ATALAYA MINING COPPER, S.A. (ATYM) Q1 2026 Earnings Call Transcript

Good morning and welcome to the Atalaya Mining Q1 2026 Financial Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just simply type in your questions and press send. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO Alberto Lavandeira. Good morning to you.

Good morning. Good morning, ladies and gentlemen. many thanks for being here we are here to review the first quarter financial results the presentation that's in the screen and it will be posted in our webpage I have with me Cesar Sanchez the CFO that will help me reply in any questions that's related to the details of the presentation we have already submitted information about the first quarter. We announced that and as you know it was below our plans. It was affected by very heavy rainfalls during the late part of January and the whole of February but we have made a lot of progress and since the end of the quarter during the months of april and may which have been quite dry we have exceeded our plan and we have recovered a good part of the shortfall from from q1 the cost performance has been consistent with guidance even with lower production i'll get into into more details a bit later in relation to full your guidance also we will give in be given a bit more details further but basically what we can say is that we feel comfortable that we can keep it relatively unchanged we had good results even having low production we generate the 48 million euros a bit it was impacted by lower production so it could have been much much higher but we benefited from higher copper prices that shows how leveraged we are to cover prices higher silver credits and of course low treatment charges of our concentrates in the following pages and i will speak a little bit more about the financial performance and and give you a little bit of an update of our growth projects. Looking at the typical graphs that we show, the plant performed well, quite consistent, recovery was okay, but the grade was lower, the grade was lower and as a result of that we produced less. But due to the good copper prices and then revenues were slightly lower than previous years and previous quarters but with a good generation of cash flow we had a bit of 48 million we had very good similar credits and we generated a cash flow of almost 30 million euros this cash flow was enough to cover our investments in the quarter and to cover the investment in Lara resources and we ended up the quarter with a fantastic balance sheet of almost 300 million euros in cash and a net cash of almost 270 million euros and growing by the way which includes obviously the procedures of our capital a race in late January just about a little less than 150 million euros. So what about the cash costs? They were consistent during Q1 with our full year guidance. Cash costs of 252 and only sustaining cost of 320 are within our guidance and you can see that the cash costs are actually lower than the full year of 2024 and just slightly higher than 2025 even in spite of the lower production. When you look at the details you will see that the mining costs were higher due to lower production but also to the effects of of higher operating costs mainly mainly diesel in the case of processing basically the difference is is due to lower production in the case of other operating costs which are basically gnas they include the pay that is the bonus that's paid normally in the during the first quarter that's why it's slightly higher and of course affected by lower production but the good news came of course with the byproduct rates by product rates were negative as they used to be uh in the last couple of years due to the silver crates but due to our good production and good metal prices of silver we had a very good negative credit but a big change and we have flagged that last year is that the DC sources they refining treatment charges and refining charges that are charged by smelters were net negative including even including the considering the freights and other side costs this is due to the fact that we have been selling some of the concentrates at the benchmark which is basically zero or close to zero but also a significant amount of lots of production with negative three figures uh negative treatment charges so the smelters pay us to get our concentrate this marks a huge difference from previous year so we were able to keep our our cash costs quite quite under control even with the slower production and not favorable exchange rates we believe this thing is going to be continuing this this thing of the negative treatment charges during the years to come and this is very important because we have this legacy of taking agreements coming from over 10 years coming to the island sparring most of them have already spired and we are basically only have some remnants in this year next year and then we believe we are going to be benefiting from the tightness in the constant trade market i say this is important because this is a kind of hidden asset in the atalaya balance sheet with with the with the off takes uncommitted both at rio tinto and at toro um this is something that in if needed it could be monetized because there's a huge demand of of copper concentrates in in right now and in the years to come we normally benchmark our only sustaining costs with other companies and we continue to be within our range very constant of course tripping up a little bit in the last quarter but still very competitive with other companies and looking at the the guidance as i said before uh q1 was under under the plan but we have already recovered uh part of that shortfall and as a result of that we thought that it would be prudent to to keep our guidance of between 50 and 54 000 tons of copper but we are saying that we are going to be the low end even having recovered a little bit of our production the costs we believe we are going to be in the within the range of our guidance but we are advising and saying that of course this this events that are happening in the Middle East this conflicts could have an impact in costs of course this could have an effect in diesel and explosives diesel is evident due to the prices of oil and the the amount of refining capacity in the middle east it looks like from the latest news although they change each week that things are soft in there and