The middle pillar, the working responsibly and maintaining the social license. There are a whole raft of items that are referred to here, but the zero harm and responsible care culture is something that permeates us through our business and that we focus on this a lot, and we do our very best. Of course, mining is a violent process, extracting ore from the planet, but we try and do this in a way which has the least impact that can be made.

The relationships with our stakeholders, in our instance, it's the host nation, Lesotho. They are a shareholder too as well as being the regulator and so we work extremely hard to ensure that our relationships with the government are good, are open, transparent and are as strong as we can make them, and the same goes for our communities. We're obviously a major, major factor in the Mokhotlong area. And it's important for us that we are seen as a positive part of that community.

Complying with all regulations, whether it's environmental or labor regulations, all of that is obviously important to us, and we focus a lot on that.

The bottom point, organizational health. Some of you may recall that when we started out on the business transformation process, one of the aspects which we looked at was this question essentially of the morale, the happiness and the organizational health of our people. And a survey was done. We didn't score as well as we would have liked to, and we have put a significant effort behind this. And over time, we're very pleased with the movement from a relatively poor score originally to a much higher score. It's a complicated matter, this, because the part of the organization, which scored poorest were some of our contractors. And obviously, we have an ability to influence them. But at the end of the day, we are not the employers of their employees, and therefore, it's a case of working with those contractors to improve that side and that aspect of their business. I'm happy to report that there has been significant improvement here.

On the preparing for the future, the most important and long-term issue was the mining lease extension, and that really was the culmination of 18 months to 2 years of work. And happy to say that, that was achieved during the course of 2019. I'll talk a bit more about that later on.

In respect of technologies, we are always looking to try and increase our revenues and reduce costs. And the best way we can do this at the Letšeng mine is through the reduction in the damage which happens to the diamonds in the drill and blast, load and haul and recovery process. So we have a number of technologies, which we've been working on for a long time as well as different blasting practices and ore -- and the quantity of ore, which we have pushed through the plant. And all of these combined to reduce diamond damage and, therefore, to enhance our revenues. And significant progress has been made there, although we are not at the end of that road.

On the growth opportunities, it's been a busy year looking at a host of opportunities. Unfortunately, nothing has really stuck so far for a variety of reasons. Obviously, the background to this has been a tough, tough market. And under those circumstances, we haven't been able to fund the opportunity, which we think our shareholders would like us to pursue. But we continue to look and evaluate various options.

If you move over to Page 5. Some comments on the diamond market, as we see it at the end of 2019. Obviously, we operate in a global world -- in a global sphere and the economic backdrop there was subdued. Geopolitical tensions, trade wars between U.S. and China sort of waxed and waned. But nevertheless, it was an unhappy atmosphere, which prevailed there. We were at the time of -- at the end of December 2019, we certainly were looking at emerging economies accelerating growth into 2020. The COVID-19 coronavirus impact, I think, now casts some doubts on all of this, and it's unclear how long this is going to impact, particularly emerging economies.

If you go to the diamond market per se, there's been sustained and continued growth in diamond demand in the important markets of the U.S., China and increasingly India too. That is all very helpful and underpins and sustains our businesses. However, as we all know, the smaller commercial type goods, I'm talking here of sort of $100 per carat goods and lower, they were under pressure for some time. And we saw those impacts earlier in 2019. However, we also, towards the back end of the year or from the half year on, we started to experience similar pressures in the higher-value diamonds, Letšeng type of product.

And inventory levels gradually in the polished were increasing in the first half. But I was very -- I'm very pleased to report that there was a good December period as well as January, and a number of important diamonds, top 10 carats GIS traded out. So we saw a good start to the market. I will talk a little bit about coronavirus and uncertainty there. And we have some -- we have a tender, which is going to take place over the course of the next 2 weeks. And at the moment, the appointments to view the goods, the number of customers that are coming remains on track. We haven't seen cancellations at a level which cause us any concern. But of course, we will see how it translates into price.

We had seen a slight firmness in the beginning of the year in January, and I hope that, that continues, although it wouldn't surprise me if there was some impact based on the coronavirus issue and the spread of a lack of confidence, which emerges out of that or an unknown impact.

On the Gem Diamonds' market position, it's well known that Letšeng is the highest dollar-per-carat producer. I think the bottom 2 points under that pillar, the 13-carat pink sold for $656,000 a carat, a really remarkable price, remarkable diamond and really it would be remiss of me not to point it out that new record at Letšeng was set.

The other point, which is interesting is we recovered our 100th 100 carat, and again, I think, an important milestone for the mine.

If you turn over the page, we'll move to Page 6. This is a graph, mainly Bain & Company graph, but also it sources a lot of information from the Kimberly Process unit as well as various other data points. And it's -- the jaws of the crocodile graph forecasting forward what the views are in respect of supply and demand. The top line and the shaded area refers to rough diamond demand, optimistic demand of 2% to 3%. We have seen demand increases of 2%. So I don't think this is overly optimistic, but I think it's probably correct to label it as an optimistic demand scenario. You then have, below that, conservative demand 0% to 1%. And then the bottom 2 lines forecasting forward to 2030 are the supply side, conservative and optimistic. Our view would tend towards the more conservative supply side, which if you were to contrast that with an optimistic demand side, you obviously have quite wide jaws of the crocodile there. And I think that, that suggests that there is going to be upward price pressure in due course.

