I would now like to hand the conference over to Marcelo Matos, Chief Executive Officer and Executive Director. Please go ahead.
Morning, all. Thank you for joining us today as we discuss our quarterly activities report for the September quarter. It's been another solid set of production results, with third quarter sellable production of 3.8 million tons, bringing the year-to-date sellable production to 10.6 million tons. Closing inventories were healthy across all sites, which helps building a buffer to meet expected sales performance and de-risk the wet weather later in the year. There were numerous one-off factors contributing to cash flow movements in the quarter. Almost $330 million in gross cash outflows between M&A-related settlements, the payment of the interim dividend, and expenditure with our ongoing capital investment program.
Nonetheless, closing cash remained healthy at $322 million, which, when accounting for the $350 million principal balance of the new term loan facility, has resulted in a net debt position of $28 million. We are very pleased to have announced during the quarter an agreement for the potential mining of a designated area within the western part of Wotonga South JV tenure, adjacent to our Isaac South exploration permit. This transaction is a significant milestone in securing a capital efficient brownfield expansion opportunity for the Isaac Complex, and we look forward to updating the market on further developments for this exciting top priority project. Jumping to the body of the report with our safety performance.
We're very happy to report that no serious accidents were recorded in the quarter, resulting in a serious accident frequency rate, reducing slightly to 0.46. This is compared to the latest industry average of 0.51. This is a credit to our site leadership teams and is a positive initial change in trend following a number of safety initiatives conducted this year. Moving on to a brief operational update at each site. South Walker Creek continues to deliver strongly on saleable production of 1.6 million tons in both the June and the September quarters. Year-to-date, saleable production sits at 6.4 million tons on an annualized basis, providing a strong position heading into the fourth quarter.
This positions the operation nicely for the fourth quarter, ahead of the scheduled 14-day CHPP shutdown for the tie-in of the expansion, dense media cyclone module later in November. Strip ratios ticked up comparatively to the June quarter, with the majority of capitalized box cut volumes related to the Y South Pit development having been completed in the prior quarter, ahead of first coal in August. We are already mining good volumes out of our Y- South Pit, with good washing yield results so far. The MRA2C project continues to progress well, with 100% of our targeted bulk earthworks achieved in the quarter, and we are reaching the tail end of this important project with 94% of total budgeted material movement now complete. The project remains ahead of schedule and under budget.
I recommend you also have a look at our LinkedIn time lapse that we posted recently about the completion of the construction works for the CHPP expansion. It's a significant milestone for the overall mine expansion and was completed with only a Band-Aid on a finger as an injury. This is a testament to the quality of our site management teams and reinforces our strong safety culture. As mentioned earlier, we will now look to move ahead with the DMC module tie-in and commissioning in the fourth quarter. And lastly, for South Walker, we are pleased to announce, as part of this quarterly, that the tender of our pre-strip mining services and coal mining services contract is now complete.
Golding, who is also the existing contractor for the services, has been awarded a new contract spanning a five-year term from January 2026, with the current contract being extended from August to the end of August 2025 to the end of 2025. We are glad to continue this partnership with Golding and its workforce. Poitrel had an exceptional quarter, setting a quarterly raw production record of 2.6 million tons since the inception of the mine in 2006. This was supported by a very strong September, where 1.2 million tons of raw coal was mined, driven by continuous mine sequence planning, resulting in shorter haulage and benefiting from the improved productivity and availability of the brand new 600- ton class diggers.
This record coal mining resulted in closing raw inventories of over a million tons as of September 30, giving Poitrel also a high level of confidence to manage any weather disruptions in the fourth quarter and remaining on track with guided volumes. The Ramp 10 North project has met our expectations, communicated previously to the market in the June quarterly, having been completed in the September quarter. This is ahead of our initial budget, which has estimated completion in 2025, and is a major milestone in securing the production, strip ratios, and cost profile for Poitrel over the remaining of its life of mine. Isaac Plains recorded the highest coal mining and saleable production volumes for the year, recovering well from the wet weather challenges early in the year to maintain volumes comfortably within our guided range.
