Atalaya upbeat on assessment results at Riotinto

Atalaya Mining announced the results of a new preliminary economic assessment for its Proyecto Riotinto operation in Spain on Thursday.

The AIM-traded firm said the assessment examined the Cerro Colorado, San Dionisio and San Antonio deposits, located near the Cerro Colorado pit, with the aim of integrating them into a new mine plan.

It said Riotinto, its flagship asset, currently consisted of an operating open pit mine, a 15 million tonnes-per-annum processing plant, and supporting infrastructure.

The assessment indicated strong potential economic results over a range of metals price assumptions.

Atalaya said the base case metals prices of $3.50 per pound of copper, $1.20 per pound of zinc, and 95 cents per pound of lead resulted in an after-tax net present value of $1.07bn at an 8% discount, while the sensitivity case metals prices of $4.03 for copper, $1.20 for zinc, and 95 cents for lead resulted in an after-tax net present value of $1.57b on the same basis.

The economics of the mine were expected to benefit from significant in-place infrastructure at Riotinto.

Processing higher grade material, the board said, could lead to a potential uplift in production with 60,000 tonnes of copper per annum during the copper stockwork-only phase between 2023 and 2026, and 90,000 annual tonnes of copper equivalent during the polymetallic massive sulphide phase beyond 2027.

There was also potential for a reduction in cash costs due to higher grades and by-product credits, with $2 per pound of copper in payable cash costs averaged over the life-of-mine, and $2.03 per pound of copper payable in cash and sustaining costs over the same period.

The company said the mineralised material of around 241 million tonnes supported a potential mine life of 15.6 years, providing long-term optionality to rising metals prices.

However, it cautioned that the assessment was preliminary in nature, with the inferred mineral resources considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves.

“We are pleased to announce the outcome of the preliminary economic assessment, which demonstrates strong economics and confirms the results of prior internal studies on the future of our flagship Riotinto operation,” said chief executive officer Alberto Lavandeira.

“After delivering a major expansion of processing capacity at Riotinto in recent years and announcing new mineral resource estimates for San Dionisio and San Antonio in 2022, we set out to quantify the significant value of an integrated Riotinto approach.

“The Riotinto District has many advantages over more remote mining regions around the world, where the ability to bring assets into production in a sustainable and economic manner is becoming increasingly difficult.”

Lavandeira said the region had a long mining history, with a highly-experienced workforce, modern infrastructure, and access to sustainable sources of water and energy.

“Together, these advantages reduce execution risk, capital intensity and development timelines.

“As we progress the permitting process for San Dionisio, we shall continue to evaluate ways to further optimise the development plan for Riotinto.

“This is an exciting time for Atalaya, and we look forward to leveraging our execution capabilities to grow our copper production and deliver further value for our shareholders.”

At 1515 GMT, shares in Atalaya Mining were up 0.73% at 351.56p.

Reporting by Josh White for Sharecast.com.