Thank you very much to everybody who's dialed in to the quarterly webcast call, the first one for Core Lithium, since we commenced the production of concentrate. I'll run through a short presentation and then over to the callers for questions. To start, I'd like to recognize the Noongar Nation or the Whadjuk people of the Noongar Nation, the traditional owners and custodians of the lands where we are speaking to you from today. I'd also like to recognize the Larrakia people, the saltwater people from the Darwin and Finniss area, the traditional owners and custodians of the lands where we operate. The quarter has been quite a busy one for Core Lithium.
We're in the process of transitioning from an explorer to an operator through the minimum viable project strategy. Grants essentially provides us with a start, and we've produced concentrate and cash as a result of the last quarter's operations. We've also completed some work to start BP33 in an early works phase. We're in the process of commencing that work now, and also working on a study for BP33. BP33 will likely become the cornerstone business.
We finished the quarter with over AUD 150 million in cash and no debt, and we've well on the way to putting together an executive team with our last executive starting in August, to look at operations moving forward and start to think about further development options out and beyond BP33. During the quarter, we've produced over 14,500 tons of spodumene concentrate at a unit cost around AUD 900 a ton. The main shipment of 5,500 tons of spodumene concentrate in April was achieved, and we recently announced in July, subsequent to the quarter, 13,100 ton shipment.
The sales have averaged around 5.35% of lithium oxide. We're on target for quality. We've approved AUD 45 million-50 million in the BP33 underground mine early works, and the feasibility study is progressing at pace with a target for FID in the first quarter, calendar year, 2025. The Finniss mineral resource has increased by 62%, and probably most importantly, the BP33 resource has doubled. We've welcomed Andrea Hall to the board as a Non-Executive Director, and we've finalized appointments with Pierre Malan , Development and Exploration. Quite a pivotal role to chart the future for Core Lithium. Paul Benjamin, the EGM for Commercial and Marketing.
Another opportunity for us to create value in the way that we think about placing product in the market. We've had no significant incidents during the period. The CRM, so Critical Risk Management, which focuses on identification and reduction of fatality risk, is well underway. We've also started working quite closely with some of the smaller organizations and community groups in and around the Darwin area, particularly the Finniss area, with 12 of our groups successfully applying and being awarded community grants. The operation has come through the wet season, I believe, quite strongly. We were able to gain access into the pit late in March, early April. That provided some access to ore in this calendar year.
We had some further weather in April, since mid to late April, after we were able to dewater the pit from that particular event, we've had reasonable access to the bottom of the pit and subsequently, good access to ore. Performance, however, has remained below expected levels, and we'll talk a little bit about that in the coming slides. We have seen some improvement in dewatering. The weather event that occurred in April was readily resolved as a result of the good work that the team had been doing on site during the first quarter to upgrade and improve our systems and equipment in that area. We've seen continued issues with the pit walls as a result of weathered material.
The feasibility study contemplated more competent materials in the upper benches. We've laid the walls back to accommodate that. We've also have a series of wall stability monitoring systems in place to check that those changes are working well. We've also, in the quarter, commenced drilling horizontal bores to depressurize the walls and further improve stability. Work continues on improving mining rates and access to ore at the bottom of the pit has improved now that the wet season is over. In terms of the wet season itself, during the period, we've spent AUD 11 million in establishing and upgrading water management infrastructure, and some of that work will continue on into the current period.
We now, after about 14 weeks of operations on a campaign basis. We commissioned, or started commissioning the processing facility in February, with the first concentrate produced during February 2023. The plant has run on a campaign basis, so that means that we've accumulated ore on the ROM, fed it into the plant, and then processed it. It's been running for relatively short durations. I think the maximum is up to about two weeks at a stretch. However, this has given us an opportunity to start testing some of the process parameters and understand how the plant will perform. Subsequently, we believe that we're in a reasonable period now to start talking about what we think we will produce in the coming year.
Concentrate produced has been on specification, so between 5.4 and 5.6, so it matches the contracts that we have struck. As is not uncommon for processing facilities of this nature to start up, recoveries have been lower than the original test we had predicted. We've seen an average of about 49%. The chart on the right-hand side, though, you will see that production is beginning to ramp up, and we're actually also seeing a slight improvement in recoveries. We're in the stage now of doing some more work to understand exactly what recoveries we expect to see out of the current facility. We will focus on a number of things moving forward.
We'll complete some screen trials, which are underway in the crushing area, to understand where fines are being liberated. We'll continue to do some process tuning, particularly around the ferrosilicon levels, but also the general plant processing. Please keep in mind that the plant has only been running for 14 weeks. It's been up and down during that particular period. These sorts of facilities prefer to run consistently, and it makes it a lot easier for the operations team, so we're moving into that phase now. Having said that, in the medium term, we are also considering a number of other options, such as, you know, do we need to look at fines processing in particular? So, separate plant and equipment to manage that.