This was driven by improved equipment availability and productivity, as well as continuing to progress mining operations in the Pit 5 North area. The CHPP saw the highest quarterly feed for the year, supported by improved utilization of the crushing, of the primary crushing units. Briefly on the Millennium Complex, the Mavis underground was safely closed within the quarter, and the mining services contractor has since demobilized from the site in October. I'll now hand over to Shane to summarize our corporate activities and key cash flow items in the quarter.
Thanks, Marcelo. It's certainly been a busy quarter, with various transactions reaching their conclusion. Kicking off with the refinance. Following the announcement that we had received binding commitments for a $350 million term loan and $100 million revolving credit facility, we have swiftly progressed through long-form legal documentation, and are pleased to report that the refinance was concluded and new term loan fully drawn on 30th of September. The $350 million proceeds were used to repay and retire the $210 million principal balance of the BMC acquisition facility, as well as accrued interest and the various refinance transaction costs.
The net proceeds have been posted to the balance sheet, bolstering our liquidity position during a somewhat cloudy macroeconomic environment, and supporting the strong 30 September closing cash position of $322 million. As previously highlighted, the refinance is another significant milestone in Stanmore's maturity, reinforcing the fact that there is still support for pure-play metallurgical coal companies with major commercial debt providers. The new facilities have significantly reduced our interest margin and overall borrowing costs, while simplifying our debt capital structure and enhancing balance sheet flexibility. We would like to thank the incoming lenders for their support during the process, and we look forward to strengthening our relationship with them over the coming years. As Marcelo highlighted at the outset of this call, there have been several once-off cash flows impacting the quarter.
These include the $150 million final contingent payment to BHP for the BMC acquisition, approximately $36 million paid in total for the Eagle Downs acquisition, $15 million paid for the Isaac South Designated Area Agreement transaction, and importantly, the interim dividend of $40 million paid in September. When factoring in an additional almost $40 million of capital spend in the quarter, primarily attributable to our ongoing improvement projects, the total non-cash, non-operational cash outflow for the quarter was approximately $280 million. After consideration of Q3's positive operating cash flows, this ultimately materialized into a net debt position of $28 million as at September 30, a modest position considering the significant M&A-related payments made during the quarter.
Finally, as evident from Marcelo's earlier comments, each of our operating assets are well-placed to meet their saleable production targets for the full year. As such, we have no change to public guidance released to the market with our half-year results in August. I'll now hand back to Marcelo to conclude the call with a brief overview of market conditions before moving to Q&A.
Thanks, Shane. Metallurgical coal market softened throughout the quarter, with the PLV Hard Coking Coal Index retreating to a low point of $180 per ton in early September, as an ongoing glut of steel exports from China impacted demand for seaborne met coals. In fact, the September monthly data for the steel exports, released last week, of 10.2 million tons, was the highest since 2016, stoking fears around Chinese domestic demand and their impacted property sector. Pleasingly, we since have seen conditions improve late in the quarter and into October, as the announcement of Chinese stimulus measures have returned a degree of confidence into the market.
This has seen the PLV Hard Coking Coal retrace back to around $200 per ton, with PCI relativities also strengthening to almost close to 80% month to date, given the reasonably tight market for FOB Australia high-quality PCIs. It's not unusual to experience a cyclically weaker third calendar quarter, and overall, we remain optimistic heading into the fourth quarter, as Indian buying is expected to return following a prolonged monsoon season, and supply usually faces challenges with the wet weather season. Nonetheless, macroeconomic uncertainty remains with the upcoming U.S. elections and ongoing tensions in the Middle East. With that, I'll now hand over to the moderator, so we can take your questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question comes from Brett McKay from Petra Capital. Please go ahead.
