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REG - Atalaya Mining PLC - Q1 2022 Financial Results

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RNS Number : 0262M  Atalaya Mining PLC  19 May 2022

19 May 2022

Atalaya Mining Plc.

("Atalaya" and/or the "Group")

Q1 2022 Financial Results

Good financial performance despite impact of energy prices, inflation and
transport sector strike

 

Atalaya Mining Plc (AIM: ATYM; TSX: AYM) is pleased to announce its unaudited
quarterly results for the three months ended 31 March 2022 ("Q1 2022" or
"Period"), together with its unaudited interim financial statements for Q1
2022.

The Unaudited Interim Condensed Consolidated Financial Statements for the
three months ended 31 March 2022 are also available under the Company´s
profile on SEDAR at www.sedar.com (http://www.sedar.com) and on Atalaya's
website at www.atalayamining.com (http://www.atalayamining.com) .

Highlights

·    Good financial performance including cash flows from operating
activities of €28.3 million, despite unprecedented energy costs,
inflationary pressures and transport sector strike

·    Continued to strengthen the balance sheet, with net cash position
growing to €86.8 million

·    Maintaining 2022 full year operational outlook including copper
production of 54 - 56 kt

·    Growth pipeline advancing as outlined in the April 2022 announcements
of new Mineral Resource Estimates for higher grade Riotinto District deposits
- San Dionisio, San Antonio and Proyecto Masa Valverde

Q1 2022 Financial Results Summary

 Quarter ended 31 March                          Unit            Q1 2022   Q1 2021   %
 Revenues from operations                       €k               86,251    97,380    (11.4%)
 Operating costs                                €k               (54,789)  (48,026)  14.1%
 EBITDA                                         €k               26,712    47,443    (43.7%)
 Profit for the period                          €k               18,257    33,702    (45.8%)
 Basic earnings per share                       € cents/share    13.5      24.5      (44.9%)

 Cash flows from operating activities           €k               28,298    36,803    (23.1%)
 Cash flows used in investing activities ((1))  €k               (7,552)   (63,930)  (88.2%)
 Cash flows from financing activities           €k               (2,378)   52,948    (104.5%)

 Net cash position ((2))                        €k               86,836    10,588    720.1%
 Working capital surplus                        €k               120,124   61,028    96.8%

 Average realised copper price                  US$/lb           4.42      3.62      22.2%

 Cu concentrate produced                        tonnes           54,209    67,260    (19.4%)
 Cu production                                  tonnes           11,461    13,979    (18.0%)
 Cash costs                                     US$/lb payable   3.33      2.04      63.5%
 All-In Sustaining Costs ("AISC")               US$/lb payable   3.59      2.46      46.0%

((1)       ) Q1 2021 includes €53 million early payment of the
Deferred Consideration to Astor.

((2)       ) Includes restricted cash and bank borrowings at 31 March
2022 and 31 March 2021.

Alberto Lavandeira, CEO commented:

"We are pleased to have generated over €20 million in free cash flow during
the quarter, despite the many external challenges we faced. The transport
sector strike in March forced a temporary shutdown of our processing plant,
electricity prices in Spain remain extremely high compared to historical and
expected future rates, and cost inflation is affecting the prices of many key
consumables.

However, our team has been successful in reducing the impact of these external
factors. During the transport sector strike, we brought forward maintenance
activities which should allow for higher throughput in Q2, we are advancing
the construction of our 50 MW solar plant and entered into a new long term
PPA, and are implementing various efficiency measures to help to offset cost
inflation. We also look forward to the new regulations proposed by Spain,
which would cap the gas price and significantly reduce spot electricity
prices.

Meanwhile, we continue to focus on advancing our project pipeline in the
Riotinto District, which we believe can deliver significant production growth
at low capital intensity as a result of the expected grades and synergies
associated with utilising our existing plant as a central processing hub. In
addition, stakeholder dialogue and the permitting process continue at Proyecto
Touro, which could become a new source of safe and responsible copper
production in Europe."

Investor Presentation Reminder

Alberto Lavandeira (CEO) and César Sánchez (CFO) will be holding a live
presentation relating to the Q1 2022 results via the Investor Meet Company
platform at 1:00pm BST today.

To register, please visit the following link and click "Add to Meet" Atalaya
via:

https://www.investormeetcompany.com/atalaya-mining-plc/register-investor

Management will also answer questions that have been submitted via the
Investor Meet Company dashboard.

Q1 2022 Operating Results Summary

 Units expressed in accordance with the international system of units (SI)

                                                                            Unit    Q1 2022   Q1 2021
 Ore mined                                                                  Mt      4.0       3.3
 Ore processed                                                              Mt      3.5       4.0
 Copper ore grade                                                           %       0.37      0.41
 Copper concentrate grade                                                   %       21.14     20.78
 Copper recovery rate                                                       %       86.07     84.90
 Copper concentrate                                                         tonnes  54,209    67,260
 Copper contained in concentrate                                            tonnes  11,461    13,979
 Payable copper contained in concentrate                                    tonnes  10,918    13,306

 

Mining

Ore totalling 4.0 million tonnes was mined during Q1 2022, which is consistent
with processing rates in recent quarters. This compares with ore mined of 3.3
million tonnes in Q1 2021.

Processing

The plant processed 3.5 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 resulted in a temporary shut down of the
plant. In order to minimise the impact of the down time on full year
production, the Company brought forward certain maintenance works previously
planned for Q2.

The processed copper grade was 0.37%, which was below comparative quarters and
resulted from pit sequencing. Copper recoveries were strong at 86.07% despite
lower grades, compared to 84.90% in the Q1 2021 period.

Production

Copper production in Q1 2022 was 11,461 tonnes, which was below Q1 2021
production of 13,979 tonnes. The decrease in copper production was mainly
attributable to the temporary plant shutdown following the transport sector
strike and lower copper grades processed, partially offset by higher copper
recoveries.

Q1 2022 Financial Results Highlights

Income Statement

Revenues for Q1 2022 were €86.3 million, compared with €97.4 million in Q1
2021. The reduction was mainly as a result of lower copper concentrate sales
volumes, partially offset by higher realised copper prices of US$4.42/lb
compared with US$3.62/lb in Q1 2021.

Operating costs for Q1 2022 were €54.8 million, compared with €48.0
million in Q1 2021, due primarily to the increase in electricity prices
following the invasion of the Ukraine and inflation associated with other key
supplies.

EBITDA for the Period was €26.7 million, below Q1 2021 of €47.4 million.
The decrease in EBITDA was driven by the combination of lower revenues and
higher operating costs compared with Q1 2021.

Profit after tax was €18.3 million, or 13.5 cents basic earnings per share,
compared with Q1 2021 profit after tax of €33.7 million, or 24.5 cents basic
earnings per share.

Cash costs for Q1 2022 were US$3.33/lb payable copper, considerably higher
than those reported in Q4 2021 (US$2.18/lb) and Q1 2021 (US$2.04/lb) as a
result of lower production volumes and higher costs associated with
electricity and other supplies, partially offset by the weaker Euro.

AISC during Q1 2022 amounted to US$3.59/lb payable copper compared with
US$2.48/lb payable copper in Q4 2021 and US$2.46/lb in Q1 2021. The increase
in AISC in Q1 2022 was mainly driven by the same factors that increased cash
costs. AISC excludes investment in the tailings dam during the Period, which
amounted to €2.5 million (Q1 2021: €2.7 million).

Cash Flow Statement

Cash flow from operating activities before changes in working capital amounted
to €26.9 million in Q1 2022 (Q1 2021: €50.2 million) or €28.3 million
after working capital changes (Q1 2021: €36.8 million).

Cash flows used in investing activities were €7.6 million in Q1 2022,
compared with €63.9 million in Q1 2021, which included the payment of
deferred consideration to Astor. Capital expenditures in Q1 2022 included
€0.9 million in sustaining capex, €2.5 million for tailings dam expansion,
as well as land purchases.

Cash flows used in financing activities were €2.4 million, which included
debt repayment of €5.8 million and the proceeds of employee options,
compared with an inflow of €52.9 million in Q1 2021 following the drawdown
of unsecured debt facilities to fund the payment to Astor.

Balance Sheet

Consolidated cash and cash equivalents as at 31 March 2022 were €128.5
million (including restricted cash and equivalents of €15.4 million), up
from €107.5 million as at 31 December 2021 and €63.6 million as at 31
March 2021.

Net of current and non-current borrowings of €41.6 million, net cash was
€86.8 million as at 31 March 2022, up from €60.1 million as at 31 December
2021 and €10.6 million as at 31 March 2021.

Inventories of concentrate at 31 March 2022 valued at cost amounted to €14.6
million (31 December 2021: €6.6 million). As at 31 March 2022, total working
capital was €120.1 million, representing a €17.7 million increase from the
€102.4 million surplus as at 31 December 2021 and an increase of €59.1
million from 31 March 2021.

Sustainability Reporting

On 25 April 2022, the Company published its inaugural sustainability report,
as part of its ongoing commitment to enhancing its disclosure and reporting.

The 2021 Sustainability Report, which is available on the Company's website,
was prepared in accordance with Global Reporting Initiative Sustainability
Reporting Standards ("GRI Standards") with the assistance of independent
sustainability consultancy ERM and was audited by EY.

Energy Market Developments in Spain

Situation Update

During Q1 2022, the price of electricity in Spain continued the volatile trend
of late 2021 and reached unprecedented peaks in March as a result of the
conflict in the Ukraine. The European natural gas reference price ("TTF")
peaked at an all-time high that was ten times the level of one year earlier.
Although the consumption of European gas in Spain and Portugal is minimal, 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 announced plans to implement 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 the coming months.

Since the end of the Period, TTF has decreased by over 50% from its peak in
March, and in April, electricity prices in Spain averaged around €190/MWh,
including days when the price was below €90/MWh.

Electricity Procurement Strategy

The Company is focused on implementing a range of measures that will reduce
its long term energy costs and exposure to the spot market, while also
lowering carbon footprint.

As previously announced, 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.

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.

In additional, the Company is evaluating further long term renewable power
initiatives such as additional 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 already utilising.

Outlook for 2022

The Company is maintaining its previously announced guidance for 2022, despite
the operational disruptions and lower grades experienced during the Period.

Full year copper production guidance is 54,000 - 56,000 tonnes, with
improvements in copper grade and ore throughput expected in the remaining
quarters of the year, due in part to the bringing forward of maintenance
activities during the transport sector strike.

2022 guidance for cash costs and AISC are US$2.25 - 2.80/lb and US$2.50 -
3.05/lb, respectively. Although electricity prices remain elevated at present,
they are within the range assumed when setting annual cost guidance. In
addition, as Europe enters the summer months and regulatory changes are
implemented in relation to energy prices, the cost of electricity is expected
to return to normalised levels. The Euro/U.S. dollar exchange rate has also
weakened compared to the 1.16 budget, averaging 1.12 during Q1 2022.

ELIX

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.

Update on Asset Portfolio

Riotinto District - Cerro Colorado

Several efficiency and cost reduction initiatives have been implemented in
recent months. The expert system to control the SAG mill operations has been
fully implemented and is reducing energy consumption. Various initiatives have
focused on improving the flotation process, including the use of new reagents
which have had a positive impact on recoveries. Also, the new tailings
thickening circuit has successfully reduced lime consumption.

Riotinto District - San Dionisio and San Antonio

As announced on 13 April 2022, 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.

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 during 2022. Open pit mining at San Dionisio will require
the relocation of certain infrastructure such as the public road, power lines
and water lines that currently run between the two deposits.

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 ("PMV")

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. The supporting NI 43-101 technical
report has now been filed. 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.

Four rigs continue drilling at PMV, with two focused on the Campanario trend
and the other two 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.

Riotinto District - Proyecto Riotinto Este

At Riotinto East, work continues on the definition of drill targets as well as
obtaining the pending administrative permits. It is expected that drilling
will commence in the coming months.

Proyecto Touro

Atalaya remains committed to the development of the Touro copper project and
continues to engage with all 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 volunteered to address 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 near completion.

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.

Proyecto Ossa Morena ("POM")

At Proyecto Ossa Morena, preparation work continues and it is expected that
drilling will begin at the flagship Alconchel-Pallares Cu-Au project during
July or August.

Update on Corporate Developments

Astor Litigation

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 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.

On 7 and 8 April 2022, the Company paid €9.6 million to Astor from the trust
account of €15.4 million previously established by Atalaya on 15 July 2021.