The feasibility study contemplated something like around 20% or maybe a little bit higher fines. We're probably seeing somewhere in the mid-30s to 40% fines. Based on what we're seeing at the moment, we do expect that some fines processing facility will probably be required. In the medium term, we're thinking about options such as a filter press or a belt filter. In the longer term, and perhaps connected to BP33, we might consider a full flotation circuit.
I think, it's also important to note that this is the early stages of operations, and as much as there are a series of improvements, projects, there's also some work going on just to make sure that we understand exactly what's happening in terms of recoveries. Moving into a discussion around guidance. One thing that I would say is that there's probably three areas or two areas rather, that we're seeing at the moment that are a little different to the feasibility study. One would be recoveries, the second would be the host rock characteristics, and the third would be the wet season itself.
We were expecting to be able to run a little more steadily, or without the need to operate during the wet season. What we're actually finding is that we need to be able to operate throughout the year. The host rock characteristics, as I said, not as competent as expected. That's causing challenges in terms of stability of the wall, so we've laid those back, but it also means that we don't have the hard rock for roads, as much as we would prefer. We are bringing some rock in in that space. Then, recoveries, as I've described, it would appear that it's connected to the proportion of fines being a little higher than what was contemplated, and we're looking at ways to manage that.
We put all that together and think about guidance for financial year 2024. We anticipate 80,000 tons-90,000 tons of spodumene concentrate at a C1 cost around AUD 1,200 a ton, so AUD 1,165-AUD 1,250, so around AUD 1,200 a ton. One thing that we will be focusing on right now is an option to produce and sell fines. The fines material that is currently immediately kind of discharged from the plant before it is able to go through the DMS plant can be recovered, and we're in the process of working with a customer who is interested in purchasing that material.
We'll also look at a series of options to improve the plant through tuning, and we'll look at a series of options to improve from a potentially a capital perspective, based on the outcome of the study work that we're doing. The Finniss sustaining capital, we expect to be around AUD 20 million-AUD 25 million for water management, civil works, some port storage, infrastructure upgrades, ROM extension and haul roads. We will continue to explore and complete studies to understand what the other opportunities may be across the Finniss leases, and I'll talk a little bit more about some of the other tenements, so Shoobridge and Anningie- Barrow Creek. BP33 remains on track for a financial investment decision in Q1 , calendar year 2024.
The early works budget has been approved by the board of AUD 45 million-AUD 50 million. BP33, quite encouragingly, we've seen a doubling of the resource to 10.1 million tons. In fact, it's a little more than double. It's looking like it will more likely become the cornerstone asset for Core. Grants does a fantastic job in terms of getting us started and generating some cash. It's more likely that BP33 will be the cornerstone asset. The early works is underway, so it's probably worth talking a little bit about the strategy there. To move quickly and preserve the schedule, the board has approved some funding to start the surface infrastructure work and the box cut development to get ready for underground mining.
The FID, we made the decision that, given such a substantial increase in the resource, it would make sense to take a closer look at the study and upgrade it with the new mine plan associated with that new resource. We're in the process of completing that feasibility study. The scope there would be the decline development, early stage development, ventilation infrastructure, some of the water management and power infrastructure that's required for the underground mine. We'll run through that process over the coming quarters, and come back with to the board for approval for FID. The target, as I said, is quarter one in next year, calendar year.
In addition to tuning operations, developing the BP33 project, the third tranche in the strategy is the exploration and development. You'll see there that we've actually also started to complete a series of studies around some of the exploration targets that are beginning to prove up. We've directed the bulk of our exploration spend in the northern part of Finniss, the near mine options. It's near the current concentrator and the current infrastructure. We'll spend between AUD 35 million and AUD 40 million on exploration in that study work in the coming year.
The majority of the exploration spend will be allocated towards extending and defining existing resources. We'll also start to test a combination of geochemistry, geophysics, and drilling at Finniss and at Shoobridge, and geochemistry and geophysics at Anningie- Barrow Creek. To date, what we're seeing is AUD 2 of exploration spend is turning into a ton of mineral resource. I would anticipate that given that we are spending or directing the majority of our spend in the exploration space to extending and defining existing resources, we will see opportunities come to us in terms of mining options in the northern part of Finniss. That is the objective.
We'll wait to see the results of that, of that work, and then we'll start to define what the growth profile looks like for Core. I also wanted to take a little bit of time just to demonstrate some of the targets and some of the options that we see in and around northern northern Finniss. You can see there where we've expanded out some of the mining options. This is a combination of study work and exploration extension work to understand where the next mines will be. At the end of the quarter, we had three diamond rigs and one RC rig running, and we're in the process of mobilizing two additional RC rigs to complete the work in and around that area.
