Good morning, ladies and gentlemen, and welcome to the Mount Gibson 2023 Annual General Meeting. My name is Lee Seng Hui, and I am the Chairman of Mount Gibson. We have elected to hold a hybrid AGM again this year, which enables shareholders to attend in person or alternatively, online via the Computershare platform. I would firstly like to introduce my fellow Non-executive Directors, Simon Bird, Alan Jones, and Evian Delfabbro. Unfortunately, our fellow directors, Professor Paul Dougas and Mr. Ding Rucai, are unable to join us here today. I would now like to introduce our executive team members, Peter Kerr, CEO, Gill Dobson, oops, and David Stokes, Company Secretary and General Counsel. A copy of the minutes of the 2022 Annual General Meeting is available for inspection at the entrance to the room.
I'm advised that a quorum of shareholders is present, and therefore, I formally declare the meeting open. I will begin the meeting with the chairman's address, followed by the formal business of the meeting and the CEO's address. Following this, all shareholders and guests are invited to join the board members and management for tea and coffee. The 2023 financial year was a significant one, and operational improvements as Mount Gibson Iron Limited began to capture the benefits of its investment in Koolan Island over the preceding two years. This investment was undertaken to enable increased production, sales, cash flow over the Koolan Island remaining mine life. The improved performance was achieved amid continued volatility in iron ore market conditions, global inflationary pressures and tight labor availability. Impacts of an accidental fire in the Koolan Island processing plant in August 2022 as well.
Group revenue in total took AUD 452.6 million FOB from high-grade ore sales of 3 million wet metric tons, grading 65.3 Fe, all from Koolan Island. This compared with revenue of AUD 131.1 million FOB on sales of 1.65 million wet metric tons in the preceding year. All currency is stated in Australian dollars, unless noted otherwise. The company's return to profitability in the year, recording a net profit after tax of AUD 5.2 million, after pre-tax accounting impairments totaling AUD 75.4 million on the carrying value of assets and the derecognition of deferred tax assets totaling AUD 16.5 million. These non-cash expenses reflected the volatile market conditions, high interest rates, and inflationary pressures evident in the recent months.
The net profit for the year compared with the loss after tax of AUD 174.1 million for the prior 2022 financial year. Gross profit totaled AUD 114.2 million, compared with a gross loss of AUD 72 million in the prior year. This improvement followed the company's decision to maintain Koolan Island mining production as planned, at the planned rates, while the fire-damaged processing plant was repaired. The resulting establishment of substantial high-grade ore stockpiles allowed ore processing and shipments to accelerate rapidly once plant repairs were completed in early April 2023. As a result, the company's cash and liquid investments increased over the year by AUD 36.8 million - AUD 162.4 million as at 30 June 2023, after repayment in full of the company's AUD 25 million borrowing facility.
This strong cash generation has continued since the end of the financial year, with the company achieving record sales of over 1.3 million wet metric tons of high-grade iron ore from Koolan Island in the September quarter. Combined with lower costs and good realized prices, total cash and investments increased over the quarter by AUD 95 million to AUD 257 million as at 30 September 2023. This solid start to the financial year supports our expectations of substantially higher ore sales going forward. As indicated, this financial year, we are targeting ore sales of between 3.8 and 4.2 million wet metric tons, and an average unit cash cost of AUD 65-AUD 70 per wet metric ton. Mount Gibson also recently captured value from the sale of its historical Mid West mining and infrastructure assets to regional iron ore miner, Fenix Resources.
At completion of this transaction in July 2023, Mount Gibson received a total consideration of AUD 29.5 million, comprising AUD 10 million in cash, plus shares and options in Fenix, with a market value at the time of approximately AUD 19.5 million. Mount Gibson is now the largest shareholder in Fenix, with an equity interest of approximately 8.6% and the scope to increase via 25 million options that came with the sale. In addition, Mount Gibson received a fully franked dividend of AUD 1.2 million on its Fenix shareholding in September. From a strategic perspective, the sale of the Mid West assets frees the business to focus on maximizing cash flow from the Koolan Island and to pursue new resource investment opportunities, while retaining exposure to Fenix's growing Mid West mining and logistics operations.
Given this focus, the board elected not to declare a dividend for 2022-23 year. However, the board does intend to resume paying dividends going forward and review dividend capacity, including the expected generation of franking credits at future, interim and full year periods. Looking ahead, the board has determined the following key business objectives for Mount Gibson for the 2023-2024 financial year. We will continue to focus on further safety improvement at all our work sites, as well as maintain our high standard of environmental and rehabilitation standard activities, and to pursue appropriate carbon reduction initiatives. At Koolan Island, we aim to further increase production and export of high-grade iron ore to maximize sales and cash flow of the operation. We will also continue to drive for sustainable productivity and cost improvements, and to responsibly manage the group's cash and financial reserves.
Finally, we are now accelerating the search for value accretive resource acquisition and growth opportunities. By focusing on these priorities, we are confident that Mount Gibson can navigate the ever-changing market conditions and deliver substantial long-term capital growth and dividend returns for all shareholders. In closing, I would like to thank my fellow directors and in particular, the employees and contractors of Mount Gibson for their commitment and effort over the year. I would also like to thank Mr. Russell Barwick for his valued contribution for over 12 years as Non-executive Director of Mount Gibson before stepping down in August 2023, and I welcome Ms. Evian Delfabbro to the board as a new Non-executive Director. I look forward to reporting on our performance in 2024 and in future years. We will now move to the formal business of the meeting.
