Adriatic mining permit opens way for Vares project in Bosnia
Adriatic Metal’s pre-feasibility study or “PFS” on Vares released last year shows the reserves sustaining production for an initial 14-year life of mine, with concentrate output for the first five years of operations averaging 15.3 million ounces of silver-equivalent per annum based on plant ore throughput of 800,000 tonnes per annum.
Balkans polymetallic project developer Adriatic Metals has successfully cleared the final major regulatory approval hurdle that now opens the way for it to start construction of its proposed Vares silver-zinc-lead mining and processing operation in Bosnia and Herzegovina later in the year. The London-based company, which is also listed on the London Stock Exchange, says it clinched the all-important exploitation, or mining, permit for the project’s cornerstone Rupice underground deposit from the country’s Federal Ministry for Energy, Mining and Industry following a public hearing in Vares earlier this month.
It caps off a remarkable turnaround time by Adriatic of just over four years between “discovery” of Vares and the project being fully permitted. Rupice underpins the proposed Vares development, which has a current forecast capital cost of US$173 million.
Latest stated probable ore reserves for Vares’ Rupice underground and Veovaca open-pit deposits stand at 11.12 million tonnes at average grades of 149.6 grams per tonne silver, 1.28 g/t gold, 4.22 per cent zinc, 2.67 per cent lead and 0.43 per cent copper.
Of the overall reserves, the Rupice deposit accounts for 8.41Mt grading an average 179 g/t silver, 1.66 g/t gold, 5.04 per cent zinc, 3.18 per cent lead and 0.55 per cent copper.
That equates to 48.4 million ounces of contained silver, 450,000 ounces of gold, 420,000 tonnes of zinc, 270,000t of lead and 50,000t of copper – out of the Vares reserves contained metal content totals of 53.5 million ounces of silver, 460,000 ounces of gold, 470,000t of zinc, 300,000t of lead and 50,000t of copper.
For the main Vares construction stage to be allowed to go ahead, Adriatic needed the exploitation licences for both the Rupice underground and Veovaca open-pit deposits, with the latter including permitting covering the proposed Vares processing plant.
Rupice is situated about 12km west-north-west of Veovaca. The $540 million market-cap company, which received the Veovaca exploitation permit about six months ago, says the Rupice permit represents the last of the key regulatory approvals.
Timing of permitting approvals for the two deposits varied due to Rupice being a greenfields deposit and Veovaca a brownfields site. Management envisages construction at Vares commencing in earnest some time during the December quarter this year after delivery of a definitive feasibility study and an environmental and social impact assessment in coming weeks.
Vares, centred around the town of Vares about 50 minutes’ drive from the Bosnia and Herzegovina capital, Sarajevo, is perched in a mountainous area of widespread forests and meadows.
Veovaca is a historic open-cut mine that produced lead, zinc and barite concentrates and ceased operations 33 years ago. Adriatic plans to build most of the processing plant and associated infrastructure at the brownfield Veovaca mine site and to carry out underground mining and partial tailings backfilling at Rupice.
Economic estimates in the PFS featured a sterling average EBITDA of about US$251 million per annum for the first five years of metal concentrate production, a net present value for the project of US$1.04 billion and an internal rate of return of 113 per cent. All-in sustaining costs for Vares across the initial mine life have been extrapolated to average $US120 per tonne milled and the capital cost payback period from production start-up has been put at an eye-catching 1.2 years.
District Metals’ polymetallic Tomtebo project in Sweden
Located in the central area of the country, the Bergslagen district is home to some world-class metal mines like Garpenberg, Zinkgruvan, and Falun. But despite its long history of mining, Sweden is still off the radar of many international investors. The country is Europe’s leading mining nation, accounting for 91% of the continent’s iron ore, 9% of the copper, and 24-39% of its lead, zinc, silver, and gold.
Sweden’s Boliden, which owns Garpenberg, is its largest mining company, but the country is also home to projects being explored by Lundin Mining and Agnico Eagle Mines. That said, international investment in exploration is still extremely limited – deterred by the notion of high taxes, an active environmental movement, and elevated labour costs.
