Atalaya Mining Plc

Good morning, ladies and gentlemen.

thanks everybody for being here uh we are today we announced the the results the q2 and first half results for 2026 including the financial results and i'm going to go through the through the highlights of this announcement let me first start with the review of of the results during this quarter we had a good production quarter we had announced that already we produced 13.5 thousand tons of copper with all in sustaining costs of 279 which means we are maintaining our guidance and of both for cost and production it was a good quarter we generated a record quarterly a bit that of 78 million euros a record half of the year of 126 million euros record uh free cash flow 58 million euros so that's over 60 million and of course we benefited from high copper prices good silver credits low treatment charges and it was very good and even with the that some higher mining costs and processing costs due to inflation and to higher leasing prices, we had an excellent cash generation. This extraordinary cash generation meant that our balance sheet at the end of the quarter was excellent, and we ended up with a net cash position of 318, almost 319 million euros, which is also again a new record. as a result of that our board the declared dividend an interim dividend of of 5.5 cent euro cents per share which is also much higher than previous previous uh interim dividend and I will go through uh some of the key points in the next in the presentation Okay. In slide seven, you will see a graph that we typically show with the evolution of production. The plant continued to perform very well. The Q2 was strong. It was a very big improvement versus first quarter. As you remember, during the late January and almost fall February, we had a extraordinarily high rainfall in the south of Spain. and that impacted our production but during the second quarter things were normal we recovered out of the lost production we had a very strong performance rates went almost 0.4 copper and we increased the recovery to 84 percent so we produced 13.5 000 tons of copper which is quite good and you can see in the graph and the bottom side a big increase a large increase versus previous quarter um as a result of that the financial results were quite good uh we a bid that was 78 million euros which is again a new quarter and of course the revenues you can see were record high, were a result of higher copper prices, higher silver credits and lower off-site costs. We made some investments of around 20 million during the quarter, Melincia and Dionisio and capitalized a strip in Acerro Colorado and with everything the operating cash flow was almost 80 million euros and we generated 58 million euros of free cash flow which is again a new quarterly record and our that means that our our balance sheet improved a lot strengthened even further and we increased our cash position to almost 320 million euros Of course, we had a nice increase in the capital placement that we had in late January. But even so, after that period, we continue to strengthen our balance sheet and increase our cash position in this quarter. Going a little bit further in the financial results, I have here some interference during the whole year we had during the whole first half of the year we had an EBITDA of 136 million euros which is again a new record looking at the the breakdown of our cash costs and also in sustained cost as you know we always give a full detail of this our cash costs were around 240 dollars per pound in q2 and in in the first half of 26 and they were solid and well below below below the guidance that we had expected for in the fall of 2026. All the sustaining costs were around $280 per pound in second quarter and around $103 in the whole 2026. If you look at the details, you will see that mining and processing were higher than the previous quarters. And this is mainly due to the impact of diesel in the mining side. and also explosives that are affected with the gas prices which have been affected by by the wars in the in the middle east also we have some not favorable exchange rate uh during during the quarter the euro euro uh and the us dollar euro strength a little bit during the quarter but of course even having this kind of by bad news at the operational level at a site level uh we most of this increase of in the costs were offset by higher silver credits and low treatment charges as you can see in the in the lines of the off-site costs we are we are right now enjoying low treatment charges from the benchmark but also we are also selling some parcels some lots with negative treatment charges which means that at the end we had been able to to have quite low freight treatment charges and all other off-site costs um going forward uh beyond 27 or our legacy of take agreements will be disappearing will have expired and if the market conditions stay like that we think we are going to be in a very good position to enjoy very low treatment charges as you all know uh the evolution of treatment charges has gone from being positive uh in the range of the 50 to 80 to be negative even at spots spot sales of minus 200 with all most of our uh of the agreements expiring this year and and all of them next year we are fully exposed to this good conditions to the for the miners and we believe are going to persist for a while due to the lack of new projects and due to the excess smelter capacity. Of course, also the smelters are enjoying the high sulfuric acid prices, high gold prices and silver, which means that they are not losing money. So there's no specific danger for the smelters to close even with this low and negative treatment charges. When we benchmark ourselves with others, we always like to compare with other pure copper players. We continue to maintain our all-in sustainable costs quite under control. We continue to be very well positioned compared to the rest. And our all-in sustainable costs have been trending downwards, even with this inflation that we have been seeing that's general all over the world. With this, how do we see the rest of the year? We have preferred to maintain our prior guidance. We believe we are going to be in the low end of the production, although we will be recovering some of the lost production of the first quarter, but we think we are going to be in the low end, even with the good production result of the second quarter. From the cash cost point of view, we had pressures on diesel and explosives, but