A hearing was held on 6 May 2022 and the calculation of the correct interest
arising under the Master Agreement was subsequently agreed between the
parties. Atalaya has agreed a final payment amount of €1.1 million with
Astor which was paid on 16 May 2022.

 

 

This announcement contains information which, prior to its publication
constituted inside information for the purposes of Article 7 of Regulation
(EU) No 596/2014.

 

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 Este. 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. In addition, Atalaya is in permitting phase of Proyecto
Ossa Morena. For further information, visit www.atalayamining.com
(http://www.atalayamining.com)

 

 

 

ATALAYA MINING PLC

MANAGEMENT'S REVIEW AND

UNAUDITED CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

31 March 2022

 

Notice to Reader

The accompanying unaudited, condensed, interim consolidated financial
statements of Atalaya Mining Plc have been prepared by and are the
responsibility of Atalaya Mining Plc's management. The unaudited, condensed,
interim consolidated financial statements have not been reviewed by Atalaya's
auditors.

Introduction

This report provides an overview and analysis of the financial results of
operations of Atalaya Mining Plc and its subsidiaries ("Atalaya" and/or
"Group"), to enable the reader to assess material changes in the financial
position between 31 December 2021 and 31 March 2022 and results of operations
for the three months ended 31 March 2022 and 2021.

This report has been prepared as of 18 May 2022. The analysis, hereby
included, is intended to supplement and complement the unaudited interim
condensed consolidated financial statements and notes thereto ("Financial
Statements") as at and for the period ended 31 March 2022. The reader should
review the Financial Statements in conjunction with the review of this report
and with the audited, consolidated financial statements for the year ended 31
December 2021. This document can be found on SEDAR at www.sedar.com
(http://www.sedar.com) and on Atalaya's website at www.atalayamining.com
(http://www.atalayamining.com) .

Atalaya prepares its Annual Financial Statements in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by EU and its
Unaudited Interim Condensed Consolidated Financial Statements in accordance
with International Accounting Standards 34: Interim Financial Reporting. The
currency referred to in this document is the Euro, unless otherwise specified.

Forward-looking statements

This report may include certain "forward-looking statements" and
"forward-looking information" under applicable securities laws. Except for
statements of historical fact, certain information contained herein
constitutes forward-looking statements. Forward-looking statements are
frequently characterised by words such as "plan", "expect", "project",
"intend", "believe", "anticipate", "estimate", and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are based on a number of
assumptions and subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking statements. Assumptions upon which such
forward-looking statements are based include that all required third party
regulatory and governmental approvals will be obtained. Many of these
assumptions are based on factors and events that are not within the control of
Atalaya and there is no assurance they will prove to be correct. Factors that
could cause actual results to vary materially from results anticipated by such
forward-looking statements include changes in market conditions and other risk
factors discussed or referred to in this report and other documents filed with
the applicable securities regulatory authorities. Although Atalaya has
attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results
not to be anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
statements. Atalaya undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions should
change except as required by applicable securities laws. The reader is
cautioned not to place undue reliance on forward-looking statements.

 

1.     Incorporation and description of the Business

Atalaya Mining Plc (the "Company") was incorporated in Cyprus on 17 September
2004 as a private company with limited liability under the Companies Law, Cap.
113 and was converted to a public limited liability company on 26 January
2005. Its registered office is at 1 Lampousa Street, Nicosia, Cyprus.

The Company was listed on AIM of the London Stock Exchange ("AIM") in May 2005
under the symbol ATYM and on the Toronto Stock Exchange ("TSX") on 20 December
2010 under the symbol AYM. The Company continued to be listed on AIM and the
TSX as at 31 March 2022.

Atalaya is a European mining and development company. The strategy is to
evaluate and prioritise metal production opportunities in several
jurisdictions throughout the well-known belts of base and precious metal
mineralisation in Spain, elsewhere in Europe and Latin America.

The Group currently owns four mining projects: Proyecto Riotinto, Proyecto
Touro, Proyecto Masa Valverde and Proyecto Ossa Morena. In addition, the
Company has an earn-in agreement to acquire three investigation permits at
Proyecto Riotinto Este.

 

Proyecto Riotinto

The Company owns and operates through a wholly owned subsidiary, "Proyecto
Riotinto", an open-pit copper mine located in the Iberian Pyrite Belt, in the
Andalusia region of Spain, approximately 65 km northwest of Seville. A
brownfield expansion of this mine was completed in 2019 and successfully
commissioned by Q1 2020.

 

Proyecto Touro

The Group has an initial 10% stake in Cobre San Rafael, S.L., the owner of
Proyecto Touro, as part of an earn-in agreement which will enable the Group to
acquire up to 80% of the copper project. Proyecto Touro is located in Galicia,
north-west Spain. Proyecto Touro is currently in the permitting process.

In November 2019, Atalaya executed the option to acquire 12.5% of
Explotaciones Gallegas del Cobre, S.L. the exploration property around Touro,
with known additional mineralisation, which will add to the potential of
Proyecto Touro.

 

Proyecto Masa Valverde

On 21 October 2020, the Company announced that it entered into a definitive
purchase agreement to acquire 100% of the shares of Cambridge Mineria España,
S.L. (since renamed Atalaya Masa Valverde, S.L.U.), a Spanish company which
fully owns the Masa Valverde polymetallic project located in Huelva (Spain).
Proyecto Masa Valverde is currently in the permitting process.

 

Proyecto Riotinto Este

In December 2020, Atalaya entered into a Memorandum of Understanding with a
local private Spanish company to acquire a 100% beneficial interest in three
investigation permits (known as Peñas Blancas, Cerro Negro and Herreros
investigation permits), which cover approximately 12,368 hectares and are
located immediately east of Proyecto Riotinto.

 

Proyecto Ossa Morena

In December 2021, Atalaya announced the acquisition of a 51% interest in Rio
Narcea Nickel, S.L., which owns 17 investigation permits. The acquisition also
provided a 100% interest in three investigation permits that are also located
along the Ossa-Morena Metallogenic Belt.

 

2.     Overview of Operational Results

Proyecto Riotinto

The following table presents a summarised statement of operations of Proyecto
Riotinto for the three months ended 31 March 2022 and 2021 and the three
months ended 31 December 2021.

                                                                                             Three months  Three months ended  Three months ended

 Units expressed in accordance with the international system of units (SI)                    ended        31 Mar 2021         31 Dec 2021

                                                                             Unit            31 Mar 2022

 Ore mined                                                                   t               3,954,647     3,328,389           3,494,222
 Ore processed                                                               t               3,547,487     4,005,790           3,846,559

 Copper ore grade                                                            %               0.37          0.41                0.41
 Copper concentrate grade                                                    %               21.14         20.78               21.44
 Copper recovery rate                                                        %               86.07         84.90               87.04

 Copper concentrate                                                          t               54,209        67,260              64,695
 Copper contained in concentrate                                             t               11,461        13,979              13,872
 Payable copper contained in concentrate                                     t               10,918        13,306              13,225
 Cash cost*                                                                  US$/lb payable  3.33          2.04                2.24
 All-in sustaining cost*                                                     US$/lb payable  3.59          2.46                2.46

(*) Refer to section 5 of this Management´s Review

Note: There may be slight differences between the numbers in the above table
due to rounding.

 

Three months operational review

During Q1 2022, a total of 3,547,487 tonnes of ore were processed with an
average copper head grade of 0.37% and a recovery rate of 86.07%. Compared
with Q1 2021, throughput decreased 11.4% while recoveries increased 1.4%.

The decrease in copper production compared to prior periods was mainly
attributable to the temporary plant shutdown following the transport sector
strike, the bringing forward of certain maintenance works 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.

Copper prices increased during Q1 2022 compared with Q4 2021. The average
copper spot price during the period was US$4.53/lb. The realised price during
Q1 2022 excluding QPs was approximately US$4.50/lb.

 

3.    Outlook

The forward-looking information contained in this section is subject to the
risk factors and assumptions contained in the cautionary statement on
forward-looking statements included in the Basis of Reporting. The Company is
aware that the inflationary pressure on the goods and services required for
its business and the geopolitical developments in Ukraine and its impact on
energy prices may still have further effects or impact how the Company can
manage it operations and is accordingly keeping its guidance under regular
review. Should the Company consider the current guidance no longer achievable,
then the Company will provide a further update.

 

3.    Outlook (cont.)

Operational guidance

Proyecto Riotinto operational guidance for 2022 remains unchanged. Should the
Company consider the current guidance no longer achievable, then the Company
will provide a further update.

                                         Guidance
                         Unit            2022
 Ore mined               million tonnes  15.5
 Waste mined             million tonnes  23.4
 Ore processed           million tonnes  15.2 - 15.8
 Copper ore grade        %               0.42
 Copper recovery rate    %               83 - 86
 Contained copper        tonnes          54,000 - 56,000
 Cash costs              $/lb payable    2.25 - 2.80
 All-in sustaining cost  $/lb payable    2.50 - 3.05

 

Atalaya's operating budget for 2022 was set in early December 2021 based on
certain economic assumptions of expected inflation, particularly with respect
to energy costs.

On this basis, full year 2022 copper production is estimated to be in the
range of 54,000 to 56,000 tonnes.

As a result of actual electricity costs in early 2022, the Company has
provided cash cost and AISC guidance that reflects a range of outcomes of
potential energy costs for the full year. Cash costs for 2022 are expected to
be in the range of $2.25/lb - $2.80/lb. AISC for 2022 is expected to be in the
range of $2.50/lb - $3.05/lb copper payable. In addition, the Company expects
to spend approximately €12.5 million in 2022 as part of the project to
increase the capacity of the tailing dam. AISC are presented net of the
one-off project to increase the capacity of the tailing dam.

 

4.    Overview of the Financial Results

The following table presents summarised consolidated income statements for the
three months ended 31 March 2022, with comparatives for the three months ended
31 March 2021.

                                    Three months ended    Three months ended

                                    31 Mar 2022           31 Mar 2021

 (Euro 000's)

 Revenue                             86,251               97,380
 Total operating costs               (54,789)             (48,026)
 Administrative and other expenses   (3,583)              (1,573)
 Exploration expenses                (452)                (120)
 Care and maintenance expenditure    (715)                (218)
 EBITDA                              26,712               47,443
 Depreciation/amortisation           (7,520)              (8,944)
 Net foreign exchange gain          2,573                 2,930
 Net finance cost                   (315)                 (82)
 Tax                                 (3,193)              (7,645)
 Profit for the period               18,257               33,702

 

 

4.    Overview of the Financial Results (cont.)

Three months financial review

Revenues for the three-month period ended 31 March 2022 amounted to €86.3
million (Q1 2021: €97.4 million). Lower revenues are mainly due to a
decrease in copper concentrate volume sold despite higher realised copper
prices.

 

Decrease in concentrate sold resulted from the transport sector strike, which
interrupted the supply of essential daily consumables as a result of which the
Company brought 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.

Realised prices were US$4.42/lb copper during Q1 2022 compared with US$3.62/lb
copper in Q1 2021.

Operating costs for the three-month period ended 31 March 2022 amounted to
€54.8 million, compared with €48.0 million in Q1 2021. Unit operating
costs in Q1 2022 were higher than in Q1 2021 due to the high cost of
electricity, diesel and other supplies as result of inflation and the
geopolitical situation in the Ukraine.

Cash costs of US$3.33/lb payable copper during Q1 2022 compared with US$2.04lb
payable copper in the same period last year. Higher cash costs were mainly due
to the reduced production levels and the increase in cost of electricity power
and other supplies despite the stronger US Dollar/Euro rate in Q1 2021 which
partially offset the higher operating costs in Q1 2022. AISC excluding
investment in tailings dam for Q1 2022 were US$3.59/lb payable copper compared
to US$2.46/lb payable copper in Q1 2021.The increase was mainly driven by the
impacts derived from the cash costs despite of lower capitalised stripping
costs, which amounted to €0.7 million in Q1 2022 compared with €4.2
million invested in Q1 2021.

Sustaining capex for Q1 2022 amounted to €0.9 million compared with €1.9
million in Q1 2021. Sustaining capex was mainly related to continuous
enhancements in the processing systems of the plant. In addition, the Company
invested €2.5 million in the project to increase the tailings dam during Q1
2022.

Administrative and other expenses amounted to €3.6 million (Q1 2021: €1.6
million) and include non-operating costs of the Cyprus office, corporate legal
and consultancy costs, on-going listing costs, officers and directors'
emoluments, and salaries and related costs of the corporate office. The higher
cost in the period was mainly related to legal costs owing to Astor litigation
case and expenses related to the execution of share options by certain
employees.

