Good morning, everyone, Welcome to Thungela's very first Capital Markets Day. I'm Ryan Africa, and I will be heading up investor relations for Thungela. I'd like to take a couple of minutes to introduce today's agenda and also to explain how the day will run. Before that, please allow me to draw your attention to a couple of important messages from our lawyers. While you take a moment to read through the disclaimer, a reminder that today's session will be recorded and that recording will be made available on the Thungela website, which you can access at www.thungela.com, and that will be available from tomorrow morning. A transcript of the session will also be made available on the Thungela website in the coming days. Let's start with the agenda for today. We have nine sessions to cover, and these have been scheduled into two blocks, as shown on slide 4. At the conclusion of the first block, we shall cover sessions one through five. There will be an opportunity for Q&A, which will be followed by a short interval. In the second block, we will cover sessions six through nine, which will be followed by a slightly longer Q&A session before we wrap-up the day. Today's presentation is available for download on the Thungela website, and for those logging to the webinar, there's also a tab where you can download the presentation. Turning to Q&A. For those joining via the webinar, you will have the opportunity to submit questions via text, which will then be read out during the Q&A session. For those wishing to ask questions directly, i.e., in your own voice, we ask that you please join the session using the conference call facility provided, as we can only take direct questions through this facility. In order to ask a question during the Q&A session on the conference call, please dial star one on your keypad, and this will register your intention to ask a question. Once the Q&A session starts, the operator will then open your line and ask you to go ahead with your question. For Q&A, specifically, we do encourage those wishing to ask a question directly to opt for the conference call option, as everyone will be much more interested to hear your question directly. It is also possible to dial into the conference call facility only shortly before each Q&A session and directly from your computer. If you are planning to do this, I do encourage you to please register for the conference call in advance of the first Q&A session this morning at 10:30 South African time, as you'll need the link sent to you upon registration. With those logistical matters out of the way, let's turn to the action. On the 8th of April 2021, Anglo American announced its intention to exit its South African thermal coal assets, specifically to demerge these assets into a separately listed business. These assets will be transferred to a new holding company called Thungela Resources Limited, which will have a primary listing on the JSE and a standard listing on the LSE. On both the JSE and the LSE, the shares will trade under the ticker TGA. Let me repeat that, TGA for the ticker. At the point of demerger, 100% of the issued share capital of Thungela will be held by existing Anglo American shareholders who will receive one Thungela share for every 10 Anglo American shares held. With regard to the necessary approvals, all of the substantial conditions and regulatory approvals have already been satisfied. Yesterday, at the Anglo American PLC AGM, the demerger was approved by Anglo American shareholders. Thus, the demerger will be effective following the close of business on the 4th of June 2021, and Thungela shares will commence unconditional trading on the 7th of June 2021. On slide 6, you can see today's presenters. You'll be hearing from July and the full executive management team during the course of the day. I will not run through the list of speakers here, but will instead ask the presenters to briefly introduce themselves at the start of their respective sections. I would, however, like to briefly introduce our first speaker for the day, our CEO, July Ndlovu. July has been with the Anglo American Group for 30 years, during which time he served in a number of senior roles, including on the executive committee of Anglo American Platinum. July took the reins as CEO of the SA Thermal Coal Business unit in 2016, and together with Deon and the rest of the executive committee, has steered this business for the last five years. Finally, July is also currently the Chairman of the World Coal Association. With that, please allow me to hand over to July. Thank you very much, Ryan, for that introductory remark. What I'd like to do to start us off for the day, is to give you an introductory journey on who we are as Thungela. Share with you the assets that we've got very briefly, talk to you about our strategy, and talk to you about our values, and talk to you about our purpose. Good morning, everyone, and welcome to Thungela's very first Markets Day. We are building a future-oriented leading thermal coal business with an owner mindset focused on value creation for all stakeholders. To succeed, we're not changing what we do. We leverage our solid historical foundation, our existing asset base, markets, track record, and talent. We intend to change how we work, what we prioritize, and why we take action. This is the essence of our purpose, to be focused on creating value for a shared future and what it takes to get there. Our purpose, priorities, and values connect us with the meaning behind our work, understanding that each decision and action we take ultimately leads us to a promising future for ourselves, the company, our communities, and our country. To succeed and become a best-in-class business for our employees, investors, and communities, we will be unwavering when it comes to safety and health, prioritizing it above all else. We shift to becoming owners, considering the right impact of every decision or action, big or small. We are unrelenting in pursuit of doing things better to drive productivity and margin uplift, and improving our cost position. Being a single commodity, single country business, we are better placed to buy goods and services that are fit for the type and life of assets we have. That's what we mean by buy better, use better. We'll spend capital appropriate to the type of assets and life of mines we have. Our goal is to make Thungela a highly appealing and investable enterprise due to its cash flow-driven mentality, robust balance sheet, credible leaders, and consistency in meeting or exceeding our targets. Among our set of priorities is a key focus on ESG, uplifting our communities, considering our environmental footprint, and becoming a preferred employer through modern and progressive rewards and career development opportunities. Our six values, which are at the bottom of this slide, underpin and are foundational to everything that we do, and make sure that all of us, together, behave and act in unison and concert towards a shared future. Let me turn to introducing the business in a little bit more detail. Our mission is to remain a sustainable and high-quality thermal coal business, with an enviable cash cost position poised to deliver attractive returns through the cycle. Our business of today is a set of well-established, well-managed assets producing high-quality thermal coal products, and strategically located close to and within established export infrastructure. If you look at the graph in front of you and you look at the middle, and you see how close those assets are, numbered one to seven. The business has significant embedded optionality that we'll touch on later, and over time, we expect to improve productivity and optimize costs. We also expect to manage our capital more efficiently, with first priority being strong cash flow generation to deliver value to our stakeholders. Where appropriate, additional investments to extend the life of our mines will be focused on value-enhancing, low-risk, brownfield options with synergies with existing infrastructure. Thermal coal is vital for the South African economy, and our country relies on thermal coal for energy generation and economic activity. In fact, thermal coal directly employs roughly 90,000 employees, accounting for roughly 20% of all mining jobs in South Africa. If you look at our business today and compare it to 2015, we had a very different business in 2015, with a meaningful portion of our production tied to supplying Eskom. We have significantly repositioned and upgraded our portfolio to make it a focused export producer. We've undertaken all the right decisions to transform and resize our business. We've disposed of our Eskom-tied mines and divested of the greenfield New Largo project. We upgraded our portfolio through bringing on Mafube into production and approving the Navigation project. You'll hear a little bit more about these projects a little later today. We've also made tough portfolio decisions by taking out high-cost production. If you look to the right of the graph, today, we have a portfolio of three underground mines and four opencast mines, all producing high-quality export coal at Zibulo, Greenside, Goedehoop, Khwezela, and Mafube. Our other two mines, Isibonelo and Rietvlei, supply the local markets. Our export mines are integrated to the Transnet railway line, running all the way to RBCT, which is a world-class bulk material handling port, of which we are the single largest shareholder. Let me turn a little bit to our financials. This is a high-level snapshot of Thungela's last three years of financials, which will be discussed in further detail later today. The key driver behind reduced revenue from 2018 through to 2020 was price reduction of about 25% into 2019. If you look on the top right graph, the line which has got three numbers, $10.60, $7.88, and $7.98, is the price line that I'm talking to. With global energy prices and coal prices continued into 2020, as the globe dealt with the COVID pandemic. During this time, however, we continued to invest in the business. You'll note that our CapEx was at historic high levels in 2019 as we constructed Navigation, a new operation within the Khwezela complex, which has extended the life of that mine. We also took some tough decisions by closing Goedehoop South and placing Bokgoni on care and maintenance. Both of these required corporate and service restructuring, which we completed early in 2021. These decisions and actions resulted in taking high-cost production out of our business, and has helped us to position ourselves for the future. Whilst the business was not profitable during the last two years, you'll note that we generated positive operating free cash flow prior to CapEx in each year. With improved market fundamentals and average prices which are above $90, which we achieved in Q1, these were last seen in 2018. We are confident that once we have rebuilt inventories and managed through the worst of COVID and TFR challenges, Thungela is well-positioned to generate attractive cash flows into the future. Let me turn to our leadership. We spend a lot of time thinking of what skills and expertise and knowledge is needed for the board, and have put together the following group of directors, which is led by renowned businessman and business leader, Sango Ntsaluba. They bring deep and diverse relevant experience to guide Thungela into the future. The executive leadership team has been together for several years, and we bring very diverse and deep mining experience. We know the coal industry well. We know our assets intimately. The management teams on the mines is a continuation of the excellent operational teams that we've had in the past. Let me pause and just reflect on what you're going to hear today. Firstly, what we're going to share with you is that thermal coal remains a key pillar of the global energy mix. With robust global demand for thermal coal, particularly from key export markets, and that the South African thermal coal export supply is in decline, and that together with declining investments in new supply globally, will provide a unique opportunity for Thungela. We believe these fundamentals are expected to support higher prices. We'll share with you our strong track record of reserves and resource conversion. We have a well-diversified quality reserve and resource base, and we have a track record of replacing reserves and adding to our resource base. We have developed a focused capital allocation framework with substantial medium-term optionality to convert further resource into reserves from projects currently undergoing feasibility studies. We have a set of well-positioned portfolio of assets. Mafube recently achieved steady-state production, while the Navigation pit at Khwezela is in ramp-up. A number of life extension options are being evaluated for assets nearing end of current life, although there is no imminent investment decision. Our assets are well positioned in the lower half of the global seaborne cost curve. We have excellent infrastructure supporting our route to the market. We'll share with you our balance sheet and the opportunities for cost and capital optimization. In that regard, costs are planned to remain flat in real terms over the next three years. That will optimize our CapEx according to a key allocation criteria, which is appropriate for the type of assets we have. We have got a strong balance sheet with cash positive balance, enabling Thungela to operate unconstrained by debt. We'll share with you that Thungela is fully empowered and meets the requirements of the DMRE. That we've got the key mining rights in place with sufficient tenure to meet the life of mine of Thungela's assets. We'll also spend a bit of time on ESG, with key commitments to the social and environmental aspects, which ensures the health and wellness of our people. We'll talk about partnering with employees and communities in which we operate, and that we undertake environmental programs that benefit society at large. We'll share with you that we have an experienced and diverse board ensuring the highest standards of governance and ethical conduct. Lastly, we'll talk about our competent and diverse and inclusive workforce, which has got a passion for business. Who demonstrate the history of productivity and cost improvement. We talk about our sound employees, and that we've got robust talent management processes that develops and retains the right people. We've got appropriate incentives that drive the right outcomes aligned to our stakeholder needs. What I'd like to do at this point in time now is to hand over to my executive colleagues, starting with Bernard, to talk to us in a bit more detail about these attractive thermal coal market dynamics. Thanks, Bernard. Thank you, July. Good morning, ladies and gentlemen. As introduced, my name is Bernard Dalton. I joined Thungela on the 1st of April of this year. Prior to that, I spent around 12 years working for South32, specifically in the thermal coal business. The last two years of that period were spent in the operational separation of the coal business from the rest of South32, and I specifically focused on the establishment of the marketing team across both London and in Johannesburg. Prior to that, I spent time in BHP Billiton working on marketing systems, specifically commodity trading and risk management systems implemented across all of BHP Billiton's commodities worldwide. Prior to that, I was involved in the aluminum business in Richards Bay, also with BHP Billiton. Moving on to the thermal coal market dynamics. The bulk of the forecasts provided for in this section are drawn from Wood Mackenzie, an independent and global research and consultancy group. We are also providing actual facts and not always necessarily what the audience may want to hear. Thermal coal remains a key energy pillar. The world, and specifically the developing economies, will continue to require increased energy generation. This increase is expected to be approximately 12.5% for both total energy generation and thermal coal global power generation, this is over the next decade. Renewables will form the largest part of total incremental energy demand. Thermal coal will continue to remain a substantial energy source, forecast to make up 31% of global power generation, that 31% equates to approximately 964 million tons of seaborne demand by around 2030. This is particularly prevalent in developing countries. Asian countries require large amounts of low-cost power to support economic development and growth. Asia's share of the global thermal coal power generation is forecast to grow from around 79% in 2020 to 86% in 2030. Asia remains the key market or region using thermal coal as a fuel source, with an expected 7% increase over the next 10 years from an already solid base. The increasing demand for energy and related thermal coal imports seen over the last three years in key Asian markets is expected to continue. The size of India's population and its ongoing large-scale industrialization requires significant power generation, which supports the forecasts that thermal coal and thermal coal demand will continue to be robust from India. Coal-fired power generation remains significantly cheaper, and the ambitious nuclear and renewable power generation targets are unlikely to be met. Base load thermal coal will be required to complement renewables. India's own domestic mining and production of thermal coal continues to face its own challenges, including coals that have quality characteristics that are not suitable for specifically industrial applications. India has been the primary market for South African thermal coal for a number of years now, at approximately 50% of South Africa's export coal. India's demand today accounts for 17% of the seaborne supply. It is important to note that South African coal is not only supplied into the energy sector in India, but also into the industrial sector, and in this regard, the cement and sponge iron industries. This is due to inherent coal qualities in South African coals required in these industries. This trend is expected to continue as the country requires large amounts of thermal coal-fired energy, given its relative cost advantage. This all translates into a forecast 19% increase, yes, 19% increase in thermal coal imports from around 162 million tons in 2020 to 192 million tons in 2035. This is an extremely positive position for Thungela's coal market placement. If we turn our attention to other key Asian markets, whilst India has for some time now been the major export market for South African coals, we are now seeing similar thermal coal demand and increasing in further South Asian countries. If we focus on each one of these countries, we start off with Pakistan, local supply of domestic gas and fuel oil is declining and being replaced by costly imports. New power stations are designed to use imported thermal coal, most of which can be sourced from South Africa. Pakistan has also imported significant volumes of South African coals for its industrial sector, including for its cement industry. As outlined on this slide, there has already been 5 GW of coal-fired powered commission in Pakistan since 2016, with a further 1.3 GW in advanced construction stages. Turning our focus to Bangladesh, the government's focus remains on expanding gas-fired power plants and renewables. However, the availability of domestic gas is declining. The construction of import-based coal-fired power stations has been proposed to lower the power costs. Coal demand is expected to grow from around 7.6 million tons in 2020 to 12.8 million tons by 2030, and this is around a 68% increase. Moving on to Vietnam. As domestic production is constrained by geology and rising costs, it is expected that Vietnam will turn increasingly to the seaborne import market to meet its thermal coal demands. As outlined on this slide, demand is expected to increase to around 51 million tons per annum. South African coals with suitable inherent qualities have penetrated this market over the last three to four years and will continue to be placed into this market. South African coal entrance into this market over the last three to four years has been a really positive story. Turning to China. China requires significant tonnage of seaborne imports to satisfy total demand, despite being a large producer of thermal coal. China's own domestic production supply faces challenges, including mining cost inflation, infrastructure challenges, and barrier to entry in the state-controlled power market. The recent political spat between Australia and China has enabled South African coals to again be exported into China. In this regard, certain Thungela coals have been certified and accepted as suitable for imports into China. Again, this is a really positive market development for Thungela. Although China's seaborne demand is expected to reduce from around 187 million tons in 2020 to 149 million tons in 2030, due to a reduction in the demand for thermal coal from China's coastal markets and increasing competition from China's domestic market for supply of thermal coal, imports are expected to continue due to the high delivered cost of domestic supply to coastal markets, as well as quality requirements. If we turn our attention to the supply side. As presented, there is increasing demand for thermal coal in all of the key markets that we supply in South Asia, as we have just discussed. However, on the opposite side of the equation, we see supply from South Africa reducing by approximately 25% on the back of depleting mines and lack of new investments. With an immediate lack of new and significant investment in either brownfield or greenfield expansions, South Africa's production is expected to decline by around 53 million tons by 2030, and with the reduced production becoming even more evident as from around 2025. The South African export production and supply is forecast to decline from 72 million