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Thank you for joining today's teleconference for the release of Mount Gibson Iron's March Quarter Activities Report. Mount Gibson's, Chief Executive Officer, Peter Kerr, will be leading the discussion and is joined by Chief Financial Officer, Gill Dobson; and External Relations Manager, John Phaceas. Mr. Kerr will provide a brief overview, after which there will be an opportunity to ask questions. Due to time constraints, only institutional participants will be invited to ask questions at that time. A recording of the call will also be available via the Mount Gibson website shortly after completion of today's teleconference. Thank you, and I will now hand you over to Peter. Thank you, Peter.
Thank you, Lisa. Good morning all, and thanks for joining us to discuss Mount Gibson's March '24 quarterly activities report. As Lisa said, I'll give a brief overview before handing back to her for any questions. And just as a quick reminder, the currency we talk about on this call is all in Australian dollars, unless we otherwise state. So as you will have seen from our report, Mount Gibson delivered a strong performance in the quarter amid typical wet season related interruptions, and we generated good operating cash flows and built the cash and investment reserves as we hoped. Iron ore sales from the operation at Koolan totaled just over 0.7 million wet metric tonnes, grading at 65.4% Fe in the quarter, and sales for the 9-month period year-to-date to 3.2 million tonnes on track with our annual fiscal '24 shipping guidance. Cash operating costs averaged $99 FOB before royalties and capital projects and that reflected reduced wet season volumes. And for the 9-month period, our costs are averaging out currently at AUD 67 per wet metric tonne that we've shipped. Ore sales revenue totaled $130 million -- excuse me, FOB for the quarter with group cash flow totaling $42 million and reflecting a robust all-in cash margin of $58 per tonne sold. Over the 9 months to the end of March, group cash flow totaled $289 million on ore sales revenue of $566 million FOB.
After working capital movements, the company's cash and investment reserves grew to $430 million as at 31 March, and that equates to a cash backing of approximately $0.35 per share and excludes the recently acquired 8.6% shareholding and additional option holding in Mid-West iron ore producer Fenix resources with that holding having a value of approximately $17 million at quarter end. So progressing to operational matters at Koolan. Firstly, on the safety front, we continued the overall safety improvement trends over the last 2 years, and the rolling 12-month Lost Time Injury Frequency Rate remained at 0 incidents, which is a good performance. And the rolling 12-month Total Recordable Injury Frequency rate, which fixed up LTIs as well as restricted work and medically treated injuries reduced to 5.4 incidents per 1 million man-hours worked at the end of the quarter, which was good, down from 6.8 at 3 months earlier. So the site team continues to undertake very good work on safety and safety leadership matters. In relation to mining, the performance at Koolan during the quarter focused on the lower levels of the western zones and some of the upper benches in the eastern half of the pit. As previously reported, mining has been resequenced to adjust for last August central footwall rock slip as well as tighter working confines and ground support activities on the high-grade floor as the pit deepens, particularly in the western end. Mining was impacted by the normal seasonal weather-related interruptions typical for that time of year, including flight disruptions, which were well managed by the operating team. Ore mining increased to almost 1.1 million tonnes compared with 0.9 million tonnes in the prior quarter and ore production for the 9-month period to the end of March, totals just over 3 million tonnes. The waste-to-ore stripping ratio reduced in the last quarter to 0.4 tonnes of waste for every tonne of ore, and that was down from 0.8 tonnes in the preceding quarter and in line with the mine plan as the pit approaches its ultimate levels in the western end. So going forward, the strip ratio will rise at times for limited periods in the next year, and that's in line with haul ramp repositioning and waste extraction cycles in the pit, but it's expected from now forward to remain low at average rates of approximately 1.5:1 over the remaining 3-year life. Geotechnical investigation work and wet season monitoring of the area that was impacted by last August footwall rockfall has produced generally favorable results, which is good. Accordingly, a program of on-wall drilling and bolting remediation, plus the installation of some safety barrier fencing is being designed with the objective of enabling the high-grade zones directly beneath that area to be extracted in the coming 12 to 24 months. In the meantime, mining will continue to bypass this area and transition to ore benches, which are higher up in the eastern half of the pit.
