Hello, welcome back, everyone. It's been a quarter already, and we're back with Bruce Griffin, the Executive Chair of Sheffield Resources, and Mark Di Silvio , CFO of Sheffield Resources. Most of you are probably familiar with the format by now, but Bruce will run through around 15-20 minutes of a new presentation for you all. The webinar will have a Q&A session towards the end, so please feel free to submit your questions in the Q&A at the bottom. Other than that, Bruce, fire away, and we'll get into it.
Well, thanks, Peter, and thanks, everyone, for joining. Presuming you can all see the presentation okay, so I will just take control of that. So look, usual drill, I'll focus mostly on the Thunderbird production results, the Q1 results. Just to remind, Sheffield is more than Thunderbird. We do have other projects we're looking at in mineral sands, albeit probably longer dated options than what we're looking at at Thunderbird. Just a sort of pictorial snapshot of where we are at Thunderbird. Top left, the mine in, well, it's July this month, making good progress. That's at the end of a mining block, about ready to move the DMU again. In the middle, process plant, lots of product stockpiles and so on. And then top right, our export path. So those are Rotainers at the jetty in Broome, about to be lifted into a vessel.
What I'm going to do is I've got the same two slides that we've used for the last couple of quarters on the cumulative production, but I would prefer to talk, we'll spend more time talking to some of the more detailed information we've provided in the quarterly around specific recoveries, month-by-month production, etc. But in terms of the cumulative ore production, Q2 ended up being a pretty good quarter, 2.5 million tons of total ore mined. That's ahead of the BFS schedule. More or less, we're actually more or less one quarter ahead of where we said we would be in terms of overall mining rate, and we would expect to maintain that through till we were expecting to be pretty much at full mine production at the end of the year. So that's where we are.
So that was pleasing, pretty good performance overall of the mine, and building month-on-month. So May was a step change on April, June a step change on May. And that was initially the benefit of, well, April was also a step change on March, the changes we made to the DMU and then getting operational efficiencies once we had the new DMU and the improved DMU and our mining contractor and so on really hitting their straps. As I said, I'll talk to some of the specifics on the detailed slides. That flowed through in terms of cumulative concentrate production in total. We are still ahead of schedule, and that's really driven by a couple of things. While we do have, we're obviously ahead on overall mining, yes, we've got the oversize, which reduces the amount of rougher head feed, but we've got the over-recovery.
Effectively, the process plant, as you'll see later, has been running at close to design throughput and recoveries pretty much from the start, which is ahead of where the ramp-up was. So we've seen that benefit of enhanced process plant performance throughout, but that's what's enabling us to still recover above expected ramp-up volumes of concentrate. In terms of the specifics, so first talking about the ore piece, so mine throughput. So the dark line here is effectively basis for design for the mine. Roughly 1 million tons a month is the basis for design. It goes up and down a little bit based on timing of DMU moves and those sorts of things. And what you can see, the light, I guess, light green line or light blue line is the month-by-month ore we actually pushed into the DMU, which you see is built strongly from January.
We had the very low month in January because of the mechanical issues. February and March, we were constrained, as we've previously said, because of waiting for pump internals and some other changes we need to make. And then April, May, June, that progressive increase month-on-month. And in the end, June was just a shade under 1 million tons of ore mined, which is very much in line with basis of design. And as I said, about one quarter earlier of where we thought we would be. So that's very, very pleasing. In terms of what is it, this is sort of to address the 75% question. So this chart is now there's two different things on here. Dark blue line, light green line, volume of rougher head feed. And then the dotted lines are the rougher head feed grade.
So first on volume, these are not basis of design. This is now BFS. So this is effectively the assumptions about what the ramp-up would be in terms of volume. And so what you can see is that it's had the—and then the light green line is the actual. So what you can see is part of it is, as we've increased the mining throughput, we have seen that flow through, but you can see the sustained gap. And so if I jump back to chart for a moment, by June, we're pretty much at basis of design for ore mined, but we've still got that gap for rougher head feed. And that's the consequence of the additional oversize. So the way to think about that is it's a volume question.