ships are starting to move within the straight but we are prudent we know that the the effect of the on the all-in sustaining costs if the diesel prices which are much higher than used to be last year continued the whole year we could have an effect between 15 cents and 20 cents per pound due to diesel and explosives. Mainly this explosives is related to the price of gas, natural gas, which affects also ammonia, which is the base price for explosives. But the real effect is in this. We remain confident that this thing is going to be sorted out and the prices will go where it used to be in the past. But as I said, the the damage is limited because it is not affecting this high diesel and gas prices is not affecting so far in Spain the prices of electricity so we have not seen any spike in electricity prices like we have seen in the past conflicts and we we are quite safe with our solar plant and with our hedging of of electricity prices plus the low prices due to the high rains in Spain we are quite confident that that we can we can keep our operating cost items in relation to the capex we have not made any changes of course some things like the like the this precipitous on Dionisio or the ramp of Masao Verde when we start could be affected by high diesel prices assuming this this uh this this extra cost remain in the market which which we don't we think it's going to be uh resolved eventually looking ahead of what our growth projects just to give you an update of what we normally look do during each quarter as an initial we continue working you can see the pictures how things are progressing the prescription is advancing quite well and we are moving well to get to the higher grade or or grade in Masa Valverde we now have all the permits we now have all the land we are clearing the land around the portal we are building the explosive magazine which is essential to be able to work three shifts a day and we continue to drill in field dream that area of copper grades that uh where we are getting as we pull as we we we said in in previous releases uh grades close to two percent copper with very good thickness and we continue there with two weeks in filling that area in preparation to to to start the ramp in the in this year also other working streams that we have mentioned in the past is that we have a good resource a big resource of poly metallic material material that has higher copper grades shown in red dots in the slide a higher copper grades in material that has around 100 or we have around 130 million tons that is poly metallic contains a lot of zinc and lead and silver while in the Cerro Colorado pit we have 180 million tons roughly which is with lower grade but much simpler only copper and of course we will need eventually to build a polymetallic circuit so we are we continue with engineering and clearly clearing some of the areas to install this installation which will cost around 80 or 90 million and we will be will be starting in 26 and and go on during 27. it's a quite simple installation basically we'll be installing some flotation circuits um in addition of sink flotation circuits plus the associated thickers and filters to be able to recover some streams of of of lead and sink we will also continue drilling drilling areas of of other deposits like san antonio uh and and doing exploration in the pirate belt and we are very focused also in looking at other opportunities in the pirate belt which is our natural growth option but as we always say our our growth is going to come from Galicia I think it's important to mention that this this quarter of law we have seen always lots of progress but this time we have seen this quarter we have seen a lot of progress in the public media by first by the the government announcing the campaigns to add economic value through the through mining in in different projects launching tenders for all licenses and focusing in critical materials a big focus in a positive way from the junta but the most important thing was that the Minister of Industry in Maria public that all the reports needed for the total project were finalized and positive and that the environmental impact statement, what we call the EIA, the Declaration of Impact Ambiental, will be ready before summer. It's not clear what before summer means, if it's before August or before real summer in end of June, but we are confident that we will be getting this as we had expected during the second quarter so before the third quarter in the meantime we continue working advancing we have our teams ready we have all the engineering ongoing we have already launched tenders on key equipment uh mine contractors purchasing of land uh on top of the plant site uh finalize the offices for field offices finalize the assay lab continue infield drilling in the areas around the pits and basically what we want is to is to get this uh this product ongoing as fast as possible we have shown this slide before this this total is going to be at least 30 million 30 000 of copper per year or more and with a modest capital intensity and with operating costs which are expected to be around 50 cents lower than than routine due to better grades better recovery better concentrate grades and and low very low periods so in two words and before we get into the questions the legend is really advancing it's very well positioned to to grow we continue to deliver our plans to get to 200,000 tons of copper and not far away no in three years thousand tons of copper equivalent considering in the 50 60 region for rio tinto another 30 000 for for total another 20 000 20 000 of for copper equipment through zinc concentrates in addition to that we have other opportunities like our exploration earning in sweden our exploration projects in the north part of of the pirate belt which is called ossa morena where we have some copper gold deposits general exploration in the in the part belt and recently also acquired a small stake in a very nice and exciting project of copper in brazil which is going through the final facility stage and that uh we believe it's going to be a mine in the in the near future so look uh try to go quite uh quite fast we are ready with the very good balance sheet uh and we are ready to deliver all this this product so with this um i will probably go into the questions uh session and try to answer as many as possible as usual.