tons in 2020 to 49 million tons by 2035. The decline in the export volume will be approximately 23 million tons. This is not a South African story alone. On a global basis, the story is similar, with export supply from operating mines globally reducing from around 950 million tons in 2020 to 750 million tons by 2030. Turning our focus to prices. The market dynamics that we have outlined on the price slide, i.e., continued firm and improving demand and reducing supply, also support higher prices going forward. Domestically in South Africa, there is also the effect and the impact of the Eskom coal cliff. The graph in this slide is Wood Mackenzie's view on prices in both nominal and real terms. We can see the trend is expected to remain steady for the next couple of years, followed by a gradual improvement. We have already seen a significant price recovery in 2021, an average of $90.76 per ton in Q1 of 2021, and with peaks of over $95 per ton versus the lows of 2020, where prices were as low as $45 per ton. The actual mine-to-market price achieved by Anglo American Marketing for this quarter was at $74 per ton, inclusive of the marketing margin. The full discount and adjustments were at 18.5%. What does this mean? Coal producers with an attractive cost position should enjoy healthy margins and cash generation over the next couple of years. If we look at the cost curve now, and again, I just want to point out that the cost curves reflected in this slide are as per the previous slide, are the views of Wood Mackenzie. Thungela has a well-capitalized asset base producing quality coal and is attractively positioned on the global energy cost curve. The best comparison to Thungela's assets on this slide would, of course, be the South African peers. As you can see, there are not a lot of peer operations that are better positioned on the cost curve versus our assets. Perhaps just worth touching on the one exception as you look at this cost curve being that of Khwezela. This was done before we placed the pit, as July mentioned, on care and maintenance, and therefore, Khwezela's costs here are still reflective of the high cost pit. Going forward, we expect Khwezela's cost position to improve. Our low-cost position, coupled with our suite of coal qualities, including high-quality coals, gives us flexibility to be profitable by selling into the various markets as discussed, and this is a positive fundamental for us as a business overall. Effective cost management will, however, be important and crucial in order for Thungela to maintain its position on the South African cost curve. Turning our attention to the pricing mechanics for South African export thermal coal. The South African coals are priced off a 6,000 kcal/ kg benchmark, basis free on board at the Richards Bay Coal Terminal. Average realized prices for export thermal coal, however, differ from the actual benchmark price due to a number of reasons. The first is the relative difference of the calorific value between the product sold and the 6,000 kcal/ kg Richards Bay benchmark. Product discounts that are relative to the benchmark, taking into account various quality factors, of which the two main would be the ash content and the sulfur content. Then the timing differences between the contract price and the spot prices, specifically when contracting on longer term and/or fixed price contracts. We will go into a bit more detail on the next slide around the details of the discounts achieved by Thungela relative to the benchmark price. As you can see, this has ranged from between 22%-26% over the last three years. That is, over the period of 2018- 2020. It is worthwhile pointing out that these discounts are in line with market benchmarks and would be comparable to our peers. Turning to the 2020 realized prices versus benchmark. On this page, we have outlined the components that contribute to the approximately 26% realized discount to the benchmark price in 2020. For 2020, the average calorific value discount was at approximately 10%, which is representative of the average quality of coal exported by Thungela, which, as pointed out by July earlier, averages at around 5,500 kcal/ kg. The product quality discount is driven by market supply/demand factors at the time of contracting and accounts for the lower quality parameters and in the main, for the higher ash and sulfur content in these products. The marketing margin is the fee paid to Anglo American Marketing to market Thungela's coal. Thungela will continue to pay Anglo American a marketing margin on its export coal. This margin is market-related. Turning our attention to a brief overview of our domestic contracts. Our focus, as has been mentioned, is on the export market. We do have a number of secure term domestic market contracts with good prices which secures further revenue for Thungela over the next two to three years. These contracts provide options, albeit by mutual agreement, to extend the term of these agreements. While this is not the core of our business, it does provide Thungela with an established market for our products and price arbitrage opportunities. Having optionality in a sales book is always attractive. On the mineral residue deposits, this refers to the historical deposits from coal, which was previously washed to a high-quality coal, as well as roof coal. Turning our attention to the supply chain and the logistics. One of the attractive propositions for Thungela is our 23.22% ownership in the Richards Bay Coal Terminal, which secures via the rail network from our mines to loading on board vessels and onto final market placement. RBCT is also supported by the port services provided by the Transnet National Ports Authority, over a 2.2-km quayside and six berthing slots. Numerous expansions have increased the nameplate capacity of RBCT from 12 million tons in 1976 to the present capacity of around 91 million tons. The total RBCT stockpile capacity at peak is around 8.2 million tons, and Thungela's capacity at peak is around 1.6 million tons. Thungela's ownership entitles us to 19.8 million tons per annum export capacity at the 91 million ton nameplate capacity, and at present operating capacities, this equates to between 17-18 million tons per annum. In summary, the outlook for thermal coal, and hence Thungela, continues to remain positive with the price recovery in 2021 and forecast prices stabilized at these levels, which is supported by the overall demand-supply balance as discussed. It is again important to note that the placement of Thungela's quality export products will be into markets that continue to develop and hence require continued increase in power generation and thermal coal imports. The South African market and related coal supply agreements provide both market, in other words, price and product optionality, and further secures revenues. The export market focus, which is a key focus for Thungela, is all brought together through the well-established logistics infrastructure of rail, terminal, and port facilities. I would now like to hand over to Leslie, who will present and discuss the Thungela reserves and resources. I thank you. Thank you, Bernard. My name is Leslie Martin. I'm the Executive Head of Technical for Thungela, and I've been associated with Coal South Africa for the last 25 years. In that period, I've served in various positions from operational and project site, so a real coal miner at heart. For me to start off, I think in the rest of the day, there's probably three phrases that you will come across that I just want to explain in a bit more detail. The first one is the various coal seams that we mine. The second one talks around the middlings product that is one of our secondary products that come out of the washing plant, and the third one is the mineral residue deposits. If we start off, I think just what the section is all about, and I think in the slides to follow, I will take you through a summary of reserves and resources as per the independent competent person's report that was prepared by SRK in 2020. This process includes a review of Thungela's exploration, mine planning, life of mine information data, in accordance with the regular codes and standards. We then go into a bit more details around what I've just explained. The reserves and resources in the basin where our mines are situated consists out of four economic seams, numbered from the bottom upwards. The thicker 2 and 4 seams make up the larger portion of what is economically mineable, but where it's financially and technically viable, the thinner 1 and 5 seams are also included. The next concept around the middlings product, the coal destined for our export market is beneficiated in our coal washing plant, producing a primary high-quality export product, and depending on the plant, also the middlings product, which is the secondary product derived from the beneficiation process at minimal incremental cost. If we just quickly talk around the mineral residue deposits. Given the improvements that were made in the beneficiation techniques over the years, together with the development of a market for lower energy coal, a concerted effort was made to reprocess some of the mineral residue deposits, or shortly MRDs, which are nothing but facilities containing remains of previously processed material. Hopefully, if we go through the rest of the slides, these three phrases or concepts will make sense. If we now turn our attention to our reserves and resources, this slide indicates the reserve and resources base for the current operating sites and illustrates a well-diversified portfolio with further resource optionalities from brownfield developments. The reserve base for all our sites are included in the current life of mine plans that, in our case, vary between about 3-11 years. As can be seen from our reserve base, it's a well-balanced reserve between the opencast and underground operations, whilst our resources on the right-hand side is largely attributed to our underground operations, where Zibulo is the largest contributor to both our reserves and resources, accounting for about a quarter of the reserve base and about half the resource base with really good future optionality. If we go into the next slide, I would like to highlight the evolution of our reserve base over the last five years. In a very depressed thermal coal price environment, we have managed to convert about 74 million tons from resources into reserves, accounting for about half of the mining depletions since 2016. In the same time, we successfully developed projects like the Mafube Lifex and Navigation. If we look at the right-hand side of the slide, in that same period, we also continued to critically evaluate the health of our business, which sometimes translate into difficult decisions, I think as mentioned by July and Bernard, by placing mines on care and maintenance where we cannot economically extract remaining reserve. This has resulted in downgrading of some of our reserves, like example, Khwezela. I must be clear that the vision for Thungela is to have a healthy reserve base, and with focused investment, there is significant potential to bring more reserves to bear, subject to our completing our feasibility studies and necessary approvals. If we now turn our attention to our resource base linked to projects, this slide illustrates a very healthy resource base that is well understood, well drilled, and with considered capital allocation to key projects, which have the potential to add to Thungela's reserves. Our resource base has seen some reductions and changes, and some of that has been converted into reserves. Over and above this, there were also a few transfers to and from our mineral inventory and changes to assumptions, as you can see on the graph. I must point out that the positives have more than offset the negatives in this category. Just to highlight a few, the resource base has seen a reduction from some downgrades to mineral inventory, mainly as a consequence of the closure of Goedehoop South, the closure of certain mined-out pits such as Kromdraai and Excelsior, and the ceding of our underground portion of our opencast lease to Exxaro Resources and Sasol. The transfers of the Bokgoni, reserves to resources and upgrading over the years of coal from various MRDs, as well as recognizing some opencast resources at Goedehoop North, just to name a few, have more than compensated for the reduction that we've seen. Very key on this slide, you can see that the main contributor to the increase in our resource base is the Dalyshope project that was upgraded to reportable resources on the back of a commercial framework agreement that, in the longer term, could unlock real development opportunities in the Limpopo province. If we look at our asset overview and reserve and resource base, this slide, and just to make reference, I'm on slide 13 now. The table is a summary of what we've spoken about. It also highlights the run-of-mine and the saleable reserve at the operating mines, also the two greenfield projects that's reflected on this table. As mentioned to Bernard, the indicated calorific value at most of our assets are of high quality and really supportive of a premium export product. It is also worth noting that the primary portions of the reserve base are even higher quality if the secondary products were excluded from the averages. The two examples here is, for instance, if we exclude the MRDs at Goedehoop and at Greenside, the calorific values that is reflected as Goedehoop sits at a 6,300 kcal/ kg and at Greenside at over 6,000 kcal/ kg gross as received. This concludes the section on reserve and resources. I now hand over to Johan to give you a view of our operating assets. Thank you, Johan. Good morning, everybody. My name is Johan van Schalkwyk, I am the Chief Operating Officer for Thungela. Just a bit of background on myself. I have 25 years of mining experience, I started my career back in 1996 in the very same portfolio of assets that we will be discussing today. I've held various operational management roles with my first general manager appointment in 2009. From 2013 to 2016, I was General Manager at Sishen Mine in Kumba Iron Ore, returned to coal with my appointment as Head of Open Cast Operations at Business Services in 2018. In this part of the presentation, I will be providing you with a high-level introduction to the various Thungela mining operations. Before I do so, please note the outlook information that I'm about to present is extracted from the competent person's reports and is intended to provide a consistent view across the portfolio. A quick introduction to the mining operations. July already mentioned that Thungela operates a portfolio of high-quality operations delivering a range of high-quality products. The map on the slide indicates that geographically, the assets are located fairly close to each other, allowing collaboration, benchmarking, sharing, and logistics amongst the operations, which is a major advantage. The various operations are listed on the right-hand side of the slide. The underground operations are the Zibulo, Greenside, and Goedehoop collieries, and the opencast operations are the Mafube, Khwezela, Isibonelo, and Rietvlei collieries. You can see on the map how they are relatively positioned according to each other. I will be providing more detail on each of these mining operations in the following slides. I'm going to start with the underground operations, beginning with Zibulo Colliery. Zibulo Colliery is our flagship operation. Thungela owns 73% of Zibulo, and Inyosi Coal owns 27%. The operation is managed by Thungela. Zibulo is a large-scale underground mechanized board and pillar mining operation targeting 2 seam extraction. There is also a small opencast operation targeting 4 and 2 seam extraction. The mine has attributable run-of-mine reserves of 48 million tons and a life of mine of nine years with significant life extension potential. Run-of-mine coal produced from the mine is processed at the Phola Coal Handling Processing Plant, which is a 50/50 percent joint venture between Thungela and South32. This is a two-stage plant producing a high-quality primary product, as well as a secondary or middlings product, with both currently dedicated to the export market. The general manager is Tieman Mpokane, with 20 years mining experience. Tieman joined the group approximately five years ago. He is originally from Sasol Mining. Tieman has distinguished himself as a very capable and mature general manager and has achieved a series of successful safety and productivity interventions. Looking at the Zibulo plan from the graph at the top of the slide, you will note that the saleable production profile for Zibulo is fairly consistent over the life of mine, with an increase from 2021 to 2022, mainly as a result of productivity and efficiency improvements. The beneficiation process results in the production of a primary and a secondary saleable product, with the latter being produced at no incremental mining cost. Zibulo produces a primary product of 6,000 kcal/ kg, with a yield of approximately 50%, and the secondary product produced in the process results in a total yield of over 70%. The yield graph in the bottom left of the slide indicates that the primary and total yields remain flat over the next three years. Sustaining capital includes stripping and development costs in 2021 for accessing the Northern reserve at the underground operation, as well as a new box cut at the opencast operation. I've mentioned to you that there is significant life extension potential at Zibulo, and the life extension study is progressing to the feasibility phase. If the project is approved, it will add an additional 10 years to the current life of mine of Zibulo. The project focuses on the underground extraction of 2 seam, and the estimated production profile will be approximately 8.4 million run tons per annum. The decision point on the life extension project is required by the end of 2022 in order to produce the first coal in 2026. Going on to Greenside Colliery. Greenside is 100% owned and managed by Thungela. It is an underground mechanized board and pillar mining operation targeting 4 seam extraction. The mine has run-of-mine reserves of 31 million tons and a life of mine of six years, which includes a mineral residue deposit that is presently being exploited. Run-of-mine production from the underground operation is processed in the 4 seam coal handling processing plant and conveyed to the rapid loading terminal, which is approximately 2.5 km away from the mine, from where it is then railed to the Richards Bay Coal Terminal. The mineral's residue deposit material, on the other hand, is processed in the five seam coal handling processing plant and trucked from the mine to the rapid loading terminal. The general manager is Naya Monareng, with 19 years mining experience. Naya started her career in Anglo American, and over the years, I've had the privilege of seeing Naya grow, develop, and progress through the ranks until now, where she has established herself as a very ambitious and talented general manager. Looking at the Greenside plan, you will note that the primary saleable profile in the top graph, as well as the primary yield for Greenside in the bottom left graph, is declining over the next three years as the operation moves to the East Block reserve, which has an inherently lower seam height and lower coal quality. Greenside produces a primary product of 5,800 kcal/kg from the underground operation and is expected to produce a secondary product of 4,800 kcal/kg over the next two years. Domestic production drops off in 2022 as the mineral residue deposit is depleted. With the secondary product, flexibility exists to sell the product in both the domestic and the export market, but currently, the strategy is to pursue the higher margin gained in the export market. The yield graph also indicates that a primary product is achieved with a yield of approximately 60% as the mining operations advances into the East Block reserve. The sustaining capital includes stripping and development costs required for accessing the East Block reserve. Going on to Goedehoop Colliery. Goedehoop is 100% owned and managed by Thungela. It is an underground mechanized board and pillar mining operation targeting four and two seam extraction. The mine has run-of-mine reserves of 27 million tons and a life of mine of five years, which includes a mineral residue deposit that is currently being exploited and sold raw to the domestic market. Run-of-mine production from the underground operation is processed in the Goedehoop coal handling processing plant, which is a one-stage plant producing a primary export product only. There is a rapid loading terminal on-site from where the primary export product is railed to the RBCT. The general manager is Dawid Taljaard, with 31 years mining experience. Dawid Taljaard also started his career in Anglo American, and with the bulk of his experience was spent in the underground operations, and currently is deemed as one of our underground mining experts. Looking at the Goedehoop plan, the top graph indicates that the primary saleable product profile for Goedehoop is fairly consistent over the next three years, noting the drop-off in production as the mine reaches its end of life. The Goedehoop produces a primary product of 5,700 kcal/kg with a yield of over 50%. The domestic production ceases in 2023 as the mineral residue dump is depleted. The stay in business capital relates largely to equipment overhauls for the remainder of Goedehoop's life. This now concludes the introduction to the underground operations. I will now continue with the opencast operations, starting with Mafube Colliery. Mafube is 50% owned by Thungela and 50% by Exxaro. The Mafube Nooitgedacht pit was commissioned in 2018 following the successful completion of the Mafube Life Extension Project. It is a multi-seam opencast operation