We are initiating coverage on Core Lithium (CXO) with a SPEC BUY and set an A$0.18 price target. CXO is currently optimising the re-start study for its Finniss Lithium Project in the Northern Territory. We expect the optimisation to deliver lower costs, particularly for the BP33 underground. We see a pathway to return to production for ~A$195m, utilising the existing open pit and modest upgrades to the process plant. Cash flow from a re-start will fund the development of the BP33 underground mine, which underpins a ten year mine producing 160-180ktpa of spodumene concentrate. We believe a development re-start is unlikely to be approved unless spot prices rise above US$1,000/t on a sustained basis. CXO’s Northern Territory exploration portfolio has the potential to deliver additional spodumene tonnes the Finniss project in the medium and long-term.
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