2024
Producing metal
concentrates
at the Vareš
Silver Operation
Annual Report for the Year
Ended 31 December 2024
Annual Report for the Year Ended 31 December 2024
1
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Introduction
ABOUT US
Adriatic Metals is a metals mining
company that is producing silver/lead and
zinc concentrates from the Vareš Silver
Operation in Bosnia and Herzegovina.
Concurrent with ongoing mining activities,
the Company continues to explore across
its highly prospective 44km
2 concession
package. Adriatic Metals is listed on the
London Stock Exchange (LSE:ADT1), the
Australian Stock Exchange (ASX:ADT) and
the OTC Markets Group (OTCQX:ADMLF).
Governance Report
Corporate Governance Report
44
Audit & Risk Committee Report
54
Sustainability Committee Report
56
Remuneration & Nomination Committee Report
58
Directors’ Report
68
Statement of Directors’ Responsibilities
71
Financial
Independent auditor’s report to the members of
Adriatic Metals Plc
73
Consolidated Income Statement
79
Consolidated Statement of Comprehensive Income
79
Consolidated Statement of Financial Position
80
Consolidated Statement of Changes in Equity
81
Consolidated Statement of Cash Flows
82
Notes to the Consolidated Financial Statements
83
Parent Company Statement of Financial Position
107
Parent Company Statement of Changes in Equity
108
Notes to the Parent Company Financial Statements
109
Additional ASX Information (Unaudited)
114
Strategic Report
Business Model
8
CEO Statement
9
Strategy
12
Operations Review
13
Ore Reserves and Mineral Resources
16
Our Products
19
Financial Review
20
Balance Sheet
21
Principal Risks and Uncertainties
22
Directors’ Section 172(1) Statement
26
Principal Decisions by the Board During the Period
30
Sustainability Review
31
Corporate Report
Company Overview
3
Chairman’s Statement
5
Annual Report for the Year Ended 31 December 2024
2
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Delivering
metal
concentrates
into Europe
CORPORATE
Company Overview
3
Chairman’s Statement
5
Annual Report for the Year Ended 31 December 2024
3
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
United
Kingdom
Ireland
Germany
Netherlands
Belgium
Portugal
Switzerland
Moldova
France
Spain
Italy
Czech
Republic
Poland
Sweden
Hungary
Slovakia
Austria
Slovenia
Montenegro
Albania
Macedonia
Greece
Turkey
Ukraine
Belarus
Lithuania
Latvia
Russia
Sarajevo
Capital of Bosnia
and Herzegovina
Vareš Silver Operation
Bosnia and Herzegovina
Raška Project
Serbia
Bulgaria
Romania
Our operations and
European smelter
locations
Likely customers
in Europe
Denmark
Company Overview
OUR MISSION:
To supply metals the
world needs to thrive
OUR VISION:
To become a European-
based mining company,
highly valued locally and
globally recognised for our
sustainable operations and
for delivering consistent
products to our customers
OUR VALUES:
OUR MISSION, VISION
AND VALUES
PARTNERSHIP
We collaborate with
stakeholders to create
positive impacts and
shared value.
RESPONSIBILITY
We carry out our
operations responsibly
and safely to benefit
future generations.
EMPOWERMENT
We foster a culture
to enable people
to take initiative
and thrive.
INTEGRITY
We build trust through
fairness, equality
and transparency
GROWTH
We seek opportunities
to improve, innovate
and drive progress.
ACCOUNTABILITY
We take ownership
of our actions and
strive for discipline
and excellence.
CORPORATE
Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
COMPANY OVERVIEW
Adriatic Metals is a metals mining company that is producing silver/lead and zinc concentrates from the Vareš Silver Operation in Bosnia and
Herzegovina. The Company’s asset portfolio consists of two polymetallic projects in southeast Europe, which are both situated within the
Tethyan Metallogenic Belt. Adriatic’s flagship asset is the Vareš Silver Operation in Bosnia and Herzegovina, which commenced operations
in 2024. The Company also has the exploration-stage Raška Project in Serbia.
VAREŠ SILVER OPERATION, BOSNIA AND
HERZEGOVINA
The Company’s flagship Vareš Silver Operation is located in
the municipality of Vareš, within the Zenica-Doboj canton,
approximately 50km north of the Bosnian capital of Sarajevo.
The town has a long history of mining. State-owned iron ore
mining operations and associated steelworks operated from
the 1890s until the late 1980s and, as a result, there remains
existing road, rail, water and power infrastructure.
2024 was a significant year for the Vareš Silver Operation
as construction was completed and first concentrates were
produced and shipped to customers. On 5 March 2024,
Adriatic marked the Grand Opening of the Vareš Silver
Operation in Bosnia and Herzegovina. The official opening
event took place at the Vareš Processing Plant and was
attended by Nermin Nikšić, Prime Minister of the Federation of
Bosnia and Herzegovina, Zdravko Marošević, Mayor of Vareš
and other key dignitaries.
The Vareš Silver Operation is now ramping up production to
nameplate capacity of 0.8Mtpa which is expected in the second
half of 2025. Adriatic is also undergoing expansion studies to
potentially increase production from 0.8Mtpa to 1.3Mtpa.
Adriatic continues to explore across its highly prospective
44km
2 concession package in Vareš, Bosnia and Herzegovina.
Exploration activity will continue to realise the resource and
reserve potential of the Rupice Mine as the deposit remains
open and still to be fully defined. In the wider Vareš region,
significant potential remains across the range of greenfield,
brownfield and advanced exploration targets. Adriatic is
committed to advancing exploration regionally to find the next
economic deposit that will diversify the current production
profile and capitalise on the existing tenement holdings.
Adratic Metals is committed to responsible and sustainable
resource extraction. The Company prioritises environmental
stewardship, community engagement, and operational
excellence.
Bosnia and Herzegovina
•
Candidate for EU membership
•
Local and federal government are supportive of mining
industry
•
Strong mining history and highly skilled workforce
•
Clear and concise mining code in a stable democracy
•
10% corporate tax and favourable royalty regime
•
Business friendly environment
•
Extensive access to rail networks linking European
smelters and the seaborne market
CORPORATE
Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
The Vareš Silver Operation has
brought significant foreign direct
investment to the country.
Michael Rawlinson
Chairman of the Board
I am proud to have overseen the remarkable
transformation of Adriatic Metals. In just
seven years, the Company has evolved
from an exploration and development stage
entity to a revenue-generating European
mining company. This achievement is
especially noteworthy given the challenges of
establishing a new mining operation in Bosnia
and Herzegovina - a country with a rich mining
heritage but only a few small hard rock
mines today.
The Vareš Silver Operation has brought
significant foreign direct investment to the
country, created numerous employment
opportunities, and revitalised the local
economy in a region that has long faced
economic challenges. Adriatic has
demonstrated that it is not only possible to
build a modern, sustainable, and efficient mine
in Europe, but that such projects can also
bring substantial benefits to all stakeholders
involved.
2024 has been a year of profound global
change, marked by an unprecedented number
of elections worldwide. The mining industry
continues to face significant challenges.
Commodity prices have diverged sharply,
with some, like lithium, falling to historic lows,
while others, such as gold and antimony, have
soared to new heights. As we approach 2025,
industry sentiment remains uncertain. Gold
prices are projected to rise further, while the
strength of the US dollar will largely hinge on
upcoming tariff decisions. Political risk is also
on the rise, as miners and investors grapple
with a new wave of resource nationalism
spanning regions from Mali to Indonesia.
Chairman’s Statement
The start of operations at Vareš coincides with a
period when mining in Europe is under intense political
scrutiny. This comes as the EU strives to meet the
ambitious goals set by its Critical Raw Materials Act
2023, driven by the pressing need to establish a
regional, critical minerals supply chain. Collaboration
across Europe is essential to achieving this objective.
Zinc, recently added to the UK’s Critical Minerals list,
underscores its pivotal role in the global transition to
Net Zero. Similarly, silver - renowned as the world’s
most efficient energy conductor - is indispensable
for manufacturing solar panels, wind turbines, and
batteries.
Meanwhile, the once-contentious role of mining in
society is undergoing a shift. Even former critics now
acknowledge that the transition to green energy relies
heavily on an increased supply of minerals and metals.
However, to meet this surging demand, the extractive
sector must navigate additional pressures; advancing
sustainable mining practices, maintaining capital
discipline, and fulfilling ever-growing stakeholder
expectations.
Bringing the Vareš Silver Operation into production
within seven years has been an exceptional
accomplishment. This remarkable achievement was
further celebrated during the mine’s official opening
in early March. The event was attended by notable
dignitaries, including Bosnia and Herzegovina’s Prime
Minister, Nermin Nikšić, and the British Ambassador,
Julian Reilly, who joined us to commemorate the
launch of Europe’s newest metals mine. This official
event was followed by a celebratory ‘Vareš Fest’ in the
town square, with the local community, employees
and key suppliers coming together to mark the
momentous occasion.
Firstly, I would like to extend my commendation and
gratitude to outgoing CEO Paul Cronin, whose bold
vision turned the ambitious goal of building a silver-
zinc-lead mine in the emerging mining jurisdiction of
Bosnia and Herzegovina into a reality. I wish him every
success in his future endeavours and I am confident
that, as a founder and shareholder, he will continue to
strongly support the business.
I would also like to warmly commend Laura Tyler for
taking the role of permanent CEO during a crucial
inflection point for Adriatic as it transitions to the
next phase of growth. With her extensive experience,
exceptional skill set, and adaptability, I have every
confidence in her ability to steer the company forward
and drive its continued success.
Throughout 2024, we further strengthened our
Board to align with Adriatic’s corporate transition,
welcoming several esteemed new members. Among
them was Eric Rasmussen, formerly with Rio Tinto
and the EBRD as Global Head of Natural Resources,
who brings extensive expertise in financing European
and global mining projects. In October, we also
appointed Mirco Bardella as a Non-Executive Director.
Mirco is an experienced specialist in assurance and
governance, predominantly in the natural resources
sector, having previously advised companies including
Xstrata, Rio Tinto, Gold Fields and Hochschild Mining
in his capacity as Assurance Partner at professional
services firm, Ernst & Young. An expert in assurance
and governance within the natural resources sector,
Mirco’s skills have already proven to be invaluable to
both our Board and management team.
Additionally, our Non-Executive Director, Sandra
Bates, was promoted to Senior Independent Director,
a milestone as the first such role on the Adriatic
Board. This appointment reflects the evolution of the
Company’s corporate structure in line with its growth
into a stronger and more dynamic entity. Additionally,
Sanela Karic was appointed as Executive Director
for Corporate Affairs at Adriatic and as a Director
of Adriatic’s operating subsidiary in Bosnia and
Herzegovina. A Bosnian native and practicing lawyer,
Sanela has the relevant experience for this key role,
which involves engaging with all levels of government
and leveraging her deep expertise to support the
Company’s strategic goals.
In May 2024, we completed a successful capital raising
of $50m, which saw a number of new institutional
investors join our share register and was also backed
by our existing shareholders. This is not only a huge
vote of confidence in Adriatic, but also provided vital
flexibility to the balance sheet during the crucial stages
of operational ramp up.
CORPORATE
Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Throughout the year, the fourth and final tranche of $30m of senior secured
debt from Orion was drawn down and the first debt repayment of $19m was
rescheduled to 31 March 2025. Post-period, in January 2025, Adriatic completed
a $25m concentrate prepayment arrangement with our offtaker, Trafigura,
at competitive terms, and in February 2025, Adriatic raised $50m, through a
well-supported placement. The proceeds of this placement will be used to
fast-track the Vareš Processing Plant expansion to 1.3Mtpa, initiate studies and
workstreams at Rupice Mine to support this production growth and de-risk the
ramp-up to nameplate production.
Our 2025 strategy will prioritise debt repayment
as ramp up continues to nameplate capacity in
the second half of the year.
In February 2025, we also announced that Adriatic is working with its advisors
regarding the transfer of the listing category of all of its ordinary shares from
the Equity Shares (Transition) category of the Official List to the Equity Shares
(Commercial Companies) category of the Official List on the London Stock
Exchange. Among other benefits, the Board believes the transfer will enable
the ordinary shares to be considered for inclusion in the FTSE UK Index Series
(subject to meeting certain other eligibility criteria), which are widely utilised
investment benchmarks for institutional investors, in due course. We hope to
update our stakeholders on this process in due course.
We are excited to share the success of Vareš with our loyal shareholders and
stakeholders who have supported us throughout this journey to production.
Our vision extends beyond current operations - we aim to leave a lasting legacy
for future generations in the country and community where we operate. By
fostering employment, driving sustainable economic growth, and supporting
the community through the Adriatic Foundation, we strive to enable this vibrant
region to thrive and prosper.
On behalf of the Board, I extend my heartfelt thanks to our management team,
employees, and stakeholders at all levels - local, regional, and national - for their
dedication, hard work, and unwavering support during this remarkable period of
success.
As we look ahead, we are filled with excitement as the Company begins to
execute its strategy for long-term sustainable growth. I would also like to
express my gratitude to our shareholders for their steadfast support during
what has been, at times, an unprecedented and challenging year. Thanks to your
confidence in us, we are now firmly on track to achieve nameplate production in
2025.
Michael Rawlinson
Chairman of the Board
Chairman’s Statement - continued
CORPORATE
Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
A scalable
model to
develop
sustainable
strategic
metals
STRATEGIC REPORT
Business Model
8
CEO Statement
9
Strategy
12
Operations Review
13
Ore Reserves and Mineral Resources
16
Our Products
19
Financial Review
20
Balance Sheet
21
Principal Risks and Uncertainties
22
Directors’ Section 172(1) Statement
26
Principal Decisions by the Board During the Period
30
Sustainability Review
31
Annual Report for the Year Ended 31 December 2024
8
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
DEVELOPMENT CYCLE
RESOURCES & RELATIONSHIPS
Generating positive
stakeholder outcomes
Adriatic believes that economic development should
underpin the prosperity and well-being of stakeholders
at both local and national levels. From inception, Adriatic
has been committed to driving a culture that places host
communities at the centre of the Company’s objectives.
Demonstrating these embedded values and principles, the
development and production of mineral resources have the
potential to deliver long term value for all shareholders and
stakeholders.
Portfolio
Targeting Pan-European, value
accretive assets to diversify the
portfolio
Asset
Continued exploration to add
ore reserves to existing Vareš
concession
Operational
Construction, production,
workforce development and high
operational standards
Sustainable
Reducing our environmental
impact whilst increasing our
positive social impacts
Restoration
Rehabilitation to ensure that
biodiversity impacts are more
than replaced
Leadership Expertise
• Strong ethics and clear policies
• Robust governance framework
• Experienced in-country team
Strong financial position
• Ample financing capacity to ramp up production
• Strong cash flow projections
• Stable balance sheet
High grade deposits
• Premium products can drive a higher valuation
• Quality source material can lower processing
costs and environmental impacts meeting supply
chain requirements
Supportive community
• Historic mining region with strong links to industry
• Existing industrial infrastructure
• Stable geo-political environment
Local capability and capacity
• A source of committed employees
• Established supply chain partnerships
Sustainable
development goals
Sustainable communities
Sustainable communities. Realising the
commercial and environmentally sustainable
development of critical raw materials
Industry innovation and infrastructure
Industry innovation & infrastructure.
Driving highly technical and remunerated
roles and skills development for local
workforce
Responsible consumption
and development
Responsible consumption and development.
Developing local renewable sources of
energy as primary resource can minimise
the carbon profile of the mine
Decent work and economic growth
Generating a significant increase in local
tax revenues through royalties, concession
fees, local employment and procurement
Business Model
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
9
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
I am delighted to deliver this
message as the new CEO of
Adriatic Metals.
Laura Tyler
Managing Director and Chief Executive Officer
OVERVIEW
I am delighted to deliver this message
as the new CEO of Adriatic Metals. I
joined the Company as a Non-Executive
Director on 1 July 2024 and was drawn
in by the immense potential of the Vareš
Silver Operation based on the world-
class, high-grade orebody at Rupice.
I was equally impressed by the speed
at which the project progressed,
from the first drill hole in 2017 to
the commencement of concentrate
production in February 2024.
Since assuming the CEO role in August
and relocating to Sarajevo, I have
worked closely with the exceptional
team in Bosnia and Herzegovina.
Witnessing their commitment and pride
to deliver this project is inspiring; they
fully understand the transformative
impact this investment will have. The
Vareš Silver Operation is the largest
private foreign direct investment in
the country since the war in Bosnia
and Herzegovina ended in 1995. This
world-class asset stands to bring
substantial benefits, not only through
local employment and regeneration but
also on a national scale. Once operating
at nameplate capacity of 0.8Mtpa,
it is expected to make a significant
contribution to the economy of Bosnia
and Herzegovina and future prosperity
of the nation.
CEO Statement
SUSTAINABILITY AND GOVERNANCE
Our people are the foundation of our business, and
ensuring the health, safety, and well-being of our team at
the Vareš Silver Operation is my top priority.
Sadly, in August we experienced the loss of a
subcontractor in a fatal incident onsite. This
heartbreaking event meant we intensified our efforts to
enhance safety protocols for our team, contractors, and
subcontractors. Our commitment is unwavering: we strive
to make sure every employee and contractor returns
home to their families safely at the end of each day.
Despite this tragic occurrence, our overall health and
safety performance continued to improve throughout
the year. At the end of Q4 2024, the 12-month rolling
total recordable incident frequency rate (TRIFR) was
1.05, a marked improvement compared to 1.40 in 2023.
Hazard reporting continues to improve and our critical
control management program has matured through the
year with increased use of structured safety dialogue -
Life Conversations. This progress reflects our ongoing
dedication to fostering a safer working environment
for all.
Sustainability is a cornerstone of
our business model. Our primary
commitment is the health and
safety of our employees and
contractors, the protection
and preservation of the natural
environment, and the adoption of
sustainable practices across all
aspects of our operation.
The Company has long recognised the importance of
maintaining our social license to operate, by sustaining
strong relationships with our local communities, as well
as with Bosnian governmental bodies and ministries; they
underpin our way of working.
Our commitment to responsible stewardship is
embedded in our Environmental and Social Management
System to make sure responsible business practices
are at the heart of our operational design through the
use of modern mining methods and technology. Adriatic
understands that our social and environmental footprint
is constantly evolving, and that the scope and impact of
our sustainability initiatives will grow in significance in the
years ahead.
In 2024, we saw a significant increase in our employee
headcount, growing from under 300 employees in 2023
to over 500 by the end of the year. This exciting growth
reflects Adriatic’s transition from contract mining to
owner-operator and from a project phase to operational
status.
The expansion of our workforce also has underscored
the importance of people management and placed a
strong emphasis on our corporate culture. We remain
dedicated to ongoing skills assessments and training to
make sure our team is equipped to meet the challenges
of our evolving operations while continuing to drive
excellence in all areas.
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
OPERATIONS
2024 saw Adriatic transition from a mine
developer into a fully functioning mining
and concentrate processing operation
with the potential to be a leading European
producer of critical metals. Early in the year,
first concentrates were produced from
the Vareš Silver Operation and since then
operations have been ramping up, with a
total of 146,000 tonnes mined in 2024.
Our team achieved total underground
development of 3km across 2024, doubling
the development totals in 2023. The Rupice
Mine is now operating from two active
production levels and the Vareš Processing
Plant is operating 24/7 with recoveries
improving as expected.
In May, Adriatic announced the first sale of
on-specification grade concentrates from
Vareš with the first shipment leaving site
for the port of Ploče. Subsequently, all our
concentrates have been sold and shipped
to European smelters and beyond.
We have faced our share of challenges
throughout the year. In July, the
Constitutional Court ruled against previous
permit issuances which impacted on the
original location of our proposed tailings
facility. However, this setback underscored
the strength of our collaboration with local,
regional, and national stakeholders. Together
with the relevant authorities, Adriatic worked
effectively to identify, fully permit, and
construct the Veovača Tailings Storage
Facility, now expected to begin operations
in Q1 2025. This achievement highlights
the power of cooperation, teamwork, and a
shared vision for the Vareš Silver Operation’s
contribution to Bosnian society.
Another significant challenge was the
extreme weather that affected Bosnia
and Herzegovina at the end of 2024. In
October, a severe storm and flooding
caused significant damage to a section
of the railway line connecting Sarajevo to
the port of Ploče, a critical component of
our transport infrastructure. Fortunately,
the country’s robust transport network
allowed us to pivot to a road haulage
solution, ensuring uninterrupted delivery
of concentrates while repairs to the railway
were underway.
In late December, a severe snowstorm
swept across the Balkan region, disrupting
operations as blocked roads and
widespread power and communication
outages hampered the transportation of ore
and concentrates. Throughout this period,
our priority was the safety of our employees.
The team’s response to these challenges
provided valuable winterisation experience
and we have since implemented additional
procedures for winter production.
In the Q4 QAR announcement, we
introduced an exciting opportunity to
the market: Ausenco had completed a
comprehensive technical review to evaluate
the potential to increase throughput at
the Vareš Processing Plant. The review
confirmed that throughput could be
increased from the nameplate capacity
of 0.8Mtpa to 1Mtpa without significant
capital expenditure. Additionally, achieving a
throughput of up to 1.3Mtpa would require
approximately $25m in process plant growth
capital.
This proposed expansion aligned with longer
dated plans to increase mine production,
following the Ore Reserve expansion at
Rupice Northwest to 13.8Mt announced
on 20 December 2023. After consulting
key shareholders, Adriatic successfully
completed a $50m capital raise in February
2025 to fast-track this debottlenecking and
expansion project. Increasing capacity by
63% will position the Vareš Silver Operation
among the world’s largest primary silver
producers, enabling the Company to
produce over 20Moz AgEq annually.
Vareš Silver Operation
146,000
Tonnes mined in 2024
CEO Statement - continued
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
CEO Statement - continued
FINANCES
During the reporting period, our balance sheet was
significantly strengthened by two key developments:
the conversion of the $20m convertible bonds held
by Queens Road Capital in March and a $50m equity
fundraise in May. These actions were taken to cover
the costs associated with transitioning to an owner-
operator mining model and to reinforce our financial
position.
In Q4 2024, we reached an agreement with our debt
provider, Orion Mine Finance, to defer the first debt
repayment to 31 March 2025. We also secured
a term sheet for a $25m prepayment facility with
Trafigura, enhancing our liquidity further. As of the
end of the year, Adriatic held $21m in cash. With
increasing revenues, combined with efficiency
initiatives implemented during the period, we are well
positioned financially, with sufficient contingency to
ensure a smooth path to sustainable commercial
production.
IN CONCLUSION
All the progress made in 2024 could not have been
possible without the extraordinary determination of
my predecessor, Paul Cronin. Paul worked tirelessly
to bring the Vareš Silver Operation into production
over the past seven years and I would like to thank
him for his time and support. His commitment
to ensure the Company is a sustainable, modern
mining operation that will ensure prosperity to all
stakeholders has been uncompromising.
Looking into 2025, the opportunity that lies ahead
for Adriatic is immense and we are excited about
the future. However, I acknowledge that there is still
much work to be done. This includes a strengthened
safety culture, consistency of our operational
performance, and making sure we seize strategic
opportunities to create value for all our stakeholders.
We remain committed to continuous improvement
and to building on our successes as we progress
toward our long-term goal to be a multi-generational
source of sustainable, critical metal in the heart of
Europe.
I would like to extend my sincere thanks to the Board,
particularly Michael Rawlinson, Chairman, for their
invaluable counsel, guidance, and support during
this pivotal time. The strengthening of the Board is a
crucial development for the Company as we place
increased emphasis on enhancing our corporate
governance. Their leadership will continue to be
instrumental as we navigate the next phase of our
growth and success.
I would also like to extend my thanks to both our
new and long-term investors for their confidence
and continued commitment. We look forward to
delivering significant returns over the years to come
as we ramp up production in the coming months and
continue our corporate evolution.
In closing, I would like to express my deep gratitude
to our dedicated employees across the Company
and to our stakeholders around the world. On behalf
of the entire team, thank you for your unwavering
support. Your commitment and partnership are vital
to our continued success, and we look forward to
achieving even greater milestones together in the
future.
Laura Tyler
Managing Director and Chief Executive Officer
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
12
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Strategy
Health
2025 KPI Targets
Key Target Areas
Diverse Workforce
Operational Effectiveness
- Production
Operational Effectiveness - Costs
Operational Effectiveness - Capital
Enterprise Value
Local Workforce
Inclusive Culture
5%
5%
5%
30%
SUSTAINABILITY
PEOPLE
OPERATIONAL DISCIPLINE
20%
50%
5%
10%
10%
10%
20%
10%
10%
10%
Safety
Environment
Stakeholder Perceptions of
Company in Local Community
Adriatic is committed to
setting high standards
across its operations
CORPORATE STRATEGY
TO BUILD LONG TERM
VALUE FOR ALL OUR
STAKEHOLDERS THROUGH:
1. NEAR TERM CASH GENERATION
•
Provide consistent operating track record
•
Be in the 1st quartile of the cost curve among
silver producers
•
Generate significant free cash flow over LOM
•
Adopt disciplined cash allocation to maximise
return on investment for shareholders
2. ORGANIC GROWTH
•
Maintain strong local recognition and support
for the benefits we bring
•
Accelerate definition of brownfield exploration
upside at Rupice Mine
•
Keep exploring! Deliver additional greenfield
opportunities within existing Vareš concession
and the region
3. EXTERNAL GROWTH
OPPORTUNITIES
•
Target value accretive assets and projects in
Europe and nearshore
•
Focus on polymetallic deposits with potential
for sustainable footprint and technology
application
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
13
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Operations Review
THE VAREŠ SILVER
OPERATION, BOSNIA AND
HERZEGOVINA
The Company’s flagship Vareš Silver Operation is
located approximately 50km north of Sarajevo, in
the district of Vareš.
Adriatic Metals owns 100% of the 44km
2 Vareš
concession. The concession area includes the
mineralisation included in the Mineral Resource
Estimates of Rupice, as well as a number of
prospects and exploration targets as outlined in
the map below:
OPERATIONAL
•
The 12-month rolling Lost Time Injury Rate
(‘LTIFR’) and Total Recordable Injury Rate (‘TRIFR’)
were 0.45 and 1.05 respectively at 31 December
2024 (200,000 work hour multiplier used).
•
A total of 76kt of ore milled at 217g/t Ag, 2.3g/t
Au, 7.1% Zn, 4.6% Pb and a total of 1,335koz
silver equivalent (‘AgEq’) produced in 2024.
•
Production ramp up continues at the Vareš Silver
Operation, with commercial production and
nameplate production expected to be reached
in 2025.
•
Underground development of 3km in 2024, an
increase of 100% compared to 1.5km 2023.
•
Mine officially opened on 5 March and first
concentrate sales took place during 2024.
•
In April, Adriatic completed the transition to
owner-operator of Rupice Mine following the
signed agreement with the former mining
contractor Nova Mining and Construction d.o.o,
(‘Nova’).
•
On 14 August, a fatal accident occurred involving
a subcontractor’s vehicle. The vehicle overturned
near the rescue station at Rupice and tragically
the driver, an employee of a local Bosnian
subcontractor, sustained fatal injuries. No other
individuals were seriously injured in the accident.
•
First stoping underground occurred in August.
•
On 3 October, severe storms and subsequent
flooding hit Bosnia and Herzegovina. Production
was unaffected, however the railway line that
connects Sarajevo to the port of Ploče was
damaged. Concentrate was trucked by road
to the port of Ploče while the railway line was
repaired. In February 2025, the rehabilitation
of the railway line was completed and rail
transportation of concentrate recommenced in
Q1 2025.
•
Ore stockpile at Rupice contained approximately
61kt at 31 December 2024.
•
Staff headcount at 31 December 2024 of 549
employees.
•
Full Year 2025 production guidance of 625-
675kt ore milled and 12,000-13,000koz AgEq
produced.
•
In Q4 2024, Ausenco completed a comprehensive
technical review to assess the potential for
increasing throughput at the Vareš Processing
Plant. The review confirmed that no material capital
expenditure is needed to raise throughput from
the nameplate capacity of 0.8Mtpa to 1Mtpa, while
approximately $25m of growth capital would be
required to achieve up to 1.3Mtpa. This proposed
increase in plant throughput aligns with longer
term plans to boost mine production, following
the expansion of the Ore Reserve at Rupice
Northwest. A plan for enhancing underground
mine production will be completed in 2025.
•
Exploration continued across Vareš and
Raška, with total of 14,764m from 57 drill holes
completed at Rupice and 15,973m drilled at
Raška.
•
The Rupice Indicated and Inferred Minerals
Resources statement as of 31 December 2024
stands at 20.9Mt at 153g/t Ag, 1.1g/t Au, 4.3%
Zn, 2.8% Pb, 0.4% Cu and 0.2% Sb, and 28%
BaSO4 (reported above a cut-off grade of 50g/t
AgEq) containing 103Moz Ag, 753koz Au, 902kt
Zn and 586kt Pb.
•
The Rupice Ore Reserve as of 31 December
2024 stands at 12.3Mt at 191.8g/t Ag, 5.7%
Zn, 3.6% Pb, 1.46g/t Au, 0.49% Cu and 0.2% Sb
reported above an NSR cut-off value of $130/t
assuming minimum mining widths of 15m
dependent on orebody thickness.
BUSINESS REVIEW
Highlights of 2024
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
14
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
FINANCIAL
•
On 4 March, Queens Road Capital Investment Ltd. (’QRC’) converted its $20m bond into 10,981,770
Adriatic new ordinary shares of £0.013355 each.
•
On 20 May, an equity raising of $50m took place. The funds were raised to provide flexibility to the
Company’s balance sheet during the final stages of ramp up to nameplate capacity and to finalise the
termination payment payable to Nova.
•
$120m of senior secured debt from Orion has been drawn. The first debt repayment is scheduled for 31
March 2025, with quarterly repayments thereafter.
•
$21m in cash plus approximately $2m in finished concentrate on 31 December 2024.
•
In December, the Company agreed a $25m concentrate prepayment arrangement with Trafigura. The
agreement was completed on 17 January 2025 with funds received.
•
During the period, Gold Royalty Corp announced that it had entered into a binding purchase and sale
agreement with OMF Fund III to acquire the Copper Stream on the Vareš Silver Operation. The terms of the
stream have not changed.
•
An equity raising of $50m took place on 18 February 2025. The funds were raised to secure long-lead
items to fast-track the Vareš Processing Plant expansion to 1.3Mtpa, initiate studies and workstreams at
Rupice Mine to support production growth and provide spare capacity to de-risk ramp-up to nameplate
production.
CORPORATE
•
On 3 May, Mike Norris, Chief Financial Officer, resigned to pursue other opportunities. Michael Horner, Head
of Business Development, was appointed interim Chief Financial Officer.
•
A ruling by the Constitutional Court of Bosnia and Herzegovina on 11 July suspended the plans for the
extended tailings storage facility at the Vareš Processing Plant and waste rock storage facilities at the
Rupice Mine. Alternative tailing storage facilities were identified at Veovača and on 24 October, Adriatic
was granted all of the permits for Phase I of the tailings storage facility at Veovača (‘Veovača TSF’).
Construction has advanced at the Veovača TSF with completion expected in Q1 2025.
•
On 13 June, Eric Rasmussen was appointed to the Board of Directors as a Non-Executive Director and
Julian Barnes stepped down from his duties as a Non-Executive Director of Adriatic.
•
On 7 August, Paul Cronin, CEO and Managing Director, tendered his resignation to the Board.
•
Laura Tyler, who was appointed to the Board of Directors on 1 July as a Non-Executive Director, was
appointed interim CEO effective 9 August and permanent CEO effective 17 Oct 2024. Ms Tyler has a
wealth of industry knowledge with over 30 years’ experience in mining, and is a specialist in technical,
operational, technology and safety applications for Tier 1 projects globally.
•
On 9 August, Sanela Karic, Non-Executive Director, became Executive Director for Corporate Affairs. Eric
Rasmussen, Non-Executive Director, became Chair of the Sustainability Committee.
•
On 3 October, Mirco Bardella was appointed to the Board of Directors as a Non-Executive Director and
Chair of the Audit and Risk Committee and Sandra Bates was appointed Senior Independent Director.
Operations Review - continued
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
15
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Exploration
OVERVIEW
With underground grade control drilling commencing in May the Company is benefiting from
greater accuracy and precision in the definition, planning and reconciliation of ore mined. Results
from grade control drilling were combined with new resource development drilling to produce the
updated Rupice Resource Estimate with no material change in resources as material mined had
been replaced, with 88% of the 2024 Rupice MRE converted to Indicated resource status.
Rupice Northwest remains open beyond the Company’s northern Exploitation License boundary.
The focus in 2025 is to extend the current license to allow further exploration to expand the Rupice
Northwest deposit.
Operations Review - continued
EXPLORATION AT VAREŠ, BOSNIA AND HERZEGOVINA
The 2024 exploration programme
across Vareš was focused on five key
prospects: Rupice, Droškovac, Brezik,
Seliste and Vareš East.
A total of 57 boreholes were drilled at Rupice and
Droškovac, amounting to 14,763m of core, with 9,821
samples dispatched for assay. Additionally, 210m
of trenches and channels were mapped, with the
collection and dispatch of 259 samples for analysis.
The soil sampling campaign yielded 1,561 samples,
contributing to a broader geochemical understanding
of the region and new exploration targets.
Drill intercepts from 2024 Rupice drilling combined
with the results of 2023 Rupice Northwest drilling
have reduced the spatial distance between these
two deposits and shown an increase in mineralisation
grade and content at the two orebodies peripheries.
Mineralisation is increasingly structurally controlled
and tightly constrained within narrow zones.
At Droskovac, the 2024 exploration campaign
focused on defining the mineralized system and
assessing its potential size, involving step-out
drilling from the 2023 campaign. 2024 drilling results
confirmed 2m to 5m wide intervals of semi-massive
Pb-Zn-Ag-Ba mineralization 75m to 130m northeast
of 2023 drill holes. The new intercepts are spaced
over 180m along the mineralisation trend, suggesting
significant continuity.
The Vareš East tenement was selected for 2025 drill
testing after successful target delineation campaigns
in Q3 and Q4 2024. Initial outcrop mapping and
sampling defined a 4km long base metal mineralised
trend. Outcrop mapping was followed up with a soil
sampling campaign over 4km on a 50m-by-50m
sample grid. The soil sampling covered a historic IP
geophysical anomaly across Palaeozoic sediments
hosting Cu and Au bearing sulphides. Further
mapping, rock chip and channel sampling extended
the mineralised surface anomaly. Soil sampling assay
results identified new anomalies and new anomalous
trends. Vareš East will be a major exploration drilling
focus area in 2025.
EXPLORATION AT RAŠKA, SERBIA
In 2024 exploration across the Raška Project
in southern Serbia in 2024 was focused on the
Rudnica, Rudnica North, and Plavkovo prospects.
There was a successful intersection of mineralisation
on the Plavkovo (Cu-Au-Ag) and Rudnica (Cu-Au)
prospects from trench, surface and drill core
sampling. Drilling results from the Rudnica prospect
identified the potential for a significant increase in
the size of the historical Rudnica porphyry deposit.
Drilling defined a low-grade gold leach cap from
surface, extensions to the known higher grade
copper supergene zone below the leach cap, and
an expansion of mineralisation potential within fresh
rock at depth.
In 2024, at the Rudnica and Plavkovo prospects,
a total of 79 drill holes were collared and 15,973m
drilled with a total of 18,208 drill core samples
dispatched for assay and 3,810 samples sent for
spectral analysis. In total, 516m of trenches and
channels have been mapped and sampled and 304
samples were dispatched for assay. During field
mapping and reconnaissance, a total of 39 rock
samples were collected and dispatched for assay.
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
16
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
STRATEGIC REPORT
GOVERNANCE AND CONTROLS
Adriatic reports its Mineral Resources and
Ore Reserves on an annual basis, with Mineral
Resources inclusive of Ore Reserves. Reporting is in
accordance with the 2012 Edition of the Australasian
Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves and applicable Listing
Rules. All Competent Persons named by Adriatic
Metals are suitably qualified and experienced as
defined in accordance with the Joint Ore Reserves
Committee (JORC) Code 2012 Edition.
RUPICE ORE RESERVES
STATEMENT AS AT 31
DECEMBER 2024
The December 2024 Ore Reserve estimate for
the Rupice deposit stands at: 12.3Mt at 192g/t Ag,
5.7% Zn, 3.6% Pb, 1.5g/t Au, 0.5% Cu and 0.2%
Sb reported above an NSR cut-off value of $130/t
assuming minimum mining widths of 5m dependent
on orebody thickness.
No Inferred Mineral Resource was used to support
the Ore Reserve, and none is included in the
Ore Reserve estimate. At the cut-off date of this
report, three stopes had been mined at the 1050
Level. No additional stoping had taken place, and
there are no underground stockpiles. The Ore
Reserve is reported on a 100% basis, with a cut-off
applied using an NSR of $130/t ore. Adriatic has
demonstrated that the operation has a positive net
present value (NPV), supporting the statement of
Ore Reserves.
The Rupice Ore Reserve Estimate has decreased
from 13.8Mt as published in December 2023 by
10.9% primarily due to a higher cut-off NSR value
being applied. The 2024 applied NSR cut-off value
is $130/t (previously $68/t). Application of a higher
cut-off NSR value has resulted in conversion of
fewer Indicated mineral resource tonnes to mineable
reserve tonnes.
The Ore Reserve estimate was prepared jointly
by Adriatic and AMC Consultants and comprises
Probable Reserves as shown in the table above:
Ore Reserves and Mineral Resources
RUPICE ORE RESERVE STATEMENT
Rupice Ore Reserve Estimate, 31 December 2024
Deposit
JORC Class.
Ore
Mt
Ag
g/t
Zn
%
Pb
%
Au
g/t
Cu
%
Sb
%
Rupice
Probable
12.3
192
5.7
3.6
1.5
0.5
0.2
Notes:
•
Ore Reserves are based on 2012 JORC Code definitions
•
It is the opinion of Adriatic Metals and the Competent Persons that all elements and products included in the
metal equivalent formula have a reasonable potential to be recovered and sold
•
Rows and columns may not add up exactly due to rounding
•
FS metal prices, payabilities and recoveries have been applied
The Ore Reserves for the Vareš Silver Operation
deposits have been estimated in accordance
with the 2012 JORC Code. The Indicated Mineral
Resources are inclusive of those Mineral Resources
modified to produce the Ore Reserves. The 2012
JORC Code defines an Ore Reserve as: “An ‘Ore
Reserve’ is the economically mineable part of a
Measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses,
which may occur when the material is mined or
extracted and is defined by studies at Pre-Feasibility
or Feasibility level as appropriate that include
application of Modifying Factors. Such studies
demonstrate that, at the time of reporting, extraction
could reasonably be justified.”
The Ore Reserve assumes a direct conversion
between Indicated Mineral Resources and Probable
Ore Reserves.
The material changes to the assumptions
underpinning the technical parameters for the Ore
Reserves have been announced on 31 March 2025.
In addition to the Company’s internal resources, the
Company also utilises the services of independent
specialist consultants including AMC (Australia)
as part of the governance and internal controls in
relation to ore reserve estimates and the reporting
thereof.
Annual Report for the Year Ended 31 December 2024
17
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
STRATEGIC REPORT
Ore Reserves and Mineral Resources - continued
BASIS OF ESTIMATE
An Ore Reserve estimate was completed jointly
by Adriatic and AMC under the direction of the
Competent Persons (CP) who were assisted by
key technical staff at Adriatic and AMC. Adriatic
used a Life of Mine (LOM) approach, whereby all
mining areas were re-evaluated using the new NSR
calculation to determine economic mining areas.
COMPETENT PERSON
The information in this report that relates to the
Ore Reserves is based on and fairly represents
information and supporting information compiled by
Dominic Claridge and Christopher Hunter. Dominic
Claridge is a full-time employee of AMC Consultants
and is a Fellow of the Australian Institute of Mining
and Metallurgy. Christopher Hunter is a full-time
employee of Adriatic Metals and is a Member of the
Australian Institute of Mining and Metallurgy. Dominic
Claridge and Christopher Hunter have sufficient
experience relevant to the style of mineralisation
and type of deposit under consideration and to
the activity which they are undertaking to qualify
as a Competent Persons as defined in the 2012
Edition of the Australasian Code for the Reporting
of Exploration Results, Mineral Resources, and
Ore Reserves (JORC Code). Dominic Claridge and
Christopher Hunter consent to the disclosure of
information in this report in the form and context in
which it appears.
RUPICE MINERAL RESOURCE STATEMENT
AS AT 31 DECEMBER 2024
At end of December 2024, the Rupice Mineral
Resource Estimate (MRE) was updated with the
results of new resource development and grade
control drilling not included in the July 2023 Rupice
MRE and depleted of 2024 mined ore tonnes. There
was no material change to the Rupice MRE as at end
of December 2024 as new drilling had replaced ore
that had been mined.
The December 2024 MRE for the Rupice silver-
zinc-lead-gold-copper deposit stands at: 20.9 Mt
at 153g/t Ag, 4.3% Zn, 2.8% Pb, 1.1g/t Au, 0.4% Cu,
0.2% Sb, and 28% BaSO4 (reported above a cut-off
grade of 50g/t AgEq) containing 103Moz Ag, 753koz
Au, 902kt Zn and 586kt Pb.
A total of 88% of the 2024 Rupice MRE is classified
as Indicated resource ready to be converted to
Probable reserve status.
There has been sufficient growth in the Indicated
resource through additional drilling since previous
reporting to replace depleted reserves and deliver
1% more Indicated resource tonnes compared to
2023 Mineral Resource reporting.
The Rupice ore deposit is comprised of two separate
significant orebodies – Rupice Main (Rupice) and
Rupice Northwest (RNW). When estimating the
Rupice MRE, the Rupice and RNW orebodies are
estimated separately and then combined into a
single combined MRE.
The estimates are inclusive of exploration infill
drilling; step-out drilling to extend mineralisation;
verification drilling of historical holes at RM and RNW;
and underground grade control drill holes completed
between the beginning of May 2024 and the end of
September 2024.
Summary Table 1 - Rupice Mineral Resources – Rupice Main and RNW Zones combined, 31 December 2024
Grades
Contained metal
Ag
Zn
Pb
Au
Cu
Sb
BaSO₄
Ag
Zn
Pb
Au
Cu
Sb
BaSO₄
Domain
Resource
Classification
Tonnes
(Mt)
(g/t)
(%)
(%)
(g/t)
(%)
(%)
(%)
(Moz)
(Kt)
(Kt)
(Koz)
(Kt)
(Kt)
(Kt)
Rupice +
RNW
Indicated
18.4
164
4.7
3.0
1.2
0.4
0.2
30
97
858
554
721
81
35
5,490
Inferred
2.5
67
1.7
1.3
0.4
0.2
0.1
13
5
43
32
32
5
3
323
Total
20.9
153
4.3
2.8
1.1
0.4
0.2
28
103
902
586
753
86
38
5,813
Rupice MRE Notes:
•
COG - A cut-off grade of 50g/t silver equivalent has been applied.
•
AgEq – Silver equivalent was calculated using conversion factors of 31.10 for Zn, 24.88 for Pb, 80.00 for Au, 1.87 for BaSO4, 80.87 for Cu and 80.87 for Sb. Metal prices used were US$2,500/t for Zn, US$2,000/t for Pb,
$150/t for BaSO4, $2,000/oz for Au, $25/oz for Ag, $6,500/t for Sb and $6,500/t for Cu.
•
ZnEq – zinc equivalent is calculated using AgEq*1/31.1.
•
Metal recoveries and payabilities have been applied from PFS.
•
AgEq applied formula: AgEq = Ag(g/t) * 90% + 31.1 * Zn(%) * 90% + 24.88 * Pb(%) * 90% + 1.87 * BaSO4(%) * 90% + 80 * Au(g/t) * 90% + 80.87 * Sb(%) * 90% + 80.87 * Cu(%) * 90%.
•
A bulk density (BD) was calculated for each model cell based on its domain, using regression formulas. For the Main zone: BD =2.66612 + BaSO4 x 0.01832 + Pb x 0.03655 - Zn x 0.02206 + Cu x 0.09279 for the barite high-
grade domain, BD = 2.72748 + BaSO4x 0.02116 + Pb * 0.04472 + Zn x 0.01643 - Cu x 0.08299 for the barite low-grade domain; and for the RNW zone: BD = 2.92581 + BaSO4 x 0.01509 + Pb x 0.04377 - Zn x 0.02123 + Cu
x 0.10089 for the barite high-grade domain, BD = 2.74383 + BaSO4 x 0.01731 + Pb x 0.04573 + Zn x 0.02023 - Cu x 0.06041 for the barite low-grade-domain (the barite domains were interpreted using 30% BaSO4 cut-off).
Annual Report for the Year Ended 31 December 2024
18
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
STRATEGIC REPORT
Ore Reserves and Mineral Resources - continued
COMPETENT PERSONS’ STATEMENT
The information in this report that relates to Mineral
Resources is based on and fairly represents
information and supporting information compiled
by Dmitry Pertel. Dmitry Pertel is a full-time
employee of AMC Consultants 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 the Reporting of Exploration Results, Mineral
Resources, and Ore Reserves (JORC Code). Dmitry
Pertel consents to the disclosure of information
in this report 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. Sergei
Smolonogov, who is a Registered Professional
member of the Australian Institute of Geoscientists
(RPGeo AIG). Mr. Smolonogov is General Manager
Growth for 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.
Smolonogov 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.
The Mineral Resources and Ore Reserves
Statement in this Annual Report is based on and
fairly represents, information and supporting
documentation prepared by Sergei Smolonogov,
Dominic Claridge and Christopher Hunter (positions
and titles outlined above). The Mineral Resources
and Ore Reserves Statement as a whole has been
approved by Sergei Smolonogov, Dominic Claridge
and Christopher Hunter. Sergei Smolonogov,
Dominic Claridge and Christopher Hunter has
provided their prior written consent as to the form
and context in which the Mineral Resources and Ore
Reserves Statement appears in this Annual Report.
Annual Report for the Year Ended 31 December 2024
19
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
The Vareš Silver Operation produces two concentrate products,
which contain a portfolio of metals - silver, zinc, lead, gold, copper, and
antimony.
These metals are fundamental to the operation of advanced
technologies, sustainable infrastructure, and everyday applications.
Through responsible mining practices,
Adriatic Metals will supply high-demand metals
that power today’s industries and support a
sustainable future.
SILVER (AG)
Silver is used in various industries
due to its high electrical conductivity,
thermal conductivity, and antibacterial
properties. Silver's demand in the
global market is largely driven by the
electronics industry and it is essential
in electronics for circuit boards,
connectors, and batteries. Silver is
also widely used in jewellery, coins,
and decorative items. In medicine,
its antimicrobial properties make it
valuable for wound dressings, medical
instruments, and water purification.
Silver’s unique properties that
support technological advancements,
healthcare, and renewable energy. Its
role in electronics and clean energy
solutions, such as solar power, makes
it a critical resource for modern
industries. Notably, silver's near-total
recyclability adds to its value in a
circular economy, underscoring its
environmental and economic benefits.
