Atalaya Mining Plc

Good morning and welcome to the Atalaya Mining PLC 2021 final results investor presentation. Throughout this recorded presentation, investors have been in listen-only mode. Questions are encouraged. You can be submitted at any time via the Q&A tab situated in the right-hand corner of your screen. To 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, the company will review all questions submitted today and publish responses where it's appropriate to do so. 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.

Good morning.

Please go ahead, Alberto.

Thank you very much. Welcome, everybody. Good morning, ladies and gentlemen. It's a pleasure to be here again. We are going to go through the results of the last year, which were very good, as you probably all know. And most importantly, we are going to be going through what's the future of this company and what are the catalysts. And we believe we can try to make a very short presentation and to leave ample room for your questions and to reply to those questions that have been pre-submitted. With me, I have Cesar Sanchez, which is the CFO, and he will be very happy to assist in the responses of questions related to some specific financing number or the process that we are going through to go away from Cyprus, to read the Messiah from Cyprus. Going directly to what was 2021. Probably you have already seen the presentation. You have had time to read the press release. So I'm not going to be reading the whole thing. The important things I would say is that the plant, the mine continued to operate well over the design capacity. And now it's already two years in a row. We produced a record of slightly over 56,000 tons of copper. Good holding and sustaining capital cost of around 250. And this generated a very important cash flow and a bid. And we ended the year with a fantastic balance sheet. Besides those operational and financial results, we continue to deliver in our targets, in our promises. And the first thing is that we paid as soon as we could. The after litigation, we closed that door, which finally has been concluded in March. As soon as we had money, we paid our dividend and we continue to improve the liquidity. And of course, getting ready for the future. Getting ready for the future means confirming the reserves of well over 10 years at Cerro Colorado, our only existing open pit, but most important, announcing that we are doing some other work within the Rio Tinto district called San Dionisio, Massa Valverde, which is around 25 kilometers away, and acquiring some new exploration properties in the north of the planet melt and in the east of Rio Tinto. Besides that, mixing assets with ESG, we have been advancing the ELEX system and decided to build a plant which basically will produce directly metals with electric systems, which is basically fantastic from the CO2 control. We are also starting to build a plant of 50 megawatts of CO2. solar at our site which is also essential when you look at the electrical situation very very worrying electrical situation in whole europe and of course we published already our sustainability report uh added a new director and we continue to advance in uh things like moving to long moving moving away from cyprus which is very important for us so as i said as usual delivering into our promises This is really seen in the graphs of the last six years. We said we were going to be growing and we continue growing. Production, you can see in the first graph, continuously going up, almost doubling our production. And copper production, as a result of higher throughput through the mill, also going up, almost doubling. With steady recoveries, which have provided excellent economical results to the company. those are expressed in slide seven and the most important things of course sales go up as a higher production and higher gold price is our copper price and the most important thing here is to see that how leveraged we are the copper copper is going to stay higher for longer and uh looking at the average prices that we had uh last year uh which were just around around four dollars per pound and we are now at 470 This generated basically 200 million euros of EBITDA, which is roughly 50% of the sales. And most importantly, this is real cash generation. It's not, let's say, accounting numbers. It's real cash. And you can see in the bottom part of the graph how our balance sheet has improved from being negative working capital during these last few years to a very strong net cash position at the end of the year. after including and giving away 50 million euros actually this would have meant if we have not given this roughly 50 million euros dividend that we would have a net cash position of around 100 million euros in our company which was not even 500 million euros at that time market cap and you can also see how we were able to manage the construction and the spending and the development of Rio Tinto during the first few years using with negative working capital which means financing with minimum debt financing with short term loans and with using the cash flow generated from our operations. So very prudent management of cash, but with very good results for the shareholders. The best results for the shareholders has been given in the dividend in October. We declared it in October 21. which was at that time, if I remember well, was almost 7% yield or 8%. And the most important thing is that we decided to set a board to give an official dividend policy between 30% and 50% of the free cash flow generated. There was one question, which I can start already saying it, that when are we going to be announcing the next dividend? Before mid-year, we will announce again, looking at the results and again, complying with this dividend policy that has been approved. We will decide what has to be done with the next dividend. Today, sustainability, ESG is essential for everybody, but not only for everybody as an industry, it's for the world. And what I would say is even more important is to achieve the credibility to be able to develop new mines and to demonstrate that actually the mines, mining, and specifically copper mining is not the problem, actually is part of the solution. Consistent with that, we have published the first sustainability report and we are about to publish our second with full data, public data, which we submit to the key stakeholders and that will be available in our, it is available in our webpage. and and where we have taken into consideration the views the of all our neighbors it's very important nowadays to be in full symphony with the stakeholders our villages around our employees even environmental groups that may be against us. This is essential. And you only need to see what's happening in the new mines being developed or trying to be developed, how difficult it is if you don't have the support of the communities. We can proudly say that our approach has been understood and we are a very welcome neighbor. So this is what we did last year, which