TORONTO - Dundee Precious Metals Inc. (TSX: DPM) ('DPM' or the 'Company') is pleased to announce that it has agreed with Adriatic Metals plc ('Adriatic') to the terms of an acquisition of the entire issued, and to be issued, ordinary share capital of Adriatic ('the Transaction') for an implied equity value of approximately $1.3 billion.
Upon completion of the Transaction, DPM will acquire 100% of the VareS operation ('VareS') in Bosnia and Herzegovina, a producing silver-lead-zinc-gold underground mine.
Strategic Rationale
Creates premier mining business: Enhances DPM's existing high-margin asset portfolio with peer-leading production growth and a high-quality development and exploration pipeline.
Delivers near-term growth: Expected to grow DPM's production up to 425,000 gold equivalent ounces1 in 2027 through the ramp-up of VareS, with access to a strong balance sheet and expanded technical resources to optimize mining and processing.
Increases DPM's mineral reserve life: VareS has an initial 15-year operating life with potential to extend further from a prospective 4,400-hectare land package led by a team with proven exploration success in the region.
Enhanced cash flow generation: Addition of another long-life producing asset complements DPM's already strong cash flow profile and provides significant cash generation to fund DPM's organic growth pipeline and ongoing capital returns program.
Combines expertise and regional presence: Builds on decades of regional experience finding, building, operating and optimizing mines with an enhanced team recognized for strong community relationships.
Delivers strong returns from a robust platform: Shareholders benefit from DPM's continued balance sheet strength, added cash flow diversification and a peer-leading capital returns program with improved trading liquidity.
David Rae, President and Chief Executive Officer of Dundee Precious Metals, made the following comments in relation to the Transaction: 'Adding Adriatic's VareS operation to our strong asset portfolio creates a premier mining business with a peer-leading growth profile, high-quality development and exploration pipeline and a robust platform to deliver above-average returns.
'VareS is a logical fit with our portfolio, as it significantly increases DPM's mine life while adding near-term production growth, a highly prospective land package, and cash flow diversification. We are well-positioned to leverage our expertise in underground mining, our regional presence, successful track record of building and ramping up new mines, as well as our strong financial position to further optimize the operation and realize VareS' full value potential, based on our analysis.'
Laura Tyler, Managing Director and Chief Executive Officer of Adriatic Metals, stated: 'VareS remains firmly on track to become a low-cost precious metal producer, underpinned by a long mine life, a high-grade deposit and strong exploration potential. What makes VareS so exciting is that it is at the beginning of its journey, with significant growth potential ahead. This transaction brings together complementary strengths to create a dynamic and diversified mining company with meaningful scale. We see clear synergies between the asset portfolios of DPM and Adriatic, supported by DPM's strong financial capacity and proven operational expertise. Together, these strengths are expected to unlock further value for shareholders of both companies in both the near and longer term. Importantly, the creation of a diversified mining company in the Balkan region will bring benefits not only to our employees and shareholders, but also to local communities and broader regional stakeholders. This is a compelling opportunity to be part of a transformative and long-term success story - one that we fully endorse and recommend to all our stakeholders.'
VareS Overview: High-grade precious metals / polymetallic underground mine
VareS is an underground precious metals-dominant mine with an offsite processing facility and prospective 4,400-hectare land package, located approximately 50 kilometres north of Sarajevo in Bosnia and Herzegovina. Since announcing first concentration production in 2024, VareS has been ramping up to nameplate processing capacity. VareS produces a saleable silver-zinc concentrate and a lead-silver-gold concentrate.
As part of DPM's evaluation of VareS, the Company commissioned SRK Consulting (UK) Limited to prepare an independent technical report in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ('NI 43-101') for VareS reflecting DPM's current plans for the asset, including the mine plan and mining and operating methods contemplated. The Technical Report has an effective date of April 1, 2025, and is deemed to be at a pre-feasibility level of study.
VareS Technical Report Highlights
Significant mine life and scale with low unit costs: Based only on existing mineral resources, Vares has a 15-year operating life with average annual payable production of approximately 168,000 ounces of gold equivalent at an all-in sustaining cost of $893 per ounce of gold equivalent.
Improved value and risk profile: DPM's approach to the VareS mine plan reflects an initial grade control and geotechnical drilling program to better define geological and geotechnical understanding of the orebody, facilitating accelerated access to higher-grade ore tonnage, as well as paste backfilling of mining areas. DPM forecasts achieving sustainable mill throughput of 850,000 tonnes per annum by year-end 2026.
Base case NPV5% of $1.6 billion (post-tax) based on consensus long-term ('LT') metal prices, including LT silver price of $28 per ounce and LT gold price of $2,212 per ounce (the 'Base Case'). Refer to 'Sensitivity Analysis' on page 10 of this news release for the project's economics at varying metal price assumptions.
$2.1 billion of post-tax cash flow over the initial mine life at Base Case commodity price assumptions.
