Discovery Silver: Corporate Update

0:07 Hi everyone and welcome to Discovery Silver's live summit today hosted by 6. I'm pleased to introduce their CEO and director Tony McCooch as well as Forbes Gemel, their Vice President of Corporate Development. Tony and Forbes are going to be walking us through a company presentation and after we're going to be taking questions live, so remember you can submit your questions using the Q&A panel found on the right hand side of your screen at any point during today's presentation. And if you'd like to get in touch with the team or leave some feedback, be sure to complete the survey linked at the top of the chat. As always, this event is being recorded and it's going to be available on six.com in the coming days so look out for that if you

0:38 want to refresh. Without further ado, Tony, I want to pass things over to you so that we can get started. Okay, well, thanks, thanks, Cameron. Thanks, 6, for hosting this and thanks everybody for being online, and as I say, myself and Forbes Gemmel here. We went through a presentation and we don't have to be very formal. We're happy to, as I say, get this done and then get to questions because sometimes that's a little bit easier. Anyway, with Discovery Silver, I think maybe just coming in is a very exciting and I think this is a tier 1 asset. One of the best undeveloped Silver projects, even the best undeveloped mining project globally. And we really get to get a chance to go through some of these things with you. We did pass through that one slide very quickly on the forward-looking statements.

1:26 And I guess I think we should qualify that first and foremost that both myself and Forrest probably will be making a lot of forward-looking statements here, so you should read or understand this from a disclosure point of view. Anyway, I think that's a big part of it. I think there's a lot of value here and lots of new value to be created. The biggest thing we have is a lot of energy in order to what we can do with this project. I mentioned it being a tier-one asset from my perspective. It's one of the world's largest Silver deposits by reserves, over 265Moz of reserves. And we see as we build this asset, it has a potential to be one of the lowest cost generated significant cash flow and significant value for shareholders as the project is built.

2:21 There are some unique aspects to the project build in terms of how you can be very efficient from a capital perspective. And once the project is built, we talk about what the NAV is, that came out of the PFS, but actually the value of the asset actually increases until year 4, once you've achieved the phase 2 expansion. It's a very unique project in terms of that perspective. It's going to be, as we talked about, one of the lower cost curve, the half of the cost curve in the Silver space. One of the largest Silver producing assets globally. If we go by the schedule that we have right now, that say by 2028, if this is built, it could be, if not the largest, the second largest Silver mine in all of Mexico.

3:10 And definitely, I would hazard to say one of the top 3 silver mines globally, as well as it's going to be one of the top, if not the top, maybe the second largest Zinc mine in all of Mexico. And on a global basis, probably one of the top 10 Zinc mines. So there's a significant size and value to this asset. But I think the most important part is where we see it from a cost perspective and where we see that what this can really do in terms of transforming the industry. And there's also, I guess There's a significant mine life like this slide is talking about, but there's also some extension potential and or potential to grow and a lot of optionality in the future.

3:56 The uniqueness about this, we talk about a

4:01 phase 1 and a phase 2. Phase 1 expansion to 25,000 tonnes a day and then the phase 2 expansion to the final design here, which was the reserve pit, which gives you the 18-year mine life. But the phase 1 pit, the phase 2 pit are all actually fitting within the total resource of almost 1.3Bnoz of Silver equivalent. So there's lots of future optionality on this project as you complete the finalisation of the mining of the phase 2 pit, what would happen in terms of metal prices in the future and what you do in terms of operating costs and how you can bring costs down on this project. There's lots of upside. And as I mentioned, it's going to be in the bottom half of the cost curve. It'll produce over 33Moz of Silver equivalent on annual production over 18-year mine life. But there are actually periods of time within that 18-year mine life, meaning the

5:02 first 12 years, and actually between year 7 and 12, where you produce almost 40 to almost 50Moz of Silver equivalent. In terms of the project itself and in terms of what our goal is. We see this as a very low risk project, both in terms of its location and for it to give you a sense of location, it's in

5:29 a Very simple area with the infrastructure, whether it's access from a road infrastructure, access for people, access for supply, access for all, whether it's water sources and power, everything is available in terms of being able to build this project and really understand the scope of what you're trying to build. Metallurgically, and technically, the project works both metallurgically and mining. It's got one of the lowest strip ratios, strip ratio on the 2 to 1. And it's very, very straight forward pit. And I mentioned it's in a very good jurisdiction in Mexico.

6:16 Maybe Forbes, you want to go through this? Yes. I've got a few slides here on Silver. I think it's the primary metal we're mining, so it's important for context. But what we're showing here is the largest undeveloped Silver deposits by reserves. And it was interesting to note there's only 3 deposits actually over 100Moz. We're at the top of the list at around 270Moz.

