ANNUAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 Adriatic Metals PLC (ASX:ADT, LSE:ADT1) Is a precious and base metals explorer and developer that owns the world- class Vares Silver Project in Bosnia & Herzegovina and holds licences across the Raska District in Serbia. The Vares project’s captivating economics and impressive resource inventory have attracted Adriatic’s highly experienced team, which is expediting exploration efforts to expand the current JORC resource. Results of a recent preliminary feasibility study announced on 15 October 2020 indicate a post-tax NPV8 of US$1,040 million and IRR of 113%. Leveraging its first-mover advantage, Adriatic is rapidly advancing the project into the development phase and through to production with significant cornerstone investment of US$28 million from Queen’s Road Capital Investment and European Bank for Reconstruction and Development. Adriatic Metals acquired TSX-V listed Tethyan Resource Corp in 2020, to advance the former Kizevak and Sastavci polymetallic mines in the Raska District, southern Serbia. ANNUAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 STRATEGIC FINANCIAL REPORT 01 STATEMENTS 70 Highlights 1 Independent Auditor’s Report to the 71 Members of Adriatic Metals PLC Chairman’s Statement 3 Consolidated Statement of 78 Strategy 5 Financial Position Business Model 6 Consolidated Statement of 79 Comprehensive Income Future Operations 7 Consolidated Statement of 80 Diversity 7 Changes in Equity Social & Human Rights 8 Consolidated Statement of Cash Flows 81 COVID-19 Impact 8 Notes to the Consolidated 82 Principal Risks and Uncertainties 9 Financial Statements Parent Company Statement of Directors’ Section 172(1) Statement 15 111 Financial Position Principal Decisions by the 21 Parent Company Statement of Board During the Period 112 Changes in Equity Our Assets 23 Parent Company Statement of 113 CEO Statement 29 Cash Flows Operational Review 31 Notes to the Parent Company 114 Financial Review 33 Financial Statements ASX ADDITIONAL GOVERNANCE 37 INFORMATION 119 Governance 37 Audit and Risk Committee Report 43 ESG Committe Report 45 Remuneration Committee Report 47 Dialogue with Shareholders 63 Directors Report 64 Directors Statement of Responsibilities 69 STRATEGIC REPORT HIGHLIGHTS OF THE 6 MONTHS ENDED 31 DECEMBER 2020 Mineral Resource Preliminary Feasibility US$28 million Financing Estimate (MRE) Study (PFS) The Company closed financings Updated MRE completed in September The Vares Silver Project PFS was totalling US$ 28 million during Q4 2020 2020 for the Rupice Deposit which now completed in October 2020 based on ensuring a strong cash position going stands as 12.0Mt @ 149g/t Ag, 1.4g/t significantly more robust inputs over the into 2021. Au, 4.1% Zn, 2.6% Pb, 0.5% Cu, 2019 Scoping Study. PFS highlights 25% BaSO4 (reported above a cut-off include as NPV8 of US$1,040 million, grade of 50g/t AgEq) containing 58Moz IRR of 113%, low up front project Ag, 527koz Au, 489kt Zn & 312kt Pb capital requirement of US$173 million reflecting a 32% increase in tonnes and average annual EBITDA of US$251 compared to the maiden 2019 Rupice million in years 1-5. MRE. COVID-19 impact: Restrictions in international travel have limited face- to-face meetings and site visits by consultants and advisors. However, the business fundamentals and progress towards our primary objectives remain largely unaffected by the current crisis. 1 ADRIATIC METALS PLC Strategic Report Governance Financial Statements ASX Additional Information CONCESSION FINANCIAL CORPORATE GOVERNANCE RIGHTS AND • Issued a US$20 • Completed the • Board stability and management PERMITS convertible bond to acquisition of Tethyan evolution continues to align Queens Road Capital Resource Corp in management skills with • 32km2 extension of the during Q4 2020. October 2020. operational objectives and existing Vares Silver • £6.2m equity private • Entered into a increase independence of the Project Concession placement to European Settlement deed with Board. Agreement area approved Bank of Construction Sandfire Resources • Board Evaluation exercise by the Government of the and Redevelopment Limited in November completed. Zenica-Doboj Canton. completed Q4 2020. 