ASX and London-listed aspiring polymetallic project developer, Adriatic Metals, has produced a cracking pre-feasibility study, or “PFS” on its Vares silver-lead-zinc project in Bosnia and Herzegovina that envisages US$251 million average EBITDA per annum in the first five years of production. In addition, the key project metrics in the PFS have resulted in a spectacular after-tax net present value of US$1.04 billion and an internal rate of return of 113 per cent being placed on the asset.
The London-based company unveiled impressive overall probable ore reserves for Vares – comprising the Rupice and Veovaca deposits – of 11.12 million tonnes going 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 speaks for 8.41Mt grading 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 the total reserves.
Rupice’s reserves represent a very high indicated resource-to-mineable ore reserves conversion percentage from the recent underground mineral resource estimate. The indicated and inferred mineral resource for Rupice currently stands at 12Mt at 149 g/t silver, 1.4 g/t gold, 4.1 per cent zinc, 2.6 per cent lead and 0.5 per cent copper for a contained 58 million ounces of silver, 526,000 ounces of gold, 488,000 tonnes of zinc, 312,000 tonnes of lead and 56,000 tonnes of copper.
While the Rupice deposit is anticipated to be the mining engine room for the proposed mining and processing operation at Vares, the project also contains the Veovaca deposit that hosts a potentially handy open-pit resource of 7.4Mt at 41 g/t silver, 1.4 per cent zinc and 0.9 per cent lead.
According to the PFS, silver and gold account for 45.3 per cent of projected concentrate revenues totalling a whopping US$3.29 billion across the initial 14-year life of the proposed Vares mine. The mine itself has a very respectable estimated development CAPEX of US$173 million and a project-build capital payback period of only 1.2 years.
Price assumptions used in the PFS were US$24 an ounce for silver, US$1,900 for gold, US$2,500 per tonne for zinc, US$2,000 per tonne for lead and US$6,500 per tonne for copper.
Other notable key financials from the PFS, in addition to the EBITDA figure of US$251 million a year in the first five years of production operations, include average EBITDA of US$142.2 million a year across the initial 14-year mine life for a total of US$1.99 billion, average revenues of US$296.3 per tonne of ore milled over the mine life and average annual revenues for the first five years of production operations of US$367 million per annum.
The latest stated reserves are expected to sustain mining and processing operations over the initial 14 years producing a combination of metal concentrates at the predicted ore throughput rate of just under 800,000 tonnes per annum, with all-in sustaining costs forecast at an incredibly low US$120 per tonne of ore milled.
Adriatic Metals Managing Director, Paul Cronin said: “Despite Covid-19 hampering efforts of mining companies around the globe, I am pleased that we are able to deliver a hugely positive pre-feasibility study, with improved economics in comparison to our 2019 scoping study, thus showing that Vares is indeed a world-class project.”
The Vares project, which sits within a mountainous region featuring widespread forests and meadows, is centred around its namesake town, an approximate 50-minute drive from the Bosnia and Herzegovina capital Sarajevo. Access to the main project areas of Veovaca and Rupice is via approximately 10km of well-maintained sealed roads and 25km of well-maintained sealed and unsealed roads, respectively.
Veovaca is a historic open-pit mine that produced lead, zinc and barite concentrates and ceased operations 32 years ago. Importantly, Adriatic is confident the proposed Vares development has a low environmental impact, with underground mining and partial tailings backfill planned at Rupice and the majority of plant infrastructure to be established at the brownfield Veovaca mine site.
The PFS on Vares was so compelling that Adriatic says it plans to launch straight into a definitive feasibility study.
With a first-mover advantage in Bosnia and Herzegovina and following its foray into Serbia via the recent acquisition of the historic Kizevak/Sastavci silver-lead-zinc project, all eyes will be on the A$435 million market-capped company’s progress at Vares.
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By Matt Birney
