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

Good afternoon, and welcome to the Atalaya Mining Plc 2022 Annual 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 is appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand over to CEO, Alberto Lavandeira. Good afternoon, sir.

Good afternoon. Thanks, everybody, for taking the time to be with us. I'm going to go through the presentation just reviewing the results of last year, especially the last quarter. It's been a quite a challenging year, but we look forward to have a much better year this year. With me, while you read these forward-looking statements, I have Cesar Sanchez, that can probably answer some questions if they come in relation to numbers that are not shown in the presentation. And I'll go directly to the presentation itself, trying to follow what we have been doing. And if possible and we have time, I will reply, as usual, to any and all of the questions. To summarize, and I don't want to be reading the whole thing, but -- and you have probably have seen the presentation, but we produce around 52,000 tonnes of copper with cash costs all-in $3.37. Remember that we always post all-in costs to give a realistic view of the reality of the company. These costs were higher, higher due to high inflation, as you all know, lower production in Q1 and high electricity prices. Q4 was much better. Production itself was quite good all over the year, quite normal, except this small hiccup in the third quarter -- in the first quarter, which was due to a strike in the Spanish transport system. The company, despite the challenges, generated an EBITDA of EUR 55 million, this is substantially lower than previous year and a big amount of that was due to EUR 264 million extra cost of the electricity. And of course, lower copper prices in relation to the previous year. We did invest in E-LIX. We started investing in E-LIX. We started investing in a solar plant using loans from local banks. But we ended up having a quite neat balance sheet with net cash position of EUR 53 million for our second consecutive year. And we were ready to pay, we paid a small dividend even with difficulties in September, and we plan to pay a small dividend also that has been decided by the Board, well, it needs to be approved by the shareholders later this year. Liquidity has improved. The company is in much better positioned. We have completed the Astor litigation, and we streamlined the shareholder register with additional shareholders having only one large shareholder right now in our register. So it has been a quite good year overall. Besides that, we have been continuing to work with our expansion projects, our growth projects, both in -- under Riotinto in our satellites. Actually, we announced the results of the PEA, and I will speak about that later last month in the satellites around Riotinto. And of course, we changed a little bit our Board, which is now composed by only one shareholder presenting a large shareholder, one Board member, I mean, and the rest, including me, are independent Board members. Of course, I'm part of the management. But other than that, I would say, it's one of the most independent Board that you can find in the industry. Looking at what we did in the last quarter. Last quarter, finally was a good quarter, nonevent. Production-wise, the plant treated us with tonnes as per design, which meant that we treated around 4 million tonnes during the quarter, which is equivalent to around 16 million tonnes per year, which is higher than the design rate of 15 million tonnes per year, with good recoveries, 86.2%, which is slightly lower than the previous year, but very well within the last few quarters. And the only small weak point was, as I said, the first quarter where we didn't produce as much as we wanted due to a strike in Spanish system. Looking at the financials, sales were back to normal with more production and slightly better copper grades. And since the electricity prices were better, not as bad as the previous 3 quarters, we generated a positive EBITDA back from negative EBITDA position in the third quarter. And our net cash position remained strong besides the fact that we were investing in lots of initiatives such as the E-LIX and the solar plant and few other things in Riotinto. The balance sheet, as I said, remained strong. And I think the key point here to highlight is at the end of the year, we had a working capital of EUR 84 million, slightly lower than previous year, but still very strong in spite of the high energy prices, higher operating cost in general, higher inflation, and the investments that we've been doing which accounted to around EUR 53 million during the year. Inflation was the key point. This -- I spoke about this several times, inflation was the key point. And you can see that the key components of our costs -- operating costs are explosive, diesel, tires, electricity still borderline. And compared to what we had in 2020 and 2021, which is referenced with 100, you will see that explosives basically doubled, diesel more than doubled; tires 50% higher; steel balls 50% higher; lime almost doubled, but electricity in the first part of the year was multiplied basically by 4 and by 5. Anyway, the good news here is the future. Future is that we have seen electricity going down as it's shown in the bottom part of the graph