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
  -2.00 -0.95% 208.50 207.00 210.00 210.50 207.00 210.50 81,423 13:04:23
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 170.4 37.4 22.8 9.7 282

Atalaya Mining PLC Third Quarter Financial Results

21/11/2019 7:00am

UK Regulatory (RNS & others)


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Atalaya Mining PLC

21 November 2019

21 November 2019

Atalaya Mining Plc.

("Atalaya", the "Group" and/or the "Company")

Unaudited, Condensed, Interim, Consolidated Financial Statements for the period ended 30 September 2019

Atalaya Mining Plc (AIM: ATYM; TSX: AYM), the European mining and development company, is pleased to announce its quarterly results for the period ended 30 September 2019 ("Q3 2019"), together with the Unaudited, Condensed, Interim, Consolidated Financial Statements.

Financial Highlights

 
 Quarter ended 30 September                          Q3 2019   Q3 2018      Nine       Nine 
                                                                           months      months 
                                                                            ended      ended 
                                                                           30 Sept    30 Sept 
                                                                            2019        2018 
 Revenues from operations              EURk           44,383     42,811    139,165     144,354 
                                -----------------  ---------  ---------  ---------  ---------- 
 Operating costs                       EURk         (34,514)   (35,152)   (97,752)   (102,311) 
                                -----------------  ---------  ---------  ---------  ---------- 
 EBITDA                                EURk            9,869      7,659     41,413      42,043 
                                -----------------  ---------  ---------  ---------  ---------- 
 Profit for the period                 EURk            6,933      3,133     27,937      27,625 
                                -----------------  ---------  ---------  ---------  ---------- 
 Earnings per share              EUR cents/share         5.1        2.2       20.5        20.4 
                                -----------------  ---------  ---------  ---------  ---------- 
 
 Cash flows from operating 
  activities                           EURk           16,487     14,937     31,457      44,151 
                                -----------------  ---------  ---------  ---------  ---------- 
 Cash flows used in investing 
  activities                           EURk         (13,115)   (20,414)   (45,390)    (41,704) 
                                -----------------  ---------  ---------  ---------  ---------- 
 Cash flows (used)/from 
  financing activities                 EURk            (158)          -      (430)         593 
                                -----------------  ---------  ---------  ---------  ---------- 
 
 Average realised copper 
  price                                $/lb             2.68       2.89       2.76        3.02 
                                -----------------  ---------  ---------  ---------  ---------- 
 
 Cu concentrate produced             (tonnes)         45,458     44,562    137,281     134,130 
                                -----------------  ---------  ---------  ---------  ---------- 
 Cu production                       (tonnes)         10,568     11,055     31,675      30,942 
                                -----------------  ---------  ---------  ---------  ---------- 
 Cash costs                        $/lb payable         1.92       1.88       1.85        2.00 
                                -----------------  ---------  ---------  ---------  ---------- 
 All-In Sustaining Cost            $/lb payable         2.25       2.13       2.12        2.35 
                                -----------------  ---------  ---------  ---------  ---------- 
 

-- Revenues for Q3 2019 were EUR44.4 million compared with EUR42.8 million for the three month period ended 30 September 2018 ("Q3 2018"). The higher revenues were the result of increased volumes sold during Q3 2019 and stronger average US Dollar rates against the Euro. Revenues for the nine month period ended 30 September 2019 ("YTD 2019") of EUR139.2 million were lower than the EUR144.4 million reported for the nine month ended 30 September 2018 ("YTD 2018") owing mainly to c. 9% lower realised copper prices throughout 2019.

-- Operating costs (including administrative, exploration and care and maintenance costs) during Q3 2019 were EUR34.5 million compared with EUR35.2 million in Q3 2018. Operating costs for the nine month ended 30 September 2019 amounted to EUR97.8 million compared with EUR102.3 million during the same period in 2018. Lower costs were driven by efficiencies in mining, maintenance costs and technical services.

-- Cash costs during Q3 2019 were $1.92/lb of payable copper, higher than the cash costs of $1.88/lb in Q3 2018 as a result of a reduction in copper produced during Q3 2019. All-in Sustaining Costs ("AISC") during Q3 2019 amounted to $2.25/lb of payable copper, higher than $2.13/lb in the same quarter last year. Cash costs for YTD 2019 were $1.85/lb of payable copper versus $2.00/lb payable copper during Q3 2018. AISC for YTD 2019 and YTD 2018 were $2.12/lb and $2.35/lb, respectively.

-- As previously announced, the Company has carried out a cost analysis during 2019 and confirms a reduced cash cost and AISC 2019 guidance. Cash costs and AISC expected for 2019 are within the range $1.85 - $1.95/lb and $2.10 - $2.25/lb, respectively.

-- The Company is currently reviewing its sustaining Capex commitments and evaluating several projects as part of its capex programme seeking further reductions to its operating costs.

-- Higher EBITDA of EUR9.9 million in Q3 2019 compared with EUR7.7 million in Q3 2018 was driven by lower operating costs and higher revenues. On an accumulative basis, EBITDA during the nine month period ended 30 September 2019 was EUR41.4 million compared with EUR42.0 million in the same period last year, as lower copper prices were largely offset by lower operating costs.

-- Q3 2019 profit after tax amounted to EUR6.9 million (or 5.1 cents basic earnings per share) compared with a profit for Q3 2018 of EUR3.1 million (or 2.2 cents basic earnings per share). Profit after tax for the nine month period ended 30 September 2019 was EUR27.9 million compared with EUR27.6 million during the same period in 2018.

-- At 30 September 2019, the Company reported a working capital surplus of EUR2.0 million, a decrease from the EUR8.4 million surplus reported at 31 December 2018. This was mainly due to a reduction in cash balances as a result of the investment in the Expansion Project. The working capital for Q3 2019 assumes that the entirety of the Astor Deferred Consideration is considered a non-current liability (please refer to note 7 for further detail). Unrestricted cash balances as at 30 September 2019 amounted to EUR18.5 million.

Operational Highlights

Proyecto Riotinto

-- Copper production during Q3 2019 was 10,568 tonnes, a decrease of 4.4% from the 11,055 tonnes produced during Q3 2018. During the nine month period ended 30 September 2019 copper production was 31,675 tonnes, a 2.4% increase from the 30,942 tonnes produced during the same period in 2018.

-- Ore processed during Q3 2019 was 2,563,594 tonnes, an increase on Q3 2018 when ore processed amounted to 2,491,403 tonnes. Total ore processed during the nine month period ended 30 September 2019 was 7,575,130 tonnes compared with 7,188,747 tonnes processed in the same period last year.

-- Copper recovery during the quarter was 87.38%, lower than 88.40% achieved in Q3 2018. Copper recovery for the nine month period ended 30 September 2019 averaged 88.77% representing an improvement over 88.06% during the same period in 2018.

-- As announced on 17 October 2019, the Company reviewed its production guidance for 2019 with a reduction in expected ore processed to 10.6Mt and copper produced expected to be in the range of 44,000 to 45,000 tonnes.

Expansion to 15Mtpa at Proyecto Riotinto ("Expansion Project")

-- Electricity supplier Endesa has finalised the work required and the additional electricity capacity is now available at site.

-- As announced in October 2019, the cold mechanical commissioning and the new installation (SAG Mill and auxiliary mills) were completed during Q3 2019 and the Company is now gradually ramping up and fine tuning to achieve a full production rate during Q4 2019.

-- All other equipment for the Expansion Project (new primary crusher, the new flotation cells and concentrate handling areas) has been commissioned and incorporated into the processing plant circuit and it is running in steady state.

Proyecto Touro

-- During the quarter, the Company continued addressing additional information requests from administrative bodies. Atalaya addressed comments from Aguas de Galicia, Natural Heritage and the General Directorate of Mines.

Legal updates

On 29 March 2019, the Company announced that it had received notification from the Supreme Court in Spain that it did not have jurisdiction over the appeal made by the Junta de Andalucía ("JdA") and therefore the announced ruling by the Tribunal Superior de Justicia de Andalucía ("TSJA") dated 26 September 2018 remains valid.

On 26 April 2019, the Company announced that a judgment relating to the Mining Permits to operate Proyecto Riotinto (the "Mining Permits") was handed down by the TSJA. The TSJA declared the Mining Permits are linked to the environmental permits, ruled by the same tribunal in September 2018. The new ruling on the Mining Permits is based on the requirement to have an environmental permit before issuing Mining Permits and therefore invalidates the existing mining permits. The TSJA did not accept the requests by Ecologistas en Accion ("EeA") for the cessation of activities at the mine and an increase in the scope of the environmental plan.

On 20 November 2019, the Company received an informal notification that its appeal to the Supreme Court on the ruling handed down by the TSJA on 26 April 2019 had been rejected. The Company has been advised by its lawyers that the rejection has no impact over the Company's legal status quo.

The JdA is undergoing the process to resolve the previously reported administrative issues identified by the TSJA relating to the Environmental and Mining Permits. The Company continues operating the mine normally and remains confident that the ongoing process carried out by the JdA will not impact its operations at Proyecto Riotinto.

Alberto Lavandeira, CEO commented:

"We are pleased to demonstrate another strong quarter of operations at Proyecto Riotinto which was achieved at the same time as completing and testing of the new 15Mtpa expansion, illustrating the flexibility within the plant. With the additional power supply now fully up and running we are confident that our stated production rates will be met during Q4 2019."

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:

 
                                 Elisabeth Cowell / Adam            + 44 20 3757 
 Newgate Communications           Lloyd / Tom Carnegie               6880 
                                                                    +44 20 3170 
 4C Communications               Carina Corbett                      7973 
                                ---------------------------------  ------------- 
 Canaccord Genuity (NOMAD        Henry Fitzgerald-O'Connor          +44 20 7523 
  and Joint Broker)               / James Asensio                    8000 
                                ---------------------------------  ------------- 
 BMO Capital Markets (Joint                                         +44 20 7236 
  Broker)                        Tom Rider / Michael Rechsteiner     1010 
                                ---------------------------------  ------------- 
                                                                    +44 20 7418 
 Peel Hunt LLP (Joint Broker)    Ross Allister / David McKeown       8900 
                                ---------------------------------  ------------- 
 

About Atalaya Mining Plc

Atalaya is an AIM and TSX-listed mining and development group which produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain. In addition, the Group 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

Management's review

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 September 2019 and 2018

ATALAYA MINING PLC

MANAGEMENT'S REVIEW AND

UNAUDITED, CONDENSED, INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

30 September 2019

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 ("Atalaya" and/or "Group"), to enable the reader to assess material changes in the financial position between 31 December 2018 and 30 September 2019 and results of operations for the three and nine month periods ended 30 September 2019 and 2018.

This report has been prepared as of 20 November 2019. The analysis, hereby included, is intended to supplement and complement the Unaudited, Condensed, Interim, Consolidated Financial Statements and notes thereto ("Financial Statements") for the nine month period ended 30 September 2019. 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 2018, and the Unaudited, Condensed, Interim, Consolidated Financial Statements for the nine month period ended 30 September 2018. These documents can be found on Atalaya's website at www.atalayamining.com.

Atalaya prepares its Annual Financial Statements in accordance with International Financial Reporting Standards ("IFRSs") and its Unaudited, Condensed, Interim, Consolidated Financial Statements in accordance with International Accounting Standards 34: Interim Financial Reporting. 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 European mining and development company domiciliated in Cyprus. The Company is listed on the AIM Market of the London Stock Exchange ("AIM") and on the Toronto Stock Exchange ("TSX").