We're effectively getting about 75% of the volume of the expected rougher head feed from a given ton of ore. And that has been consistent throughout since we've been operating. And we're now obviously working a lot on what do we do about that. And I'll talk a little bit about that in a moment as well. So that's the volume component. In terms of grade, rougher head grade, we've been fairly consistently seeing rougher head feed grade above basis for design, probably at least in part because we're assuming that if we are losing grade to the oversize, it's lower grade. So there's an upgrading process, but we don't know that for sure yet. The reason why we're showing a focus on rougher head feed grade and not ore mined grade is fundamentally, you don't measure the ore mined grade.
If you think about mining method and all of those sorts of things, you don't measure that. What we do do is measure rougher head feed. You then can back calculate what the mined grade would be. Given the oversize and the uncertainties about where material is presenting, any number we present for ore mined grade will be an approximation, and it will be based on modeling. I don't think that is a particularly clear reconciliation. We're focused on rougher head feed grade because that's a number that we are measuring, and we can compare it with what we expected. This is the first of the offsets we see for the lower volume, partly offset by higher grade in the rougher head in the material being fed to the rougher in the rougher head feed.
Then if we look at process plant overall, so that's got us to rougher head feed. Now, what happens in the process plant, wet concentrator and WCP? And we focus on this as zircon and titanium dioxide, effectively the two main products. So from the zircon perspective, again, here the dark blue, or here, the dark blue is the design recovery of ZrO₂, which is, I guess, the payable mineral in the zircon concentrate versus the light blue, which is actual. And what you can see is we've had over-recoveries all the way through. So we've had better than expected recovery of the ZrO₂ to the final product, the zircon concentrate. And then the dotted lines are the ZrO₂ content. So in the first few months, we were producing a little bit under. So the lighter line is actual and the dark line is design.
That was partly because at that stage, what we were seeing was we would get better recoveries from producing a slightly lower quality ZrO₂ when we realized we were getting good metallurgical recoveries. Effectively, we've shifted that back. So what we're now doing is producing pretty much at design ZrO₂ in the zircon concentrate. So from a recovery and quality perspective, process plant is running very well. So the material, if we present a ton of rougher head feed, we're getting very good recovery and quality of zircon concentrate, which is obviously our main revenue stream. When we look at ilmenite, for the ilmenite, same basic principle for the chart, TiO₂ being the primary payable in the ilmenite concentrate. Again, dark blue design, light blue actual. Again, you can see here we've had higher than design recovery of TiO₂ to the ilmenite concentrate.
In this case, we've had consistently higher TiO₂ content. Now, I think I had heard sort of someone commented to me, "Oh, well, that's a freebie for Yansteel because you're under a fixed price contract." The Yansteel contract is actually based on % TiO₂. And if the % TiO₂ is higher, the dollars per percent go up a little bit, and if it's lower, it goes down. So to the extent we produce higher TiO₂ ilmenite concentrate, we do actually get a price premium for that. So this is not solely for Yansteel's benefit. It's something that benefits KMS as well.
So again, here, similar to zircon, when we look at if we present a ton of rougher head feed to the process plant, we get very good recovery of TiO₂ to our main ilmenite product, the ilmenite concentrate, and we're producing a good quality ilmenite concentrate for Yansteel. The cash flow, so this is sort of if we sort of talk through the June cash flows. So the first couple there, we did draw for the finance in the quarter. We, first of all, drew the last of effectively the cost overrun facility from NAIF. So we've fully drawn our two debt facilities. And towards the end of third quarter, Yansteel and Sheffield both put AUD 7.5 million in.
So for a total of AUD 15 million, which is really designed to cover a working capital build that, with all of the production issues and so on, we just had a gap in the working capital. It was getting too tight, and we felt that we needed to put that cash in to be able to manage the day-to-day of the business. Then, from a revenue perspective, significantly higher revenue in the quarter, given that we shipped a lot of product. And in particular, it's probably worth noting, I think we said this in the quarterly particular, we had a very, very good shipping month in June. We shipped over 90,000 tons of product, which is pretty much close to what we would expect to need to ship at full production.
And we shipped a very large amount of both ilmenite and zircon in June, now, including towards the end of the month. Now, given payment terms, a reasonable amount of that revenue was not actually cash revenue was not received in June. It will actually be received in the current quarter in July, effectively. And effectively, that's part of that working capital question. That's a significant amount of working capital build related just to the timing of the payments for those sales we made at the end of June but weren't paid into the current quarter. Then OpEx exceeded revenue for the quarter. Although, note what I just said about cash revenues. Had we received all of the cash for all of the product we shipped, we would have been operating cash flow positive for the quarter.
