Atalaya Mining Copper, S.A. (ATYM) Earnings Call Transcript & Summary

Good morning, and welcome to the Atalaya Mining Plc 2024 Final Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to César Sánchez, CFO; and Alberto Lavandeira, CEO of Atalaya Mining Plc.

Good morning.

Please go ahead, Alberto.

Thank you very much. Welcome, everybody. Good morning, ladies and gentlemen. It's a pleasure to be here again. We are going to go through the results of the last year which were very good, as you probably all know. And most importantly, we are going to be going through what's the future of this company and what are the catalysts. And we believe -- we can try to make a very short presentation and to leave ample room for your questions and to reply to those questions that have been pre-submitted. With me, I have César Sánchez, who is the CFO, and he will be very happy to assist in the responses of questions related to some specific financial number or the process that we are going through.

Hello Everyone.

Go away from Cyprus -- from -- to [indiscernible] from Cyprus. Going directly to what was 2021, probably you have already seen the presentation, you have had time to read the press release, so I'm not going to be reading the whole thing. The important thing I would say is that the plant, the mine continue to operate well over the designed capacity. And now it's already 2 years in a row. We produced a record of slightly over 56,000 tonnes of copper. Good all-in sustaining capital cost of around $2.50, and this generated a very important cash flow and EBITDA. And we ended the year with a fantastic balance sheet. Besides those operational and financial results, we continue to deliver in our targets, in our promises. And the first thing is that we paid as soon as we could. The after litigation, we closed the door, which finally has been concluded in March. As soon as we have money, we paid our dividend, and we continue to improve the liquidity. And of course, getting ready for the future. Getting ready for the future means confirming the reserves well over 10 years at Cerro Colorado, our only existing open pit, but most important announcing that we are doing some other work within the Riotinto district called San Dionisio, which is around 25 kilometers away and acquired some new exploration properties in the north of the [indiscernible] and in the east of Riotinto. Besides that, mix in assets with ESG, we have been advancing E-LIX system and decided to build a plant, which basically will produce direct metals with E-LIX systems, which is basically fantastic from the CO2 control. We are also starting to build a plant of 50 megawatts of solar at our site, which is also essential when you look at the electrical situation, very worry in electrical situation in the whole Europe. And of course, we published already our sustainability report, added a new director, and we continue to advance in things like moving to -- moving away from Cyprus, which is very important for us. So as I said, as usual, delivering into our promises. This is really seen in the graphs over the last 6 years. We said we are going to be growing, and we continued growing production. You can see in the first graph, continuously going up, almost doubling our production and copper production as a result of higher throughput from the mill also going up, almost doubling. With a steady recovery which have provided excellent economical results to the company. Those are expressed in Slide 7. And the most important things, of course, sales go up as higher production and higher gold price as higher copper price. And the most important thing here is to see that how leveraged we are with copper. Copper is going to stay higher for longer. And looking at the average prices that we had last year, which were just around $4 per pound, and we are now at $4.70. This generated basically EUR 200 million of EBITDA, which is roughly 50% of the sales. And most importantly, this is real cash generation. It's not, let's say, accounting numbers. It's real cash. And you can see in the bottom part of the graph, how our balance sheet has improved from being negative working capital during these last few years to a very strong cash position, net cash position, at the end of the year after including and giving away EUR 50 million. Actually, this would have meant if we have not given this roughly EUR 50 million dividend that we will have a net cash position of around EUR 100 million in our company, which was not even EUR 500 million at that time, market cap. And you can also see how we were able to manage the construction and the spending and the development of Riotinto. During the first few years, you see with negative working capital, which means financing with minimum debt, financing with short-term loans and with using the cash flow generated from our operations. So very prudent management of cash, but with very good results for the shareholders. The best results for the shareholders has been given in the dividend in October. We declared it on October 21, which was at that time, if I remember well, was almost 7% yield rate. And the most important thing is that we decided to [indiscernible] Board to give official dividend policy between 30% and 50% of the free cash flow generated. So there was one question, which I can start already saying it that where are we going to be giving -- announcing the next dividend? Before midyear, we will announce again, looking at the results, and again, complying with this dividend policy that has been approved, we'll decide what has to be done with the next dividend. Today, sustainability, ESG is essential for everybody, but not only for everybody as an industry, for the world. And what I would say is even more important is to achieve the credibility to be able to develop new mines and to demonstrate that actually the mines, mining and specifically copper mining is not the problem. Actually, it's part of the solution. Consistent with that, we have published the first sustainability report, and we are about to publish our second with full data, public data, which we submit to key stakeholders, and that will be available in our -- it is available in our web page. And where we have taken into consideration the views of all our neighbors, it's very important. Nowadays, to be in full symphony with the stakeholders, our villages around, our employees, even environmental groups that may be against us. This is essential. And you only need to see what's happening in the new mines being developed or trying to be developed, how difficult it is if you don't have the support of the communities. We are -- we can proudly say that our approach has been understood, and we are a very welcomed neighbor. So this is what we did last year, which was fantastic, and I'm very happy to repeat it. But everybody says, well, why don't now? First thing I would like to say is that we have the bad tendency of fulfilling our targets. So we will