Joining us today, everybody, we have the Managing Director of Investigator Resources, Mr. Lachlan Wallace, here to present on this webinar and talk about the overview of the quarterly just gone, a little bit of what's going on right now, and what investors in the market can look forward to in the coming three months. I'll hand it over to Lachlan, and we'll go to some questions after his presentation and discussion.
Yeah, thanks, Peter. Hi, everybody, and thanks for joining us. Today, I'm not going to go through a line-by-line review of the September quarterly report, but rather just provide an update that we've been building on, giving shareholders and investors a really clear picture of where we are, what's been achieved, and where we're headed next. I'll cover, I think, some of the silver market backdrop, as well as the progress at Paris Silver Project, key permitting and DFS milestones, as well as our growing exploration pipeline and the strong financial position that's underpinning it all. I'll just share some screens here. We'll get into it. Sharing there, Peter.
Yep, that's all good, nice and clear.
Excellent. Okay, I just want to start with the silver market because it really frames the environment that we're operating in. This year, silver broke through $50 U.S. an ounce for the first time in more than a decade. This is a major psychological and technical milestone that's really reestablished silver as both a key investment as well as industrial metal. Since then, we've seen a modest pullback to the high 40s, which a lot of analysts are viewing as quite a healthy retest rather than a reversal. That consolidation has been largely driven by short-term profit-taking as well as a stronger U.S. dollar, not any change in the underlying fundamentals because those fundamentals still remain really compelling. We have global mine supply that has been essentially flat for years, whilst industrial demand, particularly from solar, EVs, electronics, continues to set new records. Silver remains historically cheap.
The gold-to-silver ratio is currently sitting about 82, 83 to 1, which is well above the historical average since the gold standard was abandoned in 1971, which was 65 to 1 since that point. What it really tells us here is that silver is relatively cheap when compared to gold. In fact, a simple reversion to the historical average gold-silver ratio would actually require the price of silver to go up another 30%, north of about $60 U.S. an ounce. That's assuming, of course, gold doesn't move higher or even just to its recent peaks that we saw only about a week ago. It's interesting because also in true silver bull markets, the ratio, it often overshoots the ratio to the low 20s or even to the 30 to 1. Now, if we were to see a scenario where, say, gold was at $4,000 U.S.
an ounce, and we did see it revert down to 30 to 1 or so, that would mean we'd need about a four-fold increase in silver prices. Will that happen? Look, I don't know. It's just an interesting perspective on just how much leverage silver can deliver when the sentiment really turns. What does that mean for us here at Investigator Resources? It really means that the world is paying renewed attention to silver. That's evidenced by increasing chatter on silver mainstream media, the queues of people that you might have seen in media trying to get their hands on physical bullion. All this is creating a favorable macro-economic backdrop for our project as a pure silver development, and our timing is really well placed. As global recognition grows for the silver story, we're moving Paris through the definitive feasibility, as well as permitting and getting it ready for development.
In short, we're not just riding, I guess, the tailwinds. We're positioning ourselves to really capture the value that comes with them and assist leverage investors who are seeking in the rising silver price environment. That's the genuine projects that are going to produce silver into this high-priced environment. I think it's also worth taking just a moment to distinguish pure silver from what many companies report as silver equivalent. All of the so-called silver projects in Australia are actually lead or zinc mines with silver byproduct credits. The lead and zinc prices have been pretty much flat year to date. The exposure that many of these projects have to silver price is really limited, and it's limited to a small proportion of silver in their production mix. When the silver prices rise, it's only this small fraction of their revenue that sees a benefit.
This is really where Paris is different. It's a true single commodity silver deposit. It's not a polymetallic mix. That means that our value and leverage moves directly in line with the silver price. Paris is the only silver project in Australia of development scale. It's this purity that makes Paris unique. It offers investors 100% correlation to the silver market at a time when demand is accelerating and the price momentum is building. Now, despite all of this, we still remain really undervalued compared to peers on an EV to silver basis. This is a chart that I dug out of the recent MST research. What it really shows here at Investigator is just undervalued compared to peers. I'm expecting some of this to correct once we get the DFS numbers out and advance permitting towards production.