we don't think they're going to be worse than this quarter. If anything, it looks like this is relaxing a little bit, at least from the oil point of view, oil price point of view. So we prefer to maintain also our guidance. we have made some small amendments to our operating metrics we believe that the mill is going to be performing very well has been doing very well we have some actually we had a record May where the mill stopped only three hours in the whole the whole month it was fantastic but we do have a maintenance program in the third quarter but still we we think we are going to be mining processing in the high end of 16 million tons or more than that at the mill the grades maybe are going to be slightly lower than we're predicted really this is likely shy of that but the recovery is going to be slightly better so one will compensate the other so and then we are maintaining our guidance the capex we have lowered the capex a little bit around 20 million 20 million euros less and the reason is the delays in starting some of the projects our growth project which I will we'll talk a little bit later this is the the stripping of of chardonnay she's like was slightly delayed the movement of the road and the start of the ramp so basically it doesn't mean we are saving capex we are simply pushing that to to later in the year and beyond into 2027. um looking at dividends as i said before the policy of atalaya is to give back between 35 and 50 percent of the free cash flow um we believe that we have to keep a dividend even if we know that we're going to have ahead of us a good set of investments of growth initiatives especially in total and also out of routine but the board decided due to the good financial position to increase the the interim dividend by around 25% versus the previous year uh and this is a 5.5 cents per per share euro cents per year this this dividend was expected to be paid in september and as i said it's an internet dividend and we hope we can continue increasing that in the in the final dividend um now this company is operating well but now where's our growth what's the situation of our growth projects um for the rest of the year we will continue developing this in the slide in the corner you see some initial we continue doing the pushbacks uh and they are advancing well we had a small delay buyer of by the electric company, removing an electric line that's in our way. That's the reason why there's a small delay in the access in the metric rates from the initial something of months, not years. At Masa Valverde, basically, we have continued doing all the works on surface, access roads, explosive magazine, which are quite big. excavation of the operation for the portal platforms and so on which are almost ready and simply waiting for the final decision to decide to push ahead with the ramp which is expected sometime in this later in this quarter At Rutinto, as you know, we are going to be doing some work to be able to process polymetallic material in our mill. The engineering studies are progressing. We have the engineering firms on site this month to optimize the layouts because we have, although it looks like we have lots of space, we have to remove some of the old installations in order to install the the new circuit and try to optimize and have a flexible a very flexible circuit that can treat both type of materials the pure copper we have right now and the polymetallic in addition to that we have been doing lots of test works uh to produce para concentrate from our tailings due to the strong interest from the market we have had a lot of inquiries and and companies wanting to to get access to our pyrite concentrates, because basically our waste is composed by silicates and a little bit of pyrite, and it's ground, it's quite clean, and it's a perfect stream to be sold into the market. As you know, the sulfuric market, it looks like it's coming to a point of deficit, and some of the people that produce sulfuric acid are looking to diversify and produce some of the sulfuric acid through the burning through the roasting of of pirate the important project in our growth portfolio as you all know is total in total we are really hoping to receive the environmental pack declaration soon we have been expecting this for for weeks if not months we now know that all the the reports have been have been positive we we have them we know that the the civil servants are are preparing the the declaration unfortunately we cannot give any additional color of on timing because it's out of our control we know there's no additional steps no additional papers nothing simply in there in their hands to to finalize the drafting. We believe it can be soon, but we all know also the complications that the summer can bring with less people available and so on. But we are quite positive and actually we are getting ready for that. We have already completed all the geotechnical studies at the plant site in order to push ahead the moment that the moment that that we are receiving this this final permits of total uh with what's the plan the plan of of atalaya is basically that we have said before we are quite positive in the years ahead we have several attractive projects, a good pipeline of projects in Spain. These projects could take us to around 100,000 tons of copper equivalent. Of course, the big contribution would come from TAURO, but also higher rates from Massa Valverde and the production of lead zinc concentrates in addition to the copper concentrates from Rio Tinto will also contribute to that. right now we are we have the teams which is very important very low rotation in our in our teams experienced teams and we have an excellent balance sheet with well over 300 million net cash in our balance sheet and no debt and we will be looking probably to raise some natural debt and of course the team continues to to to look at new things, to apply their experience. They have been there in the development of mining projects in Spain in their last years. I would say our teams, some of our people have participated in the last mine that were developed in Spain and some in Africa, and we have the ingredients to grow. So, I think we're very well positioned that in less than three years will be in this almost doubling our production of copper equivalent in all in Spain. And we continue to look at any other opportunity that can be around. And with that, I think I will open the floor for any questions. Maybe the operator can introduce. Yes.

Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you would like to ask a question on the phone lines and are dialed in, please press star followed by the number one on your telephone keypad. We will pause for a moment to assemble the queue. Our first question comes from the line of Laura Chan with RBC Capital Markets. Please go ahead.

Can you guys hear me?

Yes.

Hi, good morning. Thanks so much for the call. My first question is just on the CAPEX deferral, which is on San Domingo. Once you move the electric line, how quickly you expect to access those higher grade zones and what's the realistic timeline? or that meaningful Indonesia oil contribution to the mill? And just on that, you've indicated the board decision is expected later this quarter. Can you just confirm what the key remaining gating items are? What's the construction and first oil timeline look like once approval is given?

The electric line is something that has already been contracted out by the Endesa, the big company that owns the line and is the main supplier in the south of Spain and the timeline I suppose the only question here is is the availability of of maybe people or teams during the during the the summer period as soon as they remove it we can access that immediately uh when I mean immediately it's like days after that we have equipment that is there we were mining as close as we were permitted so how this can this affect the production I would say probably later this late this year or earlier this year next year I don't think it will be I don't think it will be weeks I think it will be months probably the third quarter the fourth court really not much left we continue drilling with two rigs uh mainly concentrating in the copper zones the the the contractor has been selected so as soon as we have that uh the decision to go ahead which as I say will likely be uh almost September with when everything is on surface is ready we can get there the contractor can depends on the speed there and the rock conditions which are expected to be quite good can take from two years to three years we say two and a half years to complete the whole ramp we can access or probably earlier than that around two years but not earlier than that we will concentrate directly in the copper zone with we will go through an area of polymetallic with very good grades but unless we have the the circuit of uh of uh routine already we would not be mind that we will go directly into the into the copper zone with grades between one and a half and two percent copper so production of copper I would say

the best thing is two and a half to three years to be conservative that's that's probably the the time for this this new copper production tell executive like you mentioned what's the kind of project sequencing look like more broadly and how you're thinking about staggering the different projects especially if you know the toro permit potentially coming quite not not far behind how are you thinking about you know construction timelines and little

labor contractor availability do you see any issues there in our in our case in spain we don't inspect any issues we have already pre-selected the the contractor and the this availability of offering equipment and people that's for total both i mean talking about mine contractor in the construction teams um the point of toll itself is not very complicated and the key will be the availability of the equipment which we have already a permit from the board to approve it to purchase the key equipment like the gyro crusher the the sag mill the ball mill and flotations and filters which are basically 50 weeks between 45 and 55 weeks delivery time and we are going to be doing that immediately as soon as we get the environmental permit so I expect the total project to take 18 months of construction maybe it would be one month less or whatever for commission and so on but basically 18 months is typical so could be a bit less but not much less we are looking at other projects uh in Spain and in other places and look availability of teams is important it's it's there are there have been cases where we we have been offered things in South America where really we could would be a big stretch for us so we would have to rely local total local contractors suppliers and that would probably be a problem but in spain portugal europe it's not a problem okay understood thanks so much um our next question comes from the line of jason fairclough with bank of america please go ahead

Good morning, Alberto. Buenos dias. Just a little bit of a question about the polymetallic. Can you talk to us a little bit about the capital cost for this? And when do you actually need to have this ready to take ore? Is this still one or two years away?

Well, it's a good question. If we didn't mine any of the polymetallic, we would have like 10 years ahead of us or nine years ahead of us without needing to bring any polymetallic material. So the fact of having this polymetallic can allow us to start blending in materials from different places and have a better operation. when I mean a better operation I mean that some of the future polymetallics are going to be underground and as you know going underground for a very large plant is is very difficult if you don't have an open pit to to be blending the the large chunk of material that's the reason why we want to to bring this ahead as soon as possible and when is as soon as possible I would say one and a half years it's also from from now the design is very advanced and what does it include in capital cost the first pass we had 88 million euros and that included installing a finer grinding lines plus all the sink uh so additional grinding lines all the sink and lead and filters uh in addition basically to to recover in addition to the copper the the the lead sink now we are looking and of course it also required fine grinding with vertical mills or similar ceramic ball mills one of some of we are trying to optimize that a little bit probably reduce a little bit the capex and that's the final we are in the final stages to try to use the excess capacity that we we would have in the in the grinding side because we have excess capacity and and maybe try to reduce that 88 million euros um that's the way it would work is that when we are processing only polymetallic we will be processing higher rate of copper and of course lead and zinc but we will be reducing the the tonnage through the mill instead of going at 2200 tons an hour to the side we will be going i think it was 1200 or something like that so uh now we're looking how this excess grinding capacity can be optimized and still be producing the same material so first pass is 88 million euros trying to reduce that a little bit and when the sooner the better is not essential so if it's delayed three years it wouldn't matter but it doesn't make any sense the sooner we can make it the more flexible it will be for us in the future