Proyecto Riotinto, wholly owned by the Company's subsidiary Atalaya Riotinto Minera, S.L.U., is located in Huelva, Spain. The Group operates the Cerro Colorado open-pit mine and its associated processing plant where copper in concentrate and silver by-product are produced.

The Group 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 Group 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 nine month periods ended 30 September 2019 and 2018.

 
 Units expressed in                        Three month ended   Three month ended   Nine month ended   Nine month ended 
 accordance with the                            30 Sept 2019        30 Sept 2018       30 Sept 2019       30 Sept 2018 
 international system of        Unit 
 units (SI) 
 
 Ore mined                       t                 2,704,041           2,787,406          8,035,290          7,938,961 
 Ore processed                   t                 2,563,594           2,491,403          7,575,130          7,188,747 
 
 Copper ore grade                %                      0.47                0.50               0.47               0.49 
 Copper concentrate 
  grade                          %                     23.25               24.81              23.07              23.07 
 Copper recovery rate            %                     87.38               88.40              88.77              88.06 
 
 Copper concentrate              t                    45,458              44,562            137,281            134,130 
 Copper contained in 
  concentrate                    t                    10,568              11,055             31,675             30,942 
 Payable copper 
  contained in 
  concentrate                    t                    10,113              10,609             30,303             29,600 
 Cash cost*                $/lb payable                 1.92                1.88               1.85               2.00 
 All-in sustaining cost*   $/lb payable                 2.25                2.13               2.12               2.35 
 

(*) Refer to Section 5 of this Management's Review

Note: The numbers in the above table may slightly differ among them due to rounding.

Three month operational review

Copper production at Proyecto Riotinto for Q3 2019 decreased to 10,568 tonnes from 11,055 tonnes reported in Q3 2018, representing a decrease of 4.4%. Ore milled was similar to the previous quarter and lower than management's expectations as the Expansion of Proyecto Riotinto experienced some delays in electricity availability. Copper head grade was in line with the previous quarter and expectations. The slight decrease in copper production during the quarter over Q3 2018 was mainly driven by lower ore grades.

Mining operations are progressing according to plan and up from previous quarters. On a combined basis, ore and waste increased to 2.6 million m(3) in Q3 2019 versus 2.3 million m(3) in Q2 2019.

During Q3 2019, the Group sold 46,723 tonnes of concentrates, compared with 43,927 tonnes in Q3 2018. On-site concentrate inventories at the end of the quarter were approximately 2,186 tonnes. All concentrate in stock at the beginning of the quarter and produced during the quarter was delivered to the port at Huelva.

   2.    Overview of operational results (continued) 

Exploration and infill drilling continue to progress with two rigs at Filón Sur-Cerro Colorado. One deep hole is being drilled in Cerro Colorado in order to explore a rich Cu stockwork zone that occurs under the Salomon zone. The RC drilling continues the infill drilling programme in order to better define the occurrence of penalty elements in the mining pit.

Nine month operating review

Production of copper contained in concentrate during the nine month period ended 30 September 2019 was 31,675 tonnes, compared with 30,942 tonnes in the same period of 2018. Payable copper in concentrates for the nine month period ended 30 September 2019 was 30,303 tonnes compared with 29,600 tonnes of payable copper in the same period of 2018.

Ore mined in the nine month ended 30 September 2019 was 8,035,290 tonnes compared with 7,938,961 tonnes during the same period of 2018. Ore processed was 7,575,130 tonnes versus 7,188,747 tonnes in 2018.

Ore grade during the nine month period ended 30 September 2019 was 0.47% Cu compared with 0.49% Cu in the nine month ended period 30 September 2018. Copper recovery was 88.77% versus 88.06% in 2018. Concentrate production amounted to 137,281 tonnes in the nine month period ended 30 September 2019 resulting in higher production than the same period of 2018 when production amounted to 134,130 tonnes.

Expansion to 15Mtpa at Proyecto Riotinto

Endesa has finalised the work required and the extra electricity capacity is now available at site. The cold mechanical commissioning and the new installation (SAG Mill and auxiliary mills) were completed during Q3 2019 and the Company is now gradually ramping up and fine tuning to achieve full production during Q4 2019.

All other equipment for the Expansion Project (new primary crusher, the new flotation cells and concentrate handling areas) has been commissioned and incorporated into the processing plant circuit and it is running in steady state.

Proyecto Touro

During the quarter, the Company has continued addressing additional information requests from administrative bodies. Atalaya addressed comments from Aguas de Galicia, Natural Heritage and the General Directorate of Mines.

   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.

Operating guidance

On 17 October 2019, the Company updated its operating guidance at Proyecto Riotinto for 2019 which remains as follows:

 
                                          Guidance 
                          Unit              2019 
 Ore processed       million tonnes         10.6 
 Contained copper        tonnes        44,000 - 45,000 
 

Copper head grade for 2019 is budgeted to average 0.47% Cu, with a recovery rate of approximately 85% to 87%.

The cash operating cost for 2019 is expected to be lower than previously announced. Management has updated the full year operating costs which are now estimated to be within the range of $1.85 - $1.95/lb compared $1.95 - $2.15/lb announced in April 2019. AISC is estimated to be in the range of $2.10 - $2.25 per pound of copper payable ($2.25 - $2.45/lb reported in April 2019).

   4.     Overview of the financial results 

The following table presents summarised consolidated income statements for the three and nine month periods ended 30 September 2019, with comparatives for the three and nine month periods ended 30 September 2018.

 
                               Three months ended   Three months ended   Nine months ended   Nine months ended 
                                     30 Sept 2019         30 Sept 2018        30 Sept 2019        30 Sept 2018 
   (Euro 000's) 
 
 Revenue                                   44,383               42,811             139,165             144,354 
 Total operating costs                   (31,269)             (33,592)            (89,602)            (98,004) 
 Administrative and other 
  expenses                                (2,070)              (1,249)             (5,452)             (3,302) 
 Exploration expenses                     (1,132)                (405)             (2,534)               (818) 
 Care and maintenance 
  expenditure                                (43)                   94               (164)               (187) 
 EBITDA                                     9,869                7,659              41,413              42,043 
 Depreciation/amortisation                (3,722)              (3,484)            (10,893)             (9,794) 
 Net foreign exchange 
  gain/(loss)                               1,405                 (10)               1,692               1,092 
 Net finance cost                              43                 (77)                (23)               (196) 
 Tax                                        (662)                (955)             (4,252)             (5,520) 
                              -------------------  -------------------  ------------------  ------------------ 
 Profit for the period                      6,933                3,133              27,937              27,625 
                              -------------------  -------------------  ------------------  ------------------ 
 
 
 

Three month financial review

Revenues for the three month period ended 30 September 2019 amounted to EUR44.4 million (Q3 2018: EUR42.8 million). Higher revenues, compared with the same quarter in the previous year, were mainly driven by an increase in copper concentrate sold during the period (46,723 tonnes in Q3 2019 vs 43,927 tonnes in Q3 2018) and stronger average US Dollar rates against the Euro (1.1119 in Q3 2019 vs 1.1629 in Q3 2018) partially offset by lower realised copper prices. Realised prices were $2.68/lb copper during Q3 2019 compared with $2.89/lb copper in Q3 2018. All concentrates were sold under offtake agreements in place.

Operating costs for the three month period ended 30 September 2019 amounted to EUR31.3 million, compared with EUR33.6 million in Q3 2018. In absolute terms, lower operating costs were mainly the result of lower mining, technical services and administrative costs.

Cash costs of $1.92/lb payable copper during Q3 2019 compared with $1.88lb payable copper in the same period last year. Higher cash costs were mostly due to a lower copper payable contained in concentrate during the quarter. All-in sustaining costs in the reporting quarter were $2.25/lb payable copper compared with $2.13/lb payable copper in Q3 2018. Higher AISC compared with Q3 2018 mainly related to higher sustaining capex and capitalised stripping costs.

Sustaining capex for Q3 2019 amounted to EUR2.4 million compared with EUR1.9 million in Q3 2018. Sustaining capex related to the continuous improvement in processing systems of the plant and enhancements in security.

Administrative and other expenses for Q3 2019 amounted to EUR2.1 million (Q3 2018: EUR1.2 million) and include non-operating costs of the Cyprus office, corporate, legal and consultancy costs, on-going listing costs, personnel costs of the corporate office. The increase in administrative and other expenses was mainly due to a rise in legal costs, employee options expenses and provisions.

Exploration costs at Proyecto Riotinto for the three month period ended 30 September 2019 amounted to EUR1.1 million (Q3 2018: EUR0.4 million). All exploration costs at Proyecto Touro are capitalised. Higher costs relate to an upturn in drillings and explored ground.

EBITDA for Q3 2019 amounted to EUR9.9 million compared with Q3 2018 of EUR7.7 million.

The main item below the EBITDA line is depreciation and amortisation of EUR3.7 million (Q3 2018: EUR3.5 million). Net finance costs for Q3 2019 amounted to EUR43k gain compared with EUR77k loss in Q3 2018.

   4.    Overview of the financial results (continued) 

Nine month financial review

Revenues for the nine month period ended 30 September 2019 amounted to EUR139.2 million (YTD 2018: EUR144.4 million).

Copper concentrate production during the nine month period ended 30 September 2019 was 137,281 tonnes (YTD 2018: 134,130 tonnes) with 139,762 tonnes of copper concentrates sold (nine month period ended 30 September 2018: 138,781 tonnes). Inventories of concentrates as at the reporting date were 2,186 tonnes (31 Dec 2018: 4,667 tonnes).

Realised copper prices for the nine month period ended 30 September 2019 were $2.76/lb copper compared with $3.02/lb copper in the same period of 2018. Concentrates were sold under offtake agreements in place. The Company did not enter into any hedging agreements in 2019.

Operating costs for the nine month period ended 30 September 2019 amounted to EUR89.6 million, compared with EUR98.0 million in the nine month period ended 30 September 2018. Lower costs in 2019 were mainly attributable to: (i) a reduction of circa EUR4.0 million in technical services and maintenance costs; (ii) reduction of EUR2.1 million cost of sales as the inventory decreased in ca. 2,270 tonnes less than in YTD 2018; (iii) a decrease of EUR2.0 million in earthwork costs and (iv) a EUR1.3 million decrease in consumables expenses.

Cash costs of $1.85/lb payable copper during the nine month period ended 30 September 2019 compared with $2.00/lb payable copper in the same period last year. Lower costs were mainly due to lower mining, technical services and maintenance costs compared with YTD 2018. All-in sustaining costs in the reporting quarter amounted to $2.12/lb payable copper compared with $2.35/lb payable copper for the same period in 2018. AISC in YTD 2019 decreased in comparison with YTD 2018 mostly as a result of lower sustaining capex and capitalised stripping costs.

Sustaining capex for the nine month period ended 30 September 2019 amounted to EUR5.3 million, compared with EUR7.1 million in the same period in the previous year. The Company is currently reviewing its sustaining capex commitments and evaluating several projects as part of its capex programme seeking further reductions on its operating costs.

Corporate costs for the first nine month of 2019 were EUR5.5 million, compared with EUR3.3 million in the same period in 2018. Corporate costs mainly include the Company's overhead expenses.

Exploration costs related to Proyecto Riotinto for the nine month period ended 30 September 2019 amounted to EUR2.5 million, compared with EUR0.8 million in the same period in 2018. Higher costs relate to an upturn in drillings and explored ground.

EBITDA for the nine month period ended 30 September 2019 amounted to EUR41.4 million, compared with EUR42.0 million in the nine month period ended 30 September 2018.

