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 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 Lavendera. Good morning to you.

Good morning, everybody. Thank you for being here in this summertime. I'll try to keep it brief, the presentation, because we have already pre-released the production results and we are talking here about the financial results of the corresponding to the first quarter and the second quarter and the first half of 24. With me, I will have Cesar Sánchez, if needed, that he can also respond to any specific question that you may have. We had already released the production in the second quarter. It was better than the first quarter and it showed a good improvement, especially in the tons treated through the plant. One of the key points in this quarter is that we maintained the costs, all in sustainable costs of 320 and also more or less the same 320 during the first half, despite we had low grades and we kept the guidance of costs around 320, although the guidance of the production has been reduced a little bit. The reason of that is that we believe we are going to be having much better grades in the second quarter, in the second half of the year, excuse me. But we will not be able to catch up production loss during the first half. besides that the fact that we had better higher cover prices and and good cost control we had a very good uh beta of 26.4 million in the in the quarter and accumulated 36.7 million euros which are around over 40 million 40 million dollars and uh we continue doing some investments in helix and in in the pre-stripping of the sunday initial so at the end of the at the end of the the quarter we quarter and a half of the year we ended up having over 50 million euros in net cash with a very strong balance sheet which allowed us to to declare an interim dividend of another 0.04 uh cents uh dollars per year to be paid in in august 24. All the things that we had pre-released, as you know, is that we passed to the main market. And we are going to be moving from Cyprus to Spain in the third quarter, which means that likely in the fourth quarter of 24 we'll be ready. And that will allow us, or we think that we fulfill all the conditions to be part of the index, which would improve the liquidity and the trading of our shares. Talking about the assets, as you all know, our total project has been declared strategic by the Junta de Galicia, the regional government. And this is a huge step forward, which will streamline the permitting process. Permitting is ongoing. I will speak a little bit more about that in the next few minutes, but things I can say are going very well. The same thing with the permitting of the final pit of San Dionisio, although we continue with the interim pit that has been approved and where we have continuous stripping activities during the first half and also starting to touch some of the ore already. And this will provide better grades in the months to come to be blended with the Cerro Colorado main pit. at the same time we continue commissioning the helix plant which is handled by by line technologies and and also we have almost finished the the construction of the of the solar plant finally which is basically ready to to start up almost in the immediately We have also made some changes in the board, as you all know. Neil Gregson will be the new chair, substituting Roger Davy. Roger Davy will continue the board, but due to the fact that he had been over 12 years in the company, he was not considered independent, although he is independent. compliance rules with the London Stock Exchange. He will continue as a director and Neil Gregson will take the chair of the company. Kate Harcourt has been appointed as senior independent director and Carol Whitall has been appointed as a new non executive director. Carol comes with a huge experience in M&A uh from marcelo mitad and also cfo roles in the in london listed company so um overall very good quarter in even in spite of the slightly lower rate at the end the results have been quite good i've spoken most about this about this already but basically the reason why we had good better copper production than the previous quarters that we treated more tons. So we had the same grade, same recovery, but more tons, which resulted in the increase in copper production of 11.6 thousand tons of copper, which is quite good considering that we have been treating only 0.33% copper grade. This copper grade was already flagged. It was already known that we were going to go through a period of low grade that we wanted to mix with the San Dinizio, which had a couple of months of delay. So as a result of that, we had slightly lower grade. Note that the expansion that was originally designed for 15 million tons, it's running at 4.1 million per quarter, which means 16 million tons per year. So the production-wise, things are going quite well. As a result of this production, as I said before, we had, as you can see, high revenues. Why was it high revenues? Basically because we had higher copper prices. Due to the fact that we had higher sales and and lower costs, we had very good EBITDA and it allowed us to increase our cash balances and maintain a very good working capital position of over 63 million euros, which is basically 70 million dollars. which, as you can see, is quite consistent with what we have had in the last few years, even with the fact that we have given dividends and we have also been doing some investments. The conclusion for this is that this company is very leveraged through copper price. As you can see, a very small increase in copper price, even through a small period, creates a big increase in EBITDA and in cash. The summary of the results for the half of the year are summarized in slice nine. As