Good afternoon, and I'd like to welcome everyone to the Jupiter Mines Q2 call. Today, we have Jupiter Managing Director, Brad Rogers, and Independent Non-Executive Chair, Ian Murray, to provide a brief update on the second quarter of the 2023 financial year. After that, we will open up and go to questions from the callers. Thank you, Brad. I'll hand over to you now.
Thanks, Lisa. Ian, did you wanna start off the call?
Yes. Thanks, Brad. Welcome everybody to our quarterly update call. I would like to welcome Brad for his first quarterly report as Managing Director. Brad joined us two months ago. He's new into the position. I'd like to formally welcome Brad to Jupiter Mines to his role as Managing Director and CEO, and to take us through the quarterly result. I would also like to use this opportunity to thank Scott Winter, who was our interim CEO while we did the search. Scott did a great job in keeping that seat warm and running the company over that period. Both Scott and Brad are our nominees on the Tshipi Board, and both of them have been adding great value due to their detailed knowledge of both mining and logistics.
Both of them have been welcomed at the Tshipi Board level, and their contribution at that Board has been welcomed by both Tshipi and our partner in Ntsimbintle Mining. Thanks, Brad. Over to you.
Thanks, very much, Ian, and thank you everyone for joining the call this afternoon. I thought since this is my first call, I might take a moment to just introduce my background and give some relevance as to why I wanted to join Jupiter. I came before Jupiter from a company called Bis Industries, which is Australia's largest mining logistics company. It's a 140-year-old business. It used to be called Brambles Industrial Services, for those familiar. It provides services on about 50 different mine sites around Australia and Indonesia, and is probably the largest provider, certainly in Australia, in providing bulk logistics to bulk miners, including manganese miners, crushing, screening, train load out, ship loading, and a variety of other services, including on-road bulk haulage. Servicing mostly large miners across iron ore, bauxite, coal, as well as manganese.
I've spent a lot of time on the Australian manganese assets, Bootu Creek, Woodie Woodie, Groote Eylandt, as well as downstream operations that were also customers of Bis, both TEMCO in Tasmania and also steel works in Whyalla and Port Kembla. I've also spent my career really focused on strategy, M&A, and investor relations, both as a focus in my role as CEO and previously CFO at Bis. At GRD Limited, where I was responsible for those things at a group level and my start to life was as a strategy consultant for strategy consulting firms. Looking at the Jupiter opportunity, A, I think it's a great company, and my time here, short as it's been so far, has really reaffirmed that. I see great opportunities to grow.
That's something I've been very focused on in my career, and that's something I'm very focused on here. I think both in terms of bulk mining logistics experience and manganese in particular, but also the skill set in relation to strategy and M&A. I think those are things that I can bring to bear to help benefit Jupiter and help its growth. In my time, as Ian said, I've been out to South Africa and had the opportunity to spend a good amount of time, both at site and across the logistics chain, and also with the operations management team and with our partner, Ntsimbintle, in South Africa. As I said, really reaffirmed what I already observed from afar, which is it's a very well-run, world-class asset by any standards. The team there is very experienced and dedicated.
Notwithstanding that, there's always opportunities to improve. Given bulk mining and manganese, included in that, is mostly about mining logistics. I see some exciting opportunities to add some value there working with the team. We're here on this call though, to talk about the quarterly report for August that hopefully you have all been through. It was released to the market this morning. I'll provide some overview comments this in a moment, and then I'm happy to take questions. You will have seen that August was a very strong trading quarter, and that was really off the back of strong sales volumes, and that was notwithstanding manganese prices reduced from the preceding quarter. Given that fact, the financial and sales result that was achieved and also the high-grade ore production was really an outstanding job.
The key takeaways for the quarter, high-grade production was up 10% quarter-on-quarter. Low-grade production was 0%, and that was a choice by the team appropriately because of lower manganese prices, meant that there wasn't sufficient attractive demand for that low-grade material. That low-grade material has been stockpiled at site and hasn't been processed, which is why you'll see that there's no low-grade production. Which obviously makes sense in view of the market prevailing currently. Waste and low-grade mining was down 15%, and there are a number of reasons for that. Weather was one of them.