Depreciation and amortisation for the nine month period ended 30 September 2019 amounted to EUR10.9 million (EUR9.8 million during the nine month period ended 30 September 2018).

Net finance costs for the nine month period ended 30 September 2019 amounted to EUR23k loss (loss of EUR196k for the nine month period ended 30 September 2018).

Copper prices

The average realised copper price decreased by 7.3% from US$2.89 per pound in Q3 2018 to US$2.68 per pound in Q3 2019.

The average prices of copper for the three and nine month periods ended 30 September 2019 and 2018 are shown below:

 
                                 Three months ended   Three months ended   Nine months ended   Nine months ended 
                                       30 Sept 2019         30 Sept 2018        30 Sept 2019        30 Sept 2018 
   (USD) 
 
 Realised copper price per lb                  2.68                 2.89                2.76                3.02 
 Market copper price per lb                    2.63                 2.77                2.74                3.14 
 

Realised copper prices for the reporting period noted above have been calculated using payable copper and including provisional invoices and final settlements of quotation periods ("QPs") together.

   4.    Overview of the financial results (continued) 

Higher than market averages realised prices are mainly due to the final settlement of invoices where QP was fixed in the previous quarter due to a short open period when copper prices were higher. The realised price of shipments during the quarter (excluding QP) was approximately $2.67/lb.

   5.     Non-GAAP Measures 

Atalaya has included certain non-IFRS measures including "EBITDA", "Cash Cost per pound of payable copper", "All In Sustaining Costs" ("AISC") 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, impairment, 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.

AISC per pound of payable copper includes C1 Cash Costs plus royalties and agency fees, expenditures on rehabilitation, capitalised stripping costs, exploration and geology costs, corporate costs and sustaining capital expenditures.

Realised price per pound of payable copper is the value of the copper payable included in the concentrate produced after discounts but before deducting penalties, credits and other features governed by the offtake agreements of the Group and all discounts or premiums 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 table shows a summary of Atalaya's cash position and cash flows as at 30 September 2019 and 31 December 2018.

Liquidity information

 
 (Euro 000's)                               30 Sept 2019   31 December 
                                                                  2018 
 
 Unrestricted cash and cash equivalents 
  at Group level                                  18,457        24,357 
 Unrestricted cash and cash equivalents 
  at Operation level                               3,274         8,463 
 Restricted cash                                     250           250 
 Working capital surplus                           1,954         8,435 
 

Unrestricted cash and cash equivalents as at 30 September 2019 decreased to EUR18.5 million from EUR24.4 million at 31 December 2018. The reduction in cash balances is the result of net cash flow used for investments during the nine month period ended 30 September 2019. Cash balances are unrestricted and include balances at operational and corporate level.

Restricted cash remains at EUR0.3 million as at 30 September 2019 and mainly relates to deposit bond guarantees.

As of 30 September 2019, Atalaya reported a working capital surplus of EUR2.0 million, compared with a working capital surplus of EUR8.4 million at 31 December 2018. The main liability of the working capital is trade payables related to Proyecto Riotinto contractors. At 30 September 2019, trade payables have been reduced by EUR2.0 million compared with 30 September 2018.

The working capital for Q3 2019 assumes that the entirety of the Astor Deferred Consideration is considered a non-current liability.

   6.    Liquidity and capital resources (continued) 

Overview of the Group's cash flows

 
                                 Three months ended   Three months ended   Nine months ended   Nine months ended 
                                       30 Sept 2019         30 Sept 2018        30 Sept 2019        30 Sept 2018 
   (Euro 000's) 
 
 Cash flows from operating 
  activities                                 16,487               14,937              31,457              44,151 
 Cash flows used in investing 
  activities                               (13,115)             (20,414)            (45,390)            (41,704) 
 Cash flows from financing 
  activities                                  (158)                    -               (430)                 593 
                                -------------------  -------------------  ------------------  ------------------ 
 Net increase/(decrease) in 
  cash and cash equivalents                   3,214              (5,477)            (14,363)               3,040 
                                -------------------  -------------------  ------------------  ------------------ 
 

Three month cash flows review

Cash and cash equivalents increased by EUR3.2 million during the three month period ended 30 September 2019. This rise was due to the net result of cash from operating activities amounting to EUR16.5 million, the cash used in investing activities amounting to EUR13.1 million and the cash from financing activities totalling EUR0.2 million.

Cash generated from operating activities before working capital changes was EUR11.8 million. Atalaya decreased its trade receivables in the period by EUR6.2 million, increased its inventory levels by EUR0.1 million and decreased its trade payables by EUR0.5 million.

Investing activities during the quarter consumed EUR13.1 million, mainly related to the Expansion Project Capex and sustaining Capex (mostly in enhancements to the processing systems of the plant).

Nine month cash flows review

Cash and cash equivalents decreased by EUR14.4 million during the nine month period ended 30 September 2019. This was due to cash from operating activities amounting to EUR31.5 million, cash used in investing activities amounting to EUR45.4 million and cash from financing activities amounting to EUR0.4 million.

Cash generated from operating activities before working capital changes was EUR43.7 million. The Company decreased its trade payables in the period by EUR3.1 million, increased its inventory levels by EUR0.7 million as well as its trade receivable balances by EUR5.6 million.

Investing activities during the nine month period ended 30 September 2019 amounted to EUR45.4 million, mainly related to the Expansion Project Capex and sustaining Capex.

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 its operating expenses, income taxes and other expenses are mainly denominated in Euros ("EUR"), and to a much lesser extent in British Pounds ("GBP").

Accordingly, fluctuations in exchange rates can potentially impact the results of operations and carrying value of assets and liabilities on the balance sheet.

During the three and nine month periods ended 30 September 2019 Atalaya recognised a foreign exchange profit of EUR1.4 million and EUR1.7 million, respectively. Foreign exchange profit mainly related to changes in the period in EUR and USD conversion rates, as all sales are cashed and occasionally held in USD.

   6.    Liquidity and capital resources (continued) 

The following table summarises the movement in key currencies versus the EUR:

 
                                  Three months ended   Three months ended   Nine months ended   Nine months ended 
                                        30 Sept 2019         30 Sept 2018        30 Sept 2019        30 Sept 2018 
 Average rates for the periods 
   GBP - EUR                                  0.9021               0.8924              0.8835              0.8841 
   USD - EUR                                  1.1119               1.1629              1.1236              1.1942 
 Spot rates as at 
   GBP - EUR                                  0.8857               0.8908              0.8857              0.8908 
   USD - EUR                                  1.0889               1.1606              1.0889              1.1606 
 
 
   7.    Deferred consideration 

In September 2008, the Group moved to 100% ownership of Atalaya Riotinto Minera S.L. ("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, the Group signed a Master Agreement (the "Master Agreement") with Astor Management AG ("Astor") which included a deferred consideration of EUR43.9 million (the "Deferred Consideration") payable as consideration in respect of the acquisition. The Company also entered into a credit assignment agreement at the same time with a related company of Astor, Shorthorn AG, pursuant to which the benefit of outstanding loans was assigned to the Company in consideration for the payment of EUR9.1 million to Shorthorn (the "Loan Assignment").

The Master Agreement has been the subject of litigation in the High Court and the Court of Appeal that has now concluded. As a consequence, 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 per annum (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).

As at 30 September 2019, no consideration has been paid.

"Excess cash" is not defined in the Master Agreement leaving ambiguity as to how it is to be calculated. The Company has continued to regularly review its assessment of when this could be payable. As a result, at 30 September 2019, the EUR53 million liability has been classified as non-current, reflecting results to date, the Company's copper price estimation for 2019 and the sustaining capex projects and commitments for 2019. At 30 June 2019, a portion of the EUR53 million liability was classified as a current liability based on estimates at that point.

As previously stated, the precise timing and quantum of payments will be estimated depending on future key variables such as methodology for the calculation, definition of "Project", the price of copper and the US Dollar and Euro exchanges rates, timing of sustaining capital expenditures, increased costs and other operational issues. These factors can vary significantly, and any amounts actually paid within twelve months of the balance sheet date may differ substantially from the amounts presently estimated, if any, to become payable within this period.

The effect of discounting remains insignificant, in line with the 2018 assessment, and therefore the Group has measured the liability for the Astor Deferred Consideration on an undiscounted basis.

   8.    Corporate social responsibility 

During the quarter, Atalaya has continued its involvement in social responsibility through several activities by means of Fundación Atalaya Riotinto ("Fundacion").

Following its co-operation with several local non-governmental organisations involved in social issues, Fundacion has established agreements to sponsor some of their activities. In this regard, Fundacion is supporting programmes to assist people with Alzheimer Syndrome and their families, plus an IT training lesson for people with disabilities. Furthermore, Fundacion provided financing to a local charity to purchase a van that will allow children from disadvantaged areas to go to several educational activities.

Fundacion carries on with the second edition of "Reto Malacate", an initiative to reward the best business project to be settled in the local region.

In co-operation with a few local governments in the area, Fundación has financed projects for the benefit and enhancement of the local area, including improvements in infrastructure and cultural events.

   9.    Health and safety 

During the quarter, the Company has continued its 2019 guidelines for safety. The Emergency Squad has carried on with the training in the field of protection and practical training in works at heights. Furthermore, the Company has integrated all material and equipment needed for the Emergency Squad.

Likewise, an external company has audited the OSHAS 18001.

   10.   Environmental management 

During the third quarter of 2019, the environmental department has continued the monitoring of the operation and the historical heritage. Key points of the quarter:

   -     Dust levels were high as the third quarter corresponds to the warmer season of the year. 

- The second stage to integrate the quality management system through the audit certification has been carried out during the quarter.

Archaeological excavation work at the Look Out is almost complete, expecting to finalise the Excavation Report plus the extraction of two ladle melt furnaces. Next excavation works to be performed at Corta Lago.

   11.   Risk factors 

Owing to the nature of Atalaya's business in the mining industry, the Group 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 2018.

   12.   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 2018. The impact of adopting IFRS 16 Leases which became effective on 1 January 2019 is set out in Note 2.2 to the Unaudited, Condensed, Interim, Consolidated Financial Statements.

