Atalaya Mining Copper, S.A. ($ATYM)

Good morning, and welcome to the Atalaya Mining Q1 2026 Financial Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Alberto Lavandeira. Good morning to you.

Good morning. Good morning, ladies and gentlemen. Many thanks for being here. We are here to review the first quarter financial results presentation that is on the screen and will be posted on our web page. I have with me Cesar Sanchez, the CFO, that will help me reply to any questions that's related to the details of the presentation. We have already submitted information about the first quarter. We announced that. And as you know, it was below our plans. It was affected by very heavy rainfalls during the late part of February -- of January and the whole of February. But we have made a lot of progress. And since the end of the quarter, during the months of April and May, which have been quite dry, we have exceeded our plan, and we have recovered a good part of the shortfall from Q1. The cost performance has been consistent with guidance, even with lower production. I will get into more details a little bit later. In relation to full year guidance, also, we will be giving a little bit more details further. But basically, what we can say is that we feel comfortable that we can keep it relatively unchanged. We had good results. Even having low production, we generated the EUR 40 million EBITDA. It was impacted by lower production, so it could have been much, much higher, but we benefited from higher copper prices. That shows how leveraged we are to copper prices, higher silver credits and of course, low treatment charges of our concentrates. In the following pages, and I will speak a little bit more about the financial performance and give you a little bit of an update of our growth projects. Looking at the typical graph that we show, the plant performed well, quite consistent recovery was okay, but the grade was lower. The grade was lower. And as a result of that, we produced less. But due to the good copper prices at the end, revenues were slightly lower than previous years and previous quarters, but with a good generation of cash flow. We had an EBITDA of EUR 48 million. We had very good silver credits, and we generated a cash flow of almost EUR 30 million. This cash flow was enough to cover our investments in the quarter and to cover the investment in Lara Resources. And we ended up the quarter with a fantastic balance sheet of almost EUR 300 million in cash and a net cash of almost EUR 270 million and growing, by the way, which includes obviously the proceeds of our capital raise in late January, just about a little less than EUR 150 million. So what about the cash costs? They were consistent during Q1 with our full year guidance. Cash cost of EUR 2.52 and all-in sustaining cost of EUR 3.20 are within our guidance. And you can see that the cash costs are actually lower than the full year of '24 and just slightly higher than '25 even in spite of the lower production. When you look at the details, you would see that the mining costs were higher due to lower production, but also to the effects of higher operating costs, mainly diesel. In the case of processing, basically, the difference is due to lower production. In the case of other operating costs, which are basically G&As, they include the pay that the bonus that's paid normally during the first quarter, that's why it's slightly higher and of course, affected by lower production. But the good news came, of course, with the byproduct credits. Byproduct credits were negative as they used to be in the last couple of years due to the silver grades. But due to our good production and good metal prices of silver, we had a very good negative credit. But a big change, and we have flagged that last year, is that the TCRCs, the refining treatment charges and refining charges that are charged by smelters were net negative, including even including the -- considering the freight and other site costs. This is due to the fact that we have been selling some of the concentrates at the benchmark, which is basically 0 or close to 0, but also a significant amount of lots of production with negative 3-figures, negative treatment charges. So the smelters pay us to get our concentrate. This marks a huge difference from previous year. So we were able to keep our cash costs quite under control, even with this lower production and not favorable exchange rates. We believe this thing is going to be continuing this thing of the negative treatment charges during the years to come. And this is very important because we have this legacy offtake agreements coming from over 10 years coming to the end, expiring. Most of them have already expired, and we basically only have some remnants in this year and next year. And then we believe we are going to be benefiting from the tightness in the concentrate market. I say this is important because this is a kind of hidden asset in the Atalaya balance sheet. With the offtakes uncommitted both at Riotinto and at Touro, this is something that if needed, it could be monetized because there's a huge demand of copper concentrates right now and in the years to come. We normally benchmark our all-in sustaining costs with other companies, and we continue to be within our range, very constant, of course, creeping up a little bit in the last quarter, but still very competitive with other companies. And looking at the guidance, as I said before, Q1 was under the plan, but we have already recovered part of that shortfall. And as a result of that, we thought that it will be prudent to keep our guidance of between 50,000 and 54,000 tonnes of copper, but we are saying that we are going to be on the low end, even having recovered a little bit of our production. The costs, we believe we are going to be in the -- within the range of our guidance. But we are advising and saying that, of course, these events that are happening in the Middle East, this conflict could have an impact in costs. Of course, this could have an effect in diesel and explosives. Diesel is evident due to the prices of oil and the amount of refining capacity in the Middle East. It looks like from the latest news, although they change each week that things are softening there and ships are starting