steadily. And the January has been almost as normal as previous years. And we've also seen not really reflected yet a decrease in steel balls, in lime, in diesel and in explosives. And it looks like this decrease is going to continue because the prices of explosives and lime are linked with the price of gas. And the price of gas, I'm going to advance a little bit -- speak about it a little bit later, it has been going down substantially. One of the things we have started to do this quarter, and we will continue doing so is start to break down a little bit our operating cost to give more clarity to the market. You will see that we divide our operating costs into site operating costs and offsite operating costs. Site operating costs are normally linked to the cost per tonne. I mean, the amount of material that you treat regardless of the grade. While off-site cost is basically when you have produced a concentrate, what you have to send outside. Those are -- the prices there, the costs, they are related to the prices of treatment charges, transport charges, freight. And what you can observe from the graph that's shown is that actually the inflation was not that high in mining in spite of the doubling of explosives and 50% higher in diesel, but where most of the increase came from -- basically doubling our costs came from processing. This is due to the high price of lime and especially the price of electricity. Other than that, other things like health, safety, insurance, manpower, et cetera, et cetera, you can see that really the changes from '21 to '22 are nil and actually only in the last part of the year of '22 were slightly higher, but basically, the cost of $0.54 per pound payable have remained the same. The same thing I would say with -- in general, with the all-in sustaining cost when you start considering capitalized stripping which has been quite constant and sustaining capital which has been quite constant in the year. Normally, it relates to, of course, ongoing CapEx that we require other plant, but also basically maintenance of the tailing facility. As I said before, the key component of the cost here has been electricity, and it's important that we explain how it was, how it has been historically and how it looked like it's going to be. In the upper part of the slide that you have in the screen, you will see some green columns, which showed what was the electricity market in Spain in the last few years. So we see in the left part that has been stable around EUR 50, EUR 70 per megawatt hour, which is $0.05, $0.07 per kilowatt hour. In '21, we had crisis started, but we had a fixed price coming from '20, so we didn't have any issue. But in '22, we were exposed to the market, and that shows that we went from electrical price around $0.06 per pound, which is EUR 60 to very high numbers. Very high numbers that are shown in the lower part of the graph where you will see that our electricity prices have been all around EUR 250 to EUR 300 per megawatt hour. That means 5x higher than it used to be. Okay. That's -- thanks God, situation in Q4 was a little bit better, as you can see in the lower graph. And in January and February and so far in March, slightly better even than in Q4, still not high, not as low as it used to be, but I would say, much better due to the high intensity of the wind, solar and in some cases, hydraulic. But the most important thing here is that as you -- some of you know, we signed a long-term agreement for 10 years that kicked off in 2023 in January at a long-term price of around EUR 54 per megawatt hour, flat for around 1/3 of our consumption. So this has an incredible effect of lowering our future electrical costs. And together with a solar plant that will kick in next year, basically, we will have covered about half of our electricity costs. What about the other half? Well, the other half is related to the price of gas. Spain has a distribution of electricity with a mix of nuclear, hydraulic, water, but the marginal cost producer is the gas system, the combined cycles. And the price of electricity is normal, it's like 2x multiplied by the price of gas, plus some CO2 adjustments. And one of the things you can see in this graph shown in the screen right now is that the price of electricity -- of gas that we are enjoying now, around a little bit less than EUR 50 megawatt hour is roughly the same price that we had in summer last year -- sorry, in summer '21, which is almost 6x less than what we had in the peak of August '22. If you remember what happened in August, is that there was the war of Ukraine, the blowing of the pipes coming from Russia in the Baltic, plus the extraordinary heat wave all over Europe and specifically in Spain, that pushed the prices of gas quite a lot. Two things are different this year. First is that we have this -- power purchase agreements and some fixed rates, so we will not be so much affected to the changes. And second is that Europe is prepared with LNG, Spain consumes LNG. And it looks like this year, those big spikes are not going to happen this year so far. Going to what happened in the last year, why it's not going to be repeated. You can see in the upper part of the graph that about -- the increase in prices of electricity created a huge increase of almost 250% on the cost of electricity. So we went from having less than $0.2 per pound cost of electricity