try to continue doing that. We will continue producing ore through the plant at a higher rate, separated from 2:1. Copper raised is around 0.42%, which is we have in the mine plan, and we will be producing between 54,000 and 56,000 tonnes of copper. This, we expect a good year. The production we biased towards the last quarters or the second or third quarter simply for several reasons. We had some maintenance during the first quarter, we brought in advance. We also had some strikes in Spain which are still ongoing on the transport, which gave us some issues with receiving line. So we decided to advance some of the maintenance that was scheduled, big maintenance that was scheduled in Q2 to give -- to pass it to Q1 to take advantage of that force stop for external sources. Of course, the key issue here is the guidance of costs. I don't think anybody is not aware of the situation with the gas prices in Europe. And the systems of electricity -- to fix the electricity prices in Spain are linked with the marginal cost of producer, which is in this case is set by the gas prices. Until last year, we were enjoying a stable price of electricity if around EUR 60 per megawatt hour. But this year, we are exposed to the market and the market has gone up. So it's not easy to give a guidance. We have assumed a scenario from EUR 100 per megawatt hour to EUR 200 per megawatt hour. We were -- the first 2 months in Spain, we have had an average of EUR 210 per megawatt hour. So I know people were alarmed when we said that we may take actions. Obviously, we didn't want to see this peak of EUR 500 per megawatt hour because we will be working for the supplier of electricity or for Mr. Putin. So -- but things got those alarming prices have only lasted for a short period of time. I will go to -- get a little bit deeper in the electric prices because we have lots of questions. But before that, I would like to point out that there are other investments going on at the mine, at the company, which are all consistent with our growth. The first thing is to complete the power -- the solar plant. Second is the first phase of E-LIX. Third is a lot of exploration around us. I mean, we have -- that's basically our future. And related to that future is to make a new dam or to start working in the new thing as an expansion and people should not be alarmed; by that, they should be encouraged because it means that we have very good hopes that all this exploration in Masa Valverde and San Dionisio will be passing through this existing installation. And of course, when we started this mine, we were looking at only 120 million tonnes of ore. And now we are probably looking with our reserves and resources in these deposits based on public information. We are talking about over 300 million tonnes of material that very likely will end up in this installation. So we are looking at our mine life extended around 20 years so far after having been working now for 7 years. Very important and very worrying is the electrical situation. People ask us, is this normal? What's going to happen? It's -- I wish I knew, but what we can look at the history is Spain has had -- in the lower part of the graph, you will see price from 50 -- quite stable -- EUR 50 a megawatt hour and only around mid last year when we had the gas crisis. And of course, after the invasion of Ukraine and so on, we have seen peaks going to the EUR 200 level where we are right now with a small peak in March 2022. This is due to the setting of the production schemes in Spain where -- well in Spain, I would say, in Europe, but Spain is linked with the same price of Portugal, where the marginal producer, which means the most expensive one sets the price for everybody. This was quite good and quite valid and has been working for years when the price of electricity on gas and coal did not change too much or oil. So it didn't really matter too much if there were certain peaks of production where coal or gas-fired stations went up to, let's say, EUR 60 megawatt hour. So you have a few days with high prices. But when gas prices multiply by 10 -- by 10, there's something going on. And this is not normal because the gas prices in the United States or in Korea, Japan are totally different to what we are enjoying in Europe. The funny thing is that Spain actually only consumes around 15% of the gas used by generation. We have a decent -- you can see in the charts at the division between nuclear, hydraulic, lots of wind and solar. So it doesn't make much sense in an unstable situation that these prices are set and this is by gas. This is affecting the whole industry. It's not only affected us. So something will have to happen. So one of the questions would be, well, what can we do? Well, there's a future market that anyone can check in a place called OMIP. It's a futures market where the futures as soon as they go away, 3 years right now, as we saw it this morning, at EUR 38 per megawatt our, EUR 40 per megawatt hour. That is telling us that the future will have to stabilize. Actually, right now, today, you could hedge and you could fix those prices. This is what we have done with -- taken to the advantage of us small low point. We have fixed with electrical company around 30% of our needs at the prices around EUR 50 per megawatt hour for around 10 years. What we're also doing is building our power plant, our solar plant. Our solar plant basically is constructed around our installations. You can see in the picture shown in kind of bluish that the plant surrounds our existing processing facilities. And this will be planned to start in the first half of '23, maybe I would say, between the first and second quarter. We have had certain delays in permitting, but also certain delays in the supply of materials because everybody is constructing all these kinds of installations. The net result of this is that this electricity basically will be net zero cost. But the reality, if we sold this agreement to a supplier, we will have a PPA of around EUR 25 to EUR 30 per megawatt hour. Then the result of this is that we can warranty that started in '23 onwards, we will be having an average price of electricity of around EUR 40 per megawatt hour, which is 80% of what we have last year. And roughly 5x less than we have today. We are not stopping there. We are not stopping there. We are looking at installing further solar capacity in all the lands that are not owned by us but owned by the municipality of [ Narva, ] which will allow us to be exposed to this, let's say, be able to sell electricity at a lower price, which can compensate any peak. We have already a preliminary study of wind with 4 turbines of 4.5 megawatt each close to the San Dionisio open pit to Atalaya pit, which will be able to provide us around 15% extra, all of it for self-consumption, which means you don't pay taxes and you don't pay the extra costs of moving the electricity through the net. And we are also looking at several