Adriatic Metals PLC (LSE:ADT1, ASX:ADT, OTCQX:ADMLF) said construction of its Vares silver project in Bosnia & Herzegovina is 45% complete with over 70% of the total construction capital committed, though global supply chain disruption has delayed first concentrate production.
Most long-lead items and equipment orders are expected on schedule, the company said, but noted that supply chain disruption has pushed concentrate production from the end of the second into the third quarter of 2023.
The final project cost estimate has also increased from US$170mln to US$173mln due to increases in engineering costs, plant and electrical equipment and adjustments based on recent contract awards.
Working capital reserves and contingencies are said to be sufficient to offset the delay in concentrate production, with 72% of capital committed and an estimated cash balance of US$66mln at the end of September compared to US$83.4mln at the end of June.
Surface infrastructure works at Rupice have advanced significantly over the summer, the company said, with development of the decline “progressing well”, with the lower decline currently at 210 metres (m) and the upper decline at 100m.
The London-, Sydney- and OTC-listed company said exploration and infill drilling at Rupice will continue through the winter, with results feeding into the planned mineral resource estimate update in the first 2023.
Paul Cronin, managing director and chief executive, said: “The summer has seen underground development accelerate as well as the commencement of construction of both the process plant buildings and haul road.”
He added: "Like most industries we have experienced some cost inflation but we do not envisage the total capex to increase materially. The current estimate at completion is US$173mln, which is well within our contingencies and an impressive feat in the current climate.
“With supply chains under stress, we are taking a prudent approach with production to commence in Q3 2023.”