to go into almost $1 a pound. What's the future? That's past, the future is that in the lower graph, you will see that in orange. Orange will be the average price that we will be getting with our PPA and our solar compared to the price of electricity in the market. What does it mean? That if we didn't have this agreement, we will be having, let's say, EUR 150 per megawatt hour, we will be having $0.5 per pound copper. The reality is we will have little bit about half of that. So in summary, I think we are quite well prepared for this year and especially for future years. What are we looking for '23? Well, we hope to have a year of production similar to previous years. We thought this is total we had in March. Cash costs and all-in costs, we have guided between $3 and $3.20, which is slightly lower than previous year, but higher than the other years. And the only reason here is that we don't know what the electricity price is going to be. So we have assumed, I would say, higher prices but lower than previous years. So we will be spending around EUR 10 million in installation. If needed, this is something that we can obviously reduce if needed, and we will be treating around 15.5 million tonnes of [indiscernible] plant with a recovery, we expect in the range of 84%, 86%. Basically, we expect it to be a nonevent year. Several important initiatives that we have to do this year is finally construct this 50-megawatt solar plant which we will start seeing activities in the ground in April and should be ready by the end of the year. We had some delays with civils, with supply materials, but finally, things are moving. And we are also moving, as you can see in the slides on the screen now with the construction of the E-LIX installation, which is progressing well, and we believe that we will be able to start commissioning at least partially by midyear. Also again, this installation has suffered some setbacks, some delays due to the supply chain and due to being something that's quite new and enduring these things is never something off the shelf. We will continue exploring in Masa Valverde in Ossa Morena, which is just north of Riotinto and Riotinto East. We have a budget of EUR 10 million, which is a significant budget for our company of our size. And right now, as we speak, we have 3 rigs going on in the area around Masa Valverde, one rig in the area of Ossa Morena and we are waiting to start drilling just after Easter in Riotinto East with a new rig, just as in some anomalies. So it's going to be quite a busy year. I would say that the most important development this quarter has been the growth plan of this company. This company is not under Riotinto, we have been working now for 8 years at Riotinto. But we have a huge exploration ground just around Riotinto and also in the north called Ossa Morena and in Touro in Galicia and the north called Cobre. So looking at Riotinto, we believe we have quite a different advantage, I would say, compared to others, other new projects. You all know that the new copper is needed, new copper is needed in the world. And one of the things that we have versus other projects is that we have this huge infrastructure advantage. Most of these projects are going to be needed for the decarbonization of the world, will require labor camps, fly-in fly-outs, desalination, water pipelines, smelters. Well, we have our own smelter. We have ports. We have transmission lines. We don't need cabs because we have villages around our installations. This is an incredibly huge advantage. What we plan to do with this installation? We are doing the same business model that MATSA is doing, and it's quite common in all the places, and all the districts where we do have a centralized installation, where we have our plant and where we struck the ore from the existing deposits to the single plant. This is what MATSA is doing with 3 deposits underground filling a single plant. In yellow, you will see the volcanic rocks that form in the BMS systems are the Pyrite Belt. Further to the west, you have the [indiscernible] and then in the page that we have, we have other mines like [indiscernible], all these dots are known sulfide deposits. So very prolific area. But looking at what we have specifically is, you will see in the background of the picture a big pit. There's that pit showing white and black is the existing current pit. With that one, we would have a life of around 10 years. So we said, well, we have all the resources drilled, in San Antonio, underground, high-grade, yes, continuing in the far end of the picture, which is east. And in the front part of the picture, which is west, we have San Dionisio, which is the remnant of an old deposit that was mined in the past by Riotinto where mining has started over 150 years ago. And on the left, we have the plant with a huge capacity. So we thought to -- we decided to put a plan together, we had announced already these resources with the 43-101. But we decided to put a plan together where we could mine a few of these deposits simultaneously, and see how we can benefit over this. So we ask our company to put a picture together, which if you look at the slide is shown in light green is basically the current pit and shown in dark colors and in gray would be the additional other deposits. So as you can see in the bottom part of the slide, first 4 years, we only