Good afternoon, and thank you for holding. I would like to welcome everyone to the Jupiter Mines Q1 call. Today, we have Jupiter Acting Chief Executive Officer, Scott Winter, and Independent Non-Executive Chair, Ian Murray, to provide a brief update on the first quarter of 2023 financial year. Then we will open up to questions from the callers. I will instruct how to join the queue. Right now, I'll hand over to Scott. Thank you, Scott.
Thanks very much, Lisa. Good afternoon to everyone. Welcome to the Jupiter Mines Q1 Results update. Like, first and foremost, like to thank Ian for coming on and I'll introduce Ian. He's gonna be here through the session and also at the end to answer any questions. Today, I'll hand to Ian in a moment, and then we'll go through just some of the highlights through the quarter results. As Lisa said, we'll take questions at the end for anyone that has any particular queries. First and foremost, over to you, Ian.
Thanks, Scott. Just a question that some people have on their minds is: Where are we with the new chief executive officer appointment? In the last quarter, we said we would like to have an announcement and the person appointed by the end during this quarter and update the market in our quarterly. Unfortunately, we're not in that position. We do have a preferred candidate selected, and we are going through the final negotiations with that person. Our aim is to be in a position to announce that person's appointment prior to our AGM later in July. Obviously, that person will come in and drive the strategy of the company, which is something else shareholders are waiting for the company to articulate.
We believe it's right to have the managing director articulate that strategy for the company to all shareholders. Please bear with us on this appointment. We do have the preferred candidate, and we're just going through the final negotiations with that person. Thanks, Scott. Back to you.
Thanks for the update, Ian. Appreciate that. Look, I'd now like to take you through quickly highlights and then a little bit more depth around the safety, production side, logistics, talk about some costs and market outlook. Look, I suppose I start. It's been a pretty good quarter at Tshipi. The rain has sort of stayed away a little bit, and we've had a better production month. Just touching on some of the highlights. Near on AUD 60 million of EBITDA for the quarter, NPAT of around AUD 38.5 million, which is better than last quarter. 750,000 tonnes of only high-grade sold. We've sort of put the low grade on hold at the moment, so we are stockpiling that as it's coming through. Safety is performing really well.
I'll talk about that shortly. Graded ore is on target, around 200,000 cubic meters for the month. We had a better overall in situ movement for the month, around 2.75 million meters, which is around 400,000 better than last quarter. Our high-grade production through the mill is about 780,000 tonnes. Again, a little bit more than Q4. Overall production, 883, which was good. We're still seeing some impacts of logistics through Transnet. We're 7% behind on overall land logistics. I'll talk about why that is beyond some of the rail outages as well. Our cash balance is about AUD 64 million as compared to AUD 75 million last quarter. Touching on safety.
Look, no LCIs for the quarter. If you recall, last quarter's TRIFR was 0.95. This quarter, it's down to 0.75, which is a terrific trend. Turning the right way. A number of reasons for that, largely due to the safety program they're implementing across their own team, plus the Moolmans contracts and other contractors in the business. Now they are focusing on my safety, my family, my community. They're driving some of the obligations through the supervisor team, through the statutory obligations, and really working on some of the critical risk management in the business, and that's a rolling program that touches on all those critical risks over the next few months.
Moving off that on the biodiversity program. No updates there from last. All progressing well. Again, the EMP3 work we're doing on the EMP3 around mine closure is still ongoing and will be ongoing. There's no updates there either. On to mining production. Look, we had a better quarter this quarter. As I said, less rain. We had a little bit in March, but it's certainly abated in April and May, and that always helps. We can get a little bit ahead. Graded ore production and total movement were on target for the month, which is great. We are seeing the impacts that our general manager is having with some of the programs he's implementing with Moolman, the contractor, around efficiencies.
We're seeing some of the trucks set up, maintenance, and some of the operational delays being re-reduced, which is a great sign for the operation. We talked last quarter around a focus on removing waste in the barrier pillar. We've now finished that, which has exposed a large block of ore, which is now being mined. Actually, I wouldn't say almost finished, but it's largely being mined. We're now waiting for South 32 to remove some of their ore on the other side, so we can bring the waste dumps back in and shorten some of the hauls again to reduce some of the costs. We did see a benefit in the barrier pillar.
