TIDMATYM
RNS Number : 0262M
Atalaya Mining PLC
19 May 2022
19 May 2022
Atalaya Mining Plc.
("Atalaya" and/or the "Group")
Q1 2022 Financial Results
Good financial performance despite impact of energy prices,
inflation and transport sector strike
Atalaya Mining Plc (AIM: ATYM; TSX: AYM) is pleased to announce
its unaudited quarterly results for the three months ended 31 March
2022 ("Q1 2022" or "Period"), together with its unaudited interim
financial statements for Q1 2022.
The Unaudited Interim Condensed Consolidated Financial
Statements for the three months ended 31 March 2022 are also
available under the Company's profile on SEDAR at www.sedar.com and
on Atalaya's website at www.atalayamining.com .
Highlights
-- Good financial performance including cash flows from
operating activities of EUR28.3 million, despite unprecedented
energy costs, inflationary pressures and transport sector
strike
-- Continued to strengthen the balance sheet, with net cash position growing to EUR86.8 million
-- Maintaining 2022 full year operational outlook including copper production of 54 - 56 kt
-- Growth pipeline advancing as outlined in the April 2022
announcements of new Mineral Resource Estimates for higher grade
Riotinto District deposits - San Dionisio, San Antonio and Proyecto
Masa Valverde
Q1 2022 Financial Results Summary
Quarter ended 31 March Unit Q1 2022 Q1 2021 %
Revenues from operations EURk 86,251 97,380 (11.4%)
----------------- --------- --------- ---------
Operating costs EURk (54,789) (48,026) 14.1%
----------------- --------- --------- ---------
EBITDA EURk 26,712 47,443 (43.7%)
----------------- --------- --------- ---------
Profit for the period EURk 18,257 33,702 (45.8%)
----------------- --------- --------- ---------
Basic earnings per share EUR cents/share 13.5 24.5 (44.9%)
----------------- --------- --------- ---------
Cash flows from operating
activities EURk 28,298 36,803 (23.1%)
----------------- --------- --------- ---------
Cash flows used in investing
activities (1) EURk (7,552) (63,930) (88.2%)
----------------- --------- --------- ---------
Cash flows from financing
activities EURk (2,378) 52,948 (104.5%)
----------------- --------- --------- ---------
Net cash position (2) EURk 86,836 10,588 720.1%
----------------- --------- --------- ---------
Working capital surplus EURk 120,124 61,028 96.8%
----------------- --------- --------- ---------
Average realised copper
price US$/lb 4.42 3.62 22.2%
----------------- --------- --------- ---------
Cu concentrate produced tonnes 54,209 67,260 (19.4%)
----------------- --------- --------- ---------
Cu production tonnes 11,461 13,979 (18.0%)
----------------- --------- --------- ---------
US$/lb
Cash costs payable 3.33 2.04 63.5%
----------------- --------- --------- ---------
All-In Sustaining Costs US$/lb
("AISC") payable 3.59 2.46 46.0%
----------------- --------- --------- ---------
(1) Q1 2021 includes EUR53 million early payment of the Deferred
Consideration to Astor.
(2) Includes restricted cash and bank borrowings at 31 March
2022 and 31 March 2021.
Alberto Lavandeira, CEO commented:
"We are pleased to have generated over EUR20 million in free
cash flow during the quarter, despite the many external challenges
we faced. The transport sector strike in March forced a temporary
shutdown of our processing plant, electricity prices in Spain
remain extremely high compared to historical and expected future
rates, and cost inflation is affecting the prices of many key
consumables.
However, our team has been successful in reducing the impact of
these external factors. During the transport sector strike, we
brought forward maintenance activities which should allow for
higher throughput in Q2, we are advancing the construction of our
50 MW solar plant and entered into a new long term PPA, and are
implementing various efficiency measures to help to offset cost
inflation. We also look forward to the new regulations proposed by
Spain, which would cap the gas price and significantly reduce spot
electricity prices.
Meanwhile, we continue to focus on advancing our project
pipeline in the Riotinto District, which we believe can deliver
significant production growth at low capital intensity as a result
of the expected grades and synergies associated with utilising our
existing plant as a central processing hub. In addition,
stakeholder dialogue and the permitting process continue at
Proyecto Touro, which could become a new source of safe and
responsible copper production in Europe."
Investor Presentation Reminder
Alberto Lavandeira (CEO) and César Sánchez (CFO) will be holding
a live presentation relating to the Q1 2022 results via the
Investor Meet Company platform at 1:00pm BST today.
To register, please visit the following link and click "Add to
Meet" Atalaya via:
https://www.investormeetcompany.com/atalaya-mining-plc/register-investor
Management will also answer questions that have been submitted
via the Investor Meet Company dashboard.
Q1 2022 Operating Results Summary
Units expressed in accordance with the international system of units (SI)
Unit Q1 2022 Q1 2021
Ore mined Mt 4.0 3.3
-------- ---------- ----------
Ore processed Mt 3.5 4.0
-------- ---------- ----------
Copper ore grade % 0.37 0.41
-------- ---------- ----------
Copper concentrate grade % 21.14 20.78
-------- ---------- ----------
Copper recovery rate % 86.07 84.90
-------- ---------- ----------
Copper concentrate tonnes 54,209 67,260
-------- ---------- ----------
Copper contained in concentrate tonnes 11,461 13,979
-------- ---------- ----------
Payable copper contained in concentrate tonnes 10,918 13,306
-------- ---------- ----------
Mining
Ore totalling 4.0 million tonnes was mined during Q1 2022, which
is consistent with processing rates in recent quarters. This
compares with ore mined of 3.3 million tonnes in Q1 2021.
Processing
The plant processed 3.5 million tonnes of ore during Q1 2022,
compared to 4.0 million tonnes in Q1 2021 and 3.9 million tonnes in
Q4 2021. The decrease resulted from the transport sector strike,
which interrupted the supply of essential daily consumables and
resulted in a temporary shut down of the plant. In order to
minimise the impact of the down time on full year production, the
Company brought forward certain maintenance works previously
planned for Q2.
The processed copper grade was 0.37%, which was below
comparative quarters and resulted from pit sequencing. Copper
recoveries were strong at 86.07% despite lower grades, compared to
84.90% in the Q1 2021 period.
Production
Copper production in Q1 2022 was 11,461 tonnes, which was below
Q1 2021 production of 13,979 tonnes. The decrease in copper
production was mainly attributable to the temporary plant shutdown
following the transport sector strike and lower copper grades
processed, partially offset by higher copper recoveries.
Q1 2022 Financial Results Highlights
Income Statement
Revenues for Q1 2022 were EUR86.3 million, compared with EUR97.4
million in Q1 2021. The reduction was mainly as a result of lower
copper concentrate sales volumes, partially offset by higher
realised copper prices of US$4.42/lb compared with US$3.62/lb in Q1
2021.
Operating costs for Q1 2022 were EUR54.8 million, compared with
EUR48.0 million in Q1 2021, due primarily to the increase in
electricity prices following the invasion of the Ukraine and
inflation associated with other key supplies.
EBITDA for the Period was EUR26.7 million, below Q1 2021 of
EUR47.4 million. The decrease in EBITDA was driven by the
combination of lower revenues and higher operating costs compared
with Q1 2021.
Profit after tax was EUR18.3 million, or 13.5 cents basic
earnings per share, compared with Q1 2021 profit after tax of
EUR33.7 million, or 24.5 cents basic earnings per share.
Cash costs for Q1 2022 were US$3.33/lb payable copper,
considerably higher than those reported in Q4 2021 (US$2.18/lb) and
Q1 2021 (US$2.04/lb) as a result of lower production volumes and
higher costs associated with electricity and other supplies,
partially offset by the weaker Euro.
AISC during Q1 2022 amounted to US$3.59/lb payable copper
compared with US$2.48/lb payable copper in Q4 2021 and US$2.46/lb
in Q1 2021. The increase in AISC in Q1 2022 was mainly driven by
the same factors that increased cash costs. AISC excludes
investment in the tailings dam during the Period, which amounted to
EUR2.5 million (Q1 2021: EUR2.7 million).
Cash Flow Statement
Cash flow from operating activities before changes in working
capital amounted to EUR26.9 million in Q1 2022 (Q1 2021: EUR50.2
million) or EUR28.3 million after working capital changes (Q1 2021:
EUR36.8 million).
Cash flows used in investing activities were EUR7.6 million in
Q1 2022, compared with EUR63.9 million in Q1 2021, which included
the payment of deferred consideration to Astor. Capital
expenditures in Q1 2022 included EUR0.9 million in sustaining
capex, EUR2.5 million for tailings dam expansion, as well as land
purchases.
Cash flows used in financing activities were EUR2.4 million,
which included debt repayment of EUR5.8 million and the proceeds of
employee options, compared with an inflow of EUR52.9 million in Q1
2021 following the drawdown of unsecured debt facilities to fund
the payment to Astor.
Balance Sheet
Consolidated cash and cash equivalents as at 31 March 2022 were
EUR128.5 million (including restricted cash and equivalents of
EUR15.4 million), up from EUR107.5 million as at 31 December 2021
and EUR63.6 million as at 31 March 2021.
Net of current and non-current borrowings of EUR41.6 million,
net cash was EUR86.8 million as at 31 March 2022, up from EUR60.1
million as at 31 December 2021 and EUR10.6 million as at 31 March
2021.
Inventories of concentrate at 31 March 2022 valued at cost
amounted to EUR14.6 million (31 December 2021: EUR6.6 million). As
at 31 March 2022, total working capital was EUR120.1 million,
representing a EUR17.7 million increase from the EUR102.4 million
surplus as at 31 December 2021 and an increase of EUR59.1 million
from 31 March 2021.
Sustainability Reporting
On 25 April 2022, the Company published its inaugural
sustainability report, as part of its ongoing commitment to
enhancing its disclosure and reporting.
The 2021 Sustainability Report, which is available on the
Company's website, was prepared in accordance with Global Reporting
Initiative Sustainability Reporting Standards ("GRI Standards")
with the assistance of independent sustainability consultancy ERM
and was audited by EY.
Energy Market Developments in Spain
Situation Update
During Q1 2022, the price of electricity in Spain continued the
volatile trend of late 2021 and reached unprecedented peaks in
March as a result of the conflict in the Ukraine. The European
natural gas reference price ("TTF") peaked at an all-time high that
was ten times the level of one year earlier. Although the
consumption of European gas in Spain and Portugal is minimal, the
price of electricity is set by the marginal high-cost producer that
uses TTF as a reference, and as a result the Company has seen the
price of electricity during Q1 2022 averaging around EUR230/MWh,
which is almost four times higher than the price realised in
2021.
The Spanish Government announced plans to implement measures
that will aim to significantly reduce prices, which are currently
unsustainable for the general economy. The details of these
measures have not been finalised yet but are expected to come into
effect during the coming months.
Since the end of the Period, TTF has decreased by over 50% from
its peak in March, and in April, electricity prices in Spain
averaged around EUR190/MWh, including days when the price was below
EUR90/MWh.
Electricity Procurement Strategy
The Company is focused on implementing a range of measures that
will reduce its long term energy costs and exposure to the spot
market, while also lowering carbon footprint.
As previously announced, in Q1 2022 the Company signed a
long-term Power Purchase Agreement ("PPA") with its electricity
supplier for approximately 31% of its electricity requirements,
with deliveries beginning in January 2023 at prices that are
approximately 80% of the rate realised in 2021.
The Company's planned 50 MW solar plant for self-consumption
will also help to reduce the Company's long term power costs while
at the same time lower its carbon emissions. The solar plant, which
is expected to provide approximately 22% of the Company's
electricity needs, is under construction following the signing of
an agreement with an affiliate of Endesa, the power supply company.
With ground preparation under way and equipment on order, full
commissioning of the solar plant is expected in H1 2023.
In additional, the Company is evaluating further long term
renewable power initiatives such as additional solar capacity, the
installation of a wind farm for self-consumption at the mine site
and a pumped hydro project linked with the clean water dams that
the Company is already utilising.
Outlook for 2022
The Company is maintaining its previously announced guidance for
2022, despite the operational disruptions and lower grades
experienced during the Period.
Full year copper production guidance is 54,000 - 56,000 tonnes,
with improvements in copper grade and ore throughput expected in
the remaining quarters of the year, due in part to the bringing
forward of maintenance activities during the transport sector
strike.
2022 guidance for cash costs and AISC are US$2.25 - 2.80/lb and
US$2.50 - 3.05/lb, respectively. Although electricity prices remain
elevated at present, they are within the range assumed when setting
annual cost guidance. In addition, as Europe enters the summer
months and regulatory changes are implemented in relation to energy
prices, the cost of electricity is expected to return to normalised
levels. The Euro/U.S. dollar exchange rate has also weakened
compared to the 1.16 budget, averaging 1.12 during Q1 2022.
ELIX
In January 2022, the Company announced the approval of the
development of a Phase I industrial-scale plant that utilises the
E-LIX System. The plant will produce high value copper and zinc
metals from complex sulphide concentrates produced from material
sourced within the Riotinto District.
All equipment has been ordered and construction activities are
under way. The plant is expected to reach the commissioning phase
before the end of 2022.
Update on Asset Portfolio
Riotinto District - Cerro Colorado
Several efficiency and cost reduction initiatives have been
implemented in recent months. The expert system to control the SAG
mill operations has been fully implemented and is reducing energy
consumption. Various initiatives have focused on improving the
flotation process, including the use of new reagents which have had
a positive impact on recoveries. Also, the new tailings thickening
circuit has successfully reduced lime consumption.
Riotinto District - San Dionisio and San Antonio
As announced on 13 April 2022, an independent consultant has
finalised new Mineral Resource Estimates for the San Dionisio and
San Antonio deposits, as part of preparing a new NI 43-101
technical report on the overall Proyecto Riotinto property.
The San Dionisio deposit is located immediately west of the
operating Cerro Colorado open pit. It represents a high-grade
resource that could be mined first by open pit methods by expanding
the existing historic Atalaya pit, followed by underground methods
for the remaining resource. The San Dionisio deposit contains
copper ore that is very similar to what is currently being mined at
Cerro Colorado, as well as polymetallic mineralisation containing
copper, zinc and lead. Atalaya plans to complete a PEA on an
operating schedule that combines Cerro Colorado reserves with
higher grade material from San Dionisio deposit during 2022. Open
pit mining at San Dionisio will require the relocation of certain
infrastructure such as the public road, power lines and water lines
that currently run between the two deposits.
San Antonio is a shallow polymetallic deposit that will require
underground mining methods. It is located immediately east of the
Cerro Colorado open pit, from where it is easily accessible via the
construction of a ramp.
Riotinto District - Proyecto Masa Valverde ("PMV")
PMV consists of two main deposits: the large Masa Valverde
("MV") deposit and the smaller, shallower and higher grade
Majadales ("MJ") deposit, which is located 1 km to the southeast of
MV along the same northwest trending structure.
A new Mineral Resource Estimate for PMV was announced on 5 April
2022, which included a significant increase in tonnage and
contained copper, gold and silver compared to the prior estimate.
An initial Indicated Mineral Resource was also declared for the MV
deposit. The supporting NI 43-101 technical report has now been
filed. As a next step, the Company plans to complete a PEA that
focuses on scenarios that would leverage the existing plant at
Proyecto Riotinto and access the orebodies via a single ramp.
Four rigs continue drilling at PMV, with two focused on the
Campanario trend and the other two drill testing a Fix Loop
Electromagnetic Anomaly ("FLEM") anomaly 300 meters west of MV. The
Campanario trend is a parallel structure to MV-MJ, located 1 km to
the north and with associated outcropping mineralisation (gossans
and sulphide stockworks) along approximately 5 km. In addition,
several high-priority FLEM anomalies were defined on PMV, all of
which will be systematically drill tested.
Riotinto District - Proyecto Riotinto Este
At Riotinto East, work continues on the definition of drill
targets as well as obtaining the pending administrative permits. It
is expected that drilling will commence in the coming months.
Proyecto Touro
Atalaya remains committed to the development of the Touro copper
project and continues to engage with all stakeholders in order to
resolve any concerns associated with the project.
Consistent with its commitment to a world class development of
the project, the Company made the decision to address the legacy
issues associated with water runoff from the historical mine prior
to submitting the Environmental Impact Assessment ("EIA") for the
new Touro development proposal. The original plan was to construct
a water treatment plant during project development, but the Company
has volunteered to address the legacy matters ahead of the EIA
submission as an early contribution to the local community and to
demonstrate that operating systems have drastically improved over
the last 35 years. The water treatment plant is near
completion.
In addition, as an integral part of Atalaya's commitment to
excellence and long-term transparency in relation to the
development of Touro, agreements have been signed with major
fishing communities in order to implement a water quality control
system located downstream of Touro at the Ulla River, in order to
demonstrate the project's lack of impact on the river. This is
consistent with the Company's overall project design and its
"zero-discharge" philosophy.
The Company continues to be confident that its approach to
Touro, which includes fully plastic lined tailings with zero
discharge, is in line with international best practice and will
satisfy the most stringent environmental conditions that may be
imposed by the authorities prior to the development of the
project.
Proyecto Ossa Morena ("POM")
At Proyecto Ossa Morena, preparation work continues and it is
expected that drilling will begin at the flagship
Alconchel-Pallares Cu-Au project during July or August.
Update on Corporate Developments
Astor Litigation
As announced on 21 March 2022 and 24 March 2022, the Company
received the formal Judgment from the High Court of Justice in
relation to the claim for residual interest arising out of the
payment of EUR53 million in deferred consideration to Astor.
The Judgment, which puts an end to the litigation between the
parties (subject to any appeal by either party), clarified the
basis for calculating the interest due and confirmed that it is
payable by the Company.
On 7 and 8 April 2022, the Company paid EUR9.6 million to Astor
from the trust account of EUR15.4 million previously established by
Atalaya on 15 July 2021.
A hearing was held on 6 May 2022 and the calculation of the
correct interest arising under the Master Agreement was
subsequently agreed between the parties. Atalaya has agreed a final
payment amount of EUR1.1 million with Astor which was paid on 16
May 2022.
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:
Elisabeth Cowell / Axaule
SEC Newgate UK Shukanayeva / Max Richardson + 44 20 3757 6882
4C Communications Carina Corbett +44 20 3170 7973
------------------------------- ------------------
Canaccord Genuity
(NOMAD and Joint Henry Fitzgerald-O'Connor
Broker) / James Asensio +44 20 7523 8000
------------------------------- ------------------
BMO Capital Markets
(Joint Broker) Tom Rider / Andrew Cameron +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. Atalaya's
current operations include the Cerro Colorado open pit mine and a
modern 15 Mtpa processing plant, which has the potential to become
a centralised processing hub for ore sourced from its wholly owned
regional projects around Riotinto that include Proyecto Masa
Valverde and Proyecto Riotinto Este. 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. In addition,
Atalaya is in permitting phase of Proyecto Ossa Morena. For further
information, visit www.atalayamining.com
ATALAYA MINING PLC
MANAGEMENT'S REVIEW AND
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
31 March 2022
Notice to Reader
The accompanying unaudited, condensed, interim consolidated
financial statements of Atalaya Mining Plc have been prepared by
and are the responsibility of Atalaya Mining Plc's management. The
unaudited, condensed, interim consolidated financial statements
have not been reviewed by Atalaya's auditors.
Introduction
This report provides an overview and analysis of the financial
results of operations of Atalaya Mining Plc and its subsidiaries
("Atalaya" and/or "Group"), to enable the reader to assess material
changes in the financial position between 31 December 2021 and 31
March 2022 and results of operations for the three months ended 31
March 2022 and 2021.
This report has been prepared as of 18 May 2022. The analysis,
hereby included, is intended to supplement and complement the
unaudited interim condensed consolidated financial statements and
notes thereto ("Financial Statements") as at and for the period
ended 31 March 2022. The reader should review the Financial
Statements in conjunction with the review of this report and with
the audited, consolidated financial statements for the year ended
31 December 2021. This document can be found on SEDAR at
www.sedar.com and on Atalaya's website at www.atalayamining.com
.
Atalaya prepares its Annual Financial Statements in accordance
with International Financial Reporting Standards ("IFRSs") as
adopted by EU and its Unaudited Interim Condensed Consolidated
Financial Statements in accordance with International Accounting
Standards 34: Interim Financial Reporting. The currency referred to
in this document is the Euro, unless otherwise specified.
Forward-looking statements
This report may include certain "forward-looking statements" and
"forward-looking information" under applicable securities laws.
Except for statements of historical fact, certain information
contained herein constitutes forward-looking statements.
Forward-looking statements are frequently characterised by words
such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate", and other similar words, or statements
that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are based on
a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. Assumptions upon which such
forward-looking statements are based include that all required
third party regulatory and governmental approvals will be obtained.
Many of these assumptions are based on factors and events that are
not within the control of Atalaya and there is no assurance they
will prove to be correct. Factors that could cause actual results
to vary materially from results anticipated by such forward-looking
statements include changes in market conditions and other risk
factors discussed or referred to in this report and other documents
filed with the applicable securities regulatory authorities.
Although Atalaya has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Atalaya undertakes no obligation to
update forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements.
1. Incorporation and description of the Business
Atalaya Mining Plc (the "Company") was incorporated in Cyprus on
17 September 2004 as a private company with limited liability under
the Companies Law, Cap. 113 and was converted to a public limited
liability company on 26 January 2005. Its registered office is at 1
Lampousa Street, Nicosia, Cyprus.
The Company was listed on AIM of the London Stock Exchange
("AIM") in May 2005 under the symbol ATYM and on the Toronto Stock
Exchange ("TSX") on 20 December 2010 under the symbol AYM. The
Company continued to be listed on AIM and the TSX as at 31 March
2022.
Atalaya is a European mining and development company. The
strategy is to evaluate and prioritise metal production
opportunities in several jurisdictions throughout the well-known
belts of base and precious metal mineralisation in Spain, elsewhere
in Europe and Latin America.
The Group currently owns four mining projects: Proyecto
Riotinto, Proyecto Touro, Proyecto Masa Valverde and Proyecto Ossa
Morena. In addition, the Company has an earn-in agreement to
acquire three investigation permits at Proyecto Riotinto Este.
Proyecto Riotinto
The Company owns and operates through a wholly owned subsidiary,
"Proyecto Riotinto", an open-pit copper mine located in the Iberian
Pyrite Belt, in the Andalusia region of Spain, approximately 65 km
northwest of Seville. A brownfield expansion of this mine was
completed in 2019 and successfully commissioned by Q1 2020.
Proyecto Touro
The Group has an initial 10% stake in Cobre San Rafael, S.L.,
the owner of Proyecto Touro, as part of an earn-in agreement which
will enable the Group to acquire up to 80% of the copper project.
Proyecto Touro is located in Galicia, north-west Spain. Proyecto
Touro is currently in the permitting process.
In November 2019, Atalaya executed the option to acquire 12.5%
of Explotaciones Gallegas del Cobre, S.L. the exploration property
around Touro, with known additional mineralisation, which will add
to the potential of Proyecto Touro.
Proyecto Masa Valverde
On 21 October 2020, the Company announced that it entered into a
definitive purchase agreement to acquire 100% of the shares of
Cambridge Mineria España, S.L. (since renamed Atalaya Masa
Valverde, S.L.U.), a Spanish company which fully owns the Masa
Valverde polymetallic project located in Huelva (Spain). Proyecto
Masa Valverde is currently in the permitting process.
Proyecto Riotinto Este
In December 2020, Atalaya entered into a Memorandum of
Understanding with a local private Spanish company to acquire a
100% beneficial interest in three investigation permits (known as
Peñas Blancas, Cerro Negro and Herreros investigation permits),
which cover approximately 12,368 hectares and are located
immediately east of Proyecto Riotinto.
Proyecto Ossa Morena
In December 2021, Atalaya announced the acquisition of a 51%
interest in Rio Narcea Nickel, S.L., which owns 17 investigation
permits. The acquisition also provided a 100% interest in three
investigation permits that are also located along the Ossa-Morena
Metallogenic Belt.
2. Overview of Operational Results
Proyecto Riotinto
The following table presents a summarised statement of
operations of Proyecto Riotinto for the three months ended 31 March
2022 and 2021 and the three months ended 31 December 2021.
Three months Three months ended Three months ended
Units expressed in accordance with the ended 31 Mar 2021 31 Dec 2021
international system of units (SI) Unit 31 Mar 2022
Ore mined t 3,954,647 3,328,389 3,494,222
Ore processed t 3,547,487 4,005,790 3,846,559
Copper ore grade % 0.37 0.41 0.41
Copper concentrate grade % 21.14 20.78 21.44
Copper recovery rate % 86.07 84.90 87.04
Copper concentrate t 54,209 67,260 64,695
Copper contained in concentrate t 11,461 13,979 13,872
Payable copper contained in concentrate t 10,918 13,306 13,225
Cash cost* US$/lb payable 3.33 2.04 2.24
All-in sustaining cost* US$/lb payable 3.59 2.46 2.46
(*) Refer to section 5 of this Management's Review
Note: There may be slight differences between the numbers in the
above table due to rounding.
Three months operational review
During Q1 2022, a total of 3,547,487 tonnes of ore were
processed with an average copper head grade of 0.37% and a recovery
rate of 86.07%. Compared with Q1 2021, throughput decreased 11.4%
while recoveries increased 1.4%.
The decrease in copper production compared to prior periods was
mainly attributable to the temporary plant shutdown following the
transport sector strike, the bringing forward of certain
maintenance works and lower copper grades processed, partially
offset by higher copper recoveries.
On-site copper concentrate inventories at the end of Q1 2022
were approximately 9,904 tonnes. All concentrate in stock at the
beginning of the Period was delivered to the port at Huelva.
Copper prices increased during Q1 2022 compared with Q4 2021.
The average copper spot price during the period was US$4.53/lb. The
realised price during Q1 2022 excluding QPs was approximately
US$4.50/lb.
3. Outlook
The forward-looking information contained in this section is
subject to the risk factors and assumptions contained in the
cautionary statement on forward-looking statements included in the
Basis of Reporting. The Company is aware that the inflationary
pressure on the goods and services required for its business and
the geopolitical developments in Ukraine and its impact on energy
prices may still have further effects or impact how the Company can
manage it 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.
3. Outlook (cont.)
Operational guidance
Proyecto Riotinto operational guidance for 2022 remains
unchanged. Should the Company consider the current guidance no
longer achievable, then the Company will provide a further
update.
Guidance
Unit 2022
Ore mined million tonnes 15.5
Waste mined million tonnes 23.4
Ore processed million tonnes 15.2 - 15.8
Copper ore grade % 0.42
Copper recovery rate % 83 - 86
Contained copper tonnes 54,000 - 56,000
Cash costs $/lb payable 2.25 - 2.80
All-in sustaining cost $/lb payable 2.50 - 3.05
Atalaya's operating budget for 2022 was set in early December
2021 based on certain economic assumptions of expected inflation,
particularly with respect to energy costs.
On this basis, full year 2022 copper production is estimated to
be in the range of 54,000 to 56,000 tonnes.
As a result of actual electricity costs in early 2022, the
Company has provided cash cost and AISC guidance that reflects a
range of outcomes of potential energy costs for the full year. Cash
costs for 2022 are expected to be in the range of $2.25/lb -
$2.80/lb. AISC for 2022 is expected to be in the range of $2.50/lb
- $3.05/lb copper payable. In addition, the Company expects to
spend approximately EUR12.5 million in 2022 as part of the project
to increase the capacity of the tailing dam. AISC are presented net
of the one-off project to increase the capacity of the tailing
dam.
4. Overview of the Financial Results
The following table presents summarised consolidated income
statements for the three months ended 31 March 2022, with
comparatives for the three months ended 31 March 2021.
Three months ended Three months ended
31 Mar 2022 31 Mar 2021
( Euro 000's )
Revenue 86,251 97,380
Total operating costs (54,789) (48,026)
Administrative and other expenses (3,583) (1,573)
Exploration expenses (452) (120)
Care and maintenance expenditure (715) (218)
EBITDA 26,712 47,443
Depreciation/amortisation (7,520) (8,944)
Net foreign exchange gain 2,573 2,930
Net finance cost (315) (82)
Tax (3,193) (7,645)
------------------- -------------------
Profit for the period 18,257 33,702
------------------- -------------------
4. Overview of the Financial Results (cont.)
Three months financial review
Revenues for the three-month period ended 31 March 2022 amounted
to EUR86.3 million (Q1 2021: EUR97.4 million). Lower revenues are
mainly due to a decrease in copper concentrate volume sold despite
higher realised copper prices.
Decrease in concentrate sold resulted from the transport sector
strike, which interrupted the supply of essential daily consumables
as a result of which the Company brought forward certain
maintenance works previously planned for Q2 and shut down the plant
temporarily in order to minimise the impact of the transport sector
strike on full year production.
Realised prices were US$ 4.42 /lb copper during Q1 2022 compared
with US$3.62/lb copper in Q1 2021.
Operating costs for the three-month period ended 31 March 2022
amounted to EUR54.8 million, compared with EUR48.0 million in Q1
2021. Unit operating costs in Q1 2022 were higher than in Q1 2021
due to the high cost of electricity, diesel and other supplies as
result of inflation and the geopolitical situation in the
Ukraine.
Cash costs of US$3.33/lb payable copper during Q1 2022 compared
with US$2.04lb payable copper in the same period last year. Higher
cash costs were mainly due to the reduced production levels and the
increase in cost of electricity power and other supplies despite
the stronger US Dollar/Euro rate in Q1 2021 which partially offset
the higher operating costs in Q1 2022 . AISC excluding investment
in tailings dam for Q1 2022 were US$3.59/lb payable copper compared
to US$2.46/lb payable copper in Q1 2021.The increase was mainly
driven by the impacts derived from the cash costs despite of lower
capitalised stripping costs, which amounted to EUR0.7 million in Q1
2022 compared with EUR4.2 million invested in Q1 2021.
Sustaining capex for Q1 2022 amounted to EUR0.9 million compared
with EUR1.9 million in Q1 2021. Sustaining capex was mainly related
to continuous enhancements in the processing systems of the plant.
In addition, the Company invested EUR2.5 million in the project to
increase the tailings dam during Q1 2022.
Administrative and other expenses amounted to EUR3.6 million (Q1
2021: EUR1.6 million) and include non-operating costs of the Cyprus
office, corporate legal and consultancy costs, on-going listing
costs, officers and directors' emoluments, and salaries and related
costs of the corporate office. The higher cost in the period was
mainly related to legal costs owing to Astor litigation case and
expenses related to the execution of share options by certain
employees.
Exploration costs for the three-month period ended 31 March 2022
amounted to EUR0.5 million, higher than Q1 2021 (EUR0.1
million).
EBITDA for the three months ended 31 March 2022 amounted to
EUR26.7 million compared with Q1 2021 of EUR47.4 million.
The main item below the EBITDA line is depreciation and
amortisation of EUR7.5 million (Q1 2021: EUR8.9 million). Lower
depreciation was mainly due to the decrease in ore mined. Net
financing costs for Q1 2022 amounted to EUR0.3 million compared
with EUR82k in Q1 2021. Net finance costs are mainly related to
credit facilities used to pay the Deferred Consideration to Astor
in Q1 2021 (Note 5).
The net foreign exchange gain in Q1 2022 totalled EUR2.6 million
(Q1 2021: EUR2.9 million).
Income tax expense booked in Q1 2022 amounted to EUR3.2 million
(Q1 2021: EUR7.6 million). Lower expenses compared to comparative
period is due to lower profit in Q1 2022.
Copper prices
The average realised copper price increased 18.1% from US$3.62
per pound in Q1 2021 to US$4.42 per pound in Q1 2022.
The average prices of copper for the three months ended 31 March
2022 and 2021 are summarised below:
Three months ended Three months ended
31 Mar 2022 31 Mar 2021
( USD )
Realised copper price per lb 4.42 3.62
Market copper price per lb 4.53 3.85
4. Overview of the Financial Results (cont.)
Realised copper prices for the reporting period noted above have
been calculated using payable copper and including provisional
invoices and final settlements of quotation periods ("QPs")
together. Lower realised prices than market averages are mainly due
to the final settlement of invoices where QP was fixed in previous
quarters due to a short open period when copper prices were lower.
Atalaya's average realised price increased to US$4.42/lb from
US$4.36/lb in the previous quarter. When excluding the QPs, the
realised price during Q1 2022 was US$4.50/lb.
5. Non-GAAP Measures
Atalaya has included certain non-IFRS measures including
"EBITDA", "Cash Cost per pound of payable copper", "All-In
Sustaining Costs" ("AISC") and "realised prices" in this report.
Non-IFRS measures do not have any standardised meaning prescribed
under IFRS, and therefore they may not be comparable to similar
measures presented by other companies. These measures are intended
to provide additional information and should not be considered in
isolation or as a substitute for indicators prepared in accordance
with IFRS.
EBITDA includes gross sales net of penalties and discounts and
all operating costs, excluding finance, tax, impairment,
depreciation and amortisation expenses.
Cash Cost per pound of payable copper includes cash operating
costs, including treatment, and refining charges ("TC/RC"), freight
and distribution costs net of by-product credits. Cash Cost per
pound of payable copper is consistent with the widely accepted
industry standard established by Wood Mackenzie and is also known
as the C1 cash cost.
AISC per pound of payable copper includes C1 Cash Costs plus
agency fees, expenditures on rehabilitation, capitalised stripping
costs, exploration and geology costs, corporate costs and
sustaining capital expenditures, but excludes one-off sustaining
capital projects, such as investments in the tailings dam.
Realised price per pound of payable copper is the value of the
copper payable included in the concentrate produced including the
discounts and other features governed by the offtake agreements of
the Group and all discounts or premiums provided in commodity hedge
agreements with financial institutions, if any, expressed in USD
per pound of payable copper. Realised price is consistent with the
widely accepted industry standard definition.
6. Liquidity and Capital Resources
Atalaya monitors factors that could impact its liquidity as part
of Atalaya's overall capital management strategy. Factors that are
monitored include, but are not limited to, the market price of
copper, foreign currency rates, production levels, operating costs,
capital and administrative costs.
The following is a summary of Atalaya's cash position and cash
flows as at 31 March 2022 and 31 December 2021.
Liquidity information
( Euro 000's ) 31 March 31 December
2022 2021
Unrestricted cash and cash equivalents
at Group level 69,985 48,375
Unrestricted cash and cash equivalents
at Operation level 43,053 43,722
Restricted cash and cash equivalents
at Operation level 15,420 15,420
--------- ------------
Consolidated cash and cash equivalents 128,458 107,517
Net cash position (1) 86,836 60,073
Working capital surplus 120,124 102,430
(1) Includes borrowings
Unrestricted cash and cash equivalents (which include cash at
both Group level and Operation level) as at 31 March 2022 increased
to EUR113.0 million from EUR92.1 million at 31 December 2021. The
increase in cash balances is the result of net cash flow generated
in the period. Restricted cash of EUR15.4 million represents the
amount in escrow out of which the Company has paid interest of
EUR9.6 million on 7 and 8 April 2022 (following the trial in
February and March 2022) and EUR1.1 million on 16 May 2022 to Astor
under the Master Agreement. Following the payment made in May 2022
the balance (less an amount representing GBP280,000 being the
remaining liability to Astor on costs) will revert to the Company
and it will be classified as unrestricted cash. See more details in
Deferred Consideration note 20.
6. Liquidity and Capital Resources (cont.)
As of 31 March 2022, Atalaya reported a working capital surplus
of EUR120.1 million, compared with a working capital surplus of
EUR102.4 million at 31 December 2021. The main liability of the
working capital is trade payables related to Proyecto Riotinto
contractors and, to a lesser extent, short-term loans following the
drawdown of credit facilities during Q1 2022. The increase in
working capital resulted from higher cash balances as well as
higher inventory levels.
Overview of the Group's cash flows
Three months ended Three months ended
31 Mar 2022 31 Mar 2021
( Euro 000's )
Cash flows from operating activities 28,298 36,803
Cash flows used in investing activities (7,552) (63,930)
Cash flows from financing activities (2,378) 52,948
Net increase in cash and cash equivalents 18,368 22,890
------------------- -------------------
Net foreign exchange differences 2,573 2,931
------------------- -------------------
Three months cash flows review
Cash and cash equivalents increased by EUR20.9 million during
the three months ended 31 March 2022. This was due to the net
results of cash generated from operating activities amounting to
EUR28.3 million, the cash used in investing activities amounting to
EUR7.6 million, the cash used from financing activities totalling
EUR2.4 million and net foreign exchange differences of EUR2.6
million.
Cash generate d from operating activities before working capital
changes was EUR26.9 million. Trade receivables in the period
decreased by EUR5.2 million, inventory levels increased by EUR13.0
million and trade payables
increased by EUR9.7 million.
Investing activities during the quarter consumed EUR7.6 million,
relating mainly to the tailings dams project, acquisition of lands
around Riotinto and continuous enhancements in the processing
systems of the plant.
Financing activities during the quarter used EUR2.4 million
driven by the payments of existing unsecured credit facilities and
cash generated from issuance of shares.
Foreign exchange
Foreign exchange rate movements can have a significant effect on
Atalaya's operations, financial position and results. Atalaya's
sales are denominated in U.S. dollars ("USD"), while Atalaya's
operating expenses, income taxes and other expenses are mainly
denominated in Euros ("EUR"), and to a much lesser extent in
British Pounds ("GBP").
Accordingly, fluctuations in the exchange rates can potentially
impact the results of operations and carrying value of assets and
liabilities on the balance sheet .
During the three months ended 31 March 2022, Atalaya recognised
a foreign exchange profit of EUR2.6 million. Foreign exchange
losses mainly related to change in the period end EUR and USD
conversion rates, as all sales are cashed and generally held in
USD.
The following table summarises the movement in key currencies
versus the EUR:
Three months ended Three months ended
31 Mar 2022 31 Mar 2021
Average rates for the period
GBP - EUR 0.8459 0.8739
USD - EUR 1.1217 1.2048
Spot rates as at end of the period
GBP - EUR 0.8364 0.8521
USD - EUR 1.1101 1.1725
7. Deferred Consideration
In September 2008, the Group moved to 100% ownership of Atalaya
Riotinto Mineral S.L. ("ARM") (and thus full ownership of Proyecto
Riotinto) by acquiring the remaining 49% of the issued capital of
ARM. At the time of the acquisition, the Group signed a Master
Agreement (the "Master Agreement") with Astor Management AG
("Astor") which included a deferred consideration of EUR43.9
million (the "Deferred Consideration") payable as consideration in
respect of the acquisition among other items. The Company also
entered into a credit assignment agreement at the same time with a
related company of Astor, Shorthorn AG, pursuant to which the
benefit of outstanding loans was assigned to the Company in
consideration for the payment of EUR9.1 million to Shorthorn (the
"Loan Assignment").
The Master Agreement was the subject of litigation in the High
Court and the Court of Appeal that concluded in November 2018. As a
consequence, ARM was obliged to any excess cash (after payment of
operating expenses, sustaining capital expenditure, any senior debt
service requirements and up to US$10 million per annum (for
non-Proyecto Riotinto related expenses)) to pay the consideration
due to Astor (including the Deferred Consideration and the amount
of EUR9.1 million payable under the Loan Assignment). "Excess cash"
was not defined in the Master Agreement leaving ambiguity as to how
it was to be calculated.
On 2 March 2020, the Company filed an application in the High
Court to seek clarity on the definition of "Excess Cash". Following
the filing of the statements of case for the trial, Astor applied
to Court seeking an early determination (without the need for a
full trial) of the dispute in relation to the "Excess Cash" (the
"Summary Judgment application"). The Summary Judgment application
was heard on 14-15 June 2021. The Court dismissed Astor's
application meaning the proceedings would continue. The trial was
heard from 21 February 2022 (the "Trial").
As at 31 December 2020, no consideration was paid to Astor.
However, during December 2020 the Board had discussions and
considered an early payment of the Deferred Consideration and the
Loan Assignment provided certain conditions could be met.
Conditions included among others the execution of credit facilities
agreements to fund the payment.
In March 2021, the Company fulfilled all conditions required by
the Board and made the early payment of EUR53 million to Astor. The
payment was fully funded by unsecured credit facilities.
The payment of the Deferred Consideration did not end the
ongoing litigation as the issue as to whether any residual interest
may or may not be payable remained unresolved. On 15 July 2021, the
Company transferred EUR15.4 million to the Company's solicitors
representing the full amount of interest claimed by Astor (as at
that date) to 30 June 2022. The Company's solicitors provided an
undertaking to Astor's solicitors to hold the full amount until
settlement of the claim to interest or judgment following the
Trial. The Company understood the monies held on client account by
the Company's solicitors safeguarded the maximum outstanding
liability to Astor in relation to the Master Agreement. On that
basis, and because the Consideration has been paid in full in
accordance with the Master Agreement, the Company treated itself as
free of the obligations set out at clauses 6(g)(iv)(A) and
6(g)(iv)(B) in the Master Agreement.
On 21 March 2022, further to the Trial which took place between
21 February and 1 March 2022, Judgment was handed down. The
Judgment deals with matters of principle. It was left to the
parties to calculate the amount of interest that is payable on the
basis of the Judge's conclusions. On 7 and 8 April 2022, the
Company made an initial payment of EUR9.6 million from the
solicitors' client account it had established in July 2021.
A consequential hearing was held on 6 May 2022 dealing with (i)
the interest calculation; and (ii) Atalaya's application for
permission to appeal. As to (i), again the Court decided certain
matters of principle at the hearing and gave directions as to the
remaining issue to be resolved between the parties. As to (ii), the
Court denied Atalaya's application. Atalaya has a right to apply
for permission to appeal from the Court of Appeal.
The Company agreed a final payment amount of EUR1.1 million with
Astor which was paid on 16 May 2022 from its solicitors' client
account. Subject to the position on costs, the Company has now
discharged its liability to Astor in respect of 'Excess Cash' and
associated interest under the Master Agreement.
8. Corporate Social Responsibility
Atalaya and its wholly owned Fundación Atalaya Riotinto have
continued its efforts to develop initiatives to comply with its
social responsibility during the first quarter of the year.
The Foundation has finalised the classroom sessions of its
second edition of its training program for unemployed people from
the local communities. The course, also supported by Riotinto Mine
main contractors is starting now its practical programme, which
includes four weeks of hands-on practice with machinery and
different abilities needed in industrial work environments. Thanks
to the collaboration of some of the company's main contractors, it
will include some experience with blasting and hauling operations,
which will grant specific official qualifications to the
participants. The precedent program concluded satisfactorily with
around half the participants now working in different
companies.
During the quarter, the Foundation has started the conversations
with the neighbouring municipalities to agree the principles of the
specific projects for the year, based on the new collaboration
agreement that was signed with all the surrounding towns. The
agreement is aimed at providing with funds to undertake
collaboration initiatives addressing infrastructure, social and
environmental projects. In this regard, the Foundation has
established agreements with Riotinto Municipality, to build a
child's playground, to acquire a new ambulance and construction
machinery to be used in municipal works. The Foundation has also
agreed to fund various initiatives including the sponsoring of
Riotinto Balompie, the oldest football club in Spain, also the
local Golf Club, and an official running team. The Foundation is
also sponsoring a local carnival association and a running contest
that will bring many visitors to the area. In the cultural area,
the Foundation has sponsored the publication of a book which is a
study on prehistoric copper mining, and another one by a local
journalist about historical protests in the mining area.
9. Health and Safety
The safety index in Q1 2022 has improved significantly compared
to Q4 2021. At 31 March 2022 the frequency rate index was 4.22 and
0.02 for the severity index, with two accidents with minor sick
leave in this quarter. This change in trend is marked by a period
of 93 consecutive days without lost time accidents and although
these data are improving, we must continue to work on prevention to
reach "zero harm".
In the first quarter of 2022, the Field Leadership activity was
fully implemented and with compliance objectives already integrated
into the company's Management System.
Regarding the SAR Cov-2 global health crisis, the sixth wave was
controlled in January 2022 with close monitoring of close contacts
through a strict protocol of antigen and PCR tests, which prevented
massive contagion and possible effects on production. At the end of
the quarter, thanks to the high percentage of vaccination, it has
been possible to relax the preventive measures.
Finally, random checks at the entrances to prevent work under
the influence of psychoactive substances are operating
normally.
10. Environmental Management
During the first quarter of the year, no environmental incidents
have been recorded at the Proyecto Riotinto.
A total rainfall of 137.6 l/m(2) has been recorded, which is
around 37% less than the rainfall recorded in the same period of
the previous year. The total rainfall recorded for the water year
(October 2021 to date) is 333.7 l/m(2) (including April), which is
30% less than the rainfall recorded in the same period of the
previous water year.
The additional measures contemplated in the action plan against
dust continued to be implemented, intensifying periodic irrigation,
implementing new coordination measures and carrying out exhaustive
monitoring of the emissions generated in the operation.
Environmental inspections have continued to control the
generation of waste, storage of hazardous chemical products, as
well as other aspects related to order and cleanliness and good
environmental practices. These inspections were carried out on both
Atalaya personnel and subcontracted companies. The results of the
inspections to contractors are transferred to the environmental
ranking in order to assess the effort to improve the environmental
performance of the companies operating in the PRT facilities. In
February, a gift is given to the contractor company that came first
in 2021.
Training in environmental management continued for the
organisation's personnel, providing training for workers belonging
to the maintenance and plant departments. This training includes
specific content by levels and operational areas that make up the
Proyecto Riotinto.
11. Risk Factors
Due to the nature of Atalaya's business in the mining industry,
the Group is subject to various risks that could materially impact
the future operating results and could cause actual events to
differ materially from those described in forward-looking
statements relating to Atalaya. Readers are encouraged to read and
consider the risk factors detailed in Atalaya's audited,
consolidated financial statements for the year ended 31 December
2021.
The Company continues to monitor the principal risks and
uncertainties that could materially impact the Company's results
and operations, including the areas of increasing uncertainty such
as COVID-19, inflationary pressure on goods and services required
for the business and geopolitical developments in Ukraine.
12. Critical accounting policies, estimates, judgements, assumptions and accounting changes
The preparation of Atalaya's Financial Statements in accordance
with IFRS requires management to make estimates, judgements and
assumptions that affect amounts reported in the Financial
Statements and accompanying notes. There is a full discussion and
description of Atalaya's critical accounting policies in the
audited consolidated financial statements for the year ended 31
December 2021.
As at 31 March 2022, there are no significant changes in
critical accounting policies or estimates to those applied in
2022.
13. Other Information
Additional information about Atalaya Mining Plc. is available at
www.sedar.com and at www.atalayamining.com
Unaudited Interim Condensed Consolidated Financial Statements on
pages 12 to 37.
By Order of the Board of Directors,
"Roger Davey"
___________________________________
Roger Davey
Chairman
Nicosia, 18 May 2022
Interim Consolidated Income Statements
(All amounts in Euro thousands unless otherwise stated)
For the three months period ended 31 March 2022 and 2021 - (Unaudited)
Three Three
months months
ended ended
31 March 31 March
( Euro 000's ) Notes 2022 2021
Revenue 4 86,251 97,380
Operating costs and mine site administrative
expenses (54,611) (47,872)
Mine site depreciation and amortization (7,520) (8,944)
========== ==========
Gross profit 24,120 40,564
Administration and other expenses (3,583) (1,573)
Share-based benefits 15 (178) (154)
Care and maintenance expenditure (715) (218)
Exploration expenses (452) (120)
Operating profit 19,192 38,499
Net foreign exchange gain 3 2,573 2,930
Net finance costs 5 (315) (82)
Profit before tax 21,450 41,347
Tax 6 (3,193) (7,645)
========== ==========
Profit for the period 18,257 33,702
========== ==========
Profit for the period attributable
to:
* Owners of the parent 7 18,824 33,858
* Non-controlling interests (567) (156)
18,257 33,702
========== ==========
Earnings per share from operations
attributable to equity holders of
the parent during the period:
Basic earnings per share (EUR cents
per share) 7 13.5 24.5
========== ==========
Fully diluted earnings per share (EUR
cents per share) 7 13.2 24.0
========== ==========
Profit for the period
Other comprehensive income: 18,257 33,702
Change in fair value of financial
assets through other comprehensive
income 'OCI' - 9
Total comprehensive profit for the
period 18,257 33,711
========== ==========
Total comprehensive profit for the
period attributable to:
* Owners of the parent 7 18,824 33,867
* Non-controlling interests (567) (156)
18,257 33,711
========== ==========
The notes on pages 16 to 37 are an integral part of these
unaudited condensed interim consolidated financial statements.
Interim Consolidated Balance Sheet
(All amounts in Euro thousands unless otherwise stated)
As at 31 March 2022 and 31 December 2021 - (Unaudited)
31 March 31 December
(Euro 000's) Note 2022 2021
Assets
Non-current assets
Property, plant and equipment 9 333,912 333,096
Intangible assets 10 56,639 57,368
Trade and other receivables 12 9,638 5,330
Non-current financial assets 12 1,101 1,101
Deferred tax asset 5,503 5,564
======== ===========
406,793 402,459
======== ===========
Current assets
Inventories 11 37,809 24,781
Trade and other receivables 12 41,051 50,128
Tax refundable 379 483
Other financial assets 38 39
Cash and cash equivalents 13 128,458 107,517
======== ===========
207,735 182,948
======== ===========
Total assets 614,528 585,407
======== ===========
Equity and liabilities
Equity attributable to owners of the parent
Share capital 14 13,594 13,447
Share premium 14 319,374 315,916
Other reserves 15 68,710 52,690
Accumulated profits 61,752 58,754
======== ===========
463,430 440,807
Non-controlling interests (5,476) (4,909)
-------- -----------
Total equity 457,954 435,898
-------- -----------
Liabilities
Non-current liabilities
Trade and other payables 16 3,450 3,450
Provisions 17 26,705 26,578
Leases 19 4,758 4,913
Borrowings 18 34,050 34,050
68,963 68,991
======== ===========
Current liabilities
Trade and other payables 16 75,849 66,191
Leases 19 591 597
Borrowings 18 7,572 13,394
Current tax liabilities 3,599 336
87,611 80,518
======== ===========
Total liabilities 156,574 149,509
======== ===========
Total equity and liabilities 614,528 585,407
======== ===========
The notes on pages 16 to 37 are an integral part of these
unaudited condensed interim consolidated financial statements
Interim Consolidated Statements of Changes in Equity
(All amounts in Euro thousands unless otherwise stated)
For the three months period ended 31 March 2022 and 2021 - (Unaudited)
Non-controlling
Share Share Other Accum. interest Total
(Euro 000's) Note capital premium(1) reserves losses Total equity
----------------
At 1 January 2021 13,439 315,714 40,049 (15,512) 353,690 (3,491) 350,199
Profit for the
period - - - 33,858 33,858 (155) 33,703
Change in fair
value
of financial
assets
through OCI - - 9 - 9 - 9
---------- ------------- ---------- --------- --------- ---------------- ---------
Total
comprehensive
income - - 9 33,858 33,867 (155) 33,712
Transactions with
owners
Issuance of share
capital 4 91 - - 95 - 95
Recognition of
share-based
payments 15 - - 153 - 153 - 153
Recognition of
depletion
factor 15 - - 6,100 (6,100) - - -
Recognition of
non-distributable
reserve 15 - - 1,179 (1,179) - - -
Recognition of
distributable
reserve - - 4,511 (4,511) - - -
At 31 March 2021 13,443 315,805 52,001 6,556 387,805 (3,646) 384,159
Profit for the 99,
period - - - 99,786 786 (1,263) 98,476
Change in fair
value
of financial
assets
through OCI - - (56) - (56) - (56)
Total
comprehensive
income - - (56) 99,786 99,730 (1,263) 98,467
Transactions with
owners
Issuance of share
capital 14 4 111 - - 115 - 115
Recognition of
share-based
payments 15 - - 746 - 746 - 746
Recognition of 15 - - - - - - -
depletion
factor
Recognition of
non-distributable
reserve 15 - - 1,193 (1,193) - - -
Recognition of
distributable
reserve 15 - - (1,194) 1,194 - - -
Other changes in
equity - - - (299) (299) - (299)
Interim dividends
paid 8 - - - (47,290) (47,290) - (47,290)
At 31 December
2021/1
January 2022 13,447 315,916 52,690 58,754 440,807 (4,909) 435,898
Profit for the ( 567
period - - - 18,824 18,824 ) 18,257
Change in fair
value - - - - - - -
of financial
assets
through OCI
---------- ------------- ---------- --------- --------- ---------------- ---------
Total
comprehensive ( 567
income - - - 18,824 18,824 ) 18,257
Transactions with
owners
Issuance of share
capital 14 147 3,458 - - 3,605 - 3,605
Recognition of
share-based
payments 15 - - 178 - 178 - 178
Recognition of
depletion
factor 15 - - 12,800 (12,800) - - -
Recognition of
non-distributable
reserve 15 - - 316 (316) - - -
Recognition of
distributable
reserve 15 - - 2,726 (2,726) - - -
Other changes in
equity - - - 16 16 - 16
( 5,476
At 31 March 2021 13,594 319,374 68,710 61,752 463,430 ) 457,954
========== ============= ========== ========= ========= ================ =========
(1) The share premium reserve is not available for
distribution
The notes on pages 16 to 37 are an integral part of these
unaudited condensed interim consolidated financial statements.
Interim Consolidated Statements of Cash Flows
(All amounts in Euro thousands unless otherwise stated)
For the three months period ended 31 March 2022 and 2021 - (Unaudited)
Three Three
months months
ended ended
(Euro 000's) Notes 31 March 31 March
2022 2021
Cash flows from operating activities
Profit before tax 21,450 41,347
Adjustments for:
Depreciation of property, plant and equipment 9 6,489 7,611
Amortisation of intangibles 10 1,031 1,333
Recognition of share-based payments 15 178 154
Interest income 5 (1) -
Interest expense 5 238 76
Legal provisions 17 - 2,529
Unwinding of discounting 17 73 -
Net foreign exchange differences 3 (2,573) 2,931
Unrealised foreign exchange loss on financing
activities 44 83
========== ==========
Cash inflows from operating activities
before working capital changes 26,929 50,202
Changes in working capital:
Inventories 11 (13,028) 3,280
Trade and other receivables 12 5,177 (8,954)
Trade and other payables 16 9,660 (9,517)
Cash flows from operations 28,738 35,011
Interest expense on lease liabilities 5 (5) (7)
Interest paid 5 (238) (76)
Tax paid (197) (1,056)
Net cash from operating activities 28,298 36,803
========== ==========
Cash flows from investing activities
Purchase of property, plant and equipment 9 (7,251) (10,847)
Purchase of intangible assets 10 (302) (83)
Payment of deferred consideration 20 - (53,000)
Interest received 5 1 -
========== ==========
Net cash used in investing activities (7,552) (63,930)
========== ==========
Cash flows from financing activities
Lease payments 19 (160) (161)
Proceeds from borrowings 18 (5,822) 53,015
Proceeds from issuance of shares 15 3,604 94
Net cash flows from financing activities (2,378) (52,948)
Net increase in cash and cash equivalents 18,368 22,890
Net foreign exchange difference 3 2,573 2,931
Cash and cash equivalents :
At beginning of the period 107,517 37,767
========== ==========
At end of the period 128,458 63,588
========== ==========
The notes on pages 16 to 37 are an integral part of these
unaudited condensed interim consolidated financial statements.
Notes to the Unaudited Condensed Interim Consolidated Financial
Statements
(All amounts in Euro thousands unless otherwise stated)
For the three months period ended 31 March 2022 and 2021 -
(Unaudited)
1. Incorporation and Summary of Business
Country of incorporation
Atalaya Mining Plc (the "Company") was incorporated in Cyprus on
17 September 2004 as a private company with limited liability under
the Companies Law, Cap. 113 and was converted to a public limited
liability company on 26 January 2005. Its registered office is at 1
Lampousa Street, Nicosia, Cyprus.
The Company was listed on AIM of the London Stock Exchange in
May 2005 under the symbol ATYM and on the TSX on 20 December 2010
under the symbol AYM. The Company continued to be listed on AIM and
the TSX as at 31 March 2022.
Additional information about Atalaya Mining Plc is available at
www.atalayamining.com as per requirement of AIM rule 26.
Change of name and share consolidation
Following the Company's Extraordinary General Meeting ("EGM") on
13 October 2015, the change of name from EMED Mining Public Limited
to Atalaya Mining Plc became effective on 21 October 2015. On the
same day, the consolidation of ordinary shares came into effect,
whereby all shareholders received one new ordinary share of nominal
value Stg GBP0.075 for every 30 existing ordinary shares of nominal
value Stg GBP0.0025.
Principal activities
Atalaya is a European mining and development company. The
strategy is to evaluate and prioritise metal production
opportunities in several jurisdictions throughout the well-known
belts of base and precious metal mineralisation in Spain, elsewhere
in Europe and Latin America.
The Group currently controls four mining projects: Proyecto
Riotinto, Proyecto Touro, Proyecto Masa Valverde and Proyecto Ossa
Morena. In addition, the Group has an earn-in agreement to acquire
three investigation permits at Proyecto Riotinto Este.
Proyecto Riotinto
The Company owns and operates through a wholly owned subsidiary,
"Proyecto Riotinto", an open-pit copper mine located in the Iberian
Pyrite Belt, in the Andalusia region of Spain, approximately 65 km
northwest of Seville. A brownfield expansion of this mine was
completed in 2019 and successfully commissioned by Q1 2020.
Proyecto Touro
The Group has an initial 10% stake in Cobre San Rafael, S.L.,
the owner of Proyecto Touro, as part of an earn-in agreement which
will enable the Group to acquire up to 80% of the copper project.
Proyecto Touro is located in Galicia, north-west Spain. Proyecto
Touro is currently in the permitting process.
In November 2019, Atalaya executed the option to acquire 12.5%
of Explotaciones Gallegas del Cobre, S.L. the exploration property
around Touro, with known additional reserves, which will provide
high potential to the Proyecto Touro.
Proyecto Masa Valverde
On 21 October 2020, the Company announced that it entered into a
definitive purchase agreement to acquire 100% of the shares of
Cambridge Mineria España, S.L. (since renamed Atalaya Masa
Valverde, S.L.U.), a Spanish company which fully owns the Masa
Valverde polymetallic project located in Huelva (Spain). Proyecto
Masa Valverde is currently in the permitting process.
Proyecto Riotinto Este
In December 2020, Atalaya entered into a Memorandum of
Understanding with a local private Spanish company to acquire a
100% beneficial interest in three investigation permits (known as
Peñas Blancas, Cerro Negro and Herreros investigation permits),
which cover approximately 12,368 hectares and are located
immediately east of Proyecto Riotinto.
Proyecto Ossa Morena
In December 2021, Atalaya announced the acquisition of a 51%
interest in Rio Narcea Nickel, S.L., which owns 17 investigation
permits. The acquisition also provided a 100% interest in three
investigation permits that are also located along the Ossa- Morena
Metallogenic Belt.
2. Basis of Preparation and Accounting Policies
2.1 Basis of preparation
(a) Overview
These condensed interim financial statements are unaudited.
The unaudited interim condensed consolidated financial
statements for the period ended 31 March 2022 have been prepared in
accordance with International Accounting Standards 34: Interim
Financial Reporting. IFRS comprise the standard issued by the
International Accounting Standard Board ("IASB"), and IFRS
Interpretations Committee ("IFRICs") as issued by the IASB.
Additionally, the unaudited interim condensed consolidated
financial statements have also been prepared in accordance with the
IFRS as adopted by the European Union (EU), using the historical
cost convention.
These unaudited interim condensed consolidated financial
statements include the financial statements of the Company and its
subsidiary undertakings. They have been prepared using accounting
bases and policies consistent with those used in the preparation of
the consolidated financial statements of the Company and the Group
for the year ended 31 December 2021. These unaudited interim
condensed consolidated financial statements do not include all the
disclosures required for annual financial statements, and
accordingly, should be read in conjunction with the consolidated
financial statements and other information set out in the Group's
annual report for the year ended 31 December 2021. The accounting
policies are unchanged from those disclosed in the annual
consolidated financial statements for the year ended 31 December
2021.
(b) Going concern
These unaudited condensed interim consolidated financial
statements have been prepared based on accounting principles
applicable to a going concern which assumes that the Group will
realise its assets and discharge its liabilities in the normal
course of business. Management has carried out an assessment of the
going concern assumption and has concluded that the Group will
generate sufficient cash and cash equivalents to continue operating
for the next twelve months.
Management continues to monitor the impact of COVID 19 as well
as geopolitical developments. Currently no significant impact is
expected in the operations of the Group.
2.2 New standards, interpretations and amendments adopted by the
Group
The accounting policies adopted in the preparation of the
unaudited condensed interim consolidated financial statements are
consistent with those followed in the preparation of the Group's
annual consolidated financial statements for the year ended 31
December 2021, except for the adoption of new standards effective
as of 1 January 2022. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
Several amendments and interpretations apply for the first time
in 2022, but do not have a material impact on the unaudited
condensed interim consolidated financial statements of the
Group.
Reference to the Conceptual Framework - Amendments to IFRS 3
The amendments replace a reference to a previous version of the
IASB's Conceptual Framework with a reference to the current version
issued in March 2018 without significantly changing its
requirements.
The amendments add an exception to the recognition principle of
IFRS 3 Business Combinations to avoid the issue of potential 'day
2' gains or losses arising for liabilities and contingent
liabilities that would be within the scope of IAS 37 Provisions,
Contingent Liabilities and Contingent Assets or IFRIC 21 Levies, if
incurred separately. The exception requires entities to apply the
criteria in IAS 37 or IFRIC 21, respectively, instead of the
Conceptual Framework, to determine whether a present obligation
exists at the acquisition date.
The amendments also add a new paragraph to IFRS 3 to clarify
that contingent assets do not qualify for recognition at the
acquisition date. These amendments had no impact on the interim
condensed consolidated financial statements of the Group as there
were no contingent assets, liabilities and contingent liabilities
within the scope of these amendments arisen during the period.
2. Basis of Preparation and Accounting Policies (cont.)
2.2 New standards, interpretations and amendments adopted by the
Group (cont.)
Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16
The amendment prohibits entities from deducting from the cost of
an item of property, plant and equipment, any proceeds of the sale
of items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner
intended by management. Instead, an entity recognises the proceeds
from selling such items, and the costs of producing those items, in
profit or loss.
These amendments had no impact on the interim condensed
consolidated financial statements of the Group as there were no
sales of such items produced by property, plant and equipment made
available for use on or after the beginning of the earliest period
presented.
IFRS 1 First-time Adoption of International Financial Reporting
Standards - Subsidiary as a first-time adopter
The amendment permits a subsidiary that elects to apply
paragraph D16(a) of IFRS 1 to measure cumulative translation
differences using the amounts reported in the parent's consolidated
financial statements, based on the parent's date of transition to
IFRS, if no adjustments were made for consolidation procedures and
for the effects of the business combination in which the parent
acquired the subsidiary. This amendment is also applied to an
associate or joint venture that elects to apply paragraph D16(a) of
IFRS 1.
These amendments had no impact on the interim condensed
consolidated financial statements of the Group as it is not a
first-time adopter.
IFRS 9 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when
assessing whether the terms of a new or modified financial
liability are substantially different from the terms of the
original financial liability. These fees include only those paid or
received between the borrower and the lender, including fees paid
or received by either the borrower or lender on the other's behalf.
There is no similar amendment proposed for IAS 39 Financial
Instruments: Recognition and Measurement. These amendments had no
impact on the interim condensed consolidated financial statements
of the Group as there were no modifications of the Group's
financial instruments during the period.
2.3 Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the reporting date.
The fair value of financial instruments traded in active
markets, such as publicly traded trading and other financial assets
is based on quoted market prices at the reporting date. The quoted
market price used for financial assets held by the Group is the
current bid price. The appropriate quoted market price for
financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
group uses a variety of methods, such as estimated discounted cash
flows, and makes assumptions that are based on market conditions
existing at the reporting date.
2. Basis of Preparation and Accounting Policies (cont.)
2.3 Fair value estimation (cont.)
Fair value measurements recognised in the consolidated statement
of financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, Grouped into Levels 1 to 3 based on the degree to which
the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Financial assets
(Euro 000's) Level 1 Level 2 Level 3 Total
31 March 2022
Other financial assets
Financial assets at FV through OCI 38 - 1,101 1,139
Trade and other receivables
Receivables (subject to provisional pricing) - 11,669 - 11,669
-------- -------- -------- -------
Total 38 11,669 1,101 12,808
-------- -------- -------- -------
31 December 2021
Other financial assets
Financial assets at FV through OCI 39 - 1,101 1,140
Trade and other receivables
Receivables (subject to provisional pricing) - 29,148 - 29,148
-------- -------- -------- -------
Total 39 29,148 1,101 30,288
-------- -------- -------- -------
2.4 Critical accounting estimates and judgements
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and
the accompanying disclosures, and the disclosure of contingent
liabilities at the date of the unaudited condensed interim
consolidated financial statements. Estimates and assumptions are
continually evaluated and are based on management's experience and
other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Uncertainty
about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or
liabilities affected in future periods.
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and a reliable estimate of the amount can be made. If
the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
A full analysis of critical accounting estimates and judgements
is set out in Note 3.3 of the 2021 audited consolidated financial
statements.
3. Business and Geographical Segments
Business segments
The Group has only one distinct business segment, being that of
mining operations, which include mineral exploration and
development.
Copper concentrates produced by the Group are sold to three
off-takers as per the relevant offtake agreement (Note 22.3). in
addition, the Group has spot agreements for the concentrates not
committed to off-takers.
Geographical segments
The Group's mining activities are located in Spain. The
commercialisation of the copper concentrates produced in Spain is
carried out through Cyprus. Sales transactions to related parties
are on an arm's length basis in a similar manner to transactions
with third parties. Accounting policies used by the Group in
different locations are the same as those contained in Note 2.
Cyprus Spain Other Total
(Euro 000's)
Three months ended 31 March 2022
Revenue 11,830 74,421 - 86,251
======== ========== ====== ==========
Earnings/(loss) Before Interest, Tax,
Depreciation and Amortisation (EBITDA) 8,967 17,752 (7) 26,712
Depreciation/amortisation charge - (7,520) - (7,520)
Net foreign exchange gain 1,170 1,403 - 2,573
Finance income - 1 - 1
Finance cost - (316) - (316)
==========
Profit/(loss) before tax 10,137 11,320 (7) 21,450
======== ========== ====== ==========
Tax (1,024) (2,169) - (3,193)
==========
Profit for the period 9,113 9,151 (7) 18,257
==========
Total assets 81,725 531,625 1,178 614,528
======== ========== ====== ==========
Total liabilities (2,617) (153,949) (8) (156,574)
======== ========== ====== ==========
Depreciation of property, plant and
equipment - 6,489 - 6,489
======== ========== ====== ==========
Amortisation of intangible assets - 1,031 - 1,031
======== ========== ====== ==========
Total additions of non-current assets - 18,876 - 18,876
======== ========== ====== ==========
Three months ended 31 March 2021
Revenue 14,954 82,426 97,380
======== ========== ====== ============
Earnings/(loss) Before Interest, Tax,
Depreciation and Amortisation (EBITDA) 12,590 34,869 (16) 47,443
Depreciation/amortisation charge - (8,944) - (8,944)
Net foreign exchange gain 555 2,374 2 2,931
Finance cost - (83) - (83)
-------- ---------- ------ ------------
Profit/(loss) before tax 13,145 28,216 (14) 41,347
-------- ---------- ------ ------------
Tax - (7,645) - (7,645)
======== ========== ====== ============
Profit for the period 33,702
Total assets 79,788 457,544 1,158 538,490
======== ========== ====== ============
Total liabilities (1,517) (152,778) (36) (154,331)
======== ========== ====== ============
Depreciation of property, plant and
equipment - 7,611 - 7,611
======== ========== ====== ============
Amortisation of intangible assets - 1,333 - 1,333
======== ========== ====== ============
Total additions of non-current assets - 17,588 - 17,588
======== ========== ====== ============
4. Revenues
Three months ended 31 March 2022 Three months ended
31 March 2021
(Euro 000's )
================================ ==================
Revenue from contracts with customers (1) 81,769 92,700
Fair value gains relating to provisional pricing within
sales (2) 4,482 4,680
================================ ==================
Total revenue 86,251 97,380
================================ ==================
All revenue from copper concentrate is recognised at a point in
time when the control of the product is transferred. Revenue from
freight services is recognised over time as the services are
provided.
(1) Included within Q1 2022 revenue, there is a transaction
price of EUR1.4 million (EUR0.3 million in Q1 2021) related to the
freight services provided by the Group to the customers arising
from the sales of copper concentrate under CIF incoterm.
(2) Provisional pricing impact represented the change in fair
value of the embedded derivative arising on sales of
concentrate.
5. Net Finance Costs
Three months Three
ended 31 months
(Euro 000's) March 2022 ended
31 March
2021
Interest expense:
Other interest (238) (76)
Unwinding of discount on mine rehab prov (73) -
Interest expense on lease liabilities (5) (7)
Interest income 1 -
(315) (83)
------------- ----------
6. Tax
The Group calculates the period income tax expense using the tax
rate that would be applicable to the expected total annual
earnings. The major components of income tax expense in the
unaudited interim condensed consolidated statement of profit or
loss are:
Three months ended 31 March 2022 Three months ended 31 March 2021
(Euro 000's)
Income taxes
Current income tax expense 3,193 7,645
Income tax expense recognised in statement of
profit and loss 3,193 7,645
--------------------------------- ---------------------------------
7. Earnings per share
The calculation of the basic and fully diluted profit per share
attributable to the ordinary equity holders of the Company is based
on the following data:
Three Three
months months
ended 31 ended
March 2022 31 March
(Euro 000's) 2021
Parent company (734) (368)
Subsidiaries 19,558 34,226
------------ ----------
Profit attributable to equity holders of
the parent 18,824 33,858
------------ ----------
Weighted number of ordinary shares for the
purposes of basic earnings per share (000's) 139,407 138,163
------------ ----------
Basic profit per share (EUR cents/share) 13.5 24.5
------------ ----------
Weighted number of ordinary shares for the
purposes of fully diluted earnings per share
(000's) 142,163 140,928
------------ ----------
Fully diluted profit per share (EUR cents/share) 13.2 24.0
------------ ----------
As at 31 March 2022, there are nil warrants (Note 14) and
2,341,000 options (Note 15) (31 March 2021: nil warrants and
2,746,250 options). Warrants and options are included when
calculating the weighted average number of shares for the
period.
8. Dividends paid
Cash dividends declared and paid during the period:
(Euro 000's) 31 Mar 2022 31 Mar 2021
Dividend - -
Total cash dividends paid in the period to ordinary shareholders - -
------------ ------------
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
Dividend Policy
On 27 October 2021, Atalaya initiated a sustainable dividend
policy that will allow for continued investments in its portfolio
of low capital intensity growth projects, such as the San Dionisio
deposit, Proyecto Masa Valverde, Proyecto Ossa Morena and Proyecto
Touro. The approved a Dividend Policy will set out an annual
pay-out of between 30% and 50% of free cash flow generated during
the applicable financial year.
The declaration and payment of all future dividends under the
new policy are subject to approval by the Board of Directors.
An inaugural dividend of US$0.395 per share was declared on 27
October 2021, and paid on 1 December 2021, totalling EUR47.3
million.
9. Property, Plant and Equipment
Right Deferred
(Euro 000's) of use Plant Assets mining
Land assets and under costs(2) Other
and buildings (5) machinery construction(3) assets(1) Total
Cost
At 1 January
2021 64,034 6,569 268,051 15,828 41,868 801 397,151
Additions 43 - 1,621 4,990 4,236 - 10,890
Reclassifications - - 587 (587) - - -
At 31 March
2021 64,077 6,569 270,259 20,231 46,104 801 408,041
Additions 227 507 320 15,396 5,563 - 22,013
Increase in
rehab. Provision 655 - - - - - 655
Reclassifications - - 12,767 (12,767) - - -
Advances 44 - - - - - 44
At 31 December
2021 65,003 7,076 283,346 22,860 51,667 801 430,753
2,383
Additions (4) - 244 3,950 671 - 7,248
Reclassifications - - 2,376 (2,376) - - -
Increase in
rehab. Provision 54 - - - - - 54
Advances 3
At 31 March
2022 67,443 7,076 286,326 24,074 52,338 801 438,058
--------------- --------- ----------- ------------------- ----------- ----------- --------
Depreciation
At 1 January
2021 11,671 956 48,134 - 8,528 688 69,977
Charge for the
period 1,176 148 5,552 - 728 7 7,611
At 31 March
2021 12,847 1,104 53,686 - 9,256 695 77,588
Charge for the
period 3,719 442 14,305 - 2,124 19 20,069
At 31 December
2021 16,026 1,546 67,991 - 11,380 714 97,657
Charge for
the period 1,001 140 4,466 - 875 7 6,489
At 31 March
2022 17,027 1,686 72,457 - 12,255 721 104,146
--------------- --------- ----------- ------------------- ----------- ----------- --------
Net book value
At 31 March
2022 50,416 5,390 213,869 24,074 40,083 80 333,912
--------------- --------- ----------- ------------------- ----------- ----------- --------
At 31 December
2021 48,977 5,530 215,355 22,860 40,287 87 333,096
--------------- --------- ----------- ------------------- ----------- ----------- --------
(1) Includes motor vehicles, furniture, fixtures and office
equipment which are depreciated over 5-10 years.
(2) Stripping costs
(3) Assets under construction at 31 March 2022 were EUR24.1
million (2021: EUR20.2 million) which include sustaining capital
expenditures and tailings dams project.
(4) Increase in lands related with the acquisition of lands
surround Riotinto District.
(5) See leases in Note 19.
The above fixed assets are mostly located in Spain.
10. Intangible Assets
(Euro 000's) Licences,
R&D and
Permits software Total
Cost
At 1 January 2021 78,210 8,595 86,805
Additions - 83 83
At 31 March 2021 78,210 8,678 86,888
Additions 2,148 (1) (83) 2,065
At 31 December 2021 80,358 8,595 88,953
Additions 302 - 302
At 31 March 2022 80,660 8,595 89,255
---------- ------------ --------
Amortisation
On 1 January 2021 18,683 8,306 26,989
Charge for the period 1,316 17 1,333
At 31 March 2021 19,999 8,323 28,322
Charge for the period 3,215 48 3,263
At 31 December 2021 23,214 8,371 31,585
Charge for the period 1,015 16 1,031
At 31 March 2022 24,229 8,387 32,616
---------- ------------ --------
Net book value
At 31 March 2022 56,431 208 56,639
---------- ------------ --------
At 31 December 2021 57,144 224 57,368
---------- ------------ --------
(1) Additions of Q1 2021 resulted from the acquisition of 51% of Rio Narcea Nickel SL
The ultimate recovery of balances carried forward in relation to
areas of interest or all such assets including intangibles is
dependent on successful development, and commercial exploitation,
or alternatively the sale of the respective areas.
The Group conducts impairment testing on an annual basis unless
indicators of impairment are not present at the reporting date. In
considering the carrying value of the assets at Proyecto Riotinto,
including the intangible assets and any impairment thereof, the
Group assessed that no indicators were present as at 31 March 2022
and thus no impairment has been recognised.
11. Inventories
(Euro 000's) 31 Mar 31 Dec
2022 2021
Finished products 14,618 5,185
Materials and supplies 20,785 18,216
Work in progress 2,406 1,380
------- -------
37,809 24,781
------- -------
As of 31 March 2022, copper concentrate produced and not sold
amounted to 9,904 tonnes (31 Dec 2021: 5,254 tonnes). Inventory for
copper concentrate is valued at cost and was EUR14.6 million as at
31 March 2022 (31 Dec 2021: EUR5.2 million).
Materials and supplies relate mainly to machinery spare parts.
Work in progress represents ore stockpiles, which is ore that has
been extracted and is available for further processing.
12. Trade and Other Receivables
(Euro 000's) 31 Mar 31 Dec
2022 2021
Non-current
Deposits 304 303
Loans 6,639 2,332
Other non-current receivables - long term
deposits 2,695 2,695
------- ---------
9,638 5,330
------- ---------
Current
Trade receivables at fair value - subject
to provisional pricing 11,669 8,865
Trade receivables from shareholders at fair
value - subject to provisional pricing (Note
22.3) - 20,283
Other receivables from related parties at
amortised cost (Note 22.3) 56 56
Deposits 21 21
VAT receivable 23,077 17,300
Tax advances 9 -
Prepayments 4,280 3,303
Other current assets 1,939 300
------- ---------
41,051 50,128
Allowance for expected credit losses - -
------- ---------
Total current trade and other receivables 50,689 55,458
------- ---------
Trade receivables are shown net of any interest applied to
prepayments. Payment terms are aligned with offtake agreements and
market standards and generally are 7 days on 90% of the invoice and
the remaining 10% at the settlement date which can vary between 1
to 5 months. The fair values of trade and other receivables
approximate to their book values.
Non-current deposits included EUR250k (EUR250k at 31 December
2021) as a collateral for bank guarantees, which was recorded as
restricted cash (or deposit). Restricted cash related to the
collateral was reclassified to noncurrent trade and other
receivables since the deposit is considered to be long term.
Loans are related to an agreement entered by the Group and Lain
Technologies Ltd in relation to the construction of the pilot plan
to develop the E-LIX System. The Loan is secured with the pilot
plant, has a grace period of up to four years and repayment terms
depending on future investments on the system. Amounts withdrawn
bears interest at 2%
13. Cash and cash equivalents
( Euro 000's ) 31 Mar 2022 31 Dec 2021
Unrestricted cash and cash equivalents at Group level 69,985 48,375
Unrestricted cash and cash equivalents at Operation level 43,053 43,722
Restricted cash and cash equivalents at Operation level 15,420 15,420
Consolidated cash and cash equivalents 128,458 107,517
------------ ------------
13. Cash and cash equivalents (cont.)
As at 31 March 2022, the Group's operating subsidiary held
Restricted cash of EUR15.4 million for paying interest to Astor
under the Master Agreement. Following the hearing of 6 May 2022,
the Company has transferred a total amount of EUR10.7 million. The
majority of the balance (less GBP280,000) will revert to the
Company and will be classified as unrestricted cash. See more
details in Deferred Consideration note 20.
Cash and cash equivalents denominated in the following
currencies:
(Euro 000's) 31 Mar 2022 31 Dec 2021
------------ ------------
Euro - functional and presentation currency 38,155 30,145
Great Britain Pound 2,903 36
United States Dollar 87,400 77,336
============ ============
128,458 107,517
============ ============
14. Share Capital and Share Premium
Shares Share Capital Share premium Total
000's StgGBP'000 StgGBP'000 StgGBP'000
Authorised
Ordinary shares of Stg
GBP0.075 each* 200,000 15,000 - 15,000
--------- ---------------- ---------------- -------------
Issued and fully paid
000's Euro 000's Euro Euro
000's 000's
Issue Date Price Details
(GBP)
31 December 2020/1 January
2021 138,141 13,439 315,714 329,153
Exercised share
12 Feb 2021 2.015 options (a) 41 4 91 95
Balance at 31 March 2021 138,182 13,443 315,805 329,248
Exercised share
18 May 2021 2.015 options(b) 20 1 45 46
Exercised share
18 May 2021 1.475 options(b) 10 1 15 16
Exercised share
15 Dec 2021 1.475 options(c) 9 2 43 45
Exercised share
15 Dec 2021 2.015 options(c) 15 - 8 8
31 December 2021/1 January 2022 138,236 13,447 315,916 329,363
======== ============= ======== ========
Exercised share
22 Jan 2022 1.440 options(d) 314 28 512 540
Exercised share
22 Jan 2022 2.015 options(d) 321 29 746 775
Exercised share
22 Jan 2022 2.045 options(d) 400 36 941 977
Exercised share
22 Jan 2022 1.475 options(d) 451 42 754 796
Exercised share
22 Jan 2022 3.090 options(d) 134 12 505 517
31 March 2022 139,857 13,594 319,374 332,968
======== ============= ======== ========
14. Share Capital and Share Premium (cont.)
Authorised capital
The Company's authorised share capital is 200,000,000 ordinary
shares of Stg GBP0.075 each.
Issued capital
2022
(a) On 26 January 2022, the Company announced that is was
notified that PDMRs exercised a total of 1,300,000 options. Further
details (including details of sales of shares following the
exercise of options) are given in Note 25.
2021
(b) On 12 February 2021, the Company was notified that certain
employees exercised options over 40,750 ordinary shares of GBP0.075
at a price of GBP2.015, thus creating a share premium of
EUR91k.
(c) On 18 May 2021, the Company was notified that certain
employees exercised options over 30,000 ordinary shares of GBP0.075
at a price between GBP1.475 and GBP2.015, thus creating a share
premium of EUR61k.
(d) On 15 December 2021, the Company was notified that certain
employees exercised options over 24,500 ordinary shares of GBP0.075
at a price between GBP1.475 and GBP2.015, thus creating a share
premium of EUR50k.
Warrants
As at 31 March 2022 and 2021, there were no warrants.
15. Other Reserves
Fair
(Euro 000's) value Non-Distributable
reserve reserve(3) Distributable
Depletion of reserve(4)
factor(1) financial
assets
Share Bonus at FVOCI
option share (2) Total
----------- ------------------- ---------------
At 1 January
2021 8,187 208 25,033 (1,100) 5,628 2,093 40,049
Recognition
of depletion
factor - - 6,100 - - - 6,100
Recognition
of
non-distributable
reserve - - - - 1,179 - 1,179
Recognition
of distributable
reserve - - - - - 4,510 4,510
Recognition
of share based
payments 154 - - - - - 154
Change in
fair value
of financial
assets at
fair value
through OCI - - - 9 - - 9
At 31 March
2021 8,341 208 31,133 (1,091) 6,807 6,603 52,001
Recognition
of depletion
factor - - (6,155) - - - 6,155
Recognition
of share based
payments 745 - - - - - 745
Change in
fair value
of financial
assets at
fair value
through OCI - - - (56) - - (56)
Recognition
of
non-distributable
reserve - - - - 1,193 - 1,193
Recognition
of distributable
reserve - - - - - 4,962 4,962
----------- ------------------- ---------------
At 31 December
2021 9,086 208 24,978 (1,147) 8,000 11,565 52,690
Recognition
of share based
payments 178 - - - - - 178
Recognition
of depletion
factor - - 12,800 - - - 12,800
Recognition
of
non-distributable
reserve - - - - 316 - 316
Recognition
of distributable
reserve - - - - - 2,726 2,726
Change in
fair value
of financial - - - - - - -
assets at
fair value
through OCI
At 31 March
2021 9,264 208 37,778 (1,147) 8,316 14,291 68,710
------- ------- ----------- ----------- ------------------- --------------- ---------
(1) Depletion factor reserve
At 31 March 2022, the Group has recognised EUR12.8 million
(disposed EUR6.2 million at 31 March 2021) as a depletion factor
reserve in order to fulfil with the Spanish Corporate Tax Act.
(2) Fair value reserve of financial assets at FVOCI
The Group has elected to recognise changes in the fair value of
certain investments in equity securities in OCI, as explained in
(1) above. These changes are accumulated within the FVOCI reserve
within equity. The Group transfers amounts from this reserve to
retained earnings when the relevant equity securities are
derecognised.
(3) Non-distributable reserve
To comply with Spanish Law, the Group needed to record a reserve
when profit generated equal to a 10% of profit/(loss) for the year
until 20% of share capital is reached.
(4) Distributable reserve
The Group reclassified 10% of the profit of 2021 to
distributable reserves.
15. Other Reserves (cont.)
In general terms, share option agreements contain provisions
adjusting the exercise price in certain circumstances including the
allotment of fully paid ordinary shares by way of a capitalisation
of the Company's reserves, a subdivision or consolidation of the
ordinary shares, a reduction of share capital and offers or
invitations (whether by way of rights issue or otherwise) to the
holders of ordinary shares.
Details of share options outstanding as at 31 March 2022:
Grant date Expiry date Exercise price GBP Share options
=================================== ====================== =================== ==============
29 May 2019 28-May-2024 2.015 666,500
30 June 2020 29 June 2030 1.475 538,500
24 June 2021 23 June 2031 3.090 1,016,000
26 January 2022 25 January 2032 4.160 120,000
==============
Total 2,341,000
==============
Weighted average
exercise price GBP Share options
==================== ===================================
At 1 January 2022 2.154 3,841,750
Granted options during the year 4.160 120,000
Options executed during the year 2.015 (1,620,750)
31 March 2022 2.467 2,341,000
===================================
16. Trade and Other Payables
(Euro 000's) 31 Mar 2022 31 Dec 2021
Non-current
Other noncurrent payables 3,435 3,435
Government grant 15 15
------------ ------------
3,450 3,450
------------ ------------
Current
Trade payables 59,745 49,712
Accruals 15,907 16,267
VAT payable 61 74
Other 136 138
75,849 66,191
------------ ------------
Other non-current payables are related with the acquisition of
Atalaya Masa Valverde, SLU formerly Cambridge Minería España, SL
and Rio Narcea Nickel, SL
Trade payables are mainly for the acquisition of materials,
supplies and other services. These payables do not accrue interest
and no guarantees have been granted. The fair value of trade and
other payables approximate their book values.
Accruals included an interest payable amounted to EUR11.7
million for the Group representing the interest calculation
proposed by Astor.
Trade payables are non-interest-bearing and are normally settled
on 60-day terms.
17. Provisions
Rehabilitation
(Euro 000's) Legal costs Total
costs costs
1 January 2021 626 24,638 25,264
Additions 2,617 43 2,660
Reversal of provision (88) - (88)
At 31 March 2021 3,155 24,681 27,836
Additions - 612 278
Used of provision (286) - (286)
Revision of provision (2,590) (57) (2,647)
Finance cost - 1,063 1,063
-------- --------------- --------
At 31 December 2021 279 26,299 26,578
Additions - - -
Revision of provision - 54 54
Finance costs - 73 73
At 31 March 2022 279 26,426 26,705
-------- --------------- --------
(Euro 000's) 31 Mar 31 Dec
2022 2021
Non-current 26,705 27,836
Total 26,705 27,836
------- -------
Rehabilitation provision
Rehabilitation provision represents the accrued cost required to
provide adequate restoration and rehabilitation upon the completion
of production activities. These amounts will be settled when
rehabilitation is undertaken, generally over the project's
life.
The discount rate used in the calculation of the net present
value of the liability as at 31 March 2022 was 1.12% (2021: 1.36%),
which is the average of the 15-year Spain Government Bond rate from
2017 to 2021. An inflation rate of 1%-1.96% is applied on annual
basis.
Legal provision
The Group has been named a defendant in several legal actions in
Spain, the outcome of which is not determinable as at 31 March
2022. Management has individually reviewed each case and made a
provision of EURnil (EUR2.6 million at 31 Mar 2021) for these
claims, which has been reflected in these unaudited condensed
interim consolidated financial statements.
18. Borrowings
(Euro 000's) 31 Mar 31 Dec
2022 2021
Non-current borrowings
Credit facilities 34,050 34,050
------- -------
34,050 34,050
------- -------
Current borrowings
Credit facilities 7,572 13,394
7,572 13,394
------- -------
The Group had uncommitted credit facilities risks totalling
EUR98.8 million. During 2022, Atalaya drawn down some of its
existing credit facilities to pay the Deferred Consideration (Note
20). Interest rates of existing credit facilities, including
facilities used to pay the Deferred Consideration, range from 1.60%
to 2.45% and the average interest rate on all facilities used and
unused is 1.79%. The maximum term of the facilities is three years.
All borrowings are unsecured.
At 31 March 2022, the Group had used EUR41.6 million of its
facilities and had undrawn facilities of EUR57.2 million.
19. Lease liabilities
(Euro 000's) 31 Mar 2022 31 Dec 2021
Non-current
Leases 4,758 4,913
4,758 4,913
------------ ------------
Current
Leases 591 597
591 597
------------ ------------
Finance leases
The Group entered into lease arrangements for the renting of
land and building, laboratory equipment and vehicles which are
subject to the adoption of all requirements of IFRS 16 Leases. The
Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12
months or less and leases of low-value assets. Depreciation expense
regarding leases amount to EUR0.1 million (Q1 2021: EUR0.3million)
for the three month period ended 31 March 2022. The duration of the
land and building lease is for a period of twelve years. Payments
are due at the beginning of the month escalating annually on
average by 1.5%. At 31 March 2022, the remaining term of this lease
is eleven and half years.
The duration of the motor vehicle and laboratory equipment lease
is for a period of four years, payments are due at the beginning of
the month escalating annually on average by 1.5%. At 31 March 2022,
the remaining term of this motor vehicle and laboratory equipment
lease is nine months and one and half years respectively.
(Euro 000's) 31 Mar 31 Dec
2022 2021
Minimum lease payments due:
* Within one year 591 597
* Two to five years 1,990 2,014
* Over five years 2,779 2,899
Present value of minimum lease payments
due 5,360 5,510
------- -------
(Euro 000's) Lease liability
Balance 1 January 2022 5,510
Additions -
Interest expense 5
Lease payments (155)
Balance at 31 March 2022 5,360
----------------
Balance at 31 March 2022
* Non-current liabilities 4,769
* Current liabilities 591
----------------
5,360
----------------
20. Deferred Consideration
In September 2008, the Group moved to 100% ownership of Atalaya
Riotinto Mineral S.L. ("ARM") (and thus full ownership of Proyecto
Riotinto) by acquiring the remaining 49% of the issued capital of
ARM. At the time of the acquisition, the Group signed a Master
Agreement (the "Master Agreement") with Astor Management AG
("Astor") which included a deferred consideration of EUR43.9
million (the "Deferred Consideration") payable as consideration in
respect of the acquisition among other items. The Company also
entered into a credit assignment agreement at the same time with a
related company of Astor, Shorthorn AG, pursuant to which the
benefit of outstanding loans was assigned to the Company in
consideration for the payment of EUR9.1 million to Shorthorn (the
"Loan Assignment").
The Master Agreement was the subject of litigation in the High
Court and the Court of Appeal that concluded in November 2018. As a
consequence, ARM was obliged to any excess cash (after payment of
operating expenses, sustaining capital expenditure, any senior debt
service requirements and up to US$10 million per annum (for
non-Proyecto Riotinto related expenses)) to pay the consideration
due to Astor (including the Deferred Consideration and the amount
of EUR9.1 million payable under the Loan Assignment). "Excess cash"
was not defined in the Master Agreement leaving ambiguity as to how
it was to be calculated.
On 2 March 2020, the Company filed an application in the High
Court to seek clarity on the definition of "Excess Cash". Following
the filing of the statements of case for the trial, Astor applied
to Court seeking an early determination (without the need for a
full trial) of the dispute in relation to the "Excess Cash" (the
"Summary Judgment application"). The Summary Judgment application
was heard on 14-15 June 2021. The Court dismissed Astor's
application meaning the proceedings would continue. The trial was
heard from 21 February 2022 (the "Trial").
As at 31 December 2020, no consideration was paid to Astor.
However, during December 2020 the Board had discussions and
considered an early payment of the Deferred Consideration and the
Loan Assignment provided certain conditions could be met.
Conditions included among others the execution of credit facilities
agreements to fund the payment.
In March 2021, the Company fulfilled all conditions required by
the Board and made the early payment of EUR53 million to Astor. The
payment was fully funded by unsecured credit facilities.
The payment of the Deferred Consideration did not end the
ongoing litigation as the issue as to whether any residual interest
may or may not be payable remained unresolved. On 15 July 2021, the
Company transferred EUR15.4 million to the Company's solicitors
representing the full amount of interest claimed by Astor (as at
that date) to 30 June 2022. The Company's solicitors provided an
undertaking to Astor's solicitors to hold the full amount until
settlement of the claim to interest or judgment following the
Trial. The Company understood the monies held on client account by
the Company's solicitors safeguarded the maximum outstanding
liability to Astor in relation to the Master Agreement. On that
basis, and because the Consideration has been paid in full in
accordance with the Master Agreement, the Company treated itself as
free of the obligations set out at clauses 6(g)(iv)(A) and
6(g)(iv)(B) in the Master Agreement.
On 21 March 2022, further to the Trial which took place between
21 February and 1 March 2022, Judgment was handed down. The
Judgment deals with matters of principle. It was left to the
parties to calculate the amount of interest that is payable on the
basis of the Judge's conclusions. On 7 and 8 April 2022, the
Company made an initial payment of EUR9.6 million from the
solicitors' client account it had established in July 2021.
A consequential hearing was held on 6 May 2022 dealing with (i)
the interest calculation; and (ii) Atalaya's application for
permission to appeal. As to (i), again the Court decided certain
matters of principle at the hearing and gave directions as to the
remaining issue to be resolved between the parties. As to (ii), the
Court denied Atalaya's application. Atalaya has a right to apply
for permission to appeal from the Court of Appeal.
The Company agreed a final payment amount of EUR1.1 million with
Astor which was paid on 16 May 2022 from its solicitors' client
account. Subject to the position on costs, the Company has now
discharged its liability to Astor in respect of 'Excess Cash' and
associated interest under the Master Agreement.
21. Acquisition, Incorporation and Disposal of Subsidiaries
2022
Acquisition and incorporation of subsidiaries
There were no acquisition or incorporation of subsidiaries
during the three months period ended 31 March 2022.
Disposals of subsidiaries
There were no disposals of subsidiaries during the three months
period ended 31 March 2022.
Wind-up of subsidiaries
On 4 January 2022, the subsidiary EMED Mining Spain, S.L. was
wound up.
2021
Acquisition and incorporation of subsidiaries
There were no acquisition nor incorporation of subsidiaries
during the three months period ended 31 March 2021.
Disposals of subsidiaries
There were no disposals of subsidiaries during the three months
period ended 31 March 2021.
Wind-up of subsidiaries
There were no operations wound up during the three months period
ended 31 March 2021.
22. Related Party Transactions
The following transactions were carried out with related
parties:
22.1 Compensation of key management personnel
The total remuneration and fees of Directors (including
Executive Directors) and other key management personnel was as
follows:
(Euro 000's) Three months Three months
ended ended
31 Mar 2022 31 Mar 2021
Directors' remuneration and fees 258 279
Share option-based benefits to directors 64 56
Key management personnel fees 141 142
Share option-based and other benefits to
key management personnel 61 65
------------ ------------
524 542
------------ ------------
22.2 Share-based benefits
The directors and key management personnel have not been granted
any options during the three-month period ended 31 March 2022 (Q1
2021: nil).
22. Related Party Transactions (cont.)
22.3 Transactions with related parties/shareholders
i) Transaction with shareholders
(Euro 000's ) Three months Three months
ended ended
31 Mar 2022 31 Mar 2021
============= =============
Trafigura- Revenue from contracts 8,218 21,875
Freight services - -
------------- ---------------
8,218 21,875
Gain / (losses) relating provisional pricing
within sales 1,395 (270)
------------- ---------------
9,613 21,605
============= ===============
ii) Period-end balances with related parties
(Euro 000's)
31 Mar 2022 31 Dec 2021
Receivables from related parties:
Recursos Cuenca Minera S.L. 56 56
Total (Note12) 56 56
------------- -------------
The above balances bear no interest and are repayable on
demand.
iii) Period-end balances with shareholders
(Euro 000's ) 31 Mar 2022 31 Dec 2021
Trafigura - Debtor balance- subject to
provisional pricing - 20,283
Total (Note 12) - 20,283
---------------- --------------
The above debtor balance arising from sales of goods and other
balances bear no interest and is repayable on demand.
23. Contingent Liabilities
Legal and administrative cases
In the normal course of business, the Group may be involved in
legal proceedings, claims and assessments. Such matters are subject
to many uncertainties, and outcomes are not predictable with
assurance. Legal fees for such matters are expensed as incurred and
the Group accrues for adverse outcomes as they become probable and
estimable.
24. Commitments
There are no minimum exploration requirements at Proyecto
Riotinto. However, the Group is obliged to pay local land taxes
which currently are approximately EUR235,000 per year in Spain and
the Group is required to maintain the Riotinto site in compliance
with all applicable regulatory requirements.
In 2012, ARM entered into a 50/50 joint venture with Rumbo to
evaluate and exploit the potential of the class B resources in the
tailings dam and waste areas at Proyecto Riotinto (mainly residual
gold and silver in the old gossan tailings). Under the joint
venture agreement, ARM will be the operator of the joint venture,
will reimburse Rumbo for the costs associated with the application
for classification of the Class B resources and will fund the
initial expenditure of a feasibility study up to a maximum of
EUR2.0 million. Costs are then borne by the joint venture partners
in accordance with their respective ownership interests.
25. Significant Events
he events in Ukraine from 24 February 2022 are impacting the
Global Economy but cannot yet be predicted in full. The main
concern now is the rising prices for energy, fuel and other raw
materials and rising inflation, which may affect household incomes
and business operating costs. The financial effect of the current
crisis on the Global Economy and overall business activities cannot
be estimated with reasonable certainty at this stage.
-- On 4 January 2022 the subsidiary EMED Mining Spain, S.L. was disposed.
-- On 6 January 2022, the Company announced the approval of the
construction of the first phase of an industrial scale plant
("Phase I") that utilises the E-LIX System ("E-LIX"), which will
produce high value copper and zinc metals from the complex sulphide
concentrates sourced from Proyecto Riotinto.
-- On 25 January 2022, the Company announced that it has
published a new document that provides additional disclosure on the
Company's comprehensive approach to Environmental, Social and
Governance matters.
-- On 26 January 2022, the Company announced that it was
notified that PDMRs executed options as follow:
- Alberto Lavandeira, Chief Executive Officer and Managing
Director of the Company executed 150,000 options. Following the
above transactions Mr. Lavandeira is interested in an aggregate of
430,000 ordinary shares of the Company representing 0.30% of the
current issued share capital.
- Enrique Delgado, General Manager of Proyecto Riotinto,
executed 550,000 options. Following the above transactions Mr.
Delgado was interested in an aggregate of 550,000 ordinary shares
of the Company at that date representing 0.39% of the current
issued share capital.
- César Sánchez, Chief Financial Officer, executed 650,000
options. Following the above transactions Mr. Sánchez was
interested in an aggregate of 650,000 ordinary shares of the
Company at that date representing 0.46% of the current issued share
capital.
-- On 27 January 2022, Atalaya announced that, in accordance
with the Company's Long Term Inventive Plan 2020, it has granted
120,000 share options an employee.
25. Significant Events (cont.)
-- On 3 February 2022, the Company announced the results of five
additional drill holes from its ongoing resource definition
drilling programme at Proyecto Masa Valverde ("PMV"). PMV is
located in southern Spain approximately 28 km to the south of
Atalaya's 15Mtpa mill at Proyecto Riotinto.
New drill results include best continuous copper intercept at
PMV to date: 125 metres at 1.19% Cu, including high grade intervals
of 12m at 2.29% Cu, 19m at 2.56% Cu and 15m at 2.27% Cu.
-- On 22 February 2022, the Company announced that it was
notified on 21 February 2022, that Cesar Sanchez and Enrique
Delgado, both persons discharging managerial responsibilities
("PDMR"), had sold 300,000 and 250,000 ordinary shares in Atalaya,
respectively, at a price of 440.0 pence per share.
Following the sale of these shares Mr Sanchez is interested in
an aggregate of 350,000 ordinary shares of the Company representing
0.250% of the current issued share capital. Mr. Delgado is
interested in an aggregate of 300,000 ordinary shares of Atalaya
representing 0.215% of the current issued share capital.
-- On 21 March 2022, further to the Trial which took place
between 21 February and 1 March 2022, the Judgment was handed down.
The Judgment deals with matters of principle. The points that the
Judge has decided will dictate the amount of interest that is
payable.
-- On 24 March 2022, Atalaya announced that Mr. Harry Liu has
stepped down as a Non-Executive Director of the Company with
immediate effect.
26. Events After the Reporting Period
-- On 4 April 2022, new shareholders of the Company, Newline
Insurance Company Limited, Brit Reinsurance (Bermuda) Limited, Brit
Syndicates Limited, Odyssey Reinsurance Company, acquired 5.08% of
voting rights.
-- On 4 April 2022, Allianz Global Investors GmbH, shareholder
of the Company, increased its % of voting rights from below 3% to
3.92%.
-- On 5 April 2022, Atalaya announced a new Mineral Resource
Estimate, prepared in accordance with CIM guidelines and disclosure
requirements of NI 43-101, for its 100% owned Proyecto Masa
Valverde.
-- On 7 April 2022, the Company noted the announcement on 1
April 2022 by ICBC Standard Bank Plc ("ICBCS") confirming the sale
of the entire holding of Yanggu Xiangguang Copper Co. Ltd ("XGC")
(via its subsidiary, Hong Kong Xiangguang International Holdings
Ltd), in Atalaya. The Company therefore understands that XGC has
ceased to be a shareholder.
-- On 13 April 2022, Atalaya announced new Mineral Resource
Estimates, prepared in accordance with CIM guidelines and
disclosure requirements of NI 43-101, for its San Dionisio and San
Antonio deposits.
-- On 25 April 2022, the Company announced the publication of
its inaugural Sustainability Report for the year ended 31 December
2021.
-- The 2021 Sustainability Report represents a key component of
the Company's ongoing commitment to enhancing its disclosure and
reporting. The report was prepared in accordance with Global
Reporting Initiative Sustainability Reporting Standards ("GRI
Standards") with the assistance of independent sustainability
consultancy ERM and was audited by EY.
-- On 4 May 2022, Allianz Global Investors GmbH, shareholder of
the Company, increased its % of voting rights from below 3.92% to
4.07%.
-- On 8 April 2022, the Company transferred EUR9.6 million to
Astor from the trust account already established by Atalaya on 15
July 2021.
26. Events After the Reporting Period (cont.)
-- A hearing in respect of the Astor litigation was held on 6
May 2022, further to which the calculation of the correct interest
arising under the Master Agreement was agreed between the parties.
Consequently, the Company paid the final amount out of an escrow
account held for that purpose. Subject to the position on costs,
the Company has now discharged its liability to Astor in respect of
'Excess Cash' and associated interest under the Master
Agreement.
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