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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Atalaya Mining Plc | LSE:ATYM | London | Ordinary Share | CY0106002112 | ORD 7.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 13.00 | 3.03% | 441.50 | 438.50 | 440.00 | 443.00 | 425.00 | 435.00 | 659,164 | 16:35:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Metal Mining Services | 341.98M | 38.77M | - | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMATYM
RNS Number : 0411Q
Atalaya Mining PLC
07 September 2017
7 September 2017
Atalaya Mining Plc.
("Atalaya" or the "Company")
Q2 and H1 2017 Interim Financial Statements
Atalaya Mining Plc. (AIM: ATYM; TSX: AYM) is pleased to announce its unaudited quarterly results for the three and six months ended 30 June 2017, together with the unaudited, condensed, interim consolidated financial statements.
Operational Highlights
Proyecto Riotinto
-- Copper production during Q2 2017 was 9,058 tonnes, 3% higher than copper production in the previous quarter of 8,805 tonnes. Copper production during H1 2017 was 17,863 tonnes compared with 8,489 tonnes during H1 2016.
-- Ore processed during the quarter was 2,154,907 tonnes in line with previous quarter when ore processed was 2,196,299 tonnes. During H1 2017 ore processed was 4,351,206 tonnes compared with 2,442,728 tonnes during H1 2016.
-- Copper recovery during the quarter was 85.16% slightly above the previous quarter of 84.63%. Copper recovery for H1 2017 averaged 84.90% representing an improvement over 82.20% during H1 2016.
-- The Company maintains its copper production guidance for Proyecto Riotinto of 34,000 to 40,000 tonnes for 2017.
Expansion of Proyecto Riotinto
-- In June 2017, the Board of Directors of the Company approved the commencement of a study to demonstrate the feasibility of increasing mining and processing capacity beyond the current 9.5 Mtpa, to a maximum of 15.0 Mtpa at Proyecto Riotinto. If proven feasible, copper production would reach approximately 50,000 tonnes per year.
Proyecto Touro
-- In February of this year the Company announced the exercise of an option to acquire an initial 10% stake in Proyecto Touro. The agreement is based on a staged earn-in process to acquire up to 80% of the project. Proyecto Touro is located in Galicia, north-west Spain.
-- The Company has also signed an option agreement to acquire exploration concessions that cover 122.7 km(2) immediately surrounding Proyecto Touro, where mineralised copper occurrences are documented.
-- Permitting of Proyecto Touro is progressing according to schedule. Metallurgical test-work has demonstrated that high grade clean concentrates and high recovery rates can be achieved.
-- A technical report is at an advanced stage of development and is expected to be at a pre-feasibility level. Completion is anticipated during Q4 2017.
Financial Highlights
-- Revenues of EUR53.4 million for Q2 2017 compared with EUR17.7 million in Q2 2016. Similarly, revenues for H1 2017 were EUR79.1 million compared with EUR22.6 million for the same period of 2016.
-- Cash costs during Q2 2017 were $2.07/lb of payable copper, increased from cash costs of $1.83/lb of payable copper in Q1 2017. The increase was due to the expensing of a higher proportion of stripping costs as well as one off maintenance costs in the milling area during the quarter. All-in sustaining costs ("AISC") during Q2 2017 amounts to $2.30/lb of payable copper, also increased from $2.15/lb of payable copper during Q1 2017. Cash costs for H1 2017 were $1.97/lb payable copper versus $2.31/lb payable copper during H1 2016. AISC amounted to $2.22/lb payable copper during H1 2017 against $2.74/lb payable copper for H1 2016.
-- Positive Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA") of EUR11.9 million in Q2 2017 compared with a negative EBITDA of EUR1.1 million in Q2 2016. The increase of EUR13.0 million in EBITDA was a result of the increase in the volume of copper concentrate sold, lower cash costs and higher realised copper prices. On acumulative basis EBITDA during H1 2017 was EUR24.5 million compared with a negative EBITDA of EUR3.6 million in H1 2016.
-- Q2 2017 profit after tax amounted to EUR5.7 million (or EUR4.8 cents per share on a fully diluted basis) compared with a loss for Q2 2016 of EUR3.2 million (or -EUR2.8 cents per share on a fully diluted basis). Profits after tax for H1 2017 were EUR10.9 million versus a loss of EUR6.5 million during H1 2016.
-- Inventories of concentrate at 30 June 2017 amounted to EUR1.6 million.
-- Working capital deficit has consistently improved over the last two quarters as a result of cash generated from operations. At the end of Q2 2017 working capital deficit was EUR14.1 million from EUR20.0 million at the end of Q1 2017 and EUR25.4 million at 31 December 2016. Unrestricted cash balances as at 30 June 2017 amounted to EUR1.6 million.
-- Cash flows from operating activities before changes in working capital were EUR11.7 million for Q2 2017 compared with a negative cash flow of EUR1.2 million during Q2 2016. Cumulative for H1 2017, cash flows from operating activities before changes in working capital were EUR24.0 million for H1 2017 compared with a negative cash flow of EUR3.7 million during H1 2016.
-- Net cash flows used in operating activities after changes in working capital were negative EUR4.3 million for Q2 2017 compared with a cash flow of EUR7.4 million during Q2 2016. Net cash flows from operating activities after changes in working capital were EUR10.0 million for H1 2017 compared with of EUR8.9 million during H1 2016.
Corporate Highlights
-- On 25 April 2017, Atalaya and Astor applied for permission to appeal to the Court of Appeal. On 11 August 2017, the Court of Appeal granted permission to both parties to appeal (although it rejected three of Astor's seven grounds). The Appeal is anticipated to take place by July 2018.
Alberto Lavandeira, CEO commented:
"I am pleased to report on a successful six months for Atalaya. Proyecto Riotinto is performing well, having produced 9,058 tonnes of copper in concentrate in the quarter. Approved studies to assess the viability of an expansion of the mine are progressing as planned and we look forward to updating the market with the results in due course. Operational and financial performance at Proyecto Riotinto gives us the confidence to reiterate our full year production guidance of 34,000-40,000 tonnes copper. Progress at Proyecto Touro is promising and we look forward to the prospect of bringing this mine in to commercial production in the near future."
About Atalaya Mining Plc
Atalaya is an AIM and TSX listed operational and development company which produces copper concentrates and silver by-product at its fully owned Proyecto Riotinto site in southwest Spain. In addition, the Company has a phased, earn-in agreement for up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain which is currently in the permitting stage. For further information, visit www.atalayamining.com
This announcement contains information which, prior to its publication constituted inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
Contacts:
Hot Features
Premium
Charlie Chichester
Newgate Communications / James Ash / James +44 20 7680
(Financial PR) Browne 6550
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Canaccord Genuity Martin Davison /
(NOMAD and Joint Henry Fitzgerald-O'Connor +44 20 7523
Broker) / James Asensio 8000
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BMO Capital Markets Jeffrey Couch / Neil +44 20 7236
(Joint Broker) Haycock / Tom Rider 1010
------------------------ ---------------------------- ------------
ATALAYA MINING PLC
MANAGEMENT'S REVIEW AND
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
30 June 2017
(UNAUDITED)
Notice to Reader
The accompanying unaudited, condensed, interim consolidated financial statements of Atalaya Mining Plc have been prepared by and are the responsibility of Atalaya Mining Plc's management. The unaudited, condensed, interim consolidated financial statements have not been reviewed by Atalaya's auditors.
Introduction
This report provides an overview and analysis of the financial results of operations of Atalaya Mining Plc and its subsidiaries, to enable the reader to assess material changes in the financial position between 31 December 2016 and 30 June 2017 and results of operations for the six months ended 30 June 2017 and 2016.
This report has been prepared as of 7 September 2017. The analysis, hereby included, is intended to supplement and complement the unaudited, condensed, consolidated financial statements and notes thereto ("Financial Statements") as at and for the six months ended 30 June 2017. The reader should review the Financial Statements in conjunction with the review of this report and with the audited, consolidated financial statements for the year ended 31 December 2016, and the unaudited, condensed consolidated financial statements for the six months ended 30 June 2016. These documents can be found on the Atalaya website at www.atalayamining.com.
Atalaya prepares its Financial Statements in accordance with International Financial Reporting Standards ("IFRSs"). The currency referred to in this document is the Euro, unless otherwise specified.
Forward-looking statements
This report may include certain "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterised by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Assumptions upon which such forward-looking statements are based include that all required third party regulatory and governmental approvals will be obtained. Many of these assumptions are based on factors and events that are not within the control of Atalaya and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions and other risk factors discussed or referred to in this report and other documents filed with the applicable securities regulatory authorities. Although Atalaya has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Atalaya undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
1. Description of the business
Atalaya is a Cyprus based copper producer with mining interests in Spain. The Company is listed on the Alternative Investment Market of the London Stock Exchange ("AIM") and on the Toronto Stock Exchange ("TSX").
Proyecto Riotinto, fully owned by the Company's subsidiary Atalaya Riotinto Minera, S.L., is located in Huelva, Spain. The Company operates the Cerro Colorado open-pit mine and its associated processing plant of 9.5Mtpa where copper in concentrate and silver by-product are produced.
