ASX and London-listed aspiring Balkans polymetallic project developer, Adriatic Metals, has successfully rattled the tin for approximately US$28 million across two capital raises as it tops up the coffers in preparation for an imminent definitive feasibility study on its exciting Vares silver-lead-zinc project in Bosnia and Herzegovina.
The new funding comes after the London-based company recently revealed the scintillating results of a pre-feasibility study, or “PFS” that forecast average EBITDA of US$251 million per annum in the first five years of production at Vares from average annual revenues for the corresponding period of US$367 million a year.
The document also highlights an after-tax net present value for the project of US$1.04 billion and an internal rate of return of 113 per cent.
Adriatic has entered binding agreements to raise US$20 million from a private placement of 8.5 per cent unsecured convertible debentures to Toronto Stock Exchange-listed Queen's Road Capital Investment group, or “QRCI” and £6.2 million or about US$8 million from a share placement to the European Bank for Reconstruction and Development, or “EBRD”.
In Bosnia and Herzegovina, the EBRD has invested more than €2.6 billion across 183 projects and remains one of the largest sources of foreign direct investment in the country.
QRCI, which counts Australian entrepreneurs Andrew Forrest and Jack Cowin among its significant investors, has the option to convert its debentures into ordinary Adriatic shares at a price of A$2.79, representing a 30 per cent premium to the 20-day volume weighted average share price on the ASX to October 23.
Adriatic Metals Chief Executive Officer, Paul Cronin said: “These investments follow an extensive due diligence exercise conducted by both parties and are a strong endorsement of the quality of the company’s assets. This financing ... leaves the company very well-funded to complete the definitive feasibility study, detailed engineering work and remaining permitting processes.”
“The financing also positions the company to aggressively explore our highly prospective Serbian assets following the acquisition of Tethyan Resource Corp and our recently acquired wider landholding in Bosnia.”
In the PFS, Adriatic published combined probable ore reserves for Vares – at the Rupice and Veovaca deposits – of 11.12 million tonnes grading 150 grams per tonne silver, 1.28 g/t gold, 4.22 per cent zinc, 2.67 per cent lead and 0.43 per cent copper. Rupice accounts for 8.41Mt going 179 g/t silver, 1.66 g/t gold, 5.04 per cent zinc, 3.18 per cent lead and 0.55 per cent copper of those overall reserves.
The reserves are predicted to underpin mining and processing operations over an initial expected life of mine of 14 years for the production of a trio of metal concentrates at an annual ore throughput rate of about 800,000 tonnes per annum, with all-in sustaining costs tipped to average an incredibly low US$120 per tonne of ore milled.
According to the PFS, silver and gold speak for 45.3 per cent of projected concentrate revenues totalling a massive US$3.29 billion across the 14-year mine life.
CAPEX for the proposed Vares project development has been estimated at US$173 million, with the project-build capital payback period calculated at a paltry 1.2 years.
Metal prices assumed in the PFS are US$24 an ounce for silver, US$1,900 per ounce for gold, US$2,500 per tonne for zinc, US$2,000 per tonne for lead and US$6,500 per tonne for copper.
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By Matt Birney