mine copper only. Very simple. And in the -- starting in '27, so it's the fifth column in the lower part of the graph, we start adding zinc also, which means that we'll have to -- by that time, in '26, we'll have to have a sensor pit or something to treat that zinc which is higher rate. Well, with that plan, our equivalent production profile will go -- will be around the 55,000 to 60,000 tonnes of copper in the next 4 years. And this is an external plan. Of course, we will try to put this normalized so that in '24, you don't see a slight reduction. So have it very pretty normal. And in '27, as soon as we start getting on the zinc, we start seeing higher production profiles, which takes us well over 100,000 tonnes of copper equivalent. These numbers give exceptional high returns. And the simple reason of this is that we have a plant already and so our investments are minimum. If we use the current copper price, which is around $4 per pound, the cash flows undiscounted after tax would be around $3 billion. Remember, our market cap right now is around not even $600 million. Discount at 8%, which are kind of a standard, we will get our net percent value discounted at $1.5 billion, again, about 3x our current market cap. And I would like to highlight that this does not include any addition of the satellites of Valverde or Riotinto East or Touro. It means assuming that we didn't find any single tonne in the whole next 15 years. This would be a model of our production profile and cash flow generation after tax. Very significant and comparable with this large portfolio deposits around that -- around the world. This comes with some CapEx, which we highlight in lots of detail, which is really backended. And most of this CapEx comes from the development of the underground deposits and also from [indiscernible] a plant expansion or zinc line in 3 years' time. Other than that is basically more space for tailings, which is something that we will do anyway. Of course, these numbers of CapEx are included in the -- they will be financed from the cash flow, and they are included in the numbers I just mentioned before. So this will also come with 2 consequences of reduction of costs. Since you start putting in high-grade costs -- higher grade material, the costs are reduced. So the cash cost will go down substantially around $0.80 once we get into this poly-metallic area, which means 2 things. One is higher production and lower operating cost, which means higher cash flow. So very promising PEA, which even at $3.50 per pound copper seen in the screen still has a net percent value of EUR 1.3 billion discounted at 8% after tax, including -- without discounting over EUR 2 billion cash flows. Of course, using $4 per pound, these numbers increases the prices to the numbers I gave before. We have to say that, of course, we believe in the next 15 years, we will have years where we will see much higher copper prices at $4 because the industry and the whole demand of copper requires this higher metal prices. So very encouraging future. Touro, not much to say that we continue to permit and to progress the permitting of the installation. For those of you who are new, this is a brownfield project that has a current quarry on site, where we had already a negative environment in plant decoration. But this negative environment and permit 3 years ago was not due to any environmental grounds that the quarry has. It was due to the former legacy water issues of the project. This probably had a stop in '87, back in '87, '88. So one of the things we agreed with the government of Galicia was to install a water treatment plan that you can see in the pictures where water comes in brown with some acid formation with iron and comes out clean in the bottom part. As a result of that, now the rivers are clean, and so nobody can accuse us that not being able to fix installation -- to fix the current situation. We have had lots of visitors and people demonstration -- demonstrating that they want to mine training courses for operators being publicized in newspapers. So we believe we are in the right track and permitting takes time, but we believe it's [indiscernible] at the moment. With all this work, where do we see Atalaya? Well, if we were to stay as we are, we will be in the range of 55,000 tonnes of copper, which is -- by the way, it's 4x more than we had -- 3x more than we have when we started. We will be adding over to 90,000 tonnes of copper with the -- that's only copper with the PEA numbers that we have mentioned before, that's without zinc. And when we add total, we will be well over 120,000 tonnes of copper, which is a very significant growth for our company, power size. And this can happen in as soon as 3 years from now if we get the permits of total this year. So in summary, lots of things going on, very busy as usual, solar plant going on. E-LIX going on. San Dionisio, we'll be doing lots of work after the PEA, Touro will continue permitting, Masa Valverde still early days of exploration, but we continue with the permitting and we believe we are going to be getting the permits to mine very soon. Also, we're in a whole new ground where we will be -- every exploration of this is staged, although we already have some resources. So I think that's the summary. And I would like to leave about half an hour for questions, and we have lots of questions.

