REG - Atalaya Mining PLC - Q4 Operations Update and 2023 Production Guidance

Atalaya MiningAnnouncement

17/01/2023 07:00

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RNS Number : 9038M  Atalaya Mining PLC  17 January 2023

Atalaya Mining Plc

1 Lampousas Street

1095 Nicosia, Cyprus

Tel: +357 22442705

Fax: +357 22442708

www.atalayamining.com

 

17 January 2023

Atalaya Mining Plc.

("Atalaya" or "the Company")

Q4 2022 Operations Update and 2023 Production Guidance

Well positioned for 2023 with a strong final quarter of production

 

Atalaya Mining Plc (AIM: ATYM, TSX: AYM) is pleased to announce its operations
update for the fourth quarter of 2022 ("Q4 2022" or the "Period").

Proyecto Riotinto Operating Highlights

                            Q4              Q3         Full Year
                2022((1))   2021    2022    2022((1))  2021    2023 Guidance
 Ore mined      (M tonnes)  3.5     3.5     3.8        14.9    13.5           17.1
 Waste mined    (M tonnes)  5.3     7.3     5.8        24.7    30.5           24.1
 Ore milled     (M tonnes)  4.0     3.8     3.9        15.4    15.8           15.3 - 15.8
 Cu grade       (%)         0.41    0.41    0.41       0.40    0.41           0.40 - 0.42
 Cu recovery    (%)         86.24   87.04   84.62      85.85   85.97          84 - 86
 Cu production  (tonnes)    13,969  13,872  13,453     52,269  56,097         53,000 - 55,000

((1)) Figures for Q4 2022 are preliminary and final figures will be released
with 2022 financial results.

Mining

Ore mined was 3.5 million tonnes in Q4 2022 (Q4 2021: 3.5 million tonnes),
compared with 3.8 million tonnes in Q3 2022. Ore mined was 14.9 million tonnes
in FY2022 (FY2021: 13.5 million tonnes).

Waste mined was 5.3 million tonnes in Q4 2022 (Q4 2021: 7.3 million tonnes),
compared with 5.8 million tonnes in Q3 2022. Waste mined was 24.7 million
tonnes in FY2022 (FY2021: 30.5 million tonnes).

Processing

The plant processed ore of 4.0 million tonnes during Q4 2022 (Q4 2021: 3.8
million tonnes), compared with 3.9 million tonnes in Q3 2022. Throughput was
15.4 million tonnes in FY2022 (FY2021: 15.8 million tonnes), demonstrating
strong plant performance despite the negative impact of the Q1 2022 transport
sector strike and related stoppage. The plant continues to highlight its
ability to operate above its 15 million tonne per annum nameplate capacity.

Copper grade was 0.41% in Q4 2022 (Q4 2021: 0.41%), compared with 0.41% in Q3
2022. Copper grade was 0.40% in FY2022 (FY2021: 0.41%). Lower grades in FY2022
were the result of blending with lower grade stockpiles during H1 2022 due to
pit sequencing.

Copper recoveries in Q4 2022 were 86.24% (Q4 2021: 87.04%), compared with
84.62% in Q3 2022 which was negatively impacted by the characteristics of the
ore processed. Copper recoveries in FY2022 were 85.85% (YTD 2021: 85.97%).

Production

Copper production was 13,969 tonnes in Q4 2022 (Q4 2021: 13,872 tonnes),
compared with 13,453 tonnes in Q3 2022. Copper production was 52,269 tonnes in
FY2022 (FY2021: 56,097 tonnes). Lower production for FY2022 was the result of
lower grades (pit sequencing) and lower throughput (including the impact of
the Q1 2022 plant maintenance stoppage).

On-site copper concentrate inventories at the end of Q4 2022 were
approximately 3,529 tonnes. All concentrate in stock at the beginning of the
Period was delivered to the port at Huelva.

Copper contained in concentrates sold was 14,027 tonnes in Q4 2022 (Q4 2021:
13,568 tonnes) and 52,323 tonnes in FY2022 (FY2021: 61,662 tonnes).