storage systems. Batteries are not economic from preliminary numbers. But we do have 2 dams with quite a big difference of elevation with clear water and lots of water and somebody is doing a study of pumped hydro, where we could use the very low costs of solar during the day in Spain and especially where we are, where we have lots of hours of sunlight in this part of the world, and store water and pump it and generate electricity during the night. So very heavily looking at this thing because we believe this is the most important thing that we have to sort. So looking at 2022, it is going to be very active. We're in lots of catalysts, we're going to be having the solar plant, we are going to have the sustainability report. We will be providing soon in the 43-101 evaluation or updating of the resources there after our drilling. In addition to that, we will continue with several rigs exploring in the area. San Dionisio is another positive, basically is the continuation of the existing Cerro Colorado pit, and is immediately besides our installations, and we will also be giving the update of the resource estimate calculated by independent group from Denver, which has been finalized and also be published very soon. In the case of San Dionisio, historic numbers show that we have a much better grade, so it should be quite important for our development in [indiscernible] ] total is in the permitting. We are taking it quite, I would say, step by step to make sure that we'll have a slippage in this. So if it takes longer, it will take longer. We are working with the authorities and we believe that this year will be the year. Besides that, we have -- we expect to have some news of the exploration results in the north part of the belt of [ San Marino, ] which is separate from Riotinto and also get the same -- the first results of E-LIX at the end of the year. So plenty of activities to be looking at. What's our goal? What's our view? I mean the first thing I would like to say, well, where are we going? Somebody asked, how are you going to be in 3 or 5 years' time? When we came here, we always said we were not going to be a single asset. So one of the first things we did, even we didn't have too much money at that time was to acquire total, so we have an asset in total, where not only we have an existing deposit, but we have it in the fire of a whole belt, which we have secured, go step by step. First, stop producing total, demonstrated that this is a high-quality, clean concentrate, sustainable mine with quality. And at Riotinto, totally separate. We have put together slowly, but steadily without too much commitments of CapEx and expenses and mine and options are quite an important land package in one of the most prolific belts. This is very relevant because we always try to do the agreements with a win-win situation where we only pay when we get permits, when we only pay when with royalties, we only pay real cash if we are successful. We will carry the risk of exploring, but we ask the sellers to also carry the risk of finding something or not. So we don't like to overspend. The big feature is coming from Riotinto. We want to do -- we are preparing to do the same view that MATSA Sandfire has, which is a processing hub at our installations of Riotinto, which are shown in green in the center of the picture, where we will be producing -- bringing ore from the different deposits to the central installation. Remember, we have 15.5 million tonnes of capacity and lots of grinding and zinc flotation capacity. That's totally unused. So with that, what's our goal? Easy to see -- you will see a table in your presentation. And at the left, you will see some graphs. What we are producing is 56,000 tonnes where we see that in less than 3 years, we will be getting in the 70 range. And with total, we'll get another -- we basically get to 100,000 tonnes of copper produced. In the lower part of the graph, it is a very rough, very broad timeline of when these things are going to happen. But remember that when we said in 2014, we were going to build it in 1 year, we did. When we said we were going to spend it 1 year, we did. Then we -- when we said that we were going to do a study, we did. And when we said we were going to expand and look for all the exploration, we did. So I think there are good chances of this thing happening as we say. What is the fact of these higher-grade zones or the satellite deposits. If you look at that table, I will try to use as narrow, if I can, I know. If you look at this line here, point 7, you will see that this graph, which means that if we substituted 1 million tonnes of material from our existing pit, which runs around 0.4% copper. And we substituted by something around 0.7% and we brought in 4 million tonnes of the 15.5%, it would add another 10,000 tonnes of copper without any significant investment. This is exactly what's happening when we look at our existing San Dionisio pit [indiscernible] historically has grades of copper and copper only of almost double [indiscernible] our existing mine. It means that this is bringing and this is just common sense, bringing between 4 million and 5 million tonnes, you can just add without any additional major investment at our installations, 10,000 to 15,000 tonnes of copper while you are extending the mine life for another 5 years. If you brought in some of the underground deposits in San Antonio, which have grades of around 1.6, 1.7 but they are smaller, let's say, around 10 million tonnes of reserves, which means if you mine it in 10 years, and you only brought 1 million tonnes each, you will also be adding another 10,000 tonnes. What this shows is that actually with the existing installation, our capacity is there to be able to produce the 70,000 range. And we -- that's our target for the next couple of years. So in conclusion, we have a very active year going ahead. Important thing is to concentrate to copper, develop growth, develop new projects, deliver on what our promises. And longer term, I would say, strategy would say, concentrate in multi-asset, not only have our eggs in the basket of Riotinto. Look at something regionally, looking at something, if possible in Spain, because that's where we have our higher advantage. But we are not shy to look at new geographies where we can add value. We will concentrate in copper, but we are not saying no to things like zinc and lead and silver, which also have lots of future in gold and are present in our belt. And another important thing that people ask us very often is to try to move to London at the right time, the main market, for several reasons, but simply the main one being that the A, market is good for smaller companies, but at a certain time, we believe this company is going to be over EUR 1 billion, and I think we have a place in the main market. And we are doing the right steps right now to start doing that. So with that, I would probably start with the questions, and...

