Adriatic Metals - Zn-Pb-Ag in Bosnia and Serbia

I put this up as a matter of record. Today's AFR says Adriatic is in play as Sandfire retreats and S32 may be interested:


ASX-listed explorer Adriatic Metals’ shareholder register has been blown open for the first time, paving the way for some big mining sector names to take a closer look at the company and its projects.

UK-based Adriatic Metals wants to dig for silver and other metals in Bosnia and Herzegovina. Its flagship project, Vares, was said to be worth $US1 billion ($1.35 billion) on a net present value basis (discounted at 8 per cent), could deliver 113 per cent internal rate of return post tax and require $US173 million of capex, according to its definitive feasibility study.

Adriatic is a relatively new entry to the ASX, listing in May 2018 at 20¢ a share for a $26 million market capitalisation. Three years later, it has a $516 million market cap.Throughout its short-listed life, Sandfire Resources was sitting on a strategic stake, starting with 7.65 per cent on its listing day and building it up to 16 per cent. But this changed on Wednesday, when Sandfire cleaned out, deciding instead to focus on its new $2.57 billion copper and Zinc project MATSA in Spain.

With Sandfire gone, Adriatic Metals’ share register is much more open, and is expected to prompt some opportunistic types to take a look.

Datt Capital’s Emanuel Datt, whose fund owns a 4 per cent stake, says the company would draw much attention and could fetch a price in the US$1 billion range if a bidding war ensues.‘‘For low-quality assets, we see M&A transaction values of about 50 per cent of NPV8 and that goes up to 100 per cent for high-quality assets of Adriatic’s calibre.

‘‘In Adriatic’s case, if a situation arises and [people] bid up, we could see a potential $US1 billion plus acquisition,’’ he says.

Datt thinks South32 would be the prime candidate, given its existing similar assets and its publicly stated desire to increase base metal exposure.

Others, like Rio Tinto, Zijin Mining and Dundee Resources, with Eastern European operations, could be keen.

He said after Sandfire’s reversal, no other single shareholder owns more than 8 per cent of Adriatic.‘‘Their register is truly open,’’ he said.

As Adriatic’s merits, he counted its even balance between precious and base metals revenues, longer mine life of about 10 years, and low initial capital requirement until it starts producing metal.Lastly, once the mine is running, it can pay back its expenses faster compared to peers at eight months versus three years, Datt said.

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Ash here.

For all we know, GK & team are giggling at the fund manager's' conceit and craving for a cash-out exit. Or it could be a genuine opportunity.

S32 has the financial capacity to take this on if it wants the project. It understands Zn-Pb-Ag mining and likes base metals.

We shall see, or not.

Ash