So hence our confidence that we are moving into operating cash flow positive from the September quarter onwards. A small amount of CapEx. And then we have interest and leases. So that number there, roughly half of it is interest on the finance facilities, and the other half is lease payments. The leases are effectively where we have BOO-style contracts. So effectively where we have had the contract to provide equipment and is recovering the CapEx through the operating contract. And the best examples of that, Piacentini provided the DMU under a BOO. Pacific Energy with the power station as a couple of good examples. And the other one, our Rotainers. We actually lease our Rotainers. And so what you have is a capital cost component to those. So those costs are recovering capital that has been provided as part of those operating contracts.
So that left us with a net cash position in KMS of roughly, I think it's AUD 15.4 million at the end of June. And if you think about the AUD 15 million equity injection, you can see why I said why it was tight. If we hadn't put that in, we would have been on fumes, and that's a difficult way to run a business, hence the decision to put the money into fund that working capital build. I think that probably is the sort of prepared comments I'd make. Happy to take questions now, Peter.
Perfect. Thanks, Bruce. Start on that one. So we have got some questions already coming in. So the first one is, "The quarterly seem to show that Thunderbird product is being sold at less than cost. Is this correct? And if so, when will it change?"
Yeah, as I just said, because it's a ramp-up quarter still, we've got operating cost building, and you've got the cash timing of revenue. So if we look at a ton, what we do, if I take June, for example, if we look at the cash revenue we would have received in the month if all the product we produced, we sold at those prices, we would have been cash flow positive. So it's a timing issue because of the ramp-up, not that we're selling product below cost.
Okay. "Might the higher RHF grade than predicted be a result of a positive reconciliation against the reserve grade, at least in part?"
It is possible. I mean, as often with these things, my guess is it's a mixture of things. It's possible it could be reserve.
The actual grade is a little bit higher on the ore body. Clearly, with the oversize and the volume of material that's going to oversize, the potential for an upgrading effectively occurring because lower grade, we may be preferentially losing lower grade material to the oversize. So it's possible. I don't think we don't know yet. We've done the redrill of the deposit. We'll finish the drilling certainly within, I think, we'll certainly this quarter have the results. That's a much higher density drill program. That will give us a much better understanding of the in-ground, a more granular understanding of the in-ground grade. And that will help with that sort of reconciliation. And then we'll have a clearer idea of what the drivers of that higher rougher head feed grade are.
Okay. Obviously, it was quite pleasing to see that you had the lower end of estimates, around AUD 55 million in terms of cost, that did come in. You've spoken about savings in the past. Any comments on where they could come from?
Yeah. I mean, yeah, first thing, it was we had previously flagged that we thought the June quarter would be AUD 55 million-AUD 60 million. So to come in just over AUD 55 million was pleasing. In terms of cost savings, I mean, as soon as we could see, I think probably around the time we were talking about the higher cost, we already initiated cost-saving initiatives. With KMS management, identified some fairly quick cost-saving initiatives, which were implemented quite quickly, and that's benefited. We've really got two there's probably two remaining pieces on the cost.
I think previously I've spoken about there are some inherent things in the way we operate in these first few years, like we're doing surface tailings at the moment. We expect to complete the transition to in-pit during FY 2025, in-pit tailings disposal, lower cost than surface. So while that cost will be with us throughout FY 2025, effectively, it's not going to be there forever. And those are not immaterial savings. I mean, that's in the order of probably in the order of a few million Australian dollars a quarter, potential savings from moving to in-pit. So there's things like that. And then what we've initiated is a more detailed review of effectively a performance improvement project for, I think, and it's really looking at, like any startup, particularly when you introduce inefficiencies in getting going. And the reality of operating is always different to on paper.
On paper, it all looks fine. So I think what we're doing is a review of what is the gap between how we had expected to perform. Obviously, we have things like the oversize, which is a separate question, but in terms of the gap, operational performance, and operating costs, etc., versus what we'd expected. And then looking for, okay, where are the opportunities to extract further cost savings or efficiency improvements. And part of that's a benchmarking exercise against relevant, probably not specifically mineral sands, but looking at more generally mining and WA, looking for where we're doing, have we got inefficiencies in our business that we can eliminate. So I think we certainly are very focused on 55 was a pleasing outcome in the sense that we were signaling it could have been up to 60. Are we happy with that? No.
