Adriatic Metals has expanded its footprint in the Balkans by moving to acquire TSX-listed Tethyan Resource Corp and its basket of in-country poly metallic assets ranging from historical mines and established resources to some very compelling exploration ground in Serbia, a jurisdiction that is rapidly proving that it is capable of harbouring tier one mining assets.
The deal will expand Adriatic’s land holdings in Europe to over 301km2, with the addition of two established mines at the Kizevak and Sastavci projects and a mineral resource at Karadak in Serbia that will stand alongside the company’s world class Vareš project in Bosnia.
Whilst not yet to JORC or NI 43-101 standards, Tethyan’s projects hold an historical resource of nearly 8Mt grading 45 grams per tonne silver, 5.06% zinc and 2.96% lead as reported by the Serbian State Geological Survey in 1994.
Adriatic says these estimates have not been validated yet, however they provide a solid basis from which to launch a confirmatory exploration program.
Tethyan also holds some porphyry-copper gold ground where a substantial exploration program has recently been completed that identified some very healthy intersections including a 567-metre intersection grading 0.3% and 0.45g/t gold, right from the surface.
Adriatic’s offer represents an implied equity value of CAD$14.7M for the CAD$12.065M capped company and Tethyan’s board has unanimously approved the transaction.
Tethyan’s assets, which will transfer to Adriatic once its shareholders approve, include the historical Kizevak open pit and 7,820 metres worth of underground exploration workings.
Kizevak is a zinc, lead and silver ore deposit that was discovered in the mid-1970s and mined by the Yugoslav Geological Survey between 1984 and 2000.
The Sastavci open pit mine will also be acquired in the deal and lies a few kilometres to the north of Kizevak. It was also explored and mined by the Serbian state.
Adriatic said that mineralisation at Kizevak has currently been defined to a length of about 1.2km, a width of between 1m and 30m and up to 200m at depth, with poly metallic mineralisation open in all directions.
Tethyan has been exploring the Kizevak and Sastavci areas since 2018 and recently ran some soil sampling and diamond drilling programs.
Fresh diamond results at the Kizevak project, one kilometre to the southeast of the mine, hit notable high-grade mineralisation including 23m grading 7.02% zinc, 3.16% lead, 35g/t silver and 0.26g/t gold from 212m.
At Sastavci, massive sulphide veins up to 5m wide can be seen in the shallow historic pit, according to Tethyan, who also picked up 65 rock-chip samples from the pit and some returned assays greater than 30% zinc, 7.1% lead, 94.3g/t silver and 0.47g/t gold. The zinc grades from these samples are an unknown, as the assay detection limit was 30% at the time.
Tethyan also defined a gold-in-soil anomaly grading over 100 parts per billion over 800m by 400m at the north of the existing Sastavci pit. Rock chip samples from here also graded up to 3.7g/t gold.
There are some significant historical drilling numbers from Sastavci too, with 8m grading 5.5% zinc, 2.2% lead and 26g/t silver from 47.4m down hole and 4.5m grading 4.3% zinc, 3.4% lead and 69g/t silver from 0.5m.
The historical mining projects also benefit from necessary existing infrastructure such as roads, power, water and rail in addition to a workforce that is no stranger to mining. Adriatic also noted that the area has been designated for mining under the Serbian State spatial plan.
Adriatic will also pick up the compelling Rudnica and Kremice copper-gold porphyry plays, which Tethyan operates under an option agreement with Deep Research.
At the Rudnica project, a drilling program over a 400m by 350m prospective area targeted coincident copper-gold geochemical and geophysical anomalies.
Additional notable results from Tethyan’s drilling program at Rudnica include 356m grading 0.38% copper and 0.31g/t gold from 48m and 460m grading 0.21% copper and 0.20g/t gold from the surface.
Importantly, mineralisation is open in all directions and scout channel sampling 750m north of the main Rudnica prospect returned 40m grading 0.21g/t gold.
Tethyan said it mapped porphyry-style quartz veins over a 300m by 300m area that overlaps an “ovoid magnetic high” and chargeability high. These features may indicate the presence of an intrusive body, 300m to 600m below the surface, which has not seen any drilling activity – yet.
At Kremice, trench channel sampling has identified a 450m by 350m area grading at more than 0.1g/t gold, with a 125m by 100m higher grade core grading 0.3g/t gold. Two scout drill holes intersected gold porphyry mineralisation from surface, according to Tethyan.
Porphyry copper-gold deposits are veritable giants, have average grades across the globe of around 0.4% copper and are generally hundreds of millions to billions of tonnes in size. They therefore enjoy increasingly low metal cut-off grades and mining and processing costs due to the economies of scale that they present.
Once the deal is closed, Tethyan’s President and CEO, Geologist, Fabian Baker will join Adriatic as its Corporate Development Manager. The appointment looks to be a smart move, as Mr Baker has spent much of his career in the Tethyan Mineral Belt and should know the geological ropes there.
The Tethyan Mineral Belt of the Balkans is a world-class metallogenic province and extends over 10,000km from Europe through Anatolia to Iran. The mountain belt is dominated by gold and copper with an endowment that is almost impossible to comprehend.
Endowment examples include the Serbian Sate-owned Bor copper-gold porphyry mine, which has a reported total resource of 2.1B tonnes grading 0.64% copper and 0.24g/t gold.
The Timok deposit in Serbia was reported by TSX-listed Nevsun Resources - now gobbled up by a Chinese state-owned enterprise - to contain 31.5B pounds of copper and almost 10M ounces of gold.
The Kizevak and Sastavci mine’s themselves are held by private Serbian company, EFPP and Tethyan already has an “arm’s length” agreement in place to purchase the project’s from them in two stages
Under the deal with Tethyan, Adriatic will provide Tethyan with a convertible loan for up to €1.3M to make a payment of €525,000 to EFPP for the Kizevak and Sastavci projects in the first stage of the EFPP acquisition, with the balance to be used for confirmatory drilling and transaction costs.
Under the first stage, Tethyan will acquire 10% of the shares of EFPP. Within 12 months of the first payment to EFPP, Tethyan can elect to acquire the remaining shares by paying €1,375,000 in cash, granting EFPP a 2% net smelter return over the Kizevak and Sastavci exploration licences, the issuance of Adriatic shares in tranches and lastly, a deferred €500,000 payment.
With each Tethyan shareholder offered 0.166 Adriatic shares for each Tethyan share held and approval of the acquisition required by the British Columbia Supreme Court, the deal looks to be cut and dry.
Importantly, Tethyan shareholders with 38.3% of the capital have also entered into a lock up agreement where they will not directly or indirectly sell or transfer any Adriatic or Tethyan shares until the six months after the deal is done or if the 30 day VWAP is more than AUD$2.
Tethyan already has voting support from about 54% of its shareholders and only needs 66% for the transaction to proceed.
Adriatic is now poised to become a leading Balkan’s multi-metal developer and explorer by adding what looks to be a grab bag of very exciting and potentially valuable assets to its portfolio having recently tabled a scoping study that shows a stunning, AUD$1.37B NPV for its existing Vareš project in Bosnia.
With a strong balance sheet, no debt, a $230M market cap and a swag of potentially lucrative projects, Adriatic is looking purposeful right now.
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