Adriatic Metal. Regulatory News (ADT1)

28 January 2020

Adriatic Metals PLC 

('Adriatic Metals' or the 'Company')

QUARTERLY ACTIVITIES REPORTFor the 3 months ended 31 December 2019

HIGHLIGHTS

• Scoping Study for the Vares Project completed which indicated an NPV8 of US$917 million, IRR of 107% and project capital requirement of approximately US$178 million.

• Continued expansion of Rupice with the highest gold and silver grades seen in the northern extension area with BR-22-19 returning an interval of:

• 6m @ 11.3g/t Au, 1,019g/t Ag, 13.1% Zn, 12.5% Pb, and 1.3% Cu from 238m

• Fully funded through to completion of a Bankable Feasibility Study with cash at 31 December 2019 of £13.9 million (A$26.3 million) following successful completion of a A$25 million Institutional Placement in October.

• Admitted to trading on the London Stock Exchange's Main Market on 12 December 2019 under the ticker "ADT1"

Adriatic Metals PLC (ASX:ADT, LON:ADT1) ("Adriatic" or the "Company") is pleased to provide the following Quarterly Activities Report ("QAR") that summarises the progress made and reported during the three months ended 31 December 2019 ("Q4" or the "Quarter").

Paul Cronin, Adriatic's Managing Director and CEO commented, "Q4 2019 was another tremendous quarter for the Company. The completion of the Scoping Study for Rupice and Veovaca, indicating a project NPV8 of US$917 million net of an eminently achievable project capital requirement of US$178 million, firmly establishes the Vares project as a world class asset and represents a major milestone in path towards development.

The Quarter has seen our deepest high-grade intercept to date at Rupice which clearly demonstrates that the high-grade mineralisation continues outside our current Mineral Resource and south towards our Jurasevac-Brestic prospect a further 500m to the southeast.

Several important corporate objectives were also achieved including successful completion of a A$25 million Institutional Placement and listing on the London Stock Exchange's Main Market."

1. SCOPING STUDY

On 19 November 2019 the Company released a Scoping Study (the "Study") on the Vares Project (the "Project") to the markets. The following key extracts from the Scoping Study summarised below, which provide an overview of these results, should be read in conjunction with the 19 November announcement.

All figures provided in this section of the QAR are estimates or approximations based on Adriatic's operational knowledge, familiarity of the scoping study team with deposits of similar size and complexity, in analogous settings and discussions with suppliers, and may be subject to future modification during Pre-Feasibility and Definitive Feasibility stages.

The following tables in this section of the QAR should be read in conjunction with the details in following sections of this release as well as the material assumption included in Appendices 1 and 2.

1.1. CONCEPTUAL OPERATIONAL AND FINANCIAL OUTCOMES

This Study assesses the potential viability of running an underground mining operation at Rupice to recover on average 715,000t per annum for 10 years followed by an open pit operation at Veovaca at an annual average rate of 679,000 t per annum for 7 years.

The key financial benchmark numbers from the Study were as follows:

*Including 30% contingency

The life of mine free cash flow was as follows:

Link to life of mine free cash flow http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

The Key Operational and Financial outcomes from the Study are summarised in the table below:

The metal price assumptions used in the Study were as follows:

1.2. CONCEPTUAL MINING APPROACH

1.2.1. Rupice Conceptual Underground Mine

The diagram below illustrates the proposed declines, ramps, levels and stopes at Rupice. The conceptual mine design comprises largely of main declines (light blue), trackless ramps (magenta) and the sub-levels (green). The proposed long hole stoping areas are located below the 1,085 level and the cut and fill stopes are above the 1,085 level. The anticipated main ventilation infrastructure includes raise-bored shafts. The intake air will conceptually travel down the declines and into the mine via the internal ramps and onto the levels where it will leave the mine via the return air raises shown in red.

Link to diagram http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

1.2.2. Veovaca Open Pit Mine

Mining by conventional open pit methods including drill and blast followed by load and haul is proposed to be employed. Drilling and blasting is anticipated to be performed on 6 m benches and similarly for the loading of the blasted material. Where possible in the near surface weathered zone, free diggable material could be mined without requiring drilling and blasting. Ripping by bulldozers may also be employed in transitional areas to reduce the quantity of drilling and blasting required.

The envisaged scale of mining at the Veovaca Deposit is relatively small scale with a peak total material movement of approximately 4.5 Mtpa. The annual processing plant feed requirement is approximately 800 ktpa.

In order to ensure a seamless transition during the ramp-down of production from the Rupice underground mine initial ramp-up material is proposed to be stockpiled and reclaimed during the switch-over from underground to open pit feed.