In relation to processing, volumes totaled 0.9 million tonnes in the quarter compared with almost 1.1 million tons in the prior quarter. And in the prior quarter, obviously, we had some impacts of the high-grade ore stockpiles that were previously established. Processing activities are now more closely aligned with the ex-pit ore extraction. A mobile crushing contractor remains temporarily on site to supplement the main plant to process the harder oversize material that we see in parts of the central and eastern sections of the pit and that's until our new tertiary crushing circuit components are commissioned. And work on that tertiary unit is progressing with the expenditure in the quarter totaling $2.2 million. The project remains costed at approximately $8 million with commissioning scheduled for the middle of this year, in line with our June quarter shipping schedules.
Shipment rates have moderated since the start of 2024, and that's in line with our usual seasonal planning. As I mentioned earlier, sales for the quarter totaled just over 0.7 million tonnes of high-grade ore, and that comprised 9 shipments at an average grade of 65.4% Fe. And the sales for the 9-month period totaled 3.2 million tonnes tracking in line with our guidance. And as noted in our recent update earlier this month, in late March, we did have a ship loading interruption to 1 vessel at our Wharf, which prevented the loading of the final 2 shipments that had been planned for the quarter. The vessel concerned was temporarily relocated to the nearby anchorage for stowage adjustments, and that's now occurring, and that has allowed for the loading of subsequent vessels, which have since departed. So the restowage adjustments on that delayed vessel are close to completion and departure of that vessel is expected shortly. Operating cash flow from Koolan Island itself for the quarter totaled $41 million, and that was on ore sales revenue of $130 million FOB, as I mentioned, plus there was some other income totaling approximately $1 million. Cash outflow items comprised cash operating costs of $70 million, capital projects and equipment purchases of $7 million and government and third-party royalties totaling $13 million. In relation to pricing, obviously, the iron ore price has been reasonably volatile in the March quarter, and it declined significantly in the final weeks of the quarter, although prices have subsequently increased again in April. The benchmark Platts CFR price of 62% [ material ] started the quarter at over USD 140 a tonne CFR and then declined to just above USD 100 a tonne at the end of March. The Platts CFR price for high-grade 65% fines, which is the important pricing metric for Koolan Island, averaged USD 136 a tonne during the quarter being a grade-adjusted 5% premium to the benchmark 62% iron price. And that benchmark -- sorry, that's a premium compared with 3% in the prior quarter. The Australian dollar also provided some benefit for us an average USD 0.658 in the quarter. Shipping freight rates for Panamax vessel journeys from Koolan Ireland to China have moved around a bit and averaged around $14 per tonne shipped in the quarter. But for some time now, been sitting between that USD 13 and USD 15 per tonne level. As a result, Koolan Island's high-grade fines products realized an average free on board price of USD 124 a tonne or around AUD 189 per tonne. And those values are based on the provisional prices that we record at the time of the shipment departure. And as people may know, our final pricing ultimately reflects monthly iron ore averages up to 2 months later. And so based on the lower spot pricing that [indiscernible], we do anticipate some negative provisional pricing adjustments relating to our March quarter shipments. And we don't quite know what that will be because we don't know what the future prices hold, but that could be up to a level of circa $25 million if today's prices were to stay. We continue to hedge a proportion of our forecast or sales. And so at the quarter, we had hedge contracts covering a total of 105,000 tonnes, and that's at a fixed price of AUD 188 per tonne. What that does is protect the substantial cash margin on those hedge tonnages. And those contracts had a positive mark-to-market value at the end of the quarter of about $3.5 million. Mount Gibson also holds foreign exchange collar contracts, which provide cover for the conversion of U.S. dollars to Australian dollars, and that's in the June and September quarters and covers a total of approximately USD 33 million. As previously reported, we also received a total of $10 million in insurance proceeds during prior periods and that completed the property damage claim component resulting from the August '22 processing plant fire incident at Koolan. And we continue to liaise and work with our insurers regarding the second part of that insurance claim, which is a business interruption component. But at this stage, we're still working with our insurers on it, and it's too early to comment as to what that would look like. So in relation to group cash flow and our cash position, the cash flow for the March quarter on a group basis totaled $42 million, and that comprised the operating cash flow of $41 million from Koolan as we noted above, interest income of $5 million and less corporate administration and exploration costs totaling around $4 million. As noted earlier, the company's cash and investments balance increased to $430 million at the end of the quarter, and that compared with $358 million at the end of December and $162 million at the end of June last year. So it's been a rapid rebuild of those cash reserves. And those figures I've quoted exclude the equity position in Finex Resources. In relation to the Mid-West, really only one simple comment to make, and that is the business received the final $2 million cash payment to formally close out the long-standing historical rail credit refund to which we were entitled. And that resulted from third-party use of certain parts of the Mid-West rail network.