Vancouver-based District is hoping to change that perception with its Tomtebo property, an advanced exploration project that covers an area of 5,144 hectares around 175 kilometers (km) northwest from Stockholm, Sweden’s capital. Thanks to the district’s long history of mining, infrastructure like roads, railway, and power lines surround the project. Boliden’s Garpenberg, which was once referred to as the world’s most productive underground zinc mine, is 25km south of Tomtebo. District Metals sees a number of geological similarities between Garpenberg and Tomtebo, from host rocks, structure, alteration, and mineralization styles. Historic production at Tomtebo comprised 120,000 tonnes at 4.4% copper intermittently for over 200 years, but the area has seen little to no exploration in the intervening period. In 2018, former owner EMX Royalties Corp assayed eight rock grab samples from dump piles that ranged from 0.2% to 3% copper, 0.1 to 2.5 grams per ton (g/t) gold, 0.1 to 20.1% zinc, 0.1% to 10.8% lead, and 3.1 to 383 g/t silver. Today, District Metals is looking to apply modern systemic exploration techniques at Tomtebo in an effort to unlock the property’s potential – and put an under-the-radar mining district on the international map.
Since acquiring the project from EMX in February 2020, District Metals has been busy assembling the pieces to start its aggressive exploration campaign at Tomtebo.
In July 2020, the firm began an airborne electromagnetic and magnetic survey at Tomtebo – the first time a deep penetrating airborne study has been carried out at the site. The survey covered the entire Tomtebo property with around 600 line-kilometers at a line spacing of 100 metres (m) and detecting conductive polymetallic sulphide mineralization at depths of 500m or more.
On March 15, 2021, after months of preparation and armed with nearly $5 million raised in a private placement, the company finally started drilling with a 5,000m, 21-hole program targeting four zones — Oscarsgruvan, Steffenburgs, Gårdsgruvans, and Gamla Gruvans.
Two weeks later, District Metals announced that a ground survey revealed numerous gravity high anomalies on the property. The anomalies were located at the historic Tomtebo mine, both within and outside of the known mineralized zones, confirming the mineralized domains that offer “immense expansion potential.”
The gravity high anomalies at the mine reveal an exploration target of over 72 million tons (Mt) at a density of 3.5 grams per square centimetre (g/cm3) from near-surface down to a depth of 650m.
Another significant blind gravity high anomaly was identified 1 km northeast along trend from the historic Tomtebo mine that is open to the northeast and at depth where an exploration target of 34Mt at a density of 3.5 g/cm3 was modeled at shallow depths. Yet another anomaly was identified 600m southwest of the mine that is associated with historic iron sulphide occurrences, which are known to sometimes coalesce with polymetallic sulphide mineralization in the Bergslagen Mining District. In April, after drilling 1,377m in seven holes, the company sent drill core samples from three holes for analysis. It expects the results to arrive by late May.
On the personnel front, the company recently appointed Marlis Yassin as its new chief financial officer, taking over from Gavin Cooper who had been in the role since 2017. Cooper will continue to work with District Metals as a consultant. Yassin has over 15 years’ experience working with companies in various sectors, including mining, technology, and industrial products.
District Metals also named Hein Raat as its country manager for Sweden in the run-up to the Tomtebo drilling program. Raat is a professional geologist (EurGeol) with extensive experience exploring for base and precious metal deposits in Scandinavia and Europe. He was a geologist for the Boliden Group in Sweden for eight years, with the last four years being focused on polymetallic projects in the Bergslagen district. In addition, Rodney Allen, who did his PhD in volcanic resources, has been appointed as a technical advisor to the company. He was manager of Geology Research and Development for the Boliden Group in Sweden for 10 years.
“We are very pleased with the progression of our maiden drill program at Tomtebo,” District Metals CEO Garrett Ainsworth said in a recent statement.
“Our technical team and drill crew in the field are firing on all cylinders, which has resulted in optimized production from the drill rig with best practices being carried out with regards to health, safety, and the environment,” he added.
Adriatic Metals to expand its explorations in Serbia
UK-based Adriatic Metals acquired Tethyan Resource Corp in 2020, to advance the former Kizevak and Sastavci polymetallic mines in the Raska District, southern Serbia. Adriatic Metals has now expanded its exploration plans in Serbia’s zinc, lead and silver Raska project in 2021 to delineate near-surface resources amenable to low cost, open-pit mining.
The program will continue the company’s primary focus on the Kizevak and Sastavci prospects, but will also identify new areas of base and precious metal mineralisation from brownfield targets across the wider licence area, Adriatic Metals said in a filing with the Australia Stock Exchange.
Moreover, a third diamond drill rig will be deployed to the Raska Project within the next month, which will initially target the Karadak and Rudnica epithermal vein prospects, Adriatic Metals said.
