Atalaya Mining Plc

Good morning and welcome to the Atalaya Mining PLC Q3 2024 financial results investor presentation. Throughout the recorded presentation, investors will be in listen-only mode. Questions are encouraged and they can be submitted at any time by the Q&A tab that's situated on the top 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 during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Alberto Lavandiera. Good morning to you, sir.

Good morning. Thank you very much, Alejandro. We are here to review the financial results of the last quarter, Q3, and year-to-date. Thanks, everybody, for being here. Most of the production numbers had been pre-submitted, so I'm not going to be reading all the numbers as they had been already announced. But it's worth saying that... that production levels of copper had been similar a little bit better than previous quarter 11.9 million a thousand tons and year to date 34 000 tons and what i think is the highlight of this quarters are the all-in costs were 329 and 326 year to date so it's slightly higher than previous years and other other than that the production and everything has been quite consistent with previous months. As a result of this production, our EBITDA was around 17 million euros and 53 million year to date. And we remain in a good cash position and good net cash position because we have been able to generate cash flow while we maintain under control our investments. Let me go through the graphs, which are much easier to explain and to show you. And then we can advance also a little bit what have been the developments of the company during this quarter, which have been lots. And how are we going forward? So the first graph shows the tons that we have processed which means the plant has been performing well and actually has reached almost a record level since we started up around five years ago. This has in some way compensated all the things that were not that good because we had very good decent copper recovery similar to the previous quarters and production was slightly better previous quarters at 11.9. So the reason of this lower production, basically, although we had more tons, similar recovery, we had low grade treated, 0.33% of copper, which I will explain a little bit what's the reason for that and how these things are going to be changing in the future. As a result of that, As a result of that, our sales were slightly lower than previous quarter simply because we had a slightly lower copper prices. Of course, that translates immediately into EBITDA and also immediately the same thing in the net cash position. As you can see that the lowering in revenues EBITDA and cash has been basically the same. We still maintain a good working capital position, slightly lower than what we had nine months ago, but still very comfortable and quite good after having invested a significant amount of money. I think the good point here is to show the operating costs. The operating costs for the nine months have been 195 million euros, which is almost identical to the 195 million that we had in the previous year. This means that since we have been treating a little bit higher tonnage through the plant at around over 12 million tons, almost 12 million tons of material through the plant, it means that our cost per ton have been 16 point, a little bit less than 16.1 euros per ton versus 16.7 euros per ton previous year. This has implications. What does it mean? It means that we have controlled very well the inflation. So some things have been going down like diesel and like price of bowls and of course the energy. And by treating more tons and keeping our fixed cost down, we have been able to maintain the cost per ton at the operations and why is this important well because at the end our costs are driven by two things first is the cost of operation per ton second is the what copper you produce which is a result of recovery and grade recovery has been maintained more or less okay while grade has gone down and this is important because we believe and we are seeing it already that we are going to be getting better grades which means that with better grades having control on the cost per ton we'll see lower costs per pound which is what matters The cost per pound that we have got is around $3.26 per pound, which is slightly higher than the guidance that we had, one cent. But we believe that in this quarter that we are right now, the fourth quarter, it's going to be lower because we are seeing better grades. So we will be within the guidance and still well under control. Looking a little bit more into the details of the mining, you will see that the mining costs have been going up, like the processing costs have been going up, and other sides going up. But if you make the calculation, you will see that this is directly, exactly directly linked with the lower production. So when you multiply this by the pounds produced, and divided uh and divided by the tones you will see that this have been quite constant as i said before this is what we can control what's out of our control only part is off-site costs and you have you will see two things there that the freight transport and things which are related to the to the metal produced so they are not linked with the grade, basically, of our production, have been kept quite constant. But you will notice, and that's something that has happened already in the previous quarter, that we have a very large by-product rate, which is basically 37 cents. It's almost more than four times what we had