Good morning, everyone, and thank you for joining us. We're excited to discuss our agreement to acquire Adriatic, the owner of the high-grade Vares silver operation in Bosnia and Herzegovina for a total consideration of $1.3 billion, creating a high-quality precious metals producer with peer-leading growth.
We've been very selective in our approach to M&A in recent years and have looked at a number of opportunities. In this case, we are capitalizing on a unique opportunity to add a high-quality and long-life producing asset to our portfolio.
This transaction delivers immediate production growth and shifts our valuation to a cash flow dominant NAV. It increases DPM's mineral reserve life as Vares has an initial 15-year operating life and significant upside.
It builds on decades of regional experience and relationships with the communities where we have operated for over 2 decades. It maintains a strong balance sheet for organic growth and a continuation of our commitment to delivering returns to our investors.
The combination of Vares with our operating expertise, financial strength and growth pipeline of high-margin assets creates a premier mining business offering peer-leading growth. Overall, this is a strong natural fit for DPM, one that offers a clear and compelling value proposition for both DPM and Adriatic shareholders.
This morning, we will walk you through the strategic rationale for this transaction, highlighting the terms of the agreement and outline some of the key attributes of this highly attractive asset before taking your questions about what we see as an exciting acquisition for DPM.
The terms of the transaction are outlined in detail on Slide 5 of the webcast. To summarize, Adriatic shareholders will be entitled to receive 0.159 of a common share of DPM and 93p in cash for each share. Adriatic shareholders can elect to receive their consideration in all shares, all cash or a combination of both, subject to proration.
This values each Adriatic share at AUD 5.56 or GBP 2.38 (sic) [ GBP 2.68 ] based on the closing price of DPM's common shares on June 11. The total equity value of the acquisition at the offer price is approximately USD 1.3 billion. Adriatic shareholders will own approximately 25% of the pro forma shares outstanding upon completion of the transaction.
As an endorsement to the transaction, it is important to note that we will have received irrevocable undertakings from the Adriatic directors as well as Helikon and L1, which totals approximately 37.2% of Adriatic's total issued share capital.
Looking at our operating portfolio, it's clear that Vares is a logical fit. We operate two high-grade, low-cost and very efficient mines in Bulgaria, and we're rapidly advancing Coka Rakita towards first production targeted for midyear 2028.
Coka Rakita not only offers an additional 170,000 ounces of gold production growth within our portfolio, but we also have made several discoveries within 1 kilometer of its planned infrastructure, highlighting its significant potential.
Vares is an underground mine with an off-site processing facility and highly prospective 4,400 hectare land package located approximately 50 kilometers north of Sarajevo, the capital of Bosnia and Herzegovina.
Since achieving first production in -- first concentrate production in 2024, Vares has been rapidly ramping up to full capacity, producing a saleable silver-zinc concentrate and a lead-silver-gold concentrate, which is well within our strength and capabilities.
Overall, it is a logical fit with our portfolio. It is an underground precious metals mine located in our region with a scale and final products that are in line with our expertise and 10-year track record of operational delivery and maximizing returns on assets of this nature.
As part of our evaluation of Vares, we commissioned an independent 43-101 technical report, which reflects our more measured, better capitalized approach to mining and operating Vares for more optionality and long-term value. This leverages DPM's financial strength to reposition Vares and our combined shareholders for long-term success and sustainable growth.
Our approach includes an initial grade control and geotechnical drilling program to better define the geological and geotechnical understanding of the ore body. This facilitates accelerated access to higher-grade ore tonnage with reduced dilution. We, therefore, forecast achieving sustainable production of 850,000 tonnes per year by the end of 2026.
This results from our technical report -- sorry, the results from our technical report are outlined on Slide 8, which highlight Vares' significant 15-year operating life and scale with lower unit costs with average annual production of 160,000 ounces gold equivalent at an all-in sustaining cost of $893 per ounce.
While we see some heavy lifting near term to get Vares ramped for production -- for predictable performance at nameplate capacity, we've also identified several near- and long-term opportunities to further optimize Vares. This includes initiating ore sorting following ramp-up to full capacity, targeting a reduction in mine waste transported to the processing facilities, which will increase grade, reduce transportation costs and optimize tailings storage capacity.
There is also significant near-mine exploration potential at the Rupice Northwest deposit, which remains open. The ability to extend mineralization in the area of already known mineralization with wider, higher-grade zones is a priority in our stakeholder engagement and exploration plans.
More broadly, the Rupice deposit sits within the prospective Dinarides deformation belt hosting several barite and massive sulfide occurrences over a 22-kilometer corridor within close proximity to Vares' infrastructure and operating facilities.
Following closing, we expect to complete additional studies to fully evaluate potential growth and optimization opportunities for Vares. Overall, we're well positioned to leverage our expertise in underground mining and our strong financial position to further optimize the operations and realize Vares' full potential sooner and with less risk.
I'd now like to turn the call over to Laura Tyler to describe the benefits for the Adriatic shareholders. Please, Laura, go ahead.
