Dundee Precious Metals (OTCPK: DPMLF) has signed a deal to acquire UK-based Adriatic Metals (OTC:ADMLF) for $1.25 billion. The agreement will give Canadian miner control of Adriatic's flagship Vareš silver-zinc operation in Bosnia, expanding its strategic footprint in southeastern Europe. It is Dundee's most significant move yet to boost production growth and diversify cash flow.

"Vareš 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," Dundee CEO David Rae said in a statement. "We are well-positioned to leverage our expertise in underground mining, our regional presence, and our financial strength to optimize the operation and unlock its full value potential."

Under the mixed cash and stock terms of agreement, Adriatic shareholders will receive 268 British pence per share, comprising 93 pence in cash and 0.1590 of a Dundee share, representing a 50.5% premium to Adriatic's closing price of 177.8 pence on May 19. The acquisition will be implemented through a court-sanctioned scheme of arrangement under UK law.

Upon completion, Dundee shareholders will hold approximately 75.3% of the enlarged entity, while Adriatic shareholders will own the remaining 24.7%. Dundee has already secured support for the deal from Adriatic's board and major shareholders representing 37.2% of the UK firm's share capital.

The key asset in the acquisition is located about 50 kilometers north of Sarajevo. It is a high-grade underground mine producing silver-zinc and lead-silver-gold concentrates. It has a 15-year mine life based on current reserves and is expected to produce approximately 168,000 ounces of gold equivalent annually, with a life-of-mine all-in sustaining cost of $893 per ounce.

Dundee forecasts the project will generate $2.1 billion in post-tax cash flow over its life, with a post-tax net present value of $1.6 billion at a 5% discount rate, based on long-term metal prices.

"Vareš remains firmly on track to become a low-cost precious metals producer, underpinned by a high-grade deposit and strong exploration upside," Adriatic CEO Laura Tyler said. "This transaction brings together complementary strengths to create a diversified mining company with meaningful scale."

Adriatic's portfolio also includes the Raška zinc-silver project in Serbia, providing Dundee with exploration and development potential in the region. The merged company will be headquartered in Toronto, and Adriatic's UK office will close. Tyler and CFO Michael Horner will exit following the transaction, and Adriatic's board will step down.

BMO Capital Markets advised Dundee, while RBC Capital Markets and Macquarie Capital advised Adriatic. The transaction is expected to close by the end of 2025, subject to shareholder and regulatory approvals, including from the Bosnian Competition Council.

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