It's probably also worth mentioning that from a study perspective, there is also some geotech drilling going on, and there is also some work going on around metallurgical characteristics for some of those ore bodies to inform the study work that's underway. Looking at the longer term, we're starting to test some of our other lithium exploration areas. Shoobridge, which is around 300 kms south of Darwin and near the Adelaide River. Last year, we completed some ANT, so ambient noise tomography, and soil sampling in that area. Beginning to sort of test that. That has then resulted in a plan for 2024 to continue doing some of that surface test work and begin some early-stage drilling.
Some drilling options to start testing some of those targets that the team has identified. We're beginning to also take a look at Anningie - Barrow Creek, which is about 300 kms north of Alice Springs, but close to rail infrastructure. Using the tin-tantalum, which is a common approach to start to test for lithium in that particular area. We will get down and into that area and start doing some work in the latter part of this year to understand what options and targets there might be at the Anningie and the Barrow Creek leases.
I guess to summarize that particular discussion, we have, we are focusing on four areas. Operational delivery, safety is a significant focus, Critical Risk Management is a tool that we're using to identify fatality risks and manage those and ensure that we have safe operations. We're very focused on achieving the guidance that we've given you today of 80,000-90,000 tons of spodumene concentrate. We will focus quite closely on recoveries and mine productivity, and that all then focuses in on delivering into our offtake contracts with Ganfeng and Yahua, two offtake partners who have strongly supported the business for a number of years.
A second piece is to look at sustained growth, so the exploration plan for 2024, the BP33 underground, feasibility study, and commencing that early works. As the data comes in from all of the work that I've described in the exploration space, begin to think about our strategy for regional exploration and growth options, hence the appointment of Pierre Malan. He will start work with us in August of this year. How we operate in the area is quite important to myself and the team. The community grants program to support the smaller organizations in and around the Finniss operations and in the Greater Darwin area will continue.
We'll also look at options for local business and associations for mutual benefit, for Core and the local business community. One of the best examples I could give you is the award of the box cut and surface infrastructure to NAC for the early works for BP33. We'll build HSE systems and processes that are fit for purpose. Then the fourth one is how we work with our people. We'll take a contemporary approach to workforce management. We'll look at the way we design jobs. We'll look at opportunities to implement ways of working that are safe, sustainable, that people enjoy working with us and are focused on delivering great outcomes for the business.
We'll foster diversity, and we'll continue to build a strong and capable team. Look, at that point, I will pause and hand back to Darcy to manage the questions that you may wish to ask.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Hayden Bairstow from Macquarie. Please go ahead.
Good morning, Gareth. A couple of ones from me, mate. Just firstly, on the fine sales in 2024, are we just assuming a 1% grade and hence the one divided by six in terms of the discounted price to just sort of back out what your cash cost assumptions are?
Look, the contract is written based on the carbonate price. It's probably a new option for Core, and we're working quite closely with some commercial partners to identify the way that we will place that material and the pricing mechanism for that.
Yeah, okay. Just on the mill, keen to understand where these fines, are they coming out basically at the front end or after the DMS circuit? You're actually running the plant off pretty fast, and you're just getting a much lower recovery rate, and that's been where part of these issues are in terms of mining versus mill capacity?
Yeah, no. Good question. The way the material presents to the plant, goes through crushing and then to the DMS. That fines material is actually taken out of the feed into the plant immediately upon entry to the DMS circuit. It's not consuming operational space within the DMS itself, but it is a much higher volume stream out to the tailings facility than we anticipated.
Okay. With that in mind, when you obviously got BP33, I presume it takes, what, a year to build it at least, once you approve it. How much life have you got in Grants now with the new mine design, et cetera? When do you run out of mine ore there versus ramping up BP33?
We're looking at a transition from Grants to BP33 in the 2025-2026 year period.
Yeah. Okay. All right. Perfect, I'll leave it there. Thanks, mate.
No worries. Thanks, Hayden.
Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.
Hey, Gareth. Thanks for the call. I just had a question on BP33, whether I guess, the scope of, you know, in terms of mined output, is still open for question or is that relatively fixed still?
Yeah, look, good question. I think that's really a subject for the feasibility study. when we take a look at BP33, we think about de-risking it from two perspectives, particularly around kind of production and the, and the mine plan in particular, which is where your, where your question is directed towards. The first is to complete the feasibility study. We're using a company, Australian Mining Consultants, to help with that particular process, as well as some other experienced consultants in the mine planning, you know, geotech, et cetera.
The second thing that we are doing is, and not starting yet, but we're about to start a conversation with mining contractors, underground mining contractors, to see who might be interested in working with us on BP33. We'd like to engage them early to take a look at our plans to make sure they're practical and they will work.
Excellent. All right, excellent. Thank you. In terms of, I guess the idea that you're looking at the screens, is that essentially to catch more of that fines material, and then you'll feed that into the DMS circuit?
