REG - Atalaya Mining PLC - Q3 2022 Operations Update

Atalaya MiningAnnouncement

17/10/2022 07:00

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RNS Number : 0200D  Atalaya Mining PLC  17 October 2022

Atalaya Mining Plc

1 Lampousas Street

1095 Nicosia, Cyprus

Tel: +357 22442705

Fax: +357 22442708

www.atalayamining.com

 

17 October 2022

Atalaya Mining Plc.

("Atalaya" or "the Company")

Q3 2022 Operations Update

Consistent quarter of copper production supports full year production guidance

 

Atalaya Mining Plc (AIM: ATYM, TSX: AYM) is pleased to announce its operations
update for the third quarter of 2022 ("Q3 2022" or the "Period").

Proyecto Riotinto Operating Highlights

                            Q3                 Q2      Year-to-Date  Full Year
                            2022((1))  2021    2022    2022          2022 Guidance
 Ore mined      (M tonnes)  3.6        3.4     3.6     10.5          15.5
 Waste mined    (M tonnes)  5.8        7.8     6.7     19.3          23.4
 Ore milled     (M tonnes)  3.9        3.9     4.0     11.5          15.2 - 15.4
 Cu grade       (%)         0.41       0.40    0.39    0.39          0.40
 Cu recovery    (%)         84.62      87.24   86.44   85.70         85 - 87
 Cu production  (tonnes)    13,453     13,893  13,386  38,300        52,000 - 54,000

(1)    Figures for Q3 2022 are preliminary and final figures will be
released with Q3 2022 financials.

Mining

Ore totalling 3.6 million tonnes was mined during Q3 2022, compared with 3.6
million tonnes in Q2 2022 and 3.4 million tonnes in Q3 2021.

Waste mined during Q3 2022 was 5.8 million tonnes, below the 6.7 million
tonnes mined in Q2 2022 and also below Q3 2021 levels. Waste stripping
year-to-date has been higher than budget as waste mining was prioritised
during the temporary plant maintenance stoppage in Q1 2022.

Processing

The plant processed 3.9 million tonnes of ore during Q3 2022, which was near
Q2 2022 throughput and above processing rates in Q1 2022, which was impacted
by the transport sector strike and maintenance stoppage. The results
demonstrate the plant's ability to operate above its 15 million tonne per
annum nameplate capacity.

Copper grade was 0.41% in Q3 2022, representing an increase from 0.39% in Q2
2022 and also above the comparative period in Q3 2021 of 0.40%. Lower grades
earlier in 2022 were the result of blending with lower grade stockpiles due to
pit sequencing.

Copper recoveries in Q3 2022 were 84.62%, below Q2 2022 and Q3 2021 levels
respectively, due to the characteristics of the ore processed during the
quarter; however, performance was consistent with expectations.

Production

Copper production in Q3 2022 was consistent at 13,453 tonnes, above Q2 2022
production of 13,386 tonnes. This performance was the result of higher copper
grades and consistent throughput rates.

On-site copper concentrate inventories at the end of Q3 2022 were
approximately 4,349 tonnes. All concentrate in stock at the beginning of the
Period was delivered to the port at Huelva.

Select Financial Highlights

Realised Copper Price

The average realised price per pound of copper payable, including the QPs
closed in the Period, was $3.83/lb in Q3 2022, below the average realised
price in Q2 2022 of $4.32/lb and the Q3 2021 period of $4.31/lb. The average
spot copper price during Q3 2022 was $3.51/lb and the realised price excluding
QPs was approximately $3.52/lb.

Provisional Pricing Adjustments

For Q3 2022, provisional pricing adjustments were negative €1.8 million,
based on the outstanding QPs and copper forward curve prices as at 30
September 2022.

Asset Portfolio Update

Riotinto District - San Dionisio and San Antonio

The Company is advancing a preliminary economic assessment ("PEA") which will
include the evaluation of a scenario that combines Cerro Colorado reserves
with higher grade material from San Dionisio, targeting an uplift to copper
production by increasing the blended head grade. The permitting process for
San Dionisio is currently underway.

Subsequent to the end of the Period, a NI 43-101 Technical Report for Proyecto
Riotinto, including the San Dionisio open pit and the San Dionisio and San
Antonio underground deposits, was filed on SEDAR in order to fulfil the
Company's reporting obligations in Canada.

Riotinto District - Proyecto Masa Valverde ("PMV")

Atalaya continues to advance its exploration programme at PMV. At present,
there are three drill rigs on site - the first is devoted to resource
definition at the Campanario Trend, the second is completing infill and step
out drilling at the Masa Valverde ("MV") deposit, while the third has
commenced first drill testing of Fix Loop Electromagnetic ("FLEM") anomalies
at the Mojarra Trend, located 1km north and parallel to the Campanario Trend.

Initial drilling results from Campanario were announced in July 2022 and
included shallow high grade intervals such as 18.10m at 1.19% Cu, 0.08% Zn,
0.32% Pb and 36.66 g/t Ag from 43.20m (hole CA21) and 35.20m at 0.70% Cu,
1.53% Zn, 1.39% Pb and 62.50 g/t Ag from 77.80m (hole CA15).