Exploration costs for the three-month period ended 31 March 2022 amounted to
€0.5 million, higher than Q1 2021 (€0.1 million).

EBITDA for the three months ended 31 March 2022 amounted to €26.7 million
compared with Q1 2021 of €47.4 million.

The main item below the EBITDA line is depreciation and amortisation of €7.5
million (Q1 2021: €8.9 million). Lower depreciation was mainly due to the
decrease in ore mined. Net financing costs for Q1 2022 amounted to €0.3
million compared with €82k in Q1 2021. Net finance costs are mainly related
to credit facilities used to pay the Deferred Consideration to Astor in Q1
2021 (Note 5).

The net foreign exchange gain in Q1 2022 totalled €2.6 million (Q1 2021:
€2.9 million).

Income tax expense booked in Q1 2022 amounted to €3.2 million (Q1 2021:
€7.6 million). Lower expenses compared to comparative period is due to lower
profit in Q1 2022.

 

Copper prices

The average realised copper price increased 18.1% from US$3.62 per pound in Q1
2021 to US$4.42 per pound in Q1 2022.

The average prices of copper for the three months ended 31 March 2022 and 2021
are summarised below:

                               Three months ended    Three months ended

                               31 Mar 2022           31 Mar 2021

 (USD)

 Realised copper price per lb  4.42                  3.62
 Market copper price per lb    4.53                  3.85

 

 

4.    Overview of the Financial Results (cont.)

Realised copper prices for the reporting period noted above have been
calculated using payable copper and including provisional invoices and final
settlements of quotation periods ("QPs") together. Lower realised prices than
market averages are mainly due to the final settlement of invoices where QP
was fixed in previous quarters due to a short open period when copper prices
were lower. Atalaya's average realised price increased to US$4.42/lb from
US$4.36/lb in the previous quarter. When excluding the QPs, the realised price
during Q1 2022 was US$4.50/lb.

 

5.     Non-GAAP Measures

Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Cost
per pound of payable copper", "All-In Sustaining Costs" ("AISC") and "realised
prices" in this report. Non-IFRS measures do not have any standardised meaning
prescribed under IFRS, and therefore they may not be comparable to similar
measures presented by other companies. These measures are intended to provide
additional information and should not be considered in isolation or as a
substitute for indicators prepared in accordance with IFRS.

EBITDA includes gross sales net of penalties and discounts and all operating
costs, excluding finance, tax, impairment, depreciation and amortisation
expenses.

Cash Cost per pound of payable copper includes cash operating costs, including
treatment, and refining charges ("TC/RC"), freight and distribution costs net
of by-product credits. Cash Cost per pound of payable copper is consistent
with the widely accepted industry standard established by Wood Mackenzie and
is also known as the C1 cash cost.

AISC per pound of payable copper includes C1 Cash Costs plus agency fees,
expenditures on rehabilitation, capitalised stripping costs, exploration and
geology costs, corporate costs and sustaining capital expenditures, but
excludes one-off sustaining capital projects, such as investments in the
tailings dam.

Realised price per pound of payable copper is the value of the copper payable
included in the concentrate produced including the discounts and other
features governed by the offtake agreements of the Group and all discounts or
premiums provided in commodity hedge agreements with financial institutions,
if any, expressed in USD per pound of payable copper. Realised price is
consistent with the widely accepted industry standard definition.

 

6.     Liquidity and Capital Resources

Atalaya monitors factors that could impact its liquidity as part of Atalaya's
overall capital management strategy. Factors that are monitored include, but
are not limited to, the market price of copper, foreign currency rates,
production levels, operating costs, capital and administrative costs.

The following is a summary of Atalaya's cash position and cash flows as at 31
March 2022 and 31 December 2021.

Liquidity information

 (Euro 000's)                                                   31 March 2022  31 December 2021

 Unrestricted cash and cash equivalents at Group level          69,985         48,375
 Unrestricted cash and cash equivalents at Operation level      43,053         43,722
 Restricted cash and cash equivalents at Operation level        15,420         15,420
 Consolidated cash and cash equivalents                         128,458        107,517
 Net cash position ((1))                                        86,836         60,073
 Working capital surplus                                        120,124        102,430

((1)          ) Includes borrowings

 

Unrestricted cash and cash equivalents (which include cash at both Group level
and Operation level) as at 31 March 2022 increased to €113.0 million from
€92.1 million at 31 December 2021. The increase in cash balances is the
result of net cash flow generated in the period. Restricted cash of €15.4
million represents the amount in escrow out of which the Company has paid
interest of €9.6 million on 7 and 8 April 2022 (following the trial in
February and March 2022) and €1.1 million on 16 May 2022 to Astor under the
Master Agreement. Following the payment made in May 2022 the balance (less an
amount representing £280,000 being the remaining liability to Astor on costs)
will revert to the Company and it will be classified as unrestricted cash. See
more details in Deferred Consideration note 20.

 

6.    Liquidity and Capital Resources (cont.)

 

As of 31 March 2022, Atalaya reported a working capital surplus of €120.1
million, compared with a working capital surplus of €102.4 million at 31
December 2021. The main liability of the working capital is trade payables
related to Proyecto Riotinto contractors and, to a lesser extent, short-term
loans following the drawdown of credit facilities during Q1 2022. The increase
in working capital resulted from higher cash balances as well as higher
inventory levels.

 

Overview of the Group's cash flows

                                            Three months ended    Three months ended

                                            31 Mar 2022           31 Mar 2021

 (Euro 000's)

 Cash flows from operating activities       28,298                36,803
 Cash flows used in investing activities    (7,552)               (63,930)
 Cash flows from financing activities       (2,378)               52,948

 Net increase in cash and cash equivalents  18,368                22,890
 Net foreign exchange differences           2,573                 2,931

 

Three months cash flows review

Cash and cash equivalents increased by €20.9 million during the three months
ended 31 March 2022. This was due to the net results of cash generated from
operating activities amounting to €28.3 million, the cash used in investing
activities amounting to €7.6 million, the cash used from financing
activities totalling €2.4 million and net foreign exchange differences of
€2.6 million.

 

Cash generated from operating activities before working capital changes was
€26.9 million. Trade receivables in the period decreased by €5.2 million,
inventory levels increased by €13.0 million and trade payables increased
     by €9.7 million.

Investing activities during the quarter consumed €7.6 million, relating
mainly to the tailings dams project, acquisition of lands around Riotinto and
continuous enhancements in the processing systems of the plant.

Financing activities during the quarter used €2.4 million driven by the
payments of existing unsecured credit facilities and cash generated from
issuance of shares.

 

Foreign exchange

Foreign exchange rate movements can have a significant effect on Atalaya's
operations, financial position and results. Atalaya's sales are denominated in
U.S. dollars ("USD"), while Atalaya's operating expenses, income taxes and
other expenses are mainly denominated in Euros ("EUR"), and to a much lesser
extent in British Pounds ("GBP").

Accordingly, fluctuations in the exchange rates can potentially impact the
results of operations and carrying value of assets and liabilities on the
balance sheet.

During the three months ended 31 March 2022, Atalaya recognised a foreign
exchange profit of €2.6 million. Foreign exchange losses mainly related to
change in the period end EUR and USD conversion rates, as all sales are cashed
and generally held in USD.

The following table summarises the movement in key currencies versus the EUR:

                                     Three months ended    Three months ended

                                     31 Mar 2022           31 Mar 2021
 Average rates for the period
    GBP - EUR                        0.8459                0.8739
    USD - EUR                        1.1217                1.2048
 Spot rates as at end of the period
    GBP - EUR                        0.8364                0.8521
    USD - EUR                        1.1101                1.1725

 

7.    Deferred Consideration

In September 2008, the Group moved to 100% ownership of Atalaya Riotinto
Mineral S.L. ("ARM") (and thus full ownership of Proyecto Riotinto) by
acquiring the remaining 49% of the issued capital of ARM. At the time of the
acquisition, the Group signed a Master Agreement (the "Master Agreement") with
Astor Management AG ("Astor") which included a deferred consideration of
€43.9 million (the "Deferred Consideration") payable as consideration in
respect of the acquisition among other items. The Company also entered into a
credit assignment agreement at the same time with a related company of Astor,
Shorthorn AG, pursuant to which the benefit of outstanding loans was assigned
to the Company in consideration for the payment of €9.1 million to Shorthorn
(the "Loan Assignment").

The Master Agreement was the subject of litigation in the High Court and the
Court of Appeal that concluded in November 2018.  As a consequence, ARM was
obliged to any excess cash (after payment of operating expenses, sustaining
capital expenditure, any senior debt service requirements and up to US$10
million per annum (for non-Proyecto Riotinto related expenses)) to pay the
consideration due to Astor (including the Deferred Consideration and the
amount of €9.1 million payable under the Loan Assignment). "Excess cash" was
not defined in the Master Agreement leaving ambiguity as to how it was to be
calculated.

On 2 March 2020, the Company filed an application in the High Court to seek
clarity on the definition of "Excess Cash". Following the filing of the
statements of case for the trial, Astor applied to Court seeking an early
determination (without the need for a full trial) of the dispute in relation
to the "Excess Cash" (the "Summary Judgment application"). The Summary
Judgment application was heard on 14-15 June 2021. The Court dismissed Astor's
application meaning the proceedings would continue. The trial was heard from
21 February 2022 (the "Trial").

As at 31 December 2020, no consideration was paid to Astor. However, during
December 2020 the Board had discussions and considered an early payment of the
Deferred Consideration and the Loan Assignment provided certain conditions
could be met. Conditions included among others the execution of credit
facilities agreements to fund the payment.

In March 2021, the Company fulfilled all conditions required by the Board and
made the early payment of €53 million to Astor. The payment was fully funded
by unsecured credit facilities.

The payment of the Deferred Consideration did not end the ongoing litigation
as the issue as to whether any residual interest may or may not be payable
remained unresolved. On 15 July 2021, the Company transferred €15.4 million
to the Company's solicitors representing the full amount of interest claimed
by Astor (as at that date) to 30 June 2022. The Company's solicitors provided
an undertaking to Astor's solicitors to hold the full amount until settlement
of the claim to interest or judgment following the Trial. The Company
understood the monies held on client account by the Company's solicitors
safeguarded the maximum outstanding liability to Astor in relation to the
Master Agreement. On that basis, and because the Consideration has been paid
in full in accordance with the Master Agreement, the Company treated itself as
free of the obligations set out at clauses 6(g)(iv)(A) and 6(g)(iv)(B) in the
Master Agreement.

On 21 March 2022, further to the Trial which took place between 21 February
and 1 March 2022, Judgment was handed down. The Judgment deals with matters of
principle. It was left to the parties to calculate the amount of interest that
is payable on the basis of the Judge's conclusions. On 7 and 8 April 2022, the
Company made an initial payment of €9.6 million from the solicitors' client
account it had established in July 2021.

A consequential hearing was held on 6 May 2022 dealing with (i) the interest
calculation; and (ii) Atalaya's application for permission to appeal. As to
(i), again the Court decided certain matters of principle at the hearing and
gave directions as to the remaining issue to be resolved between the parties.
As to (ii), the Court denied Atalaya's application. Atalaya has a right to
apply for permission to appeal from the Court of Appeal.

The Company agreed a final payment amount of €1.1 million with Astor which
was paid on 16 May 2022 from its solicitors' client account. Subject to the
position on costs, the Company has now discharged its liability to Astor in
respect of 'Excess Cash' and associated interest under the Master Agreement.

 

8.    Corporate Social Responsibility

Atalaya and its wholly owned Fundación Atalaya Riotinto have continued its
efforts to develop initiatives to comply with its social responsibility during
the first quarter of the year.

The Foundation has finalised the classroom sessions of its second edition of
its training program for unemployed people from the local communities. The
course, also supported by Riotinto Mine main contractors is starting now its
practical programme, which includes four weeks of hands-on practice with
machinery and different abilities needed in industrial work environments.
Thanks to the collaboration of some of the company´s main contractors, it
will include some experience with blasting and hauling operations, which will
grant specific official qualifications to the participants. The precedent
program concluded satisfactorily with around half the participants now working
in different companies.