The Company has an initial 10% stake in Cobre San Rafael, S.L., the owner of Proyecto Touro, as part of an earn-in agreement which will enable the Company to acquire up to 80% of the copper project. Proyecto Touro is located in Galicia, north-west Spain.
2. Overview of operational results
Proyecto Riotinto
The following table presents a summarised statement of operations of Proyecto Riotinto for the three and six months ended 30 June 2017. Note that commercial production was declared in February 2016.
Three months Three months ended Six months ended Six months ended
ended 30 June 30 June 2017 30 June 2016*
Units expressed in 30 June 2016
accordance with the Unit 2017
international system of
units (SI)
Ore mined t 2,265,785 1,340,492 4,578,375 2,474,253
Ore processed t 2,154,907 1,308,780 4,351,206 2,442,728
Copper ore grade % 0.49 0.44 0.49 0.44
Copper concentrate grade % 22.77 21.43 22.34 21.38
Copper recovery rate % 85.16 80.46 84.90 82.20
Copper concentrate t 39,772 20,727 79,954 39,897
Copper contained in
concentrate t 9,058 4,442 17,863 8,489
Payable copper contained in
concentrate t 8,660 4,287 17,063 8,283
Cash cost $/lb payable 2.07 2.36 1.97 2.31
All-in sustaining cost $/lb payable 2.30 2.92 2.22 2.74
Note: The numbers in the above table may differ slightly between them due to roundings.
* Commercial production started in February 2016.
Three months operational review
Production of copper contained in concentrate in Q2 2017 was 9,058 tonnes significantly above 4,442 tonnes in Q2 2016 when the processing plant was still ramping up throughput. In terms of payable copper in concentrate, Q2 2017 production was 8,660 tonnes compared to 4,287 tonnes of payable copper in Q2 2016. Production of payable copper during Q2 2017 also improved with respect to Q1 2017 production of 8,403 tonnes of payable copper. The Company maintains its copper production guidance of 34,000 to 40,000 tonnes for 2017.
Ore mined in Q2 2017 was 2,265,785 tonnes well above 1,340,492 tonnes during Q2 2016 and slightly below 2,312,590 tonnes during Q1 2017. The mining contractor has launched a replacement programme for the mining fleet. New loaders and trucks are expected to be delivered to site over the next two quarters in anticipation of a potential increase in mining rates.
Ore processed in Q2 2017 was 2,154,907 tonnes also above 1,308,780 tonnes in Q2 2016 and in line with 2,196,299 tonnes in Q1 2017. Modifications to the primary milling circuit, which includes a pebble crusher in closed circuit with the primary mill, have reported better milling efficiencies.
Ore grade averaged 0.49% Cu in Q2 2017 compared to 0.44% Cu in Q2 2016. Copper recovery during the quarter was 85.16% slightly above the previous quarter of 84.63%.
During Q2 2017, the Company sold 55,574 tonnes of concentrates, compared to 22,701 tonnes in Q2 2016. Concentrate production in Q2 2017 amounted to 39,772 tonnes, compared to 20,727 tonnes for the same period in 2016. As at 30 June 2017, the Company had 2,277 tonnes of copper concentrates in inventories. The Company has not been impacted by the severe disruptions reported at ports across Spain due to strikes.
Six months operational review
Production of copper contained in concentrate during H1 2017 was 17,863 tonnes, compared to 8,489 tonnes in the same period of 2016. For comparative purposes commercial production was only declared in February 2016. Payable copper in concentrates was 17,063 tonnes compared to 8,283 tonnes of payable copper in H1 2016.
Ore mined in H1 2017 was 4,578,375 tonnes compared to 2,474,253 tonnes during H1 2016. Ore processed was 4,351,206 tonnes versus 2,442,728 tonnes in H1 2016.
Ore grade during H1 2017 was 0.49% Cu compared to 0.44% Cu in H1 2016. Copper recovery was 84.90% versus 82.20% in H1 2016. Concentrate production amounted to 79,954 tonnes significantly above H1 2016 production of 39,897 tonnes.
Study to increase copper production
In June 2017, the Board of Directors of the Company approved the commencement of a study to demonstrate the feasibility of increasing the mining and processing capacity beyond the current 9.5 Mtpa to a maximum of 15.0 Mtpa. This translates into an increase in copper production to approximately 50,000 tonnes per annum.
The study will revisit existing geological modelling and resource and reserve estimates with a view to maintaining life of mine in the range of 12 - 14 years. Mine planning and the existing mining fleet will be re-assessed. Processing capacity will be maximised and complemented with additional crushing and milling equipment. Flotation and concentrate handling modifications are not expected to be significant. Tailings storage facilities and auxiliary infrastructure will be re-evaluated.
Should the Board approved the expansion project, an indicative construction period is estimated to be 18-24 months after the investment has been approved.
Exploration and Geology
Near-mine exploration drilling continued from the previous quarter with a programme to test the lateral extension of Filon Sur. With the programme now essentially complete the exploration block model has been updated with results to be part of the resources and reserves update that will form part of the studies related to the Expansion to 15 Mtpa Project.
In-fill drilling exploration at Cerro Colorado was mainly centred in the north-western extension of the pit where better than anticipated mineralised intervals and grades have been discovered. This campaign is targeting inferred resources with the objective of increasing confidence levels and potential reclassification.
Proyecto Touro
The Company signed an option agreement to acquire exploration concessions that cover 122.7 km(2) immediately surrounding Proyecto Touro, where mineralised copper occurrences are documented. An ambitious exploration programme is under elaboration.
Permitting of Proyecto Touro is progressing according to schedule. Studies and applications were submitted at the end of the quarter to the regional authorities for review and evaluation. Consultations with different administrative bodies have been held and local and regional stakeholders have been engaged in the process, with positive feedback received.
As previously reported, two important milestones have been achieved at Proyecto Touro: the first was the successful completion of metallurgical test-work which has demonstrated that high grade clean concentrates and high recovery rates can be achieved. The second was the completion of 26,557 m of exploration and in-fill drilling which will provide the basis of an NI 43-101 technical report.
The technical report is progressing ahead of schedule and is at an advanced stage of development. It is expected to be at a pre-feasibility level of detail in the near future, with completion brought forward to the beginning of Q4 from the original estimate of the end of FY 2017.
Corporate Social Responsibility ("CSR")
As part of the Company's Corporate Social Responsibility initiatives a significant archaeological programme was launched in June 2017 to study a number of archaeological sites including Cortalago, a Roman mining settlement of relevance. The programme is expected to last for 12 months. During Q2 2017, the discovery of a number of gold coins at the site attracted significant media interest, and included a formal presentation of the discovery at the Minas de Riotinto town Foundation.
3. Outlook
The forward-looking information contained in this section is subject to the risk factors and assumptions contained in the cautionary statement on forward-looking statements included in the introduction note of this report.
Operational guidance
Proyecto Riotinto operational guidance for 2017 remains as follows:
Range
Unit 2017
Ore processed t million 9.5
150,000 -
Concentrate dmt 180,000
34,000 -
Contained copper t 40,000
Copper head grade for 2017 was budgeted to average between 0.49% and 0.51% Cu, with a recovery rate of approximately 79% to 82%. Cash operating cost for 2017 is expected to be in the range of $1.90/lb - $2.10/lb. All-in sustaining cost for 2017 is expected to be in the range of $2.00/lb - $2.10/lb.
4. Overview of the financial results
The following table presents summarised consolidated income statements for the three and six months ended 30 June 2017, with comparatives for the three and six months ended 30 June 2016.
Three Three Six Six
months months months months
ended ended ended ended
30 30 30 30
(Euro 000's) June June June June
2017 2016 2017 2016
Sales 53,426 17,723 79,074 22,619
Total operating costs (41,014) (15,891) (52,522) (20,339)
Corporate expenses (220) (2,398) (1,628) (5,206)
Exploration expenses (313) (517) (446) (679)
Other income 1 15 5 25
---------- ---------- ---------- ----------
EBITDA 11,880 (1,068) 24,483 (3,580)
Depreciation/amortisation (3,740) (1,912) (8,135) (2,521)
Net foreign exchange loss (511) (183) (785) (277)
Net finance cost (846) (45) (1,679) (81)
Tax charge (1,109) (6) (2,967) (12)
---------- ---------- ---------- ----------
Profit/(loss) for the
period attributable to
owners of the parent 5,674 (3,214) 10,917 (6,471)
---------- ---------- ---------- ----------
Three months financial review
Revenues for the three-month period ended 30 June 2017 amounted to EUR53.4 million (Q2 2016: EUR17.7 million). Higher revenues, compared to the same quarter in the previous year, were driven by higher volumes of concentrate sold and an increase in copper prices.
Realised prices of $2.61/lb copper during Q2 2017 compared to $2.11/lb copper in Q2 2016. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in Q2 2017.
Operating costs for the three-month period ended 30 June 2017 amounted to EUR41.0 million, compared to EUR15.9 million in Q2 2016. The increase was mainly due to higher mining and processing variable costs directly attributable to increase in copper production.
