TIDMATYM
RNS Number : 1347I
Atalaya Mining PLC
22 November 2018
22 November 2018
Atalaya Mining Plc.
("Atalaya" and/or the "Group")
Interim Financial Statements for the three and nine month period
ended 30 September 2018
Unaudited, Condensed, Interim, Consolidated Financial
Statements
Atalaya Mining Plc (AIM: ATYM; TSX: AYM), the European mining
and development company, is pleased to announce its unaudited
quarterly results for the three and nine months ended 30 September
2018, together with the unaudited, condensed, interim consolidated
financial statements.
In particular, the Group has increased its 2018 guidance due to
the operating improvements delivered during the nine months ended
30 September 2018, outlined in detail below.
Contained copper production is expected to be between 39,000
tonnes and 41,000 tonnes (previous guidance of 37,000 to 40,000
tonnes) owing to a combination of improved recoveries, ore grade
and throughput. Cash costs and All-in sustaining costs ("AISC") are
also revised and are now expected to be within $1.95-$2.10 and
$2.25-$2.40 per pound of copper, respectively (previously estimated
to be in the range of $2.50/lb - $2.60/lb).
Operating Highlights
Proyecto Riotinto
-- Copper production during the three months ended 30 September
2018 ("Q3 2018") was 11,055 tonnes, 4% higher than the 10,679
tonnes produced during the three months ended 30 September 2017
("Q3 2017"). Copper production at Proyecto Riotinto during Q3 2018
replaces Q2 2018 as the highest quarterly production on record.
During the nine month period ended 30 September 2018 copper
production was 30,942 tonnes compared with 28,542 tonnes during the
same period in 2017, an 8% increase.
-- Ore processed during Q3 2018 was 2,491,403 tonnes compared
with 2,173,826 tonnes in Q3 2017. During the nine month period
ended 30 September 2018 ore processed was 7,188,747 tonnes compared
with 6,525,032 tonnes processed in the same period last year.
-- Copper recovery during the Q3 2018 was 88.40% (Q3 2017:
85.95%). Copper recovery for the nine month period ended 30
September 2018 averaged 88.06% representing an improvement over
85.22% during the same period in 2017.
Expansion to 15Mtpa at Proyecto Riotinto
-- The 15Mtpa expansion project is progressing according to
schedule with engineering essentially complete and site
construction activities picking up. Overall progress completion at
the end of the reporting quarter was 65%. Procurement has
progressed to 64% completed. Earthworks are almost completed with
only minor final activities pending. Civil engineering works are
progressing with main activities now concentrated on completion of
the new SAG area and the crusher and coarse stockpile buildings.
Structural steel works are well advanced in the flotation area.
Piping is also close to completion in the concentrate handling area
with electrical installation commencing. Installation of mechanical
equipment is progressing in the concentrate handling area. The
milling area is the critical path to completion. The expansion
project is scheduled for mechanical completion at the end of Q2
2019.
Proyecto Touro
-- At the end of the reporting quarter, additional studies and
detailed reports addressing certain project improvements and
recommendations from the public hearing process were formally
submitted to the authorities. This is the last step to complete the
public hearing process initiated in August 2017.
Financial Highlights
-- Revenues of EUR42.8 million for Q3 2018 compared with EUR35.7
million in Q3 2017 on higher sales volumes owing to timing of sales
plus higher realised prices. Revenues for the nine month period
ended 30 September 2018 increased significantly to EUR144.4 million
compared with EUR114.8 million for the same period in 2017, as a
result of increased volumes sold and higher copper prices. Realised
copper price for Q3 2018 was $2.89/lb compared with $2.66/lb in Q3
2017.
-- Cash costs during Q3 2018 were the same as the previous
quarter at US$1.88/lb of payable copper, slightly higher than Q3
2017 (US$1.84/lb). AISC during Q3 2018 amounted to US$2.13/lb of
payable copper representing a lower cost than US$2.34/lb of payable
copper during Q2 2018. Lower costs per pound were mainly the result
of the effect of higher payable copper production, together with
lower sustaining capex during Q3 2018.
-- Cash costs for the nine month period ended 30 September 2018
were US$2.00/lb payable copper versus US$1.80/lb payable copper
during the same period last year. AISC amounted to US$2.35/lb
payable copper during the nine month period ended 30 September 2018
compared with US$2.12/lb payable copper for the nine month period
ended 30 September 2017.
-- EBITDA of EUR7.7 million in Q3 2018 compared with EUR9.3
million delivered in Q3 2017. The decrease in EBITDA was mainly the
result of higher operating costs over sales volumes. On an
accumulative basis, EBITDA during the nine month period ended 30
September 2018 was EUR42.0 million compared with EUR33.8 million in
the same period last year.
-- Year-on-year increase in profit after tax in Q3 2018 to
EUR3.1 million (Q3 2017: EUR2.7 million). Profits after tax for the
nine months ended 30 September 2018 were significantly higher at
EUR27.6 million compared with EUR14.5 million during the same
period in 2017.
-- Fully diluted earnings per share ("EPS") for Q3 2018 of 2.2
cents per share compared with 2.3 cents per share in Q3 2017. Fully
diluted earnings per share for the nine month period ended 30
September 2018 were 20.2 cents per share compared with 12.3 cents
for the same period last year.
-- Inventories of concentrate at 30 September 2018 amounted to
EUR2.0 million (EUR4.8 million at 31 December 2017).
-- Working capital surplus has decreased during Q3 2018 as a
result of capital expenditures mainly related to the expansion
project. At the end of Q3 2018, working capital was EUR19.1
million, representing a EUR13.6 million decrease from Q2 2018
(EUR32.7 million). Unrestricted cash balances as at 30 September
2018 amounted to EUR45.6 million.
-- Cash flow from operating activities before changes in working
capital was EUR7.7 million for Q3 2018 compared with EUR8.0 million
during Q3 2017. Cash flows from operating activities before changes
in working capital during the nine month period ended 30 September
2018 were EUR43.3 million compared with EUR32.0 million during the
same period last year.
-- Net cash flow from operating activities after changes in
working capital was EUR14.9 million for Q3 2018 compared with
EUR12.9 million during Q3 2017. Net cash flows from operating
activities after changes in working capital were EUR44.2 million
for the nine month period ended 30 September 2018 compared with
EUR22.9 million during the same period in 2017.
Commenting on 2018's Q3 and year to date results, Alberto
Lavandeira, CEO said:
"We are pleased to have increased our production guidance for
2018 following a very positive nine months of 2018. We have
achieved record production and recovery levels, operating costs
within our stated guidance during a period where copper prices have
also been robust. The Riotinto plant is operating well and our
expansion plans are well on track. Once complete, we will see an
improvement in operational efficiencies and a reduction in
maintenance requirements and operating cash costs."
About Atalaya Mining Plc
Atalaya is an AIM and TSX listed mining and development group.
It produces copper concentrates and silver by-product at its fully
owned Proyecto Riotinto site in southwest Spain, which is also
undergoing a brownfield expansion. 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 at the permitting stage. For further information,
visit www.atalayamining.com
This announcement contains information which, prior to its
publication constituted inside information for the purposes of
Article 7 of Regulation (EU) No 596/2014.
Contacts:
Newgate Communications Elisabeth Cowell / Adam Lloyd +44 20 7680
(Financial PR) / Tom Carnegie 6550
+44 20 3170
4C Communications Carina Corbett 7973
--------------------------------------------- ------------
Canaccord Genuity (NOMAD Martin Davison / Henry Fitzgerald-O'Connor/ +44 20 7523
and Joint Broker) James Asensio 8000
--------------------------------------------- ------------
BMO Capital Markets (Joint Jeffrey Couch / Tom Rider +44 20 7236
Broker) / Michael Rechsteiner 1010
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Management's review
(All amounts in Euro thousands unless otherwise stated)
For the three and nine months to 30 September 2018 and 2017 -
(Unaudited)
ATALAYA MINING PLC
MANAGEMENT'S REVIEW AND
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
30 September 2018
(UNAUDITED)
Notice to Reader
The accompanying unaudited, condensed, interim consolidated
financial statements of Atalaya Mining Plc have been prepared by
and are the responsibility of Atalaya Mining Plc's management. The
unaudited, condensed, interim consolidated financial statements
have not been reviewed by Atalaya's auditors.
Introduction
This report provides an overview and analysis of the financial
results of operations of Atalaya Mining Plc and its subsidiaries
("Atalaya" and/or "Group"), to enable the reader to assess material
changes in the financial position between 31 December 2017 and 30
September 2018 and results of operations for the three and nine
months ended 30 September 2018 and 2017.
This report has been prepared as of 21 November 2018. The
analysis, hereby included, is intended to supplement and complement
the unaudited, condensed, interim consolidated financial statements
and notes thereto ("Financial Statements") as at and for the three
and nine months ended 30 September 2018. 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 2017, and the unaudited, condensed
interim consolidated financial statements for the three and nine
months ended 30 September 2017. These documents can be found on
Atalaya's website at www.atalayamining.com.
Atalaya prepares its Financial Statements in accordance with
International Financial Reporting Standards ("IFRSs"). The currency
referred to in this document is the Euro, unless otherwise
specified.
