Thank you for joining today's teleconference for the release of Mount Gibson Iron's financial results for the December 2021 half year period. Mount Gibson Chief Executive Officer, Peter Kerr, will be leading the discussion and is joined by Chief Financial Officer, Giles Dobson , and External Relations Manager, John Phaceas . Mr. Kerr will provide a brief overview, after which there'll be an opportunity to ask questions. Due to 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 completion of today's teleconference. I'd now like to hand over to your host, Peter Kerr. Please go ahead, Peter.
Thanks, Bethany, and good morning, all. Thank you for joining us to discuss Mount Gibson's financial results for the December 2021 half year. As usual, I'll give a brief overview before handing back to Bethany for any questions from the floor. As the market's aware, Mount Gibson has experienced a reasonably tough half year period, given the position within the Koolan Island life of mine plan and the pricing volatility we've experienced, which disappointingly required us to suspend the Midwest Shine operation to preserve the value of that asset. Importantly, we're now very close to an inflection point where the investments made at Koolan Island are about to deliver increasing volumes of high-grade iron ore, with the level of mining movement and the associated waste to ore stripping ratio reducing accordingly.
We've previously released the details of the cash flow at both operations in our recent quarterly report, and as disclosed, the half year one was one in which we drew on our reserves to fund the investments at the Koolan Island operation, in particular, the waste stripping program, the upper footwall ground support activities, and the crushing plant upgrade. With these activities all undertaken to enable a significant increase in high-grade ore production and shipping capability for the next five years. At a headline level, the above activities and price movements during the half year resulted in Mount Gibson recording a net loss after tax 65.6 million on minimal sales of 0.7 million wet metric tons.
The result incorporates a number of carrying value write-downs totaling 41.4 million before tax at the now suspended Shine operation, in line with our previous guidance, as well as a net write-down of 7.9 million of the carrying value of lower and medium-grade stockpiles at Koolan Island. The group's net cash outflow from operations totaled 53.2 million before interest income of 1.6 million, capitalized advanced waste stripping and mine development expenditure of 116.1 million, plant and equipment purchases of 24 million, and payment of the 12.2 million cash component of last year's final dividend. Consequently, cash and investment reserves totaled 142.1 million at period end, down from 364 million at the end of June.
Turning to the performance and forecasts for Koolan Island in a bit more detail, the half year period was one of continued focus on the major waste stripping effort and the footwall ground support program, and also in completing the crusher upgrade. Iron ore sales from the operation were limited to 0.4 million wet metric tons of lower and medium grade material, which range between 55%-58% Fe, mostly from outside the main pit ore reserves and also from the Acacia East satellite pit. With the iron ore price volatility experienced in the period, a decision was made to stockpile this material rather than sell it as standalone cargos for minimal value, so that the material can be used as a blending stock in future periods for improved realized prices.
Given the limited sales, the key investments and the adverse impacts of COVID on the availability of labor and the cost of that labor, the Koolan operation posted a pre-tax loss of 46.2 million in the half year. Cash draw at the site totaled 157.4 million, after 79.3 million invested in advanced waste stripping and a combined total of just over 33 million invested in the upper footwall ground support and crusher upgrade projects. Total mining movement at Koolan for the period was 9.3 million tons, and that included 0.7 million tons of waste rehandled within the main pit, resulting in an average strip ratio of approximately 17 to one in the period.
Strip ratios forecast to fall significantly to average approximately 6:1 in the current June 2022 half year period, reflecting the scheduled increase in high-grade iron ore production from the main pit as the grades rise towards the ore reserve average of 65% Fe. From mid-2022, the stripping ratio will continue to progressively decline, and it's expected to average approximately 1.5:1 over the following five-year period, resulting in a significant reduction in total mining movement and unit cash costs per ton shipped, along with the anticipated substantial increase in operating cash flows. In relation to our Midwest operations, the business there recorded a loss before tax and interest of 59 million, and that was after recording impairment and inventory write-down expenses of approximately 41 million following the suspension of the Shine operation.
