Investigator Resources (IVR) - Technical Analysis and Due Diligence

Investigator Resources Ltd. is an Australian exploration company focused on the advancement of its projects in South Australia. The Paris Silver project of the company is a 100% owned epithermal, breccia-style silver deposit with a mineral resource estimate of 53.1 million ounces of silver and 97.6 kt of lead. The mineral resource estimate consists of 73% of the resources in the estimated category. The company plans on developing the Paris Silver project as an open-pit mining operation. The Paris Silver project also hosts the Nankivel porphyry copper-gold target within its mineralisation system.

Interview with Andrew McIlwain, Managing Director, and Jason Murray, Exploration Manager of Investigator Resources (ASX: IVR)

Company Overview

Investigator Resources Ltd. published a pre-feasibility study of the Paris Silver Project in late 2021. The PFS considered an open-pit mining operation with a simple processing circuit. The PFS was conducted on two operating scenarios, the first being a USD$ 34.30 price per ounce of silver and a production target of 8.6Mt of ore at an average grade of 128 g/t silver, and the second being a USD$ 38.00 price per ounce of silver with a production target of 10.9 Mt of ore at an average grade of 109 g/t silver.

The pre-tax economics based on the two operating scenarios showed highlights of a pre-tax NPV8% of AUD$ 202 million and AUD$ 245 million respectively. The PFS further showed an IRR of 47.9% and 54.1% and a payback period of 2.3 and 2.8 years. The project has a capital cost (CAPEX) of AUD$ 131 million.

The company is currently underway with exploration drilling near its Paris Silver project, which is planned to consist of 6,750 m of reverse circulation (RC) drilling in 51 holes across 6 targets.

Management

The company board and senior management of Investigator Resources Ltd. are led by Andrew McIlwain who wears the mantle of managing director (MD) of the company. Andrew is a qualified mining engineer and has held various operational, technical, senior management and executive roles.  He has been involved with various companies including Mount Isa Mines Ltd, WMC Resources Ltd., Lafayette Mining Ltd. and Unity Mining Ltd. McIlwain has also acted as Independent Non-Executive Director for Kidman Resources Ltd. and Tusker Gold Ltd. and has most recently been an independent consultant focused on corporate transactions for various companies.

Richard Hillis is the non-Executive Chairman of the company’s board. Hillis has over 30 years of experience as a geologist. He holds a PhD from the University of Edinburgh and has held various positions throughout his esteemed career including being the Mawson professor of geology at the University of Adelaide. He has also been the State of South Australia Chair of Petroleum Geology, the head of the Australian School of Petroleum as well as the Pro Vice-Chancellor.

Andrew Shearer is a Non-Executive Director of the company’s board and has held various positions in the finance and mining industries for the past 25 years. Shearer started his career as a geologist and geophysicist in the South Australian Government from where he held positions at Mount Isa Mines Ltd. as well as Glengarry Resources Ltd. Shearer also served as a Resource Analyst at PAC Partners Pty Ltd. Phillip Capital Inc., Austock financial services Pty. Ltd. and Taylor Collison.

The Chief Financial Officer (CFO) of Investigator Resources Ltd. of the company is Melanie Leydin. Leydin holds a bachelor’s degree in Business majoring in both corporate law and accounting from Swinburne University. She is a chartered accountant (CA) and is currently the managing director of Vistra Australia a provider of specialised consulting and administrative services to clients in the fund, corporate, capital markets, and private wealth sectors.

Anita Addorisio rounds out the team as the company secretary. Addorisio holds a master’s degree in accounting and is a fellow of the CPA and Governance Institute of Australia. She has over 20 years of experience in various financial roles in both private and publicly traded companies. Addonizio has a vast amount of experience in initial public offerings (IPOs), the raising of capital, acquisitions, corporate takeovers and restructuring initiatives.

Paris Silver Projects

The Paris Silver project of Investigator Resources Ltd. is a Shallow, high-grade silver deposit amenable to open-pit mining methods.  The project is located approximately 70 km north of the rural township of Kimba on the South Australian Eyre Peninsula. The project is accessible via highways as well as sealed roads.

The project underwent an extensive infill drilling program in late 2020 which served as the basis for the publishing of a mineral resource estimate (MRE) of the project.  McIlwain explains that when he joined the company in 2019, he immediately sought ways in which to advance the company. The silver price was historically low at the time of his joining but started to rise at the time the company announced it would complete the pre-feasibility works such as the mineral resource estimate. He explains:

“What I initially did was looked at what we needed to take the project forward, and we determined that we needed something in the order of AUD$ 3 million or AUD$ 4 million to complete the Pre-Feasibility work. So, we put the plan together and look, fortune favours the brave; the silver price started to move in mid-2020 at about the time we had spoken. We went to the market to raise some money and a major shareholder came in behind and was quite supportive in their placement and basically corner stoned that placement, and in August 2020, we raised $8M.”