This meeting is being held in person and online via the Computershare platform. All online attendees can watch a live webcast of the meeting. Shareholders and proxies attending in person or online both have the ability to ask questions and submit votes. For today's meeting, we will table Resolution 1 to 6 first, and then answer any shareholder questions submitted on those resolutions from those online and those attending in person. Once this has occurred, we will invite our CEO, Mr. Kerr, to provide his operational update. For online shareholders, questions on any of the resolutions can be submitted in writing by shareholders at any time prior to the close of voting. If you'd like to ask a question, select a Q&A icon and type your question in the text box. Once you have finished typing, press the Send button.
Alternatively, online shareholders are able to ask questions verbally. If so, please follow the instructions written below the broadcast. The Company Secretary will manage the questions to remove any duplications. For this meeting, all resolutions will be decided by poll and announced on the ASX immediately after this meeting. Ms. Nicole Lewis, from Computershare Investor Services, will act as the Returning Officer for the poll. For our online attendees, if you are eligible to vote at this meeting, once voting opens, press the Vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a Submit or Enter button, as your vote will automatically be recorded. You will receive a vote confirmation notification on your screen. You can change your vote up until the time I declare voting closed.
For the attendees here in the room today, at the time of registration, those entitled to vote, being shareholders, representatives of shareholders, and proxy holders, were given green admission cards. If there is anyone who believes they are entitled to vote but has not registered to vote, can you please raise your hand? On the reverse side of your green admission card is your voting paper and instructions. I will now run through the procedures for filling in the voting papers. Attached to the admission card of proxy holders is a summary of proxy votes, which detail the voting instructions, where these have been directed by shareholder. By completing the voting paper when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions.
In respect of any open votes a proxy holder may be entitled to cast, you need to mark a box beside the resolution to indicate how you wish to cast your open votes. Shareholders also need to mark a box beside the resolution to indicate how you wish to cast your votes. Please ensure you print your name where indicated, and sign the voting papers. When you have finished filling in your voting papers, please lodge it in one of the ballot boxes being circulated to ensure your votes are counted. If you need any help, please raise your hand. I can confirm that I'm holding undirected proxies in my capacity as chair, and it is my intention to vote all such proxies in favor of resolution 1 to 6.
Any directed proxies that are not voted at the meeting will automatically default to me as chairman of the meeting, and I am required to vote those proxies as directed. The summary of the total proxies received for each resolution is provided on screen. Item 1, financial statements and report. The first item of business of the meeting, which is to receive and consider the financial report, the directors' report, and the auditors' report for the year ended 30th June 2023. These reports are all included in the company's annual report and are also available on the company's website. Jemma Newton, from the company's auditors, Ernst & Young, is here today and is able to answer questions on audit if needed. The proxy results for these resolutions are detailed on screen, and support for the approval of the 30th June 2023 financial report, statements and reports.
We will respond to questions on the financial statements and reports at the end of resolution six of the meeting. Item two, ordinary resolutions. We will now move to the resolutions to be put forward before shareholders. Resolution one, the re-election of Alan Jones. We will move to consider the first resolution, which relates to the re-election of Mr. Alan Jones. Mr. Jones is due to retire from office and, being eligible, presents himself for re-election. The board, in the absence of Mr. Jones, unanimously supports his re-election. I now move the re-election of Mr. Jones as a director of the company. The proxy results for this resolution are detailed on screen and support the re-election of Mr. Jones. We will respond to questions on this resolution after resolution six of the meeting. Resolution two, re-election of Mr. Ding Rucai.
We will move to consider the second resolution, which relates to the re-election of Mr. Ding Rucai. Mr. Ding is due to retire from office and, being eligible, presents himself for re-election. The board, in the absence of Mr. Ding, unanimously supports his re-election. I move the re-election of Mr. Ding as director of the company. The proxy results for this resolution are detailed on screen and support the re-election of Mr. Ding. We will respond to questions on this resolution after resolution six of the meeting. Resolution three, election of Evian Delfabbro. We will move to consider the third resolution, which relates to the election of Ms. Evian Delfabbro. Ms. Delfabbro was appointed as a director effective 28 August 2023, and has not yet stood for election by shareholders. Ms. Delfabbro, being eligible, presents herself for election as director.
The board, in the absence of Ms. Delfabbro, unanimously supports her election. I move the election of Ms. Delfabbro as director of the company. The proxy results for this resolution are detailed on screen and support the election of Ms. Delfabbro. We will respond to questions on this resolution after Resolution Six. We will now move to consider the next resolution, which is the adoption of the company's remuneration report. The Corporations Act requires that at the AGM, a resolution that the remuneration report is adopted, be put to the vote. The remuneration report details the company's policy on the remuneration of Non-executive Directors, executive directors and senior executives. The vote is advisory only and does not bind the company or directors. I move the adoption of the company's remuneration report.
The proxy results for this resolution are detailed on screen and support the approval of the remuneration report. We will respond to questions on this resolution after Resolution Six of the meeting. Resolution Five: Renewal of the proportional takeover provisions. We will now move to consider the 5th resolution, which is a special resolution and relates to the renewal of the proportional takeover provisions. If passed, the resolution will renew the existing provisions of the Constitution that enable the company to prohibit the registration of transfer of shares resulting from a proportional or partial takeover, unless shareholders approve the offer. The proxy results for this resolution are detailed on screen and support the approval of Resolution Five. We will respond to the questions on this resolution after Resolution Six of the meeting. Resolution Six: Approval of Loan Share Plan and Issue of Equity Securities.
