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

Good morning, and welcome to the Atalaya Mining Copper, S. A. AGM 2025. [Operator Instructions] I'd now like to hand you over to Neil Gregson, Non-Executive Chairman. Good morning, sir.

Good morning. Thank you. Good morning, ladies and gentlemen. It is my pleasure to welcome you to the Annual General Meeting of Atalaya Mining Copper, S.A. This is my first as Chair of Atalaya. It's now 12 noon Central European Time, the time appointed for the meeting. I would like to introduce my fellow directors, Alberto Lavandeira, our CEO; Kate Harcourt, our Senior Independent Director and Chair of the Board's Sustainability Committee; Carole Whittall, Chair of the Board's Audit Committee; Hussein Barma, Chair of the Board's Remuneration Committee; Stephen Scott, Chair of the Board's Physical Risk Committee; and Coriseo González-Izquierdo, and with apologies from Jesús Fernández. Before we proceed with the formal business of the meeting, I would like to inform shareholders that Resolution 13b as set out in the notice of the meeting is being withdrawn and will not be put to the meeting today. The decision has been made by the Board since it is clear that the resolution does not have sufficient support from shareholders. In accordance with Article 15.1 of the company's Articles of Association, voting on all proposed resolutions set out in the meeting call will be taken on a poll. That is to say each ordinary shareholder present in-person or by corporate representative or by proxy has 1 vote for each ordinary share held. According to the list of votes represented at the meeting prepared by the company's proxy scrutineer, Santander Investment, S.A., there are 61,076,554 shares and votes represented in-person or by proxy at the beginning of the meeting. That is to say 43.39% of the company's voting share capital is present in-person or by proxy. I can therefore confirm that this meeting is duly called on second call, and validly constituted. The notice of the meeting, proposed resolutions and reports to be considered at this meeting have been available to all shareholders for the required period. With your permission, I would like to take the notice of meeting as read. Are there any objections? Thank you. I see that there are no objections. The notice of meeting invited shareholders to submit in writing in advance any questions concerning items on the agenda. The Secretary informs me that no shareholders' questions relating to the formal business of the meeting have been received prior to the meeting. Would any shareholder present here today like to raise any questions concerning items on today's agenda? There being no further questions or no questions, I will now propose each resolution to the meeting. The full text of each of the resolutions is set out in the document entitled Proposed Resolutions that was published on the 14th of May 2025 and amended on the 2nd of June 2025. With your permission, I would like to take the full text of each of the resolutions as read. Are there any objections? Thank you. I see that there are no objections. Santander has advised me that the total number of valid proxy votes that have been received in respect of each resolution, the number in favor, the number against and the number directed to be withheld. Full details will be displayed on the screen as each resolution is proposed to the meeting. With your permission, I intend reading aloud only the percentage of votes in favor. Are there any objections? Thank you. I see that there are no objections. As there is less than 50% of the voting capital present in order to be passed, resolutions 10, 11, 12, 13a, 14 and 15 require at least 2/3 of the votes cast to be in favor. All remaining resolutions require an absolute majority of the votes cast to be in favor. Are there any shareholders present at the company's registered office in Spain or here in London who have not yet cast their proxy votes in advance of the meeting? I see that there are none.

Would you like to cast a vote?

I will vote in the [indiscernible].

Right. Do you want us to add to the votes or are you happy to...

[indiscernible].

Okay. I note that there was one shareholder present who has not voted.

[indiscernible] shareholders for voting. So on the register, I don't think [indiscernible] shareholder present...