was fantastic. And I'm very happy to repeat it, but everybody says, well, What about now? First thing I would like to say is that we have the bad tendency of fulfilling our targets. So we will try to continue with doing that. We will continue producing ore through the plant at a high rate, strip rate of around 2 to 1. Copper rate is around 0.42%, which is what we have in the mine plan. And we will be producing between 54,000 and 56,000 tons of copper. This, we expect a good year. The production will bias towards the the last quarters or the second or third quarter, simply for several reasons. We had some maintenance during the first quarter that we brought in advance. We also had some strikes in Spain, which are still ongoing on the transport, which gave us some issues with receiving line. So we decided to advance some of the maintenance that was scheduled, big maintenance that was scheduled Q2 to pass it to Q1 to take advantage of that forced stop for external sources. Of course, the key issue here is the guidance of costs. I don't think anybody is not aware of the situation with the gas prices in Europe and the systems of electricity to fix the electricity prices in Spain are linked with the marginal cost of producer which is in this case is set by the gas prices. Until last year we were enjoying a stable price of electricity if around 60 euros per megawatt hour But this year we were exposed to the market and the market has gone up. So it's not easy to give a guidance. We have assumed scenarios from 100 euros per megawatt hour to 200 euros per megawatt hour. The first two months in Spain, we have had an average of 210 euros per megawatt hour. So I know people were alarmed when we said Well, we said that we may take actions. Obviously, we didn't want to see these peaks of 500 euros per megawatt hour because we would be working for the supplier of electricity or for Mr. Putin. But thanks God, those alarming prices have only lasted for a short period of time. I'll get a little bit deeper in the electric prices because we have lots of questions. But before that, I would like to point out that there are other investments going on at the mine. the at the company which are all consistent with our growth the first thing is is to complete the power the solar plant second is the first phase of elix third is a lot of exploration uh around us i mean we have we that's basically our future and related to that future is to to make a new a new dam or to start working in a new tailings and expansion And people should not be alarmed by that. They should be encouraged because it means that we have very good hopes that all this exploration in Maza Valverde and San Dionisio will be passing through this existing installation. And of course, when we started this mine, we were looking at only 120 million tons of ore. And now we are probably looking with our reserves and resources in these deposits based on public information. We are talking about over 300 million tons of material that very likely will end up in this installation. So we are looking at our mine life extended around 20 years so far after having been working now for seven years. Very important and very worrying is the electrical situation. People ask us, is this normal? What's going to happen? I wish I knew, but what we can look at is the history. Spain has had, in the lower part of the graph, you will see a price from 50, but quite stable, 50 euros megawatt hour, and only a around mid last year when we had the gas crisis. And of course, after the invasion of Ukraine and so on, we have seen peaks going to the 200 level where we are right now with a small peak in March 2022. This is due to the setting of the production schemes in Spain where, well, in Spain, I would say in Europe, but Spain is linked with the same price of Portugal, where the marginal producer, which means the most expensive one, sets the price for everybody. This was quite good and quite valid. It has been working for years when the prices of electricity and gas and coal did not change too much or oil. So it didn't really matter too much if there were certain peaks of production where coal or gas fired stations went up to, let's say, 60 euros megawatt hour. So you have few days with higher prices. But when gas prices multiply by 10, by 10, there's something going on. And this is not normal because the gas prices in the United States or in Korea, Japan are totally different when we are enjoying in Europe. The funny thing is that Spain actually only consumes around 15% of the gas used by generation. We have a decent, you can see in the charts, the division between Nuclear, hydraulic, lots of wind and solar. So it doesn't make too much sense in an unstable situation that these prices are set. And this is by gas. This is affecting the whole industry. It's not only affecting us. So something will have to happen. So one of the questions will be, well, what can we do? There's a future market that anyone can check it in a place called OMIP. It's a futures market where the futures, as soon as you go away three years, are right now, as we saw it this morning, at 38, 40 euros per megawatt hour. That is telling us that the future will have to stabilize. Actually, right now, today, you could hedge and you could fix those prices. This is what we have done with the advantage of a small low point. We have fixed with electrical company around 30% of our needs at a price around 50 euros per megawatt hour for around 10 years. what we also doing is is building our power plant our solar plant our solar plant um basically is is constructed around our installations you can see in the picture uh shown in kind of bluish the that the plant surrounds uh our our existing processing facilities and this will be plan to start in the first half of 2023, maybe I would say between the first and second quarter. We have had certain delays in permitting, but also certain delays in the supply of materials because everybody is constructing all these kinds of installations. The net result of this is that this electricity basically will be net zero. cost but the reality if we sold this agreement to supplier we will have a ppa of around 25 to 30 cents 25 to 30 euros per megawatt hour then the end result of this is that we can guarantee that starting 23 onwards we will be having an average price of electricity of around 40 euros per megawatt hour, which is 80% of what we had last year and roughly five times less than we have today. We are not stopping there. We are not stopping there. We are looking at installing further solar capacity in other lands that are not owned by us, but owned by the municipality of Nerva, which will allow us to be exposed to this, let's say, be able to sell electricity at a lower price, which can compensate any peak. We have already a preliminary study of wind with four turbines of 4.5 megawatt each close to the San Dinizio open pit, to the Atalaya pit, which will be able to provide us around 15% extra, all of it for self-consumption, which means you don't pay