REG - Atalaya Mining PLC - Q1 2023 Operations Update

Atalaya MiningAnnouncement

17/04/2023 07:00

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RNS Number : 3391W  Atalaya Mining PLC  17 April 2023

Atalaya Mining Plc

1 Lampousas Street

1095 Nicosia, Cyprus

Tel: +357 22442705

Fax: +357 22442708

www.atalayamining.com

 

17 April 2023

Atalaya Mining Plc.

("Atalaya" or "the Company")

Q1 2023 Operations Update

Full year guidance on track following positive operational start and improved
power costs

 

Atalaya Mining Plc (AIM: ATYM, TSX: AYM) is pleased to announce its operations
update for the first quarter of 2023 ("Q1 2023" or the "Period").

Proyecto Riotinto Operating Highlights

                            Q1                 Q4      Full Year
                            2023((1))  2022    2022    2023 Guidance
 Ore mined      (M tonnes)  3.4        4.0     3.5     17.1
 Waste mined    (M tonnes)  6.5        6.8     5.3     24.1
 Ore milled     (M tonnes)  3.7        3.5     4.0     15.3 - 15.8
 Cu grade       (%)         0.38       0.37    0.41    0.40 - 0.42
 Cu recovery    (%)         86.88      86.07   86.24   84 - 86
 Cu production  (tonnes)    12,139     11,461  13,969  53,000 - 55,000

((1)) Figures for Q1 2023 are preliminary and final figures will be released
with Q1 2023 financial results.

Mining

Ore mined was 3.4 million tonnes in Q1 2023 (Q1 2022: 4.0 million tonnes),
compared with 3.5 million tonnes in Q4 2022.

Waste mined was 6.5 million tonnes in Q1 2023 (Q1 2022: 6.8 million tonnes),
compared with 5.3 million tonnes in Q4 2022.

Overall material movements in Q1 2023 were in line with budget, although waste
mining was prioritised in order to align ore mining rates with plant capacity
during the Period.

Processing

The plant processed ore of 3.7 million tonnes during Q1 2023 (Q1 2022: 3.5
million tonnes), compared with 4.0 million tonnes in Q4 2022. Throughput rates
during the Period were impacted by the decision to bring forward a scheduled
plant maintenance shutdown from April 2023 to March 2023.

Copper grade was 0.38% in Q1 2023 (Q1 2022: 0.37%), compared with 0.41% in Q4
2022, as a result of pit sequencing into a previously mined-out area
containing backfill during the Period.

Copper recoveries in Q1 2023 were 86.88% (Q1 2022: 86.07%), compared with
86.24% in Q4 2022, due to favourable ore characteristics during the Period.

Production

Copper production was 12,139 tonnes in Q1 2023 (Q1 2022: 11,461 tonnes),
compared with 13,969 tonnes in Q4 2022. Production previously anticipated for
Q1 2023 is now expected in Q2 2023, as a result of the rescheduling of plant
maintenance activities.

On-site copper concentrate inventories at the end of Q1 2023 were
approximately 1,564 tonnes. All concentrate in stock at the beginning of the
Period was delivered to the port at Huelva.

Copper contained in concentrates sold was 12,501 tonnes in Q1 2023 (Q1 2022:
10,304 tonnes).

Select Financial Highlights

Realised Copper Price

The average realised copper price (excluding QPs closed during the Period) was
$4.00/lb in Q1 2023 (Q1 2022: $4.50/lb), compared with $3.70/lb in Q4 2022.
The average spot copper price was $4.05/lb in Q1 2023.

Provisional Revenue Adjustments

For Q1 2023, settlement adjustments (for QPs closed during the Period) and
fair value adjustments (for open QPs based on copper forward curve prices as
at 31 March 2023) were positive €2.9 million.

Balance Sheet

Atalaya's balance sheet is strong with unaudited consolidated cash and cash
equivalents of €119.3 million at 31 March 2023.

Net of current and non-current borrowings of €64.1 million, net cash was
€55.2 million as at 31 March 2023, compared with €53.1 million as at 31
December 2022.