Okay. Well, let's move on. Of those shareholders present in-person or by corporate representative or by proxy who have already cast their proxy votes, do any of you wish to change your vote in relation to any of the resolutions? I see that no shareholder wishes to change their proxy vote cast in advance of the meeting. I put Resolution 1 to the meeting, which deals with the approval of the 2024 annual report and financial statements. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 1 has been duly passed by a majority of 97.93%. The actual numbers of all the resolutions will be shown on the screen for the people present in the room. I put Resolution 2 to the meeting, which deals with the approval of the 2024 sustainability report. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 2 has been duly passed by a majority of 98.04%. I put Resolution 3 to the meeting, which deals with the approval of the corporation management actions for the 2024 financial year. Shareholders present having confirmed that they do not wish to change their proxy voting instructions, I declare that Resolution 3 has been duly passed by a majority of 97.62%. As announced on the 18th of March 2025, the Board has proposed a final dividend for the 2024 financial year of $0.03 per ordinary share, which was then equivalent to approximately 2.3p per share. Payment of the final dividend is subject to shareholder approval at this meeting of this resolution. Resolution 4 deals with the allocation of the 2024 results and approval of the dividend. I put Resolution 4 to the meeting. Shareholders present having confirmed that they do not wish to change their proxy voting instructions, I declare that Resolution 4 has been duly passed by a majority of 98.04%. I now turn to the resolutions relating to the election and reelection of directors. Biographical details of each director seeking election or reelection are contained in both the main market version of the company's 2024 annual report and in the document entitled Proposed Resolutions. I put Resolution 5a to the meeting, which pertains to the reelection of Jesús Fernández. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 5a has been duly passed by a majority of 71.6%. As Resolution 5b pertains to my own reelection, I will hand over to Kate Harcourt and have a drink of water.

I put Resolution 5b to the meeting to reelect Mr. Neil Dean Gregson as a Director for a period of 1 year. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 5b has been duly passed by a majority of 93.6%. I'll now hand back to Neil.

Thank you, Kate. I put Resolution 5c to the meeting, which pertains to the reelection of our CEO, Alberto Lavandeira. Shareholders present having confirmed that they do not wish to change their proxy voting instructions I declare that Resolution 5c has been duly passed by a majority of 95.74%. I put Resolution 5d to the meeting, which pertains to the reelection of Kate Richards. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 5d has been duly passed by a majority of 93.71%. I put Resolution 5e to the meeting, which pertains to the reelection of Stephen Scott. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 5e has been duly passed by a majority of 92.14%. I put Resolution 5f to the meeting, which pertains to the reelection of Carole Whittall. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 5f has been duly passed by a majority of 97.89%. I put Resolution 5g to the meeting, which pertains to the election of Maria Del Coriseo González-Izquierdo. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 5g has been duly passed by a majority of 98.04%. I put Resolution 6 to the meeting, which relates to the 2024 annual report on directors' remuneration. Shareholders present having confirmed that they do not wish to change their proxy voting instructions, I declare that Resolution 6 has been duly passed by a majority of 72.13%. I put Resolution 7 to the meeting, which relates to the directors' remuneration policy. Shareholders present having confirmed that they do not wish to change their proxy voting instructions, I declare that Resolution 7 has been duly passed by a majority of 96.35%. I put Resolution 8 to the meeting. This resolution relates to the ratification of the long-term incentive plan and the authority to allot a maximum of 5,471,999 shares to satisfy awards made under the plan. Shareholders present having confirmed that they do not wish to change their proxy voting instructions, I declare that Resolution 8 has been duly passed by a majority of 73.70%. I put Resolution 9 to the meeting, which relates to the proposed one-off transitional share option award to the CEO. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 9 has been duly passed by a majority of 71.13%. I put Resolution 10 to the meeting. This resolution grants authority for the company to purchase its own shares. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 10 has been duly passed by a majority of 98.01%. I put Resolution 11 to the meeting. A report on this resolution was published with the rest of the meeting documentation on 14th of May 2025. This resolution grants authority for the company to increase the company's share capital by up to 50%. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 11 has been duly passed by a majority of 87.36%. I put Resolution 12 to the meeting. A report on this resolution was published with the rest of the meeting documentation on the 14th of May 2025. This resolution grants authority for the allotment of securities. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 12 has been duly passed by a majority of 87.51%. I put resolution 13.1 to the meeting. A report on this resolution was published by -- with the rest of the meeting documentation on the 14th of May 2025. Resolution 13.1 is a general authority to disapply preemption rights. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 13a or 13.1 has been duly passed by a majority of 97.99%. I put Resolution 14 to the meeting. A report on this resolution was published with the rest of the meeting documentation on the 14th of May 2025. This resolution approves the amendment of the company's Articles of Association to permit general meeting to be held in London, U.K. as well as in Sevilla, Spain. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 14 has been duly passed by a majority of 98.04%. I put Resolution 15 to the meeting. A report on this resolution was published with the rest of the meeting documentation on the 14th of May 2025. This resolution approves an amendment to the company's Articles of Association to require disclosure of interest in the company's shares. To the extent permissible under Spanish law, this amendment broadly replicates the equivalent provisions in Section 793 of the U.K. Companies Act. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 15 has been duly passed by a majority of 98.04%. I put Resolution 16 to the meeting, which relates to the reduction in the notice period required to call extraordinary general meetings from 1 month to 15 calendar days. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 16 has been duly passed by a majority of 96.64%. I put Resolution 17 to the meeting. This resolution delegates the necessary powers and authorizations to put into effect all the resolutions passed at this meeting. Shareholders present having confirmed that they do not wish to change their proxy voting instructions. I declare that Resolution 17 has been duly passed by a majority of 98.04%. I put Resolution 18 to the meeting. This resolution relates to the approval of the minutes of this meeting. The minutes of this meeting have been drawn up in accordance with the results of the voting and the proceedings of this meeting. With the permission of the meeting, I propose that the minutes be taken as read and that the meeting proceeds to consider their approval. Are there any objections? Thank you. I see that there are no objections. The minutes will therefore be taken as read. Shareholders present having confirmed that they do not wish to change their proxy voting instructions, I declare that Resolution 18 has been duly passed by a majority of 98.04%. As previously announced, Hussein Barma is retiring at the conclusion of this Annual General Meeting. He has served on the Board since September 2015. And during his tenure, he has served as a member of and chaired several of the Board's committees. On behalf of the Board, I would like to extend my thanks to Hussein for his very dedicated service throughout his 9-year tenure on the Board. 10?

