Ann: Production and Financial Position Update, page-72

A well located project with a low strip and high grades should have a cost structure well below US$900/t. Core is well located. Core has high grades. Re Grants, the remaining key questions are what is the strip ratio remaining in the pit and can new management run a DMS plant efficiently?

But first, some basic maths. Every time you remove above average items from a collection, the average of what's left falls. For example consider a bucket had the numbers 1 to 10 in it. Overall the average number in the bucket is 5.5.

• If someone drew out the numbers 4,6,7,9 & 10 they have 5 numbers with an average of 7.2. The remaining average in the bucket drops to 3.8
• If the next two numbers drawn were 5 and 8, you again have a higher than "normal" average at 6.5 and the remaining average drops to 2.0 as the numbers 1, 2 and 3 remain in the bucket.
• If you pause drawing at this point in time all you have observed is numbers being drawn that average 7. What remains is as an average of 2.
• Sometimes early observations may not match the overall average and the gap can be quite wide.

I believe this sort of effect is in-play at Grants. All the mining so far has been around or above the whole of life strip ratio for Grants. This is exactly what you would expect for the first period of a mine plan that is basically dig a big, long, wide pit that gets narrower and slightly shorter with each lower layer. All this at or above project average strip work is pushing down the average of what remains to be mined meaning past cost is a terrible indication of future costs. Many are convinced Grants is high cost and won't accept any explanation to the contrary instead tossing out childish taunts like it all being hypothetical.

The first set of "above average" strip ratio work related to the $33.9m of pre-strip capex. The volume of material being moved as part of this capex wasn't stated by Core but they did reference A$10.79/bcm in the DFS. The pre-strip work may well have removed somewhere around 3.1M bcm. Grants July 2021 DFS noted 13.1M bcm of waste rock for 0.790M bcm of ore. After the pre-strip work this reduces to ~10.0M bcm of waste rock for 0.790M bcm of ore (12.7:1 strip ratios).

Through to June 2023 Core capitalised $89.2m against the stripping asset which includes the capex above. By June 2023 Core had produced 18.3kt of concentrate, had a tiny ROM of 8kt and had done one DSO shipment. Around 0.17Mt of ore had been mined (0.06M bcm). To balance the numbers, the costs per bcm must be much higher. Assuming pre-strip capex had a cost overrun, there is ~$50m of mining costs which I'm going to guess are now much higher than DFS at A$16.67/bcm. Another 3M bcm of waste rock is removed. The stripping asset work through to June lowered the remaining Grants work to 7.0M bcm of waste rock for 0.790M bcm of ore. If the 0.06M bcm of ore recovered had a 15:1 strip ratio then it would involve 0.9M bcm of waste ore. The Grants residual ore calculation falls to 6.1M bcm of waste rock for 0.73M bcm of ore (heading into July-Dec2023 the project has a strip ratio of ~8:1). Theoretically at least Core could create a stripping asset for even 12:1 to 15:1 work because its well above the remaining project average.

Lucas shifted nearly 2M bcm of waste rock in the September quarter (conference call details previously provided). A similar capacity was deployed through to December and a couple of days in January 2024. From the grades, recoveries and ROM build, around 0.6Mt of ore was recovered in the six months to Dec 2023 when mining stopped so about 0.22M bcm of ore was recovered. Assuming 3.8M bcm of waste rock was moved during the six months, the calculations drop to 2.3M bcm of waste rock to move to recover 0.51M bcm of ore (a ~4.5:1 strip ratio). This is the point Grants is at now. As context in the YTD Mar period PLS shifted 23,468k of waste rock and recovered 4,565k of ore a strip ratio of 5.1:1. The grade PLS was mining was 1.3-1.4% so while obviously smaller, on restart Grants may have a similar or lower strip ratio to PLS and a similar or just a little bit higher grade than PLS.

Separate to this a shareholder managed to get an answer out of Core that 10.8M of 12.2M waste rock movements had occurred. This indicates a gap of 1.4M bcm to shift. All the calculations above were done on 13.1M bcm (0.9M bcm higher than 12.2Mt mentioned). There may have been some mining plan adjustments that reduce the waste ore and presumably the open pit ore from Grants. If you add this 1.4M bcm stated gap and the 0.9M bcm back to the DFS you get 2.3M bcm which matches the results above. This doesn't confirm it, but the workings above provide a step by step pathway from DFS planned mining of Grants to the current situation I suggest exists where Grants has a low strip ratio remaining. This doesn't confirm why Core decided to pause mining at the point they did. This doesn't explain why Core isn't explaining ore movements in any meaningful way.