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TORONTO, March 31, 2023 (GLOBE NEWSWIRE) -- Discovery Silver Corp. (TSX: DSV, OTCQX: DSVSF) (“Discovery” or the “Company”) is pleased to announce its financial results for the fourth quarter (“Q4 2022”) and year ended December 31, 2022, and to provide a summary of key events for the quarter and subsequent to year-end. All figures are stated in Canadian dollars (“C$”) unless otherwise noted. Discovery’s flagship project is the 100%-owned Cordero silver project (“Cordero” or the “Project”) located in Chihuahua State, Mexico.
Tony Makuch, CEO, states: “The significant progress we made at Cordero in 2022, culminating in the delivery of a Pre-Feasibility Study (PFS) in early 2023, has demonstrated that Cordero is one of the most exciting development projects in the mining space globally with the potential to become one of the top three largest silver mines and top ten largest zinc mines worldwide. The PFS demonstrates excellent economics and is highly capital efficient through building in phases to minimize the upfront capital for Phase 1 and have the project finance the final build by utilizing operating cash flow to fund Phase 2. Additionally, the PFS incorporates less than 50% of the current known resource tonnes, creating significant leverage and optionality with only a modest increase in metal prices. The design of the reserve pit fitting within the shell of the resource pit also supports this option. There also remains further significant exploration upside, with the deposit still open at depth, and a number of other targets defined elsewhere on the property.
“Work on our Feasibility Study, which is expected to be delivered in the first half of next year, is already well underway with recent drilling in and around the pit highlighting further growth potential beyond what was outlined in the PFS. Alongside our Feasibility Study work we remain committed to maintaining our positive working relationships with all local stakeholders and look forward to initiating the construction permitting process next quarter and the commencement of property-wide exploration on our highly prospective land package in the middle of the year.”
HIGHLIGHTS FROM Q4 2022 & SUBSEQUENT EVENTS:

• Completion of our PFS on Cordero that outlined an 18-year mine life with average annual production of 33 Moz AgEq at an average AISC of $12.80/oz AgEq in Years 1 to 12. The after-tax NPV5% was US$1.2 B and the IRR was 28% at base case metal prices of Ag - US$22.00/oz, Au - US$1,600/oz, Pb - US$1.00/lb and Zn - US$1.20/lb.
• The appointment of Tony Makuch as the Chief Executive Officer; Mr. Makuch has more than 35 years of development, operational and leadership experience. Most recently he was CEO of Kirkland Lake Gold Ltd. where, under his five-year tenure, annual gold production grew from 315,000 oz to over 1,400,000 oz and Kirkland Lake’s share price increased over 500%.
• The graduation to the main board of the Toronto Stock Exchange reflecting the Company’s maturity and growth with Cordero now having advanced to the feasibility study stage.
• The announcement of the filing of a Final Short Form Base Shelf Prospectus allowing for the sale of Common Shares, Warrants, Subscription Receipts and Units of the Company in one or more series of issuances for aggregate gross proceeds of up to $300,000,000 for a period of 25 months following the filing.
• The Company’s receipt of its official ESR Certification, which is issued by the Mexican Center for Philanthropy to organizations that have demonstrated they operate in a socially and environmentally responsible manner.
• Announcement of the Company’s work program for 2023 that includes: significant advancement of FS scope items, the initiation of the construction permitting process, an initial 9,000 m drill program planned across multiple targets on the Company’s prospective land package, and further investment in our well-established ESG programs as part of our commitment to work with all local stakeholders.
• As of December 31, 2022, we had a cash and cash equivalents balance of $46.2 million.

LOOKING AHEAD:
The Company has now completed 39,000 m of its Feasibility Study drill program that consists of engineering drilling, resource upgrade drilling, and step-out drilling targeting the expansion of the PFS open pit. The drill results subsequent to the PFS cut-off date continue to demonstrate the mineral resource growth potential that could be unlocked and included in the upcoming Feasibility Study. Resource upgrade infill and step-out drilling returned a number of higher-grade intercepts within, and below, the reserves pit, in areas that were previously modeled as low-grade ore. The Company has the potential to continue lowering Cordero’s strip ratio by converting the waste to ore within the pit and expand the pit at depth.
The Company’s drill program in 2023 at the project is designed to support the FS through condemnation and geotechnical investigation for locating site infrastructure and for hydrogeology investigation.
The FS is expected to be completed in the first half of 2024, with the construction permitting work being performed in parallel. The submission of the Environmental Impact Statement (“Manifesto de Impacto Ambiental” or “MIA”) is expected to be made to the Mexican Federal Environmental Department (“SEMARNAT”) in the first half of 2023. Assuming a 12 to 24 month permitting timeline, this would position the Company to make a construction decision during the second half of 2024.
In parallel with these work plans our ESG program continues to be an important area of focus, with our 2022 ESG report scheduled for issuance in 2Q 2023, and key government and international accreditation certifications planned for completion in the second half of 2023. We also remain committed to the growth potential of Cordero almost 9,000 m of drilling planned this year on resource expansion targets and our first ever drilling of five highly prospective property targets within 10 km of Cordero.
Our balance sheet remains exceptionally strong with a current cash balance of approximately $38 million and no debt, sufficient to finance the 2023 work program at Cordero. The Company recently filed a final base shelf prospectus allowing for the sale of Common Shares, Warrants, Subscription Receipts and Units of the Company in one or more series of issuance for aggregate gross proceeds of up to $300 million for a period of 25 months following the filing. The Company expects to complete a Definitive Feasibility Study for the first half of 2024, and advance Cordero through to a construction decision following the release of the FS and completion of the necessary financings.
SUMMARY OF Q4 2022 & SUBSEQUENT EVENTS:
Environment, Social, Governance:
The Company continues to make excellent progress on its Environmental, Social and Governance (“ESG”) initiatives. Recent highlights include:

