Atalaya Mining Plc

Good morning and welcome to the Atalaya Mining PLC Annual Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and they 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 received during the meeting itself. However, the company can 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 morning to you.

Alberto Lavandera Many thanks. Hello, everybody. Good morning, everybody. Thanks for being with us. Again, I have with me the CFO, Cesar Sánchez, and Mike Restainer, head of corporate development And if needed, they will also be available to help respond some questions. I'm going to go through the presentation of our results, which will include the main results of the last quarter of 2023 and the first quarter of the full year. And I will also give a bit of highlight of how things are going. and the forecast for 2024. 2023 was an excellent year, I would say. It was a positive year with, let's say, recovering back to more or less normal conditions from the operating cost point of view. We produced 99% of what we produced the previous year, and we did so even with slightly lower grades than we had in the last quarter, which are already were planned to be there according to the mine plan before we start getting the recoveries of this grades up but we processed 15.8 million tons with good recoveries 56.6 so we achieved a cash cost of slightly less than 280 and only cost of 309. this is consistent with the guidance and i would have to say that this is these are quite remarkable good costs when you consider the type of grades we were able to maintain to maintain the cost unit costs per ton well under control this is basically due to the lower electricity prices and of course we had other this this lower electricity prices have an effect in other things like balls and the price of lime and price of rain so the whole thing flows down. In the other hand, we had some higher costs in the mining, not because our unit costs were higher, simply we had to move a little bit more tons, more tons that later we will not have to move, simply because we needed to move tons from the federal existing, federal Colorado pit, so that we could move our key equipment, the contractor could move the equipment into the stripping of San Dionisio, which has already started. San Dionisio, just to remind you, is an area with a much higher rate. Well, with all these operating parameters that went reasonably well, we had an EBITDA of 73 million euros, which is higher, almost 20 million higher than the previous year, mainly due to lower operating costs. Cash flows were also higher. And we invested this extra cash flows produced from operating activities in a prudent way so that we could maintain our net cash position under control. And we invested that in building the helix and also building the solar plant. which were 18 million euros in one and 12 million 30 million euros in all so basically around 30 million euros so with all this uh considering that we are things are going as expected and that the operating costs are under control the board decided and we had a good financial position the board decided to to give a final dividend of 0.04 which uh basically uh tops a little bit what we had already so it's it's slightly it's around 20 higher than previous year but that was not only not not only that i mean we had lots of other things going on uh we we continue with our plans to move away from aim into the main market and this is all the papers are going we had slight delay due to the our last attempt but pretty close to christmas and your end but finally this thing seems it's going to be happening in the first weeks of april so only one month from now we also proposed the domiciliation from Cyprus to Spain, which basically will allow us to be included in the indexes. And since we didn't have any liquidity in Toronto, we decided to cut costs there and to remove the listing in Toronto. So right now we basically will be listed in the main market starting in April. The board, we continue to reinforce the board. Neil Gregson was appointed the lead director. But we also continue to reinforce the board basically to fulfill the conditions set by the new main market listing. And we will be strengthening the board in the next months with new independent directors. Although our board right now is basically formed by independent professionals. From the assets point of view, we saw the first copper cathodes coming out from Helix, although these were only a small amount during the startup of the commissioning of this plant. And the plant continues to be under construction. Right now they're leaching with zinc. We also started moving the waste in Sandinicio in order to get to the ore as soon as possible. and also mining equipment has been ordered and is about to arrive to be able to get this additional waste movement. And from the permitting point of view, we continue advancing in total. We got a permit to extend the mine life of Rio Tinto, including a huge tailings expansion, which will give us space for the extra tonnage mine at San Dinizio. And we also got the mining permit for Massa Valverde, which means we will likely start at the end of the year a ramp to access the higher grade that's closer to surface. From the sustainability side, we continue to set strong targets. We advanced the construction of our solar plant, which there is some delays there, but it's going to be to be up and running in the second quarter of this year. And of course, we continue with the water treatment plants in total, which are key to get the permits. And of course, we publish a new sustainability report and the next one is going to be coming out soon. We've already seen some drafts and it really looks very professional and very nice so going to the details of those i mean most of it has been already explained but i think the graph explains very well what happens i mean you see you see in the graphs in the right side you will see that we pass more tons almost a record remember this plant was supposed to be treating 15 million tons and we have been able to treat 16 million tons equivalent so the plant is running well uh recoveries in the last quarter was slightly lower due to the lower grade and production was similar to previous quarters but since we had some good production in the second quarter uh the overall for the year has been quite constant and you see that the revenues are similar to to the previous year so basically although the copper price was slightly lower sorry production was slightly lower the revenues were basically the same a bit that was slightly lower in the last quarter but overall in the year you will see later that it has been better than the previous year and the net cash position stayed very similar to our previous levels even having invested around 15 million in this quarter and our profits as I said before were similar to previous year even with this low quarter Coming back to the whole year, revenues were slightly lower due to lower cover prices and slightly