It certainly is the case that supply has fallen off from the peak, and that it is unlikely -- we can't see any new -- major new mine, any major new production coming on stream. In fact, on the contrary, mines are getting older, infrastructure is creaking, mines are going underground, and it looks to us as if a number of mines who are in a distress that may well close and this bottom forecast may well be the realistic forecast in due course.

Turning to Page 7, some details on our mining lease extension. The lease was extended for 10 years, the maximum which is allowed for in the law, but we were granted an exclusive option to renew it for a further 10 years. So in effect, we have a 20 year -- a 10-year agreed and an option for a further 10 years renewable at our option up to 2039. So that is a very reasonable term.

An important point, and you may have heard us talk about this in the past. The difficulties which we have had in securing work permits for appropriately skilled people in a limited number of areas, this has now been formally recorded in the lease, and it's moved from 5 to 60. The interesting point, I think, and one which we're proud about is that our workforce is approximately 93% Lesotho citizens. And this is up from when the mine began in 2004, when it was about a 50-50 expat to local ratio. So we've come a very long way, and we're particularly proud of that.

The royalty rate increased from 8% to 10%. This, of course, was in line with the 2005 Mining and Minerals Act. And so we had been operating at 8% under the previous Mining Act. And so this was entirely expected. An important concession, which is granted to us, was that in the event of a material capital project being undertaken that the royalty rate could be remitted in whole or in part, and we will agree that with the government. And of course, looking a long way down the track and with potential underground mine at the end of the economic life of the open pit, this is something which will be important at that point, but it's a long way down the line. And the other point which shareholders have asked us about is the equity split, that remains at 70-30.

On Page 8, we have a long list here of corporate social investment activities that have been undertaken. I'm not going to go through this in detail. But suffice it to say that we have a very significant pipeline of projects, which have been completed. And I think it really goes to the social license to operate. And it demonstrates our work and our presence among the broader community in Lesotho, mainly close to the mine, but also further afield too.

Our approach always is to start from a needs analysis in the communities, and then we work upwards from there. We have community representatives on our various steering committees and investment committees. And so we work particularly hard to ensure that the projects that we do build and assist in building are projects which are community-driven in the sense that they are needed by the community, and it's not a sort of top-down ego project, which gets thrust upon the community and then in due course, turns into a white elephant scenario.

If you look at Page #9, 2019 from an all injury frequency rate was a very good year. And as I referred to previously, a historic low. But we, however, did have a fatality. This is a significant blot on our copy book. We really take this extremely seriously. And there has been a huge intervention. And it starts with a careful analysis of what the root cause of the fatality was and moves then through a process assessment and ultimately, a disciplinary action where it's required and then the plan going forward to ensure that such a thing doesn't happen again.

There have been huge numbers of workshops, case study, site inspections, mentorship programs implemented, and I'm happy to say that 2020 has started off well so far. One is always worried and nervous that things can go wrong. But so far, the year has got off to a very good start.

Page 10. We refer here to Dam Safety Management. There has been, obviously, as a result of the Vale and other problems, an increased and heightened awareness and focus on matters of dam safety, and indeed, we received an inquiry from Church of England, who are a shareholder in our business, and we participated in their safety initiatives and 4 of which were set up by them. Suffice it to say we are very confident and comfortable with where we are and what we have done. And our bigger and -- and the processes, which we have instituted in respect of our dam safety. And you will see the picture in front of you, at the bottom of Page 10, the broadness of the wall holding back the water on the other side.

So I think we're pretty comfortable about this. It doesn't mean that we rest on our laurels. We're always concerned, and we monitor the walls in a very close manner, a scientific manner. There is a radar, which measures minor movements and constant assessment of any cracking in the dam wall, any movement at the foot of the dam wall, the water levels are managed in a very careful way.

Just to say, too, it has been a period of significant drought in the area. Our dams are just above 50% at the moment, which is low for us. So I think it's just a case of assuring shareholders, analysts and others that this is a matter, which is taken really very, very seriously.

If you look at Page 11, we just put a photograph there, aerial view photograph of what the mine looked like in 2004, when it started up operation and what it looks like, the most recent photograph we could get is 2018. And so there you could see how things have moved on over time. And under the 2006 to 2019 comparison, waste tonnes, ore tonnes and carats recovered, you can see how the mine has grown over time.

I would like to hand over to Brandon, who is going to take us through the next couple of slides, the operational review, the slope steepening, and I'll come back for sales and marketing.

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Brandon de Bruin, Gem Diamonds Limited - Operations and Business Transformation Executive [3]

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Thank you, Clifford. And operationally, we had a solid performance in 2019. And a few of the highlights include the successful implementation of the inter-ramp pit slope steepening, which has added significant value to the company in the long term, and I'll touch that briefly on the next slide.

