Operations
The Total Recordable Injury Frequency Rate increased to 4.82 during the quarter (September 2012 quarter: 2.28). This was a disappointing outcome and the Company continues to work with its contractors to drive improved safety performance.
Mining activity concentrated on Pit 1, where activities included recommencement of mining in the western cutback. Total volumes mined were in line with the mine schedule.
For the remainder of the financial year, the mine plan is expected to continue to focus on developing Pit 1 at the current rate of mining activity. Pre-stripping activities in Pit 2 were again kept to a minimum without impacting upon ore mining or shipping rates.
Road-trains with an additional 50 tonnes capacity were commissioned, which is expected to reduce transport costs.
CIF costs averaged A$99 per tonne (equivalent to A$83 per tonne on a FOB basis). These costs were slightly above forecast due to haul road maintenance planned for the first quarter 2013 being brought forward to November 2012. FOB costs for the second half of the financial year are forecast to be approximately A$80 per tonne.
A total of five vessels were loaded during the quarter, one less than scheduled, with average cargo size for the quarter of 77,640 wet metal tonnes (wmt) (September quarter 2012: 75,912 wmt) exceeding the target of 75,000 wmt. The reduction in shipped tonnes was due to reduced rail service capacity arising from unplanned locomotive maintenance, which resulted in approximately 26,500 tonnes of rail capacity being unavailable during the quarter. This resulted in the shipping schedule moving out by approximately two weeks during the quarter, a situation that is planned to be progressively retrieved during the remainder of the financial year.
Stockpiles
At the end of the quarter, ore stockpiles carried a total value of approximately $17.0 million (30 September 2012: $11.6 million), the breakdown of the stockpiles' locations as shown in Table 2. The increase in stockpile value was as a direct result of the rail capacity issues noted above.
Table 2. Ore stockpiles at 31 December 2012
---------------------------------------------------------------------------- Pre-Crusher Post Crusher Rankin Dam Port Adelaide----------------------------------------------------------------------------Stockpile (tonnes) 101,463 43,550 136,349 59,037----------------------------------------------------------------------------
Sales and Marketing
Sales and marketing for Cairn Hill ore remained extremely competitive during the quarter, with sales to three different customers. In addition, sales to two 'end user' customers for a minimum of six and two shipments respectively for calendar year 2013 were agreed to at attractive pricing. Strong interest continues to be expressed for cargo placement for 2013.
During the quarter, there was a significant recovery in iron ore prices, with the spot price of 62% Fe ore increasing by 36%, to US$145/tonne as at the end of December. During the same period, the copper price decreased by 3% to US$7,915/tonne.
Cash Flow
Despite low commodity prices experienced early in the quarter and continued strength in the Australian dollar, the Cairn Hill JV generated operating cash flow of $4.7 million. Cash flows from operations continued to be impacted by the settlement of final invoices based upon the lower commodity prices recorded in the previous quarter.