• Community Programs – ongoing sponsorship of the supply of equipment and medicine to the mobile medical unit that was donated to the Parral municipality in 2022. The also provided assistance with the construction of local medical clinic in 2022. Both the medical unit and clinic have the capacity to serve approximately 70,000 people per annum within the Parral municipality.
• Socially Responsible Enterprise (Empresa Socialmente Responsable) Certification : the Company has received its official ESR certification from the Mexican Center for Philanthropy (Centro Mexicano para la Filantropia) in Q4 2022. The certification requires the Company’s commitment to five pillars: business ethics, community engagement, protection and preservation of the environment, quality of life for employees and corporate social responsibility.
• Great Place to Work Certification
  
• this certification was awarded to the Company in Q4 2022 and recognizes companies that create an outstanding employee experience through building a workplace culture of trust, credibility, respect, pride and collaboration.
  

Further details can be found in the news releases dated November 11, 2022, and January 12, 2023, and in the Company’s 2021 ESG report available on the Company’s website. The 2022 ESG report is progressing well and is expected to be published Q2 2023.
Projects:
Preliminary Feasibility Study (PFS)
On January 24, 2023, we announced the results from the PFS on Cordero. Highlights from the study include:

• Excellent project economics: Base Case after-tax NPV5% of US$1.2 Billion (C$1.5 Billion) and IRR of 28% (Ag - US$22.00/oz, Au - US$1,600/oz, Pb - US$1.00/lb and Zn - US$1.20/lb).
• Extended mine life & higher production: 18-year mine life with average annual production of 33 Moz AgEq.
• High margins & low capital intensity maintained: average AISC of US$12.80/oz AgEq in Years 1 to 12 with an initial development capex of US$455 M resulting in an attractive NPV-to-capex ratio of 2.5x.
• Significantly de-risked Reserve base: new Reserves declared of Ag - 266 Moz, Au - 790 koz, Pb - 2,970 Mlb and Zn – 4,650 Mlb; more than 70% of mill feed in Years 1 to 5 classified as Proven.
• Exceptional silver price leverage: PFS mine plan assumes only 42% of Measured & Indicated Resource tonnes are processed; clear potential to significantly extend mine life at higher silver prices.
• ESG/economic contribution: total estimated taxes payable of US$1.2 Billion, a peak estimated local workforce of over 1,000 employees and over $4 Billion of expected goods and services purchased locally within Mexico over the life of the mine.

The PFS was released in conjunction with an updated Mineral Resource Estimate (“MRE”). Further details on the PFS and MRE results can be found in our news release dated January 24, 2023, and in the supporting technical report filed on SEDAR and on the Company’s website.
Feasibility Study drilling
Feasibility Study drilling commenced in Q3 2022 and work is expected to be ongoing throughout 2023. The program is anticipated to consist of approximately 50,000 m of drilling related to engineering drilling, reserve expansion drilling and resource upgrade drilling. To date, the Company has released 45 drill holes consisting of 20,000 m of drilling. These initial drill holes were focused on two key areas: 1) expansion of reserves within and beneath the Pre-Feasibility Study open pit and 2) upgrading and expansion of the resource in the far northeast of the deposit.
Reserve Expansion Drilling – highlight intercepts from this drilling include:

• 77 m averaging 126 g/t AgEq 1 (46 g/t Ag, 0.08 g/t Au, 0.7% Pb and 1.4% Zn) from 218 m and 22 m averaging 265 g/t AgEq 1 (83 g/t Ag, 0.10 g/t Au, 1.8% Pb and 3.2% Zn) from 374 m within the PFS pit in areas modelled as low to medium grade in hole C22-656.
• 96 m averaging 124 g/t AgEq 1 (33 g/t Ag, 0.03 g/t Au, 0.7% Pb and 1.8% Zn) from 464 m on the margins of the PFS pit in hole C22-654.
• 32 m averaging 158 g/t AgEq 1 (77 g/t Ag, 0.16 g/t Au, 0.7% Pb and 1.3% Zn) from 108 m and 39 m averaging 241 g/t AgEq 1 (124 g/t Ag, 0.09 g/t Au, 1.2% Pb and 1.9% Zn) from 185 m within the reserves pit in the South Corridor in hole C22-677.
• 36 m averaging 126 g/t AgEq 1 (35 g/t Ag, 0.06 g/t Au, 0.7% Pb and 1.7% Zn) from 481 m and 27 m averaging 133 g/t AgEq 1 (25 g/t Ag, 0.06 g/t Au, 0.6% Pb and 2.2% Zn) from 555 m in hole C22-687; these intervals were toward the bottom and beneath the reserves pit in an area previously modelled as waste.

