Atalaya Mining Plc

Good morning, ladies and gentlemen, and welcome to the Atalaya Mining PLC Q3 Results Investor Presentation. Throughout this presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated in the right-hand corner of your screen. Simply click Q&A, scroll to the bottom, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. However, we'll review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard and you'll be notified once they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Cesar Sanchez, CFO and Alberto Lavandera, CEO of Atelier Mining PLC. Good morning.

Hi, good morning. Thank you very much. Ladies and gentlemen, thank you for being here and taking your time. We'll be running through the results that we had in the third quarter, which have been very good. I have with me the CFO of the company, and we will be following the presentation that we found in our webpage. Going directly into the subject of the meeting, in general, I would be kind of running through the presentation and through the past results. but at the same time trying to give a little bit of background where it's needed because we assume that there may be some investors that are right now, potential investors that right now are not shareholders. So please, those of you that know the company very well and have followed us for a long time, excuse me if we kind of repeat some of the things that are obvious. If I started with page five of our presentation where we reviewed what was the Q3, Look, in two words, and everybody can read it, but it went very well. The mill continued to, the mill expansion continued to work at full capacity, more than the nameplate. We are going to be in the range of the 54,000, 56,000 tons of copper a year, which is higher than the guidance and very likely in the high end. uh due to the good productivity the rolling costs are going to be low and of course due to the good cover prices and and good operational performance not only we are doing well but we are going to be doing well we believe enough and of course the balance sheet is improving significantly you will see that right now at the end of the quarter we had 90 million euros we are now in mid-november you can imagine that the situation has continued to improve so At the end is delivery. We said in the last presentation that there was no intention to sit in the cash. And we have delivered again and again. We have approved, the company has approved a 30% to 50% free cash flow starting in 2022. But actually, we had already a good year. And we started with our first maiden dividend of almost $0.30 per year. per pound share, which I think is a fantastic yield of over 7% and still the cash flow building up. In addition to that, we said, look, this is not a dividend company. This is a growth company. And we are starting to announce results of the drilling at Massaval Verde. It's a satellite deposit around 25 kilometers from Rio Tinto and at Majadales, which is one of our discoveries. We'll continue to do that. Well, as a result of all this good news, people are starting to know us. Liquidity has been improving quite a lot. So I think we have been trading average of half a million shares in the last few months, which is an excellent outcome if you remember when we only had less than 20% float. We have lots of institutions in our shareholders All this is important, but for us, health and safety for our employees and NSG initiatives are essential, like it should be. We continue to work well with the COVID situation. In Spain, as you know, things are well. In our company, it has not really affected us. And we continue to, we work in a mine that's sitting besides populated areas. So for us, dust control, water, It's essential, no absolutely zero discharge to the environment in water, trying to reduce the historic footprint and historic problems here. And now, finally, starting to build a solar plant at Rio Tinto to utilize our land and the fantastic sunshine that we enjoy here. What's the future? The future is we continue to prepare the 43-101 reports in our satellite deposits of Cerro Corrales and Nisio, San Antonio, also Maza Valverde, satellites I mentioned before. And those are complex copper and zinc. And one of the ways we believe we can get a better outcome of those red deposits is to produce metal directly. This is our helix system. For those of you that don't know it, it's something totally new in the world, which will produce metal directly. But most important, it gets a very high recovery of these complex ores. We do have another project in Galicia. It's called Touro. We continue with the permitting process. We are very careful. We are doing things the right way with lots of communication and stating the facts. We know that the people, I don't think they're against us. I think people are not well informed. but we simply deliver deliver show what we are doing right and what we can do and we will talk a little bit about that also if i go if i go to to page six and going directly to the results i mean strong copper production you will see in the in the in the graph how copper production has been going up steadily in the last years recovery recovery picking up from the small downs that we had when we connected the two expansions. For those of you that do not know the company, this project has been built in a very short period of time with half of the capex that was expected and has been delivering since 2015 after being over almost 17 years stopped. It has been built in three phases. and right now we have already been operating during the last three quarters with expanded well over the name plate capacity and of course these results in a steady copper production in the range of 50 to 55 000 tons on a live basis in a moment where the copper prices we are enjoying very good copper prices as a result of all that you will see in slide seven that of course our revenues have gone up to basically almost 100 million euros per quarter. So we are talking about analyzed 400 million euros per quarter, which