   13.   Other information 

Additional information about Atalaya Mining Plc. is available at www.atalayamining.com

Unaudited, Condensed, Interim, Consolidated Financial Statements on pages 11 to 34

By Order of the Board of Directors,

Roger Davey

Chairman

Nicosia, 20 November 2019

Condensed interim consolidated income statements

(All amounts in Euro thousands unless otherwise stated)

For the three and nine months to 30 September 2019 and 2018 - (Unaudited)

 
                                                          Three      Three        Nine       Nine 
                                                         months     months      months     months 
                                                          ended      ended       ended      ended 
                                                        30 Sept    30 Sept     30 Sept    30 Sept 
   (Euro 000's)                               Notes       2019*       2018       2019*       2018 
 
 Revenue                                       4         44,383     42,811     139,165    144,354 
 Operating costs and mine site 
  administrative expenses                              (31,012)   (33,515)    (89,239)   (97,860) 
 Mine site depreciation and amortization                (3,723)    (3,484)    (10,893)    (9,794) 
                                                     ----------  =========  ==========  ========= 
 Gross profit                                             9,648      5,812      39,033     36,700 
 Administration and other expenses                      (2,070)    (1,240)     (5,452)    (3,284) 
 Share-based benefits                                     (256)       (86)       (363)      (162) 
 Exploration expenses                                   (1,132)      (405)     (2,534)      (818) 
 Care and maintenance expenditure                          (43)         94       (164)      (187) 
 Operating profit                                         6,147      4,175      30,520     32,249 
 Net foreign exchange (loss)/gain                         1,405       (10)       1,692      1,092 
 Net finance income/(costs)                    5             43       (77)        (23)      (196) 
                                                     ----------  --------- 
 Profit before tax                                        7,595      4,088      32,189     33,145 
 Tax                                                      (662)      (955)     (4,252)    (5,520) 
                                                     ----------  ---------  ==========  ========= 
 Profit for the period                                    6,933      3,133      27,937     27,625 
                                                     ----------  ---------  ==========  ========= 
 
 Profit for the period attributable 
  to: 
 
        *    Owners of the parent                         6,975      3,049      28,090     27,807 
 
        *    Non-controlling interests                     (42)         84       (153)      (182) 
                                                     ---------- 
                                                          6,933      3,133      27,937     27,625 
                                                     ----------  =========  ==========  ========= 
 Earnings per share from operations 
  attributable to equity holders 
  of the parent during the period: 
 Basic earnings per share (EUR 
  cents per share)                             6            5.1        2.2        20.5       20.4 
                                                     ----------  =========  ==========  ========= 
 Fully diluted earnings per share 
  (EUR cents per share)                        6            5.0        2.2        20.2       20.2 
                                                     ----------  =========  ==========  ========= 
 
 Profit for the period                                    6,933      3,133      27,937     27,625 
 Other comprehensive income: 
 Change in fair value of financial 
  assets through other comprehensive 
  income 'OCI'                                             (25)       (15)        (37)       (30) 
                                                     ---------- 
 Total comprehensive income for 
  the period                                              6,908      3,118      27,900     27,595 
                                                     ----------  =========  ==========  ========= 
 
 Total comprehensive income for 
  the period attributable to: 
 
        *    Owners of the parent                         6,950      3,034      28,053     27,777 
 
        *    Non-controlling interests                     (42)         84       (153)      (182) 
                                                     ----------             ---------- 
                                                          6,908      3,118      27,900     27,595 
                                                     ----------  =========  ----------  ========= 
 

The notes on pages 15 to 34 are an integral part of these Unaudited, Condensed, Interim, Consolidated Financial Statements.

* Refer to Note 2.2 Adoption of "IFRS 16 - Leases"

Interim Condensed Consolidated Statement of Financial Position

(All amounts in Euro thousands unless otherwise stated)

As at 30 September 2019 and 2018

 
                                              30 September  31 December 
 (Euro 000's)                          Notes         2019*         2018 
 Assets 
 Non-current assets 
 Property, plant and equipment          7          300,043      257,376 
 Intangible assets                      8           70,439       71,951 
 Trade and other receivables           10              250          249 
 Deferred tax asset                                  7,801        7,927 
                                              ============  =========== 
                                                   378,533      337,503 
                                              ============  =========== 
 Current assets 
 Inventories                            9           11,475       10,822 
 Trade and other receivables           10           30,046       23,688 
 Other financial assets                                 36           71 
 Cash and cash equivalents                          18,707       33,070 
                                              ============  =========== 
                                                    60,264       67,651 
                                              ============  =========== 
 Total assets                                      438,797      405,154 
                                              ============  =========== 
 Equity and liabilities 
 Equity attributable to owners of 
  the parent 
 Share capital                         11           13,372       13,372 
 Share premium                         11          314,319      314,319 
 Other reserves                        12           22,323       12,791 
 Accumulated losses                               (39,424)     (58,308) 
                                              ============  =========== 
                                                   310,590      282,174 
 Non-controlling interests                           4,047        4,200 
                                              ------------  ----------- 
 Total equity                                      314,637      286,374 
                                              ------------  ----------- 
 
 Liabilities 
  Non-current liabilities 
 Trade and other payables              13               13           45 
 Provisions                            14            6,991        6,519 
 Leases                                15            5,846            - 
 Deferred consideration                16           53,000       53,000 
                                              ============  =========== 
                                                    65,850       59,564 
                                              ============  =========== 
 Current liabilities 
 Trade and other payables              13           54,188       57,271 
 Leases                                15              156            - 
 Current tax liabilities                             3,966        1,945 
 Deferred consideration                16                - 
                                                    58,310       59,216 
                                              ============  =========== 
 Total liabilities                                 124,160      118,780 
                                              ============  =========== 
 Total equity and liabilities                      438,797      405,154 
                                              ============  =========== 
 

* Refer to Note 2.2 Adoption of "IFRS 16 - Leases"

The notes on pages 15 to 34 are an integral part of these Unaudited, Condensed, Interim, Consolidated Financial Statements. The Unaudited, Condensed, Interim, Consolidated Financial Statements were authorised for issue by the Board of Directors on 20 November 2019 and were signed on its behalf.

 
 
Roger Davey  Alberto Lavandeira 
Chairman     Chief Executive Officer 
 

Interim Condensed Consolidated Statements of Changes in Equity

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 September 2019 and 2018

 
                                                                                            Non-controlling 
                                 Share          Share          Other     Accum.                    interest      Total 
   (Euro 000's)                capital     premium(1)    reserves(2)     losses     Total                       equity 
                                                                                           ---------------- 
 At 1 January 2019              13,372        314,319         12,791   (58,308)   282,174             4,200    286,374 
 Profit for the period               -              -              -     28,090    28,090             (153)     27,937 
 Change in fair value 
  of financial assets 
  through OCI                        -              -           (37)          -      (37)                 -       (37) 
                            ----------  -------------  -------------  ---------  --------  ----------------  --------- 
 Total comprehensive 
  income                             -              -           (37)     28,090    28,053             (153)     27,900 
 Transactions with owners 
 Recognition of 
  share-based 
  payments                           -              -          5,378    (5,378)         -                 -          - 
 Recognition of depletion 
  factor                             -              -            363          -       363                 -        363 
 Recognition of 
  non-distributable 
  reserve                            -              -          1,984    (1,984)         -                 -          - 
 Recognition of 
  distributable 
  reserve                            -              -          1,844    (1,844)         -                 -          - 
 At 30 September 2019           13,372        314,319         22,323   (39,424)   310,590             4,047    314,637 
                            ==========  =============  =============  =========  ========  ================  ========= 
 

(1) The share premium reserve is not available for distribution

(2) Refer to Note 12

 
                                                                                            Non-controlling 
                                 Share          Share          Other     Accum.                    interest      Total 
   (Euro 000's)                capital     premium(1)    reserves(2)     losses     Total                       equity 
                                                                                           ---------------- 
 At 1 January 2018              13,192        309,577          6,137   (86,527)   242,379             4,474    246,853 
 Profit for the period               -              -              -     27,807    27,807             (182)     27,625 
 Change in fair value 
  of financial assets 
  through OCI                        -              -           (30)          -      (30)                 -       (30) 
                            ----------  -------------  -------------  ---------  --------  ----------------  --------- 
 Total comprehensive 
  income                             -              -           (30)     27,807    27,777             (182)     27,595 
 Transactions with owners 
 Issue of share capital            180          4,747              -          -     4,927                 -      4,927 
 Share issue costs                   -            (5)              -          -       (5)                 -        (5) 
 Change in value of 
  available 
  for sale investment                -              -           (30)          -      (30)                 -       (30) 
 Depletion factor                    -              -          5,050    (5,050)         -                 -          - 
 Recognition of 
  share-based 
  payments                           -              -            162          -       162                 -        162 
 Recognition of 
  non-distributable 
  reserve                            -                         1,446    (1,446)         -                 -          - 
                            ==========  =============  =============  =========  ========  ================  ========= 
 At 30 September 2018           13,372        314,319         12,765   (65,216)   275,240             4,292    279,532 
                            ==========  =============  =============  =========  ========  ================  ========= 
 

(1) The share premium reserve is not available for distribution

(2) Refer to Note 12

 
                                                                                            Non-controlling 
                                 Share          Share          Other     Accum.                    interest      Total 
   (Euro 000's)                capital     premium(1)    reserves(2)     losses     Total                       equity 
                                                                                           ---------------- 
 At 1 January 2018              13,192        309,577          6,137   (86,527)   242,379             4,474    246,853 
 Profit for the period               -              -              -     34,715    34,715             (274)     34,441 
 Change in fair value 
  of financial assets 
  through OCI                        -              -           (58)          -      (58)                 -       (58) 
                            ----------  -------------  -------------  ---------  --------  ----------------  --------- 
 Total comprehensive 
  income                             -              -           (58)     34,715    34,657             (274)     34,383 
 Transactions with owners 
 Issue of share capital            180          4,747              -          -     4,927                 -      4,927 
 Share issue costs                   -            (5)              -          -       (5)                 -        (5) 
 Depletion factor                    -              -          5,050    (5,050)         -                 -          - 
 Recognition of 
  share-based 
  payments                           -              -            216          -       216                 -        216 
 Recognition of 
  non-distributable 
  reserve                            -              -          1,446    (1,446)         -                 -          - 
                            ==========  =============  =============  =========  ========  ================  ========= 
 At 31 December 2018            13,372        314,319         12,791   (58,308)   282,174             4,200    286,374 
                            ==========  =============  =============  =========  ========  ================  ========= 
 

(1) The share premium reserve is not available for distribution

(2) Refer to Note 12

The notes on pages 15 to 34 are an integral part of these Unaudited, Condensed, Interim, Consolidated Financial Statements.

Interim Condensed Consolidated Statement of Cash Flows

(All amounts in Euro thousands unless otherwise stated)

For to the period ended 30 September 2019 and 2018

 
                                                             Three           Three            Nine            Nine 
                                                            months          months          months          months 
                                                             ended           ended           ended           ended 
   (Euro 000's)                              Notes    30 September    30 September    30 September    30 September 
                                                             2019*            2018           2019*            2018 
 Cash flows from operating activities 
 Profit before tax                                           7,595           4,088          32,189          33,145 
 Adjustments for: 
 Depreciation of property, plant 
  and equipment                               7              2,864           2,650           8,354           7,386 
 Amortisation of intangibles                  8                858             834           2,539           2,408 
 Recognition of share-based payments         12                256              86             363             162 
 Interest income                              5               (83)            (19)            (99)            (58) 
 Interest expense                             5                 29              65              33             170 
 Unwinding of discounting                     5                 30              31              89              84 
 Gain(loss) on disposal of a subsidiary                          -           (115)               -           (115) 
 Legal provisions                            14                279               -             261               - 
 Rehab provisions                            14               (18)               -            (18)               - 
 Loss in disposal of property, 
  plant and equipment                         7                  -               -               2               - 
 Unrealised foreign exchange loss 
  on financing activities                                     (22)             127               4             131 
                                                    --------------  --------------  ==============  ============== 
 Cash inflows from operating activities 
  before working capital changes                            11,788           7,747          43,717          43,313 
 Changes in working capital: 
 Inventories                                  9               (97)           (189)           (653)           4,155 
 Trade and other receivables                 10              6,174          10,715         (5,587)          10,254 
 Trade and other payables                    13              (453)         (2,174)         (3,116)        (10,934) 
 Deferred consideration                      16                  -               -               -              17 
                                                    --------------  -------------- 
 Cash flows from operations                                 17,412          16,099          34,361          46,805 
 Interest paid                                               (898)            (65)         (2,877)           (170) 
 Tax paid                                                     (27)         (1,097)            (27)         (2,484) 
                                                    --------------  -------------- 
 Net cash from operating activities                         16,487          14,937          31,457          44,151 
                                                    --------------  --------------  ==============  ============== 
 
 Cash flows from investing activities 
 Purchase of property, plant and 
  equipment                                               (12,890)        (20,052)        (44,462)        (40,536) 
 Purchase of intangible assets                8              (308)           (381)         (1,027)         (1,226) 
 Interest received                            5                 83              19              99              58 
                                                    --------------  --------------  ==============  ============== 
 Net cash used in investing activities                    (13,115)        (20,414)        (45,390)        (41,704) 
                                                    --------------  --------------  ==============  ============== 
 
 Cash flows from financing activities 
 Proceeds from issue of share 
  capital                                                        -               -               -             598 
 Issuance costs                                                  -               -               -             (5) 
 Lease payment                               15              (156)               -           (424)               - 
 Interest expense on lease liabilities       15                (2)               -             (6)               - 
 Net cash flows from financing 
  activities                                                 (158)               -           (430)             593 
                                                    --------------  -------------- 
 
 Net increase / (decrease) in 
  cash and cash equivalents                                  3,214         (5,477)        (14,363)           3,040 
 Cash and cash equivalents: 
 At beginning of the period                                 15,493          51,373          33,070          42,856 
                                                    --------------  --------------  ==============  ============== 
 At end of the period                                       18,707          45,896          18,707          45,896 
                                                    --------------  --------------  ==============  ============== 
 

The notes on pages 15 to 34 are an integral part of these Unaudited, Condensed, Interim, Consolidated Financial Statements.

