REG - Atalaya Mining PLC - Q2 2022 Operations Update

Atalaya MiningAnnouncement

14/07/2022 07:00

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RNS Number : 4063S  Atalaya Mining PLC  14 July 2022

14 July 2022

Atalaya Mining Plc.

("Atalaya" or "the Company")

Q2 2022 Operations Update

 

Atalaya Mining Plc (AIM: ATYM, TSX: AYM) is pleased to announce its operations
update for the second quarter of 2022 ("Q2 2022" or the "Period").

Q2 2022 Proyecto Riotinto Operating Highlights

                            Q2                        Q1             Full year
                2022((1))   2021    2022              2022 Guidance
 Ore mined      (M tonnes)  3.8            3.3        4.0            15.5
 Waste mined    (M tonnes)  6.7     8.0               6.8            23.4
 Ore milled     (M tonnes)  4.0     4.0               3.5            15.2 - 15.4((2))
 Cu grade       (%)         0.39    0.42              0.37           0.40((2))
 Cu recovery    (%)         86.44   84.83             86.07          85 - 87((2))
 Cu production  (tonnes)    13,386  14,353            11,461         52,000 - 54,000((2))

(1)    Figures for Q2 2022 are preliminary and final figures will be
released with Q2 2022 financials.

(2)    Represents updated guidance to previous ranges provided for 2022;
read below for further detail.

Mining

Ore totalling 3.8 million tonnes was mined during Q2 2022, compared with 4.0
million tonnes in Q1 2022 and 3.3 million tonnes in Q2 2021.

Waste mined during Q2 2022 was 6.7 million tonnes, in line with the 6.8
million tonnes mined in Q1 2022 but below Q2 2021 levels. Waste stripping in
H1 2022 was higher than budget as waste mining was prioritised during the
temporary plant maintenance stoppage.

Processing

The plant processed 4.0 million tonnes of ore during Q2 2022 as it returned to
normalised throughput rates following the Q1 2022 transport sector strike and
maintenance stoppage, which lowered throughput to 3.5 million tonnes.
Processing rates in Q2 2022 were consistent with throughput in Q2 2021 of 4.0
million tonnes, highlighting the plant's ability to operate above its 15
million tonne per annum nameplate capacity.

Copper grade was 0.39% in Q2 2022, representing an increase from 0.37% in Q1
2022 but below the comparative period in Q2 2021 of 0.42%. Lower grades so far
in 2022 are the result of blending with lower grade stockpiles due to pit
sequencing.

Copper recoveries in Q2 2022 were strong at 86.44%, above Q1 2022 of 86.07%
and despite lower grades, higher than the Q2 2021 comparative period.

Production

Copper production in Q2 2022 was 13,386 tonnes, which represents an increase
of 16.8% over Q1 2022. The increase is due to good performance of the
processing plant, the return to a normalised period following the temporary
plant maintenance stoppage in Q1 2022, as well as higher copper grades and
improved copper recoveries.

On-site copper concentrate inventories at the end of Q1 2022 were
approximately 7,169 tonnes. All concentrate in stock at the beginning of the
Period was delivered to the port at Huelva.

Realised Copper Price

The average realised price per pound of copper payable, including the QPs
closed in the Period, was $4.32/lb in Q2 2022, below the average realised
price in Q1 2022 of $4.42/lb but above the Q2 2021 period of $4.27/lb. The
average spot copper price during Q2 2022 was $4.32/lb and the realised price
excluding QPs was approximately $4.28/lb.

Asset Portfolio Update

Riotinto 15 Mtpa Plant - Process Optimisation

During Q2 2022, some improvement initiatives were implemented such as the
digitization of reagent dosing and the testing of magnetic aggregation
technology in the copper circuit, both of which aim to lower reagent
consumption and improve copper recoveries.

Riotinto District - San Dionisio and San Antonio

On 13 April 2022, the Company announced new independent Mineral Resource
Estimates ("MRE") for the San Dionisio and San Antonio deposits at Proyecto
Riotinto. San Dionisio includes a potentially open pittable resource, with
separate copper-rich and polymetallic zones, that represents an extension of
the existing Cerro Colorado pit, as well as an underground polymetallic
resource. San Antonio is an underground polymetallic deposit located less than
one kilometre east of the Cerro Colorado pit.

The Company expects to complete a preliminary economic assessment ("PEA") for
San Dionisio by the end of 2022, including an evaluation of a scenario that
combines Cerro Colorado reserves with higher grade material from San Dionisio,
potentially providing an uplift to copper production by increasing the blended
head grade.

Riotinto District - Proyecto Masa Valverde ("PMV")

On 5 April 2022, the Company announced a new Mineral Resource Estimate ("MRE")
for PMV's Masa Valverde and Majadales deposits. Highlights included a
significant increase in tonnage and contained copper, silver and gold compared
to the prior estimate, as well as an initial Indicated Mineral Resource at
Masa Valverde. The mineralisation includes zones that are copper-rich and
low-zinc, which could deliver higher grade material for processing at the
existing Riotinto plant with minimal plant modifications.

