Good day, ladies and gentlemen, and welcome to Atalaya Mining Q2 and H1 2025 results. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session through the phone lines, and its instructions will follow at that time. I would like to remind all participants that this call is being recorded. I will now hand over to the CEO of Atalaya Mining, Alberto Lavandeira, to open the presentation. Please go ahead.
Good morning, ladies and gentlemen. It's a pleasure to be here, giving the presentation of our second results that are, I would say, excellent. I am here with Pesar Sanchez, who is with me, the CFO of the company. I'll go directly through a presentation that I hope you can see on the screens. We had two very strong quarters. We had already pre-released the production. As a result of that, our financial results were excellent. We had a copper production right now. It's a range of 27.5 thousand tons for half of the year. Our cash costs are much lower than the market expectations, and all-in sustaining costs are going down. The first half was around $2.78 to less than $2.80 per pound. As a result of that, we have improved our guidance, including slightly higher production and basically a little bit lower all-in sustaining cost.
It could be argued that we could lower this a little bit more, but we prefer to be conservative. As a result of this excellent production and economic results, we had a record EBITDA, which is a new record. It's a new record for both a quarter and for half of a year. From a corporate perspective, there are lots of other things that have happened this year. Some of them, for example, continue to add to strengthen our management team where we appointed Fernando Díaz-Riopa as Project Manager at Toro, which is going to be a mixed mine. We also made a couple of changes. One of them was that we appointed Fernando Louth as General Manager of Rio Tinto. He has been with us for quite a few years, and he was also instrumental in getting the permits 11 years ago.
He was substituting Enrique Dorado, who will remain with the company as a Senior Advisor and doing some other corporate things. Also, the board, we continued to do some renewal. We had Hussein Barma that had been serving in the company for over 10 years. He was deemed not to be independent, and we made this change. He moved to a very important company in Canada. We thank him for his service, really. We had the appointment of Corie Gonzalez . Corie Gonzalez. is a lady with experience in boards in Spain, very well connected. Also, Hennie Fo, who comes from Anglo-American, high-caliber experience in the copper sector. We are very pleased to welcome them on the board. Those, I would say, are the key points on this first slide. I will go a little bit more into the details now.
Moving to the details, it's quite clear that the production results that we saw, we had announced at the plant, showing that the plant is working very well. It's working with a throughput of over 4 million tons per year, which is an annualized rate of 16 million tons per year. I remind you that this plant was designed for 15 million tons per year. The grades were also good. Grades were 0.43%, so higher than before. Although we had some lower recoveries due to the complex material that was being blended from San Luis, the result of that is that we had a much better production, which is what drives the exit revenues. In the next slide, you will see that the records were very strong again, thanks to the concentrate rates, good copper price, and low offsite costs. The cost performance was very good.
The cost on site was lower, both in mining and at the plant, in the unit per ton. We also had lower offsite costs. At the end, that generated a record EBITDA of EUR 55 million, a new record. It was even better than what we had in the first quarter of 2025. As a result of all this, our operating cash flow was excellent. It was EUR 52 million. After having invested EUR 19.4 million, our free cash flow was still very strong, almost EUR 33 million, which is also excellent for a quarter. The main investments that we carried during the quarter were the capitalized stripping at Cerro Colorado , some tailings expansion, and some stripping in some . As a result of all that, our cash position, and you will see it in the last part of the slide, has been excellent.
We increased the net cash position to plus EUR 70 million, which is also very high. In the next slide, you will see the economic results with good operating costs, excellent profits of EUR 60 million for the half of the year. We are looking at an EBITDA during the first half of the year 100 and almost EUR 108 million. This was possible due to the combination of the strong production and sales, good copper prices, good cost control, and so on. As usual, we would like to give the breakdown of what are our costs, and we do have that in slide 10. There, you will see that the costs, mining, processing, and G&As have been going down compared to previous years, basically as a result of, let's say, larger production. Our cash costs, site cash costs, are around $2.30 for the quarter, around $2.20 for the first half.
More importantly, I would say that the offsite costs, the cost of selling, have been reducing dramatically. The first reason is, as you all know, the treatment charges and refining charges have been quite low from benchmarks and spot sales, which means that actually are about half of what it used to be in the past. Also, the good silver price and good production of silver that we had has also increased our by-product credits to a negative position, which means that our total offsite costs actually during the quarter have been negative. Overall, during the year, have been neutral. All this is in spite of having a not very good, unfavorable movements in the U.S. dollar. As you all know, we have our operating costs mainly in euros, except the offsite costs that are mostly in dollars.
