Atalaya Mining [LON: ATYM], the Cyprus-based mining and exploration firm, announced its quarterly and six-monthly results for the period ended 30 June 2022 on 10th August.
A rise in operating costs combined with a drop in revenue saw the business’ interim profits fall by roughly a third compared to the quarter a year ago. Atalaya Mining’s operations have been severely affected by the Covid-19 crisis, military conflict in Eastern Europe between Ukraine and Russia and the steady rise in key input costs, all of which have taken their toll on the company over past 24 months.
Atalaya Mining is a fast-growing AIM and TSX-listed mining and development company which produces copper concentrates and silver by-product at its wholly owned Proyecto Riotinto site in southwest Spain. The company, which was founded in 2004, also has a phased, earn-in agreement to acquire up to 80% ownership of Proyecto Touro, a brownfield copper project in the northwest of Spain which is at the permitting stage.
Atalaya Mining aims to become one of the leading multi-asset copper producers in Europe, maximising the potential value of its current low-cost, low-risk assets and further exploring new opportunities. The rapidly expanding company may be a profitable investment opportunity for both retail and institutional investors active within the mining space.
Atalaya Mining sees revenue contraction
For the six months that ended on 30th June, Atalaya Mining posted an 8.8% drop in revenue to EUR197.7m from EUR197.1m a year earlier. Furthermore, the Cyprus-based copper producer’s pre-tax profit decreased by 60% to EUR34.2m from EUR85.3m, as operating costs surged by 42% to EUR138.3m from EUR97.7m a year earlier.
The weak financial results posted highlight the tough macroeconomic conditions that the business has had to face in recent times. Chief executive officer, Alberto Lavandeira described it as a “period that included many macroeconomic challenges”, including the ongoing conflict in Ukraine and inflationary environment globally which have led to the company’s “costs increasing materially since last year”.
Atalaya Mining’s operational success over the past six months has, therefore, brought some much-needed positivity to the company. Atalaya Mining mined 7.5 million tonnes of ore in the first half of 2022, compared to 6.6 million tonnes a year ago, and it expects copper production to be between 52,000 and 54,000 in 2022, with full year copper grade and copper recoveries anticipated to average 0.40% and 85% to 87% respectively.
The company’s Proyecto Riotinto plant demonstrated strong performance in Q2, processing around 4 million tonnes of ore and yielding good recoveries despite lower grades. Atalaya Mining expects strong throughput to continue for the remainder of the year, as significant investment projects in a 50MW solar power plant and the E-LIX Phase I Plant continue. These should reduce both cash costs and carbon emissions.
Poor investor response
With shares of Atalaya Mining falling by over 5% intraday on Wednesday, the announcement did not go down well with investors. The share price at the end of Wednesday stood at 255.05p and has ranged between 231p and 450p over the last 52 weeks, offering a year-to-date return of -38.06% and a one-year return of -19.27%. The current market capitalisation of the company is just over GBP350m.
The company has said it expects current macroeconomic conditions to persist for some time, whilst analysts at Berenberg lowered their target price on Atalaya Mining from 400.0p to 370.0p on Wednesday after the group’s second-quarter results fell short of expectations.
The upcoming months will be a decisive period for the company as it battles through macroeconomic hurdles and tries to increase its revenue and income figures.