@Zammita, There's a number of projects worldwide in the 30-80Mt range. For simplicity I only looked at those larger than 100Mt in providing earlier comments. There are several in the 40-80Mt range and if DMS only they still have potential to come online in 2026 because you can bring a DMS plant online in 12-18 months and that length of time does still exist. Agreed LRS is in that group that still has a chance of hitting 2026 but it will require a clean run through permitting, DFS, financing, construction and ramp-up.
Resource size For shareholders it would be good if projects more regularly reported on the resource size by different high-level pit size envelopes. Projects like LRS, WR1 and GT1 outside of Australia are finding that the JORC regulatory announcement rules mean they are needing to apply a pit price envelope earlier in the process than similar JORC size announcements on Australian soil. For example, LRS's 77.7Mt @ 1.24% had a pit envelope of US$1,200/t. WR1's 77.9Mt @ 1.15% had a pit envelope of US$2,000/t. The look close to the same but are they? How much material does WR1 have in the US$1,200 to US$2,000/t range that boosts their JORC. How much material does LRS have that is excluded but in the $1,200 to $2,000/t range?
GT1 initially used a high pit envelope constraint to report the highest JORC possible within this constraint and thereby be as close as possible to like-for-like with Australian JORC's that frequently don't have a pit constraint. It however means that the GT1 total deposit size (including UG mining potential) may be higher than the reported JORC and GT1 looks small relative to not quite comparable larger Australian examples. GT1 are now doing the alternative pit shell work for Seymour. As per the diagram below, there isn't a lot of difference between the US1,000/t and US$1,500/t pit designs. Verbally from GT1 most of the slab below is also captured in sub US$1,000 pit shells. I'd need to find the video and comment but I recalled it as US$600/t. All the models go down and grab the base of the thick slab at Seymour and then consider the tail too difficult for open pit.
The millions of ton's in that tail will need UG mining to be feasible but are currently excluded from the Seymour JORC. If GT1 does implement its plan of having a hydroxide plant nearby, that UG ore will be a valuable feed when the open pit mine is exhausted.
Core Lithium I believe many investors appear to have taken the view that due to Core's problems, smaller deposits aren't viable and should be avoided at any cost (including selling at large losses). This is unfortunate as I'm don't believe its correct despite its frequent statement in social media.
I suspect this is having severe impacts on GT1's price and that of other non-huge deposits. Instead these investors are chasing any large projects, even if those projects may have other significant commercial/operational issues to address. It may take either another small deposit success story or Core restarting mining with good financials on that restart to change the opinion. The review below looks at Core more closely to understand whether small = unviable is warranted. Disc Core shareholder.
From October 2018 Core has been defining its Grants resource as 2.89Mt @ 1.48%. This is under Australian reporting so it doesn't have a pit constraint. To get back to Canadian or Brazil equivalents you either remove portions of the Grants resource that are outside pit constraints or add the non-pit constraint material of other projects back in. Both are difficult so frequently the comparisons are not quite like-for like. The 2.89Mt is really nearer 2Mt than 3Mt from an open pit perspective.
On 25 June 2018 Core released a pre-feasibility study for open pit mining at Grants. This study involved mining 8.921M bcm of waste rock for 0.644M bcm of ore (1.778Mt). Critically Grants is a vertical ore body with circa 50m of weathered material above it. As a small deposit, the only effective way of mining it is to go straight to the final pit wall shape and basically remove horizontal slices within that pit envelope. This leads to a mine plan with high to very high early strip ratios that then become adequate and then excellent ratios like 3:1 as the pit narrows and you get towards the bottom. This high early cost, late in the mine low cost situation caried through to the DFS where years 1, 2 and 3 had strip ratios of 34.8:1; 18.6:1 and 2.6:1.
By the July 2021 DFS Core had amended the physicals to 13.103M of waste rock for 0.790M bcm of ore (16.6:1 strip ratio). The incremental change was to add 4.182M bcm of waste rock removal to extract 0.146M bcm of ore. Core was adding 28.6:1 strip ratio material into the mine plan to get Grants larger. that hasn't helped financials. Other projects adding 28:1 strip ratio material would be laughed at, and with hindsight I wish I'd realised that's the sort of games SB and SL (now both over at WR1) were doing.