Forward-looking statements
This report may include certain "forward-looking statements" and
"forward-looking information" under applicable securities laws.
Except for statements of historical fact, certain information
contained herein constitutes forward-looking statements.
Forward-looking statements are frequently characterised by words
such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate", and other similar words, or statements
that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are based on
a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. Assumptions upon which such
forward-looking statements are based include that all required
third party regulatory and governmental approvals will be obtained.
Many of these assumptions are based on factors and events that are
not within the control of Atalaya and there is no assurance they
will prove to be correct. Factors that could cause actual results
to vary materially from results anticipated by such forward-looking
statements include changes in market conditions and other risk
factors discussed or referred to in this report and other documents
filed with the applicable securities regulatory authorities.
Although Atalaya has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Atalaya undertakes no obligation to
update forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements.
1. Description of the business
Atalaya is a Cyprus based copper producer with mining interests
in Spain. The Company is listed on the 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 of 9.5Mtpa where copper in concentrate and silver
by-product are produced. In December 2017, the Board of the Company
approved and announced a project to expand Proyecto Riotinto's
throughput capacity to 15Mtpa. The expansion is currently under
construction and it is expected to be finalised during 2019.
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 operating results
Proyecto Riotinto
The following table presents a summarised statement of
operations of Proyecto Riotinto for the three and nine months ended
30 September 2018 and 2017.
Three months Three months ended Nine Nine
Units expressed in accordance ended 30 Sept 2017 months months ended
with the international system Unit 30 Sept 2018 ended 30 Sept 2017
of units (SI) 30 Sept 2018
Ore mined t 2,787,406 2,366,142 7,938,961 7,685,419
Ore processed t 2,491,403 2,173,826 7,188,747 6,525,032
Copper ore grade % 0.50 0.58 0.49 0.52
Copper concentrate grade % 24.81 22.57 23.07 22.54
Copper recovery rate % 88.40 85.95 88.06 85.22
Copper concentrate t 44,562 47,328 134,130 127,281
Copper contained in
concentrate t 11,055 10,679 30,942 28,542
Payable copper contained in
concentrate t 10,609 10,206 29,600 27,269
Cash cost* $/lb payable 1.88 1.84 2.00 1.80
All-in sustaining cost* $/lb payable 2.13 2.13 2.35 2.12
(*) 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 months operating review
Copper production at Proyecto Riotinto for Q3 2018 increased to
11,055 tonnes from 10,679 tonnes reported in Q3 2017, and 10,446
tonnes in Q2 2018, representing an increase of 3.5% and 5.8%,
respectively.
In terms of ore milled, 2.5 million tonnes were processed in the
quarter, reporting a consistent quarterly throughput. Copper head
grade was slightly above plan. The increase in copper production
during the quarter is mainly attributable to slightly higher than
budgeted head grade, ore milled and better metallurgical
recoveries, which averaged 88.40% during the quarter.
The Company is pleased to increase its 2018 production guidance
from 37,000 - 40,000 tonnes to 39,000 - 41,000 tonnes of copper, as
previously announced.
Mining operations are progressing to plan and at similar levels
to previous quarters. On a combined basis, ore, waste and marginal
ore amounted to 2.2 million m(3) in Q3 2018 versus 2.6 million m(3)
in Q2 2018. Additional mining equipment is available on site in
anticipation of the increase in production in 2019.
As part of the Company's continuous improvements programme, an
additional secondary cone crusher, installed during the previous
quarter, is now fully operational. Crushing capacity is no longer a
bottleneck in the production process. A detailed analysis of the
current screening section is now under way. Construction of the
dome to cover the coarse ore stockpile has been put on hold due to
re-engineering activities.
During the first week of August a wildfire broke out in close
proximity to the north of Proyecto Riotinto which affected 1,600 ha
of pine trees and eucalyptus. Although there was some damage to
water pipelines at Proyecto Riotinto, production was minimally
affected.
On-site concentrate inventories at the end of the quarter were
approximately 2,724 tonnes. All concentrate in stock at the
beginning of the quarter and produced during the quarter was
delivered to the port at Huelva.
Exploration is underway at the Atalaya pit where massive
sulphides and stockwork mineralisation are targeted. The first
1,500 m of a 19,000 m drilling campaign have already been drilled
with positive preliminary results received. Drilling around the
high grade underground workings in Filon Sur is also ongoing.
2. Overview of operational results (continued)
Nine months operating review
Production of copper contained in concentrate during the nine
month period ended 30 September 2018 was 30,942 tonnes, compared
with 28,542 tonnes in the same period of 2017. During the nine
month period ended 30 September 2018, payable copper in
concentrates was 29,600 tonnes compared with 27,269 tonnes of
payable copper in the nine month period ended 30 September
2017.
Ore mined in the nine month period ended 30 September 2018 was
7,938,961 tonnes compared with 7,685,419 tonnes during the same
period in 2017. During the nine month period ended 30 September
2018, ore processed was 7,188,747 tonnes versus 6,525,032 tonnes in
2017.
Ore grade during the nine month period ended 30 September 2018
was 0.49% Cu compared with 0.52% Cu in the nine month period ended
30 September 2017. In the nine month period ended 30 September
2018, copper recovery was 88.09% versus 85.22% in 2017. Concentrate
production amounted to 134,130 tonnes in the nine month period
ended 30 September 2018, higher than the production of 127,281
tonnes achieved during the same period in 2017.
Expansion to 15Mtpa at Proyecto Riotinto
The 15Mtpa expansion project is progressing according to
schedule with engineering essentially complete and site
construction activities picking up. Overall progress completion at
the end of the reporting quarter was 65%. Procurement has
progressed to 64% completed. Earthworks are almost completed with
only minor final activities pending. Civil engineering works are
progressing with main activities now concentrated on completion of
the new SAG area and the crusher and coarse stockpile buildings.
Structural steel works are well advanced in the flotation area.
Piping is also close to completion in the concentrate handling area
with electrical installation commencing. Installation of mechanical
equipment is progressing in the concentrate handling area. The
milling area is the critical path to completion. The expansion
project is scheduled for mechanical completion at the end of Q2
2019.
Financing to initiate the expansion was raised through a placing
of new shares amounting to GBP31.0 million in December 2017. The
Company is evaluating a variety of options for the balance of
funding, which is expected to be finalised when required during
2019.
Receipt of ruling of claim made by an environmental group
On 26 September 2018, Atalaya received notice from the Tribunal
Superior de Justicia de Andalucía ruling in favour of certain
claims made by environmental group Ecologistas en Accion ("EeA")
against the government of Andalucía ("Junta de Andalucía" or "JdA")
and Atalaya, as co-defendant in the case.
In July 2014, EeA had filed a legal claim to JdA with a request
to declare null the Unified Environmental Declaration (in Spanish,
Authorization Ambiental Unificada, or "AAU") granted to Atalaya
Riotinto Minera, S.L.U. dated 27 March 2014, which was required in
order to secure the required mining permits for Proyecto Riotinto.
The judgment, in spite of annulling the AAU on procedural grounds,
made very clear that the AAU was correct and therefore, rejected
the issues raised by EeA and confirmed the decision of JdA not to
suspend the AAU.
The JdA has confirmed its intention to launch an appeal process.
Although the claim was against the JdA, Atalaya, being an
interested party in the process, voluntarily joined as co-defendant
and believes it could be successfully appealed to the Supreme Court
in Spain.
Atalaya continues running the mine normally and it is confident
the ruling will not impact its operations at Proyecto Riotinto.
Proyecto Touro
As of the date of this report, additional studies and detailed
reports addressing certain project improvements and recommendations
from the public hearing process were formally submitted to the
authorities. This is the last step required to complete the public
hearing process initiated in August 2017.
An environmental monitoring programme similar to the programme
carried out in Riotinto is fully implemented at Touro.
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
Proyecto Riotinto operating guidance for 2018 has been increased
to the following:
Range
Unit 2018
Ore processed million tonnes 9.7
Contained copper tonnes 39,000 - 41,000
Copper head grade for 2018 is now expected to average between
0.48% and 0.49% Cu, with a recovery rate which is now expected to
be approximately 87.0% to 88.0%. Cash operating cost guidance for
2018 has been reduced to US$1.95/lb - US$2.10/lb (from US$2.15/lb -
US$2.30/lb previously), and AISC guidance has been reduced to
US$2.25/lb - US$2.40/lb (from US$2.50/lb - US$2.60/lb
previously).
4. Overview of the financial results
The following table presents summarised consolidated income
statements for the three and nine months ended 30 September 2018,
with comparatives for the three and nine months ended 30 September
2017.
