Pre-Feasibility Study - Marketing & Logistics

  • Bosnian Pre-Feasibility Study

  • 15 October 2020

A recognised marketing expert was retained by Adriatic Metals to prepare a commercial report focussing on the high value zinc, lead-silver concentrates and precious metals pyrite concentrate predicted to be produced from the Rupice deposit at a processing plant at Veovaca. The main focus of their study was on the high-grade concentrates that have been shown to be produced from the Rupice deposit.

The high silver and gold content in both the Ag/Pb and Zn concentrates was of significant interest as was the low iron levels in the concentrates. The Silver/Lead concentrate will be extremely attractive to specialist Chinese smelters with silver tolling licenses. Chinese smelters will pay for the lead, silver, antimony and gold, and charge minimal mercury penalties increasing the NSR values. Additionally, most European smelters are experienced in dealing with high levels of mercury in zinc concentrates.

The precious metal pyrite concentrate represents a marketable product. Chinese smelters are able to process a wide range of materials, similar to this and we would expect that this would be most suited to the lead smelting industry. Other smelters have also expressed an interest.

Five smelters were approached on a no-name basis for both the Ag/Pb and Zn concentrates. Selecting a Chinese destination for the Ag/Pb concentrate and a European destination for the Zn concentrate their respective payabilities, penalties, treatment and refining charges, shipping and transport costs and other charges were used in the Financial Model to produce the revenue stream for each concentrate. Similarly, a Chinese destination was selected for the pyrite concentrate and all revenue and charges used in the model. These produce the following revenue streams for the main commodities in the first ten years.

The processing plant at Veovaca will produce metal concentrates for silver-lead, zinc, barite and precious metal pyrite products, which will need to be moved by truck and by rail to the Port of Ploce for export onto bulk carrier vessels. All concentrates will be packed into Twenty-foot Equivalent Unit (TEU) containers at the railhead in Vares in either ~ 2 mt bulker bags or loose in plastic lined containers.

The journey to the port will traverse three distinct areas, where locomotives will be changed according to the line requirements. The first section of the line from Vares to Podlugovi needs repair but is considered to be easily remediated at minimal cost. The remaining journey to the port of Ploce will be on electrified lines, with regular freight traffic. The journey with stops is expected to take approximately 10 hours from Vares to Ploce.

Provided that the containers have been suitably packed at Vares in accordance with container line regulations, it may then be possible to discharge the containers, with their concentrate contents intact, directly to the holding areas of the contracted container lines for onward shipping to final destination, the so called “Stacks”.

Delivery in bulk is assumed to be on a CIF FO basis to European and Chinese smelters; for sales in containers delivery will be assumed to be on a CIP basis.


A study of the market potential for barite from the Vares Silver Project was prepared in December 2017 by Peter W. Harben Inc. The fundamentals of the sector and the market drivers have not changed significantly, and this was subject to a 2019 update by Ted Dickson of TAK Industrial Mineral Consultancy.

To get a better understanding of the drivers for the barite market, potential markets and real-life specification requirements (API and other specifications can be quite vague), Wood Mackenzie were commissioned by Adriatic Metals to investigate and report on a “Barite Marketing Strategy”. They presented their report in May 2020 at a time when major parts for the barite market had already been impacted by COVID-19.

Industrial minerals are marketed differently from metal concentrates and because Adriatic Metals will produce a ready ground product, marketing requires more direct discussions between the company and end users in the oil & gas industry. The grade and high SG (Specific Gravity) of the barite (4.3) produced from Rupice make it an attractive product for drilling muds for the oil and gas industries and it has passed the current API (American Petroleum Institute) tests in terms of sizing and other specifications.

The Vares Silver Project is expected to become the largest barite producer in Europe at up to 250,000 tons per year at peak capacity. This scale offers Adriatic the opportunity to drive costs down through economies of scale as well as invest in best in class logistics for getting product to various markets. The scale of the operation also ensures that Adriatic Metals should be able to be a more reliable supplier than some of the other, smaller operators in the region.

Based on indicative specifications, it appears that Adriatic’s barite is best suited for use in the oil and gas drilling industry, although it could also find application in concrete and as a filler in some rubber products. There is potential for beneficiation of the barite to potentially produce other saleable barite products and this will be further investigated in the next phase of project development. Wood Mackenzie’s report considered that the barite concentrate will likely produce products that can be sold in the $100-200/tonne range. Adriatic Metals will continue to explore possibilities for further beneficiation of the barite to potentially produce different grades that could be sold into multiple industries. A price of $150/t FOB has been used for the PFS. In discussions and exchanges with a barite trader it has been suggested that shipping in bulk to larger users/traders in the USA Gulf of Mexico ports may be the best option.

Wood Mackenzie’s analysis of other barite mines shows that margins are maximised by selling product further down the value chain (i.e. self-processing and vertically integrating transportation). End users’ value standard specification production (i.e. they dislike variable quality), so it is worthwhile to invest in equipment and processes that produce a highly consistent and specific grade of barite. Minimising logistics costs/investing in value-add services is a proven way to increase margin (i.e. own transport outright, offer just-in-time delivery). Adriatic Metals will be investing into barite marketing expertise to get maximum value from the barite concentrate in the future.