It's really an interesting point in time to consider, I guess, investment in the Investigator story. If we just bring what that, I guess, silver market backdrop means into focus and look at what it means, particularly in terms of Paris and the project and the value that it can generate. In 2021, we had a pre-feasibility study and already showed nice strong economics, around $500 million in free cash for a build of about $130 million. The key point that's blinking away in the bottom of the screen here is that the price assumption used at the time was just AUD 34.30. It's roughly $22 U.S. You can see that here graphically on the screen. Even after the recent pullback, silver is still sitting around $47, $48 U.S. or around AUD 72, AUD 73 an ounce Aussie, which is more than double what the PFS price assumes.
When we run that through the same pre-feas model, you get an additional $1 billion in free cash flow, even before considering that the higher price will facilitate an expanded pit, a larger mine inventory. Basically, more silver that will be able to sell into this higher price environment. I do want to point out that costs have also risen since the PFS around inflation, particularly on the OpEx side. I'm planning to largely keep a lid on the CapEx through value engineering, as well as adopting a Wet TSF approach, which reduces the processing capital, meaning that these margins will remain extremely robust. While we wait for the definitive feasibility study to come out, which will be early next year, I'd just like to point investors to a recent MST coverage report. They released this on the 16th of October. It's available on our website.
I wasn't involved in preparing it, but they did a pretty solid job in extrapolating the economics. MST put a value on Investigator at 16% per share, so it's roughly three times our current share price. It's driven almost entirely by Paris. It underlines, I guess, the immediate rerate potential as the DFS is released. Importantly, it doesn't yet really include the growth optionality from our broader exploration portfolio, which we're really well positioned, as well as well funded to pursue. I'd encourage everyone to go and check this report out. Turning now to Paris, our flagship asset, 60 km north of Kimba on South Australia's Eyre Peninsula, about a six-hour drive from Adelaide, two hours from Whyalla, which is a large mining hub. During the quarter, we completed detailed throughput optimization analysis, and the results are really encouraging. What do I mean by a throughput optimization analysis?
Essentially, we're looking at the project through the eyes of a lender. These are the guys who ultimately decide whether this project gets financed. Lenders are not generally focused on NPV or IRR or some of those traditional project economic metrics. What they care about is getting their debt repaid with the lowest possible risk exposure. Their credit teams are naturally conservative. They'll stress test the financial models we provide by assuming the worst. They assume lower silver prices, lower silver grades, higher capital, higher operating costs, all to see if the project can still stand up, make the repayments under stress conditions. Now, having been through this process a number of times on both sides of the table, so both as a lender as well as a mine builder, I'm always keen to preempt, I guess, these stress tests during the feasibility and make sure we design accordingly.
There's really little point in designing a project for the highest MPV if it can't withstand the scenarios that a bank will inevitably throw at it. We ran full cash flow models across a range of throughput rates from 1 million- 2 million tons per annum, applying 20% adverse movements in grade, price, and costs. The outcomes here really confirm that Paris is a very robust project. It's capable of meeting lender hurdles, including debt service cover ratios, as well as the reserve tail ratios, even under stress conditions. In fact, every scenario between 1.25 million and 1.75 million tons per annum proved to meet all of the lender requirements under stress conditions. From that analysis, we've now locked in 1.5 million tons per annum as a preferred development scale.
This is a scenario that balances the key project metrics, so the traditional themes, MPV, IRR, free cash generation, capital intensity, and the like, while still remaining really resilient to the lender stress testing. In short, it's the throughput that best balances economics with real-world fundability. That throughput rate now feeds directly into the mine schedule, as well as the process plant design. These are the two remaining project workstreams in the definitive feasibility study. I'm going to take a couple of minutes now to walk through where we're up to in these workstreams and what's to go to close these off as we complete out the DFS. On the mining side, we're finalizing the mine schedule for the expanded pit.
We did a geotechnical review following some drilling in September to support the larger pit design, and we'll be able to use that information under financial due diligence assessments that are going to happen once we start to enter that financing process. Once all of these geotech parameters are confirmed, which I expect to be next week, we'll update the optimization, so pit optimization, finalize the pit design, complete the production schedules, and close out the cost estimates. There's about a month's worth of work in all of this, and then the mining side will be closed off. I also want to revisit the mining operating model. In the last mine that I oversaw, the mast mine development, that is, switching from a contract mining approach towards an owner-managed model reduced the mining operations by around 18%, largely driven by labor efficiencies.