We would be looking to further reduce those costs, as I say, both with performance improvement in the short term and then some of the longer-term structural changes that will occur naturally as our business evolves.
Okay. Perfect. In terms of the ramp-up, you're consistently showing that you're ahead of sort of where you thought design would be at BFS. How confident are you that that can continue?
Yeah. I mean, I think part of it is we would expect we see no reason why we can't continue to operate as we were in June. I think that's something important to highlight is that the June quarter wasn't three months the same. June was a very different month to April. And we don't believe any reason why we wouldn't, at minimum, sustain the way we were operating in June on average or do better than that.
So that means from a mining perspective, no reason why we can't sustain mining rates around that 900 to 1 million tons a month on average. Process plants working well, no reason why that would change. So we certainly would expect to sustain that improvement. Now, the gap, what will happen over time as part of the gap is there was a ramp-up assumption. And so with performing ahead of ramp-up, eventually the forecast ramp-up will then be at full production. At that point, I expect we're in line with on ore mined because we are already. Process plant will be performing as per design. But as we've discussed, volume of products, less than 100% because of the net effect of oversize and all the recoveries until we come to solve the oversize problem, which I note I haven't actually spoken about.
So at some stage, I could talk about where we are with the oversize.
Why don't we do that now, Bruce, because that's probably quite an important one.
Yeah. So with the oversize, I mean, in some ways, nothing's changed in terms of what we're saying, but we are doing a lot of work. So there was a couple of key points around the oversize that we've flagged up. One was drilling. So the drilling program will finish this quarter. That will give us a better understanding of what's coming next. Now, drilling doesn't perfectly predict oversize, but we will get a better understanding of what's coming next and more granular, which is helpful. The other thing is the sampling of the oversize streams to understand, are we losing heavy mineral there? Is it recoverable? And is there an economic way to recover it?
Now, we've started that, but that's not a do one sample, take a result, design something, and build it. So we're doing more samples to get repeatability so we're confident in what's happening there. And then when we know if we're seeing consistently, we understand if we are losing material to oversize, then you have to do some work to design the right solution for that and make sure it's economic before you do it. As before, solution, a combination likely of making some modification to the DMU to improve a liberation of fine material. I do believe we will have some fine material being lost that would be payable if we could get it into the rougher head feed. And then potentially increasing a DMU capacity in some form so that we can push more volume in and effectively remove the volume constraint.
So I think it's some combination of those. As I've said before, it's a little bit of a boring engineer's answer, but you can't solve the problem until you understand the problem. So we have to be methodical about understanding it, doing the work so that when we implement a solution, we can be confident it will work, similar to what we did with the DMU modifications. So that process is ongoing. We will provide updates when we know something, but until we have enough data to know what we're going to do, I can't speculate on what that will be.
Good. Okay. Thanks, Bruce. Right. So looking through some more questions. How will the receipts look like against sales in September quarter? Obviously, I know you can't say too much there because the regulators probably wouldn't be too happy if you start saying how much exactly.
But what are you expecting the next quarter to look like, Bruce, I guess, is the real question.
We would expect the September quarter is going to be more like because we would be running more steady state. There's less ramp-up in there. So what would normally what we'd expect to happen is what we sell and get paid for in a quarter will be consistent with what we produce and pay to produce. So while there'll always be a little bit of variability, we won't see a swing like we had this quarter where we actually did. I mean, I'm trying to think. What was our total shipments for the quarter Mark? It was 160.
Yeah, 160, 170.
So we did over 90 of the 160, 170 in June. So circa half our shipments were in June. We wouldn't expect to have that uneven shipping profile again.
Payment terms, I'm not going to say specifically what they are. That is confidential to customers. But the guidance I would give is that our partner, Yansteel, pays within a number of days of presentation of a bill of lading. That is, they are pretty. But obviously, if you ship material on the 31st of July, you still don't get paid for it. Sorry, 30th of June, you still don't get paid for it in June. And we did ship at the end of the month. But they pay quite quickly. Zircon concentrate with sort of typical market terms means that payment, once you've moved to, which we have now moved to LCs, all our payments are post-payment now. They're more like in the they're more than a month, but they're not multiple months is the way to think about that.