We will move to consider the sixth resolution, which is an ordinary resolution and relates to the approval of the Loan Share Plan, which was established by the board in August 2016. The Loan Share Plan provides for grant of plan shares to certain executives, employees, contractors, subject to agreed market pricing and vesting conditions, funded by way of a limited recourse loan arrangement. Shareholder approval for the Loan Share Plan will enable the company to take advantage of an exemption under the listing rules that permit the issue of plan shares outside of 15% annual limit. Shareholders' approval will also enable the company to take advantage of provisions under the Corporations Act that enable the selective buyback of plan shares without seeking shareholder approval. This mechanism may be helpful when a participant forfeits rights to plan shares, where vesting conditions have not been met.
I will now invite questions on item of business of today, including the financial accounts or any resolution from 1 to 6. Can I ask our Company Secretary to please read out any written online questions relating to today's resolutions? Mr. Stokes?
Okay. Thanks, Seng-Hui. We actually have a range of questions, but a number of them don't relate to the resolution. So what we'll do is address those at the very end of the meeting, and I'll just pick out the ones that relate to the specific resolutions, for right now. So the first one from a shareholder is that the annual report notes that we have AUD 1 billion in accumulated losses and net assets of AUD 500 million, against a current market cap of AUD 674 million. This suggests that shareholders collectively have lost around AUD 900 million supporting the company's endeavors. How much of that loss was suffered by our major shareholder, APAC? And could the chairman please clarify what APAC's average entry price is?
Go ahead, Peter.
Hi, all. My name is Peter Kerr, I'm the CEO. So in responding to that question, on our balance sheet, for those who've seen, you might notice that, accumulated losses also need to be matched with reserves, in that you might recall, circa 10 years ago, the seawall failed at Koolan Island. Prior to that time, the profits in the company were placed in a dividend distribution reserve for future use. So looking at the accumulated losses by themselves, not quite right. Need to combine that with the reserves. Now, that's still a negative, but, far less than what was quoted in the question. The answer to the question about, is APAC, in a position where it's incurred the same loss or overall of the company is yes.
APAC's been a shareholder for many years, well before my time, and from my understanding, APAC has been alongside all the other shareholders through that period. I don't know what the issue price is, or sorry, the entry price of APAC is, but I do know, publicly, from information that Mount Gibson disclosed, that price was around AUD 0.60 back in 2008, when APAC came in with a consortium of others and rescued the company at that time.
Thank you. Mr. Stokes, is there any other question?
Yes, there is. So this one is for Evian. There was a 28.7% vote against the re-election of our chairman at last year's AGM. Was this partly due to the lack of diversity on our board with Ms. Delfabbro being the first female director we've ever had, and who was only appointed in August this year? Could Ms. Delfabbro comment on what it has been like being the only female director in the room, and whether she supports a second female director joining the board before next year's AGM? And did any of the proxy advisors recommend against any of the directors up for election today?
Thank you, David, and thank you for the question. I felt very welcomed, actually, in the boardroom, and I felt very supported and felt very comfortable there, and I hope my fellow directors likewise felt comfortable having me there. I'm pleased to add to the diversity on the board, and I actually hope I can be a role model for some 23%, I believe it is, of the workforce that is female. And I've been to the island, and they are doing a wonderful job up there. I think there was another question there about the, should there be a requirement?
I guess if the need arose for another director to join the board, that would be for the board to consider, and I would support the appointment of another female, but I would just as I would support also the appointment of another male. It really just depends on the skill set that can be brought to the board at that time to drive the business forward. Thank you.
Thank you.
Okay, there's a question here for Alan. Can Mr. Jones and the Chair comment as to why Mr. Jones is listed as an independent director when they both sit on the board of Allied Group in Hong Kong? Doesn't that make them associates? Could Alan please clarify his whole history with our two largest shareholders? Also, as the longest-serving director who joined the board in 2006, wasn't 17 years long enough? Most independent directors retire after 9-12 years. Did any of the proxy advisors release reports ahead of today's AGM, and did any of them recommend against Mr. Jones's re-election, similar to what happened last year when there was a 28% vote against the chairman's re-election?
It's on? Okay. Hi, Alan Jones is my name. The first part of that question, well, thank you for that question, is the decision of the board as to whether I am independent, and that decision has been made that I am independent. I am a director, a Non-executive Director of Allied Group in Hong Kong and have been for over 15 years. I think that answers the second part of that question. I'm not related to APAC, other than Allied Group has a major shareholding in Allied, in APAC. 15-- is 17 years enough?
Well, I think if you're fit and capable and making a contribution, and the shareholders actually elect you, elect you to be a director, I'm happy to continue, and I've put myself up for re-election, and I note that that resolution looks as though it will be passed. Has any proxy advisor recommended against your re-election? The answer to that is yes. Two of the major, I can't think of the name. Two of the major proxy advisors had advised or has advised against my re-election on the basis of tenure. I think that.
Thank you.
Okay, we just have one final one in, as it relates to the resolutions. The recent Voice referendum was a difficult time for Indigenous Australians. Could long-serving director Ding Rucai and the CEO comment on how the board approached the referendum? Did we take a position like the major iron ore miners, BHP and Rio? Also, what percentage of our workforce is Indigenous, and what is the history of our agreements with the Traditional Owners of Koolan? Are we paying royalties to any Aboriginal corporations?
Peter Kerr to answer that again. So with respect to the Voice referendum, the company did not take a position. We felt it appropriate to ensure that everyone who, in particular, was working on site at that time, there being no polling booths on site, at least had the opportunity and was warned well ahead of time to be able to exercise their vote before they came to site. But we did not, as a company, direct people to vote in any way, nor put forward a corporate position. The Indigenous proportion of our employee base is very important for us. It's currently sitting at around 14%. If we just look at Koolan by itself, it's about 16%.