Select Financial Highlights

Realised Copper Price

The average realised copper price excluding QPs closed during the Period was
$3.70/lb in Q4 2022 (Q4 2021: $4.40/lb), compared with $3.52/lb in Q3 2022.
The average spot copper price was $3.63/lb in Q4 2022. The average realised
copper price excluding QPs closed was $3.96/lb in FY2022 (FY2021: $4.22/lb).

Provisional Revenue Adjustments

For Q4 2022, settlement adjustments (on QPs closed during the Period) and fair
value adjustments (for open QPs based on copper forward curve prices as at 31
December 2022) amounted to positive €5.0 million.

Balance Sheet

Despite cost inflation and the impact of unprecedented electricity costs in
2022, Atalaya's balance sheet remains strong with unaudited consolidated cash
and cash equivalents of €126.2 million at 31 December 2022.

Net of current and non-current borrowings of €73.0 million, net cash was
€53.2 million as at 31 December 2022, compared with €55.6 million as at 30
September 2022 and €60.1 million as at 31 December 2021.

2023 Production Guidance

The Company expects that the strong operating performance shown in recent
quarters will continue into 2023, with the plant at Riotinto maintaining
throughput above nameplate capacity and copper grades improving from 2022
levels. Accordingly, copper production for 2023 is expected to be in the range
of 53,000 to 55,000 tonnes.

Consistent with prior years, the Company will provide cost guidance for 2023
when it reports its 2022 Annual Results.

Electricity Market in Spain

Situation Update

During 2022, electricity prices in Spain were at unprecedented levels as a
result of the impact of the war in Ukraine on the European and global energy
markets. Severe spikes in natural gas prices in Europe pushed electricity
prices in Spain to over €500/MWh in March 2022 and similar levels in late
August and early September, with average realised prices for Q3 2022 reaching
around €290/MWh.

Electricity prices moderated in Q4 2022, due to the combination of mild
weather in Europe, good supplies of LNG into Europe and a strong contribution
from wind generation in Spain. As a result, estimated realised electricity
prices for Q4 2022 were approximately €170/MWh, which is over 40% below Q3
2022 levels of around €290/MWh.

For FY2022, the estimated realised electricity price is expected to be
approximately €240/MWh, compared with FY2021 prices of approximately
€65/MWh. 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.

Electricity Procurement for 2023 and Beyond

As a result of the electricity price so far in 2023 and the expected benefits
from two key company specific electricity procurement initiatives, Atalaya is
optimistic on the outlook for overall electricity costs for FY2023 and beyond.

On 1 January 2023, the Company's previously announced long-term power purchase
agreement ("PPA") took effect. The 10-year agreement will provide the Company
with approximately 31% of its current electricity requirements at a fixed rate
that is over 75% lower than the estimated average realised electricity price
in 2022 and also below the rates realised in 2021.

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. Most of the materials are now on
site and start-up of the 50 MW solar plant is expected in H2 2023. Combined,
the 50 MW solar plant and long-term PPA will provide over 50% of the Company's
current electricity requirements at an average final cost of less than
€40/MWh.

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 wind
turbines. Following the installation of an evaluation tower in September 2022,
new wind measurements are now being compared to the extensive historical
ground level data in order to establish confidence in the area's wind
characteristics and determine the viability of developing a small wind farm at
Riotinto dedicated to self consumption.

Asset Portfolio Update

E-LIX Phase I Plant

The Company continues to advance construction of the E-LIX Phase I plant. In
recent weeks, activities have included the completion of most civil and
structural work, with equipment now being assembled. The plant is expected to
be ready for commissioning towards the end of H1 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 - San Dionisio and San Antonio

The Company continues to advance a preliminary economic assessment ("PEA") for
a scenario that combines Cerro Colorado reserves with higher grade material
from San Dionisio, which has the potential to increase copper production by
increasing the blended head grade processed at Riotinto's 15 Mtpa plant. The
PEA is expected to be completed during H1 2022. The permitting process for San
Dionisio also continues.

