TIDMATYM
RNS Number : 1081J
Atalaya Mining PLC
15 August 2019
15 August 2019
Atalaya Mining Plc.
("Atalaya" and/or the "Group")
Interim Condensed Consolidated Financial Statements for the
period ended 30 June 2019
Atalaya Mining Plc (AIM: ATYM; TSX: AYM), the European mining
and development company, is pleased to announce its quarterly
results for the period ended 30 June 2019, together with the
interim condensed consolidated financial statements.
Financial Highlights
Quarter ended 30 June Q2 2019 Q2 2018 H1 2019 H1 2018
Revenues from operations EURk 43,070 48,867 94,782 101,543
----------------- --------- --------- --------- ---------
Operating costs EURk (31,036) (29,481) (63,238) (67,159)
----------------- --------- --------- --------- ---------
EBITDA EURk 12,034 19,386 31,544 34,384
----------------- --------- --------- --------- ---------
Profit for the period EURk 6,849 15,702 21,004 24,492
----------------- --------- --------- --------- ---------
Earnings per share EUR cents/share 5.1 11.7 15.4 18.2
----------------- --------- --------- --------- ---------
Cash flows from operating
activities EURk 6,856 10,837 14,970 29,214
----------------- --------- --------- --------- ---------
Cash flows used in investing
activities EURk (15,137) (12,549) (32,275) (21,290)
----------------- --------- --------- --------- ---------
Cash flows (used)/from
financing activities EURk (272) 545 (272) 593
----------------- --------- --------- --------- ---------
Working capital (deficit)/
surplus EURk (18,391) 32,747 (18,391) 32,747
----------------- --------- --------- --------- ---------
Average realised copper
price $/lb 2.81 3.12 2.80 3.08
----------------- --------- --------- --------- ---------
Cu concentrate produced (tonnes) 48,382 47,140 91,823 89,568
----------------- --------- --------- --------- ---------
Cu production (tonnes) 10,889 10,446 21,108 19,887
----------------- --------- --------- --------- ---------
Cash costs $/lb payable 1.74 1.88 1.81 2.07
----------------- --------- --------- --------- ---------
All-In Sustaining Cost $/lb payable 1.95 2.34 2.06 2.49
----------------- --------- --------- --------- ---------
-- Revenues for the three months ended 30 June 2019 ("Q2 2019")
were EUR43.1 million compared with EUR48.9 million for the three
months ended 30 June 2018 ("Q2 2018"). The decrease was due to
lower copper prices offset to some extent by stronger average US
Dollar rates against the Euro and slightly lower volumes sold
during the period. Revenues for the six month period ended 30 June
2019 ("H1 2019") of EUR94.8 million were lower than the EUR101.5
million reported for the six month period ended 30 June 2018 ("H1
2018"). The decrease was mainly due to lower copper prices in the
first half of 2019.
-- Operating costs, exploration costs and care and maintenance
during Q2 2019 were EUR31.0 million compared with EUR29.5 million
in Q2 2018. Operating costs for H1 2019 amounted to EUR63.2 million
compared with EUR67.2 million in H1 2018. This reduction was driven
by timing differences in mining, processing and maintenance
costs.
-- Cash costs during Q2 2019 were $1.74/lb of payable copper,
lower than the cash costs of $1.77/lb of payable copper in Q4 2018
and Q2 2018 ($1.88/lb). The decrease against Q2 2018 was primarily
as result of lower mining, processing and maintenance costs. All-in
Sustaining Costs ("AISC") during Q2 2019 amounted to $1.95/lb of
payable copper, lower than $2.00/lb of payable copper during Q4
2018 and Q2 2018 ($2.34/lb). Cash costs for H1 2019 were $1.81/lb
payable copper versus $2.07/lb payable copper during H1 2018. AISC
amounted to $2.06/lb payable copper during H1 2019 against $2.49/lb
payable copper for H1 2018. AISC for H1 2019 remains below the
Company's previously stated guidance for the year of $2.25/lb to
$2.45/lb. Given strong H1 cost performance, Atalaya will review its
full year 2019 cost guidance during H2 2019.
-- EBITDA of EUR12.0 million in Q2 2019 compared with EUR19.4
million in Q2 2018. The decrease in EBITDA was partly driven by
lower commodity prices. Q2 2018 also benefited from a higher level
of capitalised stripping costs resulting from the Technical Report
that was published at the end of that quarter. On an accumulative
basis, EBITDA during H1 2019 was EUR31.5 million compared with
EUR34.4 million in H1 2018, as lower copper prices were largely
offset by lower operating costs.
-- Q2 2019 profit after tax amounted to EUR6.8 million (or 5.1
cents basic earnings per share) compared with a profit for Q2 2018
of EUR15.7 million (or 11.7 cents basic earnings per share). Profit
after tax for H1 2019 was EUR21.0 million compared with EUR24.5
million during H1 2018.
-- Inventories of concentrate at 30 June 2019 amounted to
EUR11.4 million (EUR10.8 million at 31 December 2018). Concentrate
balances at the reporting date were shipped in the following
quarter.
-- At the end of Q2 2019, the Company reported a working capital
deficit of EUR18.4 million, a significant decrease from the EUR8.4
million surplus reported at the end of Q4 2018. This was mainly due
to the reclassification of part of the Astor Deferred Consideration
to current liabilities (refer to note 7 in the MD&A for more
details) and lower cash balances due to expenditure on the
expansion of Proyecto Riotinto. Unrestricted cash balances as at 30
June 2019 amounted to EUR15.2 million.
-- In connection with the Astor Deferred Consideration, the
Company previously classified all of the EUR53 million as a
non-current liability but has regularly been reviewing its
assessment of when it could become payable. As a result of this
review, the Group has now classified a portion of the EUR53 million
liability as a current liability. However, precise timing and
quantum of payments will be estimated depending on the future key
variables such as methodology for the calculation, definition of
"Project", the price of copper and the US Dollar and Euro exchanges
rates, timing of sustaining capital expenditures, increased costs
and other operational issues. These factors can vary significantly,
and any amounts actually paid within twelve months of the balance
sheet date may differ substantially from the amounts presently
estimated to become payable within this period. In particular,
copper price assumptions were set earlier in the year at levels
above current spot prices and if the current copper price weakness
were to continue, the amount payable within twelve months could
reduce substantially or if spot prices continue for the rest of the
year the amount payable within twelve months could be wholly
eliminated with nil Excess Cash generated during 2019.
As at 30 June 2019, no consideration has been paid as the
Company has not generated any Excess Cash as per the Master
Agreement (please refer to section 7 in the MD&A below for more
detail).
-- Cash flows from operating activities before changes in
working capital were EUR11.7 million for Q2 2019 compared with
EUR20.4 million during Q2 2018. In H1 2019, cash flows from
operating activities before changes in working capital were EUR32.0
million compared with EUR35.6 million during H1 2018.
-- Net cash flow used for investing activities amounted to
EUR15.1 million and EUR32.3 million for Q2 2019 and H1 2019,
respectively, compared to EUR12.6 million and EUR21.3 million for
the same periods in the prior year. The cash outflows related
mainly to expenditures on the expansion of Proyecto Riotinto.
Operational Highlights
Proyecto Riotinto
-- Copper production during Q2 2019 was 10,889 tonnes, an
increase of 4.2% compared with 10,446 tonnes produced during Q2
2018. Copper production for H1 2019 was 21,108 tonnes compared with
19,887 tonnes during H1 2018.
-- Ore processed during Q2 2019 was 2,565,559 tonnes, an
increase on Q2 2018 when ore processed amounted to 2,490,483
tonnes. Total ore processed during H1 2019 amounted to 5,011,536
tonnes (H1 2018: 4,697,344 tonnes).
-- Copper recovery during the quarter improved to 88.72%, an
increase over the 87.31% achieved in Q2 2018. For H1 2019 copper
recovery was 89.47%, compared with 87.92% in H1 2018.
-- The Group maintains its previously stated copper production
guidance for 2019 of 45,000 - 46,500 tonnes.
Expansion to 15Mtpa at Proyecto Riotinto
-- The 15Mtpa expansion project is now close to full
commissioning and waiting for electricity capacity to be granted by
the electricity supplier for mechanical completion. The new SAG
mill and primary crusher have started initial testing and
commissioning, while new flotation and concentrate handling areas
have been completed and are operational.
Proyecto Touro
-- Feedback from the relevant administrative bodies continues as part of the assessment of the Environmental Impact Studies and the Group is addressing additional requests to complement current management plans.
Legal updates
-- On 29 March 2019, the Company announced that it had received
notification from the Supreme Court in Spain that it did not have
jurisdiction over the appeal made by the Junta de Andalucía ("JdA")
and the Company and therefore the announced Ruling by the Tribunal
Superior de Justicia de Andalucía ("TSJA") remains valid.
On 26 April 2019, the Company announced that a judgment relating
to the Mining Permits to operate Proyecto Riotinto (the "Mining
Permits") was handed down by the TSJA. The TSJA declared the Mining
Permits are linked to the Environmental Permits, ruled by the same
tribunal in September 2018. The new ruling on the Mining Permits is
based on the requirement to have an Autorizacion Ambiental
Unificada ("AAU") before issuing mining permits and therefore
invalidates the existing Mining Permits. The TSJA did not accept
the requests by Ecologistas en Acion ("EeA") for the cessation of
activities at the mine and an increase in the scope of the
environmental plan.
The Company was notified on 16 July 2019 that the JdA has
started the administrative process to resolve the previously
reported administrative issues identified by the TSJA relating to
the Unified Environmental Declaration and the Mining Permits.
The Company continues operating the mine normally and remains
confident that the ongoing process carried out by the JdA will not
impact its operations at Proyecto Riotinto.
Alberto Lavandeira, CEO commented:
"A pleasing reduction in operating costs, combined with another
robust quarterly production performance, helped the Company to
minimise the impact of lower copper prices during the period. The
expansion at Proyecto Riotinto is another example of management
delivering a low capex intensity project and as it comes on line,
we expect to continue this improvement in operating
efficiencies."
This announcement contains information which, prior to its
publication constituted inside information for the purposes of
Article 7 of Regulation (EU) No 596/2014.
Contacts:
Elisabeth Cowell / Adam + 44 20 3757
Newgate Communications Lloyd / Tom Carnegie 6880
+44 20 3170
4C Communications Carina Corbett 7973
------------------------------- -------------
Canaccord Genuity (NOMAD Henry Fitzgerald-O'Connor +44 20 7523
and Joint Broker) / James Asensio 8000
------------------------------- -------------
Jeffrey Couch / Tom Rider
BMO Capital Markets (Joint / Michael Rechsteiner / +44 20 7236
Broker) Neil Elliot 1010
------------------------------- -------------
+44 20 7418
Peel Hunt LLP (Joint Broker) Ross Allister / David McKeown 8900
------------------------------- -------------
About Atalaya Mining Plc
Atalaya is an AIM and TSX-listed mining and development group
which produces copper concentrates and silver by-product at its
wholly owned Proyecto Riotinto site in southwest Spain. In
addition, the Group has a phased, earn-in agreement for up to 80%
ownership of Proyecto Touro, a brownfield copper project in the
northwest of Spain which is currently in the permitting stage. For
further information, visit www.atalayamining.com
Management's review
(All amounts in Euro thousands unless otherwise stated)
For the period ended 30 June 2019 and 2018
ATALAYA MINING PLC
MANAGEMENT'S REVIEW AND
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
30 June 2019
Notice to Reader
The accompanying interim condensed consolidated financial
statements of Atalaya Mining Plc have been prepared by and are the
responsibility of Atalaya Mining Plc's management. The interim
condensed consolidated financial statements have been reviewed by
Atalaya's auditors in accordance with the International Standard on
Review Engagements 2410 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity.
