Core’s Finniss operation was the earliest casualty of the epic collapse in lithium prices across 2023, shutting up shop in early 2024 as the small scale NT lithium mine ran into heavy lossmaking territory.
That prompted a major rethink, return to exploration and change of management.
The fruits of that labour have now been floated for the market to see, with a new study suggesting a restarted mine would be among the most cost competitive spodumene operations globally.
Finniss, then focused around the Grants open pit, was running at a unit cost of $1953/t in its last quarter of full operations (December 2023).
The new study, focused on a 20-year underground mine at the BP33 deposit, would run at just $690-785/t FOB on an SC6 (6% Li2O concentrate) basis, with mining costs down 40% and processing costs 33% lower.
Concentrate production would also rise 7% to 205,000tpa SC6, with recoveries of 78% and pre-production capex chopped 29% from $282m to $175-200m.
Morgan Stanley has been appointed as Core’s corporate advisor to lead its funding strategy “with a focus on minimising dilution for shareholders”, suggesting debt funding will be a key pillar of the junior’s strategy.
Any FID, of course, depends on market conditions and funding. Spodumene is currently priced around multi-year lows of US$700/t, according to Fastmarkets. Core’s study assumes a long-term lithium price of US$1300/t to come to its free cash flow number of $1.2bn.
Nevertheless, Core CEO Paul Brown said the restart plan focused on Finniss’ strengths after a ‘rigorous, bottom-up review of every aspect of the operation.’
“The Study brings together our operating experience to deliver a plan that is more robust, more efficient and built for the long term,” he said.
“At BP33, we are developing a large-scale underground mine. Grants will shift to underground mining, cutting costs and doubling its mine life. Carlton will use Grants’ surface infrastructure, supporting a 20 year mine life.
“Blackbeard offers further potential to extend mine life and expand operations. Our plant upgrades will improve recovery and reduce contaminants, whilst keeping capital costs low.
“These improvements include enhanced screening, with more affordable crushing and the addition of a gravity circuit. This resets Finniss as a more resilient operation to price volatility, and will be a reliable source of high-quality, coarse-grained spodumene concentrate.
“The Study outlines a lower-cost, longer-life, and scalable operating plan that generates free cash flow of $1.2 billion, representing a six-fold return on pre-production capital.”
Core shares have tumbled 94% from their 2022 highs of $1.67, but hit a near four month high of 9.6c after the release of the restart study.
A major catalyst to upscale the project could come from Blackbeard, which has an exploration target of 7-10Mt at 1.5-1.7% Li2O, well above the reserve of 10.73Mt at 1.29% Li2O in terms of grade.
Argonaut’s Hayden Bairstow has a 17c price target and spec buy rating on Core, saying the study came in stronger than expected.
“Unit costs were 25% lower than we had expected, and an impressive 40% lower than the previous study,” he told clients in a note.
“The exploration target for Blackbeard highlights the potential to add a second material ore source, which could push the mine life beyond 20 years, sustaining production at the ~205ktpa (SC6) capacity rate, or underpin an expansion beyond the base case.”
Source: www.stockhead.com.au