is a good sales. Importantly is EBITDA. Now you can see our efforts of building this expansion that are becoming evident and we have generated significant EBITDA in this last three quarters. which basically take us to an analyzed number of around 200 million EBITDA, which is a fantastic result. But the most important thing and most spectacular is the cash flow generation. I mean, I know people were questioning in the past about if this company was going to generate cash. Well, it's becoming evident now. Then since in the lower part of that graph, if you see what was our negative working capital position when we basically built the plant and built the installations with using our own working capital and minimal dilution from the shareholders. Remember that back in 2019, we only raised less than half of the shares that we needed. Since then, we have been delivering, we constructed the installation and since then, even with lower cover prices, producing nice excess cash flows. As we sit right now, we sit in a fantastic cash position, which can be seen in the next slide eight. So right now, our cash at the end of this quarter was almost 145 million euros. Since we have some debt of 52, which was used to pay the historic liability of Aster, which we also got rid of. We are sitting in almost 90 million euros. We were sitting in 90 million euros in the last quarter, one month and a half ago. But as you can see, the working capital surplus that was 17 last year and now 126 means that we have improved the balance sheet in the last nine months by 100 million euros, which is a very significant outcome. And that's including the fact that we use a contractor. So the contractor has always the higher costs of capital due to them replacing the equipment, but also the fact that we continue doing some investments in tailings thickening, as you can see in the lower part of the picture, in some optimizations of the plant that has given us better recoveries, in expanded tailings facility for the future, and so on so even so we have been able to generate this this excess cash well and this has resulted in the in uh announcing the dividend in the 27th of october most of you that are shareholders will have seen the results and and it's a first dividend so it has had some hiccups and some issues of of the distribution list and so on but we are overcoming all that uh the time of payment is arriving and this is uh and his team is doing a fantastic job to get all this thing done. And hopefully in less than 15 days, you will be receiving those of you who are shareholders, the money in the bank. Somebody asked me, will this be the last one? Well, we don't know. We have said that we will issue between 30 and 50% of the free cash flow generated. to our shareholders, leaving some room for expansion, for future, for growth. Well, things are going well. If the prices of copper continue to be good, maybe the board can decide to top up a little bit. But as I say, we always deliver in our promises. So certainly we are not going to... We have been very disciplined with the capex in the past with the cash. thing is not going to change so the cash is not going to be sitting or balancing forever so yes we are a dividend player now uh for a surprise of many but this is not about dividends this is about growth we have a mission the first get into production routine to then expand routine to then what's beyond that well we have a very good land position which is shown in colors in the screen. It's a quite significant land package where we have a centralized mill and we are doing some exploration in the east. It's shown in green and in orange. And southwest, we have another area called Valverde, 29 kilometers joined by a public road where we are doing significant exploration. In blue, You will see the land holdings of Matza, recently acquired by Sunfire. And I may compare with what are the resources based on public information of what they have and what we have. So we can start, people can start seeing that actually the copper resources that we have in federal Colorado, our current mine, the one that's producing cashflow, are only the tip of the iceberg and we are going to be growing. So if I may expand a little bit, what we have, for those of you that do not know the company, it's an open pit. It's shown in red. Between around 2.4 kilometers long. And east and west, which is right and left in the picture, we have two deposits which are historic, are well-known. One of them is called San Antonio. It's underground. Good grades, good combined grades with lots of lead sink also. And at the left side on the Onisio, which where we have envisioned several scenarios of open pit on the ground, it's a combination. There is already an open pit. We're thinking in expanding that and mine the remnant on the ground. It will all depends on the economics. Also contains copper, copper and zinc. So those will be treated in the same plant that we have. Here's a picture where you can see the location of our installations in our plant, which is a 15 million tons per year name plate. but the reality is 16 million tons. At the left lower part is the Corta Atalaya pit, which we plan to expand. And in the bottom right is our existing pit, where we have a mine life of over 10 years. But this is a very prolific belt. In slide 14, you will see our mineral rights. with the existing mines. You will see that there are several existing mines already. Las Cruces of First Quantum, the three mines of Matza, Sunfire now, and further to the west, we'll have two other mines, Almina and Neves Corvo in Portugal. It's a very prolific belt. Because it's a very prolific belt, the first thing we did is we got two years ago in Massa Valverde, and where it was drilled, we had an option where Typically of us, we just work and we didn't announce anything until we got it. But we did discover a deposit called Majadales, which is shown in the right side of the picture. There we have put a few holes. And the last one we have announced has significant