We hit a geological intrusion which actually replaced waste with low-grade, which was a nice bonus, ultimately reducing the overall strip ratio. It helped just get through the part of the waste in the barrier pillar a little bit quicker. It coincided actually with exposing Cut 11 graded ore. We now have quite a fair bit of exposed graded ore in the pit ready to push through the plant. You'll see that coming through in sort of July, August, and the production should be a little bit higher. Again, just wanna make a specific note that we aren't high-grading, we're maintaining our mining rate at our life of mine strip ratio to make sure that we just keep the cost profile consistent.
Our processing of high-grade ore was above target for the month. Again, because we've put low-grade off in terms of sales, the overall production was slightly lower than our target. It will come on. It's currently stockpiled on the ROM, ready to put through the plant when the market allows us to sell that at a profit. It's nice to see that the fines percentage coming through high-grade is a little lower than expected, which is a focus with the team at the moment to reduce some of the fines output through the mill. Onto logistics and sales. We again are being hampered through Transnet with the power outages. Some of the cable thefts.
There have been some rail derailment and weather has certainly affected some of that area as well. We're about 7% down. We fill that with truck road logistics, but I will say that the road logistics is. It's available, but it's starting to show higher costs. There's a strong demand as you would know in the coal sector and the iron ore sector. They are consuming a number of the trucks across the sector. You'll see fuel prices, and you probably felt that in your back pocket, that fuel prices are starting to increase and that's not only here, but it's everywhere. The cost of road transport is certainly increasing as well.
That does not turn us off from looking at innovative solutions to push through different various channels to get our product to market. Tshipi's always been one of those innovative companies at finding and I suppose leading the way in certain areas for logistics and trying to manage the costs, which they've done quite well. We shipped about 750,000 tonnes of ore for the month, which is slightly lower than planned, but that really is because we didn't ship any low grade, so we're on target with high grade. If I move now to overall costs. As I said before, we had a pretty good month.
Revenue was slightly down, but largely, that was 6% sort of attributable to sort of the tonnes and 3% down on what we expected the price to be. Our FOB cost for the quarter around $182 for DMTU, compared to a plan of slightly higher, around the $2 mark. This is lower as a result of a few things. One, the favorable geological conditions, so less cost in waste, which is good. We actually saw some improvement in losses that we run through the model, the financial model. We actually had better recovery of the ore.
Also some of the expected higher costs that were, and have been negotiated with Moolmans over the last three months have not flowed through to this as expected, but we do expect to see that increase coming in the next few months as we conclude some of those conversations with Moolmans. The rail and road logistics, again, because of that road, was slightly higher, not too much, but slightly higher than expected. Our CIF cost of production is around $ 3.80, which is lower than forecast. Again, largely a result of lower mining costs. as you would know, the shipping costs are slightly higher than what they had been last year. But that again, they're on target. They're on target.
They're on par with what we expected that to be, which is around sort of $1.90-$2 per DMTU. Which is quite high, as you can imagine. Our average CIF price achieved per high-grade lump is around $5.46. We are still making quite a healthy margin through even the higher cost profile. I'd like to take us through a little bit of the market outlook over the last quarter, and it's been quite interesting. Lots of dynamics happening through the market. If I take you through the steel market first, talked about the alloys and then move on to the manganese ore. That's how I'll flow through it.
The steel production obviously increased in the first quarter compared to Q4, and I think that was expected through the completion of the Olympics and after the Spring Festival. However, it didn't increase as much as everyone was thinking. This is really a result of COVID coming into effect again and the lockdowns and the restrictions that occurred. Essentially what happened is that affected the industrial and the construction sectors in China. The result of that is actually the steel mills started to build large inventories of steel. So again, we didn't see that flow into the alloy market.
