Good morning, and I would like to welcome everyone to the Jupiter Mines 2024 call. Today, we have Jupiter Mines Managing Director and Chief Executive Officer, Brad Rogers, and Chief Financial Officer, Melissa North, to provide a brief update on the second quarter of the 2024 financial year, and then we will open up to questions from callers. Thanks, Brad. Please go ahead.
Thank you very much, and good morning. Good afternoon. Thank you for everyone joining the call and also everyone listening afterwards. In addition to Melissa, our CFO, as was just mentioned, Ian Murray, our Chairman, is also on the line. As usual, I'll give some overview comments of the quarterly activities report that was released this morning, and after that, I'll open up for any questions that you might have there. So the second quarter was actually a strong operating performance at Tshipi against a low manganese price environment. And I'll give an overview of the manganese prices and shipping rates that prevailed during the quarter.
In the quarterly, you will have seen that I also provided some additional analysis, and it's been good to see the overhanging high Chinese stockpiles that existed throughout the quarter we're talking about today, actually get drawn down quite rapidly through January, and the manganese price has responded accordingly. So we'll speak about that in a moment. For the second quarter that we're talking about here, the manganese price hung around from an FOB level, around $5 below levels, and I think that is relevant for the results that we're about to talk to. From an operational performance, we saw sales that were 764,000 tonnes for the second quarter. That was lower than the previous quarter by about 18% and 10% lower than the prior corresponding period.
But noting that the first quarter was a very high sales quarter, and we're expecting January to be, March quarter, rather, to be higher as well. So we're not concerned about that. We're expecting a second quarter to be lower. There were some operational factors involved there at the fringes. We had two parcels of manganese ore totaling 95,000 that we expected to sell in December that have rolled into March. And if those two parcels had in fact sold in the same quarter as we expected, then the sales for the quarters would have been about 10% higher and higher than the prior corresponding period. So, hopefully that provides some context.
But as I said, in the activities report, when you combine the very high first quarter sales outcome with the lower second quarter we're talking about right now, we're on track for full year expectations for sales. So understanding that sales number would be lower, that we're in line with expectations. And we've also had, as part of that lower result, 94,000 tonnes of ore rising to which will assist us, when we're talking about the next quarterly in a few months' time. From a production perspective, the quarter was actually a record at Tshipi. So the crush tonnes for the quarter came to 1,015,633 tonnes, and that was 29% better than the previous quarter and 26% better than the prior corresponding period in the previous financial year.
So that outcome was a very good one, and it was based on underlying improvement in uptime and utilization management. That crushing circuit is operating as well as it ever has, as earmarked by the production record that was achieved there. And that's picked up the stockpile levels that have been produced during the quarter, as we'll talk about later, that can be sold into, hopefully, the manganese prices in the second half of the calendar year. Mining levels, in terms of volume, were slightly down, about 11% down on the previous quarter, mainly impacted by some labor availability issues over Christmas and also some weather issues that took place throughout the quarter, but nothing too material there. You'll see the overall trend for mining activity through last year and into this year has been improving.
From a cost of production perspective, we were at $2 at the dmtu for the quarter, which has been very stable over the last few quarters. There was a slight increase from $1.95 from last quarter, but that $2 dmtu is very much in the range of what we've been producing from the current cut of the pit. For a recent period of time, you will have noticed a change between, you know, $1.85 , $1.90 the lowest to about $2.15 at the dmtu. So $2 is right in the middle of that range that we've seen for the recent history. I'll just note that the next two quarters, we're likely to see slightly higher mining costs as we move into cut 12, which has a slightly higher, 15% higher strip ratio.
That can be obscured by whatever's happening with the rand/dollar exchange rate. And there's always a blend of, ore going through our sales. So, I'll just flag for the next two quarters, we may see slightly elevated, a 15% higher, mining cost, but that's in line with the overall, mining plan as we move through this section of the pit. Post that, next two quarters, we then move into a much lower strip ratio. So, we go down in terms of strip from cut 11 to cut 12, but after cut 12, it drops about 30%, so lower than even cut 11 was. Again, this is a function of the mine plan.
It's, you'll see those slight movements, and usually they're obscured by whatever's happening with the Australian rate, particularly as manganese prices have got, lag that, and to the extent that we do see slightly elevated, input costs in the next two quarters, that probably gives to that period of time, and we expect that to drop down to much lower levels as we move into 2024. From a safety perspective, we saw two lost time injuries during the quarter, which was disappointing. They were both contractor injuries, and they were both minor in nature, so not life-threatening. Notwithstanding that, the management are right to be proud of their safety record over a very long period of time.