copper values with zinc and lead and silver. About one and a half kilometers to the west is the main Maza Valverde deposit, where we have two rigs right now. because the distance between those holes is very wide. So it's quite open and it's a significant deposit. We are preparing the 43-101, but at the same time, we're starting to release the fantastic outcomes of this deposit. It contains some sink areas, but it also contains some copper-only areas. The copper-only areas could be sent by road directly through a ramp to our installations at Rio Tinto. So we wouldn't need any specific plant there. And that's exactly what Matza does, trucking ore from the Sotiel mine, which is just five kilometers north of this one, trucks it to the mine north at Aguas Teridas, at Matza. If you look in a flat view, this is a kind of... Imagine this is a kind of... long deposit of one kilometer long, very thick, about 200 meters. It can be seen that it sits between 400 meters to 600 meters to 700 meters of depth. It's open in all those directions that are shown in arrows. It's a significant size deposit, and it shows that the area has a lot of potential. In pink or kind of purple, the sink areas, in copper, the copper areas. You can see that there are some copper-only areas that are not polymetallic. We are very excited about that. And what can be the effect of this? Well, somebody asked us, what would the effect be if you could bring a little bit of this copper into your installation? Can you produce more from Rio Tinto? Well, yes, we can. Of course, it depends on what you bring in. You can bring some areas from, let's say, 0.7% San Dionisio which if you only added, let's say, 1 million tons, you would add 3,000 tons more of copper to our current production. If you added 4 million tons, you would add 11,000 tons of copper. Of course, you can also bring some underground, like at a 2% from Massaval Verde, and if you added, let's say, 1 million tons, which is a very small amount, that will bring 14,000 tons of copper additional. So, we do have a good potential of growth just in our satellites without making any significant amount of expansions at our site. That with Tauro on a 100% basis will get us basically close to 100,000 tons of copper produced in a stable country like Spain. So that's more or less our growth. And people ask us, I mean, oh, We didn't know there was copper in Spain. Well, there is lots of copper in Spain. It used to be storage. That's where Rio Tinto mining started. And Mazza, the deal of Mazza that has been bought by Sunfire for 1.9 billion, I think has helped to put the pirate belt in context in the map. Mazza has, you will see that table in slide 18, a plant of 4.7 million tons per year, fantastic plant. And we have 15 million tons, basically 16 million. they have an enterprise value of 1.8 million based on the purchase price. And we have a 650 million. But when you start looking at production and figures and copper reserves and resources, and all this is based on the public disclosure of the transaction by Sunfire, you realize that actually we have probably higher resource life. We have higher reserves and we have higher copper equivalent resources. So it doesn't mean they are wrong. What it means is probably we are wrong, which is really low. In addition to that, of course, we are trading at less than three times enterprise value EBITDA versus a transaction of MATSA for almost five times. And also the much lower enterprise value per ton of reserves and resources. That means basically how do you value your company compared to the metal that you have in your inventory. So we are probably trading between 160% to 250% less than what they had. Of course, the Mazza deal is a fantastic deal, good grades, but also shows you that the potential of growth of our company is totally not known in the market and it's not well understood. So I want to emphasize that, that basically we are a growth company, not only a dividend. Let me talk a little bit about ESG. I mean, for us, this is essential. It's all about people. We have a fantastic team that has been able to do all this in this last few years. For us, governance is important. We have a board that is independent. We only have two persons representing the shareholders, but we have independent board members, charters, and so on. We are a company that is not shown there, but certified ISO 9000 in quality, 14,000 in safety, sorry, in environmental, 18,000 in environmental safety. We have also signed the protocol of the United Nations. We're one of the few companies of the mining world that has signed that. And that means adhering and really being consistent and transparent with all of our our initiatives. All these initiatives are going to be recorded in an ESG report that's been prepared and will be published soon, certainly before the end of the year. And of course, since then, we are going to continue every year. For us, the pillars are environmental and climate change and try to reduce our carbon footprint. Essential on that is the ELEC system. Essential on that is the recycling of water, tailings thickening, zero discharge, and so on. Keeping society, we have to be good neighbor. The place where we're operating is Rio Tinto. We are surrounded by seven communities, some of them villages only sitting a few hundred meters from the pit. And although we are probably not very well known in the total project by some, let's say, communities, the reality is that we are very welcome and good neighbors at Atalaya, at Rio Tinto. We have most of the suppliers are local. All of our employees are local with jobs long-term with training of local people, the local workforce. We are a company that's 100% Spanish operators and employees. A few from outside of which are historic and Spanish residents for some time. But something that we believe that we have to be good neighbors for the long-term. In addition to that, we believe in the research and development. We believe in the future. And that's why we have been working with this