Good afternoon, and welcome to the Atalaya Mining plc investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO, Alberto Lavandeira. Good afternoon to you.
Hello, thank you very much, thanks. Welcome, everybody. Thank you. Thank you for attending this presentation. We will try, as usual, to be brief and leave some time to questions. We are here to look at the results, the quarterly results, the financial results, as well as looking at the advance of the company during these 3 months and our plans for the near-term future. With me, I will have César Sánchez, the CFO of the company, which will reply to some of the questions related to the listing and to some other legal things. The summary of our results is included in slide 6, and without trying to read all the numbers, which you are happy to go through, we had already pre-released the production results.
Production of 12.5 thousand tons of copper during the quarter, getting the total to today to close to 39,000 tons, with cash costs of $2.82, accumulated to $1.76, and all-in costs accumulated around $3.07 for the year, which are taking us to the outlook for the year of around 53,000-54,000 tons of copper. Now, we are in mid-November, due to some heavy rains experienced during the quarter, the current quarter, we will likely be in the lower range of that 53,000-54,000 anyway. Very, very close to what we had already agreed. And the cash costs, it looks like we are going to be also within the range that we had set, the all-in costs.
With all that, we had a quite good, I would say, results, probably better than the consensus, with a bit of 19 million, which is equivalent to EUR 60 million, year to date. There was one reason for this, let's say, better results is the electricity prices were lower than previous years. Still high, still high. And besides that, we continue having a very good balance sheet, with a net cash position of around EUR 67 million. And this is after continuing to invest in the solar plant and continuing to invest in the E-LIX plant, including dividend payments and also including, of course, the ongoing capital. So even with this kind of lowish copper price, the company continued to generate cash during the quarter.
We have made some changes within the board. Not the board has not changed, but some of the roles of each of the directors have been changed a little bit. And the most important thing from the corporate point of view is that we have announced that we are going to apply to move from AIM to the Main Market. That has already been done, and we are in the process of doing that, and I think we are just pending some technicalities and finalizing some documents, but we are following our plan to do this before the year-end. And in addition to that, which although they're not necessary, they are linked, but not necessarily, also the redomiciliation to move, redomicile the company from Cyprus to Spain.
There are several reasons for that, and this part of them are as a result of the Brexit and the fact that the U.K. is no longer in the E.U. From the assets point of view, from an investment point of view, we continue to progress. We continue to progress the construction of E-LIX. Things are moving quite fast, and the solar plant is also moving quite fast. And especially the important thing is that we got already some authorizations for the extensions of the mine life in Riotinto, which include the expanded tailings for 150 million tons. So this is a huge achievement. Also got the AU for Masa Valverde to be able to extract ore from there and treat it in our plant.
The most important point here is that we are advancing with a stakeholder and permitting in Touro. As you can see, Touro is the most important thing. It doesn't seem to be progress, but there is progress. There is progress with the paperwork being done, and especially from the Xunta, making some new laws in order to speed it and to permit projects and specifically mining projects. This new law is going to be coming into place in the beginning of the year. So going directly, health and safety, you can read the things which I think we had already mentioned in the past. Publication of our sustainability report, and then certain data that we continue to operate safely in this company.
Going directly into the data, that you just mentioned, just a few remarks. The plant continued to perform well, within the line, well over the 15 million tons design capacity. Recovery also, going well, better than planned. And the production was slightly lower, and this is a result of maybe basically lower grade. Lower grade is a result of the way, that we are going through the pit, and we believe this thing is going to be improving in the near months, because we are going through an area of lower grade at the pit. As a result of that production, sales, as I said before, slightly higher due to a little bit better copper prices than the previous quarter.
The most important thing is also EBITDA going better than the previous quarter, and as a result of that, the cash flow and the net cash position continues to be good, similar to the previous quarters. In spite of having distributed a dividend, and also having continued to invest in several projects, in growth projects at the site. We ended the quarter with 120 million EUR in cash, which is a good position to have, and with borrowings of EUR 52 million, having paid some of the lines of credit. And we continue to have a good working capital surplus of around 77 million EUR, which is basically around $85 million.
Part of this is the improvement of the market in the electricity market. But as you can see, actually, Q3, due to the summer months, very similar to what happened in the previous year, has been higher than the previous quarter, but of course, much lower, less than half what happened in the year 2022. You can see it very well in the graph. In year 2022, our cost of electricity was EUR 300/MWh, and this one, this year, was EUR 120/MWh. In addition to that, as you know, a power purchase agreement for around 30% of our needs, and so the average result has been lower than that.