During the quarter, the Foundation has started the conversations with the
neighbouring municipalities to agree the principles of the specific projects
for the year, based on the new collaboration agreement that was signed with
all the surrounding towns. The agreement is aimed at providing with funds to
undertake collaboration initiatives addressing infrastructure, social and
environmental projects. In this regard, the Foundation has established
agreements with Riotinto Municipality, to build a child´s playground, to
acquire a new ambulance and construction machinery to be used in municipal
works. The Foundation has also agreed to fund various initiatives including
the sponsoring of Riotinto Balompie, the oldest football club in Spain, also
the local Golf Club, and an official running team. The Foundation is also
sponsoring a local carnival association and a running contest that will bring
many visitors to the area. In the cultural area, the Foundation has sponsored
the publication of a book which is a study on prehistoric copper mining, and
another one by a local journalist about historical protests in the mining
area.

 

9.    Health and Safety

The safety index in Q1 2022 has improved significantly compared to Q4 2021. At
31 March 2022 the frequency rate index was 4.22 and 0.02 for the severity
index, with two accidents with minor sick leave in this quarter. This change
in trend is marked by a period of 93 consecutive days without lost time
accidents and although these data are improving, we must continue to work on
prevention to reach "zero harm".

In the first quarter of 2022, the Field Leadership activity was fully
implemented and with compliance objectives already integrated into the
company's Management System.

Regarding the SAR Cov-2 global health crisis, the sixth wave was controlled in
January 2022 with close monitoring of close contacts through a strict protocol
of antigen and PCR tests, which prevented massive contagion and possible
effects on production. At the end of the quarter, thanks to the high
percentage of vaccination, it has been possible to relax the preventive
measures.

Finally, random checks at the entrances to prevent work under the influence of
psychoactive substances are operating normally.

 

10.   Environmental Management

During the first quarter of the year, no environmental incidents have been
recorded at the Proyecto Riotinto.

A total rainfall of 137.6 l/m(2) has been recorded, which is around 37% less
than the rainfall recorded in the same period of the previous year. The total
rainfall recorded for the water year (October 2021 to date) is 333.7 l/m(2)
(including April), which is 30% less than the rainfall recorded in the same
period of the previous water year.

The additional measures contemplated in the action plan against dust continued
to be implemented, intensifying periodic irrigation, implementing new
coordination measures and carrying out exhaustive monitoring of the emissions
generated in the operation.

Environmental inspections have continued to control the generation of waste,
storage of hazardous chemical products, as well as other aspects related to
order and cleanliness and good environmental practices. These inspections were
carried out on both Atalaya personnel and subcontracted companies. The results
of the inspections to contractors are transferred to the environmental ranking
in order to assess the effort to improve the environmental performance of the
companies operating in the PRT facilities. In February, a gift is given to the
contractor company that came first in 2021.

Training in environmental management continued for the organisation's
personnel, providing training for workers belonging to the maintenance and
plant departments. This training includes specific content by levels and
operational areas that make up the Proyecto Riotinto.

 

11.        Risk Factors

Due to the nature of Atalaya's business in the mining industry, the Group is
subject to various risks that could materially impact the future operating
results and could cause actual events to differ materially from those
described in forward-looking statements relating to Atalaya. Readers are
encouraged to read and consider the risk factors detailed in Atalaya's
audited, consolidated financial statements for the year ended 31 December
2021.

The Company continues to monitor the principal risks and uncertainties that
could materially impact the Company's results and operations, including the
areas of increasing uncertainty such as COVID-19, inflationary pressure on
goods and services required for the business and geopolitical developments in
Ukraine.

 

12.   Critical accounting policies, estimates, judgements, assumptions and
accounting changes

The preparation of Atalaya's Financial Statements in accordance with IFRS
requires management to make estimates, judgements and assumptions that affect
amounts reported in the Financial Statements and accompanying notes. There is
a full discussion and description of Atalaya's critical accounting policies in
the audited consolidated financial statements for the year ended 31 December
2021.

As at 31 March 2022, there are no significant changes in critical accounting
policies or estimates to those applied in 2022.

 

13.   Other Information

Additional information about Atalaya Mining Plc. is available at www.sedar.com
(http://www.sedar.com) and at www.atalayamining.com
(http://www.atalayamining.com)

 

Unaudited Interim Condensed Consolidated Financial Statements on pages 12 to
37.

 

 

By Order of the Board of Directors,

 

"Roger Davey"

 

___________________________________

Roger Davey

Chairman

Nicosia, 18 May 2022

 

 Interim Consolidated Income Statements

(All amounts in Euro thousands unless otherwise stated)

For the three months period ended 31 March 2022 and 2021 - (Unaudited)

                                                                                      Three months ended      Three

                                                                                      31 March 2022           months ended

                                                                                                              31 March 2021

 (Euro 000's)                                                                 Notes

 Revenue                                                                      4       86,251                   97,380
 Operating costs and mine site administrative expenses                                (54,611)                 (47,872)
 Mine site depreciation and amortization                                              (7,520)                  (8,944)
 Gross profit                                                                         24,120                   40,564
 Administration and other expenses                                                    (3,583)                  (1,573)
 Share-based benefits                                                         15      (178)                   (154)
 Care and maintenance expenditure                                                      (715)                   (218)
 Exploration expenses                                                                  (452)                   (120)
 Operating profit                                                                      19,192                  38,499
 Net foreign exchange gain                                                    3       2,573                    2,930
 Net finance costs                                                            5        (315)                   (82)
 Profit before tax                                                                    21,450                   41,347
 Tax                                                                          6        (3,193)                 (7,645)
 Profit for the period                                                                18,257                  33,702

 Profit for the period attributable to:
 -       Owners of the parent                                                 7        18,824                  33,858
 -       Non-controlling interests                                                     (567)                   (156)
                                                                                       18,257                  33,702
 Earnings per share from operations attributable to equity holders of the
 parent during the period:
 Basic earnings per share (EUR cents per share)                               7        13.5                    24.5
 Fully diluted earnings per share (EUR cents per share)                       7        13.2                    24.0

 Profit for the period
 Other comprehensive income:                                                          18,257                  33,702
 Change in fair value of financial assets through other comprehensive income
 'OCI'

                                                                                      -                        9
 Total comprehensive profit for the period                                            18,257                   33,711

 Total comprehensive profit for the period attributable to:
 -       Owners of the parent                                                 7        18,824                  33,867
 -       Non-controlling interests                                                     (567)                   (156)
                                                                                       18,257                  33,711

 

The notes on pages 16 to 37 are an integral part of these unaudited condensed
interim consolidated financial statements.

 Interim Consolidated Balance Sheet

(All amounts in Euro thousands unless otherwise stated)

 As at 31 March 2022 and 31 December 2021 - (Unaudited)

  (Euro 000's)                                       31 March 2022      31 December 2021

                                              Note
 Assets
 Non-current assets
 Property, plant and equipment                9      333,912            333,096
 Intangible assets                            10     56,639             57,368
 Trade and other receivables                  12     9,638              5,330
 Non-current financial assets                 12     1,101              1,101
 Deferred tax asset                                  5,503              5,564
                                                     406,793            402,459
 Current assets
 Inventories                                  11     37,809             24,781
 Trade and other receivables                  12     41,051             50,128
 Tax refundable                                      379                483
 Other financial assets                              38                 39
 Cash and cash equivalents                    13     128,458            107,517
                                                     207,735            182,948
 Total assets                                        614,528            585,407
 Equity and liabilities
 Equity attributable to owners of the parent
 Share capital                                14     13,594             13,447
 Share premium                                14     319,374            315,916
 Other reserves                               15     68,710             52,690
 Accumulated profits                                 61,752             58,754
                                                     463,430            440,807
 Non-controlling interests                           (5,476)            (4,909)
 Total equity                                        457,954            435,898

 Liabilities

 Non-current liabilities
 Trade and other payables                     16     3,450              3,450
 Provisions                                   17     26,705             26,578
 Leases                                       19     4,758              4,913
 Borrowings                                   18     34,050             34,050
                                                     68,963             68,991
 Current liabilities
 Trade and other payables                     16     75,849             66,191
 Leases                                       19     591                597
 Borrowings                                   18     7,572              13,394
 Current tax liabilities                             3,599              336
                                                     87,611             80,518
 Total liabilities                                   156,574            149,509
 Total equity and liabilities                        614,528            585,407

 

The notes on pages 16 to 37 are an integral part of these unaudited condensed
interim consolidated financial statements

 Interim Consolidated Statements of Changes in Equity

(All amounts in Euro thousands unless otherwise stated)

For the three months period ended 31 March 2022 and 2021 - (Unaudited)

                                                                                                   Other reserves  Accum.              Non-controlling interest

                                                              Share capital   Share premium((1))                   losses    Total                               Total equity

 (Euro 000's)                                          Note
 At 1 January 2021                                            13,439          315,714              40,049          (15,512)  353,690   (3,491)                   350,199
 Profit for the period                                        -               -                    -               33,858    33,858    (155)                     33,703
 Change in fair value of financial assets through OCI

                                                              -               -                    9               -         9         -                         9
 Total comprehensive income                                   -               -                    9               33,858    33,867    (155)                     33,712
 Transactions with owners
 Issuance of share capital                                    4               91                   -               -         95        -                         95
 Recognition of share-based payments                   15     -               -                    153             -         153       -                         153
 Recognition of depletion factor                       15     -               -                    6,100           (6,100)   -         -                         -
 Recognition of non-distributable reserve              15     -               -                    1,179           (1,179)   -         -                         -
 Recognition of distributable reserve                         -               -                    4,511           (4,511)   -         -                         -
 At 31 March 2021                                             13,443          315,805              52,001          6,556     387,805   (3,646)                   384,159
 Profit for the period                                        -               -                    -               99,786    99,786    (1,263)                   98,476
 Change in fair value of financial assets through OCI

                                                              -               -                    (56)            -         (56)      -                         (56)
 Total comprehensive income                                   -               -                    (56)            99,786    99,730    (1,263)                   98,467
 Transactions with owners
 Issuance of share capital                             14     4               111                  -               -         115       -                         115
 Recognition of share-based payments                   15     -               -                    746             -         746       -                         746
 Recognition of depletion factor                       15     -               -                    -               -         -         -                         -
 Recognition of non-distributable reserve              15     -               -                    1,193           (1,193)   -         -                         -
 Recognition of distributable reserve                  15     -               -                    (1,194)         1,194     -         -                         -
 Other changes in equity                                      -               -                    -               (299)     (299)     -                         (299)
 Interim dividends paid                                8      -               -                    -               (47,290)  (47,290)  -                         (47,290)
 At 31 December 2021/1 January 2022                           13,447          315,916              52,690          58,754    440,807   (4,909)                   435,898
 Profit for the period                                        -               -                    -               18,824    18,824    (567)                     18,257
 Change in fair value of financial assets through OCI

                                                              -               -                    -               -         -         -                         -
 Total comprehensive income                                   -               -                    -               18,824    18,824    (567)                     18,257
 Transactions with owners
 Issuance of share capital                             14     147             3,458                -               -         3,605     -                         3,605
 Recognition of share-based payments                   15     -               -                    178             -         178       -                         178
 Recognition of depletion factor                       15     -               -                    12,800          (12,800)  -         -                         -
 Recognition of non-distributable reserve              15     -               -                    316             (316)     -         -                         -
 Recognition of distributable reserve                  15     -               -                    2,726           (2,726)   -         -                         -
 Other changes in equity                                      -               -                    -               16        16        -                         16
 At 31 March 2021                                             13,594          319,374              68,710          61,752    463,430   (5,476)                   457,954

 

((1)) The share premium reserve is not available for distribution

 

 

The notes on pages 16 to 37 are an integral part of these unaudited condensed
interim consolidated financial statements.

