It has agreed terms sheets with a mix of international commodities trading and smelting companies for concentrate offtake once production commences next year.
The emerging miner said ongoing turbulence in the freight markets, and the impact of the energy crisis on many European smelting operations, required a diversification of customers and freight routes, so it had approached a range of potential customers for its silver-lead and zinc concentrates in Europe and China.
While it is yet to finalise terms, the silver-lead concentrate is expected to go to Glencore International and Transamine, while the zinc product will likely be told to Transamine, Trafigura and an unidentified but "major" European smelter.
Combined, the contracts cover 82% of the first two years of planned production, with the balance to be kept for "advantageous spot market sales", or allocation to long-term contracts at a later date, depending on market conditions.
Adriatic said the pricing terms were broadly in line with expectations, however benchmark treatment charges have increased substantially due to the fact of many smelters, struggling with the recent rapid rise in energy prices, being placed on care and maintenance.
Rather than being US$65 per tonne for the lead-zinc concentrate and $195/t for the silver, they have risen to $160/t and $230/t respectively, however the negative impact has been eclipsed by rising metal prices, which now easily exceed the feasibility expectations.
Adriatic managing director Paul Cronin said there had been a high degree of interest in the company's tender process, and it expected to begin drawing down its $142.5 million debt funding next quarter, once the final offtake contracts are signed.
Construction commenced at Rupice last November, with first production expected in the June quarter of 2023.
The company had $112 million cash at the start of the year.
The $170 million Vares mine is expected to produce 14.9 million ounces of silver equivalent per annum over the first five years of a 10-year mine life at all-in sustaining costs of $7.30 an ounce.
Adriatic shares have traded between A$2.06 and $3.35 over the past year, closing yesterday at $2.61, capitalising it at $695 million.