Three months ended Nine
Three months ended 30 Sept 2017 Nine months ended months ended
30 Sept 2018 *restated 30 Sept 2018 30 Sept 2017
*restated
(Euro 000's)
Sales 42,811 35,734 144,354 114,808
Total operating costs (33,592) (24,344) (98,004) (76,866)
Corporate expenses (1,249) (1,881) (3,302) (3,509)
Exploration expenses (405) (228) (818) (674)
Care and maintenance
expenditure 94 - (187) -
Other income - - - 5
--------------------- -------------------- -------------------- ---------------------
EBITDA 7,659 9,281 42,043 33,764
Depreciation/amortisation (3,484) (4,158) (9,794) (12,373)
Net foreign exchange
(loss)/gain (10) (1,134) 1,092 (1,919)
Net finance cost (77) (119) (196) (609)
Tax charge (955) (1,188) (5,520) (4,367)
--------------------- -------------------- -------------------- ---------------------
3,133 2,682 27,625 14,496
--------------------- -------------------- -------------------- ---------------------
(*) Refer to Note 2.1. (c)
Three months financial review
Revenues for the three month period ended 30 September 2018
amounted to EUR42.8 million (Q3 2017: EUR35.7 million). Higher
revenues, compared with the same quarter in the previous year, were
driven by increased volumes of concentrate sold in addition to
improved realised prices.
During Q3 2018 the Company sold 43,927 tonnes of copper
concentrate versus 40,989 tonnes in the same quarter last year.
Realised prices of US$2.89/lb copper during Q3 2018 compared with
US$2.66/lb copper in Q3 2017.
All concentrates were sold under offtake agreements.
Operating costs for the three month period ended 30 September
2018 amounted to EUR33.6 million, compared with EUR24.3 million in
Q3 2017. Higher costs during 2018 related to (i) reduction of
EUR5.8 million cost of sales in Q3 2017 as the inventory increased
by 6,339 dmt during the quarter; and (ii) a EUR3.0 million deferred
mining cost capitalisation adjustment in Q3 2018 as per the updated
strip ratio of 1:1.43.
4. Overview of the financial results (continued)
Cash costs were US$1.88/lb payable copper during Q3 2018
compared with US$1.84/lb payable copper in Q3 2017. All-in
sustaining costs in the reporting quarter were US$2.13/lb payable
copper compared with US$2.13/lb payable copper in Q3 2017.
Sustaining capex for Q3 2018 amounted to EUR1.9 million compared
with EUR1.4 million in Q3 2017 and relates to the enhancement of
processing systems and the installation of the cone crusher.
Corporate expenses amounting to EUR1.2 million (Q3 2017: EUR1.9
million) include non-operating costs of the Cyprus office,
corporate legal and consultancy costs, on-going listing costs,
directors' emoluments, and salaries and related costs of the
corporate office.
Exploration costs at Proyecto Riotinto for the three month
period ended 30 September 2018 amounted to EUR0.4 million compared
with EUR0.2 million in Q3 2017. All exploration costs amounting to
EUR0.2 million during the quarter at Proyecto Touro are
capitalised.
Care and maintenance expenditures relate to the non-capitalised
administration costs of Proyecto Touro.
EBITDA for the three months ended 30 September 2018 amounted to
EUR7.7 million as compared to Q3 2017 of EUR9.3 million.
The main item below the EBITDA line is depreciation and
amortisation of EUR3.5 million (Q3 2017: EUR4.2 million). Net
financing costs for Q3 2018 amounted to EUR0.1 million similar to
EUR0.1 million in Q3 2017.
Nine months financial review
Revenues for the nine-month period ended 30 September 2018
amounted to EUR144.4 million (nine month period ended 30 September
2017: EUR114.8 million).
Copper concentrate production during the nine month period
ending 30 September 2018 was 134,130 tonnes (nine month period
ended 30 September 2017: 127,281 tonnes), 138,781 tonnes of copper
concentrates were sold in the same period (nine month period ended
30 September 2017: 118,666 tonnes). Inventories of concentrates as
at 30 September 2018 were 2,724 tonnes (31 Dec 2017: 4,797
tonnes).
Realised copper prices for the nine month period ended 30
September 2018 were US$3.02./lb copper compared with US$2.58/lb
copper in the nine month period ended 30 September 2017.
Concentrates were sold under offtake agreements in place. The
Company did not enter into any hedging agreements in 2018.
Operating costs for the nine month period ended 30 September
2018 amounted to EUR98.0 million, compared with EUR76.9 million in
nine month period ended 30 September 2017. Higher costs in 2018
were directly attributable to higher copper production.
Cash costs of US$2.00/lb payable copper during the nine month
period ended 30 September 2018 compares with $1.80/lb payable
copper in the same period last year. Higher costs were due to (i)
EUR1.9 million lower capitalisation of deferred mining costs in the
nine month period ended 30 September 2018; and (ii) higher mining,
maintenance and technical services costs. All-in sustaining costs
in the nine month period ended 30 September 2018 were US$2.35/lb
payable copper compared with US$2.12/lb payable copper in the nine
month period ended 30 September 2017. The higher AISC compared with
the nine month period ended 30 September 2017 results from
increased cash costs together with higher sustaining capex.
Sustaining capex for the nine month period ended 30 September
2018 amounted to EUR7.1 million, compared with EUR4.2 million in
the nine month period ended 30 September 2017. Sustaining capex was
attributed to the installation of continuous development programmes
on the perimetric channel at the tailings storage facilities,
optimisation of the flotation circuit and other processing
systems.
Corporate costs for the nine month period ended 30 September
2018 were EUR3.3 million, compared with EUR3.5 million in the same
period in 2017. Corporate costs mainly include Company overhead
expenses.
Exploration costs related to Proyecto Riotinto for the nine
month period ended 30 September 2018 amounted to EUR0.8 million,
compared with EUR0.7 million in the same period in 2017.
EBITDA for the nine month period ended 30 September 2018
amounted to EUR42.0 million, compared with EUR33.8 million in the
nine month period ended 30 September 2017.
Depreciation and amortisation amounted to EUR9.8 million in the
nine month period ended 30 September 2018 (nine month period ended
30 September 2017: EUR12.4 million). Lower depreciation was mainly
driven by an extension of the life of mine as per the updated
reserves and resources report.
Net finance costs for the nine month period ended 30 September
2018 amounted to EUR0.2 million (nine month period ended 30
September 2017 EUR0.6 million).
4. Overview of the financial results (continued)
Realised copper prices
The average prices of copper for the three and nine months ended
30 September 2018 and 2017 are summarised below:
Three months ended Three months ended Nine months ended Nine months ended
30 Sept 2018 30 Sept 2017 30 Sept 2018 30 Sept 2017
(USD)
Realised copper price per lb 2.89 2.66 3.02 2.58
Market copper price per lb (period
average) 2.77 2.88 3.14 2.72
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. Lower realised prices than market averages during the
nine months ended 30 September 2018, are mainly due to the final
settlement of invoices whose QP were fixed in the previous quarter
due to a short open period when copper prices were lower. The
realised price of shipments during the quarter excluding QP was
approximately $2.75/lb.
The Group had no hedges during the nine month period ended 30
September 2018.
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,
stripping costs, exploration and geology costs, corporate costs and
sustaining capital expenditures.
During the final quarter of 2017, Atalaya carried out an
exhaustive analysis of the methodology applied to the C1 cash cost
and AISC. As a result of the analysis, management changed the
methodology used when calculating C1 and AISC in the first three
quarters of 2017. A full reconciliation including each quarter to
Q3 2017 is included in section iii of the performance review in the
2017 Annual Report.
Realised price per pound of payable copper is the value of the
copper payable included in the concentrate produced including the
penalties, discounts, 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 is a summary of Atalaya's cash position and cash
flows as at 30 September 2018 and 31 December 2017.
Liquidity information
(Euro 000's) 30 September 31 December
2018 2017
Unrestricted cash and cash equivalents 45,646 42,606
Restricted cash 250 250
Working capital surplus 19,080 22,137
Unrestricted cash and cash equivalents as at 30 September 2018
increased to EUR45.6 million from EUR42.6 million at 31 December
2017. The increase in cash balances is the result of net cash flow
incurred in the period. Cash balances are unrestricted and include
balances at operational and corporate level, including the proceeds
of the capital raise in Q4 2017.
Restricted cash remains at EUR0.3 million as at 30 September
2018 and mainly relates to deposit bond guarantees.
As of 30 September 2018, Atalaya reported a working capital
surplus of EUR19.1 million, compared with a working capital surplus
of EUR22.1 million at 31 December 2017. The surplus results from
the equity raised in Q4 2017 and the cash generated by Proyecto
Riotinto. The principal trade payable account relates to the mining
contractor where the Group has reached certain agreements to reduce
the balance progressively during 2018.
In June 2017, the Group completed repayment of EUR16.9 million
to the Social Security's General Treasury in Spain. The debt
liability was incurred by the former owners of the assets.
Repayment was completed according to the agreed repayment
schedule.
In 2016, the Group entered into a US$14.0 million copper
concentrate prepayment agreement with Transamine Trading, S.A. an
independent and privately owned commodity trading company based in
Geneva. The duration of the prepayment was from 1 January 2017 to
31 December 2018 with terms at market conditions and the settlement
was agreed to be paid through deductions from payments received for
each shipment. On 15 September 2017, the Group fully settled the
prepayment ahead of schedule. During December 2017, the Group
decided not to extend the contract on the same terms during 2018 as
permitted under the original agreement.
