Second Quarter 2019 Financial Results

15 August, 2019

Atalaya Mining Plc.
(“Atalaya” and/or the “Group”)
Interim Condensed Consolidated Financial Statements for the period ended 30 June 2019
15 August, 2019

Atalaya Mining Plc (AIM: ATYM; TSX: AYM), the European mining and development company, is pleased to announce its quarterly results for the period ended 30 June 2019, together with the interim condensed consolidated financial statements.

Financial Highlights

Quarter ended 30 June

 

Q2 2019 Q2 2018   H1 2019 H1 2018
Revenues from operations €k 43,070 48,867   94,782 101,543
Operating costs €k (31,036) (29,481)   (63,238) (67,159)
EBITDA €k 12,034 19,386   31,544 34,384
Profit for the period €k 6,849 15,702   21,004 24,492
Earnings per share € cents/share 5.1 11.7   15.4 18.2
     
Cash flows from operating activities €k 6,856 10,837   14,970 29,214
Cash flows used in investing activities €k (15,137) (12,549)   (32,275) (21,290)
Cash flows (used)/from financing activities €k (272) 545   (272) 593
     
Working capital (deficit)/ surplus €k (18,391) 32,747   (18,391) 32,747
     
Average realised copper price $/lb 2.81 3.12   2.80 3.08
     
Cu concentrate produced (tonnes) 48,382 47,140   91,823 89,568
Cu production (tonnes) 10,889 10,446   21,108 19,887
Cash costs $/lb payable 1.74 1.88   1.81 2.07
All-In Sustaining Cost $/lb payable 1.95 2.34   2.06 2.49

 

•    Revenues for the three months ended 30 June 2019 (“Q2 2019”) were €43.1 million compared with €48.9 million for the three months ended 30 June 2018 (“Q2 2018”). The decrease was due to lower copper prices offset to some extent by stronger average US Dollar rates against the Euro and slightly lower volumes sold during the period. Revenues for the six month period ended 30 June 2019 (“H1 2019”) of €94.8 million were lower than the €101.5 million reported for the six month period ended 30 June 2018 (“H1 2018”). The decrease was mainly due to lower copper prices in the first half of 2019.
•    Operating costs, exploration costs and care and maintenance during Q2 2019 were €31.0 million compared with €29.5 million in Q2 2018. Operating costs for H1 2019 amounted to €63.2 million compared with €67.2 million in H1 2018. This reduction was driven by timing differences in mining, processing and maintenance costs.
•    Cash costs during Q2 2019 were $1.74/lb of payable copper, lower than the cash costs of $1.77/lb of payable copper in Q4 2018 and Q2 2018 ($1.88/lb). The decrease against Q2 2018 was primarily as result of lower mining, processing and maintenance costs. All-in Sustaining Costs (“AISC”) during Q2 2019 amounted to $1.95/lb of payable copper, lower than $2.00/lb of payable copper during Q4 2018 and Q2 2018 ($2.34/lb). Cash costs for H1 2019 were $1.81/lb payable copper versus $2.07/lb payable copper during H1 2018. AISC amounted to $2.06/lb payable copper during H1 2019 against $2.49/lb payable copper for H1 2018. AISC for H1 2019 remains below the Company’s previously stated guidance for the year of $2.25/lb to $2.45/lb. Given strong H1 cost performance, Atalaya will review its full year 2019 cost guidance during H2 2019.
•    EBITDA of €12.0 million in Q2 2019 compared with €19.4 million in Q2 2018. The decrease in EBITDA was partly driven by lower commodity prices. Q2 2018 also benefited from a higher level of capitalised stripping costs resulting from the Technical Report that was published at the end of that quarter. On an accumulative basis, EBITDA during H1 2019 was €31.5 million compared with €34.4 million in H1 2018, as lower copper prices were largely offset by lower operating costs.
•    Q2 2019 profit after tax amounted to €6.8 million (or 5.1 cents basic earnings per share) compared with a profit for Q2 2018 of €15.7 million (or 11.7 cents basic earnings per share). Profit after tax for H1 2019 was €21.0 million compared with €24.5 million during H1 2018.
•    Inventories of concentrate at 30 June 2019 amounted to €11.4 million (€10.8 million at 31 December 2018). Concentrate balances at the reporting date were shipped in the following quarter.
•    At the end of Q2 2019, the Company reported a working capital deficit of €18.4 million, a significant decrease from the €8.4 million surplus reported at the end of Q4 2018. This was mainly due to the reclassification of part of the Astor Deferred Consideration to current liabilities (refer to note 7 in the MD&A for more details) and lower cash balances due to expenditure on the expansion of Proyecto Riotinto. Unrestricted cash balances as at 30 June 2019 amounted to €15.2 million.
•    In connection with the Astor Deferred Consideration, the Company previously classified all of the €53 million as a non-current liability but has regularly been reviewing its assessment of when it could become payable. As a result of this review, the Group has now classified a portion of the €53 million liability as a current liability. However, precise timing and quantum of payments will be estimated depending on the future key variables such as methodology for the calculation, definition of “Project”, the price of copper and the US Dollar and Euro exchanges rates, timing of sustaining capital expenditures, increased costs and other operational issues. These factors can vary significantly, and any amounts actually paid within twelve months of the balance sheet date may differ substantially from the amounts presently estimated to become payable within this period. In particular, copper price assumptions were set earlier in the year at levels above current spot prices and if the current copper price weakness were to continue, the amount payable within twelve months could reduce substantially or if spot prices continue for the rest of the year the amount payable within twelve months could be wholly eliminated with nil Excess Cash generated during 2019.
As at 30 June 2019, no consideration has been paid as the Company has not generated any Excess Cash as per the Master Agreement (please refer to section 7 in the MD&A below for more detail).
•    Cash flows from operating activities before changes in working capital were €11.7 million for Q2 2019 compared with €20.4 million during Q2 2018. In H1 2019, cash flows from operating activities before changes in working capital were €32.0 million compared with €35.6 million during H1 2018.
•    Net cash flow used for investing activities amounted to €15.1 million and €32.3 million for Q2 2019 and H1 2019, respectively, compared to €12.6 million and €21.3 million for the same periods in the prior year. The cash outflows related mainly to expenditures on the expansion of Proyecto Riotinto.