Although the euro/dollar has been moving against us, we have been able, due to good cost controls, to maintain a very limited impact on these costs in our accounts. As usual, we normally give the breakdown of the all-in sustaining costs. There, we are adding corporate costs, sustaining capital, capitalized stripping costs, and other costs. With all these all-in sustaining costs, our AC costs are around $280 per pound, which again are around $0.40 per pound lower than it used to be in previous quarters and previous years. As usual, we like to benchmark our costs with other peers, and we show that in slide 11. We continue to show that our cost control is giving good results. We are maintaining our all-in costs within that downward trend nicely. I think we continue to be able to fight inflation and low rates nicely.
We basically were maintaining being quite competitive, maintaining our all-in costs well under the all-in sustaining costs of $3.50 which we can see is quite standard in the industry, which is also telling us that in the future projects, we'll really have to enjoy much higher copper prices to get sanctioned and to get approved. With all that, what are we doing with guidance? Because we had a very good, strong performance during the first half, we decided to, and now some revisions, we tried to be a little bit conservative and not to jump. We have increased our guidance a little bit to 49,000- 52,000. Basically, we increased a little bit the bottom end of the range because we are safely thinking that there won't be any issue to maintain that guidance. In the all-in cost, we have also reduced a little bit our guidance for around $0.10.
All this considering that we continue to expect a heavy during the second half of the year of the exchange rate of euro. Even if our euro costs are maintained stable, we may see some higher costs from the dollar perspective in the next half of the year. In relation to CapEx guidance, we have moved some things to the next year, simply some of them because we won't have time, some of them because we have better knowledge of what's going on. We're guiding between EUR 29 million- EUR 37 million in non-sustainable CapEx. This is a reduction from EUR 58 million- EUR 82 million. The main reason is that part of this cost, capital cost, were the expansion of San Luis, the associated prescription. Now we are moving that to all-in sustaining costs. That's a big difference since we got the permits. Those are going through P&L.
In other projects, we have deferred some of them to 2026, like the road relocation due to the delay of the permits of San Venancio and the ramp of Massawa, where we also had some delays in getting access to the portal and the ground. In the exploration, we increased a little bit our guidance to EUR 8 million- EUR 12 million, maybe better. Very likely it's going to be around EUR 10 million simply because we are getting some good infill results in Massawa and we want to continue that. We have other things ongoing that we are safe that we can afford to spend our money in the exploration. As a result of all these good results, the board has said and approved that we have to increase our dividend.
This is consistent with our annual payout of 30%- 50% of the free cash flow, which is normally paid in two installments. We have just been paid the first one just a couple of weeks ago. We have decided to increase the interim dividend to EUR 0.044 per share, which represents a 21% increase over the equivalent interim dividend of EUR 0.0362. We will continue to do that even knowing that we have some investments to come at Toro. We will continue to maintain this dividend policy because we believe that this shows discipline. If the company cannot afford to pay a dividend, then it means that there's something wrong with it. What are we going to focus in 2025? We are going to focus and continue with San Luis . What you see in the slide 15 is the hill of some San Luis Obispo already being moved down.
We have taken already several benches. The idea is to access while we continue mining this oxidized zone in the deeper part of the pit. We are prescripting already the hill of San Luis. We continue to relocate the road. Most of the work will be done in the final end of the year. This is not really affecting us at all in the mining. We will also continue, or our partner, Alex, Lane, continue treating material through their plant. The operation is working well, but right now, they still do not have enough operating capacity to be able to say that it provides economic cash flow to the company. We are quite confident that this will give us some better recoveries in some of the deposits that we own. We will continue concentrating and drilling in Marshall Valverde, and that's shown in slide 18.
As I mentioned before, we had excellent results that we released one month ago with very good intercepts, some of them on 25 meters at 2.9 or 26 meters at 2.8, and so on, and with a very clean copper mineralization, which is mostly stockwork or remobilized material with grain material with very low zinc levels. That's assumed according to our test results. It's going to be working very well in our plant. The idea is to continue infilling this area in the north part of the deposit so we can justify having some of the material going through the middle. It will increase the production and extend the life of the Tinto district. In order to mine here, we have approved a ramp. We have all the approvals. It's subject to board approval with respect to start this second half of the year.
