TIDMATYM
RNS Number : 4158T
Atalaya Mining PLC
25 March 2021
25 March 2021
Atalaya Mining Plc
("Atalaya" and/or the "Group")
Results for the year ended 31 December 2020
Atalaya Mining Plc (AIM: ATYM; TSX: AYM) is pleased to announce
its audited consolidated results for the year ended 31 December
2020 ("FY2020" or the "Period").
The expanded plant was successfully completed and commissioned
in early 2020 and despite the impact of COVID-19, Atalaya met
production guidance reported issued at the start of the year with
copper production for FY2020 of 55,890 tonnes (FY2019: 44,950
tonnes) thereby achieving a record production level for the
Company.
The Company reported EBITDA of EUR67.4 million (FY2019: EUR61.3
million) and EUR59.0 million of cash flows from operating
activities (FY2019: EUR37.9 million).
The audited consolidated Financial Statements are also available
under the Company's profile on SEDAR at www.sedar.com and on
Atalaya's website at www.atalayamining.com .
Financial Highlights for the Period
Year ended 31 December 2020 2019 %
Revenues from operations EURk 252,784 187,868 34.6%
----------------- ---------- ---------- ---------
Operating costs EURk (176,300) (115,944) 52.1%
----------------- ---------- ---------- ---------
EBITDA EURk 67,444 61,333 10.0%
----------------- ---------- ---------- ---------
Profit for the year EURk 30,390 30,720 (1.10%)
----------------- ---------- ---------- ---------
Earnings per share EUR cents/share 22.9 27.2 (15.8%)
----------------- ---------- ---------- ---------
Cash flows from operating
activities EURk 59,090 37,934 55.8%
----------------- ---------- ---------- ---------
Cash flows used in
investing activities EURk (30,160) (62,351) (51.6%)
----------------- ---------- ---------- ---------
Cash flows from financing
activities EURk 760 (576) (231.9%)
----------------- ---------- ---------- ---------
Working capital (deficit)/surplus EURk (17,904) 3,598 (597.6%)
----------------- ---------- ---------- ---------
Average realised copper
price $/lb 2.72 2.73 (0.4%)
----------------- ---------- ---------- ---------
Copper concentrate
produced (tonnes) 256,001 195,072 31.2%
----------------- ---------- ---------- ---------
Copper production (tonnes) 55,890 44,950 24.3%
----------------- ---------- ---------- ---------
Cash costs $/lb payable 1.95 1.80 8.3%
----------------- ---------- ---------- ---------
All-In Sustaining Cost $/lb payable 2.21 2.14 3.3%
----------------- ---------- ---------- ---------
-- Revenues of EUR252.8 million (FY2019: EUR187.9 million) from
increased volumes of copper concentrates sold from the expanded
plant with annualised realised price slightly lower than the prior
year (FY2020: $2.72/lb versus FY2019: $2.73/lb). The impact of the
increased volumes was partly offset by lower grades in concentrates
and a stronger US Dollar/Euro exchange rate.
-- Higher processing rates during the year resulted in higher
operating costs of EUR176.3 million (FY2019: EUR115.9 million).
-- Copper concentrates sold during the year under existing
off-take agreements and at spot realised an average price of
US$2.72/lb copper, compared with US$2.73/lb copper in the same
period of 2019.
-- 2020 cash costs of US$1.95/lb payable copper (2019:
US$1.80/lb payable copper) owing to exchange rate and challenging
recoveries as a result of lower ore grades and costs associated
with expansion start-up.
-- 2020 AISC of US$2.21/lb compared with US$2.14/lb in 2019
driven mainly by the increase in cash cost. FY2020 All-In
Sustaining Cost excludes the costs associated with the one off
tailings dam expansion project which amounts to EUR11.0 million in
FY2020.
-- EBITDA for the year was EUR67.4 million (FY2019: EUR61.3 million)
-- FY2020 cash flows from operating activities were EUR59.1
million (FY2019: EUR37.9 million), out of which EUR0.9 are from
working capital changes. Cash flow used for investing activities
amounted to EUR30.2 million in FY2020 (FY2019: EUR62.4 million).
The investments relate to tailings dams, capitalised stripping
costs and enhancements to the processing systems. Cash from
financing activities amounted to EUR0.8 million (FY2019: EUR0.6
million were used).
-- Inventories of concentrate at 31 December 2020 amounted to
EUR8.6 million (EUR11.0 million at 31 December 2019)
-- Working capital deficit of EUR17.9 million as at 31 December
2020, decreased from excess working capital of EUR3.6 million
reported as at 31 December 2019. The decrease in working capital is
mainly attributable to the Astor Deferred Consideration which was
classified as a current liability at the end of the year.
-- Unrestricted cash balances amounted to EUR37.8 million as at
31 December 2020. The net increase in cash and cash equivalents
during 2020 amounted to EUR29.7 million, compared with a net
decrease of EUR25.0 million in the prior year.
Proyecto Riotinto Operating Highlights
Mining
-- Despite the challenging year as a result of the COVID-19
pandemic, Atalaya met production guidance with copper production of
55,890 tonnes (FY2019: 44,950 tonnes). The expanded plant was
successfully completed and commissioned in early 2020 and
demonstrated record production levels during the year.
-- Ore mined during the year increased to 13.6Mtpa compared with
10.4Mtpa in the previous year.
Processing
-- 14.8Mtpa of ore processed (FY2019: 10.5 Mtpa) with an average
copper head grade of 0.45% (FY2019: 0.49%) and within the guidance
recovery rate of 84.53% (FY2019: 87.09%).
-- On-site concentrate inventories at 31 December 2020 were
approximately 12,180 tonnes (FY2019: 14,201 tonnes) all of which
were sold in January 2021.
Expansion Project at Proyecto Riotinto
-- The 15Mtpa Expansion Project was completed during late 2019
with the processing plant fully commissioned and operating at an
increased annualised rate of 15Mtpa from January 2020.
Exploration and Geology
-- Exploration and infill drilling continue in Atalaya pit,
Cerro Colorado pit and San Dionisio showing encouraging initial
results.
-- An independent consultant is finalising the Cerro Colorado
open pit reserves and resources update taking into consideration
the exploration results with current copper prices, operating costs
and geotechnical parameters. In addition, there is an ongoing
independent evaluation of the historic polymetallic San Antonio and
San Dionisio deposits. The San Antonio deposit is located east of
the Cerro Colorado open pit, currently being mined, and would
require underground mining methods. The San Dionisio deposit is
located west of the Cerro Colorado pit and current indications show
there is good potential for it to be mined with a combination of
open pit and underground methods. San Dionisio contains copper as
well as polymetallic mineralisation.
-- Exploration work started at the newly acquired Masa Valverde
asset and will continue through 2021. First scoping studies are
also planned during the year.
Proyecto Touro
-- On 1 March 2021, Atalaya received formal communication from
the local government in Galicia rejecting the plan to develop
Proyecto Touro, based on a negative environmental impact statement.
This was the official communication of the information reported by
the Company in January 2020.
-- Atalaya is currently evaluating its options to continue the
development of the project. Options may include several types of
appeals or modified project proposals to address the concerns of
the Xunta de Galicia.
-- The Company continues to be confident that its world class
approach to Proyecto Touro, which includes fully plastic lined
tailings with zero discharge, will satisfy the most stringent
environmental conditions that may be imposed by the authorities
prior to development of the project.
Outlook for 2021
-- As previously announced, the Company expects production for
FY2021 to be within 52,000 and 54,000 tonnes of copper.
-- Cash costs and AISC guidance to range from US$2.25/lb to
US$2.35/lb and from US$2.50/lb to US$2.65/lb, respectively. These
increases in the projected cash costs and AISC are driven mainly by
stronger Euro levels anticipated for 2021. AISC guidance for FY2021
excludes the costs associated with the one off expansion project
which is budgeted for EUR17 million in FY2021.
-- Management continues to monitor the impact of COVID-19 on the
operations and the ongoing cost structure and will update the
market with any potential changes in expectations.
Legal Overview
Proyecto Riotinto - Ruling of Autorizacion Ambiental Unificada
("AAU")
-- On 7 May 2020, the Company announced that the Junta de
Andalucía had issued a favourable resolution (the "Resolution")
which validates the Unified Environmental Authorisation (the "AAU")
of Proyecto Riotinto. The Resolution ended the legal process
announced by the Company on 26 September 2018 in relation to the
judgement made by the Tribunal Superior de Justicia de Andalucía
("TSJA") in connection with the AAU, and the AAU is now
revalidated.
-- On 1 June 2020, the Company announced that the Junta de
Andalucía confirmed through the Spanish press that the mining
permits for Proyecto Riotinto are now fully validated.
Astor
-- As at 31 December 2020, the deferred consideration to Astor
Management, A.G. ("Astor") totalling EUR53 million (the "Deferred
Consideration") had not been paid. However, the Board of Directors
considered making an early payment to remove the timing uncertainty
from the balance sheet.
-- On 15 March 2021, the Company approved the early payment of
the Deferred Consideration. The Deferred Consideration was funded
by unsecured credit lines from four major Spanish banks having a
three-year tenure and an average annual interest rate of
approximately two per cent.
-- The payment of the Deferred Consideration does not end the
ongoing litigation as the issue as to whether any residual interest
may or may not be payable remains unresolved.
-- On 2 March 2020, the Company filed an application in the High
Court to seek clarity on the definition of "Excess Cash". The
Company has now filed its statement of case to set out its formal
position and the hearing for the trial will be heard on 21 February
2022.
-- Astor applied for the Court to determine at an early stage
that particular aspects of the excess cash calculation can be
resolved without the need for a full trial. A summary judgment will
be heard on 14 June 2021 and Astor would have to demonstrate
Atalaya has no reasonable prospect of success at Trial.
Corporate developments
The Company continues exploring opportunities to increase
shareholder value:
-- Solar power project. Given its location in an area with a
natural abundance of sunlight, on 24 September, the Company
announced the start of the permitting process to develop a 50MW
solar plant at Proyecto Riotinto for self-consumption. The solar
plant project, in addition to making a significant contribution to
reducing carbon emissions, is economically viable and could
potentially also contribute to reducing operating costs. Permitting
continues and the Company expects to complete it during Q2
2021.
-- Acquisition of Masa Valverde. On 21 October 2020, Atalaya
announced that it had entered into a definitive purchase agreement
to acquire 100% of the Masa Valverde polymetallic project located
in Huelva (Spain) through the acquisition of 100% of a Spanish
company for EUR1.4 million payable in two deferred and conditional
instalments. Masa Valverde is one of the largest undeveloped
volcanogenic massive sulphide deposits in the prolific Iberian
Pyrite Belt and is located 28kms south west of Proyecto
Riotinto.
-- E-LIX System. On 28 October 2020, Atalaya announced it had
commenced a feasibility study to evaluate production of copper
cathodes at Proyecto Riotinto using the newly developed E-LIX
System owned by Lain Technologies, Ltd. It also entered into a
Licence Agreement with Lain Technologies, Ltd. to use its patents
on an exclusive basis, under certain conditions, within the Iberian
pyrite belt in Spain and Portugal. The feasibility study will help
Atalaya to understand the economic viability of a new industrial
scale plant to produce cathodes from complex sulphide ores
prevalent in the Iberian Pyrite Belt through the application of a
new leaching process called the E-LIX System, followed by
conventional SX-EW. The production of cathodes has the potential to
generate cost savings by reducing charges associated with
concentrate transportation, treatment and refining as well as
penalties with certain elements, while also reducing carbon
emissions.
COVID-19 Update and Going Concern
-- The Company issued COVID-19 updates throughout the year as
the outbreak of the virus impacted the company both operationally
and financially.
-- It is Atalaya's priority to protect its workforce and the
local communities surrounding both Proyecto Riotinto and Proyecto
Touro. Atalaya has followed and continues to follow the
requirements and recommendations issued by the Government of Spain
and the regional and local health authorities at all times to
reduce the risk of COVID-19 exposure and avoid the spread of the
virus.
-- In order to mitigate the potential operational and financial
impact of COVID-19 resulting from a sharp decrease in commodities
prices, the Company increased its cash balance from EUR8.1 million
as at 31 December 2019 to EUR32.4 million as at 30 June 2020 by net
drawdowns on existing credit facilities. Following the recovery of
commodity prices, the Company repaid the credit facilities before
the year-end.
Alberto Lavandeira, CEO commented :
"Atalaya made significant progress in 2020 despite the
challenges of the COVID-19 pandemic. Ore mined during the year
increased significantly, the copper production targets were met and
the expanded plant achieved record production levels.
"Our key priority continues to be protecting our workforce and
the local communities surrounding our facilities and because of the
great efforts of the Atalaya team we have also delivered a strong
financial performance highlighted by the increased operating
cashflows and strong balance sheet.
"Looking ahead, Atalaya is looking at new technologies to
increase productivity and reduce our carbon footprint and will
continue to pursue opportunities to grow the business and develop
new resources such as Masa Valverde."
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 Lloyd / + 44 20 3757
SEC Newgate Tom Carnegie 6880
+44 20 3170
4C Communications Carina Corbett 7973
----------------------------------- -------------
Canaccord Genuity
(NOMAD and Joint Henry Fitzgerald-O'Connor / James +44 20 7523
Broker) Asensio 8000
----------------------------------- -------------
BMO Capital Markets +44 20 7236
(Joint Broker) Tom Rider 1010
----------------------------------- -------------
Peel Hunt LLP +44 20 7418
(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. For further information, visit
www.atalayamining.com
Consolidated and Company Statements of Comprehensive Income
for the year ended 31 December 2020
The Company The Group The Company
The Group
(Euro 000's) Note 2020 2020 2019 2019
=========== ============ ========== ============
Revenue 5 252,784 1,442 187,868 1,283
Operating costs and mine site
administrative expenses (175,484) - (115,325) -
Mine site depreciation, amortisation
and impairment 13,14 (31,683) - (23,025) -
=========== ============ ========== ============
Gross profit 45,617 1,442 49,518 1,283
Administration and other expenses (6,854) (1,935) (6,718) (1,540)
Share based benefits 23 (816) - (619) -
Exploration expenses (1,661) - (3,588) -
Impairment loss on other receivables (49) (45) (1,694) (1,694)
Care and maintenance expenditure (525) - (373) -
Operating profit/(loss) 7 35,712 (538) 36,526 (1,951)
Other income 6 - - 88 124
Net foreign exchange (loss)/gain 4 (3,826) 16 350 (3)
Interest income from financial
assets at fair value through
profit and loss 9 - 13,607 - 13,607
Interest income from financial
assets at amortised cost 9 197 2,516 52 3,223
Finance costs 10 (341) - (89) -
Profit before tax 31,742 15,601 36,927 15,000
Tax 11 (1,352) (928) (6,207) (878)
=========== ============ ========== ============
Profit for the year 30,390 14,673 30,720 14,122
=========== ============ ========== ============
Profit for the year attributable
to:
* Owners of the parent 31,479 14,673 37,323 14,122
* Non-controlling interests (1,089) - (6,603) -
=========== ============ ========== ============
30,390 14,673 30,720 14,122
=========== ============ ========== ============
Earnings per share from operations
attributable to equity holders
of the parent during the year:
Basic earnings per share (EUR
cents per share) 12 22.9 27.2
=========== ============ ========== ============
Diluted earnings per share
(EUR cents per share) 12 22.4 26.8
=========== ============ ========== ============
Profit for the year 30,390 14,673 30,720 14,122
Other comprehensive income:
Other comprehensive income
that will not be reclassified
to profit or loss in subsequent
periods (net of tax):
Change in fair value of financial
assets through other comprehensive
income 'OCI' 20 44 44 (29) (29)
----------- ------------
Total comprehensive profit
for the year 30,434 14,717 30,691 14,093
=========== ============ ========== ============
Total comprehensive profit
for the year attributable to:
* Owners of the parent 31,523 14,717 37,294 14,093
* Non-controlling interests (1,089) - (6,603) -
=========== ============ ========== ============
30,434 14,717 30,691 14,093
=========== ============ ========== ============
The notes are an integral part of these consolidated and Company
financial statements.
Consolidated and Company Statements of Financial Position
As at 31 December 2020
As at 31 December As at 31 December
The The The The Company
Group Company Group 2019
(Euro 000's) Note 2020 2020 2019
======== ========= ========= ===========
Assets
Non-current assets
Property, plant and equipment 13 327,174 - 307,815 -
Intangible assets 14 59,816 - 63,085 -
Investment in subsidiaries 15 - 5,448 - 4,630
Trade and other receivables 19 2,715 318,857 500 310,002
Non-current financial asset 20 1,101 - 1,101 -
Deferred tax asset 17 8,805 - 6,576 -
======== ========= ========= ===========
399,611 324,305 379,077 314,632
======== ========= ========= ===========
Current assets
Inventories 18 23,576 - 21,330 -
Trade and other receivables 19 43,191 10,737 32,857 4,043
Tax refundable 815 - 1,924 -
Other financial assets 20 86 86 42 42
Cash and cash equivalents 21 37,767 2,049 8,077 128
======== ========= ========= ===========
105,435 12,872 64,230 4,213
======== ========= ========= ===========
Total assets 505,046 337,177 443,307 318,845
======== ========= ========= ===========
Equity and liabilities
Equity attributable to
owners of the parent
Share capital 22 13,439 13,439 13,372 13,372
Share premium 22 315,714 315,714 314,319 314,319
Other reserves 23 40,049 7,295 22,836 6,435
Accumulated losses (15,512) (21,863) (30,669) (36,535)
======== ========= ========= ===========
353,690 314,585 319,858 297,591
Non-controlling interests 24 (3,491) - (2,402) -
======== ========= ========= ===========
Total equity 350,199 314,585 317,456 297,591
======== ========= ========= ===========
Liabilities
Non-current liabilities
Trade and other payables 25 1,448 - 13 -
Provisions 26 25,264 - 6,941 -
Lease liability 27 4,796 - 5,265 -
Deferred consideration 28 - - 53,000 9,117
31,508 - 65,219 9,117
======== ========= ========= ===========
Current liabilities
Trade and other payables 25 68,437 13,002 57,537 10,272
Lease liability 27 592 - 588 -
Current tax liabilities 11 1,310 473 2,507 1,865
Deferred consideration 28 53,000 9,117 - -
123,339 22,592 60,632 12,137
======== ========= ========= ===========
Total liabilities 154,847 22,592 125,851 21,254
======== ========= ========= ===========
Total equity and liabilities 505,046 337,177 443,307 318,845
======== ========= ========= ===========
The notes are an integral part of these consolidated and company
financial statements.