ZINC (ZN)
Zinc is a versatile metal used in
various industries. It is primarily
used for galvanizing steel to
prevent rust, making it essential
in construction, automotive,
and infrastructure. Zinc enables
innovative, sustainable battery
solutions for long-lasting,
corrosion resistant structures.
In health, it plays a crucial role
in immune function, wound
healing, and enzyme production,
often found in supplements
and fortified foods. Additionally,
zinc is used in cosmetics, and
fertilizers, contributing to energy
storage, skincare, and agriculture.
In agriculture, zinc fertilizers have
been shown to significantly boost
crop yields, therefore contributing
to global food security. Additionally,
zinc-air batteries are emerging as a
promising energy storage solution.
LEAD (PB)
Lead is used in various industries
due to its density, malleability,
and resistance to corrosion. It
is commonly found in batteries,
particularly in lead-acid car
batteries, which are essential
for vehicles and backup power
systems. Lead is also used in
radiation shielding for medical
and industrial applications, such
as X-ray rooms and nuclear
facilities. Additionally, it is used
in some construction materials,
ammunition, and protective
coatings.
Lead is important because of its
ability to store energy efficiently,
block harmful radiation, and
provide durability in industrial
applications.
GOLD (AU)
The main use of gold is as a
storage of wealth. Gold is also
important due to its rarity,
durability, conductivity, and
resistance to corrosion. It has
been valued for centuries as a
form of currency, investment, and
jewellery. In modern industries,
gold is essential in electronics,
used in circuit boards, connectors,
and high-performance technology
due to its excellent conductivity
and resistance to tarnish. It also
plays a role in medicine, used in
dental work, medical implants, and
cancer treatments. Additionally,
gold is a key component in
aerospace technology, where
reliability is crucial. Its role as a
store of value and hedge against
economic instability further
solidifies its significance in global
finance.
COPPER (CU)
Copper is essential due to its
outstanding electrical and thermal
conductivity and its versatility
comes from its malleability, softness,
and high conductivity, making
it indispensable in construction
and manufacturing, Its corrosion
resistance and durability contribute
to its widespread use in plumbing,
construction, and transportation.
Copper plays a crucial role in the
electrification of transportation,
renewable energy grids, and power
infrastructure, offering unmatched
recyclability.
Copper is crucial for renewable
energy, used in solar panels, wind
turbines, and electric vehicles.
The expanding EV market further
increases copper demand, as both
electric vehicle technology and
charging stations require significant
amounts of this metal.
ANTIMONY (SB)
Antimony is used to increase the
hardness of alloys, with lead alloys
for batteries, with lead/copper/tin
alloys for machine bearings. It is
also used in automotive clutch and
brake parts. The other major use is
as antimony trioxide, which is used to
produce flame retardant chemicals
and lead-acid batteries. Additionally,
antimony is used in a variety of
military applications, including
night vision goggles, explosive
formulations, flares, nuclear weapons
production, and infrared sensors.
These expanded uses for antimony
contribute to its inclusion as a ‘critical
material’, particularly with respect to
battery technology
Recent export restrictions by
China, the world’s largest antimony
producer, have led to supply
constraints and price increases,
impacting global markets.
Our Products
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
20
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
INCOME STATEMENT
(In USD’000)
At 31 December
2024
At 31 December
2023
Change
Operating Loss
(45,556)
(22,058)
(23,498)
Net finance expense & fair value
movements
(21,798)
(8,054)
(13,744)
Loss before taxation
(67,354)
(30,112)
(37,242)
The Group generated pre-commercial production
revenue of $27.6m (2023: Nil), reported after
deduction of treatment charges and offtake buyers’
fees.
Gross margin after $0.9m selling and distribution
costs (2023: Nil) was $1.0m (2023: Nil) which was
driven by greater mining and processing costs of
sold ore during the ramp up phase, as expected.
GENERAL AND ADMINISTRATIVE
EXPENSES
During the year general and administrative increased
to $39.9m (2023: $18.4m). This reflects the higher
headcount and greater business activity and
includes a $3.5m one off termination payment to
Nova Mining.
Non-capitalised employee costs in the year totalled
$26.1m, an increase of $18.6m compared with
prior year driven by a higher headcount and greater
proportion of expatriate workers, with the average
total number of employees increasing to 549 in the
year (2023: 296).
EXPLORATION COSTS
Expensed exploration costs increased to $5.2m
(2023: $2.1m) due to greater activity in Serbia with
two drill rigs completing a programme primarily
focused on the Rudnica copper-gold porphyry and
additional work across the licences there and in
Bosnia and Herzegovina completed to advance new
targets and maintain the concessions.
FINANCING MOVEMENTS
The Group incurred finance expenses of $28.7m
(2023: $5.5m) which increased due to $12.4m
interest accrued on the Orion Senior Secured Debt
being expensed in 2024 compared with prior year
where it was 100% capitalised. Capitalised amounts
in both years are shown in note 12. This was offset
by nil interest in current year on the QRC Convertible
Debt (2023: $1.9m) which was converted to equity in
March 2024.
In addition, included within finance expenses is a
revaluation loss of $12.1m (2023: loss $2.5m) on
the Copper Stream liability due to an increase in
forward copper price estimates and a reduction in
the discount rate.
This is offset by a revaluation gain of $6.5m (2023:
loss $3.5m) recorded on the QRC Convertible Debt
primarily due to a lower share price at the time of
conversion of A$3.28 (2023: $4.01) compared with
the conversion strike price of A$2.80 per ordinary
share.
REVENUE AND COST OF SALES
The Group generated
pre-commercial production
revenue of
reported after deduction
of treatment charges and
offtake buyers’ fees.
$27.6m (2023: Nil),
Financial Review
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
21
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Balance Sheet
CASH FLOW
(In USD)
Year ended
31 December 2024
Year ended
31 December 2023
Change
Net cash used in operating activities
(53,329)
(22,887)
(30,442)
Net cash used in investing activities
(44,821)
(99,485)
54,664
Net cash inflows from financing activities
74,672
106,999
(32,327)
Net decrease in cash and cash equivalents
(23,478)
(15,373)
(8,105)
CASH AND BORROWINGS
(In USD)
At 31 December 2024
At 31 December 2023
Change
Cash and cash equivalents
20,697
44,856
(24,159)
Current borrowings
(79,989)
(47,373)
(32,616)
Net current liability
(59,292)
(2,517)
(56,775)
Net cash used in operating activities during
the year was $53.3m compared with $22.9m
in the prior year.
Investing activities included cash outflows
for the purchase of property, plant and
equipment during the year of $40.8m (2023:
$94.4m) reflecting continued investment in
the development and ramp-up of the Vareš
Silver Operation.
Net cash inflows from financing activities
totalled $74.7m, a decrease of $32.3m on
the prior year. This includes one drawdown of
$30m in relation to the Orion Senior Secured
Debt, net of fees and associated legal costs
totalling $29.2m.
Other financing inflows include $46.9m (net
of transaction costs of $3.1m) from issue
of share capital to accelerate and expand
the Company’s ramp-up. These inflows
were partially offset by $3.4m capital and
interest paid in lease payments and $0.6m in
settlement of copper warrants.
WORKING CAPITAL
As at 31 December 2024, current trade and other
receivables were $13.4m (2023: $13.2m). This
increase from the prior year is primarily driven by
contract assets of $1.4m (2023: Nil) which was offset
by a reduction in VAT receivables of $1.8m due to
timing of tax receipts.
Current trade and other payables increased to
$37.3m (2023: $22.9m), primarily due to $10.9m
higher accrued liabilities due to the increase in
employees and contractors causing an uplift
in global employment taxes and social security
contributions owed. Deferred revenue of $1.9m
(2023: Nil) was also recognised at year-end.
Total inventories at 31 December 2024 increased
to $16.8m (2023: $1.6m) driven by the stockpiling
of ore at Rupice as operations ramped up totalling
$10.8m (2023: $0.1m), unsold finished concentrate
in containers at the port of Ploče $1.9m (2023:
Nil), and an increase in spares and consumables
to $4.1m (2023: $1.4m) as the business procured
necessary materials to support the operational
ramp-up and also acquired inventories from Nova
Mining during the transition to owner-operator.
The Group had a cash balance at 31 December 2024 of $20.7m (2023: $44.9m)
which was bolstered post period by a $25m prepayment agreement with Trafigura
which was drawn down in January 2025, and the successful completion of a two-
tranche institutional placement, raising approximately $50.0m before fees.
Current borrowings were $80.0m (2023: $47.4m) with the Group being in a net current liability position as at 31
December 2024 of $59.3m (2023: $2.5m). The increase in net current liability position was driven by the cash flow
movements noted above, additional interest accruing on the Orion Senior Secured Debt, a significant increase in
the fair value of the Copper Stream due to a reduction in the discount rate used for valuation and four instalments
of loan and interest repayments forecast in 2025 (2024: three).
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
22
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Principal Risks and Uncertainties
ENTERPRISE RISK
MANAGEMENT
The Board is responsible for putting in place a
system to manage risk and implement internal
controls. The Board has considered mechanisms
by which the business and financial risks facing the
Group are managed and reported to the Board.
The principal business and financial risks have been
identified and control procedures implemented.
The Board acknowledges it has the responsibility for
reviewing the effectiveness of the systems that are
in place to manage risk.
The Board has delegated certain authorities for risk
management to the Audit & Risk Committee, which
has its own formal terms of reference. The Audit
& Risk Committee meets at least twice a year to
consider presentations by the auditors and drafts
of the Annual and Interim Financial Statements and
to assess the effectiveness of the Group’s system
of internal controls. The Audit & Risk Committee
is chaired by Mirco Bardella, who has recent and
relevant financial and business experience. All the
members of the Committee are Non-Executive and
Independent.
The Audit & Risk Committee is responsible, inter alia,
for:
1. Reviewing the Company’s risk management
framework at least annually to satisfy itself that
the framework continues to be sound and to
determine whether there have been any changes
in the material business risks the Company faces;
2. Ensuring that the material business risks do
not exceed the risk appetite determined by the
Board; and
3. Overseeing the Company’s risk management
systems, practices and procedures to ensure
effective risk identification and management, and
compliance with internal guidelines and external
requirements.
A. RISK MANAGEMENT POLICY
The Board determines the Company’s risk profile
and is responsible for overseeing and approving
risk management strategy and policies, internal
compliance and internal controls.
The Board has delegated to the Audit & Risk
Committee responsibility for implementing the risk
management system.
The Audit & Risk Committee submits particular
matters to the Board for its approval or review.
Among other things, the Audit & Risk Committee is
responsible for:
1. Overseeing the Company’s risk management
systems, practices and procedures to ensure
effective risk identification and management, and
compliance with internal guidelines and external
requirements;
2. Assisting management to determine whether
the Company has any material exposure
to economic, environmental and/or social
sustainability risks and, if it does, how it manages,
or intends to manage, those risks;
3. Assisting management to determine the key risks
to the business, and prioritising work to manage
those risks; and
4. Reviewing reports from management on the
efficiency and effectiveness of risk management
and associated internal compliance and control
procedures.
The Company’s process of risk management and
internal compliance and control includes:
•
Identifying and measuring risks that might impact
upon the achievement of the Company’s goals
and objectives, and monitoring the environment
for emerging factors and trends that affect these
risks;
•
Formulating risk management strategies to
manage identified risks, and designing and
implementing appropriate risk management
policies and internal controls; and
•
Monitoring the performance and improving the
effectiveness of risk management systems
and internal compliance and controls, including
regular assessment of the effectiveness of
risk management and internal compliance and
control.
To this end, comprehensive practices are in place
that are directed towards achieving the following
objectives:
•
Compliance with applicable laws and regulations;
•
Preparation of reliable published financial
information; and
•
Implementation of risk transfer strategies where
appropriate (e.g. insurance).
The responsibility for undertaking and assessing risk
management and internal control effectiveness is
delegated to management. Management is required
to assess risk management and associated internal
compliance and control procedures and report back
to the Audit & Risk Committee at least annually. The
Board reviews assessments of the effectiveness
of risk management and internal compliance and
control at least annually.
B. PRINCIPAL RISKS
The following risks are those that the Group
considers could have the most serious adverse
effect on its performance and reputation. The
Principal Risks have evolved from those reported
in 2023 commensurate with the advancement
of operations and increased maturity of the
organisation’s systems and processes for managing
risk.
Organisational and operational risks are reviewed
and re-evaluated quarterly for changes to material
risks, new risks, effectiveness of controls and
status of work underway to improve the control
environment. This process underpins the Principal
Risks reported.
Workforce fatality, serious illness and
injury prevention
The risk of single or multiple fatalities, and serious
illnesses or injuries, is a fundamental point of focus
for the organisation. Specific vulnerabilities include
maturity of the organisation’s health and safety
control environment defined in its Health and Safety
Management System, embedding safety behaviours
and mindsets in the workforce and frontline
leadership, and aligning contracting partners with
the organisation’s health and safety performance
expectations. The tragic event in August 2024 where
a sub-contractor was fatally injured while carrying
out construction works catalysed a doubling down
on commitment and effort invested in preventing
serious incidents.
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
23
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Principal Risks and Uncertainties - continued
During 2024, the organisation made advancements
in:
•
Designing and deploying a routine, detailed
assurance process of critical controls for major
health and safety hazards;
•
Embedding ‘Life Saving Rules’ into day-to-day
decision making and leadership processes;
•
Enhancing positive communication of safety
risks, controls and safety mindsets; and
•
Controls to minimise and monitor exposure to
inhalable and ingestible agents, in particular lead.
These and other improvements have considerably
increased the level of control of this risk, and have
provided demonstrable improvements in lag safety
performance indicators.
Maintaining a Social Licence to Operate
The formal and informal support of our host
community, including our Government and
Regulatory Bodies, local and regional communities,
remains increasingly important to maintaining
our social licence to operate. Expectations of
our business and our stakeholders on social,
compliance, health and safety, and environmental
outcomes are high.
The Company continues to maintain an active,
two-way dialogue with the communities surrounding
the Operation with the aim of mitigating the risk of
potential opposition from environmental groups,
local residents or others. This is primarily achieved
through three channels: The Public Liaison
Committee (“PLC”), the Vareš Information Centre
and the many staff that the Company employs
from its local communities. The PLC consists of 28
members, was set up in July 2020 and meets on a
quarterly basis. The Information Centre is a staffed
location, open to the public, located centrally in the
town of Vareš and has been open since September
2019.
The community of Vareš, government stakeholders
and the wider audience in Bosnia and Herzegovina
remain supportive of the Vareš Silver Operation.
A significant proportion of the Company’s staff is
from the local communities of Vareš, Breza and
Kakanj. An ongoing priority for the Company is the
importance of carefully managing the activities of
its employees, contractors and sub-contractors to
ensure that they adhere to the highest standards
of environmental, social and safety practices, and
to rectify any issues arising through sincere and
transparent communication and committed, prompt
action. Efforts in this regard are maintained on a
continuous basis to anticipate any concerns posed
by community or NGOs. The Company seeks to
mitigate these risks through effective engagement
with relevant stakeholders, including all levels of
government and local communities.
These relationships have naturally been tested
through a dynamic change environment, as the
Company progressed from construction into
commissioning, and subsequently into operations.
Attention and interest in perceived and actual
impacts from our operations have increased on
topics such as Tailings Storage Facility construction,
local road use and local economic benefits. An
increase in interest from local community and
NGOs has been met with increased efforts to work
with stakeholders on mutually beneficial solutions.
Relationships with Government and Regulatory
stakeholders continued to improve through a
proactive approach to engagement.
A stakeholder survey was undertaken in Vareš in
2024 and it has provided unique insights into the
potential risks and opportunities that lie ahead.
Analysis from this survey, as well as the feedback
from ongoing consultations, has positioned the
organisation to improve its stakeholder strategy for
2025 and beyond.
Protecting Sensitive Environmental and
Social Receptors
Environmental and social values must be identified,
understood and protected from harm from the
activities of the organisation. The main potential
impact vectors are environmental water quality,
visual amenity, noise, dust, air quality and operational
traffic on public roads.
Impact on environmental values is highly regulated in
Bosnia and Herzegovina, and monitoring throughout
2024 confirmed that controls were effective and the
organisation remained compliant with regulations
and permit conditions. Considerable advancements
of engineering controls for water management at
Rupice have led to observable and measurable
improvements in water quality, and a reduction in the
number and severity of incidents. Dust management
from vehicle movement near the processing plant
remains an opportunity that is being progressed
through measures such as additional water carts,
street sweepers and additional asphalting of
unsealed surfaces. Improvements to local roads
were advanced and continue to reduce social impact
from increase in public road use.
Achieving Full Operational Potential
Project development is no longer considered
a Principal Risk as the Company has been in
production for several quarters. The Company’s
future success will therefore largely depend upon
the Company’s ability to complete the production
stabilisation and ramp-up through to nameplate
production.
Related to this is the challenge of achieving all the
plans set out in the Definitive Feasibility Study (DFS).
The DFS is a conceptual study based on certain
technical and economic assessments. As such, it is
insufficient to provide certainty that the conclusions
of the DFS will be realised or that any conceptual,
projected or indicative net present value or internal
rate of return is assured or certainty as to the
estimation of ore reserves.
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
24
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Principal Risks and Uncertainties - continued
It is not uncommon for new mines to experience
unexpected problems, increased costs and delays
during production ramp-up. Any adverse event
affecting the Vareš Silver Operation following
the commencement of production, would have a
material adverse effect on the Company’s business,
results of operations, financial condition and the
price of its Ordinary Shares. The Company’s ultimate
success will depend on its ability to reach nameplate
concentrate production and generate positive cash
flow from operations, with the principal risks being:
•
adverse ground conditions and slow advance
rates of underground development and mining;
and
•
difficulties in ramping up the plant and equipment
to nameplate capacity.
The threats to steady operation of the Vareš Silver
Operation are unchanged as follows. In the event
that any of these situations arise, the Company’s
operational and financial performance may be
adversely affected. This includes, but is not limited
to:
•
shortages or delays in obtaining critical mining
and processing equipment, or the breakdown or
failure of such equipment;
•
operational and technical difficulties encountered
during mining;
•
insufficient or unreliable infrastructure, such as
power, water and transportation;
•
difficulties in operating the plant and equipment,
including mechanical failure or plant breakdown;
•
shortage of transportation and interruptions in
transportation services;
•
increases in extraction, processing or
transportation costs, including unanticipated
metallurgical problems which may affect
extraction costs;
•
performance of the Vareš Processing Plant and
ancillary operations falling below expected levels
of output or efficiency;
•
difficulties experienced by the state rail operator
of Bosnia and Herzegovina in operating the
railway line for the movement and storage of
concentrates from the Vareš Railhead to the port
of Ploče;
•
difficulties in operations at the deep-water port
of Ploče required for shipping of concentrates to
smelters;
•
changes in the regulatory environment including
environmental compliance requirements;
•
inability to comply with the conditions attached
to the various permissions, permits and licences;
•
non-performance by third party operations
contractors;
•
inability to attract and retain a sufficient number
of qualified workers;
•
hazards associated with the use of heavy
machinery;
•
catastrophic events such as fires, adverse
weather, explosions, flooding, seismic activity,
underground integrity issues, discharges of gas in
the air or lubricants, fuel oil or other contaminants
into watercourses;
•
opposition from environmental groups, local
residents or others;
•
civil unrest around the mine site, processing plant
and supply routes;
•
changes to anticipated levels of taxes and
royalties; and
•
a material and prolonged deterioration in the
prices of the commodities to be produced by the
Vareš Silver Operation.
Progressing of the Organisation’s Growth
Agenda
The organisation maintains a pipeline of key growth
projects, which are vulnerable to political, regulatory,
economic and public sentiment headwinds.
During the year, the Company achieved
further success with its exploration
programme at Vareš, with strong drilling
results both at the Rupice main orebody
and at Rupice Northwest, serving to de-risk
the operation and its commercial viability.
Nonetheless, there can be no assurance that
continued exploration on the Vareš Silver Operation,
or any other exploration properties that may be
acquired in the future, will result in the discovery
of further economic mineral resource. Even if an
apparently viable mineral resource is identified, there
is no guarantee that it can be economically exploited.
The future exploration activities of the Company
may be affected by a range of factors including
geological conditions, limitations on activities
due to seasonal weather patterns, unanticipated
operational and technical difficulties, unavailability
of drilling rigs, insufficient or unreliable infrastructure
(such as power, water and transport), unanticipated
metallurgical problems which may affect extraction
costs, industrial and environmental accidents,
changing government regulations and many other
factors beyond the control of the Company.
Resource and reserve estimates are expressions of
judgement based on knowledge, experience and
industry practice. Estimates which were valid when
initially calculated may alter significantly when new
information or techniques become available. In
addition, by their very nature, resource and reserve
estimates are imprecise and depend to some extent
on interpretation which may prove to be inaccurate.
The Company follows industry standard Quality
Assurance and Quality Control (“QA/QC”) practices.
AMC (Perth) provides services for resource
estimation and sign-off on the QA/QC related to
all resource block models and resultant estimates
produced. AMC is a globally recognised geological
consultancy providing registered competent
persons capable of completing and signing off on
JORC standard resource estimates.
Climate Change
The Company has considered the resilience of its
strategy, taking into consideration different climate-
related scenarios, including a 2°C or lower scenario.
Although overall precipitation rates are expected
to decrease, higher intensity events may occur and
increased temperatures in winter mean that snowfall
melts more quickly than was previously the case and
this, in turn, could increase the risk of flooding. The
design of both Rupice Mine and Vareš Processing
Plant allows for accommodating drainage and
storage from intense stormwater events. However,
the haul road may be at increased risk of surface
damage, wash outs and landslides. Climate change
risks and mitigations have been considered in the
Task Force on Climate-related Financial Disclosures
(TCFD) within the Directors’ report.
Inherent within climate change risk is the ability of
the organisation to economically and efficiently
navigate towards ‘net zero’ emissions from its
operations. Dependable energy sources in the
region are largely limited coal-fired reticulated
electricity and imported diesel for mobile equipment.
Despite this, there are pathways to materially
improve energy efficiency and increase energy
derived from low or zero emission sources that the
organisation is currently analysing for viability.
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
25
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Principal Risks and Uncertainties - continued
Operating Legally and Ethically
The Company must understand and comply with a
complex landscape of national and international legal
and other requirements. Bosnia and Herzegovina
maintains a comprehensive legal framework at
local (municipal), Cantonal, State and Federal levels
of Government. Legal requirements are subject
to frequent change linked to a dynamic domestic
political environment. Adriatic maintains in-house
and external legal counsel, dedicated internal audit
resources, as well as strong management system
controls, to ensure we remain abreast of, and
compliant with, legal requirements including the
need for all our operational activities to be permitted.
The Company’s code of corporate governance
specifies the measures the Company takes to
comply with all applicable Anti-Bribery & Corruption
legislation. A Speak Out (whistleblowing) programme
has been in place for several years, providing all
staff with the opportunity to disclose anonymously
any infringement of the Company’s codes, including
incidences of bribery and corruption, departures
from legal requirements, bullying, harassment and
other unethical behaviour. This is supported by
continually improving the training and awareness
programmes for the workforce, and routine reporting
to the Adriatic Board Audit and Risk Committee on
the health and outcomes of these exercises.
Mining concessions in Bosnia and
Herzegovina and Serbia
The laws and regulations on mining in Bosnia and
Herzegovina and Serbia are still evolving and, as
a result, some areas of the laws on mining are
unclear. If the Company does not comply with the
terms of agreement, it may be in default and the
mining concession may be terminated, which would
have adverse consequences for the Company’s
operational and financial performance.
Failure to comply strictly with applicable laws,
regulations and local practices relating to mineral
rights applications and tenure, could result in loss,
reduction or expropriation of entitlements, or the
imposition of additional local or foreign parties as
joint venture partners with carried or other interests.
Outcomes in courts in Bosnia and Herzegovina and
Serbia may be less predictable than in the United
Kingdom, which could affect the enforceability
of contracts entered into by the Company or its
subsidiaries in Bosnia and Herzegovina and Serbia.
There is no guarantee that the Company will be
able to obtain all required approvals, licences and
permits relating to its exploration and subsequent
exploitation activities. Notwithstanding these
risks, the Company has made good progress in
obtaining the permits it needs for development and
preparation for operations.
Guarding Cybersecurity and Data Privacy
The business maintains sensitive business systems,
intellectual property and personal data that must
comply with legal requirements and be protected
from violation. As the sophistication of attacks on
data and systems increases, the Company must
remain agile and vigilant and adapt to the changing
threat profile. The Company deploys a variety of
software and physical controls, as well as internal
training and auditing of system controls, to manage
cybersecurity and data privacy risk.
Workforce Capability and Resilience
The Company relies heavily on a small number
of key individuals, in particular the Directors, its
senior management and consultants, including,
among other matters, to manage its operations
and to develop and maintain effective engagement
with government, regulatory authorities and
communities in Bosnia and Herzegovina and Serbia.
The Group’s business may be negatively affected
by the departure of any of these key individuals or
any other key employees and the failure to attract
suitable replacements. Although the Company has
succeeded in attracting and retaining key personnel
and is confident of continuing to do so, there can be
no guarantee of this.
The loss or diminution in the services of any of the
Directors or any member of the management team
or an inability to recruit, train and/or retain necessary
personnel could have a material and adverse effect
on the Group’s business, results of operations,
financial condition and prospects.
More broadly, the access to requisite skills and
experience in the labour market is limited given the
relatively low number of comparable operations
in the region. Adriatic meets this challenge
through Technical Training Programmes, Student
Programmes, Development Pathways and targeted
appointments to catalyse skill transfer. These
processes have been successful in meeting the
operational needs of the organisation to date, but
as the regional industry develops, skill migration
remains a future threat.
Business Interruption
The Company endures business continuity risk
of disruption from major disruptive natural and
organisational events, such as inclement weather
(extreme wind, snow and rainfall events), water
supply disruption and major equipment damage.
These have and can have direct and indirect impacts
to stable performance. Examples experienced in
2024 include inclement snow impacting access and
operations, and intense rainfall causing considerable
and prolonged structural damage to sections of
the rail line to the port of Ploče. The organisation
has been relatively resilient to these events through
enacting response and contingency plans and
improving preventative controls as learnings from
events when they occur either inside of, or outside of
the organisation.
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
26
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Directors’ Section 172(1) Statement
WORKING AND
COMMUNICATING WITH OUR
STAKEHOLDERS
This statement, a key component of the Strategic
Report, is intended to demonstrate how the
Directors have approached and fulfilled their
responsibilities under Section 172(1) (a) to (f) of
Companies Act 2006 (“Section 172(1)”) during the
period under review.
In accordance with Section 172(1), Directors must
act in a way he/she considers, in good faith, would
most likely promote the long-term success of the
Company for the benefit of its members as a whole,
having regard for its stakeholders and the matters
set out in Section 172(1). In doing this, the Director
must have regard, amongst other matters, to:
•
The likely consequences of any decision in the
long term;
•
The interests of the Company’s employees;
•
The need to foster the Company’s business
relationships with suppliers, customers and
others;
•
The impact of the Company’s operations on the
community and the environment;
•
The desirability of the Company maintaining
a reputation for high standards of business
conduct; and
•
The need to act fairly between members of the
Company.
Adriatic consistently communicates and
collaborates with individuals or groups that have
influence or have an impact on the organisation.
Through both formal and informal engagement, the
objective is to understand and respond to the needs
and concerns of stakeholders, and to work together
to find mutually beneficial solutions.
The Board acknowledges the importance of forming
and retaining constructive relationships with all
stakeholder groups. Effective engagement with
stakeholders yields valuable feedback and insights,
enabling Directors to incorporate stakeholder
interests in decision-making processes, ultimately
contributing to the long-term success of the
Company.
The Company maintains ongoing interactions with a
variety of stakeholders including shareholders, debt
providers, staff, national, cantonal and municipal
government administrative and environmental
bodies, NGOs, the local community and suppliers.
The Board is committed to providing shareholders
with clear and timely information on Adriatic’s
activities, strategy and financial position. General
communication with shareholders is coordinated
by the Chairman and Managing Director and Chief
Executive Officer together with the General Manager
– Corporate Development.
Corporate engagement can take many forms,
including surveys, focus groups, town hall meetings
and one-on-one conversations. It is a key aspect
of corporate social responsibility and is often
considered essential for companies seeking to build
and maintain a positive reputation and achieve long
term success.
The Company publishes on its website a range
of information which helps current and potential
shareholders to assess the Group’s position and
prospects. This includes investor presentations,
technical reports on projects, resource estimates,
drilling updates, annual and interim financial
statements, sustainability reports, quarterly activities
report, business strategy documents, governance
materials, and regulatory announcements, among
others.
CONSIDERATIONS OF KEY
STAKEHOLDERS
SHAREHOLDERS
Acknowledging that a majority of private investors
hold shares via nominee shareholders, limiting
the full exploitation of their shareholder rights,
the Company is committed to engaging with
all shareholders, not just institutional ones. The
General Manager – Corporate Development, based
in London, manages shareholder inquiries and
collaborates with the Company's brokers and public
relations advisers to facilitate engagement.
BOARD REVIEW
To keep the Board informed about the perspectives
and concerns of major shareholders, briefings
from the CEO, CFO, Chairman, General Manager –
Corporate Development, and the Company's brokers
are regularly conducted. External consultants
provide share register analyses on a monthly basis,
along with significant investment reports from sell-
side analysts.
The Company’s annual general meeting, open to all
shareholders, will be held following the publication
of annual results and the issuance of the Notice of
Annual General Meeting.
LOCAL STAKEHOLDERS
Adriatic Metals recognises that its activities and
the ongoing operation of the Vareš Silver Operation
create significant potential impacts on, as well
as opportunities for, local people. The ongoing
management of environmental and social issues
is based on an international standard of ESIA. In
addition, the Company is committed to regular
consultation and engagement with the community,
including through a Community Information Centre
and a Public Liaison Committee.
KEY CONSIDERATIONS UNDER
SECTION 172(1)
A. THE LIKELY CONSEQUENCES OF
ANY DECISION IN THE LONG TERM
The Board prioritises the long-term success of
the Company, evaluating decisions with a focus on
sustained growth and value generation. Strategies,
such as ongoing engagement and environmental
impact assessments, contribute to the Company’s
long-term success.
B. THE NEED TO FOSTER BUSINESS
RELATIONSHIPS WITH KEY
STAKEHOLDERS
The Board acknowledges the significance of
relationships with key stakeholders, emphasising
effective engagement and relationship-building.
Analyses of stakeholder engagement mechanisms
and ongoing reports ensure a comprehensive
understanding of stakeholder feedback and insights.
C. THE DESIRABILITY OF MAINTAINING
A REPUTATION FOR HIGH
STANDARDS OF BUSINESS
CONDUCT
The Board oversees the Company's culture, values,
and reputation. A commitment to high standards of
business conduct is maintained through compliance
reports, stakeholder engagement, and metrics that
contribute to upholding the Company's reputation.
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
D. THE IMPACT OF THE COMPANY’S
OPERATIONS ON THE COMMUNITY
AND ENVIRONMENT
The Board actively monitors the Company’s
community and environmental impact through
reporting from senior management, aligning with
ESG objectives. Comprehensive discussions on
environmental issues and ongoing engagement with
the local community guide decision-making.
E. THE NEED TO ACT FAIRLY AS
BETWEEN MEMBERS
The Company's Directors engage with shareholders
through various channels, ensuring accessibility and
transparency. Regular meetings, comprehensive
online updates, and the publication of key
information contribute to fair and transparent
communication with members.
In adherence to our purpose and strategy, these
considerations contribute to the long-term
sustainable success of the Company.
The following table sets out the Company’s key
stakeholder groups, how the Company has engaged
them during the year.
Key Stakeholder groups
Key topics raised
How and why we engage
Engagement outcomes
Shareholders
Current or potential individuals
or entities that may own shares
have a financial interest in its
performance through changes
in share price or payment of
dividends.
Shareholders also have the right
to vote on certain important
matters, such as the election
of directors and approval of
major corporate actions such
as mergers, acquisitions and
fundraises.
As the Company progresses
through development and into
production, shareholders have
raised the following topics:
•
Operational ramp up at the
Vareš Silver Operation
•
Location of the Tailings Storage
Facility
•
Management changes
•
Geopolitical impacts on
supply chain and sourcing key
equipment
•
NGO activity
•
Inflationary impact on costs
•
Climate change / TCFD
reporting
•
Political climate in Bosnia and
Herzegovina
•
Executive remuneration versus
targets
The Company maintains a regular dialogue
with investors, providing them with such
information on the Company’s progress as
commercial confidentiality, market abuse
rules and other legal requirements permit.
The Company typically holds meetings
with institutional investors and other large
shareholders following the release of major
news flow, interim and annual financial
results.
The key mechanisms of engagement
included:
•
The Annual General Meeting
•
Annual and Interim Results
•
Investor roadshows and presentations
•
One-on-one investor meetings with
the Chairman, CEO and CFO
•
Access to the Company’s brokers and
advisers
•
Regular news and operational updates
•
Social media posts
•
Site visits for existing and potential
investors and equity analysts
Shareholders with queries are encouraged
to contact Klara Kaczmarek, the
Company’s General Manager – Corporate
Development at
klara.kaczmarek@adriaticmetals.com
The Company has engaged with investors on topics
of strategy, governance, operational updates and
performance.
In addition to a number of investor roadshows and
one-to-one meetings, the Company conducted a
number of investor site visits in 2024 which provided
direct experience of the progress of the Vareš
Silver Operation and understand more about the
development process.
The Company also held investor roadshows and
attended key industry conferences globally.
Existing and potential
future debt providers
Individuals or entities that provide
loans to fund operations and
finance growth in exchange for
fixed income payments, such as
interest and principal repayments.
The Orion Debt Finance Package
agreements contain a number of
financial and other operational-
related reporting obligations that
the Company must comply with on
a regular basis; and has done so
during the year.
During the year, one-to-one meetings with
the CEO and/or CFO were undertaken on a
regular basis to provide regular updates on
progress of the Vareš Silver Operation.
Regular technical team meetings have
taken place between the Company and
Orion Mine Finance throughout the
construction phase of the Vareš Silver
Operation.
The CEO and CFO maintained regular and
open communications with Orion Mine
Finance and Queens Road Capital, as well
as external consultants, on an ongoing
basis.
In 2024, Adriatic Metals hosted site visits for Orion
Mine Finance, Trafigura and Queens Road Capital.
Directors’ Section 172(1) Statement - continued
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Directors’ Section 172(1) Statement - continued
Key Stakeholder groups
Key topics raised
How and why we engage
Engagement outcomes
Workforce
Employees are critical to Adriatic Metals’
culture and have a vested interest in the
Company’s success.
Employees have a direct impact on the
Company’s performance and can also be
impacted by its decisions.
Employees have raised a number of topics
during the course of the year, including:
•
Compensation and benefits
•
Health and safety
•
Career development
•
Diversity and inclusion
Adriatic Metals maintains an open line of communication
between its employees, senior management and Board.
The Group monitors health and safety on a daily
basis and reports performance of lost time injury and
frequency rates.
The Group undertakes annual group-wide employee
surveys to capture important insights and monitor
workforce satisfaction.
The CEO and CFO report regularly to the Board,
including the provision of board information. Key
members of the finance team are invited to the Audit &
Risk Committee meetings.
There is a formalised employee induction into the
Company’s corporate governance policies and
procedures.
Senior management regularly visit the operations in
Bosnia and Herzegovina and Serbia and engage with
employees through one-on-one and staff meetings,
employee events and operational updates.
Health & safety
The Company maintained an excellent safety record during the year. The 12-month
rolling Lost Time Injury Rate (‘LTIFR’) and Total Recordable Injury Rate (‘TRIFR’) were
0.45 and 1.05 respectively.
Training
2024 focused on a fit for purpose Technical Training solution, to ensure operational
readiness and safe production.
Diversity
The Company has maintained a strong level of female representation in the workforce
of 24%.
Employee Survey outcome
In October 2024, an Employee Survey was conducted to gauge the performance of
senior management’s delivery of the Company’s values and visions.
Employee Council
In Q4 management conducted an extensive review of the legal and organisational
framework governing the existing Employee Council, with significant changes made.
Meetings take place monthly and Employee Council elections to take place in Q3 2025.
Governmental and
NGO bodies
Adriatic Metals maintains strong
working relationships with governmental
representatives at all levels in the host
regions where we operate, to foster
continual dialogue and build trust.
Governmental bodies are critical in
determining local regulations and can
influence decision-making through their
input, feedback, advocacy and policies.
We also engage with independent, non-
governmental organisations that focus on
socio-political and environmental goals
such as human rights, education, business
ethics, health, safety and biodiversity
preservation.
Areas that were raised and discussed
during the course of the year, included:
•
Licencing and permitting
•
Site visits
The Company engages with local (Municipal), regional
(Cantonal) and national (Federal) government in Bosnia
and Herzegovina.
In Serbia the Company engages with local (Municipal)
and national government.
In addition to statutory reporting the Company
regularly updates the government departments.
Open, continuous engagement is key to developing a
successful permitting regime.
The Country Managers report regularly to the Board on
progress with obtaining licences and permits.
Adriatic Metals is committed to being a long term
participant in both Bosnia and Herzegovina and Serbia
with a firm commitment to each country’s sustainable
development. We are committed to conducting our
relationships on the basis of transparency, partnership,
integrity and shared prosperity.
Bosnia and Herzegovina
On 5 March 2024, Adriatic celebrated the inauguration of its mine at the Vareš
Processing Plant, an occasion attended by government officials and diplomats. The
event continued in the town with Vareš Fest, a local celebration featuring music, crafts,
and cuisine. The milestone occasion underscored the mutually beneficial relationship
between the Company and the local community, reaffirming Adriatic’s steadfast
dedication to sustainability and fostering strong community relations.
Throughout 2024 Adriatic Metals also conducted several site visits for guests such
as the British Embassy, the Prime Minister and Cabinet of Zenica-Doboj Canton,
the Federal Minister of Environment, and representatives from various Balkan
governments.
During 2024 eight key permits were successfully completed, as well as 39 permits for
the execution of works on mining projects and facility usage and six urban planning
consents for haulage road.
On 24 October 2024, Adriatic received the permits and licence for the Veovaca
Tailings Storage Facility.
Serbia
During 2024 two applications were made to the Ministry of Mining and Energy, one
for permit extension and one for permit retention. Application for permit retention for
Rudno Polje Raška was submitted in September 2024, and application for Kaznovice
permit extension was submitted in October 2024. Both of these applications were
submitted on time, and Ministry decisions are pending.
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Directors’ Section 172(1) Statement - continued
Key Stakeholder groups
Key topics raised
How and why we engage
Engagement outcomes
Community
Establishing and maintaining good relations
with the local community throughout the
development, operation and ultimately
closure of the mine is vital for the
Company’s social licence to operate.
Principally, the Company needs to engage
with its affected communities in order to
build trust. Community engagement will
inform better decision making, particularly
during the ramp up stage of operations.
Bosnia and Herzegovina
The near-mine communities in Vareš and
Kakanj and the wider population of the
municipalities and Canton of Zenica-Doboj.
Serbia
The near-mine communities in the
Municipality of Raška, the national park of
Kopaonik and the wider population of both
Southwest Serbia and Northern Kosovo.
As Adriatic Metals is progressing towards
production, the Company is starting to
have significant social, economic and
environmental impacts on the local
community and surrounding area, leading
to questions around:
•
Strategic plans in place for the
successful execution of infrastructure
undertakings such as the road
reconstruction.
•
Employment opportunities.
•
Involvement in Adriatic Metals
sponsored events and education
programmes such as English language
courses.
•
Installation of electric cables.
Adriatic Metals continues its local engagement through
the Vareš Information Centre and Public Liaison
Committee, proving an excellent forum for community
feedback.
This includes dissemination of operational
developments, the advertisement of the public
consultations and the Company’s approach to
sustainability.
Social, print, radio and television media platforms have
all been utilised.
Procurement and contracting
The Company employs the majority of its staff from
the local municipalities of Vareš and Kakanj. In addition,
Local Business Development Officers are in place to
engage with local suppliers and contractors.
In 2024, Adriatic Metals has continued the practice of publishing newsletters aimed at
the local community and available in print at the Information Centre in Vareš and online
on Company website, providing valuable information to interested parties. These
newsletters serve as a means of keeping stakeholders informed about the latest
developments, including updates on sustainability initiatives, community engagement
activities and interviews with important people from the local community.
The Company demonstrated ongoing social responsibility in Vareš, Kakanj and Raška
through community contributions, benefiting various local organizations, emphasizing
the importance of community engagement for trust and positive relationships.
Adriatic Metals has been actively engaging in several activities within the Kakanj
Municipality to enhance operational capabilities and strengthen community relations.
Key initiatives include:
•
Opening of an information centre in 2025
•
Employment of local workers
•
Increased active coordination with local authorities
Suppliers
Suppliers are fundamental to ensuring that
Adriatic Metals can operate the Vareš Silver
Operation safely and efficiently.
Using quality suppliers ensures that the
Company can meet the highest standards
of performance and safety across all areas
of the business, including contractors and
subcontractors.
During the construction and ramp-up
phase of the Vareš Silver Operation,
Adriatic Metals engaged key suppliers
under commercial engineering and
supply contracts to deliver the mine and
plant equipment and support ongoing
production.
The procurement team has undertaken the pre-
qualification of several engineering providers and
mining contractors, with engagement including:
•
One-on-one meetings between management and
suppliers.
•
Contact with procurement departments and
accounts payable.
•
Membership of Cantonal and National Chambers of
Commerce.
•
Presentations at National trade events and forums.
At a local level, the Company has also engaged and
partnered with smaller companies, some of which are
independent, or family run businesses.
Bosnia and Herzegovina
Adriatic Metals’ engagement with suppliers for the Vareš Silver Operation aims to
ensure strategic alignment. Through transparent communication and collaboration,
Adriatic Metals continues to uphold high standards of performance and safety while
optimising procurement.
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Annual Report for the Year Ended 31 December 2024
30
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Principal Decisions by the Board During the Period
The Company defines principal
decisions as those which potentially
have a long-term strategic impact and
are material to the Group, and/or are
significant to key stakeholder groups.
In making the following principal
decisions, the Board considered
balancing the needs of different
stakeholders, the need to maintain
a reputation for high standards of
business conduct, the impact on the
environment and the interests of the
shareholders:
QRC BOND CONVERSION
In March, the Board approved the issue of 10,981,770
new ordinary shares in the Company to Queens Road
Capital (QRC) at the conversion price of $1.8212 (GBP
equivalent £1.4394) per share following QRC’s election
to convert their $20,000,000 unsecured convertible
debentures into equity (which followed the Board’s prior
approval of the decision to issue an optional redemption
notice to QRC).
TERMINATION OF MINING SERVICES
CONTRACT – MOVE TO OWNER-
OPERATOR
In April, the Board approved the entering into of a
settlement and termination agreement (“Termination
Agreement”) with Adriatic’s mining contractor, Nova Mining
and Construction d.o.o, (‘Nova’), to commence the transition
for Adriatic to take over as owner-operator of Rupice Mine.
Pursuant to the Termination Agreement, Adriatic and Nova
agreed constructive transition arrangements to ensure a
seamless handover of mining operations.
ORION ADDITIONAL $25M LOAN
FACILITY
In April, the Board approved the Company entering into an
additional short-term loan facility with Orion Mining Finance
of $25m, to be available in a single tranche during the
period 1 September 2024 - 31 December 2024 as required
for project-related purposes. By agreement with Orion, this
additional facility was cancelled in December and, at the
same time, the First Repayment Date for repayment of the
first instalment under the Orion Debt Finance Package was
extended to 31 March 2025.
EQUITY FINANCING
In May, the Board approved an institutional placement of
approximately $50.0m (approximately AU$75.8m) via the
issue of 18,254,838 CHESS Depositary Interests (“CDIs”)
over new fully paid ordinary shares in the Company at
AU$4.15 per CDI. The equity financing was completed
during May 2024.
EXECUTIVE MANAGEMENT CHANGES
In August, the Board approved the following executive
management changes following the resignation of
Paul Cronin, former CEO and Managing Director: Laura
Tyler was appointed interim CEO and Sanela Karic was
appointed Executive Director for Corporate Affairs.
In October, the Board confirmed the appointment of
Laura Tyler as Adriatic’s permanent CEO and Managing
Director.
NON-EXECUTIVE DIRECTOR CHANGES
In June, the Board approved the appointment of Eric
Rasmussen to the Board of Directors as a Non-Executive
Director. In October, Mirco Bardella was appointed a Non-
Executive Director and Sandra Bates was appointed to
the newly created role of Senior Independent Director.
TRAFIGURA PREPAYMENT FINANCING
In December, the Board approved the entering into
of a term sheet for a $25m concentrate prepayment
arrangement with Trafigura Pte Ltd, which included the
delivery of zinc and lead-silver concentrates at market
prices over a 12-month period. The prepaid amount
is unsecured, includes a 3-month grace period and
will be paid down in line with deliveries over the final
nine months of the arrangement. The transaction was
completed post year end in January 2025.
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Annual Report for the Year Ended 31 December 2024
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
OVERSIGHT
Adriatic Board of Directors
Executive Team
Operations and Functions
Human Resources
Risk
Sustainability Committee
Sustainability-related policies and non-financial metrics
The Board supervises and evaluates management, oversees business
performance, sets policies and approves strategies and goals.
All Sustainability-related matters sit with the CEO who remains informed on sustainability-related
matters on a weekly basis. In 2025, the recently expanded role of General Manager Sustainability
and Business Optimisation will be key in the reporting of sustainability-related matters.
The Executive Team has collective responsibility for delivering the Company’s strategy and
operating performance and ensuring that the appropriate skills and competencies are held within
the company to address the diverse range of impacts, risks and opportunities within the business.
Includes exploration, development and
contractor teams on operations as well as
other sustainability-linked functions such as
sustainability and community.
Responsible for managing Adriatic Metals’
approach to HR and all relevant risks and
opportunities, oversight of the companies’ HR
management system and processes.
Responsible for management
and ownership of Adriatic Metals’
Health and Safety performance and
management systems.
Relevant policies on topics such as anti-bribery and corruption, climate change, human rights,
health and safety, human resources, social performance and community, environment and
procurement.
MANAGEMENT
Sustainability governance structure
MANAGING SUSTAINABILITY-
RELATED RISK AND
OPPORTUNITY
We believe that sustainability
considerations must be built into
the foundations of what we do.
Adriatic Metals is committed to managing sustainability-
related risks and opportunities, embodying a
comprehensive approach led by our Executive Team. The
Board bears ultimate responsibility for the Company’s
environmental, social and climate change management.
This crucial leadership role is complemented by
the General Manager Sustainability and Business
Optimisation, who leads a team of experienced social
and environmental professionals tasked with delivering
the Company’s sustainability strategy. This strategy
includes targeted initiatives to address climate-related
risks and seize emerging opportunities.
