Atalaya Mining PLC

LSE:ATYM

Earnings Call Transcript

[Operator]

Good afternoon, and welcome to the Atalaya Mining Plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's 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.

[Alberto Lavandeira Adan, executive]

Hello. Thank you very much. Thanks. Welcome, everybody. Thank you for attending this presentation. We'll try as usual to be brief and leave some time to questions. We're here to look at the results -- quarterly results, financial results, as well as looking at the advance of the company during this 3 months and our plans for the near-term future.

With me, I will have Cesar Sanchez, 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 on Slide 6 and without trying to read all the numbers which you're happy to go through. We had already released the production results, production of 12,500 tonnes of copper during the quarter, getting the total today to close to 39,000 tonnes with cash cost of $2.82, accumulated $2.76, and all-in costs accumulated around $3.07 for the year, which are taken us to the outlook for the year of around 53,000 to 54,000 tonnes of copper.

Now we're in mid-November, due to some heavy rains experienced during the quarter, the current quarter, where we likely be in the lower range of that 53,000 to 54,000 tonnes anyway, very close to what we had already read. And the cash cost, it looks like we are going to be also within the range that we have set, the all-in costs. With all that, we had a quite good, I would say, results probably better than the consensus with EBITDA of EUR 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 year. Still high, still high.

And besides that, we continue having a very good balance sheet with a net cash position of EUR 67 million. And this is after continuing to invest in the solar plant. We continue to invest in the E-LIX plant including dividend payments and also including, of course, the ongoing capital. So even with this kind of low-ish copper price, the company continued to generate cash during the quarter. We have made some changes with the Board.

No, 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 spending 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 are not necessarily -- they are linked, but not necessarily also the proportion 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 not -- no longer in the EU.

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 are -- we got already some authorizations of -- for the extension of the mine life and Rio Tinto, which include the expanded tailings for 150 million tonnes. So this is a huge achievement. Also got the AAU for Masa Valverde to be able to truck ore from there and treat it in our plant.

And 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 progressed, but there is progress. There is progress with paper work being done and especially from the Xunta making some new laws in order to expedite into permit projects and specifically mining projects. That's going to -- 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 have already mentioned in the past, publication of our sustainability report and 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 continue to perform well within the line well over to 15 million tonnes designed capacity. Recovery also going well better than planned. 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. And 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 given -- having distributed a dividend and also having continue to invest in several projects, in growth projects at site. We ended the quarter with EUR 120 million in cash, which is a good position to have 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 EUR 77 million, which is basically around [ $85 million. ]

Part of this is the improvement of the market, 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 '22, you can see it very well in the graph. And year '22, our cost of electricity was EUR 300-megawatt hour, and this one -- this year was [ EUR 120 megawatt hour ].

In addition to that, we had, 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 have been lower than the previous quarters.

Also it happens in previous years, and it should continue to happen in January due to the strong winds, very strong winds, very strong storms and rains in Spain, which reduced 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, 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 we can still see in explosives, diesel and gas, gas [indiscernible] lime.

But also is the effect of lower production due to the lower rate. And then most of the costs are cost per tonne and the effect of that is that we have slightly higher costs in a cost per pound basis. But, we, overall, there's $0.06 difference in cash cost versus the year-to-date and well below what happened in the previous years. You can see that we have had a capitalized stripping, higher 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 on the -- 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 equipment.

But of course, overall, this does not change at all the strip rate of the Cerro Colorado, which is a little bit less than [ $0.21 ]. 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 compared with other peers similar to us. And the first thing you will notice is the tendency of increase, of course, a new experience in '22 has been stopped while in other companies, this has continued due to several factors.

So with this, we continue to generate cash. We are just only 1.5 months to go. So as I said before, the guidance, there's no reason to make changes in the guidance. We will be likely in the lower range of the guidance for production of 53,000. So very close to 53,000, 52,800, 53,200 something like that, plus/minus, so not in the 54,000, still good.

Recoveries are a little bit better than expected originally and the cash cost will be in the range. Everything from the capital point of view is also within the grade range. So now looking at what we have been doing simply from a corporate point of view, we have announced that we are moving to the Main Market. These things, is moving very fast.

