TIDMATYM

RNS Number : 9754V

Atalaya Mining PLC

13 August 2020

13 August 2020

Atalaya Mining Plc.

("Atalaya" and/or the "Group")

Unaudited Interim Condensed Consolidated Financial Statements for the period ended 30 June 2020

Atalaya Mining Plc (AIM: ATYM; TSX: AYM), the European mining and development company, is pleased to announce its quarterly results for the period ended 30 June 2020 ("Q2 2020"), together with its unaudited interim condensed consolidated financial statements.

The Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2020 ("H1 2020") are also available under the Company's profile on SEDAR at www.sedar.com and on Atalaya's website at www.atalayamining.com.

Financial Highlights

 
 Period ended 30 June                                Q2 2020   Q2 2019     H1 2020    H1 2019 
 Revenues from operations              EURk           56,544     43,070    117,733     94,782 
                                -----------------  ---------  ---------  ---------  --------- 
 Operating costs                       EURk         (43,710)   (31,036)   (95,625)   (63,238) 
                                -----------------  ---------  ---------  ---------  --------- 
 EBITDA                                EURk           12,834     12,034     22,108     31,544 
                                -----------------  ---------  ---------  ---------  --------- 
 Profit for the period                 EURk            3,035      6,849      5,966     21,004 
                                -----------------  ---------  ---------  ---------  --------- 
 Basic earnings per share        EUR cents/share         2.3        5.1        4.6       15.4 
                                -----------------  ---------  ---------  ---------  --------- 
 
 Cash flows from operating 
  activities                           EURk            7,515      6,856     23,000     14,970 
                                -----------------  ---------  ---------  ---------  --------- 
 Cash flows used in investing 
  activities                           EURk          (7,746)   (15,137)   (13,331)   (32,275) 
                                -----------------  ---------  ---------  ---------  --------- 
 Cash flows (used in)/from 
  financing activities                 EURk          (9,415)      (268)     14,631      (268) 
                                -----------------  ---------  ---------  ---------  --------- 
 
 Working capital surplus 
  / (deficit)                          EURk           10,309   (18,391)     10,309   (18,391) 
                                -----------------  ---------  ---------  ---------  --------- 
 
 Average realised copper 
  price                               US$/lb            2.51       2.81       2.54       2.80 
                                -----------------  ---------  ---------  ---------  --------- 
 
 Cu concentrate produced             (tonnes)         60,938     48,382    120,941     91,823 
                                -----------------  ---------  ---------  ---------  --------- 
 Cu production                       (tonnes)         13,635     10,889     26,864     21,108 
                                -----------------  ---------  ---------  ---------  --------- 
                                      US$/lb 
 Cash costs                           payable           1.87       1.74       1.93       1.81 
                                -----------------  ---------  ---------  ---------  --------- 
                                      US$/lb 
 All-In Sustaining Cost               payable           2.22       1.95       2.25       2.06 
                                -----------------  ---------  ---------  ---------  --------- 
 

-- Q2 2020 revenues of EUR56.5 million (Q2 2019: EUR43.1 million). H1 2020 revenues of EUR117.7 million were higher than the same period for the prior year of EUR94.8 million. Despite lower copper prices, revenues increased as a result of higher concentrate sales volume in the period following the completion of the plant expansion at Proyecto Riotinto.

-- Q2 2020 operating costs were EUR43.7 million (Q2 2019: EUR31.0 million). H1 2020 operating costs amounted to EUR95.6 million (H1 2019: EUR63.2 million) reflecting the higher production volumes and higher cash costs.

-- Q2 2020 EBITDA of EUR12.8 million (Q2 2019: EUR12.0 million). H1 2020 EBITDA of EUR22.1 million (H1 2019: EUR31.5 million). The increase in Q2 EBITDA was driven by an increase in copper concentrates sold in the period offset by lower commodity prices and higher cash costs.

-- Q2 2020 profit after tax of EUR3.0 million or 2.3 cents basic earnings per share (Q2 2019: EUR6.8 million or 5.1 cents basic earnings per share). Profit after tax for H1 2020 was EUR6.0 million or 4.6 cents basic earnings per share (H1 2019: EUR21.0 million or 15.4 cents per share). Lower EBITDA and higher depreciation charges for the expanded plant at Proyecto Riotinto contributed to lower profits during the period.

-- Q2 2020 cash costs of US$1.87/lb of payable copper, higher than Q2 2019 cash costs of US$1.74/lb, mainly attributable to increased processing costs during the quarter relating to higher consumption of lime and grinding balls and, to a lesser extent, SAG liners. Nevertheless, Q2 2020 cash costs were lower than Q1 2020 cash cost of US$1.99/lb.

-- Q2 2020 AISC was US$2.22/lb of payable copper, higher than US$1.95/lb during Q2 2019. Increase in AISC was driven by additional investments in sustaining capex, stripping costs. AISC in Q2 2020 was lower than Q1 2020 AISC of US$2.27/lb.

-- Inventories of concentrate at 30 June 2020 amounted to EUR2.9 million (EUR11.0 million at 31 December 2019).

-- Working capital surplus as at 30 June 2020 of EUR10.3 million, increased from EUR3.6 million reported as at 31 December 2019. Increase in working capital attributable to operating, cash generated, cash from financing activities and partly netted off by investment cash outflows.

-- Unrestricted cash balances as at 30 June 2020 amounted to EUR32.4 million with EUR14.9 million remaining drawn against the unsecured credit facilities

-- Q2 2020 cash flows from operating activities before changes in working capital were EUR10.7 million (Q2 2019: EUR11.7 million). H1 2020 cash flows from operating activities before changes in working capital were EUR21.9 million (H1 2019: EUR31.9 million).

-- Cash flow used for investing activities amounted to EUR7.7 million and EUR13.3 million for Q2 2020 and H1 2020 respectively (Q2 2019 and H1 2019: EUR15.1 million and EUR32.3 million respectively). The investments relate to sustaining capex and work on tailings dams.

-- Q2 2020 cash from financing activities decreased by EUR9.4 million as credit facilities used to ensure sufficient liquidity during the COVID-19 pandemic were partly repaid. For H1 2020, the cash generated from financing activities was EUR14.6 million (H1 2019 EUR0.3 million).

Operational Highlights

Proyecto Riotinto

-- Copper production during Q2 2020 was 13,635 tonnes, an increase of 25.2% compared with 10,888 tonnes produced during Q2 2019 due to the plant expansion completed in 2019. Copper production for H1 2020 was 26,864 tonnes compared with 21,108 tonnes during H1 2019.

-- Ore processed during Q2 2020 was 3,572,094 tonnes, an increase on Q2 2019 when ore processed amounted to 2,565,559 tonnes. Total ore processed during H1 2020 amounted to 6,999,242 tonnes (H1 2019: 5,011,536 tonnes).

-- Copper recovery during the quarter was 85.89%, higher than the 82.62% achieved in Q1 2020. For H1 2020 copper recovery was 84.32%, compared with 89.47% in H1 2019. Plant recoveries increased against Q1 2020 as a result of operational improvements to the fully commissioned plant.

-- As reported on 30 March 2020, operations at Proyecto Riotinto halted for five days following the Royal Decree issued by the Spanish Government to establish national protective measures against COVID-19. This affected tonnage processed during April 2020 resulting in ore milled lower than planned during Q2 2020.

-- On 13 April 2020, the Company was formally notified that the Environment Department of the Xunta de Galicia had issued a negative Impact Declaration ("DIA") required to restart copper production at Proyecto Touro.

-- The Company continues to assess its options which may include several types of appeals or modified project proposals to address the concerns of the Xunta de Galicia.

-- The Company is confident that its world class approach to Proyecto Touro, that includes fully plastic lined tailings with zero discharge, will satisfy the most stringent environmental conditions that may be imposed by the authorities prior to the development of the project.

Outlook 2020

-- Annual guidance range of US$1.95/lb-US$2.05/lb and US$2.20/lb-US$2.30/lb for cash costs and AISC, respectively, is currently being maintained.

   --      Production guidance remains at 55k to 58k tonnes of contained copper. 

-- Management continues to monitor the impact of COVID-19 on the operations and the ongoing cost structure and will update the market with any potential changes in expectations.

COVID-19 Update

-- Since the announcement on 6 April 2020, Proyecto Riotinto continues operating with exceptional requirements and recommendations to prevent exposure to COVID-19 and the spread of the virus.

-- Atalaya's key priority continues to be protecting its workforce and the local communities surrounding both Proyecto Riotinto and Proyecto Touro.

-- In light of new cases in the north of Spain, the Company has reinforced its measures to protect against the pandemic and any adverse development will be notified accordingly.

Legal updates

-- On 7 May 2020, the Company announced the Junta de Andalucía had issued a favourable resolution (the "Resolution") which validates the Unified Environmental Authorisation (the "AAU") of Proyecto Riotinto. In addition, on 1 June 2020, the Company announced the Junta de Andalucía validated the Mining Permits. The Resolutions end the legal process announced by the Company on 26 September 2018 in relation to the judgement made by the Tribunal Superior de Justicia de Andalucía ("TSJA") in connection with the AAU and the Mining Permits.

Alberto Lavandeira, CEO commented:

"Despite the challenges of COVID-19, our Proyecto Riotinto site continues to perform well, with copper production and ore milled both increasing over the quarter and half year and our production and cash costs on track to meet our full year guidance. The work the Atalaya team has carried out during this time gives me immense pride as our key priority continues to be protecting our workforce and the local communities surrounding both Proyecto Riotinto and Proyecto Touro. Looking ahead, the completion of the Proyecto Riotinto expansion in 2019 means that Atalaya is well positioned to continue benefitting from higher copper concentrate sales and the improved commodity price environment."

This announcement contains information which, prior to its publication constituted inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Contacts:

 
                                 Elisabeth Cowell / Adam            + 44 20 3757 
 Newgate Communications           Lloyd / Tom Carnegie               6880 
                                                                    +44 20 3170 
 4C Communications               Carina Corbett                      7973 
                                ---------------------------------  ------------- 
 Canaccord Genuity (NOMAD        Henry Fitzgerald-O'Connor          +44 20 7523 
  and Joint Broker)               / James Asensio                    8000 
                                ---------------------------------  ------------- 
 BMO Capital Markets (Joint      Tom Rider / Michael Rechsteiner    +44 20 7236 
  Broker)                         / Neil Elliot                      1010 
                                ---------------------------------  ------------- 
                                                                    +44 20 7418 
 Peel Hunt LLP (Joint Broker)    Ross Allister / David McKeown       8900 
                                ---------------------------------  ------------- 
 

About Atalaya Mining Plc

Atalaya is an AIM and TSX-listed mining and development group which produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain. In addition, the Group has a phased, earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain. For further information, visit www.atalayamining.com

Management's review

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 June 2020 and 2019

Notice to Reader

The accompanying unaudited interim condensed consolidated financial statements of Atalaya Mining Plc have been prepared by and are the responsibility of Atalaya Mining Plc's management. The unaudited interim condensed consolidated financial statements have been reviewed by Atalaya's auditors in accordance with the International Standard on Review Engagements 2410 "Review of Interim Financial Information performed by the Independent Auditor of the Entity".

Introduction

This report provides an overview and analysis of the financial results of operations of Atalaya Mining Plc and its subsidiaries ("Atalaya" and/or "Group"), to enable the reader to assess material changes in the financial position between 31 December 2019 and 30 June 2020 and results of operations for the three and six months ended 30 June 2020 and 2019.

This report has been prepared as of 12 August 2020. The analysis hereby included, is intended to supplement and complement the unaudited interim condensed consolidated financial statements and notes thereto ("Financial Statements") as at and for the period ended 30 June 2020. The reader should review the Financial Statements in conjunction with the review of this report and with the audited, consolidated financial statements for the year ended 31 December 2019, and the unaudited interim condensed consolidated financial statements for the period ended 30 June 2019. These documents can be found on Atalaya's website at www.atalayamining.com .

Atalaya prepares its Annual Financial Statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by EU and its Unaudited Interim Condensed Consolidated Financial Statements in accordance with International Accounting Standards 34: Interim Financial Reporting. The currency referred to in this document is the Euro, unless otherwise specified.

