Budding silver miner Adriatic Metals has drawn down its second $30m tranche, along with accessing a further $22.5m “copper stream” payment, from a $142.5m debt package to steer development of its high-grade Vares silver project in Bosnia and Herzegovina.
The ASX-listed company tipped the $52.5m into the till courtesy of a senior secured debt with Orion Resource Partners as Adriatic looks towards project completion and production of its first concentrate by September 2023.
The company received the first $30m payment of the Orion debt package late last year with the funds steering development of the mine past the halfway mark.
Two more $30m tranches are expected be drawn down over the course of 2023 as Adriatic eyes the September timeline.
Adriatic Managing Director Paul Cronin said: “I am pleased that Adriatic has drawn down the second $30m tranche of Senior Secured Debt, as well as the $22.5m Copper Stream, from Orion Mine Finance. These funds will be used to continue the construction of the world-class Vares Silver Project, which will deliver first concentrates in Q3 2023.”
Adriatic says progress on the underground mine development is advancing rapidly with the lower decline and upper declines scheduled to reach ore by June, three months before commissioning of the processing plant.
According to the company’s quarterly report, installation of the powerline and communications cable has also commenced and the water treatment plant is 80 per cent complete.
Strong headway has also been made in constructing the processing plant.
The Vares processing plant is expected to churn out some 800,000 tonnes each year and Adriatic says it will have a sizeable high-grade stockpile to begin chewing through from the get-go.
The Vares project is nestled between the picturesque inland mountain towns of Vares and Kakanj. It boasts an ore reserve in its Rupice deposit of 7.3 million tonnes going 485 g/t silver equivalent.
Breaking that figure down sees a return of 202 g/t silver, 1.9 g/t gold, 5.7 per cent zinc, 3.6 per cent lead, 0.6 per cent copper and 0.23 per cent antimony, an alloy-hardening material.
Adriatic released a cracking set of numbers from a definitive feasibility study, or “DFS” evaluating the potential of bringing Vares into production.
The study projected an average EBITDA of US$281.1 million per year in the first five years of concentrate production.
A sensational net present value after tax of US$1.06 billion was estimated in the study, with an extraordinary internal rate of return of 134 per cent after tax.
The DFS envisaged capital costs of US$168m to bring the project to life, with a pay-back period of only 0.7 years.
Adriatic has proposed a 10-year mine life with plenty of potential to expand. The company’s recent efforts with the drill bit have confirmed an extension of mineralisation up to 250m north-west of the current resource.
Notable intercepts from recent work include 0.9m at 846 grams per tonne silver equivalent and 27.2 per cent zinc equivalent from 207m including a 6.5m interval going 1861 g/t silver equivalent and 59.8 per cent zinc equivalent.
Another 32.5m hit was returned about 155m north-west of Rupice going 657 g/t silver equivalent and 21.1 per cent zinc equivalent from 285.5m. The wide strike also enclosed a richer 2m hit at 1331 g/t silver equivalent and 42.8 per cent zinc equivalent.
With development progressing at a breakneck pace at its Vares project and funding firmly bedded down, Adriatic looks to be on track to bring the project online in 2023.
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By Matt Birney