Yeah, thank you. Good morning, gents. Another really strong quarter. Congratulations. Just looking at the guidance for the year, I know you've kept it unchanged post the update at the half year, but it looks like you're tracking pretty strongly. There's only about 3 million tons saleable production left to achieve the upper end of your guidance for the year. Can you just give us a bit of a feel for the length of the shutdown at South Walker Creek? Because that looks like you know, you're sort of going to have a softer quarter due to that shutdown, based on where guidance is tracking. Maybe just give us a bit of a feel for how long that outage will be to tie in the new part of the CHPP.
Because it looks like, you know, it's probably not gonna be that long to account for the lower production volumes, that sort of guidance is implying at this point.
Brett, shutdown is scheduled as a 14-day shut. So far on track, as planned. No reasons to expect that would be any shorter or longer at this stage. Q3 was a pretty big quarter. We were expecting, as we indicated in previous quarters, that we would be catching up reasonably well in tonnage production and, of course, on the coal flow overall on the second half. It will position us well, all going well, of course, ahead of the wet season, to start next year, also with healthy ROM stocks. The fourth quarter is expected to be not as big as the third quarter. Hence, the reason we've kept guidance unchanged. Yeah, we have the 14-day shut, South Walker.
We have, of course, more wet weather potential risk as part of the plan. But if anything, I think we're I mean, with the performance here today, we risk a lot at Q4, of course, any potential wet weather and, and of course, the 14-day shut that was always expected.
Hmm, okay. All right, thanks for that, Marcelo. Just staying on South Walker, with that mining contract renewal, can you give us a feel for the percentage increase that you ended up landing, or what ended up being agreed? Is there any sort of color you can provide around that?
We haven't. Yeah, we haven't considered providing that color, Brett, yet. It's all pretty fresh, actually. We signed and announced it today, and our guide was also announced today. As we indicated before, a reset was always expected, right? The original HIC contract was signed many years ago. The last review was five years ago. It was a very different world, a world of zero interest rates, and there will be a fleet renewal component as part of the new contract, as we've indicated before, where we actually gonna hire five new fleets, trucks and excavator fleets on the operating lease. We will provide this to the mining service contractor to maintain and operate. It will be actually a competitive solution for us to do the operating lease ourselves.
Of course, there's the benefit of the fleet renewal from a performance standpoint. I mean, obviously, it's a new fleet, a new world in terms of financing costs. And of course, a bit of inflation since the last contract, although, you know, the last contract already included some rise and fall mechanisms. What we've managed to do as well, Brett, was to extend the existing contract from August to the end of August 2025 to December 2025. So it gives us another full calendar year of the existing contract. And then the new contract kicking in from January 2026.
I think hopefully, I mean, going forward, as we provide a bit more color on guidance, we should be able to give a bit more visibility on what to expect cost-wise at South Walker. But as I said, I think the new contract and we see the new contract as a better contract, okay? With a better commercial model in our view, with a scheduled rate, with price and run matrices and more aligned between us and the contractor towards achieving better production and productivities than in the current contract.
Yeah, okay. That makes sense. Thanks. And just finally, you know, obviously it's been a massive year of investment in both organic, sorry, inorganic bolt-on acquisitions around the area, but also organic capital projects. Can you give us a sense moving into 2025 , outside of sort of inorganic opportunities that you may be considering, and outside of sort of the Eagle Downs project, are there any other projects in the pipeline across the three main projects that you might look to pull the trigger on moving into 2025 ?
Not really. As we've been saying for a while, I think the investment campaign through, let's say, to strengthen the current assets and make them more resilient, the next two years, I think it's concluded with the South Walker MRA and Y- South development, and of course, the expansion project. Poitrel, I think we've concluded the campaign, and I think we're gonna see a you know years of mostly sustaining capital going forward. Poitrel was always an operation that where fleet replacement was expected. We are already. We have embarked on that, but as you know, we are doing that on the form of operating leases. But there's no other significant projects in Poitrel.