in the past. And this is due that this is part of our controls, is because we are blending in some higher grade silver ore that goes through the plant. It's very soft ore. It doesn't contain copper, but it contains very high, very good grades of silver. And since the silver is, we can recover most of it. It means that our concentrates used to have 60 grams of silver per ton of concentrate. And right now they're having around three times higher, 180. So By doing this, we lower a little bit the grade of the concentrate because we are introducing more pirate, which doesn't have the silver, but we are well compensating the offsite costs, which are reduced by over almost 20 cents and overall this results in a benefit for the company actually the byproduct rates are over 15 million if i remember well in this first nine months so this is this is the good thing so let's say that we are going through an area with a lower grade of the mine or rating in federal colorado which was more or less known but we are compensating that a little bit with a with the silver credits All in, the rest things are quite in line. We are keeping our overheads well in line and all the rest of the things, sustaining capital and corporate costs well under control, even lower than used to be in the past. With that, compared to peers, we always benchmark with peers. We are slightly higher in the last four quarters, five quarters, but well within within the range that we have always been in this last couple of years. And guidance for 24, we're maintaining it. It looks like we are going to be treating tons at the plant in the high range. The grade is expected to be slightly higher in the last quarter and it's going, it's been higher. So we will be probably in the low range of the guidance of around 45,000 tons of copper. As a result of that and slightly in the high range in the C1 cost and in the all-in cost, we always report all-in costs. And we are in the low range in sustaining development, basically the development of San Dionisio. And there is a reason for that. And the reason is that we are seeing better cost in mining. So it means that we are not spending as much in San Dionisio as needed. And also the fact that we have this delay, the delay in the permitting is also slightly lower than we had anticipated. I will talk about this thing of the permit in a second. So now going back to the, what have we been doing in this quarter? Finally, we have seen the connection of the solar plant. The solar plant is finally connected, is ready to, to connect to the grid. Sorry, not to the grid, it's connected to our grid. It's still not producing because we need a kind of stamp from the electric company to connect. But this is something that we expect either this week or next week maximum. It's the official, let's say, paper, that's all. But everything is done and approved. And finally, we have got this out of the way. Remind you that this thing is going to provide around 22% of our electricity needs in the future. And this will also be a further reduction of cost in the future, in 2025 and beyond. So, in the initial, you know, we have flagged the delays of the permitting process because we incurred in a different permitting process that we had anticipated in the beginning of our plans. But actually, we are not going bad when we compare it to the revised plan, the authorities have allowed us to go and to mine a pit, intern pit, which is providing the ore. You can see it's quite advanced. And we have already gone through the most complicated and lengthy part of the process of permitting process, which is the public information, like the public information period and we this thing has gone through with minimum allegations actually almost nothing and uh we are very confident we will be getting the environmental permit of the sandinicio at the end of this year or maximum in january so and without any uh any problems at all so for me the the possibilities of not getting the permit of sandinicio is is are I don't think it will be any problem at all. And of course, the idea here is to blend higher grade, which we are already starting to blend with this interim pit and be able to get higher rates combined with the grades of Cerro Colorado. In Maza Valverde, we have been also doing a lot of work with one rig, drilling some deeper stuff. The plan we have here is to start a ramp waiting for some final paperwork and buying some land of the portal the plan is to start a ramp to develop a ramp in 25 early 25 and we have not provided the information of what were we going to mine here but if you look at previous previous press releases you will see that the area of Masa Valverde contains an area that has around 2% copper drilled from surface with true thickness over 20, 30 meters thickness. And we are continuing to drill this area to confirm exactly the shape while we get to the ramp. So that will be our first focus to try to get to a high copper area to be able to blend in our installations. It's clean copper without any other metal. So we've been quite active in that front. In ELEX, although I'm always disappointed for the lack of speed of progress, I realize that this is a very difficult and very different process. It's encouraging the pictures I'm showing right now. For those of you that are familiar with the treatment of copper, concentrates with charcoal parrot. you know that leaching copper chalcopyrite is extremely difficult. If not, it's almost considered impossible. And you can see that it has been done in this few months, producing