Thank you for joining today's teleconference for the release of Mount Gibson Iron's December quarter activities report. Mount Gibson Chief Executive Officer, Peter Kerr, will be leading the discussion and is joined by Chief Financial Officer, Gill Dobson, and External Relations Manager, John Phaceas. Mr. Kerr will provide a brief overview, after which there will 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. Please go ahead, Peter. Thank you.
Thanks, Bethany. Good morning, all, and thanks for joining us to discuss Mount Gibson's December quarter report. As usual, I'll give a brief overview and then hand back to Bethany for any questions that anyone may have. As an introduction, the business performed steadily over the quarter and the half year period, both in the Mid West and at Koolan. Notwithstanding some challenging weather conditions at Koolan later on in the quarter. Group ore sales, as we've disclosed, totaled 0.9 million metric tons in the quarter, and the total for the half year was 2.3 million tons, in line with our plan. Sales at Koolan totaled 0.4 million tons in the quarter, while the final quarter of low-grade sales from our Extension Hill site in the Mid West totaled just over 0.5 million tons.
High-grade sales from Koolan in the half year were 1.1 million tons, which was consistent with our plan and guidance. While low-grade sales for the half year were just over 1.2 million tons, which was a touch above the top end of our guidance. Sales revenue totaled AUD 110 million FOB for the quarter and AUD 239 million for the half year. Of course, it was assisted by the strong pricing we've seen, particularly in the last two months. Group unit cash costs were below guidance at AUD 56 per wet metric ton FOB for the quarter and AUD 55 for the half. That's before the investments we've made in advanced overburden stripping at Koolan Island and one or two other minor capital projects, and I'll talk about those shortly.
Group net cash flow for the quarter was AUD 20 million, for the half year was AUD 52 million. The company's cash and investment reserves totaled AUD 436 million at the end of the quarter, we have no borrowings. The reduction of AUD 9 million in the cash and investments total over the quarter wasn't reflective of the operating cash flow, reflective for the working capital outflows as we close and clear creditors from the Extension Hill site. It doesn't yet reflect the proceeds of significant positive provisional pricing adjustments from Koolan Island's December quarter sales, which we'll receive this quarter now. Just turning to Koolan in a bit more detail.
For mining and production, as you know, our focus this financial year is on completing or substantially completing the overburden stripping phase to set the site up for significantly increased ore sales and reduced costs from this second half of this calendar year onwards. Mining performance was on plan in October and November, and we achieved total mining movement in those months of over two million tons, which was very encouraging. We were also tracking well in December before being affected by the onset of very heavy early wet season rains. In December, more than 770 mm of rain fell in the month, which is a bit of a record, I think, for December, for some years at least. In one 48-hour period, we had 430 mm, and that temporarily restricted access to lower levels of the main pit.
Mining continued as planned in the upper western end of the main pit, but our overall volumes reduced for the December month. Mining access was reestablished in early January, and our volumes are returning to planned levels, which is good. In addition, as we reported in early November, and although not having an impact on mine volumes in the period, we incurred a localized rock fall on the upper western footwall of the main pit. This required us to suspend mining in that area, but only a week or so earlier than we were currently scheduled to actually stop in that area. There were no injuries or equipment damage, and the rock fall was constrained by protective meshing installed on the footwall as part of our normal geotechnical controls. The seawall side of the main pit was not impacted, and mining in the rest of the pit continued as planned.
Mining was not originally scheduled to resume in the affected rock fall area until later in March this year. That's enabled us to review and determine the best approach to resume safe mining in this area. It's anticipated that these remedial works will involve some modest additional capital expenditure this year for ground support on upper zones of the footwall where historical ground support installations are less intensive than they are on the lower levels closer to where we're mining now. The timing to complete this work is under further assessment and contractor resources are being appointed. Ore crushed during the quarter totaled 0.3 million tons, and our sales, as I mentioned, were in line with our plan at 0.4 million tons for the quarter and 1.1 million tons for the half.
Our site cash costs at AUD 56 per wet metric ton sold for the quarter and AUD 55 for the half year were good. That was before our waste stripping investment and capital upgrade projects. We'll be updating our annual cost guidance with the release of our half year financials later next month, once we've updated some forecasts for our mining performance. We've clarified the timing of that footwall ground support work that's required. The site generated operating cash flow in the quarter of AUD 54 million, before capitalized advanced waste stripping of AUD 40 million and other capital projects of AUD 2 million. The net cash flow figure was AUD 12 million for the quarter. In terms of outlook, based on the mining activities that we've done in the quarter, we now expect Koolan ore sales probably to be at the lower end of our guidance for this 2021 financial year.