Adriatic Metals views the management of sustainability-
related risks and opportunities not only as a strategic
imperative but as a collective responsibility that affects
every level of our organisation. Through active leadership,
operational excellence, and community engagement,
we strive to reach a sustainable future aligned with our
values and responsibilities.
SUSTAINABILITY POLICY
Adriatic Metals’ Sustainability Policy regulates and provides guidance for the company’s
management of activities to minimise adverse workforce, community or environmental
impacts and to realise opportunities in these areas.
The Company recognises that its principal concern must be the wellbeing of its
people, whether employees, contractors, consultants, affected communities or other
stakeholders. The health and safety of these stakeholders, and the preservation of the
environment in which they work or live, is a critical factor in measuring the long-term
success of the company’s business.
CLIMATE CHANGE POLICY
As stated in our Climate Change Policy, Adriatic Metals recognises that climate change
represents one of the most significant challenges facing the world today and supports
the goals of the Paris Agreement. Our aim is to minimise our contribution to greenhouse
gas emissions, to consider and plan for the physical risks of climate change on our
operations and to work with our host communities to build their understanding of their
resilience to the physical impacts of climate change.
The responsibility for implementing the policy extends to all employees and contractors
engaged in relevant activities within our operational sphere. Company managers play
a pivotal role in promoting and ensuring compliance with this policy, as well as any
specific site-level policies and practices. In the Vareš Silver Operation, our commitment
to sustainability is further manifested through advanced stakeholder engagement,
facilitated by a comprehensive plan. Activities such as establishing a Public Liaison
Committee (PLC) contribute to transparent information dissemination, fostering
collaboration and understanding.
Chaired by Eric Rasmussen. Responsible for
overseeing the development and implementation of our
sustainability and ESG strategy.
Areas of focus include: HSSE, HR (including labour
rights, DEI etc.), Human Rights, Climate Change, Supply
Chain and Community.
Sustainability Review
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Sustainability Review - continued
SUSTAINABILITY
FRAMEWORK AND
NON-FINANCIAL AND
SUSTAINABILITY
INFORMATION
STATEMENT
The table to the right shows how we assess
and manage our operational impacts
and includes information required by
Section 414CA and Section 414CB of the
Companies Act in relation to:
Building
capability
COLLEAGUES
Driving shared
prosperity
COMMUNITY
Meeting environmental
challenges
CLIMATE & ENVIRONMENT
Transparency and
accountability
COMPANY
1. Zero life altering injuries
(this would include fatalities,
physical and health injuries)
2. Total recordable injury
frequency < 8
3. 25% of women employed
to 2024
4. Build capacity and
capability in local workforce
5. Zero degradation in public
health from our activities
6. Socioeconomic
contribution
7. Community engagement
and development
8. Social investments
9. Build capacity in local
supply chain
10. Zero serious environmental
incidents
11. Rehabilitate at least 110
ha of degraded forest
together with local forestry
authorities
12. Reduce fresh water use
through recycling
13. Design and achieve
100 % of recycling waters
in process plant and
underground mining
14. Corporate governance and
business ethics
15. Zero tolerance for bribery
and corruption
Long-term success criteria
2024 Facts and Highlights
Pillar
549 total employees
24% female employees
1.05 TRIFR
0.45 LTIFR
1
fatality of a sub-contractor
during construction
44,464
total hours of internal and
external training
79%
of employees are proud to work
for Adriatic Metals
2,630
visits to the Vareš Information
Centre
74%
of spending on local suppliers
in Bosnia and Herzegovina
152 local contractors
12,134 tCO2e
scope 1 and scope 2 emissions
0.726 Mm3
tailings capacity
4.5ha
of reforestation complete with
10,000 trees planted
Built water treatment facility with
40 m3/h
of treatment capacity
12
environmental incidents
4
Sustainability Committee
meetings
In addition to the above, other
related information can be found
here:
•
Environmental and climate
matters, including Task Force on
Climate Related Financial (TCFD)
Disclosures (pages 33-42)
•
Our business model (page 8)
•
Principal risks and how they are
managed (pages 22-25)
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Sustainability Review - continued
TCFD
CLIMATE RISK MANAGEMENT
INTRODUCTION
Throughout the year, the governance of climate-related
matters has remained consistent. Both the Board
and management teams have maintained a proactive
approach to engaging with climate-related issues. A
comprehensive climate report was commissioned,
addressing both physical and transitional risks. This
report evaluated the potential implications of the National
Determined Commitments (NDC), current and upcoming
legislation impacting the business, carbon-related taxes
like the EU’s Carbon Border Adjustment Mechanism
(CBAM), and relevant litigation. It also considered a range
of physical scenarios, using TCFD-suggested tools, that
may impact the business and its value chains.
As the first year of operational mining and processing
activity, there has been a significant shift in the Company’s
emissions profile. Moving into 2025, analysis of our
emissions profile will inform our decarbonisation planning.
BOSNIA
TRANSITIONAL FACTORS
Net-zero
Bosnia and Herzegovina is a signatory of the Sofia
Declaration of the Green Agenda for the Western
Balkans, a commitment to collaborate with the
European Union in achieving net-zero emissions
across the continent by 2050. As part of this
declaration, the country has pledged to reduce and
gradually phase out coal subsidies, in alignment
with state aid regulations. Bosnia and Herzegovina
has also committed to actively participating in the
“Coal Regions in Transition in the Western Balkans
and Ukraine” initiative, through which the European
Commission and partners such as the World Bank
aim to help countries in the region shift away from
coal to a carbon-neutral economy.
Power
Coal and Hydro form the bedrock of Bosnia and
Herzegovina’s power generation capacity, comprising
67% and 29% respectively according to the IEA.
Despite the country’s national energy and climate
plan for 2023–2030 that aims to close 410 MW
of coal-fired power plants, 2024 saw an uptick in
coal-powered energy generation. The plan also aims
to construct 2 GW of renewable energy capacity,
including 1.5 GW of solar photovoltaic (PV) by 2030.
Carbon price mechanism
Bosnia and Herzegovina continues to assess the
implications of the EU’s Carbon Border Adjustment
Mechanism (CBAM). While CBAM comes into effect
for certain products from 2026, which will impact the
country’s energy generation businesses, the exact
date for the products produced by Adriatic Metals
is unknown. Additionally, the country has mooted
establishing its own carbon tax, but details are yet to
be published.
Nationally Determined Contributions (NDC)
commitments
Bosnia and Herzegovina’s latest NDC, submitted in
2021, aims to reduce its GHG emissions by 33%
by 2030 versus a 1990 baseline year, and by 62%
by 2050. Decarbonisation could be accelerated
if the country receives international financial and
technological assistance, particularly for the
decarbonisation of the mining sector.
Disclosure related to Task
Force on Climate-Related
Financial Disclosures
The Company welcomed Eric Rasmussen as
Chair of the Sustainability Committee. Eric has a
deep understanding of the climate factors that
may influence the success and resilience of
Adriatic Metals.
In October 2024, a storm and subsequent flooding
impacted our downstream supply chain in the central
and southern regions of Bosnia and Herzegovina.
Whilst there was no impact to the Company’s mining
or processing operations, damage to certain sections
of railway line necessitated trucking of concentrate by
road to the port of Ploče, which had a marginal negative
impact on operating costs.
The 32kW solar infrastructure is now
operational, providing power to both
processing and administrative facilities
Now that the Company is
operational, it will commence
work to define its decarbonisation
trajectory and Net Zero targets.
It intends to announce interim
targets and anticipated Net Zero
pathway in 2025.
SPOTLIGHTS FOR THE YEAR
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Sustainability Review - continued
PHYSICAL CLIMATE RISK
ASSESSMENT
Bosnia and Herzegovina’s diverse climate profile is
influenced by its expansive size, varied topography,
and unique landscape. The country encompasses
temperate continental climates in the north and
central regions, colder sub-mountainous and
mountainous climates, and warmer climates along its
coastline. The influence of the Adriatic Sea and the
Dinarides Mountains, running parallel to the coast,
plays a pivotal role in shaping these climatic zones.
The southern region of Bosnia and Herzegovina
benefits from abundant sunlight, contributing to its
distinctive Mediterranean climate in the coastal and
lowland Herzegovina area. This climatic diversity is a
key factor in Bosnia and Herzegovina’s biodiversity,
ranking among the largest in Europe. The country
experiences three distinct geological and climatic
regions: the Mediterranean, Euro Siberian-Bore
American, and the Alpine-Nordic.
To assess the potential impact of climate-related
risks on Adriatic Metals, the company conducted a
desktop-based evaluation of the physical risks. This
involved utilising a range of online tools that focus
on specific issues, such as water stress, flooding,
landslide and forest fire, and provide analysis for
each of these risks under various IPCC-designed
scenarios. Each risk was reviewed during a workshop
with key personnel to consider the identified risk
and to ensure the risk is captured within company
documentation, including management and
response plans, and assigned an owner.
During the year, a critical piece
of infrastructure within Adriatic
Metal’s value chain failed during a
storm event. While the event itself
cannot be definitively linked with
the effects of climate change, it is
acute weather events such as these
that the company must be aware of
and prepared for as it matures as a
business.
I look forward to bringing my
experience to bear on our assessment
of impact, risk and opportunity as
Chair of the Sustainability Committee,
as well as supporting the process
to defining our decarbonisation
pathway, which is so important to our
stakeholders. Together, these are
going to be essential for assessing the
financial impact of the EU’s CBAM on
our operations.
Eric Rasmussen
Non-Executive Director and Chairperson of the
Sustainability Committee
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Risk
Water stress
(Aqueduct Water Risk Atlas)
Flooding
(Aqueduct Water Risk Atlas)
Landslide
(Think Hazard)
Extreme heat
(Think Hazard; Climate Analytics)
Wildfire
(Global Forest Watch; Think Hazard)
Desktop
Research
LOW
HIGH
HIGH
MEDIUM
HIGH
Management
Evaluated Rating
MEDIUM
HIGH
MEDIUM
MEDIUM
HIGH
Commentary
While desktop data indicated
this to be a low-risk matter, now
and into the future, management
studies recognise an increase in
water stress during the summer
months. This has informed
Adriatic’s water management
planning.
Flooding at site because of rain
and meltwater during the winter
and spring seasons has been
identified as a risk to the business.
Preventative and mitigating
actions are connected to Adriatic’s
water management planning with
additional capacity to manage
extreme events to be included in
capital expenditure.
Landslides caused damage
to the railway networks within
Adriatic’s supply chain in Oct
2024, slowing distribution of
concentrate and increasing
operating costs. Adriatic
is acutely aware of the
mountainous terrain in which
it operates and through which
it hauls ore and concentrate.
While the haul roads are new
and have been designed to
meet the latest standards,
ongoing monitoring forms part
of our management plans.
With temperatures dipping to
-10°C during the winter and
above 40°C in the summer,
Adriatic’s operations experience
a great annual temperature
range. Adriatic has designed
its operations and provided
the appropriate equipment to
its personnel, in addition to
specifically designed operation
procedures, to mitigate these
effects.
Adriatic operates within a highly forested
area.
Fires have been documented in recent
years, including within Bosnia’s national
parks, but have not caused material
issues to life or infrastructure.
Adriatic has considered forest fire within
its emergency response plans.
Sustainability Review - continued
SUMMARY FINDINGS
Further financial analysis is provided within the group-wide risk and opportunity table below.
In Focus: Water strategy in action
Effective water management is crucial for
mining operations, especially in regions like
Vareš, where water-related challenges such as
seasonal water stress and excess flood water
pose significant risks. Ensuring the sustainable
use and treatment of water is vital for not only
minimising environmental impact but also
contributing to the resilience of local ecosystems
and communities. The Vareš Silver Operation
exemplifies this approach, incorporating innovative
water conservation and management practices to
address these challenges.
The Vareš Processing Plant (VPP) has achieved
a closed-loop water management system,
where water is entirely circulated within the
plant. This ensures that no waste or process
water is discharged into the natural environment,
exemplifying the Company’s commitment to
sustainable operations.
At the Rupice Mine, a state-of-the-art water
treatment lagoon has been constructed to manage
all contact water. After undergoing treatment,
approximately 30% of the water is reused within
the mining operations, while the remaining 70%
is safely discharged into natural recipients,
adhering to strict environmental standards. This
system underscores the operation’s dedication to
reducing water waste and minimising its ecological
footprint.
To support its water needs, the Rupice mine draws
drinking water from the Bukovica intake. Technical
water requirements are met through a combination
of the Borovicki stream, the Vruči stream, and
treated water. Meanwhile, the VPP sources its water
supply from the municipal “Lalića mlin” system.
These initiatives reflect the Vareš Silver Operation’s
innovative approach to water conservation
and management, ensuring that environmental
considerations remain central to its operations.
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Sustainability Review - continued
SERBIA
TRANSITIONAL AND
PHYSICAL FACTORS
Net-zero goal and strategy
Serbia does not currently have an official
net-zero greenhouse gas emissions target;
however, it aims to reach a 40% share of
renewable energy in final energy consumption
by 2040. Recent assessments of its 2013
renewable energy action plan indicate that
investment is behind schedule. In its 2022
NDC, Serbia set an emissions reduction target
of 13.2% compared to 2010 level by 2030.
Power
In 2021, some 62% of Serbia’s generation
came from coal, while 30% came from large
hydro. Generation from renewable sources of
power, however, has been picking up in recent
years. Serbia is not subject to the EU carbon
price, unlike its neighbouring countries, the
country benefits from exporting cheap coal
power to EU countries.
Physical climate risk assessment
Climate change projections indicate that
Serbia, along with the broader Western
Balkans region, is likely to experience
continued temperature increases, along with
more frequent and prolonged droughts and
wildfires.
Adriatic Metals drew upon the ND-Gain
Country Index and climate risk reports from
the University of Notre Dame to assess the
potential impact of climate-related risks on
the Company in Serbia. According to the
tool, Serbia’s low vulnerability score and high
readiness score places the country in the
lower-right quadrant of the ND-GAIN Matrix.
Adaptation challenges still exist, but Serbia
is well positioned to adapt. Serbia is the 99th
most vulnerable country to climate change
and the 82nd most ready country.
Risks and opportunities
Type
Potential impact on Adriatic Metals
Timeframe
Adriatic Metals controls
and mitigants
TRANSITIONAL
MARKET
Demand for
our products
Meeting Net Zero ambitions, as set out in the
Paris Agreement, requires global shift in energy
generation, storage and utilisation. The company’s
primary products can be used to support the
growing EV market, renewable and low carbon
fuel in power generation, and in energy storage
and energy grid expansion. We consider the net
effect to be positive for silver, zinc, lead and copper
product streams. Consequently, and irrespective of
the current offtake agreement that Adriatic Metals
has in place, we believe this will support revenue
generation for the business.
Short Term,
Medium Term &
Long Term
•
Responsible production of
metals
Increased
cost of
capital
Restricted availability of debt and/ or equity
financing for heavy emitting industries could impact
on the ability to fund acquisitions and/or to fully
develop existing assets in an optimal timeframe.
Medium Term &
Long Term
•
Deliver transparent, robust
GHG emissions disclosures
•
GHG mitigation
incorporated into
corporate funding model,
such as commitment to
meet EBRD criteria
•
Utilising management
expertise, consider
sustainability-linked
financing initiatives, where
cost of funds is linked to
ESG outcomes
Enterprise-wide considered
climate risks and opportunities
The Company recognises that being a mining
business, which is considered energy intensive, may
present certain climate-related risks to the business,
and fundamentally believe that the business itself
- which is to produce metals that can be used
to support both the energy and transportation
transition - provides significant opportunity.
CLIMATE RELATED RISKS
Adriatic Metals considers climate-related risks under
two broad headings: physical risk and transition risk
and recognise climate litigation as an emerging third
risk category.
Physical risk can be divided into two types: acute
risks from increased severity of extreme weather
events such as storms and floods and increased
incidence of wild-fires and other climate-related
emergencies; and chronic risks from changes in
precipitation patterns, extreme variability in weather,
rising mean temperatures, rising sea levels and
increased incidence and intensity of droughts.
Transition risk meanwhile refers to the actual and
potential impacts of risks associated with the energy
transition on our business, strategy, and financial
planning. These risks are considered under four
headings suggested by the TCFD – Policy and
Legal, Technology, Market and Reputation – and is
the approach taken in carrying out the company’s
climate risk assessment.
The physical and transition risks we have identified,
based on the assessment of their impacts on the
Company, and the actions we are taking to mitigate
these risks, are summarised in the table below. We
have assessed potential impact against short-,
medium, and long-term time horizons which we
define as up to two years, between two and ten
years, and ten years and beyond respectively.
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Risks and opportunities
Type
Potential impact on Adriatic Metals
Timeframe
Adriatic Metals controls and mitigants
TRANSITIONAL
POLICY
Cost of
carbon
Bosnia and Herzegovina intends to implement a system for CO2 pricing
and trading by January 2026, as the country aims to avoid paying the
European Union’s carbon border tax. Indeed, the EU will apply a Carbon
Border Adjustment Mechanism (CBAM) from 2026 on energy-intensive
products (initially applying to products such as iron, steel, aluminium,
cement, fertiliser) and electricity from countries without a national
carbon pricing scheme. The impact of such this mechanism will impact
financial performance. The business may consider increasing its
capex budget to reduce its emissions profile, by increasing investment
into its own renewable energy power generation. The business may
also consider strategic partnerships with renewable energy power
generation partners that would require investment.
Short Term,
Medium Term &
Long Term
•
Continue to assess the operational emissions
footprint of the business and to identify
credible investment opportunities to
decarbonise
•
Maintain ongoing monitoring of policy and
legislation development in countries of
interest.
Increased
regulation
and reporting
requirements
The London Stock Exchange is amongst the global leaders for ESG
and climate-related disclosure. The Company also operates in Bosnia
and Herzegovina and Serbia, who possess differing regulatory maturity
relative to climate change. The failure to meet the highest of these
expectations may result in fines, impacts to reputation and access to
future commercial endeavours.
Short Term &
Medium Term
•
Maintain transparency relating to all ESG
issues.
•
Comply with the highest reporting standards.
•
Ensure continued engagement with external
stakeholders.
REPUTATION
Changes
in market
requirements
Increasing expectations for companies to define a clear net zero
strategy could mean the Company is at risk of being associated with the
negative impacts of climate change.
Medium Term
•
To define a Net Zero strategy, setting and
communicating interim decarbonisation
targets.
LEGAL
Increase in legal
cases being
brought against
heavy emitting
industries
With the increased appreciation for the link between GHG emissions and
physical climate impacts, and a growing body of regulation, raises the
risks of climate-related litigation. Such litigation would impact financial
performance directly, with reputational issues potentially impacting cost
of access to capital.
Medium Term &
Long Term
•
Robust compliance management and
regulation scanning
•
Increased awareness, training and skillset
development amongst operating teams,
management and board
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Risks and opportunities
Type
Potential impact on Adriatic Metals
Timeframe
Adriatic Metals controls and mitigants
PHYSICAL
Chronic
Drought, variable
rainfall patterns
and water stress
According to Aqueduct, the World Resources Institute online tool,
drought and water stress are anticipated to increase in Bosnia over
the coming decades, based on current science and environmental
forecasts. Consequently, this may drive direct increases in OpEx costs
for the business to acquire an increasingly precious resource. Indirectly,
operations may be affected by local communities as businesses
consuming large quantities of water, or those considered to be water
intensive, contend with protests.
Medium Term &
Long Term
•
The business has taken this issue incredibly
seriously during the construction and
commissioning phase and provides detail in a
case study below as to how it has reduced its
reliance on access to water.
•
Adriatic Metals has radically redesigned its
water management processes at Vareš,
dramatically reducing water requirements.
•
Communicate water management strategies
and utilisation to stakeholders, and
increasingly to local stakeholder groups to
ensure true appreciation of Adriatic’s approach
to this precious resource.
Increased
ambient
temperatures
According to the World Bank’s Bosnia and Herzegovina Climate Risk
Report, Bosnia and Herzegovina has increasing temperature anomalies
under the IPCC’s RCP 8.5 – business-as-usual, high emissions scenario.
Increased peak temperatures could adversely affect the workforce
through dehydration, heat stroke etc., which may affect productivity
levels that could impact financial performance, and cause plant and
machinery to overheat impacting maintenance schedules, as well as
OpEx costs.
Additionally, most of the operational area is surrounded by forestry,
increased temperatures may result in increased risk of forest fires.
Long Term
•
Clearly defined occupational HSSE policies
and procedures that inform personnel of the
correct working practices through seasons.
•
Clearly defined equipment maintenance
programmes.
•
Clearly defined management practices and
systems for the storage of explosives and fuel
and taken active steps to remove possible
fuel and ignition sources, particularly during
intense periods of dry weather.
Acute
Flooding,
heavy rainfall
Localised flooding during heavier periods of rainfall, as well as the
operation’s design may impact the business’s ability to manage
waterfall. This could be particularly acute at our Rupice mining
operations where surface runoff may flow through our declines and
other infrastructure channels, such as ventilation shafts, affecting
operating activity. Consequently, impacts to operations may affect
financial performance, and require increases in OpEx and CapEx
to address water management issues. An increase in intensity and
variability of rainstorms may result in unauthorised discharge into local
water sources, which might incur violations of environmental permits.
Short Term,
Medium Term &
Long Term
•
Initial hydrology and water management
consideration were assessed within the
Prefeasibility Study and ESIA, which have
continued to evolve as the business has
progressed through the construction phase. In
satisfaction of all regulatory requirements, the
water management and physical infrastructure
capacity at Rupice was materially upgraded
during construction phase to reduce water
handling risk, including at the TSF.
•
The business will continue to assess water
supply security as well as more detailed water
vulnerability assessments.
•
The business has an emergency response
process in place to respond to flood risk.
We have conducted assessments to consider the way in which the climate is expected to vary over the life of the mine based on local projections for Bosnia and Herzegovina. The projections have been used to help undertake
a vulnerability assessment as to potential risks to the operation itself from changing climatic patterns.
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Sustainability Review - continued
COMPLIANCE INDEX
Under FCA Listing Rule 9.8.6R(8), Adriatic Metals is required to report
on a comply or explain the basis against the TCFD Recommendations
and Recommended Disclosures in respect of the financial
year 31 December 2024. The Company is striving for climate-
related disclosures to be consistent with the four pillars and 11
recommendations. The compliance table below details our consistency
with the recommendations, status and planning regarding the
recommendations where the Company does not currently comply.
This Compliance Table provides information as to the consistency of
Adriatic Metals’ reporting with the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD).
The Company understands that climate change resilience is integral
to the long-term success of the organisation. It has used the TCFD
recommendations to further develop its climate-related strategies,
programmes, and reporting. While the reporting is not entirely
consistent with the TCFD requirements at this stage, it will focus on
advancing its processes and embed the recommendations within the
management structure.
Governance
Compliance
Page reference
Describe the Board’s oversight
of climate-related risks and
opportunities
Compliant
Managing Sustainability (page 31)
Risk Management Section (page 22)
Sustainability Committee Report (page 56)
Sustainability Committee Charter (link to
charter)
Climate Change Policy (link to policy)
Describe management’s role in
assessing and managing climate-
related risks and opportunities
Compliant
Managing Sustainability (page 31)
Climate Change Policy (page 22)
Risk Management
Compliance
Page reference
Describe the organisation’s
processes for identifying and
assessing climate-related risks
Compliant
Risk Management section (page 56)
Describe the organisation’s
processes for managing climate-
related risks
Compliant
Risk Management section (page 56)
Metrics and targets
Compliance
Page reference
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process
Compliant
GHG / SECR report
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process
Partial
compliance
Risk Management section (page 56)
Target date: 2026
Describe the targets used by the
organisation to manage climate-
related risks, opportunities and
performance against targets
Partial
compliance
GHG / SECR report
Targets can only be set once the asset is
fully operational and actual GHG emissions
data, including a true appreciation of
emissions sources, is understood.
Target date: 2026
Strategy
Compliance
Page reference
Describe the climate-related
risks and opportunities the
organisation has identified over
the short, medium, and long term
Compliant
We have detailed
a comprehensive
list of risks and
opportunities for the
business to manage.
Table above
Link to ESIA
Describe the impact of climate-
related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning
Compliant
Table above
Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-
related scenarios, including a 2°C
or lower scenario
Partial
compliance
Risk Management section (page 56)
Target date: 2027
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STREAMLINED ENERGY AND CARBON REPORT
Scope 1 and Scope 2 GHG emissions for
project are calculated and reported as
part of Adriatic’s SECR and CDP.
The Company has assessed its energy fuel
consumption and determined that this is above the
40 MWh threshold set by the SECR for reporting
in the comparative period and, as such, the Group
reports its greenhouse gases on an annual basis
in tonnes of carbon dioxide equivalent resulting
from the combustion of fuel (direct Scope 1
emissions), the purchase of electricity (indirect
Scope 2 emissions) and from business travel (Scope
3 emissions). Where a figure for emissions, or a
percentage (%) is not included for exclusions, it is
because those calculations are optional or have not
yet been carried out.
METHODOLOGY
The Company has sourced consumption information
from utility bills, fuel expenditure and internal
records to produce a dataset of consumption for
the reporting period. GHG emissions have been
calculated in accordance with the GHG Protocol
Corporate Accounting and Reporting Standard
(revised edition), using the location-based method
to determine Scope 1 and Scope 2 emissions
using the latest emissions factors from recognised
public sources that are applicable to the various
jurisdictions in which the group operates. Market-
based emissions are also calculated for Scope 2
emissions. The Group’s carbon emissions disclosure
has been undertaken in accordance with the UK
Companies Act 2006.
Emissions information for the UK covers the head
office in London. Emissions disclosures for Europe
cover two mining operations: the Vareš Silver
Operation in Bosnia and the Raška exploration
project in Serbia.
GREENHOUSE GAS EMISSIONS
In 2024, total emissions increased by 392% to
12,134 tonnes of CO2e compared to reported figures
in 2023. This is primarily due to Scope 2 emissions
increasing by 3,840% with the connecting of Bosnia
and Herzegovina facilities to the supply grid and the
start of production at the Vareš Silver Operation.
A proportion of transport emissions for rental
vehicles reported as Scope 1 in 2023 have been
reallocated to Scope 3 under business travel. This
results in an overall increase for Scope 1 emissions
of 49% to 3,037 tCO2e and a 321% increase for
Scope 3 emissions to 902 tCO2e, with 65% (587
tCO2e) coming from the inclusion of air travel part
way through 2024.
This report uses the following data sources for
emissions factors used in the preparation of these
figures for factor data:
1
Annual UK Greenhouse gas reporting
conversion factors
for appropriate Scope 1, 2 and 3
categories
2
Our World In Data published factors
for Scope 2 factors for BiH and Serbia
3
Ecoinvent LCA analysis data for
Ammonium Nitrate
4
Fuel conversion factors
are sourced from gov.uk published
reports.
Sustainability Review - continued
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Sustainability Review - continued
Reduction Targets
The Company considers that the most material climate-
related risks will occur once the mine and Processing
Plant are fully operational. The Company previously
published the following GHG reduction targets and
strategies.:
•
A targeted science-based reduction in combined
Scope 1 and 2 emissions by 2035, from a 2025
baseline (i.e. from the first full year of concentrate
production).
•
Develop a progressive Net Zero strategy during 2025
with clearly defined measures for emission reduction
and shape the boundaries of an eventual effective
net zero target. This process will include Scope 1, 2
and 3 (location and market-based evaluations) and
result in a published strategy document with plans
and targets.
•
As part of the Net Zero journey the company
also commits to monitoring its emissions
reductions through the SBTi processes permitting
external verification of its sustainability strategy
implementation.
•
During Q1 2025 operations have continued to ramp
up, therefore 2025 as a baseline year is no longer
appropriate as this year will not be representative of
the mine’s emissions when in steady state. Therefore,
the Company is currently revisiting the above targets
and will provide more detail in the upcoming 2024
Sustainability Report
Notes
1.
2023 figures have been updated with recent data. Overall
variance between 2023 reported figures and 2023
updates is < 1%
2.
Fuel for rented vehicles was included in Scope 1
emissions in 2023. This has been moved to Scope 3.
The totals are the same
3.
Emissions were reported in Jan 2023 using available
data for 2022. An updated dataset was used to
recalculate in 2024
4.
Increase in Scope 2 is due to new grid connected supply
5.
Scope 3 emissions now include flight data
6.
Market-based emissions use the same factors are 2023
7.
Diesel energy is 2023 was overstated by 1.74% but did
not impact the associated carbon calculation
8.
Global electricity use updated to include UK (data not
available in 2024 for UK, so previous year has been used)
9.
Concentrate production data began from May 2024
The following table outlines the metrics used by Adriatic to assess climate-related risks and opportunities in line with its strategy and risk management process.
Unit
2024
2023
Notes
1. TOTAL SCOPE 1 AND SCOPE 2 EMISSIONS
12,134
2,464
1
Scope 1
tCO2e
3,037
2,042
2
Scope 2
tCO2e
8,195
208
3
Scope 2
tCO2e
902
214
2. EMISSIONS BREAKDOWN (LOCATION BASED)
UK
Scope 2
Indirect emissions from electricity
tCO2e
2
2
Global (including UK)
Scope 1
Transport Emissions
tCO2e
380
606
Process emissions
tCO2e
321
217
Stationary combustion
tCO2e
2,336
1,220
Scope 2
Indirect emissions from electricity
tCO2e
8,195
208
4
Scope 3
Transport Emissions
tCO2e
902
214
5
3. EMISSIONS AND OFFSETS (MARKET BASED)
Scope 2
Global market-based emissions
tCO2e
7,762
238
6
Scope 2
Avoided emissions due to renewable facility
tCO2e
19
19
4. GLOBAL ENERGY USE
Total energy use
kWh
25,533,113
8,352,306
Scope 1
Liquid fuels
kWh
11,124,321
7,480,951
7
Process chemicals
kWh
747,209
505,688
Scope 2
Electricity
kWh
13,661,583
365,667
8
Scope 3
Liquid fuels
1,286,880
875,781
5. PARAMETERS
Number of FTEs
527
296
Tonnes of concentrate
14,540
NA
9
Electricity from solar generation
kWh
17,122
17,122
Percentage of consumed energy from renewable sources
0.13%
4.68%
6. INTENSITY MEASURES
Scope 1 and 2 GHG emissions per FTEs
tCO2e/person
23.02
8.32
Scope 1 and 2 GHG emissions per tonne of concentrate
tCO2e/tonne
0.83
NA
Key: NR – Not Reported, NA – Not Available
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Sustainability Review - continued
ENERGY CONSUMPTION
In 2024, total energy use was up by 206%
driven predominantly by an increase in
electricity consumption to 13,661,583
kWh (2023: 376,667 kWh) due to
commencement of production. UK figures
were not available in 2024. As a result,
the UK contribution has been estimated,
and the total global energy use restated
to include the UK. Liquid fuel use is up by
49% for Scope 1 and 47% for Scope 3
respectively, while the use of ammonium
nitrate based process chemicals are up
by 48%.
Electricity consumption increased in 2024
due to the Rupice mine being connected
to grid supplies. The Vareš Processing
Plant also started operating in 2024 and
used energy from the public grid. Due to
the supply of grid electricity, the use of
diesel fuel for powering the Rupice mine
and Vareš Processing Plant via generators
has been reduced, although the total
emissions associated with stationary
combustion increased by 92%..
ENERGY EFFICIENCY ACTIONS
In accordance with EBRD PR3, Adriatic has worked
to integrate best available techniques and Good
International Industry Practice (“GIIP”) to optimise
resource use and efficiently prevent and control
release of pollutants into the environment, with
modern energy efficient equipment and mobile
plant being selected. A company park and ride
scheme is planned to reduce employee transport
emissions. A 32.4 kWp roof-mounted solar PV array
has been included at the Vareš Processing Plant
administration building.
The Company has worked to implement actions
that reduce energy across operations. Some
examples of recent activities undertaken include:
•
The completion of the underground mains
electricity connection at the Rupice Mine
facility will replace diesel generation, increasing
the efficiency of operations and reducing
associated emissions from stationary
combustion.
•
Commenced company transport with 3x
vans reducing light vehicles on the road and
transitioned to 2x 12hr shifts versus 3x 8hr
shifts. This has reduced operational employee
transport by 33%.
•
Procurement of Sandvik haulage fleet (3x
loaders, 4 trucks) all of which have Tier
4 engines with advanced exhaust gas
aftertreatment technologies that reduce
particulate matter and NOx.
RENEWABLE ENERGY AND OFFSETS
The Company has installed a 32.4 kWp roof-
mounted solar PV array at the Vareš Processing
Plant administration building which generates
electricity meeting a proportion of the building’s
energy needs.
The Company also entered into a partnership
agreement with a local forestry commission
in Bosnia and Herzegovina, actively engaging
in environmental preservation initiatives and
reforestation programmes.
FUTURE STRATEGIES
A mix of Scope 1 and 2 reduction measures are
being considered. The Company intends to carry
out life cycle analysis (LCA) studies to the end of life
of products and set up company targets based on
2025 GHG emissions, which will encompass a full
year of production.
Additionally, the VPP offers an opportunity for solar
panel integration. Within the VPP area, there are 10
buildings that could have solar panels installed that
would generate savings in CO2e emissions.
ASSURANCE AND VERIFICATION
The information in this report is for information
purposes only. Energy Systems makes no warranty,
either express or implied, as to the accuracy or
completeness of the assumptions, calculations
or information contained in this report. Energy
Systems and its affiliates do not accept liability
for errors and omissions and cannot be held liable
for indirect, direct or consequent losses under
any circumstances. No external assurance has
been carried out regarding these figures and an
independent audit of the information in this report
should be conducted by Adriatic’s statutory
reporting representatives.
The strategic report of Adriatic
Metals PLC on the preceding
pages was approved and
authorised for publication by
the Board of Directors on
30 March 2025 and was signed
on its behalf by:
Michael Rawlinson
Chairman of the Board
STRATEGIC REPORT
Annual Report for the Year Ended 31 December 2024
43
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Delivering
responsibly
developed
value to all
stakeholders
GOVERNANCE
Corporate Governance Report
44
Audit & Risk Committee Report
54
Sustainability Committee Report
56
Remuneration & Nomination Committee Report
58
Directors’ Report
68
Statement of Directors’ Responsibilities
71
Annual Report for the Year Ended 31 December 2024
44
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report
CORPORATE STRUCTURE
The Board remains fully committed to good
corporate governance, including the Corporate
Governance Code published by the Quoted
Company Alliance, of which the Company is a
member. The Board continues to align the skills
and experience of the Directors and management
with the needs of the Vareš Silver Operation as it
advances toward steady-state production.
The corporate structure of the Group at the date of
this report is as follows:
Adriatic Metals PLC
England & Wales
Company Number: 10599833
Adriatic Metals Jersey Limited
Jersey
Company Number: 138204
Adriatic Metals Holdings BIH Limited
England & Wales
Company Number: 13430806
Adriatic Metals d.o.o.
Serbia
Company Number: 21609021
Adriatic Metals Services (UK) Limited
England & Wales
Company Number: 03781581
Tethyan Resources Jersey Ltd
Jersey
Company Number: 106154
Tethyan Resources d.o.o.
Serbia
Company Number: 21185531
Global Mineral Resources d.o.o.
Serbia
Company Number: 21164429
Adriatic Metals Trading & Finance Ltd.
Jersey
Company Number: 145475
Adriatic Metals BH d.o.o.
Bosnia and Herzegovina
Company Number: 43-01-0404-13
AM Projects d.o.o.
Bosnia and Herzegovina
Company Number: 61-01-0023-21
Holding Company
Operating Company
Liquidated 2024
All shareholdings 100% unless
otherwise stated
KEY
Adriatic Metals PLC is a public limited company incorporated in
England and Wales on 3 February 2017.
The Company’s principal assets are its wholly
owned indirect holding, via Adriatic Metals Holdings
BIH Limited, in Adriatic Metals BH d.o.o. and its
wholly owned direct holding in Adriatic Metals d.o.o.
(formerly RAS Metals d.o.o.) which comprises the
Raška Project in Serbia.
Adriatic Metals BH d.o.o. (formerly named Eastern
Mining d.o.o.) was registered in Bosnia and
Herzegovina on 19 May 2008. Adriatic Metals BH is
the main operating entity of the Group and holds the
Vareš Silver Operation concession which comprises
the Rupice and Veovača deposits. Eastern Mining
d.o.o. underwent a name change to Adriatic Metals
BH d.o.o. in April 2023.
Adriatic Metals Holdings BIH Limited was
incorporated on 1 June 2021 and acquired the
entire share capital of Adriatic Metals BH d.o.o. from
Adriatic Metals plc on 30 September 2021 as part
of the Group’s preparation for entering into the Orion
Project Finance Package.
Adriatic Metals Trading and Finance Ltd was
incorporated on 28 September 2022 to act as a
trading and finance company for the Group and is
the borrower under the Orion Debt Finance Package.
This entity holds the contracts with the third party
offtakers under which revenue is earned and incurs
selling and distribution costs on behalf of the Group.
AM Projects d.o.o. was incorporated on 8 April 2021
and had limited operating activity during the year to
31 December 2024. During the period, the company
changed its name from Adriatik Metali d.o.o. to
Adriatic Metals Services d.o.o and post year end to
AM Projects d.o.o.
Adriatic Metals Jersey Limited (formerly Tethyan
Resource Corp.) and its wholly owned subsidiaries
were acquired on 8 October 2020. The acquisition of
the remaining share capital of Adriatic Metals d.o.o.
occurred on 22 February 2021.
Adriatic Metals Services (UK) Ltd provides managed
services to other members of the Group.
The Group carried out an internal reorganisation of
its Serbian entities to simplify the Group structure.
Effective 4 July 2024, three wholly owned Serbian
operating entities within the Group, namely: Global
Mineral Resources d.o.o., Tethyan Resources d.o.o.
and TAOR d.o.o., merged into the existing entity
Adriatic Metals d.o.o. (formerly RAS Metals d.o.o.),
leaving Adriatic Metals d.o.o. as the sole operating
entity for the Serbian segment.
As part of the reorganisation, an application was
submitted to the Serbian Ministry of Licences to
allow the Kremice and Kaznovice licences to be
transferred from Global Mineral Resources d.o.o. and
TAOR d.o.o. to Adriatic Metals d.o.o., respectively,
and duly granted. The transfer process resulted in
the Company’s related party balances with Serbian
entities being transferred to Adriatic Metals d.o.o.
the new licence holder.
Taor d.o.o.
Serbia
Company Number: 20975393
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
45
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
CORPORATE GOVERNANCE CODE – QCA DISCLOSURE STATEMENT
The Board believes in the value of good corporate
governance in improving performance and mitigating
risk and acknowledges its duty to take into account
all of Adriatic’s stakeholders in its decision making
and not just the shareholders.
As a company with an Equity Shares Transition
category (“ESTC”) (previously standard listing) on the
London Stock Exchange, Adriatic is able to choose
which governance code to follow. The Board has
decided to apply the Quoted Company Alliance’s
(QCA) Corporate Governance Code (QCA Code)
(revised in April 2018).
On 17 February 2025, Adriatic announced that it is
working with its advisors regarding the transfer of
the listing category of all of its ordinary shares from
the ESTC category of the Official List of the FCA
(“Official List”) to the Equity Shares (Commercial
Companies) category of the Official List on the
London Stock Exchange
The Code is based on 10 principles and a set of
supporting disclosures. It sets out what the QCA
considers to be appropriate arrangements for
growing companies and asks companies to explain
how they are meeting those principles
through the prescribed disclosures. We have
considered how we apply each principle and a full
description of our compliance with the QCA code
can be found on our website:
https://www.adriaticmetals.com/
corporate-governance/
The Chairman has overall responsibility for
implementing an appropriate corporate governance
regime at the Company.
The Board is committed to ensuring the
sustainability of its development strategy and to
delivering on its commitments to shareholders,
clients, employees, partners and other stakeholders
with sustainability in mind.
We believe that transparency and fair dealing,
particularly in relation to environmental and
community issues, are essential to the Company’s
ultimate success. At all times Adriatic will aim to:
•
Minimise its environmental impact;
•
Meet legal and other requirements applicable to it;
•
Foster positive relationships in the local
community;
•
Protect the health and wellbeing of employees and
encourage positive relationships in the workplace;
and
•
Ensure the sustainability of the business for
shareholders and other stakeholders.
The Board firmly believes that
a corporate culture based on
sustainability and ethical values
and behaviour is in the best
interests of the shareholders.
The Company maintains a Code
of Conduct, which underpins its
commitment to integrity and fair
dealing in its business affairs and
to a duty of care to all employees,
clients and stakeholders.
The document sets out the
principles covering appropriate
conduct in a variety of contexts
and outlines the minimum
standard of behaviour expected
from employees.
The Code of Conduct is included in the Corporate
Governance Manual on the Company’s website.
https://www.adriaticmetals.com/corporate-
governance/
Corporate Governance Report - continued
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
46
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report - continued
A. BOARD COMPOSITION
At 31 December 2024, the Board comprised a
Non-Executive Chairman, a Managing Director and
Chief Executive Officer, an Executive Director for
Corporate Affairs, a Senior Independent Director and
three other Non-Executive Directors. As part of its
annual performance evaluation process the Board,
in conjunction with the Remuneration & Nomination
Committee, keeps its structure under review in order
to maintain an appropriate balance of executive and
non-executive experience and skills.
The Board considers the following Non-Executive
Directors who served during the year to have been
independent: Peter Bilbe, Julian Barnes, Sandra
Bates, Eric Rasmussen, Mirco Bardella and Michael
Rawlinson. None of these Directors is or has been an
employee, had a significant business relationship or
close family ties with related parties, or represented
significant shareholders, although some of them
previously held non-performance related options to
acquire ordinary shares in the Company.
The QCA Code recommends that, in the interests
of maintaining their independence, Non-Executive
Directors should not normally participate in
performance-related remuneration schemes or
have a significant interest in a company share option
scheme; any performance-related remuneration for
Non-Executive Directors should be proportionate,
and shareholders must be consulted and their
support obtained. However, in Adriatic’s case the
options granted to the Non-Executive Directors
had no performance conditions and vested fully
on the date of grant, and it is not considered that
they compromise the Non-Executive Directors’
independence.
B. BOARD PERFORMANCE
EFFECTIVENESS REVIEW
December 2024
January- March 2025
Board discussion on evaluation
and design
Skills matrix and discussion
sheet distributed
Collective discussion and
one-to-one interviews
Findings discussed with CEO
Findings documented by Chairman
and Company Secretary
Findings discussed with Independent
Non-Executive Directors
Board discussion of findings and
action plan for implementation
The most recent board performance
effectiveness review was undertaken
internally during December 2024
through a collective discussion with
Non-Executive Directors and one-to-
one interviews with Executive Directors
conducted by the Chairman, Michael
Rawlinson, supported by the UK
Company Secretary.
The interviews were structured to seek the Directors’ views on a number of subject areas including those
outlined below.
•
The overall composition of the Board was
considered, taking into account the balance of
skills represented by Board members relative
to the current and future requirements of the
Company together with gender diversity.
•
The workings of the Board and interpersonal
dynamics
•
A review of strategic oversight and direction
•
Lessons learned
•
Discussion on the provision of information – focus,
relevance and quantity
•
Views on governance and the composition and
workings of the main Board Committees was
evaluated
•
Stakeholder management
•
Culture and employee sentiment
•
Site visits.
As part of the Board’s performance evaluation and within the remit of the Nomination Committee, the Adriatic
Board undertook a skills self-assessment matrix review. The skills categories chosen were all discussed and
noted as likely to be required for Adriatic as a production company. The outcome of the self-assessment was
as follows:
Expert - Deep knowledge / formal qualification or experience over many years
Moderate – Moderate skills / experience – knowledgeable but not highly skilled
Aware - Some knowledge and can follow a discussion
Adriatic Board Skills Matrix Self Assessment Dec-24
Board composition
Directors were generally broadly happy with the size of the Board and skills on the Board currently (local/
regional/mining/exploration/financial/auditing/corporate/legal/HR), given the stage of the operations and
taking into account the injection of additional skills onto the Board during the year. With potential further
changes to composition expected in the coming year, the focus was on the need for more local expertise and
advice through a local independent director with Board experience, particularly as the Company has moved
into the operational phase. Members recognised that reshaping the Board further and altering the skills mix
were questions that would naturally arise as the Company moved forward.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
47
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report - continued
2024 BOARD PERFORMANCE
EFFECTIVENESS REVIEW FINDINGS
The findings of the Chairman’s
board performance effectiveness
review were collated and
considered amongst the Non-
Executive Directors before being
relayed to the CEO. The resulting
conclusions and recommendations
were discussed and, where
appropriate, approved by the Board.
The Company has successfully taken the
Vareš Silver Operation from construction to
production in 2024; at the same time 2024 saw
significant changes in executive management
reflecting the Company’s evolution into an
operating company. The Board composition
has also changed and expanded, with the
addition of three new directors during the year,
including the new Managing Director and CEO.
Development of the operational team has
continued to progress and the culture of the
Company has continued to evolve positively
under the new executive leadership.
The following matters reflect the central
questions considered by the Board as
part of the Chairman’s board performance
effectiveness review.
Lessons learned
The Board recognised that lessons had been learnt
regarding the process around making strategic
decisions. The Board considered that with hindsight
the process around the Company’s decision to make
the Raska investment should have been subjected to
more rigorous due diligence. The Board was pleased
that an internal audit function had been set up and
was contributing to a strengthening of internal
controls and oversight.
Action point: The Board should focus more on
spotting sources of potential problems and
challenges and building up the internal audit
capability
Board Composition and Skills
The Board considered that the current board
composition reflected a reasonable balance of
skills, noting that it was not necessary for the
Board to carry every skill. The Board was satisfied
with the level of diversity and independence of the
current Board. The appointments during the year
of new independent Non-Executive Directors, Eric
Rasmussen and Mirco Bardella, had injected valuable
new skills into the Board, in particular in relation to
regional expertise, ESG experience and financial
controls.
Potential additional skills - the Board continued to
believe it would be beneficial to enhance the Board
composition with the addition of an independent
Bosnian director with board experience. In addition,
the Board considered that a director with an HR
background would be a useful addition to the
Board’s skills matrix. The Board recognises there
will be a need to plan for the replacement of skills
as and when directors retire and, in particular, it was
important to maintain strong technical mining skills
on the Board.
Board dynamics
On the whole, the Board was satisfied with the
atmosphere in the boardroom. The quality of
discussion and debate was regarded as good and
the ability to have a free and frank exchange of views
was appreciated.
Appointment of Senior Independent
Director
The Board regarded the appointment of the Board’s
first Senior Independent Director during the year as
a timely enhancement of Board governance and an
important reflection of the Company’s maturity. The
Senior Independent Director’s primary role was to
act as sounding board for the Chair and intermediary
for other directors where necessary. The Senior
Independent Director would also be available to
meet with shareholders and discuss any issues of
concern.
Stakeholder management
While the Board believed management of
shareholder relations was well covered, other areas
of stakeholder engagement, in particular in relation
to government, deserved more attention.