Barrier pillar mining, which obviously is at a slightly lower strip ratio, as well as the Section 54 notice, which was received by Tshipi during August, which shut mining for a week while a number of mostly housekeeping matters were addressed. That did not affect train loading, truck loading, or shipping, which all continued unabated. As I said, that shutdown lasted for about a week. Strip ratio of 10.2 x for the quarter is actually in line with life of mine of 10.5 x. Notwithstanding, you can see it looked like, and there was less waste mined during that quarter.
The preceding quarter was actually above life of mine strip ratio, so there's nothing to be kinda concerned about in my view in relation to that apparent step down in the strip ratio during the quarter. The big call-out, though, was that sales were up 24% quarter-on-quarter, and that was driven by a decision to push four more ships out than was planned during that quarter, taking advantage of demand for the high-grade ore and taking advantage of the good high-grade ore production that you will have seen that was achieved during the quarter. Land logistics, not surprisingly, having to get that material to port for shipping. Land logistics was also up quarter-on-quarter as a result, and costs were up slightly quarter-on-quarter, and that was driven by higher diesel prices.
More trucking, obviously, because we were pushing above where we'd expected to be because of taking advantage of the shipping above plan. That meant using trucking, which is obviously a slightly higher cost. Also drilling, which was increased in activity during the quarter. That's not an ongoing factor. That will abate in the current quarter. Although costs were up slightly, though, it was still within the overall reducing trend you can see from the preceding year. Prices, manganese prices were down around 6%-7% quarter-on-quarter, as I mentioned before. However, the stronger sales and high-grade ore production supported the very strong financial performance for the quarter that you can see in the report, and that was at a Tshipi 100% level for the quarter.
EBITDA of AUD 87.7 million, which was 49% up on the preceding quarter. NPAT of AUD 54.4 million and ending cash of AUD 115 million. That sales run rate for the first- half sees us on track for the full- year range of what you've seen from Tshipi on a very stable, reliable basis for the preceding years in the range of 3.3 million-3.4 million tons per annum. That run rate is on track even if we don't sell any low grade for the remainder of the financial year. We're not expecting to, unless there's a big increase in manganese prices, we will just continue to stockpile that material.
From a market outlook perspective, and I've called this out a few times on this discussion already, it is worth noting that manganese prices have been coming off. They stepped down this August quarter from the preceding quarter. You will have seen in the August quarter report that the average manganese price, 37% FOB Port Elizabeth, was $3.36 for the August quarter. Today, it's about $3.12. That actually represents some stabilization in the manganese price over the last two weeks. It did get down to about $3, again, 37% FOB PE, two weeks ago.
We are seeing moderating manganese prices at the moment, and you should expect, unless there's a big turnaround, that there may be a step down in the average manganese price for the current quarter that we're in at the moment. Conversely, and very pleasingly from my perspective, shipping costs are also abating. You will have seen if you had a look at my Africa Down Under presentation from a few weeks ago that's on the Jupiter website if you haven't seen it, that shipping costs was actually the big mover last financial year negatively. It was about AUD 90 million higher in FY22 than the average for the preceding three years. It actually became quite a factor. That was an uncontrollable effect of world events that drove dry bulk shipping rates up.
We have seen those dry bulk shipping rates starting to moderate actually relatively materially. To give you a bit of a feel for that, in the third quarter of last financial year, those shipping rates equivalent we were paying were about $56 a ton. Currently, they're at about $37 a ton. If you annualize the impact of that difference over our sales volume that I outlined before, that makes about a $63 million delta. You won't expect to see all of that because it has been a reducing trend, but it's certainly a material item for us and it's good to see that continuing and reducing trend, which will provide some relief to manganese prices coming off as well. Yeah, hopefully we see freight coming back down to more long-term averages sustainably.
They have been elevated for a couple of years, and last year in particular was quite elevated, as I said. Those were the overarching comments I wanted to make. We only do have 30 minutes together, so I wanted to give enough time for any questions that might be on the call. Lisa, I'll just turn over to any questions if there are any.
Thank you so much, Brad. If anybody would like to ask a question, please press star one on your phone keypad now and I'll introduce you into the call. So star one. We have our first question from Jon Scholtz from Macquarie. Go ahead, please, Jon.
Hi, Brad and team. Just a question. What's the quantum of stockpiles on site at the moment? All our great stockpiles.
At what price do you kind of expect that to go back into the sales mix?