The good news is also as expected that the electricity prices have been so far in October and November lower than the previous quarters. Also, it happens in previous years, and it should continue to happen in January, due to the strong winds and very strong winds, very strong storms and rains in Spain, which reduce the need of gas although the gas prices are slightly higher. So I think this is all going well in the good direction. From the cost point of view, a very, I would say, flattish quarter in general in mining and in process. But you can see that the cost of the quarter have been slightly higher in mining and processing.
This is basically due to the still the inflation that's, we can still see in explosives, diesel, and gas. Gas is affecting lime. But also is the effect of lower production due to the lower grade. And then most of the costs are cost per ton, and the effect of that is that we have slightly higher costs in a cost per pound basis. But we... Overall, overall, there are $0.06 difference in Cash Costs versus the year to date, and well below what happened in the previous years. You can see that we have had a capitalized stripping, high capitalized stripping.
This is due to the start of the waste movement in San Dionisio and also at Cerro Colorado, our current pit, in anticipation of starting to move in the new pit called San Dionisio, because the contractor is only getting the new trucks and escalator by June. So they had to advance a little bit more with their equipment during this quarter, and they will continue to be doing that in the next quarter before we get ready with the supply of the equipment. But of course, overall, this does not change at all the strip ratio of Cerro Colorado, which is a little bit less than 2-to-1. Going... Comparing with our peers, we always show this picture. We continue to try to control our costs.
I think we are in a good shape with comparing with other peers similar to us. And the first thing you will notice is that the tendency of increase, of course, that you experienced in 2022, has been stopped, while in other companies, this has continued due to several factors. So with this, we continue to generate cash. Well, there's only one and a half months to go. So as I said before, the guidance, there's no reason to make changes in the guidance. We will, we will be likely in the lower range of the guidance for production of 53,000, so very close to 53, 52,800, 53,200, something like that, plus minus, so not, not in the 54. Still good.
Recovery is a little bit better than expected originally, and the cash costs, they will be in the range. Everything from the capital point of view is also within the range. So now looking at what we have been doing simply from corporate point of view, we have announced that we are moving to the Main Market. These things is moving very fast, and the admission documents and all the papers are almost ready, and the prospectus is going to be published soon, and certainly, we will be ready for the end of the year. The prospectus will be published without needing to raise any fund.
There are several conditions, but we have been in constant contact with the stock exchange, and we are fulfilling all the issues, all the paperwork needed. So we think the time to be accepted for the listing will be in December, end of December 2023. So, very likely, instead of being listed in AIM, in 2024, we'll be listed in the Main Market. As you know, this has lots of implications, and one of them is that this opens the possibility of being included in index. And we have seen that there are a few questions about this in the Q&A, so we'll go through them.
For that, we'll have an AGM, special AGM in our offices in London, the small offices in London. And you're welcome to assist for those of you that are available. This, the main question will be to consider the potential redomiciliation, because this domiciliation is a requisite to be able to be included in the index. If we continue to have our domicile in Cyprus, then we wouldn't be entitled to be participating in the index due to several reasons. You have to find some other country.
This paperwork is linked, but not related to or not totally conditional to the listing, and it will be finished, expected to be finished, the redomiciliation, by sometime the end of May, due to the paperwork, it has. If it's approved by the shareholders, of course. With that, we will be one of the fewer copper plays in London. Small, but hopefully we will be able to grow, and then we included in the index. It's important to be included there in the index because, we show this picture here. We are still of the belief that the deficit of copper is there.
It's increasing, and there are numbers of copper deficit in the world between 4 and 6 million tons of copper by the end of the decade of 2030. And all the indications are that this is going to be there, and simply, there's not enough copper coming on stream. An important producer, Codelco, the larger producer until recently of the world, is going down, and they need to do a lot of investments just to maintain their status quo. And actually, they have already guided for the production of this year to be lower than the previous year, actually, the lower in five years. And next year, they only show a very modest increase, which is basically flat, is totally... Assuming everything goes all right.
The reason why there, there's still some potential oversupply in the market this year, has been twofold. One is the reason is that the coming on stream of Quebrada Blanca with a huge delay and a huge investment and overinvestment. Teck, Quellaveco by Anglo American in Peru, after long delays in Cobre Panamá. These are the main reasons why there's a kind of oversupply this year. What happens with these three is, first of all, the big one, the first one, Quebrada Blanca, huge overspending and delays means that, Teck has already said that is, they will not consider any further expansion, in the next 12 months, at least. Quellaveco, it's ramping up, but so far, I have not seen any brownfield expansion.
Cobre Panamá, you probably are aware of the problems they are having, and there are even rumors that this thing, this mine could shut down due to the award of the concession being unconstitutional. We don't want anything bad happening to our colleagues of First Quantum, which are excellent operators, but the reality that shows you how difficult it is to be getting new mines into production, and also how risky it is in certain countries, and how country risk is so important. That's why we are so happy to be in Spain and specifically in Europe. Obviously, if this mine stops for some reason, then the copper price can go to any point. But even in places that are very well-known like Chile, the largest mine of the world is Escondida, as you know.