Overview of the Group's cash flows
Three Nine
Three months ended months ended Nine months ended
30 Sept 30 Sept 2017 *restated months ended 30 Sept 2017
2018 30 Sept 2018 *restated
(Euro 000's)
Cash flows from operating
activities 14,937 12,886 44,151 22,876
Cash flows used in investing
activities (20,414) (5,378) (41,704) (14,622)
Cash flows from financing - - 593 -
activities
--------------------- ------------------------ --------------- --------------
Net (decrease)/increase in cash and
cash equivalents (5,477) 7,508 3,040 8,254
--------------------- ------------------------ --------------- --------------
Three month cash flows review
Cash and cash equivalents decreased by EUR5.5 million during the
three months ended 30 September 2018. This was due to the net
results of cash from operating activities amounting to EUR14.9
million and cash used in investing activities amounting to EUR20.4
million.
Cash generated from operating activities before working capital
changes was EUR7.7 million. Atalaya decreased its trade receivables
in the period by EUR10.7 million, as well as its trade payables by
EUR2.2 million and increased its inventory levels by EUR0.2
million.
Investing activities during the quarter consumed EUR20.4
million, relating mainly to the expansion project Capex the Rumbo
Royalty Buyout and the capitalisation of deferred mining costs.
6. Liquidity and capital resources (continued)
Nine months cash flows review
Cash and cash equivalents increased by EUR3.0 million during the
nine months ended 30 September 2018. This was due to cash from
operating activities amounting to EUR44.2 million, cash used in
investing activities amounting to EUR41.7 million and cash from
financing activities amounting to EUR0.6 million.
Cash generated from operating activities before working capital
changes was EUR43.3 million. Atalaya decreased its trade payables
in the period by EUR10.9 million, its trade receivable balances by
EUR10.3 million, as well as its inventory levels by EUR4.2
million.
Investing activities during the nine-month period amounted to
EUR41.7 million, relating mainly to the deferred mining costs,
expansion project Capex and Rumbo Royalty Buyout.
Foreign exchange
Foreign exchange rate movements can have a significant effect on
Atalaya's operations, financial position and results. Atalaya's
sales are denominated in U.S. Dollars ("USD"), while Atalaya's
operating expenses, income taxes and other expenses are denominated
in Euros ("EUR"), and to a much lesser extent in British Pounds
("GBP").
Accordingly, fluctuations in the exchange rates can potentially
impact the results of operations and carrying value of assets and
liabilities on the balance sheet.
During the three and nine months ended 30 September 2018,
Atalaya recognised a foreign exchange loss of EUR0.01 million and a
foreign exchange profit of EUR1.1 million respectively. Foreign
exchange losses mainly related to a change in the period end of EUR
and USD conversion rates, as all sales are cashed and occasionally
held in USD.
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 2018 30 Sept 2017 30 Sept 2018 30 Sept 2017
Average rates for the periods
GBP - EUR 0.8924 0.8978 0.8841 0.8732
USD - EUR 1.1629 1.1746 1.1942 1.1140
Spot rates as at
GBP - EUR 0.8908 0.8818 0.8908 0.8818
USD - EUR 1.1606 1.1806 1.1606 1.1806
In February 2017, the Group entered into certain foreign
exchange hedging contracts to offset the agreements in force as at
31 December 2016. During the nine month period 2018, Atalaya did
not have any currency hedging agreements.
Further information on the hedging agreements is disclosed in
the unaudited, condensed interim consolidated financial statements
that follow (Note 15).
7. Rumbo royalty and Deferred consideration
Rumbo royalty
In July 2012, Atalaya Riotinto Minera, S.L. signed a royalty
agreement with Rumbo 5 Cero, S.L. ("Rumbo"), at which Rumbo was
entitled to receive a royalty payment of up to US$0.25 million per
quarter if the average copper sales price or LME price for the
period is equal to or above US$2.60/lb for ten years up to a
maximum amount of US$10.0 million. As the average copper price for
the third and fourth quarter of 2017 was above US$2.60/lb, the
company was obligated to pay a royalty amounting to US$0.5 million
to Rumbo. On 8 February 2018, the companies agreed to satisfy this
payment through an issuance of 192,540 new ordinary shares at Stg
GBP0.075.
On 5 April 2018, the Company signed a contract with Rumbo to
purchase the remaining royalty agreement for a total consideration
of US$4.75 million to be paid through the issuance of 1,600,907 new
ordinary shares of Stg GBP0.075.
7. Rumbo royalty and Deferred consideration (continued)
Deferred Consideration to Astor
In September 2008, the Group moved to 100% ownership of Atalaya
Riotinto Mineral 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 EUR43.8
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). While the
cash sweep provisions of the Master Agreement require ARM to repay
the Loan Assignment early, the Credit Assignment Agreement
(concerning the Loan Assignment) is governed by Spanish Law and is
not governed by the Master Agreement. Therefore there is no clarity
on whether the Conditions have been met in respect of payment of
the Loan Assignment and there remains significant doubt concerning
the legal obligation to pay the Loan Assignment pursuant to the
terms of the Credit Assignment Agreement.
As at 30 September 2018, the Group has not generated any excess
cash and, consequently, no consideration has been paid.
8. Risk factors
Due to the nature of Atalaya's business in the mining industry,
the Group is subject to various risks that could materially impact
its 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
2017.
9. Critical accounting policies, estimates and accounting changes
The preparation of Atalaya's Financial Statements in accordance
with IFRS requires management to make estimates and assumptions
that affect amounts reported in the Financial Statements and
accompanying notes. There is a full discussion and description of
Atalaya's critical accounting policies in the audited consolidated
financial statements for the year ended 31 December 2017.
10. Other information
Additional information about Atalaya Mining Plc. is available at
www.atalayamining.com
Condensed interim consolidated income statements
(All amounts in Euro thousands unless otherwise stated)
For the three and nine months to 30 September 2018 and 2017 -
(Unaudited)
Three Nine
Three months Nine months
months ended months ended
ended 30 Sept ended 30 Sept
Notes 30 Sept 2017 30 Sept 2017
(Euro 000's) 2018 restated* 2018 restated*
Gross sales 42,811 35,734 144,354 114,808
Realised gains on derivative financial - - - -
instruments held for trading
========== ----------- ========== ===========
Sales 42,811 35,734 144,354 114,808
Operating costs and mine site administrative
expenses (33,515) (24,291) (97,860) (76,783)
Mine site depreciation and amortization (3,484) (4,158) (9,794) (12,370)
========== ----------- ========== ===========
Gross income 5,812 7,285 36,700 25,655
Corporate expenses (1,240) (1,869) (3,284) (3,482)
Corporate depreciation - - - (3)
Share based benefits (86) (65) (162) (110)
Exploration expenses (405) (228) (818) (674)
Care and maintenance costs 94 - (187) -
-----------
Operating profit 4,175 5,123 32,249 21,386
Other income - - - 5
Net foreign exchange (loss)/gain (10) (1,134) 1,092 (1,919)
Net finance costs 4 (77) (119) (196) (609)
-----------
Profit before tax 4,088 3,870 33,145 18,863
Tax charge (955) (1,188) (5,520) (4,367)
========== ----------- ---------- -----------
Profit for the period 3,133 2,682 27,625 14,496
========== ----------- ---------- -----------
Profit for the period attributable
to:
* Owners of the parent 3,049 2,697 27,807 14,511
* Non-controlling interests 84 (15) (182) (15)
3,133 2,682 27,625 14,496
========== =========== ========== ===========
Earnings per share from operations
attributable to equity holders of
the parent during the period :
Basic earnings per share (expressed
in cents per share) 5 2.2 2.3 20.4 12.4
========== =========== ========== ===========
Fully diluted earnings per share
(expressed in cents per share) 5 2.2 2.3 20.2 12.3
========== =========== ========== ===========
Profit for the period 3,133 2,682 27,625 14,496
Other comprehensive income:
Change in value of available-for-sale
investments (15) (11) (30) (51)
Total comprehensive profit for the
period 3,118 2,671 27,595 14,445
========== =========== ========== ===========
Total comprehensive profit for the
period attributable to:
* Owners of the parent 3,034 2,686 27,777 14,460
* Non-controlling interests 84 (15) (182) (15)
3,118 2,671 27,595 14,445
========== =========== ========== ===========
* Refer to Note 2.1 (c)
The notes on pages 14 to 29 are an integral part of these
unaudited condensed interim consolidated financial statements.