6:39 Karani is next. That's a project in Peru. It's actually been stalled for a number of years. And then Prognos is in Russia. So look, probably some struggles in terms of getting the silver out of the country, given that location. And then after that, it does drop off quite significantly to other deposits, which are more in the sort of 50 to 60 million ounce range. So in terms of looking forward, a new silver supply coming online, there's not really a lot out there. And when you look at the demand side of things, really we're seeing significant growth in solar, there's supplementary growth in auto through electric vehicles. And we've seen a tripling over the last decade in that demand. So basically going from about 50 million ounces to over 150 million ounces, I think we're in the early stages of that transition

7:33 to that renewable energy and this increase in demand, I think is expected to continue to the foreseeable future. And so when you combine that flat mine supply with that increasing demand, and these numbers are hot off the press from the Silver Institute, we saw a record deficit of demand outstripping supply to the tune of almost 250Moz last year. So when you look at the recent run rate where we've been more dealing with market surpluses to now have that record deficit with continuing demand growth from those renewables, potentially tailwinds from investment demand, just given some of the financial instability and certainly Gold pushing through 2000 here.

8:20 I think we have a very favourable setup in terms of Cordero and the project

8:27 as we move it forward, when it could be coming online and what the silver price could be at that point in time. Yeah, I think that's there's a fundamental, I mean, if you look at the man to silver, I mean, maybe when we got out of regular photography back in the early 2000s, the demand to the demand of for Silver and that has now been in terms of what's coming from solar and industrial has kind of taken that up over the last few years. And

8:55 the question is always on the investment demand for Silver. And as we go forward, you see there's a further industrial growth and industrial demand for Silver, as well as what's going to happen from the investor side.

9:13 So we're pretty excited about what lies in store. Before we just get into our project, quick corporate summary. Cash balance, we did a recent financing. We're now positioned with over US$80M. I think the context, the motivation there was to not only get us through the feasibility study, but also to get us to that construction decision. And there's various items around land, power, water, which are key de-risking items that we are now in a position to be able to achieve and de-risk alongside the feasibility study. And with that sort of current cash balance, we're well positioned to do that. And we'll talk to our timeline in a couple of slides.

9:58 Eric Sprott, I think we're all familiar, this is his biggest investment in the silver space as far as we're aware. And certainly he's been, I think there was a podcast here a couple of weeks ago, certainly talking about his top pick in the silver space being Discovery just because of its unique talk to higher silver prices. And current market cap right now is around $450M.

10:23 Actually well down from its peak around $800M. And that was at a time when the project was in a much earlier stage. So certainly an opportune time to be looking at the stock given where we're trading up right now.

10:41 Maybe this slide is just giving a sense of what our goals are for 2023 and going into 2024. I think In simple terms, we believe that we have a very valuable asset here, a Tier 1 asset in the Silver space to be developed here in Cordero down in Mexico. We did come up with a Pre-Feasibility Study at the beginning of this year. Now, the goal as we progress the rest of 2023 into 2024, we're working to deliver a feasibility study that's really an executable plan for how we're going to confirm capital costs, estimate the detailed engineering, detailed scheduling in terms of how you're going to go forward, make sure we've got the equipment selection, et cetera,

11:30 and processes in place for what we're going to do. So in terms of getting that work, getting the project sort of really well understood now, work with that as part of a goal to, what needs to be done from a financing perspective, but fundamentally, and give it the optionality on how we can advance this project and ensure that shareholders really understand the value of what is sitting here in Cradaro. So as we progress, deliver the feasibility study of this program

12:03 for what we want to do next with the financing alternatives, etc. In the first half of 2024, to be in a position as we complete our permits, to be in a position by the end of the year, before the end of the year, begin advancing to construction of this project. It may be a good time now just to talk around the new mining law in Mexico. And so this was something that was passed a couple of weeks ago. We're still working through some of the specifics of that. But I, and Tony can add some more flavor, but from our first review, it looks relatively benign in terms of the impact on our project.

12:43 So, first of all, there's been a lot of rhetoric in Mexico around potential bans of open pit mining. There's no reference in the new mining law in terms of any restrictions around open pits. So I think that potentially removes a lot of that uncertainty,

13:01 given that was not mentioned. In terms of other key aspects of the law, there's mention around social engagement, engagement with the local communities. I think that's par for the course. And then we can talk about our project location, but there's actually, the nearest community is actually a town of Perala, it's a mining town about 100 about 40 kilometers away. In terms of any sort of environmental permitting the process is similar to what was before there's requirements for some maybe more details around the closure plan. It's certainly nothing that was sort of too unreasonable. And beyond that, there wasn't sort of really anything jumping out. There seemed to be maybe a bit of a focus on the granting of new concessions and shortening the duration of the term of those new concessions, but that would not impact us, given we have an existing concession. So overall, I think it removes a lot of the uncertainty. It gives us a clear path forward in terms of the permanent process and what we're dealing with.

