Adriatic Metals seeks US$50M after first concentrate sale

Europe-focused Adriatic Metals (ASX: ADT; LSE: ADT1) said on Monday it had sold the first shipment of concentrate from its Vares silver mine in central Bosnia, and plans to raise US$50 million to support the operation’s ramp-up.

The company is now in the final phases of increasing production at Vares, and said the equity raising aims to optimize Adriatic’s balance sheet. Adriatic has taken on $120 million in debt, with the first repayment scheduled for the end of the year.

Chief executive Paul Cronin said Adriatic anticipates transitioning to full production by the fourth quarter of the year, amidst favourable market conditions with high silver, gold and zinc prices and low treatment charges.

The Vares processing plant is currently producing at saleable grades of more than 2,500 grams per tonne of silver and close to 50% zinc. Adriatic expects to reach nameplate capacity of 800,000 tonnes by the fourth quarter of this year.

Before Adriatic revived it, Vares was a former silver operation that was abandoned during the years of civil unrest that hit the region in the early 1990s.

Cronin told The Northern Miner‘s sister publication MINING.COM that the original idea was to resume operations at the old open pit, which still has 7 million tonnes of resources. Studies conducted later showed high levels of harmful elements, particularly mercury, so Adriatic Metals chose not to go that route.

Instead, the junior invested in exploration and pinpointed what is now its flagship silver-zinc asset, which has been awarded the status of “project of special importance” by the government of Bosnia-Herzegovina.

Before reaching commercial production in March, the project contributed to 25% of Bosnian 2022 foreign direct investment and is expected to account for 2% of the country’s GDP during operations.

Adriatic, which began the transition to owner-operator in April, invested US$250 million to bring Vares back to life. The asset became the first new mine to open in Europe in over a decade.