The consolidated and company financial statements were
authorised for issue by the Board of Directors on 24 March 2021 and
were signed on its behalf.
Roger Davey Alberto Lavandeira
Chairman Chief Execute Officer
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Attributable to owners of the
parent
=========================================================
Non-
Note Share Share Other Accumulated controlling Total
capital Premium reserves losses Total interest equity
(Euro 000's) (2) (1)
========= ========= ========== ============= ======== ============= =========
At 1 January 2019 13,372 314,319 12,791 (58,308) 282,174 4,200 286,374
Profit / (loss)
for the year - - - 37,323 37,323 (6,602) 30,721
Change in fair
value of financial
assets through
OCI 20 - - (29) - (29) - (29)
--------- --------- ---------- ------------- -------- ------------- ---------
Total comprehensive
income - - (29) 37,323 37,294 (6,602) 30,692
Transactions with
owners
Depletion factor 23 - - 5,378 (5,378) - - -
Recognition of
share-based payments 23 - - 619 - 619 - 619
Recognition of
non-distributable
reserve 23 - - 1,984 (1,984) - - -
Recognition of
distributable
reserve 23 - - 1,844 (1,844) - - -
Other changes
in equity 23 249 (478) (229) - (229)
At 31 December
2019 /
1 January 2020 13,372 314,319 22,836 (30,669) 319,858 (2,402) 317,456
Profit / (loss)
for the year - - - 31,479 31,479 (1,089) 30,390
Change in fair
value of financial
assets through
OCI 20 - - 44 - 44 - 44
--------- --------- ---------- ------------- -------- ------------- ---------
Total comprehensive
income / (loss)
for the year - - 44 31,479 31,523 (1,089) 30,434
Transactions with
owners
Issuance of share
capital 22 67 1,395 - - 1,462 - 1,462
Depletion factor 23 - - 14,155 (14,155) - - -
Recognition of
share-based payments 23 - - 816 - 816 - 816
Recognition of
non-distributable
reserve 23 - - 2,198 (2,198) - - -
Other changes
in equity 23 - - - 31 31 - 31
At 31 December
2020 13,439 315,714 40,049 (15,512) 353,690 (3,491) 350,199
--------- --------- ---------- ------------- -------- ------------- ---------
(1) Refer to Note 23
(2) The share premium reserve is not available for
distribution.
The notes are an integral part of these consolidated and company
financial statements.
Company Statement of Changes in Equity
for the year ended 31 December 2020
Share Share Other Accumulated
Note capital premium reserves losses Total
(Euro 000's) (2) (1)
======== ======== ========= =========== ========
At 1 January 2019 13,372 314,319 5,845 (50,657) 282,879
Profit for the year - - - 14,122 14,122
Change in fair value of
financial assets through
OCI 20 - - (29) - (29)
-------- -------- --------- ----------- --------
Total comprehensive income - - (29) 14,122 14,093
Recognition of share-based
payments 23 - - 619 - 619
======== ========
At 31 December 2019/1 January
2020 13,372 314,319 6,435 (36,535) 297,591
Profit for the year - - - 14,673 14,673
Change in fair value of
financial assets through
OCI 20 - - 44 - 44
-------- -------- --------- ----------- --------
Total comprehensive income - - 44 14,673 14,717
Issuance of share capital 22 67 1,395 - - 1,462
Recognition of share-based
payments 23 - - 816 - 816
At 31 December 2020 13,439 315,714 7,295 (21,862) 314,585
======== ======== ========= =========== ========
(1) Refer to Note 23
(2) The share premium reserve is not available for
distribution.
Companies, which do not distribute 70% of their profits after
tax, as defined by the Special Contribution for the Defence of the
Republic Law, within two years after the end of the relevant tax
year, will be deemed to have distributed this amount as dividend on
the 31 of December of the second year. The amount of the deemed
dividend distribution is reduced by any actual dividend already
distributed by 31 of December of the second year for the year the
profits relate.
The Company pays special defence contribution on behalf of the
shareholders over the amount of the deemed dividend distribution at
a rate of 17% (applicable since 2014) when the entitled
shareholders are natural persons tax residents of Cyprus and have
their domicile in Cyprus. In addition, from 2019 (deemed dividend
distribution of year 2017 profits), the Company pays on behalf of
the shareholders General Healthcare System (GHS) contribution at a
rate of 2.65% (31 December 2019: 1.70%), when the entitled
shareholders are natural persons tax residents of Cyprus,
regardless of their domicile.
The notes are an integral part of these consolidated and company
financial statements.
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
(Euro 000's) Note 2020 2019
========= =========
Cash flows from operating activities
Profit before tax 31,742 36,927
Adjustments for:
Depreciation of property, plant and equipment 13 25,766 12,575
Amortisation of intangible assets 14 4,941 3,502
Impairment of intangibles 14 985 6,948
Recognition of share--based payments 23 816 619
Interest income 9 (197) (52)
Interest expense 10 180 41
Unwinding of discounting 10 144 40
Legal provisions 26 238 261
Impairment loss on other receivables 19 49 1,694
Rehabilitation provision - (18)
Unrealised foreign exchange loss on financing
activities (47) 2
Cash inflows from operating activities
before working capital changes 64,617 62,539
Changes in working capital:
Inventories 18 (2,246) (10,508)
Trade and other receivables 19 (10,356) (9,911)
Trade and other payables 25 11,747 1,159
--------- ---------
Cash flows from operations 63,762 43,279
Interest expense on lease liabilities 27 (17) (8)
Interest paid (180) (41)
Tax paid (4,475) (5,296)
========= =========
Net cash from operating activities 59,090 37,934
========= =========
Cash flows from investing activities
Purchases of property, plant and equipment 13 (27,046) (56,453)
Purchases of intangible assets 14 (3,311) (5,449)
Acquisition of other financial assets 20 - (501)
Interest received 9 197 52
========= =========
Net cash used in investing activities (30,160) (62,351)
========= =========
Cash flows from financing activities
Lease payment 27 (618) (576)
Proceeds from issue of share capital 1,378 -
Net cash from / (used in) financing activities 760 (576)
========= =========
Net increase / (decrease) in cash and cash
equivalents 29,690 (24,993)
Cash and cash equivalents:
At beginning of the year 21 8,077 33,070
========= =========
At end of the year 21 37,767 8,077
========= =========
The notes are an integral part of these consolidated and company
financial statements.
Company Statement of Cash Flows
for the year ended 31 December 2020
(Euro 000's) Note 2020 2019
========= =========
Cash flows from operating activities
Profit before tax 15,601 15,000
Adjustments for:
Interest income 9 (16) (25)
Interest income from interest-bearing intercompany
loans 9 (16,123) (16,805)
Impairment loss on other receivables (45) -
Unrealised foreign exchange loss on financing 20 -
activities
Cash used in operating activities before
working capital changes (563) (1,830)
Changes in working capital:
Trade and other receivables 19 (15,549) (17,252)
Trade and other payables 25 2,728 2,204
Cash flows used in operations (13,384) (16,878)
Tax paid (2,194) (537)
Net cash used in operating activities (15,578) (17,415)
========= =========
Cash flows from investing activities
Interest received 9 - 25
Investment in subsidiaries (2) (113)
Interest income from interest-bearing intercompany
loans 9 16,123 16,805
Net cash from investing activities 16,121 16,717
========= =========
Cash flows from financing activities
Proceeds from issue of share capital 22 1,378 -
Net cash from financing activities 1,378 -
========= =========
Net increase/(decrease) in cash and cash
equivalents 1,921 (698)
Cash and cash equivalents:
At beginning of the year 21 128 826
========= =========
At end of the year 21 2,049 128
========= =========
The notes are an integral part of these consolidated and company
financial statements.
Notes to the Consolidated and Company Financial Statements
Year ended 31 December 2020
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 31 December 2020.
Additional information about Atalaya Mining Plc is available at
www.atalayamining.com as per requirement of AIM rule 26.
Change on name and share consolidation
Following the Company's EGM on 13 October 2015, the change of
the name 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 GBP0.075 for every 30
existing ordinary shares of nominal value of GBP0.0025.
Principal activities
The Company owns and operates through a wholly owned subsidiary,
"Proyecto Riotinto", an open-pit copper mine located in the Pyritic
belt, in the Andalusia region of Spain, approximately 65 km
northwest of Seville.
Atalaya also owns 10% of Proyecto Touro, a brownfield copper
project in northwest Spain. The following four phases determine how
the Company may acquire up to 80% of Proyecto Touro:
-- Phase 1 - The Company paid EUR0.5 million to secure the
exclusivity agreement and will continue to fund up to a maximum of
EUR5 million to get the project through the permitting and
financing stages.
-- Phase 2 - When permits are granted, the Company will pay EUR2
million to earn-in an additional 30% interest in the project
(cumulative 40%).
-- Phase 3 - Once development capital is in place and
construction is underway, the Company will pay EUR5 million to
earn-in an additional 30% interest in the project (cumulative
70%).
-- Phase 4 - Once commercial production is declared, the Company
will purchase an additional 10% interest in the project (cumulative
80%) in return for a 0.75% Net Smelter Return (NSR) royalty, with a
buyback option.
In November 2019, Atalaya executed the option to acquire 12.5%
of Explotaciones Gallegas del Cobre, S.L. the exploration property
around Touro, with known additional reserves, which will provide
high potential to the Proyecto Touro.
On 21 October 2020, the Company announced that it entered into a
definitive purchase agreement to acquire 100% of the shares of
Cambridge Mineria España, S.L. (since renamed Atalaya Masa
Valverde, S.L.U.), a Spanish company which fully owns the Masa
Valverde polymetallic project located in Huelva (Spain). Under the
terms of the agreement Atalaya will make an aggregate EUR1.4
million cash payment in two instalments of approximately the same
amount. Initial payment to be executed once the project is
permitted and second and last payment when first production is
achieved from the concession.
The Company's and its subsidiaries' activity are 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 Spain and the
Eastern European region.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated and company financial statements are set out
below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
2.1 Basis of preparation
(a) Overview
The financial statements of Atalaya Mining Plc have been
prepared in accordance with International Financial Reporting
Standards ("IFRS"). IFRS comprise the standards issued by the
International Accounting Standards Board ("IASB").
The financial statements are presented in EUR and all values are
rounded to the nearest thousand (EUR'000), except where otherwise
indicated.
Additionally, the financial statements have also been prepared
in accordance with the IFRS as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap.113. For the year
ending 31 December 2020, the standards applicable for IFRS's as
adopted by the EU are aligned with the IFRS's as issued by the
IASB.
The consolidated financial statements have been prepared on a
historical cost basis except for the revaluation of certain
financial instruments that are measured at fair value at the end of
each reporting period, as explained below and in note 3.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements are disclosed in Note 3.4.
(b) Going concern
The Directors have considered and debated different possible
scenarios on the Company's operations, financial position and
forecast for a period of at least 12 months since the approval of
these financial statements. Possible scenarios range from (i)
disruption in Proyecto Riotinto including any potential future
impact of the COVID-19 pandemic; (ii) market volatility in
commodity prices; and (iii) availability of existing credit
facilities.
The Directors, after reviewing these scenarios, the current cash
resources, forecasts and budgets, timing of cash flows, borrowing
facilities, sensitivity analyses and considering the associated
uncertainties to the Group's operations have a reasonable
expectation that the Company has adequate resources to continue
operating in the foreseeable future. The analysis included the long
term credit lines available to fund the payment of the Deferred
Consideration, reclassified as at 31 December 2020 as current
liability.
Accordingly, these financial statements have been prepared based
on accounting principles applicable to a going concern which
assumes that the Group and the Company will realise its assets and
discharge its liabilities in the normal course of business.
Management has carried out an assessment of the going concern
assumption and has concluded that the Group and the Company will
generate sufficient cash and cash equivalents to continue operating
for the next twelve months.
2.2 Changes in accounting policy 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 2020.
Several other amendments and interpretations apply for the first
time in 2020, but do not have a significant impact on the
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.
Conceptual Framework in IFRS standards
The IASB issued the revised Conceptual Framework for Financial
Reporting on 29 March 2018. The Conceptual Framework sets out a
comprehensive set of concepts for financial reporting, standard
setting, guidance for preparers in developing consistent accounting
policies and assistance to others in their efforts to understand
and interpret the standards. IASB also issued a separate
accompanying document, Amendments to References to the Conceptual
Framework in IFRS Standards, which sets out the amendments to
affected standards in order to update references to the revised
Conceptual Framework. Its objective is to support transition to the
revised Conceptual Framework for companies that develop accounting
policies using the Conceptual Framework when no IFRS Standard
applies to a particular transaction. For preparers who develop
accounting policies based on the Conceptual Framework, it is
effective for annual periods beginning on or after 1 January
2020.
2.2 Changes in accounting policy and disclosures (cont.)
IFRS 3: Business Combinations (Amendments)
The IASB issued amendments in Definition of a Business
(Amendments to IFRS 3) aimed at resolving the difficulties that
arise when an entity determines whether it has acquired a business
or a group of assets. The Amendments are effective for business
combinations for which the acquisition date is in the first annual
reporting period beginning on or after 1 January 2020 and to asset
acquisitions that occur on or after the beginning of that period,
with earlier application permitted. As a result, the Group has
adopted this accounting policy for the acquisition of the asset of
Atalaya Masa Valverde.
IAS 1 Presentation of Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors: Definition of
'material' (Amendments)
The Amendments are effective for annual periods beginning on or
after 1 January 2020 with earlier application permitted. The
Amendments clarify the definition of material and how it should be
applied. The new definition states that, 'Information is material
if omitting, misstating or obscuring it could reasonably be
expected to influence decisions that the primary users of general
purpose financial statements make on the basis of those financial
statements, which provide financial information about a specific
reporting entity'. In addition, the explanations accompanying the
definition have been improved. The Amendments also ensure that the
definition of material is consistent across all IFRS Standards.
These amendments had no impact on the consolidated financial
statements of the Group.
Interest Rate Benchmark Reform - IFRS 9, IAS 39 and IFRS 7
(Amendments)
In September 2019, the IASB issued amendments to IFRS 9, IAS 39
and IFRS 7, which concludes phase one of its work to respond to the
effects of Interbank Offered Rates (IBOR) reform on financial
reporting. The amendments published, deal with issues affecting
financial reporting in the period before the replacement of an
existing interest rate benchmark with an alternative interest rate
and address the implications for specific hedge accounting
requirements in IFRS 9 Financial Instruments and IAS 39 Financial
Instruments: Recognition and Measurement, which require
forward-looking analysis. The amendments provide temporary reliefs,
applicable to all hedging relationships that are directly affected
by the interest rate benchmark reform, which enable hedge
accounting to continue during the period of uncertainty before the
replacement of an existing interest rate benchmark with an
alternative nearly risk-free interest rate. There are also
amendments to IFRS 7 Financial Instruments: Disclosures regarding
additional disclosures around uncertainty arising from the interest
rate benchmark reform. The amendments are effective for annual
periods beginning on or after 1 January 2020 and must be applied
retrospectively. Phase two (ED) focuses on issues that could affect
financial reporting when an existing interest rate benchmark is
replaced with a risk-free interest rate (an RFR). These amendments
had no impact on the consolidated financial statements of the
Group.
2.2.1 Standards issued but not yet effective
The new and amended standards and interpretations that are
issued, but not yet effective, up to the date of issuance of the
financial statements are disclosed below. Some of them were adopted
by the European Union and others not yet. The Group and the Company
intend to adopt these new and amended standards and
interpretations, if applicable, when they become effective.
Amendment in IFRS 10 Consolidated Financial Statements and IAS
28 Investments in Associates and Joint Ventures: Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture
The amendments address an acknowledged inconsistency between the
requirements in IFRS 10 and those in IAS 28, in dealing with the
sale or contribution of assets between an investor and its
associate or joint venture. The main consequence of the amendments
is that a full gain or loss is recognized when a transaction
involves a business (whether it is housed in a subsidiary or not).
A partial gain or loss is recognized when a transaction involves
assets that do not constitute a business, even if these assets are
housed in a subsidiary. In December 2015 the IASB postponed the
effective date of this amendment indefinitely pending the outcome
of its research project on the equity method of accounting. The
amendments have not yet been endorsed by the EU. These amendments
had no impact on the consolidated financial statements of the Group
but may impact future periods should the Group enter into any Joint
Venture.
IAS 1 Presentation of Financial Statements: Classification of
Liabilities as Current or Non-current (Amendments)
The amendments are effective for annual reporting periods
beginning on or after January 1, 2022 with earlier application
permitted. However, in response to the covid-19 pandemic, the Board
has deferred the effective date by one year, i.e. 1 January 2023,
to provide companies with more time to implement any classification
changes resulting from the amendments. The amendments aim to
promote consistency in applying the requirements by helping
companies determine whether, in the statement of financial
position, debt and other liabilities with an uncertain settlement
date should be classified as current or non-current. The amendments
affect the presentation of liabilities in the statement of
financial position and do not change existing requirements around
measurement or timing of recognition of any asset, liability,
income or expenses, nor the information that entities disclose
about those items. Also, the amendments clarify the classification
requirements for debt which may be settled by the company issuing
own equity instruments. The amendments have not yet been endorsed
by the EU. These amendments had no impact on the consolidated
financial statements of the Group but may impact future
periods.
IFRS 3 Business Combinations; IAS 16 Property, Plant and
Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent
Assets as well as Annual Improvements 2018-2020 (Amendments)
The amendments are effective for annual periods beginning on or
after 1 January 2022 with earlier application permitted. The IASB
has issued narrow-scope amendments to the IFRS Standards as
follows:
-- IFRS 3 Business Combinations (Amendments) update a reference
in IFRS 3 to the Conceptual Framework for Financial Reporting
without changing the accounting requirements for business
combinations.
-- IAS 16 Property, Plant and Equipment (Amendments) prohibit a
company from deducting from the cost of property, plant and
equipment amounts received from selling items produced while the
company is preparing the asset for its intended use. Instead, a
company will recognise such sales proceeds and related cost in
profit or loss.
-- IAS 37 Provisions, Contingent Liabilities and Contingent
Assets (Amendments) specify which costs a company includes in
determining the cost of fulfilling a contract for the purpose of
assessing whether a contract is onerous.