I'll be testing that again here, although, having said that, looking at the current contractor rates, they already look reasonably competitive. In terms of the definitive feasibility study processing aspects, the flow sheet is nearly complete. The value engineering exercise I talked about in the last webinar stripped out about $18 million from the process flow sheet as we move towards a lean fit-for-purpose plant design. The last step now is just nailing the grind size. We've been reviewing the latest metallurgical test work and seeing potential to potentially increase the recovery through a slightly finer grind. The trade-off is a pretty straightforward assessment. A finer grind usually means marginally higher CapEx and OpEx due to some additional crushing stages. If recovery improves in line with the methods studies I've been looking at, then there's a clear economic win.
Once that analysis is complete, we'll get that out to market, but also advance towards full engineering and then seek vendor quotes on an [EPCM] basis. This will wrap up by the end of the year and feed into a definitive feasibility study for release in early 2026. Paris remains firmly on track. It's robust, finance-ready, and advancing pretty much as planned. Really looking forward to getting the study out so we can have a much more thorough discussion around the value proposition, which I think will surprise people to the upside. Whilst the definitive feasibility study is obviously important, it's just a stepping stone in the overall mission, which is basically to build the Paris Silver [line] as soon as possible.
What that means is that we're also progressing in parallel to the definitive feasibility study, the mine lease application, as well as the environmental permit, which is known in South Australia as the PEPA, which, in case I mention it later on, stands for the Program for Environmental Protection and Rehabilitation. Basically, just think of it as an environmental permit that's required to commence mining. Whilst the mine list application is being assessed, we'll also finalize the native title mining agreement, which is essentially an agreement with the traditional custodians of the land, in our case, the Gullah Rangers Aboriginal Corporation. We have a longstanding relationship with traditional owners, having undertaken numerous heritage surveys as part of drilling and exploration programs. Such surveys on country have identified a number of areas of significance to both heritage and songlines.
We've just made sure that in our project design, we've avoided all of these sensitive sites. Once the layout is finalized, we'll undertake a further series of surveys to ensure that traditional owners are comfortable with the layout and negotiate a set of commercial terms. In terms of the technical studies that are required for the mine list application, the PEPA, many of the environmental studies were already completed before I joined in July and were adequate for the DFS, but some just lacked the rigor that's required to meet the permitting requirements. We've restructured those studies now such that they also satisfy the mine list application and, where possible, the PEPA requirements. I guess doing these studies concurrently with the DFS avoids rework, delays, and moves us quickly from feasibility to development.
As part of this, we're continuing to work closely with government to make sure our studies and documentation meet their expectations. We have another all-of-government meeting scheduled for the 20th of November, where we'll review the ongoing technical work and confirm that the information that's being produced is in the format and the level of detail that the regulator requires to support rapid assessment and permitting. In effect, we're treating government as a customer in this process, ensuring they're getting exactly what they need when they need it to keep these approvals moving along efficiently. As an important part of the package of work for the mine list application, it's tails management. The move to a Wet TSF requires a completely new design.
It's not necessarily complex in its own right, but because regulators view the tail storage facilities as long-term environmental risk structures, there is a significant amount of supporting work that's required to meet the modern regulatory requirements. To navigate this, we've undertaken a practical risk-focused approach, drawing on real-world mining experience to deliver a design that's inherently safe, stable, and efficient. I've built tailored structures before, and from experience, it's far more cost-effective to use mined waste rock and the large mining equipment straight from the pit to build, say, a 30 m wide embankment in one or two-meter lifts, rather than take the traditional civil engineering approach of constructing a narrow wall of maybe only five or six meters wide and building it up in compacted 0.3 m layers.