14:05 But just removing that uncertainty, I think in a lot of ways, it's actually a big positive for us. Yes. And I know there was a lot of maybe negative outlook or negative perception per se with these revised mining laws coming out in Mexico. And maybe just because it created some uncertainty, definitely as it's become clarified and as it gets out in the Gazette, etc. And gets published in terms of what it is. You can see that with how the path works. And I can tell you that within,

14:38 for the most part, everything that's outlined there kind of fits within how we operate, how we would operate or build mines, whether you're in other jurisdictions in Canada, United States and Australia, and even in South America that I'm familiar with. So I don't see anything there that is a game changer. It's actually, and for the most part, how we would normally work is we would try to work at the highest standard of where the jurisdiction we come from.

15:06 And I see this as really more of a catch up in some ways. And it's still a very good place to work And to build a mine, as Forbes talked about, in terms of location, where you are, in terms

15:25 of access to people, access to suppliers. You've got a mining-friendly state with a lot of operations going on. You have access to people, access to suppliers, you've got good mining laws and regulations happening in the region, whether it's to help you in terms of what you build. As you finance something, you have a lot of surety in terms of what you're going to be able to accomplish in terms of getting it built. And again, the infrastructure, highways, simple road access, this would not be a fly-in, fly-out operation whatsoever. This would be operated where people can live in the local communities around here and drive in and out to the mine site. A lot of positives in terms of the jurisdiction.

16:11 And I just say, we don't see nothing in terms of the new mining laws that really cause us any major consternations. The consternations were maybe

16:21 tied around the perception of, well, there's something new changing and what's going to happen. And you could see based on what's been proposed or what they're going to pass as new laws. Nothing there that would be any different than what we would be doing in Australia or in Ontario or British Columbia or in Nevada or other jurisdictions that I've been in.

16:49 Yeah, obviously, I think we've talked to this already in terms of the infrastructure. This just zooms in on our land package and it shows you a bit of an outline of what the project infrastructure, the project footprint looks like.

17:04 That footprint sits on privately owned land. So it gives us a big head start in terms of securing surface rights. And as we've talked before, we have a big head start, given we have an existing power line down one side of the property and a 2 to 4 lane highway down the other side. As far as power, we've confirmed through a recent study that there's sufficient power at the substation that feeds that power line. It looks like we'll probably have to put in a parallel power line, and that's what was assumed in our pre-feasibility study. So no major surprises there. Well, and even fitting within the deliverables for 2023, Again, we talk about wanting to complete a feasibility study, which is a plan, a detailed plan now that says what we find, basically confirm infrastructure for the site and plans and capital programs and equipment selection moving forward, combined with that, de-risking the project, that's on the technical side, we de-risked the project. We de-risked the project from the surface rights in terms of purchase of land and infrastructure locations on site, condemnation, drilling, et cetera, for that confirmed access to the water

18:22 for what we need for going from phase 1 to phase 2 to carry out the mine operations and confirm them in terms of power and power availability for site with that support, that's that's some work all supports are going for permitting that work for all this work with permitting supports what we plan to do in 2024 in terms of getting the financing put in place to build the project.

18:51 So look, a lot of this additional detail comes from the pre-feasibility study. I mean, that was out in January. We'll probably move pretty quickly through this and happy to fill in any gaps as part of the Q&A. But what's really nice is we're dealing with a big disseminated deposit. So very straightforward in terms of getting the ore from within the ground to above the ground. And then the metallurgy is very straightforward. It's very straightforward to then liberate that metal through conventional flotation processing. And we talked about the benefits of the existing infrastructure. But when you take those lovely qualitative characteristics and you put a mine plan and some economics around it, some very good numbers come out. We're sitting here with a US$1.2Bn

19:39 net present value, and that's still over US$22 an ounce. I think at current prices, it's probably more like US$1.4Bn. Internal rate of return is almost 30%.

19:51 A lot of production, a long mine life, bottom half of the cost curve. And what's really nice is, as we talked about, is the phase expansion. And so that means the initial CapEx, we're building a plant that's 25,000t per day. So that comes in around 450M, meaning the net present value, CapEx ratio is around 2.5 times. Typically, anything above 1.5 times is excellent. So it really speaks to the capital efficiency of that phased approach. Also though, in terms of the net present value at 1.2 billion, that's the net present value with the financing decision for the phase 1. But actually, as this project is finally completed at phase 2, the actual net present value increases on this project.

20:39 That's a good point.

20:42 So you actually grow value. So the true economics of this project is not really outlined here.