Fantastic. Alberto and César, thank you very much indeed for the presentation. [Operator Instructions] I'd like to remind you the recording of the presentation, along with a couple of the slides and the published Q&A can be accessed via your investor dashboard. And, Alberto and Cesar, we did have a number of pre-submitted questions. If I may, I'll just read these out and we'll start through those. The first one, I think you have really covered off, it says you've described that electricity prices in Spain are currently higher than normal. What is your long-term expectation for electricity prices versus today, just in case there's anything further to add?

Our expectations are I think are marked by the future and by the history. Spain and Europe, I would say, cannot afford higher prices. It's not normal that you have basically all your 85% of production at some EUR 40 and due to the fact that something is happening with the gas, you are selling at EUR 200. So this will have to be set at what's normal, which is around EUR 40 per megawatt hour, EUR 50 per megawatt hour which is the real cost with profit for what we have in Spain and Portugal and in some way, we'll have to decouple and remove and incentivize and/or pay the companies to use these gas installations where they are needed in emergency. So the longer term, already marked, but what you see in the market in the OMIP, which is already setting that beyond 2023, '24, the futures prices that we could right now lock immediately, could be in the range of EUR 35 to EUR 45 right now. So that's telling you something.

Fantastic. The second question we have here is, I see that new San Dionisio Resource estimate will be released soon. Can you talk about how this deposit will be developed and when? Also, what is the production impact and capital cost? And what's the permitting process?

Okay. San Dionisio really is the massive deposit under Atalaya pit. It has been mined in the past. Actually, this created Riotinto Mining Company where they were mining very high-grade copper and sulfer. But of course, at those years, they only mined a high-grade, why bother for something with around 1% when you had a 5% copper. So what really we see in San Dionisio, there are some massive sulfides left, but most of it is related to the polymetallic, which has copper and zinc. At that time, they were concentrated in copper, but mostly and more important than the other part is the higher grade copper only material. So what it will be -- how it will be mined? Actually, it's quite straightforward. It's basically expanding the existing pit. If any of you go into Google Earth and look for Cerro Colorado or Corta Atalaya, you will see a whole round elliptical hole of pit partly flooded, which [indiscernible] will be expanded towards our existing pits. They will basically be touching our existing installation. So what's the production and capital cost and how it's going to be developed? It's quite straightforward. We use the same mining fleet. We use the same installation, the same processing facilities. It's at the same distance, actually lower than what we are mining in Cerro Colorado. And what we needed to, up to I think from year 3 or so, we have to remove the water, which doesn't give us any pain because we've already done that we were mining in Cerro Colorado. Those of you who have been knowing this company for years, remember that the pits were flooded. We had 5 million cubic meters of acid water, which we treated and used. We have a water treatment plant. So that will be one of the key components of the cost, which is around EUR 0.5 per cubic meter water treatment. So it's not end of the world. And from a capital cost point of view, for the first few years, basically we will only be moving off the road, which we'll be doing anyway, which is around EUR 7 million. We'll doing it anyway for the expansion of Cerro Colorado. We have to remove some electric lines that are crossing, but we have removed lots of them to expand the plant. And the permitting is we expect it to be quite straightforward because we already have approval for the road, moving electric lines that something that we do very often, and expanding the pit is like expanding in the same way we expanded the pit at Cerro Colorado. Remember that when we started here, we had 120 million tonnes of reserves. And right now, we have 250 million tonnes. So basically, this is quite straightforward. If it doesn't go away from the current footprint of the project, which it doesn't, so we expect it to be quite a simple thing and we're working it already.