A large wide structure is not only simpler and faster constructed, it virtually eliminates all of the realistic risks associated with wall failure because the geometry and just sheer mass of the embankment provides enormous inherent stability. At Paris, we're going to mine north of 80 million tons of waste rock, so material supply isn't an issue for us. It's about designing the TSF structure to suit our mining fleet rather than treating it as a separate civil job. There's nothing really novel in this approach. It's the same approach that was used at Prominent Hill in South Australia, Carrapateena, the Lubbock Dam, Kanmantoo, pretty much all of the projects in South Australia. It's also the philosophy now that I'm working through with our tails dam engineers. To their credit, they're pragmatic, they're really experienced, and share the same goal.
That's just really to design a tails dam that is safe, efficient, fit for purpose, and fully compliant with the regulatory expectations. We're also designing with a focus on mine closure, I guess, from the outset. Building closure principles into the design early really strengthens our permitting case. It reduces closure risk and can help lower the environmental bond, which is effectively part of the capital funding requirement for the project, but also just makes for good business. There are always spare dozer and truck hours available during the operation, and we can use those for progressive rehabilitation rather than bringing in a smaller scale civil crew years later at a far greater cost. By progressively closing out areas as we go, it reduces dust lift.
We can start post-mining monitoring early, which shortens the tail end of a project at closure and avoids years of unnecessary post-production maintenance and costs. This approach also sends a clear message to our stakeholders, traditional owners, community regulators, that we're serious about responsible development. Importantly, it builds trust and assists responsible track record that will make future approvals far easier as we advance our exploration pipeline towards development at Paris in the Silver Corridor, Uno Morgans, Curnamona, and potentially other assets that we may acquire in the future. Our philosophy is pretty simple. It's design smart, build efficiently, and close responsibly. That's basically the principles that we're using to guide the decisions that we make at Paris. While the engineering and permitting are continuing, we're also advancing exploration across the Paris Silver Corridor. During the quarter, we completed the gravity survey at Athena. The results are due really shortly.
The survey's been extremely useful, not only in refining our structural interpretation at Athena for potential future drilling, but also identifying another promising target further to the south within the Black Hill tenement. All this data is just being reviewed and will be incorporated into the other information we have within the Paris Corridor ahead of next year's drilling program. We plan to commence that early in the new year. Obviously, with the Black Hill prospects, because they're subject to an earning agreement, they've got a slightly higher hurdle than some of the targets within our own portfolio. All that will be taken into account when ranking the next drill targets. In parallel, we'll seek to undertake resource upgrade drilling within the Paris deposit itself to de-risk the financing, particularly focusing on areas that will be mined in the early years of production where most of the repayments occur.
Improving the geological confidence in these areas will reduce the cost of capital and just really improve the bankability of the project further. The second growth front for Investigator is at Uno Morgans, about 80 km to the east of Paris. It's a large land package comprising multiple tenements with the potential to develop a hub and spoke model with Paris as the central processing hub. Early drilling results have returned strong results, including 12 m at 240 g per ton silver. Almost every hole in that program, we hit mineralization. A great strike rate that builds a lot of confidence in the system itself. Since then, we've expanded our ground position, and we're now executing some baseline programs just to assist again in that ranking process for targets in the Uno Morgans. We're doing some soil sampling at Eurilla Hill that's underway at the moment.
A gravity survey will commence in December at Corunna, and all this data will be integrated with the existing drilling and geochemistry information to prioritize some future follow-up targets. This work will position us for a comprehensive drill program next year to test the high-priority silver targets and advance potential feed sources for Paris under a hub and spoke concept. Curnamona is located in the east of South Australia, near the border of New South Wales and South Australia, a short drive to Broken Hill. It's a large-scale system, potentially porphyry or IOCG, defined by coincident magnetic gravity, IP, and soil anomalies. There's also a history of gold and copper mining in the region. Despite this, it's never been drilled.
It still blows me away considering it sits in a mineral province that already hosts major copper deposits, as well as we have the White Dam gold mine literally across the other side of the road. Here we're chasing a gold-silver-copper system of real scale with multiple high-priority targets that have already been identified. First pass drilling is scheduled to commence in about two weeks' time, so mid-November. That'll mark the first genuine test of what could be a new gold-copper asset within what is already a proven mineral district in South Australia. On the copper front, we continue to build momentum. Earlier this month, we completed a $10 million placement with an added 8.6% premium to the 15-day VWAP, which in itself is a strong vote of confidence in the project's fullest attained.
