Adriatic Metal. Regulatory News (ADT1)

Adriatic Metals PLC 

('Adriatic Metals' or the 'Company')

QUARTERLY ACTIVITIES REPORT For the 3 months ended 31 March 2021

HIGHLIGHTS

· Veovaca Exploitation Permit Received

· Rupice Environmental Permit Issued a with positive Record of Decision ("RoD")

· Assay results from ongoing exploration work at the Raska Project, in Serbia

· Acquisition completed of the remaining 90% of Ras Metals d.o.o. that the Company did not previously own for a consideration of cash and shares. The Ras Metals assets include the exploration licences for both Kizevak and Sastavci prospects that make up the Raska Project.

· Post quarter-end the Company provided a Vares Project Operations and Corporate Update;

• Optimised underground mine plan for Rupice, which targets the central higher-grade zones sooner. This has resulted in a 26% increase in silver-equivalent contained metal mined during the first 24 months.

• Demolition of the Old Processing Plant Site is nearing completion. A geotechnical drilling program to test the structural integrity of the original concrete pad has been completed.

• Urban Planning Permit and Exploitation Permit for Rupice are on course to be received later this quarter.

• Exploration permit for the 32km2 of new concession area, granted in Q3 2020, is expected within a month.

• Exploration drilling has now re-commenced at Rupice

Paul Cronin, Adriatic's Managing Director and CEO commented:

"During the first quarter of 2021, two important permits for the Vares Silver Project were delivered, which is a significant step forward in the development of the Project. This gives me great confidence in the timely delivery of the Main Mining Project permit this summer.

The Company is well positioned for what will be a transformational year for the for the Vares Silver Project, with the completion of the Definitive Feasibility Study and associated Project Financing.

Adriatic Metals PLC is pleased to provide the following Quarterly Activities Report ("QAR") that summarises the progress made and reported during the three months ended 31 March 2021 ("Q1" or the "Quarter").

1. Vares Project Permitting Approvals

During the Quarter the Company received two key permits to the development of the Vares Project.

On 28 January, 2021 the company received the Veovaca Exploitation Permit from the Federal Ministry for Energy, Mining and Industry ("Exploitation Permit"). The receipt of the Exploitation Permit initiated the formal exploitation period for the project, which under the terms of the Concession Agreement is up to 30 years. As the Concession Agreement covers both the Veovaca and Rupice deposits, the security of tenure applies to both the Veovaca open pit and plant areas, as well as the Rupice underground mine area.

The receipt of the Exploitation Permit also enables Adriatic to complete the Main Mining Project permit for the Veovaca open pit mine, flotation plant, and tailings management facility at a detailed engineering level for the start of construction in Q3 2021. The Exploitation Permit for Rupice, which is expected in Q2 2021, is required before the commencement of underground development at Rupice, and the application will be made following the issue of the Urban Planning Permits for Rupice, in a process similar to what has completed for Veovaca.

On 8 February, 2021 the Federal Ministry of Environment and Tourism ("Ministry") issued a positive Record of Decision ("RoD") for the Rupice Environmental Permit - one of the key approvals required for the issue of the Exploitation Permit at Rupice. The RoD was received following the submission of an Environmental Impact Assessment, which was prepared in accordance with the Federal Mining Code and reviewed by a five-member expert committee, as well as a public hearing in August 2020.

The Environmental Permit is required to be issued within 30 days from the date of the RoD, at which point Adriatic will submit an application for an Urban Planning Permit to the Federal Ministry for Spatial Planning. Following the receipt of the Urban Planning Permit, Adriatic will apply for an Exploitation Permit, in a process similar to what was recently completed for Veovaca.

2. Vares Project Operations and Corporate Update

Post quarter end, on 19 April 2021, the Company provided a Vares Project Operations and Corporate Update. The highlights were as follows:

Vares Project Highlights

- Optimised underground mine plan for Rupice, which targets the central higher-grade zones sooner. This has resulted in a 26% increase in silver-equivalent contained metal mined during the first 24 months.

Demolition of the Old Processing Plant Site is nearing completion. A geotechnical drilling program to test the structural integrity of the original concrete pad has been completed.

- Urban Planning Permit and Exploitation Permit for Rupice are on course to be received later this quarter.

- Exploration permit for the 32km2 of new concession area, granted in Q3 2020, is expected within a month.

- Exploration drilling has now re-commenced at Rupice.

- Adriatic Metals Chief Geologist, Phil Fox, hosted a Vares Project Geology Webinar on Tuesday, 20 April 2021. A recording of the webinar is available, see link: https://www.adriaticmetals.com/news/the-vares-project-geology-presentation/

- The webinar's Vares Project Geology Presentation is available on the ASX announcements page of the Company's website, see link: https://www.adriaticmetals.com/investors/asx-announcements/ 

- The Company has received several non-binding term sheets for the Vares Project Financing.

Corporate Highlights

- Appointment of Thomas Horton as Head of Corporate Development & Investor Relations.

- Appointment of RBC Capital Markets as the Company's Joint Corporate Broker, effective 30 March 2021.

3. Raska Project Drill Results

In the Quarter, the Company reported on two sets of assay results from ongoing exploration work at the Raska Project, in Serbia.

