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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 | |
---|---|---|---|---|---|---|---|---|---|---|
7.00 | 1.57% | 452.00 | 448.50 | 449.00 | 452.00 | 445.00 | 447.50 | 234,398 | 16:35:23 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Metal Mining Services | 341.98M | 38.77M | 0.2772 | 16.20 | 628.06M |
TIDMATYM
RNS Number : 1370J
Atalaya Mining PLC
07 September 2016
Atalaya Mining Plc
("Atalaya" or the "Company")
Half Yearly Financial Statements
Atalaya Mining plc (AIM:ATYM, TSX:AYM), the European mining and development company, announces its unaudited quarterly and interim results for the three and six months to June 30 2016, together with the unaudited, condensed interim consolidated financial statements.
The complete unaudited, condensed half yearly financial statements displayed below, are also available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.atalayamining.com
Period Highlights
-- The Expansion Project was declared mechanically complete during the first week of May 2016, ahead of schedule and under budget.
-- The ramp-up process progressed according to plan. Copper production increased by 10% in Q2 2016 to 4,442 tonnes, compared with 4,048 tonnes in Q1 2016. The 10% increase in production during the second quarter was significant considering the plant was temporarily shut down as a result of both the tailings discharge suspension by the Junta de Andalucía and the interruptions required to commission the Expansion Project.
-- 1.3 million tonnes of ore were processed, compared with 1.1 million tonnes during Q1 2016, representing a 15% increase. Production levels in June 2016 increased to an annualised rate of 6.8Mtpa, in line with the ramp-up schedule. This trend continued in August 2016 with annualised rate equivalent to 8.3Mtpa.
-- Copper grade in the final concentrate was consistent with the previous quarter, reporting 21.43% in Q2 2016 as compared to 21.33% for Q1 2016. Recoveries were lower at 80.46% during Q2 2016, compared with 84.26% during Q1 2016. Recoveries increased back to over 84% during July and August, which is the expected rate of the new flotation circuit.
-- Atalaya announced commercial production in February 2016 with revenues of EUR17.7 million and EUR22.6 million for the three months and six months period, respectively. Negative EBITDA of EUR1.1 million and EUR3.6 million was recorded for the three months and six months period respectively. EBITDA values were significantly impacted by ramp-up of production but have improved in Q2 2016 as compared to Q1 2016 and are expected to improve further in Q3 2016.
-- The average market prices of copper for the three and six months ended 30 June 2016 amounted to US$2.21/lb for the second quarter and US$2.16/lb for the six months. The Company's realised copper prices for the same periods were US$2.11/lb and US$2.06/lb respectively. As commercial production was declared in February 2016, no comparative operational data was available for 2015.
-- Operating cash costs per pound of payable copper were negatively impacted by the normal ramp-up process and the temporary suspension. Cash costs for Q2 2016 were $2.36/lb whereas for H1 2016 were $2.31/lb. These costs are projected to come down as nameplate capacity is reached and steady state production is achieved.
-- Inventories of concentrates at 30 June 2016 amounted to EUR6.2 million. -- Capital expenditure for the six months ending 30 June 2016 amounted to EUR17.1 million.
-- Astor case - Atalaya continues to work closely with its legal advisors in preparing for trial at the High Court of Justice in London, with the date for the trial having been set for 30 January 2017. Atalaya remains confident of a positive outcome of the upcoming trial and will update shareholders following the trial, or if there are any material developments in the meantime.
Events after the reporting period
-- The Company announced the appointment of Cesar Sanchez as Group Chief Financial Officer.
-- An updated Reserves and Resources statement was released indicating a 12% increase in contained reserves and extended life of mine to 16.5 years.
-- BMO Capital Markets Limited was appointed as Joint Corporate Broker.
-- On 5 September 2016, the Company announced the completion of a US$14 million prepayment funding facility with Transamine Trading S.A. The facility covers part of the Group's short term working needs in order to support itself through the ramp-up phase. The Group continues to work on alternative funding solutions to improve its balance sheet and its working capital position during the ramp-up period to full expanded production.
Alberto Lavandeira, CEO commented:
"We continue to be satisfied with the rapid progress of the successful commissioning of the plant expansion. The Company experienced a couple of isolated operational incidences that together with the weak copper price have adversely affected the operations and results. We nevertheless remain confident that with the ramp up of the expansion and with steady throughput being rapidly achieved, the Company is moving to positive cash generation in the coming months. We continue to remain bullish on the long term outlook for copper."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
Contacts:
+34 959 59 Atalaya Mining plc Roger Davey / Alberto Lavandeira 28 50 ---------------------------- ---------------------------------- ------------ Canaccord Genuity (NOMAD Henry Fitzgerald-O'Connor +44 20 7523 and Joint Broker) / Martin Davison 8000 ---------------------------- ---------------------------------- ------------ BMO Capital Markets (Joint Jeffrey Couch/Neil Haycock/Tom +44 20 7236 Broker) Rider 1010 ---------------------------- ---------------------------------- ------------
ATALAYA MINING PLC
MANAGEMENT'S REVIEW AND
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
30 JUNE 2016
(UNAUDITED)
Notice to Reader
The accompanying unaudited condensed interim consolidated financial statements of Atalaya have been prepared by and are the responsibility of Atalaya'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 ("Atalaya" and/or the "Group"), to enable the reader to assess material changes in the financial position between 31 December 2015 and 30 June 2016 and results of operations for the three and six months ended 30 June 2016 and 2015.
This report has been prepared as of 6 September 2016. 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 three and six months ended 30 June 2016. 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 2015, and the unaudited, condensed consolidated financial statements for the three months ended 31 March 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. Highlights - three and six months ended 30 June 2016
Operational performance
-- The expansion project was declared mechanically complete during the first week of May 2016, ahead of schedule and under budget.
