Atalaya warns of gas price risks after bumper fourth quarter
By Josh White
Date: Thursday 13 Jan 2022
(Sharecast News) - Atalaya Mining reported "consistent" fourth quarter performance at Proyecto Riotinto on Thursday, with production exceeding expectations at 13,885 tonnes of copper, due to better metallurgical recoveries offsetting a "slightly lower" head grade.
The AIM-traded firm said a new annual production record of 56,139 tonnes of copper was achieved in 2021, exceeding its increased guidance despite operational challenges and risks related to Covid-19 restrictions throughout the year.
It said that in the fourth quarter of 2021, 3.8 million tonnes of ore was milled, with a copper recovery of 87.16%.
On-site concentrate inventories at the end of the quarter totalled about 5,254 tonnes, with all concentrate in stock at the beginning of, and produced during, the period delivered to the port at Huelva.
Copper prices increased during the quarter compared to both the prior quarter and the previous year, with an average realised price per pound payable of $4.36, compared to $4.31 in the third quarter.
The company said the average copper spot price during the period was $4.40 per pound.
All-in sustaining costs for the year, meanwhile, were expected to be "slightly below" the lower end of Atalaya's revised 2021 cost guidance, primarily due to a strengthening dollar against the euro, and higher copper tonnes produced.
Looking ahead, Atalaya said its operating budget for 2022 was set in early December based on certain economic assumptions of expected inflation, particularly with respect to energy costs, and on that basis, full-year 2022 copper production was estimated to be in the range of 54,000 to 56,000 tonnes.
Grade mined during 2022 was expected to be slightly higher than in 2021, owing to pit sequencing.
In addition, the board said the firm's plant optimisation initiatives were expected to further support copper production.
During December and in early January, energy prices in Spain increased "significantly" due to a sharp increase in wholesale European gas prices.
Atalaya said that should the volatility and current energy prices persist for a sustained period, it expected that its operating budget and production guidance for 2022 could require revising.
The company said it was "actively monitoring" energy prices on a daily basis, and was identifying potential measures that could be implemented.
In the event that energy prices remained at elevated levels for a sustained period, possible measures could include temporary modifications to the mine plan, curtailment of throughput during periods of peak energy prices, or reductions in discretionary expenditures.
"The company has enjoyed another robust quarter culminating in record annual production for 2021," said chief executive officer Alberto Lavandeira.
"We enter 2022 with a proven operational track record, a range of exciting optimisation workstreams and a strengthened portfolio of growth opportunities.
"We are mindful of current inflationary pressures and while we shall endeavour to keep costs as low as possible, it is not unreasonable to assume that challenges lie ahead, particularly in relation to unprecedented energy costs."
Lavandeira said the company was "confident" that it was well-positioned to navigate any uncertainty, while still investing in its portfolio of growth projects owing to its strong balance sheet.
"We have much to look forward to in 2022 with the advancement of our projects and exploration activities."
Atalaya said more details on costs would be included in its financial statements for 2021, to be reported in March.
At 1213 GMT, shares in Atalaya Mining were down 2.16% at 420.72p.
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