On 27 January, 2021 Adriatic reported assay results from 16 diamond core holes at the Kizevak Prospect and 3 drill holes at the Sastavci Prospect. The Drilling at the Kizevak Prospect confirmed the down dip continuity of a high grade lens in the central-northwest part of the deposit, beneath the limits of historic drilling, where mineralisation remains open. Drill hole KZDD-030 intercepted thick mineralisation down dip from the previously reported drill hole KZDD-014, demonstrating excellent continuity as well as elevated gold grade. This thick, high-grade lens remains open to depth. Mineralisation in the central-south eastern part of the Kizevak Prospect licence has been identified, occurring as an array of sub-parallel, near-surface vein zones with some high-grade parts in several holes. Drilling at the Sastavci Prospect has continued to deliver excellent intercepts of wide, high grade mineralisation from surface at the base of the historic Sastavci open pit. Thicker zones of mineralisation than historically reported have been encountered, and mineralisation is open in all directions.

Subsequently on 22 March 2021, Adriatic reported further exploration results, as well as providing plans for an expansion of the Company's exploration plans at the Raska Project in Serbia. At the Kizevak Prospect, near-surface, high grade mineralisation continues to be identified, confirmed by drill hole KZDD-051, which was located up-dip from a thick, deeper lens. In addition, drill hole KZDD-042 also extended mineralisation down dip and southeast from the historically defined limits of mineralisation. At Sastavci, drill hole SSDD-006 intercepted two thick zones of mineralisation that are both sub-parallel to the historically mined vein zone and are open to the northwest. Drill hole SSDD-007 intercepted a broad, well mineralised zone from surface that continues to demonstrate much thicker zones of mineralisation are present than historically interpreted. As part of the 25,000 metres of diamond drilling planned at the Raska Project for 2021, a third drill rig will be deployed to focus on more regional exploration targets.

4. Completion of Ras Metals Acquisition

On 23 February 2021, the Company announced that it has completed the acquisition of the entire share capital of Ras Metals d.o.o ("Ras Metals") under an agreement held by Tethyan Resource Corp ("Tethyan"), now a wholly owned subsidiary of Adriatic.

The Ras Metals assets include the exploration licences for both Kizevak and Sastavci prospects (together, the "Raska Project"). The consideration paid for the remaining 90% of the shares in Ras Metals that the Company did not already hold was EUR 1,365,000, plus the allotment of 166,000 Ordinary shares of 0.013355p each in the Company ("Shares"). Additionally, there is deferred consideration of EUR 500,000, payable on 14 May 2022, and 498,000 Ordinary shares in the Company that will be allotted in three equal tranches on or around 22 August 2021, 22 February 2022 & 22 August 2022.

The Shares rank pari passu with the existing Ordinary shares and application has been made to the Financial Conduct Authority and the London Stock Exchange for the Shares to be admitted to the standard segment of the Official List of the London Stock Exchange. Admission of the Shares is expected on 2 March 2021.

Since the Tethyan acquisition last year, 11,000m of diamond core ("DC") drilling has been completed on the Raska licenses. Drilling has been focussed around the area South East of the Kizevak Prospect, where under the prior ownership of Tethyan, thick intersections of high-grade mineralisation were drilled. See Tethyan announcement dated 04 September 2018 on SEDAR for more information. Adriatic has a further 25,000m of step-out DC drilling planned across the Raska Project during 2021.

5. Summary of Expenditure

A summary of operating and investing expenditure made by Adriatic on a consolidated basis during the Quarter in relation to operating and investing activities reported in the Appendix 5B Cash Flow Report is as follows:

6. Payments to Related Parties

During the Quarter, Adriatic paid an aggregate total of £146k to Directors, or companies controlled by them, comprised of salaries, fees and reimbursement / recharge of corporate office facilities & associated services used / provided by the Company. This is disclosed in Item 6 of the accompanying Appendix 5B Cash Flow Report.

7. Tenement Holdings

In accordance with ASX Listing Rule 5.3.3 please find below the Company's tenements as at 31 March 2021. The Company holds a 100% interest in all concession agreements and licences via its wholly owned subsidiaries, with the exception of the Raska (Suva Ruda) licence held by Deep Research d.o.o.. The Company has an option agreement to acquire 100% ownership of Deep Research d.o.o. but has no equity interest in that entity at present.

Authorised by, and for further information please contact:Paul CroninManaging Director & CEOinfo@adriaticmetals.com

-ends-

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

ABOUT ADRIATIC METALS

Adriatic Metals Plc (ASX:ADT, LSE:ADT1) is a precious and base metals developer that is advancing the world-class Vares Silver Project in Bosnia & Herzegovina, as well as the Raska Zinc-Silver Project in Serbia.

The Vares Project Pre-Feasibility Study boasts robust economics of US$1,040 million post-tax NPV8, 113% post-tax IRR and a capex of US$173 million. Adriatic is the only publicly listed mining company exploring in Bosnia and is leveraging its first-mover advantage. The Company is well-funded and concurrent with the advancing Definitive Feasibility Study, continues to explore across its large, highly prospective 41km2 concession package.

Adriatic Metals completed the acquisition TSX-listed Tethyan Resource Corp. in Q4 2020, which contained the Raska Zinc-Silver Project in southern Serbia. The Company is exploring across its 99km2 highly prospective concession area, which includes around the formerly operating Kizevak and Sastavci polymetallic mines.

There have been no material changes to the assumptions underpinning the forecast financial information derived from the production target in the 15 October 2020 announcement and these assumptions continue to apply and have not materially changed. Adriatic Metals is not aware of any new information or data that materially affects the information included in the announcement of the updated Mineral Resource Estimate announced on 1 September 2020 and all material assumptions and technical parameters underpinning the Mineral Resource Estimate continue to apply and have not materially changed.

COMPETENT PERSONS' REPORT

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.

Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entityquarterly cash flow report

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.

Date: 27 April 2021

Authorised by: Audit and Risk Committee

(Name of body or officer authorising release - see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow 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 cash flow 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.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.