanted to understand the process. I mean, if you can provide a bit more visibility in terms of how many other parties were there. And also, I wanted to understand that $500 million that's contingent. Is that all payable in any given year, as soon as the price goes up, or is it staged over the time period that's been pointed out? That's the first one. I'll come back with a second. Thanks. Yeah, thanks, Rahul. Appreciate the first question. Look, in terms of the process, I mean, obviously, yeah, other people will talk about who was involved in the process. What I can talk to you about, how we approached this. As I said in the opening comments, we've always-... You know, start with the position that M&A is opportunistic from our perspective. You know, we'll do it where we see the opportunity to create value for our shareholders. And the challenge really is to find something which the market undervalues, and we see there's a clear pathway to value. Sierra Gorda clearly falls in that, if you like, zone from our perspective. It's, it's an asset that isn't really that closely followed. If you look at KGHM, there's not that many brokers that follow them in that much detail. You know, Sierra Gorda started commissioning in 2014 and had a number of early challenges that have been fixed over time through redesign or real change to the plan, and now is going through quite a detailed debottlenecking project. And we can talk about that in a bit more detail. But again, the key here is to find an asset that we think the market is undervaluing, and we believe there's a pathway to value. The process itself, obviously, it was a competitive process. You know, we get asked the question, you know, "Why you? Why not someone else?" Look, I think there are a number of people that are obviously interested in copper assets. We've said from day one, we're not driven by ego. So what does that actually mean? For us, it means we will find an asset where we think we can create value. The second piece is we don't always have to be the operator. There are a number of players out there in the marketplace today that insist on being the operator. From our perspective, you know, we participate today in a number of joint ventures, whether it be in our manganese business in South Africa or Australia, Mitsubishi, we own, if you like, at Mozal. Obviously, the joint ventures we have with Alumar, Alumar in Brazil. You know, we're very comfortable operating in that environment. For us, it's more about choosing the right partner, and in that space, certainly KGHM has, you know, shown a good, strong track record from our perspective, and particularly the management team on the ground is super impressive. From our perspective, you know, I'll be brutally honest, we started this process about nine months ago. We've had a very detailed due diligence process that has involved multiple site visits, and we'll talk about that composition, if you like, in a little moment. But I would have started the position when the team first raised this, probably about 14-16 months ago, that I'm convinced that this is something we should have a look at. But I think every piece of work that we've done along the journey, every site visit, has actually allowed us to actually, if you like, if you like, take some of those layers off the onions where people haven't understood. And certainly from our perspective, if you look at the performance over the last three years, whether it's throughput, whether it's mining efficiencies, whether it's recoveries, you know, there's a number of slides in the chart that really show how they're on a pathway to improvement. Again, we can dive into that in a little bit more detail later on. Your second question, Rahul, around the structure of the deal. You know, obviously investing in a new project, new jurisdictions, there's some risks that we need to manage. One of them, obviously, is around, you know, tax, and obviously, we spoke about the tax indemnity that sort of helps support us in any potential changes in the tax regime. Keeping in mind, there's a tax stability agreement to 2028 that supports Sierra Gorda. The other aspect that we wanted to manage is price, because, you know, we have the belief that the price at the moment for copper is probably running hot. When we think about an acquisition, you know, we're thinking about our long-term price, not the short-term price. But we think the way we've designed the price participation is an important component that manages some of that price risk. And slide 6 in the pack, if you have a look at footnote D, it really outlines with clear transparency, as we always do, what the thresholds are around that. And the thresholds themselves are twofold. They're measured on an annual basis, and you need to meet both thresholds. So the first one is a production hurdle, and the second one is there, then a price threshold for copper. And then you're basically designed to share 50% of any incremental revenue that's realized above those metrics. So they're quite clear, if you like, on slide 6, Rahul. Mm-hmm. Okay, perfect. Look, that was gonna be my second question around the indemnity. You, you did talk about that. I mean, would you be comfortable talking to perhaps how that indemnity is in terms of the order of magnitude? I mean, should we think about that in terms of that flexible $500 million component, or how, how can we sort of draw some kind of understanding of the risk, potentially, of those law changes? Yeah, as you would expect, that's been an area of focus. I mean, obviously, there's a little bit noise coming out this week at LME Week, where the Chilean government talking about how that's probably gonna be moderated versus some people's expectations. But as you'd expect, we're catering, if you like, to make sure that we can manage that risk. And, you know, maybe Katie can talk a little bit about how we approach the tax indemnity and that tax risk. Yeah, sure. Look, I think, probably, to cover tax more broadly, just while we're on the tax topic. Sierra Gorda, just from a modeling perspective, for information, 27% corporate tax rate. And Sierra Gorda benefits from a deferred tax asset of $1.6 billion. So with opening tax losses of $4.97 billion, we don't expect that there'll be corporate tax payable for an extended period. The second tax that's relevant for Sierra Gorda is mining tax, which is based on production and operating margin. And there's some detail in the pack, I think, on at the back in the appendix. And also, you know, I'd encourage you to reach out to the guys to walk through in some detail how that mining tax works. But at a high level, as a guide, from a modeling perspective, over the medium term, we see that mining tax being roughly 75% of EBIT, which is the mining taxable income, and a 5% mining tax rate. And that mining tax is not offset with the DTA, so that is tax that's payable and