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summary
Adriatic Metals Plc (OTCPK:ADMLF) is a multi-mineral mining company listed in Australia and the United Kingdom. I’ve covered Adriatic Metals several times over the past few years, and those articles can be found here.
the The company has Varis Project In Bosnia and Herzegovina, which recently began production. This article will focus on the Vares project, but the company has one as well Raska Exploration Project In Serbia.
Earlier this year, Adriatic Metals announced the first central production at Varis and indicated a relatively slow ramp-up towards commercial production at the end of 2024. This is primarily due to the need for advanced ground support, but the latest guidance indicates higher productivity By much of 2025 and beyond.
Figure 1 – Source: Adriatic Metals 2024 press release 
Recent developments
One positive development since then for me Last article On Adriatic Metals is that the prices of base metals and precious metals have increased significantly. Zinc and silver, which are estimated at about 2/3 of total revenues, have increased by 25-30% over the past year. Gold and lead, which account for most of the remaining revenue, also performed well.
Figure 2 – Source: Quivin
The latest very recent update is that Adriatic Metals has raised nearly $50 million at a price of AU$4.15 per share. As shares increased, Orion Resource Partners sold a significant portion of its holdings as well. There are plenty of reasons why Orion might want to reduce its position after performing relatively well over the past few years, so this is not a cause for concern for me.
Adriatic Metals has announced in the past that no additional capital was needed to bring Vares into commercial production. Therefore, some investors criticized the recent decisions. However, raising capital makes sense to me. It is much better to lift when you do Can Instead of when I was He should.
There are no absolutes, and this increase may ultimately be redundant, but the margin of error will now improve significantly during the ramp-up process. So, if we get a delay during the back half of 2024 in Varis, it will be easier to manage with improved liquidity and a stronger balance sheet.
If the company had “increased safety” at its lowest level in 12 months, I would also be more critical, but this was done at a reasonably good level, so dilution was kept to a minimum. The number of shares rose only 6%.
Figure 3 – Source: Koyfin – Australian List 
evaluation
For the company’s valuation, I relied on the feasibility study as a basis, adjusted the numbers based on updated reserves, construction cost increases, and used flow-through value according to the latest financial data. The stock and cash count includes the most recent increase in shares.
I’ve based it on the following commodity prices, which are still slightly below current spot prices: silver $27 per ounce, gold $2,200 per ounce, zinc $2,700 per ounce, and lead $2,100 per ounce.
Figure 4 – Source: My estimates
Based on the above assumptions, the estimated NPV is about $1.7 billion, while the enterprise value of Adriatic Metals is about half that, giving us an EV to NPV of 0.51.
Conclusion
Over the past year, the Adriatic Metals stock price has been significantly ahead of precious metals and precious metals prices, but after recent weakness, its performance has been similar to that of silver miners overall over the past year.
Figure 5 – Source: Quivin
As is often the case, the recent surge in stocks is undoubtedly the main reason for the recent weakness, even if we have seen a general decline over the past week among miners, which has likely exacerbated the decline in the share price as well.
Adriatic Metals is a high-quality, low-cost polymetallic mining company that takes approximately 6 months to commercial production, at which time the company is expected to begin generating significant amounts of free cash flow. There are minimal liquidity and balance sheet concerns following the recent surge in the stock. The company has done an excellent job of taking the Varis project from exploration to production much faster than the industry average, and last year also reported reserve growth of 89%.
There is always some execution risk during a ramp-up, but I view the recent weakness as a good buying opportunity, as the valuation is still very attractive. I added to my holdings in Adriatic Metals over the past week.
The company is expected to release another resource upgrade in 2024, which has the potential to extend the life of the Farris mine, which is another near-term catalyst to look forward to.
Editor’s Note: This article discusses one or more securities that are not traded on a major U.S. exchange. Please be aware of the risks associated with these stocks.