I said before, revenues due to the higher cover prices, even in spite of lower production, have been similar to the previous year, but operating on the same thing with operating costs, but in a bit that has been better. And cash flows has also been quite consistent with previous years, even in spite of lower production. The details of the cash costs and all-in costs are, as you know, we always break down all these details. There is an increase in mining costs versus previous years due to slightly higher waste mined and lower production mainly, basically lower production. the same thing happens with with the others other side costs the processing costs have been kept lower lower than previous years and and the reason for that is that the electricity prices have been uh or also slightly lower and also we have if you remember we had some some long-term contracts for one-third of our production what was a big change is the the the byproduct rates we had a very good byproduct rates due to two facts one is that this byproduct is formed by silver silver in our concentrates so uh silver prices have been good but in addition to that we have been processing some areas with higher silver uh rates knowing those those areas were quite accessible and knowing that we were going to be having a lower copper copper grades we at least were able to mine this higher silver to compensate a little bit the copper rate so then we were able to maintain the the the costs in a quite good range in spite of this lower production due to the bipolar claims overall the the Overall, the total all-in costs have been quite consistent during the year and within the guidance. important to note here as we used to compare ourselves with peers and you will see our our costs in the last quarters all in cost in our last quarters in the left columns in in orange you will see that we have been quite consistent after the the big increase that happened with uh in 2022 but also quite well controlled compared with other companies that are shown there. All of this is based on public information. So it's very important because we always report all in cost due to the fact that the mining is contracted out and being contracted out, the contractor, the operator takes care of purchasing the equipment. and the mining equipment and so we don't have extra cost to buy once in a while uh equipment to replace the fleet we have uh we have reiterated the lower guidance than we had already already flagged about one month ago with copper containing concentrates uh at the end of the year being between 45 and 50 000 which is roughly uh three thousand tons less than originally planned But we have kept the cash cost within the guidance and we will still be investing because we believe that the copper prices will stay as they are. We'll still be investing some money in finalizing the solar plant, the helix plant and the road and investments associated with the development of some division. As I said before, we have given a dividend consistent with our policy of distributing back to the shareholders between 30 and 50% of the free cash flows without considering extraordinary investments. So the mid range of that was 4 cents and the dividend rate The date is going to be August and it's going to be payable more or less mid-September. So what are we doing for the rest of the year? Basically, the redevocation is going quite well. ELEX supposedly is going to be ramping up in the last part of the year. The first part of the solar plan will be connected finally after receiving a small permit and finalizing that was pending due to a change of scope. and will be connected and you will see a picture that basically everything is finished. Sandinicio will continue with this working quite normally. TAURO, we believe we are in a key period of permitting because TAURO, we have already submitted the 24,000 pages project proposal, very well received. We have had presentations to the public, to the authorities, very well attended. We are almost sure this project is going to be attended soon. An important thing is, as we say, is an initiative. You can see that in the center part of the picture that the activities are going quite well. I mean, this is for stripping, so there's big activity there. Remember, we started in the early part of this year. and as you can see that the main road that separates both pits is crossing the center part of the picture. Our excavations do not affect the main road, so we don't need to relocate anything and we are already starting to touch the first ore, which is expected to have a better grade. The solar plant, as you remember also in the previous pictures, The solar plant had some missing panels and had a small problem with the relocation of the change on the high electric line that was crossing the road that in theory was going to be crossing under the road. And finally, the road authority is required to cross on top of the road. We had a small delay. But as you can see, basically, this is ready to start an operation. Right now, we have shown in green around one third of our costs hedged at a lower price, at around 54, which is a very good price. And in the future, when this gets into production, we will get over 50% of our production at very low rates, which will help our operating costs. Deluxe is nothing really to show, simply that they continue commissioning. They had lots of issues with filter, with cathodes, with connection, simply because of connecting something new, totally new, with new people, with new persons, with new maintenance, new operators. It requires a lot of training. So it's taking longer than we expected. By the way, and you can see in the picture, in the right side of the picture, that white area is the solar plant. You can see the quite big size