So if you imagine, notwithstanding those minor injuries, it's still a concern there in the nature of sort of actual roles, et cetera, which are not uncommon mining injuries, but obviously we're trying to eliminate all injuries. On the— that's the focus of the team at sites at the moment as well. I'll just move on to provide some more color in relation to the general market update. As I mentioned before, what we've tried to do in this activities report is provide a bit more color, given the low manganese prices and actually higher than you expect shipping rates that prevailed during the quarter. So a little bit more color on what's occurred there and what we're seeing post quarter end now, which, I said, conditions have improved from where they were in the December quarter.
Before the December quarter, firstly, we did see, as I've mentioned, manganese prices, from an FOB perspective, that hung around, five-year low levels. The five-year low, that we had in $2.61, and that was a couple of years ago, per dmtu. Prices in early December got down to $2.66. But the reality is, for most of the December quarter, they were at low levels, somewhere in the $2.66-$3.80 type range. What was going on there, was that CIF prices, so, manganese prices, excluding the impact of shipping rates, actually range traded in a fairly, small range from about $3.55 to about $3.60, or in that $0.05-$0.10 range for most of the quarter.
So manganese prices were relatively stable at relatively modest levels. But what we saw through the quarter was that shipping rates increased. We will have spoken at the last activities report discussion of shipping rates between $24 and $25 a tonne, which is about the pre-COVID average and in line with the general market circumstances we're seeing, that we would expect the rates to be. The shipping rates through the second quarter were around $30-$32 a tonne. They're still around the lower end of that range today, as you would have seen in the activities report.
What happened with the FOB prices during the second quarter, down rating by well $20-$36, was actually mostly driven by an escalation in shipping rates on top of manganese prices that were stubborn and stubborn at relatively low levels. The core factor affecting the manganese price was high stockpiles in China, and I think we will have spoken about that in previous discussions, quarter discussions. That was driven by trader speculatively buying earlier in the calendar year. People expected the Chinese industrial economy to come out of COVID stronger than it eventually did, and that resulted in manganese ore stockpiles being at elevated levels for most of last calendar year. For most of last calendar year, manganese ore supply into China also stayed quite high.
With the manganese ore prices running off and with various other things happening in the world, manganese supply from major manganese-producing countries started to moderate as profitability waned for those suppliers. And so while Chinese end steel demand wasn't spectacular, it was fine. We started to see supply dropping off. There's also been post-closure of the December quarter, some usual cyclical calendar restocking prior to Chinese New Year. So that's steel mills buying up more manganese ore. And what that combination of factors has been a reasonably material drawdown in Chinese stockpiles of manganese ore over the last few days. You will have seen in the activities report that Chinese stockpiles have reduced by about 11% in the last month.
And so that's been pleasing to see, and that's been a key factor behind the FOB manganese price increasing to about $2.92. So still a low level, much lower than the sort of four- or five-year average, but it's much improved on the $2.66 that we saw in early December. I've given some history in the activities report as well to say that if you look further back to the March quarter, and you compare it to the current levels of Chinese stockpiles, the Chinese stocks currently are 19% lower than we saw in the March 2023 quarter. And at that time, the FOB manganese price was 15% higher than today, noting that shipping rates were lower at that period of time as well.
But all of that points to hopefully some continuing support for the manganese price, and that's the general sentiment in the market today. So we've been through a low quarter by historical terms, and hopefully I've explained the reason as to why that was the case, and it was a combination of high manganese ore stockpiles existing in China, as well as increased shipping rates. The shipping rates haven't come down, although hopefully they do at some point in time. That's driven by other global factors, as we explained in the activities report. But the manganese prices have started to respond to reduced supply, and that's resulted in the drawdown in Chinese stockpile to, and they're now sitting around more normal levels. So hopefully we've gone through the period of some price disruption, but that did impact the second quarter.
From a land logistics market perspective in South Africa, that was relatively stable through the quarter. No real change, there. We saw road trucking at much lower levels, which is to be expected given the manganese prices prevailing. The road trucking in South Africa is the highest cost of getting ore to port, and so naturally, people are looking to diminish, reduce that part of their production if you have to. The low manganese prices has resulted in less, manganese being shipped by any method in general, though, and that's resulted in opportunities for Tshipi to rail more than expected, and that's what we've been doing. So even when you look at the mix of, logistics volumes for Tshipi, road is drastically reduced, apart from the route out through Lüderitz in Namibia.
But we've been railing more volume than we expected to, and that's because a lot of producers aren't taking up their expected rail allocations. Just briefly, from an earnings, cash, and corporate perspective, Tshipi's earnings were naturally lower this quarter compared to the prior quarter, and that's because of the factors that we've just mentioned. Lower sales volume compared to the previous quarter, but also lower manganese prices achieved quarter-on-quarter. There was a minor FOB cost differential, but that was fairly minor. The major driver for the earnings, price, and lower manganese sales. From a cash perspective, you will have seen that Jupiter's cash was stable for the quarter, but Tshipi's cash actually reduced quarter-on-quarter as a function of various timing impacts.
