Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF) said it was “incredibly pleased” with a heads of terms agreement for concentrate produced from its Vares project in Bosnia and Herzegovina.
Four major commodity trading groups have agreed to take 82% of production from Vares for 24 months.
Trafigura, Transamine and an unnamed European smelter group will take the zinc while Glencore and Transamine will take silver-lead concentrate.
The remaining 18% is to be sold on the spot market or used for another offtake deal later, said Adriatic.
Paul Cronin, chief executive, added that the high levels of interest confirmed the marketability of concentrate from Vares and "underpin the exceptional financial performance of the project.”
Offtake agreements were one of the final condition precedents for it to draw down a US$143mln debt and royalty package agreed with financier Orion in January.
Cronin said today he expects to start to use this facility in the third quarter of 2022.
The four potential offtakers will now enter an exclusivity period while the final terms are agreed upon, Cronin added.
No price hedging is involved in this deal he said, adding that the terms are broadly in line with the baseline assumptions used in the feasibility study last August.
One difference is the change in treatment charges for both concentrates to reflect rising energy costs, though higher metal prices since have more than offset these, said the statement.