The company continues to receive the historical rail refund with 4.1 million recorded as other income in the half year period. While production performance at Shine was consistent with our plan, the operation suffered from the rapid deterioration in iron ore market conditions, particularly with regard to the widening discounts for iron ores grading under 60% FE, increased penalties for impurities. A sharp rise in shipping freight costs out of the Geraldton Port in the half year. Consequently, in early October, the decision was made for a staged suspension of operations at Shine to preserve the value of the Shine deposit and provide time to assess the iron ore market outlook for a potential restart. After the planned final shipment of lump ore from Shine in October, the company negotiated the sale of two further shipments of fines material from the available stockpiles.
Sales from Shine consequently totaled approximately 0.3 million tons in the December half year. The cash outflow at Shine for the December half year period was 29.9 million, and this reflected the site development and waste stripping costs in the September quarter and closure costs net of the final revenues in the December quarter. In relation to our sales guidance for the fiscal 2022 financial year, Mount Gibson Iron's focus for the second half, so our current period now, at Koolan Island is to substantially complete the planned open pit waste stripping and upper footwall ground support programs and to resume high-grade ore production, which will obviously significantly increase our shipments. At Shine, we're monitoring market conditions to determine the feasibility of restarting the operation.
On a group basis, we're targeting FY 2022 iron ore sales of 1.8-2 million tons, of which Koolan is expected to contribute 1.5-1.7 million tons. Our focus is on the upper end of that guidance range. However, we're cautious as this is subject to the impacts of the current wet season and the evolving COVID-19 situation in Western Australia. Before we close, I wanted to say a few comments regarding the iron ore price and the potential impacts for Koolan Island going forward. As you're aware, during the half year, the Platts 62 index more than halved from a peak of around $220 in July to $87 per dry metric ton in November, before recovering to around $118 or $119 by period end.
For 58% iron ores, 58% FE iron ores rather, the average price in the half year was significantly lower at around $95 per ton, reflecting the expanded lower grade discounts that we're seeing. However, positively, since the start of 2022, iron ore prices have been well supported, and based on feedback from our customers and market commentators, the general outlook for the next year looks supportive around current price levels. We do, however, still expect periods of volatility given the tussle that is evolving between the fundamental demand from Chinese steel makers, lower than anticipated supply increases from certain other geographies, and Chinese political announcements regarding commodity exchange speculation and of note recently potential centralized purchasing platforms.
For Koolan Island, our optimism is underpinned by the continued robust outlook for high-grade iron ore feedstocks, especially as steel makers seek to become more efficient and reduce their carbon emission intensity. In closing, after a half year defined by volatile price movements and heavy expenditure as we progressed important mining and equipment investments at Koolan Island, we're positioned to achieve a significant near-term progressive improvement in production and cash flows through the current year, 2022. On that note, I'll hand back to you now, Bethany, for any questions that anyone may have. Thanks.
Thank you, Peter. Institutional guests are now invited to ask questions by pressing star one on your telephone keypad now. You will hear a tone as you join the queue. Please listen for your name to be announced, and I'll introduce you through to ask your question. That is star one on your telephone keypad now. We do have a question. Just one moment. Our first question is from Jon Scholtz from Macquarie. Please go ahead, John.
Hi, all. Just thinking about the original mine plan, and how that looks now that we're getting close to the end of post-stripping. Are we looking at the same sort of production schedule and cost schedule that you had in that mine plan?
Very similar to it, John. It's not precisely the same, obviously, because since we've restarted the mine at Koolan, we've also mined outside of the ore reserve at times, so, including the Acacia East satellite pit. Some of the tonnages we're reporting are probably a little bit higher than what's in that original mine plan. What hasn't changed is the profile of the stripping. We'll update that in due course, but that profile, I think you'll recall from the original plan, had the first or certainly the second year and part of the third year at an elevated stripping ratio, and then it dropped quite quickly. That, as we've said, from the middle of this year, we're expecting an average of around 1.5 waste to one ore, going forward.
