Robert Van Niekerk: Okay. James, I’m sorry for that. As fate would have it, as soon as I started talking, we had lightening, so I was actually cut off and I had to go onto an alternate system. I don’t know if you got that message. But my message was that, at consensus pricing, the operation shouldn’t really mean more and the operation should wash their face currently, the operations will wash their faces going forward.
Neal Froneman: Thanks, Rob.
James Wellsted: I believe we’ve got two more calls on the line. Two more people asking questions.
Operator: Correct, sir. The next question comes from Cameron Needham of Bank of America.
Cameron Needham: Thanks very much for the presentation. Just two quick questions from me. Firstly on Sandouville. Just on the back of the cut to production guidance and some of the issues that you’ve outlined in your presentation, are you still confident in delivering the anticipated improvement of asset performance longer term? And what are some of these headwinds that change the picture? And then just secondly, is the amount of management time that asset turnaround is demanding, is it kind of proportionate to the amount of capital and potential returns you see from the asset that it could generate? Thanks very much.
Neal Froneman: Perfect. Thanks. Thanks, Cameron. And Mika, you are probably best placed to answer that question. Please go ahead.
Mika Seitovirta: Thank you, Neal. And thanks for the question. As we mentioned earlier, we have a completely new management team now in place and actually, they have started to work at the very end of March this year on different options for Sandouville, and as we call optimization of the plant. And that means that the work will be done later this year and we will also come with a comprehensive plan how and what are we actually doing in order to radically improve the performance of the plant. Today, we are working with options through modeling. We are going through the mass balance sheet, we are doing very professional and careful work, which we are taking seriously. So, today we are not in a position to give you an understanding of the long-term returns. But later on this year, we will tell you how and what we are going to do.
Cameron Needham: Thanks. Thanks, Mika.
Neal Froneman: Thank you. And the last caller?
Operator: Thank you. The next question comes from Leroy Mnguni of HSBC. Please go ahead.
Leroy Mnguni: Hi. Good afternoon, guys. So, I’ve got a few questions. The first one is, if PGM prices do not recover from these levels, how long would it take in your quest to turn around your Stillwater’s operation to reach sort of a free cash flow breakeven level? And then my second question is, I’m just mindful of that slide you presented around this time last year with the restructuring of Stillwater, you gave that sort of balanced outlook for palladium, and I’m just curious as to whether if you could go back in time and face the decision of funding the tri-metallic catalyst, if you would still fund it or how you would maybe change your approach given what it’s done to the palladium market? I think I’ll stop there in the interest of time.
Neal Froneman: Okay. Thanks. Thanks, Leroy. And Charles, if you can just prepare yourself for the — how long it will take, assuming the PGM price recovery to get to a breakeven price. But Leroy, on the tri-metal catalyst, we had a situation where the — the demand across the basket was unsustainable. So, there is absolutely no doubt in my mind that we would have still pushed for the tri-metal catalyst, the — the substitution of palladium with platinum. Obviously, the price differential today is less of an incentive for that to happen, but I also want to say that I don’t believe that has really been the driver of the decreasing palladium price. And Richard, perhaps you want to just come in on that, but really, we really do approach the business on with sustainability and that’s the fundamental in terms of whatever we do.
But Rich, your views on palladium price, I don’t believe it’s driven by the tri-metal substitution, that’s probably had very little impact, before you come in Charles.
Richard Stewart: Yes. Thanks very much Neal, and Leroy. I think to answer your question directly, absolutely, we still would have done it. I think what’s critical in PGMs is that ultimately you’re looking at a basket. So that basket that gets produced in a certain ratio and the better that you can manage that basket balance is better for both producers and ultimate end users. And essentially what that technology does is gives us flexibility to be able to manage that balance. So, I certainly think that helped when needed. I think what we’re going to see is a lot less substitution, because clearly the price differential between platinum and palladium has now come right down. But it does also give us an opportunity moving forward that should we need to reverse, that will go back, that technology now exists.
