Investigator to begin resource expansion drilling at Paris, silver market approaches huge deficit

Investigator Resources (ASX: IVR) is poised to begin further resource drilling at its Paris silver project as the precious metal heads for its biggest deficit in decades.

The Silver Institute predicts global demand for silver will increase 16% this year to 1.21 billion ounces, which will create the largest market shortfall seen in decades of 194Moz, up substantially on the 48Moz deficit in 2021.

Investigator’s Paris project in South Australia already hosts the highest grade undeveloped silver deposit in the country, and this is expected to grow with resource expansion drilling kicking-off this week.

Paris has a JORC resource of 18.8 million tonnes at 88 grams per tonne silver and 0.52% lead for 53.1Moz silver and 97,600t lead.

Definitive feasibility study underway

A definitive feasibility study in underway for Paris and will build on the results from an earlier pre-feasibility study that was released in November last year.

The study gave Paris a pre-tax net present value range of $202-245 million and 47.9-54.1% internal rate of return.

Capital expenditure was estimated at $131 million to develop an initial five-to-seven year open pit operation and a simple processing circuit.

Using a scenario of mining 8.6Mt of ore with an average grade of 128g/t silver and producing 26.7Moz over the life-of mine, the operation is forecast to generate $969 million in gross revenue based on an average $34.3/oz silver price.

Another scenario of mining 10.9Mt of ore grading 109g/t silver to produce 29Moz was also analysed. Using a $38/oz silver price, this scenario would bring in gross life-of-mine revenue of $1.18 billion.

The life-of-mine pre-tax free cash flow range is $487-602 million with average all-in-sustaining costs of $17.45/oz.

These pre-feasibility results were based on silver only, with lead to be included in the definitive feasibility study.

Diminishing silver supply

Global silver production is about 900Moz a year.

Mined output from primary silver mines plunged 12% to 210Moz in 2021.

Like most metals China dominates global output of the metal, followed by Australia, then Russia.

Investigator noted that any reduction in Chinese and Russian exports would place further pressure on an already tight market.

Meanwhile, demand for the precious metal continue to rise due to its necessity in technologies assisting the world’s transition to net zero.