Hello, and welcome to Core Lithium's September quarter investor call. Today's call will start with an investor presentation, followed by a question-and-answer session. Participants on the call will have the opportunity to ask questions by pressing star one on their telephone keypad. Participants on the webinar will have the opportunity to submit written questions through the web portal. I will now hand the call over to Core Lithium CEO, Mr. Paul Brown. Please go ahead.
Hello, and welcome to Core Lithium's September quarter update. I'm Paul Brown, CEO, and joining me is James Virgo, my CFO. Please note the usual disclaimer, and we'll now hop into our presentation. The September quarter was our first quarter since processing operations ceased at Finniss, and our site now has transitioned into a full-time care and maintenance phase. As I've said previously, the site remains in a light-touch care and maintenance, and, you know, should the market uptick, we will be able to restart in a relatively short space of time. Our focus has been delivering on our growth strategy. We remain fully compliant with all of our environmental obligations at Finniss, and pleasingly, across our business, we haven't recorded any injuries.
Our restart studies are progressing really well, and pleasingly, we've managed to update our ore reserves, to incorporate a more up-to-date, set of modifying factors. Our balance sheet remains strong. We remain debt-free, and we're up to closing out a number of one-off costs linked to the suspension of the operation. Drilling at Shoobridge Project has revealed exciting gold potential across a 4.5 km prospective trend, and we made an investment into Charger Metals and a conditional offer of a 30% of their Bynoe Project. Moving to sustainability. Sustainability remains critical to us. At the moment, we're preparing for the Northern Territory wet season. We have a fully approved mine management plan from the regulator and a very competent team to manage through the wet.
I've been busy meeting with ministers and members of the Northern Territory government, establishing relationships with the new government. We have just had a transition to a new government, but again, you know, thanking the outgoing government, and certainly had a very warm welcome and really good engagement with the new government. We continue to have, you know, great support, you know, for growing in the region and certainly restarting Finniss from the government. We remain Northern Territory's only lithium mine and we have great support within the local community also. So just moving to our ore reserves. We updated our ore reserves in September, seeing strong growth in our BP33 deposit.
We've managed to lift that from 3.9 million tonnes to 8.7 million tonnes, with a grade of 1.4% Li2O, so a really strong, positive result, and certainly this deposit, you know, cornerstones our restart strategy. The open pit at Grants will provide the ramp up ore feed once operations commence, and combined supports a notional operating mine life of around about 9.5 years. We didn't focus our reserves on the smaller deposits, and further work is required, which is ongoing. I think I'd like to point out that, you know, certain assumptions used in the ore reserves were conservative and based on historical data from the work undertaken to prepare the reserves. A number of opportunities and areas of focus was identified.
These items will underpin the work to be done in the coming months as part of restart study. So, really good level of focus, and again, commend the team for what's been delivered there. As part of our study, we'll also update our life of mine plan. I'll hand over to James to discuss our balance sheet and financial update.
Thanks, Paul, and hello to everyone. I'll briefly add a bit of color to the Core Lithium's balance sheet and cash flow. The quarter ended with a cash balance of AUD 61.3 million, and Core remains debt-free. I'll walk through a couple of the key movements in the cash flow during the quarter. Given that both Paul and I are new in our roles, we've prioritized addressing some legacy matters and the transition to paused operations at site. It's been a complex quarter regarding cash flow reconciliation, with several one-off and non-recurring items in the quarter. These were all anticipated and aligned with our budget expectations. One-off, non-recurring payments relating to the transition and site included contractor payments and some termination fees. These relate to the cessation of operations in late June. Some staff-related redundancy costs of AUD 1.2 million.
Royalty payments for the June quarter, which flowed in the September quarter of AUD 4.8 million. These were in line with expectations. Some non-recurring CapEx for the purchase of some generators at site. These were purchased to reduce long-term operating costs. I'd like to reiterate, for CapEx, the company has a strict process to review the costs, and there's an ongoing effort to reduce operating costs and be disciplined with our capital management. There will be some minor CapEx in the December quarter for water management infrastructure, but that should be minimal. During the quarter, we did repay approximately AUD 1 million for some unused grant funds received under the Modern Mining Initiative, and that closes any payments relating to that initiative or call.
From a recurring perspective, Finniss site care and maintenance was AUD 2.3 million, and there was some exploration, as Paul mentioned, at both Finniss and Shoobridge. Cash for the quarter was impacted by unfavorable, unrealized foreign exchange movements, relating to the Aussie dollar versus US dollar, and there were some working capital movements as expected. When these one-off costs are added back, and including the unfavorable FX, these accounted for about 75% of the expenditure in the quarter, and we expect the go-forward to be reduced significantly compared to September. We continue to focus on strict compliance with our budget and capital allocation. I would like to note that there's a final quotation price payment that will occur in the December quarter, and that's now flowed in October for AUD 3.5 million.