of the solar plant. What you're seeing here is some rigs. Why are we showing rigs which normally we don't? It's because in Mazabal Verde, if you remember, it's a satellite deposit that's around 36 kilometers from our site. We have identified an area with copper grates, copper only. which can be added into our circuits without any modification of the circuits. Right now we are doing some drilling to support where is the ventilation races, where is the best rock conditions, the design is ready, the land on surface is ready. And we are in basically the preparation stages with all the designs to start the ramp, access ramp at the end of this year, beginning of next year. Because as you know, this project is fully permitted right now. The idea is to bring ore from Massa Valverde to Criotipo. What can it mean? So you get an idea, and of course we have not given too much information about this, because we are quite prudent, as you know. We have areas, which you would see in past press releases, of very good intercepts of 2% copper. 2% copper with minimum deleterious materials, those can be fed in our circuits without any problem. Well, if you could bring in half a million tons of copper mine underground at 2% copper, uh into the just half a million tons it would be equivalent to bringing uh four million tons three million tons of upgrade of 0.35 copper so as you can see with a minimum material from this area can increase the production by 10 000 tons at least copper which is not in the federal colorado which is not in any of our plans but you can see why we want to develop this project as soon as possible uh it's not that fast they will require between year and a half and two years of development maybe we will go a little bit faster than that but we are getting ready because it has some some very promising production expectations there a total total i think is without any question the the the growth project that can give more value to our company um this thing is going quite well uh we have had multiple presentations during july since our project was declared strategic with uh hundreds of people attending with from all the sectors of the economy of galicia the project is on going into public consultation it has has received uh coverage to the media constant coverage and in right now um the situation you would say is quite good because the the the company has made a huge effort in engaging with the local communities with with all the stakeholders from the sea from the area from municipalities around the project from potential local investors from potential suppliers and really this project we are we are quite sure this is going to go ahead The plan is to, obviously, we don't have any control on the timing of the permits, but the way this thing is going with all the support, very likely we'll get the key environmental permit at the end of the year or beginning of next year, which will pave the way to start the construction of this project, which is around 250 million euros. which we have already, we are working already in the funding mechanisms for this. So in conclusion, we are in our way to get to our target of getting over 100,000 tons of copper in three years. And actually, I would say in less years. First, coming from the expansion on Rio Tinto, where we are treating only the copper only. uh the second increase is when we start increasing the polymetallic which higher grades in san diricio and uh and the third leg and obviously the more important one is the the other production of very clean copper concentrates from from door uh as i said before our company is very leveraged to the copper price um have seen the peaks of the copper price uh in may get into getting to uh over four point uh over 11 000 tons of per ton of copper now prices have gone down a little bit but we are not uh let's say too much worried about that the reason of that is that we are seeing that from the supply side almost all the companies are showing lower production. Lower production in the first half, everybody's saying it's going to be weighted in the second half. And although China continues to have some issues with the construction itself in the real estate activities, the reality is that the consumption in infrastructure, electrical infrastructure is going very well. and it's also going very well in other countries. At the same time, what's happening with what used to be the biggest producer of the work, Odelco, is warring because it's going down. And although it seemed, well, that's not very relevant, you should see that this reduction of production as shown in the left part, means it's the equivalent of one very large big mine, like 400,000 tons of copper. So although the price of copper has gone down in the last months, the physical premise of the demand for copper in China, which used to be negative, and it's a good indication of the demand of copper, physical copper has already picked up and is positive again, as well as a pickup of copper premium in the United States. So we believe that when we get TOTO back, the copper project is going to go back over to $5 or even more. And as we have said before, our company is very, very leveraged to the copper price. of course we're one of the few few copper price in in london so with with the inclusion of the company as in the index i think the demand for shares both from london market and from the european market is going to be quite And I think this concludes this part.

That's great, 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 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 your invested dashboard. Alberto, as you can see, we have received a number of questions throughout today's presentation, and Alberto, if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you at the end.