Condensed interim consolidated statements of financial
position
(All amounts in Euro thousands unless otherwise stated)
As at 30 September 2018 and 31 December 2017 - (Unaudited)
30 September 31 December
(Euro 000's) Note 2018 2017
Assets
Non-current assets
Property, plant and equipment 6 237,435 199,458
Intangible assets 7 72,518 73,700
Trade and other receivables 9 228 212
Deferred tax asset 9,974 10,130
============ ===========
320,155 283,500
============ ===========
Current assets
Inventories 8 9,519 13,674
Trade and other receivables 9 22,227 34,213
Available-for-sale investments 99 129
Cash and cash equivalents 45,896 42,856
============ ===========
77,741 90,872
============ ===========
Total assets 397,896 374,372
============ ===========
Equity and liabilities
Equity attributable to owners
of the parent
Share capital 10 13,372 13,192
Share premium 10 314,319 309,577
Other reserves 11 12,765 6,137
Accumulated losses (65,216) (86,527)
============ ===========
275,240 242,379
Non-controlling interests 4,292 4,474
------------ ===========
Total equity 279,532 246,853
------------ ===========
Liabilities
Non-current liabilities
Trade and other payables 12 52 74
Provisions 13 6,651 5,727
Deferred consideration 14 53,000 52,983
============ ===========
59,703 58,784
============ ===========
Current liabilities
Trade and other payables 12 56,666 67,983
Current tax liabilities 1,995 752
58,661 68,735
============ ===========
Total liabilities 118,364 127,519
============ ===========
Total equity and liabilities 397,896 374,372
============ ===========
The notes on pages 14 to 29 are an integral part of these
unaudited condensed interim consolidated financial statements
Condensed interim consolidated statements of changes in
equity
(All amounts in Euro thousands unless otherwise stated)
For the three and nine months to 30 September 2018 and 2017 -
(Unaudited)
Non-controlling
Share Share Other Accum. interest Total
(Euro 000's) capital premium reserves losses Total equity
----------------
At 1 January 2017
restated* 11,632 277,238 5,667 (104,316) 190,221 - 190,221
Addition - - - - - 4,502 4,502
Profit for the period
restated* - - - 14,511 14,511 (15) 14,496
Change in value of
available-for-sale
investment - - (51) - (51) - (51)
Depletion factor - - 450 (450) - - -
Recognition of share
based
payments - - 110 - 110 - 110
========== ========== ========== ============ ========== ---------------- ==========
At 30 September 2017
restated* 11,632 277,238 6,176 (90,255) 204,791 4,487 209,278
Profit for the period
restated* - - - 3,728 3,728 (13) 3,715
Issue of share capital 1,560 33,182 - - 34,742 - 34,742
Share issue costs - (843) - - (843) - (843)
Change in value of
available-for-sale
investment - - (81) - (81) - (81)
Recognition of share
based
payments - - 42 - 42 - 42
At 31 December 2017/1
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
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
========== ========== ========== ============ ========== ================ ==========
* Refer to Note 2.1 (c)
The notes on pages 14 to 29 are an integral part of these
unaudited condensed interim consolidated financial statements.
Condensed interim consolidated statements of cash flows
(All amounts in Euro thousands unless otherwise stated)
For the three and nine months to 30 September 2018 and 2017 -
(Unaudited)
Three Nine
Three months Nine months
months ended months ended
Notes ended 30 Sept ended 30 Sept
30 Sept 2017 30 Sept 2017
(Euro 000's) 2018 restated* 2018 restated*
Cash flows from operating activities
Profit before tax 2.1(c) 4,088 3,870 33,145 18,863
Adjustments for:
Depreciation of property, plant
and equipment 6 2,650 2,910 7,386 9,311
Amortisation of intangibles 7 834 1,248 2,408 3,062
Recognition of share-based payments 11 86 65 162 110
Hedging income 4 - - - (205)
Interest income 4 (19) - (58) (19)
Interest expense 4 65 94 170 759
Rehabilitation cost 4 31 25 84 74
Gain on disposal of a subsidiary (115) - (115) -
Unrealised foreign exchange
(profit)/loss on financing activities 127 (204) 131 56
========== =========== ========== ===========
Cash inflows from operating
activities before working capital
changes 7,747 8,008 43,313 32,011
Changes in working capital:
Inventories 8 (189) (5,733) 4,155 (9,566)
Trade and other receivables 9 10,715 7,496 10,254 2,821
Trade and other payables 12 (2,174) 3,557 (10,934) (1,228)
Derivative instrument - - - (215)
Deferred consideration - - 17 -
Provisions - (25) - (74)
========== =========== ========== ===========
Cash flows from operations 16,099 13,303 46,805 23,749
Interest paid (65) (303) (170) (759)
Tax paid (1,097) (114) (2,484) (114)
Net cash from operating activities 14,937 12,886 44,151 22,876
========== =========== ========== ===========
Cash flows used in investing
activities
Purchase of property, plant
and equipment (20,052) (4,879) (40,536) (12,551)
Purchase of intangible assets 7 (381) (499) (1,226) (2,100)
Proceeds from sale of property,
plant and equipment - - - 10
Interest received 19 - 58 19
========== =========== ========== ===========
Net cash used in investing activities (20,414) (5,378) (41,704) (14,622)
========== =========== ========== ===========
Cash flows from financing activities
Proceeds from issue of shares - - 598 -
Issuance costs - - (5) -
========== =========== ========== ===========
Net cash flows from financing - - 593 -
activities
Net (decrease)/increase in cash
and cash equivalents (5,477) 7,508 3,040 8,254
Cash and cash equivalents:
At beginning of the period 51,373 1,881 42,856 1,135
========== =========== ========== ===========
At end of the period 45,896 9,389 45,896 9,389
========== =========== ========== ===========
* Refer to Note 2.1 (c)
The notes on pages 14 to 29 are an integral part of these
unaudited condensed interim consolidated financial statements.
Notes to the condensed interim consolidated financial
statements
(All amounts in Euro thousands unless otherwise stated)
For the three and nine months to 30 September 2018 and 2017 -
(Unaudited)
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 June 2018.
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.
Summary of business
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. A brownfield expansion of this mine is in
progress.
In addition, the Company has a phased earn-in agreement to
acquire 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 focused on
exploring for and developing metals production operations in
Europe, with an initial focus on copper.
2. Basis of preparation and accounting policies
2.1 Basis of preparation
(a) Overview
The unaudited condensed interim consolidated financial
statements have been prepared in accordance with International
Financial Reporting Standards (IFRS). IFRS comprises the standards
issued by the International Accounting Standard Board ("IASB"), and
IFRS Interpretations Committee ("IFRICs") as issued by the IASB.
Additionally, the unaudited condensed consolidated financial
statements have also been prepared in accordance with IFRS as
adopted by the European Union (EU), using the historical cost
convention.
These condensed interim consolidated financial statements are
unaudited and include the financial statements of the Company and
its subsidiary undertakings. They have been prepared using
accounting bases and policies consistent with those used in the
preparation of the consolidated financial statements of the Company
and the Group for the year ended 31 December 2017. These unaudited
condensed interim consolidated financial statements do not include
all of the disclosures required for annual financial statements,
and accordingly, should be read in conjunction with the
consolidated financial statements and other information set out in
the Company's 31 December 2017 Annual Report. The accounting
policies are unchanged from those disclosed in the annual
consolidated financial statements.
The Directors have formed a judgment at the time of approving
the unaudited condensed interim consolidated financial statements
that there is a reasonable expectation that the Company and the
Group have adequate available resources to continue in operational
existence for the foreseeable future.
2. Basis of preparation and accounting policies (continued)
(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.
(c) 2016 Restatement
Deferred consideration (Note 14)
At the end of 2017 the discount rate used to value the liability
for the deferred consideration was re-assessed to apply a risk free
rate as required by IAS 37. The discounted amount, when applying
this discount rate, was not considered significant and the Group
has measured the liability for the deferred consideration on an
undiscounted basis. The value of the liability is in line with the
court ruling issued on 6 March 2017. Full details of the
restatement to 2016 full year comparatives are set out in the
audited, consolidated financial statements for the year ended 31
December 2017 available from the Atalaya website at
www.atalayamining.com.
The three and nine months 2017 comparatives have been restated
in line with this re-assessment as follows:
3 months ended 3 months ended 9 months ended 9 months ended
30 Sept 2017 30 Sept 2017 30 Sept 2017 30 Sept 2017
as reported as restated as reported as restated
(Euro 000's) Adjustments Adjustments
Income statement
Mine site depreciation
and amortization (3,760) (398) (1) (4,158) (11,892) (478)(1) (12,370)
Gross margin 7,683 7,285 26,133 25,655
Operating profit 5,521 5,123 21,864 21,386
Finance costs (733) 614(1) (119) (2,412) 1,803(1) (609)
Profit before tax 3,654 3,870 17,538 18,863
Tax charge (1,141) (47) (1) (1,188) (4,108) (259) (1) (4,367)
Basic earnings per
share 2.1 2.3 11.5 12.4
Fully diluted earnings
per share 2.1 2.3 11.4 12.3
---------------------- -------------- ------------- -------------- -------------- ------------- --------------
(1) The discount rate was re-assessed considering a risk free
rate for the relevant periods as required by IAS 37. Discounting
the provision using the risk free rate would not result in a
significant impact to the financial statements and the Group has
measured the liability on an undiscounted basis. The amount of the
provision is in line with the court ruling. Finance costs have been
revised to exclude the unwinding of discounts and amortisation
charges based on the restated carrying amount of Intangible
assets.
2.2 Fair value estimation
The fair values of the Company's financial assets and
liabilities approximate their carrying amounts at the reporting
date. The fair value of financial instruments traded in active
markets, such as publicly traded trading and available--for--sale
financial assets is based on quoted market prices at the reporting
date. The quoted market price used for financial assets held by the
Company is the current bid price. The appropriate quoted market
price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Company uses a variety of methods, such as estimated discounted
cash flows, and makes assumptions that are based on market
conditions existing at the reporting date.
