REG - Atalaya Mining PLC - First Quarter 2022 Operations Update

Atalaya MiningAnnouncement

13/04/2022 07:00

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RNS Number : 1907I  Atalaya Mining PLC  13 April 2022

13 April 2022

Atalaya Mining Plc.

("Atalaya" or "the Company")

First Quarter 2022 Operations Update

 

Atalaya Mining Plc (AIM: ATYM, TSX: AYM) is pleased to announce its operations
update for the first quarter of 2022 ("Q1 2022" or the "Period").

Q1 2022 Proyecto Riotinto Operating Highlights

                            Q1                        Q4             Full year
                2022        2021    2021              2022 Guidance
 Ore mined      (M tonnes)  3.7            3.3        3.5            15.5
 Waste mined    (M tonnes)  6.8     7.4               7.3            23.4
 Ore milled     (M tonnes)  3.6     4.0               3.9            15.2 - 15.8
 Cu grade       (%)         0.37    0.41              0.43           0.42
 Cu recovery    (%)         85.86   84.79             85.69          83 - 86
 Cu production  (tonnes)    11,249  13,979            14,332         54,000 - 56,000

 

Mining

Ore totalling 3.7 million tonnes was mined during Q1 2022, compared to 3.3
million tonnes in Q1 2021 and 3.5 million tonnes in Q4 2021.

Processing

The plant processed 3.6 million tonnes of ore during Q1 2022, compared to 4.0
million tonnes in Q1 2021 and 3.9 million tonnes in Q4 2021. The decrease
resulted from the transport sector strike, which interrupted the supply of
essential daily consumables and forced the Company to bring forward certain
maintenance works previously planned for Q2 and shut down the plant
temporarily in order to minimise the impact of the transport sector strike on
full year production.

Copper grade was 0.37%, which was below comparative quarters and resulted from
pit sequencing. Copper recoveries were strong at 85.86% despite lower grades,
above both the Q1 2021 and Q4 2021 periods.

Production

Copper production in Q1 2022 was 11,249 tonnes, which was 19.5% lower than Q1
2021. The decrease in copper production compared to prior periods is mainly
attributable to the temporary plant shutdown following the transport sector
strike and lower copper grades processed, partially offset by higher copper
recoveries.

On-site copper concentrate inventories at the end of Q1 2022 were
approximately 9,904 tonnes. All concentrate in stock at the beginning of the
Period was delivered to the port at Huelva.

Realised Copper Price

Copper prices increased in Q1 2022 compared with Q4 2021, with an average
realised price per pound of copper payable, including the QPs closed in the
Period, of $4.42/lb compared with $4.36/lb in the previous quarter. The
average copper spot price during the Period was $4.53/lb. The realised price
during Q1 2022 excluding QPs was approximately $4.50/lb.

Outlook for 2022

Despite the above-mentioned operational disruptions, the Company is
maintaining its full year copper production guidance for 2022 at 54,000 -
56,000 tonnes.

Cash operating costs for the Period are expected to be higher than the full
year 2022 cost guidance owing to the extremely high cost of electricity and
diesel and lower production levels, while being partly offset by a weaker
Euro/U.S. dollar exchange rate of 1.12 compared with 1.16 budgeted by the
Company in its 2022 guidance. Further details on costs will be provided with
the Q1 Financial Statements that will be reported in May.

Asset Portfolio Update

Riotinto District - San Dionisio and San Antonio

An independent consultant has finalised new Mineral Resource Estimates for the
San Dionisio and San Antonio deposits, as part of preparing a new NI 43-101
technical report on the overall Proyecto Riotinto property. Further details
can be found in the separate announcement released today by the Company.

The San Dionisio deposit is located immediately west of the operating Cerro
Colorado open pit. It represents a high-grade resource that could be mined
first by open pit methods by expanding the existing historic Atalaya pit
followed by underground methods for the remaining resource. The San Dionisio
deposit contains copper ore that is very similar to what is currently being
mined at Cerro Colorado, as well as polymetallic mineralisation containing
copper, zinc and lead. Atalaya plans to complete a PEA on an operating
schedule that combines Cerro Colorado reserves with higher grade material from
San Dionisio deposit.