And the decision documents and all the papers are almost ready. And the prospectus is going to be published soon. Certainly, we will be ready for the end of the year. The prospectus will be published without having to need -- 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 '23. So very likely, instead of being listed in AIM in '24, 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 for them. For that, we'll have an AGM, an AGM, especially AGM in our offices in London -- small offices in London. And you're welcome to assist for those of you who are available.

This -- the main question will be to consider the potential redomiciliation because this redomiciliation is requisite to be able to be included in the Index. We were -- we continue to have our domicile in Cyprus, then we wouldn't be entitled to be participating in Index due to several reasons. We had 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 at 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 players in London, small, but hopefully, we will be able to grow and then we include it in the Index. It's important to be included there in Index because we show this picture here. We are still of the belief that the deficit of copper is there. They will -- it's increasing and there are numbers of copper deficit in the world between 4 million and 6 million tonnes 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 previous year, actually the lower in 5 years. And next year, they only show a very modest increase, which is basically flattish totally, assuming everything goes alright.

The reason why there's still some potential oversupply in the market this year has been twofold. One is the reason is that the coming onstream 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 Panama. These are the main reasons why there is a kind of oversupply this year.

What happens with these three is, first of all, the big one, the first one, Quebrada Blanca, huge overexpenditure and delays means that Teck has already said that they were not considering 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. In Cobre Panama, you are probably aware of the problems they are having, and there are even rumors that this thing -- this mine could shut down due to the cost being the award of the [ concession ] being [indiscernible] .

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 tonnes of copper and this is -- this graph shown in the presentation, it has been shown by them.

In 4 years' time, their production dropped by 0.5 million tonnes. 0.5 million tonnes is larger than any of these mines that showed before Quellaveco, Cobre Panama, or Quebrada Blanca. 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 show you that even the largest mine of the world in 4 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 what -- 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 flattish 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 project is huge. It's going very fast. And planning to start commissioning at the end of this -- the month of December and even have some initial production, even if it's only trial stages in the end of the year or the beginning of 2024.

So we have some delays, but things are finally going full steam. Same thing we can say with the solar. The solar -- this picture is probably a bit old. The construction and implanting of panels and support is advancing very, very fast. And we already have a schedule with electrical company to connect -- to disconnect our substation for a few days from the 132 lines to connect this substation to our substation into the grid. And this will be likely the first week of January, meaning that any time from then on, we can start producing from these electric panels and this will be huge cost savings for next year, starting basically already in January 2024.

And we continue to have a good support in total. Things are going slowly but advancing very well. And here, I can report that the Xunta de Galicia, the local government, Xunta de Galicia has -- is passing a law. It's going to be working in January. In order to expedite and improve the time line for approval of projects, they have created four category of projects industry, another one is specifically called Energy and Mines where we will be specifically included. Another one is agro business and other one is forestry. Those project qualify and we are there.

And this law is -- when this law is passed, as I say, starting in January, has been discussed now with full majority. The projects will have a maximum of 1 year of time line 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 environment lists as well as wind farms, both onshore and on offshore.

We are including that one-off, 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 permitting of Touro.

In parallel to that, the company continues -- our teams continue to work in optimization of that project, looking at as 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 '24 and have it constructed by '25, and we believe that this is possible. Time where we believe that the copper deficit will be at [indiscernible] size.

So I think that's probably taking a little bit more than I expected. And so this -- I'm going to go into questions.

Please feel free to add to the questions, but we have some that have been submitted.

[Alberto Lavandeira Adan, executive]

Some of them are related to the Listing, which are going to be replied by Cesar. And the first one actually is for Cesar, which says, how is the process of Listing on to LSE going? Any updates, although most of it has already been said in the presentation and by me, but Cesar, do you want to add anything?

[Cesar Sanchez, executive]

Yes, sure. Thank you Alberto. Hello, everyone. So we've been working for a number of months now to basically get communication with the FCA, which we already have a few draft of their prospective submitted. And so I would say that now there is public information, we have identified no deal breakers for being listed in the main board 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 you will be sort of mid-December. So I guess the short answer today 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.

[Alberto Lavandeira Adan, executive]

And second one is how do you see the price of copper moving in the near term? Could China decline in the real estate market and decrease copper usage be an issue for our firm? If so how we manage this issue?