Forward-looking statements

This report may include certain "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitute forward-looking statements. Forward-looking statements are frequently characterised by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Assumptions upon which such forward-looking statements are based include that all required third party regulatory and governmental approvals will be obtained. Many of these assumptions are based on factors and events that are not within the control of Atalaya and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions and other risk factors discussed or referred to in this report and other documents filed with the applicable securities regulatory authorities. Although Atalaya has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Atalaya undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

   1.     Description of the Business 

Atalaya is a European mining and development company domiciled in Cyprus. The Company is listed on the AIM Market of the London Stock Exchange ("AIM") and on the Toronto Stock Exchange ("TSX").

Proyecto Riotinto, wholly owned by the Company's subsidiary Atalaya Riotinto Minera, S.L.U., is located in Huelva, Spain. The Group operates the Cerro Colorado open-pit mine and its associated processing plant where copper in concentrate and silver by-product is produced. A brownfield expansion of the plant was completed in 2019.

The Group has an initial 10% stake in Cobre San Rafael, S.L., the owner of Proyecto Touro, as part of an earn-in agreement which will enable the Group to acquire up to 80% of the copper project. Proyecto Touro is located in Galicia, north-west Spain.

In November 2019, Atalaya executed the option to acquire 12.5% of Explotaciones Gallegas del Cobre, S.L. the exploration property around Touro, with known additional reserves, which will add to the potential to the Proyecto Touro.

   2.     Overview of Operational Results 

Proyecto Riotinto

The following table presents a summarised statement of operations of Proyecto Riotinto for the three and six months ended 30 June 2020 and 2019, respectively.

 
                                          Three months ended   Three months ended   Six months ended      Six months 
  Units expressed in                            30 June 2020         30 June 2019       30 June 2020           ended 
  accordance with the         Unit                                                                      30 June 2019 
  international 
  system of units 
  (SI) 
 
 Ore mined                     t                   3,232,331            2,781,264          6,261,693         5,331,249 
 Ore processed                 t                   3,572,094            2,565,559          6,999,242         5,011,536 
 
 Copper ore grade              %                        0.44                 0.48               0.46              0.47 
 Copper concentrate 
  grade                        %                       22.35                22.51              22.21             22.99 
 Copper recovery rate          %                       85.89                88.72              84.32             89.47 
 
 Copper concentrate            t                      60,938               48,382            120,941            91,823 
 Copper contained in 
  concentrate                  t                      13,635               10,889             26,864            21,108 
 Payable copper 
  contained in 
  concentrate                  t                      13,025               10,405             25,654            20,190 
 Cash cost*             US$/lb payable                  1.87                 1.74               1.93              1.81 
 All-in sustaining 
  cost*                 US$/lb payable                  2.22                 1.95               2.25              2.06 
 

(*) Refer to Section 5 of this Management's Review

Note: The numbers in the above table may slightly differ among them due to rounding.

Three months operational review

During Q2 2020 a total of 3.6 million tonnes of ore were processed with an average copper head grade of 0.44% and a recovery rate of 85.89%. In comparison with the same quarter of 2019, throughput increased 39% while recovery decreased 3% as a result of the plant expansion completed in 2019. Compared with Q1 2020, copper production increased 3% as a result of a 6% higher throughput and lower grades being compensated for by higher recoveries.

Plant recoveries compared to Q1 2020 increased as a result of operational improvements to the fully commissioned plant despite scheduled maintenance and mandatory COVID-19 shutdown during the quarter.

As reported on 30 March 2020, operations at Proyecto Riotinto halted for five days following the Royal Decree issued by the Spanish government to increase the national protective measures against COVID-19, affecting tonnage processed during April 2020 and resulting in lower ore milled than planned during Q2 2020.

Mining operations continued concentrating on mining ore from the higher levels of the mine. On a combined basis, ore, waste and marginal ore amounted to 3.2 million m(3) in Q2 2020 versus 2.9 million m(3) in Q1 2020.

On-site concentrate inventories at the end of the quarter were approximately 3,845 tonnes.

Copper prices decreased during Q2 2020 compared with Q1 2020, with an average realised price per pound of copper payable, including the QPs closed in the period, of US$2.51/lb compared with US$2.58/lb in Q1 2020. The average copper spot price during the quarter was US$2.42/lb. The realised price during the quarter, excluding QPs, was approximately US$2.43/lb.

Cash operating costs for Q2 2020 are within the lower end of the range of the annual AISC guidance of US$2.20-US$2.30/lb.

Exploration around Proyecto Riotinto continued during Q2 2020 focused around the massive sulphides and stockwork mineralisation under the Atalaya pit as well as potential resource increases at the Cerro Colorado pit.

Six months operational review

Production of copper contained in concentrate during H1 2020 was 26,864 tonnes, compared with 21,108 tonnes in the same period of 2019. Payable copper in concentrates was 25,654 tonnes compared with 20,190 tonnes of payable copper in H1 2019 as a result of the plant expansion completed in 2019.

Ore mined in H1 2020 was 6,261,693 tonnes compared to 5,331,249 tonnes during H1 2019. Ore processed was 6,999,242 tonnes versus 5,011,536 tonnes in H1 2019.

Ore grade during H1 2020 was 0.46% Cu compared with 0.47% Cu in H1 2019. Copper recovery was 84.32% versus 89.47% in H1 2019. Concentrate production amounted to 120,941 tonnes above H1 2019 production of 91,823 tonnes as increased throughput and recoveries offset the slightly lower grade.

   3.     Outlook 

The forward-looking information contained in this section is subject to the risk factors and assumptions contained in the cautionary statement on forward-looking statements included in the introduction note of this report.

Operational guidance

The Company is aware that the COVID-19 pandemic may still further impact how the Company manages its operations and is accordingly keeping its guidance under regular review.

Proyecto Riotinto operational guidance for 2020 remains unchanged. Should the Company consider the current guidance no longer achievable, then the Company will provide a further update.

 
                                                         Guidance 
                                         Unit              2020 
 Ore processed                      million tonnes      14.0 - 15.0 
 Contained copper in concentrate        tonnes        55,000 - 58,000 
 

Copper head grade for 2020 is estimated to average 0.45% Cu, with a recovery rate of approximately 84% to 86%. Cash operating costs for 2020 are expected to be in the range of US$1.95/lb - US$2.05/lb, and AISC is estimated to be in the range of US$2.20/lb - US$2.30/lb Cu payable.

   4.   Overview of the Financial Results 

The following table presents summarised consolidated income statements for the three and six months ended 30 June 2020, with comparatives for the three and six months ended 30 June 2019, respectively.

 
                                   Three months ended   Three months ended   Six months ended   Six months ended 
                                         30 June 2020         30 June 2019       30 June 2020       30 June 2019 
   ( Euro 000's ) 
 
 Revenue                                       56,544               43,070            117,733             94,782 
 Costs of sales                              (43,020)             (28,255)           (92,211)           (58,334) 
 Administrative and other 
  expenses                                      (450)              (1,465)            (2,158)            (3,382) 
 Exploration expenses                           (202)              (1,201)            (1,104)            (1,402) 
 Care and maintenance 
  expenditure                                    (46)                (116)              (160)              (121) 
 Other income                                       8                    -                  8                  - 
 EBITDA                                        12,834               12,033             22,108             31,543 
 Depreciation/amortisation                    (7,101)              (3,744)           (13,767)            (7,170) 
 Impairment loss on other                           -                    -               (45)                  - 
 receivables 
 Net foreign exchange 
  (loss)/gain                                 (1,061)                (426)              (616)                287 
 Net finance cost                               (138)                 (35)              (149)               (66) 
 Tax                                          (1,499)                (979)            (1,565)            (3,590) 
                                  -------------------  -------------------  -----------------  ----------------- 
 Profit for the period after tax                3,035                6,849              5,966             21,004 
                                  -------------------  -------------------  -----------------  ----------------- 
 

Three months financial review

Revenues for the three month period ended 30 June 2020 amounted to EUR56.5 million (Q2 2019: EUR43.1 million). Higher revenues, compared with the same quarter in the previous year, were mainly driven by higher volumes sold during the period and to some extent by stronger average US Dollar rates against Euro offset by lower copper prices.

Realised prices were US$2.51/lb copper during Q2 2020 compared with US$2.81/lb copper in Q2 2019. All concentrates were sold under offtake agreements in place.

Operating costs for the three month period ended 30 June 2020 amounted to EUR43.0 million, compared with EUR28.3 million in Q2 2019. In absolute terms, higher operating costs were mainly due to more tonnes being mined and processed during the quarter at higher unit costs.

Cash costs of US$1.87/lb payable copper during Q2 2020 compared with US$1.74lb payable copper in the same period last year. Higher cash costs in Q2 2020 mainly attributable to increased processing costs during the quarter relating to higher consumption of lime and grinding balls and, to a lesser extent, SAG liners. All-in sustaining costs in the reporting quarter were US$2.22/lb payable copper compared with US$1.95/lb payable copper in Q2 2019. Higher AISC compared with Q2 2019 mainly related to higher cash cost and sustaining capex.

Sustaining capex for Q2 2020 amounted to EUR4.6 million compared with EUR1.3 million in Q2 2019. Sustaining capex related works done on the tailing dams and continuous improvement in processing systems of the plant and enhancements in security.

Administrative and other expenses amounted to EUR0.5 million (Q2 2019: EUR1.5 million) and include non-operating costs of the Cyprus office, corporate legal and consultancy costs, on-going listing costs, officers and directors' emoluments, and salaries and related costs of the corporate office.

Exploration costs at Proyecto Riotinto for the three month period ended 30 June 2020 amounted to EUR0.2 million (Q2 2019: EUR1.2 million). Lower costs related to a decrease in drilling activities, during the period.

EBITDA for the three months ended 30 June 2020 amounted to EUR12.8 million compared with Q2 2019 of EUR12.0 million.

The main item below the EBITDA line is depreciation and amortisation of EUR7.1 million (Q2 2019: EUR3.8 million) which increased as a result of the higher throughput resulting from the 2019 plant expansion. Net financing costs for Q2 2020 amounted to EUR0.1 million (Q2 2019: EUR0.1 million).

Six months financial review

Revenues for the six month period ended 30 June 2020 amounted to EUR117.7 million (H1 2019: EUR94.8 million).

Copper concentrate production during the six month period ended 30 June 2020 was 120,941 tonnes (H1 2019: 91,823 tonnes) with 133,775 tonnes of copper concentrates sold in the period (H1 2019: 93,039 tonnes). Inventories of concentrates as at the reporting date were 3,845 tonnes (31 Dec 2019: 14,201 tonnes).

Realised copper prices for H1 2020 were US$2.54/lb copper compared with US$2.80/lb copper in the same period of 2019. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in 2020.

Operating costs for the six month period ended 30 June 2020 amounted to EUR92.2 million, compared with EUR58.3 million in H1 2019. Higher costs in 2020 reflected the higher production volumes and higher cash costs

Cash costs of US$1.93/lb payable copper during H1 2020 compare with US$1.81/lb payable copper in the same period last year. Higher cash costs in Q2 2020 mainly attributable to increased processing costs during the quarter relating to higher consumption of lime and grinding balls and, to a lesser extent, SAG liners. All-in sustaining costs in the reporting quarter were US$2.25/lb payable copper compared with US$2.06/lb payable copper in H1 2019. Higher AISC compared with H1 2019 mostly related to higher cash costs, sustaining capex and capitalised stripping costs.

Sustaining capex for the six month period ended 30 June 2020 amounted to EUR7.9 million, compared with EUR2.9 million in the same period in the previous year. Sustaining capex related to tailing dams and enhancements in processing systems.

Corporate costs for the first six month period ended of 2020 were EUR2.2 million, compared with EUR3.4 million in H1 2019. Corporate costs mainly include Company's overhead expenses.

Exploration costs related to Proyecto Riotinto for the six month period ended 30 June 2020 amounted to EUR1.1 million, compared with EUR1.4 million in H1 2019.

EBITDA for the six months ended 30 June 2020 amounted to EUR22.1 million, compared with EUR31.5 million in H1 2019.

Depreciation and amortisation amounted to EUR13.8 million for the six month period ended 30 June 2020 (H1 2019: EUR7.2 million) as a result of the higher throughput resulting from the 2019 plant expansion.

Net finance costs for H1 2020 amounted to EUR0.1 million (H1 2019 EUR0.1 million).