We improved our drill and blasting practices for improved berm retention, which is a requirement and really added to the ability to steepen the slopes. And also implemented a program targeting better blasting for diamond breakage reduction.

We enhanced our fleet management system, and I think that is working well. We improved the plant stability and uptime through sustained BT initiatives, and we've also added to carat recoveries through the continuous operation of the retreatment of tailings to the mobile plant.

In terms of the PCA, which is our Primary Crushing Area, we also replaced the jaw crusher, and we refurbished the structure, which has placed us in good state going forward for this year in terms of our production and treatment.

Just on the right-hand side of that slide, we can see in terms of ore tonnes treated at 6.7 million, and that is well within our targets for the year and a reduction in waste tonnes mined from 26 million tonnes in 2018 to 24 million tonnes in 2019, largely due to reduction in waste.

And carats recovered, there is reduction in the carats recovered from '18 to '19, and that is largely due to the mining mix and the reduction of the higher grade -- reduction to the higher-grade satellite tonnes treated in 2018. The difference there was about 2.1 million tonnes versus 1.7 million tonnes in 2019.

On the bottom right-hand side of the page, we have the frequency of large diamonds in numbers. Interesting to see that the numbers in 2019 were all above our average for the last 10 years, and well in line with our 2018 numbers, other than the 3 large 100 carater in -- the 3 large 100 carater in 2018, including a 900 carater in the first quarter. The larger than 10.8 carat diamonds usually make up about 80% of our production. Last year, this was 75% in terms of value, which, again, talks to the impact largely in terms of market and on price.

If we flip over to Slide 13, just to touch on the benefits and value of the steeper slopes. One can see over the life of mine profile, our total waste in terms of a shallower slope mine plan in 2017 versus the 2019 steeper mine plan, we've seen a change of a reduction in waste of about 95 million tonnes and increasing carats between those 2 mine plans of about 20,000 carats and a reduction in ore of about 1 million tonne. The reduction in ore is largely due to the elimination of cut 5 in the main pipe. Due to steepening, we were able to eliminate the cut 5 of that pack. And that resulted in a reduction in terms of waste, but also reduction of about 5 million tonnes, which is about 5% to 10% of the expected ore from that cut. So 90 -- about 90% of that ore is still recoverable through the steeper slopes.

And it was compensated slightly by the increase of about 4 million tonnes in the satellite pipe where cut 5 and cut 6 would be steepened, and with the benefit of less waste and more ore.

In 2019, we saved about 5.8 million tonnes of waste due to the steepening, and that is, again, compared to the 2017 shallower slopes.

And lastly, in terms of 2020, we're looking at a targeted saving of about 4.7 million tonnes of waste.

If I can hand back to Clifford for the sales and marketing.

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Clifford Thomas Elphick, Gem Diamonds Limited - Founder, CEO & Director [4]

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Thank you, Brandon. Some of the highlights in 2019. I've referred to the pink diamond, but we sold 27 diamonds for greater than $1 million each, generating $68 million and a further 67 diamonds sold for greater than $20,000 per carat, that's our sort of bread and butter, and so that was a pleasing scenario. And the large diamonds, greater than 10.8 carats, just to point out, that accounts for 75% of the revenue. So this is the nature of the ore body that we are dealing with.

I previously referred to the fact that there was an impact on pricing from the middle of the year. But again, very pleased to say that the Tender 1 results in 2020 showed signs of -- we've got price stabilization. In fact, prices were slightly up.

If you turn to Page 15, you will see just photographs of our significant diamond recoveries in 2019. I think this is always a very good graph to look at. And it really shows some of the iconic diamonds, which we produce.

Turning to Page 16. The 100 greater-than-100 carat Letšeng recoveries is a highlight, we want to hop on that. And you'll see that those diamonds have generated $436 million in sales for this ore body.

If you turn then to Page 17, I'd like to talk about technology and innovation for a short while. The picture shows the small pilot plant, which we have now built and commissioned. And we have been dealing with a whole lot of commissioning issues, but I'm happy to say now that those are almost all completed, and we have begun now to look at material, which may well contain diamonds within it.

So the tailings material, material from a 25-millimeter to 40-millimeter size, and we are starting to pass that through the plant. And hopefully, we will be able to prove that we can indeed see the diamonds inside this rock and then that we can, as a second stage, extract the diamonds from the rock using nonmechanical means and thereby not damaging the diamonds. And that will coincide, of course, with our ultimate aim of maximizing revenue by not damaging diamond.

The final point is, we have been working with the GIA to introduce a blockchain technology, which keeps the history of the diamond from the moment it was recovered as a rough diamond through the recovery, sorting process to Antwerp through the sales process and the manufacturing process to a final polished diamond. And we have been, as I say, working in partnership with the GIA on this, and we're making significant progress.

Before I hand back to Brandon on the business -- to comment on business transformation, I thought I should make just a few comments about our reaction to the coronavirus COVID-19 scenario. We are, obviously, in the first instance, concerned about our people and their health and safety. Our mine is a 1,800-person enterprise. People live in close contact and go about their business in an isolated, but concentrated place.