will be included in income tax expense. In terms of your question around tax risk, there's probably a couple of points to note. One is that there's a tax stability agreement in place, and that agreement's in place until December 2028. I think there's been maybe some different dates in the market there, but certainly December 2028 is the date for that stability agreement. In terms of the Sumitomo tax indemnity, that's in place for potential changes in the current Chilean mining tax, and also the introduction of a new mining tax royalty. Any of those changes must be enacted prior to December 2025. As we have said, there's an agreed cap in place. If you think about how that indemnity works, if it's triggered, the amount would be paid to South32 equivalent to the NPV impact of the change in tax law up to the cap. So it would be effectively a life of mine indemnity for changes prior to December 2025. At the time of that event, or when the tax is enacted, that's when we would receive the cash payment. So we would actually receive cash in advance of having to pay any higher tax rate. The indemnity also covers any amendments, or expiration or termination of the Stability Agreement prior to December 2025, albeit, you know, our modeling assumption is that we expect that Stability Agreement to remain whole. So if you think about, you know, overall, from a tax risk perspective, the joint venture Stability Agreement, together with the indemnity, we believe provides us with protection against potential near-term changes to the Chilean tax regime. And our assumption, therefore, would be that you would effectively model Sierra Gorda on the basis that the tax regime in place currently, which I referenced at the beginning, will be unchanged. Does that help, Rowan? Yes. Yes, it does a lot. One quick follow-up for Katie. That 2028 Stability Agreement, does that mean any changes in Chile that come through would not be enacted before 2029? Is that the right way to think about it? We have the indemnity in place to December 2025, in relation to any changes to the Stability Agreement. But our current assumption is that Stability Agreement will hold until December 2028. Okay, perfect. Look, one final question, before I pass it on, is just around if you've had time to perhaps liaise with KGHM, how they are thinking about the project and the potential sale? Obviously, they have first right of refusal here. Have you had any any sort of communication with them? And, if you have any sort of understanding of how they're thinking about the sale price and whether they'd be interested? Yeah, look, we've obviously had lots of communication with them. You know, obviously, in the world of COVID, I've spent a lot of time, see, both on the ground with the team at Sierra Gorda, but also back in the head office in Poland. We've had a lot of discussions about how we want the joint venture to work, and it's important to understand that, you know, while we talk about not necessarily having to be the operator, it's important that we have the ability to actually influence and have joint control of where this is going to actually realize, if you like, that value that I think the market appreciates at the moment. And we sort of outlined that on one of the slides in the pack that really sort of went into some of that detail. And if you think about some of the critical points from our perspective, it was about finding a partner that we were really comfortable with in terms of safety performance, culture, performance, you know, that continuous mindset for improvement. And absolutely, the team on the Sierra, Sierra - on the ground on Sierra Gorda has been critically important, so it gives us comfort around that. But if you go back to that joint control, you know, we have equal representation with KGHM on the owners' council. There are a number of subcommittees, health and safety, technical, finance, marketing, and tailings, where that also applies. The actual chair rotates between South32 and KGHM every two years. As I mentioned, I think the team at Sierra Gorda, we've been really impressed by the team on the ground there, and there are a number of key decision-making points, you know, ordinary resolutions, budget approvals, production curtailments, that basically require both parties to agree. So we're really comfortable this is joint control. I think one of the other things we had a lot of discussion with KGHM about is, you know, because it is an asset that probably isn't that sort of well understood by the marketplace, is about how do we bring a little bit more light or transparency to some of, I think, what's been really good performance over the last couple of years there and the plan going forward. And as part of that, you know, we will sort of, in our reporting, include these numbers in underlying EBIT, so people can see with clear transparency about how it's actually performing. At the same time, we'll actually change the way we manage our Manganese joint venture to bring that into underlying reporting as well in earnings, so people can see a clear line of that. With regards to what KGHM does, you know, publicly, they've sort of been on the record talking about, you know, they're quite happy with what their position is today, and they're not really looking to exercise. But who knows? They have contractual rights, and we'll see what decision they make over the last period of time. But certainly, we've had very extensive engagement over the last nine months and particularly the last three months. It's been a really good working relationship from our perspective. Now, obviously, the flip side, if they ultimately decide to start to leave the joint venture, we have the opportunity to acquire their share under how the joint venture agreement actually works. Okay. No, that, that's very helpful. Okay, thank you very much. I'll pass it on. Thank you. Your next question comes from Paul Young, from Goldman Sachs. Please go ahead. Morning, morning, Graham, Katie, and Brendan. Congratulations on a major transaction. Graham, can I focus in on, and you've covered a lot of ground already, but can I focus in on the due diligence process and the asset itself in a bit more detail? You know, a few observations. You say it's not well understood, but, you know, it's been a tough asset, you know, since the get-go. You know, built at the, really, at the top of the cycle by Fluor. ... and, you know, three-stage crushing circuit HPGR, sort of unconventional, non-conventional, if you call it, for Chile. You know, from a flow sheet perspective, you know, it's low grade. It uses seawater, you know, obviously other assets, too. In Chile, of course, high all-in sustaining costs at around $2 a pound. And, you know, the asset's improved recently, I get that. But, so I'm just trying to understand about, you know, the history here and what got you guys comfortable. And you mentioned