Ann: December Quarterly Report and Investor Webcasts, page-28

I'm not so sure on that assessment. Mining costs are the majority of the cost base at Core and they are driven by factors like ground conditions, strip ratios, efficient or inefficient site layouts and of course how much you pay per ton of dirt/rock moved. I really can't see how a "big" project shifting say 320Mt of rock/ore over 20 years will be that much more efficient than Core need needing to move 32Mt of rock over 2 years for Grants. Both involve moving 16Mt of material per year. If that material has a density of 2.5x then both scenarios involve moving 6.4m cubic metres per year. The big project is just needing to keep on moving that amount year after year after year (and through this, potentially further distances than Core is shifting its waste).

The first "year" on Cores DFS mining plan is super expensive. 6.5M bcm of waste for 187k bcm of ore (about 507k of ROM) for a strip ratio near 35x. The 2nd year is better 5.8m bcm of waste for 313k bcm (849k of ROM) and a strip ratio of 20x. The last year is a SWEET cost structure with 1.05m bcm of waste for 290k bcm of ore (797k of ROM). That 3rd year of Grants has a strip ratio under 3x. The 3rd year is when all the money is made if prices are normal. Some poorly informed individuals think the 1st year cost structure repeats for the 2nd and 3rd years. They think because Core's 1st year cost structure is so high, Core won't restart mining to access the normal and very cheap 2nd and 3rd years. The original ore movement mining plan for Grants in the DFS is below. Ignore the years, they are now out of sync with activities:



Scale efficiencies:
The 1Mt capacity DMS plant is full commercial scale and unlikely to have unit operating costs much higher than bigger variants like 2Mtpa. In many instances these larger configurations are simply multiple trains of mining / equipment with a similar capacity to what Core is using. Fixed site management costs are only a small percentage of the total operational cost and a larger site would reduce their relative importance. If site management was a major cost then larger scale would be critical.

Say PLS and Core had the task of moving a blended mix of 5Mt of rock and ore out of their pits. Economies of scale aren't going to mean haul trucks carry more, drive faster or carry more tons of rock per day. Diggers aren't going to be suddenly more efficient because there's a huge site. If Core was sub-commercial scale then those issues would apply. Core might be paying too much per ton, but that's an issue for GM to sort out.

Core's costs (my interpretation)
Core has provided guidance that its unit operating cost for the 2nd half is anticipated to be A$800-$900/t and the lower concentration grade being produced will have assisted to get costs down to that level because you need less units of ROM if less concentration is occurring. Some appear to have interpreted this as a massively high processing cost. Using Core's previously stated unit costs in the July 2022 ore reserves update its consistent with being the total cost of producing a unit of ore from Grants, inclusive of mining costs.

If you produce a 4.8% grade concentrate product from a 1.4% head grade with 60% recoveries you need about 5.7t of product for each ton of SC4.8.

The July 2022 ore reserves statement noted Primero/MinRes were cumulatively charging $35.11/t processed. The processing cost would appear to be about A$200/t before any subsequent inflation price adjustments from 2022. Transportation to port, site G&A etc are small but lets assume they along with processing cost inflation take this cost to A$300/t.

The July 2022 quoted unit cost for moving a cubic metre of material was A$13.79/cm. While Grants ROM ore density is estimated at 2.72/t in the JORC, the waste rock/dirt will have a lower density. Lets assume the blended average density is 2.5x. Core could be paying a rather high A$5.52/t for movement of material. If the Grants average strip ratio was 17x then on-average 17t of waste and 1t of ore need to be moved for each ton that gets to the ROM. 18 * $5.52 = $99.4/t to the ROM ($100/t). As noted above, 5.7t of ROM is being used for a ton of spod so the mining cost within a ton of Spod is $570/t.

$300 + $570 = $870/t. Core has guided a unit cost of A$800-$900/t (With a smaller uplift from $200/t you would be at the middle or lower-middle point of this range).

Core's guidance of $800 to $900/t of Spod is similar to some other WA operations but clearly A$1,900/t is massively above. If Core could get the mining cost down a bit from $800-$900/t, they would be back to lower-mid cost. If they could write off some of that deferred stripping cost, they might even get down to being low cost.

Well that's at least how I see the numbers unpacking.

If you change recovery rates and target grades around, you can use these same unit costs to get back to the unit cost Core advised of A$771/t in July 2022. The recent costs nearer A$1,900/t would appear to be a factor of two thing. The first is they involve the cost of building up the ROM. Very broadly $600 mining ROM + $600 mining for processing + $300 for processing = $1500/t. The actual costs were higher than that again because phase 2 stripping work was underway. The earlier intention was to capitalise this stripping work (basically shift year one costs into year three so you had less huge 1st year costs and less SWEET 3rd year costs). With mining paused, and the deferred stripping is now only $3m its conceivable the stripping work did occur over the last six months. Its no longer being deferred, so deferred stripping is now only $3m. The $600/t mining figures above are nearer $800/t due to higher strip ratios from extra stripping work. $800 + $800 + $300 = $1900/t.

This would mean to restart mining after ROM levels reduce, Core would need confidence that the price slide has stopped and there's money to be made at with a A$800-A$900/t C1 cost structure (ex royalities).