Atalaya on track despite softening copper prices

Atalaya Mining reported robust production figures and progress in its renewable energy projects in a second-quarter update on Wednesday, as it remained on track to meet its full-year guidance.

The AIM-traded firm said its mining operations showed positive growth, with ore mined reaching 3.9 million tonnes in the quarter, compared to 3.6 million tonnes in the same period last year.

Waste mining also saw significant growth, reaching 8.6 million tonnes, compared to 6.7 million tonnes a year earlier.

In terms of processing, Atalaya processed 4.1 million tonnes of ore during the second quarter, compared to 4.0 million tonnes in the same period last year.

The board put the improvement down to the strong mill performance following plant maintenance activities rescheduled to the first quarter of 2023.

It said the copper grade also increased slightly to 0.40% in the period, from 0.39% a year earlier, while copper recoveries reached 87.18%, up from 86.44%.

Copper production demonstrated substantial growth, rising to 14,212 tonnes from 13,386 tonnes year-on-year.

Atalaya said the increase was primarily driven by strong throughput and copper recoveries.

It said additionally, on-site copper concentrate inventories at the end of June totalled 7,291 tonnes, significantly higher than the 1,564 tonnes at the end of March.

All concentrate in stock at the beginning of the period was delivered to the port at Huelva.

Copper contained in concentrates sold totalled 12,858 tonnes in the second quarter, slightly lower than the 13,872 tonnes it reported for the same period last year, but higher than the 12,501 tonnes in the first quarter of this year.

Financially, Atalaya Mining reported an average realised copper price of $3.81 per pound in the second quarter, down from $4.28 per pound on the year, and $4.00 per pound quarter-on-quarter.

The company said its balance sheet remained strong, with €112.6m in consolidated cash and cash equivalents as at 30 June.

Net cash, after accounting for current and non-current borrowings, stood at €68.8m, compared to €53.1m at the end of December.

Atalaya said it was also making strides in renewable energy projects, with the construction of a 50 MW solar plant at Riotinto progressing well, and start-up expected in late 2023 or early 2024, slightly delayed from the original timeline.

Once operational, the plant was projected to provide about 22% of Riotinto's electricity needs.

Combined with the long-term power purchase agreement, Atalaya said the initiatives would supply more than 50% of the company's current electricity requirements at a rate below historical prices in Spain.

Additionally, Atalaya said it was exploring the potential installation of wind turbines at Riotinto to further support its decarbonisation goals.

Looking ahead, Atalaya Mining remains confident in achieving its full-year 2023 guidance.

The company said it expected copper production of between 53,000 to 55,000 tonnes, with cash costs ranging from $2.80 to $3.00 per pound of copper payable, and all-in sustaining costs (AISC) ranging from $3.00 to $3.20 per pound of copper payable.

“We are pleased to report a strong quarter of production, thanks to a solid performance at the plant including good throughput and recoveries,” said chief executive officer Alberto Lavandeira.

“We remain confident in our full year operational guidance.

“Although the copper price has softened in recent months, the overall outlook is far better than many market participants had predicted for 2023.”

Lavandeira said supply disruptions in many key copper-producing regions had improved the near-term market balance.

“In the medium term, we remain confident on the outlook for copper, given its critical role in the energy transition and the increasing challenges faced by the industry to deliver new supply.

“At Atalaya, we are fortunate to control a substantial resource base and a large-scale processing facility, which will allow us to grow production for Europe and other global markets.”

At 0937 BST, shares in Atalaya Mining were up 0.31% at 325p.

Reporting by Josh White for Sharecast.com.