Atalaya Mining Plc

Good day, ladies and gentlemen, and welcome to the Atalaya Mining 2025 annual results. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session through the phone lines, and instructions will follow at that time. I would like to remind all participants that this call is being recorded. I will now hand over to the CEO of Atalaya Mining, Alberto Lavandera, to open the presentation. Please go ahead.

Hello, everybody. Hello, everyone. Good morning. We are pleased to report our financial result for 25, which was a good year overall. I have with me Cesar Sanchez, CFO of the company, and I'm going to go direct to the presentation. During the last year, we produced 51,000 tons of copper, which was just in the high range of our guidance, improved guidance, and that was produced at a cash cost of around $240 per pound, and with all interesting cost of $290, which were both better than we had guided. This resulted in quite strong financial results, including a beta of 180 million euros, and a free cash flow of over 100 million euros. We ended up the year with 122 million euros in net cash on the balance sheet, and I should note that this does not include the money that we raised in the late January 26. As a result of this good performance, our board has posted a final dividend of 6.5 cents of euro. per share, which I will discuss a little bit later in the presentation. At the corporate level, we had some changes in the leadership of the retinto, including a new general manager. And I should also remind everybody that we were added to the FTSE 250 index following the re-domiciliation of to Spain earlier this year. Since then our liquidity has improved a lot and this is something that we had been promising and finally we delivered. I will provide some updates of our projects later in the presentation and I will also provide a little bit of some details of impairment that we recognize in our LX project. And I should also remind that we strengthened our board with the addition of a new non-executive director with Mike Armitage. That followed the addition of Henny Foll and Cori von Faleth earlier in the year. Looking at some sustainability highlights, I think We are showing here some key numbers. We take this quite seriously. It's part of our operating philosophy. I think one of the key highlights that everybody sees when we arrive to our mindset as Retinto is how good relations, very good relations that we have with our communities around Retinto, with most of our workforce. coming from the area with 12 years with operation with absolutely minimum incidents. And I think it's something that we are really very proud of. Some of the numbers shown there that show that our injury frequency rate in 25 have been slightly higher than previous year. Something we are focusing, even if this means some of these incidents are very low, let's say, severity, of very low severity, but the reality is that it's something that we take very seriously at the company at the board level. Beyond that, we continue to work to be more efficient in the use of our water, something that normally is scarce in the south part of Spain, although this year we had a lot. And also the use of electricity and power, which have been consistently lowering through several initiatives in the last year, besides the fact of installing an important solar plant that you can see in the background of this picture. Going directly into the operational results of the last quarter, we had announced these results in the previous January. The mill performed very well. Remember that this mill was designed for 15 million tons per year, has been running at over 16 million tons per year. But the grades were lower than the previous quarter, as expected, because we were pre-stripping in the high rate of some initials. So we were only mining the Cerro Colorado. Cerro Colorado has lower grades, but it's very clean ore, so we offset some of these lower grades with better recovery due to treating this ore from Cerro Colorado. Even so, with this slightly lower predictive recovery due to the good copper prices and the good cost control, the results of the four quarters were very solid. We had a bid of €41 million, we had free cash flow of €47 million, and that includes also some changes in working capital. Profits were also similar to the previous year, but it included an impairment of €24 million related to ELEX. This impairment, I have to point out, that's related to the loans that Atalaya has been giving to Laín, which Lain continues to own and owns the intellectual property and operates the plant. The plant works well, the plant continues to work well, but the company had given loans in excess to 55 million euros to develop this in these last 10 years, and the board decided to be prudent to impair, have a non-cash impairment of some of these loans until the plant was operating totally well due to the potential limitations of a scale. So as I said, we continue to believe that this is going to be something that's going to have a positive impact in Atalaya and specifically and in the Parrot Belt in general, but it's simply due to prudent reasons, accounted reasons, we prefer to to have this partial impairment of our loans to lay. We finalized the year with fantastic cash position with working capital surplus over 94 million euros and that's again before the placement that we made in late January. If we look at the All 25, the whole year of 25, we can see that our production was just over 51,000 tons, slightly better than previous year. Our plant continues to perform very well, setting a new record of throughput, 