Cash costs of $2.07/lb payable copper during Q2 2017 compares to $2.36/lb payable copper in the same period last year. Cash costs were impacted by the expensing of a higher proportion of stripping costs during Q2 2017 compared to Q1 2017 as well as one-off maintenance costs in the milling area during the quarter. Capitalised stripping costs during Q2 2017 amounted to EUR1 million compared to EUR4.5 million in Q1 2017. All-in sustaining costs in the reporting quarter were $2.30/lb payable copper compared to $2.92/lb payable copper in Q2 2016 and to $2.15/lb payable copper in Q1 2017. The increase in AISC compared to Q1 2017 was mainly related to the one-off maintenance cost.
Sustaining costs for Q2 2017 amounted to EUR2.2 million compared to EURnil in Q2 2016. Sustaining costs accounted for development programmes at the tailings storage facilities, flotation circuit and environmental measures.
Corporate expenses amounting to EUR0.2 million (Q2 2016: EUR2.4 million) include non-operating costs of the Cyprus office, corporate legal and consultancy costs, on-going listing costs, officers and directors' emoluments, and salaries and related costs of the corporate office. Corporate costs were partially offset by legal costs paid by Astor to the Company as a result of the Court ruling during Q2 2017.
Exploration costs at Proyecto Riotinto for the three-month period ended 30 June 2017 amounted to EUR0.3 million compared to EUR0.5 million in Q2 2016. All exploration costs at Proyecto Touro are capitalised.
EBITDA for the three months ended 30 June 2017 amounted to EUR11.9 million as a result of the increase in copper concentrate sold and higher realised copper prices, as compared to a negative EBITDA in Q2 2016 of EUR1.1 million.
The main item below the EBITDA line is depreciation and amortisation of EUR3.7 million (Q2 2016: EUR1.9 million). Net financing costs for Q2 2017 amounted to EUR0.9 million, including accretion cost of the discounted debt for Astor and interest cost for the Transamine prepayment.
Six months financial review
Revenues for the six-month period ended 30 June 2017 amounted to EUR79.1 million (H1 2016: EUR22.6 million). Commercial production at Proyecto Riotinto was declared in February 2016.
Copper concentrate production during the six months period ended on 30 June 2017 was 79,954 tonnes (H1 2016: 39,897 tonnes), 77,677 tonnes of copper concentrates were sold in the same period (H1 2016: 35,228 tonnes). Inventories of concentrates as at the reporting date were 2,277 tonnes (2016: 11,212 tonnes), with no inventories held as at 31 December 2016.
Realised price for the six months period in 2017 was $2.55/lb copper compared to $2.06/lb copper in the same period of 2016. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in 2017.
Operating costs for the six-month period ended 30 June 2017 amounted to EUR52.5 million, compared to EUR20.3 million in H1 2016. The increase was mainly due to higher mining and processing variable costs directly attributable to increase of copper production and the impact of the pre-stripping cost, as previously indicated in this report.
Cash costs of $1.97/lb payable copper during H1 2017 compares to $2.31/lb payable copper in the same period last year. All-in sustaining costs in the reporting quarter were $2.22/lb payable copper compared to $2.74/lb payable copper in H1 2016.
Sustaining costs for the six-month period amounted to EUR2.7 million, compared to EURnil in the same period in the previous year. Sustaining costs accounted for improvements in the water supply systems, modifications to the processing flowsheet, upgrades at the main incoming substation and development programmes at the tailings storage facilities, flotation circuit and environmental measures.
Corporate costs for the first six months of 2017 were EUR1.6 million, compared to EUR5.2 million in H1 2016. Corporate costs mainly include Company overhead expenses as described before in this report.
Exploration costs related to Proyecto Riotinto for the six-month period ended 30 June 2017 amounted to EUR0.5 million, compared to EUR0.7 million in H1 2016. All exploration costs relating to Proyecto Touro during 2017 have been capitalized.
EBITDA for the six months ended 30 June 2017 amounted to EUR24.5 million, compared to a negative EBITDA in the same period of last year of EUR3.6 million.
Depreciation and amortisation amounted to EUR8.1 million for the six-month period ended 30 June 2017 (H1 2016: EUR2.5 million). The increase in depreciation was mainly driven by increase in production as all mining assets are depreciated per unit of production.
Net finance costs for the period of EUR1.7 million (H1 2016 EUR0.1 million) mainly relate to the unwinding of the net present value of the deferred consideration for Astor. In addition, the Company has also incurred interest costs for the Transamine prepayment and the Social Security debt.
Realised copper prices
The average prices of copper for the three and six months ended 30 June 2017 and 2016 are summarised below:
Three Three Six Six
months months months months
ended ended ended ended
30 30 30 30
(USD) June June June June
2017 2016 2017 2016
Realised copper price per
lb 2.61 2.11 2.55 2.06
Market copper price per
lb (period average) 2.65 2.21 2.61 2.16
Realised copper prices for the reporting period noted above have been calculated using payable copper and including provisional invoices and QPs together, compared to previous quarter, where QPs were included individually. As a result, the realised copper price per pound payable of copper in the reporting period was similar to the market average copper price as the Company had no hedges during the six-month period ended 30 June 2017.
5. Non-GAAP Measures
Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Cost per pound of payable copper" and "realised prices" in this report. Non-IFRS measures do not have any standardised meaning prescribed under IFRS, and therefore they may not be comparable to similar measures presented by other companies. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for indicators prepared in accordance with IFRS.
EBITDA includes gross sales net of penalties and discounts and all operating costs, excluding finance, tax, depreciation and amortisation expenses.
Cash Cost per pound of payable copper includes cash operating costs, including treatment and refining charges ("TC/RC"), freight and distribution costs net of by-product credits. Cash Cost per pound of payable copper is consistent with the widely accepted industry standard established by Wood Mackenzie and is also known as the C1 cash cost.
Realised prices per pound of payable copper is the value of the copper payable included in the concentrate produced including the penalties, discounts, credits and other feature governed by the offtake agreements of the Company and all discounts or premium provided in commodity hedge agreements with financial institutions, expressed in USD per pound of payable copper. Realised price is consistent with the widely accepted industry standard definition.
6. Liquidity and capital resources
Atalaya monitors factors that could impact its liquidity as part of Atalaya's overall capital management strategy. Factors that are monitored include, but are not limited to, the market price of copper, foreign currency rates, production levels, operating costs, capital and administrative costs.
The following is a summary of Atalaya's cash position as at 30 June 2017 and 31 December 2016 and cash flows for the three and six months ended 30 June 2017 and 2016.
Liquidity information
(Euro 000's) 30 June 31 December
2017 2016
Unrestricted cash and cash
equivalents 1,631 885
Restricted cash 250 250
Working capital deficit (14,106) (25,382)
Unrestricted cash and cash equivalents as at 30 June 2017 increased to EUR1.6 million from EUR0.9 million at 31 December 2016. Increase in cash balances is the result of net cash flow incurred in the period. Cash balances are unrestricted and include balances at operational and corporate level.
Restricted cash remains at EUR0.3 million as at 30 June 2017 and mainly relates to deposit bond guarantees.
As of 30 June 2017, Atalaya reported a working capital deficiency of EUR14.1 million, compared with a working capital deficit of EUR25.4 million at 31 December 2016. The main liability of the working capital is trade payables. The trade payable account relates to the main contractor where the Company has reached certain agreements to reduce its deficit progressively during 2017 and 2018. The Company expects the deficit to be reduced over the next months with cash generated by operations.
In June 2017, the Company completed repayment of EUR16.9 million to the Social Security's General Treasury in Spain. The debt liability was incurred by the former owners of the assets. Repayment was completed according to the agreed repayment schedule.
During Q2 2017, the Company filed a formal claim in the Administrative Court relating to the previously announced government grant of EUR8.8 million. No amount has been recognised in the financial statements.
Overview of the cash flows of the Company
Three Three Six Six
months months months months
ended ended ended ended
30 30 30 30
(Euro 000's) June June June June
2017 2016 2017 2016
Cash flows (used in)/from
operating activities (4,286) 7,415 9,989 8,889
Cash flows used in investing
activities (3,844) (8,784) (9,243) (17,061)
-------- -------- -------- ---------
Net (decrease)/increase
in cash and cash equivalents (8,130) (1,369) 746 (8,172)
======== ======== ======== =========
Three months cash flows review
Cash and cash equivalents decreased by EUR8.1 million during the three months ended 30 June 2017. This was due to cash used in operating activities amounting to EUR4.3 million and cash used in investing activities amounting to EUR3.8 million.
Cash generated from operating activities before working capital changes was EUR11.7 million. Atalaya reduced its trade receivables in the period by EUR13.0 million and its trade payables by EUR11.9 million and increased its inventory levels by EUR9.3 million.
Investing activities during the quarter consumed EUR3.8 million, relating mainly to the deferred mining costs.