It has been up to the low 20% area, about 22%, and we want to get it back up there. People will understand that can be challenging, but it can also be very rewarding, and it's a big investment we make in the local communities of Derby and Broome to try and increase our flow of employees from those areas. We do have an agreement with our key Traditional Owner , that's the Dambimangari group. They are based in Derby, and that agreement was signed many, many years ago, in the early 2000s, and it does see them receive a royalty.
Thank you. That's the last question.
Thank you, Mr. Stokes. Can I ask our Company Secretary, David, to please invite those online shareholders wanting to ask verbal questions on today's resolutions to come into the meeting. David? Finally, can I now invite those shareholders attending in person today to please ask any questions they may have on the specific resolutions? Go ahead.
Hi, sir. So last year we had a fire incident.
Yes.
So we got the damage claim already. So how about the business interruption loss? How much we can claim back from the insurance, you think?
Very good question.
Do I need to speak into that for the online folks? Very good question. So the property damage claim has been finalized. It's approximately AUD 10 million, and the vast majority of that amount has been received. The business interruption claim works to protect the company from interruption over a 12-month period. That 12-month period recently elapsed, so there is calculation and discussion with the insurance group. We do not know yet where it will land specifically, because there's quite a process involved for the insurers and ourselves to review, but that is something we will disclose in due course. So I can't give you a number on that, other than there's likely to be some form of business interruption claim amount.
Thank you. Another question is about the Mid West asset sale to Fenix. Is that we only get AUD 10 million cash plus AUD 25 million share. Is that any impairment? I know it's a big asset, port, rail. Is there any impairment to, We sell this asset to Fenix.
Okay, I think I understand. Your question is, will there be an accounting impairment from that sale when we record it this financial year because it settled in July?
Oh.
Make sense?
Uh.
Okay. So there won't be an impairment. In actual fact, there will be a profit on the sale because the transaction involved the sale of assets that had largely been written down to very low amounts, plus also the absorption by Fenix of our rehabilitation obligations that are left over in the Mid West. So we've disclosed in our subsequent events note in our annual financials, you'll see some commentary regarding the profit on sale.
So another question is Koolan Island. So we only have three years mine life. Do you think that we can find a new resource to extend the mine life, or you think that three years later, it's dead?
That's a question about extensions of mine life. Can I hold that until after my presentation? Because I'm going to deal with that as we talk through after the formal business. Thank you.
Thank you. It seems that there are no further questions for today. With that in mind, if not ready already, I would ask that online shareholders please finalize any outstanding votes on resolutions 1-6 by selecting the polling icon and casting your vote. Could I ask shareholders attending in person to please complete your green cards and raise their hand so that it may be collected by Computershare representatives? Have all persons attending in person who intend to vote now voted? Thank you. Thank you, Nicole. It appears the voting process has been completed. I therefore declare the poll closed. Results will be published on the ASX this afternoon. Ladies and gentlemen, that concludes the formal proceedings of today's annual general meeting. I will now invite Peter Kerr, our CEO, to provide his CEO update presentation.
You will have the opportunity to ask questions after Peter's representation, presentation, and then I would invite those attending in person to please join us for tea and coffee.
Morning, all. Thanks very much for coming along to our AGM. This is a presentation. Just advance it. Which? Okay, that is on the ASX this morning. So welcome. I pay respects to Traditional Owners locally and importantly, to our Traditional Owners from Koolan Island. We've already talked about the Dambimangari people. The usual disclaimer is there. In respect of corporate overview, I'm just going to run through the key points here, although I think it will be familiar to many of you. The market capitalization of the company is now a little higher. It's around AUD 680 million today, and we have obviously, after substantial investment at Koolan Island, been rebuilding our cash reserves, and they stood at just above AUD 250 million as at the end of September.
We published that in our September quarter report. The dividend history of the company is that over AUD 300 million has been paid in fully franked dividends since we started doing that, back in 2011. And I'll talk about dividends, going forward, if there are some queries on that. In terms of the shareholder base, it remains stable, and that APAC is our largest shareholder, with just over 37%. Shougang Fushan, another Hong Kong-listed stock exchange company, is 13.5%, and then a range of Australian and other institutions pick up a reasonable proportion, including our... Disclosed that. In relation to our board of directors, we've obviously already talked about, Russell Barwick's recent, resignation, and, I'm very pleased to welcome Evian to our board, already having, a really good impact.
The business itself, our key asset is obviously Koolan Island, up in the Kimberley. It is Australia's highest grade hematite resource and mining operation, and the sales last year of 3 million tons at 65.3% Fe are a testament to that. We're now delivering, after substantial investment, the cash flows we've been trying for, for a number of years, and with that, obviously, production that is running as to support those cash flows very well, but also iron ore prices that are maintaining strong levels for us. I'll talk a bit about the iron ore market in a minute, because with the high grade that we do produce, we capture that higher price.
Our target for sales this financial year, so fiscal 2024, is between 3.8 and 4.2 million tons at an average cash operating cost of AUD 65-70 wet metric ton, FOB, which means as at Koolan Island, so it doesn't include shipping freight, and that's before royalties as well. In relation to our Mid West business, as already has been asked about, we obviously packaged up those residual assets and sold them to Fenix. That was announced just before 30 June and completed just before 31 July. It's been a big effort pulling all of those assets together, and we are proud to be shareholders in Fenix, sitting at 8.6% currently, with an ability to go higher than that, with the exercise of options in due course.