two site visits, but just on that, can you step through two things here? One is, you know, why was the asset, you know, problematic? You know, what's been improved? And secondly, on your DD, you know, site visits, you know, who did you use? I mean, 'cause, you know, this is a, this is a, you know, next scale asset that, you know, my understanding is, you know, interpretation is it technically inside South32. There's not a lot of, I guess, knowledge on big circuit processing circuits like this, despite it being, you know, mill and, mill and float. So who did you use from an expert perspective to really get comfortable with the, you know, the plant and the operation? Yeah, look, Paul, they're, they're both really good questions, and maybe I'll tackle those in the parts. And I'll start off, if you like, around the due diligence, and then talk about how we're seeing, if you like, the performance of the team at Sierra Gorda and where we see maybe they're going in the future. So we can talk a little bit about that in detail. Look, from a perspective around due diligence, I mean, again, I'd go back to that opening comment that I personally, and probably the other people on this call, started this process rather skeptically because of some of the noise around performance in the past and reputation of Sierra Gorda as an asset. So, you know, making sure that we had the appropriate level of due diligence into this was gonna be super critical to actually get that right. It is interesting, your question, I guess, around copper experiences in the portfolio. You know, if you look at my lead team, you know, Jason's been involved in copper projects. Vanessa, you know, she, her background is actually in Vale, and she cut her teeth on, if you like, a number of different of their base metals projects. Marco, heads our projects, has worked at Rio Tinto, Vale, and a few other companies where his primary focus has been on building and developing copper projects. And then as you get further into our organization, for example, Grant Edgington, is at Hermosa now, you know, used to be the general manager of mining at, Olympic Dam. So we actually have a lot more extensive, if you like, copper experience than perhaps people recognize. Now, in saying that, you know, we also have the belief that Sierra Gorda, you know, Sierra Gorda, there's a lot of similar things around processing and technology where we can apply actually skills around that. And certainly we can use some of the experience in that space to sort of work through the process. But we did also rely on external consultants. Some of those external consultants, if you like, on the ground, obviously based in Chile, because they're experienced. And keeping in mind that Sierra Gorda is surrounded by about four other operations that actually use similar kind of technology. Admittedly, not all of them use seawater processing, but they're not the only one there that is using seawater processing, if you like, in that hotspot of operations. I think the other important piece for us is, and certainly from my perspective, Paul, would be that, you know, there was a number of people that obviously I have a fair degree of confidence in. One of those is we certainly sent a team down from Cerro Matoso, and Ricardo, who actually ran Cerro for us for a number of years and has done a great job, as you're aware, about turning that asset around. You know, him and a number of his technical people went down and actually had a review of how the operation's going, as well as the external consultants. At the same time, we used a gentleman called Carlos Garcia, who I've known Carlos for probably 20 years. You know, he used to run Escondida for BHP, then he ran their base metals projects. You know, not been South32 side, but he's ran Mozal, he's ran Cerro Matoso. You know, he's had 15 years plus in the copper space, and like that last 15 years was predominantly based in Chile. So he's an experienced copper operator. And we relied on him to basically work with Ricardo and the rest of the team to do a complete due diligence that actually covered everything as you'd expect from mining, processing, health, safety, culture, debottlenecking plans, also doing a large deep dive on the tailings piece. So we had a very extensive program that was done over multiple site visits to sort of get our minds around what those metrics look like. I guess a couple of things when, you know, you sort of talk about some of your comments. I mean, we would probably argue that the actual processing there is not dissimilar from what other people are doing in that region, in terms of approach and technology. We'd also again make the point that we're not the only persons using seawater there, and obviously, the impact of seawater on the infrastructure was a big focus for us, and that was, you know, they're managing that really well. You know, we did a fair bit of benchmarking to get comfort around that. I think one of the challenges is, as you pointed out, there isn't probably too much information there that you can talk to the market about, in terms of how it looks. But maybe if we sort of go through some of the history, Paul, and it's probably worth, well, starting with slide 26. You know, if you think about Sierra Gorda today, the bottleneck for capacity is actually concentrator throughput. The operation has surplus capacity in mining and infrastructure. The concentrator is actually a conventional design. It was undertaken and constructed by Fluor. Certainly from our perspective, they did it using Tier One equipment. The actual layout is actually well laid out in terms of space, with the view to actually build expansion over time. Look, they started commissioning in 2014 and 2015, and to your point, it was a tough commissioning for them, and they experienced a very slow ramp-up to nameplate capacity. The operation, you know, had to overcome some initial issues in both-... Crushing and milling areas, and they did that through a systematic approach to reduce the unscheduled breakdowns, resolving some material handling constraints that have been probably built into the design around screen capacity, chute design, etc. And in doing this, the plant availability increased, which reduced the process disruptions, improving operating performance of the downstream flotation circuit. Also, the copper and moly recoveries have progressively improved. And if you look at slide 26, you can really see some of those basic metrics, such as ore milled and plant availability, that sort of show performance over a sustained period of time. You know, that work really enabled them to achieve or allowed the concentrator to achieve its initial design throughput of about 100,000 tons per day in 2018. It's interesting at that stage, you know, the original proposal when they actually put forward Sierra Gorda, was to go from 110,000 tons per day to roughly 190. But