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Adriatic Metals: Buy The World's Most Exciting Zinc-Silver Exploration Stock For A Song

Jun. 02, 2020 10:00 PM ETAdriatic Metals PLC (ADMLF) Stock54 Comments


  • Adriatic Metals discovered the extra-high-grade Rupice, arguably the world's most exciting undeveloped polymetallic deposit. It has assembled a portfolio of exploration projects in the Balkans, Rupice included.
  • Adriatic checks a lot of boxes as a base metal exploration play, from jurisdiction to permitting, exploration upside to infrastructure, from the assets to the management.
  • Thanks to an under-appreciation of the Balkan jurisdictions, Adriatic currently trades at a discount to its mineral resource that is being expanded and rapidly de-risked.
  • Based on an in-depth analysis of the upside, risk factors, and near-term catalysts, I believe Adriatic provides long-term investors with a very attractive risk-reward profile.
  • Looking for more stock ideas like this one? Get them exclusively at The Natural Resources Hub. Get started today »

Investment thesis

Adriatic Metals PLC (OTCPK:ADMLF)(ADT.ASX)(ADT1.LSE) is a U.K.-headquartered mining company that operates in Bosnia and Herzegovina as well as Serbia.

Richly endowed with mineral resources, the Balkan region, in general, and the Vareš area in Bosnia and Herzegovina, in particular, have been mined as early as the Bronze Age and the Roman times. Fast forward to 1989-1992, the breakup of Yugoslavia and the ensuing civil unrest forced mines to be closed before the depletion of mineral resources. The region received little mineral exploration thereafter, thus preserving it for today's exploration using modern techniques.

The predecessor of Adriatic entered Bosnia early, after a long hiatus of foreign investment. Thanks to the first-mover advantage, it was able to pick up the exceptionally prospective Vareš mining district on the cheap, which Adriatic subsequently expanded considerably. In May 2020, Adriatic further added the Raska mining district in neighboring Serbia to its exploration pipeline through the acquisition of Tethyan Resources.

Since 2017, Adriatic has carried out aggressive exploration programs, which led to the re-discovery of its flagship asset, the ultrahigh-grade Rupice zinc-silver-lead-gold-copper-barite deposit. Findings of a scoping study completed in November 2019 indicate the Vareš project, consisting of Rupice and nearby brownfield Veovača, is highly economical with projected after-tax IRR of 107.4%, making it the most economical pre-development base-metal project in the world.

At an EV/MRE multiple of US$0.025/lb ZnEq, Adriatic trades at a deep discount to its mineral resources, which is set to expand in the mineral resource update scheduled for the next quarter. It trades only at 17% of the NPV-8 of the Vareš project, much lower than analogous mines in production, although the quality aspect of Rupice may have been priced in.

I believe Adriatic stock will rerate upward, as the company expand mineral resources and advances Vareš and Raska through permitting, pre-feasibility

If you like Adriatic Metals, You should join The Natural Resources Hub. Subscribers to this top-ranked Marketplace service get unique access to a whole portfolio of high-alpha investment ideas like Adriatic and much more...

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This article was written by

Laurentian Research profile picture
Laurentian Research is a resource industry veteran with a Ph.D. in geoscience and decades of investment experience. He leads the investing group The Natural Resources Hub, with an aim of helping membes uncover undervalued opportunities in the energy and mining sectors with multi-bagger potential. He is also passionate about helping members find dividend growth opportunities from long-term growth industries. Members get weekly newsletters, proprietary in-depth analyses, trade alerts, model portfolios, private access to him, and a community of fellow investors to share investment ideas with. Learn more >> Members get weekly newsletters, proprietary in-depth analyses, trade alerts, model portfolios, private access to me, and a community of fellow investors to share investment ideas with. Learn more about The Natural Resources Hub today and start growing your wealth alongside Laurentian Research!

Analyst’s Disclosure: I am/we are long ADMLF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (54)

vikingglobetrotter profile picture
Excellent article, much appreciated!
Laurentian Research profile picture

Glad it's of value to you.

Follow me to be alerted of my future articles.