-- Copper production increased by 10% in Q2 2016 to 4,442 tonnes, compared with 4,048 tonnes in Q1 2016. The increase in production was significant considering the plant was temporarily shut down due to the administrative tailings discharge suspension and interruptions required to commission the expansion project.
-- 1.3 million tonnes of ore were processed compared with 1.1 million tonnes during Q1 2016, representing a 15% increase.
-- Ramp-up of production is continuing as planned, with the plant now running at 8.3 Mtpa with accumulated production for July and August being 26% higher than Q2 2016. Full plant throughput rate of 9.5 Mtpa expected to be achieved by the end of 2016.
-- Copper grade in final concentrate remained consistent at 21.43% while recoveries decreased to 80.46% during Q2 2016, compared with 84.26% in Q1 2016. Recoveries increased back and continued to average over 84% in July and August.
-- An updated Reserves and Resources statement was released following the end of Q2 2016, indicating a 12% increase in contained reserves and extended life of mine to 16.5 years.
Financial performance
-- Atalaya announced commercial production in February 2016 with revenues of EUR17.7 million and EUR22.6 million for the three months and six months period, respectively.
-- Negative Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA") of EUR1.1 million and EUR3.6 million for the three months and six months period respectively. EBITDA values were significantly impacted by ramp-up of production but have improved in Q2 2016 as compared to Q1 2016.
-- Inventories of concentrates at 30 June 2016 amounted to EUR6.2 million.
-- Capital expenditure for the six months period ended on 30 June 2016 amounted to EUR17.1 million.
1. Highlights - three and six months ended 30 June 2016 (continued)
Funding
-- On 5 September 2016, Atalaya announced the completion of a US$14 million prepayment funding facility with Transamine Trading S.A. The facility covers part of Atalaya's short term working needs in order to support itself through the ramp-up phase. Atalaya continues to work on alternative funding solutions to improve its balance sheet and its working capital position during the ramp-up period to full expanded production.
2. Overview of operational results
The following table presents a summarised statement of operations for the three and six months ended 30 June 2016. As commercial production was declared in February 2016, no operational data was available for 2015.
Three months Three months Six months Six months ended ended ended ended Unit 30 June 30 June 2015*** 30 June 30 June 2016* 2016** 2015*** Ore mined T 1,340,492 n/a 2,474,253 n/a Ore processed T 1,308,780 n/a 2,442,728 n/a Copper ore grade % 0.44 n/a 0.44 n/a Copper concentrate grade % 21.43 n/a 21.38 n/a Copper recovery rate % 80.46 n/a 82.20 n/a Copper concentrate DMT 20,727 n/a 39,897 n/a Copper contained in concentrate FMT 4,442 n/a 8,489 n/a Payable copper contained in concentrate FMT 4,287 n/a 8,283 n/a Cash cost per lb of payable copper $/lb 2.36 n/a 2.31 n/a
Note: The numbers in the above table may slightly differ between them due to roundings.
* Quarterly operation data compared to prior quarter. Commercial production started in February 2016.
** For comparison purposes, the six months figures include pre-commissioning production for January 2016.
*** There were no operations in 2015.
Expansion Project
During the first week of May 2016, the expansion project was declared mechanically complete, ahead of schedule and under budget. Commissioning of the new equipment and subsequent handover to the operations team took place during the latter part of the quarter. Production levels increased to an annualised rate of 6.8 Mtpa in June, in line with the ramp-up schedule. This trend has continued and the annualised rate achieved during August was equivalent to 8.3 Mtpa.
Phase 1 of the plant ramp-up was performing well at the start of the quarter before operations were temporarily suspended by the Junta de Andalucía. During the suspension period, which was lifted on 4 May 2016, the site team integrated the new expansion equipment into the existing Phase 1 section, which then allowed commissioning and ramp-up to move continuously through May.
Mining and Processing
Copper production increased by 10% during Q2 2016 to a total of 4,442 tonnes compared with 4,048 tonnes during Q1 2016. The increase was adversely impacted by the temporary operational suspension due to the tailings discharge issue as well as the interruptions required to connect the Expansion of the plant to the Phase 1 Project. Copper grade in the final concentrate was consistent with the previous quarter, reporting 21.43% in Q2 2016 as compared to 21.33% for Q1 2016. Recoveries were lower at 80.46% during Q2 2016, compared with 84.26% during Q1 2016. Recoveries increased back to over 84% during July and August, which is the expected rate of the new flotation circuit.
A total of 1,308,780 tonnes of ore was processed during Q2 2016, compared with 1,133,948 tonnes during Q1 2016. A total of 1,343,400 cubic metres of waste was removed during Q2 2016 compared with 935,452 cubic metres during Q1 2016. The accumulated cash cost per lb of payable copper for the six months period of $2.31/lb was impacted by the cost scale of an expanded plant, but with lower production levels and a temporary stoppage of production in Q2 2016.
Ramp-up of production is progressing as planned, with the plant now running at 8.3 Mtpa annualized capacity and having produced 3,175 tonnes of copper during August. This is approximately a 30% improvement over July`s production of 2,442 tonnes of copper. Accumulated production for July and August 2016 is already 26% higher than the production of the second quarter of 2016, and is an indication of the good progress of the ramp-up of the Expansion Project that is expected to be working at full capacity by the end of 2016.
Exploration and Geology
Following the end of Q2 2016, a Reserves and Resources statement was released on 14 July 2016. Total open-pit mineral reserves have increased from 123 million tonnes at 0.49% Cu to 153 million tonnes averaging 0.45% Cu using variable, declining cut-off grades, representing a 12% increase in contained metal. Total open-pit Measured and Indicated Mineral Resources were estimated at 193 million tonnes averaging 0.43% Cu, compared with the previous estimate of 203 million tonnes at 0.46% Cu. Inferred Mineral Resources increased to 23 million tonnes averaging 0.48% Cu, from 2 million tonnes at 0.50% Cu.
