Atalaya Mining PLC Option to acquire Touro Copper Project interest (6097X)
23 February 2017 - 6:01PM
UK Regulatory
TIDMATYM
RNS Number : 6097X
Atalaya Mining PLC
23 February 2017
Atalaya Mining plc ("Atalaya" or the "Company")
Exercise of option to acquire interest in the Touro Copper
Project ("Proyecto Touro") in Spain
Atalaya (AIM: ATYM, TSX: AYM), the European mining and
development company, announces that it has exercised an option to
acquire 10% of the share capital of Cobre San Rafael S.L., ("CSR"),
a wholly owned subsidiary of Explotaciones Gallegas S.L. ("EG"),
part of the F. GOMEZ Group. This is part of an earn-in agreement
(the "Agreement"), which will enable the Company to acquire up to
80% of CSR.
Acquisition Rationale
Atalaya is focused on creating a portfolio that combines
producing, development and exploration assets. By acquiring an
initial 10% of CSR, the Board of Atalaya sees this Agreement as a
low risk first step in creating a growth portfolio to complement
Proyecto Riotinto, which is now fully operational.
Background
Proyecto Touro is located about 27 km east of Santiago de
Compostela in northwest Spain. It was operated by Riotinto Patiño
from 1973 to 1986 using open pit mining followed by copper
flotation. Infrastructure is in place, including high voltage power
and a road network providing access to an international airport and
a number of deep-water ports.
In July 2015, the Company secured an exclusivity agreement.
Since then it has been working with its consultants to evaluate the
viability of the project. The Company has carried out significant
drilling, resource evaluation, mine planning, metallurgical test
work, plant engineering and other auxiliary studies required to
fast track the project to feasibility stage ahead of
permitting.
The Company's evaluation of the results to date has confirmed
and expanded the resources identified by previous owners. As the
project has been a past producer, the orebody is well understood
and exhibits straightforward metallurgy, reporting good copper
recoveries and clean concentrates.
Drilling has confirmed a significant resource that remains open
in several directions. The deposit is amenable to open pit mining
in shallow pits. Capital expenditures are expected to compare
favourably with copper projects globally, as was the case at
Proyecto Riotinto.
Phased Earn-in Agreement
Following the acquisition of the initial 10% of CSR's share
capital, the Agreement includes the following four phases:
-- Phase 1 - The Company paid EUR0.5 million to secure the
exclusivity agreement and will continue to fund up to a maximum of
EUR5 million to get the project through the permitting and
financing stages.
-- Phase 2 - When permits are granted, the Company will pay EUR2
million to earn-in an additional 30% interest in the project
(cumulative 40%).
-- Phase 3 - Once development capital is in place and
construction is underway, the Company will pay EUR5 million to
earn-in an additional 30% interest in the project (cumulative
70%).
-- Phase 4 - Once commercial production is declared, the Company
will purchase an additional 10% interest in the project (cumulative
80%) in return for a 0.75% Net Smelter Return (NSR) royalty, with a
buyback option.
The Agreement has been structured so that the various phases and
payments will only occur once the project is de-risked, permitted
and in operation.
Alberto Lavandeira, CEO, commented:
"The initiation of Atalaya's first major project following the
successful restart of Proyecto Riotinto is an exciting prospect and
the next step in our growth strategy. We are delighted with the
excellent relationship that we have developed with our partners,
EG, in advancing this new project. Following the preliminary work
and exercise of the option, we are now entering the permitting
phase, which we believe will be a relatively straightforward
process owing to the current producing status of Touro (as an
aggregate quarry) and the experience of our local partners."
About Explotaciones Gallegas S.L.
CSR is a subsidiary of EG, part of the F. GOMEZ Group, a private
local company with more than 100 years history specialising in the
construction and industrial sector in Spain. EG has been mining in
the area of the Proyecto Touro for 25 years as part of its
construction business and has consequently kept the mining
concessions current.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Contacts:
+34 959 59
Atalaya Mining plc Roger Davey / Alberto Lavandeira 28 50
--------------------------- ---------------------------------- ------------
Canaccord Genuity Henry Fitzgerald-O'Connor +44 20 7523
(NOMAD and Joint Broker) / Martin Davison 8000
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BMO Capital Markets Jeffrey Couch/Neil Haycock/Tom +44 20 7236
(Joint Broker) Rider 1010
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This information is provided by RNS
The company news service from the London Stock Exchange
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