Copper prices

The average realised copper price decreased by 11% from US$2.81 per pound in Q2 2019 to US$2.51 per pound in Q2 2020.

The average prices of copper for the three months ended 30 June 2020 and 2019 are summarised below:

 
                                   Three months ended   Three months ended   Six months ended   Six months ended 
                                         30 June 2020         30 June 2019       30 June 2020       30 June 2019 
   ( USD ) 
 
 Realised copper price per lb                    2.51                 2.81               2.54               2.80 
 Market copper price per lb 
  (period average)                               2.42                 2.77               2.49               2.80 
 

Realised copper prices for the reporting period noted above have been calculated using payable copper and including provisional invoices and final settlements of quotation periods ("QPs") together. Higher realised prices than market averages are mainly due to the final settlement of invoices where QP was fixed in the previous quarter due to a short open period when copper prices were higher. Q2 2020 realised price excluding QP was approximately US$2.43/lb.

   5.   Non-GAAP Measures 

Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Cost per pound of payable copper", "All-In Sustaining Costs" ("AISC") and "realised prices" in this report. Non-IFRS measures do not have any standardised meaning prescribed under IFRS, and therefore they may not be comparable to similar measures presented by other companies. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for indicators prepared in accordance with IFRS.

EBITDA includes gross sales net of penalties and discounts and all operating costs, excluding finance, tax, impairment, depreciation and amortisation expenses.

Cash Cost per pound of payable copper includes cash operating costs, including treatment and refining charges ("TC/RC"), freight and distribution costs net of by-product credits. Cash Cost per pound of payable copper is consistent with the widely accepted industry standard established by Wood Mackenzie and is also known as the C1 cash cost.

AISC per pound of payable copper includes C1 Cash Costs plus royalties and agency fees, expenditures on rehabilitation, capitalised stripping costs, exploration and geology costs, corporate costs and sustaining capital expenditures.

Realised price per pound of payable copper is the value of the copper payable included in the concentrate produced including the discounts and other features governed by the offtake agreements of the Group and all discounts or premiums provided in commodity hedge agreements with financial institutions, expressed in USD per pound of payable copper. Realised price is consistent with the widely accepted industry standard definition.

   6.     Liquidity and Capital Resources 

Atalaya monitors factors that could impact its liquidity as part of Atalaya's overall capital management strategy. Factors that are monitored include, but are not limited to, the market price of copper, foreign currency rates, production levels, operating costs, capital and administrative costs.

The following is a summary of Atalaya's cash position and cash flows as at 30 June 2020 and 31 December 2019.

Liquidity information

 
 ( Euro 000's )                             30 June 2020   31 December 
                                                                  2019 
 
 Unrestricted cash and cash equivalents 
  at Group level                                  10,024         1,730 
 Unrestricted cash and cash equivalents 
  at Operation level                              22,353         6,347 
 Working capital surplus                          10,309         3,598 
 

Unrestricted cash and cash equivalents as at 30 June 2020 increased to EUR32.4 million from EUR8.1 million at 31 December 2019. The increase in cash balances is the result of the operation and use of credit facilities. Cash balances are unrestricted and include balances at operational and corporate level.

As of 30 June 2020, Atalaya reported a working capital surplus of EUR10.3 million, compared with a working capital surplus of EUR3.6 million at 31 December 2019. The main liability of the working capital is trade payables related to Proyecto Riotinto contractors and the use of credit facilities. At 30 June 2020, trade payables have been increased by circa 20% compared with the same period last year.

Overview of the Group's cash flows

 
                                   Three months ended   Three months ended   Six months ended   Six months ended 
                                         30 June 2020         30 June 2019       30 June 2020       30 June 2019 
   ( Euro 000's ) 
 
 Cash flows from operating 
  activities                                    7,515                6,856             23,000             14,970 
 Cash flows used in investing 
  activities                                  (7,746)             (15,137)           (13,331)           (32,275) 
 Cash flows (used in)/from 
  financing activities                        (9,415)                (272)             14,631              (272) 
                                  -------------------  -------------------  -----------------  ----------------- 
 Net (decrease)/increase in cash 
  and cash equivalents                        (9,646)              (8,553)             24,300           (17,577) 
                                  -------------------  -------------------  -----------------  ----------------- 
 

Three months cash flows review

Cash and cash equivalents decreased by EUR9.6 million during the three months ended 30 June 2020. This was due to the net results of cash from operating activities amounting to EUR7.5 million, the cash used in investing activities amounting to EUR7.7 million and the cash used in financing activities totalling EUR9.4 million.

Cash generated from operating activities before working capital changes was EUR11.9 million. Atalaya increased its trade receivables in the period by EUR8.9 million, decreased its inventory levels by EUR0.6 million and increased its trade payables by EUR3.9 million.

Investing activities during the quarter consumed EUR7.7 million, relating mainly to the tailing dams Capex and sustaining Capex mostly in enhancements in processing systems of the plant.

Financing activities during the quarter decreased by EUR9.4 million as result of the reduced use of existing unsecured credit facilities.

Six months cash flows review

Cash and cash equivalents increased by EUR24.3 million during the six months ended 30 June 2020. This was due to cash from operating activities amounting to EUR23.0 million, cash used in investing activities amounting to EUR13.3 million and cash from financing activities amounting to EUR14.6 million.

Cash generated from operating activities before working capital changes was EUR21.9 million. Atalaya increased its trade payables in the period by EUR7.8 million, decreased its inventory levels by EUR5.8 million and increased its trade receivable balances by EUR11.1 million.

Investing activities during the six month period amounted to EUR7.7 million, mainly relating to the tailing dams project and sustaining Capex.

Financing activities during the six month period ended 30 June 2020 increased by EUR14.6 million driven by the use of existing unsecured credit facilities.

Foreign exchange

Foreign exchange rate movements can have a significant effect on Atalaya's operations, financial position and results. Atalaya's sales are denominated in U.S. dollars ("USD"), while Atalaya's operating expenses, income taxes and other expenses are mainly denominated in Euros ("EUR") which is the functional currency of the Group, and to a much lesser extent in British Pounds ("GBP").

Accordingly, fluctuations in the exchange rates can potentially impact the results of operations and carrying value of assets and liabilities on the balance sheet.

During the three and six months ended 30 June 2020, Atalaya recognised a foreign exchange loss of EUR1.1 million and EUR0.6 million, respectively. Foreign exchange losses mainly related to changes in the period in EUR and USD conversion rates, as all sales are cashed and occasionally held in USD.

The following table summarises the movement in key currencies versus the EUR:

 
                                  Three months ended   Three months ended   Six months ended   Six months ended 
                                        30 June 2020         30 June 2019       30 June 2020       30 June 2019 
 Average rates for the periods 
   GBP - EUR                                  0.8874               0.8748             0.8746             0.8736 
   USD - EUR                                  1.1014               1.1237             1.1020             1.1298 
 Spot rates as at 
   GBP - EUR                                  0.9124               0.8966             0.9124             0.8966 
   USD - EUR                                  1.1198               1.1380             1.1198             1.1380 
 
 
   7.   Deferred Consideration 

In September 2008, the Group moved to 100% ownership of Atalaya Riotinto Mineral S.L. ("ARM") (and thus full ownership of Proyecto Riotinto) by acquiring the remaining 49% of the issued capital of ARM. At the time of the acquisition, the Group signed a Master Agreement (the "Master Agreement") with Astor Management AG ("Astor") which included a deferred consideration of EUR43.9 million (the "Deferred Consideration") payable as consideration in respect of the acquisition. The Company also entered into a credit assignment agreement at the same time with a related company of Astor, Shorthorn AG, pursuant to which the benefit of outstanding loans was assigned to the Company in consideration for the payment of EUR9.1 million to Shorthorn (the "Loan Assignment").

The Master Agreement has been the subject of litigation in the High Court and the Court of Appeal that has now concluded. As a consequence, ARM must apply any excess cash (after payment of operating expenses, sustaining capital expenditure, any senior debt service requirements and up to US$10 million per annum (for non-Proyecto Riotinto related expenses)) to pay the consideration due to Astor (including the Deferred Consideration and the amount of EUR9.1 million payable under the Loan Assignment). "Excess cash" is not defined in the Master Agreement leaving ambiguity as to how it is to be calculated.

On 2 March 2020, the Company filed an application for directions in the High Court to seek clarity on the definition of "Excess Cash" and to determine when it is payable. The Company has served its Statement of Case to the High Court and a case management hearing is scheduled for 30 October 2020 with a trial expected in 2021.

As at 30 June 2020, no consideration has been paid.

The amount of the liability recognised by the Group is EUR53 million. The effect of discounting remains insignificant, in line with 2019 assessment, and therefore the Group has measured the liability for the Astor deferred consideration on an undiscounted basis.

   8.    Corporate Social Responsibility 

During the quarter, Atalaya has implemented several initiatives to continue with its social responsibility activities through Fundación Atalaya Riotinto.

Due to the special circumstances derived from the COVID-19 pandemic episode, Fundacion Atalaya Riotinto Minera ("Fundacion") established an extraordinary aid program to support the local communities, specially aimed at financing the acquisition of protection and cleaning equipment by local municipalities and other local institutions. The program comprised a EUR20,000 investment that was distributed among the various requesters.

Additionally, the Fundacion has sponsored a number of initiatives by local NGOs, including the sponsoring of a charitable event to collect money for the people affected by the floods suffered by Nerva town last winter. Also, the Fundacion has supported the publishing of a book released by Nerva's historical TV and Radio station. Furthermore, the Fundacion has finalised an agreement with Asocación Athenea, to make a significant contribution to their very valuable work at supporting the disabled of the whole region.

   9.    Health and Safety 

During the second quarter of 2020, the safety leadership for management programme continues in developing a training in communication and safety skills. Key points of the quarter:

   -       Strong information campaign for COVID-19; 
   -       a protocol for action in different scenarios; 

- the implementation of a monitoring committee to regularly inform workers' representatives, the establishment of special hygiene measures (including taking the temperature of employees both at the entrance and at the exit of the facility);

- the design of an exhaustive disinfection program as well as the reorganization of cleaning in all areas to obtain greater efficiency of resources; and

- the implementation of specific rules that are being controlled with a strict monitoring program by safety technicians.

The result of internal measures against COVID-19 is that contagion has been avoided. These works will continue throughout the year.

On the other hand, occupational health and safety performance is on a positive trend meeting the targets set for 2020. In this respect, the Frequency Index and the Severity Index are below expectations as of June 2020.

   10.   Environmental Management 

During the second quarter of 2020, the environmental department has continued executing the actions of environmental monitoring of the activity, management of the natural environment and the usual historical heritage. Key points of the quarter:

- Monitoring of dust emissions into the atmosphere has continued without exceeding the established limit values. The large volume of work due to the increase in production and the beginning of the summer season have produced an increase in dust emissions. To confront it, Atalaya has implemented a plan to control and reinforce the emissions.

- The furnaces from the Look Out were finally extracted. After the extraction the mining works continued on that area.

- The archaeological excavation work in Cortalago has been highly conditioned this quarter by the COVID-19 measures. After the State of Alarm declared by the Spanish Government was finalised, a relay system was launched in June, so that 24 archaeological assistants/day are already working at the site.

- Atalaya obtained an authorization for the excavation of the two deposits that remain in Filón Norte. These excavations will start in the third quarter of 2020 and are expected to finish in 3-6 months.

- Certifications: ISO 9000 and ISO 14000 systems were also obtained and the migration process from the OHSAS 18000 system to certification ISO 45000 has begun in this quarter.#

   11.   Risk Factors 

Due to the nature of Atalaya's business in the mining industry, the Group is subject to various risks that could materially impact the future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to Atalaya. Readers are encouraged to read and consider the risk factors detailed in Atalaya's audited, consolidated financial statements for the year ended 31 December 2019.

The Company continues to monitor the principal risks and uncertainties that could materially impact the Company's results and operations, including the areas of increasing uncertainty such as COVID-19 (refer to point 13 below).

   12.   Critical Accounting Policies, Estimates and Accounting Changes 

The preparation of Atalaya's Financial Statements in accordance with IFRS requires management to make estimates and assumptions that affect amounts reported in the Financial Statements and accompanying notes. There is a full discussion and description of Atalaya's critical accounting policies in the audited consolidated financial statements for the year ended 31 December 2019.

