Atalaya Mining Copper (LSE:ATYM) — Q2 and H1 2025 Financial Results

0:00 Good morning, and welcome to the ATALAYA Mining Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO, Aletho

0:32 Loendeira. Good morning. Hello. Good morning. Thank you very much, sir. It's a pleasure for me. Thank you for being here. It's a pleasure for me to be presenting the second quarter results and the first half results for 2025. With me I have Fesar Sampshet, that can answer any question that you may have at the end of the at the end of the session. And without that I'm going to go direct into the presentation that you see on the screen. It's in going through page six. We had a excellent quarter and an excellent first half of the year. As a result, mainly of good operations that we had already flagged.

1:23 Production of copper was 27,500 tons of copper during first half. And we did that with very low cash costs on the site and also with quite low all in sustaining cost, which includes investments that are carried in the operations and other things. So, as a result of this excellent first half of the year, we have decided to upgrade a little bit the guidance for the full year of 2025, increasing the low end of the Copper and also lowering a little bit our view of what's are the copper, production costs, cash costs up to 60 to $80 per pound, or all in cost of $3.10 to $330 per pound.

2:22 We are going to go into details a bit later, so I'm not going to be reading all these numbers of revenues, but it's important to say that the revenues were very consistent with what we had in the first quarter, during the second quarter. EBITDA was quite high, was with a new record for the company. Also slightly better than what we had in the first quarter. And, and we continued already excavating and and doing investments in in in stripping, in San Luisio, in Terra Corrado, basically to prepare the mind for for the future. And, we did all this keeping a excellent balance sheet with a net cash position of 70,000,000 Euros, which is around $85,000,000.

3:12 And, with a working capital surplus that we have not seen for some long time of over magnitude, which is well over a $100,000,000. And of course, don't have any long term debt, we don't have any hedging streams or anything like that. As a result of all that, we decided to give a dividend, which interim dividend which is higher than the previous one. And we also did some other things in the in the company. From the corporate point of view, we we appointed Fernando Ralf as General Manager of Rio Tinto, which institutes Enrique Del Rioardo, is semi retiring but still keeping a position in the company, which has been with us already in the last five or six years.

4:01 And we also named Tarlando in the Ariopa as a general manager of Proto Toro because we see that this project is going to be developed very soon, and this person has been responsible of part of the construction Rio Tinto, but also has been in in the construction phases of the of several miles in the in the world. Several other things that happened in in this during this quarter is that we were added to the FTSE two fifty index in May 7, which has allowed increase of visibility and liquidity in the company. And going through all the things, we we I think it's also on the board, we made some changes simply to reinforce the board for the future.

4:52 And this include the the retirement of Hussein Barba that had been with us over ten years. She's joining an excellent company now. And we we appointed Cody Gonzalez, Cody S. Gonzalez, who's a lady with quite a lot of experience in Spain, very well connected. And Heni Fall, which is is incredible background experience and track record in Anglo American copper, which we we believe they are going to be two in play very important roles in the future of our company. And with that, I will pass directly with highlights of of production. As we as we said before, the plant continue to operate very well. The plant has been running at 4,000,000 tons per year this quarter, same as previous quarter, which means that basically we are we are running at 16,000,000 tons per year capacity. And I remind you that this company, this this plant had been built by this company at 15,000,000 tons per year capacity. So, we are running at higher capacity.

6:00 We went through higher rates in the plant and that has been the key of production. This high grade also includes some oxidized material that has been found as an issue in the old workings. We are starting we are mining some areas close to the old workings, which means the recovery has been slightly lower. But at the end, what matters is the production of Copper, and the production of Copper was was quite good at 13,000, almost 200 tons of Copper were produced. And, a result of all this, in this next slide, you will see that we have a strong revenues driven by the excellent copper price, good production result, good sales, and also low costs of of low selling costs.

6:48 With these two ingredients and with good copper price and good control of our costs, we had a record EBITDA of over €50,000,000, which is is excellent. And of course this drove an increase in cash position for the company and a reformers of the balance sheet. The same thing we would say for for the whole half of the year. Half of the year, the profits are are €60,000,000, which is a huge increase almost more than over four times what we had in the similar year of '24. The EBITDA was over three times what we had in '24.

7:37 And and of course, the cash flow, of course, also like three times what we had in operating cash flow, what we had in '24. And that's including the fact that we continue to invest in the stripping of some initial, which you can see in in in several slides of this presentation, which includes 40 almost €42,000,000 during the the first half, which even higher than than the last year, but still the free cash flow has been excellent compared to the last year, which was negative in during the the first half of the year. Looking at the breakdowns of of our cash cost, you will see them in in page 10.

8:24 You will see that the the mining costs have been going down, processing costs have been going down due to the to the higher production, but not only due to the high production. In the mining, our mining costs have been going down from average of $2.20 per ton to $2 per ton due to shorter distance and diesel and higher productivity. And in in the processing, we also have experienced almost $1 per pound increase in the cost per ton due to the fact that we treated more tons, but we also have low electricity costs and we will go through to some big maintenance during this quarter, which the next big maintenance is planned for for this quarter. So, our site costs have been quite good, both in the per pound basis, but also in a per ton basis.

9:19 But what has been a big change is the the off-site costs. During this quarter, they were negative and actually basically neutral during the first half. And this is due to two reasons. First is the by product rates, silver price, with very good prices, and also good production of silver, which meant that we have higher by product rates than previous years, like 30% higher than previous years. But in addition to that, we also had the benefit. We started to enjoy the benefit of lower premium charges, which is half which means that our freight TCs and RCs are basically half of what they used to be.

10:06 And we expect this tendency in this freight driven charges to continue like that in the some years because there's a lack of of concentrate in the in the world that's that's very important. Important that, as you know, we always report all in sustaining costs and and there we incorporate cost, sustaining capital, capitalizes stripping. So whenever we produce more waste than it's in our average waste plan, we capitalize those costs but we always report them because at the end they are cash And and there we have a higher higher production of waste due to the fact that we now have the permits of San Dimitio, which means we no longer capitalize that. We will be no longer capitalizing that.

11:00 But during this quarter, we had a lot of that. All in, at the end, our all in costs were still around 40¢ per pound lower than than previous years. And all this in spite of the fact that we have a a unfavorable exchange rate of euro to to dollar, which moved from $10.05 to $1.15. So that's all our mining processing and site operating costs are in in euros, most of them. But even so, we had a favorable evolution of our all in sustaining costs. And we report this all in costs normally. We benchmark with with other companies to see if we are doing well or if it's just the world that's doing the same thing because the explosives are cheap or the diesel are cheap.

11:50 We see a continuous trend of our cost going down and sustaining and and and being under control under the $3.50 level, which we believe is the level where you need to be in order to be competitive because at the end, it's showing you what's the type of of copper price that you would be needing to enjoy in the future to to sanction new new new projects. So how are we looking at the the rest of '25? Well, we decided to upgrade a little bit the the production, because we are going to be treating likely, over six mill around 16,000,000 tons per year. The grade seems to be going well, although we expect to have slightly lower in the in the in the months to come in the second part.

12:40 But they still think we believe

12:43 we are safe that we are not going to be touching the the low end of the guidance, so we decided to increase it a little bit. And we maintain the upper upper guidance, upper range of the guidance just to be a bit conservative. In the costs, we also lowered our our cash cost by 10¢ and and 20 in the high end. Thinking again, being a little bit conservative, on the unfavorable unfavorable evolution of the euro dollar, which we expected to be there going into second part of of the year. We also lowered our capital investment. Some of them due to the fact that we are going to be, as I said before, not capitalizing those going forward in San Dionisio.

13:36 And another thing, reason is that we are going to be we have delayed a little bit some of the investments in Masha Valverde and in in the road around San Benicio, simply because the the delays in permitting have pushed the investment back, but none of this is affecting us in the future. So basically, some of them are saving, some of them are simply delayed. But we have increased all the the exploration expenditures due to the good results of some some Vasa Del Norte, and also what the the campaign that we want that we are planning in in Sweden, as well as some inspiration that we are going to be doing in around Toro, basically, ahead of our our what we believe is going to be the the startup.

14:28 Due to these good results and the good views that we see in the in the company for the rest of the year, the board has decided to to give a dividend that is 21% higher than the previous dividend of 4.4¢ per pound of euro, which is around, I would say, it's around two point something yield, which consistent to to the fact that that we want to return money to our shareholders, which I think so far we have almost given around $100,000,000 back since only since 2021. So and in addition to that, we still maintain a very healthy healthy balance sheet. So what's the where are we going to be focusing our efforts 25?

15:17 Well, more or less what we were doing, continue with San Dimitio. You can see in the screen 25 that we have already started as soon as we got the permits, taking away the Hill San Benicio. We're already taking a couple of two or three benches already there, we're moving very fast. And we expect to reach the good grades later in this year, beginning of this year of of fresh material. Right now, are mining in the bottom of that small pit where we are mining some material which is good but slightly lower rate. We will continue finalizing the road, most of it at the end of the of the end of this year, and we'll continue supporting our partner, Lain, in the LX system. The the plant is is working well and continuously, still not in the final positions to be to be breaking even.

16:10 But, what we can confirm is that the system works well and we simply need to to fine tune and debottleneck or they need to the to debottleneck the installation. An important thing will be that we will continue exploring and completing the exploration result of Massa Al Barde. Recently, about one month ago, we released the results of the campaign. In darker colors, you see the the the intercepts that they're going to be providing the the the copper material with very big areas of 2% copper, which means that this is and this is very coarse material with expected recoveries in our existing installations without having to make any significant modifications of the installations that that we have at at the Puritan two.

17:06 We will also start the ramp, and we plan to start the ramp subject to board approval in during this half of the year. The ramp will access first one of the deposits called Bahadales, but this is a high grade deposit but it's polymetallic. This will require a mill to treat the the zinc concentrates. But the the this ramp will be accessing the green area, which is the green, the Copper stone only. But also, will provide access to the red area, which is the poly metallic, which also contains Lead stink silver materials. So this will be an important focus. But of course, the important focus will be to continue with Toto. Toto, we we are very well advanced.

17:58 We like this project because it will provide with a modest capital investment of around €250,000,000, we'll provide a production of around $30,000 per sorry, 30,000 tons per per year, which means a capital intensity of 10,000, which is one third to to half of what's normal in any other project in the world due to the very, very good infrastructure and location of the of the project. It will also provide very good costs around 0.5 a dollar per pound less than than what we have in Rio Tinto. So you can easily see and judge what we do and what when we have rates of around point 42%, which is what we had in Rio Tinto.

18:48 But imagine that instead of having 80% recovery, like in Ruatinto, we have 90% recovery and we had a higher concentrate rate and higher payability and low penalties because it's a very clean concentrate and this is slightly softer. So what the bottom line of this is that the cash cost of of total could be around 0.5 a dollar per pound lower than what you would have at Rio Tinto. So you can judge by yourselves. How are we with this project? We are in the final stages of the environmental impact evaluation. The administration is is preparing lots of report from the different sectors. We have received almost all of them positive results, but we are still working with administration to, in, to respond to questions and doubts that they may have before providing the final final reports.

19:47 But we expect all this to to be finalized soon. Actually, we I can I can report back that the administration is not stopping in July, neither, our teams are stopping sorry, in August? So the teams are working in in August to finalize this, and we have we hope to have all these reports ready by September. So in the summary, Port 25, San Ignacio Working, Massa Del Verde development ramp, total permitting continue. ELX finalized the debottlenecking. San Antonio is a new deposit that you know. It's around four kilometer away from around Cerro Colorado, just directly east. It's a good grade polymetallic.

20:33 We are drilling that already. We'll update the market in the right moment, and then we'll continue with exploration because we have certain

20:40 certain areas that are quite interesting, we'll continue doing that. So in conclusion, our company, I mean, I'm not going to you all know this company, 50,000 range production, potential to double this this this production in in the next three years, low risk, good grades, stable jurisdiction, good team, good operators, now in the Futzet two fifty, one of the pure copper place, 800,000,000 in price value. This was before the hike in the share price today, but I think this is is quite logical because we have a excellent balance sheet and we are the employee paying dividends and we have a great future.

21:32 And with that, I think we'll open it for questions. And we have lots of other questions. I will try to reply as many as possible. That's great, Alberto. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via our investor dashboard. I'm Alberto Cesar. As you can see, we have received a number of questions for today's presentation. And, Alberto, if I may now hand back to you to take us through the q and a, and I'll pick up from you at the end. Thank you. Thanks. I will try to read all of them and reply to all of them. Pre submitted. Switzerland is a principal country to which ATALAYA sells their copper. What do the Swiss do with it? Well, this is just in principle is is kind of artificial because the traders that are buying our our our copper are based in Switzerland. So they probably it looks like it's it's it's going to Swiss companies, the reality is that this they are just traders and most of our copper goes to to China and Eastern area regions.

22:50 But also with some of these material going to Spain, the the smelter in in Huelva and to Europe in the in the smelters that are in Germany and Sweden. How does the Spanish government view the importance of copper in Spain contribution to that in the EU? Well well informed or close. Well, look, I don't think the government has any any special view on this in this situation. And they see it as a contributor. We are a good contributor, but not as big as other countries like like Poland and and Sweden. But what I can do is, I can say is that we are getting a lot of support specifically by the regional governments, are those that rule rule our our activities.

23:44 The dividend is rather less than half of what the annual dividend policy implies. Can you confirm your simply tell improved at the half of the year? Well, it's simply probably not very well explained, but the reality is that we always give an interim dividend first, then a second dividend. So this is roughly half of what we will give. Very likely, the next the next dividend will be if things continue, will be either like this one or or higher. We always give the dividends in two stages, interim and final. The Trump tariffs affect your results? No. Really, no. I think the Trump tariffs, I think what's affecting is the uncertainty on the market, which there's always fears of recessions and recessions are never good for copper for any things.

24:39 But besides that for us, they are not affecting us at all. I think the copper, what the copper is affected by consumption and by supply. Consumption seems to be going well in the Western countries and in China. We still consume around 50% of the market. And from the supply side, we have seen we have seen recently in the in the last few months some issues with supply, with seismic events, with earthquakes in in in Chile and in in Congo with production disappearing from and this is just telling you how difficult it is. The mines get deeper. This means a problem. Next question is how will total capital be financed? We have we have had already and we have reported that in several presentations, Oleg, so I'm not selling any anything new that that we already have three three offers offers from three banks in Spain for over a €150,000,000 to to finance total based on basically corporate loans of very good interest from three Spanish banks and two other in the queue. In addition to that, we have a good balance sheet as you see with over 100,000,000 in in cash and we continue to generate cash.

25:57 And on top of that, we have the interest from traders, smelters that are traders and smelters that are willing to finance the full amount of total in exchange of offtake agreements or in the way of rebates or with other type of of bills. We have several in writing from several of them. And in the right moment, we will announce what's the final formula. We will probably be a combination of of all the three. Could you please recap when you expect the copper production to double given the new price in the pipeline?

26:43 I think the production of copper plus copper equivalent, will need to have both total working and the polymetallic working, which means about three years from now. Maybe a little bit less, but three years from now. When will total stop producing and how long it will reach full production? If we get the permits at the end of this year, that project will be in production in in eighteen months, year and a half. So we will see production by mid twenty seven. And the ramp up should be very fast. If you look at our past presentations where you see the ramp up of different phases from ATYMTO in two or three months, we're in full production. This concentrate seems to be quite straightforward.

27:31 We have a team that has lots of experience. We will be training also the operators in our installations at Rio Tinto with very similar machines. So I think this will be very fast in two, three months we will be working. Copper concentrate market looks very tight. Why do you see this happening also in in h two twenty five and '26? Without any question, Marcos, without any question. This thing is is very tight. It's very likely going to be there like that. Not in two years, probably four years, and even we heard things of five years. Maybe not as as as tight as soon as we start getting some new production from new mines. The problem is that there are some new smelters being built in have been built in Indonesia, Congo, India, and China and and the mines have not followed.

28:22 So this is going to stay. And unless somebody starts closing the smelters and this is difficult if you, Europe and Australia, North America, if they started closing the smelters they are very difficult to reopen again and there's a real question mark of if Europe, North America, Australia wants to be in the hands of external third parties for for copper, which is required, as you know, for cables and and the big industry. We expect this thing to be very tight, really tight in the next years. Extremely tight.

29:12 There are talks about negative benchmarks for the future, which I don't think is a good thing, because it's almost you cannot ask all the smelters to lose money. But certainly better than we are now, which are already very good for us. Regarding NERLYNX, when will this start to mean fully benefit results, and how does this operation impact your approach to other polymer direct deposits? Well, I I don't know. I don't know because it's external to us. I expect them to be following what their guidance to be fully, let's say, breaking even and with the cost demonstrated during this year.

30:01 And then we will, we'll decide what we do with this. Our current thinking is that we will go with the safe route, which is flotation. Even in spite of lower recoveries, it would be good. So whatever will come from elix would be a plus. And they can be complementary because we could produce a higher recovery with a bulk of concentrate and then leach the product with elix in order to remove the copper or to remove the lead or or any of that good. It's very unlikely that we'll be producing copper because it's very difficult to compete with with this smelted treatment charges. So I think in 2026, that thing should be running.

30:59 And for us, it's very clear. It cannot be dragging cash. That's the instructions of the board. So if it doesn't work well with our ores and concentrates because we produce good results with without it, we'll not use it, but we can always use it with third parties material, which obviously we have to to make the return. I have a question here of returning cash to shareholders is great. However, since the corporate legislation to Spain, UK show shareholders are hit with 19% withholding tax on dividend payments, Share buybacks are therefore a much better strategy for shareholder returns.

31:48 Please advise the board strategy on buybacks. We have not we have discussed at the board the possibility of buybacks. At certain time, we had low we had low liquidity. We had low liquidity and didn't make too much sense. Now we may revisit again. Looking at at the 19% tax, I suppose this thing could be offset. So it's something that it's it's quite difficult to to for me to judge depends on the the who are the shareholders. But specifically looking at the buybacks, the board will revisit it, but right now, we are not considering that for the moment.

32:39 How should we think about grades over the next couple of years? The grades of couple of years will be equal or better than what we have right now. So, they will not be over 45%, so don't expect us to have 60,000, 65,000 tons of copper. But expect it to be higher than that due to the blend of some initial, which we have to be very careful to blend it because it contains lots of sulfides, so the it's a it's a quite a tricky task in the mill to maintain those grades known as constant without the foundation. But you will see it either equal or higher than what we have this year.

33:26 Are there any problems with water supply foreseen? Not at all. Actually, what we have is excess excess water. Up to the excess water we have. This year was we had double rain than we had in the in the past years. We have all our dams are full, the deposits are full. And actually, we always want to operate water. But we never know because we still have a rest of the summer, could be the autumn we don't have any rain. It has happened in other years. So, but this year and very likely with what the water we have, we will have more than enough to get to the next spring. Much more than we have never had in in the past. Whenever tow is fully working at ATALAYA, we'll be reaching c one cost below $2 per pound average and all the system same two fifty which is very competitive.

34:18 100% right. That's that's our goal. And also when as soon as we get the byproduct grades from zinc and so on, our cash cost are treated to be slightly lower. So absolutely a 100% our cash cost in the future. All in sustaining cost will be in the range of $22.50 level. That's great. If I may just jump in and thank you for addressing those questions questions for investors today. And, of course, the company can review your questions submitted today. I will publish those responses in the investment company platform. But, Albert de Fait, before I redirect investors to provide you with their feedback, which one is particularly important to the company, can I please just ask you for a few closing comments? Well, as usual, I only want to thank everybody for attending the presentation, especially in the holiday period, or at least in Spain, this holiday period and half of Europe also.

35:09 Thank you again for local for your support, our shareholders, the company. The company has gone through difficult periods, but we are very constant, and I think we are now getting the reward. So thank you again for your continued support, and see you next time in in three months from now. Fantastic. Thank you, Anne, again, for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of ATALAYA MINING, we would like to thank you for attending today's presentation, and good morning to you all.