2. Basis of preparation and accounting policies (continued)
2.2 Fair value estimation (continued)
Fair value measurements recognised in the consolidated statement
of financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Financial assets
(Euro 000's) Level 1 Level 2 Level 3 Total
30 September 2018
Available-for-sale financial assets 99 - - 99
-------- -------- -------- ------
Total 99 - - 99
-------- -------- -------- ------
31 December 2017
Available-for-sale financial assets 129 - - 129
-------- -------- -------- ------
Total 129 - - 129
-------- -------- -------- ------
2.3 Use and revision of accounting estimates
The preparation of the unaudited condensed interim consolidated
financial statements requires the making of estimations and
assumptions that affect the recognised amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent
liabilities. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods.
2.4 Adoption of new and revised International Financial
Reporting Standards (IFRSs)
The Group has adopted all the new and revised IFRSs and
International Accounting Standards (IASs) which are relevant to its
operations and are effective for accounting periods commencing on 1
January 2018. The adoption of these Standards did not have a
material effect on the condensed interim consolidated financial
statements.
-- IFRS 15 - Revenue from Contracts with Customers and
Clarifications to IFRS 15 - Revenue from Contracts with Customers.
New standard for recognising revenue (replaces IAS 11, IAS 18,
IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31). The Company has adopted
IFRS 15 as of January 1, 2018.
-- IFRS 9 - Financial Instruments and subsequent amendments.
This standard replaces the classification, measurement, recognition
and de-recognition in accounts of financial assets and liabilities,
hedge accounting, and impairment set out in IAS 39 Financial
instruments: Recognition and Measurement. The Company has adopted
IFRS 9 as of January 1, 2018.
-- IFRS 16 - Leases. The new standard on leases that replaces
IAS 17, IFRIC 4, SIC-15 and SIC-27. Effective for annual periods
beginning on or after 1 January 2019. Early adoption is permitted
for entities that apply IFRS 15 at or before the date of initial
application of IFRS 16. IFRS 16 introduces a single, on-balance
sheet lease accounting model for lessees. A lessee recognises a
right-of-use asset representing it right to use the underlying
asset and a lease liability representing its obligation to make
lease payment. There are recognition exemptions for short-term
leases and leases of low-value items. Lessor accounting remains
similar to the current standard - i.e. lessor continue to classify
leases as finance or operating leases. The Company will adopt IFRS
16 as of 1 January 2019.
2. Basis of preparation and accounting policies (continued)
2.5 Critical accounting estimates and judgements
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the reporting date. Estimates
and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are unchanged from those disclosed in the annual
consolidated financial statements.
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and a reliable estimate of the amount can be made. If
the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
3. Business and geographical segments
Business segments
The Group has only one distinct business segment, being that of
mining operations, mineral exploration and development. Copper
concentrates produced by the Group are sold to three off takers as
per the relevant offtake agreement (Note 17.3).
Geographical segments
The Group's mining activities are located in Spain. The
commercialisation of the copper concentrates produced in Spain is
carried out in Cyprus. Corporate costs and administration costs are
based in Cyprus. Intercompany transactions within the Group are on
arm's length basis in a manner similar to transaction with third
parties.
(Euro 000's) Cyprus Spain Other Total
Three months ended 30 September 2018
Sales 42,811 - - 42,811
========= ========== ======== ==========
Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) 40,982 (33,239) (84) 7,659
Depreciation/amortisation charge - (3,484) - (3,484)
Finance income 15 4 - 19
Finance cost (1) (95) - (96)
Foreign exchange gain (106) 96 - (10)
Profit/(loss) for the period before
taxation 40,890 (36,718) (84) 4,088
========= ========== ========
Tax charge (955)
==========
Net profit for the period 3,133
==========
Nine months ended 30 September 2018
Sales 144,354 - - 144,354
========= ========== ======== ==========
Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) 137,472 (95,351) (78) 42,043
Depreciation/amortisation charge - (9,794) - (9,794)
Finance income 54 4 - 58
Finance cost (2) (252) - (254)
Foreign exchange gain 781 311 - 1,092
Profit/(loss) for the period before
taxation 138,305 (105,082) (78) 33,145
========= ========== ========
Tax charge (5,520)
==========
Net profit for the period 27,625
==========
3. Business and geographical segments
(continued)
Geographical segments (continued)
(Euro 000's) Cyprus Spain Other Total
30 September 2018
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 net additions of non-current assets - 46,452 - 46,452
========= ========== ======== ==========
Three months ended 30 September 2017
restated*
Sales 35,734 - - 35,734
========= ========== ======== ============
Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) 34,845 (25,544) (20) 9,281
Depreciation/amortisation charge - (4,158) - (4,158)
Finance income - - - -
Finance cost (44) (75) - (119)
Foreign exchange loss (1,000) (134) - (1,134)
Profit/(loss) for the period before
taxation 33,801 (29,911) (20) 3,870
========= ========== ========
Tax charge (1,188)
============
Net profit for the period 2,682
Nine months ended 30 September 2017
restated*
Sales 114,808 - - 114,808
========= ========== ======== ============
Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) 109,419 (75,629) (26) 33,764
Depreciation/amortisation charge (3) (12,370) - (12,373)
Finance income - 19 - 19
Finance cost (366) (262) - (628)
Foreign exchange loss (1,411) (508) - (1,919)
Profit/(loss) for the period before
taxation 107,639 (88,750) (26) 18,863
========= ========== ========
Tax charge (4,367)
============
Net profit for the period 14,496
============
Total assets 13,818 319,794 275 333,887
========= ========== ======== ============
Total liabilities* (9,180) (115,336) (93) (124,609)
========= ========== ======== ============
Depreciation of property, plant and
equipment 3 9,308 - 9,311
========= ========== ======== ============
Amortisation of intangible assets* - 3,062 - 3,062
========= ========== ======== ============
Total net additions of non-current assets - 20,093 - 20,093
========= ========== ======== ============
* Refer to Note 2.1 (c)
4. Net finance cost
Three Nine
Three months months Nine months
ended ended months ended
30 Sept 30 Sept ended 30 Sept
2018 2017 30 Sept 2017
(Euro 000's) restated* 2018 restated*
Interest expense :
Debt to department of social security
and other interest 65 50 170 393
Interest on copper concentrate prepayment(1) - 4 - 110
Interest on early payment - 40 - 256
Unwinding of discount on mine rehabilitation
provision (Note 13) 31 25 84 74
Interest income (19) - (58) (19)
Hedging - net foreign exchange - - - (205)
77 119 196 609
--------------- ----------- ---------- -----------
* Refer to Note 2.1 (c)
(1) Interest rate US$ 3 months LIBOR + 2.75%
5. 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 months Nine months Nine
months ended ended months
ended 30 Sept 30 Sept ended
30 Sept 2017 restated* 2018 30 Sept
2018 2017
(Euro 000's) restated*
Parent company (194) (370) (1,516) (1,547)
Subsidiaries 3,243 3,067 29,323 16,058
---------- ---------------- ------------ -----------
Profit attributable to equity
holders of the parent 3,049 2,697 27,807 14,511
---------- ---------------- ------------ -----------
Weighted number of ordinary
shares for the purposes of basic
earnings per share (000's) 137,340 116,679 136,558 116,679
---------- ---------------- ------------ -----------
Basic profit per share (cents) 2.2 2.3 20.4 12.4
---------- ---------------- ------------ -----------
Weighted number of ordinary
shares for the purposes of fully
diluted earnings per share (000's) 138,652 118,342 137,910 118,342
---------- ---------------- ------------ -----------
Fully diluted profit per share
(cents) 2.2 2.3 20.2 12.3
---------- ---------------- ------------ -----------
* Refer to Note 2.1 (c)
At 30 September 2018 there are 1,313,000 options (Note 11) and
nil warrants (Note 10) (2017: 1,400,000 options and 262,569
warrants) which have been included when calculating the weighted
average number of shares for 2018.
6. Property, plant and equipment
Plant Deferred
Land and Assets mining Other
(Euro 000's) and buildings machinery under construction(2) costs(3) assets(4) Total
Cost
At 1 January 2017 40,188 144,930 566 13,848 838 200,370
Additions 335(1) - 6,370 6,115 - 12,820
Reclassifications 400 472 (872) - - -
Disposals - - - - (53) (53)
At 30 September 2017 40,923 145,402 6,064 19,963 785 213,137
Additions 72(1) - 5,381 2,354 - 7,807
At 31 December 2017 40,995 145,402 11,445 22,317 785 220,944
Additions 4,853(1) 1,978 34,178 4,354 - 45,363
Reclassifications - 1,579 (1,579) - - -
At 30 September 2018 45,848 148,959 44,044 26,671 785 266,307
--------------- ----------- ----------------------- ----------- ----------- --------
Depreciation
At 1 January 2017 1,736 5,073 - 1,758 423 8,990
Charge for the period 1,714 6,148 - 1,378 71 9,311
Disposals - - - - (43) (43)
At 30 September 2017 3,450 11,221 - 3,136 451 18,258
Charge for the period 626 2,244 - 333 26 3,229
Disposals - - - - (1) (1)
At 31 December 2017 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
--------------- ----------- ----------------------- ----------- ----------- --------
Net book value
At 30 September 2018 40,326 130,675 44,044 22,329 61 237,435
--------------- ----------- ----------------------- ----------- ----------- --------
At 31 December 2017 36,919 131,937 11,445 18,848 309 199,458
--------------- ----------- ----------------------- ----------- ----------- --------
(1) Mine rehabilitation asset (Note 13). In 2018, it also
includes the capitalisation of the remaining Rumbo royalty fee
amounting to US$4,750,000 (ie. EUR4,025,000) paid through shares
issue.
