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
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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
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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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