Atalaya Mining Plc

Good morning and welcome to the Atalaya Mining PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. before we begin, I would like to submit the following poll, and I would now like to have with the CEO, Alberto Lavandera. Good morning to you.

Good morning. Thank you. Thank you very much. Thank you for everybody for being here. And first, let me apologize for not having my camera on. It looks like we have some... I'm here. We have a Speed for some reason so in order to preserve the quality Of the presentation we have taken it off with me. I also have a Cesar Sanchez the CFO of the company So the idea here would be to kind of review As soon as would be a short presentation the results of the first quarter and And especially, as usual, try to answer as many or possible all of the questions that we have received. So if I may advance through the presentation. As I say, I have Cesar Sánchez also with us. I think the first quarter has been a quite good quarter, a positive start. I mean, it's not probably not the best. It looks like we have started in a slow mode from the production point of view, since we only produced 12,000, 140,000 tons of copper, but this was due to the advancing of maintenance plan that we had for April. And I can report here, I think I have said it in public already, that in April we more than recovered the lost production in March and so far May is going very well. And as a result of that, we have kept our outlook and we believe we are going to be as expected. Cash costs and all in sustaining costs have improved versus previous year, and especially when you compare them to the equivalent quarter of 2022. If you remember well, the electricity prices then were very high. As a result of those improvements, and although even that we didn't have a good cover price as we had the first quarter of last year, we generated a positive EBIT of 24.4 million euros, around 25, a bit more, 26 million dollars. and we kept a very good balance sheet we know that even after continuing to invest in the solar plant and helix and repaying some of our our medium term boring one of the things somebody has asked and we will respond is that we decided to go away from the Toronto Stock Exchange. And I may advance now that simply the reason for this has been cost savings because we didn't have any significant volume and the big shareholders that we have in Canada, in any case, they didn't mind staying only with AIM. So this is simply a cost-cutting exercise, no other reading from that you may have. From the assets point of view, we have announced the results of the PEA at Ritinto. I will try to elaborate a little bit on this because I think that supports the growth of this company in the next few years. And we continue with the construction of ELEX plant and the 50 megawatts solar plant. We also received the authorization and approval of the AU of Mesa Valverde. And we also announced, but without a big announcement because it was post-quarter, the receiving of an AU to expand the Rio Tinto mine. From other points of view, ESG point of view, safety, health and safety, our metrics have been continuing very good. We had a couple of months without any lost time accident. We have been working with initiatives of restoration, the water streams are total, which are essential to get the permits there. And after the closing of quarter we also announced the filing of an ESG report that is in our web page so going directly into this details in the graph that we like to show you can see how the throughput in the right side columns throughput of the mill has been more or less constant one week stopped since we said before which compares similar to first quarter of 2022, one week stop due to maintenance, recovery as usual and copper production consistent with this stop. And as I said, this copper recovery in April has more than compensated what we had in the first quarter. Besides that, grades and throughput, recoveries and so on have been quite consistent with the results. Revenues slightly lower than than previous quarters due to the lower production but similar and a bit they're going up again versus the the third quarter and As I said net cash position, this is the important thing has remained healthy the working capital surplus is 85 million better than similar what we had in last last year and and with a cash position at that time, 120 as we speak right now is higher than that. So we are in a much better position than we used to be in the past. I should probably remind those that do not know so much the company, how this last two years have been quite a big change since we finalized the expansion of the plant. And you can see that in the bottom graph in in the slide eight where immediately after the expansion was was finalized the cash flow generation was very good which allowed us to pay a dividend in the last year about sorry previous year and also to pay a remaining debt to astor or we close that file once and forever so we have started to give some um additional details in our cash costs so that people can follow up the evolution of our company how things are going and i think the only thing to highlight here is that there's a significant decrease as you can see in process costs process cost includes electricity electricity was the reason for the main reason of the higher cost last year And this seems to be getting to an end. And finally, we are back again to kind of normal costs. We still have some resilient, higher operating costs in things like lime, explosives, diesel, also going down, but they were still there in 2023, the first quarter. We will see improvements in this costs during the second quarter. Explosive seems to be going down in correlation to the gas prices, the international gas prices, to remind you, reached levels of 300 euros per megawatt hour in August last year. And recently, the European gas prices have been in the range of 32. So it's like 10 times lower than that. And the Spanish prices have been around 25, so even lower than that. those gas prices have immediately immediate influence in the electricity prices so as a result of that our oil and sustaining costs are substantially lower than the equivalent quarter last year and it should be much better in the next in the next quarter which i expect it to be much better due to higher production, which means divided by your fixed cost by a larger units of copper, but also due to the reduction of the main components of consumables that I mentioned before, explosives, diesel, steel, lime, and mainly electricity. Electricity is shown in slide 10. We have continued to show this several times and you can see the evolution in the upper part of the graph of the electricity prices in the years before 2022. In 21, we were covered because we had a one year and a half contract. 