With the lockdowns lifted in Shanghai, I thought the prices would start to rise off the back of the demand, but because you've got all the inventory stuck, still sticking there, that needs to flow out before we see any effect. Manganese alloy prices rose at the start of the quarter off the back of supply concerns, and this is largely as a result of Ukraine and Russia. Europe really didn't know where they were gonna get their alloy from. We started to see higher-cost production in China, coupled with sort of downstream pressures, which have really squeezed margins in China. Even some of the factories in China have been asked to ease some of the production of alloys in China.
I suppose the thing that was not expected was Ukraine came back into production of alloys into the market a little earlier than expected. The supply squeeze lifted. Europe started to see a flow of alloys into their market. India also has started to really start to increase and pick up some of the shortfall in the market as well. They do consume a lot of their own. They've got a large steel market themselves. Interestingly, another dynamic, they had a massive heatwave which affected their domestic construction industry. Again, they didn't see the domestic demand, so whatever they produced in India started to export as well.
You're starting to see a sort of excess supply of manganese alloy in the market, certainly near the end. Again, that leads on to the manganese ore. If you looked at the start of the quarter, both seaborne and the port side prices jumped at the start of the quarter. We did see, you know, quarter four was quite poor, but at the start of this quarter, we saw restocking and GEMCO came out and indicated there was a shortage of oxide ore, so people started to get a little bit worried. The oxide price went through the roof. The high-grade manganese price went through the roof. Semi-carbonate jumped on the back of that for no real reason other than manganese prices were going up.
It logically sort of fell back a little bit. Then coupled with what I was talking about before, the subdued steel sector in China and with all the inventories sort of being consumed and the alloy sector being it's a bit of an oversupply that the prices started to fall. We are seeing slight sort of pressure on prices, which is interesting. We're starting to see stocks in China now being consumed at the start of June, which is starting to show a little bit more support in regards to prices.
If you look forward, it's all very finely balanced, lots of parts of the puzzle, which is interesting, but I suppose the rest of the world's steel production is showing signs of improvement. I think if you look back now that all of the lockdowns in China are starting to lift, those production of sort of general items are just starting to ramp up now. The demand ex-China is growing, but they are. I mean, the example in the car market, you've got a lot of other components that are required to sort of see increased production. A lot of those companies are relying on other components coming out of China. It is.
That slowed progress. It's having an impact on the overall manganese price. I suppose China's turned on a lot of economic stimulus as well, and this is gonna have an impact, so we do see a positive resurgence in prices for manganese going forward in the next quarter. Sorry, that was a bit of a long-winded, but it's quite a dynamic market. A lot of things that impact that. You need to be across a lot of items to have an understanding of where manganese itself is actually being priced. Corporately, we talked about EBITDA. We had a strong month. It's got a strong cash position.
I suppose that what is dominating the corporate business at the moment is largely the conversations with Moolmans to secure that going forward, making sure that we've got the right contract in place, commercials to see GP secure and operating. We have spent a considerable amount of time looking at the site and have specific sort of conversations around reinvesting. I talk about reinvestment in some of the infrastructure, some of the materials handling where we see some terrific opportunities to sort of further reduce some of the operating costs in there. We are looking at capital investment in the materials handling parts of the operation to.
Those should flow more towards the back end of this year before commencing some of those projects as they get through the board. They're really targeted improving costs in that part of the operation, safety because there's some contractors there with equipment, loaders and trucks that move in and around that infrastructure area. Another important one is really improving the quality to manage the manganese grade. Not that it's bad at the moment, but we certainly wanna fine-tune that and improve how we manage quality throughout the system and certainly onto the train and to the customer. There is a fair bit going on. Sorry, the last point that.
I'll just touch briefly on it, and we'll certainly wait for the appointment of the managing director to I suppose talk about this in a lot more. There is a lot of work going on, as we've said before in the work we're doing corporately with some of the opportunities, the merger and acquisition opportunities we're currently looking at. Our corporate advisor is working strongly at developing those and again, we'll keep you well posted on progress as they come to light. That concludes the updates for the quarterly report, and I'd like to now open if there's any questions. Thank you very much. Appreciate it.
