Atalaya Mining Plc

Good afternoon and welcome to the Atalaya Mining PLC Q2 and H1 2023 Financial Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated at the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in 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. And I'd now like to hand you over to Alberto Labandiera. Good afternoon, sir.

Going to go through the present. You have seen the results in the press release. At the end, to summarize, we had a good quarter. I would say a quarter with 14.2 thousand tons of copper. Basically, it's setting us in the right target to get to the our plans for around 53 to 55,000 tons of copper at the end of the year. All-in costs, all-in sustaining costs have been good, have been much lower than we have had in the first quarter and much lower, of course, in the equivalent quarter last year. And so far, it looks like we are fully on track to get to this production of around 54,000 tons of copper with only insisting cost between 3 and 320, likely in the low end of this cost if things continue like they were. A bid that this quarter has been around 16 million euros with a little bit lower than the first quarter. with better cash costs, and there were some known cash adjustments due to the quotational periods of previous quarters that have impacted the EBITDA. Even so, the EBITDA, the half of the year, around 40 million euros is quite a healthy one. One of the reasons of this is that the electricity prices are substantially lower than previous year. around 60% lower and they continue to trend lower. Right now in August, though, it's still slightly higher than the previous months due to the holiday season in Spain and the lack of wind, but still much lower, substantially lower than they were in the previous year. We continue to do some investments in the two main projects, which are the solar plant in our operation and the construction of the phase one of the helix. And even so, after, These investments and paying back debt of around 30 million euros, we continue to have a strong net cash position of close to 70 million euros. And this was one of the reasons why after debating at the board, the board decided to declare an interim dividend. for the first part of 23, consistent with our policy between 30 and 50% of the free cash flow. And we decided to give another 5 cents per share. And I will go over the details of payment a bit later. Another important thing of this quarter was we finally delisted from Toronto. It was an unnecessary expense cost that we decided to remove because really it was not giving us any liquidity. From the assets point of view, from the construction point of view, we continue to construct, as I said before, ELEX and the solar plant. And we have been given some announcements which were first interesting. The first ones where we announced the results of the PEA of Retinto, but we also got some authorizations of projects, of Masa Valverde project, environmental authorization, and also the environmental authorization to continue expansions of Retinto, including Taming's Pond. The work in Tauro is slow, but it's continuing, permanently wise. And related to Tauro, We continue working with the water treatment at Tauro and the rivers are clean. And the news coming from that side, from that project, from the society and our stakeholders are always all very, very positive. So going a little bit into the details of this to the quarter, the plant behave normally at a rate of close to 15 and a half million tons per year. uh good recoveries of 87 which were higher in previous quarters and and getting back to our levels of 87 88 and recover production as i said before with decent concentrated grades were were around 14,000 tons, even if we had a slightly grade, which was 0.4, which is probably slightly lower than we had expected, but this was compensated by the high recovery. As a result of that, slightly lower sales, obviously due to the lower copper prices a bid that I mentioned before, slightly lower due to this non-cash adjustments, but with good operating cash flow for around 20 million euros and left us with a net cash position, which was better than the previous quarter. And, of course, this results in a good cash position and good balance sheet, which you will see in slide 9. We had a cash position of around 113 million euros and a net cash of around 70 with a nice working capital surplus of 81, even after these investments that we have been doing in ELEX, in Solar, plus exploration and plus the permit in October. So overall, I would say that we had a very good performance and we continue to deliver in our plans. Part of this improvement came as a result of the decrease of the electricity prices. You will note in slide 10, the decrease of the equivalent quarter of around 300 euros per megawatt hour back in 2022 in the third quarter. And we are now a little bit less than 100 euros per megawatt hour. So it's a huge decrease. And this is one of the reasons why the results are better. The operating results are better. The financial results are better. Of course, the gas prices also have a reflection in other things like lime production and even explosive prices, where explosive prices have been decreasing from around 150 to around 1 euro per kilo. This is reflected in the detailed breakdown of cash costs that we see in slide 11. We have been starting to give the breakdown of these costs during the last few quarters. And you can see comparing with previous quarter and comparing with the full year, how the mining has been reduced significantly, almost 10 cents per pound from equivalent quarter of last year. And that was due to the high diesel price, high explosives price. and in in the processing that's planned treatment is really where you can see the big difference uh the cost of 0.82 it's significantly lower than what we had at 131 in in the last year and even lower than what we had in the first quarter this is mainly due to the reduction in prices slight reduction in prices in line but mainly the reduction in the reduction in the electricity price. The rest being other sites, which is health and safety, administration, purchases, all these things, laboratory, the auxiliary services, water, are more or less constant. Same, slightly lower than they used to be in the last year. But other than that, we can see that overall we have a reduction in site operating costs of almost 50 cents per pound compared to previous year. Just to give you an idea, if we are producing more or less 120 million pounds per year, this is equivalent to around 60 million dollars, just this reduction in operating costs. Freight has also reduced a little bit due to the reduction in freight charges, 5 cents. So overall, all cash costs are 260, which are in the lower end of our guidance. And I would remind those listening that this cash costs, specifically mining, include the capital cost of replacement of the mining fleet, which is taken care by the mining contractor. uh this is something that not very often and that mining companies have their own normally mining companies have their own mining fleet and they have to replace the feet once in a while we don't have that case uh and that normally that's included in all interesting costs which also were substantially lower again around 58 cents per pound than previous year Again, how does this compare with others? Well, normally we have this slide in the back end of the presentation. In this slide, we put all the sustained costs of peers, companies, based on public information, all of it. And in the left side of each of the columns is the quarter