Penny Himlok : Good morning, everyone, and welcome to Kumba's interim results presentation for 2026. Thank you very much for joining us in the room and on the call today. On behalf of Kumba's executive team, a very warm welcome. I'm Penny Himlok, Head of Investor Relations. And I'm pleased to be joined by CEO, Nompumelelo Zikalala; and our CFO, Xolani Mbambo. I'm still trying to get that click but hopefully, it's annual results to get there. Before we get started, just a quick safety note. There are no drills planned for today. So if you do here in Lam, please take it seriously and please follow the instructions. Hedcor back through the exit through which he came in and make your way to the front of the building where our safety marshals will guide you. [Operator Instructions]. And of course, please take note of the disclaimer, especially regarding forward-looking statements. Turning to today's agenda. We'll keep the usual flow. Mpumi and Xolani will walk you through our performance. We'll follow that up with a Q&A, and we also have members of the executive team here with us in the room that will be available to help address any questions that you may have at the end. Thank you, and I'll now hand over to Mpumi.
Nompumelelo Zikalala : Thank you, Penny. Good morning, everyone, and thank you for taking the time to join us today. We do appreciate your time as well as your attention. So let me start by setting the context for performance and some of the headlines before I unpack the detail. As you all know, it's been a period with plenty of challenges with the war in Iran, raising energy prices -- and importantly for us, diesel, which I'm sure everyone is out as well as other input costs being essentially affected. In terms of are -- while the strong are signals welcome investor confidence in South Africa, it did have a detrimental impact on our costs in U.S. dollar terms as well as our revenue as a business. The most disruptive element for us, however, was the extremely heavy rainfall in the Northern Cape. And I will put it in context a little bit later because sometimes when people hear heavy rainfall, they think of one thing. But here, it was something completely different. Well, I'm very pleased to say that despite those headwinds, we delivered on the aspect of our performance that we can control, including on our first priority, and our first value as a business, which is the safety and health of our people. Our protocols and recovery action plans proved very effective in managing the issues that were created by the rainfall in the Northern Cape. I would also like to just thank our partners, Transnet as well as the rest of the all users forum for helping to deliver a steady performance when it comes to the logistics aspect of our business. There is more to do, but the additional maintenance completed in May went very well. I'll talk about that a little bit later and that leaves us very much well positioned for performance in the second half. We also made good progress on our UHDMS project. As previously communicated, the main tie-in remains intact, and it will commence in August. Our teams have done the preparation needed to execute it safely and effectively. It remains one of our most significant value opportunities and an important part of Kumba's future. I have to say that overall, the numbers don't do justice when it comes to our performance for the first half, given the various headwinds, but I'm also pleased that we go into the second half well set to deliver on our promises, execute on the next phase of the UHDMS and continue with our capital and cost discipline. Now let's get into the results, starting as we always do, with safety. Safety, as I said, is our first value, and it's the foundation of everything that we do at Kumba. I'm pleased to say that this year marks more than 10 years of fatality-free production at Sishen and just over 3 years at Kolomela. Now milestones like these reflect the commitment of our teams to making sure that every person that comes into our parameters goes back home unharmed each and every single day. As our UHDMS project has ramped up, there was much more activity, particularly efficient. We had more people coming in as well as more service partners actually coming into the site. Despite that extra activity and risk, we kept our people safe and improved our safety performance. And that comes from years of work to strengthen our safety culture and embed our fatal risk management program. We continue to also invest in the well-being of our people, covering both aspects of well-being the mental aspect as well as the physical well being. Safety and wellness are part of our culture at Kumba, because when our people are safe and well, we are better able to deliver sustainable results. Now moving to our business overview. Operationally, the business held up well despite the weather disruptions and planned maintenance on the Ore export channel. That came down to disciplined execution and a continued focus on operational improvement. Sishen delivered a solid half offset by planned lower production at Kolomela. I'll touch on that a little bit later. Sales were only marginally lower and despite -- that was despite the additional 10 days of maintenance shutdown that was actually executed on the export channel. As I mentioned upfront, the strong exchange rate as well as higher input costs meant lower EBITDA and a lower return on capital employed. We declared an interim cash dividend of ZAR 2.5 billion. In addition to this, ZAR 0.5 billion also went to our empowerment partners. And as you know, those include the Sishen iron ore company, Community Development Trust as well as our employee share ownership scheme similar. So while earnings were impacted by external headwinds, our dividend reflects our disciplined approach to capital allocation, balancing returns to shareholders with the investment needed to strengthen Kumba's competitiveness and value over the longer term. Now moving on to sustainability. At the heart of our business is a simple commitment and that's for us to contribute to a better future for all our stakeholders. This year, we updated our sustainability strategy so that our ambitions and targets remain aligned with our business strategy and the changing external environment. While the targets have been refreshed, our 3 themes remain the same and more details on the updated targets are available on our sustainability report in our website. We continue to create meaningful value for our stakeholders, and that includes our contribution to the fees cut, but also the role we play in supporting transformation as well as inclusive participation and the communities around our operations. We are also making good progress on our road to decarbonization. In March this year, Kolomela mine began receiving will renewable electricity. And last week, we announced the signing of the Sishen solar PV energy offtake agreement with Envusa and this is an important step in reducing our Scope 2 emissions and supporting our transition to a lower carbon business. All of this work is about delivering sustainable value for our people, our communities as well as all our stakeholders. Now moving on to operational performance. Waste mining growth 4% and that's despite the tough operating conditions, which I will unpack in more detail shortly. As I said earlier, production was lower in the first half, down 3%, but we have set up our Gian Kolomela plants well for delivery in the second half. The 10-day Transnet maintenance shut in May meant that less ore was rail to the port and this also had an impact when it came to our sales. Saldana Bay port stocks were at optimal levels, putting us in a strong position ahead of the second maintenance shut which will take place in the fourth quarter of this year. We are confident of achieving our production guidance of between 31 million and 33 million tonnes, which will be supplemented with 4 million tonnes of finished stock. And essentially, that gap is what will enable us to meet our sales guidance. Now taking a closer look at our operational performance. I mentioned earlier the rainfall that