22, we're exposed. And how is 23 going? Well, we started obviously with a much lower price than 22, but We also started with a PPA that we had signed in the early part of 2022. So one third of our costs have been covered around 54, which is that line that you see there, dark line. And in the lower part of the slide, you will see a green line, which is the evolution of the spot prices. As we speak today, this week, the prices in Spain have been around 54, 55, 50, in that range. Due to the high influence of the wind, which has been very high in the last couple of weeks, and also due to the solar influence, which is the higher now in this close to summer. Tomorrow we are going to be in the range of 60. As you can see, these sort of numbers are basically the normal numbers that we had prior to 2022. So we expect an even higher decline of the cost of energy and as a result, the cost per pound in the second quarter of this year. And I also expect this to continue during the rest of the year due to the huge construction activities of solar and wind in Spain. Actually, this last week, we had one day where all of the production in Spain was produced with a non-CO2 origin, 20% nuclear, and the rest coming from wind and solar. So this is the tendency in the future in Spain, and I think it's good news for the company. So result of all this, our guidance, we're still maintaining our guidance of costs of around 3 to 320 for a year. but it looked like this is probably high end because we had assumed market prices of 100 to 150 to be conservative but during during the first quarter we had a close 200 but in the second quarter so far we are quite below 100 so probably in the 70 level 80 level so we expect to see a lower influencing our costs. From the production point of view, we continue to point to the mid-range of 54,000. That's what our projections are showing now. So if things go correctly in this half of the remaining of the second quarter, we'll be more or less in the 54,000 tons of copper produced. Let me speak a little bit about the PA and where are we going. Several things from the reduction of costs are initiatives that we are doing, as I spoke before, the solar plant, construction of the ELEX plant, which is the first kind of commission, industrial plant of leaching technology to to produce metal directly and the most important thing has been the the release of the results of of the pa on san antonio san denisio and the continued permitting stages of total besides that we have other projects called valverde and osama which are in rio tinto east where we continue to drill and we have four rigs working there The most important thing is really the, let me, before I go to the PA, let me finish with the 50 megawatts solar plant. Sibyls are ready. They're working in the service station right now. In the bottom corner of the picture, you see all the panels that are there. And hopefully, next time we meet, we will be showing all these panels on top of the surface. The startup data has been given by the construction companies the last quarter of this year, with a little bit delayed from before, basically because they had too much work. That's, to be honest, the reality. ELEX is almost the same thing. This picture's probably a bit old, but the construction is advancing and all of the equipment is there. We had 30 persons visiting, investors visiting the site last week. They could see the amount of equipment that was there. Still, the activity is not at full steam, but we still have to expect this thing to start processing some concentrates in the second part of the year, although I believe it's going to be closer to the mid part of the second half, so end of summer. This is the way I see it personally. and we continue to explore, as I said before. We have four rigs right now, a fifth being added, drilling at Masa Valverde satellites, at Rio Tinto East, we have also one rig there, and at an iron IUCG, so basically copper gold project in Osa Morena, where we have another rig right now, and maybe we'll move a second one. But the important thing here is to speak a little bit about the value generation of the PA of Rio Tinto. We have a huge mill, a large mill working efficiently in the last eight years. Besides that, left and and right on the picture, which is west and east, we have San Dionisio and San Antonio, which are two satellite deposits that were known, that we have been drilling. Cerro Corral is our existing pit. Besides that, we have another satellite, Masa Valverde, around 29 kilometers south. So, obviously, we said, what can we do with this? The idea is that since at Cerro Colorado we have around 0.9 million tons of copper or copper equivalent. But when you start adding what we have in San Dionisio, Maso Valverde, San Antonio, El Conchal, Even without TOTO, we are getting close to over 4 million tons of copper, so almost four times what we have at existing reserves. And the most important thing here is what you see in the right side of the picture, where our grades are around 0.4 at the existing pit. But in the other satellite areas of San Dinisio, San Antonio, both open pit around the ground the grades are much higher and some of them contain in addition to that thing so it was an obvious choice to see how can we exploit the federal colorado but bring as soon as possible this and the inicio into into production so what's an issue and what's the the global p of an integrated plan it's basically what you see in this picture we have an existing pit which is if it was alone it would be running for around 10 years but let's say in the far east which is the far end of the pit around one kilometer away we have the san antonio deposit which has higher copper grade and sink and uh west of it is the old san antonio which is the corta talaya pit where previous owners were mining very high copper and they left in the side of the wall things with around 0.9 copper obviously this this grade is is double than what we have in the existing pit so we should obviously we should try to integrate this as soon as possible how does it look when you made a kind of vertical section when you where you when you cut this pits vertically and make a slice it looks like this so in the left side you will see the existing pit and you could see some red things which is high grade that has Red is over 1% copper that has been left in the side. That was considered low grade in the past. And basically what we are doing, it sounds logical to do a pushback. In the center is what we currently are mining, which is a several Colorado pit. And in the right side, you see a kind of semi-horizontal dip into the right, dip into the east, also with nice red colors over 1%, which is the San Antonio. Two things you can notice here. First of all, how close they are. So with only one kilometer, you can go from one pit to the next. And the other one in Sandinista itself is basically the expansion of the existing pit. So when we put all this thing together, we get a plan which is shown summarized. By the way, this PA is in our webpage. We get a plan that is shown in this slide 21. What