Some people have asked, since we did the raise, you know, why raise again so soon after the $4.3 million that was raised in June? It's a good question. The June funding was really sufficient to complete the definitive feasibility study and support a modest drilling program. I guess our mission really isn't to deliver a study; it's to get to first silver pour. To make that happen, we've been accelerating permitting so that approvals can advance in parallel with the definitive feasibility study. Now that acceleration does cost money, and I don't want to slow down or compromise the exploration programs that are aimed at expanding the silver endowment just to fund the permitting. We really need to run hard on both fronts, both the Paris development as well as exploration and growth. This placement really allows us to do exactly that. It also achieves much more.
First, it strengthens our register as we prepare for development financing. Our loyal retail base has been pivotal in getting us to this position. As we move forward, we're going to need larger chunks of capital to build Paris. It's important to prepare ourselves for that and to broaden and deepen our institutional base. This raise really positions us to negotiate project finance from a position of strength with larger cornerstone instows in there to assist in the equity aspect of any future project finance. Second, as I've already discussed, it enables us to accelerate the permitting without compromise and really keeps us firmly on track for bringing that silver production forward. Third, it really enables us to expand the project through drilling, not only the grade control, sort of de-risking drilling at Paris itself, but also across the Paris Silver Corridor, Uno Morgans, and Curnamona.
Now, around $5.6 million of the $10 million placement still remains subject to shareholder approval at the AGM on the 26th of November. I strongly encourage all shareholders to vote this up. Once approved, our cash position will sit around $15 million. Plus, we'll have another around $2 million to come from the Molyhil transaction that was completed earlier in this past quarter. In addition to that, we also have about $19.6 million of options that are on issue that expire in March 2028. These options are well within the money, and we've already started seeing some holders exercise them. I expect that as we move closer to expiry, that activity will continue to ramp up, adding further cash to the business.
If we add all of this up, we have around up to $35 million of current and future cash expected to come into the business over the next two and a half years. This sees us really well funded through to the final investment decision for Paris. In short, this placement wasn't just about plugging a gap. It's about positioning Investigator for the next phase. It's accelerating silver production, expanding our growth pipeline, and building the institutional need to be able to fund Paris into development. Strategically, our path is very clear. Investigator is evolving from explorer to producer. We're anchored by Paris. We're supported by a growing pipeline and backed by a strong institutional register. As I've said a number of times today, our goal really isn't just to finish a feasibility study, it's to pour first silver.
By advancing the DFS and the permitting together, we're really compressing that timeline from study through financing, construction, and into silver production. I guess what do we have to look forward to over the next six months? We've got two main workstreams. We've got the DFS as well as exploration. As I've said, the latter half of this year is all about finalizing the mining and the processing design, which will then be compiled into the final study early next year and released to market. I appreciate this study's been a long time coming. Like you, I'm really keen to show the market, I guess, the strength of the Paris project. Permitting-related works continue, and I'm seeking to lodge the mine list application by mid-2026. We've got to run hard to achieve that, but that's exactly what we are doing.
Whilst all this is going on, we've got exploration at all of our sites getting underway. A cleaner of the gravity survey is all but complete, and we'll get that out over the course of the next week. We're preparing the drilling program for Paris as well as part of the Silver Corridor to start in the first quarter of the calendar year 2026. Drilling at Curnamona gets underway in a couple of weeks. Given the way, I guess, everything sort of tends to slow down over Christmas, particularly in the labs, those results are likely to be early next year. At Uno Morgans, we've got underway or sort of surveys underway at Eurilla Hill, followed by a gravity survey in December at Curonna, both of which will feed into the drilling program that we'll try to get underway in the first half of 2026.
A fair bit to look forward to over the next six to nine months. To wrap up, the silver market remains strong and structurally supported. Paris is advancing toward a finance-ready, permit-ready outcome. Exploration at Paris, Uno Morgans, Curnamona is expanding our growth profile, and our balance sheet has never been stronger. We're heading into 2026 with momentum, discipline, and a clear line of sight to first silver. I'd just like to thank you all for your continued support. Now I'll open up the floor to any questions. Peter, I'll just throw it back to you.