16.6 million tons, which is basically a 10% improvement over the main capacity. and we had overall better rates than previous year, even if the recovery was slightly lower when in the first part of the year, we were processing some of the oxidized material that was at higher rate, but oxidized from the . So overall, a very good year, which translated in the next slide in a very good results for the whole year, with EBITDA of 180 million euros, free cash flow of over 100 million euros, which was excellent results. And the profits is still 85 million euros after the impairment of 25 that I have just mentioned, 24 that I have just mentioned before. So it means that if it wasn't this, we would have tripled the profits of previous year and also tripled the EBITDA of previous year. Looking at the cash cost breakdown, we normally give a quite detailed breakdown of mining processing GNAs and offsite costs. The performance was strong in 2025. Actually, the performance both in cash cost, site cost costs, and all in sustained cost was better than the guidance. in the last quarter was 262 and 307 respectively, and the whole year were 240 and 290 in all in-sustaining costs. The good performance was due to several reasons. The input costs in the mining, processing, and GNAs were quite constant, so the only variation was basically the better production. So we have kept inflation, side inflation, quite under control. We had some positive, very positive, by-product credits in the higher silver prices because we produce over 1 million ounces, approximately, of silver. So that has been a very good contribution to our off-site costs. And we also benefited from the falling TCs And we also were able to sell some spot sales, spot lots, even with negative, very negative treatment charges. So both the silver and the very low treatment charges resulted in basically negative offsite costs, which improved our hauling sustainable costs. In the negative side, we had higher stripping, capitalized stripping at Terra Colorado, which had an impact on all interesting costs. And also we had a small improvement in the euro versus the U.S. dollar, which has some unfavorable impacts in these U.S.-denominated costs. We normally provide a benchmark of our all interesting costs with our copper price. producing peers. Our performance in 25 was in line. We can see that we are comparatively favorable. And the only point I would like to show here is that the industry is seeing more and more the 350 level around all entertainment costs as being quite common in the industry. And I know normally Some companies provide only C1 costs, but at the end you have to provide only sustained costs. As a result of this good financial performance and good balance sheet, and even knowing that there's going to be a significant amount of investments in this next few years, Atalaya's board has proposed a final dividend of another 6.5 cents per share. As a final dividend, this dividend is obviously going to need to be approved in the AGM of the company in June. And together with the interim dividend that we paid in October, the total dividend of 25 is going to be 10.9 cents per share. This compares with 6.4 that we had in 2024, so it's a significant increase. It also shows that since we started the dividend payment five years ago, the company has paid over 94 million euros of dividends, which was more than it had raised. the money raised from the markets in all this operating history before January, January 26. Going forward to the guidance, how does 26 look? We have already provided the guidance back in January. Since then, we have had some things that have changed slightly. Our perception is that we had a huge rainfall events including flooding in the last weeks of January and the first part of February where we the region received water more water from rains heavy rains than the whole previous year this has some some effect in the access in the federal corral the pit that we could not access And so we expect to have the first quarter production slightly lower than planned. But we expect also, we will be treating some of the marginal materials. But we expect that this grade will be improving in the course of 2026. With all that said, 2026 is still going to be expected to be between 50 and 54,000 tons of copper. And in addition to that, we expect to produce around 1 million ounces of silver, which is always quite interesting. The guidance, we are keeping the guidance of $260 to $290 per pound in the site costs, and $310 to $340 per pound in all the sustaining costs. Compared to 2025, the mining rates will be slightly higher than 2026. Sorry, 125. And the euro, we also expected to strengthen a little versus the US dollar. All these things that are happening in the Middle East can change from what our expectations were in the beginning of the year. Normally, inflation is well under control in the past year, but this war in the Middle East could drive up costs, so something that we will be monitoring closely. Obviously, the effect of this war, one should look at the effect on energy. In that sense, our energy cost is electricity, which is an important part of our cost. It's quite stable because we have First, our solar plant, and secondly, we have our long-term PPA, which covers a good portion of our costs. We are not very exposed to the markets of gas, and also in Spain, there's a huge production of electricity from wind and solar, plus a lot of hydraulic production due to the heavy rains in the first part of the year. We do have something that we will be watching carefully, which is the diesel price. Diesel price has an