they made the decision at that time to approach it on the debottlenecking project, which is referred to as the DBM project. And this is progressively focused on increasing the capacity of each of the constraints that actually exist, if you like, in the plant. Probably something that's not, you know, it's been seen before in the industry. It's quite common practice to achieve capital efficiency, capital in- capacity increases. And from 2018 to 2021, this DBM project has increased the capacity to 130,000 tons per day, and has increased both the copper and the moly recoveries at the same time. If you sort of move on to slide 27 in the pack, and 28, you can see that in a little bit more detail. This improvement has been achieved through a series of incremental upgrades, including increased power utilization of the high-pressure grinding rolls, increased ball mill power draw, increased cyclone capacity, and capacity of the cleaner flotation circuit, and given the increase in concentrate production, also the addition of a fourth copper filter. The DBM project has been really successful in our view, in increasing capacity and metal recovery so far, and it's currently, if you like, implementing upgrades to the primary grinding circuit, conveyors in the crushing circuit, and tailings thickener capacity, combined will allow them to achieve a mill capacity of 140,000 tons per day, and increase copper recovery by around 2%. Really, if you flow on to slide 29, you sort of see what that means from, if you like, the financial benefits from the stable performance and the debottlenecking. From our perspective, look, it's been great work by the team on the ground. They have used not only their own people, but they've also used some of the key consultants in the region of Chile. It's certainly been something that the joint venture owners historically have used, if you like, independent peer reviews, to check that it's on the right track, particularly with Hatch. Certainly from our own perspective, as part of the due diligence, you know, we wanted to really understand that, and we used, again, I spoke about Carlos, I spoke about Ricardo, but we also used Golder, SRK, and Ausenco, to develop our own view of the operation and how the actual debottlenecking project was performing. So from our perspective, we are supportive of that. There's still some more work to be done, but we think it's a real good example of, you know, there's tangible things that you can point to, actual physical changes in the plant that actually show that the work has actually been done and changed, which is how they've allowed themselves to get over some of those initial hurdles and continue to actually, in a low capital intensity way, creep production capacity. The other thing I'd point out, Paul, is, you know, we were really interested in understanding capability there. And certainly if you look at Sierra Gorda and you look at the stability of labor relations, that's been a real strength for the team there. It's probably one of the, you know, few places in Chile where they've had no strikes to date. The EBA processes are being closed on friendly terms. You know, they've currently got an agreement in place for 2024. And we were really impressed by the quality of people there that have been drawn from a number of the major operators. You know, Sierra Gorda is a very well-run operation. The GM there, super impressive. You know, I think they're doing a really good job, and I think, you know, we talk about that piece, about... It's something I don't think the market's appreciated. I think they've got a good track record of delivering these improvements, and going forward, the debottlenecking plan has still got some work to be completed, which continues to add capacity. Thanks, Graham. Great to hear there's a lot of internal and external bodies involved in the due diligence process. Thanks for all the additional information. Gives me a little bit of comfort. The next question, Graham, is actually just about the valuation process and how you formulated your valuation. And, you know, looking at, I guess, some upside in this project, you mentioned the debottlenecking project at 140,000 ton a day. There's also an oxide feasibility study on the oxides at the moment. I've always thought the oxides and heaps of synergy between those and, and Spence down the road, so, you know, that's always interested me. But, but more around, the question is around what you included in, in your, in your valuation process as far as, you know, upside or your valuation ranges. Did you include any value for the oxides? You know, is your base case within that you know they do achieve 140,000 tons a day consistently? Yeah, look, I mean, Paul, good question. I mean, to your point, there are a number of, if you like, upside potentials on this. For example, Catabela, we think there's more resource at depth, which some of the early drilling is sort of indicating. We haven't included that. The oxide project, to your point, there is a number of those, you know, roughly 100 million tons of stockpiled or oxide material already. That's actually going through, if you like, a study phase now. We haven't sort of included any value for that. And then obviously, you've got Pampa Lina, the broader exploration package, which we haven't included in our expected value for that. I mean, they're all opportunities we think to add value to the portfolio, but they're not materially impacting any shape or form how we think about it now. Thanks, Graham. Last question, you wouldn't consider copper hedging? ...Look, it's a debate we actually had internally. We think the price participation is probably the better way to actually manage this, and obviously, at the moment, the copper price has been really high, and what's the price of that? Brendan can maybe talk a little bit, if you like, at the high level about how we're viewing the market, Brendan? Oh, look, yeah, thanks, Graham. Look, I'll keep it short, cognizant of the queue. But look, frankly, you know, you can look at the deal structure, and I think the first key point is you can assume that we haven't embedded any real assessment of the current forward curve. We're not, you know, if you like, basing the valuation on current market dynamics. Look, I think, Paul, as you know, if you talk to a number of different commentators at the moment, there's always a divergent set of views. Those that see deficits persisting into next year, increasing levels of disruption on the supply side, versus those that see a surplus. And I guess from our perspective, as we look into next year, as you'll see in the pack, we do see the skew, if you like, to a modest surplus next year, with significant capacity coming on, if you like, to the middle part of this decade. The Quellavecos, OTs, Kamoas, QB 2s, Spence, obviously net relative to the oxide, those sorts of projects coming