That's great, Alberto. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our invested dashboard. Alberto, if I may now hand over to you to take us through the Q&A session and I'll pick up from you at the end. Thank you.

Many thanks. Look, I will try to read. There are lots of questions that have been pre-submitted and probably more coming soon. The first one is what's been done to reduce the risk of diesel prices increase? Not much that we can do. We have our contractor takes care of the diesel purchase, asking for calls for three or four suppliers in the region, trying to get better competitive prices. Unfortunately, there's not much that you can hedge over one month or they can cover. We are confident that we will be, that the prices will be reducing and one of the things we are doing is try to limit if possible any big movements in this time or this high prices period by reducing the transport distances in areas where there is some flexibility. Have you looked at the facility of electrifying hold trucks I note a large scale like Fortescue is seen big 300 400 million savings switch into electric levers and XCMG hold trucks well electrifying trucks is unless you go with trolley assisted is not something that's proven the case of Fortescue is a quite different stage because it's long holes very horizontal it's not so there are not many mines if any that were have vertical distances that can electrify because it's not it's like technology that's not it's not available yet unless you have a trolley assisted like they have in the in sweden or in zambia in other places uh with hitachi trucks but this is something that right now we are we are our mind cannot allow us to do that if electrification of whole trucks is being studied could you spend our solar and battery energy storage well as I said it's not possible due to the technology right now although we are looking at the possibility of of doing some selective battery storage no relation to a timely acquisition of Lara where were funds used from the recent race or was it something from existing cash well it was not a big amount of money so it was a very limited purchase that we could fund perfectly from our system cash resources we didn't need the we didn't need the the recent racing this is something that we have been we have been trying to look at companies with value all over the all over the world but basically as i said several times always concentrated in latin america where we have certain relations and language advantage and that means peru chile brazil and at us at the lower extent other countries but mainly concentrated in those and we thought that this was a good opportunity uh very serious uh shareholders which we knew and we thought it was a good opportunity and it was investment purposes maybe also for for the future so i think it was it was a good acquisition fair acquisition um when atlasia raised uh funds uh the rns rns specifically said it was for total and send in in spain uh lara purchases pivot away from spain doesn't back the funding requirements for two spanish projects mentioned does lara purchase complete with the rns fund raise message no not really not really because as i said a lot of right now they need funds for for the previous for the facility study so we're talking about two or three years uh and in that time frame um we are not thinking we're having to provide any more funds to lara at all and we'll see what we will we do also when we made the race we had enough money to do total by itself but we said we want to advance some early works but as i said before we have other things like simultaneous to total in the polymetallic circuit for example we could wait until the end of the my life and start the poly metallic circuit at the end of the the my life but it makes more economic sense to do it ahead and to be able to blend uh the normal copper with the poly metallic the same thing with the with developing marshal verde we have no rush to develop it it's we still have a we can fill fill our our mill with with existing thermal colorado pit but obviously you can blend some higher rate while you have a large mill that has very good operating costs it makes more economic sense so the reason was basically to be able to advance other projects more than than it was not necessary but it was it was it was good and gives us also very good flexibility to fund total with loans now with the the power that will allow us to negotiate with banks without requiring hedging because this is something that we've always been very careful of and i think we have been right when people thought that the copper price was never going to go over five dollars and here we are with higher prices and it would go to a 20 price Next question is, with the recent continued price movement in copper, there is some chatter in bulletin boards that Atalaya could be a bid target. With the exit of COVA Centrofigura, what defense measures, if any, do you have towards a lost Well, the best defense is to have a good contact with the shareholders to show them that the future is