2020 raising A$8.5 • Corporate risk register updated. • Received the urban • Cash balance at 31 million via a Settlement planning permit for the • Established an Environmental, December 2020 of Placement. Veovaca area of the Vares Social & Governance (ESG) £29.6 million, ensuring • Exercised an option to Silver Project. Committee and implement a the group is fully acquire the remaining number of policies including • Submitted the application financed through to 90% of Ras Metals establishing a reporting for the Veovaca completion of the Vares d.o.o. in Serbia in framework for ESG matters, exploitation permit Silver Project Feasibility February 2021 not whistleblower policy and which was subsequently Study. previously held by the establishment of the Adriatic received in January 2021. Company. Foundation. • Submitted the application • Remuneration policies updated for environmental permit with short and long term for the Rupice area. incentives to ensure alignment • Acquisition of highly of employees at all levels around prospective land package a clear set of common goals in southern Serbia, and shareholder value creation. containing two historic Zinc-Silver mining operations. Annual Report for the Six Months Ended 31 December 2020 2 STRATEGIC REPORT PREPARING FOR MINE DEVELOPMENT CHAIRMAN’S STATEMENT Key Milestones area is highly prospective and adds 2 The Company has achieved several some 32.12km of land in close important milestones during the proximity to the existing Rupice and period including the completion of the Veovaca deposits of the Vares Project. Preliminary Feasibility Study, announced We look forward to drilling in the new on 15 October 2020, for the Vares areas of the concession during 2021. Silver Project. This indicated an Corporate Developments impressive project NPV8 of US$1,040 million net representing a 13% increase On 8 October 2020, the Company over the scoping study outcome and a completed the acquisition of TSX-V US$ 5 million reduction in the estimated listed Tethyan Resource Corp. (Tethyan) project capital cost requirement to via a plan of arrangement in British US$173 million compared to the Columbia. Tethyan’s principal asset at scoping study. The PFS, which was the time of acquisition was an option based on an updated mineral resource agreement to acquire the entire share estimate for the Rupice deposit which capital of Ras Metals d.o.o., holder was also completed in the period, of the exploration licenses for both represents a further de-risking of Kizevak and Sastavci which form the the project and reinforces the solid Raska Project in Serbia. On 22 February economics of the Vares Silver Project 2021 we exercised our rights under the Michael Rawlinson, which is increasingly recognized as option agreement acquiring Ras Metals Chairman a world class asset amongst the d.o.o. so that we now control 100% of investment community and peers. the project making clear our intentions “I am pleased to be able to towards accelerating the advancement report that in the six months The Environmental Permit was issued of the Raska Project. for the Veovaca mine, processing since our previous annual report plant and tailing facility, and the Urban Impact of COVID-19 we have continued to make Planning Permit was issued by the The global COVID-19 pandemic considerable progress towards Federal Ministry for Spatial Planning in required us, like many of our peers, our main objective of exploring October 2020. This strong progress to continue to adapt our operational mineral resource opportunities on permitting has been made possible plans and maintain the strict safety that have the potential to deliver through the enthusiastic, dedicated protocols to protect our staff and our growth for the benefit of Adriatic’s and professional support shown by local community during the period that shareholders. our partners in the communities and were implemented during the first half in government at local, cantonal and of 2020. Our operational productivity The team have made great federal levels. continues to be only moderately progress on the Vares Project affected and the Company has been with an updated mineral resource Following completion of the PFS, the able to continue to deliver on its key estimate and a very positive team has immediately transitioned into milestones. Whilst there are still certain Preliminary Feasibility Study the various workstreams necessary restrictions imposed on our activities to complete the feasibility study. This and completed the acquisition by the crisis, we are confident of our has also seen a number of additional ability to adapt to this dynamic situation of Tethyan Resource Corp as appointments to further build out our in- part of our long-term strategy to and continue to deliver the Vares Silver house technical capability in anticipation Project on time. become a multi-mine producer of commencing construction during the notwithstanding the challenges second half of 2021. As illustrated by the successful presented by the ongoing completion of the £6.2 million private COVID-19 pandemic.” We are also excited that Adriatic placement to EBRD and US$ 20 million Metals’ application for a significant land convertible bond issue to Queens extension to its current Concession Road Capital during Q4 2020, we Agreement was approved on