Atalaya Mining Plc (AIM: ATYM; TSX: AYM) is pleased to announce its audited consolidated results for the year ended 31 December 2020 (“FY2020” or the “Period”).
The expanded plant was successfully completed and commissioned in early 2020 and despite the impact of COVID-19, Atalaya met production guidance reported issued at the start of the year with copper production for FY2020 of 55,890 tonnes (FY2019: 44,950 tonnes) thereby achieving a record production level for the Company.
The Company reported EBITDA of €67.4 million (FY2019: €61.3 million) and €59.0 million of cash flows from operating activities (FY2019: €37.9 million).
Financial Highlights for the Period
|Year ended 31 December||2020||2019||%|
|Revenues from operations||€k||252,784||187,868||34.6%|
|Profit for the year||€k||30,390||30,720||(1.10%)|
|Earnings per share||€ cents/share||22.9||27.2||(15.8%)|
|Cash flows from operating activities||€k||59,090||37,934||55.8%|
|Cash flows used in investing activities||€k||(30,160)||(62,351)||(51.6%)|
|Cash flows from financing activities||€k||760||(576)||(231.9%)|
|Working capital (deficit)/surplus||€k||(17,904)||3,598||(597.6%)|
|Average realised copper price||$/lb||2.72||2.73||(0.4%)|
|Copper concentrate produced||(tonnes)||256,001||195,072||31.2%|
|Cash costs||$/lb payable||1.95||1.80||8.3%|
|All-In Sustaining Cost||$/lb payable||2.21||2.14||3.3%|
- Revenues of €252.8 million (FY2019: €187.9 million) from increased volumes of copper concentrates sold from the expanded plant with annualised realised price slightly lower than the prior year (FY2020: $2.72/lb versus FY2019: $2.73/lb). The impact of the increased volumes was partly offset by lower grades in concentrates and a stronger US Dollar/Euro exchange rate.
- Higher processing rates during the year resulted in higher operating costs of €176.3 million (FY2019: €115.9 million).
- Copper concentrates sold during the year under existing off-take agreements and at spot realised an average price of US$2.72/lb copper, compared with US$2.73/lb copper in the same period of 2019.
- 2020 cash costs of US$1.95/lb payable copper (2019: US$1.80/lb payable copper) owing to exchange rate and challenging recoveries as a result of lower ore grades and costs associated with expansion start-up.
- 2020 AISC of US$2.21/lb compared with US$2.14/lb in 2019 driven mainly by the increase in cash cost. FY2020 All-In Sustaining Cost excludes the costs associated with the one off tailings dam expansion project which amounts to €11.0 million in FY2020.
- EBITDA for the year was €67.4 million (FY2019: €61.3 million)
- FY2020 cash flows from operating activities were €59.1 million (FY2019: €37.9 million), out of which €0.9 are from working capital changes. Cash flow used for investing activities amounted to €30.2 million in FY2020 (FY2019: €62.4 million). The investments relate to tailings dams, capitalised stripping costs and enhancements to the processing systems. Cash from financing activities amounted to €0.8 million (FY2019: €0.6 million were used).
- Inventories of concentrate at 31 December 2020 amounted to €8.6 million (€11.0 million at 31 December 2019)
- Working capital deficit of €17.9 million as at 31 December 2020, decreased from excess working capital of €3.6 million reported as at 31 December 2019. The decrease in working capital is mainly attributable to the Astor Deferred Consideration which was classified as a current liability at the end of the year.
- Unrestricted cash balances amounted to €37.8 million as at 31 December 2020. The net increase in cash and cash equivalents during 2020 amounted to €29.7 million, compared with a net decrease of €25.0 million in the prior year.
Proyecto Riotinto Operating Highlights
- Despite the challenging year as a result of the COVID-19 pandemic, Atalaya met production guidance with copper production of 55,890 tonnes (FY2019: 44,950 tonnes). The expanded plant was successfully completed and commissioned in early 2020 and demonstrated record production levels during the year.
- Ore mined during the year increased to 13.6Mtpa compared with 10.4Mtpa in the previous year.
- 8Mtpa of ore processed (FY2019: 10.5 Mtpa) with an average copper head grade of 0.45% (FY2019: 0.49%) and within the guidance recovery rate of 84.53% (FY2019: 87.09%).
- On-site concentrate inventories at 31 December 2020 were approximately 12,180 tonnes (FY2019: 14,201 tonnes) all of which were sold in January 2021.
Expansion Project at Proyecto Riotinto
- The 15Mtpa Expansion Project was completed during late 2019 with the processing plant fully commissioned and operating at an increased annualised rate of 15Mtpa from January 2020.
Exploration and Geology
- Exploration and infill drilling continue in Atalaya pit, Cerro Colorado pit and San Dionisio showing encouraging initial results.