These positive drill results demonstrate the potential to expand reserves through the conversion of waste to ore within the reserves pit and through the expansion at depth of the reserves pit.
Far Northeast Drilling – Drilling in 2022 outlined low grade mineralization with a number of discrete high-grade zones in the far northeast of the deposit, more than 1 km beyond the limits of the reserves pit. Most of this mineralization is within 100 m of surface and is included within the resource pit constraint as part of the January 2023 resource update. 15 follow up drill holes have been completed testing the lateral depth and strike extent of mineralization within this zone. This drilling confirms the presence of a broad mineralized fracture system in the area. The orientation of mineralization does not appear to be consistent with the dominant northeast orientation evident in the main part of the Cordero deposit. A more detailed review of fracture orientation along with further drilling is required to develop a better understanding of the main controls of mineralization in this part of the deposit.
For further details on the drill results noted above refer to our news releases dated November 17, 2022 and March 22, 2023. Supporting Technical Disclosure for drill results can be found at the end of this release.
SELECTED FINANCIAL DATA:
The following selected financial data is summarized from the Company’s consolidated financial statements and related notes thereto (the “Financial Statements”) for the year ended December 31, 2022, and the Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2022.
A copy of the Financial Statements and MD&A is available at www.discoverysilver.com or on SEDAR at www.sedar.com
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(1) Non-GAAP measure defined as current assets less current liabilities from the Company’s consolidated financial statements.
About Discovery
Discovery’s flagship project is its 100%-owned Cordero project, one of the world’s largest silver deposits. The PFS completed in January 2023 demonstrates that Cordero has the potential to be developed into a highly capital efficient mine that offers the combination of margin, size and scaleability. Cordero is located close to infrastructure in a prolific mining belt in Chihuahua State, Mexico. Continued exploration and project development at Cordero is supported by a strong balance sheet with cash of approximately C$38 million.
On Behalf of the Board of Directors,
Tony Makuch, P.Eng
CEO & Director
For further information contact:
Forbes Gemmell, CFA
VP Corporate Development
Phone: 416-613-9410
Email: [email protected]
Website: www.discoverysilver.com
TECHNICAL NOTES & REFERENCES:
Drill results: all drill results in this news release are rounded. Assays are uncut and undiluted. Widths are drilled widths, not true widths, as a full interpretation of the actual orientation of mineralization is not complete. As a guideline, intervals with disseminated mineralization were chosen based on a 25 g/t AgEq cutoff with no more than 10 m of dilution. AgEq calculations are used as the basis for total metal content calculations given Ag is the dominant metal constituent as a percentage of AgEq value in approximately 70% of the Company’s mineralized intercepts. AgEq calculations for reported drill results are based on USD $22.00/oz Ag, $1,600/oz Au, $1.00/lb Pb, $1.20/lb Zn. The calculations assume 100% metallurgical recovery and are indicative of gross in-situ metal value at the indicated metal prices.
Sample analysis and QA/QC Program
The true width of the veins is estimated to be approximately 70% of the drilled width. Assays are uncut except where indicated. All core assays are from HQ drill core unless stated otherwise. Drill core is logged and sampled in a secure core storage facility located at the project site 40km north of the city of Parral. Core samples from the program are cut in half, using a diamond cutting saw, and are sent to ALS Geochemistry-Mexico for preparation in Chihuahua City, Mexico, and subsequently pulps are sent to ALS Vancouver, Canada, which is an accredited mineral analysis laboratory, for analysis. All samples are prepared using a method whereby the entire sample is crushed to 70% passing -2mm, a split of 250g is taken and pulverized to better than 85% passing 75 microns. Samples are analyzed for gold using standard Fire Assay-AAS techniques (Au-AA24) from a 50g pulp. Over limits are analyzed by fire assay and gravimetric finish. Samples are also analyzed using thirty three-element inductively coupled plasma method (“ME-ICP61”). Over limit sample values are re-assayed for: (1) values of zinc > 1%; (2) values of lead > 1%; and (3) values of silver > 100 g/t. Samples are re-assayed using the ME-OG62 (high-grade material ICP-AES) analytical package. For values of silver greater than 1,500 g/t, samples are re-assayed using the Ag-CON01 analytical method, a standard 30 g fire assay with gravimetric finish. Certified standards and blanks are routinely inserted into all sample shipments to ensure integrity of the assay process. Selected samples are chosen for duplicate assay from the coarse reject and pulps of the original sample. No QAQC issues were noted with the results reported herein.
Qualified Person
Gernot Wober, P.Geo, VP Exploration, Discovery Silver Corp., is the Company's designated Qualified Person for this news release within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and has reviewed and validated that the information contained in this news release is accurate.
The most recent technical report for the Cordero Project is the 2023 Preliminary Feasibility Study for the Company’s Cordero project. The report was completed by Ausenco with support from by AGP, Knight Piésold and Hard Rock and is available on Discovery’s website and on SEDAR under Discovery Silver Corp. The PFS assumed average life-of-mine recovery assumptions for of 87% for Ag, 22% for Au, 86% for Pb and 85% for Zn.
FORWARD-LOOKING STATEMENTS:
Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release is not for distribution to United States newswire services or for dissemination in the United States.
This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful, including any of the securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”) or any state securities laws and may not be offered or sold within the United States or to, or for account or benefit of, U.S. Persons (as defined in Regulation S under the 1933 Act) unless registered under the 1933 Act and applicable state securities laws, or an exemption from such registration requirements is available.
Cautionary Note Regarding Forward-Looking Statements
This news release may include forward-looking statements that are subject to inherent risks and uncertainties. All statements within this news release, other than statements of historical fact, are to be considered forward looking. Although Discovery believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those described in forward-looking statements. Statements regarding the results of the pre-feasibility study and the anticipated capital and operating costs, sustaining costs, net present value, internal rate of return, payback period, process capacity, average annual metal production, average process recoveries, concession renewal, permitting of the Project, anticipated mining and processing methods, proposed pre-feasibility study production schedule and metal production profile, anticipated construction period, anticipated mine life, expected recoveries and grades, anticipated production rates, infrastructure, social and environmental impact studies, availability of labour, tax rates and commodity prices that would support development of the Project. Information concerning mineral resource/reserve estimates and the economic analysis thereof contained in the results of the pre-feasibility study are also forward-looking statements in that they reflect a prediction of the mineralization that would be encountered, and the results of mining, if a mineral deposit were developed and mined. Forward-looking statements are statements that are not historical facts which address events, results, outcomes or developments that the Company expects to occur. Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made and they involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from those described in forward-looking statements include fluctuations in market prices, including metal prices, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. Discovery does not assume any obligation to update any forward-looking statements except as required under applicable laws. The risks and uncertainties that may affect forward-looking statements, or the material factors or assumptions used to develop such forward-looking information, are described under the heading "Risks Factors" in the Company’s Annual Information Form dated March 29, 2023, which is available under the Company’s issuer profile on SEDAR at www.sedar.com.
NON-GAAP MEASURES:
The Company has included certain non-GAAP performance measures as detailed below. In the mining industry, these are common performance measures but may not be comparable to similar measures presented by other issuers and the non-GAAP measures do not have any standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
CASH COSTS PER OUNCE
The Company calculated total cash costs per ounce by dividing the sum of operating costs, royalty costs, production taxes, refining and shipping costs, by payable silver-equivalent ounces. While there is no standardized meaning of the measure across the industry, the Company believes that this measure is useful to external users in assessing operating performance.
ALL-IN SUSTAINING COSTS ("AISC")
The Company has provided an AISC performance measure that reflects all the expenditures that are required to produce an ounce of payable metal. While there is no standardized meaning of the measure across the industry, the Company’s definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance dated June 27, 2013. Subsequent amendments to the guidance have not materially affected the figures presented.
FREE CASH FLOW
Free Cash Flow is a non-GAAP performance measure that is calculated as cash flows from operations net of cash flows invested in mineral property, plant and equipment and exploration and evaluation assets. The Company believes that this measure is useful to the external users in assessing the Company’s ability to generate cash flows from its mineral projects.
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Source: https://www.federalreserve.gov/aboutthefed/files/CDIAC-meeting-20221117.pdf