•
The Board wished to see regular updates
concerning the governmental landscape in
Bosnia and Herzegovina, in particular regarding
the governmental hierarchy and officialdom. It
was recognised that Bosnia and Herzegovina
had a complex constitutional structure with
multiple legislative and administrative layers.
Consequently, the Board considered it crucial to
maintain good visibility in this area, including in
relation to the Office of the High Representative,
State, Federal, cantonal and municipal bodies.
•
The Board sought more regular and detailed
briefings in this regard from executive
management, to ensure that directors were kept
fully up to date. This includes regularly updating
the stakeholder management plan which covers
political and community relations, with clear
responsibilities and accountabilities.
Action point: Annual stakeholder management
plan, with clear responsibilities and
accountabilities, to be submitted for Board
approval.
Culture and employee sentiment
The Board considered that it was not doing enough
with the annual employee survey and results. It was
important for the Company and Board to show
that they were listening to employees’ concerns.
Further, the Board recognised the importance
of the Employee Council, but considered that
improvements were needed to ensure it served its
intended function more effectively. The conclusion
was that while existing structures and processes
to monitor employee sentiment and cultural
issues should be retained, they should be made to
work better – this being the responsibility of both
management and the Board. The Board was pleased
that Eric Rasmussen, in his capacity as Chair of the
Sustainability Committee, would have oversight of
the Employee Council.
Board materials
The Board was pleased with improvements in the
approach to format, content and delivery of board
materials during the year, however the Board wished
to see more efficiency and better organisation
around agenda setting and board papers. In
particular, the Board considered that board materials
should be more concise and streamlined, focused
on clarity of purpose and delivered timeously.
The Board made the decision in principle to separate
the Company Secretary role into a discrete function,
in light of the Company’s level of maturity reached
and volume and degree of complexity of secretarial
support required to meet the Board’s needs.
Site visits
The Board considered it very important for the Non-
Executive Directors to make regular site visits to
Bosnia and Herzegovina and familiarise themselves
with management and particular issues of concern.
The Board was pleased that the regular twice-yearly
meetings in Bosnia and Herzegovina had become a
fixed item in the annual board calendar. During those
visits, and additionally where appropriate, directors
should be encouraged to spend informal time with
management, especially those Directors with a
particular focus e.g. mining, ESG, finance, controls
and risk management.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
48
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report - continued
C. BOARD TERMS OF REFERENCE AND
POWERS (SEE BOARD CHARTER
IN SCHEDULE 1 TO CORPORATE
GOVERNANCE MANUAL ON THE
COMPANY WEBSITE)
The Board derives its authority from the
shareholders under the Company’s Articles of
Association. Its main duty is to drive the strategic
direction of the Company while ensuring that
appropriate resources are available to meet
objectives and monitor management’s performance.
Members of the Board have collective responsibility
for the performance of the Company and must
ensure that all decisions are taken in the interests
of the Company as a whole, taking into account the
interests of the various stakeholder groups.
Whilst the Board has delegated the normal
operational management of the Company to the
Managing Director and CEO and other senior
management, it has reserved to itself specific
matters including:
•
Approving the Company’s remuneration
framework;
•
Reviewing and ratifying systems of audit, risk
management and internal compliance and
control, codes of conduct and legal compliance;
•
Approving and monitoring the progress of major
capital expenditure;
•
Approving and monitoring the budget; and
•
Approving the annual and interim accounts.
The Board Charter requires that, where practical, the
majority of Board members should be independent
Non-Executives. An independent Director is a
director who in the Board’s opinion is free of any
interest, position, association or relationship that
might (or might be perceived to) influence materially
his or her capacity to bring an independent
judgement to bear on issues before the Board and
to act in the best interests of the Company and its
shareholders generally.
D. DIRECTOR COMMITMENTS (ALSO
SEE REMUNERATION & NOMINATION
COMMITTEE REPORT)
The services of the Managing Director and Chief
Executive Officer, Laura Tyler, are supplied under a
contract with Adriatic. She is not required to provide
these services on an exclusive basis, although
any services provided to third parties must avoid
conflicts of interest or any interference with her
obligation to provide services to the Company. Ms.
Tyler has a separate agreement with Adriatic Metals
BH d.o.o. (an operating subsidiary of Adriatic) in
respect of her role as Director of that company.
The services of the Executive Director for Corporate
Affairs, Sanela Karic, are supplied under a contract
with Adriatic. She is not required to provide these
services on an exclusive basis, although any services
provided to third parties must avoid conflicts of
interest or any interference with her obligation to
provide services to the Company. Ms. Karic has a
separate agreement with Adriatic Metals BH d.o.o.
(an operating subsidiary of Adriatic) in respect of her
role as an Executive Director of that company.
All Non-Executive Directors acknowledge in their
letter of appointment that the nature of the role
makes it impossible to be specific on maximum time
commitment and that at certain times of increased
activity, the preparation for and attendance at
meetings will increase. All Directors are expected
to attend all board meetings (either in person or by
telephone), the AGM, one annual Board strategy
meeting a year, committee meetings where
appropriate, meetings with the Non-Executive
Directors, meetings with shareholders, any meetings
forming part of the Board evaluation process, and
training meetings.
E. BOARD MEETINGS
The Board meets formally once per quarter, with additional meetings held as required to review the corporate
and operational performance of the Group and address any other issues that need to be dealt with before
the next scheduled meeting. The Directors also hold informal conference calls on average once per month
(during those months where there is no quarterly or other Board meeting) in order to receive regular updates
from the Managing Director and Chief Executive Officer.
During the year, the majority of the Board met physically on a quarterly basis, with those unable to attend
physically participating remotely by video-conference.
The agendas of the Board and its Committees ensure that all areas for which the Board has responsibility are
addressed and reviewed during the course of the year.
The Chairman is responsible, with the help of the Company Secretaries, for ensuring that the Directors receive
Board briefings that are accurate, comprehensive and timely enough to allow them to make proper use of
them in the fulfilment of their duties. The Company Secretaries assemble the Board and Committee papers
and circulate them to the Directors in advance of the relevant meeting. The Company Secretaries also take
minutes of each board meeting.
A summary of attendance at board meetings in the year ended 31 December 2024 is set out below:
Director
Independent
Maximum
possible attendance *
Actual
attendance
Michael Rawlinson
Yes
6
6
Peter Bilbe
Yes
6
6
Laura Tyler
No
4
4
Paul Cronin
No
4
4
Julian Barnes
Yes
1
1
Sandra Bates
Yes
6
6
Sanela Karic
No
6
6
Eric Rasmussen
Yes
5
5
Mirco Bardella
Yes
1
1
*based on date of appointment
F. BOARD COMMITTEES
The Board has delegated specific responsibilities to the Audit & Risk, Sustainability and Remuneration &
Nomination Committees, details of which are set out below. Each Committee has written terms of reference
setting out its duties, authority and reporting responsibilities. It is intended that these will be kept under
continuous review to ensure they remain appropriate and reflect any changes in legislation, regulation or best
practice.
The Board considers that, at this stage in Adriatic’s development, it is appropriate for the members of the
Remuneration Committee to be also members of the Nomination Committee. However, the separate terms of
reference of the two Committees will be respected. This decision will be kept under review by the Board.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
49
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report - continued
G. AUDIT & RISK COMMITTEE
The Audit & Risk Committee’s overall goal is to
ensure that the Company adopts and follows a policy
of proper and timely disclosure of material financial
information and reviews all material matters affecting
the risks and financial position of the Company. The
Committee meets the Company’s external auditors
and its senior financial management to review the
annual and interim Financial Statements of the
Company, oversees the Company’s accounting
and financial reporting processes, the Company’s
internal accounting controls, including the work of
the Company’s internal auditor, and the resolution
of issues identified by the Company’s internal
and external auditors. Periodic corporate reports
released to the market that are not audited by an
external auditor are also reviewed and authorised for
release in advance by the Audit & Risk Committee.
It also advises the Board on the appointment of the
auditors, reviews their fees and discusses the nature,
scope and results of the audit with the auditors.
The Audit & Risk Committee was chaired during
the year by Sandra Bates until 3 October when
Mirco Bardella was appointed to be Chair. The other
members of the Committee were Michael Rawlinson,
until 3 October, Julian Barnes, until 13 June, and
Eric Rasmussen from 13 June. At the date of the
Annual Report the composition of the Audit & Risk
Committee was Mirco Bardella (Chair), Sandra
Bates and Eric Rasmussen. In accordance with the
Committee Charter, all of its members have been
Non-Executive and independent throughout the
year.
The Committee has unrestricted access to the
Group’s internal and external auditors. The CFO, UK
Company Secretary and other executives are invited
to attend Committee meetings, as necessary. The
Committee meets at least twice a year and met five
times during the year with all committee members
attending each meeting.
The Audit & Risk Committee Report contains
more detailed information on the Committee’s
deliberations during the year.
H. SUSTAINABILITY COMMITTEE
The Environmental, Social & Governance Committee
was renamed the Sustainability Committee in 2022
to reflect the Company’s appreciation of the holistic
nature of all aspects of corporate and operational
sustainability. The role of the Sustainability
Committee is to assist the Board in fulfilling
its oversight responsibilities, by reviewing and
monitoring any matters relating to the management
of workforce, community or environmental impacts
(in accordance with the ESG Policy annexed to
the ESG Committee Charter), the management
of stakeholder relationships, and the oversight
of permitting and relevant regulatory risks. The
Committee also seeks to identify opportunities to
strengthen the Company’s license to operate and
to strengthen the sustainability and resilience of the
communities and regions where Adriatic companies
operate. It will also provide scrutiny of, and guidance
to, executive management on these issues.
During the year, Sanela Karic chaired the
Sustainability Committee until 9 August, with the
other members being Michael Rawlinson, Peter Bilbe,
Eric Rasmussen (appointed Chair from 9 August) and
Mirco Bardella (from 3 October).
At the date of the Annual Report, the composition of
the Sustainability Committee was Eric Rasmussen
(Chair), Michael Rawlinson, Peter Bilbe and Mirco
Bardella. In accordance with the Committee Charter,
all of its members are Non-Executives and the
majority were independent throughout the year. The
Committee met four times during the year with all
Committee members attending each meeting. The
UK Company Secretary and other executives are
invited to attend Committee meetings, as necessary.
The Company published its first
stand-alone Sustainability Report
on 24 April 2023, containing
more detailed information on
the Company’s sustainability
activities and the Committee’s
deliberations during the year, a
second Sustainability Report will
be published in 2025.
Committee attendance during the year:
Director
Independent
Maximum
possible attendance *
Actual
attendance
Mirco Bardella (Chair) (from 3 October)
Yes
1
1
Sandra Bates (Chair) (until 3 October)
Yes
5
5
Eric Rasmussen (from 13 June)
Yes
3
3
Michael Rawlinson (until 3 October)
Yes
4
4
Julian Barnes (until 13 June)
Yes
2
2
*based on appointment date
Committee attendance during the year:
Director
Independent
Maximum
possible attendance
Actual
attendance
Sanela Karic (Chair until 9 August)
No
2
2
Michael Rawlinson
Yes
4
4
Peter Bilbe
Yes
4
4
Eric Rasmussen (Chair from 9 August)
Yes
2
2
Mirco Bardella
Yes
1
1
*based on appointment date
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
50
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report - continued
I. REMUNERATION & NOMINATION COMMITTEE
The Remuneration & Nomination Committee, which
comprises four independent directors, assists the
Board in monitoring and reviewing any matters of
significance affecting the composition of the Board
and the executive team including:
•
maintaining a Board that has an appropriate
mix of skills and experience to be an effective
decision-making body; and
•
ensuring that the Board is composed of Directors
who contribute to the successful management of
the Company and discharge their duties having
regard to the law and the highest standards of
corporate governance.
The Remuneration & Nomination Committee also
assumes general responsibility for assisting the
Board in respect of remuneration policies for
the Company and reviewing and recommending
remuneration strategies for the Company
and proposals relating to compensation for
the Company’s Directors and employees. The
Committee reviews the performance of Executive
Directors and other senior management and makes
recommendations to the Board on matters relating
to their remuneration and terms of employment. It
has the responsibility for, inter alia, administering
share and cash incentive plans and programmes
for Directors and other senior management, for
approving (or making recommendations to the Board
on) share and cash awards for Directors and other
senior management.
The Remuneration & Nomination Committee is
chaired by Peter Bilbe, and its other members during
the year were Julian Barnes, until 13 June, Sandra
Bates, Eric Rasmussen, from 13 June, and Mirco
Bardella, from 3 October. At the date of the Annual
Report, the Committee members were Peter Bilbe,
Sandra Bates, Eric Rasmussen and Mirco Bardella.
The Remuneration & Nomination
Committee Report contains
more detailed information on
the Committee’s role and the
Directors’ remuneration and fees.
Committee attendance during the year:
Director
Independent
Maximum
possible attendance *
Actual
attendance
Peter Bilbe (Chair)
Yes
6
6
Julian Barnes
Yes
3
3
Sandra Bates
Yes
6
6
Eric Rasmussen
Yes
3
3
Mirco Bardella
Yes
1
1
*based on appointment date
J. THE BOARD AS A WHOLE
The skills and experience of the members of the
Board are set out in their biographical details below.
The experience and knowledge of each of the
Directors enables them to challenge management
and scrutinise performance in a constructive way.
The Board believes it has achieved a good balance
of experience in financial and operational matters.
Board members have diverse national, cultural and
career backgrounds, and gender diversity.
The Board does not consider that any of the
Directors is in danger of “over-boarding” by holding
too many directorships at other listed companies
to be able to devote sufficient time to Adriatic’s
business, and Directors are required to consult the
Board before accepting any new appointment that
might cause a conflict of interests or prevent them
from discharging their responsibilities to Adriatic
effectively.
New Directors receive a formal induction to the
Company including a briefing discussion with
existing Directors and a site visit to the operations as
soon as practicable. Directors are also provided with
a memo on the continuing obligations of a company
admitted to the London Stock Exchange (Standard
Segment), a copy of the QCA Code and the ASX
Governance, Principles and Recommendations
Guide from the Company Secretaries. Directors also
have full access to the Company’s management and
advisors.
GOVERNANCE
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Corporate Governance Report - continued
K. LIST OF DIRECTORS
A
Michael Rawlinson
Non-Executive Chairman
Mr Rawlinson was the Global Co-Head of Mining and
Metals at Barclays Investment Bank between 2013
and 2017 having joined from the boutique investment
bank, Liberum Capital, a business he helped found
in 2007. He is currently the Senior Independent
Non-Executive Director at Hochschild Mining, the
Senior Independent Non-Executive Director at Capital
Limited and an Independent Non-Executive Director at
Andrada Mining Limited.
B
Peter Bilbe
Non-Executive Director
Mr Bilbe is a mining engineer with over 50 years of
diverse Australian and international mining experience
in gold, base metals and iron ore in operational, CEO
and board positions. Mr Bilbe has held numerous
board appointments including, until recently, Chair/
Non-Executive Director of Horizon Minerals Ltd, an
emerging gold producer and from 2009 to 2021 as
Chair/Non-Executive Director of IGO Ltd, an ASX100
company.
C
Laura Tyler
Managing Director and Chief Executive
Officer
Ms Tyler has a wealth of industry knowledge with
over 30 years’ experience in mining and is a specialist
in technical, technology and safety applications for
Tier 1 operations globally. Her 20-year career at BHP
Limited (“BHP”) between 2005 and 2024 included her
role as the inaugural Chief Technical Officer (2020-
2024) focusing on digital transformation at the world’s
largest listed mining group. She also held roles as BHP
Asset President Olympic Dam (2018-2020) and Asset
President Cannington (2012-2015), Chief Geoscientist
(2016-2020), and Chief of Staff to BHP’s CEO (2015-
2018). She has a wealth of knowledge of polymetallic
underground mining, significant experience in
operational leadership and eight years of Executive
Leadership at BHP.
D
Sandra Bates
Senior Independent Director
Ms Bates is an international lawyer and public
company director with over 25 years of top-tier
private practice and in-house experience advising
management teams and boards of both listed (LSE,
TSX and ASX) and private companies in the UK,
North America, Australia and Africa. She is a risk
assessment and ESG specialist bringing extensive
experience of guiding exploration, development,
operating and royalty companies in the natural
resources sector through complex negotiations
often with a cross-cultural element. She is currently
Executive Director – Legal and ESG for ASX listed
Predictive Discovery Limited and was previously a
partner at Canadian law firm Stikeman Elliott LLP
and other international firms, where for 15+ years
she focused on M&A and financing matters for
mining companies globally.
E
Sanela Karic
Executive Director for Corporate Affairs
Ms. Karic is an experienced legal professional with
25 years of experience spanning corporate affairs,
mergers & acquisitions and human resources. A
graduate of the University of Sarajevo and a qualified
lawyer, she passed the bar exam before beginning
her career as a lawyer and deputy public notary.
She later served as Executive Director of Legal
Affairs for five years at Bosnia’s largest diversified
industrial corporation, operating across the EU.
She has held both executive and non-executive
roles and currently serves as Executive Director of
Corporate Affairs at Adriatic Metals in the UK and
Bosnia and Herzegovina. She also serves as the
president of the Foreign Investors Council in Bosnia
and Herzegovina.
F
Eric Rasmussen
Non-Executive Director
Mr Rasmussen has significant experience in the
financing of European and global mining projects,
having most recently been Chief Advisor Structured
& Project Finance for Renewables & Mining at Rio
Tinto, as well as having been at the European Bank
for Reconstruction and Development (‘EBRD’) for
27 years, of which he was Global Head of Natural
Resources between 2013-2022.
Mr Rasmussen led EBRD’s team of 28 bankers on a
portfolio of projects across Europe, FSU and MENA,
overseeing on average €1bn of investments per
annum. During his career at EBRD, Mr Rasmussen
was not only a leader across many disciplines
of both finance and sustainability, but also was
a highly successful investor in multiple projects
which generated industry-leading returns for all
participating stakeholders.
G
Mirco Bardella
Non-Executive Director
Mr Bardella is an experienced specialist in assurance
and governance, predominantly in the natural
resources sector, having previously advised
companies including Xstrata, Rio Tinto, Gold Fields
and Hochschild Mining in his capacity as Assurance
Partner at professional services firm, Ernst & Young
(‘EY’). His previous roles include Global Lead Audit
Partner for Xstrata and Global Assurance Lead for
Rio Tinto.
Mr Bardella led EY’s Assurance services in the
Mining & Metals sector for Europe, Middle East, India,
and Africa (EMEIA), and its Energy division for UK &
Ireland from 2007 to 2019. He is also experienced
in ASX and LSE listing requirements and holds
a Bachelor of Accounting from the University of
Witwatersrand, South Africa.
A
B
C
D
E
F
G
GOVERNANCE
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Corporate Governance Report - continued
K. BOARD ADVICE DURING THE YEAR
FIT Remuneration Consultants were engaged
to advise the Remuneration Committee on its
remuneration policy. Advice was also provided to the
Board by the investment banks RBC Europe Limited
and Stifel Nicolaus Europe Limited.
L. INTERNAL ADVISORY ROLES
i.
Company Secretary
The joint Company Secretaries during the year
were Gabriel Chiappini (Australia) and Jonathan
Dickman (UK), the latter combining the role with
that of General Counsel. The Company Secretaries
are responsible for advising the Board on the
Company’s legal and regulatory compliance,
including (for the UK) the Market Abuse Regulation,
and play a central role in ensuring good governance.
They assist the Chairman and Committee Chairs
in preparing for and running effective board and
shareholder meetings and act as the first point of
contact for the Non-Executive Directors on the
workings of the Company, providing information and
advice, and also general guidance on their duties as
Directors. The Company Secretaries report directly
to the Chairman on governance matters.
ii. Annual Board Evaluation
In accordance with current best practice and the
Code, the Board undertakes an annual formal
evaluation of its performance and effectiveness
and that of each Director and each Committee. In
line with the QCA Code Principles, the evaluation
is based on clear and relevant objectives, seeking
continuous improvement. A summary of the findings
from the 2024 Board evaluation is set out in section
b above.
M. ONGOING BOARD DEVELOPMENT
The Company Secretaries ensure that all Directors
are kept informed of developments in relevant
legislation, regulations and best practice, with
the assistance of the Company’s advisers where
appropriate.
Non-Executive Directors are encouraged to raise
any personal development or training needs with the
Chairman or through the Board evaluation process.
i.
Succession Planning
The Board has an emergency succession plan for
the senior management team. Succession planning
is considered as part of the Remuneration &
Nomination Committee’s remit and Board members
maintain a watching brief to identify relevant internal
and external candidates who may be suitable
additions to, or backup for, current Board members.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
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Corporate Governance Report - continued
N. BOARD DIVERSITY POLICY STATEMENT: GENDER AND ETHNICITY
The Board is committed to ensuring
that it has the right balance of skills,
experience and diversity, and a Board
composition that reflects the current
areas of operation of the Company,
its employees and major markets.
The Board supports the targets
of the FTSE Women Leaders and
Parker reviews on gender and ethnic
diversity.
Between August 2020 and 1 July 2024, two
(33.3%) of the 6 directors were female and one
(17%) identified as minority ethnic. After 1 July
2024 and as at 31 December 2024 and the date
of this report, three (43%) of the 7 directors are
female and one (14%) identifies as minority ethnic.
The Senior Independent Director is female and the
Executive Director for Corporate Affairs is female. In
addition, a majority of the Board have a nationality
or place of origin outside the UK. The Company
satisfies the targets in the UK Listing Rules in
having at least one Director from a minority ethnic
background. The Company currently meets the UK
Listing Rule targets of having at least 40% female
representation on its Board and that at least one
of the senior positions on its Board (defined under
the Listing Rules as the chair, chief executive, senior
independent director or chief financial officer) is held
by a woman. The additional diversity data required
under the UK Listing Rules is set out below.
The Company considers that the experience and
expertise of its Board, including the continuity of its
composition and relatively small size, best positioned
the Company for its continued growth during 2024,
including the successful development of the Vareš
Silver Operation which enabled it to achieve its
first concentrate production in 2024. Currently,
the Company is still at a relatively early stage of
its development and its operational footprint is
primarily in the Balkan region, where ethnicity profiles
and representation in society differ considerably
from those in the UK. The Board is also mindful
that the mining industry has been traditionally
male-dominated when compared to several other
sectors making up UK listed businesses. The Board
recognises the importance of addressing these
gaps and is committed to implementing measures
to ensure its board diversity. In considering plans
to make further appointments to the Board as the
Company grows and succession plans for the Board
evolve, considerable effort will be made to ensure
that the applicable targets are met. Appointments
to the Board will be made on merit, ensuring the
overall composition of the Board and its committees
continues to reflect a mix of capabilities, experience
and diversity (of gender, ethnicity, nationality, age and
perspectives). The Company is confident that future
appointments will, as a whole, continue to support
the Board’s diversity aims.
As required by UK Listing Rule 14.3.33, further
details on board composition as at 31 December
2024 are set out below.
(i) Gender identity or sex
Number of
board members
Percentage
of the board
Number of senior positions on the
board (CEO, CFO, SID and Chair)
Number in executive
management
Percentage
of executive
management
Men
4
57%
1
5
55.6%
Women
3
43%
2
4
44.4%
(ii) Ethnic background
White British or other White
(including minority-white groups)
6
86%
3
8
89%
Mixed/Multiple Ethnic Groups
-
-
-
-
-
Asian/Asian British
-
-
-
-
-
Black/African/Caribbean/Black
British
-
-
-
-
-
Other ethnic group,
including Arab
1
14%
-
1
11%
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
54
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
I am pleased to present this
report on the activities of the
Audit & Risk Committee for the
year ended 31 December 2024.
Mirco Bardella
Chair of the Audit & Risk Committee
This report is prepared in accordance
with the Quoted Companies Alliance
(QCA) corporate governance code
for small and mid-sized quoted
companies, revised in April 2018. A
summary of the Committee’s role
and membership can be found in the
Governance section of this Annual
Report.
Committee meetings are held at least
twice a year, and the CFO, Group
Financial Controller and UK Company
Secretary are invited to attend
together with the external auditors.
Five meetings of the Committee were
held during the year, and the following
significant issues were considered:
Audit & Risk Committee Report
Significant issue
Summary of Significant Issue
Actions and Conclusion
Going
concern
Assessment of the Group’s ability to
continue as a going concern as part
of the preparation of the financial
statements. This includes considering
whether the Group has adequate
resources to continue in operation for
the foreseeable future from the date
of anticipated signing of the financial
statements.
The assessment of going concern covers
a period of at least 12 months from the
date of signing the financial statements.
The Committee has reviewed forecasts for the period to
December 2026 to assess the Group’s liquidity, which
demonstrates substantial headroom and compliance with
the DSCR covenant ratio.
The Committee has considered additional sensitivity
scenarios in terms of the Group’s commodity price
forecasts, mining grades, expected throughput volumes,
operating cost profile and capital expenditure.
As part of its review, the Committee has assessed the
key risks that could impact on the prospects of the Group
over the going concern period including commodity
price outlook, cost inflation, negative grade reconciliation,
and weaker production performance, with reverse stress
testing of the forecasts in line with best practice
The Committee assessed the disclosures in the FY 2024
Annual Report and Financial Statements in respect of going
concern, viability and covenant compliance and concluded
that they were appropriate.
Carrying
value of
assets
The Group’s total property, plant and
equipment, including mine under
construction of $281.0m (31 December
2023: $215.7m) and exploration and
evaluation assets of $8.5m (2023: $8.5m)
are material to the Group’s balance sheet.
Assets are reviewed to consider if there
are any indicators of impairment.
Management’s conclusion that there were no indicators of
impairment for the carrying value of assets was reviewed
by the Committee.
The Committee considered the critical estimates and
assumptions by management that were used to assess
indicators of impairment for property, plant and equipment,
including metal prices, changes in laws & regulations, and
cost inflation.
Having done so, the Committee supported the conclusions
of management. The Committee further reviewed the
relevant disclosure in the Financial Statements to ensure
compliance with reporting standards.
Copper
Stream
The Group drew down on a $22.5m
copper stream (the “Copper Stream”)
facility in 2023. The Copper Stream is
accounted for at fair value in accordance
with IFRS 9. Changes in fair value are
recognised in the consolidated statement
of comprehensive income.
The accounting and disclosure of
the Copper Stream is a complex area
involving key estimates and judgements.
These include applying an appropriate
discount rate, and forecasting production
volumes and commodity prices.
The fair value of the Copper Stream obligation has been
valued by management at $38.4 m (2023: $26.9m),
assisted by independent valuation experts. Assumptions
used in the valuation included: long-term copper price
curves, nominal discount rate based on the Company’s risk
adjusted cost of debt, and timing of cashflows relevant to
the stream arrangement.
The Committee reviewed and challenged the estimates
and inputs used by management in valuing the Copper
Stream.
Having done so, the Committee endorsed the valuation of
the Copper Stream and relevant disclosure in the Financial
Statements.
GOVERNANCE
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Audit & Risk Committee Report - continued
EXTERNAL AUDITORS’ FEES
To safeguard the independence and objectivity of
the external Auditors on an ongoing basis, we have in
place a policy for non-audit services to mitigate any
risks threatening, or appearing to threaten, the external
audit firm’s independence and objectivity arising
through the provision of non-audit services.
There were no non-audit services provided in the year,
apart from the audit related services in relation to the
half year interim review. Details of fees paid during
the year may be found in note 8 to the consolidated
financial statements.
OBJECTIVITY AND INDEPENDENCE
The Committee continues to monitor the auditors’
objectivity and independence and is satisfied that
BDO LLP (‘BDO’) and the Company have appropriate
policies and procedures in place to ensure that these
requirements are not compromised.
RE-APPOINTMENT OF EXTERNAL
AUDITORS
The Committee recommends to the Board the re-
appointment of BDO as auditors at the forthcoming
2025 annual general meeting (“AGM”), and BDO has
expressed its willingness to continue in office.
During the year our external Auditors, BDO assigned
Adriatic a new Audit Partner to satisfy the professional
rotation requirements under the Ethical Standards
INTERNAL AUDITORS
The Group’s Internal Audit function provides
assurance, in conjunction with the external assurance
providers, on the effective functioning of the internal
control system. Planning and execution of Internal
Audit projects is informed by risk assessment and
aims to identify control weaknesses.
GOING CONCERN
The Directors considered it appropriate to continue
to adopt the going concern basis of accounting
in preparing the financial statements. The going
concern statement is detailed in full in note 2.3 to the
consolidated financial statements.
CONCLUSION
The Committee is satisfied with the
quality, independence and objectivity
of the external audit and believes
that on the basis of the audit it can
make a proper assessment of the
quality of financial and other systems
of reporting and control within the
Company.
In respect of its own performance, the
Committee considers that it has given
appropriate challenge and direction
to management, concentrating on
the areas that are relevant to the risks
facing the Company.
Mirco Bardella
Chair of the Audit & Risk Committee
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
56
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
On behalf of the Committee, I am
pleased to present the Sustainability
Committee Report for the year
ended 31 December 2024.
Eric Rasmussen
Chair of the Sustainability Committee
This has been a defining year for Adriatic Metals,
transitioning from construction to full-scale
production at the Vareš Silver Operation and
taking on new executive leadership with the
appointment of the highly experienced Laura
Tyler as CEO.
Our active Committee role has continued to
guide the Company to deliver its Environmental,
Social, and Governance (ESG) commitments,
ensuring that operational expansion aligns with
our sustainability principles and stakeholder
expectations.
COMMITTEE MEMBER
ATTENDANCE LOG
Number of
Meetings Attended
Sanela Karic
Non-Executive Director &
Chair (until 9 August)
Eric Rasmussen
Non-Executive Director &
Chair (from 9 August)
Michael Rawlinson
Non-Executive
Director & Chairman
Peter Bilbe
Non-Executive
Director
Mirco Bardella
Non-Executive
Director
Sustainability Committee Report
2
2
4
4
1
Committee changes
In August 2024, there was a change in the leadership
of the Sustainability Committee and I was appointed
as the new Committee Chair, replacing Sanela
Karic. I bring extensive experience in sustainable
finance and responsible investment, having spent
28 years at the European Bank for Reconstruction
and Development (EBRD), where I led sustainability
and environmental finance initiatives. I shall continue
the good work of Sanela with a particular focus
on integrating climate risk management and ESG
governance more deeply into the Company’s
strategic framework, now that we are in operation.
Sanela Karic has transitioned into an Executive
Director role, where she now leads corporate
affairs, including permitting and local government
relations. This shift ensures that ESG considerations
remain central to both board-level oversight and
operational decision-making, which enables me to
drive sustainability strategy at the governance level,
while Sanela continues to play a key role in corporate
affairs.
Meetings and attendance
The Committee met four times over the course
of the year, engaging in discussions on critical
issues including health and safety governance,
environmental compliance, stakeholder
engagement, and climate strategy. As we advance
our production activities, our focus remains on
strengthening risk management, promoting social
responsibility, and ensuring that Adriatic continues
to operate to the highest international sustainability
standards.
KEY AGENDA ITEMS DURING THE YEAR
Health & Safety Oversight
The Committee prioritised safety improvements
following the fatal accident in August 2024 involving
a sub-contractor. This tragic incident underscored
the need for more rigorous contractor management,
vehicle inspections, and hazard control measures.
In response, a revised Health & Safety strategy was
introduced, strengthening compliance requirements
for subcontractors and introducing advanced
monitoring tools to improve oversight.
Additionally, the transition to in-house operatorship,
following the decision to take over mining activities
from Nova Mining, increased the workforce by
approximately 100 employees and enabled stronger
internal safety management. The Committee
has closely monitored these changes to ensure
they deliver tangible improvements to workforce
protection and risk mitigation, which I am pleased to
say we are seeing in the incident reports.
Stakeholder Engagement and Social
Licence to Operate
A key priority for 2024 has been strengthening
stakeholder relationships, particularly as production
ramps up. The Company continues to engage
with local municipalities, regulatory authorities and
community organisations, maintaining an open-
door policy on concerns related to operational
impact. The Board has been kept informed of the
results of community surveys and local sentiment
regarding both the social and environmental
impacts of operations. We have been pleased to
see the Company support several community
initiatives related to local healthcare, education and
infrastructure and a swift resolution of any grievances
raised.
In addition to the Company’s community plan, the
Adriatic Foundation has separately played a significant
role in community development, funding initiatives in
education, healthcare, and environmental sustainability
as selected by the local community representatives.
As a major source of the Foundation’s annual funding,
we have welcomed the launch of new vocational
training programmes aimed at building skills for local
workers and creating employment pathways in the
mining sector.
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Sustainability Committee Report - continued
Environmental Performance and
Compliance
Transitioning this year into an operator of a
producing mine, there has been a significant increase
in the monitoring and management of environmental
performance which sets high benchmarks for future
reporting. The Committee has also noted how
many improved environmental solutions have been
implemented through the construction process that
have helped to further mitigate potential negative
impacts and help avoid unnecessary consequences
on the local biodiversity.
We have also supported the new tailings storage
solution, which again upgrades the outcomes
previously set out in the ESIA.
Key Environmental Actions:
•
Tailings Management: The approval and
construction of the Veovaca Tailings Storage
Facility (TSF) marked a major regulatory
milestone, ensuring responsible waste storage
in alignment with Global Industry Standard on
Tailings Management (GISTM).
•
Water & Air Quality Monitoring: The Company
continued rigorous water and air quality
assessments, recycling a major proportion of
its process water, ensuring no major long-term
environmental impacts.
•
Biodiversity Initiatives: Environmental teams
worked closely with cantonal forestry agencies
to implement offsetting measures, focusing on
habitat preservation and reforestation efforts
Regulatory Challenges:
•
Forestry Permits Issue: Legal complexities
regarding forest land access remain unresolved,
requiring continued engagement with the Federal
Ministry of Environment and Tourism.
•
NGO and Regulatory Scrutiny: The Bern
Convention complaint regarding environmental
protection remains under review, with active
discussions ongoing with relevant stakeholders.
Climate Strategy and Net Zero Pathway
Recognising the increasing importance of carbon
reduction, the Committee discussed the formulation
of a five-year Net Zero strategy, targeted for
completion in 2025. Key developments include:
•
Solar Power Expansion: The Company has
installed a 32.4 kWp roof-mounted solar PV array
at the Vareš Processing Plant administration
building to meet a proportion of the building’s
energy needs.
•
Rail Transportation Advocacy: The Company is
lobbying for the electrification of a 30km railway
section, reducing dependency on road freight and
lowering transport-related emissions.
•
Carbon Tax Preparation: Anticipating Bosnia and
Herzegovina’s 2026 carbon tax implementation,
Adriatic Metals is proactively integrating carbon
pricing into its financial planning.
Community action and Grievance
Management
The Company’s grievance mechanism proved
effective in addressing local concerns, with only six
formal complaints filed in 2024, reflecting improved
community relations. A notable case involved the
Kakanj Municipality, which raised concerns over
heavy goods transport disruptions. In response,
Adriatic Metals committed to providing advance
traffic notifications and optimising logistics planning
to minimise community impact.
It has also been interesting to review recent reports
on the positive projected socio-economic benefits
of the Vareš Silver Operation. Many companies will
promise that prosperity will be shared as a result of
their operations, and it is vital that Adriatic Metals
is seen to be delivering a tangible difference both
locally and nationally.
Future Sustainability Priorities for 2025
Looking ahead, the Sustainability Committee will
focus on:
•
Finalising the Company’s Net Zero Strategy,
defining emissions reduction commitments and
implementation plans.
•
Implementing the GISTM Tailings Management
Framework to ensure continued compliance with
best practices in tailings storage.
•
Conducting a stakeholder perception survey in
Vareš, capturing community concerns on key ESG
issues.
•
Strengthening local workforce development, with
increased investment in training programs and
safety leadership initiatives.
As we ramp up to full-scale operations,
Adriatic Metals remains committed to
upholding its ESG responsibilities and
strengthening stakeholder trust. The
Committee will continue its oversight
role, ensuring that sustainability remains
a core pillar of the Company’s growth
strategy and is supported by transparent
communication.
We extend our appreciation to all teams
involved in advancing Adriatic Metals’
sustainability agenda and look forward to
continued progress in 2025.
Eric Rasmussen
Chair of the Sustainability Committee
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Strong alignment of Remuneration
Policy with shareholder interests
Peter Bilbe
Chairman of Remuneration Committee
Remuneration & Nomination Committee Report
PART 1 – SUMMARY STATEMENT FROM THE CHAIR
On behalf of the Board, I am pleased to present the
Remuneration & Nomination Committee Report,
which sets out the Directors’ remuneration report
for the year ended 31 December 2024. It has been
prepared in accordance with the requirements
of The Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008
(the Regulations).
After this introductory statement, this Report
contains the Annual Report on Remuneration
covering the year ended 31 December 2024,
reflecting the arrangements in place during that
year.
An important point to note is that, as required by
ASX rules, all share incentive awards to Directors
are required to be approved by shareholders at a
general meeting. Share awards are a key part of
Adriatic’s Directors’ remuneration policy.
At our 2025 AGM there will therefore be a number
of resolutions on pay matters, summarized as
follows:
•
The annual advisory vote to approve this
Directors’ remuneration report (comprising both
the Annual Report on Remuneration and this
introductory statement); and
•
Votes to approve a number of share awards
to our Executive Directors. These will include
proposed 2025 LTIP share awards to Laura Tyler
and Sanela Karic (which are being made in the
normal course of their continuing packages) and
also share awards related to Laura Tyler’s service
as our Interim CEO from 9 August 2024 to 9
February 2025 (which are in lieu of pro-rata cash
salary and pro-rata cash bonus for that 6 months’
period) and Sanela Karic’s pro-rata 2024 LTIP
award for serving as an Executive Director since
9 August 2024.
BOARD CHANGES IN 2024
As our shareholders will be aware, 2024 saw significant changes in the executive leadership of our Board,
together with changes amongst our Non-Executive Directors. A summary of the Executive Director
changes is below, together with the remuneration treatments which were applied for these events.
Date and Event
Remuneration treatments
9 August 2024
Paul Cronin steps
down as Managing
Director and CEO
All treatments for Paul were in line with the terms of Paul’s existing
contract and the company’s Directors’ remuneration policy.
Paul received his fixed pay and benefits for the six months’ notice period
of his contract.
Paul has not received a 2024 Short-term Incentive Plan (“STIP”) cash
bonus.
Paul was permitted to retain his “inflight” and unvested share awards on a
time pro-rata basis, but subject to all continuing requirements: the original
vesting dates for these awards and the relevant performance-vesting
conditions continue to apply.
9 August 2024
Laura Tyler
appointed as
Interim CEO
Laura was appointed as Interim CEO for 6 months until 9 February 2025.
Laura’s main remuneration terms as Interim CEO were as follows:
•
Annual consultancy fee (salary) equivalent to USD$800,000 per annum
(USD$400,000 for the 6 months’ fixed period)
-
50% ($200,000) was paid as monthly cash
-
50% ($200,000) is to be delivered as an award of shares, priced
on August 30-day VWAP (“salary shares”), accruing monthly but
conditional on the receipt of prior shareholder approval (but if not
approved by 30 June 2025, then payable in cash).
•
Short-term bonus opportunity of 100% of Interim CEO consultancy
fee based on bespoke KPIs agreed by the Board (payable in shares
by mutual agreement at the 30-day VWAP for the period immediately
prior to the bonus award date, conditional on the receipt of prior
shareholder approval. The bonus award date was 19 March 2025.
•
No LTIP.
•
Relocation package of accommodation and car in Sarajevo plus travel
expenses.
9 August 2024
Sanela Karic
appointed as
Executive Director
for Corporate Affairs
Sanela Karic’s main remuneration terms are as follows:
•
Fixed annual remuneration comprising consultancy fees, and
management fees paid in BAM, totalling in aggregate USD$320,000.
•
Annual STIP participation at maximum of 70% of fixed annual
remuneration.
•
LTIP – annual award of up to 140% of fixed annual remuneration
(including a 2024 pro-rated award).
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Remuneration & Nomination Committee Report - continued
Date and Event
Remuneration treatments
17 October 2024
Laura Tyler confirmed
as our permanent
Managing Director and
CEO
Laura’s agreed Interim CEO pay arrangements were left in place until 9
February 2025.
Laura’s permanent CEO package from 9 February 2025 contains the
following remuneration terms:
•
Base annual salary USD$650,000
•
Annual STIP participation at maximum of 100% of annual base salary,
pro-rated for 2025
•
Annual LTIP award at 200% of annual base salary, pro-rated for 2025
•
Accommodation package covering London and Sarajevo, use of car in
Bosnia plus travel expenses.
All of the remuneration treatments described
above are in line with our shareholder approved
Directors’ remuneration policy. Each also reflects
the commercial circumstances of the Company
and seeks to protect our shareholders’ long-term
best interests. In this regard:
•
Agreeing that Paul can retain inflight and
unvested LTIPs (with the application of time
pro-rating and continued application of
performance conditions in all cases) was an
appropriate recognition of Paul’s contribution to
the business as our former Managing Director
and CEO.
•
Our Interim CEO package for Laura with its
heavy use of shares and conservation of
cash reflected our need to control costs as
we moved into production in H2 2024, and it
also reflected feedback from a number of our
leading shareholders that Laura should be
aligned to shareholders’ experience during her
Interim CEO tenure.
•
Both Laura’s and Sanela’s continuing permanent
Executive Director packages reflect what we
view as appropriate market rates of pay in our
industry when all pay elements (fixed pay, annual
bonus and LTIPs) are available to be awarded, in
line with our Directors’ remuneration policy.
Amongst our Non-Executive Directors, the
following changes also took place in 2024:
•
Laura Tyler became a Non-Executive Director
from 1 July 2024, prior to accepting the
executive director roles detailed above.
•
Eric Rasmussen became a Non-Executive
Director from 13 June 2024 and Chair of our
Sustainability Committee from 9 August 2024.
•
Mirco Bardella became a Non-Executive
Director and Chair of our Audit and Risk
Committee from 3 October 2024.
•
Sandra Bates became our first Senior
Independent Director from 3 October 2024.
•
Julian Barnes resigned as Non-Executive
Director on 13 June 2024
For completeness, during the period of CEO transition
from August to October 2024, our Company
Chairman, Michael Rawlinson, provided additional
support on a range of leadership matters for the
purpose of business continuity and accordingly we
have paid additional non-executive Chair fees for this
additional work in line with our Directors’ remuneration
policy – calculated on an equivalent pro-rata ‘day
rate’ for continuing non-executive Chair work. The
Board regards the payment of these additional
pro-rata Chair fees (total £40,000) as appropriate
and necessary to secure the best outcomes for
shareholders and considers the fees to be fully in
shareholders’ best interests.
REMUNERATION POLICY – PROPOSED
APPLICATION IN 2025
The continuing packages of our Executive Directors
(Ms Tyler and Ms Karic) are described above. These
packages will both operate within the scope of our
shareholder approved Directors’ remuneration policy
in 2025, and we will again operate our STIP plan and
make a further annual award under our LTIP (subject
to the appropriate approval from our shareholders for
these new awards at the 2025 AGM).
The metrics for our 2025 STIP will again have an
appropriate balance of measures weighted between
Operational Discipline (including both production
and financial measures), Sustainability (including
environmental and health & safety aspects) and
People measures. Our 2025 LTIP measures will again
focus on shareholder return and growth.
REMUNERATION & NOMINATION
COMMITTEE
Remuneration & Nomination Committee meetings
are normally held at least twice a year and the
Committee met on 5 scheduled occasions during
the year ended 31 December 2024. Additionally,
matters for its consideration were discussed at Board
meetings on several occasions. On each occasion,
no Director was present while matters concerning him
or her were discussed, and all decisions were taken
by Non-Executive Directors, in accordance with the
Committee’s Charter. The Remuneration & Nomination
Committee currently comprises Peter Bilbe (Chair),
Sandra Bates, Eric Rasmussen and Mirco Bardella,
all of whom have been deemed by the Board to be
independent.
The Remuneration & Nomination Committee has
taken the following principal actions and made the
following principal decisions during 2024 and after the
year end:
•
Approving the annual STIP bonus outcomes and
associated bonus payments in respect of 2023, as
well as setting the KPI targets for the 2024 Annual
STIP bonus.
•
Approving 2024 LTIP awards to our former
Managing Director and CEO and senior
management, including setting the performance
conditions and associated targets.
•
Agreeing the remuneration treatments for the
changes in our Board in 2024 as outlined above.
•
Approving the annual STIP bonus outcomes and
associated bonus payments to the Executive
Directors and senior management in respect of
2024, as well as setting the KPI targets for the 2025
annual STIP bonus.
•
Approving the STIP bonus outcomes and associated
bonus amount for the CEO in respect of the interim
CEO period to 9 February 2025
•
Approving the grant of LTIP awards to senior
management, including the in-principle grant of
a 2025 LTIP award to our CEO and our Executive
Director for Corporate Affairs (subject to approval at
the 2025 AGM), including setting the performance
conditions and associated targets for the 2025 LTIP
awards.
AGM
As we explained in the introduction to this statement,
at our 2025 AGM we will be asking shareholders to
approve:
•
The normal annual advisory vote to approve this
Directors’ remuneration report; and
•
Votes to approve the proposed share awards for our
continuing Executive Directors, namely:
-
An award of shares to our CEO in lieu of salary during
the 6 month period of service as our Interim CEO
-
An award of shares to our CEO in respect of a pro-
rata STIP for the 6 month period of service as our
Interim CEO
-
A pro-rata 2024 LTIP award for our Executive Director
for Corporate Affairs
-
2025 LTIP awards to both our CEO and our Executive
Director for Corporate Affairs
I hope that you find this report helpful and informative
I look forward to receiving further feedback from our
investors on the information presented.
Peter Bilbe
Chair of Remuneration Committee
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Remuneration & Nomination Committee Report - continued
PART 2 – REMUNERATION REPORT (AUDITED)
The Group paid the following remuneration to each Director:
Year ended 31 December 2024
(In USD ‘000)
Total salaries
and fees
(e)
Benefits
STIP
(f)
Share awards
vesting in year
(g)
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
Executive Directors
Laura Tyler
(a)
313(h)
5
300
-
618
313
305
Sanela Karic
(b)
115
-
-
-
115
115
-
Paul Cronin
(c)
395
46
-
-
441
395
46
Non-Executive Directors
Laura Tyler
(a)
14
-
-
-
14
14
-
Michael Rawlinson
236
-
-
-
236
236
-
Peter Bilbe
89
-
-
-
89
89
-
Julian Barnes
(d)
44
-
-
-
44
44
-
Sandra Bates
89
-
-
-
89
89
-
Sanela Karic
(b)
51
-
60
-
111
51
60
Eric Rasmussen
(d)
48
-
-
-
48
48
-
Mirco Bardella
(d)
22
-
-
-
22
22
-
Total Directors’ Remuneration
1,416
51
360
-
1,827
1,416
411
Year ended 31 December 2023
(In USD ‘000)
Total salaries
and fees
Benefits
STIP
Share awards
vesting in year
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
Executive Directors
Paul Cronin
476
61
330
-
867
537
330
Non-Executive Directors
Michael Rawlinson
124
-
-
-
124
124
-
Peter Bilbe
66
-
-
-
66
66
-
Julian Barnes
62
-
-
-
62
62
-
Sandra Bates
69
-
-
-
69
69
-
Sanela Karic
89
-
-
-
89
89
-
Total Directors’ Remuneration
886
61
330
-
1,277
947
330
Notes:
a.