An exploration drilling campaign has been initiated during the quarter to evaluate historical mineral resources around both the Corta Atalaya and Filon Sur pits.
2. 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.
Operations
The Riotinto Project operational guidance for 2016 is as follows:
Range Unit 2016 Ore processed T million 6.7 - 7.1 115,000 - Concentrate DMT 130,000 Contained copper T 23,500 - 27,000
The average head grade for 2016 is expected to be between 0.48% Cu and 0.50% Cu with a recovery rate of approximately 80%. Cash operating cost is expected to be within $2.05/lb to $2.20/lb of payable copper in the second half of the year.
3. Overview of the financial results
The following table presents a summarised consolidated income statements for the three and six months ended June 2016 with comparatives for the three and six months ended June 2015.
Three Three Six months Six months months ended months ended ended 30 June ended 30 June 30 June 2016 30 June 2016 2015 2015 --------- --------- ----------- --------- (Euro 000's) Sales 17,723 - 22,619 - Total operating costs (17,799) - (22,852) - --------- --------- ----------- --------- Gross loss (76) - (233) - Administrative expenses (2,402) (649) (5,214) (1,736) Care and maintenance expenses - (746) - (4,961) Exploration expenses (517) (42) (679) (90) --------- --------- ----------- --------- Operating loss (2,995) (1,437) (6,126) (6,787)
Other income 15 16 25 102 Net foreign exchange loss (183) (1,735) (277) (4,922) Net finance cost (45) (2,019) (81) (4,228) --------- --------- ----------- --------- Loss before tax (3,208) (5,175) (6,459) (15,835) Tax (6) - (12) - --------- --------- ----------- --------- Loss for the period attributable to owners of the parent (3,214) (5,175) (6,471) (15,835) ========= ========= =========== =========
As at 30 June 2016, Atalaya shows revenues amounting to EUR22.6 million. Revenues include sales of concentrate to off takers during the period. Total operating costs include operating production costs amounting to EUR22.9 million.
Administrative expenses for the period included head office costs, costs associated with a publicly listed company and any costs incurred by Atalaya not directly linked to production. The cost for the period ended 30 June 2016 amounted to EUR5.2 million. Exploration costs amounted to EUR0.7 million.
Realised copper prices
The average prices of copper for the three and six months ended 30 June 2016 are as summarised below. As commercial production was declared in February 2016, no operational data was available for 2015.
Three months Three months Six months Six months ended ended ended ended 30 June 30 June 30 June 30 June 2016 2015 2016 2015 ------------- ------------- ----------- ----------- USD Realised copper price per lb 2.11 n/a 2.06 n/a Market copper price per lb (period average) 2.21 n/a 2.16 n/a 4. Non-GAAP Measures
Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Operating Cost per pound of payable copper" and "realisable 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 all operating costs in the operation, excluding finance, tax, depreciation and amortisation expenses. The realised price for copper concentrates is the average price of copper per tonne sold over the period under analysis.
The Cash Operating Cost per pound of payable copper includes cash operating costs, including treatment and refining charges ("TC/RC"), freight and distribution costs, and is net of by-product metal credits. The Cash Operating Cost per pound of payable copper indicator is consistent with the widely accepted industry standard established by Wood Mackenzie and is also known as the C1 cash cost.
5. Liquidity and capital resources
Atalaya monitors factors that could impact its liquidity as part of the 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 costs and administrative costs.
The following is a summary of Atalaya's cash position and cash flows as at 30 June 2016 and 31 December 2015 and for the six months ended 30 June 2016 and year ended 31 December 2015:
Liquidity information
30 June 31 December Euro 000's 2016 2015 ----------- ------------ Unrestricted cash and cash equivalents 10,156 18,578 Restricted cash 290 40 Working capital deficit (28,618) (6,359) Six months Six months ended ended 30 June 30 June 2016 2015 Cash flows from/(used in) operating activities 8,936 (19,803) Cash flows from financing activities - 93,507 Cash flows used in investing activities (17,108) (35,826) ----------- ------------ Net (decrease)/increase in cash and cash equivalents (8.172) 37,878 =========== ============
Unrestricted cash and cash equivalents as at 30 June 2016 decreased to EUR10.2 million from EUR18.6 million at 31 December 2015. The decrease in the cash balances is the result of capital expenditures incurred in the period related to the finalisation of the expansion project, certain ramp-up inefficiencies and slow revenues cash inflows. Atalaya reported a working capital deficiency of EUR28.6 million at 30 June 2016 compared with EUR6.4 million at 31 December 2015.
6. 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") and USD. 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 months ended 30 June 2016, Atalaya recognised a foreign exchange loss of EUR183,000 whilst for the six months ended 30 June 2016, Atalaya recognised a foreign exchange loss of EUR277,000.
The following table summarises the movement in key currencies versus the EUR:
Three months Three Six Six ended months months months 30 June ended ended ended 2016 30 June 30 June 30 June 2015 2016 2015 ------------- --------- --------- --------- Average rates for the periods ended GBP - EUR 0.83 n/a 0.81 n/a USD - EUR 1.11 n/a 1.12 n/a Spot rates as at GBP - EUR 1.29 n/a 1.28 n/a USD - EUR 1.10 n/a 1.12 n/a
During Q2 2016, Atalaya signed certain short term hedging agreements to ensure a competitive rate to USD. Further information on the hedging agreements is disclosed in the Financial Statements (Note 14).
7. Contingencies
Astor
Following the announcements on 2 November 2015 and 26 May 2016, Atalaya continues to work closely with its legal advisors in preparing for trial at the High Court of Justice in London. The date for the trial has been set for 30 January 2017. Atalaya remains confident of a positive outcome of the upcoming trial and will update shareholders following the trial, or if there are any material developments in the meantime.