- An independent consultant is finalising the Cerro Colorado open pit reserves and resources update taking into consideration the exploration results with current copper prices, operating costs and geotechnical parameters. In addition, there is an ongoing independent evaluation of the historic polymetallic San Antonio and San Dionisio deposits. The San Antonio deposit is located east of the Cerro Colorado open pit, currently being mined, and would require underground mining methods. The San Dionisio deposit is located west of the Cerro Colorado pit and current indications show there is good potential for it to be mined with a combination of open pit and underground methods. San Dionisio contains copper as well as polymetallic mineralisation.
- Exploration work started at the newly acquired Masa Valverde asset and will continue through 2021. First scoping studies are also planned during the year.
- On 1 March 2021, Atalaya received formal communication from the local government in Galicia rejecting the plan to develop Proyecto Touro, based on a negative environmental impact statement. This was the official communication of the information reported by the Company in January 2020.
- Atalaya is currently evaluating its options to continue the development of the project. Options may include several types of appeals or modified project proposals 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 development of the project.
Outlook for 2021
- As previously announced, the Company expects production for FY2021 to be within 52,000 and 54,000 tonnes of copper.
- Cash costs and AISC guidance to range from US$2.25/lb to US$2.35/lb and from US$2.50/lb to US$2.65/lb, respectively. These increases in the projected cash costs and AISC are driven mainly by stronger Euro levels anticipated for 2021. AISC guidance for FY2021 excludes the costs associated with the one off expansion project which is budgeted for €17 million in FY2021.
- 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.
Proyecto Riotinto – Ruling of Autorizacion Ambiental Unificada (“AAU”)
- On 7 May 2020, the Company announced that the Junta de Andalucía had issued a favourable resolution (the “Resolution”) which validates the Unified Environmental Authorisation (the “AAU”) of Proyecto Riotinto. The Resolution ended the legal process announced by the Company on 26 September 2018 in relation to the judgement made by the Tribunal Superior de Justicia de Andalucía (“TSJA”) in connection with the AAU, and the AAU is now revalidated.
- On 1 June 2020, the Company announced that the Junta de Andalucía confirmed through the Spanish press that the mining permits for Proyecto Riotinto are now fully validated.
- As at 31 December 2020, the deferred consideration to Astor Management, A.G. (“Astor”) totalling €53 million (the “Deferred Consideration”) had not been paid. However, the Board of Directors considered making an early payment to remove the timing uncertainty from the balance sheet.
- On 15 March 2021, the Company approved the early payment of the Deferred Consideration. The Deferred Consideration was funded by unsecured credit lines from four major Spanish banks having a three-year tenure and an average annual interest rate of approximately two per cent.
- The payment of the Deferred Consideration does not end the ongoing litigation as the issue as to whether any residual interest may or may not be payable remains unresolved.
- On 2 March 2020, the Company filed an application in the High Court to seek clarity on the definition of “Excess Cash”. The Company has now filed its statement of case to set out its formal position and the hearing for the trial will be heard on 21 February 2022.
- Astor applied for the Court to determine at an early stage that particular aspects of the excess cash calculation can be resolved without the need for a full trial. A summary judgment will be heard on 14 June 2021 and Astor would have to demonstrate Atalaya has no reasonable prospect of success at Trial.
The Company continues exploring opportunities to increase shareholder value:
- Solar power project. Given its location in an area with a natural abundance of sunlight, on 24 September, the Company announced the start of the permitting process to develop a 50MW solar plant at Proyecto Riotinto for self-consumption. The solar plant project, in addition to making a significant contribution to reducing carbon emissions, is economically viable and could potentially also contribute to reducing operating costs. Permitting continues and the Company expects to complete it during Q2 2021.
- Acquisition of Masa Valverde. 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 deferred and conditional 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.
- E-LIX System. On 28 October 2020, Atalaya announced it had commenced a feasibility study to evaluate production of copper 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 a new industrial scale plant to produce 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 SX-EW. 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.
COVID-19 Update and Going Concern
- The Company issued COVID-19 updates throughout the year as the outbreak of the virus impacted the company both operationally and financially.
- It is Atalaya’s priority to protect its workforce and the local communities surrounding both Proyecto Riotinto and Proyecto Touro. Atalaya has followed and continues to follow the requirements and recommendations issued by the Government of Spain and the regional and local health authorities at all times 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 resulting from a sharp decrease in commodities prices, the Company increased its cash balance from €8.1 million as at 31 December 2019 to €32.4 million as at 30 June 2020 by net drawdowns on existing credit facilities. Following the recovery of commodity prices, the Company repaid the credit facilities before the year-end.
Alberto Lavandeira, CEO commented:
“Atalaya made significant progress in 2020 despite the challenges of the COVID-19 pandemic. Ore mined during the year increased significantly, the copper production targets were met and the expanded plant achieved record production levels.
“Our key priority continues to be protecting our workforce and the local communities surrounding our facilities and because of the great efforts of the Atalaya team we have also delivered a strong financial performance highlighted by the increased operating cashflows and strong balance sheet.
“Looking ahead, Atalaya is looking at new technologies to increase productivity and reduce our carbon footprint and will continue to pursue opportunities to grow the business and develop new resources such as Masa Valverde.”
This announcement contains information which, prior to its publication constituted inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
|SEC Newgate||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||+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