Q3 2020 Financial Results

19 November, 2020

Atalaya Mining Plc (AIM: ATYM; TSX: AYM), is pleased to announce its quarterly results for the period ended 30 September 2020 (“Q3 2020”), together with its unaudited interim condensed consolidated financial statements for the year to date.

The Unaudited Interim Condensed Consolidated Financial Statements for the nine months ended 30 September 2020 (“YTD 2020”) are also available under the Company´s profile on SEDAR at www.sedar.com and on Atalaya`s website at www.atalayamining.com.

Financial Highlights

 

 

Quarter ended 30 September

   

Q3 2020

Q

3 2019

  Nine months ended

30 Sep 2020

Nine months ended

30 Sep 2019

Revenues from operations €k 65,836 44,383   183,569 139,165
Operating costs €k (43,571) (34,514)   (139,196) (97,752)
EBITDA €k 22,265 9,869   44,373 41,413
Profit for the period €k 12,237 6,933   18,203 27,937
Basics earnings per share € cents/share 9.0 5.1   13.7 20.5
     
Cash flows from operating activities €k 18,820 16,487   41,820 31,457
Cash flows used in investing activities €k (6,338) (13,115)   (19,669) (45,390)
Cash flows used in financing activities €k (15,085) (158)   (454) (430)
     
Working capital surplus €k 25,002 1,954   25,002 1,954
     
Average realised copper price $/lb 2.72 2.68   2.60 2.76
     
Cu concentrate produced (tonnes) 66,091 45,458   187,032 137,281
Cu production (tonnes) 14,695 10,568   41,559 31,675
Cash costs $/lb payable 1.94 1.92   1.93 1.85
All-In Sustaining Cost $/lb payable 2.29 2.25   2.27 2.12

 

  • Revenues for Q3 2020 increased to €65.8 million compared with €44.4 million for the three months ended 30 September 2019 (“Q3 2019”). The increase was mainly due to higher concentrate sales volumes in the period following the completion of the plant expansion at Proyecto Riotinto, in addition to higher copper prices.
  • Operating costs during Q3 2020 were €43.6 million compared with €34.5 million in Q3 2019. This increase mainly reflects the higher production volumes.
  • Q3 2020 EBITDA increased to €22.3 million compared with €9.9 million in Q3 2019 driven by higher copper concentrate sold in addition to higher copper prices.

 

 

  • Q3 2020 profit for the period amounted to €12.2 million (or 9.0 cents basic earnings per share) compared with €6.9 million for Q3 2019 (or 5.1 cents basic earnings per share). Profit margin was lower mainly due to depreciation increasing significantly as a result of the plant expansion at Proyecto Riotinto.
  • Q3 2020 cash costs were $1.94/lb of payable copper, similar to cash costs in Q3 2019 ($1.92/lb). This small increase is mainly the result of unfavourable FX rates and to a lower extent in maintenance and processing costs.
  • All-in Sustaining Costs (“AISC”) during Q3 2020 amounted to $2.29/lb of payable copper, slightly higher than Q3 2019 ($2.25/lb). AISC were impacted by additional investments in sustaining capex and higher capitalised stripping costs.
  • Inventories of concentrate as of 30 September 2020 amounted to €6.7 million (€11.0 million at 31 December 2019).
  • At the end of Q3 2020, the Company reported a working capital surplus of €25.0 million, a significant increase from the €3.6 million reported at the end of Q4 2019 and the €1.9 million reported at the end of Q3 2019. The increase mostly related to the cash generated from higher sales of concentrate, partly offset by capex in the period.
  • Unrestricted cash balances as of 30 September 2020 amounted to €29.8 million.
  • Cash flows from operating activities before changes in working capital were €21.3 million for Q3 2020 compared with €11.8 million during Q3 2019. In YTD 2020, cash flows from operating activities before changes in working capital were €43.2 million compared with €43.7 million during YTD 2019.
  • Net cash flow used for investing activities amounted to €6.3 million and €19.7 million for Q3 2020 and YTD 2020, respectively, compared with €13.1 million and €45.4 million for the same periods in the prior year. Cash outflows in the current period is mostly related to sustaining capex and work on tailings dams.
  • Net cash flow used in financing activities amounted to negative €15.1 million and €0.5 million for Q3 2020 and YTD 2020, compared with negative €0.2 million and €0.4 million, respectively, for the same periods in the previous year. Negative cash flows for Q3 2020 are mainly driven by the repayment of existing unsecured credit facilities taken out earlier in 2020 and leases repayments.