Won't be immediately, but later this year, but it will progressively decline, so that's the average over the remaining life of the five years.
Excellent. Thanks. Then just wondering about the capital management programs. I mean, I understand you pay the final dividend. Is that gonna continue, or are you looking as we head into this higher cash generation period to relook at the capital management program?
That's a discussion that's active at the minute. The dividend approach for Mount Gibson has been assessed on an annual basis in August each year by the board. That will occur again this year, and that will be the board's decision depending on results as to what the dividend strategy is. Going forward from that point, there will be consideration to what we do because we are, based on our forecasts, expected to generate considerable cash. I don't have any disclosure on that point, today.
Okay. Then maybe just one more on the weather you're seeing up at Koolan at the moment. I mean, how are you seeing that and the impacts on especially this quarter?
This quarter, the March quarter, is always the most difficult at Koolan Island, given the wet season weather, which typically runs from December through to early April. So far, touch wood, we've had some rain interruptions, but our systems have dealt with the water inflows very well. We haven't seen at this point any cyclonic weather events that have really come very close, so that's good. We know that, as we're experiencing, I think and as forecasts are flagging for the north of Australia and the East Coast, the wet season might be a little extended this year. We're just preparing ourselves as best we can and working as efficiently as we can, when enabled, outside any rain or lightning interruptions.
Excellent. Thanks, all.
Okay. Thanks, John.
Thank you, John. Our next question is from Paul McTaggart from Citigroup. Please go ahead, Paul.
Hi, Peter.
Hi, Paul.
I just wanna get a sense, you know, how confident you are about, you know, the kind of strip ratios coming back to, you know, sort of that lower ratio by end of year, given that it's kind of been a stop-start story with Koolan, some disappointments along the way. It feels like we're on the cusp of it, a success. Like, I think we've been burnt once or twice before. I just wanna gauge your level of confidence around that.
Sure. It's a fair question, Paul. We've had plenty of challenges at Koolan with weather, ground conditions, COVID. Obviously we tried to, in the last six months, have shipments when the profile of the waste has meant it's very difficult to access the high-grade ore. I think we're quite confident we're on the cusp of being able to increase the high-grade ore production. We're seeing the grades in the pit as we're mining already in January and February start to lift. There'll be a move towards the 65% Fe level over the next few months. Just the sheer geometry of that waste movement, barring any wet season impacts, should see our shipments increase progressively month-on-month through to the middle of the year.
At this point, we're confident that we are at that inflection point, and we obviously need to make sure that as we go through this year, we keep those costs under control, as we increase that production level.
If I can follow up, I mean, you know, the focus has obviously been on operations now for a little while. Let's assume in the next 12 months things pan out as anticipated. You know, when do you then actively start, you know, looking at alternate assets? I mean, is that kinda have you kicked off that process again, or you're still sort of, you know, busy focusing inwardly?
Look, we in the last six months have needed to prioritize the inward focus, particularly at Koolan. We have not stopped the business development initiatives though. We still hold a number of investments in junior companies where we've built relationships and are looking at possible strategies for some of those holdings. We have still undertaken the occasional due diligence site visit and the like in just looking at the potential for us. We have our short list of things that we'd like to consider, but the key focus for shareholders and for us as in the management team is getting Koolan right first because we want to turn that corner with Koolan cash flows.
I think you'll start to see more activity on the growth front in the coming year or two because Koolan has a five-year mine life. Perhaps that can be extended a little bit. Now is the time once we turn the corner here to focus on what we do longer term.
Thanks, Pete.
Cheers. Thanks, Paul.
Thank you, Paul. Peter, I'd like to let you know we have no further questions. I'll now hand back to you. Thank you.
Okay. Thanks Bethany, and thanks all. Have a good day. If you do have any further queries, anyone on the call, please feel free to call the contacts listed at the bottom of the announcement. Thank you.
Thank you, everyone. As your host has closed the call, you may leave by disconnecting your phone line. Thank you for attending.