to move within the Strait, but we are prudent. We know that the effect of the all-in sustaining costs if the diesel prices, which are much higher than it used to be last year, continue the whole year, we could have an effect between $0.15 and $0.20 per pound due to diesel and explosives, mainly diesel. Explosives is related to the price of gas, natural gas, which affects also ammonia, which is the base price for explosives, but the real effect is in diesel. We remain confident that this thing is going to be sorted out and the prices will go where it used to be in the past. But as I said, the damage is limited because it is not affecting -- this high diesel and gas prices is not affecting so far in Spain, the prices of electricity. So we have not seen any spike in electricity prices like we have seen in the past conflicts. And we are quite safe with our solar plant and with our hedging of electricity prices plus the low prices due to the high rains in Spain, we are quite confident that we can keep our operating cost guidance. In relation to the CapEx, we have not made any changes. Of course, some things like the Proyecto San Dionisio or the ramp of Masa Valverde when we start could be affected by high diesel prices, assuming this extra costs remain in the market, which we don't -- we think it's going to be resolved eventually. Looking ahead of what our growth projects, just to give you an update of what we normally do during each quarter, San Dionisio, we continue working. You can see the pictures how things are progressing. The pre-stripping is advancing quite well. And we are moving well to get to the higher grade ore grade. In Masa Valverde, we now have all the permits. We now have all the land. We are clearing the land around the portal. We are building the explosive magazine, which is essential to be able to work 3 shifts a day. And we continue to drill infill drilling that area of copper grades that where we are getting as we said in previous releases, grades close to 2% copper with very good thickness. And we continue there with 2 rigs in filling that area in preparation to start the ramp in this year. Also other working streams that we have mentioned in the past is that we have a good resource, a big resource of polymetallic material, material that has higher copper grades, shown in red dots in the slide, higher copper grades in material that has around 100 -- where we have around 130 million tonnes that is polymetallic contains a lot of zinc and lead and silver. While in the Cerro Colorado pit, we have 180 million tonnes roughly, which is with lower grade, but much simpler only copper. And of course, we will need eventually to build a polymetallic circuit. So we are -- we continue with engineering and clearing some of the areas to install this installation, which will cost around $80 million, $90 million, and we will be starting in '26 and go on during 2027. It's a quite simple installation. Basically, we'll be installing some flotation circuits in addition of zinc flotation circuits plus the associated thick and filters to be able to recover some streams of lead and zinc. We also continue drilling areas of other deposits like San Antonio and doing exploration in the Pyrite Belt. And we are very focused also in looking at other opportunities in the Pyrite Belt, which is our natural growth option. But as we always say, our growth is going to come from Galicia. I think it's important to mention that this quarter, although we have seen always lots of progress, but this time, we have seen -- this quarter, we have seen a lot of progress in the public media by -- first, by the government announcing the campaigns to add economic value through mining in different projects, launching tenders for all licenses and focusing in critical materials, a big focus in a positive way from the EU. But the most important thing was that the Minister of Industry, Maria Jesus Lorenzana, shown in the picture on the right, said in public that all the reports needed for the Touro project were finalized and positive and that the environmental impact statement, what we call the EIA, the Declaration of Impact of Environmental, will be ready before summer. It's not clear what before summer means if it's before August or before real summer in end of June. But we are confident that we will be getting this as we had expected during the second quarter, so before the third quarter. In the meantime, we continue working and advancing. We have our teams ready. We have all the engineering ongoing. We have already launched tenders on key equipment, mine contractors, purchasing of land on top of the plant site, finalize the offices for field offices, finalize the assay lab, continue infill drilling in the areas around the pits. And basically, what we want is to get this project ongoing as fast as possible. We have shown this slide before. This total is going to be at least 30 million -- 30,000 tonnes of copper per year or more and with a modest capital intensity. And with operating costs, which are expected to be around $0.50 lower than Riotinto due to better grades, better recovery, better concentrate grades and low -- very low impurities. So in 2 words and before we get into the questions, Atalaya is really advancing. It's very well positioned to grow. We continue to deliver our plans to get to 200,000 tonnes of copper and not far away in 3 years, 100,000 tonnes of copper equivalent considering in the [ 50,000 to 60,000 ] region for Riotinto, another 30,000 for Touro and another 20,000 -- 20,000 for copper equivalent through zinc concentrates. In addition to that, we have other opportunities like our exploration earn-in in Sweden, our exploration projects in the north part of the Pyrite Belt, which is called Ossa-Morena, where we have some copper gold deposits, general exploration in the Pyrite Belt and recently, we also acquired a small stake in a very nice and exciting project of copper in Brazil, which is going through the final feasibility stage and that we believe is going to be a mine in the near future. So look, we try to go quite fast. We are ready with a very good balance sheet, and we are ready to deliver all these projects. So with this, I will probably go into the questions session and try to answer as many as possible.