Electricity Prices

Estimated Realised Prices

So far in 2023, market electricity prices have been significantly lower than
the levels experienced during 2022, thanks to lower gas prices in Europe and
mild weather.

When including the contribution from the Company's 10-year power purchase
agreement ("PPA"), estimated realised electricity prices in Q1 2023 were
around 50% lower than the Company's average realised electricity price in
2022.

Renewable Energy Projects

The Company continues to advance construction of its 50 MW solar plant at
Riotinto, which is expected to provide approximately 22% of its current
electricity needs when fully operational. All major materials are on site,
civil works are under way and start-up is expected in late 2023. Combined, the
50 MW solar plant and long-term PPA will provide over 50% of the Company's
current electricity requirements at a rate below historical prices in Spain.

As previously disclosed, the Company continues to evaluate additional
renewable power initiatives that could deliver further low cost and
carbon-free electricity for its operations at Riotinto, including the
installation of wind turbines.

2023 Guidance

The Company remains confident in its ability to achieve the full year 2023
guidance it announced in March 2023 as part of its 2022 Annual Results.

Asset Portfolio Update

Proyecto Riotinto

On 23 February 2023, the Company announced the results of a new preliminary
economic assessment for the Cerro Colorado, San Dionisio and San
Antonio deposits at Proyecto Riotinto ("Riotinto PEA"). The objective of the
Riotinto PEA was to incorporate these deposits into a new integrated mine plan
in order to quantify the benefits of the Company's planned processing hub
strategy for its 15 Mtpa processing plant.

The Riotinto PEA demonstrated strong potential economic results, including a
$1.07 billion after-tax NPV(8%) at $3.50/lb copper (Base Case) and a $1.57
billion after-tax NPV(8%) at $4.03/lb copper (Sensitivity Case). In addition,
the Riotinto PEA illustrated the potential uplift in copper equivalent
production to ~90 ktpa (from 2027 onwards) as a result of processing higher
grade material, as well as a potential reduction in cash costs.

The Riotinto PEA serves as a foundation for further optimisation and the
Company will continue to evaluate opportunities to enhance value. These will
include the potential application of the E-LIX System, considering a revised
mining sequence to bring forward the highest value material and studying the
refurbishment of existing processing equipment at Riotinto in order to reduce
the capital costs associated with plant modifications.

E-LIX Phase I Plant

Construction activities at the E-LIX Phase I plant continue, with
commissioning activities expected in H2 2023.

Once operational, the E-LIX plant is expected to produce high purity copper or
zinc metals on site, allowing the Company to potentially achieve higher metal
recoveries from complex polymetallic ores, lower transportation and
concentrate treatment charges and a reduced carbon footprint.

Riotinto District - Proyecto Masa Valverde ("PMV")

In March 2023, the Company announced that PMV was granted the Unified
Environmental Authorisation (or in Spanish, Autorización Ambiental Unificada
("AAU")) by the Junta de Andalucía, following an application process that was
initiated by the Company in December 2021. The AAU is an integrated process
that combines the Environmental Impact Assessment and other authorisations and
specifies requirements to avoid, prevent and minimise a project's impacts on
the environment and the cultural heritage of the area.

The Company will now file for the exploitation permit which, once granted,
will allow for project development to begin. Meanwhile, evaluation work will
continue including further metallurgical testing.

In addition, three core rigs are active and focused on step-out drilling at
the Masa Valverde deposit, resource definition drilling at the Campanario
Trend and step-out drilling around the new discovery made at the Mojarra
Trend. The last comprehensive update on recent exploration results at these
targets was announced in November 2022.

An airborne gravity gradiometry ("AGG") and magnetic survey covering the
entirety of PMV has been completed. Final results were received, and first
drill testing of selected anomalies is planned to begin during Q2 2023.

Proyecto Touro

Atalaya remains fully committed to the development of the Touro copper project
in Galicia, which could become a new source of copper production for Europe.

In March 2023, the European Union announced the Critical Raw Materials Act,
which seeks to "address the EU's dependency on imported critical raw materials
by diversifying and securing a domestic and sustainable supply of critical raw
materials". Copper was added to the list of "Strategic Raw Materials" as a
result of the challenges associated with substituting copper metal in
electrical applications.