The last point I'll touch on balance sheet is that we still retain approximately 5,100 tonnes of spodumene concentrate on site and 75,000 tonnes of fines, which are available for sale when market conditions are right. With that, I'll hand back to Paul.
Thanks, James. So let's move to restart study, and I'll provide an update on how I'm thinking about that. But there's certainly been plenty going on, a lot of work behind the scenes. Our reserve estimate was a really important step. Where we're sort of focusing our time and effort at the moment is a detailed flow sheet evaluation. And I will say, you know, we have a tremendous amount of quality data from operating the site. And if you look at site performance in that sort of last, you know, two, three, four months, we had really good site performance. We had really good recoveries, et cetera.
So we've got a very solid foundation to evaluate our flow sheet, and certainly, you know, add in those optimization opportunities, which is currently underway. So the flow sheet will be supported, you know, by a bunch more test work, you know, engineering, validation, and third-party assessment. The mining study for BP33 is also progressing, with a big focus on OpEx and CapEx cost reduction, cost efficiencies, and how we're planning on executing, once we get underway. I've appointed two key senior people recently. First is James Bruce. He's our newly appointed Chief Operating Officer. I'm really pleased to be able to have James come and join us. James has a wealth of underground operating experience in his early to mid-career, and certainly has progressed, and operated, you know, on a global scale.
He also has a, you know, a very well known to the market, and operated, you know, in areas like sustainability, et cetera. So we're really pleased to be able to attract James, and again, welcoming him. Mike Di Trento is the Head of Processing and Operational Readiness. I touched on Mike briefly, but certainly he has operated, you know, three or four of the key assets here in WA, or lithium assets here in WA. So he knows what works and what doesn't. And again, someone that's very practical, likes to keep things simple, but also backs up things, you know, through validation, engineering, test work. So we're really pleased to be able to attract those two key appointments.
We certainly don't necessarily need to be bringing on too many more people. We've got the right balance of people to deliver on our next steps. But again, welcome to those two. We continue to monitor the market conditions. I think pleasingly, you saw Rio Tinto and Pilbara Minerals acquisitions. They're certainly looking to build their lithium business. You know, that's a positive signal to the market. A major investment just recently by General Motors in the Thacker Pass, which is a U.S. deposit, clay sediment deposit, is another good signal. We've also seen some supply starting to come out of the market, which in time will have a positive implications for price. You know, Our ongoing external engagement remains really strong. We're always engaging with our customers and potential new customers.
There's a lot of interest in our products. I've previously touched on before, we do have a very high quality, coarse-grained spodumene product that is highly sought after. We've also been talking to current potential investors, so, you know, a lot of good, a good engagement and a lot of good, solid interest in our organization. We'll certainly continue to stay close to the market and our offtake partners as study progresses, and no doubt provide market updates when necessary. As far as our study work, we remain on track for release in the first half of 2025. Just moving to the next slide. Exceptional multi-commodity potential. I get a lot of questions on how I see value through exploration.
I think I view the exploration as a, you know, a smaller subset of our main business, but it certainly has to deliver value. We are spending, you know, we are spending money, so it's a big focus of ours to ensure that, you know, that value is created, you know, through smart exploration. I was out on site this week with James and our geology team at Shoobridge. There's nothing better than walking the ground and talking to the team and really seeing what's going on out there. Pleasingly, we're operating, you know, very safely and sustainably, which is, you know, critical. We have great relationships with our landowners, and certainly, you know, access to these areas wouldn't be possible without them. So a really strong focus on safety and our relationships.
The majority of our drilling was at Shoobridge this quarter. You know, Shoobridge is prospective for gold and of course lithium, and lithium remains you know our key focus. The tenement itself is located a 160 km south of Finniss by road. It's only 10 km from the Stuart Highway and around about 60 km from ore processing facilities in that region. We've reported lithium and tin mineralization in our program. I think the most exciting results are our gold, though, with shallow, high-grade intersections up to 1 km apart, certainly supported by historic results across a 4.5 km trend. The region itself hosts six multimillion-ounce deposits, all within a 100 km of where we are.
So we are planning, you know, supported by the results of our original program, we're planning a follow-up 4.5 m RC and diamond program, which is currently underway and progressing well. You know, we want to see those results will come through, I guess, the back end of this quarter and into early 2025. The lithium, you know, remains our focus, but certainly, when you're in and around these areas, drilling, you know, we were pretty confident there was some potential for gold. So you know, the potential to define a shallow, high-grade deposit, gold deposit in the region with processing infrastructure is something we believe we can generate an attractive return on investment for our shareholders.
