Energy prices hit Atalaya earnings despite consistent production

Atalaya Mining reported a “consistent” third quarter of production on Wednesday, supporting its own confidence in full-year guidance.

The AIM-traded firm said its EBITDA for the nine months ended 30 September totalled €37.1m, down from €148.21m year-on-year.

It noted that the result came amid “extremely high” electricity prices and other input cost inflation, which resulted in an EBITDA loss of €4.3m in the third quarter itself.

The company said it maintained a “strong” balance sheet, with net cash standing at €55.6m.

It said it had made continued investments in growth, future cost reductions and decarbonisation through an exploration programme, a 50 MW solar plant, and the first phase of the ‘E-LIX’ project.

Lower power prices since the end of the third quarter supported the board’s positive outlook for the final quarter of the year, and into 2023, when a new power purchase agreement and the 50 MW solar plant were expected to “materially” lower costs.

“The third quarter was a consistent quarter operationally, with good throughput and improved grades compared to earlier quarters in 2022,” said chief executive officer Alberto Lavandeira.

“These trends are expected to continue in Q4 and into 2023 and support our reiterated 2022 guidance.

“In terms of financial results, we were impacted by lower copper prices and very high inflationary pressures, most notably the price of electricity including extremely severe spikes in August and September.”

Lavandeira noted that since the end of the period, electricity prices had decreased by about 40% due to mild weather and growing wind generation in Spain, reduced industrial demand, and a good supply of LNG cargoes.

“As a result, we expect that costs will moderate in the fourth quarter and look forward to 2023, when we will also benefit from our new long-term power purchase agreement and the start-up of the 50 MW solar plant, which will together provide around 50% of our electricity requirements at highly competitive rates.

“With the benefit of a strong balance sheet, we remain committed to investing in growth.

“Through greenfield exploration, the development of higher-grade orebodies and Touro, and operating a commercial scale E-LIX plant, we are confident that Atalaya will transform into a growth oriented and diversified multi-asset copper producer.”

At 1239 GMT, shares in Atalaya Mining were down 1.71% at 281.11p.

Reporting by Josh White for Sharecast.com.