Running parallel with the Touro permitting process, the Company continues to
focus on numerous initiatives related to securing the social licence to
operate, including engaging with the many stakeholders in the region in
advance of its plans to submit a new improved project design. Positive and
favourable feedback from numerous meetings with municipalities, farmer and
fishermen associations and other industries indicate meaningful support
towards the development of a new and modern mining project.

The Company continues to restore rivers around Touro and is operating its
water treatment plant, which is addressing the legacy issues associated with
acid water runoff from the historical mine, which closed in 1987. The
construction of the treatment plant was contemplated in the original project
proposal, but Atalaya volunteered to fix the historical acid water issues
prior to the new Environmental Impact Assessment ("EIA") in order to
demonstrate its operating philosophy and the benefits of modern operating
systems. The field work carried out by Atalaya has resulted in an immediate
and visible improvement of the water systems surrounding the project.

Atalaya continues to be confident that its approach to Touro, which includes
fully plastic lined thickened tailings with zero discharge, is consistent 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

Drilling continued to progress with one rig at the Guijarro-Chaparral
gold-copper project, located in the central part of the district. Drilling at
the flagship Alconchel-Pallares copper-gold project is expected to commence
during Q3 2023.

Proyecto Riotinto East

An airborne gravity gradiometry and magnetic survey covering the entire
project was completed. Final results were received and first drill testing of
selected anomalies is planned to start during Q2 2023.

Corporate Matters

In March 2023, Atalaya's ordinary shares were delisted from the Toronto Stock
Exchange ("TSX") following a voluntary application made by the Company. The
objective was to reduce the financial costs and administrative requirements
associated with the TSX listing, where minimal trading volumes have taken
place in recent years. The TSX delisting has no impact on the Company's
ordinary shares, which continue to trade on the AIM market of the London Stock
Exchange.

Alberto Lavandeira, CEO, commented:

"We have had a positive start to 2023, with significant improvements in Q1
compared to the same period last year. Our operations are performing well,
with a catch-up in throughput expected in April 2023 following the decision to
bring forward plant maintenance activities into Q1 2023. Electricity prices
have continued to fall from 2022 levels, which will have a positive impact on
our unit costs.

With respect to our project portfolio, we remain busy as always. Construction
is progressing at the E-LIX and solar plants, optimisation work is under way
following the announcement of the Riotinto PEA, permitting continues at Touro
and exploration activities are ongoing at Proyecto Masa Valverde and Proyecto
Ossa Morena. We were also very pleased to be granted the environmental
approval at Proyecto Masa Valverde, which highlights that Andalucía is a
world-class mining jurisdiction.

Finally, we continue to believe in the long-term outlook for copper, which
continues to improve as major economies accelerate their investments in the
energy transition and secure critical raw materials supply. In recent months,
many of our peers in the mining sector have been active in pursuing copper
production growth, which emphasises the scarcity value associated with high
quality copper assets in mining friendly jurisdictions like Spain."

 

 

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 / Matthew Elliott   + 44 20 3757 6882
 4C Communications          Carina Corbett                                            +44 20 3170 7973
 Canaccord Genuity          Henry Fitzgerald-O'Connor / James Asensio / Thomas Diehl  +44 20 7523 8000

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

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

 (Joint Broker)

 

About Atalaya Mining Plc

Atalaya is an AIM-listed mining and development group which produces copper
concentrates and silver by-product at its wholly owned Proyecto Riotinto site
in southwest Spain. Atalaya's current operations include the Cerro Colorado
open pit mine and a modern 15 Mtpa processing plant, which has the potential
to become a central processing hub for ore sourced from its wholly owned
regional projects around Riotinto that include Proyecto Masa Valverde and
Proyecto Riotinto East. In addition, the Group has a phased earn-in agreement
for up to 80% ownership of Proyecto Touro, a brownfield copper project in the
northwest of Spain, as well as a 99.9% interest in Proyecto Ossa Morena. For
further information, visit www.atalayamining.com
(http://www.atalayamining.com)

 

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