Escondida is producing around 1 million tons of copper, and this is—this graph shown in the presentation, it has been shown by them. In four years' time, their production drops by half a million tons. Half a million tons is larger than any of these mines that I showed before, Quellaveco, Cobre Panamá, or Quebrada Blanca 2. It means a huge new mine disappears just because of the grades going down. Does it mean this will happen? No. It will. I'm sure BHP will invest whatever is needed to maintain the production. But that shows you that even the largest mine of the world, in four years' time, needs a huge investment not to grow, simply to be—to stay in business, simply because the grades are going down, as most of the mines do.
We are very bullish in the copper market, and this is why we wanted to bring these slides. Let me finish with how things are going. On site, in the first place, you see this, in red, the E-LIX plant. The E-LIX plant is advancing quite fast, shows the size compared to the rest of our installations. And in the background, you will see a flattened surface. That's the position where our solar plant is located. If we went inside the E-LIX plant, there's not much pictures there because the company that has the technology doesn't want us to publish pictures to guide people to... because this is something new. But I can show you that the progress is huge.
It's going very fast and planning to start commissioning at the end of the month of December, and even having some initial production, even if it's only trial stages in the end of the year or the beginning of 2024. So we had some delays, but things are finally going full steam. Same thing we can say with the solar. The solar, this picture is probably a little bit old. The construction and implementing of panels and supports is advancing very fast, and we already have a schedule with the electrical company to disconnect our substation for a few days from the 132 lines, to connect this substation to our substation into the grid.
This will be likely the first week of January, meaning that anytime from then on, we can start producing from these electric panels, and this will be huge, huge cost-saving for next year, starting basically already in January 2024. We continue to have good support in Touro. Things are going slowly, but advancing very well. And here I can report that the Xunta de Galicia, the local government, Xunta de Galicia, is passing a law; it's going to be working in January. In order to expedite and improve the timeline for approval of projects, they have created four categories of projects: industry, another one is specifically called energy and mines, where we will be specifically included.
Another one is agribusiness, and another one is forestry. Those projects qualifying, and we are there, and this law is, when this law is passed, as I say, starting in January, it's being discussed now with full majority. The projects will have a maximum of one year of timeline for permitting, warranted by the local government, even with compensations for the costs that this creates if the project is not approved. This is directed to specifically some large projects like ours, that have some controversial disputes by environmentalists, as well as wind farms, both onshore and offshore. We are including that one of energy and mines.
So I think it's quite good, showing very good support from the local government, which is working, reviewing all the documents, and we are seeing finally the time for the permitting of Touro. In parallel to that, our teams continue to work in optimization of that project. They're looking at new equipment, preparing engineering, so that whatever time we lose right now, we will be able to compensate it later with bringing this into production, starting sometime in 2024, and have it constructed by 2025. And we believe that this is possible. Time where we believe that the copper deficit will be in at its highest. So I think that's... I've probably taken a little more than I expected, and so this, I'm going to go into... into questions.
Please feel free to add to the questions, but we have some that have been submitted. Some of them related to the listing are going to be replied by César. The first one actually is for César, which says: How is the process of listing onto the LSE going and the updates? Although most of it has already been said in the presentation and by me, but César, do you want to add anything?
Yeah, sure. Thank you, Alberto, and hello, everyone. So we've been working for a number of months now to basically get a communication with the FCA, which we already have a few drafts of the prospectus submitted. So I would say that nowadays, with public information, we have and identify no deal breakers for being listed in the Main Market of the London Stock Exchange. And as Alberto mentioned, we're expecting to have that trading in the London Stock Exchange by before the end of December. So it will be sort of mid-December.
So, I guess, you know, the short answer to that is, I think we are going pretty well and aligned with our expectation, just to be traded on the London Stock Exchange before the year-end.
And the second one is: How do you see the price of copper moving in the near term? Could China decline in real estate market and increase copper usage be an issue for our firm? If so, how we manage this issue? This is correct in the sense of there is a kind of decrease in the real estate market. But I have to say two things. One is that there is a kind of contradiction in the real estate decrease when you see that the iron consumption and the steel market is booming with iron ore prices getting to record highs, which are specifically due to the huge demand of iron for construction, so which is normally the predecessor of the copper, because obviously, you have construction is followed by copper.
Having said that also, the real estate market decrease has been more than compensated, and actually, China has been growing month by month, the copper usage, due to the huge demand on green energies, specifically wind and solar, but also as well, the grids related to the electric vehicle, where China is the biggest producer in the world, and this is more than compensating the decrease in real estate. If now it looks like the China's government are implementing measures to give credits and to re-bump again, the real estate market, this is going to be a huge bonus in addition to what's going on. So we don't see a real decrease in copper usage right now.