through. So a propensity to a modest surplus, but again, that still already assumes a relatively modest supply disruption. But once we look beyond that, we think the market looks increasingly tight. And in fact, we see a very large deficit emerging with regards to identified projects, and at least I'd say 3 million tons of a supply gap towards the back end of this decade, which again, for us means we'll stay firmly in inducement pricing territory. The market therefore may even look through the modest surplus that we see in the short term. And so again, if you look at the deal structure, I think from our point of view, and I think from Katie's point of view, this is the right way to structure it, whereby, you know, we've got some degree of conservatism in the way we think about value, and there's certainly a lot of upside if markets do indeed turn out being tighter than we assume in our base case. Great. Thanks very much. That's it for me. Thank you. Your next question comes from Glyn Lawcock, from Barrenjoey. Please go ahead. Good morning. Just a quick couple of questions from me. Just on the sponsor loans, I mean, it's $5 billion, and you're gonna acquire Sumitomo's. Are they on an equal footing to the ownership? So you'll, you'll get 45% of what's outstanding there. That's the first one, and the second one, just a quick one. The 5% tax rate you said you were paying, I noticed that the rules are greater than 50,000 tons between 5% and 14%. Does it slide as you slide production? I'm just curious, 'cause that wouldn't be covered by, I guess, Sumitomo, 'cause that's not a change. So I'm just wondering why you're at 5% when you're well ab- you're not well above, but you are above 50,000 tons per annum. Thanks. Okay. Well, maybe, both questions for Katie around structure and the, the tax rate. The structure one, Katie, you want to take that first? Yeah. Look, Glyn, in terms of the sponsor loans, yeah, you're dead right. They are on a proportionate basis with ownership interest, and that's how you should think about them. In terms of the 5%, look, that is our assessment over the four-year window, FY 2022 calendar year 2022 to 2026. So that's our best assessment at this point. Okay, great. Thanks. Thank you. Your next question comes from Hayden Bairstow, from Macquarie. Please go ahead. Good morning, guys. Well done on that. It's a great, looks like a great acquisition. Just keen to understand, Graham, just with the JV, you know, how many sort of South32 people do you think you're gonna be injecting sort of directly on site? Or it's just gonna be more of a, the management per team from Perth that are talking with the JV partner? And beyond the sort of, debottlenecking projects, you know, where do you see the easiest opportunities? Is it the oxide process, putting something in there? Or where do you think you've got some upside from beyond the debottlenecking plan? Thanks. Yeah, absolutely, Hayden. Thanks. I mean, the way I think about, you know, we have the MRN joint venture and the Alumar joint venture in Brazil. There's no way we run that actually out of Perth. It's just impossible around language, but also, you know, time. You know, from our perspective, we will have a team on the ground. Carlos will help us set that up and initially be, you know, responsible for putting that in place. Look, from our perspective, you know, there'll obviously be a number of the key committees that we'll put members on. They will be actually based in country in terms of Chile. We'll have you know, Simon will be obviously the senior person on, because he's in the time zone jurisdiction. But we will have a team, a small team, if you like, in Chile, that will actually help drive this. And, you know, we have the ability to second some people, if you like, into that, and we'll make an assessment of where we think we can add value. But all the committees are obviously equally stacked with our people and KGHM, so getting the right technical expertise, we think there is gonna be important. And as I mentioned earlier, the chair actually rotates every two years, so making sure we position that well. Should make the comment, while KGHM is the operator, they actually have a really good track record of picking choosing the best person for the job. So when you look at the critical parts of their business, there's a combination of KGHM people, but there's also a lot of local talent that exists there. But certainly, we will use, Hayden, you know, Carlos, to help put the right people in the right chairs over the next period of time. We're confident we can have access to those people pretty quickly. Great, thanks. The opportunities beyond the debottlenecking? Yeah, so absolutely. Look, the, probably the way I think about it is, you know, if you look at the debottlenecking project, obviously there's some more work to be done on executing the current plan. That's probably the first piece. The second piece is, we think there's potentially a phase two approach of that, which can add some more value. And then thirdly, there's the oxide value as that actually goes through the study phase. Okay, great. Thanks. Well done, guys. ... Thank you. Your next question comes from Lyndon Fagan from J.P. Morgan. Please go ahead. Thanks very much. First question is just on the stockpile strategy. So if we look at slide 24 this year, you're mining 76 million tons of ore, but milling 47 million tons. So there's obviously quite a big difference there, and I'm wondering for how long does that big differential play out? That was the first one. Thanks. Yeah, thanks, Lyndon. Look, I mean, you will obviously see there's a number of metrics that we have there, and there's no doubt that, FY 2020, this current calendar year, you actually see they are producing more out of the mine, and they're actually, you know, processing some of the high-grade material and also stockpiling some of the other material. You know, it's something that obviously we had a close look at, and we think it is NPV, the right way to look at it when you look through that lens. It's probably not something we'll continue to see them do on a long-term basis. You know, it's probably, something that I think occurs from memory. If you think about the life of the operation, it's probably over the next eight years, you'll see them sort of approach that strategy. But I think calendar year 2021 probably has the biggest numbers in that space. Okay, thanks. The next one's just on the grade profile. Looks like the reserve's at 0.4%, and you're doing 0.48% this year. I noticed slide 28 talks about 0.43% medium term, but, how many years can you stay up at that sort of 0.48% level? Yeah, so if you look at slide 24, we actually talk about some of the key metrics about what we actually expect to see. And we also talk about some of the grade, if you like, on slide 28. And to your point, 0.48 this year is actually, you