I assume this has got differential flotation to separate the lead zinc from the copper. Does that mean that you are now giving up on Elix?

Actually, it's a very good question because we are not. I mean, actually we are going to go like we are doing differential flotation. That's absolutely to go for the safe bet. But in Elix we have been working now for 100 days. continuously without stopping the plant really without stopping the problem is that it's only running three four tons an hour so basically it's running let's say 90 tons per day of concentrate and it's processing right now uh we made some bulk flotation of several zones specifically to feed this this the plant which had good copper grade but also contain lots of zinc so we are feeding with material that has around 13 copper and around 15 zinc and the LX is removing the zinc very well and leaving it in around two percent or or even less and and then the copper grade goes to around 16 which we blend with our normal material it also recovers silver and and both the silver precipitate and the zinc precipitate which is a carburetor of zinc with around 45 to 47 percent zinc is blended with the with this with zinc precipitates through with a trader and we get paid for it like a concentrate so right now this is working already but i would call it a a a big pilot plant like an industrial scale pilot plant so are we giving back giving up we will go with the safe with a safe bet and if we can de-bottleneck which we have we are seeing what is the what are the bottlenecks to be able to treat more tones we know it works so what is the what's the bottleneck to treat more tones we see energy is one of the things filtering capacity settling capacity of the precipitates things that can be sorted out very well so that's that's what we are studying but right now we are keeping with the safe bet uh and the other one is running to make sure it doesn't cost us money the uh in terms of the polymetallic ores uh those are mainly coming then from San Dionisio and uh Massa Belverde San Dionisio San Antonio and Massa Valverde yeah San Antonio it's uh we have almost completed the drilling it's just east of Rio Tinto San Dionisio it's most of it is open pit and we are looking how we can increase the open pit and extract much more of the underground and Massa Valverde in addition to the copper zone there is there are areas around good dead zinc and copper grades we have a few other deposits called mojarra campanario whatever which are not even in the resource let's say blocks kind of drill but we're still evaluating which are also polymetallic main material which is the only one we are counting for this project is San Dinizio Open Pitting Underground San Antonio Underground and Valverde Underground combined with the leftover of the copper stock work at Terra Coronado okay vale all right thanks I'll let somebody else ask a question thank you sir thanks Jason once again as a reminder if you are dialed into the conference and would like to ask a question please press star followed by the number one on your telephone keypad

Our next question comes from the line of Jasper Mainwaring with Berenberg. Please go ahead.

Oh, thanks for taking my questions. Just on the guidance to lower copper grades into H2, during this period, could you please just provide some more color on how we should be thinking about the grade profile into early next year? Do we expect some pick up in grades sort of after H2? Thanks.

Yes, we expect a little bit of higher grades next year, especially when we get some of the material coming from the upper part of San Dinizio kick it in so I think this next year you should be expecting in grades in the range of 0.4 I don't have the plan up here but I think yes you will see better grades next year okay great thank you and just to follow up on the earlier question around Elix

in the text of the release you have this statement saying uncertainty remains regarding the recoverability of the related assets can you please just sort of explain what you mean by this or is is that what you were talking about earlier well the thing is that we as you know we as you know we made an impairment in the investment due to the very bad financial situation of the company

that runs ELEX and we had doubts that our our investment which basically we had had we had loans into ELEX could be recovered so we were careful to to include this sentence saying that although the plant is working there's no assurance yet that this would that that to reverse this impairment is simply saying look it's working and the process is working fine it's breaking even but is this enough to change our impairment that we decided in the first part of the year we are not yet sure so simply to be conservative okay makes sense thanks and it seems that we have a follow-up from the line of Jason circle with Bank of America please go ahead