we had. So let me just give you a sense when it comes to the scale of what we saw. The heavy lanes started in the first quarter, and that's as always, for the Northern Cape province, but it actually continued to the second quarter, which is very unusual for the Northern key province. Rainfall in April and early May was the highest on record ever recorded position since 1963. And for Kolomela, it was the highest on record ever recorded since 1918, and that's per our records. And as you can imagine, this resulted in flooding across the entire region and also flooding at our operations as well. Now this, coupled with equipment availability and reliability challenges did impact our waste mining. I am incredibly proud of our teams, not only for keeping our people safe during the flooding, but also for the way they executed on our recovery plans. We improved our dewatering capacity and drain and infrastructure so that we can better manage heavy and persistent rainfall in the future. We also increased maintenance of our heavy mobile equipment fleet, improving availability and reliability. And as a result, waste mining ended the first half 4% higher. Operational momentum is building, and the measures we put in place in the second quarter should continue to improve operational efficiency as we move into the second half of this year. Moving to production. We are really seeing the benefits of the maintenance work that we did at Sishen when it came to both our DMS as well as chip plants late last year. Systems production increased by 3% and this was, however, offset by planned lower production at Kolomela as we drew down our high stock levels in the first quarter and undertook plant maintenance in the second quarter. And as a result, our total production decreased by 3%. Looking ahead to the second half of the year, Sishen's production will be lower as we go ahead with the UHDMS maintain, which means that our DMS plant will be operating through -- actually, our DMS plant will be shut and will be operating our chip plant at Sishen. And at Kolomela production will continue at current levels, and we are on track to meeting our production guidance. Now turning to logistics performance. As I said, Transnet successfully completed its planned 10-day maintenance shut in May, which enabled important work across the entire export channel. This was in addition to the annual logistics maintenance that is still planned for the second quarter of this year -- or for the fourth quarter of this year. As expected, the short had an impact on volumes rail to the port, which were 2% lower relative to the same period last year, and sales were also much really lower. That said, we are encouraged to see real performance stabilizing. This reflects the continued collaboration between the oil users Forum. And as you know, Kumba is part of the all-user Forum and Transnet which means maintenance can be planned and executed more efficiently, and we should continue to see steady growth going forward. Importantly, the maintenance were completed during the period, has also strengthened the network. So some 101 kilometers of rail was replaced when it came to the track. And this allowed for speed restrictions to be lifted on 26 kilometers of the export channel. At Saldana Bay port, critical port equipment was refurbished and also very excitingly, TIPLA3 was called commissioned and the commissioning of TIPLA3 will enable better throughput rates in the second half of this year. So while the maintenance chart certainly had a short-term impact on our sales, it was an important step in supporting more reliable logistics performance over time. Policy reforms in the logistics sector are also continuing, and we are keeping a very close eye on this. At a strategic level, Kumba and its OUF partners continue to advocate for the release of the request for proposal and for the OEC or the export channel to remain a key priority corridor. I will now hand over to Xolani, who will take us through the numbers.
Xolani Mbambo : Thank you, Mpumi, and good morning, everyone. So our financial performance this half was shaped by essentially 4 factors. The first one was the stronger rent and Mpumi has touched on that. Secondly was the softer iron ore price. -- you'd have seen in our numbers that we came in at 90 this year, realized price versus 91 last year. And then thirdly, we experienced inflation cost increases in Kumba costs. you have seen we all experienced the diesel impact that we're currently seeing as a result of conflict in the car. And lastly, the Machine lower sales volume, you'd have seen a 1% drop in our in our sales volume as a result of the maintenance work that happened in the Transnet. So with that, let me then turn to the markets. We saw that the ore price averaged $106 per tonne during the first half. As freight costs rose sharply due to the Middle East conflict. So this lifted our CFR pricing. In fact, if you do a netback on FOB, you'll see that last year, we had $101 per tonne FOB pricing. And this year, in fact, the CFR was 101 and DC 106, if you take the the shipping into account and the uplift from $15 per tonne to $22 per tonne, you'd see that the FOB netback is actually $1 lower than last year at $83 per tonne this year. So that had an impact in terms of the dollar deal price that you actually realized. Patirali was lost in that momentum was lost at the second quarter of this year. political situation ease and that lowered our risk premium. So we saw that there was a bit of a return to normals, but it was short lived. And as a result, that momentum was lost. So the prices for the remainder of the year will be driven by a combination of market fundamentals and the evolving geopolitical situation. So if you look at the lump and high-grade premium, that is well supported. Having recovered from severe lows at the start of the year, at some stage at the start of the year, we are in cents per TMTU that has now since improved. The lamp stock at Chinese ports have fallen to a near 12-month low, signaling a constructive outlook for the lump premium in the second half of this year. So let's look at our commercial performance this first half. Our product portfolio achieved an average Fe content of 63.6%. A SP536166058 We maintained a high lamp to finance ratio of 66%, which is good. These quality attributes remain among the strongest in the seaborne market. Our share of sales into premium market outside China increased from 42% in the first half of 2025 to 47% this half. You'll recall that outside China, we are able to to fetch good premium, particularly on the lump as well as to an extent on the AFE. This reflects strong original demand dynamics from improving steel production in Japan, in South Korea, as well as in Europe. So as a result, we actually achieved an overall price premium of $7 per tonne. So even though it's lower than last year, if you compare to our peers, we had $7 per tonne higher, which is positive for us. Now let's turn to our financial results. I think that's what matters. I touched on realized prices, which was $90 per tonne, down a $1 in the first half of 2025 and that contributed to the price variance that you -- see you on the chart. The stronger rent on average against dollar impacted us on both sides. It actually reduced our rent denominated revenue and inflated our dollar reported C1 costs. So this resulted in lower EBITDA when compared to the prior period, impacting our margins. I'll unpack the key drivers shortly. Despite these impacts, we generated headline earnings per share of [ ZAR 0.24 ] and in line with our 55% of headline earnings payout policy, we declared a dividend of ZAR 7.90 per share and Mpumi touched on that area. This represents a payout ratio of 60%, which is only marginally below the midpoint of the range. while retaining flexibility given the continued volatility in the operating environment. So now let's take a closer look at our EBITDA, which is the slide I was rushing to apologies. External factors reduced EBITDA by 30%. Accounting for more than 90% of the total ZAR 5.1 billion impact. So you'll see we're almost at ZAR 16 billion last year, and we