The ramp will be prepared in a couple of three straight lines so in the future, belts can be installed, but it will be using truck haulage. Initially, the ramp will access the high-grade deposit, but this is a polymetallic deposit with high content of zinc that requires a separate circuit at Tinto. It will go directly to the copper-only area, and that's located Northeast, kind of under the Massawa border polymetallic deposit. We will continue focusing in Togo. Toro, as you all know, is the major growth of this company. This project will require around EUR 250 million of CapEx. It has a very low strip ratio, higher rates than Rio Tinto. You can see that with average rates of around 42%, you can see what can be done as of cash flows at Rio Tinto. This is a good example.
This deposit is expected to have better recoveries, better concentrate rates, meaning higher payability. Actually, the cash cost of this deposit should be lower than what we're experiencing in Rio Tinto, around $0.40- $0.50 per pound lower than Rio Tinto. The capital intensity of this project is going to be around $10,000 per ton, which is half to one-third of what most new projects that are built in the world cost. This is due to the location of the project, the lowest prescription, especially location and infrastructure. What are we doing there and where are we focusing? We are focusing on permitting. Most of our team is focusing on replying to the questions that are brought by the authorities. It's a quite complex project that has been declared strategic by the local government, implying that this should be increasing fast tracking the permitting stages.
We have received already positive reports from most of the departments of the [Xunta de ]. Although we are now in a kind of quiet period of the year, I have to report that actually meetings are continuing. Our teams are working. The teams of the [Xunta de] are working to finalize all the reports that are required to issue an environmental impact statement and probably be issued in September, October. Obviously, we expect this environmental impact statement to be positive, and that will basically open the door for immediate development, which will take around one year and a half. In summary, with initial continuing activities of development, Basal Alberde drilling, total permits, Alix trying to debottleneck and wrap up and confirm the ability, we are starting to drill in a place called San Antonio, which is a satellite deposit just located one kilometer east from Cerro Corallo .
We had already thirty holes confirming what we had there. We continue to do some exploration both in our company and in our sites around Rio Tinto and also in other projects like in Sweden. In summary, in this the company and guidance of around 50,000 tons improved, potential to get 200,000 tons of copper and copper equivalent in the next three years, low risk, good rates, fast production, a team that has been delivering, a good enterprise value of equivalent to $16,000 per ton. Actually, the shares today seem that they are going up. This is increasing. A good solid balance sheet without any royalties or streams or anything like that. No debt. We have been declaring dividends, $84 million, almost $100 million since four years ago, which means that besides producing and besides development, besides building new product, we are very disciplined with the money.
We are located, as we all know, in Spain, stable, modern jurisdiction with people that are very good operators and explorers with experience in building. Finally, I think it's a very important point that I jumped before that I didn't say is that we have been added to the FTSE 250 index in May. We are one of the pure copper places listed in London. With that, I think I will stop my presentation and be ready for any questions that you may have for me or for Cesar.
We will now begin the conference line questions. As a reminder, participants can submit written questions using the Ask a Question button on the webcast page. To ask a question on the phone line, please press star followed by one on your telephone keypad. We will pause for a brief moment to wait for the questions to come in. We'll take our first question from the line of Jason Fairclough of Bank of America. Your line is now open.
Good morning, guys. Buenos días. The market seems to like your results. I think you're up 7.3% on my screen. That's EUR 5.13 a share. Guys, just a couple, I guess, related questions. Obviously, the surprise this year, the positive surprise has been the strong production, all the strong by-product credits, ultimately higher revenue per ton of rock. I guess my question is, how do we think about grades over the next couple of years? When could we start to see the Maca de Valverde ore actually going into your mill?
Very good question, Jason. Thank you. The by-product grades are not going to be—just a second. I'm not sure if I think the screen is not being shared. Anyway, it doesn't matter. The by-product grades are going to continue this year and a little bit next year after, I mean, the silver grades. They will come back to the normal levels of around half of what we have right now. Right now, we are having like double than we used to have. The input of new Massa A lverde, it will take us two years. You will start seeing good copper grades coming in two years, let's say two years and a half to be conservative by the time you start bringing in material. This is also increasing rate.
Sorry, in terms of the board approval, Alberto, the board approval is when? Now? Like that should happen any day now, sort of thing?
Very likely, very likely in the next board meeting because we already have everything. We're waiting for some, let's say, confirmation of our final capital cost to be serious and to have everything known. What's the capital cost of this and how is the capital cost profile for the company in the next five years so that we can manage? We expect the approval of this thing certainly in this quarter, in the September board meeting or October board meeting, yes. The moment you feed certain grades around 2%, it's a no-brainer. You have a payback of the ramp of one year, year and a half. We are quite sure that this thing is going to be approved. In relation to the higher grades coming from San Dionysio, we are stripping, as you see, quite fast.