So that clearly with the Zircon we shipped in June for the most part was not paid for in June. We wouldn't expect that to repeat over a quarter. We would now expect to more or less ship what we produce, get paid for what we've shipped on average because you're receiving the receipts you receive at the start offset the receipts you haven't received at the end. So we should start to see a more steady working capital position.
Okay. Great. Is there a plan to increase all mining capacity to achieve design RHF tonnage?
No, as I said, that is a possibility, but that's not we haven't determined whether that's what we should do or not. Depending on what we discover in terms of if we can liberate more fine material, we may or may not need or the size of that adjustment to mining rate would vary.
I think it's important to say as well, we haven't actually changed. We tried a few different things in terms of mining, in terms of the way we prepped the ore and so on to see if that would make a difference. But in terms of the mining blocks, the sequence we're mining in and the T1 + T2 ore, we're very much mining in accordance with the original plan. And obviously, if you're mining a bit faster, you just finish the block quicker. But we haven't fundamentally changed the blocks we're mining. So again, we don't change things until we understand them. So at this stage, we're mining. I mean, the simple principle here is we mine every ton we can every day in the DMU because obviously, we are not full in the process plant.
So if we can mine an extra ton, we can process an extra ton. So we will mine all we can. But at this stage, we don't have a commitment to make the DMU bigger because we don't know if that's the solution.
Okay. Another question. Why is the zircon revenue lower than the BFS amount?
I mean, effectively, it is price. It's price. We are the and it's important to me. Zircon revenue is not just zircon. The zircon concentrate has three payable minerals in it: ZrO₂ for zircon, TiO₂ for the titanium minerals, and CeO for monazite for rare earths. So all three are payable. Now, I think we've talked about this before, but I'll say it again. If we break each of those three down, we're being more or less paid what we expected for TiO₂.
However, the TiO₂ percentage is a bit lower than we had assumed in the DFS. That's the fine non-mag TiO₂ can go different places in the plant. We don't overly focus on that because the primary driver of value is ZrO₂. So the plant is set up to maximize recovery and production of ZrO₂ because that's our primary revenue driver. So TiO₂, slightly lower percentage. CeO, again, market price lower. So I think everybody knows rare earth prices have come off a lot. No surprise that people are not paying as much for monazite. So that is predominantly a price effect. And although it's not a large percentage, it translates into, I think, probably relative to the BFS assumption, I can't remember exactly, but it's probably in the order of AUD 50-AUD 100 a ton, potentially of lower monazite revenue.
And then we have on the ZrO₂; it is now predominantly the discount they're applying for the quality of the recovery and quality of ZrO₂. So our customers can make near premium quality from a ZrO₂ perspective. The iron and titanium dioxide content is above for premium, so it's standard. And they're going to work; they're working on how do they process our material to remove more TiO₂, remove more iron. And I think it's also important to remember if you think we've got three customers at the moment, three primary customers; there are three fixed term for volume. If you think about the cadence, the customers have had one; maybe they've had their second bulk shipment. So the time, it's not like they've got; they're receiving product all the time and so on.
So there is a time period required for them to figure out exactly what they're going to do to make that product work. So that's where we're seeing all three of those elements are driving the lower revenue. The discount for quality and recovery, we expect to erode over time or effectively go back closer to because they will recover either premium or near premium quality as they figure out what's the best way to process this material, recognizing that it's quite fine material and therefore and the sequencing of the process. There's always the thing with mineral sands is there isn't one way to process a non-,mag con. The sequence of process steps, do you need to do a final cleaning step? Those sorts of things, they take a bit of time to figure out and learn.
Good. There's a couple of questions on G&A, so I thought I'd cover a few of them at the same time. So what can be done to bring down G&A costs and also what's actually included in the G&A costs at KMS, that is?
Yeah. So look, this is something, so G&A and it's possibly something we'll look at going forward in terms of the classification, but it is worth noting that in KMS, because Kimberley Mineral Sands is a single asset company, they have things in G&A that would probably normally be considered site G&A and included in operating costs. So the best example I can give is the village cost, effectively the catering accommodation cost is showing up in G&A. So when we look at that G&A number, that's not classic corporate costs for KMS.
