ADT1 Adriatic Metals Plc

29 January 2025

Adriatic Metals PLC

QUARTERLY ACTIVITIES REPORT

For the three months ended 31 December 2024

("Q4" or "Quarter")

Q4 HIGHLIGHTS

•   48kt ore milled at 234g/t Ag, 2.6g/t Au, 7.5% Zn, 4.8% Pb in Q4 and a total of 76kt of ore milled in 2024.

•   934koz of silver equivalent ('AgEq') produced in Q4, with a total of 1,335koz AgEq produced in 2024.

•   $27m of sales receipts in Q4.

•   Operations are running 24/7 and commercial production now expected to be reached in Q1 due to the severe winter weather delays in December and January.

•   Construction advanced at the Veovaca Tailing Storage Facility ('TSF') for completion in Q1.

•   FY 2025 production guidance of 625-675kt ore milled and 12,000-13,000koz AgEq produced.

•   Ausenco technical study completed on Vares Processing Plant expansion options. Estimated $25m plant capex required to increase throughput to 1.3Mtpa.

•   Cash balance at 31 December 2024 of $21m plus approximately $3m in finished concentrate.

•   $25m concentrate prepayment arrangement with Trafigura completed. Funds received in January 2025.

•   Current cash balance at 27 January of $46m.

•   First debt repayment of approx. $19m to Orion Mine Finance scheduled for 31 March 2025.

Note: Unless otherwise stated, all dollar figures are United States dollars ($).

The Company will host a Q4 QAR webinar on Wednesday 29 January at 8am GMT / 7pm AEDT on the Investor Meet Company platform. Please register and submit a question here: https://www.investormeetcompany.com/adriatic-metals-plc/register-investor

A recording of the webinar will be also published on the Adriatic website following the event. The webinar presentation will be available at: https://www.adriaticmetals.com/investors/corporate-presentations.

Laura Tyler, Managing Director & CEO of Adriatic, commented:

"In Q4, Adriatic transitioned from a development-stage company to a metals producer, generating $27m in sales receipts. However, the quarter presented significant challenges due to extreme weather, including devastating floods in October and heavy snowfall in late December. These events disrupted mining operations and delayed the start of commercial production, which is now anticipated in Q1 2025.

We are pleased to share our updated 2025 production guidance, targeting 625-675kt of ore milled and 12,000-13,000koz of AgEq produced. Production will be weighted towards the second half of 2025 as we continue the ramp up to nameplate capacity. Additionally, we have released production guidance for 2026 and the LOM average, highlighting the remarkable potential of the Vares Silver Operation. Our expansion plans remain a priority, with the Ausenco study demonstrating the ability to increase current nameplate production capacity at the Vares Processing Plant from 0.8Mtpa to 1.3Mtpa. We look forward to updating stakeholders in the coming months on the underground mine expansion required to support this growth.

As a business, we continue to invest in our workforce, skills, and operations. Both the Rupice Mine and Vares Processing Plant are operating 24/7. I am optimistic about the year ahead as we work towards the consistent delivery of product to market."

Adriatic Metals PLC (ASX:ADT, LSE:ADT1, OTCQX:ADMLF) ("Adriatic" or the "Company") is pleased to provide an update on mining and processing activities at the Vares Silver Operation in Bosnia and Herzegovina over Q4 2024.

1.     OPERATIONS

Health & Safety

At the end of Q4 2024, the 12-month rolling Lost Time Injury Rate ('LTIFR') and Total Recordable Injury Rate ('TRIFR') were 0.45 and 1.05 respectively compared to Q3 2024 where LTIFR and TRIFR were 1.75 and 1.05, respectively (frequency rate = (LTI or RI) * 200,000 / total hours).

Q4 2024 Production

* Recoveries and contained metal are only into payable concentrates

Figure 1: Silver equivalent produced (koz)

* Silver equivalent (AgEq) assumes $25/oz Ag, $2,000/oz Au, $2,500/t Zn, $2,000/t Pb, $2,000/t Cu, $2,000/t Sb

In Q4 2024, 73kt of ore was mined and in FY 2024, 146kt of ore was mined. A severe snowfall in late December affected the entire Balkan region and consequently mining operations at Rupice Mine were disrupted for five days. The transportation of ore and concentrate was hindered by blocked roads and communications and power systems were impacted by outages across the country. Mining resumed safely, with operations back to normal, running 24/7.

Due to the adverse weather causing a break in production, commercial production (as previously stated as 75% of nominal plant throughput sustained over a 21-day continuous period) is now expected to be reached during Q1 2025.

There was a total of 675m of underground development in Q4, a 24% decrease compared to Q3 2024 at 890m. Development rates were below the 300m/month run rate target in October and December due to the weather disruptions, power outages and a shortage of key consumables. In total, there was 3km of underground development completed in 2024.

Milled tonnage was also lower than expected in Q4, with 47kt of ore milled in Q4 and 76kt of ore milled in FY 2024. This was due to crusher issues with wet fine material, now resolved by the addition of pre-screening. Since installing the new screen, the crushing plant has been operating at a rate of 40kt per month.

The ore stockpile at Rupice contained approximately 61kt at 31 December 2024.

Metal recoveries continue to improve quarter-over-quarter, in line with expectations during ramp up.