 Interim Consolidated Statements of Cash Flows

(All amounts in Euro thousands unless otherwise stated)

 For the three months period ended 31 March 2022 and 2021 - (Unaudited)

                                                                                Three months ended  Three

                                                                                31 March            months ended

                                                                                2022                31 March

 (Euro 000's)                                                           Notes                       2021
 Cash flows from operating activities
 Profit before tax                                                              21,450              41,347
 Adjustments for:
 Depreciation of property, plant and equipment                          9       6,489               7,611
 Amortisation of intangibles                                            10      1,031               1,333
 Recognition of share-based payments                                    15      178                 154
 Interest income                                                        5       (1)                 -
 Interest expense                                                       5       238                 76
 Legal provisions                                                       17      -                   2,529
 Unwinding of discounting                                               17      73                  -
 Net foreign exchange differences                                       3       (2,573)             2,931
 Unrealised foreign exchange loss on financing activities                       44                  83
 Cash inflows from operating activities before working capital changes          26,929              50,202
 Changes in working capital:
 Inventories                                                            11      (13,028)            3,280
 Trade and other receivables                                            12      5,177               (8,954)
 Trade and other payables                                               16      9,660               (9,517)
 Cash flows from operations                                                     28,738              35,011
 Interest expense on lease liabilities                                  5       (5)                 (7)
 Interest paid                                                          5       (238)               (76)
 Tax paid                                                                       (197)               (1,056)
 Net cash from operating activities                                             28,298              36,803

 Cash flows from investing activities
 Purchase of property, plant and equipment                              9       (7,251)             (10,847)
 Purchase of intangible assets                                          10      (302)               (83)
 Payment of deferred consideration                                      20      -                   (53,000)
 Interest received                                                      5       1                   -
 Net cash used in investing activities                                          (7,552)             (63,930)

 Cash flows from financing activities
 Lease payments                                                         19      (160)               (161)
 Proceeds from borrowings                                               18      (5,822)             53,015
 Proceeds from issuance of shares                                       15      3,604               94
 Net cash flows from financing activities                                       (2,378)             (52,948)

 Net increase in cash and cash equivalents                                      18,368              22,890
 Net foreign exchange difference                                        3       2,573               2,931
 Cash and cash equivalents:
 At beginning of the period                                                     107,517             37,767
 At end of the period                                                           128,458             63,588

 

 

The notes on pages 16 to 37 are an integral part of these unaudited condensed
interim consolidated financial statements.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

(All amounts in Euro thousands unless otherwise stated)

For the three months period ended 31 March 2022 and 2021 - (Unaudited)

1.   Incorporation and Summary of Business

Country of incorporation

Atalaya Mining Plc (the "Company") was incorporated in Cyprus on 17 September
2004 as a private company with limited liability under the Companies Law, Cap.
113 and was converted to a public limited liability company on 26 January
2005. Its registered office is at 1 Lampousa Street, Nicosia, Cyprus.

The Company was listed on AIM of the London Stock Exchange in May 2005 under
the symbol ATYM and on the TSX on 20 December 2010 under the symbol AYM. The
Company continued to be listed on AIM and the TSX as at 31 March 2022.

Additional information about Atalaya Mining Plc is available at
www.atalayamining.com (http://www.atalayamining.com) as per requirement of AIM
rule 26.

Change of name and share consolidation

Following the Company's Extraordinary General Meeting ("EGM") on 13 October
2015, the change of name from EMED Mining Public Limited to Atalaya Mining Plc
became effective on 21 October 2015. On the same day, the consolidation of
ordinary shares came into effect, whereby all shareholders received one new
ordinary share of nominal value Stg £0.075 for every 30 existing ordinary
shares of nominal value Stg £0.0025.

Principal activities

Atalaya is a European mining and development company. The strategy is to
evaluate and prioritise metal production opportunities in several
jurisdictions throughout the well-known belts of base and precious metal
mineralisation in Spain, elsewhere in Europe and Latin America.

The Group currently controls four mining projects: Proyecto Riotinto, Proyecto
Touro, Proyecto Masa Valverde and Proyecto Ossa Morena. In addition, the Group
has an earn-in agreement to acquire three investigation permits at Proyecto
Riotinto Este.

Proyecto Riotinto

The Company owns and operates through a wholly owned subsidiary, "Proyecto
Riotinto", an open-pit copper mine located in the Iberian Pyrite Belt, in the
Andalusia region of Spain, approximately 65 km northwest of Seville. A
brownfield expansion of this mine was completed in 2019 and successfully
commissioned by Q1 2020.

Proyecto Touro

The Group has an initial 10% stake in Cobre San Rafael, S.L., the owner of
Proyecto Touro, as part of an earn-in agreement which will enable the Group to
acquire up to 80% of the copper project. Proyecto Touro is located in Galicia,
north-west Spain. Proyecto Touro is currently in the permitting process.

In November 2019, Atalaya executed the option to acquire 12.5% of
Explotaciones Gallegas del Cobre, S.L. the exploration property around Touro,
with known additional reserves, which will provide high potential to the
Proyecto Touro.

Proyecto Masa Valverde

On 21 October 2020, the Company announced that it entered into a definitive
purchase agreement to acquire 100% of the shares of Cambridge Mineria España,
S.L. (since renamed Atalaya Masa Valverde, S.L.U.), a Spanish company which
fully owns the Masa Valverde polymetallic project located in Huelva (Spain).
Proyecto Masa Valverde is currently in the permitting process.

Proyecto Riotinto Este

In December 2020, Atalaya entered into a Memorandum of Understanding with a
local private Spanish company to acquire a 100% beneficial interest in three
investigation permits (known as Peñas Blancas, Cerro Negro and Herreros
investigation permits), which cover approximately 12,368 hectares and are
located immediately east of Proyecto Riotinto.

Proyecto Ossa Morena

In December 2021, Atalaya announced the acquisition of a 51% interest in Rio
Narcea Nickel, S.L., which owns 17 investigation permits. The acquisition also
provided a 100% interest in three investigation permits that are also located
along the Ossa- Morena Metallogenic Belt.

2.  Basis of Preparation and Accounting Policies

2.1 Basis of preparation

(a)           Overview

These condensed interim financial statements are unaudited.

The unaudited interim condensed consolidated financial statements for the
period ended 31 March 2022 have been prepared in accordance with International
Accounting Standards 34: Interim Financial Reporting. IFRS comprise the
standard issued by the International Accounting Standard Board ("IASB"), and
IFRS Interpretations Committee ("IFRICs") as issued by the IASB. Additionally,
the unaudited interim condensed consolidated financial statements have also
been prepared in accordance with the IFRS as adopted by the European Union
(EU), using the historical cost convention.

These unaudited interim condensed consolidated financial statements include
the financial statements of the Company and its subsidiary undertakings. They
have been prepared using accounting bases and policies consistent with those
used in the preparation of the consolidated financial statements of the
Company and the Group for the year ended 31 December 2021. These unaudited
interim condensed consolidated financial statements do not include all the
disclosures required for annual financial statements, and accordingly, should
be read in conjunction with the consolidated financial statements and other
information set out in the Group's annual report for the year ended 31
December 2021. The accounting policies are unchanged from those disclosed in
the annual consolidated financial statements for the year ended 31 December
2021.

(b)           Going concern

These unaudited condensed interim consolidated financial statements have been
prepared based on accounting principles applicable to a going concern which
assumes that the Group will realise its assets and discharge its liabilities
in the normal course of business. Management has carried out an assessment of
the going concern assumption and has concluded that the Group will generate
sufficient cash and cash equivalents to continue operating for the next twelve
months.

Management continues to monitor the impact of COVID 19 as well as geopolitical
developments. Currently no significant impact is expected in the operations of
the Group.

2.2 New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the unaudited condensed
interim consolidated financial statements are consistent with those followed
in the preparation of the Group's annual consolidated financial statements for
the year ended 31 December 2021, except for the adoption of new standards
effective as of 1 January 2022. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.

Several amendments and interpretations apply for the first time in 2022, but
do not have a material impact on the unaudited condensed interim consolidated
financial statements of the Group.

Reference to the Conceptual Framework - Amendments to IFRS 3

The amendments replace a reference to a previous version of the IASB's
Conceptual Framework with a reference to the current version issued in March
2018 without significantly changing its requirements.

The amendments add an exception to the recognition principle of IFRS 3
Business Combinations to avoid the issue of potential 'day 2' gains or losses
arising for liabilities and contingent liabilities that would be within the
scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets or
IFRIC 21 Levies, if incurred separately. The exception requires entities to
apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the
Conceptual Framework, to determine whether a present obligation exists at the
acquisition date.

The amendments also add a new paragraph to IFRS 3 to clarify that contingent
assets do not qualify for recognition at the acquisition date. These
amendments had no impact on the interim condensed consolidated financial
statements of the Group as there were no contingent assets, liabilities and
contingent liabilities within the scope of these amendments arisen during the
period.

 

2.  Basis of Preparation and Accounting Policies (cont.)

2.2 New standards, interpretations and amendments adopted by the Group (cont.)

 

Property, Plant and Equipment: Proceeds before Intended Use - Amendments to
IAS 16

The amendment prohibits entities from deducting from the cost of an item of
property, plant and equipment, any proceeds of the sale of items produced
while bringing that asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Instead, an entity
recognises the proceeds from selling such items, and the costs of producing
those items, in profit or loss.

These amendments had no impact on the interim condensed consolidated financial
statements of the Group as there were no sales of such items produced by
property, plant and equipment made available for use on or after the beginning
of the earliest period presented.

IFRS 1 First-time Adoption of International Financial Reporting Standards -
Subsidiary as a first-time adopter

The amendment permits a subsidiary that elects to apply paragraph D16(a) of
IFRS 1 to measure cumulative translation differences using the amounts
reported in the parent's consolidated financial statements, based on the
parent's date of transition to IFRS, if no adjustments were made for
consolidation procedures and for the effects of the business combination in
which the parent acquired the subsidiary. This amendment is also applied to an
associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.

These amendments had no impact on the interim condensed consolidated financial
statements of the Group as it is not a first-time adopter.

 

IFRS 9 Financial Instruments - Fees in the '10 per cent' test for
derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing
whether the terms of a new or modified financial liability are substantially
different from the terms of the original financial liability. These fees
include only those paid or received between the borrower and the lender,
including fees paid or received by either the borrower or lender on the
other's behalf. There is no similar amendment proposed for IAS 39 Financial
Instruments: Recognition and Measurement.  These amendments had no impact on
the interim condensed consolidated financial statements of the Group as there
were no modifications of the Group's financial instruments during the period.

 

2.3 Fair value estimation

The fair values of the Group's financial assets and liabilities approximate
their carrying amounts at the reporting date.

The fair value of financial instruments traded in active markets, such as
publicly traded trading and other financial assets is based on quoted market
prices at the reporting date. The quoted market price used for financial
assets held by the Group is the current bid price. The appropriate quoted
market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. The group uses a variety
of methods, such as estimated discounted cash flows, and makes assumptions
that are based on market conditions existing at the reporting date.

 

2.  Basis of Preparation and Accounting Policies (cont.)

2.3 Fair value estimation (cont.)

Fair value measurements recognised in the consolidated statement of financial
position

The following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, Grouped into Levels
1 to 3 based on the degree to which the fair value is observable.

·      Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or liabilities.

·      Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).

·      Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).

 

 

 Financial assets
 (Euro 000's)                                  Level 1  Level 2  Level 3      Total
 31 March 2022
 Other financial assets
 Financial assets at FV through OCI            38       -        1,101        1,139
 Trade and other receivables
 Receivables (subject to provisional pricing)  -        11,669   -            11,669
 Total                                         38       11,669   1,101        12,808
 31 December 2021
 Other financial assets
 Financial assets at FV through OCI            39       -        1,101        1,140
 Trade and other receivables
 Receivables (subject to provisional pricing)  -        29,148   -            29,148
 Total                                         39       29,148   1,101        30,288

 

 

2.4 Critical accounting estimates and judgements

The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities at the date of the unaudited
condensed interim consolidated financial statements. Estimates and assumptions
are continually evaluated and are based on management's experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. Uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods.

Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate
of the amount can be made. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time
is recognised as a finance cost.

A full analysis of critical accounting estimates and judgements is set out in
Note 3.3 of the 2021 audited consolidated financial statements.

 

3.  Business and Geographical Segments

Business segments

The Group has only one distinct business segment, being that of mining
operations, which include mineral exploration and development.

Copper concentrates produced by the Group are sold to three off-takers as per
the relevant offtake agreement (Note 22.3). in addition, the Group has spot
agreements for the concentrates not committed to off-takers.

Geographical segments

The Group's mining activities are located in Spain. The commercialisation of
the copper concentrates produced in Spain is carried out through Cyprus. Sales
transactions to related parties are on an arm's length basis in a similar
manner to transactions with third parties. Accounting policies used by the
Group in different locations are the same as those contained in Note 2.

