Aspiring Balkans precious and base metals developer Adriatic Metals has produced a humdinger of a definitive feasibility study that is knee deep in “exceptional” key financial metrics. The study points to a potentially lucrative mining operation at its advancing Vares silver-zinc-lead project in Bosnia and Herzegovina. The London-based, multi-listed company’s latest study improves on what was already a cracking pre-feasibility study on the proposed project development unveiled about 10 months ago.
The recently released definitive feasibility study or “DFS” foreshadows Vares averaging bumper annual EBITDA of US$281.1 million a year in the first five years of concentrate production, up from the US$251 million a year predicted in the pre-feasibility study or “PFS”.
The DFS also ascribes a stunning net present value after tax of US$1.06 billion to the asset and an extraordinary internal rate of return after tax of 134 per cent, compared with US$1.04 billion and 113 per respectively in the PFS.
Pre-production CAPEX has been adjusted to an estimated US$168 million in the DFS, down from US$173 million in the PFS, largely due to modifications that have simplified the overall processing plant design, with the expected capital payback period reduced to an exceptional 0.7 years.
Ore will be exclusively sourced and treated from the planned Rupice underground mine at Vares via a flotation process to produce a silver-lead concentrate and a zinc concentrate.
The project’s cornerstone Rupice deposit’s probable ore reserves now total an impressive 7.3 million tonnes at average grades of 202 grams per tonne silver, 1.9 g/t gold, 5.7 per cent zinc, 3.6 per cent lead and 0.6 per cent copper, or a silver-equivalent grade of 485 g/t.
According to the DFS, silver and gold will speak for almost half of the forecast average concentrate revenues of almost US$377 per tonne of ore milled or total revenues of about US$2.7 billion across Vares’ initial mine life of 10 years.
Price assumptions applied in the DFS are US$25 an ounce for silver, US$1,800 an ounce for gold, US$3,000 per tonne for zinc, US$2,300 per tonne for lead and US$9,500 per tonne for copper.
The average annual concentrate production for the first five years of Vares’ mining and processing operations has been calculated in the DFS at a silver-equivalent of just under 15 million ounces per annum.
Life-of-mine all-in sustaining costs of production come in at an eye-catching average of US$7.30 per silver-equivalent ounce.
Rupice’s underground mine production rate is designed to match the nameplate capacity of the Vares processing plant at 800,000 tonnes per annum.
Adriatic Metals Managing Director and Chief Executive Officer Paul Cronin said: “The completion of the 2021 DFS is a major milestone for the company and clearly demonstrates the exceptional potential of the Vares silver project. Project delivery and execution risks have been substantially reduced through the simplification of the process flow sheet and initial capital costs lowered against the backdrop of inflationary construction costs, whilst improving the overall project economics.”
Adriatic’s focus now turns to finalising project financing, which management says is well advanced.
The company will also look to kick off the main construction phase at Vares while continuing to try to eke out marginal improvements in metallurgical recoveries, capital and operating costs.
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By Matt Birney