In addition to that, there's a second thing that we saw yesterday or two days ago with the meeting of the two presidents of China and the U.S., where they have agreed in certain measures to implement green energies, wind and solar, which I don't remember the number of gigawatts, but it was huge. Meaning that the extra consumption from what I've seen in a research from Citi, extra consumption, if they did these goals up to 2030 with these two countries, would be an extra 2.5 million tons of copper per year, which is basically 10% more. It's so much that's almost incredible. Just this commitment between these two countries. There's certain logic to do this.
The logic is that China is the largest fabricator of solar and wind turbines, so not only they're installing themselves, but they want to install it outside the world. In the US, I think, they have a huge potential of cheap and fast energy. I think there's quite a good news to see these two big, large economies of the world getting a common goal, which is the green energy, which will more than compensate the real estate. Do we have a plan B if the price of copper goes down? Well, we don't think it's going to go down, but if we have a plan B, we'll have to adapt like we did in the past, cutting...
We have been through periods of, periods of very low, very low prices of copper, and we managed, simply cutting costs, and things that are not essential, like exploration or, or some investments that can be delayed as- slightly, like, 1 or 2 years, not without having a, a, a big issue with the long-term value of the company. Our next question is, is it raised to be from the original articles of the Association of AIM Listing, there was this... It says that there was an extensive database inherited by the old, Cyprus company, basically, Oceana, and they had interest in, in the Tethyan Belt, 3,000 kilometers of the Tethyan Belt. And there was a s- a strategy to look at, jurisdictions, so on and so on.
Well, this comes from the times of EMED. The question is: Is there anything left from the legacy goals of activity of EMED? Are we still working from this database information and prior knowledge? Well, I have to say that we, that this, this database was not very useful. The investments that had been done in places like in Georgia and in Slovenia were not really very good. And even in Cyprus, long time ago, we finished with the commitments that were done there. It was basically spending money without really any potential. And we have been focusing in growth, yes, but we have been evaluating things in South America, some in Central America, Spain, Portugal, North of Europe, and Eastern Europe.
That we continue to be very active all the time, but really, we're not using too much the database that's available from EMED days. EMED has some assets in Bulgaria, Slovakia, and a strategic focus on Greece. Do we retain any assets? No, I've just mentioned that we don't have anything there since a long time ago. Is KEFI fully owned by Atalaya? No, I don't think so. It has a 3% in KEFI, down from 3.8. Either way, what's the Atalaya stake in KEFI? Are you holding or selling? Given KEFI management previous experience and understanding of EMED, is there not any opportunity to partner with KEFI Gold Project in Ethiopia and Copper in Arabia? Have any talks taken place? If not, could it be worth exploring their potential.
We'll take that advice and maybe give a call. I have to say, honestly, my own opinion, we—I tried to sell the shares of KEFI when still the people that were there in, in KEFI, I say, EMED, were here. This is 9 years ago. 9 years ago, the promise that was about to start in production in Ethiopia, and the shares have gone asymptotic to, to down. I don't even know what we have right now. Maybe César has the-
Yeah.
the detail, but-
We really have around 4 million shares of KEFI, which is worth around just above GBP 20,000, which,
At that time, it was worth $several million. So, KEFI is a good example of how money of the shareholders is not wisely invested. I don't think we see any value in getting into this things, which, by the way, I don't know if they have any value or not. I simply see the results are not quite good. Moving from Cyprus... Our next question is, moving from Cyprus to Spain and any Canadian listing. Is I fully understand the motivation to from Cyprus and the cost of running Canadian listing versus actual volume. However, I believe there were certain anti-hostile takeover advantages when enjoyed from our current previous setup. Am I correct in this assumption? What would change? I think, probably yes.
Maybe, maybe César can reply, but the reality is that, there were certain limitations of ownership, being in Cyprus. But at the end, we only have one big shareholder, which has 22%, and I don't see how anyone can make a takeover bid without agreeing with this large shareholder or with other two that we have, each with 13% and few others that have five or six. So we are quite relaxed from a hostile takeover point of view, to be honest, but I don't know if there is any big change, César, with this.
Yeah. More than a change, I can give a clear guidance about what should be expected. So, we're speaking about the redomiciliation to Spain, but if you take one step backwards, we tested the market for a number of months to be listed in the Main Market. And one of the benefits of being listed in the Main Market is you can be eligible to be included in one of the FTSE index. Now, in order to be eligible to be one of those, you need to apply the UK Corporate Governance Code, you need to apply the UK City Code, and you need to basically be domiciled in one country, which unfortunately, Cyprus is not qualified for.