This is correct in the sense that there is a kind of decrease in the real estate market. But I have to say two things. One is there is a kind of contradiction in the real estate decrease when you see that the iron consumption and steel market is booming with iron ore prices getting to record highs, which is -- 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 in 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 rebump again in 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 2 days ago with the meeting of the 2 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 there was huge, meaning that the extra consumption for what I've seen in the reserve from city, extra consumption if they did this goes up to 2030 with these two countries would be extra 2.5 million tonnes 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. And in the U.S., I think they have a huge potential of cheap and fast energy and I think there's -- it's quite a good news to see these two big large economies of the world get into the common goal, which is the green energy, which will more compensate in 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 we have a plan B, we'll have to adapt like we did in the past, cutting, we have been through periods of very low prices of copper, and we managed simply cutting costs and things that are not essential like exploration or some investments that can be delayed, slightly like 1 or 2 years, not without having a big issue within the long-term value of the company.

Our next question is -- relates to -- from the original articles of the association of AIM Listing, there was -- it says that there was an extensive database inherited by the old Cyprus company, basically Oceana, and they had interest in the [indiscernible] belt 3000 kilometers of the [indiscernible] belt. And was a strategy to look at the jurisdictions, so on and so on. Well, this comes from the times of event. 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 database was not very useful. The investments that have been done in places like in Georgia and in Slovenia, we're not really very good. We -- and even in Cyprus. We long time ago, we finished with the commitments that were done there. We're 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. And that we continue to be very active and all the time. But really, we are not using too much of the database that's available from EMED days. EMED had some assets in Bulgaria, Slovakia and static focused on Greece, do we retain in the assets?

Now I've just mentioned that we don't have anything there since long time ago.

Is which ventures 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's stake in KEFI? Are you holding or selling given KEFI management previous understanding of EMED, is there not any opportunity to partner with KEFI Gold project in Ethiopia and copper in Arabia. Have any talks taking place? If not, who it be worth to exploration as part of [indiscernible] .

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 KEFI basically EMED were here. This is 9 years ago. 9 years ago, the [ promise ] it was about to start in production in Ethiopia and the shares have gone [indiscernible] too down. I don't even know what we have right now. Maybe Cesar will tell but...

[Cesar Sanchez, executive]

We really have around 4 million shares of KEFI, which is worth around just about GBP 20,000.

[Alberto Lavandeira Adan, executive]

At that time, it was worth several millions. So KEFI is a good -- is a good example of how money of the shareholders is not wisely invested. And I don't think we see any value in getting into these things, which, by the way, I don't know if they have any value or not. I think we see the results are not quite good. Moving from the Cyprus...

Next question is moving from the Cyprus to Spain and then in [ Canadian] listing, fully understand the motivation to move from Cyprus and the cost of brand in Canadian Listing versus actual volume. However, I believe there were certain anti-hostile takeover advantage when they enjoy from our current premium setup. Am I correct in this assumption? What will change?

I think probably yes, maybe Cesar 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 having -- without agreeing with this large shareholder or with other two that we have, call us with 13% and a few others that have 5% or 6%. So I'm -- we're quite relaxed from a hostile takeover point of view, to be honest. But I don't know if there is any big change Cesar with this [ bid ]?

[Cesar Sanchez, executive]

More than a change. I can't give a clear guidance about what should be expected. So we're speaking about the redomiciliation to Spain. But if you take one step forward, we adjusted the market for a number of months to be listed in the Main Market. And one of the benefits of being listed to 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 them, the most you need to apply the U.K. Corporate Governance Code. You need to apply the U.K. City Code and you need to basically do obviously, the one country, which unfortunately, Cyprus is not qualified for. So -- and that's the main driver about leaving Cyprus, which would be for a number of years, and we think that no longer represent or interest in the world.

And that's why we decided to propose to the shareholders to domiciliate the company in Spain. Now once we domiciliate in Spain, we would also approve that option of a U.K. Corporate Governance Code and the U.K. City Code. So when in terms of M&A, I'm now addressing the question, a specific question in terms of the M&A, so you have enough provisions in the U.K. company law to basically apply the U.K. City Code. And all the provisions included in the U.K. City Code, will apply to Atalaya once we are listed and once we are in Spain.

And that answers the question. So yes, we had some old provisions coming from Cyprus, which -- but they're not significant where we would be applying now as part of being a Spanish company listed in the Main Market.