ended at ZAR 10.9 billion. Now if you look at that chart, the prior period benefited from one-off uplift, which was included in the other income, and it related to compensation for logistics under performance. That is the ZAR 942 million that you see there. And between the currency and price, that is actually about ZAR 4 billion of the ZAR 5.1 billion. We also have CPI, which is a normal increase, but added to that was a cost escalation and input costs, particularly in diesel and explosives, which impacted EBITDA by ZAR 765 million and reflecting the negative effects of geopolitical instability. Our royalties declined and that's in line with the level of profitability that we achieved in the first half. Higher freight rates contributed positively to our EBITDA though through higher shipping revenue because we run shipping for some of our customers. Internal factors had a modest 2% EBITDA impact. mainly due to lower sales volume with operating expenses only up ZAR 32 million, well controlled. If you look at the positive stock movement, it largely offset the additional cost of mining ore that remained unprocessed at half year as we were recovering from the rains in the second half of the year -- sorry, in the second half of the first half second quarter. This resulted in a margin of $27 million decrease in EBITDA. Looking ahead, our cost-out initiatives and operational efficiency drive will help mitigate the risk of further cost escalation in a volatile geopolitical environment. That is our online unit cash costs. The good news here is that Sishen unit cash cost improved to ZAR 549 per tonne, which reflects the benefit of stock movement and higher production. And it remained well within the guidance, and that's good news. Kolomela's unit cash cost of 24 per tonne actually outperformed its guidance, and that is despite the lower production. Our forecast remains on maximizing value from every rent that we spend and converting volumes into cash flow. So let's look at CapEx. Our capital expenditure for the first half totaled ZAR 5.2 billion, ZAR 1.4 billion of that related was up on 2025 H1. So if you look at 2025, we are 1.4 below. This places fast half spend below the midpoint of our full year CapEx guidance of between ZAR 13.2 billion and ZAR 14.2 billion. Of course, if you take [indiscernible] multiply 2 get actually below the range, we expect an uplift in the run rate in the second half. but will be within our guidance. Defect stripping was mainly driven by a higher stripping ratio at Captive South at Kolomela, increasing the capitalized deferred stripping spend by up to ZAR 200 million. The baseline stain business, which is brick-and-mortar at ZAR 1.3 billion was in line with the first half of 2025. While it ZAR 500 million of fleet replacement program commenced this year, as we noted in our last results. We spent ZAR 1.3 billion in the TMS project against ZAR 300 million last year as we ramped up the project this year. And as a reminder, the HDMS spend this year will peak, and Mpumi will provide an update on progress of this flagship project shortly. In the medium term, stain business, fleet replacement and deferred stripping CapEx remained broadly stable, whilst UHDMS CapEx decelerates from next year onwards after the completion. So let's look at our capital allocation. Our disciplined approach to capital allocation remains unchanged. From a starting net cash position of ZAR 14.9 billion, we generated ZAR 9.9 billion of cash from our operations. Of these, ZAR 4.9 billion was allocated to sustaining capital, covering stain business and fleet replacement, as I indicated earlier. We then paid the 2025 final dividend of ZAR 6.5 billion to the shareholders and fund at ZAR 1.3 billion of UHDMS project spend. After declaring an interim dividend of ZAR 3.4 billion, we retained a national cash balance of ZAR 8.7 billion. Capital balance sheet management remains vital as we navigate market and operational volatility while sustaining operational while sustaining a predictable dividend payout. Thank you for your time, and now over to you Mpumi.
Nompumelelo Zikalala : Thank you, Xolani. I have to say I had your comment when you said the most important part is the financial results. They are very important, but I do hope that other parts are also important. Now before we wrap up, let me look ahead, starting with our full potential program. Now full potential is how we unlock the next phase of value at Kumba. It's an operational excellence program. And from the initial scoping work that's been done, I believe that we have significant opportunities to build on from our current stable base, which has already been established. Our forecast is very simple. Firstly, lower C1 and stay in business costs. secondly, improve our overall equipment effectiveness and as a result, step up the run rate cash flow of the business. And last but definitely not least, improved returns from our CapEx program and that includes our current project, the UHDMS project. While the primary focus is on mine performance, the program covers the full value chain including our plants as well as supply chain. This will be a multiyear journey, and we'll look to set up and embed changes into meaningful run rate performance improvement. But we have already identified 28 initiatives within these 4 areas of buckets that you can see on the slide. And we should start to see some of the early gains starting to come through as early as the second half of this year. Whilst we are busy with the diagnostics, which started with the first phase, which was high level followed by the deep dive, we are already starting to implement because some of the elements are actually just quick wins for us as a business. So let me give you just one example in the mine and plant productivity space. Our truck fleet is our largest capital asset and change in our mine traffic procedures could lead to a 10% improvement in our haulage cycle time. This would increase the volume throughput or in a constrained rail scenario, this would reduce the number of trucks required and as a result, have an impact on costs. That's one of our early focus areas, and there will be a number of other initiatives that we will continue working on. And I have to say that I'm looking forward to telling you more about this as we move forward. Within the volume lever, as we work with our logistics partners, there is a next phase of upside that we could also unlock if we can actually get back to contractual run rates from a logistics perspective. I will leave it at that for now. But as I said, I look further to giving you additional updates as we continue at the end of the year. Now let me give you an update on the progress made on our UHDMS project. As we said before, UHDMS is a transformational project for Kumba, with the potential to reshape the future of Sishen and create significant long-term value for our stakeholders. The project is now approximately 45% complete with 96% of all detailed engineering work behind us. By the end of this year, over 75% of the steel will have been completed from an installation perspective. And the balance of that will be concluded by 2028 as we've previously said. Importantly, all major procurement has been completed for the project, and we have had no supply chain disruptions due to tensions in the Middle East. Construction of the first cause and fines modules took longer than planned as we were constructing within an existing plant, as we've always said. However, as we previously said, we have applied the learnings from the construction of those modules into the next phase. And we are already seeing a significantly faster pace of construction when it comes to our next set of modules. To put this in context, just in terms of the step change that we are seeing from a construction execution perspective, I'm not just talking about a couple of days or a couple of weeks. I am talking about a couple of months, which is significant for us. And as we said, when we started with the project, we set the modular approach from a construction perspective will actually allow us to land from the construction of the first couple of modules and implement the learnings into the schedule going forward. The main tie-in remains on track to start in August and pre-shutdown mechanical and electrical [ wake ] on schedule. And we have also installed preassembled structures ahead of the time. Now zooming in to the slide, and I apologize to those online, but I did just want to put it in context in terms of pictures. So on the right-hand side of the slide, you can see the full scope of the UHDMS project, which is ultimately about converting the current technology that sits within our current case drum plant as well as our fines plant into UHDMS technology. But you will also see from the numbering on the slide that the full scope includes other sections, which are part of the materials handling of the overall GMS plant. So the full extent of the area where construction is taking place is within an area of 1 kilometer by 0.35 kilometers, if you just look at the full extent of this. And I'd now like to say a couple of interesting facts. The full electrical cabling that is going into this construction -- over the life of the project, is 460 kilometers. 