As at 30 June 2020, there are not significant changes in critical accounting policies or estimates to those applied in 2019.

   13.   COVID-19 impact 

The Company issued COVID-19 updates on 17 March 2020, 30 March 2020 and 6 April 2020. As announced on 30 March 2020, a Royal Decree of 29 March 2020 excluded mining from essential industries resulting in the halting of operations at Proyecto Riotinto from 30 March 2020. As announced on 6 April 2020, further clarifications were received on the Royal Decree on 3 April 2020 which reinstated mining on the list of permitted activities and accordingly, operations at Proyecto Riotinto were authorized to recommence.

It is Atalaya's priority to protect its workforce and the local communities surrounding both Proyecto Riotinto and Proyecto Touro. Atalaya is following the requirements and recommendations issued by the Government of Spain and the regional and local health authorities to reduce the risk of COVID-19 exposure and avoid the spread of the virus.

In order to mitigate the potential operational and financial impact of COVID-19 the Company has increased its cash balance from EUR8.1 million as at 31 December 2019 to EUR32.4 million as at 30 June 2020 by net drawdowns on existing credit facilities.

Refer to Note 23 and Note 2.1(b) of the Financial Statement for the on-going analysis carried out by the Company to evaluate the current impact of COVID-19 and potential scenario review by Management under the uncertainty on the development of the pandemic.

   14.   Other Information 

Additional information about Atalaya Mining Plc. is available at www.atalayamining.com

Unaudited Interim condensed consolidated financial statements on pages 12 to 34

By Order of the Board of Directors,

___________________________________

Roger Davey

Chairman

Nicosia, 12 August 2020

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TO THE SHAREHOLDERS OF ATALAYA MINING PLC

Introduction

We have reviewed the interim condensed consolidated financial statements of Atalaya Mining Plc (the "Company"), and its subsidiaries (collectively referred to as "the Group") on pages 12 to 34 contained in the accompanying interim report, which comprise the interim condensed consolidated statement of financial position as at 30 June 2020 and the interim condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the period then ended and selected explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements do not present fairly, in all material respects, the financial position of the Group as at 30 June 2020 and of its financial performance and its cash flows for the period then ended in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (IAS 34).

 
Stavros Pantzaris 
Certified Public Accountant and Registered Auditor 
for and on behalf of 
 
Ernst & Young Cyprus Limited 
Certified Public Accountants and Registered Auditors 
 
Nicosia 
 12August 2020 
 
 

Unaudited Interim Condensed Consolidated Income Statements

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 June 2020 and 2019

 
                                                         Three      Three   Six months        Six 
                                                        months     months        ended     months 
                                                         ended      ended      30 June      ended 
                                                       30 June    30 June         2020    30 June 
   ( Euro 000's )                             Note        2020       2019                    2019 
 
 Revenue                                      4         56,544     43,070      117,733     94,782 
 Operating costs and mine site 
  administrative expenses                             (42,860)   (28,201)     (91,890)   (58,227) 
 Mine site depreciation and amortization               (7,101)    (3,744)     (13,767)    (7,170) 
                                                    ----------  =========  ===========  ========= 
 Gross profit                                            6,583     11,125       12,076     29,385 
 Administration and other expenses                       (450)    (1,465)      (2,158)    (3,382) 
 Share-based benefits                         12         (160)       (54)        (321)      (107) 
 Impairment loss on other receivables                        -          -         (45)          - 
 Exploration expenses                                    (202)    (1,201)      (1,104)    (1,402) 
 Care and maintenance expenditure                         (46)      (116)        (160)      (121) 
 Operating profit                                        5,725      8,289        8,288     24,373 
 Other income                                                8          -            8          - 
 Net foreign exchange (loss)/gain                      (1,061)      (426)        (616)        287 
 Net finance costs                            5          (138)       (35)        (149)       (66) 
                                                    ----------  --------- 
 Profit before tax                                       4,534      7,828        7,531     24,594 
 Tax                                                   (1,499)      (979)      (1,565)    (3,590) 
                                                    ----------  ---------  ===========  ========= 
 Profit for the period                                   3,035      6,849        5,966     21,004 
                                                    ----------  ---------  ===========  ========= 
 
 Profit for the period attributable 
  to: 
 
        *    Owners of the parent                        3,217      6,954        6,392     21,115 
 
        *    Non-controlling interests                   (182)      (105)        (426)      (111) 
                                                    ---------- 
                                                         3,035      6,849        5,966     21,004 
                                                    ----------  =========  ===========  ========= 
 Earnings per share from operations 
  attributable to equity holders 
  of the parent during the period: 
 Basic earnings per share (EUR 
  cents per share)                            6            2.3        5.1          4.6       15.4 
                                                    ----------  =========  ===========  ========= 
 Fully diluted earnings per share 
  (EUR cents per share)                       6            2.3        5.1          4.5       15.3 
                                                    ----------  =========  ===========  ========= 
 
 Profit for the period                                   3,035      6,849        5,966     21,004 
 Other comprehensive income: 
 Change in fair value of financial 
  assets through other comprehensive 
  income 'OCI'                                              10       (17)          (9)       (12) 
                                                    ---------- 
 Total comprehensive income for 
  the period                                             3,045      6,832        5,957     20,992 
                                                    ----------  =========  ===========  ========= 
 
 Total comprehensive income for 
  the period attributable to: 
 
        *    Owners of the parent                        3,227      6,937        6,383     21,103 
 
        *    Non-controlling interests                   (182)      (105)        (426)      (111) 
                                                    ----------             ----------- 
                                                         3,045      6,832        5,957     20,992 
                                                    ----------  =========  -----------  ========= 
 

The notes on pages 16 to 34 are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

Unaudited Interim Condensed Consolidated Statement of Financial Position

(All amounts in Euro thousands unless otherwise stated)

As at 30 June 2020 and 2019

 
                                                    30 June  31 December 
 (Euro 000's)                              Note        2020         2019 
 Assets                                           Unaudited      Audited 
 Non-current assets 
 Property, plant and equipment             7        310,070      307,815 
 Intangible assets                         8         60,752       63,085 
 Trade and other receivables               10           497          500 
 Non-current financial assets                         1,101        1,101 
 Deferred tax asset                                   6,438        6,576 
                                                 ==========  =========== 
                                                    378,858      379,077 
                                                 ==========  =========== 
 Current assets 
 Inventories                               9         15,569       21,330 
 Trade and other receivables               10        45,096       32,857 
 Tax refundable                                         743        1,924 
 Other financial assets                                  32           42 
 Cash and cash equivalents                           32,377        8,077 
                                                 ==========  =========== 
                                                     93,817       64,230 
                                                 ==========  =========== 
 Total assets                                       472,675      443,307 
                                                 ==========  =========== 
 Equity and liabilities 
 Equity attributable to owners of the 
  parent 
 Share capital                             11        13,372       13,372 
 Share premium                             11       314,319      314,319 
 Other reserves                            12        33,346       22,836 
 Accumulated losses                                (34,449)     (30,669) 
                                                 ==========  =========== 
                                                    326,588      319,858 
 Non-controlling interests                          (2,828)      (2,402) 
                                                 ----------  ----------- 
 Total equity                                       323,760      317,456 
                                                 ----------  ----------- 
 
 Liabilities 
  Non-current liabilities 
 Trade and other payables                  13            13           13 
 Provisions                                14         7,420        6,941 
 Leases liabilities                        16         4,974        5,265 
 Deferred consideration                    17        53,000       53,000 
                                                 ==========  =========== 
                                                     65,407       65,219 
                                                 ==========  =========== 
 Current liabilities 
 Trade and other payables                  13        65,707       57,537 
 Leases liabilities                        16           584          588 
 Borrowings                                15        14,934            - 
 Current tax liabilities                              2,283        2,507 
                                                     83,508       60,632 
                                                 ==========  =========== 
 Total liabilities                                  148,915      125,851 
                                                 ==========  =========== 
 Total equity and liabilities                       472,675      443,307 
                                                 ==========  =========== 
 

The notes on pages 16 to 34 are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements. The unaudited interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 12 August 2020 and were signed on its behalf.

 
 
Roger Davey  Alberto Lavandeira 
Chairman     Managing Director 
 

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 June 2020 and 2019

 
                                                                                            Non-controlling 
                        Note       Share          Share       Other     Accum.                     interest      Total 
   (Euro 000's)                  capital     premium(1)    reserves     losses     Total                        equity 
                                                                                          ----------------- 
 At 1 January 2020                13,372        314,319      22,836   (30,669)   319,858            (2,402)    317,456 
 Profit for the 
  period                               -              -           -      6,392     6,392              (426)      5,966 
 Change in fair 
  value 
  of financial 
  assets 
  through OCI                          -              -         (9)          -       (9)                  -        (9) 
                              ----------  -------------  ----------  ---------  --------  -----------------  --------- 
 Total 
  comprehensive 
  income                               -              -         (9)      6,392     6,383              (426)      5,957 
 Transactions with 
 owners 
 Recognition of 
  share-based 
  payments                12           -              -         321          -       321                  -        321 
 Recognition of 
  depletion 
  factor                  12           -              -       8,000    (8,000)         -                  -          - 
 Recognition of 
  non-distributable 
  reserve                 12           -              -       2,198    (2,198)         -                  -          - 
 Other changes in 
  equity                               -              -           -         26        26                  -         26 
 At 30 June 2020                  13,372        314,319      33,346   (34,449)   326,588            (2,828)    323,760 
                              ==========  =============  ==========  =========  ========  =================  ========= 
 

(1) The share premium reserve is not available for distribution

 
                                                                                            Non-controlling 
                         Note       Share          Share       Other     Accum.                    interest      Total 
   (Euro 000's)                   capital     premium(1)    reserves     losses     Total                       equity 
                                                                                           ---------------- 
 At 1 January 2019                 13,372        314,319      12,791   (58,308)   282,174             4,200    286,374 
 Profit for the 
  period                                -              -           -     21,115    21,115             (111)     21,004 
 Change in fair 
  value 
  of financial 
  assets 
  through OCI                           -              -        (12)          -      (12)                 -       (12) 
                               ----------  -------------  ----------  ---------  --------  ----------------  --------- 
 Total comprehensive 
  income                                -              -        (12)     21,115    21,103             (111)     20,992 
 Transactions with 
 owners 
 Recognition of 
  share-based 
  payments                 12           -              -         107          -       107                 -        107 
 Recognition of 
  depletion 
  factor                   12           -              -       5,378    (5,378)         -                 -          - 
 Recognition of 
  non-distributable 
  reserve                  12           -              -       1,984    (1,984)         -                 -          - 
 Recognition of 
  distributable 
  reserve                  12           -              -       1,844    (1,844)         -                 -          - 
                               ==========  =============  ==========  =========  ========  ================  ========= 
 At 30 June 2019                   13,372        314,319      22,092   (46,399)   303,384             4,089    307,473 
                               ==========  =============  ==========  =========  ========  ================  ========= 
 

(1) The share premium reserve is not available for distribution

 
                                                                                            Non-controlling 
                         Note                                                                      interest 
   (Euro 000's)                     Share          Share       Other     Accum.                                  Total 
   Audited                        capital     premium(1)    reserves     losses     Total                       equity 
                                                                                           ---------------- 
 At 1 January 2019                 13,372        314,319      12,791   (58,308)   282,174             4,200    286,374 
 Profit for the 
  period                                -              -           -     37,323    37,323           (6,602)     30,721 
 Change in fair 
  value 
  of financial 
  assets 
  through OCI                           -              -        (29)          -      (29)                 -       (29) 
                               ----------  -------------  ----------  ---------  --------  ----------------  --------- 
 Total comprehensive 
  income                                -              -        (29)     37,323    37,294           (6,602)     30,692 
 Transactions with 
 owners 
 Recognition of 
  depletion 
  factor                   12           -              -       5,378    (5,378)         -                 -          - 
 Recognition of 
  share-based 
  payments                 12           -              -         619          -       619                 -        619 
 Recognition of 
  non-distributable 
  reserve                  12           -              -       1,984    (1,984)         -                 -          - 
 Recognition of 
  distributable 
  reserve                  12           -              -       1,844    (1,844)         -                 -          - 
 Other changes in 
  equity                                -              -         249      (478)     (229)                 -      (229) 
                               ==========  =============  ==========  =========  ========  ================  ========= 
 At 31 December 2019               13,372        314,319      22,836   (30,669)   319,858           (2,402)    317,456 
                               ==========  =============  ==========  =========  ========  ================  ========= 
 