The volume of stockpiles, I couldn't give you an exact number, Jon, and I can revert to you. The price question is a good one because it relates not just to the 37% prevailing price that we sell off as an index, but also the discount that is being applied for low grade. It's not just a question of manganese content, it's actually demand for the material. If you were to sell that material at the moment, I would suggest it would be at less than FOB cost, which clearly isn't worthwhile. Since we're essentially producing that material as a waste volume item at the moment, it makes sense to sell it, providing you can get a positive cash margin.
Because it's something that has an occasional market, when that reappears as a margin opportunity, then that's what we'll be doing. But as I said, we're not factoring on selling it for the rest of the year. If we do have the opportunity because there is a positive margin, then we will do that. We've had some discussions, particularly with Indian providers about the opportunity to do that. But at the moment, we're planning conservatively, focusing on high-grade ore and hitting the sales target for the year on that basis.
Great. Thank you. Can you speak about rail availability? What's the level of utility versus your stated capacity at the moment, and how do you see that going for the rest of the year?
Yeah. We have a macro allocation of about 2.1 million tons , Jon, and the delivery against that hasn't been too bad, to be honest. I know there's a lot of stress about performance against Transnet rail allocation, but they've consistently been between 90%-100% in our view. There are always shorter- term operational matters, but that can happen anywhere. We are obviously producing well in excess of that level. We've got the option through Lüderitz, which is a good option, and we'll be looking at some logistical efficiencies to further improve that particular option, as well as South African road trucking, which is quite busy, long way to be trucking, you know, low payloads.
I'd say there are some opportunities through there as well. The rail, it's not something that causes us stress from day to day. Yes, there are issues, and we'd like there to be more capacity than there currently is, but it's a reality of the situation we just have to plan for. The reality is at the moment that actually, you know, they may miss by 10%, but it's not more than that. We're able to plan for that because we're producing well in excess of that capacity anyway.
Okay, excellent. Thank you.
Um.
Brad, while you're talking there, I found the low-grade stockpile. It's 1.5 million tons.
That's exactly what we're saying. Thank you.
Just on that low grade. Sorry, 1.5 million n ow, what can it build up to? I mean, if you keep stockpiling, how big can they get before it causes issues at mine site?
We've got space. We're not gonna be material bound there, so we can continue to stockpile for the rest of the year comfortably, Jon. We've got a lot more space, so that's not gonna be a factor.
Okay, excellent. Thank you.
Thank you. Our next question is from Mark Fichera from Foster Stockbroking. Go ahead, please, Mark.
Yes. Hi, Brad. Yeah, just a question relating to costs. I noted in the last quarterly, the company mentioned that there was a delay in expected increase in mining rates from the contractor. I think you were negotiating new rates. Can you just elaborate on that, whether you concluded those negotiations or whether they're still ongoing? To give us a feel, I guess, in terms of the costs, you know, have been quite low and whether you can sustain that or should we start to factor in some type of increase? Thanks.
Thanks, Mark, for the question. Those negotiations are advanced, but they're ongoing. That's something I can give you an update on in the next quarterly, which I'd expect we will have executed that mining contract extension by then. About half of the cost increase that we're expecting is already factored in to the second quarter numbers, though, Mark.
Although you know, we're expecting an increase, and again, I can give you a little bit more detail once we've actually concluded. This does include a step- up. As you know, mining is not a large percentage of our overall cost base. Most of the action in that regard is in logistics and shipping. While there's a step up, part of it's in the rate in the second quarter run rate already in that number you can see. We're not expecting it to be overly material, but we'll give you more detail on that. Overly material at an overall business level. We'll give you an update in the next quarterly once that contract is concluded.
Great. Thanks. Just for clarification, obviously you mentioned you're not shipping the low grade at the moment, and production in the second quarter was 0%. Was there any shipment at all during the second quarter of low grade, or was it purely 100%?
[Crosstalk] Right.
It was purely high grade, Mark. There was no production. By production, I mean, there was no material processed. We're obviously mining low grade. It's being stockpiled, and we're not spending money crushing and screening it. We're not selling any either. There hasn't been any low grade sold for the whole quarter, and there hasn't been any incidentally so far this quarter either.
Great. Thanks, Brad. That's it.
Thank you.
Thank you, Brad. I'm just going to ask again as we don't have anybody else in the queue. If anybody else would like to ask a question, star one now on your phone keypad, please. Thanks, Brad. We have no further questions.
Okay. Thanks, Lisa. Thanks, everyone for joining the call. Look forward to talking to you soon.
Cheers, everyone.