That's great, Alberto. [Operator Instructions] Alberto, if I may now hand over to you to take us through the Q&A session, and I'll pick up from you at the end. Thank you.

Many thanks. Look, I will try to read. There are a lot of questions that have been submitted and probably more coming soon. The first one is what's been done to reduce the risk of diesel prices increase. Not much that we can do. We have our contractor takes care of the diesel purchase asking for quotes for 3 or 4 suppliers in the region, trying to get better competitive prices. Unfortunately, there's not much that you can hedge over one month or you can cover. We are confident that we will be -- that the prices will be reducing. And one of the things we are doing is try to limit, if possible, any peak movements in this time of this high prices period by reducing the transport distances in areas where there is some flexibility. Have you looked at the feasibility of electrifying haul trucks? I note the a large scale, like Fortescue has seen big EUR 300 million, EUR 400 million savings, switching to electric loaders and XCMG haul trucks. Well, electrifying trucks is unless you go with trolley assisted, it's not something that's proven. The case of Fortescue is quite a different stage because it's long hauls, very horizontal. It's not -- so there are not many mines, if any, that have vertical distances that can electrify because it's not a technology that is not available yet, unless you have a trolley assisted like they have in Sweden or in Zambia and other places with Hitachi trucks, but it's something that right now we are -- our mine cannot allow us to do that. If electrification of haul trucks is being studied, could you spend our solar and battery energy storage? Well, as I said, it's not possible due to the technology right now, although we are looking at the possibility of doing some selective battery storage. The rotation to a timely acquisition of Lara, were funds used from the recent raise? Or was it something from existing cash? Well, there was not a big amount of money. So it was a very limited purchase that we could fund perfectly from our existing cash resources. We didn't need the recent raising. This is something that we have been -- we have been trying to look at companies with value all over the world. But basically, as I said several times, always concentrated in Latin America, where we have certain relations and language advantage. And that means Peru, Chile, Brazil and at a lower extent, other countries, but mainly concentrated in those. And we thought that this was a good opportunity, very serious shareholders, which we knew, and we thought it was a good opportunity for investment purposes, maybe also for the future. So I think it was a good acquisition, fair acquisition. When Atalaya raised funds, the RNS specifically said it was for Touro and San Dionisio in Spain. Lara purchase is pivot away from Spain, doesn't impact the funding requirements for 2 Spanish projects mentioned. Does Lara purchase compete with the RNS fund raise message? No, not really. Not really because, as I said, Lara, right now, they need funds for the feasibility study. So we're talking about 2 or 3 years. And in that time frame, we are not thinking having to provide any more funds to Lara at all, and we will see what we do. Also when we made the raise, we had enough money to do Touro itself, but we said we want to advance some early works. But as I said before, we have other things like simultaneous to Touro in the polymetallic circuit, for example, we could wait until the end of the mine life and start the polymetallic circuit at the end of the mine life, but it makes more economic sense to do it ahead and to be able to blend the normal copper with the polymetallic. The same thing with developing Masa Valverde, we have no rush to develop it. We still have -- we can fill our mill with existing Cerro Colorado pit. But obviously, you can blend some higher rate while you have a large mill that has very good operating costs. It makes more economic sense. So the reason was basically to be able to advance other projects more than -- it was not necessary, but it was good and it gives us also very good flexibility to fund Touro with loans now with the power that will allow us to negotiate with banks without requiring hedging because this is something that we've always been very careful of. And I think we have been right when people thought that the copper price was never going to go over $5. And here we are with higher prices, and it would go to $20 price. Next question is with the recent continued price movement in copper, there is some chatter in bulletin boards that Atalaya could be a bid target. With the exit of Kovas and Trofimova, what defense measures, if any, do you have towards a hostile bid? Well, the best defense is to have a good contact with the shareholders to show them that the future is still there that there is a big upside with this project