Approximately 1.8 million tons. That's a function of the mining challenges that we've had and the things we need to do to ensure that that footwall works well. Ore sales over the March and June quarters are anticipated to therefore remain broadly in line with what we've achieved in the December quarter. With more ore coming from the upper west end of the main pit as we move ahead with the waste stripping program, and this has always been in line with our plan, the grade shipments or the grades of the shipments for the balance of this year will reduce to between 58% and 61% Fe, before the volumes and grades lift very quickly and significantly from the September quarter onwards. That remains subject to our footwall works. Higher iron ore prices are having a significant positive impact on our shipment revenues.
As a result, the net investment that we're making in the waste stripping program is significantly below where we thought we'd be, which is good. In relation to the Mid West, our team there has done a great job over the last 18 months of the low-grade sales program from Extension Hill. As planned, the final shipment of low-grade material was exported in late December, and that took the sales in the quarter to a little over 0.5 million tons. Sales for the half year were just, as I mentioned, a little over 1.2 million tons. The average site cash costs for the quarter and the half year was AUD 40 per wet metric ton FOB, which was the bottom end of our guidance.
The cash flow from the Mid West was AUD 12 million for the quarter, including AUD 2 million from the historical rail refund credit that continues to flow through. For the half year was AUD 20 million cash flow from the operation. The low-grade program has been a significant success for us since we commenced those shipments in June 2019 and has generated 4.1 million tons of sales and cumulative operating cash flow of just over AUD 30 million, which is a great result. We're now transitioning to final closure at Extension Hill and turning our focus to the Shine project, which I'll talk about in a minute, which is located 85 km to the north, and we've already moved and mobilized equipment and people from Extension Hill to Shine to assist with that development.
Rehabilitation of Extension Hill is currently provisioned at approximately AUD 10 million, much of which will be spent over the next year. That's also subject to the timing of plant and infrastructure removal. In relation to Shine, during the quarter, we declared an initial Stage 1 ore reserve of 2.8 million tons at 59.4% Fe. We're targeting mining commencement early in the June quarter and initial shipments early in the September quarter. As with our low-grade program, we've adopted a stage development plan for Shine to keep aligned with market conditions. Stage 1 has a low capital cost of only AUD 17 million-AUD 20 million. To establish the site and produce around 1.5 million ton per annum of lump and fines products over an initial two-year period.
The average cash operating cost of that stage will be somewhere around AUD 65- AUD 70 per wet metric ton FOB before royalties. In our original pit optimization, we assumed an average 62% iron ore price of $70, albeit at a lower FX rate of $67, which is around where it was at that stage. Given today's significantly higher prices in AUD terms, the project is obviously extremely robust. Assuming conditions remain supportive, there's good potential for a further two years in an expanded Stage 2 pit for Shine, and that's based on measured and indicated mineral resources within the model pit shells at the moment. Work in the December quarter at Shine focused on site preparation, permitting and approvals, and really chasing down the remaining requirements and advancing key commercial arrangements.
Our base case assumes ore is hauled approximately 300 km by road to Mount Gibson's storage facilities within the Geraldton port. However, potentially more efficient and lower cost transport options are under advanced discussion with third parties, and we'll update on those as appropriate. Initial site works commenced in the last few weeks, including the establishment of the site water supply and deployment of mobile plant and equipment. The mobile mining fleet itself, and we will do the mining ourselves, has also been secured and recruitment of the key senior site leadership personnel is now effectively complete. The project remains on schedule to commence mining pre-stripping during April in order to achieve the first sales, as I mentioned, early in the September quarter.
In the December quarter, expenditure on the project was only AUD 1 million and we expect to incur most of our budgeted capital development expenditure in the current June half. In addition, approximately AUD 15 million will be spent in the June quarter on initial mining waste pre-stripping and stockpile build activities. That's effectively a working capital type investment. Just before I finish up, I wanted to say a few words on pricing, which obviously continues to be very strong. The average flat 62% Fe benchmark index, and that's the CFR price for delivery in China, was $134 per ton for the quarter. That was up from $118 in the September quarter. For the half year was $126. They're prices that not many people, including ourselves, anticipated, but very welcome. The 65% Fe index price also lifted.
This is the 65% Fe index price, to an average of $146 CFR U.S. in the quarter and $138 for the half year. As we've noticed and consistent with past periods of higher pricing, the high-grade premium was actually quite compressed at just under an average of 4% for the quarter, and we adjusted our blending strategy accordingly to maximize our revenues. Our Koolan DSO fines realized an average price of $149 U.S. per ton FOB after penalties and significant positive provisional pricing adjustments. That was compared with $104 U.S. per ton in the prior quarter. The December quarter price of $149 comprised $130 of pricing related to the December quarter shipments, plus the provisional pricing adjustments relating to the September quarter.
