Adriatic Metals (LSE: ADT1; ASX: ADT) has received an exploitation permit for its Veovaca project near Vares in Bosnia-Herzegovina, 50 km north of the capital, Sarajevo.
The permit, issued by the Federal Ministry for Energy, Mining and Industry, initiates the project's formal exploitation period, valid for 30 years.
"This is a major permitting achievement that has been realised through close cooperation between Adriatic's BiH [Bosnia-Herzegovina] team and the significant number of governmental and commercial stakeholders involved in the process, as well as the local community in Vares," Paul Cronin, Adriatic's managing director and CEO, stated in a press release.
The permit will allow Adriatic to complete detailed engineering work for the Veovaca open pit mine, flotation plant, and tailings management facility, and the company plans to start construction in the third quarter of 2021.
The company is still waiting to submit an application for an exploitation permit for its Rupice underground project, 12 km northwest of Vares. It will submit that application once it receives its environmental and urban planning permits for the project, which it hopes will be approved in the second quarter.
Veovaca and Rupice are past-producing polymetallic deposits that form part of the company's flagship Vares project, which it acquired out of bankruptcy proceedings in 2017 for US$760,000.
In October 2020, a prefeasibility study for Vares envisioned a mine producing 8,000 tonnes of mineralized materially annually with average production of 15.3 million oz. of silver equivalent per year for the first five years of a 14-year mine life at average all-in sustaining costs of US$120 per tonne of milled material.
Initial pre-production capex was pegged at US$173 million, and the study estimated an after-tax payback period of just over one year. The PFS forecast an after-tax net present value of US$1.04 billion, at an 8% discount rate, and an after-tax internal rate of return of 113%. The study used metal prices of US$1,900 per oz. of gold, US$24 per oz. of silver, US$2,500 per tonne of zinc, US$2,000 per tonne of lead, US$6,500 per tonne of copper, US$150 per tonne of barium sulphate, and US$6,500 per tonne of antimony.
Alexander Pearce, a mining analyst at BMO Capital Markets, has a price target of A$2.40 per share. (At presstime the company was trading at A$2.18 per share.)
"Adriatic has got off to a strong start in 2021, delivering continued progress at its flagship Vares project as well as exploration success at Raska," he wrote in a research note to clients. "With Veovaca receiving its exploitation permit, attention turns to Rupice with its equivalent exploitation permit expected in Q2 2021. Further, with the Vares project DFS [definitive feasibility study] also expected in `Q3, 2021 remains a significant year for catalysts for Adriatic as it transitions from explorer to developer."
On Jan. 26, the company released drill results from a brownfield project it owns in southwestern Serbia's Raska district: the Kizevak-Sastavci zinc-lead-silver project, which consists of two past-producing mines. The company picked up the project in May 2020 when it acquired Tethyan Resource for US$10 million in an all-share deal.
Sixteen of the holes were drilled at Kizevak and three holes at Sastavci, about 3.5 km away. Highlights from Kizevak included drill hole KZDD-030, which cut 38 metres of 2.7% zinc, 2.2% lead, 30 grams silver per tonne and 0.6 gram gold per tonne starting from 100 metres. Another hole, KZDD-025, discovered a new, mineralized sub-parallel structure from surface, about 100 metres northeast of the mineralized trend, and returned 29 metres of 2.6% zinc, 1.2% lead, 15 grams silver starting from 2 metres downhole, including 15 metres of 4.3% zinc, 1.9% lead, and 24 grams silver.
At Sastavci, drill hole SSDD-003 cut 27.7 metres of 3.1% zinc, 1.3% lead, 22 grams silver, 0.5 gram gold from 13 metres downhole, while SSDD-004 cut 45 metres of 3.3% zinc, 1.0% lead, 17 grams silver and 0.2 gram gold from 17 metres.