Thank you, Scott. If anybody would like to ask a question, please press star one on your phone keypad now. Star one, and you'll be placed in a queue. Thank you. Thank you. We have our first question from Jon Scholtz. Go ahead, please, Jon.
Hi, Scott and team. Just a question on the lower grade stockpile. Could you just give us how much is actually on site at the moment and sort of what price would those low-grade stockpiles go for, in this current environment? Thank you.
The stockpile is building, that's for sure. There's a few hundred thousand tonnes that is currently in various stockpiles. We've got some sitting on product and sitting in on the ROM side. Yeah, we're not gonna extend the cost to put it through to the product side. That's the first part of it. The exact numbers I can get back to you, we can pull it through easy enough. What they would go for? Look, the current price, you know, if we're in the realm of sort of $5.30, CIF pricing doesn't trigger the sale of low-grade. You know, we need prices to 'cause it's all very linked to the high-grade price.
We'd need that to increase, you know, another $0.30 or $ 0.40, I think, to trigger the low-grade sales.
Scott, to add to that is obviously any low-grade material would have to get trucked. You've got the additional cost of the trucking. What Scott and the team have worked on in the last quarter is just a pricing matrix which looks at the different cost elements together with the revenue side. We know should diesel go below a certain price and the manganese price go above a certain price, we would then increase production through the trucking route because that is. Any marginal sales does go to our highest cost of export.
Yeah, that makes sense. Thank you. I mean, thinking of that logistics, how's the negotiations on the next round of MECA looking at the moment?
Sorry, can you just say that one again?
The rail negotiations, the next round, I think it's called MECA or MICA.
The MECA conversation. Yeah, it's currently underway. Yep, absolutely. It hasn't concluded at this point in time, but it is. We don't expect too many things to change there at all, Jon.
Okay. Excellent. Thanks, guys.
Thank you. Our next question is from Mark Fichera from Foster Stockbroking. Go ahead, please, Mark.
Yeah. Hi, Scott. Well done on the cost during the quarter. I just had a question regarding the expected increase in mining rates from the contractor. From what I understand, with previous Jupiter management, they were looking at, you know, annual increases of 5%-7% in terms of, you know, wages, contractor costs. I was wondering, can you give me maybe a sort of a ballpark figure of what you're expecting in rates and also how that compares with the current inflationary environment out there? Thanks.
I don't wanna jump at the increase yet because that's still something that we're working through, but I will say that it's more than 5%-7%. It's a bit hard to say because our budget has included in there some of the sort of general expected increase. Over the last sort of 12 months, and certainly I've been there, we've already made some step change with the contractor with increases. Some of the costs you're seeing today have already seen some of those cost increases flow through the mining side. There is another change to come and to conclude. That may well be backdated or may not be. We're still negotiating out of that.
It won't get back to the start of the financial year. We're seeing it being a little more than what you would see in escalation today, just purely because the rates that should be secured a while ago were very sharp. They were very good. We've enjoyed some, you know, some low costs. Escalation, I think, is probably in the range of where you're talking, then, sort of 8% range. In some areas, it's even more. If you look at explosives, that's actually sort of taken a very sort of significant step up. We should be able to give you a better indication once we've concluded the negotiations, which aren't far away at all.
Sure. These rates, will they be locked in for a number of years, or will they be just done on an annual basis?
No, we'll set a schedule that will get locked. The basis will be locked in. For sure, there'll be escalations sort of baked into that, so annually they'll increase. It will be a term where those rates will be fixed.
Right. Just one more from me, Scott. Just on the. Obviously you talked about the freight charges and they were quite high. There's been some mixed messages out there in just the cost, you know, the general market that some companies are seeing rates probably going down, others saying they're still high. I was just wondering what's your feel for the outlook, say, in the next quarter? Do you think, you know, we should be expecting rates still quite high, or do you see some easing?
It's volatile. I think I expected last quarter that they would decrease.
Yeah.
