Good afternoon. I would like to welcome everyone to the Jupiter Mines Group Q4 call. Today, we have Jupiter Managing Director and Chief Executive Officer, Brad Rogers, and Independent Non-Executive Chair, Ian Murray, to provide a brief update on the fourth quarter of 2023 financial year. We will open up for questions from callers. I will now hand over to Ian. Thank you, Ian.
Good afternoon, everybody, and welcome to our call. This, as you see from the heading, is our fourth quarter quarterly report, which we've changed the year-end, which Brad will talk about. I would just like to congratulate Brad on completing 12 months, or tomorrow, completing 12 months with Jupiter. With that, over to Brad to talk us through the quarterly.
Thanks, Ian, thank you everyone for joining the call today. In addition to myself and Ian Murray, our CFO, Melissa North, is also on the call today. As Ian said, this is our June quarterly report, and we're now moving on to a 30 June reporting calendar and rhythm from here on out. Again, as I think we discussed on the last call, that is to align Jupiter with Australian reporting norms, and hopefully, that will make us an easier follow with respect to Australian investors. As was mentioned, I'll just provide some overview comments in relation to the key themes and highlights from the last production quarter, and then we should have time for questions, should there be any.
As you've seen on the report that we put out this morning, Australian time, the last quarter was quite strong from a production perspective. Our production of 921,488 tons for the June quarter was up 9% on the last quarter, and it's been the strongest quarter in the last 12 months. Pleasingly, costs were also down at the same time, so down 8% on the last quarter. From a cost perspective, it's been the strongest performance also in the last 12 months that we've reported there. Some of that is due to the weak rand relative to the US dollar, but there was also underlying improvement in mining and land logistics costs. That's good to see, and it's been a focus of the team.
Sales on the face of it were down quarter on quarter. There's a couple of key points to make there. One is that the March quarter was particularly strong as we were rolling off the South African February year-end. That February sales figure was particularly high, and that obviously was contained within the reported March quarter. You'll see that the March quarter was particularly high. The other point to make was that, as I've said in the activities report, that 130,000 ton shipment rolled over into July. It was expected to be booked in this June quarter figures, and it carried over slightly into July, and so that 30,000 ton shipment will be picked up in the next reported quarter, and we do expect that next reported quarter to be higher in terms of sales volumes.
Although the current reported quarter looks slightly down on sales, it's actually in line with trend, particularly when you normalize for that 30,000 ton shipment that I just mentioned. For the full year, as you can also see on a financial year reported basis, Tshipi delivered about 3.5 million tons of sold ore, and that's slightly above the long-term trend and around the current target for sales. Notwithstanding those few comments, the quarter was in line with the trend in the overall year, was satisfactory from a target perspective. manganese prices were lower during the June quarter. The supply side disruptions that benefited the manganese price in the third quarter that we talked about on last quarter's call were resolved.
Combined with that, muted Chinese end demand and sufficient stockpiles at the moment in China resulted in lower manganese prices than prevailed in the previous quarter. That's continuing right now through July, post the end of the June quarter. Most market analysts that I've seen are predicting a modest pickup in the manganese price towards the end of this calendar year and into next year. The assumption there is that Chinese end demand will pick up post the Chinese winter going into summer, which is a traditionally stronger demand period. Freight rates are still down, which is obviously good for us. For the quarter we're looking at now, freight rates trended between $25 and $30 per ton U.S. They're currently at around $23 a ton, that's good.
You will recall the discussion through last calendar year that freight rates were quite elevated. Since that's a major component of Tshipi's cost base, if that was impacting profitability, freight rates are pleasingly low at the moment. With those comments, you'll see in the financial outcomes section of the activities report that profit was slightly lower than last quarter. That's not surprising given what I've just said about lower manganese prices and also lower sales volumes for the June quarter. Although you can also compare the fourth quarter with the second quarter, and on that basis, the fourth quarter actually outperforms the second quarter on the 30 June financial year. The December quarter had higher CIF prices and also had higher sales volumes.
Notwithstanding that, the fourth quarter had higher profitability. That was because of the lower costs, both FOB delivered costs and also lower shipping costs on a quarter-on-quarter basis. Again, coming back to that theme of good control around the controllables, production volumes and costs have served this quarter's performance well. The nice thing about Tshipi is it does produce good cash through the cycle as a function of its focus on cost and performance on costs. You can see that again in this quarterly report, that Tshipi has accumulated a little under AUD 27 million in cash through the quarter, notwithstanding relatively modest manganese prices prevailing throughout that quarter. Looking forward into the current quarter, we should expect fairly steady state operating conditions.
As I said, the manganese price is likely to remain in around its current range, and that's based on the forecast I've seen from most analysts. We are expecting higher ship, higher sales volumes, ship volumes in the September quarter, in part benefiting from that rollover of the 30,000 ton shipment that I mentioned earlier in my comments. Finally, from a strategy update point of view, we expect to be scheduling a strategy day, and we'll provide the details of that strategy day in the next month to interested investors.