We have recommenced regional exploration works in the Mid West, and concentrating on base metals prospective areas around the Tallering Peak area. Tallering Peak being a former mine that we own and have rehabilitated and further north, and so that's the start of some renewed activity. Our Mid West rail refund credit, for those who might recall, we receive a credit and have been for the last few years based on the volume transported by other parties on certain segments of that rail network. The cap on that is about AUD 35 million, and we've now reached that with the final installment being calculated. In relation to high-level points on fiscal year 2023, so the year ended 30 June 2023. Safety, it's our critical focus, and it's actually very pleasing, good news about the improvements that the site team has achieved there.
So the total recordable injury frequency rate reduced to 5.2, which was less than half of what it was 12 months prior. Now, that's an easy thing to say in stats. It's very difficult to achieve, requires a lot of communication and work and training and effort on site. So congratulations to our team for that. Commensurate with that, the lost time injury frequency rate also reduced and less than half. So what we're trying to do now, obviously, is maintain that performance and improve it from here if we can. On the mining side, and I'm just working across from left to right, across the top, our mining rate of iron ore increased. It's all high grade we were extracting.
The strip ratio reduced to 2.2 tons of waste for every ton of ore, compared with the prior year, where it was just over 10:1. As you can see, the corresponding impact it's going to have on cash costs when we don't need to move nearly as many tons of waste for every ton of ore. Our shipment rates accelerated, as we have disclosed, and so that was 3 million tons at 65.3%, and obviously, it increased our revenue substantially. In relation to cashflow generation, all of that production work manifested in operating cash flow of AUD 84 million, and our cash and investment reserves growing at 30 June 2023 to AUD 162 million.
The small bank facility that we put in place with our long-term counterparty, HSBC, was fully repaid during that period, and we have no other bank borrowings. We do have various forms of leases and performance bonds, but no other bank debt like that. In relation to earnings, our gross profit was AUD 114 million. Net profit after non-cash impairments for the write-down of various non-current assets at Koolan Island was just over AUD 5 million. Our cash operating costs reduced, and they've reduced further, and I'll talk about that in a minute. And obviously, that's helping us with our cash flow generation at the minute. Mid West transaction, we've talked about, so we put the effort into basically packaging those assets and trying to participate in that. A few comments on the iron ore market.
These charts I'm going to show will be familiar to a number of you. The three colors in that chart, this is $ per dry metric ton, and so this is for delivery in northern China. The three colors are, in yellow, the 58% Fe index, so it's a medium to low-grade index. The black is the nightly news index of 62% Fe, and the red is the high-grade index of 65% Fe. The other day, when we prepared this slide, it was sitting around the high 130s, a bit higher than that today. I've put on the right-hand side just various influences that we're seeing now on the iron ore price. None of these are really surprising, but there are many factors that take impact.
First of all, we had a low towards the end of 2022, and the price got down to about $80, actually, a little bit low, below $80 a ton, CFR. Then sentiment since that time, with what's happened in the Chinese economy, stimulus in China, and what looks like really sustained steel demand, has driven that price. The iron ore price does get impacted by quite a bit of speculation, particularly from Chinese platforms. But at this point in time, we are able, with our high grade, to be taking advantage of that price at around $140 sits today for the red line.
If we compare on that last chart, the difference between the red line and the black line, and also the yellow line and the black line, so I'm looking at a relative grade adjusted premium or discount. This is the chart you get over a 5-year period, and we put it up because it is important for the material that we sell. At the moment, if we adjust for the quantity of iron ore in either 65% product or 62% product and look at the price that's paid for every percent, there is a slight premium of around 3% today for the high-grade material. We receive more because it is higher grade, but we also receive a little bit extra for that 3% premium.
Conversely, if we're selling lower grade, and we're not at Koolan, then there is a discount as well in that customers basically demand a discount to take that material that's lower grade. And so you can see in this chart that although it's 3% now, it has been, at times, 10%-15% as a premium, and in particular, if you overlay it with where the absolute iron ore price is, that premium, going back some years, was 20%, 30%, or even 40%. So it's an important protection mechanism for us, should iron ore prices reduce, in that the red line. If I go back a slide, you can see the red line over that five-year period hasn't really moved terribly far under $100 a ton. So that's an important protection mechanism for us.
When prices reduce, that gap between the discount and the premium typically increases. Then final chart here on the iron ore price, is it expressed in Australian dollars? Obviously, we've seen recently the iron ore price be reasonably well supported, if not increasing, and the Australian dollar weakening. So from that perspective, in terms of realized prices for us, last quarter, we attracted a margin, after all of our costs, of AUD 86 a ton sold, and at today's price, it would be slightly higher than that. We hope that continues. Koolan Island, I know that some of you have been there, is an island about 10 kms long, 3-4 km wide. It sits 1 km off the Kimberley coast, right up in the Western Kimberley area of Western Australia. There's no community on the island.
It's uninhabited, apart from mining. We have all the infrastructure that we have built there. It's a fly-in, fly-out operation. About 20%-25% of our people come from the local region, and I'll talk about the breakdown of the workforce shortly. But otherwise, everything is done on the island, so all supplies are barged, all people are flown in, whether that's from locally or from Perth. We built the main airstrip along the central core of the island a few years ago, and that's been a godsend for us, particularly during COVID and in our ability to attract and retain our people, right? Our typical employee turnover rates have reduced quite substantially. They currently sit around 20% on an annualized basis, which for the WA market is competitive. So what have we done at Koolan over the last year?
