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.