That's been obviously a very positive outcome for us as that price has particularly lifted later in the quarter in line with our quotation periods in our agreements. Shipping freight remained reasonably consistent across the quarter, averaging approximately $10 a ton for Panamax vessels shipping from Koolan Island to China. For our low-grade sales program in the Mid West, where we've sold our cargoes on a fixed price basis, our average realized prices in the quarter were $34 a ton FOB for fines and $45 a ton FOB for lump products. In summary, just to close, I believe we achieved a steady December quarter in line with our plans. In particular, our focus on the schedule overburden stripping program at Koolan Island.
We will continue to invest in this program and in the development of Shine over the next two quarters, being the March and June quarters this year. Our focus will remain on cost control and then the significant increase in production and cash flows that we're chasing from the September quarter onwards this year. On that note, Bethany, I now hand back to you for any questions that others 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, and I will 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 Hayden Bairstow from Macquarie. Please go ahead, Hayden. Thank you.
Hi, Peter.
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Just a couple from me. Firstly, just at Koolan, the costs are going up a little bit. Is that just the variance in waste versus ore movements for the quarter, or you're finding it harder to get a full complement of staff or anything like that? I would have thought with the airport's now open, I presume so you can just fly direct up there. Just keen to get your thoughts on that. On Shine in the Mid West, it's not huge amounts of volumes. The forward market's not that liquid, but for those sort of volumes, it probably is all right. At what point do you start locking some of this stuff away to guarantee your capital return?
Yep, no problem, mate. Good questions, Hayden. Relevant for us. Look, I'd say for Koolan, the costs that we're seeing, we've been actually steadily working and improving on the cost metric that we've mentioned in the quarterly of mining and administration and logistics cost per total ton moved. That's been coming down. In the December quarter, we were impacted by weather and also the western footwall piece, which will require some more ground support higher up. It's those things that we're wanting to assess a little more accurately now and adjust in our guidance. That's important for us, obviously, because as a cost per total ton move, that's the efficiency and cost effectiveness of our waste mining that's key.
When you express that total cost overall with crushing and the port-related costs in the Island divided by the tons we're selling, because we're going to be selling, I think, fewer tons than we had originally hoped, particularly in the June quarter, and we'll be continuing with the kind of run rate we're seeing now, just per ton sold, that will necessarily rise because of that waste stripping we're doing and because of these mining adjustments that we're making. I see it as a pretty temporary thing. It's part of the exercise in getting this waste, this overburden moved so we can then get into more substantial volumes of the 65% plus iron ore from the September quarter onwards. That's really the key.
On the airport, yes, the airport is open. We've been flying direct jets twice a week, Wednesdays and Thursdays, Perth, Koolan and return. That's been operating very well. We've had one or two interruptions in the wet season, which we've needed to work around. On the whole, our staff are very happy with that. We are seeing labor cost pressures. I think you probably see that from every miner, in particular in certain disciplines. We are putting a lot of effort into our people and our incentive plans and our conditions on site to ensure that we offer a pretty good package for employment. That's important to us. No doubt, those cost pressures are starting to rise and will become an issue for the industry in terms of numbers of skilled people for the available jobs. In relation to Shine, yes, it isn't a big volume.
We have actually done iron ore hedging in the past, and we've done a little bit, going forward. It's something we're looking at now as we particularly get closer to the start date of shipments for Shine, because the market's in backwardation, and obviously the further out you or further ahead you do it, you suffer from that backwardation in the forward curve. That's something that's a hot topic for us at the moment. At this point, it's a monitoring and strategy exercise for us.
Okay, great. Just one final one. It's obviously for the Board. Should we expect any sort of material shift in the dividend policy, given how much money you're starting to make and where iron ore is? Is it still just going to be sort of a continued, as you were, payments?
Yeah. Look, I can't comment at the moment on that because the Board's approach is to assess for the full year and see. The Board can obviously decide and change its approach as needed. That is a topic of discussion at board meetings, pretty obvious for when iron ore prices are higher. I've got no information at this point on what the Board might be thinking there now.
Okay. Well, good stuff. Thanks.
Thank you, Hayden. If any other institutional guests would like to ask a question, please press star one on your telephone keypad now. Thank you, Peter. It seems we have no further questions at this time.
Okay. Thanks, Bethany, and thank you all for listening to the call. A copy will be placed on our website if you would like to go back and access it. Hopefully, we shall see you and speak soon.
Thank you, everyone. As your host has closed the call, you may now simply leave by disconnecting your line. Thank you for attending.