DFS - Environment and Social

Adriatic Metals has committed to ensuring that the Vares Project will comply with international best practice regarding environmental and social standards. As such, Adriatic Metals engaged Wardell Armstrong International (“WAI”) to undertake an Environmental, Social and Health Impact Assessment (“ESHIA”) in conformance with the European Bank for Reconstruction and Developments (“EBRD”) environmental and social policy, including the Performance Requirements (“PRs”). The Project is now fully permitted with regards to environmental requirements.

An Environmental and Social Scoping Study was developed and finalised in January 2020. Alongside this, a 12-month period of baseline data collection took place and the ESHIA developed. WAI worked closely with the Project team and engineers to integrate the mitigation hierarchy into the project design.

Baseline studies utilised local consultants and contractors where possible and have covered air quality, noise, soils, biodiversity, hydrology, hydrogeology, geochemistry, landscape and visual impact assessment, social aspects, human rights, traffic, ecosystem services, and archaeology and cultural heritage across the defined Project area of influence.

As far as possible, environmental measures have been integrated into the Vares Silver Project design, ensuring the application of the mitigation hierarchy, where avoidance of potential impact is the preferred option. The proximity of Vares Processing Plant to residential dwellings in Tisovci means that multiple phases of noise modelling have been undertaken. The fabric and noise retention of Vares Processing Plant buildings have been determined, as well as the requirement for a 5.2 m noise barrier on the north-western and northern edges of the plant site. Without these integrated mitigations noise emissions would be above the maximum allowable under local and international requirements.

Water engineering and geochemistry aspects represent a critical overlap between the engineering studies and the ESHIA. Certain aspects, namely the TSF, mine waste management, contact and storm water management and the collection and treatment of acid rock drainage and metal leaching at Rupice have been designed in collaboration with environmental specialists and project engineers. 

A biodiversity and ecosystem services assessment have been undertaken as part of the ESHIA. Whilst there are no protected areas that will be directly impacted from the Project, biodiversity mitigation will be required to ensure no net loss (“NNL”) is achieved, in accordance with EBRD PR6. A biodiversity management plan is being developed to outline the required mitigation, and Adriatic Metals are committed to establishing suitable areas and programmes for ensuring the biodiversity offset requirement is met for the Project.

In accordance with EBRD PR3, Adriatic Metals have worked to integrate best available techniques and Good International Industry Practice (“GIIP”) to optimise resource use and efficiently prevent and control release of pollutants into the environment. Land clearance and tree felling has been minimised as far as possible and modern energy efficient equipment and mobile plant has been selected. A company park and ride scheme will be in place to reduce employee transport emissions and to reduce the risk to community health & safety. A 32.4 kWp roof-mounted solar PV array has been included at the Vares Processing Plant administration building expected to save at least 20.6 tCO2e per year.

The Green House Gas (“GHG”) assessment calculated the relative emissions of the project compared to other extractive processes to determine whether the emissions in this instance are higher or lower than ‘typical’. Using the 2020 JORC figures of indicated and inferred contained metals and emissions factors and embodied emissions factors from a variety of sources including the World Gold Council, it can be shown that the predicted Scope 1 & 2 emissions for this site (575.4 kt CO2e) equate to only 2.67% of the embodied Scope 1, 2 & 3 emissions that would be expected for this quantity of metal production, were it to be produced elsewhere from a typical source (21,551.4 ktCO2e). 2.67% is at the lower end of comparative figures per unit produced. It is concluded that, although emissions are significant in absolute terms, in relative terms per unit of metal recovered they are not considered significant. The reasons for this are assumed to be because there are so many varieties of metals being produced from this ore that production efficiencies, economies of scale and reduced waste per unit production are likely to be lowering the GHG effects on a unit basis. Another factor is that this is an underground mine rather than an open pit, hence there are lower volumes of waste rock production and haulage. Efficiency improvements also arise from vehicle movements: rather than using two fleets of trucks, one for ore and one for waste, the same fleet will be used for both activities, so it operates fully laden for up to 100% of the time, with the bulk of the tailings returned to the underground mine. This helps reduce unnecessary emissions despite the length of the haul route.

A set of management plans are being developed alongside the ESHIA, to capture the mitigation measures and commitments to reduce impacts in the ESHIA and ensure that the Project upholds environmental standards, in accordance with international best practice and local legislation. GIIP will be applied across operations and stipulated within contractual arrangements. The plans are initially being developed for the construction period and will later be adapted to cover operations.

Stakeholder engagement and consultation has been ongoing ESIA development to gather opinions and to share information. The Information Centre was established in Vares in 2019 and acts as a central point for local stakeholders to obtain information and raise concerns or questions with Eastern Mining. A Stakeholder Engagement Plan (“SEP”) and grievance mechanism has been disclosed for the Project. The SEP will be updated as the Project evolves and is available in both English and Bosnian on the Adriatic Metals and Eastern Mining websites. A Public Liaison Committee was established during 2020 and now meets quarterly; members are representative of all local communities in the region, as well as of local government, business owners and religious groups.

Throughout the ESHIA process it is evident that the local communities are supportive of the Project and the associated anticipated direct and in-direct economic opportunities that it may bring. Local procurement including goods and services is a key focus for the Adriatic team as well as giving priority to local hiring. Community development has been formalised for the Project through the Adriatic Foundation (“Foundation”). The Foundation supports and promotes local sustainable socio-economic development, with a particular focus on the communities associated with Adriatic’s operations. The Foundation is a consultation body that channels social investment in an effective and responsible manner in order to leave lasting positive legacies. It supports programmes and projects that have long-term development impact, particularly in the areas of education, environmental protection, and healthcare.

Land acquisition is required for the development of Rupice Surface Infrastructure and the TSF. Adriatic Metals are committed to aligning with BiH/FBiH law as well as applicable international best practice standards (EBRD’s PR5) regarding land acquisition. Impacts to land acquisition have been assessed through an interactive process across the project inception and design period. Certain design choices, such as the routing of the haul road and positioning of the TSF have been optimised to avoid and minimise the impact of land acquisition. A Land Acquisition, Compensation and Livelihood Restoration Plan (“LACLRP”) has been developed which defines the legal and regulatory framework to which the plan has been designed, project displacement impacts to land owners and vulnerable groups and the implemented strategy, mitigation and monitoring procedures. Land identified currently for acquisition is pastoral and forestry land, no residential properties requiring acquisition have been identified.

Environmental and Social aspects are managed on site by a dedicated team based at Vares Processing Plant, the manager of which reports directly to the Managing Director & CEO. Several policies pertaining to environmental and social aspects have been developed and implemented by Adriatic and are available on the corporate website. The Board of Adriatic has established an Environmental Social & Governance committee to oversee and advise on policy implementation. Governance policy aspects are also addressed at the corporate level and will apply to all subsidiary companies.

A framework for mine closure has been developed for the Vares Silver Project. The closure plan considers relevant legislation of BiH as well as international best practice, namely that of the International Council for Metals and Mining. The plan covers the complete closure and rehabilitation of Rupice, the remediation of Vares Processing Plant to a state suitable for light industry and the closure and rehabilitation of the TSF. The costings consider physical closure, aftercare, and social closure requirements.