20:53 A quick comparison, I think we showed reserves versus other assets, but when you put in context versus the big silver producers, These big deposits are pretty rare. And we're actually sitting with bigger reserves here than Corwin-Heckler. And I suppose about 50% of where Pan American is. And these are companies that obviously have a significantly bigger market cap than us. But within Pan American's reserves, half of that reserve, which is the size of Escobar, of the discovery of the Canary's Escobar in Guatemala, which is developed, but currently no social license operated. So This project, once built, will definitely transform the industry within any one of these players.

21:44 It would be part of building the platform to build the next leading Silver company. I think just to reiterate that point, I mean, we're showing sort of production costs and profitability metrics here against some of the key Silver players. So years 1 to 12 Cordero is going to be producing around 35Moz of Silver equivalent. So that's slightly behind Core, but actually bigger than Heckler and bigger than 1st Majestic.

22:14 So impressive scale. I mean, those companies have multiple operating mines. Obviously, in our case, all that production is coming from the one asset. Because of the low strip ratio, the good metallurgy,

22:29 we're in the bottom half of the cost curve. The all-in sustaining cost is around US$12.80 an ounce. So it's actually significantly below some of the biggest silver producers and not too far off the really low cost producers of silvercrest and mag. But what is often overlooked when you look at the cash flow generation of any company is the scale of its assets. And when you look at profitability and here we're measuring profitability in terms of the ASIC margin. So the profit margin at a $22 silver price times by the amount of ounces you're producing. In our case, we're sitting up around $280 million of ASIC margin based on those assumptions and purely a function of the level of production and that AC cost profile.

23:19 So that's significantly above these other silver producers. And I think it's a concept that often is missing in our industry. And when you look in the gold space, the top 3 biggest cash flowing assets last year in the Gold space were Pinusquito, Canadian Malarkey and Detour Lake. They're all big, large-scale projects. And so the power of scale, I think, is incredibly important. I mean, I think Tony saw that first hand over his time with Kirkland Lake and running Detail Lake and the ability to get your unit costs down, high production and the amount of cash that you generate as a return. From a scalability point of view, this one asset, And this is just based on Silver prices that we look at and Metal prices currently. So you see there's lots of future optionality of Metal, if you believe in increased Metal price. But you can see because of the scale of this operation, the amount of cash flow and profitability generated from this one asset.

24:21 It would lead the industry. For us looking forward, We're comparing where we're trading at right now to more advanced peers. I mean, Mag and Soil Request are obviously in production now, but I think as we continue to de-risk and deliver the Feasibility Study, advance the permitting process, we'll continue to bridge that valuation gap. I think there'll be some strong tailwinds for the Silver price along the way. But certainly there's a clear re-rating opportunity here as we continue to advance Discovery Cordero towards a construction decision as we get better visibility on that level of production profile, that cash flow generation that's going to come with this asset over the next 12, 18 months here.

25:15 So That's the formal part of the presentation. And so now, Cameron, I'll hand it back to you to see if there's any questions. Yeah, absolutely. Thank you, Forbes. Thanks, Tony, for the great presentation. And just as a reminder to everyone in the audience, if you'd like to participate, Please feel free to submit your questions in the Q&A panel found on the right hand side of your screen next to the chat. Let's get started though. We have a bunch of questions that have already come in. First question comes from John. What's the risk of Mexico nationalizing silver mines? We think it's pretty low. So look, the only rhetoric around nationalization today in Mexico has been on lithium. There's only really 1 advanced lithium project that's actually owned by a Chinese company.

26:02 Politically, there hasn't been much sort of pushback from any of the NAFTA countries as a result of that type of nationalization because for obvious reasons, but Look, silver, I mean, Mexico is the largest silver producing nation on earth. There's big silver producing companies that are local within Mexico, Fresnillo and Pinole are the big ones. Grupo Mexico is a very sizable company, even though they're more focused on copper. Those companies do have a lot of political sway. I would never think that we would sort of get down that path. I think if it would have happened, it would have happened under AMLO and it would happen by now. But as we just talked about, AMLO's put forward his new mining law and overall, for more advanced age projects, it looks relatively benign and certainly in line with countries like Canada and the US. So I couldn't see that happening, to be honest.

27:02 No, fair enough. Indra wants to know, and he states this, that many construction projects sometimes suffer cost overruns. What specific protections are you going to be building into your plans so that you can avoid a cost overrun? Yeah, good points. I mean, There are always things that happen and I've spent a lot of time sort of understanding projects. A lot of times it's not necessarily cost creep, sometimes it's scope creep. The scope changes, I haven't fully understood the scope. I think some of the things that, if you look at what our plan is in terms of 2023, detailed understanding of the scope and detailed understanding of the project itself, your capital cost estimates based on fixed sort of ideas, fixed scope in terms of what you want to build, what you want to put together.