a copper precipitate, which is this thing called kind of green-blue in the center, zinc precipitate in white, and re-dissolving these two precipitates, copper cathodes and zinc cathodes. So this is with a new plant, which is working, although with lots of commissioning issues. Commissioning issues only related to the lack of experience of predators or teething issues or problems sometimes with the filter, typical commissioning things. And since it's a totally new method with totally new people and something that's basic needs to be developed. It sometimes once in a while gets issues with the production, continuous production, but has been working for some weeks in the continuous basis, leaching copper sink concentrates, so copper with sink concentrates. Why is this important for us? I mean, it's not essential. We are not in a rush. We are quite patient. Of course, I'll be disappointed with the lack of speed. But this is very important because I don't think leaching copper concentrates, clean copper concentrates will be economic due to the very low prevailing treatment charges in the market today. As you know, treatment charges with clean concentrates, the benchmarks are being set very low. And with that, there's no way anybody can beat the conditions given by smelters. You can sell almost everything to the smelters. But in the area of San Dinizio deeps and in some parts of Pasa Valverde and some of the deposits that we've been drilling, we have not announced resources yet, we have complex sulfites, which have a mix of copper and zinc. based on the test work that we have done and historically was done. At San Dionisio and San Antonio, the recoveries assumed in our PAA, in our studies, were 58% copper and 75% zinc. With those, the project was very economic. But using the system, ELIX, we were able to get a high bulk concentrate of around 85% recovery for both, and then leaching over 90% copper and zinc, which means we will get between 15 and 20 points high recovery for this type of concentrates. And that's why we see this is very important. So we see the system works. We now need to fine tune to make sure it works continuously. And of course, it is economic. Otherwise, if it's not economic, we will have to find the right concentrate to be able to make it economic. But I'm quite encouraged to see that this thing has been working Continuous ways even with all the hiccups of problems with filters problem with retro winning, you know things like that Which are really nothing to do with the principle of Alex, which is what's very difficult to reproduce Total without any question is the value driver of this company. It's the next thing so I have been having lots of meetings in in Galicia with lots of people attending and big support from the local communities. What I'm pleased to report is that all the papers are finished and ready for the public information, which actually is only waiting for the official Gazette to have a space to be published and that we have absolutely no opposition. So I'm quite confident that we will be getting the public information consultation through during this year before the year end and at the same time the next steps are that the administration will have to prepare the sectoral reports which will be prepared at the same time we are in public information and in the first few months of of 25 we believe we are going to be getting the a positive environmental impact declaration, which is the key step before development of this project. And we still see this thing happening during the first half of 2025 from all our conversations that we are having. As you know, The Junta de Galicia, the local government, has declared this project of strategic interest, which means they, by law, they set a one-year timeframe period to give you the authorizations, which would be given, I don't remember, I think it was first part of June. I think this is an excellent thing. I have an additional thing that is not mentioned here, which is redomiciliation. It has taken a long time. We are already in, the main market but finally we have the final hearing of local court in Cyprus which should be something very short and very simple to let's say give the final authorization with all the papers blessings and everything it's sort of the preset for the first days of December and with that in also in another 10 days or two weeks we should be able to have a full domiciling in in spain the effect of that is that in the next revision of the index in in the main market which will happen around march for sure we'll have all these papers ready and we would be able to to be included in the uh in the index which also we believe is going to improve a lot the liquidity of the so things are progressing well of course we have this disappointment of higher costs due to the lower production not unexpected but we were i would say quite effective in being able to control those costs in the circumstances so with that 20 minutes i think i can go into the question and answer

Perfect. Alberto, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions, and you can do that 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 moments to read the questions that have been submitted today, I'd like to remind you that the recording of this presentation, along with a copy of the slides on the published Q&A, can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Now, Alberto, if I can just hand back to you to read out the questions and give responses where it's appropriate to do so, I'll pick up on you both at the end.