 

                                                                               Cyprus    Spain          Other       Total

 (Euro 000's)
 Three months ended 31 March 2022
 Revenue                                                                       11,830    74,421         -           86,251
 Earnings/(loss) Before Interest, Tax, Depreciation and Amortisation (EBITDA)  8,967     17,752         (7)         26,712
 Depreciation/amortisation charge                                              -         (7,520)        -           (7,520)
 Net foreign exchange gain                                                     1,170     1,403          -           2,573
 Finance income                                                                -         1              -           1
 Finance cost                                                                  -         (316)          -           (316)
 Profit/(loss) before tax                                                      10,137    11,320         (7)         21,450
 Tax                                                                           (1,024)   (2,169)        -           (3,193)
 Profit for the period                                                          9,113     9,151          (7)        18,257

 Total assets                                                                  81,725    531,625        1,178       614,528
 Total liabilities                                                             (2,617)   (153,949)      (8)         (156,574)
 Depreciation of property, plant and equipment                                 -         6,489          -           6,489
 Amortisation of intangible assets                                             -         1,031          -           1,031
 Total additions of non-current assets                                         -         18,876         -           18,876

 Three months ended 31 March 2021
 Revenue                                                                       14,954    82,426                     97,380
 Earnings/(loss) Before Interest, Tax, Depreciation and Amortisation (EBITDA)   12,590    34,869         (16)       47,443
 Depreciation/amortisation charge                                              -         (8,944)        -           (8,944)
 Net foreign exchange gain                                                     555       2,374          2           2,931
 Finance cost                                                                  -         (83)           -           (83)
 Profit/(loss) before tax                                                      13,145    28,216         (14)        41,347
 Tax                                                                           -         (7,645)        -           (7,645)
 Profit for the period                                                                                              33,702

 Total assets                                                                  79,788    457,544        1,158        538,490
 Total liabilities                                                             (1,517)   (152,778)      (36)        (154,331)
 Depreciation of property, plant and equipment                                 -         7,611          -            7,611
 Amortisation of intangible assets                                             -         1,333          -            1,333
 Total additions of non-current assets                                         -                17,588  -           17,588

 

 

4. Revenues

                                                                      Three months ended               31 March 2022                Three months ended

                                                                                                                                    31 March 2021

 (Euro 000's)
 Revenue from contracts with customers ((1))                          81,769                                                                    92,700
 Fair value gains relating to provisional pricing within sales ((2))  4,482                                                                     4,680
 Total revenue                                                        86,251                                                                    97,380

 

All revenue from copper concentrate is recognised at a point in time when the
control of the product is transferred. Revenue from freight services is
recognised over time as the services are provided.

((1)      ) Included within Q1 2022 revenue, there is a transaction
price of €1.4 million (€0.3 million in Q1 2021) related to the freight
services provided by the Group to the customers arising from the sales of
copper concentrate under CIF incoterm.

((2)      ) Provisional pricing impact represented the change in fair
value of the embedded derivative arising on sales of concentrate.

 

5. Net Finance Costs

                                           Three months ended               31 March 2022                    Three

                                                                                                             months ended

 (Euro 000's)                                                                                                31 March 2021
 Interest expense:
 Other interest                            (238)                                                             (76)
 Unwinding of discount on mine rehab prov  (73)                                                              -
 Interest expense on lease liabilities     (5)                                                               (7)
 Interest income                           1                                                                 -
                                           (315)                                                             (83)

 

6. Tax

The Group calculates the period income tax expense using the tax rate that
would be applicable to the expected total annual earnings. The major
components of income tax expense in the unaudited interim condensed
consolidated statement of profit or loss are:

 

                                                                Three months ended               31 March 2022                Three months ended               31 March 2021

 (Euro 000's)
 Income taxes
 Current income tax expense                                     3,193                                                         7,645
 Income tax expense recognised in statement of profit and loss  3,193                                                         7,645

 

 

7. Earnings per share

The calculation of the basic and fully diluted profit per share attributable
to the ordinary equity holders of the Company is based on the following data:

                                                                                Three months ended               31 March 2022                    Three months ended

                                                                                                                                                  31 March 2021

 (Euro 000's)
 Parent company                                                                 (734)                                                             (368)
 Subsidiaries                                                                   19,558                                                            34,226
 Profit attributable to equity holders of the parent                            18,824                                                            33,858

 Weighted number of ordinary shares for the purposes of basic earnings per
 share (000's)

                                                                                139,407                                                           138,163
 Basic profit per share (EUR cents/share)                                       13.5                                                              24.5

 Weighted number of ordinary shares for the purposes of fully diluted earnings
 per share (000's)

                                                                                142,163                                                           140,928
 Fully diluted profit per share (EUR cents/share)                               13.2                                                              24.0

As at 31 March 2022, there are nil warrants (Note 14) and 2,341,000 options
(Note 15) (31 March 2021: nil warrants and 2,746,250 options). Warrants and
options are included when calculating the weighted average number of shares
for the period.

8. Dividends paid

Cash dividends declared and paid during the period:

 

 (Euro 000's)                                                      31 Mar 2022      31 Mar 2021
 Dividend                                                          -                -
 Total cash dividends paid in the period to ordinary shareholders  -                -

Fully paid ordinary shares carry one vote per share and carry the right to
dividends.

Dividend Policy

On 27 October 2021, Atalaya initiated a sustainable dividend policy that will
allow for continued investments in its portfolio of low capital intensity
growth projects, such as the San Dionisio deposit, Proyecto Masa Valverde,
Proyecto Ossa Morena and Proyecto Touro. The approved a Dividend Policy will
set out an annual pay-out of between 30% and 50% of free cash flow generated
during the applicable financial year.

The declaration and payment of all future dividends under the new policy are
subject to approval by the Board of Directors.

An inaugural dividend of US$0.395 per share was declared on 27 October 2021,
and paid on 1 December 2021, totalling €47.3 million.

 

9. Property, Plant and Equipment

                               Land and buildings                              Plant and machinery  Assets under construction((3))                               Other assets((1))  Total

                                                   Right of use assets ((5))                                                        Deferred mining costs((2))

 (Euro 000's)
 Cost
 At 1 January 2021             64,034              6,569                       268,051              15,828                          41,868                       801                397,151
 Additions                     43                  -                           1,621                4,990                           4,236                        -                  10,890
 Reclassifications             -                   -                           587                  (587)                           -                            -                  -
 At 31 March 2021              64,077              6,569                       270,259              20,231                          46,104                       801                408,041
 Additions                     227                 507                         320                  15,396                          5,563                        -                  22,013
 Increase in rehab. Provision

                               655                 -                           -                    -                               -                            -                  655
 Reclassifications             -                   -                           12,767               (12,767)                        -                            -                  -
 Advances                      44                  -                           -                    -                               -                            -                  44
 At 31 December 2021           65,003              7,076                       283,346              22,860                          51,667                       801                430,753
 Additions                     2,383((4))          -                           244                  3,950                           671                          -                  7,248
 Reclassifications             -                   -                           2,376                (2,376)                         -                            -                  -
 Increase in rehab. Provision

                               54                  -                           -                    -                               -                            -                  54
 Advances                      3
 At 31 March 2022              67,443              7,076                       286,326              24,074                          52,338                       801                438,058

 Depreciation
 At 1 January 2021             11,671              956                         48,134               -                               8,528                        688                69,977
 Charge for the period         1,176               148                         5,552                -                               728                          7                  7,611
 At 31 March 2021              12,847              1,104                       53,686               -                               9,256                        695                77,588
 Charge for the period         3,719               442                         14,305               -                               2,124                        19                 20,069
 At 31 December 2021           16,026              1,546                       67,991               -                               11,380                       714                97,657
 Charge for the period         1,001               140                         4,466                -                               875                          7                  6,489
 At 31 March 2022              17,027              1,686                       72,457               -                               12,255                       721                104,146

 Net book value
 At 31 March 2022              50,416              5,390                       213,869              24,074                          40,083                       80                 333,912
 At 31 December 2021           48,977              5,530                       215,355              22,860                          40,287                       87                 333,096

( )

((1)) Includes motor vehicles, furniture, fixtures and office equipment which
are depreciated over 5-10 years.

((2)) Stripping costs

((3)) Assets under construction at 31 March 2022 were €24.1 million (2021:
€20.2 million) which include sustaining capital expenditures and tailings
dams project.

((4)) Increase in lands related with the acquisition of lands surround
Riotinto District.

((5)) See leases in Note 19.

The above fixed assets are mostly located in Spain.

10. Intangible Assets

                        Permits

 (Euro 000's)                       Licences, R&D and software           Total
 Cost
 At 1 January 2021      78,210      8,595                                86,805
 Additions              -           83                                   83
 At 31 March 2021       78,210      8,678                                86,888
 Additions              2,148((1))  (83)                                 2,065
 At 31 December 2021    80,358      8,595                                88,953
 Additions              302         -                                    302
 At 31 March 2022       80,660      8,595                                89,255
 Amortisation
 On 1 January 2021      18,683      8,306                                26,989
 Charge for the period  1,316       17                                   1,333
 At 31 March 2021       19,999      8,323                                28,322
 Charge for the period  3,215       48                                   3,263
 At 31 December 2021    23,214      8,371                                31,585
 Charge for the period  1,015       16                                   1,031
 At 31 March 2022       24,229      8,387                                32,616
 Net book value
 At 31 March 2022       56,431      208                                  56,639
 At 31 December 2021    57,144      224                                  57,368

 

(1)    Additions of Q1 2021 resulted from the acquisition of 51% of Rio
Narcea Nickel SL

The ultimate recovery of balances carried forward in relation to areas of
interest or all such assets including intangibles is dependent on successful
development, and commercial exploitation, or alternatively the sale of the
respective areas.

The Group conducts impairment testing on an annual basis unless indicators of
impairment are not present at the reporting date. In considering the carrying
value of the assets at Proyecto Riotinto, including the intangible assets and
any impairment thereof, the Group assessed that no indicators were present as
at 31 March 2022 and thus no impairment has been recognised.

 

11. Inventories

 (Euro 000's)            31 Mar 2022      31 Dec 2021
 Finished products       14,618           5,185
 Materials and supplies  20,785           18,216
 Work in progress        2,406            1,380
                         37,809           24,781

As of 31 March 2022, copper concentrate produced and not sold amounted to
9,904 tonnes (31 Dec 2021: 5,254 tonnes). Inventory for copper concentrate is
valued at cost and was €14.6 million as at 31 March 2022 (31 Dec 2021:
€5.2 million).

Materials and supplies relate mainly to machinery spare parts. Work in
progress represents ore stockpiles, which is ore that has been extracted and
is available for further processing.

 

12. Trade and Other Receivables

 (Euro 000's)                                                                31 Mar 2022      31 Dec 2021
 Non-current
 Deposits                                                                    304              303
 Loans                                                                       6,639            2,332
 Other non-current receivables - long term deposits                          2,695            2,695
                                                                             9,638            5,330
 Current
 Trade receivables at fair value - subject to provisional pricing            11,669           8,865
 Trade receivables from shareholders at fair value - subject to provisional
 pricing (Note 22.3)

                                                                             -                20,283
 Other receivables from related parties at amortised cost (Note 22.3)        56               56
 Deposits                                                                    21               21
 VAT receivable                                                              23,077           17,300
 Tax advances                                                                9                -
 Prepayments                                                                 4,280            3,303
 Other current assets                                                        1,939            300
                                                                             41,051           50,128
 Allowance for expected credit losses                                        -                -
 Total current trade and other receivables                                   50,689           55,458

 

Trade receivables are shown net of any interest applied to prepayments.
Payment terms are aligned with offtake agreements and market standards and
generally are 7 days on 90% of the invoice and the remaining 10% at the
settlement date which can vary between 1 to 5 months. The fair values of trade
and other receivables approximate to their book values.

Non-current deposits included €250k (€250k at 31 December 2021) as a
collateral for bank guarantees, which was recorded as restricted cash (or
deposit). Restricted cash related to the collateral was reclassified to
noncurrent trade and other receivables since the deposit is considered to be
long term.

 

Loans are related to an agreement entered by the Group and Lain Technologies
Ltd in relation to the construction of the pilot plan to develop the E-LIX
System. The Loan is secured with the pilot plant, has a grace period of up to
four years and repayment terms depending on future investments on the system.
Amounts withdrawn bears interest at 2%

 

13. Cash and cash equivalents

 

 (Euro 000's)                                                              31 Mar 2022                   31 Dec 2021

 Unrestricted cash and cash equivalents at Group level                     69,985                        48,375
 Unrestricted cash and cash equivalents at Operation level                 43,053                        43,722
 Restricted cash and cash equivalents at Operation level                   15,420                        15,420
 Consolidated cash and cash equivalents                                                         128,458  107,517

 

 

13. Cash and cash equivalents (cont.)

As at 31 March 2022, the Group's operating subsidiary held Restricted cash of
€15.4 million for paying interest to Astor under the Master Agreement.
Following the hearing of 6 May 2022, the Company has transferred a total
amount of €10.7 million. The majority of the balance (less £280,000) will
revert to the Company and will be classified as unrestricted cash. See more
details in Deferred Consideration note 20.

