Resources for Investigators (ASX: IVR) is set to begin new resource drilling on its Paris silver project as the precious metal heads for its biggest shortfall in decades.
The Silver Institute forecasts global silver demand to rise 16% this year to 1.21 billion ounces, creating the largest market deficit in decades of 194 Moz, up substantially from the deficit of 48 Moz in 2021.
Investigator’s Paris project in South Australia already hosts the highest-grade undeveloped silver deposit in the country, and that is set to grow with the start of resource expansion drilling this week.
Paris has a JORC resource of 18.8 million tonnes at 88 grams per tonne of silver and 0.52% lead for 53.1 Moz of silver and 97,600 t of lead.
Definitive feasibility study in progress
A definitive feasibility study is underway for Paris and will build on the results of an earlier pre-feasibility study published in November last year.
The study gave Paris a pre-tax net present value range of $202 million to $245 million and an internal rate of return of 47.9 to 54.1 percent.
Capital expenditures were estimated at $131 million to develop an initial five to seven year open pit operation and simple process circuit.
Using a mining scenario of 8.6 Mt of ore with an average grade of 128 g/t silver and production of 26.7 Moz over the life of mine, the operation is expected to generate 969 million dollars in gross revenue based on an average silver price of $34.3/oz.
Another mining scenario of 10.9 Mt of ore grading 109 g/t silver to produce 29 Moz was also analyzed. Using a silver price of $38 per ounce, this scenario would generate gross revenue over the life of mine of $1.18 billion.
Life of mine pre-tax free cash flow range is $487-602 million with all-in average 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.
Decrease in silver supply
The world production of silver is about 900Moz per year.
Production mined from primary silver mines fell 12% to 210 Moz in 2021.
Like most metals, China dominates global metal production, followed by Australia, then Russia.
The investigator noted that any reduction in Chinese and Russian exports would put additional pressure on an already tight market.
Meanwhile, demand for the precious metal continues to rise due to its need in technologies aiding the global transition to net zero.