-- Annual Improvements 2018-2020 make minor amendments to IFRS 1
First-time Adoption of International Financial Reporting Standards,
IFRS 9 Financial Instruments, IAS 41 Agriculture and the
Illustrative Examples accompanying IFRS 16 Leases
The amendments have not yet been endorsed by the EU. These
amendments had no impact on the consolidated financial statements
of the Group but may impact future periods, Management is currently
evaluating the effect of these standards or interpretations on its
financial statements.
IFRS 16 Leases-C vid 19 Related Rent Concessions (Amendment)
The amendment applies, retrospectively, to annual reporting
periods beginning on or after 1 June 2020. Earlier application is
permitted, including in financial statements not yet authorized for
issue at 28 May 2020. IASB amended the standard to provide relief
to lessees from applying IFRS 16 guidance on lease modification
accounting for rent concessions arising as a direct consequence of
the covid-19 pandemic. The amendment provides a practical expedient
for the lessee to account for any change in lease payments
resulting from the covid-19 related rent concession the same way it
would account for the change under IFRS 16, if the change was not a
lease modification, only if all of the following conditions are
met:
-- The change in lease payments results in revised consideration
for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change.
-- Any reduction in lease payments affects only payments
originally due on or before 30 June 2021.
-- There is no substantive change to other terms and conditions
of the lease. Earlier application is permitted. This amendment had
no material impact on the consolidated financial statements of the
Group.
Interest Rate Benchmark Reform - Phase 2 - IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16 (Amendments)
In August 2020, the IASB published Interest Rate Benchmark
Reform - Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16, completing its work in response to IBOR reform. The
amendments provide temporary reliefs which address the financial
reporting effects when an interbank offered rate (IBOR) is replaced
with an alternative nearly risk-free interest rate (RFR). In
particular, the amendments provide for a practical expedient when
accounting for changes in the basis for determining the contractual
cash flows of financial assets and liabilities, to require the
effective interest rate to be adjusted, equivalent to a movement in
a market rate of interest. Also, the amendments introduce reliefs
from discontinuing hedge relationships including a temporary relief
from having to meet the separately identifiable requirement when an
RFR instrument is designated as a hedge of a risk component.
Furthermore, the amendments to IFRS 4 are designed to allow
insurers who are still applying IAS 39 to obtain the same reliefs
as those provided by the amendments made
to IFRS 9. There are also amendments to IFRS 7 Financial
Instruments: Disclosures to enable users of financial statements to
understand the effect of interest rate benchmark reform on an
entity's financial instruments and risk management strategy. The
amendments are effective for annual periods beginning on or after 1
January 2021 with earlier application permitted. While application
is retrospective, an entity is not required to restate prior
periods.
2.3 Consolidation
(a) Basis of consolidation
The consolidated financial statements comprise the financial
statements of Atalaya Mining Plc and its subsidiaries.
(b) Subsidiaries
Subsidiaries are all entities (including special purpose
entities) over which the Group and the Company has control. Control
exists when the Group is exposed, or has rights, to variable
returns for its involvement with the investee and has the ability
to affect those returns through its power over the investee. The
existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity. The Group also assesses
existence of control where it does not have more than 50% of the
voting power but is able to govern the financial and operating
policies by virtue of de-facto control.
De-facto control may arise in circumstances where the size of
the Group's voting rights relative to the size and dispersion of
holdings of other shareholders give the Group the power to govern
the financial and operating policies, etc.
The Group re-assesses whether it controls an investee if facts
and circumstances indicate that there are changes to one or more of
the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during
the year are included in the consolidated financial statements from
the date the Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of OCI are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to
bring their accounting policies in line with the Group's accounting
policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. If the Group loses control
over a subsidiary, it derecognises the related assets (including
goodwill), liabilities, non-controlling interest and other
components of equity, while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised
at fair value'.
The main operating subsidiary of Atalaya Mining Plc is the 100%
owned Atalaya Riotionto Minera, S.L.U. which operates "Proyecto
Riotinto", in the historical site of Huelva, Spain.
The name and shareholding of the entities included in the Group
in these financial statements are:
Entity name Business %(2) Country
Atalaya Mining, Plc Holding n/a Cyprus
EMED Marketing Ltd. Marketing 100% Cyprus
EMED Mining Spain, S.L. Dormant 100% Spain
Atalaya Riotinto Minera, S.L.U. Operating 100% Spain
Recursos Cuenca Minera, S.L. Operating 50% Spain
Atalaya Minasderiotinto Project Holding 100% United Kingdom
(UK), Ltd.
Eastern Mediterranean Exploration Operating 100% Spain
& Development, S.L.U.
Atalaya Touro (UK), Ltd. Holding 100% United Kingdom
Fundación Atalaya Riotinto Trust 100% Spain
Cobre San Rafael, S.L. (1) Development 10% Spain
Atalaya Servicios Mineros, S.L.U. Dormant 100% Spain
Atalaya Masa Valverde, S.L.U. Development 100% Spain
Atalaya Financing Ltd Financing 100% Cyprus
Notes
(1) Cobre San Rafael, S.L. is the entity which holds the mining
rights of the Proyecto Touro. The Group has control in the
management of Cobre San Rafael, S.L., including one of the two
Directors, management of the financial books and the capacity to
appoint the key personnel. Refer to Note 31 for details on the
acquisition of Cobre San Rafael, S.L.
(2) The effective proportion of shares held as at 31 December 2020 and 2019 remained unchanged.
The Group applied the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the transferred assets,
liabilities incurred by the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business
combination are measured initially at fair value at the acquisition
date. The Group recognised any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis, either at fair
value or at the non-controlling interest's proportionated share of
the recognised amounts of acquiree's identifiable net assets.
(c) Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquire is re-measured to fair value at the
acquisition date; any gains or losses arising from such
re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IFRS 9 in profit or loss. Contingent consideration that is
classified as equity is not re-measured, and its subsequent
settlement is accounted for within equity.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Gains and
losses resulting from intercompany transactions that are recognised
in assets are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
(d) Changes in ownership interests in subsidiaries without
change of control
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(e) Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
(f) Associates and joint ventures
An associate is an entity over which the Group has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee (generally
accompanying a shareholding of between 20% and 50% of the voting
rights) but is not control or joint control over those
policies.
A joint venture is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require
the unanimous consent of the parties sharing control.
Investments in associates or joint ventures are accounted for
using the equity method of accounting. Under the equity method, the
investment is initially recognised at cost, and the carrying amount
is increased or decreased to recognise the investor's share of the
profit or loss of the investee after the date of acquisition. The
Group's investment in associates or joint ventures includes
goodwill identified on acquisition.
If the ownership interest in an associate or joint venture is
reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in other comprehensive
income is reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profit or loss is
recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is
recognised in other comprehensive income, with a corresponding
adjustment to the carrying amount of the investment. When the Group
share of losses in an associate or a joint venture equals or
exceeds its interest in the associate or joint venture, including
any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate or the
joint venture.
The Group determines at each reporting date whether there is any
objective evidence that the investment in the associate or the
joint venture is impaired. If this is the case, the Group
calculates the amount of impairment as the difference between the
recoverable amount of the associate or the joint venture and its
carrying value and recognises the amount adjacent to 'share of
profit/(loss) of associates' or joint ventures' in the income
statement.
Profits and losses resulting from upstream and downstream
transactions between the Group and its associate or joint venture
are recognised in the Group's consolidated financial statements
only to the extent of unrelated investors' interests in the
associates or the joint ventures. Unrealised losses are eliminated
unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of associates have been
changed where necessary to ensure consistency with the policies
adopted by the Group. Dilution gains and losses arising in
investments in associates or joint ventures are recognised in the
income statement.
(g) Functional currency
Functional and presentation currency items included in the
financial statements of each of the Group's entities are measured
using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The financial
statements are presented in Euro which is the Company's functional
and presentation currency.
Determination of functional currency may involve certain
judgements to determine the primary economic environment and the
parent entity reconsiders the functional currency of its entities
if there is a change in events and conditions which determined the
primary economic environment.
Foreign currency transactions are translated into the functional
currency using the spot exchange rates prevailing at the dates of
the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions are recognised in the income statement.
Monetary assets and liabilities denominated in foreign
currencies are updated at year-end spot exchange rates.
Non-monetary items that are measured at historical cost in a
foreign currency are translated using the exchange rates at the
dates of the initial transaction. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Gains or losses of monetary and non-monetary items are
recognised in the income statement.
Balance sheet items are translated at period-end exchange rates.
Exchange differences on translation of the net assets of such
entities whose functional currency are not the Euro are taken to
equity and recorded in a separate currency translation reserve.
2.4 Investments in subsidiary companies in the Company's
financial statements
Investments in subsidiary companies are stated at cost less
provision for impairment in value, which is recognised as an
expense in the period in which the impairment is identified.
2.5 Interest in joint arrangements
A joint arrangement is a contractual arrangement whereby the
Group and other parties undertake an economic activity that is
subject to joint control that is when the strategic, financial and
operating policy decisions relating to the activities the joint
arrangement require the unanimous consent of the parties sharing
control.
Where a Group entity undertakes its activities under joint
arrangements directly, the Group's share of jointly controlled
assets and any liabilities incurred jointly with other ventures are
recognised in the financial statements of the relevant entity and
classified according to their nature. Liabilities and expenses
incurred directly in respect of interests in jointly controlled
assets are accounted for on an accrual basis. Income from the sale
or use of the Group's share of the output of jointly controlled
assets, and its share of joint arrangement expenses, are recognised
when it is probable that the economic benefits associated with the
transactions will flow to/from the Group and their amount can be
measured reliably.
The Group enters joint arrangements that involve the
establishment of a separate entity in which each acquiree has an
interest (jointly controlled entity). The Group reports its
interests in jointly controlled entities using the equity method of
accounting.
Where the Group transacts with its jointly controlled entities,
unrealised profits and losses are eliminated to the extent of the
Group's interest in the joint arrangement.
2.6 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the CEO who makes strategic
decisions.
The Group has only one distinct business segment, being that of
mining operations, mineral exploration and development.
2.7 Inventory
Inventory consists of copper concentrates, ore stockpiles and
metal in circuit and spare parts. Inventory is physically measured
or estimated and valued at the lower of cost or net realisable
value. Net realisable value is the estimated future sales price of
the product the entity expects to realise when the product is
processed and sold, less estimated costs to complete production and
bring the product to sale. Where the time value of money is
material, these future prices and costs to complete are
discounted.
Cost is determined by using the FIFO method and comprises direct
purchase costs and an appropriate portion of fixed and variable
overhead costs, including depreciation and amortisation, incurred
in converting materials into finished goods, based on the normal
production capacity. The cost of production is allocated to joint
products using a ratio of spot prices by volume at each month end.
Separately identifiable costs of conversion of each metal are
specifically allocated.
Materials and supplies are valued at the lower of cost or net
realisable value. Any provision for obsolescence is determined by
reference to specific items of stock. A regular review is
undertaken to determine the extent of any provision for
obsolescence.
2.8 Assets under construction
All subsequent expenditure on the construction, installation or
completion of infrastructure facilities including mine plants and
other necessary works for mining, are capitalised in "Assets under
Construction". Any costs incurred in testing the assets to
determine if they are functioning as intended, are capitalised, net
of any proceeds received from selling any product produced while
testing. Where these proceeds exceed the cost of testing, any
excess is recognised in the statement of profit or loss and other
comprehensive income. After production starts, all assets included
in "Assets under Construction" are then transferred to the relevant
asset categories.
Once a project has been established as commercially viable,
related development expenditure is capitalised. A development
decision is made based upon consideration of project economics,
including future metal prices, reserves and resources, and
estimated operating and capital costs. Capitalisation of costs
incurred and proceeds received during the development phase ceases
when the property is capable of operating at levels intended by
management.
Capitalisation ceases when the mine is capable of commercial
production, except for development costs which give rise to a
future benefit.
Pre-commissioning sales are offset against the cost of assets
under construction. No depreciation is recognised until the assets
are substantially complete and ready for productive use.
2.9 Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and any accumulated impairment losses.
Subsequent costs are included in the assets' carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are
incurred.
Property, plant and equipment are depreciated to their estimated
residual value over the estimated useful life of the specific asset
concerned, or the estimated remaining life of the associated mine
("LOM"), field or lease. Depreciation commences when the asset is
available for use.
The major categories of property, plant and equipment are
depreciated/amortised on a Unit of Production ("UOP") and/or
straight-line basis as follows:
Buildings UOP
Mineral rights UOP
Deferred mining costs UOP
Plant and machinery UOP
Motor vehicles 5 years
Furniture/fixtures/office 5 - 10
equipment years
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within "Other
(losses)/gains - net" in the income statement.
(a) Mineral rights
Mineral reserves and resources which can be reasonably valued
are recognised in the assessment of fair values on acquisition.
Mineral rights for which values cannot be reasonably determined are
not recognised. Exploitable mineral rights are amortised using the
UOP basis over the commercially recoverable reserves and, in
certain circumstances, other mineral resources. Mineral resources
are included in amortisation calculations where there is a high
degree of confidence that they will be extracted in an economic
manner.
(b) Deferred mining costs - stripping costs
Mainly comprises of certain capitalised costs related to
pre-production and in-production stripping activities as outlined
below.
Stripping costs incurred in the development phase of a mine (or
pit) before production commences are capitalised as part of the
cost of constructing the mine (or pit) and subsequently amortised
over the life of the mine (or pit) on a UOP basis.
In-production stripping costs related to accessing an
identifiable component of the ore body to realise benefits in the
form of improved access to ore to be mined in the future (stripping
activity asset), are capitalised within deferred mining costs
provided all the following conditions are met:
i. it is probable that the future economic benefit associated
with the stripping activity will be realised;
ii. the component of the ore body for which access has been improved can be identified and;
iii. the costs relating to the stripping activity associated
with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping
costs are charged to the consolidated statement of income as they
are incurred.
The stripping activity asset is initially measured at cost,
which is the accumulation of costs directly incurred to perform the
stripping activity that improves access to the identified component
of ore, plus an allocation of directly attributable overhead
costs.
(c) Exploration costs
Under the Group's accounting policy, exploration expenditure is
not capitalised until the management determines a property will be
developed and point is reached at which there is a high degree of
confidence in the project's viability and it is considered probable
that future economic benefits will flow to the Group. A development
decision is made based upon consideration of project economics,
including future metal prices, reserves and resources, and
estimated operating and capital costs.
Subsequent recovery of the resulting carrying value depends on
successful development or sale of the undeveloped project. If a
project does not prove viable, all irrecoverable costs associated
with the project net of any related impairment provisions are
written off.
(d) Major maintenance and repairs
Expenditure on major maintenance refits or repairs comprises the
cost of replacement assets or parts of assets and overhaul costs.
Where an asset, or part of an asset, that was separately
depreciated and is now written off is replaced, and it is probable
that future economic benefits associated with the item will flow to
the Group through an extended life, the expenditure is
capitalised.
Where part of the asset was not separately considered as a
component and therefore not depreciated separately, the replacement
value is used to estimate the carrying amount of the replaced
asset(s) which is immediately written off. All other day-to-day
maintenance and repairs costs are expensed as incurred.
(e) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or
sale (a qualifying asset) are capitalised as part of the cost of
the respective asset. Where funds are borrowed specifically to
finance a project, the amount capitalised represents the actual
borrowing costs incurred. All other borrowing costs are recognised
in the statement of profit or loss and other comprehensive income
in the period in which they are incurred.
(f) Restoration, rehabilitation and decommissioning
Restoration, rehabilitation and decommissioning costs arising
from the installation of plant and other site preparation work,
discounted using a risk adjusted discount rate to their net present
value, are provided for and capitalised at the time such an
obligation arises.
The costs are charged to the consolidated statement of income
over the life of the operation through depreciation of the asset
and the unwinding of the discount on the provision. Costs for
restoration of subsequent site disturbance, which are created on an
ongoing basis during production, are provided for at their net
present values and charged to the consolidated statement of income
as extraction progresses.
Changes in the estimated timing of the rehabilitation or changes
to the estimated future costs are accounted for prospectively by
recognising an adjustment to the rehabilitation liability and a
corresponding adjustment to the asset to which it relates, provided
the reduction in the provision is not greater than the depreciated
capitalised cost of the related asset, in which case the
capitalised cost is reduced to zero and the remaining adjustment
recognised in the consolidated statement of income. In the case of
closed sites, changes to estimated costs are recognised immediately
in the consolidated statement of income.
2.10 Intangible assets
(a) Business combination and goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
acquired interest in net fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree and the fair
value of the non-controlling interest in the acquiree.
The results of businesses acquired during the year are brought
into the consolidated financial statements from the effective date
of acquisition. The identifiable assets, liabilities and contingent
liabilities of a business which can be measured reliably are
recorded at their provisional fair values at the date of
acquisition. Acquisition-related costs are expensed as
incurred.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs to sell. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
(b) Permits
Permits are capitalised as intangible assets which relate to
projects that are at the pre-development stage. No amortisation
charge is recognised in respect of these intangible assets. Once
the Group receives those permits and commence production, the
intangible assets relating to permits will be depreciated on a UOP
basis.
Other intangible assets include computer software.
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition
provided they meet recognition criteria as per IFRS 3. Following
initial recognition, intangible assets are carried at cost less any
accumulated amortisation (calculated on a straight-line basis over
their useful lives) and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over their
useful economic lives and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the end of
each reporting period.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in
the consolidated and company statements of comprehensive income
when the asset is derecognised.
2.11 Impairment of non-financial assets
Assets that have an indefinite useful life - for example,
goodwill or intangible assets not ready for use - are not subject
to amortisation and are tested annually for impairment. Assets that
are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an
asset's fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than goodwill
that suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
2.12 Financial assets and liabilities
2.12.1 Classification
From 1 January 2019, the Group classifies its financial assets
in the following measurement categories:
-- those to be measured at amortised cost.
-- those to be measured subsequently at fair value through OCI, and.
-- those to be measured subsequently at fair value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's and the Company's business model
for managing them. In order for a financial asset to be classified
and measured at amortised cost, it needs to give rise to cash flows
that are 'solely payments of principal and interest' ('SPPI') on
the principal amount outstanding. This assessment is referred to as
the SPPI test and is performed at an instrument level.
For assets measured at fair value, gains and losses will either
be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on
whether the group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its
business model for managing those assets changes.