In relation to the company's current operating and growth strategy, we're obviously continuing to seek to maximize cash flow generation from Koolan, which is our primary objective in order to provide the internal reserves we need to pursue our opportunistic acquisitions. Our opportunities that we are targeting are in the bulk commodities and base metal sectors in Australia. And we do hold already some small equity positions with a combined market value of approximately $5 million in a number of junior resource development companies where it's considered the future financing of strategic opportunities may arise for us. A significant time is also being devoted to new project generation, due diligence field visits and various discussions with third parties regarding potential acquisition partnering opportunities as well as a number of discussions underway on exploration [ mining ] projects. So in relation to our annual guidance, we continue to target fiscal '24 sales of 3.8 million to 4.2 million tonnes of high-grade iron ore from Koolan Island, and our cash cost target is AUD 65 million to AUD 70 FOB per wet metric tonne that we ship, excluding royalties and capital projects. Based on Koolan Island's forecast mining and shipping profile, the business is well positioned to achieve these targets and to generate substantial cash flow over the remaining life of the operation. So to sum up, Mount Gibson has achieved a solid operating financial performance in the quarter and that is built on the record results we achieved in the December half year period. We remain focused on the safe and responsible operations for Koolan to maximize its cash flow generation and we continue to build the company's reserves in order to provide a robust platform for near-term resources investment opportunities. So with that, Lisa, I hand back to you for any questions that any listeners may have. Thank you.
[Operator Instructions] We do have a question and that is from Glyn Lawcock at Barrenjoey.
Peter, I know you have a small little business, but you obviously have a very influential shareholder over in China. Any comments you can make from what they're seeing on the ground? I mean it was a bit of a wild ride for the iron ore price through Q1, down 40%, but now obviously, almost down to 20% of its low. Any feedback or color you're getting from your major shareholder on what's going on in China in terms of steel, et cetera, to drive the profit.
Yes, there is a bit of recent feedback, Glyn, and it comes from not only a major shareholder, which is APAC, but also Shougang and some of our other customers. And so recently, what we're hearing and certainly impacting us is that the demand for the high-grade material is pretty good. Price expectations seem to be around that USD 110 to USD 120 per tonne level for 62% Fe. I think practically, every customer we speak with and the key shareholders staying around that level is the sensible equilibrium for what's being seen in the steel sector. And I know we're going into the seasonal stronger period for various activities in China for steel production. So that's really the latest that we see, and that would obviously work well for this business.
Yes. So that's $110 million to $120 million, that's a comment for the year or for the quarter or just what they'd like to make they're happy to live with?
No comment for looking forward, what they think in 2024 is a reasonable price.
Okay. And then just the second question, just the working capital. Is it a reasonable move? Was that receivables or payables? Or what was that?
Usually, most of our working capital moves are receivables related. So we had late shipments in the December quarter, and we wouldn't have received the cash [ flow though ] at the end of that period, but we obviously received it in the March quarter. So it really just depends on how it looks at quarter end. But those movements are typically less about the expenses because they are reasonably consistent and more about the timing of receipts and provisional pricing adjustments.
Okay. But even though you had some late shipments in the March quarter, it was an overall low quarter anyway, so it's just those late December shipments?
Yes. Look, the shipments in the March quarter actually when it likely had this delayed vessel that I talked about. So that really held us up in the last week. And the payment for that obviously isn't until April, plus 2 other shipments that we were expecting to send out actually have gone since that time in April, not in March. So we didn't really have the same at the end of March that we had at the end of December.
All right. Makes sense.
[Operator Instructions] Peter, we have no further questions.
Okay. Lisa, thanks very much. And thank you to all for listening in. A copy of this will be placed on our website if others want to listen to it. Thank you, and have a good morning.
Thank you.