Thank you for joining today's teleconference for the release of Mount Gibson Iron's financial results for the year ending June 30, 2022. Mount Gibson's Chief Executive Officer, Peter Kerr, will be leading the discussion, and he's joined by Chief Financial Officer, Gillian Dobson, and Manager, Investor & External Relations, John Phaceas. Mr. Kerr will provide a brief overview, after which there'll be an opportunity to ask questions. Due to the 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 the completion of today's teleconference. Thank you, and go ahead, Peter.
Thanks, Lisa. Good morning, all, and thanks for joining us to discuss Mount Gibson Iron's results for the 2021-2022 financial year. As usual, I'll give a brief overview and then hand back to Lisa for any questions. Our results for the year reflected the significant investments made at Koolan to set the operation up for the next four to five years of the mine life. As you know, they also reflected a number of adverse factors that occurred during the year, including the iron ore price movements, COVID-related labor availability shortages, general inflationary pressures, and some supply chain issues.
Despite all this, however, the benefits of our investment at Koolan started to flow in the last part of the year, in the June quarter in particular, and to provide Mount Gibson with confidence going forward as high-grade mining performance steadily improves, and I'll talk more about that shortly. At a headline level, we reported a loss after tax for the year of AUD 174.1 million, and that was after previously guided pre-tax impairments totaling AUD 184.6 million. Of this impairment amount, the Koolan component of AUD 147.4 million reflects a conservative approach we've taken to the impacts of recently lower iron ore prices, and the Shine impairment of AUD 37.2 million, which was recorded in the December 2021 half year period, reflects the suspension of the operations at that time.
Cash and investment reserves reduced by AUD 239 million over the year and closed the year at AUD 125.6 million. That was the value at June 30, 2022. This was driven by investments in waste stripping and key capital projects at Koolan Island, including the crusher upgrade and the upper footwall ground support works. Importantly, in the latter part of the year, the benefits of these investments commenced being realized, and we had a significant turnaround in operating cash flows in the June quarter, as I mentioned, as ore production, quality, and sales at the Koolan operation all lifted substantially and the mining strip ratio declined rapidly as planned. While repairing damage from the recent fire at Koolan Island, which I'll talk about in a minute, will temporarily constrain our improvement trajectory in the current half year.
The operation remains robust and is underpinned by growing high-grade ore production. We continue to expect a strong performance over this coming 2022-2023 financial year. In relation to the Koolan plant fire within its screening section, as we reported on twelfth of August, a fire occurred in the product screening circuit of the Koolan Island processing plant, and that was during a routine maintenance shutdown. Obviously a disappointing event, but most importantly, the prompt efforts of our emergency response team meant that there were no significant injuries and the fire was promptly extinguished. Since then, we've commenced assessing the damage and worked to determine the best way to start the crushing plant again in the shortest possible time and to try and increase our crushed volumes.
The fire damaged the upper levels of the product screen area of the plant, and that's where oversized material out of the front end of the plant is screened and redirected to the secondary crusher for further processing and sizing. The rest of the plant is unaffected and we'll be utilizing this as part of our interim crushing solution. Mining and other site activity was also unaffected by the fire and continues to ramp up as planned, meaning we'll have substantial high-grade ore stocks ready for crushing as processing capacity increases. We expect to resume crushing at about 30% capacity within the next one to two weeks, and that's using the front end of the processing plant, so the jaw crusher and the first scalping screen.
This will be augmented by the addition of mobile crushing equipment to site, the first parts of which will be mobilized next week, enabling a further increase in crushing activities up to approximately 70% of our normal capacity around the end of September. That's our target we're trying to achieve is that 70% level, while we have this temporary processing configuration in place, and that should return us to shipping rates of initially two and then, around three shipments per month from that time. In parallel, we're sourcing materials and planning the necessary repairs to the damaged section of the plant, and subject to detailed assessment, the repairs are presently anticipated to be completed in late 2022 or early 2023, and we'll of course provide updates as we progress.
To date within the September quarter, we've completed five high-grade shipments for almost 0.4 million tons and are targeting to deliver two more high-grade shipments by the end of September. Subject to the progress rather of the recovery plan, we expect shipping rates to increase in the December quarter and then rise further from early 2023, at which time we expect to be crushing at full capacity and able to consistently ship our targeted levels of four to five cargoes per month. Retention of the mobile crushing equipment that we're using in this next little while may further support a production catch-up in the June 2023 half year. As indicated in our guidance, although our near-term shipment volumes will be impacted, we're still targeting high-grade ore sales of between 3.2 million and 3.7 million tons from Koolan during the 2022-2023 financial year.
That is still a significant increase, well over double, over the last year. Cash operating costs for 2022-2023 financial year will be dependent on our recovery progress. But the initial target for the year is an average of between AUD 70 and AUD 75 per ton FOB, and that's before royalties. Costs are likely to be a bit higher in the first half and lower in the second as the repair and recovery activities are completed, and as the waste-to-ore strip ratio continues to fall over the year. As we've noted before, the mining strip ratio will average about 3.5 to one in the current half, and then fall to around one to one in the second half. Across the full year, we're expecting somewhere around two to one.
The stripping ratio, for reference, averaged over 10 to one in the year we just completed. Moving on to more general market matters, I just wanted to say a few words about the iron ore market. While we're seeing some divergent views regarding near and medium-term iron ore prices, from our perspective, and this is based on conversations with our customers and other market participants, prices have obviously been supported around these current levels at the moment, and in particular, as we head into the traditionally stronger seasonal period for infrastructure investment in China, and also towards this year's National Congress, where economic growth will obviously be a key focus. Whilst we're a price taker at Mount Gibson , and we're obviously monitoring the market closely, there are some reasons why we see that prices will be supported around these current levels, potentially higher.