We try to get fast to the normal grades that are fresh material that contain around 7.7% copper. It's fresh material so the recoveries can go back to the + 80s. This will be there for, I would say, the next five, six, seven years continuously. That's something that we should be enjoying normally. There is a certain limitation of feeding this type of material in the plant. You cannot just feed this 0.7% during long periods because of the fine balance of copper and content of sulfide. It contains more pyrite and more, although it's fluorides, it's not the typical stockwork. I'd say that you have to blend it carefully between 10% and 20% of the material coming from Southern Issuer, and the rest coming from Theragorella .
Going a little bit forward, if you want, although we have not spoken about this here, obviously, you see that we have lots of polymetallics and lots of test work has been performed in this type of material. We are working already with an international, very well-known company to already design. We already have designed, but the final decision of layouts and how to do things of a polymetallics plant, which will be aligned to be able to separate the zinc in addition to the copper. That thing probably announced it sometime in the first part of 2026. It will be also built in late 2026, 2027. It won't be a huge thing. It simply will be to add a zinc flotation, thickening, filtering, plus summary grind in the existing server. Those are the three components of the grade that you want to see in the next three years, besides total, of course.
Just to push you a little bit on it, Alberto, if I were thinking about what grade to put in my model for the next two, three, four years for Rio Tinto, is it sort of above 0.4, less than 0.6? Or is it going to be even less than 0.5?
I think above 4, less than 0.5. No, you cannot go over 0.6.
Okay.
No, you cannot go over 0.5.
Okay, thank you.
We have a low grade, but we make.
Your next question comes from the line of David Radclyffe of Global Mining Research. Your line is now open.
Good morning, Alberto. Just following on San Inicio, the old guidance had capital of EUR 32 million- EUR 46 million. Could you confirm how much of that capital is now within the production costs, in euro millions, and how much has been deferred into 2026?
Cesar, do you have those numbers in front of you? Because.
Yeah. We have rough numbers. Some of the CapEx that has been pushed forward to 2026 is related to Massimo, which is not related to Sandinisia , and the relocation of the road, right? Both together account for around EUR 16 million that is now expected to be in 2026. It was expected in 2025. In terms of Sandianasia , there is a big portion of it that now that we have the permit, it will be classified as an item within the P&L. It is just following more an accounting rule where the stripping costs, basically, everything that goes above the average for the life of mine will go to the balance sheet, and everything below the average for the life of mine will go to the P&L. There is a small portion that will go for the Sandianasia to 2026, but the majority of them will be just classified as a P&L item.
Right. Thank you. If I could have a quick follow-up, could you provide some more color on Elix and the third-party review you're initiating? Why now and how long is that expected to take? With EUR 55 million invested, are you still actually there to be funding for this project?
That's a very good question. Certainly, we will not continue funding the way we have been funding. Most of it has been done funding it with loans and with convertible loans. Certainly, with conditions that, due to the delays of a startup, and we all understand that this is a new technology, certainly will require a review of this funding. Right now, we have not added any money since last year. They are, let's say, operating based on our last injection in the second quarter of 2024. This thing is under review. What we see is that the process works. The process will be quite interesting if the copper TCs, RCs were not so low or negative because, obviously, you cannot compete with that. Right now, Elix is being focused on removing the zinc of some complex bulk concentrates with copper zinc or copper-like zinc.
You remove the zinc and then the copper grade goes up. That is working quite well. Of course, since the zinc prices are substantially lower than copper, the economics are not that clear. Right now, it's quite close to breaking even. It really is not costing us money. Certainly, we'll have to review our future engagement. We continue to think that this is going to add a lot to us and to the parent belt because the value will not come from the small operation that's there right now that simply is too small and the fixed cost component is quite high. The value will come from making it possible to mine deposits that otherwise the alternative would be pressure leaching or this high alveolum or high oxygen, high energy, high everything processes around the world, which are all well-known but very seldom installed due to the high capital costs.
I think that's where we see the value. We see the value of the process that we own and that we have that otherwise the recoveries would be quite low and then the economics could not be so interesting. That's why we continue pushing.
Brilliant. Thank you. I'll jump back in the queue.
Question comes from the line of Alex Bagwini of Canaccord Genuity. Your line is now open.
Yeah. Thanks, guys, for taking my question. Just the first one back on San Luis. When do you expect that you're going to get through into that fresh material with the higher grades? How much of the ore being mined at the moment is making its way to the plant?
