Ann: Becoming a substantial holder, page-49

There is some unexplained additional capital expenditure at Core but this isn't the main difference between the $89m DFS and $290m raised by issuing new equity (as per quarterlies across 2021 and 2022 - excluding options). The main difference is after spending $136m on PP&E / capitalised other assets (presumably mainly grants pre-strip), Core still have $125m in the bank. Broadly equal in 2nd is higher capex and non-mine development costs. Core's cash balances at this point in time are a surprise. Normally you would expect cash balances to be much lower than the DFS capital cost as commissioning commences. The ASX listing rules may be creating a problem towards the end of mine development because you could easily have a $50m cash outflow quarter towards the end of a significant development and to have >2 quarters cash then you need to have $100m cash (or explain why you don't). I'd have thought that Core would manage liquidity risks until Spod starts through a committed undrawn bank borrowing facility but a key value proposition of their's was no debt. This may have made this option unacceptable so they did a late stage $100m capital raise. Note - the $21m from the DSO sale isn't in the Dec figures.

With $136.4m spent on PP&E/other non-current assets (tagged as mine development in the last two quarters) you would think that Core is towards the end of the costs for its $89m DFS. Core's $100m capital raise noted $95m of Finniss costs to first production and $6m re DMS project acceleration so $12m of over-runs have at least been identified. Its unclear if BP33 costs are now part of this $136.4m.

But all of this cash raised for expenses and cash balances beyond mine development creates a warning for the likes of ESS around whether a high enough provision for this is factored into the scoping study. In Core's case Admin, exploration, tenement acquisition, capital raise costs and boosting cash balance have collectively consumed $182m across 2021 and 2022. This increase will lower a little with Q1's capex costs (what-ever they are). The ESS scoping study noted $350m (inc working capital) vs $293m capital costs. The scoping study has a gap of $57m for working capital. If core's needed around 3x this amount for working capital, head office and exploration purposes, perhaps I was too optimistic in my earlier post and should have assumed $450m of capital needed to be raised if ESS was to go it alone.

At December 2020 Core had $4.5m cash. Across the 8 quarterlies across 2021 and 2022 core gained (spent):

• ($17.0m) on operating cash flows (admin and corporate had increased to $5.1m in the last quarter!!)
• ($3.3m) on production costs (presumably for the DSO sale)
• ($6.4m) on Tenement acquisition
• ($25.0m) on investment classified exploration and evaluation
• ($61.2m) on the purchase of PP&E
• ($75.2m) on other non-current assets with the last two quarters called mine development
• ($1.4m) on other investment including security bonds
• $290.4m gained from of proceeds from the issue of shares
• ($13.0m) spend on costs of raising equity
• $34.3m gained from options converting
• ($1.6m) on other inc lease payments
• $0.2m of rounding because the total closing Dec22 cash was $125.3m