Thanks, Lachlan. Pretty good coverage and some positives to look out for as well. We're going to kick some of these questions off. I'm going to combine two into one here. One of our audiences said, "The strategy of having a pure silver leverage is very sensible, but is there any situation you can see where you may look to process the lead?" I think that that segues with another question here that somebody sent through about why you call yourself a pure silver play and how that differentiates you from other silver plays on the market.
Sure. I guess taking the first part of that about the lead. We do have, we've got about 99,000 tons of lead within our resource model. In some mines, the lead is associated with silver, and they create a polymetallic sort of concentrate, which is effectively lead, in our case, would be with a silver byproduct. That's what I guess many of the, or all, in fact, of our peers, if you like, silver peers are doing in Australia. They're not really silver companies. They're lead companies or, in some cases, zinc companies with a bit of silver. We are different. We are 100% silver. That's because some of our lead does not sit with the silver. It sits external to it. To model that is relatively complex from a geological point of view.
I think it'd be fair to say there's still some work ongoing with regards to the viability of extracting the lead and forming part of the flow sheet. As far as the DFS is concerned, there will be no lead in the flow sheet. It's just going to be a silver doré product. That's how we'll differentiate ourselves from the rest of the market. It's also what is generating, I guess, the most value that we see from a capital operating to a cost point of view versus the money that we get back from the revenue. As the process for permitting continues, I'll continue to take a look at the lead.
It'd be fair to say that the DFS has been a long time coming, and I was not prepared to delay the process any further by doing, I guess, the requisite studies that would be required to bring lead into the process. I guess that puts to bed that part of the question. I think the second part was around why do we call ourselves pure silver company. It is in fact that. We're basically, we are only planning to produce silver. In that regard, we are basically leveraged 100% to the silver. I'm really trying to make sure that we, I guess, highlight that to market. Hence, people might have noticed in the notice of meeting that we've proposed, seeking shareholder approval, to change our name to Investigator Silver. This is just about making sure that it's very clear about what we are focused on.
We've been, over the last 12 months, very disciplined in streamlining the portfolios towards a precious metals-focused business with silver at the center. We've sold our interest in the Molyhil Tungsten Project in the Northern Territory, put our interest in Whitesbury Tin Project in Tasmania, offloaded the Stuart Shelf Copper Project in South Australia. All of those achieved value for shareholders. Importantly, what they've done is making sure that, I guess, investors know that by buying Investigator today, what you're buying is exposure to precious metals and particularly silver, which I'm confident still has a long way to run from a price point of view. That's the reason that we're doing things like Investigator Silver from a naming point of view, just to make sure it's very, very clear that that's what we're focused on as a business moving forward.
Lachlan, there's a lot of offshore investors, institutional especially as well, that are very focused, love silver. Being a pure silver leverage play must make you more attractive to a company that's got some silver and zinc or some silver and lead or silver gold. This way, they know that the commodity that they want to focus on is focused on the same one.
Yeah, and I think that goes to part of the renaming, to make sure that's very clear that we are silver and we come up on their radar. What I'm waiting for at the moment is for the DFS, and then I plan to become quite active, particularly over the U.S., where I think the understanding of the silver market is probably more mature, particularly around retail, but also with the institutional investors. I'd like to make sure that Investigator is being put front and center in front of those, I guess, large either high net worths or institutions that are supportive of silver to be able to bring, I guess, that investor flow into Investigator Silver as it will be at that point in time. I think we do differentiate ourselves as a pure silver play.
There are obviously projects in Mexico, Latin America that are pure silver plays, but I guess what they don't have is the certainty of jurisdiction that we have here in Australia. There is very little silver that sits in tier one mining jurisdictions that is pure silver. In fact, we will be the only one in Australia. Around 75% of silver is coming from Latin America, inclusive of Mexico, as well as China and Russia. There's only about 25% that sort of sits outside of that. What we want to make sure is that we are known to those large investors, and having the DFS to be able to go and talk about real numbers will assist in that communication and promotion process.
We know very well the stories of bandits holding up truckloads of silver out of Mexico and Latin America. Your jurisdiction is a plus for institutional investors. You'll be talking to them, obviously, about the DFS. How confident are you that the DFS will confirm the strong economics of the PFS?