1.3. Proposed Combined Mine Output

The base-case production schedule assumes an 800 ktpa plant throughput rate, commencing with the Rupice deposit (2021 - 2032) continuing with the Veovaca open pit operation from 2032 to the end of the Life of Mine with a view to extracting the highest grade at the Rupice deposit in the early stage of the Rupice underground operation. The figure below shows the Veovaca processing plant feed grades during the LoM:

Link to figure showing the Veovaca processing plant feed grades during the LoM http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

PROPOSED DEPOSIT PROCESSING

1.3.1. Process Description

This subsequent process description should be read in conjunction with the process flowsheet below:

Link to process flowsheet http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

Rupice material would be transported from the underground mine to the surface and reloaded for transport to Veovaca processing plant. There it would be dumped in stockpile fingers representing various mineralisation types and grades. Veovaca would be mined by open pit and trucked to the Run of Mine ("ROM") stockpiles for processing. Material would be reclaimed by front end loader to the primary crusher feed hopper. Oversize +500 mm lump material can be removed from the static grizzly for mechanised breaking, or alternatively the rock breaker fitted to the primary jaw crusher can be used.

1.3.2. Crushing & Screening

The proposed crushing and screening plant will be designed for a nominal treatment rate of 150 t/h which will require around 16 hours per day of crushing during two 8 hour shifts, 7 days per week. The crushing circuit is a conventional two-stage closed circuit. There will be 3 main units - primary jaw crusher, secondary cone crusher and product screen, each with integral product conveyors.

The primary jaw crusher would be fed using a vibrating grizzly feeder to pre-screen the ROM feed. The speed of the feeder will be controlled to maintain the tonnage set point based on the tonnage measured on the fine material stockpile feed conveyor. The oversize from the feeder will be fed directly into the primary jaw crusher.

A proposed secondary cone crusher equipped with a small feed hopper fed by a vibrating pan feeder which will discharge material in the centre of the crushing chamber. The secondary crusher product would be recirculated back onto the double deck screen via two mobile conveyors to operate in closed circuit.

1.3.3. Fine Material Storage and Reclaim

The fine-material bin feed conveyor would discharge the product screen undersize directly into the open-topped fine material bin which has a conceptual capacity of 4,000 tonnes or roughly 48 hours of crushing plant operation. The storage capacity is needed to accommodate maintenance, and the shorter working hours of the crushing plant.

Material would be reclaimed from the fine material bin by a variable speed vibrating feeder onto the rod mill feed conveyor.

1.3.4. Grinding & Classification

The proposed grinding circuit will consist of a rod-ball mill combination, with the ball mill, operating in closed circuit with a battery of hydrocyclone classifiers. The conceptual plant has been designed to achieve a utilisation of not less than 90% with a treatment rate of 100 t/h to achieve the required annual throughput rate of 800 ktpa.

Slurry exiting the mills would pass over integral trommel screens to remove coarse particles and scats and prevent them from entering the mill discharge hopper. Additional dilution water would be added to dilute the cyclone feed stream before being pumped to the hydrocyclone cluster for classification.

The proposed cyclone battery will comprise a cluster of hydrocyclones in a manifold, eight operating and two on standby. The cyclone overflow would flow by gravity to the trash screen feed box. Underflow from the cyclone cluster would gravitate to the ball mill for further size reduction.

Oversize trash would gravitate directly to a trash bin. Undersize product from the trash screen would gravitate to the primary flotation conditioning tank.

1.3.5. Copper / Lead Flotation

Throughout the flotation area, VF vertical froth pumps are proposed to be used complete with integral tanks. These will greatly benefit the energy efficiency and reliable operation of the plant.

The first stage of the proposed flotation circuit is to produce a saleable bulk copper-lead concentrate containing gold, and silver. The primary grind cyclone overflow stream would report to the rougher bulk flotation. The combined design residence time for the proposed copper/lead rougher and scavenger circuits is 25 minutes, equating to a total combined rougher/scavenger float cell volume of 80 m3.

The proposed copper-lead stirred regrind mill will operate in closed circuit with a hydrocyclone cluster with the cyclone underflow material reporting back to the regrind mill feed, whilst the cyclone overflow becomes cleaner flotation feed.

1.3.6. Zinc Flotation Circuit

The second stage of the proposed flotation circuit is to produce a saleable zinc concentrate. The copper-lead rougher tailings stream would report to the zinc flotation conditioning tank.

The zinc rougher-scavenger circuit would consist of standard mechanically agitated flotation cells. The product would then be subjected to regrind ahead of cleaning.

The proposed zinc stirred regrind mill would operate in closed circuit with the hydrocyclone cluster with the cyclone underflow material reporting back to the regrind mill feed, whilst the cyclone overflow becomes cleaner flotation feed.

1.3.7. Pyrite Flotation

The tails from the Zinc circuit would be sent to a Pyrite float to remove any residual sulphides ahead of the barite float stage.

The proposed pyrite float consists of a pyrite rougher-scavenger and a single cleaner stage. The pyrite concentrate was initially sent to tailings whilst the pyrite tailing became feed to the barite float circuit. However, further test work has revealed that the pyrite concentrate can be upgraded to produce a saleable gold concentrate. This will be studied further in PFS stage.