that we have in hand and with other projects and that they should be trying to see a company stand-alone. Of course, we are a public company, and we could be subject to a bid, of course. I doubt that it would be hostile because obviously, it's quite difficult to do that without having the knowledge -- internal knowledge of the projects. But of course, anything is possible. The best defense what we are doing is keeping our main shareholders very well informed of what we are doing and what is the future so that they are not tempted to listen to bids that could be undervaluing the company. Europe faces a strategic bottleneck. It can mine rare earths, but it cannot refine them. Given Atalaya's land bank and site infrastructure, water, power, site access, would it not be worthwhile storing business or refined rare earth post mining of Riotinto? Well, the land is there. We have lots of things to do before the end of the mine life. We have ahead of us 10 to 15 years life at least. I think it's probably not a business that would add too much value. I think, for example, just to give you an idea, within our land and for example, very close to our tailings, we have the old gold tailings, which today -- at today's value with gold and silver prices probably contain around $1 billion of recoverable gold. So I would say that there is value in using this first ahead of doing anything else. E-LIX, any update on Atalaya potential improved terms, exploitation of technology share ownership? Well, we continue to close -- to watch closely E-LIX. They are working with successfully removing zinc from copper concentrates and also silver still needs to finalize plans for a long-term financial, let's say, viability of the company because we believe that the owner of E-LIX has a very stressed balance sheet. And let's say, we continue with conversations. But right now, we don't have any longer-term plans. Atalaya ore capacity, will this be free from offtake agreements? Yes, we don't have any offtake agreements after -- I think after next year, we are done. Mining.com global mining power rankings, Atalaya was officially named the small-cap winner in the market '26 ranking, securing 8.2% of the votes. Will you tell us more about this, the significance? Well, it's interesting because the winners of the large caps were important companies like Newmont and BHP and Riotinto with around 9% or 10% of the votes. We were the leaders in the small caps with around similar number of votes. So it's very encouraging. I think that I suppose this is a result of good share performance. And people like what we are doing because we have fulfilling our targets. We have been growing from nothing. We have a very good balance sheet. So we are small, but yes, people have voted in favor of us. Next question is as of '26 MSCI model update, Atalaya Mining is characterized as AA leader in metals and mining, non-precious metals industry. Please could you tell us what this is significant? I'm not an expert in this, but this is an index, Morgan Stanley Sustainability Index. It's basically something that they gather information from all the places and that you have the leader -- the AAA and -- which is the best category and then the leaders, which is AA. We are in that upper category, which means that we are doing things better than others. And that's really what it means. So we are very pleased on that because it shows that based on all information of sustainability, we are very well perceived, and we do things in the right way. Next question is Touro expected to add additional 30,000 tonnes per year, 12, 15 years life. Is this a cautionary statement? What's the likelihood of more copper at Touro, longer mine life and new discoveries nearby? I think the likelihood is 100%. Even I'm not telling any insider information. When you look at past reports that we have published and they are in our web page, the reserves based on $2.60 copper price were 100 million tonnes. When you look at the same pits calculated at $3.20 copper price, they were 150 million tonnes. The mineralization remains open. So very likely, we will see a much longer life at Touro. I would bet that not less than 20 years life is what we see in Touro. And we are not disclosing them all. This is the same thing that happened at Riotinto, where we had a mine life of 12 years. We have basically been mining 11 and ahead of us, at least we have another 10, 11 at the very least. So that's what we also expect in Touro, which I think is at least generation, which is very important. And by the way, we have also control of the whole belt. So we have to do more exploration and see if we can find some new discoveries nearby that can extend the mine life. We are quite confident on that. For sure, it will be much more than what we have. How are you working to improve your sustainability credentials? We're doing a lot of work, but maybe Cesar, which is expert in deals with the agencies, can tell you a little bit about that.

