Adriatic Metals (ADT AU)/Dundee (DC/A CN): A Burgeoning Balkan Play

• Dual-Listed Adriatic Metals PLC (ADT AU) has announced a cash/scrip Offer from Dundee (DC/A CN) with an implied Offer price of A$5.56/share, a 47.8% premium to undisturbed.

• Dundee is offering 0.1590 new Dundee shares per ADT share, plus 93 pence in cash. Roughly a 35:65 cash/scrip split for the Aussie listed line.

• Adriatic is incorporated in the UK so the Offer is being done by a UK Scheme. Irrevocables tally 37.23%. Clean deal.

Conclusions First:

• This appears a clean deal.

  • The terms enable existing Adriatic shareholders to remain exposed to the back-end.

  • I see some chatter suggesting a $7/share handle is more appropriate; however, those assumptions appear lofty.

• Adriatic's flagship Vares Silver underground operation is located 50 kilometers north of Sarajevo, in Bosnia and Herzegovin.

  • Adriatic believes that Dundee would be a suitable operator of the Vareš ops given its financial clout; plus extensive experience and track record in the Balkans.

  • Adriatic added the transaction would be accretive to cashflow/share in the first year after completion. The company expects further upside as Vares fully ramps up.

  • Commercial production at the Vares mine wasdelayed into 1Q25 due to heavy flooding and snowfall in the region. This pushed back the expected timeline for reaching nameplate production, originally anticipated for 4Q24.

  • Adriatic also operates the Raska Zinc-Silver Project in Serbia, where Dundee also has operations.

• Adriatic confirmed on the 21st May that Dundee was provided limited due diligence information.

  • Under UK takeover rules, Dundee was subject to a PUSU of 28 days in which to make a formal Offer, which has now unfolded.

• The price of silver have been on a tear of late, touching a 13-year high last week.