Importantly for us, however, the high-grade premium for 65% material relative to the benchmark 62% material is now sitting at around 7%-8% on a grade-adjusted basis, and we'd be expected to rise should steel demand increase or, in particular, should steel producer profitability and margins increase in China. That's the pattern that we've seen consistently on a historical basis. Sales from Koolan Island under our long-term offtake agreements capture this premium, and that's historically offered solid pricing benefits for us. In relation to dividends, you will have seen that the board has not declared a distribution for the 2021-2022 year, and this decision was obviously based on the substantial operating investments that we made in the last year and on our current priority of resuming the growth trajectory in high-grade sales at Koolan Island and building our cash reserves.
The company is pursuing a plan to drive substantial production and cash flow growth at Koolan, and the board has a stated intention to pay dividends as and when the company's performance justifies, and that's entirely consistent with the approach adopted for many years now. For reference, the company's distributed over AUD 330 million in fully franked dividends over the last 10 years. In summary, we expect the 2022-2023 financial year to be much stronger operationally and financially for Mount Gibson than last year, and that's even with the near-term impacts as we deal with the recent processing plant fire. That's driven by the benefits of the previous year's investments as they flow through to our increasing high-grade ore production and sales.
With that, I'll hand back to you, Lisa, for any questions that anyone may have.
Thank you very much, Peter. If anybody would like to ask a question, please select star one on your phone now. You will be placed in a queue. Star one. We have one question. It won't be a moment. Thank you. We have John Small from Macquarie. Go ahead, please, John.
Hi, all. Just touching on that, ramp up, or getting back to crushing capacity. The guidance currently that you have out there accounts for that, and is the cash cost as well included, the mobile crushing, is that included in the costs that you have set out?
John, yes. The answer is yes there. We're obviously, prior to this fire, targeting levels in excess of what we've given for guidance. That incorporates our assumptions at this stage for how we'll deal with the aftermath of that fire in the screening circuit. The costs likewise reflect how we're dealing with it. They will reflect, they do reflect the mobile crushing costs that we will be adding to the business to deal with this short period now.
Excellent. Product quality coming out, what do you expect, especially in the first half, given the constraints in crushing in that period?
Yeah, no change, John. The product quality has been consistently now for some time, 65% FE product, and sometimes actually a little bit higher than that. The silica content in our material is sitting around the 4.5-5.5 silica area. Alumina remains low in this product, as you know, so that's sort of 0.8%-0.9%.
Excellent. Thank you very much.
Great.
Thank you. Our next question is from Angus at Barrenjoey. Go ahead please, Angus.
Oh, hi, Peter. Thanks for taking the question. I think I was gonna ask about whether the mobile crushing costs were built into your cost guide as well for, it appears you've addressed that. But just in looking into the second half and assuming everything's resolved in line with expectations, I mean, I get your, you know, your current shipping rates to fall in line with the bottom end of guidance, that's sort of 3.2 million tonnes. How should we think about your ability to catch up the tonnes between the bottom and upper end of guidance in the second half? You know, what are the constraints to getting more of those tonnes on ships?
I mean, you're obviously gonna build your stockpiles through this period, but just wanna try and get a sense for how we should think about what that second half could look like.
Sure. Well, look, maybe the way to answer that is in shipment numbers, Angus. Our average shipment size is between 70,000 and 80,000 tonnes on a vessel. During this period, while we're using mobile crushing units to basically supplement the front end of the existing crusher, we're expecting to do two and then rise to three per month, is our target. That's for three shipments, I should say. Once the main plant is repaired and comes back online, and so we've made some conservative estimates on that at the minute. That would be early next year. As in early next calendar year, then our that plant is capable of processing the needs for four or possibly five shipments per month. That will be our target to run through.
If we keep the mobile crushing facility on site, there is potential to add to that baseload target to try and catch up the deferred shipments that we have. We'll obviously be trying to maximize that and do everything we can as long as that's cost effective. That hopefully gives you a profile if you model it that sort of four to five shipments per month in that second half.
Okay, great. Just thinking about, I mean, obviously costs are gonna be higher in the first half for, you know, reasons. In terms of, you know, pulling some of those second half costs forward while you know part of the operation's down, should we think there's further benefit in the second half?
Sorry, just explain that again, Angus. What do you mean second half costs forward?
I'm just working on the basis that you're gonna be stockpiling ore, so when things start to recover, then you'll be just processing the ore at a lower cost. Maybe I'm thinking about it the wrong way.
Oh, I see what you mean. Yeah. We're gonna continue mining at our current rates, and the quantity of ore that's coming out, we'll obviously process a reasonable proportion of what with the mobile crushing circuit. What we will do is we'll end up building stockpiles, which we'll then chew into with the main plant back online next year. That's what you're referring to.
Yeah, that's right. Yep.
Yeah, our cash costs are, the cash operating costs are a ton sold. That investment in building that inventory will be obviously cash flow that we put to that purpose, and then we'll draw that down as we process next year. We won't pull back on mining. We'll still be going at the mining rate. That will continue consistently for several years. Yeah.
Yeah. The cash flow generation in the second half could be better as a result, but obviously we're there in the first half.
Correct. That's spot on. Yeah, sorry. I said that's where you're going. Correct. Yes.
Yeah. Okay, great. Thank you.
Okay, see you.
Thank you. Peter, we have no further questions in the queue.
Okay. Well, thanks, all. Thanks for the questions, John and Angus. If there is anything further, please contact us directly, as we do, and have a good day. Thank you.