Notes to the Interim Condensed Consolidated Financial Statements

(All amounts in Euro thousands unless otherwise stated)

For the period ended 30 September 2019 and 2018

   1.   Incorporation and summary of business 

Country of incorporation

Atalaya Mining Plc (the "Company") 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 Company was listed on AIM of the London Stock Exchange in May 2005 under the symbol ATYM and on the TSX on 20 December 2010 under the symbol AYM. The Company continued to be listed on AIM and the TSX as at 30 September 2019.

Additional information about Atalaya Mining Plc is available at www.atalayamining.com as per requirement of AIM rule 26.

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 Company owns and operates through a wholly-owned subsidiary, "Proyecto Riotinto", an open-pit copper mine located in the Pyritic belt, in the Andalusia region of Spain, approximately 65 km northwest of Seville.

In addition, the Company has a phased earn-in agreement up to 80% ownership of "Proyecto Touro", a brownfield copper project in northwest Spain, which is currently at the permitting stage.

The Company's and its subsidiaries' business is to explore for and develop metals 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 metal mineralisation in Europe and internationally.

   2.   Basis of preparation and accounting policies 

2.1 Basis of preparation

   (a)           Overview 

The Unaudited, Condensed, Interim, Consolidated Financial Statements for the period ended 30 September 2019 have been prepared in accordance with International Accounting Standards 34: Interim Financial Reporting.

These Unaudited, Condensed, Interim, Consolidated Financial Statements 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 Group for the year ended 31 December 2018, other than as described in Note 2.2 for the changes in accounting policies. These Unaudited, Condensed, Interim, Consolidated Financial Statements do not include all of the information and disclosures required in the annual financial statements, and accordingly, should be read in conjunction with the Group's annual consolidated financial statements, which have been prepared in accordance with IFRS and is set out in the Group's Annual Report for the year ended 31 December 2018.

   2.   Basis of preparation and accounting policies (cont.) 

2.1 Basis of preparation (cont.)

   (b)           Going concern 

These Unaudited, Condensed, Interim, Consolidated Financial Statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Group 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 Group will generate sufficient cash and cash equivalents to continue operating for the next twelve months.

The Directors have considered at the time of the financial statements approval 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.

2.2 Changes in accounting policies and disclosures

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 2019.

The Group applied IFRS 16 for the first time from 1 January 2019. As required by IAS 34, the nature and effect of the changes as a result of adoption of this new accounting standard is described below.

Several other amendments and interpretations apply for the first time in 2019, but do not have a significant impact on the Unaudited, Condensed, Interim, Consolidated Financial Statements of the Group. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.

IFRS 16 - Leases

The Group has adopted all of the requirements of IFRS 16 Leases ('IFRS 16') effective 1 January 2019 (initial application). IFRS 16 supersedes IAS 17 Leases ('IAS 17'). IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model.

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported in terms of IAS 17 and IFRIC 4: Determining Whether an Arrangement Contains a Lease. The Group has applied the modified retrospective approach whereby the right of use asset was set equal to the finance lease liability with no impact on retained earnings on 1 January 2019.The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. As a result, the Group has changed its accounting policy for leases as detailed in the accounting policies.

   2.   Basis of preparation and accounting policies (cont.) 

2.2 Changes in accounting policies and disclosures (cont.)

IFRS 16 - Leases (cont.)

Impact of adopting IFRS 16 on the Group's consolidated financial statements

The following table summarises the impact of adopting IFRS 16 on the Group's extracted consolidated statement of financial position at 1 January 2019:

 
  (Euro 000's)                       As previously   Adjustments   Balance as 
                              Note        reported         as at           at 
                                       31 December     1 January    1 January 
                                              2018          2019         2019 
 Non-current assets 
 Property, plant and 
  equipment                   7            257,376         6,144      263,520 
 Deferred tax asset                          7,927             -        7,927 
 Equity and liabilities 
 Accumulated losses                       (58,308)             -     (58,308) 
 Non-current liabilities 
 Leases                       15                 -         5,609        5,609 
 Current liabilities 
 Leases                       15                 -           534          534 
 
 
   a)              Comparative accounting policy in terms of IAS 17 

In terms of IAS 17, the Group was required to classify its leases as either finance leases or operating leases and account for those two types of leases differently (both as a lessor or a lessee). A lease was classified as a finance lease if it transferred substantially all the risks and rewards incidental to ownership. A lease was classified as an operating lease if all the risks and rewards incidental to ownership did not substantially transfer.

Finance leases were recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor was included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating lease payments, in the event of the Group operating as lessee, were recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments were recognised as an operating lease asset. The liability was not discounted.

   2.    Basis of preparation and accounting policies (cont.) 

2.2 Changes in accounting policies and disclosures (cont.)

   b)             Accounting policy in terms of IFRS 16 

Right-of-use assets

The Group recognised right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

Subsequent to initial measurement, the right-of-use assets are depreciated from the commencement date using the straight-line method over the shorter of the estimated useful lives of the right-of-use assets or the end of lease term. These are as follows:

 
 Right-of-use asset     Depreciation terms in years 
 Land                   Based on Units of Production 
                         (UOP) 
 Motor vehicles         Based on straight line depreciation 
 Laboratory equipment   Based on straight line depreciation 
 

After the commencement date, the right-of-use assets are measured at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability.

Lease liabilities

The lease liability is initially measured at the present value of the lease payments that are not paid at the starting date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability include the following:

   --      Fixed payments, less any lease incentives receivable 

-- Variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date

   --      Amounts expected to be payable by the lessee under residual value guarantees 

-- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option

-- Lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option

-- Payments of penalties for early terminating the lease, unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, an extension or a termination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

   2.   Basis of preparation and accounting policies (cont.) 

2.2 Changes in accounting policies and disclosures (cont.)

   b)             Accounting policy in terms of IFRS 16 (cont.) 

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of twelve months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below EUR5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has the option, under some of its leases to lease the assets for additional terms of three to five years. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy). The Group included the renewal period as part of the lease term for leases of plant and machinery due to the significance of these assets to its operations. These leases have a short non-cancellable period (i.e., three to five years) and there will be a significant negative effect on production if a replacement is not readily available. The renewal options for leases of motor vehicles were not included as part of the lease term because the Group has a policy of leasing motor vehicles for not more than five years and hence not exercising any renewal options.

c) Amounts recognised in the statement of financial position and profit or loss

Set out below are the carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the period:

 
                                   Right - of-use assets 
                        =========================================== 
                                               Laboratory                     Lease liabilities 
   (Euro 000's)            Land     Vehicles    equipment     Total 
 
 As at 1 January 
  2019                    6,085           59            -     6,144                       6,144 
 Additions                    -            -          277       277                         277 
 Depreciation expense     (250)         (11)         (23)     (284)                           - 
 Interest expense             -            -            -         -                           6 
 Payments                     -            -            -         -                       (425) 
                        -------  -----------  -----------  --------      ---------------------- 
 As at 30 September 
  2019                    5,835           48          254     6,137                       6,002 
                        -------  -----------  -----------  --------      ---------------------- 
 
 

Set out below, are the amounts recognised in profit or loss:

 
                                           Nine months       Nine months 
                                                 ended             ended 
                                          30 September      30 September 
   (Euro 000's)                                   2019              2018 
 
 As at 31 December 2018 
 Depreciation expense of right-of-use              284                 - 
  assets 
 Interest expense on lease liabilities               6                 - 
 Total amounts recognised in profit or             290                 - 
  loss 
                                        --------------  ---------------- 
 

The Group recognised rent expense from short-term leases.

   2.   Basis of preparation and accounting policies (cont.) 

2.3 Fair value estimation

The fair values of the Group'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 other financial assets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group 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 Group 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 or liabilities 
 (Euro 000's)                                    Level 1   Level 2   Level 3    Total 
 30 September 2019 
 Other financial assets 
 Financial assets at FV through OCI                   36         -         -       36 
 Trade and other receivables 
 Receivables (subject to provisional pricing)          -    12,023         -   12,023 
 Total                                                36    12,023         -   12,059 
                                                --------  --------  --------  ------- 
 31 December 2018 
 Other financial assets 
 Financial assets at FV through OCI                   71         -         -       71 
 Trade and other receivables 
 Receivables (subject to provisional pricing)          -     6,959         -    6,959 
                                                --------  --------  --------  ------- 
 Total                                                71     6,959         -    7,030 
                                                --------  --------  --------  ------- 
 

2.4 Critical accounting estimates and judgements

The preparation of the Unaudited, Condensed, Interim, Consolidated Financial Statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

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.

A full analysis of critical accounting estimates and judgements is set out in Note 3.4 to the 2018 audited consolidated financial statements, as well as Note 2.2 of these Unaudited, Condensed, Interim, Consolidated Financial Statements.

   3.   Business and geographical segments 

Business segments

The Group has only one distinct business segment, being that of mining operations, which include mineral exploration and development.

Copper concentrates produced by the Group are sold to three off-takers as per the relevant offtake agreements (Note 4)

Geographical segments

The Group's mining activities are located in Spain. The commercialisation of the copper concentrate produced in Spain is carried out through Cyprus. Sales transactions to related parties are on arm's length basis in a similar manner to transaction with third parties. Accounting policies used by the Group in different locations are the same as those contained in Note 2.