 

Operational Highlights

Proyecto Riotinto

  • Copper production during Q3 2020 reached a new record of 14,695 tonnes, an increase of 39.1% compared with 10,568 tonnes produced during Q3 2019. Copper production for YTD 2020 was 41,559 tonnes compared with 31,675 tonnes during YTD 2019.
  • Ore processed during Q3 2020 was 3,974,821 tonnes, an increase on Q3 2019 when ore processed amounted to 2,563,594 tonnes. Total ore processed during YTD 2020 amounted to 10,974,063 tonnes (YTD 2019: 7,575,130 tonnes).
  • With the 15Mtpa expanded plant now fully operational and producing at nameplate capacity, the Company is focused on implementing cost reduction programmes relating to the reduction of fresh water and lime consumption.
  • In addition, initiatives to improve copper recoveries, by using some of the extra installed flotation capacity, are also ongoing.
  • The target of reducing the power cost at the plant in an environmentally conscious way is being addressed through the initiation of the permitting process to install a 50 MW solar power plant. The full capacity of the solar power plant will be used for self-consumption and is anticipated to make a significant contribution to reducing carbon emissions at Proyecto Riotinto.

Proyecto Touro

  • The Company has yet to receive the formal communication from the local government in Galicia rejecting the plan to develop Proyecto Touro. This unexpected lack of confirmation is believed to be related mainly to COVID-19 delays.
  • Once the expected communication is received, the Company will evaluate its options to address the concerns of the Xunta de Galicia.
  • The Company continues to be confident that its world class approach to Proyecto Touro, which includes fully plastic lined tailings with zero discharge, will satisfy the most stringent environmental conditions that may be imposed by the authorities prior to the development of the project.

 

Outlook 2020

  • Annual guidance range of US$1.95/lb-US$2.05/lb and US$2.20/lb-US$2.30/lb for cash costs and AISC, respectively, is currently being maintained.
  • Production guidance remains at 55,000 to 58,000 tonnes of contained copper. The Company expects production to be at the lower end of the range.
  • Management continues to monitor the impact of COVID-19 on the operations and the ongoing cost structure and will update the market with any potential changes in expectations.

 

COVID-19 Update

  • Since the announcement on 6 April 2020, Proyecto Riotinto continues operating with augmented requirements and recommendations to prevent exposure to COVID-19 and the spread of the virus.
  • Atalaya’s key priority continues to be protecting its workforce and the local communities surrounding both Proyecto Riotinto and Proyecto Touro.
  • In light of the recent new cases in Spain, the Company has further reinforced its measures to protect against the pandemic and any adverse developments will be notified accordingly.

 

Legal updates

  • On 1 September 2020, the Company announced that the Junta de Andalucía has confirmed through the Spanish press that the mining permits for Proyecto Riotinto are now fully validated.

 

Corporate updates post Q3 2020

  • The Company continues to go through a court process in order to determine the mechanism and timing for the payment of the deferred consideration to Astor. Following the hearing on 30 October 2020, the following stages have been fixed by the Court: (i) Atalaya’s application for permission to amend its statement of case will be heard in February 2021; (ii) a summary judgment hearing will be heard in June 2021; and (iii) if Astor’s application is unsuccessful, a trial will take place in February 2022 for six days. There are no changes in the carrying value of the liability. Further details of the process are in note 17 of the financial statements.
  • On 21 October 2020, Atalaya announced that it had entered into a definitive purchase agreement to acquire 100% of the Masa Valverde polymetallic project located in Huelva (Spain) through the acquisition of 100% of a Spanish company for €1.4 million payable in two instalments. Masa Valverde is one of the largest undeveloped volcanogenic massive sulphide deposits in the prolific Iberian Pyrite Belt and is located 28kms south west of Proyecto Riotinto.
  • On 28 October 2020, Atalaya announced it had commenced a feasibility study to evaluate production of cathodes at Proyecto Riotinto using the newly developed E-LIX System owned by Lain Technologies, Ltd. It also entered into a Licence Agreement with Lain Technologies, Ltd. to use its patents on an exclusive basis under certain conditions, within the Iberian pyrite belt in Spain and Portugal.
  • The feasibility study will help Atalaya to understand the economic viability of producing cathodes from complex sulphide ores prevalent in the Iberian Pyrite Belt through the application of a new leaching process called the E-LIX System, followed by conventional SXEW, with a new industrial scale plant. The production of cathodes has the potential to generate cost savings by reducing charges associated with concentrate transportation, treatment and refining as well as penalties with certain elements, while also reducing carbon emissions.

 

Alberto Lavandeira, CEO commented:

This has been another strong quarter for Atalaya, with copper production at Proyecto Riotinto reaching record levels. Our ability to grow the Company, despite the ongoing challenges posed by COVID-19, has been shown most recently through the purchase agreement regarding the Masa Valverde polymetallic project and the launching of the E-LIX System feasibility study, announced post period end. We remain confident in our outlook with our annual guidance and production ranges being maintained.

 

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) 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. For further information, visit www.atalayamining.com