"I thinkwe will see a bump in July. Maybe $1.20? hopefully more. All good by me as I have patience and happy to watch this go $2.50 -$3.0 over the next 18-24 months."IMO if Core has the potential to be realistically warrant a $2.50 price in the next 18-24 months it has the potential to get to $1.50+ in the next 3-4 months. Working backwards there are a lot of investors in existing producing mining companies that would say, yep I'd accept an expected 20% per year return. If they expected Core to be $2.50 in two years, then Core at $2.08 in one year would give them a 20% return. If they expected Core at $2.08 in one year, $1.74 as a share price in the near future would still give them a 20% return over the next year.
If Core can lay out a strategy that makes it clear valuations like $2.50 would be sensible in 2-4 years, laying out that strategy could be enough to see a serious re-rating of Core back up to the $1.50-$2.00 range. That "bump" in July you note could be a lot bigger than to $1.20 but it does take two key things. The first is evidence/statements about how the ramp up of integrated operations is progressing. This could easily occur in the next 1-4 months with Core confirming that it is operating at around 15kt/mth. The second key event is greater clarity on what the next/expansion strategies look like and how big Core could get (and doing what).
I presume Gareth has recently put forward a July 2023 - June 2024 budget to the board. This would have covered the typical stuff, monthly or quarterly production targets, monthly or quarterly revenue estimates, monthly or quarterly expenditure estimates and a capital expenditure plan along with what these would look like for cash flow and Core's balance sheet. This would have most likely included a staggeringly large cash balance at the end of June 2024. I would have also expected Gareth to deliver a 2, 5 and probably 10 year strategic plan to the Board. This multiyear strategy may still have been under development or pre Board endorsement when the 2 May slide deck was prepared. The plan may still have a lot of gaps/place holders. This plan may well require a lot of cash to execute, but 15Kt/mth at even US$3,000/t is US$45m/mth of revenue. That's a lot of money coming in.
The last Core slide deck didn't provide much clarity on this multiyear strategy so there's a lot Core are still trying to figure out. I'd have expected Gareth would have looked at some or all of the following:
- Is Core's strategy to become Australia's next multi-product lithium miner joining the likes of IGO & MIN or is Core's strategy to focus purely on lithium and ultimately dispose of its many non-lithium assets?
- What is needed to get BP33 into production?
- What is the next one or two lithium asset to bring into production after BP33?
- How much of the exploration budget will be spent on targets more than 10-20km from Grants?
- Are there any potential strategic acquisitions that Core want to follow closely?
- If increasing Spod output and Hydroxide are mutually exclusive, which one is chosen?
- What level of production is Core aiming for in out-year periods like the end of 2025 and 2028?
- If Core is looking at the expansion pathway (which keeps life of mine to short to realistically work for hydroxide), what is the 5-yr potential? 300ktpa, 400ktpa. Could a much bigger exploration plan allow 500ktpa?
- How much does Core invest in exploring Hydroxide?
- When does Core invest in additional concentration capacity (I'm assuming its when!!)?
- How economic are the gold assets that Core have, and if economic what is the strategy for them?
- How hard does Core push the peddle on exploration? While a $25m 2023 campaign is big relative to what Core has done in the past, some other lithium explorers are pushing out to operating 12 rigs across multiple sites at a cost of $1.7m/week. Relative to this, Core's exploration is small yet it is arguably one of the providers that can now best afford a huge exploration program and would likely gain the most from it. Has Gareth started to think about whether the exploration budget is too conservative?
- What is the strategy around fines? All the digging and crushing costs have already been incurred. The Fines scoping study indicated US$21/t of processing/transportation costs to port and US$20/t of shipping. The current market price from SMM of 1.2-1.5% Spod is US$450-$520/t (15 Jun 2023). There is potentially a 85-90% gross margin available from DSO shipping and ironically royalties could be among the largest costs. Is the fines strategy to DSO ship or is it to build a small flotation plant and enabling perhaps 15ktpa of additional Spod production?
- On 12 Oct 2018 Core announced a Napperby (NT) Uranium JORC resource of 9.54Mt at 382ppm (8.03M pounds of resource), with this resource also having a Vanadium resource at 236ppm. Only a quarter of the expected potential resource has been drilled to JORC status. At Uranium's current pricing of $57.75/pound, the inground value of Uranium is US$464m. When the under/non-drilled area is considered, the inground value (along with Vanadium) could increase to over US$2b (but a lot of drilling is needed). How much is the plant to concentrate uranium? Is this resource economic?
- What drilling would be required to establish the potential of the Fitton Uranium prospect?
- Even if the plan is to sell the Uranium assets, is there some exploratory drilling that's worth doing first to increase the potential sale value?
- Core has its Blueys and Inkheart Lead/Silver Project in the NT. Is this economic and what is needed to establish this?
- Core has its Yerelina Zinc Project in South Australia. Is this economic and what is needed to establish this?
- Does Core's Jervois Domain project in the NT contain Copper and if so, how much drilling is needed to establish the potential size?
- With the head office shifted to WA, are there prospective tenements, particularly WA tenements that are worth acquiring?
- Now that Core is a significant operation, they are sure to be being provided offers to invest/acquire tenements. Are any of these worth taking up?
- Are there tenement areas in Australia where Core wants more exposure?
This is a long list and some of these won't have answers soon, or the answers may change. The problem for investors is that Core's strategy in its last set of slides doesn't provide much clarity on the above points. If there is value on these possible directions of travel, its hard to incorporate it into the share price until Core provides that clarity.
) and if they are worth anything we should be divesting them. SB talked about corporate action on the uranium which never occurred, and the recent gold results were not great. My preference is they concentrate on turning our lithium resource into a massive one, progressing downstream and exploring our other lithium projects.
(20min delay)