1.3.8. Barite Flotation

The tails stream from the pyrite scavenger bank forms the feed to the proposed barite flotation circuit. A proposed barite scavenger circuit has also been included to allow for the recovery of any slow floating composite particles. The barite rougher / scavenger circuit would consist of standard mechanically agitated flotation cells.

The combined rougher/scavenger concentrate stream would report to the first cleaner cell bank for the first stage of upgrading. Additional activator, collector and frother would be added to the head of the first cleaner bank.

1.3.9. Concentrate Thickening

The final copper-lead, zinc, and barite concentrates from the flotation section would be pumped to individual concentrate thickeners. An auto-dilution system would be provided on the feed-well to increase the settling rate and the facility to add flocculant to the feed-well would be provided. A thickener underflow density of between 55% to 70% solids is expected to be achievable.

The thickener feed would pass through a de-aerator located at the feed-well to minimise froth generation on the thickener and water sprays provided over the surface of the thickener to assist the breakdown of any froth that does occur on the thickener.

1.3.10. Flotation Tailings

Slurry from the discharge of the barite scavenger flotation bank would be pumped to a proposed 35m tailing thickener ahead of a tailing filter. Filtered tailing would be transported back to the Rupice mine as feed to a paste-fill plant.

1.3.11. Concentrate Filtering & Washing

Thickened copper-lead concentrate is proposed to be filtered to achieve a moisture content of 8-10%. The expected TML (Transportable Moisture Limit) for a copper-lead concentrate is 11%. Thickened zinc concentrate is proposed to be filtered to achieve a moisture content of 8-10%. The expected TML for a zinc concentrate is 11%. Thickened barite concentrate is proposed to be to achieve a moisture content of 8-10%. The expected TML for a barite concentrate is 15%.

In each case a positive pressure plate and frame filter is proposed. Filter cake would discharge from the filter via chutes onto a short collection conveyor below which would feed the stockpile in the concentrate storage shed.

1.3.12. Concentrate Storage

A 300 mm high concrete bund wall would be provided around the sides of the proposed concentrate pads to help prevent loss of product off the pads and ingress of contaminants.

The concentrate pad would accommodate approximately 10 days' production. Under normal circumstances only sufficient concentrate quantities required to meet trucking schedules will be stored on the pad. The pad is required to store concentrate in greater quantities only when delays are experienced in transporting the concentrate from site due to unscheduled events such as road closures.

Concentrate is proposed to be transported from site on a contract basis by truck to the railhead in Vares and thence to Ploce in Croatia, the nearest port, for shipping to the smelters.

1.3.13. Reagents Sourcing and Storage

The majority of the proposed reagents would be procured locally in Europe and delivered to the site in bulk on an as required basis. The reagents would be stored in the specifically designed reagents storage area.

1.4. INFRASTRUCTURE REQUIREMENTS

The Rupice and Veovaca deposits are located approximately 8.7km west-north-west and 3.5km east respectively from the town of Vares and 35km to the north-north-west of the capital city Sarajevo.

The Rupice deposit is largely a greenfield site located some 1.5km from the nearest small village of Borovica Gornja and no infrastructure currently exists at the proposed mining operations. The site is currently accessed from the main sealed road to village of Borovica Gornja followed by an unsealed track in reasonable repair to the exploration site. There are no waterways or channels within close proximity to the project area and all construction material, equipment and consumables will need to be transported via rail or heavy truck and trailer from Vares, Sarajevo or Ploce port located on the coast of Croatia.

A town of Vares is electrified by a stepped down supply from the 220 KV main distribution line located in close proximity to the town. A 132 KV overhead distribution line runs in close proximity to the mine site alongside the main sealed R444a. The construction of approximately 2.5km overhead line will be required to connect to the 132 KV line.

Surface and ground-water estimates have indicated that the project will have a negative water balance and the mining and processing water requirements will require augmentation by either a planned well field or supplied mains water supply.

The Veovaca deposit is largely a greenfield site that has been mined historically using open pit methods. The deposit is located in close proximity to Dastansko village to the east approximately 250m from the planned pit.

There is currently no mining infrastructure at the Veovaca deposit, however, a derelict processing facility is located some 2km south-east of the proposed surface operation. A large administrative building located at the plant site has been successfully repaired and refurbished.

During the future mining of the Veovaca deposit, it is proposed that a new dedicated mine haul road will be constructed to the west and east of the valley. The western haul road would be used to haul feed and waste to the processing plant and the waste rock dump areas respectively. The eastern haul road would be used initially for the transport of waste rock for the construction of the southern Tailings Storage Facility (TSF) wall. Following the completion of the southern TSF wall, this road will form the permanent water diversion channel (graded at 1:100 down to the southern TSF wall) that will divert water around the TSF for discharge into the valley downstream of the TSF wall.