Operational Highlights
Proyecto Riotinto
•    Copper production during Q2 2019 was 10,889 tonnes, an increase of 4.2% compared with 10,446 tonnes produced during Q2 2018. Copper production for H1 2019 was 21,108 tonnes compared with 19,887 tonnes during H1 2018.
•    Ore processed during Q2 2019 was 2,565,559 tonnes, an increase on Q2 2018 when ore processed amounted to 2,490,483 tonnes. Total ore processed during H1 2019 amounted to 5,011,536 tonnes (H1 2018: 4,697,344 tonnes).
•    Copper recovery during the quarter improved to 88.72%, an increase over the 87.31% achieved in Q2 2018. For H1 2019 copper recovery was 89.47%, compared with 87.92% in H1 2018.
•    The Group maintains its previously stated copper production guidance for 2019 of 45,000 – 46,500 tonnes.
Expansion to 15Mtpa at Proyecto Riotinto
•    The 15Mtpa expansion project is now close to full commissioning and waiting for electricity capacity to be granted by the electricity supplier for mechanical completion. The new SAG mill and primary crusher have started initial testing and commissioning, while new flotation and concentrate handling areas have been completed and are operational.

Proyecto Touro
•    Feedback from the relevant administrative bodies continues as part of the assessment of the Environmental Impact Studies and the Group is addressing additional requests to complement current management plans.

Legal updates
•    On 29 March 2019, the Company announced that it had received notification from the Supreme Court in Spain that it did not have jurisdiction over the appeal made by the Junta de Andalucía (“JdA”) and the Company and therefore the announced Ruling by the Tribunal Superior de Justicia de Andalucía (“TSJA”) remains valid.
On 26 April 2019, the Company announced that a judgment relating to the Mining Permits to operate Proyecto Riotinto (the “Mining Permits”) was handed down by the TSJA. The TSJA declared the Mining Permits are linked to the Environmental Permits, ruled by the same tribunal in September 2018.  The new ruling on the Mining Permits is based on the requirement to have an Autorizacion Ambiental Unificada (“AAU”) before issuing mining permits and therefore invalidates the existing Mining Permits. The TSJA did not accept the requests by Ecologistas en Acion (“EeA”) for the cessation of activities at the mine and an increase in the scope of the environmental plan.
The Company was notified on 16 July 2019 that the JdA has started the administrative process to resolve the previously reported administrative issues identified by the TSJA relating to the Unified Environmental Declaration and the Mining Permits.
The Company continues operating the mine normally and remains confident that the ongoing process carried out by the JdA will not impact its operations at Proyecto Riotinto.

Alberto Lavandeira, CEO commented:
“A pleasing reduction in operating costs, combined with another robust quarterly production performance, helped the Company to minimise the impact of lower copper prices during the period.  The expansion at Proyecto Riotinto is another example of management delivering a low capex intensity project and as it comes on line, we expect to continue this improvement in operating efficiencies.”

Download the full report here.

This announcement contains information which, prior to its publication constituted inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Contacts:
Newgate Communications /// Elisabeth Cowell / Adam Lloyd / Tom Carnegie /// +44 20 3757 6880
4C Communications /// Carina Corbett /// +44 20 3170 7973
Canaccord Genuity (NOMAD and Joint Broker) /// Henry Fitzgerald-O’Connor  / James Asensio /// +44 20 7523 8000
BMO Capital Markets (Joint Broker) /// Jeffrey Couch / Tom Rider /Michael Rechsteiner / Neil Elliot /// +44 20 7236 1010
Peel Hunt LLP (Joint Broker) /// Ross Allister / David McKeown /// +44 20 7418 8900

About Atalaya Mining Plc
Atalaya is an AIM and TSX-listed mining and development group which produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain. In addition, the Group has a phased, earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain which is currently in the permitting stage. For further information, visit  www.atalayamining.com