We have instituted temperature checking on a daily basis and access control. We have enhanced our clinic and medical staff. We have put in place an isolation block, if necessary. And most importantly, we have access in South Africa through a private provider to quick turnaround testing to establish, if, in fact, we have anybody, who, in fact, will have the virus itself. So that's the immediate work we've done in respect of our people.

As far as education on sanitation, hand washing, keeping distance, not sharing mugs and coffee cups, et cetera, knives and forks, that is all goes hand in hand, and there is a big effort, a daily effort to ensure that everybody is absolutely clear as to what is the best way to behave themselves in order to limit the chance of the spread of the virus to themselves.

So that's as far as the mine itself is considered and, obviously, what we're trying to do is to ensure that we have no business interruption on the site.

As far as our supply chain is concerned, we have done an analysis of where our supplies originate from. And if there is a need to put in place ameliorating factors and other suppliers to ensure that we suffer no business interruption on that sort. And a big effort has gone into this. I'm pleased to say we're quite a long way down the track in respect of this. It is the case or it appears to be the case anyway that China's reaction has been significant and has borne a great deal of fruit there in the sense that I believe that the white-collar workers are making their way back into their offices. The blue-collar workers are finish -- or many of them are nearing the completion of their quarantine, and it is anticipated that they will be back at work quite soon. And as I understand it, the forecasts are that most of China's supply chain is going to be back, if not at full caps by mid-April, certainly shortly thereafter.

So I think that is a good sign. China, we don't purchase much of our needs from China at all. But nevertheless, it's just comforting to know that the economy there is likely to receive a substantial dose of assistance from the government and that no doubt will have an impact on our final sales to those customers when that economy starts kicking up and getting into gear again.

As far as the U.S. is concerned, we foresee that it gets worse before it gets better there. And then in India, that's at the early stages of the COVID virus reaction and how the government is going to manage that. So I think we've placed the emphasis initially on the business interruption and staff health and welfare basis. We have looked longer term at supply chains, and we're not too concerned about that at this stage. And we watch what happens in the U.S., which, of course, is the largest diamond market with great interest.

I'd like to hand back to Brandon, just to speak about business transformation, and we'll move over to Mike onto the income statement and balance sheet.

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Brandon de Bruin, Gem Diamonds Limited - Operations and Business Transformation Executive [5]

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Thank you, Clifford. I think the implementation of our business transformation, as you mentioned previously, has been a great success and has been of significant value to us and our company since its -- the start of the implementation through mid-2017. I'm pleased to say that the initiatives that have been implemented are on track to deliver the $100 million target by 2021. And to date, we've saved in terms of costs and added benefit in our performance of up to $55 million, and that is as at 31st of December 2019.

We've now commenced with the implementation of the continuous improvement strategy. And this is really twofold: one, to ensure the sustainability of the initiatives that we've implemented and the cost saving that goes along with that; and two, to introduce new ways of optimizing the operations throughout. The $100 million -- if you have a look at the pie graph just on the bottom left-hand side of Slide 18, the contribution of the work streams in mining, processing, working capital and overheads and corporate activities, the proportion that, that has reduced to the benefit and will continue to produce value over the years is set out there.

And then moving to the bar graph on the right, up to 2019, our actual savings. And going forward, the forecasting in 2020 to 2021 to be $100 million, and we set out a $22 million and $23 million, respectively. The upside of 2019 in terms of our actuals at $34 million includes the benefit of the slope steepening, and it includes an overperformance in terms of our recoveries on the mobile XRT, and there are certain one-off initiatives that contributed to that value. And those then, going forward -- they had an impact in 2019 and -- but going forward, you don't see them in '20 and '21.

If I can hand back to Michael to go -- proceed with income statement.

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Michael Michael, Gem Diamonds Limited - CFO & Director [6]

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Thanks, Brandon, and good morning, everybody. I'm just moving over to Slide 19 just to talk about the profit outturn for the year of 2019.

As Clifford mentioned earlier, we have had some headwinds with regards to the market and price and that related in a dollar per carat of $1,637, which was down from $2,131 from the previous year.

Taking into account our carat sold -- the volume of carat sold for the year of 111,292, which was within the guidance, guided profile of 111,000 to 113,000, we generated revenue of $182 million for the year.

Our revenue is down significantly from the prior year, but driven by 2 issues: the first is the price, which I've alluded to; and the second is that in the prior year, we recovered 120 -- we sold 125,000 carats.

The volume in 2019 was impacted by the lower contribution of the satellite pipe, which Brandon alluded to earlier. We only accessed 1.6 million tonnes of satellite compared to 2.2 million tonnes in the current year, which had an impact on our price and recovered carats.

Moving on to royalty and selling costs. That's obviously tied into the relation of revenue and had a diamond trade there as well to $16.9 million, but it should be noted, again, as Clifford alluded to, in terms of a new lease, which came into effect in October that Tender 7 and Tender 8 was factored in at 10% and that will be the rate applied going forward.