(1) The share premium reserve is not available for distribution

The notes on pages 16 to 34 are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

Unaudited Interim Condensed Consolidated Statement of Cash Flows

(All amounts in Euro thousands unless otherwise stated)

For to the period ended 30 June 2020 and 2019

 
                                                       Three      Three   Six months        Six 
                                                      months     months        ended     months 
                                                       ended      ended      30 June      ended 
   (Euro 000's)                              Note    30 June    30 June         2020    30 June 
                                                        2020       2019                    2019 
 Cash flows from operating activities 
 Profit before tax                                     4,534      7,828        7,531     24,594 
 Adjustments for: 
 Depreciation of property, plant 
  and equipment                              7         5,911      2,886       11,434      5,490 
 Amortisation of intangibles                 8         1,190        859        2,333      1,681 
 Recognition of share-based payments         12          160         54          321        107 
 Interest income                             5           (2)       (13)          (4)       (16) 
 Interest expense                            5            45         19           53         23 
 Unwinding of discounting on mine 
  rehabilitation provision                   5            92         29           92         59 
 Impairment loss on other receivables                      -          -           45          - 
 Legal provisions                            14            -       (20)           33       (18) 
 Loss on disposal of property, 
  plant and equipment                        7             -          -            -          2 
 Unrealised foreign exchange loss 
  on financing activities                                  9         27           71         26 
                                                   ---------  ---------  ===========  ========= 
 Cash inflows from operating activities 
  before working capital changes                      11,939     11,669       21,909     31,948 
 Changes in working capital: 
 Inventories                                 9           589    (1,300)        5,761      (556) 
 Trade and other receivables                 10      (8,890)        100     (11,127)   (11,761) 
 Trade and other payables                    13        3,926    (1,619)        7,797    (2,663) 
 Cash flows from operations                            7,564      8,850       24,340     16,968 
 Interest on leases liabilities                          (4)        (4)          (8)        (4) 
 Interest paid                                          (45)       (15)         (53)       (19) 
 Tax paid                                                  -    (1,979)      (1,279)    (1,979) 
                                                   ---------  --------- 
 Net cash from operating activities                    7,515      6,852       23,000     14,966 
                                                   ---------  ---------  ===========  ========= 
 
 Cash flows from investing activities 
 Purchase of property, plant and 
  equipment                                          (7,748)   (14,874)     (13,335)   (31,572) 
 Purchase of intangible assets               8             -      (276)            -      (719) 
 Interest received                           5             2         13            4         16 
                                                   ---------  ---------  ===========  ========= 
 Net cash used in investing activities               (7,746)   (15,137)     (13,331)   (32,275) 
                                                   ---------  ---------  ===========  ========= 
 
 Cash flows from financing activities 
 Lease payments                              16        (152)      (268)        (303)      (268) 
 Net (repayment)/proceeds from 
  borrowings                                 15      (9,263)          -       14,934          - 
 Net cash flows (used in)/from 
  financing activities                               (9,415)      (268)       14,631      (268) 
                                                   ---------  --------- 
 
 Net (decrease) / increase in 
  cash and cash equivalents                          (9,646)    (8,553)       24,300   (17,577) 
 Cash and cash equivalents : 
 At beginning of the period                           42,023     24,046        8,077     33,070 
                                                   ---------  ---------  ===========  ========= 
 At end of the period                                 32,377     15,493       32,377     15,493 
                                                   ---------  ---------  ===========  ========= 
 

The notes on pages 16 to 34 are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 June 2020 and 2019

   1.   Incorporation and summary of business 

Atalaya Mining Plc (the "Company") was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under the Companies Law, Cap. 113 and was converted to a public limited liability company on 26 January 2005. Its registered office is at 1 Lampousa Street, Nicosia, Cyprus.

The Company was listed on AIM of the London Stock Exchange in May 2005 under the symbol ATYM and on the TSX on 20 December 2010 under the symbol AYM. The Company continued to be listed on AIM and the TSX as at 30 June 2020.

Additional information about Atalaya Mining Plc is available at www.atalayamining.com as per requirement of AIM rule 26.

Change of name and share consolidation

Following the Company's Extraordinary General Meeting ("EGM") on 13 October 2015, the change of name from EMED Mining Public Limited to Atalaya Mining Plc became effective on 21 October 2015. On the same day, the consolidation of ordinary shares came into effect, whereby all shareholders received one new ordinary share of nominal value Stg GBP0.075 for every 30 existing ordinary shares of nominal value Stg GBP0.0025.

Principal activities

The Company owns and operates through a wholly-owned subsidiary, "Proyecto Riotinto", an open-pit copper mine located in the Pyritic belt, in the Andalusia region of Spain, approximately 65 km northwest of Seville. A brownfield expansion of this mine was completed in 2019.

In addition, the Company has a phased earn-in agreement to up 80% ownership of "Proyecto Touro", a brownfield copper project in northwest Spain.

In November 2019, Atalaya executed the option to acquire 12.5% of Explotaciones Gallegas del Cobre, S.L. the exploration property around Touro, with known additional reserves, which will provide high potential to the Proyecto Touro. The Company's and its subsidiaries' business is to explore for and develop metals production operations in Europe, with an initial focus on copper.

The strategy is to evaluate and prioritise metal production opportunities in several jurisdictions throughout the well-known belts of base and precious metal mineralisation in Spain and the Eastern European region.

   2.   Basis of preparation and accounting policies 

2.1 Basis of preparation

   (a)           Overview 

The unaudited interim condensed consolidated financial statements for the period ended 30 June 2020 have been prepared in accordance with International Accounting Standards 34: Interim Financial Reporting. IFRS comprise the standard issued by the International Accounting Standard Board ("IASB"), and IFRS Interpretations Committee ("IFRICs") as issued by the IASB. Additionally, the unaudited interim condensed consolidated financial statements have also been prepared in accordance with the IFRS as adopted by the European Union (EU), using the historical cost convention.

These unaudited interim condensed consolidated financial statements are unaudited but reviewed and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the consolidated financial statements of the Company and the Group for the year ended 31 December 2019. These unaudited interim condensed consolidated financial statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the consolidated financial statements and other information set out in the Group's 31 December 2019 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements for the year ended 31 December 2019. These unaudited interim condensed consolidated financial statements for the period ended 30 June 2020 have been reviewed in accordance with the International Standard on Review Engagements 2410 'Review of Interim Financial Information performed by the Independent Auditor of the Entity' by the Group's external auditors, not audited.

   (b)           Going concern 

On 11 March 2020, the World Health Organisation declared the Coronavirus COVID- 19 outbreak to be a pandemic in recognition of its rapid spread across the globe. Many governments are taking increasingly stringent steps to help contain, and in many jurisdictions, now delay, the spread of the virus, including: requiring self-isolation/ quarantine by those potentially affected, implementing social distancing measures, and controlling or closing borders and "locking-down" cities/regions or even entire countries.

The crisis and the actions taken by governments have resulted in significant disruption to business operations, consumption patterns worldwide, equity markets and significant volatility in commodities prices, including copper, which declined below Company's AISC level during March 2020 although commodity prices have recovered and the average market price for copper during Q2 2020 and the current spot price both exceed AISC. Furthermore, in Spain, where the Company has its single producing asset, the Government issued a Royal Decree on 14 March 2020 to declare the nationwide lockdown to reduce the impact of the COVID-19 pandemic. On 29 March 2020, the Spanish government issued a new Royal Decree implementing enhanced measures to protect the people from the virus. The new Decree stipulated that only employees from a short list of essential industries were allowed to continue working from 30 March 2020. Mining was excluded as an essential industry and consequently the Proyecto Riotinto site was required to halt its operations for a short period until 3 April 2020 when mining operations were permitted to restart.

The impact on copper prices and the stoppage of Proyecto Riotinto as a result of the Royal Decree has partially impacted the revenues for the six months period ended 30 June 2020. Uncertainty remains on future copper prices and if Proyecto Riotinto will be required to be halted again for a longer period. The uncertainty makes difficult to determine and quantify the operational and financial impact there may be on the business going forward.

The Directors considered and debated different possible scenarios on the Company's operations, financial position and forecast for a period of at least 12 months since the approval of these financial statements. Discussion on the potential impact of the Pandemic continues at Director level, and include scenarios range from (i) further disruption in Proyecto Riotinto; (ii) market volatility in commodity prices; and (iii) availability of existing credit facilities.

The Company has increased its cash balance from EUR8.1 million as at 31 December 2019 to EUR32.4 million as at 30 June 2020 by net drawdowns from existing credit facilities.

The Directors, after reviewing these scenarios, the current cash resources, forecasts and budgets, timing of cash flows, borrowing facilities, sensitivity analyses and considering the associated uncertainties to the Group's operations have a reasonable expectation that the Company has adequate resources to continue operating in the foreseeable future. Accordingly, these unaudited condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Group and the Company will realise its assets and discharge its liabilities in the normal course of business.

2.2 New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the unaudited condensed interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of new standards effective as of 1 January 2020. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. Several amendments and interpretations apply for the first time in 2020, but do not have a material impact on the unaudited condensed interim consolidated financial statements of the Group.

Amendments to IFRS 3: Definition of a Business

The amendment to IFRS 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the consolidated financial statements of the Group, but may impact future periods should the Group enter into any business combinations.

Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform

The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments had no impact on the consolidated financial statements of the Group as it does not have any interest rate hedge relationships.

Amendments to IAS 1 and IAS 8: Definition of Material

The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the consolidated financial statements of, nor is there expected to be any future impact to the Group.

Conceptual Framework for Financial Reporting issued on 29 March 2018

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of the Group.

2.3 Fair value estimation

The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the reporting date.

The fair value of financial instruments traded in active markets, such as publicly traded trading and other financial assets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price. The appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods, such as estimated discounted cash flows, and makes assumptions that are based on market conditions existing at the reporting date.

Fair value measurements recognised in the consolidated statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, Grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 
 Financial assets or liabilities 
 (Euro 000's)                                    Level 1   Level 2   Level 3    Total 
 30 June 2020 
 Other financial assets 
 Financial assets at FV through OCI                   32         -     1,101    1,133 
 Trade and other receivables 
 Receivables (subject to provisional pricing)          -    22,239         -   22,239 
 Total                                                32    22,239     1,101   23,372 
                                                --------  --------  --------  ------- 
 31 December 2019 
 Other financial assets 
 Financial assets at FV through OCI                   42         -     1,101    1,143 
 Trade and other receivables 
 Receivables (subject to provisional pricing)          -    17,716         -   17,716 
                                                --------  --------  --------  ------- 
 Total                                                42    17,716     1,101   18,859 
                                                --------  --------  --------  ------- 
 

2.4 Critical accounting estimates and judgements

The preparation of the unaudited interim condensed consolidated financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

A full analysis of critical accounting estimates and judgements is set out in Note 3.4 to the 2019 audited financial statements, as well as Note 2.1(b) of these unaudited interim condensed consolidated financial statements.

   3.   Business and geographical segments 

Business segments

The Group has only one distinct business segment, being that of mining operations, which include mineral exploration and development.

Copper concentrates produced by the Group are sold to three off-takers as per the relevant offtake agreements (Note 20.3)

Geographical segments

The Group's mining activities are located in Spain. The commercialisation of the copper concentrates produced in Spain is carried out through Cyprus. Sales transactions to related parties are on arm's length basis in a similar manner to transaction with third parties. Accounting policies used by the Group in different locations are the same as those contained in Note 2.