Atalaya is currently progressing a PEA which will consider operating PMV as a
satellite deposit by processing mined material at Riotinto's 15 Mtpa plant.
The permitting process for PMV is ongoing.

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.
Running parallel with the permitting process, the Company is focused on
numerous initiatives related to securing the social license, 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 is now operating a new water treatment plant at Touro, 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.

Other Regional Exploration

At Riotinto East, the Peñas Blancas investigation permit was granted. Drill
target definition is in progress and the first drill testing of selected
anomalies is expected by year end.

At Proyecto Ossa Morena, the first drilling campaign is now underway at the
Hinchona copper-gold target. Two holes have been completed and the third hole
is in progress. Drilling at the flagship Alconchel-Pallares copper-gold
project is now expected to commence during Q4 2022.

E-LIX Phase I Plant

Construction of the E-LIX Phase I plant continues to advance, including the
assembly of metal structures and the delivery of equipment to site. The
Company now expects the plant to be ready for commissioning by Q1 2023.

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

50 MW Solar Plant

Construction of Atalaya's 50 MW solar plant at Proyecto Riotinto is underway,
with equipment for the solar plant starting to arrive on site at the end of
October.

Electricity Market in Spain

Situation Update

The ongoing conflict in Ukraine continues to impact global energy markets,
especially with respect to natural gas prices in Europe, which drove the price
of electricity in Spain to unprecedented levels of over €500/MWh in March
2022.

In response, the governments of Spain and Portugal implemented a gas price
cap, which took effect in mid-June 2022 and had a positive impact on market
electricity prices. The legislation also included a new mechanism whereby
certain power consumers must make additional "adjustment" payments to
compensate gas power plants that are disadvantaged by the gas price cap. As a
result, the realised electricity price by a consumer like Atalaya is well
above the observed spot market rates.

Following a period of curtailed gas deliveries via Nord Stream 1 as well as
maintenance activities, Gazprom announced the indefinite shutdown of the
pipeline in early September 2022. Then in late September, leaks were detected
in the Nord Stream 1 and Nord Stream 2 pipelines, with many observers
suspecting an act of sabotage. Consequently, gas prices have remained at
unprecedented levels, including severe spikes in late August 2022, which
coincided with a historic heat wave in Spain, triggering high energy demand
and electricity prices near the March 2022 peaks.

As a result of high gas prices and the "adjustment" mechanism, the Company's
estimated realised electricity price for Q3 2022 is expected to be around
€280/MWh, with the market price component averaging around €150/MWh and
the "adjustment" component accounting for the remainder. Since the end of Q3
2022, estimated realised electricity prices for the Company have improved to
around €200-240/MWh. During the extreme pricing in late August, the Company
took the opportunity to carry out planned preventive mill maintenance to
mitigate the impact.

Electricity Procurement Strategy

Atalaya's 50 MW solar plant is expected to become a reliable source of low
cost and carbon-free energy for Proyecto Riotinto, and, combined with the
Company's previously announced long-term power purchase agreement ("PPA"),
will guarantee that over 50% of the electricity requirements at Proyecto
Riotinto are sourced at an average final cost of less than €40/MWh. This
average rate represents a discount of 80-90% from recent peaks in the realised
electricity price in Spain, and is also below long run historical prices in
the Spanish market over the 2016-2020 period.

As previously disclosed, an increase or decrease in realised electricity
prices of €100/MWh results in an increase or decrease, respectively, to the
Company's annual operating costs of around €37 million.

The Company continues to evaluate additional renewable power initiatives,
including the installation of wind turbines at Riotinto dedicated to
self-consumption. In September 2022, an evaluation tower was installed to test
the area's wind characteristics and compare measurements to extensive
historical ground level data. Based on preliminary measurements, it is
estimated that the wind turbines could potentially produce around 15% of
current electricity needs.

Production Guidance for 2022

Atalaya reiterates its 2022 guidance of 52,000 - 54,000 tonnes of copper
production. The Company will continue to monitor the volatile electricity
markets in Spain as well as overall input cost inflation, which has moderated
from earlier peaks but remains elevated.

Alberto Lavandeira, CEO, commented:

"We are pleased to report consistent copper production for the quarter and
reiterate our guidance for the full year despite the many uncertainties in
Europe and abroad. Inflation remains high mainly due to high electricity
prices that will continue to impact our cash costs during this year. We look
forward to 2023 and the significant benefits we will realise from the start of
our long term PPA and 50 MW solar plant.

Regardless of current challenges, we remain excited about many growth
opportunities within Atalaya's asset portfolio and confident on the outlook
for copper. It is evident that more copper supply will be required to fuel the
global energy transition, and that high quality assets in safe jurisdictions
will become increasingly scarce. These views are clearly shared by the
diversified majors, who have been active in pursuing copper growth in recent
months."

 

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 99.9% interest in
Proyecto Ossa Morena. For further information, visit www.atalayamining.com
(http://www.atalayamining.com)

 

 

 

 

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