Alberto, thank you very much indeed for your presentation this afternoon. [Operator Instructions] Alberto, if I may hand back to you for the Q&A and ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

Okay. So yes, I have lots of questions that we have received sent by e-mail or before presentation. So let me read all of them and try to respond to all of them. Some of them are kind of repeated, but no problem. First one, in terms of total, how have your discussions with authorities progressed during '23? I suppose it's also '22. Further, is it still news, but how do you think copper being the clear strategic commodity in Europe can assist, if at all, given the key impediment of the project was -- is on environmental grounds? Well, interesting a couple of questions here. First of all, let me start by the end. The project never had a problem with the environment. Actually, this is a brownfield area with lots of eucalyptus where our quarry is still active and is ongoing. So there is an open pit there. And the problem is to give us a negative permit 3 years ago was not based on special [flower], special affection to environment or whatever. It was due to 2 things. It was more political than anything. It was the noise created by anti-mining groups when the tailings of the Brumadinho dam in Brazil broke and created a wave of mud flowing down and killing lots of people. And second is the fact that there were acid waters from the legacy mine, and they were saying, if this is what people did in the past, you're going to do same but much larger. To address both, we need to set 2 things, okay? The thing of the past was due that they didn't use plastic lining and they didn't do the right things. And we address those with using a water treatment plant. The issue with the tailings itself, we have presented a project which is basically without any water on top of the tailing. So if there's no water it cannot break. Besides the fact that the tailings itself is designed a different way. Our discussions have been continuous with the government, the regional government and all the authorities to get the water permits, to get -- to make sure that the project we were presenting was correct, and all of this has been done in hand. Another thing they recommend us to do is to fix the social license because the -- due to the lies that were transmitted by the anti-mining groups, the population was believing that we're going to be creating a moon landscape and throwing everything into the river, which I don't know why we would do it. And we have done that with signing lots of agreements with stakeholders, regional stakeholders, fishermen, river, et cetera, et cetera. So all of them has been -- lots of work in the background. And we believe we are in the right path or so it looks like from all the feedback we are getting. Excuse me, it was a little bit long, but I think it is very important. What are your next steps now that you have completed the PEA? Will you start feasibility study and any impairments required? Well, lots of work ahead of the PEA. The PEA is basically a guideline, it's a route, but we will be doing more or less feasibility study itself basically doing the tailing engineer for the plant design. So all those numbers that were part of the PEA have a backing that is realistic instead of a more general review. We will be doing detailed designs of the zinc circuit and detailed mine planning of the underground mine. The open pit is quite clear. Permits we will require is additional space for tailings and disturbance of land, which we believe we will get very soon because we have started with this well ahead of all this. In Spain ones you have that and you have certain disturbance of land and then the changes, let's say, within the [broader] permit are considered nonmaterial and are dealt with in a year-by-year basis. So the permit is required to start mining in San Dionisio, for example. Very likely, we will get them later this year or even in the first quarter -- later in the year. And the tailings for additional space and tailings probably in April or very soon. Next question is with the solar plant and potential wind turbines, would Atalaya get into the power business life of the mine? Has any more work, future planning been done on this, feasibility study planning? Well, not really in the power business. This is for self consumption that has certain advantages. Our goal is to get to around 50% of our self-consumption, which has the advantage of not having to pay the taxes and the connection to the grid. So it's more economic than selling the electricity, obviously, if you have a consumption like we do have. We have been doing lots of work and the feasibility study of this -- of the wind is about to be completed after having 6 months of continuous measurements with a big tower and also 20 years of data from -- around level of measurements. So far, the preliminary numbers show that 4 wind turbines of around 5 megawatts each would provide us with around 15% of our needs according to the prevailing winds and the price that we can get there based on the capital costs is very competitive, better than connecting with the grid, even with the loan term prices that are seen in Spain, around EUR 40 to EUR 50. So we would get better prices than connecting with the grid of EUR 40 to EUR 50. Our plan is to probably get this final study to the Board in the next meeting. And the next question is on the PEA, the net asset values look high compared to our market value. Will values decrease once the feasibility study is finished? Well, no, that's the reality. That's the numbers. Normally, companies trade at around 0.7% of the net asset value, 0.6% -- we believe we are trading at 0.3% or 0.20%, which is a fact. So I think it's a matter of catching up when people start seeing that we continue to deliver like we have done in the past. The feasibility studies of the numbers will just optimize the current plans. I hope that the studies show that it's actually better than the PEA by advancing the production of high rates and reducing the capital costs. By the way, we have not assumed the use of E-LIX in the system, which could provide an additional advantage. And we have been very conservative in the PEA by assuming differential flotation which is something that we know it works. ESG, do you know where Atalaya scores relative to peers? I don't have that data here in front of me, but maybe Cesar, do you have the numbers?