More details on contingencies are included in Note 17 of the Financial Statements that follow.
8. Off-balance sheet arrangements
Atalaya has no off-balance sheet arrangements.
9. Risk factors
Due to the nature of Atalaya's business in the mining industry it is subject to various risks that could materially impact the future operating results of Atalaya 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 2015.
10. 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 2015.
11. Other information
Additional information about Atalaya Mining Plc is available at www.atalayamining.com
Atalaya Mining Plc
(All amounts in Euro thousands unless otherwise stated)
Condensed interim consolidated income statements
(unaudited)
Three Three Six months Six months months ended months ended ended 30 June ended 30 June 30 June 2016 30 June Notes 2016 2015 2015 ---------- ---------- ----------- ----------- Sales 17,723 - 22,619 - Total operating costs (17,799) - (22,852) - ---------- ---------- ----------- ----------- Gross loss (76) - (233) - Administrative expenses (2,402) (649) (5,214) (1,736) Care and maintenance expenses - (746) - (4,961) Exploration expenses (517) (42) (679) (90) ---------- ---------- ----------- ----------- Operating loss (2,995) (1,437) (6,126) (6,787) Other income 15 16 25 102 Net foreign exchange loss (183) (1,735) (277) (4,922) Net finance cost 4 (45) (2,019) (81) (4,228) ---------- ---------- ----------- ----------- Loss before tax (3,208) (5,175) (6,459) (15,835) Tax (6) - (12) - ---------- ---------- ----------- ----------- Loss for the period attributable to owners of the parent (3,214) (5,175) (6,471) (15,835) ========== =========== Loss per share from operations attributable to equity holders of the parent during the period: Basic and fully diluted loss per share (expressed in cents per share) 5 (2.8) (9.9) (5.5) (31.7) ========== ========== =========== =========== Loss for the period (3,214) (5,175) (6,471) (15,835) Other comprehensive profit: Change in value of available-for-sale investment 161 (172) 193 (172) ---------- ---------- ----------- ----------- Total comprehensive loss for the period attributable to owners of the parent (3,053) (5,347) (6,278) (16,007) ========== ========== =========== ===========
Condensed interim consolidated statements of financial position
(unaudited)
30 June 31 December Notes 2016 2015 ---------- ------------ Assets Non-current assets Property, plant and equipment 6 184,910 168,424 Intangible assets 7 18,278 20,158 Investment in associate 10 10 203,198 188,592 ---------- ------------ Current Assets Inventories 8 10,965 - Trade and other receivables 9 11,676 16,632 Available-for-sale investment 495 302 Cash and cash equivalents 10,446 18,618 ---------- ============ 33,582 35,552 ---------- ------------ Total assets 236,780 224,144 ========== ============ 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 5,832 5,508 Accumulated losses (124,483) (118,012) ---------- ============ Total equity 170,219 176,366 ---------- ------------ Liabilities Non-current liabilities Trade and other payables 12 343 1,896 Provisions 13 4,018 3,971 ------------ 4,361 5,867 ---------- ------------ Current liabilities Trade and other payables 12 62,200 41,911 62,200 41,911 ---------- ------------ Total liabilities 66,561 47,778 ---------- ------------ Total equity and liabilities 236,780 224,144 ========== ============
Condensed interim consolidated statements of changes in equity
(unaudited)
Share Share Other Accumulated Non -controlling capital premium reserves losses Total Interest Total ---------- ---------- ---------- ------------ ----------- ----------------- ----------- At 1 January 2015 4,409 149,823 5,815 (103,002) 57,045 (116) 56,929 Total comprehensive loss for the period - - - (15,835) (15,835) - (15,835) Issue of share capital 7,223 130,017 - - 137,240 - 137,240 Share issue costs - (2,592) - - (2,592) - (2,592) Derivative element of conversion of convertible note - 440 - - 440 - 440 Purchase of minority interest share - - - - - 116 116 Change in value of available-for-sale investment - - (172) - (172) - (172) Bonus shares issued in escrow - - 50 - 50 - 50 Warrant issue costs - (122) 122 - - - - Recognition of share based payments - - 76 - 76 - 76 At 30 June 2015 11,632 277,566 5,891 (118,837) 176,252 - 176,252 Total comprehensive profit for the period - - - 825 825 - 825 Share issue costs - (328) - - (328) - (328) Bonus shares issued in escrow - - 51 - 51 - 51 Change in value of available-for-sale investment - - (510) - (510) - (510) Recognition of share based payments - - 76 - 76 - 76 ---------- ---------- ---------- ------------ ----------- ----------------- ----------- At 31 December 2015 11,632 277,238 5,508 (118,012) 176,366 - 176,366 Total comprehensive loss for the period - - - (6,471) (6,471) - (6,471) Change in value of available-for-sale investment - - 193 - 193 - 193 Bonus shares issued in escrow - - 63 - 63 - 63 Recognition of share
based payments - - 68 - 68 - 68 ----------- At 30 June 2016 11,632 277,238 5,832 (124,483) 170,219 - 170,219 ========== ========== ========== ============ =========== ================= ===========
Condensed interim consolidated statements of cash flows
(unaudited)
