Aspiring silver and base metals producer Adriatic Metals has formalised the financing of its Vares silver project, bedding down US$142.5 million of debt finance and putting it in a strong position to be Europe’s next miner.
Adriatic originally announced the US$142.5m debt financing package deal with Orion Resource Partners in October 2021 which involved US$120m in senior secured debt and a US$22.5 million copper stream.
It said the Vares Silver Project is now fully-funded to production, which is expected in the second quarter in 2023.
The financing comes on the back of an October institutional equity raise of US$102m. Orion also subscribed for US$50m million issue, giving it 9.1 per cent of Adriatic.
Last month Adriatic reported more high-grade silver and zinc hits from three step-out holes near its cornerstone Rupice multi-commodity deposit in Bosnia and Herzegovina, part of its larger Vares project. The latest results from the newly intercepted mineralised zone – now named Rupice Northwest - including the stratigraphic sequence and style of mineralisation, has the company believing it to be could be onto a twin to the Rupice deposit itself.
The Rupice Northwest results come soon after the release of some cracking figures from a definitive feasibility study, or “DFS” for bringing Vares into production.
The Vares study projected an average EBITDA of US$281.1 million per year in the first five years of concentrate production. It also contained an eye-popping net present value after tax of US$1.06 billion 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 less than a year.
One diamond hole from Rupice Northwest returned a broad 24.7 metre hit going 514 grams per tonne silver equivalent about 145m north-west of the company’s 12 million tonne resource grading 149 g/t silver, 1.4 g/t gold and 4.1 per cent zinc.
The 24.7m strike from 295.1m contained 181 g/t silver, 9.0 per cent zinc, 4.6 per cent lead, 0.9 g/t gold, 0.3 per cent copper, 67 per cent barium sulphate and 0.1 per cent tin.
Another new hole, BR-16-21, returned a 7.1m intercept at a remarkable 1,123 g/t silver equivalent, confirming continuity of the mineralised zone to the north-west of the Rupice deposit. Notably, zinc grades alone in the 7.1m strike clocked in at 11.3 per cent, with silver in the intercept grading 662 g/t.
The nearby BR-19-21 also hit mineralisation to deliver a 15.8m intercept grading 508 g/t silver equivalent from 346.2m.
Interestingly, accordingly to the company mineralisation at the southern and south-eastern parts of Rupice also remains open.
Adriatic Metals’ Managing Director and CEO, Paul Cronin, said: “Adriatic Metals has entered a new phase with the Vares Silver Project fully funded through to production. This significantly de-risks the Company and puts us in a strong position to become Europe’s next miner, providing the continent with locally sourced, strategic metals.
We are delighted to have Orion on board and believe it’s a strong validation of the potential of the Vares Silver Project. Critical to achieving production at Vares is our social license to operate, which we have secured by taking a responsible approach to developing and working towards the creation of a positive long-term legacy.“
Adriatic could be one to watch in 2022 after completing both its standout Vares DFS and its project financing arrangements. If the Rupice Northwest orebody yields further encouraging intercepts, it will only add more spring to Adriatic’s steps.
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By Matt Birney