targeting 4, 2, and 1 seam extraction with a low strip ratio, allowing it to deploy a lesser capital-intensive dozer fleet for primary waste stripping activities. The mine has attributable run-of-mine reserves of 28 million tons and a life of mine of 11 years with significant life extension potential. Run-of-mine production from the operation is processed in the Mafube coal handling processing plant, a two-stage plant delivering a primary product and a secondary product both for the export market. There is a rapid loading terminal on-site from where the product is railed to the Richards Bay Coal Terminal. Very important to note is that each shareholder, both Thungela and Exxaro, is responsible for the marketing sale of its own share of production. The general manager is Shepherd Nkadimeng, with 17 years mining experience. Shepherd also started his career in Anglo American and is a very dedicated mining professional and also one of our more diversified general managers with extensive experience in both underground and opencast operations. Looking at the Mafube plan, the saleable production profile for Mafube is consistent over the life of mine and shown on 100% basis in this graph. Mafube produces a primary product of 5,850 kcal/kg with an average primary yield of over 40% over the life of mine. The yield graph indicates that with the secondary product, a total yield in excess of 60% is achieved. The primary and secondary products are currently dedicated to the export market, optionality exists with the secondary product to sell it into the domestic market, depending on where the best margins can be achieved. The sustaining capital includes stripping and development costs required for pit and surface infrastructure development, as well as capital for additional equipment as the mining strip ratio increases over time. I now move on to Khwezela Colliery. Khwezela is 100% owned and managed by Thungela. July has already mentioned that the Navigation pit was commissioned following the successful completion of the Khwezela life extension project, and it's currently in a ramp-up phase. It is a multi-seam opencast operation targeting the 5, 4, 2, and 1 seam extraction, and has a fairly low strip ratio with one dragline deployed for primary waste stripping activities. The mine has run-of-mine reserves of 37 million tons and a life of mine of eight years, with further life extension potential. Run-of-mine production is processed in the Navigation coal handling processing plant, delivering a primary export product, which is conveyed to the rapid loading terminal approximately 3 km away from the mine, and then railed to the RBCT. The general manager is Luctor Roode with 26 years of mining experience. Luchtenhorster joined our group approximately one year ago from Petra Diamonds, where he was the Chief Operating Officer. Since then, he has established and settled in extremely well in the coal mining industry and established himself as a very capable and mature general manager. Looking at the Khwezela plan, the top graph indicates that production at Khwezela produced between 2020 and 2021. This is mainly due to the Bokgoni pit being put on care and maintenance, as Leslie Martin has already mentioned, as well as the closure of the Umlalazi pit. From 2021, the Navigation pit is the only operating pit at Khwezela and is in a ramp-up phase. It is expected to achieve steady-state rates by the end of 2021, with a stable saleable production profile over the life of mine from 2022 onwards. Navigation produces a primary product of 5,700 kcal per kilogram, with an average yield of approximately 50%. The sustaining capital includes stripping and development costs related to the establishment of additional pit room in the Navigation mine. I have mentioned that there is further life extension potential at Khwezela, and the life extension study is progressing towards the feasibility phase and is targeting the Clydesdale area as an opencast operation. Clydesdale will be contiguous to the Navigation pit, so there is potential for cost optimization through the use of existing Navigation infrastructure. If the project is approved, it will add approximately 10 years to the current Navigation pit life of mine and is planned at a rate of approximately 4.6 million run-of-mine tons per annum. A decision point on this project is only required in the latter part of 2025. Going on to Isibonelo Colliery. Isibonelo is 100% owned and managed by Thungela. It is a single seam opencast operation targeting 4 seam extraction, consisting of two main pits and deploying two draglines for primary waste stripping activities. The mine has a run-of-mine reserve of 27 million tons and a life of mine of six years. Isibonelo Colliery is the only mine in the Thungela portfolio where coal production is exclusively dedicated to Sasol Synfuels under a coal supply agreement which ends in 2025. The run-of-mine production from the mine is only crushed and screened and then conveyed to the Sasol Synfuels in Secunda over a 22-km overland conveyor. The general manager is Dirk Miller, with 33 years of mining experience, and in the team of general managers, by far the most experienced and distinguished general manager. Looking at the Isibonelo plan from the graph at the top, it can be seen that the Isibonelo saleable production profile is consistent over the next three years. Very important to note is that the saleable production in the second half of 2025, and also for the whole of 2026, is not committed to the coal supply agreement with Sasol Synfuels. Therefore, product optionality exists in terms of product sales during this period. The same business capital relates to machine overalls for the remainder of Isibonelo's life. Lastly, Rietvlei Colliery. Construction of the Rietvlei Colliery was started in November 2018. Thungela holds an effective 34% interest in Rietvlei. Rietvlei is an independently managed, small-scale, truck-and-shovel opencast operation where mining is undertaken exclusively by contractors. Rietvlei produces a domestic quality product supplied under a coal supply agreement to Eskom, which expires in February 2024. There is sufficient resources to extend current operations. This will depend on whether an extension to the current off-take agreement can be negotiated with Eskom, or alternatively, if other markets for this production can be found. Looking at the Thungela production potential. On this slide, it is important to note that the information for the outlook period is sourced from the Competent Person's Reports and may differ from management's guidance. The first graph on the left-hand side indicates how the saleable production from each operation stacks up over the next three years. I will explain the variance between 2020 and 2021 in the following slide. The graph on the right indicates the saleable production market split over the next three years. It can be seen that Thungela is becoming progressively more export market focused. The Thungela portfolio evolution. A number of changes have taken place in the portfolio. This has had an impact on the Thungela saleable production into 2021. Consequently, overall saleable production for 2021 is expected to be lower than what was achieved in 2020, primarily due to the Khwezela Bokgoni pit that was placed on care and maintenance, the Khwezela Landau 3 Minerals Residue Deposit operation that was depleted, and the closure of the Khwezela Umlalazi pit as a result of reserve depletion. There is also an increase in sellable production in some instances, primarily due to the Zibulo and Navigation operations, resulting in a total sellable production plan of 25 million tons in 2021. I will now hand back to Leslie Martin, who will take you through our successful track record of executing capital projects, as well as developing and operating our portfolio of assets. Thank you. Thank you, Johan. Me again. Key to the future of Thungela is the ability of this team to deliver on successful greenfield and brownfield projects. As per the slide, I would like to highlight three projects that were delivered on time and on budget in the last 10 years. First of that being Zibulo Colliery, that was completed in 2010. Mafube Colliery, which was developed as a greenfields project in 2008, and which benefited from another investment in 2016 to extend the life of that operation to 2031. Lastly, Navigation, our latest project that was completed and is still in the ramp-up phase. The project team that did these projects is well experienced and has remained largely stable for the duration of these projects, and is ready to successfully deliver on key future developments for Thungela. It is also important to point out how the business reacts to market conditions and its determination to act decisively to close sub-economic assets or place them on care maintenance when required. The two recent examples being Bokgoni and Goedehoop, in 2019. Thungela will continue to review the operating performance and market conditions and make these decisions necessary to sustain this business. If we go over to the next slide, very important to the success of any business is to continually review and improve productivity, which is 100% in our hands. At Thungela, this is part of our DNA and a mindset of innovation is well entrenched in our operating teams. Just to mention a few of these examples. We have successfully converted a conventional underground continuous miner section into what we call a prime section by including additional coal cutting and roof bolting machines to reduce the production time losses associated with waiting for support and logistical constraints linked to the traditional continuous miner cycle. On the right-hand side of this slide, you would see that this has resulted in a 54% increase in output from a single underground continuous miner section. This has also now been successfully rolled out to three of our underground mines and is currently operating with four prime sections at the three underground mines. On the opencast site, we have implemented technology, and to mention two of these initiatives at Mafube, one was the CAES system on the dozers and Trimble on the drills, and that has enhanced the productivity levels of the dozers by 10% in removing overburden and improved the blast game, which is also very key to moving overburden, by another 8%. The next lever that we pulled in this business was to standardize on our key production equipment across the sites, and that provides us the flexibility at our opencast and underground sites to redeploy equipment from site to site or from operations that we close, thereby maximizing the efficient use of our assets. Just for reference, we're now on slide 54. Just to further illustrate the eagerness of our operating teams to innovate, I would like to mention a couple of examples that have changed the efficiency of our mining and beneficiating processes. The first one is APC or what we call Advanced Process Control, where we have enhanced the level of digitally monitoring key processes in our washing plants to a point where a computer makes changes on a real-time basis and optimizes our product recovery to levels that would never be possible in an operator-controlled environment. Just to mention some of these enhancements. First of all, increased plant runtime, improved throughput, improved yield, and very importantly, improved energy efficiency. That's reducing the carbon emissions that we see from our washing plants. The next piece of technology, we installed geophones both at Goedehoop and at Greenside, where we use seismic intelligence to enable us to access mining areas underground that would normally have been sterilized due to underlying workings. We initially tried this technology at Goedehoop South, where we were able to increase the life of that mine by 18 months and a re currently using that at Greenside to access areas that would probably not been possible to mine in the past. Taking our attention to the opencast mines, the draglines are really the prime movers. At the draglines, we fitted integrated strain monitoring on the boom sections of the machines to enable us to increase the payload of these machine buckets by between 12% and 25%. This is achieved through continuously monitoring and analyzing the data that comes from these sensors to optimize the load based on the operating conditions that the machines are working under. Lastly, probably very close to my heart, to sort of manage our environmental liabilities into the future, we have trialed technology where we can sustainably manage decant from older operations by using passive water treatment technology. We have installed a full-scale passive treatment plant at one of our closed mines, where we use biological processes to neutralize acid water and remove heavy metals from the decant. That concludes my section. I now hand over back to Ryan to take us through the Q&A section. Thanks, Ryan. Thank you very much, Leslie. Thank you to all our presenters from the first session. We will now move to Q&A. A reminder that if you wish to ask a question directly, please join the conference call facility using the link you had received upon registration. Dialing star one on your keypad will indicate to the operator that you would like to ask a question. For those who have submitted questions via the webinar platform, and I can see that some have come in, I will be reading those out. Operator, please could I ask you to open the line for our first question? Of course, good sir. The first question is from Jason Fairclough of Bank of America. Please go ahead. Yep. Good morning, everybody. Thanks for the teaching. Very interesting. I'm just wondering, it looks like you've got a lot of opportunity here to do projects, to do life extension. Maybe you could just talk to us a little bit about how you're going to be making that decision. When do we need to make those decisions, and then how will you be making that decision? I guess tied into that, how do you think about your cost of capital as a coal company? Perfect. Thank you very much for that question. I'm going to ask Deon Smith, our CFO, to respond first. Thank you very much, Ryan. Good morning. My name is Deon Smith, and I'm the finance director for Thungela. Thanks for your question. Whilst you are right that we have a number of options, clearly those options need to be evaluated against a number of uses of capital. A bit later today, we will refer or reflect on those capital allocation criteria and decisions around payback returns to shareholders and alternatives. We, at the moment, are studying a number of projects in parallel in order to be in a position to make those type of decisions around 2023 or early 2023. There are no immediate expansion or life extension capital requirements as the business is well capitalized, and therefore no key decisions in the very short term. We will clearly have to evaluate that over the next year or two before we have to make those type of decisions. In terms of your question on our cost of capital, clearly, we will be a newly listed single commodity, single-geography business. Clearly anticipating a higher than usual beta compared to what we've had in the past. Therefore, signaling a requirement for us to carefully evaluate an appropriate cost of capital to evaluate it. I want to reiterate that it's not only about an NPV or an IRR return. Any project would have to compete for capital against returns for shareholders, but importantly also be competitive relative to other supply in the market, both in cost curve and in capital intensity perspectives. Thanks, Ryan. Thank you very much, Deon, and thank you for that question, Jason. Sorry. Please go ahead. Sorry. Could I just ask a quick follow-up question? Would you consider inorganic growth options, so M&A? Do you feel like that's in your mandate today, Deon? We don't believe that that's in our mandate, if you use the word today. Clearly, July will add to this to the extent that he feels the need. Jason, our mandate today is to successfully demerge list this business. Our mandate today is to operationally focus on the efficiency drive, the cost, and the capital efficiency drives that we've set ourselves, to settle this business, and to earn the operational credibility that comes with that journey. That does not mean that we will never look at any inorganic opportunities, but those would have to most certainly be evaluated at the appropriate time, which certainly isn't today. Okay, thank you very much. The only additional point to make to the question that you're asking, as of today, obviously, we are demerging and setting these assets and want to operate these as best as we can, and making sure that each asset is delivering its full potential. The decision in the future, however, is a far broader question, not just about what assets we hold, what reserves and resources we've got, but also to look at the megatrends in terms of what is happening in the market, and whether, in fact, the profit pool is sufficiently attractive for us to continue to make investments, and/or in fact, the question that you just asked, whether there is opportunities for consolidation. We are nowhere near there as we sit here today. As we sit here today, we only got approval yesterday to become a standalone, and we are thankful for our shareholders doing that. Our first priority is to set this as a standalone business which is sustainable, making sure that we're delivering attractive cash flows for our shareholders. Only then do we then step back and say, "What do we do going into the future?" That's not a question that we're grappling with as we speak today. Thank you very much, July. Thank you for that. Thank you for your question, Jason. Operator, if we can take our second question on the line. Of course. The next question is from Tim Clark of SBG Securities. Please go ahead. Thank you. Good morning, and congratulations on the demerger approvals. I just got a couple of questions maybe towards the assets and the discounts. If I look at it, your primary product is of a higher calorific value than some of the average product. Then the MRD tends to be winding down across most of the assets. I guess what I'm trying to understand is, will that mean that discounts will narrow to the benchmark because on average you're selling a higher quality product as those MRD deposits wind down? Will those MRD deposits be replaced by other lower grade or lower calorific value production? I just wonder, I don't know if it's going to fit in the finance section, so apologies if it is. Perhaps if we could just get some idea, you've shown us the SIB for each of the operations coming down as sort of specific projects up front come to an end. I wonder if you could give us just an indication of what your sort of longer term across the portfolio SIB expectation would be, without any life approvals, just keeping the current ball rolling. Thank you. Thank you very much for your question, Tim. I'm going to ask Deon to respond to both of those. Hi, Tim. Good morning. Thanks for your questions. Tim Clark, your observation around the product mix in the portfolio is correct. On average, currently, our portfolio mix last year was around a 5,500 CV. Correct, that's spread across high grade RB1 material all the way down to a 4,800 material or a washed mineral residue deposit type material. It's important to note a number of factors when we look at our product mix and portfolio. We determine the output in the portfolio mainly on optimizing our full cash revenue. Therefore, the market most certainly determines our ability to sell some of the lower grade material, and the discounts that we observe in the market determine that also. There's clearly also a number of tons that we put into the market that's essentially rawish, so unwashed MRD type material. For that, we earn a very modest margin from a cash perspective. The reason, however, we quite often continue entering into those short-term contracts where it makes sense is because where we have historic MRD, so deposits, that also come with a longer dated environmental obligation. Selling those off to a user that has value and use, obviously also optimizes our longer term liability. Our mix is therefore determined primarily, so our product mix, by where we are able to earn a margin, and where we have other benefits such as that environmental benefit or a capital benefit where it avoids us having to extend or grow a footprint of a particular MRD environment or area with the necessary permits and the like required to do that. That's sort of on the product mix. We do not anticipate a material change in that product mix in the short to medium term, but clearly, market forces might tweak that for us on the edges. The decline in that MRD in the medium to longer term is therefore more a lack of visibility on whether the market would or wouldn't need or require that type of material, medium to longer term. That's on the product mix. I have included a section on capital, and I therefore beg for your patience. I'll get to that a bit later on. Last year, we spent around ZAR 93 a ton on same business capital, so that's per annum, on that 16.5 million tons export saleable as a denominator. We clearly see that in the shorter term, there's a bit of stripping and development capital to be spent across some of our operations. Absolutely from 2023 onwards, we see that number moderating and reducing down. That's not only as a result of the life of the assets, but also as a result of our own internal plans and the targets we're setting ourselves to go and review the efficiency and the prioritization of our capital spend. Thanks, Tim. Thank you very much. Thank you very much for that question, Tim. Operator, if we can go to the next question. Next question is from Brian Morgan of RMB Morgan Stanley. Please go ahead. Hi, good morning, and thanks for the opportunity to ask questions. Can I just ask, Greenside comes to end of life very soon. That's 