On cost of sales at $114.7 million, down significantly from the prior year of $146 million. And that's driven by specific cost savings within the direct cash cost element of our operation, but also predominantly driven by the lower volume of satellite pipe, which we mined during the year and processed, and that is driven by the lower amortization rate as the satellite pipe has got a higher strip ratio.

I will refer to more detail on the costs on the next slide. On the corporate expenses line item there, costs continue to trend downwards. Again, down to $9.4 million, and we're now below $10 million. I will refer to it a bit more detail in the following slide. That resulted in us generating EBITDA of $41 million. And before leading into depreciation of $14.7 million, which is higher than the prior year of $8.5 million. And that's driven by a couple of factors: the first is, we've had the new workshop coming into use and, therefore, we've had an increase in depreciation directly related to that. But also the implementation of IFRS 16, which is the new standard, which we implemented for the year in terms of accounting for certain contracts and financial assets and liabilities.

And as a result of that, we capitalized about $8 million to $10 million of assets, which resulted in additional depreciation in the year. Other income of $4.7 million comprises foreign exchange gains of $3.6 million and some -- and profit of about $1 million related to the sale of some redundant stock and assets that we had at the operation.

Our net finance costs of $5.8 million split up in 2. We had interest received of just under $1 million and expenses of about $6.5 million. The increase in interest paid is, again, driven twofold: one is the impact of the IFRS 16 matter, which I referred to earlier, which now results in certain expenditure being accounted for as interest and/or depreciation. And then during the course of the year, due to the strain on the market and the lower dollar per carat, we've utilized our facilities in and out during the course of the year and resulted in additional interest being paid.

Noncash items of $1.1 million, mainly represents the share-based payment, annual charge we incur. Profit of $24 million was generated before we incurred a tax expense, an accounting tax expense of $9 million. The $9 million represents 25% at Letšeng and that's a statutory rate in Letšeng of Letšeng's profits. Profit after tax of 15 million -- $15.1 million, resulting in attributable profit from continuing operations of $7.1 million and taking into account, weighted average number of shares and issue of 138.9 million resulted in an earnings per share from continuing operations of $5.1 million (sic) [$0.051].

We did have an additional charge from discontinued operations during the course of the year and based on the fact that we concluded the agreement to sell Ghaghoo, and we've classified it as a discontinued operation. We have not, at the end of the year, concluded the sale at full with the department and the purchases, final negotiation in terms of approvals, and we've incurred $4.5 million worth of cost to maintain around care and maintenance.

Moving on to Slide 20, which is a Letšeng cost analysis. Again, just look -- referring to the ore tonnes treated, you'll see that we had a 200,000-tonne volume increase to 6.7 million tonnes. Again, that was within the guided numbers of 6.6 million to 6.8 million. And based on that, our direct cash costs turned out to be LSL 150.6 a tonne. Increase of 6% last year, taking into account the benefits from the business transformation, impact of inflation of roughly about 6% in additional haul distance -- hauling distances for the -- for mining deeper in the pit and a 6% increase is well-achieved target for us, and we're happy with the LSL 150 in terms of that cost.

The Plant third operator costs, if you recall, that's the first plant that's operated by an independent contractor and the contract is revenue-based. So our cost is as a percentage of the revenue, we generate from their sales -- from their production. And therefore, that turned out to be a LSL 20.4 a tonne. But again, the higher the cost just really means the higher dollar per carat that we've achieved.

Clifford referred to the pilot plant, which started during the course of the year. And in August, we started commissioning and ramping that up, and LSL 0.45 is the cost that we've incurred just to start running that plant. A total cost of LSL 171 a tonne compared to prior year of LSL 168 is a 1% increase.

When referring to the business transformation, there's 2 elements to it. There is one significant initiative that we're running, and that's the mobile plant, which processes certain tailing materials, and that's running at LSL 2 a tonne and generated additional revenue for us. So that is a benefit cost that we include as a separate line there.

And then the last element is fees and employment rewards scheme of LSL 8 a tonne. That has now concluded, and that's the final fees to the consultant who assisted us with the process and also the final payment in terms of the reward scheme. So that should not continue into the new year.

Overall, our direct cash costs before waste came in at LSL 181 a tonne and that again was slightly below the bottom end of our guidance of LSL 182 to LSL 193. Noncash accounting charges of LSL 64, as mentioned earlier, that's down significantly from last year, and again, driven by the fact that we only had 1.6 million tonnes of satellite material versus 2.2 million and driven by the lower amortization charge by doing more Main pipe.

Again, the total operating costs coming in at LSL 245.9, is just over the bottom end of our guidance number of LSL 245 to LSL 255. The average exchange rate for the year was LSL 14.45 and that turned into a dollar cost of just over $17 a tonne.

On the waste side, we mined 24 million tonnes, down from last year of 25.8 million. And again, within the revised guidance we provided of 24 million to 26 million. Our unit cost, however, was out of our original guided numbers of LSL 36 to LSL 38, and we ended up LSL 38.62, and that's an 8% increase over last year. The major impact of that was the lower volume of tonnes we incurred, we mined. And there is a fixed cost element, and unfortunately, on a unit cost basis, that fixed cost is dragged into our unit cost reporting. However, the decision was taken to reduce waste mining to the extent possible, and that overall aggregate costs, in maloti terms, turned out to be a saving of about LSL 50 million that we didn't incur, albeit that our unit cost went up. On a dollar term basis from the same exchange rate of LSL 14.45, it turns to $2.67.