know, a large, if you like, increase in the grade versus prior years. We probably see that 0.43, which is above the reserve grade of 0.4, been around for roughly 5 years. And then you probably post that, you're sort of more sort of moving toward the reserve grade. I think from our perspective, we also think there's opportunities to, if you like, continue to optimize that, and we do think that's one area we can sort of have some work with from around the mine planning. The other thing to obviously consider in that space is the moly grade and what that actually looks like. In the early years of the operation, the moly grade was quite high as they chased some of the pockets of the moly. I guess following up on that, Graham, in which year do you go below the current reserve grade, considering that you're above it for a number of years? Like I mentioned, for the first five years, you're probably running at about 0.43. I'll just... One second, I'll check it on the... I think it's way beyond 2030, just looking at the numbers of the mine plan here. Then, so it sort of pushes out probably around 2032 onwards, you can see that grade, sort of, grade starts to drop, drop off, and obviously you've got time in that process to look at further debottlenecking, and it slowly, sort of, gradually moves down that reserve grade for the rest of the life. Great. And just a couple of other ones, if I may. So payability, is that just standard? Yeah, look, I mean, one thing about the payability standard, I think the other thing for the con, it's a relative, it's a very clean con. It's quite attractive because obviously many of the other smelters need to sort of balance that. So from that perspective, it's quite attractive. The concentrate grade is about FY 2021, has sort of moved itself up to the twen- to around 25%. Historically, it was probably more around 22%-23%. But important to note, it's really clean. Just another quick one. This is gonna be an equity accounted unit, just to confirm that? Katie, why don't you talk about the reporting? Because I think it's worth drawing out the transparency we give people to model this, but also the flow-on impacts of Mozal and Manganese in a similar way, because I think that's something that the market doesn't always give full value to. Katie? Yeah. No, absolutely. So we do have a couple of slides in the pack on the accounting treatment, slides 35 and 36. But just really to make kind of the high-level point, yes, we will be capturing Sierra Gorda as an individual segment from an underlying accounting perspective. You'll see Sierra Gorda captured in underlying EBITDA, EBIT, and underlying earnings on a proportionately consolidated basis. And I think Graham referenced at the start, concurrently, we will actually include Manganese on an equity accounted basis to be proportionately consolidated to align our approach on material equity accounted investments in the group. In terms of the statutory accounted treatment, Sierra Gorda will be recorded as an equity accounted investment, but with zero carrying value. What you will see is we'll recognize a credit-impaired receivable in our accounts, which will be grossed up for tax liabilities on completion. In terms of balance sheet adjustments, you'll see balance sheet adjustments coming through in relation to the revaluation of the credit-impaired receivable each half year and full year. And you'll see any of the movements that come through on the income statement won't have any impact on underlying earnings based on how we intend to capture the reporting. We will report, you know, clear reconciliation between underlying earnings, stat income, and balance sheet each half year and full year period. But really, essentially, the key is both Manganese and Sierra Gorda will be captured in our underlying reporting at half year and full year. ...And, thanks for that. Just a final one from me. It does seem like a fairly capital-intensive asset. If I look at slide 29, it's had a $1 billion or so in the last four or five years. A lot of that's on deferred stripping. Can you maybe talk about the opportunity to get that down a bit? I noticed the medium-term target is pretty similar to the 17-20 kind of average. But is there anything that's driving that up that can be looked at? Yeah. So maybe let's break that into parts. I mean, to your point, if you look at the medium-term target, we gave capital guidance of roughly $270 million-$310 million, and that really covered deferred stripping and improvement, sorry, safe and reliable capital. On top of that, between calendar year 2022 and 2023, we think that the Debottlenecking project, there's roughly $200 million-$250 million to spend, which is obviously increasing our throughput. Look, from the longer term perspective, there is an opportunity to basically look at how that is actually done. Certainly from our perspective, we've had a look at the way they do some of their mine planning, and while there's no fault in the way they're doing that, we do believe there's an opportunity to basically optimize that a little bit more, and certainly through the technical committee, that is one area that we think we have the opportunity to add value. We haven't built it into our base case, but we certainly do believe there's an opportunity to further improve in that space. Great. Sorry, I did have another one. Sorry for all these questions. Just with the lower grades, as we model that, how should we think about factoring in lower recoveries? i.e., how much lower the recoveries trend with lower grades? Yeah, maybe I wasn't super clear. I mean, obviously, we've given very clear guidance on what the actual grade looks like for the next couple of years, in terms of that medium-term target. I didn't want you to walk away with the fact that the grade actually drops off a cliff. You know, the grade sort of goes back towards reserve grade and really holds in that position, you know, in 2032, 2040, around that space, and then it gradually declines after that, but it's not like a drop off a cliff. Certainly from our perspective, normal modeling we've seen, you see they're actually taking a step up in their recovery of copper from 83 to 85, as part of the current debottlenecking project. We think, you know, they can hold that 85% flat pretty well through the life of that, despite the slight shift in grade. But don't sort of walk away with the perspective, the grade drops off the cliff, and certainly that's something Alex and the team, you know, can go through a little bit more detail on that when we, you know, get a chance then. Okay, thanks a lot. Appreciate it. Thank you. Your next question comes from Peter O'Connor, from Shaw and Partners. Please go ahead. Good morning, Graham. Congratulations. First question on the Owners' Council and related councils. You talked about equal representation. What is the voting structure at the Owners' Council