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the Group commits to
purchase or sell the asset.
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed
in profit or loss.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are solely
payment of principal and interest.
Subsequent measurement of debt instruments depends on the
Group's business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement
categories into which the Group classifies its debt
instruments:
2.12.2 Amortised cost
Assets that are held for collection of contractual cash flows
where those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these
financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the
statement of profit or loss.
The Company's financial assets at amortised cost include current
and non-current receivables (other than trade receivables which are
measured at fair value through profit and loss) and cash and cash
equivalents.
2.12.3 Fair value through other comprehensive income
Financial assets which are debt instruments, that are held for
collection of contractual cash flows and for selling the financial
assets, where the assets' cash flows represent solely payments of
principal and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition
of impairment gains or losses, interest income and foreign exchange
gains and losses which are recognised in profit or loss. When the
financial asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to profit
or loss and recognised in other gains/(losses). Interest income
from these financial assets is included in finance income using the
effective interest rate method. Foreign exchange gains and losses
are presented in profit/(loss) before tax and impairment expenses
are presented as a separate line item in the statement of profit or
loss.
At transition to IFRS 9, the Group had certain financial asset
that were accounted for as debt instruments at fair value through
other comprehensive income; however, at the year end, no such
assets existed.
2.12.4 Equity instruments designated as fair value through other
comprehensive income
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments designated
at fair value through OCI when they meet the definition of equity
under IAS 32 Financial Instruments: Presentation and are not held
for trading. The classification is determined on an
instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to
profit or loss. Dividends are recognised as other income in the
consolidated and company statements of comprehensive income when
the right of payment has been established, except when the Group
benefits from such proceeds as a recovery of part of the cost of
the financial asset, in which case, such gains are recorded in OCI.
Equity instruments designated at fair value through OCI are not
subject to impairment assessment.
The Group elected to classify irrevocably its listed equity
investments under this category.
2.12.5 Assets at fair value through profit and loss
Assets that do not meet the criteria for amortised cost or FVOCI
are measured at FVPL. A gain or loss on a debt investment that is
subsequently measured at FVPL is recognised as profit or loss and
presented net within other gains/(losses) in the period in which it
arises.
Changes in the fair value of financial assets at FVPL are
recognised in other gains/(losses) in the consolidated and company
statements of comprehensive income as applicable.
2.12.6 De-recognition of financial assets
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the
risks and rewards of ownership.
2.12.7 Impairment of financial assets
From 1 January 2019, the Group assesses on a forward looking
basis the expected credit losses associated with its debt
instruments carried at amortised cost. Expected credit losses are
based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original
effective interest rate. The expected cash flows will include cash
flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
For receivables (other than trade receivables which are measured
at FVPL), the Group applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised
from initial recognition of the receivables.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually
occurs when past due for more than one year and not subject to
enforcement activity.
2.12.8. Financial liabilities and trade payables
After initial recognition, interest-bearing loans and borrowings
and trade and other payables are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in the
consolidated and company statements of comprehensive income when
the liabilities are derecognised, as well as through the EIR
amortisation process.
Amortised cost is calculated by taking any discount or premium
on acquisition and fees or costs that are an integral part of the
EIR, into account. The EIR amortisation is included as finance
costs in the consolidated and company statements of comprehensive
income
2.13 Current versus Non-current Classification
The Group presents assets and liabilities in the consolidated
and company statements of financial position based on
current/non-current classification.
(a) An asset is current when it is either:
-- Expected to be realised or intended to be sold or consumed in normal operating cycle;
-- Held primarily for the purpose of trading;
-- Expected to be realised within 12 months after the reporting period
Or
-- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months
after the reporting period
All other assets are classified as non-current.
(b) A liability is current when either:
-- It is expected to be settled in the normal operating cycle;
-- It is held primarily for the purpose of trading
-- It is due to be settled within 12 months after the reporting period
Or
-- There is no unconditional right to defer the settlement of
the liability for at least 12 months after the reporting period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
2.14 Cash and cash equivalents
In the consolidated and company statements of cash flows, cash
and cash equivalents includes cash in hand and in bank including
deposits held at call with banks, with a maturity of less than 3
months.
2.15 Provisions
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 the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
2.16 Interest-bearing loans and borrowings
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as interest
expense.
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit
or loss over the period of the borrowings, using the effective
interest method, unless they are directly attributable to the
acquisition, construction or production of a qualifying asset, in
which case they are capitalised as part of the cost of that
asset.
Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extent there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a prepayment and
amortised over the period of the facility to which it relates.
Borrowing costs are interest and other costs that the Group
incurs in connection with the borrowing of funds, including
interest on borrowings, amortisation of discounts or premium
relating to borrowings, amortisation of ancillary costs incurred in
connection with the arrangement of borrowings, finance lease
charges and exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to
interest costs.
2.17 Deferred consideration
Deferred consideration arises when settlement of all or any part
of the cost of an agreement is deferred. It is stated at fair value
at the date of recognition, which is determined by discounting the
amount due to present value at that date. Interest is imputed on
the fair value of non-interest-bearing deferred consideration at
the discount rate and expensed within interest payable and similar
charges. At each balance sheet date deferred consideration
comprises the remaining deferred consideration valued at
acquisition plus interest imputed on such amounts from recognition
to the balance sheet date.
2.18 Share capital
Ordinary shares are classified as equity. The difference between
the fair value of the consideration received by the Company and the
nominal value of the share capital being issued is taken to the
share premium account.
Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction, net of tax,
from the proceeds in the share premium account.
2.19 Current and deferred income tax
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period date in the countries where the Company and its
subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill;
deferred income tax is also not recognised if it arises from
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Income tax
is determined using tax rates (and laws) that have been enacted or
substantively enacted by the end of the reporting period date and
are expected to apply when the related deferred tax asset is
realised or the deferred income tax liability is settled. Deferred
tax assets are recognised only to the extent that it is probable
that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except for deferred
income tax liabilities where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
2.20 Share-based payments
The Group operates a share-based compensation plan, under which
the entity receives services from employees as consideration for
equity instruments (options) of the Group. The fair value of the
employee services received in exchange for the grant of the options
is recognised as an expense. The fair value is measured using the
Black Scholes pricing model. The inputs used in the model are based
on management's best estimates for the effects of
non-transferability, exercise restrictions and behavioural
considerations. Non-market performance and service conditions are
included in assumptions about the number of options that are
expected to vest.
Vesting conditions are: (i) the personnel should be an employee
that provides services to the Group; and (ii) should be in
continuous employment for the whole vesting period of 3 years.
Specific arrangements may exist with senior managers and board
members, whereby their options stay in use until the end.
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied (Note 23).
2.21 Rehabilitation provisions
The Group records the present value of estimated costs of legal
and constructive obligations required to restore operating
locations in the period in which the obligation is incurred. The
nature of these restoration activities includes dismantling and
removing structures, rehabilitating mines and tailings dams,
dismantling operating facilities, closure of plant and waste sites
and restoration, reclamation and re-vegetation of affected areas.
The obligation generally arises when the asset is installed, or the
ground/environment is disturbed at the production location. When
the liability is initially recognised, the present value of the
estimated cost is capitalised by increasing the carrying amount of
the related mining assets to the extent that it was incurred prior
to the production of related ore. Over time, the discounted
liability is increased for the change in present value based on the
discount rates that reflect current market assessments and the
risks specific to the liability. The periodic unwinding of the
discount is recognised in the consolidated income statement as a
finance cost. Additional disturbances or changes in rehabilitation
costs will be recognised as additions or charges to the
corresponding assets and rehabilitation liability when they occur.
For closed sites, changes to estimated costs are recognised
immediately in the consolidated income statement.
The Group assesses its mine rehabilitation provision annually.
Significant estimates and assumptions are made in determining the
provision for mine rehabilitation as there are numerous factors
that will affect the ultimate liability payable. These factors
include estimates of the extent and costs of rehabilitation
activities, technological changes, regulatory changes and changes
in discount rates. Those uncertainties may result in future actual
expenditure differing from the amounts currently provided. The
provision at the consolidated statement of financial position date
represents management's best estimate of the present value of the
future rehabilitation costs required.
2.22 Leases
The determination of whether an arrangement is, or contains a
lease is based on the substance of the arrangement at inception
date including whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset. A reassessment is
made after inception of the lease only if one of the following
applies:
a) There is a change in contractual terms, other than a renewal
or extension of the arrangement;
b) A renewal option is exercised, or extension granted, unless
the term of the renewal or extension was initially included in the
lease term;
c) There is a change in the determination of whether fulfilment
is dependent on a specified asset; or
d) There is a substantial change to the asset.
The Group assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration.
The Group applies a single recognition and measurement approach
for all leases, except for short-term leases and leases of
low-value assets. The Group recognises lease liabilities to make
lease payments and right-of-use assets representing the right to
use the underlying assets.
2.22.1 Group as a lessee
The Group has lease contracts for various items of laboratory
equipment, motor vehicle, lands and buildings used in its
operations. Leases of laboratory equipment and motor vehicles
generally have lease terms for four years, while lands and
buildings generally have lease terms for the life of mine,
currently after 13 years of operation. The Group's obligations
under its leases are secured by the lessor's title to the leased
assets. Generally, the Group is restricted from assigning and
subleasing the leased assets.
2.22.2 Accounting policy - leases
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.
After 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
Lands and buildings 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. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is re-measured if there is
a modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset. The result of this re-measurement is
disclosed in a line of the right-of-use assets note as
modifications.
When the lease liability is remeasured, a corresponding
adjustment is made to the carrying amount of the right-of-use asset
or is recorded as profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
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.
2.23 Revenue recognition
(a) Revenue from contracts with customers
Atalaya is principally engaged in the business of producing
copper concentrate and in some instances, provides freight/shipping
services. Revenue from contracts with customers is recognised when
control of the goods or services is transferred to the customer at
an amount that reflects the consideration to which Atalaya expects
to be entitled in exchange for those goods or services. Atalaya has
concluded that it is the principal in its revenue contracts because
it controls the goods or services before transferring them to the
customer.
(b) Copper in concentrate (metal in concentrate) sales
For most copper in concentrate (metal in concentrate) sales, the
enforceable contract is each purchase order, which is an
individual, short-term contract. For the Group's metal in
concentrate sales not sold under CIF Incoterms, the performance
obligations are the delivery of the concentrate. A proportion of
the Group's metal in concentrate sales are sold under CIF
Incoterms, whereby the Group is also responsible for providing
freight services. In these situations, the freight services also
represent separate performance obligation (see paragraph (c)
below).
The majority of the Group's sales of metal in concentrate allow
for price adjustments based on the market price at the end of the
relevant QP stipulated in the contract. These are referred to as
provisional pricing arrangements and are such that the selling
price for metal in concentrate is based on prevailing spot prices
on a specified future date after shipment to the customer.
Adjustments to the sales price occur based on movements in quoted
market prices up to the end of the QP. The period between
provisional invoicing and the end of the QP can be between one and
three months.
Revenue is recognised when control passes to the customer, which
occurs at a point in time when the metal in concentrate is
physically transferred onto a vessel, train, conveyor or other
delivery mechanism. The revenue is measured at the amount to which
the Group expects to be entitled, being the estimate of the price
expected to be received at the end of the QP, i.e., the forward
price, and a corresponding trade receivable is recognised. For
those arrangements subject to CIF shipping terms, a portion of the
transaction price is allocated to the separate freight services
provided (See paragraph (c) below).
For these provisional pricing arrangements, any future changes
that occur over the QP are included within the provisionally priced
trade receivables and are, therefore, within the scope of IFRS 9
and not within the scope of IFRS 15. Given the exposure to the
commodity price, these provisionally priced trade receivables will
fail the cash flow characteristics test within IFRS 9 and will be
required to be measured at fair value through profit or loss up
from initial recognition and until the date of settlement. These
subsequent changes in fair value are recognised as part of revenue
in the statement of profit or loss and other comprehensive income
each period and disclosed separately from revenue from contracts
with customers as part of 'Fair value gains/losses on provisionally
priced trade receivables. Changes in fair value over, and until the
end of, the QP, are estimated by reference to updated forward
market prices for copper as well as taking other relevant fair
value considerations as set out in IFRS 13, into account, including
interest rate and credit risk adjustments.
Final settlement is based on quantities adjusted as required
following the inspection of the product by the customer as well as
applicable commodity prices. IFRS 15 requires that variable
consideration should only be recognised to the extent that it is
highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur. As the adjustments
relating to the final assay results for the quantity and quality of
concentrate sold are not significant, they do not constrain the
recognition of revenue.
(c) Freight services
As noted above, a proportion of the Group's metal in concentrate
sales are sold under CIF Incoterms, whereby the Group is
responsible for providing freight services (as principal) after the
date that the Group transfers control of the metal in concentrate
to its customers. The Group, therefore, has separate performance
obligation for freight services which are provided solely to
facilitate sale of the commodities it produces.
The revenue from freight services is a separate performance
obligation under IFRS 15 and therefore is recognised as the service
is provided, hence at year end a portion of revenue must be
deferred.
Other Incoterms commonly used by the Group are FOB, where the
Group has no responsibility for freight or insurance once control
of the products has passed at the loading port, Ex works where
control of the goods passes when the product is picked up at
seller's promises, and CIP where control of the goods passes when
the product is delivered to the agreed destination. For
arrangements which have these Incoterms, the only performance
obligations are the provision of the product at the point where
control passes.
(d) Sales of services
The Group sells services in relation to maintenance of
accounting records, management, technical, administrative support
and other services to other companies. Revenue is recognised in the
accounting period in which the services are rendered.
Contract assets
A contract asset is the right to consideration in exchange for
goods or services transferred to the customer. If the Group
performs by transferring goods or services to a customer before the
customer pays consideration or before payment is due, a contract
asset is recognised for the earned consideration that is
conditional. The Group does not have any contract assets as
performance and a right to consideration occurs within a short
period of time and all rights to consideration are
unconditional.
Contract liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the Group
transfers goods or services to the customer, a contract liability
is recognised when the payment is made or the payment is due
(whichever is earlier). Contract liabilities are recognised as
revenue when the Group performs under the contract.
From time to time, the Group recognises contract liabilities in
relation to some metal in concentrate sales which are sold under
CIF Incoterms, whereby a portion of the cash may be received from
the customer before the freight services are provided.
2.24 Interest income
Interest income is recognised using the effective interest
method. When a loan and receivable is impaired, the Group and the
Company reduce the carrying amount to its recoverable amount, the
estimated future cash flow is discounted at the original effective
interest rate of the instrument and the discount continues
unwinding as interest income. Interest income on impaired loan and
receivables is recognised using the original effective interest
rate.
2.25 Dividend income
Dividend income is recognised when the right to receive payment
is established.
2.26 Dividend distribution
Dividend distributions to the Company's shareholders are
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders. No dividend has been paid by the Company since its
incorporation.
2.27 Earnings per share
Basic earnings per share is calculated by dividing the net
profit for the year by the weighted average number of ordinary
shares outstanding during the year. The basic and diluted earnings
per share are the same as there are no instruments that have a
dilutive effect on earnings.
2.28 Comparatives
Where necessary, comparative figures have been adjusted to
conform to changes in presentation in the current year.
2.29 Amendment of financial statements after issue
The consolidated and company financial statements were
authorised for issue by the Board of Directors on 24 March 2021.
The Board of Directors has no right to amend the Financial
Statements after they are authorised.
2.30 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 and available--for--sale financial
assets is based on quoted market prices at the reporting date. The
quoted market price used for financial assets held by the 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 and
company 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).
THE GROUP
(Euro 000's) Level 1 Level 2 Level 3 Total
31 December 2020
Other financial assets
Financial assets at FV through OCI 86 - 1,101 1,187
Trade and other receivables
Receivables (subject to provisional pricing) - 24,250 - 24,250
Total 86 24,250 1,101 25,437
======== ======== ======== =======
31 December 2019
Other financial assets
Financial assets at FV through OCI 42 - 1,101 1,143
Trade and other receivables
Receivables (subject to provisional pricing) - 17,716 - 17,716
======== ======== ======== =======
Total 42 17,716 1,101 18,859
======== ======== ======== =======
THE COMPANY
(Euro 000's) Level 1 Level 2 Level 3 Total
31 December 2020
Non-current receivables
Financial assets at FV through profit and loss - - 243,557 243,557
Other current assets
Financial assets at FV through OCI 86 - - 86
Total 86 - 243,557 243,643
======== ======== ======== ========
31 December 2019
Non-current receivables
Financial assets at FV through profit and loss - - 229,686 229,686
Other current assets
Financial assets at FV through OCI 42 - - 42
======== ======== ======== ========
Total 42 - 229,686 229,728
======== ======== ======== ========
3. Financial Risk Management and Critical accounting estimates
and judgements
3.1 Financial risk factors
The Group manages its exposure to key financial risks in
accordance with its financial risk management policy. The objective
of the policy is to support the delivery of the Group's financial
targets while protecting future financial security. The main risks
that could adversely affect the Group's financial assets,
liabilities or future cash flows are market risks comprising:
commodity price risk, interest rate risk and foreign currency risk;
liquidity risk and credit risk; operational risk, compliance risk
and litigation risk. Management reviews and agrees policies for
managing each of these risks that are summarised below.
The Group's senior management oversees the management of
financial risks. The Group's senior management is supported by the
AFRC that advises on financial risks and the appropriate financial
risk governance framework for the Group. The AFRC provides
assurance to the Group's senior management that the Group's
financial risk-taking activities are governed by appropriate
policies and procedures and that financial risks are identified,
measured and managed in accordance with the Group's policies and
risk objectives. Currently, the Group does not apply any form of
hedge accounting.
(a) Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability but can also increase the risk
of losses. The Group has procedures with the object of minimising
such losses such as maintaining sufficient cash to meet liabilities
when due. Cash flow forecasting is performed in the operating
entities of the Group and aggregated by Group finance. Group
finance monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational
needs.
The following tables detail the Group's remaining contractual
maturity for its financial liabilities. The tables have been drawn
up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to
pay. The table includes principal cash flows.
