Adriatic Metals seeks $50m after first concentrate sale

Europe-focused Adriatic Metals (ASX: ADT) (LON: ADT1) said on Monday it had sold the first shipment of concentrate from its Vares silver mine in central Bosnia, and launched a $50 million capital raising.

The company, now in the final phases of increasing production at Vares, said the equity raising aims to optimize Adriatic’s balance sheet during this ramp-up period. 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 capacity by the fourth quarter of the year, amidst favorable market conditions with high silver, gold and zinc prices and low treatment charges.

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’s plan is to increase processing until reaching nameplate capacity of 800,000 tonnes by the fourth quarter of this year.

The mine is the result of Adriatic’s efforts to revive a former silver operation that was abandoned during the years of civil unrest that hit the region in the early 1990s.

Cronin told 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 $250 million to bring Vares back to life. The asset became the first new mine to open in Europe in over a decade.