Adriatic Metals PLC (ASX:ADT) (LON: ADT1) (OTCMKTS:ADMLF) has delivered positive and robust pre-feasibility study (PFS) results for the Vares high-grade silver project in Bosnia & Herzegovina.
The PFS estimates a post-tax net value of US$1.04 billion at an 8% discount rate and an internal rate of return of 113% along with low upfront capital requirement of US$173 million with a 1.2-year payback period.
This study, which was completed by a number of international consultants led by Ausenco Pty Ltd, also projects an annual EBITDA of US$251 million in years one to five.
Based on the positive outcome of the PFS, the company has immediately started working on a definitive feasibility study (DFS).
"Hugley positive PFS"
Adriatic managing director and CEO Paul Cronin said: “This pre-feasibility study has been the culmination of hard work and effort by international consultants and the team at Adriatic Metals.
“Despite COVID-19 hampering efforts of mining companies around the globe, I am pleased that we are able to deliver a hugely positive PFS, with improved economics in comparison to our 2019 scoping study, thus showing that Vares is indeed a world-class project.”
Production estimates
The study estimates a total probable ore reserve of around 11.1 million tonnes to be mined over a 14-year mine life.
Annual output is estimated at 800,000 tonnes with 85.5% conversion of indicated resource to ore reserve at Rupice, one of the two polymetallic deposits at the project.
The study relies on significantly more robust inputs over the 2019 scoping study and projects that 45.3% of the total revenues of the project will come from silver and gold.
Reserve and resource estimates underpinning the production target were prepared in accordance with the JORC Code 2012 with improved geological interpretation.
The process design for the Rupice and Veovaca project is based on the mine plan and corresponding feed grades from metallurgical test-work.
Adriatic’s PFS also estimates a low environmental impact with underground mining and partial tailings backfill at Rupice and use of brownfield Veovaca mine site for majority of plant infrastructure.
Project summary
The Vares Silver Project is near the town of Vares of the ZenicaDoboj Canton, Bosnia and Herzegovina, a 50-minute drive from the capital Sarajevo.
The project consists of two deposits, Rupice and Veovaca, around 12 kilometres apart, and lies within a mountainous region with widespread forests and meadows.
Veovaca was a previously operating open pit mine producing lead, zinc and barite concentrates but ceased operations in 1988.
A tailings dam east of the process plant was utilised during the previous period of mining in the area.
The Rupice brownfield site is predominantly on the eastern side of the Vruci Potok valley on forestry land.