Thank you, and good morning to everyone on the call today. On the call, we have Richard Hay, Red 5's Chief Operating Officer, and myself, David Coyne, CFO and Joint Company Secretary. As Mark Williams, Red 5 Managing Director and CEO, is committed to other external meetings on the East Coast of Australia this morning, Richard and I will present Red's Quarter Two results for FY 2024, referencing the slide deck that was released to the market this morning alongside the quarterly report. As explained by the operator, there will be time for Q&A at the end of the presentation. Moving to slide 3, please. I'll now hand over to Red 5's COO, Richard Hay, for opening remarks and an overview of our Quarter Two results.
Thanks, David. Red 5 has three active mines at the KOTH Open Pit, KOTH Underground, and Darlot Underground, with the ore being centrally processed at the KOTH Hub, which in the December quarter, achieved significant periods of throughputs well in excess of 5.5 million tonnes per annum. Red 5 also owns a 3.25% royalty from the Siana Gold Project in the Philippines, and we note that the project's owners have announced receipt of their debt funding to advance mine development and production. Additionally, during the quarter, Red 5 was included in VanEck's GDX ETF, which is good recognition of Red 5's production, scale, and maturity. Moving to Slide 4. We are pleased to see the continued improvement trend in safety performance.
Over the past 12 months, the TRIFR has reduced from 15.5 to 4.7, and the LTIFR has reached 0. Our operations leadership team continues to focus on activities to improve our leading indicator safety statistics, which we know ultimately, over time, has a positive impact on our lagging safety results. Production for the first half of FY 2024 was an excellent result, achieving 108,027 ounces produced at an all-in sustaining cost of AUD 2,008 per ounce, with 53,018 ounces of gold produced for the December quarter at an AISC of AUD 2,328 per ounce.
The AISC includes a non-cash NRV expense on accumulated low-grade stockpiles of AUD 132 per ounce for the first half and AUD 267 per ounce for the December quarter. David will cover this aspect in more detail later. The strong first half year production from all three mines and the KOTH processing plant has set Red 5 up for a strong second half, and it has us on track to achieve the top end of guidance for the year. Moving on to Slide 5.
Mining of the KOTH open pit made good progress during the quarter, with a total of 3.41 million BCM moved and 1.37 million tonnes of ore mined at a grade of 0.74 grams per tonne, which included 851,000 tonnes at 0.97 grams per tonne of high-grade ore. Access to the high-grade ore in the Stage One pit floor is now fully established and very consistent, providing optionality to the business as to how fast we mine the high-grade ore, which is dependent on the status of the ROM pad stocks. In Stage Two, we are ahead of our mining schedule with consistently good digging in the predominantly oxide waste of the upper benches.
Stage Two oxide material has been strategically incorporated into the planning schedule and stockpiled separately to supply construction materials for the TSF 4 dam wall lift that is due to commence shortly. The KOTH Underground completed another solid quarter, mining 244,000 tonnes at 1.8 grams per tonne. During the December month, a number of improvement initiatives culminated in a record 69,000 tonnes of ore mined from stopes in the Regal, West, East, and Central areas. The mining contract continues to perform well, meeting planned schedules despite some personnel shortages over the Christmas-New Year period.
Over at Darlot, the team continues to string solid quarters together, mining a total of 168,000 tonnes at an improved grade of 3.2 grams per tonne, reflecting a focus on higher-grade stopes in the Boon West area and the completion of a large lower-grade bulk stope in the prior September quarter. Airleg mining at Darlot made an improved contribution versus the prior quarter, mining 14,000 tonnes at 4.9 grams per tonne. The processing team at KOTH posted a quarterly crushing record of 1.25 million tonnes and a record 1.24 million tonnes milled, having resolved some crusher reliability challenges in the first half of the quarter.
A trial of a finer crush product in the second half of the quarter was very successful, resulting in a record 519,000 tonnes milled for the month of December. This finer crush size is now standard practice. The finer crush product saw consistent days well in excess of 20,000 tonnes per day crushed and 17,000 tonnes per day milled, for a throughput run rate equivalent to well in excess of 5.5 million tonnes per annum. The finer crush product is now standard practice for the team, with the challenge of achieving a 5.5 million tonnes per annum run rate throughout the second half of FY 2024.