Six months cash flows review
Cash and cash equivalents increased by EUR0.7 million during the six months ended 30 June 2017. This was due to cash from operating activities amounting to EUR10.0 million and cash used in investing activities amounting to EUR9.2 million.
Cash generated from operating activities before working capital changes was EUR24.0 million. Atalaya decreased its trade payables in the period by EUR4.8 million, as well as its inventory levels and its trade receivable balances by EUR3.8 million and EUR4.7 million, respectively.
Investing activities during the six-month period amounted to EUR9.3 million, relating mainly to the deferred mining costs.
Foreign exchange
Foreign exchange rate movements can have a significant effect on Atalaya's operations, financial position and results. Atalaya's sales are denominated in U.S. dollars ("USD"), while Atalaya's operating expenses, income taxes and other expenses are denominated in Euros ("EUR"), and to a much lesser extent in British Pounds ("GBP").
Accordingly, fluctuations in the exchange rates can potentially impact the results of operations and carrying value of assets and liabilities on the balance sheet.
During the three and six months ended 30 June 2017, Atalaya recognised a foreign exchange loss of EUR0.5 million and EUR0.8 million respectively.
The following table summarises the movement in key currencies versus the EUR:
Three Three Six Six
months months months months
ended ended ended ended
30 June 30 June 30 June 30 June
2017 2016 2017 2016
Average rates for the
periods
GBP - EUR 0.8611 0.7868 0.8606 0.7788
USD - EUR 1.1021 1.1292 1.0830 1.1159
Spot rates as at
GBP - EUR 0,8793 0.8265 0,8793 0.8265
USD - EUR 1,1412 1.1102 1,1412 1.1102
In February 2017, the Company entered into certain foreign exchange hedging contracts to offset the agreements in force as at 31 December 2016. During Q2 2017, Atalaya did not have any currency hedging agreements.
Further information on the hedging agreements is disclosed in the unaudited, condensed interim consolidated financial statements that follow (Note 15).
7. Deferred consideration
Astor Case
On 6 March 2017, judgment in the case (the "Astor Case") brought by Astor Management AG ("Astor") was handed down in the High Court of Justice in London (the "Judgment"). On 31 March 2017, declarations were made by the High Court which gave effect to the Judgment. The High Court found that the deferred consideration under the master agreement entered into between the Company, Astor and others (the "Master Agreement") did not start to become payable when permit approval was granted for the Rio Tinto Copper Project ("Proyecto Riotinto"). Accordingly, the first instalment of the deferred consideration had not fallen due.
While the Court confirmed that the Company was not in breach of any of its obligations, the Master Agreement and its provisions remain in place.
As a consequence, the Judgment requires that, in accordance with the Master Agreement, Atalaya Riotinto Minera, S.L.U. must apply any excess cash, (after payment of operating expenses, sustaining capital expenditure, any senior debt service requirements and up to US$10 million (for non-Proyecto Riotinto related expenses), to pay approximately EUR43.9 million of the deferred consideration due to Astor under the Master Agreement and the amount of EUR9.1 million payable under the loan assignment early.
Accordingly, the Company recorded the liability of EUR53 million at fair value, using a discount rate on an estimated excess cash flow of Atalaya Riotinto Minera, S.L.U.
On 25 April 2017, Atalaya and Astor applied for permission to appeal to the Court of Appeal. On 11 August 2017, the Court of Appeal granted permission to both parties to appeal (although it rejected three of Astor's seven grounds). The Appeal is anticipated to take place by July 2018.
More details on the Astor Case are included in Note 14 of the unaudited, condensed interim consolidated financial statements that follow.
8. Risk factors
Due to the nature of Atalaya's business in the mining industry, the Company is subject to various risks that could materially impact the future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to Atalaya. Readers are encouraged to read and consider the risk factors detailed in Atalaya's audited, consolidated financial statements for the year ended 31 December 2016.
9. Critical accounting policies, estimates and accounting changes
The preparation of Atalaya's Financial Statements in accordance with IFRS requires management to make estimates and assumptions that affect amounts reported in the Financial Statements and accompanying notes. There is a full discussion and description of Atalaya's critical accounting policies in the audited consolidated financial statements for the year ended 31 December 2016.
10. Other information
Additional information about Atalaya Mining Plc. is available at www.atalayamining.com
Condensed interim consolidated income statements
(unaudited)
Three months ended Three months ended Six months ended Six months ended
30 June 2017 30 June 2016 30 June 2017 30 June 2016
(Euro 000's) Notes
Gross sales 53,426 17,723 79,074 22,619
Realised gains on - - - -
derivative financial
instruments held for
trading
------------------- ------------------- ================= -----------------
Sales 53,426 17,723 79,074 22,619
Operating costs and mine
site administrative
expenses (40,994) (15,891) (52,492) (20,339)
Mine site depreciation and
amortisation (3,740) (1,908) (8.132) (2,513)
------------------- ------------------- ================= -----------------
Gross income/(loss) 8,692 (76) 18,450 (233)
Corporate expenses (211) (2,364) (1,613) (5,138)
Corporate depreciation - (4) (3) (8)
Share based benefits (29) (34) (45) (68)
Exploration expenses (313) (517) (446) (679)
------------------- ------------------- -----------------
Operating profit/(loss) 8,139 (2,995) 16,343 (6,126)
Other income 1 15 5 25
Net foreign exchange loss (511) (183) (785) (277)
Net finance costs 4 (846) (45) (1,679) (81)
------------------- ------------------- -----------------
Profit / (loss) before tax 6,783 (3,208) 13,884 (6,459)
Tax charge (1,109) (6) (2,967) (12)
------------------- ------------------- ----------------- -----------------
Profit/(loss) for the
period attributable to
owners of the parent 5,674 (3,214) 10,917 (6,471)
------------------- ------------------- ----------------- -----------------
Earnings/(loss) per share
from operations
attributable to equity
holders of the parent
during
the period :
Basic earnings/(loss) per
share (expressed in cents
per share) 5 4.9 (2.8) 9.4 (5.5)
------------------- ------------------- ----------------- -----------------
Fully diluted
earnings/(loss) per share
(expressed in cents per
share) 4.8 (2.8) 9.2 (5.5)
------------------- ------------------- ----------------- -----------------
Profit/(loss) for the
period 5,674 (3,214) 10,917 (6,471)
Other comprehensive
(loss)/income:
Change in value of
available-for-sale
investments (6) 161 (40) 193
------------------- ------------------- ----------------- -----------------
Total comprehensive
profit/(loss) for the
period attributable to
equity holders of the
parent 5,668 (3,053) 10,877 (6,278)
------------------- ------------------- ----------------- -----------------
The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.
Condensed interim consolidated statements of financial position
(unaudited)
30 June 2017 31 December
(Euro 000's) Note 2016
Assets
Non-current assets
Property, plant and equipment 6 192,910 191,380
Intangible assets 7 59,581 59,715
Trade and other receivables 211 206
Deferred tax asset 12,141 12,196
============ ===========
264,843 263,497
============ ===========
Current assets
Inventories 8 10,028 6,195
Trade and other receivables 9 34,520 29,850
Available-for-sale investments 221 261
Cash and cash equivalents 1,881 1,135
============ ===========
46,650 37,441
============ ===========
Total assets 311,493 300,938
============ ===========
Equity and liabilities
Equity attributable to owners
of the parent
Share capital 10 11,632 11,632
Share premium 10 277,238 277,238
Other reserves 11 6,122 5,667
Accumulated losses (95,508) (105,975)
============ ===========
Total equity 199,484 188,562
============ ===========
Liabilities
Non-current liabilities
Trade and other payables 12 95 115
Provisions 13 5,623 5,092
Deferred consideration 14 45,535 44,346
============ ===========
51,253 49,553
============ ===========
Current liabilities
Trade and other payables 12 57,827 62,592
Taxation 2,929 16
Derivative instruments - 215
============ ===========
60,756 62,823
============ ===========
Total liabilities 112,009 112,376
============ ===========
Total equity and liabilities 311,493 300,938
============ ===========
The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.
Condensed interim consolidated statements of changes in equity
(unaudited)
Share Share Other Accumulated
(Euro 000's) capital premium reserves losses Total
At 1 January 2016 11,632 277,238 5,508 (118,012) 176,366
Loss for the period (6,471) (6,471)
Change in value of
available-for-sale
investment - - 193 - 193
Bonus shares issued
in escrow - - 63 - 63
Recognition of share
based payments - - 68 - 68
========== ========== ========== ============ ==========
At 30 June 2016 11,632 277,238 5,832 (124,483) 170,219
Profit for the period - - - 18,508 18,508
Change in value of
available-for-sale
investment - - (234) - (234)
Bonus shares issued - - - - -
in escrow
Recognition of share
based payments - - 69 - 69
---------- ---------- ---------- ------------ ----------
At 31 December 2016 11,632 277,238 5,667 (105,975) 188,562
Profit for the period - - - 10,917 10,917
Change in value of
available-for-sale
investment - - (40) - (40)
Depletion factor - - 450 (450) -
Recognition of share
based payments - - 45 - 45
========== ========== ========== ============ ==========
At 30 June 2017 11,632 277,238 6,122 (95,508) 199,484
========== ========== ========== ============ ==========
The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.