Introduction
This report provides an overview and analysis of the financial
results of operations of Atalaya Mining Plc and its subsidiaries
("Atalaya" and/or "Group"), to enable the reader to assess material
changes in the financial position between 31 December 2018 and 30
June 2019 and results of operations for the three and six months
ended 30 June 2019 and 2018.
This report has been prepared as of 14 August 2019. The
analysis, hereby included, is intended to supplement and complement
the interim condensed consolidated financial statements and notes
thereto ("Financial Statements") as at and for the period ended 30
June 2019. The reader should review the Financial Statements in
conjunction with the review of this report and with the audited,
consolidated financial statements for the year ended 31 December
2018, and the interim condensed consolidated financial statements
for the period ended 30 June 2018. These documents can be found on
Atalaya's website at www.atalayamining.com.
Atalaya prepares its Annual Financial Statements in accordance
with International Financial Reporting Standards ("IFRSs") and its
Interim Condensed Consolidated Financial Statements in accordance
with International Accounting Standards 34: Interim Financial
Reporting. The currency referred to in this document is the Euro,
unless otherwise specified.
Forward-looking statements
This report may include certain "forward-looking statements" and
"forward-looking information" under applicable securities laws.
Except for statements of historical fact, certain information
contained herein constitutes forward-looking statements.
Forward-looking statements are frequently characterised by words
such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate", and other similar words, or statements
that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are based on
a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. Assumptions upon which such
forward-looking statements are based include that all required
third party regulatory and governmental approvals will be obtained.
Many of these assumptions are based on factors and events that are
not within the control of Atalaya and there is no assurance they
will prove to be correct. Factors that could cause actual results
to vary materially from results anticipated by such forward-looking
statements include changes in market conditions and other risk
factors discussed or referred to in this report and other documents
filed with the applicable securities regulatory authorities.
Although Atalaya has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Atalaya undertakes no obligation to
update forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements.
1. Description of the business
Atalaya is a Cyprus European mining and development company. The
Company is listed on the AIM Market of the London Stock Exchange
("AIM") and on the Toronto Stock Exchange ("TSX").
Proyecto Riotinto, wholly owned by the Company's subsidiary
Atalaya Riotinto Minera, S.L.U., is located in Huelva, Spain. The
Group operates the Cerro Colorado open-pit mine and its associated
processing plant where copper in concentrate and silver by-product
are produced. A brownfield expansion of the plant is in
progress.
The Group has an initial 10% stake in Cobre San Rafael, S.L.,
the owner of Proyecto Touro, as part of an earn-in agreement which
will enable the Group to acquire up to 80% of the copper project.
Proyecto Touro is located in Galicia, north-west Spain.
2. Overview of operational results
Proyecto Riotinto
The following table presents a summarised statement of
operations of Proyecto Riotinto for the three and six months ended
30 June 2019 and 2018.
Units expressed in Three months ended Three months ended Six months ended Six
accordance with the 30 June 2019 30 June 2018 30 June 2019 months
international system of Unit ended
units (SI) 30 June 2018
Ore mined t 2,781,264 2,592,354 5,331,249 5,151,555
Ore processed t 2,565,559 2,490,483 5,011,536 4,697,344
Copper ore grade % 0.48 0.48 0.47 0.48
Copper concentrate grade % 22.51 22.16 22.99 22.20
Copper recovery rate % 88.72 87.31 89.47 87.92
Copper concentrate t 48,382 47,140 91,823 89,568
Copper contained in
concentrate t 10,889 10,446 21,108 19,887
Payable copper contained
in concentrate t 10,405 9,975 20,190 18,991
Cash cost* $/lb payable 1.74 1.88 1.81 2.07
All-in sustaining cost* $/lb payable 1.95 2.34 2.06 2.49
(*) 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 operational review
Copper production at Proyecto Riotinto for Q2 2019 increased to
10,889 tonnes from 10,446 tonnes reported in Q2 2018, and 11,172
tonnes in Q4 2018, representing an increase and a decrease of 4.2%
and 2.5%, respectively. Ore milled was higher than the previous
quarter and in line with management's expectations. Copper head
grade was in line with the previous quarter and with expectations.
The increase in copper production during the quarter compared with
Q2 2018 was driven by increased throughput and a higher average
recovery of 88.72%.
Mining operations are progressing according to plan and at
similar levels to previous quarters. On a combined basis, ore,
waste and marginal ore amounted to 2.3 million m3 in Q2 2019, the
same as in Q1 2019. Additional mining equipment is available on
site in anticipation of the increase in production scheduled for H2
2019.
During Q2 2019, the Group sold 47,867 tonnes of concentrates,
compared with 44,487 tonnes in Q4 2018 and 46,172 tonnes in Q2
2018. On-site concentrate inventories at the end of the quarter
were approximately 3,451 tonnes. All concentrate in stock at the
beginning of the quarter and produced during the quarter was
delivered to the port at Huelva.
2. Overview of operational results (continued)
Exploration is progressing well with two drilling programmes
under way. Residual massive sulphides and stockwork mineralisation
are the targets under the Atalaya pit. Lateral extensions of
massive sulphides and stockwork are also being drilled at Filon
Sur. Geological modelling is being updated as information becomes
available.
Six months operating review
Production of copper contained in concentrate during H1 2019 was
21,108 tonnes, compared with 19,887 tonnes in the same period of
2018. Payable copper in concentrates was 20,190 tonnes compared
with 18,991 tonnes of payable copper in H1 2018.
Ore mined in H1 2019 was 5,331,249 tonnes compared to 5,151,555
tonnes during H1 2018. Ore processed was 5,011,536 tonnes versus
4,697,344 tonnes in H1 2018.
Ore grade during H1 2019 was 0.47% Cu compared with 0.48% Cu in
H1 2018. Copper recovery was 89.47% versus 87.92% in H1 2018.
Concentrate production amounted to 91,823 tonnes above H1 2018
production of 89,568 tonnes as increased throughput and recoveries
offset the slightly lower grade.
Expansion to 15Mtpa at Proyecto Riotinto
The 15Mtpa expansion project is now close to full commissioning
and waiting for electricity capacity to be granted by the
electricity supplier for mechanical completion. The new SAG mill
and primary crusher have started initial testing and commissioning,
while new flotation and concentrate handling areas are finished and
operational.
Proyecto Touro
Feedback from the relevant administrative bodies continues as
part of the assessment of the Environmental Impact Studies and the
Company is addressing additional requests to complement current
management plans.
3. Outlook
The forward-looking information contained in this section is
subject to the risk factors and assumptions contained in the
cautionary statement on forward-looking statements included in the
introduction note of this report.
Operational guidance
Proyecto Riotinto operational guidance for 2019 remains as
follows:
Guidance
Unit 2019
Ore processed million tonnes 11.4
Contained copper tonnes 45,000 - 46,500
Copper head grade for 2019 is budgeted to average 0.47% Cu, with
a recovery rate of approximately 85% to 87%. Cash operating costs
for 2019 are expected to be in the range of $1.95/lb - $2.15/lb,
and AISC is estimated to be in the range of $2.25/lb - $2.45/lb.
Given strong H1 cost performance, Atalaya will review its full year
2019 costs guidance during H2 2019.
4. Overview of the financial results
The following table presents summarised consolidated income
statements for the three and six months ended 30 June 2019, with
comparatives for the three and six months ended 30 June 2018.
Three months ended Three months ended Six months ended Six months ended
30 June 2019 30 June 2018 30 June 2019 30 June 2018
(Euro 000's)
Revenue 43,070 48,867 94,782 101,543
Total operating costs (28,254) (27,986) (58,333) (64,412)
Administrative and other
expenses (1,465) (1,000) (3,382) (2,053)
Exploration expenses (1,201) (214) (1,402) (413)
Care and maintenance
expenditure (116) (281) (121) (281)
EBITDA 12,034 19,386 31,544 34,384
Depreciation/amortisation (3,745) (2,210) (7,171) (6,310)
Net foreign exchange
gain/(loss) (426) 932 287 1,102
Net finance cost (35) (112) (66) (119)
Tax (979) (2,294) (3,590) (4,565)
------------------- ------------------- ----------------- -----------------
Profit for the period 6,849 15,702 21,004 24,492
------------------- ------------------- ----------------- -----------------
Three months financial review
Revenues for the three month period ended 30 June 2019 amounted
to EUR43.1 million (Q2 2018: EUR48.9 million). Lower revenues,
compared with the same quarter in the previous year, were mainly
driven by lower copper prices offset to some extent by stronger
average US Dollar rates against the Euro and slightly higher
volumes sold during the period.
Realised prices were $2.81/lb copper during Q2 2019 compared
with $3.12/lb copper in Q2 2018. All concentrates were sold under
offtake agreements in place.
Operating costs for the three month period ended 30 June 2019
amounted to EUR28.3 million, compared with EUR28.0 million in Q2
2018. In absolute terms, higher operating costs were mainly due to
more tonnes being mined and processed during the quarter at lower
unit costs. In addition, the Company incurred some implementation
costs for the updated collective bargaining agreement.
Cash costs of $1.74/lb payable copper during Q2 2019 compared
with $1.88lb payable copper in the same period last year. Cash
costs were impacted by lower processing, technical services and
maintenance unit costs compared with Q2 2018. Additionally,
capitalised stripping costs during Q2 2019 amounted to EUR0.1
million compared with EUR3.4 million in Q2 2018. All-in sustaining
costs in the reporting quarter were $1.95/lb payable copper
compared with $2.34/lb payable copper in Q2 2018. Lower AISC
compared with Q2 2018 mainly related to lower sustaining capex and
capitalised stripping costs.
Sustaining capex for Q2 2019 amounted to EUR1.3 million compared
with EUR2.5 million in Q2 2018. Sustaining capex related to the
continuous improvement in processing systems of the plant and
enhancements in security.
Administrative and other expenses amounted to EUR1.5 million (Q2
2018: EUR1.0 million) and include non-operating costs of the Cyprus
office, corporate, legal and consultancy costs, on-going listing
costs, officers and directors' emoluments, and salaries and related
costs of the corporate office.
Exploration costs at Proyecto Riotinto for the three month
period ended 30 June 2019 amounted to EUR1.2 million (Q2 2018:
EUR0.2 million). All exploration costs at Proyecto Touro are
capitalised. Higher costs relate to an upturn in drillings and
explored ground.
EBITDA for the three months ended 30 June 2019 amounted to
EUR12.0 million compared with Q2 2018 of EUR19.4 million.
The main item below the EBITDA line is depreciation and
amortisation of EUR3.8 million (Q2 2018: EUR2.2 million). Net
financing costs for Q2 2019 amounted to EUR0.1 million same as Q2
2018.
4. Overview of the financial results (continued)
Six months financial review
Revenues for the six-month period ended 30 June 2019 amounted to
EUR94.8 million (H1 2018: EUR101.5 million).
Copper concentrate production during the six month period ended
30 June 2019 was 91,823 tonnes (H1 2018: 89,568 tonnes) with 93,039
tonnes of copper concentrates sold in the period (H1 2018: 94,854
tonnes). Inventories of concentrates as at the reporting date were
3,451 tonnes (31 Dec 2018: 4,667 tonnes).
