Atalaya pleased after 'year of stabilisation'

Investors in Atalaya Mining heard how 2017 was a year of “stabilisation and process improvements” at the Rio Tinto Project on Wednesday - a period that was also the first full year of commercial production for the company.

The AIM-traded firm, which was holding its annual general meeting, said the ore processing throughput rate was steadily increased during the year to achieve a cumulative plant throughput of 8.8 Mtpa, against a nameplate capacity of 9.5 Mtpa.

Roger Davey, non-executive chairman, explained that the copper grade was consistent with reserve estimates, and the process recovery rate improved over the year to 85.45%, producing a total of 37,164 tonnes of copper - an increase of 40% over the 2016 production, from an average copper head grade of 0.49%.

“This year, to date, copper grades, recoveries and operating cash costs are within the forecast values and the estimated copper production guidance for 2018 remains in the range of 37,000 to 40,000 tonnes,” Davey said.

He added that an expansion project to 15 Mtpa throughput was formally approved during the fourth quarter, and launched at the beginning of December.

Process flowsheet, basic design criteria and preliminary layouts had now been established, and financing to initiate the expansion was raised through a £31m placing of new shares, which he said allowed long-lead equipment to be identified and purchase orders issued according to the schedule.

The expansion was said to be on track to deliver the increased production by 2019.

“To facilitate the assessment of potential additional mining areas, the dewatering of the Atalaya pit continues as previously reported,” Davey said.

“An infill drilling campaign for reserve definition was initiated in the Cerro Colorado pit and is planned to last for most of 2018.

“Near-mine exploration also continued with drilling of the north-west extension of the Cerro Colorado pit.”

An updated resources and reserves statement was being prepared as part of the 15 Mtpa expansion project, Davey said.

Mining operations continued to run “well”, he added, with the mining fleet fully operational and preparing to meet the increased requirements of the expansion programme.

As part of the company's continuous improvement programme, improvements to process and water supply systems were underway, together with essential additions to the tailings storage facilities.

Whilst dust emission indicators remained below legal requirements, as a precautionary measure, Davey said civil works and structural fabrication was underway to install a dome covering the coarse-ore stockpile.

The permitting of Proyecto Touro was also continuing to progress according to plan, with Atalaya already having engaged a number of consultants to address the recommendations received as part of the permitting process.

Davey said the pre-feasibility study for a proposed open pit copper mine and concentrator was published and filed with the guidelines set out in Canadian National Instrument 43-101.

“In March, judgment in the Astor Case was handed down in the High Court of Justice in London,” he explained.

“The High Court found that the deferred consideration under the master agreement entered into between the group, Astor and others, did not start to become payable when permit approval was granted for Proyecto Riotinto.

“Accordingly, the first instalment of the deferred consideration had not fallen due.”

Davey said that, while the Court confirmed that Atalaya was not in breach of any of its obligations, the master agreement and its provisions remained in place.

In April last year, Atalaya and Astor applied for permission to appeal to the Court of Appeal, and in August, the Court of Appeal granted permission to both parties to appeal, with that taking place during May of this year.

“All of our successful activities to date are due not only to the continued commitment and efforts of our management, staff and associates, but also to the continued support and contributions of all the board members.

“For this, I offer my sincerest thanks to all of them.

“Last but not least, I extend my thanks to all of you, our valued shareholders, for your continued support and look to the year ahead with continued confidence and optimism.”