The proposed infrastructure at Veovaca is shown in the diagram below:

Link to diagram http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

1.4.1. Tailings Disposal

The tailings disposal strategy is proposed to be managed in two phases:

·; Phase 1 - Processing of Rupice feed, dewatering and transporting tailings to the paste-fill plant located at Rupice for the purposes of stope void filling; and

·; Phase 2 - following the depletion of the Rupice, Veovaca tailings will be pumped to the existing tailings facility located in the valley immediately east of the processing plant.

1.4.2. Telecommunications

Telecommunications in Bosnia and Herzegovina comprises of licensed fixed telecommunication operators with a highly competitive mobile sector covering 99% of the population with a 63.29% penetration rate operating on 4G+ network.

It is proposed that the mine site will be linked to data and voice telecommunications network via a satellite receiving station or cellular network repeater station. Communications on site will link the public network to the various voice, data and telemetry infrastructure systems within the local mine network using fibre optic cable which will support both data and voice communications. A repeater system will provide the infrastructure to enable hand-held and mobile radio sets to communicate around the site.

1.4.3. Transportation

Two main electrified rail lines form the rail network with a standard gauge of 1,435mm in Bosnia and Herzegovina with a west-east line connecting Bilhac in the west to Doboj in the north, and a south-north line (25kV / 50Hz) connecting the Croatian port of Ploce to Doboj.

The south-north line traverses Sarajevo with the Podlugovi - Vares rail branch for a distance of 24.5km terminating at the historical iron ore loading siding in the town of Vares.

Product concentrate will be loaded into 20-foot standard intermodal containers, with a net weight 27.8t and internal volume 33.1m3; they will be hauled via truck to the rail siding in Vares and loaded onto flat rail cars for transport approximately 230km to the Port of Ploce in Croatia for shipment to the off-taker. Empty containers will be returned to the rail siding at Vares for loading of the next consignment.

1.5. CONCETRATE MARKETING

1.5.1. Metals

Bluequest Resources AG based in Baar, Switzerland were retained by Adriatic Metals to prepare a commercial report to calculate the overall value of the anticipated concentrates focussing on the high value zinc and lead-silver concentrates predicted to be produced from the Rupice deposit at a processing plant at Veovaca.

The high silver and gold content in both the Cu/Pb and Zn concentrates was of significant interest to the smelters that were contacted as was the low iron levels in the concentrates. It was also noted that the Chinese smelters would view the Cu/Pb concentrate as a silver concentrate because of the high silver values and this has benefits in that VAT would then not be payable as the silver is exportable as bullion. Another benefit of the Chinese smelter is that the antimony (Sb) becomes another payable metal, in addition to the copper, lead, silver and gold, making this a very high value concentrate.

Overall Net Smelter Revenues (NSR) values, taking into account all payables and all deductions and costs, for the Rupice Cu/Pb and Zn concentrates are about USD 2,500/t and USD 950/t respectively. Applying the same basic factors to the Veovaca concentrates gives NSR values for the Pb and Zn concentrates of approximately USD 1400/t and USD 700/t respectively.

1.5.2. Barite

A study of the market potential of barite from the Project was prepared in December 2017 by Peter W. Harben Inc. The fundamentals of the sector and the market drivers have not changed significantly, and this was subject to a 2019 update by Ted Dickson of TAK Industrial Mineral Consultancy. Because industrial minerals are marketed differently from metal concentrates and because Adriatic Metals will produce a ready ground product, marketing requires more direct discussions between the company and end users in the oil & gas industry. The grade and high SG (Specific Gravity) of the barite produced from Rupice make it an attractive product for drilling muds and it has passed the current API (American Petroleum Institute) tests in terms of sizing and other specifications. It proved difficult without being able to provide a bulk product for testing to get end-users to give an estimated FOB (Free on Board) price for Adriatic's barite and estimates of between USD 130/t and USD 180/t have been suggested. A price of USD 155/t was chosen for the Scoping Study report.

1.6. ROYALTIES AND TAXATION

Corporate Income tax rates in Bosnia and Herzegovina are 10% and have been accounted for in the Economic model. There are no Royalties payable to the central government, but the Concession Agreement between the Company and Zenica-Doboj Canton allows for a fee of KM1.50 (US$ 0.85) per run of mine tonne with a minimum fee of 100,000 tonnes per annum. On a Net Smelter Return basis, this Royalty is equivalent to 0.2%.

1.7. CAPITAL EXPENDITURE

1.7.1. Rupice

Capital costs for mining have been estimated from international benchmarked rates for mobilization of equipment and construction on a Mine Services Area (MSA) that includes heavy equipment workshops, store and administrative structures. The mining capital is separated into surface and underground infrastructure.

Underground mining at Rupice is assumed as an owner operator underground operation. Mining equipment owning costs are included including in the operational cost model as a leased cost at 5% over 60 months.