The intention for that strategy day is that we will give a run through of the strategy document that was released in late March, take questions in relation to that strategy, but also we'll be providing an update in relation to the key focus areas of that strategy. We've been working in the meantime on all of those matters. I think I'll leave it there in terms of overarching comments, Lisa, and just hand back to see if there are any questions.
Thank you, Brad. If anybody would like to ask a question, please press star one on your phone now to raise your hand. That's star one. We do have our first question from John Schulz at Macquarie. Go ahead. You're unmuted. Thanks, John.
Hi, all. Just two questions. Just with the warehousing of cash at Tshipi, with the change in financial year, does that mean that when it comes to an interim dividend for, I suppose, first half or for the December half, does that include this interim period or the transitional period that we just went through? Thank you.
Yes, it does, John, and thanks for the question. You will note that although our dividend, forecast, or in terms of timing of when we next expect to pay the dividend, has been in our calendar, investor calendar on the website, for a couple of months. We did clarify that in this activities report. The answer to your question is yes, the next dividend will sweep the cash produced for the entire intervening period, notwithstanding there has been, a changeover because of this reporting period, and we will distribute the next dividend when we receive the next dividend from Tshipi. That interim cash will remain at Tshipi, but the next dividend will benefit from the accumulated cash flow, including for that intervening transition period of time. Is that clear?
Yeah, that is clear. Thanks. Maybe just on the High-Purity Manganese Sulfate Monohydrate, just wondering, what's that outlook looking like at the moment? What's Jupiter and Tshipi doing on that front?
Thanks for the question, John. This is the fourth pillar of our announced strategy, and I will be providing more detail both in relation to our view on that market and outlook and also our strategy for that market and also where we're up to in our work in that regard. Our view is that it is a potentially exciting market. We also think that Jupiter is well, well-positioned to compete in that market as a supplier. We're an existing significant miner of manganese. We have a strategy around which particular product stream we could use to provide advantage into that market without taking any revenue away from our existing incumbent business. And we think we also have other advantages that I'll go into. It's a very new market.
It's a rapidly growing market. There's a bit to think about from a strategic and commercial perspective. We have been working for some time on a business case that's under development, including in relation to a flow sheet that we've developed and the testing of that material. We will provide, again, a more detailed update on the strategy day. This is something that's included within our strategic focus area. It's an add-on for Jupiter. We've got a great business already. The core of the strategy that's been reported is around broadening and deepening our exposure to what we're already doing well and continuing to pay dividends. The High-Purity Manganese Sulfate Monohydrate market is, in its nature, different to what we're doing today. It's really a chemical processing business and much more infrastructure-like in its nature.
We're seeing that as a potentially quite valuable additive opportunity, but something we want to diligently do the work on and provide our view to investors before we decide to actually head down that path. The strategy that we've announced is that by the end of this calendar year, we will have done that work, and we will provide that information, including our view as to how we intend to proceed to the market. It is an exciting new area for manganese. We think it's an area which is potentially quite valuable for Jupiter's investors, and it's something where we think we've got some competitive advantages. Otherwise, we wouldn't bother to look at it.
We are doing that work, and we will keep investors updated, and the next major update on that will be at the strategy day that I've just mentioned.
Awesome. Thank you. Maybe one more. Just the rail in South Africa at the moment, how's it going? What's the outlook for it? Maybe the same for load shedding.
Yeah. Yeah, thanks, John. I'll take load shedding first, for those not familiar, the term load shedding refers to the current practice in South Africa of Eskom, who are the state provider of electricity in South Africa, having to limit supply, that's because there isn't enough electricity supply to go around. What that means is businesses and householders in South Africa are having to go for times of the day where they don't have power supplied to them. That's never been an issue, for Tshipi, the reason is we have our own diesel-fired power station. Tshipi was built on that basis, was subsequently connected to the grid. Tshipi has both a grid connection and a diesel-fired power station. It's entirely self-sufficient if it needs to be from that diesel-fired power station.
Putting in solar at Tshipi is a good option. The Kalahari Manganese Field tends to be located in a very sunny part of the world. There's quite a strong sustainability case, but also a financial case to put in a solar farm and to replace that diesel-fired power station with a solar farm, and there's a financial payback available to Tshipi if it, if it does so. For us, we are insulated, like many businesses in South Africa, larger businesses, from that power situation. It is a concern if you're a residential homeowner that can't afford your own power generation.
There is a real focus on that within South Africa, which we're pleased to see, and, you know, it's not an easy problem to fix, or it would be fixed already, but there are efforts afoot to try and address the power situation. For Jupiter and for Tshipi, it isn't an impact on our business. Rail is also constrained in South Africa, and if you have a look at the strategy document that I put out in March, the issue with respect to rail capacity, at least as it pertains to manganese, is not underperformance of the rail system, it's rather under capacity. The rail system performs there or thereabouts, where it's meant to, at least as it pertains to rail, but the capacity hasn't grown with production.