Well, I guess the natural answer is by doing things right. But the reality is we engage with a Tier 1 adviser, which basically help us to channel all the information with all the work that we do at Atalaya. So just to be clear, so we have not engaged with any of the sustainability rating agency to improve. It's just the consequence of doing a good job over the last 2 years.

Thank you, Cesar. The next question is, Touro approaching the final approval, how should we see the recent 7.3% stake in Lara? Is this a passive investment or first step towards international asset development? Let's say that right now, we consider this as an investment, simple as investment, a good investment, open to the possibility of doing something internationally. We like the country. It's located in a place with good infrastructure, mining friendly, good people, copper only clean. So it's something that we will be very happy to participate in the event that Lara wanted or we could do something with Lara. So it could be a step. But right now, we are using that as a good investment, and we believe it's a good project and with offering value for the shareholders, which, by the way, has been confirmed by the movement in the share price. Can you clarify as best as possible before summer for Touro approvals? Well, we are just repeating what we have heard in the radio and we're seeing in the media. Before summer in Spain could be before August, which is when everybody takes holidays. But actually before summer is before the 21 or 23 of June. We are confident that this could be obtained -- the environmental impact statement declaration could be obtained before the end of June, during this quarter, as I said before. We are confident from our conversations. Of course, this does not depend on us, but we know it's coming -- we believe it's going to be coming during this quarter. Is the increase in operational cost because there has been less ore processed in Q1? Is this considered to be a one event or because of heavy rain? Or is there a need to create some sort of drainage at site? No. Look, it's more lower production, lower production -- the cost per tonne itself have not been affected too much. Actually, at the plant, they have been even lower than previous quarter. The higher production per pound is due to lower production of copper, which means your cost is divided by less pounds of copper and you have higher costs. That's the main reason. The reason why this affects mainly mining is because you cannot access areas that have better grades, you have to rely in lower grades and with lower grades, you have lower production. And it's not possible to have drain. Simply we had some areas that we could not work. We had rains during this last week of January and the whole February, where we received the same amount of water that we received the whole year in basically every day, it was raining and in some areas that we could access. So this should be a one-off event. We had to change the mine plan a little bit, and we are recovering from that. But in theory, this is something that there will be recovered. Obviously, the ore has not disappeared. Might threaten U.S. sanctions against Spain affect Atalaya? I don't think so. I think I don't know what sanctions can come, but really Atalaya is a mining company, producing in Spain, producing in Europe. And I don't think that will affect us at all. Last question is, what's the latest of E-LIX? As I said before, E-LIX has been working the -- during the first quarter, it didn't work too much. Recently has been working basically due to difficulty with funding because now had been always funded with loans from Atalaya. And we decided that due to some risk perception, we could not continue funding with loans. Somehow, they have started again. The have been working for one month continuously, removing zinc from copper concentrates, lower copper concentrates, which is encouraging and quite positive. We don't have economic results yet, but operationally, it seems to be working well. So that's the latest of E-LIX. And I think this was the last question.

That's great. Thank you very much indeed for addressing all those questions as usual. Alberto, before I redirect investors to provide you with their feedback, which is particularly important to yourself and the company, could I please just ask you for a few closing comments?

Well, thanks very much for being here. Thanks for your continued support as shareholders. It has been a difficult quarter from a production point of view. Sometimes it's important to be a little bit lucky, and we had good metal prices. And at the same time, we had a big shortage of copper concentrates in the market, which is likely going to continue, which have offset the difficulties on production and resulted in a very good quarter as good as any other, which shows the potential of this company. So we look forward for a very good bright '26 in the years to come.

That's great. Alberto, Cesar, thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you.