THE GROUP
Between
Carrying Contractual Less than Between 1 - 2 Between Over
(Euro 000's) amounts cash flows 3 months 3 - 12 months years 2 - 5 years 5 years
=============== =============== ========== =============== ======== ============= ===========
31 December
2020
Tax liability 1,310 1,310 - 1,310 - - -
Deferred
consideration 53,000 53,000 53,000 - - -
Trade and
other
payables 69,885 69,885 27,077 41,360 13 1,435 -
Lease
liability 6,046 6,046 154 463 619 1,623 3,187
=============== =============== ========== =============== ======== ============= ===========
130,241 130,241 80,231 43,133 632 3,058 3,187
=============== =============== ========== =============== ======== ============= ===========
31 December
2019
Land options
and mortgages 282 282 11 271 - - -
Tax liability 2,507 2,507 - 2,507 - - -
Deferred
consideration 53,000 53,000 - - - 53,000 -
Trade and
other
payables 56,681 56,681 44,407 12,265 9 - -
Lease
liability 6,512 6,512 141 453 604 1,672 3,632
=============== =============== ========== =============== ======== ============= ===========
118,982 118,982 44,569 15,496 613 54,672 3,632
=============== =============== ========== =============== ======== ============= ===========
THE COMPANY
Between
Carrying Contractual Less than Between 1 - 2 Between Over
(Euro 000's) amounts cash flows 3 months 3 - 12 months years 2 - 5 years 5 years
============== ============== ========== =============== ======== ============= ===========
31 December
2020
Tax liability 473 473 - 473 - - -
Deferred
consideration 9,117 9,117 - 9,117 - -
Trade and
other
payables 12,485 12,485 - 12,485 - - -
22,075 22,075 - 22,075 - - -
============== ============== ========== =============== ======== ============= ===========
31 December
2019
Tax liability 1,865 1,865 - 1,865 - - -
Deferred
consideration 9,117 9,117 - - - 9,117 -
Trade and
other
payables 10,272 10,272 - 10,272 - - -
21,254 21,254 - 12,137 - 9,117 -
============== ============== ========== =============== ======== ============= ===========
(b) Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates.
Currency risk arises when future commercial transactions and
recognised assets and liabilities are denominated in a currency
that is not the Group's measurement currency. The Group is exposed
to foreign exchange risk arising from various currency exposures
primarily with respect to the US Dollar and the British Pound. The
Group's management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonably
possible change in the foreign exchange rate, with all other
variables held constant, of the Group's profit before tax due to
changes in the carrying value of monetary assets and liabilities at
reporting date:
Effect on profit before tax for the year ended Effect on profit before tax for the year ended
31 Dec 2020 increase/(decrease) 31 Dec 2019 increase/(decrease)
(Euro 000's)
================================================ =================================================
+5% 12,867 9,393
-5% (12,867) (9,393)
(c) Commodity price risk
Commodity price is the risk that the Group's future earnings
will be adversely impacted by changes in the market prices of
commodities, primarily copper. Management is aware of this impact
on its primary revenue stream but knows that there is little it can
do to influence the price earned apart from a hedging scheme.
Commodity price hedging is governed by the Group's policy which
allows to limit the exposure to prices. The Group may decide to
hedge part of its production during the year.
Commodity price sensitivity
The table below summarises the impact on profit before tax for
changes in commodity prices on the fair value of derivative
financial instruments and trade receivables (subject to provisional
pricing). The impact on equity is the same as the impact on profit
before income tax as these derivative financial instruments have
not been designated as hedges and are classified as
held-for-trading and are therefore fair valued through profit or
loss.
The analysis is based on the assumption that the copper prices
move $0.05/lb with all other variables held constant. Reasonably
possible movements in commodity prices were determined based on a
review of the last two years' historical prices.
Effect on profit before tax for the Effect on profit before tax for the
year ended 31 Dec 2020 year ended 31 Dec 2019
increase/(decrease) increase/(decrease)
===================================== =====================================
Eur 000's Eur 000's
Increase/(decrease) in copper prices
Increase $0.05/lb (2019: $0.05) 4,629 4,090
Decrease $0.05/lb (2019: $0.05) (4,629) (4,090)
(d) Credit risk
Credit risk arises when a failure by counterparties to discharge
their obligations could reduce the amount of future cash inflows
from financial assets on hand at the reporting date. The Group has
no significant concentration of credit risk. The Group has policies
in place to ensure that sales of products and services are made to
customers with an appropriate credit history and monitors on a
continuous basis the ageing profile of its receivables. The Group
has policies to limit the amount of credit exposure to any
financial institution.
Except as detailed in the following table, the carrying amount
of financial assets recorded in the financial statements, which is
net of impairment losses, represents the maximum credit exposure
without taking account of the value of any collateral obtained:
3.1
(Euro 000's) 2020 2019
======= =====
Unrestricted cash and cash equivalent at Group 24,519 1,730
Unrestricted cash and cash equivalent at operating entity 13,248 6,647
Cash and cash equivalents 37,767 8,077
======= =====
Restricted cash was reclassified to non-current trade and other
receivables in 2019, as the deposit is considered to be long term
(Note 19).
Besides of the above, there are no collaterals held in respect
of these financial instruments and there are no financial assets
that are past due or impaired as at 31 December 2020.
(e) Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
Borrowings issued at variable rates expose the Group to cash flow
interest rate risk. Borrowings issued at fixed rates expose the
Group to fair value interest rate risk. The Group's management
monitors the interest rate fluctuations on a continuous basis and
acts accordingly.
At the reporting date the interest rate profile of
interest--bearing financial instruments was:
(Euro 000's) 2020 2019
======= =====
Variable rate instruments
Financial assets 37,767 8,077
======= =====
An increase of 100 basis points in interest rates at 31 December
2020 would have increased / (decreased) equity and profit or loss
by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
For a decrease of 100 basis points there would be an equal and
opposite impact on the profit and other equity.
Equity Profit or loss
(Euro 000's) 2020 2019 2020 2019
==== ===== ======== =======
Variable rate instruments 378 81 378 81
(f) Operational risk
Operational risk is the risk that derives from the deficiencies
relating to the Group's information technology and control systems
as well as the risk of human error and natural disasters. The
Group's systems are evaluated, maintained and upgraded
continuously.
(g) Compliance risk
Compliance risk is the risk of financial loss, including fines
and other penalties, which arises from non--compliance with laws
and regulations. The Group has systems in place to mitigate this
risk, including seeking advice from external legal and regulatory
advisors in each jurisdiction.
(h) Litigation risk
Litigation risk is the risk of financial loss, interruption of
the Group's operations or any other undesirable situation that
arises from the possibility of non--execution or violation of legal
contracts and consequentially of lawsuits. The risk is restricted
through the contracts used by the Group to execute its
operations.
3.2 Capital risk management
The Group considers its capital structure to consist of share
capital, share premium and share options reserve. The Group's
objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital. The Group is not subject to any externally imposed capital
requirements.
In order to maintain or adjust the capital structure, the Group
issues new shares. The Group manages its capital to ensure that it
will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the debt and
equity balance. The AFRC reviews the capital structure on a
continuing basis.
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern and to maintain
an optimal capital structure so as to maximise shareholder value.
In order to maintain or achieve an optimal capital structure, the
Group may adjust the amount of dividend payment, return capital to
shareholders, issue new shares, buy back issued shares, obtain new
borrowings or sell assets to reduce borrowings.
The Group monitors capital on the basis of the gearing ratio.
The gearing ratio is calculated as net debt divided by total
capital. Net debt is calculated as provisions plus deferred
consideration plus trade and other payables less cash and cash
equivalents.
(Euro 000's) 2020 2019
======== =======
Net debt (1) 117,080 117,774
Total equity 353,690 319,858
======== =======
Total capital 470,770 437,632
======== =======
Gearing ratio 24.9% 26.9%
-------- -------
(1) Net debt includes non-current and current liabilities net of
cash and cash equivalent.
3.3 Critical accounting estimates and judgements
The preparation of the financial statements requires 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.
In particular, the Group has identified a number of areas where
significant judgements, estimates and assumptions are required.
(a) Capitalisation of exploration and evaluation costs
Under the Group's accounting policy, exploration and evaluation
expenditure is not capitalised until the point is reached at which
there is a high degree of confidence in the project's viability and
it is considered probable that future economic benefits will flow
to the Group. Subsequent recovery of the resulting carrying value
depends on successful development or sale of the undeveloped
project. If a project proves to be unviable, all irrecoverable
costs associated with the project net of any related impairment
provisions are written off.
(b) Stripping costs
The Group incurs waste removal costs (stripping costs) during
the development and production phases of its surface mining
operations. Furthermore, during the production phase, stripping
costs are incurred in the production of inventory as well as in the
creation of future benefits by improving access and mining
flexibility in respect of the orebodies to be mined, the latter
being referred to as a stripping activity asset. Judgement is
required to distinguish between the development and production
activities at surface mining operations.
The Group is required to identify the separately identifiable
components or phases of the orebodies for each of its surface
mining operations. Judgement is required to identify and define
these components, and also to determine the expected volumes
(tonnes) of waste to be stripped and ore to be mined in each of
these components. These assessments may vary between mines because
the assessments are undertaken for each individual mine and are
based on a combination of information available in the mine plans,
specific characteristics of the orebody, the milestones relating to
major capital investment decisions and the type and grade of
minerals being mined.
Judgement is also required to identify a suitable production
measure that can be applied in the calculation and allocation of
production stripping costs between inventory and the stripping
activity asset. The Group considers the ratio of expected volume of
waste to be stripped for an expected volume of ore to be mined for
a specific component of the orebody, compared to the current period
ratio of actual volume of waste to the volume of ore to be the most
suitable measure of production.
These judgements and estimates are used to calculate and
allocate the production stripping costs to inventory and/or the
stripping activity asset(s). Furthermore, judgements and estimates
are also used to apply the units of production method in
determining the depreciable lives of the stripping activity
asset(s).
(c) Ore reserve and mineral resource estimates
The Group estimates its ore reserves and mineral resources based
on information compiled by appropriately qualified persons relating
to the geological and technical data on the size, depth, shape and
grade of the ore body and suitable production techniques and
recovery rates.
Such an analysis requires complex geological judgements to
interpret the data. The estimation of recoverable reserves is based
upon factors such as estimates of foreign exchange rates, commodity
prices, future capital requirements and production costs, along
with geological assumptions and judgements made in estimating the
size and grade of the ore body.
The Group uses qualified persons (as defined by the Canadian
Securities Administrators' National Instrument 43-101) to compile
this data. Changes in the judgments surrounding proven and probable
reserves may impact as follows:
-- The carrying value of exploration and evaluation assets, mine
properties, property, plant and equipment, and goodwill may be
affected due to changes in estimated future cash flows;
-- Depreciation and amortisation charges in the consolidated and
company statements of comprehensive income may change where such
charges are determined using the UOP method, or where the useful
life of the related assets change;
-- Capitalised stripping costs recognised in the statement of
financial position as either part of mine properties or inventory
or charged to profit or loss may change due to changes in stripping
ratios;
-- Provisions for rehabilitation and environmental provisions
may change where reserve estimate changes affect expectations about
when such activities will occur and the associated cost of these
activities;
-- The recognition and carrying value of deferred income tax
assets may change due to changes in the judgements regarding the
existence of such assets and in estimates of the likely recovery of
such assets.
(d) Impairment of assets
Events or changes in circumstances can give rise to significant
impairment charges or impairment reversals in a particular year.
The Group assesses each Cash Generating Unit ("CGU") annually to
determine whether any indications of impairment exist. If it was
necessary management could contract independent expert to value the
assets. Where an indicator of impairment exists, a formal estimate
of the recoverable amount is made, which is considered the higher
of the fair value less cost to sell and value-in-use. An impairment
loss is recognised immediately in net earnings. The Group has
determined that each mine location is a CGU.
These assessments require the use of estimates and assumptions
such as commodity prices, discount rates, future capital
requirements, exploration potential and operating performance. Fair
value is determined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Fair value for
mineral assets is generally determined as the present value of
estimated future cash flows arising from the continued use of the
asset, which includes estimates such as the cost of future
expansion plans and eventual disposal, using assumptions that an
independent market participant may take into account. Cash flows
are discounted at an appropriate discount rate to determine the net
present value. For the purpose of calculating the impairment of any
asset, management regards an individual mine or works site as a
CGU.
Although management has made its best estimate of these factors,
it is possible that changes could occur in the near term that could
adversely affect management's estimate of the net cash flow to be
generated from its projects.
(e) Provisions for decommissioning and site restoration
costs
Accounting for restoration provisions requires management to
make estimates of the future costs the Group will incur to complete
the restoration and remediation work required to comply with
existing laws, regulations and agreements in place at each mining
operation and any environmental and social principles the Group is
in compliance with. The calculation of the present value of these
costs also includes assumptions regarding the timing of restoration
and remediation work, applicable risk-free interest rate for
discounting those future cash outflows, inflation and foreign
exchange rates and assumptions relating to probabilities of
alternative estimates of future cash outflows.
Management uses its judgement and experience to provide for and
(in the case of capitalised decommissioning costs) amortise these
estimated costs over the life of the mine. The ultimate cost of
decommissioning and timing is uncertain and cost estimates can vary
in response to many factors including changes to relevant
environmental laws and regulations requirements, the emergence of
new restoration techniques or experience at other mine sites. As a
result, there could be significant adjustments to the provisions
established which would affect
future financial results. Refer to Note 26 for further details.
(f) Income tax
Significant judgment is required in determining the provision
for income taxes. There are transactions and calculations for which
the ultimate tax determination is uncertain during the ordinary
course of business. The Group and Company recognise liabilities for
anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
Judgement is also required to determine whether deferred tax
assets are recognised in the consolidated statements of financial
position. Deferred tax assets, including those arising from
unutilised tax losses, require the Group to assess the probability
that the Group will generate sufficient taxable earnings in future
periods, in order to utilise recognised deferred tax assets.
Assumptions about the generation of future taxable profits
depend on management's estimates of future cash flows. These
estimates of future taxable income are based on forecast cash flows
from operations (which are impacted by production and sales
volumes, commodity prices, reserves, operating costs, closure and
rehabilitation costs, capital expenditure, dividends and other
capital management transactions). To the extent that future cash
flows and taxable income differ significantly from estimates, the
ability of the Group to realise the net deferred tax assets could
be impacted.
In addition, future changes in tax laws in the jurisdictions in
which the Group operates could limit the ability of the Group to
obtain tax deductions in future periods.
(g) Inventory
Net realisable value tests are performed at each reporting date
and represent the estimated future sales price of the product the
entity expects to realise when the product is processed and sold,
less estimated costs to complete production and bring the product
to sale. Where the time value of money is material, these future
prices and costs to complete are discounted.
(h) Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in
the lease, therefore, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. The IBR is the rate of interest that
the Group would have to pay to borrow over a similar term, and with
a similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic
environment. The IBR therefore reflects what the Group 'would have
to pay', which requires estimation when no observable rates are
available (such as for subsidiaries that do not enter into
financing transactions) or when they need to be adjusted to reflect
the terms and conditions of the lease (for example, when leases are
not in the subsidiary's functional currency). The Group estimates
the IBR using observable inputs (such as market interest rates)
when available and is required to make certain entity-specific
estimates (such as the subsidiary's stand-alone credit rating).
(i) Contingent liabilities
A contingent liability arises where a past event has taken place
for which the outcome will be confirmed only by the occurrence or
non-occurrence of one or more uncertain events outside of the
control of the Group, or a present obligation exists but is not
recognised because it is not probable that an outflow of resources
will be required to settle the obligation.
A provision is made when a loss to the Group is likely to
crystallise. The assessment of the existence of a contingency and
its likely outcome, particularly if it is considered that a
provision might be necessary, involves significant judgment taking
all relevant factors into account.
(j) Deferred consideration
As disclosed in Note 28, the Group has recorded a deferred
consideration liability in relation to the obligation to pay Astor
EUR53.0 million out of excess cash from operations at the Proyecto
Riotinto.
In 2018 the discount rate used to value the liability for the
deferred consideration was re-assessed to apply a risk free rate as
required by IAS 37. The discounted amount, when applying this
discount rate, was not considered significant and the Group has
measured the liability for the deferred consideration on an
undiscounted basis.
(k) Share-based compensation benefits
Share based compensation benefits are accounted for in
accordance with the fair value recognition provisions of IFRS 2
"Share-based Payment". As such, share-based compensation expense
for equity-settled share-based payments is measured at the grant
date based on the fair value of the award and is recognised as an
expense over the vesting period. The fair value of such share-based
awards at the grant date is measured using the Black Scholes
pricing model. The inputs used in the model are based on
management's best estimates for the effects of non-transferability,
exercise restrictions, behavioural considerations and expected
volatility. Please refer to Note 23.
(l) Consolidation of Cobre San Rafael
Cobre San Rafael, S.L. is the entity which holds the mining
rights of Proyecto Touro. The Group controls Cobre San Rafael, S.L.
as it is exposed to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its
power over the subsidiary. The control is proven as: one of the two
Directors belongs to the Group and management of the financial
books and the capacity to appoint the key personnel is controlled
by Atalaya.
(m) Classification of financial assets
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value
through OCI, or fair value through profit or loss.
The Group and Company exercises judgement upon determining the
classification of its financial assets upon considering whether
contractual features including interest rate could significantly
affect future cash flows. Furthermore, judgment is required when
assessing whether compensation paid or received on early
termination of lending arrangements results in cash flows that are
not 'solely payments of principal and interest (SPPI).
4. Business and geographical segments
Business segments
The Group has only one distinct business segment, that being
mining operations, which include mineral exploration and
development.
Copper concentrates produced by the Group are sold to three
offtakers as per the relevant offtake agreement (Note 30.3)
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.