So these are really the key points that I want to stress. Ore production has risen, and we are producing approximately 1 million tons per quarter. Now, that will vary going forward because the pit, as I'll show you in some pictures in a minute, is a long and fairly narrow pit. It's like a wedge shape, and so that does come and go with the waste cycle that we do have. But for the last few quarters, around that million-ton level has been, very consistent. Our strip ratio has reduced, as I explained, so a couple of years ago, above 10 to 1, and in the last quarter, it was 0.7 to 1. So actually at the low end of where we expect to be.
Going forward, it's really 1 to 1.5 times is going to be our average for the rest of the mine life, but at times it might be slightly higher than that, depending on what we're doing waste-wise. The plant's now operating at full capacity. So you, the question before, the gentleman asked about the fire repairs. They were completed, and, the plant's operating well. We also have on site a crushing contractor that is working our way, or we have worked our way through, substantial iron ore stockpiles that we built up from the mine. You'll note that last year we mined 4 million tons, but we sold 3, so a substantial part of that sat in stockpiles, and we've been working our way through that over the last 4 or 5 months.
Cash operating costs in the recent quarter were down to AUD 56 per ton FOB, so that's at Koolan Island, excluding royalties, and that obviously gave us our good margin. Our shipped grades from Koolan have increased. They've been at high, around that 65% Fe level since 2022, but we obviously, at times, go through the pit and have higher grades, and we seek to blend and adjust to try and maintain our production around that 65% Fe level. September quarter, I've already touched on a few points here, so I won't go through all of this, but steady ore production and going from left to right across the top again. Good shipments, 1.3 million tons sold in the quarter at 65.5%.
If you think about our run rate, we sell Panamax or what are called Kamsarmax vessel loads. Kamsarmax, slightly bigger than a Panamax, between 70,000-80,000 tons on a vessel. In the dry season, we target around 5, maybe 6 shipments a month, and in the wet season, we will target 4 shipments a month. And our ability to ship at that rate is not only dependent on our mining, but also weather interruptions and rainfall and flooding activity that might suspend activity for a period in the pit. So at times, we'll be achieving 4. At other times, if the wet season is bad or we have heavy rains, we will be deferring and then picking that up in the following period. Strong operating margin.
These statistics were all produced, so that's the $86 per ton margin that we achieved in the quarter. Cash flow overall for the group was AUD 124 million, so it was our best quarter for the last little while, and really important in us recovering the investment we've made in a whole range of things on the island. And our cash grew at the end of the quarter to AUD 257 million, plus our shareholding, which settled in the quarter in Fenix. So going forward, as I mentioned, we're looking for that circa 4 million tons for this year.
The reserve, as at 30 June 2023, is 12.4 million tons, which gives us a mine life of 3-4 years, and I'll come around to the question I think that was asked by the gentleman there about extensions in a minute. On the outlook, 3.8-4.2 million tons, as I mentioned. We do have a challenging ground condition mine, in that there's a lot of investment required, a lot of activity in managing the ground support and the ground conditions. And you'll see that when I just flag a couple of pictures in a minute. But that obviously takes effort, and we do have disruptions at times that we need to work around and deal with, but we have an experienced team capable of doing that. So that's where we sit at the minute.
Here are a few pictures. So looking at the main pit, it's hard to tell the length here, but it is 2 km long. You're looking-- You're above the western end here, looking to the east. On the far top right is the wharf. There isn't a ship in this picture, but if there were, it would be sitting right there, and the channel is off to the right, down to the bottom right of the picture. The work in ore extraction is predominantly, at the moment, in the western end, closer to you, and obviously, on the footwall, it's a bermless footwall. You can see there, it's a single flat plain. Geologically, it's the bedding of the high-grade iron ore deposit, which sits in the base of the pit. That deposit is 30-35 meters wide.
It ebbs and flows, but it's consistent all the way through, and we know it goes down extensively deeper, but heads towards the ocean. Hence, ultimately, and maybe we deal with the question here now about extensions. Ultimately, we will be trying our hardest to see if we can extend along strike, so that means to the west or to the east, but we know the grades and the conditions there are more challenging. The grades are not as good as the main ore body. We will also be looking to go as deep as we can in this pit, so our design goes down to a certain level, but always when you finish in an area, there's the possibility of good by-cuts to try and extract some additional material.
What I'm telling, saying to you is incremental gains are likely, but there's nothing of substantial substance in effect in terms of being able to mine further here. If we were on the mainland and away from the ocean, we would be doing substantially more in the way of cutbacks through the hanging wall side, the right-hand side of that picture, because we'd be able to then access deeper and be able to follow that ore body down. But we can't, because we'd be cutting into the ocean. Here's a picture of the base of the pit, pit floor in the western end. The red color you see there is wet. It's water. It is an aquifer through the iron ore body, and so we do manage that water. We also have rainfall events, so we manage through sumps and dewatering systems.
But in the western end of the pit, we're now down to the last few benches, and that means drops of 5-10 meters, and we are ore-bound in terms of ore from one wall to the other. So this is our opportunity now to maximize the extraction in this end, before ultimately it will become a water sump for us for managing water in the pit. But very good, productive equipment. We've invested in excavators and haul trucks, and they're running at high availability and working well for us. In relation to processing, this is a recent picture, from a lookout overlooking the wharf in the background, with a ship being loaded. It's low tide in this picture. The tides move up and down 10 meters, approximately, and the crushing facility sits in the foreground.
