REG - Atalaya Mining PLC - Historical Related Party Transactions

Atalaya MiningAnnouncement

01/12/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231201:nRSA3058Va&default-theme=true

RNS Number : 3058V  Atalaya Mining PLC  01 December 2023

 

1 December 2023

Atalaya Mining Plc.

("Atalaya" or "the Company")

Historical Related Party Transactions

 

Atalaya Mining Plc (AIM: ATYM) has identified certain historical dealings with
related parties where additional public disclosure is required. All of these
dealings relate to amendments, entered into on preferable terms to the
Company, to certain historical contracts.

Background

In May 2015, the Company agreed terms with key stakeholders in a
capitalisation exercise to finance the re-start of Proyecto Riotinto (the
"2015 Capitalisation").

As part of the 2015 Capitalisation, the Company entered into offtake
agreements with some of its large shareholders, one of which was Trafigura Pte
Ltd ("Trafigura"), under which the total forecast concentrate production from
Proyecto Riotinto was committed ("2015 Offtake Agreements"). Trafigura was a
substantial shareholder in Atalaya and, therefore, a Related Party to the
Company. As a result, the offtake agreement with Trafigura was deemed to be an
AIM Rule 13 Related Party Transaction and appropriately disclosed in the
Shareholder Circular published at the time.

In addition, in September 2015, the Company separately entered into a services
agreement with Impala Terminals Huelva S.L.U. ("Impala Terminals") for the
handling, storage and shipment of copper concentrates produced from Proyecto
Riotinto ("2015 Port Handling Agreement"). At the time, Impala Terminals was
majority owned by Trafigura. The agreement covered total export concentrate
volumes produced from Proyecto Riotinto for three years for volumes not
committed to Trafigura under its offtake agreement and for the life of mine
for the volumes committed to Trafigura under its offtake agreement.

Spot Sales Agreements

Due to various expansions implemented at Proyecto Riotinto in recent years, as
well as the production of pre-commercial concentrate in 2015 and 2016, volumes
of concentrate have been periodically available for sale outside of the
Company's various offtake agreements. As a result, from 2015 to November 2023,
the Company completed 19 concentrate sales transactions on a spot basis
("Historical Spot Sales") outside of its offtake agreements, 10 of which were
completed with Trafigura through amendments to its existing offtake agreement.
Historical Spot Sales were the result of competitive tenders involving
multiple potential buyers and were completed on an arm's length basis.

The Historical Spot Sales to Trafigura are shown below in Table 1 and
represent an aggregate invoice value of approximately €159.9 million, or
approximately 7.6% of the Company's total aggregate invoices over the eight
year period. These transactions with Trafigura, although not individually
identifiable, formed part of the related party transactions disclosure notes
of the Company's financial statements since 2015.

Table 1: Historical Spot Sales to Trafigura

  Transaction Date                    Invoice Value (€m)
 2015 November (pre-commercial)((1))  5.3
 2015 December (pre-commercial)((1))  9.1
 2016 March (pre-commercial)((1))     4.8
 2020 December / 2021 January         19.9
 2021 June                            10.8
 2021 June / July                     15.7
 2021 September                       19.5
 2021 December / 2022 May             29.9
 2023 August                          30.1
 2023 October                         14.8
 Total                                159.9

(1)   Shipments of concentrate produced before commerical production was
declared, therefore the sales were not included in historical revenues,
consistent with accounting standards.

As a result of an internal review, the Company has identified that the
Historical Spot Sales transactions with Trafigura, as they technically sat
outside the original 2015 Offtake Agreement, should have been evaluated as AIM
Rule 13 Related Party Transactions individually but they were not evaluated as
such at the time of being entered into.

The Company's independent directors (excluding Trafigura's nominee) consider,
having consulted with its nominated adviser, that the terms of the Historical
Spot Sales with Trafigura  were fair and reasonable insofar as its
shareholders are concerned.

Port Handling Agreement Amendment

In September 2018, the Company entered into an amendment to the 2015 Port
Handling Agreement, which included improved financial terms and a five year
extension ("2018 Port Handling Extension Agreement").

In aggregate, the total fees paid to Impala Terminals, both directly and
indirectly via deductions included in sales invoices, amounted to
approximately €13 million during the period from October 2018 to October
2023. This represents approximately 1.3% of the Company's operating costs over
the same period.

The Company notes that the fees payable to Impala Terminals were not included
in the related party transactions disclosure notes of the Company's financial
statements since the 2015 Port Handling Agreement was entered into. Future
transactions with Impala Terminals, if it remains a related party, will be
disclosed in the notes of all future financial statements. No amendments are
required to be made to the Company's historical financial statements, as the
fees payable to Impala Terminals were accurately accounted for.

As a result of an internal review, the Company has identified that the 2018
Port Handling Extension Agreement should have been evaluated as an AIM Rule 13
Related Party Transaction but it was not evaluated as such at the time.

The Company's independent directors (excluding Trafigura's nominee) consider,
having consulted with its nominated adviser, that the terms of the 2018 Port
Handling Extension Agreement were fair and reasonable insofar as its
shareholders are concerned.

Further Review of Procedures

The Company regularly evaluates its internal controls and procedures to ensure
compliance with all applicable rules and regulations. As a result, revisions
to its reporting procedures are in the process of being implemented, in
consultation with the Company's Board of Directors and its external advisors.

 

Contacts:

 SEC Newgate UK             Elisabeth Cowell / Tom Carnegie / Matthew Elliott  + 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-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 central 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, as well as a 99.9% interest in Proyecto Ossa Morena. For
further information, visit www.atalayamining.com
(http://www.atalayamining.com)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCBBLLXXFLLFBD