Atalaya Mining Plc

Good day, ladies and gentlemen, and welcome to Italia Mining Q1 2026 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 Italia Mining, Alberto Lavendiera, to open the presentation. Please go ahead.

Many thanks. Good morning, ladies and gentlemen. Thanks for being here in the conference call to review the financial results for the first quarter of 2026. I will be using the presentation that's going to be in the web page. And I'm with Tessa Sanchez, the CFO of the company that can answer any question after this. after the review of the slides. First quarter production had already been announced. And as you remember, it was below plan. It was below plan because we had quite heavy rainfall events higher than basically the whole previous year during late January and whole February. But since then, the end of the quarter and the first part of, well, I would say most of the second quarter, so during April and May, we have exceeded our plan and we have recovered some of this shortfall during Q1. So we are trying to recover those losses. And The cost performance, even being with low production, was within our guidance. This means that in relation to the full gear guidance, we will discuss this later with more detail, but we believe that's going to be unchanged because we see that we are going to be very close to what we have guided before. But we had a good EBITDA. We generated 48 million euros EBITDA, which was excellent and probably ahead of expectations. It was impacted by lower production, but it had the positive impact of better high copper prices, better copper prices. Actually, we achieved very good realization prices, good silver credits and low treatment charges. In the following pages, I will be saying a bit more about the financial performance in our growth projects. There are a few other comments in the page six of the slide of things that have been going on during the quarter, like the acquisition of almost an 8%, 7.3% stake in Lara exploration in Brazil and a few other things. Continuing with the production results, you will see that the mill performed quite well, but the rainfall impacted grades because we could not access the places where we were mining normally, so we had to rely on stockpiles, and this really affected the production. But Even with that lower production, as you can see in slide eight, we had very good financial results. Although the revenues were lower, the operating costs were also lower. The main reason for this, as I said before, was the high cover prices and lower TCRCs. And we ended up generating 29 million, almost 30 million euros of operating cash flow. This operating cash flow was more enough to cover our investments in LARA and the capex of around 20 million euros. So after all this, our balance sheet is extremely robust, extremely strong. We have almost 300 million euros of cash and net cash of around 266 million euros. which of course includes the proceeds of our capital raise back in late January of around 150 million euros. But even with this low production, we generated positive cash in spite of the investments, even with this bad production results. And the reason for this is that we have kept quite good control of the costs. The cost performance overall, the first quarter is consistent with our full year guidance. Cash costs of 252 and all-in sustain cost of 320. If you compare that with year 25, you will see it's slightly higher, but not that much higher. And if you compare it with 24, you will see that actually it's better than we had. The reasons for that, as you can see in the details broken down in page 9, is that we did have high mining costs and higher mining costs due to lower production, but also more importantly, also with the effect of unfavorable forex exchange rates, and also higher diesel prices started to bite in this, I would say, February, March, and continue in April. However, you will see that the by-product credits, which means silver, have been negative almost double than what we had previous years. So very strong silver credits and also very low treatment charges. You will notice that treatment charges are negative. The reason of this is that we have been making some shipments into the spot market that have been sold at negative DCs. And also, we have also benchmarks for the contracts that we have linked with long-term contracts. The benchmarks of these are quite low, much lower than previous year. This is also important because going into the future, because most or all of our legacy of tech agreements are expiring. And they're expiring in a moment where the concentrate market is pretty tight, which means we still have ahead of us an important period of production of concentrates in a moment where the traders and the smelters are ready to pay to treat our concentrates. We believe that this uncommitted offtake is a hidden asset for Atalaya. In other words, if we wanted to, we could even capitalize in getting some funding if needed through the existence of this uncommitted offtakes. both for the case of Rio Tinto and of course for our new project, growth project in total. All in sustaining costs of 320 are consistent what we had in 24 and slightly higher what we had in 25. But of course, this is, as I said, it's due to the lower production. We normally benchmark our only sustainable with the rest of the industry and we are keeping of course keeping within the range going up relative to previous quarters but still within being quite competitive looking ahead of the guidance we as we said we had a lower first quarter but we were able to recover some of this shortfall during April and May. So right now we thought that looking at the planning ahead, that we continue to expect our guidance for 2026 within the guidance between 50,000 and 54,000 tons of copper. Now, to be prudent, we are saying and we believe we are likely going to be in the low end of that, in the 50,000 range, but we will continue to make efforts to recover as much of that production and be able to get that higher. In relation to costs, as I said before, so far we have achieved our high guidance and it's consistent to what we had said. The only question that we have here is the uncertainty that we have around the Middle East. We are constantly quantifying the potential impact. The potential impact here comes mainly from with the price of diesel. The price of diesel has gone up, I would say, 20% in Spain in the last few months. And explosives could be affected a little bit, not much, but could be affected a little bit due to the prices of gas, which is linked with the price of ammonia, and the price of ammonia is linked with the price of explosives. But the potential impact of the diesel is the one that is... have an effect on our costs. We have quantified that in If things continued as they