Realised copper prices for H1 2019 were $2.80/lb copper compared
with $3.08/lb copper in the same period of 2018. Concentrates were
sold under offtake agreements in place. The Company did not enter
into any hedging agreements in 2019.
Operating costs for the six-month period ended 30 June 2019
amounted to EUR58.3 million, compared with EUR64.4 million in H1
2018. Lesser costs in 2019 were mainly attributable to: (i)
reduction of EUR3.5 million cost of sales as the inventory
decreased in ca. 4,170 tonnes less than in H1 2018; (ii) reduction
of EUR0.9 million in agency fees as result of the decrease in
market copper prices and; (iii) a EUR0.7 million reduction in
operating machinery expenses.
Cash costs of $1.81/lb payable copper during H1 2019 compare
with $2.07/lb payable copper in the same period last year. Lower
costs were mainly due by lower processing, technical services and
maintenance costs compared with H1 2018. All-in sustaining costs in
the reporting quarter were $2.06/lb payable copper compared with
$2.49/lb payable copper in H1 2018. Lower AISC compared with H1
2018 mostly related to lesser sustaining capex and capitalised
stripping costs.
Sustaining capex for the six month period amounted to EUR2.9
million, compared with EUR5.2 million in the same period in the
previous year. Sustaining capex related to enhancements in
processing systems.
Corporate costs for the first six month of 2019 were EUR3.4
million, compared with EUR2.1 million in H1 2018. Corporate costs
mainly include Company's overhead expenses.
Exploration costs related to Proyecto Riotinto for the six-month
period ended 30 June 2019 amounted to EUR1.4 million, compared with
EUR0.4 million in H1 2018. Higher costs relate to an upturn in
drillings and explored ground.
EBITDA for the six months ended 30 June 2019 amounted to EUR31.5
million, compared with EUR34.4 million in H1 2018.
Depreciation and amortisation amounted to EUR7.2 million for the
six-month period ended 30 June 2019 (H1 2018: EUR6.3 million).
Net finance costs for H1 2019 amounted to EUR0.1 million (H1
2018 EUR0.1 million).
Copper prices
The average realised copper price decreased by 10.3% from
US$3.12 per pound in Q2 2018 to US$2.81 per pound in Q2 2019.
The average prices of copper for the three months ended 30 June
2019 and 2018 are summarised below:
Three months ended Three months ended Six months ended Six months ended
30 June 2019 30 June 2018 30 June 2019 30 June 2018
(USD)
Realised copper price per lb 2.81 3.12 2.80 3.08
Market copper price per lb 2.77 3.12 2.80 3.14
Realised copper prices for the reporting period noted above have
been calculated using payable copper and including provisional
invoices and final settlements of quotation periods ("QPs")
together. Higher realised prices than market averages are mainly
due to the final settlement of invoices where QP was fixed in the
previous quarter due to a short open period when copper prices were
higher. The realised price of shipments during the quarter
excluding QP was approximately $2.76/lb.
5. Non-GAAP Measures
Atalaya has included certain non-IFRS measures including
"EBITDA", "Cash Cost per pound of payable copper", "All In
Sustaining Costs" ("AISC") and "realised prices" in this report.
Non-IFRS measures do not have any standardised meaning prescribed
under IFRS, and therefore they may not be comparable to similar
measures presented by other companies. These measures are intended
to provide additional information and should not be considered in
isolation or as a substitute for indicators prepared in accordance
with IFRS.
EBITDA includes gross sales net of penalties and discounts and
all operating costs, excluding finance, tax, impairment,
depreciation and amortisation expenses.
Cash Cost per pound of payable copper includes cash operating
costs, including treatment and refining charges ("TC/RC"), freight
and distribution costs net of by-product credits. Cash Cost per
pound of payable copper is consistent with the widely accepted
industry standard established by Wood Mackenzie and is also known
as the C1 cash cost.
AISC per pound of payable copper includes C1 Cash Costs plus
royalties and agency fees, expenditures on rehabilitation,
capitalised stripping costs, exploration and geology costs,
corporate costs and sustaining capital expenditures.
Realised price per pound of payable copper is the value of the
copper payable included in the concentrate produced before
deducting 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 June 2019 and 31 December 2018.
Liquidity information
(Euro 000's) 30 June 2019 31 December
2018
Unrestricted cash and cash equivalents
at Group level 8,317 24,357
Unrestricted cash and cash equivalents
at Operational level 6,926 8,463
Restricted cash 250 250
Working capital (deficit) / surplus (18,391) 8,435
Unrestricted cash and cash equivalents as at 30 June 2019
decreased to EUR15.2 million from EUR32.8 million at 31 December
2018. The decrease in cash balances is the result of net cash flow
incurred in the period. Cash balances are unrestricted and include
balances at operational and corporate level.
Restricted cash remains at EUR0.3 million as at 30 June 2019 and
mainly relates to deposit bond guarantees.
As of 30 June 2019, Atalaya reported a working capital deficit
of EUR18.4 million, compared with a working capital surplus of
EUR8.4 million at 31 December 2018. The main liability of the
working capital is trade payables related to Proyecto Riotinto
contractors and the estimated short term portion of the Deferred
Consideration to Astor (Paragraph 7). At 30 June 2019, trade
payables have been reduced by circa 8% compared with the same
period last year.
6. Liquidity and capital resources (continued)
Overview of the Group's cash flows
Three months ended Three months ended Six months ended Six months ended
30 June 2019 30 June 2018 30 June 2019 30 June 2018
(Euro 000's)
Cash flows from operating
activities 6,856 10,837 14,970 29,214
Cash flows used in investing
activities (15,137) (12,549) (32,275) (21,290)
Cash flows from financing
activities (272) 545 (272) 593
------------------- ------------------- ----------------- -----------------
Net (decrease)/increase in cash
and cash equivalents (8,553) (1,167) (17,577) 8,517
------------------- ------------------- ----------------- -----------------
Three months cash flows review
Cash and cash equivalents decreased by EUR8.6 million during the
three months ended 30 June 2019. This was due to the net results of
cash from operating activities amounting to EUR6.9 million, the
cash used in investing activities amounting to EUR15.1 million and
the cash from financing activities totalling EUR0.3 million.
Cash generated from operating activities before working capital
changes was EUR11.7 million. Atalaya decreased its trade
receivables in the period by EUR0.1 million, increased its
inventory levels by EUR1.3 million and decreased its trade payables
by EUR1.6 million.
Investing activities during the quarter consumed EUR15.1
million, relating mainly to the expansion project Capex and
sustaining Capex mostly in enhancements in the plant's processing
systems.
Six months cash flows review
Cash and cash equivalents decreased by EUR17.6 million during
the six months ended 30 June 2019. This was due to cash from
operating activities amounting to EUR15.0 million, cash used in
investing activities amounting to EUR32.3 million and cash from
financing activities amounting to EUR0.3 million.
Cash generated from operating activities before working capital
changes was EUR32.0 million. Atalaya decreased its trade payables
in the period by EUR2.7 million, as well as its inventory levels by
EUR0.6 million and increased its trade receivable balances by
EUR11.8 million.
Investing activities during the six-month period amounted to
EUR32.3 million, mainly relating to the expansion project Capex and
sustaining Capex.
Foreign exchange
Foreign exchange rate movements can have a significant effect on
Atalaya's operations, financial position and results. Atalaya's
sales are denominated in U.S. dollars ("USD"), while Atalaya's
operating expenses, income taxes and other expenses are mainly
denominated in Euros ("EUR"), and to a much lesser extent in
British Pounds ("GBP").
Accordingly, fluctuations in the exchange rates can potentially
impact the results of operations and carrying value of assets and
liabilities on the balance sheet.
During the three and six months ended 30 June 2019, Atalaya
recognised a foreign exchange (loss)/profit of EUR(0.4) million and
EUR0.3 million, respectively. Foreign exchange losses mainly
related to changes in the period in EUR and USD conversion rates,
as all sales are cashed and occasionally held in USD.
6. Liquidity and capital resources (continued)
The following table summarises the movement in key currencies
versus the EUR:
Three months ended Three months ended Six months ended Six months ended
30 June 2019 30 June 2018 30 June 2019 30 June 2018
Average rates for the periods
GBP - EUR 0.8748 0.8762 0.8736 0.8798
USD - EUR 1.1237 1.1915 1.1298 1.2104
Spot rates as at
GBP - EUR 0.8966 0.8861 0.8966 0.8861
USD - EUR 1.1380 1.1658 1.1380 1.1658
7. 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 a deferred consideration of EUR43.9
million (the "Deferred Consideration") payable as consideration in
respect of the acquisition. The Company also entered into a credit
assignment agreement at the same time with a related company of
Astor, Shorthorn AG, pursuant to which the benefit of outstanding
loans was assigned to the Company in consideration for the payment
of EUR9.1 million to Shorthorn (the "Loan Assignment").
The Master Agreement has been the subject of litigation in the
High Court and the Court of Appeal that has now concluded. As a
consequence, ARM must apply any excess cash (after payment of
operating expenses, sustaining capital expenditure, any senior debt
service requirements and up to US$10 million per annum (for
non-Proyecto Riotinto related expenses)) to pay the consideration
due to Astor (including the Deferred Consideration and the amount
of EUR9.1 million payable under the Loan Assignment).
As at 30 June 2019, no consideration has been paid as the
Company has not generated any Excess Cash as per the Master
Agreement.
"Excess cash" is not defined in the Master Agreement leaving
ambiguity as to how it is to be calculated. The Company regularly
revisits its assessment on when the Deferred Consideration will
become payable and at the date of the balance sheet has classified
the EUR53 million liability recognised by the Group between current
liabilities and non-current liabilities, accordingly.
Timing and quantum of payments will be estimated depending on
the future key variables such as methodology for the calculation,
definition of "Project", the price of copper and the US Dollar and
Euro exchanges rates, timing of sustaining capital expenditures,
increased costs and other operational issues. These factors can
vary significantly, and any amounts actually paid within twelve
months of the balance sheet date may differ substantially from the
amounts presently estimated to become payable within this period.
In particular, copper price assumptions were set earlier in the
year at levels above current spot prices and if the current copper
price weakness were to continue, the amount payable within twelve
months could reduce substantially or if spot prices continue for
the rest of the year the amount payable within twelve months could
be wholly eliminated with nil Excess Cash generated during
2019.
The effect of discounting remains insignificant, in line with
the 2018 assessment, and therefore the Group has measured the
liability for the Astor Deferred Consideration on an undiscounted
basis.
8. Corporate social responsibility
During the quarter, Atalaya has continued its involvement in
social responsibility through several activities by means of
Fundación Atalaya Riotinto ("the Foundation").
Continuing its work in education and entrepreneurship, the
Foundation has sponsored a regional music contest, with the
participation of hundreds of young players from the official Music
Schools; Atalaya has also sponsored the Cultural Week of the
Nerva's Adults School; and has continued the school visits
programme of the mining region to Atalaya's facilities.
The Foundation is progressing with the second edition of "el
Reto Malacate": an initiative to reward the best business project
to be settled in the region.
In co-operation with the business association, it has sponsored
a gastronomic event to promote the local restaurants and attract
tourism. In co-ordination with the City Hall of Nerva, the
Foundation has agreed to provide the necessary funding for the
reconstruction of a road that connects the town with some populated
suburbs away from the town.
The Foundation has also reached agreements with the association
of retired workers of Riotinto Mine (that represent more than 200
people) to support the funding of some of their activities. The
agreement includes a site tour for the members. The Foundation has
taken part as sponsor in a charitable Golf Tournament for the
benefit of Huelva's Food Bank.
