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MINING | Atalaya Mining
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ATALAYA MINING Multi-asset copper production in Spain
MINING | Atalaya Mining
The company that is today called Atalaya Mining first started trading on London’s Alternative Investment Market (AIM) in May 2005. Exactly two years later, the company (then called EMED Mining) was granted an option to acquire the Rio Tinto Copper Mine known as Proyecto Riotinto in Spain. However, it was not until 2014 that Atalaya received the approved Unified Environmental Authorisation (AAU) for the project, which set the foundations for the firm to begin construction and refurbishment of the historically producing mine a year later. By 2016, Riotinto had commenced commercial production and during the past three years Atalaya has expanded the facilities at the mine and acquired an interest in another copper project in Spain. Atalaya’s phased, earn-in agreement to acquire up to 80% ownership of Proyecto Touro, a brownfield copper project in Spain’s Northwest, represents a key step towards the company goal of becoming a leading multi-asset copper producer in Europe. “We are still a small company compared with the big producers, but we are on the
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MINING | Atalaya Mining way towards becoming a mid-tier copper
quartet of cornerstone investors that are well
producer,” says Atalaya’s CEO and director
renowned across the mining industry.
Alberto Lavandeira. Multinational commodity trading company “There is a lack of companies on the London
Trafigura and Chinese smelting company
market, and on European markets in general,
Yanggu Xiangguang Copper each hold around
that are pure copper producers. This means
22% of the company, while private equity
we give investors greater leverage to pure
group Liberty Metals & Mining Holdings LLC
copper, as opposed to a larger multi-
and Orion Mine Finance own around 14%
commodity company.”
and 13% respectively.
Strong institutional backing
“These shareholders have been very supportive when the markets were down,
Despite Lavandeira’s acknowledgement that
which has been important because we
the company is not yet competing with the
needed capital and these guys were there.
major producers, Atalaya is backed by a
Resource Global Network It’s a blessing to have these powerful
“The main benefit of being in a European
shareholders, but we also have supportive
country is you don’t have the same country
smaller funds from the UK, Spain, Italy and
risk as you might have in South American,
the US.”
Asian and African countries,” Lavandeira asserts.
A key aspect of the business that has filled investors with confidence is the location of
“Secondly, both projects are close to
Atalaya’s assets in Spain – a stable jurisdiction
industrial areas where there are smelters,
with an established mining sector and
refineries, fertiliser sources and so on. This
excellent infrastructure in place around the
gives you a pool of educated and trained
mines.
MINING | Atalaya Mining
people and allows you to make things of a
of Seville, that is 100% owned by Atalaya
very good quality.
through its Spanish subsidiary. The current plant was built over 30 years ago and
“There is no need for camps either, so people
operated by Rio Tinto until 2000, when it was
can go to sleep in their houses. There are
placed on care and maintenance due to low
also universities, good communications and
copper prices.
ports close by in both locations.” “The first thing we did was put together a The close proximity of Atalaya’s assets to
good, experienced team that would be able
industrial centres and existing infrastructure
to lead the initial refurbishment phase. It was
has also allowed for the projects to be
an installation that had been built over 30
developed at a low capital intensity, especially
years ago, so there were lots of things we had
when compared to conventional copper
to fix including electronics and piping, plus
mines that are usually found in remote
additional equipment to install.”
locations.
Restarting Riotinto
The restart phase of the project was completed in February 2016, when first
Proyecto Riotinto is an open pit copper mine
commercial production was declared at an
in the Iberian Pyrite Belt, 65 km Northwest
initial processing rate of 5 million tonnes
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wasted no time in starting an expansion
Steady production growth
project to better capitalise on the +25 years
While the current expansion phase is not due
mine life at Riotinto.
to be completed until mid-2019, Atalaya’s
of ore per annum (Mtpa). However, Atalaya
ambitious growth plan at Riotinto has already The expansion phase aimed to increase
resulted in steady production progress
processing capacity to 9.5Mtpa and was
over 2018, which culminated in a record Q4
duly completed on time and on budget.
performance.
Now, the company is close to finalising the third phase of the project, which will boost
The company produced a record 11,172
capacity to 15Mtpa and allow for a nameplate
tonnes of copper in the final quarter of
production rate of 50-55,000 tonnes of
last year, contributing to a full-year haul of
copper per year.
42,114 tonnes. Considering this impressive 2018 performance and its track record of
“This is impressive when you consider its only
delivering consistent near-term growth,
five years since we received the mining rights
Atalaya has set its 2019 production guidance
for Riotinto and four years since we started
at 45-46,500 tonnes.
the refurbishments,� says Lavandeira. Atalaya has also identified additional underground potential for base metals
MINING | Atalaya Mining including copper, zinc and lead in adjacent orebodies at Riotinto, and has subsequently set aside €2.57 million for its exploration budget this year. “The life of a mining company is dependent on continued exploration as assets get depleted. Therefore, it’s important to set aside a percentage of annual revenues for exploration, otherwise you have a limited life. “We have not fully discovered the extent of the mineralisation around Riotinto. It has a lot of potential and we plan to drill the areas where we know there is something. We plan to define resources and add to our reserve life.” Atalaya acquired a 10% interest in Proyecto Touro in 2017, before quietly undertaking two years of drilling and engineering studies without making a single announcement. The project is currently at the permitting phase, with the ball in the court of the Spanish authorities after the company submitted all the relevant studies and stakeholder communications. Once the authorities return the crucial environmental impact statement (EIS) and Atalaya agrees to the various conditions laid out in the EIS, the company will exercise an option for an additional 30% interest in Touro. Then, once project financing is secured and construction commences, Atalaya will
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Alberto Lavandeira, Atalaya Mining CEO
MINING | Atalaya Mining
exercise another 30%, taking its total interest
to exercise our option for at least 70% by
in the project to 70%. To reach the maximum
mid-2019, which is when the permit could
80% interest, the company would then make
possibly come through.�
a simple decision to increase its interest by another 10%.
Another low cost asset Atalaya completed a pre-feasibility study
“We are expecting things to go well from a
(PFS) for an open pit mine and concentrator
permitting point of view this year. We hope
in April 2018. The PFS indicated that Touro
Resource Global Network In addition, the PFS also provided strong project economics with a net present value of US$180 million and a life of mine total free cash flow of $489.3 million. However, Lavandeira is most pleased with the low capital and operating costs indicated in the PFS. “This is a project that has a very low capital intensity. It is not as low as initially thought because we have to spend $165 million on pre-production expenditure, but it is still very low because we are very close to a town, an airport, motorways and a port. “The results have been good and that is why capex is modest compared to others. The project has a lot of potential for upside, we have very good exploration ground, so this is only going to be the starting point.” The Atalaya team has a strong track record of delivering growth and shareholder value, and given the recent progress made at its two low cost assets in Spain, Lavandeira has every confidence in his team continuing to deliver growth on time and on budget. “Not only are we looking at these Spanish projects, we are also looking at other contained 392,000 tonnes of copper and 2.1
opportunities in Europe and other parts
million ounces of silver, which would give an
of the world, where we can leverage our
average annual production of 30,000 tonnes
experience. We are quite sure this company
of copper and 70,000 ounces of silver.
will continue growing.”
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Published by Anderson Murray Media Ltd
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