So, summarizing, you know, the value proposition, you know, as James touched on, we are both new. Well, certainly James is new to his role. He's been around in the business for over 12 months, but I'm still relatively new, joining in early June. But I feel really confident, you know. I've got my feet on the ground. I've met everyone. I understand where our priorities are. You know, we appointed a couple of new strategic positions into our executive structure. So, I see things, you know, very clearly, and I'm really happy to be here leading Core.
But if you look at, you know, us as a whole, you know, we have a very valuable, well-established infrastructure, 80 km away from Darwin, or 88 km away from Darwin, and port infrastructure. Our logistics chain and things like that are very simple, proven. We know how to operate this asset. We have target exploration, generating good returns on investment. We have a strong balance sheet with no debt. We have moved through our one-off suspension costs, and they're now behind us. We have a very supportive government and local community. We are progressing really well with our restart studies, which again, have been underpinned by the work we've done with our ore reserves, and they remain on track for the first half of calendar year next year.
Really pleased to build out the team, you know, with a strong executive and well-credentialed, supporting board. I'd just like to thank the shareholders. Your support has been fantastic. I will continue to engage and provide updates as we progress in the coming months. I'll now hand back to the moderator to take questions.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Our first question comes from the line of Hugo Nicolaci from Goldman Sachs. Please go ahead.
Hi, Paul. Hi, James. Thanks for the call. I just wanted to initially follow-up on the comments you made earlier around being able to restart quickly if lithium prices rebound, and just putting that in the context of the restart study being expected in the second half of FY 2025. Do you need the study to be finished before you restart? And I guess from the early works, is there any change to the level of spodumene pricing you'd like to see before you restart?
Right. Look, we want to get the work done. You know, I think there's time to be able to do that. We certainly don't see the market sort of rebounding between, you know, now and when we get this, this study work done. We think there's real value to be driven, you know, through the study, and certainly when we get going again. I guess what I was thinking around that is we have a, you know, a really good, developed open pit that has, you know, ore uncovered already. So it doesn't take too much time and effort to be able to get back in there and, you know, mobilize a relatively small mining fleet to deliver ore to the plant. So we are focused on our study work.
So that's sort of how we're thinking about it, but certainly do have the ability, you know, to get back into the Grants pit and get going relatively easy.
... Got it, and then just on that price you'd like to see, I mean, I appreciate it's still part of the ongoing study and optimization works, but are we still thinking probably something north of, you know, 1,200 spodumene before you'd wanna be able to restart?
Look, I think everyone would be happy to see north of 1,200 at the moment. You know, others have come out and said it's a pretty big struggle at the moment. But look, we haven't got a number. You know, the work is certainly being done, and it's gonna define how we're thinking about things. As I briefly touched on, the work we did with BP33 is really sort of blowing the covers back on a number of opportunities that we see. So we're focused on how that looks and how we're going to be operating these assets in the future.
Because when we do get going, you know, we think the market will be there for us. You know, the world needs, you know, operations like Finniss. We are a very, you know, high quality, hard rock, you know, lithium asset in a great region, you know, with a relatively simple supply chain. So when we do get going, you know, we wanna operate, you know, in a sustainable manner. We've got a, you know, a nine-and-a-half-year life in front of us, so that's certainly something we wanna look to exploit.
Got it. Thanks for that, and then just one more, if I could, just around, I guess, how you're thinking about funding for the restart? You know, just assuming obviously BP33 development likely tied to that restart to get that mine life. Are you thinking about that from kind of a, you know, is there potential for ongoing government grants there as well and NAIF funding and the like, like some of your peers have historically received, and would you look to, you know, start to move some of that stockpile that you're sitting on as well to help fund that restart?
Yeah, a good question, and I think, you know, what I am finding is that there's a lot of support out there for us and for, you know, multiple ways of potentially funding this thing. But what we're really focused on is getting this work done, really understanding, you know, strategically how we're going to operate this thing, what we can operate it for, and I think that will open up, you know, multiple potential pathways of funding. As you touched on, there is support, you know, via NAIF and things like that. So we're very open. We haven't closed the door on any of those things, but the focus right now is to get the work done to enable those conversations to be had certainly at the right levels.
How I think about our stockpile is, you know, the market, you know, eventually will return, and there's value in that spodumene that's sitting at Finniss and certainly value in the fines that are sitting there as well. So, you know, when the market's there and the time's right, you know, we'll look to do something with those stockpiles. So they'll feature at our balance sheet at some point.