9. Health and safety
During the second quarter of 2019, the safety leadership for
management programme was carried out to develop the training in
communication and safety skills.
Likewise, Atalaya has already established the Emergency Brigade,
formed by volunteer workers. This team has established a site and
has begun training in the field of fire protection.
Regarding other lines of work such as accident investigation and
root cause analysis, safety meetings with contractor companies,
measurements of contaminants or risk assessments, are running
smoothly. Additionally, the Health & Safety department
performed two emergency drills at the mine area and the chemical
plant.
10. Environmental management
During the second quarter of 2019, the environmental department
has continued executing the actions of environmental monitoring of
the activity, management of the natural environment and the usual
historical heritage. Key points of the quarter:
- Forest fire preventive measures have been completed. Approx.
64 km of firebreak were finalised and ca. 130 hectares of forest
were cleared.
- An increase in air emissions compared with the previous year
was recorded during the quarter. Though the level of emissions
remains under the specified limits, the Company carried out new
preventive actions to monitor the mine site and the processing
plant.
- The first stage to integrate the quality management system
(ISO 9001, ISO 14001 y OHSAS 18001) through the audit certification
has been performed during the quarter.
Archaeological excavation work has continued at the Look Out. In
June, the excavation reached the last archaeological level and
consequently the archaeological dig is about to end as planned.
11. 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
the future operating results and could cause actual events to
differ materially from those described in forward-looking
statements relating to Atalaya. Readers are encouraged to read and
consider the risk factors detailed in Atalaya's audited,
consolidated financial statements for the year ended 31 December
2018.
12. Critical accounting policies, estimates and accounting changes
The preparation of Atalaya's Financial Statements in accordance
with IFRS requires management to make estimates and assumptions
that affect amounts reported in the Financial Statements and
accompanying notes. There is a full discussion and description of
Atalaya's critical accounting policies in the audited consolidated
financial statements for the year ended 31 December 2018. The
impact of adopting IFRS 16 Leases which became effective on 1
January 2019 is set out in Note 2.2 to the Interim Condensed
Consolidated Financial Statements.
13. Other information
Additional information about Atalaya Mining Plc. is available at
www.atalayamining.com
Interim condensed consolidated financial statements on pages 12
to 34.
By Order of the Board of Directors,
Roger Davey
Chairman
Nicosia, 14 August 2019
REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
TO THE SHAREHOLDERS OF ATALAYA MINING PLC
Introduction
We have reviewed the interim condensed consolidated financial
statements of Atalaya Mining Plc (the "Company"), and its
subsidiaries (collectively referred to as "the Group") on pages 12
to 34 contained in the accompanying interim report, which comprise
the interim condensed consolidated statement of financial position
as at 30 June 2019 and the interim condensed consolidated
statements of profit or loss and other comprehensive income,
changes in equity and cash flows for the period then ended and
selected explanatory notes. Management is responsible for the
preparation and presentation of these interim condensed
consolidated financial statements in accordance with International
Financial Reporting Standard IAS 34 Interim Financial Reporting
(IAS 34). Our responsibility is to express a conclusion on these
interim condensed consolidated financial statements based on our
review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity". A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim condensed
consolidated financial statements do not present fairly, in all
material respects, the financial position of the entity as at 30
June 2019 and of its financial performance and its cash flows for
the period then ended in accordance with International Financial
Reporting Standard IAS 34 Interim Financial Reporting (IAS 34).
Stavros Pantzaris
Certified Public Accountant and Registered Auditor
for and on behalf of
Ernst & Young Cyprus Limited
Certified Public Accountants and Registered Auditors
Nicosia
14 August 2019
Interim Condensed Consolidated Income Statements
(All amounts in Euro thousands unless otherwise stated)
For the period ended 30 June 2019 and 2018
Three Three Six months Six
months months ended months
ended ended 30 June ended
30 June 30 June 2019* 30 June
(Euro 000's) Notes 2019* 2018 2018
Revenue 4 43,070 48,867 94,782 101,543
Operating costs and mine site
administrative expenses (28,201) (27,953) (58,227) (64,345)
Mine site depreciation and amortization (3,744) (2,210) (7,170) (6,310)
--------- ========= =========== =========
Gross profit 11,125 18,704 29,385 30,888
Administration and other expenses (1,465) (995) (3,382) (2,044)
Share-based benefits (54) (38) (107) (76)
Exploration expenses (1,201) (214) (1,402) (413)
Care and maintenance expenditure (116) (281) (121) (281)
Operating profit 8,289 17,176 24,373 28,074
Net foreign exchange (loss)/gain (426) 932 287 1,102
Net finance costs 5 (35) (112) (66) (119)
--------- ---------
Profit before tax 7,828 17,996 24,594 29,057
Tax (979) (2,294) (3,590) (4,565)
--------- --------- =========== =========
Profit for the period 6,849 15,702 21,004 24,492
--------- --------- =========== =========
Profit for the period attributable
to:
* Owners of the parent 6,954 15,901 21,115 24,758
* Non-controlling interests (105) (199) (111) (266)
---------
6,849 15,702 21,004 24,492
--------- ========= =========== =========
Earnings per share from operations
attributable to equity holders
of the parent during the period:
Basic earnings per share (EUR
cents per share) 6 5.1 11.7 15.4 18.2
--------- ========= =========== =========
Fully diluted earnings per share
(EUR cents per share) 6 5.1 11.6 15.3 18.0
--------- ========= =========== =========
Profit for the period
Other comprehensive income: 6,849 15,702 21,004 24,492
Change in fair value of financial
assets through other comprehensive
income 'OCI' (17) (18) (12) (15)
---------
Total comprehensive income for
the period 6,832 15,684 20,992 24,477
--------- ========= =========== =========
Total comprehensive income for
the period attributable to:
* Owners of the parent 6,937 15,883 21,103 24,743
* Non-controlling interests (105) (199) (111) (266)
--------- -----------
6,832 15,684 20,992 24,477
--------- ========= ----------- =========
* Refer to Note 2.2 Adoption of "IFRS 16 - Leases"
The notes on pages 16 to 34 are an integral part of these
Interim Condensed Consolidated Financial Statements.
Interim Condensed Consolidated Statement of Financial
Position
(All amounts in Euro thousands unless otherwise stated)
As at 30 June 2019 and 2018
30 June 31 December
(Euro 000's) Note 2019* 2018
Assets
Non-current assets
Property, plant and equipment 7 289,999 257,376
Intangible assets 8 70,989 71,951
Trade and other receivables 10 250 249
Deferred tax asset 7,841 7,927
======== ===========
369,079 337,503
======== ===========
Current assets
Inventories 9 11,378 10,822
Trade and other receivables 10 36,220 23,688
Other financial assets 60 71
Cash and cash equivalents 15,493 33,070
======== ===========
63,151 67,651
======== ===========
Total assets 432,230 405,154
======== ===========
Equity and liabilities
Equity attributable to owners of the
parent
Share capital 11 13,372 13,372
Share premium 11 314,319 314,319
Other reserves 12 22,092 12,791
Accumulated losses (46,399) (58,308)
======== ===========
303,384 282,174
Non-controlling interests 4,089 4,200
-------- -----------
Total equity 307,473 286,374
-------- -----------
Liabilities
Non-current liabilities
Trade and other payables 13 23 45
Provisions 14 6,682 6,519
Leases 15 5,846 -
Deferred consideration 16 30,664 53,000
======== ===========
43,215 59,564
======== ===========
Current liabilities
Trade and other payables 13 54,630 57,271
Leases 15 307 -
Current tax liabilities 4,269 1,945
Deferred consideration 16 22,336
81,542 59,216
======== ===========
Total liabilities 124,757 118,780
======== ===========
Total equity and liabilities 432,230 405,154
======== ===========
* Refer to Note 2.2 Adoption of "IFRS 16 - Leases"
The notes on pages 16 to 34 are an integral part of these
Interim Condensed Consolidated Financial Statements. The interim
condensed consolidated financial statements were authorised for
issue by the Board of Directors on 14 August 2019 and were signed
on its behalf.
Roger Davey Alberto Lavandeira
Chairman Managing Director
Interim Condensed Consolidated Statements of Changes in
Equity
(All amounts in Euro thousands unless otherwise stated)
For the period ended 30 June 2019 and 2018
Non-controlling
Share Share Other Accum. interest Total
(Euro 000's) capital premium(1) reserves(2) losses Total equity
----------------
At 1 January 2019 13,372 314,319 12,791 (58,308) 282,174 4,200 286,374
Profit for the period - - - 21,115 21,115 (111) 21,004
Change in fair value
of financial assets
through OCI - - (12) - (12) - (12)
---------- ------------- ------------- --------- -------- ---------------- ---------
Total comprehensive
income - - (12) 21,115 21,103 (111) 20,992
Transactions with owners
Recognition of
share-based
payments - - 107 - 107 - 107
Recognition of depletion
factor - - 5,378 (5,378) - - -
Recognition of
non-distributable
reserve - - 1,984 (1,984) - - -
Recognition of
distributable
reserve - - 1,844 (1,844) - - -
At 30 June 2019 13,372 314,319 22,092 (46,399) 303,384 4,089 307,473
========== ============= ============= ========= ======== ================ =========
(1) The share premium reserve is not available for
distribution
(2) Refer to Note 12
Non-controlling
Share Share Other Accum. interest Total
(Euro 000's) capital premium(1) reserves(2) losses Total equity
----------------
At 1 January 2018 13,192 309,577 6,137 (86,527) 242,379 4,474 246,853
Profit for the period - - - 24,758 24,758 (266) 24,492
Change in fair value
of financial assets
through OCI - - (15) - (15) - (15)
---------- ------------- ------------- --------- -------- ---------------- ---------
Total comprehensive
income - - (15) 24,758 24,743 (266) 24,477
Transactions with owners
Issue of share capital 180 4,747 - - 4,927 - 4,927
Share issue costs - (5) - - (5) - (5)
Depletion factor - - 5,050 (5,050) - - -
Recognition of
share-based
payments - - 76 - 76 - 76
Recognition of
non-distributable
reserve - - 1,446 (1,446) - - -
========== ============= ============= ========= ======== ================ =========
At 30 June 2018 13,372 314,319 12,694 (68,265) 272,120 4,208 276,328
========== ============= ============= ========= ======== ================ =========
(1) The share premium reserve is not available for
distribution
(2) Refer to Note 12
Non-controlling
Share Share Other Accum. interest Total
(Euro 000's) capital premium(1) reserves(2) losses Total equity
----------------
At 1 January 2018 13,192 309,577 6,137 (86,527) 242,379 4,474 246,853
Profit for the period - - - 34,715 34,715 (274) 34,441
Change in fair value
of financial assets
through OCI - - (58) - (58) - (58)
---------- ------------- ------------- --------- -------- ---------------- ---------
Total comprehensive
income - - (58) 34,715 34,657 (274) 34,383
Transactions with owners
Issue of share capital 180 4,747 - - 4,927 - 4,927
Share issue costs - (5) - - (5) - (5)
Depletion factor - - 5,050 (5,050) - - -
Recognition of
share-based
payments - - 216 - 216 - 216
Recognition of
non-distributable
reserve - - 1,446 (1,446) - - -
========== ============= ============= ========= ======== ================ =========
At 31 December 2018 13,372 314,319 12,791 (58,308) 282,174 4,200 286,374
========== ============= ============= ========= ======== ================ =========
(1) The share premium reserve is not available for
distribution
(2) Refer to Note 12
The notes on pages 16 to 34 are an integral part of these
Interim Condensed Consolidated Financial Statements.