Rupice surface and underground mining infrastructure capital costs used in the financial model are summarised in below:

1.7.2. Veovaca

Open pit mining at Veovaca is assumed as a mining contractor open pit operation. Mining equipment owning costs are included in the operational cost model as a leased cost at 5% over 60 months. The mining infrastructure capital costs used in the financial model are summarised below:

1.7.3. Processing

The hydrometallurgical processing capital costs have been derived for equipment, construction and engineering management for the concentrator plant from scoping study work undertaken by Wardell Armstrong under the guidance of Holland and Holland Consultants. Plant capital costs have been adjusted for expected high mass-pull concentrate conditions during the initial high-grade underground feed from the Rupice underground mine. The capital costs for the processing plant are summarised below:

1.7.4. Other Capital Costs

The following capital ratios have been applied in the capital estimate for the allowance of EPCM and owners' fees:

·; 2.5% Capital allowance for Owners Costs

·; 15% capital fee for Engineering Procurement and Construction Management (EPCM) for the processing plant

·; 12.5% capital fee for Engineering Procurement and Construction Management (EPCM) for the mining infrastructure

·; 30% Contingency for estimation inaccuracy and miscellaneous items

1.7.5. Rehabilitation and Closure

No provision for the rehabilitation and closure of the mine has been allowed in the capital cost estimate. An environmental provision of US$1.50/tonne amounting to some US$17.9m over the LOM is allowed in the operational cost. It is recommended that where appropriate structures are procured that are of the mobile / temporary nature to ensure cost effective and rapid demobilisation of surface site infrastructure is possible.

1.8. OPERATING EXPENDITURES

The operating costs were estimated from zero base activity-based model and calculated per period based on the mine production schedule for both the open pit and underground operation. Costs presented are real US Dollar denominated and any cost components presented in local currency (BAM) were converted to real US Dollar terms at the exchange rate of BAM 1.75 to 1 US$.

1.8.1. Mining Operational Cost

The open pit and underground operational cost models are both developed as zero base activity based operational cost models. The open pit mining operational cost model assumes mining contractor scenario with a 10% mark-up. The underground mine operating cost model assumes an owner operator underground model with mining equipment leasing approach (5% interest 60 months repayment schedule).

Schedule quantities from the mine plan and scheduling were used to calculate operating cost cashflows on a per period basis. In addition to the variable unit rates and quantities a fixed cost allowance has been provisioned in the mining operational costs.

The mining operational cost in the Study can be summarised as follows:

Notes:

1. Steady State production accompanied by increased waste development for feed access.

2. Steady State production accompanied by decreased / minimal waste development.

3. Steady State production accompanied by increased waste stripping (above 3:1) for feed access.

4. Steady State production accompanied by decreased / minimal waste development (approx. 1:1).

1.8.2. On-Mine Costs

The on-mine costs for the Rupice and Veovaca Deposits site were estimated from first principles based on estimated local labour rates and includes provision for stores and equipment. On-mine costs are calculated for the indirect equipment, stores and ancillary items. Indirect labour is included in the mining operational costs for both the Rupice and Veovaca mining operations. Ancillary cost is summarised in the table below:

1.8.3. Processing Operational Costs

The hydrometallurgical processing operating costs have been derived from metallurgical test-work and scoping study work undertaken by Wardell Armstrong under the guidance of Holland and Holland Consultants. Operating costs are adjusted for local energy, reagent and labour costs and are summarised in the table below:

Off-mine costs comprises of additional cost for transport of Rupice feed to the Veovaca processing facility. A specialist transportation contractor is assumed to fulfil the transport requirements and a unit rates of US$0.15/t/km is based on a benchmarked contractor rate. A total unit rate of US$ 4.20 / tonne is applied as an off-mine cost for the 28km route (single way) from the Rupice mine to the Veovaca processing facility, equating to a total LOM off-mine cost of US$30m. The transportation of intermodal containers containing product concentrate has been calculated at a unit rate of US$ 0.92 / tonne dry concentrate (unit rates of US$0.15/t/km) based on a 6.6km route (single way) from the Veovaca processing facility to the rail siding in Vares , equating to a total LOM off-mine cost of US$3.5m.

1.9. Sustaining Capital Costs

A 2.5 % and 4.0% sustaining capital provision has been applied to the processing and mining operational cost for the Rupice deposit. The open pit mining operation proposed at the Veovaca deposit will be undertaken using a mining contractor and no mining sustaining costs have been allowed once Veovaca is in full production. The sustaining capital provision for the total LOM equates to US$17m.

1.10. Environmental Provision

An environmental provision of US$1.50/ tonne feed has been applied for the purpose of site rehabilitation following the end of the life of mine. The environmental provision for the total LOM equates to US$18m.

