Adriatic Metals (ASX:ADT) has drawn down on the first $30 million tranche of senior secured debt financing from Orion Resource Partners (UK) for its flagship Vares Project in Bosnia and Herzegovina.
On 10 January 2022, Adriatic announced the completion of a $142.5 million debt financing package with Orion comprising $120 million senior secured debt and $22.5 million copper stream.
Adriatic Metals reports the first draw down of $30 million of the Orion debt package has now taken place, with all conditions precedent satisfied (or waived) and funds received on 30 December 2022.
All conditions precedent for the $22.5 million Copper Stream, apart from those relating to certain Bosnian law security documents, have been satisfied, the company says.
These remaining procedural conditions will be satisfied in January 2023, allowing the Copper Stream to be drawn down shortly thereafter. The second, third and fourth tranches of the senior secured debt will be drawn down in 2023 when required.
The $142.5 million Orion debt package and institutional equity raise of $102 million, that closed on 13 October 2021, make up the total $244.5 million Vares Project financing package.
Adratic notes the project is fully funded, with first concentrate production expected in Q3 2023.
the project is fully funded, with first concentrate production expected in Q3 2023
Orion also subscribed for $50 million (24,191,000 ordinary shares) in the institutional equity raise, making it a 8.9% shareholder in Adriatic.
On 30 November 2020 Adriatic issued $20 million 8.5% convertible bonds through a deed of covenant to Queen’s Road Capital Investment (TSXV:QRC). Concurrently to the first draw down of the Orion debt package, Adriatic and QRC have executed an amendment to the 30 November 2020 deed of covenant, confirming that Adriatic is not required to redeem the debentures and that the cash coupon has been increased from 8.5% to 9.5% per annum.
All other terms of the original deed remain unchanged. As a result of this amendment, an additional $20 million (less interest) will be available for the project funding, should it be required.
Paul Cronin, Adriatic’s Managing Director and CEO, says: “I am delighted that Adriatic has completed all conditions precedent to draw down the first tranche of the Orion Debt Package.
The funds will be used to continue the construction of the world-class Vares Silver Project, which is already over 50% complete. This is another critical step towards de-risking the project, and we remain on track to deliver first concentrates in Q3 2023.
In the Orion team we have a professional finance partner that has a detailed understanding of the Vares Silver Project. Orion are aligned with our commitment to responsible mining and sustainability, via a $100,000 donation to the Adriatic Foundation, which will support valued community and environmental initiatives in Vares & Kakanj.”