Close to 10...

9 and a bit year tenure on the Board.

9 and a bit sounds better than [indiscernible].

Yes. Thanks for all your great help. I would ask the Secretary to release the required announcement confirming that all the resolutions have been passed at the meeting and to make available on the company's website the voting results. I would like to thank those shareholders who attended in Sevilla and in London, and those who availed themselves of the webcast facility for their interest. Ladies and gentlemen, that concludes the business of the meeting, and I declare the formal business of the meeting closed. And I will now hand back to Paul.

Fantastic. Thank you very much indeed for running through the AGM today. I now believe I'd like to hand you over to Alberto to run through a short presentation and take any questions that you have. [Operator Instructions] Thank you.

Good morning, ladies and gentlemen. I'm going to go through a very short presentation looking at the results and accomplishments that we had last year. And also, I will go through the near-term future of this company, how things are evolving in the almost half year that we have gone through and how the company looks in the next few years. '24 was a transitional year, I would say, with some things that were excellent and some things that were not as expected. Starting from the operational and financial results, we produced 46,000 tonnes of copper, with a record throughput of the plant of 15.9 million tonnes, which is more than the design rate of 15 million tonnes. And this was achieved with cash cost of around $3.26 all-in sustaining costs and generated EUR 32 million EBITDA -- profits and an EBITDA of around EUR 66 million. Cash flow was EUR 53 million, and free cash flow was negative of EUR 12.7 million due to the investments that we had to do during this year. The results were slightly lower than we had expected due to lower production, but we ended up with an excellent balance sheet, and we kept our net cash position very similar to what we had in previous years. It was not only the financial results were important. I think we had set some goals in the previous meetings. One of them was to move to the Main Market out of AIM, which was something that some of our key shareholders had asked for. We also moved our legal re-domicile in Cyprus to Spain that had effect at the end of the year. And this was also a requirement that was needed to be able to be part of the FTSE index sometime in the future, it was something that we have achieved in the first part of 2025. And besides that, we paid and we continue to pay the dividend, a small dividend, and we proposed another final dividend of $0.03 per share, basically confirming our stated discipline of giving back some of the money even knowing that we'll have to reinvested in the future years. Where the investments are going to come with our growth projects. We are not a dividend company. We are a growth company, and we have certain assets. One is the Cerro Colorado pit, which is working, but our growth project is very close to Cerro Colorado, it's called San Dionisio. And finally, we got -- put all the papers to get the permits, which we got this year. But last year, we started already with the first stripping with an interim pit that we were allowed to start with. Our next growth project is Touro. Touro is a project in the north part of Spain, as you know. And finally, last year, more or less at this time of the year, the regional government, Xunta de Galicia declared this project strategic, which means that they would streamline and push the permitting of this project, which in theory should be around 1 year, which is very close to where we are getting. Of course, interruptions in the process can extend this deadline, but really put some pressure on the Xunta de Galicia to give the permits of this project. Other assets that we have been working is to continue working with E-LIX, which basically is a system to be able to leach complex sulfides where we have lots in Spain and specifically in Huelva, and also even, potentially there in an exploration asset that we have in Sweden. One of these assets is Masa Valverde, where we continue exploration and advancing towards development, and we expect to do this year. And the other -- and we also signed an agreement for exploration in a farm in 2 belts in the northern part of Sweden, which are very well known for hosting VMS deposits. Last but not least, we improved -- we continue with our highest standards in ESG and safety, very low frequency -- accident frequency, lowered our consumption rates of water in Spain, installed a solar plant where we have completed and it's operating -- in operation in the first phase, 50 megawatts. It is the largest self-consumption solar plant in Spain for a single consumer. And related to -- and also we published our Sustainability Report in '23. Related also to corporate matters, Neil Gregson was appointed Chair substituting Roger Davey after a long servicing with the company. And Kate Harcourt was appointed Senior Independent Director. We also had Carole Whittall appointed as Independent Non-Executive Director. So this is what happened during 2024. So how are things looking in first quarter of '25 and even the first -- almost 3 months of '25. There are some graphs shown in the screen, but basically showing that the plant is performing very well, almost at record levels. The recovery is slightly lower than previous quarters due to the presence of start-up ores from San Dionisio. But the combination of both very good recovery, better grades and better recovery. Basically has set almost a record copper production in levels that have not been seen since 3 or 4 years ago. As a result of that and very good copper prices, our revenues were a company record and also the EBITDA over EUR 50 million was the higher