Ann: Strategic Review Update, page-183

So if management want to maximise the value of a smaller ore resource, they would be best to sell more when prices are high and less when prices are low. Long-term estimates being used in other companies scoping studies are often US$1,500 to US$2,500. If these are indeed good estimates of future prices, selling a bit less now at low prices and having a bit ore to process and sell later is smart business and good for shareholders.

Across the September quarter, Core was mining ore at an annualised rate around 1.2-1.3Mt/yr. This is well beyond what speed ore is being used by the DMS so some sort of slow-down or pause was always going to be needed. If Core was simply preparing for the wet season, they would probably have slowed down mining activities in the December quarter so that they realigned the speed ore was mined and the speed it was being used from the ROM. The ROM would be stable rather than increasing. Instead Core was continuing to build the ROM to 280kt. Core appears to have decided to pause operations rather than materially slow them down and built the RoM up in preparation. What ever Core did, a significant number of contractors needed to depart around this time. Low spod prices have given Core a reason to implement a plan that was under development for at least a month, if not somewhat longer.

If you are going to book a restructuring expense, definitive action towards that restructure is typically needed before the period ends although fine tuning details can come later. Auditors typically disagree with management if they attempt to create a restructuring charge after the end of the half year or end of year to manipulate results. The pre-Christmas announcement looked like the last practical date for announcing a review and getting it accepted as an write-down expense in the Dec 2023 accounts. Unsurprisingly Management have now confirmed a write-down is likely. The asset I'd be trying to write down if I were management is the stripping asset that was $83m at June 2023. This relates purely to Grants so it will need to be expensed over the next 2 years anyway. Take the hit now and the cost of production when you restart is lower. 2025 profitability also improves. Depending on the size of the write-down, Core may still have a tiny profit in the December half year (A lot of the prepayment cash received in the 2023 year will be booked as revenue within the December half year result - It wasn't booked as revenue in the year to June 2023)

We know that the DFS has proved inaccurate, but it estimated processing costs at US$103/t (US$126/t including Site G&A/Haulage). Even all these post mining costs are running at double the DFS they are only at US$252/t. While Core's not mining and using up ROM over the early part of 2024, Core could potentially be paying something around US$250/t (or less) while generating something close to US$750/t in cash flow (assuming receiving US$1,000/t for the product sold).