Results for the year ended 31 December 2019

7 April, 2020

Atalaya Mining Plc (AIM: ATYM; TSX: AYM) is pleased to announce its audited consolidated results for the year ended 31 December 2019 (“FY2019” or the “Period”).

The consolidated Financial Statements 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 for the Period

Year ended 31 December   2019 2018 %
Revenues from operations €k 187,868 189,476 (0.8%)
Operating costs €k (115,944) (128,898) (10.0%)
EBITDA €k 61,333 53,542 14.6%
Profit for the year €k 30,720 34,441 (10.8%)
Earnings per share € cents/share 27.2 25.4 7.0%
Cash flows from operating activities €k 37,934 55,333 (31.4%)
Cash flows used in investing activities €k (62,351) (65,712) (5.1%)
Cash flows from financing activities €k (576) 593 (197.1%)
Working capital surplus €k 3,598 8,435 (57.3%)
Average realised copper price $/lb 2.73 2.95 (7.5%)
Copper concentrate produced (tonnes) 195,072 180,661 8.0%
Copper production (tonnes) 44,950 42,114 6.7%
Cash costs $/lb payable 1.80 1.94 (7.2%)
All-In Sustaining Cost $/lb payable 2.14 2.26 (5.3%)

 

  • Revenue of €187.9 million (FY2018: €189.5 million) from increased volume of copper concentrates sold at a lower price compared to prior year.
  • Reduced operating costs of €115.9 million (FY2018: €128.9 million).
  • EBITDA of €61.3 million (FY2018: €53.5 million).
  • Profit after tax of €30.7 million (FY2018: €34.4 million).
  • Copper was sold during the Period under in place off-take agreements for an average realised price of US$2.73/lb copper, compared to US$2.95/lb copper in the same period of 2018.
  • Efficiencies in maintenance cost and technical services reduced cash costs to US$1.80/lb payable copper (FY2018: US$1.94/lb payable copper).

 

Proyecto Riotinto Operating Highlights

Mining

  • Copper production of 44,950 tonnes (FY2018: 42,114 tonnes) reflecting the positive impact of the expansion project at Proyecto Riotinto which was completed and commissioned on budget at the end of the Period.
  • Mining operations progressed according to plan and at similar levels during the quarters. Ore mined during the year decreased slightly to 10.4 Mtpa compared with 10.8 Mtpa in the previous year.

Processing

  • 5 Mtpa of ore processed (FY2018: 9.8 Mtpa) with an average copper head grade of 0.49% and a recovery rate of 87.09% (FY2018: 88.30%).
    • Throughput increased with recoveries slightly decreasing from 2018 levels owing to the ramp-up of the new SAG Mill.
  • On-site concentrate inventories at 31 December 2019 were approximately 14,201 tonnes (FY2018: 4,667 tonnes) all of which were sold in January 2020.

Expansion Project at Proyecto Riotinto

  • The 15Mtpa Expansion Project was completed with the processing plant fully commissioned and operating at an increased annualised rate of 15Mtpa since January 2020.

Exploration and Geology

  • Exploration and infill drilling continue in Atalaya pit and Cerro Colorado pit.
  • Results from ongoing exploration drilling in 2019 were encouraging with 7,238m drilled at San Dionisio (in Atalaya pit) and 4,959m drilled at Filón Sur (in Cerro Colorado pit).
  • Evaluation of new drill data continues to assist in defining and validating the historical data from the copper stockwork in the area.
  • FY2019 exploration costs of €3.6 million (FY2018: €1.0 million).

Proyecto Touro

  • The “Dirección Xeral de Calidade Ambiental e Cambio Climático” (the General Directorate for the Environment and Climate Change of Galicia) announced on 28 January 2020 that a negative Environmental Impact Statement for Proyecto Touro (Declaración de Impacto Ambiental) had been signed.
  • The Company, along with its advisers is continuing to evaluate potential next steps for Proyecto Touro, which could include an appeal of the decision made by the Xunta de Galicia, and/or the clarification of the questions raised by the reports.