since 4 years ago before the crisis of the gas and Ukraine invasion. As a result of that, we had -- we continue to have a very good cash position with very good working capital. And the company is very well placed to continue with these levels in the rest of the year. As we are now in AGM, I can report that most of the second quarter is already gone. So far, the production is going quite well. The copper price is also maintaining very good levels. So we expect to have a very good quarter, close or very similar or maybe even better than the first quarter of 2024. Looking at a little bit of our assets and how we were able to do that is that in the picture, you will be able to see the pit that's providing the ore during the last 10 years, which is called Cerro Colorado in the back part of the picture. In the front part of the picture, you see the interim development of the San Dionisio pit. So you can see, first of all, in the picture that we are already working there, mining a small part of the pit, which is slightly oxidized. Thus that's the reason why we are going to have a slightly lower recoveries. But also in the left part of the picture, it's shown that it contains very good copper grades, double the grade of the Cerro Colorado. And in the lower part, it also contains zinc, which means that we are looking forward to mine this polymetallic, including zinc in the lower part of the pit. One thing you will notice is that there is a road there divided in both pits. Of course, that road needs to be moved, and we have advanced the movement of that road and the thing is it's not going to be a problem at all. In the back end of the picture, you see a white shadow, that's the solar plant, which is fully operational right now. We have mentioned polymetallic. As you know, we have been betting and using the system for polymetallic complex ores. It has been a very difficult year because being something totally new with new people, new hires, new equipment, a new system. I won't say that the results have been -- the operation is working quite well, but still needs to perform to the highest capacity in order to be -- to prove its economics. We continue to support this. And the reason why we are supporting this has been -- is that using differential flotation to -- for complex copper and zinc ores, the recoveries that you can get with global flotation plus E-LIX are much larger. So we will be able to use this system in deposits that are very complex. One of the deposits that's very complex is the Masa Valverde deposit, which is the one shown in the picture on the left. It is a very large deposit of around 90 million tonnes of sulfides shown in red. We have also discovered, our exploration teams have discovered 3 smaller deposits called Majadales, Campanario and several others actually not shown in this picture, which are very complex and will require some of these systems like E-LIX. But in the meantime, our geologist have discovered one zone that's only copper shown in the pictures as red. We have 4 rigs right now as we speak, drilling that area because that area is copper only with very good grades. We will be reporting those soon. And that type of material, you can dump into the plant directly without having to modify the circuits and produce extra copper from the same installations. We do have already all the permits to do start this, and we are basically waiting for the final investment decision in this case. And last but not least, really the future of this company, the high value is Touro project. Touro, as I said, we are in the last stages of permitting. And why we like Touro is that we will be producing around 30,000 tonnes of copper, so it's slightly lower than Riotinto. But with a very low capital intensity of less than $10,000 per tonne, which is less than half of what's the normal produce in the world. CapEx is around EUR 250 million. And we have progressed the financing of this to almost a final level. Why we like the project is it has a slightly lower strip ratio than Riotinto, 2 versus 2.2, slightly higher grade. You get better recoveries, and you get better recoveries in a much better concentrate grade, which means higher payability, almost 1 point more, and with very low penalties, basically nothing, so extremely clean concentrate. All these features make this concentrate very valuable for the company because as you probably all know, there's a huge deficit of copper concentrates in the world, and this deficit, it seems here to stay for quite a few years. So the ore itself also from the operational point of view is softer, slightly softer than Riotinto and the haulage distance is low. What does all this mean? It means probably around $0.5 per pound lower operating cost than Riotinto. So it's a project that has extreme value for the company. With all this, this basically is a summary of what I have said. This company is not a dividend payer. It is a dividend payer, but that's not the scope of the company. We are going to be around 50,000 tonnes this year of copper, but there is the potential to grow the stock work. The copper-only ore at San Dionisio, it can add up to 10,000 tonnes of copper. The copper-only ore of Masa Valverde has the potential of around the same thing. The polymetallic will increase because it has extra sulfides in the form of zinc and lead. But the key growth is going to be around 30,000 tonnes of copper from Touro. With these things, it means that with our projects in the next few years and not much more than 3, our company has the potential to be basically doubling the capacity of production, which is something that not many companies can say. And I think with that, this is the end of my presentation. And probably before further introduction, maybe I could go directly to the questions that have been pre-submitted and those that have -- that I can read on my screen.