Laura Tyler became our permanent CEO on 17 October 2024,
having been appointed Interim CEO on 9 August 2024, and Laura’s
remuneration as an Executive Director in 2024 is shown above. Before
that, Laura Tyler joined the board as a Non-Executive Director on 1
July 2024, and we also show the fees paid to Laura as a Non-Executive
Director in 2024 separately above.
b.
Sanela Karic became our Executive Director for Corporate Affairs on
9 August 2024, and Sanela’s remuneration as an Executive Director
in 2024 is shown above. Before that, Sanela served on the board as a
Non-Executive Director, and we also show the fees paid to Sanela as a
Non-Executive Director in 2024 separately above. Also, whilst a Non-
Executive Director, Ms Karic provided legal services through her law
firm, Legal Solutions d.o.o. Please refer to note 25.1 of the consolidated
financial statements regarding the provision of services by Legal
Solutions d.o.o.
c.
Paul Cronin served as our Managing Director and CEO until 9 August
2024 when Paul stood down from the Board. Details regarding the
arrangements for Paul’s remuneration in 2024 are more fully explained
at page 66.
d.
Julian Barnes served as a Non-Executive Director until 13 June 2024.
Eric Rasmussen joined the board as a Non-Executive Director on 13
June 2024. Mirco Bardella joined the Board as a Non-Executive Director
on 3 October 2024. In each case their remuneration for the part of
2024 served is shown above.
e.
As explained on page 59, in the period of August and October 2024,
Michael Rawlinson provided additional support on a range of leadership
matters for the purpose of business continuity and was paid additional
non-executive Chair fees for this additional work in line with our
Directors’ remuneration policy.
f.
Details of STIP outcomes for our Executive Directors are set out
following this table.
g.
No options or performance rights held by Directors vested during 2024.
h.
This value was paid 50% in cash with the balance to be delivered
as a share award as explained in the Summary Statement from the
Chairman introducing the Directors’ remuneration report.
There were no gains on the exercise of
performance rights or share options by
Directors in the current year or prior year.
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Remuneration & Nomination Committee Report - continued
FIXED REMUNERATION OF THE
CONTINUING EXECUTIVE DIRECTORS
The total salary and fees paid to Laura Tyler as
Interim and permanent CEO represents salary from
9 August 2024 to 31 December 2024 pro-rata for
an annual equivalent salary of $800,000. As was
explained on page 58, 50% of this value was paid
as cash and 50% will be delivered in shares subject
to authorisation by shareholders at the 2025 AGM,
failing which it will also be paid in cash.
The total salary and fees paid to Sanela Karic as
Executive Director for Corporate Affairs represents
salary from 9 August 2024 to 31 December
2024 pro-rata for an annual equivalent salary of
$320,000. This incorporates an amount in respect
of management fees paid in BAM.
In addition, in 2024 the former Managing Director
and CEO received an annual travel allowance of GBP
50,000.
ANNUAL STIP BONUS IN RESPECT OF
2024 PERFORMANCE
As summarised in the Chair’s Introductory Statement
to this Report, following the CEO’s initial appointment
as Interim CEO from 9 August 2024, a STIP for the 6
month period of the Interim CEO role was established.
The parameters of the 6-month STIP are that the
maximum amount available is 100% of the pro-rata
annual fee as Interim CEO and that the intention is that
any STIP outcomes may be delivered as an award of
shares if mutually agreed (subject to shareholders’
approval at the 2025 AGM).
A STIP scorecard for the Interim CEO period to
9 February 2025 was accordingly established as
summarised below. This gave an overall outcome of
75%, which means that Laura is entitled to receive an
Interim CEO STIP of $300,000 based on the Interim
CEO STIP scorecard outcomes.
When the CEO’s appointment was confirmed as
permanent on 17 October 2024, the Company
disclosed that Laura’s agreed Interim CEO pay
arrangements were being left in place until 9 February
2025. Accordingly, the Company discloses below
the Interim CEO STIP scorecard for the period to 9
February 2025 including the specific performance
targets, weightings and performance outcomes
against each of the targets. Certain specific targets are
and remain commercially sensitive.
Strategic Rsk
Area
Wt %
Target
Measures (sample)
Attainment
Rtg %
Sustainability
Safety
10
Reset of safety culture
• Covers Critical Control Management reset commenced
by October 2024 evidenced by increased Life
Conversations (up 10%), Management Verifications
(2 per lead team member per month), and employee/
contractor awareness
• High
10
Permits
15
Develop and complete
strategies to manage
Constitutional Court
decision impacts
• Legal strategy and technical solutions to address impact
of CC decision on permits
• Medium/high
10
People
Culture
5
Reset of Whistleblower
process
• Rebadge and relaunch Whistle-blower system (October
2024), to increase employee awareness of process
including independent investigation
• High
4
Governance
Corporate
Structure and
Organisational
redesign
15
Complete Governance
review including org design
Re-align executive team for
next development phase
• Review corporate structure and deliver revised
organisational design
• Complete executive team actions
• Medium/high
10
Operational
Discipline
Operational
Effectiveness -
Production
20
Deliver production at
September forecast levels
• Mine: Development metres per month
• Production: tonnes in December 24
• Plant: throughput rate, recovery and concentrate quality
• Medium
10
20
Apply measures to maintain
cashflow through 2024
Develop and agree
operating budget for 2025
• Cashflow management to maintain going concern
• Operating budget developed for 2025 for review and
approval by January 2025 Board meeting.
• High
20
Business
Investors
5
Investor relations –
improved information flow
regarding plans, costs and
related guidance
• Build relations with investors and analysts, especially
understanding of the business’s expected production
trajectory
• High
5
Growth &
Profitability
Effective
Capital
Management
5
Covenants
Cost of capital
Capital Allocation Policy
•
Compliance with all covenants
•
Make first debt repayment in December 2024
•
Review cost of capital options
•
Refresh Capital Allocation Policy
• Medium
3
Strategy for
growth
5
Develop medium term
value growth Strategy
• Organic and inorganic growth strategy to be reviewed
and approved by Board
• Medium
3
100
TOTAL
75
The Executive Director for Corporate Affairs, Sanela Karic, received a pro-rated 2024 STIP of $59,811 based on the corporate scorecard outcome - 67.6% as disclosed below.
As summarised in the Chair’s Introductory Statement to this Report, our former Managing Director and CEO did not receive a 2024 STIP.
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Remuneration & Nomination Committee Report - continued
Details of the STIP bonus outcome for the Executive Director for Corporate Affairs for 2024, including the specific performance metrics, weightings and performance against each of the metrics, are provided in the table below.
Target Thresholds
Strategic Risk Area
Target Area
Target Details
Weighting %
Low 25%
Expected 75%
High 100%
Achievement
Performance
Outcome
Achievement
Notes
Growth &
Profitability
Growth in Development
Asset Pipeline
MRE at Rudnica
5
>50 million tonnes
>75 million tonnes
>100 million tonnes
>100m tonnes
5%
Cost of Capital
Refinance debt to achieve lower
cost of capital
5
Remco judgment of
progress
Remco judgment of
progress
Remco judgment of
progress
Medium
3.75%
Growth in Development
Asset Pipeline
Identification and appropriate
diligence of suitable opportunities
5
Remco judgment of
progress
Remco judgment of
progress
Remco judgment of
progress
Expected level
3.75%
Appropriate steps
implemented, taking into
account Q3 impact of
Constitutional Court decision
Exploration Growth
and ROI
Exploration drilling in BiH & Serbia
5
20,000m completed
plus new potentially
economic orebody
identified
plus 2 new potentially
economic orebodies
identified
High
5%
Effective Capital
Management
Compliance with all Covenants
2.5
2 EOD Resolved within
Cure Period
1 EOD Resolved within
Cure Period
No Events of Default
No events
2.50%
20k+ drilled -
Rupice NW extension
Vares East
Operational
Discipline
Operational Effectiveness
- Underground
Development
Development metres
8
Exceeds 2,800m
Exceeds 3,000m
Exceeds 3,300m
Expected level
6%
minor adjustment to original
targets for exceptional weather
events
Operational Effectiveness
- Plant Performance
Expected Metallurgical Recovery
8
>80%
>90%
>95%
Expected level
6%
Effective Management of
Project Cost
Vares Project cost on production
commencement
5
Cost <$180m
Cost <$170m
Cost <$165
Costs exceeded $180m
0%
Operational Effectiveness
- Production Ramp Up
First Stope Access
5
After 31/7/2024
During July 2024
Before 1/7/2024
July'24
3.75%
People
Diversity
Percentage of all staff female
(excluding contractors)
5
>17%
>20%
>23%
24%
5%
Maxmise Staff Retention
Percentage staff turnover
5
<15%
<10%
<7.5%
Expected level
3.75%
adjusted to exclude impacts
of in-year absorption of mining
contractor
Cultural Awareness
Expat Cultural Awareness Training
5
>85%
>95%
100.00%
>95%
3.75%
Increase Staff
Engagement
Staff engagement survey result
for ‘unfavourable’ score
5
<30%
between low and high
rating
<15%
High
5%
Sustainability
Occupational Health &
Safety
Total Recordable Incident
Frequency Rate
12
<5
<3
<2
N/A
0.%
nil due to fatality
Environmental Incidents
Environment incident and
frequency rating
8
24
15
9
Below 9
8%
Stakeholder Perceptions
in Local Community
Stakeholder Assessment Survey
satisfied
7
75%
85%
90%
Expected level
5.25%
Contractor Management
Plan Implementation
Implement Contractor
Management Policy & Procedures
4.5
By 31/12/24
By 30/6/24
By 30/4/24
By 31/12/24
1.125%
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Remuneration & Nomination Committee Report - continued
LONG TERM EQUITY INCENTIVES
On 22 May 2024, Paul Cronin was granted an LTIP
award under the Adriatic Metals Employee Incentive
Plan 2019, following approval of the award by
shareholders at the 2024 AGM, as follows:
•
award over 499,240 shares in respect of the
2024 financial year (FY24 Performance Rights).
The FY24 Performance Rights are subject to
satisfaction of the performance conditions set out in
the table below. Any vested shares resulting from the
FY24 Performance Rights will be subject to a further
two-year holding period.
Performance measure
Weighting
Summary of targets
Absolute Total Shareholder Return (TSR)
(measured as compound annual growth (CAGR) in
TSR)
15%
• 17% or more CAGR: 100% vesting
• 9% CAGR: 60% vesting
• 5% CAGR: 25% vesting
• Below 5% CAGR: nil vesting
• Straight-line vesting between these points
Relative Total Shareholder Return
(measured against relative performance of a group of
peer companies, listed below)
20%
• Upper quartile plus 20%* or better: 100% vesting
• Upper quartile: 60% vesting
• Median: 25% vesting
• Straight-line vesting between these points
• * Measured as % increase above TSR performance of Upper Quartile ranked company
Resource Growth
(measured as compound annual resource growth)
35%
• 20% or more compound annual growth: 100% vesting
• 15% compound annual growth: 60% vesting
• 10% compound annual growth: 25% vesting
• Below 10% compound annual growth: nil vesting
• Straight-line vesting between these points
Sustainability Metrics
30%
• (a) Diversity (15%): Measured against annual targets for gender and disability diversity.
• (b) National staff development (5%): Measured against annual targets for national
workforce at operating sites.
• (c) CO2 emissions reduction plan (10%): Measured against annual targets for reduction
in Scope 1 and Scope 2 CO2 emissions.
Notes:
1.
The performance conditions applicable to the FY24 Performance Rights will each be measured over the three financial years 2024 to 2026.
2.
Peer group for Relative TSR performance condition: Atalaya Mining PLC, Trilogy Metals Inc., Bear Creek Mining Corporation, Discovery Silver Corp., Chaarat Gold Holdings
Limited, Aurelia Metals Limited, Sandfire Resources Limited, SilverCrest Metals Inc., MAG Silver Corp., New Pacific Metals Corp., Dundee Precious Metals Inc., Osisko
Mining Inc., Horizonte Metals PLC, Central Asia Metals PLC, Bellevue Gold Ltd.
3.
Compound annual resource growth is measured by reference to annual growth of in-situ value of Group resources (including measured, indicated and inferred), and
multiplied without recovery adjustments by the relevant commodity prices at the time.
4.
Annual targets for the Sustainability Metrics to be set for each of the three financial years.
Further details of the performance conditions that apply to the FY24 Performance Rights are provided in the 2024 AGM Notice.
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Remuneration & Nomination Committee Report - continued
STATEMENT OF THE DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS
The interests in the Company’s shares and other securities directly or indirectly held by Directors at 31 December 2024 who served during the year is set out below:
Shareholding requirement
as a % of salary
Number of Ordinary
Shares
Percentage of Issued
Share Capital
Shareholding guideline met?
Number of
Performance Rights
1
Subject to
performance measures
Not subject to
performance measures
Paul Cronin
200%
12,251,132
3.78%
Yes
933,5122
142,7783
Peter Bilbe
n/a
1,050,000
0.32%
n/a
-
-
Michael Rawlinson
n/a
447,942
0.14%
n/a
-
-
Julian Barnes
n/a
-
-
n/a
-
-
Sandra Bates
n/a
-
-
n/a
-
-
Sanela Karic
n/a
326,216
0.10%
n/a
-
-
Laura Tyler
200%
28,380
0.01%
no
Mirco Bardella
n/a
-
-
n/a
-
-
Eric Rasmussen
n/a
-
-
n/a
-
-
14,103,670
933,512
142,778
Total in issue at 31 December 2024
324,476,883
-
3,195,866
Percentage held by Directors that served during the year
4.35%
-
33.68%
Notes:
1.
At 31 December 2024, none of the Performance Rights in the table above held by Directors had vested.
2.
Performance Rights over a total of 499,240 shares were granted to Paul Cronin during 2024. Further details
are set out above in the section headed ‘Long term equity incentives’. As shown in the section below
“Paul Cronin Leaving Arrangements”, Paul’s Performance Rights were reduced on a time pro-rata basis
in connection with his leaving the Company. His total Performance Rights subject to performance measures
retained after time pro-rating is 360,930.
3.
Paul Cronin’s total Performance Rights not subject to performance measures retained after time
pro-rating is 93,937
UK PERFORMANCE GRAPH AGAINST
CEO REMUNERATION
The Directors have considered the requirement for a UK
performance graph comparing the Company’s relative
shareholder return with that of a comparable indicator.
The comparable indicators chosen are indexes in similar
industry classification on exchanges in which the Group
are listed, being the FTSE 350 Mining Index and S&P ASX
300 Metals & Mining.
Adriatic Metals PLC
FTSE 350 Basic Resources
S&P ASX 300 Metals & Mining
The chart to the right illustrates the
Company’s share price performance
during the year compared to relevant
market indices:
100%
-50%
0%
50%
100%
150%
200%
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Jun-23
Sep-23
Dec-23
Mar-24
Jun-24
Sep-24
Dec-24
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
65
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Remuneration & Nomination Committee Report - continued
CEO pay table (audited)
CEO and Period end
Total
remuneration
$’000
Fixed
$’000
Annual bonus payment
level achieved (% of
maximum opportunity)
LTIP vesting level
achieved (% of
maximum opportunity)
Laura Tyler - 9 Aug 2024 to 31 Dec 2024
618
313
75%
n.a.
Paul Cronin - 1 Jan 2024 to 9 Aug 2024
449
395
n.a.
n.a.
Paul Cronin - Dec 2023
867
537
70%
n.a.
Paul Cronin - Dec 2022 (12m)
601
329
90%
n.a.
Paul Cronin - Dec 2021 (12m)
2,060
335
50%
n.a.
Paul Cronin - Dec 2020 (6m)
140
140
n.a.
n.a.
Paul Cronin - June 2020 (12m)
1,083
262
n.a.
n.a.
As explained in this report, Laura Tyler became interim CEO from 9 August 2024, then permanent
CEO from 17 October 2024, after Paul Cronin stepped down from the Board.
The Company has operated a structured annual bonus plan since 2021. Before this the Company
used key performance indicator bonuses which did not correspond to specific one year periods.
KPI bonuses totalling $96,262 were paid in cash during the year ended December 2021 in respect
of the issue of exploitation permits for Veovaca and Rupice, and of $37,812 in year ended June
2020 in respect of the achievement of the London Stock Exchange Listing.
Prior to 1 January 2021, the Company’s policy was to make significant share incentive awards
either as options or performance rights, normally with operational or share price performance
targets, to be met by specified dates which did not correspond to the Company’s annual financial
cycle. Performance rights held by the Executive Director vested on completion of a JORC
compliant feasibility study and the meeting of the share price performance condition during year
ended December 2021 and had a value at vesting of $1,497,409. Performance rights held by the
Executive Director vested during year ended June 2020 and had a value at vesting of $782,369.
% change from 2023 to 2024
% change from 2022 to 2023
% change from 2021 to 2022
Salary or fees
Benefits
Bonus
Salary or fees
Benefits
Bonus
Salary or fees
Benefits
Bonus
Employees
1,2
(1%)
0%
(56%)
6.6%
0%
(40.3%)
78.9%
100%
32.5%
Executive Director:
Laura Tyler
100%
100%
100%
n.a
n.a
n.a
n.a
n.a
n.a
Paul Cronin
(17.0%)
(24.9%)
(100%)
44.9%
100%
21.0%
(1.8%)
0%
19.5%
Sanela Karic
100%
n.a
100%
n.a
n.a
n.a
n.a
n.a
n.a
Non-Executive
Directors:
Laura Tyler
100%
100%
n.a
n.a
n.a
n.a
n.a
n.a
n.a
Michael Rawlinson
88.6%
n.a
100%
0.1%
n.a
n.a
79.0%
n.a
n.a
Eric Rasmussen
100%
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
Mirco Bardella
100%
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
Peter Bilbe
35.4%
n.a
n.a
(3.8%)
n.a
n.a
69.4%
n.a
n.a
Julian Barnes
(28.8%)
n.a
n.a
0.1%
n.a
n.a
50.2%
n.a
n.a
Sandra Bates
30.7%
n.a
n.a
0.1%
n.a
n.a
64.1%
n.a
n.a
Sanela Karic
(43.0%)
n.a
n.a
(23.0%)
n.a
n.a
446.4%
n.a
n.a
PERCENTAGE CHANGE IN
REMUNERATION OF DIRECTORS
AND EMPLOYEES
The table to the right outlines the % change
in salary, other pay and benefits and annual
bonus of the Directors to that of the wider UK
and expatriated workforce. The table below is
presented for the past 3 years, FY2021 being
the Company’s first full 12-month period for a
comparison base.
Notes:
1.
The strict legal requirement is to provide only
details of employees of Adriatic Metals plc.
As the listed entity has only a few employees,
voluntary disposure has been made in respect
of all UK and expatriate group employees.
2.
The average percentage change in employee
remuneration was calculated using the
movement in mean values (in respect of
each element of remuneration) between the
relevant years. The relevant mean values were
calculated by dividing the aggregate total of
each element of remuneration for all UK and
expatriate group employees during the year
(calculated on a full-time equivalent basis) by
the total number of UK and expatriate group
employees.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
66
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Remuneration & Nomination Committee Report - continued
CEO TO EMPLOYEE PAY RATIO
During 2024 the average number of UK employees of the Company (and the wider Group) was not more than
250 and accordingly the Company is not required to provide CEO to employee pay ratio information. If in future
years, the Company meets the qualifying condition then this information will be produced.
RELATIVE IMPORTANCE OF SPEND ON PAY
The Directors have considered the requirement to present information on the relative importance of spend on
pay compared to other financial metrics.
The total monetary value of Group remuneration was as follows. The Company made no distributions to
shareholders during 2023 or 2024.
(In USD)
Year ended 31
December 2024
Year ended 31
December 2023
% change
Cash remuneration
27,897
12,703
+120%
Total remuneration
27,897
12,703
+120%
Dividends
-
-
ADVICE ON REMUNERATION
During the year, in order to enable the Committee to reach informed decisions on executive remuneration,
advice on market data and trends was obtained from independent consultants FIT Remuneration Consultants
LLP (FIT). FIT are signatories to and abide by the Code of Conduct for Remuneration Consultants (which can
be found at www.remunerationconsultantsgroup.com). The fees paid to FIT in respect of work carried out in
2024 were £ £79,729.75 (£67,795.50), excluding expenses and VAT, and were charged on the basis of FIT’s
standard terms of business for advice provided. Other than advice on remuneration and share schemes, no
other services were provided by FIT to the Company. The Committee is satisfied that the advice provided by
FIT in 2024 was independent and objective.
OTHER DISCLOSURES ON REMUNERATION FOR THE YEAR ENDED
31 DECEMBER 2024
Paul Cronin – Leaving arrangements
•
As summarized in the Chair’s Introductory Statement to this report, the treatment of Paul Cronin’s
remuneration items following his resignation as Managing Director and CEO with effect from 9 August
2024 was as follows: Paul received his fixed pay and benefits for the six months’ notice period of his
contract. Paul also received an amount of $32,319 in respect of accrued but untaken leave.
•
Paul did not receive a 2024 STIP bonus.
•
Paul was permitted to retain his “inflight” and unvested share awards on a time pro-rata basis, but subject
to all continuing requirements: the original vesting dates for these awards and the relevant performance-
vesting conditions continue to apply.
The impact of time pro-rating on Paul’s LTIPs is shown in the notes to the section “Statement of Directors’
shareholdings and Share interests” above and involved the following pro-rata reductions to share numbers.
Year of Award
Date of grant
Originally awarded
number of Shares
Vesting
Date
Prorated
number of
shares
Holding period
from Vesting Date
2023
24/05/2023
142,778
01/01/2026
93,937
2 years
2023
24/05/2023
434,272
24/05/2026
248,438
2 years
2024
12/06/2024
499,240
22/05/2027
112,492
2 years
STATEMENT OF VOTING AT AGM
The table below shows the results of the binding vote on the Directors’ remuneration policy at our 2024 AGM
and of the advisory vote on the 2023 Annual Report on Remuneration at our 2024 AGM:
2023 Directors’
Remuneration Policy
2023 Annual Report
on Remuneration
Total number
of votes
% of
votes cast
Total number
of votes
% of
votes cast
For (including discretionary)
122,729,918
99.95%
98,383,522
99.98%
Against
64,419
0.05%
19,228
0.02%
Total votes cast
(excluding withheld votes)
122,794,337
98,402,750
Votes withheld
25,544
122,272
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
67
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Remuneration & Nomination Committee Report - continued
REMUNERATION POLICY IN 2025
Executive Directors Fixed Remuneration
2025 salaries for the Executive Directors are as
follows:
•
CEO – USD $650,000
•
Executive Director Corporate Affairs -
$320,000
2025 Short Term Incentive Plan (STIP)
and KPIs
The target areas for 2025 STIP and their
weightings within the bonus are:
Further details of the target thresholds are commercially sensitive and will be disclosed together with
information on actual performance in each area in our 2025 Directors’ remuneration report.
The potential maximum percentage of base salary achievable as a bonus under the STIP for the CEO is
100% of base salary and for the Executive Director for Corporate Affairs is 70% of base salary. The Executive
Directors’ 2025 STIP bonus is based on the corporate objectives summarised in the above KPI table.
2025 STIP bonuses earned are expected to be paid in either cash or equity in early 2026.
Long Term Incentive Plan (LTIP)
The Committee will make awards in 2025 to the Executive Directors at the following levels:
•
200% of base salary for the CEO (pro-rated).
•
140% of base salary for the Executive Director of Corporate Affairs.
Vesting will be based on similar performance measures as those set for the FY24 LTIP awards.
In outline, the proposed performance conditions for the FY25 LTIP awards are as follows:
•
Absolute Total Shareholder Return (15% weighting)
•
Relative Total Shareholder Return (20% weighting)
•
Growth Initiatives (35%)
•
Sustainability Metrics - diversity, national staff
development and CO2 reduction plan (15%, 5%,
10% weightings respectively)
Further details of the performance measures will be provided in the 2025 AGM Notice.
Each performance condition is to be measured over the three financial years 2025 to 2027. Full details of the
performance measures will be provided in the Directors’ remuneration report for the 2025 financial year.
A two year holding period will apply to any vested shares resulting from the 2025 LTIP award.
Chairperson and Non-Executive Directors
The fees for the Chairperson and Non-Executive Directors have been set at a level to reflect the amount of time
and level of involvement required in order to carry out their duties as members of the Board and its committees.
Position
Annual fee level from
1 January 2025 (£’000 p.a.)
Previous fee level
(£’000 p.a.)
Chairperson fee
140
140
Non-Executive Director base fee
60
60
Committee Chairperson fee
10
10
Senior Independent Director fee
10
10
Directors’ Remuneration Policy at Adriatic Metals
The Directors’ Remuneration Policy for Executive Directors and Non-executive Directors for the three-year
period expiring at the Company’s 2026 AGM was approved by shareholders at the 2023 AGM on 24 May 2023
and is available on the Company’s website at
https://www.adriaticmetals.com/downloads/agm/2023/directors-remuneration-policy-2023.pdf.
Peter Bilbe
Chair of Remuneration Committee
Operational Effectiveness
– Production (20%)
Mine: Development metres, Production
tonnes, Fill placed
7%
Haulage & Fleet: on time delivery
6%
Plant: Throughput rate, Recovery, Saleable
concentrate tonnes
7%
Operational Effectiveness
– Costs (10%)
Cost compared with budget
10%
Operational Effectiveness
- Capital (5%)
Capital spend compared with budget
10%
Enterprise value (10%)
Incremental growth plan
5%
Exploration success
5%
Diverse Workforce (5%)
Increase Diversity Index
5%
Local Workforce (5%)
Increase in local leadership /
skilled operator roles
5%
Inclusive Culture (10%)
Employee Survey - improvement in metrics
5%
Reduction in Voluntary Staff Turnover
5%
Health (5%)
Critical Controls
5%
Safety (10%)
Increase in compliance levels
5%
Increase in hazard reporting
5%
Environment performance
and permits (10%)
Reduction in environment incidents
5%
Renewal of environmental permits
5%
Stakeholder Perception
of Company in Local
Community (5%)
Develop and implement action plan
5%
Operational
Discipline
(50%)
People
(20%)
Strategic Area
Target Area
Target Details
Weighting
Sustainability
(30%)
TOTAL
100%
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
68
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Another transformative
period as we continue to
move forward
Michael Rawlinson
Chairman of the Board
INTRODUCTION
In accordance with Section 415 of the Companies Act 2006, the Directors
of Adriatic Metals PLC present their report to shareholders for the 12-month
financial year ended 31 December 2024. The Directors’ Report comprises the
Directors’ Report section of this report, together with the sections of the Annual
Report incorporated by reference. As permitted by legislation, some of the
matters normally included in the Directors’ Report have instead been included in
other sections of the Annual Report, as indicated to the right.
Directors’ Report
DIRECTORS
The names of the Directors who held office during the year
and to the date of this report are:
•
Michael Rawlinson* (Chairman)
•
Laura Tyler (Managing Director and CEO) (appointed
Non-executive director on 1 July 2024, interim CEO on
9 August 2024 and permanent Managing Director and
CEO from 17 October 2024)
•
Peter Bilbe* (Non-Executive Director)
•
Paul Cronin (Managing Director and CEO) (resigned 9
August 2024)
•
Julian Barnes* (Non-Executive Director) (resigned 13
June 2024)
•
Sandra Bates* (Senior Independent Director)
•
Sanela Karic (Executive Director for Corporate Affairs)
•
Eric Rasmussen* (Non-Executive Director) (appointed
13 June 2024)
•
Mirco Bardella* (Non-Executive Director) (appointed 3
October 2024)
* Determined by the board to be independent in accordance
with the Quoted Company Alliance’s Corporate Governance
Code (QCA Code).
The joint company secretaries are Jonathan Dickman and
Gabriel Chiappini.
RESULTS AND DIVIDENDS
The Group results for the year ended 31 December 2024
are set out in the Financial Review on page 20.
The Company’s aim is to generate long term value for its
stakeholders and design a shareholder distribution policy
that reflects the growth prospects and profitability of the
Company while maintaining appropriate levels of operational
liquidity in due course. However, due to the early-stage
nature of the Company and the Vareš Silver Operation
transitioning from the developer to the producer, no interim
dividend was paid and no final dividend is recommended for
the year ended 31 December 2024.
LIKELY FUTURE DEVELOPMENTS
The Company’s key future development is completion of
the production ramp up at the Vareš Silver Operation with
commercial production anticipated in Q2 2025.
SHARE CAPITAL
The Company was granted authority at the 2024 AGM to
allot shares in the capital of the Company up to a maximum
nominal amount of £1,363,198 (equivalent to 102,073,980
shares) in accordance with Section 551 of the Companies
Act 2006. Details of the Company’s share capital are set
out in note 23.2 to the consolidated financial statements,
including details of the movements in the Company’s issued
share capital during the year.
The Company’s issued ordinary share capital ranks pari
passu in all respects and carries the right to receive all
dividends and distributions declared, made or paid on or
in respect of the ordinary shares. There are currently no
redeemable non-voting preference shares or subscriber
shares of the Company in issue.
DIRECTORS’ AND OFFICERS’
INSURANCE
The Company has arranged appropriate Directors’ and
Officers’ insurance to indemnify the Directors and Officers
against liability in respect of proceedings brought about by
third parties. Such provisions remain in place at the date of
this report.
DIRECTORS’ INTERESTS
Information on share ownership, options and performance
rights held by Directors can be found in this report and in the
Remuneration & Nomination Committee Report.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
69
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Directors’ Report - continued
SUBSTANTIAL SHAREHOLDINGS
The Company’s issued share capital as at 31 December 2024 was 324,476,883 ordinary shares and at
30 March 2025 was 345,295,293 ordinary shares with each share carrying the right to one vote. No shares
are held in treasury.
At 31 December 2024, the Company had been notified, pursuant to the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rule (DTR 5), or was otherwise aware of the following substantial
interests (3% or more) in the Company’s issued share capital.
Shareholder
Number of
ordinary shares
Percentage of
issued share capital
Helikon Investments
52,636,698
16.22
L1 Capital
46,420,433
14.31
T Rowe Price
29,274,915
9.02
Mr Paul D Cronin
12,248,632
3.77
Orion Asset Mgt
12,095,500
3.73
Mr Milos Bosnjakovic
11,086,174
3.42
163,762,352
50.47%
At 17 March 2025, being the latest practicable date before the approval of the Annual Report and Accounts,
the Company had been notified, pursuant to DTR 5 that the above positions had changed
Shareholder
Number of
ordinary shares
Percentage of
issued share capital
Helikon Investments
71,979,868
21.44
L1 Capital
52,080,894
15.52
T Rowe Price
29,624,490
8.83
Mr Paul D Cronin
12,251,132
3.36
Mr Milos Bosnjakovic
11,086,174
3.30
177,022,558
52.45
Changes in interests that have been notified to the Company pursuant to DTR 5 since 17 March 2024 can be
found in the Regulatory News section of the Investors page of the Company’s corporate website:
https://www.adriaticmetals.com/investors/lse-announcements/.
ADDITIONAL DISCLOSURES
For the purposes of UKLR 6.6.4 R, the information required to be disclosed by UKLR 6.6.1 R, where applicable,
can be found in the following parts of this Annual Report:
Section
Matter
Location
(1)
Interest capitalized
Property, plant and equipment, note
12, page 96
(2)
Publication of unaudited financial information
Not applicable
(4)
Details of long term incentive scheme
Remuneration & Nomination
Committee Report page 58
(5)
Waiver of emoluments by a Director
Remuneration & Nomination
Committee Report page 58
(6)
Waiver of future emoluments by a Director
Not applicable.
(7)
Non pre-emptive issues of equity for cash
Not applicable
(8)
As item (7) in relation to major subsidiary undertakings
Not applicable
(9)
Parent participation in a placing by a listed subsidiary
Not applicable
(10)(a)
Contract of significance in which a Director is interested
Not applicable
(10)(b)
Contract of significance with controlling shareholder
Not applicable
(11)
Provision of services by a controlling shareholder
Not applicable
(12)
Shareholder waivers of dividends
Not applicable
(13)
Shareholder waivers of future dividends
Not applicable
(14)
Agreement with controlling shareholder
Not applicable
BRANCHES
Adriatic Metals PLC does not have any branches of the Company outside the United Kingdom as defined in
s1046(3) of the Companies Act 2006.
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Information regarding the financial risk management and internal control processes and policies and exposure
to the risks associated with the financial instruments, can be found in notes 21 and 22 to the consolidated
financial statements, and in the sections on Corporate Governance and Internal Control on page 45 and Risk
Management on page 22.
STREAMLINED ENERGY AND CARBON REPORTING
The Group has prepared a streamlined energy and carbon report covering emissions categorized as Scope 1
and Scope 2, which can be found on page 40.
GOVERNANCE
Annual Report for the Year Ended 31 December 2024
70
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Directors’ Report - continued
POLITICAL AND CHARITABLE
DONATIONS
Neither Adriatic Metals PLC nor its subsidiaries have
made any political donations during the year. During
the year $0.1m (2023: $0.1m) was donated to the
Adriatic Foundation.
POWERS OF DIRECTORS
Subject to the Company’s Articles of Association,
UK legislation, ASX Rules and to any directions given
by special resolution, the business of the Company
is managed by the Board, which may exercise all the
powers of the Company. The Articles of Association
contain specific provisions concerning the
Company’s power to borrow money and also provide
the power to make purchases of any of its own shares.
The Directors have the authority to allot shares or
grant rights to subscribe for or to convert any security
into shares in the Company. Further details of the
proposed authorities will be set out in the Notice of
the AGM.
GOING CONCERN
The Company’s going concern assessment has
been performed as part of the Group’s going
concern assessment. The Group sells and distributes
its concentrate product through annual offtake
arrangements with third parties, which commit to
purchasing 100% of the Vareš Silver Operation
concentrate production.
The Group has a $120m borrowing facility with Orion
that is fully drawn as at 31 December 2024, with the
first repayment due 31 March 2025, which will be
repaid from funds generated from concentrate sales.
A Debt-Service Coverage Ratio (“DSCR”) covenant is
included in the Orion Debt Finance Package, and is
required to be above 1.25x on a quarterly basis over
each 6-month testing period, with the first testing
period covering September 2025 to March 2026.
Post year end, the Group is meeting its day-to-
day working capital requirements through its cash
generating operations at Vareš. Expansionary capital
expenditure for 2025 has been funded through equity
financing. Post year end the Group raised $50m via an
oversubscribed equity raise, gross of costs, to support
this.
The Board has reviewed forecasts for the period
to December 2026 to assess the Group’s liquidity.
The base case scenario demonstrates substantial
headroom and compliance with the DSCR covenant
ratio. The Board has considered additional sensitivity
scenarios in terms of the Group’s commodity price
forecasts, mining grades, expected throughput
volumes, operating cost profile and capital expenditure.
The Board has assessed the key risks that could
impact the prospects of the Group over the going
concern period including commodity price outlook,
cost inflation, negative grade reconciliation, and softer
production performance, with reverse stress testing of
the forecasts in line with best practice
Liquidity headroom and covenant compliance was
demonstrated in each reasonably possible scenario
with application of mitigation measures that are
within the Group’s control. Accordingly, the Directors
continue to adopt the going concern basis in
preparing the consolidated financial statements.
POST BALANCE SHEET EVENTS
Please refer to note 27 in the consolidated financial
statements for a detailed report on major events that
occurred after 31 December 2024.
ANNUAL GENERAL MEETING (“AGM”)
The date of the 2025 AGM will be announced in
due course. At the AGM, shareholders will have the
opportunity to put questions to the Board, including
the Chairs of the Board Committees.
Full details of the AGM, including explanatory notes,
will be contained in the Notice of the AGM, which will
be distributed at least 28 days before the meeting.
The Notice will set out the resolutions to be proposed
at the AGM and an explanation of each resolution. All
documents relating to the AGM will be available on the
Company’s website at www.adriaticmetals.com.
CORPORATE GOVERNANCE
STATEMENT
The Disclosure Guidance and Transparency Rules
(DTR 7.2) require certain information to be included
in a Corporate Governance Statement set out in a
Company’s Directors’ Report. In common with many
companies, Adriatic Metals PLC has an existing
practice of issuing, within its Annual Report, a Corporate
Governance Report that is separate from its Directors’
Report.
ELECTRONIC COMMUNICATIONS
A copy of the 2024 Annual Report, other corporate
publications, reports and announcements are
available on the Company’s website at the following
link: www.adriaticmetals.com. Shareholders may elect
to receive notification by email of the availability of
the Annual Report on the Company’s website instead
of receiving paper copies.
SHARE RIGHTS
Without prejudice to any rights attached to any
existing shares, the Company may issue shares with
rights or restrictions as determined by either the
Company by ordinary resolution or, if the Company
passes a resolution, the Directors.
VOTING RIGHTS
There are no restrictions on voting rights or transfers
of shares in the Articles other than those described in
these paragraphs. Details of deadlines for exercising
voting rights and proxy appointment will be set out in
the Notice of the 2025 AGM.
At a general meeting, subject to any special rights
or restrictions attached to any class of shares on a
poll, every member present in person or by proxy
has one vote for every share that he or she holds. All
substantive resolutions at a meeting of security holders
are decided by poll rather than by a show of hands.
A proxy is not entitled to vote where the member
appointing the proxy would not have been entitled
to vote on the resolution had he or she been present
in person. Unless the Directors decide otherwise, no
member shall be entitled to vote either personally or
by proxy or to exercise any other right in relation to
general meetings if any sum due from him or her to the
Company in respect of that share remains unpaid.
Additional information relating to holders of shares
in the Company in the form of CHESS Depositary
Instruments (CDIs) can be found in the Additional
Information section of the Annual Report.
TRANSFER OF SHARES
The Company’s Articles provide that transfers of
certificated shares must be effected in writing, and
duly signed by or on behalf of the transferor and,
except in the case of fully paid shares, by or on behalf
of the transferee. The transferor shall remain the
holder of the shares concerned until the name of the
transferee is entered in the Register of Members in
respect of those shares. Transfers of uncertificated
shares may be effected by means of CREST unless
the CREST Regulations provide otherwise.
The Directors may refuse to register an allotment or
transfer of shares in favour of more than four persons
jointly.
AUDITORS
BDO LLP have been auditors of Adriatic Metals PLC
since 2020 and will be proposed for re-appointment
at the 2025 Annual General Meeting.
STATEMENT OF DISCLOSURE TO THE
AUDITORS
Each of the Directors who were members of the Board
at the date of the approval of this report confirms that:
•
So far as they are aware, there is no relevant audit
information of which the Company’s auditors are
unaware.
•
He or she has taken all the reasonable steps that
he or she ought to have taken as a Director to
make him or herself aware of any relevant audit
information and to establish that the Company’s
auditors are aware of the information.
•
The confirmation is given and should be
interpreted in accordance with the provisions of
s418 of the Companies Act 2006.
The Adriatic Metals PLC Directors’ Report has been
prepared in accordance with applicable UK company
law and was approved by the Board on 30 March
2025.
By order of the Board
Michael Rawlinson
Chairman of the Board
GOVERNANCE
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CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Statement of Directors’ Responsibilities
The Directors
are responsible
for preparing the
Annual Report
and the Financial
Statements in
accordance with
applicable law and
regulations.
Company law requires the Directors to prepare
Financial Statements for each financial year. Under
that law the Directors are required to prepare the
Group financial statements in accordance with UK
adopted international accounting standards and
have elected to prepare the company financial
statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS
101 ‘Reduced Disclosure Framework’, and applicable
law). Under company law the Directors must not
approve the Financial Statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and Company and of the
profit or loss of the Group for that year. The Directors
are also required to prepare financial statements
in accordance with the rules of the London Stock
Exchange for companies in the Equity Shares
Transition category (“ESTC”) (previously Standard
List companies).
In preparing each of the Group and Parent Company
Financial Statements, the Directors are required to:
•
select suitable accounting policies and then
apply them consistently;
•
make judgements and accounting estimates that
are reasonable, relevant, reliable and prudent;
•
state whether the applicable UK adopted
international accounting standards have been
followed for the Group Financial Statements;
and United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure
Framework’, have been followed for the Parent
Company Financial Statements, subject to any
material departures disclosed and explained in
those Financial Statements; and
•
prepare the Financial Statements on the going
concern basis unless it is inappropriate to
presume that the Group and the Parent Company
will continue in business.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ remuneration report
and Corporate Governance Statement that complies
with that law and those regulations.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that the Financial Statements comply with the
requirements of the Companies Act 2006.
The Directors are also responsible for safeguarding
the assets of the Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors consider the Financial Statements,
taken as a whole, are fair, balanced, and
understandable and provide the information
necessary for shareholders to assess the Group’s
position and performance, business model and
strategy.
WEBSITE PUBLICATION
The Directors are responsible for ensuring the
Annual Report and the Financial Statements are
made available on a website. Financial Statements
are published on the Company's website in
accordance with legislation in the United Kingdom
governing the preparation and dissemination of
financial statements, which may vary from legislation
in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the
Directors. The Directors' responsibility also extends
to the ongoing integrity of the Financial Statements
contained therein.
DIRECTORS‘ RESPONSIBILITIES
PURSUANT TO DTR 4
In accordance with Disclosure Guidance and
Transparency Rule (DTR) 4.1.16R, the Financial
Statements will form part of the annual financial
report prepared under DTR 4.1.17R and 4.1.18R.
The external auditor’s report on these financial
statements provides no assurance over whether
the annual financial report has been prepared in
accordance with those requirements.
GOVERNANCE
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Strong capital
control &
cash position
FINANCE
Independent auditor’s report to the members of
Adriatic Metals Plc
73
Consolidated Income Statement
79
Consolidated Statement of Comprehensive Income
79
Consolidated Statement of Financial Position
80
Consolidated Statement of Changes in Equity
81
Consolidated Statement of Cash Flows
82
Notes to the Consolidated Financial Statements
83
Parent Company Statement of Financial Position
107
Parent Company Statement of Changes in Equity
108
Notes to the Parent Company Financial Statements
109
Additional ASX Information (Unaudited)
114
Annual Report for the Year Ended 31 December 2024
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Independent auditor’s report to the members of Adriatic Metals Plc
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2024 and of the Group’s loss for the year then ended;
•
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
•
the Parent Company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements of Adriatic Metals Plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2024 which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated and parent company statements of
financial position, the consolidated and parent company statements of changes in equity, the consolidated
statement of cash flows and notes to the financial statements, including a summary of material accounting
policy information.
The financial reporting framework that has been applied in the preparation of the Group financial statements
is applicable law and UK adopted international accounting standards. The financial reporting framework that
has been applied in the preparation of the Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted Accounting Practice FRS 101 “Reduced Disclosure Framework”), as
applied in accordance with the provisions of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional
report to the Audit and Risk Committee.
INDEPENDENCE
Following the recommendation of the Audit and Risk Committee, we were appointed by the Board of Directors
on 28 May 2020 to audit the financial statements for the period ending 30 June 2020 and subsequent
financial periods. The period of total uninterrupted engagement including retenders and reappointments is
5 years, covering the period ended 30 June 2020 and the years ended 31 December 2021 to 31 December
2024. We remain independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. The non-audit services prohibited by that standard were not provided to
the Group or the Parent Company.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Please refer to the Key Audit Matter
section for the detailed explanation on our evaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue as a going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in
the relevant sections of this report.
OVERVIEW
Key audit
matters
2024
2023
Going concern
Yes
Yes
Valuation and accounting for the Orion Copper streaming
arrangement
No
Yes
The valuation and accounting for the Orion Copper stream arrangement was performed
for the first time in 2023. As the accounting and valuation methodology is now
established, it is no longer considered a key audit matter in the current year.
Materiality
Group financial statements as a whole
$3,500,000 (2023: $4,350,000) based on 1% (2023: 1.5%) of total assets
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
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AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its environment, the applicable
financial reporting framework and the Group’s system of internal control. On the basis of this, we identified and
assessed the risks of material misstatement of the Group financial statements including with respect to the
consolidation process. We then applied professional judgement to focus our audit procedures on the areas
that posed the greatest risks to the group financial statements. We continually assessed risks throughout our
audit, revising the risks where necessary, with the aim of reducing the group risk of material misstatement to an
acceptable level, in order to provide a basis for our opinion.
COMPONENTS IN SCOPE
From the above risk assessment and planning procedures, we determined which of the Group’s components were likely
to include risks of material misstatement relevant to the Group’s financial statements. We then determined the type of
procedures to be performed at these components, and the extent to which component auditors were required to be
involved.
As part of performing our Group audit, we have determined the components in scope as follows:
Number of components
FY2024
FY2023
Full scope audit [1]
6
6
Full scope audit of one or more balance [2]
-
-
Specified audit procedures [3]
-
-
6
6
As part of performing our Group audit, we have determined the components in scope as follows:
Scope [1]: Comprises Adriatic Metals Plc (Parent company), Adriatic Metals Bosnia and Herzegovina d.o.o, Adriatic
Metals d.o.o, Adriatic Metals Services (UK) Limited, Adriatic Metals BiH Holdings Limited and Adriatic Metals Trading and
Finance Limited (2023: Adriatic Metals Plc (Parent company), Adriatic Metals Bosnia and Herzegovina d.o.o., Adriatic
Metals d.o.o, Adriatic Metals Services (UK) Limited, Adriatic Metals BiH Holdings Limited and Adriatic Metals Trading and
Finance Limited)
Scope [2]: none (2023: none)
Scope [3]: none (2023: none).
In determining components, we have considered how components are organised within the Group, and the
commonality of control environments, legal and regulatory framework, and level of aggregation associated with
individual entities. Whilst there is relative commonality of controls across the Group, differences in jurisdictional risk, and
the legal and regulatory frameworks under which the entities operate, prevent the further amalgamation of components.
For components in scope, we used a combination of risk assessment procedures and further audit procedures to
obtain sufficient appropriate evidence. These further audit procedures included:
•
procedures on the entire financial information of the component, including performing substantive procedures
and tests of operating effectiveness of controls
•
procedures on one or more classes of transactions, account balances or disclosures
•
specific audit procedures
PROCEDURES PERFORMED AT THE COMPONENT LEVEL
The audit of the Adriatic Metals Bosnia and Herzegovina component was performed in Bosnia and Herzegovina
by the local BDO network member firm. The audits of the parent company, other significant components and the
Group consolidation were performed in the United Kingdom by the Group audit team.
PROCEDURES PERFORMED CENTRALLY
We considered there to be a high degree of centralisation of financial reporting and commonality of controls and
similarity of the Group’s activities and business lines in relation to consolidation, going concern, valuation of the copper
streaming arrangement, income and deferred taxation, revenue, valuation of exploration and evaluation assets, right
of use assets, lease liabilities, contractor tax liabilities and asset retirement obligations. We therefore designed and
performed procedures centrally by the Group audit team in these areas. In addition, the Group audit team performed
additional procedures in respect of certain significant risk areas including that which represented a Key Audit Matter in
addition to procedures performed by the component auditor.