 
(Euro 000's)                              Cyprus      Spain    Other       Total 
Three months ended 30 September 2019 
 (*) 
Revenue - from external customers          2,706     41,677        -      44,383 
                                        ========  =========  =======  ========== 
Earnings/(loss) Before Interest, 
 Tax, Depreciation and Amortisation 
 (EBITDA)                                    775      8,969      125       9,869 
Depreciation/amortisation charge               -    (3,722)        -     (3,722) 
Net foreign exchange (loss) / gain           788        617        -       1,405 
Finance income                                75          8        -          83 
Finance cost                                   -       (40)        -        (40) 
Profit/(loss) before tax                   1,638      5,832      125       7,595 
                                        ========  =========  ======= 
Tax                                                                        (662) 
                                                                      ========== 
Profit for the period                                                      6,933 
                                                                      ========== 
 
Nine months ended 30 September 2019 
 (*) 
Revenue - from external customers          9,391    129,774        -     139,165 
                                        ========  =========  =======  ========== 
Earnings/(loss) Before Interest, 
 Tax, Depreciation and Amortisation 
 (EBITDA)                                  4,157     37,792    (536)      41,413 
Depreciation/amortisation charge             (1)   (10,892)        -    (10,893) 
Net foreign exchange gain/(loss)             955        739      (2)       1,692 
Finance income                                75         24        -          99 
Finance cost                                 (1)      (121)        -       (122) 
Profit/(loss) before tax                   5,185     27,542    (538)      32,189 
                                        ========  =========  ======= 
Tax                                                                      (4,252) 
                                                                      ========== 
Profit for the period                                                     27,937 
                                                                      ========== 
 
Total assets                              29,063    409,078      656     438,797 
                                        ========  =========  =======  ========== 
Total liabilities                       (14,252)  (109,472)    (436)   (124,160) 
                                        ========  =========  =======  ========== 
Depreciation of property, plant and 
 equipment                                     1      8,353        -       8,354 
                                        ========  =========  =======  ========== 
Amortisation of intangible assets              -      2,539        -       2,539 
                                        ========  =========  =======  ========== 
Total additions of non-current assets          1     51,924        -      51,925 
                                        ========  =========  =======  ========== 
 

*Refer to Note 2.2 Adoption of "IFRS 16 - Leases"

   3.   Business and geographical segments (cont.) 

Geographical segments (cont.)

 
(Euro 000's)                                 Cyprus       Spain   Other       Total 
Three months ended 30 September 2018(1) 
Revenue - from external customers            42,811           -       -      48,867 
                                          =========  ==========  ======  ========== 
Earnings/(loss) Before Interest, Tax, 
 Depreciation and Amortisation (EBITDA)      40,982    (33,239)    (84)       7,659 
Depreciation/amortisation charge                  -     (3,484)       -     (3,484) 
Net foreign exchange gain/(loss)              (106)          96       -        (10) 
Finance income                                   15           4       -          19 
Finance cost                                    (1)        (95)       -        (96) 
Profit/(loss) before tax                     40,890    (36,718)    (84)       4,088 
                                          =========  ==========  ====== 
Tax                                                                           (955) 
                                                                         ---------- 
Profit for the period                                                         3,133 
                                                                         ---------- 
 
Nine months ended 30 September 2018(1) 
Revenue - from external customers           144,354           -       -     144,354 
                                          =========  ==========  ======  ========== 
Earnings/(loss) Before Interest, Tax, 
 Depreciation and Amortisation (EBITDA)     137,472    (95,351)    (78)      42,043 
Depreciation/amortisation charge                  -     (9,794)       -     (9,794) 
Net foreign exchange gain/(loss)                781         311       -       1,092 
Finance income                                   54           4       -          58 
Finance cost                                    (2)       (252)       -       (254) 
Profit/(loss) before tax                    138,305   (105,082)    (78)      33,145 
                                          =========  ==========  ====== 
Tax                                                                         (5,520) 
                                                                         ========== 
Profit for the period                                                        27,625 
                                                                         ========== 
 
Total assets                                 46,441     351,029     426     397,896 
                                          =========  ==========  ======  ========== 
Total liabilities                          (10,644)   (107,662)    (58)   (118,364) 
                                          =========  ==========  ======  ========== 
Depreciation of property, plant and 
 equipment                                        -       7,386       -       7,386 
                                          =========  ==========  ======  ========== 
Amortisation of intangible assets                 -       2,408       -       2,408 
                                          =========  ==========  ======  ========== 
Total additions of non-current assets             -      46,452       -      46,452 
                                          =========  ==========  ======  ========== 
 

(1) For the purposes of the geographical segment, in 2019 revenues have been reallocated between Cyprus and Spain as per IFRS 15. Comparatives for 2018 have not been restated

Revenue represents the sales value of goods supplied to customers, net of value added tax. The following table summarises sales to customers with whom transactions have individually exceeded 10.0% of the Group's revenues.

 
                       Nine months       Nine months 
                             ended             ended 
                      30 September      30 September 
(Euro 000's)                  2019              2018 
                  Segment  EUR'000  Segment  EUR'000 
 ------------------------  -------  -------  ------- 
 
    Offtaker 1     Copper   27,267   Copper   23,641 
    Offtaker 2     Copper   39,045   Copper   77,722 
    Offtaker 3     Copper   72,853   Copper   42,975 
 

4. Revenue

 
                                               Three     Three  Nine months  Nine months 
                                              months    months        ended        ended 
  (Euro 000's)                                 ended     ended      30 Sept      30 Sept 
                                             30 Sept   30 Sept         2019         2018 
                                                2019      2018 
                                            ========  ========  ===========  =========== 
    Revenue from contracts with customers     46,185    46,039      140,177      148,445 
    Fair value (losses) relating to 
     provisional pricing within sales 
     (1)                                     (1,802)   (3,228)      (1,012)      (4,106) 
                                            ========  ========  ===========  =========== 
    Total revenue                             44,383    42,811      139,165      144,338 
                                            ========  ========  ===========  =========== 
 

All revenue from copper concentrate is recognised at a point in time when the control is transferred. Revenue from freight services is recognised over time as the services are provided.

(1) Included within the nine month period ended 30 September 2019 revenue, there is a transaction price of EUR0.1 million related to the freight services provided by the Group.

(2) Provisional pricing impact represented the change in fair value of the embedded derivative arising on sales of concentrate.

5. Net finance (income) / cost

 
                                       Three months   Three months   Nine months   Nine months 
                                              ended          ended         ended         ended 
   (Euro 000's)                             30 Sept        30 Sept       30 Sept       30 Sept 
                                               2019           2018          2019          2018 
 Interest expense: 
     Other interest                             (8)           (65)          (27)         (170) 
     Interest expense on lease 
      liabilities                               (2)              -           (6)             - 
     Unwinding of discount on 
      mine rehabilitation provision 
      (Note 14)                                (30)           (31)          (89)          (84) 
 Interest income(1)                              83             19            99            58 
                                      -------------  -------------  ------------  ------------ 
                                                 43           (77)          (23)         (196) 
                                      -------------  -------------  ------------  ------------ 
 

(1) Interest income relates to interest received on bank balances

6. Earnings per share

The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the Company is based on the following data:

 
                                                 Three       Three   Nine months        Nine 
                                                months      months         ended      months 
   (Euro 000's)                                  ended       ended       30 Sept       ended 
                                               30 Sept     30 Sept          2019     30 Sept 
                                                  2019        2018                      2018 
 Profit/(loss) attributable to 
  equity holders of the parent                   (962)       3,049       (2,494)      27,807 
                                            ----------  ----------  ------------  ---------- 
 
 Weighted number of ordinary shares 
  for the purposes of basic earnings 
  per share (000's)                            137,339     137,340       137,339     136,558 
                                            ----------  ----------  ------------  ---------- 
 Basic profit per share (EUR cents/share)          5.1         2.2          20.5        20.4 
                                            ----------  ----------  ------------  ---------- 
 
 Weighted number of ordinary shares 
  for the purposes of fully diluted 
  earnings per share (000's)                   138,517     138,652       138,959     137,910 
                                            ----------  ----------  ------------  ---------- 
 Fully diluted profit per share 
  (EUR cents/share)                                5.0         2.2          20.2        20.2 
                                            ----------  ----------  ------------  ---------- 
 

6. Earnings per share (cont.)

At 30 September 2019 there are nil warrants (Note 11) and 2,713,000 options (Note 12) (2018: 262,569 warrants and 1,334,333 options) which have been included when calculating the weighted average number of shares for 2019.

7. Property, plant and equipment

 
 
                                                                                      Deferred 
    (Euro 000's)       Land             Right-of-use   Plant        Assets under        mining   Other 
                        and buildings    assets         and          construction        costs    assets 
                        (1)              (5)            machinery    (2)                   (3)    (4)      Total 
  Cost 
  At 1 January 
   2018                        40,995              -      145,402          11,445       22,317       785       220,944 
  Additions                  4,853(1)              -        1,978          34,178        4,354         -        43,363 
  Reclassifications                 -              -        1,579         (1,579)            -         -             - 
  At 30 September 
   2018                        45,848              -      148,959          44,044       26,671       785       266,307 
  Additions                      5(1)              -          346          21,481          866         -        22,698 
  Reclassifications                 -              -        3,515         (3,515)            -         -             - 
  At 31 December 
   2018                        45,853              -      152,820          62,010       27,537       785       289,005 
  Adoption of 
   IFRS 16(5)                       -          6,144            -               -            -         -         6,144 
  At 1 January 
   2019                        45,853          6,144      152,820          62,010       27,537       785       295,149 
  Additions                       169            277          646          41,846        1,940         1        44,879 
  Disposals                         -              -            -               -            -       (5)           (5) 
  Reclassifications                 -              -        4,609         (4,609)            -         -             - 
  At 30 September 
   2019                        46,022          6,421      158,075          99,247       29,477       781       340,023 
                      ---------------  -------------  -----------  --------------  -----------  --------  ------------ 
 
  Depreciation 
  At 1 January 
   2018                         4,076              -       13,465               -        3,469       476        21,486 
  Charge for the 
   period                       1,446              -        4,819               -          873       248         7,386 
  At 30 September 
   2018                         5,522              -       18,284               -        4,342       724        28,872 
  Charge for the 
   period                         550              -        2,031                          339     (163)         2,757 
  At 31 December 
   2018                         6,072              -       20,315               -        4,681       561        31,629 
  Charge for the 
   period                       1,585            284        5,398               -        1,040        47         8,354 
  Disposals                         -              -            -               -            -       (3)           (3) 
  At 30 September 
   2019                         7,657            284       25,713               -        5,721       605        39,980 
                      ---------------  -------------  -----------  --------------  -----------  --------  ------------ 
 
  Net book value 
  At 30 September 
   2019                        38,365          6,137      132,362          99,247       23,756       176       300,043 
                      ---------------  -------------  -----------  --------------  -----------  --------  ------------ 
  At 31 December 
   2018                        39,781              -      132,505          62,010       22,856       224       257,376 
                      ---------------  -------------  -----------  --------------  -----------  --------  ------------ 
 
 

(1) Mine rehabilitation assets and Rumbo Royalty Buyout.

(2) Assets under construction at 30 September 2019 were EUR99.2 million (2018: EUR62.0 million) which include the capitalisation of costs related to the Expansion Project and sustaining capital expenditures.

(3) Stripping costs

(4) Includes motor vehicles, furniture, fixtures and office equipment which are depreciated over 5-10 years.

(5) Refer to Note 2.2 Adoption of "IFRS 16 - Leases"

The above fixed assets are mainly located in Spain.

8. Intangible assets

 
                                   Permits 
      (Euro 000's)            of Rio Tinto     Licences, 
                                   Project       R&D and 
                                       (1)      software     Total 
    Cost 
    At 1 January 2018               76,521         4,505    81,026 
    Additions                           17         1,209     1,226 
    At 30 September 2018            76,538         5,714    82,252 
    Additions                            -         1,267     1,267 
    Disposals                            -         (955)     (955) 
    At 31 December 2018             76,538         6,026    82,564 
    Additions                            -         1,027     1,027 
    At 30 September 2019            76,538         7,053    83,591 
                            --------------  ------------  -------- 
  Amortisation 
    On 1 January 2018                7,145           181     7,326 
    Charge for the period            2,363            45     2,408 
    At 30 September 2018             9,508           226     9,734 
    Charge for the period              862            17       879 
    At 31 December 2018             10,370           243    10,613 
    Charge for the period            2,492            47     2,539 
    At 30 September 2019            12,862           290    13,152 
                            --------------  ------------  -------- 
  Net book value 
    At 30 September 2019            63,676         6,763    70,439 
                            --------------  ------------  -------- 
    At 31 December 2018             66,168         5,783    71,951 
                            --------------  ------------  -------- 
 
 

(1) Permits and R&D include an amount of EUR5.0 million and an amount of EUR3.8 million respectively that relate to the Touro Project mining rights.