On the bottom right is the ROM pad, where material from the mine is stockpiled ahead of being crushed, and on the far left of that picture is the contract crushing group that we've engaged to help us move through some of those stockpiles. That's all I wanted to say on Koolan. In relation to Mid West assets, we have packaged the assets, as I think you all know, and sold them through to Fenix. Fenix has since on-sold one or two smaller components of those, but we sit with a shareholding of about 8.6% in Fenix, and an ability to rise above that through the exercise of our options. And the attraction for us here was Fenix is a smaller iron ore producer. It's regionally focused.
It has an in-built, truck haulage business, which is very important for any Mid West developments, because the truck haulage distances into Geraldton Port are very large. The sale will result in a profit on sale, to go to your question, and we think is a very good outcome that enables us to then focus on maximizing the cash flow from Koolan, and to look at the future things we want to do in the business in terms of exploration and other acquisition opportunities, which we're now able to really go about, seriously, given the cash flow that we're building.
In relation to the last few slides I have, I just want to spend a couple of minutes on emissions and carbon-related matters, because it's evident from all of the discussions we had that and from proxy advisor feedback, this is clearly a key area. We've distilled it into a few slides, and the story is fairly simple. Our material movement is reducing at Koolan Island, therefore, our fuel burn is reducing and our emissions are reducing. We can't reduce that to negligible levels, because everything at Koolan needs to be powered, and from a renewable energy perspective, there are some options we're looking at, but for a mine life of 3-4 years, you'll understand that there's not always things that make good financial sense. So we're being very disciplined about what we look at.
But in terms of our activities, you can see in that chart on the top right, the yellow columns are our carbon emissions, and they have reduced. The green line is the carbon emission per 100 tons of iron ore that we've sold. Clearly, as we've sold more and we've burned less fuel for doing that, that green line has come down. So energy consumption on the site is modest. It's power, basically, for crushing and fuel burn for trucks and equipment.
In relation to the iron ore and what are called Scope 3 emissions, there's really one key selling point for Mount Gibson's material, and that is, when you use iron ore in a blast furnace, and it's basically heated, that iron ore, the iron is extracted and the impurities in it can impact the slag and require greater coking coal input to burn them and make that slag mobile. So our impurities are very low. Alumina is very low by world standards, phosphorus, likewise, and our silica is modest. What we don't get in iron, if our grades fall a little bit, is picked up with silica, but that can be dealt with in the blast furnace. So part of our advantage of having the higher grade is that from an emissions perspective for the steel industry in China, it's less.
This chart, many of you will have seen before. It's just a summary of the Koolan specifications based on our resource work of where the grade sits relative to impurity. So on the left-hand side, the vertical axis is iron ore grade, so you know we're around 65%, and the horizontal axis is phosphorus level. The silver dots are Western Australian mines and other public company information that we've been able to find, and the gold dot is Koolan Island. Likewise, in the middle, that's the same chart against alumina, and clearly, we're a standout, and we know from our customers that alumina is an attractive... the lower alumina levels are attractive. For silica, we're not the lowest on the right-hand chart, but we're also in a pretty, modest area of around 5%.
Silica has an impact of dealing with slag or can be dealt with in slag through heating, so it's not a problem with steel output, but it is something for which we occasionally incur penalties. Community activities. Just to finish up on some sustainability points, because it goes to some of the questions we received. We take pride in what we do in the Kimberley area and in Perth, associated with that. There's some stats available in our sustainability report coming up, which detail a lot of this. Local employment is over 17% at the moment from the Kimberley. That does range between 15%-25%. We try and maximize that. Also, it can be seasonal. Our gender diversity, we've talked about numbers. At the end of the year, it was 21.5% of total employees were female.
In actual fact, that's slightly risen since then, and 1/3 of our exec and senior management team through the company is female. Traditional owners, talked about 14% being our traditional owner employment rate at the moment, and we are working to grow that percentage through a range of programs with our Traditional Owners and others in the region. Support for local communities is obvious, because without their buy-in and the support of those communities in Broome and Derby, life would be a lot harder, so we put a lot of effort into that. Right, so just to finish, to summarize the key points: we remain one of the few and well-established mid-tier iron ore producers. We offer meaningful exposure to the high-grade iron ore that we sell, 65% Fe.
And obviously, we've invested substantially at Koolan Island, and we're trying to recover that investment and build our returns over the next few years, so we can set this company in the next direction. Increased sales and cash flows are expected, and that's what we're really driving for in terms of all our operations. We have a small and stable management team, consistency on the board, and a new director, which is terrific. Our cash and investment reserves will build from here, and that building rate may not be as fast as what we've had in the last two quarters as we've drawn down our stockpiles, but it will ebb and flow according to seasonal influences and what we're doing with our shipping rates and mining extraction. And obviously, the next step is seeking growth. So you've heard about some increase in exploration activity and focus.
Now we're in a range of due diligence exercises on base metals projects and mines, and that's something where we see a potentially good future for Mount Gibson going forward. But it's early days, given we're really only just coming through that recovery at Koolan Island. So with that, I'm happy to answer any questions.
Comments?
Yeah, any from the floor? Anything, please.
I noticed that we paid the AUD 20 million royalty in the last quarter. It's like 10%, but I know that the iron ore industry is at 7.5%. Why is like higher than?
That goes to my previous answer. The state government royalty is 7.5%, and on top of that is, and that's not quite up to 10, but it's not far from it, the other difference is the traditional owner royalty.
Okay. We have more and more cash now, and the iron price is a two-year high now. So is the board consider to do interim dividend or special dividend to shareholders rather than, like, the final dividend?
