Adriatic Metals PLC (ASX:ADT) announced a private placement of 8.5% unsecured convertible debentures for gross proceeds of $20,000,000 (£15,365,000) on October 27, 2020. The transaction will involve participation from Queen's Road Capital Investment Ltd. (TSXV:QRC). The company and the investor have entered into a legally binding term sheet in relation to the debentures financing.

The debentures are unsecured and will have a four-year term from closing. If not otherwise converted earlier into ordinary shares, the debentures are therefore expected to be refinanced as part of the development funding for the construction of the Vareš Silver Project, significantly before they become due for payment. A cash coupon of 8.5% per annum is payable quarterly.

The debentures will be convertible at the holder's option into ordinary shares at a conversion price of AUD 2.7976 (£1.531010), representing a 30% premium to the 20 day volume weighted average price of the company's chess depository interests on the Australian Securities Exchange to October 23, 2020. The company shall be entitled to redeem the debentures early at par plus accrued and unpaid interest (i) at any time that the 20-day volume weighted average price on the Australian Securities Exchange exceeds 125% of the conversion price; (ii) on or after the third anniversary of the date of the issuance of the debentures, or (iii) from the proceeds of any project financing or other secured debt financing completed after the closing date. The debentures may not be transferred, other than to a wholly owned affiliate, without the consent of the company, such consent not to be unreasonably, withheld, conditioned or delayed in the case of a transfer to a financial institution, investment fund or other investor which customarily invests in mining companies, but may be withheld in the company's absolute discretion in the case of a transfer to a shareholder of the company or to a mining company.

The debentures financing is subject to the satisfaction of customary closing conditions for a transaction of this nature, including but not limited to, the execution of definitive documentation, there being no material adverse change in the business of the company, or a major event of national or international consequence that disrupts the financial markets or the business, operations or affairs of the company. The company will pay to the investor on the closing date an establishment fee equal to 3% of the principal amount of the debentures, payable in either cash or ordinary shares issued at AUD 2.1520 (£1.177703) per share. The debentures financing is expected to close on or around November 6, 2020, following the company's annual general meeting.