does all these colors mean? In the lower part means basically you see green and gray. Green means copper material. Gray means copper plus zinc. And the first thing you notice is that in the next four years, including this one, we will only be processing mainly copper. But in the upper part, you see green being Cerro Colorado, our existing pit. And then in other colors, blackish and gray is the production coming from the solar satellites of San Dionisio and San Antonio. So the first thing you notice is that you already have some mining in the San Dionisio, but copper only in 24, 25, 26. This means two things. It means that we can start next year already bringing this high-grade material into the pit. And second thing, it means that we don't have to make any modification of the plant during the next four years. It also means that before the end of 26, we should have already a sink circuit installed some way to recover the sink at Terra Colorado. There has implications in the CAPEX. The CAPEX required to do this expansion of the sink circuit is back-ended towards 26. Of course, we can advance it, but also we can we have flexibility to delay it if needed because we always have the feed from the existing pit. And this is very important because it's not an underground mine where you are dependent on an exit in one single entry. This is something that gives you lots of flexibility because in an open pit, in order to produce more, you only need to put trucks and move machines from one place to another. Flexibility of an open pit is very important. As a result of that, you get the production profile that you see in this slide. You will notice that the production is going towards over 60,000 tons of copper in the next four years, and then beyond that, it's even higher when you add the zinc circuit. Some people have highlighted and noticed that in 2024, it looks like our production is low. But also, please note that this was based on the study done by Tetratech, And they were also showing much higher production in 2023, close to 60,000 tons. The reality is that it will be much more smooth. It will be like we are pointing our guidance around 54,000 tons, 55,000 tons for both years. So what we've shown here in this graph in 2023, it's shown higher and in 2023, 24 lower, actually will be similar. If possible, we will try to bring higher rates from 25, 26, from this high rate that I mentioned in the previous report, forward. Anyway, being what it is, non-optimized, the result of this, different cover prices are shown in the lower slide. They are shown with after-tax net present value, which means cash flows. and it's important to note that even at a 350 copper price flat which is even lower than what we have for 15 years by the way it's a price that i don't see it achievable impossible to happen it's not in the world uh the discounted cash flow at eight percent would be over one billion which is doubled our market cap and and then discounted which is really what counts to to give out dividends is over 2.1 billion so which is four times less than our market cap at a normalized price that we believe is more close to the consensus actually the consensus of most analysts is now getting long term in the 420 425 couple price these figures go up to 1.5 billion discounted at 8%, which is three times our market cap, and 3 billion undiscounted, which is six times. Remember, this does not include any additional ton from our satellite deposits of Maso Valverde, any new discovery, or any addition of total. So I think it's a very positive outcome, especially when you compare with other projects that are being built or launched elsewhere, where the net present value that's shown sometimes of 1.5 billion to billion often comes with a capex of also 1 billion to billion. And these net present values are shown from the day of the start, which in our case is in mid and in their case is probably five, six years away. Another focus of potential is total. It's always delayed. Things are progressing, although very slowly from our point of view. It's an old system where the quarry is working. And things that have been moving in this last year is the water treatment plant, which is up and running. The rivers are now clean. And the administration is totally positive with us right now. A big change, which is really what I wanted to highlight in this presentation is this, is in late March, we had a gathering with over 3,000 people saying yes to the mine from all the villages, having a kind of party in a peaceful demonstration of support. This is a very unique, of course, this was followed by the local TVs and local newspapers, and there was a real... showed to the politicians that there was full support in the area. And the noisy people against the mine were basically eight persons making a lot of noise. We believe this is the case in the area. We respect all the views of the people that do not want any mining. That's fine. But we have been slowly showing the benefits of the project, cleaning the rivers to make sure nobody can point to us. And this we have done before the permits, which is a kind of unprecedented, I would say. The normal case would be that as part of your construction, you will be cleaning the rivers as part of the taking over the past liabilities that's existing on site. And since there was a lack of credibility of those opposing the project saying yes, but they will never do it, we decided to do it ahead of the project at our own cost and own risk. So I believe that this has been preceded by the administration and things are going in the right direction. Permitting takes time, but eventually we would succeed. With all those things, Our production profile will be looking how shown in slide 26. From the current level of around 55,000 tons of copper, we will be close to the 60,000 tons just from Rio Tinto, and then going over 90,000 tons of copper So that's where we get into the new areas of San Dionisio. And with total carbon stream, which hopefully can be in the next two years, we can get over 30,000 tons, additional tons of copper. our company in around 120,000 tons of copper, which is substantially higher than the 20,000 that we started just seven, eight years ago. So the growth profile is very high. I have other slides that are there as a backup in the presentation, but I don't want to make this too long. I believe that the best thing is to go to the question and answer session.

Alberto, thank you very much indeed for your presentation. Ladies and gentlemen, please continue to submit your questions using the Q&A tab situated on the top right corner of your screen. while the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our investor dashboard. Alberto Cesar, as you can see, we have received a number of questions throughout today's presentation, and thank you to all investors for submitting their questions. Alberto, if I may hand back to you and kindly ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.