[Alberto Lavandeira Adan, executive]

The next question is also related to the listing and to the domiciliation in Spain. Did you look at all your authorities are. 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 Spanish, are there other advantages of being redomicile in Spain. Did you consider a jurisdiction like Netherlands, which I believe has better anti-hostile takeover.

Yes, we look at other jurisdictions, and the main reason why I'm not moving 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 view the interchange of shares, and we even had a company called Atalaya Metals created in the U.K. It will be seen as selling shares of 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 changed. 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 [indiscernible] you to have offices, you have to have something there. So really 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 why we are going to pass to our shareholders to both. Of course, if the shareholders do not approve it. Well, we will look at other options because we believe that the ultimate gold -- goal, which is going away from Cyprus is to be -- able to be included in the Listing -- sorry, in the listing -- in the Index of the FTSE.

[Cesar Sanchez, executive]

And 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 U.K. company will have by applying the U.K. City Code. I think this is the [ mine ]. So we're not going to be in a different situation as any other U.K. entity.

[Alberto Lavandeira Adan, executive]

Would you agree -- next question, would you agree that there are advantages of how to make and find an acquisition? Atalaya is gearing very low and could make the company attractive to private equity [ vulture ] funds or another copper player who would use Atalaya balance sheet to [ parse the financial at the core ]?

I think just -- you're correct. I mean, somebody asked me -- I was recently in the U.K. doing some marketing in out of London that one of my worries was that our share price was low. And I said, "Look, this is the thing that we really worry me because eventually, we know that the market situation is tough and somebody could come with a very attractive offer and some funds will say, oh, you know what, I'm tired, and I will take this in whatever. It's not so easy. It's not so easy because for our concentration of shareholders. But of course, it can always happen. And -- 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 will 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 have 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 [indiscernible] were issues. I mean, things have taken longer than we expected due to the fact that E-LIX is something new, and line is development is by themselves, which means they don't give this to a big engineering firm to do the whole thing.

And this is 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, August and September, simply, they did not have enough people to put pipes, cable and so on. Right now, there are over 100 persons working inside the building. I was visiting than that 2 days ago, and 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 production of first production from that side, 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 Consulting Firm, the electrification trend is expected to increase on our copper demand, 36 million tonnes by [ '31 ] with supply forecast to be around 30 million tonnes from the current [ '22 ], creating a 6.5 million deficit in the start of the next decade. Is this considering Atalaya is starting to [indiscernible]. Obviously, what we produce today is potentially the consumer discount to [indiscernible] the demand.

This is a good point because I mean somebody can ask, well, why don't you keep the grades there? And use it later. Well, I think it's -- the setback will be, okay, we will stop production. And so our share price will go down immediately 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 started exploding and some day the electrification is not there. So then this will 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, is going to start any time. I mean the deficit is there, probably we will start seeing prices that are elevated in 2024, '25 very elevated. What I mean very elevated is prices could go to 15,000 tonnes. It would double, not at 20%. They could double easily in order to first incentivize production, new production; and second, reduce demand from sources. So try to take substitution or simply make it so expensive that it will not happen. So then the deficit has to be compensated in some way. So look, what are we thinking?

Well, I think 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 we -- 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 the deeper parts of Cerro Colorado would be not to be economic. So we have a plan that if this price is materialized, our reserve will be larger, and we will be producing more.

And of course, 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 at things to position ourselves in good metals because then, the shares in a mining company are like options in underlying commodity.

In 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 advisers identified what indexes you're likely to join? I believe the normal index, not so far, we will have the size to join a larger index.

[Cesar Sanchez, executive]

To add a little bit more color on that. So yes, we have discussions with all bankers. And First, you need to be a little book, as I mentioned, one of the condition is basically being domiciliated in Spain. And the second one, [indiscernible] you need to 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 currently have around 500 million market once you get to around 700 million, which I think we will, at some point, we will qualify for the FTSE 250.

[Alberto Lavandeira Adan, executive]

With your potential -- with our potential move to the main board in the U.K. have any institutional investors indicated that this will enable them to have or initiate investments in Atalaya?

Yes, actually, we have had investors in the U.K. saying that they were not allowed in the institutes to invest in AIM companies, and they will be welcome to if we were in the Main Market. Likewise, there are other companies in institutions out of U.K. that had the same reason they could not invest if we were only AIM Listed, So, yes, I think this would attract new investments without any question.