As of the 31st of March 2022, the largest institutional shareholders of the company included Citicorp Nominees Pty Ltd. which has a 15.5% position in the company, HSBC Custody Nominees at 1.24% and Shipsters Investments Pty Ltd. at a 1.13% position.

The mineral resource estimate (MRE) of the project consists of 53 million ounces of silver comprised of 18.8 million tons at a grade of 88 g/t of silver. The project also holds 97.6 kilotons (kt) of lead that can be recovered and positively affect the pre-feasibility study of the project,  73% of the total mineral resource estimate is in the indicated category.

Mineralisation

The mineralisation of the project consists of an intermediate sulphidation mineralised body, associated with a felsic volcanic breccia system in an epithermal environment with a significant component of strata bund control. The deposit is an elongated mineralisation system, with a tubular shape of approximately 1.6 km in length and 800 m in width. The mineralisation system is situated at the base of the Gawler Range Volcanic sequence at an unconformity with the underlying Hutchison Group dolomitic basement.

On the northern side of the deposit, the mineralisation consists of a significant large package of felsic volcanic mineralisation. The deposit is predominantly breccia-hosted, intensely argillic altered, with a large amount of silica present. The Breccia system is close to the surface with the majority of the mineralisation located at an approximate depth of 110 m.

The envisioned open-pit of the project will be situated at the depth of mineralisation i.e. approximately 100 m with the northern edge thereof deepening to 140 m.

Pre-Feasibility Study (PFS)

The pre-feasibility study (PS) of the Paris Silver project was published in November 2021 and is based on an envisioned high-grade, near-surface and open-pit mining operation with a simple processing circuit.

The PFS envisions the mined ore being crushed, ground to a P80 (80% passing) 53µm and leached in cyanide solution.  Silver is recovered from the solution by Merrill Crowe precipitation. The recovered silver is then smelted to silver Dore on site. The mining operation is expected to produce approximately 2,000,000 tons of ore per annum.

The pre-tax economics of the project include a pre-tax net present value (NPV8%) of AUD$ 245 million, with an internal rate of return (IRR) of  54.1% and a payback period of 2.8 years. The project has an initial life of mine (LOM) of approximately 7 years and will return a pre-tax life of mine net operating cash flow of AUD$ 602 million.

The initial capital cost of the project is estimated to be approximately AUD$ 130 million which consists of the pre-production mining at AUD$ 5.2 million, the processing plant at AUD$ 43.2 million, the infrastructure costs which include a power plant at AUD$ 46.8 million, AUD$ 20.4 million in indirect costs and a contingency of AUD$51.5 million.

The all-in-sustaining cost (AISC) of production over the life of mine (LOM) is AUD$ 17.45 per ounce of silver. The detailed nature of the published PFS of the company will enable it to easily progress the project to a definitive feasibility study (DFS) stage.

Future

Investigator Resources Ltd. will continue to advance the Paris Silver project towards the definitive feasibility study (DFS) stage in the coming year. The work still to be completed to enable the DFS is estimated to take approximately 14 months. The work includes a diamond drilling campaign, which is planned to consist of 6,750 m of reverse circulation (RC) drilling in 51 holes across 6 targets.

The company will also continue its investigations to identify a sustainable source of water for the project. Investigator Resources Ltd. has identified a palaeochannel, a geological anomaly showing the remnant of a previous aquifer or river, from which it may be able to source water for the project. The company is currently underway with an investigation regarding the effect of sourcing water from the palaeochannel on the groundwater systems of the area. The company plans on continuing the investigation through a hydrological program.

The company will further investigate the possibility of producing lead at the Paris Silver project. The lead component of the project was not included in the previously published pre-feasibility study and has the potential to positively affect the project’s economics. The company will investigate a possible additional flotation circuit enabling the lead processing. The produced and saleable lead concentrate is then envisioned to be transported to the Port Pirie smelter, one of the world’s largest multi-metal smelters located on the Port Pirie River in the Upper Spencer Gulf approximately 300 km away from the project.

Investigator Minerals Corp is awaiting the assay results of approximately 10,000 m of exploration drilling samples which it anticipates receiving by the end of June 2022.

The company plans to publish the definitive feasibility study of the Paris Silver project by the second half of 2023.

To find out more, go to the Investigator Resources website