There's a few improvement opportunities there, but they are not, let's say, material as, as the ones that we just concluded. In Isaac, it's a short life, and the main target for the Isaac Complex now is extend life beyond 2028, which is where Isaac Downs start to get uneconomic. All the focus for us, in the short term will be on progressing the Isaac South development, which will be a game changer for Stanmore, because it could prolong and extend life in the Isaac Complex for another 10- 15 years, at least, at pretty competitive strip ratios. Of course, that project needs mining lease, and we'll need all the regulatory and environmental approvals.
I'm confident that we will work closely with the regulators to progress that, given that it is a brownfield extension of an existing mine, and we hope to be able to implement that very competitively.
What would you say is the next major milestone we should look out for there for Isaac South?
Work in progress, Brett, but of course, we need to do all the data acquisition to support the EIS submission. Okay? We are talking about ecology works and groundwater, and a development plan that we can land on to be able to support those submissions. That's very important to get the ball rolling, okay, both on state and federal levels. And that, of course, then moves ahead with everything else in parallel. Like, all the engineering works and design works for the infrastructure pieces, which is, you know, all road, bridge over the Isaac River, and the pit development overall can run in parallel. But really, the approvals work stream is where it's gonna always be the critical path to implement the project. It's quite a simple project to be implemented, similar to what we've done in Isaac Downs.
The implementation itself can be pretty well. We could move with it pretty fast, but of course we need the approvals to start disturbing and getting the project moving.
Okay, great. Thanks, Marcel. I'll leave it there today.
We should be able to give a bit more update, Brett, soon about when exactly we're expecting submissions to the EIS being made and so on, and what we think could be an indicative timetable expected at state and federal level. Of course, we don't control those timetables, but as far as our internal work and submissions, I think we can plan to provide a bit more color on that, perhaps in the next few months or so.
Okay, great. Thank you.
Thank you. The next question comes from Paul McTaggart, from Citigroup. Please go ahead.
Morning, gents. So I just wanted to follow up on India. India, you were saying that, you know, they were kind of slow coming back into the market and maybe haven't sort of, you know, got back at the traditional run rate. So if you maybe give us a little more color on that. And I wanted to also know what proportion of your met coal sales does India represent now? Thank you.
India at the moment is around, probably around the mid-twenties. If you look at percentage of sales, we do expect that to grow, Paul, given India's growth, and I mean, we have a bit of growth volume in South Walker, so that should absorb a bit of that growth. To your first point, I think India market's too quiet. We would have expected that at this stage it would already be buying more. What's been driving the spot market more recently has been mostly in some, you know, positions and the trades done in the Chinese market. So, yeah, I think it's still unfortunately a bit quiet in India, but, you know, we hope that they come back and start restocking more, especially ahead of the wet season here in the Southern Hemisphere, right?
I think, given they're growing and they need to secure volumes, and they've been running stocks reasonably low, I think we are hoping to see that happening towards the fourth quarter.
... Thank you.
Thank you. The next question comes from Glyn Lawcock from Barrenjoey. Please go ahead.
Morning, Marcelo. You've sort of avoided the elephant in the room, but any comments you can make on the Anglo coal sale process that you're willing to share? Thanks.
Glyn, you know me, we don't comment on M&A, as you know. As far as the process is concerned, I think the process, what I hear, the process is happening. They're probably down to final stage. Rumors are that they wanna get it concluded soon, sooner than later, and that's a highly, highly competitive process. Yeah, that's as much as I can comment at this stage.
That's fine. I just thought I'd just ask. Second question, just if I look at the third quarter production, I know you should never annualize a quarter, but 'cause you've obviously gonna have maintenance and weather, but you know, that's 15 million tons of production against your guidance for this year of 12.8-13.6. I mean, where do you think the business is now operating? I mean, you know, on a sustainable yearly basis now, are we in that 14-15 million ton range, do you think now as a business?
