Francois van der Westhuizen
Management
We’re still working all of that out but it should leave the cost associated with the fine-grind and that would be sufficient to cover most of it. Niël Pretorius: Are we relieving 2 million month on the table so we didn’t slash away all of the 14 million in total cost, we’re leaving behind 2 million a month for the engineering upgrades. Adrian Hammond – BNP Cadiz: I had three questions for you Niël, firstly it appears to me now that with or without the fine-grind, you’ve uphill battle with rising unit costs on per tonne or on pounds basis. What more do you think you can do on the cost side to keep this business really I think we’re talking about sustainable -- I mean you have gone to all these pillars capital here and obviously the most concerning one is the environmental and as you continue mining your provision will continue to rise. So what’s left on the cost side that you can explore, that’s the first question. Secondly, with regards your intention to buy through minorities, could you just give us an update on that and what’s the implication for meeting your 2014 the BE charter requirements and then lastly as I understand they are pumping AMD now at ERPM through TCTA. What is your commercial agreement with them using your that -- these area -- any upside for you there? Niël Pretorius: I want to start with the last one first maybe it's something that I should have mentioned in my discussion of the environmental capital component and that is also our contribution into treating this increasing environmental threat or risk of asset mine drainage. Our arrangement with the TCTA is that they can lease from us the shaft infrastructure where they submerge their pumps and also the land on which they have built the pumping infrastructure or rather they plant infrastructure. And then they can also introduce at a predetermined rate, at an agreed rate which has already been fixed, they can introduce this slurry into a position lines, our residue deposition line and for that they pay us the actual cost of dealing with that and they continue to bear the environmental risks associated with the substances that they put on our tailings dam. And so far as the usage of our facilities of concern or facilities is concern, we didn’t charge them a market related price for the usage of the shaft or actually gaining access into the infrastructure and also for the rest. We also didn’t charge them a market related cost in linking up into our deposition infrastructure and having access to the deposition facility. But we have created let’s call it a future contingent credit of about R250 million against which we can offset until after we have determined the actual amount, any future directive for contributions towards capital requests and so forth and so forth. So we will have an income stream in respect of the slurry that they have deposited on to our tailings and if there is any suggestion in future of having to make such any kind of contribution, there will be 250 million offset claim that we can bring against that. In addition to that we also have the right to buy up to 30 megs of treated water from them per day at actual cost of treating the waters in other words at net cost as and when we want to. So if the sewage water becomes insufficient then we can top that up with their water. The water is the one that we are least excited about because that contains high quantities of lime so there is going to be a scaling problem, so we want to avoid that water but it's a fall back situation for us and obviously you could do something to maybe diminish the impact of that lime. On the BE side, we have posted the circular this week, I think that’s where we’re with that. We have posted the circular and we are finalizing the section 102 submission to the minister. We need to get a consent, one of the conditions for the transaction is that the minister consents to the transaction in terms of Section 102 of the MPRDA. That consent is what will ensure continued BE compliance. If the consent is not given based on the terms contained in the consent because remember the BE level are discretionary levels determined by the minister in terms of a statutory authority agents. You publish a certain levels but it has the discretion around those levels and on the look through basis in particular if you can show that there is a link between the equity holder and the holding company and what 26% is worth in the subsidiary company and then those are more often than not are accepted as adequate. But the 102 consent is what will ensure continued BE compliance. And then on the cost side I think one of the things that we have done because of -- there is quality accelerated expenditure on the likes of environmental management expenses by way of an example. I think we rushed ahead a little bit and just how much is necessary in order to contain the effects of our current environmental footprint. So in that regard we’re not doing any active spending at this stage. We’re pretty much just holding and maintaining the existing environmental improvements that we have made and there is quite a significant saving in that regard, now that is not something that you will do indefinitely because I mean if you sort try some of the other side slopes of the Crown tailings you will see that instead of lush vegetation there was netting. A netting is a temporary measure, it works very well but it's not a permanent solution. You got to get the vegetation and so at some point or another we will have to recommend where the vegetation of the slides starts slopes in particular. But that won't happen, but there is some cost coming out of the actual equation and then of course I mean the process that I spoke about around the consolidation of the corporate footprint and the operational footprint reconfiguring the lacks of the EBDA facility, the training facility and add all of those things -- how many course -- runs Ergo, said to media the other day, we’re not going to save R10 million on one single thing. We’re going to save a R100,000 100 times that’s how we’re going to get to that number and let’s focus on that, that will take us where we need to be. And I do think and I do believe that there is adequate margin in the operations if we look at our costs in that way, we have got a very interesting a little tool that we have planned where we will take this total cost, supporting cost every last cent that we got to spend. And we look at different variables on gold price and gold production and that seems to indicate that we could keep this thing going the way that we have and have some margin and some flexibility until such time as we reintroduce and that’s why the reintroduction and the test work has not been done with a haste that we were working earlier. We were doing at a more measured pace to make sure that we have got the necessary verification. Adrian Hammond – BNP Cadiz: Just to come quickly based on minorities, I mean how stressed [ph] are you of getting this consent on a two through and this is quite pivotal because in my mind if it does it means that the term once in part, is part holds. What do you think? Niël Pretorius: Not really, look I think if I look at the new codes that have recently have been published, it's look as though the compromised position on the ones in part always in part concept is one in terms of which you’re entitled to claim BE credits for as long as you have held them before there was an exit. Let’s say you were in BE compliant for five years and there is a (indiscernible) then you would be able to claim this credits for five years. I think that’s the mindset, that’s what the new codes, the generic codes seem to suggest. We’re not relying on a once in part always in part what we’re saying is to the minister, we want to do this deal in terms of this deal we have translated 26% of value into a percentage in a holding company and we believe that this is the number of shares that amounts to. Give us a consent to do the deal on that basis and stipulate that compliance with the code and with the charter and the terms of our license the conditions of our license will be assured provided that we always maintain that number of shares, that holding. If she says then there is a deal. If she says no then there is no deal. There is no Plan B if we don’t get the consent and there won't be a roll up. Brendan Ryan – Business Day: Hi Niël. Brendan Ryan, Business Day. Two questions please. The first on the timing of the working you have to do, am I correct in assuming that this case you will have your free float grind and high grade circuit kicking in from the March quarter next year? Niël Pretorius: I saw you were working it out and you obviously did that with reference to the times that I mentioned. Yes, we will start testing in September. We will test for at least three months until we have verified everything and then we will reintroduce so yes it's September this year. Brendan Ryan – Business Day: So you’ve perfectly lost a year? Niël Pretorius: Basically a year. Brendan Ryan – Business Day: And then second question, I mean I crossed my mind back three months ago I remember the last year, you gave a very upbeat presentation the grade was rising, the new plant was working, things were looking great and then six weeks later the roof it was then -- did you have no inkling at that stage of what was coming down the track? Niël Pretorius: I maybe take you back even a month or two before that when I was buying shares and I spent quite a lot of money buying shares at R6.25. That’s a bit high, I was confident that we were on the right track. Brendan the failure that we saw is not a failure of the technology, it was a failure of the integration of the process into the high grade circuit. It's a metallurgical issue that we got to deal with, it is not an engineering or a technology issue and then that we didn’t foresee. We did not foresee the impact that in a commissioning this and the middle of the worst rainstorm in so many years was going to have just on densities. These power interruptions, the bottleneck is a consequence of these thickeners tripping and so forth. That’s a combination of those things and I think we just found ourselves in the worst possible situation during a very intense period of commissioning but the most worked and the flotation circuit worked and we all very much consider, still consider to be the difficult part. The rest is tweaking, it's reconfiguring your metallurgical protocols and configuration.