Adriatic Metals Faces Tailings Challenges but Advances Toward Commercial Production

Strong Production Growth Amid Operational Challenges

Adriatic Metals PLC (ASX:ADT) reported a significant uplift in its Q1 2025 operational performance at the Vareš Silver Operation in Bosnia and Herzegovina. Production surged 46% quarter-on-quarter to 1.4 million ounces silver equivalent (AgEq), driven by a 40% increase in ore milled to 66,000 tonnes. This ramp-up reflects ongoing improvements in processing throughput despite some earlier setbacks.

However, the quarter was not without challenges. Adverse weather conditions and tailings management issues delayed production by approximately 40,000 tonnes relative to guidance. These issues, including power outages and tailings filtration cycle bottlenecks, have since been addressed or are in the process of resolution, with debottlenecking modifications planned for Q2 and additional filter capacity expected in Q3.

Infrastructure Milestones and Financial Strength

A key highlight was the completion of the Veovača Tailings Storage Facility (TSF) in March, a critical infrastructure milestone that reduces operational risk and supports the transition to steady-state production. Initial tailings deposition began in early April, with construction of the direct access road to the TSF progressing on schedule for completion by the end of May.

Financially, Adriatic Metals demonstrated robust cash generation for the first time since operations commenced, with quarterly sales rising 26% to $34 million. The company’s cash position strengthened markedly to $76 million at quarter-end, bolstered by a $25 million concentrate prepayment agreement with Trafigura and a $50 million equity raise completed in February to fund expansion projects.

Notably, Adriatic made its first $20 million quarterly debt repayment to Orion Mine Finance, signaling disciplined financial management and confidence in cash flow generation as production scales.

Post-Quarter Momentum and Outlook

April’s operational metrics continued the positive trajectory, with monthly ore milled reaching 35,000 tonnes (60% above the Q1 average) and silver equivalent production hitting 0.8 million ounces, a 76% increase over the quarter’s daily average. Mine development also accelerated by 30%, underscoring the company’s commitment to advancing its underground infrastructure.

Adriatic’s management remains optimistic about achieving commercial production in Q2 2025, supported by improved throughput rates and resolved operational bottlenecks. CEO Laura Tyler emphasized the company’s focus on long-term value creation through sustained production growth and strong cash flow, while acknowledging the ramp-up challenges faced.

Strategic Expansion and Tenement Consolidation

Looking ahead, the company is fast-tracking the expansion of the Vareš Processing Plant to 1.3 million tonnes per annum and advancing studies at the Rupice Mine to underpin future production growth. Additionally, Adriatic is consolidating its tenement holdings, including the transfer of the Raska (Suva Ruda) licence to a wholly owned subsidiary, streamlining its asset base.

These initiatives, combined with a strong balance sheet and operational momentum, position Adriatic Metals well to capitalize on the growing demand for silver and base metals.