Adriatic Metals Delivers Robust DFS for High-Grade Vares Silver Project

• Adriatic Metals (ADT) owns the high-grade Vares silver project in Bosnia and Herzegovina and the Rupice project in Serbia.
• The company has simplified its project to two concentrated streams: a zinc concentrate and a silver-lead concentrate, reducing risk and enhancing economics.
• Significant improvements in economic metrics: NPV increased from $1.04B to $106.8M, IRR at 134%, payback reduced from 15 to 8 months.
• Project financing is progressing, with the international ESIA close to completion, following the requirements of the European Bank of Reconstruction and Development.
• Company has listed on OTCQX to attract North American investors, with a focus on silver production and positive market fundamentals, despite recent market volatility.

About Adriatic Metals

Adriatic Metals PLC is a precious and base metals explorer and developer focused on the Balkans. The company's flagship asset is the Vares Silver Project in Bosnia & Herzegovina, which contains high-grade silver, zinc, lead, gold and copper. Adriatic also holds the Raska base metals project in Serbia. The company is dual-listed on the Australian Securities Exchange and London Stock Exchange.

Interview with CEO Paul Cronin

Optimized DFS Results in Improved Economics for Flagship Vares

Adriatic Metals recently announced results from an optimized definitive feasibility study (DFS) for its 100%-owned Vares Silver Project in Bosnia & Herzegovina. The new study outlines a simpler operation producing two concentrate streams compared to four streams in the previous feasibility study.

The optimized DFS has significantly enhanced the project economics, increasing the NPV8% to US$645 million from US$640 million previously. The internal rate of return has also improved to 134% from 103% in the preliminary feasibility study (PFS). In addition, the payback period has been reduced to just 8 months from 15 months in the PFS.

Paul Cronin, Managing Director and CEO of Adriatic Metals, explained the optimized DFS has involved “a fundamentally massive derisking exercise that’s giving better economics.” He added that the study is robust, having been conducted by a range of consultants coordinated by Zenko Engineering.

Streamlined Operation Focused on High-Grade Zones

The key changes in the DFS include adjusting the mine plan to target high-grade zones early, bringing material to surface stockpiles for sorting before processing. This will enable shorter commissioning times as the exact material going into the plant will be known.

The operation has been simplified to produce just two concentrate streams – a zinc concentrate and a silver-lead concentrate with payable gold, copper and antimony. Producing fewer concentrate products will reduce complexity during ramp-up.

Development of the low-margin barite circuit has also been deferred due to market uncertainty caused by COVID-19 and shipping challenges. This further simplifies execution and reduces upfront capex.

Strong Progress Towards Financing and Development

With permitting complete and the DFS finished, Adriatic continues to advance the Vares Silver Project rapidly towards development.

The company is at an advanced stage of financing discussions, with the independent technical report to be delivered to lenders next week. Subject to final due diligence and credit approval, project financing could be in place as soon as early September.

Early works construction such as access roads has already commenced on site. Adriatic is also working to start underground development by mid-October this year, which will further derisk the start-up.

Ongoing Exploration Highlights Resource Expansion Potential

In addition to optimizing the Vares Silver Project, Adriatic continues to pursue resource expansion through aggressive exploration. Recent drilling intercepted high-grade mineralization around 80 metres north of the main orebody. While more work is needed, this has the potential to substantially grow the resource base.

The company now plans to mobilize additional rigs to follow up on these results and test extensions of the deposit. This exploration upside provides further potential catalysts for investors.

CEO Views on Market Volatility, Commodity Fundamentals

With equity markets recently experiencing higher volatility, Adriatic’s CEO Paul Cronin offered his views on the macro environment:

“I think we've seen concerns over the delta variant COVID and the impact of that...I think interventions by central banks suggesting inflation is transitory, but I think we all expect interest rates to rise reasonably soon. I don't think inflation is probably pretty entrenched quite frankly.”

However, he noted that the demand fundamentals for Adriatic’s key metals remain strong:

“If we look at the demand for zinc, for copper, all around the electrification and decarbonization of the world, there is not enough supply and I think higher metal prices are here to stay."

5 Key Takeaways

1. Optimized DFS significantly improves project economics for the Vares Silver Project, including higher NPV, IRR and shorter payback period.
2. Streamlined operation with just two concentrate products reduces complexity and derisks execution.
3. Project financing expected to be secured in September, enabling accelerated construction.
4. Early works construction underway, with goal to start underground development by October.
5. Ongoing exploration delivering high-grade results, highlighting potential to expand resources further.

Conclusion

With permitting and feasibility complete, Adriatic Metals is on the cusp of transforming into a near-term silver producer in a Tier 1 jurisdiction. The company continues to aggressively derisk Vares while expanding resources through exploration.

With project financing likely secured in the coming weeks, construction is set to accelerate. This offers investors a compelling entry point to position ahead of catalysts in 2023 including first production at Vares. Adriatic represents a unique opportunity to gain leveraged exposure to surging silver and base metals prices.