Look, South Walker, it's pretty consistent. Bottleneck was always the plant. The plant could always do slightly more, and fortunately, the plant has been performing well. The hours we are getting in the plant has been fantastic. So. And we had the opportunity to do a bit of toll washing with the producer next door as well, during this fourth quarter, which helped, let's say, with the. Well, we are expecting now in this fourth quarter, which will help us South Walker to be slightly above its usual 6 million type of mark. Poitrel was where volume's been really outstanding, okay? And combination of a few things.
I think we've first, we started the year with very healthy ROM stocks, which helped, of course, with good performance in the first half, but now also in the second half with Millennium closure. I think some of the windows that washing windows in Red Mountain that were expected to be used by Millennium, I think we had an opportunity, given the high ROM stocks in Poitrel to really wash some of that coal and and bring production up. So I think that that's a it, it's been a. I mean, other than that, productivity overall, Poitrel has been outstanding. Isaac, it's pretty much on the mark.
Okay, so probably Poitrel was the outstanding one, and South Walker as well, just really performing well at the wash plant and with a bit of toll washing opportunity. I think for next year, it's a bit early. I think obviously we are looking now at what the potential is, and it's gonna all be about the ramp up of the South Walker expanded CHPP module, which we are confident that we shouldn't have any issue. I think we may build a bit of a ramp up curve in the first quarter, okay, as we restart the plant now in December.
So we may not get to or assume that we're gonna get to the 7 million in 2025, given we're gonna build a bit of a ramp up profiling in 2025, sorry, in the first quarter. But Poitrel is the one where we are having a strong look at, because there's a bit of a... I mean, there's always a bit of movement between whether we take the mix more towards PCI or coke. If we take a bit, if we produce a bit more PCI, we get a better yield. And of course, how much of those lower seams that produce thermal coal that we can wash, especially now, where Millennium is no longer there.
So we could have likely that we could have another reasonably high year in Poitrel next year. But I think we are very, you know, active now as part of the budget process for the calendar year. And hopefully, soon we'll provide guidance in the normal calendar that we work towards.
All right. No, I appreciate that. And just a couple of quick ones to follow up. Just on Isaac South, do you have any sense of what that scope of that looks like? I know there's a lot of things to do, and you've only just acquired it, but I mean, what are you thinking? Is it, you know, a low single-digit tonnage operation, or what does it look like in your mind?
We'll be targeting something at least around the 4 million type of ROM setup. It could potentially do more. That's what we are doing in Isaac Downs now, okay? So if you look at dragline and the fleet configuration we have now at Downs, we should be able to replicate that in Isaac South with at least 4 million ROM. But as I said, there is a potential to do more there. It is a low strip ratio deposit for the first, I would say, 10 years. It is. There will be a dragline pit, so there is a potential to actually stretch that. CHPP now is running at around 600 tons an hour, but perform extremely well after we implemented the primary crusher. We'd actually improve yields as well.
There is a potential to do four or more. If we wanna do six, substantially more than four, we could either wash that in Red Mountain, or we could also do Modern X to wash Poitrel Isaac Plains a little bit further. But that's something we, of course, need to land on as part of the studies. But I mean, as the resource itself would offer the ability to definitely to do the same 4 million or potentially slightly more, but of course, that would shorten the life of that pit as well. Project-wise, a very simple project, a box cut, pit development, haul road to connect to Isaac Downs, a bridge over the Isaac River as part of that haulage path, and just basic pit infrastructure to the further south.
It's around 60 kilometers, five to six kilometers between Isaac Downs and Isaac South.
Okay. And you see this as all incremental tonnage, Marcelo, to the business?
Not really, right? Isaac South, Isaac Downs would phase out around 2028. We've indicated before that from 2028, Isaac Downs, the economics would start to get very challenging, and given it's a steep and dipping seam, and we have seam splitting beyond that, at that point as well. So we've been working very hard for a while, I mean, extending life for Isaac. This was the very logical opportunity. We already own the eastern part of that Isaac South block. The western south was very important because that's where the subcrop is, that's where the lowest preparation and logistics box cut would sit. And now we have it after the transaction done. We need to get the approvals done, but it is an extension of life for Isaac rather than incremental tons.