3 million tons or 4 million tons of export tons, doesn't seem to be a life extension option there as far as I can see, and nothing in the presentation. Coupled to that, the rail take-or-pay contract comes to an end within the next three years. Can I read into that you guys would be willing to, not utilize your full rail allocation in the next contracting period? Would you be willing for your export volumes to decline in the next contracting period? Thank you very much for that question, Brian. July, I am going to ask you to respond to that and then maybe give over to Bernard as well. Seeing that the question is marketing related, I'll deal with the life extension, then I'll talk about the take. I'll ask Bernard and Deon to comment on the take or pay, how we're thinking about that. When you think about Greenside and where it is, Greenside is contiguous to Navigation, actually, as well. They're all in the same geographical area. The way we try to think about the mines in that region, we actually call it the South African, colliery. What is it called? [inaudible] Okay, South African Coal Estates. I just got the name right. We tend to treat Khwezela, Greenside as one complex, sharing the same amount of infrastructure. When we think about the life extensions in that region, what we're trying to do is to evaluate what makes the best use of the infrastructure that we've got in that region. We may not necessarily always talk to this being a Greenside extension or Khwezela extension. You would have heard, Johan actually said something quite subtly. He said, the Clydesdale pit, which is also contiguous to Greenside and mines some of Greenside reserves, is contiguous to Navigation. What we're trying to do is to optimize our capital by utilizing the full infrastructure in that region, mining infrastructure, rapid loading terminals, water treatment, and all that infrastructure in that region. We'll do what makes most sense. What we're not planning to do is just to say we'll replace volume for volume exactly, even if it doesn't make sense. We'll only do capital projects, as Deon said, which protect our position on the cost curve, are value-accretive, utilize our existing infrastructure most efficiently, and are short pay back. That's why quite often we don't tie one life extension to necessarily that specific mine. Leslie made an important point, if you heard him talk about how we standardize our equipment to be able to share and deploy it across the whole portfolio. That's part of the reason why we think about it that way. Deon or Bernard, do you guys want to comment on the take-or-pay and the 2024 date? Yes. Thank you very much, July. It is common knowledge that the industry have around a 10-year agreement with Transnet, which comes to an end early, Q1 2024. As I mentioned earlier, Brian, those projects that July has just referred to include a number of options to add export tonnage into our portfolio, given the right economics, clearly. We, between Bernard and I, are planning to start those engagements with Transnet early, given that the Transnet expectations provide another input into the viability and into the merits of switching on any of those life extension projects. Your observation, however, around the life of mine profile of the total export tonnage, is correct, that if we switch on a number of those projects that we have in our armory and in our sights at the moment, we could potentially replace all of that export tonnage. July has sort of moderated expectations that we believe that we would only do so, and therefore might have a lower profile in export tonnage post that point. Clearly that will be a discussion that we will have over time with Transnet and as we evaluate the viability of those projects. Thanks, Brian. Maybe if I could add something, Deon. In addition to what you said, we've actually started engaging with our colleagues in the strategy and business development functions within Thungela. A renewal of the TFR contract is one of the high priority projects. We haven't engaged with TFR yet. We will, as Deon mentioned, do that shortly, but it is high on our priority list. Thank you very much. [crosstalk] Thank you very much. Deon, Bernard. Can I ask a follow-up question? Yes, please go ahead. Thank you. You haven't spoken about Elders. I don't know if you're going to during the course of the presentation, but could you give us a little bit more color on that mine in terms of conceptually what you're thinking about there? I was hoping that you would not have picked up on all my projects. You notice that I said, we will utilize our infrastructure, which way it makes sense. Elders is a reserve and resource which is contiguous to Goedehoop. Again, our thinking, both in terms of sequencing and capital efficiency, is how do we develop that resource in the most capital efficient way, and what would be the most appropriate timing? Also, more importantly, what kind of products should we be producing out of that mine, and for which market channels? It's one of those resources that is both suited to providing coal for the export markets, good quality, but equally we could, at the right price point, supply the local markets if we needed to. That study is currently ongoing. We're nowhere near a position to make an imminent announcement about what we're going to do there. If I could add to what July has said in terms of the Elders opportunity and resource, it is immediately contiguous to an existing operation. Whereas it is arguably a unmined and undeveloped resource, it has the potential benefit from synergies with the complex which it sits next to, which is the Goedehoop complex. Again, Elders would have to pass muster and stand up to scrutiny relative to all of the other project options that we have, Brian. We're not today sharing details as to the shape and size of that opportunity, given that we continue to study it and refine our thinking on it, and in order for us to compare those with the other options in our portfolio. Thanks. Perfect. Thank you very much. Thank you, Brian, for those questions. At this stage, before we go back to the lines, I do want to read out a couple of questions that have come through the webinar. The first question, actually, we have two questions from Gavin Rabbolini from PSG Asset Management. Gavin, I see that your first question was related to when is the Transnet take-or-pay freight rail contract up for renewal. I think that's been addressed. Your second question, I'm going to read out, and Bernard, this one will be for you. Again, from Gavin Rabbolini at PSG Asset Management, what are the tail risks we should monitor that could materially derail the medium-term Asian demand forecasts from SA over the next 10 years? Bernard, if I could ask you to respond on that. Thanks, Ryan, and thanks for that question. What we need to monitor and watch carefully, clearly, at the moment would be COVID. A further breakout or spread of COVID could have an impact on the demand side in Asia. That is hard to watch and monitor. I guess there could also be a second, and that would be mounting environmental pressures. As we explained during the presentation, given the economic development in the Asian and South Asian countries, the need for new energy and the need for low-cost energy, we believe that there are adequate options in that market to cover that environmental pressure. Likewise, with COVID as well. Again, we're not reliant on one market and have various market options available to us. I guess one additional comment to that is, wearing my World Coal Association hat, I think there are a number of other factors you need to look at, which are not just specific demand factors. With a depleting base of production globally, one of the things we're going to have to monitor is how much investment is actually going into building new mines globally. That's quite important, because if there are no new mines being built, that can only create a bigger supply gap. If there's investment, that could change the supply/demand dynamics for us. The other megatrend we need to watch is whether global tons, which traditionally don't compete in our markets, are able to compete in our markets. What we have seen with the switch off of thermal coal demand in Europe, for instance, one would have expected a lot of the American tons, which traditionally serve that market, South America, to switch to our markets. That has not happened because of freight rates. It just can't compete. We need to watch all those flags to determine whether, in fact, the supply market dynamics continue to be supportive, not just of South African coal, but actually of the seaborne traded markets. There are broader trends that we're keeping very focused on. Thank you very much, July. The next question that we've got through the webinar is from Alexander Kozak from T. Rowe Price. The question, and Bernard, this one's going to be for you, does the cost curve you show incorporate the discount you historically sell the coal at? Thanks for that question. Just as a reminder, the cost curve that we showed is a WoodMac cost curve. No, that cost curve does not show the discounts. It is a cost curve for the benchmark coal and benchmark price, which is a 6,000 kcal. It would not be reflective of the discounts that we worked through during the part of my presentation. Thank you very much, Bernard. The next question is from Liam Fitzpatrick from Deutsche Bank. Leslie, it's a question that I'm going to ask you to respond to. Question on Zibulo life extension. Can you provide details on when you expect to approve licensing challenges, and how would approval impact the production profile? Thank you, Ryan. Maybe just to start off, Liam, in the short term, we are developing towards the north of that reserve, and we're going through the graben, which will give us access to the northern portion of the two seam reserve. In that same region, as you would have seen from the resource statement, there's quite optionality around 4 seam and 2 seam in the Zondagsfontein West area. I think we've got time to complete that study around accessing the rest of that resource. We'll be in a position to interrogate the licensing requirements for that area. I think from a timing point of view, we would then consider how do we need to phase in the potential from that area into the broader portfolio mix. Not sure, July, if you would or Deon would like to add. I would rather get the COO who owns this mine to comment if there is any additional comments. Yeah. Liam, just from my side, so just a couple of key highlights from my presentation. I mentioned that this project will add approximately 10 years additional life to Zibulo, and that the run-of-mine production profile will be approximately 8.4 million tons per annum. Now, like Leslie has mentioned, the Zibulo resource sits immediately north of the current operation. Secondly, it's also an underground operation. What you will find is that licensing requirements between underground and opencast operations differ slightly in that underground operations licensing processes are, I don't want to say less stringent, but it is usually less of a challenge than for opencast operations. From that perspective, we don't really foresee any major licensing challenges. As far as the production profile is concerned, so currently we don't envisage a major change to the current Zibulo production profile. Obviously we are still in the study phase, we are considering our options. We are optimizing. There might be changes, once we get to a better level of detail. At this point in time, we're not envisaging any changes. Thank you very much, Johan. Thank you for that question. I'm going to take another two questions from the webinar before we go back to the lines. Deon, the next question is going to be for you. The question is from Andrew Snowdowne at Sanlam Investments. I'll read out the question. It was suggested earlier that costs will be flat for the next three years. Is this target not too optimistic given rising mining inflation? Please give more detail why you are comfortable with this aggressive guidance. Thank you for that question, Andrew, and Deon, I'll hand over to you. Yes, Andrew. It is a relevant question for us. We are setting ourselves a couple of ambitious targets as a team. However, you have to recognize that I think when July said we're setting that target of flat cost, let's say cost per ton, he was referring to the ZAR 833 a ton FOB cost. I'll unpack a bit later today how we get to that ZAR 833 number. In real terms, though, we think that we have sufficient productivity and efficiency programs in place to counter the bulk of geological inflation. I think you refer in your question to geological inflation as mining inflation. Those should set itself off. The second one is that you also would have noted when Johan spoke, and also July, that we've recently developed what we call the Navigation pit project, within the Khwezela complex. If you put that in context of the cost curve slide that Bernard showed with Khwezela on the Q4, so the only asset not in the lower half of the cost curve, you'll recognize that there's a denominator shortfall in that we only started to ramp-up Mafube. Therefore, we would benefit on a cost per ton basis as that denominator improves. One, efficiency and productivity improvements. Two, Mafube denominator ramp-up. The third issue is around a strategy we've set ourselves around buying better and spending better, which essentially is a cash cost efficiency lever. We believe that we should be able to focus our procurement spend on a more appropriate basis given the shape and size of our assets and where we're located. Clearly, that is an important lever for us to bring the actual absolute cost that we spend down by buying the same, but buying better and using the utilization of that as best as we can. We think through those three levers, whilst it is an ambitious target, it's flat in real terms, though, it is achievable. Thanks, Andrew. Thank you very much, Deon. I'm going to take one more question from the webinar before we go back to the lines. My apologies, I do see a large number of questions. We might not get to all of them in this Q&A session, but if we don't, we'll pick up on the second Q&A session. Another one from the webinar, and again, Deon, I'm going to ask for you to respond to this one. The question comes from Luvuyo Booi at Noah Capital. Congratulations on the approval of the demerger. Is there a possibility for extension of the coal supply agreement with Sasol at Isibonelo? In the absence of that, what will this do to the realized price as the mine will be forced to seek other markets for this coal production? Thank you, Luvuyo Booi. Deon. Thank you, Luvuyo, for that question. The agreement with Sasol has customary confidentiality provisions. I won't be able to give you all of the details on every single scenario. Safe to say the following: Isibonelo is a very good quality coal into the Sasol Synfuels business. It is a very important coal for Sasol's processes. We are a very important ingredient of its total coal sourcing strategy. As a result, I believe that there could be, if we felt that it's appropriate and commercially attractive, extension options at mutually acceptable terms. We also recognize, and whilst I wouldn't want to speculate around the timing of this, that Eskom continues to face should the country's growth resume post-COVID, that Eskom also faces a potential coal cliff and a requirement or demand for similar type quality coal. If you look at the geographic location of Isibonelo close to Secunda, you will note that there's, for example, Kriel across the road. There are Eskom options also. In addition to that, clearly there could be other industrial market offsets for that coal. It's not something that we are concerned about today, recognizing that agreement runs until mid-2025, from memory, and therefore we have enough time to reflect on what to do with that coal at the end of that current CSA. Thanks, Luvuyo. Thank you very much, Deon. Operator, at this stage, if I can ask us to go back to the questions on the conference call. Of course. The next question is from Ben Davis of Liberum. Please go ahead. Thanks. Yeah, just a quick question on life extension opportunities. Is there any sort of rough guide we can use, particularly for Isibonelo and also Khwezela in terms of capital intensity to reach those resources? Should we be thinking about conversion loss at all or is that not a factor, going from resources to reserves? Thanks. Thank you very much, Ben. Deon, if I can ask you to start, and I might ask one or two of the others to chip in as well. Hi, Ben. Hope you're well. I will definitely pass the conversion factor and the loss to Leslie or Johan to answer, at the risk of getting that 100% incorrect. In terms of the capital intensity, we have done only early studies on these options. We've also only done studies from an Anglo American lens. What we really would like to do is to dust these off using a Thungela lens. I would be loath to be drawn right now on the capital intensity. Safe to say that it is our ambition to ensure that we only switch life ex projects on where it is very competitive from a relative capital intensity perspective. Apologies, Ben, for not being able to give you dollars or pounds and cents today. Bear with us whilst we press the reset button and think through what those capital projects could look like wearing a Thungela hat. On the resources and conversion into reserves, clearly, the capital intensity plays mathematically into that equation, and so does the cost per ton and a number of other factors as you would well know, given resources is only about geological confidence and reserves about the economic extractability. It's difficult to answer your second question without having the answer to the first. I'm going to just pass to Leslie to see if he's got any perspectives on what we've observed historically in that conversion or the loss on that type of conversion from resource to reserves. Yeah. Thanks, Deon. Ben, I would say in terms of Zibulo, I don't foresee, I think from a resource point of view, that those conversions will be to the negative side. I think, as you're very well aware, that the CPRs do take into account economic factors. I think what sits 100% in our hands is that in the next couple of years, we've got the opportunity to drive those productivity and cost savings that can also, when we do those projects, can actually unlock some of those. I think that's what we'll focus on in the next couple of years, is to really drive those efficiency projects so that we can actually have a better economic view of some of these resources. Perfect. Thank you very much, Leslie and Deon. We've got time for one more question on the line. Operator, if you can go ahead. Thank you. The next question is from Sylvain Brunet of Exane BNP Paribas. Please go ahead. Good morning. Thanks for the presentation. Maybe one question from me on the marketing side. Curious to know if you guys have looked at the coal-to-gas parity, if you've done some math flexing CO2 ETS in there. Where would that leave the coal price switching points at current gas prices, please? Perfect. Thank you very much for that question. Go on, yeah, Deon. I can take a first stab and hand to July to the extent. Thank you very much for the question, and I think you're asking a question that probably the whole world has and continues to graben with. There are a number of unknown factors and assumptions, as you well know, in particular around the carbon pricing and taxes across the different jurisdictions. We don't have particularly strong views on it. Our primary view is obviously that we are a coal miner and that we want to produce the best and lowest quality coal most efficiently, and clearly, place that into the markets that we know and understand to prefer high-quality imports of coal. In those markets, typically, there are variable degrees of efficiency on gas extraction and transportation, and clearly, those technologies are evolving also. That isn't our primary focus at the moment. As you can imagine, we've got a high-quality suite of assets which we will mine as efficiently as we can in order to be as competitive as possible in those type of markets. I don't know if July has any perspectives on that. I guess, yeah. The only comment I would add is that in the game that we play, first and foremost, you want to know if there's demand for your products or not, and the answer is, we've done a fair amount of work that says there is robust demand, certainly in the next decade and maybe beyond. We have got the right quality assets in the right part of the cost curve to be able to take advantage of that. I did say that we do watch broader trends, and the one that is crushing it, which is what will the cost of gas do to the switching from thermal coal to gas. In fact, it's a broader question, not just switch from thermal coal to gas. It's actually a switch from thermal coal to other energy sources. We think about this from an energy complex pricing point of view, we don't take a far more detailed look at it. We look at it from a megatrend point of view, insofar as it informs our view about the long-term dynamics. There will be some switching happening, as we saw in the Americas, for instance. What we found, and that's why I made that comment about that although the American market, for instance, in the U.S., where at peak was producing roughly 1.5 billion tons of coal, when the switch from thermal coal power stations to shale gas power stations happened, one would ordinarily have expected that coal to start trading in the seaborne trading market. It didn't happen. In fact, that production closed down. Those are the kind of broader macro trends that we would watch to inform whether the industry into which we supply remains attractive, and therefore, where do we position our assets within that competitive environment. Thank