2020
(Euro 000's ) Cyprus Spain Other Total
========= ========== ========= ==========
Revenue 30,848 221,936 - 252,784
========= ========== ========= ==========
Earnings/(loss)before Interest, Tax, Depreciation and Amortisation 22,324 45,277 (157) 67,444
Depreciation/amortisation charge (2) (31,681) - (31,683)
Net foreign exchange gain/(loss) (960) (2,870) 4 (3,826)
Impairment of other receivables (49) - - (49)
Finance income - 197 - 197
Finance cost (1) (340) - (341)
========= ==========
Profit/(loss) before tax 21,312 10,583 (153) 31,742
========= ========== ========= ==========
Tax (2,036) 684 - (1,352)
==========
Profit for the year 30,390
==========
Total assets 37,284 466,605 1,157 505,046
========= ========== ========= ==========
Total liabilities (12,271) (142,545) (31) (154,847)
========= ========== ========= ==========
Depreciation of property, plant and equipment 2 25,741 - 25,743
========= ========== ========= ==========
Amortisation of intangible assets - 4,941 - 4,941
========= ========== ========= ==========
Total additions of non-current assets 2 58,650 - 58,652
========= ========== ========= ==========
2019
(Euro 000's ) Cyprus Spain Other Total
========= ========== ========= ==========
Revenue 10,335 177,533 - 187,868
========= ========== ========= ==========
Earnings/(loss)before Interest, Tax, Depreciation and Amortisation 4,195 58,209 (1,071) 61,333
Depreciation/amortisation charge (1) (23,024) - (23,025)
Net foreign exchange gain/(loss) 126 224 - 350
Impairment of other receivables (1,694) - - (1,694)
Finance income 25 27 - 52
Finance cost (1) (88) - (89)
--------- ---------- --------- ----------
Profit/(loss) before tax 2,650 35,348 (1,071) 36,927
========= ==========
Tax (1459) (4,748) - (6,207)
========= ========== ========= ==========
Profit for the year 30,720
==========
Total assets 19,515 422,316 1,476 443,307
Total liabilities (13,823) (111,461) (567) (125,851)
========= ========== ========= ==========
Depreciation of property, plant and equipment 1 12,574 - 12,575
========= ========== ========= ==========
Amortisation of intangible assets - 3,502 - 3,502
========= ========== ========= ==========
Total additions of non-current assets 1 63,498 - 63,499
========= ========== ========= ==========
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.
(Euro 000's) 2020 2019
Segment EUR'000 Segment EUR'000
------------------------ -------- ------- -------
Offtaker 1 Copper 50,611 Copper 35,766
Offtaker 2 Copper 67,012 Copper 53,147
Offtaker 3 Copper 119, 491 Copper 98,955
5. Revenue
THE GROUP
(Euro 000's ) 2020 2019
======== =======
Revenue from contracts with customers (1) 249,438 188,019
Fair value gain/losses relating to provisional pricing within sales (2) 3,346 (151)
======== =======
Total revenue 252,784 187,868
======== =======
All revenue from copper concentrate is recognised at a point in
time when the control is transferred. Revenue from freight services
is recognised over time as the services are provided.
(1) Included within 2020 revenue there is a transaction price of
EUR3.0 million (EUR0.2 million in 2019) related to the freight
services provided by the Group to the customers arising from the
sales of copper concentrate under CIF incoterm.
(2) Provisional pricing impact represented the change in fair
value of the embedded derivative arising on sales of
concentrate.
THE COMPANY
(Euro 000's ) 2020 2019
====== =====
Sales of services to related companies (Note 30.3) 1,442 1,283
1,442 1,283
====== =====
6. Other income
THE GROUP
(Euro 000's ) 2020 2019
===== ====
Gain on disposal of associate - 50
Release of prior year provision - -
Other income - 38
====== ====
- 88
====== ====
THE COMPANY
(Euro 000's ) 2020 2019
===== ====
Gain on disposal of associate - 50
Release of prior year provision - -
Sales of services to related parties (Note 30.3) - 74
====== ====
- 124
====== ====
7. Expenses by nature
THE GROUP
(Euro 000's ) 2020 2019
======== =======
Operating costs 150,253 92,699
Rents (Note 27) 4,509 4,040
Care and maintenance expenditure 369 240
Exploration expenses 1,661 3,588
Employee benefit expense (Note 8) 21,194 20,153
Compensation of key management personnel 2,100 2,105
Auditors' remuneration - audit 229 215
* Other services 19 31
Other accountants' remuneration 111 152
Consultants' remuneration 1,174 1,026
Depreciation of property, plant and equipment
(Note 13) 25,744 12,575
Amortisation of intangible assets (Note 14) 4,941 3,502
Travel costs 140 371
Share option-based employee benefits 816 619
Shareholders' communication expense 178 -
On-going listing costs 235 369
Legal costs 689 448
Public relations and communication development 492 567
Insurances 112 -
Impairment of intangible assets (Note 14) 985 6,948
Impairment loss on other receivables (Note
19) 49 1,694
Other expenses and provisions 1,069 -
======== =======
Total cost of operation, corporate, share based
benefits, care and maintenance,
and exploration expenses 217,069 151,342
======== =======
THE COMPANY
(Euro 000's ) 2020 2019
====== =====
Employee benefit expense (Note 8) - 122
Key management remuneration 656 386
Auditors' remuneration - audit 118 116
* Other services 17 31
Other accountants' remuneration 80 134
Consultants' remuneration 60 159
Management fees (Note 30.3) 55 42
Travel costs 4 13
Shareholders' communication expense 178 181
On-going listing costs 235 188
Legal costs 661 420
Insurances 113 -
Impairment loss on other receivables (Note
19) 45 1,694
Other expenses and provisions (242) (252)
Total cost of corporate, share based benefits
and impairment 1,980 3,234
====== =====
8. Employee benefit expense
THE GROUP
(Euro 000's ) 2020 2019
======= ======
Wages and salaries 15,675 14,599
Social security and social contributions 5,054 4,997
Employees' other allowances 20 21
Bonus to employees 445 536
21,194 20,153
======= ======
The average number of employees and the number of employees at
year end by office are:
Average At year end
========== =============
Number of employees 2020 2019 2020 2019
==== ==== ====== =====
Spain - Full time 482 441 482 446
Spain - Part time 6 6 6 7
Cyprus - Full time 1 3 1 2
Cyprus - Part time 1 - 1 -
==== ==== ====== =====
Total 490 450 490 455
==== ==== ====== =====
THE COMPANY
(Euro 000's ) 2020 2019
===== ====
Wages and salaries - 109
Social security and social contributions - 13
- 122
=================================================== ====
The average number of employees and the number of employees at
year end by office are:
Average At year end
========== =============
Number of employees 2020 2019 2020 2019
==== ==== ======= ====
Cyprus - Full time - 3 - -
==== ==== ======= ====
Total - 3 - -
==== ==== ======= ====
9. Finance income
THE GROUP
(Euro 000's ) 2020 2019
======= ====
Interest income 197 52
197 52
======= ====
THE COMPANY
(Euro 000's ) 2020 2019
========= ======
Interest income from interest-bearing intercompany
loans at fair value through profit and loss
(Note 30.3) 13,607 13,607
Interest income from interest-bearing intercompany
loans at amortised cost (Note 30.3) 2,516 3,198
Interest income 16 25
========= ======
16,139 16,830
========= ======
Interest income relates to interest received on bank
balances.
10. Finance costs
THE GROUP
(Euro 000's ) 2020 2019
==== ====
Interest expense:
Other interest 180 40
Interest expense on lease liabilities 17 8
Unwinding of discount on mine rehabilitation
provision (Note 26) 144 41
341 89
==== ====
11. Tax
THE GROUP
(Euro 000's ) 2020 2019
======= =====
Current income tax charge 3,582 5,158
(Over)/under provision previous years - (302)
Deferred tax related to utilization of losses
for the year (Note 17) 777 256
Deferred tax income relating to the origination
of temporary differences (Note 17) (3,320) 874
Deferred tax expense relating to reversal of
temporary differences (Note 17) 313 221
1,352 6,207
======= =====
The tax on the Group's results before tax differs from the
theoretical amount that would arise using the applicable tax rates
as follows:
(Euro 000's ) 2020 2019
======== =======
Accounting profit before tax 31,742 36,927
======== =======
Tax calculated at the applicable tax rates
of the Company - 12.5% 3,968 4,616
Tax effect of expenses not deductible for tax
purposes 2,334 1,103
Tax effect of tax loss for the year 662 4,021
Tax effect of allowances and income not subject
to tax (3,502) (7,123)
Over provision for prior year taxes - (302)
Effect of higher tax rates in other jurisdictions
of the group 897 2,797
Tax effect of tax losses brought forward (777) (256)
Additional tax - -
Deferred tax (Note 17) (2,230) 1,351
Tax charge 1,352 6,207
======== =======
THE COMPANY
(Euro 000's ) 2020 2019
==== =====
Current income tax charge 928 1,152
(Over)/under provision previous years - (274)
928 878
==== =====
Tax losses carried forward
As at 31 December 2020, the Group had tax losses carried forward
amounting to EUR15.4 million from the Spanish subsidiary for the
period 2008 to 2015.
Cyprus
The corporation tax rate is 12.5%. Under certain conditions
interest income may be subject to defence contribution at the rate
of 30%. In such cases this interest will be exempt from corporation
tax. In certain cases, dividends received from abroad may be
subject to defence contribution at the rate of 17% for 2014 and
thereafter. Under current legislation, tax losses may be carried
forward and be set off against taxable income of the five
succeeding years.
Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defence at
20% for the tax years 2012 and 2013 and 17% for 2014 and thereafter
will be payable on such deemed dividends to the extent that the
shareholders (companies and individuals) are Cyprus tax residents
and Cyprus domiciled. The amount of deemed distribution is reduced
by any actual dividends paid out of the profits of the relevant
year at any time. This special contribution for defence is payable
by the Company for the account of the shareholders.
Spain
The corporation tax rate for 2020 and 2019 is 25%. The recent
Spanish tax reform approved in 2014 reduced the general corporation
tax rate from 30% to 28% in 2015 and to 25% in 2016, and
introduced, among other changes, a 10% reduction in the tax base
subject to equity increase and other requirements. Under current
legislation, tax losses may be carried forward and be set off
against taxable income with no limitation.
12. Earnings per share
The calculation of the basic and diluted earnings per share
attributable to the ordinary equity holders of the Company is based
on the following data:
(Euro 000's ) 2020 2019
========== =======================
Parent company (2,842) (3,997)
Subsidiaries 34,321 41,320
========== =======================
Profit attributable to equity holders of the parent 31,479 37,323
========== =======================
Right of Deferred
Land and use Plant and Assets under mining Other
buildings assets equipment construction(3) costs (2) assets (1) Total
(Euro 000's ) (5)
=========== ========== =========== ================ ========== =========== ==========
2020
Cost
At 1 January 2020 46,063 6,421 248,221 16,517 34,013 781 352,016
Additions - 148 2,278 16,863 7,855 20 27,164
Increase in rehab.
provision 17,954 (7) - - - - - 17,954
Reclassifications - - 17,552(4) (17,552) - - -
Advances 17 - - - - - 17
At 31 December
2020 64,034 6,569 268,051 15,828 41,868 801 397,151
=========== ========== =========== ================ ========== =========== ==========
Depreciation
At 1 January 2020 8,257 391 28,872 - 6,061 620 44,201
Charge for the
year 3,414 565 (6) 19,257 (8) - 2,467 63 25,766
Disposals - - 5 - - 5 10
At 31 December
2020 11,671 956 48,134 - 8,528 688 69,977
=========== ========== =========== ================ ========== =========== ==========
Net book value at
31 December 2020 52,363 5,613 219,917 15,828 33,340 113 327,174
=========== ========== =========== ================ ========== =========== ==========
2019
Cost
At 1 January 2019 45,853 6,144 152,820 62,010 27,537 785 295,149
Additions 210 277 1,171 48,737 6,476 1 56,872
Reclassifications - - 94,230 (94,230) - - -
Disposals - - - - - (5) (5)
At 31 December
2019 46,063 6,421 248,221 16,517 34,013 781 352,016
=========== ========== =========== ================ ========== =========== ==========
Depreciation
At 1 January 2019 6,072 - 20,315 - 4,681 561 31,629
Charge for the
year 2,185 391 8,557 - 1,380 62 12,575
Disposals - - - - - (3) (3)
At 31 December
2019 8,257 391 28,872 - 6,061 620 44,201
=========== ========== =========== ================ ========== =========== ==========
Net book value at
31 December 2019 37,806 6,030 219,349 16,517 27,952 161 307,815
=========== ========== =========== ================ ========== =========== ==========
Weighted number of ordinary shares for the purposes of basic earnings per share ('000) 137,359 137,339
======== ========
Basic profit per share (EUR cents/share) 22.9 27.2
======== ========
Weighted number of ordinary shares for the purposes of diluted earnings per share ('000) 140,511 139,236
========== ==========
Diluted profit per share (EUR cents/share) 22.4 26.8
========== ==========
At 31 December 2020, there are 2,787,000 options (Note 23) and
nil warrants (Note 22) (At 31 December 2019: 2,505,250 options and
nil warrants) which have been included when calculating the
weighted average number of shares for FY2020.
13. Property, plant and equipment
THE GROUP
(1) Includes motor vehicles, furniture, fixtures and office
equipment which are depreciated over 5-10 years.
(2) Stripping costs
(3) Assets under construction at 31 December 2020 amounted to
EUR15.8 million (2019: EUR16.5 million). It includes the
capitalisation of costs related sustaining capital expenses.
(4) Transfers related to sustaining Capex and the Tailing Dam
Project.
(5) See leases in Note 27.
(6) Depreciation includes an adjustment of previous year
amounted to EUR11k.
(7) Increase in lands related with the rehabilitation provision
amounting to EUR17,941k
(8) The increase in the depreciation relate to the completion of
the expansion project in January 2020 and the increase of ore
processed.
The above fixed assets are mainly located in Spain.
THE COMPANY
Other
(Euro 000's ) assets (1) Total
=========== =======
2020
Cost
At 1 January 2020 15 15
Disposals - -
At 31 December 2020 15 15
=========== =======
Depreciation
At 1 January 2020 15 15
Charge for the year - -
At 31 December 2020 15 15
=========== =======
Net book value at 31 December 2020 - -
=========== =======
2019
Cost
At 1 January 2019 15 15
Disposals - -
At 31 December 2019 15 15
=========== =======
Depreciation
At 1 January 2019 15 15
Charge for the year - -
Disposals - -
At 31 December 2019 15 15
=========== =======
Net book value at 31 December 2019 - -
=========== =======
(1) Includes furniture, fixtures and office equipment which are
depreciated over 5-10 years.
The Group
In 2017 the BoD approved an Expansion Project to increase the
plant capacity to 15Mtpa. During 2020, the Expansion Project was
completed with the processing plant fully commissioned and
operating at an increased annualised rate of 15 Mtpa since January
2020.
During FY2020, the Group capitalised personnel costs amounting
to EUR466k (2019: EUR953k).
14. Intangible assets
The Group
Permits (1) Licences, R&D and
Software
(Euro 000's ) T otal
============ ================= ========
2020
Cost
On 1 January 2020 76,538 7,610 84,148
Additions 1,672(2) 1,312 2,984
Disposals - (327) (327)
At 31 December 2020 78,210 8,595 86,805
============ ================= ==========
Amortisation
On 1 January 2020 13,808 7,255 21,063
Charge for the year 4,875 66 4,941
Impairment charge (Note 7) - 985 985
At 31 December 2020 18,683 8,306 26,989
============ ================= ==========
Net book value at 31 December 2020 59,527 289 59,816
============ ================= ==========
2019
Cost
On 1 January 2019 76,538 6,026 82,564
Additions from acquisition of subsidiary - 5,449 5,499
Additions - (3,865) (3,865)
At 31 December 2019 76,538 7,610 84,148
============ ================= ==========
Amortisation
On 1 January 2019 10,370 243 10,613
Charge for the year 3,438 64 3,502
Impairment charge (Note 7) - 6,948 6,948
At 31 December 2019 13,808 7,255 21,063
============ ================= ==========
Net book value at 31 December 2019 62,730 355 63,085
============ ================= ==========
(1) Permits include an amount of EUR5.0 million that relate to
the Proyecto Touro mining rights.
(2) Addition resulting from the acquisition of Atalaya Masa
Valverde SLU.
The useful life of the intangible assets is estimated to be not
less than fourteen years from the start of production (the revised
Reserves and Resources statement which was announced in July 2016
increased the life of mine to 16 1/2 years). In July 2018, the
Company announced an updated technical report on the mineral
resources and reserves of the Proyecto Riotinto. 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.
Atalaya assessed its assets concluding that there are no indicators
of impairment for either Proyecto Riotinto or Atalaya Masa Valverde
as of 31 December 2020. Management decided to impair in 2019 all
the investment (EUR6,948k) referred to exploration and other
related expenses of Proyecto Touro due to the existence of
substantial evidence of impairment based on the negative
Environmental Impact Statement notified by the Xunta de Galicia.
Mining rights relating to Proyecto Touro continue to be carried at
their book value of EUR5.0 million in Permits as their market value
is in excess of the carrying value.
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.
15. Investment in subsidiaries
(Euro 000's ) 2020 2019
====== ======
The Company
Opening amount at cost minus provision for impairment 4,630 3,899
Increase of investment (2) (4) 818 731
Closing amount at cost less provision for impairment 5,448 4,630
====== ======
The directly-owned subsidiaries of the Group, the percentage of
equity owned and the main country of operation are set out below.
These interests are consolidated within these financial
statements.
Effective Effective
proportion of proportion of
Date of Principal Country of shares held in shares held in
Subsidiary incorporation/ activity incorporation 2020 (5) 2019 (5)
companies acquisition
================== =================== =================== ================== ================= =================
Atalaya Touro
(UK) Ltd(1) 10 March 2017 Holding United Kingdom 100% 100%
Atalaya
Minasderiotinto
Project (UK)
Ltd(2) 10 Sep 2008 Holding United Kingdom 100% 100%
EMED Marketing
Ltd 08 Sep 2008 Trading Cyprus 100% 100%
EMED Mining Spain
SLU(3) 12 April 2007 Exploration Spain 100% 100%
Atalaya Financing
Ltd(4) 16 Sep 2020 Financing Cyprus 100% 100%
As security for the obligation on ARM to pay consideration to
Astor under the Master Agreement and the Loan Assignment Agreement,
Atalaya Minasderiotinto Project (UK) Ltd has granted pledges to
Astor Resources AG over the issued capital of ARM and granted a
pledge to Astor over the issued share capital of Eastern
Mediterranean Exploration and Development S.L.U. and the Company
has provided a parent company guarantee (Note 28).
(1) On 10 March 2017, Atalaya Touro (UK) Limited was
incorporated. Atalaya Mining Plc is its sole shareholder.
(2) During the year 2020 there was an increase amounting to
EUR816k in the investment mainly related to the employee benefit
expenses (2019: EUR731k).
(3) In December 2017, EMED Mining Spain S.L.U. increased its
capital by EUR300k from its sole shareholder. This investment
increase was fully impaired in the year.
