Corp updated needed SYA/PLL, page-2

There are at least three conceptual ways of doing an open pit mine with massively different cost consequences over time. The first is you are able to mine the easy ore first and then you get progressively and higher strip ratios and increasing costs as subsequent down-dip cutback's are undertaken to get to progressively deeper ore. I'll call this the standard model but I'm not sure how standard it is.

The second is the final pit wall model. Within this model you take progressively smaller slices out of the pit as you get deeper. If there's a similar amount of ore per metre of depth, costs start high and then reduce as the deeper slices become smaller but still recover the ore in the centre of the pit's design. The smaller (but deeper) slices mean strip ratios fall over time as do mining costs (assuming the strip ratio effects trump any haul cost increases from deeper mining).

The third is a blend of the two above.

Both Core and SYA would appear from previously released ore production profiles to have examples of the second - final pit wall model. Strip ratios start high (expensive producers) and then reduce over time. This is the reverse of your "standard" project meaning that companies like CXO and SYA are being hammered for their "high" costs. Anyone then applying standard models to them which forecast to increased over time costs will form the view the projects have marginal viability that is assumed to get worse over time. This is a classic situation to get market mispricing.

The market appears to be patting itself on the back for a job well done on Core's high early costs causing it to be a RHS of the cost curve casualty and is now moving onto the next candidate (SYA). SYA's mining profile from its 2023 revised DFS is below. What I suspect SYA will need to do is redesign the pit with more cut-back's so that it more closely resembles a "standard" model and those higher peaks across 2024 to 2030 are reduced with more cut-back work across 2032 to 2040. This would lower 2024-2030 costs and through that reduce doubt about C&M at CYA.


This Core production profile below was from Jun 2018. Its month by month due to the much lower production profile. Core stopped giving good detail on what the monthly production (or quarterly production) looked like in later updates. The ex CFO has noted in an email to someone's view I trust that waste movements are ~85% complete. From the resource movements and production/ROM they look to be about 1/3rd complete for ore recovery. They like SYA have the classic high costs that reduce but have incurred most of the high costs while not yet recovering most of the ore. Possibly due to price, possibly due to weather, possibly due to available space on the ROM pad, possibly due to corporate gamesmanship Core have paused mining. The market accepted wisdom is the RHS of this chart has an unviable cost structure!!