Great. Thanks for that, Paul. That's done.
Thank you. Just a moment for our next question, please. Next, we have Sam Catalano from Wilsons Advisory. Please go ahead.
Oh, yeah. Hi, Paul and James. Sorry, three questions, if I could. Firstly, if you could just remind us of the progress of the early works. Obviously, I think there's AUD 40 million or AUD 50 million on early works for BP33 slated to be spent. Just wanna get an update of exactly where they got to with regards to box cut and any other further infrastructure? I'll leave that there and ask questions subsequent afterwards.
Yeah, thanks. Look, you know, if you look at the site holistically, you know, we have all, you know, all the infrastructure in place as far as open pit, you know, offices, crib, workshops, importantly, a DMS plant that's been built incredibly well. And our underground development, yeah, there was quite a bit of money spent, so we do have a good head start. The box cut, I would say, is around about 95% complete. We're not looking to do anything in and around that area at the moment, but again, it sort of indicates, you know, how we're thinking about being able to get back into production. Certainly, progress the likes of BP33.
Okay, great. And so the second two questions related, I guess, is, I know the studies aren't done yet, but I wonder if you're in a position to give us any sort of ballpark range on CapEx? And then linked to that, and perhaps pushing you a bit on the funding question that was asked earlier, given that you've gone to the effort, time and effort to define 10 years of reserve base, that says to me that you're perhaps trying to open up the avenue of bank debt as a funding tool. Is that a fair comment to make as well?
Yeah, look, I think, you know, we have to get the work done. And, you know, it's the key reason why I'm here is, you know, I'm an operator and that's my background and, you know, I know how to operate assets. It's something I've done all my life and, you know, excitingly been able to have the opportunity to join Core. You know, we have all of these things in place. We have, you know, a supporting government. We have a, you know, supporting shareholders. We've got a strategic asset located, you know, very close to the port infrastructure. We've got an all-weather road. So we have a lot of good ingredients, which is really exciting.
You know, as far as funding, you know, yeah, you're right. I can't be drawn on it 'cause I don't have the answer to that, other than, you know, there's been a lot of engagement. There's a lot of, you know, a lot of good constructive engagement externally with us and certainly a lot of eyes on us. Once we get the work done, we'll be able to come out and be a bit more transparent in how we're thinking about, you know, funding. So really that's all I can say at the moment on that stuff, mate.
Yep. No, understood, mate. Thank you.
Thanks.
Thank you. Just a moment for our next question, please. Next, we have Jon Bishop from Jarden. Please go ahead.
Morning, James and Paul. Thanks for the call today. I'm just a little bit interested, and I think I asked you this earlier, Paul, around restart study. You obviously included a reasonable amount of detail on operating costs and indeed restart capital with your reserve and resource statement last month. I'm just wondering where the big levers are to reduce those numbers?
Reduce capital and operating costs, sorry, was that the question?
Essentially, yes. Yep.
Yeah, okay. Well, you know, I think if you look at some assumptions that were previously out in the market about how we were going to operate, and certainly some capital that were needed through the processing facility, et cetera. We're looking at all of those avenues, how we were operating. Previously, we had a lot of help from, you know, third party contractors, et cetera. And of course, you know, when you're operating these assets in their infancy, they're particularly challenging, like you know any asset is to ramp up. So we have all of those learnings. You know, we have all of the data that supports some of the flow sheet thinking.
You know, as I've touched on before, we have a coarse grain, you know, spodumene deposit that lends itself really well to DMS processing, and we certainly had a, you know, pretty strong recoveries as we ceased operating the mine. So we're taking all of those things into consideration. There's a, you know, there's also a bit of new technology and things out in the market to assist with processing. So all of those things are, you know, being considered. I mean, CapEx, you know, is something we think about. You know, how do we drive the right value through the CapEx that we put into the ground?
You know, return on capital invested is another key indicator that we'll be, you know, particularly focusing on. You know, I think it's fair to say that, you know, apart from Grants, we have a pretty big future in underground mining and developing underground mines. That's an area that, you know, James and his team are focused on, because I don't think this is, you know, the last underground development that we'll do in the region. But we have to do the work, but there's certainly a lot of green shoots and a lot of experience around the table that's gonna be able to drive the right outcomes.
Okay. That's helpful. The other area that I'm sort of interested to explore is you have offtake agreements in principle with Yahua and Ganfeng. You've obviously noted periodically with your disclosures that there are offtake discussions or contractual discussions around those agreements, and as I understand, it's a volume fulfillment commitment. Respecting that lithium prices aren't fantastic at the moment, nevertheless, I would argue that you are contractually on the hook to those counterparties. Can I understand where things are at with them and whether you're likely to receive some form of final resolution in the near term?