(2) Net of pre-commissioning sales
(3) Stripping costs
(4) Includes motor vehicles, furniture, fixtures and office
equipment which are depreciated over 5-10 years.
The above fixed assets are located mainly in Spain.
7. Intangible assets
Permits
of
Rio Tinto Licences,
(Euro 000's) Project R&D and
(1) software Goodwill Total
Cost
At 1 January 2017 restated* 71,521 1,685 9,333 82,539
Additions - 2,100 - 2,100
Additions from acquisition
of subsidiary 5,000 55 - 5,055
At 30 September 2017 76,521 3,840 9,333 89,694
Additions - 665 - 665
At 31 December 2017 76,521 4,505 9,333 90,359
Additions 17 1,209 - 1,226
At 30 September 2018 76,538 5,714 9,333 91,585
----------- ------------ ----------- --------
Amortisation
On 1 January 2017 restated* 3,072 123 9,333 12,528
Charge for the period restated* 3,019 43 - 3,062
----------- ------------ ----------- --------
At 30 September 2017 6,091 166 9,333 15,590
Charge for the period restated* 1,054 15 - 1,069
At 31 December 2017 7,145 181 9,333 16,659
Charge for the period 2,363 45 - 2,408
At 30 September 2018 9,508 226 9,333 19,067
----------- ------------ ----------- --------
Net book value
At 30 September 2018 67,030 5,488 - 72,518
----------- ------------ ----------- --------
At 31 December 2017 69,376 4,324 - 73,700
----------- ------------ ----------- --------
(1) Permits include an amount of EUR5.0 million that relates to
the Touro Project mining rights.
* Refer to Note 2.1 (c)
The useful life of the intangible assets is estimated to be not
less than fourteen years from the start of production (the revised
Reserves and Resources statement which was announced in July 2016
increased the life of mine to 16 1/2 years). In July 2018, the
Company announced an updated technical report on the mineral
resources and reserves of the Rio Tinto Copper Project. The Report
increases the open pit mineral reserves by 29% and stated the life
of mine as 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 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
2018 and thus no impairment has been recognised.
Goodwill of EUR9,333,000 arose on the acquisition of the
remaining 49% of the issued share capital of Atalaya Riotinto
Minera S.L.U. ("ARM") back in September 2008. This amount was fully
impaired on acquisition, in the absence of the mining licence back
in 2008.
8. Inventories
(Euro 000's) 30 Sept 31 Dec
2018 2017
Finished products 1,972 4,797
Materials and supplies 6,704 8,003
Work in progress 843 874
---------- ---------
9,519 13,674
---------- ---------
8. Inventories (continued)
Materials and supplies relate mainly to machinery spare parts.
Work in progress represents ore stockpiles, which is ore that has
been extracted and is available for further processing.
As of 30 September 2018, copper concentrate produced and not
sold amounted to 2,724 tonnes. Accordingly, the inventory for
copper concentrate was EUR2.0 million (31 Dec 2017: EUR4.8
million).
9. Trade and other receivables
(Euro 000's) 30 Sept 31 Dec
2018 2017
Non-current
Deposits 228 212
---------- ---------
228 212
---------- ---------
Current
Trade receivables 6,317 12,113
Receivables from related parties (Note 17.3
ii)) - 56
Receivables from shareholders (Note 17.3
iii)) 319 1,556
Deposits and prepayments 424 221
VAT 13,971 17,804
Tax advances - 1,716
Other receivables 1,196 747
---------- ---------
22,227 34,213
---------- ---------
Trade receivables are shown net of any interest applied to
prepayments. Payment terms are aligned with offtake agreements and
market standards and generally are 7 days on 90% of the invoice and
the remaining 10% at the settlement date which can vary between 1
to 5 months.
The fair values of trade and other receivables approximate to
their carrying amounts as presented above.
10. Share capital and share premium
Share Share
Shares Capital premium Total
000's StgGBP'000 StgGBP'000 StgGBP'000
Authorised
Ordinary shares of Stg GBP0.075
each* 200,000 15,000 - 15,000
------------- ------------ ------------ ---------------
Issued and fully paid Euro
000's Euro Euro 000's
000's 000's
Balance at 1 January 2017 and
30 September 2017 116,679 11,632 277,238 288,870
7 Dec 2017 Share placement at
Stg GBP1.67 18,575 1,560 33,182 34,742
Share issue costs - - (843) (843)
------------- ------------ ------------ ---------------
Balance at 31 December 2017 135,254 13,192 309,577 322,769
13 Feb 2018 Shares issued to
Rumbo at Stg GBP1.87 193 16 410 426
13 Feb 2018 Exercised share
options at Stg GBP1.44 29 3 45 48
13 April 2018 Rumbo buyout
at Stg GBP2.118 1,601 139 3,887 4,026
1 June 2018 Exercised warrants
at Stg GBP1.425 263 22 405 427
Share issue costs - - (5) (5)
------------- ------------ ------------ ---------------
Balance at 30 September 2018 137,340 13,372 314,319 327,691
------------- ------------ ------------ ---------------
10. Share capital and share premium (continued)
Authorised capital
The Company's authorised share capital is 200,000,000 ordinary
shares of Stg GBP0.075 each.
Issued capital
2018
a) On 13 February 2018, the Company issued 192,540 new ordinary
shares of Stg GBP0.075 to Rumbo at a price of Stg 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 Stg
GBP0.075 at a price of Stg GBP1.44, thus creating a share premium
of EUR44,576.
c) On 5 April 2018, the Company signed with Rumbo a contract 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 Stg GBP0.075. 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 Stg
GBP1.425 per ordinary share. Hence, 262,569 ordinary shares of Stg
GBP0.075 were issued, thus creating a share premium of
EUR405,087.
Warrants
The Company has issued warrants to advisers to the Group.
Warrants expire three years after the grant date and have exercise
price Stg GBP1.425.
Details of share warrants outstanding as at 30 September
2018:
Number of warrants
Outstanding options at 1 January 2018 262,569
- Exercised during the reporting period (262,569)
Outstanding options at 30 September 2018 -
-------------------
On 1 June 2018, the Company has received notification for the
exercise of warrants over 262,569 ordinary shares of Stg GBP0.075
in the Company at an exercise price of Stg GBP1.425 per share. As a
result, the Company has received proceeds of Stg GBP374,160.83
(Note 10 d)).
11. Other reserves
Share Bonus Depletion Available-for-sale Non-distributable
(Euro 000's) option share factor investment reserve Total
At 1 January 2017 6,384 208 - (925) - 5,667
Change in value of
available-for-sale
investment - - - (51) - (51)
Recognition of share
based payments 110 - - - - 110
Recognition of the
Depletion factor - - 450 - - 450
-------- ------- ------------ ------------------- ------------------ --------
At 30 September 2017 6,494 208 450 (976) - 6,176
Change in value of
available-for-sale
investment - - - (81) - (81)
Recognition of share
based payments 42 - - - - 42
-------- ------- ------------ ------------------- ------------------ --------
At 31 December 2017 6,536 208 450 (1,057) - 6,137
Change in value of
available-for-sale
investments - - - (30) - (30)
Recognition of share
based payments 162 - - - - 162
Recognition of
non-distributable
reserve - - - - 1,446 1,446
Recognition of the
Depletion factor - - 5,050 - - 5,050
-------- ------- ------------ ------------------- ------------------ --------
At 30 September 2018 6,698 208 5,500 (1,087) 1,446 12,765
-------- ------- ------------ ------------------- ------------------ --------
11. Other reserves (continued)
Share options
During the nine month period there were no options granted to
either employees or directors.
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
2018:
Number of share options 000's
Outstanding options at 1 January 2018 1,400
- Exercised during the reporting period (29)
- Cancelled during the reporting period (58)
------------------------------
Outstanding options at 30 September 2018 1,313
------------------------------
12. Trade and other payables
(Euro 000's) 30 Sept 2018 31 Dec 2017
Non-current
Land options 43 74
Other 9 -
--------------- --------------
52 74
--------------- --------------
Current
Trade payables 53,074 64,234
Land options and mortgage 787 791
Accruals 2,784 2,660
VAT payable - 7
Other 21 291
--------------- --------------
56,666 67,983
--------------- --------------
The fair values of trade and other payables due within one year
approximate to their carrying amounts as presented above.