So, that's the main driver about leaving Cyprus, which would be, you know, for a number of year, and we think that no longer represent our interest in the world. And that's why we decided to propose to the shareholders to approve to domiciliate the company in Spain. Now, once we domiciliate in Spain, we would also approve, you know, the adoption of the UK Corporate Governance Code and the UK City Code. So in terms of M&A, I'm now addressing the question, the specific questions, in terms of the M&A, so you have enough provisions in the UK company law to basically apply the UK City Code, and all the provisions, including the UK City Code, will apply to Atalaya once we are listed and once we are in Spain.
And that answer the question. So yes, we had some old provisions coming from Cyprus, which. But they're not significant what we would be applying now in, as part of being a Spanish company listed in the Main Market.
The next question is also related to the listing and to the domiciliation. Domiciliation in Spain, did you look at other jurisdictions? Or at one point, I think you were considering the U.K. Is this correct? Yes, it was correct. Apart from the logic of all your main asset being in Spain, are there any advantages of being domiciled in Spain? Did you consider all jurisdictions like Netherlands, which I believe has better anti-hostile takeovers? Yes, we look at other jurisdictions, and the main reason why not moving to, into U.K., was it would trigger a huge tax issue since it went out from Brexit.
Due to not being in Europe, it would basically, if you, the interchange of shares, and we even had a company called Atalaya Metals created in U.K., it would be seen as selling shares of a European country like Cyprus, and buying shares one by one in the U.K. This created a potential tax liability or loss, but anyway, like you have to pay taxes at that moment without having to actually have been buying or selling any shares, basically, simply this change. So that really avoided the plan of U.K., which was our original plan and best plan. Then we looked at other advantages.
The problem here is that you really have to, other places like Netherlands or other countries in Europe, you have to have a real presence in this country. So first of all, so in order to be eligible, you have to have offices, have something there. So really, it made it very difficult in the case of Netherlands, although we had to be moving there and have a presence there. But probably, I believe it has certain anti-hostile takeover measures, yes, and other advantages, but we decided that it was better to do it in Spain, and this is what we are going to pass to our shareholders to vote.
Of course, if the shareholders do not approve it, well, we will look at other options, because we believe that the ultimate goal, which is going away from Cyprus, is to be able to be included in the listing, sorry, not in the listing, in the index of the FTSE.
Sorry, Alberto, if I may add, I don't know if it's better or worse, but at the end of the day, we will have the anti-hostile takeover measures as any other UK company will have by applying the UK City Code. I think this is the main, so we're not gonna be in a different situation as any other UK entity.
Would you agree... The next question is: Would you agree that there are advantages how to make and final acquisition? Atalaya gearing is very low and could make the company attracted to private equity, vulture funds, or another corporate player who would use Atalaya balance sheet to partially finance at the cover. I think, yes, you're correct. I mean, somebody asked me and I was recently in the UK doing some marketing in out of London, that my one of my worries was that, our share price was low. And I said, "Look, this is the thing that really worried me, because, eventually, we know that the market situation is tough, and, somebody could come with a very attractive offer, and, you know, some funds will say, 'Look, you know what?
I'm tired, and I will take this, and whatever." It's not so easy. It's not so easy because of our concentration of shareholders, but of course, it can always happen. But I don't think this makes a difference of being in one place or the other. We don't believe that's a problem. I also don't think that anyone would make an aggressive acquisition without having certain knowledge of the permitting, without being friendly with existing employees or shareholders. It would be very risky. I can tell you, and I'm happy to keep this recorded, that I would not accept to be bought by someone to simply keep it in private equity without trying to get the higher value for our shareholders, including me.
So from that side, it's not the first time I've been subject to this, and I'm very well known to, let's say, provide to work for my shareholders. Another one is, I heard from some non-accredited sources that there were some setback issues with E-LIX. Is everything on track? Well, I don't know what the word issues. I mean, things have taken longer than we expected due to the fact that E-LIX is something new, and Lain is developing this by themself, which means they don't give this to a big engineering firm to do the whole thing, and this really has delayed things. Especially, for example, in summer, they could not get enough people to work in the final assembly.
So in July, sorry, in July, or since September, simply, they did not have enough people to put pipes, cables, and so on. Right now, there are over 100% working inside that building. I was visiting that two days ago, and it was. I was very impressed. But the proof will be coming soon, before the end of the year or first weeks of January, we will announce the first production from that site, even if we are still in the commissioning stage. So I think this is a huge success.
Next question is, background to question: According to McKinsey, a consulting firm, the electrification trend is expected to increase annual copper demand, 36 million tons by 2031, with supply forecast to be around 30 from the current 22, creating a 6.5 million deficit in the start of the next decade. Is this considering that I started to explore Rio Tinto? Obviously, what we produce today is potentially at a considerable discount to expected demand. This is a good point, because, I mean, somebody can ask, well, why don't we, you keep the, the grades there and, and use it later? Well, the thing is, the, the setback would be, okay, we will stop production, and so our share price will go down immediately and, and wait until the prices come.