Thanks for reading.
Sorgenfrei profile picture
$ADMLF Adriatic Metals

We are pleased to announce that we have entered into binding agreements for a US$28 million financing with Queen's Road Capital and EBRD.


Very strong axis now cemented to take this project forward. Any sellers anticipating an issue now redirected. Major derisking point on journey to production.
Sorgenfrei profile picture
Adriatic Metals Plc $ADMLF Pre-Feasibility Study results for the Vares Silver Project are now out:

NPV 8%: $1.04 billion

Capex: $173 million

Payback: 1.2 years

Mine life: 14 years

=> Work is immediately commencing on the DFS

To read the release in full


Good overview:

Laurentian Research profile picture
@Sorgenfrei Thanks. Been analyzing the PFS and forgot to update it here.

Yes, polar bear gave a good overview.
Laurentian Research profile picture
"Adriatic Metals Plc (ASX:ADT, LON:ADT1) is pleased to announce that Tethyan Resource Corp. (TSX-V: TETH) (“Tethyan”) has obtained a final order of the Supreme Court of British Columbia approving the plan of arrangement (the “Arrangement”) with Adriatic Metals plc. As previously announced Tethyan shareholders approved the Arrangement at the annual general and special meeting of Tethyan shareholders."

Laurentian Research profile picture


Things are getting tense...
TopDoggie profile picture
Tense and interesting.
Laurentian Research profile picture
It looks like on June 22, 2020, Adriatic Metals (ADMLF) will be added to the S&P/ASX 300 Index (XKO).


I look forward to better liquidity for this fine stock. Do you think Adriatic joining XKO will help with the liquidity?
Laurentian Research profile picture
Meanwhile, Bosnjakovic will be replaced by Dominic Roberts.

“Milos Bosnjakovic has been involved with Adriatic since its acquisition of the Vares Project in 2017 and has been instrumental in establishing the strong relationships we enjoy with government and the local community. On behalf of all of the Board, I would like to thank Milos for his contribution during his time with the Company and wish him well in his future endeavours.”

Laurentian Research profile picture
"Tethyan Resource Corp. (TSXV: TETH) ("Tethyan" or the "Company") is pleased to announce that it has commenced drilling at the recently acquired Kizevak project in Serbia. This initial programme will be conducted with one diamond drill rig, with hole depths to between 150 - 300 metres for approximately 2,300 metres in total and is anticipated to complete in mid-August. Drilling is intended to verify historic drill results and test for depth extensions to mineralisation identified in historic exploration adits.

Fabian Baker, Tethyan's President & CEO commented: "We are excited to commence drilling at Kizevak. This will be the first significant exploration programme on the project since it was explored by the Serbian State, predominantly in the 1970's and 80's. Drilling at that time intercepted broad intervals of high-grade silver-zinc-lead mineralisation from surface to approximately 150 metres depth, and our drill programme intends to verify these results and begin to test for continuations of mineralisation at depth. It is testament to the effective working environment in Serbia that we have been able to permit land access and build drill pads in just 3 weeks following the acquisition of the Kizevak project, and we look forward to scaling up our exploration efforts over the coming year.""

Two points worth emphasizing here:
1. Adriatic is doing what it said it would do, as expected as in my article above;
2. Serbia authority impressed me that it was swift in permitting drilling, which is in contrast to numerous other mining jurisdictions.
Chris Guenther profile picture
I am long Adriatic from much lower levels, I took some profit when I had a double on it, and am letting the remainder ride. Thank you for the in depth research and the great presentation!
Laurentian Research profile picture
@Chris Guenther Thank you for your comment. Let's see how much higher Adriatic can go.
TopDoggie profile picture
Interesting thanks for the article.
Laurentian Research profile picture
Thanks for commenting.
bengalesq profile picture
Very solid. Very comprehensive.
Laurentian Research profile picture
@bengalesq Thank you for the comment.
Sr. Canario profile picture
Ticker ADT1 in London.
Laurentian Research profile picture
Yes. Thank you.