taxes and you don't pay the extra costs of moving the electricity through the net. And we are also looking at several storage systems. Batteries are not economic from our preliminary numbers but we do have two dams with quite a big difference of elevation with clear water and with lots of water. And somebody is doing a study of pumped hydro where we could use the very low costs of solar during the day in Spain and especially where we are, where we have lots of hours of sunlight in this part of the world and store water and pump it and generate electricity during the night. So very heavily looking at this thing because we believe this is the most important thing we have to sort. So looking at 2002 is going to be very active and lots of catalysts. You're going to be having the solar plant. We are going to have the sustainability report. We will be providing soon the 43-101 evaluation or updating of the resources there. after our drilling in addition to that we will continue with several rigs exploring in the area San Dionisio is its other posit basically the continuation of the existing Cerro Colorado pit and it's immediately besides our installations and we will also be given the update of the resource estimate calculated by an independent group from Denver, which is being finalized and will also be published very soon. In the case of San Dinizio, historic numbers show that we have a much better rate, so it should be quite important for our development At Rio Tinto. Todo is in the permitting. We are taking it quite, I would say, step by step to make sure that we don't have a slippage in this. So if it takes longer, it will take longer. We are working with the authorities and we believe that this year will be the year. Besides that, we expect to have some news of the exploration results in the north part of the belt of Azomarena, which is separate from Rio Tinto and also get the first results of ELEX at the end of the year. So plenty of activities to be looking at. What's our goal? What's our view? I mean, the first thing I would like to say, well, where are we going? Somebody asked, how are you going to be in three or five years' time? When we came here, we always said we were not going to be a single asset. So one of the first things we did, even if we didn't have too much money at that time, was to acquire TORU. So we have an asset in total where not only we have an existing deposit, but we have identified a whole belt, which we have secured. Go step by step. First, start producing total. Demonstrate that this is a high quality, clean, concentrate, sustainable mine with good quality. And at Rio Tinto, totally separate, we have put together slowly but steadily without too much commitments of CAPEX and expenditures and buying and options are quite an important land package in one of the most prolific belts. This is very relevant because we always try to do the agreements with a win-win situation where we only pay when we get permits, where we only pay when With royalties, we only pay real cash if we are successful. We will carry the risk of exploring, but we ask the sellers to also carry the risk of finding something or not. So we don't like to overspend. The big future is coming from Rio Tinto. We want to do, we are, preparing to do the same thing, same view that Matzah Sunfire has, which is a processing hub at our installations of Rio Tinto, which are shown in green in the center of the picture, where we will be bringing ore from the different deposits to the central installation. Remember, we have 15.5 million tons of capacity and lots of grinding and and sink floatation capacity that's totally unused so with that what's our goal uh easy to see uh you will see a table in your presentation and and And at the left, you will see some graphs. What we are producing is 56,000 tons. And we see that in less than three years, we will be getting in the 70 range. And with total, we will basically get 200,000 tons of copper produced. In the lower part of the graph, it's a very rough, very blurred timeline of when these things are going to happen. But remember that when we said in 2014 we were going to build it, in one year we did. When we said we were going to expand it, one year we did. Then when we said that we were going to do a study, we did. And when we said we were going to expand and look for other inspiration, we did. So I think there are good chances of this thing happening, as we say. What is the effect of this higher rate zones or the satellite deposits. If you look at that table, I will try to use an arrow if I can, if I know. If you look at this line here, 0.7, you will see that there's a graph which means that if we substitute it 1 ton, 1 million tons of material from our existing pit, which runs around 0.4% copper. And we substitute it by something around 0.7. And if we brought in 4 million tons of the 15 and 1 half, it would add another 10,000 tons of copper without any significant investment. This is exactly what's happening when we look at our existing San Dionisio Pits. San Dionisio historically has grades of copper and copper only of almost double what we have in Cerro Colorado, in our existing mine. It means that just bringing, and this is just common sense, bringing between four and five million tons, you can just add without any additional major investment at our installations, 10 to 15,000 tons of copper while you are extending the mine life for another five years if if you brought in some of the underground deposits of san antonio which have grades of around 1.6 1.7 but they are smaller let's say around 10 million tons per of reserves which means if you mine it in 10 years and you only brought one million dollars each you will also be adding another 10 What this shows is that actually with the existing installation, our capacity is there to be able to produce the 70,000 range. And that's our target for the next couple of years. So in conclusion, we have a very active year going ahead. Important thing is to concentrate into copper, develop growth. develop new projects, deliver in what our promises, and longer term, I would say strategic, would say concentrate in multi-asset, not only have our eggs in the basket, look at something regionally, look at something, if possible, in Spain, because that's where we have our higher advantage. But we're not shy to look at new geographies where we can add value. uh we will concentrate in copper but we are not saying no to things like zinc and lead and silver which also have lots of future and gold and are present in our pirate belt and another important thing that people ask us very often is that try to move to london at the right time the main market for several reasons but simply the main one being that the A market is good for smaller companies but at certain time we believe this company is going to be over 1 billion and I think we have a place we have a place in the main market and we are doing the right steps right now to start with that so with that I would probably start with the questions and