Really confident. I think they'll blow the PFS away, really. The PFS showed, you know, we obviously had good returns, but really, the silver price has more than doubled since then. We've refined the design. We've locked in 1.5 million tons per annum as a throughput, adopted a Wet TSF, and really stripped out, I guess, about $18 million of cost from the plant capital just through a value engineering process. As I talked about, some costs have risen, particularly on the operational cost point of view. We will put that into the DFS so that we have an updated study. The price doubling really makes sure that we retain some really strong margins. The DFS will just confirm that Paris is not only a project that's very profitable and has some great economic metrics, but also demonstrate that it's bankable.
Really looking forward to getting that out and demonstrating that to the broader market, not just in Australia, but as I said, also to the U.S. that is very bullish on silver.
We've got some good questions here around the economics. You mentioned lender stress testing. Why is that such a focus?
It's because what determines whether a project's going to get financed and built. Look, if we wanted to maximize MPV, I would just push for a high throughput. Too many tons per annum would have generated a higher output than 1.5 will do because on a discounted time value of money basis, nothing's more powerful than basically dragging forward cash flows. MPV alone doesn't fund projects. Banks do. Lenders don't look at MPV. They look at your ability to repay under worst-case scenarios. Two really common metrics that work against each other are the debt service cover ratio. This is the amount of money, I guess, or free cash the project generates every quarter over and above the debt repayment obligation. Generally, this needs to be around 1.7x, 1.7 x.
You want 1.75 x roughly the amount of cash getting generated as you need to repay debt to get a reasonable low cost of finance. Usually, your default number is about 1.3 x. The easiest way to get around this is to spread your repayments over a long period of time. This is where the other metric, I guess, comes into it, and that's the reserve tail because generally, lenders will like to see the final debt repayments made with at least 30% of the mine life remaining, because that provides them with plenty of buffer. It's really important to develop a project which, under stress conditions, can meet these two fundamental metrics as a minimum. That's what we've done to basically inform, I guess, the optimal throughput.
Not only does this give us a nice MPV, but it also provides a fundable project, which I'd argue is probably more value to shareholders than a theoretical value on a spreadsheet basis.
Segueing from that, what do you see as a debt-to-equity ratio to build a mine? Would it be 60/40, which is fairly traditional? Do you see silver hedging as a factor in that for your project funders?
Yeah, look, it's a really good question. Yeah, 60/40, 70/30, something in that range would probably be where I think we would be. The stronger the project, the more debt finance you can attract. You know, with debt comes covenants as well. There's been plenty of good projects that have stumbled early on and then have had to either seek additional, I guess, lender support, which always comes at a cost, or to raise then under a depressed price position. Ideally, you don't want to be in that position. I'd be seeking to keep any debt finance relatively covenant-light. We're not going to get away without having liens over the project, so they will be there. In terms of hedging, that'd be interesting to see. Ideally, we approach this without hedging in place. I'd definitely seek to hedge out some of the cost aspects, particularly around fuel.
I think there's some really prudent things that are being done with some fuel hedging. In terms of silver hedging, ideally, you get away without it. Some lenders are going to require, again, to de-risk the project with a form of hedging. It depends on, I guess, what number that becomes. The other reason they push for hedging is generally, if they've got the capability, there's a lot of money to be made in the hedging environment for the banks themselves. They look at it as an additional revenue stream, and that's why a lot of them also push for that. As we approach it, we'll be seeking to be covenant-light, hedging-light.
However, having said that, we may get to a position where we need to put some hedging in to secure finance or indeed just to backstop the project because there is a risk appetite that we also need to balance as well. Whilst I appreciate that all investors like to be fully exposed to the silver price, there is a modest level of hedging that can also be done to really backstop the project and make sure that in an adverse price movement position, the mine doesn't fail to meet its repayment obligations.
Good. We're in a good situation to be looking at that as the price continues to rise. Question about the raising, which follows on. You've raised twice this year. Should shareholders worry about dilution?