13. Provisions
Rehabilitation
(Euro 000's) Legal costs costs Total costs
1 January 2017 - 5,092 5,092
Additions 213 269 482
Finance cost - 74 74
At 30 September 2017 213 5,435 5,648
Additions - 138 138
Revision of discount rate - (98) (98)
Finance cost - 39 39
-------------- --------------- --------------
At 31 December 2017 213 5,514 5,727
Additions 6 953 959
Revision of provision (35) - (35)
At 30 September 2018 184 6,467 6,651
-------------- --------------- --------------
13. Provisions (continued)
(Euro 000's) 30 Sept 31 Dec
2018 2017
Non-current 6,651 5,727
Current - -
---------- ---------
Total 6,651 5,727
---------- ---------
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 2018 was 1.87%, which is
the 15-year Spain Government Bond rate (31 December 2017: 1.87%,
which is the 15-year Spain Government Bond rate). An inflation rate
of 1.5% is applied on annual basis.
Legal provision
The Group has been named a defendant in several legal actions in
Spain, the outcome of which is not determinable as at 30 September
2018. Management has reviewed individually each case and made a
provision of EUR193 thousand for these claims, which has been
reflected in these unaudited condensed interim consolidated
financial statements.
14. Deferred consideration
In September 2008, the Group moved to 100% ownership of Atalaya
Riotinto Mineral 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 deferred consideration of EUR43.8 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). While the
cash sweep provisions of the Master Agreement require ARM to repay
the Loan Assignment early, the Credit Assignment Agreement
(concerning the Loan Assignment) is governed by Spanish Law and is
not governed by the Master Agreement. Therefore there is no clarity
on whether the Conditions have been met in respect of payment of
the Loan Assignment and there remains significant doubt concerning
the legal obligation to pay the Loan Assignment pursuant to the
terms of the Credit Assignment Agreement.
As at 30 September 2018, the Group has not generated any excess
cash and, consequently, no consideration has been paid.
The nominal amount of the liability recognised is EUR53.0
million. In 2017 the discount rate used to measure the liability
for the deferred consideration was re-assessed to apply a risk free
rate for the relevant periods, as required by IAS 37. The effect of
discounting, when applying this risk free rate, was considered
insignificant and the Group has measured the liability for the
deferred consideration on an undiscounted basis.
For details on the restatement of the deferred consideration
liability as at 31 December 2017, refer to 2017 Annual Report Note
2.1(c).
15. Derivative instruments
15.1. Foreign exchange contract
As at 31 December 2016, Atalaya had certain short-term foreign
exchange contracts which are as follows:
Foreign exchange contracts - Euro/USD
Period Contract type Amount in USD Contract rate Strike
------------------- --------------- -------------- -------------- -------
June 2016 - March FX Forward
2017 - Put 5,000,000 1.0955 n/a
FX Forward
- Call 10,000,000 1.0955 1.0450
The counter parties of the foreign exchange agreements are third
parties.
In February 2017, the Group entered into certain foreign
exchange hedging contracts to offset the agreements noted above
before its expiration date. The contracts were signed with the same
financial institution and resulted in a loss of EUR9,000 which was
recorded as financial expense during the quarter.
During the nine months ended 30 September 2018, the Group did
not enter into any foreign exchange hedging contract.
15.2. Commodity contract
During the nine months ended 30 September 2018, the Group had
not entered into any hedging contract.
16. Acquisition, incorporation and disposal of subsidiaries
On 14 February 2018, Atalaya Servicios Mineros, S.L. was
incorporated. Atalaya Minasderiotinto Project (UK) Limited is its
sole shareholder.
On 18 May 2018, the Company signed the disposal of the
wholly-owned subsidiary Georgian Minerals Development Company, Ltd.
a company incorporated and existing under the laws of Georgia.
Following the disposal, the Group has no presence in Georgia.
17. Related party transactions
The following transactions were carried out with related
parties:
17.1 Compensation of key management personnel
The total remuneration and fees of Directors (including
Executive Directors) and other key management personnel was as
follows:
Three Three Nine Nine
months months months months
ended ended ended ended
30 Sept 30 Sept 30 Sept 30 Sept
(Euro 000's) 2018 2017 2018 2017
Directors' remuneration and fees 193 190 593 549
Share option-based benefits to directors 26 11 39 17
Bonus - 398 68 398
Key management personnel remuneration 106 1,126 313 1,339
Share option-based and other benefits
to key management personnel 39 16 81 38
-------- -------- -------- --------
364 1,741 1,094 2,341
-------- -------- -------- --------
17.2 Share-based benefits
The directors and key management personnel have not been granted
any options during the nine month period ended 30 September 2018
(2017: 900,000 options were granted).
17.3 Transactions with related parties/shareholders
i) Transaction with shareholders
Three months Three Nine months Nine
ended months ended months
30 Sept ended 30 Sept ended
2018 30 Sept 2018 30 Sept
(Euro 000's) 2017 2017
Trafigura- Sales of goods 5,929 9,154 23,641 22,162
Orion Mine Finance (Master) Fund I
LP ("Orion") - Sales of goods - - - (4)
------------ -------- ----------- --------
5,929 9,154 26,641 22,158
------------ -------- ----------- --------
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 to transfer the rights over the
concentrates. Similarly, in December 2017, XGC notified to the
Group the novation of the offtake agreements with a third
party.
ii) Period-end balances with related parties
(Euro 000's) 30 Sept 2018 31 Dec 2017
Receivables from related parties:
Recursos Cuenca Minera S.L. - 56
Total (Note 9) - 56
-------------- -------------
The above balances bear no interest and are repayable on
demand.
iii) Period-end balances with shareholders
(Euro 000's) 30 Sept 2018 31 Dec 2017
Trafigura - Debtor balance 319 1,556
Total (Note 9) 319 1,556
--------------- --------------
The above debtor balance arising from sales of goods and other
balances bear no interest and is repayable on demand.
18. 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 this 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.
Receipt of ruling of claim made by an environmental group
On 26 September 2018, Atalaya received notice from the Tribunal
Superior de Justicia de Andalucía ruling in favour of certain
claims made by environmental group Ecologistas en Accion ("EeA")
against the government of Andalucía ("Junta de Andalucía" or "JdA")
and Atalaya, as co-defendant in the case.
In July 2014, EeA had filed a legal claim to JdA with a request
to declare null the Unified Environmental Declaration (in Spanish,
Authorization Ambiental Unificada, or "AAU") granted to Atalaya
Riotinto Minera, S.L.U. dated 27 March 2014, which was required in
order to secure the required mining permits for Proyecto Riotinto.
The judgment, in spite of annulling the AAU on procedural grounds,
made very clear that the AAU was correct and therefore, rejected
the issues raised by EeA and confirmed the decision of JdA not to
suspends the AAU.
The JdA confirmed its intention to launch an appeal process.
Although the claim was against the JdA, Atalaya, being an
interested party in the process, voluntarily joined as co-defendant
and believes it could be successfully appealed to the Supreme Court
in Spain.
Atalaya continues running the mine normally and it is confident
the ruling will not impact its operations at Proyecto Riotinto.
19. Commitments
There are no minimum exploration requirements at Proyecto
Riotinto. However, the Group is obliged to pay municipal land taxes
which currently are approximately EUR235,000 per year in Spain and
the Group is required to maintain the Riotinto site in compliance
with all applicable regulatory requirements.
Expansion Capex commitments at 30 September 2018 amounted to
EUR56.0 million. Commitments relate to the on-going expansion of
the Proyecto Riotinto processing plant.
20. Significant events
Buyout of Rumbo Royalty
Following the statement on 13 February 2018, Atalaya Mining Plc
("The Company") announced the issuance of new ordinary shares to
satisfy the first two instalments due under the Rumbo Royalty
Agreement. The Company agreed with Rumbo to buy the 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 Stg
GBP0.075 in the Company ("Rumbo Shares"). The shares were issued at
the 30-day volume weighted average price (the "Calculation Period")
of Stg GBP2.118 per share and using the average USD to GBP exchange
rate for the Calculation Period of 1.4008. Atalaya Riotinto Minera,
S.L. ("ARM") also agreed to pay the VAT associated with the
transaction through a cash payment of US$997,500 to Rumbo, which is
recoverable by ARM upon an ordinary course application for a VAT
reclaim from the Spanish tax authorities.
20. Significant events (continued)
Exercise of Warrants and Issue of Equity
In May, the Company received notification for the exercise of
options over 262,569 ordinary shares of Stg GBP0.075 at an exercise
price of Stg $1.425 per share. As a result, the Company received
proceeds of Stg GBP374,160.83.
Application was made for the 262,569 shares ("New Ordinary
Shares") to be admitted to trading on AIM and the dealings in the
New Ordinary Shares commenced on 7 June 2018.
Following the issue of the New Ordinary Shares, the total number
of Ordinary Shares in issue is 137,339,126.
21. Events after the reporting period
On 1 November 2018, the Court of Appeal confirmed the 2017
decision of the High Court regarding the Deferred Consideration in
the Astor Case. Further details are given in Note 14.
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
QRTKMMZMNMNGRZM
(END) Dow Jones Newswires
November 22, 2018 02:00 ET (07:00 GMT)
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