Community Depository Institutions Advisory Council:

The Community Depository Institutions Advisory Council (CDIAC) was established in 2010 by the Board of Governors to provide input to the Board on the economy, lending conditions, and other issues of interest to community depository institutions. Unlike the Federal Advisory Council, CDIAC is not a statutory body, but it performs a parallel function in providing first-hand input to the Board on the economy, lending conditions, and other issues. Members are selected from representatives of banks, thrift institutions, and credit unions serving on local advisory councils at the twelve Federal Reserve Banks. One member of each of the Reserve Bank councils is selected to serve on the CDIAC, which meets twice a year with the Board in Washington.

Record of Meeting Community Depository Institutions Advisory Council and the Board of Governors November 17, 2022:

Overall Economic Conditions: How do Council members assess overall economic conditions in their regions?

• Council members reported strong economic conditions as measured by spending, though there are concerns that strong inflationary pressures may at some point undermine real spending.
• Council members, particularly in the Fourth District, reported that the return of production and manufacturing from offshore locations is helping the economy with significant investment in manufacturing and capital expenditure.
• Despite generally strong conditions, Council members reported stark differences in economic impact between the “haves” and the “have nots.”
• Wealthier parts of their markets are not yet slowed by inflationary pressures, while lower-income households are feeling the squeeze.
• The possibility of a recession remains a concern, but so far declines in overall spending are not evident.
• Despite being vocal about price increases, consumers are continuing to spend.

Inflation: Are the prices o for products and services rising (or declining) more or less quickly than in the recent past? Are the prices for the products and services Council members purchase rising more or less quickly?:

• Council members generally reported that inflationary pressures remain strong, with prices rising rapidly.
• Some Council members reported early signs of inflation softening for some goods in certain sectors.
• Despite rising prices, customers and businesses have not yet pulled back on spending.
• Council members summarized sentiment as a lot of optimism about the economy coupled with much uncertainty about the future because there is an expectation that inflation will have a long tail that has yet to be fully absorbed.
• Drivers of inflation remain mixed.
• Wage inflation is one key driver, particularly in the services sector, with employees expecting higher wages to keep up with inflation. (this is not slowing down presently either! https://www.reddit.com/Superstonk/comments/127pdic/inflation_alert_the_feds_preferred_inflation/)
• Firms that want to retain talent in a tight labor market anticipate salary increases of 5-9% next year.
• Council members reported double-digit increases in insurance costs, with some insurers exiting markets along the Gulf Coast.
• Supply chain issues persist and are another significant contributor to inflation, particularly in the manufacturing and goods-producing sectors.
• The drought in the Midwest and the low Mississippi River levels also contributed to a supply chain backup of both agricultural commodities moving downstream to export markets and raw materials moving upstream for manufacturing and agricultural production. (we have talked about this previously: https://www.reddit.com/Superstonk/comments/zzh5jx/inflation_alert_from_the_transportation/)
• This had a strong effect in several Districts that are reliant on the upper parts of the river.
• Council members also highlighted lingering effects of supply chain issues— some of which were caused by labor shortages—from the pandemic on construction.
• Some areas are experiencing a shortage of concrete and electric transformers (with one-year wait times).
• The apparent randomness of these shortages is likely contributing to further uncertainty among households and businesses.
• In other cases, Council members noted that some firms have realized that they are able to maintain margins by raising prices.
• Council members reported that auto dealers still have strong pricing power with high prices and little negotiation.
• Most businesses are passing a high percentage of cost increases downstream to consumers, which generally was not the case last year.
• However, Council members have observed early signs of a potential shift in this dynamic. For example, market-dominant retailers such as Walmart and Target are now pushing back on vendors, seeking justification for further price increases.
• The most acute effects of inflation are being felt in rural and lower-income areas, with higher gas and diesel prices squeezing the wallets of consumers and businesses, particularly smaller farm operations and other industries that use diesel-fueled equipment.
• While prices for some commodities (such as aluminum and lumber) have fallen, that softening has often been offset by higher transportation costs.
• Prices for trucking and transportation have declined but remain high—and those higher prices are being passed on to consumers.
• The Council also reported that some consumers and businesses have become more focused on interest rates than inflation, which has resulted in real estate sales and development and capital expenditures being compressed by the higher interest rates.

Housing: How have home prices changed in recent months? Have there been any changes in overall housing activity in Council members’ Districts?:

• Strong demand coupled with low inventory have kept home prices stable.
• However, price appreciation has slowed or even declined somewhat in parts of the country.
• Buyer activity has slowed down as mortgage rates have increased.
• Council members reported that the days of frenzied buying are over.
• Buyers are taking more time, and homes are sitting on the market longer.
• However, conditions have not returned to pre-pandemic levels.
• The shortage of available homes continues to constrain the market for buyers.
• Many homeowners sitting on sub-4% mortgage rates are essentially locked into their homes and will be unwilling to sell their home if it means that their next mortgage will be near 7%.
• This shortage has had cascading impacts across markets. Housing remains unaffordable for many low- to moderate income and first-time homebuyers who are now locked into the rental market.
• While multifamily construction has been strong, Council members reported that rental rate increases continue to exceed overall inflation in many markets.
• Housing shortages are also impacting the upper end of the income distribution in some markets. For example, Council members noted that some hospitals are having challenges filling vacancies because of a lack of housing suitable for higherincome health professionals.
• Multifamily construction has been so strong that some Council members reported that municipalities have had to tap the brakes on new developments because municipal infrastructure cannot keep up.
• Meanwhile, single-family construction is slowing as builders finish their existing projects without lining up new ones because profit margins are too narrow or unpredictable to justify new builds.
• Buyers are choosing to purchase larger homes instead of ordering premium finishes and features that in the past have increased profit margins for builders.
• There is some variability by region. In-migration from high-cost-of-living metro areas into rural areas has driven up costs in those rural areas while urban areas see softer prices.
• In a mixed bag, some Districts reported fewer institutional investors and house flippers buying up properties, while others continue to see an influx of investors for multifamily housing based on strong demand (and increases in rental rates.

Labor Markets: How have the labor markets in which Council members operate changed in recent months? In particular, please assess the degree o f job loss or gain (and, in which industries). Please comment on the changes to wages that Council members have observed over the pastyear.:

• All Council members reported that increased labor costs and the labor shortage are affecting both their financial institutions and their business customers.
• The labor shortage is a primary concern of bankers and a major driver of inflation. Businesses that are not raising their wages fast enough to retain workers and attract new ones are losing their employees to other firms.
• There was broad consensus that several industries, such as the healthcare and daycare industries, are facing more severe shortages.
• Shortages in these sectors are having broader impacts.
• With fewer options for daycare or eldercare, more prime-age workers are being forced to remain on the sidelines.
• In some parts of the country, daycare now costs nearly $500 a week, which is typically much more than what many young employees with children make.
• The price and availability of daycare will remain a major barrier for labor force participation.
• Even manufacturers with capital and contracts in hand cannot find workers to fulfill the contracts.
• Council members noted that the labor shortage is not transitory and will be a reality for businesses into the longer term.
• The decline in labor force participation has been a long-term demographic trend exacerbated by the pandemic and the transmission path of inflation to wages.
• Council members also noted that employers are still digesting the (1) ability for workers to work remotely and (2) increased participation of younger generations in the workforce that have different views, compared to older generations, of their relationship with work.
• Several Council members noted an increased desire for immigration reform to offset the structural shortage of labor.
• The opioid crisis was also named as a key driver of labor shortages in some areas, and a major causal factor in many geographies with the lowest labor force participation rates.
• Most businesses remain hungry for labor.
• In reaction to these pressures, Council members reported increased investment in equipment to make up for labor shortages across sectors.
• However, Council members also reported the beginning of layoffs in some markets in their region, which is a harbinger of a slowing economy.