27:52 So that's a large part of what we're trying to do, combined with working at areas that de-risk and really understand the details of the project. And whether that's again, making sure we put a pin on the water, put a pin on power, etc. And then the other aspect that causes cost creep, There's always going to be inflation, but it's your whole project management systems in terms of how you do your project controls, how you build a project, what the ownership you have internally, both in the management group and going right up to the board in terms of how you're going to build this project and manage it on a day-to-day and report on it. There's a lot of things you have to do.

28:39 What I see on this project that really sets the difference is the scope looks fairly somewhat easy to understand. A lot of people have commented to us about building this operation for only US$450M. It seems too low. But first off, The strip ratio, there's no pre-strip or very little pre-strip to be done here in terms of the surface. We are doing condemnation drilling, we are doing geotechnical drilling, but in terms of surface infrastructure and foundation support and earth moving, there doesn't seem to be, there's no big water course, no big play systems or large overburdened things that would have an impact on infrastructure, et cetera.

29:27 And so the areas that are the unpredictable areas in terms of scope, we're working towards trying to understand all those and get the detailed engineering done before we advance. Sometimes a lot of projects get cost cut, maybe because they get advanced too quickly into capital program without really understanding the details and spending a little bit more time making sure you do your detail engineering and detail work on that. Those are the things we can manage. The things we can't manage is definitely cost creep and inflation, etc. And Those are areas where you put in contingencies in your estimates. And I always say there are 2 or 3 different types of contingency that you have in any estimate.

30:14 The one contingency you have is just based on ensuring that you, when you talk about commodities or amounts of things with the amount of labor hours, amount of materials and supplies you're going to need. There's 1 contingent of that, and they can serve that you estimate that correctly. You might say, I need 100 million or 100 cubic meters of concrete, maybe you need 110. So you got to give yourself contingency there. Second part of the contingency, second contingency you need when you're building a project is the quality, the accuracy of the estimate that you have and the timeliness of the estimate. We might be doing something now in May of 2023 and finally going to agree to advance it in May of 2024, May of 2025.

31:04 So you've got to provide contingency for the quality and the accuracy of the estimate. And then your third contingency you need to put in place is for all the stuff that you don't know is going to happen and make sure that you don't sit there and say, oh, well, we're so thorough that we knew everything that was gonna happen. So as long as you put those things in place, and we've been working towards that type of discipline in terms of our estimates, and we're gonna be a lot more proactive in those areas to come up before we present it to the market what we're actually going to build here. OK, great. Could you give some context for what 1 shareholder describes as dilution from recent underwriting when the company seemed funded through to 2024? Yes, look, we sort of did touch on this before.

31:51 So we were funded through the delivery of our feasibility study, which was targeted for the first quarter of next year. Now, beyond the feasibility study to get to a construction decision, there's key items such as surface rights, water rights, and then some of the sort of easements rights related to power that would be an added cost above and beyond that delivery of that feasibility study. So it looks like we have an opportunity to bring forward some of those key de-risking items into this year. Hence why we raised an additional amount of capital recently to accelerate the delivery of those key items. So overall, the project now, we should be set up to get to a construction decision rather than just a feasibility study. And look, the timing of these financings, it's always nice to try and get cute with it and sit tight for a higher share price or a higher silver price.

32:57 But there was demand from some key institutions and that demand doesn't just sit there on the sidelines forever. And so we have to sort of make a decision as a management team. Do we want to get queued and maybe sit tight for another 6, 9 months? Or given the demand was there, we can accelerate some of these risky items for the sake of issuing, in the big scheme of things, another 10, 15 million shares, we had to make that call. And so that just provides a lot of context around that, but I appreciate that obviously our messaging leading up to that was we were funded, but there are additional costs that need to get us to that construction. Yeah, I guess it's part of it is that we presented a feasibility study was still a whole bunch of de-risking. I, I, our parts to it are saying, you know, we moving forward and we've, instead of putting out a feasibility study where we don't own the surface rights, where we actually complete that we, and if we're working right now on a, on a definitive agreement to purchase the surface rights, then, and to not have the financial capability to live up to the contract agreement. Part of it was, we can secure the surface rights, we can secure some water rights, begin moving forward and water de-risking, similar to UNPOWER, but we're going to need to put the financial resources there so that we can get it done as part of getting the Feasibility Study done.

34:23 Those are the things we looked at. And then as Corbyn mentioned, we were able to find a demand for that, that we could get it done. We all never want to do things and take dilution to shareholders, but you have to go back to fundamentally, we have to have the ability to invest money and help in terms of de-risking this project. We're not just here doing a Feasibility Study to just have another study done so that in May or June of 2024, we can keep talking about now we got this Feasibility Study, how we're going to move it forward. We're not just here to study things. We're here to work towards building a mine. And it was about taking this and giving it, de-risking it so that when we have some surety of an end game of where we can go to lead up. We would not be able to in 2024, delivering a feasibility study to go to the next stage in terms of financing, et cetera, without having de-risked it from a, again, from a land surface rights, land ownership, power and water on this project. And we would not be able to advance permits to the timeframe we want to without having secured that as well.