So, you want me to answer that, or?
Yeah.
Okay, so the position is quite clear, and it's unchanged from what we said at the full-year results, in that the board is constantly reviewing it. A dividend was not paid in August when we put out our results, because we were on that early path to improvement, but the intention is to pay a dividend, and it will be looked at starting with the interim period next year, going forward. We're not saying that we will or won't. It will be a case of looking at the results over this period and what the outlook is at that time.
Is there any condition that our dividend policy that they paid, like, 20% or 30% of the free cash flow or net profit? Is that
There's no formal dividend policy based on earnings or cash flow like that.
Wow.
We're obviously looking at metrics and looking at what the cash flow needs could be, but there's no formal policy stated.
Okay.
at this time.
Thank you.
Any other queries from others in the room? Okay, I know we have a number of online questions. Maybe we can deal with items I haven't covered.
Okay, I'm just going to merge a couple of these questions in light of your presentation. First one is: what happens to Koolan Island once mining is finished? And now that we've sold all of our assets in the Mid West, have we given any thought to changing our name to Koolan Island Iron Ore?
Okay, in response to the last one, no. So the company remains Mount Gibson Iron. I mean, if we change and we acquire other assets going forward, we'll need to look into that. In relation to what happens at Koolan once mining is finished, we'll obviously be trying to extend mining as long as we can and extract everything that's feasible and safe to do so. But there are a number of options to do with the Traditional Owners and the state government in that area, primarily driven around the fact that Koolan has infrastructure and an airstrip that's a 2-km-long sealed airstrip. So it does represent an opportunity, potentially for logistics benefits for oil and gas companies offshore. It also represents tourism and other things.
What you may not know, for instance, is that the site team, through the tourism season, which is the dry season, and we don't advertise this, typically is responsible for housing for medical purposes and emergency purposes, a number of people who are from cruise boats that go by through that part of the world. And the RFDS, Royal Flying Doctor Service, and ourselves have an active arrangement to use our airstrip to provide that service. It's an unsung community benefit that we do. You might recall last year there were 24 odd people, almost tipped out of a boat at Horizontal Falls. Well, they all came through Koolan, and they were all looked after on our airstrip and through our medical facilities. So given the tourism in that part of the world, there may well be a role for something there as well.
Okay, next question. It's got a couple of subparts, so I'll just do them one at a time here. What are the major shipping companies taking our product to China, and which Chinese ports are we mainly servicing? Then the extension of that is, compared to other iron ore miners, how do we compare in terms of what we do in-house versus what we do outsource?
Is that on marketing, or is that in
Yeah
relation to operations?
It actually seems to be separate questions
Okay.
All jammed into one. So we'll do the shipping one first.
All right. Okay. So Mount Gibson's contracts do not see Mount Gibson contracting vessels. When we sold from Geraldton, we did. We actually chartered vessels, and we sold on CFR terms in China. The customers we sell to now, 80% of the output goes to a company called Ace Profit, which is a Hong Kong-listed company, and the trading team there have moved through different organizations over time but have been involved with Mount Gibson material for a long time. 20% goes to APAC Resources, the trading arm of APAC Resources, and that arrangement, that 80-20 arrangement, was set up many years ago, before my time, and involves competitive market rates accessing the Platts indices for 62% and 65%.
We constantly benchmark that to competitive prices and oversee that, either with independent reports required or through our own channels and networks. We, in terms of internally, we utilize the services of a gentleman at the back here, Philip Kirchlechner, for those who see him, to help us with customer liaison and those sales arrangements, but we do that in-house. In relation to operations, Mount Gibson is an owner-mining organization, so at Koolan Island, we own the fleet, or we lease the fleet, and it's our people who operate it, and we don't use mining contractors or crushing contractors for the main plant. We do, at times, bring in specialists, like for the mobile plant we have, or for particular work in the walls in the pit, drill and blast services and the like.
But largely, we are an own-and-perform organization and have been like that for many years.
Okay, you probably answered this, but do our major shareholders provide any services to the business, or are they just passive shareholders?
The major shareholders, APAC, other than from obviously the, it's not a service, but the offtake agreement at Koolan Island, no, they are passive shareholders. So all of the services are provided within the organization itself.
Okay. Congratulations on the move into Fenix. However, this is a relatively small investment, and can you give us any indication of future investments?
I'd love to be able to do that, but I don't think it's appropriate to do so. We're looking at a range of things. We already hold shares, but small positions in a few other companies in the base metal space. They are developers and/or companies heading towards production. We're constantly looking to do that, to build a portfolio that gets conversations and financing and partnering opportunities up and running, and that's something that we're active in, but we don't, we're not in a position to talk about. It's confidential at this point.
Okay, final question. Thank you for offering shareholders a hybrid AGM this year, and will you commit to doing this in future years to maximize shareholder participation? Big companies like BHP, Boral, Commonwealth, Fortescue, Harvey Norman, Origin, Ramsay Health, Rio Tinto, Seven Group, Whitehaven Coal, all banned online questions and voting in 2022. So well done for showing them up. What was the experience like from your end, and do you know how many shareholders are currently in the room and participating? And on that last part, we've got 19 online and 8 shareholders.
Okay, thanks. So the current intention is to do the same next year. We'll evaluate it, but I think it works reasonably effectively. Okay. All right. Well, thank you for attending. It's quite an extensive list of questions compared to previous years, but we have no problem answering them. If anyone does have further questions or wants to stay for a cup of tea or coffee and ask some more, please feel free to do so. Thanks.