I think that the restart decision may occur on sub US$1,000/t and quite possibly even sub A$1,000/t SC6 rates. I know that's massively lower than some analyst commentary doing the rounds. An explanation for this is clearly needed otherwise its just a throw away comment from a tin-hat wearing loon.
The last 6 months have a lot of quirks meaning they are unlikely to be representative of the ongoing cost Core will have. Most (all?) of the high restart estimates are basically taking the existing high reported C1 costs, typically converting them to USD and noting that something well above US$1,000/t would be needed so that these costs are covered with a risk margin and Core is above break-even. The underlying logic is assuming current costs = future costs. This logic fails to recognise that over the July-Dec 2023 period Core has been close to double-speed mining. For every unit of ore used by the Crushing/DMS, another unit has been added to ROM. That going to drastically increase the cost base being reported in the ROM build period and push up reported C1 costs.
The second less appreciated fact is how front-end loaded the mining plan for Grants is. The table below takes information from the July 2021 DFS and adds calculations for the implied closing ROM and the different period strip ratios. The DFS plan was to shift 6.5m cubic metres of waste material in the first year. 5.8m cubic metres the 2nd year and 0.8m cubic metres in the 3rd year. Basically half Grants waste rock removal was planned to happen before Grants got to having even produced 25% of its planned ore. Rounding a little, the remaining life of Grants mine (FY23/FY24 but those actual periods have changed) had 75% of the ore but only 50% of waste rock removal costs. Waste removal costs on the DFS mining plan drop drastically after some high early periods. This will mean the rest of Grants mine C1 cost is drastically below the mine to date Grants C1 cost. By the September quarter Core was slightly below 507kt of ore from Grants and still delivering the "FY22" DFS plan. The December 2023 quarter was broadly the 1st quarter of FY23 from the DFS.
Something well below rather than aligned to past C1 costs seems sensible. A lot of the pause in mining may have been related to having sufficient ROM stocks and at least needing to slow down mining if not pause it for a few months. that double-speed mining was not sustainable or needed.
The assumption being made that C1 remains similar is fundamentally flawed.
Working the other way - Additions to the DFSCosts are going to be higher than the DFS. If Core were to make no further improvements in recoveries beyond 63%, they would need to process 13.8% more material to recover the same lithia units that 71.7% recoveries would have achieved. If you assume recoveries remain at 63% then mining and processing costs should be DFS + 13.8% (if nothing else changes).
The DFS estimated open pit mining costs to be $10.79/cubic metre and processing costs at $24.38/ton (page 82). By the July 2022 ore reserves update, these open pit costs had increased $13.79/cubic metre (+27.8%) and processing costs were $35.11/ton processed (+44%). That cost does include Hang Gong so the increase to Grants may not be that large but I'm going to assume it is. That would put Core's 5.8% equivalent cost base at around US$546/t. At a 0.65 exchange rate this would be around A$840/t. Prices above this are higher than a crudely adjusted DFS and therefore potentially viable as a standalone restart decision. Spod prices like A$900/t or A$1,000/t (SC5.8) would appear to be above Core's underling cost DFS adjusted cost base making a restart sensible.
There would be substantial shutdown and restart costs if Core were to put the DMS and site into C&M. Restarting mining avoids these. Core may sensibly decide to restart mining even if its only at about break-even because that avoids an even bigger cost of C&M and restart costs for the site and DMS plant. Overall, if Core had confidence that Spod prices are not continuing to freefall down to levels like US$500/t I'd expect a mining restart.