On Slide 21, we just got 3 graphs today just to show the historical trends of some of our costs. The Letšeng direct cash costs, you'll see that over time, from 2014 to 2019 has gone from LSL 138 to LSL 173. And what we're trying to illustrate here is that we -- if we apply just inflation-adjusted costs, where our costs have remained flat in real terms since 2014, and that's notwithstanding the fact that we've had longer haul distances, increased costs associated with that and that we've had out of inflation-adjusted costs, in particular, power and 1 or 2 other dollar-related costs coming through.

In the middle table, the Letšeng operating costs, that's our IFRS accounting charge. And again, you'll see, it's dropped down to LSL 246, I spoken to the fact that this year, there was a volume impact on the -- from the satellite pipe, but it's the lowest cost that we've had in the last 3 years.

And then importantly, on the right-hand side is the corporate cost slide. The pink bars, they reflect our baseline operating costs. And you'll see that's trended down from $11.4 million in 2014, down to $6.2 million in 2019, and that's a key initiative for us in terms of trying to maintain our cost at an appropriate level, but at the same time, maintaining appropriate governance and oversight on the operations. The $3.2 million, that's shown separately there and in all the previous graphs, represents project costs and/or bonuses paid. In the current year, we incurred final BT and incentive costs at the corporate office similar to that at the Letšeng operation, which was $1 million. And we incurred project costs, again, Clifford referred to, strategic discussion of looking at various projects and opportunities of about 0.8 -- just under $1 million. And it also includes bonus provisions of $1.4 million, which is, at this stage, a noncash allocation.

If I then move to the financial position on Slide 22, and there's 2 issues I would just like to highlight. Under IFRS right-of-use of assets in 2019, you'll see the $8.5 million of assets and nothing in 2018. And similarly, in the liability side of lease liabilities of $10.5 million and nothing in the previous years and that just relates to the impact of adopting the new standard with regards to accounting for leases.

The other area that I'd like to highlight is in the current year, you'll see that we have an income tax receivable of $8.2 million. We had previously alluded to this in terms of our tax payments for the year, and our outturn this year results in a refund of $8.2 million.

But just to correlate that, you'll see that in our cash flow statement in the next slide. Our income tax payable last year was $9 million, we ended up end of the year, which was paid in the current year.

Before I get to the cash position, I'd just like to talk to Slide 24, which is our guidance for 2020. We put in the production numbers, the waste mining plan is between 23 million and 25 million, so very similar levels as what we've been incurring this year. Ore treated, we believe there is a slight improvement that we can still build on from this year, what we did 6.7 million. So our guided numbers is 6.7 million to 6.9 million. I think also important to note that we have previously noted in a mine plan that the third plant operator would terminate in the middle of this year. However, we're in a final negotiation to extend that to the end of 2021. So therefore, there is additional production coming through from that compared to what we previously stipulated.

Satellite pipe, our aim is to increase that and improve the contribution from the satellite. So our guided numbers for this year is between 2.5 million and 2.6 million tonnes. That production profile will result in carats of between 118,000 and 122,000 and then taking that into sold numbers will be 115,000 and 119,000.

On a direct cash cost basis, our costs are very similar to last year. Our guided number is LSL 185 to LSL 195, and the operating costs of LSL 260 to LSL 270, go up slightly and that's to account for the additional satellite that we referred to earlier.

Mining waste cash cost of LSL 37 to LSL 39, and that is very similar to this year's cost of LSL 38.62 and the reason why that is -- and hoping to stay at that level is we're doing very similar volumes to what we did in 2019. And in addition to that we don't believe in terms of our forecast plan that the hauling distance for 2020 compared to 2019 won't be materially different.

Total CapEx of $10 million to $11 million -- sorry, $11 million to $13 million is being planned for this year. The capital has been based on FX rate of LSL 14.75.

And then just on the last slide, with regards to the financials is Slide 23 on the cash position. We ended the year at $11 million of cash, but in a net debt position of $10 million. We did -- during the course of the year, we paid $14 million to facilities and $10 million of that related to the old Ghaghoo dig that we have, which left us with the balance of $10 million at the end of 2019 and the balance to be paid in 2020. And then $4 million of $14 million related to the workshop facility that we've got.

I referred to the $19 million in tax payments, and again, that is split in terms of $8.3 million, which we paid this year and effectively overpaid, which was on the balance sheet, which I referred to earlier. And then it also includes the $9 million, which we paid for 2018, which was cash flowed in Q1 of 2018. We've got a total of 3 available facilities totaling $70 million at the end of the year.

Just to run through the waterfall there, you'll see Letšeng generated $94 million in cash -- operational cash before waste. We generated $2 million on the assets that I referred to early in income statement. And we then invested $73 million in waste, which was capitalized during the year. That's for the 24 million tonnes, and that compares to $79 million in 2018.