Basically, 4 ticker symbols for Adriatic:
TETH.TSX-V (to be converted to ADT1, they say)
hulubalang profile picture
I like Adriatic. I own Tethyan so look forward to receiving Adriatic shares. However, with a market cap of nearly $200M, I'm not sure it's honest say to you can "buy this exploration stock for a song."
Laurentian Research profile picture
...relative to the intrinsic value and as a fractional owner.

Thanks for sharing your position.
Laurentian Research profile picture
One of the favorite parts of publishing articles at SA is to ask you, my dear readers:

Which company would you like to read about the next?

I'm all ears.
Lolorenzo profile picture
Now that copper is back around 2.50, Excelsior Mining and Regulus Resources.
Laurentian Research profile picture
Thank you for the suggestion. They are fine companies with some flaws. Both are already covered at The Natural Resources Hub, I'll see what we can do to publish an article here.

BTW, have you ever considered Altius Minerals in lieu of Excelsior cuz the former owns both equity and royalty interest? See here: seekingalpha.com/...
Hello @Laurentian Research
Thanks for this instructive presentation.
Regarding the NPV, How much was the cost of capital considered in the calculation ?
Have you done a chart calculating the NPV depending of the different cost of capital entry ?
What are you personal "cost of capital" you use in general for junior mining projet ? Do you modify it depending on mining juridiction ?

Regarding the potential future article, I wonder if you have ever studied SOUTHERN ARC MINERALS ?

keep the good job,
Outstanding stuff, LR. I'll add it to my watchlist.
Laurentian Research profile picture
I'm glad you like the article and the stock.
Follow Laurentian Research with real-time email alerts to get notifications of my future articles.
Already do. :)
Laurentian Research profile picture
Super. Thanks for following.
Nolibsplease profile picture
Ok i can't pull up ticker with my Schwab acct. It's on the pink sheets. Anyone ?
GREAT READ! well done.
Laurentian Research profile picture

Thanks for reading.

Adriatic Metals is indeed on the pink sheet. As I wrote in the article, "no firm is making a market in Adriatic on OTC Link; all prices there reflect unsolicited customer orders, and investors may need to pay a high premium buying or have a difficult time selling the stock."

It was the best performing stock on ASX in 2019.

Some brokerage firms in the U.S. carry it, e.g., Fidelity, and of course Interactive Brokers LLC.
Lolorenzo profile picture
The easiest way to buy it is throught Tethyan (TETH.V) which also offers a nice 20 % arbitrage at the moment.
Laurentian Research profile picture
That's right. Thanks! Once the acquisition is closed, I heard TETH owners would get the AIM shares but I am curious what procedure they will follow to get that done. I think there might be more NRs to get this clarified.
Laurentian Research profile picture
I look forward to your comments and suggestions as to how we should carry on our effort to cover micro to small-cap mining companies like Adriatic.
Junior mining exploration is arguably the most under-followed corner of the stock market, with an extremely high degree of market inefficiency. A lot of real money can be made at reasonable risk by discerning investors.
If you are here searching for money-making opportunities, rather than just finding popular stock ideas to chase, I invite you to follow Laurentian Research with real-time email alerts. I highly recommend The Natural Resources Hub, a Marketplace service that is designed with the goal of helping its members to make money in the stock market. Please have a no-obligation free trial to discover how The Natural Resources Hub has distinguished itself in investment performance. I guarantee you'll be surprised by the high-performance stock ideas presented there.
Laurentian Research profile picture
Please note, this article was first presented to subscribers at The National Resources Hub on May 25, as part of comprehensive research on Adriatic Metals. At the time, Adriatic traded at US$0.84 per share.

Due to the publication cycle, by the time this article is published here, the share price has risen to US$1.22 per share, up by 45%. Adriatic is still deeply undervalued, but my point is that 45% could've been yours too. That's why you should sign up at The National Resources Hub.
Nolibsplease profile picture
Very informative and excellent company. I tried looking it up with charles Schwab to no avail. It's on the pink sheets. What am I doing wrong?
Laurentian Research profile picture
In addition to my reply to your previous comment, you may want to ask your brokerage on the phone how you may buy a stock you can't find online, see if they have any solutions. I do know the stock can be bought at Fidelity or IB, which you may share with your brokerage.

Good luck!
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