35:41 Okay, fair enough. And just sort of on this topic, Adrian is wondering when you might need to next raise more funds? Yeah, so our target probably next time around will be part of the construction financing package. And so that process is going to ramp up through the course of next year. I think right now, all options are on the table. We've had initial chats with lenders. It looks like there's appetite there to potentially take sort of 60 to 65 percent of the funding to come through debt. We're producing concentrates. There's going to be interest on the opt-out side of things as well. Obviously, there'll be an equity component to that financing too. And flavour of the day is obviously streamed in Royalties. And it's not something we're ruling out. I think we just be cognizant of the drain on cash flows that come with that over that, not in the life of mine, but the extension of the mine life beyond the current 18 years.

36:42 So, so more, that's a more sort of second half of next year, all those different project financing components coming together. Absolutely. I'm going to combine John and Adrian's questions here as well as I can. Are you looking yourselves, are you looking at yourselves as being a major independent silver producer company, possibly involving acquisitions, or would you prefer to monetize the assets that you have? Just a big question about, I guess, is there interest from your perspective and also is there interest from large mining companies reaching out to you? I think fundamentally, we have an asset here and we can build, as Forbes has shown in the previous slide, this would be a transformational Silver company in the space. And we have the capability, we're going to build the platform to build that and be able to really take it forward.

37:40 And the optionality for that will come as we complete the feasibility study, de-risk the project, secure surface rights, secure water, secure power, secure permitting, and secure the financing for this project. On the other side, though, we want to make sure that the shareholders really can understand the value of this project so that if something else happens, whether we build this ourselves and use this to transform the silver space and build a company, or there's third parties that have options. The optionality would be there for the shareholders, that the shareholders can make a valid decision on what they want to do. The company belongs to the shareholders, it doesn't belong to us as management. We're going to demonstrate as much that we can in terms of what the value is here currently, what the value that we can create and provide that opportunity for shareholders.

38:32 This is definitely once it's, I think over the next 12 months, you're going to really see the value of this project. And it's going to be something that definitely is going to raise the eyes of a lot of larger, major companies. At the same time, it's going to really, I think, open up the eyes of people of what type of a Silver company this can build itself. Great. Ali is referring to page 12 with this question, And he says that it seems to show conventional tailings dams. Could you please explain your stance on filtered tails deposition instead of wet tails dam options? No, this is actually a high density tailings, even to dry stack tailings options. I mean, water management is critical to what we do. Plus we're from a dam construction point of view. The concept here right now is a high density tailings deposition strategy. So not a water tailings deposition strategy with, We're looking at the design, the tailings area, et cetera, with increased drainage, and such as capabilities.

39:38 And one of the things that really sets this deposit off, this project off, we got a very coarse grind. So from a water efficiency point of view, it's going to be something that we're really going to be working on. So it is not a conventional payments area, if that's what you're asking. Well, fair enough. Adrian is wondering, is there anything that might happen that could accelerate the timeline to production? And he offers this as an example, you know, granting of permits potentially? Yeah, look, I think the critical part item for us will be the permits. And so we're submitting the EIA, that's the main permit required later this quarter. Typically in the past in Mexico, it's been a 6 to 12 month turnaround time on permits.

40:27 I think for our internal forecast, we're assuming 12 to 24 months. So look, if it ends up being 6 months, I mean, that is a very quick turnaround considering Canada and the US, often you're waiting more than 5 years. But for us, I think where, and even this timeline we show, we're assuming a mid case 18 months, but look, if it is 12 months, then potentially permits could be in hand towards the end of first half of next year. So that's probably where there's a little bit of sway in terms of where the timeline can be brought forward. Okay, great. Bob has this, Tony, you mentioned this being a tier 1 asset and one that could be most prolific, 1 within the country. Given the equity distribution, the potential for friendly and not so friendly M&A seems high. When does that strategy take on more meaningful emphasis?

41:20 I think as we get over the course of the year, we're working to de-risk the project. We're working to complete the feasibility study, which is really a detailed estimate of what we're going to do, so we can really understand the value and any third parties would understand what value is here. I think we could be talking to people now, but there's still a lot of, we don't have as much substance or details to support things as we will in the next 6 to 12-months. But I can tell you again, we don't have, we're not going to sit here and have an ego that says we need to own this asset.