Notes Three Three Six months Six months months ended months ended ended 30 June ended 30 June 30 June 2016 30 June 2016 2015 2015 ---------- ----------- ----------- ---------- Cash flows from operating activities Loss before tax (3,208) (5,175) (6,459) (15,835) Adjustments for: Depreciation of property, plant and equipment 6 1,712 33 2,207 66 Amortisation of intangibles 7 200 - 314 123 Recognition of share-based payments 11 34 38 68 76 Bonus share issued in escrow 11 31 25 63 50 Interest income 4 (4) (1) (18) (1) Interest expense 4 25 61 52 136 Rehabilitation cost 4 24 - 47 - Gain on disposal of property, plant and equipment (1) - (1) - (Gain)/loss on fair value on the convertible note 4 (827) - 310 Accretion expense on convertible note 4 - - - 31 Bridge loan interest expense 4 - 678 - 1,232 Bridge loan financing expenditure 4 - 1,342 - 1,342 Convertible note interest expense 4 - 766 - 1,178 Foreign exchange loss on repayment of borrowings - 1,846 - 5,304 Unrealised foreign exchange loss on financing activities - 248 - 248 ---------- ----------- Cash outflows from operating activities before working capital changes (1,187) (966) (3,727) (5,740) Changes in working capital: Inventories 8 (3,464) (1,669) (10,965) (1,669) Trade and other receivables (119) (5,550) 4,956 (7,506) Trade and other payables 12,234 (5,137) 18,724 (4,059) ---------- ----------- Cash flows from/(used in) operations 7,464 (13,322) 8,988 (18,974) Interest paid (25) (590) (52) (665) Financing expenditure paid - (164) - (164) Tax paid - - - - ---------- ----------- ----------- ---------- Net cash from/(used) in operating activities 7,439 (14,076) 8,936 (19,803) ---------- ----------- ----------- ---------- Cash flows from investing activities Purchase of property, plant and equipment 6 (8,788) (19,180) (17,079) (27,838) Purchase of intangible assets - (5,646) - (7,982) Proceeds from disposal of property, plant and equipment 1 - 1 - Increase in provisions (24) - (47) - Payment for increase in investment in subsidiary - - - (7) Interest received 3 1 17 1 ---------- ----------- Net cash used in investing activities (8,808) (24,825) (17,108) (35,826) ---------- ----------- ----------- ---------- Cash flows from financing activities Proceeds from issue of share capital - 90,435 - 90,435 Listing and issue costs - (2,592) - (2,592) Proceeds from bridge loan drawn down in the period - 5,664 - 5,664 ---------- ----------- ----------- ---------- Net cash from financing activities - 93,507 - 93,507 ---------- ----------- ----------- ---------- Net (decrease)/increase in cash and cash equivalents (1,369) 54,606 (8,172) 37,878 Cash and cash equivalents: At beginning of the period 11,815 4,322 18,618 21,050 ---------- ----------- ----------- ---------- At end of the period 10,446 58,928 10,446 58,928 ========== =========== =========== ==========
Atalaya Mining Plc
(All amounts in Euro thousands unless otherwise stated)
Notes to the condensed interim consolidated financial statements
For the three and six months to 30 June 2016 and 2015 - (Unaudited)
1. General information
Country of incorporation
Atalaya Mining Plc ("Atalaya Mining" and/or the "Company"), and its subsidiaries ("Atalaya" and/or the "Group"), was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under the 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 Group has offices in Minas de Riotinto in Spain and in Nicosia, Cyprus. The Company was listed on AIM 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 (IFRS) including International Accounting Standard 34 "Interim Financial Reporting" and IFRIC interpretations 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 Group for the year ended 31 December 2015. 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 2015 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 Group have adequate available resources to continue in operational existence for the foreseeable future.
The condensed interim 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. These condensed interim consolidated financial statements do not give effect to any adjustment, which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different than those reflected in the consolidated financial statements.
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.
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 Level 1 Level 2 Level 3 Total -------- -------- -------- ------ 30 June 2016 Available for sale financial assets 495 - - 495 -------- -------- -------- ------ Total 495 - - 495 ======== ======== ======== ====== 31 December 2015 Available for sale financial assets 302 - - 302 -------- -------- -------- ------ Total 302 - - 302 ======== ======== ======== ======
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 Group 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 2016. 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 Group'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 Group 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 Group 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 Group has only one distinct business segment, being that of mining operations, mineral exploration and development.
Geographical segments
The Group's mining and exploration activities are located in Spain and its administration is based in Cyprus.
Three months ended 30 June 2016 Cyprus Spain Other Total -------- -------- ------ -------- 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) Net finance cost - (45) - (45) Foreign exchange (loss) / gain (247) 64 - (183) Loss for the period before taxation (898) (2,306) (4) (3,208) -------- -------- ------ Tax (6) -------- Net loss for the period (3,214) ======== Six months ended 30 June 2016 Cyprus Spain Other Total -------- -------- ------ -------- 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) Net 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 (12) -------- Net loss for the period (6,471) ======== 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 - 17,0079 ======== ======== ====== ======== Three months ended 30 June 2015 Cyprus Spain Other Total -------- -------- ------ ---------- Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) (371) (861) - (1,232) Depreciation/amortisation charge (132) (57) - (189) Finance cost (1,958) (61) - (2,019) Foreign exchange loss (1,715) (20) - (1,735)
Loss for the period before taxation (4,176) (999) - (5,175) -------- -------- ------ Tax - ---------- Net loss for the period (5,175) ========== Six months ended 30 June 2015 Cyprus Spain Other Total --------- -------- ------ --------- Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) (1,284) (5,202) (10) (6,496) Depreciation/amortisation charge (132) (57) - (189) Finance cost (4,092) (136) - (4,228) Foreign exchange loss (4,866) (56) - (4,922) Loss for the period before taxation (10,374) (5,451) (10) (15,835) --------- -------- ------ Tax - --------- Net loss for the period (15,835) ========= Total assets 23,803 166,052 9 189,864 ====== ======== ==== ======== Total liabilities (383) (13,194) (35) (13,612) ====== ======== ==== ======== Depreciation of property, plant and equipment 9 57 - 66 ====== ======== ==== ======== Amortisation of intangible assets 123 - - 123 ====== ======== ==== ======== Total net additions of non-current assets 123 35,820 - 35,943 ====== ======== ==== ========
