Adriatic Metals is to raise US$50.0 million through an equity issue to institutional investors mainly in Australia following the first concentrate sale from its Vares silver project in Bosnia & Herzegovina.
Around 18.3 million CDIs are being sold at an offer price of AU$4.15 per CDI through a bookbuild, a discount of approximately 5.7% to the last close.
Funds raised will strengthen the balance sheet and finance the ongoing ramp-up at Vares, with US$11 million to be used as termination payments to the former contractor.
Mining financier Orion will sell a third of its holding or around eight million CDIs alongside the placing.
Following this, Orion will hold 16.2 million CDIs (4.99% of the issued capital) with a 90-day lock-in agreed for these shares.
A US$ 23 million debt facility with Orion remains undrawn and is unlikely to be utilised based on current forecasts, said Adriatic, adding that Vares is now fully commissioned and operating as expected with the plant producing concentrates at saleable grades of over 2,500g/t Ag and close to 50% zinc.
The first shipment of concentrates has left the site for the Port of Ploc.
Underground development rates are also accelerating. Having reached a record high of 250 metres of development in March, topped 256 metres in April and are on track to exceed that amount in May, with close to 300 metres expected.
“With increasing feed tonnage of development ore available, the processing plant will now transition to 24-hour operations in anticipation of first stopes in July and ramp up completion in the fourth quarter of this year,” said the statement.
Paul Cronin, Adriatic's chief executive, commented: "Adriatic is pleased with the progress at Vares, with ramp-up well underway and significant milestones such as the first sale of concentrate being achieved in parallel with the transition to an owner-operator model.
"The placement will position the Company well to address near-term working capital commitments and provide additional flexibility as it continues hitting milestones in this critical period.
“Orion remains a meaningful shareholder and supporter of the company."