Interim Condensed Consolidated Statement of Cash Flows
(All amounts in Euro thousands unless otherwise stated)
For to the period ended 30 June 2019 and 2018
Three Three Six Six
months months months Months
ended ended ended ended
(Euro 000's) Notes 30 June 30 June 30 June 30 June
2019* 2018 2019* 2018
Cash flows from operating activities
Profit before tax 7,828 17,996 24,594 29,057
Adjustments for:
Depreciation of property, plant
and equipment 7 2,886 1,666 5,490 4,736
Amortisation of intangibles 8 859 544 1,681 1,574
Recognition of share-based payments 12 54 38 107 76
Interest income 5 (13) (19) (16) (39)
Interest expense 5 19 104 23 105
Unwinding of discounting 5 29 27 59 53
Legal provisions 14 (20) - (18) -
Loss in disposal of property,
plant and equipment 7 - - 2 -
Unrealised foreign exchange loss
on financing activities 27 49 26 4
--------- --------- ========= =========
Cash inflows from operating activities
before working capital changes 11,669 20,405 31,948 35,566
Changes in working capital:
Inventories 9 (1,300) 264 (556) 4,344
Trade and other receivables 10 100 495 (11,761) (461)
Trade and other payables 13 (1,619) (8,836) (2,663) (8,760)
Deferred consideration 16 - - - 17
--------- ---------
Cash flows from operations 8,850 12,328 16,968 30,706
Interest paid (15) (104) (19) (105)
Tax paid (1,979) (1,387) (1,979) (1,387)
--------- ---------
Net cash from operating activities 6,856 10,837 14,970 29,214
--------- --------- ========= =========
Cash flows from investing activities
Purchase of property, plant and
equipment (14,874) (12,204) (31,572) (20,484)
Purchase of intangible assets 8 (276) (364) (719) (845)
Interest received 5 13 19 16 39
--------- --------- ========= =========
Net cash used in investing activities (15,137) (12,549) (32,275) (21,290)
--------- --------- ========= =========
Cash flows from financing activities
Proceeds from issue of share
capital - 550 - 598
Issuance costs - (5) - (5)
Lease payment 15 (268) - (268) -
Interest expense on lease liabilities 15 (4) - (4) -
Net cash flows from financing
activities (272) 545 (272) 593
--------- ---------
Net (decrease) / increase in
cash and cash equivalents (8,553) (1,167) (17,577) 8,517
Cash and cash equivalents:
At beginning of the period 24,046 52,540 33,070 42,856
--------- --------- ========= =========
At end of the period 15,493 51,373 15,493 51,373
--------- --------- ========= =========
The notes on pages 16 to 34 are an integral part of these
Interim Condensed Consolidated Financial Statements.
Notes to the Interim Condensed Consolidated Financial
Statements
(All amounts in Euro thousands unless otherwise stated)
For the period ended 30 June 2019 and 2018
1. Incorporation and summary of business
Country of incorporation
Atalaya Mining Plc (the "Company") was incorporated in Cyprus on
17 September 2004 as a private company with limited liability under
the Companies Law, Cap. 113 and was converted to a public limited
liability company on 26 January 2005. Its registered office is at 1
Lampousa Street, Nicosia, Cyprus.
The Company was listed on AIM of the London Stock Exchange in
May 2005 under the symbol ATYM and on the TSX on 20 December 2010
under the symbol AYM. The Company continued to be listed on AIM and
the TSX as at 30 June 2019.
Additional information about Atalaya Mining Plc is available at
www.atalayamining.com as per requirement of AIM rule 26.
Change of name and share consolidation
Following the Company's Extraordinary General Meeting ("EGM") on
13 October 2015, the change of name from EMED Mining Public Limited
to Atalaya Mining Plc became effective on 21 October 2015. On the
same day, the consolidation of ordinary shares came into effect,
whereby all shareholders received one new ordinary share of nominal
value Stg GBP0.075 for every 30 existing ordinary shares of nominal
value Stg GBP0.0025.
Principal activities
The Company owns and operates through a wholly-owned subsidiary,
"The Riotinto project", 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 up to
80% ownership of "The Touro project", a brownfield copper project
in northwest Spain, which is currently at the permitting stage.
The Company's and its subsidiaries' business is to explore for
and develop metals production operations in Europe, with an initial
focus on copper.
The strategy is to evaluate and prioritise metal production
opportunities in several jurisdictions throughout the well-known
belts of base and precious metal mineralisation in Europe and
internationally.
2. Basis of preparation and accounting policies
2.1 Basis of preparation
(a) Overview
The Interim Condensed Consolidated Financial Statements for the
period ended 30 June 2019 have been prepared in accordance with
International Accounting Standards 34: Interim Financial
Reporting.
These interim condensed consolidated financial statements
include the financial statements of the Company and its subsidiary
undertakings. They have been prepared using accounting bases and
policies consistent with those used in the preparation of the
consolidated financial statements of the Group for the year ended
31 December 2018, other than as described in Note 2.2 for the
changes in accounting policies. These interim condensed
consolidated financial statements do not include all of the
information and disclosures required in the annual financial
statements, and accordingly, should be read in conjunction with the
Group's annual consolidated financial statements, which have been
prepared in accordance with IFRS and is set out in the Group's
Annual Report for the year ended 31 December 2018.
These interim condensed consolidated financial statements for
the period ended 30 June 2019 have been reviewed in accordance with
the International Standard on Review Engagements 2410 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity' by the Group's external auditors, not audited.
2. Basis of preparation and accounting policies (cont.)
2.1 Basis of preparation (cont.)
(b) Going concern
These interim condensed consolidated financial statements have
been prepared on the basis of accounting principles applicable to a
going concern which assumes that the Group will realise its assets
and discharge its liabilities in the normal course of business.
Management has carried out an assessment of the going concern
assumption and has concluded that the Group will generate
sufficient cash and cash equivalents to continue operating for the
next twelve months.
The Directors have formed a judgment at the time of approving
the financial statements that there is a reasonable expectation
that the Company and the Group have adequate available resources to
continue in operational existence for the foreseeable future.
2.2 Changes in accounting policies and disclosures
The Group has adopted all the new and revised IFRSs and
International Accounting Standards (IASs) which are relevant to its
operations and are effective for accounting periods commencing on 1
January 2019.
The Group applied IFRS 16 for the first time from 1 January
2019. As required by IAS 34, the nature and effect of the changes
as a result of adoption of this new accounting standard is
described below.
Several other amendments and interpretations apply for the first
time in 2019, but do not have a significant impact on the interim
condensed consolidated financial statements of the Group. The Group
has not early adopted any standards, interpretations or amendments
that have been issued but are not yet effective.
IFRS 16 - Leases
The Group has adopted all of the requirements of IFRS 16 Leases
('IFRS 16') effective 1 January 2019 (initial application). IFRS 16
supersedes IAS 17 Leases ('IAS 17'). IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases-Incentives
and SIC-27 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases and
requires lessees to account for most leases under a single
on-balance sheet model.
The Group has applied IFRS 16 using the modified retrospective
approach and therefore the comparative information has not been
restated and continues to be reported in terms of IAS 17 and IFRIC
4: Determining Whether an Arrangement Contains a Lease. The Group
has applied the modified retrospective approach whereby the right
of use asset was set equal to the finance lease liability with no
impact on retained earnings on 1 January 2019.The Group elected to
use the transition practical expedient allowing the standard to be
applied only to contracts that were previously identified as leases
applying IAS 17 and IFRIC 4 at the date of initial application. As
a result, the Group has changed its accounting policy for leases as
detailed in the accounting policies.
2. Basis of preparation and accounting policies (cont.)
2.2 Changes in accounting policies and disclosures (cont.)
IFRS 16 - Leases (cont.)
Impact of adopting IFRS 16 on the Group's consolidated financial
statements
The following table summarises the impact of adopting IFRS 16 on
the Group's extracted consolidated statement of financial position
at 1 January 2019:
(Euro 000's) As previously Adjustments Balance as
Note reported as at at
31 December 1 January 1 January
2018 2019 2019
Non-current assets
Property, plant and
equipment 7 257,376 6,144 263,520
Deferred tax asset 7,927 - 7,927
Equity and liabilities
Accumulated losses (58,308) - (58,308)
Non-current liabilities
Leases 15 - 5,609 5,609
Current liabilities
Leases 15 - 534 534
a) Comparative accounting policy in terms of IAS 17
In terms of IAS 17, the Group was required to classify its
leases as either finance leases or operating leases and account for
those two types of leases differently (both as a lessor or a
lessee). A lease was classified as a finance lease if it
transferred substantially all the risks and rewards incidental to
ownership. A lease was classified as an operating lease if all the
risks and rewards incidental to ownership did not substantially
transfer.
Finance leases were recognised as assets and liabilities in the
statement of financial position at amounts equal to the fair value
of the leased property or, if lower, the present value of the
minimum lease payments. The corresponding liability to the lessor
was included in the statement of financial position as a finance
lease obligation. The discount rate used in calculating the present
value of the minimum lease payments is the interest rate implicit
in the lease. The lease payments are apportioned between the
finance charge and reduction of the outstanding liability. The
finance charge is allocated to each period during the lease term so
as to produce a constant periodic rate on the remaining balance of
the liability.
Operating lease payments, in the event of the Group operating as
lessee, were recognised as an expense on a straight-line basis over
the lease term. The difference between the amounts recognised as an
expense and the contractual payments were recognised as an
operating lease asset. The liability was not discounted.
2. Basis of preparation and accounting policies (cont.)
2.2 Changes in accounting policies and disclosures (cont.)
b) Accounting policy in terms of IFRS 16
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease
incentives received. Unless the Group is reasonably certain to
obtain ownership of the leased asset at the end of the lease term,
the recognised right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life
and the lease term. Right-of-use assets are subject to
impairment.
Subsequent to initial measurement, the right-of-use assets are
depreciated from the commencement date using the straight-line
method over the shorter of the estimated useful lives of the
right-of-use assets or the end of lease term. These are as
follows:
Right-of-use asset Depreciation terms in years
Land Based on Units of Production
(UOP)
Motor vehicles Based on straight line depreciation
Laboratory equipment Based on straight line depreciation
After the commencement date, the right-of-use assets are
measured at cost less any accumulated depreciation and any
accumulated impairment losses and adjusted for any remeasurement of
the lease liability.
Lease liabilities
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
Lease payments included in the measurement of the lease
liability include the following:
-- Fixed payments, less any lease incentives receivable
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate as at the commencement
date
-- Amounts expected to be payable by the lessee under residual value guarantees
-- The exercise price of a purchase option if the lessee is
reasonably certain to exercise that option
-- Lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option
-- Payments of penalties for early terminating the lease, unless
the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest rate method. It is remeasured when there is a
change in future lease payments arising from a change in an index
or rate, if there is a change in the Group's estimate of the amount
expected to be payable under a residual value guarantee, or if the
Group changes its assessment of whether it will exercise a
purchase, an extension or a termination option.
When the lease liability is remeasured, a corresponding
adjustment is made to the carrying amount of the right-of-use asset
or is recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
2. Basis of preparation and accounting policies (cont.)
2.2 Changes in accounting policies and disclosures (cont.)
b) Accounting policy in terms of IFRS 16 (cont.)
