With the materials sector down around 3% in late afternoon trading, today was never going to be a great day to bring positive news to the market.
So when Adriatic Metals (ASX: ADT) posted a mixed market update this morning, it’s hardly surprising investors focused more on the brickbats than the bouquets.
The silver miner’s share price was down around 11% today following a glass-is-half-full operations update.
Firstly, Adriatic reported a record quarter of processing throughput of 86,000 tonnes of ore milled at its flagship Vares Silver Operation in Bosnia and Herzegovina, up 43% on the December update.
However, in the next breath, the miner told the market that milled tonnage was lower than expected due to tailing filtration cycle time issues.
What’s also putting lead in the shareholders’ saddlebags are growing investor fears that the Vares Silver Project in Bosnia and Herzegovina could be underperforming.
Commercial production concerns
Investors are concerned that commercial production remains elusive for the Bosnia and Herzegovina-focused silver miner due to forestry access issues impending road construction, delaying production.
It’s understood that road construction to the Veovaca TSF was delayed due to finalising forestry access agreements.
These concerns saw Adriatic return to the top ten with a short list of 9.7%, and this is also clearly lowering the price.
To appease the market Adriatic has reassured investors that commercial production is expected in Q2 with access agreements now resolved.
Production is on track
Adriatic Metal's CEO Laura Tyler has also reassured the market that the process of ramping up production to nameplate capacity of 800,000 tonnes remains on track for 2H FY25.
“We remain in a solid financial position at the end of Q1 with a cash position of $75m after making our first debt repayment of $20 million [Orion Mine Finance last week],” said Tyler.
“Our focus over the next few months is to actively debottleneck and optimise our operations and continue to improve our performance.”
Adriatic has a market cap of $1.2 billion, making it an ASX300 stock; the share price is up 5% over one year and up 6% year to date.
Other key numbers in today’s update
• Record quarterly sales of $33 million, an increase of 23% from Q4 2024.
• Total net debt of $85 million (including Trafigura prepayment), compared to net debt of $129 million at the end of Q4 2024.
The stock appears to be in a long-term uptrend as confirmed by multiple indicators.
Consensus is Moderate Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.