for the day-to-day stuff, but also for major capital decisions such as the Oxide project? Is it equal or is it- Yep. No, keep going. Sorry. Sorry, I've done. Fire away. Yep. Slide 23, probably equal the way I think about it. The Owners' Council, the management, if you like, via those technical committees and the subcommittees, you know, is essentially each member on that has a vote, so it's essentially equal voting, if you like, on the committees. The committees can also interact, if you like. The chairs of the committees can interact with the actual management team. They really set the agenda and the plan. If you look at some of the key decision-making, you know, the ordinary and special resolutions require both parties to support, so one can't push over the other. And that's reflected by the fact that for ordinary resolutions, you need 60%. You also need both parties to agree to management employment, appointments, budget approvals, any change in production, any change in debt financing and capital expenditure. So from our perspective, this is absolutely, if you think about it, something where we have joint control and very strong governance rights. And to be very clear, you know, the question was asked earlier, interaction we've had with KGHM. It's been, you know, a lot of interaction with them to sort of talk about how we're gonna work, how this will sort of go going forward. But also the feedback from Sumitomo has been that they have obviously had people on the ground, confident to the business, and found that technical committees are a really useful way to help improve performance. So it's not like we're asking for something new in that space. There are some things that we've been strong about, you know, around tailings and safety, where we'd probably like a little bit more active involvement with Sumitomo. But that's something KGHM has had a good discussion around the dialogue, and there's been no differences of opinion. So if I, if I look about our different joint ventures that we have in our business, ranging from MRN, Alumar, to the manganese joint ventures we have, I think this is by far the one that is the most joint control and has the governance rights to make sure and protect our interests. And we certainly can't be dragged along in anything. To work through this process, we've had a few hours. Just to synthesize some of the detailed comments you've given us, which is really insightful. The key levers, it sounds like it's the mill capacity getting to 140, number 1. Number 2, is recovery bumping up 2%, and 3 would be life of mine. Would they be three of the key levers? Look, I think that's right. Yeah, I would say in between the last two, there's still an opportunity for phase two of the debottlenecking and oxide, which is relatively low risk and low capital. But we certainly do think Catabela has the ability to extend the life of the mine by some of. You know, that's more work to be done. But from our perspective, you know, it, it, good entry into an asset at a good price when you think about what historical prices look. But also, if you look at some of our major diversified peers that are about to commission projects in calendar year 2022, you know, they're paying well in excess, probably around $20,000 in terms of value. You know, we've got in at a good entry price here and something that we think is a clear pathway to realize value. So, Graham, with that in mind, and knowing that the details you just told me are fairly straightforward, I guess, but you've dug into a lot of detail. And as a competitive process, do I conclude you've paid full and fair value? Well, you'll work out your own numbers for that. But if you look at the metrics, and obviously we had a couple of slides on that to clearly map that out, and you look at those metrics through a number of different lenses. If you look at it from a, you know, an upfront EV versus historical cost, we think we're getting it at a discount. If you look at what it looks like from a multiple, you know, getting it at 3.3. If you look at an upfront EV, copper equivalent payable production, these are all on slide 8. You know, we think we're getting in very cheaply compared to what these new builds look like, and that's before you consider permitting, construction, ramp up risk. And I think the other piece that we would draw out very quickly, even if you look on a consensus basis, it's value accretive in FY 2022. I actually think in this space, and again, I would start with the position that when we started this process, Simon can tell you I was the most skeptical about this. We didn't think this was gonna go anywhere. The reputation of the asset wasn't great. But every time we took off a layer of the onion, we were surprised by, A, the work that had been done over the last couple of years, and B, the potential that still exists. So I think we did the hard work. We put a lot of effort in over the last 9 months, that some of the other counterparties probably didn't. And again, I don't think we're driven by the ego that we believe we have to be the operator, and we're the best operator in the world. We're comfortable around the joint control, and that we can exercise our rights and our influence to realize that value. But from our perspective, you know, we think we've got it at a very good price. There's more upside. We've looked at a number of different opportunities over the last six and a half years extensively, and this is by far the best one we've seen, despite the initial skepticism of probably myself, Katie, Brendan, and Simon. I think it's a credit to the team who have continued to do the work and see some value in stuff that other people have passed over really quickly. Graham, what do South32 or team South32 bring to the partner? You've talked a lot about the partner and how highly you value them. If they were sitting and reflecting on this, what would they say that you bring to the table? Yeah, look, it's an interesting one because it is one of the questions they asked us. I mean, if you're looking at it from KGHM's perspective, you know, they could have done this deal with a trading house or pushed Sumitomo. They could have looked at the Chinese, and each partner has their strengths and weaknesses. Look, from our perspective, you know, we do have deep experience in joint ventures. It's not like we haven't done that before. It's not like we don't have a track record in that. We think if you look, some of the people that we'll look to move into some of these roles that we have in the Cerro Matoso business, they actually have worked in Chile before. So we'll have the ability to move people up and down from that perspective, and add some value from that process. I think there's still opportunity for them on some of the mine planning side, and we have some really experienced people in the mine planning side who have good working knowledge