But it could happen, as history has shown us, that there is a war, and this price do not come for any reason, or suddenly all the electric cars start exploding and suddenly the electrification is not there. So then this would be a very risky business to bet in what's going to happen in the future. Having said that, this deficit is totally I also believe so. And it's going to start anytime. I mean, if the deficit is there, probably we'll start seeing prices that are elevated in 2024, 2025. Very elevated. What I mean very elevated is prices could go to 15,000 tons. It would double. Mm, not at 20%, they could double easily. In order to first incentivise production, new production, and second, reduce demand from sources.
So try to make substitution or simply make it so expensive that it will not happen. So at the end, the deficit has to be compensated in some way. So look, what are we thinking? Well, I think this is. It is being considered as part of the strategy right now, yes. We know that the pits can be deeper, and we can extend our mine life beyond 15 years. We know that the higher copper price will make deposits that otherwise would be lower grade, like Masa Valverde, or like the deeper parts of San Dionisio, or the deeper parts of Cerro Colorado, would not be economic. So we have a plan that if this price is materialized, our reserve will be larger, and we will be producing more.
Of course, if this materializes, as we expect, the share price of Atalaya will also go in a similar boom, like copper price. But right now, what we are looking is, looking at things to position ourselves in good metals, because at the end, the shares in a mining company are like options in the underlying commodity. The longer life you have is the better value of the option. Another question, we have lots of questions today, is: With your potential move to the main board, have your banking advisors identified what index, indexes you're likely to join? I believe the normal index, not... So far, we don't have the size to join a larger index.
So, yeah, well, so yeah, to add a little bit more color on that. So yes, we have discussions with our bankers, and first, you need to be eligible, as I mentioned. And one of the condition is basically being domiciled in Spain. And the second one, you need be the size. So as we don't qualify to have the size for a FTSE 250, we will be included in the small business FTSE. And then once we get the size, which we could really have around GBP 500 million market cap, once you get around 700, which I think we will at some point, we will qualify for the FTSE 250.
With our potential move to the Main Market in the U.K., have any institutional investors indicated that this will enable them to add or initiate investments in Atalaya? Yes. Actually, we have had investors in the U.K. saying that they were not allowed in their institutions to invest in AIM companies, and they would be welcome to, if we were in the main market. Likewise, there are other companies and institutions out of the U.K. that had the same reasoning. They could not invest if we were only AIM-listed. So yes, I think this would attract new investments without any question. The next question is: Are U.K. corporate investors, SIPP investors, ISA investors, to be subject to the 10% withholding tax on any future dividend distributions by Atalaya?
If redomiciled into Spain, such withholding tax shall be irrecoverable, not be recovered, by said UK corporate investors, ISA investors, and SIPP investors. Has Atalaya considered this tax implication when domiciling in Spain? Could you please go ahead, César, with all the details?
Yeah. So starting from the back, from the end of the question, yes, we have considered the tax implications, and overall, we think that it will be neutral for the majority of the shareholders, but regime will be slightly different. So, by definition, any non-resident shareholder need to be withholding tax at 19%, unless you have a couple of conditions to basically be qualified not to be withheld. One of these conditions will be if you are domiciled in any other country of the European Union, and the second one, if you have above 5% of the company, for a period longer than one year.
Now, if you don't qualify to those, to those conditions, you might be subject to withholding up to 19%, which, according to the double taxation treaty agreements between Spain and the U.K., you will be able to basically deduct when you do your tax return in the U.K. So, effectively, so we have no way to impact your tax schemes, but we likely will need to withhold 19% from non-residents, unless you have those qualifications. And that 19%, we will provide you with a tax certificate, which you will be able to deduct from your tax returns due to your taxation. Now, I'm not 100% familiar with the ISA investors, or the SIPP investor.
I mean, I don't know how exactly that works in the UK, but at the end of the day, if you need to tax that and you are being withheld for 19%, then you will be able to deduct that 19% on the tax return you do when you're doing your investment through those tools.
The next question is very similar to this one. Please advise the impact on taxation, on dividends, on the proposed revision in Spain. In particular, my reading is that Spain will withhold taxes of 19% or 24% on dividends, and for holders of stock in SIP, SIP, and ISA, majority of individual holders expect that none of these taxes are recoverable. Clearly, a major concern. Well, I think César has explained the possibility of offsetting those, but we don't know exactly the details of that. Do we have an off-taker for our Elix product as yet, or we will have just sell to the market? Well, we don't have an official off-taker, but we have received indications and people who have visited.