Consumer Confidence: Are Council members seeing any signs o fimproved (or declining) consumer confidence? What is the outlookfor consumer credit losses?:

• Council members reported a disconnect between consumer behavior and reported confidence.
• While inflation has reduced confidence, consumers are still spending.
• However, increases in spending on services has been hampered by labor shortages in that sector.
• The consumer confidence divide is vast between the “haves” and “have nots”
• For those on the upper end of the income distribution, folks are complaining but still spending.
• There is greater confidence among consumers with higher levels of discretionary income, who, as a result, feel insulated from rising prices.
• Holiday spending, possibly driven by pent-up demand, is expected to remain strong for these consumers. Purchasing activity may not fully reflect consumer pessimism.
• For low- to moderate-income households, rising utility bills and food prices have eaten into both their savings and purchasing power.
• Energy prices are a major concern as we enter winter, and the cost of heating oil is a concern in the Northeast.
• It was estimated that for minimum wage workers, 70% of their money goes to essentials (e.g., food, energy, transportation). Lowerincome households are cutting back on discretionary spending, and in many cases, they are being forced to make difficult choices about which monthly essentials they can afford.
• Council members reported that consumer delinquencies remain minimal but are starting to slowly creep up.
• Most institutions expect losses to increase in 2023.
• Some Council members have observed significant deterioration in the mobile home portfolio and others have observed some weakness in auto loans.
• While delinquencies remain relatively low, lower used-car prices have resulted in losses for repossessed autos.

Deposits: What changes have Council members seen in local deposit markets? Describe these changes by segment (retail, small business, and corporate). What are Council members' expectations with respect to deposit levels?:

• Some Council members reported an outflow of deposits on the commercial side, but most Council members have not yet seen a significant decline in their consumer deposit base.
• However, consumer deposits are expected to run off soon, following a strong growth during the pandemic.
• Deposits have been surprisingly sticky even as nonbanks offer higher interest rate CDs and money market accounts to attract deposits.
• Banks have not repriced deposit rates in parallel with the rapid rate hikes of the Federal Reserve, and Council members reported wide variability in the degree that banks have raised deposit rates.
• Marketing, social media, and consumer pressures are expected to contribute to an acceleration of deposit pricing pressures.
• Council members noted that differences in bank deposit rates stem from how institutions managed the excess liquidity gained during the pandemic.
• Banks that more aggressively deployed deposits into investments are now competing for deposits to maintain liquidity, while banks that invested less aggressively are now sitting comfortably at current deposit levels.
• Council members expect deposits to continue running off in the future, partly due to higher rate alternatives but also because of higher levels of spending as a result of inflation.
• Personal savings rates have fallen significantly and are currently below their pre-pandemic levels, though Council members did report an outflow of deposits into treasury bonds and brokerage accounts.
• Businesses are using their cash to pay down their lines of credit that have much higher rates now and are drawing down commercial deposit levels.

Potential FHLB borrowing limitations and Cryptocurrency:

• Council members expressed concern about the ability of community institutions to continue to borrow from Federal Home Loan Banks (FHLBs) over the short term.
• Council members discussed current balance sheet trends, where most institutions saw a significant inflow of deposits during the pandemic and invested the funds in safe assets, such as treasuries and agency securities.
• Council members are also concerned about the impact the rate hikes are having on their bond portfolios, and, by extension, the increase in unrealized losses that flow through to tangible capital. Under Federal Housing Finance Agency (FHFA) regulations, banks whose tangible capital becomes negative must receive written permission from their primary federal regulators to roll over or utilize new advances.
• Council members noted that bank capital regulations were updated almost 10 years ago to ensure that bank capital is (1) robust, (2) reflects modern banking and markets, and (3) can withstand stress during adverse economic and financial market conditions.
• Council members discussed the downside of using tangible equity, rather than regulatory capital, as a proxy for a bank’s health because the latter is a much more robust measure of risk.
• The Council requested that the Federal Reserve engage in communications with the FHFA and other banking agencies to avoid the risk of an administrative reduction in the ability to borrow from FHLBs, triggered by an exclusive focus on tangible capital, when an analysis of regulatory capital does not indicate the need to reduce FHLB borrowing.
• Council members reiterated their concern that compliance regulations will adversely affect how banks are lending in their communities, both in terms of product variety and innovation and in lending volumes.
• Council members discussed the continued fight against cybercrime and other scams, noting that the types of fraud are changing as criminals are getting smarter and more strategic.
• Council members feel that these are national issues that are not just affecting community depository institutions and large depositories.
• Council members believe that in addition to the fraud prevention practices they are employing, more should be done at the federal level to educate consumers.
• Council members continued to recommend that efforts be made to help community institutions streamline their due diligence process for shared vendors.
• In addition, the Council recommended further development of federal outreach programs designed to increase customer awareness of fraud and cybercrime.
• Council members reported that there have been many recent news stories related to increases in fraud in Person-To-Person (P2P) payment networks.
• They stressed that the fraud is real, and efforts should be made to mitigate risk and reduce depository institution and consumer losses. Council members noted that changes to Regulation E have been proposed.
• Currently, Regulation E provides protections for consumers for unauthorized transactions. There have been proposals to have the CFPB reinterpret Regulation E to include “fraudulently induced but authorized transactions.”
• This would protect consumers who are tricked into paying fraudsters.
• The payments are then authorized by the consumer, who later has second thoughts and wants to retrieve their funds.
• Expanding Regulation E in this manner would affect all consumer payment platforms, but especially P2P services where a lot of this fraud occurs.
• Increases in Regulation E liability could have a stifling effect on bank and credit union adoption of faster payments, including FedNow, due to the increased expense and lack of provisions for offsetting revenue to cover the risks.
• Financial institutions may slow down implementation, stop adoption, or even abandon existing P2P services. Some proposals suggest shifting liability to the receiving bank in these types of transactions, but that would also have a chilling effect on faster payments adoption.
• Right now, joining one of the faster payments networks in “receive only” mode is considered a safe way to get involved in faster payments, without fear of fraud risk.
• Shifting the liability from consumers to the receiving financial institution makes it less likely that the institution would participate in a faster payments network.
• Council members discussed recent developments in the cryptocurrency markets.
• There is strong interest in making these markets subject to robust regulations equivalent to what exists in the United States for securities and derivatives.
• Council members were agnostic about which agency—the CFTC or SEC—is authorized by Congress to conduct oversight.

