Investigator Silver Ltd (ASX: IVR) has released a definitive feasibility study (DFS) into its Paris silver project in South Australia, saying a mining operation would cost $260 million to build and pay itself back in just 11 months.
The ASX silver company said in a statement on Friday that the mine, on the Eyre Peninsula, would generate strong cash flow from an open-pit mine using contract mining operators.
Numbers looking strong
The 11-month payback was calculated using a spot price for silver of US$80 per ounce, while the current spot price is US$92.07.
Investigator said every US$1 increase in the spot price would translate into a $42 million increase in life of mine cash flows.
Investigator Managing Director Lachlan Wallace said the study indicated that the company had a solid project on its hands.
He said:
The feasibility study confirms Paris as a tier-one, high-margin, finance-ready silver development project with strong leverage to the silver price and a practical near-term pathway to silver production. The project is a conventional low-risk development â shallow open-pit, contract mining, and whole-ore leach to produce silver doré; prioritising operability, schedule certainty and a reliable ramp-up. Importantly, the study outcomes are underpinned by a staged mine plan designed to bring forward higher-grade, lower strip ore, build stockpiles and strengthen resilience through the funding and ramp-up period. The development funding estimate includes appropriate allowances and contingency to support a robust, fully-costed funding plan.
Mr Wallace said the company’s focus would now swing to development, taking the designs through detailed engineering and contracting, “to firm up execution certainty, progress permitting, and prepare for financing”.
This phase would also include a high-density drilling program targeting the first three years of mining, “to strengthen grade confidence in the early cash-flow window and support a faster lender process to deliver more competitive financing outcomes, which includes pricing, covenants and overall terms”.
Mr Wallace added:
Our objective is clear â move rapidly and methodically from study into development, tighten execution certainty, position Paris to be construction-ready and then look to hit the go-button on building our world-class asset into Australia’s leading, pure silver mine.
The DFS said the breakeven price for the mine was US$37.35 per ounce of silver, with the mine to operate for 11 years, including construction, mining 1.5 million tonnes of ore per annum under the current plan.
Shares in the ASX silver company were steady on Friday at 12 cents apiece. The company was valued at $238 million at the close of trade on Thursday.
The post This major new silver project will pay itself back in under a year its proponents say appeared first on The Motley Fool Australia.
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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.