Delta Lithium General Discussion, page-762

At its fundamental basic's direct shipping ore (DSO) is getting the ore out of the ground, onto a truck/ship and to China where they then put it through a concentrator to derive Spod. The outfit that does this may then on-sell the Spod or may be integrated and concentrate further to Hydroxide. The higher the recovery rate they get from the material, the better the price and the less they need to improve the grade to get to SC5.5-SC6.0 the better the price. You are substituting Australian soil concentration for Chinese soil concentration.

The price received for DSO will therefore vary by grade (higher grade = higher price). It will also vary by available concentrator capacity in China (Higher availability = higher price due to more competitive bidding). Critically it will also depend on the current price of SC6. Core's DSO cargo was optimal in several respects:

• Around October 2022 there were SC6 quotes over US$7,000/t
• The lead time from the tender to delivery was fairly short reducing the risk of falling prices in the period between buying from Core and delivery/concentration allowing the on-selling (or use) of Spod
• Core's ore from Grants is amenable to DMS concentration so they could have Chinese buyers either using DMS or further crushing for flotation
• A near 80% recovery may have been possible from this material as it was already crushed to 6.3mm

The simplistic calculation was the purchaser paying circa $5.7k for SC6 before then adding their processing costs and planned profit margins. [$951*(6/1.4)/.717 = $5,684]. The purchaser of Core's DSO ore may have however had a probable ore cost for SC6 nearer US$5,100 because the losses from fines had already occurred $951*(6/1.4)/.797=$5113/t. While Core has a published 71.7% average expected recovery rate, this includes perhaps 10% fines with zero recovery (Core intended to process a max of 1.1Mt and had a 110ktpa fines business case). Core's actual recovery calculation from 1,000t of out of the ground ore would be 900t of 6.3mm and a 79.7% recovery on this along with 100t of fines with a zero recovery from DMS. This blends to 71.7%.

Back to Delta: SC6 prices have reduced since then. Also if you need perhaps 7t of ore for one ton of SC6, that also means to understand the cost of mining DSO you need to divide the mining cost within C1 costs of comparable operations by 7. Excluding issues around fines, each ton of lithium bearing ore you mine, you also ship. GL1 noted a ROM cost of $67.47/t in their Manna scoping study and I think Manna has a fairly high strip ratio. This means Delta's Mt Ida deposit shouldn't be much above, if not below this price. Byproduct credits for Gold in the mined "waste" rock may reduce this cost price further. Even after adding on crushing, trucking, shipping and royalties you should have robust margins at current prices.

The price I'd quoted was a current spot price as determined by SMM and it came back a lot recently.