A mobile crusher was purchased by the company during the quarter to assist with building 150,000-200,000 tonnes of crushed ore stockpile to de-risk this section of the processing circuit. Metallurgical recoveries were slightly lower in the quarter at 91.2% as a result of reliability issues with the carbon regeneration circuit. Remedial actions have been put in place and should see recoveries rebound back to the expected run rate of around 92.5%. Moving on to slide 6. Darlot has proved over 2023 that it can consistently deliver positive cash flow, and as a result, the company has mobilized an additional jumbo to assist in opening up the Dar-Cent and other areas, together with a diamond drilling program designed to de-risk the FY 2025 and FY 2026 mine plans.
A total of 11,748 meters was drilled in the first half of FY 2024, of a planned program of 17,500 meters. This program is very likely to be extended based on the success we are seeing to date. The Darlot drilling results shown on this slide, contained in our November 2023 announcement, highlight the ongoing strong potential for additional conversion of mineral resources to ore reserves to extend the mine life past FY 2026, as well as de-risking areas earmarked for mining in the FY 2025 and FY 2026 years. Now over to Dave.
Thanks, Richard, and on to slide seven, please. 53,087 ounces sold at an average realized price of $2,619 per ounce, yielding almost $140 million in sale proceeds to underpin another solid financial quarter for the company. Total operating and capital expenditure for the quarter has decreased marginally from the prior quarter, from $120 million down to $117 million, and resulting free cash flow for the quarter was approximately $23 million. A key focus for us during the quarter was on implementing methods to reduce consumption of diesel when equipment is idled. Pleasingly, we're starting to see some positive effects from this in terms of behaviors and an overall reduction in diesel costs.
As operations across all three mines and the process plant continue to perform well, we are increasingly turning our attention to improved efficiencies and cost optimization activities, such as extending durations between mill relines, tendering for longer term supply of key services and materials, and the like. All of this is placing Red 5 into a solid financial position, opening the window to replace the current project finance debt facility with a more appropriate corporate-style facility in the coming months. On to slide 8. Strong gold production and management of our costs has enabled us to progress our strategy of accelerated debt repayments, with AUD 10 million of bank debt repaid in the quarter, being a combination of both scheduled and voluntary repayments.
At the end of December, Red had AUD 102.8 million in outstanding bank debt and AUD 53.3 million in cash and other liquid assets, resulting in a net debt improvement to below AUD 50 million of AUD 49.5 million. Most importantly, though, we are on track for our goal of refinancing in calendar year 2024. Some key activities for the second half of the 2024 financial year are continuing to deliver on our target of safely, profitably, and strengthening our balance sheet. Areas of particular focus are further progressing of the King of the Hills Stage Two cutback, improving our overall crusher performance, which Richard alluded to a little bit earlier, and substantially completing the TSF4 lift at King of the Hills. Onto slide nine, please.
In our quarterly activities report released this morning, we announced a change in our policy for run-of-mine ore inventory costing. It's pragmatic for the company to periodically review the accounting policies that underpin its financial results. The review of the inventory cost methodology highlighted the need to change the basis of our current and future processing costs for apportioned from an accounting perspective. This change puts a greater proportion of processing costs onto lower grade ore than what was applied under the previous methodology.
The net outcome of this change is the recognition of a net realizable value expense that unwinds part of the cost credit to the all-in sustaining cost. The half year outcome for ROM inventory movement. It still remains as a cost credit to AISC, however, and we expect that the half year cost credit will be a better indication of future inventory movement cost credits to AISC going into the future. I think it's important to recognize that this has no cash flow impact and does not change our FY 2024 guidance range of $1,850-$2,100 per ounce. The company will continue to build its low-grade ore stockpiles into the future, and our mine plan does not see us needing to utilize this material for some time.
This means that this asset will be classified as a non-current asset on our balance sheet for the foreseeable future. I'd now like to hand back to Richard for some concluding remarks.
Thanks, David, and on to slide 10. Thanks. As I said earlier, you know, we were very pleased to see Red 5's entry into the VanEck GDX ETF during the quarter, and we certainly welcome them as a major shareholder at approximately 10%. The bubble chart on the right-hand side is a clear indicator of the excellent value proposition as it emerges. As Red 5 emerges into the mid-tier Australian gold producer status, companies such as Capricorn immediately above Red 5 there indicate the opportunity for Red 5. So in conclusion, a very solid quarter for Red 5.