DISAGGREGATION
The financial information relating to management override of controls is disaggregated across the Group. We took
a decentralised approach to responding to this risk. We performed procedures at the component level in relation
to this risk in order to obtain assurance over the population of Group balances.
LOCATIONS
Adriatic Metals Plc’s operations are spread over a number of different geographical locations. We visited the
operations in Bosnia and Herzegovina including the corporate offices in country and in the UK.
WORKING WITH OTHER AUDITORS
As Group auditor, we determined the components at which audit work was performed, together with the resources
needed to perform this work. These resources included the component auditor, who formed part of the Group
engagement team as reported above. As Group auditor, we are solely responsible for expressing an opinion on the
financial statements.
In working with this component auditor, we held discussions with the component audit team on the significant
areas of the Group audit relevant to the components based on our assessment of the Group risks of material
misstatement. We issued our Group audit instructions to the component auditor on the nature and extent of their
participation and role in the Group audit, and on the Group risks of material misstatement.
We directed, supervised and reviewed the component auditor’s work. This included holding meetings and calls
during various phases of the audit and reviewing component auditor documentation in person and remotely and
evaluating the appropriateness of the audit procedures performed and the results thereof.
CLIMATE CHANGE
Our work on the assessment of potential impacts of climate-related risks on the Group’s operations and financial
statements included:
•
Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks
and their potential impacts on the financial statements and adequately disclose climate-related risks within the
annual report and financial statements;
•
Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how
climate change affects this particular sector; and
•
Review of the minutes of Board, Audit and Risk Committee meetings and other papers related to climate change and
performed a risk assessment as to how the impact of the Group’s commitment as set out in the Parent Company’s
website may affect the financial statements and our audit.
We challenged the extent to which climate-related considerations, including the expected cash flows from the
initiatives and commitments have been reflected, where appropriate, in the Directors’ going concern assessment and in
management’s judgements and estimates in relation to cashflow forecasts.
We also assessed the consistency of management’s disclosures included as Other Information in the annual report and
notes to the financial statements within the financial statements and with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially
impacted by climate-related risks and related commitments.
FINANCIAL STATEMENTS
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KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the key audit matter
Going concern
Refer to Note 2.3 for
further details.
The Group produced its first metal
concentrate and generated first revenue
in 2024, however it has not achieved
commercial production as at year end.
There is a risk that delays to the ramp-up to
commercial production, places stress on the
Group’s and Parent Company’s liquidity.
The Group also needs to comply with
loan covenants linked to the Orion Senior
Secured Loan and pay its first instalment on
the loan in March 2025. There is a risk that
the Group may not comply with future loan
covenants linked to the Orion Loan.
Due to significant judgements involved in
estimating future cash flows and forecasting
covenants compliance in the Directors’ and
Management’s going concern assessment,
we have identified going concern as a
significant risk and a key area of focus for
our audit.
Our specific audit testing in regard to this included the following. We:
Reviewed the Directors’ and Management’s assessment and conclusion for preparing the Group and Parent Company’s financial statements on a
going concern basis.
Checked if Management’s forecasts cover a period of at least twelve months from the expected date of approval of the financial statements.
Checked the mathematical accuracy of the cash flow forecasts.
Challenged the cash flow forecasts by assessing the reasonableness of judgements applied in estimating the key inputs such as corporate and capital
expenditures, production ramp-up, forecast sales and commodity prices. We assessed Management’s historical forecasting accuracy, performed
commodity prices benchmarking against external price forecasts, and agreed production forecasts to the life-of-mine plan and approved budgets.
We also considered actual production to date and checked the consistency of the inputs in the forecast against other information obtained during the
audit.
Assessed committed expenditure on the Vares project, exploration costs on the Raska project that are contractual, other spend under the Group’s
license arrangements, and the general and administrative costs (G&A) within the forecast, checking their consistency with other information obtained
during the audit.
Challenged Management’s reverse stress testing scenario to determine the point at which liquidity breaks, taking into consideration the ability to
secure future funding. We also reviewed stress test scenarios including scenarios relating to delays in production ramp-up and capital and operating
expenditure. Our challenge of Management also incorporated other plausible scenarios not considered by Management.
Assessed compliance of covenants in the Orion debt facility and forecast adherence thereof.
Reviewed and recalculated forecast covenants.
Verified post-year-end cash position in the going concern model to bank statements.
Verified the post-year-end receipt of the prepayment facility and equity raise to bank statements.
Reviewed the adequacy of disclosures in the financial statements in respect of going concern.
Key observations:
Our conclusions are set out in the conclusions related to going concern section of our report.
FINANCIAL STATEMENTS
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OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements
Parent company financial statements
2024 $m
2023 $m
2024 $m
2023 $m
Materiality
3,500,000
4,350,000
2,100,000
1,700,000
Basis for determining materiality
1% of total assets
1.5% of total assets
1% of total assets
40% of Group materiality
Rationale for the
benchmark applied
The materiality has been based on total assets as the Group is not yet profit-making
and is expected to achieve a commercial level of production in 2025.
We consider total assets to be one of the principal considerations for users of the
financial statements.
The materiality has been based on total
assets as the Company is not revenue
generating or profit making.
Capped at 40% of Group materiality
given the assessment of the
component’s aggregation risk.
Performance materiality
2,200,000
3,000,000
1,200,000
1,190,000
Basis for determining
performance materiality
65%
70%
65%
70%
Rationale for the percentage
applied for performance
materiality
In reaching our conclusion on the level of performance materiality to be applied we considered a number of factors including the expected total value of known and likely
misstatements (based on past experience) and our knowledge of the Group’s internal controls.
COMPONENT MATERIALITY
For the purposes of our Group audit opinion, we set performance materiality for each component of the Group, apart from the Parent Company whose materiality and performance materiality are set out above, based on a
percentage of between 36% and 73% (2023: 40% and 71% ) of Group performance materiality dependent on a number of factors including potential significant risks of material misstatements at the component, relative
size of components, extent of disaggregation of the financial information across components, control environment and our assessment of the risk of material misstatement of those components. Component performance
materiality ranged from $800,000 to $1,600,000 (2023: $1,190,000 to $2,170,000
REPORTING THRESHOLD
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of $175,000 (2023: $87,000). We also agreed to report differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
FINANCIAL STATEMENTS
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OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information
included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described
below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent
with the financial statements; and
•
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has
been properly prepared in accordance with the Companies Act 2006.
Matters on which
we are required to
report by exception
We have nothing to report in respect of the following matters in relation to which
the Companies Act 2006 requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches not
visited by us; or
•
the Parent Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the accounting
records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made;
or
•
we have not received all the information and explanations we require for our
audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or
the Parent Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
EXTENT TO WHICH THE AUDIT WAS CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
NON-COMPLIANCE WITH LAWS AND REGULATIONS
Based on:
•
Our understanding of the Group and the industry in which it operates;
•
Discussion with Management and those charged with governance; and
•
Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and
regulations.
we considered the significant laws and regulations to be the elements of the financial reporting network, the
Companies Act 2006, UK and Bosnia and Herzegovina tax legislations, mining laws in Bosnia and Herzegovina,
London Stock Exchange (LSE) and Australian Securities Exchange (ASX) listing rules, the QCA corporate
governance code and environmental regulations.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a
material effect on the amount or disclosures in the financial statements, for example through the imposition of
fines or litigations.
Our procedures in respect of the above included:
FINANCIAL STATEMENTS
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•
Review of minutes of meetings of those charged with governance for any instances of non-compliance
with laws and regulations.
•
Reviewing correspondence with regulatory and tax authorities for any instances of non-compliance with
laws and regulations.
•
Discussing with the component auditor if there are aware of any non-compliance with laws and regulations.
•
Reviewing financial statement disclosures and agreeing to supporting documentation; and
•
Reviewing legal expenditure accounts to understand the nature of expenditure incurred.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
FRAUD
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
•
enquiry with management and those charged with governance, Audit and Risk Committee regarding any
known or suspected instances of fraud;
•
obtaining an understanding of the Group’s policies and procedures relating to:
- Detecting and responding to the risks of fraud; and
- Internal controls established to mitigate risks related to fraud.
•
review of minutes of meetings of those charged with governance for any known or suspected instances of
fraud;
•
discussion amongst the engagement team as to how and where fraud might occur in the financial
statements;
•
performing analytical procedures to identify any unusual or unexpected relationships that may indicate
risks of material misstatement due to fraud;
•
engaging internal BDO specialists to support the fraud risk assessment process;
•
critically assessing the reasonableness of key estimates and judgements;
•
reviewing the Group’s whistleblowing hotline register; and
•
performing enquiries of non-finance personnel regarding their knowledge of any alleged or actual fraud.
Based on our risk assessment, we considered the area most susceptible to fraud to be management override
of controls and revenue recognition.
Our procedures in respect of the above included:
•
We addressed the fraud risk in relation to revenue recognition, by testing revenue transactions to
supporting documentation, including testing a sample of revenue transactions in the period subsequent
to year end to check that revenue was recognised in the correct period. In addition, we obtained direct
confirmations from the key customers for the sales made during the year.
•
We addressed the risk of management override of controls by:
- Testing a sample of journal entries throughout the year, which met defined risk criteria, by agreeing the
sample to supporting documentation;
- Introducing an element of unpredictability into our audit work such that management do not become over
familiar with our audit approach. In addition, we selected all samples on a random basis;
- Performing a detailed review of the Group’s year end adjusting entries and investigated any that appeared
unusual as to nature or amount and agreed these entries to supporting documentation;
- For significant and unusual transactions, particularly those occurring at or near year end, we obtained
evidence for the rationale of these transactions and evidence supporting the transactions;
- Assessing whether the significant judgements and accounting estimates were indicative of potential bias;
and
- Reviewing minutes from Board meetings of those charged with governance to identify any instances of non-
compliance with laws and regulations.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members including component engagement team who were all deemed to have appropriate
competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit. For the component engagement team, we also reviewed the result of their
work performed in this regard.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations is from the events and transactions reflected
in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report
USE OF OUR REPORT
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent
Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Jill MacRae (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
30 March 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
79
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
For The Year Ended 31 December 2024
For The Year Ended 31 December 2024
(In USD ’000)
Note
Year Ended
31 December 2024
Restated
1
Year Ended
31 December 2023
Revenue
7
27,585
-
Cost of goods sold
(25,661)
-
Distribution and selling costs
(947)
-
Gross profit
977
-
Exploration costs
8
(5,192)
(2,090)
Administrative expenses
(39,933)
(18,407)
Share-based payment expense
24
(1,408)
(1,561)
Operating loss
8
(45,556)
(22,058)
Finance income
10
451
949
Finance expense
10
(28,706)
(5,462)
Revaluation of external derivative liability
19
6,457
(3,541)
Loss before taxation
(67,354)
(30,112)
Income tax
11
4,863
-
Loss for the year attributable to
owners of the parent
(62,491)
(30,112)
Net loss per share
Basic and diluted (cents)
5
(19.83)
(10.66)
¹ Refer to note 4.3 for details of the restatement of prior year results.
(In USD ’000)
Note
Year Ended
31 December 2024
Restated
1
Year Ended
31 December 2023
Loss before taxation
(62,491)
(30,112)
Other comprehensive gain that might be reclassified to profit or loss in subsequent years:
Exchange gain arising on translation of
foreign operations
1,200
51
Total comprehensive expense for the year
attributable to owners of the parent
(61,291)
(30,061)
¹ Refer to note 4.3 for details of the restatement of prior year results.
The above consolidated income statement and consolidated statement of comprehensive income should be
read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
80
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Consolidated Statement of Financial Position
At 31 December 2024
(In USD ’000)
Note
31 December
2024
Restated
1
31 December
2023
Restated¹
1 January
2023
ASSETS
Current assets
Cash and cash equivalents
20,697
44,856
60,585
Trade and other receivables
16
13,396
13,212
18,830
Inventory
15
16,770
1,553
-
Total current assets
50,863
59,621
79,415
Non-current assets
Property, plant and equipment
12
281,027
215,717
78,785
Right-of-use assets
13
4,897
8,320
8,954
Exploration and evaluation assets
14
8,500
8,500
8,500
Trade and other receivables
16
1,570
1,680
-
Deferred tax assets
11
4,863
-
-
Total non-current assets
300,857
234,217
96,239
Total assets
351,720
293,838
175,654
¹ Refer to note 4.3 for details of the restatement of prior year results.
The above consolidated statement of financial position should be read in conjunction with the accompanying
notes.
The consolidated financial statements of Adriatic Metals PLC, registered number 10599833, were approved
and authorised for issue by the Board of Directors on 30 March 2025 and were signed on its behalf by:
Laura Tyler
Managing Director and Chief Executive Officer
Michael Horner
Interim Chief Financial Officer
(In USD ’000)
Note
31 December
2024
Restated
1
31 December
2023
Restated¹
1 January
2023
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
17
37,343
22,903
7,331
Lease liabilities
13
3,567
1,495
2,379
Borrowings
19
79,989
47,373
-
Derivative Liability
19
-
9,910
-
Total current liabilities
120,899
81,681
9,710
Non-current liabilities
Lease liabilities
13
1,537
6,641
5,808
Provisions
18
5,396
3,674
4,431
Borrowings
19
105,514
93,427
42,498
Derivative liability
-
-
6,369
Total non-current liabilities
112,447
103,742
59,106
Total liabilities
233,346
185,423
68,816
Equity
Share capital
23
6,253
5,713
5,376
Share premium
243,449
174,146
143,830
Merger reserve
23,498
23,498
23,498
Warrants reserve
-
2,743
2,743
Share-based payment reserve
24
4,802
3,591
4,943
Foreign currency translation reserve
2,511
1,311
1,260
Retained deficit
(162,139)
(102,587)
(74,812)
Total equity
118,374
108,415
106,838
Total liabilities and equity
351,720
293,838
175,654
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
81
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
(In USD ‘000)
Share
Capital
Share
Premium
Merger
Reserve3
Share- Based
Payment
Reserve
(note 24.1)
Warrants
Reserve
3
Foreign
Currency
Translation
Reserve
2
Retained
Deficit
1
Total Equity
1 January 2023
5,376
143,830
23,498
4,943
2,743
1,260
(73,747)
107,903
Correction of error (net of tax)
-
-
-
-
-
-
(1,065)
(1,065)
(Restated total equity at 1 January 2023)
5,376
143,830
23,498
4,943
2,743
1,260
(74,812)
106,838
Loss for the year (restated)
-
-
-
-
-
-
(30,112)
(30,112)
Other comprehensive income
-
-
-
-
-
51
-
51
Total comprehensive expense
-
-
-
-
-
51
(30,112)
(30,061)
Issue of share capital
251
31,428
-
-
-
-
-
31,679
Share issue costs
-
(2,111)
-
-
-
-
-
(2,111)
Exercise of options and performance rights
81
470
-
(2,337)
-
-
2,337
551
Issue of options and performance rights
-
-
-
1,645
-
-
-
1,645
2022 STIP awards
5
529
-
(576)
-
-
-
(42)
Expiry/Cancellation of options and performance rights
-
-
-
(84)
-
-
-
(84)
31 December 2023 (restated)
5,713
174,146
23,498
3,591
2,743
1,311
(102,587)
108,415
Loss for the year
-
-
-
-
-
-
(62,491)
(62,491)
Other comprehensive income
-
-
-
-
-
1,200
-
1,200
Total comprehensive expense
-
-
-
-
-
1,200
(62,491)
(61,291)
Issue of share capital
309
49,691
-
-
-
-
-
50,000
Share issue costs
-
(3,068)
-
-
-
-
(3,068)
Exercise of options and performance rights
231
22,680
-
(197)
(2,498)
-
2,694
22,910
Issue of options and performance rights
-
-
-
1,599
-
-
1,599
Expiry/Cancellation of options and performance rights
-
-
-
(191)
(245)
-
245
(191)
31 December 2024
6,253
243,449
23,498
4,802
-
2,511
(162,139)
118,374
1.
Retained deficit include all other net gains and losses and transactions with owners, including dividends. No dividends paid to date. Refer to note 4.3 for details of the restatement of prior year results.
2.
Foreign currency reserve include gains or losses arising on retranslating the net assets of entities from their functional currencies into the Group presentation currency.
3.
The merger reserve was created and warrants issued as part of Tethyan Resources Corp acquisition.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
82
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
(In USD ‘000)
Note
Year Ended
31 December 2024
Restated
1
Year Ended
31 December 2023
Cash flows from operating activities:
Loss before tax for the year
(67,354)
(30,112)
Adjustments for:
Depreciation of property, plant and equipment
12
2,391
476
Depreciation of right-of-use assets
13
595
390
Share-based payment expense
24
1,408
1,561
Finance Income
10
(451)
(949)
Finance expense
10
28,706
5,462
Fair value movements in derivative liabilities
19
(6,457)
3,541
Changes in working capital items:
Increase trade and other receivables
(2,204)
(4,816)
Increase in inventory
(15,217)
(1,553)
Increase in trade and other payables
5,254
3,113
Net cash used in operating activities
(53,329)
(22,887)
¹ Refer to note 4.3 for details of the restatement of prior year results.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
(In USD ‘000)
Note
Year Ended
31 December 2024
Restated
1
Year Ended
31 December 2023
Cash flows from investing activities:
Purchase of property, plant and equipment
12
(40,842)
(94,408)
Prepaid property, plant and equipment
(4,559)
(6,585)
Interest received on cash holdings
580
1,508
Net cash used in investing activities
(44,821)
(99,485)
Cash flows from financing activities:
Net proceeds from the issue of ordinary shares
46,932
30,656
Proceeds from drawdown of borrowings net of
transaction costs
19
29,228
81,060
Interest paid on loans and borrowings
19
-
(1,895)
Proceeds from exercise of warrants
2,498
-
Settlement of copper warrants
19
(629)
-
Capital payments on leases
13
(2,750)
(1,719)
Interest paid on leases
13
(607)
(1,103)
Net cash generated from financing activities
74,672
106,999
Net decrease in cash and cash equivalents
(23,478)
(15,373)
Exchange losses on cash and cash equivalents
(681)
(356)
Cash and cash equivalents at beginning of the year
44,856
60,585
Cash and cash equivalents at end of the year
20,697
44,856
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
83
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements
1. CORPORATE INFORMATION
The consolidated financial statements present the financial information of Adriatic Metals PLC and its
subsidiaries (collectively, the “Group”) for the year ended 31 December 2024. Adriatic Metals PLC (the
Company or the parent) is a public company limited by shares and incorporated in England and Wales. The
registered office is located at 4th Floor, 3 Hanover Square, London, W1S 1HD, United Kingdom.
The Group’s principal activity is precious and base metals exploration and development. During 2024 the
Group has transitioned from a developer to a producer and seller of precious metals. The Group owns the
Vareš Silver Operation in Bosnia and Herzegovina and the Raška Project in Serbia.
Bosnia and Herzegovina and Serbia are well-positioned in central Europe and boast strong mining history, pro-
mining environment, highly skilled workforce as well as extensive existing infrastructure and logistics.
2. BASIS OF PREPARATION
2.1. STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in accordance with the recognition, measurement,
presentation and disclosure requirements of UK adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006 (the “Companies Act”).
The consolidated financial statements were authorised for issue by the Board of Directors on 30 March 2024.
2.2. BASIS OF PREPARATION
The consolidated financial statements have been prepared under the historical cost convention, as modified
by the revaluation of certain financial assets and liabilities (including derivative instruments), at fair value
through profit or loss. A summary of the Group’s material accounting policies is set out below in note 3.
The consolidated financial statements are presented in United States Dollars (“USD” or “$”) which reflects the
fact that the USD is a more widely recognised currency for the mining sector in which the Group operates and
that its Project Finance Debt Package, offtake agreements and mining services contracts are denominated in
USD.
Unless otherwise stated, the Group financial statements are presented in US dollars ($) and rounded to the
nearest thousand.
2.3. GOING CONCERN
The Company’s going concern assessment has been performed as part of the Group’s going concern
assessment. The Group sells and distributes its concentrate product through annual offtake arrangements
with third parties, which commit to purchasing 100% of the Vareš Silver Operation concentrate production.
The Group has a $120m borrowing facility with Orion that is fully drawn as at 31 December 2024, with the first
repayment due 31 March 2025, which will be repaid from funds generated from concentrate sales. A Debt-
Service Coverage Ratio (“DSCR”) covenant is included in the Orion Debt Finance Package, and is required to
be above 1.25x on a quarterly basis over each 6-month testing period, with the first testing period covering
September 2025 to March 2026.
Post year end, the Group is meeting its day-to-day working capital requirements through its cash generating
operations at Vareš. Expansionary capital expenditure for 2025 has been funded through equity financing.
Post year end the Group raised $50m via an oversubscribed equity raise, and $25m via a concentrate prepay,
gross of costs, to support this.
The Board has reviewed forecasts for the period to December 2026 to assess the Group’s liquidity. The
base case scenario demonstrates substantial headroom and compliance with the DSCR covenant ratio. The
Board has considered additional sensitivity scenarios in terms of the Group’s commodity price forecasts,
mining grades, expected throughput volumes, operating cost profile and capital expenditure. The Board has
assessed the key risks that could impact the prospects of the Group over the going concern period, including;
commodity price outlook, cost inflation, negative grade reconciliation, and softer production performance,
with reverse stress testing of the forecasts conducted in line with best practice.
Liquidity headroom and covenant compliance was demonstrated in each reasonably possible scenario with
application of mitigation measures that are within the Group’s control. Accordingly, the Directors continue to
adopt the going concern basis in preparing the consolidated financial statements.
3. MATERIAL ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below.
3.1. BASIS OF CONSOLIDATION
The consolidated Group Financial Statements consist of the financial statements of the ultimate Parent
Company (Adriatic Metals plc, a company registered in the UK), and all its subsidiary undertakings made up
to the same accounting date. Subsidiary undertakings are those entities controlled by Adriatic Metals plc.
Control exists where the Group is exposed to, or has the rights to, variable returns from its involvement with
the investee and has the ability to use its power over the investee to affect its returns.
Subsidiaries are consolidated in the Group’s financial statements from the date on which control is obtained.
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions are eliminated in preparing the consolidated financial statements. The accounting policies of
subsidiaries have been changed where necessary to ensure consistency with accounting policies adopted by
the Group.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
84
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
3.2. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
The following amended standards and interpretations were adopted by the Group during the year ending 31
December 2024. These amended standards and interpretations have not had a significant impact on the
consolidated Financial Statements.
•
Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
•
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants –
Amendments to IAS 1
•
Supplier Financing Arrangements – Amendments to IAS7 and IFRS 7
The following new and amended standards are effective for annual periods beginning on or after 1 January
2025 and have not been adopted early. Except for IFRS 18 – Presentation and Disclosure in the Financial
Statements, which is effective from 1 January 2027, these new standards, amendments and interpretations
are not expected to have a material impact on the Group in the current or future reporting periods:
•
Lack of exchangeability – Amendments to IAS 21
•
Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7
•
Annual Improvements to IFRS Accounting Standards – Volume 11
•
Presentation and Disclosure in Financial Statements – IFRS 18
•
Subsidiaries without Public Accountability: Disclosures – IFRS 19
3.3. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (the functional currency). The consolidated
Financial Statements are presented in United States Dollars (“USD”), which is the Group’s presentational
currency.
i ) Transactions and balances
Transactions in foreign currencies are initially recorded using the spot exchange rates between the functional
currency and the foreign currency, at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the spot rates at the
reporting date.
Foreign exchange differences arising on settlement or translation of monetary items are recognised in profit
or loss.
ii ) Group companies
On consolidation, the assets and liabilities of foreign operations are translated into USD at the rate of
exchange ruling at the reporting date and their income statements are translated at average rate of exchange
for the year. The exchange differences arising on translation for consolidation are recognised in other
comprehensive income.
3.4. RECEIVABLES
All receivables are held at amortised cost less any provision for impairment. A loss allowance for expected
credit losses is made to reflect changes in credit risk since the initial recognition.
3.5. EXPLORATION AND EVALUATION ASSETS
Pre-licence costs
Pre-licence costs relate to costs incurred before the Group has obtained legal rights to explore in a specific
area. Such costs may include the acquisition of exploration data and the associated costs of analysing that
data. These costs are expensed in the year in which they are incurred.
Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for mineral resources, the determination of technical
feasibility and the assessment of commercial viability of an identified resource.
Exploration and evaluation activity includes:
•
licence costs paid in connection with a right to explore;
•
researching and analysing historical exploration data;
•
gathering exploration data through geophysical studies;
•
exploratory drilling and sampling;
•
determining and examining the volume and grade of the resource;
•
surveying transportation and infrastructure requirements; and
•
conducting market studies.
Exploration and evaluation costs include directly attributable employee remuneration, materials and fuel used,
surveying costs, drilling costs and payments made to contractors.
In evaluating whether the expenditure meet the criteria to be capitalised, several different sources of
information are used. The information that is used to determine the probability of future benefits depends on
the extent of exploration and evaluation that has been performed.
Exploration and evaluation expenditure in the year for activity on licences where a JORC-compliant resource
has not yet been established is expensed as incurred until sufficient evaluation has occurred to establish a
JORC-compliant resource. Costs expensed during this phase are included in exploration expenses and other
operating expenses in the statement of profit or loss and other comprehensive income.
Upon the establishment of a JORC-compliant resource (at which point, the Group considers it probable that
economic benefits will be realised), the Group capitalises any further evaluation expenditure incurred for the
licence as exploration and evaluation assets up to the point when a JORC-compliant reserve is established.
Capitalised exploration and evaluation expenditure is considered to be an intangible asset and measured at
cost less accumulated impairment.
Exploration and evaluation assets acquired in a business combination are initially recognised at fair value,
including resources and exploration potential that is considered to represent value beyond proven and
probable reserves. Similarly, the costs associated with acquiring an exploration and evaluation asset (that
does not represent a business) are also capitalised and subsequently measured at cost less accumulated
impairment.
Once a JORC-compliant reserve is established and development is sanctioned, exploration and evaluation
assets are tested for impairment and transferred to mine under construction. Exploration and evaluation
assets are not amortised during the exploration and evaluation phase and are considered to have an indefinite
life until determined to be part of a mine plan.
Notes to the Consolidated Financial Statements - continued
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
85
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
3.6. PROPERTY, PLANT AND EQUIPMENT
i ) Land
Land is held at cost less accumulated impairment losses. Once a JORC-compliant reserve is established
and development is sanctioned, land is tested for impairment and transferred to mine under construction
and depreciated in line with the useful economic life of the mine or on a unit of depletion basis. Land is not
depreciated during the exploration and evaluation phase and is considered to have an indefinite life until
determined to be part of a mine plan.
ii ) Short lived property, plant and equipment
Short lived property, plant and equipment consists of buildings, plant and machinery, office furniture and
equipment, transportation assets and computer equipment. Short-lived property, plant and equipment are
carried at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of
short lived property, plant and equipment consists of the purchase price and any costs directly attributable
to bringing the asset to the location and condition necessary for its intended use. Short-lived property, plant
and equipment depreciation is provided at rates calculated to expense the cost, less estimated residual value,
using the straight-line method over the estimated useful life of the asset at the following rates:
Buildings & leasehold improvements
Shorter of 10% or lease term
Plant and equipment
15% - 33%
iii ) Mine under construction
Mine under construction includes construction costs as well as exploration and evaluation and land balances
transferred as noted above once a JORC-compliant reserve is established and development is sanctioned.
Expenditure which is necessarily incurred whilst commissioning the mine is also capitalised as a mine under
construction cost. Development costs incurred after the commencement of production are capitalised to the
extent they are expected to give rise to a future economic benefit.
Expenditure which is necessarily incurred whilst commissioning the mine under construction, in the period
prior to being capable of operating in the manner intended by management, are capitalised. Development
costs incurred after the commencement of commercial production (as defined in Note 4.2 d), are capitalised
to the extent they are expected to give rise to a future economic benefit.
iv ) Depreciation and amortisation
The assets’ residual values, useful lives and methods of depreciation and amortisation are reviewed at each
financial year-end and adjusted prospectively if appropriate.
3.7. LEASES
The Group has various lease arrangements for buildings. Lease terms are negotiated on an individual basis
locally and subject to domestic rules and regulations. At the inception of the lease contract, the Group
assesses whether the contract conveys the right to control the use of an identified asset for a certain period
in exchange for consideration, in which case it is identified as a lease. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except
for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value
assets. Low value leases are those with an underlying asset value of USD 5,000 or less. For those leases, the
Group recognized the lease payments as an operating expense on a straight-line basis over the term of the
lease.
Right-of-use assets
At the commencement date of the lease right-of-use assets are measured at cost which comprises the
following:
•
The initial measurement of the lease liability;
•
Prepayments before commencement date of the lease
•
Initial direct costs; and
•
Costs to restore.
Subsequent to initial recognition, right-of-use assets depreciated on a straight-line basis over the duration of
the contract. The right-of-use assets are assessed for impairment where indicators of impairment are present.
Lease liabilities
At the commencement date of the lease, lease liabilities are measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease
payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying asset.
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Notes to the Consolidated Financial Statements - continued
i ) Revision of lease term
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the
lease liability to reflect the payments to make over the revised term, which are discounted using a revised
discount rate. The carrying amount of lease liabilities is similarly revised when the variable element of future
lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both
cases an equivalent adjustment is made to the carrying amount of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-
of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.
3.8. REHABILITATION PROVISION
The Group recognises provisions for contractual, constructive or legal obligations, including those associated
with the reclamation of mineral interests and property, plant and equipment, when those obligations result
from the acquisition, construction, development or normal operation of the assets. Initially, a provision for
rehabilitation is recognised at its present value in the period in which it is incurred. Upon initial recognition of
the liability, an amount equal to the corresponding provision is added to the carrying amount of the related
asset and the cost is amortised as an expense over the economic life of the asset. Following the initial
recognition of the rehabilitation provision, the carrying amount of the liability is increased for the passage of
time as the discount is unwound, and adjusted for changes to the current market-based discount rate and
amount or timing of the underlying cash flows needed to settle the obligation. The increase in the provision
due to the passage of time is recognised as interest expense.
3.9. FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions
of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows
from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expired.
Financial assets and financial liabilities are measured initially at fair value plus or minus, in the case of a financial
asset or financial liability not at fair value through profit or loss, transactions costs that are directly attributable
to the acquisition or issue of the financial instrument. Trade receivables which do not contain a significant
financing component are recognised at their transaction price. Financial assets and financial liabilities are
subsequently measured as described below.
i ) Financial assets
A financial asset is subsequently recognised at amortised cost under IFRS 9 if it meets both the hold to collect
and contractual cash flow characteristics tests. A financial asset is measured at fair value through other
comprehensive income if the financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
If neither of the above classifications are met the asset is classified as fair value through the profit and
loss, with changes in fair value recognised in the income statement. Even if an asset meets the above two
requirements to be measured at fair value through other comprehensive income, IFRS 9 contains an option to
designate, at initial recognition, a financial asset as measured at fair value through the profit and loss provided
the classification eliminates or significantly reduces a measurement or recognition inconsistency.
Cash and cash equivalents and trade and other receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial recognition these are measured at
amortised cost using the effective interest method, less provision for impairment, if any.
ii ) Financial liabilities
Financial liabilities are subsequently measured at amortised cost using the effective interest method, except
for financial liabilities designated at fair value through profit or loss, that are carried subsequently at fair value
with gains and losses recognised in the income statement.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period. Where the movement in fair value is due to a change in the entity’s credit risk,
such gain or loss is recognised in other comprehensive income.
Any gain or loss on modification of a financial liability held at amortised cost is recognised in the income
statement.
iii ) Convertible debt
The proceeds received on issue of the Group’s convertible debt are allocated to their debt and derivative
liability components. The amount initially attributed to the debt component equals the discounted cash flows
using a market rate of interest that would be payable on a similar debt instrument that does not include an
option to convert. Subsequently, the debt component is accounted for as a financial liability measured at
amortised cost until extinguished on conversion or maturity of the debt. The remainder of the proceeds is
allocated to the conversion option and is recognised as a derivative liability.
3.10. IMPAIRMENT OF ASSETS
i ) Financial assets
A financial asset that is not carried at fair value through profit or loss is assessed at each reporting date to
determine a loss allowance for expected credit losses. If the credit risk on a financial instrument has increased
significantly since initial recognition, the loss allowance is equal to the lifetime expected credit losses. If the
credit risk has not increased significantly, the loss allowance is equal to the twelve month expected credit
losses.
The expected credit losses are measured in a way that reflects the unbiased and probability weighted amount
that is determined by evaluating a range of possible outcomes, the time value of money and reasonable
and supportable information that is available about past events, current conditions and forecasts of future
economic conditions.
ii ) Non-financial assets
The carrying amounts of capitalised exploration and evaluation expenditure for undeveloped mining projects
(projects for which the decision to mine has been not yet been deemed commercially viable and development
has not yet been authorised) are reviewed at each reporting date for indicators of impairment in accordance
with IFRS 6, and when indicators are identified, are tested in accordance with IAS 36 Impairment of Assets.
Property, plant and equipment and intangible assets with finite lives are reviewed for impairment if there is an
indication that the carrying amount may not be recoverable.
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Notes to the Consolidated Financial Statements - continued
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible
assets to determine whether there is an indication that the assets are impaired. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.
Where the asset does not generate largely independent cash inflows, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from
other assets or groups of assets.
The recoverable amount is the higher of fair value less costs to sell, and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessment of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than the carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised in the income statement. All assets are subsequently reassessed for
indications that an impairment loss previously recognised may no longer exist. Where an impairment loss is
subsequently reversed, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior
periods. A reversal of an impairment loss is recognised in the income statement.
3.11. INCOME TAXES
Current income tax is the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or
receivable in respect of previous years.
Deferred income taxes are calculated based on temporary differences between the carrying amounts of
assets and liabilities and their tax bases. However, deferred tax is not recognised on the initial recognition of
goodwill, on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss at the time of the transaction, or on temporary
differences relating to investments in subsidiaries and jointly controlled entities where the reversal of these
temporary differences can be controlled by the Group and it is probable that reversal will not occur in the
foreseeable future.
Deferred income tax assets and liabilities are measured, without discounting, at the tax rates that are expected
to apply when the assets are recovered, and the liabilities settled, based on tax rates that have been enacted
or substantively enacted by the reporting date.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to
the extent that it is probable that future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow the related tax benefit to be utilised.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off current tax assets
against current tax liabilities, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different taxable entities which intend either to settle current tax liabilities and assets
on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax liabilities and assets are expected to be settled or recovered.
3.12. SHARE CAPITAL
Ordinary shares issued by the parent are classified as share capital and share premium and recorded at the
proceeds received, net of direct issue costs.
3.13. SHARE-BASED PAYMENTS AND WARRANTS PAYMENTS
i ) Share-based payment transactions
The Company grants share options and performance rights to Directors, officers, consultants and employees
(“equity-settled transactions”). The Company may grant warrants to institutions in relation to an equity raise
or other transaction. The Board of Directors determines the specific grant terms within the limits set by the
Company’s share option plans.
ii ) Equity-settled transactions
The costs of equity-settled transactions are measured by reference to the fair value at the grant date and are
recognised, together with a corresponding increase in equity, over the period in which the performance and/
or service conditions are fulfilled, ending on the date on which the relevant persons become fully entitled to
the award (the “vesting date”). The cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the Company’s best estimate of the number of equity instruments
that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative
expense recognised at the beginning and end of that period and the corresponding amount is represented in
share option reserve. No expense is recognised for awards that do not ultimately vest.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as
if the terms had not been modified. An additional expense is recognised for any modification which increases
the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee as
measured at the date of modification.
Where equity-settled transactions are awarded to employees, the fair value of the options at the date of grant
is charged to the income statement over the vesting period. Non-market performance vesting conditions are
taken into account by adjusting the number of equity instruments expected to vest at each reporting date
so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of the
options that will eventually vest. Market performance vesting conditions are incorporated into the fair value of
the equity instrument at the grant date.
Where equity-settled transactions are entered into with non-employees and some or all of the goods or
services received by the entity as consideration cannot be specifically identified, they are measured at the
fair value of the equity instruments issued. Otherwise equity-settled transactions with non-employees are
measured at the fair value of the goods or services received.
Upon exercise of share options or warrants, the proceeds received are allocated to share capital, and share
premium if applicable, and any associated balance in share-based payments reserve is transferred to retained
earnings. The dilutive effect of outstanding options is reflected as additional dilution in the computation of
diluted earnings per share.
The Group utilises the Black-Scholes option pricing model to estimate the fair value of share options and
performance rights granted to Directors, officers and employees. The use of this model requires management
to make various estimates and assumptions that impact the value assigned to the share options and
performance rights including the forecast future volatility of the share price, the risk-free interest rate, dividend
yield, the expected life of the share options and performance rights and the expected number of options and
performance rights which will vest. See note 24.2 for further details regarding these inputs.
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Notes to the Consolidated Financial Statements - continued
iii ) STIP equity scheme
The Group operates an STIP scheme which runs on a calendar year basis, with employees receiving cash
or (exceptionally) shares subsequent to year end based on to their performance during the year. An option
pricing model is used to measure the Group’s liability at each reporting date, taking into account the terms
and conditions on which the bonus is awarded and the extent to which employees have rendered their
service. Movements in the liability (other than cash payments) are recognised in the consolidated statement of
comprehensive income.
3.14. SEGMENTAL REPORTING
The reportable segments represent all the Group’s activities. The reportable segments are an aggregation
of the operating segments within the Group as prescribed by IFRS 8. The reportable segments are based on
the Group’s management structures and the consequent reporting to the chief operating decision maker, the
Board of Directors. These reportable segments also correspond to geographical locations such that each
reportable segment is in a separate geographic location. Income and expenses included in profit or loss for
the period are allocated directly or indirectly to the reportable segments.
The Group’s operating segments are as follows:
•
Bosnia and Herzegovina (principally the Vareš Silver Operation);
•
Serbia (principally the Raška Project); and
•
Corporate (which supports the activities of the other two segments, principally the UK).
Segment assets are those used directly for segment operations. Inter-company balances comprise
transactions between operating segments making up the reportable segments. These balances are
eliminated to arrive at the figures in the Consolidated Financial Statements.
3.15. INVENTORY
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighed
average method.
The cost of finished goods and work in progress comprises raw materials, direct labour and all other direct
costs associated with mining the ore and processing it to a saleable product.
Assay data is used to verify the amount of metal contained within ore stockpiles, adjusted for expected
recovery rates. Monthly surveys are used to verify the volumes of material.
Net realisable value is the estimated selling price in the ordinary course of business, less any further costs
expected to be incurred to completion. Provision is made, if necessary, for slow-moving, obsolete and
defective inventory.
3.16. REVENUE
The Group sells metal concentrate product to smelters through offtake agreements with the customer. The
agreements provide for provisional pricing, i.e. the selling price is subject to final adjustment at the end of
the quotation period based on the average price for the month, two months, three months, or four months
following delivery to the buyer and subject to final adjustment for assaying results. At each reporting date, if
any sales are provisionally priced, the provisionally priced sales are marked to market using forward prices,
with any significant adjustments being recorded in revenue in the income statement and in deferred revenue in
the statement of financial position.
All revenue is measured at a point in time, being that point at which the Group meets its promise to transfer
control of a quantity of metal concentrate to a customer. Control is transferred in accordance with the
Incoterms specified in the contract, which are normally CIP. Adjustments to sales prices arising from
settlement of provisional pricing arrangements are recognised as a debit or credit to revenue and are not
separated or treated as an embedded derivative.
Revenue is measured at the fair value of consideration received or receivable from sales of metal to an end
user, net of any buyers’ discount, treatment charges and value added tax. Revenue is net of treatment charges,
as the cost of smelting and refining is borne by the customer and the transaction price is agreed to be net of
these charges.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In preparing these consolidated financial statements, management has made certain judgements, estimates,
and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual
amounts and results may differ from these estimates. The significant judgements, estimates, and assumptions
that have the most significant effect on the recognition and measurement of assets, liabilities, income and
expenses are highlighted below.
4.1. ESTIMATES
i ) Copper Stream
The Group entered into an agreement with Orion Partners under which it received a prepayment of $22.5m on
13 February 2023 in respect of future deliveries of copper warrants under the Copper Stream. Consideration
as to the substance of the agreement and the value of the Copper Stream has been made in line with the
requirements of IFRS.
Regarding the accounting treatment, reference has been made to IFRS9 and IFRS15 as to the nature and
substance of the agreement, with the conclusion that IFRS9 is the most appropriate treatment of financial
liability because the liability can be settled by cash or delivery of another financial instrument. The agreement
was not intended to be a sales and purchase agreement, implied by the nature of the transactions in that
concentrate is sold to an offtaker and not directly to the holder of the stream.
Regarding the split of current and non-current liability, management use forecasts to estimate the volume of
copper production in the next 12 months after the balance sheet date compared with volumes produced after
this period.
The fair value of the Copper Stream obligation was valued by management on a nominal basis. The significant
assumptions included the nominal future copper curve prices, the latest mine plan and nominal weighted
average cost of capital which was calculated by the company’s nominated experts. See note 19 for further
details.
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Notes to the Consolidated Financial Statements - continued
ii ) Rehabilitation provision
The Group recognises provisions for contractual, constructive or legal obligations, including those associated
with the reclamation of mineral interests and property, plant and equipment, when those obligations result
from the acquisition, construction, development or normal operation of the assets. Initially, a provision for the
rehabilitation is recognised at its present value in the period in which it is incurred. Upon initial recognition
of the liability, an amount equal to the liability is added to the carrying amount of the related asset and this
amount is amortised as an expense over the economic life of the asset. Following the initial recognition of the
rehabilitation provision, the carrying amount of the liability is increased for the passage of time by unwinding
the discount, and adjusted for changes to the current market-based discount rate and to the amount or timing
of the underlying cash flows needed to settle the obligation.
Management uses its judgement and experience to determine the potential scope of closure rehabilitation
work required to meet the Group’s legal, statutory and constructive obligations, and any other commitments
made to stakeholders, and the options and techniques available to meet those obligations and estimate the
associated costs and the likely timing of those costs.
Significant estimates are also required to determine both the costs associated with that work and the other
assumptions used to calculate the provision, including timing of future expenditure, and discount and inflation
rates. External experts support the cost estimation process where appropriate but there remains significant
estimation uncertainty.
See note 18 for further details.
4.2. JUDGEMENTS
a) Capitalisation of exploration costs
The Group uses its judgement to determine whether costs meet the capitalisation requirements in
accordance with IFRS 6 and its accounting policy on exploration and evaluation assets, including whether the
activities performed are directly attributable to increasing the value of the project.
Upon the establishment of a JORC-compliant resource (at which point, the Group considers it probable that
economic benefits will be realised), the Group capitalises any further evaluation expenditure incurred for the
licence as exploration and evaluation assets. There is an element of judgement involved by management
as to which costs are directly attributable to increasing the value of the project. Broadly, activities in relation
to scoping, exploration and development are deemed directly attributable, whilst activities in relation to
supporting and administrative duties are deemed not to be directly attributable.
b) Indicators of impairment
The Group uses its judgement in assessing whether indicators of impairment have occurred.
The Group reviews and tests the carrying amount of exploration and evaluation assets when events or
changes in circumstances suggest that the carrying amount may not be recoverable in accordance with IFRS
6. Indicators of impairment are as follows:
•
the period for which the entity has the right to explore in the specific area has expired or will expire in the
near future, and is not expected to be renewed;
•
substantive expenditure on further exploration for, and evaluation of, mineral resources in the specific area
is neither budgeted nor planned;
•
exploration for and evaluation of mineral resources in the specific area have not led to the discovery
of commercially viable quantities of mineral resources and the entity has decided to discontinue such
activities in the specific area; and
•
sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
The Group also reviews property, plant and equipment and intangible assets with finite lives for impairment if
there is an indication that the carrying amount may not be recoverable.
In assessing whether an indicator of impairment has occurred, the Group considers external sources of
information including observable indications of decline in market value, actual or expected negative changes
in the technological, market, economic or legal environment, changes in market interest rates or other market
rates of return on investments, and whether the carrying amount of its net assets is greater than its market
capitalisation. As external sources of information will typically be broader and less clearly linked to a specific
asset or cash generating unit, for example, a decline in market capitalisation below the carrying value of the
entity’s net assets. This may then require the use of judgement to determine which assets or cash generating
unit should be tested in response to an external source of information.
The Group also considers internal sources of information including changes in planned development of the
assets, evidence of obsolescence or damage, changes in the expected use or life of an asset, and evidence
from internal reporting that an asset’s economic performance is, or will be, worse than expected.
No changes in circumstances or other indicators of impairment occurred during the year in respect of the
Raška Project exploration and evaluation asset.
No changes in circumstances or other indicators of impairment occurred during the year in respect of the
Vareš Silver Operation.
c) Entities not consolidated
Adriatic Foundation
The Adriatic Foundation (the “Foundation”) is a not-for-profit trust which was created in Bosnia and
Herzegovina with the objective of supporting the communities around the Vareš Silver Operation. The
Company provided the initial funding required for the formation of the Foundation.
The Company has the ability to appoint the Board of Trustees of the Foundation and hence transactions
between the Company and the Foundation have been classified as related party on the basis of the company
yielding significant influence.
An assessment has been carried out to determine whether the Company controls the Adriatic Foundation
in accordance with IFRS 10. The conclusion of this assessment is that whilst the company is able to yield
significant administrative influence over the Foundation, it is not able to affect returns to the Company.
The Foundation statute prevents the Company as the founder, and any other person associated with the
Foundation, from directly or indirectly deriving profit, or any other material or financial benefit, from the
activities of the Foundation. For the purposes of IFRS 10, the Directors have therefore concluded that the
Company does not control the Foundation and as a result the Foundation is not included in the consolidated
financial statements of the Group.
d) Commercial Production
Commercial production is deemed to have commenced when a mining interest is capable of operating
at levels intended by management. This is achieved when management determines that the operational
commissioning of a major mine and plant components is complete, operating results are being achieved
consistently for a period of time, and that there are indications that these operating results will continue.
After this point, depreciation of the mining assets commences.
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Notes to the Consolidated Financial Statements - continued
The Group determines commencement of commercial production based on the following factors:
•
All major capital expenditures to bring the mine to the condition necessary for it to be capable of operating
in the manager intended by management have been completed;
•
Key major necessary permits in place;
•
Key personnel required to maintain commercial production in place;
•
First concentrate shipments achieved;
•
The completion of a reasonable period of testing of the mine plant and equipment;
•
The mine or mill has reached a pre-determined percentage of design capacity; and,
•
The ability to sustain ongoing production of commercial levels of metal concentrate.
The list is not exhaustive and each specific circumstance is taken into consideration before making the
decision. Based on a review of the above factors, management determined that the Vareš Silver Operation did
not commence commercial production during 2024.