 
(Euro 000's)                              Cyprus      Spain    Other       Total 
Three months ended 30 June 2020 
Revenue - from external customers          3,458     53,086        -      56,544 
                                        ========  =========  =======  ========== 
Earnings/(loss) Before Interest, 
 Tax, Depreciation and Amortisation 
 (EBITDA)                                  2,275     10,627     (68)      12,834 
Depreciation/amortisation charge               -    (7,101)        -     (7,101) 
Net foreign exchange (loss) / gain         (258)      (808)        5     (1,061) 
Finance income                                 -          2        -           2 
Finance cost                                 (1)      (139)        -       (140) 
                                                                      ========== 
Profit/(loss) before tax                   2,016      2,581     (63)       4,534 
                                        ========  =========  =======  ========== 
Tax                                                                      (1,499) 
                                                                      ========== 
Profit for the period                                                      3,035 
                                                                      ========== 
 
Six months ended 30 June 2020 
Revenue - from external customers          7,584    110,149        -     117,733 
                                        ========  =========  =======  ========== 
Earnings/(loss) Before Interest, 
 Tax, Depreciation and Amortisation 
 (EBITDA)                                  4,349     17,860    (101)      22,108 
Depreciation/amortisation charge               -   (13,767)        -    (13,767) 
Net foreign exchange (loss)/gain            (56)      (564)        4       (616) 
Impairment of other receivables             (45)          -        -        (45) 
Finance income                                 -          4        -           4 
Finance cost                                 (1)      (152)        -       (153) 
                                                                      ========== 
Profit/(loss) before tax                   4,247      3,381     (97)       7,531 
                                        ========  =========  =======  ========== 
Tax                                                                      (1,565) 
                                                                      ========== 
Profit for the period                                                      5,966 
                                                                      ========== 
 
Total assets                              32,365    439,142    1,168     472,675 
                                        ========  =========  =======  ========== 
Total liabilities                       (12,989)  (135,890)     (36)   (148,915) 
                                        ========  =========  =======  ========== 
Depreciation of property, plant 
 and equipment                                 -     11,434        -      11,434 
                                        ========  =========  =======  ========== 
Amortisation of intangible assets              -      2,333        -       2,333 
                                        ========  =========  =======  ========== 
Total additions of non-current assets          -     19,969        -      19,969 
                                        ========  =========  =======  ========== 
 
 
(Euro 000's)                                 Cyprus     Spain       Other     Total 
Three months ended 30 June 2019 
Revenue - from external customers             3,360      39,710         -      43,070 
                                          =========  ==========  ========  ========== 
Earnings/(loss) Before Interest, Tax, 
 Depreciation and Amortisation (EBITDA)       1,679      10,923     (568)      12,034 
Depreciation/amortisation charge                (1)     (3,744)         -     (3,745) 
Net foreign exchange (loss)                   (280)       (144)       (2)       (426) 
Finance income                                    -          13         -          13 
Finance cost                                    (1)        (47)         -        (48) 
Profit/(loss) before tax                      1,397       7,001     (570)       7,828 
                                          =========  ==========  ======== 
Tax                                                                             (979) 
                                                                           ---------- 
Profit for the period                                                           6,849 
                                                                           ---------- 
 
Six months ended 30 June 2019 
Revenue - from external customers             6,685      88,097         -      94,782 
                                          =========  ==========  ========  ========== 
Earnings/(loss) Before Interest, Tax, 
 Depreciation and Amortisation (EBITDA)       3,382      28,823     (661)      31,544 
Depreciation/amortisation charge                (1)     (7,170)         -     (7,171) 
Net foreign exchange gain/(loss)                167         122       (2)         287 
Finance income                                    -          16         -          16 
Finance cost                                    (1)        (81)         -        (82) 
Profit/(loss) before tax                      3,547      21,710     (663)      24,594 
                                          =========  ==========  ======== 
Tax                                                                           (3,590) 
                                                                           ========== 
Profit for the period                                                          21,004 
                                                                           ========== 
 
Total assets                                 26,869     404,667       694     432,230 
                                          =========  ==========  ========  ========== 
Total liabilities                          (14,777)   (109,352)     (628)   (124,757) 
                                          =========  ==========  ========  ========== 
Depreciation of property, plant and 
 equipment                                        1       5,489         -       5,490 
                                          =========  ==========  ========  ========== 
Amortisation of intangible assets                 -       1,681         -       1,681 
                                          =========  ==========  ========  ========== 
Total additions of non-current assets             1      38,747         -      38,748 
                                          =========  ==========  ========  ========== 
 

Revenue represents the sales value of goods supplied to customers, net of value added tax. The following table summarises sales to customers with whom transactions have individually exceeded 10.0% of the Group's revenues.

 
                        Six months        Six months 
                             ended             ended 
                           30 June           30 June 
(Euro 000's)                  2020              2019 
                  Segment  EUR'000  Segment  EUR'000 
 ------------------------  -------  -------  ------- 
 
    Offtaker 1     Copper   14,248   Copper   20,652 
    Offtaker 2     Copper   45,681   Copper   29,681 
    Offtaker 3     Copper   57,804   Copper   44,449 
 

4. Revenue

 
                                Three months ended      Three months ended 30 June  Six months ended  Six months ended 
                                      30 June 2020                            2019      30 June 2020      30 June 2019 
  (Euro 000's ) 
                                ==================  ==============================  ================  ================ 
Revenue from contracts with 
 customers (1)                              55,865                          45,774           120,026            93,992 
Fair value (losses)/gains 
 relating to provisional 
 pricing within sales (2)                      679                         (2,704)           (2,293)               790 
                                ==================  ==============================  ================  ================ 
Total revenue                               56,544                          43,070           117,733            94,782 
                                ==================  ==============================  ================  ================ 
 

All revenue from copper concentrate is recognised at a point in time when the control is transferred. Revenue from freight services is recognised over time as the services are provided.

(1) Included within H1 2020 revenue, there is a transaction price of EUR2.0 million (EURnil in H1 2019) related to the freight services provided by the Group to the customers arising from the sales of copper concentrate under CIF incoterm.

(2) Provisional pricing impact represents the change in fair value of the embedded derivative arising on sales of concentrate.

5. Net finance cost

 
                                                        Three      Three   Six months   Six months 
                                                       months     months        ended        ended 
                                                        ended      ended      30 June      30 June 
                                                      30 June    30 June         2020         2019 
   (Euro 000's)                                          2020       2019 
 Interest expense: 
     Other interest                                        44         15           53           19 
     Interest on lease liabilities                          4          4            8            4 
     Unwinding of discount on mine rehabilitation 
      provision (Note 14)                                  92         29           92           59 
 Interest income (1)                                      (2)       (13)          (4)         (16) 
                                                    ---------  ---------  -----------  ----------- 
                                                          138         35          149           66 
                                                    ---------  ---------  -----------  ----------- 
 
   (1)   Interest income relates to interest received on bank balances 

6. Earnings per share

The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the Company is based on the following data:

 
                                                 Three       Three   Six months   Six months 
                                                months      months        ended        ended 
                                                 ended       ended      30 June      30 June 
                                               30 June     30 June         2020         2019 
   (Euro 000's)                                   2020        2019 
 Profit attributable to equity 
  holders of the parent                           (59)       6,954        (680)       21,115 
                                            ----------  ----------  -----------  ----------- 
 
 Weighted number of ordinary shares 
  for the purposes of basic earnings 
  per share (000's)                            137,339     137,339      138,102      137,339 
                                            ----------  ----------  -----------  ----------- 
 Basic profit per share (EUR cents/share)          2.3         5.1          4.6         15.4 
                                            ----------  ----------  -----------  ----------- 
 
 Weighted number of ordinary shares 
  for the purposes of fully diluted 
  earnings per share (000's)                   139,858     138,680      140,627      138,419 
                                            ----------  ----------  -----------  ----------- 
 Fully diluted profit per share 
  (EUR cents/share)                                2.3         5.1          4.5         15.3 
                                            ----------  ----------  -----------  ----------- 
 

At 30 June 2020 there are nil warrants (Note 11) and 3,555,250 options (Note 12) (2019: nil warrants and 2,505,250 options) which have been included when calculating the weighted average number of shares for 2020.

7. Property, plant and equipment

 
 
                                                                           Assets         Deferred 
    (Euro 000's)                                                            under          mining     Other 
                            Land        Right-of-use       Plant        construction       costs      assets 
                        and buildings      assets       and machinery        (1)            (2)        (3)      Total 
  Cost 
  At 1 January 
   2019                        45,853          6,144          152,820          62,010       27,537       785   295,149 
  Additions                       166            277              272          30,410          845         1    31,971 
  Disposals                         -              -                -               -            -       (5)       (5) 
  Reclassifications                 -              -              183           (183)            -         -         - 
  At 30 June 2019              46,019          6,421          153,275          92,237       28,382       781   327,115 
  Additions                        44              -              899          18,327        5,631         -    24,901 
  Reclassifications                 -              -           94,047        (94,047)            -         -         - 
  At 31 December 
   2019                        46,063          6,421          248,221          16,517       34,013       781   352,016 
  Additions                       371              -              439           9,682        3,197         -    13,689 
  Disposals                         -              -                -               -            -         -         - 
  Reclassifications                 -              -            1,924         (1,924)            -         -         - 
  At 30 June 2020              46,434          6,421          250,584          24,275       37,210       781   365,705 
                      ---------------  -------------  ---------------  --------------  -----------  --------  -------- 
 
  Depreciation 
  At 1 January 
   2019                         6,072              -           20,315               -        4,681       561    31,629 
  Charge for the 
   period                       1,048            190            3,543               -          677        32     5,490 
  Disposals                         -              -                -               -            -       (3)       (3) 
  At 30 June 2019               7,120            190           23,858               -        5,358       590    37,116 
  Charge for the 
   period                       1,137            201            5,014               -          703        30     7,085 
  At 31 December 
   2019                         8,257            391           28,872               -        6,061       620    44,201 
  Charge for the 
   period                       1,453            255            8,650               -        1,049        27    11,434 
  At 30 June 2020               9,710            646           37,522               -        7,110       647    55,635 
                      ---------------  -------------  ---------------  --------------  -----------  --------  -------- 
 
  Net book value 
  At 30 June 2020              36,724          5,775          213,062          24,275       30,100       134   310,070 
                      ---------------  -------------  ---------------  --------------  -----------  --------  -------- 
  At 31 December 
   2019                        37,806          6,030          219,349          16,517       27,952       161   307,815 
                      ---------------  -------------  ---------------  --------------  -----------  --------  -------- 
 

(1) Assets under construction at 30 June 2020 were EUR24.3 million (2019: EUR92.2 million) which include sustaining capital expenditures and tailings dams project.

(2) Stripping costs

(3) Includes motor vehicles, furniture, fixtures and office equipment which are depreciated over 5-10 years.

The above fixed assets are mainly located in Spain.

8. Intangible assets

 
 
      (Euro 000's)                       Licences, 
                             Permits       R&D and 
                                 (1)      software     Total 
    Cost 
    At 1 January 2019         76,538         6,026    82,564 
    Additions                      -           719       719 
    At 30 June 2019           76,538         6,745    83,283 
    Additions                      -         4,730     4,730 
    Disposals                      -       (3,865)   (3,865) 
    At 31 December 2019       76,538         7,610    84,148 
    Additions                      -             -         - 
    At 30 June 2020           76,538         7,610    84,148 
                            --------  ------------  -------- 
  Amortisation 
    On 1 January 2019         10,370           243    10,613 
    Charge for the period      1,650            31     1,681 
    At 30 June 2019           12,020           274    12,294 
    Charge for the period      1,788            33     1,821 
    Impairment charge              -         6,948     6,948 
    At 31 December 2019       13,808         7,255    21,063 
    Charge for the period      2,300            33     2,333 
    At 30 June 2020           16,108         7,288    23,396 
                            --------  ------------  -------- 
  Net book value 
    At 30 June 2020           60,430           322    60,752 
                            --------  ------------  -------- 
    At 31 December 2019       62,730           355    63,085 
                            --------  ------------  -------- 
 
 
   (1)    Permits include an amount of EUR5.0 million related to Proyecto Touro mining rights. 

The ultimate recovery of balances carried forward in relation to areas of interest or all such assets including intangibles is dependent on successful development, and commercial exploitation, or alternatively the sale of the respective areas.

The Group conducts impairment testing on an annual basis unless indicators of impairment are not present at the reporting date. In considering the carrying value of the assets at Proyecto Riotinto, including the intangible assets and any impairment thereof, the Group assessed that no indicators were present as at 30 June 2020 and thus no impairment has been recognised.

9. Inventories

 
 (Euro 000's)              30 Jun   31 Dec 
                             2020     2019 
 Finished products          2,863   11,024 
 Materials and supplies    11,660    9,266 
 Work in progress           1,046    1,040 
                          -------  ------- 
                           15,569   21,330 
                          -------  ------- 
 

As of 30 June 2020, copper concentrate produced and not sold amounted to 3,845 tonnes (31 Dec 2019: 14,201 tonnes). Accordingly, the inventory for copper concentrate was EUR2.9 million (31 Dec 2019: EUR11.0 million).