That number includes a bunch of other stuff, which is like general site support type services. Now, that said, I'm not saying there aren't opportunities to make savings there. And certainly, as I said, we have an exercise underway to review effectively the whole business from both a production efficiency perspective, but also a cost. Do we have the right people doing the right roles? Have we got the right coordination between different contractors? All of those sorts of things. So it is a focus, but the G&A number is not a classic corporate G&A that would be reported if this was a multi-asset sort of company.
Good. I know you've already touched on this next part a couple of times, and there's not too much you can really say. But do you have any ideas on when an update on the oversize issue might come around?
And the way that you currently think about it, would there be any associated CapEx that solutions could carry?
Yeah. I mean, look, I'm reluctant to say exactly when because what I would say is when we know, we will be more than happy to share that. But I think because the process is you do work, you learn things, you do a bit more work. And when does that process conclude and you go, "Actually, we now know enough to know that we're looking for a solution now or whatever," I wouldn't like to put a specific date on that. I will reiterate my view that the long stop for me is I don't see this as an issue we carry beyond FY 2025.
But I'm not going to say that exactly when I'm going to be able to say, "This is the answer, and this is what we're doing about it." In terms of CapEx, look, I'll repeat what I've said previously. We don't know because until we know what you would do, it's hard to say what it is. In terms of equipment CapEx, the way I think about it is the DMU, which I've just noted previously is a leased piece of equipment rather than purchased. But put that aside. A DMU is a circa AUD 20 million piece of equipment. And if you had to double mining, assume you had to do that again. So now, I don't think that's the solution, but it's a flavor of it's unlikely that modifications to a DMU cost more than the DMU.
It's unlikely an increase of mining capacity that is less than the full less than a doubling cost more than that. So from an equipment perspective, I would assume that the solution is in that range. It's probably not zero. I don't think it's above 20, but we don't know. Until we know what the solution is, it's hard to cost it. But I can say that's the piece of equipment we're focused on as an AUD 20 million piece of equipment. So I see that as being a reasonable way to think about the CapEx.
Okay. Another question here, essentially saying you're producing concentrate volumes in line with DFS estimates. Yet you say you are producing 85% of what is expected. They're a bit unsure what you mean by that.
Yeah. So draw the distinction here. So part of the reason why we're above is because our overall ramp-up is above. So we're getting better recoveries and so on in the process plant. But if I actually look at a ton of ore, if you actually look at a ton of ore mined and you look at products produced, we're at about 85% of the products we would expect from that ton of ore. And that is because volumetrically, we're getting 75% of the volume is becoming rougher head feed. And that's because the oversize, you remove the oversize, it's using up capacity in the DMU. That's a physical volume constraint, 75%. Then the higher rougher head feed grade, higher recoveries, good process plant performance is giving about 10% of that back so that you end up at about 85%.
So it's a mixture of so when you think about, well, you're at design concentrate. That's because we'd assumed we wouldn't be getting the current recoveries. We wouldn't be at design or above design yet. And we kind of are. So I think there's 2 effects there. So as we get to the time when the ramp, when we're fully, when the DFS is assumed fully ramped up, I'm assuming that if nothing changes, we'll be producing about 85% of the concentrates we expected at that point in time equivalent to the BFS. I don't know if that helped or not.
No, that's good. I've heard around 3 questions come in more on the share price and trading volumes and things like that.
So in terms of the share price, so the most recent one, obviously, we've had higher trading volumes over the past few months since the fallback in share price. Have you seen any higher uptake/support from institutional investors? And also, obviously, there has been some selling pressure. Are you alarmed by that? Are there any comments on sort of what you're seeing in the market at the moment in regards to the Sheffield share price?
Well, I mean, yeah, we're not happy with the share price because, I mean, the market still seems to be assuming a sort of fairly Armageddon type scenario here, despite the fact that overall performance is operationally pretty good. I think in terms of I think, yes, volumes have picked up, but it's worth putting in mind that volumes are still very low.