4. Net finance cost
Three Three Six Six months months months months ended ended ended ended 30 June 30 June 30 June 30 June 2016 2015 2016 2015 --------- --------- --------- --------- Interest expense 25 61 52 136 Interest income (4) (1) (18) (1) Rehabilitation cost 24 - 47 - Accretion expense on convertible note - - - 31 Bridge loan interest expense - 678 - 1,232 Convertible note interest expense - 766 - 1,178 Bridge loan financing expenditure - 1,342 - 1,342 Loss on fair value on conversion of the convertible note - (827) - 310 --------- --------- --------- --------- 45 2,019 81 4,228 ========= ========= ========= =========
5. Basic and fully diluted loss per share
The calculation of the basic and fully diluted 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 30 30 30 June June June June 2016 2015 2016 2015 -------- -------- -------- --------- Parent (730) (4,176) (1,379) (10,374) Subsidiaries (2,484) (999) (5,092) (5,461) -------- -------- -------- --------- Loss attributable to the ordinary holders of the parent (3,214) (5,175) (6,471) (15,835) ======== ======== ======== ========= Weighted number of ordinary shares for the purposes of basic loss per share (000's) 116,680 51,811* 116,680 49,903* ======== ======== ======== ========= Basic loss per share: Basic and fully diluted loss per share (cents) (2.8) (9.9) (5.5) (31.7) ======== ======== ======== =========
* Adjusted for the 30:1 share consolidation which took place in October 2015
6. Property, plant and equipment
Plant Assets Deferred Land and Mineral under mining Other Cost and buildings machinery rights construction costs(2) assets(3) Total --------------- ----------- -------- ----------------- ---------- ----------- -------- At 1 January 2015 35,797 29,087 - - - 1,086 65,970 Additions 23 27,747 - - 68 27,838 --------------- ----------- -------- ----------------- ---------- ----------- -------- At 30 June 2015 35,820 56,834 - - - 1,154 93,808 Additions / (reclassifications) 3,971(1) (27,770) - 88,885 10,334 4 75,424 Reclassifications (730) (5,860) 950 5,640 - - - Disposals - (158) - - (132) (290) At 31 December 2015 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 --------------- ----------- -------- ----------------- ---------- ----------- -------- Depreciation At 1 January 2015 - 158 - - - 498 656 Charge for the period - - - - - 66 66 At 30 June 2015 - 158 - - - 564 722 Charge for the period - - - - - 86 86 Disposals - (158) - - - (132) (290) At 31 December 2015 - - - - - 518 518 Charge for the period 658 1,652 - - - (103) 2,207 Disposals - - - - - (5) (5) At 30 June 2016 658 1,652 - - - 410 2,720 --------------- ----------- -------- ----------------- ---------- ----------- -------- Net book value At 30 June 2016 38,449 86,937 950 52,794 5,130 650 184,910 =============== =========== ======== ================= ========== =========== ======== At 31 December 2015 39,061 23,046 950 104,859 - 508 168,424 =============== =========== ======== ================= ========== =========== ========
(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 Acquisition Cost of Rio Tinto of mineral Project rights Goodwill Total -------------- ------------ ----------- ---------- At 1 January 2015 17,655 310 10,023 27,988 Additions 7,982 - 123 8,105 -------------- ------------ ----------- ---------- At 30 June 2015 25,637 310 10,146 36,093 Reclassification (5,479) - - (5,479) Disposals/closure of subsidiaries - (310) (813) (1,123) At 31 December 2015 20,158 - 9,333 29,491 Reclassifications - property, plant and equipment (1,614) - - (1,614) Other reclassifications 48 - - 48 At 30 June 2016 18,592 - 9,333 27,925 -------------- ------------ ----------- ---------- Provision for impairment On 1 January 2015 - 310 10,023 10,333 Provision for the period - - 123 123 -------------- ------------ ----------- ---------- At 30 June 2015 - 310 10,146 10,456 Disposal/closure of subsidiaries - (310) (813) (1,123) -------------- ------------ ----------- ---------- At 31 December 2015 - - 9,333 9,333 Provision for the period 314 - - 314 -------------- ------------ ----------- ---------- At 30 June 2016 314 - 9,333 9,647 -------------- ------------ ----------- ---------- Net book value At 30 June 2016 18,278 - - 18,278 ============== At 31 December 2015 20,158 - - 20,158 ============== ============ =========== ==========
The useful life of the intangible assets is estimated to be not less than fourteen years from the start of production (the revised Reserves and Resources statement which was announced in July 2016 has increased the life of mine to 16 1/2 years). 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 Group 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 Group 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 of 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
30 June 31 Dec 2016 2015 -------- ------- Finished products 6,216 - Materials and supplies 4,749 - 10,965 - ======== =======
9. Trade and other receivables
30 June 31 Dec 2016 2015 -------- ------- Trade receivables 1,016 - Receivables from related parties (Note 16.4) 570 6,541 Deposits and prepayments 1,109 1,114 VAT 8,789 7,970 Other receivables 192 1,007 11,676 16,632 ======== =======
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 ========= ============ ============ ============= Issued and fully paid 000's Euro Euro Euro 000's 000's 000's Balance at 1 January 2016 and 30 June 2016 116,679 11,632 277,238 288,870 ========= ============ ============ =============
Authorised capital
2015
*Following the Company's EGM on 13 October 2015, the consolidation of ordinary shares came into effect on 21 October 2015, 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.
2016
The Company's authorised share capital is 200,000,000 ordinary shares of Stg GBP0.075 each.
Issued capital
2016
No shares were issued in the period from 1 January 2016 to 30 June 2016.
