Atalaya Mining Plc

Good afternoon 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 hand you over to CEO Alberto Lavandera. Good afternoon to you.

Hello. Thank you very much, Alex. Welcome, everybody. Thank you for attending this presentation. We'll try, as usual, to be brief and leave some time to questions. We're here to look at the results, quarterly results, financial results, as well as looking at the advance of the company during these three months and our plans for the near term future. With me, I will have Cesar Sanchez, the CFO of the company, which will reply to some of the questions related to the listing and to some other legal things. The summary of our results is included in slide six, and without trying to read all the numbers, which you're happy to go through, we had already pre-released the production results, production of 12,500 tons of copper during the quarter, getting the total today to close to 39,000 tons with cash costs of 282, accumulated to 76 and all in costs accumulated around 307 for the year, which are taking us to the outlook for the year of around 53 to 54,000 tons of copper. Now we're in mid November, to some heavy rains experience during the quarter, the current quarter, we will likely be in the lower range of that 53 to 54 anyway, very close to what we had already, And the cash costs, it looks like we are going to be also within the range that we had set, the all-in costs. With all that, we had quite good, I would say, results, probably better than the consensus, with a bit of 19 million, which is equivalent to 60 million euros year-to-date. There was one reason for this increase. say better results is the electricity prices were lower than previous years still high still high and besides that we continue having a very good balance sheet with net cash position for around 67 million euros and this is after continuing to invest in the solar plant and continuing to invest in the helix plant including dividend payments, and also including, of course, the ongoing capital. So even with this kind of lowish cover price, the company continued to generate cash during the quarter. We have made some changes within the board. Not the board has not changed, but some of the roles of each of the directors have been changed a little bit. And the most important thing from the corporate point of view is that we have announced that we are going to apply to move from AIM to the main market. That has already been done. And we are in the process of doing that. And I think we are just spending some technicalities and finalizing some documents, but we are following our plan to do this before the year end. And in addition to that, which, although they're not necessarily, they are linked, but not necessarily also the proposal to move, remove the missile, the company from Cyprus to Spain. There are several reasons for that. And this part of them are as a result of the of the Brexit and the fact that the UK is no longer in the EU. From the assets point of view, from the investments point of view, we continue to progress. We continue to progress the construction of Helix. Things are moving quite fast and the solar plants also moving quite fast. And especially the important thing is that we got already some authorizations for the extensions of the mine life in Rio Tinto, which include the expanded tailings for 150 million tons. So this is a huge achievement. Also got the AU... for Basavalverde to be able to extract ore from there and treat it in our plant. And the most important point here is that we are advancing with a stakeholder and permitting in total. As you can see, total is the most important thing. It doesn't seem to be progress, but there is progress. There is progress with paperwork being done and especially from the Junta making some new laws in order to expedite and to permit projects and specifically mining projects. This new law is going to be coming into place in the beginning of the year. So going directly, health and safety, you can read things which I think we had already mentioned in the past, publication of our sustainability report and certain data that we continue to operate safely in this company. Going directly into the data that was mentioned, just a few remarks. The plant continued to perform well. within the line, well over the 15 million tons design capacity. Recovery also going well, better than planned. And the production was slightly lower and this is a result of maybe basically lower grade. Lower grade is a result of the way that we are going through the pit and we believe this thing is going to be improving in the near months because we are going through an area of lower lower lower grade at the bit as a result of that production sales as i said before slightly higher due to a little bit better copper prices than the previous quarter and the most important thing is also a bit going better than the previous quarter and as a result of that the cash flow and the net cash position continues to be good similar to the previous quarters in spite of having given a having distributed a dividend and also having continued to invest in in several projects and growth projects at the at the outside we ended the the the quarter with 120 million euros in cash, which is a good position to have, and with borrowings of 52 having paid some of the lines of credit. And we continue to have a good working capital surplus of around 77 million, which is basically around 85 million US dollars. Part of this is the improvement of the market in the electricity market. But as you can see actually Q3 due to the summer months, very similar to what happened in, in the previous year has been higher than the previous quarter, but of course, much lower, less than half what happened in the year 22. You can see it very well in the graph. In year 22, our cost of electricity was 300 euros megawatt hour, and this year was 120. In addition to that, we had, as you know, power purchase agreement for around 30% of