Yeah, it's about tuning the plant, understanding what the top size feed is that sort of optimize the plant. Where is the fines being generated? Is it kind of the ore characteristic itself? Is it some way in the way the material is being crushed through the crushing circuit? Is it actually the way that we're managing it in the DMS itself? That's the reason for taking a look at the more the top size rather than screen measures. Screen measures how we're kind of managing that, if that makes sense.
Excellent. No worries. Thank you very much. I'll pass it over.
Thanks, Tim.
Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.
You know, I'd say the focus now-
Good day, Gareth. Thanks for your call. Maybe just on the mine grades and sort of reconciliation, can you just talk to a little bit of that to tie off the recovery and the fines talk? What are the grades, and how's that reconciling so far?
I think generally what I would say is that the grades seem to be matching with what we expected. In the early phase of the mining operation, where we're probably seeing maybe a little bit more ore than we expected, but I wouldn't get too excited about that. All I'm sort of pointing out is that it's as we expect. Our the grades that we expect to see in financial year 2024, around 1.46% and in financial year 2025, 1.35%.
Yeah, perfect. Thank you. Just when it comes to the offtake, it's, you know, reduced volumes versus what you expected previously, what does this mean for the offtake? How do we model it out? I guess, you know, part of that is also the Yahua ceiling prices. How do we, you know, factor that in over the four-year term of the original contract?
I think the conversations with Yahua and Ganfeng have continued. Now that we're able to actually talk about what this schedule looks like, we'll have more detailed conversations with them in that space. Generally speaking, the conversations have been good, and they've been quite flexible in managing the early-stage nature of operations. They're very familiar with this. They actually know and understand how concentrators start. I don't think they're overly surprised, but we need to have a more detailed conversation about what that looks like in the coming years, to your point.
Yeah. Roger. Thanks, mate. Thank you.
Thanks, Levi.
Thank you. Your next question comes from Alex Papaioanou from Citi. Please go ahead.
Hi, Gareth and team. A few questions from me. If my 2024 volume guidance is lower than previously assumed, what plant recovery has been assumed in the guidance? Can you talk to the assumptions that were made in the wet season mining in the original study?
Sorry, wet season mining in the original study?
In terms of, what were your mining rates that you'd assumed around the wet season?
Oh!
- in the DFS?
Okay, no problems. I misunderstood. I thought you were talking about a different recovery during that period. We are expecting to see recoveries around the 50%, moving forward, until we actually are able to put some of this improvement work in place. We still see some upside in recoveries. You know, you could probably expect something somewhere between what we've actually seen in the past quarter, for the period, until we start to see the benefit coming out of that improvement work. Look, I think a number of operations have gone through a similar journey, and we just need to do the same thing to do the work to see where we can get to from that particular point.
Generally speaking, the, we don't anticipate or the feasibility study didn't anticipate too much mining at all, during the wet season. What we're finding is that actually you do need to be able to manage and mine during the wet season. We have reduced our productivities and expectations around the wet season. To a degree, that's what's actually driving the financial year 25 numbers. We expect at or better performance out of the mine and out of the processing facility in that financial year 25. The timing of the ore and the mining sequence means that, we're seeing the back end of the year with accumulation on the ROM and not being able to just process all of that material through the plant during that period.
Great, thanks. Very clear. AUD 45 million-AUD 50 million is a lot to spend before FID. What else do you need to get comfortable with for BP33 before the FID can proceed? When could we potentially see first production if the FID goes on ahead of Q1 CY 2024?
Yeah. Sort of in that first comment, let's just think about what the scope of work is for that surface infrastructure. The way that we've split the project is into two pieces. The initial early works is a box cut. That's actually, you know, quite a reasonable excavation. It's covered with an engineered product and then backfilled. We're also putting in dams and other infrastructure in that area. There is a reasonable amount of equipment that is going into that early works.
Then the second part of the question, I think, you know, the purpose of doing the feasibility study is to understand exactly what the schedule will look like, to check this transition from grass and BP33. We'll keep the market informed on progress on what we find, and as those details become available, we'll begin to announce them.
Perfect, thanks. I'll pass it on.
Thanks, Alex.
Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Morning, Gareth and team. Thanks. Thanks for having me this morning. My first one. I'm just kind of following on from some of the previous questions around wet season management. Can you just remind us, do you have any room around the Grants Pit to build another mine water dam?
The AUD 11 million that we've spent has gone into pumps, pipes, upgrading some of that infrastructure. We're beginning to continue to improve the quality of the sedimentary dams to actually provide additional storage in some of the mine water dams. That work will continue over the next year.
Great. Thanks for that. Then, like, the second one, just around exploration, obviously still being a very big focus going into 2024 and likely 2025. I guess now that you've got, you know, pushing a 20-year sort of resource life at the moment with the current resource and plant, you know, how meaningful would you have to see a new discovery being before you start thinking about, you know, expanding that plant or building another one? You know, when would you think about doing that? If, if you did go down that path, would you need to see the current plant performing kind of closer to main plant expectations before you went down that path?