Other question is, are U.K. corporate investors, SIPP investors, ISA investors to be subject to 10% withholding tax or any future dividend distributions by Atalaya? If we redomicile into Spain, such withholding tax shall be recover -- not been recovered by said U.K. corporate investors. ISA investors and SIPP investors. Has Atalaya considered this tax implication when redomicile in Spain. Could you please go ahead, Cesar? With all the details.

[Cesar Sanchez, executive]

Yes. So starting from the back half -- to the end of the question is, we consider the tax implication. 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 nonresidential to be withholding tax at 19%, only you have a couple of conditions to basically to be qualified not to be withhold. One of these conditions will be, if you're domiciliated in any other country of European union. And the second one is, you have about 5% of the company for a period longer than 1 year.

Now if you don't qualify to those conditions, you might be subject to withhold 19%, which according to the [indiscernible] agreement 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% for nonresidents or let you have those qualifications. And that 19%, we will be able to provide you with tax certificate, which you will be able to deduct from your tax returns should you do [indiscernible] investment. 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 U.K.

At the end of the day, if you need to tax that you have been withhold for 19% then you will be able to deduct that 19% of the tax return you do when you're doing your investment through those tools.

[Alberto Lavandeira Adan, executive]

The next question is very similar to this one. Please advise the impact of taxation on dividends, on the proposed redomiciliation in Atalaya in Spain, in particular, my region is that Spain will withhold taxes of 19% or 24% of dividends. And for holders of stock in SIPP and ISA priority of individual holders, I expect then none of these taxes recovered clearly a major concern?

Although I think Cesar has explained the possibility of offsetting those, but we don't know exactly the details of that.

Do we have an offtaker for our E-LIX product as yet or will have [indiscernible] to the market?

Well, we don't have an official offtaker, but we have received indications and people have visited. Both the zinc and copper products will not at full value for companies that are buying the 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 is how much will admission to the main market increase unit costs?

Well, we have a very low overheads, and I don't think this will be a big issue. And so far, we don't see a big cost in anything major or any significant relevance except the more additional paper work, but nothing special that we can see.

[Cesar Sanchez, executive]

I'm sorry, on the cost for the admission to the main market will not be qualified as a unit cost, right? So it's a one-off. And as I say, as we [indiscernible] ratio, we're trying to minimize the cost to do all the work.

[Alberto Lavandeira Adan, executive]

Can you explain how revenue and EBITDA are sequentially higher in Q3 compared to Q2 when sale volumes generalized, copper prices were both lower than in Q2 and cash costs were higher than Q2. Can you reply for this, Cesar?

[Cesar Sanchez, executive]

Yes, sure. And this is quite technical. Yes, indeed, we have -- we book it for EUR 85 million in Q3 and compared to EUR 79 million in Q2 in terms of revenue. And -- but the main reason under the realized price, excluding [ Q2 ], it's slightly lower in Q3. And the main reason is for the [indiscernible] so -- and this is not cash adjustment. But when you have some [indiscernible] that you need to put mark-to-market in your P&L every time you do a hard closing. That adjustment was [indiscernible] million in the previous quarter and was almost zero in Q3.

So addressing your question is the way that you evaluate the mark-to-market, the [indiscernible], 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 few quarters.

[Alberto Lavandeira Adan, executive]

Well, the next question, how do you expect the production and cost front for '24? Well, we have not given guidance yet, but I expect it to be very similar to the previous year to this '23.

Next question. Today, we report a significant cost reduction in TC/RCs for '24? Are you expecting to benefit from this reduction in these charges. Yes, we are expecting to be a 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 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 the smelter.

And our trucks pass in front of the smelter. So very likely, we have been in discussion then that will take a significant amount of production, which means not only we will benefit from the TCs/RCs that were a benchmark for '24, but also will 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 costs will be better.

Next question. In the case of Touro, what will be the next key milestones considering there is support for mining projects from 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 have a specific team -- they will have a specific team expediting the paper work 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 '24.

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 [indiscernible] as a strategic project, which we have been told verbally that it fulfills all the conditions, and we are going to be basically the first larger product to be included in this -- in this type of new law that's going to start in the first of January.