You're talking about 300,000 shares a day on a company with 400 million shares on issue. It's not massive volumes. And I mean, that has its own set of issues. But so although we've seen it pick up, look, what we can see, we have not seen, or at least thus far, we cannot identify and haven't been told by any significant institutional investor that they are offloading their position. Equally, it's not obvious that they're adding to their positions either. It appears that the bulk of the trading is occurring in the sort of smaller end of holders is how I would put it.
Okay. Perfect. A few questions have come in on South Atlantic and Sri Lanka as well. Maybe we'll focus on South Atlantic first and then Sri Lanka.
Any progress on South Atlantic and what's the obviously, you mentioned some drilling in the press release as well, right? So maybe you could touch on that, and then we can touch on Sri Lanka after.
Yeah. So for South Atlantic, we talked about it in the quarterly that we are still doing the drilling program. I mean, for those who may or may not have seen it, but the state of Rio Grande do Sul actually had the proverbial 100-year storm. It was very, very severe. And we spent about a month effectively doing or supporting disaster relief efforts in the community, providing equipment, labor, food, etc. So there was very much a focus on actually just people lost their homes. It was a lot of damage. So we lost a bit of time with that. And the weather itself didn't help.
It was a pretty unproductive time. That has delayed our drilling program. We've completed the bulk of the drilling at Retiro. We drilled the main Retiro area. We're currently drilling in Bujuru. The expectation is the drill program should finish certainly this quarter. It's our own rig. It's not a big cost to extend time out like it would be if we were using a hired rig. Depending on when the results are presented, etc., but we still would expect that we have some resource update late this quarter or ideally probably by the time the September quarterly comes out. It's about sample analysis and it being processed. The DFS has progressed well.
Again, because of the delay in the drilling and therefore the mineral resource estimate, we may see some delay in when we ultimately have a PFS or a PFS, not DFS, a PFS to release. And it's not a, I mean, I think we've said this before, but we've now put the last of the money in for the stage one, the current option. We are not expecting or the approval process is slow in Brazil. And we've identified that while there are really good approvals in place for one part of the deposit, albeit not all in place, we think we need approvals across the wider would need approvals across the wider project to really move forward. So we would expect that the next stage, even stage one, but the timing is probably drawn out.
So we continue to like the project, but it'll be a slow burn for us. It's not something that's going to consume a lot of time or dollars in the short term.
Okay. And obviously, on South Atlantic, I think we saw either from yourselves or from Capital Metals that you wasn't going to proceed. Could you just touch on that?
Yeah. Look, sorry, Sri Lanka, yeah, with Capital Metals with the Eastern Minerals Project. Look, we like the project, still do. It is high-grade, potential low capital, high-grade development. The reality is we had to cut our cloth. I mean, once it became clear that we would need to provide some cash support to KMS in the short term, we felt it was appropriate to preserve our cash corporately if we needed to be able to provide further support for KMS alongside Yansteel.
And so while we would have liked to have done something with Capital Metals, it just didn't feel like the right time for us. We still own 10%. I'm on the board there. They will continue to progress that project. They've appointed someone there who should be capable of moving the project forward. And so we certainly are an interested shareholder there. We'd like to see it be successful, but it's not something we can—it's not a priority for us from a cash or resources perspective at the moment either.
Yep. Sure. Okay. I think we're running low on questions now. So perhaps, Bruce, Mark, if either of you have any sort of final thoughts that you'd like to share, we'll do that, and then we'll close up.
Look, probably the closing comment just would be that company in transition, the operations in transition. The June quarter was a quarter where every month was different. I would think about June as being much more representative of where we are now than the June quarter. And hence, we certainly see that September should be operating cash flow positive. We are in that transition. We should see less working capital type movements. So we move out of that initial transition, and things become more stable. And I think it becomes a bit clearer where the business really is. And obviously, recognizing that the identification and solution of the oversized problem is key to unlocking the full value of Thunderbird.
Perfect. Good. Mark, see you nodding your head there. Nothing from you.
So nothing from myself, Peter.
Good. Okay. Well, thank you, everyone, for joining. As always, this is recorded.
This will be up on the Sheffield Resources YouTube channel, and we'll share it on all the social links. If you have had to dip in and out or miss any of this, you can catch up. But Bruce, Mark, thank you very much for your time. We'll see you again next quarter.
Thanks, everyone. Thanks, Peter.