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered of low value (i.e.,
below EUR5,000). Lease payments on short-term leases and leases of
low-value assets are recognised as expense on a straight-line basis
over the lease term.
Significant judgement in determining the lease term of contracts
with renewal options
The Group determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the
assets for additional terms of three to five years. The Group
applies judgement in evaluating whether it is reasonably certain to
exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the
renewal. After the commencement date, the Group reassesses the
lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to
exercise (or not to exercise) the option to renew (e.g., a change
in business strategy). The Group included the renewal period as
part of the lease term for leases of plant and machinery due to the
significance of these assets to its operations. These leases have a
short non-cancellable period (i.e., three to five years) and there
will be a significant negative effect on production if a
replacement is not readily available. The renewal options for
leases of motor vehicles were not included as part of the lease
term because the Group has a policy of leasing motor vehicles for
not more than five years and hence not exercising any renewal
options.
c) Amounts recognised in the statement of financial position and
profit or loss
Set out below are the carrying amounts of the Group's
right-of-use assets and lease liabilities and the movements during
the period:
Right - of-use assets
============================================
Laboratory Lease liabilities
(Euro 000's) Land Vehicles equipment Total
As at 1 January
2019 6,085 59 - 6,144 6,144
Additions - - 277 277 277
Depreciation expense (177) (7) (6) (190) -
Interest expense - - - - 4
Payments - - - - (272)
------- ----------- ----------- --------- --------------------------
As at 30 June 2019 5,908 52 271 6,231 6,153
------- ----------- ----------- --------- --------------------------
Set out below, are the amounts recognised in profit or loss:
Six months Six months
ended ended
30 June 30 June
(Euro 000's) 2019 2018
As at 31 December 2018
Depreciation expense of right-of-use 190 -
assets
Interest expense on lease liabilities 4 -
Total amounts recognised in profit or 194 -
loss
----------- -------------
The Group recognised rent expense from short-term leases
2. Basis of preparation and accounting policies (cont.)
2.3 Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the reporting date.
The fair value of financial instruments traded in active
markets, such as publicly traded trading and other financial assets
is based on quoted market prices at the reporting date. The quoted
market price used for financial assets held by the Group is the
current bid price. The appropriate quoted market price for
financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Group uses a variety of methods, such as estimated discounted cash
flows, and makes assumptions that are based on market conditions
existing at the reporting date.
Fair value measurements recognised in the consolidated statement
of financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, Grouped into Levels 1 to 3 based on the degree to which
the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Financial assets or liabilities
(Euro 000's) Level 1 Level 2 Level 3 Total
30 June 2019
Other financial assets
Financial assets at FV through OCI 60 - - 60
Trade and other receivables
Receivables (subject to provisional pricing) - 16,852 - 16,852
Total 60 16,852 - 16,912
-------- -------- -------- -------
31 December 2018
Other financial assets
Financial assets at FV through OCI 71 - - 71
Trade and other receivables
Receivables (subject to provisional pricing) - 6,959 - 6,959
-------- -------- -------- -------
Total 71 6,959 - 7,030
-------- -------- -------- -------
2.4 Critical accounting estimates and judgements
The preparation of the interim condensed consolidated financial
statements require management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities, and the accompanying disclosures, and the
disclosure of contingent liabilities at the date of the
consolidated financial statements. Estimates and assumptions are
continually evaluated and are based on management's experience and
other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Uncertainty
about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or
liabilities affected in future periods.
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and a reliable estimate of the amount can be made. If
the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
A full analysis of critical accounting estimates and judgements
is set out in Note 3.4 to the 2018 audited financial statements, as
well as Note 2.2(b) of these interim condensed consolidated
financial statements.
3. Business and geographical segments
Business segments
The Group has only one distinct business segment, being that of
mining operations, which include mineral exploration and
development.
Copper concentrates produced by the Group are sold to three
off-takers as per the relevant offtake agreements (Note 19.3)
Geographical segments
The Group's mining activities are located in Spain. The
commercialisation of the copper concentrates produced in Spain is
carried out through Cyprus. Sales transactions to related parties
are on arm's length basis in a similar manner to transaction with
third parties. Accounting policies used by the Group in different
locations are the same as those contained in Note 2.
(Euro 000's) Cyprus Spain Other Total
Three months ended 30 June 2019 (*)
Revenue - from external customers 3,360 39,710 - 43,070
======== ========= ======== =========
Earnings/(loss) Before Interest, Tax,
Depreciation and Amortisation (EBITDA) 1,679 10,923 (568) 12,034
Depreciation/amortisation charge (1) (3,744) - (3,745)
Net foreign exchange (loss) / gain (280) (144) (2) (426)
Finance income - 13 - 13
Finance cost (1) (47) - (48)
Profit/(loss) before tax 1,397 7,001 (570) 7,828
======== ========= ========
Tax (979)
=========
Profit for the period 6,849
=========
Six months ended 30 June 2019 (*)
Revenue - from external customers 6,685 88,097 - 94,782
======== ========= ======== =========
Earnings/(loss) Before Interest, Tax,
Depreciation and Amortisation (EBITDA) 3,382 28,823 (661) 31,544
Depreciation/amortisation charge (1) (7,170) - (7,171)
Net foreign exchange gain/(loss) 167 122 (2) 287
Finance income - 16 - 16
Finance cost (1) (81) - (82)
Profit/(loss) before tax 3,547 21,710 (663) 24,594
======== ========= ========
Tax (3,590)
=========
Profit for the period 21,004
=========
Total assets 26,869 404,667 694 432,230
======== ========= ======== =========
Total liabilities (14,777) (109,352) (628) (124,757)
======== ========= ======== =========
Depreciation of property, plant and
equipment 1 5,489 - 5,490
======== ========= ======== =========
Amortisation of intangible assets - 1,681 - 1,681
======== ========= ======== =========
Total additions of non-current assets 1 38,747 - 38,748
======== ========= ======== =========
*Refer to Note 2.2 Adoption of "IFRS 16 - Leases"
3. Business and geographical segments (cont.)
Geographical segments (cont.)
(Euro 000's) Cyprus Spain Other Total
Three months ended 30 June 2018(1)
Revenue - from external customers 48,867 - - 48,867
========= =========== ====== ==========
Earnings/(loss) Before Interest, Tax, Depreciation and Amortisation
(EBITDA) 46,779 (27,404) 11 19,386
Depreciation/amortisation charge - (2,210) - (2,210)
Net foreign exchange gain/(loss) 433 499 - 932
Finance income 19 - - 19
Finance cost (1) (130) - (131)
Profit/(loss) before tax 47,230 (29,245) 11 17,996
========= =========== ======
Tax (2,294)
----------
Profit for the period 15,702
----------
Six months ended 30 June 2018(1)
Revenue - from external customers 101,543 - - 101,543
========= =========== ====== ==========
Earnings/(loss) Before Interest, Tax, Depreciation and Amortisation
(EBITDA) 96,490 (62,112) 6 34,384
Depreciation/amortisation charge - (6,310) - (6,310)
Net foreign exchange gain/(loss) 887 215 - 1,102
Finance income 39 - - 39
Finance cost (1) (157) - (158)
Profit/(loss) before tax 97,415 (68,364) 6 29,057
========= =========== ======
Tax (4,565)
==========
Profit for the period 24,492
==========
Total assets 61,389 335,437 300 397,126
========= =========== ====== ==========
Total liabilities (11,988) (108,755) (55) (120,798)
========= =========== ====== ==========
Depreciation of property, plant and equipment - 4,736 - 4,736
========= =========== ====== ==========
Amortisation of intangible assets - 1,574 - 1,574
========= =========== ====== ==========
Total additions of non-current assets - 26,167 - 26,167
========= =========== ====== ==========
(1) For the purposes of the geographical segment, in 2019
revenues have been reallocated between Cyprus and Spain as per IFRS
15. Comparatives for 2018 have not been restated
Revenue represents the sales value of goods supplied to
customers, net of value added tax. The following table summarises
sales to customers with whom transactions have individually
exceeded 10.0% of the Group's revenues.
Six months Six months
ended ended
30 June 30 June
(Euro 000's) 2019 2018
Segment EUR'000 Segment EUR'000
------------------------ ------- ------- -------
Offtaker 1 Copper 20,652 Copper 17,712
Offtaker 2 Copper 29,681 Copper 51,153
Offtaker 3 Copper 44,449 Copper 32,678
4. Revenue
(Euro 000's) Three months ended Three months ended Six months ended Six months ended
30 June 2019 30 June 2018 30 June 2019 30 June 2018
================== ================== ================ ================
Revenue from contracts with customers 45,774 49,599 93,992 102,421
Fair value (losses)/gains relating to
provisional pricing within sales (1) (2,704) (732) 790 (878)
================== ================== ================ ================
Total revenue 43,070 48,867 94,782 101,543
================== ================== ================ ================
All revenue from copper concentrate is recognised at a point in
time when the control is transferred. Revenue from freight services
is recognised over time as the services are provided.
(1) Within H1 2019 revenue there is a transaction price related
to the freight services provided by the Group.
(2) Provisional pricing impact represented the change in fair
value of the embedded derivative arising on sales of
concentrate.
5. Net finance cost
Three months Three months Six Six months
ended ended months ended
30 June 30 June ended 30 June
2019 2018 30 June 2018
(Euro 000's) 2019
Interest expense:
Other interest 15 104 19 105
Interest expense on lease liabilities 4 - 4 -
Unwinding of discount on mine
rehabilitation provision (Note
14) 29 27 59 53
Interest income(1) (13) (19) (16) (39)
------------- ------------- --------- -----------
35 112 66 119
------------- ------------- --------- -----------
(1) Interest income relates to interest received on bank
balances
6. Earnings per share
The calculation of the basic and fully diluted loss per share
attributable to the ordinary equity holders of the Company is based
on the following data:
Three Three Six months Six months
months months ended ended
ended ended 30 June 30 June
30 June 30 June 2019 2018
(Euro 000's) 2019 2018
Profit attributable to equity
holders of the parent 6,954 15,901 21,115 24,758
---------- ---------- ----------- -----------
Weighted number of ordinary shares
for the purposes of basic earnings
per share (000's) 137,339 136,159 137,339 136,159
---------- ---------- ----------- -----------
Basic profit/(loss) per share
(EUR cents/share) 5.1 11.7 15.4 18.2
---------- ---------- ----------- -----------
Weighted number of ordinary shares
for the purposes of fully diluted
earnings per share (000's) 138,680 137,505 138,419 137,505
---------- ---------- ----------- -----------
Fully diluted profit per share
(EUR cents/share) 5.1 11.6 15.3 18.0
---------- ---------- ----------- -----------
At 30 June 2019 there are nil warrants (Note 11) and 2,313,000
options (Note 12) (2018: 262,569 warrants and 1,334,333 options)
which have been included when calculating the weighted average
number of shares for 2019.