were this year, we could have an effect of around 15 to 20 cents in the cash costs and not in costs. The reason for this is that we, for example, very simple numbers last year, we consumed around 30 million liters at our reordained operations. So basically an increase of... of 10, 15 cents or 20 cents will mean multiply the extra. By the consumption, you will get the extra cost that we'll be suffering due to the high diesel prices. Of course, we expect that this complex will be resolved in a favorable way. And because it looks like that's the way that the world is going to need it. And we don't expect really any other effect of this conflict. In the case of the energy, Electricity, actually, due to the high rain events in Spain, the price of electricity that, as you know, in Spain is very much linked with solar, wind, water, nuclear, has been quite low. Actually, the effect of the higher gas prices has not been as in previous years. And we don't expect that to have a high influence in the costs. That's why electricity really has not changed much. In relation to the CAPEX guidance, we have not made any changes, of course. If we had to do some developments or in the case of press stripping, obviously the effect of the diesel prices would have some effect in the CAPEX guidance as well. Going to these investments that we are doing, one of the things we are doing is getting to the high rates of the Saint-Denisio satellite deposit. You can see now what's the development of the Saint-Denisio. The pre-stripping is advancing quite well. And you can see in the picture the idea is to get into mine some higher rates through 26. Of course, the The stripping of 20 million tons, more or less, in 26 could be affected with high diesel prices if this was the case. We also continue to make some progress in the Massa Valverde development. Here we have a couple of rings drilling the red area, the copper area. We are finding very good rates there and we are getting ready after having acquired all the land and all the permits. We are preparing all the surface installations. We are preparing the explosives magazine. And basically we expect to start the real excavation of the rub later in the year. having gone through the contractor selection and of course subject to final board approval. In the meantime, we'll continue drilling this zone to better understand the area that we're going to be lining initially. We continue to do some work also in the preparation to construct a line to recover the sink inlet We do have around 130 million tons of polymetallic deposits known and drilled within San Dionisio, San Antonio and Massa Olverde. which compares to around 190 million tons of copper-only ore. The copper only has lower grade and better recoveries. The polymetallic has higher rates, but also requires a specific circuit to recover it. The specific circuit, I've said this in previous lectures, It basically is adding in a circuit to recover zinc and lead, trying to maximize the use of the existing installation with a capex that at this stage is around 80 to 90 million euros, which we are trying to optimize as we speak. We also have some drilling ongoing in San Antonio, which is a very shallow polymetallic deposit, very close to Rio Tinto. And we have there one rig, and we also have one rig in Maceo Almerde, and we continue to do some other exploration within the Rio Tinto East area and other parts of the Rio Tinto Belt. We continue to focus on potential opportunities within the Rio Tinto area, within the Pirate Belt, because we believe this is what can give more value to the company. But obviously, the important thing is the permitting of TOTO. TOTO during this quarter has had some significant changes. We have had several meetings with the authorities finalizing the documentation, clarifying things before final reports were issued by different departments. And actually, the Minister of of industry, Maria Jesus Lorenzana, she was saying that she was confident that the EIS, the environment impact declaration would be ready before summer. Still not clear if before summer is before the 21st of June or before August. But the reality is that all the reports that had to be produced have been finalized and we know they are all positive. which means the environment's backstatement can only be positive. And it looks like it's in the final stages. But very important also is the mention from the president of Galicia and from high ranks of the Galician government that there is a strict commitment to exploit the critical materials and the mining opportunities that are in Galicia. announcing the launch of tenders for free licenses, announcing social measures in order to get some of the profits of the mines into the surrounding communities. And really, at the end, the bottom line is some very proactive measures from the Melitian government to support mining, and of course, including Togrom. Autoro, we have basically completed most of the front-end engineering. We are advancing with the tail engineering. We are buying some land or getting options of some other land in order to get past access to the plant site in order to start construction as soon as possible. We have been negotiating with the main equipment suppliers for final tenders and ready to award the key equipment in order to shorten the the construction period. We have also strengthened our teams. We have built an assay lab. We are infield drilling around the pits that are going to be the first starter pits. We continue to operate the water treatment plant. We are building field offices for the construction. So very confident that the project will be approved and we are making prudently some preparatory works. We like TAURO because it's going to be producing over 30,000 tons of copper. It's going to be our second producing asset. It has a low capital intensity. Its costs are going to be around 50 cents lower than Rio Tinto. And we believe it has a huge upside in the deposit itself and its surrounding belt around Tono. With all this, concluding, Atalaya is very well positioned to grow. We are getting ready to get to our focus of around 100,000 tons of copper equivalent, which would come from Rio Tinto in the 50,000-60,000 range, with Tauro in the 30,000 or more range, and with zinc and lead as copper equivalent in the range of around 20,000 tons extra. The key components of this growth are all brownfields, And we have the teams and we have the balance sheet. We are very fortunate that we have a very good balance sheet and the teams to build it. And the important thing here is that we are ready to deliver this in a very short time frame. We're not talking about five and ten years. We're talking about three years or so. And I think this concludes my presentation. I would like to open it to some questions for me or for Tessa.