TLDRS:

There is a TON to take in here but the bullets called out above:

• Council members reported stark differences in economic impact between the “haves” and the “have nots.”
• Council members generally reported that inflationary pressures remain strong, with prices rising rapidly.
• Despite rising prices, customers and businesses have not yet pulled back on spending.
• Council members summarized sentiment as a lot of optimism about the economy coupled with much uncertainty about the future because there is an expectation that inflation will have a long tail that has yet to be fully absorbed.
• Wage inflation is one key driver, particularly in the services sector, with employees expecting higher wages to keep up with inflation. (this is not slowing down presently either! https://www.reddit.com/Superstonk/comments/127pdic/inflation_alert_the_feds_preferred_inflation/)
• Firms that want to retain talent in a tight labor market anticipate salary increases of 5-9% next year.
• The drought in the Midwest and the low Mississippi River levels also contributed to a supply chain backup of both agricultural commodities moving downstream to export markets and raw materials moving upstream for manufacturing and agricultural production. (we have talked about this previously: https://www.reddit.com/Superstonk/comments/zzh5jx/inflation_alert_from_the_transportation/)
• In other cases, Council members noted that some firms have realized that they are able to maintain margins by raising prices.
• Most businesses are passing a high percentage of cost increases downstream to consumers, which generally was not the case last year.
• The most acute effects of inflation are being felt in rural and lower-income areas, with higher gas and diesel prices squeezing the wallets of consumers and businesses, particularly smaller farm operations and other industries that use diesel-fueled equipment.
• Prices for trucking and transportation have declined but remain high—and those higher prices are being passed on to consumers.
• The Council also reported that some consumers and businesses have become more focused on interest rates than inflation, which has resulted in real estate sales and development and capital expenditures being compressed by the higher interest rates.
• Many homeowners sitting on sub-4% mortgage rates are essentially locked into their homes and will be unwilling to sell their home if it means that their next mortgage will be near 7%.
• This shortage has had cascading impacts across markets. Housing remains unaffordable for many low- to moderate income and first-time homebuyers who are now locked into the rental market.
• Multifamily construction has been so strong that some Council members reported that municipalities have had to tap the brakes on new developments because municipal infrastructure cannot keep up.
• Meanwhile, single-family construction is slowing as builders finish their existing projects without lining up new ones because profit margins are too narrow or unpredictable to justify new builds.
• The labor shortage is a primary concern of bankers and a major driver of inflation. Businesses that are not raising their wages fast enough to retain workers and attract new ones are losing their employees to other firms.
• In some parts of the country, daycare now costs nearly $500 a week, which is typically much more than what many young employees with children make.
• The price and availability of daycare will remain a major barrier for labor force participation.
• Even manufacturers with capital and contracts in hand cannot find workers to fulfill the contracts.
• Council members noted that the labor shortage is not transitory and will be a reality for businesses into the longer term.
• The decline in labor force participation has been a long-term demographic trend exacerbated by the pandemic and the transmission path of inflation to wages.
• It was estimated that for minimum wage workers, 70% of their money goes to essentials (e.g., food, energy, transportation). Lower income households are cutting back on discretionary spending, and in many cases, they are being forced to make difficult choices about which monthly essentials they can afford.
• Council members reported that consumer delinquencies remain minimal but are starting to slowly creep up.
• Most institutions expect losses to increase in 2023.
• Some Council members have observed significant deterioration in the mobile home portfolio and others have observed some weakness in auto loans.
• While delinquencies remain relatively low, lower used-car prices have resulted in losses for repossessed autos.
• Banks have not repriced deposit rates in parallel with the rapid rate hikes of the Federal Reserve, and Council members reported wide variability in the degree that banks have raised deposit rates.
• Marketing, social media, and consumer pressures are expected to contribute to an acceleration of deposit pricing pressures.
• Council members expressed concern about the ability of community institutions to continue to borrow from Federal Home Loan Banks (FHLBs) over the short term.
• Council members discussed current balance sheet trends, where most institutions saw a significant inflow of deposits during the pandemic and invested the funds in safe assets, such as treasuries and agency securities.
• Council members are also concerned about the impact the rate hikes are having on their bond portfolios, and, by extension, the increase in unrealized losses that flow through to tangible capital. Under Federal Housing Finance Agency (FHFA) regulations, banks whose tangible capital becomes negative must receive written permission from their primary federal regulators to roll over or utilize new advances.