Fantastic. Alberto, Cesar, thank you very much indeed for the presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. But just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. Alberto, Cesar, we did have a number of pre-submitted questions. If I may, I'll just read these out and we'll start through those. The first one I think you have really covered off, it says, you've described that electricity prices in Spain are currently higher than normal. What is your long-term expectation for electricity prices versus today, just in case there's anything further to add?

Our expectations, I think, are marked by the future and by the history. Spain and Europe, I would say, cannot afford higher prices. It's not normal that you have... basically your 85% of the production at sub 40 and due to the fact that something is happening with the gas, you are selling it at 200. So this will have to be set at what's normal, which is around 40-50 euros per megawatt hour, which is the real cost with profit for what we have in Spain and Portugal. And in some way, we'll have to decouple and remove and incentivize and pay the companies to use these gas installations where they are needed as emergency. So the longer term already marked, but what you see in the market in the OMIP, which is already set in that business. beyond 2023, 2024, the futures prices that we could right now lock immediately could be in the range of 35 to 45 right now. So that's telling you something.

Fantastic. Thank you. The second question we have here is, I see that Nissan Dionisio resource estimate will be released soon. Can you talk about how this deposit will be developed and when? Also, what is the production impact and capital cost and what's the permitting process?

Okay, San Dionisio really is the massive deposit under Atalayapet. It has been mined in the past. Actually, this created Rio Tinto Mining Company, where they were mining very high-grade copper and so forth. But of course, at those years, they only mined the high-grade copper. Why bother for something with around 1% when you had a 5% copper? So what really we see in Saint-Denis is there are some massive sulfides left, but most of it is related to the polymetallic, which has copper and zinc. At that time, they were concentrated in copper. But mostly, and more important than the other part, is the higher-grade copper-only materials. So how it will be mined actually is quite straightforward. It's basically expanding the existing bit. If any of you go into Google Earth and look for Cerro Colorado or Corta Atalaya, you will see a hole, a round elliptical hole of pit, partly flooded, which basically will be expanded towards our existing pits. They will basically be touching our existing installation. So what's the production impact capital cost and how it's going to be developed. It's quite straightforward. We use the same mining fleet. We use the same installation, the same processing facilities. It's at the same distance, actually lower than what we are mining in Cerro Coronado. And what we need is to Up to, I think from year three or so, we have to remove the water, which doesn't give us any pain because we already done that when we were mining in Cerro Colorado. Those of you that have been knowing this company for years, remember that the pits were flooded. We had a 5 million cubic meters of acid water, which we treated and used. We have a water treatment plant. So that will be one of the key components of the cost, which is around 0.5 euros per liter. per cubic meter water treatment. So it's not the end of the world. And from capital cost point of view, for the first few years, basically we'll only be moving up the road, which we'll be doing anyway, which is around 7 million euros. We'll be doing it anyway for the expansion of Cerro Colorado. We have to remove some electric lines that are crossing, but we have removed lots of them to expand the plant. And the permitting, we expect it to be quite straightforward because we already have approval for the road. the moving the electric lines was something that we do very often and expanded the pit is like expanding the same way we expanded the pit at Cerro Colorado. I remember that when we started here, We had 120 million tons of reserves and right now we have 250 million tons. So basically, this is quite straightforward. If it doesn't go away from the current footprint of the project, which it doesn't. So we expect it to be quite a simple thing and we're working on it already.

