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ReGIonAL RoUnDUP

All in due course for Adriatic

t has been described as the most rigor- don-listed, Australian-listed
Ious due diligence process ever experi- company with a number of Vares PFS
enced by a junior resources company, but operating assets in Europe.”
as far as Adriatic Metals plc managing di- Cronin said the com- Mined tonnes to plant 11.1mt
rector Paul Cronin is concerned the unu- pany remained in discus-
sually high level of scrutiny was all worth sions with a range of banks, Life of operation 14 years
it for the final outcome. streaming and royalty com- LOM SilverEq production 137 moz
Adriatic now counts the European Bank panies, offtake and EPCM
for Reconstruction and Development groups over project finance Average production (1-5 years) 15.3 mozpa
(EBRD) as a substantial shareholder fol- for Vares, but he expected Cash cost $US117.10/t
lowing a recent $US28 million capital rais- those talks to progress sig-
ing which was also comprised a $US20 nificantly now that the PFS AISC $US120/t
million private placement of 8.5% unse- results were out in the mar- Revenue $US296.30/t
cured convertible debentures to Queen’s ket.
Road Capital Investment Ltd. Highlights from the PFS Pre-production capital $US173 million
EBRD is owned by 69 countries – in- include a post-tax NPV of Post-tax NPV (8%) $US1.04 billion
cluding Australia and the US – alongside $US1.04 billion, an IRR of
the European Union and the European 113% and an average an- IRR 113%
Investment Bank. Each shareholder is nual EBITDA of $US251 Payback 1.2 years
individually represented on the board of million in the first five years
governors which ultimately approves the of production. Some 45% of Annual EBITDA (years 1-5) $US251 million
overall strategic direction. the revenue is aligned with
Queen’s Road listed on the TSX earlier the silver and gold produc-
this year and is backed by the likes of bil- tion streams. the Vares project following an earlier meet-
lionaire fast food entrepreneur Jack Cowin Adriatic has already begun work for the ing.
and Fortescue Metals Group Ltd founder DFS which has a tentative completion date “It was quite a pleasant surprise,” Cronin
Andrew Forrest. of April 2021, although Cronin said that said. “He understands we’re on a critical
Having EBRD and Queen’s Road join “could swing a little bit” pending the out- path to project development and he is also
the register will likely prove critical towards come of upcoming metallurgical testing. very much aware of some of the bureau-
Adriatic’s bid to lock away development fi- Despite some of the challenges created cratic frustrations that foreign companies
nance for the Vares silver project in Bosnia this year by the COVID-19 pandemic, Adri- have when they’re operating in Bosnia.
and Herzegovina over the coming year. A atic has hardly skipped a beat. So marked “To that extent, they are at the moment
PFS released in mid-October estimated has been the company’s progress in 2020 preparing to vote on legislation which re-
just $US173 million was needed to build that Bosnian Prime Minister Zoran Tegelti- moves a lot of those seeming impediments
the proposed 800,000 tpa operation which ja, who was reported to have tested posi- to foreign investment. Certainly his gov-
is set to produce 15.3 mozpa silver equiva- tive for coronavirus in November, offered ernment is committed to accelerating for-
lent for the first five years of the initial 14- his personal support for development of eign direct investment into the country and
year mine life. some of those legislative changes I think
Cronin said the arrival of EBRD was a will do that.”
particular boon for the Balkans-focused Cronin said his company had started
company because it “brings with it the full identifying potential cost savings for the
might of the European Union”. In Bosnia, upcoming DFS, mostly focusing on im-
the bank has invested over €2.6 billion provements to transport logistics and port
across 183 projects and is one of the larg- handling charges. Staged construction of
est sources of foreign direct investment the process plant is another option under
into the country. consideration given the sequential nature
“We’ve been through probably the of the mine schedule.
most rigorous due diligence exercise that Vares is comprised of two deposits,
any junior company has ever faced, par- Rupice (underground) and Veovaca (open
ticularly on our environmental and social pit), about 12km apart. The latter once pro-
impacts, but what it does mean is we will duced lead, zinc and borate concentrates,
now have the full clout of those political in- but has not been operational since 1988.
stitutions behind our expansion strategy in Adriatic successfully converted 88.5%
Europe, and that for us is a huge positive,” of the inferred resource at Rupice into
Cronin told Paydirt. reserves for the PFS and Cronin expects
“I’m not talking for the next six months that work to have a material impact on fu-
or two years; I’m talking 10 years down ture operations.
the track where Adriatic wants to be, a “I think the fact we got such a high re-
multi-site regional player. We are setting serve conversion is indicative of the
ourselves up as a British-registered, Lon- amount of work that we put into the re-
Paul Cronin

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