by quarter. So basically it's more recent quarters on the left side of each of the piles. One of the things you will notice is in the last six quarters, our all-in costs have been going down constantly. Unlike lots of other peers where you can see that the costs have been continuing to go higher for whatever it is, for whatever reasons. But this is something that we like to make some emphasis because often Atalaya is considered a high cost producer. And we don't think, we think we are not a low cost producer, obviously, but we do wonderful things with what we have. So this is a good comparison to see what you have in the market. So, How does it look this year? Well, it looks normal. I would say, I won't say boring normal, but I would say normal. Copper grade, we are right now in the low end of our guidance, but anyway, we are in the high end of the copper recovery. So at the end, these things are compensating one each other. We believe we are in the low end of cash costs. So cash costs will be closer to 260 and an all-in cost $3 or under. per pound. So, in theory, consistently under our guidance and the guidance of production would be around 54,000 tons of copper. Obviously, this is assuming that the electricity prices continue as they are. looks like the tendency is going down once the summer is out and except the recent days where where the gas prices in europe have jumped a little bit due due to some uncertainty of of supplies the reality is that it looks like europe and specifically spain is it's already uh uh not reliant at all in the gas prices coming from Russia. And the stores are over 80% well before they were supposed to be before the winter. So it looks like we're in a good position. We will continue to to invest in helix and in exploration and in solar and it looks like the capital costs of helix is going higher due to several reasons but mainly being a new technology and being done in a very i would say in a way that's not fast track due to the technology being applied for the first time. So we have a slight delay, which obviously means that we have a slightly higher capital costs. Besides all this, as I said, the behavior of the company has been going quite well. So the board decided to give a dividend of five cents per share. around four pennies per share. The record date will be 25th of August, so a couple of weeks, and the payment will be more or less at the end of September. We realize that we have just paid the last part of the the dividend of last year uh just just days ago weeks ago but we wanted to be consistent with what we did last year so um the reason of this is that by cyprus law the dividend the final dividend has to be approved by by the agm which sets the date of this this final payment uh at the a June approval, so by the time you pay, you end up paying in August. And we decided to declare interim dividend each six months, and then have the final dividend once we know the final results of 23. So we continue with our policy, as we stated, of paying 30 to 50% of the cash flow generated during the year. And unless there's investment needed at certain time and short notice, we will continue with this policy, of course. For 23, I think for 23, we have two things that we have to finish. First, finish with ELEX. It's advancing all the equipment on site. They are assembling pipes, cables, lots of activity in the ground. And our target is to have some feed of concentrate before the end of the year. So likely to be in the fourth quarter. And we are pushing and trying to help Laín Technologies as much as we can. In the case of the solar plant, we also had some delays with the final license of Ryutinto Village. Right now, there's lots of work going on on the ground by installing the supports, cables. We have all the equipment, all the transformer on site. So again, this solar plant is divided in two areas, the one in the north and one in the south. The one in the north is smaller, close to the plant. and we are targeting to start the collection of that at the end of the year, maybe worse, the first month of 24. So a small delay, but still advancing very well. Besides that, we continue to do all the studies and all the work, detailed work, detailed permitting to get San Dionisio into production as soon as possible. San Dionisio, as you may recall, is basically the pushback of this pit that you've seen in picture 17 in the left corner. In the bottom corner is just one drill rig which we continue with drilling with three rigs in Basaval Verde, two rigs in Oso Morena, and one rig in Rio Tinto East. And we will continue with this small slowdown in summer, but we will continue doing this due to the effect, the restrictions of forest fires. You cannot do lots of things during this extreme heat wave that we have right now in Spain. But besides that, we will continue drilling normally in this separation sites. The right side is some expressions of total. In total, the activities there are all related to engaging with the authorities, they're helping them looking through the papers, all the papers have been presented, and we are waiting to see some decision after the summer period. In summer, everything goes to sleep, at least in the administration. But so far, the reception of the project and the local support has been excellent, including some public support by authorities and by associations recently in the newspapers. In summary, I've just gone through all these things. In summary, we still have a very busy year. And our goal is to get our company on track to get to over 100,000 tons of copper produced, first with the addition of production from San Dionisio area, from Rio Tinto, and second with the addition of total that can get us over 120,000 tons. We believe in a copper market, we believe that The market will change. We know there's a slowdown in the consumption in China from internal consumption, although the energy transition is requiring more and more copper. The stocks are low. We see what's happening with big companies like Codelco going down. So we don't know when, but for sure it will happen that there is a certain time where copper will have to go up and significant copper prices have to up significantly to incentivize new projects, either brownfield or greenfield. We are, as part of that, we are one of the few copper producers in London. And we continue with our goal to be listed in the main market as soon as possible. We are doing all the work. And I believe there's a question about that, a question and answer, and we'll give you how that is progressing. So for those of you that do not know much about us, we are in Europe, stable, consistent. best practices. We have a growth pipeline, very clear. We have demonstrated that in the past years, we never stopped. We have an excellent team that continue to deliver, continue to do always improvements in operation, in new installations, reducing of costs, exploring. And really it is a low cost proposition and a low risk proposition on COP. And with that, I would say that the best thing is to go to the question and answer.

Perfect. Alberto, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab, which is situated on the top right hand corner of your screen. But just while the company take a few minutes to review those questions submitted today, I'd like to remind you that recording of this presentation along with the copy of the slides and the published Q&A can be accessed via your investor dashboard. As you can see, we've received questions throughout today's presentation. And if I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you at the end.