Investigator Silver Ltd (ASX: IVR) will raise $55 million via the issuance of new equity to accelerate work on its Paris silver project in western South Australia.
The company said in a statement to the ASX on Tuesday that it was in a "very strong" position, with a clear development pathway for Paris, and that it released a definitive feasibility study (DFS) for Paris last week.
Investigator said it had received firm commitments to raise the money at 8.6 cents per share, with its largest shareholder, Jupiter Asset Management, taking part in the raise.
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Work to forge ahead
The ASX silver company said following the release of the DFS, its priority was to maintain momentum "and transition immediately from study phase into execution''.
Investigator added:
With an estimated development funding requirement of approximately $260 million for Paris, the company considered it important to secure funding at this stage to remove near-term financing uncertainty and enable an accelerated execution program. The placement strengthens Investigator's balance sheet and supports early, schedule-critical activities that position Paris for a construction decision and accelerate the pathway to first silver.
The DFS indicated that the project would pay itself back in just 11 months, generating strong cash flow from an open-pit mine using contract mining operators.
The 11-month payback was calculated using a spot price for silver of US$80 per ounce, while the current spot price is US$93.48.
Investigator said every US$1 increase in the spot price would translate into a $42 million increase in life of mine cash flows.
Strong silver price a boon
Investigator Managing Director Lachlan Wallace said the DFS confirmed the project as a "financeable and buildable project", bolstered by high margins, impressive economics, and a rapid payback period.
He added:
Since the DFS release, silver has traded above the $US80 per ounce spot case used in the study, reinforcing the strength of the silver price at a time when international demand continues to strengthen and the lack of near-term silver mines coming online demonstrates the need for high-quality projects like Paris to fill the growing gap in supply. Securing this $55 million placement allows us to keep momentum at Paris and along with the completion of the DFS, marks a key step change in focus as Investigator move straight into execution phase.
Mr Wallace said the company would now strengthen its delivery team, focus on early execution activities, and progress long lead time procurement planning.
There would also be more targeted drilling in the initial mining areas "to strengthen lender confidence through the debt repayment period and support more attractive financing terms'', he said.
Investigator shares were 19.2% lower at 9.7 cents in early trade.