Fantastic. Next question we've got here. Which project has the most potential to add value in the near term? San Dinizio, Massa Valade or Toro?

Well, if I had to put my bets, I would say San Dinizio because The grade is higher and grade of copper is higher. Copper is, we are producing copper. So it's something that we will see very soon in the balance sheet. Second, without any question, Tauro. Tauro is a fantastic project. It has at least the quality or the size of the existing installation, but of course needs the permitting and needs to be constructed. I have no question that it's going to be permitted, but still needs to be built. Masa Valverde is an exploration project that requires some underground development. So Masa Valverde is a long-term project, something that will add value, especially will add life. It will add expectations. It will take us beyond 20 years of life. And I would even say there's a fourth parameter here that we are not even taking into consideration. Only recently we started exploring and we already found things. I think with a good budget and in such a prospective ground, I would say that the perspectives of finding a new discovery in the next 10 years are very high. So another thing that would probably add a lot of value is that we discover a new deposit in our land, which is something that I would not rule out.

Thank you.

next one we have here is you have a big exploration budget for 2022 which project is the main focus for drilling uh you're right 10 million euros is a very serious project uh investment which basically will all of it will be in drilling because we have already been doing a lot of geophysics to define targets so we already have the targets there the most of the targets are around masa al verde because we had the good luck of being able to to test geophysics on top of an existing deposit that had been untouched so we could see perfectly what was the reflection of the geophysics so now with that reflection in that the signal we see okay where is it is it duplicating or showing similar patterns so i would say that um that the main focus will be Massa Valverde and the Rio Tinto East because the main volcanic trend continues towards the East of Rio Tinto. And we also have a few anomalies there. And about 15 kilometers away from us, there's an old mine called Castillo de las Guardas and used to mine 3% copper historically. So I think we have to give a chance that if there's something found there, it could have something.

Great, thank you. What is the latest with Touro? Why is Atalaya building a water treatment plant at Touro?

Well, I don't know if I should start by the last part. It's very interesting. Why should we build something that's historic, is a legacy, something that is not our problem? But, you know, we received a negative environment impact statement two years ago, and we had lots of dialogue. And... And we needed to change the perception that was used by the anti-mining groups saying, oh, look at what happened in the past. They have done it bad in the past and this is going to be the same thing in the future. It's very difficult to explain them that the same way that people 30 years ago their toilets were not the same quality as they are right now their cars were not the same thing and the industry was not the same it doesn't matter the argument of showing pictures of the tailings sorry of the small acid drains in a green bushes and you see a gray red stain was always there, and that was the picture they were using. Even if this red stain is something that you can even jump, but with a small jump, it's not even one meter. So it's not really a problem. It's the picture. Also, they were using the pictures and films of this tailings disaster of Brazil that happened three years ago. So, you know what we said, we are going to change the perception of this. We are going to take care voluntarily and we will do it as a part of future costs. Like you do inspiration. We are taking, going to take care of this historic legacy to show you that this is not really a problem. And we are doing that. And actually we already very advanced in that in a couple of months, it will be ready. And all this has been done. with the knowledge of the administration. They gave us the permits to do this very fast, moving very fast. So this is really what it is. It's basically to show, look, it can be done. Don't tell us that we are going to be throwing any water into the river because we don't want to be shut down the next day after investing $200 million. It doesn't make any sense. So it has been done by a pure consultation with authorities, with mayors of the villages, with fishermen. so that we could take away the arguments of the opposition. Fantastic.

There have been lots of copper deals recently with high values. Matza is one, also Cobar and Sierra Gorda. Alberto, what do you think this is about the industry?

It's a fantastic question. It's a fantastic question. Well, it shows you two things. First of all, it's not easy to discover new things. It's not easy to discover mines. It takes a long time to build and it's showing you that big companies are the only ones that are developing mines and have the capability, technical and financial capability. So how companies are going to be exposed to copper? They see the future and one of the ways they do is by production. This was the case of Sierra Gorda, was the case of Glencore selling a minor asset and also Sunfire and Matzah. What's it telling us? It's telling us that the copper price will have to go much higher, much higher to incentivize new production coming fast and in a big wave, because right now the market is there. We have seen the energy crisis in Europe, but also elsewhere. Everybody's trying to decarbonize. And all of this requires more copper. We are seeing huge installations of green energy being built by China in the Gobi desert, wind and solar, that requires huge amount of copper. Where's the copper going to come in the green world? Needs new mines. It will require, this is telling us that all these companies are seeing higher copper prices, otherwise It's not going to happen. It's a fantastic indication of what we are going to be seeing in the future. With the higher copper prices. That's good to hear.

