Gold has been stealing the spotlight lately. Prices are ten times higher than when former chancellor Gordon Brown dumped most of the UK’s gold bullion, and at more than $2,300 an ounce, many market watchers believe gold’s fortunes are bright. .
However, gold is not alone. Behind the scenes, silver has also been quietly gaining momentum.
In 2014, global demand for silver amounted to just over a billion ounces, supply was virtually the same, and the metal cost around $16 an ounce. Supply has barely changed since then, but demand is on track to surpass 1.2 billion ounces, the second-highest figure ever recorded.
As silver reserves dwindle, prices rise, hovering around $30 an ounce today, and projected to reach $35 by the end of the year and over $50 by December 2025, with long-term predictions suggesting a price of almost $350 per ounce by 2030.
Silver is on a roll. While pretty jewelry and shiny photo frames account for about 40 percent of global demand, the rest comes from industry. As it kills insects, silver is found in medicine. As an antioxidant, it is found in top-notch facial creams. And, as a formidable conductor of electricity, silver plays a central role in the modern world, being used in solar panels, data centers, electric cars and also millions of phones and devices.
On a roll: Global silver demand is on track to exceed 1.2 billion ounces a year, almost a record
With demand for all this equipment expected to increase, silver’s prospects are bright, which bodes well for the London-listed miner. Adriatic Metals.
Founded in 2017 by no-nonsense Australian Paul Cronin, Adriatic has gone from exploration to commercial production in just seven years. The first official sales were completed last month and progress is expected to accelerate from now on. Brokers predict underlying profits of around $45 million this year, skyrocketing to $260 million in 2025.
The speed at which Adriatic has transformed from a cash guzzler to a cash producer sets this business apart from most young miners. But Adriatic’s location is another point of difference: it is located in the heart of Bosnia and Herzegovina, a country more often associated with war and conflict than with a successful industry in recent times. However, mining was historically a critical industry, so both the government and local people have strongly supported Cronin’s efforts.
The mine has also proven to be world-class. Silver is the most valuable metal there, but Adriatic produces zinc, lead, copper, and small amounts of gold. Ratings are high, resources have been steadily increasing, and there is an expectation that more good news will follow.
Like most mining projects, there have been difficult times. Cronin has had to look for cash and has an outstanding debt of $120 million to mining finance specialist Orion Resource Partners.
However, now that Adriatic is in production, the group has several options open, from reimbursement to refinancing on cheaper terms.
Adriatic just raised $50 million on the stock market, retaining some of the money to ensure production continues at pace, but also using the cash to buy outside contractors and bring operations completely in-house, a move that should reduce the costs. Corruption may be a problem in the Balkans, but Cronin has just the man to make sure Adriatic keeps its business healthy.
Major Mark Richards spent 18 years in the British Army, led logistics for the Olympic torch relay in London in 2012 and is now head of procurement at Adriatic, tasked with ensuring operations are correct and no money is diverted.
A second mine is being explored in Serbia and Cronin has his eye on some potential acquisitions in and around Europe. However, this is not growth for the sake of growth. Cronin is notoriously stingy but also ambitious, searching for mines that can help Europe reduce its dependence on raw materials from China and Russia.
These deals could prove shrewd over time, as Cronin has proven he can deliver and the Bosnian mine is expected to bring in plenty of cash.
Midas Verdict: Adriatic Metals has come a long way quickly and should go much further from here. Cronin is very focused, his team is dedicated and Silver’s prospects are promising. Young mining companies are not for widows and orphans but, at £2.03, Adriatic shares could prove rewarding for the adventurous punter.
Traded in: Main market Heart: ADD1 Contact: adriaticmetals.com or 0207 993 0066