lower production. But since we had much lower operating costs, we had better EBITDA and better profits and much better cash flow and it allowed us to continue investing in the operations in the future. And we still kept a very good cash position at the end of the year with around 120 million euros and a net cash position without any net debt of 54. Working capital has gone down a little bit, but that's simply due to our short-term debt. It's a mixture of short-term and medium-term debt. Medium-term meaning three years and depending on the maturity of that debt, which normally we can't. we can roll because they are, yes, revolving facilities. It doesn't mean too much. But it shows that our financial position in the last three years, in spite of this high cost structure, have been maintained quite well while we continue to invest. And this is fully disclosed in slide 10, where we show the costs in a quarter and the cost for the full year second column from the right you will see the year 23 what we are discussing compared to 22. the main difference as you can see is is much lower cost from processing that's mainly due to electricity but also due to lower line costs lower steel balls lower things other things like mining slightly higher due to the as i said before more material in order to get to the better grades of San Dinizio and overall lower site costs. The rest of the things like freight and off-site are quite similar to previous years, slightly lower, but we expect to see much better costs in this next year. We will go later with the guidance and there are reasons for that. The treatment charges are falling down, freight is flat or going down and we also expect to see lower inflation in other parts. Corporate costs and the rest of things are very similar. The main question here is much higher in capitalized stripping and this is due to the start of the activities in San Dionisio. This is as expected. As you remember, there was a plan to mine San Dionisio and Cerro Corral simultaneously and the first movement of material was going to happen in In 24, we accelerated that a little bit because we wanted to see if we can compensate the slightly lower rates that were predicted in this year as soon as possible with the higher rates that are going to be found at the Saint-Denis Pit. Overall, there's an important reduction in all-in sustaining costs. I should probably remind here that that within our capitalized stripping and within our mining costs, we have the cost of the contractor includes the purchasing of equipment, the replacement of the mining fleet. And this is very relevant since, for example, just to get to the Sandanisi area, The contractor is buying, has already ordered and they are arriving five new trucks with much larger size, a 50% larger capacity and excavator that's double the size simply to expand. And this is totally out of our cost. So within the cost of excavation, those costs are included and you don't have to account in addition to that for the purchase of a new mining fleet. Most of these good results, as I said before, are due to the lower cost of energy. You can see that 2023 has been much lower than the horrible year of 22. But I think the important point here is also to show that 24 has already started in a very good mode. We have had around two months where the prices have been around 50. So well within the prices in the long term. And remember, as a reminder, that we have hedge, we have covered around 30% of our production for the future at those prices around the 50s. Plus the solar plant will provide price at much lower. So our future cost will be similar to what we had in the days 2021 or even 19. So that's a big part of the equation that gave rise to much higher costs during during 22 are I believe we are gone just to compare with with peers into the industry and we always do that not to show ourselves versus others simply to show that due to the way of reporting that some people do not include in the c1 costs the the the mining cost the capital the capital required to replace the fleet in the mining costs our c1 costs are normally higher than average but later the the difference between c1 and all in costs are much lower which means you can see there that in spite that the big increase in the left side of the columns the big increase in cost that we we saw in 20 due to the electricity prices. Since then, we have been able to control the costs and to keep them well within the industry average, which I think is relevant. Because at the end, what matters is not the C1, it's the all-in cost. You always need to replace fleet and you always need to do ongoing work in your mines. So with that, how is 24 looking? Well, we expect to produce more or less the same price. or we expect to process around, same thing, 15 and a half to 15, maybe a little bit higher, million tons through the plant. copper grade it's going to be slightly lower in the first part of the year but higher in the second part when we access the higher rates of some initial and recovery rate we also expect it to be around 85 with all these parameters we usually expect a transitional year a year that will have around also around 52 000 tons of copper similar to the previous year with cash cost i would say very very similar to to what we had this year With that, of course, depends on the copper price, which so far seems to have started in a good way. Our EBITDA should be equal or higher than previous years. And the extra cash flow, where we will use it? Well, we'll use it to finalize the solar plant and helix. not because there are new investments simply their investment coming from previous year that are rolled to this year but the main thing is to move the the road and and relocate the electric line and so on uh at san denisio uh which is takes most of the investment uh part of this can could probably be going into 25 but most of it is going to be done in 24 because we need to get to get to the better grades sooner rather than later to benefit from the higher grades and to be able to get lower costs. So in addition to that, within our normal investments, we continue spending around 5 to 7 million into exploration, probably a bit higher this year. And of course, this can change if we have a discovery. So, for those of you that are not familiar why we are pushing so hard in St. Ignatius, because the resource rate is basically doubled than what we have. In the picture that you have in the center, you will see the pit of Cerro Colorado, which is the one we are mining right now. There you see two things. You see in the far right, you see we are advancing with a pushback. You see that there's a new area there that needs to be taken down in order to access areas of the north and the south. Sorry, in the east and the south. But at the same time, you will see in the first part of the picture that the machines have already started pushing in Saint-Denis. And this picture actually is slightly old because it's already advancing very well uh things that