 

Outlook for 2020

  • The Company provides the following guidance for 2020:
    • Production guidance estimated within 55,000 to 58,000 tonnes of copper, targeting an improvement on 2019 production.
    • Cash costs and AISC 2020 guidance to range from US$1.95/lb to US$2.05/lb and from US$2.20/lb to US$2.30/lb, respectively.
  • The Company is aware that the COVID-19 pandemic may still further impact how the Company manages its operations and is accordingly keeping its guidance under regular review. Should the Company consider the current guidance no longer achievable, then the Company will provide a further update.

 

Legal Overview

Proyecto Riotinto – Ruling of Autorizacion Ambiental Unificada (“AAU”)

  • Throughout 2019, the Company, together with the Junta de Andalucía (“JdA”) continued to work on remedying the legal standing of the AAU.
  • On 30 January 2020 the JdA issued a favourable report in relation to the AAU. The AAU is still in a short legal consultation period as the JdA has suspended all deadlines of the process as result of COVID-19 outbreak. After this process is completed, the JdA is expected to issue the validated AAU.

Astor

  • On 2 March 2020, the Company filed an application in the High Court to seek clarity on the definition of “Excess Cash”. A preliminary hearing is currently due to take place in May 2020. As and when a substantive hearing takes place, the Company expects to have clarity on the definition of Excess Cash and the payment schedule of the Deferred Consideration and the Loan Assignment.
  • As at 31 December 2019, no consideration has been paid.

 

COVID-19 Update and Going Concern

  • The Company issued COVID-19 updates on 17 March 2020, 30 March 2020 and 6 April 2020.
  • As announced on 30 March 2020, a Royal Decree of 29 March 2020 excluded mining from essential industries resulting in the halting of operations at Proyecto Riotinto from 30 March 2020. As announced on 6 April 2020, further clarifications were received on the Royal Decree on 3 April 2020 which re-included mining on the list of permitted activities and accordingly, operations at Proyecto Riotinto were authorized to recommence.
  • It is Atalaya’s priority to protect its workforce and the local communities surrounding both Proyecto Riotinto and Proyecto Touro. Atalaya is following the requirements and recommendations issued by the Government of Spain and the regional and local health authorities to reduce the risk of COVID-19 exposure and avoid the spread of the virus.
  • In order to mitigate the potential operational and financial impact of COVID-19 the Company has increased its cash balance from €8.0 million as at 31 December 2019 to €41.7 million as at 31 March 2020 by drawing down on existing credit facilities.
  • The Company has evaluated the potential financial and operational impact of COVID-19 as a result of the uncertainty surrounding future copper prices and future potential stoppages to Proyecto Riotinto through detailed scenario analysis.
  • The directors of the Company have a reasonable expectation that Atalaya has adequate resources to continue operating for the foreseeable future and have prepared the consolidated financial statements on a going concern basis (see Note 2.1 (b) of the Financial Statements below for further detail on the Going Concern).
  • The auditors have reported on the consolidated financial statements; their audit opinion was unqualified. They included an Emphasis of Matter paragraph drawing attention to the disclosures describing the COVID-19 developments and the impact of these developments on the Group’s operations. Their audit opinion was not modified in respect of this matter.

 

Alberto Lavandeira, CEO commented:

“The expansion and successful commissioning of the Riotinto plant by the end of 2019 is another demonstration of our ability to develop low capital intensity projects in a timely and cost effective manner.  The Company’s financial performance over 2019 withstood decreasing copper prices and minor operational interruptions caused by the integration of the expansion to deliver an improved EBITDA on the previous year. The impact of the COVID-19 virus necessitated a short-term shutdown at Proyecto Riotinto which we expect to make up over the coming months.  We shall continue to monitor the situation in line with Spanish government guidelines as the wellbeing of our employees is our primary concern. We will also continue to keep shareholders updated as to the effect of these guidelines may have on our operations”

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