you very much. July. Thank you, everyone. Unfortunately, that is all we have time for in this session. We will, however, try to pick up on more of your questions in the second session. I can see, both on the webinar and the call, there are a couple more questions. We will pick up on those in the second Q&A session this afternoon. We will now have a short break. We will resume proceedings at 11:10 A.M. South Africa time, when we will kick off the second part of today's schedule. Thank you very much for your participation. We'll see you back in about 15 minutes. Thank you. Good afternoon, everyone. Welcome back to the second half of the Thungela Capital Markets Day. To start this session, I'm going to ask our CFO, Deon Smith, to lead us. Thank you very much, Ryan. As I introduced myself earlier, I'm the finance director for Thungela. Been with the coal division of Anglo American as the CFO since 2017, and prior to that, spent most of my career in the corporate finance team. I'll be presenting the financial section today. It's worth reminding you that the entities forming Thungela did not exist as a single company previously. What we're presenting is essentially an aggregated view of the entities as if they were under one group for each of the three historical periods in the PLS. We also presented pro forma financials in the PLS that show how the business would have performed had the demerger taken place effective 1 Jan 2020. We've not made any material changes to the accounting policies in separation of Thungela from Anglo American. On this page, we've essentially outlined a build-up of how we look at the business, and we hope that this will provide you with a base to assess the economics on a go-forward basis. The result of this page at the bottom, referred to as adjusted operating free cash flow, which is more fully defined in the PLS, was ZAR 4 billion positive in 2018, followed by ZAR 1.7 billion negative in 2019. These results were off the back of a much softer price, which Bernard and July set out earlier, in particular in 2019 and 2020. We start off at the top with production metrics. During 2020, we produced around 16.5 million tons of export saleable production, which represents around 80% of our revenue. The 2020 benchmark export price, which was in 2020, $65 a ton, results in a ZAR price of about ZAR 1,082 a ton. During 2020, we observed an aggregate discount, as Bernard set out earlier, around 26%, which if you apply that, gives you a net realized price of ZAR 798 a ton. If you look at Anglo American Q1 2021 production report, you will note that on the mine-to-market basis, the realized price was $74 a ton. Comparing this to the benchmark price of $90 a ton in Q1, the discount narrowed to around 18% compared to 26%, albeit the latter is on a mine-to-port basis. We then move on to the FOB cost per ton, which I will set out in more detail a bit later in this presentation. In short, if you take your total operating costs, which includes both export and domestic operating cost, and you then deduct domestic revenue, given that domestic is mainly a secondary product, you arrive at a total export operating cost only. If you take that total export operating cost and divide it by the export saleable production of 16.5 million tons, you get to the ZAR 833 a ton in 2020. There's a bridge later on in the presentation, which I'll take you through. The other costs of ZAR 29 a ton relates to corporate cost studies and demurrage, so everything beyond FOB. The delta between the realized export price of $798 and the FOB cost of ZAR 833, and obviously the ZAR 29 a ton, then gives you that negative margin of ZAR 64 a ton, and in turn, the ZAR 1 billion negative adjusted EBITDA in 2020. Adjusted EBITDA is clearly very sensitive to production and sales price, as well as foreign exchange movements. For example, in 2020, and this is mathematically, if you assume a $10 a ton higher realized price, that would result in improvement of about ZAR 2.7 billion in earnings. Using the adjusted EBITDA, we then remove various cash flow statement adjustments, and these are set out more clearly in the PLS, so working capital movements, profit and loss on disposal of PPE and so forth, as well as sustaining capital to then get to an adjusted operating free cash flow, which in 2020 was -ZAR 1.7 billion. We will cover the sustaining capital, as I said earlier today, as well as look at the next couple of years of capital later on in the presentation. On rehabilitation, I will also set out the balance sheet position a bit later, as well as the future funding. As an indication on this slide, you can assume that we would continue to fund a minimum of 5.5% of the guarantee amount in cash per annum. The corporate tax rate in South Africa is currently around 28%, and you would also note from the PLS that we've incurred losses across the last two years. As mentioned, you would have also seen in the pre-listing statement that adjusted operating free cash flows, so the result on this page, is the number that we will base our dividend off. It is therefore a key number that we have and will continue to monitor going forward. Other than the employee and community participation at a South African coal operation level, which we'll talk about later on as well, there's no meaningful participation of minorities in the adjusted operating free cash flow line, given significant debt in the structures and most notably, in AAIC, so in Inyosi Coal, which owns Zibulo. I will now step you through the key financial drivers and considerations for Thungela, including revenue, cost, capital, and our day one balance sheet. In order to establish Thungela as a focused mining company for the first three years, with the requisite level of operational focus that this will take, we have entered into an export offtake arrangement with Anglo American. The Anglo American marketing team clearly has the expertise to access the most appropriate markets in order to optimize the realized price for the kinds of products that we produce, given the expertise and knowledge of our assets in the markets. Thungela will manage the mine through to port logistics from day one, and we clearly have the opportunity to expand into a standalone marketing business over time. As mentioned earlier, Bernard will lead the development of our marketing business for Thungela. Prices paid by Anglo American for coal sold by Thungela will be market related and with reference to the benchmark price, as well as independent broker quotes for any quality discounts, which Bernard set out earlier. Our team will also be monitoring this price realization, which we expect to improve from historic levels, and that you would have seen in Q1 this year already. In addition to the upfront cash injection of ZAR 2.5 billion, which we will get onto, we sought to develop a capital support structure to protect Thungela from adverse market conditions in the short term with an additional capital support mechanism which will be in place until the end of 2022. As set out in the pro forma financials in the PLS, had this structure been in place since the 1st of January 2020 until the end of 2020, it would have resulted in a further ZAR 1.5 billion cash support in 2020. For the period up to the end of 2022, at which this price support would kick in is a price of about ZAR 1,175 a ton, and that is the benchmark price, which will then be adjusted in accordance with the quality discounts that Bernard stepped through earlier. Based on the 2020 product mix, the realized price in accordance with that capital support agreement would have been ZAR 894 a ton. Capital support earned up to the end of 2022 is not repayable to Anglo, should clearly Thungela benefit from it. Given recent market volatility, this is a good arrangement to have in place, but at current prices, we clearly do not expect the capital support to be required. Clearly, Thungela is robustly capitalized with ZAR 2.5 billion cash balance from day one, and the additional capital support if needed. Reflecting on day one for Thungela, all cash and debt will be extinguished on 31 May 2021, ahead of the demerger, which allows us to start with a clean slate and a strong balance sheet. The ZAR 2.5 billion cash injection is not repayable and can be used as Thungela deems fit in an unconstrained manner. Absent external liquidity on day one, the upfront cash clearly provides us with balance sheet flexibility in order to manage our working capital requirements, but is clearly very meaningful in the context of the current stripping and development capital cycle that we're in, as well as providing further comfort around the business's ability to fund future rehabilitation obligations. Capital support is indicated in the light bars on the slide, which are potential amounts that we could get in 2021 and 2022, which provides us with full downside protection around ZAR 4 billion until the end of 2022. We look at our working capital over three components. Firstly, trade payables. These have recently increased in line with increase in some of the operating expenditures, such as consumables and production input costs, but also due to efforts to constantly optimize payment terms. Trade receivables on a go-forward basis, around 80% of this will accrue from Anglo American Marketing, given that new arrangement. Inventory is valued only once it's washed, and the numbers on the screen clearly reflect inventory volumes and coal prices at the end of each respective reporting periods. You may recall that spot prices were strong at the end of 2020. Given the new arm's-length marketing arrangements with Anglo American, we are rebuilding physical stock levels during 2021. You also see from the slide, which represents year-end balance sheet numbers, that working capital as at the end of 2020 was historically low and is likely to increase to historic levels in 2021, in addition to the inventory rebuild that I've mentioned. Further to the discussion we had on CapEx earlier, we look at our capital through two main components. One, expansionary CapEx, which is essentially extensions to the footprint of an asset, or a life extension project. Two, sustaining capital, which is made up of sustaining business CapEx on the current asset base, as well as stripping and development at these assets. Stripping development includes, for example, box cuts in the opencast mines such as Mafube and Navigation, or extending ventilation and infrastructure in an underground mine, such as Greenside, where we're currently mining to the east or Zibulo to the north. We have continued, notwithstanding the challenging price environment in recent years, to invest in our assets, and this results in us not needing to spend any material expansionary CapEx until at least 2023, as I said earlier. Sustaining capital is aimed at maintaining the integrity of our installed infrastructure and assets for the duration of the life of mine. I mentioned earlier that during 2020, we spent ZAR 93 a ton per annum, SIB CapEx per export saleable ton. Whilst guided to be slightly more elevated in 2021, mainly due to capital deferrals off the back of COVID deferrals in 2020, we expect SIB to gradually moderate to below 2020 levels from 2022 onwards, this is as we carefully review the efficiency of our spend and our plans with a Thungela lens. Couple of course, with the ramp-up of Navigation, the concomitant increase in the denominator, export saleable production. We have around ZAR 6.45 billion, or $440 million of rehabilitation costs. That's on an NPV basis as at the end of 2020, which will be incurred into the future. When we unpack operating expenditure for 2020 a bit later on, you will note that this provision was increased in 2020 by around ZAR 1.3 billion. We constantly reassess our liability numbers through engagements with independent third-party consultants to ensure that we are fully compliant with applicable legislative provisioning requirements. We currently also use a combination of NEMA and the existing legislation, and water treatment, for example, is provided based on a combination of active and passive treatment. Given the nature and extent of these liabilities, we're also focused on developing technologies to mitigate the future cost. For example, to enable us to shift to passive water treatment only. As set out on this slide, we have ZAR 2.9 billion in trust currently. We also have around ZAR 3.2 billion of guarantees in place, and these will be provided through insurance products. As part of those arrangements, we will contribute 5.5% of our guarantee amount to a Green Fund. This contribution, coupled with the other efforts such as, for example, the improved water treatment technologies I referred to, should help us to fully fund with cash collateral this liability over time. Employee costs remain broadly flat if I look at this graph starting from the bottom over the last three years, and this is as wage inflation of around high single digit, which is commensurate for South African labor market, have been offset by lower head count in mines that no longer are in operation, as well as some broader restructuring of the business during this time. Input costs such as consumables and maintenance, notwithstanding local inflation, have also stayed flat due to lower production footprint in 2020 as compared to 2018. Logistics costs are largely related to TFR costs to get coal to the port. As mentioned before, in 2020, there was a large increase in the rehabilitation provision that went through the income statement as a non-cash item. That was to ensure that we adequately provisioned based on current legislation. In real terms, we will aim to keep our cost base flat over the next three years, and we'll have a number of operational efficiencies, which I spoke about a bit earlier on in Q&A, that we've identified to execute on this. If I sort of just pause on one or two elements around this cost momentum, looking at the cost base on a go-forward basis, there are two key drivers that we envisage keeping our costs relatively flat in real terms in the next couple of years, in addition to what we spoke about earlier. We've retired higher cost production by replacing or placing Bokgoni, which is a pit in Khwezela, on care and maintenance in early 2021. We'll continue to ramp-up Navigation in order to improve the relative competitive position of that Khwezela mine. In terms of recharges from Anglo, we've entered into a series of Transitional Services Arrangements to enable a seamless transition to a standalone business. These TSAs represent around a third of the current recharges. In addition, we're also replacing around 1/3 of those recharges with standalone services. We have also envisaged the ability to improve our cost base by reducing the total cost of this bucket of spend over time. I said earlier that we'll talk a bit about the ZAR 833. We've spoken about a simplified financial model, as well as our aims to keep those costs flat in real terms. Let me step you through how we get to the ZAR 833 a ton FOB. On the left, we start with our total operating cost base, which includes costs pertaining to all production, export, and domestic. We subtract domestic revenue to get to our FOB export costs. By and large, domestic production is a secondary or a by-product in this equation. The FOB export costs divided by export saleable production of that 16.463 million tons in 2020 gives you the ZAR 833. To get to an all-in sustaining cost, which on the graph for 2020 is the ZAR 894 a tonne, we add other costs, which is around ZAR 204, and that mainly includes sustaining capital, expansionary capital, but also the corporate and project study costs as well as the management I mentioned earlier. We remove non-cash costs, that's the ZAR 143, which is included in the total operating cost of the ZAR 2.35 billion. That includes mainly depreciation, amort, as well as the movement in the rehabilitation liability. This gives us our total all-in sustaining cost per export tonne of ZAR 894. This is for the business compared to a realized export price of ZAR 798 for 2020. Perhaps another reminder on this slide of the Capital Support Agreement, which is in place till end 2022, which would have resulted in that ZAR 1.5 billion, given a realized price below the ZAR 894 a tonne. We recognize that we have a responsibility to think carefully about the business's ability to generate cash, but also then how to allocate those cash flows. We'll continue to have a disciplined approach to our capital allocation. Maintaining the health of our assets with efficient sustaining capital remains a priority. We will focus on funding our closure liabilities. Currently, approximately 45% of our environmental liabilities are funded by cash collateral in the trust with a balance supported by guarantees. Our intention is to gradually increase this coverage from 45% to 100% through contributions to the Green Fund and other initiatives such as water technology, as we believe that this is a critical element of being a responsible operator. We are absolutely committed to delivering strong cash returns, as July said to shareholders, with a minimum dividend payout ratio of 30% of net cash flows from operating activities after funding sustaining capital and taxes. We will, however, continue to review the payout ratio in favor of a gradual increase over time should our performance allow us to do so. Each of our mines have value or life-enhancing investment options. It's important to again highlight that we are taking a conservative approach to managing capital, preserving cash flow for shareholders, and therefore would only invest in low risk, quick payback, value-accretive projects where we have a high conviction that our investment criteria and hurdles are met. While I covered this briefly as we went through, absent further TFR and COVID disruptions, export saleable production will be at the upper end of the 15 million tons-16 million tons range for 2021, growing organically to produce over 16 million tons for 2022 and 2023. Thungela's FOB costs per export ton are expected, again, to remain relatively flat in real terms going forward, with those productivity improvements offsetting mining geological inflation. The intention is to sustain and organically develop the portfolio of existing well-invested assets with only critical sustaining capital expected for the next three years. Let me now turn to regulatory matters. We've observed encouraging progress over the last couple of years, mainly around the clarity and the stability from Department of Mineral Resources and Energy and, in particular, government's commitment to the mining industry, recognizing its importance in a South African economic context. We remain confident in the security of tenure of Thungela's rights as a result of this increased stability and clarity from the regulator. Whilst the MPRDA or Mineral and Petroleum Resources Development Act contains many objectives aimed at exploiting the country's resources responsibly and sustainably, the transformation of the industry in South Africa by mineral license holders is clearly a very important consideration. To this end, Thungela is fully empowered and has been involved in the establishment of many meaningful BEE entities across the South African mining landscape. The implementation of the community and employee partnership plans, which Mpumi will unpack in a bit more, is accordingly not a regulatory requirement but will clearly further contribute to Thungela's empowerment credentials. We also believe that as a listed South African mining company, we are well-positioned to continue to contribute meaningfully to empowerment and transformation of the industry and indeed our country. Our mining rights expire between 2030 and approximately 2048 as set out, which is beyond the current life of mine of all our assets. In relation to the life of mine plans as set out in the competent person's report, Thungela owns or has access to all land required to execute on our plans. In addition to the core surface land, Thungela also has access to non-core surface land, which is the land in or around the group's operations that provide ancillary benefits to us, such as security and safety. With that, I will now hand back to July to introduce us to the ESG section. Thank you, Deon, for that wonderful detail and great agenda on our financials and how we're looking going forward. At the beginning, I said I'll come back and talk to you about our ESG. What I'm going to do in this section, as you can see, is tag team with my two executive colleagues, Carina Venter and Mpumi Sithole, to try and unpack this robust ESG framework. To start off with, our ESG vision supports our purpose to responsibly create value together for a shared future. Establishing and committing to a comprehensive ESG framework and associated targets is one of Thungela's five strategic priority areas, which include the elimination of mining fatalities, operational excellence, a lean organization and fast decision-making, supply chain optimization, which Deon spoke to earlier. After considering major trends in the external landscape, existing activities, and the ambitions of our employees and stakeholders, Thungela developed a fit-for-purpose ESG framework to prioritize those areas that are most salient to our host communities, and broader stakeholders. Our ESG framework focuses on three pillars, which is environmental stewardship, create shared value for our stakeholders, and responsible decision-making and leadership. Within each of these pillars, we've identified a further three core priorities, most relevant to our employees, communities, and broader stakeholder universe. Underpinning these priorities are robust management systems, open and engaged leadership, and a commitment to effective and transparent stakeholder engagement, reporting, and disclosures further supported by our values and ethical code of conduct. Let me turn briefly to our governance