Not additional dilution, no. Between, I guess, current cash, the balance of the placement, assuming we get the approval at the AGM that's coming up on the 26th of November, the Molyhil proceeds that are still to come, as well as the in-money options, we would have in the order of about $35 million of current and future cash. That's more than enough to complete the DFS, complete the permitting, and move through to the final investment decision while still keeping a reasonable pace going for exploration. The placement, as I said before, wasn't really about plugging a gap. It was really about accelerating development as well as exploration in parallel, as well as strengthening the register for project finance.
I think we're in quite a good position now to be able to finish off all of those workstreams, get to a point of FID, and basically build this project.
To complete the questions coming through, I've got one here on permitting. Obviously, that's something which can make or break a good or bad project. Permitting in Australia can be slow. How are you managing that risk?
Yeah, I mean, I spent a fair bit of time about it in the slide deck specifically because, look, it is a risk and it's something that we're about to move into. I think it's important that investors understand what that risk is and how we're going about, I guess, mitigating that. I think it's a really good question. That's something we're pretty proactive about. First and foremost, we're in South Australia. It's a state that values mining, about AUD 1 in AUD 7 of the state's GDP. The gross domestic product basically comes from the resource industry. The government really understands the importance of getting quality projects approved in an efficient manner, getting them up and running, and receiving royalties, as well as the economic activity that comes from jobs and the flow-on sort of aspects of having a mining business. It's also important to consider where we're located.
We're above the [Gullah] line. This is the line where, effectively, below which is nice productive farmland, above which is fairly hostile for agriculture. Unlike many parts of New South Wales and Victoria, we've got shared land use. We don't have that, and we're not subject to those same sort of delays. We've got relatively low-value pastoral land, if you like, and a great relationship with the landholder there that are obviously seeking for us to get this project underway and seeking to participate in that. Great local support, not only from the local landholder, but also the broader community in Kimba, as well as traditional owners that are the Gullah Rangers Aboriginal Corporation.
We'll be seeking to ensure that we have their support continuing as we build, process, and continue to develop the project all the way through to closure, as well as any additional satellite pits that might come into the process over time. I've also been through the PEPA process twice before. What I learned is that the delays generally come from poor scoping or communication, not generally from government. I find if you engage early, scope properly, keep that dialogue open, it runs relatively smoothly. That's why we're taking a very positive, proactive, page-turn approach with regulators. We're meeting every couple of weeks, resolving questions in real time instead of waiting for months between reviews. We're also using top-tier consultants, including former senior government assessors, hydrologists, as well as TSF designers that have been behind most of the state's recently approved mines.
Put simply, what we're doing is de-risking the process by doing it properly the first time.
It's pretty arid out there. Lachlan, how's the water situation? What would be your plan for sourcing it and reusing it?
Yes, we identified a paleo channel, so effectively an area containing water about 10 km or 11 km from the site. What that's demonstrated through there, it was identified a number of years ago, but it was earlier this year it was identified that they would have more than enough capacity of water to be able to supply the area. Now, the water is pretty salty. It's just not as salty as some of the mines up north, which are running at, say, 100 TDS, which is effectively the dissolved solids. It's still running about 22, 25. For something like a sheep to survive, an adult sheep, it needs to be around 1,000 TDS, maybe an adult could get around it up to maybe 2,000 TDS. Anything above that really is no good for livestock usage. We're running about 20, 25 TDS. It's not much good for livestock usage.
What we'll be able to do is treat that with some reagents, create it into potable water for both the camp as well as what we need on site, but then also treat it with reagents to get it chemically balanced for the process for extracting silver through the CIO plant. Water won't be an issue. Plenty of water there, not only for the plant and camp, but also dust suppression. We've done the hydrogeological models to demonstrate that the water is available. Now what we're doing is just knocking those models into shape so they're acceptable for the government through the mine lease application process because they do need generally a higher degree of rigor to be comfortable with those models.
OK, a good topic to end the presentation on, Lachlan. Pretty good summary. I think shareholders will be pretty happy about the information you're giving today and what they can look out for too. I'll just reiterate that if anybody has questions, please send them through to peter@nwrcommunications.com.au, and I'll make sure Lachlan gets them. Lachlan, thank you for your time today, and we'll see you at the next webinar.
Yeah, thanks, Peter, and thanks everyone for joining. Really appreciate it.