Alberto just to come back on Toro I think with the last set of results you were making some very positive noises Toro any day now I don't think those were the exact words but something like that but now it seems to be taking longer again so what's what's the hold up

look I don't know it's you're right I've been wrong so many times that I almost feel embarrassed here but I feel embarrassed what has I have to say because I'm from the region um uh last quarter the reports we were ready they said that they could send us any time uh and finally we received them in I think it was in July or late late early July totally signed and then they asked us for okay can you make a summary for of the project like a compendium of a project we said well why didn't you ask this before because it's like 20 000 pages and they needed that to kind of finalize the EIA the EIA We prepared that, send it to them with meetings and clarifications basically to prepare the idea. Why I think now there's no more work simply because they are working already on it. They told us, we know the person that's preparing this, what's holding up. I suppose there are civil servants that politicians cannot, go and ask them to work if they have a planned holiday on the 15th of July or the 15th of August. It doesn't matter what they say, they will go out for holidays. I suppose this is what's holding up. Really nothing else, but there's no more, send me a new summary, a new project or a new whatever. so right now it's it's it's final also we also have other signs that are indirect to to justify this which is they gave us the permit to do all the geotechnical work uh including trenching including drilling at plant site and tailings which we completed already which in theory should be waiting for a final dia so there are lots of signs going on there but when the guy finalizes. We always believed it was going to be in summer. When was the past certain point, it was going to be in summer because if they are scared, the politicians sometimes are scared or worried about the noise, probably summer is a quieter period. but we have had a positive environment the pack decorations and lots of points in Spain in any month of the year so I think it can happen anytime but could it be in September could it be in August I spoke so but could it be early September yes certainly not going to go much more than that because there's no excuse no excuse okay okay

Just a question on the exploration in Sweden. So, we don't want to get too excited about drill results and intercepts, but it still smells kind of interesting. How are you thinking about a timeline to a resource in Sweden?

Oh, timeline is difficult to say. I think exploration is difficult because, yeah, we have good results, but it would be a few million tons, it would be not enough to have to have a project to be developed there are two zones this collective in the rock leading areas I think this winter campaign will provide us a little bit more color because until now we were going very conservative following up Interception anomalies while now we are going to do a little bit this this year we expect to do some step outs to show is the is there something big there or is it better to to to look at different options to farm it out or to explore different alternatives so i think this this winter season which is starting we are already mobilizing rigs in the north belt will be essential to to understand if we have other deposits there that are worth mining by themselves or or do anything with them um yeah it's it's early days and in okay in the in the other Belt and Road leading it's uh it's still a little bit early has a few few good areas okay perfect

Okay, thanks for that, sir.

Thanks. Our next question comes from the line of David Radcliffe with Global Mining Research. Please go ahead.

Hi, good morning, everyone. So my question is just to follow up to the polymetallic question. So I'm just wondering, does this mean that you're thinking about publishing an update to the 2023 PEA? If so, when would that be? And I guess to what level would that That's a very good question. We will have to at a certain time

update the BA, yes. When? I would say next year, certainly not this year. You're 100% right that what has changed from that year, which is, as you say, already outdated, is the timing. Things have slipped, which means the timing of the blends are different. So I would say that's the first adjustment. Otherwise, in principle, it's still the same. It's basically having some material being mined from San Antonio. We already have the signs of access ramps of mining and even preliminary mining designs. The access through San Antonio is through a ramp of around 1.2 kilometers. from one of the sides of the Cerro Coronado pit, the east side. We already have where it's going, the rock conditions and so on. And we were basically waiting to finalize the infield drain, which is, it's about to be finished. There should be only three or four holes remaining. So that's, that basically what it includes is a ramp, access ramp in connection with, there is a shaft there for, emergency exit and ventilation so that's one thing in the case of San Dionisio most of it is open pit we want to optimize that open pit to try to do as much open pit as possible and and that includes the final results of your technical campaign because the one of the sides most of most of the rock is very good but there's one side that has uh some shells that require a much lower slope and we have to to finalize the technical study which has been carried out when is going to be this update I would say next year I don't think we'll have time to do it this year the scope itself is is similar to what it was previous year well not not big difference the only thing is what changes is the timing okay all right no that's very helpful thank you I'll um pass it

Thank you. And at this time, we have no further questions on the conference line. I will now turn the call back over to the management team for closing remarks.

Okay, thank you very much. Well, only to thank you everybody to be here this morning with us. Thanks for your continued support. We look forward to an excellent second part of the year and finally getting done which is we're all looking forward for that. Thanks a lot. Thanks a lot.