If we keep it at four, it will be just hopefully, if we can stagger it at the end of Isaac Downs back-to-back without discontinuity. Hopefully, it will just be a continuation of 4 million tons raw, you know, close to three product, for 10- 15 years. As I said, there is a potential to maybe stretch a bit more. That's something we need time to work on.
Okay. That's great. Appreciate the color. Thank you.
Of course.
Thank you once again. To ask a question, please press star one on your phone. The next question comes from Tom Sartor from Morgans Financial. Please go ahead.
Good morning, guys. Thanks for the call and for the detail. Just had a quick couple on the market, actually. Just firstly on realizations, going back a while, we had pretty low sort of point six plus sort of realizations would be a much more solid history. But we've seen realizations improve a lot despite a weaker prime hard market. I'm curious, you mentioned the tightness in the Aussie supply, and previously there was a Russian sort of oversupply issue. I'm wondering how that realization piece has normalized lately, if it's actually more around Australia or what insights you could provide there?
Hey, Tom. Look, there's definitely a decoupling of Russia. Those are doing, let's say, if you look at the CFR, China-based and India, towards the prices for Aussie FOB, high-quality PCIs. The market's been quiet, which is good on the FOB Australia PCI. It is tight. We are not seeing a lot of offering of high-quality FOB PCI, PCI FOB Australia. As we've spoken before, we've seen Korea, for instance, South Korea, phasing out some Russian volumes and moving some of that purchase into Australian PCIs, which was expected to generate a tightness. I think it's a process that's probably still happening, given that the second batch of sanctions in Korea. But that kept the, let's say, the demand and the Aussie FOB prices reasonably tight and quiet. Relativities are up.
They were pretty high recently. They normalized a bit towards the mid-70s, which where we always thought they would go to, and now just sitting between 75% and 80%. It's very aligned with historical levels. It's not, not, there's nothing unusual to where things are at now. But as we all know, there's still this, let's say, this market is not very normal, right? From a trade flow standpoint, with Russia only going to, you know, a very limited number of markets at different prices, and then the other markets were sanctioning Russian coals, buying mostly Aussie PCIs, and at the FOB levels.
No worries. Thank you. And just, on China stimulus, I know China is not a key end market for you, but, drives index setting. Just curious if you've seen any change in tone amongst your North Asian customers around this, the monetary stimulus out of China, and whether it's actually changed anything yet to speak of in tone or sentiment around your steel customers?
Not really. General feedback we've got is stimulus measures being, let's say, disappointing, as in having significant impact or material impact into steel demand, let's say, especially in the short term. I mean, there's recent trades that pushed, moved the PLVs a bit up. I mean, the low vol, the premium vol is what's driving the market, rather than the mid vols that normally move more into India. China drives the low vol spot market more. And that's where we've seen more activity. On the way up was mostly positions being taken, okay, ahead of the fourth quarter and maybe with some expectation of the stimulus driven improvements.
But you saw in the last couple of days, you saw already some of these positions unwound and price going slightly down. I think it's reasonably quiet. Fortunately, we've seen support at $180- $190 levels. We've seen improvement. Market is tight, and we are ahead of now and approaching a wet season, with India having to come back and buy. A wet season in the Southern Hemisphere and we'll see if the disruptions we've seen here in Queensland with the Grosvenor incident will have an impact as well, in terms of keeping the market a bit tight. Because I think we'll see what happens now in the next couple of quarters, but usually they are stronger quarters, right? With the tighter supply.
No worries. Thanks for the detail. Cheers.
Thank you. At this time, we're showing no further questions. I'll hand the conference back to Marcelo for any closing remarks.
Thanks, everyone, for your questions and for joining today's call. As always, I'd like to thank our employees, our contractors. It has been a remarkable quarter, and delivering a strong set of numbers has not been easy, with all the activity and the construction going on at all the three sites. Look forward to continuing to engage with our shareholders in the coming weeks and months. Thanks, everyone. Thank you for your support, and have a good day.