"Explorers Podcast: Silver Mines steering Bowdens towards resource upside"

Explorers Podcast: Silver Mines steering Bowdens towards resource upside - *

"In this episode Barry chats to Jo Battershill, managing director at Silver Mines"
03 April 2024

My comments:
- Hoping for federal environmental approval mid-May.
- Then expecting State rubber stamp and grant of mining license soon after.
- Resource is 50/50 silver / base metals.
- Relatively low reserve to resource conversion ratio, about 100 million oz but about 70% of that is silver.
- Good silver play re EBITDA when considering high silver percentage.
- Less than US$10/oz cost AISC in first three years.
- Optimisation process numbers finalised and given to market in July/August this year, leading into FID later this year.
- Will produce two products, lead concentrate and zinc concentrate, with majority of silver going into lead concentrate.
- Lead concentrate 10-12,000g/tonne, and will generate about 80-85% of revenue.
- Cost A$300-340mil cost to get to first production, board doesn't want to do more than around $220mil of debt to finance it.
- FID towards end of year; financing should then take a few months, build time is ~18 months after financing is in place.
- Will be mining high-grade material from day one.
- Internal view is that resource estimate is relatively conservative in terms of contained metal.
- MD notes there are not a lot of silver plays on the ASX.
- Currently 2mtpa, 15-16-year mine life.
- They expect to see a further increase to reserves from current feasibility study (but not +56% like last upgrade). Expect to get mine life (as open pit) to 20+ years.
- Small element of activists in community have made a lot of noise. Makes it sound like there are more people against the project than there actually is.
- Lots of local support otherwise though. IPC noted that they'd never seen a mining application with so much local support.
- MD considers himself a silver bull, but not a silver nut.
- "1GW of solar generating capacity requires 3.1 million solar panels; each panel will need 10-20g of silver." China last year installed 121 GW of solar capacity (75-80million oz of silver); in US under IRA act, US is targeting 240 GW of solar installation by 2028.
- Current mine supply is 800 million oz of silver per year, solar demand could jump 4x between now and 2035, that would be the entire mine supply going just into panels (but MD notes it wouldn't go that crazy due to technology change).
- Expects silver price to either go back to $16, or up to $35. But doesn't think it will go to $16.
- World market is short 100-200million oz / year. Expects recycling of silver into market (e.g. silver cutlery lol) to increase over time.
- Milestones to look out for share price re-ratings: enviro approvals from federal department soon, which leads to mining license; optimisation study resource update, which will lead into reserve update by July/August this year; and now permitting process is basically done, the company will now look at land access for exploration targets e.g. Coomber 20 miles south of Bowdens to keep news flow up whilst construction is underway.

Disclosure: I hold a position in ASX:FZR as exposure to Bowdens (they have a 1-2% royalty over the project), and I am very much looking forward to the ~3 cps p.a. cashflow to FZR from SVL kicking off in ~mid-2026.