1.11. Deductions from Concentrate Sales

Deductions from the sales of the Zinc, Lead and Barite concentrates, set out in the table below, include the concentrate transport and treatment charges.

1.12. Operating Cost Summary

A summary of the total operating cost is presented in the table below:

Notes:

1. Production period representing steady state underground production with increased development requirements.

2. Production period representing steady state underground production with decreased development requirements.

3. Production period representing steady state open-pit production with increased waste stripping requirements.

4. Production period representing steady state open-pit production with minimal waste stripping requirements.

1.13. PROJECT ECONOMICS

A standard Discounted Cashflow (DCF) method of financial valuation is used to value Veovaca and Rupice. The key post tax financial outcomes are presented in the following tables:

The operating expenditure and income from concentrate product stream for the combined products is presented in the figure below:

Link to figure http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

The contribution to income by element from concentrate sales is summarised in the table below:

A number of standard financial sensitivities are listed in the tabulation below.

Link to sensitivity analysis graphs http://www.rns-pdf.londonstockexchange.com/rns/0709B_1-2020-1-27.pdf

2. EXPLORATION RESULTS

During the Quarter assay results from a number of drill holes were received and announced to the market, the best intercepts from those announcements are summarised below. Please refer to the original announcement for full details of all reported drill hole assays.

2.1. RUPICE CONTINUES TO EXPAND WITH HIGH GRADE PRECIOUS METAL INTERCEPTS AND FIRST INTERCEPTS AT JB ZONE

On 28 November 2019 the Company announced the results of several step out drilling holes in the Rupice mineralisation which increased the strike length to over 500m and remains open to the north into unexplored ground, and south towards the Jurasevac-Brestic prospect.

The results included:

• The highest gold and silver grades in northern extension area with BR-22-19 returning an interval of:

• 6m @ 11.3g/t Au, 1,019g/t Ag, 13.1% Zn, 12.5% Pb, and 1.3% Cu from 238m

• Additionally, the most northerly hole BR-25-19 (Figure 6) confirmed further and open extensions of the Rupice mineralisation intersecting two thick zones of mineralisation which returned:

• 14m at 0.33g/t Au, 130g/t Ag, 1.6% Zn, 1.4% Pb, and 0.2% Cu from 246m, and

• 26m at 0.11g/t Au, 18g/t Ag, 0.7% Zn, 0.6% Pb, and 0.3% Cu from 302m.

• BR-27-19 and BR-41-19 which extends the southerly continuation of the Rupice mineralisation returning:

• 48m @ 0.72g/t Au, 70g/t Ag, 2.3% Zn, 2.0% Pb, 0.6% Cu and 58% BaSO4 from 240m including intervals of:

4m @ 1.69g/t Au, 175g/t Ag, 6.5% Zn, 4.6% Pb, 0.5% Cu, and 48% BaSO4 and 26m @ 79% BaSO4. (BR-27-19).

• 10m @ 0.51g/t Au, 58g/t Ag, 3.5% Zn, 3.6% Pb and 0.6% Cu from 248m including an interval of:

4m @ 0.70g/t Au, 86g/t Ag, 6.4% Zn, 5.9% Pb and 0.7% Cu, and

• 12m @ 1.15g/t Au, 253g/t Ag, 3.0% Zn, 1.8% Pb, 0.5% Cu and 56% BaSO4 from 262m (BR-41-19).

The mineralisation displayed some zonation with the upper section rich in barite with one of the best barite intersections of 28m @ 79% BaSO4, whilst the lower section was more base metal rich with an interval greater than 3% lead or zinc returning:

• 10m @ 4.1% Zn, 3.0% Pb, 0.4% Cu, 0.97g/t Au, 142g/t Ag and 40% BaSO4 from 270m

Significantly, this interval is many times thicker and higher grade than the nearby BR-18-19 which intersected 6m of mineralisation, and may represent another substantial thickening of the Rupice mineralisation as it extends to the south into untested ground towards the Jurasevac-Brestic prospect some 600m to the southeast.

2.2. HIGH GRADE INTERCEPT 60M EAST OF KNOWN MINERALISATION AT RUPICE SOUTH

On 5 December 2019 the Company announced drill hole BR-43-19, which is the deepest drill hole to date in the southern extensions of the Rupice mineralisation, may represent another substantial thickening of the Rupice mineralisation as it extends to the south into untested ground returning:

• 16m @ 1.96g/t Au, 350g/t Ag, 5.3% Zn, 3.4% Pb, 0.5% Cu and 47% BaSO4 from 330m including:

• 10m @ 2.83g/t Au, 536g/t Ag, 7.4% Zn, 4.8% Pb, 0.5% Cu and 60% BaSO4

This drill section in Figure [2] which includes drill holes BR-27-19, BR-37-19 and BR-43-19 extends the mineralisation some 200m down-dip and outside of the current ore block model (OBM). The mineralisation remains open down dip and to the south.