Yeah, I think, look, good question, and I like where it's heading, Hugo. It's absolutely something that we're focused on as well. Look, I think in the near term, we need to get our mining operation up and running. Get the plant running, understand what's required to improve recoveries, understand Grants and that transition to BP33, and establish the BP33 mine. In parallel to that is some work that's going on to understand where the next mines may be. That's a combination of the exploration work and the study work that I managed. So sorry, that I mentioned. More longer term is to look at some other prospects around Shoobridge and the Anningie Creek to see where what they may look like.
I think at the end of the day, we need to do that work and understand what that broader range of options may be, and then we'll come back and start defining that growth agenda.
Great. Thanks for that. Maybe if I could just ask one more around what your material movements were in the quarter, and then I guess just broadly, FY 2023. Just how impacted, I guess, the mine movements were versus schedule in terms of the wet season outages?
Look, I think, one of the ways to take a look at that is the mine is in startup. We were hit with quite a heavy rainfall event in the back end of December that filled the pit. Really, you know, that 3 months of not having access to the bottom of the pit and slower rates on the benches in the upper levels have meant that it hasn't been... well, it's been a difficult period for the operations team. I think for us, moving forward is what we should be focusing on for financial year 2024 and some of our targets in that space.
Thanks. Yeah, that's fine. I'll come back if anything else. I'll pass it on. Thanks.
Yeah, no problems. Thanks, Hugo.
Thank you. Your next question comes from Al Harvey, from JPMorgan. Please go ahead.
Good morning. Morning, Gareth. Just following up on the fines material. Just wanted to clarify, what network's been done on spodumene mineral size across the project. I'm just trying to understand whether this is kind of exclusive to the Grants pit or the resources at Finniss at present. I guess, just on following that, just, you know, what kind of split you're seeing in the lithium report into the micas and the work going on there?
Yeah. I think the best way to answer that question is, we're doing a lot of work right now to understand where the fines are coming from and how they're liberated. The initial study work indicated sort of a little above 20%. We're seeing, as I said earlier, sort of 35-40%. I think to your point, it's the first time anyone has mined and processed any material out of the Finniss district. We're in the process of designing a series of studies to understand exactly what is happening in that space and define the improvement pathway. We do know right now that we can excavate and there's a good chance we'll be able to sell the fines material.
That's a great interim measure. We know that there's some options in the plant for tuning right now. You know, the ferrosilicon dosing, for example, how the, how the various different flows through across screens, et cetera. We're doing that metallurgical test work at the moment. Micah, to your more detailed question there, features into that, and there's a facility that we're working on commissioning in the, in the plant right now to see if we can address some of that.
Great. Sorry, did we have timelines on some of these studies around the filter press, the full float circuit? Just any kind of guide there?
I think the short answer to that is no. I think let's just please be clear that the plant's been running for about 14 weeks on and off. The longest duration would be a week or two. We've been running on a campaign-type basis. This is really the earliest we could come out with any particular guidance on what is happening at Finniss and the processing facility right now. We're just highlighting that these are projects that we're in the process of initiating right now and starting to you know, for example, just in the last weeks, we've started to engage with Primero to say, "Look, let's do some study work on these options." You know, what are the options?
Let's do the study work on the options. We'll, in parallel with that, we'll do the metallurgical test work that you've, kind of alluded to, and then we'll actually define the program after that.
Sure thing. Yeah, I appreciate it is very, very early stage. Just one more before I queue up again. Just looking at the royalties in 2024, looks like the Northern Territory have a 20% net value of production, and 2024 is looking at like it's about 8%-10% of gross revenue. Can you just kind of step us through, you know, the bridges to those, between those two, and whether or not we're expecting that to be maintained beyond FY 2024?
No problem. Look, thanks, Al. What I might do is ask Doug if he could respond to that particular question.
Look, thanks for that. We've given the 8%-10% just because it is a convoluted net value method. 20% of the net value, as you say, it's not based on, as we outlined in the paper, in the release, it's not based on any sort of accounting number. You do get deductions which are explained on the NT's website, if you just look it up. It is a relatively complicated formula. Unfortunately, it's not based on sort of EBITDA or any sort of accounting metric that you might be familiar with. It will change over time.
I would caution against just using 8%-10% going forward because it is profitability-based or net value, as they call it. The other thing I'd say, which I think we mentioned in the release, is that they are going through a consultation period, they being the NT government. There's been a lot of push, both from industry participants and also within the government, recognizing that other states, particularly WA, is based on the ad valorem method, as you know, of 5% of royalties, sorry, at 5% of revenues. That consultation period is happening right now.