Yeah. Thanks for the question. You're right, that they are our partners, and they've certainly been, you know, very supportive partners. Ganfeng is a organization I'm particularly familiar with and have great relationships as well, and that's the only contract that we've ever supplied into. But very supportive. You know, they understand the market themselves. So, you know, I have dialogue, regular dialogue, you know, not only them, but others. So, you know, when we look to get going again, there's certainly customers that are well known to us and are supportive. But, you know, there's certainly no pressure coming from the likes of Ganfeng to do anything at the moment.
Yeah, I guess what I'm driving at is, respecting the Ganfeng have behaved, I feel, as a market observer, sensibly in recent times. I guess there is a volume commitment there, and if they wanted to play hardball, and certainly Yahua could play hardball, is there remedy being explored at the moment? Because as I understand it, the agreements facilitate them stepping into the market and buying externally, and you have potentially exposure if there's a differential between benchmark price and price paid. Now, seems unlikely, but I guess it is an exposure that I would have thought that yourselves and the board would wanna nip in the bud as soon as possible.
Yeah, I think, you know, we're not. I'm certainly not gonna get into the contractual, you know, obligations, and that's probably a question for Ganfeng. And, you know, as I said, we're comfortable where things are at, and the relationships are solid, and, you know, I think most parties probably have, you know, some of those hooks and various things throughout their structures. And, you know, what makes great partners is being able to get around the table and have constructive dialogue when each other require it, and that's certainly something that we've been able to do, you know, with both parties.
Okay. I appreciate you taking my questions.
... Thank you.
Thank you. Our next question comes from the line of Hayden Bairstow from Argonaut. Please go ahead.
Good morning, guys. Thanks for the call. It's been really useful. Just a final one, just on exploration, please? Just this whole multi-commodity strategy, given where your cash balance is at and likely funding on lithium, does it wind back a little bit to be more just lithium focused? 'Cause I mean, the business has looked at uranium, and now there's gold here as well as lithium. Where's your head at with that strategy?
Yeah. So I think good, good question, and something I've spent a lot of time on, and certainly our board, you know, is very focused on as well. And, you know, as I touched on, it's, you know, exploration is a mini business inside of our larger business, and we want to be able to generate the right, you know, the right outcomes for our shareholders. And Shoobridge is one example of that. You know, we were specifically targeting lithium. There's, you know, there's hundreds of potential peg and opportunities across that tenement, but we were fortunate enough to strike some pretty interesting gold results, which, you know, has led us to progress with a 4,500 m campaign. And, you know, at the end of the day, it's...
You know, lithium is our priority. You know, the update I originally gave around our exploration spend was, you know, 80% or 90% of that was focused on lithium, and that still remains, you know, it remains the split. With regards to Napperby, you know, we do have a uranium resource there. We're not. We looked. We still may, you know, move into some more exploratory drilling there, but, you know, given our focus at Shoobridge and our near-term exploration in that Finniss region, we certainly are pretty satisfied with our strategy. But we are a lithium miner, and that's our bread and butter, and, you know, certainly that's our focus, Hayden.
Yeah, okay. Beautiful. Thanks, then.
Thank you. I see no further questions on my side. I will now hand back to James.
Thanks, Maggie. As we noted in our call details, there's an opportunity for investors to also put questions through to us. So, there's a number of questions. We've aggregated those into buckets of questions, given the similar themes. So, I'll just run through those quickly now. So, the first question, Paul, is we received a few questions regarding the recently announced capital raising from Charger Metals. Could you just share your thoughts on that and the impact on the preemptive for the 30% on Bynoe?
Thanks. Well, we haven't given it too much thought. I think that news or the document just really came out yesterday. I mean, the Charger investment price is relatively small. So look, we'll certainly you know, assess that and what it means, and you know, talk through our assessment of that with the board in the coming week.
Cool. Another question we received was a bit of an update on the Finniss drilling results that are currently the exploration that's currently underway.
Yeah. So look, still ongoing, and pleasingly progressing well, progressing safely, so under budget, but we'd look to have results out in the next six to eight weeks, assuming that program continues to be on track.
I'll answer the next question. So we've received a question about moving our head office from Perth to Adelaide. So the answer is yes, Core moved in the middle of last year to a Perth-based office. That was all the questions that we had received, so I'll hand back to the operator to conclude the call.
Thank you. Thank you for coming into the conference call today. This concludes the conference call. Thank you for participating. You may now disconnect.