Drilling will start with a 2,200-metre programme designed to test the Karadak prospect, a near-surface vein-type prospect with a historical, non-compliant mineral resource, and a 1,500-metre program is planned to follow up on the polymetallic vein intercepts at Rudnica, which is a copper-gold prospect cross-cut by later base and precious metal epithermal veins.
“Adriatic will continue to systematically explore around the Kizevak and Sastavci prospects, with the aim to generating a sizeable resource to support a significant open-pit mining operation. Based on the results to date a maiden resource and scoping study at Raska will be delivered in the 2nd half of the year, once the DFS, ESIA and the project financing workstreams at Vares have been completed and construction is underway,” Paul Cronin, Adriatic’s Managing Director and CEO, said.
Adriatic and Tethyan merged group will expand footprint in the Balkans
The merged group will subsequently have an expanded footprint in two mining-friendly jurisdictions in the region as it looks to step up exploration and feasibility study activities.
Aspiring project developer, Adriatic Metals, has completed an all-scrip acquisition to the value of approximately C$15 million of fellow Balkans precious and base metals player Tethyan Resource Corp. Tethyan’s shareholders will receive 0.166 Adriatic shares for each share they hold in Tethyan. After the allotment of approximately 13.2 million new Adriatic shares, UK-based Adriatic will still have a tightly issued capital structure of about 196.2 million shares. The transaction was approved by Tethyan’s shareholders and the British Columbia Supreme Court in August and shares in the Vancouver-based junior were expected to be delisted from the TSX Venture Exchange this week.
Adriatic owns the exciting Vares underground silver-lead-zinc project in Bosnia and Herzegovina that comprises two deposits at Rupice and Veovaca. Rupice hosts a very recently updated JORC-compliant indicated and inferred mineral resource of 12 million tonnes going 149 grams per tonne silver, 1.4 g/t gold, 4.1 per cent zinc and 2.6 per cent lead for a contained 58 million ounces of silver, 527,000 ounces of gold, 489,000 tonnes of zinc and 312,000 tonnes of lead.
The A$400 million market-capped company, which has seen a remarkable 10-fold rise in its share price since listing on the ASX in May 2018, hopes to use the updated Rupice resource estimate as a catalyst to a pre-feasibility study as it looks to flesh out the project economics for a possible Vares stand-alone development, prove up ore reserves and build its confidence in the metallurgy.
Initial projections provided in the scoping study, or “SS” undertaken by Adriatic last year were compelling. The SS suggested a CAPEX of US$178.4 million for the potential development of Vares and eye-catching free cash flows in the early years of mining starting around 2023 through to 2031 of between US$100 million and US$250 million per annum courtesy of very impressive average operating costs of US$57 per tonne. Capital payback period has been predicted at an incredible eight months.
Tethyan brings a couple of intriguing brownfields assets to the table in the form of the historic Kizevak/Sastavci silver-lead-zinc project and the Rudnica copper-gold porphyry project, both in Serbia. Adriatic is aiming to deliver a maiden JORC-compliant mineral resource estimate for Kizevak/Sastavci in the March 2021 quarter.
Early signs have been encouraging with a round of confirmation diamond drilling encountering a high-grade, lead-zinc-rich mineralised structure in one of the holes at Kizevak. It returned an impressive 12.9m polymetallic intersection grading 8.2 per cent zinc, 4.1 per cent lead, 98.3 g/t silver and 0.4 g/t gold within a broader interval of 35.3m at 4.2 per cent zinc, 2.2 per cent lead, 46.7 g/t silver and 0.4 g/t gold from 124.8m.
According to Adriatic, a potential bonus in terms of operational synergies is that Kizevak/Sastavci’s metallurgical characteristics may be favourable for concentrate blending with Vares ore. Nonetheless, the low strip ratios of the project’s open pittable resources offer the company a route to maximising tonnages and generating revenues based on potentially enviable costs of mining.
Following the Tethyan takeover, Adriatic now holds advanced projects – roughly 200km apart as the crow flies – in the two jurisdictions of Bosnia and Serbia that have established mining pedigrees and infrastructure, skilled workforces and low-cost operating environments.
The company has a first-mover advantage in the region, and with the two countries attracting significant investment from the likes of Rio Tinto, Toronto-based Dundee Precious Metals, Chinese group Zijin Mining, Vancouver-based Mundoro and Vancouver-based Fortuna Silver, it’s a case of watch this space.