San Antonio is a shallow polymetallic deposit that will require underground
mining methods. It is located immediately east of the Cerro Colorado open pit,
from where it is easily accessible via the construction of a ramp.

Riotinto District - Proyecto Masa Valverde

Proyecto Masa Valverde ("PMV") consists of two main deposits: the large Masa
Valverde ("MV") deposit and the smaller, shallower and higher grade Majadales
("MJ") deposit, which is located 1 km to the southeast of MV along the same
northwest trending structure.

A new Mineral Resource Estimate for PMV was announced on 5 April 2022, which
included a significant increase in tonnage and contained copper, gold and
silver compared to the prior estimate. An initial Indicated Mineral Resource
was also declared for the MV deposit. As a next step, the Company plans to
complete a PEA that focuses on scenarios that would leverage the existing
plant at Proyecto Riotinto and access the orebodies via a single ramp.

Three rigs continue drilling at PMV, with two focused on the Campanario trend
and the other drill testing a Fix Loop Electromagnetic Anomaly ("FLEM")
anomaly 300 meters west of MV. The Campanario trend is a parallel structure to
MV-MJ, located 1 km to the north and with associated outcropping
mineralisation (gossans and sulphide stockworks) along approximately 5 km. In
addition, several high-priority FLEM anomalies were defined on PMV, all of
which will be systematically drill tested.

Proyecto Touro

Atalaya remains committed to the development of the Touro copper project and
has continued to hold constructive dialogue with all the stakeholders in order
to resolve any concerns associated with the project.

Consistent with its commitment to a world class development of the project,
the Company made the decision to address the legacy issues associated with
water runoff from the historical mine prior to submitting the Environmental
Impact Assessment ("EIA") for the new Touro development proposal. The original
plan was to construct a water treatment plant during project development, but
the Company has now committed to addressing the legacy matters ahead of the
EIA submission as an early contribution to the local community and to
demonstrate that operating systems have drastically improved over the last 35
years. The water treatment plant is under construction and is to be
commissioned during April 2022.

In addition, as an integral part of Atalaya's commitment to excellence and
long-term transparency in relation to the development of Touro, agreements
have been signed with major fishing communities in order to implement a water
quality control system located downstream of Touro at the Ulla River, in order
to demonstrate the project's lack of impact on the river. This is consistent
with the Company's overall project design and its "zero-discharge" philosophy.

The Company continues to be confident that its approach to Touro, which
includes fully plastic lined tailings with zero discharge, is in line with
international best practice and will satisfy the most stringent environmental
conditions that may be imposed by the authorities prior to the development of
the project.

Other Regional Exploration

Drilling is expected to commence in a few weeks at Proyecto Riotinto East and
Proyecto Ossa Morena. Several promising drill targets have been already
delineated at both projects.

In aggregate, Atalaya has a controlling interest in approximately 1,100 km(2)
of exploration concessions in Spain. The Company has an exploration budget of
€10 million for 2022 that will be mainly dedicated to drilling.

E-LIX Phase I Plant

In January 2022, the Company announced the approval of the development of a
Phase I industrial-scale plant that utilises the E-LIX System. The plant will
produce high value copper and zinc metals from complex sulphide concentrates
produced from material sourced within the Riotinto District.

All equipment has been ordered and construction activities are under way. The
plant is expected to reach the commissioning phase before the end of 2022.

Legal Update

As announced on 21 March 2022 and 24 March 2022, the Company received the
formal Judgment from the High Court of Justice in relation to the Claim by
Astor for residual interest arising out of the payment of €53 million in
deferred consideration to Astor.

The Judgment, which puts an end to the litigation between the parties (subject
to any appeal by either party), clarified the basis for calculating the
interest due and confirmed that it is payable by the Company. As a result,
Atalaya expects the interest payable to be in the range of €9.6 million to
€11.7 million.