We don't really have an explicit time frame as to when they might come to a landing or if they might change their royalty method, but it's in process, and I think there's an appetite from the government to make that change. Not to say it will happen, but they're certainly very open to it.
Great. Thanks very much.
Thank you. Your next question comes from Sam Catalano, from Wilsons Advisory. Please go ahead.
Hi, Gareth. Look, just stepping back from some of the questions that we've had already, notwithstanding the fact that you're, you know, ramping up in the early stages of plant commissioning, for example. It seems like you're chasing your tail a bit with regards to the robustness of the due diligence that was done, you know, previously into the project as a whole. In my experience, typically, you know, there's a lot of gremlins that typically will take a lot of time to come out, and we're not just talking about things like recovery rates through a DMS plant.
Yeah, how comfortable are you that, you know, what you've sort of uncovered to date and a sort of circa 100,000 ton per annum, you know, new nameplate, if you like, is enough of a kitchen sink, or, you know, are you concerned that perhaps, you know, there'll be other things as you get into, you know, how you're going to develop BP33, for example?
I think it's always worth keeping in mind that a feasibility study is a theoretical construct based on the best information that's available at the time. As we all know, when you start up, you know, you start to understand exactly what is in the ground. You put it into the plant that's been designed and constructed, you find out how it operates. You know, you'll find issues in there just associated with fairly standard delivered equipment, where bolts weren't done up properly, for example. You know, we're working through all those sorts of sorts of issues at the moment. To your question, you know, the how long do we kind of wait to come out? We've had 14 weeks of campaign operations.
That's given us a sense of where we were at. We know that our recoveries are around sort of 48%, 50% moving forward. That's a good baseline to start and to then design a series of pieces of work to enhance and improve. This is the early stage of an operation, so there'll be a lot of activity in that space during this period. I'd also say that I've worked in quite mature operations that are also continuing to improve and upgrade, and something happens in the mine that causes a process upset, et cetera. That's the nature of operations, and we're working on moving into that steady operations space.
I think the other piece to kind of consider is Core has moved very quickly with this minimum viable project. The smallest resource, low capital entry point into a favorable market. We've been generating some cash, and we're currently working on that transition from Grants to BP33, subject to FID approval.
Thanks. Just quickly to follow up, just on OpEx. Obviously, we've talked a bit about the recovery being below study rates and, yeah, mining rates as well. What do you think is the biggest impact, you know, the delta between the sort of AUD 400-500 a ton to the AUD 1,100-1,200 that you're looking at the moment?
Yeah, look, well, I might ask Doug, if he'd like to answer that question.
Part of it is the timing. In the original study, it was anticipated that significantly more of the overburden for Grants would have been moved in FY 2023 than actually happened. The issues we've had with the wet season are well documented, that's the main driver of that. A lot of the stripping costs, which are obviously deferred, they're not necessarily impacting the C1 costs, but they're impacting cash costs in FY 2024, would have been in FY 2023. The crushing and the processing costs have come in a bit higher. Not hugely materially so, but it's mainly around the mining.
I think the unit rates that were assumed in the study were not far out. It's just the volume of material and the timing of when that's moved. As I said, it was expected that it'd be in 23, now it's in 24, less so in 25. That's, they're the main changes. A bit higher on, you know, site support and dayworks-type rates than was studied. The rest is really denominator driven.
if you were talking sort of 170,000-180,000 tons in the study when you got to full ramp up, and that was obviously envisaged that it would be very early on, certainly in FY 2024 and 2025, and then you're talking, you know, a number that's nearly half that or around 90,000, clearly, that's going to have a significant impact on your unit cost situation. That's the main driver, and the rest is largely timing and some inflation in the costs. The inflation in the cost is not anywhere near as impactful as the denominator.
Thanks, Doug.
Okay, thanks, James.
Thank you. Your next question comes from Jon Bishop from Jarden. Please go ahead.
Hi, Gareth. Thanks for taking my question. If I could just go back to the contract. Can I assume that it's for the, your guidance this year, it's in effect from July 1, in terms of that 50% of the material under the ceiling cap? Is that correct?
Yeah, we're in the process of working out what our, what our shipping schedule will be. As I mentioned, earlier in the call, that's a conversation that we need to have with, Yahua and Ganfeng.
Okay. Then in terms of that ceiling, respecting commercial and confidence, if I look at Visible Alpha consensus, the sort of price implied, based on production and revenue lines, looks at sort of $3,250 a ton. Are you able to give us a bit of a steer as to where the ceiling looks? Is it sort of below that number?
Yeah, look, it's really difficult to preserve commercial confidentiality and respect for our off-take partners to give too much in that space. Look, we will provide, moving forward, our average realized price in future updates. Look, if we were to put it all together, there will be some softening against spot, but we'll probably best to wait to see where we get to, and we're able to provide you with more information.
