@MikeMedia, many are in the same boat with an average cost well...

@MikeMedia, many are in the same boat with an average cost well above the current price.

Core has stuffed up in several ways, but not the ways that are normally being thrown around in the media and by certain other posters. The mining of Grants basically had 4 phases. Understanding these phases and their costs is the key to understanding Core's pre-BP33 start potential. Phase zero aka pre-strip capex involved taking away a lot of waste rock and getting no ore. This phase and early phase1 ran until about October 2022 when the first ore was available to commission the crusher. This phase didn't even have a C1 cost because there was no production. Mining costs of this phase were taken to a stripping asset on the balance sheet to be expensed later. EasylikeSunday recently posted a photo of around the transition point between phase 0 and phase 1 where there were 3 side wall areas showing and the bottom of the pit was flat. In that photo core was near the "transitional Pegmatite Waste" on the cross section below.

Phase one involved removing more of the over burden so that the northern and upper portion of the Grants pegmatite could be mined. This phase also had very high costs for the production it allowed. Critically this phase also involved moving material that would benefit phases 2 and 3. Because mining was at higher than life of mine average strip ratios, further costs were added to the stripping asset. .

Phase two involved a southern extension of phase one. While the southern pit extension required lots of waste overburden removal, the northern end was substantially complete due to the work done in phase one. This phase involve a closer to average stripping ratio for the mine but effectively didn't realise benefits of the stripping asset because at average stripping ratios still existed. That didn't stop Core writing off the stripping asset while still in this phase. While getting out some ore, most of the work is removing the waste rock above the ore. Core's costs for this phase may have looked semi ok if they weren't also rapidly building ROM.

For reasons I don't understand, the management at Core have failed to tell shareholders much about phase 3. Possibly because it doesn't involve much risk and the board put in a risk focused CEO in GM. In some mining plans ore gets progressively more expensive as the mine starts to take out deeper and deeper ore with progressively larger cutbacks. This isn't the case with Core's mining plan where phase 3 ore is the super cheap. Over simplifying things, phase zero involved taking away enough weathered rock so that there was access to the pegmatite (The red shaded area below). Phase 1 and 2 related to different areas of the pit but basically took out all the material back to the ultimate pit boundary walls and above the green zone added to the diagram below.

Phase 3 is the bottom green zone. All the overburden above has been removed so the waste rock removal is now only the side's of the pegmatite as progressively deeper slices are extracted. This phase will commence as around 80-90% of waste rock removal is complete. As Core transitions to phase 3 it will undergo a dramatic cost structure change. Core will shift from having huge mining costs as all the waste is removed to having minimal waste removal costs as the waste rock becomes a narrower and narrower slice next to the central pegmatite. Unless the mining plan has changed, the physical clue of getting close to or into phase 3 is seeing 5-6 side walls in the pit structure. This phase could commence with a lot of Grants ore still to be recovered. The percentage of Grants ore mined upon entering this phase may be as low as 35-40%. I think we may be at the transition to phase 3.



There is one major logistical problem for phase 3 and GM may have failed to prepare Core properly for this. Phase 3 delivers ore to the ROM at greatly increased rates. To manage this transition Core either needed to collapse the speed of mining or have a much bigger ROM pad. Arguably Core ultimately paused mining so the ROM pad could be near empty before commencing this phase.

Phase 3 ROM build explained
During this phase the weekly waste rock to ore ratio collapses. If mining volume movement rates are maintained, the daily volume of material being sent to the ROM pad will balloon. During the last six months of 2023 just over 3kt/day of material was being supplied to the ROM pad. Core was using about 150 to 160kt/qtr or 1.7kt/day from the ROM. The amount of waste movements per day is unclear but perhaps around 45-60kt+/day. Core have declined to provide physical movement figures on waste movement in quarterly published updates.

If Lucas were to continue mining at 2M bcm/qtr and the average density was 2.7x then they are moving around 60kt of material each day.
>If mining at 30-40:1 strip ratios they may struggle to keep up with DMS demand - ROM didn't build through to June 2023
>If mining at 16.6:1 strip ratios, 56.6kt of waste would be mined and 3.4kt of ROM would be mined. This strip ratio would allow a 50:50 split with ROM building at about the same rate as the DMS is using ore. This is close to the situation seen across Jul-Dec2023
>If mining at 9:1 strip ratios 54kt of waste would be mined along with 6kt of ROM/day
>If mining at 5:1 strip ratios 50kt of waste would be mined along with 10kt of ROM/day (this ratio is roughly where PLS operates and is why its lower cost despite its slightly lower than Grants average grades)
>If mining at 3:1 strip ratios 45kt of waste would be mined along with 15kt of ROM/day
>Toward the end, the strip ratio is 1:1 through to pure ore (the bottom bench) with 30kt or less of waste for 30kt of ROM/day

Towards these later stages a day's mining may deliver the same ROM increase that previously took a weeks mining. The implication of this falling strip ratio is without changing the mining rate, the speed ore gets dumped onto the ROM pad goes exponential. Either a much bigger ROM pad is needed that would have needed to hold approaching 1.5Mt of ROM or Core needed to materially slow down or pause mining. Core took the pause mining approach, presumably to empty the ROM pad before either blitzing the mining for a huge ROM pad or a much slow mining restart because even with slow mining the ROM pad would be adequately supplied. If mining was restarted at previous rates with an empty ROM, a ROM size about 1.2Mt may be created.

Rather than owning the problem, Core ducked for cover and blamed the pause on falling prices and wet weather. It would appear that if Lucas had continued mining at their previous rates they could have moved approximately 2M bcm of waste and ore. At 2.7x densities that's 5.4Mt. If the strip ratio was down in this 3-5 range, that sort of movement volume would supply over 1Mt of ore to the ROM pad in a quarter. Without the pause Grants pit would be very close to being mined out by the end of March24 and by April24 would possibly have been mined out completely (if weather didn't create problems).

So Phase 3 is where mining costs collapse. Core delivers cheap ore to ROM. The cost of ROM may become equal or lower than that of PLS. Whether Core has a period that is cheaper than PLS will depend on Core's mining/DMS operating costs on restart. (Core's true cost is higher than this, but all the expenses related to that higher cost have now been written off in the December HY result).

Until Core starts to talk about phase 3 with some clarity, there will continue to be negative posters, the never restart talk and the media/lazy broker commentary about Core being at the right hand side of the cost curve. BTW phase 3 also helps reconcile many of the differences between observed financials and DFS financials.