Infrastructure

Due to the railway line being damaged in the severe storm as announced on 9 October: Production Unaffected by Regional Storm e9de2a16-cc2.pdf, concentrate product continues to be trucked by road to Ploce Port. It is now expected that the rehabilitation of the railway line will be completed imminently, with rail transportation of concentrate to recommence in Q1.

Tailings

On 24 October all permits for Phase I of the Veovaca TSF were received from the Federal Ministry of Energy, Mining, and Industry of Bosnia and Herzegovina ('FMERI'). Construction is well advanced and first tailings disposal is scheduled for Q1 2025, aligning with the remaining capacity of the operating temporary TSF.

2.     2025 MARKET GUIDANCE

Production guidance for 2025 and 2026 is as outlined below:

Note: Metal production represents contained metal in payable concentrates. Silver equivalent (AgEq) assumes $25/oz Ag, $2,000/oz Au, $2,500/t Zn, $2,000/t Pb, $2,000/t Cu, $2,000/t Sb.

Cost guidance for 2025 is as outlined below:

Cost guidance for 2025 has been issued based on Adriatic's inaugural production budget and the current run rate observed in Q4 2024. As production ramps up to reach nameplate capacity by the second half of 2025, the Company will continue to identify and implement cost-saving measures.

Expansion plans

In Q4, Ausenco completed a comprehensive technical review to assess the potential for increasing throughput at the Vares 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 1.3Mtpa.

This proposed increase in plant throughput aligns with plans to boost mine production, following the expansion of the Ore Reserve at Rupice Northwest to 13.8Mt announced on 20 December 2023: Updated Ore Reserves Estimate for Rupice accaf3e4-0f7.pdf. A plan for enhancing underground mine production will be completed in 2025. The Company plans to provide an update in the coming months outlining this organic growth opportunity and its alignment within the broader corporate strategy.

3.     EXPLORATION & GRADE CONTROL DRILLING

Rupice underground grade control drilling completed 1,332m from 9 holes in Q4. Drilling results continue to confirm and refine the Rupice Resource Model and have modified a previously interpreted fault control on ore with thickening of mineralization due to folding. Fold thickening of the orebody is associated with better grades than the Ore Reserve and has been a significant outcome of completing tighter 12.5m to 15m spaced drill fans. Assay results have confirmed the higher grades in the core of the fold, with a mantle of lower grade and fringe of mineralized waste.

The 2024 Rupice infill and step-out resource drilling program was completed with results being incorporated into the updated mineral resource estimate to be published in the Company's annual report.

4.     CORPORATE

On 17 October, Laura Tyler was appointed permanent Managing Director and Chief Executive Officer of Adriatic (having been appointed on an interim basis on 9 August). 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 projects globally.

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.

5.     FINANCE

Cash balance at 31 December 2024 was $21m with approximately $3m in finished concentrate. The $25m concentrate prepayment arrangement with Trafigura has been completed, with funds received in January 2025. The current cash balance as at 27 January is $46m.

The first quarterly debt repayment of approximately $19m to Orion Mine Finance is scheduled for 31 March 2025, with quarterly repayments thereafter.

Summary of Cash flow

A summary of operating, investing and financing cash flows during the Quarter, before movements in exchange rates, as reported in the Appendix 5B Cash Flow Report, is as follows:

Payments to Related Parties

During the Quarter, Adriatic paid an aggregate total of $551k to Directors, or companies controlled by them, consisting of salaries and fees, associated services used/provided by the Company. This is disclosed in Item 6 of the accompanying Appendix 5B Cash Flow Report.

6.     TENEMENT HOLDINGS

In accordance with ASX Listing Rule 5.3.3, the Company's tenements as at 31 December 2024 are set out below. 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. which is subject to changes that occurred during 2024.

Adriatic Metals PLC has entered into a sale and purchase agreement with Deep Research d.o.o. and its shareholders which provides for the transfer of the Raska (Suva Ruda) licence to a newly established company owned 100% by Adriatic Metals PLC. It has also been agreed that the previous option agreement over Deep Research d.o.o. will be terminated as part of the licence transfer.

*Request for 1^st extension submitted on time. Pending approval.

**Pending Ministry decision on getting a two year extension for preparation of reserves elaborate which excludes any geological exploration work. Upon approval, plan is to split the exploration area into 2 new areas and continue exploration work.

-ends-

Authorised by Laura Tyler, CEO and Managing Director of Adriatic Metals.

For further information please visit: www.adriaticmetals.com; email: info@adriaticmetals.com, @AdriaticMetals on Twitter; or contact:

MARKET ABUSE REGULATION DISCLOSURE

The information contained within this announcement is deemed by the Company (LEI: 549300OHAH2GL1DP0L61) to constitute inside ‎information for the purpose of Article 7 of EU Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) ACT 2018, as amended. The person ‎responsible for arranging and authorising the release of this announcement on behalf of the Company is Laura Tyler, CEO and Managing Director.

Appendix 5B

Mining exploration entity or oil and gas exploration entity
quarterly cash flow report

Compliance statement

1        This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2        This statement gives a true and fair view of the matters disclosed.

Date:                     28 January 2025

Authorised by:       Audit and Risk Committee

(Name of body or officer authorising release - see note 4)

Notes

1.        This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2.        If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3.        Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4.        If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - e.g. Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".

5.        If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.