On 8 April 2022, the Company transferred €9.6 million to Astor from the
trust account already established by Atalaya on 15 July 2021. The remaining
interest payable to Astor, if any, is expected to be clarified on 6 May 2022
after of which the issue will be finished, subject to appeal, and the
remaining balance of the trust account will be transferred back to the
Company.

Update on Energy Market in Spain

During Q1 2022, the price of electricity in Spain continued the volatile trend
of late 2021 and reached unprecedented peaks in March coincident with the
Ukraine conflict. The European natural gas reference price ("TTF") peaked at
an all-time high that was ten times the level of one year ago. Although the
consumption of European gas in Spain and Portugal is minimum, the price of
electricity is set by the marginal high-cost producer that uses TTF as a
reference, and as a result the Company has seen the price of electricity
during Q1 2022 averaging around €230/MWh, which is almost four times higher
than the price realised in 2021.

The Spanish Government has announced measures that will aim to significantly
reduce prices, which are currently unsustainable for the general economy. The
details of these measures have not been finalised yet but are expected to come
into effect during Q2 2022.

In order to provide future price stability, in Q1 2022 the Company signed a
long-term Power Purchase Agreement ("PPA") with its electricity supplier for
approximately 31% of its electricity requirements, with deliveries beginning
in January 2023 at prices that are approximately 80% of the rate realised in
2021.

In addition to the new PPA, the Company's planned 50 MW solar plant for
self-consumption will also help to reduce the Company's long term power costs
while at the same time lower its carbon emissions. The solar plant, which is
expected to provide approximately 22% of the Company's electricity needs, is
under construction following the signing of an agreement with an affiliate of
Endesa, the power supply company. With ground preparation under way and
equipment on order, full commissioning of the solar plant is expected in H1
2023.

Additional long term renewable power initiatives are being evaluated, such as
further solar capacity, the installation of a wind farm for self-consumption
at the mine site and a pumped hydro project linked with the clean water dams
that the Company is utilising.

Alberto Lavandeira, CEO, commented:

"The start of 2022 has been one of the most challenging periods experienced by
the Company since the re-start of Proyecto Riotinto. The unprecedented high
prices of energy products have affected all the economic sectors in Spain and
culminated with a strike of the transport sector that temporally interrupted
our processing operations. The extremely high electricity price, due to the
record natural gas price in Europe, has also created inflationary pressures
that have only been partially offset by the higher copper prices and
favourable exchange rates. Measures have been taken by the Company and by the
Spanish Government and we are confident that the situation will improve in the
coming months. The Company maintains its full commitment to continue improving
its operations by developing its pipeline of organic growth projects which
benefit from a growing resource base."

 

 

Contacts:

 SEC Newgate UK             Elisabeth Cowell / Axaule Shukanayeva / Max Richardson  + 44 20 3757 6882
 4C Communications          Carina Corbett                                          +44 20 3170 7973
 Canaccord Genuity          Henry Fitzgerald-O'Connor / James Asensio               +44 20 7523 8000

 (NOMAD and Joint Broker)
 BMO Capital Markets        Tom Rider / Andrew Cameron                              +44 20 7236 1010

 (Joint Broker)
 Peel Hunt LLP              Ross Allister / David McKeown                           +44 20 7418 8900

 (Joint Broker)

 

 

About Atalaya Mining Plc

Atalaya is an AIM and TSX-listed mining and development group which produces
copper concentrates and silver by-product at its wholly owned Proyecto
Riotinto site in southwest Spain. Atalaya's current operations include the
Cerro Colorado open pit mine and a modern 15 Mtpa processing plant, which has
the potential to become a centralised processing hub for ore sourced from its
wholly owned regional projects around Riotinto that include Proyecto Masa
Valverde and Proyecto Riotinto East. In addition, the Group has a phased,
earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield
copper project in the northwest of Spain. For further information, visit
www.atalayamining.com (http://www.atalayamining.com)

 

 

 

 

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