How long is it going to take before people learn how to read a table?
The following table is from the quarterly. I've added two circles onto it and used red/green colour coding to help. The red one is the wrong one to use as its 6 month old data from when core was in startup mode. The Green one is the correct column to use. Several apparently numerically challenged individuals have and continue to quote Core's September operating costs as A$2,386. Zara's done it. Just a few posts back Phantom77's done it. Its a largely irrelevant 6mth old figure where they quote Jan23-Mar23. The green title is the key Q1 FY24 (Jul-Sep23) is clearly after Q4 FY23 or Q3 FY23. Perhaps someone forgot that Core has a June year end. For clarity:
Q3 FY23 = Jan23-Mar23
Q4 FY23 = Apr23-Jun23
Q1 FY24 = Jul23-Sep23
Q2 FY24 = Oct23-Dec23
The more sensible discussion is why is there such a huge difference between A$1,889/t and A$904/t?
The next line below that "Inventory and other (non-cash)" provides part of the answer. Core started the September quarter period with 7.6k on the RoM pad. Given Core uses about 2k/day and should be using nearly 3k/day if at nameplate, this balance was tiny and was only a couple of day's production. At the start of the Jul-Sep quarter Core basically had no buffer between mining activities and crushing/processing activities.
During the September quarter Core built up that buffer. The ROM pad increased by 157.2kt (2069%) from 7.6kt to 164.8kt. Core has since advised the ROM is up to 240kt. This has introduced a large buffer between mining operations and crushing/processing operations. The direct link between the two is now broken. If Core was using 2kt/day for the DMS, they could run the DMS for another 120 days without another ton of ore being recovered out of Grants. If pit access issues occur (high rains filling the pit, wall slips etc), Core has time to address the issue without it impacting supply of ore to the DMS. The management team had a looming potential wet season problem and have produced a mitigation - Well done Gareth and team.
With Core "buying" a whole lot of inventory in the quarter, the cash cost in the quarter is a lot higher than BAU. The accountants estimation of the cash cost adjusting for inventory build factors is A$904/t (circa US$600/t). A few more quarters are necessary to confirm Grants true unit operating costs excluding royalties but based on the last two quarters it is well below US$800/t. The NT royalty scheme is currently profitability based not revenue based. If Spod rates were to crash further like one US bank suggests, the NT royalties will reduce to basically zero. Using the C1 excluding royalty is therefore more appropriate in severe down-side scenario analysis. Core should still be cash positive while mining Grants at US$800/t. If prices remain nearer US$1,800/t (or more) then there's robust profits to be made.
As another sanity check, over entire life of mine at Grants the inventory adjustment will be zero. While negative adjustments are currently occurring to circa A$900/t C1 unit costs, at some stage in the mine's life this is going to become positive cost adjustments. This adjustments would increase a lower cash cost back up to A$900/t. At some mid/later stage of Grants mine, cash unit operating cost will be below A$900/t as all the strip work has happened and its basically a case of blasting the pegmatite, loading it on a truck and taking it out of the depths of the pit. The truck load after truck load of overburden will have ended.
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