460 kilometers is just over halfway if we look at the distance between Sishen and the Saldana Bay port, so as you can imagine lots and lots and lots of cabling. And if you look at the overall steel construction, that will essentially be done by the end of the project. It will be over 4,000 tons of steel. And as I said, over 75% of this will actually be installed by the end of this year with the conclusion of the modules and the main tie-in, which is the main materials handling element. Now this conversion enables mining and processing of C grade material, increasing our premium product portfolio as well as realizing the full potential of Sishen. Now moving on to the next slide. And I'm very excited to be sharing just a couple of the WACC that we are doing with you. So firstly, I'd like to zoom in to the core DMS plant. This picture shows the full extent of the core DMS plant. It has got 8 modules moving from module 735 all the way to module 743 and as we've said before, we will only convert 6 out of the 8 case modules. Now just look at the picture because it will change as we move on to the next slide, which will now show you where we practically are with regards to the construction. The first module that we converted was Module 743. And as I said, this module is currently being commissioned. In addition, the second module is MO2U735, and we are almost halfway with the conversion of this module. And the reason why the construction of this module, as I said, has moved significantly faster is because we took the learnings out of 743 and applied them into 735. So some elements of what we are seeing is that we performed back in series steps we are following each other when we are constructing Module 743 and through including a hard barrier between the top section and the bottom section of the plant, we are actually able to do WACC in parallel, which is assisting us with moving significantly faster when it comes to the modular construction. But what you'll also see is that the fast picture did not have anything that was looking a little bit grayish around it. Now this picture indicates the additional WACC that has been done outside of the core DMS plant. And this picture includes the modular substation which is already in place. It also shows that various conveyor WACC that's actually been installed. There's also a section that shows just on the other side of this plant, is our catenary screening plant. So you can see, and I'll show you a little bit more on this in subsequent slides. But additional work has taken place. And you can actually also see some of the transfer towers that have already been constructed. Now if we move on to the next slide. Thanks, Penny. Now this shows you what the final constructed space will look like. And as I said, we are only converting 6 out of the 8 cost modules. So we will decommission Module 741 and Module 731. And that's simply because the capacity of the new modules is higher than the capacity of the old modules, and we don't need to convert everything to get back to full capacity. And that's without task compromising the overall capacity of overall Sishen mine. And this picture reflects what will be in place by 2028 when it comes to the cost DMS plant. Now on the next slide, I just want to zoom in a little bit further on the actual modules themselves, to just give you the full extent of what we are practically talking about. And this is now zooming in to one of the fast cost modules. So it's Module 743 that's already essentially been converted from a construction perspective. The picture on your left shows the current existing technology and you will clearly see that it has the drum technology, which is the technology that we are moving away from. Now with the new technology, you will see the cyclones, which are the UHDMS cyclones that we are installing. Just on top of the picture, you can see a small lever of the mixing box, which essentially feeds the cycles and you can see one of the screens that is sitting underneath that. And this is an indication of the visible difference that we are essentially seeing as we are constructing the various modules simply because we now have the extra cycles that are part of the UHDMS technology. Now last, but definitely not least, to just give you an indication of the WACC that's taking place within the materials handling section. And this is critical because as we said before, this is work that will also be taking place during the tie-in. Now this picture has the core DMS plant on the one side. And just outside of this visual is the catenary screening section. And this is an area that we call the spaghetti junction. It's simply because it's got massive conveyor structures running through. And for those in South Africa, Spaghetti action means there's a lot that's taking place there. But for us, it's the catenary screening section where we've got massive conveyors that run in front of this area. Now I'd like to zoom you in to the great-looking structures that are already in place. And this is an actual photo that shows you the full extent of the work that's been done ahead of the tie-in. And the reason why we actually spend a lot of time installing cable regs, conveyor structures, massive transfer towers ahead of the tie-in was to reduce the complexity of the tie-in and as a result, minimize or derisk the actual tie-in period. Now ladies and gentlemen, this is clearly massive, but also very exciting and complex engineering WACC and construction that's currently taking place at Sishen right now. And as I close, as a reminder, our modular construction approach means that the Jipplant will continue operating during the tie-in period, and we have built up sufficient product stockpiles so that sales can continue uninterrupted through the shutdown period. On capital, we remain firmly on track. To date, we have invested ZAR 5.2 billion, which is broadly aligned to the project's overall progress. As I said, we're not only progressed WACC, but also brought forward WACC ahead of the tie-in in order to derisk the actual tie-in. The total project capital remains unchanged at ZAR 11.2 billion, and we remain on track to close off this project in 2029 with the bulk of the construction being concluded by the end 2028. And as a reminder, UHDMS is a high-quality investment that creates value on multiple fronts. It allows us to produce more premium product, recover more value from a resource we already own and improve the efficiency of our operations. But it's real value also lies in unlocking a longer life of mine and greater flexibility across our resource base, strengthening our ability to create value for decades to come. Next, I would like to take you through how we see the long-term realized price evolving. So looking ahead, we remain positive on the long-term outlook for high-quality iron ore for a number of reasons. Total iron ore demand is set to rise as urbanization and industrialization reshape the still demand in developing economies. While China's demand plateaus the