Transaction Summary
Under the terms of the Transaction, shareholders of Adriatic ('Adriatic Shareholders') will be entitled to receive 0.1590 of a common share of DPM (each whole share, a 'DPM Share') and 93 pence in cash for each ordinary share of Adriatic (each, an 'Adriatic Share'). Under the terms of the Transaction, the value for each Adriatic Share is GBP2.68 (and CHESS Depository Interest ('CDIs') of Adriatic at AUD$5.56), and the entire issued share capital of Adriatic at approximately US$1.3 billion, based on the closing price of CAD$20.33 per DPM Share and a GBP:CAD$ exchange rate of GBP1:CAD$1.85 on June 11, 2025.
It is intended that the Transaction will be implemented by means of a court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act 2006 (the 'Scheme').
Unless the context requires otherwise, in this news release, references to Adriatic Shares include Adriatic CDI holders.
Adriatic Shareholders will be able to elect, pursuant to a 'mix and match facility', subject to off-setting elections, to vary the proportions in which they receive cash and DPM Shares in respect of their holdings in Adriatic. However, the total number of DPM Shares to be issued and the aggregate amount of cash to be paid under the terms of the Transaction will not be varied as a result of the elections under the mix and match facility.
Immediately following completion of the Transaction, it is expected that the current shareholders of DPM (the 'DPM Shareholders') will own approximately 75 percent, and former Adriatic Shareholders will own approximately 25 percent, of DPM's enlarged issued share capital.
The Transaction will be subject to certain closing conditions, including, among other things: (i) approval of the Transaction by Adriatic Shareholders; (ii) court approval; (iii) the issuance of the DPM Shares to be issued in the Transaction being approved by DPM Shareholders; (iv) receipt of the approval for listing of such DPM common shares by the Toronto Stock Exchange ('TSX'); (v) receipt by DPM of an unconditional approval of the Transaction by the Bosnian Competition Council in accordance with the Bosnian Competition Act and (vi) the Transaction becoming effective no later than December 31, 2025.
DPM has received from the Adriatic directors and certain non-director Adriatic Shareholders (including Helikon Investments Ltd and L1 Capital Pty Ltd) irrevocable undertakings to vote in favour of the Scheme in respect of a total of 128,541,045 Adriatic Shares in aggregate, representing 37.2 percent of Adriatic's total issued share capital.
A Rule 2.7 announcement (the 'Rule 2.7 Announcement') has been published in accordance with the City Code on Takeovers and Mergers (United Kingdom) and can be accessed at the following www.dundeeprecious.com or on DPM's SEDAR+ profile at www.sedarplus.ca.
Board of Directors' Recommendation
The board of directors of DPM has been advised by BMO Capital Markets as to the financial terms of the Transaction and considers the Transaction to be in the best interest of DPM and fair to DPM from a financial point of view. The board of directors of DPM intends to recommend that DPM Shareholders vote in favour of the resolution of the DPM Shareholders to approve the issuance of DPM Shares in the Transaction (the 'DPM Shareholder Resolution') at the DPM special meeting to be called for that purpose.
Advisors and Counsel
BMO Capital Markets are acting as financial advisors to DPM in connection with the Transaction. RBC Capital Markets and Macquarie Capital (Europe) Limited are acting as joint financial advisors to Adriatic in connection with the Transaction.
Bryan Cave Leighton Paisner LLP is acting as UK legal advisor to DPM in connection with the Transaction. Cassels Brock & Blackwell LLP is acting as Canadian legal advisor to DPM in connection with the Transaction. Gilbert + Tobin is acting as Australian legal advisor to DPM in connection with the Transaction. Herbert Smith Freehills Kramer LLP is acting as UK and Australian legal advisor to Adriatic in connection with the Transaction. Stikeman Elliott LLP is acting as Canadian legal advisor to Adriatic in connection with the Transaction.
About Dundee Precious Metals Inc.
Dundee Precious Metals Inc. is a Canadian-based international gold mining company with operations and projects located in Bulgaria, Serbia and Ecuador. Our strategic objective is to become a mid-tier precious metals company, which is based on sustainable, responsible and efficient gold production from our portfolio, the development of quality assets, and maintaining a strong financial position to support growth in mineral reserves and production through disciplined strategic transactions. This strategy creates a platform for robust growth to deliver above-average returns for our shareholders. DPM's shares are traded on the Toronto Stock Exchange (symbol: DPM).
Contact:
Jennifer Cameron
Tel: (416) 219-6177
Email: jcameron@dundeeprecious.com
About Adriatic Metals plc
Adriatic is a UK-based precious and base metals producer, with listings on the London Stock Exchange and Australian Stock Exchange. Adriatic's asset portfolio consists of its flagship VareS Silver Operation in Bosnia and Herzegovina and the exploration-stage RaSka Project in Serbia. The VareS Silver Operation produces silver/lead and zinc concentrates and has the potential to be one of the world's largest producing, low-cost silver mines, with a high-grade Mineral Reserve base underpinning a 15-year mine life. First sale of concentrate was achieved in 2024 and the asset is currently ramping up to commercial production, with further plans underway to expand the plant processing capacity from 0.8 to 1.3 million tonnes per annum. The orebody remains open along strike and at depth, and there are several options available for regional exploration targets on VareS' 44km2 concession.