Condensed interim consolidated statements of cash flows
(unaudited)
Notes Three Three Six Six
months months months months
ended ended ended ended
30 June 30 June 30 30 June
(Euro 000's) 2017 2016 June 2016
2017
Cash flows from operating
activities
Profit /(loss) before
tax 6,783 (3,208) 13,884 (6,459)
Adjustments for:
Depreciation of property,
plant and equipment 6 2,875 1,712 6,401 2,207
Amortisation of intangibles 7 865 200 1,734 314
Recognition of share-based
payments 11 29 34 45 68
Bonus shares issued in
escrow 11 - 31 - 63
Interest income 4 (3) (4) (19) (18)
Interest expense 4 424 25 665 52
Interest on deferred
consideration 4 605 - 1,189
Rehabilitation cost 4 25 24 49 47
Gain on disposal of property,
plant and equipment - (1) - (1)
Unrealised foreign exchange
loss on financing activities 129 - 54 -
========= ========== ========= ==========
Cash inflows/(outflows)
from operating activities
before working capital
changes 11,732 (1,187) 24,002 (3,727)
Changes in working capital:
Inventories 8 9,406 (3,464) (3,833) (10,965)
Trade and other receivables 9 (13,034) (119) (4,675) 4,956
Trade and other payables 12 (11,935) 12,234 (4,785) 18,724
Derivative instruments (215) - (215) -
Provisions (25) (24) (49) (47)
========= ========== ========= ==========
Cash flows from operations (4,071) 7,440 10,445 8,941
Interest paid (215) (25) (456) (52)
Net cash (used in)/from
operating activities (4,286) 7,415 9,989 8,889
========= ========== ========= ==========
Cash flows from investing
activities
Purchase of property,
plant and equipment 6 (3,378) (8,788) (7,672) (17,079)
Purchase of intangible
assets 7 (469) - (1,600) -
Proceeds from sale of
property, plant and equipment - 1 10 1
Interest received 4 3 3 19 17
========= ========== ========= ==========
Net cash used in investing
activities (3,844) (8,784) (9,243) (17,061)
========= ========== ========= ==========
Net (decrease)/increase
in cash and cash equivalents (8,130) (1,369) 746 (8,172)
Cash and cash equivalents:
At beginning of the period 10,011 11,815 1,135 18,618
========= ========== ========= ==========
At end of the period 1,881 10,446 1,881 10,446
========= ========== ========= ==========
The notes on pages 15 to 29 are an integral part of these condensed interim consolidated financial statements.
Notes to the condensed interim consolidated financial statements
For the three and six months to 30 June 2017 and 2016 - (Unaudited)
1. General information
Country of incorporation
Atalaya Mining Plc and its subsidiaries ("Atalaya" and/or the "Company"), was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under Companies Law, Cap. 113 and was converted to a public limited liability company on 26 January 2005. Its registered office is at 1 Lampousa Street, Nicosia, Cyprus. The Company has offices in Minas de Riotinto in Spain and in Nicosia, Cyprus. The Company was listed on the AIM market of the London Stock Exchange in May 2005 and on the TSX on 20 December 2010.
Change of name and share consolidation
Following the Company's Extraordinary General Meeting ("EGM") on 13 October 2015, the change of name from EMED Mining Public Limited to Atalaya Mining Plc became effective on 21 October 2015. On the same day, the consolidation of ordinary shares came into effect, whereby all shareholders received one new ordinary share of nominal value Stg GBP0.075 for every 30 existing ordinary shares of nominal value Stg GBP0.0025.
Principal activities
The principal activity of the Company and its subsidiaries is to operate the recently commissioned Rio Tinto Copper Project ("Proyecto Riotinto") and to explore and develop metal production operations in Europe, with an initial focus on copper. The strategy is to evaluate and prioritise metal production opportunities in several jurisdictions throughout the well-known belts of base and precious metals mineralisation in the European region.
2. Basis of preparation and accounting policies
Basis of preparation
The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). IFRSs comprise the standards issued by the International Accounting Standard Board ("IASB"), and IFRS Interpretations Committee ("IFRICs") as issued by the IASB. Additionally, the consolidated financial statements have also been prepared in accordance with IFRSs as adopted by the European Union (EU), using the historical cost convention.
These condensed interim consolidated financial statements are unaudited and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the consolidated financial statements of the Company and the Company for the year ended 31 December 2016. These condensed interim consolidated financial statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the consolidated financial statements and other information set out in the Company's 31 December 2016 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.
The Directors have formed a judgment at the time of approving the financial statements that there is a reasonable expectation that the Company and the Company have adequate available resources to continue in operational existence for the foreseeable future.
These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will realise its assets and discharge its liabilities in the normal course of business. Management has carried out an assessment of the going concern assumption and has concluded that the Company's will generate sufficient cash and cash equivalents to continue operating for the next twelve months.
Fair value estimation
The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date.
The fair value of financial instruments traded in active markets, such as publicly traded trading and available--for--sale financial assets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. The appropriate quoted market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses a variety of methods, such as estimated discounted cash flows, and makes assumptions that are based on market conditions existing at the reporting date.
2. Basis of preparation and accounting policies (continued)
Fair value measurements recognised in the consolidated statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Financial assets
(Euro 000's) Level 1 Level 2 Level 3 Total
30 June 2017
Available for sale financial assets 221 - - 221
-------- -------- -------- ------
Total 221 - - 221
-------- -------- -------- ------
31 December 2016
Available for sale financial assets 261 - - 261
-------- -------- -------- ------
Total 261 - - 261
-------- -------- -------- ------
Use and revision of accounting estimates
The preparation of the condensed interim consolidated financial statements requires the making of estimations and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Adoption of new and revised International Financial Reporting Standards (IFRSs)
The Company has adopted all the new and revised IFRSs and International Accounting Standards (IASs) which are relevant to its operations and are effective for accounting periods commencing on 1 January 2017. The adoption of these Standards did not have a material effect on the condensed interim consolidated financial statements.
Critical accounting estimates and judgements
The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are unchanged from those disclosed in the annual consolidated financial statements.
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
3. Business and geographical segments
Business segments
The Company has only one distinct business segment, being that of mining operations, mineral exploration and development.
Geographical segments
The Company's mining and exploration activities are located in Spain and its administration is based in Cyprus.