Can you talk more about the other solar and wind projects that you're studying?

Well, I mentioned a little bit, simply adding more solar. You know that the solar distribution, the sun distribution, everybody understands that it's very light during the sun rays in the dusk and it's at the peak at midday more or less at three o'clock or so so uh this is different in in winter and summer but it's more or less a gauss curve which means that your peak is is basically your maximum you can demand at a certain time but if you built additional additional uh installation an additional surface what you can get is that that gauss uh They'll be much larger and you would be using 100% of your solar more hours during the day. What do you do with the excess during peak hours? You sell it. And you sell it or use it for other things like basically cheap, very cheap energy to pump. To pump or to generate hydrogen or to other things like that. If we had edX working at that moment, we could produce cathodes and have electroweaning at that moment. So this is the reasoning behind solar. The other things like wind is simply because there's lots of wind power in Spain. Spain is big in this industry. And we started in the studies, what are the patterns of winds? In our case, we're not in a fantastic wind, but there's lots of wind farms in the area. And we saw that if you are connected for your self-consumption and not to the grid, you don't need to have such high speeds. The good thing of wind is that it provides wind also during the night. It actually is more during the night, which means we can also reduce our reliance on the external grid. Then what we want is to make sure we have not only green power, which is very nice, but we have reliable and cheap power.

I think the question we have here, yes, you did answer that in the meeting when the next dividend will be declared. Next one we've got here, you've described options for managing electricity costs. We've talked about that several times during the presentation and Q&A. What can you do about other areas of cost inflation?

Cost inflation, look, we have been very careful in buying things that are other consumables like bowls, reagents and so on out of demand. uh out of the system before this and we are looking elsewhere some things are are not enjoying these prices because not the steel price is not the same in spain and elsewhere so that's what we have we have a big stock of of consumables we cannot do too much of of electricity we cannot do too much of diesel because it's the market how we can manage the cost of this so basically modifying the mine plan a little bit so the contractors use uh use less transport basically the distance try to shorten the distance to the to the dumps now in spite of having them a little bit longer in the future so we change a little bit our mind plan We also, to reduce electricity costs, we are using more explosives to fracture more because so far, although the explosives have also gone up quite a lot, they have not gone up so much as electricity. So, small things that we can do to optimize to lower operating costs.

Fantastic. And the final question we have here is, what is the process for moving the parent company to the UK?

I think Cesar is there probably can give you the whole details and is working very actively in it.

Cesar? Yeah, thank you, Alberto. Yeah, so the process itself, so we've been working with the legal advisors to see the best way and the quickest way to go to the UK. And we think that is just establishing a UK entity which will acquire all the share of the existing Cypriot entity. the IPO on AIM as a first step before going to the main market. So that's the idea. The process went in between three to four months. We're now finalising the due diligence on moving to the UK just to ensure that we are get the due diligence done within weeks in order to start hopefully proposing to the shareholders in the next AGM during this year. That's it. So it's just basically establishing a UK entity which will acquire all the shares from the existing .

Fantastic, Cesar. Thank you very much indeed. Alberto, we have actually seen quite a few questions come in during the meeting itself. If I may, Alberto, perhaps just ask you to click on the Q&A tab and where appropriate to do so. Just read out the question and give your response.