principles. We embrace strong corporate governance principles to deliver our strategic outcomes and engender trust in Thungela as a corporate citizen. Our governance pillars and priorities are reflected in the board committee structures that we've established, which is ethical culture, and that we will conduct our business ethically in line with good corporate governance practices with zero tolerance for corruption. We shall ensure strong governance to deliver operational excellence and report transparently and consistently to remain accountable to our stakeholders. We commit to proactively identifying and assessing the risks and opportunities to the business, and then to developing and implementing strategies to address these particular risks. Let me come back to the comments I made about our board earlier on. With a majority of independent non-executive directors, commitment to maintaining an inclusive and diverse board, what we intend to do in terms of that commitment is that we're going to add another black female director just to broaden the diversity of our board. We have, as I said, a very experienced and diverse board, which brings broad experience, and most of these people are actually well-proven in their own right. I'm now on slide 77, just make sure that we're all following. I'm going to talk to our committees. Our board committees are mainly populated by non-independent executive directors with relevant experience to maintain the governance that I spoke about. These committees comprise prominent professionals that are distinguished both in South Africa and in an international context. Our committees have responsibility to the board to deliver on the broader ESG outcomes. The committee structures and mandates reflect best practice requirements from both the South African and U.K. corporate governance. With that, what I'm going to do now is to hand over to Carina Venter to take us through the next element. Carina. Thank you, July. I'm Carina Venter, Executive Head of Safety, Health, and Environment in Thungela. I've been in mining, in fact, coal mining for 21 years, predominantly in safety. Having started my career at Sasol Mining, I later joined Anglo American Coal South Africa and have worked across the business in various positions. I will be talking to you about safety, health, as well as the environment that we operate in. I am committed to zero harm. We are committed to the principle of zero harm to our workers. In order for us to achieve zero harm, we are focused on the elimination of fatalities as well as the Be Well program. The elimination of fatalities is a combination of three pillars. These three pillars were arrived at after an intensive five-day safety stoppage, during which we interviewed all of our employees and all of our business partners. We analyzed the feedback and developed a robust program to ensure safe production. The first pillar is back to basics. We define this pillar as the six essentials for safe production. It addresses aspects such as rigorous planning, safe work area design, systematic change management, effective supervision, correct tools and equipment, and a trained and competent workforce. The second pillar is around work management, to ensure that all the work we do is not only planned, but resourced and executed to the plan. The third pillar addresses our culture, transforming our safety behavior, aligning the behavior with the back to basics fundamentals, as well as our work management pillar. We can only achieve these results with healthy people, and that is why our Be Well program is critical. This program manages initiatives across our business, such as human immunodeficiency, better known as HIV, body mass index, blood pressure, glucose levels, as well as smoking cessation. I will now touch on Thungela's objectives, which are having zero loss of life incidents, decreasing the total recordable case frequency rate, focused leadership interactions. More familiar to the mining industry is the term visible felt leadership, or VFL. As part of our back to basics pillar, we changed this program to be a focused leadership interaction, where attention is specially given to the six essentials, which I've mentioned earlier. A robust risk management system, which includes a four-layered approach, knowing our risk status and managing our critical controls. In addition, doing inspections and verifying compliance through a system we call assurance execution. Effectively planning, executing, and monitoring our work, which includes high-risk activities. Our key health objectives are to increase knowledge around our HIV status, to provide treatment to those affected, focusing our attention on preventing conversions from a HIV-negative status to a HIV-positive status. Decreasing occupational health hazard exposure while ensuring we do medical surveillance. As I've mentioned, managing the Be Well program across our business. We have shown continued and consistent improvements in safety and health, as indicated by the 29% total recordable case frequency rate improvement over the 2018- 2020 period. You can see the graph to the left. In terms of health, we've been able to know the HIV status of 92% of our employees. We treated 93% of affected employees and achieved 100% in health surveillance during 2020, notwithstanding the tough COVID year that we've had. This is on the graph to the right. We will now move to our environmental stewardship, using resources to ensure sustainability. Thungela uses our resources, including water and energy, efficiently. We minimize waste generation and air quality impacts. How do we do that? Through consumption improvement projects, reducing waste to landfill, reuse and recycling of water with a target to reuse 75% of mine-affected water that's abstracted from the pit or underground workings, and reducing the import of portable water to our sites. We understand and we manage our climate risks and opportunities, as well as the impact on air quality, through reducing our Scope 1 and Scope 2 emissions by identifying mitigation adaption plans and disclosing our good practices. We have targeted a 15% reduction in carbon emissions of our 2016 baseline by 2025. I will elaborate more on greenhouse gas emissions in a later slide. We ensure our land stewardship and biodiversity through our commitment to apply mitigation hierarchy to our biodiversity management and closing our mines responsibly. This enables sustainable future land users while managing residual environmental impacts. Regional biodiversity plans, as well as mine closure plans, are in place and reviewed annually. Mine closure plans are updated to include the latest life of mine views and any new regulatory changes and requirements. Closure liabilities are adequately provided for through trust and guarantees. Deon elaborated a lot more on those. We are targeting zero reportable incident, environmental incidents. I will not be doing Thungela justice if I do not take the opportunity to share with you some of our flagship environmental initiatives. The first flagship that I would like to share with you is on our eMalahleni Water Treatment Plant. This plant was established in 2007 at a cost of about ZAR 1.4 billion. The plant augments drinking water supply to the eMalahleni local municipality. It supplies clean, treated water into the water-stressed Olifants River catchment and provides fit-for-purpose water to the operations to reduce freshwater abstraction. Our second flagship initiative is the wetland rehabilitation at Isibonelo. This initiative is a world first in wetland rehabilitation and return degraded wetland systems to their pristine natural condition. The initiative forms part of an integral component of operations ongoing wetland offset project. It enabled the reintroduction of wetland bulb species. Isibonelo has been nursing them for 15 years. The project includes local employment opportunities and skills development. Our third flagship initiative is the Mafube irrigation trials. This project involved government, mining, and academia partnering in a crop irrigation. More than 30 years of research indicates mine water can be safe for use in agriculture. The research project involves Mafube's establishment of two 19-hectare trial sites with saline-tolerant crops to be planted on a rotational basis. The first crop was irrigated with water from the Mafube pit. We are very pleased that it has since been harvested, delivering maize and soya. With that, I would like to touch on reducing our greenhouse gas emissions. We will continue to drive emissions lower. Thungela has achieved 16% reduction in CO2 emissions since 2018, though this includes asset disposals and assets on care and maintenance. We were able to achieve this reduction through various projects, such as solar plants installed at our Highveld Hospital, Greenside, and at the training center. Lightweight truck bodies installed at Isibonelo, contributing to diesel savings. Heat pumps for change houses at Isibonelo, Khwezela, and Goedehoop. Optimizing our ventilation fans at the underground operations, and as Leslie has mentioned earlier, Goedehoop North plant upgrades. Thungela, excluding the care and maintenance and disposed assets, are still on track to achieve the 2025 target, which is a reduction of 15%, as I've mentioned, of the 2016 baseline. The 2020 number is influenced by a lower production number, which was directly related to the COVID pandemic. A number of projects are in place and being considered in order to meet the carbon reduction targets, such as cycle variability management and payload optimization, offset of diesel usage with lower carbon alternatives such as gas, and processing plant direct operating hours. With that, I conclude the safety, health, and environment presentation, and I will hand over to Mpumi on community partnerships. Thank you very much. Thank you, Carina, and good afternoon, everyone. My name is Mpumi Sithole. I am responsible for the corporate affairs function within Thungela. I have been with Anglo American since 2011 and spent most of those years in the platinum business. I moved to coal in February 2019. July has already introduced Thungela's robust ESG framework, and I have the pleasure to take you through some detail of the work that we do in host communities, which underpins our license to operate. Thungela is deeply committed to the upliftment of the communities where we operate, and through our community partnerships, we continue working towards building an inclusive environment where communities and stakeholders collaborate with us to create and deliver on the shared value. Our stakeholder engagement strategy is guided by our purpose, which is responsibly creating value together for a shared future, and that is supported by our values, ensuring that we conduct proactive, transparent, and inclusive engagements. We proactively engage our stakeholders while upholding human rights in line with the United Nations Sustainable Development Goals, national and local development goals, as guided by our social policy and other international standards on implementation, disclosure, and reporting. Our initiatives actively address community needs in various areas, ensuring socioeconomic development through a systematic and integrated implementation and delivery of initiatives within the regulatory framework. This active participation in social development has seen many youth educated, many healthcare facilities built and supported to provide primary healthcare services, inclusive procurement in host communities, and employment of local labor. Now I'm going to take you through our partnering with our stakeholders for the shared value that I've mentioned before. Thungela has created an empowerment structure that is inclusive to ensuring meaningful contribution to the lives of both our employees and host communities through an Employee Partnership Plan and the Community Partnership Plan. Our employees and host communities will hold a direct equity stake of 5% each, with a minimum dividend of ZAR 4,000 per annum per employee and dividend direct contribution of ZAR 6 million per annum for communities from 2011. As Thungela, we believe in the implementation of these plans, as they will create a long-lasting legacy and make a meaningful impact to our partners, our employees, and host communities. The partnership plans have not been implemented for compliance purposes, but we are doing it because it is the right thing to do. I will take you through to the next slide, which is slide number 87. At our Mafube joint venture, we have partnered with the Department of Health and constructed a clinic to service the local community, ensuring ready access to primary healthcare, maternal care, and specialist services such as dentistry. This clinic has now brought services to close proximity, as opposed to previous situations, where the community members would travel over 50 km to obtain basic medical care. Our healthcare initiatives, which include infrastructure development, the provision of supplies and equipment such as obstetrician ambulances, have benefited well over 60,000 community members across the Emalahleni and Steve Tshwete local municipalities. Carina has already spoken about Emalahleni Water Reclamation Plant, which supplies clean water. And we supply clean water to more than 90,000 citizens of Emalahleni. We also run a scholarship program, which is only awarded to learners born and bred in communities where we operate. This is very close to my heart, and you'll get to find out why. We have a very strict selection process to ensure that only deserving students who come from severely financially constrained environments receive these scholarships. The students are not compelled to study in fields related to mining. Over the years, we've seen students excelling in a broad range of academic disciplines, including medicine, marketing, and actuarial sciences. Over 100 of these students have benefited from the scholarship program since 2014 to the tune of ZAR 40 million. I'd like to share a slide, right at the bottom of slide 87. Dineo Mogashoa there with her penguin friends. Dineo grew up in a township called Mhluzi in Middelburg. She was raised by a dad who worked as a cook and a mother who sold lunches at schools in the community. She is one of the bursars to graduate from our Community Scholarship Program and has had the opportunity to be among a team of scientists to be stationed on the remote volcanic Sub-Antarctic Marion Island as an assistant researcher with the South African National Antarctic Programme. This opportunity of a lifetime for this young researcher would not have been possible were it not for the Community Scholarship Program. Over and above the scholarship program, Thungela supports just over 23,000 learners through a holistic approach to improving education and learner outcomes through the Education Program. We will continue to impact the lives of youth through our education where we operate. I would now like to draw you to slide 88. Our employees, as well as our communities, are at the center of the business. During this pandemic, we embarked on a coordinated approach towards collaborating and assisting host communities and authorities in the fight against COVID-19 where we operate. Our comprehensive approach was premised on prevention, response, and recovery, and it tried to address all potential issues host communities have been facing. Through a WeCare program, we provided much needed communication and awareness, educating our employees and communities on new behaviors required during the pandemic, and ensuring the constant flow of validated information about COVID-19. We provided food packs to vulnerable families that were carefully identified who are child-headed families headed by the elderly, families with disabled members where we operate, and we also provided water and sanitation to three municipalities. As we preached the message of washing hands, we needed to make sure that there was water available for communities to do this. At our Highveld Hospital, we made the necessary changes to effectively manage the pandemic by establishing a COVID-19 testing laboratory, which was fully equipped with a PCR machine and installed 50 new bed units. In addition to this, eight clinics received personal protective equipment, medical supplies, clinical support, and training of healthcare professionals. Over and above this, we made sure that there was human resources available in the form of clinical associates who could support the clinics with their screening and testing endeavors. During the national lockdown, 50 of our students who are coming from our scholarship program, which I've already spoken to, received laptops to enable remote learning. The students that form part of our education program received online access. We made that possible to ensure that they could interact with tutors. They received study guides, calculators, which they also could use during the holiday support program, which we conducted and hosted for the students to help them catch up with the amount of time that they've lost. I am pleased to confirm that these efforts have yielded great results for the students. The Class of 2020 delivered satisfactory results despite the devastating disruption with schools in the education program, obtaining an 87% pass rate, exceeding the national pass rate of 76.2%. We have continued to be intentional about increasing our spend in host communities. Over the last three years, we have almost doubled our procurement spend in local host businesses. Direct host community spend has increased by 67% since 2018. Working together with original equipment manufacturers and suppliers, we disaggregated some of the services to make it possible for local suppliers to provide goods and services into smaller parcels to our operations. Our strategic focus is to build a more inclusive and diversified supply chain, ensuring that historically disadvantaged South Africans, women, and youth-owned businesses from our host communities play a measurable and meaningful role. Thank you for your time, and I would like to hand over to Lesego Mataboge, who will take us through the human resources section. Thank you very much, Mpumi, and good afternoon, ladies and gentlemen. My name is Lesego Mataboge. I am the Executive Head of Human Resources for Thungela. I have been with Anglo American for the last 24 years in the HR field. We have a stable and experienced workforce across our operations. The total number of employees across our mines and head office functions is 7,500, of which 64%, or 4,800, are permanent, and 36%, or 2,700, are contractors with an average age of 41 years, which demonstrates the maturity and experience of our workforce. We also have sound employee relations practices that help us maintain strong relationships with organized labor. This is particularly helpful given that most of our workforce is unionized with the terms and conditions of their employment governed by collective bargaining agreements. To put this in perspective, ladies and gents, 86% of our employees are governed by collective agreements, and the National Union of Mineworkers is the majority union. We are focused on creating a culture that values inclusion and diversity. This is also supported by our new values that are carefully chosen to help us embed the new culture. We have made significant progress over the years with representation of historically disadvantaged persons sitting at 59% and 33% at senior and executive management levels, respectively. Our target is to significantly increase female representation in senior management to 33% by 2023. Finally, we are developing talent through intentional interventions such as leadership development programs, career development panels, and mentoring and coaching sessions to ensure that they are not only technically ready, but their leadership skills are also refined to cope with the transition to the next level. In addition to that, we also have a market-aligned approach to remuneration to enable us to attract and retain key talent. Let me now hand over back to July. Thank you very much, Lesego, and thank you very much, all my ex-co colleagues. What I'd like to do now is just to try and tie everything together that you have heard this morning. I guess the best way to do that would be to remind you of our investment proposition, and part of that you will find in the PLS. Let me just make a few remarks first about what you heard this morning. I started off by talking about we've got a purpose, we've got values, we've got an ambition. An ambition being to generate cash flows through the cycle. I said, we do have the plans, we've defined the priorities and the supporting values that ensure that we can do that. We spent quite a bit of time talking about the market dynamics, and that's quite important because ultimately it's about making sure that you are working in an industry where there's demand for your products, and that industry is sufficiently attractive to allow you to participate in the profit pool. We moved to talking about our assets. What we sought to do was not only to give you a broad understanding of the resource and reserve base that we've got and the optionality thereof, but actually spend a bit more time talking to the unique portraiture of each and every single one of those assets. What was quite interesting in that discussion is, I hope you heard that, is the notion that each of our assets are led by very credible, very experienced, competent leaders. In fact, the way it came across from Johan reminds me one of our mottos that our business is about people. We wanted to unpack in a bit more detail and give you some guidance around the financials that you'd have seen in detail in the PLS. We moved on to the key priority of ESG and really just sharing with you how we're thinking about our ESG and our responsibility to society. In that, we've put together a board that is capable