Warrants
The Company has issued warrants to advisers to the Group. 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 2016:
Number of warrants ------------------- Outstanding warrants at 1 January and 30 June 2016 473,061 ===================
11. Other reserves
Share Bonus Available-for-sale option share investment Total -------- ------- ------------------- -------- At 1 January 2015 5,973 44 (202) 5,815 Change in value of available-for-sale investment - - (172) (172) Bonus shares issued in escrow - 50 - 50 Warrant issue costs 122 - - 122 Recognition of share based payments 76 - - 76 -------- ------- ------------------- -------- At 30 June 2015 6,171 94 (374) 5,891 Bonus shares issued in escrow - 51 - 51 Change in value of available-for-sale investment - - (510) (510) Recognition of share based payments 76 - - 76 -------- ------- ------------------- -------- At 31 December 2015 6,247 145 (884) 5,508 Change in value of available-for-sale investments - - 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 ======== ======= =================== ========
Share options
No share options were issued in the period from 1 January 2016 to 30 June 2016. Details of share options outstanding as at 30 June 2016:
Number of share options 000's ------------------------------ Outstanding options at 1 January 2016 931,654 - cancelled/expired during the reporting period (113,331) ------------------------------ Outstanding options at 30 June 2016 818,323 ==============================
12. Trade and other payables
30 June 2016 31 Dec 2015 Non-current trade and other payables Social Security* 208 1,741 Land options 135 155 343 1,896 Current trade and other payables Trade payables 48,594 37,106 Deferred income 5,403 - Deferred income (Note 16.4) 3,503 - Social Security* 3,248 2,867 Land options and mortgage 774 789 Accruals 642 1,124 Tax liability 36 24 Other - 1 62,200 41,911
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. EUR13.5 million has been repaid to date. Originally payable over 5 years, the repayment schedule was subsequently extended until June 2017.
13. Provisions
Rehabilitation costs --------------- At 1 January 2015 - Additions 3,971 At 31 December 2015 3,971 Charge to profit and loss as finance cost (Note 4) 47 --------------- At 30 June 2016 4,018 =============== 30 June 2016 31 Dec 2015 Non-current 4,018 3,971 Current - - Total 4,018 3.971
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.
14. Derivative instruments
As at 30 June 2016, Atalaya had certain short term foreign exchange contracts. The contracts were in an unrealised gain position which was recorded as a foreign exchange gain in the income statements (30 June 2016 - EUR54,000), as part of net foreign exchange loss, the corresponding receivable amount recorded in other receivables. The relevant information of the contracts is as follows:
Foreign exchange contracts - Euro/USD
Period Contract type Amount in USD Contract rate Strike ------------------- --------------- -------------- -------------- ------- June 2016 - March FX Forward 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.
15. Acquisition and disposal of subsidiaries
There were no acquisitions in the six months ended 30 June 2016.
16. Related party transactions
The following transactions were carried out with related parties:
16.1 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 2016 2015 2016 2015 -------- -------- ---------- -------- Directors' remuneration and fees 175 170 350 258 Share option-based benefits to directors 14 14 28 28 Bonus shares issued to director, in escrow 31 25 63 50 Key management personnel remuneration 95 157 190 315 Share option-based and other benefits to key management personnel 8 20 16 26 -------- -------- ---------- -------- 323 386 647 677 ======== ======== ========== ========
16.2 Share-based benefits
The directors and key management personnel have not been granted options during the three month period.
16.3 Transactions with shareholders
Three Three Six Six months months months months ended ended ended ended 30 June 30 June 30 June 30 June 2016 2015 2016 2015 -------- -------- ---------- -------- Trafigura - Sales of goods (pre commissioning sales offset against the cost of constructing - - 2,452 - assets) Trafigura - Sales of goods 6,497 - 11,393 - 6,497 - 13,845 - ======== ======== ========== ========
16.4 Period-end balances with shareholders
30 June 31 Dec 2015 2016 --------- ----------- Receivables from related parties (Note 9): Trafigura 570 6,541 ========= =========== The above debtor balance arising from sales of goods bears no interest and is repayable on demand. Deferred income (Note 12): Orion 3,503 - ========= ===========
17. Contingent liabilities
Deferred consideration
In September 2008, the Group moved to 100% ownership of ARM (and thus full ownership of Proyecto Riotinto) by acquiring the remaining 49% of the issued capital of ARM. The cost of the acquisition was satisfied by issuing 39,140,000 Ordinary Shares to MRI Trading AG ("MRI") at an issue price of 21p per Ordinary Share and a deferred cash settlement of up to EUR53 million ("Deferred Consideration"), (including loans of EUR9,116,617.30 owed to companies related to MRI incurred in relation to the operation of Proyecto Riotinto). The obligation to pay the Deferred Consideration 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 Group securing a senior debt finance facility 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.
Originally the Group was obliged to pay the Deferred Consideration in instalments commencing on the date of drawdown under the Senior Debt Facility until the second anniversary of commercial production at Proyecto Riotinto. On 31 March 2009, pursuant to a deed of amendment, MRI consented to the Group paying the Deferred Consideration over a period of six or seven years following satisfaction of the Conditions (the "Payment Period"). In return, the Company agreed to potentially pay further Deferred Consideration of up to EUR15,900,000 in regular instalments over the Payment Period depending upon the price of copper. Any such additional Deferred Consideration would 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). On 11 November 2011 MRI novated its right to be paid the Deferred Consideration to Astor Management AG ("Astor").
As security, inter alia, for the obligation to pay the Deferred Consideration to Astor, EMED Holdings (UK) Limited has granted a pledge to Astor Resources AG over the issued capital of ARM and the Company has provided a parent company guarantee.
As at the date of this report, the Permit Approval condition has been satisfied. However, the Group has not entered into arrangements in connection with a Senior Debt Facility and, in the absence of drawdown of funds by the Group pursuant to a Senior Debt Facility, there is significant doubt concerning the legal obligation on the Company to pay any of the Deferred Consideration.