Yep. No, that's cool. Just quickly on the June quarterly, Appendix 5B there, you've got some receipts from customers. I assume that's pre any adjustment for pricing realized. When will that sort of flow through?
Yeah, I'll ask Doug.
Yeah.
Comment on that.
Good question. It is before the adjustments. You'll see that flow through in the next quarter, when the realized prices, you know, the QP, plays out.
Okay.
Yeah, obviously.
That's not been finalized yet?
No, it hasn't.
No. Okay. Can I just squeeze in one more, just to be cheeky?
Sure.
Thanks. Just a broad question. I mean, it's a reasonable lump of capital expenditure going out in fiscal 2024. Obviously, necessary for BP33 in particular, and obviously getting the mine up and to steady state. It is a big chunk of capital going towards exploration, though. I guess my question is along the line of, you know, AUD 35 million-AUD 40 million, when you're looking at potential requirements for flotation circuits and the like at the back end, is that really a judicious use of capital? I mean, you do have reasonable line of sight for mine life in terms of reserves and resource inventories at the moment. I guess I'm just wondering whether that might be better applied to getting those tons into production.
Look, I think it's a reasonable question. Let's consider the strategy is to get going and moving quite quickly. You know, Grant's Pit has a relatively short mine life. Let's get into BP33. More importantly, we've got a lot of ground to cover between Finniss, Shoobridge and Anningie- Barrow Creek. We should understand what those opportunities are and test them, and start thinking about what the broader opportunity for Core may be across those leases.
All right. Okay. No, thanks for the opportunity, guys.
No problems. Thanks, Jon.
Thank you. Your next question comes from Andrew Harrington, from Petra Capital. Please go ahead.
Thank you. Thanks, Gareth and team. Look, a couple of them have been answered. Just wanted to make sure I understand correctly, your recoveries. You're getting about 50% recoveries to spodumene, plus another 20%-30% in fines. Putting in a belt, how does that change? Putting in float, how does that change?
The work that we need to do and to check to make sure that those projects make sense. Essentially, what it means is that we're able to process and get value out of those fines before they go into the fine storage facility, the tailings dam, and recover them. Then we actually have a concentrate product that's been upgraded with additional volume.
Are we talking you then become, like, 100,000 tons of spodumene and then another 120,000 tons or 150,000 tons in fines and sales? Or what's the, what would be the rough breakup of what you actually start selling under an improved recovery scenario?
Yeah. The, with the campaign nature of the operation over the last 14 weeks or, sorry, 14 weeks in aggregate of campaign operation, we're able to talk about where we see recoveries at the moment. We're able to talk about some of the options we might take a look at to improve those. The outcome of those improvements is not clear until we do the work. The, the fines sales piece is an interim method to make sure we capture value out of that stream at the moment. Once we're able to take a look at these particular projects, do the study work, understand what the plan forward looks like, we can start to begin to update you on some of those questions.
Okay. You talked about price a couple of times, but perhaps give us a view on how you're seeing the market, and what's your take on where things are and where they might go over the next 12 months?
Sure. What we're seeing at the moment is still quite strong inbound interest, despite asking people just to give us some time. We've got a commission get up and running and find out what volume we have to offer the market. We're still getting regular engagement from interested customers. It does appear that, you know, the broad kind of conversation in the market around being in structural deficit is probably true. You know, we're seeing people interested in purchasing the fines. We're seeing people that are still interested in other products, so concentrate, DSO, et cetera. At the moment, we're enjoying quite a healthy market from that perspective. And it's hard to see ...
When we talk with some of those customers' plans, they're talking about multi-year plans. It looks like there'll be demand out into the near future, at least.
Okay. Lastly, if I may, a hydroxide plant have been sort of mooted, you know, a few times. Is that something that is now deeply in the back burner or even, or is something that's still under consideration?
I made a few public comments on downstream processing. At the moment, Core's focus is becoming a mining operator and understanding what opportunities there are to produce concentrate across the leases between Finniss, Shoobridge and Anningie Creek. That's our focus at the moment.
Okay. Thank you for your time, guys.
Thank you.
Thank you. Your next question comes from Matt Starick from Red Door Capital. Please go ahead.
Hi, Gareth. Just a quick question. It's a pretty simple one, I think, but, going from when you do develop BP33, is that much easier to mine during the wet season?
Yeah, look, very good question, one that is absolutely a subject of the feasibility study. I think on the one hand, look, it's underground, we're putting a cover over the box cut. There's a lot of, you know, that surface infrastructure that we've talked about. It is a lot around managing surface water in the area so that you have good access to BP33. We expect it to be a little easier to mine, every underground mine has a water management plan and dewatering process in place. The feasibility study will take a look at what we think some of those inflows will be and what infrastructure is required to manage that.
Okay, thanks.
Thank you.
Maybe we could have perhaps two more questions.
Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Oh, hi, Gareth and team. Thanks for the follow-up. I just wanted to ask one on the royalty since it came up. Great that potentially the Northern Territory is maybe changing that structure and makes it a much cleaner comp versus some of your peers. I guess as it stands, going back to your original study, you'd hoped that the state royalty would apply to a DSO product under a sort of internal transfer mechanism. Can you maybe just talk us through how the royalties applied this quarter? Based on what you've reported, has that been the case, or has the royalty been applied on the basis of export spodumene prices? Thanks.
A really good question. I'll ask Douglas if he could comment on that one for you.
Yeah. Initially, what was agreed between the company and the NT government is that it is on a DSO basis, so it's sort of a back-calculated assessment. That's valid until the end of the next quarter, Well, the quarter we're currently in, till the end of September, and then it's for discussion as to whether it's gonna be based on spodumene or DSO going forward. Obviously, it depends on, you know, you're assessed, because we only sold one lot of DSO and two lots of spodumene, it then becomes an assessment and an agreed value for that DSO, if you like, to calculate the royalty. It makes it, you know, probably more complicated to do it that way, particularly if you are selling spodumene going forward. That was what was agreed initially.
Great, thanks. Just so we've got a little bit of color on that process, I mean, for this quarter then, how have you gone about calculating that sort of back calc for the DSO? If you kind of use the one parcel of DSO you did sell as kind of an approximation in terms of a percentage discount to price or value add sort of discounts or maybe, you know, how could you talk through how that's been applied? Thanks.
Yeah. You're spot on. That's our reference point that we have, obviously, and we disclosed what that number was. I think it was AUD 951 a ton, and you obviously have to look at what the spodumene price was at that time to look at the relativities. Then it becomes an assessment of logistics, really. What does it cost to get the extra material to port and then to China? Obviously, you're moving in that royalty calculation at least-
Y ou know, probably 7 x as much material, you've obviously got the concentrator processing costs that are not applied in that case, if you know what I mean, because you're theoretically bypassing it.
Yeah, that's clear. Thanks. Just one more, if I could, on the royalty, just around the timing of the Northern Territory proposed change. I presume that's probably a lot more longer dated, so would we expect to then see the next update around that, maybe with the next quarterly, as to whether you've gotten that sort of waiver to apply to DSO going forward or not?
Based on the workshop forums that I've attended, they are targeting it within 12 months. I have no real feel for whether that's achievable within the logistics of getting legislation through government, having gone through a consultation process. That's what they've told us, that they were targeting 12 months, and that process probably started last month. That gives you an indication, but does that mean they're gonna have ad valorem in place from 1 July next year? I, you know, obviously, I can't guarantee that because it's based on how quickly the government moves.
Yep. No, that's clear. Thanks for that, team.
Can I take one more question, please?
Thank you. Your final question comes from Al Harvey, from JP Morgan. Please go ahead.
Thanks for the follow-up. Just want to shed a bit more clarity on the exploration side of things. You've got a new exploration manager starting, and I suppose the focus is on resource drilling. Just wondering what split that 35-40 is going to resource extension and how much is going to regional projects. I guess, you know, given that all resources are open at depth, you've called that out in the preso. That does kind of imply that there's not strike extensions to anything you're seeing out around Finniss?
Yeah. The, the, that sort of AUD 30 million-AUD 40 million that we're talking about also includes study work. That will be geomet test work. It'll be some geotech work. It will be engineers designers, and others working on preliminary studies. The actual spend is still in that AUD 25 million-AUD 27 million range for exploration. The split, and let's just keep in mind that I want the team to have some flexibility in this space, so that if we find some opportunity, then we'll actually dive towards towards that. Generally, you could expect probably like 70%-80% will be associated more with proving up existing resource. The rest would be on testing other areas, so more greenfield-type work.
Just finally, that greenfields, there still is greenfields targets, I'm assuming, around Finniss, or is the move to Anningie- Barrow Creek kind of a way to where you think more opportunity is?
We're actually directing the bulk of that spend to the northern part of Finniss, in and around where Grants and BP33 is. There's still plenty of ground to be tested across the Finniss leases.
Thanks, Gareth.
Just to a follow-up to that, you can actually get a reasonable picture of that on slide 11 in the pack that we've issued. Look, thank you very much to all who've taken the time for the call today. It's an important quarter for Core. You can see that the three areas that we're focusing on is establishing the mining and processing operations at Grants. Progressing with the development of the BP33 project in two ways. One is to get going with some early works, and the second is to complete the feasibility study based on the more than doubling of resource that we've seen at BP33.
The third is to start testing and looking at further growth options for Core Lithium. Then the background to that is to build the capability and capacity of the organization to deliver on that. Work closely and very well with the local communities and ensure that we have a safe operation and that they are comfortable having in their area. Thank you very much to each and everyone for dialing in on the call. I look forward to further conversations as the operations in and around Finniss matures.