(4) On 16 September 2020 the Group established a new company in
Cyprus under the name of Atalaya Financing, Limited. The activity
of the new company is financing. The audited consolidated financial
statements include the results of the entity since its
establishment date.
(5) The effective proportion of shares held as at 31 December
2020 and 2019 remained unchanged excluding Eastern Mediterranean
Resources (Caucasus) Ltd which was sold in 2018.
16. Investment in joint venture
Country of incorporation Effective proportion of
C ompany name Principal activities shares
held at 31 December 2015
============================= ============================= ========================== ============================
Exploitation of tailing dams
Recursos Cuenca Minera S.L. and waste areas resources Spain 50%
In 2012 ARM entered into a 50/50 joint venture with Rumbo to
evaluate and exploit the potential of the class B resources in the
tailings dam and waste areas at The Proyecto Riotinto. Under the
joint venture agreement, ARM will be the operator of the joint
venture and will reimburse Rumbo for the costs associated with the
application for classification of the Class B resources. ARM will
fund the initial expenditure of a feasibility study up to a maximum
of EUR2.0 million. Costs are then borne by the joint venture
partners in accordance with their respective ownership
interests.
16. Investment in joint venture (cont.)
The Group's significant aggregate amounts in respect of the
joint venture are as follows:
(Euro 000's ) 2020 2019
====== =====
Intangible assets 94 94
Trade and other receivables 2 2
Cash and cash equivalents 21 21
Trade and other payables (115) (115)
====== =====
Net assets 2 2
====== =====
Revenue - -
Expenses - -
====== =====
Net profit/(loss) after tax - -
====== =====
17. Deferred tax
Consolidated Consolidated
statement of income statement
financial position
(Euro 000's) 2020 2019 2020 2019
----------- --------- ------------ ------
The Group
Deferred tax asset
At 1 January 6,576 7,927 - -
Deferred tax asset due to losses
available against future taxable - - - -
income (Note 11)
Deferred tax related to utilization
of losses for the year (Note
11) (777) (256) 777 256
Deferred tax asset due to losses
available against future taxable - - - -
income overprovision previous
years (Note 11)
Deferred tax income relating
to the origination of temporary
differences (Note 11) 3,319 (874) (3,319) 874
Deferred tax expense relating
to reversal of temporary differences
(Note 11) (313) (221) 313 221
=========== =========
At 31 December 8,805 6,576
Deferred tax income (Note 11) (2,229) 1,351
------------ ------
Deferred tax assets are recognised for the carry-forward of
unused tax losses and unused tax credits to the extent that it is
probable that taxable profits will be available in the future
against which the unused tax losses/credits can be utilised.
In addition to recognised deferred income tax asset, the Group
has unrecognised tax losses in Cyprus that are available to carry
forward for 5 years against future taxable income of the Group
companies in which the losses arose, and in Spain EUR15.4 million
(2019: EUR18.5 million) which are available to carry forward
indefinitely against future profits. Deferred tax assets have not
been recognised in respect of losses in Cyprus as they may not be
used to offset taxable profits elsewhere in the Group, and due to
the uncertainty in profitability in the near future to support
(either partially or in full) the recognition of the losses as
deferred income tax assets.
18. Inventories
(Euro 000's ) 2020 2019
======= ======
The Group
Finished products 8,642 11,024
Materials and supplies 13,764 9,266
Work in progress 1,170 1,040
23,576 21,330
======= ======
As at 31 December 2020, copper concentrate produced and not sold
amounted to 12,180 tonnes (FY2019: 14,201 tonnes). Accordingly, the
inventory for copper concentrate was EUR8.6 million (FY2019:
EUR11.0 million). During the year 2020 the Group recorded cost of
sales amounting to EUR175.5 million (FY2019: EUR115.3 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.
19. Trade and other receivables
(Euro 000's ) 2020 2019
========== =========
The Group
Non-current trade and other receivables
Deposits 48 500
Loans 2,667 -
2,715 500
========== =========
Current trade and other receivables
Trade receivables at fair value - subject
to provisional pricing 20,304 8,798
Trade receivables from shareholders at
fair value - subject to provisional pricing
(Note 30.5) 3,946 8,918
Other receivables from related parties
at amortised cost (Note 30.3) 56 56
Deposits 21 26
VAT receivable 15,826 14,380
Tax advances 9 7
Prepayments 2,507 616
Other current assets 522 56
========== =========
43,191 32,857
Allowance for expected credit losses - -
========== =========
Total trade and other receivables 45,906 33,357
========== =========
(Euro 000's ) 2020 2019
========== =========
The Company
Non-current trade and other receivables
Receivables from own subsidiaries at
amortised cost (Note 30.4) 75,300 80,316
Receivables from own subsidiaries at
fair value through profit and loss (Note
30.4) 243,557 229,686
318,857 310,002
========== =========
Current trade and other receivables
VAT receivable - 47
Receivables from own subsidiaries at amortised
cost (Note 30.4) 10,737 3,996
Total current trade and other receivables 10,737 4,043
========== =============
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 value of trade and other receivables
approximate their book values.
The increase in loans is related to an agreement entered by the
Group and lain Technologies Ltd in relation to the construction of
the Pilot Plan to develop the E-LIX System. The Loan is secured
with the pilot plant, has a grace period of up to four years and
repayment terms depending on future investments on the system.
Amounts withdrawn bears interest at 2%
In 2018, the Company recognised EUR200k prepayment from an
option to acquire a portion of an investment on a company which
held mining rights of a land. In 2019, the Company signed an
agreement to acquire an option over a portion of investment in
another entity. The total amount paid in as prepayment for these
two investments in 2019 was EUR1,494k. After the exploration
processed performed by the Company on both lands, management
decided not to pursue with the execution of both options and
therefore to fully impaired the prepayments in 2019. Set out below
are the movements of the impairment:
(Euro 000's ) 2020 2019
===== ================
The GROUP
1 January - 200
Additions 49 1,494
Impairment (49) (1,694)
At 31 December - -
===== ================
20. Other Financial assets
The Group
(Euro 000's ) 2020 2019
====== =====
Financial asset at fair value through OCI
(see (a)) below) 1,187 1,143
Total current 86 42
====== =====
Total non-current 1,101 1,101
====== =====
THE COMPANY
(Euro 000's ) 2020 2019
===== ====
Financial asset at fair value through OCI
(see (a)) below) 86 42
Total current 86 42
===== ====
a) Financial assets at fair value through OCI
The Group
(Euro 000's ) 2020 2019
====== =====
At 1 January (1) 1,143 71
Additions (3) - 1,101
Fair value change recorded in equity (Note
23) 44 (29)
Reversal of previously impaired - 50
Disposals (2) - (50)
At 31 December 1,187 1,143
====== =====
THE COMPANY
(Euro 000's ) 2020 2019
===== ====
At 1 January (1) 42 71
Fair value change recorded in equity (Note
23) 44 (29)
Reversal of previously impaired - 50
Disposals (2) - (50)
At 31 December 86 42
===== ====
Country Effective proportion
C ompany name Principal activities of incorporation of shares
held at 31 December
2020
===================== ======================== =================== ====================
Explotaciones
Gallegas del Cobre
SL Exploration company Spain 12.5%
Exploration and
development mining
KEFI Minerals company listed on
Plc AIM UK 0.19%
Prospech Limited Exploration company Australia 0.53%
(1) The Group decided to recognise changes in the fair value of
available-for-sale investments in Other Comprehensive Income
('OCI'), as explained in Note 2.12.
(2) On 20 March 2019, the Board of Directors approved the
disposal of the 10% free-carried investment of Atalaya in Eastern
Mediterranean Minerals (Cyprus) Limited, an exploration company
with interest in Cyprus.
(3) In November 2019, Atalaya executed the option to acquire
12.5% of Explotaciones Gallegas del Cobre, S.L. the exploration
property around Touro, with known additional reserves.
21. Cash and cash equivalents
The Group
(Euro 000's ) 2020 2019
====== =====
Cash at bank and in hand 37,767 8,077
====== =====
As at 31 December 2020, the Group's operating subsidiary held
EUR250k (FY2019: EUR250k) as a collateral for bank guarantees,
which was recorded as restricted cash (or deposit). Restricted cash
was reclassified to non-current trade and other receivables (Note
19) since the deposit is considered to be long term.
Cash and cash equivalents denominated in the following
currencies:
(Euro 000's ) 2020 2019
------- -----
Euro - functional and presentation currency 2,431 2,059
Great Britain Pound 2,019 374
United States Dollar 33,317 5,644
======= =====
37,767 8,077
======= =====
The Company
(Euro 000's) 2020 2019
Cash at bank and on hand 2,049 128
===== ====
Cash and cash equivalents denominated in the following
currencies:
Euro - functional and presentation currency 62 97
Great Britain Pound 1,985 29
United States Dollar 2 2
====== ===
2,049 128
====== ===
22. Share capital
Nr. Share Share
Authorised of Shares capital Premium Total
'000' GBP GBP 000's GBP
s 000's 000's
Ordinary shares of GBP0.075
each 200,000 15,000 - 15,000
=========== ========= ============= ========
Issued and fully paid
000's Euro Euro 000's Euro
000's 000's
1 January 2019 137,340 13,372 314,319 327,691
Issue Date Price Details
(GBP)
3 31 December 2019/1
January 2020 137,340 13,372 314,319 327,691
Exercised share
22 Dec 2020 2.015 options (e) 228 19 491 510
Exercised share
22 Dec 2020 1.475 options (e) 41 3 65 68
Exercised share
22 Dec 2020 1.440 options (e) 499 42 758 800
Bonus share to
22 Dec 2020 2.302 former Key management 33 3 81 84
===========
31 December 2020 138,141 13,439 315,714 329,153
===========
Authorised capital
The Company's authorised share capital is 200,000,000 ordinary
shares of GBP0.075 each.
Issued capital
FY2020
a) On 22 December 2020, the Company was notified that certain
employees exercised options over 768,250 ordinary shares of
GBP0.075 at a price between GBP1.44 to GBP2.015, thus creating a
share premium of EUR1,314k.
b) On 22 December 2020, the Company granted a bonus share to a
former Key management of 33,333 ordinary shares of GBP0.075 at a
price GBP2.302.
FY2019
No issuances during the twelve months period ended 31 December
2019.
23. Other reserves
THE GROUP
(Euro 000's
) Fair
value
reserve
of financial
assets Non-distributable Distributable
Depletion at FVOCI reserve reserve(4)
Share Bonus factor (2) (3)
option share (1) Total
At 1 January
2019 6,752 208 5,500 (1,115) 1,446 - 12,791
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
Recognition
of share
based payments 619 - - - - - 619
Change in
fair value
of financial
assets at
fair value
through OCI
(Note 20) - - - (29) - - (29)
Other changes
in reserves - - - - - 249 249
At 31 December
2019 7,371 208 10,878 (1,144) 3,430 2,093 22,836
Recognition
of depletion
factor - - 14,155 - - - 14,155
Recognition
of non-distributable
reserve - - - - 2,198 - 2,198
Recognition - - - - - - -
of distributable
reserve
Recognition
of share
based payments 816 - - - - - 816
Change in
fair value
of financial
assets at
fair value
through OCI
(Note 20) - - - 44 - - 44
Other changes - - - - - - -
in reserves
At 31 December
2020 8,187 208 25,033 (1,100) 5,628 2,093 40,049
the Company
Fair value
reserve of
financial
(Euro 000's ) Share Bonus assets at
option share FVOCI (2) Total
At 1 January 2019 6,752 208 (1,115) 5,845
Adjustment for initial - - - -
application of IFRS 9
Recognition of share based
payments 619 - - 619
Change in fair value of
financial assets at fair
value through OCI (Note
20) - - (29) (29)
======= ====== =======
At 31 December 2019 7,371 208 (1,144) 6,435
Recognition of share based
payments 816 - - 816
Change in fair value of
financial assets at fair
value through OCI (Note
20) - - 44 44
=======
At 31 December 2020 8,187 208 (1,100) 7,295
=======
(1) Depletion factor reserve
During the twelve month period ended 31 December 2020, the Group
has disposed EUR14.2 million (FY2019: EUR5.4 million) as a
depletion factor reserve as per the Spanish Corporate Tax Act.
(2) Fair value reserve of financial assets at FVOCI
The Group decided to recognise changes in the fair value of
certain investments in equity securities in OCI. These changes are
accumulated within the FVOCI reserve under equity. The Group
transfers amounts from this reserve to retained earnings when the
relevant equity securities are derecognised.
(3) Non-distributable reserve
As required by the Spanish Corporate Tax Act, the Group
classified a non-distributable reserve of 10% of the profits
generated by the Spanish subsidiaries until the reserve is 20% of
share capital of the subsidiary.
(4) Distributable reserve
As result of the 2018 profit generated in ARM, the Group decided
to record a distributable reserve in order to comply with the
Spanish Corporate Tax Act.
Details of share options outstanding as at 31 December 2020:
Grant date Expiry date Exercise price GBP Share options
23 Feb 2017 22 Feb 2022 1.44 314,000
29 May 2019 28-May-2024 2.015 1,064,500
8 July 2019 7 July 2024 2.045 400,000
30 June 2020 29 June 2030 1.475 1,008,500
Total 2,787,000
Weighted average
exercise price GBP Share options
At 1 January 2020 1.833 2,505,250
Granted options during the year 1.475 1,050,000
Options executed during the year 1.612 (768,250)
31 December 2020 1.759 2,787,000
On 30 May 2019, the Company announced a grant of 1,500,000 share
options (the "Options") to Persons Discharging Managerial
Responsibilities ("PDMRs") and management, in accordance with the
Company's approved Share Option Plan 2013 (the "Option Plan"). The
Options expire five years from the date of grant (29 May 2019),
have an exercise price of 201.5 pence per ordinary share, based on
the minimum share price in the five days preceding the grant date,
and vest in two equal tranches, half on grant and half on the first
anniversary of the granting date.
On 30 June 2020, the Company announced a grant of 1,050,000
share options (the "Options") to Person Discharging Managerial
Responsibilities ("PDMRs") and key management in accordance to the
Company's approved Share Option Plan 2020 (the "Option Plan"). The
Options expire ten years from the date of grant (30 June 2030),
have an exercise price of 147.5 pence per ordinary share, based on
the minimum share price in the five days preceding the grant date,
and vest in two equal tranches, half on grant and half on the first
anniversary of the granting date.
On 10 July 2019, the Company announced a grant of 400,000 share
options (the "Options") to Person Discharging Managerial
Responsibilities ("PDMRs") in accordance with the Company's
approved Share Option Plan 2013 (the "Option Plan"). The Options
expire five years from the date of grant (8 July 2019), have an
exercise price of 204.5 pence per ordinary share, based on the
minimum share price in the five days preceding the grant date, and
vest in two equal tranches, half on grant and half on the first
anniversary of the granting date.
On 22 December 2020, the Company was notified that certain
employees exercised options over 768,250 ordinary shares of
GBP0.075 at a price between GBP1.44 to GBP2.015 (Note 22 (b)).
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 subdivision 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.
The estimated fair values of the options were calculated using
the Black Scholes option pricing model. The inputs into the model
and the results are as follows:
Weighted Weighted Estimated
average average Expected Risk Expected Fair
Grant share price exercise Expected life Free dividend Value
Date GBP price GBP volatility (years) rate yield GBP
23 Feb 2017 1.440 1.440 51.8% 5 0.6% Nil 0.666
29 May 2019 2.015 2.015 46.9% 5 0.8% Nil 0.66
8 July 2019 2.045 2.045 46.9% 5 0.8% Nil 0.66
30 June
2020 1.475 1.475 50.32% 10 0.3% Nil 0.60
The volatility has been estimated based on the underlying
volatility of the price of the Company's shares in the preceding
twelve months.
24. Non-controlling interest
(Euro 000's ) 2020 2019
Opening balance (2,402) 4,200
Share of results for the year (1,089) (6,602)
Closing balance (3,491) (2,402)
The Group has a 10% interest in Cobre San Rafael, S.L. acquired
in July 2017 while the remaining 90% is held by a non-controlling
interest (Note 2.3 (b) ( 1)). The significant financial information
with respect to the subsidiary before intercompany eliminations as
at and for the year ended 31 December 2020 is as follows:
(Euro 000's ) 2020 2019
Non-current assets 5,111 5,096
Current assets 706 580
Non-current liabilities - -
Current liabilities 9,697 8,345
Equity (3,879) (2669)
Revenue - -
Loss for the year and total comprehensive income (1,210) (7,336)
Cobre San Rafael, S.L. was established on 13 June 2016.
* 10% interest in Cobre San Rafael, S.L. was acquired by the
Group in July 2017.
25. Trade and other payables
THE GROUP
(Euro 000's ) 2020 2019
Non-current trade and other payables
Other non-current payables 1,435 -
Government grant 13 13
1,448 13
Current trade and other payables
Trade payables 63,946 52,395
Land options and mortgage - 282
Accruals 4,355 4,860
VAT payable 60 -
Other 76 -
68,437 57,537
THE COMPANY
(Euro 000's ) 2020 2019
Current trade and other payables
Suppliers 753 21
Accruals 809 1,744
Payable to own subsidiaries (Note 30.4) 11,380 8,507
VAT payable 60 -
13,002 10,272
Other non-current payables are related with the acquisition of
Atalaya Masa Valverde former Cambridge Minería España, SL (see note
29).
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.
The Group's exposure to currency and liquidity risk related to
liabilities is disclosed in Note 3.
Trade payables are non-interest-bearing and are normally settled
on 60-day terms.
26. Provisions
THE GROUP
(Euro 000's ) Legal Rehabilitation Total
1 January 2019 127 6,392 6,519
Additions 284 138 422
Revision of provision (23) (18) (41)
Finance cost (Note 10) - 41 41
31 December 2019/1 January 2020 388 6,553 6,941
Additions 311 - 311
(Reduction) / addition of provision (73) 17,941 17,868
Finance cost (Note 10) - 144 144
31 December 2020 626 24,638 25,264
(Euro 000's ) 2020 2019
Non-Current 25,264 6,941
Current - -
Total 25,264 6,941
Rehabilitation provision
Rehabilitation provision represents the estimated cost required
for 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.