Materials and supplies relate mainly to machinery spare parts. Work in progress represents ore stockpiles, which is ore that has been extracted and is available for further processing.

10. Trade and other receivables

 
 (Euro 000's)                                      30 Jun    31 Dec 
                                                     2020      2019 
 Non-current 
 Deposits                                             497       500 
                                                 --------  -------- 
                                                      497       500 
                                                 --------  -------- 
 Current 
 Trade receivables at fair value - subject 
  to provisional pricing                           15,170     8,798 
 Trade receivables from shareholders at fair 
  value - subject to provisional pricing (Note 
  20.3)                                             7,069     8,918 
 Other receivables from related parties at 
  amortised cost (Note 20.3)                           56        56 
 Deposits                                              27        26 
 VAT receivables                                   21,764    14,380 
 Tax advances                                           7         7 
 Prepayments                                          927       616 
 Other current assets                                  76        56 
                                                 --------  -------- 
                                                   45,096    32,857 
 Allowance for expected credit losses                   -         - 
                                                 --------  -------- 
 Total trade and other receivables                 45,593    33,357 
                                                 --------  -------- 
 

Trade receivables are shown net of any interest applied to prepayments. Payment terms are aligned with offtake agreements and market standards and generally are 7 days on 90% of the invoice and the remaining 10% at the settlement date which can vary between 1 to 5 months. The fair values of trade and other receivables approximate to their book values.

11. Share capital and share premium

 
                                                      Share         Share 
                                       Shares       Capital       premium              Total 
                                        000's    StgGBP'000    StgGBP'000         StgGBP'000 
 Authorised 
 Ordinary shares of Stg GBP0.075 
  each                                200,000        15,000             -               15,000 
                                    ---------  ------------  ------------      --------------- 
 
 Issued and fully paid                  000's          Euro          Euro                 Euro 
                                                      000's         000's                000's 
                                    ---------  ------------  ------------      --------------- 
 Balance at 1 January 2019            137,340        13,372       314,319              327,691 
                                    ---------  ------------  ------------      --------------- 
 Balance at 30 June 2019              137,340        13,372       314,319              327,691 
                                    ---------  ------------  ------------      --------------- 
 Balance at 31 December 2019 
  / 30 June 2020                      137,340        13,372       314,319              327,691 
                                    ---------  ------------  ------------      --------------- 
 
 

Authorised capital

The Company's authorised share capital is 200,000,000 ordinary shares of Stg GBP0.075 each.

Issued capital

There were no changes in share capital during the six months ended 30 June 2020 and 2019.

Warrants

As at 30 June 2020 and 2019 there were no warrants.

12. Other reserves

 
 
                                                                Fair 
                                                               value 
   (Euro 000's)                                              reserve    Non-Distributable 
                                           Depletion    of financial              reserve    Distributable 
                                              factor          assets                  (3)          reserve 
                        Share    Bonus           (1)        at FVOCI                                   (4) 
                       option    share                           (2)                                           Total 
                                                      --------------  -------------------  --------------- 
 At 1 January 
  2019                  6,752      208         5,500         (1,115)                1,446            6,752    12,791 
 Recognition 
  of share- 
  based payments          107        -             -               -                    -                -       107 
 Recognition 
  of depletion 
  factor                    -        -         5,378               -                    -                -     5,378 
 Recognition 
  of 
  non-distributable 
  reserve                   -        -             -               -                1,984                -     1,984 
 Recognition 
  of distributable 
  reserve                   -        -             -               -                    -            1,844     1,844 
 Change in 
  fair value 
  of financial 
  assets at 
  fair value 
  through OCI               -        -             -            (12)                    -                -      (12) 
                     --------  -------  ------------  --------------  -------------------  ---------------  -------- 
 At 30 June                                                   (1,127 
  2019                  6,859      208        10,878               )                3,430            1,844    22,092 
 Recognition 
  of share-based 
  payments                512        -             -               -                    -                -       512 
 Change in 
  fair value 
  of financial 
  assets at 
  fair value 
  through OCI               -        -             -            (17)                    -                -      (17) 
 Other changes 
  in reserves               -        -             -               -                    -              249       249 
                                                      --------------  -------------------  --------------- 
 At 31 December 
  2019                  7,371      208        10,878         (1,144)                3,430            2,093    22,836 
 Recognition 
  of share-based 
  payments                321        -             -               -                    -                -       321 
 Recognition 
  of depletion 
  factor                    -        -         8,000               -                    -                -     8,000 
 Recognition 
  of 
  non-distributable 
  reserve                   -        -             -               -                2,198                -     2,198 
 Change in 
  fair value 
  of financial 
  assets at 
  fair value 
  through OCI               -        -             -             (9)                    -                -       (9) 
 At 30 June 
  2020                  7,692      208        18,878         (1,153)                5,628            2,093    33,346 
                     --------  -------  ------------  --------------  -------------------  ---------------  -------- 
 

(1) Depletion factor reserve

At 30 June 2020, the Group has disposed EUR8.0 million (H1 2019: EUR5.4 million) as a depletion factor reserve as per the Spanish Corporate Tax Act.

(2) Fair value reserve of financial assets at FVOCI

The Group has elected to recognise changes in the fair value of certain investments in equity securities in OCI, as explained in (1) above. These changes are accumulated within the FVOCI reserve within equity. The Group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

(3) Non-distributable reserve

To comply with Spanish Law, the Group needed to record a reserve when profit generated equal to a 10% of profit/(loss) for the year until 20% of share capital is reached.

(4) Distributable reserve

The Group reclassified 10% of the profit of 2019 to distributable reserves.

In general, option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of fully paid ordinary shares by way of a capitalisation of the Company's reserves, a sub division or consolidation of the ordinary shares, a reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to the holders of ordinary shares.

Details of share options outstanding as at 30 June 2020:

 
  Grant date                               Expiry date          Exercise price GBP   Share options 
=====================================  ======================  ===================  ============== 
                          23 Feb 2017             22 Feb 2022              1.44            813,000 
                          29 May 2019             28-May-2024              2.015         1,292,250 
                          8 July 2019             7 July 2024              2.045           400,000 
                         30 June 2020            29 June 2030              1.475         1,050,000 
                                                                                    ============== 
 Total                                                                                   3,555,250 
                                                                                    ============== 
 
                                           Weighted average 
                                           exercise price GBP                        Share options 
                                         ====================  =================================== 
  At 1 January 2020                              2.08                                    2,505,250 
  Granted during the reported period             1.475                                   1,050,000 
  30 June 2020                                   1.924                                   3,555,250 
                                                               =================================== 
 
 

13. Trade and other payables

 
 (Euro 000's)                 30 Jun 2020   31 Dec 2019 
 Non-current 
 Government grant                      13            13 
                             ------------  ------------ 
                                       13            13 
                             ------------  ------------ 
 Current 
 Trade payables                    61,913        52,395 
 Land options and mortgage            261           282 
 Accruals                           3,533         4,860 
                                   65,707        57,537 
                             ------------  ------------ 
 

Trade payables are mainly for the acquisition of materials, supplies and other services. These payables do not accrue interest and no guarantees have been granted. The fair value of trade and other payables approximate their book values. Trade payables are non-interest-bearing and are normally settled on 60-day terms.

14. Provisions

 
                                          Rehabilitation 
   (Euro 000's)             Legal costs            costs     Total costs 
 1 January 2019                     127            6,392           6,519 
 Additions                      5                    122             127 
 Revision of provision             (23)                -            (23) 
 Finance cost                         -               59              59 
 At 30 June 2019                    109            6,573           6,682 
 Additions                          279               16             295 
 Revision of provision                -             (18)            (18) 
 Finance cost                         -             (18)            (18) 
                         --------------  ---------------  -------------- 
 At 31 December 2019                388            6,553           6,941 
 Additions                           33              354             387 
 Finance cost                         -               92              92 
 At 30 June 2020                    421            6,999           7,420 
                         --------------  ---------------  -------------- 
 
 
 (Euro 000's)    30 Jun 2020   31 Dec 
                                 2019 
 Non-current           7,420    6,941 
 Current                   -        - 
 Total                 7,420    6,941 
                ------------  ------- 
 

Rehabilitation provision

Rehabilitation provision represents the accrued cost required to provide adequate restoration and rehabilitation upon the completion of production activities. These amounts will be settled when rehabilitation is undertaken, generally over the project's life.

The discount rate used in the calculation of the net present value of the provision as at 30 June 2020 was 1.87%, which is the 15-year Spain Government Bond rate (31 December 2019: 1.87%, which is the 15-year Spain Government Bond rate). An inflation rate of 1.5% is applied on annual basis.

Legal provision

The Group has been named a defendant in several legal actions in Spain, the outcome of which is not determinable as at 30 June 2020. Management has reviewed individually each case and made a provis ion of EUR33 thousand for these claims, which has been reflected in these unaudited interim condensed consolidated financial statements.

15. Borrowings

 
 (Euro 000's)         30 Jun 2020     31 Dec 
                                        2019 
 Current borrowings 
 Credit facilities         14,934          - 
                           14,934          - 
                     ------------    ------- 
 

The Group has unsecured credit facilities totalling EUR47.5 million. During the half year, Atalaya has drawn down some of its existing credit facilities to strengthen the cash position of the Company to provide additional liquidity in view of any potential impacts of the COVID-19 pandemic. The average interest rate on the facilities is 1.69%. The maximum term of the facilities is one year. All borrowings are unsecured.

16. Leases liabilities

 
 (Euro 000's)          30 Jun 2020   31 Dec 2019 
 Non-current 
 Leases liabilities          4,974         5,265 
                             4,974         5,265 
                      ------------  ------------ 
 Current 
 Leases liabilities            584           588 
                               584           588 
                      ------------  ------------ 
 

Leases liabilities

The Group entered into lease arrangements for the renting of land, laboratory equipment and vehicles which are subject to the adoption of all requirements of IFRS 16 Leases. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. Depreciation expense regarding leases amounts to EUR0.2 million (2019: EUR0.2 million) for the six month period ended 30 June 2020. The duration of the land lease is for a period of thirteen years, payments are due at the beginning of the month escalating annually on average by 1.5%. At 30 June 2020, the remaining term of this lease is twelve years.

The duration of the motor vehicle and laboratory equipment lease is for a period of four years, payments are due at the beginning of the month escalating annually on average by 1.5%. At 30 June 2020, the remaining term of this motor vehicle and laboratory equipment lease is two years and a half, and three years, respectively.

 
 (Euro 000's)                               30 Jun 2020   31 Dec 2019 
 Minimum lease payments due: 
 
        *    Within one year                        584           588 
 
        *    Two to five years                    2,078         2,134 
 
        *    Over five years                      2,896         3,131 
 Present value of minimum lease payments 
  due                                             5,558         5,853 
                                           ------------  ------------ 
 
 
 (Euro 000's)                           Lease liabilities 
 Balance 1 January 2020                             5,853 
 Additions                                              - 
 Interest expense                                       8 
            Lease payments                          (303) 
 Balance at 30 June 2020                            5,558 
                                       ------------------ 
 
 Balance at 30 June 2020 
 
        *    Non-current liabilities                4,974 
 
        *    Current liabilities                      584 
                                       ------------------ 
                                                    5,558 
                                       ------------------ 
 

17. Deferred consideration

In September 2008, the Group moved to 100% ownership of Atalaya Riotinto Mineral S.L. ("ARM") (and thus full ownership of Proyecto Riotinto) by acquiring the remaining 49% of the issued capital of ARM. At the time of the acquisition, the Group signed a Master Agreement (the "Master Agreement") with Astor Management AG ("Astor") which included a deferred consideration of EUR43.9 million (the "Deferred Consideration") payable as consideration in respect of the acquisition. The Company also entered into a credit assignment agreement at the same time with a related company of Astor, Shorthorn AG, pursuant to which the benefit of outstanding loans was assigned to the Company in consideration for the payment of EUR9.1 million to Shorthorn (the "Loan Assignment").