The project planned to stockpile ore with a delayed DMS start so that during the high strip ratio period there was still enough ore to feed the DMS. It didn't work out that way so they ended up mining high strip ratio material and also stockpiling ROM from this high strip ratio material. This means the waste ore to production ratio is likely to have exceeded 40:1 during some of the Jul-Dec2023 period. Anyone who knows anything about mining lithium knows a 40:1 ratio will create ugly cash flow metrics and it did.
Unlike projects like GT1, A11 and LRS, the project only has 3 DMS units. The main primary/secondary and a single ultrafine DMS. This means Core can't selectively identify ultrafine middlings and put them through for recrushing. All the DMS floats from the ultrafine DMS (2.0mm-0.5mm) appear to be being put through for recrushing. Non-spod ore may well be circulating in a loop increasing costs because SB saved a few dollars of capex and didn't build the right plant. Again a project specific issue, not representative of small deposit problems.
Core then failed terribly in explaining what was happening. The CE and CFO overseeing this terrible communication have both been booted. The CFO did however respond to a shareholder query noting 10.8M bcm of 12.2M bcm of waste rock had been moved and waste rock movements were ~85% complete. The difference between 12.2M and 13.1M wasn't explained. Core has moved ~85% of the waste rock for ~33% of the ore. What remains to be mined is ~15% of the waste rock for 67% of the ore. This means the open pit plan still has perhaps 1.4 - 1.5Mt of 1.4% ore to recover by moving 1.4M bcm of waste rock that's an implied future strip ratio of 3:1. Those are far better than metrics like PLS and must be profitable at a huge range of Spod prices. I can't explain easily why Core isn't announcing the good information it has available other than some of the write-down's done wouldn't be sustained through to the June 2024 audit if Core were to start putting out information on the state of future Grants profitability. Another stupid move by Core, you don't do major write-down's in the half year report.
While weather, ROM size and mining capacity elements contributed to the mining shut-down a major part of it appears to be an ex RIO guy doing the big write-down / recovery story and being sacked before implementing the recovery side of the story. The shutdown appears to have been just before Core transitioned to mining low strip ratio ore. The shutdown will create a very effective divide between the old high cost Core and what I suspect will start being announced in the next month or two is the emergence of the new low cost Core.
So back to the relevance to GT1:
Core and GT1 share the similarity that they intend to mine sub 10Mt deposits and use DMS as a concentration.
From a modelling perspective sub 10Mt deposits can work and produce impressive NPV's and IRR's.
While Core had ore starting 50m deep, Seymour's ore starts at surface which huge implications on early project profitability
While Core had vertical peg's, the peg's of Seymour's are under the slope of open pit slope designs meaning you can design progressively larger/deeper cutback and avoid the huge early mining cost instances Core has at Grants.
GT1 has been comparatively open and noted fines in its recovery calculations making them look superficially lower than other companies that release only the HLS test results. The HLS test material is however after screening out fines and the volume of crushing fines is not stated (I suspect PMT, probably WR1 and others "recovery" results are before dilution effects of crushing fines)
GT1 is looking at reducing the open pit recovered ore by decreasing the pit envelope, the exact reverse of Core who added 28.6:1 material to boost the size of the project.
While Core has a number of deposits, its poor financial results relate to mining under 1Mt of ore. Its not yet a good sample of costs and it won't reflect the costs of proposed UG mining with its different economics that aren't related to strip ratios.
If pit constraints are applied then Grants is a 2.1Mt resource vs GT1's 10.3Mt. While they are both not huge, there is a scale difference with GT1's starting deposit being a lot larger.
If you go the other direction and count all of Grants 2.89Mt, then to get like-for-like, all the material in that UG mining extension in Seymour needs to be considered.
While not large, bundling Seymour and Grants as both the same and only small is overly simplistic.
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