The upshot of all of that is that there's, today, about 16 million tons of rail capacity made available for manganese, and there's 22 million tons and growing, and the delta goes on road. That's something Tshipi does as well. You'd all be familiar that we rail some of our volume, and we road haul some of our volume. That capacity that is insufficient for, for demand with respect to rail, needs to be shared around the different manganese producers in South Africa, and that's why Tshipi and none of the major mines have enough rail capacity for their requirements. We're working across all of the logistics options to try and optimize within that constrained situation. The latest, John , to answer your question, is that there's no real change in that situation.
Transnet is working on improving capacity over time, but that will take time. We are engaged with them, as are others, in exploring both short and long-term ways to lift the capacity on the rail line. In the meantime, we continue to work on the controllable elements of the logistics chain, which is the road haulage side of things, and that's part of our strategy to improve costs and risks as part of our road haulage logistics. It's really status quo with respect to rail. It, it is what it is. We've been living with a constrained rail situation for years, and that continues to be the case.
There are short- and long-term projects that Transnet is working on in order to lift that rail capacity, but it's not likely to change in the very short- term, other than quite fractional improvements in, in the rail capacity. This is one of the, yeah, is what it is factors, frankly, operating there. It, it's been the state for the last five, six years. It will continue to be for the next few years. What we need to do as part of our overall logistics strategy is to continue to work with Transnet to find ways of being innovative, to improve capacity on the rail, but also work on our road haulage, which sits outside naturally of that rail, constrained rail capacity. There are opportunities to improve there.
As we go through the next six months or so, I'll provide updates on how we're intending to attack that situation. It's a multi-pronged approach, including working with Transnet for the medium and longer-term improvement of rail capacity.
Excellent. Thank you.
Thanks, John.
Thank you. Our next question is from Mark Fichera at Foster Stockbroking. Go ahead, please, Mark.
Yeah. Hi, Brad. A couple of questions. I think, one's on logistics, and I think you answered that just previously now, but, just on the mentioning of the rail volume being higher than planned, was that due to be able to picking up slack where, you know, some of the other producers couldn't fit their allocation on there? I was just wondering why the volumes were higher than planned. Secondly, just on the low grade product, for the year, should we expect a similar outlook for FY 2024 in terms of the ratio between the, the high grade and low, low grade product? Thanks.
Yeah. Thank you, Mark, for the question. Answering your first question in relation to why we managed to get more rail than we had anticipated in the last quarter. The answer to that is the answer you gave. Not everyone is taking up their rail allocations at the moment, and for some people, that's operational reasons. They've been given a rail allocation that they're not able to take up. For others, in this type of manganese pricing environment, you've got higher cost mines or maybe newer and lower volume mines that aren't profitable. That's actually an advantage for Tshipi as a low-cost incumbent mine, one of the top five mines in the world, that is actually quite profitable through the cycle, including at these manganese prices, is to take up that additional rail capacity.
That rail is our lowest logistics cost. As I mentioned, we're working on all links of our logistics path to market, but rail is the lowest cost naturally, and so our costs are gonna be lower to the extent we're averaging up the amount of rail that we're utilizing in the overall mix. So that answers the first question. The second question in relation to low grade. That's a, you know, a month to month looking at the pricing environment, looking at whether it's profitable to put low grade into the market, and we're working with different geographic markets to see if we can optimize. We should be looking at lower grade to the extent that it is cash generative to put into the market, because otherwise it's being produced as a waste byproduct effectively.
We do continue to look for opportunities. We sold very little of it into the market last year, and we've sold very little of it so far, this year also into the market, but we continue to look. We'll be opportunistic. We are looking to, for this year, the same sort of run rate volume, regardless of what the mix is, to produce. If there's an opportunity to do a bit more, including putting low grade into the market, providing it's, you know, a responsible and cash generative thing to do, then that's what we'll be doing. Naturally, when you're in a lower manganese price environment like we are now, and like we were for much of last year as well, we're gonna be studied around how we put low grade into the market.
Okay, that's great. Thanks.
Thanks, Mark.
Thank you. If anybody else would like to ask a question, star one on your phone keypad now, please. We have a question from Peter Crane. Go ahead please, Peter.
Oh, hi, Brad. Look, I might have mentioned this before, but the previous board supported the share price by consistently buying a high volume in the company, and yet the current board doesn't seem to be interested in doing that. Is there any reason for that, please?
Thanks for your question, and, I might, if Ian's able, since that's really a governance question and Ian, our chairman, is on the line, I might ask him if he'd like to answer that question. If you can, Ian. I know Ian's in Germany with patchy comms. If you can't answer it, I'm happy to.
Yeah. No. Thanks, Brad. Thank you, Peter, for that question. The reality is this new board came in with a mandate to look at growth and to grow Jupiter, and that is what we've been busy with for the last 18 months, and Brad, for the last 12 months, that he's been in the seat. That means that because we are in discussions with other, other groups, we are precluded from transacting. There are a number of directors together with the groups Who have appointed them onto the board that are keen to increase their positions in the company. At the moment, we are unable to do anything because of discussions which are ongoing behind the scenes.
Thank you.
Thank, thank you. We have no further questions.
Thanks, Lisa, and thank you everyone for joining the call.
Thank you. That does conclude our call today. Thank you for participating. You may now disconnect.