Australian lithium miner Core Lithium (ASX: CXO) has provided its annual report to shareholders for the financial year ended 30 June 2022.
In his letter to shareholders, Core chairman Greg English said that Financial Year 2022 was pivotal for Core, and marked by the transformation from mineral explorer to early-stage project developer to its pending status as Australia’s next lithium producer.
Following the completion of a Definitive Feasibility Study (DFS) for the Finniss project in July 2021, Core successfully equity funded the Finniss lithium project. With this funding in place, the Core board made the Final Investment Decision (FID) to proceed with construction of the Project.
The company continues to achieve each milestone and is on track to achieve the first production from Finniss by the end of the year.
Mining is well underway, as is the commencement of construction of the crushing and dense media separation facilities. Importantly, the company has achieved this progress despite the impact of the ongoing COVID-19 pandemic, and against the backdrop of an increasingly competitive market in the Australian mining industry which has made accessing labour, services and equipment an increasing challenge across the resources sector.
Despite Core’s progress at Finniss, Financial Year 2022 was a challenging with the ongoing effects of COVID-19. The company continues to monitor and manage potential COVID-19 implications for Finniss’ construction and other activities.
The Finniss project will make a crucial contribution to global efforts to reduce greenhouse gas emissions. The performance of the Company and the project will continue to be subject to international commodity prices, foreign exchange rates, competitive factors and seasonal outcomes. Core said it will continue its strong performance, develop the project and investigate capacity expansion opportunities at Finniss. The DFS and recent Reserve and Resource upgrades showed that Finniss has the potential to support a 12-year mine life with plenty of exploration upside.
Mr English noted that the 10.6Mt lithium Ore Reserve Estimate grading 1.3% Li2O was estimated using a US$1,250/t CIF China 6% spodumene price, which is over $4,000/t lower than current realised spot price.
Mr English said that while performance over a particular year is important – and the principal focus of market commentators and company analysts – it is frankly not what drives the board and management team. Instead, the company is focused on the long term. Short term performance is invariably affected by events outside the Company’s control, such as the COVID-19 pandemic and high inflation. Long-term corporate success requires the company to invest in growth activities. In parallel with the Finniss construction activity, Core aims to grow the inventory and mine life at Finniss.
Mr English said this two-pronged strategy would maximise the creation of shareholder value, particularly as it enables the company to leverage the infrastructure that will be in place while pursuing an aggressive exploration campaign at and around Finniss to help grow the inventory and extend mine life.
In addition, over the coming year, Core said it expects to make significant progress towards establishing new mining areas at Finniss and maintaining an active exploration program across its tenement portfolio.
Core holds more than 500km2 of tenure prospective for lithium and has significant areas of prospective pegmatites within that area. Very little exploration work has been undertaken outside the old workings, and Core has started targeting and drilling in several areas.
The company said it was conscious that a new lithium discovery within trucking distance of the processing facilities would generate significant value for the company. Regionally more than 20 priority targets have been identified and will be explored aggressively in the coming year.
Core has planned an extensive infill and extensional drilling program at BP33, Ah Hoys, Carlton and Hang Gong over the next 12 months to allow further updates to the current resource and, in due course, completion of further reserve updates.
Mr English said he was excited about the long-term potential of the project to host a long-life mining operation. Core has successfully attracted experienced and proven management, development, and operations teams given the Project’s proximity to Darwin.