Fantastic. Next question you got here, which project has the most potential to add value in the near term? San Dionisio, Masa Valverde or Touro?

Well, if I had to put my bets, I would say, San Dionisio because the grade is higher and grade of copper is higher. Copper is -- we are producing copper. So it's something that we will see very soon in the balance sheet. Second, without any question, Touro. Touro is a fantastic project, it has at least the quality or the size of the existing installation but, of course, needs the permitting and needs to be constructed. I have no question that it's going to be permitted, but still needs to be built. Masa Valverde is exploration project that requires some underground development. So Masa Valverde is long-term project. Something that will add value, especially will add life, it will add expectations. It will take us beyond 20 years of life. And I would even say there is a fourth parameter here that we are not even taking into consideration. I mean, only recently, we started exploring, and we already found things. I think with a good budget and in such a prospective ground, I would say that the perspectives of finding a new discovery in the next 10 years are very high. So I noticed that would probably add a lot of value is that we discover new deposit in our land, which is something that I would not rule out.

Next one we have here is, you have a big exploration budget for 2022, which project is the main focus for drilling?

You're right. The EUR 10 million is a very serious project investment, which basically will -- all of it will be in drilling because we have already been doing a lot of geophysics to define targets. So we already have the target there. Most of the targets are around Masa Valverde because we had the good luck of being able to test geophysics on top of our existing deposits that have been untouched, so we could see perfectly what was the reflection of the geophysics. So now with that reflection in that signal, we see, okay, [indiscernible] is duplicating or showing similar patterns. So I would say that the main focus will be Masa Valverde and the Riotinto East because the main organic trend continues towards the east of Riotinto. And we also have a few anomalies there. And about 15 kilometers away from us, there's an old mine called [indiscernible] that used to mine 3% copper historically. So I think we have to give a chance that if there's something found there, could have something.

Great. What is the latest with Touro? Why is Atalaya building a water treatment plant at Touro?

Well, I don't know if I should start by the last part. It's very interesting. I mean, why should we build something that's historic is a legacy something that is not our problem. But we gave -- we received a negative environment impact stated 2 years ago, and we had lots of dialogue. And we needed to change the perception that was used by the anti-mining groups saying, "Oh, look at what happened in the past. They have done bad in the past, and this is going to be the same thing in the future." It's very difficult to explain them that the same way that people, 30 years ago, their toilets were not the same quality as they are right now, the cars were not the same thing, and the industry was not the same. Doesn't matter the argument of showing pictures of the tailings -- sorry, of the small acid rains in green bushes and you see a red stain was always there, and that was the picture that we're using. Even if this red stain is something that you can even jump, but with a small jump, it's not even 1 meter. So it's not really a problem. It's the picture. Also, they were using the pictures and films of this tailings, disaster of Brazil that happened 3 years ago. So you know what we said. We are going to change the perception of this. We are going to take care voluntarily, and we will do it as a part of future costs, like new exploration. We are going to take care of this historic legacy to show you that this is not really a problem, and we are doing that. And actually, we are already very advanced in that in a couple of months, it will be ready. And all this has been done with the knowledge of the administration. They gave us the permits to do this very fast, moving very fast. So this is really what it is. It's basically to show, look, it can be done. Don't tell us that we are going to be throwing any water into the river because we don't want to be shut down the next day after investing $200 million, doesn't make any sense. So it has been done by a pure consultation with authorities, with mayors of the villages, with fisherman, so that we could take away the arguments of their position.

Fantastic. There have been lots of copper deals recently with high values. MATSA is one, also [indiscernible] and Sierra Gorda. Alberto, what do you think this is about the industry?

It's a fantastic question. So fantastic question, well, it shows you 2 things. First of all, it's not easy to discover new things. It's not easy to discover mines. It takes a long time to build and it's showing you that big companies are the only ones that are developing mines and have the capability, technical and financial capability. So how companies are going to be exposed to copper. They see the future. And one of the ways they do is byproduction. And this was the case of Sierra Gorda. It was the case of Glencore, selling a minor asset and also Sandfire and MATSA. What's it telling us? It's telling us that the copper price will have to go much higher, much higher to incentivize new production coming fast and in a big wave because right now, the market is there. We have seen the energy crisis in Europe, but also elsewhere, everybody is trying to decarbonize and all of this requires more copper. We are seeing huge installations of green energy being built by China in the Gobi desert, wind and solar that requires huge amount of copper. Where is the copper going to come in a green world meets new mines. It will require -- this is telling us that all these companies are seeing higher copper prices. Otherwise, it's not going to happen. It's a fantastic indication of what we are going to be seeing in the future, the higher copper prices.