I don't hold that view now. I think there's still a lot of shipping routes and channels that are finding their way, with certainly the Ukraine sort of, you know, Russia issue. I mean, a lot of routes are being rerouted. You know, different commodities are being rerouted. We're finding that's consuming sort of capacity in the shipping sector and in others it's releasing some. It's still volatile. I would think I mean, we're in the sort of $50-$60 per tonne range at the moment. I wouldn't see it drastically going under that. I wouldn't see it drastically again going over that. I know that's a pretty broad range, but I. There's nothing to show that it's gonna significantly decrease at this point.
No worries. Thanks for that. That's all.
Thanks.
Thank you. Our next question is from Oswell Capitosa. Sorry, I hope that's right. From Capital Investment Fund. Thanks, Oswell.
All right. Thanks, Scott, for the presentation. Just have a couple of questions. We've seen your peers, including Assmang and Eramet, aggressively expanding over the last few years. Are Tshipi's expansion plans to 4.5 million tonnes still on the cards?
The review of our capacity at Tshipi is on this year's budget. You know, the one thing that we really want to cement and continue, you know, Tshipi is a low-cost producer. The comment I made before around looking at reinvestment in the asset is really about maintaining that. It's setting ourselves up for the next step going forward, and that's to keep our operating costs low, you know, to keep our contractor sharp, but keep our infrastructure, you know, low cost and efficient risk-free going forward. That being said, we are looking at, I think, you would have seen in the past a 4.5 million tonnes expansion study. Now that may be 4.5, it may be 4, it may be.
We don't have the number, right? We are doing that review this budget year. We're doing sort of a review of each of the pieces in the jigsaw puzzle that make our production profile, like the primary crusher, the secondary and the train loadout, to see where our bottlenecks are and where we need to invest so that if we were to increase, then you know we know where to put our money. Yeah, I won't say we're gonna increase. I would say we're gonna review it this year and we'll have an answer throughout this year.
Okay. The last one that I think we spoke about, the high grade and low grade. Just wondering, what is the long-term effect on performance if we, say, experience an extended period of hard market conditions or tough market conditions? What is the effect of selectively mining out or sending out high-grade material? Is it gonna cause us to then face a period later on in the future when we just got fines, or can the mine sort of sustain the average grade for the remaining life?
The beauty of the Kalahari. We're not the only one. I mean, we have 100 years of reserves. That's, you know, the next 30, 40 years of open cut and then beyond that is underground. We're not the only ones that have significant reserves of manganese ore, at the current, you know, 36.5%-37% grade. Don't see that in the very short term being an issue. You know, the market is finely balanced around, you know, from a price perspective, finely balanced around the volume that's going into the market, which is, you know, primarily high grade.
It will take more structural things like improvement in the rail system, you know, increasing capacity in the rail and the ports to, you know, again, change the structure of the market again, as to whether or not low grade can be put into the market. I think we're fine. There's enough reserves to maintain the current semi-carbonate production profile into the market into the foreseeable future.
Scott, the other comment is just on the strip ratio, that the mining rate is keeping the strip ratio consistent. It's not as if we're high grading and leaving the low grade behind. We're mining the low grade, just stockpiling it, so it is available for the future. It's not as if we have to then go back and spend a lot of money to access the high grade areas.
Yeah.
Okay.
Perfect point.
Okay, thanks.
Thank you. Our next question is from Charles Walrope. He's a private investor. Go ahead please, Charles. Are you there, Charles? You are off mute if you'd like to go ahead with your question. We don't have Charles there. Thanks, Scott, we don't have any further questions in the queue.
Okay. That's terrific. I'd just offer Ian a chance if he wanted to say anything further, Ian. If not, that's fine.
No, thanks, Scott. Yeah, it's been a mixed quarter for us. Obviously, the financial numbers are very good, which is great. Certainly, Scott and I came away from that International Manganese Conference in Cape Town with a much better understanding of the potential growth in the Indian market, which does bode well for the manganese sector, together with the work going on in the battery space, using manganese in the battery space. Both of those are growth markets for the sector and Jupiter certainly wants to be part of both of those growth areas. Thanks, Scott. Thanks, shareholders.
Thank you. Thank you very much. Appreciate everyone for joining us this afternoon and until next quarter, be safe. Thank you.