 

Cash and cash equivalents denominated in the following currencies:

 (Euro 000's)                                 31 Mar 2022      31 Dec 2021
 Euro - functional and presentation currency  38,155           30,145
 Great Britain Pound                          2,903            36
 United States Dollar                         87,400           77,336
                                              128,458          107,517

 

14. Share Capital and Share Premium

                                           Shares      Share Capital       Share premium   Total

                                           000's       Stg£'000            Stg£'000        Stg£'000
 Authorised
 Ordinary shares of Stg £0.075 each*       200,000     15,000              -               15,000

 

         Issued and fully paid

                                                                               000's            Euro 000's        Euro 000's   Euro 000's
 Issue Date        Price (£)   Details
         31 December 2020/1 January 2021                                       138,141                13,439      315,714                329,153
 12 Feb 2021       2.015       Exercised share options ((a))                        41          4                 91                           95
    Balance at 31 March 2021                                                        138,182     13,443            315,805                      329,248
 18 May 2021       2.015       Exercised share options((b))                         20          1                 45                           46
 18 May 2021       1.475       Exercised share options((b))                         10          1                 15                           16
 15 Dec 2021       1.475       Exercised share options((c))                         9           2                 43                           45
 15 Dec 2021       2.015       Exercised share options((c))                         15          -                 8                            8
 31 December 2021/1 January 2022                                                    138,236     13,447            315,916                      329,363
 22 Jan 2022       1.440       Exercised share options((d))                    314        28                512                     540
 22 Jan 2022       2.015       Exercised share options((d))                    321        29                746                     775
 22 Jan 2022       2.045       Exercised share options((d))                    400        36                941                     977
 22 Jan 2022       1.475       Exercised share options((d))                    451        42                754                     796
 22 Jan 2022       3.090       Exercised share options((d))                    134        12                505                     517
 31 March 2022                                                                      139,857     13,594            319,374                      332,968

14. Share Capital and Share Premium (cont.)

Authorised capital

The Company's authorised share capital is 200,000,000 ordinary shares of Stg
£0.075 each.

Issued capital

2022

(a)   On 26 January 2022, the Company announced that is was notified that
PDMRs exercised a total of 1,300,000 options. Further details (including
details of sales of shares following the exercise of options) are given in
Note 25.

2021

(b)   On 12 February 2021, the Company was notified that certain employees
exercised options over 40,750 ordinary shares of £0.075 at a price of
£2.015, thus creating a share premium of €91k.

(c)   On 18 May 2021, the Company was notified that certain employees
exercised options over 30,000 ordinary shares of £0.075 at a price between
£1.475 and £2.015, thus creating a share premium of €61k.

(d)   On 15 December 2021, the Company was notified that certain employees
exercised options over 24,500 ordinary shares of £0.075 at a price between
£1.475 and £2.015, thus creating a share premium of €50k.

 

Warrants

As at 31 March 2022 and 2021, there were no warrants.

 

15. Other Reserves

                                                                     Share option  Bonus share

                                                                                                                        Fair value reserve of financial assets at FVOCI ((2))                                                                      Total

 (Euro 000's)                                                                                                                                                                   Non-Distributable reserve((3))

                                                                                                                                                                                                                 Distributable reserve((4))

                                                                                                Depletion factor((1))
 At 1 January 2021                                                   8,187         208          25,033                  (1,100)                                                 5,628                            2,093                             40,049
 Recognition of depletion factor                                     -             -            6,100                   -                                                       -                                -                                 6,100
 Recognition of non-distributable reserve                            -             -            -                       -                                                       1,179                            -                                 1,179
 Recognition of distributable reserve                                -             -            -                       -                                                       -                                4,510                             4,510

 Recognition of share based payments

                                                                     154           -            -                       -                                                       -                                -                                 154
 Change in fair value of financial assets at fair value through OCI

                                                                     -             -            -                       9                                                       -                                -                                 9
 At 31 March 2021                                                    8,341         208          31,133                  (1,091)                                                 6,807                            6,603                             52,001
 Recognition of depletion factor

                                                                     -             -            (6,155)                 -                                                       -                                -                                 6,155
 Recognition of share based payments

                                                                     745           -            -                       -                                                       -                                -                                 745
 Change in fair value of financial assets at fair value through OCI

                                                                     -             -            -                       (56)                                                    -                                -                                 (56)
 Recognition of non-distributable reserve

                                                                     -             -            -                       -                                                       1,193                                                         -    1,193
 Recognition of distributable reserve                                -             -            -                       -                                                       -                                4,962                             4,962
 At 31 December 2021                                                 9,086         208          24,978                  (1,147)                                                 8,000                            11,565                            52,690
 Recognition of share based payments

                                                                     178           -            -                       -                                                       -                                -                                 178
 Recognition of depletion factor

                                                                     -             -            12,800                  -                                                       -                                -                                 12,800
 Recognition of non-distributable reserve

                                                                     -             -            -                       -                                                       316                              -                                 316
 Recognition of distributable reserve

                                                                     -             -            -                       -                                                       -                                2,726                             2,726
 Change in fair value of financial assets at fair value through OCI

                                                                     -             -            -                       -                                                       -                                -                                 -
 At 31 March 2021                                                    9,264         208          37,778                  (1,147)                                                 8,316                            14,291                            68,710

 

((1)       ) Depletion factor reserve

At 31 March 2022, the Group has recognised €12.8 million (disposed €6.2
million at 31 March 2021) as a depletion factor reserve in order to fulfil
with the Spanish Corporate Tax Act.

((2)       ) Fair value reserve of financial assets at FVOCI

The Group has elected to recognise changes in the fair value of certain
investments in equity securities in OCI, as explained in (1) above. These
changes are accumulated within the FVOCI reserve within equity. The Group
transfers amounts from this reserve to retained earnings when the relevant
equity securities are derecognised.

((3)       ) Non-distributable reserve

To comply with Spanish Law, the Group needed to record a reserve when profit
generated equal to a 10% of profit/(loss) for the year until 20% of share
capital is reached.

((4)       ) Distributable reserve

The Group reclassified 10% of the profit of 2021 to distributable reserves.

15. Other Reserves (cont.)

In general terms, share option agreements contain provisions adjusting the
exercise price in certain circumstances including the allotment of fully paid
ordinary shares by way of a capitalisation of the Company's reserves, a
subdivision or consolidation of the ordinary shares, a reduction of share
capital and offers or invitations (whether by way of rights issue or
otherwise) to the holders of ordinary shares.

Details of share options outstanding as at 31 March 2022:

 

 Grant date             Expiry date                           Exercise price £       Share options
 29 May 2019            28-May-2024                           2.015                  666,500
 30 June 2020           29 June 2030                          1.475                  538,500
 24 June 2021           23 June 2031                          3.090                  1,016,000
 26 January 2022        25 January 2032                       4.160                  120,000
 Total                                                                               2,341,000

                                                  Weighted average        Share options

                                                  exercise price £
           At 1 January 2022                      2.154                   3,841,750
 Granted options during the year                  4.160                   120,000
           Options executed during the year       2.015                   (1,620,750)
           31 March 2022                          2.467                   2,341,000

 

 

16. Trade and Other Payables

 (Euro 000's)               31 Mar 2022      31 Dec 2021
 Non-current
 Other noncurrent payables  3,435            3,435
 Government grant           15               15
                            3,450            3,450
 Current
 Trade payables             59,745           49,712
 Accruals                   15,907           16,267
 VAT payable                61               74
 Other                      136              138
                            75,849           66,191

 

 

Other non-current payables are related with the acquisition of Atalaya Masa
Valverde, SLU formerly Cambridge Minería España, SL and Rio Narcea Nickel,
SL

Trade payables are mainly for the acquisition of materials, supplies and other
services. These payables do not accrue interest and no guarantees have been
granted. The fair value of trade and other payables approximate their book
values.

Accruals included an interest payable amounted to €11.7 million for the
Group representing the interest calculation proposed by Astor.

Trade payables are non-interest-bearing and are normally settled on 60-day
terms.

17. Provisions

                                      Rehabilitation costs

 (Euro 000's)           Legal costs                             Total costs
 1 January 2021         626           24,638                    25,264
 Additions              2,617         43                        2,660
 Reversal of provision  (88)          -                         (88)
 At 31 March 2021       3,155         24,681                    27,836
 Additions              -             612                       278
 Used of provision      (286)         -                         (286)
 Revision of provision  (2,590)       (57)                      (2,647)
 Finance cost           -             1,063                     1,063
 At 31 December 2021    279           26,299                    26,578
 Additions              -             -                         -
 Revision of provision  -             54                        54
 Finance costs          -             73                        73
 At 31 March 2022       279           26,426                    26,705

 

 (Euro 000's)  31 Mar 2022    31 Dec 2021
 Non-current   26,705         27,836
 Total         26,705         27,836

Rehabilitation provision

Rehabilitation provision represents the accrued cost required to provide
adequate restoration and rehabilitation upon the completion of production
activities. These amounts will be settled when rehabilitation is undertaken,
generally over the project's life.

The discount rate used in the calculation of the net present value of the
liability as at 31 March 2022 was 1.12% (2021: 1.36%), which is the average of
the 15-year Spain Government Bond rate from 2017 to 2021. An inflation rate of
1%-1.96% is applied on annual basis.

Legal provision

The Group has been named a defendant in several legal actions in Spain, the
outcome of which is not determinable as at 31 March 2022. Management has
individually reviewed each case and made a provision of €nil (€2.6 million
at 31 Mar 2021) for these claims, which has been reflected in these unaudited
condensed interim consolidated financial statements.

 

18. Borrowings

 (Euro 000's)            31 Mar 2022      31 Dec 2021
 Non-current borrowings
 Credit facilities       34,050           34,050
                         34,050           34,050
 Current borrowings
 Credit facilities       7,572            13,394
                         7,572            13,394

 

The Group had uncommitted credit facilities risks totalling €98.8 million.
During 2022, Atalaya drawn down some of its existing credit facilities to pay
the Deferred Consideration (Note 20). Interest rates of existing credit
facilities, including facilities used to pay the Deferred Consideration, range
from 1.60% to 2.45% and the average interest rate on all facilities used and
unused is 1.79%. The maximum term of the facilities is three years. All
borrowings are unsecured.

At 31 March 2022, the Group had used €41.6 million of its facilities and had
undrawn facilities of €57.2 million.

19. Lease liabilities

 (Euro 000's)  31 Mar 2022      31 Dec 2021
 Non-current
 Leases        4,758            4,913
               4,758            4,913
 Current
 Leases        591              597
               591              597

Finance leases

The Group entered into lease arrangements for the renting of land and
building, laboratory equipment and vehicles which are subject to the adoption
of all requirements of IFRS 16 Leases. The Group has elected not to recognise
right-of-use assets and lease liabilities for short-term leases that have a
lease term of 12 months or less and leases of low-value assets. Depreciation
expense regarding leases amount to €0.1 million (Q1 2021: €0.3million) for
the three month period ended 31 March 2022. The duration of the land and
building lease is for a period of twelve years. Payments are due at the
beginning of the month escalating annually on average by 1.5%. At 31 March
2022, the remaining term of this lease is eleven and half years.

The duration of the motor vehicle and laboratory equipment lease is for a
period of four years, payments are due at the beginning of the month
escalating annually on average by 1.5%. At 31 March 2022, the remaining term
of this motor vehicle and laboratory equipment lease is nine months and one
and half years respectively.

 

 (Euro 000's)                                 31 Mar 2022  31 Dec 2021
 Minimum lease payments due:
 -       Within one year                      591          597
 -       Two to five years                    1,990        2,014
 -       Over five years                      2,779        2,899
 Present value of minimum lease payments due  5,360        5,510

 

 (Euro 000's)                           Lease liability
 Balance 1 January 2022                 5,510
 Additions                              -
 Interest expense                       5
 Lease payments                         (155)
 Balance at 31 March 2022               5,360

 Balance at 31 March 2022
 -       Non-current liabilities        4,769
 -       Current liabilities            591
                                        5,360

 

 

20. Deferred Consideration

In September 2008, the Group moved to 100% ownership of Atalaya Riotinto
Mineral S.L. ("ARM") (and thus full ownership of Proyecto Riotinto) by
acquiring the remaining 49% of the issued capital of ARM. At the time of the
acquisition, the Group signed a Master Agreement (the "Master Agreement") with
Astor Management AG ("Astor") which included a deferred consideration of
€43.9 million (the "Deferred Consideration") payable as consideration in
respect of the acquisition among other items. The Company also entered into a
credit assignment agreement at the same time with a related company of Astor,
Shorthorn AG, pursuant to which the benefit of outstanding loans was assigned
to the Company in consideration for the payment of €9.1 million to Shorthorn
(the "Loan Assignment").