That's good to hear. Can you talk more about the other solar and wind projects that you're studying?

Well, I mentioned a little bit, simply adding more solar. You know that the solar distribution -- the sun distribution, everybody had the sense that is very light during the sunrise and the dusk, and it's at the peak at midday, more or less at 3:00 or so. So this is different in winter and summer, but it's more or less a Gauss curve which means that your peak is basically your maximum that you can demand at a certain time. But if you build additional -- installation and additional surface, what you can get is that Gauss bell will be much larger, and you would be using 100% of your solar more hours during the day. What do you do with the excess during peak hours? You sell it, and you sell it or use it for other things like basically it's cheap, very cheap energy to pump or to generate hydrogen or to other things like that. If we had E-LIX working at that moment, we could produce cathodes at heavy electro winning at that moment. So this is what the reasoning behind solar. The other things like wind is simply because there's a lot of wind power in Spain. Spain is big in this industry. And we started in the studies what are the patterns, winds. In our case, we're not in a fantastic wind, but there's lots of wind farms in the area. And we saw that if you are connected for your self-consumption and not to the grid, you don't need to have such high speeds. The good thing of wind is that provides wind also during the night. It actually is more during the night, which means we can also reduce our reliance on the external grid. And then what we want is to make sure we have not only green power, which is very nice, but we have reliable and cheaper power.

I think the question we have to -- yes, you [indiscernible] in the meeting when the next dividend will be declared? Next one, we've got here, you've described option for managing electricity costs, and we've talked about that several times during the presentation and Q&A. What can you do about other areas of cost inflation?

Cost inflation, look, we have been very careful in buying things that are other consumables like bowls, reagents and so on out of the season before this, and we are looking elsewhere. Some things are not enjoying these prices because not -- the steel price is not the same in Spain and elsewhere. So that's what we have. We have a big stock of consumables. We cannot do too much of electricity. We cannot do too much of diesel because it's the market. How we can manage the cost of diesel, basically modifying the mine plan a little bit. So the contractors use less transport. Basically, the distance -- try to shorten the distance to the dumps now in spite of having them a little bit longer in the future. So we changed a little bit our mine plan. We also -- to reduce electricity costs, we are using more explosive to fracture more because so far, although the explosive has also gone up quite a lot, they have not gone up so much as electricity. So small things that we can do to optimize to lower our operating costs.

Fantastic. My final question we have here is what is the process we're moving the parent company to the U.K.?

I think César is there. Probably he can give you the whole details and he's working very actively in it. César?

Yes. Thank you, Alberto. So the process itself, so we've been working with the legal advisers to see the best way and the quickest way to [indiscernible] the U.K. And we think that is just establishing a U.K. entity, which will acquire or the share of the assistant [indiscernible] entity and then we will do the IPO [indiscernible] as a first step before going to the main market. So that's the idea. And the process will take between 3 to 4 months, we're now finalizing the [indiscernible] on moving to the U.K. just to ensure that we understand all the tax consequences and accounting consequences and service consequences, and we are expecting to get the dividends done within weeks in order to start. Hopefully, it will be proposed to the shareholders in the next AGM in sort of during this year. That's just establishing in U.K. entity, which will acquire or the share from the system to execute them.

Fantastic, Cesar. So we have actually seen quite a few questions coming during the meeting itself. If I may, Alberto, perhaps just ask you to click on the Q&A tab and where appropriate to do so, just read out the question and give answers.