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Fresh Supply Co. (FSCO), the largest user of Mastercard Provenance and partner of Commonwealth Bank, has recently migrated from the private Mastercard blockchain to Hedera Hashgraph for Real-World Asset (RWA) tokenization. This transition marks a significant step in digitizing the agrifood value chain, enabling complete transparency and providing financiers with deep, verifiable data.
The Traditional Agrifood Value Chain: The agrifood value chain encompasses the entire process of producing, processing, and distributing agricultural products from farm to fork. Traditionally, this value chain has been complex and opaque, making it challenging for financiers to assess credit risk accurately. They have often been limited to balance sheets and profit and loss statements, which do not provide a comprehensive picture of a business's cash flow and overall health.
FSCO's Tokenization Solution: FSCO aims to revolutionize the agrifood value chain by tokenizing assets and events throughout the entire process. This includes the transformation of raw materials into finished products, such as cow to beef and milk to cheese, as well as logistics, customs, and order fulfillment.
By tokenizing these events and assets, FSCO can track and verify every step of the value chain with full transparency. This comprehensive data enables financiers to analyze and validate the flow of goods and assets into and out of a business, allowing them to substantiate cash flows as a result of those events continuously.
Migrating to Hedera Hashgraph: As part of the migration to Hedera, FSCO is moving its entire existing business onto the Hedera network, leveraging both the Hedera Consensus Service (HCS) and Hedera Token Service (HTS). Hedera's fast, secure, and efficient distributed ledger technology provides a robust foundation for FSCO's tokenization initiatives.
Benefits of the Transition: 1. Enhanced Transparency: By utilizing Hedera's advanced blockchain technology, FSCO can offer unparalleled transparency in the agrifood value chain, allowing all parties involved to access and verify critical information about the products they handle.

1. Improved Credit Risk Assessment: With a more transparent and data-driven approach, financiers can make better-informed decisions regarding credit risk, ultimately benefiting the entire agrifood ecosystem.
   
2. Scalability and Efficiency: Hedera's high throughput and low latency provide a scalable and efficient infrastructure for FSCO's tokenization efforts, ensuring smooth and rapid transaction processing.
   

Fresh Supply Co.'s migration from Mastercard's private blockchain to Hedera Hashgraph signifies a groundbreaking shift in the way the agrifood value chain is managed and financed. Through RWA tokenization, FSCO is paving the way for a more transparent, data-driven, and efficient future in the agrifood industry. As more companies follow suit, the potential benefits of adopting distributed ledger technology in the agrifood sector will become increasingly apparent, fostering greater innovation and collaboration in this critical global market.

Sports Competition in WEB3.0 Major Trend
UK - March 22, 2023 —
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Recently： Warner Bros. Discovery Sports continues to build crypto-related offerings, and it’s incorporating one of its biggest brands for its next experiment. Fans of TNT’s Inside the NBA will be able to answer trivia questions online and on Discord for tokens that in turn can be spent on prizes, both digital and real-world.
Web 3.0, blockchain and more decentralized digital systems will fundamentally transform areas of our society and our economy.
There could be a much larger transformation on the horizon for the pro sports business driven by blockchain, NFTs and Web 3.0 thinking: a realignment of ownership and control between leagues, owners, players and fans.
The pioneers in sports were really like the innovators in Web 1.0, who built products and tools but saw no direct benefit. In Web 2.0, the league drove value creation and distribution, but Web 3.0 usher in a creatoplayer, fan-driven model.
A sports competition WEB3.0 profit storm that everyone can participate in is about to set off.William Hill Football Club, registered in the British Virgin Islands, is one of the most influential online sports investment platforms in Europe.The club mainly conducts online football quiz business in the UK, Ireland, Belgium, and Spain, and has gradually opened the registration business in the Asian market.
We can often see William Hill Football Club at the CSMF Sports Expo. The club often takes advantage of the opportunity of the exhibition to hold football summits and organize football sector exhibition areas.
The club brings together more than 1,000 teams from all over the world, and updates 20-100 international matches every day. Provide entertainment products including event guessing, hedging arbitrage, casino and sports peripherals.
William Hill Football Club is a decentralized digital financial protocol ecosystem that supports sports events, competitive games, NFT blind box guessing, Web3.0 sports metaverse applications, etc.
The Sharp Alpha hedging model mechanism introduced by the platform has also subverted the traditional Internet football betting concept and gameplay mechanism. With ultra-low threshold, rich commission, privacy security, and rapid settlement, it breaks the geographical barriers and allows all countries and regions in the world to participate in this game. The wealth feast of sports, entertainment and financial management is coming.
According to the different reward rates and sales rebates given by each ball lottery platform in each country, the platform can calculate the win, draw, and loser of each game with the greatest benefit. Hedge funds can Get 7%-12% rebates from different institutions. In fact, as long as the capital is guaranteed under the hedging purchase of each game, even in a state of slight loss, positive profits can be achieved.
WEBSITE：http://www.williamhillund.com
Twitter: u/WilliamHill_000
Contact Info: Name: William Hill Football Club Email: Send Email Organization: William Hill Football Club Website: http://www.williamhillund.com
William Hill Football Club-New Opportunities for WEB3.0 Sports Competition (emporiumpost.com)
William Hill Football Club-New Opportunities for WEB3.0 Sports Competition (marketsanctum.com)