(Euro 000's) Cyprus Spain Other Total
Three months ended 30 June
2017
Sales 53,426 - - 53,426
======== ========= ====== =========
Earnings Before Interest, Tax,
Depreciation and Amortisation
(EBITDA) 50,839 (38,944) (15) 11,880
Depreciation/amortisation charge - (3,740) - (3,740)
Net finance cost (697) (149) - (846)
Foreign exchange loss (119) (392) - (511)
Profit/(loss) for the period
before taxation 50,023 (43,225) (15) 6,783
======== ========= ======
Tax charge (1,109)
=========
Net profit for the period 5,674
=========
Six months ended 30 June 2017
Sales 79,074 - - 79,074
======== ========= ====== =========
Earnings Before Interest, Tax,
Depreciation and Amortisation
(EBITDA) 74,573 (50,084) (6) 24,483
Depreciation/amortisation charge (3) (8,132) - (8,135)
Net finance cost (508) (1,171) - (1,679)
Foreign exchange loss (411) (374) - (785)
Profit/(loss) for the period
before taxation 73,651 (59,761) (6) 13,884
======== ========= ======
Tax charge (2,967)
=========
Net profit for the period 10,917
=========
Total assets 19,025 291,695 773 311,493
======== ========= ====== =========
Total liabilities (11,980) (99,995) (34) (112,009)
======== ========= ====== =========
Depreciation of property, plant
and equipment (3) (6,398) - (6,401)
======== ========= ====== =========
Amortisation of intangible
assets - (1,734) - (1,734)
======== ========= ====== =========
Total net additions of non-current
assets - 9,293 - 9,293
======== ========= ====== =========
Three months ended 30 June
2016
Sales 17,723 - - 17,723
======== ========= ====== ===========
Earnings Before Interest, Tax,
Depreciation and Amortisation
(EBITDA) (647) (417) (4) (1,068)
Depreciation/amortisation charge (4) (1,908) - (1,912)
Finance cost - (45) - (45)
Foreign exchange (loss)/gain (247) 64 - (183)
-------- --------- ------ -----------
Loss for the period before
taxation (898) (2,306) (4) (3,208)
-------- --------- ------
Tax charge (6)
===========
Net loss for the period (3,214)
===========
Six months ended 30 June 2016
Sales 22,619 - - 22,619
======== ========= ====== ===========
Earnings Before Interest, Tax,
Depreciation and Amortisation
(EBITDA) (1,625) (1,947) (8) (3,580)
Depreciation/amortisation charge (8) (2,513) - (2,521)
Finance cost - (81) - (81)
Foreign exchange (loss)/gain (343) 66 - (277)
-------- --------- ------ -----------
Loss for the period before
taxation (1,976) (4,475) (8) (6,459)
-------- --------- ------
Tax charge (12)
===========
Net loss for the period (6,471)
===========
3. Business and geographical segments (continued)
Geographical segments (continued)
(Euro 000's) Cyprus Spain Other Total
Total assets 4,327 232,448 5 236,780
======== ========= ====== ===========
Total liabilities (9,080) (57,422) (59) (66,561)
======== ========= ====== ===========
Depreciation of property, plant
and equipment 8 2,199 - 2,207
======== ========= ====== ===========
Amortisation of intangible
assets - 314 - 314
======== ========= ====== ===========
Total net additions of non-current
assets - 17,079 - 17,079
======== ========= ====== ===========
4. Net finance cost
Three Three Six Six
months months months months
ended ended ended ended
30 June 30 30 30
(Euro 000's) 2017 June June June
2016 2017 2016
Interest expense :
Debt to department of
social security and other
interest 171 25 343 52
Interest on copper concentrate
prepayment 37 - 106 -
Interest on early payment 216 216
Deferred consideration 605 - 1,189 -
Interest income (3) (4) (19) (18)
Rehabilitation cost (Note
13) 25 24 49 47
Net foreign exchange (205) (205)
---------
846 45 1,679 81
--------- -------- -------- --------
5. Basic and fully diluted profit/(loss) per share
The calculation of the basic and fully diluted profit/(loss) per share attributable to the ordinary equity holders of the parent is based on the following data:
Three Three Six Six
months months months months
ended ended ended ended
30 June 30 30 30
(Euro 000's) 2017 June June June
2016 2017 2016
Parent (496) (730) (1,363) (1,379)
Subsidiaries 6,170 (2,484) 12,280 (5,092)
---------- ---------- ---------- ----------
Profit/(loss) attributable
to the ordinary holders
of the parent 5,674 (3,214) 10,917 (6,471)
---------- ---------- ---------- ----------
Weighted number of ordinary
shares for the purposes
of basic profit/(loss)
per share (000's) 116,680 116,680 116,680 116,680
---------- ---------- ---------- ----------
Basic profit/(loss) per
share:
Basic profit/(loss) per
share (cents) 4.9 (2.8) 9.4 (5.5)
---------- ---------- ---------- ----------
Weighted number of ordinary
shares for the purposes
of fully diluted profit/(loss)
per share (000's) 118,445 116,680 118,445 116,680
---------- ---------- ---------- ----------
Fully diluted profit/(loss)
per share (cents) :
Fully diluted profit/(loss)
per share (cents) 4.8 (2.8) 9.2 (5.5)
---------- ---------- ---------- ----------
6. Property, plant and equipment
Land Plant Assets Deferred
(Euro 000's) and and Mineral under mining Other
buildings machinery rights construction costs(2) assets(3) Total
Cost
At 1 January
2016 39,061 23,046 950 94,525 10,334 1,026 168,942
Additions 46 16,994 - - - 39 17,079
Reclassifications - 46,935 - (41,731) (5,204) - -
Reclassifications
- intangibles - 1,614 - - - - 1,614
Disposals - - - - - (5) (5)
----------- ----------- -------- -------------- ----------- ----------- --------
At 30 June
2016 39,107 88,589 950 52,794 5,130 1,060 187,630
Additions/(correction) 1,075(1) (1,011) - - 13,848 125 14,037
Reclassifications 6 57,352 - (52,228) (5,130) - -
Reclassifications
- intangibles - - (50) - - (247) (297)
Disposals - - - - - (37) (37)
Written off - - (900) - - (63) (963)
----------- ----------- -------- -------------- ----------- ----------- --------
At 31 December
2016 40,188 144,930 - 566 13,848 838 200,370
Additions 334 - - 2,852 4,754 - 7,940
Reclassifications 400 99 - (499) - - -
Disposals - - - - - (53) (53)
At 30 June
2017 40,922 145,029 - 2,919 18,602 785 208,257
----------- ----------- -------- -------------- ----------- ----------- --------
Depreciation
At 1 January
2016 - - - - - 518 518
Charge/(correction)
for the period 658 1,652 - - - (103) 2,207
Disposal - - - - - (5) (5)
----------- ----------- -------- -------------- ----------- ----------- --------
At 30 June
2016 658 1,652 - - - 410 2,720
Charge for
the period 1,078 3,280 - - 1,758 320 6,436
Reclassifications - 141 - - - (141) -
Reclassifications
-intangibles - - - - - (81) (81)
Disposals - - - - - (20) (20)
Impairment - - 900 - - 3 903
Written off - - (900) - - (68) (968)
----------- ----------- -------- -------------- ----------- ----------- --------
At 31 December
2016 1,736 5,073 - - 1,758 423 8,990
Charge for
the period 1,139 4,097 - - 1,116 49 6,401
Disposals - - - - - (44) (44)
At 30 June
2017 2,875 9,170 - - 2,874 428 15,347
----------- ----------- -------- -------------- ----------- ----------- --------
Net book
value
At 30 June
2017 38,047 135,859 - 2,919 15,728 357 192,910
----------- ----------- -------- -------------- ----------- ----------- --------
At 31 December
2016 38,452 139,857 - 566 12,090 415 191,380
----------- ----------- -------- -------------- ----------- ----------- --------
(1) Rehabilitation provision
(2) Stripping costs
(3) Includes motor vehicles, furniture, fixtures and office equipment which are depreciated over 5-10 years.
The above property, plant and equipment is located in Cyprus and Spain.
7. Intangible assets
Permits
(Euro 000's) of Rio Licences,
Tinto R&D and
Project software Goodwill Total
Cost
At 1 January 2016 20,158 - 9,333 29,491
Reclassifications -
property, plant and
equipment (1,589) - - (1,589)
---------- ------------ ----------- --------
At 30 June 2016 18,569 - 9,333 27,902
Additions 42,244(1) 1,334 - 43,578
Reclassifications -
property, plant and
equipment (25) 297 - 272
Other reclassifications (28) 54 - 26
---------- ------------ ----------- --------
At 31 December 2016 60,760 1,685 9,333 71,778
Additions - 1,600 - 1,600
At 30 June 2017 60,760 3,285 9,333 73,378
---------- ------------ ----------- --------
Amortisation
On 1 January 2016 - - 9,333 9,333
Charge for the period 114 - - 114
---------- ------------ ----------- --------
At 30 June 2016 114 - 9,333 9,447
Charge for the period 2,493 42 - 2,535
Reclassifications -
property, plant and
equipment - 81 - 81
---------- ------------ ----------- --------
At 31 December 2016 2,607 123 9,333 12,063
Charge for the period 1,706 28 - 1,734
At 30 June 2017 4,313 151 9,333 13,797
---------- ------------ ----------- --------
Net book value
At 30 June 2017 56,447 3,134 - 59,581
---------- ------------ ----------- --------
At 31 December 2016 58,153 1,562 - 59,715
---------- ------------ ----------- --------
(1) This addition relates to the deferred consideration as at 1 February 2016 (Note 14)
The useful life of the intangible assets is estimated to be not less than 16 1/2 years according to the revised Reserves and Resources statement released in July 2016. The ultimate recoupment of balances carried forward in relation to areas of interest or all such assets including intangibles is dependent on successful development, and commercial exploitation, or alternatively sale of the respective areas. The Company conducts impairment testing on an annual basis unless indicators of impairment are present at the reporting date.
In considering the carrying value of the assets at Proyecto Riotinto, including the intangible assets and any impairment thereof, the Company assessed the carrying values having regard to (a) the current recovery value (less costs to sell) and (b) the net present value of potential cash flows from operations. In both cases, the estimated net realisable values exceeded current carrying values and thus no impairment has been recognised.
Goodwill amounting to EUR9,333,000 arose on the acquisition of the remaining 49% of the issued share capital of Atalaya Riotinto Minera S.L.U. ("ARM") back in September 2008. This amount was fully impaired on acquisition, in the absence of the mining license back in 2008.
8. Inventories
(Euro 000's) 30 June 31 Dec
2017 2016
Finished products 1,633 -
Materials and supplies 7,221 5,647
Work in progress 1,174 548
-------- -------
10,028 6,195
-------- -------
9. Trade and other receivables
(Euro 000's) 30 June 31 Dec
2017 2016
Non-current
Deposits 211 206
-------- -------
211 206
-------- -------
Current
Trade receivables 14,255 15,082
Receivables from related parties
(Note 17.3 ii) 69 68
Receivables from shareholders
(Note 17.3 iii) 3,661 2,024
Deposits and prepayments 720 522
VAT 14,648 11,187
Other receivables 1,167 967
-------- -------
34,520 29,850
-------- -------
The fair values of trade and other receivables approximate to their carrying amounts as presented above.
10. Share capital and share premium
Share Share
Shares Capital premium Total
000's StgGBP'000 StgGBP'000 StgGBP'000
Authorised
Ordinary shares of Stg
GBP0.075 each* 200,000 15,000 - 15,000
------------- ------------ ------------ -------------
000's Euro Euro Euro
000's 000's 000's
Issued and fully paid
Balance at 1 January
2017 and 30 June 2017 116,680 11,632 277,238 288,870
------------- ------------ ------------ -------------
Authorised capital
The Company's authorised share capital is 200,000,000 ordinary shares of Stg GBP0.075 each.