What I've sought to do in the activities report is give you a bit more color of that movement. You can see that there are a number of, like, timing impacts in nature. You had in there some biannual payments that are only paid in December and January, naturally being paid in December, with tax and royalties. There was some working capital investment during the quarter. That higher production has resulted in higher inventory. We're at relatively high levels of stockpile online now, and as I said, the market provides us the opportunity. All that cash was spent during the quarter to sell that inventory into the second half, where hopefully we'll see higher manganese prices and therefore comparatively higher revenue realized.
We had some shipping during the month of July, as well, which again, will open up the volume to be sold into the coming period of time. There was some CapEx and a non-recurring payment that I've outlined in that activities report as well. Tshipi typically does not spend much CapEx, and that is still true, and nothing has changed there. They did have some minor projects outlined for this year and, you know, the bulk of that spending occurred during the December quarter. CapEx in that line item is about a third of the overall item. So the actual CapEx, although we spent a bit in December, was overall that material when you take into account, it's about a third of that total amount on that line item.
The major item in the CapEx was the procurement of skip containers of vessels that are used to rail material from Tshipi to East London. You may have seen us mention that Tshipi has opened up a new channel to rail ore out through the port of East London. And to do that, we needed to procure skip containers to go on to the rail. It's a relatively short payback for that investment of about a year. So that made sense to go ahead and do that, and that capital was spent during the year. The rest of that line item is a non-recurring payment, the settlement of a rise and fall dispute, that was paid, so that won't be recurring either.
So you'll see there is a combination, a number of timing impacts, from a working capital and non-recurring or occasional payment perspective that occurred during the December quarter. We did have positive operating profit cash, as you would expect, given the FOB prices for the quarter. But obviously, with the lower prices, that does sort of draw out some of these timing impacts a bit more, but a number of them have added to the opportunity to generate higher cash in the second half. I'm noting that there was also a rollover in the cash receiving line items as well. From a interim dividend perspective, Tshipi é Ntle and Jupiter will be deciding, declaring the interim dividend, so the next dividend at the end of February.
Jupiter intends to announce that by February, in line with our first half financial report. So that's something to look out for. From a strategy update perspective, the work on Jupiter's announced strategy continues in all of its limbs, and we expect to have several updates this quarter, including in relation to the EV battery scoping study, which is now complete, and so we'll be providing an update on that, as well as the sustainability report work is also completed. The other things of the strategy announced in last March will also see updates in the short to medium term. So hopefully that provides a bit of additional color on the activities report. As I said, it seems like did a good job during the quarter.
Sales were a bit lower, but if you take into account the fact that the 95,000 tonnes of ore has rolled into January, you would have actually seen a reduction on the corresponding period, and the first quarter was high. So we're on track for sales that you would expect us to be tracking towards for the financial year. Very high production levels, record production levels, so that speaks well of the performance in that area, that site, and that set us up with stockpiles that hopefully position us well to sell into improving manganese prices. They are still quite low, but certainly much improved from what we saw prevailing through the second quarter. I'll pause there and see if there are any questions from the line.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Mark Fichera from Foster. Please go ahead.
Yeah. Hi, Brad. Yeah, just a couple of questions from me. Just on the Tshipi EBITDA, obviously a significant drop as well as a profit from the previous quarter. And I know you've talked about the lower sales and lower manganese price, but it seems to have, yeah, that EBITDA seems to fallen more dramatically than the first two were there. I'm just wondering, was there any other costs, cost items besides the production cost, which was quite flat, that that impacted those earnings? Thanks.
Thanks, Mark. No, so I haven't trawled through the actual proportions to see whether there was anything causing a disconnect. But the things in my analysis, although no doubt that you're right, but the major drivers to explain that reconciliation is sales volumes, realized prices, and a slight increase in FOB cost of production. So, there may be a little bit extra to explain there, but those are the key drivers and what we've, what we've focused on. So there's nothing else going on that's materially in my review.
Okay. And secondly, just on the high purity manganese sulfate, I know in terms of the scoping study, which you were looking into, and you said you completed that. In terms of releasing the details to the market, is that — would that be at the time of the result in late February, or could it be before, or maybe —
It'll be the— Yeah. Thanks, Mark. So as I said, that work has been done. It was due to be completed, from memory, by 31 December, and it was through the course of January, and most people have been on leave and preparing a public release version of that, and that work is done as well. So our intention is to release that scoping study as well as outlining proposed next steps prior to our interim report. So that, that should come out in the next week and a half.
Okay, great! Thanks.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. There are no further questions at this time. I'll now hand it back to Brad for closing remarks.
Okay. Thank you, for your time, everyone, and hopefully, that's been informative. We look forward to speaking with you in the not-too-distant future. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.