our needs and so the average result has been lower than that. The good news is also as expected that the electricity prices have been so far in October and November has been lower than the previous quarters. Also, it happens in previous years and it should continue to happen in in January due to the strong winds and very strong winds, very strong storms and rains in Spain, which reduced the need of gas, although the gas prices are slightly higher. So I think that this is all going well in the good direction. From the cost point of view, very, I would say, flattish quarter in general, in mining and in process. But you can see that the cost of a quarter have been slightly higher in mining and processing. This is basically due to the still the inflation that we can still see in explosives, diesel and gas. Gas is affecting lime. but also is the effect of lower production due to the lower grade. And then most of the costs are cost per ton. And the effect of that is that we have slightly higher costs in a cost per pound basis. But we, overall, there are 6 cents difference in cash costs versus the year to date. and well below what happened in the previous years. You can see that we have had a capitalized stripping, high capitalized stripping. This is due to the start of the waste movement in San Dionisio and also at Cerro Colorado, our current pit, in anticipation of the starting to move in the new pit called San Dionisio. because the contractor is only getting the new trucks and escalator by June. So they had to advance a little bit more with their equipment during this quarter and they will continue to be doing that in the next quarter before we get ready with the supply of the equipment. But of course, overall, this does not change at all the strip rate of Cerro Corrales, which is a little bit less than 2 to 1. Comparing with our peers, we always show this picture. We continue to try to control our costs. I think we are in good shape compared with other peers similar to us. And the first thing you will notice is that the tendency of increase of costs that you experience in 2022 has been stopped, while in other companies this has continued due to several factors. So with this, we continue to generate cash. um there's only one and one half months to go so as i said before the guidance uh there's no reason to make changes in the guidance and we will we will be likely in the lower range of the guidance for production of 53 000 so very close to 53 52 8 53 2 something like that plus minus so not not in the 54 still recoveries will be better than expected originally and the cash costs will be in the range. Everything from the capital point of view is also within the range. So now looking at what we have been doing simply from corporate point of view we have we have announced that we are moving to the main market. This thing is moving very fast and the addition documents and all the papers are almost ready. And the prospectus is going to be published soon. Certainly we will be ready for the end of the year. The prospectus will be published without needing to raise any fund. There are several conditions, but we have been in constant contact with the stock exchange and we are fulfilling all the issues, all the paperwork needed. So we think the time to be accepted for the listing will be in December, end of December 23. very likely, instead of being listed in name, in 24 will be listed in the main market. As you know, this has lots of implications. And one of them is that this opens the possibility of being included in index. And we have seen that there are a few questions about this in the Q&A, so we'll go through them. For that, we'll have an AGM, an AGM, especially AGM in our offices in London, the small offices in London. And you're welcome to assist for those of you that are available. The main question will be to consider the potential demisillation because this this remedialization is a requisite to be able to be included in the index. If we continue to have our domicile in Cyprus, then we wouldn't be entitled to be participating in the index due to several reasons. You have to find some other country. This paperwork is linked but not related to or not totally conditional to the listing and it will be finished, expected to be finished, the remitulation by sometime the end of May due to the paperwork it has. If it's approved by the shareholders, of course. With that, we will be one of the few pure copper place in London, small, but hopefully we will be able to grow and we include it in the index. It's important to be included there in the index because we show this picture here. We are still of the belief that the deficit of copper is there. It's increasing and There are numbers of copper deficit in the world between four and six million tons of copper by the end of the decade of 2030. And all the indications are that this is going to be there and simply there's not enough copper coming on stream. An important producer, Codelco, the largest producer until recently of the world, is going down and they need to do a lot of investments just to maintain their status quo. And actually, they have already guided for the production of this year to be lower than previous year, actually the lower in five years. And next year, they only show a very modest increase, which is basically flat, assuming everything goes all right. The reason why there's still some potential oversupply in the market this year has been twofold. One is the reason is that coming on stream of Quebrada Blanca with a huge delay in a huge investment and overinvestment. Tech, Quella Beco, Buy Anglo American in Peru after long delays and Cobre Panama. These are the main reasons why there is a kind of oversupply this year. What happens with these three is first of all, the big one, the first one, Quebrada Blanca, Huge over expenditure and delays means that the tech has already said that they will not consider any further expansion in the next 12 months at