Similarly drill hole BR-39-19 is the deepest hole in the northern extensions of the Rupice mineralisation and intersected an upper lens of 58m of low-grade mineralisation (including 2 intervals of internal waste refer Table 3) and a further two lower lenses of 8m and 6m respectively. The drilling in the northern extension is over 80m along strike and outside of the current OBM. The mineralisation remains open to the north. Drilling continues at both the Rupice deposit and the Jurasevac-Brestic prospect.

3. COMPLETION OF INSTITUTIONAL PLACEMENT

On 30 October 2019 the Company announced the completion of a A$25 million Institutional Placement (the "Placement") at an issue price of A$1.00 per share. The Placement was strongly supported by existing shareholders and also introduced a number of new, high quality global institutional investors to Adriatic's share register. Sandfire Resources NL (ASX: SFR), an existing Adriatic shareholder, also subscribed for their pro-rata interest in the placement under the terms of the 2018 Collaboration & Strategic Partnership Deed.

The company received the gross Placement funds (before costs) in the following tranches:

·; A$10,878,508 on 6 November

·; A$9,121,492 on 14 November

·; A$5,000,000 on 22 November

Pursuant to the Placement the Company issued a total of 25,000,000 new ordinary shares in the form of CHESS Depository Interests in respect of the three tranches.

Following the Placement, the Company's cash balance at 31 December 2019 was £13.9 million. The Company is now fully funded through to completion of a Bankable Feasibility Study for the Vares Project and is well positioned to aggressively expedite the exploration & development activities at the Vares Project including:

·; Ongoing exploration drilling

·; Completion of an Environmental Impact Assessment and permitting activities

·; Completion of a Bankable Feasibility Study

·; General working capital requirements

4. ADMISSION TO TRADING ON THE LONDON STOCK EXCHANGE

Following publication of the Company's Prospectus on 9 November 2019, the Adriatic's 177,715,987 ordinary shares were admitted to the Standard Segment of the Official List of the Financial Conduct Authority ("Admission") and to trading on the London Stock Exchange's Main Market ("LSE") at 8.00am GMT on 12 December 2019 under the ticker "ADT1". As a result, the Company is now, amongst other things, subject to the UK City Code on Takeovers and Mergers, as administered by the UK Panel on Takeovers and Mergers, more details of which can be found in the Company's announcement on 17 December 2019.

The LSE listing was completed following continued interest received by the Company from investors in the United Kingdom and Europe and, given the location of the Company's assets, it believes that these markets have the potential to provide support to Adriatic as it continues to progress the Vares Project.

Adriatic has, and will continue to, retain its existing ASX listing which remains the primary trading exchange in the Company's shares.

5. BOARD AND MANAGEMENT CHANGES

During the Quarter, as part of the Company's agreed strategy to diversify the skill set of the entire board and increase its independence, and strengthen the senior management team to align with the skill sets needed as the Vares project advances toward production, a number of board and management changes were announced follows:

• In October Mr Eric de Mori, a founding member of Adriatic, resigned from the Board of Adriatic and confirmed he would not be seeking re-election at the Annual General Meeting.

• In November, Ms Sandra Bates and Mr John Richards were appointed as Non-Executive Directors of the Company. In accordance with the UK Corporate Governance Code, the board has determined that Ms Bates will be treated as an independent Non-Executive Director. Mr Richards' appointment follows a request from Sandfire Resources NL, under the terms of the Collaboration and Strategic Partnership Deed., to appoint a nominee to the Board of Adriatic following Sandfire increasing their interest in Adriatic to greater than 10% of issued capital.

• In January 2020, post Quarter end, Mr Geoff Eyre was appointed as Chief Financial Officer of the Company, replacing Mr Sean Duffy who had been CFO of Adriatic since November 2017, and Mr Phillip Fox was appointed as Chief Geologist, following the retirement of Bob Annett in December 2019.

6. EVENTS SUBSEQUENT TO THE QUARTER END

6.1. 16 January 2020 - Additional Drilling Results

Additional drilling results were released including the following exceptional drill intercepts, which confirm a robust extension of the high-grade mineralisation, that still remains open along strike from Rupice to the south towards the Jurasevac-Brestic prospect:

• BR-49-19 intersected exceptionally high-grade mineralisation in the southern extension of the Rupice mineralisation returning:

• 11.3m @ 4.37g/t Au, 406g/t Ag, 16.1% Zn, 9.8% Pb, 1% Cu and 50% BaSO4 from 244.7m.

• BR-44-19, 95 metres down-dip on the same drill section as BR-49-19 also returned mineralised drill results:

• 6m @ 1.34g/t Au, 223g/t Ag, 2.1% Zn, 2.4% Pb, 0.3% Cu and 41% BaSO4 from 298m. 

6.2. 21 January 2020 - Metallurgical Test Work Update

The Company announced the early results from its Phase 2 metallurgical test work with the following highlights:

• Copper concentrate produced grading 25.1% Copper and containing significant quantities of payable gold (20.9 Au g/t) and silver (9,550 Ag g/t).