In July 2018, the Company announced an updated technical report on the mineral resources and reserves of Proyecto Riotinto. The report increased the open pit mineral reserves by 29% and stated the life of mine to 13.8 years, considering the on-going expansion of the processing plant.

The ultimate recovery 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 the sale of the respective areas.

The Group conducts impairment testing on an annual basis unless indicators of impairment are not 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 that no indicators were present as at 30 September 2019 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. back in September 2008. This amount was fully impaired on acquisition, in the absence of the mining licence back in 2008.

9. Inventories

 
 (Euro 000's)              30 Sept   31 Dec 
                              2019     2018 
 Finished products           1,641    2,955 
 Materials and supplies      8,764    7,381 
 Work in progress            1,070      486 
                          --------  ------- 
                            11,475   10,822 
                          --------  ------- 
 

As of 30 September 2019, copper concentrate produced and not sold amounted to 2,186 tonnes (31 December 2018: 4,667 tonnes). Accordingly, the inventory for copper concentrate was EUR1.6 million (31 December 2018: EUR3.0 million). During the nine month period ended 30 September 2019 the Group recorded operating costs amounting to EUR89.2 million (2018: EUR97.9 million).

Materials and supplies mainly relate to machinery spare parts. Work in progress represents ore stockpiles, which is ore that has been extracted and is available for further processing.

10. Trade and other receivables

 
 (Euro 000's)                                     30 Sept   31 Dec 
                                                     2019     2018 
 Non-current 
 Deposits                                             250      249 
                                                 --------  ------- 
                                                      250      249 
                                                 --------  ------- 
 Current 
 Trade receivables at fair value - subject 
  to provisional pricing                            6,212    4,498 
 Trade receivables from shareholders at fair 
  value - subject to provisional pricing (Note 
  19.3)                                             5,811    2,461 
 Other receivables from related parties at 
  amortised cost (Note 19.3)                           56       56 
 Deposits                                              26       26 
 VAT receivable                                    11,475   13,691 
 Tax refundable                                         -        - 
 Tax advances                                       1,980    1,208 
 Prepayments                                        1,000      688 
 Other current assets                               3,486    1,060 
                                                 --------  ------- 
                                                   30,046   23,688 
 Allowance for expected credit losses                   -        - 
                                                 --------  ------- 
 Total current trade and other receivables         30,046   23,688 
                                                 --------  ------- 
 

Trade receivables are shown net of any interest applied to prepayments. Payment terms are aligned with offtake agreements and market standards which generally are 7 days for the 90% of the invoice and the remaining 10% at the settlement date which can vary between 1 to 5 months. Fair values of trade and other receivables approximate their book values.

11. 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 31 December 2017/1 
  January 2018                                   135,254        13,192       309,577              322,769 
 13 Feb 2018 Shares issued 
  to Rumbo at GBP1.87                   a)           193            16           410                  426 
 13 Feb 2018 Exercised share 
  options at GBP1.44                    b)            29             3            45                   48 
 13 April 2018 Shares issued 
  to Rumbo buyout at GBP2.118            c)        1,601           139         3,887                4,026 
 1 June 2018 Exercised warrants 
  at GBP1.425                           d)           263            22           405                  427 
 Share issued costs                                    -             -           (5)                  (5) 
                                              ----------  ------------  ------------      --------------- 
 Balance at 30 September 2018 
  / 31 December 2018 / 30 September 
  2019                                           137,340        13,372       314,319              327,691 
                                              ----------  ------------  ------------      --------------- 
 
 

Authorised capital

The Company's authorised share capital is 200,000,000 ordinary shares of Stg GBP0.075 each.

Issued capital

2019

There were no changes in share capital during the nine month period ended 30 September 2019.

2018

a) On 13 February 2018, the Company issued 192,540 new ordinary shares of GBP0.075 to Rumbo at a price of GBP1.867, thus creating a share premium of EUR410,146.

b) On 13 February 2018, the Company was notified that certain employees exercised options over 29,000 ordinary shares of GBP0.075 at a price of GBP1.44, thus creating a share premium of EUR44,576.

c) On 5 April 2018, the Company entered into an agreement with Rumbo to purchase the whole royalty agreement for a total consideration of US$4,750,000 to be paid through the issuance of 1,600,907 new ordinary shares of GBP0.075 at a price of GBP2.118 per share. After this transaction the share premium increased by EUR3,887,128. On 13 April 2018, the new ordinary shares were issued to Rumbo.

d) On 1 June 2018, 262,569 warrants were exercised at GBP1.425 per ordinary share. Hence, 262,569 new ordinary shares of GBP0.075 were issued creating a share premium of EUR405,087.

Warrants

All warrants were exercised on 1 June 2018 (see (d) above).

As at 30 September 2019, there were no warrants.

12. Other reserves

 
 
                                                                               Fair 
                                                                              value 
   (Euro 000's)                                                             reserve    Non-Distributable 
                                        Depletion                                of              reserve    Distributable 
                                           factor                         financial                  (4)          reserve 
                                              (1)   Available-for-sale       assets                                   (5) 
                       Share   Bonus                        investment     at FVOCI 
                      option   share                               (2)          (3)                                           Total 
                                                                        -----------  -------------------  --------------- 
 At 1 January 
  2018                 6,536     208          450              (1,057)                                 -                -     6,137 
 Adjustment 
  for initial 
  application 
  of IFRS 9                -       -            -                1,057      (1,057)                    -                -         - 
 Recognition 
  of depletion 
  factor                   -       -        5,050                    -            -                    -                -     5,050 
 Recognition 
  of share- 
  based payments          76       -            -                    -            -                    -                -        76 
 Recognition 
  of 
  non-distributable 
  reserve                  -       -            -                    -            -                1,446                -     1,446 
 Change in 
  fair value 
  of financial 
  assets at 
  fair value 
  through OCI              -       -            -                    -         (15)                    -                -      (15) 
                     -------  ------  -----------  -------------------  -----------  -------------------  ---------------  -------- 
 At 30 September 
  2018                 6,612     208        5,500                    -      (1,072)                1,446                -    12,694 
 Recognition 
  of share-based 
  payments               140       -            -                    -                                 -                -       140 
 Change in 
  fair value 
  of financial 
  assets at 
  fair value 
  through OCI              -       -            -                    -         (43)                    -                -      (43) 
                                                                        -----------  -------------------  --------------- 
 At 31 December 
  2018                 6,752     208        5,500                    -      (1,115)                1,446                -    12,791 
 Recognition 
  of share-based 
  payments               363       -            -                    -            -                    -                -       363 
 Recognition 
  of depletion 
  factor                   -       -        5,378                    -            -                    -                -     5,378 
 Recognition 
  of 
  non-distributable 
  reserve                  -       -            -                    -            -                1,984                -     1,984 
 Recognition 
  of distributable 
  reserve                  -       -            -                    -            -                    -            1,844     1,844 
 Change in 
  fair value 
  of financial 
  assets at 
  fair value 
  through OCI              -       -            -                    -         (37)                    -                -      (37) 
                                                                        -----------  -------------------  --------------- 
 At 30 September 
  2019                 7,115     208       10,878                    -      (1,152)                3,430            1,844    22,323 
                     -------  ------  -----------  -------------------  -----------  -------------------  ---------------  -------- 
 

(1) Depletion factor reserve

During the nine month period ended 30 September 2019, the Group has disposed EUR5.4 million (nine month period ended 30 September 2018: EUR5.0 million) as a depletion factor reserve as per the Spanish Corporate Tax Act.

(2) Available-for-sale investments reserve

As at 31 December 2017 this reserve recorded fair value changes on available-for-sale investments. On disposal or impairment, the cumulative changes in fair value were recycled to the income statement. These assets were reclassified upon adoption of IFRS 9.

(3) Fair value reserve of financial assets at FVOCI

The Group decided to recognise changes in the fair value of certain investments in equity securities in OCI, as explained in comment (2) above. These changes are accumulated within the FVOCI reserve under equity. The Group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

(4) Non-distributable reserve

As required by the Spanish Corporate Tax Act, the Group classified a non-distributable reserve of 10% of the profits generated by the Spanish subsidiaries until the reserve is 20% of share capital of the subsidiary.

12. Other reserves (cont.)

(5) Distributable reserve

As result of the 2018 profit generated in ARM, the Group decided to record a distributable reserve in order to comply with the Spanish Corporate Tax Act.

In general, option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of fully paid ordinary shares by way of a capitalisation of the Company's reserves, a sub division or consolidation of the ordinary shares, a reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to the holders of ordinary shares.

Details of share options outstanding as at 30 September 2019:

 
                                                         Number of share options 000's 
 Outstanding options at 1 January 2019                                           1,313 
 
        *    Expired during the reporting period                                 (500) 
 
        *    Granted during the reporting period (1)                             1,900 
                                                        ------------------------------ 
 Outstanding options at 30 September 2019                                        2,713 
                                                        ------------------------------ 
 

On 30 May 2019, the Company announced a grant of 1,500,000 share options (the "Options") to Persons Discharging Managerial Responsibilities ("PDMRs") and management, in accordance with the Company's approved Share Option Plan 2013 (the "Option Plan"). The Options expire five years from the date of grant (29 May 2019), have an exercise price of 201.5 pence per ordinary share, based on the minimum share price in the five days preceding the grant date, and vest in two equal tranches, half on grant and half on the first anniversary of the granting date.

On 10 July 2019, the Company announced a grant of 400,000 share options (the "Options") to Person Discharging Managerial Responsibilities ("PDMRs") in accordance with the Company's approved Share Option Plan 2013 (the "Option Plan"). The Options expire five years from the date of grant (8 July 2019), have an exercise price of 204.5 pence per ordinary share, based on the minimum share price in the five days preceding the grant date, and vest in two equal tranches, half on grant and half on the first anniversary of the granting date.

13. Trade and other payables

 
 (Euro 000's)                 30 Sept 2019   31 Dec 2018 
 Non-current 
 Land options                            -            32 
 Government grant                       13            13 
                             -------------  ------------ 
                                        13            45 
                             -------------  ------------ 
 Current 
 Trade payables                     49,848        53,098 
 Land options and mortgage             292           791 
 Accruals                            4,048         3,382 
                                    54,188        57,271 
                             -------------  ------------ 
 

Trade payables mostly comprise the purchase of materials, supplies and other services. These payables do not accrue interest and no guarantees have been granted. The fair value of trade and other payables approximate their book values.

Trade payables are non-interest-bearing and usually settled on a 60-day term.

