Adriatic Metals PLC 

('Adriatic Metals' or the 'Company')

QUARTERLY ACTIVITIES REPORT

For the 3 months ended 31 December 2021 ("Q4" or "Quarter")

HIGHLIGHTS

Vares Silver Project, Bosnia & Herzegovina:

•    Exploration drilling northwest of the Rupice Mineral Resource continues to intercept additional high-grade mineralisation.

•    Commenced civil earth works on the Rupice Surface Infrastructure site and the access road construction.

•    Released an Environmental & Social Impact Assessment in line with international best practice.

•    Signed an engineering and procurement services contract with Ausenco for the delivery of the Vares Silver Project.

Raska Project, Serbia

•   The Company was awarded a new 37 km² licence area, called Kaznovice, located southwest of the existing Raska Project licence area.

Corporate

•    The Company announced a project finance package of approximately US$244.5 million comprising:

• Term sheet signed with Orion for US$142.5 million debt financing ("Orion Debt Financing") package:

•     US$120.0 million senior secured debt,

•     US$22.5 million copper stream.

• Completed equity raise of approximately US$102.0 million, consisting of:

•     Equity subscription for US$50.0 million by Orion,

•     placing of US$52.0 million, conducted through an accelerated bookbuild process.

•    Post quarter end, the Company announced the completion of the Orion Debt Financing.

•    Cash balance at 31 December 2021 of US$112 million (£83.2 million).

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

"We are very pleased with our achievements during the Quarter. Our flagship Vares Silver Project has now entered a new phase with the financing package in place the project is fully funded through to production. Strong exploration results have also continued indicating the potential for future growth of the resource base.

In addition, the publication of the ESIA represents a further landmark in the development of the project. The resulting ESG measures will enable the Company to commence development in accordance with best international practise and is aligned with the aspirations and requirements of the communities and environment in which it operates."

Adriatic Metals PLC (ASX:ADT, LSE:ADT1, OTCQX:ADMLF) is pleased to provide the following Quarterly Activities Report ("QAR") that summarises the progress made and reported during the three months ended 31 December 2021 ("Q4" or "Quarter").

1.  Continued High-Grade Mineralisation at Rupice

In December, Adriatic announced strong exploration results at its flagship Vares Silver Project in Bosnia & Herzegovina.

As announced on 10 August 2021, step-out exploration drilling intersected high-grade mineralisation in drill hole BR-02-21, located 80 metres northwest of the existing Rupice Mineral Resource ("Rupice"). Subsequently, the Company has focused exploration activities on testing this potential northwest extension ("Rupice Northwest") with continued success.

The stratigraphic sequence and mineralisation style at Rupice Northwest appears to be the same as that seen at Rupice. Whether this is a continuation of the main Rupice orebody, or a structural repetition, is yet to be determined. The mineralisation at Rupice Northwest is continuous along strike to the northwest, as seen from the drill hole data in holes BR-02-21, BR-12-21 and BR-19-21. However, there appears to be a sporadically mineralised, lower-grade gap between Rupice and Rupice Northwest. Hole BR-06-21 intercepted a two metre zone of mineralisation grading 1,268g/t AgEq from 413m and approximately 20m south east of BR-02-21. This zone will be further tested with ongoing drilling.

2. US$244.5 Million Project Finance Package Secured

In October, the Company announced that it had signed a term sheet for a US$142.5 million debt financing package with Orion, comprising US$120.0 million senior secured debt and a US$22.5 million copper stream.

In addition, the Company announced that it raised total gross proceeds of US$102 million from a US$52 million equity placement and US$50 million from an equity subscription by Orion. For further details, see the ASX announcement dated 13 October 2021.

Post the quarter, the Company announced that this financing package had been completed with terms unchanged from those announced in the ASX announcement dated 12 October 2021.

3. Environment & Social Impact Assessment Released

During the quarter, the Company announced the release of its Environmental & Social Impact Assessment ("ESIA") for its Vares Project.

The Company appointed Wardell Armstrong International ("WAI") to produce the ESIA to conform with the Performance Requirements ("PR") set out in the European Bank for Reconstruction and Development's ("EBRD") 2019 Environmental and Social Policy, as well as taking into consideration, amongst others, the World Bank's International Finance Corporation ("IFC") Performance Standards and the recently published findings of the Global Tailings Review.

As per the EBRD's PRs, the ESIA was released for a 60-day public review and disclosure period and is accessible on the Company website https://www.adriaticmetals.com/sustainability/esia/.

4. Raska Project Additional Licences Awarded

During the quarter, the Company was awarded a new licence area, called Kaznovice, located southwest of the existing Raska Project concessions area. The 37 km² of new licence area increases the total licence area held within the Raska project to 136km².

The Kaznovice licence comprises of three main targets that have been identified from historical drilling and field work; Bukovik, Lipovica and Plavkovo (see Figure 1). The Bukovik target has indications at surface of a high-sulphidation epithermal system, with the potential of a gold-copper porphyry system beneath. The Lipovica target is an intermediate-suphidation epithermal target with lead, silver and zinc veins outcropping at surface. Finally, the Plavkovo target is an intermediate-to-high sulphidation epithermal system with gold, silver, copper, zinc and lead rich veins at surface. The Company plans on commencing exploration activities on these targets in due course.

For the full release, including illustrations see link: https://www.adriaticmetals.com/investors/asx-announcements/

Figure 1. Map of the Raska Project licences

5. Summary of Expenditure

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

6. Payments to Related Parties

During the Quarter, Adriatic paid an aggregate total of £111k to Directors, or companies controlled by them, comprised of salaries, fees and reimbursement / recharge of corporate office facilities & associated services used / provided by the Company. This is disclosed in Item 6 of the accompanying Appendix 5B Cash Flow Report.

7. Tenement Holdings

In accordance with ASX Listing Rule 5.3.3 please find below the Company's tenements as at 31 December 2021. The Company holds a 100% interest in all concession agreements and licences via its wholly owned subsidiaries, with the exception of the Raska (Suva Ruda) licence held by Deep Research d.o.o.. The Company does not hold an equity interest in Deep Research d.o.o. but has an option agreement pursuant to which it may acquire the entire share capital of Deep Research d.o.o..