We’re doing some of the research and market development in other PGM metals as well, where demand for select of the more minor metals, iridium, ruthenium’s, etc., where future demand is looking like it could be very tight and how can we balance that with other PGMs, that’s the beauty of these metals is that they can substitute each other. And I think the more we work on that, the better it is for the overall basket going forward and we always need to look at this as a basket. Ultimately, it will come back to some level of parity. So, I still think that was absolutely key research and I don’t think it’s been a fundamental driver. I think at the moment, the fundamental driver on palladium is more around the destocking in the short term. And I think people are taking a very long-term view on the down — sort of downgrade of ICE vehicles, which, as you’ve heard today, I think we filed as bearish on the ICE vehicles.
In fact, I think we’re a bit more bullish than most. So, I can see that balance working, but yes, it’s a good — it was still a good investment and one I think we’d still make.
Neal Froneman: Thanks, Richard. Charles?
Charles Carter: Yes. Thanks, Neal. And Leroy to your question, earlier I gave a comment on the sort of medium-term plan work underway and the trade-offs that we’re still working through. But I think you should be under no illusions that right now, we’re looking to make cash at depressed prices in real-time. So, it takes a bit of time to shift there given what we’ve planned for the year, but I am encouraged by what I’m seeing July through August and the team is very mindful of a strong second half, so we’re not looking to continue to lose cash if we can help it. And I think Neal gave you a very clear sense that every cost element is under review, so we are not just working on the mining tradeoffs and the development tradeoffs and the capital tradeoffs, we are working on all the levers to be pulled across the Montana set-up to reduce our cost profile and — and to make cash as we have historically done.
So, I’m encouraged by what I’m seeing for the remainder of this year. And given the skills shortage, this is not a scenario where you cut labor in the hourly paid, our hourly paid being miners, mechanics, geologists, etc. This is where you pull very different levers and some of those we are still building, so our whole procurement strategy has big levers that will — that will unlock value longer term. But right now we’re moving from decentralized mine-based procurement to centralized regional procurement. Good work on the go and that goes for the HR strategies, it goes to all the support strategies across the two operations. These have historically been fairly decentralized. That has its merits, but actually what we need in depressed prices is bigger levers that you can pull with confidence over and above simply how you mine and develop and how you spend capital.
So, that’s where the big focus is and it’s good work on the go, and it’s for long-term sustainable performance of these assets, it’s not just knee-jerk quarter-to-quarter depending on prices. So, short answer to your question is, we look to make money through the remainder of this year. Obviously, if there’s further price downside, we have to then have a different mindset to the one we currently have, which is hard to favor and protect development and reduce mining costs and reduce overhead costs. Nothing is off the table on cost reduction if we have more dramatic scenarios. But I think from this presentation, you should also be mindful, this is a team that believes mainly, possibly there is price upside on what we’re experiencing right now into pricing, but we can’t bank that until we see it.
So, we have to be prepared for downside. But I think this is a peculiar market, lot of destocking, lot of trading dynamics short-term and my job is to make money and build a sustainable long-term business that does justice to a world-class ore body, as well as build the region in the right way. So, that’s my focus. Thank you.
James Wellsted: Thanks. I think that’s the last question that’s on the call lines. I think we do have to wrap it up. We have been going on for quite some time. There was a question around New Century, but I think we’ve said that we’re still integrating and obviously doing a feasibility study on Mount Lyell. So, we’ll release more information when we’ve completed that feasibility study. There were some questions on the buybacks, I think Neal, you already responded to those. And then some PGM market questions which we’ll respond to directly. So, at this point, I think we’ll wrap it up. Neal, I’m not sure if you have any final words before we wrap up the session.
Neal Froneman: No, just to — it’s been a long session. So, thank you for your patience and we appreciate your time and we look forward to delivering an improved result at year-end. So, thank you and have a good and safe day.