The tax, I've already spoken to, and the financial liabilities repaid as well. Corporate costs, as I mentioned, our cost element of the $9.4 million corporate costs was $8 million. We invested $10 million in PPE. The majority of that related to the pilot plant and that Clifford referred to in terms of the technology, which is about $1.1 million. We incurred $1.5 million for further work on our tailings storage facilities, at Letšeng facility. Brandon alluded to some PCA work, primary crushing area work, that was incurred, and that was just under $1 million. And then we are working on our resource and reserve statement, and we've incurred $1.5 million this year in terms of some drilling work and the actual work to finalize that report.

Net finance costs, I've spoken to, and the Ghaghoo cash cost for the year was $4 million. Again, I alluded to earlier, resulting in cash at the end of the year to be $11 million, together with $70 million of available facilities.

With that, I will just hand back to Clifford.

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Clifford Thomas Elphick, Gem Diamonds Limited - Founder, CEO & Director [7]

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Thanks, Mike. So we get to that point of the presentation where we're happy to take any questions you might have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Richard Hatch of Berenberg.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [2]

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A few questions. First one, just on the satellite pipe contribution for 2020. Are you able to give a stare as to the splits on that in terms of whether you can give it quarterly or half 1, half 2?

And just off the back of that, what the mix is looking like coming out of the mine at the moment? And how we should think about the kind of expected realized price versus kind of previous sort of tender averages? That's first one.

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Clifford Thomas Elphick, Gem Diamonds Limited - Founder, CEO & Director [3]

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Perfect. Thanks, Richard. I'll hand over to Brandon to talk to the satellite contribution.

Richard?

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Brandon de Bruin, Gem Diamonds Limited - Operations and Business Transformation Executive [4]

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Yes, speak up.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [5]

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Hi Brandon...

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Brandon de Bruin, Gem Diamonds Limited - Operations and Business Transformation Executive [6]

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Yes. Richard, just in terms of the satellite contribution, you'll see in the guidance that Mike spoke to the contribution there through -- step up through the year, and our aim is to be quite consistent on a month-to-month basis. The plan is to consistently produce the total amount per month that we need to achieve that. So there is no -- at this stage, there is no deferment into H2 rather than H1. We're going to try and consistently provide satellite through the year. And of course, as you know, that could change if something changes, but that's the plan as it stands now.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [7]

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Okay. And the mix as it stands?

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Michael Michael, Gem Diamonds Limited - CFO & Director [8]

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Sorry, what do you mean by the mix, Richard, the satellite?

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [9]

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I mean I believe you've kind of mentioned in kind of when we've spoken previously, just the mix probably mainly due to the Main pipe was not as strong as kind of a more blended mix, which includes more satellites. So should we expect the average realized price to trend higher kind of with the exception of market movements just on that improvement of mix because you've got more satellite material coming through?

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Michael Michael, Gem Diamonds Limited - CFO & Director [10]

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Yes, Richard, you should. I mean in terms of the resource, the reserve price is for the baseline prices of the different phases of the ore body. Having more satellite, it will improve our dollar per carat. And again, as you mentioned, it's notwithstanding what any view you take on the market impact.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [11]

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Yes. And what you're seeing in terms of the size-frequency distribution and the quality distribution of the ore coming out of the mine as you're processing more satellite pipe over the last sort of couple of months. Is that consistent with your expectation?

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Michael Michael, Gem Diamonds Limited - CFO & Director [12]

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Yes, it is. We are seeing some better quality production coming through, and that's driven by the satellite increase and contribution.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [13]

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And then while I've got you, can I just ask a few picky ones on the accounts? So should we, therefore, increase our D&A assumptions in the model and is sort of $15 million a decent run rate?

And then secondly, on tax, that $8 million kind of receivable, how should we think about modeling tax for the course of the year?

And then thirdly, just CapEx, is there any kind of split? Or should we just 50-50 it for the course of the year?

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Michael Michael, Gem Diamonds Limited - CFO & Director [14]

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Richard, a lot of questions, let me quickly run through them in order. And the first one was...

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [15]

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D&A.

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Michael Michael, Gem Diamonds Limited - CFO & Director [16]

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The D&A, yes. Sorry, so on D&A, yes, I think if you ran a $15 million run rate, that would be fine. And of course, now -- and the guided cost is now excluding -- or including impact of IFRS, so that would be fine.

On the tax side, the receivable is obviously due to us. We have to file our tax return, which is due at the end of the month, and there is a process then to recover that. In the extent that there is a challenge to recover it from a liquidity perspective from the LRA in country, no doubt, we would then offset that against current payments for the year of 2020.

In calculating your tax position, I think your baseline is to treat them separately. One is to work out your base tax calculation for 2020 on your numbers at 25% for this thing and then treat the $8 million as a refundable during the course of the year.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [17]

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Okay. And then CapEx splits?