to guide us into that future. My colleagues spoke about two subjects that sometimes we don't talk about enough, which is the impact in our communities, among our employees. Carina, talking about our safety and health, really just saying to all of you that for us, when we talk about zero harm, we're thinking about the lives of people. That, in fact, no one needs to die in our operations just trying to earn a living for their loved ones. I guess the only message I'll leave you when you listen to Mpumi, apart from the fact that what we're doing is the right thing with the community partnership forums. I hope you hear the story of Dineo. Remember that name, not because of Dineo herself, but about many other young people and children in our societies that are like her. That companies like ours together are the only source of hope. What we do is more than just mining. I hope when she spoke to you about the difference we did during the pandemic, and in fact, the fact that many people who live around our mines are among the poor of the poorest, and relied on us to provide not only basic services such as water, medical care, but we even had to supply food. Let me bring all of this together and recap with our investment proposal. Our singular mission really just simply being to generate cash flows through the cycle, making sure that our assets, each and every one of those assets, is performing to its maximum potential. We want to remain the leading South African thermal coal exporter. We have the assets. We have got the infrastructure. It's efficient, it's mature. We are located contiguous to the Transnet railway network. Our mines are equipped with very efficient rapid loading terminals, which allows us to be able to have unfettered access to the markets. We spoke in a fair amount of detail about how competitive our assets are, and that we've got the plans to continue to improve them. We do have a low-cost position on the global seaborne thermal market. I hope you didn't hear that as us just saying, "Oh, no, we compare very favorably against South African peers." In fact, we compare very favorably globally. Our plans are designed to ensure that we protect that position. There were several questions about the life extensions. I need to be clear. We do have the optionality, both within the existing mines, we do have greenfield optionality. These decisions are medium-term decisions. We said to you, we don't need to make any rash decisions over the next two to three years. It gives us time to study these. It gives us time, as Deon was at pains to explain, that we look at these with a Thungela lens. Actually, we've got to look at these with our own eyes, being a single commodity, single country business, and make sure that these are the most competitive from a capital point of view, and that they deserve to be allocated capital. We do have the options to extend the life of our mines. I hope you also heard us talk about we've designed the right operating model, we've got the right culture, we've got the right management processes to be able to deliver on all these ambitious goals. When we talk about wanting to keep our costs flat in real terms over the next three years, this is not merely hopeful proclamations almost made out of blissful ignorance. These are backed by very rigorous plans, very clear understanding of our operations. Lastly, we do have the people. We've been together as a management team through some of the toughest times. We've been through some of the most difficult negative cycles of this industry. Together, we've continued to deliver superior operating performance and good cost performance. We've got the right culture. We've got the teams on the mines. We are ready to deliver on that aspiration to absolutely deliver attractive cash flows going forward. That's our singular mission. Let me pause there and hand back to Ryan, whom I suspect has got quite a few questions. Thank you very much, July. We will now move into our second Q&A session. As July said, there are quite a number of questions online. Again, a reminder that if you want to ask a question directly via the conference call facility, please dial star one to indicate to the operator that you have a question. Operator, please could I ask you to open the line for our first question? Of course, sir. First question is from Alain Gabriel of Morgan Stanley. Please go ahead. Yes. Hi, thank you for the detailed presentation. My question is on the innovation, which has been part of the Anglo American DNA for the last five or six years. What are your thoughts about running a similar program like, the P101, for example? Are there any opportunities for automation or efficiency gains that have not been fully exploited yet and that are not reflected in your cost guidance? If so, can you give some concrete examples? Thanks. Perfect. Thank you very much, Alain. I'm going to ask our Head of Technical, Leslie Martin, to respond on that. Yeah. Thanks, Alain. I think we've really set a good basis with where we started as Anglo Coal, and we will continue to, I think, similar to what you've mentioned, what Anglo is following, the P101, we were part and parcel of that innovation. We will continue to drive innovation. I think that's key to our business model. We will make sure that it is fit for purpose for Thungela. Maybe to mention something that was not in the presentation, we're using drones to do survey mapping. We use drones to do survey, where we take people out of harm's way. Quite a few of these things will continue to be very key to Thungela's success. I think our teams at the sites are well-equipped to deal with the innovation and the implementation thereof. If I can just make a quick addition to comment. Yes, we intend to continue to innovate, absolutely, because our competitive position is dependent on us being able to drive productivity and take costs out. You can't achieve what we want to achieve without doing both. We also have to be very thoughtful about what we choose to do. Given our size, there are things we simply won't be able to invest and amortize over the long term, like 20, 30 years, which Anglo can afford to do. They've got the base and life of assets which are 20, 30 years, which will allow them to amortize over time like that. You're going to start seeing a slightly different shift. We're going to be chasing innovation that gives us quicker results. It's important for us because what I can't afford is for my technical teams to spend time on things that will only pay back in 30 years. In fact, I don't think Deon will fund it, would be the one. The second one is making sure that it's fit for the type of assets that we run. That's part of the advantage of being a single commodity business. You can be a quick follower by customizing what you have learned, even within an Anglo context, into only your circumstances. Yes, we'll be much sharper, much more focused on what is most relevant and fit for purpose to our business. Perfect. Thank you very much. Thank you very much, July. Operator, if we can take our next call. Next question is from Brian Morgan of RMB Morgan Stanley. Please go ahead. Hi, guys. Thanks very much. Two questions on environmental rehab, if I may. First one is, gathering from the CPRs that Khwezela has the largest unfunded environmental liability. If you're able to add on 10 years of life there, would you be able to reduce the 5.5% Green Fund contribution as a result? The second question is, I assume that most of the trust fund cash is in DMRE Trust Fund. Can you confirm that? Under what circumstances are you able to access that cash as those three big operations come to the end of their life in the next five years or so? Perfect. Thank you very much for that question, Brian. I'm going to ask Deon to respond on those. Hi, Brian. Thanks for that. On your first question, that's correct. Of that ZAR 6.45 billion, around ZAR 3 billion from memory, relates to that Khwezela or the broader complex in that area. You're absolutely right. In terms of the life fix projects, clearly there's an element of the ZAR 3 billion that we might be able to address if we do extend the life of that operation. Clearly that's an NPV outcome rather than necessarily less physical tons to be moved. That's on the first bit. To the extent that that NPV number reduces, mathematically you are correct, then the absolute amount under the 5.5% arrangement that we would allocate into the Green Fund would also reduce. That is a correct deduction. The ZAR 2.9 billion that we've showed on an earlier slide is indeed, as you term it, a DMRE Trust Fund. The incremental contributions, so the Green Fund 5.5%, which is ZAR 188 million in the first year, is not within that DMRE Fund. That would be not linked to those same terms and conditions of the DMRE Fund. Clearly, given our history and relationship with the DMRE, to the extent that we pursue any closure activities in and around our existing mines, we will also pursue extracting the equivalent amount in relation to that ZAR 2.9 billion in trust. Does that answer your question, Brian? It does. Thank you. Thank you very much, Deon. If we can go to the next call on the line. Next question is from Tim Clark of SBG Securities. Thanks very much. I've got a couple of questions. The first one on timing. This Anglo sale arrangement. I was writing and I might have missed what you said. In terms of working capital, when you get the cash, you deliver free on board. My impression, and I could be wrong, but my impression is that you're going to receive a sort of average price with lesser discounts as checked and agreed, but there is then still an opportunity for Anglo to extract further value somehow through sort of marketing means. I wonder if you could confirm that, and you haven't given us the margin, but it would really help us to have some idea of where that is. Sorry, my second question is a little bit of an odd one. Just as we model Thungela and we look at the company going forward, I wonder if you could give us some idea of what kind of segmental information you're going to give us, at what level? Are you going to go down to ROM tons and yield? Are you going to report mine by mine? It's always, with new listings, a problem when we over-model and then start trying to beg information from you that the companies don't necessarily want to give post the IPO. I wonder if you could give us some high level of that. My last question is just, I wonder if there are any sort of residual assets in the portfolio that you think you could sell to reduce this environmental liability. My sense is that from a market's point of view, from an investment criteria, or from an investment case point of view, that the rehab liability is quite a significant concern to the market, especially if prices are going to be a little bit lower at points in time, and it's going to add a lot of leverage to the company. Is there anything you can do to accelerate the funding and reduce that liability? Thank you. Perfect. Thank you very much for those questions, Tim. Deon, if I could ask you to respond to Tim. Thanks, Tim. I'll tackle them in the same order as what you've asked, and I'll circle back to Bernard on your marketing question if he thinks I've missed out on anything. The term of that marketing arrangement is for three years, commencing June 2021, with a further six-month roll-off period at the end of the three-year period. It's essentially on export coal sales. The terms also include, and we've included an appendix slide for ease of reference, Tim, but some of this is also clearly in the PLS, that Anglo's preserved the option to accelerate the termination of that offtake agreement. The three years plus six is therefore the upper end of that. At their discretion, should they do ESG or other pressures, they might ask us to take over the marketing function earlier. That's why Bernard and team have started building their prowess and getting ready to take any marketing activities over at an appropriate time. Whilst we haven't disclosed the percentage of the so-called marketing fee, at spot today, it's around a dollar a ton. So you can calculate broadly what that is, which we believe is absolutely arm's length and market-related terms. The actual realized price per ton that we get is not based off an Anglo American assessment, but rather the benchmark price. So that's an observable price that we will monitor, clearly. It's also based, Tim, off where there are discounts off a combination of broker notes, so independently verified. In order to ensure that we and Bernard can keep a tab on exactly that price realization to ensure that that truly reflects what the market has on offer. Clearly, there is some value for Anglo American in trading off the back of our equity coal by adding third-party coals and the like, but that's outside of our asset perimeter, so to speak. In terms of reporting, we have in our H1 disclosed to you intent to continue to show underground and opencast as two segments. You would've seen in the presentation earlier, July stratify clearly our mines into those two categories. We intend to continue to report in the financial accounting outputs on that basis. You have to also, however, recognize that a number of our products are sold on a portfolio basis. Therefore, for us, we focus not only at each mine level and optimizing that mine, we also focus at a portfolio level. Whilst naturally it is an underground and opencast segment, is a reportable view of our business, clearly a mine-by-mine view, but more importantly a portfolio view is where we optimize value. In terms of your question on asset sales in order to mitigate that environmental liability. In the South African context, we certainly do not want to pursue such a path without absolute careful consideration in that it's the responsible thing to do to mitigate and close assets in the context of a polluter pays. Clearly where there are potential opportunities of a contiguous or a synergy of a different operator to more efficiently either continue mining or consolidate and mitigate some of that closure liability, those will absolutely be explored. I think you are correct, there are definitely opportunities to potentially optimize that in the future. As I said earlier, there are also other opportunities to optimize that and also some risks. The other opportunities to optimize it is on the water. I said that we provide for what the environmental legislation or provisioning requirements are, but also some NEMA. For example, the current applicable legislation does not require us to provide for water treatment. Yet we have, because we are aware that the new regulations from NEMA will include that, and it's highly likely to include that into the future. We haven't provided necessarily for elements in NEMA that we don't believe is going to survive into the final regulations. My point is that through a number of other initiatives in technology, we think that we could manage some of that longer term environmental liabilities so that we don't have to resort primarily to selling any of those necessarily. Thanks, Tim. When will the cash flow from Anglo on sales? It's on the end of the second week of the month. The first revenue check that Thungela would receive from Anglo American would be mid-June 2021 in relation to sales in May 2021. Therefore, every month we would get 80% of our revenue roughly mid-month. Thank you. Thank you very much, Deon, and thank you, Tim, for those questions. If we can take the next question on the call, please. Of course. The next question is from Ian Rossouw of Barclays. Please go ahead. Hi, guys. Thanks. Just on the mining rights you mentioned in one of the slides, and just sort of thinking in context of some of the life of mine extensions. If you look at some of those life extension options, what is the current BEE ownership, sort of excluding some of the historical credits you've received for some of these options? I'm just thinking, my understanding of the sort of legislation is that you would need to I guess, re-empower these assets back to 30% of BEE if you were to renew mining rights. I just wanted to get a sense on that. Thank you very much for that question, Ian. I'm going to ask Deon to respond on that. Thank you, Ian. Clearly the Mining Charter and the DMRE's position on that is an ongoing robust but healthy discussion. At the moment, if you look at Thungela, you had to, for a minute, ignore the historic empowerment that we have completed, our direct equity ownership, and I might remind you, that's not the measure under the charter that we elected to empower our assets. We elected the units of production, which gives us a much higher percentage clearly. Under the direct ownership, at the date of demerger, we would be at around 36%. That includes clearly Inyosi Coal's ownership through the AIC structure of Zibulo, but also it includes what Mpumi spoke about, the 10% which is spread between the community and the employee participation, which is a net new introduction on the demerger of Thungela. We believe that we are fully empowered and we will remain fully empowered, and that those aspirations in the Charter we would've exceeded in any event in order to qualify for the extension of those rights where we require them. Okay, great. That's useful. Thanks. Just a couple of follow-ups. Just on this Eskom coal cliff, I mean, it's obviously something that's been talked about for many years. Maybe if you just give us a sense of when do you think that happens. I mean, to what extent has that fallen? Maybe just in relation to that, have you seen what sort of Eskom spot prices for, I guess, tonnages you sell on a short-term basis and your view of what those prices will do in the future. Do you expect that to reach export parity prices at some stage, or is that a bit optimistic? Maybe just a last question on your climate strategy. I guess there's been some questions previously around Scope 3, and just maybe want to clarify your intentions. Obviously, investors are under increasing pressure to line their portfolio with Paris benchmarks. In turn, they are pressuring companies to align their emission targets with Paris Agreement. For the fossil fuel producers, that obviously includes total emissions, including Scope 3. You're also seeing a similar trend in banking, bank lending, and insurance. You've obviously given us Scope 1 and 2 emission reduction targets, but on my account, that's only 2% of your total emissions. Just wanted to get a sense of, do you plan in the future to give us total emission targets to align your strategy with Paris benchmarks? If not, do you think that's not perhaps the right strategy given the pressure investors might be under to sell your shares? Perfect. Thank you very much for those two further questions, Ian. I'm going to ask Bernard to respond on the question around the Eskom coal cliff, and then with regard to Scope 3 and emissions, I'll ask July and Carina to respond. Bernard, if we can start with the first question for Ian. All right. Thanks for that question, Ian. In terms of the Eskom coal cliff, which is a subject that's been spoken for a number of years now. Recall almost my first coal conference down in Cape Town, there was already talk about that, and that was a number of years ago. If one considers that Eskom has a number of long-term contracts tied to collieries, which are coming up or terminating pretty soon, Eskom will be forced to go back to the market to buy coal. Whether that's on a shorter term basis or a longer term will still be decided. Definitely that coal cliff is coming. I think one needs to also be aware that generally during the winter months, Eskom is looking to buy in larger volumes of coal. We could in fact, given we are moving into the winter period in South Africa right now, we could see some shorter term buying from Eskom. In terms of pricing, interesting question, Ian. We believe Eskom will be forced to pay higher prices for the coal, given mining costs inflation. What may or may not add to that price as well is where they buy the coal from. What I'm saying is, if it's a tight colliery across the belt, you avoid logistical costs. We do know that there are a fair number of contracts where coal has been transported over fairly large distances. Will the coal be at export parity? That's difficult to answer. As I said, I do believe that Eskom will be forced to pay higher prices versus what they've had in the past. I trust that answers your question, Ian. Maybe just, do you have a sense of how much the supply and demand gap would be, let's say, by 2030, in terms of when exactly does this gap start to emerge in terms of Eskom demand versus contracted and sort of shortened supply, or at least from a mine reserve life perspective? Yeah, Ian. In terms of when that gap starts appearing, if I look at where, and obviously not providing too much detail, right now, Eskom is sitting on relatively good stock levels. They're not absolutely forced to go into the market right now. My overall sense is that we're definitely gonna see that gap starting to emerge in the next two to three years. They will be forced, given certain contracts, to start buying in and contracting on a longer term basis. Okay, that's clear. Thank you. Thanks, Ian, I'll take the first part of the Scope 3 emissions. I think as per the other companies in our position, we're keeping a close eye on Scope 3 emissions. Our focus has predominantly been on Scope 1 and 2 emissions and projects that we've put in place to manage and mitigate those emissions. We will collaborate as far as we possibly can with other businesses in the same position as us to mitigate those Scope 3 emissions. July? I guess we are in that unique position given the nature of our demerger that we are in a transition. We've got a three-year marketing agreement with a single customer, who themselves then onsell to hopefully direct consumers of coal. It will be quite tricky at this point in time to start thinking about