So one question is how effective is E-LIX system? How is it progressing comparing with the estimates and for estimated pre-commissioned delivery in terms of output? If it's progressing, what commercialization opportunities are available? And are there any deals lined up with offtakers? Well, it's progressing. It's taking longer than expected because it's absolutely new. The system is working perfectly well from the operational point of view. In terms of output, I think we are still not in the design capacity. And about opportunities, I think it's very early to say. I think we'll be dealing with offtakers. The real value for us will be the added value that we can get from deposits that otherwise would not be easy to process. One question. Can you be more specific about the percentage return in dividend of free cash flow? Previously notified as between 30% and 50%. That's correct. We will be giving back 30% or 50% of the free cash flow. Obviously, in this free cash flow, sometimes you deduct some one-off investments that are needed, and that's what we have been doing up to now. It means that when we do get higher cash flows due to higher production of higher -- copper prices like we did back in 2021, we provided more dividends than we did the last few years. Just the technicality, but the majorities for these votes are in the total of the 4 votes, they are -- the 4 votes minus the against votes. Okay. Thank you very much. As we take note of that, we are just reading the votes. Another question and the last one is, once permits have been granted, how long would it take to bring Touro into production? I think once all the permits are granted with 18 months, we will be into production. The commissioning should be very fast based on our experience in Riotinto, about 3 months. So in between 18 months and 2 years, we will be at full production in Riotinto, which in -- at total, which probably means we're looking at some time in year 2027. And that ends up the informal part of the meeting from my side. Any questions present -- from those present here? So Paul, back to you. Thanks.

Fantastic. Alberto, thank you very much indeed, and thank you to the Board for updating investors today. That concludes today's session. Again, thank you for updating. [Operator Instructions] On behalf of the Board of Atalaya Mining Copper, S.A., we would like to thank you for attending today's Annual General Meeting proceedings. That concludes today's session, and good afternoon to you all.