Yeah, I can read the question and go through them. I think some of them are very interesting. Some of them we have kind of replied. But look, when will the company release the results of the 43-101? Will we... Ah, we have already said that. When will the company release the details of the 43-101 in San Antonio? Soon, soon. What I mean soon is we're talking about weeks. Finalizing, let's call it. Somebody is asking about the last year we said we are going to possibly hedge in the forward prices 85, 90 euros. What happened? Well, what happened is that the prices shot up and the future prices have also gone up substantially. So, for example, the results of EQ2 right now hedging for the future prices are around 250 and for 2023, if we wanted to hedge, was 133. So basically, it couldn't be done. And we had to go with that. And this offered us the possibility of giving us a lower price for the second part of the year, but basically increasing the rest of the year. So basically, it would be giving us a loan that we would pay later. We believe that we will watch the market. We hope the situation of Ukraine unfolds and we will be able to lock lower prices in the future. Right now, I'm reading in a second the prices for 2400 for the whole year are 87 in 26, already 50 and 28 or 42. But unfortunately, still 2022 is still in the 23 is still 133 range we believe is too high They even know given the new prices there is scope to increase the 50 I've yes I mentioned yes Confirming dividend policy. Yes We confirm that we will continue hardcore ruling. We will ask to drop any future litigation. Yes We don't care if he litigates or not. He has nothing to litigate. I he will have to leave the security. We continue paying the marketing fee, yes, until a certain amount of material, although it's fixed, until we deliver all this concentrate. We believe, I think, it still has three years. or four going on management incentives it is important resident board selling to finance options well this can be misinterpreted but let me tell you it's important to mention this uh the reason for selling is because we management has very short periods of of open periods that we cannot sell uh because we are always in blackout periods. Otherwise, these options would lapse. So that was the only way for some of the management to be able to finance the purchase. Myself, for example, I exercised the options and I paid with money and I did not sell any shares. So I have paid the option and I'm a happy holder of additional 150,000 shares. So it was simply a matter of that the management left it to the very last minute because the options were expiring and we were entering in a black period. So that's the whole reply to the question. You are not hedging any production currently, as far as I'm aware. Can you explain the rationale behind this, particularly against backdrop of potential sharply higher costs? Are you expecting the higher copper prices? And in relation to that, what is the copper price that you're basing your budgets on? Yes, we are not hedging. And we have been asked to hedge several times at $4, at 350, when everybody thought it was going to be much lower. If we had done that at that moment, we would have been killed. Right now, at least part of the losses of energy costs have been in some way compensated by electricity and higher copper prices. Today we are at 470. I should remind that only one year ago we were not even at 4. So I think we need to be exposed to this unless we hedge the whole thing. If we hedged copper Energy and exchange rate probably yes, then you lock certain numbers, but otherwise Locking copper and then is supposed to do To all the things that can be very dangerous Do we expect higher cop prices? Yes. I don't know when but yes The only copper that's coming on the world is the right now is Congo Camorra Calcula and And two other projects that have been built, significant projects that have been built in Peru, Callabeco, and in Chile, Quebrada Blanca, later in the year. But beyond that, there is nothing. So only to remind that the studies of supply demand last year are showing a deficit of around 1 million tons of copper per year. and International Copper Study Group from Lisbon, which is very conservative, deficit during 2021 at 475,000 tons of copper. What does it mean? It means that in spite of people saying that two years ago that the copper price was going to go down, in spite of the copper price having exploded up We have not seen any additional production and we are in still a big deficit. Another important argument against hedging at this moment is the potential squeeze of margin calls. We have seen what has happened with some people trying to fix prices of prices of commodities like copper and gas. And I would not even know what has happened with coal and having to post margin cash. This can destroy a company. Why am I a little bit scared of this is that the stocks are very low and we only need a huge problem in Congo uh we only need a problem in in chile in one of these big mines and this can happen anytime that suddenly there is no copper and because the demand is there the copper can shoot like i have seen shooting in 2005 with the nickel going from two and a half to 20 for good reasons so i believe that the coppers are going to go up As per our budget, I think we made our budget at 4.15, if I remember well.

4.30. So we normally use for the budget process the forward curve at the time that we do the budget. That's normally the Q4 of the previous year. And then we normally do quarterly forward price. But the average is 4.29.