7. Property, plant and equipment
Deferred
(Euro 000's) Land Right-of-use Plant Assets under mining Other
and buildings assets and construction costs assets
(1) (5) machinery (2) (3) (4) Total
Cost
At 1 January
2018 40,995 - 145,402 11,445 22,317 785 220,944
Additions 4,842(1) - 1,490 15,352 3,732 - 25,416
Reclassifications - - 1,579 (1,579) - - -
At 30 June 2018 45,837 - 148,471 25,218 26,049 785 246,360
Additions 16(1) - 834 40,307 1,488 - 42,645
Reclassifications - - 3,515 (3,515) - - -
At 31 December
2018 45,853 - 152,820 62,010 27,537 785 289,005
Adoption of
IFRS 16(5) - 6,144 - - - - 6,144
At 1 January
2019 45,853 6,144 152,820 62,010 27,537 785 295,149
Additions 166 277 272 30,410 845 1 31,971
Disposals - - - - - (5) (5)
Reclassifications - - 183 (183) - - -
At 30 June 2019 46,019 6,421 153,275 92,237 28,382 781 327,115
-------------- ------------- ----------- -------------- ----------- -------- ----------
Depreciation
At 1 January
2018 4,076 - 13,465 - 3,469 476 21,486
Charge for the
period 879 - 3,138 - 550 169 4,736
At 30 June 2018 4,955 - 16,603 - 4,019 645 26,222
Charge for the
period 1,117 - 3,712 662 (84) 5,407
At 31 December
2018 6,072 - 20,315 - 4,681 561 31,629
Charge for the
period 1,048 190 3,543 - 677 32 5,490
Disposals - - - - - (3) (3)
At 30 June 2019 7,120 190 23,858 - 5,358 590 37,116
-------------- ------------- ----------- -------------- ----------- -------- ----------
Net book value
At 30 June 2019 38,899 6,231 129,417 92,237 23,024 191 289,999
-------------- ------------- ----------- -------------- ----------- -------- ----------
At 31 December
2018 39,781 - 132,505 62,010 22,856 224 257,376
-------------- ------------- ----------- -------------- ----------- -------- ----------
(1) Mine rehabilitation assets and Rumbo Royalty Buyout.
(2) Assets under construction at 30 June 2019 were EUR92.2
million (2018: EUR62.0 million) which include the capitalisation of
costs related to the Expansion Project and sustaining capital
expenditures.
(3) Stripping costs
(4) Includes motor vehicles, furniture, fixtures and office
equipment which are depreciated over 5-10 years.
(5) Refer to Note 2.2 Adoption of "IFRS 16 - Leases"
The above fixed assets are mainly located in Spain.
8. Intangible assets
Permits
(Euro 000's) of Rio Tinto Licences,
Project R&D and
(1) software Total
Cost
At 1 January 2018 76,521 4,505 81,026
Additions 17 828 845
At 30 June 2018 76,538 5,333 81,871
Additions - 1,648 1,648
Disposals - (955) (955)
At 31 December 2018 76,538 6,026 82,564
Additions - 719 719
At 30 June 2019 76,538 6,745 83,283
-------------- ------------ --------
Amortisation
On 1 January 2018 7,145 181 7,326
Charge for the period 1,543 31 1,574
At 30 June 2018 8,688 212 8,900
Charge for the period 1,682 31 1,713
At 31 December 2018 10,370 243 10,613
Charge for the period 1,650 31 1,681
At 30 June 2019 12,020 274 12,294
-------------- ------------ --------
Net book value
At 30 June 2019 64,518 6,471 70,989
-------------- ------------ --------
At 31 December 2018 66,168 5,783 71,951
-------------- ------------ --------
(1) Permits and R&D include an amount of EUR5.0 million and
an amount of EUR2.4 million respectively that relate to the Touro
Project mining rights.
In July 2018, the Company announced an updated technical report
on the mineral resources and reserves of The Riotinto Project. The
Report increased 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 the sale of the respective areas.
The Group conducts impairment testing on an annual basis unless
indicators of impairment are not present at the reporting date. In
considering the carrying value of the assets at The Riotinto
Project, including the intangible assets and any impairment
thereof, the Group assessed that no indicators were present as at
30 June 2019 and thus no impairment has been recognised.
Goodwill of EUR9,333,000 arose on the acquisition of the
remaining 49% of the issued share capital of Atalaya Riotinto
Minera S.L.U. back in September 2008. This amount was fully
impaired on acquisition, in the absence of the mining licence back
in 2008.
9. Inventories
(Euro 000's) 30 June 31 Dec
2019 2018
Finished products 2,398 2,955
Materials and supplies 7,922 7,381
Work in progress 1,058 486
-------- -------
11,378 10,822
-------- -------
As of 30 June 2019, copper concentrate produced and not sold
amounted to 3,451 tonnes (31 Dec 2018: 4,667 tonnes). Accordingly,
the inventory for copper concentrate was EUR2.4 million (31 Dec
2018: EUR3.0 million). During the period the Group recorded cost of
sales amounting to EUR65.5 million (H1 2018: EUR70.7 million).
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.
10. Trade and other receivables
(Euro 000's) 30 June 31 Dec
2019 2018
Non-current
Deposits 250 249
-------- --------
250 249
-------- --------
Current
Trade receivables at fair value - subject
to provisional pricing 10,695 4,498
Trade receivables from shareholders at fair
value - subject to provisional pricing (Note
19.3) 6,157 2,461
Other receivables from related parties at
amortised cost (Note 19.3) 56 56
Deposits 24 26
VAT receivable 13,051 13,691
Tax refundable 28 -
Tax advances 1,979 1,208
Prepayments 2,374 688
Other current assets 1,856 1,060
-------- --------
36,220 23,688
Allowance for expected credit losses - -
-------- --------
Total current trade and other receivables 36,220 23,688
-------- --------
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 book values.
11. Share capital and share premium
Share Share
Shares Capital premium Total
000's StgGBP'000 StgGBP'000 StgGBP'000
Authorised
Ordinary shares of Stg GBP0.075
each 200,000 15,000 - 15,000
---------- ------------ ------------ ---------------
Issued and fully paid 000's Euro Euro Euro
000's 000's 000's
Balance at 31 December 2017/1
January 2018 135,254 13,192 309,577 322,769
13 Feb 2018 Shares issued
to Rumbo at GBP1.87 a) 193 16 410 426
13 Feb 2018 Exercised share
options at GBP1.44 b) 29 3 45 48
13 April 2018 Shares issued
to Rumbo buyout at GBP2.118 c) 1,601 139 3,887 4,026
1 June 2018 Exercised warrants
at GBP1.425 d) 263 22 405 427
Share issued costs - - (5) (5)
---------- ------------ ------------ ---------------
Balance at 30 June 2018 /
31 December 2018 / 30 June
2019 137,340 13,372 314,319 327,691
---------- ------------ ------------ ---------------
Authorised capital
The Company's authorised share capital is 200,000,000 ordinary
shares of Stg GBP0.075 each.
Issued capital
2019
There were no changes in share capital during the six months
ended 30 June 2019.
11. Share capital and share premium (continued)
2018
a) On 13 February 2018, the Company issued 192,540 new ordinary
shares of GBP0.075 to Rumbo at a price of GBP1.867, thus creating a
share premium of EUR410,146.
b) On 13 February 2018, the Company was notified that certain
employees exercised options over 29,000 ordinary shares of GBP0.075
at a price of GBP1.44, thus creating a share premium of
EUR44,576.
c) On 5 April 2018, the Company entered into an agreement with
Rumbo to purchase the whole royalty agreement for a total
consideration of US$4,750,000 to be paid through the issuance of
1,600,907 new ordinary shares of GBP0.075 at a price of GBP2.118
per share. After this transaction the share premium increased by
EUR3,887,128. On 13 April 2018, the new ordinary shares were issued
to Rumbo.
d) On 1 June 2018, 262,569 warrants were exercised at GBP1.425
per ordinary share. Hence, 262,569 new ordinary shares of GBP0.075
were issued, thus creating a share premium of EUR405,087.
Warrants
All warrants had been exercised in June 2018 (see d) above).
As at 30 June 2019, there were no warrants.
12. Other reserves
Fair
value
(Euro 000's) reserve Non-Distributable
Depletion of reserve(4) Distributable
factor(1) financial reserve(5)
assets
Share Bonus Available-for-sale at FVOCI
option share investment(2) (3) Total
----------- ------------------- ---------------
At 1 January
2018 6,536 208 450 (1,057) 6,137
Adjustment
for initial
application
of IFRS 9 - - - 1,057 (1,057) - - -
Recognition
of depletion
factor - - 5,050 - - - - 5,050
Recognition
of share-
based payments 76 - - - - - - 76
Recognition
of
non-distributable
reserve - - - - - 1,446 - 1,446
Change in
fair value
of financial
assets at
fair value
through OCI - - - - (15) - - (15)
------- ------ ----------- ------------------- ----------- ------------------- --------------- --------
At 30 June
2018 6,612 208 5,500 - (1,072) 1,446 - 12,694
Recognition
of share-based
payments 140 - - - - - 140
Change in
fair value
of financial
assets at
fair value
through OCI - - - - (43) - - (43)
----------- ------------------- ---------------
At 31 December
2018 6,752 208 5,500 - (1,115) 1,446 - 12,791
Recognition
of share-based
payments 107 - - - - - - 107
Recognition
of depletion
factor - - 5,378 - - - - 5,378
Recognition
of
non-distributable
reserve - - - - - 1,984 - 1,984
Recognition
of distributable
reserve - - - - - - 1,844 1,844
Change in
fair value
of financial
assets at
fair value
through OCI - - - - (12) - - (12)
----------- ------------------- ---------------
At 30 June
2019 6,859 208 10,878 - (1,127) 3,430 1,844 22,092
------- ------ ----------- ------------------- ----------- ------------------- --------------- --------
12. Other reserves (continued)
(1) Depletion factor reserve
At 30 June 2019, the Group has disposed EUR5,378k (H1
2018:EUR5,050k) as a depletion factor reserve as per the Spanish
Corporate Tax Act.
(2) Available-for-sale investments reserve
As at 31 December 2017 this reserve recorded fair value changes
on available-for-sale investments. On disposal or impairment, the
cumulative changes in fair value were recycled to the income
statement. These assets were reclassified upon adoption of IFRS
9.
(3) Fair value reserve of financial assets at FVOCI
The Group has elected to recognise changes in the fair value of
certain investments in equity securities in OCI, as explained in
(2) above. These changes are accumulated within the FVOCI reserve
within equity. The Group transfers amounts from this reserve to
retained earnings when the relevant equity securities are
derecognised.
(4) Non-distributable reserve
As required by the Spanish Corporate Tax Act, the Group has
classified a non-distributable reserve of 10% of the profits
generated by the Spanish subsidiaries until the reserve is 20% of
share capital of the subsidiary.
(5) Distributable reserve
As result of the 2018 profit generated in Atalaya Riotinto
Minera, the Group decided to record a distributable reserve in
order to comply with the Spanish Corporate Tax Act.
In general, option agreements contain provisions adjusting the
exercise price in certain circumstances including the allotment of
fully paid ordinary shares by way of a capitalisation of the
Company's reserves, a sub division or consolidation of the ordinary
shares, a reduction of share capital and offers or invitations
(whether by way of rights issue or otherwise) to the holders of
ordinary shares.
Details of share options outstanding as at 30 June 2019:
Number of share options 000's
Outstanding options at 1 January 2019 1,313
- Expired during the reporting period (500)
- Granted during the reporting period (1) 1,500
------------------------------
Outstanding options at 30 June 2019 2,313
------------------------------
(1) On 30 May 2019, the Company announced that it granted
1,500,000 share options (the "Options") to Persons Discharging
Managerial Responsibilities ("PDMRs") and management in accordance
with the Company's approved Share Option Plan 2013 (the "Option
Plan"). The Options expire five years from the date of grant (29
May 2019), have an exercise price of 201.5 pence per ordinary
share, based on the minimum share price in the five days preceding
the grant date, and vest in two equal tranches, half on grant and
half on the first anniversary of the granting date.