growth in ex China markets will more than offset this reduction. Key contributors to this growth are new steel capacities in India and Southeast Asian markets. Kumba is well positioned to benefit from the steel production growth, both geographically as well as from a product quality perspective due to our high-grade Fe content as well as the production of our lump product. Additionally, despite increasing price pressures, decarbonization policies have strengthened with the implementation of the carbon border adjustment mechanism or [ CBA ] framework in Europe. And the CBM agglomerated products like pellets will face an import levy, depending on the quantum of embedded emissions and prevailing carbon prices. These penalties are likely to trend higher longer term making lump [indiscernible] more attractive or a more attractive alternative in the region. Lamps replacement potential is significant given imported pellets occupy roughly a 35% share in total EU imports. There's still industry's decarbonization journey continues to reinforce demand for higher grade ores as well as lump products. These materials improved blast finite productivity, lower emission intensity and support the transition towards lower carbon steelmaking pathways. And that brings me to our full year guidance. For 2026, we expect total production of between 31 million and 33 million tonnes. As we cut back to allow for the planned UHDMS tie-in period. This includes about 22 million tonnes from Sishen and about 10 million tonnes from Kolomela. Next year, production will increase by around 12% to 13% to between 35 million and 37 million tonnes. Our sales guidance stays at between 35 million and 37 million tons and we plan to supplement production with finished stock built up ahead of the UHDMS tie-in. Our C1 unit cost guidance remains unchanged at $45 per ton. The increase to $46 per tonne in the first half is largely due to a stronger rent and above inflation increases in key input prices. However, we remain focused on cost and capital optimization and our full potential program will be rolled out in the second half of the year, and we expect to start to see some of the benefits coming through. And as Xolani has mentioned, Capital expenditure is expected to be between ZAR 13.2 billion and ZAR 1.2 billion for the full year. Now before moving to Q&A, I would like to remind you, as we always do, of our value proposition. As we look ahead, we need to be prepared for the macro environment to remain volatile. But as you have heard today, I'm excited about what we can achieve with all the elements under our control. So to quickly recap how these elements come together. Firstly, we are putting in place a new full potential program to build from our stable operating base in order to take operational excellence to the next level across our entire business. And that includes our mining and plant productivity, it also includes better cost competitiveness and enhancing returns on our key capital projects, including the UHDMS project. Secondly, we want to improve the competitiveness of our old export channel. We will work with our partners to support improved logistics performance while securing sustainable capacity over the longer term. And success here will allow us to unlock another level of upside from the full potential program. Thirdly, across the business, we are looking to enhance our return on capital with real discipline on capital allocation, supported by specific interventions from our full potential program. Now we do have all the right ingredients required to succeed with a clear strategy, world-class assets, a fantastic team and strong partnerships. Together, these foundations position Kumba well to deliver the next level of performance over years ahead. And with that, I will hand over back to Penny, who will lead the Q&A session for us. Thank you.
Penny Himlok : Thank you Mpumi. We'll now take questions in the room, and then we'll look to the conference call line, and finally, we'll take questions from the webcast. I see Brian's hand is up already.
Brian Morgan : Thanks very much. It's Brian Morgan here, RMB Morgan Stanley. Thanks for all the detail on the UHDMS it's excellent. My question is actually on transmit this time again. So we saw, I think you said 101 kilometers of rail replacements in the first half. We've got another shut in the second half of the year. Just maybe update us on where we are on that in that process of replacing the rail. And then maybe just help me understand your kilometers of rail, but only have speed restrictions lifted on '26. How does that work? And then the second question is brands become more and more of an issue in the -- over the years and looks like it's getting worse. Is there anything you can do about that? Do you -- is the CapEx needed to prepare for rand readiness? Or what else -- what are the mitigating factors you can actions you can take into account there.
Nompumelelo Zikalala : Thanks, Brian. I think a couple of things. So firstly, you'd recall that we previously spoke about the independent technical assessment that was done on both rail as well as port. You'd recall that we said at the time that there's just over 860 kilometers of rail and that over 500 kilometers needed to be replaced. Now over the last couple of years, they have been replacing that. But last year, they didn't have the rails that were required ahead of the shot. And as a result, the I mean, an amount that was replaced was actually significantly lower than what we wanted to see. So we are excited by the 101 kilometers that was replaced this year. But remember, we are still working back towards the 500-kilometer mark. So this WACC will continue as we move forward because fundamentally, this infrastructure has actually been there for some time. And this WACC is WACC that needs to be replaced. Now the extra-speed restrictions themselves, they don't have speed restrictions throughout the railway line. They have sections that are more worn than other sections, so this actual replacement assisted with the upliftment of the speed restrictions within a particular section. And we remain on track as I look at the additional work that they need to do in the second half of the year, but this work will actually continue for a couple of years. And this links back to, I guess, the question where people typically ask us, why are you not increasing your sales guidance, and we always say that, let's remember, we started off with the independent technical assessment, which identified all the work that needed to be done. But we are excited by the volumes of WACC that are essentially taking place. And as I said, we, as Kumba a part of the user forum, which includes all the users of the line, and we collectively work with Transnet on the or corridor restoration program that they are busy with and heading up into the second shot, we'll plan the shot with them and as a result, make sure that the execution of that chart will also be done properly. And then on rain -- so one, it rains every year in the Northern Cape as well as other areas of the country. The difference here is that our rains typically go to much. And then we have very limited rain post March. So -- and here, we had both the extension of the period. It went to the early parts of May, but it was also the massive amounts of rain that we essentially had. Now I guess to put it in context, it's typically what you'd call a 1 in 100-year flood that we are talking about. It does, however, link back to the impacts of climate change. So what we have essentially thought about is that we've taken learnings from this period. Clearly, during the period, we increased our dewatering capability and infrastructure. in order to make sure that we actually dealt with the actual rain. And we are looking at applying those learnings into the next rainfall season, and that will only help strengthen our capabilities going forward. Do I expect us to have the same volumes of rain that we had. I guess it's unlikely, but we won't leave it to chance. We'll still work on increasing our capabilities and as a result, deal a little bit better with the rain.