Right now, if I remember well, from the last meeting, I think we have been feeding about 0.5 million tons or 600,000 tons of material that was not coming from the fresh area. It was coming from the oxidized old mining area with grades around 1%, but we're giving quite low recoveries. That's what we are feeding right now.
Is that for the last quarter, Alberto?
No, I think it's year to date.
Last six months.
Something like July numbers. I think July numbers. I'm just thinking in the report of, I don't have it in front of me, in the report of July. We have not reached the fresh material in the top of the hill. We are starting to touch it, but it's quite oxidized. It has a grade of around 0.3, but it's very oxidized. We don't feed that to the plant because it contains lots of oxide material. I really don't know exactly when we reach the fresh material. If I wanted to guess, I would say at the end of this year. I don't think we will have it before that. Just looking at the top. I'm thinking loudly because I think it will be, I know it should be in all the plants, but looking at the hill and so on, I suppose it will not be fresh until we are at the hill level.
Okay. That makes sense. Just as a follow-up for the polymetallic zone, when do you think you'll make a decision whether to go with a recovery circuit expansion at the plant? Do you think you need to have a solid answer as to how Elix looks before you make a call on that?
I think we will go directly with sulfides, with a typical differential rotation. Elix still has room there to improve the recovery. That will give us enough flexibility that we could have some mixed bulk concentrates that, if that plant is working, we would improve them. We cannot think and be delaying our decision for years or for one year or two because certainly the polymetallic will have them available in Marsa Albano . Besides the copper, we have polymetallic. In Majalales, we have also very nice polymetallic. San Antonio, where the grades are 1.6% copper, 1.8% copper, and 3.5% zinc, and they're just one kilometer away. We cannot fully rely. We will be using Elix in the future, likely, but we are right now going ahead. When is this going to happen? I think the first part of 2026 we'll have a full budget and flow sheet and so on. First part, I mean, probably first quarter or so on.
Okay. Great. Thank you, guys.
Thanks, Alex. Again, just to confirm what Alberto just said, year to date, we have mined 0.5 million tons from San Diego, and the remaining are coming from Southern Colorado .
Okay. Fantastic. Thanks .
Next question comes from the line of Alexander Pierce, BMO. Your line is now open.
Morning, Alberto. It seems you're still confident that you can get the permit for Toro before year-end, but can you remind us of the other kind of key stages for the project, and how quickly do you think after the permitting process that you can start work on the ground?
Really, the starting on the ground will be very fast. We have the teams ready. We have quotes and final quotes for big items that have long delivery times. We have everything basically ready to start. Right now, I would say that the only thing that would probably affect us is the weather. I would not like to start in autumn. It seems that we will not have all the permits for autumn because it rains. There is normally a very good period in January, February of cold but dry weather. I would say that that's the time where we will be clearing the grass and the topsoil and all this. Expect the permits to arrive certainly end of this third quarter or beginning of the fourth quarter. Things are moving quite fast. There's no special permits after that.
I mean, going through the strategic process means that once you get the environmental permit, the approval is almost automatic. I don't know how long it can take, one month or two, whatever, to finalize all the paperwork. It's a fact that it's basically a road of no return. With this being in the strategic route, it means that we have already automatic access to land, to water, to roads, to electricity, to any urbanistic land change. You don't go through the, let's say, slow process where you will still need a change in land use in the municipality. Separately to that, you have a water discharge permit like it happened in other well-known operations in the paravel . Everything is given at once, which is the important part of this type of things. I see a lot of development during 2026.
It will be hopefully, if we get the permits, which I assume we'll get it because I don't see any signs of not getting it. Most of the activity will be very active in 2026. By the way, I did not mention this in the presentation. We have a very advanced financing stage of this project. We have interest in writing and basically ready to go to the notary and sign from three Spanish banks, plus other two in the queue, but three Spanish banks. We also have a formal proposal from traders, offtakers, and smelters or a combination of them for financing up to basically 100% of the project. Due to the fact that we have all the offtakes of Toro are going to be very clean without any issues with any type of material, which are going to be premium concentrates for blending.
Also, the fact that we also have concentrates to Rio Tinto available from basically this year, next year, since all our offtake agreements that we currently have right now with the offtakers are expiring, which means we'll be free.
Thank you so much. There are no further questions on the conference line. I will now hand over to the management for the closing remarks.
I just wanted to thank you for being here. Thank you for your continued support. It has been a long journey, and we hope that this good journey continues during the rest of the year and the years ahead. Thanks very much for your continued support.
Thank you for attending today's call. You may now disconnect. Goodbye.