Issued capital
2017
No shares were issued in the period from 1 January 2017 to 30 June 2017.
Warrants
The Company has issued warrants to advisers to the Company. Warrants, noted below, expire three or five years after the grant date and have exercise prices ranging from Stg GBP1.425 to Stg GBP3.150.
Details of share warrants outstanding as at 30 June 2017:
Number of warrants
Outstanding warrants at 1 January 2017 and 30 June 2017 365,354
----------------------
Some of the warrants above expired during July and August 2017. Refer to Note 21.
11. Other reserves
Share Bonus Depletion Available-for-sale
(Euro 000's) option share factor investment Total
At 1 January 2016 6,247 145 - (884) 5,508
Change in value of
available-for-sale
investment - - - 193 193
Bonus shares issued
in escrow - 63 - - 63
Recognition of share
based payments 68 - - - 68
-------- ------- ------------ ------------------- --------
At 30 June 2016 6,315 208 - (691) 5,832
Change in value of
available-for-sale
investment - - - (234) (234)
Recognition of share
based payments 69 - - - 69
-------- ------- ------------ ------------------- --------
At 31 December 2016 6,384 208 - (925) 5,667
Change in value of
available-for-sale
investments - - - (40) (40)
Recognition of share
based payments 45 - - - 45
Recognition of the
Depletion factor - - 450 - 450
-------- ------- ------------ ------------------- --------
At 30 June 2017 6,429 208 450 (965) 6,122
-------- ------- ------------ ------------------- --------
Share options
On 23 February 2017, the Company granted 900,000 incentive share options to Persons Discharging Managerial Responsibilities ("PDMRs") and management in accordance with the Company's Share Option Plan 2013.
The share options expire five years from the date of grant, have an exercise price of GBP144.0 pence per share, based on the minimum share price in the five days preceding the grant date and vest in three equal tranches - one third on grant, one third on the first anniversary of the original grant date and one third on the second anniversary of the original grant date.
Details of share options outstanding as at 30 June 2017:
Number of share options 000's
Outstanding options at 1 January 2017 500
- Issued during the reporting period 900
------------------------------
Outstanding options at 30 June 2017 1,400
------------------------------
12. Trade and other payables
(Euro 000's) 30 June 31 Dec
2017 2016
Non-current
Land options 95 115
95 115
-------- -------
Current
Trade payables 51,343 49,309
Payable to shareholders (Note
17.3 iii) - 12
Copper concentrate prepayment 1,720 8,684
Social Security* - 1,741
Land options and mortgage 791 790
Accruals 3,760 1,826
Other 213 230
-------- -------
57,827 62,592
-------- -------
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.
* On 25 May 2010 ARM recognised a debt with the Social Security's General Treasury in Spain amounting to EUR16.9 million that was incurred by a previous owner in order to stop the execution process by Public Auction of the land over which Social Security had a lien.
Originally payable over 5 years, the repayment schedule was subsequently extended until June 2017. As of 30 June 2017 the debt was fully repaid to the Social Security.
13. Provisions
Rehabilitation
(Euro 000's) Legal costs Total
costs costs
1 January 2016 - 3,971 3,971
Revision of discount rate - 732 732
Revision of estimates - 296 296
Accretion expense - 93 93
-------- --------------- --------
At 31 December 2016 - 5,092 5,092
Additions - 269 269
Charge to profit and loss
as operating costs 213 - 213
Charge to profit and loss
as finance cost - 49 49
-------- --------------- --------
At 30 June 2017 213 5,410 5,623
-------- --------------- --------
(Euro 000's) 30 June 31 Dec
2017 2016
Non-current 5,623 5,092
Current - -
-------- -------
Total 5,623 5,092
-------- -------
Rehabilitation provision represents the accrued cost required to provide adequate restoration and rehabilitation upon the completion of production activities. These amounts will be settled when rehabilitation is undertaken, generally over the project's life.
The Company has been named a defendant in several legal actions in Spain, the outcome of which is not determinable as at 30 June, 2017. Management has reviewed individually each case and provided a provision of EUR213 thousand for these claims, which has been reflected in these financial statements.
14. Deferred consideration
In September 2008, the Company moved to 100% ownership of ARM (and thus full ownership of Proyecto Riotinto) by acquiring the remaining 49% of the issued capital of ARM. At the time of the acquisition, certain companies in the Company signed a master agreement with Astor (the "Master Agreement") which includes the potential payment of deferred consideration of EUR43.8 million (the "Deferred Consideration") and up-tick payments of up to EUR15.9 million depending on the price of copper (the "Up-tick Payments"). These potential payments are in consideration of (a) all parties to the Master Agreement accepting the legal structure of ARM (formerly Emed Tartessus); (b) the parties agreeing to waive claims and rights under various agreements relating to ARM and Proyecto Riotinto entered into prior to the Master Agreement; and (c) the provision of indemnities by Astor and its related parties in favour of the Company and Atalaya MinasdeRiotinto (UK) Ltd, and the agreement by Astor and its related parties not to pursue litigation against the Company or ARM.
The obligation to pay the Deferred Consideration and the Up-tick Payments is subject to the satisfaction of the following conditions (the "Conditions"): (a) all authorisations to restart mining activities in Proyecto Riotinto having been granted by the Junta de Andalucía ("Permit Approval"); and (b) the Company securing senior debt finance and related guarantee facilities for a sum sufficient to restart mining operations at Proyecto Riotinto ("Senior Debt Facility") and being able to draw down funds under the Senior Debt Facility.
Subject to satisfaction of the Conditions, the Deferred Consideration and the Up-tick Payments are payable over a period of six or seven years (the "Payment Period"). In addition to the satisfaction of the Conditions, the Up-tick Payments are only be payable if, during the relevant period, the average price of copper per tonne is US$6,614 or more (US$3.00/lb).
14. Deferred consideration (continued)
The Company has also entered into a credit assignment agreement with a related company of Astor, Astor Resources AG (previously Shorthorn AG), pursuant to which the benefit of outstanding loans were assigned to the Company in consideration for the payment of EUR9.1 million to Astor Resources (the "Loan Assignment"). Payment under the Loan Assignment is also subject to satisfaction of the Conditions and is payable in instalments over the Payment Period.
As security, inter alia, for the obligation to pay the Deferred Consideration, the Up-tick Payments and the Loan Assignment, Atalaya MinasdeRiotinto (UK) Ltd (previously EMED Holdings (UK) Limited) has granted pledges to Astor Resources over the issued capital of ARM and the Company has provided a parent company guarantee.
As at the date of this report, the Condition relating to Permit Approval has been satisfied. However, the Company has not entered into arrangements in connection with a Senior Debt Facility and, in the absence of drawdown of funds by the Company pursuant to a Senior Debt Facility, the Conditions have not been satisfied.
On 6 March 2017, judgment in the Astor Case was handed down in the High Court of Justice in London. On 31 March 2017 declarations were made by the High Court which gave effect to the Judgment.
In summary, the High Court found that the Deferred Consideration did not start to become payable when Permit Approval was granted. In addition, the intra-company loans by which funding for the restart of mining operations was made available to ARM did not constitute a Senior Debt Facility so as to trigger payment of the Deferred Consideration. Accordingly, the first instalment of the Deferred Consideration has not fallen due.
Astor failed to show that there had been a breach of the all reasonable endeavours obligation contained in the Master Agreement to obtain a Senior Debt Facility or that the Company had acted in bad faith in not obtaining a Senior Debt Facility. While the Court confirmed that the Company was not in breach of any of its obligations, the Master Agreement and its provisions remain in place. Accordingly, other than up to US$10 million a year which may be required for non-Proyecto Riotinto related expenses, ARM cannot make, declare or pay any dividend, distribution or any repayment of the money lent to it by companies in the Company until the consideration under the Master Agreement (including the Deferred Consideration) has been paid in full.
As a consequence, the Judgment requires that, in accordance with the Master Agreement, ARM must apply any excess cash (after payment of operating expenses, sustaining capital expenditure, any senior debt service requirements and up to US$10 million (for non-Proyecto Riotinto related expenses)) to pay the consideration due to Astor (including the Deferred Consideration and the amount of EUR9.1 million payable under the Loan Assignment) early. The Court confirmed that the obligation to pay consideration early out of excess cash does not apply to the Up-tick Payments and the Judgment notes that the only situation in which the Up-tick Payments could ever become payable is in the unlikely event that mining operations stop at Proyecto Riotinto and a Senior Debt Facility is then secured for a sum sufficient to restart mining operations.
While the Judgment confirms that the cash sweep provisions of the Master Agreement require ARM to repay the Loan Assignment early, it does not extend to the credit assignment agreement which is governed by Spanish law. The Judgment therefore does not provide any clarity on whether the Conditions have been met in respect of payment of Loan Assignment and there remains significant doubts concerning the legal obligation to pay the Loan Assignment pursuant to the terms of the credit assignment agreement.