The Master Agreement has been the subject of litigation in the High Court and the Court of Appeal that has now concluded. As a consequence, ARM must apply any excess cash (after payment of operating expenses, sustaining capital expenditure, any senior debt service requirements and up to US$10 million per annum (for non-Proyecto Riotinto related expenses)) to pay the consideration due to Astor (including the Deferred Consideration and the amount of EUR9.1 million payable under the Loan Assignment). "Excess cash" is not defined in the Master Agreement leaving ambiguity as to how it is to be calculated.

On 2 March 2020, the Company filed an application for directions in the High Court to seek clarity on the definition of "Excess Cash" and to determine when it is payable. The Company has served its Statement of Case to the High Court and a case management hearing is scheduled for 30 October 2020 with a trial expected in 2021.

As at 30 June 2020, no consideration has been paid.

The amount of the liability recognised by the Group is EUR53 million. The effect of discounting remains insignificant, in line with prior year's assessment, and therefore the Group has measured the liability for the Deferred Consideration on an undiscounted basis.

18. Acquisition, incorporation and disposal of subsidiaries

There were neither acquisition nor incorporation of subsidiaries during the six month period to 30 June 2020.

19. Winding-up of subsidiaries

There were no subsidiaries wound-up during the six month period to 30 June 2020.

20. Related party transactions

The following transactions were carried out with related parties:

20.1 Compensation of key management personnel

The total remuneration and fees of Directors (including Executive Directors) and other key management personnel was as follows:

 
                                           Three     Three  Six months  Six months 
                                          months    months       ended       ended 
  (Euro 000's)                             ended     ended     30 June     30 June 
                                         30 June   30 June        2020        2019 
                                            2020      2019 
Directors' remuneration and fees             247       242         512         486 
Share option-based benefits and other 
 benefits to directors                        56        13         112          24 
Key management personnel fees                125       616         249         730 
Share option-based and other benefits 
 to key management personnel                  79        23         158          48 
                                        --------  --------  ----------  ---------- 
                                             507       894       1,031       1,288 
                                        --------  --------  ----------  ---------- 
 

20.2 Share-based benefits

On 30 June 2020, the directors and key management personnel have been granted with 750,000 share options. The options expire ten years from the deemed date of grant (30 June 2020), have an exercise price of 147.5 pence per ordinary share, based on the share price at the close of market on the grant date, and vest in two equal tranches, half on grant and half on the first anniversary of the granting date.

20.3 Transactions with related parties/shareholders

i) Transaction with shareholders

 
                                               Three     Three   Six months  Six months 
                                              months    months        ended       ended 
                                               ended     ended      30 June     30 June 
  (Euro 000's )                              30 June   30 June         2020        2019 
                                                2020      2019 
                                           =========  ========  ===========  ========== 
Trafigura- Revenue from contracts              4,555     8,986       12,948      20,663 
Freight services                                   -         -            -           - 
                                           ---------  --------  -----------  ---------- 
                                               4,555     8,986       12,948      20,663 
Gain / (losses) relating provisional 
 pricing within sales                          1,704     (782)        1,299        (11) 
                                           ---------  --------  -----------  ---------- 
Trafigura - Total revenue from contracts       6,259     8,204       14,248      20,652 
                                           =========  ========  ===========  ========== 
 

ii) Period-end balances with related parties

 
 
  (Euro 000's)                        30 Jun 2020    31 Dec 2019 
Receivables from related parties: 
Recursos Cuenca Minera S.L.                    56             56 
Total (Note10)                                 56             56 
                                    -------------  ------------- 
 

The above balances bear no interest and are repayable on demand.

iii) Period-end balances with shareholders

 
 
  (Euro 000's )                             30 Jun 2020     31 Dec 2019 
Trafigura - Debtor balance- subject to 
 provisional pricing                              7,069           8,918 
Total (Note 10)                                   7,069           8,918 
                                         --------------  -------------- 
 

The above debtor balance arising from sales of goods and other balances bear no interest and is repayable on demand.

21. Contingent liabilities

Judicial and administrative cases

In the normal course of business, the Group may be involved in legal proceedings, claims and assessments. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and the Group accrues for adverse outcomes as they become probable and estimable.

Receipt of rulings of claims made by an environmental group

On 26 September 2018, Atalaya received notice from the Tribunal Superior de Justicia de Andalucía ("TSJA") ruling in favour of certain claims made by environmental group Ecologistas en Accion ("EeA") against the government of Andalucía ("Junta de Andalucía" or "JdA") and Atalaya, as co-defendant in the case.

In July 2014, EeA had filed a legal claim to JdA with a request to declare null the Unified Environmental declaration (in Spanish, Authorization Ambiental Unificada, or "AAU") granted to Atalaya Riotinto Minera, S.L.U. dated 27 March 2014, which was required in order to secure the required mining permits for Proyecto Riotinto. The judgment, in spite of annulling the AAU on procedural grounds, made very clear that the AAU was correct and therefore, rejected the issues raised by EeA and confirmed the decision of JdA not to suspend the AAU.

The JdA filed for appeal to the Supreme Court. Although the claim was against the JdA, Atalaya, being an interested party in the process, voluntarily joined as co-defendant to ask for permission to appeal to the Supreme Court in Spain.

On 29 March 2019, Atalaya announced the receipt of notification from the Supreme Court in Spain stating that it does not have jurisdiction over the appeal made by the Junta de Andalucía and the Company, which voluntary joined the appeal as co-defendant.

On 7 May 2020, the Company announced the JdA has issued a favourable resolution (the "Resolution") which validates the AAU and ends the legal process. (Refer to Note 23)

In addition to the legal procedure described above, on 26 April 2019, the Company announced a judgment related to the Mining Permits to operate Proyecto Riotinto (the "Mining Permits") was handed down by the TSJA. The TSJA declared the Mining Permits are linked to the Environmental Permits, ruled by the same tribunal on September 2018. The new ruling on the Mining Permits is based on the requirement to have an AAU before issuing mining permits and therefore invalidates the existing Mining Permits.

On 1 June 2020, the Company announced the validation of the mining permits by the Junta de Andalucía. The validation of the mining permits ends all legal processes previously announced by the Company in relation to claims made by interest parties in connection with the approval process of Proyecto Riotinto.

22. Commitments

There are no minimum exploration requirements at Proyecto Riotinto. However, the Group is obliged to pay local land taxes which currently are approximately EUR235,000 per year in Spain and the Group is required to maintain the Riotinto site in compliance with all applicable regulatory requirements.

In 2012, ARM entered into a 50/50 joint venture with Rumbo to evaluate and exploit the potential of the class B resources in the tailings dam and waste areas at Proyecto Riotinto (mainly residual gold and silver in the old gossan tailings). Under the joint venture agreement, ARM will be the operator of the joint venture, will reimburse Rumbo for the costs associated with the application for classification of the Class B resources and will fund the initial expenditure of a feasibility study up to a maximum of EUR2.0 million. Costs are then borne by the joint venture partners in accordance with their respective ownership interests.

23. Significant events

COVID-19 outbreak

On 11 March 2020, the World Health Organization raised the public health emergency caused by the coronavirus outbreak (COVID-19) to an international pandemic. The rapid national and international developments represent an unprecedented health crisis, which will impact the macroeconomic environment and business developments. To address this situation, among other measures, the Spanish government declared a state of emergency by publishing Royal Decree 463/2020 of 14 March and approved a series of extraordinary urgent measures to address the economic and social impact of COVID-19 by Royal Decree Law 8/2020 of 17 March. On 17 March 2020, the Company released an update on the measures taken to manage and respond to the pandemic to protect its workforce and local communities surrounding its projects.

In addition, a new Royal Decree was released on 29 March 2020 (the "Royal Decree") implementing enhanced measures to protect the people from the virus. The Royal Decree stipulated that only employees from a short list of essential industries were allowed to continue working from 30 March 2020. Mining was excluded as an essential industry and consequently the Company's Proyecto Riotinto site was required to halt its operations for a period until 3 April 2020 when mining operations were permitted to restart.

The Directors continue monitoring the business and taking appropriate steps to address the situation and reduce its operational and financial impact. After reviewing alternative scenarios, the current cash resources, forecasts and budgets, timing of cash flows, borrowing facilities, sensitivity analyses on alternative commodities prices and considering the associated uncertainties to the Group's operations, the Directors have a reasonable expectation that the Group has adequate resources to continue operating in the foreseeable future. Accordingly, the unaudited interim condensed consolidated financial statements continue to be prepared on a going concern basis.

The Company continues carrying out several measures and implemented a plan developed for the purpose of protecting its workforce and the people of the surrounding communities to manage the crisis. The main key risks, their potential impacts and the response plans to protect its workforce are, amongst others:

-- spread of COVID-19 at the mine site may cause an interruption of production either on a partial or whole basis;

   --      a disruption of either the national or international logistics of the operation; 
   --      partial supply chain disruptions; 
   --      unavailability of key personnel of the Company; 
   --      additional costs as a result of implementing control measures to spread the virus; and 

-- the impact on the commodity demand fundamentals affecting the Company's products or commodity prices.

The Group continues the implementation of response plans. Only critical employees for the operation are allowed to enter on site. There are stringent distance and hygienical mandatory rules, mandatory body temperature controls, key protection mandatory safety equipment, tests to employees, meeting control track and facilitate systems and tools to work from home for all remaining employees.

Additionally, the Group, up to the date of approval of these unaudited interim condensed consolidated financial statements, re-assessed the existence of any impairment indicators and the sensitivity analysis to volatility of commodity prices about its key assets being the mining rights, the property plant and equipment, the intangible assets, deferred taxes, trade receivables and inventories corresponding above 95% of its total assets (excluding cash and cash equivalents). The Directors have considered and debated different possible scenarios on the Group's operations, financial position and forecast for a period of at least 12 months since the approval of these unaudited interim condensed consolidated financial statements. Possible scenarios range from (i) further disruption in Proyecto Riotinto; (ii) market volatility in commodity prices; and (iii) availability of existing credit facilities. The directors have considered the capacity of the Group and its single asset Proyecto Riontinto to generate cash, and have concluded that no impairment indicators are in place.

In the current environment, assumptions about future commodity prices, exchange rates, and interest rates are subject to greater variability than normal, which could in the future affect the valuation of the Company's assets, both financial and non-financial. While these matters continue to be monitored, the short-term prices for copper increased during Q2 2020, and the Group's estimates in relation to these assumptions over a long-term view have remained unchanged, reflecting the long life of the Group 's single operation Proyecto Riotinto.

While the Group has not experienced any significant negative impact to date, the extent to which COVID-19 could impact the future business activity or financial results, and the duration of any such negative impact, will depend on future developments, which are highly uncertain and unknown at this time.

AAU Permits

On 7 May 2020, the Company announced that the Junta de Andalucía had issued a favourable resolution which validates the Unified Environmental Authorisation (the "AAU") of Proyecto Riotinto. In addition, on 1 June 2020, the Company announced that the Junta de Andalucía validated the Mining Permits. The Resolutions end the legal process announced by the Company on 26 September 2018 in relation to the judgement made by the Tribunal Superior de Justicia de Andalucía ("TSJA") in connection with the AAU and the Mining Permits.

Negative Environmental Impact Statement on Proyecto Touro

The "Dirección Xeral de Calidade Ambiental e Cambio Climático", (the General Directorate for the Environment and Climate Change of Galicia), announced on 28 January 2020 that a negative Environmental Impact Statement for Proyecto Touro (Declaración de Impacto Ambiental) had been signed.

The short release stated that the decision was based on two reports which form part of a wider evaluation consisting of fifteen reports produced by different departments of the Xunta de Galicia. These two reports challenge the ability of the Company to guarantee that there will be no environmental impact of the Project on the Ulla River and related protected ecosystems which are located downstream.

On 7 February 2020, the formal communication from the Xunta de Galicia was published in Galicia's official journal. In the meantime, the Company along with its advisers, is evaluating potential next steps for the Project, which could include an appeal of the decision made by the Xunta de Galicia, and/or the clarification of the questions raised by the reports.

New group entity

On 16 June 2020 the Group established a new company in Cyprus under the name of Atalaya Financing, Limited. The activity of the new company is financing.

24. Events after the reporting period

There were no significant events subsequent to the reporting period.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR KKBBBABKDQFD

(END) Dow Jones Newswires

August 13, 2020 02:00 ET (06:00 GMT)

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