There are obvious ways to transition for CXO but they involve being able to look at the operation and understand why costs are high and what can be done about it. Not everyone has that ability and I'm sorry for you that you don't have that ability.
The Grants Pit Core designed its pit structure with two stages (basically northern and southern). Both involve a wide pit that gets progressively narrower as it gets deeper. If you have ever seen a wooden toy game like this - consider the wooden circles stacked in reverse order from smallest at the bottom to largest at the top. They represent the waste rock needing to be removed from Grants pit with the stick in the middle being the pegmatite that contains ore. That in an over-simplified version is what's happening in Grants pit. The top few circles are big and wide. They have a high cost to remove but removing them is necessary to get to the lower circles (if open pit mining).
Assuming the stick is 1cm wide and the base circle is 6cm wide, the biggest circle has an area 35x that of the central peg (pun intended). The next circle is 29x down to the smallest which is 3.0x the area of the central peg. The overall average is 16.7x. The 4 biggest circles are 44% of the pegmatite but 72% of the material contained in the wooden circles. Cash costs and production are not equally phased.
This is the cost effect that is happening with Grants mining costs, they have been removing the biggest circles at high cost but have yet to get to the small circles at lower cost. The idea some seem to have that mining costs will stay the same is to suggest that Core will change the mining to vertical walls and remove huge amounts of unnecessary waste rock. Nobody would do that but it doesn't stop the suggestions appearing on HC.
Core's financial plan to address this was to capitalise some of the early waste rock removal and to create a stripping asset. These actions help even out the P&L side of things but don't sort out the cash flow aspects. The Dec 2023 writedown's mean the cheap little circles now have limited to no residual costs associated with them.
Wet weather flexibility For the upper layers only a small portion of the mining was at the lowest point of the pit. As Core got to lower layers, progressively more of the mining was at the bottom of the pit. This has wet season implications, particularly around activities like blasting rock before removing it. Core had reached a point where most of the mining was progressively at the lowest points in the pit. With this mine design and where Core was at with this plan, Core was most likely pausing mining in early 2024 whether the price was $1,000/t or $3,000/t. The low price provided an external reason that was different to strategically poor mine design planning. It was almost as if SB spend the wet season in Adelade and the dry season up in Darwin and hadn't appreciated the impact the wet season would have on the mine plan. Core also appears to have been planning for this from before when the price really cashed because the 289kt ROM pad that existed at the end of 2023 was far more than necessary to cover a few weeks or a month lost to wet weather.
Speed of mining issue. There's also a Mining speed to ore recovered issue but Core hasn't talked about this much. Lets assume you could mine at 5 units per month. Ring 9 would take just over 5 and a half months to complete. Ring 7 is down to just under 4 months. Ring 4 is down to just under 2 months. Rings 2 and 1 are under a month each. If a ring and the associated ore were to provide DMS feed for 4mths, for the first couple of rings, mining is unable to supply enough for the DMS to run at full speed. Core's plan to address this issue was to delay the commissioning of the DMS so that this period of high waste to ore ratio mining could be completed first.
By ring 7 mining is generating enough ore for the DMS. Keep mining at the same speed and rings 6 and 5 start to cause an over-supply and cause the ROM pad to build in size.
By the time you are down to ring 4 there's a big mining capacity to DMS feed requirement mismatch. It takes just under 2 months to mine it but it supplies 4 months of ore. Rings 1-3 if mined at 5 units per month would collectively take 3 months to mine but provide 12 months of DMS feed. Unless an operation with these logistics had a huge ROM pad, mining would need to slow down to 25% of prior speeds. Core decided to slow down mining to 0% speed, in part as the ROM cleared. Interestingly, part of the early works at BP33 was constructing the ROM pad. If Core hadn't stopped mining they may have used that ROM pad as overflow.
Reasons for the mining pause IMO to deflect from the mine design and weather timing issues, Core put an emphasis for the shutdown on external factors - the price of spod. While price will have had an impact on the timing of the decision, it would appear Core was heading for a mining pause whether the price was $1,000/t or $3,000/t. With the mining capacity Lucas was deploying, the waste rock removed to date (about 85%) and the amount of ore remaining in the plan (somewhere around 70%), and the logistics of completing the lower layers of Grants open pit mine in the wet season mining across Jan-Apr 2024 just didn't work. If Core had paused mining at US$2,000/t to US$3,000/t and used up ROM there would be no doubt that Core would restart.
For some reason Core has been unable to explain this issue of higher layers having a higher mining cost and lower layers having less waste rock to move and a lower mining cost. Its unclear whether Doug simply didn't comprehend this, or was unable to explain it clearly to GM and through to Core communications with shareholders. Either way Core had a concurrent announcement of Mr Brown as the new CEO and the announcement that Doug was exiting as CFO. Its distinctly possible that Mr Brown made Doug's exit a condition of his employment (possibly after feedback from MinRes CSI staff).
Those smaller circles (bottom layers in Grants pit) should have a very competitive cost structure. With the DMS restaffed on a sensible price structure Core could well re-emerge as a low cost operator.
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