Atalaya Mining upbeat after 2022 challenges

Atalaya Mining reported a solid operational performance in an update on Wednesday, despite a number of macroeconomic and political challenges.

The AIM-traded firm, which was holding its annual general meeting, said copper production for 2022 totalled 52,300 tonnes, slightly lower than the prior year due to reduced grades and throughput.

However, the plant performed well throughout the year, despite the negative impact of a transport sector strike and related stoppage in the first quarter.

The average process plant feed grade of 0.40% copper and a process recovery rate of approximately 86% were in line with reserve estimates and budgeted figures.

Costs, on the other hand, were on the upper end of its guidance for the year.

Cash costs and all-in sustaining costs for 2022 were $3.16 and $3.37 per pound, respectively.

The board said the increase was mainly attributed to higher electricity costs and other supplies, as well as lower production volumes.

However, the weaker euro partially offset those factors.

The strong operating performance seen in the latter part of 2022 had meanwhile carried over into 2023, with the plant maintaining throughput above its nameplate capacity.

As a result, the copper production guidance for 2023 remained unchanged in the range of 53,000 to 55,000 tonnes.

Despite the solid operational performance, revenues for 2022 amounted to €361.8m, down from €405.7m in 2021.

The reduction was primarily due to lower production volumes and a lower average realised copper price.

EBITDA for 2022 stood at €55.3m, significantly affected by the global inflationary environment and the substantial increase in electricity costs, which amounted to around €64m.

Looking ahead, Atalaya Mining expressed optimism over electricity costs for 2023 and beyond.

The firm implemented a long-term power purchase agreement (PPA) at the start of the year, which was expected to provide around 31% of its current electricity requirements at a fixed rate significantly lower than the average realised electricity price in 2022 and below the rates achieved in 2021.

Additionally, the construction of a 50 MW solar plant at Riotinto was underway and expected to provide about 22% of Atalaya's electricity needs on completion in late 2023.

Together, the 50 MW solar plant and the long-term power purchase agreement would supply more than 50% of the company's current electricity requirements at a rate below historical prices in Spain.

Atalaya said it was also exploring other renewable power initiatives, including wind turbines, to further enhance its low-cost and carbon-free electricity supply.

In terms of growth prospects, Atalaya said it was focussed on five main projects.

The company said it remained fully committed to the development of the Touro copper project in Galicia, and was actively engaging with stakeholders to secure the necessary permits and social licence.

At Proyecto Masa Valverde in the south, exploration work was ongoing, with promising drilling results.

Drill target definition was progressing, and the first drill testing was planned at Riotinto East.

Two short drilling programs were completed at the Hinchona and Chaparral copper-gold projects at Proyecto Ossa Morena.

Moreover, Atalaya Mining said it recently announced the completion of a new preliminary economic assessment for Proyecto Riotinto, which saw an integrated mine plan for Cerro Colorado, San Dionisio, and San Antonio.

The plan had the potential to increase copper production by enhancing the blended head grade processed at Riotinto's 15 million tonnes-per-annum plant.

Atalaya said it was also making progress on the construction of the E-LIX phase one plant.

Most of the civil and structural work was now complete, and equipment assembly was currently underway.

Commissioning of the plant was expected to take place in the second half of 2023.

The E-LIX plant was designed to produce high-purity copper or zinc metals on-site, enabling higher metal recoveries from complex polymetallic ores, reducing transportation and concentrate treatment charges, and contributing to a reduced carbon footprint.

“Our balance sheet remains strong and this allows the company to continue to invest in growth and cost reduction initiatives, including E-LIX, higher-grade orebodies and exploration across our portfolio,” said non-executive chairman Roger Davey.

“In addition, our financial strength means we are well positioned to develop Touro should approvals be granted, which could become a new source of copper production in Europe.”

At 1214 BST, shares in Atalaya Mining were up 2.81% at 329p.

Reporting by Josh White for Sharecast.com.