42:07 We're not in the business of studying. We're here to build a mine and move this thing forward. And we're going to do it for the best interest of to create value for the shareholders of Discovery. But it's gotta be right now, I think as we're talking to people, it might be too opportunistic on the other side. I think we've got the company we're financed, we're property, we've got a proper course of action in terms of what we can do to really demonstrate to our shareholders what the value is here and then the decisions can come to the shareholders what they want to do as we go forward. We'll be talking as part of our financing and plans to advance this, we're going to look at all ways, whether we finance it with debt and finance with debt and equity and build it ourselves.

42:54 Forbes talked about a couple of different financing alternatives, whether we want to do it from a joint venture perspective or whether we want to look at it from a partnership perspective or a way to transform. You know, you can transform and make a transformational company out of discovery or it can definitely help in terms of transforming any one of those other silver producers And or it would definitely be an asset that as I say, that would fit within any of the majors. Right. Adrian wants to know with respect to construction, would you be looking to buy all new equipment or could you save money by acquiring secondhand equipment that as long as the quality is acceptable. You always want to work for it. The biggest thing in terms of equipment, and it depends where it is, if it's a mobile fleet, is consistency of equipment. The last thing you want to do is have 3 different versions of.

43:48 So if there's a way to take advantage of a fleet of gear somewhere that would work, we're open to that. We are even looking at some things about contracting out. So that's on mobile fleet, etc. In terms of plant and the actual plant itself, if there's, you know, we've done it before, if there's mills or if there's crushers that you can get from someplace else that you can save money on, We'll look at it provided that they fit the criteria that we need in terms of throughput rates, efficiency, etc. You always want to look at things to optimize what you get in terms of value. We don't need to go and build a brand new mill if we can find one that's sitting out there that more than fits the bill and what we're trying to do here.

44:41 Biggest part of that is also, is the other parts of costs that cost could happen, It's time to get to delivery. So you can take advantage of getting things a lot sooner than having to manufacture brand new. That's worth a lot of money to you. Fair enough. Danny wants to know, in your opinion, what's the largest risks that you see getting to full value realisation? Look, I think from a technical point of view, the project is very straightforward, as we mentioned. So I think for us, it's really focused now on these items we've mentioned. So the permit is one big one, but we now have clarity based on the new mining laws. So there's been a lot of uncertainty, certainly in the story, the last sort of 12, 18 months, when there's been rhetoric around mine bans and the turnaround times of permits and what the new mining law is going to look like.

45:36 We now have some clarity on that front. So I think that's definitely going to help a lot. And then we have been advancing the background things around the land and water especially, they are key de-risking items to get to that construction decision. So I think overall they're probably the 3 key areas that are the key items for us that we recognize are a risk to the project, but we have been proactive in terms of how we've been dealing with them. The EIA, which we'll submit later, has been a huge amount of work that's gone into that the last 24 months. So it's not something that we've been spinning our wheels. And so that's a big, hefty document that we'll be presenting, but it's been done in a very detailed and diligent way, which we feel should give us a big head start as we initiate that process.

46:30 And really everything sort of goes on the subset. I mean, the biggest thing, excuse me, you have a company, a small junior company with about a CAD$400M-450M market cap, presenting a pre-feasibility study that demonstrates the US$450M capital rates requirement, capital requirement to build that. So That's the biggest thing on the street. If we were to deliver a feasibility study in 12-months from now that hasn't de-risked water, hasn't de-risked power, hasn't de-risked land surface rights, hasn't de-risked permitting, right? Hasn't de-risked the financing aspect of it. Then I would say, I mean, that's the biggest risk. So that's, you know, the biggest risk we have is that we're a small company, where the capital raised that required to take us to the next step is more than our current market capitalization.

47:24 And so, these are, as you say, that's what you see. So, how do we deal with what can we control about that? Do a really good feasibility study and an executable plan. Let's make sure we, so we understand the scope of that project. Let's de-risk it as much as we can with, again, surface rights, power permits, water, and then we'll be able to then maybe make a good decision and get that, take that financing overhang off of the story and get that done. Just a quick question about requesting some clarity. The slide show says that the feasibility study is going to be the first half of 2024, but Adrian, he may have heard you say first quarter in today's presentation. He's just wondering if you could clarify.

48:16 First quarter's in the first half. First quarter in the first half, yeah. So look, I think we're shooting for the first quarter, or maybe we're giving ourselves a little bit more runway there. But certainly internally, we're shooting for the first quarter. Yeah, look at it this way. I mean, a part of what I said to the board, it's a small management group, but all we have to do is complete a Feasibility Study and we're going to get it done as fast as we can to deliver the quality that we need to deliver. Absolutely. Peter just asked this, if you think that the stock is going to have to be consolidated after the construction financing? I mean, often you say with consolidation is the stock just tends to drift down on the back of that. So, look, outside of maybe an upgrade of listing in one of the big US exchanges where it's mandatory.