least. Callabeco, it's ramping up, but so far I have not seen any brownfield expansion. And Cobra Panama, you probably are probably aware of the problems they are having. And there are even rumors that this thing, this mine could shut down due to being the award of the concession being constitutional. We don't want anything bad happening to our colleagues of FreshQuantum, which are excellent operators. But the reality that shows you how difficult it is to be getting new mines into production and also how risky it is in certain countries and how country risk is so important. That's why we are so happy to be in Spain and specifically in Europe. Obviously, if this mine stops for some reason, then the copper price can go to any point. But even in places that are very well known like Chile, the largest mine of the world is Escondida, as you know. Escondida is producing around 1 million tons of copper. And this graph shown in the presentation, it has been shown by them. In four years time, their production drops by half a million tons. Half a million tons is larger than any of these mines that I showed before, Quellabenco, Cobre Panama, or Quebrada Blanca too. It means a huge new mind disappears just because of the grades going down. Does it mean this will happen? No. I'm sure BHP will invest whatever is needed to maintain the production. But that shows you that even the largest mine of the world in four years time needs a huge investment not to grow, simply to stay in business. Simply because the grades are going down as most of the mines do. We are very bullish in the copper market and this is why we wanted to bring these slides. Let me finish with how things are going. On site, in first place, you see this in red, the helix plant. The helix plant is advancing quite fast, shows the size compared to the rest of our installations. And in the background, you will see a flat surface. That's the position where our solar plant is located. we went inside the the lx plan there's not much pictures there because the the the company that has the technology doesn't want us to to publish pictures to guide people to because this is something new but i can show you that the process is huge the it's it's going very fast and uh and planning to start commissioning at the end of this month of December, and even having some initial production, even if it's only trial stages in the end of the year or the beginning of 2024. So we have some delays, but things are finally going full steam. Same thing we can say with this solar. The solar, this picture is probably a bit old. the construction and implementing of panels and support is advancing very, very fast. And we already have a schedule with the electrical company to disconnect our substation for a few days from the 132 lines to connect this substation to our substation and to the grid. And this will be likely the first week of of January, meaning that anytime from then on, we can start producing from these electric panels. And this will be huge, huge cost saving for next year, starting basically already in January, 2024. And we continue to have a good support in total. Things are going slowly, but advancing very well. And here I can report that the Junta de Andalucía, the local government, Junta de Galicia, is passing a law. It's going to be working in January in order to expedite and improve the approach the timeline for approval of projects. They have created four categories of projects, industry, another one is specifically called energy and mines, where we will be specifically included. Another one is agribusiness and another one is forestry. Those projects qualified and we are there. This law is, when this law is passed, as I say, starting in January, it's being discussed now with full majority. The projects will have a maximum of one year of timeline for permitting, warranted by the local government, even with compensations for the costs that this creates if the project is not approved. This is directed to specifically some large projects like ours that have some controversial disputes by environmentalists, as well as wind farms, both onshore and offshore. We are including that one of energy and mines. So I think it's quite good, showing very good support from the local government. which is working, reviewing all the documents, and we are seeing finally the time for the permitting of TOTO. In parallel to that, the company continued, our teams continued to work in optimization of that project, looking at that equipment, preparing engineering, so that whatever time we lose right now, we will be able to compensate it later with bringing this into production, starting sometime in 2024. and have it constructed by 2025. And we believe that this is possible. Time where we believe that the copper deficit will be at its highest. So I think that's probably taking a little bit more than I expected. And so this, I'm going to go into questions. Please feel free to add to the questions, but we have some that have been submitted. Some of them related to the listing are going to be replied by by Cesar and the first one actually is for Cesar which says how is the process of listing onto LSE going and the updates although most of it has already been said in the presentation and by me but Cesar do you want to add anything?

yeah sure thank you um albert and hello everyone so we we've been working uh for a number of months now uh to basically get um communications with the fca which we already have a few draft of the perspective submitted and and so i would say that nowadays uh the public information we have identified no deal breakers for being listed in the main board of the London Stock Exchange. And as Alberto mentioned, we're expecting to have that trading in the London Stock Exchange before the end of December. So it will be sort of mid-December. So I guess the short answer to that is I think we're going pretty well aligned with our expectation, just to be traded in the longer-term before the year-end.