• A Sequential Locked Cycle Test (LCT1) also produced saleable lead, zinc and barite concentrates.

• Based on advice from Adriatic's concentrate marketing consultant, it is now expected that the copper concentrate will be in excess of 95% payable as compared to the previous assumption that the copper/lead concentrate would be only 30% payable

• The barite concentrate collected from LCT1 assayed 92.3% BaSO4 at a recovery of 77.6% with a specific gravity estimated to be 4.4. Additional analyses of the barite concentrates found that all of the American Petroleum Institute's requirements for drilling-grade barite were met and the specific gravity was well above the required specification. Although levels of some potential impurities (Hg, Cd, Pb) may require further investigation.

Adriatic also confirmed that Ausenco had been appointed as lead consultant for feasibility program in the same announcement.

For further information please visit www.adriaticmetals.com, @AdriaticMetals on Twitter, 

or contact:

MARKET ABUSE REGULATION DISCLOSURE

Certain information contained within this announcement is deemed by the Company (LEI: 549300OHAH2GL1DP0L61) to constitute inside ‎information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. The person ‎responsible for arranging the release of this announcement on behalf of the Company is Paul Cronin, Managing Director and CEO.

COMPETENT PERSONS' REPORT

The information in this report that relates to the Mineral Resources is based on, and fairly represents, information compiled by Dmitry Pertel. Dmitry Pertel is a full-time employee of CSA Global and is a Member of the Australian Institute of Geoscientists. Dmitry Pertel has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources, and Ore Reserves" (JORC Code). Dmitry Pertel consents to the disclosure in this report of the matters based on that information in the form and context in which it appears.

The information in this report which relates to Exploration Results is based on, and fairly represents, information compiled by Mr Philip Fox, who is a member of the Australian Institute of Geoscientists (AIG). Mr Fox is a consultant to Adriatic Metals PLC, and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Fox consents to the inclusion in this report of the matters based on that information in the form and context in which it appears.

The information in this report which relates to Metallurgical Results is based on, and fairly represents, information compiled by Mr Philip King of Wardell Armstrong. Mr King and Wardell Armstrong are consultants to Adriatic Metals plc and Mr King has sufficient experience in metallurgical processing of the type of deposits under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr King is a Fellow of the Institute of Materials, Minerals & Mining (which is a Recognised Professional Organisation (RPO) included in a list that is posted on the ASX website from time to time), and consents to the inclusion in this report of the matters based on that information in the form and context in which it appears.

ABOUT ADRIATIC METALS

Adriatic Metals PLC (ASX:ADT, LON:ADT1) ("Adriatic" or the "Company") is a dual listed (ASX and LSE) precious and base metals explorer and developer via its 100% interest in the world class Vares Project (the "Project") in Bosnia & Herzegovina. The Project comprises a historic open cut mine at Veovaca and brownfield exploration at Rupice, an advanced proximal deposit which exhibits exceptionally high grades of base and precious metals.

The Company announced the results of a Scoping Study on 19 November 2019 which indicated an NPV8 of US$917 million and IRR of 107%, following the release of a Maiden Resource Estimate earlier the year on 23 July 2019. There have been no material adverse changes in the assumptions underpinning the forecast financial information or material assumptions and technical parameters underpinning the Maiden Resource Estimate since the original relevant market announcements which continue to apply.

Adriatic has attracted a world class team to both expedite its exploration efforts to expand the current JORC resource at the high-grade Rupice deposit and to rapidly advance the Project into the development phase utilising its first mover advantage and strategic position in Bosnia.

DISCLAIMER

Forward-looking statements are statements that are not historical facts. Words such as "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)", "potential(s)"and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to statements regarding future production, resources or reserves and exploration results. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include, but are not limited to: (i) those relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations, (ii) risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined, (iii) the potential for delays in exploration or development activities or the completion of feasibility studies, (iv) risks related to commodity price and foreign exchange rate fluctuations, (v) risks related to failure to obtain adequate financing on a timely basis and on acceptable terms or delays in obtaining governmental approvals or in the completion of development or construction activities, and (vi) other risks and uncertainties related to the Company's prospects, properties and business strategy. Our audience is cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and we do not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.

APPENDIX 1 - SCOPING STUDY MATERIAL ASSUMPTIONS

Material assumptions used in the estimation of the mineable material and associated financial information relating to the study discussed in this announcement, including consideration of the "modifying factors" under the JORC Code, are set out in the following table.

APPENDIX 2 - SCOPING STUDY ABBREVIATIONS

Appendix 3: VEOVACA and RUPICE JORC Code 2012 Tables

Section 1: Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

Section 2: Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section)

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 28 January 2020

(Company secretary)

Print name: Sean Duffy

Notes

1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.