how do we mitigate our Scope 3 emissions, given that construct. We probably have got the next 18-24 months to wrap our minds around this subject. I guess I prefer to step back, because quite often we reduce the ESG conversation to only carbon emissions. We have been very intentional and thoughtful about crafting an ESG strategy, because I think at least that's our firm belief, that you've got to get all these three elements in an integrative way if you want to be a sustainable and successful business going forward. It's not just about emissions. We've got to think about the social aspect. We've also got to think about the governance aspect. The way I'm thinking about it at the moment is set up our business over the next two to three years to be successful. Yes, we'll think through what we need to do from a Scope 3 point of view. As you probably know, there's even debate about what is the most accurate way of measuring those, and who is accountable for doing what, in the value chain. We have got time to wrap our minds around that, but we're going to do that from an ESG integrative thinking point of view. Thank you very much, July. Maybe just, sorry, just one last, if I may. Just on the acid mine drainage. I understand there's some membrane distillation technology some of the coal mines in the U.S. are looking at actually extracting some of these heavy metals into quite attractive sort of rare earth metals, for example. Have you looked at that at all? Thank you for that additional question, Ian. I'm going to ask Leslie to respond on that. Yeah. Thanks, Ian. I think we've been using reverse osmosis at our water treatment plant probably for the last 10 years to deal with the majority of water in the SACE complex quite successfully. I think the next step for us is to look at the by-products of the reverse osmosis plants, which we're in advanced stages of looking at. Probably the next step, because you can imagine that reverse osmosis, and we're in this carbon debate, is very energy intensive. The next steps need to be to look at biological, what we refer to as passive treatment technologies, where we can use novel technologies to actually deal with the water. I think we're well set up to look at that in the next five years. Thank you very much. Just a quick comment on rare earths vis-a-vis the acid mine drainage and whether we're finding metals in those. There's been a number of project studies. In fact, I had the technical team look at it sometime back. There's been a number of studies in South Africa which suggest that yes, there is some rare earths that leach, but hardly in economic recoverable levels. At this point in time in the Highveld Coal Basin or Witbank Coal Basin, it's probably currently an area of academic study rather than something that has moved to economic exploitation yet. Perfect. Thank you very much, July. Thanks, July. Thanks, bye. Thank you very much, Ian. I'm going to ask if us to take another two questions from the call before we go to the questions that have come through the webinar. I suspect some people might be nervous that I haven't received their questions, but I have. Operator, if we can take another question from the call. Thank you. The next question is from Sylvain Brunet of Exane BNP Paribas. Please go ahead. Oh, hi again. That's more of a reporting and maybe disclosure question. Do you intend in the future to disclose the profitability on your Eskom contract so we can get a better sense of the performance of export versus domestic on an EBITDA return or, EBITDA basically disclosure in the future, please? Thanks. Perfect. Thank you, Sylvain. I'm going to ask Deon if you could respond to that. The domestic arrangements, and just for clarity, we do not hold any direct contracts with Eskom. The domestic arrangements are of a confidential nature that we are not able to necessarily unpack the profitability of each of those arrangements or contracts in isolation. Unfortunately, we will not be able to split that out in the manner that you're scratching at. Thanks, Ryan. Perfect. Thank you, Deon. If we can take one last question from the call, and then we'll move to questions on the webinar. Thank you. The next question is from Jason Fairclough of Bank of America. Please go ahead. Hi, guys. Thanks again. Look, a couple quick ones. Just first on the listing. You're gonna be main board listed here in London and then also down in Johannesburg. Have you spoken to the exchanges about the potential for index inclusion? I guess along with that are, particularly for the London end, are you anticipating behaving like a London listed company? Doing results presentations, et cetera. That's the first question. Second question, just in terms of the capital return policy. You're saying greater than 30% of the operating free cash flow. How do you think about it if you've got surplus free cash flow? Is it just more dividends or do you bring forward retirement of some of the environmental liabilities? How would you prioritize that? Thank you very much for those questions, Jason. Deon, if I could ask you to respond to those two from Jason, please. Yeah. Thanks, Jason. Your assessment of the listing venues are correct. We will hold a primary listing on the JSE and a standard but main board listing in the LSE. Indexation is clearly on our radar but hinges on a number of elements around the shape and size of market cap and the like. Given our categorization, certainly primarily on the JSE, there will be some level of indexation. In terms of capital returns to shareholders, we've said that we want to commit to, or we have committed to a 30% payout of operating free cash flows. The cash flows that are surplus to that clearly provides us a level of balance sheet flexibility in the near term. In the same breath, Jason, we also said that on balance, we would like to grow that 30%. Clearly, that might not be day two post-demerger, but soon after Thungela is settled, we would like to review that. One also needs to consider that the LifeEx options opportunities are around 2023, which therefore means that we would want to reflect on the capital required to potentially develop that and trade off, as we've said earlier today, between further returns, so additional returns to shareholders, and potentially developing those projects. At a minimum, as I said, the 30% is there, and clearly, we focused on growing that if at all possible in the short to medium term. Perfect. Thank you very much, Deon. At this stage, I'd like to read out a couple of questions that have come through the webinar. Our first question, and July, this is going to be for you, is from Bruce Zungu at Cornerstone Capital Partners. In addition to a number of key action plans in place to drive growth and sustainability of Thungela, it seems that demand and supply, together with life of mine extension will be key determinant to the success of the business. Are there any issues that management foresee that will impact the company's ability to further extract value in the assets and increase the life of mines? I guess, the way to think about a business like ours is quite simple. There are things that we can control, and there are things we can't control. Supply and demand for us is an uncontrollable. No, demand is uncontrollable. We need to understand it to inform the decisions we take internally. Ultimately, it comes down to the things that we can control, which is our strategy to improve our productivity, to improve our cost position, to improve our capital intensity, making sure that we've got the right people in the right place driving our business forward. Beyond that, there is not much uncertainty. Yeah, there are regulatory issues and all those kinds of things, those are all things we believe we can manage. Ultimately, we want to focus on the things that we can control to become a far more competitive business. Because it is in that context that we're able to go and perform through the cycle. Thank you very much, July. The next question is from Thabang Thlaku from SBG Securities. It's a two-part question. Bernard, the first part's going to be for you. Leslie, the second for you. I'm going to read both of them together. The first part, what is Thungela's strategy to remain competitive in the Pacific Basin? The second part of Thabang's question, does Thungela Coal also have trace elements which are unattractive to the Chinese market? If so, is there a solution to reduce these trace elements to take advantage of the current geopolitical tension between China and Australia? Bernard, I'm going to ask you to start. Yeah, thanks. Thanks for that question. I think the first point I'd make is that, as I indicated in the presentation that we gave, certain of Thungela's coals actually have been qualified for import into China. I'll ask Leslie maybe when I'm finished to answer the question on whether you can remove trace elements out of coal. I'm not a technical expert, but I'll leave that to Leslie. Again, I'd just like to reemphasize that that ability to now again export into China is a big advantage for Thungela. It's an advantage that we're working closely with our Anglo, well, soon to be ex-colleagues in Anglo Marketing. That is a big marketing advantage. I think just to reflect on the trace elements, I think this has really come to the forefront in the last sort of while with the tensions between the Australian coal and China. I think we've started making this analysis of trace elements part of our exploration and quality control drilling regime. We're really at the start of this, and we're setting up our labs to actually give us a view, and then establish, do we sort of foresee any risk and the markets that we want to play with. I think to Bernard's point, we have put some coal into the Chinese market without any concerns. To the question, is there any sort of current or viable method to get rid of trace elements in a coal? Unfortunately not. I think that's inherent, and it's where we would find these resources. That's, I think, where we're at. Early stages, but it is I think an opportunity in the future to have a good understanding of trace elements in our coal fields. Perfect. Thank you very much, Bernard. Thank you, Leslie. The next question is from Liam Fitzpatrick from Deutsche Bank. Question on the dividend and leverage levels. Should we expect a dividend to be announced with the first set of results in July, August, or are you targeting a larger cash buffer? Once the targeted cash buffer is reached, should your base dividend not be much higher than greater than 30%? Deon, I am going to ask you to respond to Liam on that one, please. Thanks, Ryan, Liam. What we've said is that the economics up until the 31st of May 2021 is clearly extinguished, therefore, for Anglo American's account. Two, we have also said that the dividend policy would be committing to that 30% payout ratio. Therefore, in Thungela's economic existence, practically starts from the 1st of June 2021, and accordingly, our first interims, whilst it would reflect a full six month of activity, would only really reflect economics of the June month. If I can add to that, the 30% is also based on an earn it first principle. Therefore, we committed to the 30%, but we would want to earn that first before we fund a dividend. We would, as a result of what I've just said, need to carefully reflect on the interims and the June results, so that one-month result, and we would also clearly reflect on the current pricing and the trading activity throughout the rest of this year. Your question around whether there is a cash target or buffer, there is no such target or buffer set. There's certainly no leverage target or buffer currently either, given that we are not envisaging external debt and that we'll be cash positive. You are correct that the board would carefully look at potentially a higher percentage than 30% if all conditions remain positive and the outlook remains positive, and that could be expected as an outcome. We certainly haven't committed to that, mainly as a result of where we are in our thinking processes. Thanks, Liam. Perfect. Thank you, Deon. Thank you, Liam. The next question is from Tintswalo Manganyi at Sanlam Investments. You have repeatedly referred to re-looking at capital allocation options and other important future decisions through a Thungela lens versus the Anglo lens in the past. Please unpack what you envisage to be the key future differences between this Thungela lens versus an Anglo diversified miner lens, where SA coal typically only made a minor or marginal contribution to the overall Anglo group returns. Deon, I am going to ask for you to start on that, then July, maybe if you want to add anything on there. Thanks, Ryan. In addition to July, Leslie might also want to add perspectives. What we mean by a Thungela lens is that you have to recognize that we would look at opportunities that might be smaller in absolute size compared to what Anglo might have considered, in its context of a capital allocation strategy. They're definitely different opportunities that we would also add into our fuller mix of options. The second important one is that of a technical standard. Clearly, Anglo American continues to own and operate a number of assets with different features. One feature, for example, is the life of, where some of its assets have a 50-100-year life. As a result, some of the decisions one would make in the technical standards that you implement at an asset that has a 50-year life is different from a capital project with a 10-year life. We have not yet reviewed all of those standards, and that would be part of looking at these from a Thungela lens. From experience, we are convinced and confident that there are opportunities to optimize that quantum of spend into the future and get the same coal output and therefore a potentially superior economic output from those investments. Let me have ask July and Les to add to that. I think, Deon, you're broadly right. That's the issue. The issue is if you have got a different view about, and ownership of type of assets that you've got, the decisions you would make are very different. That's one. You also got to accept that Anglo American is a global, diversified, and therefore certain standards are required for a global diversified that actually when you're a single commodity, single country, there is some simplicity. Not because there's anything inherently wrong with what Anglo does, but they have to manage that complexity, would be the one observation. The second observation is this point that Deon is making about if you've got shorter life of assets, in certain instances, even the type of equipment you invest in those assets could very well be different. It would be quite okay, for instance, to buy the latest and greatest, which is automated, knowing that I can afford to have 10-year payback and it still makes sense in a 30-year life asset. If I've got a 10-year life of asset, then I'm thinking very differently. Could very well be acceptable to relocate some of my used equipment, which saves significantly on capital going forward. When we talk about looking at things from a Thungela lens, what we're saying is we intend to look at things very differently to the way we've done it to optimize our cost, to optimize our capital intensity of the projects going forward. Thank you very much, July. The next question we have is from Luvuyo Booi from Noah Capital. Question for Deon. Can you please explain the reason for reducing total operating costs by domestic revenue to get to FOB export costs on slide 67? By doing this, it looks like you're reducing operating costs by profit margin included in domestic revenue and other. It seems costs are understated by the profit element included in the domestic revenue line. Can you please provide clarity on this? Yes, certainly. Thank you very much for that. There are various methodologies to display and disclose cost per ton. What we sought to do in that particular slide, and unpacking it in that manner for our annual benefit, is to try and get as close as possible to an export-only cost per ton. A different methodology could be to take the total operating costs and divide it by a higher denominator, so therefore, including domestic tonnage alongside the export tonnage. That would mathematically give you a cost per ton rather than the ZAR 833 below ZAR 700 a ton. However, what would you compare the ZAR 700 a ton to? Therefore, we sought to exclude domestic revenue. Now, last year, in the domestic portfolio, that profitability margin was not necessarily as high that the benefit you're talking about is material. The methodology we're therefore displaying or showing assumes that domestic production is a by-product, and that we're trying to strip it down to a comparable export cost and export volume in order for us to compare that ZAR 833 as well as the build-up to the ZAR 894 most appropriately to the benchmark price of the export tonnage that is our primary business. Perfect. Thank you very much, Deon. We've got about five minutes left before we have to wrap-up. I'll see how many other questions I can get to, but it might be that we might not get to all of them. The next question is from Tyler Broda, from RBC. Thanks for the presentations. Will the internal marketing team work alongside Anglo Marketing for the three-year transition period? What are the costs and potential risks with this transition? Is there any infrastructure that will need to be brought into Thungela for this? Bernard, if I can ask you to respond to that. Thanks. Thanks for the question, Tyler. I'm going to answer your question on the infrastructure first. There's no infrastructure that needs to be brought in by Thungela. We have access to the rail, as we discussed earlier, through to 2024, and we remain the 23.22% shareholder in RBCT. In terms of working with Anglo Marketing, I absolutely can confirm that. The way I look at it is that there's a phase one and a phase two, as I'm calling it, period. The phase one period we're actually in right now, where we're working extremely closely with them to set up all the necessary arrangements such that we can both execute the contract come June, and also ensure that at the end of June, we can actually invoice them and get the money into the bank account. Otherwise, the gentleman sitting next to me is going to be jumping all over me. Tyler, phase two would be working on developing our marketing strategy once we take over the frontline export marketing, whether that's at the end of a three-year period or earlier, given an ESG termination. We will be working on that. It's one of those requirements that I know sits in my area of responsibility. I have started giving it some thought, having, as I mentioned in my introduction previously, set up a marketing arrangement for a separated company. We're not ready to talk about that yet, but we will do so into the future. Just important to also mention that part of the period that we're going to post June, July, is also setting up within marketing and other parts of our business, our own marketing intelligence. We need to have that for a whole host of reasons. Price forecasting, supply, demand overviews, check on and ensure that we are getting the right price for the coal that we would be selling to Anglo Marketing, as Deon mentioned earlier. Also, it would be part of the preparation for that eventual transition from the single offtake agreement to an arrangement where we're doing the frontline export marketing. Tyler, I hope that answers your question. He's not on the line. We hope so, Bernard. Thank you very much. I am sure that it does. I think we will have time for one last question on the webinar. Apologies, I do see that there are a number of other questions. The next question is from James Corgan at Steyn Capital Management. On the RBCT operating licenses. In the PLS, it is disclosed that after the various renewal extensions, the license on the land, buildings, and infrastructure on the RBCT terminal assets comes to an end on 31 December 2038. Under the current arrangements, what happens on that date to these assets? Do they just transfer back to Transnet? Deon, if I can ask you to take that one. Yeah, happy to answer that. We are unable to necessarily answer questions on behalf of RBCT, albeit we have a 23% holding in RBCT. Safe to say that infrastructure and assets are no different to other similar assets in the country where they serve a very important purpose. In 2018, as you might know, generated through that port, in fact, the largest earner of foreign currency for the country through the coal exports. It is therefore not only important to us, but also important to the government that those assets are most optimally utilized. It's therefore a bit of a moot point, in that the most beneficial use of that infrastructure will no doubt include an element of exporting, utilizing the rail attached to it. And whether that's multipurpose or coal only time will tell. Fortunately, it's 2038 rather than 2023, so we have a bit of time to think about that. Thank you very much, Deon. Thank you, everyone. Unfortunately, I will have to wrap-up the Q&A session here. If we were not able to get to your question today, and I can see that there are some questions we weren't able to get to, please do get in touch with me via email. My email address is ryan.africa@angloamerican.com, and I will get back to you. With that, please allow me to hand back to July to close out the day. Thanks. Thank you very much, Ryan. Thank you very much everyone who joined us, whether through the webinar or through the phones. It's been an absolute pleasure for us to be able to share with you this new pure play that is coming onto the market. Clearly, there might very well be some questions that you've got, continue to engage with us, we look forward to our continued engagement as we deliver value that will meet your expectations going forward. Thank you very much. Have a wonderful day.