Before the Judgment dated 6 March 2017, the Company had not recognised the Deferred Consideration on the basis that the payment of the amounts was not considered probable. The Judgment required the Company to revisit its estimates and assumptions as at and for the year ended 31 December 2016. Accordingly, the Company recorded the liability at fair value using a discount rate on an estimated excess cash flow of ARM.
As at 30 June 2017, the Company has not generated any excess cash and, consequently, no consideration has been paid.
As at the reporting date, the Company has updated the estimation of the excess cash flows and the fair value of the Deferred Consideration. The main assumptions of the net present value are as follows:
Gross amount: EUR53,000,000 Discount rate: 5.5%
Net present value: EUR45,535,587
14. Deferred consideration (continued)
The fair values disclosed are provisional as of 30 June 2017 due to the complexity of the Master Agreement, and the inherently uncertain nature of the assumptions to calculate the future cash flows of ARM.
When determining the net present value of the Deferred Consideration, the Company has used historical facts and future assumptions, based on opinions and estimates on the excess cash to be generated at ARM.
Many of these assumptions are based on factors such as commodities prices, cost of operations, future settlements on current and future trade creditors and debtors and other events that are not within the control of Atalaya.
On 25 April 2017, Atalaya and Astor applied for permission to appeal to the Court of Appeal. On 11 August 2017 the Court of Appeal granted permission to both parties to appeal (although it rejected three of Astor's seven grounds). The Appeal is to take place by July 2018.
15. Derivative instruments
15.1. Foreign exchange contract
As at 31 December 2016, Atalaya had certain short term foreign exchange contracts with the following relevant information:
Foreign exchange contracts - Euro/USD
Period Contract Amount in Contract Strike
type USD rate
-------------- ------------ ----------- --------- -------
June 2016 FX Forward
- June 2017 - Put 5,000,000 1.0955 n/a
FX Forward
- Call 10,000,000 1.0955 1.0450
The counter parties of the foreign exchange agreements are third parties.
In February 2017, the Company entered into certain foreign exchange hedging contracts to offset the agreements noted above before its expiration date. The contracts were signed with the same financial institution.
During the three month period ended 30 June 2017 the Company had not entered into any short term foreign exchange contract.
15.2. Commodity contract
During the six month period ended 30 June 2017, the Company had not entered into any hedging contract.
16. Acquisition, incorporation and disposal of subsidiaries
During the six months ended 30 June 2017, the Company announced the exercise of the option to acquire 10% of Proyecto Touro. Further details are given in Note 20.
On 10 March 2017, Atalaya Touro (UK) Limited was incorporated. Atalaya Mining Plc is its sole shareholder. In July 2017, Atalaya Touro (UK) Limited executed the option and acquired 10% of Cobre San Rafael, S.L. the Company which owns the mining rights of Proyecto Touro (Note 20).
17. Related party transactions
The following transactions were carried out with related parties:
17.1 Compensation of key management personnel
The total remuneration and fees of Directors (including Executive Directors) and other key management personnel was as follows:
Three Three Six Six
months months months months
ended ended ended ended
30 June 30 June 30 June 30 June
(Euro 000's) 2017 2016 2017 2016
Directors' remuneration and
fees 179 175 359 350
Share option-based benefits
to directors 4 14 6 28
Bonus shares issued to director,
in escrow - 31 - 63
Key management personnel remuneration 120 95 213 190
Share option-based and other
benefits to key management
personnel 13 8 22 16
-------- -------- -------- --------
316 323 600 647
-------- -------- -------- --------
17.2 Share-based benefits
The directors and key management personnel have been granted 900,000 options during the six month period.
17.3 Transactions with related parties/shareholders
i) Transaction with shareholders
Three Three Six Six
months months months months
(Euro 000's) ended ended ended ended
30 30 June 30 June 30
June 2016 2017 June
2017 2016
Trafigura PTE LTD ("Trafigura")
- Sales of goods (pre commissioning
sales offset against the cost
of constructing assets) - - - 2,452
Trafigura- Sales of goods 6,497 13,008 11,393
Orion Mine Finance (Master)
Fund I LP ("Orion") - Sales
of goods - - (4) -
---------- -------- -------- -------
6,497 13,004 13,845
-------- -------- -------
ii) Period-end balances with related parties
(Euro 000's) 30 June 31 Dec
2017 2016
Receivables from related parties:
Fundacion Atalaya Riotinto 13 12
Recursos Cuenca Minera S.L. 56 56
Total (Note 9) 69 68
--------- --------
The above debtor balance arising from sales of goods bears no interest and is repayable on demand
iii) Period-end balances with shareholders
(Euro 000's) 30 June 31 Dec
2017 2016
Trafigura - Debtor balance (Note
9) 3,661 2,024
---------- ---------
Orion - Creditor balance (Note
12) - (12)
---------- ---------
The above debtor balance arising from the pre-commissioning sales of goods bear no interest and is repayable on demand.
18. Contingent liabilities
Judicial and administrative cases
In the normal course of business, the Company may be involved in legal proceedings, claims and assessments. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and the Company accrues for adverse outcomes as they become probable and estimable.
ARM has been notified for certain industrial discharges from the Tailing Management Facility ("TMF"). A full description of each notification from the Authorities and its resolution have been included in the 2016 financial statements. As of June 2017, all notifications related to discharges dated September 2010, January 2014 and February 2015 were either ruled by a Court in favour of ARM or lapse without any further notification from the Authorities.
19. Commitments
There are no minimum exploration requirements at Proyecto Riotinto. However, the Company is obliged to pay municipal land taxes which currently are approximately EUR235,000 per year in Spain and Atalaya is required to maintain the Riotinto site in compliance with all applicable regulatory requirements.
As part of the consideration for the purchase of land from Rumbo, ARM has agreed to pay a royalty to Rumbo subject to commencement of production of $250,000 in each quarter where the average price of LME copper or the average copper sale price achieved by the Company is at least $2.60/lb. No royalty is payable in respect of any quarter where the average copper price for that quarter is below this amount and in certain circumstances any quarterly royalty payment can be deferred until the following quarter. The royalty obligation terminates 10 years after commencement of production. No payments were made in 2016 (2015 - nil). Commencement of production is defined as being the first to occur of processing of ore at a rate of nine million tonnes per annum for a continuous period of six months or the date that is 18 months after the first product sales from Proyecto Riotinto. No payments have been made during the six months ended 30 June 2017.
ARM has entered into a 50/50 joint venture with Rumbo to evaluate and exploit the potential of the class B resources in the tailings dam and waste areas at Proyecto Riotinto (mainly residual gold and silver in the old gossan tailings). Under the joint venture agreement, ARM will be the operator of the joint venture, will reimburse Rumbo for the costs associated with the application for classification of the Class B resources and will fund the initial expenditure of a feasibility study up to a maximum of EUR2 million. Costs are then borne by the joint venture partners in accordance with their respective ownership interests. Half of the costs paid by ARM in connection with the feasibility study can be deducted from any royalty which may fall due to be paid.
20. Significant events
Proyecto Touro
On 23 February 2017, the Company announced that it had exercised an option to acquire 10% of the share capital of Cobre San Rafael S.L., ("CSR"), a wholly owned subsidiary of Explotaciones Gallegas S.L. ("EG"), part of the F. GOMEZ Company. This is part of an earn-in agreement (the "Agreement"), which will enable the Company to acquire up to 80% of CSR.
Following the acquisition of the initial 10% of CSR's share capital, the agreement included the following four phases:
-- Phase 1 - The Company paid EUR0.5 million to secure the exclusivity agreement and will continue to fund up to a maximum of EUR5 million to get the project through the permitting and financing stages.
-- Phase 2 - When permits are granted, the Company will pay EUR2 million to earn-in an additional 30% interest in the project (cumulative 40%).
-- Phase 3 - Once development capital is in place and construction is underway, the Company will pay EUR5 million to earn-in an additional 30% interest in the project (cumulative 70%).
-- Phase 4 - Once commercial production is declared, the Company will purchase an additional 10% interest in the project (cumulative 80%) in return for a 0.75% Net Smelter Return (NSR) royalty, with a buyback option.
The Agreement has been structured so that the various phases and payments will only occur once the project is de-risked, permitted and in operation.
On July 2017, the Company executed the acquisition of 10% of CSR.
Study to increase copper production at Proyecto Riotinto
The Board of Directors of the Company approved in June 2017 a study to demonstrate the feasibility of increasing copper production to 50,000 - 55, 000 tonnes per annum.
As of the date of this report, the study is underway and it is expected to be concluded during Q4 2017.
21. Events after the reporting period
Subsequent to the reporting date, the following warrants were expired:
Equity instrument Grant date Expired Number of Ex price
date warrants
------------------- ------------ ----------- ---------- ---------
2 July 2 July
Warrants 2012 2017 33,332 3.15
22 August 22 August
Warrants 2012 2017 69,453 2.55
At the Annual General Meeting of the Company held on 13 July 2017, the shareholders approved all resolutions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFDAIIRIID
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