14. Provisions

 
                                          Rehabilitation 
   (Euro 000's)             Legal costs            costs     Total costs 
 1 January 2018                     213            5,514           5,727 
 Additions                      6                    953             959 
 Revision of provision             (35)                -            (20) 
 Finance cost                         -                -               - 
 At 30 September 2018               184            6,467           6,651 
 Additions                            -               19              19 
 Revision of provision             (57)            (133)           (190) 
 Finance cost                         -               39              39 
                         --------------  ---------------  -------------- 
 At 31 December 2018                127            6,392           6,519 
 Additions                          284              140             424 
 Revision of provision             (23)             (18)            (41) 
 Finance cost                                         89              89 
 At 30 September 2019               388            6,603           6,991 
                         --------------  ---------------  -------------- 
 
 
 (Euro 000's)    30 Sept   31 Dec 
                    2019     2018 
 Non-current       6,991    6,519 
 Current               -        - 
                --------  ------- 
 Total             6,991    6,519 
                --------  ------- 
 

Rehabilitation provision

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 discount rate used in the calculation of the net present value of the provision as at 30 September 2019 was 1.87%, which is the 15-year Spain Government Bond rate (31 December 2018: 1.87%). An inflation rate of 1.5% is applied on annual basis.

Legal provision

The Group has been named as defendant in several legal actions in Spain, the outcome of which is not determinable as at 30 September 2019. Management has reviewed individually each case and made a provision of EUR284 thousand for these claims, which has been reflected in these unaudited condensed interim consolidated financial statements.

15. Leases

 
 (Euro 000's)   30 Sept 2019     31 Dec 2018 
 Non-current 
 Leases                5,846               - 
                       5,846               - 
               -------------    ------------ 
 Current 
 Leases                  156               - 
                         156               - 
               -------------    ------------ 
 

Finance leases

The Group entered into lease arrangements for the renting of land, laboratory equipment and vehicles. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. Depreciation expense for the nine month period ended 30 September 2019 regarding leases amounted to EUR0.3 million (2018: EURnil). The term of the land lease is thirteen years. Payments are due at the beginning of the month escalating on an annual average of 1.5%. As at 30 September 2019, the remaining term of this lease is twelve and a quarter years.

15. Leases (continued)

The term of the motor vehicle and laboratory equipment leases is four years Payments are due at the beginning of the month increasing by a 1.5% average on an annual basis. At 30 September 2019, the remaining term of the motor vehicle and laboratory equipment leases is three and a quarter years, and three years and nine months, respectively.

 
 (Euro 000's)                              30 Sept   31 Dec 
                                            2019      2018 
 Minimum lease payments due: 
                                               148        - 
        *    Within one year 
                                             2,249        - 
        *    Two to five years 
                                             3,605        - 
        *    Over five years 
 Less future finance charges                     -        - 
                                          --------  ------- 
 Present value of minimum lease payments     6,002        - 
  due 
                                          --------  ------- 
 
 Present value of minimum lease payments 
  due: 
                                               148        - 
        *    Within one year 
                                             2,249        - 
        *    Two to five years 
                                             3,605        - 
        *    Over five years 
                                          --------  ------- 
                                             6,002        - 
                                          --------  ------- 
 
 
 (Euro 000's)                           Lease liability 
 Balance 1 January 2019                           6,144 
 Additions                                          277 
 Interest expense                                     6 
            Lease payments                        (424) 
 Balance at 30 September 2019                     6,002 
                                       ---------------- 
 
 Balance at 30 September 2019 
 
        *    Non-current liabilities              5,846 
 
        *    Current liabilities                    156 
                                       ---------------- 
                                                  6,002 
                                       ---------------- 
 

16. Deferred consideration

In September 2008, the Group moved to 100% ownership of Atalaya Riotinto Minera S.L. ("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, the Group signed a Master Agreement (the "Master Agreement") with Astor Management AG ("Astor") which included a deferred consideration of EUR43.9 million (the "Deferred Consideration") payable as consideration in respect of the acquisition. The Company also entered into a credit assignment agreement at the same time with a related company of Astor, Shorthorn AG, pursuant to which the benefit of outstanding loans was assigned to the Company in consideration for the payment of EUR9.1 million to Shorthorn (the "Loan Assignment").

The Master Agreement has been the subject of litigation in the High Court and the Court of Appeal that has now concluded. As a consequence, 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 per annum (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).

As at 30 September 2019, no consideration has been paid.

"Excess cash" is not defined in the Master Agreement leaving ambiguity as to how it is to be calculated. The Company has continued to regularly review its assessment of when this could be payable. As a result, at 30 September 2019, the EUR53 million liability has been classified as non-current, reflecting results to date, the Company's copper price estimation and the sustaining capex projects and commitments for 2019. At 30 June 2019, a portion of the EUR53 million liability was classified as a current liability based on estimates at that point.

As previously stated, the precise timing and quantum of payments will be estimated depending on the future key variables such as methodology for the calculation, definition of "Project", the price of copper and the US Dollar and Euro exchanges rates, timing of sustaining capital expenditures, increased costs and other operational issues. These factors can vary significantly, and any amounts actually paid within twelve months of the balance sheet date may differ substantially from the amounts presently estimated, if any, to become payable within this period.

16. Deferred consideration (continued)

The effect of discounting remains insignificant, in line with the 2018 assessment, and therefore the Group has measured the liability for the Astor Deferred Consideration on an undiscounted basis.

17. Acquisition, incorporation and disposal of subsidiaries

There were neither acquisition nor incorporation of subsidiaries during the nine month period ended 30 September 2019.

18. Wind-up of subsidiaries

There were no operations wound-up during the nine month period ended 30 September 2019.

19. Related party transactions

The following transactions were carried out with related parties:

19.1 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      Nine      Nine 
                                            months    months    months    months 
  (Euro 000's)                               ended     ended     ended     ended 
                                           30 Sept   30 Sept   30 Sept   30 Sept 
                                              2019      2018      2019      2018 
Directors' remuneration and fees               244       193       730       593 
Share option-based benefits and other 
 benefits to directors                          88        26       112        39 
Director's bonus                               365         -       365        68 
Key management personnel fees (1)              174       106       454       313 
Key management bonus (1)                     1,150         -     1,150         - 
Share option-based and other benefits 
 to key management personnel (1)               135        39       183        81 
Share bonus to key management personnel        (*)         -       (*)         - 
 (1) 
                                          --------  --------  --------  -------- 
                                             2,156       364     2,994     1,094 
                                          --------  --------  --------  -------- 
 

(1) Included compensation approved by the Board of Directors of the Company to a former employee of the Group.

(*) Included a compensation of 33,333 ATYM shares to a former employee of the Group.

19.2 Share-based benefits

On 30 May 2019, the directors and key management personnel have been granted 1,500,000 options. The options will expire in five years from the date of grant (29 May 2019), have an exercise price of 201.5 pence per ordinary share, based on the minimum share price in the five days preceding the grant date, and vest in two equal tranches, half on grant and half on the first anniversary of the granting date (Q3 2018: nil).

On 10 July 2019, the Company announced that it granted 400,000 share options (the "Options") to Persons Discharging Managerial Responsibilities ("PDMRs") in accordance with the Company's approved Share Option Plan 2013 (the "Option Plan"). The Options expire five years from the date of grant (8 July 2019), have an exercise price of 204.5 pence per ordinary share, based on the minimum share price in the five days preceding the grant date, and vest in two equal tranches, half on grant and half on the first anniversary of the granting date.

19. Related party transactions (continued)

19.3 Transactions with related parties/shareholders

i) Transaction with shareholders

 
                                            Three months  Three months   Nine months  Nine months 
                                                   ended         ended         ended        ended 
                                                 30 Sept       30 Sept       30 Sept      30 Sept 
  (Euro 000's)                                      2019          2018          2019         2018 
                                           =============  ============  ============  =========== 
Trafigura- Revenue from contracts                  5,789         8,258        26,452       26,296 
Freight services                                       -             -             -            - 
                                           -------------  ------------  ------------  ----------- 
                                                   5,789         8,258        26,452       26,296 
Gain/(losses) relating provisional 
 pricing within sales                                826       (2,329)           815      (2,655) 
                                           -------------  ------------  ------------  ----------- 
Trafigura - Total revenue from contracts           6,615         5,929        27,267       23,641 
                                           =============  ============  ============  =========== 
 

XGC was granted an offtake over 49.12% of life of mine reserves as per the NI 43-101 report issued in September 2016. Similarly, Orion was granted an offtake over 31.54% and Trafigura 19.34% respectively of life of mine reserves as per the same NI 43-101 report. In November 2016, the Group was notified and consented the novation of the Orion offtake agreement as Orion reached an agreement with a third party (XGC) to transfer the rights over the concentrates. In December 2017, the Group was notified and consented the novation of XGC offtake agreement as XGC reached an agreement with a third party (LDC) to transfer the rights over the concentrates.

ii) Period-end balances with related parties

 
 
  (Euro 000's)                        30 Sept 2019    31 Dec 2018 
Receivables from related parties: 
Recursos Cuenca Minera S.L.                     56             56 
Total (Note10)                                  56             56 
                                    --------------  ------------- 
 

The above balances bear no interest and are repayable on demand.

iii) Period-end balances with shareholders

 
 
  (Euro 000's)                              30 Sept 2019     31 Dec 2018 
Trafigura - Debtor balance- subject to 
 provisional pricing                               5,811           2,461 
Total (Note 10)                                    5,811           2,461 
                                         ---------------  -------------- 
 

The above debtor balance arose from sales of goods. It bears no interest and is repayable on demand.

20. Contingent liabilities

Judicial and administrative cases

In the normal course of business, the Group 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 Group accrues for adverse outcomes as they become probable and estimable.

The Junta de Andalucía notified the Group of another disciplinary proceeding for unauthorised discharge in 2014. The Group 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 these proceedings will also be favourable for the Group. Once the necessary time has lapsed, the Group will ask for the Administrative File to be dismissed.

20. Contingent liabilities (continued)

Receipt of rulings of claims made by an environmental Group

On 29 March 2019, the Company announced that it had received notification from the Supreme Court in Spain that it did not have jurisdiction over the appeal made by the Junta de Andalucía ("JdA") and therefore the announced, Ruling by the Tribunal Superior de Justicia de Andalucía ("TSJA") dated 26 September 2018 remains valid.

On 26 April 2019, the Company announced that a judgment relating to the Mining Permits to operate Proyecto Riotinto (the "Mining Permits") was handed down by the TSJA. The TSJA declared the Mining Permits are linked to the environmental permits, ruled by the same tribunal in September 2018. The new ruling on the mining permits is based on the requirement to have an environmental permit before issuing mining permits and therefore invalidates the existing mining permits. The TSJA did not accept the requests by Ecologistas en Accion ("EeA") for the cessation of activities at the mine and an increase in the scope of the environmental plan.

On 20 November 2019, the Company received an informal notification that its appeal to the Supreme Court on the ruling handed down by the TSJA on 26 April 2019 had been rejected. The Company has been advised by its lawyers that the rejection has no impact over the Company's legal status quo.

The JdA is undergoing the process to resolve the previously reported administrative issues identified by the TSJA relating to the environmental and mining permits. The Company continues operating the mine normally and remains confident that the ongoing process carried out by the JdA will not impact its operations at Proyecto Riotinto.

21. Commitments

The Company has capital commitments related to the multiple projects to improve the environmental management, the capacity of the tailing dams and to increase the efficiency of the processing plant.

22. Significant events

There have been no significant events during the nine month period ended 30 September 2019 other than as disclosed in the unaudited, interim, condensed, consolidated financial statements and the notes above.

23. Events after the reporting period

-- On 29 October 2019 the Board of Directors approved the issuance of 33,333 shares to a former employee of the Group.

-- On 13 November 2019, the Company executed a Share Purchase Agreement to acquire the 12.5% of Explotaciones Gallegas del Cobre, S.L. a limited company which held the permits for the land surrounding the Proyecto Touro with exploration potential.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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