still there, that there is a big upside with this project that we have in hand and with other projects, and that they should be trying to see a company stand alone. Of course, we're a public company and we could be subject to a bit, of course. I doubt that it would be hostile because, obviously, it's quite difficult to do that without having the internal knowledge of the projects. But, of course, anything is possible. The best defense, what we are doing, is keeping our main shareholders very well informed of what we are doing and what is the future. so that they are not tempted to listen to to bits that could be undervalued in the the company your faces has to be bottleneck if it can mine rare earths but you cannot refine them given at alias land bank and site infrastructure water power sciences will not be worldwide exploring business or refine rare-earth sports mining of Gretinto. Well, the land is there. We have lots of things to do before the end of the mine life. We have ahead of us 10 to 15 years' life at least. I think it's probably not a business that would add too much value. I think, for example, just to give you an idea, within our land and, for example, very close to our tailings we have the old gold tailings which today at today's value with gold and silver prices probably contain around 1 billion dollars of recovery of gold uh so i would say that there's value in in using this first ahead of of doing any anything else alex any update on atalaya potential improvement improved terms exploitation of technology share over the ship well we continue to close to watch closely elix they are working with successfully removing zinc from copper concentrates and also silver still needs to to finalize plans for a long-term financial let's say viability of the company because we believe that the owner of Elix has a very stressed balance sheet and well let's say we continue with conversations but right now we don't have any longer term plans. Atalaya or capacity, will this be free pro off-take agreements yes we don't have any offtake agreements after i think after next year we are we are done mining.com global mining power rankings talaja was officially named the small cap winner in the market at 26 rankings securing 8.2 percent of votes will tell us more about this the significance well it's interesting because the the the winners of the large caps were important companies like newmont and bhp and rio tinto with around nine or ten percent of the boats we were the leaders in the small caps with around similar number of boats so it's very encouraging i think that i suppose this is this is a result of of a good share performance and people like what we are doing because we have fulfilling our targets we have been growing from nothing we have a very good balance sheet so we're small but yeah people have voted in favor of us um next question is of 26 msci model update atalaya mining is categorized as a leader in metals and mining non-precious metals industry please could you tell us what all this is significant i'm not an expert in this but this is an index morgan morgan stan stanley's sustainability index is basically something that that they gather information from all the places and that you have the the leader the AAA and which is the best category and then the leaders which is AA we are in that upper category which means that we are doing things better than others and that's really what it means so we are better pleased on that because it shows that based on all informations of sustainability we are we're in very well perceived and we do things in the right way. Next question is total is expected to add additional 30,000 tons per year 12-15 years life. Is this a cautionary statement? What's the likelihood of more copper or total longer than my life and new discoveries nearby? I think the likelihood is 100 percent. Even i'm not telling any insider information uh when you look at past uh report that we have published and they are in our web page the the reserves uh based on a 260 copper price were 100 million tons when you look at uh the same pits calculated at 320 copper price there were 150 million tons the mineralization remains open so very likely we would see a much longer life in at a total i would bet that not less than 20 years life is what we see in total and we are not discovering the wall this is the same thing that happened in at rio tinto where we had a my life of 12 years we have basically been mining 11 and ahead of us at least we have another 10 11 at the very least So that's what we also expect in total, which I think is at least a generation, which is very important. And by the way, we have also control of the whole belt. So we have to do more exploration and see if we can find some new discoveries nearby that can extend the my life. We are quite confident on that. For sure, it will be much more than what we have. How are you working to improve your sustainability credentials? Well, doing lots of work, but maybe Tessa, which is an expert in deals with the agencies can tell you a little bit about that.

