Mineral developer Adriatic Metals is ramping up construction at its Vares high-grade silver project in Bosnia and Herzegovina as it moves towards opening its namesake underground mine and processing plant next year.
The company says the project is now 45 per cent complete and has used the European summer to accelerate the development of the site’s surface infrastructure, process plant and haul road.
Management believes the bulk of the project’s long lead items are expected to arrive on schedule, but global disruptions have postponed the launch of the mine by a few months. However, the company remains confident it could now commence concentrate production at Vares in Q3 next year.
The UK-based developer says it has set aside an adequate amount of working capital and contingencies to compensate for the lag in production.
Adriatic’s cash as of September 30 this year stood at US$66 million.
The ASX-listed company is also pressing ahead with Vares’ sub-surface components and says the project’s lower decline – the tunnel which links its underground sections to the surface - is currently at a depth of 210m. The mine’s upper decline is at a depth of 100m.
The company recently engaged the services of mining contractor Ciftay to accelerate the project’s underground works and recent data suggests the lower decline is advancing a rate of about 2.6m per day whilst the upper decline is moving at about 1.5m per day.
Construction of the lower decline kicks off three phases of mining at Rupice – an orebody that sits inside the larger operation.
Adriatic says it will also continue exploration and infill drilling at Rupice over the next few months and will subsequently feed the results into a new-year resource update
About two years ago, Adriatic enlisted the services of mining consultancy group CSA Global to produce an updated mineral resource for the project.
The work led to the definition of a 12 million tonne resource grading 149 grams per tonne silver, 1.4 g/t gold, 4.1 per cent zinc, 2.6 per cent lead, 0.5 per cent copper and 25 per cent barite.
A subsequent definitive feasibility study, or “DFS” released late last year suggested the operation could deliver an average EBITDA of US$281.1 million a year in its first five years of concentrate production.
The study also pointed to a net present value after tax of US$1.06 billion and a remarkable internal rate of return of 134 per cent after tax.
The DFS suggested the cost to bring the project on-line would be US$168m.
According to Adriatic the current economic climate has raised this figure to about US$173m – an increase the company says it is well placed to meet.
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By Matt Birney