Yes I can read the questions and go through them. I think that some of them are very interesting. Some of them we have kind of replied. But look, when will the company release -- when we released the results of the 43-101 will be -- that we have already said. When will the company release the details of the 43-101 San Antonio? soon. What I mean soon is we're talking about weeks, finalizing, let's call it. Somebody is asking about the last year, we said we were going to possibility of hedge in the forward prices, EUR 85, EUR 90. What happened? Well, what happened is that the prices shot up and the future prices have also gone up substantially. So for example, the results of Q2 right now, hedging for the future prices around EUR 250. And for 2023, if we wanted to hedge was EUR 133. So basically, it couldn't be done. And we had to go with that. And this offered us a possibility of giving us a lower price for the second part of the year, but basically increasing rest of the year. So basically would be giving us a loan, a loan that we'll pay later. We believe that we will watch the market. We hope the situation of Ukraine unfolds, and we will be able to lock lower prices in the future. Right now, I'm reading in a second. The prices for '24 for the whole year are EUR 87; in '26, already EUR 50; in '28 are EUR 42. But unfortunately, still 2022 is still in the -- '23 is still EUR 133 range, we believe it's too high. [indiscernible] given the prices, there is scope to increase to 50, yes, I mentioned, yes. Confirming dividend policy. Yes, we confirm that we will continue. Higher court ruling will also drop any future litigation. Yes, we don't care if we litigate. No, he has nothing to litigate. He will have to leave the security. We continue paying a marketing fee, yes, under a certain amount of material, although it's fixed until we deliver all this concentrate, we believe I think it still has 3 years or 4 going on. Manage main incentives. It is important recent board selling [indiscernible] finance options. Well, this can be misinterpreted, but let me tell you, it's important to mention this. The reason for selling is because we -- management has very short periods of open periods that we cannot sell because we are always in blackout periods. This -- otherwise, these options would lapse. So that was the only way for some of the management to be able to finance the purchase. Myself, for example, I exercised the options, and I paid with money, and I did not sell any share. So I believe -- so I have paid the option and I have -- I'm a happy holder of additional 150,000 shares. So it was simply a matter of that the management left it to the very last minute because the options were expiring, and we were entering in a black period. So that's the reply to the question. You are not hedging any production currently as far as I'm aware. Can you explain the rationale behind this, particularly against the backdrop of potential [indiscernible] higher cost? Are you expecting the higher copper prices? And in relation to that, what is the copper price that you are based on your budgets on? Yes, we are not hedging. And we have been asked to hedge several times at $4, at $3.50 when everybody thought it was going to be much lower. If we had done that at that moment, we were being killed. Right now, at least part of the losses of energy costs had been in some way compensated by electricity and higher copper prices. Today, we are at $4.70. I should remind that we were -- only 1 year ago, we were not even at $4. So I think we need to be exposed to this unless we hedge the whole thing. If we hedge copper energy and exchange rate, probably yes, and you lock certain numbers. But otherwise, locking copper and then it's supposed to all the things that can be very dangerous. Do we expect higher comp prices? Yes. I don't know when, but yes. The only copper that's coming on the world is to -- right now is Congo Kamoa-Kakula and 2 other projects that have been built significant products that are being built in Peru, [indiscernible] and in Chile, [indiscernible] later in the year. But beyond that, there's nothing. So only to remind that the studies of supply-demand last year are showing a deficit of around 1 million tonnes of copper per year. And International Copper Study Group from Lisbon, which is very conservative, deficit during 2021 at 475,000 tonnes of copper. What does it mean? It means that in spite of people saying that 2 years ago that the copper price was going to go down. In spite of the copper price having exploded up, we have not seen any additional production, and we are still a big deficit. Another important argument against hedging at this moment is the potential squeeze of margin calls. We have seen what has happened with some people trying to fix prices of -- prices of commodities like copper and gas. And I would not even know what has happened with coal and having to post margin cash, this can destroy a company. Why am I a little bit scared of this is that the stocks are very low. And we only need a huge problem in Congo. We only need a problem in Chile in one of these big mines, and this can happen any time that suddenly, there is no copper and because the demand is there, the copper can shoot like I have seen shooting in 2005 with the nickel going from 2.5 to 20 for good reasons. So I believe that the copper are going to go up. As per our budget, I think we made our margins at 4.15% if I remember well.

4.30%, so we normally use for the budget process, the forward curve at the time that we do the budget, and that's normally the Q4 of the previous year. And then we normally do quarterly forward price [indiscernible].