Yes. So yes, we do know how we're [indiscernible] to local peers. So we got into Sustainalytics, we basically issued a report on Atalaya long ago, it was in February 2023. We are very close to [indiscernible]. But I think important here is not where we announced, or where we get into, I think there is a significant improvement. So taking against Sustainalytics' previous report they rated us at 58.8 and we are now in the range of 39.2, which is a significant improvement from the last -- from the previous report. And I think that we recently approved the Sustainability Report for 2022, which means a significant improvement on the quality and the disclosure that we took on all ESG matters. And I think that will give a significant improvement to our rating. So we continue having base discussions with the 2 major rating agency like MSCI and Sustainalytics and I think that will get to a better rating which will, again, compare to better companies that are doing better in sustainability.

The next question is also related to ESG and maybe you can also ask -- answer, just that I want to read it. Carbon footprint, current credits. With solar coming online, would this generate carbon credits, potential source revenue?

Yes. Well, we -- so as a company, we don't have so many carbon emissions to that. So we don't have an [indiscernible] other than the vehicles that operate in our mines. With that in mind, we are not really into the credit market at this time. I mean, we'll look at any other various alternatives. But I can say that as Alberto mentioned, we have a solar plant which may become big, we will be using the full capacity of the plant to be used in our plant. So I'm not expecting to have any sort of accident on that -- on the capacity of the plant. So yes, this is something that we will look at it. We haven't looked at it so far, but I'm not expecting a significant amount of revenue there if it's something.

Thank you, Cesar. Next question is regarding acquisitions. Last time, you mentioned prices. You mentioned prices were too expensive, and it made no sense. Anything changed? Well, we continue to look at things, and it's too early to say. We continue to look at several opportunities, but not much to comment here. If we do anything, and it makes sense and that can create value because we have enough in our plate to grow without needing to acquire. But of course, we are quite opportunistic in this sense. Next question is, are you still planning to move to London to the main market? Yes, although we have come with some difficulties due to Brexit, which may be, Cesar, if you want, you can give some small summary. But I mean, yes, we continue to look to find ways to get to the main market.

Indeed, so the goal, the main goal for Atalaya is being listed in the premium market of the London Stock Exchange. And so we're getting ready to get there. We plan to do it 2 different steps. So step 1 would be to move the company from Southeast to the U.K. and then step 2, once we are in the U.K. going to the premium list, which obviously will have the possibility of being eligible when we have the size to be in the index -- on the [indiscernible] index. But we found in this first step moving from Southeast to the U.K., some tax issues, mainly driven by as a result of that, the U.K. not being in the European Union anymore. And this is something that is slightly changing the plan. But the plan in order to get to the same government, is going to the premium listing. So some of the work or many of the work that we have been doing for the last 1 year or 1.5 years, will continue to be in order to get to the main board or be listed in the main board. This is something -- all the improvement that we have done on the corporate governance with the Sustainability Committee and we're now looking at the U.K. [indiscernible]. I'm also looking -- keeping an eye on the U.K. corporate development [indiscernible] just to ensure that will fulfill all the requirements and go to the main market. This is something that is internally planned, and we'll get there. We just need to slightly change the plan as a result that we're now moving to the U.K. but still that's the main goal of the company.