Any concentrate produced before commercial production has been reached is recognised in line with IFRS
15 as pre-production income earned and the cost of the output generated is recognised in the statement of
comprehensive income in accordance with the principles of IAS 2.
e) Capitalisation of Borrowing Costs
The Group capitalises borrowing costs that are directly attributable to the construction of a mining asset and
included in the cost of that asset. Accrued interest expense on the Orion Senior Debt Finance Package is
capitalised as part of the mine under construction asset in property, plant and equipment.
The Group ceases the capitalisation of borrowing costs attributable to a part of the construction of a mining
asset when it completes substantially all the activities necessary to prepare that part of the project, and where
that part is capable of being used while construction continues on other parts of the mining asset.
Management considers the processing plant a distinct part of the construction of the Vareš Silver Operation
asset. Management uses judgement to determine the element of borrowing costs attributable to that part
that should cease to be capitalised.
The Group ceases the capitalisation of borrowing costs when substantially all the activities necessary to
prepare the mining asset for its intended use are completed. The mining asset is judged to be ready for its
intended use when physical construction is complete, but before commercial production has been reached.
f) Inventories
Stock is valued at the lower of cost or net realisable value. Costs that are incurred in or benefit the production
process are accumulated as ore stockpiles, concentrate in circuit, and finished metal concentrate. Although
the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of metal
actually recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely
monitor recoverability levels.
Where proceeds are not expected to be earned based on the mineral content being below what is considered
economically viable, the stockpile ore is considered to be waste material generated. No costs are allocated to
this waste material because proceeds are not expected to be earned from the sale of output.
Net realisable value tests are performed at each reporting date and represent the estimated future sales value
less estimated costs to complete production and bring the product to sale.
These net realisable tests take into account management’s estimate of the maximum values to be realised
from ore stockpiles, in some instances through the blending of different ore stockpile grades, prior to these
being added to future processing plant feeds. The carrying value of inventory is disclosed within note 15.
g) Deferred Tax
Judgement is applied in making assumptions about recognition of deferred tax assets in respect of the timing
and value of estimated future taxable income and available tax losses.
Management has made assumptions in the recognition of deferred tax assets, including the timing and value
of estimated future taxable income and available tax losses. The recognised and unrecognised deferred tax
balances reflect amounts based on the actual submitted tax returns.
Where the realisation of deferred tax assets is dependent on future profits, the Group recognises losses
carried forward and other deferred tax assets only to the extent that the realisation of the related tax benefit
through future taxable profits is probable and losses are still available for use after expiry dates are considered.
FINANCIAL STATEMENTS
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Notes to the Consolidated Financial Statements - continued
4.3. RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS
An error was identified in the prior year results (31 December 2023), whereby accruals for employment taxes and social security contributions owed were understated by $5.2m, mine under construction additions understated
by $3.0m, administrative expenses understated by $1.2m, and retained deficit understated by $1.2m.
Basic and diluted loss per share was understated by 0.42 cents per share.
No other previous financial years are materially impacted by this restatement.
The error has been corrected by restating each of the affected financial statement line items for the prior periods as follows:
Statement of financial position
(In USD ‘000)
31 December 2023
Increase
(Restated)
31 December 2023
31 December 2022
Increase
(Restated)
31 December 2022
Property, plant and equipment
212,731
2,986
215,717
77,861
924
78,785
Trade and other payables
17,673
5,230
22,903
5,342
1,989
7,331
Retained deficit
100,343
2,244
102,587
73,747
1,065
74,812
Income Statement and Statement of Comprehensive Income (extract)
(In USD ‘000)
2023
Increase
(Restated)
2023
Administrative expenses
(17,228)
(1,179)
(18,407)
Loss for the year
(28,933)
(1,179)
(30,112)
Other comprehensive loss for the year
51
-
51
Total comprehensive loss for the year
(28,882)
(1,179)
(30,061)
Basic loss per share (cents)
(10.24)
(0.42)
(10.66)
Diluted loss per share (cents)
(10.24)
(0.42)
(10.66)
5. LOSS PER SHARE (“EPS”)
Year ended
31 December 2024
(Restated)
Year ended
31 December 2023
Loss for the year attributable to owners of the parent
equity (In USD ‘000)
(62,491)
(30,112)
Weighted average number of common shares for the
purposes of basic loss per share (in number ‘000)
315,064
282,505
Weighted average number of common shares for the
purposes of diluted loss per share (in number ‘000)
315,064
282,505
Basic loss per share (cents)
(19.83)
(10.66)
Diluted loss per share (cents)
(19.83)
(10.66)
Basic loss per share is calculated by dividing the net loss attributable to owners of the parent (2024: $62.5m
loss, 2023: $30.1m loss) by the weighted average number of common shares in issue during the year (2024:
315,063,816; 2023: 282,504,794).
Diluted loss per share is calculated by adjusting the weighted average number of common shares outstanding
to assume conversion of all potentially dilutive ordinary shares. The company has share options and
performance rights as categories of potentially dilutive ordinary shares.
The options and performance rights only dilute earnings when they result in the issue of shares at a value
below the market price of the share and when all performance criteria (if applicable) have been met. As at
31 December 2024, there are 3,195,866 potentially dilutive share options and performance rights (2023:
2,062,071 potentially dilutive share options and performance rights) which were not included in the calculation
of diluted earnings/loss per share as their conversion to ordinary shares would have decreased the loss per
share and because their exercise was contingent on the satisfaction of certain criteria that had not been met
at the end of the respective year.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
92
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
6. SEGMENTAL INFORMATION
The segmental analysis of the Group’s loss after tax and movement in non-current assets is as follows:
Year ended 31 December 2024
(Restated) Year ended 31 December 2023
(In USD ‘000)
Bosnia
Serbia
Corporate
Total
Bosnia
Serbia
Corporate
Total
Revenue
27,585
-
-
27,585
-
-
-
-
Cost of goods sold
(25,661)
-
-
(25,661)
-
-
-
-
Distribution and selling costs
(947)
-
-
(947)
-
-
-
-
Exploration costs
(1,042)
(4,150)
-
(5,192)
-
(2,090)
-
(2,090)
Share-based payment expense
-
-
(1,408)
(1,408)
-
-
(1,561)
(1,561)
Administrative expenses excluding depreciation
(25,171)
(1,738)
(10,011)
(36,920)
(9,903)
(1,911)
(5,727)
(17,541)
Depreciation of property, plant and equipment
(2,353)
(27)
(24)
(2,404)
(403)
(50)
(23)
(476)
Depreciation of right-of-use assets
(126)
(96)
(387)
(609)
(183)
(97)
(110)
(390)
Operating Loss
(27,715)
(6,011)
(11,830)
(45,556)
(10,489)
(4,148)
(7,421)
(22,058)
Finance income
-
-
451
451
-
-
949
949
Finance expense
(919)
(59)
(27,728)
(28,706)
(1,056)
(28)
(4,378)
(5,462)
Revaluation of external derivative liability
-
-
6,457
6,457
-
-
(3,541)
(3,541)
Loss before taxation
(28,634)
(6,070)
(32,650)
(67,354)
(11,545)
(4,176)
(14,391)
(30,112)
Tax credit
4,863
-
-
4,863
-
-
-
-
Loss for the year
(23,771)
(6,070)
(32,650)
(62,491)
(11,545)
(4,176)
(14,391)
(30,112)
Additions to mining under construction assets
40,183
-
-
40,183
111,624
-
-
111,624
1 Refer to note 4.3 for details of the restatement of prior year results.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
93
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
7. REVENUE
(In USD ‘000)
31 December 2024
31 December 2023
Lead-silver concentrate
18,375
-
Zinc concentrate
11,268
-
Less:
Treatment charges
(1,545)
-
Offtake penalties
(254)
-
Offtake buyers’ fees
(259)
-
Revenue
27,585
-
The Group sells zinc, silver, and lead concentrate product to smelters through offtake agreements with
third parties. Agreements are in place with four international commodities trading and smelting companies
(“Offtakers”) for the purchase of concentrate production from the Vareš Silver Operation. The concentrates
have been allocated to the Offtakers as follows:
•
Zinc concentrate to Bolliden AB, Trafigura Pte Ltd, Transamine SA; and
•
Lead-silver concentrate to Glencore International AG and Transamine SA.
During 2024, three customers contributed more than 20% of the Group’s revenue each (2022: none),
contributing $11.6m, $10.2m and $5.8m each.
The Offtakers had been allocated 82% of the total projected concentrate production over the first 24 months.
The remaining 18% of concentrate production was intentionally reserved either for advantageous spot sales
or additional long-term offtake agreements. Post period, the 18% was allocated to Trafigura Pte Ltd in line with
the prepayment agreement outlined in note 27.
The agreements with the smelters provide for provisional pricing, i.e. the selling price is subject to final
adjustment at the end of the quotation period based on the average price for the month, two months, or three
months following delivery to the buyer and subject to final adjustment for assaying results.
8. OPERATING LOSS
Operating loss is stated after charging/(crediting):
(In USD ‘000)
Note
Year Ended
31 December 2024
(Restated)
Year Ended
31 December 2023
Wages and salaries
24,441
6,459
Consultancy fees
1,699
1,129
Cash remuneration in respect of qualifying services
26,140
7,588
Exploration activities expensed
5,192
2,090
Termination payment to mining contractor
3,681
-
Depreciation of property, plant and equipment
12
2,391
476
Depreciation of right-of-use assets
13
595
390
Auditors’ remuneration
573
330
Non audit services for interim review
122
39
The majority of exploration activities expensed during the year represent costs incurred at the Raška Project,
for which a JORC-compliant resource has not yet been established.
Wages and salaries constitutes net payments made to employees together with social security and other
contributions.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
94
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
9. WAGES AND SALARIES
Wages and salaries comprise all employees of the Group including Directors, key management personnel and
personnel in management positions engaged under management services contracts. The table below shows
total costs for all employees, including costs capitalised during the year.
(In USD ‘000)
Year Ended
31 December 2024
(Restated)
Year Ended
31 December 2023
Wages and salaries
26,438
8,219
Consultancy fees
1,917
4,484
Cash remuneration in respect of qualifying services
28,355
12,703
Social security costs
13,912
4,759
Defined contribution pension cost
24
13
Share-based payments expense
1,408
1,561
Total
43,699
19,036
Average number of employees (number)
549
296
Share-based payments expense is stated at fair value at the time of grant using the Black-Scholes option
pricing model. Further details are available in note 24.2 of the accounts.
The average monthly number of employees during the year increased to 549 in the year (2023: 296
employees). This is due to the ramp up of the Vareš Silver Operation from construction phase to test
production phase.
Year ended 31 December 2024
Year ended 31 December 2023
(In USD ‘000)
Serbia
Bosnia
UK
(Parent)
Total
Serbia
Bosnia
UK
(Parent)
Total
Exploration
15
57
-
72
23
39
-
62
Operations
-
305
-
305
-
156
-
156
Administration
5
155
12
172
8
60
10
78
Total
20
517
12
549
31
255
10
296
Directors’ remuneration is set out below:
(In USD ‘000)
Year Ended
31 December 2024
Year Ended
31 December 2023
Board fees
594
442
Consultancy fees
823
445
Accrued cash bonus
360
330
Benefits
50
60
Cash remuneration in respect of qualifying services
1,827
1,277
Average number of Directors
8
6
There were no directors’ share awards that vested in the year (2023: Nil).
The highest paid Director in the year ended 31 December 2024 received cash remuneration, excluding
notional gains on share options or performance rights, of $0.7m (2023: $0.9m).
10. FINANCE INCOME AND EXPENSE
(In USD ‘000)
Note
Year Ended
31 December 2024
Year Ended
31 December 2023
Interest income
580
1,567
Foreign exchange gain
-
209
Interest income capitalised within property,
plant and equipment
12
(129)
(827)
Finance income
451
949
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
95
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
Interest income of $0.1m (2023: $0.8m) and accrued interest expense of $7.8m (2023: $13.0m) on the Orion
Senior Debt Finance Package has been capitalised within additions to the mine under construction asset, a
net capitalised amount of $7.7m (2023: $12.2m) as shown in note 13.
Interest income relates to interest earned on cash holdings.
(In USD ‘000)
Note
Year Ended
31 December 2024
Year Ended
31 December 2023
Interest expense
19
12,651
1,718
Fair value of copper stream liability
19
12,142
2,549
Interest expense on lease liabilities
13
607
1,103
Amortisation of day one fair value gain on
Copper Stream
17
105
92
Unwinding of the discount on the rehabilitation
provision
18
62
-
Foreign exchange loss
3,139
-
Finance expense
28,706
5,462
$12.4m of interest expense comprises accrued interest on the Orion Senior Debt Finance Package (2023:
$1.7m wholly relates to the QRC convertible bond). See note 19 for further details.
11. TAXATION
a) Current taxation
(In USD ‘000)
Year Ended
31 December 2024
Year Ended
31 December 2023
Current tax expense
–
–
Prior year tax expense
–
–
Overseas tax
–
–
Deferred tax credit (note b)
4,863
–
Income tax credit
4,863
–
The table below reconciles the tax credit on the Group’s loss for the year with the standard rate of corporation
tax in the United Kingdom:
(In USD ‘000)
Year Ended
31 December 2024
(Restated)
Year Ended
31 December 2023
Loss before tax
67,354
30,112
Tax credit on loss at standard UK rate of 25%
(2023: 23.52%)
16,839
7,082
Effects of:
Income not taxable
1,896
59
Expenses not deductible for tax purposes
(1,093)
(1,465)
Effect of overseas tax rates
(10,911)
(2,166)
Amounts not recognised
(1,868)
(3,510)
Total tax credit
(4,863)
-
Corporate income tax is calculated at 25% (2023: 23.52%) of the assessable profit for the year for the UK
parent company, 15% (2023: 15%) for the operating subsidiaries in Serbia, and 10% (2023: 10%) for the
operating subsidiaries in Bosnia and Herzegovina.
Expenses not deductible for tax purposes include share-based payment charges, impairment and
depreciation and amortisation charges.
b) Deferred income tax asset
The deferred tax asset comprises:
(In USD ‘000)
Year ended
31 December 2024
Year ended
31 December 2023
Deferred tax asset recoverable within 12 months
4,493
-
Deferred tax asset recoverable after 12 months
370
–
Deferred tax asset
4,863
-
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
96
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
A $4.9m (2023: Nil) deferred tax asset has been recognised in respect of $48.6m (2023: Nil) tax losses at the
main operating subsidiary in Bosnia and Herzegovina. The total tax losses carried forward were $49.3m (2023:
$17.1m) however $0.7m (2023: Nil) have been excluded from the deferred tax asset calculation as they expire
within twelve months.
(In USD ‘000)
Year ended
31 December 2024
Recognised
Year ended
31 December 2024
Unrecognised
Tax Losses
4,863
16,948
Deferred taxation asset
4,863
16,948
(In USD ‘000)
Year ended
31 December 2023
Recognised
Year ended
31 December 2023
Unrecognised
Tax Losses
-
14,313
Deferred taxation asset
-
14,313
At year-end, potential deferred tax assets of $17.1m (2023: $14.3m) relating to tax losses of $75.3m (2023:
$75.6m) were not recognised as it is not probable that future taxable profits will be available against which the
associated unused tax losses can be utilised.
$16.1m of these losses relate to the Serbia operating subsidiaries and have the below expiry dates:
•
<1 year: $1.7m
•
1-2 years: $5.2m
•
2-5 years: $9.2m
The remaining losses relate to the UK parent company and have no expiry date.
12. PROPERTY, PLANT AND EQUIPMENT
Cost (In USD ‘000)
Note
Land &
Buildings
Plant &
Machinery
Restated
1
Mine under
Construction
Restated
1
Total
31 December 2022
4,781
2,026
71,804
78,611
Additions
828
2,062
122,021
124,911
Capitalised net interest
12, 19
-
-
12,172
12,172
Capitalised depreciation
12
-
-
2,006
2,006
Reassessment of
rehabilitation provision
18
-
-
(757)
(757)
31 December 2023
5,609
4,088
207,246
216,943
Additions
1,111
4,892
49,686
55,689
Capitalised net interest
12, 19
-
-
7,687
7,687
Capitalised depreciation
12
-
-
2,665
2,665
Reassessment of
rehabilitation provision
18
-
-
1,660
1,660
Transfer
2,442
10,520
(12,962)
-
31 December 2024
9,162
19,500
255,982
284,644
Depreciation (in USD ‘000)
31 December 2022
61
497
192
750
Charge for the year
24
452
-
476
31 December 2023
85
949
192
1,226
Charge for the year
517
1,874
-
2,391
31 December 2024
602
2,823
192
3,617
Net Book Value (in USD ‘000)
31 December 2023
5,524
3,139
207,054
215,717
31 December 2024
8,560
16,677
255,790
281,027
1Refer to note 4.3 for details of the restatement of prior year results.
Capitalised interest consists of accrued interest expense in the year of $7.8m (2023: $13.0m) on the Orion
Senior Debt Finance Package as set out in note 19, less $0.1m (2023: $0.1m) interest income, as set out in
note 10.
Mine under construction amounts relate to the Vareš Silver Operation, located in Bosnia and Herzegovina.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
97
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
13. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Set out below are the carrying amounts of right-of-use assets accounted for in accordance with IFRS 16 and
the movements during the year:
Cost (In USD ‘000)
Land & Buildings
Plant & Machinery
Total
31 December 2022
794
8,160
8,954
Additions
1,097
600
1,697
Depreciation
(346)
(2,051)
(2,397)
Foreign exchange difference
64
2
66
31 December 2023
1,609
6,711
8,320
Additions
133
6,431
6,564
Termination
(432)
(5,950)
(6,382)
Modification
(335)
-
(335)
Depreciation
(501)
(2,759)
(3,260)
Foreign exchange difference
(10)
-
(10)
31 December 2024
464
4,433
4,897
In June 2022, Adriatic and Nova Mining & Construction d.o.o, entered into a five-year mining services contract.
On 20 April 2024, Adriatic and Nova agreed to terminate the Mining Services Contract, and enter into a
settlement and termination agreement effective on 20 April 2024. Under the terms of the settlement and
termination agreement, Adriatic assumed financial liabilities with Sandvik Mining and Construction amounting
to $6.4m for underground mining equipment to be used by Adriatic.
This has been treated as a termination of the previous lease agreement with Nova Mining and a new lease
addition under IFRS 16 with Sandvik Mining and Construction.
Depreciation relating to right-of-use assets taken to mine under construction includes capitalised
depreciation of $2.7m (2023: $2.0m), as set out in note 12. The corresponding charge in the income
statement is $0.6m (2023: $0.4m).
Set out below are the carrying amounts of lease liabilities and the movements during the year:
(In USD ‘000)
Land & Buildings
Plant & Machinery
Total
31 December 2022
884
7,302
8,186
Additions
982
600
1,582
Interest expense
105
999
1,104
Payments
(466)
(2,357)
(2,823)
Foreign exchange difference
85
2
87
31 December 2023
1,590
6,546
8,136
Additions
132
6,454
6,586
Termination
(447)
(6,005)
(6,452)
Modification
(377)
-
(377)
Interest expense
72
535
607
Payments
(496)
(2,861)
(3,357)
Foreign exchange difference
(39)
-
(39)
31 December 2024
435
4,669
5,104
Of the total lease liabilities amount, $3.6m (2023: $1.5m) is recognised as a current liability and the remainder
$1.5m (2023: $6.6m) is shown within non-current liabilities. The maturity analysis of contractual undiscounted
cash-flows is in note 22b.
The following are the amounts recognised in the statement of comprehensive income:
Cost (In USD ‘000)
Note
12 months to
December 2024
12 months to
December 2023
Depreciation expense of right-of-use assets
13
3,260
2,397
Less: right-of-use asset depreciation capitalised to
mine under construction
12
(2,665)
(2,007)
Total depreciation
595
390
Interest expense on lease liabilities
10
607
1,103
Total amount recognised in profit or loss
1,202
1,493
The following are the amounts recognised in the statement of cashflow:
Cost (In USD ‘000)
12 months to
December 2024
12 months to
December 2023
Capital payments on leases
(2,750)
(1,719)
Interest paid on leases
(607)
(1,103)
Total amount paid in respect of lease liabilities
(3,357)
(2,822)
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
98
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
14. EXPLORATION AND EVALUATION ASSETS
Cost (In USD ‘000)
Raška Project
in Serbia
Total Exploration &
Evaluation Assets
31 December 2022
8,500
8,500
31 December 2023
8,500
8,500
Net Book Value (In USD ‘000)
31 December 2023
8,500
8,500
31 December 2024
8,500
8,500
Exploration and evaluation assets relate to the Raška Project in Serbia. Exploration activities are ongoing in
order to progress towards a JORC mineral resource.
The Raška Project is managed as a single project and if advanced to the production stage, it is anticipated
that there would be a single processing plant. The project is therefore treated as a single cash generating
unit, with the post-impairment value of $8.5m attributed to the Raška Project as a whole instead of to specific
tenements.
No further indicators of impairment or reversal of previous impairment have been identified in the year to 31
December 2024, the carrying value of $8.5m remains unchanged from prior year.
15. INVENTORY
(In USD)
31 December 2024
31 December 2023
Ore stockpiles
10,826
121
Spares and consumables
4,058
1,432
Finished goods
1,886
-
Total inventories
16,770
1,553
The Group recognises all inventory at the lower of cost and net realisable value and did not have any slow-The
Group recognises all inventory at the lower of cost and net realisable value, and did not have any slow-moving,
obsolete, or defective inventory as at 31 December 2024, and therefore there were no write-offs to the
income statement during the year (2023: Nil).
The total inventory recognised through the income statement was $11.9m (2023: Nil).
All ore stockpiles are expected to be processed in 12 months and are therefore current.
16. TRADE AND OTHER RECEIVABLES
(In USD ‘000)
31 December 2024
31 December 2023
Current
Contract asset
1,401
-
Prepayments and deposits
6,559
6,585
Unamortised deferral of Copper Stream fair value at initial
recognition
105
99
VAT receivables
4,788
6,364
Other receivables
543
164
13,396
13,212
Non-Current
Unamortised deferral of Copper Stream fair value at initial
recognition
1,570
1,680
Total
14,966
14,892
Trade and other receivables are accounted for under IFRS 9 using the expected credit loss model and
are initially recognised at fair value and subsequently measured at amortised cost less any allowance for
expected credit losses. Due to the nature of its sales model and credit terms of 3-30 days, expected credit
loss exposure to the Group is insignificant.
$4.6m (2023: $6.1m) of total prepayments relates to the Vareš Silver Operation prepayments and deposits
which represent advance payments in respect of equipment purchases.
At 31 December 2023, Copper Stream deposit was subject to a day 1 fair value adjustment of $1.9m
with a corresponding day one deferral in other debtors, which will be amortised over the life of the stream.
Amortisation at 31 December 2024 amounts to $0.1m (2023: $0.1m), resulting in an unamortised balance of
$1.7m of which $0.1m (2023: $0.1m) is current and $1.6m (2023: $1.7m) is non-current.
17. TRADE AND OTHER PAYABLES
(In USD ‘000)
31 December 2024
Restated
1
31 December 2023
Trade payables
14,629
13,720
Accrued liabilities
19,520
8,646
Deferred revenue
1,929
-
Other payables
1,265
537
37,343
22,903
¹Refer to note 4.3 for details of the restatement of prior year results.
The carrying value of all the above payables is equivalent to fair value. All trade and other payables are payable
within less than one year for both reporting periods.
Accrued liabilities were higher at year-end due to an increase in employees and contractors causing an uplift
in global employment taxes and social security contributions owed.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
99
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
18. REHABILITATION PROVISION
(In USD ‘000)
Note
31 December 2024
31 December 2023
At 1 January
3,674
4,431
Change in estimate
12
1,660
(757)
Unwinding of discount
10
62
-
At 31 December
5,396
3,674
The Group provision for the asset retirement obligation associated with mining activities at Vareš Silver
Operation at 31 December 2024 was $5.4m (2023: $3.7m).
The provision represents the net present value of the Company’s best estimate of the Vareš Silver Operation’s
future closure, restoration and environmental obligations, based on the extent of land and other disturbance
caused by construction and other activities.
The increase in estimate in relation to the asset retirement obligation is primarily due to additional estimated
costs due to development in 2024 as well as an update to the discount rate to 4.9% (2023: 4.2%) and inflation
rate to 2.0% (2023: 2.5%) using latest estimates.
The present value of the above provision is measured by unwinding the discount on expected future cash
flows over the period up to closure, using a discount rate of 4.9% (2024: 4.3%) that reflects the risk-free
rate of interest. The yield of US Treasury bonds with a maturity profile commensurate with the anticipated
rehabilitation schedule has been used to determine the discount factor applied to anticipated future
rehabilitation costs.
The sensitivity of the provision to a 1% change in the discount factor is shown below:
•
a decrease from 4.9% to 3.9% would increase the provision by $0.95m with a corresponding increase in
Property, plant and equipment; and
•
an increase from 4.9% to 5.9% would decrease the provision by $0.8m with a corresponding decrease in
Property, plant and equipment.
Future climate change risks could impact the rehabilitation provision both in terms of the nature of
decommissioning and rehabilitation required, as well as the cost of these activities given its long-term nature.
Climate change risks and mitigations have been considered in the TCFD Climate Disclosure within the
Directors report.
19. BORROWINGS AND DERIVATIVE LIABILITY
a) Total borrowings and derivative liability
(In USD ‘000)
Orion Senior
Secured Debt
Copper
Stream
QRC
Convertible
Debt
Total
Borrowings
Derivative
Liability on QRC
Convertible Debt
At 31 December 2022
(26,212)
-
(16,286)
(42,498)
(6,369)
Additions
(58,560)
(22,500)
-
(81,060)
-
Interest expense
(13,000)
-
(1,718)
(14,718)
-
Payment of Interest
-
-
1,895
1,895
-
Day one fair value
adjustment
-
(1,871)
-
(1,871)
-
Fair value adjustment
(2,548)
(2,548)
-
Revaluation of fair value
embedded option
-
-
-
-
(3,541)
At 31 December 2023
(97,772)
(26,919)
(16,109)
(140,800)
(9,910)
Additions
(29,228)
-
(29,228)
-
Interest expense
(18,479)
(305)
(18,784)
-
Loan modification
(1,592)
-
(1,592)
-
QRC conversion
-
-
16,414
16,414
3,453
Fair value adjustment
-
(12,142)
-
(12,142)
6,457
Payments
-
629
-
629
-
At 31 December 2024
(147,071)
(38,432)
-
(185,503)
-
Year end balances are analysed below:
(In USD ‘000)
Orion Senior
Secured Debt
Copper
Stream
QRC
Convertible
Debt
Total
Borrowings
Derivative
Liability on QRC
Convertible Debt
At 31 December 2024
Current liability
(75,917)
(4,072)
-
(79,989)
-
Non-current liability
(71,154)
(34,360)
-
(105,514)
-
(147,071)
(38,432)
-
(185,503)
-
At 31 December 2023
Current liability
(30,177)
(1,087)
(16,109)
(47,373)
(9,910)
Non-current liability
(67,595)
(25,832)
-
(93,427)
--
(97,772)
(26,919)
(16,109)
(140,800)
(9,910)
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
100
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
b) Orion Senior Secured Debt
On 10 January 2022, the Group announced the completion of a $142.5m debt financing package (“Orion Debt
Finance Package”), with Orion Resource Partners (UK) LLP (“Orion”) comprising:
•
$120m Senior Secured Debt; and
•
$22.5m Copper Stream
Under the terms of this agreement, the Senior Secured Debt maturity date is 30 June 2027. Interest accrues
daily at an annual rate equal to a margin of 7.5% plus the greater of (i) a floor of 0.26161% plus the CME Term
SOFR for a period equal to three months and (ii) the floor of 0.26161%. Interest is payable on each interest
repayment date, on the final maturity date, and on any earlier date on which a loan is prepaid in full or in part.
The First Repayment Date was the earlier of the Project Completion Longstop Date of 30 June 2024 and
the last business day of the quarter following the quarter in which the Project Completion Date falls. The
repayment schedule provides for the repayment of the loan in 10 equal quarterly installments in each of the 10
successive quarters, with the first such quarterly repayment occurring on the First Repayment Date and the
repayment in each successive quarter occurring on the last Business Day of the relevant quarter.
The Orion Debt Finance Package contains covenants and restrictive covenants typical for a project financing,
including in relation to financial reporting. It also contains security customary for a project financing, principally
security over the assets of Adriatic Metals BH d.o.o. and material project-related contracts held by the Adriatic
Group. A DSCR covenant of above 1.25x is included in the Orion Debt Finance Package.
Secured Overnight Financing Rate (“SOFR”) is a secured interbank overnight interest rate used as a reference
rate by parties in commercial contracts, as an alternative to LIBOR which was discontinued in 2021. The CME
SOFR is administered by the CME Group.
In January 2024, the Orion Senior Secured Debt fourth tranche of $30m was drawn net of a 2% fee of $0.6m
and associated legal and other fees of $0.2m, with a net amount received of $29.2m. At 31 December
2024, these Orion fees and a further amount of transaction fees incurred by the Group totalling $0.8m were
recognised as a deduction from the value of borrowings in accordance with IFRS 9, on the basis that they
represented transaction costs directly attributable to the acquisition of the borrowings.
First Modification of Facility
On 22 January 2024, the Group amended the terms of the original Senior Secured Debt agreement as below:
•
The Project Completion Longstop Date of 30 June 2024 was extended to 31 December 2024 and
became the First Repayment Date;
•
A fee applicable to the amendment (“the Front End Fee”) of $0.8m was payable immediately following the
utilisation date for the fourth draw down and added to the principal amount of the loans then outstanding;
•
The Company was required to ensure that prior to 31 July 2024, the QRC Convertible Debt was finally, fully
and irrevocably discharged or converted into equity without incurring financial indebtedness in relation to
the same.
Additional Facility
On 21 April 2024, the Group negotiated an additional debt facility of $25m with an arrangement fee payable of
$0.2m. These funds were to be made available in a single tranche during the period 1 September 2024 – 31
December 2024.
The tranche had to be repaid within six months of utilisation in cash or, at Orion’s option, in silver credits. The
amount of any silver credits used to repay the additional tranche was to be calculated by reference to market
price discounted by 2%.
This facility was undrawn during 2024.
Second Modification of Facility
On 6 December 2024, the Group made further amendments to the terms of the original Senior Secured Debt
agreement as below:
•
The Project Completion Longstop Date of 31 December 2024 was extended to 31 March 2025 and
became the First Repayment Date;
•
The additional commitment of $25m made available under the terms of the Deed of Amendment was
cancelled;
•
A fee applicable to the amendment (“the Amendment Fee”) of $0.5m became payable on the Amendment
Date and was added to the principal amount of the loan then outstanding;
•
Orion may elect to have the first repayment instalment paid in silver credits. If so, the amount of any silver
credits used to repay the first repayment instalment is to be calculated by reference to market price
discounted by 2%.
During 2024 the applicable CME Term SOFR has fluctuated between 4.60367% and 5.33156%, meaning that
the total interest rate applicable has fluctuated between 12.36528% and 13.15643%. The first DSCR testing
period is expected to be late-2025, and six monthly thereafter. The Company’s forecasts show headroom
above the requirement of 1.25x.
The Group is entitled to deduct the amount of any payment it makes to the Adriatic Foundation on behalf of
the Lenders from any interest accrued in the last quarter of each year.
Post period on 28 March the Group made its first debt repayment of $19.5m to Orion Mine Finance.
c) Copper Stream
On 13 February 2023 the Company announced that all conditions precedent for the $22.5m Copper Stream
had been satisfied and that the Copper Stream deposit funds had been received as a prepayment for the
Copper Stream agreement with OMF Fund III.
During the year, Gold Royalty Corp announced that it had entered into a binding purchase and sale agreement
with OMF Fund III to acquire the Copper Stream on the Vareš Silver Operation. The Company was not
impacted by the transaction nor a party to it, and the terms of the Copper Stream have not changed.
In accordance with the Copper Stream agreement, the Group will deliver copper warrants purchased on
the London Metal Exchange with a value equal to 24.5% of the payable copper in concentrates sold at the
official LME copper cash price. Gold Royalty will pay 30% of the value of copper warrants with the remaining
70% being credited to the prepayment. Copper warrants are delivered monthly when the Group exceeds the
threshold of 25 tonnes of payable copper contained in produced concentrates.
The agreement will be effective for an initial term of 40 years from the signing date and thereafter will
automatically be extended for any successive 20 year additional periods unless there have been no active
mining operations during the last 20 years of the initial term or throughout such additional periods, in which
case the agreement will terminate at the end of the initial term or such additional period, as applicable. The
agreement may also be terminated by the parties on mutual written consent or in the event of default.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
101
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
The Group’s obligations under the Copper Stream agreement are accounted for as a financial liability at fair
value through profit or loss and comprise the following at 31 December 2024:
(In USD ‘000)
31 December 2024
At 1 January 2024
26,919
Fair value adjustment at 31 December 2024
12,142
Copper warrant deliveries
(629)
At 31 December 2024
38,432
As the fair value of copper warrants depends on copper price volatilities and a risk-adjusted discount rate
which are unobservable inputs, the financial liability above is classified within Level 3 of the fair value hierarchy.
The valuation of the Copper Stream financial liability was prepared by management on a nominal basis. The
finance department performs the valuation, with support from external experts. The assumptions used were
the life of mine based on latest mineral reserves, copper production, the nominal copper forward price curve
and the nominal discount rate based on an adjusted Group weighted average cost of capital.
The following table contains sensitivities showing the impact of a 10%, 15% and 20% discount factor
compared with the discount rate used by the Group of 14.65% (2023: 18.94%).
10%
15%
20%
Valuation at 31 December 2024
48,899
37,798
30,385
The following table contains sensitivity analysis showing the impact of a plus or minus percentage applied to
the forecast nominal copper prices used in the Copper Stream valuation compared with those used by the
Group
+5%
+10%
+15%
Valuation at 31 December 2024
40,354
42,276
44,198
-5%
-10%
-15%
Valuation at 31 December 2024
36,511
34,589
32,668
d) QRC convertible debt
The Group issued $20m 8.5% convertible debt through a deed of covenant dated 30 November 2020. The
debt was convertible into fully paid equity securities in the share capital of the issuer, subject to the conditions
of the debt issue.
The debt was converted into shares on 4 March 2024 whereby the Group allotted 10,981,770 new ordinary
shares of £0.013355 each which were issued to Queens Road Capital Investment Ltd following their decision
to exercise their right to convert the bonds into equity. Following this conversion, the Company’s issued share
capital increased to 306,222,045 ordinary shares of £0.013355 each.
e) Derivative liability on QRC convertible debt
Management have revalued QRC’s option to convert the debt into equity at 4 March 2024. For valuations
of non-property items required for financial reporting, including level 3 fair values, the finance department
performs the valuation, with support from external experts.
It was concluded that the call option in the hands of the bondholder satisfied the conditions stipulated by IFRS
9 Financial Instrument – Recognition and Measurement for the recognition of a derivative liability in the Group
accounts and require a separate fair valuation.
The redemption options in the hands of the Company were concluded to fall outside the exemptions of IFRS 9
and to be closely related to the debt host contract. Therefore, the redemption options need not be separated
from the debt host contract and hence need not be valued separately. The Group has accounted for both the
embedded option and liability at fair value through profit and loss and at amortised cost respectively.
The Black Scholes model was chosen as the most appropriate pricing model to value QRC’s option to convert
the debt into equity and the valuation was updated at 4 March 2024. The main assumptions and inputs used in
the options pricing model were as follows:
•
Dividend yield – assumed to be nil because the Group has not declared or paid any dividends in prior years
on ordinary shares.
•
Strike price – The initial conversion price of AUD 2.7976 per ordinary share.
•
Expected term – Judgement applied to assign probability to the various redemption and put options in the
contract. Expected term of redemption calculated as 0.01 years from the valuation date.
•
Expected volatility – Weekly volatility over the 0.01 years (<1 weeks) was calculated as 60.3% prevailing on
ASX as of the valuation date.
•
Risk-free rate – Risk free yield obtained from Australian Treasury bond issues converted into continuous
compound yields.
•
Value of underlying common stock price – The closing price of ordinary shares AUD 3.280 on the valuation
date on the ASX.
Using the assumptions set out above, the Black Scholes value of the call option in the hands of the debt
holder at the date of conversion was $3.5m.
20. NET DEBT AND BORROWINGS
An analysis of net debt and borrowings, including lease liabilities, and movements in each year is shown below.
(In USD ‘000)
Note
31 December 2024
31 December 2023
Cash and cash equivalents
20,697
44,856
Borrowings
19
(185,503)
(140,800)
Lease liabilities
13
(5,104)
(8,136)
(169,910)
(104,080)
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
102
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
(In USD ‘000)
Borrowings
Lease
liabilities
Cash and cash
equivalents
Total
Net cash at 1 January 2023
(42,498)
(8,187)
60,585
9,900
Net cash used in operating activities
-
-
(22,886)
(22,886)
Net cash used in investing activities
-
-
(99,485)
(99,485)
Net proceeds from loans and borrowings
(81,060)
-
81,060
-
Lease additions
-
(1,581)
-
(1,581)
Foreign exchange movements
-
(87)
(356)
(443)
Changes in fair value
(4,420)
-
-
(4,420)
Interest expense
(14,718)
(1,103)
-
(15,821)
Net interest payments
1,896
844
(2,740)
-
Capital payments on leases
-
1,978
(1,978)
-
Net cash arising from issue of equity
-
-
30,656
30,656
Net borrowings at 31 December 2023
(140,800)
(8,136)
44,856
(104,080)
Net cash used in operating activities
-
-
(53,329)
(53,329)
Net cash used in investing activities
-
-
(44,821)
(44,821)
Net proceeds from loans and borrowings
(29,228)
-
29,228
-
Proceeds from exercise of warrants
-
-
2,498
2,498
Lease additions
-
(6,586)
-
(6,586)
Lease terminations
-
6,452
-
6,452
Lease modification
-
377
-
377
Foreign exchange movements
-
39
(681)
(642)
Debt conversion into equity
16,414
-
-
16,414
Changes in fair value
(10,818)
-
-
(10,818)
Interest expense
(21,700)
(607)
-
(22,307)
Net interest payments
-
607
(607)
-
Capital payments on stream liability
629
-
(629)
-
Capital payments on leases
-
2,750
(2,750)
-
Net cash arising from issue of equity
-
-
46,932
46,932
Net borrowings at 31 December 2024
(185,503)
(5,104)
20,697
(169,910)
21. FINANCIAL INSTRUMENTS
IFRS 13 requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy, depending on whether the fair value measurements are derived from:
•
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
•
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); or
•
inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(level 3).
Fair value is the amount at which a financial instrument could be exchanged in an arm’s length transaction. Set
out below are the financial instruments held at amortised cost and fair value through profit or loss and their fair
value measurement hierarchy.
See note referenced for further detail on inputs to fair value for each financial instrument.
At 31 December 2024
(In USD ‘000)
Note
At
amortised
cost
At fair value
through profit
or loss
Total
Fair Value
Hierarchy
Financial assets
Cash and cash equivalents
20,697
-
20,697
N/A
Trade and other receivables
16
647
-
647
N/A
Total financial assets
21,344
-
21,344
Financial liabilities
Trade and other payables
17
19,952
-
19,952
N/A
Borrowings
19
147,071
38,432
185,503
Level 3*
Total financial liabilities
167,023
38,432
205,455
Net financial (liabilities)
(145,679)
(38,432)
(184,111)
*copper stream only
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
103
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
At 31 December 2023
(In USD ‘000)
Note
At
amortised
cost
At fair value
through profit
or loss
Total
Fair Value
Hierarchy
Financial assets
Cash and cash equivalents
44,856
-
44,856
N/A
Trade and other receivables
16
223
-
223
N/A
Total financial assets
44,915
-
44,915
Financial liabilities
Trade and other payables
17
17,672
–
17,672
N/A
Borrowings
19
113,881
26,919
140,800
Level 3*
Derivative liability
19
-
9,910
9,910
Level 3
Total financial liabilities
131,553
36,829
168,382
Net financial (liabilities)
(86,638)
(36,829)
(123,467)
*copper stream only
22. FINANCIAL RISK MANAGEMENT
a) Credit risk
The Group has no significant concentrations of credit risk. Credit risk arises from the risk that a counter-party
will fail to perform its obligations. Credit risk arises from cash and cash equivalents, deposits with banks and
financial institutions, as well as credit exposures to customers.
Due to the nature of the business, the Group’s exposure to credit risk arising from its operating activities is
currently inherently low. However, the Audit & Risk Committee considers the risks associated with new material
counterparties where applicable to ensure the associated credit risk is of an acceptable level.
The total carrying amount of cash and cash equivalents and trade and other receivables represents the
Group’s maximum credit exposure.
The Group’s cash is held in major UK, Jersey, Australian, Serbian and Bosnian financial institutions, and as such
the Group is exposed to credit risks of those financial institutions. Of the Group’s year end cash holdings, 76%
(2023: 72%) are located in UK and Jersey A1 or A2 rated institutions and as such are considered to have low
credit risk.
Credit risk related to trade receivables is managed by the Group’s commercial team. The expected credit loss
on trade receivables is insignificant.
The Group’s tax receivables primarily relate to value added taxes due from governments in the UK and Bosnia
and Herzegovina. These amounts are excluded from the definition of financial instruments in the accounts and
in any event are considered to have low credit risk.
The Board of Directors, with input from the Audit & Risk Committee, is ultimately responsible for monitoring
exposure to credit risk on an ongoing basis and does not consider such risk to be significant at this time. As
such, the Group considers all its financial assets to be fully collectible.
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The
Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses.
The following table analyses the Group’s financial liabilities and derivatives into the relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date. The contractual
gross financial liabilities shown below are undiscounted estimated cash outflows which, where applicable,
include estimated future interest payments, and certain amounts therefore differ from the amounts presented
in the consolidated financial statements and elsewhere in the accompanying notes.
At 31 December 2024
(In USD ‘000)
<1 month
1-6 months
6-12
months
>12 months
Trade and other payables
7,520
12,400
26,227
-
Borrowings
245
40,448
39,629
190,664
Lease liabilities
318
1,763
1,736
1,563
8,083
54,611
67,592
192,227
At 31 December 2023
(In USD ‘000)
<1 month
1-6 months
6-12
months
>12 months
Trade and other payables
17,673
-
-
-
Borrowings
-
13,951
27,630
163,062
Derivative liability
-
-
9,910
-
Lease liabilities
124
623
748
7,946
17,797
14,574
38,288
171,008
c) Market risk
Foreign exchange risk
The Group conducts operations and exploration projects in Bosnia and Herzegovina and in Serbia. As a result,
a portion of the Group’s expenditures, receivables, cash and cash equivalents, accounts payable and accrued
liabilities are denominated in Bosnian Marks, Serbian Dinar, Pound Sterling, Australian Dollars, and Euros and
are therefore subject to fluctuation in exchange rates.
The Group manages foreign exchange risk by engaging with banking and treasury advisers to understand
macroeconomic forces that could expose the business to foreign exchange losses. For operating working
capital flows, the Group seek to, where possible, have Group entities settle liabilities denominated in their local
currency with the cash generated from converting USD concentrate revenues to local currencies.
At 31 December 2024, a 10% change in the exchange rate between USD and the Euro, Bosnian Mark and
Serbian Dinar, which is a reasonable estimation of volatility in exchange rates, would have an impact of
approximately $3.7m (2023: $1.4m) on the Group’s total comprehensive loss, and approximately $0.5m (2023:
$1.6m) on the balance of cash and cash equivalents.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
104
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
Interest rate risk
The Group’s interest rate risk arises from long-term borrowings issued at variable rates (see note 19) which
includes a margin of 7.5%.
Management regularly monitors the impact of a change in the variable interest rate to the Group’s financial
results. In the current year, the impact of a 10% increase/decrease in the reference rate would result in a
financial loss/gain of $1.3m (2023: $0.4m).
d) Fair values
The fair value of cash, receivables, accounts payable and accrued liabilities approximate their carrying
amounts due to the short term nature of the instruments.
As set out in note 21, fair value measurements recognised in the consolidated statement of financial position
subsequent to their initial fair value recognition can be classified into Levels 1 to 3 based on the degree to
which fair value is observable.
There were no transfers between any levels of the fair value hierarchy in the current or prior years.
e) Capital management
The Group’s objectives in managing capital are to safeguard its ability to operate as a going concern while
pursuing exploration and development, and opportunities for growth through identifying and evaluating
potential acquisitions of assets or businesses. The Group defines capital as the equity attributable to equity
shareholders of the Group which at 31 December 2024 was $118.8m (31 December 2023: $108.4m).
The Group sets the amount of capital in proportion to its risk and corporate growth objectives. The
Group manages its capital structure and adjusts it in light of changes in economic conditions and the risk
characteristics of the underlying assets.
23. SHARE CAPITAL
23.1. AUTHORISED SHARE CAPITAL
The authorised share capital of the Company consists of an unlimited number of voting ordinary shares with a
nominal value of £0.013355.
23.2. COMMON SHARES ISSUED AND FULLY PAID
Ordinary Shares (Number)
31 December 2022
272,746,292
Issue of share capital
14,807,632
Shares issued on exercise of options and performance rights
5,180,495
31 December 2023
292,734,419
Issue of share capital
18,254,838
QRC Bond Conversion
10,981,770
Shares issued on exercise of warrants and performance rights
2,505,856
31 December 2024
324,476,883
The average price paid for shares issued in the year was $2.40 per share (31 December 2023: $1.64 per
share).
24. SHARE OPTIONS AND PERFORMANCE RIGHTS
All share options and performance rights are issued under the Group’s share option plan.
The following table summarises movements of the Company’s share option plan:
Weighted average
exercise price
of options (USD)
Number of
options
Number of
performance
rights
Total options and
performance rights
31 December 2022
0.46
5,174,300
941,594
6,115,894
Granted
N/A
-
1,811,174
1,811,174
Exercised
0.13
(5,018,260)
(588,194)
(5,606,454)
Expired
1.47
(14,940)
(102,503)
(117,443)
31 December 2023
2.25
141,100
2,062,071
2,203,171
Granted
N/A
-
1,527,196
1,527,196
Exercised
N/A
-
(91,386)
(91,386)
Expired
2.21
(141,100)
(302,015)
(443,115)
31 December 2024
N/A
-
3,195,866
3,195,866
On exercise, holders of performance rights are required to pay £0.013355 for each performance right
exercised, being the nominal value of one ordinary share.
No options were granted during the year or prior year. Performance rights granted in the year were valued
using the Black-Scholes method (see note 24.2 below).