There is an interesting question here that are you considering any projects to recover minerals from historic tailings? This is something that has somebody has published and it's not with our knowledge or agreement. We have a partner called Rombo which has 50% of the gold tailings. The gold tailings contain around 0.35 gold and around 30 grams of silver. In theory, that's almost like 1 million ounces, but the recovery is very questionable due to being very refractory and very difficult. So unless the gold price went up, it would not be economic. Somebody is saying that they have a fantastic system, and they are going to be using the system, which is a system of basically leaching the whole thing with nitric acid. I'm not sure if people know what -- how you can leach with nitric acid, you can leach everything, including the tanks and the pipes. So only plastic holds it and titanium. No, we are not considering that at this moment, although we don't rule it out if gold went to $200 or silver went to $40 an ounce. Is there likely to be any progress in Touro? Well, I've mentioned that we expect some news this year. What is our current estimate of free cash flow for the full year '22? Very difficult to say that in the light of the energy prices. And look, our operations are going to be similar to last year. And for whoever has made a question, each -- we consumed 24-kilowatt hour per tonne. That means around 370,000 megawatt hour per year. It means that going from what was last year cost of electricity, which are around EUR 60 rough numbers to EUR 210 these first 2 months, the difference is EUR 150, EUR 150 multiplied by our consumption, it means that this -- if these electric prices stayed the whole year, it would eat around EUR 55 million of our bottom line. Against that, you have to add a better exchange rate, which will help and you have to add a slightly better copper price if it continues like it is right now. So we only need a crystal ball to know what's the electrical prices. Other inflation is diesel, in a certain way, explosives, all of them related to the oil and electric price, but without the big influence of the electricity. Michael is asking when we could -- Masa Valverde begin initial production? Hard to say, but I think we will probably get some production from the polymetallic in around 3 years' time. When? Because we need to develop around to get to the deposit [indiscernible]. We are getting the permits probably later this year to drive underground decline. And the ideal situation will be to have the E-LIX working at that moment because it's polymetallic. So their list, I would say, 3 years, maybe 2.5 years or 3 years, but we have lots to choose in San Dionisio and in San Antonio. Marcos is asking about consolidation M&A opportunities in pipeline, consolidation in Riotinto area, and in a recent approach to Atalaya. Started by then, no recent approach to Atalaya but I'm sure we are in the radar screens of everybody because we are very good showing very good value. And certainly, there is a good consolidation potential Riotinto with Sandfire being here. But remember, we also have last cruises with a polymetallic deposit of around 40 million tonnes for the -- to the east. We have a couple of private companies drilling and making some nice interesting results. We have some private companies in Portugal, we have a public company with Lundin in Neves-Corvo and 2 other juniors drilling in Span Global and Amerita. So there's lots of activity in the parent belt. I mean, I don't rule out that something happens, we don't know [indiscernible] not necessarily with our [indiscernible] Sandfire, but with the 6 or 7. Consolidation is answering this question. It's basically the potential to use some synergies since there are -- some of these deposits are very close. And obviously, we have a very big installation where we can handle more copper or more material if it was needed. It's very important to be in production. [indiscernible] is asking just to check, could you give us the IRR you expect on the renewal investments that you are doing in consuming, please? I don't remember the IRR. But I do remember -- I mean, specifically in the wind. I do remember the cost of solar, which is -- has gone up a little bit due to silver and costs, but even so it was a payback of 6 years in my life of -- sorry, the life of these things is around 25. So it's not a fantastic, huge return, but it was a quite decent return. The important thing is you can finance this with loans from main Spanish banks with no recourse except the installation itself, at a very low interest rates. But the return is quite good and it's very straightforward. No question there economically. Are you able to provide an update of the E-LIX process? Well, we -- all the key equipment, electrical cells, anodes, cathodes, civil have been ordered or in the process of being ordered and started. So we have not started physical construction itself in the ground but all of the equipment and everything has been ordered and paid for. So we believe at the end of this year, it will be okay. In the meantime, the company is doing test work with existing pilot plant to test production of zinc, production of copper and so on with existing installation too, so that the production activities will be better when we start. [indiscernible] is what's meant with the right time for moving to the main market? Is it really residing on the U.K. necessary as the first step? Is it needed to really domicile in the U.K. first?

No, just simplified the process quite low. I mean having been [indiscernible] means that you need to comply with the [indiscernible] company law and then doing the process of listing into main market being [indiscernible] low, my [indiscernible] assume that this is a U.K. entity but it is not. It does imply.

If you apply the recent pay prices for all the Sandfire acquisitions or per tonne and a couple of multiples of companies would that mean -- what would that mean for the share price of Atalaya that's only asking about that? Well, very high, I would say, very high. Probably years, probably double, probably double that we have, which is probably the next question, which is, is it fair to assume that this translates into a theoretical price of EUR 800 million, for Atalaya? Yes. I think these are the 2 questions at the same time. If you look at the theoretical on discounted cash flows, our share price should be much higher especially when you add Touro, when you add some initial and [indiscernible], really, the numbers are very high. If you look at transaction multiples, yes, our share price should probably be double than that.

That's probably a great time to end Alberto. Thank you very much indeed for answering every single question we've had through from the attendees today. So thanks for posting those. Just before we redirect your attendees to give you some feedback, but perhaps just a few closing comments, if you may.

Well, I would say thank you very much for the support. I think this company has its time more and more -- got more and more support, more shareholders, they see value. It gives us also a lot of, let's say, power to continue delivering and continue growing this company. We don't like to be still, as we've done in the past. And we really would like to see this company growing and getting better because I could recognize lots of these names in the questions, and there are shareholders, which like I am, in this company, we believe it has a great future. So I want to take the opportunity to thanking everybody for their continued support through the bad times and now that we are in better times, we have gone through bad times. So this electricity is only one more, we'll succeed.

Fantastic. That's absolutely fantastic. Thank you again for updating investors today. Can I please ask investors not to close this session as you'll be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, it's greatly valued by the team. On behalf of the management team of Atalaya Mining Plc, I would like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon.

Thank you.