There is an interesting question here that, are you considering any projects to recover minerals from historic tailings? This is something that somebody has published and it's not with our knowledge or agreement. We have a partner called RUMBO, which has 50% of the gold tailings. The gold tailings contain around 0.35 gold and around 30 grams of silver. In theory, that's almost like 1 million ounces, but the recovery is very questionable due to being very refractory and very difficult. So unless the gold prices went up, it would not be economic. Somebody is saying that they have a fantastic system and they are going to be using the system, which is a system of basically leaching the whole thing with nitric acid. I'm not sure if people know how you can leach with nitric acid. You can leach everything, including the tanks and the pipes. So only plastic holds it and titanium. No, we are not considering that at this moment, although we don't rule it out if gold went to 200 or silver went to $40 an ounce. Is there likely to be any progress in total? Well, I've mentioned that. We expect some news this year. What is our current estimate of free cash flow for the full year 22? Very difficult to say that in the light of the energy prices. Look, our operations are going to be similar to last year. And for whoever has made the question, we consume 24 kilowatt hour per tonne. uh that means around 370 000 megawatt hour per year it means that going from what was last year uh costs of electricity which are around 60 rough numbers to 210 this first two months the difference is 150 150 euros multiplied by their our consumption it means that this if this electric prices stayed the whole year it would eat around 55 million euros of our bottom line. Against that, you have to add a better exchange rate, which will help, and you have to add a slightly better copper price if it continues like it is right now. So we only need a crystal ball to know what the electrical price is. Other inflation is diesel. and in a certain way, explosives, all of them related to the oil and electric price, but without the big influence of the electricity. Michael is asking, when could Massa Valverde begin initial production? Hard to say, but I think we could probably get some production from the polymetallic in around three years time. when because we need to develop around to get to the deposit called mahanales we are getting the permits the probably later this year to drive underground decline and the ideal situation would be to have the helix working at that moment because it's polymetallic so the earliest i would say three years maybe two years and a half or three years but we have lots to chew in san denisio and san antonio Marcos is asking about consolidation M&A opportunities pipeline consolidation in Rio Tinto area and in recent approach to Atalaya started by then no no recent approach to Atalaya but I'm sure we are in the radar screens of everybody because we are very good or showing very good value and certainly there is a good consolidation potential Rio Tinto with Sunfire being here. But remember, we also have Las Cruces with a polymetallic deposit of around 40 million tons further to the east. We have a couple of private companies drilling and making some nice, interesting salts. We have some private companies in Portugal. We have a public company with Londin in Neves Corvo. and two other juniors drilling in SPANC Global and Emerita. So there's lots of activity in the Pirate Belt. I mean, I don't rule out that something happens between all the six, not necessarily with our neighbors, Sunfire, but with the six or seven. Consolidation is answering this question. It's basically the potential to use some synergies since they are some of these deposits are very close and obviously we have a very big installation where we can we can handle more more copper if or more material if it was needed it's very important to be in production um juan c is asking just to check will you give us the ira respect to the renewal investments that that you are doing and considering please I don't remember the IRR, but I do remember, I mean, specifically in the wind, I do remember the cost of solar, which has gone up a little bit due to the silver and costs, but even so, it was a payback of six years. And my life of, sorry, the life of these things is around 25. So it's not a fantastic huge return, but it was a quite decent return. The important thing is you can finance this with loans from main Spanish banks with no recourse except the installation itself at a very low interest rates. But the return is quite good and it's very straightforward. There's no question they're economic. Are you able to provide an update of the LX process? Well, all the key equipment, electrical cells, anodes, cathodes, civil have been ordered or are in the in the in the process of being ordered and started so we have not started physical physical construction itself in the ground but all of the equipment and everything has been ordered and paid for so we believe at the end of this year will it will be okay in the meantime the The company is doing test work with the existing pilot plant to test production of zinc, production of copper, and so on, with the existing installation, so that the production activities will be better when we start. Joan B. Borras is, what's meant with the right time for moving to the main market? Is it really a sign on the UK necessary as the first step, Cesar? Is it needed to read the style in the UK first?

No, I'll just simplify the process quite a lot. I mean, having been a Cyprian entity means that you need to comply with the Cyprian company law. And then during the process of listing in the main market, being in the Cyprian law, my greater confusion as a UK might assume that this is a UK

If you apply the recently paid prices for other Sunfire positions or Perton on couple multiples of companies would that mean what? What would that mean for the share price of Atalaya? That's really asking about that. Well Very high I would say very high I Probably, yes, probably double. Probably double than we have, which is probably the next question, which is, is it fair to assume that this translates into a theoretical price of 800 million? 800 for Atalaya, 8? Yes. I think these are the two questions at the same time. If you look at the theoretical discounted cash flows, our share price should be much higher. Especially when you add Toto and when you add Sandinicio and so on, really the numbers are very high. If you look at transaction multiples, yes, our share price should probably be double than that.

That's probably a great time to end it, Alberto. Thank you very much, Cesar, as well. Thank you very much indeed for answering every single question we've had through from the attendees today. So thanks for posting those. Just before we redirect your attendees to give you some feedback, Alberto, perhaps just a few closing comments, if I may.

Well, I would say thank you very much for the support. I think this company has each time more and more got more support, more shareholders. They see the value. It gives us also lots of, let's say, power to continue delivering and continue growing this company. We don't like to be still as we've done in the past. And we really would like to see this company growing and getting better because I could recognize lots of these names in the questions. And there are shareholders which, like I am, in this company, we believe it has a great future. So I want to take the opportunity of thanking everybody. for their continuous support through the bad times. And now that we are in better times, we have gone through bad times. So this electricity is only one more. We will succeed.

Fantastic. Alberto, that's absolutely fantastic. Thank you again for updating investors today. Could I please ask investors not to close this session and should be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and is greatly valued by the team. On behalf of the management team of Atalaya Mining PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you and good afternoon.

Thank you.