Constructing a compelling case for re-rating

This development has taken place against a backdrop of global inflation, challenging supply chain logistics and the significant ‘sell-off’ of high- risk companies in the second half of 2022.

To address these pressures during this critical period, Buchanan and Adriatic organised a site visit to Vares between 10-12 October 2022, combining key participants from the UK, European, Australian and North American capital markets.

With 30 attendees equally balanced between buy-side and sell-side, the purpose of the site visit was to commence the re-rating of the value of the equity ahead of Adriatic commencing production in Q3 2023.

The narrowing of the gap between the Company’s NPV and its current valuation would largely be addressed through stimulating more buyers of the equity.

To achieve this aim, existing and new shareholders needed to be convinced that the Vares Project would deliver returns similar to those included in the feasibility study from 2021, notwithstanding current market volatility and the changes in pricing of silver, zinc, lead, copper and gold.

The other route to gaining further interest in their stock would be through the generation of ‘buy’ recommendations from existing analyst followers, as well as encouraging broader future coverage from additional independent analysts.

Buchanan commenced pre-marketing in July 2022, supported with the development of key investor materials that ensured the appreciation of Adriatic’s ESG commitments at the core of their business model and in the de-risking of the project.

The response from both the buy-side and the sell-side was overwhelmingly positive.

One of the key objectives was to position Adriatic as a highly competent, professional and efficient business. The logistical challenge of moving 30 guests seamlessly and safely around their operations, as well as the provision of quality materials and the timing of the construction update prior to the site visit, ensured that Adriatic came across as a highly proficient operator – the response from all attendees certainly confirmed that view.

For those investors who were already invested in Adriatic, the visit significantly reduced their perception of the risks which face the Company, and those who were not invested it made them more likely to invest.

From the sell-side, positive research notes were published by Stifel, Tamesis, Canaccord Genuity and BMO and with new independent brokers to soon initiate coverage on Adriatic.