LX system, which is sponsoring some people, some person that has discovered something that can change the world to produce directly metal. And we have been working with this already for five years. And we believe this is going to be something announced very soon. Besides that, it's incredible the amount of technology one mine has. If you're not familiar with mines, it's not really a quarry by itself. It's just an excavation. It's controlling where each truck goes, where each machine goes. There's over 800 motors working at any time with 1,500 control points and around 20,000 signals at every given moment all controlled from control rooms almost and more actually that you would find in a passenger plane that's the type of complexity that's where sometimes we feel a little bit how can I say that we are not transmitting that because when people doubt that we are going to be doing things right for example in a total project not being able to control tailings or control control our discharge the river well if we are doing it right now if we are using satellite controls to control any movement including day and night i mean being in the in the first class why wouldn't we do it in these new projects so eventually it's a problem of of transmission it's a problem of education we will we'll get there So those are the pillars that we have in ESG. So in conclusion, I used to say that we don't want to give surprises. I mean, I'm very proud of the team that they tell us the wrong things soon so we can correct them. We have always been guiding what we are going to be doing. First, a few years ago was to reduce the capital costs. increase the production expand and always always we have been delivering against the odds of lots of people and and so the targets that we had in 21 like reducing increasing the production in safety growth options some sustainability disclosure and so on both have everything has been done or is in track so The last one was giving back dividends. Near term, we will continue with growth projects, basically concentrating on our land. But we don't care to look at the future in other places. We continue to work with the increased liquidity of the shares. And I think that's improving a lot. And you have probably seen that six institutions, six brokers are now covering our company. That's a signal. of the interests of this company, all of them with very good, nice targets. And I think people are starting to realize that we are a serious company. One of the things we are doing, we said, is how can we re-domicile our parent company to the UK? And there are a few questions that we will answer about this. We are working on that. Long term, what are we going to be doing? Well, have a little bit, not have all the eggs in the same basket, become a multi-asset producer. Obviously, TOTO is our first goal, but if that one gets delayed, well, we will continue, insist and be patient, but we have other growth options in the south part of Spain, and even we are going to be looking at other parts of Spain and the rest of the world. We probably will be exposing ourselves to other commodities if it's an opportunity. And one important thing strategic is to move to the main market. I mean, I know we inherited the situation with AIM. Okay, we have gone, made a lot of changes, but the end game will be to move the main market, which provides more liquidity, more visibility. And we are working on that. i we say the right time but you all know that when we say the right time it's it's not going to be it's not going to take long so look um in the presentation besides uh besides what i just mentioned you will see uh the register summary of the registers and the recommendations of of shareholders uh how are we compared with peers i mean compared in with in production ratios and so on how How are we in costs, in all in sustaining costs? You would see that in page 29. And you also see a summary of the reserves and you will also see a little bit of total and ELIX. But that's for any of you that want more details. In any case, I think the best thing is to get into the answering the questions that have been submitted. We have had lots of questions and they have been kindly summarized into groups so that we try not to leave any question unanswered. So with that, I will open it back to the moderator.

Fantastic. That's wonderful, Alberto. Thank you so much. Thank you, César, as well for the presentation. Ladies and gentlemen, as Alberto said, we have had a number of questions, so please do continue to submit them just by clicking on the Q&A tab situated in the top right-hand corner of the screen. Just while the team take a few moments to review those investor questions submitted already, I'd like to remind you that recording of the presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard on the InvestorMeet company platform. I'd also like to remind you that your feedback is important to the company. immediately after the presentation has ended you'll be redirected for the opportunity to provide your feedback in order that the company can better understand your views and expectations says alberto as you as you uh did state we've had a number of questions both pre-submitted and during today's live event and perhaps if i could start the q a session off of the first question which relates to elix and it comes in four parts um which i'll read out all four and if you want to repeat them as you go and do let me know it reads as follows how much will it cost to build a full-scale plant How long do you expect it will take to build the full-scale plant? And have you applied for any EU environmental initiative grants to support the cost of building the plant? If so, could that reduce the cost? How much could that reduce the cost by? And when we'll hear if that application is successful. And the final part, does ELIX technology help to increase Atalaya's reserve and resources? If so, can you quantify that for us? I appreciate four parts of that. And if you want me to repeat any, just please say.