PERTH (miningweekly.com) – ASX- and LSE-listed Adriatic Metals has unveiled a $244.5-million project finance package to fund the development of its Vares silver project, in Bosnia & Herzegovina.
The company on Wednesday reported that it had inked a term sheet with Orion Resource Partners for a $142-million debt financing package, comprising of $120-million in senior secured debt and a $22.5-million copper stream.
The financing remains subject to ongoing due diligence and definitive legally binding documentation, which Adriatic expected to finalise in the fourth quarter of this year.
In addition to the debt funding, Adriatic on Wednesday also flagged a $102-million equity raising, consisting of a $52-million share placement, and a conditional equity subscription for $50-million worth of shares by Orion.
The equity raise will be priced at £1.5174 a share, representing a discount of some 10.7% to Adriatic’s ten-day volume weighted average share price on the ASX.
Orion has agreed to subscribe for 24.1-million new ordinary shares at the placing price for a total investment of some $50-million.
Meanwhile, ASX-listed Sandfire Resources on Wednesday announced that it would sell its entire shareholding in Adriatic, which amounted to some 34.6-million shares in the company, which represented around a 16% interest in Adriatic’s existing issued ordinary share capital.
The company has priced its share sale at A$2.80 a share, and is expected to raise gross proceeds of around A$97-million.
“We are delighted to welcome Orion as a new partner in the Vares silver project and we thank Sandfire for their support of the company since its initial public offering in 2018,” said Adriatic CEO Paul Cronin.
“The announcement of the proposed project finance package is a significant milestone, demonstrating the extent of support globally for new investments in mining in the Balkans, and Bosnia & Herzegovina in particular.
“At Adriatic we have strived to move through the project development phases, at pace and professionally, in order to deliver value to our shareholders and align the project delivery with the aspirations of our local community in Vares. This outcome is a positive reflection of the team we have built at Adriatic in its short history, who over the past 12 months have delivered several critical outcomes that have culminated in the success we have today. We look forward to continued success in the future as we transform from developer to producer.”
Funds raised would be used to start construction of the Vares project.
A definitive feasibility study estimated that the project would require a capital investment of $168-million to develop, and could produce some 14.9-million ounces a year of silver equivalent during the first five years of its ten-year mine life.
The study estimated that the project would have a post-tax net present value of $1.06-billion and an internal rate of return of 134%, with cash costs estimated at $7/oz of silver equivalent.