On 2 November 2015, the Company announced that it was in receipt of a formal claim from Astor (the "Claim"). The Claim was made in the High Court of Justice in London against the Company and certain other members of the Group. In its Claim, Astor is claiming, inter alia, that the Conditions have been satisfied and the first instalment of the Deferred Consideration is due (together with damages). The Company is disputing this and it is defending the proceedings vigorously. The Company continues to work closely with its legal advisors in preparing for trial at the High Court of Justice in London. The date for the trial has been set for 30 January 2017.
Judicial and administrative cases
On 23 September 2010, ARM was notified that the Andalucían Water Authority ("AWA") had initiated a Statement of Objections and Opening of File (the "Administrative File 2010") following allegations by third parties of unauthorised industrial discharges from the Tailings Management Facility ("TMF") at the Rio Tinto Copper Mine in the winter months of late 2010 and early 2011. These assertions are judicial (alleging negligence) and administrative (alleging damage to the environment) in nature. At that time, the Company owned 33% of the TMF and the owners of the remaining 67% are co-defendants (Rumbo and Zeitung).
In December 2011, the judicial claims were dismissed in the initial discovery phase by the appeals Court (upholding a lower court decision) finding that the controlled discharges of excess rainwater were force majeure events carried out to protect the stability of the TMF, thereby ensuring public safety and protection of the environment (the "Court Decisions").
Given that all judicial claims were dismissed in the very early stages of the court's investigation, no formal charges were ever made against ARM or against any of its Directors or Officers.
Now that the Court Decisions are final, the Administrative File 2010, which can only result in a monetary sanction against the co-defendants, was re-opened in 2012. The defence arguments successfully used in a later case which has been dismissed on 11 February 2015 (see below) will be used in the defence of Administrative File 2010 and the management is positive that they will be accepted.
On January 2, 2013 ARM, Rumbo and Zeitung were notified of a Resolution of Fine and Damages (in a total amount of EUR1,867,958.39). In February 2013 ARM appealed this Resolution and the Court has agreed that the Fine and Damages amount be secured by a mortgage over certain properties owned by ARM until the final decision on the alleged discharges is known.
In the Company's view, no "industrial discharge" took place, but rather a force majeure controlled discharge of excess rainwater accumulated in the TMF since industrial operations ceased in the early 2000's with no actual damage to the environment having taken place.
In the Company's view it is unlikely that any fine or sanction will be imposed against ARM once the Administrative File 2010 reaches its final conclusion after all appeals are exhausted in approximately 3-5 years. On 28 January 2016, the Court ruled in favour of ARM, Rumbo and Zeitung. On 26 April 2016 the Court issued a final decree by which the 28 January 2016 ruling was declared final.
On 20 January 2014, ARM was notified that the Huelva Territorial Delegation of the Ministry of Environment (which has absorbed the former AWA) had initiated another disciplinary proceeding for unauthorised discharge (the "Administrative File 2013") of administrative nature following allegations by the administration of alleged unauthorised industrial discharges from the TMF at the Rio Tinto Copper Mine during the heavy rains occurred from 7 March to 25 April 2013. The Administration has proposed the amount of EUR726,933.30 as compensation for alleged damages to the environment ("Public Water Domain") and a fine of between EUR300,507 and EUR601,012. On 11 February 2015, the Huelva Territorial Delegation of the Ministry of Environment dismissed the case. On 13 May 2015, the Huelva Territorial Delegation of the Ministry of Environment re-opened the Administrative File 2013. Written allegations were submitted on 30 May 2015. On 29 March 2016 the Huelva Territorial Delegation of the Ministry of Environment dismissed finally and without further recourse the Administrative File 2013.
On 19 February 2015, ARM was notified that the Huelva Territorial Delegation of the Ministry of Environment had initiated another disciplinary proceeding for unauthorised discharge (the "Administrative File 2014") which has proposed a fine of between EUR300,507 and EUR601,012. On 10 March 2015 the Company submitted the relevant defence arguments.
The Junta de Andalucía notified ARM of another disciplinary proceeding for unauthorised discharge in 2014. ARM submitted the relevant defence arguments on 10 March 2015 but has had no response or feedback from the Junta de Andalucía since the submissions. Based on the time that has lapsed without a response, it is expected that the outcome of this proceedings will also be favourable for ARM. Once the necessary time has lapsed, ARM will ask for the Administrative File to be dismissed.
18. Commitments
Spain
There are no minimum exploration requirements at Proyecto Riotinto. However, the Group is obliged to pay municipal land taxes which currently are approximately EUR110,000 per year in Spain and the Group 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 Group 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.
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.
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. 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.
At Proyecto Riotinto, the Group had four year options with each of Zeitung and Inland for the purchase of certain land plots adjacent to the mine at a purchase price of EUR4,202,000 (expiry date 31 July 2016) and EUR4,648,000 (expiry date 2 August 2016) respectively. The completion of the infill drilling programme, assays and updating of the block model provided the Group with a better understanding of the mineralisation. Based on these results, the Group took the view that the options on the said land plots were no longer necessary and opted not to exercise them.
19. Significant events
The Group declared commercial production on 1 February 2016. The commissioning of the expansion project began in May 2016, with nameplate capacity of 9.5Mtpa forecast by the end of 2016.
The updated Reserves and Resources statement released on 14 July 2016 indicated a 12% increase in contained reserves and extended life of mine to 16 1/2 years.
20. Events after the reporting period
On 7 July 2016, the Annual General Meeting was held at Rio Tinto, in Spain, with all resolutions being passed by shareholders. On the same day, Atalaya announced the appointment of Mr Cesar Sanchez as Group Chief Financial Officer.
On 5 September 2016, the Company announced the completion of a US$14 million prepayment funding facility with Transamine Trading S.A. The facility covers part of the Group's short term working needs in order to support itself through the ramp-up phase. The Group continues to work on alternative funding solutions to improve its balance sheet and its working capital position during the ramp-up period to full expanded production.
There were no other events after the reporting period, which would have a material effect on the consolidated financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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