Options outstanding and exercisable:
Grant date
Expiry date
Option exercise
Expiry date
Number
exercisable
8 October 2020
28 February 2024
£1.80
-
91,300
8 October 2020
7 March 2024
£2.22
-
24,900
8 October 2020
19 August 2024
£1.20
-
24,900
141,100
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
105
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
Performance rights outstanding and exercisable:
At 31 December 2024
Grant date
Performance
rights
outstanding
Weighted average
remaining contractual
life (Years
Expiry date
Number
exercisable
17 February 2022
8,557
1.0
31 December 2025
8,557
5 April 2022
25,000
-
31 December 2024
-
23 February 2023
146,996
2.0
31 December 2026
78,193
24 May 2023
142,778
3.4
1 January 2028
-
24 May 2023
434,272
3.4
24 May 2028
-
18 September 2023
911,067
3.4
24 May 2028
-
12 June 2024
499,240
4.2
22 May 2029
499,240
12 December 2024
1,027,956
4.9
12 December 2029
1,027,956
3,195,866
1,613,946
Performance rights outstanding and exercisable:
At 31 December 2023
Grant date
Performance
rights
outstanding
Weighted average
remaining contractual
life (Years
Expiry date
Number
exercisable
17 February 2022
100,000
0.0
31 December 2023
100,000
17 February 2022
100,000
0.5
30 June 2024
100,000
17 February 2022
23,765
2.0
31 December 2025
14,537
5 April 2022
100,000
0.0
31 December 2023
100,000
5 April 2022
25,000
1.0
31 December 2024
-
23 February 2023
225,189
3.0
31 December 2026
78,193
24 May 2023
142,778
4.0
1 January 2028
-
24 May 2023
434,272
4.4
24 May 2028
-
18 September 2023
911,067
4.4
24 May 2028
-
2,062,071
392,730
24.1. SHARE-BASED PAYMENT RESERVE
The following table presents changes in the Group’s share-based payment reserve during the year ended 31
December 2024:
(In USD ‘000)
Share-based payment reserve
31 December 2022
4,943
Exercise of share options and performance rights
(2,337)
Issue of performance rights
1,645
Short term incentive plan awards
(576)
Expiry/cancellation of share options and performance rights
(84)
31 December 2023
3,591
Exercise of share options and performance rights
(197)
Issue of performance rights
1,599
Expiry/cancellation of share options and performance rights
(191)
31 December 2024
4,802
24.2. SHARE-BASED PAYMENT EXPENSE
During the year ended 31 December 2024; the Group recognised share-based payment expenses of $1.4m
(31 December 2023: $1.6m).
The fair value of the share-based compensation was estimated on the dates of grant using the Black-Scholes
option pricing model with the following weighted average assumptions:
Year Ended
31 December 2024
Year Ended
31 December 2023
Risk-free interest rate
3.65% - 4.05%
3.01% - 3.93%
Expected volatility
(1)
48% - 55%
39% - 56%
Expected life (years)
4.78 – 5.00
3.85-5.01
Fair value per performance right
$1.62 - $2.64
$1.03 - $2.23
1.
Expected volatility is derived from the Company’s historical share price volatility.
All options and performance rights have both market and non-market vesting conditions with the exception
of those issued to Non-Executive Directors in prior periods. Non-market vesting conditions include Group
and individual performance targets such as permitting milestones, exploration drilling rates or completion of
business improvement projects. Details of the vesting condition relating to options and performance rights
issued to Executive Directors are included in the Remuneration & Nomination Committee Report.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
106
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Consolidated Financial Statements - continued
25. RELATED PARTY DISCLOSURES
25.1. RELATED PARTY TRANSACTIONS
The Group’s related parties include key management personnel, companies which have directors in common
and their subsidiaries and any entities over which the Company may exert significant influence. The Company
has identified the following other related parties:
•
Black Dragon Gold Corp (until 9 August 2024), an entity of which Paul Cronin is the Non-Executive
Chairman and substantial shareholder;
•
Legal Solutions d.o.o. (until 9 August 2024), an entity of which Sanela Karic is Chief Executive Officer and
substantial shareholder;
•
The Adriatic Foundation is a not-for-profit trust which was created in Bosnia and Herzegovina with the
objective of supporting the communities around the Vareš Silver Operation. Adriatic Metals PLC provided
the initial funding required for the formation of the Foundation. The Company has the ability to appoint the
Board of Trustees of the Foundation and the Foundation has therefore been classified as a related party
on the basis that the Company is in a position to yield significant influence over it.
There were no material transactions with related parties during 2024 or material balances owed to or from
related parties as at year-end (2023: Nil).
The Company announced on 9 June 2021 its intention to donate 0.25% of the future profits from its
operations in Bosnia and Herzegovina to the Foundation. No amendment to this intention has been made
during 2024.
Transactions with key management personnel are disclosed below.
25.2. KEY MANAGEMENT PERSONNEL COMPENSATION
Compensation for key management personnel is shown in the table below. Key management personnel are
those persons having authority and responsibility for planning, directing and controlling the activities of the
Group. Key management personnel are considered to be the Non-Executive Directors and the Managing
Director and Chief Executive Officer.
(In USD ‘000)
Year Ended
31 December 2024
Year Ended
31 December 2023
Board fees
594
441
Consultancy fees
823
445
Short term incentive plan bonus
360
330
Other
50
-
Cash remuneration in respect of qualifying services
1,827
1,216
Share-based payments expense
531
290
Social security costs
25
29
2,383
1,535
Share-based payments expense is stated at fair value at the time of grant using the Black-Scholes option
pricing model. Further details are available in note 24.2 of the accounts.
Consultancy fees above include amounts paid to related party companies controlled by key management
personnel.
The balances owed at 31 December 2024 in respect of STIP bonuses were $0.4m in respect of the Managing
Director and Chief Executive Officer (2023: $0.3m). There were no other balances outstanding with related
parties at 31 December 2024 (2023: Nil).
26. CAPITAL COMMITMENTS AND CONTINGENCIES
At 31 December 2024, the Group had total capital commitments contracted for by not yet incurred of $9.1m
(2023: $11.0m).
The Directors are not aware of any contingent liabilities or contingent assets that are likely to have a material
effect on the results of the Group.
27. SUBSEQUENT EVENTS
On 16 January 2025, the Company announced that the binding agreement for the $25m concentrate
prepayment arrangement with Trafigura, previously announced on 12 December 2024, had been executed
and closed with funds drawn down.
The prepayment includes the delivery of zinc and lead-silver concentrates at market prices over a 12-month
period. The prepaid amount is unsecured, includes a 3-month grace period and will be paid down in line with
deliveries over the final nine months of the arrangement.
The transaction includes extended offtake agreements for approximately 100kt of zinc and lead-silver
concentrates into 2027, with increased payabilities and lower treatment charges compared to existing
offtakes.
Due to the rescheduled debt repayments and prepayment arrangement with Trafigura, Orion and the
Company have cancelled the additional Orion loan facility of $25m that was previously announced on
22 April 2024.
On 18 February 2025, the Company announced the successful completion of its capital raise of
approximately A$80.0m (approximately US$50.0m) via the issue of 20,512,821 CHESS Depositary Interests
(“New CDIs”) over new fully paid ordinary shares in the Company (“New Ordinary Shares”) at A$3.90 per New
CDI (the “Offer Price”).
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
107
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Parent Company Statement of Financial Position
At 31 December 2024
(In USD)
Note
31 December 2024
$’000
31 December 2023
$’000
ASSETS
Current assets
Cash and cash equivalents
2,712
29,676
Trade and other receivables
5
47,730
33,158
Total current assets
50,442
62,834
Non-current assets
Investment in subsidiaries
11
36,546
34,929
Trade and other receivables
5
106,798
67,653
Property, plant and equipment
6
35
29
Right-of-use asset
7
-
216
Total non-current assets
143,379
102,827
Total assets
193,821
165,661
The above Parent Company statement of financial position should be read in conjunction with the
accompanying notes.
The Company’s loss after tax for the year ended 31 December 2024 was $17.8m (year ended 31 December
2023: $12.6m).
The Parent Company Financial Statements of Adriatic Metals PLC, registered number 10599833, were
approved and authorised for issue by the Board of Directors on 30 March 2025 and were signed on its behalf
by:
Laura Tyler
Managing Director and Chief Executive Officer
Michael Horner
Interim Chief Financial Officer
(In USD)
Note
31 December 2024
$’000
31 December 2023
$’000
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
9
2,649
1,677
Lease liabilities
8
-
49
Borrowings
10
-
16,109
Derivative liability
10
-
9,910
Total current liabilities
2,649
27,745
Non-current liabilities
Lease liabilities
8
-
206
Total non-current liabilities
-
206
Total liabilities
2,649
27,951
Equity
Share capital
6,253
5,713
Share premium
243,449
174,146
Merger reserve
23,498
23,498
Warrants reserve
-
2,743
Share-based payment reserve
4,802
3,591
Foreign currency translation reserve
2,514
2,514
Retained deficit
(89,344)
(74,495)
Total equity
191,172
137,710
Total liabilities and equity
193,821
165,661
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
108
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Parent Company Statement of Changes in Equity
For the year ended 31 December 2024
(In USD ‘000)
Share
Capital
Share
Premium
Merger
Reserve3
Share- Based
Payment
Reserve
Warrants
Reserve3
Foreign
Currency
Translation
Reserve2
Retained
Deficit¹
Total Equity
$’000
31 December 2022
5,376
143,830
23,498
4,943
2,743
2,514
(64,257)
118,649
Comprehensive expense for the year
Loss for the year
-
-
-
-
-
-
(12,575)
(12,575)
-
-
-
-
-
-
(12,575)
(12,575)
Issue of share capital
251
31,428
-
-
-
31,679
Share issue costs
-
(2,111)
-
-
-
-
-
(2,111)
Exercise of options
81
470
-
(2,337)
-
-
2,337
551
Issue of options
-
-
-
1,645
-
-
-
1,645
2022 STIP awards
5
529
-
(576)
-
-
-
(42)
Expiry/cancellation of options/warrants
-
-
-
(84)
-
-
-
(84)
31 December 2023
5,713
174,146
23,498
3,591
2,743
2,514
(74,495)
137,710
Comprehensive expense for the year
Loss for the year
-
-
-
-
-
-
(17,789)
(17,789)
-
-
-
-
-
(17,789)
(17,789)
Issue of share capital
309
49,691
-
-
-
-
50,000
Share issue costs
(3,068)
-
-
-
-
(3,068)
Exercise of options
231
22,680
(197)
(2,498)
-
2,695
22,911
Issue of options
-
-
-
1,599
-
-
-
1,599
Expiry/cancellation of options/warrants
-
-
-
(191)
(245)
-
245
(191)
31 December 2024
6,253
243,449
23,498
4,802
-
2,514
(89,344)
191,172
1.
Retained deficit include all other net gains and losses and transactions with owners, including dividends. No dividends paid to date.
2.
Foreign currency reserve arose in FY22, on change to functional currency from GBP to USD.
3.
The merger reserve was created and warrants issued as part of Tethyan Resources Corp acquisition.
The above Parent Company statement of changes in equity should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
109
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Parent Company Financial Statements
1. CORPORATE INFORMATION
These Financial Statements represent the individual financial statements of Adriatic Metals Plc (the “Parent
Company”) for the year ended 31 December 2024. The Company is the parent of the Adriatic Metals Plc
Group and its principal activity is to act as a holding company for the Group.
The Company is a public company limited by shares and incorporated in England and Wales. The registered
office is located at 4th Floor 3 Hanover Square, London, W1S 1HD.
The Parent Company Financial Statements were authorised for issue by the Board of Directors on 30 March
2025.
2. BASIS OF PREPARATION
i ) Statement of compliance
In preparing these financial statements, the Company applies Financial Reporting Standards 101, ‘Reduced
Disclosure Framework’ (FRS 101 ‘Reduced Disclosure Framework’), and applicable law.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of
the following disclosures:
•
Cash Flow Statement and related notes;
•
Disclosures in respect of transactions with wholly owned Group companies;
•
Comparative year reconciliations for share capital, and intangible assets;
•
Disclosures in respect of capital management;
•
The effects of new but not yet effective IFRSs; a statement of compliance with FRS 101 is provided
instead.
•
Disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements of the Group include the equivalent disclosures, the Parent Company
has also taken the exemptions under FRS 101 available in respect of the following disclosures:
•
Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7
Financial Instrument Disclosures
ii ) Basis of preparation
These Financial Statements have been prepared on a historical cost basis, except for certain financial
instruments that have been measured at fair value.
As permitted section 408 (3) of the Companies Act 2006, a Statement of Comprehensive Income is not
presented for the Parent Company. The Parent Company’s loss after tax for the year ended 31 December
2024 is $17.8m (year ended 31 December 2023: $12.6m).
These Parent Company Financial Statements are presented in USD. Unless otherwise stated, all amounts
indicated by “$” represent USD.
iii ) Going concern
Refer to accounting policies in note 2.3 of the Group consolidated financial statements.
3. MATERIAL ACCOUNTING POLICIES
In addition to the material accounting policies in note 3 of the Group consolidated financial statements, the
following accounting policies are relevant only to the Parent Company Financial Statements.
i ) Investments in subsidiaries
Unlisted investments are carried at cost, being the purchase price, less provisions for impairment. Additional
consideration paid when subscribing for new shares, is made via capital contributions and recorded as
additions to investments in subsidiaries.
ii ) Intercompany loans
All intercompany borrowings and loans are initially recognised at the fair value of consideration received or
paid after deduction of issue costs and are subsequently measured at amortised cost.
iii ) Impairment
The Company recognises an allowance for expected credit losses (“ECL”) for all receivables held at amortised
cost where there is objective evidence that the receivable is irrecoverable. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the
Company expects to receive.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
110
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Parent Company Financial Statements - continued
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Parent Company’s Financial Statements requires management to make certain
judgements, estimates, and assumptions about recognition and measurement of assets, liabilities, income
and expenses. The actual results are likely to differ from these estimates. In addition to the critical accounting
estimates and judgements in note 4 to the consolidated financial statements, the following information about
the material judgements, estimates, and assumptions that have the most significant effect on the recognition
and measurement of assets, liabilities, income and expenses that are relevant only to the Parent Company
Financial Statements are discussed below.
i ) Value of investments in subsidiaries
The Parent Company’s investments in subsidiaries, which are made via capital contributions or arise upon
acquisition, are reviewed for impairment if events or changes indicate that the carrying amount may not be
recoverable. When a review for impairment is conducted, the recoverable amount is assessed by reference to
the net present value of expected future cash flows of the relevant generating unit or disposal value if higher.
As set out in note 11, no indicators of impairment have been identified during the year ended 31 December
2024.
ii ) Intercompany loans
As set out in note 5, judgement has been made to establish a provision of $16.0m (2023: $11.9m) against
foreign exchange adjusted receivables on the basis that the Serbian entity is in a net liability position. The
provision represents 100% receivable with the Serbian entity. The value of investment is unchanged.
5. TRADE AND OTHER RECEIVABLES
All current receivables due within one year as follows:
(In USD ‘000)
31 December 2024
31 December 2023
Current
Accrued interest income
-
59
Prepayments and deposits
342
215
Taxes recoverable
219
95
Amounts receivable from subsidiaries
47,169
32,789
47,730
33,158
Non-current
Amounts receivable from subsidiaries
106,798
67,653
106,798
67,653
Receivables contain amounts receivable for VAT, prepaid expenses and deposits paid. All receivables are held
at cost less any provision for impairment.
During the year, a provision of $4.1m was recognized against the Serbian entity receivables, representing
current year funding to the Serbian entity. The total provision is $16.0m (2023: $11.9m), reducing the non-
current amounts receivable from $119.2m to a net receivable $106.8m (2023: from $79.6m to net receivable
$67.6m).
6. PROPERTY, PLANT AND EQUIPMENT
(In USD ‘000)
Land & Buildings
Plant and machinery
Total
Cost
31 December 2022
23
92
115
Additions
-
2
2
31 December 2023
23
94
117
Additions
-
16
16
31 December 2024
23
110
133
Depreciation
31 December 2022
7
73
80
Charge for the year
2
6
8
31 December 2023
9
79
88
Charge for the year
2
8
10
31 December 2024
11
87
98
Net Book Value
31 December 2023
14
15
29
31 December 2024
12
23
35
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
111
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Parent Company Financial Statements - continued
7. RIGHT-OF-USE ASSET
The carrying amounts of right-of-use assets and the movements during the year are set out below:
(In USD ‘000)
Land & buildings
31 December 2022
250
Depreciation
(34)
31 December 2023
216
Modification
(183)
Depreciation
(33)
31 December 2024
-
8. LEASE LIABILITIES
Set out below are the carrying amounts of lease liabilities and the movements during the year:
(In USD ‘000)
31 December 2022
287
Interest expense
19
Payments
(51)
31 December 2023
255
Modification
(225)
Interest expense
9
Payments
(39)
31 December 2024
-
During the year, the scope of the lease was modified and as a result there are no current or non-current
liabilities relating to leases at 31 December 2024 (31 December 2023: $49k and $0.2m respectively).
9. TRADE AND OTHER PAYABLES
The breakdown of current accounts payable and accrued liabilities is as follows:
(In USD ‘000)
31 December 2024
31 December 2023
Trade payables
895
338
Accrued liabilities
1,637
1,284
Other payables
117
55
2,649
1,677
10. BORROWINGS AND DERIVATIVE LIABILITY
The movements in the QRC convertible debt and its embedded derivative liability are as detailed in note 19 of
the Group consolidated financial statements.
The Orion Senior Secured Debt referred to in note 19 of the consolidated financial statements is held in a
Jersey based Group subsidiary, Adriatic Metals Trading and Finance Limited, and is therefore not included in
the Parent Company Financial Statements.
11. INVESTMENTS IN SUBSIDIARIES
The breakdown of the investments in subsidiaries is as follows:
(In USD ‘000)
Adriatic Metals Holdings
BIH Limited
AM Projects
d.o.o.
Adriatic Metals
d.o.o.
Total
31 December 2023
26,426
3
8,500
34,929
Additions
-
1,617
-
1,617
31 December 2024
26,426
1,620
8,500
36,546
During the year ended 31 December 2022, impairment indicators were noted in relation to the Raška Project,
see note 14 of the Consolidated Finance Statements for further information. This resulted in an impairment
against the investment in Adriatic Metals d.o.o., down to a carrying amount of $8,500,000 on the basis that the
recoverable amount of the investment value is equal to the fair value less cost of disposal of the exploration
and evaluation asset in line with the requirements of IAS 36.
No further indicators of impairment or reversal of previous impairment have been identified in the year to 31
December 2024, the carrying value of $8.5m remains unchanged from prior year.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
112
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Parent Company Financial Statements - continued
The list of subsidiaries of the Parent Company are presented below:
Name of subsidiary
Country of incorporation
Registered Address
Shareholding
at 31 Dec. 2024
Shareholding
at 31 Dec. 2023
Nature of business
Adriatic Metals BH d.o.o.(formerly Eastern
Mining d.o.o.)
Bosnia and Herzegovina
Tisovci bb, Vareš, 71 330, Bosnia and
Herzegovina
100%
100%
Mineral producer, developer, and explorer
AM Projects d.o.o. (formerly (Adriatic Metals
Services d.o.o. and Adriatik Metali d.o.o.)
Bosnia and Herzegovina
Bulevar Meše Selimovića 81A, Sarajevo, 71
000, Bosnia and Herzegovina
100%
100%
Mineral exploration and development
Adriatic Metals Jersey Ltd
(formerly Tethyan Resource Corp)
Jersey (formerly Canada)
35-37 New Street, St. Helier, Jersey,
Channel Islands, JE2 3RA
100%
100%
Holding company - financing mining exploration of
subsidiary
Adriatic Metals Services (UK) Limited
(formerly Tethyan Resources Limited)
England and Wales
4th Floor, 3 Hanover Square, London
W1S 1HD, UK
100%
100%
Holding company and management services
company - financing mining exploration of subsidiary
and providing services to other group companies.
Adriatic Metals Trading and Finance Ltd
Jersey
35-37 New Street, St. Helier, Jersey,
Channel Islands, JE2 3RA
100%
100%
Trading and finance company
Adriatic Metals Holdings BIH Limited
England and Wales
4th Floor, 3 Hanover Square, London
W1S 1HD, UK
100%
100%
Holding company - financing mining exploration of
subsidiary
Tethyan Resources Jersey Ltd
Jersey
35-37 New Street, St. Helier, Jersey,
Channel Islands, JE2 3RA
100%
100%
Holding company - financing mining exploration of
subsidiary
Taor d.o.o.*
Serbia
Kneza Milosa 93(street) /4 floor, Belgrade,
Serbia
N.A.
100%
Mineral exploration and development
Tethyan Resources d.o.o.*
Serbia
Kneza Milosa 93(street) /4 floor, Belgrade,
Serbia
N.A.
100%
Mineral exploration and development
Global Mineral Resources d.o.o.*
Serbia
Kneza Milosa 93(street) /4 floor, Belgrade,
Serbia
N.A.
100%
Mineral exploration and development
Adriatic Metals d.o.o.
(formerly RAS Metals d.o.o.)
Serbia
Kneza Milosa 93(street) /4 floor, Belgrade,
Serbia
100%
100%
Mineral exploration and development
* Effective, 4 July 2024, these entities merged with Adriatic Metals d.o.o.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
113
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Notes to the Parent Company Financial Statements - continued
12. COMMITMENTS
Commitments relating to the Parent Company have
been disclosed in note 26 of the Group consolidated
financial statements.
The Parent Company has provided a Letter of
Support to its subsidiaries Adriatic Metals Services
(UK) Ltd and Adriatic Metals Holdings BIH Limited
(“BIH”), confirming that it does not intend to recall
intragroup payables should they not have the
financial capability to settle them. The Parent
Company will continue to support both in meeting its
liabilities as they fall due, for a period of not less than
12 months from the date of signing of these financial
statements.
13. SUBSEQUENT EVENTS
Subsequent events relating to the Parent Company
have been disclosed in note 27 of the Group
consolidated financial statements.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
114
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited)
The Company’s corporate governance statement is available on the Company’s website at
https://www.adriaticmetals.com/downloads/corp-governance-files-/adt-2020-06-05-cgp-v03.pdf
(“Corporate Governance Manual”).
This statement is current as at 30 March 2025 and has been approved by the Company’s Board of
Directors. To the extent applicable, the Company has adopted The Corporate Governance Principles and
Recommendations (4th Edition) as published by the ASX Corporate Governance Council (Principles and
Recommendations).
The Company is not established in Australia but it is subject in its home jurisdiction to an equivalent law to
sections 299 and 299A of the Corporations Act requiring the preparation of a directors’ report that includes
operations, business and financial review for the reporting period which is included in the main body of this
Annual Report.
Principles of Best Practice Recommendations
In accordance with ASX Listing Rule 4.10, Adriatic Metals PLC is required to disclose the extent to which it
has followed the Principles of Recommendations during the financial year. Where Adriatic Metals PLC has not
followed a recommendation, this has been identified and an explanation for the departure has been given.
Principles and recommendations
Comment
1.
Lay solid foundations for management and oversight
1.1
A listed entity should disclose: (a) the
respective roles and responsibilities of its
board and management; and (b) those matters
expressly reserved to the board and those
delegated to management.
The Board is ultimately accountable for the
performance of the Company and provides
leadership and sets the strategic objectives of
the Company. It is responsible for overseeing
all corporate reporting systems, remuneration
frameworks, governance issues, and stakeholder
communications. Decisions reserved for the Board
relate to those that have a fundamental impact on
the Company, such as material acquisitions and
takeovers, dividends and buy backs, material profits
upgrades and downgrades, and significant closures.
Management is responsible for implementing Board
strategy, day-to-day operational aspects, and
ensuring that all risks and performance issues are
brought to the Board’s attention. They must operate
within the risk and authorisation parameters set by
the Board.
Principles and recommendations
Comment
1.2
A listed entity should: (a) undertake appropriate
checks before appointing a person, or putting
forward to security holders a candidate
for election, as a director; and (b) provide
securityholders with all material information
in its possession relevant to a decision on
whether or not to elect or re-elect a director.
The Company undertakes comprehensive reference
checks prior to appointing a director, or putting
that person forward as a candidate to ensure that
person is competent, experienced, and would not be
impaired in any way from undertaking the duties of a
director. The Company provides relevant information
to shareholders for their consideration about the
attributes of candidates together with whether the
Board supports the appointment or re-election.
1.3
A listed entity should have a written agreement
with each director and senior executive setting
out the terms of their appointment.
The terms of the appointment of a Non-Executive
Director, or executive directors and senior executives
are agreed upon and set out in writing at the time of
appointment.
1.4
The company secretary of a listed entity
should be accountable directly to the board,
through the Chair, on all matters to do with the
proper functioning of the board.
The Joint Company Secretaries report directly to the
Board through the Chairman and are accessible to all
directors.
1.5
A listed entity should (a) have a diversity
policy which includes requirements for the
board or a relevant committee of the board
lo set measurable objectives for achieving
gender diversity and to assess annually both
the objectives and the entity’s progress in
achieving them; (b) disclose that policy or
a summary of it; and (c) disclose at the end
of each reporting period the measurable
objectives for achieving gender diversity set
by the board or a relevant committee of the
board in accordance with the entity’s diversity
policy and its progress towards achieving
them, and either: (1) the respective proportions
of men and women on the Board, in senior
executive positions and across the whole
organisation (including how the entity has
defined “senior executive” for these purposes);
or (2) if the entity is a “relevant employer”
under the Workplace Gender Equality Act,
the entity’s most recent “Gender Equality
Indicators”, as defined in and published under
that Act.
The Company’s Corporate Governance Plan includes
a ‘Diversity Policy’, which provides a framework for
establishing measurable objectives for achieving
gender diversity and for the Board to assess annually
both the objectives and progress in achieving them.
The Board set formal diversity objectives for 2021
onwards which are included as a KPI in the Company’s
Short Term Incentive Plan in both 2023 and 2024.
Further detail on the Diversity Policy is included in the
Strategic Report of the Directors.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
115
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Additional ASX Information (Unaudited) - continued
Principles and recommendations
Comment
1.6
A listed entity should (a) have and disclose
a process for periodically evaluating the
performance of the Board, its Committees
and individual directors; and (b) disclose, in
relation to each reporting period, whether
a performance evaluation was undertaken
in the reporting period in accordance with
that process. The Company's Corporate
Governance Plan includes a section on
performance evaluation practices adopted by
the Company.
The Chairman reviews the performance of the Board,
its Committees and individual directors to ensure that
the Company continues to have a mix of skills and
experience necessary for the conduct of its activities.
The most recent performance evaluation of the board
was performed during December 2024.
The Company’s Corporate Governance Manual
includes a section on performance evaluation
practices adopted by the Company.
1.7
A listed entity should (a) have and disclose
a process for periodically evaluating the
performance of its senior executives: and
(b) disclose, in relation to each reporting
period, whether a performance evaluation
was undertaken in the reporting period in
accordance with that process.
The Company’s Corporate Governance Plan includes
a section on performance evaluation practices
adopted by the Company.
The Chairman monitors the Board and the Board
monitors the performance of any senior executives
who are not Directors, including measuring actual
performance against planned performance.
The most recent performance evaluation of the
Managing Director and CEO was performed during
January 2025.
2.
Structure of the board to add value
2.1
The board of a listed entity should:
(a) have a nomination committee which: (1) has
at least three members, a majority of whom
are independent directors: and (2) is chaired
by an independent director, and disclose: (3)
the charter of the committee; (4) the members
of the committee; and (5) at the end of each
reporting period, the number of times the
committee met throughout the period and
the individual attendances of the members at
those meetings: or
(b) if it does not have a nomination committee,
disclose that fact and the processes it
employs to address board succession
issues and to ensure that the board has the
appropriate balance of skills, knowledge,
experience, independence and diversity
to enable it to discharge its duties and
responsibilities effectively.
The Company’s Corporate Governance Manual
includes a Nomination Committee Charter, which
discloses the specific responsibilities of the
committee.
The Company has established a formal Remuneration
& Nomination committee.
Refer to the Company’s Annual Report for further
details regarding the Remuneration & Nomination
committee.
Principles and recommendations
Comment
2.2
A listed entity should have and disclose a
board skills matrix setting out the mix of skills
and diversity that the board currently has or is
looking to achieve in its membership.
The Board’s skills matrix is set out below.
The matrix reflects the Board’s objective to have
an appropriate mix of industry and professional
experience including skills such as leadership,
governance, strategy, finance, risk, IT, HR. policy
development, international business and customer
relationship.
Additionally, external consultants may be brought it
with specialist knowledge to complement the board’s
matrix of skills in the event that a deficiency were to
exist in required areas.
2.3
A listed entity should disclose: (a) the names
of the directors considered by the board to be
independent directors; (b) if a director has an
interest. position, association or relationship of
the type described in Box 2.3 but the board is
of the opinion that it does not compromise the
independence of the director, the nature of the
interest, position. association or relationship in
question and an explanation of why the board
is of that opinion; and (c) the length of service
of each director.
Those directors who are considered to be
independent are specified in the Directors Report.
The length of service of each of the Company’s
directors is included in the Directors Report.
2.4
A majority of the board of a listed entity should
be independent directors.
The majority of the Company’s directors are
independent.
2.5
The Chair of the board of a listed entity should
be an independent director and, in particular,
should not be the same person as the CEO of
the entity.
Mr. Rawlinson, who was the Chairman through the
reporting year, is independent.
2.6
A listed entity should have a program
for inducting new directors and provide
appropriate professional development
opportunities for directors to develop and
maintain the skills and knowledge needed to
perform their role as directors effectively.
The Chairman and Company Secretaries brief and
inform New Directors on all relevant aspects of the
Company's operations and background. A director
development program is also available to ensure that
directors can enhance their skills and remain abreast
of important developments.
3.
Act ethically and responsibly
3.1
A listed entity should: (a) have a code of
conduct for its directors, senior executives
and employees; and (b) disclose that code or
a summary of it.
The Company's Corporate Governance Manual
includes a 'Corporate Code of Conduct', which
provides a framework for decisions and actions in
relation to ethical conduct in employment.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
116
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited) - continued
Principles and recommendations
Comment
4.
Safeguard Integrity In financial reporting
4.1
The board of a listed entity should: (a) have an
Audit Committee which: (1) has at least three
members, all of whom are Non-Executive
directors and a majority of whom are independent
directors; and (2) is chaired by an independent
director, who is not the Chair of the board, and
disclose: (3) the charter of the committee; (4)
the relevant qualifications and experience of the
members of the committee; and (5) in relation
to each reporting period, the number of times
the committee met throughout the period and
the individual attendances of the members at
those meetings; or (b) if it does not have an audit
committee, disclose that fact and the processes it
employs that independently verify and safeguard
the integrity of ifs corporate reporting, including
the processes for the appointment and removal
of the external auditor and the rotation of the audit
engagement partner.
The Company has established an Audit & Risk
Committee.
Refer to the Company’s Annual Report for further
details regarding the Audit & Risk Committee.
4.2
The board of a listed entity should, before it
approves the entity’s financial statements for
a financial period, receive from its CEO and
CFO a declaration that, in their opinion, the
financial records of the entity have been properly
maintained and that the financial statements
comply with the appropriate accounting
standards and give a true and fair view of the
financial position and performance of the entity
and that the opinion has been formed on the
basis of a sound system of risk management and
internal control which is operating effectively.
A declaration in accordance with these
requirements has been provided by the CEO and
CFO.
4.3
A listed entity that has an AGM should ensure
that its external Auditor attends its AGM and
is available to answer questions from security
holders relevant to the audit.
The Company seeks to ensure that its external
auditors attend its AGM and are available to answer
questions from security holders relevant to the
audit.
Principles and recommendations
Comment
5.
Make timely and balanced disclosure
5.1
A listed entity should (a) have a written policy
for complying with its continuous disclosure
obligations under the Listing Rules; and (b)
disclose that policy or a summary of it.
The Company has a continuous disclosure
program in place designed to ensure the
compliance with ASX Listing Rule disclosure and
to ensure accountability at a senior executive level
for compliance and factual presentation of the
Company's financial position.
New and substantive investor or analyst
presentations materials are released on the
ASX Market Announcements Platform ahead of
presentation.
See Schedule 7 of the Corporate Governance
Manual for further details.
6.
Respect the rights of shareholders
6.1
A listed entity should provide information about
itself and its governance to investors via its
website.
The Company maintains information in relation
to governance documents, directors and senior
executives, Board and committee charters, annual
reports, ASX announcements and contact details
on the company's website.
6.2
A listed entity should design and implement an
investor relations program to facilitate effective
two-way communication with investors.
The Company encourages shareholders to attend
its AGM and to send in questions prior to the AGM
so that they may be responded to during the
meeting. It also encourages ad hoc enquiry via
email which are responded to and actively uses
social media to engage with shareholders.
6.3
A listed entity should disclose the policies
and processes it has in place to facilitate and
encourage participation at meetings of security
holders.
Refer to commentary at Recommendation 6.2
6.4
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
The Company engages its share registry to
manage the majority of communications with
shareholders. Shareholders are encouraged
to receive correspondence from the company
electronically, thereby facilitating a more
effective, efficient and environmentally friendly
communication mechanism with shareholders.
Shareholders not already receiving information
electronically can elect to do so through the share
registry, Computershare Australia at
www.computershare.com/au.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
117
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited) - continued
Principles and recommendations
Comment
7.
Recognise and manage risk
7.1
The board of a listed entity should: (a) have
a committee or Committees to oversee risk,
each of which: (1) has at least three members,
a majority of whom are independent directors;
and (2) is chaired by an independent director,
and disclose: (3) the charter of the committee;
(4) the members of the committee; and (5) at
the end of each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or (b) if it does
not have a Risk Committee or Committees
that satisfy (a) above, disclose that fact and
the processes it employs for overseeing the
entity’s risk management framework.
The Company has established an Audit & Risk
Committee. The Company’s Corporate Governance
Plan includes an Audit & Risk Committee Charter, which
discloses the specific responsibilities of the committee.
Refer to the Company’s Annual Report for further
details regarding the Audit & Risk Committee.
7.2
The board or a committee of the board
should: (a) review the entity’s risk
management framework at least annually to
satisfy itself that it continues to be sound;
and (b) disclose, in relation to each reporting
period, whether such a review has taken
place.
The Company’s Corporate Governance Manual
includes a risk management policy.
The Company maintains a risk register as part of its risk
management strategy which is periodically updated
and subject to scrutiny by the Audit & Risk Committee,
this was updated in the current reporting period.
Where appropriate, the Audit & Risk Committee makes
recommendations to the Board in respect of key
operational risks and their management. Risks and the
management thereof is a recurring item for deliberation
at Board Meetings.
Procedures are in place to ensure the Board is informed
of any material breaches of the Corporate Code of
Conduct.
7.3
A listed entity should disclose: (a) if it has an
internal audit function, how the function is
structured and what role it performs; or (b)
if it does not have an internal audit function,
that fact and the processes it employs for
evaluating and continually improving the
effectiveness of its risk management and
internal control processes.
The Company is currently not in compliance with this
recommendation as it does not maintain a separate
internal audit function as the Board considers the
Company is not currently of the relevant size or
complexity to warrant the formation of a formal internal
audit function.
The Board, as a whole, evaluates and continually
strives for improvement in the effectiveness of risk
management and internal control processes.
The Audit & Risk Committee receives the report from
the Company’s external auditors which includes an
assessment of internal controls. In the event that
weaknesses in internal control processes are identified
these matters are brought to the attention of and dealt
with by the Board.
Principles and recommendations
Comment
7.4
A listed entity should disclose whether it
has any material exposure to economic,
environmental and social sustainability risks
and, if it does, how it manages or intends to
manage those risks.
Refer to the Company’s Annual Report for
disclosures relating to the company’s material
business risks, in particular the Principal Risks and
Uncertainties section. . Refer to commentary at
Recommendations 7.1 and 7.2 for information on the
company’s risk management framework.
8.
Remunerate fairly and responsibly
8.1
The board of a listed entity should: (a) have
a Remuneration & Nomination Committee
which: (1) has at least three members, a
majority of whom are independent directors;
and (2) is chaired by an independent
director, and disclose: (3) the charter of
the committee; (4) the members of the
committee; and (5) at the end of each
reporting period, the number of times the
committee met throughout the period and
the individual attendances of the members
at those meetings; or (b) if it does not have a
remuneration committee, disclose that fact
and the processes it employs for setting the
level and composition of remuneration for
directors and senior executives and ensuring
that such remuneration is appropriate and not
excessive.
The Company has established a Remuneration &
Nomination Committee.
The Company’s Corporate Governance Plan includes
a Remuneration & Nomination Committee Charter,
which discloses the specific responsibilities of the
Remuneration Committee.
Refer to the Company’s Annual Report for further
details regarding the Remuneration & Nomination
Committee.
8.2
A listed entity should separately disclose
its policies and practices regarding the
remuneration of Non-Executive Directors and
the remuneration of executive directors and
other senior executives.
Refer to the Remuneration & Nomination Committee
Report in the Company’s Annual Report.
8.3
A listed entity which has an equity-based
remuneration scheme should: (a) have a
policy on whether participants are permitted
to enter into transactions (whether through
the use of derivatives or otherwise) which
limit the economic risk of participating in
the scheme; and (b) disclose that policy or a
summary of it.
The Company does not have formal policy on whether
participants in the equity-based remuneration scheme
are permitted to enter into transactions which limit the
economic risk of participating in the scheme. However,
no such transactions have been entered into by
scheme participants and such transactions may only
be enter into with the prior approval of the Company as
noted in Schedule 4 Remuneration Committee Charter
of the Corporate Governance Manual.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
118
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited) - continued
BOARD SKILLS MATRIX
Michael Rawlinson
Peter Bilbe
Sandra Bates
B. Economics. Master of Science
B. Engineering Mining
B.Com & LLB
Investment banking
Mining Engineer
Corporate Law
Resources
Gold, Base Metals
Corporate Finance
Mining Finance
Operational experience
M&A
NED – LSE, ASX
NED - ASX
Resources focus
NED – ASX, LSE, AIM
Laura Tyler - CEO
Sanela Karic
Mirco Bardella
B.Sc. (Hons) Geology; M.Sc.
Mining Engineering
LLB
B. Accounting
Base metals, gold, diamonds
Bosnian Law
Chartered Accountant
Operational and asset leadership
Corporate affairs
Financial Reporting
Technical and technology
leadership
M&A
Resources Governance
M&A
Human Resources
NED LSE, AIM
NED – LSE
Eric Rasmussen
Master of Law and Finance
Road Military Engineer; Explosives
Military Engineer
Certified Teacher
Certified Sustainability Officer
Natural Resource Finance
NED – LSE, TSX
SHAREHOLDINGS
At the time of publishing this Annual Report there is no on-market buy-back.
SUBSTANTIAL SHAREHOLDINGS
The following table lists the 20 largest shareholders of Adriatic Metals plc in accordance with the ASX listing
rules, together with the number of shares and the percentage of issued capital each holds, as at 17 March
2025.
Rank
Name
Number
of
ordinary
shares
Percentage of
issued share
capital
1
CITICORP NOMINEES PTY LIMITED
47,357,828
14.01
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
39,181,122
11.67
3
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
31,574,162
9.40
4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
21,448,819
6.39
5
BNP PARIBAS NOMS PTY LTD
18,611,718
5.54
6
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
17,485,868
5.21
7
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
15,541,419
4.63
8
BNP PARIBAS NOMINEES PTY LTD
15,501,418
4.62
9
WARBONT NOMINEES PTY LTD
13,931,991
4.15
10
MR MILOS BOSNJAKOVIC
10,385,000
3.09
11
BNP PARIBAS NOMINEES PTY LTD
9,020,839
2.69
12
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
8,136,976
2.42
13
GLAMOUR DIVISION PTY LTD
5,600,000
1.67
14
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
5,312,748
1.58
15
BNP PARIBAS NOMS PTY LTD
5,278,714
1.57
16
EUROCLEAR NOMINEES LIMITED
4,865,635
1.45
17
BNY (OCS) NOMINEES LIMITED
4,153,972
1.24
18
MR ERIC DE MORI
4,000,000
1.19
19
NORTRUST NOMINEES LIMITED
2,529,239
0.75
20
BNY (OCS) NOMINEES LIMITED
2,346,305
0.70
Totals: Top 20 holders
282,263,773
84.04
Total Remaining Holders Balance
53,612,076
15.96
At 17 March 2025 the Directors are aware of three shareholders who held a substantial shareholding within
the meaning of the Australian Corporations Act as outlined in the top 20 listing above. A person has a
substantial holding if the total votes that they or their associates have relevant interests in is five per cent of
more of the total number of votes.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
119
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited) - continued
DISTRIBUTION OF ORDINARY SHARES AT 17 MARCH 2025
Range
Number of
shareholders
Number of
ordinary shares
Percentage of issued
share capital
1 - 1,000
1,284
534,187
0.16
1,001 - 5,000
854
2,161,085
0.64
5,001 - 10,000
265
2,044,014
0.61
10,001 - 100,000
321
9,961,467
2.97
100,001 Over
99
321,174,096
95.62
Total
2,823
335,874,849
100
UNMARKETABLE PARCEL
Minimum Parcel
Size Shares
Number of
shareholders
Total Shares
Minimum $ 500.00 parcel at $ 4.4600 per unit
113
188
4,196
RESTRICTED SECURITIES
There were no restricted securities or securities subject to voluntary escrow at 31 December 2024.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
120
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited) - continued
TENEMENT HOLDINGS
The Company’s tenements at 21 March 2025 are set out in the table below. The Company holds a 100% interest in all concession agreements and licences.
Concession document
Registration number
Licence holder
Concession name
Area (km
2)
Date granted
Expiry date
Bosnia and Herzegovina
Concession Agreement
No.:04-18-21389-1/13
Eastern Mining d.o.o.
Veovaca1
1.08
12-Mar-13
12-Mar-38
Veovaca 2
0.91
12-Mar-13
12-Mar-38
Rupice-Jurasevac, Brestic
0.83
12-Mar-13
12-Mar-38
Annex 3 & 6 Area
No.: 04-18-21389-3/18
Eastern Mining d.o.o.
Rupice - Borovica
4.52
14-Nov-18
12-Mar-33
Extension
Veovaca - Orti - Seliste - Mekuse
1.32
14-Nov-18
12-Mar-33
Annex 5 – Area
No: 04-18-14461-1/20
Eastern Mining d.o.o.
Orti-Selište-Mekuše- Barice- Smajlova Suma-Macak
19.33
3-Dec-20
3-Dec-50
Extension
Droškovac - Brezik
2.88
3-Dec-20
3-Dec-50
Extension
Borovica – Semizova Ponikva
9.91
3-Dec-20
3-Dec-50
Concession Agreement
No: 04-14-5359-3/22
Eastern Mining d.o.o.
Saski Do
1.28
19-Jul-22
19-Jul-25
Serbia
Exploration Licence
310-02-1721/2018-02
Adriatic Metals d.o.o.
Kizevak
1.84
3-Oct-19
29-May-26
Exploration Licence
310-02-1722/2018-02
Adriatic Metals d.o.o.
Sastavci
1.44
7-Oct-19
29-May-26
Exploration Licence
310-02-1114/2015-02
Adriatic Metals d.o.o.
Kremice
8.54
21-Apr-16
07-Jul-25
Exploration Licence
310-02-01670/2021-02
Adriatic Metals d.o.o.
Kaznovice
37.1
22-Nov-21
22-Nov-24*
* the licence is still valid under the original decision from 22 November 2021 and the Company can continue to operate in accordance with that decision. The Company has had verbal confirmation of renewal from the Serbian
Government and is awaiting issue of official renewal which is imminent.
FINANCIAL STATEMENTS
Annual Report for the Year Ended 31 December 2024
121
CORPORATE | STRATEGIC | GOVERNANCE | FINANCIAL
Additional ASX Information (Unaudited) - continued
CHAPTERS 6, 6A, 6B AND 6C OF THE CORPORATIONS ACT
As the Company is incorporated in England and Wales, chapters 6, 6A, 6B and 6C of the Corporations Act
dealing with the acquisition of shares (i.e. substantial holdings and takeovers) do not apply to the Company. In
the United Kingdom, the City Code on Takeovers and Mergers (City Code) regulates takeovers and substantial
shareholders and the Company is subject to the City Code.
VOTING RIGHTS
The Company is incorporated under the legal jurisdiction of England and Wales. To enable the Company to
have their securities cleared and settled electronically through CHESS, Depositary Instruments called CHESS
Depositary Interests (CDIs) are issued. Each CDI represents one underlying ordinary share in the Company
(Share). The main difference between holding CDIs and Shares is that CDI holders hold the beneficial
ownership in the Shares instead of legal title. CHESS Depositary Nominees Pty Limited (CDN), a subsidiary of
ASX, holds the legal title to the underlying Shares.
Pursuant to the ASX Settlement Operating Rules, CDI holders receive all of the economic benefits of actual
ownership of the underlying Shares. CDIs are traded in a manner similar to shares of Australian companies
listed on ASX.
CDIs will be held in uncertificated form and settled/transferred through CHESS. No share certificates will be
issued to CDI holders. Each CDI is entitled to one vote when a poll is called, otherwise each member present
at a meeting or by proxy has one vote on a show of hands.
All substantive resolutions at a meeting of security holders are decided by poll rather than by a show of hands.
If holders of CDIs wish to attend and vote at the Company's general meetings, they will be able to do so. Under
the ASX Listing Rules and the ASX Settlement Operating Rules, the Company as an issuer of CDIs must allow
CDI holders to attend any meeting of the holders of Shares unless relevant English law at the time of the
meeting prevents CDI holders from attending those meetings.
In order to vote at such meetings, CDI holders have the following options:
a.
Instructing CDN, as the legal owner, to vote the Shares underlying their CDIs in a particular manner. A
voting instruction form will be sent to CDI holders with the notice of meeting or proxy statement for the
meeting and this must be completed and returned to the Company's Share Registry prior to the meeting;
or
b.
informing the Company that they wish to nominate themselves or another person to be appointed as
CDN's proxy with respect to their Shares underlying the CDIs for the purposes of attending and voting at
the general meeting; or
c.
converting their CDIs into a holding of Shares and voting these at the meeting (however, if thereafter the
former CDI holder wishes to sell their investment on ASX it would be necessary to convert the Shares
back to CDIs). In order to vote in person, the conversion must be completed prior to the record date for
the meeting. See above for further information regarding the conversion process.
As holders of CDls will not appear on the Company's share register as the legal holders of the Shares, they will
not be entitled to vote at Shareholder meetings unless one of the above steps is undertaken.
As each CDI represents one Share, a CDI Holder will be entitled to one vote for every CDI they hold.
Proxy forms, CDI voting instruction forms, and details of these alternatives will be included in each notice of
meeting sent to CDI holders by the Company.
These voting rights exist only under the ASX Settlement Operating Rules, rather than under British Columbia
Law. Since CDN is the legal holder of the applicable Shares and the holders of CDIs are not themselves the
legal holder of their applicable Shares, the holders of CDIs do not have any directly enforceable rights under
the Company’s articles of association.
As holders of CDIs will not appear on our share register as the legal
holders of shares of ordinary shares, they will not be entitled to
vote at our shareholder meetings unless one of the above steps is
undertaken.
FINANCIAL STATEMENTS
3 Hanover Square
London
W1S WHD
United Kingdom
Tel: +44 (0) 207 993 0066
www.adriaticmetals.com