Riotinto District - Proyecto Masa Valverde ("PMV")

Three core rigs continue to be active and are focused on step-out drilling at
the Masa Valverde deposit, resource definition drilling at the Campanario
Trend and drill testing Fix Loop Electromagnetic ("FLEM") anomalies at the
Mojarra Trend. A comprehensive update on recent exploration results at these
targets was announced in November 2022.

The second hole (MR02) drilled at the Mojarra Trend, in a previously undrilled
area, intersected massive sulphides at 434m depth. Assay results returned a
main mineralised interval of 18.75m at 0.84% Cu, 0.63% Zn, 0.66% Pb and 76.24
g/t Ag including a higher-grade interval of 6.80m at 1.22% Cu and 101.60 g/t
Ag.

Step-out drilling in the westernmost area of the Masa Valverde deposit
discovered a new high-grade zinc zone in hole MJ54, including a main
mineralised interval of 18.00m at 0.25% Cu, 8.30% Zn, 2.49% Pb, 60.17 g/t Ag
and 0.89 g/t Au from 852 meters depth.

Resource definition drilling at the Campanario Trend continues to encounter
shallow, massive, and semi-massive sulphides with, in cases, associated high
grade intersections. For example, hole CA42 in the western part of the
Campanario Trend assayed 7.50m at 0.45% Cu, 1.09 g/t Ag and 6.67 g/t Au from
35m depth.

An airborne gravity gradiometry ("AGG") and magnetic survey covering the
entire PMV is near completion. AGG is a leading technology in the search for
buried mineral deposits, especially those of the size that is typical in the
Iberian Pyrite Belt.

Work continues on the PEA which will consider operating PMV as a satellite
deposit by processing mined material at Riotinto's 15 Mtpa plant. Further
metallurgical testing for the Masa Valverde and Majadales deposits is now
planned for inclusion in the PEA, which may also include new results from the
regional drilling programme, therefore the Company now expects the PEA to be
completed no earlier than H2 2023. The permitting process for PMV is also
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 licence, 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.

Proyecto Ossa Morena

Two short drilling programmes were completed at the Hinchona and Chaparral
copper-gold prospects, which are both located in the central part of the
district.

At Hinchona, four holes totalling 1,874m were completed, with the initial
results previously announced in November 2022. The best results were in the
southernmost hole, HIN04, with several mineralised intervals such as 14.95m at
0.29% Cu from 239.35m depth and including two higher-grade intervals of 3.40m
at 0.80% Cu, 1.84 g/t Ag and 479 ppm Co and 1.45m at 1.01% Cu and 6.04 g/t Ag.

At Chaparral, four holes totalling 1,185m were recently completed and results
will be published once the exploration campaign is completed. Drilling at the
flagship Alconchel-Pallares copper-gold project is expected to commence during
Q1 2023.

Riotinto East

Drill target definition continues to progress and the first drill testing of
selected anomalies is planned to start during Q1 2023.  An airborne gravity
gradiometry and magnetic survey covering the entire project will commence
shortly.

Alberto Lavandeira, CEO, commented:

"We are pleased to have closed 2022 with a strong quarter, allowing the
Company to deliver solid production for the year despite the disruption during
Q1. The year was dominated by geopolitical and macroeconomic factors,
including war, cost inflation and an unprecedented energy crisis in Europe,
but for the most part, our operational performance was not impacted.

We look forward to 2023 and expect Q4's momentum to continue, both in terms of
operations and also with respect to energy prices. The combination of lower
market electricity prices and the contribution from our long-term PPA and 50
MW solar plant are expected to reduce our costs materially compared with 2022.

Despite the cost headwinds we faced, our balance sheet remains strong and will
allow Atalaya to continue to invest in growth and cost reduction initiatives,
including E-LIX, higher-grade orebodies and exploration across our portfolio.
In addition, our financial strength means we are well positioned to develop
Touro should approvals be granted, which could become a new source of copper
production in Europe."

 

 

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                  + 44 20 3757 6882
 4C Communications          Carina Corbett                                         +44 20 3170 7973
 Canaccord Genuity          Henry Fitzgerald-O'Connor / James Asensio / Tom 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 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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