13. Trade and other payables
(Euro 000's) 30 June 2019 31 Dec 2018
Non-current
Land options 10 32
Government grant 13 13
------------- ------------
23 45
------------- ------------
Current
Trade payables 49,226 53,098
Land options and mortgage 542 791
Accruals 4,862 3,382
54,630 57,271
------------- ------------
Trade payables are mainly for the acquisition of materials,
supplies and other services. These payables do not accrue interest
and no guarantees have been granted. The fair value of trade and
other payables approximate their book values.
Trade payables are non-interest-bearing and are normally settled
on 60-day terms.
14. Provisions
Rehabilitation
(Euro 000's) Legal costs costs Total costs
1 January 2018 213 5,514 5,727
Additions - 954 954
Revision of provision (20) - (20)
Finance cost - 53 53
At 30 June 2018 193 6,521 6,714
Additions 6 18 24
Revision of provision (72) (133) (205)
Finance cost - (14) (14)
-------------- --------------- --------------
At 31 December 2018 127 6,392 6,519
Additions 5 122 127
Revision of provision (23) - (23)
Finance cost - 59 59
At 30 June 2019 109 6,573 6,682
-------------- --------------- --------------
(Euro 000's) 30 June 31 Dec
2019 2018
Non-current 6,682 6,519
Current - -
-------- -------
Total 6,682 6,519
-------- -------
Rehabilitation provision
Rehabilitation provision represents the accrued cost required to
provide adequate restoration and rehabilitation upon the completion
of production activities. These amounts will be settled when
rehabilitation is undertaken, generally over the project's
life.
The discount rate used in the calculation of the net present
value of the provision as at 30 June 2019 was 1.87%, which is the
15-year Spain Government Bond rate (31 December 2018: 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 June 2019.
Management has reviewed individually each case and made a provision
of EUR5 thousand for these claims, which has been reflected in
these interim condensed consolidated financial statements.
15. Leases
(Euro 000's) 30 June 2019 31 Dec 2018
Non-current
Leases 5,846 -
5,846 -
------------- ------------
Current
Leases 307 -
307 -
------------- ------------
Finance leases
The Group entered into lease arrangements for the renting of
land, laboratory equipment and vehicles. The Group has elected not
to recognise right-of-use assets and lease liabilities for
short-term leases that have a lease term of 12 months or less and
leases of low-value assets. Depreciation expense regarding leases
amounts to EUR0.2 million (2018: EURnil) for the six month period
ended 30 June 2019. The duration of the land lease is for a period
of thirteen years, payments are due at the beginning of the month
escalating annually on average by 1.5%. At 30 June 2019, the
remaining term of this lease is twelve and a half years.
15. Leases (cont.)
The duration of the motor vehicle and laboratory equipment lease
is for a period of four years, payments are due at the beginning of
the month escalating annually on average by 1.5%. At 30 June 2019,
the remaining term of this motor vehicle and laboratory equipment
lease is three and a half years and four years respectively.
(Euro 000's) 30 June 31 Dec
2019 2018
Minimum lease payments due:
299 -
* Within one year
2,249 -
* Two to five years
3,605 -
* Over five years
Less future finance charges - -
-------- -------
Present value of minimum lease payments 6,153 -
due
-------- -------
Present value of minimum lease payments
due:
299 -
* Within one year
2,249 -
* Two to five years
3,605 -
* Over five years
-------- -------
6,153 -
-------- -------
(Euro 000's) Lease liability
Balance 1 January 2019 6,144
Additions 277
Interest expense 4
Lease payments (272)
Balance at 30 June 2019 6,153
----------------
Balance at 30 June 2019
* Non-current liabilities 5,846
* Current liabilities 307
----------------
6,153
----------------
16. 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 a deferred consideration of EUR43.9
million (the "Deferred Consideration") payable as consideration in
respect of the acquisition. The Company also entered into a credit
assignment agreement at the same time with a related company of
Astor, Shorthorn AG, pursuant to which the benefit of outstanding
loans was assigned to the Company in consideration for the payment
of EUR9.1 million to Shorthorn (the "Loan Assignment").
The Master Agreement has been the subject of litigation in the
High Court and the Court of Appeal that has now concluded. As a
consequence, ARM must apply any excess cash (after payment of
operating expenses, sustaining capital expenditure, any senior debt
service requirements and up to US$10 million per annum (for
non-Proyecto Riotinto related expenses)) to pay the consideration
due to Astor (including the Deferred Consideration and the amount
of EUR9.1 million payable under the Loan Assignment).
As at 30 June 2019, no consideration has been paid as the
Company has not generated any Excess Cash as per the Master
Agreement.
"Excess cash" is not defined in the Master Agreement leaving
ambiguity as to how it is to be calculated. The Company regularly
revisits its assessment on when the Deferred Consideration will
become payable and at the date of the balance sheet has classified
the EUR53 million liability recognised by the Group between current
liabilities and non-current liabilities, accordingly.
Timing and quantum of payments will be estimated depending on
the future key variables such as methodology for the calculation,
definition of "Project", the price of copper and the US Dollar and
Euro exchanges rates, timing of sustaining capital expenditures,
increased costs and other operational issues. These factors can
vary significantly, and any amounts actually paid within twelve
months of the balance sheet date may differ substantially from the
amounts presently estimated to become payable within this period.
In particular, copper price assumptions were set earlier in the
year at levels above
16. Deferred consideration (continued)
current spot prices and if the current copper price weakness
were to continue, the amount payable within twelve months could
reduce substantially or if spot prices continue for the rest of the
year the amount payable within twelve months could be wholly
eliminated with nil Excess Cash generated during 2019.
The effect of discounting remains insignificant, in line with
the 2018 assessment, and therefore the Group has measured the
liability for the Astor Deferred Consideration on an undiscounted
basis.
17. Acquisition, incorporation and disposal of subsidiaries
There were neither acquisition nor incorporation of subsidiaries
during the six-month period to 30 June 2019.
18. Wind-up of subsidiaries
There were no operations wound-up during the six-month period to
30 June 2019.
19. Related party transactions
The following transactions were carried out with related
parties:
19.1 Compensation of key management personnel
The total remuneration and fees of Directors (including
Executive Directors) and other key management personnel was as
follows:
Three Three months Six months Six months
months ended ended ended
(Euro 000's) ended 30 June 30 June 30 June
30 June 2018 2019 2018
2019
Directors' remuneration and fees 242 144 486 400
Share option-based benefits and other
benefits to directors 13 59 24 66
Key management personnel fees 616 88 730 207
Share option-based and other benefits
to key management personnel 23 57 48 57
-------- ------------ ---------- ----------
894 348 1,288 730
-------- ------------ ---------- ----------
19.2 Share-based benefits
On 29 May 2019, the directors and key management personnel have
been granted 1,250,000 options. The options will expire in five
years from the date of grant (29 May 2019), have an exercise price
of 201.5 pence per ordinary share, based on the minimum share price
in the five days preceding the grant date, and vest in two equal
tranches, half on grant and half on the first anniversary of the
granting date (Q2 2018: nil).
19.3 Transactions with related parties/shareholders
i) Transaction with shareholders
Three months Three months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
(Euro 000's) 2019 2018 2019 2018
============= ============ =========== ==========
Trafigura- Revenue from contracts 8,986 8,136 20,663 18,038
Freight services - - - -
------------- ------------ ----------- ----------
8,986 8,136 20,663 18,038
Gain / (losses) relating provisional
pricing within sales (782) - (11) (326)
------------- ------------ ----------- ----------
Trafigura - Total revenue from contracts 8,204 8,136 20,652 17,712
============= ============ =========== ==========
19. Related party transactions (continued)
XGC was granted an offtake over 49.12% of life of mine reserves
as per the NI 43-101 report issued in September 2016. Similarly,
Orion was granted an offtake over 31.54% and Trafigura 19.34%
respectively of life of mine reserves as per the same NI 43-101
report. In November 2016, the Group was notified and consented the
novation of the Orion offtake agreement as Orion reached an
agreement with a third party (XGC) to transfer the rights over the
concentrates. In December 2017, the Group was notified and
consented the novation of XGC offtake agreement as XGC reached an
agreement with a third party (LDC) to transfer the rights over the
concentrates.
ii) Period-end balances with related parties
(Euro 000's) 30 June 2019 31 Dec 2018
Receivables from related parties:
Recursos Cuenca Minera S.L. 56 56
Total (Note10) 56 56
-------------- -------------
The above balances bear no interest and are repayable on
demand.
iii) Period-end balances with shareholders
(Euro 000's) 30 June 2019 31 Dec 2018
Trafigura - Debtor balance- subject to
provisional pricing 6,157 2,461
Total (Note 10) 6,157 2,461
--------------- --------------
The above debtor balance arising from sales of goods and other
balances bear no interest and is repayable on demand.
20. Contingent liabilities
Judicial and administrative cases
In the normal course of business, the Group may be involved in
legal proceedings, claims and assessments. Such matters are subject
to many uncertainties, and outcomes are not predictable with
assurance. Legal fees for such matters are expensed as incurred and
the Group accrues for adverse outcomes as they become probable and
estimable.
The Junta de Andalucía notified the Group of another
disciplinary proceeding for unauthorised discharge in 2014. The
Group submitted the relevant defence arguments on 10 March 2015 but
has had no response or feedback from the Junta de Andalucía since
the submissions. Based on the time that has lapsed without a
response, it is expected that the outcome of these proceedings will
also be favourable for the Group. Once the necessary time has
lapsed, the Group will ask for the Administrative File to be
dismissed.
Receipt of rulings of claims made by an environmental Group
On 29 March 2019, the Company announced that it had received
notification from the Supreme Court in Spain that it did not have
jurisdiction over the appeal made by the Junta de Andalucía ("JdA")
and the Company and the announced Ruling by the Tribunal Superior
de Justicia de Andalucía ("TSJA") remains valid.
On 26 April 2019, the Company announced a judgment related to
the Mining Permits to operate Proyecto Riotinto (the "Mining
Permits") was handed down by the TSJA. The TSJA declared the Mining
Permits are linked to the Environmental Permits, ruled by the same
tribunal on September 2018. The new ruling on the Mining Permits is
based on the requirement to have an AAU before issuing mining
permits and therefore invalidates the existing Mining Permits. The
TSJA did not accept the requests by EeA for the cessation of
activities at the mine and an increase in the scope of the
environmental plan.
The Company was notified on 16 July 2019 that the JdA has
started the administrative process to resolve the previously
reported legal issues identified by the TSJA relating to the
Unified Environmental Declaration and the Mining Permits.
The Company continues operating the mine normally and it is
still confident that the ongoing process carried out by the JdA
will not impact its operations at Proyecto Riotinto.
21. Commitments
There have not been any new commitments during the period.
22. Significant events
There have been no significant events during the six month
period other than as disclosed in the financial statements and the
notes above.
23. Events after the reporting period
On 10 July 2019, the Company announced that it has granted
400,000 share options (the "Options") to a PDMR in accordance with
the Company's approved Option Plan. The Options expire five years
from the date of grant (8 July 2019), have an exercise price of
204.5 pence per ordinary share, based on the minimum share price in
the five days preceding the grant date, and vest in two equal
tranches, half on grant and half on the first anniversary of the
granting date.
On 5 July 2019, the Company announced the appointment of Peel
Hunt LLP as joint broker, alongside Atalaya's existing brokers,
There were no other significant events subsequent to the
reporting period.
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
MSCUSUWRKNAWAAR
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August 15, 2019 02:01 ET (06:01 GMT)
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