That both the zinc and copper products will be worth full value for companies that are buying these materials from other places. The quality of the zinc and copper products are so far basically 100% assay or 99.99. So it should be enough to basically get 100% from the market. Next question: How much will admission to the Main Market increase unit costs? Well, we have a very low overheads, and I don't think this would be a big issue. So far, we don't see a big cost in anything major or any significant relevance, except the more additional paperwork, but nothing special that we can see.
Sorry, the cost for the admission to the Main Market will not be qualified as a unit cost, right? It's as a one-off, and as I say, as we move through fund, we're trying to minimize the cost to do all the work.
Can you explain how revenue and EBITDA are sequentially higher in Q3 compared to Q2, when sale volumes and realized copper prices were both lower than in Q2, and cash costs were higher than Q2? Can you reply for this, César?
Yeah, sure. And this is quite technical. Yes, indeed, we have we book it for $85 million in Q3 and compared to $79 million in Q2 in terms of revenue. And but the main reason and the realized price, excluding QP, it's slightly lower in Q3. But the main reason is for the open QPs, so, and this is not gas adjustment, but when you have some open QPs that you need to put mark to market in your P&L, every time you do a hard closing, that adjustment was -6 million in the previous quarter and was almost 0 in Q3. So is...
So, addressing your question is the way that you evaluate the market to market, the open QPs, and there is no other reason. And that's why it works in a different way, and it's just the way that the market price, the copper price, has been moved in the last two quarters.
Well, the next question: How do you expect the pro copper, the production and cost front on for 2024? Well, we have not given guidance yet, but I expect to be very similar to the previous year, to this 2023. Next question is, today, we reported a significant cost reduction in TCs and RCs for 2024. Are you expecting to benefit from this reduction in charges? Yes, we are expecting to, to benefit from that because we are linked with the benchmarks. Having said that, in addition to that, we expect the next year to be able to sell some, a significant portion of our production to the local smelter, since this local smelter, owned by Freeport, is getting supplies from Indonesia, and Indonesia is finally getting into production, a new smelter.
Which means, concentrates that were coming from Indonesia are not going to come to this smelter, and our trucks pass in front of the smelter. So very likely, we have been in discussion then that we will take a significant amount of production. Which means, not only we will benefit from the TCs, RCs that were, are marked for the benchmark for 2024, but also we'll benefit for a profit sharing of the savings of shipment costs to China, which are at least, the same amount of the TCs, in a normal year. So we expect, the next year in this side of selling cost will be better. Next question: In the case of Touro, what will be the next key milestones, considering there is support for mining project from the Xunta?
I think the key milestones will be the inclusion, official inclusion of our project as a strategic project, which very likely will happen in the beginning of the year. And from that, they will have a specific team spotlighting the paperwork done by the Xunta. And the next milestone will be the completion of the public information period, which we expect some time in the first part of the year 2024. From there, it should be quite straightforward, but with permits, you never know. But I think the key milestone will be the inclusion of our project as a strategic project, which we have been told verbally that it fulfills all the conditions, and that we are going to be...
Basically, the first larger project to be included in this type of new law that is going to start in the first of January. Is there any risk to the mine plan if your permits of San Dionisio are delayed? What is the critical path of that deposit? San Dionisio is composed by two zones. The upper part is open pit, and the lower part is underground. Both will be mined simultaneously to Cerro Colorado. So whatever is not mined now, will be mined later. So the only thing is, as you know, San Dionisio contains higher grade, and the sooner we get that higher grade, the better it is from the net present value of the project. With permits, we never know because it's subject to the authorities.
We already have a permit for pre-stripping and for doing some initial work, which right now we are doing already, but they still need a much larger permit for the full footprint. What is the risk? The risk is delay. We don't expect it not to be approved. Actually, it would be crazy that they give us the approval for initial project and not give us the full project. And also it will be crazy not to, having given us the space for the tailings, $150 million, not to have the space, not to have the ore to mine it.
So it will happen, but simply this bureaucracy and the critical path, I would say, is the periods of papers, stability, several things that are needed, which we'll expect it to happen sometime in the year. So far, we will continue with this smaller pit that we are doing right now. And I would say mid in the year, we'll be ready to go full steam. But as I say, it doesn't affect too much the whole overall picture because we have the Cerro Colorado pit. In Cerro Colorado, we are assuming basically next year, we are mining minimum amount of material from San Dionisio, just to be conservative. Next question is, will there be a Spanish withholding tax on dividends after the headquarters move to Spain?
I think this question has already been replied. Success in coarse particle recovery and primary sulfide leaching would add 2 million tons to incremental supply in 2030. Thoughts on that? Well, coarse particle recovery gives a better recovery, but does not mean more copper coming on the stream. What they talk about primary sulfide leaching, basically in heap leach, they talk about extra 2 million tons of supply, but this has been already going to for 2 or 3 years, and especially with the system called Jetti. The reality is that the only place where it has been applied in Capstone, in Arizona, I have not seen any incremental production coming on that.