David Fraser : David Fraser from Peregrine Capital. Spot freight rates, you mentioned, I think, 22% in this half. What are they at the moment? And do you have any hedge position at all in the forward freight rates?
Nompumelelo Zikalala : Thanks, David. I'm actually going to ask Ibrahim, who's standing in for Tim or from our sales perspective to add to this. we don't hedge, number one, but it's also -- it wouldn't be the right time to hedge if one considers the elevated freight rates by Ebrahim.
Unknown Executive : David. So to answer your question, well, spot freight rates have been very volatile. They've been bouncing around to as high as $30 However, they've been linked with a few factors. So when we look at that spot freight rate, it's made up of both the bunker cost and then the chartering cost. What we've seen is, of course, with the Strait of Hormuz or the war in Iran with the closure of the straight, that bunker cost went up. However, we've also seen very strong demand for vessels in the Pacific and now more recently, some congestion in China due to adverse weather conditions, that's been impacting on the chartering rate side. That said, we have seen freight rates once the war was for a short period where we had a cease fire. We saw bunker costs come off quite considerably. And in that period, spot rates fell to as low as about $20, okay? Now what we've seen subsequent to that is we've gone back to about $24. So to answer your question in terms of what do we expect a little bit difficult. What we do see that congestion should clear. It's a little bit seasonal in terms of where the weather patterns are However, we do see the bunker effect that comes in. Are we hedged? No, we don't really take a hedged position. However, as Anko American, we do have some vessels of our own. So there is some ability to manage some of this year.
Penny Himlok : Thanks. And we have the question from Tim.
J. Clark : It's Tim Clark from SBG Securities. Let's just start with UHDMS. It's clearly an enormous project. It looks like there's about ZAR 6 billion still to spend. We've seen quite a lot of CapEx increases across the industry in the last 6 months. But you guys seem to have secured a lot of the engineering and a lot of the steel. Where are you most worried Premiere like obviously, there's a huge project. It puts the whole sort of mine and plant at risk. Where is your -- where do you think the sort of maybe compared to where we were 6 months ago, where has the risk move to? Where do you see the greatest concern or risk with the plan?
Nompumelelo Zikalala : Yes. Thanks, Tim. So I guess a couple of things. You'd recall that we previously paused this project. And at the time, from an engineering perspective, our engineering was only sitting at around 30%. And -- and I'm very pleased when I look at the fact that this is now sitting at 96% at this stage of the project. The other thing that is good for us is that all procurement for the project is complete. And as I said, we weren't really impacted by what's happening in Iran. The rest of what remains is actually the construction side and balancing both the pressures of construction and the pressures of production. Now how we fundamentally decided to proceed with the strategy was different from how we initially thought about it as if you recall, and that was to actually derisk the project. So the modular construction approach does mean that if you just look at the -- I mean, the cost DMS plant, it does mean that we can actually work on a module whilst running production. Even with the first couple of modules, they take a little bit longer because we were learning, but that did not actually have an impact on production, and that's part of the strategy that we applied. The most critical part of this project has not changed. It is the tie-in period because, clearly, during this period, we will stop the production in the plant as we do construction within the material handling elements. Again, the approach of our project team and they're a fantastic team, was to actually bring WAC forward, and that's why I wanted to show you the gray still structures because I was initially worried about the level of work and the amount of it that was going to take place. Clearly, as we go into the tie-in and it will start in August, we've done a lot of reviews. By both our various teams and external teams to figure out if we have any unknown unknowns. And we've made sure that we actually try and do as much work as possible ahead of the tie-in. There may be remaining unknown unknowns because we are actually constructing within an existing plant. But what gives me comfort is that we've actually reduced the scope quite significantly. So what am I thinking about going into the shut in August. Firstly, and as always, it's the safety of our teams because that for us comes first. And there's a lot of additional -- a lot of additional measures that we are going to be putting in place for the period of the tie-in because we'll have the maximum number of people during this time. Secondly, I am thinking about the actual duration of the tie-in. So I like the fact that the team in terms of their own schedule has got a slightly shorter number of days. than the days that we are looking at. But clearly, we need to go through the tie-in to finally get to that. And then the third element is we've spoken about stock and the fact that we'll maintain our sales even during the duration of the time, which is why we've carried the elevated levels of stock. So something else that I'm thinking about is the overall balance of that stock and the number of days from a tie-in perspective. But That's, I guess, the thinking that we've applied to the strategy of how we are approaching this time in. But it is construction, and we always know that there are sometimes some unknowns. We've just done our best to uncover those ahead of the actual time.
J. Clark : That's really helpful. Xolani, just a question for you on the financial impact of the shut. Presumably, there's a fixed cost of the DMS plant that won't be operating. So there'll be cash flow statement impacts as well as income statement impact. I thought about it a lot, and I was trying to sort of work out what the net impact is because you're going to be selling more out of stock. That stock is older stock. It looks like your WIP was quite big in this first half. Like there was quite a big increase in WIP which then needs to ultimate will carry on building because your stripping is higher in the second half. So what I suppose I'm asking you is, you've obviously done a lot of work on the balance sheet and on cash flow. Around the dividends. And maybe you can give us some indication on, say, working capital impacts or any income statement impact that you see from the shut particularly. Obviously, the market itself is uncertain, right? What happens to freight and lump and all those things, that will happen.
Xolani Mbambo : Yes. That's correct. So let me start with the working capital. So there will be a buildup on working capital in the form of the WIP as we -- as the mine will continue to operate even though the plant will be shut during the time. So that in the income statement to come towards the credit, of course, and the income seen on the cash flow, it's an outflow. With that, there will be finished goods drawdown because we'll continue to sell and we'll continue to rail whatever is currently at the mine and which continues to be produced by Digi plant as well as Kolomela. So my expectation is that for as long as the time lines are met, we should be coming out square on the working capital side of the balance sheet. And then in terms of the cash flow and how we see the cash in the balance sheet, of course, it's -- this is a working capital, which is very short term in nature, whereas we're looking at the impacts in terms of the volatility on the Middle East issue, which is more longer term. And coupled with that, we've got the high capital intensity in terms of the ZAR 13.2 billion to ZAR 14.2 billion capital commitment. All of those factors were key in our decision around the dividend level that we have proposed.
