So here's an interesting question, if provided a working...

So here's an interesting question, if provided a working DMS/site infrastructure and needing to implement Core's original plan (but at new more conservative values) would you do it, would it be sensible at current prices and at the sort of mining rates assumed in scoping/DFS cases?

Waste and ore material movements at Grants
I'm not aware of Core releasing the total tons of material required to be moved across waste and ore from Grants pit. The ore is stated as ton's but not the waste and that's where all the mining costs come from. The DFS noted 13.9M cubic metres of waste rock and ore requiring movement. If the average waste/ore density was 2.7x then this equates to 37.5Mt of combined waste and ore movements to complete open pit mining. I'm going to assume shallower walls at the top of the pit have increased this by 10% to 41.3Mt. I did see one social media post reference to Grants being a 50Mt pit but no support. I'd love to hear anyone's better informed guesses as to the total waste and ore movements required to complete the Grants project. Highly weathered rock is well below 2.7x density but fresh basalt can be just above this. Given this blend a 2.7x density assumption may be a conservative but should be ball-park correct.

While its only a scoping study, Essential metals produced financials for mining Pioneer Dome using 200t diggers (2) and a series of 90t haul trucks. That's pretty close to the Core mining configuration. Their underlying assumed mining cost was A$4.7/t. Multiple similar or lower than A$5/t references exist from other sources. If Core were to mine 41.3Mt at A$5/t then getting the ore to process is going to cost A$207m. Its probably heading to be more than that due to inefficiencies, but I'll work with expected costs and adjust for inefficiency later. At a 0.70 exchange rate the total Grants mining costs is perhaps US$145m. These costs are not spread evenly across the life of Grants. The DFS mining plan has them front-end weighted. Core's DFS noted A$10.79/cubic metre but by the July 2022 ore reserve update this was A$13.79/cubic metre. This change probably reflects a combination of price inflation and a change in the waste rock mix (by July 2022 there was less light surface rock remaining to be moved). A$5/t doesn't seem a silly whole of project figure given quoted figures from Core.

So spending US$145m gets you some ore and then after processing Spod - How much and at what further cost?
From the June 2023 annual report the Ore Reserve statement is 2.0Mt at 1.4%. Prior to that about 0.1Mt was removed from Grants pit. The pre-start position is 2.1Mt @ 1.4% of ore being recovered from the mining activities noted above. The DFS clearly notes Core spending USD$125/t on Processing, Haulage & Logistics and Site and General Admin. It appears processing costs are higher than that and I'll assume actual costs are double that at US$250/t of concentrate. It may require better throughput volumes or breaking the Primero contract and going inhouse to hit that estimate. Lower recoveries/lower grade needing less ore being processed may offset, at least at a high level of accuracy. So very ball-park there's $96.5m of processing and transportation, site and port costs. [2.1Mt * (1.4%/4.8%) * 63% = 386kt of SC4.8. 386kt * US$250/t = US$96.5m].

If there were an operational site and an operational DMS already, the opex cost of taking Grants project from start of mining to mined out and processed is perhaps around US$242m. To get US$242m from 386kt of SC4.8 requires a price of US$627/t for SC4.8. A USD$875/t price for SC6.0 might deliver a price around that if you adjust for grade and a probable lower price for ore of lower grades. [US$875 * (4.8%/6.0%) * 90% = $630]. This indicates if you wouldn't look at starting to look at mining a "Grants" project pre breaking ground, even with a built DMS/site facilities unless the price of SC6 was something north of US$875/t. You might therefore consider the project at US$1,000 even with now known recovery rates.

Impact of work already done at Grants
If the work done at Grants had taken out "cheap" early ore, the price to consider completing the project increases. If the early work had provided expensive ore by proportionally doing more of the stripping work, the price to consider completing the project decreases.

Across Jul22-Jun23 there was $19.8m of mining costs expensed to COGS net of mining deferral costs. As at June 2023, Core had a stripping asset of A$83.2m. Core notes expenditure on mining of A$68.9m in the current HY report. Cumulative expenditure to date would appear to be around $171.9m. It needs to be presumed that the reason this total is getting so close to the A$207m above is probably because there's some inefficient and higher than A$5/t mining rates embedded in Core's past costs. Assuming costs are 25% higher than they should have been, around $137m of work has been done meaning at A$5/t mining rates, A$70m remains to get all the ore out of Grants.

Could it really be that on a forward looking basis there's A$70m of work to be done to recover 1.4Mt of ore? If that is the case the remaining mining activities would deliver ROM at a cost of A$50/t which compares to A$115/t being reported in this half year report ($68.9m / approx. 600kt of ore recovered across ROM build and DMS usage). That's going to have a huge impact on Core's costs in the future (in a favourable way).

Remaining paradox
The remaining paradox is that if Core is mining something even close to A$50/t ROM ore for the remaining life of Grants, that's a sweet cost structure. At 5.5t of ore for SC4.8 [5.5t * (1.4%/4.8%) * 63% = 1.01t of SC4.8]. It would have mining costs of A$275/t of SC4.8. Why would you stop mining with that sort of low cost? You wouldn't. You might pause for the wet season but you wouldn't abandon the project.

The only reason I can think of is that rather than trying to explain the cost structures with the high C1 costs, Core decided to create a butterfly effect.

There was the ugly hungry caterpillar eating high strip ratio ore with horrible costs through to Dec23. The cocoon phase commenced in January 2024 with a pause in mining allowing things transform. The transform phase has involved changing the GM, one director disagreeing with the overall approach and resigning, ending the Lucas contract, ending the Primero contract, writing off the stripping asset, writing down the site asset value, making provisions for onerous contracts, by necessity writing down the value of inventory to the lower of cost or market and pausing pre FID development work on a pre FID project (PB33).

Could Core possibly out of the cocoon/transform phase as a "beautiful" butterfly with its low cost structure?