The Master Agreement was the subject of litigation in the High Court and the
Court of Appeal that concluded in November 2018.  As a consequence, ARM was
obliged to any excess cash (after payment of operating expenses, sustaining
capital expenditure, any senior debt service requirements and up to US$10
million per annum (for non-Proyecto Riotinto related expenses)) to pay the
consideration due to Astor (including the Deferred Consideration and the
amount of €9.1 million payable under the Loan Assignment). "Excess cash" was
not defined in the Master Agreement leaving ambiguity as to how it was to be
calculated.

On 2 March 2020, the Company filed an application in the High Court to seek
clarity on the definition of "Excess Cash". Following the filing of the
statements of case for the trial, Astor applied to Court seeking an early
determination (without the need for a full trial) of the dispute in relation
to the "Excess Cash" (the "Summary Judgment application"). The Summary
Judgment application was heard on 14-15 June 2021. The Court dismissed Astor's
application meaning the proceedings would continue. The trial was heard from
21 February 2022 (the "Trial").

As at 31 December 2020, no consideration was paid to Astor. However, during
December 2020 the Board had discussions and considered an early payment of the
Deferred Consideration and the Loan Assignment provided certain conditions
could be met. Conditions included among others the execution of credit
facilities agreements to fund the payment.

In March 2021, the Company fulfilled all conditions required by the Board and
made the early payment of €53 million to Astor. The payment was fully funded
by unsecured credit facilities.

The payment of the Deferred Consideration did not end the ongoing litigation
as the issue as to whether any residual interest may or may not be payable
remained unresolved. On 15 July 2021, the Company transferred €15.4 million
to the Company's solicitors representing the full amount of interest claimed
by Astor (as at that date) to 30 June 2022. The Company's solicitors provided
an undertaking to Astor's solicitors to hold the full amount until settlement
of the claim to interest or judgment following the Trial. The Company
understood the monies held on client account by the Company's solicitors
safeguarded the maximum outstanding liability to Astor in relation to the
Master Agreement. On that basis, and because the Consideration has been paid
in full in accordance with the Master Agreement, the Company treated itself as
free of the obligations set out at clauses 6(g)(iv)(A) and 6(g)(iv)(B) in the
Master Agreement.

On 21 March 2022, further to the Trial which took place between 21 February
and 1 March 2022, Judgment was handed down. The Judgment deals with matters of
principle. It was left to the parties to calculate the amount of interest that
is payable on the basis of the Judge's conclusions. On 7 and 8 April 2022, the
Company made an initial payment of €9.6 million from the solicitors' client
account it had established in July 2021.

A consequential hearing was held on 6 May 2022 dealing with (i) the interest
calculation; and (ii) Atalaya's application for permission to appeal. As to
(i), again the Court decided certain matters of principle at the hearing and
gave directions as to the remaining issue to be resolved between the parties.
As to (ii), the Court denied Atalaya's application. Atalaya has a right to
apply for permission to appeal from the Court of Appeal.

The Company agreed a final payment amount of €1.1 million with Astor which
was paid on 16 May 2022 from its solicitors' client account. Subject to the
position on costs, the Company has now discharged its liability to Astor in
respect of 'Excess Cash' and associated interest under the Master Agreement.

 

21. Acquisition, Incorporation and Disposal of Subsidiaries

2022

Acquisition and incorporation of subsidiaries

There were no acquisition or incorporation of subsidiaries during the three
months period ended 31 March 2022.

 

Disposals of subsidiaries

There were no disposals of subsidiaries during the three months period ended
31 March 2022.

 

Wind-up of subsidiaries

On 4 January 2022, the subsidiary EMED Mining Spain, S.L. was wound up.

 

2021

Acquisition and incorporation of subsidiaries

There were no acquisition nor incorporation of subsidiaries during the three
months period ended 31 March 2021.

 

Disposals of subsidiaries

There were no disposals of subsidiaries during the three months period ended
31 March 2021.

 

Wind-up of subsidiaries

There were no operations wound up during the three months period ended 31
March 2021.

 

22. Related Party Transactions

The following transactions were carried out with related parties:

22.1 Compensation of key management personnel

The total remuneration and fees of Directors (including Executive Directors)
and other key management personnel was as follows:

 (Euro 000's)                                                         Three months ended    Three months ended

                                                                      31 Mar 2022           31 Mar 2021
 Directors' remuneration and fees                                     258                   279
 Share option-based benefits to directors                             64                    56
 Key management personnel fees                                        141                   142
 Share option-based and other benefits to key management personnel    61                    65
                                                                      524                   542

22.2 Share-based benefits

The directors and key management personnel have not been granted any options
during the three-month period ended 31 March 2022 (Q1 2021: nil).

 

22. Related Party Transactions (cont.)

22.3 Transactions with related parties/shareholders

i) Transaction with shareholders

 (Euro 000's)                                               Three months ended      Three months ended

                                                            31 Mar 2022              31 Mar 2021
 Trafigura- Revenue from contracts                          8,218                   21,875
 Freight services                                           -                       -
                                                            8,218                   21,875
 Gain / (losses) relating provisional pricing within sales  1,395                   (270)
                                                            9,613                   21,605

 

ii) Period-end balances with related parties

 

 (Euro 000's)

                                    31 Mar 2022       31 Dec 2021
 Receivables from related parties:
 Recursos Cuenca Minera S.L.        56                56
 Total (Note12)                     56                56

The above balances bear no interest and are repayable on demand.

 

iii) Period-end balances with shareholders

 (Euro 000's)                                                31 Mar 2022       31 Dec 2021
 Trafigura - Debtor balance- subject to provisional pricing  -                 20,283
 Total (Note 12)                                             -                 20,283

 

The above debtor balance arising from sales of goods and other balances bear
no interest and is repayable on demand.

 

23. Contingent Liabilities

Legal and administrative cases

In the normal course of business, the Group may be involved in legal
proceedings, claims and assessments. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. Legal fees for
such matters are expensed as incurred and the Group accrues for adverse
outcomes as they become probable and estimable.

 

24. Commitments

There are no minimum exploration requirements at Proyecto Riotinto. However,
the Group is obliged to pay local land taxes which currently are approximately
€235,000 per year in Spain and the Group is required to maintain the
Riotinto site in compliance with all applicable regulatory requirements.

In 2012, ARM entered into a 50/50 joint venture with Rumbo to evaluate and
exploit the potential of the class B resources in the tailings dam and waste
areas at Proyecto Riotinto (mainly residual gold and silver in the old gossan
tailings). Under the joint venture agreement, ARM will be the operator of the
joint venture, will reimburse Rumbo for the costs associated with the
application for classification of the Class B resources and will fund the
initial expenditure of a feasibility study up to a maximum of €2.0 million.
Costs are then borne by the joint venture partners in accordance with their
respective ownership interests.

 

25. Significant Events

Τhe events in Ukraine from 24 February 2022 are impacting the Global Economy
but cannot yet be predicted in full. The main concern now is the rising prices
for energy, fuel and other raw materials and rising inflation, which may
affect household incomes and business operating costs. The financial effect of
the current crisis on the Global Economy and overall business activities
cannot be estimated with reasonable certainty at this stage.

·      On 4 January 2022 the subsidiary EMED Mining Spain, S.L. was
disposed.

·      On 6 January 2022, the Company announced the approval of the
construction of the first phase of an industrial scale plant ("Phase I") that
utilises the E-LIX System ("E-LIX"), which will produce high value copper and
zinc metals from the complex sulphide concentrates sourced from Proyecto
Riotinto.

·      On 25 January 2022, the Company announced that it has published a
new document that provides additional disclosure on the Company's
comprehensive approach to Environmental, Social and Governance matters.

·      On 26 January 2022, the Company announced that it was notified
that PDMRs executed options as follow:

-       Alberto Lavandeira, Chief Executive Officer and Managing
Director of the Company executed 150,000 options. Following the above
transactions Mr. Lavandeira is interested in an aggregate of 430,000 ordinary
shares of the Company representing 0.30% of the current issued share capital.

-       Enrique Delgado, General Manager of Proyecto Riotinto, executed
550,000 options. Following the above transactions Mr. Delgado was interested
in an aggregate of 550,000 ordinary shares of the Company at that date
representing 0.39% of the current issued share capital.

-       César Sánchez, Chief Financial Officer, executed 650,000
options. Following the above transactions Mr. Sánchez was interested in an
aggregate of 650,000 ordinary shares of the Company at that date representing
0.46% of the current issued share capital.

·      On 27 January 2022, Atalaya announced that, in accordance with
the Company's Long Term Inventive Plan 2020, it has granted 120,000 share
options an employee.

 

25. Significant Events (cont.)

·      On 3 February 2022, the Company announced the results of five
additional drill holes from its ongoing resource definition drilling programme
at Proyecto Masa Valverde ("PMV"). PMV is located in southern Spain
approximately 28 km to the south of Atalaya's 15Mtpa mill at Proyecto
Riotinto.

New drill results include best continuous copper intercept at PMV to date: 125
metres at 1.19% Cu, including high grade intervals of 12m at 2.29% Cu, 19m at
2.56% Cu and 15m at 2.27% Cu.

·      On 22 February 2022, the Company announced that it was notified
on 21 February 2022, that Cesar Sanchez and Enrique Delgado, both persons
discharging managerial responsibilities ("PDMR"), had sold 300,000 and 250,000
ordinary shares in Atalaya, respectively, at a price of 440.0 pence per share.

Following the sale of these shares Mr Sanchez is interested in an aggregate of
350,000 ordinary shares of the Company representing 0.250% of the current
issued share capital. Mr. Delgado is interested in an aggregate of 300,000
ordinary shares of Atalaya representing 0.215% of the current issued share
capital.

·      On 21 March 2022, further to the Trial which took place between
21 February and 1 March 2022, the Judgment was handed down. The Judgment deals
with matters of principle. The points that the Judge has decided will dictate
the amount of interest that is payable.

·      On 24 March 2022, Atalaya announced that Mr. Harry Liu has
stepped down as a Non-Executive Director of the Company with immediate effect.

 

26. Events After the Reporting Period

·      On 4 April 2022, new shareholders of the Company, Newline
Insurance Company Limited, Brit Reinsurance (Bermuda) Limited, Brit Syndicates
Limited, Odyssey Reinsurance Company, acquired 5.08% of voting rights.

·      On 4 April 2022, Allianz Global Investors GmbH, shareholder of
the Company, increased its % of voting rights from below 3% to 3.92%.

·      On 5 April 2022, Atalaya announced a new Mineral Resource
Estimate, prepared in accordance with CIM guidelines and disclosure
requirements of NI 43-101, for its 100% owned Proyecto Masa Valverde.

·      On 7 April 2022, the Company noted the announcement on 1 April
2022 by ICBC Standard Bank Plc ("ICBCS") confirming the sale of the entire
holding of Yanggu Xiangguang Copper Co. Ltd ("XGC") (via its subsidiary, Hong
Kong Xiangguang International Holdings Ltd), in Atalaya. The Company therefore
understands that XGC has ceased to be a shareholder.

·      On 13 April 2022, Atalaya announced new Mineral Resource
Estimates, prepared in accordance with CIM guidelines and disclosure
requirements of NI 43-101, for its San Dionisio and San Antonio deposits.

·      On 25 April 2022, the Company announced the publication of its
inaugural Sustainability Report for the year ended 31 December 2021.

·      The 2021 Sustainability Report represents a key component of the
Company's ongoing commitment to enhancing its disclosure and reporting. The
report was prepared in accordance with Global Reporting Initiative
Sustainability Reporting Standards ("GRI Standards") with the assistance of
independent sustainability consultancy ERM and was audited by EY.

·      On 4 May 2022, Allianz Global Investors GmbH, shareholder of the
Company, increased its % of voting rights from below 3.92% to 4.07%.

·      On 8 April 2022, the Company transferred €9.6 million to Astor
from the trust account already established by Atalaya on 15 July 2021.

 

26. Events After the Reporting Period (cont.)

·      A hearing in respect of the Astor litigation was held on 6 May
2022, further to which the calculation of the correct interest arising under
the Master Agreement was agreed between the parties. Consequently, the Company
paid the final amount out of an escrow account held for that purpose. Subject
to the position on costs, the Company has now discharged its liability to
Astor in respect of 'Excess Cash' and associated interest under the Master
Agreement.

 

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