J. Clark : Okay. That's also helpful. And then just my last question, quickly, your breakeven is up quite a lot. It's up from, what, 71 -- sorry, $68 to $81-odd are you guys worried about that? Or is it sort of out of your hands, noncontrollables and you're more just focused on the controllables -- or are you starting to think about plans in case iron ore comes down a little bit because it does seem to be under a little bit of pressure in the short term. Are you sort of accelerating concerned plans or not?
Xolani Mbambo : Yes. So we are concerned about the level of our web -- and in fact, if you look at it, 72% of the movement is coming from external factors that includes premium, your currency in domain, which is the key driver as well as the freight costs. So those ones would probably be difficult to manage. But the controllables in the form of the stay in business are there for us to explore. And within outside the commitment on there is flexibility on the remaining stain business as well as HMA replacement CapEx that one could look to explore. In fact, as part of the full potential exercise, we will be looking at capital expenditure in terms of how to optimize it. How do we lessen the capital intensity for every time that you produce. And the other item that we will be looking at is OpEx, how do we rationalize the OpEx, such that our overheads continue to support at a lower level, the existing business. So those are delivered that one would be able to pull into the system to ensure that CBA is kept in check. So we are concerned.
Nompumelelo Zikalala : And Tim, just one additional thing. In addition to this, so we've spoken about the benefits of the UHDMS. It will allow us to actually treat the C grade material, so we'll reduce our cutoff grade from 48% to 40%. And as a result, as we've said before, materials that would typically go into the waste stream will go into the plant. And that will be quite supportive when it comes to our operating costs going forward. And then the second element or benefit of the UHDMS is actually the increase in our premium products, which will also be on the controllable space, helpful when it comes to our price premiums. So in thinking about the capital for the UHDMS, we are also considering the benefits that this will have on our CBP as well.
Steven Friedman : Steve Friedman from UBS. My question is around the increase in waste mining at Kolomela. I know this is something you guys have guided to, but just trying to see how we should think about this from a medium-term perspective, I mean, this is largely temporary pre-stripping -- or does the signal any sort of sort of structural operation and cost base going forward for Kolomela.
Nompumelelo Zikalala : Thanks, Steve. So we spoke a little bit about our resource and reserve statement in February. And we spoke about the stripping for this year for both Sishen and Kolomela and the long-term stripping for Kolomela as well. And we spoke about the fact that if one looks at last year coming into this year, the increase in stripping at Kolomela is linked to us starting to strip for the next phase of Kapstevel South. Kapstevel South #2. But that overall, if you look at just the overall strip pressure of Kolomela, it will actually be lower than the ratio, the strip pressure that we are looking at right now. But in addition to this, I guess, how you should also be thinking about Kolomela is that in February, we also spoke about additional areas that we are looking at. So starting to talk about bloating and and runs -- we spoke about the fact that we actually declared those and they essentially increased our resource base and that we're going to speed up the exploration side simply because we want to ultimately convert those from resources into reserves and actually bring them forward early on into our mine plans. And if I look at just block 1, it's actually got a lower strip pressure and that should actually assist with the pressure in the short term. So quite a few things, but exciting things that we are looking at from a colonel perspective. And that's why we continue with the exploration work to actually get further information on the resource space and clearly convert that into reserves.
Penny Himlok : Okay. I don't see any further hands. We can now go to the webcast. And I don't think there's anything, then we'll go into the online side. We have some questions on the marketing side as well from [indiscernible] from Merchant West is a hard Simandou affecting premiums and seaborne iron ore market supply, demand and pricing. How will it affect Kumba? That's the first marketing question.
Nompumelelo Zikalala : Thanks, Penny. I'll ask Ebrahim to take this. Thanks, Ebrahim.
Unknown Executive : So on Simandou, I think, first, important to understand what product Simandou actually produces. They are producing a high-quality fines product. At the moment, they still remain in a ramp-up phase. And I suppose, guidance is somewhere around 15 million to 20 million tonnes for this year. How do we see this impacting us? If we compare directly with Kumba is a business, we Kumba is predominantly a lump producer. So there isn't any direct competition with our product. That said, in general, if we just park Simandou for a moment, what we've seen is that the general trend in the iron ore market has been a reduction in grades. So by and large, the input has decreased to steel mills. Does that mean that steel mods actually need lower Air fees? No, it doesn't. Overall, we believe that a higher FE always makes sense. So in the overall blend, there's definitely a growing space for higher-quality FE products. So from that perspective, we don't believe that Simandou has a material impact. Next, it all does define how the overall supply to the market comes on. Well, I've expressed that we believe it will be somewhere around 15 million tonnes for this year. that would not have too material an impact on the overall iron ore price. We would, of course, monitor how the ramp-up of Cimento progresses beyond that.
Nompumelelo Zikalala : Thank you so much, Ebrahim. And Louis, you would have noted that in terms of the Pilbara, they actually moved from the 62 or the Plett62to the 61 index, and that's linked to the quality reduction that Ibrahim's talking about -- and even for Brazil, they actually introduced a slightly lower quality products. So what one needs to look at is just the overall balance.
Penny Himlok : Okay. We have another marketing question for you, Ebrahim. Do you [indiscernible] confirm whether this is sorry, from MacGreen from Goldman Sachs. He's asked if you could confirm whether covers reached a supply agreement with in markets through the same margin under this arrangement.
Nompumelelo Zikalala : Great. I'll answer the second one first for Ebrahim. Actually, I'll answer the second one, just cover the first one. Thanks Ebrahim.
Unknown Executive : All right. Yes, we have reached an agreement with CMRG, but I mean that's the outcome. It's important to note that in dealing with China, well, you will be dealing with CMRG. We've had very constructive engagements with MR -- we've got an agreement in place with them as of the first of April, and that does impact our product that we sell to CMRG member molds. Now it's important to understand what we actually sell into China without giving out more details on this. This is always confidential. What I would want to say is that our product portfolio is split China ex China. So we sell give or take, around 54% into China at the moment. Okay? That's point number one. That doesn't mean that all the 54% goes to CMRG. We have some long-term customer contracts, and we also sell a significant volume on spot. The only volumes that are covered here would be what we supply under a long-term agreement to CMRG memormolds. So that effect is fairly small on our overall portfolio.