Exploration activities continue at PMV, with four drill rigs currently
operating including two rigs at the Campanario Trend and two at anomalies west
of the Masa Valverde deposit. Initial drilling results from Campanario were
announced subsequent to the end of the quarter and included intersections of
massive and semi-massive sulphides at shallow depths.

In addition, the permitting process continues, and the Company expects to
complete a PEA for PMV by the end of 2022.

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.
The Company continues to engage with the many stakeholders in the region in
advance of its plans to submit a new project design.

In June, the Company commissioned a new acid water treatment plant at Touro,
which will address the legacy issues associated with water runoff from the
historical mine. The construction of the plant was contemplated in the
original project proposal, but Atalaya volunteered to fix the historical acid
water issues prior to submitting the Environmental Impact Assessment ("EIA")
in order to demonstrate its operating philosophy and the benefits of modern
operating systems.

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.

Other Regional Exploration

At Riotinto East, ongoing activities include field mapping, rock sampling,
soil geochemistry and reinterpretation of geophysical data. The Company
expects to begin drilling targets later this year once the investigation
permit is granted.

At Proyecto Ossa Morena, the Company has been focused on permitting,
environmental and social matters. Exploration drilling is expected to begin
soon at the Hinchona copper-gold target and at the flagship Alconchel-Pallares
copper-gold project.

E-LIX Phase I Plant

Since announcing the approval of the E-LIX Phase I plant in January 2022,
Atalaya has placed all equipment orders and has started initial construction
activities on the site, which is located beside the Riotinto plant. The
Company expects the plant to be ready for commissioning by the end of 2022.

The Phase I of the E-LIX plant will produce high value copper and zinc metals
from complex sulphide concentrates produced from material sourced within the
Riotinto District. Potential benefits of the process include improved metal
recoveries, lower transportation and concentrate treatment charges and reduced
carbon emissions.

50 MW Solar Plant

Atalaya continues to progress the development of a 50 MW solar plant, which
will become a reliable source of low cost and carbon-free energy for Proyecto
Riotinto. Equipment orders have been made and deliveries of key materials are
expected to arrive on site during Q4 2022. Expectations for start-up of the
solar plant continues to be Q2 2023.

The construction of the solar plant in addition to the previously announced
long-term power purchase agreement ("PPA") will guarantee that over 50% of the
electricity requirements at Riotinto are sourced at competitive terms.

Energy Market in Spain

Electricity prices in Spain remain well above historical levels as a result of
the continued conflict in Ukraine. After reaching unprecedented levels of over
€500/MWh in March 2022, prices decreased and averaged approximately
€190/MWh in April and May 2022.

In mid June 2022, the legislated gas price cap for Spain and Portugal took
effect. The cap has had a positive impact on electricity prices, with rates
averaging approximately €150/MWh since the implementation of the new pricing
mechanism. Electricity prices for Q2 2022 have averaged approximately
€180/MWh, down from approximately €230/MWh in Q1 2022.

Outlook for 2022

Atalaya is pleased with the plant's performance in Q2 2022, with strong
throughput and recoveries contributing to a solid quarter of production.
However, as a result of the shortfall in production in Q1 2022 and lower than
expected grades continuing into Q2 2022, the Company now expects full year
copper production to be 52,000 - 54,000 tonnes. The average copper grade is
expected to increase in H2 2022 due to pit sequencing and full year guidance
is now 0.40%. Copper recoveries are expected to be 85 - 87% for the full year.

The Company continues to experience significant cost inflation over prior
periods, with the prices of many key consumables remaining materially above
2021 levels. Notable examples include electricity, explosives, diesel,
grinding media and lime, as well as ocean freight rates. As a result, the
Company now expects that its original 2022 guidance range for cash costs and
all-in-sustaining costs will be revised upwards by approximately 5-10%.
Further details including new cost guidance for 2022 will be provided in
August when the Company reports its Q2 and H1 financial results.

Alberto Lavandeira, CEO, commented:

"We are pleased with the performance of the plant in Q2, with strong
recoveries and a return to processing rates above our 15 Mtpa nameplate
capacity. These contributed to a solid quarter of production and a material
improvement from Q1. However, cost inflation remains very high and the prices
of many key inputs are uncontrollable by nature. Therefore, we continue to
focus on several key initiatives that will deliver operational efficiencies,
stable and low cost electricity from 2023 and higher grade material to our
processing plant. Our balance sheet remains strong and we are well placed to
navigate the ongoing uncertainties."

 

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 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 51% interest in
Proyecto Ossa Morena. For further information, visit www.atalayamining.com
(http://www.atalayamining.com)

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