Is there any risk to the mine plan in 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 simultaneous to Cerro Colorado. So whatever is not mine now, we'll mine later. So the only thing is, as you know, San Dionisio contains higher grade and the sooner we get that higher grade, the better is from the net present value of the project. With permits, we never know because it's subject to the authorities.

We already have our permit for stripping and for doing some initial work, which right now we are doing already. And -- but they still need a much larger [ print ] for the full footprint. What is the risk? The risk is delayed. 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 paper, stability, several other 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 through full steam. But as I say, it doesn't affect too much the whole overall picture because we are -- we have the Cerro Colorado pit. In Cerro Colorado, we are assuming basically next year, we're mining a 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 leaching would add 2 million tonnes 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 tonnes of supply but this has been already going for 2 or 3 years and especially with the system called [indiscernible]. 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 a heap leaching, which means you can extract things that are in [ ducts ] but it's not just irrigating with acid.

You need to have a line to recollect that acid and you need to have [indiscernible] capacity. So it's not that simple to implement. It's easier to say than to implement. Yes, it may have some extra production, but I don't think that will be the change. Another thing is that these systems that they are talking, they increased the improved timing for recovery in the copper from the heaps from infinite, which means it's not leachable 2 years or not months, not hours, 2, 3 years, more or less.

So even if you start applying them now, you will not start seeing the benefit until 3 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 leach the first [indiscernible] sense recoveries cost of [indiscernible] plan to the market?

I would say after we commissioned this, which commission will, let's say, the first few months of the year, '24, I would say mid-second quarter or mid-'24s when we have results. Obviously, before, we'll give you an update.

Next question, redomiciliation of, what are the net profit -- net cash flow implications to move the Cyprus to Spain, concern withholding tax and dividends, corporate tax increasing from 12% to 25%?

Well -- the first thing has already been discussed about withholding tax. And the corporate tax actually officially is 25%, but we are paying a little bit less than 20% due to certain things. But in addition to that, really at the end, the tax authorities in Spain consider the company as a profit here. So they are very careful not to think that the profits, a transfer of profits from here to Cyprus due to the regulation within the European Union. So I don't think from that side, the corporate tax will be a big difference.

[Cesar Sanchez, executive]

Yes. On the top of that, Alberto, just to mention that some of the profit that we declare 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 structure there to basically organize that. So no significant change there.

[Alberto Lavandeira Adan, executive]

Well, there is another question about how I move to U.K. Why not move to U.K.? There's no withholding tax. Well, we have already said that the U.K. was our first choice, but there was a one-off tax from the Spanish authorities. It was quite a complicated situation. Then the withhold tax another question, we have already discussed that.

The next one is if at all domiciling to Spain in the future was affecting 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 buyback?

Yes, we have been thinking of that at the Board, and we don't rule it off. Well, people say, talk again about tax-free investment wrappers, most common holding form U.K. investors is SIPPs as U.K. pensions. To another question. Several questions about that. Another one is the same thing. Dividend tax, unfortunately, holders of Atalaya say, we will not be able to recover withholding tax on dividends.

Can you look further [indiscernible] are not applied withholding tax on grants. So most U.K. holders have through SIPP, ISA. 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 go for this?

[Cesar Sanchez, executive]

Yes. 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 purpose, which is included in the taxonomy of European [indiscernible].

Yes, we're doing a lot of work on the ESG front, and we are starting to see our ratings related to ESG improving, and we continue. And I think we [indiscernible] with the work that we did doing to [indiscernible] be even that, which, again, it's with an aim to have when we need to fund -- raise funds for Touro. Once we have the permit, we will be in a position to do that. All this work done and we'll be able to benefit our base better rate. But yes, we've been rated by the more significant rating company on the sustainability, and we are proving it since we got the last one a few years back.

[Operator]

Perfect. That's great. Alberto .Thank you for being so generous with your time today. And I just think every question there. And of course, the company can't review all questions submitted today, and we will publish those responses on Investor meet company platform or appropriate to do so. But before we direct the investors to provide you with their feedback, which is particularly important for the company. Alberto, could I please ask you for a few closing comments?

[Alberto Lavandeira Adan, executive]

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 questions to our addresses, and we will 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.

[Operator]

Alberto, Cesar, 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 in other to let 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.

[Alberto Lavandeira Adan, executive]

Thank you.