Well, I guess the natural answer is by doing things right. But the reality is we engage with a tier one advisor, which basically help us to channel all the information with all the work that we do at Atalaya. so just to be clear so we have not engaged with any of the sustainability rating agency to improve it's just the consequences of doing a good job for the last two years.

Thank you Cesar. The next question is total approaching the final approval how should we see the recent 7.3 stake in Lara? Is this a passive investment or first step towards international asset development? let's say that right now we consider this as a investment simple as investments a good investment open the possibility of doing something international we like the country it's located in a place with good infrastructure mining friendly good people copper only clean so it's something that we will be very happy to participate in the event that lara wanted or we could do something with lara so it could be a could be a step but right now we are using that as a good investment and we believe it's a it's a good product and with offering value for the shareholders which by the way has been confirmed by the moving in the share price can you clarify us as best as possible before summer for total approval well we're just repeating what we have heard in the radio and we're seeing in the media before summer in Spain could be before August which when everybody takes holidays but actually before summer is before the 21 or 23 of June we are confident that we this could be obtained the environmental impact the statement declaration could be obtained before the end of June during this quarter as I said before we are confident from our conversations of course this does not depend on us but we know it's coming we believe it's going to be coming in during this quarter is the increase in operational cost because there is has been less or processing you want is this considered to be a one event or because of heavy rain or is there need to create some sort of drainage outside no look it's more lower production lower production the cost per total itself have not been affected too much actually are the plant they have been even lower than previous quarter the the higher production per pound is due to a lower lower production of copper which means your cost you divided by by less pounds of copper and you have higher costs um that's the main the main reason the reason why this affects mainly mining is because if you cannot access areas that have better grades you have to rely in lower grades and with lower grades you have lower production and it's not possible to have drain it simply we have some areas that we could not work uh we had rains during this last week of of of uh january and the whole february where we received the same amount of water that we received the whole year in a basic area every day was it was raining in some areas that we couldn't we couldn't access so this should be a one-off event we had to change the mind plan a little bit and we are recovering from that but uh in theory this is something that there will be recovered obviously the the ore has not disappeared um might threaten u.s sanctions against spain affect atlaya i don't think so i think i don't know what sanctions can come but really atlaya is a some mining company producing in spain producing europe and i don't thinking that will affect us at all last question is what's the latest of elix as i said before elix has been working the during the first quarter didn't work too much recently has been working basically with due to difficulty with funding because right now had been always funded with loans from atalaya and we decided that due to some risk perception we could not continue funding with loans somehow they have started again they have been working for one month continuously removing zinc from copper concentrates uh global copper concentrate which is encouraging and quite positive we don't have economic results yet but operationally it seems to be working working well so that's the that's the latest of of felix and i think this was the last question that's great thank you very much indeed for addressing all those questions as usual about that before i redirect investors to provide you with their feedback which is particularly important to yourself and the company could i please just ask you for a few closing comments uh well uh thanks very much for for being here thanks for your continued support as shareholders it has been a a difficult quarter from production point of view sometimes it's important to be a bit lucky and we have a good metal prices and at the same time we have a big shortage shortage of copper concentrates in the market which is likely going to continue which have offset these difficulties of production and resulted in a very good quarter as good as any other which shows the potential of this company. So we look forward for a very good bright 26 and in the years to come.

That's great. Alberto Cesar, thank you once again for updating investors today. could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback which will help the company better understand your views and expectations. On behalf of the management team we would like to thank you for attending today's presentation and good morning to you all.