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Michael Michael, Gem Diamonds Limited - CFO & Director [18]

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CapEx splits, I'll probably look at it 30%, 40% H1 and the balance H2.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [19]

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Okay. And then -- and sorry, I've just got a couple more. Last ones are, firstly, just the dividend up cash from the mine to the TopCo, is there any -- is the -- is there an expectation to dividend up cash from Letšeng this year?

And then just on the corporate and other costs, can you just help me clarify on that? The -- what should a sustainable run rate be? Because I've got kind of like the operating cost of $6.2 million and then the bonus and projects of $3.2 million, but I would imagine that should come down. So what's a decent long-term run rate, Mike?

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Michael Michael, Gem Diamonds Limited - CFO & Director [20]

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So to quickly answer that one, I would put $8 million in at the moment. I think that's a fair cost but that excludes any particular project costs that we incur because those are ad-hoc as they incur. So $8 million to me is a sustainable run rate to deal with.

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Richard James Hatch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [21]

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Okay. And then the dividend from Letšeng?

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Michael Michael, Gem Diamonds Limited - CFO & Director [22]

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So we always look to extract dividends out of Letšeng. At the -- our plan and our business plan based on the pricing assumptions and FX rates we've used, we do see a dividend being extracted out of it, but we're obviously going to monitor that. We got a minimum cash policy in terms of their requirements to operate. We maintain 3 to 4 months' worth of working costs and a 6-month view on capital from a cash perspective and the rest, we generally extract out of Letšeng from a dividend flow.

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Operator [23]

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Our next question is from Kennedy Nyangoni of Barclays.

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Izak Jan Rossouw, Barclays Bank PLC, Research Division - Director [24]

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It's actually Ian Rossouw. I just had a couple of questions as a follow-up on -- from Richard. Firstly, on the satellite. Just wanted to get a sense of the guidance you gave is slightly lower than the sort of previous mine plan that had 3 million tonnes in the chart last year. Is that due to or related to the sort of contact face sort of deviation issues you still had last year?

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Michael Michael, Gem Diamonds Limited - CFO & Director [25]

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Ian, it's Mike here. Not directly. I mean we do have that issue, and it was an impact that it could flow into the current year. So we have put up those numbers. We are targeting higher numbers. Our plan was to deliver the 3 point -- 3 million tonnes for an extended period to 2023, but we just believe that the 2.6 million is a fairly reasonable rate that we should achieve taking into account some of the challenges of last year.

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Izak Jan Rossouw, Barclays Bank PLC, Research Division - Director [26]

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Okay. And is 3 million then a reasonable number for 2021?

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Michael Michael, Gem Diamonds Limited - CFO & Director [27]

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I mean, I'd say...

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Izak Jan Rossouw, Barclays Bank PLC, Research Division - Director [28]

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Or say, we keep it at 2.5 million to 2.6 million. Okay.

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Michael Michael, Gem Diamonds Limited - CFO & Director [29]

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Yes. I think you should run it at the similar levels, over 2.5 million to 2.6 million, but I think we'll take a clearer view once we see the outturn of 2020, and if we haven't had any significant challenges. We haven't lost ore. So the reduction is not a review on volume of ore available. It's just the scheduling had to be revisited based on the fact that we lost that contact previously.

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Izak Jan Rossouw, Barclays Bank PLC, Research Division - Director [30]

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Okay. Okay. That's fine. And then just on the direct operating cost guidance, I -- I guess, from previous indications, you said that the business transformation cost should come down quite meaningfully from 2020. So I'm a bit surprised that despite that, the direct operating cost is actually going up quite a bit. Could you maybe just talk about that or just say how much you've assumed for the BT cost within the guidance?

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Michael Michael, Gem Diamonds Limited - CFO & Director [31]

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Okay. So there is no external BT costs within the guidance anymore, so that's gone. So the item that I referred to in our 2019 cost of LSL 8, which were referred to the consultative fees is gone. What is in our costs are any initiative that drives additional revenue. So for instance, the first -- the mobile plant that I referred to, those costs are in here. So we've had an increase in costs, but there is an increase in benefit and revenue because of that, and so there is no external costs. The other matter that in terms of our guided numbers for 2019 is we've run usual inflation, which is about 6% local currency inflation in there. And we have got longer haul distances on the ore side in the current year of roughly about 6% to 7% planned for the new year again. So that is driven that impact up. There was significant movement in the last quarter of last year on the exchange rate, the net debt has an impact on our contractor costs, and there was an adjustment in terms of our rise and fall calculation, which impacted local currency costs, which are dollar-based, i.e., a certain of the space on the fleet for a contractor and tires and the like. So there was an impact of foreign exchange on our costs.

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Operator [32]

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(Operator Instructions) We have no further questions on the conference call.

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Clifford Thomas Elphick, Gem Diamonds Limited - Founder, CEO & Director [33]

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Right. Well, thank you, everybody. Thanks for attending. Much appreciated. And if during the course of the day, you have any other point which you wish to ask, you can contact either Mike or myself or Brandon directly. But thanks very much for your attendance.

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Operator [34]

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Ladies and gentlemen, that concludes this event. Thank you for joining us. You may now disconnect your lines.