49:04 I think we've got to be cognizant of that sort of trading post the consolidation. I mean, if there is pressure, you'd really want to do it around a big milestone for the company that you then can market heavily on the back of. But there's no immediate plans right now. We have a plan for creating value for our shareholders and our execution strategy around, as we talked earlier, about advancing this project and de-risking it is our value creation for the shareholders. We don't intend to create value for a shareholder. It's not our strategy to consolidate our stock to help get us a better share price and create value for the shareholders. That's not our goal here.

49:57 Right. Bob wants to know, Assuming that he has the interest to do so, does Sprott have limits on how much more of the company that he can own? I think there is a trigger point where I think in current ownership levels, he's already a controlled person. So there are any sort of buying or selling that has to be disclosure around any transaction. And then I think there is an automatic limit where I think you can be restricted in terms of how much you can go out and purchase. I don't think he has any rights to increase his ownership position. He does have rights to to be able to to participate in his program and to maintain his position as he moves forward. But as he as he as he dilutes down, he doesn't have any rights to increase his position again.

50:52 Great, thank you. Question, if you could elaborate further on the management changes and the reasons behind that, as well as why you, Tony, specifically, were interested in taking on this role as CEO. I mean, first off, I didn't come and get involved with discovery with a goal to do this. I mean, I agreed to join the board. It was a project that was very interesting and I'd known about and been in discussions with in the previous role. And so when the opportunity came to turn the board, it did. And in terms of the decision to make a management change, That was something that was done at the board level. And they just asked me to fill in on an interim role. I think as we progress throughout 2022 and into 2023, completing a pre-feasibility study, and a combination of de-risking this project, getting a real sense on the quality and the size of this project. You look at it and say, this is something that I think is a game changer in the Silver industry. And definitely, as I mentioned, one of the best undeveloped Silver Zinc projects globally.

52:05 You look at that and you say, why wouldn't you participate and help in terms of moving this forward? I think It's a very unique project. As Forbes showed earlier, it's a large-scale operation that will be in the low half of the cost curve in terms of this industry. It's one of the largest Silver deposits in the world with future optionality in terms of, if you look at the total resource of 1.3Bnoz Silver equivalent, you get a sense on future optionality with higher Silver prices and higher metal prices in terms of what goes forward. It produces the right mix of metals. When you talk about whether, as you build social license, it's producing the right mix of metals that the world needs over the next 20-30 years.

53:03 You look at it as there's a lot of projects out there. This one looked like something that's worth throwing your hat in the ring and working on in terms of helping move it along. Great. Quick question. What's the strip ratio at Cordero? 2.2 to 1 over the life of the mine. What's really nice is, as Tony said, the deposit comes to surface. So we're not dealing with a huge amount of pre-strip before getting into the ore body. And the best grades are actually near surface in the start up there in the southwest. So good numbers overall and a good geometry in terms of the ore body. And any strip that you have to do early on is really stripping the oxide to get to the sulfide mineralization. And the oxide is ore that we're going to process. We just want to process it.

53:58 It's got to compete for its position in the mill, but blend at 10% to 90% with the sulfide. So even what you're pre-stripping is ore. And then even as you do any, what we might classify it as waste in the 2 to 1 strip ratio. We do have some clarifications on this. It is mineralised material because you're in it within the resource. So there's potential to create some lower-grade stockpiles as the mine progresses. Right. Adrian has this question. What's the value breakdown between silver and zinc? Yeah, so on a revenue basis, we're looking at spot prices. Silver is probably close to 50 percent.

54:45 Zinc's probably 35 percent with the remainder coming from lead. The pre-feasibility study, given silver was around at $22 an ounce, life of mine, silver was probably 45%. But obviously we're seeing some nice moves in the Silver price here. It is more Silver rich in the early years and more Zinc rich in the later years. All right. Well, look, gentlemen, that's all the Q&A that we have for today. So I want to thank you for going through a great presentation and an awesome Q&A session. Of course, I wanna thank everyone who's joined us today, especially those who have asked us questions. If you wanna get in touch or leave feedback, please feel free to complete the survey that's linked at the top of the chat. But Forbes, Tony, I wanna pass things back to you for any closing remarks that you might have.

55:34 Thanks everyone, Obviously a lot of good questions there and our contact details are on the presentation there as well as our website. We pride ourselves in getting back if there are shareholder queries. So I appreciate everyone's time and feel free to reach out if there's any follow up required. And again, we see this as being a very valuable project. The company is not getting recognized for the trading in terms of value, but we expect that over the next 12-months as we de-risk the project, as we continue to change that perception of this project, you're going to see a lot of value coming back into this story. Thanks.