JOHANNESBURG (miningweekly.com) – The outlook for Australian silver development and production has risen to its best in years with the owner of one of the country’s highest grade discoveries pointing to a 35% price increase in the commodity in just the past 12 months.

Addressing a mining forum in Brisbane on Wednesday, Investigator Resources MD John Anderson said silver was enjoying substantially strengthened market fundamentals over 2016 and had been tracking the upturn being enjoyed by its more fancied precious metals sibling, gold.

“The increasing demand for silver is being driven by the explosion in exchange traded funds transactions being witnessed globally and jewellery demand from India particularly,” Anderson said.

“This has combined with a decreasing silver supply globally where Comex silver inventories have plunged more than 64% from 70-million ounces just a year ago to new historic lows of around 25-million ounces currently,” he said.

“The shortage is attributable to less scrap silver supply availability, reduced production grades and closures of lead-zinc-silver mines.

“In this environment, the recent silver price surge has outperformed industry forecasts – climbing from around $15/oz a year ago to closer to or above $19/oz currently.”

The positive silver trajectory comes at a key time for Investigator Resources, which over the next two years is accelerating its high-grade and wholly owned Paris silver project on South Australia’s Eyre Peninsula to development, including targeted completion of a prefeasibility study (PFS) by June next year, and a bankable feasibility study within the following 12 months.

The improving outlook for Paris and the company – which counts the China-backed Citic group as its largest shareholder – underpinned an oversubscribed $5.4-million capital raising via a placement last month, including strong new support by institutional investors, and an aggressive onground schedule for the next nine months.

Investigator Resources will spend up to A$3.5-million before June next year undertaking work at Paris necessary to complete the PFS. Much of this work will be directed to infill drilling to upgrade Paris’s current 33-million-ounce resource grading a high 116 g/t silver using a 50 g/t silver cutoff to indicated status for inclusion in the PFS. An initial 7 000 m drill programme will start in a few weeks.

“Our main objective for 2016/17 is to do infill drilling to upgrade the resource status at Paris, complete preliminary geotechnical studies, undertake additional metallurgical tests on existing and new drill samples, and agree an optimal processing pathway,” Anderson said.

The company is investigating three development scenarios for Paris: using a suitable mining contractor and modular mobile processing plants to enable flexibility in scaling up to optimal output rates; processing the Paris ore by one of tank leaching to produce silver doré, flotation to produce a silver-lead concentrate or leaching a floated concentrate; and either operating its own metallurgical process plant (requiring a higher initial capital cost) or leasing a suitable process plant (lower capital costs) operated by a third party specialist.

“We are strengthening Paris’s offering of a shallow resource amenable to bulk mining with the potential low-cost soft digging in addition to options for higher-grade starter pits close by,” Anderson said.

“We know our metallurgical work is on track as our laboratory tests to date have delivered conventional silver extractions ranging between 65% to 97% metal recoveries,” he said.

In addition to the development pathway for Paris, Anderson told delegates the company would undertake some further work beyond the immediate Paris deposit boundary, where there was evidence of potential for larger and even higher-grade silver deposits within the local district, to expand the Paris project’s inferred resource, as well as regional copper-gold discovery opportunities.

Another A$1-million will fund the drill testing of these new silver and copper-gold targets, which includes strong co-drilling support recently granted by the South Australian government’s PACE drill incentive programme.