Thank you, Cesar. Another question is, do you have any contingency plans if the banking crisis continues to grow? Well, first, it's expected not to grow much. But second is, I think the banking crisis is probably unless it goes global, I'm not so sure if it will affect the copper demand. The copper demand now is linked to real demand from especially CO2 fights electrification globally, not only in China, but worldwide. For example, I read this morning that China had installed in China this year, electrical panels, solar panels equivalent to the rest of the world. So there are still -- and it's growing big time. The bank crisis of 2008, which is the one that was probably the deepest part was -- did also affect the copper. But if you remember, 2009 was extreme in rebound. Actually, prices peaked in 2009 and '10. If it happens this year, I think that will happen, it will be the same result. The demand is there and there's no supply. So the way we prepare with this is stick with our long-term plan, be tight with our expenditures. And obviously, there was a huge decline in copper prices, we'll probably have to slow down in contingent expenditures like exploration and maybe a few others, but not much. We are a very slim company. Another question is, can the solar plant be expanded beyond 50 megawatts, and what's the update on wind turbines? Yes. Just mentioned the updated wind turbines, finalizing the final economic studies. We already have data. And the solar plant cannot be expanded beyond 50 without making lots of modifications and also because you are not allowed to sell to grid and what we can absorb is 50 megawatts. So I think this is our limit at this stage. It doesn't mean that the long term, we cannot use our existing land to install a much larger solar plant, I mean, a huge solar plant, which actually we are looking at, but that's a different story. It would be, for us, a business itself. Next question also related to power. Power prices seem to much better in Europe now. Would you consider being more power -- hedging more power in another long-term contract? Yes, we would. We continue to watch the long-term prices. Right now, they are around EUR 60 megawatt hour. We signed for lower than that. So if we can see the opportunity, we will probably do it in a certain part of our costs because we believe that although the long-term views of prices in Spain, everybody talks about 40s to 50s, at the end, we wouldn't care paying high 50s if it was needed because it doesn't mean too much of a difference. But so far, the prices have not gone there yet. Another question is which exploration probably has the most potential, Ossa Morena or Masa Valverde? It's difficult to say. Ossa Morena is, I would say, more greenfield, very clean copper with gold, huge belt, but early days. So you have to be careful because -- and it's lowly because it's basically in discovery mode. I think the potential is very high, but it's longer term. Masa Valverde, it's an existing deposit where we are basically highlighting the higher rates of the existing deposits. And around this Masa Valverde itself, we are finding several satellites, which we are drilling. So I would say, shorter term is Masa Valverde, and longer-term is Ossa Morena. Another question is your recent work on ESG, have you started to see any positive feedback from investor community analysts, given the investment communities supposedly track companies which score highly? If not, will you make sure necessarily tracking agencies are updated? Well, I think this has been explained by Cesar. Yes, we get in contact with the tracking agencies, we are doing much more than million people see. Very soon, I mean, in weeks, we'll be publishing then our next ESG report, which is even better than the previous one. And yes, we are receiving quite a good feedback from the investor community because they see we are actually in the front of what's been done by companies and mining companies specifically. Another question is, do you have a target date to be quoted in the main market? Is the main -- the market cap large enough? Maybe Cesar you can speak. I mean, I'll repeat the question. Do you have a target date to be quoted in the main market, and is the market cap large enough? By the way, I can send you the e-mail -- the telephone of Cesar and you can speak with him directly. But please, Cesar.

Yes. So the target that we have in terms of planning was, as you might know already was early in 2023. And saw the way to what we sound on moving the company to the U.K., it's been a little bit delayed but we continue having the idea of making that movement in 2023. But we obviously don't know what is the step that we will be founding going to the main market. I think the discussion with the bank is we can terminate the perspective and we pretty much getting [indiscernible] before we go to do the perspectives and the perspective might take between 3 to 6 months. So I think this is something that still was seen in 2023. But we just need to ensure that we have a good base and the company is domiciliated in the country that we need to be in order to be in the premium listing. So -- and then you're also asking about the market cap. I think the company -- that the answer is yes, we have a good size to go to the main market premium listed, but we may not be big enough to go to one of the index. So we may not get to FTSE 350, for example, in the last time. So I've seen a cut or it's around GBP 850 million. So we are in the range of GBP 500 million. So we can be in the main market premium listed, but we might not be eligible to be in the FTSE index yet as a result of that market cap. So yes. So I think that's a good progress and it's just waiting being in the premium listed, and waiting to get the right size to get to the index.

Okay. The next question is, is there any further liability to Astor? And if so, how is this case proceeding since the last update, please? No, there's no further liability with Astor, and the only thing we have done, and this we have -- I don't think we have even announced it is to have an appeal to see if we can recover the cost because we believe the result of the last trial was not fair, and we were asked to pay interest well before they were due. So we have asked the court in an appeal to see if this cost could be reviewed. And that's it. But no liability from our side. If anything, it will only be positive. The next question is, this is some -- can I check if the solar plant is in your cost guidance for '23? Yes, it's -- the capital cost is included. The operating cost for conservative reasons, I don't think we have put any savings in our cost guidance because we will start in the last part of the fourth quarter and normally it's winter time, so we believe it's -- for conservative reasons, we don't believe it's not going to be making any contribution this year. The next question is what percent of our copper output can E-LIX be -- treat? Well, depends on the grade that we put in. Normally, we will start with zinc and copper. If we start with zinc and copper, which we will be extracting the zinc and maintaining the copper in concentrate. So this thing could treat half of -- only the plant that we have right now could treat easily half of our concentrates or more with the current grades that we have. The bottleneck is about the higher concentrates that you have -- sorry, the higher content of metal that you have. If we assume we have around 4%, 5% of zinc in it, we could treat about half of it. The main target for E-LIX is to prove in industrial base, and then we'll just repeat in lines and be able to treat complicated concentrates having copper and zinc, which would give us around 15 to 20 points higher recovery, especially in the polymetallic materials, namely San Dionisio, San Antonio and Masa Valverde. Let me see. Another one is, please, one on cash costs. Taking into account electricity, 100 to 150 PPA, 54 to reach [indiscernible]. We will be looking at very high inflation still for the remaining costs, right? Well, I think I'm not sure if that's the case. I mean, probably...

