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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.