Well set up for the second half and reiterate what David mentioned, that we are on track for our meeting our guidance at the upper end for production and well within our guidance range for AISC. With that, I'd like to hand back to the operator.
Thank you. If you wish to ask a question, please press star then 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 are on a speakerphone, please pick up your handset to ask your question. The first question today comes from Hayden Bairstow with Argonaut. Please go ahead.
Yeah, morning, guys. Just a couple from me. Just quickly on the accounting policy shift, just no change in the all-in cash costs. So are we stripping that out of the guidance, or you think you'll still hit that, even if I'm adding, what? $130 an ounce every quarter, pretty much, on this inventory adjustment?
It's Dave here, Hayden. Yeah, at this point in time, even factoring that into the half year result and from a forward projection perspective, we're still comfortable there with the AISC guidance range of AUD 1,850-AUD 2,100, even taking that into account, in that regard. So what it meant was, under the prior policy, we're probably doing a slight over credit to AISC costs, and we were tracking, partly tracking ahead of our expectations. So in essence, the policy change brings us back into line with what we would ordinarily expect for the full year for that low-grade, inventory build credit to AISC. So hence why we are pretty comfortable there, maintaining, the full year guidance range, from a cost perspective.
Yeah. So I'm just knocking down the credit going forward, right? So you're still going to have a credit because you're building stockpiles.
Correct. Yeah. Yeah. It just won't be as if, if you saw in the September quarter, it was a pretty large credit. But if you take the average of what we've credited for the half year, circa AUD 4 million, that's probably a better indication of the net credit moving forward as we continue to build those stockpiles.
Okay, perfect. Then just on the mill, I mean, running at 5.5 million tonnes plus for a little period is pretty encouraging. I mean, assuming you could actually keep that going, can you ramp the mining up easily to deal with that? Or would you just have a lower low-grade stockpile build if you were going to run at a higher rate to the mill?
Absolutely. Yeah. And the open pit, which provides the base load, has plenty of capacity to produce the high grade to fill the mill and has been doing so through those periods. There's plenty of the high grade above half a gram cut off that reports the high grade.
All right, great over there. Thanks, guys.
As a reminder, if you wish to ask a question, please press star then one to enter the question queue. The next question comes from Paul Kaner with Ord Minnett. Please go ahead.
Yeah. Hi, gents. Thanks, thanks for taking my questions. Firstly, just on your balance sheet, I see that you've sort of made an additional debt repayment beyond your required repayments. What sort of cash buffer are you happy with to make further accelerated payments? Is that sort of AUD 50 million? And should we just assume any additional free cash flow will be used to make further repayments?
It's Dave here, Paul. Look, there's no specific answer on that. I think that circa AUD 50 million is a good guide. Is there something definitive set in place as an internal rule? No. AUD 50 million dollars of, let's call it cash slash liquid assets, is generally a good buffer there for us. That, in essence, covers, in rough guide, two months worth of costs. So having that buffer there is, you know, probably a good indicator. We do have a very stated policy there of accelerated debt repayment, so you can, you know, generally assume there at the moment that anything above that circa AUD 50 million dollar cash balance range, we would look to make additional repayments there over the next couple of quarters, for amounts over and above that.
As a, I guess, a general guide, but, you know, that's by no means definitive, but probably a good, good way to assume at the moment.
Yeah, great. Thanks. Thanks, Dave. That's clear. And then secondly, maybe another question for yourself on the balance sheet. Just on your working capital position, are you able to sort of disclose where your trade payables are at and if that's at a normalized level with the stage two strip that's sort of continuing?
Yeah. Our trade payables are certainly in what I would call normalized levels in that regard. So, there's no, you know, we're not paying people outside payment terms or anything of that nature, so everything's running pretty much normal as it has done now for, you know, mostly nine months and continues to do so on a monthly basis there. So, you know, that strong cash generation and, you know, + 50,000 ounces produced each quarter is a key contributor to that.
Yep, that's great. No, that's it for me. Thanks very much.
There are no further questions at this time. The conference is now concluded. Thank you for attending today's presentation.