We will now begin conference line questions. To ask a question on the phone line, please press star one. We'll pause for a moment to assemble the queue. Your first question comes from Laura Chan from RBC Capital Markets. Your line is open.

Hi, good morning. Thanks for the call, Berto and Cesar. Just a couple of questions on my side. So the first one, how much of that Q1 production shortfall has been kind of recovered post the quarter? And what gives you the confidence that the guidance range is achievable? Are you really getting into those high grades at San Dionisio already? Should we see that grade uplift come through? And just, you can, oh, I'll move on to the second one.

Yeah, we are getting from around 2018 tons, 2,200 tons in the minimum shortfall. From the guidance, we have recovered around 800 already. So we are short around 1,400 more or less from our plans. We have obviously this follow-up, daily follow-up. Yes, according to the planning guys, that we have had to switch from one place to the other, some places to the other, but according to the plan, we will we would be there in the range, if everything's fine, in the range of 2,000 tons. But let's say this is, assuming everything goes okay, this is the plan.

Okay, understood. And you also mentioned that your legacy contracts are coming to an end. Could you just give an update on how you're thinking about spot versus benchmark mix going forward? Are you just willing to sell most of the concentrate on spot? to a kind of perpetuity? Is that how we should be thinking about it?

I think you should be seeing us looking at spot tenders. Last year or beginning of the year, we had a tender with five or six offtakers and smelters. We tendered 200,000 tons of concentrate, 100,000 for this year and 100,000 for next year. And we got negative TCs, three figures. And we divide that with two important traders, so first-class traders. We believe that that's the way we are going to continue doing it in an open tender for everybody and with very clear specifications so that we can benefit. We are of the belief that this situation with the smelters is going to to be there for quite a long time, certainly not one or two years, due to two reasons. The smelters are still surviving nicely with the high prices of sulfuric acid, now even much higher with the conflict of Iran, but also due to the high prices of gold and silver that they recover. So the smelters are not going to close due to lack of funds, plus the premium of upper cathodes. We believe that the situation with negative disease is going to last for quite a while until new production comes in, which is not that straightforward. So we plan to end up our existing rollout, our existing contracts, which are finalizing all of them between this year and next year, and continue with the spot tenders or limited tenders saying, okay, we tender out 200,000, 300,000, 100,000, and we lock in these negative prices for one year, two years.

Okay, understood. I'll pass it over to someone else. Thanks so much. Thanks, Laura.

Your next question comes from the line of David Radcliffe of Global Mining Research. Your line is open.

Hi, good morning, Berto and team. So my question's on the operating costs as reported in the income statement. Last year, reported costs were about €72 million. This year, they're €60 million. There's not many people kind of reducing overall costs. So could you help bridge the gap here? I mean, overall total material movement was down, what, 2 million tonnes? So that might be, you know, €5 million. So what's the balance item here? Is it higher capitalised stripping at Cerro? Is it the TCs? That would be helpful.

Cesar, do you have the breakdown there? I believe, first of all, it's lower amount of material, for sure. Then, that's the main question. Maybe the plant costs have been slightly lower, actually, the previous year, due to the lower electricity prices. I don't think that these, are these TCRCs included? I'm not sure that these TCRCs are included in the first line. I think they are in the second line. Yeah. Can you give a breakdown to David, Cesar? Sure.