influence in the mining rates, and obviously this can translate, the diesel price maintains high levels, can translate the mining costs as you can expect. Regarding CAPEX, we expect similar levels to D5. Most of the CAPEX is associated with this. It's an issue of stripping, and they need to move a road to be able to access some of the better grades that are in that area. In addition to that, we will be preparing a ramp to Masalberde, a good deposit that's located south. southwest of Rio Tinto, around 35 kilometers away. Of course, this is still subject to board approval, but we expect that will be started later this year. We also have some investment to continue with our Telensdam expansion, and of course, we will keep investing in exploration, which is quite important for our future, both in Spain, in the south, in Tauro, and also abroad. I would like to mention a small, in a second, our equity offering in January 36, where we finalized an equity offering that raised £130 million. This really strengthened our balance sheet and provided us with confidence to advance all the projects. This is not only for TOTO, which we will still be finalizing the funding package once we get the the final approvals and but it will also allow us to make some small acquisitions it will also allow us to go ahead with all this this this capital price that we are going in addition to total which are basically driving our growth obviously the main one is to to accelerate the press tripping at some initial that you can see here In the second part of 25, you can see how we started moving the waste in the left part of the picture, and the idea is to access the battery rates that are in the center of the picture. As we move to 26, we will be increasing this high-grade ore, and that's one of the reasons why the production guidance is weighted towards the second half of the year. At Masa Volverde, this is around the polymetallic deposits. We now have all the land that we need to build the portal and to access, and we have had some discussions with the contractors to finalize the final award to try to control inflation, and basically we are in the final stages of that. Subject to board approval, once these discussions are finalized, we will be started the construction. The idea there is to continue drilling this red zone, which is the high grade of copper, where we will start mining initially with grades over 2% copper. Another important point is to remind people is that we have most of our resources and reserves are uh open pit bull uh ferro colorado around 160 million tons at the rate of our slightly less than 0.4 copper it means that if we didn't do anything we would be mining during 10 years but we do have a significant amount of polymetallic material that has copper lead sink with better copper rates uh basically triple than what we have more than triple than what we have but they do contain also some zinc. It means that we need to build a polymetallic circuit. That's part of the use of procedure. We're going to be using it for the race that we completed in January. Building the circuit basically means installing some equipment in line with our existing installation in such a way that provides flexibility to be able to treat both type of materials and be able to treat this polymetallic ores with higher rate as we go through without waiting until the very end of the mine life. We continue also to to drill San Antonio deposit, which is located immediately to the east of Rio Tinto. We continue to drill at Massa Valverde. It's focused in the high-grade copper zone. And also, we are doing some early works, which requires some capex in the Aptoro, where we are very close to get the permits, we believe. is basically completed and we are ready to start buying some equipment with the last discussions being held with suppliers. Actually, Toro, as you know, is the value driver of this company. It's very low capital intensity. It has, it will have, it will have all interesting costs that will be around 50 cents lower than Rio Tinto. And this is something that we are really very keen to develop. And I was in total actually this week, and it looks like the final reports that are ready, that need to be ready before issuing the environmental impact statement are progressing very fast. And we continue to believe that we are going to get the environmental impact statement during the early part of the second quarter. With this, it's clear that our growth targets are going to be very clear in order to get us to a production growth of around 100,000 tons of copper equivalent. Most of them are brownfield. Most of them are in Spain. All of them are in Spain. And very important is that we have right now a balance sheet of around $300 million. euros uh which is basically of net cash which should should with together with the debt that we are going to be raising for total should allow us to to develop this as projects and growth pipeline in a short time frame and there are more details in our presentation whoever needs them but i think i'm going to stop here and open it to q a and Yeah, I would pass this to the operator.

Thank you so much. And we will now begin the conference line set questions. To ask a question on the phone line, please press star 1 to raise your hand and join the queue. To withdraw your question, press the star 1 again. When called upon to ask your questions, please ensure you unmute your device and pick up the device handset to ensure optimum quality. Again, that is star 1 to ask a question. And the first question comes from the line of Laura Chan of RBC Capital Markets. Please go ahead.