A collection of past information around BP33Unfortunately nobody external to Core has clarity on the current cost to get BP33 into production. Many will have asked but no clear answers are emerging so the general tendency by brokers and others has been to risk manage this by assuming the number is progressively larger/only put buy prices in at lower prices. This process may have cycled around so far that the general perception is that BP33 startup costs are a lot higher than they are. Then again the plans may have changed and now have a lot higher capex/lower opex solution than previously thought. The 3 obvious ways that clarity will emerge on this are unfortunately only Core releasing the BP33 DFS, Possibly as Core releases its annual ore reserve update (needed for the 2024 annual report) and as separate statement.
The info below is a recap of what is known/released re BP33 capex
The 26 July 2021 DFS (page 33) had the table below. At that point BP33 was estimated to have $11.7m of capital work to get it started and a further $26.5m of capital works after commencement (further decline development to lower levels?). The plan was substantially similar to the current one involving a box cut of 340m length with a decline grade of 1:7 grade. This would mean the box cut enabled 48m depth reduction from the entry point. From Google maps the start of the box cut has a ground height of around 32m which then decreases to 24m as it goes SE towards the old BP33 pit. If 8 metres of height were lost then the box cut would be 40m deep. At this stage BP33 didn't go particularly deep - proven and probable resource was extracting 2.3Mt of ore. No equipment capex was included on the assumption of using contract mining.
By Core's July 2022 ore reserve update the pre-production capex estimate for BP33 was A$27.1m. Clearly this was also still incorrect as the early works package of $45-$50m exceeded this cost, as does the FY2024 estimate of spent early works expenditure of $36-37m. It shows the thinking by Core was that BP33 had a start up capital cost that wasn't huge (nearer the $100m numbers being thrown around by some).
A key change is by July 2022 the mine design was 3.9Mt so BP33's design was going deeper. This may have had impacts on the capacity and size of surface equipment for dewatering and airflow but that's speculation on my part. Core hasn't confirmed why the startup capex more than doubled from the figures SB and SL prepared. The deeper mine also increased post-production sustaining capex with an increase from $26.5m to $62.7m. The total capital development length was now 7.9km and at $7.8m/km came to a cost of $62.0m. Resource upgrades since then indicate the total capex cost is going past $100m however sustaining capex spend 2, 3, 5+ years after starting up BP33 doesn't require payment until that date. From a startup capex cost viewpoint what matters is the cost until ore (and revenue) starts to be generated.
If there was 0.5km of decline/horizontal development necessary to start producing ore, on these costs that would be around $3.9m (at $7.8m/km). Allowing for inflation in costs it could be nearer $5-$6m
Where does 0.5km guess of decline/horizontal estimates come from?It is a guess. From design diagrams, there is a distance of about 200m from the bottom of the box cut to being vertically above old BP33 pit mine workings. The BP33 pegmatite is just over 300m long so at least some if not most of that length will need horizontal tunnels before ore is extracted. Unlike some mines however there is minimal additional depth required from the decline until getting to the ore body. From Core's description of BP33 there is heavy weathering for the top 50m so ore doesn't start until below 50m (but the box cut is 40m) so the bottom of the box cut to the top of BP33 ore is only about 10m in height. If the operational level was 70m below ground, 212m of decline would take Core from 40m down to 70m below ground which could be done naturally in getting from the box cut to vertically below the old BP33 pit.
In the 2023 calendar year one of the developments was a change of plan from an open box cut to a covered box cut however the total advised box cut depth has remained constant at 40m. The incremental cost of this was not explained but was presumably related to better managing the wet season. This will be part of the cost increment from $27.1m. So looking forward, there's the rest of the early works $8-$14m. Perhaps $5-6m of decline development costs and some unknown amount of non-early works costs. At least these costs are easily managed by Core's existing cash
Wildcards taking the price of BP33 capex up:- The planned volume of ore to be produced has increased and now exceed the DMS's capacity meaning BP33 comes with expansion capex for additional concentration capacity (DMS or flotation).
- Electric vehicles. Core may have decided UG mining would work more effectively with electric haul trucks or there's a premium for "green" spod. EV trucks can probably still be leased (or paid for by a mining contractor) but this would make it optimal to complete the grid connection.
- Non haul truck solutions. Intuitively the longer the haul truck cycle the more expensive they are. With BP33 plans getting progressively deeper, other options the conveyor belts may flip to being the best choice.
- A flotation plant planned to start soon after BP33 comes online (rather than DMS changes, shipping fines, staying with the DMS only status quo, or commencing flotation after BP33 has been successfully commissioned).