So I don't have the full breakdowns with me now, and I'm happy to work on it. But the main reason is you spoke about absolute terms, and these are related to volumes, as we have been producing less volumes. And in terms of TCRCs, they are deducted from revenue. So in this case, they are added to the revenue. So you won't see that on the operational cost.

uh but as we go let me let me get a little bit more detail on operating and cost and i'll get back to you the main the main reason is lower lower volumes uh slightly lower distances and that's the main reason maybe also some part going being capitalized depends on the the amount produced because if if if we are producing less normally we capitalize a percent a proportion of the excess that goes on top of the strip rate, the average strip rate is capitalized, and you will see it in the all-in sustaining costs.

Okay, now that'd be good to get a bit more clarity around that. And then maybe as a follow-up, given the advanced state of engineering at Toro you were talking to, and then the early preparatory works you've already undertaken, Are you still confident about costing of the project? Because obviously the capital intensity is quite low. So just wondering if there's been any movement either way there?

Well, yes, we are seeing a slightly higher capex in our final numbers. When we look at everything, I think we'll be in the range of 300 million. Instead of 260 to 70 million euros, we'll be in the range of 300 million. This is the last estimate. This is the last estimate that I have, assuming there's still a contingency of 2,500, I think we had. It's also true that with the higher certainty of costs, the contingency should be lower. So I don't think we'll see much more than that. I think we'll be in the range of 300 million euros. So yes, there was some inflation relative to the past, but not much. The main reason of this is that once you go to final equipment tenders, the people know that's the final one and the prices actually are getting more tight in the big mills or in the filters or in or the gyro crusher. And then another thing is that's quite a big difference versus other projects that are located in the middle of nowhere is that you are within an area with a heavy industry and construction where you have concrete plants within a few kilometers. You have very good access to ports, good fabrication. You don't have any camps. people go and assemble things and the next day they will go and assemble something for any other industry. So the inflation from that point of view, it has been quite modest.

That's great. Thank you. I'll pass it on.

Your next question comes from Richard Hatch from Berenberg. Your line is open.

Yeah, thanks for the call. Morning, guys. On this DIA approval, when you say before the summer, so how should we think about that? Is that within the next six weeks or so? I'm just conscious that we've sort of had this promise for a number of, well, well over a year. And I think the market's sort of getting to the point where it's becoming a problem. sort of cause of frustration for some corners of the market and also perhaps something that is the tail that wags the dog from other sides of it so it'd be good to kind of try to get get a clearer understanding of your exact time frame frames of this and you know what is the impact as well if you don't get the permit by the summer does that mean that now it's a September story and that pushes first production out by a quarter can we just talk a bit about that

You are 100% right. Not only the market is frustrated, I can tell you we are very frustrated also. We are extremely frustrated. The difference between now and then is that we knew that there were some reports, specifically the water report that was being prepared, and they came back with questions of last minute and asking for additional clarifications and so on and forever and forever. Now the reports are final and contain the word positive, which means now the only thing that's pending, it's the environment pack preparation, which basically is a summary of all the different reports around 27, with our summaries, which we have already provided, and put everything together in what they call the Environment Pact Statement, or in Spanish, the Clavafilm Impacto Mental. This shouldn't take more than four weeks, even working very slowly. And that's why the Minister has said that she expects this before summer. Before summer, meaning the real summer, which starts in June, late June, or before, this is what we expect, or before summer, which is, let's say, holidays in August. If it delayed over August, I would say, yes, we will see a delay of the whole thing. The main reason for this would be that we would not be able to start the movement of the topsoil removal and geotechnical final works for final concrete foundations of the mills during the summer period. And we'll have to go into September period or October, which is more rains and it's always complicated things. But we are quite confident that from what we have seen and what the discussions we have had, and I have been personally there in meetings, that they are working on this declaration, which will probably be before the end of June. This is what we have been told. Okay, that's great. Good luck. Out of our control. i hate to say that i have been wrong so many times that i almost feel embarrassed because i am from this region i am from this area and and it's embarrassing how bureaucratic it can be but it looks like now it's real good okay let's hope um and then um secondly just says are very quickly on the q2

And how should we be thinking about the capitalized stripping in Q2? Should we expect an increase on that 42 cents a pound or should we expect it to be flat, lower? What's your view?

Flat, I would say. I think Q2 should be very similar to Q1.

Okay, clear. That's me.

Thank you very much.

There are no further questions on the conference line. I want to hand over to management for closing remarks.

Many thanks. Well, thank you for being here. Thank you for your continued support. And we look forward for a good second quarter and the rest of the year.