I have to say that this thing, what they call Primary Sulfide Leaching and sulfides, it's heap leaching, which means you can extract things that are in dumps, but it's not just irrigating with acid. You need to have a liner, you need to recollect that acid, and you need to have idle capacity. So it's not that simple to implement. It's easier to say than to implement. Yes, it may add some extra production, but I don't think that will be the change. Another thing is that these systems that they're talking, they increase, they improve the timing for recovering the copper from these heaps, from infinite, which means it's not leachable, to years, not months, not hours, to three years, more or less.
So even if you start applying them now, you will not start seeing the benefit until in three years from now. Our system of E-LIX is totally different. You produce a concentrate, and then you leach that concentrate, and it's a matter of hours, not years or months. So I'm not so sure that this is going to be so fast. Another question is related to this: When do you expect to reach the first zones recovery's costs and so from E-LIX plant to the market? I would say after we commission it, which will, let's say, the first few months of the year 2024. I would say mid second quarter or mid-2024 is when we have results. Obviously, before we'll be giving updates.
Next question, redomiciliation of, what are the net profit, net cash flow implications to move Cyprus to Spain? Concerned withholding tax on dividends, corporate tax increasing from 12%-25%. Well, the first thing, thing has already been discussed about withholding tax, and the corporate tax actually, officially is 25, 25%, but we are paying a little bit less than 20% due to certain, certain things. But in addition to that, really, at the end, the, the tax authorities in Spain consider the company as a profit here. So it's- they're very careful not to, to think that, that the, the profits, a transfer of profits from here to, to Cyprus, due to the regulation within the European Union.
So I don't think from that side, corporate tax will be here a big difference.
Yeah, and on the top of that, Alberto, just to mention that, some of the profit that we declare it in Cyprus are related to intercompany loans, which will remain in Cyprus. So, a company, a financing company, will fund intercompany subsidiaries, and basically, that will also be continue paying 12.5% on taxes, as we have already an office and a structure there to basically organize that. So, not significant change there.
Yeah. Well, there is another question about why move to UK, and why not move to UK? There's no withholding tax. Well, we have already said that the UK was our first choice, but there was a one-off tax from the Spanish authorities, so it was quite a complicated situation. Then, withholding tax, another question, we have already discussed that. The next one is, if Atalaya is domiciled in Spain in the future, what is the effect on company shares, tax-free? Again, same thing. Given your high net cash position and how share price and low share price, would you consider a share buy, share buyback? Yes, we have been thinking that in the, at the board, and we don't rule it off. Well, people say, talk again about tax-free investment wrappers.
Most common holding form in U.K. investors is SIPP, is U.K. pensions. So another question, several questions about that. Another one is the same thing. Dividend tax. Unfortunately, holders of Atalaya will not be able to recover withholding tax on dividends. Can you look further? The regulator disagrees not to apply withholding tax on grounds on most U.K. holders held through SIPP. I think we discussed that. Any traction from your investment in ESG, can you compare your green credentials against other copper miners? Are you listed in any ESG index? Can you-
Yeah, sure.
Can you go through this?
Yeah. So yes, we have done. So we raised a small credit line recently, which was basically used for the solar plant, and we already have the benefit about better rates, because that was for a purpose, which is included in the taxonomy of the European Union. But yes, we're doing a lot of work on the ESG front, and we're starting to see our ratings related to ESG improving, and we continue, and I think we expect with the work that we've been doing to those ratings be even better.
Which again is with an aim to have, when we need to fund or raise funds for Touro, and once we have the permit, we will be in a position to have all this work done, and we'll be able to get benefit out of this better rate. Yes, we've been rated by the most significant rating company on the sustainability, and we're improving since we got the last one a few years back.
Perfect. That's great, Alberto, César, thank you for update, for being so generous with your time today, and addressing every question there. Of course, the company can review all questions submitted today, and we will publish those responses on the Investor Meet Company platform, where appropriate to do so. Before redirecting investors to provide you with their feedback, which one is particularly important to the company, Alberto, could I please ask you for a few closing comments?
Well, again, thank you very much for attending, it's a long time. Thank you very much for sending so many questions. And of course, for those of you, feel free to, any of you, feel free to send any question to our addresses, and we'll take the time to reply as soon as we can. So thank you very much for your continued support, it helps us a lot, and we look forward to for a fantastic year. Thank you very much.
Alberto, César, thank you once again for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback and although the team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Atalaya Mining PLC, we'd like to thank you for attending today's presentation, and good afternoon to you.
Thank you.