of how to develop copper porphyries and work through that. And again, if you look at some of this processing, it's not like we're talking about things that are unusual in this space that we don't actually have experience in. There's exploration potential on the property, and some of our team in the exploration area have really good experience looking for copper porphyries and deposits. So we actually, you know, certainly from our perspective, we think we put our best foot forward with KGHM, and they certainly saw value from their perspective working with us. Okay, my last question, just to do with the existing capital management. You did mention on the call, but I just couldn't quite type as quick as you spoke. The current program, it continues to run, did you say? Yeah, I mean, look, from our perspective, our approach to capital management remains unchanged. The framework's the same, the belief in a strong balance sheet, the belief that we have excess cash. We'll look at the most effective way to return this back to our shareholders. Clearly, at what we think is a good value entry price, clearly something where it's, you know, value accretive, 9% on consensus in FY 2022. You know, we believe that we'll be in a position to continue to return excess cash back to our shareholders. You know, we will have the same flexibility you've seen us exert over the last two or three years, but the philosophy and approach to capital management remains the same. Thank you very much, Graham. Thank you. Your next question comes from Matthew Hope, from Credit Suisse. Please go ahead. Hi. Yeah, I just wanted to check a couple of things. On the balance sheet, would I be right in sort of calculating, you're gonna be looking at something like $1.6 billion of net debt once we add in, say, $250 million for Mozal, the capital management, Sierra Gorda, and probably the dividends available need to be paid in the second half. Is that where we're at? Maybe Katie can talk to that. I mean, obviously, where we end up at the end of the year will be very dependent on where we view prices are going. Katie? Yeah, look, I think, I mean, if you take our end of September net cash number of $660 million, and to your point, make the relevant adjustments in relation to Sierra Gorda, Mozal, should we take up the full 25% option there. Capital management remaining of $231 million, and our FY 2021 divvy that's coming out in October or has come out in October. You do take the balance sheet to a net debt position of $1.6 billion. But certainly, you know, we are generating strong cash flow at the moment. We do believe, you know, if we extrapolate out in a positive scenario, you know, our current cash generation capacity over the full year, you would expect to see that we're back into a over the full year. Now, certainly, you know, we're not relying on that. We believe that the funding approach is consistent with our capital management framework. We do maintain a strong balance sheet and investment-grade credit rating through the cycle, post completion of the transaction. We do expect to retain our, you know, triple B plus, Baa1 credit rating on completion. And we maintain significant access to liquidity. So, look, the transaction is earning and margin accretive, builds further resilience in our balance sheet, and we feel we're in a pretty good position. Okay, thanks for that. And then just wanted to understand, how do you see this business? I mean, what is South32, really? Because it's now looking very complicated already. We've got bits of operations scattered around the world in, you know, multiple diverse commodities, bits of equity acc ounted material. And now we've added a minority ownership in a new commodity, really a small tier two copper asset, on the other side of the world. I mean, with no synergies. I just- it just... Why would you go ahead of it? I get the point about the value accretive and the earnings accretive, but I guess you, you're almost heading towards being an aluminum company, but now there's suddenly a turn away from that. So what do you see South32 as? How do you get investor interest in it? Because it's just such a complicated company. Hmm. It's an interesting one, Matthew. I'll give you probably a slightly different take. Over the last couple of years, with our investment in South African Energy Coal, the exit of the alloy business, a simple, if you like, acquisition of an additional share in Mozal than an asset that we actually operate today. I think we're going the opposite way. Our liabilities are vastly less. Our operating people that we have, our operating sites have dramatically reduced. You know, if you look at the composition of the company now with this acquisition, and obviously very dependent on prices, as per slide 7, roughly 80% of our EBITDA earnings in FY 2021 would have come from base metals and precious metals. If you think about where the long-term demand for the minerals was coming from, as the world decarbonizes and goes through that green energy transition, that's probably the composition of what you want to actually have. If you look at the position we have left, which is more in the bulks around manganese, we're the world's largest manganese producer. We're going to give you more transparency with that, the way we're gonna report it now through underlying earnings. The met coal business is a small portion of our business, and naturally tied largely to a domestic contract that we actually have in Australia. Look, I think, you know, we are diversified both in commodity and jurisdiction. That's not a bad thing, but I think the flip side, the group is actually getting much simpler, not more complicated. Okay, that's an interesting take. Thanks. Thank you. That does conclude our time for questions. I'll now hand back to Mr. Kerr for closing remarks. Look, really quick remarks, because I know everyone sort of made time available at short notice today. Look, I'd go back to the starting position. This is opportunistic. We see this as something that creates value, that's not understood by the market. There's a clear pathway to the value. It is a long-life, open pit copper mine that benefits from significant historical investment. It does have great infrastructure in place, including access to renewable power. It's immediately value accretive from an earnings perspective. If you look at all the other metrics, we think we've got it at a good price. There's more opportunities in sight on top of our base case to unlock value through plant bottlenecking, the oxide project, mineral resource growth, regional exploration. It is absolutely consistent with our strategy from day one, so it's no deviation from that. Our capital management framework remains unchanged. We still believe in a strong balance sheet. We still believe in returning excess capital back to our shareholders. Thanks for your time today and your support.