During 2020, Management engaged an independent consultant to
review and update the rehabilitation liability. The updated
estimation includes the expanded capacity of the plant and its
impact on the mining project. The key comparative figures are:
Key numbers 2020 2019
Undiscounted liability at the
end of the Project (1) Euro 31,007,410 11,617,030
Undiscounted liability affected
as at reporting date Euro 25,334,377 7,870,243
Life of mine (3) Years 13.8 13.8
Restoration period Years 20 13.8
Average inflation rate used % 0.8800% 1,50%
Discount rate (2) % 1.3580% 1.8700%
Discounted liability Euro 24,638,008 6,553,094
(1) Total undiscounted liability in 2019 was EUR9.3 million with
an extra 25% provision
(2) The discount rate used in the calculation of the net present
value of the liability as at 31 December 2020 was 1.36% (2019:
1.87%), which is the average of the 15-year Spain Government Bond
rate from 2016 to 2020.
(3) In July 2018, the Company announced an updated technical
report on the mineral resources and reserves of the Proyecto
Riotinto. 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 expected payments for the rehabilitation work are as
follows:
(Euro 000 's) Between Between Between
1 - 5 Years 6 - 10 Years 10 - 20 Years
Expected payments for rehabilitation of the mining site, discounted 4,704 3,247 16,687
Legal provision
The Group has been named as defendant in several legal actions
in Spain, the outcome of which is not determinable as at 31
December 2020. Management has reviewed individually each case and
made a provision of EUR626k (EUR388k in 2019) for these claims,
which has been reflected in these consolidated financial
statements. (Note 32)
27. Leases
(Euro 000's) 31 Dec 2020 31 Dec 2019
Non-current
Leases 4,796 5,265
4,796 5,265
Current
Leases 592 588
592 588
The Group entered into lease arrangements for the renting of
land, laboratory equipment, a building and vehicles which are
subject to the adoption of all requirements of IFRS 16 Leases (Note
2.2). 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.
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) Lands Vehicles equipment Total
and buildings
As at 1 January
2020 5,750 44 237 6,031 5,853
Additions 135 - - 135 135
Depreciation expense (469) (15) (69) (553) -
Interest expense - - - - 17
Payments - - - - (617)
-----------
As at 31 December
2020 5,416 29 168 5,613 5,388
The amounts recognised in profit or loss, are set out below:
Twelve month Twelve month
ended ended
31 Dec 31 Dec
(Euro 000's) 2020 2019
As at 31 December
Depreciation expense of right-of-use
assets (553) (391)
Interest expense on lease liabilities (17) (8)
Total amounts recognised in profit or
loss (570) (399)
The Group recognised rent expense from short-term leases (Note
7).
Depreciation expense regarding leases amounts to EUR0.5 million
(2019: EUR0.3) for the twelve month period ended 31 December
2020.
The duration of the land and building lease is for a period of
twelve years. Payments are due at the beginning of the month
escalating annually on average by 1.5%. At 31 December 2020, the
remaining term of this lease is twelve years. (Note 2)
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 31 December
2020, the remaining term of this motor vehicle and laboratory
equipment lease is two years and two and half years
respectively.
(Euro 000's) 31 Dec 2020 31 Dec
2019
Minimum lease payments due:
* Within one year 592 588
* Two to five years 2,068 2,134
* Over five years 2,728 3,131
Less future finance charges - -
Present value of minimum lease payments
due 5,388 5,853
Present value of minimum lease payments
due:
* Within one year 592 588
* Two to five years 2,068 2,134
* Over five years 2,728 3,131
5,388 5,853
(Euro 000's) Lease liability
Balance 1 January 2020 5,853
Additions 135
Interest expense 17
Lease payments (617)
Balance at 31 Dec 2020 5,388
Balance at 31 Dec 2020
* Non-current liabilities 4,795
* Current liabilities 592
5,388
28. 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 among other items. 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). "Excess cash"
is not defined in the Master Agreement leaving ambiguity as to how
it is to be calculated.
On 2 March 2020, the Company filed an application in the High
Court to seek clarity on the definition of "Excess Cash". The
Company and Astor have now exchanged statements of case to set out
their formal position. The trial is listed to be heard from 21
February 2022 (the "Trial"). Following the filing of the statements
of case for the Trial, Astor applied to Court seeking an early
determination (without the need for a full trial) of the dispute in
relation to the "Excess Cash" (the "Summary Judgment application").
The Summary Judgment application will be heard on 14-15 June 2021.
Astor will need to demonstrate (i) Atalaya has no reasonable
prospect of success at Trial: and (ii) there is no other compiling
reason why the case or issue should be disposed of at Trial.
As at 31 December 2020, no consideration was paid to Astor.
However, during December 2020 the Board had discussions and
considered an early payment of the Deferred Consideration and the
Loan Assignment provided certain conditions could be met.
Conditions included among others the execution of credit facilities
agreements to fund the payment.
The Company classified the liability as current as at 31
December 2020.
On 15 March 2021, the Company fulfilled all conditions required
by the Board of Directors and made the early payment of EUR53
million to Astor. The payment was fully funded by unsecured credit
facilities entered into between December 2020 and February 2021 at
interest rates ranging from 1,60% to 2,45% and repayable by 2023
and 2024.
The payment of the Deferred Consideration does not end the
ongoing litigation as the issue as to whether any residual interest
may or may not be payable remains unresolved. Consequently, the
Company continues with these aspects of the case.
29. Acquisition, incorporation and disposals of subsidiaries
2020
Acquisition and incorporation of subsidiaries
On 16 September 2020 the Group established a new company in
Cyprus under the name of Atalaya Financing, Limited. The activity
of the new company is financing. The unaudited interim condensed
consolidated financial statements include the results of the entity
for half month period since the acquisition date:
On 15 October 2020, the Company acquired 100% of the voting
shares of Cambridge Minería España, SL, a company located in Huelva
(Spain) that holds exploration permits for Masa Valverde
polymetallic project located in Huelva (Spain) for EUR1.4 million
payable in two instalments.
Disposals of subsidiaries
There were no disposals of subsidiaries during the year.
2019
Acquisition and incorporation of subsidiaries
There were no acquisition nor incorporation of subsidiaries
during the year.
Disposals of subsidiaries
There were no disposals of subsidiaries during the year.
Wind-up of subsidiaries
There were no operations wound-up during FY2020 and FY2019.
30. Group information and related party disclosures
30.1 Information about subsidiaries
These audited consolidated financial statements include:
Effective proportion
of shares held
Parent Principal activity Country of
Subsidiary companies incorporation
Atalaya Touro (UK) Ltd Atalaya Mining Plc Holding United Kingdom 100%
Atalaya Financing
Limited Atalaya Mining Plc Financing Cyprus 100%
Atalaya
MinasdeRiotinto
Project (UK) Limited Atalaya Mining Plc Holding United Kingdom 100%
EMED Marketing Ltd Atalaya Mining Plc Trading Cyprus 100%
EMED Mining Spain
S.L.U. Atalaya Mining Plc Exploration Spain 100%
Atalaya
Atalaya Riotinto MinasdeRiotinto
Minera S.L.U. Project (UK) Limited Production Spain 100%
Eastern Mediterranean Atalaya
Exploration and MinasdeRiotinto
Development S.L.U. Project (UK) Limited Exploration Spain 100%
Cobre San Rafael, S.L. Atalaya Touro (UK)
(1) Limited Exploration Spain 10%
Recursos Cuenca Minera Atalaya Riotinto Exploration Spain J-V
S.L.U. Minera SLU
Fundacion Atalaya Atalaya Riotinto
Riotinto Minera SLU Trust Spain 100%
Atalaya
Atalaya Servicios MinasdeRiotinto
Mineros, S.L.U. Project (UK) Limited Dormant Spain 100%
Atalaya Masa Valverde Atalaya Servicios
S.L.U. (2) Mineros, S.L.U. Exploration Spain 100%
(1) Cobre San Rafael, S.L. is the entity which holds the mining
rights of The Proyecto Touro. The Group has control in the
management of Cobre San Rafael, S.L., including one of the two
Directors, management of the financial books and the capacity of
appointment the key personnel (Note 2.3 (b) (1)).
(2) Cambridge Mineria Espana, S.L.U. changed its name to Atalaya
Masa Valverde, S.L.U on 28 November 2020.
The following transactions were carried out with related
parties:
30.2 Compensation of key management personnel
The total remuneration and fees of Directors (including
executive Directors) and other key management personnel was as
follows:
The Group The Company
(Euro 000's ) 2020 2019 2020 2019
Directors' remuneration and fees 1,044 1,319 572 536
Director's bonus (1) 305 325 - -
Share option-based benefits to
Directors 291 173 - -
Key management personnel remuneration
(2) 522 765 - -
Key management bonus (1) 182 740 - -
Key management share bonus (3) 84 - - -
Share option-based and other benefits
to key management personnel (4) 374 267 - -
======
2,802 3,589 572 536
======
(1) These amounts related to the approved performance bonus for
2019 by the Board of Directors following the proposal of the CGNC
Committee. The 2020 estimates recorded are not included in the
table above as this is yet to be approved by the Board of
Directors. There is no certainty or guarantee that the Board of
Directors will approve a similar amount for 2020 performance.
(2) Includes wages and salaries of key management personnel of
EUR506k (2019: EUR730k) and other benefits of EUR16k (2019:
EUR35k).
(3) In December 2020, a former key management employee was
granted with 33,333 shares.
(4) Includes share option of a former key management
employee.
At 31 December 2020 amounts due to Directors, as from the Group,
are EURnil (EURnil million at 31 December 2019) and EURnil million
(EUR0.5 million at 31 December 2019) to key management.
At 31 December 2020 amounts due to Directors, as from the
Company, are EURnil (EURnil at 31 December 2019) and EURnil (EURnil
million at 31 December 2019) to key management.
Share-based benefits
In 2020, the Directors and key management personnel have been
granted 1,050,000 options (2019: 1,650,000 options) (see note
23).
During 2020 the Directors and key management personnel have not
been granted any bonus shares (2019: nil).
30.3 Transactions with shareholders and related parties
THE GROUP
(Euro 000's ) 2020 2019
Trafigura- Revenue from contracts 49,775 33,179
Freight services - -
49,775 33,179
Gains relating provisional pricing within
sales 837 2,587
Trafigura - Total revenue from contracts 50,592 35,766
50,592 35,766
======
THE COMPANY
(Euro 000's ) 2020 2019
Sales of services (Note 5):
* EMED Marketing Limited 749 690
* Atalaya MinasdeRiotinto Project (UK) Limited 693 593
======
1,442 1,283
======
Other income services (Note 6):
* EMED Marketing Limited - 74
Purchase of services (Note 7):
* Atalaya Riotinto Minera SLU (55) 42
Finance income (Note 9):
Atalaya MinasdeRiotinto Project (UK) Limited
- Finance income from interest-bearing loan:
* Credit agreement - at amortised cost 970 1,644
* Participative loan - at fair value through profit and
loss 13,606 13,607
* Credit facility - at amortised cost 1,547 1,554
16,123 16,805
======
THE GROUP
(Euro 000's ) 2020 2019
Current assets - Receivable from related
parties (Note 19):
Recursos Cuenca Minera S.L. 56 56
56 56
The above balances bear no interest and are repayable on
demand.
30.4 Year-end balances with related parties
THE COMPANY
(Euro 000's ) 2020 2019
Non-current assets - Loan from related parties
at FV through profit and loss (Note 19):
Atalaya MinasdeRiotinto Project (UK) Limited
- Participative Loan (1) 243,545 229,686
Atalaya MinasdeRiotinto Project (UK) Limited
- Eastern Participative Loan (5) 12 -
Total 243,557 229,686
Non-current assets - Loans and receivables
from related parties at amortised cost (Note
19):
Atalaya MinasdeRiotinto Project (UK) Limited
- Credit Expansion Loan (2) 45,138 43,591
Atalaya MinasdeRiotinto Project (UK) Limited
- Credit Agreement (3) 27,412 26,442
Atalaya Riotinto Minera SLU (4) - 9,117
EMED Marketing Limited (4) 892 -
Atalaya MinasdeRiotinto Project (UK) Limited
(4) 1,858 1,166
Total 75,300 80,316
Current assets - Loans and receivables from
related parties at amortised cost (Note 19):
Atalaya Riotinto Minera SLU (4) 9,117 -
Atalaya Touro (UK) Limited (4) 1,618 1,611
EMED Marketing Limited (4) - 2,385
Atalaya Financing Ltd 2 -
Total 10,737 3,996
(1) This balance bears interest of 6.75% (2019: 6.75%).
(2) This balance bears interest of EURIBOR 6m plus 4% (2019:
LIBOR 6month + 4.00%).
(3) This balance bears interest of EURIBOR 12month plus 4%
(2019: 12month plus 4%). The Note Facility Agreement expired on 29
September 2019. The Group signed on 30 September 2019 a new Credit
Agreement for the amount due of the Note Facility Agreement bearing
a EURIBOR 12month plus 4% interest and maturing on 30 September
2024
(4) These receivables bear no interest These balances are
repayable on demand. However, management will not claim any
repayment in the following twelve months period after the release
of the current consolidated financial statements.
(5) This balance bears interest of 3.00% (2019: 3.00%).
THE COMPANY
(Euro 000's ) 2020 2019
Payable to related party (Note 25):
EMED Marketing Limited 10,808 7,990
EMED Mining Spain S.L. 262 262
Atalaya Riotinto Minera S.L.U. 310 255
11,380 8,507
The above balances bear no interest and are repayable on
demand.
30.5 Year-end balances with shareholders
(Euro 000's ) 2020 2019
Receivable from shareholders (Note 19):
Trafigura - Debtor balance -subject to
provisional pricing 3,946 8,918
3,946 8,918
The above debtor balance arising from the pre-commissioning
sales of goods bear no interest and is repayable on demand.
31. 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.
32. Commitments
There are no minimum exploration requirements at Proyecto
Riotinto. However, the Group is obliged to pay local land taxes
which currently are approximately EUR235,000 per year in Spain and
the Group is required to maintain the Riotinto site in compliance
with all applicable regulatory requirements.
In 2012, ARM entered into a 50/50 joint venture with Rumbo to
evaluate and exploit the potential of the class B resources in the
tailings dam and waste areas at Proyecto Riotinto (mainly residual
gold and silver in the old gossan tailings). Under the joint
venture agreement, ARM will be the operator of the joint venture,
will reimburse Rumbo for the costs associated with the application
for classification of the Class B resources and will fund the
initial expenditure of a feasibility study up to a maximum of
EUR2.0 million. Costs are then borne by the joint venture partners
in accordance with their respective ownership interests.
33. Significant events
COVID-19 outbreak
The Company issued COVID-19 updates through the year as the
outbreak of the virus impacted the company both operationally and
financially. As announced on 30 March 2020, a Royal Decree of 29
March 2020 excluded mining from essential industries resulting in
the halting of operations at Proyecto Riotinto from 30 March 2020.
As announced on 6 April 2020, further clarifications were received
on the Royal Decree on 3 April 2020 which reinstated mining on the
list of permitted activities and accordingly, operations at
Proyecto Riotinto were authorized to recommence.
It is Atalaya's priority to protect its workforce and the local
communities surrounding both Proyecto Riotinto and Proyecto Touro.
Atalaya has followed and continues following the requirements and
recommendations issued by the Government of Spain and the regional
and local health authorities at all times to reduce the risk of
COVID-19 exposure and avoid the spread of the virus.
In order to mitigate the potential operational and financial
impact of COVID-19 resulting from a sharply decrease in commodities
prices, the Company increased its cash balance from EUR8.1 million
as at 31 December 2019 to EUR32.4 million as at 30 June 2020 by net
drawdowns on existing credit facilities. Following the recoveries
of the commodities prices, the Company has repaid the credit
facilities as of 31 December 2020.
AAU Permits
The Junta de Andalucía issued a favourable report in relation to
the Unified Environmental Authorisation (the "AAU") of Proyecto
Riotinto in January 2020. After a short legal consultation period
exclusively with parties involved in the process lapses, The
Company now has the AAU revalidated with no impact on the
operation.
Negative Environmental Impact Statement on Proyecto Touro
The "Dirección Xeral de Calidade Ambiental e Cambio Climático",
(the General Directorate for the Environment and Climate Change of
Galicia), announced on 28 January 2020 that a negative
Environmental Impact Statement for Proyecto Touro (Declaración de
Impacto Ambiental) had been signed.
The short release stated that the decision was based on two
reports which form part of a wider evaluation consisting of fifteen
reports produced by different departments of the Xunta de Galicia.
These two reports challenge the ability of the Company to guarantee
that there will be no environmental impact of the Project on the
Ulla River and related protected ecosystems which are located
downstream.
On 1 March 2021 the formal communication from the Xunta de
Galicia was received. The Company along with its advisers, is
evaluating potential next steps for the Project, which could
include an appeal of the decision made by the Xunta de Galicia,
and/or the clarification of the questions raised by the
reports.
New group entity
In 2020, the Company has initiated the process to establish in
Cyprus a new subsidiary under the name of Atalaya Financing,
Limited. The activity of this new company will be financing.
On 21 October 2020, Atalaya announced that it had entered into a
definitive purchase agreement to acquire 100% of the Masa Valverde
polymetallic project located in Huelva (Spain) through the
acquisition of 100% of a Spanish company for EUR1.4 million payable
in two instalments. Masa Valverde is one of the largest undeveloped
volcanogenic massive sulphide deposits in the prolific Iberian
Pyrite Belt and is located 28kms south west of Proyecto
Riotinto.
34. Events after the reporting period
Depending on the duration of the COVID-19 pandemic, and
continued negative impact on economic activity, the Group might
experience negative results, and liquidity restraints and incur
impairments on its assets in 2021. The exact impact on the Group's
activities in 2021 and thereafter cannot be predicted. In the
period since 31 December 2020 the Group has not incurred losses due
to impairments. Refer to note 19.
On 10 February 2021, the Company announced that its Board of
Directors had appointed Mr. Neil Gregson as an independent
Non-Executive Director of the Company.
On 12 February 2021, the Company was notified that certain
employees exercised options over 40,750 ordinary shares of
GBP0.075.
On 1 March 2021, Atalaya received the formal communication from
Xunta de Galicia of the negative Enviromental Impact Declaration on
Proyecto Touro (Note 33).
In March 2021, the Board of Directors of the Company decided to
make an early payment of the Deferred Consideration and the Loan
Assignment related to Astor. The Payment was completed in March
2021 (Note 28).
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