Nompumelelo Zikalala : Actually, thanks, Ebrahim, you've covered it. We want to give the details of the actual conclusion of the sales. I have to say just 2 things on my side. I joined Ebrahim and Tim in a visit to China a little bit earlier this year. It was actually pleasing to see the, I guess, level of relationship that we have with our actual customers and looking at the conversations that were taking place, linking back to what we are doing on the UHDMS project and the changes that we expect to see from a product portfolio perspective was actually interesting to see. So typically, people think that our Chinese customers actually want lower quality products, and that was certainly not the case. And for me, it was more the discussions that were taking place around the value-in-use element that was quite exciting. And then secondly, as Ibrahim said, it's actually not the full volumes of what we sell into China that are covered by CMRG.
Penny Himlok : Okay. We have another follow-up question on freight rates. Do you have a view on what prefall look like in H2? So that's quite a question because of the volatility, not easy to answer. But if we could look at that Ebrahim, and then -- it's also a question probably more for Xolani what freight assumption is embedded in the full year breakeven price? Has that changed significantly. And then I'll also just add the marketing question on the more of the Chinese property markets in terms of the demand. property-linked steel man remains weak with steel production and iron ore prices have been relatively resilient. From your customer discussions, do you get a sense of what's sustaining the current demand? Is it domestic consumption or exports or more restocking mortifications of policy support.
Unknown Executive : Let me go with the freight question first. I think the answer there is perhaps a slightly shortish one. uncertain exactly what the freight rates will do. However, we expect that they would remain fairly strong in the second half of the year, considering where bunker costs are and the current chartering status. Maybe I go to the next question then.
Nompumelelo Zikalala : Chinese steel market.
Unknown Executive : Chinese steel market. So let's -- I mean, in terms of the Chinese demand, so property has been a drag in China. However, we do see that there has been an offsetting from infrastructure and manufacturing. It's not entirely enough to keep China on a positive outlook. So China is partly weak. However, if you look at the iron ore price, what has been really driving the iron ore price? Well, freight is somewhat embedded in that price because the price of iron ore is on a CFR basis. So that's landed support in H1 to the iron ore price. The second factor is that during the first part of this year, the low margins in China actually improved. They had improved from the early part of the year, where it was around about 38% profitability. It went up towards the and then it started slipping again towards the latter part of Q2. And that's why we've seen the iron ore price come down a little bit again. The third point. Whilst China is decreasing, what we are seeing is that Southeast Asia has been fairly strong. Japan, Korea and Europe has been fairly stable. And with some of the CBM and quota imports or restrictions that are now coming into Europe, we would see some effect on that in volumes towards the second half of this year. So overall, that's what the INO market has been like and what's driven the prices to where we're at. The current decrease in the price is primarily driven by the reduction in the mill margins that we are seeing in China. However, overall, we do see support on the iron ore price at around the $95 mark, and that's on the back of the increased C90 because of the higher energy costs that we're seeing in the market.
Xolani Mbambo : And then on the question around how we see freight. Look, I mean, anyone can make an estimate and the volatility at this stage makes it really extremely difficult. But -- but the way I'd look at it is pick a range between $20 and $25 a tonne. But don't be surprised if it falls below if it goes above $25.
Penny Himlok : Maybe staying on you. Could you please quantify how much cost reduction you're targeting through full potential program over the medium term? And does the full year tax guidance incorporates some of these benefits as related to the full year -- I mean, to the full potential program. had questions from Shashi from Citi.
Xolani Mbambo : Yes. So -- there's no specific number, but indicatively, we are targeting a minimum 10% reduction in our cost base. That's just indicative at this stage. And remember, the the construct around the cost out for the value is that there will be elements that will target the cost out under the current capacity of the business which delivers around 37 million tonnes. And then added to that is if there is an element of unlock on the rail capacity side, there will then be volume-related value creation, which then talks to the full potential of this exercise. And that runs between now and then for the next 3 years. But it's certainty around the actual number, as Bumindicated earlier, will be communicated at the end of the year next year.
Penny Himlok : Okay. Thanks, Xoloni. We have a question on Transnet. How much of the rail line has been replaced so far -- and when will that be completed after rail replacement is completed by how much would Kumba be able to lift sales?
Unknown Executive : Thank you for the question. Currently, like Mpumi said, we -- when we did the independent technical assessment, we said that more than half of the rail needs to be replaced. -- current estimations are that they've replaced around 170 kilometers of the rail line. So the rail replacement program is gathering momentum, but it still needs to be executed over the next couple of years. So it's a multiyear program. The program or the independent technical assessment also spoke about refurbishment in the port. So there still needs to be work done in the port. -- before we can see an uptick in output. So like ampumisaid, it's maybe too early now to talk about increased performance and lifting sales at the moment. We're comfortable with the levels where we are. And once we've seen that this well and port replacement process and program really get this speed, we'll be able to reassess our sales guidance.
Nompumelelo Zikalala : And I did just want to add that with that, I know that we've been receiving a question that's saying why anti-increasing our sales guidance for the 3 years. It's simply because of the amount of work that actually needs to be done. And as I've said before, there were 2 options. One was for Transnet to stop the entire line and do all the WACC. Well, that would have taken a couple of months and it would have required a lot of capital. And as you can imagine, that would have had a significant impact on our business, and Transnet would also have had an affordability issue. So this approach, which is covered as part of the corridor restoration program, sort of phases the WACC, but starts with the WACC that actually has the highest levels from a benefit perspective, which is why we are seeing greater stability and slight uplift in terms of performance there.
Penny Himlok : One other question from Myles. Also from UBS. He's also now asked when is the time expected to be completed end of September, end of October apiece.
Nompumelelo Zikalala : It will definitely be completed before the end of this year.
Penny Himlok : Short and sweet. Thanks Mpumi. Can I check one more time if there's any other questions on course call.
Operator : At this stage, there are no questions.
Penny Himlok : Thank you. That brings our presentation to an end. Thank you very much for joining us today, and we look forward to receiving your reports.
Nompumelelo Zikalala : Thank you.