Yes. So I think the issue is mainly on the FX which have a massive impact. And just to remind that almost 95% of our cost base is euro denominated. So the issue with FX when reporting cash cost is just an important issue. But the reality is when we budget 2023, we use forward [indiscernible] at the time that we approve the budget was [indiscernible], and the FX rate that we have in '22 was much lower than that. If you take that into consideration in overall costs, you have that significant gap between what we should be looking at and what we have if you compare to the previous year. But to get into the inflation, other than electricity and diesel, which we don't know, we just made some estimations on 2023. The remaining cost of the input to the contrary, we are expecting to either stay where they are now or even reduce a bit in 2023. But we're not screening any inflation or significant inflation in any other finding other than electricity and diesel.

The question is actually the same in the -- along the same lines and it makes a very good point, I have to say. We achieved $2.70/lb Cu cash cost in Q4, can you explain the bridge to $2.83/lb Cu in cash costs guidance in '23 also given that you should be achieving some tailwinds on your energy prices, and hence, you would perhaps expect a lower cash cost for '23? I think it has been explained in the sense of the exchange rate, but it's -- I suppose that's the main reason. Otherwise, the point is very good. Cesar?

Yes, it's comparing 2022 with the previous year. And I think that we sort of have in '22, some sort of inflation where for 2023, as I say, we're not assuming any additional inflation, but we're also assuming that the inflation that we experienced in 2022 will never come back. So salaries increased by 5% an average, that's [indiscernible] will stay in 2023, it won't increase, but obviously, you're going to come down to 5%. So yes, so this is mainly that the inflation that we experienced in '22 will remain in 2023, again, other than electricity and diesel.

The last question is how much of energy requirements are now locked in a fixed price for '23 and '24? What price have you locked in? Well, we have actually locked in from '23 onwards for 10 years, so '23 to '32, around 30% of our current needs. I think it's a fixed bottom and the price we have locked in is EUR 54 megawatt hour. Of course, on top of that, you had to add some taxes and some connections to the grid and so on, but basically comparing peers with peers with the plain consumption prices. In addition to that, starting, as I said before, in '24, we will have our solar plant kicking in. And based on the number of hours that we received in this region, this solar plant will give us around 22% of our needs, starting in '24. And of course, the price that you have is basically 0. It's your operating cost because we already have in the budget, in our balance sheet, the investment. If we took this solar plant and, let's say, sold it to our energy supplier, and they charge us a price for that, we will be probably getting around EUR 25 to EUR 30 megawatt hour for this 20%. So you made an average between the EUR 54 megawatt hour and this, let's say, EUR 25 megawatt hour, we'll be getting around EUR 40 megawatt hour forever for around 50% of our needs. And just to -- and also if we got the wind, it would probably be able to add another 15% of our needs based on 4 towers. We could probably go for more, but it's -- the study we are doing is more a kind of prudent investment and something that we can afford. Well, I think that's all. I don't think I have any more questions. I think we have replied to all -- each and all of them.

Yes. That's great, Alberto, Cesar. Thank you for that. And I believe you have addressed all the questions that came in from investors today. And of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet Company platform. But perhaps before we direct investors to provide you with a feedback, which is particularly important to you and the company, Alberto, could I please ask you for a few closing comments?

No, I think, thank you very much. Thank you very much for being here. I think the future of the company is great. We have had a difficult year, but we are very well positioned for the future. And I'll just remind people that this company was supposed to be 12 years mining back in 2014. We have been already 8 years, and we see ahead of us another 15 without even considering the new projects in total, in Masa Valverde and any other discovery. So I could see this company well over 20 years life, which is quite a lot considering where we came from. So I think the future is great, and thanks a lot for your continued support which always helps us to keep pushing and working hard. Thanks a lot.

Alberto, that's great, and Cesar as well. Thank you once 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 management team 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 Plc, I would like to thank you for attending today's presentation. That concludes today's session. Good afternoon to you all.

Thank you.

Thanks a lot.