you can see in the in the picture in the picture that i'm showing now in slide 16 is several things in the far end you see a whole gray area that's the solar plant that you can see is basically covered already with panels and in the bottom left corner you see the edX plant In blue is the thickener of the tailings. Elixir is important because normal differential flotation applied to polymetallic sulfides in the parrot belt will give you recoveries of 60-70% of copper, 70-75% of zinc. This is basically based on historic reporting and also in our own test work. By applying Elix, the combination of flotation and Elix itself goes up to 85% in copper sink. This is a huge difference, and we are seeing that's why we are so keen in getting this up and running and to prove the concept in order to apply it in the longer term. it's going well we started the year the plant as you can see in the right side it's not a small plant it's a complex plant with lots of pipes lots of tanks and electrolytic cells and leaching system it's a quite novel system which i cannot give too much details and in January 24 when they were leaching some copper concentrates they got very clean solution enough to produce very clean copper cathodes, totally commercial, grade A, 99.995 copper content without the use of Essex, which is absolutely incredible and intriguing. right now they're working with other with conditions to remove sync and i can report verbally that the results are coming very well but of course this any startup and especially when it's a startup of something that's totally new needs time and they they still need some time to finalize this and i don't expect this to start running smoothly until mid-year because it's logical they need it works when it works but then suddenly a ball breaks or where a pipe is leaking and they have to repair it and things go smoothly. In addition to that, they started with a small team, but right now they are engaging people and they are training people locally, normally, and they will be continuing to recruit people during this next few months. The solar plant had some delays and this picture is in February. Now it's much more advanced than a few days ago. You can see some small holes in the middle. There were some delays when including the supports because of rejects in the polling tests. But the plant is very advanced and the main connection to the to the electric line to the high voltage line has already been completed we had to stop during a few days in this quarter and the service station is in the far end so we will not need to to stop to make the connection to the to the electric to the solar plant a little bit of delay in this plant which is disappointing but in the other hand as i said before we had very low electricity prices during the first quarter and is going to be also low in the second quarter. So we took advantage of these good prices and have locked in prices for basically most of the second quarter. So any delay on the start of this plan will not affect our costs. To the contrary, it will be very similar or lower than previous years. But we will hope to get this thing going during the second quarter. And total is not much to say. It's not much to say, but there is important thing to say is that we had elections. There were elections in in February in the regional elections and we don't mention too much obviously in the press release because this is something that in theory does not affect us but what I mean in theory the reality is that obviously there was a certain uncertainty of the results of the elections which were won by the conservative party with full majority not because any specific party has more or less support simply because obviously this continuity is is very good to to be able to to process our papers we have applied to we have applied uh for our project to be included in the strategic project strategic interest project of strategic interest which is a new law that came into into stream in in first of january and we believe this is going to be included and approved and as soon as the new government is in place, which is expected to happen sometime late March or early April, we believe that our requests will be accepted. This means that the permitting lines are speed, are shorted and there's a much higher confidence that this thing will be we'll see the light sometime later this year an important point is as i said before is that we will be starting to to be trading in the main market sometime in april and later we'll also be we're trying to get into the into the uh indexes a little bit later So overall, I can cite in 24 where we have lots of targets. ELEX to confirm that the solar plant will reduce our costs and initially we'll as soon as we try to get to the higher rates as soon as possible. The permitting process, hopefully we get this as a strategic nomination, which means it will be a further improvement. Right now, the situation with the stakeholders is excellent, with very good relations with everybody. And we will continue exploring and, of course, passing to the main market, as I said before. So our future is very clear. We have said we don't want to be a single asset. So we want to have the total as soon as possible. We continue to look at all the things. And I think that in less than three years, I see our company getting to the 120,000 tons of copper equivalent level, which means copper in the sink coming from the other areas of polymetallic. which is basically doubling our copper production, the same thing that we did, that we doubled it in the first years of this company. So I can cite in future, and since we are one of the few pure copper players in the copper market, I think there will be a strong interest in these years that we are seeing an important change in the... in the upper market perception. As you probably all know, we have been going back to the $4 per pound levels with the difficulties in production for mines, with the waking up after the lunar period, the new year period in China. The supply side is a little bit stressed, let's say, with Codelgo facing problems, with the Panama shutdown, with Anglo-American and Quebrada Blanca delays. So I think the time from the supply side is bright. From the demand, we continue to see the steady demand, especially from renewals and new energy transition is going all over the world, in India especially. is picking up so there's lots of good news expecting to come from from the copper price we expect and i would say that this is uh this concludes my my my presentation probably longer than expected but fine

Perfect. Alberto, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the 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 your invested dashboard. Alberto, Cesar, as you can see, we have received a number of questions throughout today's presentation. And, Alberto, if I may just hand back to you and kindly ask you to read out the questions, give responses where appropriate to do so, and I'll pick up from you at the end.